STATEMENT OF ADDITIONAL INFORMATION
April 22, 1996
SELIGMAN COMMON STOCK FUND, INC.
100 Park Avenue
New York, New York 10017
New York City Telephone (212) 850-1864
Toll Free Telephone (800) 221-2450 all continental United States
For Retirement Plan Information - Toll Free Telephone (800) 445-1777
This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of Seligman Common Stock
Fund, Inc., (the "Fund") dated April 22, 1996. It should be read in conjunction
with the Prospectus, which may be obtained by writing or calling the Fund at the
above address or telephone numbers. This Statement of Additional Information,
although not in itself a Prospectus, is incorporated by reference into the
Prospectus in its entirety.
The Fund offers three classes of shares. Class A shares may be
purchased at net asset value plus a sales load of up to 4.75%. Class B shares
may be purchased at net asset value and are subject to a contingent deferred
sales load ("CDSL"), if applicable, in the following amount (as a percentage of
the current net asset value of the original purchase price, whichever is less,
if redemption occurs within the indicated number of years of purchase of such
shares: 5% (less than one year), 4% (1 but less than 2 years), 3% (2 but less
than 4 years), 2% (4 but less than 5 years) 1% (5 but less than six years) and
0% (6 or more years). Class B shares automatically convert to Class A shares
after approximately eight years resulting in lower ongoing fees. Shares
purchased through reinvestment of dividends and distributions on Class B shares
also will convert automatically to Class A shares along with the underlying
shares on which they were earned. Class D shares may be purchased at net asset
value and are subject to a CDSL of 1% (of the current net asset value or the
original purchase price, whichever is less) if redeemed within one year of
purchase.
Each Class A, Class B and Class D share represents an identical legal
interest in the investment portfolio of the Fund and has the same rights except
for certain class expenses and except that Class B and Class D shares bear a
higher distribution fee that generally will cause the Class B and Class D shares
to have a higher expense ratio and pay lower dividends than Class A shares. Each
Class has exclusive voting rights with respect to its distribution plan.
Although holders of Class A, Class B and Class D shares have identical legal
rights, the different expenses borne by each Class will result in different net
asset values and dividends. The three classes also have different exchange
privileges.
TABLE OF CONTENTS
Page
Investment Objectives, Policies and Risks............ 2
Investment Limitations............................... 4
Directors And Officers............................... 5
Management And Expenses ............................. 9
Administration, Shareholder Services And
Distribution Plan................................. 10
Portfolio Transactions............................... 11
Purchase And Redemption Of Fund Shares............... 12
Distribution Services................................ 14
Valuation............................................ 15
Performance.......................................... 15
General Information.................................. 17
Financial Statements................................. 17
Appendix............................................. 17
EQFR1A
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INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Fund seeks to produce favorable, but not the highest, current income and
long-term growth of both income and capital value without exposing capital to
undue risk. The following information regarding the Fund's investment policies
supplements the information contained in the Prospectus.
Lending of Portfolio Securities. The Fund may lend portfolio securities to
certain institutional borrowers of securities and may invest the cash collateral
and obtain additional income or receive an agreed upon amount of interest from
the borrower. Loans are subject to termination at the option of the Fund or the
borrower. The Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the interest earned
on the cash or equivalent collateral to the borrower or placing broker. The Fund
does not have the right to vote securities on loan, but would terminate the loan
and regain the right to vote if that were considered important with respect to
the investment.
Rights and Warrants. The Fund may invest in common stock rights and warrants
believed by the Manager to provide capital appreciation opportunities. Common
stock rights and warrants received as part of a unit or attached to securities
purchased (i.e., not separately purchased) are not included in the Fund's
investment restrictions regarding such securities.
The Fund may not invest in rights and warrants if, at the time of
acquisition, the investment in rights and warrants would exceed 5% of the Fund's
net assets, valued at the lower of cost or market. In addition, no more than 2%
of net assets may be invested in warrants not listed on the New York or American
Stock Exchanges. For purposes of this restriction, rights and warrants acquired
by the Fund in units or attached to securities may be deemed to have been
purchased without cost.
Foreign Currency Transactions. A forward foreign currency exchange contract is
an agreement to purchase or sell a specific currency at a future date and at a
price set at the time the contract is entered into. The Fund will generally
enter into forward foreign currency exchange contracts to fix the U.S. dollar
value of a security it has agreed to buy or sell for the period between the date
the trade was entered into and the date the security is delivered and paid for,
or, to hedge the U.S. dollar value of securities it owns.
The Fund may enter into a forward contract to sell or buy the amount of a
foreign currency it believes may experience a substantial movement against the
U.S. dollar. In this case the contract would approximate the value of some or
all of the Fund's portfolio securities denominated in such foreign currency.
Under normal circumstances, the portfolio manager will limit forward currency
contracts to not greater than 75% of the Fund's portfolio position in any one
country as of the date the contract is entered into. This limitation will be
measured at the point the hedging transaction is entered into by the Fund. Under
extraordinary circumstances, the Subadviser may enter into forward currency
contracts in excess of 75% of the Fund's portfolio position in any one country
as of the date the contract is entered into. The precise matching of the forward
contract amounts and the value of securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market involvement in the value of those securities
between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movement is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Under certain circumstances, the Fund may commit up to the entire
value of its assets which are denominated in foreign currencies to the
consummation of these contracts. The Subadviser will consider the effect a
substantial commitment of its assets to forward contracts would have on the
investment program of the Fund and its ability to purchase additional
securities.
Except as set forth above and immediately below, the Fund will also not
enter into such forward contracts or maintain a net exposure to such contracts
where the consummation of the contracts would oblige the Fund to deliver an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency. The Fund, in order to
avoid excess transactions and transaction costs, may nonetheless maintain a net
exposure to forward contracts in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency provided the excess
amount is "covered" by cash or liquid, high-grade debt securities, denominated
in any currency, at least equal at all times to the amount of such excess. Under
normal circumstances, consideration of the prospect for currency parties will be
incorporated into the longer term investment decisions made with regard to
overall diversification strategies. However, the Subadviser believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of the Fund will be served.
2
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At the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for the Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. However, the Fund may use liquid, high-grade
debt securities, denominated in any currency, to cover the amount by which the
value of a forward contract exceeds the value of the securities to which it
relates.
If the Fund retains the portfolio security and engages in offsetting
transactions, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange contracts will be
limited to the transactions described above. Of course, the Fund is not required
to enter into forward contracts with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by the Subadviser. It
also should be realized that this method of hedging against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange at a future date.
Additionally, although such contracts tend to minimize the risk of loss due to a
decline in the value of a hedged currency, at the same time, they tend to limit
any potential gain which might result from an increase in the value of that
currency.
Shareholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.
Investment income received by the Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source. The United States
has entered into tax treaties with many foreign countries which entitle the Fund
to a reduced rate of such taxes or exemption from taxes on such income. It is
impossible to determine the effective rate of foreign tax in advance since the
amounts of the Fund's assets to be invested within various countries is not
known.
Repurchase Agreements. The Fund may enter into repurchase agreements with
commercial banks and with broker/dealers to invest cash for the short-term. A
repurchase agreement is an agreement under which the Fund acquires a money
market instrument, generally a U.S. Government obligation, subject to resale at
an agreed upon price and date. Such resale price reflects an agreed upon
interest rate effective for the period of time the instrument is held by the
Fund and is unrelated to the interest rate on the instrument. Repurchase
agreements could involve certain risks in the event of bankruptcy or other
default by the seller, including possible delays and expenses in liquidating the
securities underlying the agreement, decline in value of the underlying
securities and loss of interest. Repurchase agreements usually are for short
periods, such as one week or less, but may be for longer periods. However, as a
matter of fundamental policy, the Fund will not enter into repurchase agreements
of more than one week's duration if more than 10% of its net assets would be so
invested. The Fund to date has not entered into any repurchase agreements and
has no present intention of doing so in the future.
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Except as described under "Investment Limitations" below, the foregoing
investment policies are not fundamental and the Board of Directors of the Fund
may change such policies without the vote of a majority of its outstanding
voting securities (as defined on page 4).
Portfolio Turnover. The Fund's portfolio turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities for the fiscal year by
the monthly average value of the portfolio securities owned during the fiscal
year. Securities with remaining maturities of one year or less at the date of
acquisition are excluded from the calculation.
The Fund's portfolio turnover rates were 46.08% in 1995 and 57.17% in 1994.
INVESTMENT LIMITATIONS
Under the Fund's fundamental policies, which cannot be changed except by vote
of a majority of its outstanding voting securities, the Fund may not:
o Borrow money, except for temporary or emergency purposes in an amount not
to exceed 15% of the value of its total assets;
o Mortgage or pledge any of its assets, except to the extent necessary to
effect permitted borrowings on a secured basis and except to enter into
escrow arrangements in connection with the sales of permitted call options;
o Purchase securities (other than closing call options) except for
investment, buy on "margin," or sell "short." The Fund has no present
intention of investing in these types of securities, and will not do so
without the prior approval of the Fund's Board of Directors.
o Invest more than 5% of the value of its total assets, at market value, in
securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided, however, that
securities guaranteed by a company that (including predecessors) has been
in operation at least three continuous years shall be excluded from this
calculation;
o Invest more than 5% of its total assets (taken at market) in securities of
any one issuer, other than the U.S. Government, its agencies or
instrumentalities, buy more than 10% of the outstanding voting securities
or more than 10% of all the securities of any issuer, or invest to control
or manage any company;
o Invest more than 25% of total assets at market value in any one industry;
o Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
o Purchase or hold any real estate, except the Fund may invest in securities
secured by real estate or interests therein or issued by persons (including
real estate investment trusts) which deal in real estate or interests
therein.
o Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the Fund individually owning beneficially more
than 0.5% of the securities of that other company own in the aggregate more
than 5% of such securities;
o Deal with its directors or officers, or firms they are associated with, in
the purchase or sale of securities of other issuers, except as broker;
o Purchase or sell commodities and commodity contracts;
o Underwrite the securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security;
o Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, the entry
into repurchase agreements or deposits with banks may be considered loans;
or
o Write or purchase put, call, straddle or spread options except that the
Fund may sell covered call options listed on a national securities exchange
or quoted on NASDAQ and purchase closing call options so listed or quoted.
The Fund has no present intention of investing in these types of
securities, and will not do so without the prior approval of the Fund's
Board of Directors.
4
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Although not fundamental policies subject to shareholder vote, as long as the
Fund's shares are registered in certain states, it may not mortgage, pledge or
hypothecate its assets to the extent that the value of such encumbered assets
exceed 10% of the per share offering price of shares of the Fund, it may not
invest in interests in oil, gas or other mineral exploration or development
programs and it must limit to 5% of its gross assets at market value its
combined investments in securities of companies in operation for less than three
years.
Under the Investment Company Act of 1940 (the "1940 Act") a "vote of a
majority of the outstanding voting securities" of the Fund means the affirmative
vote of the lesser of (l) more than 50% of the outstanding shares of the Fund or
(2) 67% or more of the shares present at a shareholders' meeting if more than
50% of the outstanding shares are represented at the meeting in person or by
proxy.
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below. Each
Director who is an "interested person" of the Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief
(57) Executive Officer and Chairman of the Executive
Committee
Managing Director, Chairman and President, J. &
W. Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisers,
Inc., advisers; Chairman and Chief Executive
Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial
Services, Inc., broker/dealer; Seligman
Holdings, Inc, holding company; Seligman
Services, Inc., broker/dealer; and Carbo
Ceramics Inc., ceramic proppants for oil and
gas industry; Director or Trustee, Seligman
Data Corp., shareholder service agent;
Kerr-McGee Corporation, diversified energy
company; and Sarah Lawrence College; and a
Member of the Board of Governors of the
Investment Company Institute; formerly,
Chairman, Seligman Securities, Inc.,
broker/dealer; and J. & W. Seligman Trust
Company, trust company.
BRIAN T. ZINO* Director, President and Member of the Executive
(43) Committee
Director and Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors,
Inc., advisers; Director or Trustee, the
Seligman Group of Investment Companies;
President, the Seligman Group of Investment
Companies, except Seligman Quality Municipal
Fund, Inc. and Seligman Select Municipal Fund,
Inc.; Chairman, Seligman Data Corp.,
shareholder service agent; Director, Seligman
Financial Services, Inc., broker/dealer;
Seligman Services, Inc., broker/dealer; and
Senior Vice President, Seligman Henderson Co.,
advisers; formerly, Director and Secretary,
Chuo Trust - JWS Advisors, Inc., advisers; and
Director, Seligman Securities, Inc.,
broker/dealer; and J. & W. Seligman Trust
Company, trust company.
FRED E. BROWN* Director
(82)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
and Seligman Advisors, Inc., advisers; Director
or Trustee, the Seligman Group of Investment
Companies; Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc.,
broker/dealer; Trudeau Institute, nonprofit
biomedical research organization; Lake Placid
Center for the Arts, cultural organization;
Lake Placid Education Foundation, education
foundation; formerly, Director, Seligman
Securities, Inc., broker/dealer and J. & W.
Seligman Trust Company, trust company.
5
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JOHN R. GALVIN Director
(66)
Dean, Fletcher School of Law and Diplomacy at
Tufts University; Director or Trustee, the
Seligman Group of Investment Companies;
Chairman of the American Council on Germany; a
Governor of the Center for Creative Leadership;
Director of USLIFE, insurance; National
Committee on U.S.-China Relations, National
Defense University; the Institute for Defense
Analysis; and Raytheon Co., electronics;
formerly, Ambassador, U.S. State Department;
Distinguished Policy Analyst at Ohio State
University and Olin Distinguished Professor of
National Security Studies at the United States
Military Academy. From June, 1987 to June,
1992, he was the Supreme Allied Commander,
Europe and the Commander-in-Chief, United
States European Command. Tufts University,
Packard Avenue, Medford, MA 02155
ALICE S. ILCHMAN Director
(60)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; Chairman, The Rockefeller
Foundation, charitable foundation; and
Director, NYNEX, telephone company; and the
Committee for Economic Development; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, International
Research and Exchange Board, intellectual
exchanges. Sarah Lawrence College, Bronxville,
NY 10708
FRANK A. McPHERSON Director
(62)
Chairman of the Board and Chief Executive
Officer, Kerr-McGee Corporation, energy and
chemicals; Director or Trustee, the Seligman
Group of Investment Companies; Director,
Kimberly-Clark Corporation, consumer products,
Bank of Oklahoma Holding Company, American
Petroleum Institute, Oklahoma City Chamber of
Commerce, Baptist Medical Center, Oklahoma
Chapter of the Nature Conservancy, Oklahoma
Medical Research Foundation and United Way
Advisory Board; Chairman, Oklahoma City Public
Schools Foundation; and Member of the Business
Roundtable and National Petroleum Council.
123 Robert S. Kerr Avenue, Oklahoma City, OK
73102
JOHN E. MEROW* Director
(66)
Chairman and Senior Partner, Sullivan &
Cromwell, law firm; Director or Trustee, the
Seligman Group of Investment Companies; the
Municipal Art Society of New York; Commonwealth
Aluminum Corporation; the U. S. Council for
International Business and the U.S.-New Zealand
Council; Chairman, American Australian
Association; and the Municipal Art Society of
New York; Member of the American Law Institute
and Council on Foreign Relations; and Member of
the Board of Governors of the Foreign Policy
Association and New York Hospital. 125 Broad
Street, New York, NY 10004
6
<PAGE>
BETSY S. MICHEL Director
(53)
Attorney; Director or Trustee, the Seligman
Group of Investment Companies; and Chairman of
the Board of Trustees of St. George's School
(Newport, RI); formerly, Director, the National
Association of Independent Schools (Washington,
D.C.).
St. Bernard's Road, P.O. Box 449, Gladstone, NJ
07934
JAMES C. PITNEY Director
(69)
Partner, Pitney, Hardin, Kipp & Szuch, law
firm; Director or Trustee, the Seligman Group
of Investment Companies; and Public Service
Enterprise Group, public utility. Park Avenue
at Morris County, P.O. Box 1945, Morristown, NJ
07962-1945
JAMES Q. RIORDAN Director
(68)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; The Brooklyn
Union Gas Company; the Committee for Economic
Development; Dow Jones & Co., Inc.; and Public
Broadcasting Service; formerly, Co-Chairman of
the Policy Council of the Tax Foundation;
Director and Vice Chairman, Mobil Corporation;
Director, Tesoro Petroleum Companies, Inc.; and
Director and President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY
10017
RONALD T. SCHROEDER* Director and Member of the Executive Committee
(48)
Director, Managing Director and Chief
Investment Officer, Institutional, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors,
Inc., advisers; Director or Trustee, the
Seligman Group of Investment Companies;
Director, Seligman Holdings, Inc., holding
company; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co.,
advisers; and Seligman Services, Inc.,
broker/dealer; formerly, President, the
Seligman Group of Investment Companies, except
Seligman Quality Municipal Fund, Inc. and
Seligman Select Municipal Fund, Inc.; and
Director, J. & W. Seligman Trust Company, trust
company; Seligman Data Corp., shareholder
service agent and Seligman Securities, Inc.,
broker/dealer.
ROBERT L. SHAFER Director
(63)
Vice President, Pfizer Inc., pharmaceuticals;
Director or Trustee, the Seligman Group of
Investment Companies and USLIFE Corporation,
life insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(61)
Executive Vice President, Chief Operating
Officer and Director, Sammons Enterprises,
Inc.; Director or Trustee, the Seligman Group
of Investment Companies; Red Man Pipe and
Supply Company, piping and other materials; and
C-SPAN. 300 Crescent Court, Suite 700, Dallas,
TX 75201
STACEY G. NAVIN Co-Portfolio Manager
(31)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; and Co-Portfolio
Manager, two other open-end investment
companies in the Seligman Group of Investment
Companies.
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CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(39)
Managing Director (formerly, Senior Vice
President and Senior Investment Officer), J. &
W. Seligman & Co. Incorporated, investment
managers and advisers; Vice President and
Portfolio Manager, two other open-end
investment companies in the Seligman Group of
Investment Companies and Tri-Continental
Corporation, closed-end investment company.
LAWRENCE P. VOGEL Vice President
(39)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; Seligman Financial
Services, Inc., broker/dealer; and Seligman
Advisors, Inc., advisers; Vice President, the
Seligman Group of Investment Companies; Senior
Vice President, Finance (formerly, Treasurer),
Seligman Data Corp., shareholder service agent;
Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisers;
formerly, Senior Vice President, Seligman
Securities, Inc.; broker/dealer and Vice
President, Finance, J. & W. Seligman Trust Co.,
trust company.
FRANK J. NASTA Secretary
(31)
Senior Vice President, Law & Regulation and
Corporate Secretary, J. & W. Seligman & Co.,
Incorporated, investment managers and advisers
and Seligman Advisors, Inc. advisers; Corporate
Secretary, the Seligman Group of Investment
Companies; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co.,
advisers; Seligman Services, Inc.,
broker/dealer; and Seligman Data Corp.,
shareholder service agent; formerly, Secretary,
J. & W. Seligman Trust Co., trust company and
attorney, Seward & Kissel, law firm.
THOMAS G. ROSE Treasurer
(38)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc. and the American
Investors Family of Funds
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
<TABLE>
<CAPTION>
Compensation Table
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Fund and
Position With Registrant from Fund (1) Fund Expenses Fund Complex (2)
------------------------ ------------- ------------- ----------------
<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
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director N/A N/A N/A
John R. Galvin, Director $2,360.24 N/A $ 41,252.75
Alice S. Ilchman, Director 3,857.08 N/A 68,000.00
Frank A. McPherson, Director 2,360.24 N/A 41,252.75
John E. Merow, Director 3,785.64(d) N/A 66,000.00(d)
Betsy S. Michel, Director 4,035.63 N/A 67,000.00
Douglas R. Nichols, Jr., Director* 1,425.40 N/A 24,747.25
James C. Pitney, Director 3,857.08 N/A 68,000.00
James Q. Riordan, Director 4,142.80 N/A 70,000.00
Herman J. Schmidt, Director* 1,425.40 N/A 24,747.25
Robert L. Shafer, Director 4,142.79 N/A 70,000.00
James N. Whitson, Director 4,071.36(d) N/A 68,000.00(d)
</TABLE>
8
<PAGE>
- ---------------------
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1995.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
* Retired May 18, 1995.
(d) Deferred. The total amounts of deferred compensation (including interest)
payable to Messrs. Merow, Pitney and Whitson as of December 31, 1995 were
$77,759, $72,739 and $11,568 respectively. Mr. Pitney no longer defers current
compensation.
The Fund has a compensation arrangement under which outside directors may
elect to defer receiving their fees. Under this arrangement, interest is accrued
on the deferred balances. The annual cost of such interest is included in the
directors' fees and expenses, and the accumulated balance thereof is included in
"Liabilities" in the Fund's financial statements.
Directors and officers of the Fund are also directors or trustees and
officers of some or all of the other investment companies in the Seligman Group.
Directors and officers of the Fund as a group less than 1% of the Fund's Class A
Capital Stock at March 29, 1996. As of that date, no Directors or officers owned
shares of the Fund's Class D Capital Stock.
MANAGEMENT AND EXPENSES
Under the Management Agreement, dated December 29, 1988, as amended April
10, 1991 and January 1, 1996, subject to the control of the Board of Directors,
J. & W. Seligman & Co. Incorporated ( the "Manager") manages the investment of
the assets of the Fund, including making purchases and sales of portfolio
securities consistent with the Fund's investment objectives and policies, and
administers its business and other affairs. The Manager provides the Fund with
such office space, administrative and other services and executive and other
personnel as are necessary for Fund operations. The Manager pays all of the
compensation of directors of the Fund who are employees or consultants of the
Manager and of the officers and employees of the Fund. The Manager also provides
senior management for Seligman Data Corp., the Fund's shareholder service agent.
The Fund pays the Manager a management fee for its services, calculated
daily and payable monthly. Effective January 1, 1996, the management fee is
equal to annual rate of .65% of the Fund's average daily net assets on the first
$1 billion of net assets, .60% of the Fund's average daily net assets on the
next $1 billion of net assets, and .55% of the Fund's average daily net assets
in excess of $2 billion. The management fee amounted to $2,898,605 in 1995,
$2,676,075 in 1994 and $2,645,990 in 1993,which was equivalent to an annual rate
of .48% of the Fund's average net assets in 1995, .49% in 1994 and .49% in 1993.
The Fund pays all its expenses other than those assumed by the Manager or
Seligman Henderson Co., (the "Subadviser"), including brokerage commissions,
administration, shareholder services and distribution fees, fees and expenses of
independent attorneys and auditors, taxes and governmental fees including fees
and expenses for qualifying the Fund and its shares under Federal and state
securities laws, cost of stock certificates and expenses of repurchase or
redemption of shares, expenses of printing and distributing reports, notices and
proxy materials to shareholders, expenses of printing and filing reports and
other documents with governmental agencies, expenses of shareholders' meetings,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services, fees and disbursements of
transfer agents and custodians, expenses of disbursing dividends and
distributions, fees and expenses of directors of the Fund not employed by (or
serving as a Director of) the Manager or its affiliates, insurance premiums and
extraordinary expenses such as litigation expenses. The Manager has undertaken
to one state securities administrators, so long as required, to reimburse the
Fund for each year in the amount by which total expenses, including the
management fee, but excluding interest, taxes, brokerage commissions,
distribution fees, and extraordinary expenses, exceed 2 1/2% of the first
$30,000,000 of average net assets, 2% of the next $70,000,000 of average net
assets, and 1 1/2% thereafter. Such reimbursement, if any, will be made monthly.
9
<PAGE>
The Management Agreement was initially approved by the Board of Directors on
September 30, 1988 and by the shareholders at a Special Meeting held on December
16, 1988. The amendments to the Management Agreement, effective April 10, 1991,
to increase the fee rate payable to the Manager by the Fund, were approved by
the Fund's Board of Directors on January 17, 1991 and approved by shareholders
at a special meeting held on April 10, 1991. The amendments to the Management
Agreement, effective January 1, 1996, to increase the fee rate payable to the
Manager by the Fund were approved by the Fund's Board of Directors on September
21, 1995 and by the shareholders at a special meeting on December 12, 1995. The
Management Agreement will continue in effect until December 31 of each year if
(1) such continuance is approved in the manner required by the 1940 Act (i.e. by
a vote of a majority of the Board of Directors or of the outstanding voting
securities of the Fund and by a vote of a majority of the Directors who are not
parties to the Management Agreement or interested persons of any such party) and
(2) if the Manager shall not have notified the Fund at least 60 days prior to
December 31 of any year that it does not desire such continuance. The Management
Agreement may be terminated by the Fund, without penalty, on 60 days' written
notice to the Manager and will terminate automatically in the event of its
assignment. The Fund has agreed to change its name upon termination of the
Management Agreement if continued use of the name would cause confusion in the
context of the Manager's business.
The Manager is a successor firm to an investment banking business founded in
1864 which has thereafter provided investment services to individuals, families,
institutions and corporation. On December 29, 1988, a majority of the
outstanding voting securities of the Manager was purchased by Mr. William C.
Morris and a simultaneous recapitalization of the Manager occurred. See the
Appendix for further history of the Manager.
Under the Subadvisory Agreement, dated June 1, 1994, as amended January 1,
1996, the Subadviser supervises and directs a portion of the Fund's investment
in foreign securities and Depositary Receipts as designated by the Manager,
consistent with the Fund's investment objectives, policies and principles. For
these services, the Subadviser is paid a fee by the Manager as described in the
Fund's Prospectus. The Subadvisory Agreement was initially approved by the Board
of Directors at a meeting held on January 20, 1994 and by the shareholders of
the Fund on May 19, 1994. The amendments to the Subadvisory Agreement, effective
January 1, 1996, to increase the subadvisory fee rate payable by the Manager to
the Subadviser, were approved by the Fund's Board of Directors on September 21,
1995 and by the shareholders at a special meeting held on December 12, 1995. The
Subadvisory Agreement will continue in effect until December 31 of each year (1)
if such continuance is approved in the manner required by the 1940 Act (by a
vote of a majority of the Board of Directors or of the outstanding voting
securities of the Fund and by a vote of a majority of the Directors who are not
parties to the Subadvisory Agreement or interested persons of any such party)
and (2) if the Subadviser shall not have notified the Manager in writing at
least 60 days prior to December 31 of any year that it does not desire such
continuance. The Subadvisory Agreement may be terminated at any time by the
Fund, on 60 days written notice to the Subadviser. The Subadvisory Agreement
will terminate automatically in the event of its assignment or upon the
termination of the Management Agreement.
For the period June 1, 1994 through December 31, 1994, and for the year
ended December 31, 1995, the Subadviser was paid fees by the Manager of $146,005
and 244,337, respectively.
The Subadviser is a New York general partnership formed by the Manager and
Henderson International, Inc., a controlled affiliate of Henderson
Administration Group plc. Henderson Administration Group plc, headquartered in
London, is one of the largest independent money managers in Europe. The Firm
currently manages approximately $19 billion in assets and is recognized as a
specialist in global equity investing.
Officers, directors and employees of the Manager are permitted to engage in
personal securities transactions, subject to the Manager's Code of Ethics (the
"Ethics Code"). The Ethics Code proscribes certain practices with regard to
personal securities transactions and personal dealings, provides a framework for
the reporting and monitoring of personal securities transactions by the
Manager's Director of Compliance, and sets forth a procedure of identifying, for
10
<PAGE>
disciplinary action, those individuals who violate the Ethics Code. The Ethics
Code prohibits each of the officers, directors and employees (including all
portfolio managers) of the Manager from purchasing or selling any security that
the officer, director or employee knows or believes (i) was recommended by the
Manager for purchase or sale by any client, including the Fund, within the
preceding two weeks, (ii) has been reviewed by the Manager for possible purchase
or sale within the preceding two weeks, (iii) is being purchased or sold by any
client, (iv) is being considered by a research analyst, (v) is being acquired in
a private placement, unless prior approval has been obtained from the Manager's
Director of Compliance, or (vi) is being acquired during an initial or secondary
public offering. The Ethics Code also imposes a strict standard of
confidentiality and requires portfolio managers to disclose any interest they
may have in the securities or issuers that they recommend for purchase by any
client.
The Ethics Code also prohibits (i) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages and (ii) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors and employees are required, except under very limited
circumstances, to engage in personal securities transactions through the
Manager's order desk. The order desk maintains a list of securities that may not
be purchased due to a possible conflict with clients. All officers, directors
and employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
The Fund has adopted an Administration, Shareholder Services and
Distribution Plan for each Class (the "Plan") in accordance with Section 12(b)
of the 1940 Act and Rule 12b-1 thereunder.
The Plan was approved on July 16, 1992 by the Board of Directors of the
Fund, including a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan (the "Qualified Directors") and was approved by shareholders of the
Fund at a Special Meeting of Shareholders held on November 23, 1992. The Plan
became effective in respect of the Class A shares on January 1, 1993. The Plan
was approved in respect of the Class B shares on March 21, 1996 by the Board of
Directors of the Fund, including a majority of Qualified Directors, and became
effective in respect of the Class B shares on April 22, 1996. The Plan was
approved in respect of the Class D shares on March 18, 1993 by the Board of
Directors of the Fund, including a majority of the Qualified Directors, and
became effective in respect of the Class D shares on May 1, 1993. The Plan will
continue in effect through December 31 of each year so long as such continuance
is approved annually by a majority vote of both the Directors and the Qualified
Directors of the Fund, cast in person at a meeting called for the purpose of
voting on such approval. The Plan may not be amended to increase materially the
amounts payable to Service Organizations with respect to a Class without the
approval of a majority of the outstanding voting securities of the Class. If the
amount payable in respect of Class A shares under the Plan is proposed to be
increased materially, the Fund will either (i) permit holders of Class B shares
to vote as a separate class on the proposed increase or (ii) establish a new
class of shares subject to the same payment under the Plan as existing Class A
shares, in which case the Class B shares will thereafter convert into the new
class instead of into Class A shares. No material amendment to the Plan may be
made except by a majority of both the Directors and Qualified Directors.
The Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefore) under the Plan. Rule 12b-1 also
requires that the selection and nomination of Directors who are not "interested
persons" of the Fund be made by such disinterested Directors.
PORTFOLIO TRANSACTIONS
The Management and Subadvisory Agreements recognize that in the purchase and
sale of portfolio securities the Manager and Subadviser will seek the most
favorable price and execution, and, consistent with that policy, may give
consideration to the research, statistical and other services furnished by
brokers or dealers to the Manager and Subadviser for their use, as well as to
the general attitude toward and support of investment companies demonstrated by
such broker or dealers. Such services include supplemental investment research,
analysis and reports concerning issuers, industries and securities deemed by the
Manager and Subadviser to be beneficial to the Fund. In addition, the Manager
and Subadviser are authorized to place orders with brokers who provide
supplemental investment and market research and security and economic analysis
although the use of such brokers may result in a higher brokerage charge to the
Fund that the use of brokers selected solely on the basis of seeking the most
favorable price and execution and although such research and analysis may be
useful to the Manager and Subadviser in connection with its services to clients
other than the Fund.
11
<PAGE>
In over-the-counter markets, the Fund deals with primary market makers
unless a more favorable execution or price is believed to be obtainable. The
Fund may buy securities from or sell securities to dealers acting as principal,
except dealers with which its directors and/or officers are affiliated.
When two or more of the investment companies in the Seligman Group or other
investment advisory clients of the Manager and Subadviser desire to buy or sell
the same security at the same time the securities purchased or sold are
allocated by the Manager and Subadviser 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.
Brokerage commissions for the last three fiscal years are set forth in the
following table:
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Total Brokerage Commissions Paid (1) $866,610 $ 947,390 $674,160
Brokerage Commissions Paid
to Seligman Securities, Inc. (2) --- --- 94,089
Brokerage Commissions Paid to Others for
Execution and Research and Statistical Services 866,610 947,390 580,071
</TABLE>
Notes:
(1) Not including any spreads on principal transactions on a net basis.
(2) Brokerage commissions paid to Seligman Securities, Inc. were 14.0% of total
brokerage commissions paid for 1993. The aggregate dollar amount of the
Fund's transactions for which Seligman Securities, Inc. acted as broker was
16.4% of the total dollar amount of all commission transactions in 1993.
The Board adopted procedures effective January 1, 1984, pursuant to which
Seligman Securities, Inc. was available to the Fund as broker for
approximately one-half of agency transactions in listed securities
(exclusive of option and option-related transactions) at commissions rates
believed in accordance with applicable regulations to be fair and
reasonable. As of March 31, 1993, Seligman Securities, Inc. ceased
functioning as a broker for the Corporation and its other clients.
PURCHASE AND REDEMPTION OF FUND SHARES
The Fund issues three classes of shares: Class A shares may be purchased at
a price equal to the next determined net asset value per share, plus a sales
load. Class B shares may be purchased at a price equal to the next determined
net asset value without an initial sales load, but a CDSL may be charged on
redemptions within 6 years of purchase. Class D shares may be purchased at a
price equal to the next determined net asset value without an initial sales
load, but a CDSL may be charged on redemptions within one year of purchase. See
"Alternative Distribution System," "Purchase Of Shares," and "Redemption Of
Shares" in the Prospectus.
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales charge of 4.75% and
Class B and Class D shares are sold at net asset value*. Using the Fund's net
asset value at December 31, 1995, the maximum offering price of the Fund's
shares is as follows:
Class A
Net asset value per Class A share...................................... $14.19
-----
Maximum sales load (4.75% of offering price)........................... 0.71
----
Offering price to public............................................... $14.90
=====
Class B and Class D
Net asset value and offering price per share*......................... $14.16
======
- ---------
* Class B shares are subject to a CDSL declining from 5% in the first year
after purchase to 0% after 6 years. Class D shares are subject to a CDSL of
1% on redemptions within one year of purchase. See "Redemption Of Shares"
in the Prospectus.
12
<PAGE>
Class A Shares - Reduced Front-End Sales Loads
Reductions Available. Shares of any Seligman Mutual Fund sold with a front-end
sales load in a continuous offering will be eligible for the following
reductions:
Volume Discounts are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which were sold with a front-end sales load, reaches
levels indicated in the sales load schedule set forth in the Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other mutual funds in
the Seligman Group which were sold with a front-end sales load with the total
net asset value of shares of those mutual funds already owned that were sold
with a front-end sales load and the total net asset value of shares of Seligman
Cash Management Fund which were acquired through an exchange of shares of
another mutual fund in the Seligman Group on which there was a front-end sales
load at the time of purchase to determine reduced sales loads in accordance with
the schedule in the Prospectus. The value of the shares owned, including the
value of shares of Seligman Cash Management Fund acquired in an exchange of
shares of another mutual fund in the Seligman Group on which there was a
front-end sales load at the time of purchase will be taken into account in
orders placed through a dealer, however, only if Seligman Financial Services,
Inc. ("SFSI") is notified by an investor or 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 sales loads in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares sold with a front-end sales load of the other mutual funds in the
Seligman Group already owned and the total net asset value of shares of Seligman
Cash Management Fund which were acquired through an exchange of shares of
another mutual fund in the Seligman Group on which there was a front-end sales
load at the time of purchase. Reduced sales loads also may apply to purchases
made within a 13-month period starting up to 90 days before the date of
execution of a letter of intent. For more information concerning the terms of
the letter of intent, see "Terms and Conditions - Letter of Intent - Class A
Shares Only" in the back of the Prospectus.
Persons Entitled To Reductions. Reductions in sales loads apply to purchases of
Class A shares by a "single person," including an individual; members of a
family unit comprising husband, wife and minor children; or a trustee or other
fiduciary purchasing for a single fiduciary account. Employee benefit plans
qualified under Section 401 of the Internal Revenue Code of 1986, as amended,
organizations tax exempt under Section 501 (c)(3) or (13), and non-qualified
employee benefit plans that satisfy uniform criteria are considered "single
persons" for this purpose. The uniform criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
13
<PAGE>
Eligible Employee Benefit Plans. The table of sales loads in the Prospectus
applies to sales to "eligible employee benefit plans" (as defined in the Fund's
Prospectus) except that the Fund may sell shares at net asset value to "eligible
employee benefit plans," (i) which have at least $1 million invested in the
Seligman Group of Mutual Funds or (ii) of employers who have at least 50
eligible employees to whom such plan is made available or, regardless of the
number of employees, if such plan is established or maintained by any dealer
which has a sales agreement with SFSI. Such sales must be made in connection
with a payroll deduction system of plan funding or other systems acceptable to
Seligman Data Corp., the Fund's shareholder service agent. Such sales are
believed to require limited sales effort and sales-related expenses and
therefore are made at net asset value. Contributions or account information for
plan participation also should be transmitted to Seligman Data Corp. by methods
which it accepts. Additional information about "eligible employee benefit plans"
is available from investment dealers or SFSI.
Payment in Securities. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value plus any applicable sales load) although the Fund does not presently
intend to accept securities in payment for Fund shares. Generally, the Fund will
only consider accepting securities (l) to increase its holdings in a portfolio
security, or (2) if the Manager determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than $100,000 per issue in
payment for shares. The Fund may reject in whole or in part offers to pay for
Fund shares with securities, may require partial payment in cash for applicable
sales loads, and may discontinue accepting securities as payment for Fund shares
at any time without notice. The Fund will not accept restricted securities in
payment for shares. The Fund will value accepted securities in the manner
provided for valuing portfolio securities of the Fund. Any securities accepted
by the Fund in payment for Fund shares will have an active and substantial
market and have a value which is readily ascertainable (See "Valuation"). In
accordance with Texas securities regulations, should the Fund accept securities
in payment for shares, such transactions would be limited to a bona fide
reorganization, statutory merger, or to other acquisitions of portfolio
securities (except for municipal debt securities issued by state political
subdivisions or their agencies or instrumentalities) which meet the investment
objectives and policies of the investment company; are acquired for investment
and not for resale; are liquid securities which are not restricted as to
transfer either by law or liquidity of market; and have a value which is readily
ascertainable (and not established only by evaluation procedures) as evidences
by a listing on the American Stock Exchange, the New York Stock Exchange
("NYSE") or NASDAQ.
Further Types of Reductions. Class A shares may be issued without a sales load
in connection with the acquisition of cash and securities owned by other
investment companies and personal holding companies, to financial institution
trust departments, to registered investment advisers exercising discretionary
investment authority with respect to the purchase of Fund shares, or pursuant to
sponsored arrangements with organizations which make recommendations to, or
permit group solicitation of, its employees, members or participants in
connection with the purchase of shares of the Fund, to separate accounts
established and maintained by an insurance company which are exempt from
registration under Section 3(c)(11) of the 1940 Act, to registered
representatives (and their spouses and minor children) and employees of any
dealer that has a sales agreement with SFSI, to shareholders of mutual funds
with investment objectives and policies similar to the Fund's who purchase
shares with redemption proceeds of such funds and to certain unit investment
trusts as described in the Prospectus.
14
<PAGE>
Class A shares may be issued without a sales load to present and retired
directors, trustees, officers, employees (and their family members, as defined
in the Prospectus) of the Funds, the other investment companies in the Seligman
Group, the Manager and other companies affiliated with the Manager. Such sales
may also be made to employee benefit plans and thrift plans for such persons and
to any investment advisory, custodial, trust or other fiduciary account managed
or advised by the Manager or any affiliate. These sales may be made for
investment purposes only, and shares may be resold only to the Fund.
Class A shares may be sold at net asset value to these persons since such
sales require less sales effort and lower sales related expenses as compared
with sales to the general public.
More About Redemptions. The procedures for redemption of Fund shares under
ordinary circumstances are set forth in the Prospectus. In unusual circumstances
payment may be postponed, or the right of redemption postponed for more than
seven days if the orderly liquidation of portfolio securities is prevented by
the closing of, or restricted trading on the NYSE during periods of emergency,
or such other periods as ordered by the Securities and Exchange
Commission.Payment may be made in securities, subject to the review of some
state securities commissions. If payment is made in securities, a shareholder
may incur brokerage expenses in converting these securities into cash.
DISTRIBUTION SERVICES
SFSI, an affiliate of the Manager, acts as general distributor of the
shares of the Fund and of the other mutual funds in the Seligman Group The Fund
and SFSI are parties to a Distributing Agreement, dated January 1, 1993. As
general distributor of the Fund's Capital Stock, SFSI allows commissions to all
dealers, as indicated in the Prospectus. Pursuant to agreements with the Fund,
certain dealers may also provide sub-accounting and other services for a fee.
SFSI receives the balance of sales loads and any CDSLs paid by investors. The
balance of sales loads paid by investors and received by SFSI in respect of
Class A shares amounted to $83,458 in 1995, after allowance of $1,076,487 as
commissions to dealers; $46,173 in 1994, after allowance of $355,656 as
commissions to dealers; and $38,939 in 1993, after allowance of $302,241 as
commissions to dealers. No Class B shares were were outstanding throughout the 3
year period ended December 31, 1995. For the years ended December 31, 1995 and
1994 and for the period May 3, 1993 through December 31, 1993, SFSI retained
CDSL charges from Class D shares amounting to $8,440, $3,862, and $1,072,
respectively .
Effective April 1, 1995, Seligman Services, Inc. ("SSI"), an affiliate of
the Manager, became eligible to receive commissions from certain sales of Fund
shares, as well as distribution and service fees pursuant to the Plan. For the
period ended December 31, 1995, SSI received commissions of $26,338 from sales
of Fund shares. SSI also received distribution and service fees of $315,230,
pursuant to the Plan.
VALUATION
Net asset value per share of each class of the Fund is determined as of the
close of trading on the NYSE, (normally, 4:00 p.m. Eastern time), on each day
that the NYSE is open. The NYSE is currently closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Fund will also determine net asset value
for each class on each day in which there is a sufficient degree of trading in
the Fund's portfolio securities that the net asset value of Fund shares might be
materially affected. Net asset value per share for a class is computed by
dividing such class' share of the value of the net assets of the Fund (i.e., the
value of its assets less liabilities) by the total number of outstanding shares
of such class. All expenses of the Fund, including the Manager's fee, are
accrued daily and taken into account for the purpose of determining net asset
value. The net asset value of Class B and Class D shares will generally be lower
than the net asset value of Class A shares as a result of the higher
distribution fee with respect to such shares.
Portfolio securities, including open short positions and options written,
are valued at the last sale price on the securities exchange or securities
market on which such securities primarily are traded. Securities traded on a
foreign exchange or over-the-counter market are valued at the last sales price
on the primary exchange or market on which they are traded. United Kingdom
securities and securities for which there are no recent sales transactions are
valued based on quotations provided by primary market makers in such securities.
Any securities for which recent market quotations are not readily available,
including restricted securities, are valued at fair value as determined in
accordance with procedures approved by the Board of Directors. Short-term
obligations with less than sixty days remaining to maturity are generally valued
at amortized cost. Short-term obligations with more than sixty days remaining to
maturity will be valued on an amortized cost basis based on the value of such
date unless the Board determines that this amortized cost value does not
represent fair market value. Expenses and fees, including the investment
management fee, are accrued daily and taken into account for the purpose of
determining the net asset value of Fund shares. Premiums received on the sale of
call options will be included in the net asset value, and the current market
value of the options sold by the Fund will be subtracted from net asset value.
Generally, trading in foreign securities, as well as U.S. Government
securities, money market instruments and repurchase agreements, is substantially
completed each day at various times prior to the close of the NYSE. The values
of such securities used in computing the net asset value of the shares of the
Fund are determined prior to the close of the NYSE, which will not be reflected
in the computation of net asset value. If during such periods events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in accordance with procedures approved by
the Fund's Board of Directors.
15
<PAGE>
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the mean between the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
PERFORMANCE
The Fund's average annual total returns of Class A shares for the one-year,
five-year and ten-year periods ended on December 31, 1995 were 22.12%,14.65% and
12.51% respectively. These returns were computed by subtracting the maximum
sales load of $47.50 (4.75% of public offering price) and assuming that all of
the dividends and distributions by the Fund over the relevant time period were
reinvested. It was then assumed that at the end of each period, the entire
amount was redeemed. The average annual total return was then calculated by
calculating the annual rate required for the initial payment to grow to the
amount which would have been received upon redemption (i.e., the average annual
compound rate of return). The average annual total returns for Class D shares of
the Fund for the year ended December 31, 1995 and since inception through
December 31, 1995 were 26.17% and 11.69%, respectively. These returns were
computed assuming that all of the dividends and distributions paid by the Fund's
Class D shares, were reinvested over the relevant time period. It was then
assumed that at the end of each period, the entire amount was redeemed,
subtracting the 1% CDSL, if applicable. Performance information is not provided
for Class B shares because no Class B shares were outstanding prior to April 22,
1996.
Table A below illustrates the total return (income and capital) on Class A
shares of the Fund with dividends invested and gain distributions taken in
shares. It shows that a $1,000 investment in Class A shares, assuming payment of
the 4.75% sales load, made on January 1, 1986 had a value of $3,251 on December
31, 1995, resulting in an aggregate total return of 225.07%. Table B illustrates
the total return (income and capital) on Class D shares of the Fund with
dividends invested and gain distributions taken in shares. It shows that a
$1,000 investment in Class D shares made on May 3, 1993 (commencement of
offering of Class D shares) had a value of $1,342 on December 31, 1995 resulting
in an aggregate total return of 34.23%. The results shown should not be
considered a representation of the dividend income or gain or loss in capital
value which may be realized from an investment made in a class of shares of the
Fund today.
<TABLE>
<CAPTION>
TABLE A - CLASS A SHARES
Value of
Year Value of Initial Value of Gain Dividend Total
Ended (1) Investment (2) Distribution Invested Total Value(2) Return (3)
- --------- -------------- ------------ -------- -------------- ----------
<C> <C> <C> <C> <C> <C>
12/31/86 $883 $ 245 $35 $1,163
12/31/87 749 355 61 1,165
12/31/88 765 411 106 1,282
12/31/89 830 633 163 1,626
12/31/90 718 652 193 1,563
12/31/91 850 891 289 2,030
12/31/92 867 1,025 359 2,251
12/31/93 913 1,226 446 2,585
12/31/94 821 1,245 470 2,536
12/31/95 961 1,662 628 3,251 225.07 %
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
TABLE B - CLASS D SHARES
Value of
Year/Period Value of Initial Value of Gain Dividend Total
Ended (1) Investment (2) Distribution Invested Total Value(2) Return (3)
- --------- -------------- ------------ -------- -------------- ----------
<S> <C> <C> <C> <C> <C>
12/31/93 $ 1,013 $ 62 $16 $1,091
12/31/94 909 115 32 1,056
12/31/95 1,065 220 57 1,342 34.23%
</TABLE>
1 For the ten years ended December 31, 1995; and from commencement of
offering of Class D shares on May 3, 1993.
2 The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales load, assumes that all dividends and capital
gain distributions were taken in cash and reflects changes in the net asset
value of the shares purchased with the hypothetical initial investment.
"Total Value" reflects the effect of the CDSL, if applicable, assumes
investment of all dividends and capital gain distributions and reflects
changes in the net asset value.
3 "Total Return" for each class of shares of the Fund is calculated by
assuming a hypothetical initial investment of $1,000 at the beginning of
the period specified, subtracting the maximum sales load for Class A
shares; determining total value of all dividends and distributions that
would have been paid during the period on such shares assuming that each
dividend or distribution was invested in additional shares at net asset
value; calculating the total value of the investment at the end of the
period; subtracting the CDSL on Class D shares, if applicable; and finally,
by dividing the difference between the amount of the hypothetical initial
investment at the beginning of the period and its total value at the end of
the period by the amount of the hypothetical initial investment.
No adjustments have been made for any income taxes payable by investors on
dividends invested or gain distributions taken in shares.
The total return and average annual total return of the Class A shares
quoted from time to time through December 31, 1992 does not reflect the
deduction of the administration, shareholder services and distribution fee,
effective January 1, 1993; through April 10, 1991 also does not reflect the
increased management fee approved by shareholders on April 10, 1991, and through
December 31, 1995, does not reflect the increased management fee approved by
shareholders on December 12, 1995, and effective on January 1, 1996, which fees
if reflected would reduce the performance quoted.
The Fund may also include its aggregate total return over a specified
period in advertisements or in information furnished to present or prospective
shareholders.
GENERAL INFORMATION
Capital Stock. The Board of Directors is authorized to classify or reclassify
and issue any unissued Capital Stock of the Fund into any number of other
classes without further action by shareholders. The 1940 Act requires that where
more than one class exists, each class must be preferred over all other classes
in respect of assets specifically allocated to such class.
Custodian. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105 serves as custodian of the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for the Fund.
Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, New
York 10281.
FINANCIAL STATEMENTS
The Annual Report to Shareholders for the year ended December 31, 1995 is
incorporated by reference into this Statement of Additional Information. The
Annual Report contains a schedule of the investments as of December 31, 1995, as
well as certain other financial information as of that date. The Annual Report
will be furnished, without charge, to investors who request copies of the Fund's
Statement of Additional Information.
17
<PAGE>
APPENDIX
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in the
sale of government securities to help finance the Civil War - Joseph Seligman,
with his brothers, established the international banking and investment firm of
J. & W. Seligman & Co. In the years that followed, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.
The Seligman Complex:
.... Prior to 1900
o Helps finance America's fledgling railroads through underwriting.
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. Provides
financial assistance to Mary Todd Lincoln and urges the Senate to award her
a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of underwritings including those for some of the
country's largest companies: Briggs Manufacturing, Dodge Brothers, General
Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company, United
Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $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.
...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.
18
<PAGE>
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt 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 and Seligman Quality Municipal
Fund, two closed-end funds that invest in high-quality municipal bonds.
o In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global investment
products.
o Introduces Seligman Frontier Fund, Inc., a small capitalization mutual
fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
four separate series: Seligman Henderson International Fund, Seligman
Henderson Global Growth Opportunities Fund, Seligman Henderson Global
Smaller Companies Fund and Seligman Henderson Global Technology Fund.
