<PAGE>
File No. 2-10835
811-234
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 76 [X]
--
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 24 [X]
--
- --------------------------------------------------------------------------------
SELIGMAN COMMON STOCK FUND, INC.
(Exact name of registrant as specified in charter)
- --------------------------------------------------------------------------------
100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
Registrant's Telephone Number: 212-850-1864 or Toll Free: 800-221-2450
- --------------------------------------------------------------------------------
THOMAS G. ROSE, Treasurer, 100 Park Avenue, New York, New York 10017
(Name and address of agent for service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box):
<TABLE>
<S> <C>
[X] immediately upon filing pursuant to [ ] on (date) pursuant to paragraph (a)(1)
paragraph (b)
[ ] on (date) pursuant to paragraph (b) [ ] 75 days after filing pursuant to
----------- paragraph (a)(2)
[ ] 60 days after filing pursuant to [ ] on (date) pursuant to paragraph
paragraph (a)(1) (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.
</TABLE>
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on March 27,
1998.
<PAGE>
SELIGMAN COMMON STOCK FUND, INC.
FORM N-1A CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 76
Pursuant to Rule 481(a)
-----------------------
Item in Part A of Form N-1A Location in Prospectus
- ----------------------------- ----------------------
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Organization and
Capitalization
5. Management of the Fund Management Services
5a. Manager's Discussion of Fund Management Services
Performance
6. Capital Stock and Other Securities Organization and Capitalization
7. Purchase of Securities Being Alternative Distribution System;
Offered Purchase of Shares; Administration,
Shareholder Services and Distribution
Plan
8. Redemption or Repurchase Telephone Transactions; Redemption of
Shares; Exchange Privilege
9. Pending Legal Proceedings Not applicable
Item in Part B of Form N-1A Location in Statement of Additional
- --------------------------- -----------------------------------
Information
-----------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information; Organization and
Capitalization (Prospectus); Appendix
13. Investment Objectives and Policies Investment Objective, Policies And
Risks; Investment Limitations
14. Management of the Registrant Management and Expenses
15. Control Persons and Principal Directors and Officers
Holders of Securities
16. Investment Advisory and Other Management and Expenses;
Services Distribution Services
17. Brokerage Allocation Portfolio Transactions; Administration,
Shareholder Services and Distribution
Plan
18. Capital Stock and Other Securities General Information; Organization and
Capitalization (Prospectus)
19. Purchase, Redemption and Pricing Purchase and Redemption of Fund Shares;
of Securities being Offered Valuation
20. Tax Status Federal Income Taxes (Prospectus)
21. Underwriter Distribution Services
22. Calculation of Performance Data Performance
23. Financial Statements Financial Statements
<PAGE>
GRAPHIC
SELIGMAN
- --------------
COMMON STOCK
FUND, INC.
PROSPECTUS
MAY 1, 1998
-----
A
Growth and
Income Fund
In Its
69th Year
LOGO
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
GRAPHIC
TABLE OF CONTENTS
Summary of Fund Expenses 2
Financial Highlights 3
Alternative Distribution System 5
Investment Objectives, Policies and Risks 7
Management Services 9
Purchase of Shares 10
Telephone Transactions 17
Redemption of Shares 19
Administration, Shareholder Services
and Distribution Plan 21
Exchange Privilege 22
Further Information about Transactions in
the Fund 24
Dividends and Capital Gains Distributions 24
Federal Income Taxes 25
Shareholder Information 26
Advertising the Fund's Performance 28
Organization and Capitalization 29
TIMES CHANGE . . . VALUES ENDURE
<PAGE>
Seligman Common Stock Fund, Inc.
100 Park Avenue . New York, NY 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450
For Retirement Plan Information--Toll-Free Telephone: (800) 445-1777
May 1, 1998
Seligman Common Stock Fund, Inc. (the "Fund") is a mutual fund which invests
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. In-
vestment advisory and management services are provided to the Fund by J. & W.
Seligman & Co. Incorporated (the "Manager"). The Fund's distributor is Selig-
man Financial Services, Inc., an affiliate of the Manager. For a description
of the Fund's investment objective and policies, including the risk factors
associated with an investment in the Fund, see "Investment Objectives, Poli-
cies and Risks." There can be no assurance that the Fund's investment objec-
tives will be achieved.
The Fund offers three classes of shares. Class A shares are sold subject to
an initial sales load of up to 4.75% and an annual service fee currently
charged at a rate of up to .25% of the average daily net asset value of the
Class A shares. Class A shares purchased in an amount of $1,000,000 or more
are sold without an initial sales load but are subject to a contingent de-
ferred sales load ("CDSL") of 1% on redemptions within eighteen months of pur-
chase. Class B shares are sold without an initial sales load but are subject
to a CDSL, of 5% on redemptions in the first year after purchase of such
shares, declining to 1% in the sixth year and 0% thereafter, an annual distri-
bution fee of .75% and an annual service fee of up to .25% of the average
daily net asset value of the Class B shares. Class B shares will automatically
convert to Class A shares on the last day of the month that precedes the
eighth anniversary of their date of purchase. Class D shares are sold without
an initial sales load but are subject to a CDSL of 1% imposed on redemptions
within one year of purchase, an annual distribution fee of up to .75% and an
annual service fee of up to .25% of the average daily net asset value of the
Class D shares. Any CDSL payable upon redemption of Class B or Class D shares
will be assessed on the lesser of the current net asset value or the original
purchase price of the shares redeemed. No CDSL will be imposed on shares ac-
quired through the reinvestment of dividends or gain distributions received
from any class of shares. See "Alternative Distribution System." Shares of the
Fund may be purchased through any authorized investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Fund before investing. Please read it carefully before
you invest and keep it for future reference. Additional information about the
Fund, including a Statement of Additional Information, has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
available upon request without charge by calling or writing the Fund at the
telephone numbers or the address set forth above. The Statement of Additional
Information is dated the same date as this Prospectus and is incorporated
herein by reference in its entirety.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
---------------- --------------- ----------------
(INITIAL SALES (DEFERRED SALES (DEFERRED SALES
SHAREHOLDER TRANSACTION LOAD LOAD LOAD
EXPENSES ALTERNATIVE) ALTERNATIVE) ALTERNATIVE)
<S> <C> <C> <C>
Maximum Sales Load Imposed
on Purchases (as a
percentage of offering
price)..................... 4.75% None None
Sales Load on Reinvested
Dividends.................. None None None
Deferred Sales Load (as a
percentage of original
purchase price or None; 5% in 1st year 1% in first year
redemption proceeds, except 1% in 4% in 2nd year None thereafter
whichever is lower)........ first 18 months 3% in 3rd and
if initial sales 4th years
load was waived 2% in 5th year
in full due to 1% in 6th year
size of purchase None thereafter
Redemption Fees............. None None None
Exchange Fees............... None None None
ANNUAL FUND OPERATING
EXPENSES FOR 1997 CLASS A CLASS B CLASS D
---------------- --------------- ----------------
(as a percentage of average
net assets)
Management Fees............. .65% .65% .65%
12b-1 Fees.................. .24% 1.00%* 1.00%*
Other Expenses.............. .24% .24% .24%
----- ---- -----
Total Fund Operating
Expenses................... 1.13% 1.89% 1.89%
===== ==== =====
</TABLE>
The purpose of this table is to assist investors in understanding the vari-
ous costs and expenses which shareholders of the Fund bear directly or indi-
rectly. The sales load on Class A shares is a one-time charge paid at the time
of purchase of shares. Reductions in initial sales loads are available in cer-
tain circumstances. Class A shares are not subject to an initial sales load
for purchases of $1,000,000 or more; however, such shares are subject to a
CDSL, a one-time charge, only if the shares are redeemed within eighteen
months of purchase. The CDSLs on Class B and Class D shares are one-time
charges paid only if shares are redeemed within six years or one year of pur-
chase, respectively. For more information concerning reductions in sales loads
and for a more complete description of the various costs and expenses, see
"Purchase of Shares," "Redemption of Shares" and "Management Services" herein.
The Fund's Administration, Shareholder Services and Distribution Plan to which
the caption "12b-1 Fees" relates, is discussed under "Administration, Share-
holder Services and Distribution Plan" herein.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE ------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on
a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time
period................................ Class A $58 $82 $107 $178
Class B+ 69 89 122 201
Class D 29 59 102 221
An investor would pay the following expenses on
the same
investment, assuming no redemptions... Class A $58 $82 $107 $178
Class B+ 19 59 102 201
Class D 19 59 102 221
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN AND THE 5% AN-
NUAL RETURN USED IN THIS EXAMPLE IS A HYPOTHETICAL RATE.
- -------
* Includes an annual distribution fee of .75% and an annual service fee of
.25%. Pursuant to the Rules of the National Association of Securities Deal-
ers, Inc., the aggregate deferred sales loads and annual distribution fees
on Class B and Class D shares of the Fund may not exceed 6.25% of total
gross sales, subject to certain exclusions. The maximum sales charge rule is
applied separately to each class. The 6.25% limitation is imposed on the
Fund rather than on a per shareholder basis. Therefore, a long-term Class B
or Class D shareholder of the Fund may pay more in total sales loads (in-
cluding distribution fees) than the economic equivalent of 6.25% of such
shareholder's investment in such shares.
+ The expenses shown for the ten-year period reflect the conversion of Class B
shares to Class A shares after 8 years.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights for the Fund's Class A, Class B and Class D shares
for the periods presented have been audited by Deloitte & Touche llp, indepen-
dent auditors. This information, which is derived from the financial and ac-
counting records of the Fund, should be read in conjunction with the financial
statements and notes contained in the Fund's 1997 Annual Report, which is in-
corporated by reference in the Fund's Statement of Additional Information,
copies of which may be obtained free of charge by calling or writing the Fund
at the telephone numbers or address provided on the cover page of this Pro-
spectus.
"Per share operating performance" data is designed to allow investors to
trace the operating performance, on a per share basis, from the beginning net
asset value to the ending net asset value so that they can understand what ef-
fect the individual items have on their investment, assuming it was held
throughout the period. Generally, the per share amounts are derived by con-
verting the actual dollar amounts incurred for each item, as disclosed in the
financial statements, to their equivalent per share amount.
"Total return based on net asset value" measures each Class's performance
assuming investors purchased Fund shares at net asset value as of the begin-
ning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value per share on the last
day of the period. The total return computations do not reflect any sales
loads investors may incur in purchasing or selling shares of the Fund. The to-
tal returns for periods of less than one year are not annualized.
"Average commission rate paid" represents the average commissions paid by
the Fund to purchase or sell securities. It is determined by dividing the to-
tal commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
1997O 1996O 1995O 1994O 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of year...... $14.89 $14.19 $12.12 $13.47 $12.79 $12.54 $10.60 $12.24 $11.30 $11.06
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment income... .30 .35 .36 .38 .39 .39 .40 .38 .44 .43
Net realized and
unrealized investment
gain (loss)............ 3.18 1.81 3.00 (.64) 1.49 .95 2.72 (.86) 2.52 .68
Net realized and
unrealized gain (loss)
from foreign currency
transaction............ (.07) -- .01 -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Increase (decrease) from
investment operations.. 3.41 2.16 3.37 (.26) 1.88 1.34 3.12 (.48) 2.96 1.11
Dividends paid.......... (.32) (.34) (.36) (.37) (.38) (.39) (.40) (.41) (.43) (.42)
Distributions from net
gain realized.......... (2.06) (1.12) (.94) (.72) (.82) (.70) (.78) (.75) (1.59) (.45)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net asset value..... 1.03 0.70 2.07 (1.35) .68 .25 1.94 (1.64) .94 .24
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
year................... $15.92 $14.89 $14.19 $12.12 $13.47 $12.79 $12.54 $10.60 $12.24 $11.30
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON
NET ASSET VALUE: 23.58% 15.44% 28.17% (1.89)% 14.86% 10.86% 29.93% (3.89)% 26.77% 10.08%
RATIOS/SUPPLEMENTAL
DATA:
Expenses to average net
assets................. 1.13% 1.15% .93% .85% .87% .75% .72% .66% .65% .69%
Net investment income to
average net assets..... 1.83% 2.36% 2.56% 2.93% 2.86% 3.00% 3.24% 3.22% 3.51% 3.70%
Portfolio turnover...... 106.02% 56.10% 46.08% 57.17% 54.37% 46.78% 47.60% 45.22% 56.27% 52.58%
Average commission rate
paid................... $.0426 $.0554
Net assets, end of year
(000s omitted)......... $734,635 $656,260 $614,400 $510,956 $553,222 $514,069 $494,858 $422,099 $495,029 $487,179
</TABLE>
- -------
oPer share amounts for the years ended December 31, 1997, 1996, 1995 and
1994, are calculated based on average shares outstanding.
The data provided above reflects historical information and therefore has
not been adjusted to reflect (i) through April 10, 1991, the effect of the in-
creased management fee which was approved by shareholders on April 10, 1991;
(ii) through December 31, 1992, the effect of the Administration, Shareholder
Services and Distribution Plan which was approved by shareholders on November
23, 1992 and became effective January 1, 1993; or (iii) through December 31,
1995, the effect of the increase in the management fee rate payable by the
Fund, which was approved by shareholders on December 12, 1995 and became ef-
fective on January 1, 1996.
3
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS B CLASS D
------------------- --------------------------------------------
YEAR 4/22/96* YEAR ENDED DECEMBER 31, 5/3/93*
ENDED TO ---------------------------------- TO
12/31/97O 12/31/96O 1997O 1996O 1995O 1994O 12/31/93
--------- --------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $14.87 $14.80 $14.87 $14.16 $12.07 $13.46 $13.29
------- ------ ------- ------- ------- ------- ------
Net investment income... .17 .15 .17 .24 0.24 .22 .18
Net realized and
unrealized investment
gain (loss)............ 3.17 1.20 3.18 1.80 3.00 (.66) 1.02
Net realized and
unrealized gain (loss)
from foreign currency
transaction............ (.07) -- (.07) -- .01 -- --
------- ------ ------- ------- ------- ------- ------
Increase (decrease) from
investment operations.. 3.27 1.35 3.28 2.04 3.25 (.44) 1.20
Dividends paid.......... (.20) (.16) (.20) (.21) (.22) (.23) (.21)
Distributions from net
gain realized.......... (2.06) (1.12) (2.06) (1.12) (.94) (.72) (.82)
------- ------ ------- ------- ------- ------- ------
Net increase (decrease)
in net asset value..... 1.01 .07 1.02 .71 2.09 (1.39) .17
------- ------ ------- ------- ------- ------- ------
Net asset value, end of
period................. $15.88 $14.87 $15.89 $14.87 $14.16 $12.07 $13.46
======= ====== ======= ======= ======= ======= ======
TOTAL RETURN BASED ON
NET ASSET VALUE: 22.59% 9.21% 22.66% 14.58% 27.17% (3.24)% 9.09%
RATIOS/SUPPLEMENTAL
DATA:
Expenses to average net
assets................. 1.89% 1.92%+ 1.89% 1.91% 1.72% 1.96% 2.02%+
Net investment income to
average net assets..... 1.07% 1.55%+ 1.07% 1.61% 1.80% 1.68% 1.83%+
Portfolio turnover...... 106.02% 56.10%++ 106.02% 56.10% 46.08% 57.17% 54.37%+++
Average commission rate
paid................... $.0426 $.0554++ $.0426 $.0554
Net assets, end of
period (000s omitted).. $19,568 $6,451 $80,896 $63,938 $46,564 $14,416 $5,667
</TABLE>
- -------
*Commencement of offering of shares.
oPer share amounts for the periods ended December 31, 1997, 1996, 1995 and
1994, are calculated based on average shares outstanding.
+Annualized.
++For the year ended December 31, 1996.
+++For the year ended December 31, 1993.
The data provided above reflects historical information and therefore
through December 31, 1995 does not reflect the effect of the increase in the
management fee rate payable by the Fund, which was approved by shareholders on
December 12, 1995 and became effective on January 1, 1996.
4
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM
The Fund offers three classes of shares. Class A shares are sold to invest-
ors who have concluded that they would prefer to pay an initial sales load and
have the benefit of lower continuing fees. Class B shares are sold to invest-
ors choosing to pay no initial sales sold, a higher distribution fee and a
CDSL with respect to redemptions within six years of purchase and who desire
shares to convert automatically to Class A shares after eight years. Class D
shares are sold to investors choosing to pay no initial sales load, a higher
distribution fee and, with respect to redemptions within one year of purchase,
a CDSL. The Alternative Distribution System allows investors to choose the
method of purchasing shares that is most beneficial in light of the amount of
the purchase, the length of time the shares are expected to be held and other
relevant circumstances. Investors should determine whether under their partic-
ular circumstances it is more advantageous to incur an initial sales load and
be subject to lower ongoing fees, as discussed below, or to have the entire
initial purchase price invested in the Fund with the investment thereafter be-
ing subject to higher ongoing fees and either a CDSL for a six-year period
with automatic conversion to Class A shares after eight years or a CDSL for a
one-year period with no automatic conversion to Class A shares.
Investors who expect to maintain their investment for an extended period of
time might choose to purchase Class A shares because over time the accumulated
continuing distribution fees of Class B and Class D shares may exceed the ini-
tial sales load and lower distribution fee of Class A shares. This considera-
tion must be weighed against the fact the amount invested in the Fund will be
reduced by the initial sales load on Class A shares deducted at the time of
purchase. Furthermore, the higher distribution fees on Class B and Class D
shares will be offset to the extent any return is realized on the additional
funds initially invested therein that would have been equal to the amount of
the initial sales load on Class A shares.
Investors who qualify for reduced initial sales loads, as described under
"Purchase of Shares" be-low, might also choose to purchase Class A shares be-
cause the sales load deducted at the time of purchase would be less or waived
in full. However, investors should consider the effect of the 1% CDSL imposed
on shares on which the initial sales load was waived because the amount of
Class A shares purchased was $1,000,000 or more. In addition, Class B shares
will be converted automatically to Class A shares after a period of approxi-
mately eight years, and thereafter investors will be subject to 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.
Alternatively, some investors might choose to have all of their funds in-
vested initially in Class B or Class D shares, although remaining subject to a
higher continuing distribution fee and, for a six-year or one-year period, a
CDSL as described below. For example, an investor who does not qualify for re-
duced sales loads would have to hold Class A shares for more than 6.33 years
for the Class B or Class D distribution fee to exceed the initial sales load
plus the distribution fee on Class A shares. This example does not take into
account the time value of money, which further reduces the impact of the Class
B and Class D shares' 1% distribution fee, other expenses charged to each
class, fluctuations in net asset value or the effect of the return on the in-
vestment over this period of time.
Investors should bear in mind that total asset based sales charges (i.e. the
higher continuing distribution fee plus the CDSL) on Class B shares that are
redeemed may exceed the total asset based sales charges that would be payable
on the same amount of Class A or Class D shares, particularly if the Class B
shares are redeemed shortly after purchase or if the investor qualifies for a
reduced sales load on the Class A shares.
Investors should understand that the purpose and function of the initial
sales loads (and deferred sales load, when applicable) with respect to Class A
5
<PAGE>
shares is the same as those of the deferred sales loads and higher distribu-
tion fees with respect to Class B and Class D shares in that the sales loads
and distribution fees applicable to each class provide for the financing of
the distribution of the shares of the Fund.
Class B and Class D shares are subject to the same ongoing distribution fees
but Class D shares are subject to a CDSL for a shorter period of time (one
year as opposed to six years) than Class B shares. However, unlike Class D
shares, Class B shares automatically convert to Class A shares after eight
years, which are subject to lower ongoing fees.
The three classes of shares represent interests in the same portfolio of in-
vestments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and, potentially, cer-
tain other class expenses and has exclusive voting rights with respect to any
matter to which a separate vote of any class is required by the Investment
Company Act of 1940, as amended (the "1940 Act"), or Maryland law. The net in-
come attributable to each class and dividends payable on the shares of each
class will be reduced by the amount of distribution and other expenses of each
class. Class B and Class D shares bear higher distribution fees, which will
cause the Class B and Class D shares to pay lower dividends than the Class A
shares. The three classes also have separate exchange privileges.
The Directors of the Fund believe that no conflict of interest currently ex-
ists between the Class A, Class B and Class D shares. On an ongoing basis, the
Di-rectors, in the exercise of their fiduciary duties under the 1940 Act and
Maryland law, will seek to ensure that no such conflict arises. For this pur-
pose, the Directors will monitor the Fund for the existence of any material
conflict among the classes and will take such action as is reasonably neces-
sary to eliminate any such conflicts that may develop.
DIFFERENCES BETWEEN CLASSES. The primary differences between Class A, Class
B and Class D shares are their sales load structures and ongoing expenses as
set forth below. The primary differences between Class B and Class D shares
are that Class D shares are subject to a shorter CDSL period and a lower CDSL
rate but Class B shares automatically convert to Class A shares after eight
years, resulting in a reduction in ongoing fees. Investors in Class B shares
should take into account whether they intend to redeem their shares within the
CDSL period and, if not, whether they intend to remain invested until the end
of the conversion period and thereby take advantage of the reduction in ongo-
ing fees resulting from the conversion to Class A shares. Other investors,
however, may elect to purchase Class D shares if they determine that it is ad-
vantageous to have all their assets invested initially and they are uncertain
as to the length of time they intend to hold their assets in the Fund or an-
other mutual fund in the Seligman Group for which the exchange privilege is
available. Although Class D shareholders are subject to a shorter CDSL period
at a lower rate, they forgo the Class B automatic conversion feature, making
their investment subject to higher distribution fees for an indefinite period
of time. Each class has advantages and disadvantages for different investors,
and investors should choose the class that best suits their circumstances and
their objectives.
6
<PAGE>
<TABLE>
<CAPTION>
ANNUAL 12B-1
FEES
(AS A % OF
AVERAGE
INITIAL DAILY NET OTHER
SALES LOAD ASSETS) INFORMATION
---------- ------------ -----------
<C> <C> <C> <S>
CLASS A Maximum Service fee Initial sales
initial of .25%. load
sales waived or reduced for
load of certain purchases.
4.75% of CDSL of 1% on
the redemptions within 18
public months of purchase on
offering shares on which
price. initial sales load was
waived in full due to
the size of the purchase.
CLASS B None Service fee CDSL of:
of .25% 5% in 1st year
Distribution 4% in 2nd year
fee of .75% 3% in 3rd and 4th years
until 2% in 5th year
conversion* 1% in 6th year
0% after 6th year.
CLASS D None Service fee CDSL of 1% on
of .25% redemptions within one
Distribution year of purchase.
fee of up to
.75%.
</TABLE>
* Conversion occurs at the end of the month which precedes the 8th anniversary
of the purchase date. If Class B shares of the Fund are exchanged for Class
B shares of another Seligman Mutual Fund, the conversion period applicable
to the Class B shares acquired in the exchange will apply, and the holding
period of the shares exchanged will be tacked onto the holding period of the
shares acquired.
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Fund is an open-end diversified management investment company, as de-
fined in the 1940 Act, or mutual fund, incorporated in Maryland in 1930.
The Fund strives to produce favorable, but not the highest, current income
and long-term growth of both income and capital value, without exposing capi-
tal to undue risk. Income is thought of in terms of both the dollar amount of
dividends paid and the purchasing power of the income they provide.
The Fund emphasizes careful selection of individual securities suited to its
investment objectives, broad diversification of investment risk and continuing
supervision of securities owned. Assets may be held in cash or invested in all
forms of securities. For many years, common stocks have made up the bulk of
securities owned. However, substantial proportions of assets have been held,
and may be held, in cash and fixed income securities. Investments may be
changed whenever considered advisable and portfolio turnover may vary with
such changes. There can be no assurance that the Fund's investment objectives
will be attained.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
brokers or dealers in corporate or government securities, or banks or other
institutional borrowers of securities. The borrower must maintain with the
Fund cash or equivalent collateral equal to at least 100% of the market value
of the securities loaned. During the time portfolio securities are on loan,
the borrower pays the Fund an amount equivalent to any dividends or interest
paid on the securities. The Fund may invest the cash collateral and earn addi-
tional income or may receive an agreed upon amount of interest income from the
borrower.
BORROWING. The Fund may borrow money only from banks and only for temporary
or emergency purposes in an amount not to exceed 15% of the value of its total
assets. The Fund may pledge its assets only to the extent necessary to effect
permitted borrowings on a secured basis.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in il-
liquid securities, including restricted securities (i.e., securities not read-
ily marketable without registration under the Securities Act of 1933 (the
"1933 Act")) and other securities that are not readily marketable. The Fund
may purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1993 Act, and the Manager, acting
pursuant to procedures approved by the Fund's Board of Directors, may
determine, when appropriate, that specific Rule 144A securities are liquid and
not subject to the 15% limitation on illiquid securities. Should this determi-
nation be made, the Manager, acting pursuant to such procedures, will care-
fully monitor the security (focusing on such factors, among others, as trading
activity
7
<PAGE>
and availability of information) to determine that the Rule 144A security con-
tinues to be liquid. It is not possible to predict with assurance exactly how
the market for Rule 144A securities will further evolve. This investment prac-
tice could have the effect of increasing the level of illiquidity in the Fund,
if, and to the extent that, qualified institutional buyers become for a time
uninterested in purchasing Rule 144A securities.
FOREIGN SECURITIES. The Fund may invest in commercial paper and certificates
of deposit issued by foreign banks and may invest in other securities of for-
eign issuers directly or through American Depositary Receipts ("ADRs"), Euro-
pean Depositary Receipts ("EDRs") or Global Depositary Receipts ("GDRs") (col-
lectively, "Depositary Receipts").
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 U.S. company and foreign compa-
nies may not be subject to reporting standards and requirements comparable to
those applicable to U.S. companies. Foreign securities may not be as liquid as
U.S. securities. Securities of foreign companies may involve greater market
risk than securities of U.S. companies, and foreign brokerage commissions and
custody fees are generally higher than those in the United States. Investments
in foreign securities may also be subject to local economic or political
risks, political instability and possible nationalization of issuers. Deposi-
tary Receipts are instruments generally issued by domestic banks or trust com-
panies that represent the deposits of a security of a foreign issuer. ADRs may
be publicly traded on exchanges or over-the-counter in the United States and
are quoted and settled in dollars at a price that generally reflects the dol-
lar equivalent of the home country share price. EDRs are typically traded in
Europe. GDRs are typically traded in both Europe and the United States. Depos-
itary Receipts may be issued under sponsored or unsponsored programs. In spon-
sored programs, the issuer has made arrangements to have its securities traded
in the form of a Depositary Receipt. In unsponsored programs, the issuers may
not be directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored Depositary Receipt pro-
grams are generally similar, the issuers of securities represented by
unsponsored Depositary Receipts are not obligated to disclose material infor-
mation in the United States, and therefore, the import of such information may
not be reflected in the market value of such receipts. The Fund may invest up
to 10% of its total assets in foreign securities that it holds directly, but
this 10% limit does not apply to foreign securities held through Depositary
Receipts which are traded in the United States or to commercial paper and cer-
tificates of deposit issued by foreign banks.
GENERAL. Except as noted above, the foregoing investment policies are not
fundamental and the Fund's Board of Directors may change such policies without
the vote of a majority of the Fund's outstanding voting securities. As a mat-
ter of policy, the Board would not change the Fund's investment objectives of
seeking to produce favorable, but not the highest, current income and long-
term growth of both income and capital value without such a vote. A more de-
tailed description of the Fund's investment policies, including a list of
those restrictions on the Fund's investment activities which cannot be changed
without such a vote, appears in the Statement of Additional Information. Under
the 1940 Act, a "vote of a majority of the outstanding voting securities" of
the Fund means the affirmative vote of the lesser of (1) 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 repre-
sented at the meeting in person or by proxy.
YEAR 2000 RISKS. The Fund is dependent upon service providers and their com-
puter systems for its day-to-day operations, and many of the Fund's service
providers in turn depend upon computer systems of other persons. Many computer
systems currently
8
<PAGE>
cannot properly recognize or process date sensitive information relating to
the year 2000 and beyond. The Manager, Seligman Financial Services, Inc., and
the Fund's custodian have been evaluating the impact the year 2000 issue may
have on their computer systems. They expect that any modifications to their
computer systems necessary to address the year 2000 issue will be made and
tested in a timely manner. They are also working with vendors and other per-
sons whose systems are linked to theirs to obtain satisfactory assurances re-
garding the year 2000 issue. Seligman Data Corp., which provides certain cor-
porate and shareholder account services to the Fund at cost, has informed the
Fund that it does not expect that the cost to the Fund of its services will
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The costs of systems remediation by
persons other than Seligman Data Corp. will not be borne directly by the Fund.
There can be no assurance that the remedial actions taken by the Fund's serv-
ice providers will be sufficient or timely. Inadequate remediation could have
an adverse effect on the Fund's operations, including pricing and securities
trading and settlement, and the provision of shareholder services.
MANAGEMENT SERVICES
THE MANAGER. The Board of Directors provides broad supervision over the af-
fairs of the Fund. Pursuant to a Management Agreement approved by the Board
and the shareholders of the Fund, the Manager manages the investments of the
Fund and administers the business and other affairs of the Fund. The address
of the Manager is 100 Park Avenue, New York, NY 10017.
The Manager also serves as manager of seventeen other investment companies
which, together with the Fund, comprise the "Seligman Group." These companies
are: Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Selig-
man Communications and Information Fund, Inc., Seligman Frontier Fund, Inc.,
Seligman Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc., Se-
ligman High Income Fund Series, Seligman Income Fund, Inc., Seligman Municipal
Fund Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Munic-
ipal Fund, Inc., Seligman Pennsylvania Municipal Fund Series, Seligman Portfo-
lios, Inc., Seligman Quality Municipal Fund, Inc., Seligman Select Municipal
Fund, Inc., Seligman Value Fund Series, Inc. and Tri-Continental Corporation.
The aggregate assets of the Seligman Group were approximately $20.2 billion at
March 31, 1998. The Manager also provides investment management or advice to
institutional and other accounts having an aggregate value at March 31, 1998
of approximately $7.4 billion.
Mr. William C. Morris is Chairman of the Manager and Chairman of the Board
and Chief Executive Officer of the Fund. Mr. Morris owns a majority of the
outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a wholly-
owned subsidiary of the Fund and certain other investment companies in the Se-
ligman Group, which performs, at cost, certain recordkeeping functions for the
Fund, maintains the records of shareholder accounts and furnishes dividend
paying, redemption and related services.
The Manager is entitled to receive a management fee, calculated daily and
payable monthly. The management fee is equal to an 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. In 1997,
the management fee paid by the Fund was equal to an annual rate of .65% of the
average daily net assets of the Fund. The Fund pays all of its expenses other
than those assumed by the Manager. Total expenses of the Fund's Class A, Class
B and Class D shares for the year ended December 31, 1997 amounted to 1.13%,
1.89% and 1.89%, respectively, of the average daily net assets of such class.
9
<PAGE>
Prior to March 30, 1998, the Manager was party to a Subadvisory Agreement
with Seligman Henderson Co. pursuant to which Seligman Henderson Co. agreed to
provide investment advisory services to the Fund in respect of foreign assets
to the extent requested by the Manager. On March 30, 1998, the Subadvisory
Agreement terminated in accordance with its terms. The Manager has no present
plans to enter into similar subadvisory arrangements in respect of the Fund.
PORTFOLIO MANAGEMENT. Charles C. Smith, Jr., a Managing Director of the Man-
ager, has been a Vice President and Portfolio Manager of the Fund since Decem-
ber 1991. He is also a Vice President and Portfolio Manager of Seligman Income
Fund, Inc. and Tri-Continental Corporation and Vice President of Seligman
Portfolios, Inc. ("SPI") and Portfolio Manager of SPI's Seligman Common Stock
Portfolio and Seligman Income Portfolio. Mr. Smith joined the Manager in 1985
as Vice President, Investment Officer. He was promoted to Senior Vice Presi-
dent, Senior Investment Officer in 1992 and Managing Director in January 1994.
Odette S. Galli, Senior Vice President, Investment Officer, of the Manager,
has served as Co-Portfolio Manager of the Fund since October 1996. She is also
Co-Portfolio Manager of the Seligman Common Stock Portfolio of Seligman Port-
folios, Inc. and Tri-Continental Corporation. Ms. Galli joined the Manager in
1993 as Vice President, Investment Officer.
The Manager's discussion of the Fund's performance as well as a line graph
illustrating comparative performance information between the Fund, the Stan-
dard & Poor's 500 Composite Stock Price Index and the Lipper Growth and Income
Funds Average is included in the Fund's 1997 Annual Report to Shareholders.
Copies of the 1997 Annual Report may be obtained, without charge, by calling
or writing the Fund at the telephone numbers or address listed on the cover
page of this Prospectus.
PORTFOLIO TRANSACTIONS. The Management Agreement recognizes that in the pur-
chase and sale of portfolio securities, the Manager will seek the most favora-
ble price and execution and, consistent with that policy, may give considera-
tion to the research, statistical and other services furnished by brokers or
dealers to the Manager. The use of brokers who provide investment and market
research and securities and economic analysis may result in higher brokerage
charges than the use of brokers selected on the basis of the most favorable
brokerage commission rates, and research and analysis received may be useful
to the Manager in connection with its services to other clients as well as to
the Fund. In over-the-counter markets, orders are placed with responsible pri-
mary market makers unless a more favorable execution or price is believed to
be obtainable.
Consistent with the Rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution available
and such other policies as the Directors of the Fund may determine, the Man-
ager may consider sales of shares of the Fund and, if permitted by applicable
laws, may consider sales of shares of the other Seligman Mutual Funds as a
factor in the selection of brokers or dealers to execute portfolio transac-
tions for the Fund.
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" which may result in the payment by the Fund of dealer
spreads or underwriting commissions and other transaction costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
High portfolio turnover involves correspondingly greater transactions costs
and a possible increase in short-term capital gains or losses. Although it is
the policy of the Fund to hold securities for investment, changes in securi-
ties held by the Fund will be made from time to time when the Manager believes
such changes will strengthen the Fund's portfolio. The portfolio turnover of
the Fund may exceed 100%.
10
<PAGE>
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the Fund's shares. Its address is 100 Park Ave-
nue, New York, NY 10017.
The Fund issues three classes of shares: Class A shares are sold to invest-
ors choosing the initial sales load alternative; Class B shares are sold to
investors choosing to pay no initial sales load, a higher distribution fee and
a CDSL with respect to redemptions within six years of purchase and who desire
shares to convert automatically to Class A shares after eight years; and Class
D shares are sold to investors choosing no initial sales load, a higher dis-
tribution fee and a CDSL on redemptions within one year of purchase. See "Al-
ternative Distribution System" above.
Shares of the Fund may be purchased through any authorized investment deal-
er. All orders will be executed at the net asset value per share next deter-
mined after receipt of the purchase order plus, in the case of Class A shares,
a sales load which, except for shares purchased under one of the reduced sales
load plans, will vary with the size of the purchase as shown in the schedule
under "Class A Shares--Initial Sales Load" below.
THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE FUND IS $1,000; SUBSEQUENT
INVESTMENTS MUST BE IN THE MINIMUM AMOUNT OF $100 (EXCEPT FOR INVESTMENT OF
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS). THE FUND RESERVES THE RIGHT TO RE-
TURN INVESTMENTS THAT DO NOT MEET THESE MINIMUMS. EXCEPTIONS TO THESE MINIMUMS
ARE AVAILABLE FOR ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH THE INVEST-A-
CHECK(R) SERVICE. THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE SELIGMAN
TIME HORIZON MATRIXSM ASSET ALLOCATION PROGRAM IS $10,000. FOR INFORMATION
ABOUT THIS PROGRAM, CONTACT YOUR FINANCIAL ADVISOR.
The minimum amount for initial investment in the Fund is $500 for investors
who purchase shares of the Fund through Merrill Lynch's MFA or MFA Select Pro-
grams. There is no minimum investment required for investors who purchase
shares of the Fund through wrap fee programs.
Purchase orders placed for Class B shares must be for an amount LESS THAN
$250,000.
Orders received by an authorized dealer before the close of regular trading
on the New York Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern time) and
accepted by SFSI before the close of business (5:00 p.m. Eastern time) on the
same day will be executed at the Fund's net asset value determined as of the
close of regular trading on the NYSE on that day plus, in the case of Class A
shares, any applicable sales load. Orders accepted by dealers after the close
of regular trading on the NYSE, or received by SFSI after the close of busi-
ness, will be executed at the Fund's net asset value as next determined plus,
in the case of Class A shares, any applicable sales load. The authorized
dealer through which a shareholder purchases shares is responsible for for-
warding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire pay-
ments, dealer orders must first be placed through SFSI's order desk and as-
signed a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A., ABA #043000261, A/C Seligman Common Stock
Fund, Inc. (A, B or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PUR-
CHASE CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER.
Persons other than dealers who wish to wire payment should contact Seligman
Data Corp. for specific wire instructions. Although the Fund makes no charge
for this service, the transmitting bank may impose a wire service fee.
Current shareholders may purchase additional shares of the Fund at any time
through any authorized dealer or by sending a check payable to the "Seligman
Group of Funds," in a postage-paid return
11
<PAGE>
envelope or directly to P.O. BOX 9766, PROVIDENCE, RI 02940-9766. Checks for
investment must be in U.S. dollars drawn on a domestic bank. The check should
be accompanied by an investment slip (provided on the bottom of shareholder
account statements) and include the shareholder's name, address, account num-
ber, name of Fund and class of shares (A, B or D). Checks sent directly to Se-
ligman Data Corp. and received in good order will be invested at the Fund's
net asset value determined as of the close of regular trading on the NYSE on
that day plus, in the case of Class A shares, any applicable sales load.
IF A SHAREHOLDER DOES NOT PROVIDE THE REQUIRED INFORMATION, SELIGMAN DATA
CORP. WILL SEEK FURTHER CLARIFICATION AND MAY BE FORCED TO RETURN THE CHECK TO
THE SHAREHOLDER. IF ONLY THE CLASS DESIGNATION IS MISSING, THE INVESTMENT WILL
AUTOMATICALLY BE MADE IN CLASS A SHARES FOR NEW ACCOUNTS OR IN THE
SHAREHOLDER'S EXISTING CLASS FOR ADDITIONAL PURCHASES. Credit card convenience
checks and third party checks (i.e., checks made payable to someone other than
the "Seligman Group of Funds") may not be used to open a new fund account or
purchase additional shares of the Fund.
Seligman Data Corp. may charge a $10.00 service fee for checks returned to
it as uncollectable. This charge may be deducted from the shareholder's ac-
count. For the protection of the Fund and its shareholders, no redemption pro-
ceeds will be remitted to a shareholder with respect to shares purchased by
check (unless certified) until Seligman Data Corp. receives notice that the
check has cleared, which may be up to 15 days from the credit of the shares to
the shareholder's account.
Current shareholders may also purchase additional shares by having funds
electronically transferred directly from an employer, the Internal Revenue
Service or other government agency, or any institution capable of transmitting
payments through the Automated Clearing House ("ACH") network. Purchases may
be one-time transactions, or, for those institutions that offer direct deposit
programs, may be made on a systematic basis. To utilize this service, the fol-
lowing bank information must be provided to the paying institution:
Mellon Bank, N.A. ABA #043000261 A/C No. 600FFFNNNNNNNNNN
"600" IDENTIFIES THE SELIGMAN GROUP OF FUNDS, "FFF" IS THE FUND CODE REPRE-
SENTING THE FUND AND CLASS OF SHARES IN WHICH THE PURCHASE SHOULD BE MADE
(this code is available on the back of all shareholder account statements),
AND "NNNNNNNNNN" INDICATES THE SHAREHOLDER'S TEN-DIGIT ACCOUNT NUMBER. In ad-
dition, the Shareholder must indicate that this is a checking account at
Mellon Bank. For IRA and group retirement accounts, all electronic purchases
will be designated as current year contributions. For more information about
this service, please contact Seligman Data Corp.
VALUATION. The net asset value of the Fund's shares is determined each day,
Monday through Friday, as of the close of regular trading on the NYSE (normal-
ly, 4:00 p.m. Eastern time) on each day that the NYSE is open for business.
Net asset value is calculated separately for each class. Securities traded on
a U.S. or foreign exchange or over-the-counter market are valued at the last
sales price on the primary exchange or market on which they are traded. United
Kingdom securities and securities for which there are no recent sales transac-
tions are valued based on quotations provided by primary market makers in such
securities. Short-term holdings maturing in 60 days or less are generally val-
ued at amortized cost if their original maturity was 60 days or less. Short-
term holdings with more than 60 days remaining to maturity will be valued at
current market value until the 61st day prior to maturity, and will then be
valued on an amortized cost basis based on the value as of such date unless
the Board determines that amortized cost value does not represent fair market
value. Any securities for which recent market quotations are not readily
available are valued at fair value determined in
12
<PAGE>
accordance with procedures approved by the Fund's Board of Directors.
Although the legal rights of Class A, Class B and Class D shares are sub-
stantially identical, the different expenses borne by each class will result
in different net asset values and dividends. The net asset values of Class B
and Class D shares will generally be lower than the net asset value of Class A
shares as a result of the higher distribution fee charged to Class B and Class
D shares. In addition, net asset value per share of the three classes will be
affected to the extent any other expenses differ among classes.
CLASS A SHARES--INITIAL SALES LOAD. Class A shares are subject to an initial
sales load which varies with the size of the purchase as shown in the follow-
ing schedule, and an annual service fee of up to .25% of the average daily net
asset value of Class A shares. See "Administration, Shareholder Services and
Distribution Plan" below.
<TABLE>
<CAPTION>
SALES LOAD AS A
PERCENTAGE OF
-------------------
REGULAR
DEALER
NET AMOUNT DISCOUNT
INVESTED AS A % OF
AMOUNT OF OFFERING (NET ASSET OFFERING
PURCHASE PRICE VALUE) PRICE
-------------------------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$ 50,000- 99,999 4.00 4.17 3.50
100,000- 249,999 3.50 3.63 3.00
250,000- 499,999 2.50 2.56 2.25
500,000- 999,999 2.00 2.04 1.75
1,000,000- or more* 0 0 0
</TABLE>
CLASS A SHARES--SALES LOAD SCHEDULE
-------
* Shares acquired at net asset
value pursuant to the above
schedule will be subject to a
CDSL of 1% if redeemed within 18
months of purchase. See "Pur-
chase of Shares--Contingent De-
ferred Sales Load."
There is no initial sales load on purchases of Class A shares of $1,000,000
or more ("NAV sales"); however, such shares are subject to a CDSL of 1% if re-
deemed within eighteen months of purchase.
SFSI shall pay broker/dealers, from its own resources, a fee on NAV sales,
calculated as follows: 1.00% of NAV sales up to but not including $2 million;
.80% of NAV sales from $2 million up to but not including $3 million; .50% of
NAV sales from $3 million up to but not including $5 million; and .25% of NAV
sales from $5 million and above. The calculation of the fee will be based on
assets held by a "single person" as defined below.
SFSI shall also pay broker/dealers, from its own resources, a fee on assets
of certain investments in Class A shares of the Seligman Mutual Funds partici-
pating in an "eligible employee benefit plan" (as defined below under "Special
Programs") that are attributable to the particular broker/dealer. The shares
eligible for the fee are those on which an initial front-end sales load was
not paid because either the participating eligible employee benefit plan has
at least $500,000 invested in the Seligman Mutual Funds or (ii) 50 eligible
employees to whom such plan is made available. Class A shares representing
only an initial purchase of Seligman Cash 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 a follows: 1.00% of sales up to
but not including $2 million; .80% of sales from $2 million up to but not in-
cluding $3 million; .50% of sales from $3 million up to but not including $5
million; and .25% of sales from $5 million and above.
REDUCED SALES LOADS. Reductions in sales loads apply to purchases of Class A
shares by a "single person," including an individual, members of a family unit
comprising husband, wife and minor children purchasing securities for their
own account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any
other fiduciary or individual account.
Shares purchased without an initial sales load in accordance with the sales
load schedule or pursuant
13
<PAGE>
to a Volume Discount, Right of Accumulation or Letter of Intent are subject to
a CDSL of 1% on redemptions within eighteen months of purchase.
. VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the Seligman Mu-
tual Funds that are sold with an initial sales load, reaches levels indicated
in the above sales load schedule.
. THE RIGHT OF ACCUMULATION allows an investor to combine the amount being in-
vested in shares of any Seligman Mutual Fund sold with an initial sales load
with the total net asset value of shares already owned that were sold with an
initial sales load, including shares of Seligman Cash Management Fund that
were acquired by the investor through an exchange of shares of another Selig-
man Mutual Fund on which there was an initial sales load, to determine reduced
sales loads in accordance with the sales load schedule. An investor or a
dealer purchasing shares on behalf of an investor must indicate that the in-
vestor has existing accounts when making investments or opening new accounts.
. A LETTER OF INTENT allows an investor to purchase Class A shares over a 13-
month period at reduced initial sales loads, based upon the total amount the
investor intends to purchase plus the total net asset value of shares of the
Seligman Mutual Funds already owned that were sold with an initial sales load
and the total net asset value of shares of Seligman Cash Management Fund that
were acquired through an exchange of shares of another Seligman Mutual Fund on
which there was an initial sales load. An investor or a dealer purchasing
shares on behalf of an investor must indicate that the investor has existing
accounts when making investments or opening new accounts. For more information
concerning terms of Letters of Intent, see "Terms and Conditions."
SPECIAL PROGRAMS. The Fund may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees and their spouses
(and family members of the foregoing) of the Fund, the other investment compa-
nies in the Seligman Group, the Manager and other companies affiliated with
the Manager. Family members are defined to include lineal descendants and lin-
eal ancestors, siblings (and their spouses and children) and any company or
organization controlled by any of the foregoing. Such sales also may be made
to employee benefit and thrift plans for such persons and to any investment
advisory, custodial, trust or other fiduciary account managed or advised by
the Manager or any affiliate.
Class A shares also may be issued without an initial sales load in connec-
tion with the acquisition of cash and securities owned by other investment
companies; to any registered unit investment trust which is the issuer of pe-
riodic payment plan certificates, the net proceeds of which are invested in
Fund shares; to separate accounts established and maintained by an insurance
company which are exempt from registration under Section 3(c)(11) of the 1940
Act; to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with SFSI; to financial in-
stitution trust departments; to registered investment advisers exercising dis-
cretionary investment authority with respect to the purchase of Fund shares;
to accounts of financial institutions or broker/dealers that charge account
management fees, provided the Manager or one of its affiliates has entered
into an agreement with respect to such accounts; pursuant to sponsored ar-
rangements with organizations which make recommendations to or permit group
solicitations of, its employees, members or participants in connection with
the purchase of shares of the Fund; to other investment companies in the
Seligman Group in connection with a deferred fee arrangement for outside di-
rectors; and to "eligible employee benefit plans" which have at least (i)
$500,000 invested in the Seligman Mutual Funds or (ii) 50 eligible employees
to whom such plan is made available. "Eligible employee benefit plan" means
any plan or arrangement, whether or not tax qualified, which provides for the
purchase of Fund shares. Sales of shares to such plans must be made
14
<PAGE>
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. Employee benefit plans eligible
for net asset value sales, as described above, will be subject to a CDSL of 1%
for terminations at the plan level only, on redemptions of shares purchased
within eighteen months of plan termination. Sales pursuant to a 401(k) or
other retirement alliance program the sponsor of which has an agreement with
SFSI pursuant to which shares are made available at net asset value are not
subject to a CDSL.
CLASS B SHARES. Class B shares are sold without an initial sales load but
are subject to a CDSL if the shares are redeemed within six years of purchase
at rates set forth in the table below, charged as a percentage of the current
net asset value or the original purchase price, whichever is less.
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CDSL
- -------------------- ----
<S> <C>
less than 1 year........................................................... 5%
1 year or more but less than 2 years....................................... 4%
2 years or more but less than 3 years...................................... 3%
3 years or more but less than 4 years...................................... 3%
4 years or more but less than 5 years...................................... 2%
5 years or more but less than 6 years...................................... 1%
6 years or more............................................................ 0%
</TABLE>
Class B shares are also subject to an annual distribution fee of .75% and an
annual service fee of up to .25% of the average daily net asset value of the
Class B shares. SFSI will make a 4% payment to dealers in respect of purchases
of Class B shares. Approximately eight years after purchase, Class B shares
will convert automatically to Class A shares which are subject to an annual
service fee of .25% but no distribution fee. Shares purchased through rein-
vestment of dividends and distributions on Class B shares also will convert
automatically to Class A shares along with the underlying shares on which they
were earned. Conversion occurs at the end of the month which precedes the
eighth anniversary of the purchase date. If Class B shares of the Fund are ex-
changed for Class B shares of another Seligman Mutual Fund, the conversion pe-
riod 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 pe-
riod of the shares acquired. Class B shareholders of the Fund exercising the
exchange privilege will continue to be subject to the Fund's CDSL schedule if
such schedule is higher or longer than the CDSL schedule relating to the new
Class B shares. In addition, Class B shares of the Fund acquired by exchange
will be subject to the Fund's CDSL schedule if such schedule is higher or
longer than the CDSL schedule relating to the Class B shares of the fund from
which the exchange has been made.
CLASS D SHARES. Class D shares are sold without an initial sales load but
are subject to a 1% CDSL if the shares are redeemed within one year, an annual
distribution fee of up to .75% and an annual service fee of up to .25%, of the
average daily net asset value of the Class D shares. SFSI will make a 1% pay-
ment to dealers in respect of purchases of Class D shares. Unlike Class B
shares, Class D shares do not automatically convert to Class A shares after
eight years.
CONTINGENT DEFERRED SALES LOAD. A CDSL will be imposed on redemptions of
Class B or Class D shares which were purchased during the preceding six years
(for Class B shares) or twelve months (for Class D shares). The amount of any
CDSL will initially be used by SFSI to defray the expense of the payment of 4%
(in the case of Class B shares) or 1% (in the case of Class D shares) made by
it to Service Organizations (as defined under "Administration, Shareholder
Services and Distribution Plan") at the time of sale. Pursuant to an agreement
with FEP Capital, L.P. ("FEP") to fund payments in respect of
15
<PAGE>
Class B shares, SFSI has agreed to assign any Class B CDSL to FEP.
A CDSL of 1% will also be imposed on redemptions of Class A shares purchased
during the preceding eighteen months if such shares were acquired at net asset
value pursuant to the sales load schedule provided under "Class A Shares--Ini-
tial Sales Load." Employee benefit plans eligible for net asset sales as de-
scribed above under "Special Programs" may be subject to a CDSL of 1% for ter-
minations at the plan level only, or redemptions of shares purchased within
eighteen months prior to plan termination.
The 1% CDSL normally imposed on redemptions of certain Class A shares (i.e.,
those purchased during the preceding eighteen months at net asset value pursu-
ant to the sales load schedule provided under "Class A Shares--Initial Sales
Load") will be waived on shares that were purchased through Morgan Stanley
Dean Witter & Co. ("Morgan Stanley") by certain Chilean institutional invest-
ors (i.e., pension plans, insurance companies and mutual funds). Upon redemp-
tion of such shares within an eighteen-month period, Morgan Stanley will reim-
burse SFSI a pro rata portion of the fee it received from SFSI at the time of
sale of such shares.
To minimize the application of a CDSL to a redemption, shares acquired pur-
suant to the investment of dividends and capital gain distributions (which are
not subject to a CDSL) will be redeemed first; followed by shares held for a
period of time longer than the applicable CDSL period. Shares held for the
longest period of time within the applicable period will then be redeemed. Ad-
ditionally, for those shares determined to be subject to a CDSL, the CDSL will
be assessed on the current net asset value or original purchase price, which-
ever is less. No CDSL will be imposed on shares acquired through the invest-
ment of dividends or capital gain distributions from any Class A, Class B or
Class D shares of Seligman Mutual Funds.
For example, assume an investor purchased 100 Class D shares in January at a
price of $10.00 per share. During the first year, 5 additional Class D shares
were acquired through investment of dividends and distributions. In January of
the following year, an additional 50 Class D shares are purchased at a price
of $12.00 per share. In March of that year, the investor chooses to redeem
$1,500.00 from the account which now holds 155 Class D shares with a total
value of $1,898.75 ($12.25 per share). The CDSL for this transaction would be
calculated as follows:
<TABLE>
<S> <C>
Total shares to be redeemed
(122.449 @ $12.25) as follows:...................................... $1,500.00
=========
Dividend/Distribution shares
(5 @ $12.25)........................................................ $ 61.25
Shares held more than 1 year
(100 @ $12.25)...................................................... 1,225.00
Shares held less than 1 year subject to CDSL (17.449 @ $12.25)....... 213.75
---------
Gross proceeds of redemption........................................ $1,500.00
Less CDSL (17.449 shares @
$12.00 = $209.39 X 1% = $2.09)..................................... (2.09)
---------
Net proceeds of redemption.......................................... $1,497.91
=========
</TABLE>
For federal income tax purposes, the amount of the CDSL will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the re-
demption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability (as defined in section
72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code")) of a
shareholder or beneficial owner; (b) in connection with (i) distributions from
retirement plans qualified under section 401(a) of the Code when such redemp-
tions are necessary to make distributions to plan participants (such payments
include, but are not limited to death, disability, retirement, or separation
of service), (ii) distributions from a custodial account under sec -
16
<PAGE>
tion 403(b)(7) of the Code or an individual retirement account (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 (iii) a tax-free return of an excess contribution to an
IRA; (c) in whole or in part, in connection with shares sold to current and
retired Directors of the Fund; (d) in whole or in part, in connection with
shares sold to any state, county, or city or any instrumentality, department,
authority, or agency thereof, which is prohibited by applicable investment
laws from paying a sales load or commission in connection with the purchase of
shares of any registered investment management company; (e) in whole or in
part, in connection with systematic withdrawals; (f) in connection with par-
ticipation in the Merrill Lynch Small Market 401(k) Program; and (g) in con-
nection with the redemption of shares of the Fund if the Fund is combined with
another Seligman Mutual Fund, or another similar reorganization transaction.
If, with respect to a redemption of any Class A, Class B or Class D shares
sold by a dealer, the CDSL is waived because the redemption qualifies for a
waiver as set forth above, the dealer shall remit to SFSI promptly upon notice
an amount equal to the payment or a portion of the payment made by SFSI at the
time of sale of such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the Seligman Mutual Funds. SFSI may from time to time pay a bonus or
other incentive to dealers that sell shares of the Seligman Mutual Funds. In
some instances, these bonuses or incentives may be offered only to certain
dealers which employ registered representatives who have sold or may sell a
significant amount of shares of the Fund and/or certain other mutual funds
managed by the Manager during a specified period of time. Such bonus or other
incentive may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representa-
tives and members of their families to places within or outside the United
States. The cost to SFSI of such promotional activities and payments shall be
consistent with the Rules of the National Association of Securities Dealers,
Inc., as then in effect.
TELEPHONE TRANSACTIONS
A shareholder with telephone transaction privileges, AND THE SHAREHOLDER'S
BROKER/DEALER REPRESENTATIVE, has the ability to effect the following transac-
tions via telephone: (i) redemption of Fund shares with proceeds sent to ad-
dress of record (up to $50,000 per day per fund account), (ii) exchange of
Fund shares for shares of the same class of another Seligman Mutual Fund,
(iii) change of a dividend and/or capital gain distribution option, and (iv)
change of address. In addition, a shareholder who has current bank information
on file with Seligman Data Corp. may redeem shares via telephone and have the
proceeds transferred electronically from the shareholder's fund account to the
shareholder's predesignated bank account. See "Redemption of Shares." All tel-
ephone transactions are effected through Seligman Data Corp. at (800) 221-
2450.
For investors who purchase shares by completing and submitting an Account
Application: Unless an election is made otherwise on the Account Application,
a shareholder and the shareholder's broker/ dealer of record as designated on
the Account Application, will automatically receive telephone services. A
shareholder must provide bank information on the Account Application or a sup-
plemental election form in order to have redemptions via telephone sent to the
shareholder's bank account.
For investors who purchase shares through a broker/dealer: Telephone serv-
ices for a shareholder and the shareholder's representative may be elected
17
<PAGE>
by completing a supplemental election form available from the broker/dealer of
record.
For accounts registered as IRAs. Telephone services will include only ex-
changes or address changes.
For corporations or group retirement plans: Telephone redemptions are not
permitted. Additionally, group retirement plans are not permitted to change a
dividend or gain distribution option. Group retirement plans that may allow
plan participants to place telephone exchanges directly with the Fund must
first provide a letter of authorization signed by the plan's custodian or
trustee, and provide a telephone services election form signed by each plan
participant.
All Seligman Mutual Fund accounts with the same account number (i.e., regis-
tered exactly the same) as an existing account, including any new fund in
which the shareholder invests in the future, will automatically include tele-
phone services if the existing account has telephone services. Telephone serv-
ices may also be elected at any time on a supplemental telephone services
election form.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or requesting
telephone services, authorizes each of the other owners to effect telephone
transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative may experience difficulty in contacting Seligman
Data Corp. to request a redemption or exchange of Fund shares via telephone.
In these circumstances, the shareholder or the shareholder's representative
should consider using other redemption or exchange procedures. (See "Redemp-
tion of Shares" below.) Use of these other redemption or exchange procedures
may result in the request being processed at a later time than if a telephone
transaction had been used, and the Fund's net asset value may fluctuate during
such periods.
The Fund and Seligman Data Corp. will employ reasonable procedures to con-
firm that instructions communicated by telephone are genuine. These will in-
clude: recording all telephone calls requesting account activity, requiring
that the caller provide certain requested personal and/or account information
at the time of the call for the purpose of establishing the caller's identity,
and sending a written confirmation of redemptions, exchanges or address
changes to the address of record each time activity is initiated by telephone.
As long as the Fund and Seligman Data Corp. follow instructions communicated
by telephone that were reasonably believed to be genuine at the time of their
receipt, neither they nor any of their affiliates will be liable for any loss
to the shareholder caused by an unauthorized transaction. In any instance
where the Fund or Seligman Data Corp. is not reasonably satisfied that in-
structions received by telephone are genuine, the requested transaction will
not be executed, and neither they nor any of their affiliates will be liable
for any losses which may occur due to a delay in implementing the transaction.
If the Fund or Seligman Data Corp. does not follow the procedures described
above, the Fund or Seligman Data Corp. may be liable for any losses due to un-
authorized or fraudulent instructions. Telephone transactions must be effected
through a representative of Seligman Data Corp., i.e., requests may not be
communicated via Seligman Data Corp.'s automated telephone answering system.
Shareholders, of course, may refuse or cancel telephone services. Telephone
services may be terminated by a shareholder at any time by sending a written
request to Seligman Data Corp. TELEPHONE SERVICES MAY NOT BE ESTABLISHED BY A
SHAREHOLDER'S BROKER/DEALER WITHOUT THE WRITTEN AUTHORIZATION OF THE SHARE-
HOLDER. Written acknowledgment of the addition of telephone services to an ex-
isting account or termination of telephone services will be sent to the share-
holder at the address of record.
18
<PAGE>
REDEMPTION OF SHARES
A shareholder may redeem shares held in book credit ("uncertificated") form
without charge, except a CDSL, if applicable, at any time by SENDING A WRITTEN
REQUEST to Seligman Data Corp., P.O. Box 9759, Providence, RI 02940-9759; or
if the request is being sent by overnight delivery service to 100 Park Avenue,
New York, NY, 10017. The redemption request must be signed by all persons in
whose name the shares are registered. A shareholder may redeem shares that are
not in book credit form without charge, except a CDSL, if applicable by sur-
rendering certificates in proper form to the same address. Certificates should
be sent certified or registered mail. Return receipt is advisable; however,
this may increase mailing time. Share certificates must be endorsed for trans-
fer or accompanied by an endorsed stock power signed by all share owners ex-
actly as their name(s) appear(s) on the account registration. The sharehold-
er's letter of instruction or endorsed stock power should specify the Fund
name, account number, class of shares (A, B or D) and the number of shares or
dollar amount to be redeemed. The Fund cannot accept conditional redemption
requests (i.e., requests to sell shares at a specific price or on a future
date).
If the redemption proceeds are (i) $50,000 or more, (ii) to be paid to some-
one other than the shareholder of record (regardless of the amount) or (iii)
to be mailed to other than the address of record (regardless of the amount),
the signature(s) of the shareholder(s) must be guaranteed by an eligible fi-
nancial institution including, but not limited to, the following: banks, trust
companies, credit unions, securities brokers and dealers, savings and loan as-
sociations and participants in the Securities Transfer Association Medallion
Program (STAMP), the Stock Exchanges Medallion Program (SEMP) or the New York
Stock Exchange Medallion Signature Program (MSP). The Fund reserves the right
to reject a signature guarantee where it is believed that the Fund will be
placed at risk by accepting such guarantee. A signature guarantee is also nec-
essary in order to change the account registration. Notarization by a notary
public is not an acceptable signature guarantee. A signature guarantee is not
required if the redemption proceeds are transferred electronically to the
shareholder's predesignated bank account.
ADDITIONAL DOCUMENTATION MAY ALSO BE REQUIRED BY SELIGMAN DATA CORP. IN THE
EVENT OF A REDEMPTION BY A CORPORATION, EXECUTOR, ADMINISTRATOR, TRUSTEE, CUS-
TODIAN OR RETIREMENT PLAN. FOR FURTHER INFORMATION WITH RESPECT TO REDEMPTION
REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES DEPARTMENT OF SELIGMAN
DATA CORP. FOR ASSISTANCE.
In the case of Class A shares (except for shares purchased without an ini-
tial sales load due to the size of the purchase), and in the case of Class B
shares redeemed after six years and Class D shares redeemed after one year, a
shareholder will receive the net asset value per share next determined after
receipt of a request in good order. If Class A shares which were purchased
without an initial sales load because the purchase amount was $1,000,000 or
more are redeemed within eighteen months of purchase, a shareholder will re-
ceive the net asset value per share next determined after receipt of a request
in good order, less a CDSL of 1% as described under "Purchase of Shares--Class
A Shares--Initial Sales Load" above. If Class B shares are redeemed within six
years of purchase, a shareholder will receive the net asset value per share
next determined after receipt of the request in good order less the applicable
CDSL, as described under "Purchase of Shares--Class B Shares" above. If Class
D shares are redeemed within one year of purchase, a shareholder will receive
the net asset value per share next determined after receipt of the request in
good order, less a CDSL of 1% as described under "Purchase of Shares--Class D
Shares" above.
A shareholder also may "sell" shares to the Fund through an investment
dealer and, in that way, be certain, providing the order is timely, of receiv-
ing the net asset value established at the end of the day on which the dealer
is given the repurchase order (less
19
<PAGE>
any applicable CDSL). The Fund makes no charge for this transaction, but the
dealer may charge you a service fee. "Sell" or repurchase orders received from
an authorized dealer before the close of regular trading on the NYSE (normal-
ly, 4:00 p.m. Eastern time) and received by SFSI, the repurchase agent, before
the close of business on the same day will be executed at the net asset value
per share determined as of the close of regular trading on the NYSE on that
day, less any applicable CDSL. Repurchase orders received from authorized
dealers after the close of regular trading on the NYSE or not received by SFSI
prior to the close of business will be executed at the net asset value deter-
mined as of the close of regular trading on the NYSE on the next trading day,
less any applicable CDSL. Shares held in a "street name" account with a
broker/dealer may be sold to the Fund only through a broker/dealer.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares may be
made once per day, in an amount of up to $50,000 per fund account. Proceeds
will be sent to the address of record. A shareholder whose bank is a member of
the ACH network and who has current bank information on file with Seligman
Data Corp. may have redemption proceeds transferred electronically to the
shareholder's predesignated bank account. Telephone redemption requests re-
ceived by Seligman Data Corp. at (800) 221-2450 by the close of regular trad-
ing on the NYSE (normally, 4:00 p.m. Eastern time) will be processed at the
Fund's net asset value determined as of the close of business on that day. Re-
demption requests by telephone will not be accepted within 30 days following
an address change. IRAs, group retirement plans, corporations and trusts for
which the name of the current trustee does not appear in the account registra-
tion are not eligible for telephone redemptions. The Fund reserves the right
to suspend or terminate its telephone redemption service at any time without
notice.
For more information about telephone redemptions and the circumstances under
which a share holder may bear the risk of loss for a fraudulent transaction,
see "Telephone Transactions" above.
GENERAL. With respect to shares redeemed, a check for the proceeds, less any
applicable CDSL, will be sent to the shareholder's address of record within
seven calendar days after acceptance of the redemption order and will be made
payable to all of the registered owners on the account. With respect to shares
repurchased by the Fund, a check for the proceeds will be sent to the invest-
ment dealer within seven calendar days after acceptance of the repurchase or-
der and will be made payable to the investment dealer. Redemptions via tele-
phone to the shareholder's bank account will be transferred electronically
within five business days. Payment of redemption proceeds will be delayed on
redemptions of shares purchased by check (unless certified) until Seligman
Data Corp. receives notice that the check has cleared, which may be up to 15
days from the credit of such shares to the shareholder's account. No interest
is earned on the redemption proceeds during this period. The proceeds of a re-
demption or repurchase may be more or less than the shareholder's cost.
The Fund reserves the right to redeem shares owned by a shareholder whose
investment in the Fund has a value of less than a minimum amount specified by
the Fund's Board of Directors, which is presently $500. Shareholders would be
sent a notice before the redemption is processed stating that the value of the
investment in the Fund is less than the specified minimum and that they have
sixty days to make an additional investment.
REINSTATEMENT PRIVILEGE. If a shareholder redeems Class A shares and then
decides to reinvest them, or to shift the investment to one of the other Se-
ligman Mutual Funds, the shareholder may, within 120 calendar days of the date
of the redemption, use all or any part of the proceeds of the redemption to
reinstate, free of an initial sales load, all or any part of the investment in
shares of the Fund or in shares of
20
<PAGE>
any of the other Seligman Mutual Funds. If a shareholder redeems shares and
the redemption was subject to a CDSL the shareholder may reinstate all or any
part of the investment in shares of the same class of the Fund or of any of
the other Seligman Mutual Funds within 120 calendar days of the date of re-
demption and receive a credit for the applicable CDSL paid. Such investment
will be reinstated at the net asset value per share established as of the
close of the NYSE on the day the request is received. Seligman Data Corp. must
be informed that the purchase represents a reinstated investment. REINSTATED
SHARES MUST BE REGISTERED EXACTLY AND BE OF THE SAME CLASS AS THE SHARES PRE-
VIOUSLY REDEEMED AND THE FUND'S MINIMUM INITIAL INVESTMENT AMOUNT MUST BE MET
AT THE TIME OF REINSTATEMENT.
Generally, exercise of the Reinstatement Privilege does not alter the fed-
eral income tax status of any capital gain realized on a sale of Fund shares,
but to the extent that any shares are sold at a loss and the proceeds are re-
invested in shares of the same fund, some or all of the loss will not be al-
lowed as a deduction, depending upon the percentage of the proceeds reinvest-
ed.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
Under the Fund's Administration, Shareholder Services and Distribution Plan
(the "Plan"), the Fund may pay to SFSI an administration, shareholder services
and distribution fee in respect of the Fund's Class A, Class B and Class D
shares. Payments under the Plan may include, but are not limited to: (i) com-
pensation to securities dealers and other organizations ("Service Organiza-
tions") for providing distribution assistance with respect to assets invested
in the Fund, (ii) compensation to Service Organizations for providing adminis-
tration, accounting and other shareholder services with respect to Fund share-
holders, and (iii) otherwise promoting the sale of shares of the Fund, includ-
ing paying for the preparation of advertising and sales literature and the
printing and distribution of such promotional materials and prospectuses to
prospective investors and defraying SFSI's costs incurred in connection with
its marketing efforts with respect to shares of the Fund. The Manager, in its
sole discretion, may also make similar payments to SFSI from its own re-
sources, which may include the management fee that the Manager receives from
the Fund.
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of Class A shares. It is expected that the proceeds from the fee in re-
spect of Class A shares will be used primarily to compensate Service Organiza-
tions which enter into agreements with SFSI. Such Service Organizations will
receive from SFSI a continuing fee of up to .25% on an annual basis, payable
quarterly, of the average daily net assets of Class A shares attributable to
the particular Service Organization for providing personal service and/or the
maintenance of shareholder accounts. The fee payable from time to time is,
within such limit, determined by the Directors of the Fund.
The Plan, as it relates to Class A shares, was approved by shareholders on
November 23, 1992 and became effective on January 1, 1993. The total amount
paid for the year ended December 31, 1997 in respect of the Fund's Class A
shares pursuant to the Plan was equal to .24% of the Class A shares' average
daily net assets.
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class B and Class D shares at an annual rate of up to 1% of the respective av-
erage daily net asset value of the Class B and Class D shares. Proceeds from
the Class B distribution fees are used to pay Service Organizations a continu-
ing fee of up to .25% on an annual basis of the average net asset value of
Class B shares attributable to particular Service Organizations for providing
personal service and/or the maintenance of shareholder accounts and will also
be used by SFSI to defray the expense of the payment
21
<PAGE>
of 4% made by it to Service Organizations at the time of sale of Class B
shares. In that connection, SFSI has assigned FEP its interest in the fees
payable to it in respect of Class B shares, other than the portion payable to
Service Organizations on a continuing basis. Proceeds from the Class D distri-
bution fees are used primarily to compensate Service Organizations for admin-
istration, shareholder services and distribution assistance (including a con-
tinuing fee of up to .25% on an annual basis of the average daily net asset
value of Class D shares attributable to particular Service Organizations for
providing personal services and/or the maintenance of shareholder accounts)
and will initially be used by SFSI to defray the expense of the payment of 1%
made by it to Service Organizations at the time of sale of Class D shares. The
amounts expended by SFSI in any one year upon the initial purchase of Class B
and Class D shares may exceed the amounts received by it from Plan payments
retained. Expenses of administration, shareholder services and distribution of
Class B and Class D shares in one fiscal year of the Fund may be paid from
Class B and Class D Plan fees, respectively, received from the Fund in any
other fiscal year.
The Plan as it relates to Class B shares was approved by the Directors on
March 21, 1996 and be came effective April 22, 1996. The Plan, as it relates
to Class D shares, was approved by the Directors on March 18, 1993 and became
effective May 1, 1993. The total amount paid for the year ended December 31,
1997 by the Fund's Class B and Class D shares pursuant to the Plan was 1% per
annum of the average daily net assets of the Class B and Class D shares. The
Plan is reviewed by the Fund's Directors annually.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI acts as a broker/dealer of record for most share-
holder accounts that do not have a designated broker/dealer of record includ-
ing all such shareholder accounts established after April 1, 1995 and receives
compensation for providing personal service and account maintenance to such
accounts of record.
EXCHANGE PRIVILEGE
A shareholder of the Fund may, without charge, exchange at net asset value
any part or all of an investment in the Fund for shares of any of the other
Seligman Mutual Funds. Exchanges may be made by mail, or by telephone, if the
shareholder has telephone services.
Class A, Class B or Class D shares may be exchanged only for Class A, Class
B or Class D shares, respectively, of another Seligman Mutual Fund on the ba-
sis of relative net asset value.
If shares that are subject to a CDSL are exchanged for shares of another
fund, for purposes of assessing the CDSL payable upon disposition of the ex-
changed shares, the applicable holding period shall be reduced by the period
for which the original shares were held.
Class B shareholders of the Fund exercising the exchange privilege will con-
tinue to be subject to the Fund's CDSL schedule if such schedule is higher or
longer than the CDSL schedule of the new Class B shares. In addition, Class B
shares of the Fund acquired by exchange will be subject to the Fund's CDSL
schedule if such schedule is higher or longer than the CDSL schedule relating
to the Class B shares of the fund from which such shares were exchanged.
The Seligman Mutual Funds available under the Exchange Privilege are:
. SELIGMAN CAPITAL FUND, INC. seeks aggressive capital appreciation. Current
income is not an objective.
. SELIGMAN CASH MANAGEMENT FUND, INC. invests in high quality money market
instruments. Shares are sold at net asset value.
22
<PAGE>
. SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC. invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective.
. SELIGMAN FRONTIER FUND, INC. seeks to produce growth in capital value; in-
come may be considered but will only be incidental to the Fund's investment
objective.
. SELIGMAN GROWTH FUND, INC. seeks longer-term growth in capital value and
an increase in future income.
SELIGMAN HENDERSON GLOBAL FUND SERIES, INC. consists of the Seligman Hen-
derson International Fund, the Seligman Henderson Emerging Markets Growth
Fund, the Seligman Henderson Global Growth Opportunities Fund, the Seligman
Henderson Global Smaller Companies Fund and the Seligman Henderson Global
Technology Fund, which seek long-term capital appreciation primarily by in-
vesting in companies either globally or internationally.
. SELIGMAN HIGH INCOME FUND SERIES consists of the Seligman U.S. Government
Securities Series and the Seligman High-Yield Bond Series each of which seeks
high current income by investing in debt securities.
. SELIGMAN INCOME FUND, INC. seeks high current income and the possibility
of improvement of future income and capital value.
. SELIGMAN MUNICIPAL FUND SERIES, INC. consists of several State Series and
a National Series. The National Municipal Series seeks to provide maximum in-
come exempt from regular federal income taxes; individual state series, each
seeking to maximize income exempt from regular federal income taxes and from
personal income taxes in designated states, are available for Colorado, Geor-
gia, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New
York, Ohio, Oregon and South Carolina. (Does not currently offer Class B
shares.)
. SELIGMAN MUNICIPAL SERIES TRUST includes the Seligman California Municipal
Quality Series, the Seligman California Municipal High-Yield Series, the Se-
ligman Florida Municipal Series and the Seligman North Carolina Municipal Se-
ries, each of which invests in municipal securities of its designated state.
(Does not currently offer Class B shares.)
. SELIGMAN NEW JERSEY MUNICIPAL FUND, INC. invests in investment grade New
Jersey municipal securities. (Does not currently offer Class B shares.)
. SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES invests in investment grade
Pennsylvania municipal securities. (Does not currently offer Class B shares.)
. SELIGMAN VALUE FUND SERIES, INC. consists of the Seligman Large-Cap Value
Fund and the Seligman Small-Cap Value Fund each of which seeks long-term capi-
tal appreciation by investing in equity securities of value companies primar-
ily located in the U.S.
All permitted exchanges will be based on the net asset values of the respec-
tive funds determined at the close of regular trading on the NYSE on that day.
Telephone requests for exchanges received by the close of regular trading on
the NYSE (normally 4:00 p.m. Eastern time) by Seligman Data Corp. at (800)
221-2450, will be processed as of the close of business on that day. Requests
received after the close of regular trading on the NYSE will be processed at
the net asset values per share calculated the following business day. The reg-
istration of an account into which an exchange is made must be identical to
the registration of the account from which shares are exchanged. When estab-
lishing a new account by an exchange of shares, the shares being exchanged
must have a value of at least the minimum initial investment required by the
mutual fund into which the exchange is being made. THE METHOD OF RECEIVING
DISTRIBUTIONS, UNLESS OTHERWISE INDICATED, WILL BE CARRIED OVER TO THE NEW
FUND ACCOUNT, AS WILL TELEPHONE SERVICES. ACCOUNT SERVICES, SUCH AS INVEST-A-
CHECK(R) SERVICE, DIRECTED DIVIDENDS AND SYSTEMATIC WITHDRAWAL PLAN WILL NOT
BE CARRIED OVER TO THE NEW FUND ACCOUNT UNLESS SPECIFICALLY REQUESTED AND
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PERMITTED BY THE NEW FUND. Exchange orders may be placed to effect an exchange
of a specific number of shares, an exchange of shares equal to a specific dol-
lar amount or an exchange of all shares held. Shares for which certificates
have been issued may not be exchanged via telephone and may be exchanged only
upon receipt of a written exchange request together with certificates repre-
senting shares to be exchanged in proper form.
The Exchange Privilege via mail is generally applicable to investments in
group retirement plans, although some restrictions may apply. The terms of the
exchange offer described herein may be modified at any time; and not all of the
Seligman Mutual Funds are available to residents of all states. Before making
any exchange, a shareholder should contact an au-thorized investment dealer or
Seligman Data Corp. to obtain prospectuses of any of the Seligman Mutual Funds.
A broker/dealer representative of record will be able to effect exchanges on
behalf of a shareholder only if the shareholder has telephone services or if
the broker/dealer has entered into a Telephone Exchange Agreement with SFSI
wherein the broker/dealer must agree to indemnify SFSI and the Seligman Mutual
Funds from any loss or liability incurred as a result of the acceptance of tel-
ephone exchange orders.
Written confirmation of all exchanges will be forwarded to the shareholder to
whom the exchanged shares are registered and a duplicate confirmation will be
sent to the dealer of record listed on the account. SFSI reserves the right to
reject a telephone exchange request. Any rejected telephone exchange order may
be processed by mail. For more information about telephone exchange privileges,
which unless objected to, are assigned to most shareholders automatically, and
the circumstances under which shareholders may bear the risk of loss for a
fraudulent transaction, see "Telephone Transactions" above.
Exchanges of shares are sales, and may result in a gain or loss for federal
income tax purposes.
FURTHER INFORMATION ABOUT TRANSACTIONS IN THE FUND
Because excessive trading (including short-term, "market timing" trading) can
hurt the Fund's performance, the Fund may refuse any exchange (1) from any
shareholder account from which there have been two exchanges in the preceding
three month period, or (2) where the exchanged shares equal in value the lesser
of $1,000,000 or 1% of the Fund's net assets. The Fund may also refuse any ex-
change or purchase order from any shareholder account if the shareholder or the
shareholder's broker/dealer has been advised that previous patterns of pur-
chases and redemptions or exchanges have been considered excessive. Accounts
under common ownership or control, including those with the same taxpayer ID
number and those administered so as to redeem or purchase shares based upon
certain predetermined market indicators, will be considered one account for
this purpose. Additionally, the Fund reserves the right to refuse any order for
the purchase of shares.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income is paid to shareholders in dividends quar-
terly, usually in March, June, September and December. Payments vary in amount
depending on income received from portfolio securities and the costs of opera-
tions. The Fund distributes substantially all of any taxable net long-term and
short-term gain realized on investments to shareholders at least annually. Div-
idends and capital gain distributions will generally be taxable to shareholders
in the year in which they are declared by the Fund if paid before February 1 of
the following year.
Shareholders may elect: (1) to receive both dividends and gain distributions
in shares; (2) to receive dividends in cash and gain distributions in shares;
(3) to receive both dividends and gain distributions in cash. Cash dividends
and gain distributions are paid by check and sent to the shareholder's address
of record, or, if elected by a shareholder who has current bank information on
file with Seligman Data
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Corp., electronically deposited into the shareholder's predesignated bank ac-
count. Such deposits will normally be credited to the shareholder's bank ac-
count in 3 to 4 business days after the payable date of the dividend or gain
distribution.
In the case of prototype retirement plans, dividends and gain distributions
are reinvested in additional shares. Unless another election is made, divi-
dends and capital gain distributions will be credited to shareholder accounts
in additional shares. Shares acquired through a dividend or gain distribution
and credited to a shareholder's account are not subject to an initial sales
load or a CDSL. Dividends and gain distributions paid in shares are invested
on the payable date using the net asset value of the ex-dividend date. Share-
holders may elect to change their dividend and gain distribution options by
writing Seligman Data Corp. at the address listed below. If the shareholder
has telephone services, changes may also be telephoned to Seligman Data Corp.
between 8:30 a.m. and 6:00 p.m. Eastern time, by either the shareholder or the
broker/dealer of record on the account. For information about telephone serv-
ices, see "Telephone Transactions." These elections must be received by Selig-
man Data Corp. before the record date for the dividend or gain distribution in
order to be effective for such dividend or gain distribution. For information
on how to have dividend or gain distributions electronically deposited into a
shareholder's bank account, contact Seligman Data Corp.
The per share dividends from net investment income on Class B and Class D
shares will be lower than the per share dividends on Class A shares as a re-
sult of the higher distribution fees applicable with respect to Class B and
Class D shares. Per share dividends of the three classes may also differ as a
result of differing class expenses. Distributions of net capital gains, if
any, will be paid in the same amount for Class A, Class B and Class D shares.
See "Purchase of Shares--Valuation."
Shareholders exchanging shares of a mutual fund for shares of another Selig-
man Mutual Fund will continue to receive dividends and gains as elected prior
to such exchange unless otherwise specified. In the event that a shareholder
redeems all shares in an account between the record date and the payable date,
the value of dividends or gain distributions declared will be paid in cash re-
gardless of the existing election. A transfer or exchange of all shares (clos-
ing an account), between the record date and payable date, will result in the
value of dividends or gain distributions being paid to the new fund account in
accordance with the option on the closed account, unless Seligman Data Corp.
is instructed otherwise.
FEDERAL INCOME TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Code. For each year so qualified, the Fund will not be subject to
federal income taxes on its net investment income and capital gains, if any,
realized during any taxable year, which it distributes to its shareholders,
provided that at least 90% of its net investment income and net short-term
capital gains are distributed to shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to shareholders, whether received
in cash or reinvested in additional shares. To the extent designated as de-
rived from the Fund's dividend income that would be eligible for the dividends
received deduction if the Fund were not a regulated investment company, they
are eligible, subject to certain restrictions, for the 70% dividends received
deduction for corporations.
Distributions of net capital gain (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long shares have been held by a shareholder. Such distributions are not eligi-
ble for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in
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the form of additional shares issued by the Fund will be treated for federal
income tax purposes as having received a distribution in an amount equal to
the fair market value on the date of distribution of the shares received. In-
dividual shareholders will be subject to federal income tax on distributions
of net capital gains at a maximum rate of 28% if designated as derived from
the Fund's capital gains from property held for more than one year and at a
maximum rate of 20% if designated as derived from the Fund's capital gains
from property held for more than eighteen months.
Any gain or loss realized upon a sale or redemption of shares in the Fund by
a shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Individual sharehold-
ers will be subject to federal income tax on net capital gain at a maximum
rate of 28% in respect of shares held for more than one year and at a maximum
rate of 20% in respect of shares held for more than eighteen months. Net capi-
tal gain of a corporate shareholder is taxed at the same rate as ordinary in-
come. However, if shares on which a long-term capital gain distribution has
been received are subsequently sold or redeemed and such shares have been held
for six months or less, any loss realized will be treated as long-term capital
loss to the extent that it offsets the long-term capital gain distribution. In
addition, no loss will be allowed on the sale or other disposition of shares
of the Fund if, within a period beginning 30 days before the date of such sale
or disposition and ending 30 days after such date, the holder acquires (such
as through dividend reinvestment) securities that are substantially identical
to the shares of the Fund.
In determining gain or loss on shares of the Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permit-
ted to include in the tax basis attributable to such shares the sales load in-
curred in acquiring such shares to the extent of any subsequent reduction of
the sales load by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales load not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
The Fund will generally be subject to an excise tax of 4% on the amount of
any income or capital gains, above certain permitted levels, distributed to
shareholders on a basis such that such income or gain is not taxable to share-
holders in the calendar year in which it was earned. Furthermore, dividends
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 gain 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 CERTI-
FIES THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS
REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY A PORTION OF DISTRIBUTIONS
AND OTHER REPORTABLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLD-
ING IS 31%. SHAREHOLDERS SHOULD BE AWARE THAT, UNDER REGULATIONS PROMULGATED
BY THE INTERNAL REVENUE SERVICE, THE FUND MAY BE FINED $50 ANNUALLY FOR EACH
ACCOUNT FOR WHICH A CERTIFIED TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED.
IN THE EVENT THAT SUCH A FINE IS IMPOSED, THE FUND MAY CHARGE A SERVICE FEE OF
UP TO $50 WHICH MAY BE DEDUCTED FROM THE SHAREHOLDER'S ACCOUNT AND OFFSET
AGAINST ANY UNDISTRIBUTED DIVIDENDS AND CAPITAL GAIN DIS-
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TRIBUTIONS. THE FUND ALSO RESERVES THE RIGHT TO CLOSE ANY ACCOUNT WHICH DOES
NOT HAVE A CERTIFIED TAXPAYER IDENTIFICATION NUMBER.
SHAREHOLDER INFORMATION
Shareholders will be sent reports semi-annually regarding the Fund. General
information about the Fund may be requested by writing the Corporate Communi-
cations/ Investor Relations Department, J. & W. Seligman & Co. Incorporated,
100 Park Avenue, New York, NY 10017 or by telephoning the Corporate
Communications/Investor Relations Department toll-free at (800) 221-7844 from
the continental United States or (212) 850-1864 in the New York City area. In-
formation about shareholder accounts may be requested by writing Shareholders
Services, Seligman Data Corp. at the same address or by calling toll-free
(800) 221-2450 from the continental United States, or (212) 682-7600 outside
the continental United States. Seligman Data Corp. may be telephoned Monday
through Friday (except holidays), between the hours of 8:30 a.m. and 6:00 p.m.
Eastern time, and calls will be answered by a service representative.
24-HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, YIELD, ACCOUNT BAL-
ANCE, MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT
STATEMENTS AND FORM 1099-DIVS CAN BE ORDERED. TO INSURE PROMPT DELIVERY OF
DISTRIBUTION CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION, SELIGMAN DATA
CORP. SHOULD BE NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS CHANGE. ADDRESS
CHANGES MAY BE TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS
ELECTED TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE
"TELEPHONE TRANSACTIONS" ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial transac-
tions in their Account.
Other investor services are available. These include:
. INVEST-A-CHECK(R) SERVICE enables a shareholder to authorize additional pur-
chases of shares automatically by electronic funds transfer from the share-
holder's savings or checking account, if the bank that maintains the account
is a member of ACH or by preauthorized checks to be drawn on the shareholder's
checking account at regular monthly intervals in fixed amounts of $100 or more
per fund, or regular quarterly intervals in fixed amounts of $250 or more per
fund, to purchase shares. Accounts may be established concurrently with the
Invest-A-Check(R) Service only if accompanied by a check for at least $100 in
conjunction with the monthly investment option, or a check for at least $250
in conjunction with the quarterly investment option. For investments into the
Seligman Time Horizon Matrix SM Asset Allocation Program, the minimum amount
is $500 at regular monthly intervals or $1,000 at regular quarterly intervals.
By utilizing the Invest-A-Check(R) Service to establish an account, you are
agreeing to continue the service until the Fund's minimum investment amount is
met. If you elect to cancel the service prior to meeting the minimum, your
account may be subject to closure. (See "Terms and Conditions.")
. AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder of Seligman
Cash Management Fund to exchange a specified amount, at regular monthly inter-
vals in fixed amounts of $100 or more per fund, or regular quarterly intervals
in fixed amounts of $250 or more per fund, from shares of any class of the
Cash Management Fund into shares of the same class of any other Seligman Mu-
tual Fund registered in the same name. For exchanges into the Seligman Time
Horizon Matrix SM Asset Allocation Program, the minimum amount is $500 at reg-
ular monthly intervals or $1,000 at regular quarterly intervals. The share-
holder's Cash Management Fund account must have a value of at least $5,000 at
the initiation of the service. Exchanges will be made at the public offering
price.
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. DIVIDENDS FROM OTHER INVESTMENTS permits a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Fund or another Seligman Mutual Fund. (Dividend checks must in-
clude the shareholder's name, account number, the name of the Fund and the
class of shares in which the investment is to be made.) If the dividends are
to be invested in a new fund account, the first investment must meet the re-
quired minimum purchase amount for such fund.
A shareholder may also direct that dividends payable on shares of other com-
panies be transferred electronically to purchase shares of any Seligman Mutual
Fund, if the other company provides this service. See "Purchase of Shares" for
more information or contact Seligman Data Corp.
. AUTOMATIC CD TRANSFER SERVICE permits a shareholder to instruct a bank to
invest the proceeds of a maturing bank certificate of deposit ("CD") in shares
of any designated Seligman Mutual Fund. Shareholders who wish to use this
service should contact Seligman Data Corp. or a broker to obtain the necessary
documentation. Banks may charge a penalty on CD assets withdrawn prior to ma-
turity. Accordingly, it will not normally be advisable to liquidate a CD be-
fore its maturity.
. SYSTEMATIC WITHDRAWAL PLAN permits payments in fixed amounts of $50 or more
at regular intervals to be made to a shareholder who owns or purchases shares
worth $5,000 or more held as book credits. Payments will be sent by check to
the address designated by the shareholder or, if elected by a shareholder who
has current bank information on file with Seligman Data Corp., electronically
deposited into the shareholders predesignated bank account. Such deposits will
normally be credited to the shareholder's bank account in 2 to 3 business days
after the shares are redeemed from the shareholder's fund account. Holders of
Class A shares purchased at net asset value because the purchase amount was
$1,000,000 or more should bear in mind that withdrawals may be subject to a 1%
CDSL if made within eighteen months of purchase of such shares. Holders of
Class B and Class D shares may elect to use this plan immediately, although
certain withdrawals may be subject to a CDSL. (See "Terms and Conditions.")
. DIRECTED DIVIDENDS allows a shareholder to pay dividends to another person
or to direct the payment of such dividends to another Seligman Mutual Fund for
purchase at net asset value. Dividends on Class A, Class B and Class D shares
may only be directed to shares of the same class of another Seligman Mutual
Fund.
. OVERNIGHT DELIVERY to service shareholder requests is available for a $15.00
fee which will be deducted from a shareholder's account, if requested.
. COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of charge
for the current year and most recent prior year. Copies of year-end statements
for prior years back to 1970 are available for a fee of $10.00 per year, per
account, with a maximum charge of $150 per account. Statement requests should
be forwarded, along with a check, to Seligman Data Corp.
TAX-DEFERRED PLANS. Shares of the Fund may be purchased for:
--Individual Retirement Accounts (IRAs), including Traditional IRAs, Roth
IRAs and Education IRAs;
--Savings Incentive Match Plans for Employees (SIMPLE IRAs);
--Simplified Employee Pension Plans (SEPs);
--Section 401(k) Plans for corporations and their employees;
--Section 403(b)(7) Plans for employees of public school systems and certain
non-profit organizations who wish to make deferred compensation arrangements;
and
--Money Purchase Pension and Profit Sharing Plans for sole proprietorships,
corporations and partnerships.
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These types of plans may be established only upon receipt of a written ap-
plication form. The Fund may register an IRA investment for which an account
application has not been received as an ordinary taxable account.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, NY 10017 or telephone toll-free (800) 445-1777 from
all continental United States. You also may receive information through an au-
thorized dealer.
ADVERTISING THE FUND'S PERFORMANCE
From time to time the Fund advertises its "total return" and "average annual
total return," each of which are calculated separately for Class A, Class B
and Class D shares. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" shows what an in-
vestment in shares of Class A, Class B and Class D of the Fund would have
earned over a specified period of time (for example, one, five and ten-year
periods or since inception) assuming the payment of the maximum sales load, if
any (or CDSL upon redemption, if applicable), when the investment was made and
that all distributions and dividends paid by the Fund were reinvested on the
reinvestment dates during the period. The "average annual total return" is the
annual rate required for the initial payment to grow to the amount which would
be received at the end of the specified period (one, five and ten-year periods
or since inception); i.e., the average annual compound rate of return. The to-
tal return and average annual total return of Class A shares quoted from time
to time through December 31, 1992 have not been adjusted to reflect the deduc-
tion of the administration, shareholder services and distribution fee and
through April 10, 1991 also have not been adjusted to reflect the increase in
the management fee approved by shareholders on April 10, 1991, which fees if
reflected would reduce the performance quoted. The total return and average
annual total return quoted from time to time for Class A and Class D shares
for periods prior to January 1, 1996 do not reflect the increase in the man-
agement fee payable by the Fund effective on such date, which if reflected
would reduce the performance quoted. Total return and average annual total re-
turn may also be presented without the effect of the initial sales load or
CDSL, as applicable.
From time to time, reference may be made in advertising or promotional mate-
rial to performance information, including mutual fund rankings, prepared by
Lipper Analytical Services, Inc. ("Lipper"), an independent reporting service
which monitors the performance of mutual funds. In calculating the total re-
turn of the Fund's Class A, Class B and Class D shares, the Lipper analysis
assumes investment of all dividends and distributions paid but does not take
into account applicable sales loads. The Fund may also refer in advertisements
or in other promotional material to articles, comments, listings and columns
in the financial press pertaining to the Fund's performance. Examples of such
financial and other press publications include Barron's, Business Week,
CDA/Weisenberger Mutual Funds Investment Report, Christian Science Monitor,
Financial Planning, Financial Times, Financial World, Forbes, Fortune, Indi-
vidual Investor, Investment Advisor, Investors Business Daily, Kiplinger's,
Los Angeles Times, MONEY Magazine, Morningstar, Inc., Pensions and Invest-
ments, Smart Money, The New York Times, USA Today, U.S. News and World Report,
The Wall Street Journal, Washington Post, Worth Magazine and Your Money.
ORGANIZATION AND CAPITALIZATION
The Fund is an open-end diversified management investment company incorpo-
rated under the laws of the State of Maryland in 1930. The Fund is authorized
to issue 500,000,000 shares of common stock, each with a par value of $0.50,
divided into three classes. Each share of the Fund's Class A, Class B and
Class D common stock is equal as to earnings, assets and voting privileges,
except that each class bears its own separate distribution and, potentially,
certain other class expenses and has exclusive voting rights with respect to
any matter to which a separate vote of any class is required by the
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<PAGE>
1940 Act or Maryland law. The Fund has adopted a Plan (the "Multiclass Plan")
pursuant to Rule 18f-3 under the 1940 Act permitting the issuance and sale of
multiple classes of common stock. In accordance with the Articles of Incorpo-
ration, the Board of Direc-tors may authorize the creation of additional clas-
ses 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, do not have preemptive or subscription rights and are transfer-
able.
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TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares, including fractions to the third
decimal place, as can be purchased at the net asset value plus a sales load,
if applicable, at the close of business on the day payment is received. If a
check in payment of a purchase of shares is dishonored for any reason, Selig-
man Data Corp. will cancel the purchase and may redeem additional shares, if
any, held in the shareholder's account in an amount sufficient to reimburse
the Fund for any loss it may have incurred and charge a $10.00 return check
fee. Shareholders will receive dividends from investment income and any dis-
tributions from gain realized on investments in shares or in cash according to
the option elected. Dividend and gain options may be changed by notifying Se-
ligman Data Corp. These option changes must be received by Seligman Data Corp.
before the record date for the dividend or distribution in order to be effec-
tive for such dividend or distribution. Stock certificates will not be issued,
unless requested. Replacement stock certificates and certain waiver of probate
procedures will be subject to a surety fee.
INVEST-A-CHECK(R) SERVICE
The Invest-A-Check(R) Service is available to all shareholders. The applica-
tion is subject to acceptance by the shareholder's bank and Seligman Data
Corp. The electronic funds transfer ("ACH debit") or preauthorized check in
the amount specified will be drawn automatically on the shareholder's bank on
the fifth day (unless otherwise specified) of each month (or on the prior
business day if such day of the month falls on a weekend or holiday) in which
an investment is scheduled and invested price at the close of business on the
same date. By utilizing the Invest-A-Check(R) Service to establish an account,
you are agreeing to continue the service until the Fund's minimum investment
amount is met. If you elect to cancel the service prior to meeting the mini-
mum, your account may be subject to closure. If an ACH debit or preauthorized
check is not honored by the shareholder's bank, or if the value of shares held
falls below the required minimum, the Invest-A-Check(R) Service may be sus-
pended. In the event that a check or ACH debit is returned uncollectable, Se-
ligman Data Corp. will cancel the purchase, redeem shares held in the share-
holder's account for an amount sufficient to reimburse the Fund for any loss
it may have incurred as a result, and charge a $10.00 return check fee. This
fee will be deducted from the shareholder's account. The Invest-A-Check(R)
Service may be reinstated upon written request indicating that the cause of
interruption has been corrected. The Invest-A-Check(R) Service may be termi-
nated by the shareholder or Seligman Data Corp. at any time by written notice.
The shareholder agrees to hold the Fund and its agents free from all liability
which may result from acts done in good faith and pursuant to these terms. In-
structions for establishing Invest-A-Check(R) Service are given on the Account
Application. In the event a shareholder exchanges all of the shares from one
mutual fund in the Seligman Group to another, the Invest-A-Check(R) Service
will be terminated in the Seligman Mutual Fund that was closed as a result of
the exchange of all shares and the shareholder must re-apply for the Invest-A-
Check(R) Service in the Seligman Mutual Fund into which the exchange was made.
In the event of a partial exchange, the Invest-A-Check(R) Service will be con-
tinued, subject to the above conditions, in the Seligman Mutual Fund from
which the exchange was made. Accounts established in connection with the In-
vest-A-Check(R) Service must be accompanied by a check for at least $100 in
connection with the monthly investment option or a check for at least $250 in
connection with the quarterly investment option. If a shareholder uses the In-
vest-A-Check(R) Service to make an IRA or group retirement plan investment,
the purchase will be credited as a current year contribution.
SYSTEMATIC WITHDRAWAL PLAN
A sufficient number of full and fractional shares will be redeemed to pro-
vide the amount required for a scheduled payment and any applicable CDSL. Re-
demptions will be made at the asset value at the close of business on the spe-
cific day of each month designated by the shareholder (or on the prior busi-
ness day if the day specified falls on a weekend or holiday), less, in the
case of Class B or Class D shares, any applicable CDSL. Systematic withdrawals
of Class A shares which were purchased at net asset value because the purchase
amount was $1,000,000 or more will be subject to a CDSL if made within eigh-
teen months of purchase of such shares. Under this plan, a Class B or Class D
shareholder who requests both dividends and capital gain distributions in ad-
ditional shares may withdraw up to 12%, or 10%, respectively of the value of
the Shareholder's fund account (at the time of election) per annum, without
the imposition of a CDSL. A minimum payment amount of $50 per cycle is needed
to establish this plan. A shareholder may change the amount of scheduled pay-
ments or may suspend payments by written notice to Seligman Data Corp. at
least ten days prior to the effective date of such a change or suspension. The
plan may be terminated by the shareholder or Seligman Data Corp. at any time
by written notice. It will be terminated upon proper notification of the death
or legal incapacity of the shareholder. This plan is considered terminated in
the event a withdrawal of shares, other than to make scheduled withdrawal pay-
ments, reduces the value of shares remaining on deposit to less than $5,000.
Continued payments in excess of dividend income invested will reduce and ulti-
mately exhaust capital. Withdrawals, concurrent with purchases of shares of
this or any other investment company, will be disadvantageous because of the
payment of duplicative sales loads, if applicable. For this reason, additional
purchases of Fund shares are discouraged when the Withdrawal Plan is in ef-
fect.
LETTER OF INTENT--CLASS A SHARES ONLY
Seligman Financial Services, Inc. will hold in escrow shares equal to 5% of
the minimum purchase amount specified. Dividends and distributions on the
escrowed shares will be paid to the shareholder or credited to their account.
Upon completion of the specified minimum purchase within the thirteen-month
period, all shares held in escrow will be deposited into the shareholder's ac-
count or delivered to the shareholder. A shareholder may include toward com-
pletion of a Letter of Intent the total asset value of shares of the Seligman
Mutual Funds on which an initial sales load was paid as of the date of the
Letter. If the total amount invested within the thirteen-month period does not
equal or exceed the specified minimum purchase, a shareholder will be re-
quested to pay the difference between the amount of the sales load paid and
the amount of the sales load applicable to the total purchase made. If, within
20 days following the mailing of a written request, a shareholder has not paid
this additional sales load to Seligman Financial Services, Inc. sufficient
escrowed shares will be redeemed for payment of the additional sales load.
Shares remaining in escrow after this payment will be released to the account.
The intended purchase amount may be increased at any time during the thirteen-
month period by filing a revised Agreement for the same period, provided that
the Dealer furnishes evidence that an amount representing the reduction in
sales load under the new Agreement, which becomes applicable on purchases al-
ready made under the original Agreement, will be refunded to the Fund and that
the required additional escrowed shares will be purchased by the shareholder.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another Seligman Mutual Fund on which there is an ini-
tial sales load may be taken into account in completing a Letter of Intent, or
for Right of Accumulation. However, shares of the Seligman Cash Management
Fund which have been purchased directly may not be used for purposes of deter-
mining reduced sales loads on additional purchases of the other Seligman Mu-
tual Funds.
5/98
31
<PAGE>
SELIGMAN
COMMON STOCK FUND, INC.
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
LOGO
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
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
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 May 1, 1998. 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 A shares purchased in
an amount of $1,000,000 or more are sold without an initial sales load but are
subject to a contingent deferred sales load ("CDSL") of 1% (of the current net
asset value or original purchase price, whichever is less) if such shares are
redeemed within eighteen months of purchase. Class B shares may be purchased at
net asset value and are subject to a CDSL, if applicable, in the following
amount (as a percentage of the current net asset value of the original purchase
price, whichever is less), if redemption occurs within the indicated number of
years of purchase of such shares: 5% (less than one year), 4% (1 but less than 2
years), 3% (2 but less than 4 years), 2% (4 but less than 5 years), 1% (5 but
less than six years) and 0% (6 or more years). Class B shares automatically
convert to Class A shares after approximately eight years, resulting in lower
ongoing fees. Shares purchased through reinvestment of dividends and gain
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 higher
ongoing fees that generally will cause the Class B and Class D shares to have
higher expense ratios 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 Page
Investment Objectives, Policies and Purchase and Redemption of
Risks ................................2 Fund Shares ........... 11
Investment Limitations.................4 Distribution Services ... 14
Directors and Officers.................5 Valuation................ 4
Management and Expenses................9 Performance ............. 15
Administration, Shareholder Services General Information...... 17
and Financial Statements..... 17
Distribution Plan.....................10 Appendix................. 18
Portfolio Transactions................11
EQFR1A
-1-
<PAGE>
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 Manager may enter into forward currency
contracts in excess of 75% of the Fund's portfolio position in any one country
as of the date the contract is entered into. The precise matching of the
forward contract amounts and the value of securities involved will not generally
be possible since the future value of such securities in foreign currencies will
change as a consequence of market involvement in the value of those securities
between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movement is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Under certain circumstances, the Fund may commit up to the entire
value of its assets which are denominated in foreign currencies to the
consummation of these contracts. The Manager will consider the effect a
substantial commitment of its assets to forward contracts would have on the
investment program of the Fund and its ability to purchase additional
securities.
Except as set forth above and immediately below, the Fund will also not enter
into such forward contracts or maintain a net exposure to such contracts where
the consummation of the contracts would oblige the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency. The Fund, in order to avoid excess
transactions and transaction costs, may nonetheless maintain a net exposure to
forward contracts in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency provided the excess amount is
"covered" by cash or liquid, high-grade debt securities, denominated in any
currency, at least 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 Manager believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of the Fund will be served.
-2-
<PAGE>
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
Manager. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange
at a future date. Additionally, although such contracts tend to minimize the
risk of loss due to a decline in the value of a hedged currency, at the same
time, they tend to limit any potential gain which might result from an increase
in the value of that currency.
Shareholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.
Investment income received by the Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source. The United
States has entered into tax treaties with many foreign countries which entitle
the Fund to a reduced rate of such taxes or exemption from taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amounts of the Fund's assets to be invested within various countries is not
known.
Repurchase Agreements. The Fund may enter into repurchase agreements with
commercial banks and 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.
Except as indicated above or 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 5).
-3-
<PAGE>
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. High portfolio turnover involves correspondingly greater
transactions costs and a possible increase in short-term capital gains or
losses. 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 for the years ended December 31, 1997 and 1996 were 106.02% and 56.10%,
respectively. The increase in portfolio turnover was due to a realignment of
the Fund which decreased its convertible debt holdings and increased its
holdings in common stock.
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:
. Borrow money, except for temporary or emergency purposes in an amount not to
exceed 15% of the value of its total assets;
. Mortgage or pledge any of its assets, except to the extent necessary to
effect permitted borrowings on a secured basis and except to enter into
escrow arrangements in connection with the sales of permitted call options.
The Fund has no present intention of selling call options, and will no do so
without the prior approval of the Fund's Board of Directors;
. Purchase securities (other than closing call options) except for investment,
buy on "margin," or sell "short." 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;
. Invest more than 5% of the value of its total assets, at market value, in
securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided, however, that
securities guaranteed by a company that (including predecessors) has been in
operation at least three continuous years shall be excluded from this
calculation;
. Invest more than 5% of its total assets (taken at market) in securities of
any one issuer, other than the U.S. Government, its agencies or
instrumentalities, buy more than 10% of the outstanding voting securities or
more than 10% of all the securities of any issuer, or invest to control or
manage any company;
. Invest more than 25% of total assets at market value in any one industry;
Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;/*/
. 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;
. Purchase or hold the securities of any issuer, if to its knowledge, directors
or officers of the Fund individually owning beneficially more than 0.5% of
the securities of that other company own in the aggregate more than 5% of
such securities;
. Deal with its directors or officers, or firms they are associated with, in
the purchase or sale of securities of other issuers, except as broker;
. Purchase or sell commodities and commodity contracts;
. 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;
- -------------------------
/*/ The Fund has applied for and received an exemptive order from the Securities
and Exchange Commission that would permit it to purchase shares of other
investment companies advised by the Manager for the limited purpose of
hedging its obligations in connection with the deferred fee arrangement for
outside directors referred to under "Directors and Officers" below.
-4-
<PAGE>
. Make loans, except loans of portfolio securities and except to the extent the
purchase of notes, bonds or other evidences of indebtedness, the entry into
repurchase agreements or deposits with banks may be considered loans; or
. Write or purchase put, call, straddle or spread options except that the Fund
may sell covered call options listed on a national securities exchange or
quoted on NASDAQ and purchase closing call options so listed or quoted. The
Fund has no present intention of entering into these types of transactions,
and will not do so without the prior approval of the Fund's Board of
Directors.
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 Executive Officer
(60) and Chairman of the Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated, investment
managers and advisers; Chairman and Chief Executive
Officer, the Seligman Group of Investment Companies;
Chairman, Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc., broker/dealer; and
Carbo Ceramics Inc., ceramic proppants for oil and gas
industry; Director, Seligman Data Corp., shareholder
service agent; Kerr-McGee Corporation, diversified energy
company; and Sarah Lawrence College; and a Member of the
Board of Governors of the Investment Company Institute;
formerly, President, J. & W. Seligman & Co. Incorporated;
Chairman, Seligman Advisors Inc., advisers; Seligman
Holdings, Inc., holding company; Seligman Securities,
Inc., broker/dealer; and J. & W. Seligman Trust Company,
trust company; and Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
BRIAN T. ZINO* Director, President and Member of the Executive Committee
(45)
Director and President, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; President,
(with the exception of Seligman Quality Municipal Fund,
Inc. and Seligman Select Municipal Fund, Inc.) and
Director or Trustee, the Seligman Group of Investment
Companies; Chairman, Seligman Data Corp., shareholder
service agent; and Director, Seligman Financial Services,
Inc., broker/dealer; Seligman Services, Inc.,
broker/dealer; and Seligman Henderson Co., advisers;
formerly, Director, Seligman Advisors, Inc., advisers;
Seligman Securities, Inc., broker/dealer; and J. & W.
Seligman Trust Company, trust company.
RICHARD R. SCHMALTZ* Director and Member of the Executive Committee
(57)
Director and Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated; Director of Seligman
Henderson Co. and Trustee Emeritus of Colby College;
formerly, Director of Research at Neuberger & Berman from
May 1993 to September 1996 and Executive Vice President of
McGlinn Capital from July 1987 to May 1993.
-5-
<PAGE>
JOHN R. GALVIN Director
(68)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group of
Investment Companies; Chairman, American Council on Germany;
a Governor of the Center for Creative Leadership; National
Committee on U.S.-China Relations, National Defense
University; the Institute for Defense Analysis; and Raytheon
Co., electronics; formerly, Director, USLIFE Corporation,
life insurance; Ambassador, U.S. State Department for
negotiations in Bosnia; Distinguished Policy Analyst at Ohio
State University and Olin Distinguished Professor of National
Security Studies at the United States Military Academy. From
June, 1987 to June, 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United States
European Command.
Tufts University, Packard Avenue, Medford, MA 02155
ALICE S. ILCHMAN Director
(63)
President, Sarah Lawrence College; Director or Trustee, the
Seligman Group of Investment Companies; and the Committee for
Economic Development; Chairman, The Rockefeller Foundation,
charitable foundation; formerly, Trustee, The Markle
Foundation, philanthropic organization; and Director, NYNEX,
telephone company; and International Research and Exchange
Board, intellectual exchanges.
Sarah Lawrence College, Bronxville, NY 10708
FRANK A. McPHERSON Director
(65)
Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; Kimberly-Clark
Corporation, consumer products; Bank of Oklahoma Holding
Company; Baptist Medical Center; Oklahoma Chapter of the
Nature Conservancy; Oklahoma Medical Research Foundation; and
National Boys and Girls Clubs of America; and Member of the
Business Roundtable and National Petroleum Council; formerly,
Chairman of the Board and Chief Executive Officer, Kerr-McGee
Corporation, diversified energy company; Chairman, Oklahoma
City Public Schools Foundation; Director, Federal Reserve
System's Kansas City Reserve Bank; and the Oklahoma City
Chamber of Commerce.
123 Robert S. Kerr Avenue, Oklahoma City, OK 73102
JOHN E. MEROW Director
(68)
Retired Chairman and Senior Partner, Sullivan & Cromwell, law
firm; Director or Trustee, the Seligman Group of Investment
Companies; Commonwealth Industries, Inc., manufacturer of
aluminum sheet products; the Foreign Policy Association;
Municipal Art Society of New York; the U. S. Council for
International Business; and The New York and Presbyterian
Hospital; Chairman, American Australian Association; and The
New York and Presbyterian Hospital Care Network, Inc.; Vice-
Chairman, the U.S.-New Zealand Council; Member of the
American Law Institute and Council on Foreign Relations.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Director
(55)
Attorney; Director or Trustee, the Seligman Group of
Investment Companies; Trustee, The Geraldine R. Dodge
Foundation, charitable foundation; and Chairman of the Board
of Trustees of St. George's School (Newport, RI); formerly,
Director, the National Association of Independent Schools
(Washington, DC).
St. Bernard's Road, P.O. Box 449, Gladstone, NJ 07934
-6-
<PAGE>
JAMES C. PITNEY Director
(71)
Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm;
Director or Trustee, the Seligman Group of Investment
Companies; and Director, Public Broadcasting Service (PBS);
formerly, Director, Public Service Enterprise Group, public
utility.
Park Avenue at Morris County, P.O. Box 1945, Morristown, NJ
07962-1945
JAMES Q. RIORDAN Director
(70)
Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; The Houston
Exploration Company; The Brooklyn Museum; The Brooklyn Union
Gas Company; the Committee for Economic Development; and
Public Broadcasting Service (PBS); formerly, Co-Chairman of
the Policy Council of the Tax Foundation; Director and
Chairman, Mobil Corporation; Director, Tesoro Petroleum
Companies, Inc.; Dow Jones & Co., Inc.; and Director and
President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY 10017
ROBERT L. SHAFER Director
(65)
Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; formerly, Vice
President, Pfizer Inc., pharmaceuticals; and Director, USLIFE
Corporation, life insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(63)
Director, Sammons Enterprises, Inc.; Director or Trustee, the
Seligman Group of Investment Companies; C-SPAN; and
CommScope, Inc., manufacturer of coaxial cables; formerly,
Executive Vice President and Chief Operating Officer, Sammons
Enterprises, Inc.; and Director, Red Man Pipe and Supply
Company, piping and other materials.
5949 Sherry Lane, Suite 1900, Dallas, TX 75225
CHARLES C. SMITH,
JR Vice President and Portfolio Manager.
(41)
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
(41)
Senior Vice President, Finance, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; Seligman
Financial Services, Inc., broker/dealer; and Seligman Data
Corp., shareholder service agent; Vice President, the
Seligman Group of Investment Companies; and Seligman
Services, Inc. broker/dealer; Treasurer, Seligman Henderson
Co., advisers; formerly, Senior Vice President, Seligman
Advisors, Inc., advisers; and Treasurer, Seligman Holdings,
Inc., holding company.
FRANK J. NASTA Secretary
(33)
Senior Vice President, Law & Regulation and Corporate
Secretary, J. & W. Seligman & Co., Incorporated, investment
managers and advisers; Secretary, the Seligman Group of
Investment Companies; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co., advisers; Seligman
Services, Inc., broker/dealer; and Seligman Data Corp.,
shareholder service agent; formerly, Senior Vice President,
Law & Regulation and Corporate Secretary, Seligman Advisors,
Inc. advisers; and an attorney at Seward & Kissel, law firm.
-7-
<PAGE>
THOMAS G. ROSE Treasurer
(40)
Treasurer, the Seligman Group of Investment Companies; and
Seligman Data Corp., shareholder service agent.
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.
Compensation Table
<TABLE>
<CAPTION>
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Fund and
Position With Fund from Fund (1) Fund Expenses Fund Complex (1)(2)
- ------------------ ------------- ------------------- ---------------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Richard R. Schmaltz, Director N/A N/A N/A
Fred E. Brown, Director Emeritus** N/A N/A N/A
John R. Galvin, Director $2,248.99 N/A $69,000.00
Alice S. Ilchman, Director 2,181.35 N/A 65,000.00
Frank A. McPherson, Director 2,217.07 N/A 66,000.00
John E. Merow, Director 2,181.35 N/A 65,000.00
Betsy S. Michel, Director 2,248.99 N/A 69,000.00
James C. Pitney, Director 2,170.71 N/A 64,000.00
James Q. Riordan, Director 2,227.71 N/A 67,000.00
Robert L. Shafer, Director 2,227.71 N/A 67,000.00
James N. Whitson, Director 2,238.35(d) N/A 68,000.00(d)
</TABLE>
_____________________
(1) For the year ended December 31, 1997. Effective January 16, 1998, the per
meeting fee for Directors was increased by $1,000, which is allocated among
all Funds in the Fund Complex.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
** Retired as Director and designated Director Emeritus March 20, 1997.
(d) Deferred.
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. The total amount
of deferred compensation (including interest) payable in respect of the Fund to
Mr. Whitson as of December 31, 1997 was $18,475. Messrs. Merow and Pitney no
longer defer current compensation; however, they have accrued deferred
compensation in the amounts of $89,420 and $80,477, respectively, as of December
31, 1997. The Fund has applied for and received exemptive relief that would
permit a director who has elected deferral of his or her fees to choose a rate
of return equal to either (i) the interest rate on short-term Treasury bills, or
(ii) the rate of return on the shares of any of the investment companies advised
by the Manager, as designated by the director. The Fund may, but is not
obligated to, purchase shares of such investment companies to hedge its
obligations in connection with this deferral arrangement.
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 owned less than 1% of the Fund's
Class A Capital Stock at March 31, 1998. As of that date, no Directors or
officers owned shares of the Fund's Class B and Class D Capital Stock.
-8-
<PAGE>
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. 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 $5,192,858 in 1997, $4,516,946 in 1996 and $2,898,605
in 1995, which was equivalent to annual rates of .65%, .65%, and .48%,
respectively, of the Fund's average net assets in 1997, 1996 and 1995. The
Manager paid fees to Seligman Henderson Co., pursuant to a subadvisory agreement
no longer in effect, of $430,725, $367,285 and $244,337 for the years ended
December 31, 1997, 1996 and 1995, respectively.
The Fund pays all its expenses other than those assumed by the Manager,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees including fees and expenses for qualifying the Fund
and its shares under Federal and state securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder recordkeeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by (or serving as a Director of) the Manager
or its affiliates, insurance premiums and extraordinary expenses such as
litigation expenses.
The 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.
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 Compliance Officer, and sets forth a procedure of identifying, for
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,
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<PAGE>
(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 Compliance Officer, 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.
For the year ended December 31, 1997, Seligman Financial Services, Inc.
("SFSI"), an affiliate of the Manager, received payments of $1,715,126 under the
Plan in respect of Class A shares, or 0.24% per annum of the average daily net
assets of Class A shares. This amount was used primarily to pay Service
Organizations on a continuing basis for providing personal services and/or
maintenance of shareholder accounts. For the year ended December 31, 1997, fees
incurred by the Fund in respect of Class B shares amounted to $126,148, or 1.00%
per annum of the average daily net assets of Class B shares. Of this amount,
0.725% per annum was paid directly to FEP Capital, L.P. ("FEP") to compensate it
for having funded, at the time of sale (i) the 4% commission paid to selling
brokers and (ii) a payment of 0.25% of sales to SFSI; 0.025% per annum was paid
to SFSI; and the remaining 0.25% per annum was paid to SFSI which, in turn, made
an equal payment to Service Organizations for providing personal services and/or
maintenance of shareholder accounts. For the year ended December 31, 1997, fees
incurred in respect of Class D shares amounted to $725,752, or 1.00% per annum
of the average daily net assets of Class D shares. This amount was paid to SFSI
and, in the first twelve months after a sale, reimbursed it primarily for the 1%
payment made to dealers at the time of sale and for certain other direct
distribution costs. After the first twelve months, fees paid to SFSI are used
to pay a continuing fee to Service Organizations.
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
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<PAGE>
the selection and nomination of Directors who are not "interested persons" of
the Fund be made by such disinterested Directors.
PORTFOLIO TRANSACTIONS
The Management Agreement recognizes that in the purchase and sale of portfolio
securities the Manager will seek the most favorable price and execution, and,
consistent with that policy, may give consideration to the research, statistical
and other services furnished by brokers or dealers to the Manager for its use,
as well as to the general attitude toward and support of investment companies
demonstrated by such broker or dealers. Such services include supplemental
investment research, analysis and reports concerning issuers, industries and
securities deemed by the Manager to be beneficial to the Fund. In addition, the
Manager is authorized to place orders with brokers who provide supplemental
investment and market research and security and economic analysis although the
use of such brokers may result in a higher brokerage charge to the Fund that the
use of brokers selected solely on the basis of seeking the most favorable price
and execution and although such research and analysis may be useful to the
Manager in connection with its services to clients other than the Fund.
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 desire to buy or sell the same
security at the same time the securities purchased or sold are allocated by the
Manager in a manner believed to be equitable to each. There may be possible
advantages or disadvantages of such transactions with respect to price or the
size of positions readily obtainable or saleable.
The total brokerage commissions paid to others for execution and research and
statistical services for the fiscal years ended December 31, 1997, 1996 and 1995
were $2,439,633, $1,374,513 and $866,610, respectively.
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 A shares purchased at net asset value without an initial sales load due to
the size of the purchase are subject to a CDSL of 1% if such shares are redeemed
within eighteen months of purchase. 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, 1997, the maximum offering price of the Fund's
shares is as follows:
<TABLE>
<CAPTION>
CLASS A
<S> <C>
Net asset value per Class A share.............. $15.92
Maximum sales load (4.75% of offering price)... 0.79
------
Offering price to public....................... $16.71
======
CLASS B
Net asset value and offering price per share*.. $15.88
======
</TABLE>
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<PAGE>
CLASS D
Net asset value and offering price per share** $15.89
======
_________
* 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.
CLASS A SHARES - REDUCED INITIAL SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Mutual Fund sold with an initial
sales load in a continuous offering will be eligible for the following
reductions:
VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other Seligman
Mutual Funds which were sold with an initial sales load, reaches levels
indicated in the sales load schedule set forth in the Prospectus.
THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of the Fund and any Seligman Mutual Fund sold with an
initial sales load with the total net asset value of shares already owned that
were sold with an initial sales load, including shares of Seligman Cash
Management Fund that were acquired by the investor through an exchange of shares
of another Seligman Mutual Fund on which there was an initial sales load, to
determine reduced sales loads in accordance with the 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 load at the time of purchase will be
taken into account in orders placed through a dealer, however, only if 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 initial sales loads in accordance with the sales load
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 an initial sales load 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 load at the
time of purchase. Reduced initial sales loads also may apply to purchases made
within a 13-month period starting up to 90 days before the date of execution of
a letter of intent. For more information concerning the terms of the letter of
intent, see "Terms and Conditions - Letter of Intent - Class A Shares Only" in
the back of the Prospectus.
Class A shares purchased without an initial sales load in accordance with the
sales load schedule in the Fund's prospectus, or pursuant to a Volume Discount,
Right of Accumulation or Letter of Intent are subject to a CDSL of 1% on
redemptions of such shares within eighteen months of purchase.
PERSONS ENTITLED TO REDUCTIONS. Reductions in initial sales loads apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code of 1986,
as amended, 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.
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<PAGE>
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
ELIGIBLE EMPLOYEE BENEFIT PLANS. The table of sales loads in the Prospectus
applies to sales to "eligible employee benefit plans" (as defined in the Fund's
Prospectus) except that the Fund may sell shares at net asset value to "eligible
employee benefit plans," which have at least (i) $500,000 invested in Seligman
Mutual Funds or (ii) eligible employees to whom such plan is made available.
Such sales must be made in connection with a payroll deduction system of plan
funding or other systems acceptable to Seligman Data Corp., the Fund's
shareholder service agent. Such sales are believed to require limited sales
effort and sales-related expenses and therefore are made at net asset value.
Contributions or account information for plan participation also should be
transmitted to Seligman Data Corp. by methods which it accepts. Additional
information about "eligible employee benefit plans" is available from investment
dealers or SFSI.
PAYMENT IN SECURITIES. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value 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.")
FURTHER TYPES OF REDUCTIONS. Class A shares also may be issued without an
initial sales load in connection with the acquisition of cash and securities
owned by other investment companies and personal holding companies; to any
registered unit investment trust which is the issuer of periodic payment plan
certificates, the net proceeds of which are invested in fund shares; to separate
accounts established and maintained by an insurance company which are exempt
from registration under Section 3(c)(11) of the 1940 Act; to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with SFSI; to financial institution trust
departments; to registered investment advisers exercising discretionary
investment authority with respect to the purchase of Fund shares; to accounts of
financial institutions or broker/dealers that charge account management fees,
provided the manager or one of its affiliates has entered into an agreement with
respect to such accounts; pursuant to sponsored arrangements with organizations
which make recommendations to or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the Fund;
to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors; and to "eligible employee
benefit plans" which have at least (i) $500,000 invested in the Seligman Mutual
Funds or (ii) 50 eligible employees to whom such plan is made available.
"Eligible employee benefit plan" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Fund shares. Sales of shares
to such plans must be made in connection with a payroll deduction system of plan
funding or other system acceptable to Seligman Data Corp.
The Fund may sell Class A shares at net asset value to present and retired
directors, trustees, officers, employees and their spouses (and family members
of the foregoing) of the Fund, the other investment companies in the Seligman
Group, the Manager, and other companies affiliated with the Manager. Family
members are defined to include lineal descendants and lineal ancestors, siblings
(and their spouses and children) and any company or organization controlled by
any of the foregoing. Such sales also may be made to employee benefit and
thrift plans for such persons and to any investment advisory, custodial, trust
or other fiduciary account managed or advised by the Manager or any affiliate.
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
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<PAGE>
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 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
$65,673 in 1997, after allowance of $512,897 as commissions to dealers; $102,883
in 1996, after allowance of $797,266 as commissions to dealers; $83,458 in 1995,
after allowance of $1,076,487 as commissions to dealers. For the years ended
December 31, 1997, 1996 and 1995, SFSI retained CDSL charges from Class D shares
and on certain redemptions of Class A shares occurring within 18 months of
purchase amounting to $20,009, $15,668 and $8,440, respectively.
SFSI has assigned its rights to collect any CDSL imposed on
redemptions of Class B shares to FEP Capital, L.P. ("FEP"). SFSI has also
assigned its rights to the distribution fees in respect of Class B shares
received by it pursuant to the Plan (other than the portion of such fees used to
make ongoing shareholder servicing payments to Service Organizations as
described in the Prospectus) to FEP, which provides funding to SFSI to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares. In connection with the assignment of its rights to collect any CDSL and
the distribution fees with respect to Class B shares, SFSI receives payments
from FEP based on the value of Class B shares sold. The aggregate amount of
such payments from FEP and the Class B distribution fees retained by SFSI for
the year ended December 31, 1997 and the period ended December 31, 1996, were
$28,801 and $16,591, 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
years ended December 31, 1997 and 1996 and the period ended 1995, SSI received
commissions of $22,385, $21,997 and $26,338, respectively, from sales of Fund
shares. SSI also received distribution and service fees of $468,360, $448,975
and $315,230, respectively, pursuant to the Plan.
VALUATION
Net asset value per share of each class of the Fund is determined as of the
close of regular 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,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Fund will
also determine 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 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.
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<PAGE>
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 regular trading on the
NYSE. The values of such securities used in computing the net asset value of
the shares of the Fund are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of 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 Fund's Board of Directors.
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, 1997 were 17.73%, 14.43%
and 14.26% 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 gain 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 determined by
calculating the annual rate required for the initial investment 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 B shares
of the Fund for the one-year period ended December 31, 1997 and the period April
22, 1996 (inception) through December 31, 1997 were 17.59% and 16.70%,
respectively. This return was computed assuming that all the dividends and gain
distributions paid by the Fund's Class B shares were reinvested over the
relevant time period. It was then assumed that at the end of the period, the
entire amount was redeemed, subtracting the applicable CDSL (5% for the one-year
period and 4% for the period since inception). The average annual total returns
for Class D shares of the Fund for the one-year period ended December 31, 1997
and since inception through December 31, 1997 were 21.66% and 14.57%,
respectively. These returns were computed assuming that all of the dividends
and gain 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.
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, 1988 had a value of $3,792 on
December 31, 1997, resulting in an aggregate total return of 279.19%. Table B
illustrates the total return (income and capital) on Class B shares of the Fund
with dividends invested and gain distributions taken in shares. It shows that a
$1,000 investment in Class B shares made on April 22, 1996 (commencement of
offering of Class B shares) had a value of $1,299 on December 31, 1997 resulting
in an aggregate total return of 29.88%. Table C 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 $1,887 on December 31, 1997 resulting in an aggregate total return of
88.65%. 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 A - CLASS A SHARES
<TABLE>
<CAPTION>
VALUE OF
YEAR VALUE OF INITIAL VALUE OF GAIN DIVIDEND TOTAL
Ended /1/ INVESTMENT /2/ DISTRIBUTION INVESTED TOTAL VALUE/ 2/ RETURN /1, 3/
- ------------- ---------------- -------------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
12/31/88 $ 974 $ 40 $ 35 $1,049
12/31/89 1,054 197 78 1,329
12/31/90 913 255 110 1,278
12/31/91 1,080 400 180 1,660
12/31/92 1,101 503 236 1,840
12/31/93 1,160 650 304 2,114
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
VALUE OF
YEAR VALUE OF INITIAL VALUE OF GAIN DIVIDEND TOTAL
Ended /1/ INVESTMENT /2/ DISTRIBUTION INVESTED TOTAL VALUE/ 2/ RETURN /1, 3/
- ------------- ---------------- -------------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
12/31/94 1,044 701 329 2,074
12/31/95 1,222 987 449 2,658
12/31/96 1,283 1,249 537 3,069
12/31/97 1,371 1,780 641 3,792 279.19%
</TABLE>
TABLE B - CLASS B SHARES
<TABLE>
<CAPTION>
VALUE OF
YEAR/PERIOD VALUE OF INITIAL VALUE OF GAIN DIVIDEND TOTAL
Ended /1/ INVESTMENT /2/ DISTRIBUTION INVESTED TOTAL VALUE /2/ RETURN /1,3/
- ------------- ---------------- -------------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
12/31/96 $1,005 $ 76 $ 11 $1,092
12/31/97 1,033 239 27 1,299 29.88%
</TABLE>
<TABLE>
<CAPTION>
TABLE C- CLASS D SHARES
YEAR/PERIOD VALUE OF INITIAL VALUE OF GAIN DIVIDEND TOTAL
Ended /1/ INVESTMENT /2 / DISTRIBUTION INVESTED TOTAL VALUE /2/ RETURN/ 1,3/
- ------------- ---------------- -------------- -------- --------------- -------------
<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
12/31/96 1,119 338 81 1,538
12/31/97 1,197 107 583 1,887 88.65%
</TABLE>
/1/ For the ten years ended December 31, 1997; commencement of offering of
Class B shares on April 22, 1996; 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 and CDSL, if applicable, 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 capital gain
distributions that would have been paid during the period on such shares
assuming that each dividend or capital gain distribution was invested in
additional shares at net asset value; calculating the total value of the
investment at the end of the period; subtracting the CDSL on Class B and
Class D shares, if applicable; and finally, by dividing the difference
between the amount of the hypothetical initial investment at the beginning
of the period and its total value at the end of the period by the amount of
the hypothetical initial investment.
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
through December 31, 1992, do not reflect the deduction of the administration,
shareholder services and distribution fee, effective January 1, 1993; through
April 10, 1991, do not reflect the increased management fee approved by
shareholders on April 10, 1991; and for Class A and Class D shares, through
December 31, 1995, do 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 performances quoted.
-16-
<PAGE>
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
It is the intention of the Fund not to hold Annual Meetings of Shareholders.
The Directors may call Special Meetings of Shareholders for action by
shareholder vote as may be required by the 1940 Act or the Articles of
Incorporation.
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, 801 Pennsylvania, Kansas City,
Missouri 64105 serves as custodian of the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for the Fund.
AUDITORS. 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, 1997
contains a schedule of the investments as of December 31, 1997, as well as
certain other financial information as of that date. The financial statements
and notes included in the Annual Report, and the Independent Auditor's Report
thereon, are incorporated herein by reference. The Annual Report will be
furnished without charge to investors who request copies of this 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
. Helps finance America's fledgling railroads through underwriting.
. Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
. Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
. Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
. Is appointed U.S. Navy fiscal agent by President Grant.
. Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
. Helps Congress finance the building of the Panama Canal.
...1910s
. Participates in raising billions for Great Britain, France and Italy, helping
to finance World War I.
...1920s
. Participates in hundreds of underwritings including those for some of the
country's largest companies: Briggs Manufacturing, Dodge Brothers, General
Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company, United
Artists Theater Circuit and Victor Talking Machine Company.
. Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $3 billion in
assets, and one of its oldest.
...1930s
. Assumes management of Broad Street Investing Co. Inc., its first mutual fund,
today known as Seligman Common Stock Fund, Inc.
. Establishes Investment Advisory Service.
...1940s
. Helps shape the Investment Company Act of 1940.
. Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the investment
banking industry.
. Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
. Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
-18-
<PAGE>
...1950-1989
. Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
. Helps pioneer state-specific, municipal bond funds, today managing a national
and 18 state-specific municipal funds.
. Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations
Corporation.
. Establishes Seligman Portfolios, Inc., an investment vehicle offered through
variable annuity products.
...1990s
. Introduces Seligman Select Municipal Fund and Seligman Quality Municipal
Fund, two closed-end funds that invest in high-quality municipal bonds.
. In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global investment products.
. Introduces to the public Seligman Frontier Fund, Inc., a small capitalization
mutual fund.
. Launches Seligman Henderson Global Fund Series, Inc., which today offers five
separate series: Seligman Henderson International Fund, Seligman Henderson
Global Growth Opportunities Fund, Seligman Henderson Global Smaller Companies
Fund, Seligman Henderson Global Technology Fund and Seligman Henderson
Emerging Markets Growth Fund.
. Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
-19-
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
COMMON STOCKS 88.3%
AEROSPACE/DEFENSE 2.4%
General Dynamics
Diversified defense contractor 90,000 $ 7,779,375
-------------
United Technologies
Nanufacturer of jet engines,
flight systems, elevators,
and automotive parts 170,000 12,378,125
-------------
20,157,500
-------------
AUTOMOTIVE AND
RELATED 2.7%
Chrysler
Nanufacturer of automobiles,
trucks, and related parts 210,000 7,389,375
Eaton
Diversified manufacturer,
including truck transmissions
and axles 51,000 4,551,750
Harley-Davidson
Manufacturer of motorcycles 300,000 8,212,500
Volkswagen (ADRs) (Germany)
Manufacturer of automobiles 19,000 2,136,313
-------------
22,289,938
-------------
BASIC MATERIALS 0.8%
Aluminum Company of America
Aluminum producer 100,000 7,037,500
-------------
BUSINESS SERVICES
AND SUPPLIES 0.6%
Xerox
Developer and marketer of
document processing
products and services 64,600 4,768,287
-------------
CHEMICALS 2.8%
Bayer (Germany)
Producer of specialty chemicals,
pharmaceuticals, and plastics 66,000 4,256,999
duPont (E.I.) de Nemours
Producer of chemicals 133,000 7,988,313
Goodrich (B.F.)
Chemical manufacturer; supplier
of systems and component
parts for the aerospace industry 185,000 7,665,938
Morton International
Manufacturer and marketer
of adhesives, coatings, salt,
and specialty products 100,000 3,437,500
-------------
23,348,750
-------------
COMPUTER GOODS
AND SERVICES 3.1%
Computer Associates International
Developer of software
utilities and databases 112,500 5,948,437
International Business Machines
Manufacturer of micro and
personal computers 75,000 7,842,188
Microsoft*
Developer of computer software 92,000 11,888,125
-------------
25,678,750
-------------
CONSTRUCTION 0.7%
Sherwin-Williams
Manufacturer of paints and
related products 200,000 5,550,000
-------------
CONSUMER GOODS
AND SERVICES 5.3%
Allied Domecq (UK)
International food, drink, and
hospitality group 230,000 2,089,401
Anheuser-Busch
Brewery; theme park operator;
manufacturer and recycler
of aluminum beverage containers 190,000 8,360,000
Coca-Cola
Manufacturer and marketer
of soft drinks and consumer
products 185,000 12,325,625
PepsiCo
Manufacturer and marketer
of soft drinks and
consumer products 250,000 9,109,375
Procter & Gamble
Manufacturer and distributor
of household and personal
care products 150,000 11,971,875
-------------
43,856,276
-------------
- ----------
See footnotes on page 12.
- ----
8
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
DRUGS AND
HEALTH CARE 7.8%
Abbott Laboratories
Developer and manufacturer
of diversified health
care products 75,000 $ 4,917,187
American Home Products
Developer and manufacturer
of pharmaceuticals, food,
and housewares 70,000 5,355,000
Bristol-Myers Squibb
Developer and manufacturer
of health and personal
care products 145,000 13,720,625
Johnson & Johnson
Health care products 150,000 9,881,250
Merck
Manufacturer of pharmaceuticals 98,300 10,444,375
Novartis (Switzerland)
Manufacturer of pharmaceuticals 2,000 3,242,134
Pfizer
Manufacturer of health care and
consumer products 115,000 8,574,688
Schering-Plough
Manufacturer of
pharmaceuticals and health
and personal care products 150,000 9,318,750
-------------
65,454,009
-------------
ELECTRIC AND GAS
UTILITIES 3.4%
Companhia Energetica de
Minas Gerais (ADRs) "CEMIG"
(Brazil)
Provider of electricity 22,700 1,021,500
Electricidade de Portugal
(ADRs) (Portugal)
Generator and distributor
of electricity 62,200 2,410,250
Endesa (ADRs) (Spain)
Provider of electric energy 200,000 3,637,500
Unicom
Electric utility 260,000 7,995,000
Veba (Germany)
Provider of electric energy 45,000 3,065,139
Williams Companies
Natural gas and
telecommunications utility 350,000 9,931,250
-------------
28,060,639
-------------
ELECTRICAL EQUIPMENT 0.8%
Thomas & Betts
Manufacturer of electronic
connectors and components 150,000 7,087,500
-------------
ELECTRONICS 4.2%
AMP
Manufacturer of electronic
connectors and systems 165,000 6,930,000
Applied Materials*
Developer, manufacturer, and
marketer of semiconductor
wafer fabrication equipment 235,000 7,072,031
KLA Tencor*
Manufacturer of wafer
inspection and metrology
equipment 155,000 5,982,031
Motorola
Producer of semiconductors
and communications equipment 75,000 4,279,688
Philips Lamps Holdings (ADRs)
(Netherlands)
Worldwide manufacturer
of consumer electronics
and components 35,000 2,117,500
Raytheon
Producer of defense and
commercial electronics 165,000 8,332,500
-------------
34,713,750
-------------
ENERGY 8.8%
Amoco
Producer of oil and gas 100,000 8,512,500
Atlantic Richfield
Oil producer and
west coast marketer 100,000 8,012,500
-------------
- ----------
See footnotes on page 12.
----
9
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
ENERGY (continued)
Exxon
Explorer and producer
of natural gas, oil, and
petroleum products 260,000 $ 15,908,750
Mobil
International oil enterprise 100,000 7,218,750
Royal Dutch Petroleum (Netherlands)
Provider of international
oil services 260,000 14,088,750
Schlumberger
Worldwide provider of
energy services 100,000 8,050,000
Texaco
Explorer, producer, transporter,
refiner, and marketer of
natural gas, oil, and
petroleum products 166,000 9,026,250
Total (Class B) (France)
International oil enterprise 24,796 2,699,473
-------------
73,516,973
-------------
FINANCE AND
INSURANCE 15.6%
Ahmanson (H.F.)
Provider of savings and loan
services throughout the us 235,000 15,730,313
American General
Provider of insurance
and annuity services 100,000 5,406,250
American International Group
International insurance
holding company 112,500 12,234,375
ASA-UAP (France)
Provider of financial
services and insurance 42,845 3,316,366
Banco Bilbao Vizcaya (Spain)
Provider of banking services 62,100 2,009,471
Bank of Ireland (Ireland)
Financial services provider 258,900 3,989,742
Bank of New York
Commercial bank 300,000 17,343,750
Bankers Trust
Commercial bank 100,000 11,243,750
Citicorp
Global commercial bank 50,000 6,321,875
Federal National
Nortgage Association
Provider of mortgage financing 200,000 11,412,500
First Union
Commercial bank 170,000 8,712,500
General Re
Property casualty reinsurer 20,000 4,240,000
ING Groep (Netherlands)
Provider of banking and
insurance services 76,136 3,208,495
Irish Life (Ireland)
Provider of insurance and
related products 380,000 2,165,379
Mellon Bank
Financial services provider 80,000 4,850,000
National Australia Bank
(ADRs) (Australia)
Commercial bank 50,000 3,531,250
St. Paul Companies
Property and casualty insurance 60,000 4,923,750
Societe Generale (France)
Provider of full banking and
financial services 13,000 1,771,794
TIG Holdings
Insurance provider 135,000 4,480,313
Zurich Versicherungs (Switzerland)
Provider of insurance services 7,800 3,713,269
-------------
130,605,142
-------------
FOOD 2.9%
ConAgra
Prepared foods and
agricultural products 300,000 9,843,750
Sara Lee
Manufacturer of processed
foods and consumer products 250,000 14,078,125
-------------
23,921,875
-------------
- ----------
See footnotes on page 12.
- ----
10
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
MACHINERY AND
INDUSTRIAL EQUIPMENT 7.9%
Dana
Manufacturer and distributor
of products and systems
for automotive and
related industries 125,000 $ 5,937,500
Deere
Manufacturer, distributor,
and financier of
farm machinery 111,500 6,501,844
GATX
Railcar leasing; equipment
financing 150,000 10,884,375
General Electric
Supplier of electrical
equipment and other
industrial and
consumer products 335,000 24,580,625
Harnischfeger Industries
Manufacturer and distributor
of machinery and
mining equipment 119,000 4,202,187
Illinois Tool Works
Manufacturer of fasteners,
tools, and plastic items 180,000 10,822,500
Mannesmann (Germany)
Manufacturer of plant
and machinery equipment;
automotive technology 6,000 3,012,594
-------------
65,941,625
-------------
METALS AND MINING 0.5%
Allegheny Teledyne
Manufacturer of specialty
metals 175,000 4,528,125
-------------
PAPER AND PACKAGING 1.9%
Fort James
Producer of paper and
related products for consumer
and industrial use 200,000 7,650,000
Mead
Manufacturer of paper,
lumber, and wood products 300,000 8,400,000
-------------
16,050,000
-------------
PRINTING AND PUBLISHING 0.6%
Knight-Ridder Newspapers
Newspapers; business
information services 100,000 5,200,000
-------------
RETAIL TRADE 2.1%
May Department Stores
Department store operator 100,000 5,268,750
Penney (J.C.)
Operator of retail department
stores and drugstores 76,000 4,583,750
Tesco (UK)
Food retailer 184,600 1,494,029
Wal-Mart Stores
Discount retailer 150,000 5,915,625
-------------
17,262,154
-------------
TECHNOLOGY 1.2%
Intel
Manufacturer of
semiconductors/memory circuits 145,000 10,181,719
-------------
TELECOMMUNICATIONS 2.3%
Alcatel Alsthom (France)
Developer of equipment and
systems for public
telecommunications 17,000 2,161,556
Sprint
Global communications company 93,100 5,457,987
Telecomunicacoes Brasileiras
(ADRs) "Telebras" (Brazil)
Provider of telecommunications
services 7,000 815,062
Telecom Italia-Di Risp (Italy)
Provider of the whole spectrum
of telecommunications services 400,000 2,555,044
Worldcom*
Diversified telecommunications
company 275,000 8,327,344
-------------
19,316,993
-------------
TELEPHONE UTILITIES 4.4%
AmeriTech
Provider of
telecommunications services 105,000 8,452,500
- ----------
See footnotes on page 12.
----
11
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
TELEPHONE UTILITIES (continued)
Bell Atlantic
Provider of telephone services
in the atlantic region 100,000 $ 9,100,000
GTE
Provider of telephone services,
systems, and equipment 150,000 7,837,500
SBC Communications
Provider of telephone services,
primarily in the midwest 150,000 10,987,500
-------------
36,377,500
-------------
TOBACCO 4.0%
B.A.T Industries (UK)
Financial services and
tobacco company 310,000 2,839,190
Philip Morris
Manufacturer of tobacco
products 345,000 15,632,812
RJR Nabisco Holdings
Manufacturer of processed
foods and tobacco products 400,000 15,000,000
-------------
33,472,002
-------------
MISCELLANEOUS/DIVERSIFIED 1.5%
AlliedSignal
Producer of aerospace
and automotive materials 270,000 10,513,125
Pacific Dunlop (Australia)
Diversified manufacturer 1,100,000 2,329,112
-------------
12,842,237
-------------
TOTAL COMMON STOCKS
(Cost $527,684,552) 737,219,244
-------------
PRIN. AMT. VALUE
---------- -----
CONVERTIBLE BONDS 0.1%
(Cost $1,000,000)
FINANCE AND INSURANCE 0.1%
LibLife International (UK),
6 1/2%, 9/30/2004
Provider of life and
casualty insurance $1,000,000 $ 1,172,508
-------------
SHORT-TERM HOLDINGS 11.0%
Canadian Imperial Bank of
Commerce, Grand Cayman
Fixed Time Deposit,
6 5/8%, 1/2/1998 31,605,000 31,605,000
First National Bank of Chicago,
Grand Cayman Fixed
Time Deposit,
6 5/8%, 1/2/1998 30,000,000 30,000,000
National Westminster Bank,
Nassau Fixed Time Deposit,
6 1/2%, 1/2/1998 30,000,000 30,000,000
-------------
TOTAL SHORT-TERM HOLDINGS
(Cost $91,605,000) 91,605,000
-------------
TOTAL INVESTMENTS 99.4%
(Cost $620,289,552) 829,996,752
OTHER ASSETS
LESS LIABILITIES 0.6% 5,102,710
-------------
NET ASSETS 100.0% $ 835,099,462
=============
- ----------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
- ----
12
<PAGE>
================================================================================
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value:
Common stocks and convertible issues (cost $528,684,552)..... $738,391,752
Short-term holdings (cost $91,605,000) ...................... 91,605,000 $ 829,996,752
------------
Cash ......................................................................... 1,892,521
Receivable for securities sold ............................................... 1,952,447
Receivable for interest and dividends ........................................ 1,768,595
Receivable for Capital Stock sold ............................................ 1,270,396
Expenses prepaid to shareholder service agent ................................ 165,317
Other ........................................................................ 61,950
-------------
Total Assets ................................................................. 837,107,978
-------------
LIABILITIES:
Payable for Capital Stock repurchased ........................................ 677,601
Accrued expenses, taxes, and other ........................................... 1,330,915
-------------
Total Liabilities ............................................................ 2,008,516
-------------
Net Assets ................................................................... $ 835,099,462
=============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.50 par value; 500,000,000 shares
authorized; 52,458,584 shares outstanding):
Class A .................................................................... $ 23,067,560
Class B .................................................................... 615,959
Class D .................................................................... 2,545,773
Additional paid-in capital ................................................... 539,104,537
Undistributed net investment income .......................................... 20,589
Undistributed net realized gain .............................................. 60,040,379
Net unrealized appreciation of investments ................................... 210,936,107
Net unrealized depreciation on translation of assets and
liabilities denominated in foreign currencies ................................ (1,231,442)
-------------
Net Assets ................................................................... $ 835,099,462
=============
NET ASSET VALUE PER SHARE:
Class A ($734,634,930 / 46,135,119 shares) ................................... $15.92
======
Class B ($19,567,807 / 1,231,918 shares) ..................................... $15.88
======
Class D ($80,896,725 / 5,091,547 shares) ..................................... $15.89
======
</TABLE>
- ----------
See Notes to Financial Statements.
----
13
<PAGE>
================================================================================
Statement of Operations
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends ......................................................... $ 20,401,956
Interest .......................................................... 3,123,709
Other ............................................................. 125,741
-------------
Total Investment Income (net of foreign taxes withheld of $212,716)............... $ 23,651,406
EXPENSES:
Management fee .................................................... 5,192,858
Distribution and service fees ..................................... 2,567,026
Shareholder account services ...................................... 1,227,231
Custody and related services ...................................... 212,000
Shareholder reports and communications ............................ 205,382
Registration ...................................................... 109,091
Auditing and legal fees ........................................... 83,355
Directors' fees and expenses ...................................... 37,509
Miscellaneous ..................................................... 50,732
-------------
Total Expenses ................................................................... 9,685,184
-------------
Net Investment Income ............................................................ 13,966,222
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments .................................. 135,910,283
Net realized loss from foreign currency transactions .............. (1,513,242)
Net change in unrealized appreciation of investments .............. 19,276,740
Net change in unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies ..................... (2,113,562)
-------------
Net Gain on Investments and Foreign Currency Transactions ........................ 151,560,219
-------------
Increase in Net Assets from Operations ........................................... $ 165,526,441
=============
</TABLE>
- ----------
See Notes to Financial Statements.
- ----
14
<PAGE>
================================================================================
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 13,966,222 $15,992,537
Net realized gain on investments ................................ 135,910,283 62,861,837
Net realized loss from foreign currency transactions ............ (1,513,242) (9,298)
Net change in unrealized appreciation of investments ............ 19,276,740 20,969,267
Net change in unrealized appreciation on translation of
assets and liabilities denominated in foreign currencies ........ (2,113,562) (158,076)
------------ ------------
Increase in Net Assets from Operations .......................... 165,526,441 99,656,267
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ...................................................... (13,924,923) (14,590,224)
Class B ...................................................... (164,161) (34,814)
Class D ...................................................... (893,492) (813,879)
Net realized gain on investments:
Class A ...................................................... (87,928,428) (47,224,171)
Class B ...................................................... (1,905,117) (297,882)
Class D ...................................................... (8,996,490) (4,385,491)
------------ ------------
Decrease in Net Assets from Distributions ....................... (113,812,611) (67,346,461)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------
YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sale of shares:
Class A ....................... 1,308,404 2,178,472 21,242,046 32,299,564
Class B ....................... 626,437 430,908 10,275,506 6,449,796
Class D ....................... 653,126 1,319,042 10,523,717 19,486,806
Investment of dividends:
Class A ....................... 473,066 527,914 7,757,656 7,838,581
Class B ....................... 9,277 2,114 152,545 31,288
Class D ....................... 50,194 50,273 821,894 745,246
Exchanged from associated Funds:
Class A ....................... 5,617,352 5,995,029 89,701,736 89,181,764
Class B ....................... 213,033 9,871 3,448,926 146,507
Class D ....................... 2,927,353 481,390 48,648,056 7,120,548
Shares issued in payment of
gain distributions:
Class A ....................... 3,903,524 2,201,193 61,643,305 33,016,448
Class B ....................... 114,620 17,548 1,797,496 262,950
Class D ....................... 534,270 273,306 8,416,701 4,087,158
----------- ----------- ------------ ------------
Total ............................ 16,430,656 13,487,060 264,429,584 200,666,656
----------- ----------- ------------ ------------
Cost of shares repurchased:
Class A ....................... (3,842,001) (4,436,075) (62,421,380) (65,928,248)
Class B ....................... (62,983) (5,175) (1,046,510) (77,652)
Class D ....................... (800,763) (502,645) (12,923,435) (7,458,967)
Exchanged into associated Funds:
Class A ....................... (5,397,178) (5,701,122) (86,520,445) (84,564,193)
Class B ....................... (102,320) (21,412) (1,680,196) (324,343)
Class D ....................... (2,573,135) (610,189) (43,101,112) (8,937,833)
----------- ----------- ------------ ------------
Total ............................ (12,778,380) (11,276,618) (207,693,078) (167,291,236)
----------- ----------- ------------ ------------
Increase in Net Assets
from Capital Share Transactions .. 3,652,276 2,210,442 56,736,506 33,375,420
=========== =========== ------------ ------------
Increase in Net Assets .......................................... 108,450,336 65,685,226
NET ASSETS:
Beginning of year ............................................... 726,649,126 660,963,900
------------ ------------
End of Year (including undistributed net investment income of
$20,589 and $1,123,357, respectively) ........................... $835,099,462 $726,649,126
============ ============
</TABLE>
- ----------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
----
15
<PAGE>
================================================================================
Notes to Financial Statements
1. Multiple Classes of Shares -- Seligman Common Stock Fund, Inc. (the "Fund")
offers three classes of shares. All shares existing prior to May 3, 1993, the
commencement of Class D shares, were classified as Class A shares. The Fund
began offering Class B shares on April 22, 1996. Class A shares are sold with an
initial sales charge of up to 4.75% and a continuing service fee of up to 0.25%
on an annual basis. Class A shares purchased in an amount of $1,000,000 or more
are sold without an initial sales charge but are subject to a contingent
deferred sales load ("CDSL") of 1% on redemptions within 18 months of purchase.
Class B shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75%, a service fee of up to 0.25% on an annual basis, and
a CDSL, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of up
to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSL, if
applicable, of 1% imposed on redemptions made within one year of purchase. The
three classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other class
expenses, and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required.
2. Significant Accounting Policies -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. Security Valuation -- Investments in common stocks and convertible issues
are valued at current market values or, in their absence, at fair values
determined in accordance with procedures approved by the Board of
Directors. Securities traded on national exchanges are valued at last
sales prices or, in their absence and in the case of over-the-counter
securities, at the mean of bid and asked prices. Short-term holdings
maturing in 60 days or less are valued at amortized cost.
b. Foreign Currency Transactions -- The books and records of the Fund are
maintained in USdollars. The market value of investment securities, other
assets and liabilities denominated in foreign currencies are translated
into US dollars at the daily rate of exchange as reported by a pricing
service. Purchases and sales of investment securities, income, and
expenses are translated into USdollars at the rate of exchange prevailing
on the respective dates of such transactions.
The Fund separates that portion of the results of operations
resulting from changes in the foreign exchange rates from the fluctuations
arising from changes in the market prices of securities held in the
portfolio. Similarly, the Fund separates the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market
prices of portfolio securities sold during the period.
c. Federal Taxes -- There is no provision for federal income tax. The Fund
has elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
d. Security Transactions and Related Investment Income -- Investment
transactions are recorded on trade dates. Identified cost of investments
sold is used for both financial statement and federal income tax purposes.
Dividends receivable and payable are recorded on ex-dividend dates, except
that certain dividends from foreign securities where the ex-dividend dates
may have passed are recorded as soon as the Fund is informed of the
dividend. Interest income is recorded on an accrual basis.
e. Multiple Class Allocations -- All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares based upon the relative value of
shares of each class. Class-specific expenses, which include distribution
and service fees and any other items that are specifically attributable to
a particular class, are charged directly to such class. For the year ended
December 31, 1997, distribution and service fees were the only
class-specific expenses.
f. Distributions to Shareholders -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such
reclassification will have no effect on net assets, results of operations,
or net asset value per share of the Fund.
3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended December 31, 1997, amounted to $785,313,672 and $831,457,378,
respectively.
At December 31, 1997, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities, including
- ----
16
<PAGE>
================================================================================
Notes to Financial Statements
the effects of foreign currency translations, amounted to $217,178,514 and
$7,471,314, respectively.
4. Management Fee, Administrative Services, and Other Transactions -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides or arranges for the necessary personnel and facilities. Seligman
Henderson Co. (the "Subadviser"), an entity owned 50% each by the Manager and
Henderson plc, supervises and directs all or a portion of the Fund's foreign
investments. For this service, the Subadviser receives a fee from the Manager,
payable monthly. Compensation of all officers of the Fund, all directors of the
Fund who are employees or consultants of the Manager, and all personnel of the
Fund and the Manager is paid by the Manager or by Henderson plc. The Manager
receives a fee, calculated daily and payable monthly, equal to 0.65% per annum
of the first $1 billion of the Fund's average daily net assets, 0.60% per annum
of the next $1 billion of the Fund's average daily net assets, and 0.55% per
annum of the Fund's average daily net assets in excess of $2 billion. The
management fee reflected in the Statement of Operations represents 0.65% per
annum of the Fund's average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $65,673 from sales of Class A shares, after commissions of
$512,897 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the year ended December 31,
1997, fees incurred aggregated $1,715,126 or 0.24% per annum of the average
daily net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily net
assets of the Class B and Class D shares for which the organizations are
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provides funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the year ended December 31, 1997, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $126,148 and $725,752, respectively.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the year ended
December 31, 1997, such charges amounted to $20,009.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class Bshares sold. The aggregate amount of such payments
and the Class B shares distribution fees retained by the Distributor, for the
year ended December 31, 1997, amounted to $28,801.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of shares of the Fund, as well as
distribution and service fees pursuant to the Plan. For the year ended December
31, 1997, Seligman Services, Inc. received commissions of $22,385 from the sales
of shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $468,360, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $1,227,231 for shareholder
account services. The Fund's investment in Seligman Data Corp. is recorded at a
cost of $22,506.
Certain officers and directors of the Fund are officers or directors of
the Manager, the Subadviser, the Distributor, Seligman Services, Inc., and/or
Seligman Data Corp.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in directors'
fees and expenses and the accumulated balance thereof at December 31, 1997, of
$188,372 is included in other liabilities. Deferred fees and the related accrued
interest are not deductible for federal income tax purposes until such amounts
are paid.
----
17
<PAGE>
================================================================================
Financial Highlights
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. Total returns for periods
of less than one year are not annualized.
"Average commission rate paid" represents the average commission paid by
the Fund to purchase or sell portfolio securities. It is determined by dividing
the total commission dollars paid by the number of shares purchased and sold
during the period for which commissions were paid. This rate is provided for
periods beginning January 1, 1996.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1997(o) 1996(o) 1995(o) 1994(o) 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year ................ $ 14.89 $ 14.19 $ 12.12 $ 13.47 $ 12.79
--------- --------- --------- --------- ---------
Net investment income ............................. .30 .35 .36 .38 .39
Net realized and unrealized investment gain (loss) 3.18 1.81 3.00 (.64) 1.49
Net realized and unrealized gain (loss)from foreign
currency transactions ............................. (.07) -- .01 -- --
--------- --------- --------- --------- ---------
Increase (Decrease) From Investment Operations .... 3.41 2.16 3.37 (.26) 1.88
Dividends paid .................................... (.32) (.34) (.36) (.37) (.38)
Distributions from net gain realized .............. (2.06) (1.12) (.94) (.72) (.82)
--------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Asset Value ........ 1.03 .70 2.07 (1.35) .68
--------- --------- --------- --------- ---------
Net Asset Value, End of Year ...................... $ 15.92 $ 14.89 $ 14.19 $ 12.12 $ 13.47
========= ========= ========= ========= =========
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 23.58% 15.44% 28.17% (1.89)% 14.86%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 1.13% 1.15% .93% .85% .87%
Net investment income to average net assets ....... 1.83% 2.36% 2.56% 2.93% 2.86%
Portfolio turnover ................................ 106.02% 56.10% 46.08% 57.17% 54.37%
Average commission rate paid ...................... $ .0426 $ .0554
Net Assets, End of Year (000S Omitted) ............ $ 734,635 $ 656,260 $ 614,400 $ 510,956 $ 553,222
</TABLE>
- ----------
See footnotes on page 19.
- ----
18
<PAGE>
================================================================================
Financial Highlights
<TABLE>
<CAPTION>
CLASS B CLASS D
---------------------- ---------------------------------------------------
YEAR 4/22/96* YEAR ENDED DECEMBER 31, 5/3/93*
ENDED TO ---------------------------------------- TO
12/31/97(o) 12/31/96(o) 1997(o) 1996(o) 1995(o) 1994(o) 12/31/93
----------- ----------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year ................ $ 14.87 $14.80 $ 14.87 $ 14.16 $ 12.07 $ 13.46 $13.29
------- ------ ------- ------- ------- ------- ------
Net investment income ............................. .17 .15 .17 .24 .24 .22 .18
Net realized and unrealized investment gain
(loss) ............................................ 3.17 1.20 3.18 1.80 3.00 (.66) 1.02
Net realized and unrealized gain (loss)from
foreign currency transactions ..................... (.07) -- (.07) -- .01 -- --
------- ------ ------- ------- ------- ------- ------
Increase (Decrease) from Investment
Operations ........................................ 3.27 1.35 3.28 2.04 3.25 (.44) 1.20
Dividends paid .................................... (.20) (.16) (.20) (.21) (.22) (.23) (.21)
Distributions from net gain realized .............. (2.06) (1.12) (2.06) (1.12) (.94) (.72) (.82)
------- ------ ------- ------- ------- ------- ------
Net Increase (Decrease) in Net Asset Value ........ 1.01 .07 1.02 .71 2.09 (1.39) .17
------- ------ ------- ------- ------- ------- ------
Net Asset Value, End of Year ...................... $ 15.88 $14.87 $ 15.89 $ 14.87 $ 14.16 $ 12.07 $13.46
======= ====== ======= ======= ======= ======= ======
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 22.59% 9.21% 22.66% 14.58% 27.17% (3.24)% 9.09%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net asset ..................... 1.89% 1.92%+ 1.89% 1.91% 1.72% 1.96% 2.02%+
Net investment income to average net assets ....... 1.07% 1.55%+ 1.07% 1.61% 1.80% 1.68% 1.83%+
Portfolio turnover ................................ 106.02% 56.10%++ 106.02% 56.10% 46.08% 57.17% 54.37%+++
Average commission rate paid ...................... $ .0426 $.0554++ $ .0426 $ .0554
Net Assets, End of Year (000s omitted) ............ $19,568 $6,451 $80,896 $63,938 $46,564 $14,416 $5,667
</TABLE>
- ----------
* Commencement of offering of shares.
(o) Per share amounts for the years ended December 31, 1997, 1996, 1995, and
1994, are calculated based on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
See Notes to Financial Statements.
----
19
<PAGE>
================================================================================
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Common Stock Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Common Stock Fund, Inc. as of December
31, 1997, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the Fund's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Common
Stock Fund, Inc. as of December 31, 1997, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 30, 1998
- --------------------------------------------------------------------------------
- ----
20
<PAGE>
PART C. OTHER INFORMATION
- --------------------------
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements and Schedule:
Part A Financial Highlights for Class A shares for the ten years ended December
31, 1997; Financial Highlights for Class B shares for the period from
April 22, 1996 (commencement of offering) to December 31, 1997;
Financial Highlights for Class D shares for the period from May 3, 1993
(commencement of offering) to December 31, 1997.
Part B Required Financial Statements, which are included in the Fund's Annual
Report to Shareholders dated December 31, 1997, are incorporated by
reference in the Statement of Additional Information. These Financial
Statements are: Portfolio of Investments as of December 31, 1997;
Statement of Assets and Liabilities as of December 31, 1997; Statement
of Operations for the year ended December 31, 1997; Statements of
Changes in Net Assets for the years ended December 31, 1997 and 1996;
Notes to Financial Statements; Financial Highlights for the five years
ended December 31, 1997 for the Fund's Class A shares; for the period
April 22, 1996 (commencement of offering) through December 31, 1997 for
the Fund's Class B shares; and for the period May 3, 1993 (commencement
of offering) through December 31, 1997 for the Fund's Class D shares;
Report of Independent Auditors.
(b) Exhibits: All Exhibits have been previously filed; except Exhibits
marked with an asterisk (*) which are incorporated herein.
(1) Articles of Amendment and Articles Supplementary to Articles of
Incorporation of Registrant. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 76, filed April 29, 1997.)
(2) By-laws of the Corporation. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 76, filed April 29, 1997.)
(3) Not applicable.
(4) Specimen certificate of Class B Capital Stock. (Incorporated by reference
to Form SE filed on behalf of the Registrant on April 16, 1996)
(4a) Specimen certificate of Class D Capital Stock. (Incorporated by Reference
to Post-Effective Amendment No. 71 filed on April 23, 1993.)
(5) Amended Management Agreement between Registrant and J. & W. Seligman & Co.
Incorporated. (Incorporated by reference to Post-Effective Amendment No.
74, filed on April 19, 1996.)
(6) Copy of Amended Distributing Agreement between Registrant and Seligman
Financial Services, Inc. (Incorporated by reference to Registrant's Post-
Effective Amendment No. 76, filed April 29, 1997.)
(6a) Copy of Amended Sales Agreement between Seligman Financial Services, Inc.
and Dealers. (Incorporated by reference to Post-Effective Amendment No.
74, filed on April 19, 1996.)
(6b) Form of Sales Agreement between Seligman Financial Services, Inc. and Dean
Witter Reynolds, Inc. (Incorporated by reference to Exhibit 6b of
Registration Statement No. 2-33566, Post-Effective Amendment No. 53, filed
on April 28, 1997.)
(6c) Form of Sales Agreement between Seligman Financial Services, Inc. and Dean
Witter Reynolds, Inc. with respect to certain Chilean institutional
investors. (Incorporated by reference to Exhibit 6c of Registration
Statement No. 2-33566, Post-Effective Amendment No. 53, filed on April 28,
1997.)
(6d) Form of Dealer Agreement between Seligman Financial Services, Inc. and
Smith Barney Inc. (Incorporated by reference to Exhibit 6d of Registration
Statement No. 2-33566, Post-Effective Amendment No. 53, filed on April 28,
1997.)
C-1
<PAGE>
PART C. OTHER INFORMATION (continued)
-----------------
Item 24. Financial Statements and Exhibits (continued)
- ------- ---------------------------------
(7) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by Reference to Exhibit 7 of Registration Statement No. 2-
92487, Post-Effective Amendment No. 21, filed on January 29, 1997.)
(7a) Deferred Compensation Plan for Directors of Seligman Common Stock Fund.*
(8) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 76, filed April 29, 1997.)
(9) Not applicable.
(10) Opinion and Consent of Counsel. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 76, filed April 29, 1997.)
(11) Report and Consent of Independent Auditors.*
(12) Not applicable.
(13) Purchase Agreement for Initial Capital between Registrant's Class B shares
and J. & W. Seligman & Co. Incorporated. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 76, filed April 29, 1997.)
(13a) Purchase Agreement for Initial Capital between Registrant's Class D
Shares and J. & W. Seligman & Co. Incorporated. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 76, filed April
29, 1997.)
(14) The Seligman Roth/Traditional IRA Information Kit. (Incorporated by
reference to Exhibit q(1) of Registration Statement No. 333-50295, Form
N-2, filed on April 16, 1998.)
(14a) The Seligman Simple IRA Plan Set-Up Kit. (Incorporated by reference to
Exhibit 14 of Registration Statement No. 333-20621, Pre-Effective
Amendment No. 2, filed on April 17, 1997.)
(14b) The Seligman Simple IRA Plan Agreement. (Incorporated by reference to
Exhibit 14 of Registration Statement No. 333-20621, Pre-Effective
Amendment No. 2, filed on April 17, 1997.)
(14c) Qualified Plan and Trust Basic Plan Document. (Incorporated by reference
to Exhibit q(4) to Registration No. 333-50295, Form N-2, filed on
April 16, 1998.)
(14d) Flexible Standardized 401(k) Profit Sharing Plan Adoption Agreement.
(Incorporated by reference to Exhibit q(4) to Registration No. 333- ,
Form N-2, filed on April 16, 1998.)
(14e) Flexible Nonstandardized Safe Harbor 401(k) Profit Sharing Plan Adoption
Agreement. (Incorporated by reference to Exhibit q(4) to Registration No.
333-50295, Form N-2, filed on April 16, 1998.)
(14f) Simplified Employee Pension Plan.*
(14g) Educational IRA.*
(15) Form of Administration, Shareholder Services and Distribution Plan of
Registrant. (Incorporated by reference to Post-Effective Amendment No. 74,
filed on April 19, 1996.)
(15a) Form of Administration, Shareholder Services and Distribution Agreement
between Seligman Financial Services, Inc. and Dealers. (Incorporated by
reference to Post-Effective Amendment No. 74, filed on April 19, 1996.)
(16) Schedule of Computation of Performance Data provided in Registration
Statement in response to Item 22. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 76, filed April 29, 1997.)
(17) Financial Data Schedules meeting the requirements of Rule 483 under the
Securities Act of 1933. *
(18) Copy of Multiclass Plan entered into by Registrant pursuant to Rule 18f-3
under the Investment Company Act of 1940.
(Incorporated by reference to Post-Effective Amendment No. 74, filed on
April 19, 1996.)
Other Exhibits: Power of Attorney*
C-2
<PAGE>
PART C. OTHER INFORMATION (continued)
-----------------
Item 25. Persons Controlled by or Under Common Control with Registrant -
- ------- -------------------------------------------------------------
Seligman Data Corp. ("SDC"), a New York corporation, is owned by the
Registrant and certain associated investment companies. The
Registrant's investment in SDC is recorded at a cost of $22,506.
Item 26. Number of Holders of Securities
- -------- -------------------------------
<TABLE>
(1) (2)
Number of Record
Title of Class Holders as of March 31, 1998
-------------- ----------------------------
<S> <C>
Class A Common Stock 19,775
Class B Common Stock 1,801
Class D Common Stock 5,609
</TABLE>
Item 27. Indemnification
- -------- ---------------
Reference is made to the provisions of Articles Twelfth and Thirteenth of
Registrant's Amended and Restated Articles of Incorporation filed as
Exhibit 24(b)(1) and Article IV of Registrant's Amended and Restated By-
laws filed as Exhibit 24(b)(2) to Registrant's Post-Effective Amendment
No. 75 to the Registration Statement.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised by the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser - The
- -------- ----------------------------------------------------
Manager also serves as investment manager to seventeen associated
investment companies. They are Seligman Capital Fund, Inc., Seligman
Cash Management 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. and Tri-Continental
Corporation.
The Manager has an investment advisory service division which provides
investment management or advice to private clients. The list required by
this Item 28 of officers and directors of the Manager, together with
information as to any other business, profession, vocation or employment
of a substantial nature engaged in by such officers and directors during
the past two years, is incorporated by reference to Schedules A and D of
Form ADV, filed by the Manager, pursuant to the Investment Advisers Act
of 1940 (SEC File No. 801-15798), which was filed on March 31, 1998.
C-3
<PAGE>
PART C. OTHER INFORMATION (continued)
- ------ -----------------
Item 29. Principal Underwriters
- ------- ----------------------
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter currently distributing
securities of the Registrant also acts as a principal underwriter,
depositor or investment adviser follow:
Seligman Cash Management Fund, Inc.
Seligman Capital Fund, Inc.
Seligman 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 the answer to Item 21:
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
(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 Director and President
RONALD T. SCHROEDER* Director None
FRED E. BROWN* Director Director Emeritus
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President None
CHARLES W. KADLEC* Chief Investment Strategist None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
ED LYNCH* Senior Vice President, Director None
of Marketing
MARK R. GORDON* Senior Vice President, National None
Sales Manager
GERALD I. CETRULO, III Senior Vice President of Sales, None
140 West Parkway Regional Sales Manager
Pompton Plains, NJ 07444
JONATHAN G. EVANS Senior Vice President of Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
BRADLEY W. LARSON Senior Vice President of Sales, None
367 Bryan Drive Regional Sales Manager
Alamo, CA 94526
BRUCE TUCKEY Senior Vice President of Sales None
41644 Chathman Drive
Novi, MI 48375
ANDREW VEASEY Senior Vice President of Sales None
14 Woodside Drive
Rumson, NJ 07760
</TABLE>
C-4
<PAGE>
PART C. OTHER INFORMATION (continued)
- ------ -----------------
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
MICHELLE L. MCCANN Vice President, Manager, Retirement None
Plans Marketing
SCOTT H. NOVAK Vice President, Insurance Products None
Manager
MICHAEL R. SANDERS Vice President, Product Manager None
Managed Money Services
CHARLES L. VON BREITENBACH, II* Vice President, Product Manager None
Managed Money Services
ROBERT T. HAUSLER* Vice President, Global Mutual Funds, None
Product Management
MARSHA E. JACOBY* Vice President, Offshore Funds None
WILLIAM W. JOHNSON* Vice President, Order Desk None
TRACY A. SALOMON* Vice President, Retirement None
Marketing Manager
HELEN SIMON* Vice President, Sales None
Administration Manager
J. BRERETON YOUNG* Vice President, Mutual Funds None
Product Manager
PETER J. CAMPAGNA Vice President, Regional Retirement None
1130 Green Meadow Court Plans Manager
Acworth, GA 30102
MASON S. FLINN Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
CHARLES E. WENZEL Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
JAMES R. BESHER Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
RICHARD B. CALLAGHAN Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
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
ANDREW DRALUCK Regional Vice President None
4032 E. Williams Drive
Phoenix, AZ 85024
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 Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
DAVID GARDNER Regional Vice President None
2403 Cayenne Drive
McKinney, TX 75070
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine Drive
Houston, TX 77077
T. WAYNE KNOWLES Regional Vice President None
104 Morninghills Court
Cary, NC 27511
JUDITH L. LYON Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
DAVID MEYNCKE Regional Vice President None
4957 Cross Pointe Drive
Oldsmar, FL 34677
TIM O'CONNELL Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
THOMAS PARNELL Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
DAVE PETZKE Regional Vice President None
4016 Saint Lucia Street
Boulder, CO 80301
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
STEVE WILSON Regional Vice President None
83 Kaydeross Park
Saratoga Springs, NY 12866
KELLI A. WIRTH-DUMSER Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
JEFFREY S. DEAN* Assistant Vice President, Marketing None
SANDRA FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
GAIL S. CUSHING* Assistant Vice President, None
National Accounts Manager
JOSEPH M. MCGILL* Assistant Vice President and None
Compliance Officer
</TABLE>
C-6
<PAGE>
PART C. OTHER INFORMATION (continued)
- ------ -----------------
Seligman Financial Services, Inc.
---------------------------------
As of March 31, 1998
--------------------
<TABLE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
JACK TALVY* Assistant Vice President, Internal None
Marketing Service Manager
JOYCE PERESS* Assistant Secretary None
</TABLE>
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York NY 10017.
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
(1) Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105 AND
(2) Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Item 31. Management Services - Seligman Data Corp. ("SDC") the Registrant's
- -------- -------------------
shareholder service agent, has an agreement with First Data Investor
Services Group ("FDISG") pursuant to which FDISG provides a data
processing system for certain shareholder accounting and recordkeeping
functions performed by SDC, which commenced in July 1990. For the
years ended December 31, 1997, 1996 and 1995, the approximate cost of
these services were:
<TABLE>
<CAPTION>
1997 1996 1995
----------- -------- -------
<S> <C> <C> <C>
Class A Shares $102,363.36 $100,800 $90,100
Class B Shares 6,911.28 650 --
Class D Shares 28,127.64 23,800 6,000
</TABLE>
Item 32. Undertakings - The Registrant undertakes, (1) to furnish a copy of the
- -------- ------------
Registrant's latest annual report, upon request and without charge, to
every person to whom a prospectus is delivered and (2) if requested to
do so by the holders of at least ten percent of its outstanding
shares, to call a meeting of shareholders for the purpose of voting
upon the removal of a director or directors and to assist in
communications with other shareholders as required by Section 16(c) of
the Investment Company Act of 1940.
C-7
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 76 to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 29th day of April, 1998.
SELIGMAN COMMON STOCK FUND, INC.
By: /s/ William C. Morris
-----------------------------------
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Post-Effective Amendment No. 76 has been signed below
by the following persons in the capacities indicated on April 29, 1998.
Signature Title
--------- -----
/s/ William C. Morris Chairman of the Board (Principal
- ----------------------------------- executive officer) and Director
William C. Morris*
/s/ Brian T. Zino Director and President
- -----------------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- -----------------------------------
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /s/ Brian T. Zino
James C. Pitney, Director ) ---------------------------------------
James Q. Riordan, Director ) * Brian T. Zino, Attorney-in-fact
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
C-8
<PAGE>
SELIGMAN COMMON STOCK FUND, INC.
Post-Effective Amendment No. 76 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
- ------------------ -----------
24(b)(7)(a) Deferred Compensation Plan for Directors
24(b)(11) Consent of Independent Auditors
24(b)(14f) Simplified Employee Pension Plan
24(b)(14g) Educational IRA
24(b)(17) Financial Data Schedules
Other Exhibits Power of Attorney
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> SELIGMAN COMMON STOCK FUND, INC. CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 620290
<INVESTMENTS-AT-VALUE> 829997
<RECEIVABLES> 5133
<ASSETS-OTHER> 1978
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 837108
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2009
<TOTAL-LIABILITIES> 2009
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 565334
<SHARES-COMMON-STOCK> 46135<F1>
<SHARES-COMMON-PRIOR> 44072<F1>
<ACCUMULATED-NII-CURRENT> 21
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60040
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 209704
<NET-ASSETS> 734635<F1>
<DIVIDEND-INCOME> 18228<F1>
<INTEREST-INCOME> 2791<F1>
<OTHER-INCOME> 35<F1>
<EXPENSES-NET> (8072)<F1>
<NET-INVESTMENT-INCOME> 12982<F1>
<REALIZED-GAINS-CURRENT> 134483
<APPREC-INCREASE-CURRENT> 17163
<NET-CHANGE-FROM-OPS> 165526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13925)<F1>
<DISTRIBUTIONS-OF-GAINS> (87928)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6926<F1>
<NUMBER-OF-SHARES-REDEEMED> (9239)<F1>
<SHARES-REINVESTED> 4376<F1>
<NET-CHANGE-IN-ASSETS> 108450
<ACCUMULATED-NII-PRIOR> 1123
<ACCUMULATED-GAINS-PRIOR> 24387
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4639<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8072<F1>
<AVERAGE-NET-ASSETS> 713712<F1>
<PER-SHARE-NAV-BEGIN> 14.89<F1>
<PER-SHARE-NII> 0.30<F1>
<PER-SHARE-GAIN-APPREC> 3.11<F1>
<PER-SHARE-DIVIDEND> (0.32)<F1>
<PER-SHARE-DISTRIBUTIONS> (2.06)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 15.92<F1>
<EXPENSE-RATIO> 1.13<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> SELIGMAN COMMON STOCK FUND, INC. CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 620290
<INVESTMENTS-AT-VALUE> 829997
<RECEIVABLES> 5133
<ASSETS-OTHER> 1978
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 837108
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2009
<TOTAL-LIABILITIES> 2009
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 565334
<SHARES-COMMON-STOCK> 1232<F1>
<SHARES-COMMON-PRIOR> 434<F1>
<ACCUMULATED-NII-CURRENT> 21
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60040
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 209704
<NET-ASSETS> 19568<F1>
<DIVIDEND-INCOME> 322<F1>
<INTEREST-INCOME> 49<F1>
<OTHER-INCOME> 1<F1>
<EXPENSES-NET> (239)<F1>
<NET-INVESTMENT-INCOME> 133<F1>
<REALIZED-GAINS-CURRENT> 134483
<APPREC-INCREASE-CURRENT> 17163
<NET-CHANGE-FROM-OPS> 165526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (164)<F1>
<DISTRIBUTIONS-OF-GAINS> (1905)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 839<F1>
<NUMBER-OF-SHARES-REDEEMED> (165)<F1>
<SHARES-REINVESTED> 124<F1>
<NET-CHANGE-IN-ASSETS> 108450
<ACCUMULATED-NII-PRIOR> 1123
<ACCUMULATED-GAINS-PRIOR> 24387
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 82<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 239<F1>
<AVERAGE-NET-ASSETS> 12615<F1>
<PER-SHARE-NAV-BEGIN> 14.87<F1>
<PER-SHARE-NII> 0.17<F1>
<PER-SHARE-GAIN-APPREC> 3.10<F1>
<PER-SHARE-DIVIDEND> (0.20)<F1>
<PER-SHARE-DISTRIBUTIONS> (2.06)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 15.88<F1>
<EXPENSE-RATIO> 1.89<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> SELIGMAN COMMON STOCK FUND, INC. CLASS D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 620290
<INVESTMENTS-AT-VALUE> 829997
<RECEIVABLES> 5133
<ASSETS-OTHER> 1978
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 837108
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2009
<TOTAL-LIABILITIES> 2009
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 565334
<SHARES-COMMON-STOCK> 5092<F1>
<SHARES-COMMON-PRIOR> 4301<F1>
<ACCUMULATED-NII-CURRENT> 21
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 60040
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 209704
<NET-ASSETS> 80896<F1>
<DIVIDEND-INCOME> 1852<F1>
<INTEREST-INCOME> 284<F1>
<OTHER-INCOME> 3<F1>
<EXPENSES-NET> (1374)<F1>
<NET-INVESTMENT-INCOME> 765<F1>
<REALIZED-GAINS-CURRENT> 134483
<APPREC-INCREASE-CURRENT> 17163
<NET-CHANGE-FROM-OPS> 165526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (893)<F1>
<DISTRIBUTIONS-OF-GAINS> (8897)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3581<F1>
<NUMBER-OF-SHARES-REDEEMED> (3374)<F1>
<SHARES-REINVESTED> 584<F1>
<NET-CHANGE-IN-ASSETS> 108450
<ACCUMULATED-NII-PRIOR> 1123
<ACCUMULATED-GAINS-PRIOR> 24387
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 472<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1374<F1>
<AVERAGE-NET-ASSETS> 72575<F1>
<PER-SHARE-NAV-BEGIN> 14.87<F1>
<PER-SHARE-NII> 0.17<F1>
<PER-SHARE-GAIN-APPREC> 3.11<F1>
<PER-SHARE-DIVIDEND> (0.20)<F1>
<PER-SHARE-DISTRIBUTIONS> (2.06)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 15.89<F1>
<EXPENSE-RATIO> 1.89<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.7A
DEFERRED COMPENSATION PLAN FOR DIRECTORS
OF
SELIGMAN COMMON STOCK FUND, INC.
("FUND")
1. Election to Defer Payments. Any member of the Board of Directors (herein, a
--------------------------
"Director") of the Fund may elect to have payment of that Director's annual
retainer or meeting fees or both for Board service deferred as provided in this
Plan. The election shall be made in writing prior to, and to take effect from,
the beginning of a calendar year. For any Director in the year in which this
Plan is adopted or for a person elected a director in other than the last
calendar month of a year, the election shall be made within 30 days after that
event and prior to, and to take effect from, the beginning of the calendar
quarter next ensuing after that event. Elections shall continue in effect until
terminated in writing, any such termination to take effect on the first day of
the calendar year beginning after receipt of the notice of termination. An
election shall be irrevocable as to payments deferred in conformity with that
election.
2. Deferred Payment Account. Each deferred retainer or fee shall be credited
------------------------
at the time when it otherwise would have been payable to an account to be
established in the name of the Director on the books of the Fund (the "Deferred
Payment Account") adjusted for notional investment experience as hereinafter
described.
3. Return on Deferred Payment Account Balance. (a) For purposes of measuring
------------------------------------------
the investment return on his Deferred Payment Account, the Director may elect to
have the aggregate amount of his deferred compensation (or a specified portion
thereof) receive a return (i) at a rate equal to the return earned on three-
month U.S. Treasury Bills at the beginning of each calendar quarter (the
"Treasury Bill Rate") and such interest shall be credited to the account
quarterly at the end of each calendar quarter, or (ii) at a rate of return
(positive or negative) equal to the rate of return on the shares of any of the
registered investment companies managed by J. & W. Seligman & Co. Incorporated
("Seligman") or any other entity controlling, controlled by, or under common
control with (as such terms are defined in the Investment Company Act of 1940)
Seligman (each, a "Notional Fund"), assuming reinvestment of dividends and
distributions from the Notional Funds. (b) A Director may amend his designation
of investment return as of the end of each calendar quarter by giving written
notice to the President of the Fund at least 30 days prior to the end of such
calendar quarter. A timely change to a Director's designation of investment
return shall become effective on the first day of the calendar quarter following
receipt by the President of the Fund (the "President").
4. Notional Investment Experience. Amounts credited to a Deferred Payment
------------------------------
Account shall be periodically adjusted for notional investment experience. In
each case such notional investment experience shall be determined by treating
the Deferred Payment Account as though an equivalent dollar amount had been
invested and reinvested in one or more of the Notional Funds. The Notional
Funds used as a basis for determining notional investment experience with
respect to any Director's Deferred Payment Account shall be designated by the
Director in writing by instrument of election substantially in the form attached
hereto as Exhibit C and may be changed prospectively by similar written election
effective as of the first day of any calendar quarter. The President may from
time to time limit the Notional Funds available for purposes of such election.
If at any time any Notional Fund that has previously been
1
<PAGE>
designated by a Director as a notional investment shall cease to exist or shall
be unavailable for any reason, or if the Director fails to designate one or more
Notional Funds pursuant to this Section 4, the President may, at his discretion
and upon notice to the Director, treat any amounts notionally invested in such
Notional Fund (whether representing past amounts credited to a Director's
Deferred Payment Account or subsequent fee deferrals or both) as having been
invested at the Treasury Bill Rate, only until such time as the Director shall
have made another investment election in accordance with the foregoing
procedures. Deferred Payment Accounts shall continue to be adjusted for notional
investment experience until distributed in full in accordance with the
distribution method elected by the Director pursuant to Section 5 hereof.
5. Payment of Deferred Amounts. All amounts credited to an account pursuant to
---------------------------
any election by the Director made as provided in Section 1 hereof shall be paid
to the Director
(a) in, or beginning in, the calendar year following the calendar year in
which the Director ceases to be a Director of the Fund, or
(b) in, or beginning in, the calendar year following the earlier of the
calendar year in which the Director ceases to be a Director of the
Fund or attains age 70,
and shall be paid
(c) in a lump sum payable on the first day of the calendar year in which
payment is to be made, or
(d) in 10 or fewer installments, payable on the first day of each year
commencing with the calendar year in which payment is to begin, all as
the Director shall specify in making the election. If the payment is
to be made in installments, the amount of each installment shall be
equal to a fraction of the total of the amounts in the account at the
date of the payment the numerator of which shall be one and the
denominator of which shall be the then remaining number of unpaid
installments (including the installment then to be paid). If the
Director dies at any time before all amounts in the account have been
paid, such amounts shall be paid at that time in a lump sum to the
beneficiary or beneficiaries designated by the Director in writing to
receive such payments or in the absence of such a designation to the
estate of the Director.
2
<PAGE>
The Board of Directors may, in the case of an unforseeable emergency, at its
sole discretion accelerate the payment of any unpaid amount for any or all
Directors. For purposes of this paragraph, an unforseeable emergency is severe
financial hardship to the Director resulting from a sudden and unexpected
illness or accident of the Director or of a dependent (as defined in section
152(a) of the Internal Revenue Code) of the Director, loss of the Director's
property due to casualty, or other similar extraordinary and unforseeable
circumstances arising as a result of events beyond the control of the Director.
Payment due to an unforseeable emergency may not be made to the extent that such
hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of the Director's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship, or (iii) by cessation of deferrals under the Plan. Examples of what
are not considered to be unforseeable emergencies include the need to send a
Director's child to college or the desire to purchase a home. Withdrawals of
amounts because of an unforseeable emergency are only permitted to the extent
reasonably necessary to satisfy the emergency need.
6. Assignment. No deferred amount or unpaid portion thereof may be assigned or
----------
transferred by the Director except by will or the laws of descent and
distribution.
7. Withholding Taxes. The Fund shall deduct from all payments any federal,
-----------------
state or local taxes and other charges required by law to be withheld with
respect to such payments.
8. Nature of Rights; Nonalienation. A Director's rights to deferred payment
-------------------------------
under the Plan shall be solely those of an unsecured general creditor of the
Fund, and any payments by the Fund pursuant to the Plan will be made solely from
the Fund's general assets and property. The Fund will be under no obligation to
purchase, hold or dispose of any investment for the specific benefit of any
Director but, if the Fund should choose to purchase shares of any Notional Fund
in order to cover all or a portion of its obligations under the Plan, then such
investments will continue to be a part of the general assets and property of the
Fund. A Director's rights under the Plan may not be transferred, assigned,
pledged or otherwise alienated, and any attempt by the Director to do so shall
be null and void.
9. Status of Director. Nothing in the Plan nor any election hereunder shall be
------------------
construed as conferring on any Director the right to remain a Director of the
Fund or to receive fees at any particular rate.
10. Amendment and Acceleration. The Board of Directors may at any time at its
--------------------------
sole discretion amend or terminate this Plan, provided that no such amendment or
termination shall adversely affect the right of Directors to receive deferred
amounts credited to their account.
11. Administration. The Plan shall be administered by the President or by such
--------------
person or persons as the President may designate to carry out administrative
functions hereunder. The President shall have complete discretion to interpret
and administer the Plan in accordance with its terms, and his determinations
shall be binding on all persons.
Amended as of March 19, 1998
EXHIBIT A
SELIGMAN INVESTMENT COMPANIES
3
<PAGE>
DEFERRED COMPENSATION PLAN
ELECTION FORM
Pursuant to the Deferred Compensation Plan for Directors, as amended as of
March 19, 1998, (the "Plan") adopted by each of the Seligman Investment
Companies (the "Funds"), I hereby elect to have ___% of my annual retainer fees
and ___% of my meeting fees for service to the Funds deferred as provided in the
Plan. This election will take effect at such time as is provided in section 1
of the Plans, and shall continue in effect until terminated in writing, any such
termination to take effect of the first day of the next calendar year beginning
after receipt of the notice of termination.
The Deferred Compensation Plan Return Designation Form attached hereto
indicates the percentage of each of the above amounts that should earn the
designated returns. Such designations shall remain in effect until changed by
submission of a new form as provided in the Plan.
All amounts deferred with respect to any Fund and the earnings thereon made
pursuant to any election by me shall be credited to an account for my benefit
and shall be paid to me:
Check (a) or (b)
(a) in, or beginning in, the calendar year following the
------------ calendar year in which I cease to be a director of
the Fund, or
(b) in, or beginning in, the calendar year following the
------------ earlier of the calendar year in which I cease to be a
director of the Fund or attain age 70,
and shall be paid
Check (c) or (d)
(c) in a lump sum payable on the first day of the
------------ calendar year in which payment is to be made, or
(d) in 10 or fewer installments, payable on the first day
------------ of each year commencing with the calendar year in
which payment is to begin.
If (d) is selected, enter number of annual installments _________.
If the payment is to be made in installments, the amount of each
installment shall be equal to a fraction of the total of the amounts in the
account at the date of the payment the numerator of which shall be one and the
denominator of which shall be the then remaining number of unpaid installments
(including the installment then to be paid). If I die at any time before all
amounts in the account have been paid, such amounts shall be paid at that time
in a lump sum to the beneficiary or beneficiaries designated by me on the
attached Beneficiary Designation Form or in the absence of such a designation to
my estate.
- ----------------------------- ------------------------------
Date Signature
4
<PAGE>
EXHIBIT B
DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM
I hereby designate the following beneficiary or beneficiaries to receive at my
death the amounts held in my Deferred Payment Accounts from my participation in
the Deferred Compensation Plans for Directors/Trustees of all registered
investment companies advised by J. & W. Seligman & Co. Incorporated for which I
serve as a director or trustee (the "Plans").
<TABLE>
<CAPTION>
A. PRIMARY BENEFICIARY(IES)
<S> <C>
1. Name: % Share:
--------------------------------------------------- ------------------------------------------------
Address:
---------------------------------------------------------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------------------ ------------ -----------------------------
Trustee Name and Date (if beneficiary is a trust):
---------------------------------------------------------------------------
Trustee of Trust:
-------------------------------------------------------------------------------------------------------------
2. Name: % Share:
--------------------------------------------------- -------------------------------------------------
Address:
---------------------------------------------------------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------------------ ------------ -----------------------------
Trustee Name and Date (if beneficiary is a trust):
---------------------------------------------------------------------------
Trustee of Trust:
-------------------------------------------------------------------------------------------------------------
B. CONTINGENT BENEFICIARY(IES)
1. Name: % Share:
--------------------------------------------------- -------------------------------------------------
Address:
---------------------------------------------------------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------------------ ------------ -----------------------------
Trustee Name and Date (if beneficiary is a trust):
---------------------------------------------------------------------------
Trustee of Trust:
-------------------------------------------------------------------------------------------------------------
2. Name: % Share:
--------------------------------------------------- -------------------------------------------------
Address:
---------------------------------------------------------------------------------------------------------------------
Relationship: DOB: Social Security #:
------------------------------ ------------ -----------------------------
Trustee Name and Date (if beneficiary is a trust):
---------------------------------------------------------------------------
Trustee of Trust:
-------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
I understand that I may revoke or amend the above designation at any time. I
understand that payment will be made to my Contingent Beneficiary(ies) only if
there is no surviving Primary Beneficiary(ies). I further understand that if I
am not survived by any Primary or Contingent Beneficiaries, payment will be made
to my estate as set forth under the Plans.
- --------------------------------- -----------------------------------
Date Signature
-----------------------------------
Participant's Name Printed
6
<PAGE>
EXHIBIT C
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLANS
RETURN DESIGNATION FORM
I elect to have my deferred compensation for all registered investment companies
advised by J. & W. Seligman & Co. Incorporated for which I serve as a Director
or Trustee deemed to be invested as specified below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
% Allocation
% Allocation for accumulated
for future fees balances
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
At the prevailing three-month U.S. Treasury Bill Rate
- ------------------------------------------------------------------------------------------------------------
Seligman Capital Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Seligman Cash Management Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Seligman Common Stock Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Seligman Communications and Information Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Seligman Frontier Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Emerging Markets Growth Fund
- ------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Growth Opportunities Fund
- ------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Smaller Companies Fund
- ------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Technology Fund
- ------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson International Fund
- ------------------------------------------------------------------------------------------------------------
Seligman High Income Fund Series -
Seligman High-Yield Bond Series
- ------------------------------------------------------------------------------------------------------------
Seligman High Income Fund Series -
Seligman U.S. Government Securities Series
- ------------------------------------------------------------------------------------------------------------
Seligman Income Fund, Inc.
- ------------------------------------------------------------------------------------------------------------
Seligman Value Fund Series, Inc. -
Seligman Large-Cap Value Fund
- ------------------------------------------------------------------------------------------------------------
Seligman Value Fund Series, Inc. -
Seligman Small-Cap Value Fund
- ------------------------------------------------------------------------------------------------------------
Tri-Continental Corporation
- ------------------------------------------------------------------------------------------------------------
Total 100% 100%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
I acknowledge that I may amend this Return Designation in the manner, and
at such time as permitted, under the Plans. Furthermore, I acknowledge that in
certain circumstances, and pursuant to Section 4 of the Plans, the President may
at his discretion, and upon notice to me, disregard the designations made above
and cause all or a portion of my Deferred Account to receive a return equal to
the prevailing three-month U.S. Treasury Bill Rate.
7
<PAGE>
- ---------------------- ----------------------------------
Date Signature
8
<PAGE>
EXHIBIT 99.11
CONSENT OF INDEPENDENT AUDITORS
Seligman Common Stock Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 76 to Registration
Statement No. 2-10835 of our report dated January 30, 1998, appearing in the
Annual Report to Shareholders for the year ended December 31, 1997, which is
incorporated by reference in the Statement of Additional Information , which is
included in such Registration Statement, and to the references to us under the
captions "Financial Highlights" in the Prospectus and "General Information" in
the Statement of Additional Information, which are also included in such
Registraton Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 24, 1998
<PAGE>
EXHIBIT 99.24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN COMMON
STOCK FUND, INC., a Maryland corporation, which proposes to file with the
Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 1st day of April, 1998.
/s/Richard R. Schmaltz (L.S.)
------------------------
Richard R. Schmaltz
<PAGE>
EXHIBIT 99-24(b)14(f)
SEP Simplified Employee Pension Plan
PLAN ADOPTION AGREEMENT
- --------------------------------------------------------------------------------
SECTION 1 - EMPLOYER INFORMATION
- --------------------------------------------------------------------------------
Name of Employer______________________________________________________________
Address_______________________________________________________________________
_______________________________________________________________________
City____________________________________________ State_________ Zip___________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Telephone Federal Tax Income Tax Plan
Identification Number Year End Year End
- --------------------------------------------------------------------------------
(month)(day) (month)(day)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION 2 - EFFECTIVE DATES Check and complete Option A or B
- --------------------------------------------------------------------------------
[ ] Option A: This is the initial adoption of a Simplified Employee Pension
plan by the Employer.
The Effective Date of this Plan is________________________.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
[ ] Option B: This is an amendment and restatement of an existing Simplified
Employee Pension plan (a Prior Plan).
The Prior Plan was initially effective on________________.
The Effective Date of this amendment and restatement is_____.
NOTE: The effective date is usually the first day of the Plan
Year in which this Adoption Agreement is signed.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION 3 - ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
- -------------------------------------------------------------------------------
PART A. Service Requirement: An Employee will be eligible to become a
Participant in the Plan after having performed Service for the
Employer during at least_________ (enter 0, 1, 2, or 3) of the
immediately preceding 5 Plan Years. NOTE: If left blank, the
Service Requirement will be deemed to be 0.
PART B. Age Requirement: An Employee will be eligible to become a Participant
in the Plan after attaining age____(no more than 21).
NOTE: If left blank, it will be deemed there is no age requirement
for eligibility.
PART C. Class of Employees Eligible to Participate: All Employees shall be
eligible to become a Participant in the Plan, except the following
(if checked):
[ ] Certain Employees covered by a collective bargaining agreement and
nonresident aliens, as described in Section 3.02 of the Plan.
[ ] Those Employees who have received less than $300 (indexed for cost
of living increases in accordance with Section 408(k)(8) of the
Code) of Compensation from the Employer during the Plan Year.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION 4 - EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
- --------------------------------------------------------------------------------
PART A. Contribution Formula: For each Plan Year the Employer will contribute
an amount to be determined from year to year.
PART B. Allocation Formula: Check Option 1 or 2
Option 1: [ ] Pro Rata Formula. The Employer Contribution for each Plan
Year shall be allocated to the IRA of each Participant in
the same proportion as such Participant's Compensation
(not in excess of $200,000, indexed for cost of living
increases in accordance with Section 408(k)(8) of the
Code) for the Plan Year bears to the total Compensation of
all Participants for such year. The amount allocated to
each Participant's IRA shall be limited to the lesser of
15 percent of the first $200,000 (indexed) of the
Participant's Compensation or $30,000.
Option 2: [ ] Integrated Formula. Employer Contributions shall be
allocated in the manner described in Section 4.01(B) of
the Plan.
For purposes of the integrated formula, the integration
level shall be (Choose one):
Option 1: [ ] The Taxable Wage Base (TWB)
Option 2: [ ] _______% of the TWB
NOTE: If no box is checked, the integration
level shall be the Taxable Wage Base.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION 5 - EMPLOYER SIGNATURE PROTOTYPE SPONSOR
- --------------------------------------------------------------------------------
_________________________________________ _____________________________
(Signature for Employer) (Name of Prototype Sponsor)
_________________________________________ _____________________________
(Date Signed) (Address)
_________________________________________ _____________________________
(Type Name) (Address)
Note to Employer: Before signing this _____________________________
Adoption Agreement, you should obtain (City, State, Zip)
the advice of a qualified attorney and
tax advisor regarding its completion _____________________________
and the legal and tax implications of (Telephone Number)
adopting this Plan.
- ------------------------------------------------------------------------------
<PAGE>
SEP
PLAN
SIMPLIFIED EMPLOYEE PENSION PLAN
BASIC PLAN DOCUMENT
________________________________________________________________________________
SECTION ONE ESTABLISHMENT AND PURPOSE OF PLAN
1.01 PURPOSE: The purpose of this Plan is to provide, in accordance
with its provisions, a Simplified Employee Pension Plan providing
benefits upon retirement for the individuals who are eligible to
participate hereunder.
1.02 INTENT TO QUALIFY: It is the intent of the Employer that this
Plan shall be for the exclusive benefit of its Employees and shall
qualify for approval under Section 408(k) of the Internal Revenue
Code, as amended from time to time (or corresponding provisions of
any subsequent Federal law at that time in effect). In case of
any ambiguity, it shall be interpreted to accomplish such result.
It is further intended that it comply with the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA) as amended
from time to time.
1.03 WHO MAY ADOPT An employer who has ever maintained a defined
benefit plan which is now terminated may not participate in this
prototype Simplified Employee Pension Plan. If, subsequent to
adopting this Plan, any defined benefit plan of the Employer
terminates, the employer will no longer participate in this
prototype plan and will be considered to have an individually
designed plan.
1.04 USE WITH IRA This prototype Simplified Employee Pension Plan
must be used with an Internal Revenue Service model IRA (Form 5305
or Form 5305-A) or an Internal Revenue Service approved master or
prototype IRA.
SECTION TWO DEFINITIONS
2.01 ADOPTION AGREEMENT Means the document executed by the Employer
through which it adopts the Plan and thereby agrees to be bound by
all terms and conditions of the Plan.
2.02 CODE Means the Internal Revenue Code of 1986 as amended.
2.03 COMPENSATION Compensation for the purposes of the $300 limit of
Section 408(k)(2)(C) of the Code shall be defined as Section
414(q)(7) Compensation.
For all other purposes, Compensation shall mean all of a
Participant's wages as defined in Section 3401(a) of the Code for
the purposes of income tax withholding at the source (that is, W-2
wages) but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception
for agricultural labor in Section 3401(a)(2) of the Code).
For any Self-Employed Individual covered under the Plan,
Compensation will mean Earned Income.
Compensation shall include only that Compensation which is
actually paid to the Participant during the Plan Year.
Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
The annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed $200,000. This
limitation shall be adjusted by the Secretary at the same time and
in the same manner as under Section 415(d) of the Code, except the
dollar increase in effect on January 1 of any calendar year is
effective for years beginning in such calendar year and the first
adjustment to the $200,000 limitation is effected on January 1,
1990. If a Plan determines Compensation on a period of time that
contains fewer than 12 calendar months, then the annual
Compensation limit is an amount equal to the annual Compensation
limit for the calendar year in which the compensation period
begins multiplied by the ratio obtained by dividing the number of
full months in the period by 12.
<PAGE>
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Employee taken into account under
the Plan shall not exceed the OBRA '93 annual Compensation limit.
The OBRA '93 annual Compensation limit is $150,000, as adjusted by
the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-
of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the
OBRA '93 annual Compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the OBRA '93 annual Compensation limit set
forth in this provision.
2.04 EARNED INCOME Means the net earnings from self-employment in
the trade or business with respect to which the Plan is
established, for which personal services of the individual are a
material income-producing factor. Net earnings will be determined
without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by
contributions by the Employer to a qualified plan or to a
Simplified Employee Pension Plan to the extent deductible under
Section 404 of the Code.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for taxable
years beginning after December 31, 1989.
2.05 EFFECTIVE DATE Means the date the Plan becomes effective as
indicated in the Adoption Agreement.
2.06 EMPLOYEE Means any person who is a natural person employed by
the Employer as a common law employee and if the Employer is a
sole proprietorship or partnership, any Self-Employed Individual
who performs services with respect to the trade or business of the
Employer. Further, any employee of any other employer required to
be aggregated under Section 414(b), (c), (m), or (o) of the Code
and any leased employee required to be treated as an employee of
the Employer under Section 414(n) of the Code shall also be
considered an Employee.
2.07 EMPLOYER Means any corporation, partnership or sole
proprietorship named in the Adoption Agreement and any successor
who by merger, consolidation, purchase or otherwise assumes the
obligations of the Plan. A partnership is considered to be the
Employer of each of the partners and a sole proprietorship is
considered to be the Employer of the sole proprietor.
2.08 EMPLOYER CONTRIBUTION Means the amount contributed by the
Employer to this Plan.
2.09 IRA Means the designated Individual Retirement Account or
Individual Retirement Annuity, which satisfies the requirements of
Section 408 of the Code, and which is maintained by a Participant
with the Prototype Sponsor (unless the Prototype Sponsor allows
Participants to maintain their IRAs with other organizations).
2.10 PARTICIPANT Means any Employee who has met the participation
requirements of Section 3.01 and who is or may become eligible to
receive an Employer Contribution.
2.11 PLAN Means this plan document plus the corresponding Adoption
Agreement as completed and signed by the Employer.
2.12 PLAN YEAR Means the 12 consecutive month period which coincides
with the Employer's taxable year or such other 12 consecutive
month period as is designated in the Adoption Agreement.
2.13 PRIOR PLAN Means a plan which was amended or replaced by
adoption of this plan document, as indicated in the Adoption
Agreement.
2.14 PROTOTYPE SPONSOR Means the entity specified in the Adoption
Agreement which sponsors this prototype Plan.
<PAGE>
2.15 SELF-EMPLOYED INDIVIDUAL Means an individual who has Earned
Income for a Plan Year from the trade or business for which the
Plan is established; also, an individual who would have had Earned
Income but for the fact that the trade or business had no net
profits for the Plan Year.
2.16 SERVICE Means the performance of duties by an Employee for the
Employer, for any period of time, however short, for which the
Employee is paid or entitled to payment. When the Employer
maintains the Plan of a predecessor employer, an Employee's
Service will include his or her service for such predecessor
employer.
2.17 TAXABLE WAGE BASE Means the maximum amount of earnings which
may be considered wages for a year under Section 3121(a)(1) of the
Code in effect as of the beginning of the Plan Year.
SECTION THREE ELIGIBILITY AND PARTICIPATION
3.01 ELIGIBILITY REQUIREMENTS Except for those Employees excluded
pursuant to Section 3.02, each Employee of the Employer who
fulfills the eligibility requirements specified in the Adoption
Agreement shall, as a condition for further employment, become a
Participant. Each Participant must establish an IRA with the
Prototype Sponsor to which Employer Contributions under this Plan
will be made.
3.02 EXCLUSION OF CERTAIN EMPLOYEES If the Employer has so indicated
in the Adoption Agreement, the following Employees shall not be
eligible to become a participant in the Plan: (a) Those Employees
included in a unit of Employees covered by the terms of a
collective bargaining agreement, provided retirement benefits were
the subject of good faith bargaining; and (b) those Employees who
are nonresident aliens, who have received no earned income from
the Employer which constitutes earned income from sources within
the United States.
3.03 ADMITTANCE AS A PARTICIPANT
A. PRIOR PLAN - If this Plan is an amendment or continuation of a
Prior Plan, each Employee of the Employer who immediately
before the Effective Date was a participant in said Prior Plan
shall be a Participant in this Plan as of said date.
B. NOTIFICATION OF ELIGIBILITY - The Employer shall notify each
Employee who becomes a Participant of his or her status as a
Participant in the Plan and of his or her duty to establish an
IRA with the Prototype Sponsor to which Employer Contributions
may be made.
C. ESTABLISHMENT OF AN IRA - If a Participant fails to establish
an IRA for whatever reason, the Employer may execute any
necessary documents to establish an IRA on behalf of the
Participant.
3.04 DETERMINATIONS UNDER THIS SECTION The Employer shall determine
the eligibility of each Employee to be a Participant. This
determination shall be conclusive and binding upon all persons
except as otherwise provided herein or by law.
3.05 LIMITATION RESPECTING EMPLOYMENT Neither the fact of the
establishment of the Plan nor the fact that a common-law employee
has become a Participant shall give to that common-law employee
any right to continued employment; nor shall either fact limit the
right of the Employer to discharge or to deal otherwise with a
common-law employee without regard to the effect such treatment
may have upon the Employee's rights under the Plan.
SECTION FOUR CONTRIBUTIONS AND ALLOCATIONS
4.01 EMPLOYER CONTRIBUTIONS
A. ALLOCATION FORMULA - Employer Contributions shall be allocated
in accordance with the allocation formula selected in the
Adoption Agreement. Each Employee who has satisfied the
eligibility requirements pursuant to Section 3.01 (thereby
becoming a Participant) will share in such allocation.
Employer Contributions made for a Plan Year on behalf of any
Participant shall not exceed the lesser of 15% of Compensation
or the limitation in effect under Code Section 415(c)(1)(A)
(indexed for cost of living increases in accordance with Code
Section 415(d)).
<PAGE>
B. INTEGRATED ALLOCATION FORMULA - If the Employer has selected
the integrated allocation formula in the Adoption Agreement,
then Employer Contributions for the Plan Year will be
allocated to Participants' IRA as follows:
Step 1 Employer Contributions will be allocated to each
Participant's IRA in the ratio that each Participant's
total Compensation bears to all Participants' total
Compensation, but not in excess of 3% of each
Participant's Compensation.
Step 2 Any Employer Contributions remaining after the
allocation in Step 1 will be allocated to each
Participant's IRA in the ratio that each Participant's
Compensation for the Plan Year in excess of the
integration level bears to the Compensation of all
Participants in excess of the integration level, but
not in excess of 3%.
Step 3 Any Employer Contributions remaining after the
allocation in Step 2 will be allocated to each
Participant's IRA in the ratio that the sum of each
Participant's total Compensation and Compensation in
excess of the integration level bears to the sum of
all Participants' total Compensation and Compensation
in excess of the integration level, but not in excess
of the maximum disparity rate described in the table
below.
Step 4 Any Employer Contributions remaining after the
allocation in Step 3 will be allocated to each
Participant's IRA in the ratio that each Participant's
total Compensation for the Plan Year bears to all
Participants' total Compensation for that Plan Year.
The integration level shall be equal to the Taxable Wage Base
or such lesser amount elected by the Employer in the Adoption
Agreement.
Integration Level Maximum Disparity Rate
----------------- ----------------------
Taxable Wage Base (TWB) 2.7%
More than $0 but not more than X* 2.7%
More than X* of TWB but not more than 80% of TWB 1.3%
More than 80% of TWB but not more than TWB 2.4%
*X mean the greater of $10,000 or 20% of TWB.
C. TIMING OF EMPLOYER CONTRIBUTION - Employer Contributions, if
any, made on behalf of Participants for a Plan Year shall be
allocated and deposited to the IRA of each Participant no
later than the due date for filing the Employer's tax return
(including extensions).
4.02 VESTING, WITHDRAWAL RIGHTS TO CONTRIBUTIONS All Employer
Contributions made under the Plan on behalf of Employees shall be
fully vested and nonforfeitable at all times. Each Employee shall
have an unrestricted right to withdraw at any time all or a
portion of the Employer Contributions made on his or her behalf.
However, withdrawals taken are subject to the same taxation and
penalty provisions of the Code which are applicable to IRA
distributions.
4.03 SIMPLIFIED EMPLOYER REPORTS The Employer shall furnish reports,
relating to contributions made under the Plan, in the time and
manner and containing the information prescribed by the Secretary
of the Treasury, to Participants. Such reports shall be furnished
at least annually and shall disclose the amount of the
contribution made under the Plan to the Participant's IRA.
SECTION FIVE AMENDMENT OR TERMINATION OF PLAN
5.01 AMENDMENT BY EMPLOYER The Employer reserves the right to amend
the elections made or not made on the Adoption Agreement by
executing a new Adoption Agreement and delivering a copy of the
same to the Prototype Sponsor. The Employer shall not have the
right to amend any nonelective provision of the Adoption Agreement
nor the right to amend provisions of this plan document. If the
Employer adopts an amendment to the Adoption Agreement or plan
document in violation of the preceding sentence, the Plan will be
deemed to be an individually designed plan and may no longer
participate in this prototype Plan.
5.02 AMENDMENT BY PROTOTYPE SPONSOR By adopting this Plan, the
Employer delegates to the Prototype Sponsor the power to amend or
replace the Adoption Agreement or the Plan to conform them to the
provisions of any law, regulations or administrative rulings
pertaining to Simplified Employee
<PAGE>
Pensions and to make such other changes to the Plan, which, in the
judgement of the Prototype Sponsor, are necessary or appropriate.
The Employer shall be deemed to have consented to all such
amendments; provided however, that no changes may be made without
the consent of the Employer if the effect would be to
substantially change the costs or benefits under the Plan. The
Prototype Sponsor shall not have the obligation to exercise or not
to exercise the power delegated to it nor shall the Prototype
Sponsor incur liability of any nature for any act done or failed
to be done by the Prototype Sponsor in good faith in the exercise
or nonexercise of the power delegated hereunder.
5.03 LIMITATIONS ON POWER TO AMEND No amendment by either the
Employer or the Prototype Sponsor shall reduce or otherwise
adversely affect any benefits of a Participant or Beneficiary
acquired prior to such amendment unless it is required to maintain
compliance with any law, regulation or administrative ruling
pertaining to Simplified Employee Pensions.
5.04 TERMINATION While the Employer expects to continue the Plan
indefinitely, the Employer shall not be under any obligation or
liability to continue contributions or to maintain the Plan for
any given length of time. The Employer may terminate this Plan at
any time by appropriate action of its managing body. This Plan
shall terminate on the occurrence of any of the following events:
A. Delivery to the Prototype Sponsor of a notice of termination
executed by the Employer specifying the effective date of the
Plan's termination.
B. Adjudication of the Employer as bankrupt or the liquidation or
dissolution of the Employer.
5.05 NOTICE OF AMENDMENT, TERMINATION Any amendment or termination
shall be communicated by the Employer to all appropriate parties
as required by law. Amendments made by the Prototype Sponsor
shall be furnished to the Employer and communicated by the
Employer to all appropriate parties as required by law. Any
filings required by the Internal Revenue Service or any other
regulatory body relating to the amendment or termination of the
Plan shall be made by the Employer.
5.06 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER A successor of the
Employer may continue the Plan and be substituted in the place of
the present Employer. The successor and present Employer (or if
deceased, the executor of the estate of a deceased Self-Employed
Individual who was the Employer) must execute a written instrument
authorizing such substitution and the successor must complete and
sign a new Adoption Agreement.
#419(1/94) I90
<PAGE>
STANDARD SIMPLIFIED EMPLOYEE PENSION PLAN
EMPLOYEE INFORMATION
- --------------------------------------------------------------------------------
QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
1. Q. WHAT IS A SIMPLIFIED EMPLOYEE PENSION (SEP)?
A. A SEP is a retirement income arrangement under which your employer may
contribute certain amounts to your own Individual Retirement Account or
Individual Retirement Annuity (SEP-IRA).
Your employer will provide you with a copy of the SEP Summary for
Employees containing eligibility requirements and other information
about your SEP Plan.
All amounts contributed to your SEP-IRA by your employer belong to you,
even after you discontinue employment with that employer.
2. Q. IS MY EMPLOYER REQUIRED TO MAKE CONTRIBUTIONS EACH YEAR TO THIS SEP?
A. No. Whether or not your employer makes a contribution is entirely up to
your employer. If a contribution is made under the SEP, it must be
divided among all eligible employees according to the allocation formula
your employer has selected.
3. Q. HOW WILL EMPLOYER CONTRIBUTIONS BE ALLOCATED TO MY SEP-IRA?
A. Refer to the SEP Summary for Employees to see whether your employer has
selected the pro rata formula or the integrated formula.
If your employer has selected the pro rata formula, employer
contributions on behalf of each eligible employee will be the same
percentage of compensation for all employees.
If your employer has selected the integrated formula, see Question 17.
When calculating contributions to be made to the SEP plan, an employee's
compensation above $160,000 will not be included. (This $160,000 figure
is increased by the IRS periodically based on changes in the cost of
living.)
The law prohibits your employer from making discretionary contributions
which discriminate in favor of highly compensated employees.
4. Q. WHO ARE ELIGIBLE EMPLOYEES?
A. Eligible employees are employees who have satisfied the minimum age,
service, and compensation requirements set by your employer and
specified in the SEP Summary for Employees. An employee who satisfies
those eligibility requirements is entitled to participate in the SEP .
5. Q. HOW MUCH MAY MY EMPLOYER CONTRIBUTE TO MY SEP-IRA IN ANY YEAR?
A. The amount your employer may contribute to your SEP-IRA for any year is
limited to the lesser of $30,000 or 15% of your compensation for that
year. The $30,000 limitation may be increased by the IRS for changes in
the cost of living. The compensation used to determine this limit does
not include any amount which is contributed by your employer to your
SEP-IRA. Remember, the SEP plan does not require your employer to
maintain a particular level of contributions. It is possible that for a
given year no employer contributions will be made on your behalf.
6. Q. HOW DO I TREAT MY EMPLOYER'S SEP CONTRIBUTIONS FOR MY TAXES?
A. The amount your employer contributes for years beginning after 1986 is
excludable from your gross income (subject to the $30,000 or 15% of
compensation limitation mentioned above) and is not includible as
taxable wages on your Form W-2.
7. Q. MAY I ALSO CONTRIBUTE TO MY IRA IF I AM A PARTICIPANT IN A SEP?
A. Yes. You may still contribute the lesser of $2,000 or 100% of your
compensation to an IRA. However, as a participant in a SEP, you would be
considered an active participant in an employer-maintained retirement
plan and, therefore, you may or may not be able to deduct your IRA
contribution depending upon your modified adjusted gross income and how
you file your tax return (single individual, married filing jointly,
married filing separately).
8. Q. WHAT IF I DON'T WANT A SEP-IRA?
A. Under the tax rules which apply to SEPs, for an employer to have a valid
SEP, all eligible employees must establish SEP-IRAs. Your employer may
require that you become a participant in the SEP and set up a SEP-IRA as
a condition of employment. If one or more eligible employees do not
participate and the employer attempts to maintain a SEP plan with the
remaining employees, there may be adverse tax consequences for both the
employer and the employees.
9. Q. CAN I SELECT THE FINANCIAL ORGANIZATION WHERE I SET UP THE SEP-IRA WHICH
IS TO RECEIVE THE SEP CONTRIBUTION MADE ON MY BEHALF?
A. No. For the sake of administrative ease, all SEP contributions made for
you shall be deposited into an IRA which you set up with the financial
organization which makes the SEP plan available to your employer.
10. Q. CAN I MOVE FUNDS FROM MY SEP-IRA TO ANOTHER TAX-SHELTERED IRA?
A. Yes. You can withdraw funds from your SEP-IRA and, no more than 60 days
after your receipt of the funds, place such funds into another IRA, or
SEP-IRA. This is called a "rollover" and may not be done without tax
penalty more frequently than at one-year intervals. However, there are
no restrictions on the number of times you may make "transfers" if you
arrange to have such funds transferred directly between IRA trustees (or
custodians), so that you never have possession of the funds.
11. Q. WHAT HAPPENS IF I WITHDRAW MY EMPLOYER'S CONTRIBUTIONS FROM MY SEP-IRA?
A. If you don't want to leave the employer's contribution in your SEP-IRA,
you may withdraw it at any time, but any amount withdrawn is includible
in your income and will be taxed. Also, if you take withdrawals before
you reach age 59 1/2, and those withdrawals do not satisfy a penalty
exception (e.g., due to disability), you may be subject to a 10% IRS
penalty tax.
- --------------------------------------------------------------------------------
#421 (1/98) (C) 1998 Universal Pensions, Inc., Brainerd, MN 56401
Page 1 of 2
<PAGE>
12. Q. MAY I PARTICIPATE IN A SEP EVEN THOUGH I AM COVERED BY ANOTHER PLAN?
A. Yes. You can participate in a SEP (other than a SEP which uses the IRS'
model SEP document) even though you participate in another qualified
retirement plan (such as a pension or profit sharing plan) of the same
employer. However, the combined contribution limits are subject to
certain limitations described in Section 415 of the Internal Revenue
Code. Also, if you work for several employers, you may be covered by the
SEP of one employer and a SEP or pension or profit sharing plan of
another employer.
13. Q. WHAT HAPPENS IF TOO MUCH IS CONTRIBUTED TO MY SEP-IRA IN ONE YEAR?
A. Any contribution that exceeds yearly limitations may be withdrawn
without an IRS penalty by the due date (plus extensions) for filing your
tax return (normally April 15th), but is includible in your gross
income. Excess contributions left in your SEP-IRA after that time are
subject to a 6% penalty tax per year. Withdrawals of those contributions
may be taxed as early distributions.
14. Q. DO I NEED TO FILE ANY ADDITIONAL FORMS WITH THE IRS BECAUSE I
PARTICIPATE IN A SEP?
A. No.
15. Q. IS MY EMPLOYER REQUIRED TO PROVIDE ME WITH INFORMATION ABOUT SEP-IRAS
AND THE SEP PLAN?
A. Yes. Your employer must provide you with a notice that a SEP has been
established (the SEP Summary for Employees), along with this Employee
Information Sheet, and give you a statement each year showing any
contribution to your SEP-IRA.
16. Q. IS THE FINANCIAL ORGANIZATION WHERE I MUST ESTABLISH MY SEP-IRA ALSO
REQUIRED TO PROVIDE ME WITH INFORMATION?
A. Yes. It must provide you with a disclosure statement which contains the
following information in plain, nontechnical language:
(1) the statutory requirements which relate to your SEP-IRA;
(2) the tax consequences which follow the exercise of various options
and what those options are;
(3) eligibility rules and rules on the deductibility and
nondeductibility of retirement savings;
(4) the circumstances and procedures under which you may revoke your
SEP-IRA, including the name, address, and telephone number of the
person designated to receive notice of revocation (this explanation
must be prominently displayed at the beginning of the disclosure
statement);
(5) explanations of when penalties may be assessed against you because
of specified prohibited or penalized activities concerning your
SEP-IRA; and
(6) financial disclosure information which:
(a) either projects the growth in value of your SEP-IRA under
various contribution and retirement schedules, or describes
the method of computing and allocating annual earnings and
charges which may be assessed;
(b) describes whether, and for what period the growth projections
for the plan are guaranteed, or a statement of the earnings
rate and terms on which the projection is based;
(c) states the sales commission to be charged in each year
expressed as a percentage of $1,000; and
(d) states the proportional amount of any nondeductible life
insurance which may be a feature of your SEP-IRA.
For a more complete explanation of the disclosure requirements, see
Publication 590, Individual Retirement Arrangements (IRAs), available at
most IRS offices.
In addition to this disclosure statement, the financial organization is
required to provide you with a financial statement each year. It may be
necessary to retain and refer to statements for more than one year in
order to evaluate the investment performance of the SEP-IRA and so you
will know how to report IRA distributions for tax purposes.
17. Q. MY EMPLOYER HAS INDICATED IN THE SEP SUMMARY FOR EMPLOYEES THAT EMPLOYER
CONTRIBUTIONS WILL BE ALLOCATED USING THE "INTEGRATED FORMULA." WHAT
DOES THIS MEAN AND HOW DOES IT AFFECT ME?
A. If the plan uses the integrated formula, the employer contribution for
employees who have compensation in excess of the integration level will
be a higher percentage than the contribution made for employees whose
compensation is below the integration level. The integration level is
indicated on the SEP Summary for Employees.
Allocating contributions under the integrated formula involves a four-
step process, which is explained below.
STEP 1 An amount is allocated for each eligible employee not in excess
of 3% of the employee's total compensation.
STEP 2 Eligible employees with compensation greater than the
integration level receive an allocation not in excess of 3% of
their compensation above the integration level.
STEP 3 Any employer contribution remaining after the allocation in
Step 2 is allocated pro rata to each eligible employee based on
the sum of the employee's total compensation plus his or her
compensation above the integration level. The percentage
allocated in this step cannot be more than a certain amount
which varies depending upon the integration level selected, as
described below:
<TABLE>
IF THE INTEGRATION THE MAXIMUM PERCENTAGE WHICH
LEVEL IS: CAN BE ALLOCATED IN STEP 3 IS:
------------------------------------------------------------------------------------------
<S> <C>
Taxable Wage Base (TWB) 2.7%
Not more than 20% of TWB 2.7%
More than 20% of TWB but not more than 80% of TWB 1.3%
More than 80% of TWB 2.4%
</TABLE>
STEP 4 Any employer contribution remaining after the allocation in
Step 3 is allocated pro rata to eligible employees based on
their total compensation.
EXAMPLE: The Big Apple Corporation maintains a SEP plan which
uses the integrated allocation formula. The integration level
is the taxable wage base ($68,400 for 1998). For 1998, the
company will make a contribution of $17,800. Listed below are
the qualifying participants of Big Apple and their
compensation. The chart below shows how the employer
contribution will be allocated to the SEP-IRAs of eligible
employees.
<TABLE>
<CAPTION>
TOTAL ALLOCATION AS
EMPLOYEE COMPENSATION STEP 1 STEP 2 STEP 3 STEP 4 ALLOCATION A % OF COMP.
- --------- ------------ ------ ------ ------ ------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUE $100,000 $3,000 $948 $3,553 $3,288 $10,789 10.8%
SAL 58,000 1,740 0 1,566 1,907 5,213 9.0%
SAM 20,000 600 0 540 658 1,798 9.0%
TOTAL $178,000 $5,340 $948 $5,659 $5,853 $17,800
- -------------------------------------------------------------------------------------------------------
REMAINING
TO BE
ALLOCATED $17,800 $12,460 $11,512 $5,853
- -------------------------------------------------------------------------------------------------------
</TABLE>
#421 (1/98) (C) 1998 Universal Pensions, Inc., Brainerd, MN 56401
Page 2 of 2
<PAGE>
SEP PLAN
Simplified Employee Pension Plan
SEP SUMMARY FOR EMPLOYEES
Please read together with your Employee Information Sheet.
- --------------------------------------------------------------------------------
EMPLOYER'S NAME, ADDRESS AND PHONE IRA TRUSTEE'S OR CUSTODIAN'S NAME,
ADDRESS AND PHONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ESTABLISHMENT OF SEP PLAN
- --------------------------------------------------------------------------------
Your employer has adopted a type of employee benefit plan known as a Simplified
Employee Pension (SEP) Plan. In order to become a participant in the Plan, you
must meet the Plan's eligibility requirements specified below. Once you become a
participant, you are entitled to receive a certain share of the amounts your
employer contributes to the Plan. All contributions will be deposited into a
SEP-IRA for you. Contributions made to the Plan for you are yours to keep. These
features of the Plan are explained further in the Employee Information Sheet.
The actual Plan is a complex legal document that has been written in a manner
required by the Internal Revenue Service. This document is called a SEP Summary
for Employees. It is designed to explain and summarize the important features of
the Plan. If you have any questions or need additional information about the
Plan, consult
-------------------------------------------------.
(Name of Employer Representative)
You may examine the Plan itself at a reasonable time by making arrangements with
the above mentioned representative of your employer.
- --------------------------------------------------------------------------------
ELIGIBILITY REQUIREMENTS
- --------------------------------------------------------------------------------
Employer Contributions: Your employer is not required to make contributions to
the Plan. However, if a contribution is made, your SEP-IRA will receive a share
of that contribution if you are an "eligible" employee and if you have met the
age and service requirements set forth below.
Eligible Employees: Under the SEP Plan, all employees can participate except the
classifications of employees checked below:
[ ] Those employees covered by the terms of a collective bargaining agreement (a
union agreement) where retirement benefits were negotiated and those
employees who are nonresident aliens.
[ ] Those employees who did not earn at least $300 from the employer during the
year. (This $300 figure is increased by the IRS each year based on changes
in the cost of living.)
Age Requirement: You must be at least ________ years old.
Service Requirement: You must have worked for your employer in at least
_______ (must be 0, 1, 2 or 3) of the immediately preceding 5 years.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTRIBUTION FORMULA
- --------------------------------------------------------------------------------
Any employer contribution will be allocated to your SEP-IRA in accordance with
the formula selected below (check one):
[ ] Pro Rata Formula: Each eligible employee will receive a pro rata portion of
the employer contribution equal to the ratio of his or her compensation to
the total compensation of all eligible employees. Thus, the contribution
will be the same percentage of compensation for all employees.
[ ] Integrated Formula: Integration allows contribution percentages among
eligible employees to vary. Details about integration are provided in your
Employee Information Sheet. The integration level is (check one):
[ ] The Taxable Wage Base (TWB)
[ ] ________% of the TWB
- --------------------------------------------------------------------------------
SEP-IRA WITH PLAN SPONSOR
- --------------------------------------------------------------------------------
Under this SEP plan, you must maintain your SEP-IRA at the following financial
organization subject to the following terms:
Name and Address of Financial Organization: ___________________________________
___________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please refer to the Disclosure Statement and other documentation given to you by
the above named financial organization for the other terms and conditions which
apply to your SEP-IRA.
- --------------------------------------------------------------------------------
#422 (12/90) I90 (C)1996 Universal Pensions, Inc., Brainerd, MN 56401
Page 1 of 2
<PAGE>
SIMPLIFIED EMPLOYEE PENSION PLAN
SEP SUMMARY FOR EMPLOYEES
Please read together with your Employee Information Sheet.
- --------------------------------------------------------------------------------
EMPLOYER'S NAME, ADDRESS AND PHONE IRA TRUSTEE'S OR CUSTODIAN'S NAME,
ADDRESS AND PHONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IRA INVESTMENT OPTIONS WITH THE PLAN SPONSOR
- --------------------------------------------------------------------------------
FIXED/ MINIMUM
INVESTMENT DESCRIPTION RATE TERM VARIABLE DEPOSIT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please refer to the Disclosure Statement and other documentation for the other
terms and conditions which apply to your SEP-IRA.
- --------------------------------------------------------------------------------
#422 (12/90) I90 (C)1996 Universal Pensions, Inc., Brainerd, MN 56401
Page 2 of 2
<PAGE>
SELIGMAN EDUCATION IRA
Disclosure Statement Seligman
================================================================================
SPECIAL NOTE
This Disclosure Statement describes the rules applicable to Education IRAs
beginning January 1, 1998. Education IRAs are a new kind of IRA available for
the first time in 1998. Contributions to an Education IRA for 1997 are not
permitted. Contributions to an Education IRA are not tax-deductible to the
person making the contribution, but withdrawals that meet certain requirements
are not subject to federal income taxes when received. This makes the dividends
on and growth of the investments held in an Education IRA tax-free for federal
income tax purposes if the requirements are met.
Traditional IRAs, which have existed since 1975, are still available. New Roth
IRAs are also available after January 1, 1998. Both Traditional IRAs and Roth
IRAs provide a tax-advantaged savings vehicle that can be used to save for
higher education expenses as well as other needs, including retirement. This
Disclosure Statement does not describe either Roth or Traditional IRAs. This
Disclosure Statement also does not describe IRAs established in connection with
a SIMPLE IRA program or a Simplified Employee Pension (SEP) plan maintained by
your employer. If you wish to receive information about these IRA products,
including forms and explanatory materials, call 800-445-1777 or write the
address listed at the end of this Disclosure Statement.
ESTABLISHING AN EDUCATION IRA
This Disclosure Statement contains information about an Education Individual
Retirement Custodial Account with Investors Fiduciary Trust Company as
Custodian. An Education IRA provides several tax benefits. While contributions
to an Education IRA are not deductible to the contributor, dividends on and
growth of the assets held in the Education IRA are not subject to federal income
tax. Withdrawals from an Education IRA are excluded from income for federal
income tax purposes if used for qualifying higher education expenses (described
below). State income tax treatment of your Education IRA may differ from federal
treatment; ask your state tax department or your personal tax advisor for
details.
Regular annual contributions to Education IRAs must be made in cash, on behalf
of a designated individual (the "Student") who is less than 18 years old at the
time of the contribution, and rollover contributions must be made on behalf of a
Student who is less than age 30 at the time of the rollover. The IRA trustee or
custodian must be a bank or other person who has been approved by the Secretary
of the Treasury. Contributions may not be invested in life insurance or be
commingled with other property except in a common trust or investment fund. The
Student's interest in the account must be non-forfeitable at all times. Upon the
death of the Student, any balance undistributed in the account shall be
distributed to the Student's estate within 30 days of the date of death. You may
obtain further information on Education IRAs from any district office of the
Internal Revenue Service.
The Donor may revoke a newly established Education IRA at any time within seven
days after the date on which he or she receives this Disclosure Statement. An
Education IRA established more than seven days after the date of receipt of this
Disclosure Statement may not be revoked. To revoke the Education IRA, mail or
deliver a written notice of revocation to the Custodian at the address which
appears at the end of this Disclosure Statement. Mailed notice will be deemed
given on the date that it is postmarked (or, if sent by certified or registered
mail, on the date of certification or registration). If the Education IRA is
revoked within the seven-day period, the Donor will receive payment of the
entire amount originally contributed into the Education IRA, without adjustment
for such items as sales charges, administrative expenses or fluctuations in
market value.
An Education IRA is established on behalf of the Student and is controlled by
the Student (or Parent). The Donor making a contribution, if not the Student or
Parent, may designate the initial investments in the Education IRA Account, but
shall have no further rights, interests or obligations related to the Education
IRA, except that he or she can make additional contributions, subject to the
limits described below.
The Account Application must be signed by the Donor, and any and all forms,
applications, certifications and other documents must be signed by the Parent,
if the Student has not yet reached the age of majority recognized by the laws of
the state of Student's residence ("age of majority").
While the Student remains a minor, the Parent identified in the Account
Application will exercise all of the rights and responsibilities of the Student,
including the selection and exchange of Fund shares in which the Education IRA
is invested. The Custodian's acceptance of the contribution to this Education
IRA account is conditioned on agreement by the Parent of a minor Student to be
bound by all of the terms and conditions of this Disclosure Agreement and the
provisions set out in Articles I-XI of the Custodial Agreement. The Student may
notify the Custodian in writing that he or she has reached the age of majority
in the state where the Student then resides (and provide any documentation the
Custodian may request verifying the fact that he or she has attained such age).
Upon receiving such request (and documentation, if requested), the Custodian
will recognize the Student as the individual controlling the account with power
to exercise all rights and responsibilities related to the Education IRA, and
the Parent will thereafter have no control or power over the account.
Note: The Custodian is under no obligation to determine whether any Parent
actually holds the legal right and capacity to direct or control a Student's
Education IRA account.
1
<PAGE>
CONTRIBUTIONS
WHO MAY CONTRIBUTE TO AN EDUCATION IRA?
Starting in 1998, anyone, including the Student, may open and contribute to an
Education IRA established on the Student's behalf, as long as the Student is
less than 18 at the time of the contribution. The person making the contribution
- -- the "Donor" -- can be anyone, even the Student; the Donor does not have to be
related to the Student.
ARE CONTRIBUTIONS TO AN EDUCATION IRA TAX DEDUCTIBLE?
Contributions to an Education IRA are not deductible. This is a major difference
between Education IRAs and Regular IRAs.
WHEN CAN CONTRIBUTIONS BE MADE TO AN EDUCATION IRA?
A Donor may make a contribution to an Education IRA for a
particular calendar year by the end of that year (December 31). (Note: Unlike
Regular IRAs or Roth IRAs, contributions for a particular year may not be made
by the due date of the Donor's federal income tax return for that year.)
HOW MUCH MAY BE CONTRIBUTED TO AN EDUCATION IRA?
Donors may contribute up to $500 in a calendar year for the benefit of any one
Student. For example, if Uncle Joe contributes $300 to a Seligman Education IRA
on behalf of Bobby, his nephew, all other contributions made on behalf of Bobby
by Uncle Joe or any other potential Donor (such as parents or grandparents) to
this or any other Education IRA, are limited to $200 for that tax year.
Note: The Custodian is under no obligation, nor can it be, to determine whether
the maximum limit for any Student has been reached. It is the Parent's
responsibility to consult with the other parent or guardian to determine whether
the maximum limits will be exceeded.
For Donors with high income levels, the contribution limits may be reduced below
$500. This depends upon the Donor's filing status and the amount of his or her
Modified Adjusted Gross Income (MAGI). The following table shows how the
contribution limits are restricted.
HOW ARE THE LIMITS CALCULATED FOR MAGI IN THE "REDUCED CONTRIBUTION" RANGE?
If the Donor's MAGI falls in the reduced contribution range, that Donor's
contribution limit must be calculated. To do this, multiply the normal
contribution limit ($500) by a fraction. The numerator is the amount by which
MAGI exceeds the lower limit of the reduced contribution range ($95,000 if
single, or $150,000 if married filing jointly). The denominator is $15,000
(single taxpayers) or $10,000 (married filing jointly). Subtract this from the
normal limit.
For example, assume that a Donor's MAGI for the year is $157,555 and she is
married, filing jointly. The Education IRA contribution limit would be
calculated as follows:
1. The amount by which MAGI exceeds the lower limit of the reduced contribution
deductible range:
($157,555 - $150,000) = $7,555
2. Is divided by $10,000: $ 7,555
---------
$10,000 = 0.7555
3. Multiply this by $500: 0.7555 x $500 = $377.75
4. Subtract this from the $500 contribution limit:
($500 - $377.75) = $122.25
This is the contribution limit.
Of course, if one Donor is prevented by these rules from making a full $500
contribution on behalf of a Student, another person (who is not the Donor's
spouse) may be willing to contribute so that the full $500 per year that the law
allows will be added to the Student's Education IRA.
Note: Any amount contributed to the Education IRA above the maximum is
considered an "excess contribution," which is subject to excise tax of 6% for
each year it remains in the Education IRA.
HOW DO I DETERMINE MAGI?
For most taxpayers, MAGI is the same as Adjusted Gross Income (AGI), which is
their gross income minus those deductions which are available to all taxpayers
even if they don't itemize. (Instructions to calculate AGI are provided with
income tax
EDUCATION IRA CONTRIBUTION LIMITS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
If Donor is a Single Taxpayer
or Married Filing Separately Married Filing Jointly Then Donor May Make
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Modified Up to $95,000 Up to $150,000 Full Contribution
Adjusted Gross
Income (MAGI)
Level More than $95,000 but More than $150,000 Reduced Contribution
less than $110,000 but less than $160,000 (see explanation below)
$110,000 and up $160,000 and up Zero (No Contribution)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Form 1040 or 1040A.) Modified AGI is simply regular AGI adjusted to include
certain amounts earned abroad. If a Donor has not earned income in any foreign
country, Guam, American Samoa, the Northern Mariana Islands or Puerto Rico,
normal AGI should be used in the calculations above.
ARE THERE ANY OTHER LIMITS ON THE AMOUNT THAT MAY BE CONTRIBUTED TO AN EDUCATION
IRA?
A Donor cannot contribute to an Education IRA in any year in which a
contribution is made to a state prepaid tuition plan for the same Student. (A
state tuition plan allows taxpayers to pay their child's tuition in advance.)
Any amount contributed to an Education IRA in the same year that a contribution
is made to a state prepaid tuition plan on behalf of the Student is an excess
contribution, subjecting the Student (or the Parent, if the Student is under 14)
to the 6% penalty tax.
HOW ARE EXCESS CONTRIBUTIONS CORRECTED?
Excess contributions may be corrected without paying a 6% penalty. To do so, the
excess and any earnings on the excess must, in accordance with directions from
the Student (or Parent) to the Custodian, be paid to the Student before the due
date (including extensions) for filing his or her federal income tax return for
the year for which the excess contribution was made. The earnings must be
included in the Student's income for the tax year for which the contribution was
made.
One other way to eliminate excess contributions (and possibly avoid the 6%
excess contribution penalty tax) is to contribute an amount out of the Education
IRA to a qualified state tuition program, if there is one available to receive
the contribution from the Education IRA. This must be done in the same year that
the excess contribution was made.
WHAT HAPPENS IF THE EXCESS CONTRIBUTION IS NOT CORRECTED BY THE TAX RETURN DUE
DATE?
Any excess contribution withdrawn after the tax return due date (including any
extensions) for the year for which the contribution was made will subject the
Student to the 6% excise tax.
Unless an exception applies, the excess contribution and any earnings on it
withdrawn after tax filing time will be includable in the Student's (or the
Parent's, if the Student is under 14) taxable income and may be subject to a 10%
withdrawal penalty.
INVESTMENTS
HOW ARE EDUCATION IRA CONTRIBUTIONS INVESTED?
The Donor indicates the initial investment elections on the Account Application.
Thereafter, the Student controls the investment by making choices among the
available Fund(s) in accordance with the Fund rules. Investments must be in one
or more of the Fund(s) available from time to time as listed in the Account
Application for the Education IRA or in an investment selection form provided
with the Education IRA Account Application from the Fund Distributor or Service
Company. The investments of your Education IRA are directed by giving the
investment instructions to the Distributor or Service Company for the Fund(s).
Since the Student controls the investment of the Education IRA, he or she is
responsible for the investment results achieved; neither the Custodian, the
Distributor nor the Service Company has any responsibility for any loss or
diminution in value occasioned by your exercise of investment control.
Transactions for the Education IRA will generally be at the applicable public
offering price or net asset value for shares of the Fund(s) involved next
established after the Distributor or the Service Company (whichever may apply)
receives proper investment instructions from you; consult the current prospectus
for the Fund(s) involved for additional information.
Before making any investment, read carefully the current prospectus for any Fund
under consideration as an investment for the Education IRA. The prospectus will
contain information about the Fund's investment objectives and policies, as well
as any minimum initial investment or minimum balance requirements and any sales,
redemption or other charges.
Because you control the selection of investments your Education IRA and because
mutual fund shares fluctuate in value, the growth in value of the Education IRA
cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF THE EDUCATION IRA ASSETS?
The tax-exempt status of the Education IRA will be revoked if you engage in any
of the prohibited transactions listed in Section 4975 of the tax code. Upon such
revocation, the Education IRA is treated as distributing its assets to the
Student. The taxable portion of the amount in the Education IRA will be subject
to income tax unless the requirements for a tax-free withdrawal are satisfied
(see below). Also, you may be subject to a 10% penalty tax on the taxable
amount.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets in your
Education IRA. Some examples of prohibited transactions are:
. Direct or indirect sale or exchange of property between you and your
Education IRA.
. Transfer of any property from your Education IRA to yourself or from
yourself to your Education IRA.
The Education IRA could lose its tax exempt status if you use all or part of
your interest in your Education IRA as security for a loan or borrow any money
from your Education IRA. Any portion of your Education IRA used as security for
a loan will be treated as a distribution in the year in which the money is
borrowed. This amount may be taxable and you may also be subject to the 10%
premature withdrawal penalty on the taxable amount.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY EDUCATION IRA?
You may make a withdrawal from the Education IRA at any time. If the withdrawal
meets the requirements discussed below, it is tax-free. This means that no
federal income tax is due, even though the withdrawal includes dividends or
gains on the Fund shares while held in the Education IRA.
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WHEN ARE DISTRIBUTIONS MANDATORY?
Any amount remaining in the account as of your 30th birthday must be distributed
to you, and any dividends or gains will be then subject to income tax and
penalty (unless an exception applies.) You can avoid these tax implications if,
before you reach age 30, you roll-over or transfer your account balance, or
change the designated beneficiary of your Education IRA, to another member of
your family. (See Transfers/Rollovers below.)
If you die before withdrawing your entire account balance, your Education IRA
must be distributed to your estate within 30 days after your death.
WHAT ARE THE REQUIREMENTS FOR A TAX-FREE WITHDRAWAL?
To be tax-free, a withdrawal from your Education IRA must meet two requirements.
First, the amounts withdrawn must be made to cover the cost of "qualified higher
education expenses" incurred by you while attending an "eligible educational
institution."
THESE TWO IMPORTANT TERMS ARE DEFINED AS FOLLOWS:
. Qualified Higher Education Expenses for all students include expenses for
tuition, books, supplies, and equipment required for enrollment or
attendance at an eligible educational institution. For students attending
an eligible educational institution at least half time, qualified higher
education expenses also include room and board. (Note: These costs will
generally be the school's posted room and board charge, or $2,500 per
year if the Student lives off-campus and not at home.) Also, qualified
expenses include amounts contributed to a qualified state tuition
program.
. An Eligible Educational Institution includes most colleges, universities,
vocational schools, or other post-secondary educational institutions. The
Student should check with his or her school to verify that it is an
eligible educational institute as described in section 481 of the Higher
Education Act of 1965.
Second, the amount of the withdrawal in a year must not exceed your qualified
higher education expenses for that year.
HOW ARE WITHDRAWALS FROM AN EDUCATION IRA TAXED IF THE TAX-FREE REQUIREMENTS ARE
NOT MET?
If the withdrawal does not meet the tax-free requirements discussed above, the
general rule is that the amount equal to the principal contributions will not be
taxed, nor will the 10% withdrawal penalty apply to principal. However, that
portion of the account attributable to dividends or gains is includable in the
Student's (or the Parent's) gross income in the taxable year it is received, and
may be subject to the 10% withdrawal penalty.
A special rule may apply if the amount withdrawn exceeds the Student's qualified
higher education expenses in a year. In this case, the amount that must be
included as income for tax purposes is determined by first determining the ratio
that the qualified higher education expenses bear to the actual withdrawal. The
portion of the withdrawal that is potentially subject to taxation -- the amount
of gains or dividends -- is then multiplied by that percentage amount. The
resultant sum is the amount excludable from income. The following example
explains this formula:
In 2010, John withdraws $9,000 from his Education IRA, of which $4,000 is
attributable to dividends or gains. John's qualified education expenses
total only $7,000 for that year. Therefore, 77% ($7,000/$9,000) of the
withdrawal is attributable to educational expenses. So, $3,080 (77% of
$4,000) is excludable as income and the difference, $920, is includable
as income and possibly subject to the 10% penalty tax.
Taxable withdrawals of dividends and gains from an Education IRA are treated as
ordinary income. Withdrawals of taxable amounts from an Education IRA are not
eligible for averaging treatment currently available to certain lump sum
distributions from qualified employer-sponsored retirement plans, nor are such
withdrawals eligible for taxable gains tax treatment.
The receipt of any taxable withdrawal from an Education IRA may also be subject
to a 10% penalty tax, unless:
. The withdrawal is paid to your estate within thirty days of your
death;
. The withdrawal is paid to you on account of your disability (You will be
considered disabled if you show proof that you cannot do any substantial
gainful activity because of your physical or mental condition. A
physician must determine that your condition can be expected to result in
death or to be of long-continued and indefinite duration.); or
. The withdrawal is equal to or less than the amount of a scholarship
or other tax-free educational assistance you receive; or
. The withdrawal is a return of an excess contribution. For the 10% tax not
to apply, the distribution must be made before the date the contributor's
tax return is due, and it must include any net income attributable to
that condition.
Note: The Custodian is not responsible for monitoring withdrawals or determining
whether any withdrawal is being made by any individual for education expenses,
nor is the Custodian responsible for determining what taxes or penalties, if
any, may apply.
HOW DOES RECEIPT OF A TAX-FREE, QUALIFIED WITHDRAWAL AFFECT AVAILABLE EDUCATION
TAX CREDITS?
If the Student receives a tax-free distribution from an Education IRA in a
particular tax year, none of the Student's education expenses for that year may
be claimed as the basis for a Hope Scholarship Credit or Lifetime Learning
Credit for that year.
However, the tax-free treatment of the Education IRA withdrawal may be waived
(thus subjecting the withdrawal to the imposition of tax, as discussed above),
and the Student or Student's Parents, as the case may be, may elect instead to
claim a Hope Scholarship Credit or Lifetime Learning Credit for the education
expenses. Only one of the following may be elected each year: a tax-free
distribution from the Education IRA, the Hope Scholarship Credit, or the
Lifetime Learning Credit.
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You should consult with your tax advisor to determine whether you qualify for
either credit and whether waiving the tax-free withdrawal of the Education IRA
is right for you.
TRANSFERS/ROLLOVERS
Can a distribution be transferred or rolled over from an employer's retirement
plan into an Education IRA?
Distributions from qualified employer-sponsored retirement plans or 403(b)
arrangements (for employees of tax-exempt employers) are not eligible for
rollover or direct transfer to an Education IRA. Nor are withdrawals from other
types of IRAs.
CAN ROLLOVERS BE MADE FROM ONE EDUCATION IRA TO ANOTHER EDUCATION IRA?
Amounts rolled over from one Education IRA to another Education IRA are
permitted only if the receiving Education IRA is for your benefit or for the
benefit of a member of your family. Such a rollover must be completed with 60
days after the withdrawal from the first Education IRA. Only one rollover from
an Education IRA to another is permitted in a full year (365 days).
CAN THE BENEFICIARY OF AN EDUCATION IRA BE CHANGED?
Instead of rolling over an Education IRA account to another Education IRA
account, the Student may simply change the designated beneficiary of his account
to another member of his family who is under the age of 30. This can be done at
any time. (Note: This approach can be used up to the day before your 30th
birthday to avoid the tax and penalty that may otherwise apply if a distribution
is required because you reach age 30.) See When are distributions mandatory?
above.
WHO IS A MEMBER OF THE STUDENT'S FAMILY?
Family members include the Student and any of the following who are under age
30: the Student's children and their descendants, stepchildren and their
descendants, siblings and their children, parents and grandparents, stepparents,
and spouses of all of the foregoing.
HOW DO ROLLOVERS AFFECT EDUCATION IRA CONTRIBUTION LIMITS?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers from one Education IRA to another can be made even
during a year when the Donor is not eligible to contribute to an Education IRA
(for example, because MAGI for that year is too high).
WHAT TRANSFERS ARE TAXABLE?
If your spouse was the designated beneficiary of an Education IRA and you
receive the Education IRA as the result of the death of your spouse, you can
treat the Education IRA as your own. If you are someone other than the surviving
spouse of the designated beneficiary and you receive an Education IRA as the
result of the death of the IRA holder, the distribution to you is taxable at its
fair market value. You cannot treat the IRA as your own.
FEES AND EXPENSES
CUSTODIAN'S FEES
The fees charged by the Custodian for maintaining your Education IRA are
listed in the Account Application.
GENERAL FEE POLICIES
. Fees may be paid by you directly or the Custodian may deduct them from
your Education IRA.
. Fees may be changed upon 30 days' written notice to you.
. The full annual maintenance fee will be charged for any calendar year
during which you have an Education IRA with us. This fee is not prorated
for periods of less than one full year.
. The Custodian may charge you for its reasonable expenses for services
not covered by its fee schedule.
OTHER CHARGES
There may be sales or other charges associated with the purchase or redemption
of shares of a Fund in which your Education IRA is invested. Before investing,
be sure to read carefully the current prospectus of any Fund you are considering
as an investment for your Education IRA for a description of applicable charges.
TAX MATTERS
WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the recipient on the
appropriate form.
The Custodian will report to the IRS the year-end value of the Account and the
amount of any rollovers or regular contribution made during a calendar year.
WHAT TAX INFORMATION MUST THE STUDENT REPORT TO THE IRS?
The appropriate tax reporting form must be filed with the IRS for each taxable
year for which there is made an excess contribution or in which there is a
premature withdrawal that is subject to the 10% penalty tax.
ARE EDUCATION IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax withholding requirements have not been established by the law
or by IRS regulations or rulings. Consult your tax advisor or the IRS for the
latest information on withholding requirements on taxable withdrawals from and
Education IRA.
ARE THE EARNINGS ON EDUCATION IRA FUNDS TAXED?
Any dividends on or growth of investments held in an Education IRA are generally
exempt from federal income taxes and will not be taxed until withdrawn, unless
the tax-exempt status of the Education IRA is revoked. If a withdrawal qualifies
as a tax-free withdrawal (see above), amounts reflecting earnings or growth of
assets in the Education IRA will not be subject to federal income tax.
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WHAT ARE THE ESTATE AND GIFT TAX CONSEQUENCES OF CONTRIBUTIONS TO EDUCATION
IRAS?
Contributions to Education IRAs will not be considered taxable gifts for Federal
gift tax purposes, and similarly, distributions from Education IRAs will not be
treated as taxable gifts.
For estate tax purposes, the value of any interest in an Education IRA will be
includible in the estate of the designated beneficiary.
ACCOUNT TERMINATION
The Student may terminate the Education IRA at any time after its
establishment by sending a completed withdrawal form (or other
instructions in a form acceptable to the Custodian), or a transfer
authorization form, to:
Retirement Plan Services
c/o Seligman Data Corp.
10 Park Avenue
New York, NY 10017
An Education IRA with Seligman will terminate upon the first to occur of the
following:
. The date the Student's properly executed withdrawal form or instructions
(as described above) withdrawing the total Education IRA balance is
received and accepted by the Custodian.
. The date the Education IRA ceases to qualify under the tax code. This
will be deemed a termination.
. The transfer of the Education IRA to another custodian/trustee.
. The rollover of the amounts in the Education IRA to another
custodian/trustee.
Any outstanding fees must be received prior to such a termination of an
Education IRA account.
The amount received from an Education IRA upon termination of the account will
be treated as a withdrawal, and thus the rules relating to Education IRA
withdrawals will apply. For example, if the Education IRA is terminated and
distributions are not made for qualified education expenses, the 10%
early-withdrawal penalty may apply to the taxable amount received.
IMPORTANT: THE DISCUSSION OF THE TAX RULES FOR EDUCATION IRAS IN THIS DISCLOSURE
STATEMENT IS BASED UPON THE BEST AVAILABLE INFORMATION. HOWEVER, EDUCATION IRAS
ARE NEW UNDER THE TAX LAWS, AND NOT ALL ISSUES PERTAINING TO THE OPERATION AND
TAX TREATMENT OF EDUCATION IRA ACCOUNTS HAVE BEEN ADDRESSED BY THE IRS.
THEREFORE, THE STUDENT SHOULD CONSULT HIS OR HER TAX ADVISOR FOR THE LATEST
DEVELOPMENTS OR FOR ADVICE ON HOW MAINTAINING AN EDUCATION IRA WILL AFFECT HIS
OR HER (OR PARENT'S) PERSONAL TAX OR FINANCIAL SITUATION.
EDUCATION IRA DOCUMENTS
The terms contained in Articles I to X of the Education Individual Retirement
Custodial Account document are in the form promulgated by the IRS in Form
5305-EA for use in establishing an Education IRA under Code section 530. If the
IRS issues an amendment to Form 5305-EA, the Custodian will adopt the provisions
of such model form as an amendment, accordingly. IRS approval relates only to
the form of Articles I to X and will not be an approval of the merits of the
Education IRA or of any investment permitted by the Education IRA.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number:
Retirement Plan Services
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
800-445-1777
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SELIGMAN EDUCATION IRA
CUSTODIAL AGREEMENT Seligman
================================================================================
Articles I - X are in the form promulgated by the Internal Revenue Service in
Form 5305-EA.
ARTICLE I.
The Custodian may accept additional cash contributions. These contributions may
be from the Depositor, or from any other individual, for the benefit of the
Designated Beneficiary, provided the Designated Beneficiary has not attained the
age of 18 as of the date such contributions are made. Total contributions that
are not rollover contributions described in section 530(d)(5) are limited to a
maximum amount of $500 for the taxable year.
ARTICLE II.
The maximum aggregate contribution that an individual may make to the Custodial
Account in any year may not exceed the $500 in total contributions that the
Custodial Account can receive. In addition, the maximum aggregate contribution
that an individual may make to the Custodial Account in any year is phased out
for unmarried individuals who have modified adjusted gross income (AGI) between
$95,000 and $110,000 for the year of the contribution and for married
individuals who file joint returns with modified AGI between $150,000 and
$160,000 for the year for the contribution. Unmarried individuals with modified
AGI above $110,000 for the year and married individuals who file joint returns
and have modified AGI above $160,000 for the year may not make a contribution
for that year. Modified AGI is defined in section 530(c)(2).
ARTICLE III.
No part of the Custodial Account funds may be invested in life insurance
contracts, nor may the assets of the Custodial Account be commingled with other
property except in a common investment fund (within the meaning of section
530(b)(1)(D).
ARTICLE IV.
1. Any balance to the credit of the Designated Beneficiary on the date on which
such Designated Beneficiary attains age 30 shall be distributed to the
Designated Beneficiary within 30 days of such date.
2. Any balance to the credit of the Designated Beneficiary shall be distributed
to the estate of the Designated Beneficiary within 30 days of the date of
such Designated Beneficiary's death.
ARTICLE V.
The Depositor shall have the power to direct the Custodian regarding the
investment of the above-listed amount assigned to the Custodial Account
(including earnings thereon) in the investment choices offered by the Custodian.
The Responsible Individual, however, shall have the power to redirect the
Custodian regarding the investment of such amounts, as well as the power to
direct the Custodian regarding the investment of all additional contributions
(including earnings thereon) to the Custodial Account. In the event that the
Responsible Individual does not direct the Custodian regarding the investment of
additional contributions (including earnings thereon), the initial investment
direction of the Depositor also will govern all additional contributions made to
the Custodial Account until such time as the Responsible Individual otherwise
directs the Custodian. Unless otherwise provided in this agreement, the
Responsible Individual also shall have the power to direct the Custodian
regarding the administration, management, and distribution of the Account.
ARTICLE VI.
The "Responsible Individual" named by the Depositor shall be a parent or
guardian of the designated beneficiary. The Custodial Account shall have only
one Responsible Individual at any time. If the Responsible Individual becomes
incapacitated or dies while the Designated Beneficiary is a minor under state
law, the successor Responsible Individual shall be the person named to succeed
in that capacity by the preceding Responsible Individual in a witnessed writing
or, if no successor is so named, the successor Responsible Individual shall be
the Designated Beneficiary's other parent or successor guardian. At the time
that the Designated Beneficiary attains the age of majority under state law, the
Designated Beneficiary becomes the Responsible Individual.
(The following optional provision is effective only if the corresponding box is
checked in Section 2 of the Seligman Education IRA Account Application.) The
Responsible Individual shall continue to serve as the Responsible Individual for
the custodial account after the Designated Beneficiary attains the age of
majority under state law and until such time as all assets have been distributed
from the custodial account and the custodial account terminates. If the
Responsible Individual becomes incapacitated or dies after the Designated
Beneficiary reaches the age of majority under state law, the Responsible
Individual shall be the Designated Beneficiary.
ARTICLE VII.
The Responsible Individual may change the Beneficiary designated under this
agreement to another member of the Designated Beneficiary's family described in
section 529(e)(2) in accordance with the Custodian's procedures.
ARTICLE VIII.
1. The Depositor agrees to provide the Custodian with the information
necessary for the Custodian to prepare any reports required under section
530(h).
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Responsible Individual as prescribed by the Internal Revenue Service.
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ARTICLE IX.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV will be controlling. Any additional articles
that are not consistent with section 530 and related regulations will be
invalid.
ARTICLE X.
This Agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the Depositor and the Custodian whose signatures appear on the
Account Application.
Article XI.
1. As used in this Custodial Agreement the following terms have the following
meanings:
"Account" or "Custodial Account" means the Education Individual Retirement
Account established using the terms of this Agreement and the Account
Application signed by or on behalf of the Student.
The term "Student" means the person designated as such in the Account
Application (or on a form acceptable to the Custodian for use in connection
with the Custodial Account, and filed with the Custodian). The individual who
is the "Student" (as used in this Article XI) and the individual who is the
"Designated Beneficiary" (as used in Articles I through XI) are the same.
The Student may, in writing on such form as may be acceptable to the
Custodian, designate another person, who is a "family member" of the Student
(within the meaning of section 529(e)(2) of the Code) who is under the age of
30 as the successor Designated Beneficiary and Student with respect to the
Custodial Account hereunder, and thereafter such individual will be the
Designated Beneficiary and the Student for purposes of Articles I through X
and Article XI respectively.
The term "Donor" means the person designated as such in the Account
Application (or on a form acceptable to the Custodian for use in connection
with the Custodial Account, and filed with the Custodian.) The individual who
is the "Donor" (as used in this Article XI) and the individual who is the
"Depositor" (as used in Articles I through XI) are the same.
"Custodian" means Investors Fiduciary Trust Company.
The term "Parent" means the person designated as such in the Account
Application (or a form acceptable to the Custodian for use in connection with
the Custodial Account). The individual who is the "Parent" (as used in this
Article XI) and the individual who is the "Responsible Individual" (as used
in Articles I through XI) are the same.
"Fund" means any registered investment company which is specified in the
Account Application, or which is advised, sponsored or distributed by
Sponsor; provided, however, that such a mutual fund or registered investment
company must be legally offered for sale in the state of the Student's
residence.
"Distributor" means the entity which has a contract with the Fund(s) to serve
as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the
Fund(s).
"Service Company" means any entity employed by the Custodian or the
Distributor, including the transfer agent for the Fund(s), to perform various
administrative duties of either the Custodian or the Distributor.
In any case where there is no Service Company, the duties assigned hereunder
to the Service Company will be performed by the Distributor (if any) or by an
entity specified in the second preceding paragraph.
"Sponsor" means Seligman Financial Services.
2. (a) Subject to the last paragraph of this Section 2(a), the Donor may revoke
the Custodial Account established hereunder by mailing or delivering a
written notice of revocation to the Custodian within seven days after the
Donor first receives the Disclosure Statement related to the Custodial
Account. Mailed notice is treated as given to the Custodian on date of
the postmark (or on the date of Post Office certification or registration
in the case of notice sent by certified or registered mail). Upon timely
revocation, the Donor will receive a payment equal to the initial
contribution, without adjustment for administrative expenses, commissions
or sales charges, fluctuations in market value or other changes.
The Donor may certify in the Account Application that the Donor received
the Disclosure Statement related to the Custodial Account at least seven
days before signing the Account Application to establish the Custodial
Account, and the Custodian may rely on such certification.
(b) After making a contribution to the Custodial Account for the benefit of
the Student, and specifying the initial investment elections, all rights
and obligations to, in and for the Account shall irrevocably inure to,
and be enjoyed and exercised by, Student, and Donor shall have no such
rights or obligations (unless Donor and Student or Parent are the same
person or unless Donor revokes the Account in accordance with subsection
(a) above).
The Donor must sign the Account Application, and, for purposes of
maintaining the Account, the Parent (identified in the Account
Application) must execute all forms, applications, certifications and
other documents on behalf of any Student who has not yet attained the age
of majority as recognized by the laws of the Student's state of residence
("age of majority"). Any right, power, responsibility, authority or
requirement given to the Student under this Agreement or any related
document shall be exercised or carried out by such Parent on behalf of
any Student who has not yet attained the age of majority. The Custodian's
acceptance of the Account on behalf of a minor Student is expressly
conditioned upon the Parent's acceptance of the rights and
responsibilities accorded hereunder. Upon attainment of the age of
majority under the laws of the Student's state of resi-
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dence at such time, the Student may advise the Custodian in writing
(accompanied by such documentation as the Custodian may require) that he or
she is assuming sole responsibility to exercise all rights, powers,
obligations, responsibilities, authorities or requirements associated with
the Account. Upon such notice to the Custodian, the Student shall have and
shall be responsible for all of the foregoing, the Custodian will deal solely
with the Student as the person controlling the administration of the Account,
and Parent shall thereafter have or exercise none of the foregoing. (Absent
such written notice by Student, Custodian shall be under no obligation to
acknowledge Student's right to exercise such powers and authority.)
3. All contributions to the Custodial Account shall be invested and reinvested
in full and fractional shares of one or more Funds. Such investments shall
initially be made in such proportions and/or in such amounts as are specified
in the Account Application or by other written notice to the Service Company
(in such form as may be acceptable to the Service Company) may direct.
Subsequent exchanges among Funds shall be made in accordance with written
instructions from the Student. The Service Company shall be responsible for
promptly transmitting all investment directions by the Student for the
purchase or sale of shares of one or more Funds hereunder to the Funds'
transfer agent for execution. However, if investment directions with respect
to the investment of any contribution hereunder are not received initially
from the Donor or thereafter from the Student as required or, if received,
are unclear or incomplete in the opinion of the Service Company, the
contribution may be paid to the Student, or may be held uninvested (or
invested in a money market fund if available) pending clarification or
completion by the Donor or the Student, as the case may be, in either case
without liability for interest or for loss of income or appreciation. If any
other directions or other orders by the Student with respect to the sale or
purchase of shares of one or more Funds for the Custodial Account are unclear
or incomplete in the opinion of the Service Company, the Service Company will
refrain from carrying out such investment directions or from executing any
such sale or purchase, without liability for loss of income or for
appreciation or for depreciation of any asset, pending receipt of
clarification or completion from the Student.
All initial investment directions by the Donor or subsequent investment
directions by the Student will be subject to any minimum initial or
additional investment or minimum balance rules applicable to a Fund as
described in its prospectus.
All dividends and capital gains or other distributions received on the shares
of any Fund held in the Account shall be (unless received in additional
shares) reinvested in full and fractional shares of such Fund (or any other
Fund offered by the Sponsor, if so directed).
4. Subject to the minimum initial or additional investment, minimum balance and
other exchange rules applicable to a Fund, the Student may at any time direct
the Service Company to exchange all or a specified portion of the shares of a
Fund in the Account for shares and fractional shares of one or more other
Funds. The Student shall give such directions by written notice acceptable to
the Service Company, and the Service Company will process such directions as
soon as practicable after receipt thereof (subject to the second paragraph of
Section 3 of this Article XI.)
5. Any purchase or redemption of shares of a Fund for or from the Account will
be effected at the public offering price or net asset value of such Fund (as
described in the then effective prospectus for such Fund) next established
after the Service Company has transmitted the Student's investment directions
to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Account will be subject to any applicable sales, redemption or other
charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases or sales
of shares of one or more Funds for the Student's Custodial Account. Any
Account maintained in connection herewith shall be in the name of the
Custodian for the benefit of the Student. All assets of the Custodial Account
shall be registered in the name of the Custodian or of a suitable nominee.
The books and records of the Custodian shall show that all such investments
are part of the Custodial Account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the Custodial Account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the
Account hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the
Custodian with any information the Custodian requires to carry out the
Custodian's recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the Custodial
Account will have any responsibility for rendering advice with respect to the
investment and reinvestment of the Custodial Account, nor shall such parties
be liable for any loss or diminution in value which results from Student's
exercise of investment control over the Account. Student shall have and
exercise exclusive responsibility for and control over the investment of the
assets of the Account, and neither Custodian nor any other such party shall
have any duty to question his directions in that regard or to advise him
regarding the purchase, retention or sale of shares of one or more Funds for
the Custodial Account.
8. The Student may in writing appoint an investment advisor with respect to the
Custodial Account on a form acceptable to the Custodian and the Service
Company. The investment advisor's appointment will be in effect until written
notice to the contrary is received by the Custodian and the Service Company.
While an investment advisor's appointment is in effect, the investment
advisor may issue investment directions or may issue orders for the sale or
purchase of shares of one or more Funds to the Service Company, and the
Service Company will be fully protected in carrying out such investment
directions or orders to the same extent as if they had been given by the
Student.
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The Student's appointment of any investment advisor will also be deemed to be
instructions to the Custodian and the Service Company to pay such investment
advisor's fees to the investment advisor from the Custodial Account hereunder
without additional authorization by the Student or the Custodian.
9.(a) Distribution of the assets of the Custodial Account shall be made at such
time and to such person or entity as the Student shall elect by written
order to the Custodian. The Student will be responsible for (and the
Custodian will have no responsibility for) including and reporting any
distribution from the Account in the gross income of the Student in a
manner consistent with Code section 72 and Code section 530 (which
sections provide that distributions shall be considered to consist of
principal (not subject to tax) and earnings (which may or may not be
subject to tax), unless such distribution is used to pay the qualified
education expenses of the Student (as defined in Code Section 530) and
such qualified education expenses for the tax year are not less than the
aggregate distributions from the Account during the tax year; and provide
further that, if the aggregate distributions exceed the qualified
education expenses for the Student for that year, the amount that must be
included as income for tax purposes is determined by first determining the
ratio that the qualified higher education expenses bear to the actual
withdrawal. The portion of the withdrawal that is potentially subject to
taxation -- the amount of gains or dividends -- is then multiplied by that
percentage amount. The resultant sum is the amount excludable from income;
and the Student may waive application of the foregoing sentence and elect
tax treatment in accordance with Code Section 72.
(b) Student acknowledges that any distribution of a taxable amount from the
Custodial Account (except for distributions specified in Code Section 530,
including distribution on account of Student's disability or death, return
of an "excess contribution" referred to in Code section 530(d)(4)(C), a
"rollover" from this Custodial Account, or distributions made on account
of a qualified scholarship, allowance or payment described in Code section
25A(g)(2)), may subject Student to an additional tax on distributions
under Code section 530(d)(4). For these purposes, Student will be
considered disabled if Student can prove, as provided in Code Section
72(m)(7), that Student is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or be of long-
continued and indefinite duration. Neither the Custodian nor any other
party providing services to the Custodial Account assumes any
responsibility for monitoring or approving the purposes for which such
distributions are used, nor for the tax treatment accorded any
distribution from the Custodial Account; such responsibility rests solely
with the person ordering the distribution.
(c) Any balance remaining in the Account when the Student attains age 30 is,
pursuant to Code section 530, to be distributed to the Student. The
Student has the responsibility to notify the Custodian to make such
distribution and the Student will be responsible for any tax consequences
of not so directing the Custodian. However, the Custodian may, based upon
its records, make a distribution to the Student upon the Student's
attaining age 30 to the extent required by law, and/or the Custodian will
report the balance in the Account at such time as a "deemed distribution"
to the extent required by law, and the Custodian will have no
responsibility for so doing.
(d) Upon the death of the Student, any balance remaining in the Account will
be distributed to the Student's estate in the manner required by Code
section 530, and the Custodian will have no responsibility for making such
a distribution, or for not making such distribution in the absence of
instructions to do so from the legal representative of the Student's
estate.
10. The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Student containing such
information as the Custodian may reasonably request (provided that the
Custodian may make distributions on its own initiative to the extent
specifically provided for in Section 9 of this Article XI). Also, before
making any distribution or honoring any assignment of the Custodial
Account, Custodian shall be furnished with any and all applications,
certificates, tax waivers, signature guarantees and other documents
(including proof of any legal representative's authority) deemed necessary
or advisable by Custodian, but Custodian shall not be responsible for
complying with any order or instruction which appears on its face to be
genuine, or for refusing to comply if not satisfied it is genuine, and
Custodian has no duty of further inquiry. Any distributions from the
Account may be mailed, first-class postage prepaid, to the last known
address of the person or entity who is to receive such distribution, as
shown on the Custodian's records, and such distribution shall to the
extent thereof completely discharge the Custodian's liability for such
payment.
11.(a) The Student agrees to provide information to the Custodian at such time
and in such manner as may be necessary for the Custodian to prepare any
reports required under Section 530(h) of the Code.
(b) The Custodian or the Service Company will submit reports to the Internal
Revenue Service and the Student at such time and manner and containing
such information as is prescribed by the Internal Revenue Service.
(c) The Student, Custodian and Service Company shall furnish to each other
such information relevant to the Custodial Account as may be required
under the Code and any regulations issued or forms adopted by the
Internal Revenue Service thereunder or as may otherwise be necessary for
the administration of the Custodial Account.
(b) The Student and/or the Donor shall file any reports to the Internal
Revenue Service which are required of either of them by law, and neither
the Custodian nor Service Company shall have any duty to advise either
concerning or monitor ether's compliance with such requirement.
12.(b) Student retains the right to amend this Custodial Account document in any
respect at any time, effective on a stated date which shall be at least
60 days after giving written notice of the amendment (including its exact
terms) to
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Custodian by registered or certified mail, unless Custodian waives notice
as to such amendment. If the Custodian does not wish to continue serving
as such under this Custodial Account document as so amended, it may
resign in accordance with Section 16 below.
(b) Student delegates to the Custodian the Student's right so to amend,
provided (i) the Custodian does not change the investments available
under the Custodial Agreement and (ii) the Custodian amends in the same
manner all agreements comparable to this one, having the same Custodian,
permitting comparable investments, and under which such power has been
delegated to it; this includes the power to amend retroactively if
necessary or appropriate in the opinion of the Custodian in order to
conform this Custodial Account to pertinent provisions of the Code and
other laws or successor provisions of law, or to obtain a governmental
ruling that such requirements are met, to adopt a prototype or master
form of agreement in substitution for this Agreement, or as otherwise may
be advisable in the opinion of the Custodian. Such an amendment by the
Custodian shall be communicated in writing to Student, and Student shall
be deemed to have consented thereto unless, within 30 days after such
communication to Student is mailed, Student either (i) gives Custodian a
written order for a complete distribution or transfer of the Custodial
Account, or (ii) removes the Custodian and appoints a successor under
Section 16 below.
Pending the adoption of any amendment necessary or desirable to conform
this Custodial Account document to the requirements of the Code, or any
amendment thereto or to any applicable provision of the regulations or
rulings thereunder, the Custodian and the Service Company may operate the
Student's Custodial Account in accordance with such requirements to the
extent that the Custodian and/or the Service Company deem necessary to
preserve the tax benefits of the Account or otherwise necessary to meet
all legal requirements.
(c) Notwithstanding the provisions of subsections(a) and (b) above, no
amendment shall increase the responsibilities or duties of Custodian
without its prior written consent.
(d) This Section 12 shall not be construed to restrict the Custodian's right
to substitute fee schedules in the manner provided by Section 15 below,
and no such substitution shall be deemed to be an amendment of this
Agreement.
13.(a) Custodian shall terminate the Custodial Account if this Agreement is
terminated or if, within 60 days (or such longer time as Custodian may
agree) after resignation or removal of Custodian under Section 16,
Student or Sponsor, as the case may be, has not appointed a successor
which has accepted such appointment. Termination of the Custodial Account
shall be effected by distributing all assets thereof in a single payment
in cash or in kind to Student, subject to Custodian's right to reserve
funds as provided in Section 16.
(b) Upon termination of the Custodial Account, this Custodial Account
document shall have no further force and effect (except for Sections
14(f), 16(b) and (c) hereof which shall survive the termination of the
Custodial Account and this document), and Custodian shall be relieved
from all further liability hereunder or with respect to the Custodial
Account and all assets thereof so distributed.
14.(a) In its discretion, the Custodian may appoint one or more contractors or
service providers to carry out any of its functions and may compensate
them from the Custodial Account for expenses attendant to those
functions.
(b) The Service Company shall be responsible for receiving all instructions,
notices, forms and remittances from Student and for dealing with or
forwarding the same to the transfer agent for the Fund(s).
(c) The parties do not intend to confer any fiduciary duties on Custodian or
Service Company (or any other party providing services to the Custodial
Account), and none shall be implied. Neither shall be liable (or assumes
any responsibility) for the collection of contributions, the proper
amount, time or tax treatment of any contribution to the Custodial
Account or the propriety of any contributions under this Agreement, or
the purpose, time, amount (including any required distribution amounts),
tax treatment or propriety of any distribution hereunder, which matters
are the sole responsibility of Student.
(d) Not later than 60 days after the close of each calendar year (or after
the Custodian's resignation or removal), the Custodian or Service Company
shall file with Student a written report or reports reflecting the
transactions effected by it during such period and the assets of the
Custodial Account at its close. Upon the expiration of 60 days after such
a report is sent to Student, the Custodian or Service Company shall be
forever released and discharged from all liability and accountability to
anyone with respect to transactions shown in or reflected by such report
except with respect to any such acts or transactions as to which Student
shall have filed written objections with the Custodian or Service Company
within such 60 day period.
(e) The Service Company shall deliver, or cause to be delivered, to Student
all notices, prospectuses, financial statements and other reports to
shareholders, proxies and proxy soliciting materials relating to the
shares of the Funds(s) credited to the Custodial Account. No shares shall
be voted, and no other action shall be taken pursuant to such documents,
except upon receipt of adequate written instructions from Student.
(f) Student and Parent shall always fully indemnify Service Company, Sponsor,
Distributor, the Fund(s) and Custodian and save them harmless from any
and all liability whatsoever which may arise either (I) in connection
with this Agreement and the matters which it contemplates, except that
which arises directly out of the Service Company's, Distributor's,
Fund's, Sponsor's or Custodian's bad faith, gross negligence or willful
misconduct, (ii) with respect to making or failing to make any
distribution, other than for failure to make distribution in accordance
with an order therefor which is in full compliance with Section 9, or
(iii) actions taken or omitted in good faith by such parties. Neither
Service Company nor Custodian shall be obligated or expected to commence
or defend any legal action or pro-
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ceeding in connection with this Agreement or such matters unless agreed
upon by that party and Student, and unless fully indemnified for so doing
to that party's satisfaction. The Custodian's acceptance of the
contributions to this Account is expressly conditioned upon Parent's and
Student's agreement with the foregoing, and with all other provisions of
this Agreement. Exercise of any right, duty or responsibility by Parent
(or Student, as the case may be) in connection with the Student's account
shall be deemed to constitute acceptance of this condition.
(g) The Custodian and Service Company shall each be responsible solely for
performance of those duties expressly assigned to it in this Agreement,
and neither assumes any responsibility as to duties assigned to anyone
else hereunder or by operation of law.
(h) The Custodian and Service Company may each conclusively rely upon and
shall be protected in acting upon any written order from Student, or any
investment advisor appointed under Section 8, or any other notice,
request, consent, certificate or other instrument or paper believed by it
to be genuine and to have been properly executed, and so long as it acts
in good faith, in taking or omitting to take any other action in reliance
thereon. In addition, Custodian will carry out the requirements of any
apparently valid court order relating to the Custodial Account and will
incur no liability or responsibility for so doing.
15.(a) The Custodian, in consideration of its services under this Agreement,
shall receive the fees specified on the applicable fee schedule. The fee
schedule originally applicable shall be the one specified in the Account
Application or Disclosure Statement, as applicable. The Custodian may
substitute a different fee schedule at any time upon 30 days' written
notice to Student. The Custodian shall also receive reasonable fees for
any services not contemplated by any applicable fee schedule and either
deemed by it to be necessary or desirable or requested by Student.
(b) Any income, gift, estate and inheritance taxes and other taxes of any
kind whatsoever, including transfer taxes incurred in connection with the
investment or reinvestment of the assets of the Custodial Account, that
may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the performance of
its duties (including fees for legal services rendered to it in
connection with the Custodial Account) shall be charged to the Custodial
Account. If the Custodian is required to pay any such amount, the Student
shall promptly upon notice thereof reimburse the Custodian.
(c) All such fees and taxes and other administrative expenses charged to the
Custodial Account shall be collected either from the amount of any
contribution or distribution to or from the Account, or (at the option of
the person entitled to collect such amounts) to the extent possible under
the circumstances by the conversion into cash of sufficient shares of one
or more Funds held in the Custodial Account (without liability for any
loss incurred thereby). Notwithstanding the foregoing, the Custodian or
Service Company may make demand upon the Student for payment of the
amount of such fees, taxes and other administrative expenses. Fees which
remain outstanding after 60 days may be subject to a collection charge.
16.(a) Upon 60 days' prior written notice to the Custodian, Student or Seligman
Retirement Services, as the case may be, may remove it from its office
hereunder. Such notice, to be effective, shall designate a successor
custodian and shall be accompanied by the successor's written acceptance.
The Custodian also may, but is not required to, at any time resign upon
60 days prior written notice to Seligman Retirement Services c/o Seligman
Data Corp., whereupon Sponsor shall notify the Student, and shall appoint
a successor to the Custodian. In connection with its resignation
hereunder, the Custodian may, but is not required to, designate a
successor custodian by written notice to the Student, or Sponsor and the
Student or Sponsor will be deemed to have consented to such successor
unless the Student or Sponsor designates a different successor custodian
and provides written notice thereof together with such different
successor's written acceptance by such date as the Custodian specifies in
its original notice to the Student or Sponsor (provided that the Student
will have a minimum 30 days to designated a different successor).
(b) The successor custodian shall be a bank, insured credit union, or other
person satisfactory to the Secretary of the Treasury under Code section
530(b)(1)(B). Upon receipt by Custodian of written acceptance by its
successor of such successor's appointment, Custodian shall transfer and
pay over to such successor the assets of the Custodial Account and all
records (or copies thereof) of Custodian pertaining thereto, provided
that the successor custodian agrees not to dispose of any such records
without the Custodian's consent. Custodian is authorized, however, to
reserve such sum of money or property as it may deem advisable for
payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against the
assets of the Custodial Account or on or against the Custodian, with any
balance of such reserve remaining after the payment of all such items to
be paid over to the successor custodian.
(c) Any Custodian shall not be liable for the acts or omissions of its
predecessor or its successor.
17. References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time, including
successors to such sections.
18. Except where otherwise specifically required in this Agreement, any notice
from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
19. Student shall not have the right or power to anticipate any part of the
Custodial Account or to sell, assign, transfer, pledge or hypothecate any
part thereof. The Custodial Account shall not be liable for the debts of
Student or subject to any seizure, attachment, execution or other legal
process in respect thereof except to the extent required by law. At no
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time shall it be possible for any part of the assets of the Custodial
Account to be used for or diverted to purposes other than for the exclusive
benefit of the Student except to the extent required by law.
20. When accepted by the Custodian, this Agreement is accepted in and shall be
construed and administered in accordance with the laws of the state where
the principal office of the Custodian is located. Any action involving the
Custodian brought by any other party must be brought in such state. This
Agreement is intended to qualify under Code section 530 as an Education IRA
and to entitle Student to the tax benefits thereof, and if any provision
hereof is subject to more than one interpretation or any term used herein is
subject to more than one construction, such ambiguity shall be resolved in
favor of that interpretation or construction which is consistent with that
intent.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Student is
referred to Student's attorney for any such assurances.
21. Student (or Donor) should seek advice from Student's (or Donors) attorney
regarding the legal consequences (including but not limited to federal and
state tax matters) of entering into this Agreement, making contributions to
the Custodial Account, and ordering Custodian to make distributions from the
Account. Student (and Donor) acknowledges that Custodian and Service Company
(and any company associated therewith) are prohibited by law from rendering
such advice.
22. If any provision of any document governing the Custodial Account provides
for notice, instructions or other communication from one party to another in
writing, to the extent provided for in the procedures of the Custodian,
Service Company or another party, any such notice, instructions or other
communications may be given by telephonic, computer, other electronic or
other means, and the requirement for written notice will be deemed
satisfied.
23. This Agreement and the Account Application signed by Student or Donor (as
either may be amended) are the documents governing the Student's Custodial
Account. Articles I through X are in the form promulgated by the Internal
Revenue Service in Form 5305-EA for use in establishing and maintaining an
Education IRA under Code section 530. If the Internal Revenue Service amends
such form, the Custodian will amend this Agreement accordingly, and the
Student specifically consents to such amendment in accordance with Section
12(b) hereof.
24. The Donor and/or Student acknowledges that he or she has received and read
the current prospectus for each Fund in which the Account is invested and
the Individual Retirement Account Disclosure Statement related to the
Account. The Donor and Student each represent under penalties of perjury
that his or her Social Security number (or other Taxpayer Identification
Number) as stated in the Account Application is correct.
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SELGIMAN FINANCIAL SERVICES, INC.
an affiliate of
LOGO J & W
J.& W. SELIGMAN & CO.
Incorporated
Established 1864
100 Park Avenue New York, NY 10017
This material is authorized for use only in the case of a concurrent or
prior delivery of the offering prospectus of any of the Seligman Mutual Funds
eligible for the Seligman Education IRA. For complete information on any of the
other Seligman Mutual Funds eligible for the Seligman Education IRA, including a
prospectus that contains information about investment policies, sales charges,
and other expenses, please contact your financial advisor or contact Seligman
Retirement Services at 800-445-1777. Please read the prospectus carefully before
you invest or send money.
REDIRA 5/98 Printed on Recycled Paper
14
