SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. __ [_]
POST-EFFECTIVE AMENDMENT NO. __ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. __ [_]
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SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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100 PARK AVENUE
NEW YORK, NEW YORK 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER: 212-850-1864 OR
TOLL FREE: 800-221-2450
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THOMAS G. ROSE, TREASURER,
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
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<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.
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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.
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PART A
SELIGMAN
TIME HORIZON/HARVESTER
SERIES, INC.
PROSPECTUS
, 1999
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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.
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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 11
Past Performance of the Funds 12
Fees and Expenses of the Funds 12
Examples of Each Fund's Expenses 17
Management of the Funds 18
THE UNDERLYING FUNDS
Investment Objectives and Principal Strategies of the Underlying Funds 19
Principal Risks of the Underlying Funds 21
Fees and Expenses of the Underlying Funds 25
YEAR 2000 26
SHAREHOLDER INFORMATION
Deciding Which Class of Shares to Buy 27
How CDSCs are Calculated 29
Pricing of Fund Shares 30
Opening Your Account 30
How to Buy Additional Shares 31
How to Exchange Shares Among the Seligman Mutual Funds 32
How to Sell Shares 32
Important Policies That May Affect Your Account 33
Telephone Services 34
Reinstatement Privilege 35
Dividends and Capital Gain Distributions 35
Taxes 36
APPENDIX A
APPENDIX B
APPENDIX C
FOR MORE INFORMATION back cover
TIMES CHANGE ... VALUES ENDURE
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THE FUNDS
OVERVIEW
J. & W. Seligman & Co. Incorporated (the "Manager") serves as the investment
manager to 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"). 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 an
income stream from their capital. 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 seeks to achieve its objectives by investing in a combination of
mutual funds for which 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 high-quality, 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 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."
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FUND INVESTMENT OBJECTIVE(S) ASSET ALLOCATION STRATEGY
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Under normal conditions,
this Fund invests in
Underlying Funds to
produce a portfolio that
primarily invests in:
TIME HORIZON 30 FUND - INTENDED Long-term capital Domestic and international
FOR INVESTORS WITH LONG-TERM appreciation. equity securities weighted
FINANCIAL GOALS (I.E., toward small- and
APPROXIMATELY 30 YEARS AWAY). medium-capitalization and
aggressive growth companies.
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3
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FUND INVESTMENT OBJECTIVE(S) ASSET ALLOCATION STRATEGY
- -------------------------------------------- ---------------------------------- ---------------------------------------
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Under normal conditions,
this Fund invests in
Underlying Funds to
produce a portfolio that
primarily invests in:
TIME HORIZON 20 FUND - INTENDED FOR Long-term capital Growth-oriented domestic and
INVESTORS WITH LONG-TERM FINANCIAL appreciation. international equity
GOALS (I.E., APPROXIMATELY 20 YEARS securities, with a more even
AWAY). weighting among small-,
medium-, and
large-capitalization
companies than the Time
Horizon 30 Fund.
TIME HORIZON 10 FUND - INTENDED FOR Capital appreciation. Small-, medium-, and
INVESTORS WITH INTERMEDIATE-TERM large-capitalization domestic
FINANCIAL GOALS (I.E., and international equity
APPROXIMATELY 10 YEARS AWAY). securities as well as
fixed-income securities.
HARVESTER FUND - INTENDED FOR Capital appreciation and Medium- and
INVESTORS WHO SEEK AN INCOME STREAM preservation of capital large-capitalization and
FROM THEIR CAPITAL. with current income and dividend-producing equity
growth of income. securities supplemented by a
larger allocation of
fixed-income securities and
cash and cash equivalents than
the Time Horizon 10 Fund.
</TABLE>
PRINCIPAL STRATEGIES OF THE FUNDS
Investments in Underlying Funds
Each Fund seeks to achieve its investment objective(s) by investing a certain
percentage of its assets in the Underlying Funds (which are described under the
section of this Prospectus titled "The Underlying Funds"), US Government
securities and short-term instruments. The table below illustrates the current
allocation targets and ranges for each Fund under normal 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." These allocation targets and ranges are based on asset
allocation strategies developed by the Manager. The strategies are known as
Seligman Time Horizon Matrix and Seligman Harvester. Following the table is 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.
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TIME TIME TIME
HORIZON HORIZON HORIZON HARVESTER
UNDERLYING FUND 30 FUND 20 FUND 10 FUND FUND
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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>
Q: WHAT IS SELIGMAN TIME HORIZON MATRIX?
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
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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?
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?
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 chart that
illustrates how the relative risk of the major asset classes historically has
changed over different holding periods since 1950.
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Q: HOW WAS SELIGMAN HARVESTER DEVELOPED?
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 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?
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 timeframe. 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 allocation
recommended by Seligman Harvester. Using Seligman Time Horizon Matrix, an
investor would not buy and hold the same portfolio from year to year.
Q: HOW DOES EACH FUND BENEFIT FROM THE MANAGER'S RESEARCH?
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.
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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
securities. 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
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 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 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?
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
8
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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.
Q: CAN I HOLD EACH FUND WITHIN THE SERIES FOR AS LONG AS I WANT?
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 Harvester Fund, especially over holding periods
of five years or less. Such a potential exposure to increased portfolio
volatility may be particularly important 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?
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
- -------------------------------------------------------------
Under normal market conditions, the Manager intends to reallocate each Fund's
portfolio securities (i.e., Underlying Funds, US Government securities and
short-term instruments) to its current targets on a semi-annual basis if such
portfolio securities are outside the Fund's current allocation ranges on the
semi-annual
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reallocation date. These asset allocation targets and ranges apply
to the portion of each Fund's net assets that are invested in accordance with
its investment objective(s). A Fund may hold a portion of its assets in cash or
cash equivalents in order to meet anticipated redemptions, or because it has not
yet invested the proceeds of a sale of Fund shares. Cash and cash equivalents
will be excluded from net assets for purposes of calculating the allocations
among Underlying Funds.
A Fund may purchase or sell 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.
Each Fund may invest up to 100% of its assets 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 in order to
maintain liquidity, to meet shareholder redemptions, or in an attempt to respond
to adverse market, economic, political and other conditions. When a Fund's
assets are invested in such investments, the Fund may not be achieving its
investment objective(s).
As mentioned above, under normal conditions, the Manager intends to reallocate
on a semi-annual basis each Fund's portfolio securities to its current
allocation targets if such portfolio securities are outside its current asset
allocation ranges on the semi-annual reallocation date. This process will
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 position of
portfolio securities 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 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.
Potential investors in each Fund should realize that they may directly invest in
the Underlying Funds and make their own asset allocation decisions. By investing
in a Fund, an investor will incur not only a proportionate share of the expenses
of the Fund but also a portion of the expenses of the Underlying Funds in which
the Fund invests (including investment management fees and operating expenses
charged at the
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Underlying Fund level). A more complete description of these
expenses is provided under "Fees and Expenses of the Funds" and "Fees and
Expenses of the Underlying Funds." For more information about the investment
strategies of the Funds, Seligman Time Horizon Matrix or Seligman Harvester,
please contact your financial advisor.
PRINCIPAL RISKS OF THE FUNDS
Each of the Funds has a different objective and policy and different degrees of
potential investment risk and reward. Based on the asset allocation strategies
described above, an investor should choose among the Funds based on personal
objectives, investment time horizons, risk tolerance, and financial
circumstances. For example, because the Time Horizon 30 Fund's portfolio
normally includes investments in Underlying Funds that primarily invest in
aggressive domestic and international growth equity securities and is more
heavily weighted to small- and mid-capitalization stocks, it might be suitable
for an investor with a relatively long time horizon (i.e., approximately 30
years) who seeks long-term capital appreciation potential and has a fairly high
tolerance for risk and volatility. An investor who has a somewhat shorter time
horizon might choose the Time Horizon 20 Fund, which normally invests in
Underlying Funds that invest primarily in growth-oriented domestic and
international equity securities, but is more evenly weighted among small-,
medium-, and large-capitalization companies than the Time Horizon 30 Fund. An
investor who is seeking current income combined with some potential for
long-term capital appreciation might choose the Time Horizon 10 Fund, which
normally invests in Underlying Funds that invest primarily in small-, medium-,
and large-capitalization domestic and international equity securities, as well
as fixed-income securities. An investor who is seeking an income stream and some
potential for capital appreciation and growth of income might choose the
Harvester Fund, which normally invests in Underlying Funds that primarily invest
in medium- and large-capitalization, and dividend-producing equity securities
supplemented by a substantial investment in fixed-income securities and cash.
Although each Fund provides a relatively high level of diversification in
comparison with most mutual funds, a single Fund may not be suitable as a
complete investment program.
Each Fund will invest substantially all of its assets in the Underlying Funds.
As a result, each Fund's investment performance is directly related to the
investment performance of the Underlying Funds. The ability of each Fund to meet
its objective(s) is directly related to the ability of the Underlying Funds to
meet their objectives as well as the Manager's allocation of investments among
those Underlying Funds. The value of the Underlying Funds' investments, and the
net asset values of the shares of both the Funds and the Underlying Funds, will
vary in response to market and economic factors related to the equity and
fixed-income markets, as well as the financial condition and prospects of
issuers in the which the Underlying Funds invest. There can be no assurance that
the investment objective(s) of any Fund or any Underlying Fund will be achieved,
and you may lose money.
The investments of the Underlying Funds pose additional risks, which are
summarized here and described more fully below 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
11
<PAGE>
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.
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.
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.
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.
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, effective ___,
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. A more complete description
of the fees and expenses of the Underlying Funds is provided under "Fees and
Expenses of the Underlying Funds" in this Prospectus and under "Fees and
Expenses" in each Underlying Fund's Prospectus, which are incorporated herein by
reference and are available free of charge by telephoning 1-800-221-2450.
12
<PAGE>
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 Purchases (as 4.75%(1)(2) None 1% None
a % of offering price)
Maximum Contingent Deferred Sales Charge None(1) 5% 1% 1%
(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 1999:
(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>
Fund-level expenses:
Asset allocation fees.......................... 0.10% 0.10% 0.10% 0.10%
---- ---- ---- ----
Total distribution and/or service
(12b-1) fees (1)............................... 0.25 1.00 1.00 1.00
Credit to Fund for 12b-1 fees paid by
Underlying Funds (1)...................... (0.25) (0.25) (0.25) (0.25)
----- ----- ----- -----
Net 12b-1 fees paid by Fund (1)............... -- 0.75 0.75 0.75
----- ---- ---- ----
Other expenses (2)............................. 2.04 2.04 2.04 2.04
---- ---- ---- ----
TOTAL FUND-LEVEL EXPENSES................ 2.14 2.89 2.89 2.89
Less: Fee waiver and/or expense
reimbursement (3)................... (1.64) (1.64) (1.64) (1.64)
----- ----- ----- -----
TOTAL FUND-LEVEL EXPENSES (AFTER FEE
WAIVER AND/OR REIMBURSEMENT)............. 0.50 1.25 1.25 1.25
---- ---- ---- ----
Underlying Fund expenses:
Management fees (4)............................ 0.87 0.87 0.87 0.87
12b-1 fees (1)................................. 0.25 0.25 0.25 0.25
Other expenses (5)............................. 0.40 0.40 0.40 0.40
---- ---- ---- ----
TOTAL UNDERLYING FUND EXPENSES............. 1.52 1.52 1.52 1.52
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES............... 3.66% 4.41% 4.41% 4.41%
==== ==== ==== ====
TOTAL ANNUAL FUND OPERATING EXPENSES
(AFTER WAIVER AND/OR REIMBURSEMENT OF FUND-LEVEL FEES
AND EXPENSES)...................................... 2.02% 2.77% 2.77% 2.77%
==== ==== ==== ====
</TABLE>
13
<PAGE>
TIME HORIZON 20 FUND ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 1999:
(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>
Fund-level expenses:
Asset allocation fees.......................... 0.10% 0.10% 0.10% 0.10%
---- ---- ---- ----
Total distribution and/or service
(12b-1) fees (1)............................... 0.25 1.00 1.00 1.00
Credit to Fund for 12b-1 fees paid by
Underlying Funds (1)...................... (0.25) (0.25) (0.25) (0.25)
----- ----- ----- -----
Net 12b-1 fees paid by Fund (1)............... -- 0.75 0.75 0.75
----- ---- ---- ----
Other expenses (2)............................. 2.04 2.04 2.04 2.04
---- ---- ---- ----
TOTAL FUND-LEVEL EXPENSES................ 2.14 2.89 2.89 2.89
---- ---- ---- ----
Less: Fee waiver and/or expense
reimbursement (3)................... (1.64) (1.64) (1.64) (1.64)
----- ----- ----- -----
TOTAL FUND-LEVEL EXPENSES (AFTER FEE
WAIVER AND/OR REIMBURSEMENT)............. 0.50 1.25 1.25 1.25
---- ---- ---- ----
Underlying Fund expenses:
Management fees (4)............................ 0.86 0.86 0.86 0.86
12b-1 fees (1)................................. 0.25 0.25 0.25 0.25
Other expenses (5)............................. 0.40 0.40 0.40 0.40
---- ---- ---- ----
TOTAL UNDERLYING FUND EXPENSES............. 1.51 1.51 1.51 1.51
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES............... 3.64% 4.40% 4.40% 4.40%
==== ==== ==== ====
TOTAL ANNUAL FUND OPERATING EXPENSES (AFTER WAIVER
AND/OR REIMBURSEMENT OF FUND-LEVEL FEES AND EXPENSES) 2.01% 2.76% 2.76% 2.76%
==== ==== ==== ====
</TABLE>
14
<PAGE>
TIME HORIZON 10 FUND ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 1999:
(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>
Fund-level expenses:
Asset allocation fees.......................... 0.10% 0.10% 0.10% 0.10%
---- ---- ---- ----
Total distribution and/or service
(12b-1) fees (1)............................... 0.25 1.00 1.00 1.00
Credit to Fund for 12b-1 fees paid by
Underlying Funds (1)...................... (0.25) (0.25) (0.25) (0.25)
----- ----- ----- -----
Net 12b-1 fees paid by Fund (1)............... -- 0.75 0.75 0.75
----- ---- ---- ----
Other expenses (2)............................. 2.04 2.04 2.04 2.04
---- ---- ---- ----
TOTAL FUND-LEVEL EXPENSES................ (1.64) (1.64) (1.64) (1.64)
Less: Fee waiver and/or expense
reimbursement (3)................... -- -- -- --
----- ----- ----- -----
TOTAL FUND-LEVEL EXPENSES (AFTER FEE
WAIVER AND/OR REIMBURSEMENT)............. 0.50 1.25 1.25 1.25
---- ---- ---- ----
Underlying Fund expenses:
Management fees (4)............................ 0.76 0.76 0.76 0.76
12b-1 fees (1)................................. 0.25 0.25 0.25 0.25
Other expenses (5)............................. 0.36 0.36 0.36 0.36
---- ---- ---- ----
TOTAL UNDERLYING FUND EXPENSES............. 1.37 1.37 1.37 1.37
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES............... 3.51% 4.26% 4.26% 4.26%
==== ==== ==== ====
TOTAL ANNUAL FUND OPERATING EXPENSES (AFTER WAIVER
AND/OR REIMBURSEMENT OF FUND-LEVEL FEES AND EXPENSES) 1.87% 2.62% 2.62% 2.62%
==== ==== ==== ====
</TABLE>
15
<PAGE>
HARVESTER FUND ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 1999:
(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>
Fund-level expenses:
Asset allocation fees.......................... 0.10% 0.10% 0.10% 0.10%
---- ---- ---- ----
Total distribution and/or service
(12b-1) fees (1)............................... 0.25 1.00 1.00 1.00
Credit to Fund for 12b-1 fees paid by
Underlying Funds (1)...................... (0.25) (0.25) (0.25) (0.25)
----- ----- ----- -----
Net 12b-1 fees paid by Fund (1)............... -- 0.75 0.75 0.75
----- ---- ---- ----
Other expenses (2)............................. 2.04 2.04 2.04 2.04
---- ---- ---- ----
TOTAL FUND-LEVEL EXPENSES................ 2.14 2.89 2.89 2.89
Less: Fee waiver and/or expense
reimbursement (3)................... (1.64) (1.64) (1.64) (1.64)
----- ----- ----- -----
TOTAL FUND-LEVEL EXPENSES (AFTER FEE
WAIVER AND/OR REIMBURSEMENT)............. 0.50 1.25 1.25 1.25
---- ---- ---- ----
Underlying Fund expenses:
Management fees (4)............................ 0.68 0.68 0.68 0.68
12b-1 fees (1)................................. 0.25 0.25 0.25 0.25
Other expenses (5)............................. 0.32 0.32 0.32 0.32
---- ---- ---- ----
TOTAL UNDERLYING FUND EXPENSES............. 1.25 1.25 1.25 1.25
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES............... 3.39% 4.14% 4.14% 4.14%
==== ==== ==== ====
TOTAL ANNUAL FUND OPERATING EXPENSES (AFTER WAIVER
AND/OR REIMBURSEMENT OF FUND-LEVEL FEES AND EXPENSES) 1.75% 2.50% 2.50% 2.50%
==== ==== ==== ====
</TABLE>
(1) Shareholders of each Fund will pay 12b-1 fees at a total effective annual
rate of 0.25% of average daily net assets for Class A shares and 1.00% for Class
B, C and D shares. Each of the Underlying Funds (other than Seligman Cash
Management Fund) pays a 12b-1 fee of 0.25%. The line item "Credit to Fund for
12b-1 fees paid by Underlying Funds" reflects a pro rata portion of the 12b-1
fee payable by each Underlying Fund, weighted in accordance with the target
allocations for each Underlying Fund. To avoid any duplication of 12b-1 fees,
the 12b-1 fees paid by each class of a Fund will be credited in an amount equal
to the 12b-1 fees paid by Underlying Funds.
(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 Manager has undertaken to reimburse each Fund's expenses and/or to waive
its asset allocation fee to the extent that the sum of Fund-level Other expenses
plus the Asset allocation fee exceeds 0.50% per annum of average daily net
assets. This undertaking will remain in effect at least until April 30, 2003.
16
<PAGE>
(4) Reflects a pro-rata portion of the management fee payable by each Underlying
Fund, weighted in accordance with the target allocations for each Underlying
Fund. Actual amounts paid by the Fund may vary with changes in the allocation of
the Fund's assets, and may be higher or lower than the amount shown. The
management fee payable by each Underlying Fund is shown below under "The
Underlying Funds."
(5) Based on actual expenses of each Underlying Fund for the most recent fiscal
year. Reflects a pro-rata portion of the "Other expenses" payable by each
Underlying Fund, weighted in accordance with the target allocations for each
Underlying Fund. Actual amounts paid by the Fund may vary with changes in the
allocation of the Fund's assets, and may be higher or lower than the amount
shown. A more complete description of the fees and expenses of the Underlying
Funds is provided under "Fees and Expenses of the Underlying Funds" in this
Prospectus and "Fees and Expenses" in each Underlying Fund's Prospectus.
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 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............................................................... $670 $1,078
Class B............................................................... 780 1,159
Class B, if you do not sell your shares at the end of the period...... 280 859
Class C............................................................... 477 951
Class C, if you do not sell your shares at the end of the period...... 377 951
Class D............................................................... 380 859
Class D, if you do not sell your shares at the end of the period...... 280 859
TIME HORIZON 20 FUND
Class A............................................................... $669 $1,076
Class B............................................................... 779 1,156
Class B, if you do not sell your shares at the end of the period...... 279 856
Class C............................................................... 476 948
Class C, if you do not sell your shares at the end of the period...... 376 948
Class D............................................................... 379 856
Class D, if you do not sell your shares at the end of the period...... 279 856
TIME HORIZON 10 FUND
Class A............................................................... $656 $1,035
Class B............................................................... 765 1,114
Class B, if you do not sell your shares at the end of the period...... 265 814
Class C............................................................... 462 906
Class C, if you do not sell your shares at the end of the period...... 362 906
Class D............................................................... 365 814
Class D, if you do not sell your shares at the end of the period...... 265 814
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>
17
<PAGE>
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.
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 and Chief Investment Strategist for Seligman Advisors
since October 1995 and previously 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
18
<PAGE>
Horizon Matrix and Seligman Harvester. He has testified before Congress on
Monetary Policy and Government Poverty Programs, and before the Flat Tax
Commission. His articles appear frequently in The Wall Street Journal.
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 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
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 Statement
of Additional Information 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 PRIMARY INVESTMENTS
OBJECTIVE(S)
- ------------------------------------- -------------------------------- --------------------------------------------------
<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
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
UNDERLYING FUND INVESTMENT PRIMARY INVESTMENTS
OBJECTIVE(S)
- ------------------------------------- -------------------------------- --------------------------------------------------
<S> <C> <C>
respect to these types of instruments.
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.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
UNDERLYING FUND INVESTMENT PRIMARY INVESTMENTS
OBJECTIVE(S)
- ------------------------------------- -------------------------------- --------------------------------------------------
<S> <C> <C>
Seligman Henderson Long-term capital Common stock of medium to large companies in the
International Fund appreciation. principal international markets.
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.
21
<PAGE>
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 STATEMENT OF ADDITIONAL
INFORMATION 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.
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 have an adverse affect on 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.
22
<PAGE>
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.
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 themes (Seligman Henderson Global Growth Opportunities Fund only).
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 speculative
with respect to the issuer's capacity to pay interest and repay principal. These
securities can be and have been
23
<PAGE>
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 Seligman U.S. Government Securities Series and
Seligman Cash Management Fund 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 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.
24
<PAGE>
FEES AND EXPENSES OF THE UNDERLYING FUNDS
SHAREHOLDER FEES FOR EACH UNDERLYING FUND:
Each Fund will purchase Class A shares of the Underlying Funds at net asset
value. A Fund's investments in Underlying Funds will not be subject to any
initial sales charges or contingent deferred sales charges. A more complete
description of the shareholder fees of the Underlying Funds is provided under
"Fees and Expenses" in each Underlying Fund's Prospectus, each of which is
incorporated into this Prospectus by reference and is available free of charge
by telephoning 1-800-221-2450.
EACH UNDERLYING FUND'S ANNUAL OPERATING EXPENSES FOR FISCAL YEAR 1998:
Investors in each Fund indirectly bear expenses of the Underlying Funds in which
each Fund invests. The table below provides the annual fund operating expenses
for the Class A shares of each of the Underlying Funds. A more complete
description of the fees and expenses of the Underlying Funds are provided under
"Fees and Expenses" in each Underlying Fund's Prospectus, each of which is
incorporated into this Prospectus by reference and is available free of charge
by telephoning 1-800-221-2450.
<TABLE>
<CAPTION>
DISTRIBUTION AND/OR
MANAGEMENT SERVICE OTHER
UNDERLYING FUND FEES(1) (12b-1) FEES(2) EXPENSES(3)
- ------------------------------------------ --------------------------- ------------------------- ------------------------
<S> <C> <C> <C>
Seligman Capital Fund 0.48% 0.24% 0.27%
Seligman Cash Management Fund 0.40 - 0.31
Seligman Common Stock Fund 0.65 0.24 0.22
Seligman Communications and
Information Fund 0.88 0.25 0.31
Seligman Frontier Fund 0.93 0.23 0.31
Seligman Growth Fund 0.70 0.24 0.20
Seligman Henderson International
Fund 1.00 0.21 0.55
Seligman Henderson Emerging
Markets Growth Fund 1.25 0.23 0.74
Seligman Henderson Global Growth
Opportunities Fund 1.00 0.24 0.44
Seligman Henderson Global Smaller
Companies Fund 1.00 0.24 0.41
Seligman High-Yield Bond Series 0.59 0.25 0.26
Seligman Large-Cap Value
Fund 0.80 0.25 0.45
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION AND/OR
MANAGEMENT SERVICE OTHER
UNDERLYING FUND FEES(1) (12b-1) FEES(2) EXPENSES(3)
- ------------------------------------------ --------------------------- ------------------------- ------------------------
<S> <C> <C> <C>
Seligman Small-Cap Value Fund 1.00 0.25 0.44
Seligman U.S. Government
Securities Series 0.50 0.22 0.33
<FN>
(1) For a complete 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 into this Prospectus by reference
and is available free of charge by telephoning 1-800-221-2450.
(2) The 12b-1 Fee payable by each class of a Fund will be credited in an amount
equal to the dollar amount of the 12b-1 Fee charged on the Class A shares
of each Underlying Fund (not including the Seligman Cash Management Fund)
purchased by a Fund. Therefore, investors will not be charged a 12b-1 Fee
at both the Fund level and the Underlying Fund level on the same assets.
(3) Certain "Other Expenses" (e.g., custodian expenses, registrar and transfer
agent expenses, Directors' fees, legal and auditing fees) will be charged
at both the Fund level and on the Underlying Funds. An investor can avoid
these expenses at the Fund level by investing directly in the Underlying
Funds.
</FN>
</TABLE>
YEAR 2000
REFERENCES TO THE FUNDS IN THIS SECTION INCLUDE THE UNDERLYING FUNDS IN WHICH
THEY EACH INVEST.
As the millennium approaches, investment companies, financial and business
organizations and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other 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 Manager and SDC have established a year 2000
project team. The team's purpose is to assess the state of readiness of the
Manager and 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 is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Funds. The team has
assessed, and will continue to assess, the status of their year 2000 readiness.
The team continues to update its year 2000 contingency plans-recovery efforts
the team will employ in the event that year 2000 issues adversely affect the
Funds.
The team has confirmed that it has implemented 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 on and after the year 2000, but this is not
guaranteed. If these systems do not function properly, or the Funds' critical
service providers are not 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.
26
<PAGE>
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, are also
susceptible to year 2000 concerns. Year 2000 issues may affect an issuer's
operations, creditworthiness, and ability to make timely payment on any
indebtedness and could have an adverse impact on the value of its securities. If
the Funds or the Underlying Funds hold these securities, the Funds' or the
Underlying Funds' performance could be negatively affected. The Manager seeks to
identify an issuer's state of year 2000 readiness as part of the research it
employs. However, the perception of an issuer's year 2000 preparedness is only
one of the many factors considered in determining whether to buy, sell, or
continue to hold a security. Information provided by issuers concerning their
state of readiness may or may not be accurate or readily available. Further, the
Fund or the Underlying Funds may be adversely affected if the exchanges,
markets, depositories, clearing agencies, or governments or third parties
responsible for infrastructure needs do not address their year 2000 issues in a
satisfactory manner. Certain Underlying Funds may invest in securities of non-US
issuers. It may be more difficult to assess the preparedness of such issuers for
year 2000 than it is in the case of US issuers because there may be less
information available about their systems and about procedures they have
followed to address technical problems. 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 are 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 it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The 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> <C>
Less than $ 50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
</TABLE>
27
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
$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>
- Annual 12b-1 fee (for shareholder services) of up to 0.25%.
- 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 1.00%.
- 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:
<TABLE>
<CAPTION>
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
- --------------------------- -------------------- --------------- --------------
<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 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.
</FN>
</TABLE>
28
<PAGE>
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 1.00%.
- 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*
- 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 1.00%.
- 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, over time these fees will increase your investment expenses and may cost
you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, Class C, and Class D shares. On an
ongoing basis, the Directors, in the exercise of their fiduciary duties under
the Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
HOW CDSCS ARE CALCULATED
To minimize the amount of 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.
29
<PAGE>
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. 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:
30
<PAGE>
- 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
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.
31
<PAGE>
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.
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.
32
<PAGE>
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than all account owners; or
(3) mailed to other than your address of record.
SIGNATURE GUARANTEE:
PROTECTS YOU AND THE 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.
33
<PAGE>
- Reject a signature guarantee that SDC believes may be fraudulent.
- 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.
34
<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 request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.
35
<PAGE>
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.
36
<PAGE>
APPENDIX A
ASSET CLASS DESCRIPTIONS
US Small-Company Stocks: NYSE Fifth Quintile Returns (1950-1981); Dimensional
Fund Advisors Small Company Fund (1982-1998)
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: Consumer Price Index (1950-1977); Consumer Price Index for All Urban
Consumers (1978-1998)
37
<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.
Ibbatson and Rex A. Sirquefield). Used with permission all rights reserved.
The indices are comprised of the following: US Small-Company Stocks:
NYSE Fifth Quintille Returns (1950-1981) and Dimensional Fund Advisors Small
Company Fund (1982-1998); 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.
38
<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.
39
<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 Matrix SM 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 performance. 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 Matrix SM 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.
40
<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 U.S. 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 FUND, 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 FUND ARE ALSO AVAILABLE ON THE SEC'S
INTERNET SITE: HTTP://WWW.SEC.GOV.
COPIES OF THIS INFORMATION MAY BE OBTAINED, UPON PAYMENT OF A DUPLICATING
FEE, BY WRITING: PUBLIC REFERENCE SECTION OF THE SEC, WASHINGTON, DC
20549-6009.
INVESTMENT COMPANY ACT FILE NUMBER: [________]
41
<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
, 1999
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus, dated ____, 1999, 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................................. 15
Control Persons and Principal Holders of Securities...... 17
Investment Advisory and Other Services................... 17
Brokerage Allocation and Other Practices................. 22
Capital Stock and Other Securities....................... 23
Purchase, Redemption, and Pricing of Shares.............. 24
Taxation of the Series................................... 29
Underwriters............................................. 31
Calculation of Performance Data.......................... 32
Financial Statements..................................... 32
General Information...................................... 32
Appendix A .............................................. 33
Appendix B .............................................. 36
<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 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
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<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 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.
3
<PAGE>
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 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
4
<PAGE>
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.
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.
5
<PAGE>
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.
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.
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<PAGE>
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 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 funds 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, gains and losses realized on the sale of securities and net
investment income and gains, 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.
IILIQUID 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
7
<PAGE>
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 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
8
<PAGE>
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 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
9
<PAGE>
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 (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.
10
<PAGE>
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 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.
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<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 additionaal
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 another Fund 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 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,
12
<PAGE>
(iv) purchase securities on margin to the extent permitted by applicable law and
(v) borrow cash from another Fund 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
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
13
<PAGE>
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.
Name, Principal
(Age) and Position(s) Held Occupation(s) during
Address with Fund Past 5 Years
------- --------- ------------
William C. Morris* Director, Chairman of Chairman, J. & W. Seligman &
(61) the Board, Chief Co. Incorporated, Chairman
Executive Officer and and Chief Executive Officer,
Chairman of the the Seligman Group of
Executive Committee investment companies;
Chairman, Seligman 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. &
(46) Member of the Executive W. Seligman & Co.
Committee Incorporated; President (with
the exception of Seligman
Quality Municipal Fund, Inc.
and Seligman Select Municipal
Fund, Inc.) and Director or
Trustee, the Seligman Group
of investment companies;
Chairman, Seligman Data
Corp.; Member of the Board of
Governors of the Investment
Company Institute; and
Director, ICI Mutual
Insurance Company, Seligman
Advisors, Inc., and Seligman
Services, Inc.
Charles W. Kadlec Vice President and Mr. Kadlec is a Managing
(53) Portfolio Manager Director of the Manager and
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. He
has testified before Congress
on Monetary Policy, Government
Poverty Programs, and before
the Flat Tax Commission. His
articles appear frequently in
The Wall Street Journal.
15
<PAGE>
Name, Principal
(Age) and Position(s) Held Occupation(s) during
Address with Fund Past 5 Years
------- --------- ------------
Lawrence P. Vogel Vice President Senior Vice President,
(42) Finance, J. & W. Seligman &
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
(34) President, Law and 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
(41) of investment companies and
Seligman Data Corp.
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).
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits From Series and
Name and Compensation Accrued as Part of Series Complex
Position with Fund from Series (1) Series 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
<FN>
(1) For the year ending [December 31,] 1999. The per meeting fee for Directors is $_____, 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.
16
<PAGE>
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, effective [ ], so such information
is not available.
Principal Holders
Each Fund's classes of shares are new, effective [ ], so such information
is not available.
Management Ownership
Each Fund's classes of shares are new, effective [ ], 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
17
<PAGE>
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 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 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 _____________, 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
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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.
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:
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
- ------------------ ----------------- --------------- --------------
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
(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.
Class C shares:
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
- ------------------ ----------------- --------------- --------------
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
(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.
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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 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, pays
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 paid by each class of a Fund will be
credited in 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, pays
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
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Capital, L.P., to compensate it for having funded, at the time of sale 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 B shares. To
avoid any duplication of 12b-1 fees, the 12b-1 fees paid by each class of a Fund
will be credited in 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, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class 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 paid by each
class of a Fund will be credited in 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, pays
monthly to Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the
average daily net asset value of 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
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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 paid by each
class of a Fund will be credited in 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 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 ______________, 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
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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.
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, effective [ ], so no directed
brokerage information is available.
Regular Broker-Dealers
Each Fund's classes of shares are new, effective [ ], 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
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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.
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:
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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.
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;
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(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;
(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
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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.
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.
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.
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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.
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.
Fund Reorganizations
Class A shares and Class C shares of each Fund of the Series may be issued
without an initial sales charge in connection with the acquisition of cash and
securities owned by other investment companies. Any CDSC will be waived in
connection with the redemption of a Fund's shares if the Fund is combined with
another Seligman mutual fnd, or in connection with a similar reorganization
transaction.
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
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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.
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 is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, 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.
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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 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. 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.
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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
__________, 1999 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Series. Seligman 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, effective [ ], so performance
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.
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CALCULATION OF PERFORMANCE DATA
Each Fund's Class A shares, Class B shares, Class C and Class D shares are new,
effective ______________, 1999, 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 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 [ ].
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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.
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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.
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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.
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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.
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...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.
Saivfb699
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PART C. OTHER INFORMATION
Item 23. Exhibits.
All Exhibits listed below marked with an asterisk (*) will be filed by
amendment, except Item 23(a), which is filed herewith.
(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) *Form of Administration, Shareholder Services and Distribution Plan
between Registrant and Investors Fiduciary Trust Company.
(m)(1) *Form of Administration, Shareholder Services and Distribution Agreement
between Seligman Advisors, Inc. and Dealers.
(n) *Plan of Multiple Classes of Shares (4 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-2
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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:
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of July 31, 1999
(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-3
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of July 31, 1999
(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-4
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of July 31, 1999
(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-5
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of July 31, 1999
(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
JOYCE PERESS* Assistant Secretary Assistant Secretary
</TABLE>
C-6
<PAGE>
PART C. OTHER INFORMATION (CONTINUED)
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.
(c) Not applicable.
Item 28. Location of Accounts and Records. The accounts, books and documents
required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are kept in the
possession of J.& W. Seligman & Co. Incorporated at its offices at 100
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-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 12th day of
August, 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, the Registration Statement has been signed below
by the following persons in the capacities indicated on August 12, 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
<PAGE>
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
REGISTRATION STATEMENT ON FORM N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
- ------------------ -----------
Item 23(a) Articles Of Incorporation
ARTICLES OF INCORPORATION
OF
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
FIRST: I, the subscriber, Brian E. Hamilton, whose post office
address is 125 Broad Street, New York, New York 10004, being at least twenty-one
years of age, do, under and by virtue of the General Laws of the State of
Maryland authorizing the formation of corporations, associate myself as
incorporator with the intention of forming a corporation (hereinafter called the
"Corporation").
SECOND: Name. The name of the corporation is
SELIGMAN TIME HORIZON/HARVESTER SERIES, INC.
THIRD: Purposes and Powers. The purposes for which the
Corporation is formed and the business or objects to be carried on or promoted
by it are to engage in the business of an investment company, and in connection
therewith, to hold part or all of its funds in cash, to acquire by purchase,
subscription, contract, exchange or otherwise, and to own, hold for investment,
resale or otherwise, sell, assign, negotiate, exchange, transfer or otherwise
dispose of, or turn to account or realize upon, and generally to deal in and
with, all forms of stocks, bonds, debentures, notes, evidences of interest,
evidences of indebtedness, warrants, certificates of deposit, bankers'
acceptances, repurchase agreements, options on securities and other securities,
commodity futures contracts and options thereon and similar instruments,
irrespective of their form, the name by which they may be described, or the
character or form of the entities by which they are issued or created
(hereinafter sometimes called "Securities"), and to make payment therefor by any
lawful means; to exercise any and all rights, powers and privileges of
individual ownership of interest in respect of any and all such Securities,
including the right to vote thereon and to consent and otherwise act with
respect thereto; to do any and all acts and things for the preservation,
protection, improvement and enhancement in value of any and all such Securities;
to acquire or become interested in any such Securities as aforesaid,
irrespective of whether or not such Securities be fully paid or subject to
further payments, and to make payments thereon as called for or in advance of
calls or otherwise;
And, in general, to do any or all such other things in connection
with the objects and purposes of the Corporation hereinabove set forth, as are,
in the opinion of the Board of Directors of the Corporation, necessary,
incidental, relative or conducive to the attainment of such objects and
purposes; and to do such acts and things; and to exercise any and all such
powers to the same extent authorized or permitted to a
<PAGE>
Corporation under any laws that may be now or hereafter applicable or available
to the Corporation.
In addition, the Corporation may issue, sell, acquire through
purchase, exchange, or otherwise hold, dispose of, resell, transfer, reissue or
cancel shares of its capital stock in any manner and to the extent now or
hereafter permitted by the laws of Maryland and by these Articles of
Incorporation.
The foregoing matters shall each be construed as purposes,
objects and powers, and none of such matters shall be in any way limited by
reference to, or inference from, any other of such matters or any other Article
of these Articles of Incorporation, but shall be regarded as independent
purposes, objects and powers and the enumeration of specific purposes, objects
and powers shall not be construed to limit or restrict in any manner the meaning
of general terms or the general powers of the Corporation now or hereafter
conferred by the laws of the State of Maryland, nor shall the expression of one
thing be deemed to exclude another, although it be of like nature, not
expressed.
Nothing herein contained shall be construed as giving the
Corporation any rights, powers or privileges not permitted to it by law.
FOURTH: Principal Office. The post office address of the
principal office of the Corporation in this State is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202. The resident agent of
the Corporation is The Corporation Trust Incorporated, the post office address
of which is 32 South Street, Baltimore, Maryland 21202. Said resident agent is a
Corporation of the State of Maryland.
FIFTH: Capital Stock. A. The total number of shares of capital
stock of all series and classes which the Corporation has authority to issue is
4,000,000,000 shares ("Shares") of the par value of $.001 per share, having an
aggregate par value of $4,000,000. The Shares shall be known and designated as
"Common Stock". The Board of Directors shall have power and authority to
increase or decrease, from time to time, the aggregate number of shares of
stock, or of any series or class of stock, that the Corporation shall have the
authority to issue.
Pursuant to Section 2-105 of the Maryland General Corporation
Law, the Board of Directors of the Corporation shall have the power to designate
one or more series of Shares of Common Stock, to fix the number of Shares in any
such series and to classify or reclassify any unissued Shares with respect to
such series. Any series of Common Stock shall be referred to herein individually
as a "Series" and collectively, together with any further series from time to
time established, as the "Series". Any such Series (subject to any applicable
rule, regulation or order of the Securities and
2
<PAGE>
Exchange Commission or other applicable law or regulation) shall have such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of redemption
and other characteristics as the Board of Directors may determine in the absence
of a contrary provision set forth herein. The aforesaid power shall include the
power to create, by classifying or reclassifying unissued Shares in the
aforesaid manner, one or more Series in addition to those initially designated
as named below and to increase the aggregate number of Shares of a Series.
Subject to such aforesaid power, the Board of Directors has initially designated
four Series of Shares of Common Stock of the Corporation. The names of such
Series and the number of Shares of Common Stock initially classified and
allocated to these Series are as follows:
NAME OF SERIES NUMBER OF SHARES OF
- -------------- COMMON STOCK INITIALLY
CLASSIFIED AND ALLOCATED
------------------------
SELIGMAN TIME HORIZON 30 FUND ................................ 1,000,000,000
SELIGMAN TIME HORIZON 20 FUND ................................ 1,000,000,000
SELIGMAN TIME HORIZON 10 FUND ................................ 1,000,000,000
SELIGMAN HARVESTER FUND ...................................... 1,000,000,000
B. A description of the relative preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and other characteristics of all Series of Shares is as follows,
unless otherwise set forth herein or in Articles Supplementary filed with the
appropriate authorities of the State of Maryland describing any further Series
or classes thereof from time to time created by the Board of Directors:
(1) Assets Belonging to Series. All consideration received by the
Corporation for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably belong
to that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of the account of the
Corporation. Such consideration, assets, income, earnings, profits and
proceeds, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be,
together with any General Items (as hereinafter defined) allocated to
that Series as provided in the following sentence, are herein referred
to as "assets belonging to" that Series. In the event that there are any
assets, income, earnings, profits or proceeds thereof, funds or payments
which are not readily identifiable as belonging to any particular Series
(collectively "General Items"), the Board of Directors shall
3
<PAGE>
allocate such General Items to and among any one or more of the Series
created from time to time in such manner and on such basis as it, in its
sole discretion, deems fair and equitable; and any General Items so
allocated to a particular Series shall belong to that Series. Each such
allocation by the Board of Directors shall be conclusive and binding
upon the stockholders of all Series for all purposes.
(2) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the
Corporation in respect of that Series and with all expenses, costs,
charges and reserves attributable to that Series, and shall be so
recorded upon the books of account of the Corporation. Such liabilities,
expenses, costs, charges and reserves, together with any General Items
(as hereinafter defined) allocated to that Series as provided in the
following sentence, so charged to that Series are herein referred to as
"liabilities belonging to" that Series. In the event there are any
general liabilities, expenses, costs, charges or reserves of the
Corporation which are not readily identifiable as belonging to any
particular Series (collectively "General Items"), the Board of Directors
shall allocate and charge such General Items to and among any one or
more of the Series created from time to time in such manner and on such
basis as the Board of Directors in its sole discretion deems fair and
equitable; and any General Items so allocated and charged to a
particular Series shall belong to that Series. Each such allocation by
the Board of Directors shall be conclusive and binding upon the
stockholders of all Series for all purposes.
(3) Dividends. Dividends and distributions on Shares of a
particular Series may be paid to the holders of Shares of the Series at
such times, in such manner and from such of the income and capital
gains, accrued or realized, from the assets belonging to that Series,
after providing for actual and accrued liabilities belonging to that
Series, as the Board of Directors may determine.
(4) Liquidation. In event of the liquidation or dissolution of
the Corporation, the stockholders of each Series therein that has been
created shall be entitled to receive, as a Series, when and as declared
by the Board of Directors, the excess of the assets belonging to that
Series over the liabilities belonging to that Series. The assets so
distributable to the stockholders of any particular Series shall be
distributed among such stockholders in proportion to the number of
Shares of that Series held by them and recorded on the books of the
Corporation.
(5) Voting. On each matter submitted to vote of the stockholders,
each holder of a Share of Common Stock shall be entitled to one vote for
each such Share standing in his name on the books of the Corporation
irrespective of the
4
<PAGE>
Series thereof and all Shares of all Series shall vote as a single class
("Single Class Voting"); provided, however, that (a) as to any matter
with respect to which a separate vote of any Series is required by the
Investment Company Act of 1940 or would be required under the Maryland
General Corporation Law, such requirements as to a separate vote by that
Series shall apply in lieu of Single Class Voting as described above;
(b) in the event that the separate vote requirements referred to in (a)
above apply with respect to one or more Series, then, subject to (c)
below, the Shares of all other Series shall vote as a single class; and
(c) as to any matter which does not affect the interest of a particular
Series, only the holders of Shares of the one or more affected Series
shall be entitled to vote. Holders of Shares of Common Stock of the
Corporation shall not be entitled to cumulative voting in the election
of Directors or on any other matter.
(6) Equality. Subject to the foregoing, all Shares of each
particular Series shall represent an equal proportionate interest in the
assets belonging to that Series (subject to the liabilities belonging to
that Series), and each Share of any particular Series shall be equal to
each other Share of that Series; but the provisions of this sentence
shall not restrict any distinctions permissible under these Articles of
Incorporation that may exist with respect to stockholder elections to
receive dividends or distributions in cash or Shares of the same Series
or that may otherwise exist with respect to dividends and distributions
on Shares of the same Series.
C. The Board of Directors may, from time to time and without
stockholder action, classify Shares of a particular Series into one or more
additional classes of that Series, the voting, dividend, liquidation and other
rights of which shall differ from the classes of Common Stock of that Series to
the extent provided in Articles Supplementary for such additional class, such
Articles Supplementary to be filed for record with the appropriate authorities
of the State of Maryland. Any class of a Series of Common Stock shall be
referred to herein individually as a "Class" and collectively, together with any
further class or classes of such Series from time to time established, as the
"Classes".
D. The voting, dividend, liquidation and other rights of the
Common Stock of each Series of the Corporation designated herein or hereafter
designated by the Board of Directors shall be qualified further as follows:
(1) The Common Stock of each Series shall initially be further
classified into four Classes of Shares, which shall be designated Class
A, Class B, Class C and Class D. The number of authorized Shares of
Class A, Class B, Class C and Class D of each Series shall each consist
of the sum of x and y,
5
<PAGE>
where x equals the issued and outstanding shares of such Class and y
equals one-fourth of the authorized but unissued Shares of Common Stock
of all Classes of that Series; provided that at all times the aggregate
authorized, issued and outstanding shares of Class A, Class B, Class C
and Class D of such Series shall not exceed the authorized number of
Shares of Common Stock of each Series; and, in the event application of
the formula above would result, at any time, in fractional shares, the
applicable number of authorized shares of each Class shall be rounded
down to the nearest whole number of Shares of such Class.
(2) All Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter
of the Corporation to the contrary:
(A) Class A Shares may be subject to such front-end sales
loads as may be established by the Board of Directors from time
to time in accordance with the Investment Company Act of 1940 and
applicable rules and regulations of the National Association of
Securities Dealers, Inc. (the "NASD").
(B) Class B Shares may be subject to such contingent
deferred sales charges as may be established from time to time by
the Board of Directors in accordance with the Investment Company
Act of 1940 and applicable rules and regulations of the NASD.
Subject to paragraph (E) below, each Class B Share of a Series
shall convert automatically into Class A Shares of such Series on
the last business day of the month that precedes the eighth
anniversary of the date of issuance of such Class B Share; such
conversion shall be effected on the basis of the relative net
asset values of Class B Shares and Class A Shares as determined
by the Corporation on the date of conversion.
(C) Class C Shares may be subject to such front-end sales
loads and such contingent deferred sales charges as may be
established from time to time by the Board of Directors in
accordance with the Investment Company Act and applicable rules
and regulations of the NASD.
(D) Class D Shares may be subject to such contingent
deferred sales charges as may be established from time to time by
the Board of Directors in accordance with the Investment Company
Act of 1940 and applicable rules and regulations of the NASD.
6
<PAGE>
(E) Expenses related solely to a particular Class
(including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other arrangement,
however designated, which may differ between the Classes) shall
be borne by that Class and shall be appropriately reflected (in
the manner determined by the Board of Directors) in the net asset
value, dividends, distribution and liquidation rights of the
shares of that Class.
(F) At such time as shall be permitted under the
Investment Company Act of 1940, any applicable rules and
regulations thereunder and the provisions of any exemptive order
applicable to the Corporation, and as may be determined by the
Board of Directors and disclosed in the then current prospectus
of any Series, Shares of a particular Class may be automatically
converted into shares of another Class of that Series; provided,
however, that such conversion shall be subject to the continuing
availability of an opinion of counsel to the effect that such
conversion does not constitute a taxable event under Federal
income tax law. The Board of Directors, in its sole discretion,
may suspend any conversion rights if such opinion is no longer
available.
(G) As to any matter with respect to which a separate vote
of any Class is required by the Investment Company Act of 1940 or
by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other arrangement
referred to in paragraph (D) above), such requirement as to a
separate vote by the Class shall apply in lieu of Single Class
Voting, and, if permitted by the Investment Company Act of 1940
or any rules, regulations or orders thereunder and the Maryland
General Corporation Law, all Classes of a particular Series shall
vote together as a single class on any such matter that shall
have the same effect on each such Class of that Series. As to any
matter that does not affect the interest of a particular Class,
only the holders of Shares of the affected Class shall be
entitled to vote.
E. The Board of Directors may provide for a holder of Shares of
any Series or Class of stock of the Corporation, who surrenders his certificate
in good form for transfer to the Corporation or, if the Shares in question are
not represented by certificates, who delivers to the Corporation a written
request in good order signed by the stockholder, to convert the Shares in
question on such basis as the Board may provide, into Shares of stock of any
other Series or Class of the Corporation or otherwise as permitted by the Board
of Directors.
7
<PAGE>
F. No holder of shares shall be entitled as such, as a matter of
right, to purchase or subscribe for any part of any new or additional issue of
Shares or securities of the Corporation.
All Shares now or hereafter authorized, and of any Series or
Class, shall be subject to redemption and redeemable at the option of the
stockholder, in the sense used in the Maryland General Corporation Law, at the
redemption or repurchase price for shares of that Series or Class, determined in
the manner set out in these Articles of Incorporation or in any amendment
thereto. In the absence of any contrary specification as to the purpose for
which Shares are repurchased by it, all Shares so repurchased shall be deemed to
be acquired for retirement in the sense contemplated by the Maryland General
Corporation Law. Shares retired by repurchase or retired by redemption shall
thereafter have the status of authorized but unissued Shares of the Corporation.
All persons who shall acquire Shares shall acquire the same
subject to the provisions of these Articles of Incorporation.
SIXTH: Directors. The initial number of directors of the
Corporation shall be two, which shall be the minimum number of directors for so
long as there is only one or no stockholders. The names of the directors who
shall act until the first annual meeting or until their successors are duly
chosen and qualified are William C. Morris and Brian T. Zino. Upon such time as
the Corporation has issued three or more shares of its capital stock, the
minimum number of directors shall be increased in accordance with the provisions
of Section 2-402 of the Maryland General Corporation Law. The number of
directors may be changed from time to time in such lawful manner as is provided
in the By-Laws of the Corporation. Unless otherwise provided by the By-Laws of
the Corporation, the directors of the Corporation need not be stockholders.
SEVENTH: Provisions for Defining, Limiting and Regulating the
Powers of the Corporation, Directors and Stockholders.
A. Board of Directors. The Board of Directors shall have the
general management and control of the business, affairs and property of the
Corporation, and may exercise all the powers of the Corporation, except such as
are by statute or by these Articles of Incorporation or by the By-Laws conferred
upon or reserved to the stockholders. In furtherance and not in limitation of
the powers conferred by statute, the Board of Directors is hereby empowered:
(1) To authorize the issuance and sale, from time to time, of
Shares of any Series or Class whether for cash at not less than the par
value thereof or for such other consideration as the Board of Directors
may deem advisable, in
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the manner and to the extent now or hereafter permitted by the laws of
Maryland; provided, however, the consideration (or the value thereof as
determined by the Board of Directors) per share to be received by the
Corporation upon the sale of shares of any Series or Class (including
treasury Shares) shall not be less than the net asset value (determined
as provided in Article NINTH hereof) per Share of that Series or Class
outstanding at the time (determined by the Board of Directors) as of
which the computation of such net asset value shall be made.
(2) To authorize the execution and performance by the Corporation
of an agreement or agreements, which may be exclusive contracts, with
Seligman Advisors, Inc., a Delaware corporation, or any other person, as
distributor, providing for the distribution of Shares of any Series or
Class.
(3) Subject to the General Corporation Law of the State of
Maryland, to specify, in instances in which it may be desirable, that
Shares of any Series or Class repurchased by the Corporation are not
acquired for retirement and to specify the purposes for which such
Shares are repurchased.
(4) To authorize the execution and performance by the Corporation
of an agreement or agreements with J. & W. Seligman & Co. Incorporated,
a Delaware corporation, or any successor to the corporation, providing
for the investment and other operations of the Corporation.
The Corporation may in its By-Laws confer powers on the Board of
Directors in addition to the powers expressly conferred by statute.
B. Quorum; Adjournment; Majority Vote. The presence in person or
by proxy of the holders of record of one-third of the Shares of all Series and
Classes issued and outstanding and entitled to vote thereat shall constitute a
quorum for the transaction of any business at all meetings of the shareholders
except as otherwise provided by law or in these Articles of Incorporation and
except that where the holders of Shares of any Series or Class are entitled to a
separate vote as a Series or Class (a "Separate Class") or where the holders of
Shares of two or more (but not all) Series or Classes are required to vote as a
single Series or Class (a "Combined Class"), the presence in person or by proxy
of the holders of one-third of the Shares of that Separate Class or Combined
Class, as the case may be, issued and outstanding and entitled to vote thereat
shall constitute a quorum for such vote. If, however, a quorum with respect to
all Series and Classes, a Separate Class or a Combined Class, as the case may
be, shall not be present or represented at any meeting of the shareholders, the
holders of a majority of the Shares of all Series and Classes, such Separate
Class or such Combined Class, as the case may be, present in person or by proxy
and entitled to vote shall have power to adjourn the meeting from time to time
as to all Series and
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Classes, such Separate Class or such Combined Class, as the case may be, without
notice other than announcement at the meeting, until the requisite number of
Shares entitled to vote at such meeting shall be present. At such adjourned
meeting at which the requisite number of Shares entitled to vote thereat shall
be represented any business may be transacted which might have been transacted
at the meeting as originally notified. The absence from any meeting of
stockholders of the number of Shares in excess of one-third of the Shares of all
Series and Classes, or of the affected Series, Class or Classes, as the case may
be, which may be required by the laws of the State of Maryland, the Investment
Company Act of 1940 or any other applicable law or these Articles of
Incorporation, for action upon any given matter shall not prevent action of such
meeting upon any other matter or matters which may properly come before the
meeting, if there shall be present thereat, in person or by proxy, holders of
the number of Shares required for action in respect of such other matter or
matters. Notwithstanding any provision of law requiring any action to be taken
or authorized by the holders of a greater proportion than a majority of the
Shares of all Series and Classes or of the Shares of a particular Series, Class
or Classes, as the case may be, entitled to vote thereon, such action shall be
valid and effective if taken or authorized by the affirmative vote of the
holders of a majority of the Shares of all Series and Classes or of such
particular Series, Class or Classes, as the case may be, outstanding and
entitled to vote thereon.
EIGHTH: Redemptions and Repurchases.
A. The Corporation shall under some circumstances redeem, and may
under other circumstances redeem or repurchase, Shares as follows:
(1) Obligation of the Corporation to Redeem Shares. Each holder
of Shares of any Series or Class shall be entitled at his option to
require the Corporation to redeem all or any part of the Shares owned by
such holder, upon written or telegraphic request to the Corporation or
its designated agent, accompanied by surrender of the certificate or
certificates for such Shares, or such other evidence of ownership as
shall be specified by the Board of Directors, at a redemption price per
Share equal to an amount determined by the Board of Directors in
accordance with any applicable laws and regulations, subject to the
provisions of paragraph B of this Article and with any procedures or
methods further prescribed or approved by the Board of Directors;
provided that (i) such amount shall not exceed the net asset value per
Share determined in accordance with Article NINTH hereof, and (ii) if so
authorized by the Board of Directors, the Corporation may, at any time
from time to time, charge fees for effecting such redemption, at such
rates as the Board of Directors may establish, as and to the extent
permitted under the Investment Company Act of 1940. Notwithstanding the
foregoing (or any other provision of these Articles of Incorporation),
the Board of Directors of the Corporation may suspend the right
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of the holders of Shares of any Series or Class to require the
Corporation to redeem such Shares (or may suspend any voluntary purchase
of shares pursuant to the provisions of the charter of the Corporation)
or postpone the date of payment or satisfaction upon redemption of such
Shares during any financial emergency.
For the purpose of these Articles, a "financial emergency"
is defined as the whole or part of any period (i) during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings, (ii) during which trading on the New York Stock Exchange is
restricted, (iii) during which an emergency exists as a result of which
disposal by the Corporation of securities owned by such Series or Class
is not reasonably practicable or it is not reasonably practicable for
the corporation fairly to determine the value of the net assets of such
Series or Class, or (iv) during any other period when the Securities and
Exchange Commission (or any succeeding governmental authority) may for
the protection of security holders of the Corporation by order permit
suspension of the right of redemption or postponement of the date of
payment on redemption.
(2) Right of the Corporation to Redeem Shares. In addition the
Board of Directors may, from time to time in its discretion, authorize
the Corporation to require the redemption of all or any part of the
outstanding Shares of any Series or Class, for the proportionate
interest per Share in the assets of the Corporation belonging to that
Series or Class, or the cash equivalent thereof (being the net asset
value per Share of that Class determined as provided in Article NINTH
hereof), subject to and in accordance with the provisions of paragraph B
of this Article, upon the sending of written notice thereof to each
stockholder any of whose Shares are so redeemed and upon such terms and
conditions as the Board of Directors shall deem advisable.
(3) Right of the Corporation to Repurchase Shares. In addition
the Board of Directors may, from time to time in its discretion,
authorize the officers of the Corporation to repurchase Shares of any
Series or Class, either directly or through an agent, subject to and in
accordance with the provisions of paragraph B of this Article. The price
to be paid by the Corporation upon any such repurchase shall be
determined, in the discretion of the Board of Directors, in accordance
with any provision of the Investment Company Act of 1940 or any rule or
regulation thereunder, including any rule or regulation made or adopted
pursuant to Section 22 of the Investment Company Act of 1940 by the
Securities and Exchange Commission or any securities association
registered under the Securities Exchange Act of 1934.
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B. The following provisions shall be applicable with respect to
redemptions and repurchases of Shares of any Series or Class pursuant to
paragraph A hereof:
(1) The time as of which the net asset value per Share of a
particular Series or Class therein applicable to any redemption pursuant
to subparagraph A(1) or A(2) of this Article shall be computed shall be
such time as may be determined by or pursuant to the direction of the
Board of Directors (which time may differ from Series to Series and
Class to Class).
(2) Certificates for Shares of any Series or Class to be redeemed
or repurchased shall be surrendered in proper form for transfer,
together with such proof of the authenticity of signatures as may be
required by resolution of the Board of Directors.
(3) Payment of the redemption or repurchase price by the
Corporation or its designated agent shall be made in cash within seven
days after the time used for determination of the redemption or
repurchase price, but in no event prior to delivery to the Corporation
or its designated agent of the certificate or certificates for the
Shares of the particular Series or Class so redeemed or repurchased, or
of such other evidence of ownership as shall be specified by the Board
of Directors; except that any payment may be made in whole or in part in
securities or other assets of the Corporation belonging to that Series
or Class if, in the event of the closing of the New York Stock Exchange
or the happening of any event at any time prior to actual payment which
makes the liquidation of Securities in orderly fashion impractical or
impossible, the Board of Directors shall determine that payment in cash
would be prejudicial to the best interests of the remaining stockholders
of that Series or Class. In making any such payment in whole or in part
in Securities or other assets of the Corporation belonging to that
Series or Class, the Corporation shall, as nearly as may be practicable,
deliver Securities or other assets of a gross value (determined in the
manner provided in Article NINTH hereof) representing the same
proportionate interest in the Securities and other assets of the
Corporation belonging to that Series or Class as is represented by the
Shares of that Series or Class so to be paid for. Delivery of the
Securities included in any such payment shall be made as promptly as any
necessary transfers on the books of the several corporations whose
Securities are to be delivered may be made.
(4) The right of the holder of Shares of any Series or Class
redeemed or repurchased by the Corporation as provided in this Article
to receive dividends thereon and all other rights of such holder with
respect to such Shares shall forthwith cease and terminate from and
after the time as of which the redemption or repurchase price of such
Shares has been determined (except the
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right of such holder to receive (a) the redemption or repurchase price
of such Shares from the Corporation or its designated agent, in cash
and/or securities or other assets of the Corporation belonging to that
Series or Class, and (b) any dividend to which such holder had
previously become entitled as the record holder of such Shares on the
record date for such dividend, and, with respect to Shares otherwise
entitled to vote, except the right of such holder to vote at a meeting
of stockholders such Shares owned of record by him on the record date
for such meeting).
NINTH: Determination of Net Asset Value. For the purposes
referred to in Articles SEVENTH and EIGHTH hereof the net value per Share of any
Series or Class of the Corporation's Common Stock shall be determined by or
pursuant to the direction of the Board of Directors in accordance with the
following provisions:
A. Such net asset value per Share of a particular Series or Class
on any day shall be computed as follows:
The net asset value per Share of that Series or Class shall be
the quotient obtained by dividing the "net value of the assets" of the
Corporation belonging to that Series or Class by the total number of
Shares of that Series or Class, as the case may be, at the time deemed
to be outstanding (including Shares sold whether paid for and issued or
not, and excluding Shares redeemed or repurchased on the basis of
previously determined values, whether paid for, received and held in
treasury, or not).
The "net value of the assets" of the Corporation belonging to a
particular Series or Class shall be the "gross value" of the assets
belonging to that Series or Class after deducting the amount of all
expenses incurred and accrued and unpaid belonging to that Series or
Class, such reserves belonging to that Series or Class as may be set up
to cover taxes and any other liabilities, and such other deductions
belonging to that Series or Class as in the opinion of the officers of
the Corporation are in accordance with accepted accounting practice.
The "gross value" of the assets belonging to a particular Series
or Class shall be the amount of all cash and receivables and the market
value of all Securities and other assets held by the Corporation and
belonging to that Series or Class at the time as of which the
determination is made. Securities held shall be valued at market value
or, in the absence of readily available market quotations, at fair
value, both as determined pursuant to methods approved by the Board of
Directors and in accordance with applicable statutes and regulations.
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B. The Board of Directors is empowered, in its absolute
discretion, to establish other methods for determining such net asset value
whenever such other methods are deemed by it to be necessary or desirable and
are consistent with the provisions of the Investment Company Act of 1940 and the
rules and regulations thereunder and any other applicable Federal securities law
or rule or regulation.
TENTH: Determination Binding. Any determination made by or
pursuant to the direction of the Board of Directors in good faith, and so far as
accounting matters are involved in accordance with accepted accounting practice,
as to the amount of the assets, obligations or liabilities of the Corporation
belonging to any Series or Class, as to the amount of the net income of the
Corporation belonging to any Series or Class for any period or amounts that are
any time legally available for the payment of dividends on shares of any Series
or Class, as to the amount of any reserves or charges set up with respect to any
Series or Class and the propriety thereof, as to the time of or purpose for
creating any reserves or charges with respect to any Series or Class, as to the
use, alteration or cancellation of any reserves or charges with respect to any
Series or Class (whether or not any obligation or liability for which such
reserves or charges shall have been created or shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged), as
to the price or closing bid or asked price of any security owned or held by the
Corporation and belonging to any Series or Class, as to the market value of any
security or fair value of any other asset owned by the Corporation and belonging
to any Series or Class, as to the number of Shares of any Series or Class
outstanding or deemed to be outstanding, as to the impracticability or
impossibility of liquidating Securities in orderly fashion, as to the extent to
which it is practicable to deliver the proportionate interest in the Securities
and other assets of the Corporation belonging to any Series or Class represented
by any Shares belonging to any Series or Class redeemed or repurchased in
payment for any such Shares, as to the method of payment for any such Shares
redeemed or repurchased, or as to any other matters relating to the issue, sale,
redemption, repurchase, and/or other acquisition or disposition of Securities or
Shares of the Corporation shall be final and conclusive and shall be binding
upon the Corporation and all holders of Shares of all Series and Classes past,
present and future, and Shares of all Series and Classes are issued and sold on
the condition and understanding that any and all such determinations shall be
binding as aforesaid. No provision of these Articles of Incorporation shall be
effective to (a) bind any person to waive compliance with any provision of the
Securities Act of 1933 or the Investment Company Act of 1940 or of any valid
rule, regulation or order of the Securities and Exchange Commission thereunder
or (b) protect or purport to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
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ELEVENTH: Liabilities of Director or Officer. A director or
officer of the Corporation shall not be liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as a Director or
Officer, except to the extent such exemption from liability or limitation
thereof is not permitted by law (including the Investment Company Act of 1940 as
currently in effect or as the same may hereafter be amended).
No amendment, modification or repeal of this Article ELEVENTH
shall adversely affect any right or protection of a Director or Officer that
exists at the time of such amendment, modification or repeal.
TWELFTH: Indemnification of Directors, Officers and Employees.
The Corporation shall indemnify to the fullest extent permitted by law
(including the General Laws of the State of Maryland and the Investment Company
Act of 1940 as currently in effect or as the same may hereafter be amended) any
person made or threatened to be made a party to any action, suit or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that such person or such person's testator or intestate is or was a Director,
Officer or employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a Director, Officer or employee. To the
fullest extent permitted by law (including the General Laws of the State of
Maryland and the Investment Company Act of 1940 as currently in effect or as the
same may hereafter be amended), expenses incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by the
Corporation promptly upon receipt by it of an undertaking of such person to
repay such expenses if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this Article shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
Director, Officer or employee as provided above. No amendment of this Article
TWELFTH shall impair the rights of any person arising at any time with respect
to events occurring prior to such amendment. For purposes of this Article
TWELFTH, the term "Corporation" shall include any predecessor of the Corporation
and any constituent corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation or merger; the term "other
enterprise" shall include any corporation, partnership, joint venture, trust or
employee benefit plan; service "at the request of the Corporation" shall include
service as a Director, Officer or employee of the Corporation which imposes
duties on, or involves services by, such Director, Officer or employee with
respect to an employee benefit plan, its participants or beneficiaries; any
excise taxes assessed on a person with respect to an employee benefit plan shall
be deemed to be indemnifiable expenses; and action by a person with respect to
any employee benefit plan which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the Corporation. The foregoing
rights of indemnification shall not be exclusive of
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any other rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such By-Laws, resolutions or contracts implementing such
provisions or such further indemnification arrangements as may be permitted by
law.
THIRTEENTH: Amendments. The Corporation reserves the right to
take any lawful action and to make any amendment of these Articles of
Incorporation, including the right to make any amendment which changes the terms
of any Shares of any Series or Class now or hereafter authorized by
classification, reclassification, or otherwise, and to make any amendment
authorizing any sale, lease, exchange or transfer of the property and assets of
the Corporation or belonging to any Series, Class or Classes as an entirety, or
substantially as an entirety, with or without its good will and franchise, if a
majority of all the Shares of all Series and Classes or of the affected Series,
Class or Classes, as the case may be, at the time issued and outstanding and
entitled to vote, vote in favor of any such action or amendment, or consent
thereto in writing, and reserves the right to make any amendment of these
Articles of Incorporation in any form, manner or substance now or hereafter
authorized or permitted by law.
FOURTEENTH: Corporate Books. The books of the Corporation may be
kept (subject to any provisions contained in applicable statutes) outside the
State of Maryland at such place or places as may be designated from time to time
by the Board of Directors or in the By-Laws of the Corporation. Election of
directors need not be by ballot unless the By-Laws of the Corporation shall so
provide.
FIFTEENTH: Duration. The duration of the Corporation shall be
perpetual.
I acknowledge this document to be my act, and state under
penalties of perjury that with respect to all matters and facts therein, to the
best of my knowledge, information and belief such matters and facts are true in
all material respects.
DATE: August 2, 1999 BY: /s/ BRIAN E. HAMILTON
--------------------------------
BRIAN E. HAMILTON
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