AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1999
REGISTRATION NOS. 333-85111
811-9545
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. 1 |X|
POST-EFFECTIVE AMENDMENT NO. |_|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 1 |X|
- --------------------------------------------------------------------------------
SELIGMAN TIME HORIZON/HARVESTER 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>
<S> <C>
[_] IMMEDIATELY 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)
[_] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) [_] ON (DATE) PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
</TABLE>
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
|_| THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
SELIGMAN
TIME HORIZON/HARVESTER
SERIES, INC.
PROSPECTUS
, 2000
----------
SELIGMAN TIME HORIZON 30 FUND
SELIGMAN TIME HORIZON 20 FUND
SELIGMAN TIME HORIZON 10 FUND
SELIGMAN HARVESTER FUND
The Securities and Exchange Commission has neither approved nor disapproved
these Funds, and it has not determined the prospectus to be accurate or
adequate. Any representation to the contrary is a criminal offense.
An investment in these Funds or any other fund cannot provide a complete
investment program. The suitability of an investment in a Fund should be
considered based on the investment objective, strategies and risks described in
this Prospectus, considered in light of all of the other investments in your
portfolio, as well as your risk tolerance, financial goals and time horizons. We
recommend that you consult your financial advisor to determine if these Funds
are suitable for you.
managed by
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
- --------------------------------------------------------------------------------
Seligman Time Horizon/Harvester Series, Inc. is based on two processes developed
by J. & W. Seligman & Co. Incorporated: Seligman Time Horizon MatrixSM, an asset
allocation strategy, and Seligman HarvesterSM, a combined income-withdrawal and
asset allocation strategy. Seligman Time Horizon Matrix and Seligman Harvester
are proprietary service marks of Seligman Advisors, Inc. Patent pending on the
business methodologies and apparatus for implementing the Seligman Harvester
Risk Management System.
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
THE FUNDS
Overview 3
Investment Objectives and Asset Allocation Strategies of the Funds 3
Principal Strategies of the Funds 4
Principal Risks of the Funds 6
Past Performance of the Funds 7
Fees and Expenses of the Funds 7
Examples of Each Fund's Expenses 11
Questions and Answers about the Funds 12
Additional Information about the Fund's Investment Strategies and Risks 16
Management of the Funds 17
THE UNDERLYING FUNDS
Investment Objectives and Principal Strategies of the Underlying Funds 18
Principal Risks of the Underlying Funds 21
YEAR 2000 25
SHAREHOLDER INFORMATION
Deciding Which Class of Shares to Buy 26
How CDSCs are Calculated 28
Pricing of Fund Shares 28
Opening Your Account 29
How to Buy Additional Shares 30
How to Exchange Shares Among the Seligman Mutual Funds 31
How to Sell Shares 31
Important Policies That May Affect Your Account 32
Telephone Services 33
Reinstatement Privilege 34
Dividends and Capital Gain Distributions 34
Taxes 35
APPENDIX A
APPENDIX B
APPENDIX C
FOR MORE INFORMATION back cover
TIMES CHANGE ... VALUES ENDURE
2
<PAGE>
THE FUNDS
OVERVIEW
J. & W. Seligman & Co. Incorporated (the "Manager") serves as the investment
manager to the Seligman Time Horizon/Harvester Series, Inc. (the "Series"), an
asset-allocation type mutual fund containing four funds: Seligman Time Horizon
30 Fund, Seligman Time Horizon 20 Fund, Seligman Time Horizon 10 Fund and
Seligman Harvester Fund (collectively the "Funds"). The Funds are designed for
investors who are seeking to have their asset allocation decisions made by a
professional investment manager. Each of the Time Horizon Funds is named in
accordance with an investor's "time-horizon" for the achievement of one or more
investment goals. The Harvester Fund is designed for investors who are seeking
to generate current income from their capital, growth of income and growth of
capital over time. An investor may choose to invest in one or more of the Funds
based on individual investment goals, investment time horizons, risk tolerance,
and financial circumstances.
Each Fund is a "fund of funds," which means that each seeks to achieve its
objectives by investing in a combination of other Seligman mutual funds (the
"Underlying Funds"). In pursuing its investment objective, each Fund may also
invest directly in US Government securities and high-quality, short-term
instruments.
INVESTMENT OBJECTIVES AND ASSET ALLOCATION STRATEGIES OF THE FUNDS
The table below provides an overview of each Fund's investment objective(s) and
asset allocation strategy. A more complete description of each Fund's asset
allocation strategy is provided under "Principal Strategies of the Funds."
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
FUND INVESTMENT OBJECTIVE(S) ASSET ALLOCATION STRATEGY
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Under normal market
conditions, this Fund invests
in Underlying Funds to produce
a portfolio that primarily
invests in:
- ------------------------------------------------------------------------------------------------------------------------
SELIGMAN TIME HORIZON 30 FUND - Long-term capital Aggressive growth-oriented
INTENDED FOR INVESTORS WITH appreciation. domestic and international
LONG-TERM FINANCIAL GOALS (I.E., equity securities weighted
APPROXIMATELY 30 YEARS AWAY). toward small- and
medium-capitalization.
- ------------------------------------------------------------------------------------------------------------------------
SELIGMAN TIME HORIZON 20 FUND - Long-term capital Growth-oriented domestic and
INTENDED FOR INVESTORS WITH appreciation. international equity
LONG-TERM FINANCIAL GOALS (I.E., securities, with a more even
APPROXIMATELY 20 YEARS AWAY). weighting among small-,
medium-, and
large-capitalization companies
than the Time Horizon 30 Fund.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
<S> <C> <C>
SELIGMAN TIME HORIZON 10 FUND - Capital appreciation. Small-, medium-, and
INTENDED FOR INVESTORS WITH large-capitalization domestic
INTERMEDIATE-TERM FINANCIAL GOALS and international equity
(I.E., APPROXIMATELY 10 YEARS AWAY). securities as well as domestic
fixed-income securities.
- ------------------------------------------------------------------------------------------------------------------------
SELIGMAN HARVESTER FUND - INTENDED Capital appreciation and Medium- and
FOR INVESTORS WHO SEEK CURRENT preservation of capital large-capitalization and
INCOME FROM THEIR CAPITAL, GROWTH with current income and dividend-producing domestic
OF INCOME AND GROWTH OF CAPITAL growth of income. and international equity
OVER TIME. securities supplemented by a
larger allocation of domestic
fixed-income securities and
cash and cash equivalents than
the Time Horizon 10 Fund.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PRINCIPAL STRATEGIES OF THE FUNDS
Each Fund seeks to achieve its investment objective(s) primarily by investing a
certain percentage of its assets in the Class A shares of the Underlying Funds
(which are described under the section of this Prospectus titled "The Underlying
Funds"). Each Fund is managed as an asset allocation program with target
allocations and ranges for its investments in the Underlying Funds. These target
allocations and ranges are based on two asset allocation strategies developed by
the Manager, Seligman Time Horizon Matrix and Seligman Harvester. A series of
questions and answers explaining more about Seligman Time Horizon Matrix and
Seligman Harvester, as well as how an investor may invest in the Funds to take
advantage of these strategies, appears later in this prospectus under "Questions
and Answers about the Funds."
The table below illustrates the current allocation targets and ranges for each
Fund under normal market conditions. The Underlying Funds are grouped below into
three broad categories: Domestic Equity Funds, Global Equity Funds and Fixed
Income Funds. Within each category, the ordering of the Underlying Funds begins
with the most aggressively managed and concludes with the most conservatively
managed. For information about the investment objectives, strategies and risks
of each Underlying Fund, see "The Underlying Funds."
4
<PAGE>
<TABLE>
<CAPTION>
TIME TIME TIME
HORIZON HORIZON HORIZON HARVESTER
UNDERLYING FUND 30 FUND 20 FUND 10 FUND FUND
- ------------------------------- -------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
DOMESTIC EQUITY FUNDS
- ---------------------
Seligman Frontier Fund Target: 3% 3% 3%
Range: 2%-4% 2%-4% 2%-4%
Seligman Small-Cap Value Fund Target: 13% 12% 6%
Range: 10%-16% 10%-14% 4%-8%
Seligman Communications and Target: 16% 10% 10%
Information Fund Range: 13%-19% 8%-12% 8%-12%
Seligman Capital Fund Target: 22% 20% 20% 10%
Range: 18%-26% 16%-24% 16%-24% 8%-12%
Seligman Growth Fund Target: 3% 9% 9% 9%
Range: 2%-4% 7%-11% 7%-11% 7%-11%
Seligman Large-Cap Value Fund Target: 3% 9% 9% 9%
Range: 2%-4% 7%-11% 7%-11% 7%-11%
Seligman Common Stock Fund Target: 15%
Range: 12%-18%
GLOBAL EQUITY FUNDS
- -------------------
Seligman Henderson Emerging Target: 10% 10% 5%
Markets Growth Fund Range: 8%-12% 8%-12% 4%-6%
Seligman Henderson Global Target: 25% 17% 8%
Smaller Companies Fund Range: 21%-29% 14%-20% 6%-10%
Seligman Henderson Global Target: 5%
Growth Opportunities Fund Range: 4%-6%
Seligman Henderson Target: 5% 10% 10% 12%
International Fund Range: 4%-6% 8%-12% 8%-12% 10%-14%
FIXED INCOME FUNDS
- ------------------
Seligman High-Yield Bond Target: 15% 30%
Series Range: 12%-18% 25%-35%
Seligman U.S. Government Target: 5% 10%
Securities Series/Seligman Range: 4%-6% 8%-12%
Cash Management Fund
</TABLE>
Under normal market conditions, the Manager will initially allocate each Fund's
assets according to the allocation targets described in the table. The Manager
will attempt to use cash in-flows and out-flows from the purchase or sale of
each Fund's shares to remain within the allocation ranges. On a semi-annual
basis, the Manager will re-allocate each Fund's assets to its current targets if
the allocations on the semi-annual re-allocation date are outside the allocation
ranges. (Each Fund may hold a portion of its assets in cash or cash-equivalents
in order to meet redemptions or because it has not yet invested the proceeds
from the sale of
5
<PAGE>
Fund shares, for example. This cash and cash-equivalents are not included in the
Fund's assets for purposes of determining the allocations among the Underlying
Funds.)
Each Fund may change the allocation targets and ranges for each Underlying Fund
at any time if the Manager believes that doing so will better enable the Fund to
pursue its investment objective. Each Fund may also change the Underlying Funds
to which it will allocate its assets depending on the Manager's outlook on the
economy, financial markets in general and factors related to the asset classes
in which each Underlying Fund invests.
PRINCIPAL RISKS OF AN INVESTMENT IN THE FUNDS
An investment in any of the Funds, like an investment in any mutual fund,
involves risks. An investment in a "fund of funds" involves other risks as well.
The principal risks of an investment in the Funds follow, and you should
consider them carefully before investing in any of the Funds.
The value of each Fund will fluctuate, and you could lose money.
Because the assets of each Fund will be invested primarily in the Underlying
Funds, each Fund's investment performance is directly related to the investment
performance of the Underlying Funds in which it invests. The ability of a Fund
to realize its investment objective will depend, in part, on the extent to which
the Underlying Funds realize their investment objectives.
Each Fund is exposed to the same risks as the Underlying Funds in direct
proportion to the allocation of its assets among the Underlying Funds. These
risks, summarized below, are described more fully under "Principal Risks of the
Underlying Funds":
o Small-Cap Companies - Investments in small-capitalization companies
are subject to additional risks. For example, small-capitalization
companies typically have less financial and managerial resources and
more limited product lines than large-capitalization companies.
o Foreign Investments - Investments in foreign issuers expose investors
to currency fluctuations, settlement and custody risk, and changes in
political conditions. Foreign investments may also include securities
of issuers located in emerging countries. These countries may have
relatively unstable governments and less diversified industrial bases.
o "Junk Bonds" - Each Fund may also invest in Underlying Funds that in
turn invest in non-investment grade fixed-income securities, which are
subject to a greater risk of loss than higher rated fixed-income
securities and are considered to be predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal.
o Sector Volatility and Concentrated Portfolios - Certain Underlying
Funds are subject to sector volatility or hold a relatively small
number of securities in their portfolios, thus creating additional
risks.
o Additional Risks - In addition, certain Underlying Funds may purchase
derivative securities; enter into forward currency transactions; lend
their portfolio securities; enter into options transactions; purchase
zero-coupon bonds and payment-in-kind bonds; purchase restricted and
illiquid securities; purchase securities on a when-issued basis; enter
into repurchase agreements; borrow money; and engage in various other
investment practices that involve substantial risk of loss.
6
<PAGE>
In addition to the Fund's operating expenses, you will indirectly bear a portion
of the operating expenses of the Underlying Funds. Thus, the expenses you bear
as an investor in a Fund will be higher than if you invested directly in the
Underlying Funds.
PAST PERFORMANCE OF THE FUNDS
Each Fund offers four classes of shares: Class A shares, Class B shares, Class C
shares and Class D shares. Each Fund's classes of shares are new, so performance
information is not available.
FEES AND EXPENSES OF THE FUNDS
The tables below summarize the fees and expenses that you may pay as a
shareholder of each Fund. Shareholder fees are charged directly to you. Annual
fund operating expenses are deducted from a Fund's assets and are therefore paid
indirectly by you and other investors of the Fund.
SHAREHOLDER FEES FOR EACH FUND:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES CLASS A CLASS B CLASS C CLASS D
============================================================================================================
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) on 4.75%(1)(2) None 1% None
Purchases (a % of offering price)
============================================================================================================
Maximum Contingent Deferred Sales None(1) 5% 1% 1%
Charge (Load) (CDSC) on Redemptions
(as a % of original purchase price or
current net asset value, whichever is less)
- ------------------------------------------------------------------------------------------------------------
<FN>
(1) If you buy Class A shares for $1,000,000 or more you will not pay an initial sales charge, but your
shares will be subject to a 1% CDSC if sold within 18 months.
(2) Eligible employee benefit plans which have at least $500,000 invested in the Seligman Group of mutual
funds or 50 eligible employees may purchase Class A shares at net asset value.
</FN>
</TABLE>
TIME HORIZON 30 FUND ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 2000:
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Fees and Expenses Class A Class B Class C Class D
<S> <C> <C> <C> <C>
Asset allocation fees ..................................... 0.10% 0.10% 0.10% 0.10%
Distribution and/or service (12b-1) fees (1) .............. 0 0.75 0.75 0.75
Other expenses (2) ........................................ 0.73 0.73 0.73 0.73
Total gross operating expenses(3) ......................... 0.83 1.58 1.58 1.58
Less: Fee waiver and/or expense
reimbursement (4) ...................................... (0.33) (0.33) (0.33) (0.33)
Total net operating expenses (after fee
waiver and/or reimbursement) ........................... 0.50% 1.25% 1.25% 1.25%
</TABLE>
7
<PAGE>
TIME HORIZON 20 FUND ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 2000:
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Fees and Expenses Class A Class B Class C Class D
<S> <C> <C> <C> <C>
Asset allocation fees ..................................... 0.10% 0.10% 0.10% 0.10%
Distribution and/or service (12b-1) fees (1) .............. 0 0.75 0.75 0.75
Other expenses (2) ........................................ 0.73 0.73 0.73 0.73
Total gross operating expenses(3) ......................... 0.83 1.58 1.58 1.58
Less waiver and/or expense
reimbursement (4) ...................................... (0.33) (0.33) (0.33) (0.33)
Total net operating expenses (after fee
waiver and/or reimbursement) ........................... 0.50% 1.25% 1.25% 1.25%
</TABLE>
TIME HORIZON 10 FUND ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 2000:
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Fees and Expenses Class A Class B Class C Class D
<S> <C> <C> <C> <C>
Asset allocation fees ...................................... 0.10% 0.10% 0.10% 0.10%
Distribution and/or service (12b-1) fees (1) ............... 0 0.75 0.75 0.75
Other expenses (2) ......................................... 0.73 0.73 0.73 0.73
Total gross operating expenses(3) .......................... 0.83 1.58 1.58 1.58
Less: Fee waiver and/or expense
reimbursement(4) ........................................... (0.33) (0.33) (0.33) (0.33)
Total net operating expenses (after fee
waiver and/or reimbursement) ........................... 0.50% 1.25% 1.25% 1.25%
</TABLE>
8
<PAGE>
HARVESTER FUND ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 2000:
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Fees and Expenses Class A Class B Class C Class D
<S> <C> <C> <C> <C>
Asset allocation fees ..................................... 0.10% 0.10% 0.10% 0.10%
Distribution and/or service (12b-1) fees (1) .............. 0 0.75 0.75 0.75
Other expenses (2) ........................................ 0.73 0.73 0.73 0.73
Total gross operating expenses(3) ......................... 0.83 1.58 1.58 1.58
Less: Fee waiver and/or expense
reimbursement (4) ...................................... (0.33) (0.33) (0.33) (0.33)
Total net operating expenses (after fee
waiver and/or reimbursement) ........................... 0.50% 1.25% 1.25% 1.25%
<FN>
- ----------------
(1) Under each Fund's 12b-1 Plan, each Fund is authorized to pay 12b-1 fees equal to 0.25% for Class A
shares and 1.00% for Class B shares, Class C shares and Class D shares. In addition, the Class A shares of
the Underlying Funds in which each Fund will invest impose a 12b-1 fee of 0.25%. To avoid any duplication of
the 12b-1 fees, the 12b-1 fees payable by each class of shares of a Fund will be reduced by an amount equal
to the 12b-1 fees paid by the Class A shares of the Underlying Funds. The net amount is shown in the table
above.
(2) Based on estimated expenses of the Fund for the current fiscal year. Certain expenses, including
custodian expenses, registrar and transfer agent expenses, Directors' fees, legal and audit fees, and the
cost of shareholder reports and registration fees will be incurred at both the Fund level and by the
Underlying Funds. An investor can avoid these expenses at the Fund level by investing directly in the
Underlying Funds.
(3) The Fund expenses shown in this table do not include the pro rata expenses of the Underlying Funds,
which are shown in the next two tables. The Fund expenses shown in this table would be higher if they were
included.
(4) The Manager has contractually undertaken to waive its asset allocation fee and/or to reimburse each
Fund's expenses to the extent that the sum of the "asset allocation fee" plus "other expenses" (but not any
12b-1 fees) exceeds 0.50% per annum of average daily net assets. This undertaking will remain in effect at
least until December 31, 2002.
</FN>
</TABLE>
Shareholders in a Fund will bear indirectly the proportionate expenses of the
Underlying Funds in which the Fund invests, including a 12b-1 fee of up to 0.25%
incurred as a result of the Fund's investment in Class A shares of the
Underlying Fund. The following table provides the expense ratios for each
Underlying Fund (based on the expense ratios reflected in each Underlying Fund's
current annual report), including the 12b-1 fee:
- ------------------------------------------------------------------------
TOTAL OPERATING
UNDERLYING FUND CLASS A SHARES EXPENSE RATIOS
- ------------------------------------------------------------------------
Seligman Capital Fund 0.99%
- ------------------------------------------------------------------------
Seligman Cash Management Fund 0.71%
- ------------------------------------------------------------------------
Seligman Common Stock Fund 1.11%
- ------------------------------------------------------------------------
Seligman Communications and Information Fund 1.44%
- ------------------------------------------------------------------------
9
<PAGE>
- ------------------------------------------------------------------------
TOTAL OPERATING
UNDERLYING FUND CLASS A SHARES EXPENSE RATIOS
- ------------------------------------------------------------------------
Seligman Frontier Fund 1.63%
- ------------------------------------------------------------------------
Seligman Growth Fund 1.14%
- ------------------------------------------------------------------------
Seligman Henderson International Fund 1.88%
- ------------------------------------------------------------------------
Seligman Henderson Emerging Markets Growth Fund 2.57%
- ------------------------------------------------------------------------
Seligman Henderson Global Growth Opportunities Fund 1.68%
- ------------------------------------------------------------------------
Seligman Henderson Global Smaller Companies Fund 1.72%
- ------------------------------------------------------------------------
Seligman High-Yield Bond Series 1.10%
- ------------------------------------------------------------------------
Seligman Large-Cap Value Fund 1.50%
- ------------------------------------------------------------------------
Seligman Small-Cap Value Fund 1.69%
- ------------------------------------------------------------------------
Seligman U.S. Government Securities Series 1.05%
- ------------------------------------------------------------------------
After combining the total net operating expenses of the Fund with those of the
Underlying Funds, the estimated weighted average expense ratios of each class of
shares of each Fund (calculated as a percentage of average net assets) are as
follows:
- ---------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
------- ------- ------- -------
- ---------------------------------------------------------------------------
Seligman Time Horizon 30 Fund 2.08% 2.83% 2.83% 2.83%
- ---------------------------------------------------------------------------
Seligman Time Horizon 20 Fund 2.07% 2.82% 2.82% 2.82%
- ---------------------------------------------------------------------------
Seligman Time Horizon 10 Fund 1.90% 2.65% 2.65% 2.65%
- ---------------------------------------------------------------------------
Seligman Harvester Fund 1.75% 2.50% 2.50% 2.50%
- ---------------------------------------------------------------------------
10
<PAGE>
EXAMPLES OF EACH FUND'S EXPENSES:
These examples are intended to help you compare the expenses of
investing in each Fund with the expenses of investing in other mutual funds.
They assume that (1) you invest $10,000 in each Fund for each period and then
sell all of your shares at the end of the period; (2) your investment in each
Fund has a 5% return each year; and (3) each Fund's operating expenses, which
include the indirect expenses of the Underlying Funds, remain the same. Although
your actual expenses may be higher or lower, based on these assumptions your
expenses would be:
<TABLE>
<CAPTION>
FUND AND CLASS 1 YEAR 3 YEARS
-------------- ------ -------
<S> <C> <C>
TIME HORIZON 30 FUND
Class A............................................................... $676 $1,096
Class B............................................................... 786 1,177
Class B, if you do not sell your shares at the end of the period...... 286 877
Class C............................................................... 483 968
Class C, if you do not sell your shares at the end of the period...... 383 968
Class D............................................................... 386 877
Class D, if you do not sell your shares at the end of the period...... 286 877
TIME HORIZON 20 FUND
Class A............................................................... 675 1,093
Class B............................................................... 785 1,174
Class B, if you do not sell your shares at the end of the period...... 285 874
Class C............................................................... 482 965
Class C, if you do not sell your shares at the end of the period...... 382 965
Class D............................................................... 385 874
Class D, if you do not sell your shares at the end of the period...... 285 874
TIME HORIZON 10 FUND
Class A............................................................... 659 1,044
Class B............................................................... 768 1,123
Class B, if you do not sell your shares at the end of the period...... 268 823
Class C............................................................... 465 915
Class C, if you do not sell your shares at the end of the period...... 365 915
Class D............................................................... 368 823
Class D, if you do not sell your shares at the end of the period...... 268 823
HARVESTER FUND
Class A............................................................... 644 1,000
Class B............................................................... 753 1,079
Class B, if you do not sell your shares at the end of the period...... 253 779
Class C............................................................... 451 871
Class C, if you do not sell your shares at the end of the period...... 351 871
Class D............................................................... 353 779
Class D, if you do not sell your shares at the end of the period...... 253 779
</TABLE>
11
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE FUNDS
Each Fund invests a percentage of its assets in the Underlying Funds based on
two asset allocation strategies developed by the Manager, Seligman Time Horizon
Matrix and Seligman Harvester. The following series of questions and answers is
designed to explain these strategies, as well as how an investor may invest in
the Funds to take advantage of them.
Q: WHAT IS SELIGMAN TIME HORIZON MATRIX?
A: Seligman Time Horizon Matrix is an asset allocation strategy designed for
investors seeking to manage market risk and build wealth over time. It is
based on historical performance of various asset classes from 1950 through
1998 and is updated annually. Through its systematic investment approach to
meeting financial goals, Seligman Time Horizon Matrix seeks to manage the
impact of market fluctuations. A basic premise of Seligman Time Horizon
Matrix is to stay invested throughout market fluctuations rather than
trying to time the market and avoid volatility by jumping in and out of
various investments. As investment history has shown, it has been nearly
impossible to time the markets successfully.
Q: WHAT IS SELIGMAN HARVESTER?
A: Seligman Harvester (which is incorporated in Seligman Time Horizon Matrix)
is an income-withdrawal and asset allocation strategy designed for
investors who seek current income as well as growth of income and capital.
This strategy is for investors who need to withdraw income from accumulated
assets, and who, therefore, may be more sensitive to the volatility of
their investments. For example, if you withdraw a fixed amount of an
investment in a down market you deplete more capital than you would in an
up market because you have to sell more of your investment to produce the
desired withdrawal. Further, when the market rebounds, fewer assets will be
left to take part in the upswing. The Seligman Harvester strategy seeks to
adjust your withdrawals and asset allocation to reduce such risks. The
purchase of Seligman Harvester Fund, however, will not automatically
implement the withdrawal component of the strategy, which is based on an
analysis that includes an individual investor's spending needs, sources of
income and tax considerations. The Manager recommends that an investor
interested in developing a Seligman Harvester withdrawal strategy consult a
financial advisor.
Q: HOW WAS SELIGMAN TIME HORIZON MATRIX DEVELOPED?
A: Seligman Time Horizon Matrix is the result of extensive proprietary
research by the Manager that examines the performance of different asset
classes over various time periods. Although past performance of asset
classes is not a guarantee of future results, the Manager believes that an
analysis of historical performance can provide guidelines that help make
prudent long-term investment decisions. The Manager's research shows that,
historically, as time frames lengthen, market volatility and the relative
risk among various asset classes have changed.
For example, small-company stocks have been relatively volatile when
compared with Treasury bills over a number of different one-year holding
periods. However, when holding periods have been extended, the relative
risk between small-company stocks and Treasury bills has been more closely
aligned. In fact, this research demonstrates that in any 20-year holding
period from 1950 to 1998 the worst performance of small-company stocks
surpassed the best performance of Treasury bills. Seligman Time Horizon
Matrix is the result of similar comparisons among all the asset classes
described in Appendix A over one-, five-, 10- and 20-year holding periods
since 1950. Of course, past performance is not a guarantee of future
results. Appendix B includes a
12
<PAGE>
chart that illustrates how the relative risk of the major asset classes
historically has changed over different holding periods since 1950.
Q: HOW WAS SELIGMAN HARVESTER DEVELOPED?
A: Seligman Harvester also was developed through proprietary research
conducted by the Manager. Using a sophisticated statistical technique to
analyze asset class returns since 1950, this research tested different
combinations of withdrawal strategies and asset allocations to assess the
probability of conserving capital while realizing current income. Like
Seligman Time Horizon Matrix, Seligman Harvester is updated annually. One
of the key design parameters for a Harvester portfolio was to develop an
allocation that would have had no negative investment results over any
five-year period since 1950. The Manager's research demonstrated that an
asset allocation of 60% equity, 30% corporate bonds and 10% cash or US
government bonds was particularly effective in conserving capital over long
time periods when used with certain withdrawal strategies. Under normal
market conditions, the Seligman Harvester Fund intends to maintain such an
asset allocation (within the ranges specified above).
Q: HOW DOES SELIGMAN TIME HORIZON MATRIX WORK?
A: Seligman Time Horizon Matrix provides specific annual portfolio
recommendations for investors seeking to achieve investment goals over time
frames ranging from 30 years to one year. Each annual portfolio represents
investments in a different combination of certain Seligman mutual funds,
which the Manager believes will correlate with the historical performance
of the asset classes studied in its research. Annual research updates
provide additional data that the Manager factors into its analysis, which
is aimed solely at determining a prudent asset allocation, given the latest
historical performance, for seeking a specific investment goal over a
specific time frame. Based on an analysis of this research, the Manager may
make changes to the specific portfolio recommendations of Seligman Time
Horizon Matrix and also to the allocation targets and ranges for each
Fund's investments in the Underlying Funds. Because this continual analysis
creates an ever-increasing collection of historical data, the Manager
expects annual adjustments to the portfolio recommendations to be modest.
However, the possibility does exist that extreme market volatility in any
single year could significantly change the implications of long-term
historical performance patterns in one or more asset classes. This could
cause the Manager, in its judgment, to significantly revise a Fund's
allocations among the Underlying Funds.
Seligman Harvester Fund, which is intended for investors who need to
withdraw money from accumulated assets, serves as the end point of the
Seligman Time Horizon Matrix. As a result, the Matrix recommends 31
distinct portfolios - one for each year starting at Year 30 plus the
Harvester portfolio. For a complete description of these annual portfolio
recommendations, please see Appendix C.
Seligman Time Horizon Matrix seeks to reduce an investor's portfolio
volatility on an annual basis through "migration." Migration involves
reallocating portfolio investments each year as you get closer to your
investment goal from a more volatile to less volatile portfolio. For
example, if your investment goal is 20 years away, you could allocate your
investment among the nine individual Seligman mutual funds in the Seligman
Time Horizon Matrix for the recommended 20-year portfolio. After one year,
the Matrix suggests that you "migrate" the portfolio by shifting the
relative weighting of each Seligman mutual fund to the recommended
allocation of the Seligman Time Horizon Matrix 19-year portfolio. This
process would continue each year in accordance with the recommendations in
Seligman Time Horizon Matrix, until your portfolio matches the asset
13
<PAGE>
allocation recommended by Seligman Harvester. Using Seligman Time Horizon
Matrix, an investor would not buy and hold the same portfolio from year to
year. As discussed below, the Funds offer a simplified way to implement
this strategy.
Q: HOW DOES EACH FUND BENEFIT FROM THE MANAGER'S RESEARCH?
A: Each Fund seeks to replicate a specific time horizon represented in
Seligman Time Horizon Matrix by investing a specified percentage of its
assets in various Underlying Funds.
o Seligman Time Horizon 30 Fund: Under normal market conditions, this
Fund invests in Underlying Funds to produce a portfolio that invests
primarily in equity securities issued by both US and international
companies. The 100% weighting to equities is based on the Manager's
research findings that show equities have been essential to overcome
the effect of inflation and to benefit from compounding returns over
long time frames. The specific equity allocations are weighted toward
small- and medium-company stocks, as well as emerging markets, because
these asset classes have historically provided higher returns over
longer time frames than large-company stocks. Emerging markets
securities are recommended to take advantage of the Manager's belief
that the developing world will experience increasing economic freedom
and price stability, with their associated economic benefits.
o Seligman Time Horizon 20 Fund: Like the Seligman Time Horizon 30 Fund,
under normal market conditions this Fund invests in Underlying Funds
to produce a portfolio that invests primarily in US and international
equities. However, the allocations are more evenly weighted among
small-, medium- and large-company stocks, as well as emerging markets,
to reflect the need for somewhat less volatility as the long-term
investment goal draws relatively closer. The shift in favor of
large-company stocks includes established international companies that
operate in developed economies. An investment in the equity securities
of such companies offers the opportunity for growth of capital and
diversification of risk without the volatility experienced by smaller
companies in less-developed regions. Although international equity
markets have lagged the US market in recent years, the Manager
believes that long-term economic indicators are pointing toward lower
tax rates, stable prices and free trade - signs that international
equities have the potential to provide competitive returns as well as
diversification.
o Seligman Time Horizon 10 Fund: Under normal market conditions, this
Fund invests 80% of its assets in Underlying Funds that invest
primarily in domestic and international equities and 20% of its assets
in Underlying Funds that invest primarily in fixed income. The change
in allocations results from reducing the exposure to small-company and
emerging market securities found in Seligman Time Horizon 20 Fund and
introducing high-yield bonds as well as US government securities and
cash or cash equivalents. The Manager's research demonstrates that the
reduction in small-company and emerging markets securities has reduced
volatility over 10-year-holding periods. Portfolio stability is sought
by adding the fixed-income and cash allocations.
o Seligman Harvester Fund: Under normal market conditions, this Fund
invests 60% of its assets in Underlying Funds that invest primarily in
domestic and international equities, 30% of its assets in Underlying
Funds that invest primarily in fixed income and 10% of its assets in
Underlying Funds that invest primarily in cash, cash equivalents or US
Government securities. Key differences between Seligman Harvester Fund
and Seligman Time Horizon 10 Fund include the elimination of US and
international small-company stocks and emerging markets
14
<PAGE>
securities. This change reflects the Manager's opinion that these
asset classes are too volatile and speculative for investors who wish
to conserve their capital and generate an income stream. The
allocation to high-yield bonds is increased because, in the Manager's
opinion, a prudently managed high-yield bond fund - not individual
high-yield bonds - can provide relative diversification, stability and
protection against significant loss of principal due to a single
default. A 10% allocation to Underlying Funds that invest in cash,
cash-equivalents or US Government securities is intended to help
protect against sudden market downturns that could erode capital,
especially if they occur when income is withdrawn. Investments such as
money-market funds or Treasury bills also provide for more certainty
of principal.
Q: CAN I TAKE FULL ADVANTAGE OF SELIGMAN TIME HORIZON MATRIX BY SIMPLY
INVESTING IN THE FUNDS?
A: Yes. As noted, each Fund within the Series is designed to replicate a
portfolio recommended by Seligman Time Horizon Matrix at a specific point
in time. As a result, you may implement a Seligman Time Horizon Matrix
asset allocation strategy by investing directly in the Funds rather than
investing separately in each of the Underlying Funds. However, the Funds
will not automatically "migrate" their investments under the process
described above. Nevertheless, the Series is flexibly designed so that each
Fund may be combined with another Fund to take full advantage of Seligman
Time Horizon Matrix. You can begin at any point in Seligman Time Horizon
Matrix by buying a combination of two Funds. For example, if your
investment goal is 15 years away, you could invest 50% of your total
investment in the Seligman Time Horizon 20 Fund and 50% of your investment
in the Seligman Time Horizon 10 Fund (subject to the required minimum
investment in each Fund).
Similarly, migration can be accomplished by exchanging between each Fund
within the Series or making additional investments in one or more of the
Funds (subject to the required minimum investment in each Fund). In the
year following your initial investment described in the previous example,
you could, through an exchange, allocate 40% of your investment to the
Seligman Time Horizon 20 Fund and 60% to the Seligman Time Horizon 10 Fund.
After following this process for five years, 100% of your assets would be
invested in the Seligman Time Horizon 10 Fund. You could use a similar
process to migrate from each of the other Funds (or combinations of the
Funds) until you reach the Seligman Harvester Fund. You should be aware,
however, that following a migration strategy by making exchanges between or
among the Funds could result in short-term or long-term capital gains for
federal income tax purposes that may not result if you did not follow this
strategy.
Q: CAN I HOLD EACH FUND WITHIN THE SERIES FOR AS LONG AS I WANT?
A: Yes. You may choose not to migrate and simply hold a Fund for an extended
period of time. To illustrate, an investor with an investment goal 20 years
away may choose to invest in the Time Horizon 20 Fund and hold the Fund for
20 years. A "buy and hold" use of the Funds would provide an investor with
a simple way to own one or more strategically diversified portfolios
designed to achieve specific investment objectives. For example, Seligman
Time Horizon 30 Fund and Seligman Time Horizon 20 Fund each can serve as a
diversified growth portfolio for an investor seeking long-term capital
appreciation. Similarly, Seligman Time Horizon 10 Fund can be used by an
investor seeking capital appreciation with less volatility. Seligman
Harvester Fund can be used by an investor seeking a growth and income
portfolio. However, based on the Manager's research, this would subject
your investment to greater portfolio volatility on an annual basis than if
a migration strategy were followed. For example, the volatility of the
asset allocation in the Time Horizon 20 Fund historically has been far
greater that the asset allocation in the
15
<PAGE>
Harvester Fund, especially over holding periods of five years or less. Such
a potential exposure to increased portfolio volatility may be particularly
detrimental for an investor who is close to, or ready to realize, an
investment goal.
Q: WHY SHOULDN'T I JUST INVEST IN THE UNDERLYING FUNDS DIRECTLY?
A: Investing in the Time Horizon or Harvester Funds offers you the choice of
turnkey convenience and simplicity. For example, your statements will
detail only one or two Funds rather than nine or more individual Underlying
Funds. Moreover, by using cash flows and periodic adjustments, the Manager
will maintain an investment in each of the Underlying Funds that is within
the targeted allocations. By contrast, if you choose to invest in the
Underlying Funds and do not elect to have the Manager automatically
rebalance or migrate your investment, you would have to make these
adjustments yourself or risk having your actual allocations among the
Underlying Funds deviate from the recommended allocation due to the
different investment results over time of the Underlying Funds. You should
note, however, that certain retirement programs sponsored by the Manager
offer automatic migration for investors who directly purchase shares of the
Underlying Funds.
ADDITIONAL INFORMATION ABOUT THE FUNDS'
INVESTMENT STRATEGIES AND RISKS
As mentioned above, each Fund pursues its investment objective by investing a
certain percentage of its assets in the Underlying Funds. Each Fund may also
invest a portion of its net assets in US Government securities or high-quality,
short-term instruments. However, in order to maintain liquidity, to meet
shareholder redemptions, or to respond to adverse market, economic, political or
other conditions, each Fund may invest up to 100% of its assets in cash or cash
equivalents. When a Fund's assets are invested in such investments, the Fund may
not be achieving its investment objective.
A Fund may purchase or sell shares of the Underlying Funds, US Government
securities and high-quality, short-term instruments to: (a) accommodate
purchases and sales of its shares; (b) adjust the percentages of its assets
invested in each of the Underlying Funds, US Government securities and high
quality short-term instruments in response to economic or market conditions and
changes in Seligman Time Horizon Matrix; and (c) modify the allocation of its
assets among the Underlying Funds, US Government securities and high-quality,
short-term instruments to the asset allocation targets specified above.
As mentioned above, under normal conditions, the Manager intends periodically to
reallocate its investments in the Underlying Funds if the Fund's actual
allocation is outside its current asset allocation ranges on the reallocation
date. This process may generate net capital gains (including short-term capital
gains that are generally taxed to investors at ordinary income tax rates) to
investors in the Funds. The Manager will seek to minimize the realization of net
capital gains by allocating both positive and negative cash flows (realized from
purchases and sales of Fund shares) in a manner that continuously moves the
actual positions in the Underlying Funds toward the asset allocation ranges and
targets described above. However, the reallocation process may generate net
capital gains for investors that are higher than the net capital gains
ordinarily incurred by an investor through an asset allocation strategy that has
broader investment ranges or an asset allocation strategy designed by the
investor.
The Funds will indirectly bear the expenses associated with portfolio turnover
of the Underlying Funds, a number of which have fairly high portfolio turnover
rates (i.e., in excess of 100%). High portfolio turnover involves
correspondingly greater expenses to an Underlying Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestments in other securities. Investors in the Funds may
also bear expenses directly or indirectly through sales of securities held by
the
16
<PAGE>
Funds and the Underlying Funds that result in realization of ordinary income or
taxable gains (including short-term capital gains, which are generally taxed to
shareholders at ordinary income tax rates).
Except for its fundamental policy, each Fund may change its principal strategies
if the Series' Board of Directors believes doing so is consistent with that
Fund's objective(s). In addition, the Underlying Funds, US Government securities
and short-term instruments in which each Fund may invest, the equity/fixed-
income allocations and ranges, and the investments in each Underlying Fund may
be changed from time to time without shareholder approval. However, each Fund's
objective and its fundamental policy may be changed only with shareholder
approval.
Each Fund is subject to the risk that the asset allocation strategy used by the
Manager may fail to produce the intended results. The historical data on which
Seligman Time Horizon Matrix and Seligman Harvester are based involve
performance of various asset classes. (See Appendix A.) Past performance,
however, is not a guarantee of future performance. Moreover, the investments of
the Underlying Funds may differ significantly from the securities that comprise
those asset classes, and there is a risk that the performance of the Underlying
Funds will not be the same as the performance of those asset classes.
Additionally, the allocation of each Fund's assets among the Underlying Funds is
based on portfolios recommended by Seligman Time Horizon Matrix and Seligman
Harvester at a specific point in time. The Funds will not migrate their
investments among the Underlying Funds in accordance with Seligman Time Horizon
Matrix. As a result, an investment in one or more of the Funds may not produce
the same results as an investment directly in the Underlying Funds according to
Seligman Time Horizon Matrix and the migration process described above. An
attempt by an investor to replicate Seligman Time Horizon Matrix may be
unsuccessful and may result in expenses and taxes greater than other types of
investments, including investments in other mutual funds.
A Fund may not be able to pay redemption proceeds within the period stated in
the Prospectus because of unusual market conditions or an unusually high volume
of redemption requests.
There is no guarantee that investors will realize their investment goals by
investing in one or more of the Funds. Investors should carefully consider the
risks and tax consequences involved with an investment in one or more of the
Funds.
A more complete description of the risks associated with the investment
practices of the Underlying Funds is provided under "Principal Risks of the
Underlying Funds" in this Prospectus, "Investment Strategies and Risks" in the
Statement of Additional Information (SAI) to this Prospectus and "Principal
Risks" in each Underlying Fund's Prospectus. The SAI and the Prospectuses for
the Underlying Funds are incorporated into this Prospectus by reference and are
available free of charge by telephoning 1-800-221-2450.
For more information about the investment strategies of the Funds, Seligman Time
Horizon Matrix or Seligman Harvester, please contact your financial advisor.
MANAGEMENT OF THE FUNDS
The Board of Directors of the Series provides broad supervision over the affairs
of each Fund.
AFFILIATES OF THE MANAGER:
SELIGMAN ADVISORS, INC.:
EACH FUND'S GENERAL DISTRIBUTOR; RESPONSIBLE FOR ACCEPTING ORDERS FOR PURCHASES
AND SALES OF FUND SHARES.
17
<PAGE>
SELIGMAN SERVICES, INC.:
A LIMITED PURPOSE BROKER/DEALER; ACTS AS THE BROKER/DEALER OF RECORD FOR
SHAREHOLDER ACCOUNTS THAT DO NOT HAVE A DESIGNATED BROKER OR FINANCIAL ADVISOR.
SELIGMAN DATA CORP. (SDC):
EACH FUND'S SHAREHOLDER SERVICE AGENT; PROVIDES SHAREHOLDER ACCOUNT SERVICES TO
THE FUND AT COST.
J. & W. Seligman & Co. Incorporated, 100 Park Avenue, New York, New York 10017,
is the manager of each Fund. The Manager is responsible for each Fund's
investments and administers each Fund's business and other affairs.
Established in 1864, the Manager currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $ billion in assets as of , 1999. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at , 1999, of approximately $ billion.
In managing the Funds, the Manager will have the authority to select and
substitute Underlying Funds, subject to each Fund's investment objectives and
policies. This will subject the Manager to conflicts of interest in allocating
each Fund's assets among the various Underlying Funds because the fees payable
to the Manager and/or its affiliates by some Underlying Funds are higher than
those payable by other Underlying Funds and because the Manager and its
affiliates are also responsible for managing, and receiving fees from, the
Underlying Funds. The Manager is also subject to a conflict because it will not
receive a fee for assets of the Funds invested directly in US Government
securities and short-term instruments.
Each Fund pays the Manager an asset allocation fee for its advisory services.
This fee is equal to an annual rate of .10% of each Fund's average daily net
assets. In addition to the asset allocation fees assessed by each of the Funds,
investors will bear a pro-rata portion of the management fees charged by the
Underlying Funds. However, no management fees, other than the asset allocation
fees, will be charged on each Fund's investment in individual US Government
securities and short-term instruments. This will result in an investor paying
higher overall fees than if the investor purchased the Underlying Funds
directly. For a description of the management fees charged by each of the
Underlying Funds, please see "Management" in each Underlying Fund's Prospectus,
each of which is incorporated in this Prospectus by reference and is available
free of charge by telephoning 1-800-221-2450.
Each Fund is managed by Charles W. Kadlec. Mr. Kadlec has been a Managing
Director of the Manager since January 1992 and Chief Investment Strategist for
Seligman Advisors since April 1997. Before January 1992, he held the positions
of Senior Portfolio Manager, Director, Equity Research and Industry Strategist
at the Manager, which he joined in December 1985. Mr. Kadlec is the architect of
several investment strategies, chief among them Seligman Time Horizon Matrix and
Seligman Harvester.
THE UNDERLYING FUNDS
INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES OF THE UNDERLYING FUNDS
Each Fund invests a substantial portion of its assets in the Underlying Funds.
Accordingly, each Fund's performance depends upon a favorable allocation among
the Underlying Funds as well as the
18
<PAGE>
ability of the Underlying Funds to meet their objective(s). There can be no
assurance that the investment objective(s) of any Underlying Fund will be
achieved. SHARES OF THE UNDERLYING FUNDS ARE NOT OFFERED BY THIS PROSPECTUS.
Each Underlying Fund has its own investment objective(s) and principal
strategies. In addition, each Underlying Fund may, from time to time, take
temporary defensive positions that are inconsistent with its principal
strategies in seeking to minimize extreme volatility caused by adverse market,
economic, or other conditions. This could prevent a Fund from achieving its
objective(s).
Except for each Underlying Fund's fundamental policies, each Underlying Fund may
change its principal strategies if that Underlying Fund's Board of Directors or
Trustees believes doing so is consistent with the Underlying Fund's
objective(s). Each Underlying Fund's investment objective(s) and its fundamental
policies may be changed only with shareholder approval.
Each Underlying Fund may actively and frequently trade securities in its
portfolio to carry out its principal strategies. A high portfolio turnover rate
increases transaction costs, which may increase each Underlying Fund's expenses
and, therefore, each Fund's expenses. There may also be adverse tax consequences
for investors in each Underlying Fund and, therefore, for investors in each
Fund, due to an increase in net short-term capital gains.
The table below summarizes the investment objective(s) and primary investments
of the Underlying Funds. For a description of the principal strategies of the
Underlying Funds, please see "Investment Strategies and Risks" in the SAI to
this Prospectus and "Investment Objectives/Principal Strategies" in each
Underlying Fund's Prospectus, each of which is incorporated in this Prospectus
by reference and is available free of charge by telephoning 1-800-221-2450.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
UNDERLYING FUND INVESTMENT OBJECTIVE(S) PRIMARY INVESTMENTS
========================================================================================================================
<S> <C> <C>
Seligman Capital Fund Capital appreciation. Common stock of medium-sized US companies.
========================================================================================================================
Seligman Cash Management Fund Preservation of capital and US dollar-denominated high-quality Money Market
maximization of liquidity and instruments, including obligations of the US
current income. Treasury, its agencies or instrumentalities,
obligations of domestic and foreign banks (such
as certificates of deposit and fixed time
deposits), commercial paper and short-term
corporate debt securities, and repurchase
agreements with respect to these types of
instruments.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
<S> <C> <C>
Seligman Common Stock Fund Produce favorable, but Common stock of larger companies
not the highest, diversified among a number of industries.
current income and
long-term growth of
both income and capital
value, without exposing
capital to undue risk.
========================================================================================================================
Seligman Communications and Capital gain. Common stock of companies operating in the
Information Fund communications, information and related
industries.
========================================================================================================================
Seligman Frontier Fund Growth of capital. Common stock of small US companies.
Income may be
considered but is
incidental to the
Fund's investment
objective.
========================================================================================================================
Seligman Growth Fund Longer-term growth in Common stock of large US companies, selected for
capital value and an their growth prospects.
increase in future
income.
========================================================================================================================
Seligman Henderson Emerging Long-term capital Common stock of companies that conduct their
Markets Growth Fund appreciation. principal business activities in emerging
markets.
========================================================================================================================
Seligman Henderson Global Long-term capital Common stock of non-US and US growth
Growth Opportunities Fund appreciation. companies that have the potential to
benefit from global economic or social
trends.
========================================================================================================================
Seligman Henderson Global Long-term capital Common stock of smaller US and non-US
Smaller Companies Fund appreciation. companies.
========================================================================================================================
Seligman Henderson Long-term capital Common stock of medium to large companies in the
International Fund appreciation. principal international markets.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
<S> <C> <C>
Seligman High-Yield Bond Maximum current income. High-yielding, income-producing corporate bonds
Series and notes, commonly known as "junk bonds."
========================================================================================================================
Seligman Large-Cap Value Long-term capital Common stock of "value" companies (i.e., those
Fund appreciation. companies believed by the Manager to be
undervalued either historically, by the market,
or by their peers) with large market
capitalization at the time of purchase.
========================================================================================================================
Seligman Small-Cap Value Fund Long-term capital Common stock of "value" companies with
appreciation. small market capitalization at the time
of purchase.
========================================================================================================================
Seligman U.S. Government Securities High current income. Direct obligations of the US Treasury, such as
Series Treasury Bills, Treasury Notes and Treasury
Bonds, and debt securities issued or guaranteed
by the U.S. Government, its agencies or
instrumentalities which are backed by the full
faith and credit of the US Government and have
maturities greater than one year at the date of
purchase by the Fund.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PRINCIPAL RISKS OF THE UNDERLYING FUNDS
The following summarizes the principal risks associated with investments in the
Underlying Funds. The summary is not intended to be exhaustive.
There can be no assurance that the investment objective(s) of any of the
Underlying Funds will be achieved. Each Underlying Fund's investments (both
equity and fixed-income) may be affected by the broad investment environment in
the US or international securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
You may experience a decline in the value of your investment, and you could lose
money if you sell your shares at a price lower than you paid for them.
An investment in the Underlying Funds (including the Seligman Cash Management
Fund) is not a deposit in a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. The US Government
does not guarantee the market value or the current yield of government
securities. Each Underlying Fund's net asset value, yield (if applicable) and
total return will fluctuate and are not guaranteed by the US Government.
Although the Seligman Cash Management Fund seeks to preserve the value of an
investment at $1.00 per share, it is possible that a Fund will lose money by
investing in this Underlying Fund.
If an Underlying Fund is not mentioned within a risk described below, it does
not mean that the Underlying Fund is not subject to that risk. However, it does
mean that the Underlying Fund's net asset value, yield (if applicable) and total
return is less likely to be affected by such risk. For a more complete
description of such risks, please refer to the SAI to this Prospectus and
"Principal Risks" section in each Underlying Fund's Prospectus, each of which is
incorporated herein by reference and is available free of charge by telephoning
1-800-221-2450.
21
<PAGE>
EQUITY-RELATED RISKS
The following risks relate to investments in equity securities, including common
stocks, securities convertible into common stocks, options and warrants. The
Time Horizon 30 Fund and the Time Horizon 20 Fund will invest most or all of
their assets in Underlying Funds investing primarily in equity securities. The
Time Horizon 10 Fund and the Harvester Fund will invest a substantial portion of
their assets in Underlying Funds investing primarily in equity securities.
Securities of Larger US Companies - Seligman Common Stock Fund, Seligman Growth
Fund, Seligman Large-Cap Value Fund and Seligman Communications and Information
Fund invest a substantial portion of their assets in the stocks of large US
companies. Stocks of large US companies are experiencing an extended period of
strong performance. However, if investor sentiment changes, the value of large
company stocks may decline. This could adversely affect these Underlying Funds'
performance.
Securities of Smaller Companies - Seligman Henderson Global Smaller Companies
Fund, Seligman Frontier Fund and Seligman Small-Cap Value Fund invest
substantially in the stocks of smaller companies. Investments in smaller
companies typically involve greater risks than investments in larger companies.
Small companies, as a whole, may have shorter operating histories, less
experienced management and limited product lines, markets, and financial or
managerial resources.
Sector Volatility - Seligman Common Stock Fund, Seligman Capital Fund, Seligman
Growth Fund, Seligman Small-Cap Value Fund, Seligman Large-Cap Value Fund and
Seligman Frontier Fund may invest more heavily in certain industries believed to
offer good investment opportunities. If any of these industries fall out of
favor, performance may be negatively affected.
Seligman Communications and Information Fund concentrates its investments in
companies in the communications, information and related industries. Therefore,
it may be susceptible to factors affecting these industries and its net assets
may fluctuate more than a fund that invests in a wider range of industries. In
addition, the rapid pace of change within many of these industries tends to
create a more volatile operating environment than in other industries.
Concentrated Portfolios - The Seligman Small-Cap Value Fund and Seligman
Large-Cap Value Fund hold securities of a small number of issuers. Consequently,
if one or more of the securities held in each of their portfolios declines in
value or underperforms relative to the market, it may have a greater impact on
that Underlying Fund's performance than if the Underlying Fund held securities
of a larger number of issuers. Each of these Underlying Funds may experience
more volatility, especially over the short-term, than a fund with a greater
number of holdings.
Illiquid Securities and Options - Each Underlying Fund (other than Seligman Cash
Management Fund and Seligman U.S. Government Securities Series) may invest in
illiquid securities. Each Underlying Fund (other than Seligman Cash Management
Fund and Seligman High-Yield Bond Series) may invest in options. These
investments involve higher risk and subject the Underlying Funds to higher price
volatility.
Foreign Securities - Each Underlying Fund (other than Seligman U.S. Government
Securities Series) may invest in securities of foreign issuers. These securities
involve risks not associated with US investments, including settlement risks,
currency fluctuation, local withholding and other taxes, different financial
reporting practices and regulatory standards, high costs of trading, changes in
22
<PAGE>
political conditions, expropriation, investment and repatriation restrictions
and settlement and custody risks.
The Seligman Henderson International Fund and Seligman Henderson Global Growth
Opportunities Fund seek to limit the risk of investing in foreign securities by
diversifying each of their respective investments among different regions,
countries and, with respect to Seligman Henderson Global Growth Opportunities
Fund, investment themes, such as the expansion of technology as an increasingly
important influence on society. Diversification reduces the effect events that
any one country will have on each respective Underlying Fund's entire portfolio.
However, a decline in the value of an Underlying Fund's investments in one
country may offset potential gains from investments in another country.
Emerging Markets Securities - The Seligman Henderson Emerging Markets Growth
Fund invests in securities of issuers located in emerging countries. Emerging
countries may have relatively unstable governments, economies based on less
diversified industrial bases and securities markets that trade a smaller number
of securities. Companies in emerging markets are often smaller, less seasoned
and more recently organized than many US companies.
FIXED INCOME-RELATED RISKS
The following risks relate to investments in fixed income securities, including
bonds, notes and mortgage-backed securities. The Time Horizon 10 Fund and the
Harvester Fund will invest a significant portion of their assets in Underlying
Funds that invest primarily in fixed-income securities.
Interest Rate Risk - The Seligman High-Yield Bond Series, Seligman Cash
Management Fund and Seligman U.S. Government Securities Series each invest in
fixed-income securities. Generally, as interest rates rise, the value of these
securities will decline. Conversely, if interest rates decline, the value of
these securities will increase. This effect of interest rates is usually greater
for longer-term securities. Longer term securities generally tend to produce
higher yields but are subject to greater market fluctuations as a result of
changes in interest rates than fixed-income securities with shorter maturities.
Additionally, when interest rates are falling, the inflow of new money into each
of these Underlying Funds from their sale of shares will likely be invested in
securities producing lower yields than the balance of these Underlying Fund's
assets, reducing the current yield of each Underlying Fund. In periods of rising
interest rates, the opposite may be true.
The securities in which the Seligman U.S. Government Securities Series invests
are considered among the safest of fixed-income investments. However, their
market values, like those of other debt securities, will fluctuate with changes,
real or anticipated, in the level of interest rates and cause its net asset
value to fluctuate. Additionally, its yield will vary based on the yield of its
portfolio securities.
Illiquid Securities and Options - Each Underlying Fund (other than Seligman Cash
Management Fund and Seligman U.S. Government Securities Series) may invest in
illiquid securities. Each Underlying Fund (other than Seligman Cash Management
Fund and Seligman High-Yield Bond Series) may invest in options. These
investments involve higher risk and subject the Underlying Funds to higher price
volatility.
High-Yield Bonds ("Junk Bonds") - The Seligman High-Yield Bond Series purchases
higher-yielding, higher-risk, medium and lower quality corporate bonds and notes
that are subject to greater risk of loss of principal and income than
higher-rated bonds and notes and are considered to be predominantly
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<PAGE>
speculative with respect to the issuer's capacity to pay interest and repay
principal. These securities can be and have been subject to higher volatility in
yield and market value than securities of higher quality. The net asset value,
yield and total return of this Underlying Fund will fluctuate with fluctuations
in these individual securities.
An economic downturn could adversely impact issuers' ability to pay interest and
repay principal and could result in issuers defaulting on such payments. The
value of these bonds and notes will be affected by market conditions relating to
changes in prevailing interest rates. However, the value of lower rated or
unrated corporate bonds and notes is also affected by investors' perceptions.
When economic conditions appear to be deteriorating, lower-rated or unrated
corporate bonds and notes may decline in market value due to investors'
heightened concerns and perceptions over credit quality.
Lower-rated and unrated corporate bonds and notes are traded principally by
dealers in the over-the-counter market. The market for these securities may be
less active and less liquid than for higher rated securities. Under adverse
market or economic conditions, the secondary market for these bonds and notes
could contract further, causing the Fund difficulties in valuing and selling its
securities.
Mortgage-Backed Securities - The U.S. Government Securities Series may invest in
mortgage-backed securities. These securities may benefit less than other
fixed-income securities from declining interest rates because of the risk of
prepayment. Mortgage prepayments generally increase during a period of declining
interest rates. Prepayments increase the cash amounts available to this
Underlying Fund for investment and these amounts would have to be reinvested at
lower interest rates. In addition, prepayments on underlying mortgages result in
a loss of anticipated interest, and, therefore, the actual yield to this
Underlying Fund may be different from the quoted yield on the securities. As a
result, when interest rates are declining, mortgage-backed securities may not
increase as much as other fixed-income securities of comparable maturities,
although they may have a similar risk of decline when interest rates rise.
Foreign Securities - Each Underlying Fund (other than Seligman U.S. Government
Securities Series) may invest in securities of foreign issuers. These securities
involve risks not associated with US investments, including settlement risks,
currency fluctuation, local withholding and other taxes, different financial
reporting practices and regulatory standards, high costs of trading, changes in
political conditions, expropriation, investment and repatriation restrictions
and settlement and custody risks.
Repurchase Agreements - The Underlying Funds may invest in repurchase
agreements. Repurchase Agreements could involve certain risks in the event of
the default by the seller, including possible delays and expenses in liquidating
the securities underlying the agreement, decline in the value of the underlying
securities and loss of interest.
"Zero-Coupon" and "Pay-in-Kind" Securities - The Seligman High-Yield Bond Series
may purchase "zero-coupon" and "pay-in-kind" securities. These securities may be
subject to greater fluctuations in value because they tend to be more
speculative than income-bearing securities. Fluctuations in the market prices of
these securities will result in corresponding fluctuations and volatility in the
net asset value of the shares of this Underlying Fund. Additionally, because
they do not pay current income, they will detract from this Underlying Fund's
objective of producing maximum current income.
When-issued or Forward Commitment Securities - The U.S. Government Securities
Series may invest in securities on a when-issued or forward commitment basis, in
which case delivery and payment take place after the date of the commitment to
purchase the securities. Because the price to be paid and the interest rate that
will be received on the securities are each fixed at the time this Underlying
Fund
24
<PAGE>
enters into the commitment, there is a risk that yields available in the
market when delivery takes place may be higher than the yields obtained on the
securities. This would tend to reduce the value of these securities. In
addition, the market value of these securities may fluctuate between the time
this Underlying Fund commits to purchase the securities and the time of delivery
of the securities.
YEAR 2000
REFERENCES TO THE FUNDS IN THIS SECTION INCLUDE THE UNDERLYING FUNDS IN WHICH
THEY EACH INVEST.
With the turn of the millennium, investment companies, financial and business
organizations and individuals could be adversely affected if the computer
systems they rely on do not properly process and calculate date-related
information and data on and after January 1, 2000. Like other investment
companies, the Funds rely upon service providers and their computer systems for
their day-to-day operations. Many of the Funds' service providers in turn depend
upon computer systems of their vendors. The year 2000 project team established
by the Manager and SDC has spent considerable time and resources in assessing
the state of readiness of the Manager, SDC and the Funds' other service
providers and vendors. The team is comprised of several information technology
and business professionals as well as outside consultants. The project manager
of the team reports directly to the administrative committee of the Manager. The
project manager and other members of the team also report to the board of
directors of the Series and its audit committee.
The team has identified the service providers and vendors who furnish critical
services or software systems to the Funds, including securities firms that
execute portfolio transactions for the Funds and firms responsible for
shareholder account recordkeeping. The team has worked with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Funds. The project
team is continuing to assess the year 2000 compliance of the systems on which
the Manager and the Funds rely. The team is ready to activate its contingency
plans - recovery efforts if the year 2000 issues adversely affect the Funds.
The team has confirmed that it has completed all significant components of its
year 2000 plans, including appropriate testing of critical systems and receipt
of satisfactory assurances from critical service providers and vendors regarding
their year 2000 compliance. The Funds believe that the critical systems on which
they rely will function properly during and after the year 2000, but this is not
guaranteed. If these systems do not function properly, or the Funds' critical
service providers have not been successful in implementing their year 2000
plans, the Funds' operations may be adversely affected, including pricing and
securities trading and settlement, and the provision of shareholder services.
In addition, the Underlying Funds and the Funds may hold securities of issuers
whose underlying business leaves them susceptible to year 2000 issues. The
Underlying Funds and the Funds may also hold securities issued by governmental
or quasi-governmental issuers, which, like other organizations, remain
susceptible to year 2000 concerns. Year 2000 issues may affect an issuer's
operations, creditworthiness, and ability to make timely payment on any
indebtedness and could have an adverse impact on the value of its securities. If
the Funds or the Underlying Funds hold these securities, the Funds' or the
Underlying Funds' performance could be negatively affected. The Manager has
sought to identify an issuer's state of year 2000 readiness as part of the
research it employs. However, the perception of an issuer's year 2000
preparedness is only one of the many factors considered in determining whether
to buy, sell, or continue to hold a security. Information provided by issuers
concerning their state of readiness may or may not be accurate or readily
available. Further, the Funds
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<PAGE>
or the Underlying Funds may be adversely affected if the exchanges, markets,
depositories, clearing agencies, or governments or third parties responsible for
infrastructure needs have not adequately addressed their year 2000 issues.
Certain Underlying Funds may invest in securities of non-US issuers. In some
cases there has been less information available about non-US issuers' systems
and about procedures they have followed to address technical problems.
Consequently, it has been more difficult to assess the preparedness of those
non-US issuers for year 2000 than it has for most US issuers. In addition,
non-US issuers may be dependent upon foreign governments and governmental
agencies for essential services that may be disrupted if those governments and
agencies have not themselves prepared for year 2000. Such disruptions could have
an adverse effect on the business of non-US issuers and thus on the value of
their securities.
SDC has informed the Funds that the cost of its services will not increase
materially as a result of the modifications to its computer systems that were
necessary to prepare for the year 2000. The Funds will not pay to remediate the
systems of the Manager or directly bear the costs to remediate the systems of
any other service provider or vendor, other than SDC.
SHAREHOLDER INFORMATION
DECIDING WHICH CLASS OF SHARES TO BUY
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule, and its
ongoing 12b-1 fees may differ from other Classes. When deciding which Class of
shares to buy, you should consider, among other things:
- - The amount you plan to invest.
- - How long you intend to remain invested in each Fund, or another Seligman
mutual fund.
- - If you would prefer to pay an initial sales charge and lower ongoing 12b-1
fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
- - Whether you may be eligible for reduced or no sales charges when you buy or
sell shares.
Your financial advisor will be able to help you decide which Class of shares
best meets your needs.
CLASS A
- - Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
SALES CHARGE REGULAR DEALER
SALES CHARGE AS A % DISCOUNT
AS A % OF NET AS A % OF
AMOUNT OF YOUR INVESTMENT OF OFFERING PRICE(1) AMOUNT INVESTED OFFERING PRICE
- ------------------------- -------------------- --------------- --------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0.00 0.00 0.00
<FN>
(1) "Offering Price" is the amount that you actually pay for each Fund's
shares; it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more, but you
will be subject to a 1% CDSC if you sell your shares within 18 months.
</FN>
</TABLE>
26
<PAGE>
- - Annual 12b-1 fee (for shareholder services) of up to 0.25%, paid directly
as an investor in the Fund or indirectly through the Fund's investment in
the Underlying Funds.
- - No sales charge on reinvested dividends or capital gain distributions.
- - Eligible employee benefit plans which have at least $500,000 invested in
the Seligman Group of mutual funds or 50 or more eligible employees may
purchase Class A shares at net asset value. Eligible employee benefit
distributions are not subject to the 1% CDSC.
CLASS B
- - No initial sales charge on purchases.
- - A declining CDSC on shares sold within 6 years of purchase:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CDSC
- ---------------------------------------------------------
<S> <C> <C>
Less than 1 year 5%
1 year or more but less than 2 years 4 YOUR PURCHASE OF CLASS B SHARES
2 years or more but less than 3 years 3 MUST BE FOR LESS THAN $250,000,
3 years or more but less than 4 years 3 BECAUSE IF YOU INVEST $250,000 OR
4 years or more but less than 5 years 2 MORE, YOU WILL PAY LESS IN FEES
5 years or more but less than 6 years 1 AND CHARGES IF YOU BUY ANOTHER
6 years or more 0 CLASS OF SHARES.
</TABLE>
- - Annual 12b-1 fee (for distribution and shareholder services) of up to
1.00%, paid directly as an investor in the Fund or indirectly through the
Fund's investment in the Underlying Funds.
- - Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
- - No CDSC when you sell shares purchased with reinvested dividends or capital
gain distributions.
CLASS C
- - Initial sales charge on Fund purchases, as set forth below:
REGULAR DEALER
SALES CHARGE SALES CHARGE DISCOUNT
AMOUNT OF YOUR AS A % AS A % OF NET AS A % OF
INVESTMENT OF OFFERING PRICE(1) AMOUNT INVESTED OFFERING PRICE
- ---------------------- -------------------- --------------- --------------
Less than $100,000 1.00% 1.01% 1.00%
$100,000--$249,999 0.50 0.50 0.50
$250,000--$1,000,000 0.00 0.00 0.00
(1) "Offering Price" is the amount that you actually pay for each Fund's
shares; it includes the initial sales charge.
YOUR PURCHASE OF CLASS C SHARES MUST BE FOR LESS THAN $1,000,000 BECAUSE IF YOU
INVEST $1,000,000 OR MORE YOU WILL PAY LESS IN FEES AND CHARGES IF YOU BUY CLASS
A SHARES.
- - A 1% CDSC on shares sold within eighteen months of purchase.
- - Annual 12b-1 fee (for distribution and shareholder services) of up to
1.00%, paid directly as an investor in the Fund or indirectly through the
Fund's investment in the Underlying Funds.
- No automatic conversion to Class A shares, so you will be subject to higher
ongoing 12b-1 fees indefinitely.
27
<PAGE>
- - No CDSC when you sell shares purchased with reinvested dividends or capital
gain distributions.
CLASS D*
- - No initial sales charge on purchases.
- - A 1% CDSC on shares sold within one year of purchase.
- - Annual 12b-1 fee (for distribution and shareholder services) of up to
1.00%, paid directly as an investor in the Fund or indirectly through the
Fund's investment in the Underlying Funds.
- - No automatic conversion to Class A shares, so you will be subject to higher
ongoing 12b-1 fees indefinitely.
- - No CDSC when you sell shares purchased with reinvested dividends or capital
gain distributions.
*Class D shares are not available to all investors. You may purchase
Class D shares only if (1) you already own Class D shares of another
Seligman mutual fund; (2) if your financial advisor of record
maintains an omnibus account at SDC; or (3) pursuant to a 401(k) or
other retirement plan program for which Class D shares are already
available or for which the sponsor requests Class D shares because the
sales charge structure of Class D shares is comparable to the sales
charge structure of the other funds offered under the program.
Because each Fund's 12b-1 fees are paid out of each Class's assets on an ongoing
basis, or are borne indirectly by shareholders of each Class as a result of the
Fund's ownership of Class A shares of the Underlying Funds, over time these fees
will increase your investment expenses and may cost you more than other types of
sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's various classes of shares. On an ongoing basis, the
Directors, in the exercise of their fiduciary duties under the Investment
Company Act of 1940 and Maryland law, will seek to ensure that no such conflict
arises.
HOW CDSCS ARE CALCULATED
To minimize the amount of the CDSC you may pay when you sell your shares, each
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to newest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of any Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of any Fund, it will be assumed that you held the shares since the date you
purchased the shares of that Fund.
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A and Class C shares.
Purchase or sale orders received by an authorized dealer or financial advisor by
the close of regular trading on the New York Stock Exchange (NYSE) (generally
4:00 p.m. Eastern time) and accepted by Seligman Advisors before the close of
business (5:00 p.m.
28
<PAGE>
Eastern time) on the same day will be executed at the Class's NAV calculated as
of the close of regular trading on the NYSE on that day. Your broker/dealer or
financial advisor is responsible for forwarding your order to Seligman Advisors
before the close of business.
NAV:
COMPUTED SEPARATELY FOR EACH CLASS BY DIVIDING THAT CLASS'S SHARE OF THE NET
ASSETS OF THE FUND (I.E., ITS ASSETS LESS LIABILITIES) BY THE TOTAL NUMBER OF
OUTSTANDING SHARES OF THE CLASS.
If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.
The NAV of each Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because certain of the Funds invest in
Underlying Funds holding portfolio securities that are primarily listed on
foreign exchanges that may trade on weekends or other days when the Underlying
Funds do not price their shares, the value of a Fund's portfolio securities
(i.e., Underlying Funds that invest in securities that are primarily listed on
foreign exchanges) may change on days when you may not be able to buy or sell
Fund shares.
The Underlying Funds owned by the Funds are valued at their respective net asset
values. For information on the valuation of the securities held in each
Underlying Fund's portfolio, including the valuation of individual US Government
securities and short-term instruments held by the Funds, please see "Pricing of
Fund Shares" in each Underlying Fund's Prospectus (Seligman U.S. Government
Securities Series' Prospectus and Seligman Cash Management Fund's Prospectus for
individual US Government securities and short-term instruments) each of which is
incorporated into this Prospectus by reference and is available free of charge
by telephoning 1-800-221-2450.
OPENING YOUR ACCOUNT
The Funds' shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you.
To make your initial investment in a Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application.
YOU MAY BUY SHARES OF ANY FUND FOR ALL TYPES OF TAX-DEFERRED RETIREMENT PLANS.
CONTACT RETIREMENT PLAN SERVICES AT THE ADDRESS OR PHONE NUMBER LISTED ON THE
INSIDE BACK COVER OF THIS PROSPECTUS FOR INFORMATION AND TO RECEIVE THE PROPER
FORMS.
The required minimum initial investments are:
- - Regular (non-retirement) accounts: $1,000
- - For accounts opened concurrently with Invest-A-Check(R):
$100 to open if you will be making monthly investments
$250 to open if you will be making quarterly investments
29
<PAGE>
If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to 15 calendar days
from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in that Fund and the other Seligman
mutual funds you own under the same account number. Duplicate account statements
will be sent to you free of charge for the current year and most recent prior
year. Copies of year-end statements for prior years are available for a fee of
$10 per year, per account, with a maximum charge of $150 per account. Send your
request and a check for the fee to SDC.
IF YOU WANT TO BE ABLE TO BUY, SELL, OR EXCHANGE SHARES BY TELEPHONE, YOU SHOULD
COMPLETE AN APPLICATION WHEN YOU OPEN YOUR ACCOUNT. THIS WILL PREVENT YOU FROM
HAVING TO COMPLETE A SUPPLEMENTAL ELECTION FORM (WHICH MAY REQUIRE A SIGNATURE
GUARANTEE) AT A LATER DATE.
HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Subsequent investments must be for
$100 or more.
Shares may be purchased through your authorized financial advisor, or you may
send a check directly to SDC. Please provide either an investment slip or a note
that provides your name(s), Fund name, and account number. Unless you indicate
otherwise, your investment will be made in the Class you already own. Send
investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
INVEST-A-CHECK(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
AUTOMATIC DOLLAR-COST-AVERAGING. If you have at least $5,000 in the Seligman
Cash Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares or Class C shares,
you may pay an initial sales charge to buy Fund shares.
AUTOMATIC CD TRANSFER. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of a Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
30
<PAGE>
DIVIDENDS FROM OTHER INVESTMENTS. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
DIRECT DEPOSIT. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy
shares of any Fund. Exchanges will be made at each fund's respective NAV. You
will not pay an initial sales charge when you exchange, unless you exchange
Class A shares or Class C Shares of Seligman Cash Management Fund to buy shares
of the same class of a Fund or another Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to a new fund, you must specifically request so at the time of your
exchange.
If you exchange into a new fund you must exchange enough to meet the new fund's
minimum initial investment. See "The Seligman Mutual Funds" for a list of the
funds available for exchange. Before making an exchange, contact your financial
advisor or SDC to obtain the applicable fund prospectus(es). You should read and
understand a fund's prospectus before investing. Some funds may not offer all
Classes of shares.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able to use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares. It may take longer to
get your money if you send your request by mail.
As an additional measure to protect you and the Fund, SDC may confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending you your money.
This will not affect the date on which your redemption request is actually
processed.
You will need to guarantee your signature(s) if the proceeds are:
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<PAGE>
(1) $50,000 or more;
(2) to be paid to someone other than all account owners; or
(3) mailed to other than your address of record.
SIGNATURE GUARANTEE:
PROTECTS YOU AND THE FUNDS FROM FRAUD. IT GUARANTEES THAT A SIGNATURE IS
GENUINE. A GUARANTEE MUST BE OBTAINED FROM AN ELIGIBLE FINANCIAL INSTITUTION.
NOTARIZATION BY A NOTARY PUBLIC IS NOT AN ACCEPTABLE GUARANTEE.
You may need to provide additional documents to sell Fund shares if you are:
- - a corporation;
- - an executor or administrator;
- - a trustee or custodian; or
- - in a retirement plan.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account service to sell Fund shares:
SYSTEMATIC WITHDRAWAL PLAN. If you have at least $5,000 in a Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class B, Class C, or Class D
shares and reinvest your dividends and capital gain distributions, you may
withdraw 12%, 10%, or 10%, respectively, of the value of your Fund account (at
the time of election) annually without a CDSC.
IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, each Fund reserves the right to:
- - Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month period;
2. the amount you wish to exchange equals the lesser of $1,000,000 or 1%
of the Fund's net assets; or
3. you or your financial advisor have been advised that previous patterns
of purchases and sales or exchanges have been considered excessive.
- - Refuse any request to buy Fund shares.
- - Reject any request received by telephone.
- - Suspend or terminate telephone services.
- - Reject a signature guarantee that SDC believes may be fraudulent.
32
<PAGE>
- - Close your fund account if its value falls below $500.
- - Close your account if it does not have a certified taxpayer identification
number.
TELEPHONE SERVICES
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account application
that you do not want telephone services:
- - Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record).
- - Exchange shares between funds.
- - Change dividend and/or capital gain distribution options.
- - Change your address.
- - Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee).
Restrictions apply to certain types of accounts:
- - Trust accounts on which the current trustee is not listed may not sell Fund
shares by phone.
- - Corporations may not sell Fund shares by phone.
- - IRAs may only exchange Fund shares or request address changes by phone.
- - Group retirement plans may not sell Fund shares by phone; plans that allow
participants to exchange by phone must provide a letter of authorization
signed by the plan custodian or trustee and provide a supplemental election
form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within 30 days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address of
record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. A Fund's NAV
may fluctuate during this time.
The Funds and SDC will not be liable for processing requests received by phone
as long as it was reasonable to believe that the request was genuine. The Funds
and SDC will adopt reasonable procedures to determine whether a request appears
to be genuine.
33
<PAGE>
REINSTATEMENT PRIVILEGE
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the same Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each Fund generally will pay any dividends from its net investment income and
distributes net capital gains realized on investments at least annually (the
Harvester Fund generally will pay dividends from its net investment income on a
monthly basis). Because each Fund may purchase or sell the Underlying Funds, US
Government securities and short-term instruments to: (a) accommodate sales of
its shares; (b) adjust the percentages of its assets invested in each of the
Underlying Funds, US Government securities and short-term instruments in
response to economic or market conditions and changes in Seligman Time Horizon
Matrix; and (c) modify the allocation of its assets among the Underlying Funds,
US Government securities and short-term instruments to the asset allocation
targets specified herein, each Fund may generate net capital gains (including
short-term capital gains that are generally taxed to shareholders at ordinary
income tax rates) for investors that may be higher than the net capital gains
ordinarily incurred by an investor through an investment in another asset
allocation fund that has broader investment ranges or an asset allocation
strategy designed by the investor. In addition, due to federal income tax laws,
each Fund may not fully realize capital losses (to offset capital gains) from
the sale of the Underlying Funds at a loss.
DIVIDEND:
A PAYMENT BY A MUTUAL FUND, USUALLY DERIVED FROM THE FUND'S NET INVESTMENT
INCOME (DIVIDENDS AND INTEREST EARNED ON PORTFOLIO SECURITIES LESS EXPENSES).
CAPITAL GAIN DISTRIBUTION:
A PAYMENT TO MUTUAL FUND SHAREHOLDERS WHICH REPRESENTS PROFITS REALIZED ON THE
SALE OF SECURITIES IN A FUND'S PORTFOLIO.
EX-DIVIDEND DATE:
THE DAY ON WHICH ANY DECLARED DISTRIBUTIONS (DIVIDENDS OR CAPITAL GAINS) ARE
DEDUCTED FROM A FUND'S ASSETS BEFORE IT CALCULATES ITS NAV.
You may elect to:
(1) reinvest both dividends and capital gain distributions;
(2) receive dividends in cash and reinvest capital gain distributions; or
(3) receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise or if you own Fund shares in a Seligman tax-deferred
retirement plan.
If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus, or, if you have telephone services, you or
your financial advisor may call SDC. Your
34
<PAGE>
request must be received by SDC before the record date to be effective for that
dividend or capital gain distribution.
Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your predesignated bank account within 3-4 business days from the
payable date.
Dividends and capital gain distributions are reinvested to buy additional Fund
shares on the payable date using the NAV of the ex-dividend date.
Dividends on Class B, Class C, and Class D shares will be lower than the
dividends on Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
TAXES
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares. To
the extent a Fund receives certain tax benefits on dividends that it receives,
these pass-through benefits may not be realized by an investor in the Fund.
Other pass-through tax benefits realized by the Funds will not pass through to
investors. Tax-deferred retirement plans are not taxed currently on dividends or
capital gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
35
<PAGE>
APPENDIX A
ASSET CLASS DESCRIPTIONS
US Small-Company Stocks: 1979-1998: Russell Small Index Cap; 1950-1981: NYSE
Fifth Quintile Returns
US Medium-Company Stocks: 1979-1998: Russell Midcap Index; 1950-1978: Estimated
as the midpoint between the total return for the Ibbotson Small Stock Index and
the Standard & Poor's 500 Composite Stock Price Index
US Large-Company Stock: Standard & Poor's 500 Composite Stock Index (S&P 500)
International Small-Company Stocks: 1986-1998: NatWest Securities Ltd. (NWSL)
global ex. U.S. Smaller Companies Index; 1970-1985: Estimated as the difference
between the MSCI EAFE Index and the S&P 500, added to the Ibbotson Small Stock
Index; 1950-1969: Estimated as the Ibbotson Small Stock Index
Emerging Markets: 1989-1998: IFC Investables Composite; 1985-1988: IFC Global
Emerging Composite; 1970-1984: Estimated as the difference between the MSCI EAFE
Index and the S&P 500, added to the Ibbotson Small Stock Index; 1950-1969:
Estimated as the Ibbotson Small Stock Index
International Large-Company Stock: 1970-1998: Morgan Stanley Capital
International (MSCI) Europe Australasia and Far East (EAFE) Index; 1950-1969:
Estimated as the Standard & Poor's 500 Composite Stock Price Index
US Corporate Bonds: Salomon Brothers Long-Term High Grade corporate Bond Index
US Government Bonds: 1950-1998: Ibbotson "One Bond" Portfolio. To the greatest
extent possible, each year, a one-bond portfolio with a term of approximately 20
years and a reasonably current coupon, and whose returns did not reflect
potential tax benefits, impaired negotiability, or special redemption or call
privileges, was used
Inflation: 1978-1998: Consumer Price Index for All Urban Consumers; 1950-1977:
Consumer Price Index
36
<PAGE>
APPENDIX B
The chart below shows the High and Low average annual returns from
1950-1998 for US Small-Company Stocks, US Large Company Stocks, US Corporate
Bonds, US Government Bonds, and US Treasury Bills.
DIFFERENT TIME HORIZONS - DIFFERENT RISKS
[BAR CHART OMITTED - Table in place of Bar Chart]
1 Year 5 Years 10 Years 20 Years
------ ------- -------- --------
Small (30.90%) to (12.25%) to 3.20% to 8.21% to
Company 83.57% 39.80% 30.38% 20.33%
Stocks
Large (26.47%) to (2.36%) to 1.24% to 6.53% to
Company 51.62% 24.06% 19.35% 17.75%
Stocks
Corporate (8.09%) to (2.22%) to 1.00% to 1.34% to
Bonds 42.56% 22.51% 16.32% 10.86%
Gov't. Bonds (9.18%) to (2.14%) to (0.07%) to 0.69% to
40.36% 21.62% 15.56% 11.14%
Treasury Bills 0.86% to 1.41% to 1.87% to 2.87% to
14.71% 11.12% 9.17% 7.72%
Source: Figures derived from (C) Stocks, Bonds, Bills and Inflation 1999
Yearbook TM, Ibbotson Associates, Chicago (annual update work by Roger G.
Ibbotson and Rex A. Sirquefield). Used with permission all rights reserved.
The indices are comprised of the following: US Small-Company Stocks:
1982-1998: Russell Small Cap Index; 1950-1981: NYSE Quintille Returns; US
Large-Company Stocks: Standard & Poor's 500 Stock Index (S&P 500); US Corporate
Bonds: Salomon Brothers Long-Term High Grade Corporate Bond Total Return Index;
US Government Bonds; Ibbotson One Bond Portfolio; Treasury Bills: Ibbotson One
Bill Portfolio.
37
<PAGE>
The returns of these unmanaged Ibbotson Indices, in which individuals
cannot directly invest, reflect past performance and do not reflect the
performance of any mutual fund, nor are they any representation of the future
performance of mutual funds or common stocks. Also, keep in mind that the
securities represented by the Indices involve widely varying degrees of income
and growth potential and risk to investors. Rates on Treasury bills and
Government bonds are fixed, and principal if held to maturity, is guaranteed.
Although common stocks have produced higher historical returns, they may be
subject to greater risk than other types of investments. The stocks of smaller
companies are subject to greater price fluctuation than the stocks of larger
companies.
38
<PAGE>
APPENDIX C
SELIGMAN TIME HORIZON MATRIX
<TABLE>
<CAPTION>
Fund/Horizon 30 29 28 27 26 25 24 23 22
------------ -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Seligman Frontier Fund 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Seligman Small-Cap Value Fund 13.0% 12.9% 12.8% 12.7% 12.6% 12.5% 12.4% 12.3% 12.2%
Seligman Communications and Information 16.0% 15.4% 14.8% 14.2% 13.6% 13.0% 12.4% 11.8% 11.2%
Fund
Seligman Capital Fund 22.0% 21.8% 21.6% 21.4% 21.2% 21.0% 20.8% 20.6% 20.4%
Seligman Growth Fund 3.0% 3.6% 4.2% 4.8% 5.4% 6.0% 6.6% 7.2% 7.8%
Seligman Large-Cap Value Fund 3.0% 3.6% 4.2% 4.8% 5.4% 6.0% 6.6% 7.2% 7.8%
Seligman Common Stock Fund 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Seligman Henderson Emerging Markets 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Growth Fund
Seligman Henderson Global Smaller 25.0% 24.2% 23.4% 22.6% 21.8% 21.0% 20.2% 19.4% 18.6%
Companies Fund
Seligman Henderson Global Growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Opportunities Fund
Seligman Henderson International Fund 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0%
Seligman High-Yield Bond Fund 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Seligman U.S. Government Securities Fund 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.00
----- ----- ----- ----- ----- ----- ----- ----- ------
</TABLE>
<TABLE>
<CAPTION>
21 20 19 18 17 16 15 14 13
-- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Seligman Frontier Fund 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Seligman Small-Cap Value Fund 12.1% 12.0% 11.4% 10.8% 10.2% 9.6% 9.0% 8.4% 7.8%
Seligman Communications and Information 10.6% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Fund
Seligman Capital Fund 20.2% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
Seligman Growth Fund 8.4% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
Seligman Large-Cap Value Fund 8.4% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
Seligman Common Stock Fund 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Seligman Henderson Emerging Markets 10.0% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5%
Growth Fund
Seligman Henderson Global Smaller 17.8% 17.0% 16.1% 15.2% 14.3% 13.4% 12.5% 11.0% 10.7%
Companies Fund
Seligman Henderson Global Growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Opportunities Fund
Seligman Henderson International Fund 9.5% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Seligman High-Yield Bond Fund 0.0% 0.0% 1.5% 3.0% 4.5% 6.0% 7.5% 9.0% 10.5%
Seligman U.S. Government Securities Fund 0.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.00 100.0%
----- ----- ----- ----- ----- ----- ----- ------ -----
</TABLE>
<TABLE>
<CAPTION>
12 11 10 9 8 7 6 5
-- -- -- - - - - -
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seligman Frontier Fund 3.0% 3.0% 3.0% 2.7% 2.4% 2.1% 1.8% 1.5%
Seligman Small-Cap Value Fund 7.2% 6.6% 6.0% 5.4% 4.8% 4.2% 3.6% 3.0%
Seligman Communications and Information 10.0% 10.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0%
Fund
Seligman Capital Fund 20.0% 20.0% 20.0% 19.0% 18.0% 17.0% 16.0% 15.0%
Seligman Growth Fund 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
Seligman Large-Cap Value Fund 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
Seligman Common Stock Fund 0.0% 0.0% 0.0% 1.5% 3.0% 4.5% 6.0% 7.5%
Seligman Henderson Emerging Markets 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5%
Growth Fund
Seligman Henderson Global Smaller 9.8% 8.9% 8.0% 7.2% 6.4% 5.6% 4.8% 4.0%
Companies Fund
Seligman Henderson Global Growth 0.0% 0.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
Opportunities Fund
Seligman Henderson International Fund 10.0% 10.0% 10.0% 10.2% 10.4% 10.6% 10.8% 11.0%
Seligman High-Yield Bond Fund 12.0% 13.5% 15.0% 16.5% 18.0% 19.5% 21.0% 22.5%
Seligman U.S. Government Securities Fund 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.00 100.0%
----- ----- ----- ----- ----- ----- ------ -----
</TABLE>
<TABLE>
<CAPTION>
4 3 2 1 Harvester
- - - - ---------
<S> <C> <C> <C> <C> <C>
Seligman Frontier Fund 1.2% 0.9% 0.6% 0.3% 0.0%
Seligman Small-Cap Value Fund 2.4% 1.8% 1.2% 0.6% 0.0%
Seligman Communications and Information 4.0% 3.0% 2.0% 1.0% 0.0%
Fund
Seligman Capital Fund 14.0% 13.0% 12.0% 11.0% 10.0%
Seligman Growth Fund 9.0% 9.0% 9.0% 9.0% 9.0%
Seligman Large-Cap Value Fund 9.0% 9.0% 9.0% 9.0% 9.0%
Seligman Common Stock Fund 9.0% 10.5% 12.0% 13.5% 15.0%
Seligman Henderson Emerging Markets 2.0% 1.5% 1.0% 0.5% 0.0%
Growth Fund
Seligman Henderson Global Smaller 3.2% 2.4% 1.6% 0.8% 0.0%
Companies Fund
Seligman Henderson Global Growth 3.0% 3.5% 4.0% 4.5% 5.0%
Opportunities Fund
Seligman Henderson International Fund 11.2% 11.4% 11.6% 11.8% 12.0%
Seligman High-Yield Bond Fund 24.0% 25.5% 27.0% 28.5% 30.0%
Seligman U.S. Government Securities Fund 8.0% 8.5% 9.0% 9.5% 10.0%
Total 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
</TABLE>
Seligman Time Horizon MatrixSM is an asset allocation framework, developed to
help investors seek their specific financial goals. The Matrix is designed for
investors seeking to create the best asset class mix for investment portfolios,
based on their time frame for achieving specific goals.
Seligman HarvesterSM PATENT PENDING is a process designed to help investors
maximize their income stream while seeking to conserve capital. The program
involves determining "needs" and "wants" as a percentage of total investable
assets, and guides investors through a strategy of income withdrawal and asset
allocation specifically designed to lower the risk of depleting their
accumulated wealth too quickly.
Seligman Time Horizon MatrixSM and Seligman HarvesterSM PATENT PENDING are
prepared using past performance of asset classes to construct model portfolios.
Those model portfolios have inherent limitations in that they assume the future
performance of the asset classes will, over the relevant periods, correlate to
their past performance, and of course, past performance is no guarantee of
future results. Furthermore, with regard to using the Funds, the Seligman Group
of Funds or other funds of any other investment manager in seeking to follow
Seligman Time Horizon MatrixSM and Seligman HarvesterSM PATENT PENDING, there
is no assurance that the funds selected will actually correlate to the asset
allocations that the investor is seeking to track.
Shares of the Funds and Underlying Funds
are not deposits or obligations of, or guaranteed or endorsed by, any bank.
Shares are not insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other Federal agency. In addition, an
investment in the Funds and Underlying Funds involves investment risks,
including the possible loss of principal.
39
<PAGE>
For More Information
The following information is available without charge upon request: call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US or
access the internet site of J. & W. Seligman & Co. Incorporated,
www.seligman.com.
The Statement of Additional Information (SAI) contains additional
information about the Funds and the prospectus for each Underlying Fund
contains information about that Fund. The SAI and each prospectus for the
Underlying Funds are on file with the Securities and Exchange Commission
(SEC) and are incorporated by reference into (and are legally part of) this
prospectus.
Seligman Advisors, Inc.
An affiliate of
[logo]
J. & W. Seligman & Co.
Incorporated
Established 1864
100 Park Avenue, New York, NY 10017
Information about the Funds, including the SAI, can be viewed and copied at
the SEC's public reference room in Washington, D.C. For information about
the operation of the public reference room, call (800) SEC-0330. The SAI
and other information about the Funds are also available on the SEC's
internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating
fee, by writing: public reference section of the SEC, Washington, DC
20549-6009.
INVESTMENT COMPANY ACT FILE NUMBER: [________]
40
<PAGE>
PART B
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
SELIGMAN TIME HORIZON 30 FUND
SELIGMAN TIME HORIZON 20 FUND
SELIGMAN TIME HORIZON 10 FUND
SELIGMAN HARVESTER FUND
Statement of Additional Information
, 2000
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus, dated ____, 2000, which covers
the Seligman Time Horizon/Harvester Series (the "Series"), an asset allocation
Series containing four funds: Seligman Time Horizon 30 Fund, Seligman Time
Horizon 20 Fund, Seligman Time Horizon 10 Fund and Seligman Harvester Fund
(collectively, the "Funds"). This SAI, although not in itself a prospectus, is
incorporated by reference into the Prospectus in its entirety. It should be read
in conjunction with the Prospectus, which you may obtain by writing or calling
the Series at the above address or telephone numbers.
Table of Contents
Series History ............................................................ 2
Description of the Series and its Investments and Risks ................... 2
Management of the Series .................................................. 14
Control Persons and Principal Holders of Securities ....................... 18
Investment Advisory and Other Services .................................... 19
Brokerage Allocation and Other Practices .................................. 24
Capital Stock and Other Securities ........................................ 25
Purchase, Redemption, and Pricing of Shares ............................... 25
Taxation of the Series .................................................... 31
Underwriters .............................................................. 32
Calculation of Performance Data ........................................... 33
Financial Statements ...................................................... 33
General Information ....................................................... 33
Appendix A ................................................................ 34
Appendix B ................................................................ 37
<PAGE>
SERIES HISTORY
Seligman Time Horizon/Harvester Series, Inc. was incorporated under the laws of
the state of Maryland on August 4, 1999.
DESCRIPTION OF THE SERIES AND ITS INVESTMENTS AND RISKS
Classification
Seligman Time Horizon/Harvester Series, Inc. is a diversified open-end
management investment company, or mutual fund. It consists of four separate and
distinct funds: Seligman Time Horizon 30 Fund, Seligman Time Horizon 20 Fund,
Seligman Time Horizon 10 Fund and Seligman Harvester Fund.
Investment Strategies and Risks
Each Fund seeks to achieve its objectives by investing in a combination of
mutual funds for which J. & W. Seligman & Co. Incorporated (the "Manager")
either now acts or in the future will act as investment manager (the "Underlying
Funds"). The Funds may also invest directly in US Government securities and
short-term instruments. Because each Fund will invest a substantial portion of
its assets in the Underlying Funds, each Fund's investment performance is
directly related to the investment performance of the Underlying Funds in which
it invests. The ability of a Fund to realize its investment objective(s) will
depend upon the extent to which the Underlying Funds realize their objectives.
The investment objective(s) and policies of the Funds are similar to the
investment objective(s) and policies of certain other mutual funds managed by
the Manager. Although the investment objective(s) and policies may be similar,
the investment results of the Funds may be higher or lower than the results of
these other mutual funds.
Investment Strategies and Risks of the Underlying Funds
Each Underlying Fund has its own investment strategies and risks. The
information provided below describes the types of instruments that one or more
Underlying Funds may utilize in order to carry out its investment strategies,
along with a summary of the risks presented by such instruments. Please note,
however, that not every Underlying Fund is authorized under its investment
objectives, strategies and policies to invest its assets in each of the
instruments described below. Additionally, to the extent an Underlying Fund is
authorized to invest in a particular instrument, the amount of the Underlying
Fund's assets that may be so invested or the circumstances under which the
investment in the instrument may be made may be restricted by the Underlying
Fund's investment policies. References to an Underlying Fund below with respect
to each type of instrument apply only to the extent that the particular
Underlying Fund is authorized to invest in the instrument, subject to any such
limitations or restrictions. A complete description of the types of instruments
and related risks in which each Underlying Fund is permitted to invest is
provided in each Underlying Fund's Prospectus and Statement of Additional
Information, which are incorporated herein by reference and are available free
of charge by telephoning 1-800-221-2450.
CONVERTIBLE BONDS
Each Underlying Fund, other than Seligman Cash Management Fund and the Seligman
U.S. Government Securities Series, may purchase convertible bonds. Convertible
bonds are convertible at a stated exchange rate or price into common stock.
Before conversion, convertible securities are similar to non-convertible debt
securities in that they provide a steady stream of income with generally higher
yields than an issuer's equity securities. The market value of all debt
securities, including convertible securities, tends to decline as interest rates
increase and to increase as interest rates decline. In general, convertible
securities may provide lower interest or dividend yields than non-convertible
debt securities
2
<PAGE>
of similar quality, but they may also allow investors to benefit from increases
in the market price of the underlying common stock. When the market price of the
underlying common stock increases, the price of the convertible security tends
to reflect the increase. When the market price of the underlying common stock
declines, the convertible security tends to trade on the basis of yield, and may
not depreciate to the same extent as the underlying common stock. In an issuer's
capital structure, convertible securities are senior to common stocks. They are
therefore of higher quality and involve less risk than the issuer's common
stock, but the extent to which risk is reduced depends largely on the extent to
which the convertible security sells above its value as a fixed-income security.
In selecting convertible securities for an Underlying Fund, the Manager
evaluates such factors as economic and business conditions involving the issuer,
future earnings growth potential of the issuer, potential for price appreciation
of the underlying equity, the value of individual securities relative to other
investment alternatives, trends in the determinants of corporate profits, and
capability of management. In evaluating a convertible security, the Manager
gives emphasis to the attractiveness of the underlying common stock and the
capital appreciation opportunities that the convertible security presents.
Convertible securities can be callable or redeemable at the issuer's discretion,
in which case the Manager would be forced to seek alternative investments.
Debt securities convertible into equity securities may be rated as low as CC by
Standard & Poor's Rating Service (S&P) or Ca by Moody's Investors Service, Inc.
(Moody's). Debt securities rated below investment grade (frequently referred to
as "junk bonds") often have speculative characteristics and will be subject to
greater market fluctuations and risk of loss of income and principal than
higher-rated securities. A description of credit ratings and risks associated
with lower-rated debt securities is set forth in Appendix A to this Statement of
Additional Information. The Manager does not rely on the ratings of these
securities in making investment decisions but performs its own analysis, based
on the factors described above, in light of the Underlying Fund's investment
objectives.
DERIVATIVES
Each Underlying Fund, other than Seligman Cash Management Fund, may invest in
derivatives only for hedging or investment purposes. An Underlying Fund will not
invest in derivatives for speculative purposes, i.e., where the derivative
investment exposes the Underlying Fund 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. An Underlying Fund
will not invest in a specific type of derivative without prior approval from its
Board of Directors, after consideration of, among other things, how the
derivative instrument serves the Underlying Fund's investment objective, and the
risk associated with the investment. The only types of derivatives in which the
Underlying Funds are currently permitted to invest, as described more fully
below, are forward foreign currency exchange contracts, put options, and rights
and warrants.
Forward Foreign Currency Exchange Contracts
Each Underlying Fund, other than Seligman Cash Management Fund and Seligman U.S.
Government Securities Series, will generally enter into forward foreign currency
exchange contracts to fix the US dollar value of a security it has agreed to buy
or sell for the period between the date the trade was entered into and the date
the security is delivered and paid for, or to hedge the US dollar value of
securities it owns. A forward foreign currency exchange contract is an agreement
to purchase or sell a specific currency at a future date and at a price set at
the time the contract is entered into.
An Underlying Fund may enter into a forward contract to sell or buy the amount
of a foreign currency it believes may experience a substantial movement against
the US dollar. In this case the contract would approximate the value of some or
all of the Underlying Fund's securities denominated in such foreign currency.
Under normal circumstances, the Manager will limit forward currency contracts to
not greater
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than 75% of an Underlying Fund's position in any one country as of the date the
contract is entered into. This limitation will be measured at the point the
hedging transaction is entered into by the Underlying Fund. Under extraordinary
circumstances, the Underlying Fund's Manager may enter into forward currency
contracts in excess of 75% of an Underlying Fund's position in any one country
as of the date the contract is entered into. The precise matching of the forward
contract amounts and the value of securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market movement in the value of those securities
between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movement is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Under certain circumstances, an Underlying Fund may commit a
substantial portion or the entire value of its assets to the consummation of
these contracts. The Underlying Fund's Manager will consider the effect a
substantial commitment of its assets to forward contracts would have on the
investment program of an Underlying Fund and its ability to purchase additional
securities.
Except as set forth above and immediately below, an Underlying Fund will not
enter into forward contracts or maintain a net exposure to such contracts where
the consummation of the contracts would oblige the Underlying Fund to deliver an
amount of foreign currency in excess of the value of the Underlying Fund's
securities or other assets denominated in that currency. An Underlying Fund, in
order to avoid excess transactions and transaction costs, may nonetheless
maintain a net exposure to forward contracts in excess of the value of the
Underlying Fund's securities or other assets denominated in that currency
provided the excess amount is "covered" by cash and/or liquid, high-grade debt
securities, denominated in any currency, having a value at least equal at all
times to the amount of such excess. Under normal circumstances, consideration of
the prospect for currency parities will be incorporated into the longer-term
investment decisions made with regard to overall diversification strategies.
However, the Manager believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests of
the Underlying Fund will be served.
At the maturity of a forward contract, an Underlying Fund may either sell the
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of the Underlying Fund's securities at the expiration of the
forward contract. Accordingly, it may be necessary for an Underlying Fund to
purchase additional foreign currency on the spot market (and bear the expense of
such purchase) if the market value of the security is less than the amount of
foreign currency the Underlying Fund is obligated to deliver and if a decision
is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the Underlying Fund's security if its market
value exceeds the amount of foreign currency an Underlying Fund is obligated to
deliver. However, an Underlying Fund may use liquid, high-grade debt securities,
denominated in any currency, to cover the amount by which the value of a forward
contract exceeds the value of the securities to which it relates.
If an Underlying Fund retains the security and engages in offsetting
transactions, the Underlying Fund will incur a gain or a loss (as described
below) to the extent that there has been movement in forward contract prices. If
the Underlying Fund engages in an offsetting transaction, it may subsequently
enter into a new forward contract to sell the foreign currency. Should forward
prices decline during the period between the Underlying Fund's entering into a
forward contract for the sale of a foreign currency and the date it enters into
an offsetting contract for the purchase of the foreign currency, the Underlying
Fund will realize a gain to the extent the price of the currency it has agreed
to sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Underlying Fund will suffer a loss to the extent
the price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
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Each Underlying Fund's dealing in forward foreign currency exchange contracts
will be limited to the transactions described above. An Underlying Fund is not
required to enter into forward contracts with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
the Underlying Fund's Manager. It also should be realized that this method of
hedging against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes a
rate of exchange at a future date. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of a hedged currency, at
the same time, they tend to limit any potential gain which might result from an
increase in the value of that currency.
Shareholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to an Underlying Fund at one rate, while offering a lesser rate
of exchange should the Underlying Fund desire to resell that currency to the
dealer.
Put Options
Each Underlying Fund, other than Seligman Cash Management Fund and Seligman
High-Yield Bond Fund, may purchase put options in an attempt to provide a hedge
against a decrease in the market price of an underlying security held by an
Underlying Fund. An Underlying Fund will not purchase options for speculative
purposes. Purchasing a put option gives an Underlying Fund the right to sell,
and obligates the writer to buy, the underlying security at the exercise price
at any time during the option period. This hedge protection is provided during
the life of the put option since an Underlying Fund, 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, an Underlying Fund 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, an Underlying Fund would let the option
expire resulting in a reduced profit on the underlying security equal to the
cost of the put option premium and transaction costs.
When an Underlying Fund 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 Underlying Fund, 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. The cost of the
put option is limited to the premium plus commission paid. An Underlying Fund's
maximum financial exposure will be limited to these costs.
An Underlying Fund may purchase both listed and over-the-counter put options. An
Underlying Fund will be exposed to the risk of counterparty nonperformance in
the case of over-the-counter put options.
An Underlying Fund's ability to engage in option transactions may be limited by
tax considerations.
Rights and Warrants
Each Underlying Fund, other than Seligman Cash Management Fund, Seligman U.S.
Government Securities Series and Seligman High-Yield Bond Fund, may invest in
common stock rights and warrants believed by the Manager to provide capital
appreciation opportunities. Common stock rights and warrants received as part of
a unit or attached to securities purchased (i.e., not separately purchased) are
not included in each Underlying Fund's investment restrictions regarding such
securities.
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FOREIGN SECURITIES
Each Underlying Fund, other than Seligman U.S. Government Securities Series, may
invest in foreign securities. Foreign investments may be affected favorably or
unfavorably by changes in currency rates and exchange control regulations. There
may be less information available about a foreign company than about a US
company, and foreign companies may not be subject to reporting standards and
requirements comparable to those applicable to US companies. Foreign securities
may not be as liquid as US securities. Securities of foreign companies may
involve greater market risk than securities of US companies, and foreign
brokerage commissions and custody fees are generally higher than in the US.
Investments in foreign securities may also be subject to local economic or
political risks, political instability and possible nationalization of issuers.
By investing in foreign securities, an Underlying Fund will attempt to take
advantage of differences among economic trends and the performance of securities
markets in various countries. To date, the market values of securities of
issuers located in different countries have moved relatively independently of
each other. During certain periods, the return on equity investments in some
countries has exceeded the return on similar investments in the US. The Manager
believes that, in comparison with investment companies investing solely in
domestic securities, it may be possible to obtain significant appreciation from
a portfolio of foreign investments and securities from various markets that
offer different investment opportunities and are affected by different economic
trends. Global diversification reduces the effect that events in any one country
will have on the entire investment portfolio. Of course, a decline in the value
of an Underlying Fund's investments in one country may offset potential gains
from investments in another country.
Investments in securities of foreign issuers may involve risks that are not
associated with domestic investments, and there can be no assurance that the
Underlying Fund's foreign investments will present less risk than a portfolio of
domestic securities. Foreign issuers may lack uniform accounting, auditing and
financial reporting standards, practices and requirements, and there is
generally less publicly available information about foreign issuers than there
is about US issuers. Governmental regulation and supervision of foreign stock
exchanges, brokers and listed companies may be less pervasive than is customary
in the US. Securities of some foreign issuers are less liquid and their prices
are more volatile than securities of comparable domestic issuers. Foreign
securities settlements may in some instances be subject to delays and related
administrative uncertainties which could result in temporary periods when assets
of an Underlying fund are uninvested and no return is earned thereon and may
involve a risk of loss to an Underlying Fund. Foreign securities markets may
have substantially less volume than US markets and far fewer traded issues.
Fixed brokerage commissions on foreign securities exchanges are generally higher
than in the United States, and transaction costs with respect to smaller
capitalization companies may be higher than those of larger capitalization
companies. Income from foreign securities may be reduced by a withholding tax at
the source or other foreign taxes. In some countries, there may also be the
possibility of nationalization, expropriation or confiscatory taxation, (in
which case an Underlying Fund could lose its entire investment in a certain
market), limitations on the removal of monies or other assets of an Underlying
Fund, higher rates of inflation, political or social instability or revolution,
or diplomatic developments that could affect investments in those countries. In
addition, it may be difficult to obtain and enforce a judgement in a court
outside the United States.
Some of the risks described in the preceding paragraph may be more severe for
investments in emerging or developing countries. By comparison with the United
States and other developed countries, emerging or developing countries may have
relatively unstable governments, economies based on a less diversified
industrial base and securities markets that trade a smaller number of
securities. Companies in emerging markets may generally be smaller, less
experienced and more recently organized than many domestic companies. Prices of
securities traded in the securities markets of emerging or developing countries
tend to be volatile. Furthermore, foreign investors are subject to many
restrictions in emerging or developing countries. These restrictions may
require, among other things, governmental approval prior to making
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investments or repatriating income or capital, or may impose limits on the
amount or type of securities held by foreigners or on the companies in which the
foreigners may invest.
The economies of individual emerging countries may differ favorably or
unfavorably from the US economy in such respects as growth of gross domestic
product, rates of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency and balance of payment position and may be based on a
substantially less diversified industrial base. Further, the economies of
developing countries generally are heavily dependent upon international trade
and, accordingly, have been, and may continue to be, adversely affected by trade
barriers, exchange controls, managed adjustments in relative currency values and
other protectionist measures imposed or negotiated by the countries with which
they trade. These economies also have been, and may continue to be, adversely
affected by economic conditions in the countries with which they trade.
Investments in foreign securities will usually be denominated in foreign
currencies, and an Underlying Fund may temporarily hold cash in foreign
currencies. The value of an Underlying Fund's investments denominated in foreign
currencies may be affected, favorably or unfavorably, by the relative strength
of the US dollar, changes in foreign currency and US dollar exchange rates and
exchange control regulations. The Underlying Fund may incur costs in connection
with conversions between various currencies. An Underlying Fund's net asset
value per share will be affected by changes in currency exchange rates. Changes
in foreign currency exchange rates may also affect the value of dividends and
interest earned, and gains and losses realized on the sale of securities and the
resulting amount, if any, to be distributed to shareholders by the Underlying
Fund. The rate of exchange between the US dollar and other currencies is
determined by the forces of supply and demand in the foreign exchange markets
(which in turn are affected by interest rates, trade flows and numerous other
factors, including, in some countries, local governmental intervention).
Depositary Receipts
Depositary Receipts are instruments generally issued by domestic banks or trust
companies that represent the deposits of a security of a foreign issuer.
American Depositary Receipts (ADRs), which are traded in dollars on US exchanges
or over-the-counter, are issued by domestic banks and evidence ownership of
securities issued by foreign corporations. European Depositary Receipts (EDRs)
are typically traded in Europe. Global Depositary Receipts (GDRs) are typically
traded in both Europe and the United States. Depositary Receipts may be issued
as sponsored or unsponsored programs. In sponsored programs, the issuer has made
arrangements to have its securities trade in the form of Depositary Receipts. In
unsponsored programs, the issuer may not be directly involved in the creation of
the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, the issuers of unsponsored
Depositary Receipts are not obligated to disclose material information in the
US, and therefore, the import of such information may not be reflected in the
market value of such instruments.
ILLIQUID SECURITIES
Each Underlying Fund, other than Seligman Cash Management Fund and Seligman U.S.
Government Securities Series, may invest in illiquid securities, including
restricted securities (i.e., securities not readily marketable without
registration under the Securities Act of 1933 (1933 Act)) and other securities
that are not readily marketable. Certain restricted securities can be offered
and sold to "qualified institutional buyers" under Rule 144A of the 1933 Act,
and the Underlying Fund's Board of Directors, or Trustees, may determine, when
appropriate, that specific Rule 144A securities are liquid and not subject to an
Underlying Fund's limitation on illiquid securities. Should the Board of
Directors or Trustees make this determination, it will carefully monitor the
security (focusing on such factors, among others, as trading activity and
availability of information) to determine that the Rule 144A security continues
to be liquid. It is not possible to predict with assurance exactly how the
market for Rule 144A securities will further evolve. This investment practice
could have the effect of increasing the level of
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illiquidity in an Underlying Fund, if and to the extent that qualified
institutional buyers become for a time uninterested in purchasing Rule 144A
securities.
MONEY MARKET INSTRUMENTS
Each of the Underlying Funds, other than Seligman Cash Management Fund, which
intends to invest primarily in the money market instruments described below and
the U.S. Government Securities Series, which intends to invest substantially all
of its assets in US Government Obligations, may invest a portion of their assets
in the following money market instruments:
US Government Obligations
US Government Obligations are obligations issued or guaranteed as to both
principal and interest by the US Government or backed by the full faith and
credit of the US, such as US Treasury Bills, securities issued or guaranteed by
a US Government agency or instrumentality, and securities supported by the right
of the issuer to borrow from the US Treasury.
Bank Obligations
Bank obligations include US dollar-denominated certificates of deposit, banker's
acceptances, fixed time deposits and commercial paper of domestic banks,
including their branches located outside the US, and of domestic branches of
foreign banks. Investments in bank obligations will be limited at the time of
investment to the obligations of the 100 largest domestic banks in terms of
assets which are subject to regulatory supervision by the US Government or state
governments, and the obligations of the 100 largest foreign banks in terms of
assets with branches or agencies in the US.
Commercial Paper and Short-Term Corporate Debt Securities
Commercial paper and short-term debt securities include short-term unsecured
promissory notes with maturities not exceeding nine months issued in bearer form
by bank holding companies, corporations and finance companies. Investments in
commercial paper issued by bank holding companies will be limited at the time of
investment to the 100 largest US bank holding companies in terms of assets.
MORTGAGE-RELATED SECURITIES
Mortgage Pass-Through Securities. Each Underlying Fund may invest in mortgage
pass-through securities. Mortgage pass-through securities include securities
that represent interests in pools of mortgage loans made by lenders such as
savings and loan institutions, mortgage bankers, and commercial banks. Such
securities provide a "pass-through" of monthly payments of interest and
principal made by the borrowers on their residential mortgage loans (net of any
fees paid to the issuer or guarantor of such securities). Although the
residential mortgages underlying a pool may have maturities of up to 30 years, a
pool's effective maturity may be reduced by prepayments of principal on the
underlying mortgage obligations. Factors affecting mortgage prepayments include,
among other things, the level of interest rates, general economic and social
conditions and the location and age of the mortgages. High interest rate
mortgages are more likely to be prepaid than lower-rate mortgages; consequently,
the effective maturities of mortgage-related obligations that pass-through
payments of higher-rate mortgages are likely to be shorter than those of
obligations that pass-through payments of lower-rate mortgages. If such
prepayment of mortgage-related securities in which an Underlying Fund invests
occurs, the Underlying Fund may have to invest the proceeds in securities with
lower yields.
The Government National Mortgage Association (GNMA) is a US Government
corporation within the Department of Housing and Urban Development, authorized
to guarantee, with the full faith and credit of the US Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and
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backed by pools of Federal Housing Administration insured or Veterans
Administration guaranteed residential mortgages. These securities entitle the
holder to receive all interest and principal payments owed on the mortgages in
the pool, net of certain fees, regardless of whether or not the mortgagors
actually make the payments. Other government-related issuers of mortgage-related
securities include the Federal National Mortgage Association (FNMA), a
government-sponsored corporation subject to general regulation by the Secretary
of Housing and Urban Development but owned entirely by private stockholders, and
the Federal Home Loan Mortgage Corporation (FHLMC), a corporate instrumentality
of the US Government created for the purpose of increasing the availability of
mortgage credit for residential housing that is owned by the twelve Federal Home
Loan Banks. FHLMC issues Participation Certificates (PCs), which represent
interests in mortgages from FHLMC's national portfolio. FHLMC guarantees the
timely payment of interest and ultimate collection of principal, but PCs are not
backed by the full faith and credit of the US Government. Pass-through
securities issued by FNMA are backed by residential mortgages purchased from a
list of approved seller/servicers and are guaranteed as to timely payment of
principal and interest by FNMA, but are not backed by the full faith and credit
of the US Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through securities based on pools of conventional residential mortgage
loans. Securities created by such non-governmental issuers may offer a higher
rate of interest than government-related securities; however, timely payment of
interest and principal may or may not be supported by insurance or guarantee
arrangements, and there can be no assurance that the private issuers can meet
their obligations.
Collateralized Mortgage Obligations. Seligman U.S. Government Securities Series
may invest in Collateralized Mortgage Obligations (CMOs), which may include
certain CMOs that have elected to be treated as Real Estate Mortgage Investment
Conduits (REMICs). CMOs are fixed-income securities collateralized by pooled
mortgages and separated into short-, medium-, and long-term positions (called
tranches). Tranches pay different rates of interest depending upon their
maturity. CMOs may be collateralized by (a) pass-through securities issued or
guaranteed by GNMA, FNMA or FHLMC, (b) unsecuritized mortgage loans insured by
the Federal Housing Administration or guaranteed by the Department of Veteran's
Affairs, (c) unsecuritized conventional Mortgages, (d) other mortgage related
securities or (e) any combination thereof.
Each tranche of a CMO is issued at a specific coupon rate and has a stated
maturity. As the payments on the underlying mortgage loans are collected, the
CMO issuer generally pays the coupon rate of interest to the holders of each
tranche. In a common structure referred to as a "Pay" CMO, all scheduled and
unscheduled principal payments generated by the collateral, as loans are repaid
or prepaid, go initially to investors in the first tranches. Investors in later
tranches do not start receiving principal payments until the prior tranches are
paid in full. Sometimes, CMOs are structured so that the prepayment and/or
market risks are transferred from one tranche to another.
Most CMOs are issued by Federal agencies. However, the only CMOs backed by the
full faith and credit of the US Government are CMOs collateralized by
pass-through securities guaranteed by GNMA. All CMOs are subject to reinvestment
risk; that is, as prepayments on the underlying pool of mortgages increase, the
maturity of the tranches in the CMO will decrease. As a result, an Underlying
Fund may have to invest the proceeds that were invested in such CMOs in
securities with lower yields. Factors affecting reinvestment risk include the
level of interest rates, general economic and social conditions and the location
and age of the mortgages.
REPURCHASE AGREEMENTS
Each Underlying Fund may hold cash or cash equivalents and may enter into
repurchase agreements with respect to securities; normally repurchase agreements
relate to money market obligations backed by the full faith and credit of the US
Government. Repurchase agreements are transactions in which an investor
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(e.g., an Underlying Fund) purchases a security from a bank, recognized
securities dealer, or other financial institution and simultaneously commits to
resell that security to such institution at an agreed upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement thus involves the obligation of the
bank or securities dealer to pay the agreed upon price on the date agreed to,
which obligation is in effect secured by the value of the underlying security
held by the Underlying Fund. 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. Although
repurchase agreements carry certain risks not associated with direct investments
in securities, each Underlying Fund intends to enter into repurchase agreements
only with financial institutions believed to present minimum credit risks in
accordance with guidelines established by the Underlying Fund's Board of
Directors. The creditworthiness of such institutions will be reviewed and
monitored under the general supervision of the Board of Directors. An Underlying
Fund will invest only in repurchase agreements collateralized in an amount at
least equal at all times to the purchase price plus accrued interest. Repurchase
agreements usually are for short periods, such as one week or less, but may be
for longer periods.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES
Seligman U.S. Government Securities Series and Seligman High-Yield Bond Fund may
purchase securities on a when-issued or forward commitment basis. Settlement of
such securities transactions (i.e., delivery of securities and payment of
purchase price) normally takes place within 45 days after the date of the
commitment to purchase.
At the time an Underlying Fund enters into such a commitment both payment and
interest terms will be established prior to settlement; there is a risk that
prevailing interest rates on the settlement date will be greater than the
interest rate terms established at the time the commitment was entered into.
When-issued and forward commitment securities are subject to changes in market
value prior to settlement based upon changes, real or anticipated, in the level
of interest rates or creditworthiness of the issuer. If an Underlying Fund
remains substantially fully invested at the same time that it has purchased
securities on a when-issued or forward commitment basis, the market value of
that Underlying Fund's assets may fluctuate more than otherwise would be the
case. For this reason, accounts for each Underlying Fund will be established
with the Underlying Fund's custodian consisting of cash and/or liquid high-grade
debt securities equal to the amount of each Underlying Fund's when-issued or
forward commitment obligations; these accounts will be valued each day and
additional cash and/or liquid high-grade debt securities will be added to an
account in the event that the current value of the when-issued or forward
commitment obligations increases. When the time comes to pay for when-issued or
forward commitment securities, an Underlying Fund will meet its respective
obligations from then available cash flow, sale of securities held in the
separate account, sale of other securities, or from the sale of the when-issued
or forward commitment securities themselves (which may have a value greater or
less than an Underlying Fund's payment obligations). Sale of securities to meet
when-issued and forward commitment obligations carries with it a greater
potential for the realization of capital gain or loss.
SHORT SALES
Each of Seligman Henderson Emerging Markets Growth Fund, Seligman Henderson
Global Growth Opportunities Fund, Seligman Henderson Global Smaller Companies
Fund and Seligman Henderson International Fund may sell securities short
"against the box." A short sale "against-the-box" is a short sale in which the
Underlying Fund owns an equal amount of the securities sold short or securities
convertible into or exchangeable without payment of further consideration for
securities of the same issue as, and equal in amount to, the securities sold
short. To effect a short sale, the Underlying Fund will borrow a security from a
brokerage firm to make delivery to the buyer. The Underlying Fund will be
obligated to replace the borrowed security. The Underlying Fund will realize a
gain if the borrowed security declines
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in price between the date of the short sale and the date on which the Underlying
Fund replaces the security. The Underlying Fund will incur a loss if the price
of the borrowed security increases between those dates. Additionally, the
Underlying Fund will incur transaction costs, including interest expenses, in
connection with opening, maintaining and closing short sales against-the-box.
Short selling involves a risk of losses to the Underlying Fund and may
exaggerate the volatility of the Underlying Fund's investment portfolio.
LENDING OF PORTFOLIO SECURITIES
Each of the Underlying Funds may lend portfolio securities to broker/dealers,
banks or other institutional borrowers, provided that securities loaned by each
of the Underlying Funds may not exceed 33 1/3% of each Underlying Fund's total
assets taken at market value. The Underlying Funds will not lend portfolio
securities to any institutions affiliated with the Underlying Fund. The borrower
must maintain with the Underlying Fund's custodian bank cash or equivalent
collateral equal to at least 100% of the market value of the securities loaned.
During the time portfolio securities are on loan, the borrower pays the lending
Underlying Fund an amount equal to any dividends or interest paid on the
securities. The lending Underlying Fund may invest the collateral and earn
additional income or receive an agreed upon amount of interest income from the
borrower. Loans made by the Underlying Funds will generally be short-term. Loans
are subject to termination at the option of the lending Underlying Fund or the
borrower. The lending Underlying Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the collateral to the borrower or placing broker. The lending
Underlying 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. The lending of portfolio securities
may involve certain risks such as: 1) an increase in the market value of the
borrowed securities without a corresponding increase in the value of the posted
collateral might result in an imbalance in value between the borrowed securities
and the collateral; 2) in the event the borrower sought protection under the
Federal bankruptcy laws, repayment of the borrowed securities to an Underlying
Fund might be delayed; and 3) the borrower might refuse to repay the borrowed
securities. The Underlying Fund may lose money if a borrower defaults on its
obligation to return securities and the value of the collateral held by the
lending Underlying Fund is insufficient to replace the loaned securities. Each
Underlying Fund may lend portfolio securities to the extent that the Manager
deems appropriate in seeking to achieve an Underlying Fund's investment
objective and with only a prudent degree of risk.
Seligman Cash Management Fund will not lend more than 25% of the value of its
total assets, and it is not intended that payments received on account of
interest paid on securities loaned will exceed 10% of the annual gross income of
this Underlying Fund without offset for realized short-term capital losses, if
any. This Underlying Fund has not loaned any portfolio securities to date.
BORROWING
Except as noted below, the Underlying Funds may borrow money only from banks for
temporary or emergency purposes (but not for the purpose of purchasing portfolio
securities) in an amount not to exceed the following percentages of the value of
the Underlying Fund's total assets: 5% for the Seligman Henderson International
Fund, Seligman Henderson Global Growth Opportunities Fund, Seligman Henderson
Global Smaller Companies Fund and Seligman Cash Management Fund; 10% for
Seligman Frontier Fund and Seligman Henderson Emerging Markets Growth Fund; and
15% for the Seligman U.S. Government Securities Series and Seligman High-Yield
Bond Fund. In addition, the Seligman Frontier Fund, Seligman High-Yield Bond
Series, Seligman U.S. Government Securities Series, Seligman Large-Cap Value
Fund, Seligman Small-Cap Value Fund and Seligman Emerging Markets Growth Fund
will not purchase additional portfolio securities if such Underlying Funds have
outstanding borrowings in excess of 5% of the value of their total assets.
11
<PAGE>
Seligman Common Stock Fund, Seligman Growth Fund, Seligman Large-Cap Value Fund,
and Seligman Small-Cap Value Fund may from time to time borrow money for
temporary or emergency purposes, and may invest such funds in additional
securities. Seligman Capital Fund and Seligman Communications and Information
Fund may from time to time borrow money in order to purchase securities.
Borrowings may be made only from banks and each of these Underlying Funds may
not borrow in excess of one-third of the market value of its assets, less
liabilities other than such borrowing, or pledge more than 10% (15% for the
Seligman Growth Fund, Seligman Large-Cap Value Fund, and Seligman Small-Cap
Value Fund) of its total assets, taken at cost, to secure the borrowing.
Current asset value coverage of three times any amount borrowed by the
respective Underlying Fund is required at all times. Borrowed money creates an
opportunity for greater capital appreciation, but at the same time increases
exposure to capital risk. The net cost of any money borrowed would be an expense
that otherwise would not be incurred, and this expense will reduce the
Underlying Fund's net investment income in any given period. Any gain in the
value of securities purchased with money borrowed to an amount in excess of
amounts borrowed plus interest would cause the net asset value of the Underlying
Fund's shares to increase more than otherwise would be the case. Conversely, any
decline in the value of securities purchased to an amount below the amount
borrowed plus interest would cause the net asset value to decrease more than
would otherwise be the case.
Except as otherwise specifically noted above, the investment strategies of each
Underlying Fund are not fundamental and an Underlying Fund, with the approval of
its Board of Directors, may change such strategies without the vote of a
majority of the Underlying Fund's outstanding voting securities.
Fund Policies
Each Fund is subject to fundamental policies that place restrictions on certain
types of investments. Each Fund's policies cannot be changed except by vote of a
majority of its outstanding voting securities. Under these policies, each Fund
may not:
- - Make any investment inconsistent with the Fund's classification as a
diversified company under the Investment Company Act of 1940, as amended
and supplemented;
- - Invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry (excluding the US
Government and its agencies and instrumentalities);
- - Make investments for the purpose of exercising control or management;
- - Purchase or sell real estate, except that a Fund may invest in securities
directly or indirectly secured by real estate or interests therein or
issued by companies which invest in real estate or interests therein;
- - Make loans, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations,
commercial paper, pass-through instruments, certificates of deposit,
bankers acceptances, repurchase agreements or any similar instruments shall
not be deemed to be the making of a loan, and except further that the Fund
may lend its portfolio securities, provided that the lending of portfolio
securities may be made only in accordance with applicable law and the
guidelines set forth in the Prospectus and this Statement of Additional
Information, as they may be amended from time to time; and except that a
Fund may lend cash to any other mutual fund (or series thereof) in the
Seligman Group to the extent permitted by any order that may be obtained
from the SEC relating to borrowing and lending among mutual funds in the
Seligman Group;
- - Issue senior securities to the extent such issuance would violate
applicable law;
- - Borrow money, except that a Fund may (i) borrow from banks (as defined in
the Investment Company Act) in amounts up to 33 1/3% of its total assets
(including the amount borrowed), (ii) borrow up to an
12
<PAGE>
additional 5% of its total assets for temporary purposes (iii) obtain such
short-term credit as may be necessary for the clearance of purchases and
sales of portfolio securities, (iv) purchase securities on margin to the
extent permitted by applicable law and (v) borrow cash from any other
mutual fund (or series thereof) in the Seligman Group to the extent
permitted by any order that may be obtained from the SEC relating to
borrowing and lending among mutual funds in the Seligman Group. A Fund may
not pledge its assets other than to secure such borrowings or, to the
extent permitted by the Fund's investment policies as set forth in the
Prospectus and this Statement of Additional Information, as they may be
amended from time to time, in connection with hedging transactions, short
sales, when-issued and forward commitment transactions and similar
investment strategies;
- - Underwrite securities of other issuers except insofar as the Fund
technically may be deemed an underwriter under the Securities Act of 1933
in selling portfolio securities;
- - Purchase or sell commodities or contracts on commodities, except to the
extent a Fund may do so in accordance with applicable law and the
Prospectus and this Statement of Additional Information, as they may be
amended from time to time, and without registering as a commodity pool
operator under the Commodity Exchange Act.
For a description of the fundamental investment restrictions of the Underlying
Funds, please see "Fund Policies" in each Underlying Fund's Statement of
Additional Information, which are incorporated herein by reference and are
available free of charge by telephoning 1-800-221-2450.
Each Fund may not change its investment objective without shareholder approval.
Under the Investment Company Act of 1940 (1940 Act), a "vote of a majority of
the outstanding voting securities" of a Fund means the affirmative vote of the
lesser of (l) more than 50% of the outstanding shares of the Fund; or (2) 67% or
more of the shares present at a shareholders' meeting if more than 50% of the
outstanding shares of the Fund are represented at the meeting in person or by
proxy.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, each Fund may invest up to 100% of its assets either directly (or
through the Seligman Cash Management Fund or the Seligman U.S. Government
Securities Series) in cash or cash equivalents, including, but not limited to,
prime commercial paper, bank certificates of deposit, bankers' acceptances, or
repurchase agreements for such securities, and securities of the US Government
and its agencies and instrumentalities, as well as cash and cash equivalents
denominated in foreign currencies. Each Fund's investments in foreign cash
equivalents will be limited to those that, in the opinion of the Manager, equate
generally to the standards established for US cash equivalents. Investments in
bank obligations will be limited at the time of investment to the obligations of
the 100 largest domestic banks in terms of assets which are subject to
regulatory supervision by the US Government or state governments, and the
obligations of the 100 largest foreign banks in terms of assets with branches or
agencies in the United States.
Portfolio Turnover
Each Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities (i.e., the Underlying Funds and
individual US Government securities) for the year by the monthly average of the
value of the portfolio securities owned during the year. Securities whose
maturity or expiration dates at the time of acquisition were one year or less
are excluded from the calculation.
Each Fund's portfolio turnover rate is not expected to exceed 100% annually.
Because the Manager expects to reallocate each Fund's assets among the
Underlying Funds, US Government securities and short-term instruments on a
semi-annual basis (if a Fund's allocation with respect to a particular
13
<PAGE>
Underlying Fund is outside the allocation range for such Underlying Fund on the
semi-annual reallocation date), the portfolio turnover rates for the Funds may
be high in comparison to other mutual funds. In addition, the Funds indirectly
bear the expenses associated with portfolio turnover of the Underlying Funds, a
number of which have fairly high portfolio turnover rates (i.e., in excess of
100%). High portfolio turnover involves correspondingly greater expenses to an
Underlying Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestments in other
securities. Shareholders in the Funds may also bear expenses directly or
indirectly through sales of securities held by the Funds and the Underlying
Funds which result in realization of ordinary income or taxable gains (including
short-term capital gains which are generally taxed to shareholders at ordinary
income tax rates).
14
<PAGE>
MANAGEMENT OF THE SERIES
Board of Directors
The Board of Directors provides broad supervision over the affairs of the
Series.
Management Information
Directors and officers of the Series, together with information as to their
principal business occupations during the past five years, are shown below. Each
Director who is an "interested person", as defined in the 1940 Act, is indicated
by an asterisk. Unless otherwise indicated, their addresses are 100 Park Avenue,
New York, NY 10017.
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
William C. Morris* Director, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(61) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc., Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; and Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy company.
Formerly, Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
Brian T. Zino* Director, President and Director and President, J. & W. Seligman & Co.
(47) Member of the Executive Incorporated; President (with the exception of
Committee Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.) and Director or Trustee,
the Seligman Group of investment companies; Chairman,
Seligman Data Corp.; Member of the Board of Governors
of the Investment Company Institute; and Director,
ICI Mutual Insurance Company, Seligman Advisors,
Inc., and Seligman Services, Inc.
Richard R. Schmaltz* Director and Member of the Director and Managing Director, Director of
(59) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of investment
companies (except Seligman Cash Management Fund, Inc.);
Director, Seligman Henderson Co., and Trustee Emeritus
of Colby College. Formerly, Director, Investment
Research at Neuberger & Berman from May 1993 to
September 1996.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts
(70) University; Director or Trustee, the Seligman Group
Tufts University of investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; Governor of the Center for
Medford, MA 02155 Creative Leadership; Director; Raytheon Co.,
electronics; National Defense University; and the
Institute for Defense Analyses. Formerly, Director,
USLIFE Corporation, life insurance; Ambassador, U.S.
State Department for negotiations in Bosnia;
Distinguished Policy Analyst at Ohio State University
and Olin Distinguished Professor of National Security
Studies at the United States Military Academy. From
June 1987 to June 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United
States European Command.
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director
(64) or Trustee, the Seligman Group of investment
18 Highland Circle, companies; Trustee, the Committee for Economic
Bronxville, NY 10708 Development; and Chairman, The Rockefeller Foundation,
charitable foundation. Formerly, Trustee, The Markle
Foundation, philanthropic organization; and Director,
New York Telephone Company; and International Research
and Exchange Board, intellectual exchanges.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(66) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Suite Seligman Group of investment companies; Director,
805E Kimberly-Clark Corporation, consumer products; Bank
Oklahoma City, OK 73112 of Oklahoma Holding Company; Baptist Medical Center;
Oklahoma Chapter of the Nature Conservancy; Oklahoma
Medical Research Foundation; and National Boys and
Girls Clubs of America; and Member of the Business
Roundtable and National Petroleum Council. Formerly,
Chairman, Oklahoma City Public Schools Foundation;
and Director, Federal Reserve System's Kansas City
Reserve Bank and the Oklahoma City Chamber of
Commerce.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
<S> <C> <C>
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(70) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of investment companies; Director, Commonwealth
New York, NY 10004 Industries, Inc., manufacturers of aluminum sheet
products; the Foreign Policy Association; Municipal Art
Society of New York; the U.S. Council for International
Business; and New York-Presbyterian Hospital; Chairman,
New York-Presbyterian Healthcare Network, Inc.;
Vice-Chairman, the U.S.-New Zealand Council; and Member
of the American Law Institute and Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of
(57) investment companies; Trustee, The Geraldine R. Dodge
P.O. Box 449, Foundation, charitable foundation. Formerly,
Gladstone, NJ 07934 Director, the National Association of Independent
Schools (Washington, DC).
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(73) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris County, investment companies. Formerly, Director, Public
P.O. Box 1945, Morristown, NJ Service Enterprise Group, public utility.
07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment
(72) companies; Director, The Houston Exploration Company;
675 Third Avenue, The Brooklyn Museum, KeySpan Energy Corporation; and
Suite 3004 Public Broadcasting Service; and Trustee, the
New York, NY 10017 Committee for Economic Development. Formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies,
Inc. and Dow Jones & Company, Inc.; Director and
President, Bekaert Corporation; and Co-Chairman,
Mobil Corporation.
Robert L. Shafer Director Retired Vice President, Pfizer Inc.; Director or
(67) Trustee, the Seligman Group of investment companies.
96 Evergreen Avenue, Formerly, Director, USLIFE Corporation.
Rye, NY 10580
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
<S> <C> <C>
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc.;
(64) Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive, companies; Director, C-SPAN and CommScope, Inc.,
Dallas, TX 75230 manufacturer of coaxial cables. Formerly, Executive
Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.; and Director, Red Man Pipe and
Supply Company, piping and other materials.
Charles W. Kadlec Vice President and Portfolio Mr. Kadlec is a Managing Director of the Manager and
(53) Manager Chief Investment Strategist for Seligman Advisors. Mr.
Kadlec is the architect of several investment
strategies, chief among them, Seligman Time Horizon
Matrix, which is based on an investor's time horizon to
reaching goals, and Harvesting a Lifetime of Savings, a
strategy addressing the unique concerns facing
retirees.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(43) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies, and Seligman Services,
Inc.; Vice President and Treasurer, Seligman
International, Inc.; and Treasurer, Seligman
Henderson Co.
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(35) Regulation and Corporate Secretary, J. & W. Seligman
& Co. Incorporated; Secretary, the Seligman Group of
investment companies, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services, Inc.,
Seligman International, Inc. and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(42) and Seligman Data Corp.
</TABLE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Series for
which no market valuation is available, and to elect or appoint officers of the
Series to serve until the next meeting of the Board.
Directors and officers of the Series are also directors, trustees and officers
of some or all of the other investment companies in the Seligman Group
(including the Underlying Funds).
18
<PAGE>
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to Directors (1)(2)
------------------ ------------- ------------- -------------------
<S> <C> <C> <C
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Richard R. Schmaltz, Director N/A N/A N/A
John R. Galvin, Director $ N/A $72,000
Alice S. Ilchman, Director N/A 72,000
Frank A. McPherson, Director N/A 72,000
John E. Merow, Director N/A 72,000
Betsy S. Michel, Director N/A 72,000
James C. Pitney, Director N/A 72,000
James Q. Riordan, Director N/A 72,000
Robert L. Shafer, Director N/A 72,000
James N. Whitson, Director N/A 72,000(d)
<FN>
(1) For the year ending December 31, 2000. The per meeting fee for Directors is
$2,000, which is allocated among all Funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of twenty investment
companies.
</FN>
</TABLE>
The Series has a compensation arrangement under which outside directors may
elect to defer receiving their fees. The Series has adopted a Deferred
Compensation Plan under which a director who has elected deferral of his or her
fees may choose a rate of return equal to either (1) the interest rate on
short-term Treasury Bills, or (2) the rate of return on the shares of any of the
investment companies advised by the Manager, as designated by the director. The
cost of such fees and earnings is included in directors' fees and expenses, and
the accumulated balance thereof is included in other liabilities in each Fund's
financial statements.
The Series may, but is not obligated to, purchase shares of the Seligman Group
of investment companies to hedge its obligations in connection with the Deferred
Compensation Plan.
Sales Charges
Class A shares of each Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Series, the other investment companies in the Seligman Group, and the
Manager and its affiliates. Family members are defined to include lineal
descendants and lineal ancestors, siblings (and their spouses and children) and
any company or organization controlled by any of the foregoing. Such sales may
also be made to employee benefit plans and thrift plans for such persons and to
any investment advisory, custodial, trust or other fiduciary account managed or
advised by the Manager or any affiliate. The sales may be made for investment
purposes only, and shares may be resold only to the Series.
Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Control Persons
Each Fund's classes of shares are new, so such information is not available.
19
<PAGE>
Principal Holders
Each Fund's classes of shares are new, so such information is not available.
Management Ownership
Each Fund's classes of shares are new, so such information is not available.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages each Fund of the Series.
Seligman is a successor firm to an investment banking business founded in 1864
which has thereafter provided investment services to individuals, families,
institutions, and corporations. On December 29, 1988, a majority of the
outstanding voting securities of Seligman was purchased by Mr. William C. Morris
and a simultaneous recapitalization of Seligman occurred. See Appendix B for
further history of Seligman.
All of the officers of the Series listed above are officers or employees of
Seligman. Their affiliations with the Series and with Seligman are provided
under their principal business occupations.
Each Fund pays Seligman an asset allocation fee for its services, calculated
daily and payable monthly. The fee is equal to .10% per annum of the Fund's
average daily net asset value. In addition, each investor in a Fund will
indirectly bear the management fee charged to the Fund by the Underlying Funds
in which the Fund invests.
Each Fund pays all of its expenses other than those assumed by Seligman,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, including fees and expenses of qualifying their
respective shares under Federal and State securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Series not employed by or serving as a director of Seligman or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses. Certain expenses are allocated between each Fund in a manner
determined by the Board of Directors to be fair and equitable.
The Manager has contractually undertaken to reimburse each Fund's expenses or to
waive its fee to the extent that the sum of the "asset allocation fee" plus
"other expenses" (but not any 12b-1 fees) exceeds 0.50% per annum of the Fund's
average daily net assets. The undertaking will remain in effect at least until
December 31, 2002.
The Management Agreement also provides that Seligman will not be liable to the
Series 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
Management Agreement, except for willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations and duties under the
Management Agreement.
Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. The Code
of Ethics proscribes certain practices with regard to personal securities
transactions and personal dealings, provides a framework for the reporting and
monitoring of personal securities transactions by Seligman's Compliance Officer,
and sets forth a
20
<PAGE>
procedure of identifying, for disciplinary action, those individuals who violate
the Code of Ethics. The Code of Ethics prohibits each of the officers, directors
and employees (including all portfolio managers) of Seligman from purchasing or
selling any security that the officer, director, or employee knows or believes
(1) was recommended by Seligman for purchase or sale by any client, including
the Series, within the preceding two weeks, (2) has been reviewed by Seligman
for a possible purchase or sale within the preceding two weeks, (3) is being
purchased or sold by any client, (4) is being considered by a research analyst,
(5) is being acquired in a private placement, unless prior approval has been
obtained from Seligman's Compliance Officer, or (6) is being acquired during an
initial or secondary public offering. The Code of Ethics also imposes a strict
standard of confidentiality and requires portfolio managers to disclose any
interest they may have in the securities or issuers that they recommend for
purchase by any client.
The Code of Ethics also prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) that the portfolio manager or investment team
manages; and (2) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors, and employees are required, except under very limited
circumstances, to engage in personal securities transactions through Seligman's
order desk. The order desk maintains a list of securities that may not be
purchased due to a possible conflict with clients. All officers, directors and
employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
Principal Underwriter
Seligman Advisors, Inc. (Seligman Advisors), an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
each Fund of the Series and of the other mutual funds in the Seligman Group.
Seligman Advisors is an "affiliated person" (as defined in the 1940 Act) of
Seligman, which is itself an affiliated person of the Series. Those individuals
identified above under "Management Information" as directors or officers of the
Series and Seligman Advisors are affiliated persons of both entities.
Services Provided by the Investment Manager
Under the Management Agreement dated January 3, 2000, subject to the control of
the Board of Directors, Seligman manages the investment of the assets of each
Fund, including making purchases and sales of portfolio securities (i.e., the
Underlying Funds, US Government Securities and short-term instruments)
consistent with each Fund's investment objectives and policies, and administers
its business and other affairs. Seligman provides the Series with such office
space, administrative and other services and executive and other personnel as
are necessary for Series operations. Seligman pays all of the compensation of
directors of the Series who are employees or consultants of Seligman and of the
officers and employees of the Series. Seligman also provides senior management
for Seligman Data Corp., the Series' shareholder service agent.
Service Agreements
There are no other management-related service contracts under which services are
provided to the Series.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise the Series with respect to its investments.
21
<PAGE>
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of each Fund, as set forth below:
Class A shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 - $99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0 0 0
<FN>
(1) "Offering Price" is the amount that you actually pay for each Fund's shares; it
includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more, but you will be
subject to a 1% CDSC if you sell your shares within eighteen months.
</FN>
</TABLE>
Class C shares:
<TABLE>
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0 0 0
<FN>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it includes the
initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000 because if you invest
$1,000,000 or more, you will pay less in fees and charges if you buy Class A shares.
</FN>
</TABLE>
Seligman Services, Inc. (Seligman Services) an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares.
Rule 12b-1 Plan
Each Fund has adopted an Administration, Shareholder Services and Distribution
Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under the 12b-1 Plan, each Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of such Fund's Class A,
Class B, Class C and Class D shares, respectively. Payments by each Fund under
its 12b-1 Plan may include, but are not limited to: (1) compensation to
securities dealers and other organizations (Service Organizations) for providing
distribution assistance with respect to assets invested in the Fund; (2)
compensation to Service Organizations for providing administration, accounting
and other shareholder services with respect to the Fund's shareholders; and (3)
otherwise promoting the sale of shares of the Fund, including paying for the
preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying Seligman Advisors' costs incurred in
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connection with its marketing efforts with respect to shares of the Fund.
Seligman, in its sole discretion, may also make similar payments to Seligman
Advisors from its own resources, which may include the asset allocation fee that
Seligman receives from each Fund, respectively. Payments made by each Fund under
its 12b-1 Plan are intended to be used to encourage sales of each Fund, as well
as to discourage redemptions.
Fees paid by each Fund under its 12b-1 Plan with respect to any class of shares
of the Fund may not be used to pay expenses incurred solely in respect of any
other class of the Fund, or any other Seligman mutual fund. Expenses
attributable to more than one class of a Fund are allocated between the classes
of the Fund in accordance with a methodology approved by the Series' Board of
Directors. Expenses of distribution activities that benefit both a Fund and
other Seligman mutual funds will be allocated among the applicable funds based
on relative gross sales during the quarter in which such expenses are incurred,
in accordance with a methodology approved by the Board.
Class A
Under the 12b-1 Plan, each Fund, with respect to its Class A shares, is
authorized to pay quarterly to Seligman Advisors a service fee at an annual rate
of up to .25% of the average daily net asset value of such Fund's Class A
shares. These fees are used by Seligman Advisors exclusively to make payments to
Service Organizations which have entered into agreements with Seligman Advisors.
Such Service Organizations receive from Seligman Advisors a continuing fee of up
to .25% on an annual basis, payable quarterly, of the average daily net assets
of Class A shares attributable to the particular Service Organization for
providing personal service and/or maintenance of shareholder accounts. The fee
payable to Service Organizations from time to time shall, within such limits, be
determined by the Board of Directors. Each Fund is not obligated to pay Seligman
Advisors for any such costs it incurs in excess of the fee described above. No
expense incurred in one year by Seligman Advisors with respect to Class A shares
of a Fund may be paid from Class A 12b-1 fees received from the Fund in any
other year. If a Fund's 12b-1 Plan is terminated in respect of its Class A
shares, no amounts (other than amounts accrued but not yet paid) would be owed
by the Fund to Seligman Advisors with respect to its Class A shares. To avoid
any duplication of 12b-1 fees, the 12b-1 fees to be paid by each class of a Fund
will be reduced by an amount equal to the dollar amount of any 12b-1 fees paid
by Underlying Funds in respect of shares owned by the Fund.
Class B
Under the 12b-1 Plan, each Fund, with respect to its Class B shares, is
authorized to pay monthly a 12b-1 fee at an annual rate of up to 1% of the
average daily net asset value of such Fund's Class B shares. The fee is
comprised of (1) a distribution fee equal to .75% per annum, which is paid
directly to a third party, FEP Capital, L.P., to compensate it for having
funded, at the time of sale of Class B shares of each Fund (i) a 4% sales
commission to Service Organizations and (ii) a payment of up to .25% of sales to
Seligman Advisors to help defray its costs of distributing Class B shares; and
(2) a service fee of up to .25% per annum which is paid to Seligman Advisors.
The service fee is used by Seligman Advisors exclusively to make payments to
Service Organizations which have entered into agreements with Seligman Advisors.
Such Service Organizations receive from Seligman Advisors a continuing service
fee of up to .25% on an annual basis, payable quarterly, of the average daily
net assets of Class B shares attributable to the particular Service Organization
for providing personal service and/or maintenance of shareholder accounts. The
amounts expended by Seligman Advisors or FEP Capital, L.P. in any one year upon
the initial purchase of Class B shares of each Fund may exceed the 12b-1 fees
paid by the Fund in that year. Each Fund's 12b-1 Plan permits expenses incurred
in respect of Class B shares in one year to be paid from Class B 12b-1 fees
received from the Fund in any other year; however, in any year each Fund is not
obligated to pay any 12b-1 fees in excess of the fees described above. Seligman
Advisors and FEP Capital, L.P. are not reimbursed for expenses which exceed such
fees. If a Fund's 12b-1 Plan is terminated in respect of its Class B shares, no
amounts (other than amounts accrued but not yet paid) would be owed by the Fund
to Seligman Advisors or FEP Capital, L.P. with respect to its Class
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B shares. To avoid any duplication of 12b-1 fees, the 12b-1 fees to be paid by
each class of a Fund will be reduced by an amount equal to the dollar amount of
any 12b-1 fees paid by Underlying Funds in respect of shares owned by the Fund.
Class C
Under the 12b-1 Plan, the Fund, with respect to Class C shares, is authorized to
pay monthly to Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of
the average daily net asset value of the Class C shares. The fee is used by
Seligman Advisors as follows: During the first year following the sale of Class
C shares, a distribution fee of .75% of the average daily net assets
attributable to Class C shares is used, along with any CDSC proceeds during the
first eighteen months, to (1) reimburse Seligman Advisors for its payment at the
time of sale of Class C shares of a 1.25% sales commission to Service
Organizations, and (2) pay for other distribution expenses, including paying for
the preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and other marketing costs of Seligman Advisors. In addition, during
the first year following the sale of Class C shares, a service fee of up to .25%
of the average daily net assets attributable to such Class C shares is used to
reimburse Seligman Advisors for its prepayment to Service Organizations at the
time of sale of Class C shares of a service fee of .25% of the net asset value
of the Class C share sold (for shareholder services to be provided to Class C
shareholders over the course of the one year immediately following the sale).
The payment of service fees to Seligman Advisors is limited to amounts Seligman
Advisors actually paid to Service Organizations at the time of sale as service
fees. After the initial one-year period following a sale of Class C shares, the
entire 12b-1 fee attributable to such Class C shares is paid to Service
Organizations for providing continuing shareholder services and distribution
assistance in respect of the Fund. To avoid any duplication of 12b-1 fees, the
12b-1 fees to be paid by each class of a Fund will be reduced by an amount equal
to the dollar amount of any 12b-1 fees paid by Underlying Funds in respect of
shares owned by the Fund.
Class D
Under the 12b-1 Plan, each Fund, with respect to its Class D shares, is
authorized to pay monthly to Seligman Advisors a 12b-1 fee at an annual rate of
up to 1% of the average daily net asset value of such Fund's Class D shares. The
fee is used by Seligman Advisors as follows: During the first year following the
sale of Class D shares, a distribution fee of .75% of the average daily net
assets attributable to such Class D shares is used, along with any CDSC
proceeds, to (1) reimburse Seligman Advisors for its payment at the time of sale
of Class D shares of a .75% sales commission to Service Organizations, and (2)
pay for other distribution expenses, including paying for the preparation of
advertising and sales literature and the printing and distribution of such
promotional materials and prospectuses to prospective investors and other
marketing costs of Seligman Advisors. In addition, during the first year
following the sale of Class D shares, a service fee of up to .25% of the average
daily net assets attributable to such Class D shares is used to reimburse
Seligman Advisors for its prepayment to Service Organizations at the time of
sale of Class D shares of a service fee of .25% of the net asset value of the
Class D shares sold (for shareholder services to be provided to Class D
shareholders of the Fund over the course of the one year immediately following
the sale). The payment of service fees to Seligman Advisors is limited to
amounts Seligman Advisors actually paid to Service Organizations at the time of
sale as service fees. After the initial one-year period following a sale of
Class D shares, the entire 12b-1 fee attributable to such Class D shares is paid
to Service Organizations for providing continuing shareholder services and
distribution assistance in respect of a Fund. To avoid any duplication of 12b-1
fees, the 12b-1 fees to be paid by each class of a Fund will be reduced by an
amount equal to the dollar amount of any 12b-1 fee paid by the Underlying Fund
in respect of shares owned by the Fund.
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of each Fund may exceed the 12b-1 fees paid by the Fund in that year.
Each Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class D shares in one year to be paid from Class D
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12b-1 fees in any other year; however, in any year each Fund is not obligated to
pay any 12b-1 fees in excess of the fees described above.
If the 12b-1 Plan is terminated in respect of Class D shares of a Fund, no
amounts (other than amounts accrued but not yet paid) would be owed by the Fund
to Seligman Advisors with respect to its Class D shares.
The 12b-1 Plans were approved on November 18, 1999 by the Board of Directors of
the Series, including a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act) of the Series and who have no direct or
indirect financial interest in the operation of the 12b-1 Plans or in any
agreement related to the 12b-1 Plans (the "Qualified Directors") and by the sole
shareholder of each Fund on ______________, 1999. The 12b-1 Plans 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 Series, cast in person at a meeting called for the purpose of
voting on such approval. The 12b-1 Plans may not be amended to increase
materially the amounts payable to Service Organizations with respect to a Class
without the approval of a majority of the outstanding voting securities of the
Class. If the amount payable in respect of Class A shares under the 12b-1 Plans
is proposed to be increased materially, the Fund will either (1) permit holders
of Class B shares to vote as a separate class on the proposed increase or (2)
establish a new class of shares subject to the same payment under the 12b-1
Plans as existing Class A shares, in which case the Class B shares will
thereafter convert into the new class instead of into Class A shares. No
material amendment to the 12b-1 Plans may be made except by a majority of both
the Directors and Qualified Directors.
The 12b-1 Plans require that the Treasurer of the Series shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the 12b-1 Plans. Rule
12b-1 also requires that the selection and nomination of Directors who are not
"interested persons" of the Series be made by such disinterested Directors.
Seligman Services acts as the broker/dealer of record for shareholder accounts
of the Series that do not have a designated financial advisor and receives
compensation from each Fund pursuant to its 12b-1 Plan for providing personal
services and account maintenance to such accounts and other distribution
services.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Brokerage Transactions
To the extent that any Fund invests directly in US Government Securities or
short-term instruments, Seligman will seek the most favorable price and
execution in the purchase and sale of such securities. When two or more of the
investment companies in the Seligman Group or other investment advisory clients
of Seligman desire to buy or sell these same securities at the same time, the
securities purchased or sold are allocated by Seligman in a manner believed to
be equitable to each. There may be possible advantages or disadvantages of such
transactions with respect to price or the size of positions readily obtainable
or saleable.
Fixed-income securities are generally traded on the over-the-counter market on a
"net" basis without a stated commission, through dealers acting for their own
account and not as brokers. To the extent the Funds invest directly in US
Government Securities or short-term instruments, the Funds will engage in
transactions with these dealers or deal directly with the issuers. Prices paid
to dealers generally include a "spread," i.e., the difference between the prices
at which a dealer is willing to purchase or to sell the security at that time.
The Management Agreement recognizes that in the purchase and sale of such
securities, Seligman will seek the most favorable price and execution and,
consistent with that policy, may give consideration for research, statistical
and other services furnished by dealers to Seligman for its use in connection
with its services to the Funds as well as to other clients.
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In over-the-counter markets, the Series deals with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
Each Fund may buy securities from or sell securities to dealers acting as
principal, except dealers with which the Series' directors and/or officers are
affiliated.
Commissions
To the extent that the Funds invest their assets in Underlying Funds, the Funds
will not pay any commission for purchases and sales. Each Fund, however, will
bear a portion of the commissions paid by the Underlying Funds in which it
invests in connection with the purchase and sale of portfolio securities.
Brokerage Selection
Consistent with seeking the most favorable price and execution when buying or
selling US Government securities and short-term instruments, Seligman may give
consideration to the research, statistical, and other services furnished by
brokers or dealers to Seligman for its use, as well as the general attitude
toward and support of investment companies demonstrated by such brokers or
dealers. Such services include supplemental investment research, analysis, and
reports concerning issuers, industries, and securities deemed by Seligman to be
beneficial to a Fund. In addition, Seligman is authorized to place orders with
brokers who provide supplemental investment and market research and security and
economic analysis although the use of such brokers may result in a higher
brokerage charge to the Series than the use of brokers selected solely on the
basis of seeking the most favorable price and execution and although such
research and analysis may be useful to Seligman in connection with its services
to clients other than the Series.
Directed Brokerage
Each Fund's classes of shares are new, so no directed brokerage information is
available.
Regular Broker-Dealers
Each Fund's classes of shares are new, so this information is not available.
CAPITAL STOCK AND OTHER SECURITIES
Capital Stock
The Directors of the Series are authorized to issue, create and classify shares
of capital stock in separate funds without further action by shareholders.
Shares of capital stock of each Fund have a par value of $.001 and are divided
into four classes, designated as Class A common stock, Class B common stock,
Class C common stock and Class D common stock. Each share of a Fund's Class A,
Class B, Class C 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 Series has adopted a Plan (Multiclass Plan)
pursuant to Rule 18f-3 under the 1940 Act permitting the issuance and sale of
multiple classes of common stock. In accordance with the Articles of
Incorporation, the Board of Directors may authorize the creation of additional
classes of common stock with such characteristics as are permitted by the
Multiclass Plan and Rule 18f-3. The 1940 Act requires that where more than one
class exists, each class must be preferred over all other classes in respect of
assets specifically allocated to such class. Shares have non-cumulative voting
rights for the election of directors. Each outstanding share will be fully paid
and non-assessable, and freely transferable. There are no preferential
liquidation, conversion or prescriptive rights.
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Other Securities
The Series has no authorized securities other than the above-mentioned common
stock.
PURCHASE, REDEMPTION, AND PRICING OF SHARES
Purchase of Shares
CLASS A
Class A shares of each Fund of the Series may be purchased at a price equal to
the next determined net asset value per share, plus an initial sales charge.
Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:
VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of a Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge schedule set forth in the Prospectus.
THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of a Fund and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
and the total net asset value of shares of Seligman Cash Management Fund which
were acquired through an exchange of shares of another Seligman mutual fund on
which there was an initial sales charge at the time of purchase to determine
reduced sales charges in accordance with the schedule in the Prospectus. The
value of the shares owned, including the value of shares of Seligman Cash
Management Fund acquired in an exchange of shares of another Seligman mutual
fund on which there was an initial sales charge at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Advisors is notified by an investor or a dealer of the amount owned by the
investor at the time the purchase is made and is furnished sufficient
information to permit confirmation.
A LETTER OF INTENT allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of a Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales charge of the other Seligman mutual
funds already owned and the total net asset value of shares of Seligman Cash
Management Fund which were acquired through an exchange of shares of another
Seligman mutual fund on which there was an initial sales charge at the time of
purchase. Reduced sales charges also may apply to purchases made within a
13-month period starting up to 90 days before the date of execution of a letter
of intent.
PERSONS ENTITLED TO REDUCTIONS. Reductions in initial sales charges apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
director or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code of 1986,
as amended, organizations tax exempt under Section 501(c)(3) or (13) of the
Internal Revenue Code, and non-qualified employee benefit plans that satisfy
uniform criteria are considered "single persons" for this purpose.
The uniform criteria are as follows:
1. Employees must authorize the employer, if requested by the Series, to
receive in bulk and to distribute to each participant on a timely basis the
Series prospectus, reports, and other shareholder communications.
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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 Series 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
ELIGIBLE EMPLOYEE BENEFIT PLANS. The table of sales charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Series
may sell shares at net asset value to "eligible employee benefit plans" which
have at least (1) $500,000 invested in the Seligman Group of mutual funds or (2)
50 eligible employees to whom such plan is made available. Such sales must be
made in connection with a payroll deduction system of plan funding or other
systems acceptable to Seligman Data Corp., the Series' shareholder service
agent. "Eligible employee benefit plan" means any plan or arrangement, whether
or not tax qualified, which provides for the purchase of Series' shares. Sales
of shares to such plans must be made in connection with a payroll deduction
system of plan funding or other system acceptable to Seligman Data Corp. Section
403(b) plans sponsored by public educational institutions are not eligible for
net asset value purchases based on the aggregate investment made by the plan or
number of eligible employees.
Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman Data
Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
FURTHER TYPES OF REDUCTIONS. Class A shares may also be issued without an
initial sales charge in the following instances:
(1) to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in
Series' shares;
(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;
(4) to financial institution trust departments;
(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Series' shares;
(6) to accounts of financial institutions or broker/dealers that charge
account management fees, provided Seligman or one of its affiliates has
entered into an agreement with respect to such accounts;
(7) 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
Series;
(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors;
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(9) to certain "eligible employee benefit plans" as discussed above;
(10) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and
(11) in connection with sales pursuant to a 401(k) alliance program which has
an agreement with Seligman Advisors.
CDSC APPLICABLE TO CLASS A SHARES. Class A shares purchased without an initial
sales charge due to a purchase of $1,000,000 or more either alone or through a
Volume Discount, Right of Accumulation, or Letter of Intent are subject to a
CDSC of 1% on redemptions of such shares within eighteen months of purchase.
Employee benefit plans eligible for net asset value sales may be subject to a
CDSC of 1% for terminations at the plan level only, on redemptions of shares
purchased within eighteen months prior to plan termination. The 1% CDSC will be
waived on shares that were purchased through Morgan Stanley Dean Witter & Co. by
certain Chilean institutional investors (i.e., pension plans, insurance
companies, and mutual funds). Upon redemption of such shares within an
eighteen-month period, Morgan Stanley Dean Witter will reimburse Seligman
Advisors a pro rata portion of the fee it received from Seligman Advisors at the
time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
CLASS B
Class B shares of each Fund of the Series may be purchased at a price equal to
the next determined net asset value, without an initial sales charge. However,
Class B shares are subject to a CDSC if the shares are redeemed within six years
of purchase at rates set forth in the table below, charged as a percentage of
the current net asset value or the original purchase price, whichever is less.
Years Since Purchase CDSC
- -------------------- ----
Less than 1 year .......................................... 5%
1 year or more but less than 2 years ...................... 4%
2 years or more but less than 3 years ..................... 3%
3 years or more but less than 4 years ..................... 3%
4 years or more but less than 5 years ..................... 2%
5 years or more but less than 6 years ..................... 1%
6 years or more ........................................... 0%
Approximately eight years after purchase, Class B shares will convert
automatically to Class A shares. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Conversion occurs at the end of the month which precedes the eighth anniversary
of the purchase date. If Class B shares of a Fund are exchanged for Class B
shares of another Seligman mutual fund, the conversion period applicable to the
Class B shares acquired in the exchange will apply, and the holding period of
the shares exchanged will be tacked onto the holding period of the shares
acquired. Class B shareholders of each Fund exercising the exchange privilege
will continue to be subject to such Fund's CDSC schedule if such schedule is
higher or longer than the CDSC schedule relating to the new Class B shares. In
addition, Class B shares of each Fund acquired by exchange will be subject to
such Fund's CDSC schedule if such schedule is higher or longer than the CDSC
schedule relating to the Class B shares of the Seligman mutual fund from which
the exchange has been made.
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CLASS C
Class C shares may be purchased at a price equal to the next determined net
asset value, plus an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less. Unlike Class B shares, Class C shares do not automatically
convert to Class A shares after eight years.
CLASS D
Class D shares of each Fund of the Series may be purchased at a price equal to
the next determined net asset value, without an initial sales charge. However,
Class D shares are subject to a CDSC of 1% if the shares are redeemed within one
year of purchase, charged as a percentage of the current net asset value or the
original purchase price, whichever is less. Unlike Class B shares, Class D
shares do not automatically convert to Class A shares after eight years.
SYSTEMATIC WITHDRAWALS. Class B, Class C and Class D shareholders of each Fund
who reinvest both their dividends and capital gain distributions to purchase
additional shares of each Fund, respectively, may use the Fund's Systematic
Withdrawal Plan to withdraw up to 12%, 10% and 10%, respectively, of the value
of their accounts per year without the imposition of a CDSC. Account value is
determined as of the date the systematic withdrawals begin.
CDSC WAIVERS. The CDSC on Class B, Class C and Class D shares of each Fund of
the Series (and certain Class A shares, as discussed above) will be waived or
reduced in the following instances:
(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;
(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue Code when such redemptions are
necessary to make distributions to plan participants (such payments
include, but are not limited to, death, disability, retirement, or
separation of service), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age 70
1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
(3) in whole or in part, in connection with shares sold to current and retired
Directors of the Series;
(4) in whole or in part, in connection with shares sold to any state, county,
or city or any instrumentality, department, authority, or agency thereof,
which is prohibited by applicable investment laws from paying a sales load
or commission in connection with the purchase of any registered investment
management company;
(5) in whole or in part, in connection with systematic withdrawals; and
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class B, Class C or Class D
shares sold by a dealer, the CDSC is waived because the redemption qualifies for
a waiver as set forth above, the dealer shall remit to Seligman Advisors
promptly upon notice, an amount equal to the payment or a portion of the payment
made by Seligman Advisors at the time of sale of such shares.
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PAYMENT IN SECURITIES. In addition to cash, the Series may accept securities in
payment for Series' shares sold at the applicable public offering price (net
asset value and, if applicable, any sales charge), although the Series does not
presently intend to accept securities in payment for its shares. Generally, the
Series will only consider accepting securities (l) to increase its holdings in a
portfolio security, or (2) if Seligman determines that the offered securities
are a suitable investment for the Series and in a sufficient amount for
efficient management. Although no minimum has been established, it is expected
that the Series would not accept securities with a value of less than $100,000
per issue in payment for shares. The Series may reject in whole or in part
offers to pay for Series' shares with securities, may require partial payment in
cash for applicable sales charges, and may discontinue accepting securities as
payment for Series' shares at any time without notice. The Series will not
accept restricted securities in payment for shares. The Series will value
accepted securities in the manner provided for valuing portfolio securities of
the Series. Any securities accepted by the Series in payment for Series' shares
will have an active and substantial market and have a value which is readily
ascertainable.
Offering Price
When you buy or sell shares of each Fund, you do so at the Class's net asset
value (NAV) next calculated after Seligman Advisors accepts your request. Any
applicable sales charge will be added to the purchase price for Class A shares
and Class C shares.
NAV per share of each class of a Fund (including the Underlying Funds (Class A
shares only)) is determined as of the close of regular trading on the New York
Stock Exchange (normally, 4:00 p.m. Eastern time), on each day that the NYSE is
open for business. The NYSE is currently closed on New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. The Series will also determine
NAV for each class of a Fund and Underlying Fund on each day in which there is a
sufficient degree of trading in a Fund's and/or Underlying Fund's portfolio
securities that the NAV of Fund shares might be materially affected. NAV per
share for a class of a Fund and Underlying Fund is computed by dividing such
class's share of the value of the net assets of the Fund or Underlying Fund
(i.e., the value of its assets less liabilities) by the total number of
outstanding shares of such class. All expenses of a Fund and Underlying Fund,
including the asset allocation fee (the Funds) or management fee (the Underlying
Funds), are accrued daily and taken into account for the purpose of determining
their respective NAVs. The NAV of Class B, Class C and Class D shares of the
Funds will generally be lower than the NAV of Class A shares as a result of the
higher 12b-1 fees with respect to such shares.
The Underlying Funds owned by the Funds are valued at their respective net asset
values. Each Underlying Fund's 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. 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 each Underlying Fund will be subtracted from its net asset value.
Short-term obligations of the Funds and Underlying Funds with less than 60 days
remaining to maturity are generally valued at amortized cost. Short-term
obligations with more than 60 days remaining to maturity will be valued on an
amortized cost basis based on the value on such date unless the Board determines
that this amortized cost value does not represent fair market value.
31
<PAGE>
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of regular trading on the NYSE. The
values of such securities used in computing the net asset value of the shares of
each Fund and Underlying Fund are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of regular
trading on the NYSE. Occasionally, events affecting the value of such securities
and such exchange rates may occur between the times at which they are determined
and the close of regular trading on the NYSE, which will not be reflected in the
computation of net asset value. If during such periods events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in accordance with procedures approved by
the Board of Directors.
For purposes of determining the net asset value per share of each Underlying
Fund, all assets and liabilities initially expressed in foreign currencies will
be converted into US dollars at the mean between the bid and offer prices of
such currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
For more information on the valuation of the securities held in each Underlying
Fund's portfolio, including the valuation of individual US Government securities
and short-term instruments held by the Funds, please see "Pricing of Fund
Shares" in each Underlying Fund's Prospectus (Seligman U.S. Government
Securities Series' Prospectus and Seligman Cash Management Fund's Prospectus for
individual US Government securities and short-term instruments) which are
incorporated herein by reference and are available free of charge by telephoning
1-800-221-2450.
Redemption in Kind
The procedures for selling 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 seven days, if the orderly
liquidation of portfolio securities of the Funds and/or the Underlying Funds is
prevented by the closing of, or restricted trading on, the NYSE during periods
of emergency, or such other periods as ordered by the Securities and Exchange
Commission. Under these circumstances, redemption proceeds may be made in
securities. If payment is made in securities, a shareholder may incur brokerage
expenses in converting these securities to cash.
TAXATION OF THE SERIES
Each Fund intends to qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code. For each year so qualified, each Fund will not
be subject to federal income taxes on its net investment income and capital
gains, if any, realized during any taxable year, which it distributes to its
shareholders, provided that at least 90% of its net investment income and net
short-term capital gains are distributed to shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to shareholders, whether received
in cash or reinvested in additional shares. To the extent designated as derived
from a Fund's dividend income that would be eligible for the dividends received
deduction if the Fund were not a regulated investment company, they are
eligible, subject to certain restrictions, for the 70% dividends received
deduction for corporations.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in the form of additional shares issued by
the Series will be treated for federal income tax purposes as having received a
distribution in an amount equal to the fair market value on the date of
distribution of
32
<PAGE>
the shares received. Individual shareholders generally will be subject to
federal tax on distributions of net capital gains at a maximum rate of 20% if
designated as derived from the Series' capital gains from property held for more
than one year.
Any gain or loss realized upon a sale or redemption of shares in each Fund by a
shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Individual shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as long-term capital loss to the extent
that it offsets the long-term capital gain distribution. In addition, no loss
will be allowed on the sale or other disposition of shares of each Fund if,
within a period beginning 30 days before the date of such sale or disposition
and ending 30 days after such date, the holder acquires (including shares
acquired through dividend reinvestment) securities that are substantially
identical to the shares of such Fund.
In determining gain or loss on shares of each Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Series. Any sales charge not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
Each Fund will generally be subject to an excise tax of 4% on the amount of any
income or capital gains, above certain permitted levels, distributed to
shareholders on a basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned. However, based on its
distribution policy, each Fund reasonably expects to avoid this excise tax.
Furthermore, dividends declared in October, November or December, payable to
shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January of
the following year.
Shareholders are urged to consult their tax advisors concerning the effect of
federal income taxes in their individual circumstances.
Unless a shareholder includes a certified taxpayer identification number (social
security number for individuals) on the account application and certifies that
the shareholder is not subject to backup withholding, the Series is required to
withhold and remit to the US Treasury a portion of distributions and other
reportable payments to the shareholder. The rate of backup withholding is 31%.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Series 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 Series may charge a service fee of up to $50 that
may be deducted from the shareholder's account and offset against any of its
undistributed dividends and capital gain distributions. The Series also reserves
the right to close any account which does not have a certified taxpayer
identification number.
UNDERWRITERS
Distribution of Securities
The Series and Seligman Advisors are parties to a Distributing Agreement dated
January 3, 2000 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Series. Seligman
33
<PAGE>
Advisors accepts orders for the purchase of the Series' shares, which are
offered continuously. As general distributor of the Series' shares, Seligman
Advisors allows reallowances to all dealers on sales of Class A shares, as set
forth above under "Dealer Reallowances." Seligman Advisors retains the balance
of sales charges and any CDSCs paid by investors.
Compensation
Each Fund's classes of shares are new, so compensation information is not
available.
Other Payments
Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of $1,000,000 or more (NAV sales), calculated as
follows: 1.00% of NAV sales up to but not including $2 million; .80% of NAV
sales from $2 million up to but not including $3 million; .50% of NAV sales from
$3 million up to but not including $5 million; and .25% of NAV sales from $5
million and above. The calculation of the fee will be based on assets held by a
"single person," including an individual, members of a family unit comprising
husband, wife and minor children purchasing securities for their own account, or
a trustee or other fiduciary purchasing for a single fiduciary account or single
trust. Purchases made by a trustee or other fiduciary for a fiduciary account
may not be aggregated purchases made on behalf of any other fiduciary or
individual account.
Seligman Advisors shall also pay broker/dealers, from its own resources, a fee
on assets of certain investments in Class A shares of the Seligman mutual funds
participating in an "eligible employee benefit plan" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 50 eligible employees to whom such plan is made available. Class A
shares representing only an initial purchase of Seligman Cash Management Fund
are not eligible for the fee. Such shares will become eligible for the fee once
they are exchanged for shares of another Seligman mutual fund. The payment is
based on cumulative sales for each Plan during a single calendar year, or
portion thereof. The payment schedule, for each calendar year, is as follows:
1.00% of sales up to but not including $2 million; .80% of sales from $2 million
up to but not including $3 million; .50% of sales from $3 million up to but not
including $5 million; and .25% of sales from $5 million and above.
Seligman Advisors may from time to time assist dealers by, among other things,
providing sales literature to, and holding informational programs for the
benefit of, dealers' registered representatives. Seligman Advisors may from time
to time pay a bonus or other incentive to dealers that sell shares of the
Seligman mutual funds. Such bonus or other incentive may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and members of their
families to places within or outside the United States. The cost to Seligman
Advisors of such promotional activities and payments shall be consistent with
the rules of the National Association of Securities Dealers, Inc., as then in
effect.
CALCULATION OF PERFORMANCE DATA
Each Fund's Class A shares, Class B shares, Class C and Class D shares are new,
so no performance data are presented.
Each Fund may, from time to time, make reference in advertising or promotional
material to performance information, including mutual fund rankings, prepared by
Lipper Analytical Services, Inc., an independent reporting service which
monitors the performance of mutual funds. In calculating the total return of
each Fund's Class A, Class B, Class C and Class D shares, respectively, the
Lipper analysis assumes investment of all dividends and distributions paid but
does not take into account
34
<PAGE>
applicable sales charges. Each Fund may also refer in advertisements in other
promotional material to articles, comments, listings and columns in the
financial press pertaining to such Fund's performance. Examples of such
financial and other press publications include BARRON'S, BUSINESS WEEK,
CDA/WIESENBERGER MUTUAL FUNDS INVESTMENT REPORT, CHRISTIAN SCIENCE MONITOR,
FINANCIAL PLANNING, FINANCIAL TIMES, FINANCIAL WORLD, FORBES, FORTUNE,
INDIVIDUAL INVESTOR, INVESTMENT ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S,
LOS ANGELES TIMES, MONEY MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS,
SMART MONEY, THE NEW YORK TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS
AND WORLD REPORT, WORTH MAGAZINE, WASHINGTON POST AND YOUR MONEY.
Each Fund's advertising or promotional material may make reference to such
Fund's "Beta," "Standard Deviation," or "Alpha." Beta measures the volatility of
a Fund, as compared to that of the overall market. Standard deviation measures
how widely a Fund's performance has varied from its average performance, and is
an indicator of a Fund's potential for volatility. Alpha measures the difference
between the returns of a Fund and the returns of the market, adjusted for
volatility.
FINANCIAL STATEMENTS
Each Fund's classes of shares are new, effective so financial statements are not
available.
GENERAL INFORMATION
CUSTODIAN. Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105, serves as custodian of the Series. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for each Fund of the Series.
AUDITORS. [ ] independent auditors, have been selected as auditors of the
Series. Their address is [ ].
35
<PAGE>
APPENDIX A
MOODY'S INVESTORS SERVICE, INC. (MOODY'S)
DEBT SECURITIES
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than Aaa bonds because margins of protection may not
be as large or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be characteristically lacking or may be unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact may have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in high
degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
36
<PAGE>
COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to repay
punctually promissory senior debt obligations not having an original maturity in
excess of one year. Issuers rated "Prime-1" or "P-1" indicates the highest
quality repayment ability of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
ability for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an acceptable
capacity for repayment of short-term promissory obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
Issuers rated "Not Prime" do not fall within any of the Prime rating categories.
STANDARD & POOR'S RATING SERVICE (S&P)
DEBT SECURITIES
AAA: Debt issues rated AAA are highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt issues rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Debt issues rated A are regarded as upper medium grade. They have a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB: Debt issues rated BBB are regarded as having an adequate capacity to pay
interest and re-pay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and re-pay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC: Debt issues rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and pre-pay
principal in accordance with the terms of the bond. BB indicates the lowest
degree of speculation and CC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposure to adverse conditions.
C: The rating C is reserved for income bonds on which no interest is being paid.
D: Debt issues rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
37
<PAGE>
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.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
The ratings assigned by S&P may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within its major rating categories.
38
<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. Incorporated. In the years that followed, the Seligman Complex
played a major role in the geographical expansion and industrial development of
the United States.
THE SELIGMAN COMPLEX:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
39
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 50
mutual fund portfolios.
o Helps pioneer state-specific municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc., two closed-end funds that invest in high quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
o Launches innovative Seligman New Technologies Fund, Inc., a closed-end
"interval" fund seeking long-term capital appreciation by investing in
technology companies, including venture-capital investing.
Saivfb699
<PAGE>
PART C. OTHER INFORMATION
- ------- -----------------
Item 23. Exhibits.
- -------- ---------
The Exhibit listed below marked with an asterisk (*) was filed
previously. The Exhibit listed below marked with two asterisks (**) will be
filed by amendment.
(a) *Articles of Incorporation.
(b) By-laws.
(c) Specimen Stock Certificate.
(d) Management Agreement between Registrant and J. & W. Seligman & Co.
Incorporated.
(e) Distributing Agreement between Registrant and Seligman Advisors, Inc.
(e)(1) Sales Agreement between Seligman Advisors, Inc. and Dealers.
(f) Deferred Compensation Plan for Directors of Seligman Time Horizon/
Harvester Series, Inc.
(g) Form of Custody and Investment Accounting Agreement between
Registrant and Investors Fiduciary Trust Company
(h) Not applicable.
(i) **Opinion and Consent of Counsel.
(j) Not applicable.
(k) Not applicable.
(l) Form of Purchase Agreement (Investment Letter) between Registrant and
J. & W. Seligman & Co. Incorporated.
(m)(a)(1) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Time Horizon 30 Fund.
(m)(a)(2) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Time Horizon 20 Fund.
(m)(a)(3) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Time Horizon 10 Fund.
(m)(a)(4) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Harvester Fund.
(m)(b) Form of Administration, Shareholder Services and Distribution
Agreement between Seligman Advisors, Inc. and Dealers.
(n) Plan of Multiple Classes of Shares (Four Classes) pursuant to
Rule 18f-3 under the Investment Company Act of 1940, as
amended.
Other Exhibits: Powers of Attorney.
- --------------
Item 24. Persons Controlled by or Under Common Control with Registrant.-None.
- -------- --------------------------------------------------------------
Item 25. Indemnification. To be filed by amendment.
- -------- ----------------
C-1
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
- ------- -----------------
Item 26. Business and Other Connections of Investment Adviser. J. & W.
- -------- Seligman & Co. Incorporated, a Delaware corporation (the "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., Seligman
Value Fund Series, Inc. Tri-Continental Corporation and Seligman New
Technologies Fund, Inc.
The Manager has an investment advisory service division which
provides investment management or advice to private clients. The list
required by this Item 28 of officers and directors of the Manager,
together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Forms ADV, filed by the Manager
pursuant to the Investment Advisers Act of 1940 (SEC File Nos.
801-15798), which was filed on March 31, 1999.
Item 27. Principal Underwriters.
- -------- -----------------------
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter is currently distributing
securities of the Registrant and also acts as a principal
underwriter, depositor or investment adviser are as follows:
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman 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 Value Fund Series, Inc.
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 20:
Seligman Advisors, Inc. As
--------------------------
of July 31, 1999
----------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the Board and
Chief Executive Officer
BRIAN T. ZINO* Director President and Director
RONALD T. SCHROEDER* Director None
FRED E. BROWN* Director Director Emeritus
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
</TABLE>
C-2
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
Seligman Advisors, Inc. As
--------------------------
of July 31, 1999
----------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President and Director None
CHARLES W. KADLEC* Chief Investment Strategist None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
EDWARD F. LYNCH* Senior Vice President, National None
Sales Director
JAMES R. BESHER Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
GERALD I. CETRULO, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
MATTHEW A. DIGAN* Senior Vice President, None
Domestic Funds
JONATHAN G. EVANS Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
T. WAYNE KNOWLES Senior Vice President, Division None
104 Morninghills Court Sales Director
Cary, NC 27511
JOSEPH LAM Senior Vice President, Regional None
Seligman International Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
BRADLEY W. LARSON Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
MICHELLE L. MCCANN-RAPPA* Senior Vice President, None
Retirement Plans
SCOTT H. NOVAK* Senior Vice President, Insurance None
RICHARD M. POTOCKI Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
BRUCE M. TUCKEY Senior Vice President, Sales None
41644 Chattman Drive
Novi, MI 48375
ANDREW S. VEASEY Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
CHARLES L. VON BREITENBACH, II* Senior Vice President, None
Managed Money
J. BRERETON YOUNG* Senior Vice President, Director None
of Sales Development
</TABLE>
C-3
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
Seligman Advisors, Inc. As
--------------------------
of July 31, 1999
----------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
JEFFREY S. DEAN* Vice President, Business Analysis None
MASON S. FLINN Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
MARSHA E. JACOBY* Vice President, Offshore Business None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
JO ELLEN KEMP Vice President, Regional Retirement None
17011 E. Monterey Drive Plan Manager
Fountain Hills, AZ 85268
RONALD W. POND* Vice President, Portfolio Advisor None
JEFFERY C. PLEET* Vice President, Regional Retirement None
Plans Manager
TRACY A. SALOMON* Vice President, Retirement Marketing None
HELEN SIMON* Vice President, Sales Administration None
GARY A. TERPENING* Vice President, Director of Business None
Development
CHARLES E. WENZEL Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
JEFF BOTWINICK Regional Vice President None
11508 Foster Road
Overland Park, KS 66210
RICHARD B. CALLAGHAN Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
KEVIN CASEY Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
BRADFORD C. DAVIS Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
KENNETH DOUGHERTY Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
KELLI A. WIRTH DUMSER Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
EDWARD S. FINOCCHIARO Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
MICHAEL C. FORGEA Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
</TABLE>
C-4
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
Seligman Advisors, Inc. As
--------------------------
of July 31, 1999
----------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
CATHY DES JARDINS Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
MICHAEL K. LEWALLEN Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
JUDITH L. LYON Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
LESLIE A. MUDD Regional Vice President None
5243 East Calle Redonda
Phoenix, AZ 85018
TIM O'CONNELL Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
GEORGE M. PALMER, JR. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
THOMAS PARNELL Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
CRAIG PRICHARD Regional Vice President None
9207 Cross Oaks Court
Fairfax Station, VA 22039
NICHOLAS ROBERTS Regional Vice President None
200 Broad Street, Apt. 2225
Stamford, CT 06901
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
JAMES TAYLOR Regional Vice President None
290 Bellington Lane
Creve Couer, MO 63141
STEVE WILSON Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
GAIL S. CUSHING* Assistant Vice President, National None
Accounts Manager
SANDRA G. FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
ALBERT A. PISANO* Assistant Vice President and None
Compliance Officer
</TABLE>
C-4
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
Seligman Advisors, Inc. As
--------------------------
of July 31, 1999
----------------
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
JOYCE PERESS* Assistant Secretary Assistant Secretary
<FN>
* The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, NY 10017.
</FN>
</TABLE>
(c) Not applicable.
Item 28. Location of Accounts and Records. The accounts, books and documents
required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are kept in the
possession of J.& W. Seligman & Co. Incorporated at its offices at
100 Park Avenue, New York, NY 10017 or at the following locations:
(1) Investors Fiduciary Trust Company (IFTC), 801 Pennsylvania,
Kansas City, Missouri 64105 is custodian of the Registrant's cash and
securities. IFTC is also agent and performs certain accounting and
record-keeping functions relating to portfolio transactions and
calculates the net asset value of the Registrant.
(2) Seligman Data Corp., 100 Park Avenue, New York, NY 10017, as
shareholder servicing agent, maintains shareholder records for the
Registrant.
Item 29. Management Services. Seligman Data Corp. (SDC), the Registrant's
shareholder service agent, has an agreement with First Data Investors
Services Group (FDISG) pursuant to which FDISG provides a data
processing system for certain shareholder accounting and
record-keeping functions performed by SDC.
Item 30. Undertakings. Not applicable.
C-5
<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
Pre-Effective Amendment No. 1 to its Registration Statement on Form N-1A (File
Nos. 811-9545 and 333-85111) to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
18th day of November, 1999.
SELIGMAN TIME HORIZON/HARVESTER
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 Pre-Effective Amendment No. 1 to the
Registration Statement has been signed below by the following persons in the
capacities indicated on November 18, 1999.
Signature Title
--------- -----
/s/ William C. Morris Chairman of the Board
- ------------------------- (Principal executive officer)
William C. Morris and Director
/s/ Brian T. Zino Director and President
- -------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- -------------------------
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /s/ Brian T. Zino
James C. Pitney, Director ) -----------------------------------
James Q. Riordan, Director ) *Brian T. Zino, Attorney-in-Fact
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
REGISTRATION STATEMENT ON FORM N-1A
EXHIBIT INDEX
The Exhibit listed below marked with an asterisk (*) was filed previously.
The Exhibit listed below marked with two asterisks (**) will be filed by
amendment.
(a) *Articles of Incorporation.
(b) By-laws.
(c) Specimen Stock Certificate.
(d) Management Agreement between Registrant and J. & W. Seligman & Co.
Incorporated.
(e) Distributing Agreement between Registrant and Seligman Advisors,
Inc.
(e)(1) Sales Agreement between Seligman Advisors, Inc. and Dealers.
(f) Deferred Compensation Plan for Directors of Seligman Time Horizon/
Harvester Series, Inc.
(g) Form of Custody and Investment Accounting Agreement between
Registrant and Investors Fiduciary Trust Company.
(h) Not applicable.
(i) **Opinion and Consent of Counsel.
(j) Not applicable.
(k) Not applicable.
(l) Form of Purchase Agreement (Investment Letter) between Registrant
and J. & W. Seligman & Co. Incorporated.
(m)(a)(1) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Time Horizon 30 Fund.
(m)(a)(2) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Time Horizon 20 Fund.
(m)(a)(3) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Time Horizon 10 Fund.
(m)(a)(4) Form of Administration, Shareholder Services and Distribution Plan,
re Seligman Harvester Fund.
(m)(b) Form of Administration, Shareholder Services and Distribution
Agreement between Seligman Advisors, Inc. and Dealers.
<PAGE>
(n) Plan of Multiple Classes of Shares (Four Classes) pursuant to Rule
18f-3 under the Investment Company Act of 1940, as amended.
Other Exhibits: Powers of Attorney.
- ---------------
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
By-Laws
ARTICLE I
Stockholders
Section 1. Place of Meeting. All meetings of the Stockholders shall be
held at the principal office of the Corporation in the City of Baltimore or at
such other place within the United States as may from time to time be designated
by the Directors and stated in the notice of such meeting.
Section 2. Annual Meetings. The Corporation is not required to hold an
annual meeting in any year in which the election of Directors is not required by
the Investment Company Act of 1940 (the "1940 Act"). If the Corporation is
required to hold a meeting of stockholders to elect Directors, such meeting
shall be designated an annual meeting and shall be held on such date no later
than 120 days after the occurrence of the event requiring the meeting, or such
shorter time as may be required by the 1940 Act, and at such hour as may be
designated by the Board of Directors and stated in the notice of such meeting.
Any business of the Corporation may be considered at an annual meeting without
being specified in the notice, except as otherwise required by law or these
By-laws.
Section 3. Special Meetings. Special meetings of the Stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President, a majority of the Directors or a majority of the Executive Committee,
and shall be called by the Secretary upon receipt of the request in writing
signed by Stockholders holding not less than twenty-five percent (25%) of the
Shares issued and outstanding and entitled to vote thereat. Such request shall
state the purpose or purposes of the proposed meeting. The Secretary shall
inform such Stockholders of the reasonably estimated costs of preparing and
mailing such notice of meeting and upon payment to the Corporation of such
costs, the Secretary shall give notice stating the purpose of purposes of the
meeting as required in this Article and By-Laws to all Stockholders entitled to
notice of such meeting. No special meeting need be called upon the request of
the holders of Shares entitled to cast less than a majority of all votes
entitled to be cast at such meeting to consider any matter which is
substantially the same as a matter
<PAGE>
voted upon at any special meeting of Stockholders held during the preceding
twelve months.
Section 4. Notice of Meetings. Not less than ten days' or more than
ninety days' written or printed notice of every meeting of Stockholders, stating
the time and place thereof (and the purpose of any special meeting), shall be
given to each Shareholder entitled to vote thereat by leaving the same with him
or at his residence or usual place of business or by mailing it, postage
prepaid, and addressed to him at his address as it appears upon the books of the
Corporation. If mailed, notice shall be deemed to be given when deposited in the
United States mail addressed to the Shareholder as aforesaid.
No notice of the time, place or purpose of any meeting of Stockholders
need be given to any Shareholder who attends in person or by proxy or to any
Shareholder who executes a written waiver of such notice, either before or after
the meeting is held, and which notice is filed with the records of the meeting.
Section 5. Record Dates. The Directors may fix, in advance, a date not
more than ninety (90) or less than ten (10) days preceding the date of any
meeting of Stockholders as a record date for the determination of the
Stockholders entitled to notice of and to vote at such meeting; and only
Stockholders of record on such date shall be entitled to notice of and to vote
at such meeting.
Section 6. Quorum and Adjournment of Meetings. The presence in person
or by proxy of the holders of record of one-third of the Shares of all Series
and Classes of the Corporation issued and outstanding and entitled to vote
thereat shall constitute a quorum at all meetings of the Stockholders except as
otherwise provided in the Articles of Incorporation or the Maryland General
Corporation Law, 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 Stockholders, 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 to a date not more than 120 days after the original
record date. At such adjourned meeting at which the
-2-
<PAGE>
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.
Section 7. Voting and Inspectors. Unless otherwise provided in the
Articles of Incorporation of the Corporation, at all meetings, Stockholders of
record entitled to vote thereat shall have one vote for each Share standing in
his name on the books of the Corporation (and such Stockholders of record
holding fractional shares, if any, shall have proportionate voting rights) on
the date of the determination of Stockholders entitled to vote at such meeting
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
1940 Act 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. Such vote may be made either in person or by proxy
appointed by instrument in writing subscribed by such Shareholder or his duly
authorized attorney. No proxy shall be valid eleven months after its date.
Pursuant to a resolution of a majority of the Directors, proxies may be
solicited in the name of one or more Directors or officers of the Corporation.
All elections shall be had and all questions decided by a majority of
the votes cast at a duly constituted meeting, except as otherwise provided by
statute or by the Articles of Incorporation or by these By-Laws.
At any election of Directors, the Chairman of the meeting may, and upon
the request of the holders of ten percent (10%) of the Shares entitled to vote
at such election shall, appoint two inspectors of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of inspectors
at such election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result of the
vote taken. No candidate for the office of Director shall be appointed such
inspector.
Section 8. Conduct of Meetings. Every meeting of the Stockholders shall
be presided over by the Chairman, or if he is not present, by the President, or
if he is not present, by a Vice-President, or if none of them is present, by a
Chairman to be elected at the meeting. The Secretary of the Corporation, if
present, shall act as a Secretary of such meeting, or if he is not present, an
Assistant Secretary shall so act; if neither the Secretary nor any Assistant
Secretary is present, then the meeting shall elect its Secretary.
-3-
<PAGE>
Section 9. Concerning Validity of Proxies, Ballots, etc. At every
meeting of the Stockholders, all proxies shall be required and taken in charge
of and all ballots shall be required and canvassed by the Secretary of the
meeting, who shall decide all questions regarding the qualification of voters,
the validity of the proxies and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed by the Chairman of the meeting,
in which event such inspectors of election shall decide all such questions.
Section 10. Action Without Meetings. Except as otherwise provided by
law, the provisions of these By-Laws relating to notices and meetings to the
contrary notwithstanding, any action required or permitted to be taken at any
meeting of Stockholders may be taken without a meeting if all of the
Stockholders entitled to vote upon the action consent to the action in writing
and such consents are filed with the records of the Corporation. Such consent
shall be treated for all purposes as a vote taken at a meeting of Stockholders.
ARTICLE II
Directors
Section 1. Function of Directors. The business and affairs of the
Corporation shall be conducted and managed by the Board of Directors. All powers
of the Corporation shall be exercised by the Board of Directors except as
conferred on or reserved to the stockholders by statute.
Section 2. Number and Tenure of Office. The Board of Directors shall
consist of not less than three and not more than twenty Directors, as may be
determined from time to time by vote of a majority of the Directors then in
office, provided that (a) if there is no stock of the Corporation outstanding
the number of Directors may be less than three but not less than one and (b) if
there is stock of the Corporation outstanding and so long as there are fewer
than three Stockholders of record, the number of Directors may be less than
three but not less than the number of Stockholders of record. Subject to the
foregoing, until changed by the Board of Directors, the number of Directors
shall initially be two. Directors need not be Stockholders. The tenure of office
of each Director shall be set by resolution of the Directors, except that any
Director may resign his office or be removed from office for cause pursuant to
the provisions of the Articles of Incorporation.
Section 3. Vacancies. In the case of any vacancy or vacancies in the
office of Director through death, resignation or other cause, other than an
increase in the number of Directors, a majority of the remaining Directors,
although a majority is
-4-
<PAGE>
less than a quorum, by an affirmative vote, or the sole remaining Director, may
elect a successor or successors, as the case may be, to hold office if,
immediately after filling such vacancy, at least two-thirds of the Directors
then holding office shall have been elected to such office by the holders of the
outstanding voting securities of the Corporation.
If at any time the number of Directors elected by holders of
outstanding voting securities of the Corporation is less than a majority of the
members of the Board of Directors, the Board of Directors or proper Officer of
the Corporation shall forthwith cause to be held as promptly as possible and in
any event within 60 days a meeting of such holders for purpose of electing
Directors to fill any existing vacancies in the Board of Directors, unless the
Securities and Exchange Commission shall be order extend such period.
Section 4. Increase or Decrease in Number of Directors. The Directors,
by the vote of a majority of all the Directors then in office, may increase the
number of Directors and may elect Directors to fill the vacancies created by any
such increase in the number of Directors if, immediately after filling such
vacancy, at least two-thirds of the Directors then holding office shall have
been elected to such office by the holders of the outstanding voting securities
of the Corporation. The Directors, by the vote of a majority of all the
Directors then in office, may likewise decrease the number of Directors to a
number not less than two.
Section 5. Place of Meeting. The Directors may hold their meetings,
have one or more offices, and keep the books of the Corporation, outside the
State of Maryland, at any office or offices of the Corporation or at any other
place as they may from time to time by resolution determine, or in the case of
meetings, as they may from time to time by resolution determine or as shall be
specified or fixed in the respective notices or waivers of notice thereof.
Section 6. Regular Meetings. Regular meetings of the Directors shall be
held at such time and on such notice as the Directors may from time to time
determine.
Section 7. Special Meetings. Special meetings of the Board of Directors
may be held from time to time upon call of the Chairman of the Board, the
President, the Secretary or two or more of the Directors, by oral or telegraphic
or written notice duly served on or sent or mailed to each Director not less
than one day before such meeting.
Section 8. Notices. Unless required by statute or otherwise determined
by resolution of the Board of Directors in accordance with these By-laws,
notices to Directors need not be in writing and need not state the business to
be transacted at or
-5-
<PAGE>
the purpose of any meeting, and no notice need be given to any Director who is
present in person or to any Director who, before or after the meeting, signs a
waiver of notice which is filed with the records of the meeting. Waivers of
notice need not state the purpose or purposes of such meeting.
Section 9. Quorum. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of Directors
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum shall have been obtained.
The act of the majority of the Directors present at any meeting at which there
is a quorum shall be the act of the Directors, except as otherwise specifically
provided by statute or by the Articles of Incorporation or by these By-Laws.
Section 10. Executive Committee. The Board of Directors may appoint
from the Directors an Executive Committee to consist of such number of Directors
(one or more) as the Board may from time to time determine. The Chairman of the
Committee shall be elected by the Board of Directors. The Board of Directors
shall have power at any time to change the members of such Committee and may
fill vacancies in the Committee by election from the Directors. When the Board
of Directors is not in session, to the extent permitted by law, the Executive
Committee shall have and may exercise any or all of the powers of the Board of
Directors in the management and conduct of the business and affairs of the
Corporation. The Executive Committee may fix its own rules of procedure and may
meet when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary to
constitute a quorum. During the absence of a member of the Executive Committee,
the remaining members may appoint a member of the Board of Directors to act in
his place.
Section 11. Other Committees. The Board of Directors may appoint from
the Directors other committees which shall in each case consist of such number
of Directors (not less than two) and, to the extent permitted by law, shall have
and may exercise such powers as the Board may determine in the resolution
appointing them. A majority of all the members of any such committee may
determine its actions and fix the time and place of its meetings, unless the
Board of Directors shall otherwise provide. The Board of Directors shall have
power at any time to change the members or powers of any such committee, to fill
vacancies and to discharge any such committee.
Section 12. Telephone Meetings. Directors or a committee of the
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each
-6-
<PAGE>
other at the same time. Participation in a meeting by these means constitutes
presence in person at the meeting.
Section 13. Action Without a Meeting. Any action required or permitted
to be taken at any meeting of the Directors or any committee thereof may be
taken without a meeting, if a written consent to such action is signed by all
the Directors then in office or all members of such committee, as the case may
be, and such written consent is filed with the minutes of the proceedings of the
Directors or committee.
Section 14. Compensation. No director shall receive any stated salary
or fees from the Corporation for his services as such if such Director is,
otherwise than by reason of being such Director, an interested person (as such
term is defined under the 1940 Act) of the Corporation or of its investment
adviser or principal underwriter. Except as provided in the preceding sentence,
Directors shall be entitled to receive such compensation from the Corporation
for their services, and may be reimbursed for transportation and other expenses,
as may from time to time be voted by the Directors.
ARTICLE III
Offices
Section 1. Executive Officers. The executive officers of the
Corporation shall be chosen by the Directors. These shall include a Chairman
(who shall be a Director), a President, one or more Vice-Presidents (the number
thereof to be determined by the Directors), a Secretary and a Treasurer. The
Directors may also in their discretion appoint Assistant Secretaries, Assistant
Treasurers and other officers, agents and employees, who shall have such
authority and perform such duties as the Directors may determine. The Directors
may fill any vacancy which may occur in any office. Any two offices may be held
by the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law or
these By-Laws to be executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all officers shall be
one year and until their respective successors are chosen and qualified. Any
officer may be removed from office at any time with or without cause by the vote
of a majority of all the Directors then in office. Any officer may resign his
office at any time by delivering a written notice to the Corporation and, unless
otherwise specified therein, such resignation shall take effect immediately upon
delivery.
-7-
<PAGE>
Section 3. Powers and Duties. The officers of the Corporation shall
have such powers and duties as generally pertain to their respective offices, as
well as such powers and duties as may from time to time be conferred by the
Directors.
Section 4. Surety Bonds. The Board of Directors may require any officer
or agent of the Corporation to execute a bond (including, without limitation,
any bond required by the 1940 Act and the rules and regulations of the
Securities and Exchange Commission) to the Corporation in such sum and with such
surety or sureties as the Board of Directors may determine, conditioned upon the
faithful performance of his duties to the Corporation, including responsibility
for negligence and for the accounting of any of the Corporation's property,
funds or securities that may come into his hands.
ARTICLE IV
Share Interests
Section 1. Certificates for Shares. Stockholders are not entitled to
receive certificates evidencing their Share ownership, unless the Directors
shall by resolution otherwise determine.
Section 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the register of the Corporation by the holder thereof in person
or by his agent duly authorized in writing, upon delivery to the Directors or
the Transfer Agent of a duly executed instrument of transfer, together with such
evidence of the genuineness of each such execution and authorization of such
other matters as the Corporation or its agents may reasonably require. Except as
otherwise provided by law, the Corporation shall be entitled to recognize the
exclusive rights of a person in whose name any share or shares stand on the
record of Stockholders as the owner of such share or shares for all purposes,
including, without limitation, the rights to receive dividends or other
distributions, and to vote as such owner, and the Corporation shall not be bound
to recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person.
Section 3. Register of Shares. A register of the Corporation,
containing the names and addresses of the Stockholders and the number of Shares
held by them respectively and a record of all transfers thereof, shall be kept
at the principal offices of the Corporation or, if the Corporation employs a
Transfer Agent, at the offices of the Transfer Agent of the Corporation.
Section 4. Transfer Agents and Registrars. The Board of Directors may
from time to time appoint or remove transfer agents and/or registrars of
transfers of
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<PAGE>
shares of stock of the Corporation, and it may appoint the same person as both
transfer agent and registrar
ARTICLE V
Corporate Seal; Location of
Offices; Books; Net Asset Value
Section 1. Corporate Seal. The Board of Directors may provide for a
suitable corporate seal, in such form and bearing such inscriptions as it may
determine. Any officer or Director shall have the authority to affix the
corporate seal. If the Corporation is required to place its corporate seal to a
document, subject to applicable law, it shall be sufficient to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
Section 2. Location of Offices. The Corporation shall have a principal
office in the State of Maryland. The Corporation may, in addition, establish and
maintain such other offices as the Board of Directors or any officer may, from
time to time, determine.
Section 3. Books and Records. The books and records of the Corporation
shall be kept at the places, within or outside the State of Maryland, as the
Board of Directors or any officer may determine; provided, however, that the
original or a certified copy of the By-laws, including any amendments to them,
shall be kept at the Corporation's principal office.
Section 4. Net Asset Value. Subject to any requirements of the
Corporation's Articles of Incorporation, the value of the Corporation's net
assets shall be determined at such times and by such method as shall be
established from time to time by the Board of Directors.
ARTICLE VI
Fiscal Year and Accountant
Section 1. Fiscal Year. The fiscal year of the Corporation, unless
otherwise fixed by resolution of the Board of Directors, shall begin on the
first day of January and shall end on the last day of December in each year.
Section 2. Accountant. The Corporation shall employ an independent
public accountant or a firm of independent public accountants as its Accountant
to
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<PAGE>
examine the accounts of the Corporation and to sign and certify financial
statements filed by the Corporation. The employment of the Accountant shall be
conditioned upon the right of the Corporation to terminate the employment
forthwith without any penalty by vote of a majority of the outstanding voting
securities at any stockholders' meeting called for that purpose.
ARTICLE VII
Indemnification and Insurance
Section 1. Indemnification and Advancement of Expenses. The Corporation
shall indemnify any person who is or was a Director, officer, employee or agent
of the Corporation and may advance the reasonable expenses incurred by a
Director, officer, employee or agent who is a party to a proceeding to the
maximum extent permitted by applicable law. No amendment of this Article VII
shall impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. The rights of indemnification and advancement
of expenses provided in this Article VII shall neither be exclusive of, nor be
deemed in limitation of, any right to which any person may otherwise be entitled
or permitted by contract or otherwise.
Section 2. Limitations. Notwithstanding anything in Article VII,
Section 1 to the contrary, no Director, officer, employee or agent of the
Corporation shall be indemnified against any liability to the Corporation or its
stockholders to which he is subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. In the case of criminal proceedings, no Director, officer, employee
or agent shall be indemnified for any penalty or expense incurred by the
Director, officer, employee or agent in connection with such proceedings in
circumstances where the Director, officer or employee had reasonable cause to
believe that the act or omission was unlawful.
Section 3. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation or who, while a Director, officer, employee, or agent
of the Corporation, is or was serving at the request of the Corporation as a
Director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against and incurred by such person in any such
capacity or arising out of such person's position, whether or not the
Corporation would have power to indemnify such person against such liability.
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<PAGE>
ARTICLE VIII
Amendment of By-Laws
The Board of Directors is authorized and empowered to make, alter or
repeal the By-Laws of the Corporation, in any manner not inconsistent with the
laws of the State of Maryland or the Articles of Incorporation of the
Corporation.
Exhibit (c)
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CERTIFICATE NUMBER DATE SHARES ACCOUNT NUMBER
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS IS TO CERTIFY THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.001 EACH OF
THE CAPITAL STOCK OF SELIGMAN SERIES, INC. transferable on the books
of said Corporation in person or by duly authorized attorney upon surrender of
this Certificate properly endorsed. This Certificate is not valid unless
countersigned by the Transfer Clerk or Transfer Agent.
Witness the signature of the duly authorized officers of said
Corporation.
CORPORATE Countersigned:
SEAL SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
By Chairman
Transfer Clerk Secretary
<PAGE>
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACT
OF THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OR REGULATIONS:
TEN COM - as tenants in common UNIF GIFT/TRANSF MIN ACT - .....Custodian......
(Cust) (Minor)
TEN ENT - as tenants by the entireties
under Uniform Gifts/Transfers to Minors
JT TEN - as joint tenants with right
of survivorship and not as Act ..........................
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
The Certificate and the shares represented hereby are issued and shall be
held subject to all of the provisions of the Certificate of Transportation and
By-Laws of said Corporation, and all amendments from time to time made thereto,
to all of which the holder by acceptance hereof assents. Any shareholder can
require the Corporation to redeem all or any part of its Capital Stock owned by
them upon written request and upon surrender to the Corporation or its
designated agent of the certificates for his shares in proper form for
redemption.
PLEASE INSERT TAXPAYER IDENTIFICATION For value received, I/We hereby sell,
STAMP OF ASSIGNEE assign and transfer unto
- ---------------------------------------
/ /
/ /
- -------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(____________) shares
- ------------------------------------------------------------------------
of the Capital Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- --------------------------------------------------------------------- attorney.
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the in the premises.
Dated Signature(s)
--------------------------- -----------------------------
SIGNATURE GUARANTEED BY (THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.)
DELIVERY FOR TRANSFER OR REDEMPTION SHOULD BE
MADE TO SELIGMAN DATA CORP., 100 PARK AVENUE,
2ND FLOOR, NEW YORK, N.Y. 10017
SIGNATURE GUARANTEES MUST BE PROVIDED BY AN ELIGIBLE INSTITUTION AS DEFINED
IN RULE 17AD-15 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, SUBJECT TO
THE STANDARDS AND PROCEDURES ADOPTED BY THE ISSUER AS DESCRIBED IN THE
PROSPECTUS. A SIGNATURE GUARANTEE IS REQUIRED FOR REDEMPTION ONLY WHEN THE
SHARES HAVE A VALUE OF $50,000 OR MORE, OR WHEN THE CHECK IS TO BE MADE PAYABLE
TO OTHER THAN THE REGISTERED HOLDER(S) OR IS TO BE MAILED TO AN ADDRESS OTHER
THAN THAT OF RECORD.
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of January 3, 2000, between SELIGMAN
TIME HORIZON/HARVESTER SERIES, INC., a Maryland corporation (the "Corporation"),
on behalf of Seligman Time Horizon 30 Fund, Seligman Time Horizon 20 Fund,
Seligman Time Horizon 10 Fund and Seligman Harvester Fund (collectively,
together with any future funds, the "Funds") and J. & W. SELIGMAN & CO.
INCORPORATED, a Delaware corporation (the "Manager").
In consideration of the mutual agreements herein made, the parties
hereto agree as follows:
1. DUTIES OF THE MANAGER. The Manager shall manage the affairs of the
Corporation including, but not limited to, continuously providing the
Corporation with investment management services, including investment research,
advice and supervision, determining which securities shall be purchased or sold
by the Funds (including determining in which Underlying Funds, as that term is
defined in the Prospectus(es) of the Funds, the assets of the Corporation will
be invested and determining the percentage of the Funds' assets that will be
invested in each such Underlying Fund) making purchases and sales of securities
on behalf of the Funds and determining how voting and other rights with respect
to securities of the Corporation shall be exercised, subject in each case to the
control of the Board of Directors of the Corporation and in accordance with the
objectives, policies and principles set forth in the Registration Statement and
Prospectus of the Funds and the requirements of the Investment Company Act of
1940 (the "1940 Act") and other applicable law. In performing such duties, the
Manager shall provide such office space, such bookkeeping, accounting, internal
legal, clerical, secretarial and administrative services (exclusive of, and in
addition to, any such services provided by any others retained by the Funds) and
such executive and other personnel as shall be necessary for the operations of
the Funds. The Corporation understands that the Manager also acts as the manager
of all of the investment companies in the Seligman Group.
Subject to Section 36 of the 1940 Act, the Manager shall not be liable
to the Funds for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the management of the Funds
and the performance of its duties under this Agreement except for willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under this
Agreement.
2. EXPENSES. (a) The Manager shall pay all of its expenses arising from
the performance of its obligations under Section 1, and shall pay any salaries,
fees and expenses of the directors of the Corporation who are employees of the
Manager or its affiliates. Except as otherwise provided in Section paragraph (b)
of this Section 2, the Manager shall not be required to pay any other expenses
of the Funds ("Fund Expenses"), including, but not limited to, direct charges
relating to the purchase and sale of portfolio securities, interest charges,
credit commitment fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase or redemption of
shares, expenses of registering and qualifying shares for sale, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expense of corporate data processing and related services, shareholder
recordkeeping and shareholder account services, expenses of printing and filing
reports and other documents filed with governmental agencies, expenses of
printing and distributing prospectuses, expenses of annual and special
shareholders' meetings, fees and disbursements of transfer agents and
custodians, expenses of disbursing dividends and distributions, fees and
expenses of directors of the Corporation who are not employees of the Manager or
its affiliates, membership dues in the Investment Company Institute, insurance
premiums and extraordinary expenses such as litigation expenses.
<PAGE>
(b) Notwithstanding anything to the contrary in paragraph (a) of this
Section 2, the Manager has agreed that, during the term of this Agreement until
December 31, 2002, with respect to any Fund, if the sum of Fund Expenses plus
any compensation paid to the Manager pursuant to this Agreement (but excluding
any amounts paid by the Funds pursuant to a written plan adopted under Rule
12b-1 under the 1940 Act) exceeds 0.50% (the "Expense Cap") of such Fund's
average net assets (the "Excess Fund Expenses") in any fiscal year, the Manager
shall reimburse the Fund for Fund Expenses and/or waive all or any portion of
such compensation in an amount equal to the Excess Fund Expenses.
3. COMPENSATION. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, each
Fund will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month as indicated on the attached fee
schedule.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. PURCHASE AND SALE OF SECURITIES. The Manager shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with respect to
portfolio transactions as set forth in the Registration Statement and
Prospectus(es) of the Funds or as the Board of Directors of the Corporation may
direct from time to time. In providing the Funds with investment management and
supervision, it is recognized that the Manager will seek the most favorable
price and execution, and, consistent with such policy, may give consideration to
the research, statistical and other services furnished by brokers or dealers to
the Manager for its use, to the general attitude of brokers or dealers toward
investment companies and their support of them, and to such other considerations
as the Board of Directors of the Corporation may direct or authorize from time
to time.
Notwithstanding the above, it is understood that it is desirable for
the Funds that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers who execute
brokerage transactions at a higher cost to the Corporation than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and execution. Therefore, the Manager is authorized to place orders for
the purchase and sale of securities for the Funds with such brokers, subject to
review by the Corporation's Board of Directors from time to time with respect to
the extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Manager in connection with its
services to other clients as well as the Funds.
The placing of purchase and sale orders may be carried out by the
Manager or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the Funds,
the Manager or any subsidiary of the Manager may, without material risk, arrange
to receive a soliciting dealer's fee or other underwriter's or dealer's discount
or commission, the Manager shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and the
amount thereof shall be applied to reduce the compensation to be received by the
Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Funds of additional compensation to others for
consulting services, supplemental research and security and economic analysis.
2
<PAGE>
5. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect until December 31, 2001, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Manager
shall not have notified the Funds in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire such continuance. This Agreement may be terminated at any time in respect
of any Fund, without payment of penalty by the Fund, on 60 days' written notice
to the Manager, by vote of the Board of Directors of the Corporation or by vote
of a majority of the outstanding voting securities of such Fund (as defined by
the 1940 Act). The failure of the Board of Directors of the Corporation or
holders of securities of any Funds to approve the continuance of this Agreement
with respect to such Fund, shall be without prejudice to the effectiveness of
this Agreement with respect to any other Fund. This Agreement shall
automatically terminate in the event of its assignment (as defined by the 1940
Act).
6. RIGHT OF MANAGER IN CORPORATE NAME. The Manager and the Funds each
agree that the word "Seligman", which comprises a component of each Fund's name,
is a property right of the Manager. Each Fund agrees and consents that (i) it
will only use the word "Seligman" as a component of its corporate name and for
no other purpose, (ii) it will not purport to grant to any third party the right
to use the word "Seligman" for any purpose, (iii) the Manager or any corporate
affiliate of the Manager may use or grant to others the right to use the word
"Seligman", or any combination or abbreviation thereof, as all or a portion of a
corporate or business name or for any commercial purpose, including a grant of
such right to any other investment company, and at the request of the Manager,
each Funds will take such action as may be required to provide its consent to
the use of the word "Seligman", or any combination or abbreviation thereof, by
the Manager or any corporate affiliate of the Manager, or by any person to whom
the Manager or an affiliate of the Manager shall have granted the right to such
use; and (iv) upon the termination of any management agreement into which the
Manager and a Fund may enter, such Fund shall, upon request by the Manager,
promptly take such action, at its own expense, as may be necessary to change its
corporate name to one not containing the word "Seligman" and following such
change, shall not use the word "Seligman", or any combination thereof, as a part
of its corporate name or for any other commercial purpose, and shall use its
best efforts to cause its officers, directors and stockholders to take any and
all actions which the Manager may request to effect the foregoing and to
reconvey to the Manager any and all rights to such word.
7. MISCELLANEOUS. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation, on behalf of the Funds, and the
Manager have caused this Agreement to be executed by their duly authorized
officers as of the date first above written.
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
By
---------------------------------
William C. Morris
J. & W. SELIGMAN & CO. INCORPORATED
By
---------------------------------
Brian T. Zino
3
<PAGE>
FEE SCHEDULE
Funds Annual Rate
----- -----------
Seligman Time Horizon 30 Fund .10% of the Fund's average daily net
assets.
Seligman Time Horizon 20 Fund .10% of the Fund's average daily net
assets.
Seligman Time Horizon 10 Fund .10% of the Fund's average daily net
assets.
Seligman Harvester Fund .10% of the Fund's average daily net
assets.
DISTRIBUTING AGREEMENT
DISTRIBUTING AGREEMENT, dated as of January 3, 2000 between SELIGMAN
TIME HORIZON/HARVESTER SERIES, INC., a Maryland corporation (the "Series"), and
SELIGMAN ADVISORS, INC., a Delaware corporation ("Seligman Advisors").
In consideration of the mutual agreements herein made, the parties
hereto agree as follows:
1. EXCLUSIVE DISTRIBUTOR. The Series hereby agrees that Seligman Advisors
shall be for the period of this Agreement exclusive agent for distribution
within the United States and its territories, and Seligman Advisors agrees
to use its best efforts during such period to effect such distribution of
shares of Capital Stock ("Shares") of the Series; provided, however, that
nothing herein shall prevent the Series, if it so elects, from selling or
otherwise distributing its Shares directly to any persons other than
dealers. The Series understands that Seligman Advisors also acts as agent
for distribution of the shares of capital stock or beneficial interest of
other open-end investment companies which have entered into management
agreements with J. & W. Seligman & Co. Incorporated (the "Manager").
2. SALES OF SHARES. Seligman Advisors is authorized, as agent for the Series
and not as principal, (a) to sell Shares of the Series to such dealers as
Seligman Advisors may select pursuant to the terms of written sales
agreements (which may also relate to sales of shares of capital stock or
shares of beneficial interest of other open-end investment companies which
have entered into management agreements with the Manager), substantially in
the form or forms approved by the Series, and (b) to sell Shares of the
Series to other purchasers on such terms as may be provided in the then
current prospectus of the Series relating to such Shares; provided,
however, that no sales of Shares shall be confirmed by Seligman Advisors at
any time when, according to advice received by Seligman Advisors from the
Series, the officers of the Series have for any reason sufficient to them
temporarily or permanently suspended or discontinued the sale and issuance
of the Shares. Each sale of Shares shall be effected by Seligman Advisors
only at the applicable price determined by the Series in the manner
prescribed in its then current prospectus relating to such Shares. Seligman
Advisors shall comply with all applicable laws, rules and regulations
including, without limiting the generality of the foregoing, all rules or
regulations made or adopted pursuant to Section 22 of the Investment
Company Act of 1940 (the "1940 Act") by the Securities and Exchange
Commission or any securities association registered under the Securities
Exchange Act of 1934.
The Series agrees, as long as its Shares may legally be issued, to fill all
orders confirmed by Seligman Advisors in accordance with the provisions of
this Agreement.
<PAGE>
3. REPURCHASE AGENT. Seligman Advisors is authorized, as agent for the Series
and not as principal, to accept offers for resale to the Series and to
repurchase on behalf of the Series Shares of the Series at net asset values
determined by the Series in conformity with its then current prospectus
relating to such Shares.
4. COMPENSATION. As compensation for the services of Seligman Advisors under
this Agreement, Seligman Advisors shall be entitled to receive the sales
charge, determined in conformity with the Series' then current prospectus
relating to such Shares, on all sales of Shares of the Series confirmed by
Seligman Advisors hereunder and for which payment has been received, less
the dealers' concession allowed in respect of such sales. In addition, in
accordance with the terms of the Administration, Shareholder Services and
Distribution Plan (the "Plan") of each Fund in the Series (each, a "Fund"),
each Fund may make payments from time to time to Seligman Advisors in
accordance with the terms and limitations of, and for the purposes set
forth in each Plan; provided, however, that Seligman Advisors agrees that
any servicing fee to be paid to Seligman Advisors by a Fund pursuant to
such Fund's Plan will be reduced by an amount equal to any servicing fee
payments made to Seligman Advisors by an Underlying Fund (as that term is
defined in the Series' prospectus) pursuant to such Underlying Fund's Plan
in respect of the capital stock or beneficial interest of such Underlying
Fund owned by the Fund.
5. EXPENSES. Seligman Advisors agrees promptly to pay or reimburse the Series
for all expenses (except expenses incurred by the Series in connection with
the preparation, printing and distribution of any prospectus or report or
other communication to shareholders, to the extent that such expenses are
incurred to effect compliance with any Federal or State law or to enable
such distribution to shareholder(s)) (a) of printing and distributing
copies of any prospectus and of preparing, printing and distributing any
other material used by Seligman Advisors in connection with offering Shares
of the Series for sale, and (b) of advertising in connection with such
offering. The Series agrees to pay all expenses in connection with the
registration of Shares of the Series under the Securities Act of 1933 (the
"Act"), all fees and related expenses which may be incurred in connection
with the qualification of Shares of the Series for sale in such States (as
well as the District of Columbia, Puerto Rico and other territories) as
Seligman Advisors may designate, and all expenses in connection with
maintaining facilities for the issue and transfer of its Shares, of
supplying information, prices and other data to be furnished by it
hereunder, and through Seligman Data Corp., of all data processing and
related services related to the share distribution activity contemplated
hereby.
The Series agrees to execute such documents and to furnish such information
as may be reasonably necessary, in the discretion of the Directors of the
Series, in connection with the qualification of Shares of the Series for
sale in such States (as
2
<PAGE>
well as the District of Columbia, Puerto Rico and other territories) as
Seligman Advisors may designate. Seligman Advisors also agrees to pay all
fees and related expenses connected with its own qualification as a broker
or dealer under Federal or State laws and, except as otherwise specifically
provided in this Agreement or agreed to by the Series, all other expenses
incurred by Seligman Advisors in connection with the sale of Shares of the
Series as contemplated in this Agreement (including the expenses of
qualifying the Series as a dealer or broker under the laws of such States
as may be designated by Seligman Advisors, if deemed necessary or advisable
by the Series).
It is understood and agreed that any payments made to Seligman Advisors
pursuant to the Plan may be used to defray some or all of the expenses
incurred by Seligman Advisors pursuant to this Agreement.
6. PROSPECTUS AND OTHER INFORMATION. The Series represents and warrants to and
agrees with Seligman Advisors that:
(a) A registration statement, including one or more prospectuses relating
to the Shares, has been filed by the Series under the 1940 Act and has
become effective. Such registration statement, as now in effect and as
from time to time hereafter amended, and also any other registration
statement relating to the Shares which may be filed by the Series
under the 1940 Act which shall become effective, is herein referred to
as the "Registration Statement", and any prospectus or prospectuses
filed by the Series as a part of the Registration Statement, as the
"Prospectus".
(b) At all times during the term of this Agreement, except when the
officers of the Series have suspended or discontinued the sale and
issuance of Shares of the Series as contemplated by Section 2 hereof,
the Registration Statement and Prospectus will conform in all respects
to the requirements of the 1940 Act and the rules and regulations of
the Securities and Exchange Commission, and neither of such documents
will include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statement therein not misleading, except that the foregoing does
not apply to any statements or omissions in either of such documents
based upon written information furnished to the Series by Seligman
Advisors specifically for use therein.
The Series agrees to prepare and furnish to Seligman Advisors from time to
time a copy of its Prospectus, and authorizes Seligman Advisors to use such
Prospectus, in the form furnished to Seligman Advisors from time to time,
in connection with the sale of the Series' Shares. The Series also agrees
to furnish Seligman Advisors from time to time, for use in connection with
the sale of such Shares, such information with respect to the Series and
its Shares as Seligman Advisors may reasonably request.
3
<PAGE>
7. REPORTS. Seligman Advisors will prepare and furnish to the Directors of the
Series at least quarterly a written report complying with the requirements
of Rule 12b-1 under the 1940 Act setting forth all amounts expended under
the Plan and the purposes for which such expenditures were made.
8. INDEMNIFICATION.
(a) The Series will indemnify and hold harmless Seligman Advisors and each
person, if any, who controls Seligman Advisors within the meaning of
the Act against any losses, claims, damages or liabilities to which
Seligman Advisors or such controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in the Series' Registration Statement or Prospectus or
any other written sales material prepared by the Series which is
utilized by Seligman Advisors in connection with the sale of Shares or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or (in the
case of the Registration Statement and Prospectus) necessary to make
the statements therein not misleading or (in the case of such other
sales material) necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made; and will reimburse Seligman Advisors and each such controlling
person for any legal or other expenses reasonably incurred by Seligman
Advisors or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that the Series will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration
Statement or Prospectus in conformity with written information
furnished to the Series by Seligman Advisors specifically for use
therein; and provided, further, that nothing herein shall be so
construed as to protect Seligman Advisors against any liability to the
Series or its security holders to which Seligman Advisors would
otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence, in the performance of its duties, or by reason of
the reckless disregard by Seligman Advisors of its obligations and
duties under this Agreement. This indemnity agreement will be in
addition to any liability which the Series may otherwise have.
(b) Seligman Advisors will indemnify and hold harmless the Series, each of
its Directors and officers and each person, if any, who controls the
Series within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Series or any such Director,
officer or controlling
4
<PAGE>
person may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
or Prospectus or any sales material not prepared by the Series which
is utilized in connection with the sale of Shares or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or (in the case of the
Registration Statement and Prospectus) necessary to make the
statements therein not misleading or (in the case of such other sales
material) necessary to make the statements therein not misleading in
the light of the circumstances under which they were made, in the case
of the Registration Statement and Prospectus to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in conformity with written
information furnished to the Series by Seligman Advisors specifically
for use therein; and Seligman Advisors will reimburse any legal or
other expenses reasonably incurred by the Series or any such Director,
officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which
Seligman Advisors may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from liability which it may have to any
indemnified party otherwise than under this Section. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
9. EFFECTIVE DATE. This Agreement shall become effective upon its execution by
an authorized officer of the respective parties to this Agreement, but in
no event prior to shareholder approval of the Plan.
10. TERM OF AGREEMENT. This Agreement shall continue in effect until December
31, 2001 and through December 31 of each year thereafter if such
continuance is approved in the
5
<PAGE>
manner required by the 1940 Act and the rules thereunder and Seligman
Advisors shall not have notified the Series in writing at least 60 days
prior to the anniversary date of the previous continuance that it does not
desire such continuance. This Agreement may be terminated at any time,
without payment of penalty on 60 days' written notice to the other party by
vote of a majority of the Directors of the Series who are not interested
persons (as defined in the 1940 Act) of the Series and have no direct or
indirect financial interest in the operation of the Plan or any agreement
related thereto, or by vote of a majority of the outstanding voting
securities of the Series (as defined in the 1940 Act). This Agreement shall
automatically terminate in the event of its assignment (as defined in the
1940 Act).
11. MISCELLANEOUS. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require,
or to impose any duty upon, either of the parties to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Series and Seligman Advisors have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
By
-----------------------------------
Brian T. Zino, President
SELIGMAN ADVISORS, INC.
By
-----------------------------------
Stephen J. Hodgdon, President
6
SALES AGREEMENT
covering shares of capital stock
and/or shares of beneficial interest of
THE SELIGMAN MUTUAL FUNDS
Seligman Capital Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman Municipal Fund Series, Inc.
Seligman Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Value Fund Series, Inc.
between
SELIGMAN ADVISORS, INC.
and
----------------------------------------------------------------------------
Dealer/Bank
The Dealer/Bank named above and Seligman Advisors, Inc., exclusive agent for
distribution of shares of capital stock of Seligman Capital Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund, Inc.,
Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson
Global Fund Series, Inc., Seligman Income Fund, Inc., Seligman Municipal Fund
Series, Inc., and Seligman New Jersey Municipal Fund, Inc., and shares of
beneficial interest of Seligman High Income Fund Series, Seligman Municipal
Series Trust, Seligman Pennsylvania Municipal Fund Series, and Seligman Value
Fund Series, Inc., agree to the terms and conditions set forth in this
agreement.
DEALER SIGNATURE SELIGMAN ADVISORS, INC. ACCEPTANCE
- ------------------------------------ ----------------------------------
Principal Officer Stephen J. Hodgdon, President
SELIGMAN ADVISORS, INC.
- ------------------------------------ 100 Park Avenue, 8th Floor
Address New York, New York 10017
- ------------------------------------ ----------------------------------
Employer Identification No. Date
REV 10/99
<PAGE>
The Dealer/Bank and Seligman Advisors, Inc. ("SAI"), as exclusive agent
for distribution of Class A shares, Class B shares, Class C shares and Class D
shares (as described in the "Policies and Procedures," as set forth below) of
the Capital Stock and/or Class A shares, Class B shares, Class C shares and
Class D shares of beneficial interest (collectively, the "Shares") of Seligman
Capital Fund, Inc., Seligman Common Stock Fund, Inc., Seligman Communications
and Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund,
Inc., Seligman Henderson Global Fund Series, Inc., Seligman High Income Fund
Series, Seligman Income Fund, Inc., Seligman Municipal Fund Series, Inc.,
Seligman Municipal Series Trust, Seligman New Jersey Municipal Fund, Inc.,
Seligman Pennsylvania Municipal Fund Series, and Seligman Value Fund Series,
Inc., and or any other mutual fund for which SAI is exclusive agent for
distribution (herein called the Funds), agree as follows:
1. The Dealer/Bank agrees to comply with the attached "Policies and
Procedures" with respect to sales of Seligman Mutual Funds offering four
classes of shares, as set forth below.
2. An order for Shares of one or more of the Funds, placed by the Dealer/Bank
with SAI, will be confirmed at the public offering price as described in
each Fund's current prospectus. Unless otherwise agreed when an order is
placed, the Dealer/Bank shall remit the purchase price to the Fund, or
Funds, with issuing instruction, within the period of time prescribed by
existing regulations. No wire orders under $1,000 may be placed for initial
purchases.
3. Shares of the Funds shall be offered for sale and sold by the Dealer/Bank
only at the applicable public offering price currently in effect,
determined in the manner prescribed in each Fund's prospectus. SAI will
make a reasonable effort to notify the Dealer/Bank of any redetermination
or suspension of the current public offering price, but SAI shall be under
no liability for failure to do so.
4. On each purchase of Shares by the Dealer/Bank, the Dealer/Bank shall be
entitled, based on the Class of Shares purchased and except as provided in
each Fund's current prospectus, to a concession determined as a percentage
of the price to the investor as set forth in each Fund's current
prospectus. On each purchase of Class A Shares, SAI reserves the right to
receive a minimum concession of $.75 per transaction. No concessions will
be paid to the Dealer/Bank for the investment of dividends in additional
shares.
5. Except for sales to and purchases from the Dealer/Bank's retail customers,
all of which shall be made at the applicable current public offering price
or the current price bid by SAI on behalf of the Fund, the Dealer/Bank
agrees to buy Shares only through SAI and not from any other sources and to
sell shares only to SAI, the Fund or its redemption agent and not to any
other purchasers.
6. By signing this Agreement, both SAI and the Dealer/Bank warrant that they
are members of the National Association of Securities Dealers, Inc. (the
"NASD"), and agree that termination of such membership at any time shall
terminate this Agreement forthwith regardless of the provisions of
paragraph 10 hereof. Each party further agrees to comply with all rules and
regulations of the NASD (e.g., the Dealer/Bank will comply in all respects
with Notice to Members 95-80 of the NASD regarding member's obligations and
responsibilities regarding mutual fund sales practices) and specifically to
observe the following provisions:
(a) Neither SAI nor the Dealer/Bank shall withhold placing customers'
orders for Shares so as to profit itself as a result of such
withholding.
(b) SAI shall not purchase Shares from any of the Funds except for the
purpose of covering purchase orders already received, and the
Dealer/Bank shall not purchase Shares of any of the Funds through SAI
other than for investment, except for the purpose of covering purchase
orders already received.
(c) SAI shall not accept a conditional order for Shares on any basis other
than at a specified definite price. The Dealer/Bank shall not, as
principal, purchase Shares of any of the Funds from a recordholder at a
price lower than the bid price, if any, then quoted by or for the Fund,
but the Dealer/Bank shall not be prevented from selling Shares for the
account of a record owner to SAI, the Fund or its redemption agent at
the bid price currently quoted by or for such Fund, and charging the
investor a fair commission for handling the transaction.
<PAGE>
(d) If Class A Shares are repurchased by a Fund or by SAI as its agent, or
are tendered for redemption within seven business days after
confirmation by SAI of the original purchase order of the Dealer for
such Shares, (i) the Dealer shall forthwith refund to SAI the full
concession allowed to the Dealer on the original sales and (ii) SAI
shall forthwith pay to the Fund SAI's share of the "sales load" on the
original sale by SAI, and shall also pay to the Fund the refund which
SAI received under (i) above. The Dealer/Bank shall be notified by SAI
of such repurchase or redemption within ten days of the date that such
redemption or repurchase is placed with SAI, the Fund or its authorized
agent. Termination or cancellation of this Agreement shall not relieve
the Dealer/Bank or SAI from the requirements of this clause (d).
7. (a) SAI shall be entitled to a contingent deferred sales load ("CDSL") on
redemptions within six years of purchase on any Class B shares sold,
within eighteen months of purchase on any Class C shares sold and
within one year of purchase on any Class D shares sold. SAI shall also
be entitled to a CDSL on redemptions within eighteen months of purchase
on any Class A shares sold at net asset value due to the size of the
purchase. With respect to omnibus accounts in which Class A shares,
Class B shares, Class C shares or Class D shares are held at Seligman
Data Corp. ("SDC") in the Dealer/Bank's name, the Dealer/Bank agrees
that by the tenth day of each month it will furnish to SDC a report of
each redemption in the preceding month to which a CDSL was applicable,
accompanied by a check payable to SAI in payment of the CDSL due.
(b) If, with respect to a redemption of any Class A shares, Class B shares,
Class C shares or Class D shares sold by the Dealer/Bank, the CDSL is
waived because the redemption qualifies for a waiver set forth in the
Fund's prospectus or statement of additional information, the
Dealer/Bank shall remit to SAI promptly upon notice an amount equal to
the payment or a portion of the payment made by SAI to the Dealer/Bank
at the time of sale with respect to such Class A shares, Class B
shares, Class C shares or Class D shares.
8. In all transactions between SAI and the Dealer/Bank under this Agreement,
the Dealer/Bank will act as principal or as agent for the accounts of its
customers in purchasing from or selling to SAI. The Dealer/Bank is not for
any purposes employed or retained as or authorized to act as broker, agent
or employee of any Fund or of SAI and the Dealer/Bank is not authorized in
any manner to act for any Fund or SAI or to make any representations on
behalf of SAI. In purchasing and selling Shares of any Fund under this
Agreement, the Dealer/Bank shall be entitled to rely only upon matters
stated in the current offering prospectus of the applicable Fund and upon
such written representations, if any, as may be made by SAI to the
Dealer/Bank over the signature of SAI.
9. SAI will furnish to the Dealer/Bank, without charge, reasonable quantities
of the current offering prospectus of each Fund and sales material issued
from time to time by SAI.
10. Either Party to this Agreement may cancel this Agreement by written notice
to the other party. Such cancellation shall be effective at the close of
business on the 5th day following the date on which such notice was given.
SAI may modify this Agreement at any time by written notice to the
Dealer/Bank. Such notice shall be deemed to have been given on the date
upon which it was either delivered personally to the other party or any
officer or member thereof, or was mailed postage-paid, or delivered to a
telegraph office for transmission to the other party at his or its address
as shown herein.
11. This Agreement shall be construed in accordance with the laws of the State
of New York and shall be binding upon both parties hereto when signed by
SAI and by the Dealer/Bank in the spaces provided on the cover of this
Agreement. This Agreement shall not be applicable to Shares of a Fund in a
state in which such Fund Shares are not qualified for sale.
<PAGE>
POLICIES AND PROCEDURES
In connection with the offering by the Funds of four classes of
shares[1], one subject to a front-end sales load and a service fee ("Class A
Shares"), one subject to a service fee, a distribution fee, no front-end sales
load and a contingent deferred sales load on redemptions within six years of
purchase ("Class B Shares"), one subject to a service fee, a distribution fee, a
front-end sales load and a contingent deferred sales load on redemptions within
eighteen months of purchase ("Class C Shares") and one subject to a service fee,
a distribution fee, no front-end sales load and a contingent deferred sales load
on redemptions within one year of purchase ("Class D Shares")[2], it is
important for an investor to choose the method of purchasing shares which best
suits his or her particular circumstances. To assist investors in these
decisions, SAI has instituted the following policies with respect to orders for
Shares:
1. No purchase order may be placed for Class D Shares unless the investor
meets one of the qualifications provided in Footnote 2 below. The
Dealer/Bank is solely responsible for complying with this restriction.
2. No purchase order may be placed for Class B Shares for amounts of
$250,000 or more, or for Class C Shares for amounts of $1,000,000 or
more.
3. Any other purchase order may be for Class A Shares, Class B Shares,
Class C Shares, or Class D Shares in light of the relevant facts and
circumstances, including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his Shares; and
c. any other relevant circumstances such as the availability of
purchases under a Letter of Intent, Volume Discount, or Right of
Accumulation.
There are instances when one method of purchasing Shares may be more
appropriate than another. For example, an investor who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of a higher ongoing distribution fee. On the other hand,
an investor whose order would not qualify for such a discount may wish to have
all of his or her funds invested in Class B Shares or Class C Shares. An
investor who expects to hold his or her shares for longer than eight years might
prefer Class B Shares over Class C Shares because of the conversion feature;
once the Class B Shares have converted to Class A Shares, the ongoing
distribution fees will be reduced. Class C Shares may remain a more attractive
choice for shorter-term investors (especially those who would qualify for a
discount from the maximum sales load) because the front-end sales load is lower
than on Class A Shares and the contingent deferred sales load on such shares is
only 1%, and it does not apply if the investor owns his or her shares for at
least eighteen months. If an investor anticipates that he or she will redeem his
or her Class B Shares or Class D Shares while still subject to a contingent
deferred sales charge, the investor may, depending on the amount of the
purchase, pay an amount greater than the sales load and service fee attributable
to Class A Shares.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of Shares of
a Fund advise the investor of then available pricing structures offered by the
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
- ---------------------
[1] Seligman Municipal Fund Series, Inc., Seligman Municipal Series Trust,
Seligman New Jersey Municipal Fund, Inc. and Seligman Pennsylvania Municipal
Fund Series only offer three classes of shares; Class B shares are not currently
available from these Funds.
[2] Class D Shares may not be sold to all investors. You may sell Class D Shares
to investors only if (1) the investor already owns Class D Shares of the Fund or
another Seligman Mutual Fund (e.g., through a Dealer/Bank to Dealer/Bank account
transfer), (2) if you maintain an omnibus acccount at SDC (i.e., each Fund's
transfer agent), or (3) if the investor is a participant in a 401(k) or other
retirement plan program for which Class D Shares are already available or for
which the sponsor requests Class D Shares because the sales charge structure of
Class D Shares is comparable to the sales charge structure of the other funds
offered under the program.
<PAGE>
Questions relating to this policy should be directed to Stephen J.
Hodgdon, President, Seligman Advisors, Inc. at (212) 850-1217.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
("PLAN")
OF
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
("FUND")
1. Election to Defer Payments. Any member of the Board of Directors (herein, a
"Director") of the Fund may elect to have payment of that Director's annual
retainer or meeting fees or both for Board service deferred as provided in
this Plan. The election shall be made in writing prior to, and take effect
from, the beginning of a calendar year. For any Director in the year in
which this Plan is adopted or for a person elected a director in other than
the last calendar month of a year, the election shall be made within 30
days after that event and prior to, and take effect from, the beginning of
the calendar quarter next ensuing after that event. Elections shall
continue in effect until terminated in writing, any such termination to
take effect on the first day of the calendar year beginning after the
receipt of the notice of termination. An election shall be irrevocable as
to payments deferred in conformity with that election.
2. Deferred Payment Account. Each deferred retainer or fee shall be credited
at the time when it otherwise would have been payable to an account to be
established in the name of the Director on the books of the Fund (the
"Deferred Payment Account") adjusted for notional investment experience as
hereinafter described.
3. Return on Deferred Payment Account Balance. (a) For purposes of measuring
the investment return on his Deferred Payment Account, the Director may
elect to have the aggregate amount of his deferred compensation (or a
specified portion thereof) receive a return (i) at a rate equal to the
return earned on three-month U.S. Treasury Bills at the beginning of each
calendar quarter (the "Treasury Bill Rate") and such interest shall be
credited to the account quarterly at the end of each calendar quarter, or
(ii) at a rate of return (positive or negative) equal to the rate of return
on the shares of any of the registered investment companies managed by J. &
W. Seligman & Co. Incorporated ("Seligman") or any other entity
controlling, controlled by, or under common control with (as such terms are
defined in the Investment Company Act of 1940) Seligman (each, a "Notional
Fund"), assuming reinvestment of dividends and distributions from the
Notional Funds. (b) A Director may amend his designation of investment
return as of the end of each calendar quarter by giving written notice to
the President of the Fund at least 30 days prior to the end of such
calendar quarter. A timely change to a Director's designation of investment
return shall become effective on the first day of the calendar quarter
following receipt by the President of the Fund (the "President").
<PAGE>
4. Notional Investment Experience. Amounts credited to a Deferred Payment
Account shall be periodically adjusted for notional investment experience.
In each case such notional investment experience shall be determined by
treating the Deferred Payment Account as though an equivalent dollar amount
had been invested and reinvested in one or more of the Notional Funds. The
Notional Funds used as a basis for determining notional investment
experience with respect to any Director's Deferred Payment Account shall be
designated by the Director in writing by instrument of election
substantially in the form attached hereto as Exhibit C and may be changed
prospectively by similar written election effective as of the first day of
any calendar quarter. The President may from time to time limit the
Notional Funds available for purposes of such election. If at any time any
Notional Fund that has previously been designated by a Director as a
notional investment shall cease to exist or shall be unavailable for any
reason, of if the Director fails to designate one or more Notional Funds
pursuant to this Section 4, the President may, at his discretion and upon
notice to the Director, treat any amounts notionally invested in such
Notional Fund (whether representing past amounts credited to a Director's
Deferred Payment Account or subsequent fee deferrals or both) as having
been invested at the Treasury Bill Rate, only until such time as the
Director shall have made another investment election in accordance with the
foregoing procedures. Deferred Payment Accounts shall continue to be
adjusted for notional investment experience until distributed in full in
accordance with the distribution method elected by the Director pursuant to
Section 5 hereof.
5. Payment of Deferred Amounts. All amounts credited to an account pursuant to
any election by the Director made as provided in Section 1 hereof shall be
paid to the Director
(a) in, or beginning in, the calendar year following the calendar year in
which the Director ceases to be a Director of the Fund, or
(b) in, or beginning in, the calendar year following the earlier of the
calendar year in which the Director ceases to be a Director of the Fund
or attains age 70,
and shall be paid
(c) in a lump sum payable on the first day of the calendar year in which
payment is to be made, or
(d) in 10 or fewer installments, payable on the first day of each year
commencing with the calendar year in which payment is to begin, all as
the Director shall specify in making the election. If the payment is to
be made in installments, the amount of each installment shall be equal
to a fraction of the total of the amounts in the account at the date of
the payment the numerator of which shall be one and the denominator of
<PAGE>
which shall be the then remaining number of unpaid installments
(including the installment then to be paid). If the Director dies at
any time before all amounts in the account have been paid, such amounts
shall be paid at that time in a lump sum to the beneficiary or
beneficiaries designated by the Director in writing to receive such
payments or in the absence of such a designation to the estate of the
Director.
The Board of Directors may, in the case of an unforeseeable emergency, at
its sole discretion accelerate the payment of any unpaid amount for any or
all Directors. For purposes of this paragraph, an unforeseeable emergency
is severe financial hardship to the Director resulting from a sudden and
unexpected illness or accident of the Director or of a dependent (as
defined in section 152(a) of the Internal Revenue Code) of the Director,
loss of the Director's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Director. Payment due to an unforeseeable
emergency may not be made to the extent that such hardship is or may be
relieved (i) through reimbursement or compensation by insurance or
otherwise; (ii) by liquidation of the Director's assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship, or (iii) by cessation of deferrals under the Plan. Examples of
what are not considered to be unforeseeable emergencies include the need to
sent a Director's child to college or the desire to purchase a home.
Withdrawals of amounts because of an unforeseeable emergency are only
permitted to the extent reasonably necessary to satisfy the emergency need.
6. Assignment. No deferred amount or unpaid portion thereof may be assigned or
transferred by the Director except by will or the laws of descent and
distribution.
7. Withholding Taxes. The Fund shall deduct from all payments any federal,
state or local taxes and other charges required by law to be withheld with
respect to such payments.
8. Nature of Rights; Nonalienation. A Director's rights to deferred payment
under the Plan shall be solely those of an unsecured general creditor of
the Fund, and any payments by the Fund pursuant to the Plan will be made
solely from the Fund's general assets and property. The Fund will be under
no obligation to purchase, hold or dispose of any investment for specific
benefit of any Director but, if the Fund should choose to purchase shares
of any Notional Fund in order to cover all or a portion of its obligations
under the Plan, then such investments will continue to be a part of the
general assets and property of the Fund. A Director's rights under the Plan
may not be transferred, assigned, pledged or otherwise alienated, and any
attempt by the Director to do so shall be null and void.
9. Status of Director. Nothing in the Plan nor any election hereunder shall be
construed as conferring on any Director the right to remain a Director of
the Fund or to receive fees at any particular rate.
<PAGE>
10. Amendment and Acceleration. The Board of Directors may at any time at its
sole discretion amend or terminate this Plan, provided that no such
amendment or termination shall adversely affect the right of Directors to
receive deferred amounts credited to their account.
11. Administration. The Plan shall be administered by the President or by such
person or persons as the President may designate to carry out
administrative functions hereunder. The President shall have complete
discretion to interpret and administer the Plan in accordance with its
terms, and his determinations shall be binding on all persons.
November 18, 1999
<PAGE>
EXHIBIT A
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLAN
ELECTION FORM
Pursuant to the Deferred Compensation Plan for Directors, as amended as
of March 19, 1998, (the "Plan") adopted by each of the Seligman Investment
Companies (the "Funds"), I hereby elect to have ___% of my annual retainer fees
and ___% of my meeting fees for service to the Funds deferred as provided in the
Plan. This election will take effect at such time as is provided in section 1 of
the Plans, and shall continue in effect until terminated in writing, any such
termination to take effect of the first day of the next calendar year beginning
after receipt of the notice of termination.
The Deferred Compensation Plan Return Designation Form attached hereto
indicates the percentage of each of the above amounts that should earn the
designated returns. Such designations shall remain in effect until changed by
submission of a new form as provided in the Plan.
All amounts deferred with respect to any Fund and the earnings thereon
made pursuant to any election by me shall be credited to an account for my
benefit and shall be paid to me:
Check (a) or (b)
---------- (a) in, or beginning in, the calendar year following the
calendar year in which I cease to be a director of the
Fund, or
---------- (b) in, or beginning in, the calendar year following the
earlier of the calendar year in which I cease to be a
director of the Fund or attain age 70,
and shall be paid
Check (c) or (d)
---------- (c) in a lump sum payable on the first day of the calendar
year in which payment is to be made, or
---------- (d) in 10 or fewer installments, payable on the first day of
each year commencing with the calendar year in which
payment is to begin.
If (d) is selected, enter number of annual installments _________.
If the payment is to be made in installments, the amount of each
installment shall be equal to a fraction of the total of the amounts in the
account at the date of the payment the numerator of which shall be one and the
denominator of which shall be the then remaining number of unpaid installments
(including the installment then to be paid). If I die at any time before all
amounts in the account have been paid, such amounts shall be paid at that time
in a lump sum to the beneficiary or beneficiaries designated by me on the
attached Beneficiary Designation Form or in the absence of such a designation
to my estate.
- --------------------------------- -------------------------------------
Date Signature
<PAGE>
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLAN
ELECTION FORM
Pursuant to the Deferred Compensation Plan for Directors (the "Plan")
adopted by each of the Seligman Investment Companies (the "Funds"), I hereby
elect to have ___% of my annual retainer fees and ___% of my meeting fees for
service to the Funds deferred as provided in the Plan. This election will take
effect at such time as is provided in section 1 of the Plans, and shall continue
in effect until terminated in writing, any such termination to take effect of
the first day of the next calendar year beginning after receipt of the notice of
termination.
All amounts deferred with respect to any Fund and the earnings thereon
made pursuant to any election by me shall be credited to an account for my
benefit and shall be paid to me:
Check (a) or (b)
----------
(a) in, or beginning in, the calendar year following the
calendar year in which I cease to be a director of the
Fund, or
----------
(b) in, or beginning in, the calendar year following the
earlier of the calendar year in which I cease to be a
director of the Fund or attain age 70,
and shall be paid
Check (c) or (d)
---------- (c) in a lump sum payable on the first day of the calendar
year in which payment is to be made, or
---------- (d) in 10 or fewer installments, payable on the first day of
each year commencing with the calendar year in which
payment is to begin.
If (d) is selected, enter number of annual installments _________.
If the payment is to be made in installments, the amount of each
installment shall be equal to a fraction of the total of the amounts in the
account at the date of the payment the numerator of which shall be one and the
denominator of which shall be the then remaining number of unpaid installments
(including the installment then to be paid). If I die at any time before all
amounts in the account have been paid, such amounts shall be paid at that time
in a lump sum to the beneficiary or beneficiaries designated by me on the
attached Beneficiary Designation Form or in the absence of such a designation
to my estate.
- --------------------------------- -------------------------------------
Date Signature
<PAGE>
EXHIBIT B
DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM
I hereby designate the following beneficiary or beneficiaries to receive at my
death the amounts held in my Deferred Payment Accounts from my participation in
the Deferred Compensation Plans for Directors/Trustees of all registered
investment companies advised by J. & W. Seligman & Co. Incorporated for which I
serve as a director or trustee (the "Plans").
A. PRIMARY BENEFICIARY(IES)
1. Name: % Share:
----------------------------- -------------------------------
Address:
--------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------ -------- ------------
Trustee Name and Date (if beneficiary is a trust):
--------------------------
Trustee of Trust:
----------------------------------------------------------
2. Name: % Share:
------------------------------ -------------------------------
Address:
--------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------ -------- ------------
Trustee Name and Date (if beneficiary is a trust):
--------------------------
Trustee of Trust:
-----------------------------------------------------------
B. CONTINGENT BENEFICIARY(IES)
1. Name: % Share:
----------------------------- -------------------------------
Address:
--------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------ -------- ------------
Trustee Name and Date (if beneficiary is a trust):
--------------------------
Trustee of Trust:
----------------------------------------------------------
2. Name: % Share:
------------------------------ -------------------------------
Address:
--------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------ -------- ------------
Trustee Name and Date (if beneficiary is a trust):
--------------------------
Trustee of Trust:
-----------------------------------------------------------
I understand that I may revoke or amend the above designation at any time. I
understand that payment will be made to my Contingent Beneficiary(ies) only if
there is no surviving Primary Beneficiary(ies). I further understand that if I
am not survived by any Primary or Contingent Beneficiaries, payment will be made
to my estate as set forth under the Plans.
- --------------------------------- -------------------------------------
Date Signature
-------------------------------------
Participant's Name Printed
<PAGE>
EXHIBIT C
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLANS
RETURN DESIGNATION FORM
I elect to have my deferred compensation for all registered investment companies
advised by J. & W. Seligman & Co. Incorporated for which I serve as a Director
or Trustee deemed to be invested as specified below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
% Allocation
% Allocation for accumulated
for future fees balances
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
At the prevailing three-month U.S. Treasury Bill Rate
- -----------------------------------------------------------------------------------------------
Seligman Capital Fund, Inc.
- -----------------------------------------------------------------------------------------------
Seligman Cash Management Fund, Inc.
- -----------------------------------------------------------------------------------------------
Seligman Common Stock Fund, Inc.
- -----------------------------------------------------------------------------------------------
Seligman Communications and Information Fund, Inc.
- -----------------------------------------------------------------------------------------------
Seligman Frontier Fund, Inc.
- -----------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc.
- -----------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Emerging Markets Growth Fund
- -----------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Growth Opportunities Fund
- -----------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Smaller Companies Fund
- -----------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Technology Fund
- -----------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson International Fund
- -----------------------------------------------------------------------------------------------
Seligman High Income Fund Series -
Seligman High-Yield Bond Series
- -----------------------------------------------------------------------------------------------
Seligman High Income Fund Series -
Seligman U.S. Government Securities Series
- -----------------------------------------------------------------------------------------------
Seligman Income Fund, Inc.
- -----------------------------------------------------------------------------------------------
Seligman Time Horizon/Harvester Series, Inc. -
Time Horizon 30 Fund
- -----------------------------------------------------------------------------------------------
Seligman Time Horizon/Harvester Series, Inc. -
Time Horizon 20 Fund
- -----------------------------------------------------------------------------------------------
Seligman Time Horizon/Harvester Series, Inc. -
Time Horizon 10 Fund
- -----------------------------------------------------------------------------------------------
Seligman Time Horizon/Harvester Series, Inc. -
Harvester Fund
- -----------------------------------------------------------------------------------------------
Seligman Value Fund Series, Inc. -
Seligman Large-Cap Value Fund
- -----------------------------------------------------------------------------------------------
Seligman Value Fund Series, Inc. -
Seligman Small-Cap Value Fund
- -----------------------------------------------------------------------------------------------
Tri-Continental Corporation
- -----------------------------------------------------------------------------------------------
Total 100% 100%
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
(CONTINUED)
I acknowledge that I may amend this Return Designation in the manner,
and at such time as permitted, under the Plans. Furthermore, I acknowledge that
in certain circumstances, and pursuant to Section 4 of the Plans, the President
may at his discretion, and upon notice to me, disregard the designations made
above and cause all or a portion of my Deferred Account to receive a return
equal to the prevailing three-month U.S. Treasury Bill Rate.
- ---------------------------- ------------------------------------
Date Signature
CUSTODY AGREEMENT
THIS AGREEMENT made effective as of the ___ day of _______, 1999 by and
between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the
laws of the state of Missouri, having its trust office located at 801
Pennsylvania, Kansas City, Missouri 64105 ("Custodian"), and SELIGMAN TIME
HORIZON/HARVESTERS SERIES, INC., a Maryland corporation, having its principal
office and place of business at 100 Park Avenue, New York, New York 10017
("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian and Recordkeeper of the securities and monies of Fund and its now
existing and future established portfolios (individually referred to herein as
"Portfolio"); and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints Custodian as
custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at any time
owned by each Portfolio of the Fund; and
B. Appointment as agent to perform certain accounting and recordkeeping
functions required of a duly registered investment company in
compliance with applicable provisions of federal, state, and local
laws, rules and regulations including, as may be required:
1. Providing information necessary for Fund and each Portfolio to
file required financial reports; maintaining and preserving
required books, accounts and records as the basis for such
reports; and performing certain daily functions in connection
with such accounts and records, and
2. Calculating daily net asset value of each Portfolio of the Fund,
and
3. Acting as liaison with independent auditors.
2. REPRESENTATIONS AND WARRANTIES OF FUND.
A. Fund represents and warrants that it is a corporation duly organized
as heretofore described and existing and in good standing under the
laws of Maryland;
1
<PAGE>
B. Fund represents and warrants that it has the power and authority under
applicable laws, its charter document and bylaws, and has taken all
action necessary, to enter into and perform this Agreement including
appropriate authorization from the Fund;
C. Fund represents and warrants that it has determined that the
accounting system licensed for use by Custodian from a third party
("Licensor") to maintain the accounting records of the Fund (the
"System") is appropriate and suitable for its needs;
D. Fund acknowledges that Custodian and Licensor have proprietary rights
in and to the System and that the System and the programs,
documentation and information of, and other materials relevant to, the
System or the business of Custodian ("Confidential Information") are
confidential and constitute trade secrets of Custodian;
E. Fund shall preserve the confidentiality of the Confidential
Information and prevent its disclosure to other than its own employees
and agents who reasonably have a need to know such information
pursuant to this Agreement, and shall take reasonable action to
protect the rights of Custodian and Licensor in the System. For
purposes of this paragraph, "reasonable action" shall mean taking such
actions and exercising such degree of care as Fund uses with reference
to its own highly confidential information. Certain reports as agreed
upon in writing by the Fund and Custodian will be furnished to the
Fund's custodian for its reasonable business needs.
3. REPRESENTATION AND WARRANTIES OF CUSTODIAN.
A. It is a trust company duly organized and existing and in good standing
under the laws of the State of Missouri.
B. It has the requisite power and authority under applicable laws, by its
charter and bylaws, and by agreement to enter into this Agreement and has
taken all action necessary to enter into and perform the services
contemplated herein and this Agreement has been duly executed and delivered
by Custodian and constitutes a legal, valid and binding obligation of
Custodian, enforceable in accordance with its terms.
4. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Resolutions of the Board of Directors of Fund appointing Custodian as
custodian hereunder and approving the form of this Agreement; and
2
<PAGE>
B. Resolutions of the Board of Directors of Fund designating certain
persons to give instructions on behalf of Fund to Custodian and
authorizing Custodian to rely upon such instructions.
5. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets. Fund will deliver or cause to be delivered to
Custodian on the effective date of this Agreement, or as soon
thereafter as practicable, and from time to time thereafter, all
portfolio securities acquired by it and monies then owned by it
(except as permitted by the Investment Company Act of 1940) or from
time to time coming into its possession during the time this Agreement
shall continue in effect. Custodian shall have no responsibility or
liability whatsoever for or on account of securities or monies not so
delivered. All securities so delivered to Custodian (other than bearer
securities) shall be registered in the name of Fund or its nominee, or
of a nominee of Custodian, or shall be properly endorsed and in form
for transfer satisfactory to Custodian.
B. Delivery of Accounts and Records. Fund shall turn over to Custodian
all of the Fund's relevant accounts and records previously maintained
by it. Custodian shall be entitled to rely conclusively on the
completeness and correctness of the accounts and records turned over
to it by Fund, and Fund shall indemnify and hold Custodian harmless of
and from any and all expenses, damages and losses whatsoever arising
out of or in connection with any error, omission, inaccuracy or other
deficiency of such accounts and records or in the failure of Fund to
provide any portion of such or to provide any information needed by
the Custodian knowledgeably to perform its function hereunder.
C. Delivery of Assets to Third Parties. Custodian will receive delivery
of and keep safely the assets of Fund delivered to it from time to
time and the assets of each Portfolio segregated in a separate
account. Custodian will not deliver, assign, pledge or hypothecate any
such assets to any person except as permitted by the provisions of
this Agreement or any agreement executed by it according to the terms
of Section 5.S. of this Agreement. Upon delivery of any such assets to
a subcustodian pursuant to Section 5.S. of this agreement, Custodian
will create and maintain records identifying those assets which have
been delivered to the subcustodian as belonging to the applicable
Portfolio of the Fund. The Custodian is responsible for the
safekeeping of the securities and monies of Fund only until they have
been transmitted to and received by other persons as permitted under
the terms of this Agreement, except for securities and monies
transmitted to subcustodians appointed under Section 5.S. hereof, for
which Custodian remains responsible. Custodian shall be responsible
only for the monies and securities of Fund held by it or its nominees,
subcustodian or its nominees, and eligible foreign subcustodians to
the extent the domestic custodian with which the Custodian contracts
is responsible to Custodian. Custodian may participate directly or
3
<PAGE>
indirectly through a subcustodian in the Depository Trust Company,
Treasury/Federal Reserve Book Entry System, Participant Trust Company
or other depository approved by the Fund (as such entities are defined
at 17 CFR Section 270.17f-4(b)).
D. Registration of Securities. Custodian will hold stocks and other
registerable portfolio securities of Fund registered in the name of
Fund or its nominee or in the name of any nominee of Custodian for
whose fidelity and liability Custodian will be fully responsible, or
in street certificate form, so-called, with or without any indication
of fiduciary capacity. Unless otherwise instructed, Custodian will
register all such portfolio securities in the name of its authorized
nominee, as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder or in any provision of
any subsequent Federal tax law exempting such transaction from
liability for stock transfer taxes. All securities, and the ownership
thereof by a Portfolio of the Fund, which are held by Custodian
hereunder, however, shall at all times be identifiable on the records
of the Custodian. The Fund agrees to hold Custodian and its nominee
harmless for any liability as a record holder of securities held in
custody.
E. Exchange of Securities. Upon receipt of instructions as defined herein
in Section 6.A, Custodian will exchange, or cause to be exchanged,
portfolio securities held by it for the account of the applicable
Portfolio of the Fund for other securities or cash issued or paid in
connection with any reorganization, recapitalization, merger,
consolidation, split-up of shares, change of par value, conversion or
otherwise, and will deposit any such securities in accordance with the
terms of any reorganization or protective plan. Without instructions,
Custodian is authorized to exchange securities held by it in temporary
form for securities in definitive form, to effect an exchange of
shares when the par value of the stock is changed, and, upon receiving
payment therefor, to surrender bonds or other securities held by it at
maturity or when advised of an earlier mandatory call for redemption,
except that Custodian shall receive instructions prior to surrendering
any convertible security. Pursuant to this paragraph, the Custodian
will inform the Fund of such corporate actions and capital changes
when it is informed of them through the publications it subscribes to.
F. Purchases of Investments of the Fund. Fund will, on each business day
on which a purchase of securities shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase:
1. The name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares or the principal amount purchased, and
accrued interest, if any;
4
<PAGE>
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes
and other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer through
whom the purchase was made.
In accordance with such instructions, Custodian will pay for out of
monies held for the account of such named Portfolio, but only insofar
as monies are available therein for such purpose, and receive the
portfolio securities so purchased by such named Portfolio, except that
Custodian may in its sole discretion advance funds to the Fund which
may result in an overdraft because the monies held by the Custodian on
behalf of the Fund are insufficient to pay the total amount payable
upon such purchase. Such payment will be made only upon receipt by
Custodian of the securities so purchased in form for transfer
satisfactory to Custodian. Custodian agrees to promptly inform Fund of
any failures by sellers to make proper deliveries of securities
purchased by the Fund.
G. Sales and Deliveries of Investments of the Fund - Other than Options
and Futures. Fund will, on each business day on which a sale of
investment securities of Fund has been made, deliver to Custodian
instructions specifying with respect to each such sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares or principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
5
<PAGE>
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom or
person to whom the sale was made.
In accordance with such instructions, Custodian will deliver or cause
to be delivered the securities thus designated as sold for the account
of such Portfolio to the broker or other person specified in the
instructions relating to such sale, such delivery to be made only upon
receipt of payment therefor in such form as is satisfactory to
Custodian, with the understanding that Custodian may deliver or cause
to be delivered securities for payment in accordance with the customs
prevailing among dealers in securities. Custodian agrees to promptly
inform Fund of any failures of purchasers to make proper payment for
securities sold by Fund.
H. Purchases or Sales of Security Options, Options on Indices and
Security Index Futures Contracts. Fund will, on each business day on
which a purchase or sale of the following options and/or futures shall
be made by it, deliver to Custodian instructions which shall specify
with respect to each such purchase or sale:
1. The name of the Portfolio making such purchase or sale;
2. In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring
or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom the
sale or purchase was made.
3. In the case of options on indices:
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
6
<PAGE>
g. Whether the transaction is an opening, exercising, expiring
or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through whom
the sale or purchase was made, or other applicable
settlement instructions.
4. In the case of security index futures contracts:
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete and
executed custodial safekeeping account and procedural
agreement which shall be incorporated by reference into this
Custody Agreement); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
5. In the case of options on index future contracts:
a. The underlying index futures contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned. If specifically allowed for in the
prospectus of the applicable Portfolio of the Fund:
1. Upon receipt of instructions, Custodian will release or cause to
be released securities held in custody to the pledgee designated
in such instructions by way of pledge or hypothecation to secure
any loan incurred by a Portfolio of the Fund; provided, however,
that the securities shall be released only upon payment to
Custodian of the monies borrowed, except that in cases
7
<PAGE>
where additional collateral is required to secure a borrowing
already made, further securities may be released or caused to be
released for that purpose upon receipt of instructions. Upon
receipt of instructions, Custodian will pay, but only from funds
available for such purpose, any such loan upon redelivery to it
of the securities pledged or hypothecated therefor and upon
surrender of the note or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release securities
held in custody to the borrower designated in such instructions;
provided, however, that the securities will be released only upon
deposit with Custodian of full cash collateral as specified in
such instructions, and that Fund will retain the right to any
dividends, interest or distribution on such loaned securities.
Upon receipt of instructions and the loaned securities, Custodian
will release the cash collateral to the borrower.
J. Routine Matters. Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with securities or
other property of Fund except as may be otherwise provided in this
Agreement or directed from time to time by the Board of Directors of
Fund.
K. Deposit Account. Custodian will open and maintain a special purpose
deposit account(s) in the name of Custodian on behalf of each
Portfolio ("Accounts"), subject only to draft or order by Custodian
upon receipt of instructions. All monies received by Custodian from or
for the account of a Portfolio shall be deposited in said Accounts.
Barring events not in the control of the Custodian such as strikes,
lockouts or labor disputes, riots, war or equipment or transmission
failure or damage, fire, flood, earthquake or other natural disaster,
action or inaction of governmental authority or other causes beyond
its control, at 9:00 a.m., Kansas City time, on the second business
day after deposit of any check into Fund's Account, Custodian agrees
to make Fed Funds available to the appropriate Portfolio of the Fund
in the amount of the check. Deposits made by Federal Reserve wire will
be available to the Fund immediately and ACH wires will be available
to the Fund on the next business day. Income earned on the portfolio
securities will be credited to the applicable Portfolio of the Fund
based on the schedule attached as Exhibit A, except that income earned
on portfolio securities held by domestic subcustodians other than
State Street Bank & Trust Company will be credited when received. The
Custodian will be entitled to reverse any credited amounts where
credits have been made and monies are not finally collected. If monies
are collected after such reversal, the Custodian will credit the
applicable Portfolio in that amount. Custodian may open and maintain
an Account in such other banks or trust companies as may be designated
by it and by properly
8
<PAGE>
authorized resolution of the Board of Directors of Fund, such Account,
however, to be in the name of Custodian on behalf of the applicable
portfolio of the Fund and subject only to its draft or order.
L. Income and other Payments to Fund. Custodian will:
1. Collect, claim and receive and deposit for the Account of each
Portfolio of the Fund all income and other payments which become
due and payable on or after the effective date of this Agreement
with respect to the securities deposited under this Agreement,
and credit the account of the applicable Portfolio of the Fund in
accordance with the schedule attached hereto as Exhibit A. Income
from foreign securities and assets held by eligible foreign
subcustodians shall be credited by Custodian upon receipt of
income from the domestic subcustodian contracting with the
foreign eligible subcustodians. If, for any reason, the Fund is
credited with income that is not subsequently collected,
Custodian may reverse that credited amount;
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge, or
notice of which is contained in publications of the
type to which a custodian for investment companies
normally subscribes for such purpose; and
b. the endorsement for collection, in the name of the
applicable Portfolio of the Fund, of all checks, drafts or
other negotiable instruments.
Custodian, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon receipt
of instructions and upon being indemnified to its satisfaction against
the costs and expenses of such suit or other actions. Custodian will
receive, claim and collect all stock dividends, rights and other
similar items and will deal with the same pursuant to instructions.
9
<PAGE>
Unless prior instructions have been received to the contrary,
Custodian will, without further instructions, sell any rights held for
the account of Fund on the last trade date prior to the date of
expiration of such rights.
M. Payment of Dividends and other Distributions. On the declaration
of any dividend or other distribution on the shares of Capital
Stock of any Portfolio ("Portfolio Shares") by the Board of
Directors of Fund, Fund shall deliver to Custodian instructions
with respect thereto, including a copy of the Resolution of said
Board of Directors certified by the Secretary or an Assistant
Secretary of Fund wherein there shall be set forth the record
date as of which shareholders entitled to receive such dividend
or other distribution shall be determined, the date of payment of
such dividend or distribution, and the amount payable per share
on such dividend or distribution. Except if the ex-dividend date
and the reinvestment date of any dividend are the same, in which
case funds shall remain in the Custody Account, on the date
specified in such Resolution for the payment of such dividend or
other distribution, Custodian will pay out of the monies held for
the account of the applicable Portfolio of the Fund, insofar as
the same shall be available for such purposes, and wire to the
account of the Dividend Disbursing Agent for Fund, such amount as
may be necessary to pay the amount per share payable in cash on
Portfolio Shares issued and outstanding on the record date
established by such Resolution.
N. Shares of Fund Purchased by Fund. Whenever any Portfolio Shares
are repurchased or redeemed by Fund, Fund or its agent shall
advise Custodian of the aggregate dollar amount to be paid for
such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate
dollar amount to the Account of Portfolio and either deposit the
same in the account maintained for the purpose of paying for the
repurchase or redemption of Portfolio Shares or deliver the same
in accordance with such advice. Custodian shall not have any duty
or responsibility to determine that Fund Shares have been removed
from the proper shareholder account or accounts or that the
proper number of such shares have been canceled and removed from
the shareholder records.
O. Shares of Fund Purchased from Fund. Whenever Portfolio Shares are
purchased from Fund, Fund will deposit or cause to be deposited
with Custodian the amount received for such shares. Custodian
shall not have any duty or responsibility to determine that
Portfolio Shares purchased from Fund have been added to the
proper shareholder account or accounts or that the proper number
of such shares have been added to the shareholder records.
P. Proxies and Notices. Custodian will promptly deliver or mail or
have delivered or mailed to Fund all proxies properly signed, all
notices of meetings, all proxy statements and other notices,
requests or announcements affecting or relating to securities
held by Custodian for Fund and will, upon receipt of
instructions, execute and deliver or cause its nominee to execute
and deliver or mail or have
10
<PAGE>
delivered or mailed such proxies or other authorizations as may
be required. Except as provided by this Agreement or pursuant to
instructions hereafter received by Custodian, neither it nor its
nominee will exercise any power inherent in any such securities,
including any power to vote the same, or execute any proxy, power
of attorney, or other similar instrument voting any of such
securities, or give any consent, approval or waiver with respect
thereto, or take any other similar action.
Q. Disbursements. Custodian will pay or cause to be paid insofar as
funds are available for the purpose, bills, statements and other
obligations of Fund (including but not limited to obligations in
connection with the conversion, exchange or surrender of
securities owned by Fund, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal
fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting forth
the name of the person to whom payment is to be made, the amount
of the payment, and the purpose of the payment.
R. Daily Statement of Accounts. Custodian will, within a reasonable
time, render to Fund as of the close of business on each day, a
detailed statement of the amounts received or paid and of
securities received or delivered for the account of Fund during
said day. Custodian will, from time to time, upon request by
Fund, render a detailed statement of the securities and monies
held for Fund under this Agreement, and Custodian will maintain
such books and records as are necessary to enable it to do so and
will permit such persons as are authorized by Fund including
Fund's independent public accountants, access to such records or
confirmation of the contents of such records; and if demanded,
will permit federal and state regulatory agencies to examine the
securities, books and records. Upon the written instructions of
Fund or as demanded by federal or state regulatory agencies,
Custodian will instruct any subcustodian to give such persons as
are authorized by Fund including Fund's independent public
accountants, access to such records or confirmation of the
contents of such records; and if demanded, to permit federal and
state regulatory agencies to examine the books, records and
securities held by subcustodian which relate to Fund. Fund will
be entitled to receive reports produced by the System, including,
without limitation, those listed on Exhibit B hereof. -
S. Appointment of Subcustodians
1. Notwithstanding any other provisions of this Agreement, all of or
any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more other
banks or trust companies selected by Custodian and approved by
the Fund's Board of Directors. Any such subcustodian must have
the qualifications required for custodian under the Investment
Company Act of 1940, as amended. The subcustodian may participate
directly or indirectly in the Depository Trust Company,
11
<PAGE>
Treasury/Federal Reserve Book Entry System, Participant Trust
Company or other depository approved by the Fund (as such
entities are defined at 17 CFR Sec. 270.17f-4(b)). The
appointment of State Street Bank and Trust Company or any other
subcustodian, depository or clearing agency used by the Custodian
and approved by the Fund will not relieve Custodian of any of its
obligations hereunder except as provided in Section 5.C hereof.
The Custodian will comply with Section 17f-4 of the Investment
Company Act of 1940, as amended, as to depositories and clearing
agencies used by Custodian and approved the Fund. The Custodian
will not be entitled to reimbursement by Fund for any fees or
expenses of any subcustodian, depository or clearing agency.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f-5(c)(1) under the
Investment Company Act of 1940) and Fund's cash or cash
equivalents, in amounts reasonably necessary to effect Fund's
foreign securities transactions, may be held in the custody of
one or more banks or trust companies acting as subcustodians,
according to Section 5.S.1; and thereafter, pursuant to a written
contract or contracts as approved by Fund's Board of Directors,
may be transferred to an account maintained by such subcustodian
with an eligible foreign custodian, as defined in Rule
17f-5(c)(2), provided that any such arrangement involving a
foreign custodian shall be in accordance with the provisions of
Rule 17f-5 under the Investment Company Act of 1940 as that Rule
may be amended from time to time.
T. Accounts and Records. Custodian, with the direction and as interpreted
by the Fund, Fund's accountants and/or other tax advisors, will
prepare and maintain as complete, accurate and current all accounts
and records required to be maintained by Fund under the Internal
Revenue Code of 1986 ("Code") as amended and under the general Rules
and Regulations under the Investment Company Act of 1940 ("Rules") as
amended, and as agreed upon between the parties and will preserve said
records in the manner and for the periods prescribed in said Code and
Rules, or for such longer period as is agreed upon by the parties.
Custodian relies upon Fund to furnish, in writing, accurate and timely
information to complete Fund's records and perform daily calculation
of the Fund's net asset value, as provided in Section 5.W below.
Custodian shall incur no liability and Fund shall indemnify and hold
harmless Custodian from and against any liability arising from any
failure of Fund to furnish such information in a timely and accurate
manner, even if Fund subsequently provides accurate but untimely
information. It shall be the responsibility of Fund to furnish
Custodian with the declaration, record and payment dates and amounts
of any dividends or income and any other special actions required
concerning each of its securities when such information is not readily
available from generally accepted securities industry services or
publications.
U. Accounts and Records Property of Fund. Custodian acknowledges that all
of the
12
<PAGE>
accounts and records maintained by Custodian pursuant to this
Agreement are the property of Fund, and will be made available to Fund
for inspection or reproduction within a reasonable period of time,
upon demand. Custodian will assist Fund's independent auditors, or
upon approval of Fund, or upon demand, any regulatory body having
jurisdiction over the Fund or Custodian, in any requested review of
Fund's accounts and records but shall be reimbursed for all expenses
and employee time invested in any such review outside of routine and
normal periodic reviews. Upon receipt from Fund of the necessary
information, Custodian will supply necessary data for Fund's
completion of any necessary tax returns, questionnaires, periodic
reports to Shareholders and such other reports and information
requests as Fund and Custodian shall agree upon from time to time.
V. Adoption of Procedures. Custodian and Fund may from time to time adopt
procedures as they agree upon, and Custodian may conclusively assume
that no procedure approved by Fund, or directed by Fund, conflicts
with or violates any requirements of its prospectus, "Articles of
Incorporation", Bylaws, or any rule or regulation of any regulatory
body or governmental agency. Fund will be responsible to notify
Custodian of any changes in statutes, regulations, rules or policies
which might necessitate changes in Custodian's responsibilities or
procedures.
W. Calculation of Net Asset Value. Custodian will calculate Fund's net
asset value, in accordance with Fund's prospectus, once daily.
Custodian will prepare and maintain a daily evaluation of securities
for which market quotations are available by the use of outside
services normally used and contracted for this purpose; all other
securities will be evaluated in accordance with Fund's instructions.
Custodian will have no responsibility for the accuracy of the prices
quoted by these outside services or for the information supplied by
Fund or upon instructions.
X. Advances. In the event Custodian or any subcustodian shall, in its
sole discretion, advance cash or securities for any purpose (including
but not limited to securities settlements, purchase or sale of foreign
exchange or foreign exchange contracts and assumed settlement) for the
benefit of any Portfolio, the advance shall be payable by the Fund on
demand. Any such cash advance shall be subject to an overdraft charge
at the rate set forth in the then-current fee schedule from the date
advanced until the date repaid. As security for each such advance,
Fund hereby grants Custodian and such subcustodian a lien on and
security interest in all property at any time held for the account of
the applicable Portfolio, including without limitation all assets
acquired with the amount advanced. Should the Fund fail to promptly
repay the advance, the Custodian and such subcustodian shall be
entitled to utilize available cash and to dispose of such Portfolio's
assets pursuant to applicable law to the extent necessary to obtain
reimbursement of the amount advanced and any related overdraft
charges.
13
<PAGE>
6. INSTRUCTIONS.
A. The term "instructions", as used herein, means written or facsimile
instructions or advice to Custodian from two designated
representatives of Fund. Certified copies of resolutions of the Board
of Directors of Fund naming two or more designated representatives to
give instructions in the name and on behalf of Fund, may be received
and accepted from time to time by Custodian as conclusive evidence of
the authority of any two designated representatives to act for Fund
and may be considered to be in full force and effect (and Custodian
will be fully protected in acting in reliance thereon) until receipt
by Custodian of notice to the contrary. Unless the resolution
delegating authority to any person to give instructions specifically
requires that the approval of anyone else will first have been
obtained, Custodian will be under no obligation to inquire into the
right of the person giving such instructions to do so. Notwithstanding
any of the foregoing provisions of this Section 6 no authorizations or
instructions received by Custodian from Fund, will be deemed to
authorize or permit any director, trustee, officer, employee, or agent
of Fund to withdraw any of the securities or similar investments of
Fund upon the mere receipt of such authorization or instructions from
such director, trustee, officer, employee or agent. Notwithstanding
any other provision of this Agreement, Custodian, upon receipt (and
acknowledgment if required at the discretion of Custodian) of the
instructions of any two designated representatives of Fund, will
undertake to deliver for Fund's account monies, (provided such monies
are on hand or available) in connection with Fund's transactions and
to wire transfer such monies to such broker, dealer, subcustodian,
bank or other agent specified in such instructions.
B. If oral instructions are permitted pursuant to Section 6.A hereunder,
no later than the next business day immediately following such oral
instruction the Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may record
on tape, or otherwise, any oral instruction whether given in person or
via telephone, each such recording identifying the parties, the date
and the time of the beginning and ending of such oral instruction.
7. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall hold harmless and indemnify Fund from and against any
loss or liability arising out of Custodian's failure to comply with
the terms of this Agreement or arising out of Custodian's negligence
or bad faith. Custodian shall not be liable for consequential damages.
Custodian may request and obtain the advice and opinion of counsel for
Fund, or of its own counsel with respect to questions or matters of
law, and it shall be without liability to Fund for any action taken or
omitted by it in good faith, in conformity with such advice or
opinion. If Custodian reasonably believes that it could not prudently
act according to the instructions of the Fund or the Fund's counsel,
it may in its discretion, with notice
14
<PAGE>
to the Fund, not act according to such instructions.
B. Custodian may rely upon the advice of Fund and upon statements of
Fund's public accountants and other persons believed by it in good
faith, to be expert in matters upon which they are consulted, and
Custodian shall not be liable for any actions taken, in good faith,
upon such statements.
C. If Fund requires Custodian in any capacity to take, with respect to
any securities, any action which involves the payment of money by it,
or which in Custodian's opinion might make it or its nominee liable
for payment of monies or in any other way, Custodian, upon notice to
Fund given prior to such actions, shall be and be kept indemnified by
Fund in an amount and form satisfactory to Custodian against any
liability on account of such action.
D. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other
instrument or paper reasonably appearing to it to be genuine and to
have been properly executed and shall, unless otherwise specifically
provided herein, be entitled to receive as conclusive proof of any
fact or matter required to be ascertained from Fund hereunder, a
certificate signed by the Fund's President, or other officer
specifically authorized for such purpose.
E. Without limiting the generality of the foregoing, Custodian shall be
under no duty or obligation to inquire into, and shall not be liable
for:
1. The validity of the issue of any securities purchased by or for
Fund, the legality of the purchase thereof or evidence of
ownership required by Fund to be received by Custodian, or the
propriety of the decision to purchase or amount paid therefor;
2. The legality of the sale of any securities by or for Fund, or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any shares of the Capital
Stock of Fund, or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any Fund Shares,
or the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any stock
dividend.
F. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer, clearing
house funds, uncollected funds, or instrument for the payment of money
received by it on behalf of Fund,
15
<PAGE>
until Custodian actually receives such money, provided only that it
shall advise Fund promptly if it fails to receive any such money in
the ordinary course of business, and use its best efforts and
cooperate with Fund toward the end that such money shall be received.
G. Custodian shall not be responsible for loss occasioned by the acts,
neglects, defaults or insolvency of any broker, bank, trust company,
or any other person with whom Custodian may deal in the absence of
negligence, or bad faith on the part of Custodian, except as provided
in Section 5.S.1 hereof.
H. Notwithstanding anything herein to the contrary, Custodian may, and
with respect to any foreign subcustodian appointed under Section 5.S.2
must, provide Fund for its approval, agreements with banks or trust
companies which will act as subcustodians for Fund pursuant to Section
5.S of this Agreement.
8. COMPENSATION. Fund will pay to Custodian such compensation as is stated in
a separate fee schedule incorporated herein by reference, which may be
changed from time to time as agreed to in writing by Custodian and Fund.
Custodian may charge such compensation against monies held by it for the
account of Fund. Custodian will also be entitled, notwithstanding the
provisions of Sections 7.C or 7.D hereof, to charge against any monies held
by it for the account of Fund the amount of any loss, damage, liability,
advance, or expense for which it shall be entitled to reimbursement under
the provisions of this Agreement including fees or expenses due to
Custodian for other services provided to the Fund by the Custodian.
Custodian will not be entitled to reimbursement by Fund for any loss or
expenses of any subcustodian.
9. TERMINATION. Either party to this Agreement may terminate the same by
notice in writing, delivered or mailed, postage prepaid, to the other party
hereto and received not less than ninety (90) days prior to the date upon
which such termination will take effect. If the Custodian of the Fund
terminates this Agreement, the Fund may extend the effective date of the
termination ninety (90) days by written request to the Custodian thirty
(30) days prior to the end of the initial ninety (90) days notice period
unless the Custodian in good faith could not perform the duties hereunder.
Upon termination of this Agreement, Fund will pay to Custodian such
compensation for its reimbursable disbursements, costs and expenses paid or
incurred to such date and Fund will use its best efforts to obtain a
successor custodian. Unless the holders of a majority of the outstanding
shares of "Capital Stock" of Fund vote to have the securities, funds and
other properties held under this Agreement delivered and paid over to some
other person, firm or corporation specified in the vote, having not less
the Two Million Dollars ($2,000,000) aggregate capital, surplus and
undivided profits, as shown by its last published report, and meeting such
other qualifications for custodian as set forth in the Bylaws of Fund, the
Board of Directors of Fund will, forthwith upon giving or receiving notice
of termination of this Agreement, appoint as successor custodian a bank or
trust company having such qualifications. Custodian will, upon termination
of this Agreement, deliver to the successor custodian so
16
<PAGE>
specified or appointed, at Custodian's office, all securities then held by
Custodian hereunder, duly endorsed and in form for transfer, all funds and
other properties of Fund deposited with or held by Custodian hereunder, or
will co-operate in effecting changes in book-entries at the Depository
Trust Company or in the Treasury/Federal Reserve Book-Entry System pursuant
to 31 CFR Sec. 306.118. In the event no such vote has been adopted by the
stockholders of Fund and no written order designating a successor custodian
has been delivered to Custodian on or before the date when such termination
becomes effective, then Custodian will deliver the securities, funds and
properties of Fund to a bank or trust company at the selection of Custodian
and meeting the qualifications for custodian, if any, set forth in the
Bylaws of Fund and having not less that Two Million Dollars ($2,000,000)
aggregate capital, surplus and undivided profits, as shown by its last
published report. Upon either such delivery to a successor custodian,
Custodian will have no further obligations or liabilities under this
Agreement. Thereafter such bank or trust company will be the successor
custodian under this Agreement and will be entitled to reasonable
compensation for its services. In the event that no such successor
custodian can be found, Fund will submit to its shareholders, before
permitting delivery of the cash and securities owned by Fund to anyone
other than a successor custodian, the question of whether Fund will be
liquidated or function without a custodian. Notwithstanding the foregoing
requirement as to delivery upon termination of this Agreement, Custodian
may make any other delivery of the securities, funds and property of Fund
which is permitted by the Investment Company Act of 1940, Fund's
Certificate of Incorporation and Bylaws then in effect or apply to a court
of competent jurisdiction for the appointment of a successor custodian.
10. NOTICES. Notices, requests, instructions and other writings received by
Fund at the address set forth above or such other address as Fund may have
designated to Custodian in writing, will be deemed to have been properly
given to Fund hereunder; and notices, requests, instructions and other
writings received by Custodian at its offices at 127 West 10th Street,
Kansas City, Missouri 64105, or to such other address as it may have
designated to Fund in writing, will be deemed to have been properly given
to Custodian hereunder.
11. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of Missouri and
shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective
successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and executed
by both parties hereto.
17
<PAGE>
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
E. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
G. Custodian will not release the identity of Fund to an issuer which
requests such information pursuant to the Shareholder Communications
Act of 1985 for the specific purpose of direct communications between
such issuer and Fund unless the Fund directs the Custodian otherwise.
H. This Agreement may not be assigned by either party without prior
written consent of the other party.
I. If any provision of the Agreement, either in its present form or as
amended from time to time, limits, qualifies, or conflicts with the
Investment Company Act of 1940 and the rules and regulations
promulgated thereunder, such statutes, rules and regulations shall be
deemed to control and supersede such provision without nullifying or
terminating the remainder of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-------------------------------
Title:
----------------------------
SELIGMAN TIME HORIZON/HARVESTERS SERIES, INC.
By:
-------------------------------
Title:
----------------------------
18
<PAGE>
EXHIBIT A -- INCOME AVAILABILITY SCHEDULE
FOREIGN--Income will be credited contractually on pay day in the markets noted
with Contractual Income Policy. The markets noted with Actual income policy will
be credited income when it is received.
<TABLE>
<CAPTION>
============================================================================================================================
MARKET INCOME POLICY MARKET INCOME POLICY MARKET INCOME POLICY
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina Actual Hong Kong Contractual Poland Actual
Australia Contractual Hungary Actual Portugal Contractual
Austria Contractual India Actual Russia Actual
Bahrain Actual Indonesia Actual Singapore Contractual
Bangladesh Actual Ireland Actual Slovak Republic Actual
Belgium Contractual Israel Actual South Africa Actual
Bermuda Actual Italy Contractual South Korea Actual
* Bolivia Actual Ivory Coast Actual Spain Contractual
Botswana Actual * Jamaica Actual Sri Lanka Actual
Brazil Actual Japan Contractual Swaziland Actual
Canada Contractual Jordan Actual Sweden Contractual
Chile Actual Kenya Actual Switzerland Contractual
China Actual Lebanon Actual Taiwan Actual
Colombia Actual Luxembourg Actual Thailand Actual
Cyprus Actual Malaysia Actual * Trinidad & Actual
Tobago
Czech Republic Actual Mauritius Actual * Tunisia Actual
Denmark Contractual Mexico Actual Turkey Actual
Ecuador Actual Morocco Actual United Kingdom Contractual
Egypt Actual Namibia Actual United States See Attached
**Euroclear Contractual/ Netherlands Contractual Uruguay Actual
Actual
Euro CDs Actual New Zealand Contractual Venezuela Actual
Finland Contractual Norway Contractual Zambia Actual
France Contractual Oman Actual Zimbabwe Actual
Germany Contractual Pakistan Actual
Ghana Actual Peru Actual
Greece Actual Philippines Actual
<FN>
* Market is not 17F-5 eligible
** For Euroclear, contractual income paid only in markets listed with
Income Policy of Contractual.
</FN>
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
UNITED STATES--
=================================================================================================================
INCOME TYPE DTC FED PTC PHYSICAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividends Contractual N/A N/A Actual
Fixed Rate Interest Contractual Contractual N/A Actual
Variable Rate Interest Contractual Contractual N/A Actual
GNMA I N/A N/A Contractual PD +1 N/A
GNMA II N/A N/A Contractual PD *** N/A
Mortgages Actual Contractual Contractual Actual
Maturities Actual Contractual N/A Actual
==================================================================================================================
</TABLE>
Exceptions to the above Contractual Income Policy include securities that
are:
-- Involved in a trade whose settlement either failed, or is pending over
the record date, (excluding the United States);
-- On loan under a self directed securities lending program other than
IFTC's own vendor lending program;
-- Known to be in a condition of default, or suspected to present a risk
of default or payment delay;
-- In the asset categories, without limitation, of Private Placements,
Derivatives, Options, Futures, CMOs, and Zero Coupon Bonds.
-- Securities whose amount of income and redemption cannot be calculated
in advance of payable date, or determined in advance of actual
collection, examples include ADRs;
-- Payments received as the result of a corporate action, not limited to,
bond calls, mandatory or optional puts, and tender offers.
*** For GNMA II securities, if the 19th day of the month is a business day,
Payable/Distribution Date is the next business day. If the 19th is not a
business day, but the 20th is a business day, Payable/Distribution date is
the first business day after the 20th. If both the 19th and 20th are not
business days, Payable/Distribution will be the next business day
thereafter.
20
INVESTMENT LETTER
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
Seligman Time Horizon/Harvester Series, Inc. (the "Series"), an open-end
diversified management investment company, and the undersigned ("Purchaser"),
intending to be legally bound, hereby agree as follows:
1. In order to provide the Series with its initial capital, the Series hereby
sells to Purchaser and Purchaser purchases 3,502 shares of Class A Capital
Stock (par value $.001) of Seligman Time Horizon 30 Fund, 3,502 shares of
Class A Capital Stock (par value $.001) of Seligman Time Horizon 20 Fund,
3,502 shares of Class A Capital Stock (par value $.001) of Seligman Time
Horizon 10 Fund and 3,502 shares of Class A Capital Stock (par value $.001)
of Seligman Harvester Fund, in each case at a price of $7.14 per share (the
"Shares") as of the close of business on December __, 1999. The Series
hereby acknowledges receipt from Purchaser of funds in the amount of
$100,017.12 in full payment for the Shares.
2. Purchaser represents and warrants to the Series that the Shares are being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of the Shares.
IN WITNESS WHEREOF, the parties have executed this agreement as of the __th day
of December, 1999 ("Purchase Date").
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
By:
-------------------------------
Name: Lawrence P. Vogel
Title: Vice President
SELIGMAN ADVISORS, INC.
By:
--------------------------------
Name: Stephen J. Hodgdon
Title: President
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
SECTION 1. Seligman Time Horizon 30 Fund (the "Fund"), a Fund of
Seligman Time Horizon/Harvester Series, Inc. (the "Series") will pay fees to
Seligman Advisors, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class B, Class C and Class D shares of the Fund. As
a result, the Fund is adopting this Administration, Shareholder Services and
Distribution Plan (the "Plan") pursuant to Section 12(b) of the Investment
Company Act of 1940, as amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the Distributor a
shareholder servicing fee of up to .25% on an annual basis, of the average daily
net assets of the Fund (payable quarterly with respect to Class A and monthly
with respect to Class B, Class C and Class D); provided, however, that any such
servicing fee payable by the Fund to the Distributor shall be reduced by an
amount equal to any servicing fee payments made to the Distributor by an
Underlying Fund (as that term is defined in the Prospectus of the Series)
pursuant to such Underlying Fund's Administration, Shareholder Services and
Distribution Plan as a result of the ownership by the Fund of the shares of such
Underlying Fund. In addition, pursuant to the Plan, the Fund may pay to the
Distributor a distribution fee of .75% on an annual basis, payable monthly, of
the average daily net assets of the Fund attributable to the Class B Shares and
a distribution fee of up to .75% on an annual basis, payable monthly, of the
average daily net assets of the Fund attributable to Class C and Class D shares.
Such fees will be used in their entirety by the Distributor to make payments for
administration, shareholder services and distribution assistance, including, but
not limited to (i) compensation to securities dealers and other organizations
(each, a "Service Organization" and collectively, the "Service Organizations"),
for providing distribution assistance with respect to assets invested in the
Fund, (ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Fund shareholders, and
(iii) otherwise promoting the sale of shares of the Fund, including paying for
the preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Directors of
the Series.
1
<PAGE>
SECTION 3. J. & W. Seligman & Co. Incorporated, the Series' investment
manager (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Series.
SECTION 4. This Plan shall continue in effect through December 31 of
each year so long as such continuance is specifically approved at least annually
by vote of a majority of both (a) the Directors of the Series and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
SECTION 5. The Distributor shall provide to the Series' Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
so expended and the purposes for which such expenditures were made.
SECTION 6. This Plan may be terminated by the Fund with respect to any
class at any time by vote of a majority of the Qualified Directors of the
Series, or by vote of a majority of the outstanding voting securities of such
class. If this Plan is terminated in respect of a class, no amounts (other than
amounts accrued but not yet paid) would be owed by the Fund to the Distributor
with respect to such class.
SECTION 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Series
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:
A. That such agreement may be terminated in respect of any class of the
Fund at any time, without payment of any penalty, by vote of a
majority of the Qualified Directors or by vote of a majority of the
outstanding voting securities of the class, on not more than 60 days'
written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Series and (b) the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval. This Plan shall not be amended to reduce the distribution fee payable
to the Distributor pursuant to Section 2 hereof in respect of Class B shares,
unless the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated,
2
<PAGE>
provided, however that the distribution fee in respect of Class B shares may be
reduced without change to the shareholder servicing fee, if and to the extent
required in order to comply with any applicable laws or regulations, including
applicable rules of the National Association of Securities Dealers, Inc.
regulating maximum sales charges.
SECTION 9. The Fund is not obligated to pay any administration,
shareholder services or distribution expense in excess of the fee described in
Section 2 hereof, and, in the case of Class A shares, any expenses of
administration, shareholder services and distribution of Class A shares of the
Fund accrued in one fiscal year of the Fund may not be paid from administration,
shareholder services and distribution fees received from the Fund in respect of
Class A shares in any other fiscal year.
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Series who are not "interested persons" of the
Series and have no direct or indirect financial interest in the operation of
this Plan or in any agreement related to this Plan.
3
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
SECTION 1. Seligman Time Horizon 20 Fund (the "Fund"), a Fund of
Seligman Time Horizon/Harvester Series, Inc. (the "Series") will pay fees to
Seligman Advisors, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class B, Class C and Class D shares of the Fund. As
a result, the Fund is adopting this Administration, Shareholder Services and
Distribution Plan (the "Plan") pursuant to Section 12(b) of the Investment
Company Act of 1940, as amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the Distributor a
shareholder servicing fee of up to .25% on an annual basis, of the average daily
net assets of the Fund (payable quarterly with respect to Class A and monthly
with respect to Class B, Class C and Class D); provided, however, that any such
servicing fee payable by the Fund to the Distributor shall be reduced by an
amount equal to any servicing fee payments made to the Distributor by an
Underlying Fund (as that term is defined in the Prospectus of the Series)
pursuant to such Underlying Fund's Administration, Shareholder Services and
Distribution Plan as a result of the ownership by the Fund of the shares of such
Underlying Fund. In addition, pursuant to the Plan, the Fund may pay to the
Distributor a distribution fee of .75% on an annual basis, payable monthly, of
the average daily net assets of the Fund attributable to the Class B Shares and
a distribution fee of up to .75% on an annual basis, payable monthly, of the
average daily net assets of the Fund attributable to Class C and Class D shares.
Such fees will be used in their entirety by the Distributor to make payments for
administration, shareholder services and distribution assistance, including, but
not limited to (i) compensation to securities dealers and other organizations
(each, a "Service Organization" and collectively, the "Service Organizations"),
for providing distribution assistance with respect to assets invested in the
Fund, (ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Fund shareholders, and
(iii) otherwise promoting the sale of shares of the Fund, including paying for
the preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Directors of
the Series.
1
<PAGE>
SECTION 3. J. & W. Seligman & Co. Incorporated, the Series' investment
manager (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Series.
SECTION 4. This Plan shall continue in effect through December 31 of
each year so long as such continuance is specifically approved at least annually
by vote of a majority of both (a) the Directors of the Series and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
SECTION 5. The Distributor shall provide to the Series' Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
so expended and the purposes for which such expenditures were made.
SECTION 6. This Plan may be terminated by the Fund with respect to any
class at any time by vote of a majority of the Qualified Directors of the
Series, or by vote of a majority of the outstanding voting securities of such
class. If this Plan is terminated in respect of a class, no amounts (other than
amounts accrued but not yet paid) would be owed by the Fund to the Distributor
with respect to such class.
SECTION 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Series
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:
A. That such agreement may be terminated in respect of any class of the
Fund at any time, without payment of any penalty, by vote of a
majority of the Qualified Directors or by vote of a majority of the
outstanding voting securities of the class, on not more than 60 days'
written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Series and (b) the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval. This Plan shall not be amended to reduce the distribution fee payable
to the Distributor pursuant to Section 2 hereof in respect of Class B shares,
unless the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated,
2
<PAGE>
provided, however that the distribution fee in respect of Class B shares may be
reduced without change to the shareholder servicing fee, if and to the extent
required in order to comply with any applicable laws or regulations, including
applicable rules of the National Association of Securities Dealers, Inc.
regulating maximum sales charges.
SECTION 9. The Fund is not obligated to pay any administration,
shareholder services or distribution expense in excess of the fee described in
Section 2 hereof, and, in the case of Class A shares, any expenses of
administration, shareholder services and distribution of Class A shares of the
Fund accrued in one fiscal year of the Fund may not be paid from administration,
shareholder services and distribution fees received from the Fund in respect of
Class A shares in any other fiscal year.
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Series who are not "interested persons" of the
Series and have no direct or indirect financial interest in the operation of
this Plan or in any agreement related to this Plan.
3
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
SECTION 1. Seligman Time Horizon 10 Fund (the "Fund"), a Fund of
Seligman Time Horizon/Harvester Series, Inc. (the "Series") will pay fees to
Seligman Advisors, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class B, Class C and Class D shares of the Fund. As
a result, the Fund is adopting this Administration, Shareholder Services and
Distribution Plan (the "Plan") pursuant to Section 12(b) of the Investment
Company Act of 1940, as amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the Distributor a
shareholder servicing fee of up to .25% on an annual basis, of the average daily
net assets of the Fund (payable quarterly with respect to Class A and monthly
with respect to Class B, Class C and Class D); provided, however, that any such
servicing fee payable by the Fund to the Distributor shall be reduced by an
amount equal to any servicing fee payments made to the Distributor by an
Underlying Fund (as that term is defined in the Prospectus of the Series)
pursuant to such Underlying Fund's Administration, Shareholder Services and
Distribution Plan as a result of the ownership by the Fund of the shares of such
Underlying Fund. In addition, pursuant to the Plan, the Fund may pay to the
Distributor a distribution fee of .75% on an annual basis, payable monthly, of
the average daily net assets of the Fund attributable to the Class B Shares and
a distribution fee of up to .75% on an annual basis, payable monthly, of the
average daily net assets of the Fund attributable to Class C and Class D shares.
Such fees will be used in their entirety by the Distributor to make payments for
administration, shareholder services and distribution assistance, including, but
not limited to (i) compensation to securities dealers and other organizations
(each, a "Service Organization" and collectively, the "Service Organizations"),
for providing distribution assistance with respect to assets invested in the
Fund, (ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Fund shareholders, and
(iii) otherwise promoting the sale of shares of the Fund, including paying for
the preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Directors of
the Series.
1
<PAGE>
SECTION 3. J. & W. Seligman & Co. Incorporated, the Series' investment
manager (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Series.
SECTION 4. This Plan shall continue in effect through December 31 of
each year so long as such continuance is specifically approved at least annually
by vote of a majority of both (a) the Directors of the Series and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
SECTION 5. The Distributor shall provide to the Series' Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
so expended and the purposes for which such expenditures were made.
SECTION 6. This Plan may be terminated by the Fund with respect to any
class at any time by vote of a majority of the Qualified Directors of the
Series, or by vote of a majority of the outstanding voting securities of such
class. If this Plan is terminated in respect of a class, no amounts (other than
amounts accrued but not yet paid) would be owed by the Fund to the Distributor
with respect to such class.
SECTION 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Series
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:
A. That such agreement may be terminated in respect of any class of the
Fund at any time, without payment of any penalty, by vote of a
majority of the Qualified Directors or by vote of a majority of the
outstanding voting securities of the class, on not more than 60 days'
written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Series and (b) the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval. This Plan shall not be amended to reduce the distribution fee payable
to the Distributor pursuant to Section 2 hereof in respect of Class B shares,
unless the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated,
2
<PAGE>
provided, however that the distribution fee in respect of Class B shares may be
reduced without change to the shareholder servicing fee, if and to the extent
required in order to comply with any applicable laws or regulations, including
applicable rules of the National Association of Securities Dealers, Inc.
regulating maximum sales charges.
SECTION 9. The Fund is not obligated to pay any administration,
shareholder services or distribution expense in excess of the fee described in
Section 2 hereof, and, in the case of Class A shares, any expenses of
administration, shareholder services and distribution of Class A shares of the
Fund accrued in one fiscal year of the Fund may not be paid from administration,
shareholder services and distribution fees received from the Fund in respect of
Class A shares in any other fiscal year.
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Series who are not "interested persons" of the
Series and have no direct or indirect financial interest in the operation of
this Plan or in any agreement related to this Plan.
3
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
SECTION 1. Seligman Harvester Fund (the "Fund"), a Fund of Seligman
Time Horizon/Harvester Series, Inc. (the "Series") will pay fees to Seligman
Advisors, Inc., the principal underwriter of its shares (the "Distributor"), for
administration, shareholder services and distribution assistance for the Class
A, Class B, Class C and Class D shares of the Fund. As a result, the Fund is
adopting this Administration, Shareholder Services and Distribution Plan (the
"Plan") pursuant to Section 12(b) of the Investment Company Act of 1940, as
amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the Distributor a
shareholder servicing fee of up to .25% on an annual basis, of the average daily
net assets of the Fund (payable quarterly with respect to Class A and monthly
with respect to Class B, Class C and Class D); provided, however, that any such
servicing fee payable by the Fund to the Distributor shall be reduced by an
amount equal to any servicing fee payments made to the Distributor by an
Underlying Fund (as that term is defined in the Prospectus of the Series)
pursuant to such Underlying Fund's Administration, Shareholder Services and
Distribution Plan as a result of the ownership by the Fund of the shares of such
Underlying Fund. In addition, pursuant to the Plan, the Fund may pay to the
Distributor a distribution fee of .75% on an annual basis, payable monthly, of
the average daily net assets of the Fund attributable to the Class B Shares and
a distribution fee of up to .75% on an annual basis, payable monthly, of the
average daily net assets of the Fund attributable to Class C and Class D shares.
Such fees will be used in their entirety by the Distributor to make payments for
administration, shareholder services and distribution assistance, including, but
not limited to (i) compensation to securities dealers and other organizations
(each, a "Service Organization" and collectively, the "Service Organizations"),
for providing distribution assistance with respect to assets invested in the
Fund, (ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Fund shareholders, and
(iii) otherwise promoting the sale of shares of the Fund, including paying for
the preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Directors of
the Series.
1
<PAGE>
SECTION 3. J. & W. Seligman & Co. Incorporated, the Series' investment
manager (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Series.
SECTION 4. This Plan shall continue in effect through December 31 of
each year so long as such continuance is specifically approved at least annually
by vote of a majority of both (a) the Directors of the Series and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
SECTION 5. The Distributor shall provide to the Series' Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
so expended and the purposes for which such expenditures were made.
SECTION 6. This Plan may be terminated by the Fund with respect to any
class at any time by vote of a majority of the Qualified Directors of the
Series, or by vote of a majority of the outstanding voting securities of such
class. If this Plan is terminated in respect of a class, no amounts (other than
amounts accrued but not yet paid) would be owed by the Fund to the Distributor
with respect to such class.
SECTION 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Series
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:
A. That such agreement may be terminated in respect of any class of the
Fund at any time, without payment of any penalty, by vote of a
majority of the Qualified Directors or by vote of a majority of the
outstanding voting securities of the class, on not more than 60 days'
written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Series and (b) the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval. This Plan shall not be amended to reduce the distribution fee payable
to the Distributor pursuant to Section 2 hereof in respect of Class B shares,
unless the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated,
2
<PAGE>
provided, however that the distribution fee in respect of Class B shares may be
reduced without change to the shareholder servicing fee, if and to the extent
required in order to comply with any applicable laws or regulations, including
applicable rules of the National Association of Securities Dealers, Inc.
regulating maximum sales charges.
SECTION 9. The Fund is not obligated to pay any administration,
shareholder services or distribution expense in excess of the fee described in
Section 2 hereof, and, in the case of Class A shares, any expenses of
administration, shareholder services and distribution of Class A shares of the
Fund accrued in one fiscal year of the Fund may not be paid from administration,
shareholder services and distribution fees received from the Fund in respect of
Class A shares in any other fiscal year.
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Series who are not "interested persons" of the
Series and have no direct or indirect financial interest in the operation of
this Plan or in any agreement related to this Plan.
3
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION AGREEMENT, dated as of
___________________ between Seligman Advisors, Inc. ("Seligman Advisors") and
__________________________ (the "Service Organization").
The Parties hereto enter into a Administration, Shareholder Services
and Distribution Agreement ("Service Agreement") with respect to the shares of
Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund, Inc.,
Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson
Global Fund Series, Inc., Seligman High Income Fund Series, Seligman Income
Fund, Inc., Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Municipal Fund Series, Inc., Seligman Municipal
Series Trust, Seligman Time Horizon/Harvester Series, Inc., Seligman Value Fund
Series, Inc. (the "Funds"), and any other future mutual funds that may become
members of the Seligman Group of Investment Companies which adopt an
Administration, Shareholder Services and Distribution Plan, pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "Act"), and in
consideration of the mutual agreements herein made, agree as follows:
The Service Organization shall make such use of or provide such
information and services as may be necessary or appropriate (i) to provide
shareholder services to shareholders of the Funds and (ii) to assist Seligman
Advisors in any distribution of shares of the Funds, including, without
limitation, making use of the Service Organization's name, client lists, and
publications, for the solicitation of sales of shares of the Funds to Service
Organization clients, and such other assistance as Seligman Advisors reasonably
requests, to the extent permitted by applicable statute, rule or regulation.
1. Except with respect to the Class C and Class D shares of a Fund for the
first year following the sale thereof, Seligman Advisors shall pay to the
Service Organization a service fee (as defined in the National Association
of Securities Dealers, Inc. Rules of Fair Practice) not to exceed .25 of 1%
per annum of the average daily net assets of each class of shares of each
Fund attributable to the clients of the Service Organization.
2. With respect to the first year following the sale of Class C and Class D
shares of a Fund, Seligman Advisors shall pay to the Service Organization
at or promptly after the time of sale a service fee (as defined in the
National Association of Securities Dealers, Inc. Rules of Fair Practice)
not to exceed .25 of 1% of the net asset value of the Class C or Class D
shares sold by the Service Organization. Such service fee shall be paid to
the Service Organization solely for personal services and/or the
maintenance of shareholder accounts to be provided by the Service
Organization to the purchaser of such Class C or Class D Shares over the
course of the first year following the sale.
3. Any service fee paid hereunder shall be paid solely for personal services
and/or the maintenance of shareholder accounts. For greater certainty, no
part of a service fee shall be paid for subtransfer agency services,
subaccounting services, or administrative services.
4. In addition to payment of the service fee, from time to time Seligman
Advisors may make payments to the Service Organization in addition to those
contemplated above for
<PAGE>
providing distribution assistance with respect to assets invested in each
Fund by its clients.
5. Neither the Service Organization nor any of its employees or agents are
authorized to make any representation concerning the Funds or the Funds'
shares except those contained in the then current Prospectus, copies of
which will be supplied by Seligman Advisors. The Service Organization shall
have no authority to act as agent for Seligman Advisors or the Funds.
6. In consideration of the services provided pursuant to paragraphs 1, 2
and/or 4 above, the Service Organization shall be entitled to receive fees
as are set forth in Exhibit A hereto as may be amended from time to time by
Seligman Advisors. Seligman Advisors has no obligation to make any such
payments and the Service Organization agrees to waive payment of its fee
until Seligman Advisors is in receipt of the fee from the Fund(s). The
payment of fees has been authorized pursuant to Administration, Shareholder
Services and Distribution Plans (the "Plans") approved by the
Directors/Trustees and the shareholders of the Funds pursuant to the
requirements of the Act and such authorizations may be withdrawn at any
time.
7. It is understood that the Funds reserve the right, at their discretion and
without notice, to suspend or withdraw the sale of shares of the Funds.
This Agreement shall not be construed to authorize the Service Organization
to perform any act that Seligman Advisors would not be permitted to perform
under the respective Distributing Agreements between each of the Funds and
Seligman Advisors.
8. Subject to the proviso in Section 6 of the Plans, this Agreement shall
continue until December 31 of the year in which any Plan has first been
approved by shareholders and through December 31 of each year thereafter
provided such continuance is specifically approved at least annually by a
vote of a majority of (i) the Fund's Directors/Trustees and (ii) the
Qualified Directors/Trustees cast in person at a meeting called for the
purpose of voting on such approval and provided further that the Service
Organization shall not have notified Seligman Advisors in writing at least
60 days prior to the anniversary date of the previous continuance that it
does not desire such continuance. This Agreement may be terminated at any
time without payment of any penalty with respect to any of the Funds by
vote of a majority of the Qualified Directors/Trustees, or by vote of a
majority of the outstanding voting securities of the particular Fund or
class or series of a Fund, on 60 days' written notice to the Service
Organization and Seligman Advisors. Notwithstanding anything contained
herein, in the event that any of the Plans shall be terminated or any of
the Plans or any part thereof shall be found invalid or ordered terminated
by any regulatory or judicial authority, or the Service Organization shall
fail to perform the services contemplated by this Agreement, such
determination to be made in good faith by Seligman Advisors, this Agreement
may be terminated with respect to such Plan effective upon receipt of
written notice thereof by the Service Organization. This Agreement will
also terminate automatically in the event of its assignment.
9. All communications to Seligman Advisors shall be sent to it at its offices,
100 Park Avenue, New York, New York 10017.
Any notice to the Service Organization shall be duly given if mailed or
telegraphed to it at the address shown below.
<PAGE>
10. As used in this Agreement, the terms "assignment", "interested person" and
"vote of a majority of the outstanding voting securities" shall have the
respective meanings specified in the Act and in the rules and regulations
thereunder and the term "Qualified Directors/Trustees" shall mean the
Directors/Trustees of a Fund who are not interested persons of the Fund and
have no direct or indirect financial interest in its Plan or in any
agreements related to the Plan.
11. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Anything herein to the contrary
notwithstanding, this Agreement shall not be construed to require, or to
impose any duty upon, any of the parties to do anything in violation of any
applicable laws or regulations.
IN WITNESS WHEREOF, Seligman Advisors and the Service Organization have caused
this Agreement to be executed by their duly authorized offices as of the date
first above written.
SELIGMAN ADVISORS, INC.
By__________________________________
Stephen J. Hodgdon, President
SERVICE ORGANIZATION
__________________________________
By__________________________________
Address__________________________________
__________________________________
6/99
SELIGMAN GROUP OF MUTUAL FUNDS
Plan for Multiple Classes of Shares (four classes)
--------------------------------------------------
THIS PLAN, as it may be amended from time to time, sets forth the
separate arrangement and expense allocation of each class of shares (a "Class")
of each registered open-end management investment company, or series thereof, in
the Seligman Group of Mutual Funds that offers four classes of shares (each, a
"Fund"). The Plan has been adopted pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "Act"), by a majority of the
Board of Directors or Trustees, as applicable ("Directors"), of each Fund listed
on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.
1. General
-------
A. Any Fund may issue more than one Class of voting stock, provided that
each Class:
i. Shall have a different arrangement for shareholder services or the
distribution of securities or both, and shall pay all of the
expenses of that arrangement;
ii. May pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount by that Class, or if the Class
receives services of a different kind or to a different degree
than other Classes of the same Fund ("Class Level Expenses");
iii. May pay a different advisory fee to the extent that any difference
in amount paid is the result of the application of the same
performance fee provisions in the advisory contract of the Fund to
the different investment performance of each Class;
iv. Shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement;
<PAGE>
v. Shall have separate voting rights on any matter submitted to
shareholders in which the interests of one Class differ from the
interests of any other Class; and
vi. Shall have in all other respects the same rights and obligations
as each other Class of the Fund.
B. i. Except as expressly contemplated by this paragraph B., no types or
categories of expenses shall be designated Class Level Expenses.
ii. The Directors recognize that certain expenses arising in certain
sorts of unusual situations are properly attributable solely to
one Class and therefore should be borne by that Class. These
expenses ("Special Expenses") may include, for example: (i) the
costs of preparing a proxy statement for, and holding, a special
meeting of shareholders to vote on a matter affecting only one
Class; (ii) the costs of holding a special meeting of Directors to
consider such a matter; (iii) the costs of preparing a special
report relating exclusively to shareholders of one Class; and (iv)
the costs of litigation affecting one Class exclusively. J. & W.
Seligman & Co. Incorporated (the "Manager") shall be responsible
for identifying expenses that are potential Special Expenses.
iii. Subject to clause iv. below, any Special Expense identified by the
Manager shall be treated as a Class Level Expense.
iv. Any Special Expense identified by the Manager that is material to
the Class in respect of which it is incurred shall be submitted by
the Manager to the Directors of the relevant Fund on a case by
case basis with a recommendation by the Manager as to whether it
should be treated as a Class Level Expense. If approved by the
Directors, such Special Expense shall be treated as a Class Level
Expense of the affected class.
C. i. Realized and unrealized capital gains and losses of a Fund shall
be allocated to each class of that Fund on the basis of the
aggregate net asset value of all outstanding shares ("Record
Shares") of the Class in relation to the aggregate net asset value
of Record Shares of the Fund.
<PAGE>
ii. Income and expenses of a Fund not charged directly to a particular
Class shall be allocated to each Class of that Fund on the
following basis:
a. For periodic dividend funds, on the basis of the aggregate
net asset value of Record Shares of each Class in relation to
the aggregate net asset value of Record Shares of the Fund.
b. For daily dividend funds, on the basis of the aggregate net
asset value of Settled Shares of each Class in relation to
the aggregate net asset value of Settled Shares of the Fund.
"Settled Shares" means Record Shares minus the number of
shares of that Class or Fund that have been issued but for
which payment has not cleared and plus the number of shares
of that Class or Fund which have been redeemed but for which
payment has not yet been issued.
D. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the Act and otherwise, will monitor each Fund
for the existence of any material conflicts among the interests of its
several Classes. The Directors, including a majority of the
Disinterested Directors, shall take such action as is reasonably
necessary to eliminate any such conflicts that may develop. The Manager
and Seligman Advisors, Inc. (the "Distributor") will be responsible for
reporting any potential or existing conflicts to the Directors. If a
conflict arises, the Manager and the Distributor will be responsible at
their own expense for remedying such conflict by appropriate steps up
to and including separating the classes in conflict by establishing a
new registered management company to operate one of the classes.
E. The plan of each Fund adopted pursuant to Rule 12b-1 under the Act (the
"Rule 12b-1 Plan") provides that the Directors will receive quarterly
and annual statements complying with paragraph (b)(3)(ii) of Rule
12b-1, as it may be amended from time to time. To the extent that the
Rule 12b-1 Plan in respect of a specific Class is a reimbursement plan,
then only distribution expenditures properly attributable to the sale
of shares of that Class will be used in the statements to support the
Rule 12b-1 fee charged to shareholders of such Class. In such cases
expenditures not related to the sale of a specific Class will not be
presented to the Directors to support Rule 12b-1 fees charged to
shareholders of such Class. The statements, including the allocations
upon which they are based, will be subject to the review of the
Disinterested Directors.
<PAGE>
F. Dividends paid by a Fund with respect to each Class, to the extent any
dividends are paid, will be calculated in the same manner, at the same
time and on the same day and will be in the same amount, except that
fee payments made under the Rule 12b-1 Plan relating to the Classes
will be borne exclusively by each Class and except that any Class Level
Expenses shall be borne by the applicable Class.
G. The Directors of each Fund hereby instruct such Fund's independent
auditors to review expense allocations each year as part of their
regular audit process, to inform the Directors and the Manager of any
irregularities detected and, if specifically requested by the
Directors, to prepare a written report thereon. In addition, if any
Special Expense is incurred by a Fund and is classified as a Class
Level Expense in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing such
allocation, are hereby instructed to report thereon to the Audit
Committee of the relevant Fund and to the Manager. The Manager will be
responsible for taking such steps as are necessary to remedy any
irregularities so detected, and will do so at its own expense to the
extent such irregularities should reasonably have been detected and
prevented by the Manager in the performance of its services to the
Fund.
2. Specific Arrangements for Each Class
------------------------------------
The following arrangements regarding shareholder services, expense
allocation and other indicated matters shall be in effect with respect to the
Class A shares, Class B shares, Class C shares and Class D shares of each Fund.
The following descriptions are qualified by reference to the more detailed
description of such arrangements set forth in the prospectus and statement of
additional information relating to each Fund, as the same may from time to time
be amended or supplemented (collectively for each Fund, the "Relevant
Prospectus"), provided that no Relevant Prospectus may modify the provisions of
this Plan applicable to Rule 12b-1 fees or Class Level Expenses.
(a) Class A Shares
--------------
i. Class A shares are subject to an initial sales load which varies
with the size of the purchase, to a maximum of 4.75% of the public
offering price. Reduced sales loads shall apply in certain
circumstances. Class A shares of Seligman Cash Management Fund,
Inc. shall not be subject to an initial sales load.
<PAGE>
ii. Class A shares shall be subject to a Rule 12b-1 service fee of up
to 0.25% of average daily net assets.
iii. Special Expenses attributable to the Class A shares, except those
determined by the Directors not to be Class Level Expenses of the
Class A shares in accordance with paragraph 1.B.iv., shall be
Class Level Expenses and attributed solely to the Class A shares.
No other expenses shall be treated as Class Level Expenses of the
Class A shares.
iv. The Class A shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant
Prospectus.
(b) Class B Shares
--------------
i. Class B shares are sold without an initial sales load but are
subject to a contingent deferred sales load ("CDSL") in certain
cases. The CDSL in respect of any Class B share, if applicable,
will be in the following amount (as a percentage of the current
net asset value or the original purchase price, whichever is less)
if the redemption occurs within the indicated number of years of
issuance of such share:
Years since issuance CDSL
-------------------- ----
less than one 5%
one but less than two 4%
two but less than four 3%
four but less than five 2%
five but less than six 1%
six or more 0%
ii. Class B shares shall be subject to a Rule 12b-1 fee of up to 1.00%
of average daily net assets, consisting of an asset-based
distribution fee of up to 0.75% and a service fee of up to 0.25%.
iii. Each Class B share shall automatically convert to a Class A share
on the last day of the month which precedes the eighth anniversary
of its date of issue occurs.
iv. Special Expenses attributable to the Class B shares, except those
determined by the Directors not to be Class Level Expenses of the
Class B shares in accordance with paragraph 1.B.iv., shall be
<PAGE>
Class Level Expenses and attributed solely to the Class B shares.
No other expenses shall be treated as Class Level Expenses of the
Class B shares.
v. The Class B shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant
Prospectus.
(c) Class C Shares
--------------
i. Class C shares are subject to an initial sales load which varies
with the size of the purchase, to a maximum of 1.00% of the public
offering price, and a CDSL of 1% of the lesser of the current net
asset value or the original purchase price in certain cases if the
shares are redeemed within eighteen months of purchase. Reduced
sales loads shall apply in certain circumstances. Class C shares
of Seligman Cash Management Fund, Inc. shall not be subject to an
initial sales load.
ii. Class C shares shall be subject to a Rule 12b-1 fee of up to 1.00%
of average daily net assets, consisting of an asset-based
distribution fee of up to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class C shares, except those
determined by the Directors not to be Class Level Expenses of the
Class C shares in accordance with paragraph 1.B.iv., shall be
Class Level Expenses and attributed solely to the Class C shares.
No other expenses shall be treated as Class Level Expenses of the
Class C shares.
iv. The Class C shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant
Prospectus.
(d) Class D Shares
--------------
i. Class D shares are sold without an initial sales load but are
subject to a CDSL of 1% of the lesser of the current net asset
value or the original purchase price in certain cases if the
shares are redeemed within one year.
<PAGE>
ii. Class D shares shall be subject to a Rule 12b-1 fee of up to 1.00%
of average daily net assets, consisting of an asset-based
distribution fee of up to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class D shares, except those
determined by the Directors not to be Class Level Expenses of the
Class D shares in accordance with paragraph 1.B.iv., shall be
Class Level Expenses and attributed solely to the Class D shares.
No other expenses shall be treated as Class Level Expenses of the
Class D shares.
iv. The Class D shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant
Prospectus.
<PAGE>
SCHEDULE I
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Income Fund, Inc.
Seligman Henderson Emerging Markets Growth Fund
Seligman Henderson Global Growth Opportunities Fund
Seligman Henderson Global Smaller Companies Fund
Seligman Henderson Global Technology Fund
Seligman Henderson International Fund
Seligman High-Yield Bond Fund
Seligman Time Horizon/Harvester Series, Inc.
Seligman U.S. Government Securities Fund
Seligman Value Fund Series, Inc.
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ John R. Galvin (L.S.)
-------------------------
John R. Galvin
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, her attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in her name and stead, in her capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ Alice S. Ilchman (L.S.)
-------------------------
Alice S. Ilchman
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ Frank A. McPherson (L.S.)
-------------------------
Frank A. McPherson
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ John E. Merow (L.S.)
-------------------------
John E. Merow
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, her attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in her name and stead, in her capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ Betsy S. Michel (L.S.)
-------------------------
Betsy S. Michel
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ James C. Pitney (L.S.)
-------------------------
James C. Pitney
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ James Q. Riordan (L.S.)
-------------------------
James Q. Riordan
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ Richard R. Schmaltz (L.S.)
-------------------------
Richard R. Schmaltz
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ Robert L. Shafer (L.S.)
-------------------------
Robert L. Shafer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN TIME
HORIZON/HARVESTER SERIES, INC., a Maryland corporation, which proposes to file
with the Securities and Exchange Commission an Amendment to Registration
Statement on Form N-1A and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 18th day of November, 1999.
/s/ James N. Whitson (L.S.)
-------------------------
James N. Whitson