File No. 2-80168
811-3596
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. |_|
POST-EFFECTIVE AMENDMENT NO. 22 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 22 |X|
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SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER: 212-850-1864 OR
TOLL FREE: 800-221-2450
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THOMAS G. ROSE, TREASURER
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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IT IS PROPOSED THAT THIS FILING WILL BECOME
EFFECTIVE (CHECK APPROPRIATE BOX):
<TABLE>
<CAPTION>
<S> <C>
|_| IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) |_| ON (DATE) PURSUANT TO PARAGRAPH (A)(1)
------
|X| ON MAY 28, 1999 PURSUANT TO PARAGRAPH (B) |_| 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
-------------
|_| 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1) |_| ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485.
--------
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
</TABLE>
|_| THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
<PAGE>
SELIGMAN
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COMMUNICATIONS
AND INFORMATION
FUND, INC.
[GRAPHIC]
PROSPECTUS
JUNE 1, 1999
----------------
Seeking Capital Gain by
Investing in Companies
Operating in the
Communications,
Information, and Related
Industries
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in the Fund should be
considered based on the investment objective, strategies and risks described
herein, considered in light of all of the other investments in your portfolio,
as well as your risk tolerance, financial goals and time horizons. We recommend
that you consult your financial advisor to determine if this Fund is suitable
for you.
EQCI1 6/99
<PAGE>
TABLE OF CONTENTS
THE FUND
Investment Objective/Principal Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Management 5
Year 2000 6
SHAREHOLDER INFORMATION
Deciding Which Class of Shares to Buy 7
Pricing of Fund Shares 9
Opening Your Account 9
How to Buy Additional Shares 10
How to Exchange Shares Among
the Seligman Mutual Funds 11
How to Sell Shares 11
Important Policies That May Affect
Your Account 12
Dividends and Capital Gain Distributions 13
Taxes 13
The Seligman Mutual Funds 14
FINANCIAL HIGHLIGHTS 15
HOW TO CONTACT US 17
FOR MORE INFORMATION BACK COVER
TIMES CHANGE ... VALUES ENDURE
<PAGE>
THE FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Fund's objective is capital gain.
The Fund uses the following principal strategies to seek its objective:
The Fund invests at least 80% of its net assets, exclusive of government
securities, short-term notes, and cash and cash equivalents, in the securities
of companies operating in the communications, information and related
industries. The Fund generally invests at least 65% of its total assets in
securities of companies engaged in these industries. The Fund may invest in
securities of large companies that now are well established in the world
communications and information market and can be expected to grow with the
market. The Fund may also invest in small-to-medium size companies that the
investment manager believes provide opportunities to benefit from the rapidly
changing technologies and the expansion of the communications, information and
related industries. The Fund uses a bottom-up stock selection approach. This
means that the investment manager uses extensive in-depth research into specific
companies in the communications, information and related industries to find
those companies that it believes offer the greatest prospects for future growth.
In selecting individual securities, the investment manager looks for companies
that it believes display or are expected to display:
o Robust growth prospects
o High profit margins or return on capital
o Attractive valuation relative to expected earnings
or cash flow
o Quality management
o Unique competitive advantages
The Fund generally sells a stock if the investment manager believes its target
price has been reached, its earnings are disappointing, its revenue growth has
slowed, or its underlying fundamentals have deteriorated.
The Fund invests primarily in common stocks. However, the Fund may also invest
in securities convertible into or exchangeable for common stocks, in rights and
warrants to purchase common stocks, and in debt securities or preferred stocks
believed to provide opportunities for capital gain.
The Fund may purchase American Depositary Receipts (ADRs), which are publicly
traded instruments generally issued by domestic banks or trust companies that
represent a security of a foreign issuer. The Fund may invest up to 15% of its
net assets in illiquid securities (i.e., securities that cannot be readily sold)
and may invest up to 10% of its total assets directly in foreign securities. The
limit on foreign securities does not include ADRs, or commercial paper and
certificates of deposit issued by foreign banks. The Fund may also purchase put
options in an attempt to hedge against a decline in the price of securities it
holds. A put option gives the Fund the right to sell an underlying security at a
particular price during a fixed period. The Fund may, from time to time, borrow
money to purchase securities.
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective.
The Fund may change its principal strategies if the Fund's Board of Directors
believes doing so is consistent with the Fund's objective. The Fund's objective
may be changed only with shareholder approval.
As with any mutual fund, there is no guarantee the Fund will achieve its
objective.
1
<PAGE>
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Fund's net asset value will fluctuate. You may experience a decline in the value
of your investment and you could lose money if you sell your shares at a price
lower than you paid for them.
The Fund concentrates its investments in companies in the communications,
information and related industries. Therefore, the Fund may be susceptible to
factors affecting these industries and the Fund's net asset value may fluctuate
more than a fund that invests in a wider range of industries. In addition, the
rapid pace of change within many of these industries tends to create a more
volatile operating environment than in other industries.
The Fund may be negatively affected by the broad investment environment in the
international or US securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
Foreign securities, illiquid securities, or options in the Fund's portfolio
involve higher risk and may subject the Fund to higher price volatility.
Investing in securities of foreign issuers involves risks not associated with US
investments, including settlement risks, currency fluctuations, foreign
taxation, differences in financial reporting practices, and changes in political
conditions.
The Fund may actively and frequently trade securities in its portfolio to carry
out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Fund's expenses. There may also be
adverse tax consequences for investors in the Fund due to an increase in
short-term capital gains.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
<PAGE>
PAST PERFORMANCE
The Fund offers four Classes of shares. The information below provides some
indication of the risks of investing in the Fund by showing how the performance
of Class A shares has varied year to year, as well as how the performance of
each Class (except Class C) compares to one widely-used measure of stock
performance, and one measure of the performance of mutual funds with investment
objectives similar to the Fund. Class C is a new class of shares, effective June
1, 1999, so no performance information is available.
The following performance information is designed to assist you in comparing the
returns of the Fund with the returns of other mutual funds. How the Fund has
performed in the past, however, is not necessarily an indication of how the Fund
will perform in the future. Total returns will vary between each Class of shares
due to the different fees and expenses of each Class.
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table below the chart
do reflect the effect of the applicable sales charges. Both the bar chart and
table assume that all dividends and capital gain distributions were reinvested.
CLASS A ANNUAL TOTAL RETURNS
[The following table represents a graph in the printed piece.]
1989 30.12%
1990 -11.07%
1991 54.91%
1992 17.31%
1993 35.13%
1994 35.30%
1995 43.39%
1996 11.94%
1997 22.95%
1998 33.92%
Best quarter return: 45.10% - quarter ended 12/31/98
Worst quarter return: -31.14% - quarter ended 9/30/90
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AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
<TABLE>
<CAPTION>
CLASS B CLASS D
ONE FIVE TEN SINCE INCEPTION SINCE INCEPTION
YEAR YEARS YEARS 4/22/96 5/3/93
------- ------- ------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Class A 27.56% 27.77% 25.48% -- --
Class B 27.89 n/a n/a 23.29% --
Class D 31.94 27.96 n/a -- 31.05%
S&P 500 28.58 24.06 19.21 29.00(1) 22.63(2)
Lipper Science &Technology Funds Average 52.55 27.75 24.52 25.95(1) 29.10(2)
</TABLE>
The Standard &Poors 500 Composite Stock Price Index (S&P 500) and the Lipper
Average are unmanaged benchmarks that assume the reinvestment of dividends and
capital gain distributions. The Lipper Science &Technology Funds Average does
not reflect any sales charges and the S&P500 does not reflect any fees or sales
charges.The S&P500 measures the performance of 500 of the largest UScompanies
based on market capitalizations. The Lipper Average measures the performance of
mutual funds with objectives similar to the Fund.
(1) From April 30, 1996.
(2) From April 30, 1993.
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3
<PAGE>
FEES AND EXPENSES
The table below summarizes the fees and expenses that you may pay as a
shareholder of the Fund. Each Class of shares has its own sales charge schedule
and is subject to different ongoing 12b-1 fees. Shareholder fees are charged
directly to you. Annual fund operating expenses are deducted from Fund assets
and are therefore paid indirectly by you and other shareholders of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES Class A Class B Class C Class D
- ---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) on Purchases
(as a % of offering price) ....................................... 4.75%(1) none 1% none
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
on Redemptions (as a % of original purchase price or current
net asset value, whichever is less) .............................. none(1) 5% 1% 1%
ANNUAL FUND OPERATING EXPENSES FOR 1998
- ---------------------------------------
(as a percentage of average net assets)
Management Fees .88% .88% .88% .88%
Distribution and/or Service (12b-1) Fees .25% 1.00% 1.00% 1.00%
Other Expenses .31% .31% .31% .31%
----- ----- ----- -----
Total Annual Fund Operating Expenses 1.44% 2.19% 2.19% 2.19%
===== ===== ===== =====
</TABLE>
(1) If you buy Class A shares for $1,000,000 or more you will not pay an initial
sales charge, but your shares will be subject to a 1% CDSC if sold within 18
months.
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MANAGEMENT FEES:
Fees paid out of Fund assets to the investment manager to compensate it for
managing the Fund.
12B-1 FEES:
Fees paid by each Class, pursuant to a plan adopted by the Fund under Rule 12b-1
of the Investment Company Act of 1940. The plan allows each Class to pay
distribution and/or service fees for the sale and distribution of its shares and
for providing services to shareholders.
OTHER EXPENSES:
Miscellaneous expenses of running the Fund, including such things as transfer
agency, registration, custody, and auditing and legal fees.
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Example
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This example is intended to help you compare the expenses of investing in the
Fund with the expenses of investing in other mutual funds. It assumes (1) you
invest $10,000 in the Fund for each period and then sell all of your shares at
the end of that period, (2) your investment has a 5% return each year, and (3)
the Fund's operating expenses remain the same. Although your actual expenses may
be higher or lower, based on these assumptions your expenses would be:
1 Year 3 Years 5 Years 10 Years
----- ------- ------- -------
Class A $615 $909 $1,225 $2,117
Class B 722 985 1,375 2,334+
Class C 420 778 1,263 2,598
Class D 322 685 1,175 2,524
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
----- ------- ------- -------
Class A $615 $909 $1,225 $2,117
Class B 222 685 1,175 2,334+
Class C 320 778 1,263 2,598
Class D 222 685 1,175 2,524
+ Class B shares will automatically convert to Class A shares after eight years.
4
<PAGE>
MANAGEMENT
The Fund's Board of Directors provides broad supervision over the affairs of the
Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of the Fund. Seligman manages the investment of the
Fund's assets, including making purchases and sales of portfolio securities
consistent with the Fund's investment objective and strategies, and administers
the Fund's business and other affairs.
Established in 1864, Seligman currently serves as manager to 18 USregistered
investment companies, which offer more than 50 investment portfolios with
approximately $21.5 billion in assets as of April 30, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at April 30, 1999, of approximately $10.2 billion.
The Fund pays Seligman a fee for its management services. The fee rate declines
as the Fund's net assets increase. It is equal to an annual rate of .90% of the
Fund's average daily net assets on the first $3 billion of net assets, .85% of
the Fund's average daily net assets on the next $3 billion of net assets and
.75% of the Fund's average daily net assets in excess of $6 billion. For the
year ended December 31, 1998, the management fee paid by the Fund to Seligman
was equal to .88% of the Fund's average daily net assets.
The Fund, certain of its current and former directors, and Seligman have been
named in a lawsuit filed in the United States District Court for the Northern
District of Maryland on February 5, 1999. The complaint makes various
allegations and claims relating to the February 1996 special meeting of the
Fund's shareholders at which an increase in the management fee rate payable to
Seligman by the Fund was approved. The Fund believes the claims to be without
merit and intends to defend the action vigorously.
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AFFILIATES OF SELIGMAN:
SELIGMAN ADVISORS, INC.:
The Fund's general distributor; responsible for accepting orders for purchases
and sales of Fund shares.
SELIGMAN SERVICES, INC.: A limited purpose broker/dealer; acts as the
broker/dealer of record for shareholder accounts that do not have a designated
broker or financial advisor.
SELIGMAN DATA CORP. (SDC):
The Fund's shareholder service agent; provides shareholder account services to
the Fund at cost.
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PORTFOLIO MANAGEMENT
The Fund is managed by the Seligman Technology Team, headed by Mr. Paul H. Wick.
Mr. Wick, a Director and Managing Director of Seligman, is Vice President of the
Fund and has been Portfolio Manager of the Fund since January 1990. Mr. Wick
joined Seligman in August 1987 as an Associate, Investment Research, and became
Vice President, Investment Officer in August 1991; he was named Managing
Director in January 1995 and was elected a Director of Seligman in November
1997. Mr. Wick also co-manages the Seligman Henderson Global Technology Fund, a
series of Seligman Henderson Global Fund Series, Inc.; and he manages the
Seligman Communications and Information Portfolio and co-manages the Seligman
Henderson Global Technology Portfolio, two series of Seligman Portfolios, Inc.
5
<PAGE>
YEAR 2000
As the millennium approaches, mutual funds, financial and business
organizations, and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other mutual funds, the Fund relies upon
service providers and their computer systems for its day-to-day operations. Many
of the Fund's service providers in turn depend upon computer systems of their
vendors. Seligman and SDC have established a year 2000 project team. The team's
purpose is to assess the state of readiness of Seligman and SDC and the Fund's
other service providers and vendors. The team is comprised of several
information technology and business professionals as well as outside
consultants. The Project Manager of the team reports directly to the
Administrative Committee of Seligman. The Project Manager and other members of
the team also report to the Board of Directors of the Fund and its Audit
Committee.
The team has identified the service providers and vendors who furnish critical
services or software systems to the Fund, including securities firms that
execute portfolio transactions for the Fund and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Fund. The team will
assess the feasibility of their year 2000 plans. The team has made progress on
its year 2000 contingency plans - recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Fund. The team anticipates
finalizing these plans in the near future.
The Fund anticipates the team will implement all significant components of the
team's year 2000 plans by mid-1999, including appropriate testing of critical
systems and receipt of satisfactory assurances from critical service providers
and vendors regarding their year 2000 compliance. The Fund believes that the
critical systems on which it relies will function properly on and after the year
2000, but this is not guaranteed. If these systems do not function properly, or
the Fund's critical service providers are not successful in implementing their
year 2000 plans, the Fund's operations may be adversely affected, including
pricing, securities trading and settlement, and the provision of shareholder
services.
In addition, the Fund may hold securities of issuers whose underlying business
leaves them susceptible to year 2000 issues. The Fund may also hold securities
issued by governmental or quasi-governmental issuers, which, like other
organizations, are also susceptible to year 2000 concerns. Year 2000 issues may
affect an issuer's operations, creditworthiness, and ability to make timely
payment on any indebtedness and could have an adverse impact on the value of its
securities. If the Fund holds these securities, the Fund's performance could be
negatively affected. Seligman seeks to identify an issuer's state of year 2000
readiness as part of the research it employs. However, the perception of an
issuer's year 2000 preparedness is only one of the many factors considered in
determining whether to buy, sell, or continue to hold a security. Information
provided by issuers concerning their state of readiness may or may not be
accurate or readily available. Further, the Fund may be adversely affected if
the domestic or foreign exchanges, markets, depositories, clearing agencies, or
governments or third parties responsible for infrastructure needs do not address
their year 2000 issues in a satisfactory manner.
SDC has informed the Fund that it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The Fund will not pay to remediate the
systems of Seligman or bear directly the costs to remediate the systems of any
other service providers or vendors, other than SDC.
6
<PAGE>
SHAREHOLDER INFORMATION
DECIDING WHICH CLASS OF SHARES TO BUY
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule, and its
ongoing 12b-1 fees may differ from other Classes. When deciding which Class of
shares to buy, you should consider, among other things:
o The amount you plan to invest.
o How long you intend to remain invested in the Fund, or another Seligman
mutual fund.
o If you would prefer to pay an initial sales charge and lower ongoing 12b-1
fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
o Whether you may be eligible for reduced or no sales charges when you buy or
sell shares. Your financial advisor will be able to help you decide which
Class of shares best meets your needs.
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CLASS A
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
SALES CHARGE REGULAR DEALER
SALES CHARGE AS A % DISCOUNT
AS A % OF NET AS A % OF
AMOUNT OF YOUR INVESTMENT OF OFFERING PRICE(1) AMOUNT INVESTED OFFERING PRICE
-------------------------- ---------------- ---------------- --------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0.00 0.00 0.00
</TABLE>
(1)"Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2)You will not pay a sales charge on purchases of $1 million or more,
but you will be subject to a 1% CDSC if you sell your shares within
18 months.
o Annual 12b-1 fee (for shareholder services) of up to 0.25%.
o No sales charge on reinvested dividends or capital gain distributions.
o Certain employer-sponsored defined contribution-type plans can purchase
shares with no initial sales charge.
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- --------------------------------------------------------------------------------
CLASS B
o No initial sales charge on purchases.
o A declining CDSC on shares sold within 6 years of purchase:
YEARS SINCE PURCHASE CDSC
-------------------- ------
Less than 1 year 5%
1 year or more but less than 2 years 4
2 years or more but less than 3 years 3
3 years or more but less than 4 years 3
4 years or more but less than 5 years 2
5 years or more but less than 6 years 1
6 years or more 0
- ----------------------------------------------
Your purchase of Class B shares
must be for less than $250,000,
because if you are investing
$250,000 or more you will pay
less in fees and charges if you
buy another Class of shares.
- -----------------------------------------------
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
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7
<PAGE>
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CLASS C
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
REGULAR DEALER
SALES CHARGE SALES CHARGE DISCOUNT
AS A % AS A % OF NET AS A % OF
AMOUNT OF YOUR INVESTMENT OF OFFERING PRICE(1) AMOUNT INVESTED OFFERING PRICE
-------------------------- ----------------- ----------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0.00 0.00 0.00
</TABLE>
(1)"Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2)Your purchase of Class C shares must be for less than $1,000,000
because if you invest $1,000,000 or more you will pay less in fees and
charges if you buy Class A shares.
o A 1% CDSC on shares sold within eighteen months of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class Ashares, so you will be subject
to higher ongoing 12b-1 fees indefinitely.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS D*
o No initial sales charge on purchases.
o A 1% CDSC on shares sold within one year of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
*Class D shares are not available to all investors. Beginning June 1,
1999, you may purchase Class D shares only if (1) you already own Class D
shares of the Fund or another Seligman mutual fund, (2) if your financial
advisor of record maintains an omnibus account at SDC, or (3) pursuant
to a 401(k) or other retirement plan program for which Class D shares are
already available or for which the sponsor requests Class D shares because
the sales charge structure of Class D shares is comparable to the sales
charge structure of the other funds offered under the program.
- --------------------------------------------------------------------------------
Because the Fund's 12b-1 fees are paid out of each Class's assets on an ongoing
basis, over time these fees will increase your investment expenses and may cost
you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, Class C, and Class D shares. On an
ongoing basis, the Directors, in the exercise of their fiduciary duties under
the Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
HOW CDSCS ARE CALCULATED
To minimize the amount of the CDSC you may pay when you sell your shares, the
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of the Fund, it will be assumed that you held the shares since the date you
purchased the shares of the Fund.
8
<PAGE>
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A shares and Class C
shares. Purchase or sale orders received by an authorized dealer or financial
advisor by the close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) and accepted by Seligman Advisors before the
close of business (5:00 p.m. Eastern time) on the same day will be executed at
the Class's NAV calculated as of the close of regular trading on the NYSE on
that day. Your broker/dealer or financial advisor is responsible for forwarding
your order to Seligman Advisors before the close of business.
- --------------------------------------------------------------------------------
NAV:
Computed separately for each Class by dividing that Class's share of the net
assets of the Fund (i.e., its assets less liabilities) by the total number of
outstanding shares of the Class.
- --------------------------------------------------------------------------------
If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.
The NAV of the Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because of their higher 12b-1 fees, the
NAV of Class B, Class C, and Class D shares will generally be lower than the NAV
of Class A shares of the Fund.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
OPENING YOUR ACCOUNT
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more information,
see "Deciding Which Class of Shares to Buy--Class D."
To make your initial investment in the Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares. The required
minimum initial investments are:
o Regular (non-retirement) accounts: $2,500
o For accounts opened concurrently with Invest-A-Check(R):
$200 to open if you will be making monthly investments
$500 to open if you will be making quarterly investments
- --------------------------------------------------------------------------------
YOU MAY BUY SHARES OF THE FUND FOR ALL TYPES OF TAX-DEFERRED RETIREMENT PLANS.
CONTACT RETIREMENT PLAN SERVICES AT THE ADDRESS OR PHONE NUMBER LISTED ON THE
INSIDE BACK COVER OF THIS PROSPECTUS FOR INFORMATION AND TO RECEIVE THE PROPER
FORMS.
- --------------------------------------------------------------------------------
If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to 15 calendar days
from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be sent
to you free of charge for the current year and most recent prior year. Copies of
year-end statements for prior years are available for a fee of $10 per year, per
account, with a maximum charge of $150 per account. Send your request and a
check for the fee to SDC.
IF YOU WANT TO BE ABLE TO BUY, SELL, OR EXCHANGE SHARES BY TELEPHONE, YOU
SHOULD COMPLETE AN APPLICATION WHEN YOU OPEN YOUR ACCOUNT. THIS WILL PREVENT
YOU FROM HAVING TO COMPLETE A SUPPLEMENTAL ELECTION FORM (WHICH MAY REQUIRE A
SIGNATURE GUARANTEE) AT A LATER DATE.
9
<PAGE>
HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares.
Subsequent investements must be for $100 or more. Shares may be purchased
through your authorized financial advisor, or you may send a check directly to
SDC. Please provide either an investment slip or a note that provides your
name(s), Fund name, and account number. Unless you indicate otherwise, your
investment will be made in the Class you already own. Send investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
INVEST-A-CHECK(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $200 or more, or regular quarterly intervals in fixed amounts
of $500 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
AUTOMATIC DOLLAR-COST-AVERAGING. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares, or Class C
shares, you may pay an initial sales charge to buy Fund shares.
AUTOMATIC CD TRANSFER. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
DIVIDENDS FROM OTHER INVESTMENTS. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
DIRECT DEPOSIT. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
SELIGMAN TIME HORIZON MATRIX SM. (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
SELIGMAN HARVESTER. If you are a retiree or nearing retirement, this program is
designed to help you establish an investment strategy that seeks to meet your
needs throughout your retirement. The strategy is customized to your personal
financial situation by allocating your assets to seek to address your income
requirements, prioritizing your expenses, and establishing a prudent withdrawal
schedule. Contact your financial advisor for more information.
10
<PAGE>
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares or
Class C shares of Seligman Cash Management Fund to buy shares of the same Class
of the Fund or another Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
minimum initial investment.
See "The Seligman Mutual Funds" for a list of the funds available for exchange.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all classes of shares.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares; however, it may take
longer to get your money.
As an additional measure to protect you and the Fund, SDC may confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending you your money.
This will not affect the date on which your redemption request is actually
processed.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than all account owners, or
(3) mailed to other than your address of record.
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE:
Protects you and the Fund from fraud. It guarantees that a signature is genuine.
A guarantee must be obtained from an eligible financial institution.
Notarization by a notary public is not an acceptable guarantee.
- --------------------------------------------------------------------------------
You may need to provide additional documents to sell Fund shares if you are:
o a corporation;
o an executor or administrator;
o a trustee or custodian; or
o in a retirement plan.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account service to sell Fund shares:
SYSTEMATIC WITHDRAWAL PLAN. If you have at least $5,000 in the Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class B, Class C, or Class D
shares and reinvest your dividends and capital gain distributions, you may
withdraw 12%, 10%, or 10%, respectively, of the value of your Fund account (at
the time of election) annually without a CDSC.
11
<PAGE>
IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, the Fund reserves the right to:
o Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month
period;
2. the amount you wish to exchange equals the lesser of $1,000,000 or 1%
of the Fund's net assets; or 3. you or your financial advisor have
been advised that previous patterns of purchases and sales or
exchanges have been considered excessive.
o Refuse any request to buy Fund shares;
o Reject any request received by telephone;
o Suspend or terminate telephone services;
o Reject a signature guarantee that SDC believes may be fraudulent;
o Close your fund account if its value falls below $500;
o Close your account if it does not have a certified taxpayer
identification number.
TELEPHONE SERVICES
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account application
that you do not want telephone services:
o Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record);
o Exchange shares between funds;
o Change dividend and/or capital gain distribution options;
o Change your address;
o Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee).
Restrictions apply to certain types of accounts:
o Trust accounts on which the current trustee is not listed may not
sell Fund shares by phone;
o Corporations may not sell Fund shares by phone;
o IRAs may only exchange Fund shares or request address changes by
phone;
o Group retirement plans may not sell Fund shares by phone; plans that
allow participants to exchange by phone must provide a letter of
authorization signed by the plan custodian or trustee and provide a
supplemental election form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address of
record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. The Fund's
NAV may fluctuate during this time.
The Fund and SDC will not be liable for processing requests received by phone as
long as it was reasonable to believe that the request was genuine.
REINSTATEMENT PRIVILEGE
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
12
<PAGE>
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund generally pays any dividends from its net investment income and
distributes net capital gains realized on investments annually. It is expected
that the Fund's distributions will be primarily capital gains.
- --------------------------------------------------------------------------------
DIVIDEND:
A payment by a mutual fund, usually derived from the fund's net investment
income (dividends and interest earned on portfolio securities less expenses).
CAPITAL GAIN DISTRIBUTION:
A payment to mutual fund shareholders which represents profits realized on the
sale of securities in a fund's portfolio.
EX-DIVIDEND DATE:
The day on which any declared distributions (dividends or capital gains) are
deducted from a fund's assets before it calculates its NAV.
- --------------------------------------------------------------------------------
You may elect to:
(1) reinvest both dividends and capital gain distributions;
(2) receive dividends in cash and reinvest capital gain distributions; or
(3) receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise or if you own Fund shares in a Seligman tax-deferred
retirement plan.
If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus or, if you have telephone services, you or
your financial advisor may call SDC. Your request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.
Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your predesignated bank account within 3-4 business days from the
payable date.
Dividends and capital gain distributions are reinvested to buy additional Fund
shares on the payable date using the NAV of the ex-dividend date.
Dividends on Class B, Class C, and Class D shares will be lower than the
dividends on Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
TAXES
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
13
<PAGE>
THE SELIGMAN MUTUAL FUNDS
EQUITY
SPECIALTY
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND
INFORMATION FUND
Seeks capital appreciation by investing in companies operating in all aspects of
the communications, information, and related industries.
SELIGMAN HENDERSON GLOBAL TECHNOLOGY FUND
Seeks long-term capital appreciation by investing primarily in global securities
(US and non-US) of companies in the technology and technology-related
industries.
SELIGMAN HENDERSON EMERGING MARKETS GROWTH FUND
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging markets.
SMALL COMPANY
- --------------------------------------------------------------------------------
SELIGMAN FRONTIER FUND
Seeks growth of capital by investing primarily in small company growth stocks.
SELIGMAN SMALL-CAP VALUE FUND
Seeks long-term capital appreciation by investing in equities of small
companies, deemed to be "value" companies by the investment manager.
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES FUND
Seeks long-term capital appreciation by investing in securities of smaller
companies around the world, including the US.
MEDIUM COMPANY
- --------------------------------------------------------------------------------
SELIGMAN CAPITAL FUND
Seeks capital appreciation by investing in the common stocks of companies with
significant potential for growth.
LARGE COMPANY
- --------------------------------------------------------------------------------
SELIGMAN GROWTH FUND
Seeks long-term growth of capital value and an increase in future income.
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES FUND
Seeks capital appreciation by investing primarily in equity securities of
companies that have the potential to benefit from global economic or social
trends.
SELIGMAN LARGE-CAP VALUE FUND
Seeks long-term capital appreciation by investing in equities of large
companies, deemed to be "value" companies by the investment manager.
SELIGMAN COMMON STOCK FUND
Seeks favorable, but not the highest, current income and long-term growth of
both income and capital, without exposing capital to undue risk.
SELIGMAN HENDERSON INTERNATIONAL FUND
Seeks long-term capital appreciation by investing in securities of medium- to
large-sized companies, primarily in the developed markets outside the US.
BALANCED
- --------------------------------------------------------------------------------
SELIGMAN INCOME FUND
Seeks high current income and improvement in capital value over the long term,
consistent with prudent risk of capital.
FIXED-INCOME
INCOME
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND FUND
Seeks to maximize current income by investing in a diversified portfolio of
high-yielding, high-risk corporate bonds, commonly referred to as "junk bonds."
SELIGMAN U.S. GOVERNMENT SECURITIES FUND
Seeks high current income primarily by investing in a diversified portfolio of
securities guaranteed by the US government, its agencies, or instrumentalities,
which have maturities greater than one year.
MUNICIPAL
- --------------------------------------------------------------------------------
SELIGMAN MUNICIPAL FUNDS:
NATIONAL FUND
Seeks maximum income, exempt from regular federal income taxes.
STATE-SPECIFIC FUNDS:*
Seek to maximize income exempt from regular federal income taxes and from
regular income taxes in the designated state.
California Louisiana New Jersey
oHigh-Yield Maryland New York
oQuality Massachusetts North Carolina
Colorado Michigan Ohio
Florida Minnesota Oregon
Georgia Missouri Pennsylvania
South Carolina
* A small portion of income may be subject to state taxes.
MONEY MARKET
- --------------------------------------------------------------------------------
SELIGMAN CASH MANAGEMENT FUND
Seeks to preserve capital and to maximize liquidity and current income, by
investing only in high-quality money market securities having a maturity of 90
days or less. The fund seeks to maintain a constant net asset value of $1.00 per
share.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand the financial performance
of the Fund's Classes for the past five years or, if less than five years, the
period of the Class's operations. Class C is a new Class effective June 1, 1999,
so financial highlights are not available. Certain information reflects
financial results for a single share of a Class that was held throughout the
periods shown. "Total return" shows the rate that you would have earned (or
lost) on an investment in the Fund, assuming you reinvested all your dividends
and capital gain distributions. Total returns do not reflect any sales charges.
Deloitte & Touche LLP, independent auditors, have audited this information.
Their report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request.
CLASS A
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of year ............ $23.25 $23.51 $21.99 $16.64 $13.43
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ....................... (0.28) (0.33) (0.26) (0.33) (0.19)
Net gains or losses on securities
(both realized and unrealized) ............ 8.11 6.01 2.84 7.59 4.86
----- ----- ----- ----- -----
Total from investment operations .............. 7.83 5.68 2.58 7.26 4.67
----- ----- ----- ----- -----
Less distributions:
Distributions (from capital gains) .......... (0.35) (5.94) (1.06) (1.91) (1.46)
----- ----- ----- ----- -----
Total distributions ........................... (0.35) (5.94) (1.06) (1.91) (1.46)
----- ----- ----- ----- -----
Net asset value, end of year .................. $30.73 $23.25 $23.51 $21.99 $16.64
===== ===== ===== ===== =====
TOTAL RETURN: ................................. 33.92% 22.95% 11.94% 43.39% 35.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) ...... $3,890,596 $3,107,481 $2,414,672 $1,940,693 $307,542
Ratio of expenses to average net assets ..... 1.44% 1.53% 1.68% 1.61% 1.65%
Ratio of net income to average net assets ... (1.13)% (1.21)% (1.16)% (1.31)% (1.27)%
Portfolio turnover rate ..................... 126.70% 164.57% 121.32% 65.77% 104.08%
</TABLE>
- ----------------
* Per share amounts are calculated based on average shares outstanding.
15
<PAGE>
CLASS B
<TABLE>
<CAPTION>
Year ended
December 31, 4/22/96**
---------------------- to
1998 1997 12/31/96
----- ----- ---------
<S> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period ........... $21.94 $22.62 $21.51
----- ----- -----
Income from investment operations:
Net investment income ........................ (0.44) (0.50) (0.28)
Net gains or losses on securities
(both realized and unrealized) ............. 7.60 5.76 2.45
----- ----- -----
Total from investment operations ............... 7.16 5.26 2.17
----- ----- -----
Less distributions:
Distributions (from capital gains) ........... (0.35) (5.94) (1.06)
----- ----- -----
Total distributions ............................ (0.35) (5.94) (1.06)
----- ----- -----
Net asset value, end of period ................. $28.75 $21.94 $22.62
===== ===== =====
TOTAL RETURN: 32.89% 21.96% 10.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $1,033,105 $505,342 $120,848
Ratio of expenses to average net assets ..... 2.19% 2.28% 2.44%+
Ratio of net income to average net assets ... (1.88)% (1.96)% (1.96)%+
Portfolio turnover rate ..................... 126.70% 164.57% 121.32%++
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------
CLASS D 1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of year ............. $21.91 $22.61 $21.35 $16.31 $13.32
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ........................ (0.44) (0.50) (0.40) (0.50) (0.33)
Net gains or losses on securities
(both realized and unrealized) ............. 7.60 5.74 2.72 7.45 4.78
----- ----- ----- ----- -----
Total from investment operations ............... 7.16 5.24 2.32 6.95 4.45
----- ----- ----- ----- -----
Less distributions:
Distributions (from capital gains) ........... (0.35) (5.94) (1.06) (1.91) (1.46)
----- ----- ----- ----- -----
Total distributions ............................ (0.35) (5.94) (1.06) (1.91) (1.46)
----- ----- ----- ----- -----
Net asset value, end of year ................... $28.72 $21.91 $22.61 $21.35 $16.31
===== ===== ===== ===== =====
TOTAL RETURN: 32.94% 21.86% 11.07% 42.37% 33.94%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) ..... $1,228,237 $945,368 $737,979 $609,332 $96,100
Ratio of expenses to average net assets .... 2.19% 2.28% 2.43% 2.37% 2.50%
Ratio of net income to average net assets .. (1.88)% (1.96)% (1.91)% (2.07)% (2.20)%
Portfolio turnover rate .................... 126.70% 164.57% 121.32% 65.77% 104.08%
</TABLE>
- ----------------
* Per share amounts are calculated based on average shares outstanding.
** Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
16
<PAGE>
HOW TO CONTACT US
THE FUND Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
YOUR REGULAR
(NON-RETIREMENT)
ACCOUNT Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
YOUR RETIREMENT
ACCOUNT Write: Retirement Plan Services
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 445-1777
- --------------------------------------------------------------------------------
24-hour telephone access is available by dialing (800) 622-4597 on a touchtone
telephone. You will have instant access to price, yield, account balance, most
recent transaction, and other information.
- --------------------------------------------------------------------------------
17
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
The following information is available without charge upon request: Call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US.
Statement of Additional Information (SAI) contains additional information about
the Fund. It is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference into (is legally part of) this prospectus.
Annual/Semi-Annual Reports contain additional information about the Fund's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
- --------------------------------------------------------------------------------
[LOGO]
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (800) SEC-0330. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing: Public Reference Section of the SEC, Washington, DC 20549-6009.
SEC FILE NUMBER: 811-3596
<PAGE>
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
Statement of Additional Information
June 1, 1999
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of Seligman Communications and
Information Fund, Inc., dated June 1, 1999. This SAI, although not in itself a
prospectus, is incorporated by reference into the Prospectus in its entirety. It
should be read in conjunction with the Prospectus, which you may obtain by
writing or calling the Fund at the above address or telephone numbers.
The financial statements and notes included in the Fund's Annual Report, and the
Independent Auditors' Report thereon, are incorporated herein by reference. The
Annual Report will be furnished to you without charge if you request a copy of
this SAI.
Table of Contents
Fund History .............................................................. 2
Description of the Fund and its Investments and Risks ..................... 2
Management of the Fund .................................................... 6
Control Persons and Principal Holders of Securities ....................... 11
Investment Advisory and Other Services .................................... 11
Brokerage Allocation and Other Practices .................................. 17
Capital Stock and Other Securities ........................................ 18
Purchase, Redemption, and Pricing of Shares ............................... 18
Taxation of the Fund ...................................................... 24
Underwriters .............................................................. 25
Calculation of Performance Data ........................................... 26
Financial Statements ...................................................... 28
General Information ....................................................... 28
Appendix .................................................................. 29
<PAGE>
Fund History
The Fund was incorporated under the laws of the state of Maryland in 1982.
Description of the Fund and its Investments and Risks
Classification
The Fund is a diversified open-end management investment company, or mutual
fund.
Investment Strategies and Risks
The following information regarding the Fund's investments and risks supplements
the information contained in the Fund's Prospectus.
Foreign Securities. The Fund may invest in commercial paper and certificates of
deposit issued by foreign banks and may invest either directly or through
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), or
Global Depositary Receipts (GDRs) (collectively, Depositary Receipts) in other
securities of foreign issuers. Foreign investments may be affected favorably or
unfavorably by changes in currency rates and exchange control regulations. There
may be less information available about a foreign company than about a US
company and foreign companies may not be subject to reporting standards and
requirements comparable to those applicable to US companies. Foreign securities
may not be as liquid as US securities and there may be delays and risks
attendant in local settlement procedures. Securities of foreign companies may
involve greater market risk than securities of US companies, and foreign
brokerage commissions and custody fees are generally higher than those in the
United States. Investments in foreign securities may also be subject to local
economic or political risks, political instability, the possible nationalization
of issuers and the risk of expropriation or restrictions on the repatriation of
proceeds of sale. In addition, foreign investments may be subject to withholding
and other taxes.
Depositary Receipts are instruments generally issued by domestic banks or trust
companies that represent the deposits of a security of a foreign issuer. ADRs,
which are traded in dollars on US Exchanges or over-the-counter, are issued by
domestic banks and evidence ownership of securities issued by foreign
corporations. EDRs are typically traded in Europe. GDRs are typically traded in
both Europe and the United States. Depositary Receipts may be issued under
sponsored or unsponsored programs. In sponsored 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 programs are generally similar, the
issuers of securities represented by unsponsored Depositary Receipts are not
obligated to disclose material information 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 certificates of deposit issued by foreign
banks.
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 broker/dealers as a short-term cash management tool. A
repurchase agreement is an agreement under which the Fund acquires a security,
generally a US Government obligation, subject to resale at an agreed upon price
and date. The resale price reflects an agreed upon interest rate effective for
the period of time
2
<PAGE>
the Fund holds the security and is unrelated to the interest rate on the
security. The Fund's repurchase agreements will at all times be fully
collateralized.
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, a decline in value of the
underlying securities and a loss of interest. Repurchase agreements are
typically entered into for periods of one week or less. 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.
Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities, including restricted securities (i.e., securities not readily
marketable without registration under the Securities Act of 1933 (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 1933 Act, and 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 the Board of
Directors make this determination, it will carefully monitor the security
(focusing on such factors, among others, as trading activity and availability of
information) to determine that the Rule 144A security continues to be liquid. It
is not possible to predict with assurance exactly how the market for Rule 144A
securities will further evolve. This investment practice could have the effect
of increasing the level of illiquidity in the Fund, if and to the extent that
qualified institutional buyers become for a time uninterested in purchasing Rule
144A securities.
Borrowing. The Fund may from time to time borrow money to increase its portfolio
of securities. It may borrow only from banks and may not borrow in excess of
one-third of the market value of its assets, less liabilities other than such
borrowing. The Fund may pledge its assets only to the extent necessary to effect
permitted borrowing of up to 15% of its total assets on a secured basis. These
limits may be changed only by a vote of the shareholders. Current asset value
coverage of three times any amount borrowed is required at all times.
Borrowed money creates an opportunity for greater capital appreciation, but at
the same time increases exposure to capital risk. The net cost of any money
borrowed would be an expense that otherwise would not be incurred, and this
expense will limit the Fund's net investment income in any given period.
Any gain in the value of securities purchased with money borrowed in excess of
the cost of amounts borrowed would cause the net asset value of the Fund's
shares to increase more than otherwise would be the case. Conversely, any
decline in the value of securities purchased with money borrowed or any gain in
value less than the cost of amounts borrowed would cause net asset value to
decline more than would otherwise be the case.
Rights and Warrants. The Fund may invest in common stock rights and warrants
believed by the investment 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.
Lending of Portfolio Securities. The Fund may lend portfolio securities to
broker/dealers or other institutions, if the investment manager believes such
loans will be beneficial to the Fund. 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 any dividends or interest paid on the securities. The
Fund may invest the collateral and earn additional income or receive an agreed
upon amount of interest income from the borrower. Loans made by the
3
<PAGE>
Fund will generally be short-term. 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 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. The Fund may lose money if a borrower defaults on its
obligation to return securities and the value of the collateral held by the Fund
is insufficient to replace the loaned securities. In addition, the Fund is
responsible for any loss that might result from its investment of the borrower's
collateral.
Put Options. The Fund may purchase put options on portfolio securities in an
attempt to provide a hedge against a decrease in the market price of an
underlying security held by the Fund. The Fund will not purchase options for
speculative purposes.
Purchasing a put option gives the Fund the right to sell, and obligates the
writer to buy, the underlying security at the exercise price at any time during
the option period. This hedge protection is provided during the life of the put
option since the Fund, as holder of the put option, can sell the underlying
security at the put exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be profitable, the market
price of the underlying security must decline sufficiently below the exercise
price to cover the premium and transaction costs. By using put options in this
manner, the Fund will reduce any profit it might otherwise have realized in the
underlying security by the premium paid for the put option and by transaction
costs.
Because a purchased put option gives the purchaser a right and not an
obligation, the purchaser is not required to exercise the option. If the
underlying position incurs a gain, the Fund would let the option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option premium and transaction costs.
When the Fund purchases an option, it is required to pay a premium to the party
writing the option and a commission to the broker selling the option. If the
option is exercised by the Fund, the premium and the commission paid may be
greater than the amount of the brokerage commission charged if the security were
to be purchased or sold directly. The cost of the put option is limited to the
premium plus commission paid. The Fund's maximum financial exposure will be
limited to these costs.
The Fund may purchase both listed and over-the-counter put options. The Fund
will be exposed to the risk of counterparty nonperformance in the case of
over-the-counter put options.
Put options on securities may not be available to the Fund on reasonable terms
in many situations and the Fund may frequently choose not to purchase options
even when they are available. The Fund's ability to engage in option
transactions may be limited by tax considerations.
Except as otherwise specifically noted above, the Fund's investment strategies
are not fundamental and the Fund, with the approval of the Board of Directors,
may change such strategies without the vote of shareholders.
Fund Policies
The Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of the Fund's outstanding voting securities. Under these policies, the
Fund may not:
- - Borrow money, except in an amount not to exceed one-third of the value of
its total assets less liabilities other than such borrowing; or mortgage or
pledge any of its assets, except to the extent necessary to effect
permitted borrowings of up to 15% of its total assets on a secured basis;
- - Purchase securities on "margin," or sell "short," write or purchase put,
call, straddle or spread options, except that the Fund may purchase put
options solely for the purpose of hedging against a decline in the price of
securities held in the Fund's portfolio;
4
<PAGE>
- - Invest more than 5% of its total assets (taken at market) in securities of
any one issuer other than the US Government, its agencies or
instrumentalities, buy more than 10% of the voting securities of any
issuer, or invest to control or manage any company;
- - Invest more than 25% of the value of its total assets in any one industry,
except that the Fund will invest at least 25% of the value of its total
assets in securities of companies principally engaged in the
communications, information and related industries, except when investing
for temporary defensive purposes;
- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
for the purpose of hedging the Fund's obligations under the Deferred
Compensation Plan for Directors;
- - Purchase or sell commodities and commodity contracts or purchase or hold
real estate;
- - 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 issuer own in the aggregate more than
5% of such securities;
- - 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; or
- - Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, or the
entry into repurchase agreements may be considered loans;
The Fund also may not change its investment objective without shareholder
approval.
Under the Investment Company Act of 1940, as amended (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.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, the Fund may invest up to 100% of its assets in cash or cash
equivalents, including, but not limited to, prime commercial paper, bank
certificates of deposit, bankers' acceptances, or repurchase agreements for such
securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. The Fund's investments in foreign cash equivalents will be limited
to those that, in the opinion of the investment manager, equate generally to the
standards established for US cash equivalents. Investments in bank obligations
will be limited at the time of investment to the obligations of the 100 largest
domestic banks in terms of assets which are subject to regulatory supervision by
the US Government or state governments, and the obligations of the 100 largest
foreign banks in terms of assets with branches or agencies in the United States.
Portfolio Turnover
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the year by the monthly average
of the value of the portfolio securities owned during the year. Securities whose
maturity or expiration date at the time of acquisition were one year or less are
excluded from the calculation. The Fund's portfolio turnover rates for the years
ended December 31, 1998 and 1997 were 126.70% and 164.57%, respectively.
5
<PAGE>
Management of the Fund
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Fund.
Management Information
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.
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
<S> <C> <C>
William C. Morris* Director, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(61) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc., Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; and Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy company.
Formerly, Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
Brian T. Zino* Director, President and Director and President, J. & W. Seligman & Co.
(46) Member of the Executive Incorporated; President (with the exception of
Committee Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.) and Director or Trustee,
the Seligman Group of investment companies; Chairman,
Seligman Data Corp.; Member of the Board of Governors
of the Investment Company Institute; and Director,
ICI Mutual Insurance Company, Seligman Advisors,
Inc., and Seligman Services, Inc.
Richard R. Schmaltz* Director and Member of the Director and Managing Director, Director of
(58) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of investment
companies (except Seligman Cash Management Fund, Inc.);
Director, Seligman Henderson Co., and Trustee Emeritus
of Colby College. Formerly, Director, Investment
Research at Neuberger & Berman from May 1993 to
September 1996.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
<S> <C> <C>
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts
(69) University; Director or Trustee, the Seligman Group
Tufts University of investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; Governor of the Center for
Medford, MA 02155 Creative Leadership; Director; Raytheon Co.,
electronics; National Defense University; and the
Institute for Defense Analyses. Formerly, Director,
USLIFE Corporation, life insurance; Ambassador, U.S.
State Department for negotiations in Bosnia;
Distinguished Policy Analyst at Ohio State University
and Olin Distinguished Professor of National Security
Studies at the United States Military Academy. From
June 1987 to June 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United
States European Command.
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director
(64) or Trustee, the Seligman Group of investment
18 Highland Circle, companies; Trustee, the Committee for Economic
Bronxville, NY 10708 Development; and Chairman, The Rockefeller
Foundation, charitable foundation. Formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, New York Telephone Company;
and International Research and Exchange Board,
intellectual exchanges.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(66) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Suite Seligman Group of investment companies; Director,
805E Kimberly-Clark Corporation, consumer products; Bank
Oklahoma City, OK 73112 of Oklahoma Holding Company; Baptist Medical Center;
Oklahoma Chapter of the Nature Conservancy; Oklahoma
Medical Research Foundation; and National Boys and
Girls Clubs of America; and Member of the Business
Roundtable and National Petroleum Council. Formerly,
Chairman, Oklahoma City Public Schools Foundation;
and Director, Federal Reserve System's Kansas City
Reserve Bank and the Oklahoma City Chamber of
Commerce.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
<S> <C> <C>
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of investment companies; Director, Commonwealth
New York, NY 10004 Industries, Inc., manufacturers of aluminum sheet
products; the Foreign Policy Association; Municipal Art
Society of New York; the U.S. Council for International
Business; and New York Presbyterian Hospital; Chairman,
American Australian Association; and New York
Presbyterian Healthcare Network, Inc.; Vice-Chairman,
the U.S.-New Zealand Council; and Member of the
American Law Institute and Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of
(56) investment companies; Trustee, The Geraldine R. Dodge
P.O. Box 449, Foundation, charitable foundation; and Chairman of
Gladstone, NJ 07934 the Board of Trustees of St. George's School
(Newport, RI). Formerly, Director, the National
Association of Independent Schools (Washington, DC).
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris County, investment companies. Formerly, Director, Public
P.O. Box 1945, Morristown, NJ Service Enterprise Group, public utility.
07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment
(71) companies; Director, The Houston Exploration Company;
675 Third Avenue, The Brooklyn Museum, KeySpan Energy Corporation; and
Suite 3004 Public Broadcasting Service; and Trustee, the
New York, NY 10017 Committee for Economic Development. Formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies,
Inc. and Dow Jones & Company, Inc.; Director and
President, Bekaert Corporation; and Co-Chairman,
Mobil Corporation.
Robert L. Shafer Director Retired Vice President, Pfizer Inc.; Director or
(66) Trustee, the Seligman Group of investment companies.
96 Evergreen Avenue, Formerly, Director, USLIFE Corporation.
Rye, NY 10580
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
<S> <C> <C>
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc.;
(64) Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive, companies; Director, C-SPAN and CommScope, Inc.,
Dallas, TX 75230 manufacturer of coaxial cables. Formerly, Executive
Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.; and Director, Red Man Pipe and
Supply Company, piping and other materials.
Paul H. Wick Vice President and Portfolio Director and Managing Director, J. & W. Seligman &
(36) Manager Co. Incorporated, since January 1995 and November
1997, respectively; Vice President and Portfolio
Manager, two other open-end investment companies in the
Seligman Group of investment companies; and Portfolio
Manager, Henderson Investment Management Limited. He
joined J. & W. Seligman & Co. Incorporated in 1987 as
an Associate, Investment Research.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(42) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies, and Seligman Services,
Inc.; Vice President and Treasurer, Seligman
International, Inc.; and Treasurer, Seligman
Henderson Co.
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(34) Regulation and Corporate Secretary, J. & W. Seligman
& Co. Incorporated; Secretary, the Seligman Group of
investment companies, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services, Inc.,
Seligman International, Inc. and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(41) and Seligman Data Corp.
</TABLE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the 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.
Directors and officers of the Fund are also directors and officers of some or
all of the other investment companies in the Seligman Group.
9
<PAGE>
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to Directors (1)(2)
------------------ ------------- ------------- -------------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Richard R. Schmaltz, Director N/A N/A N/A
John R. Galvin, Director $7,908 N/A $79,000
Alice S. Ilchman, Director 7,847 N/A 73,000
Frank A. McPherson, Director 7,908 N/A 79,000
John E. Merow, Director 7,887 N/A 77,000
Betsy S. Michel, Director 7,908 N/A 79,000
James C. Pitney, Director 7,867 N/A 75,000
James Q. Riordan, Director 7,867 N/A 75,000
Robert L. Shafer, Director 7,867 N/A 75,000
James N. Whitson, Director 7,908(d) N/A 79,000(d)
</TABLE>
(1) For the Fund's year ended December 31, 1998. 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) The Seligman Group of investment companies consists of eighteen investment
companies.
(d) Deferred.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. The Fund has adopted a Deferred Compensation Plan
under which a director who has elected deferral of his or her fees may choose a
rate of return equal to either (1) the interest rate on short-term Treasury
Bills, or (2) the rate of return on the shares of any of the investment
companies advised by J. & W. Seligman & Co. Incorporated, as designated by the
director. The cost of such fees and earnings is included in directors' fees and
expenses, and the accumulated balance thereof is included in other liabilities
in the Fund's financial statements. The total amount of deferred compensation
(including earnings) payable in respect of the Fund to Mr. Whitson as of
December 31, 1998 was $32,629.
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation (including earnings) in the amounts of
$51,431 and $33,582, respectively, as of December 31, 1998.
The Fund may, but is not obligated to, purchase shares of the Seligman Group of
investment companies to hedge its obligations in connection with the Fund's
Deferred Compensation Plan.
Sales Charges
Class A shares of the Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Fund, the other investment companies in the Seligman Group, and J. & W.
Seligman & Co. Incorporated and its affiliates. Family members are defined to
include lineal descendants and lineal ancestors, siblings (and their spouses and
children) and any company or organization controlled by any of the foregoing.
Such sales may also be made to employee benefit plans and thrift plans for such
persons and to any investment advisory, custodial, trust or other fiduciary
account managed or advised by J. & W. Seligman & Co. Incorporated or any
affiliate. The sales may be made for investment purposes only, and shares may be
resold only to the Fund.
Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.
10
<PAGE>
Control Persons and Principal Holders of Securities
Control Persons
As of May 14, 1999, there was no person or persons who controlled the Fund,
either through a significant ownership of shares or any other means of control.
Principal Holders
As of May 14, 1999, 18.48% of the Fund's Class A capital stock then outstanding,
23.59% of the Fund's Class B capital stock then outstanding, and 33.91% of the
Fund's Class D capital stock then outstanding, were owned of record by MLPF&S
for the Sole Benefit of Its Customers, Attn Fund Administrator, 4800 Deer Lake
Drive East, 3rd Floor, Jacksonville, FL 32246.
Management Ownership
Directors and officers of the Fund as a group owned less than 1% of the Fund's
Class A capital stock as of May 14, 1999. As of the same date, no Directors or
officers owned shares of the Fund's Class B or Class D capital stock.
Investment Advisory and Other Services
Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages the Fund. Seligman is a
successor firm to an investment banking business founded in 1864 which has
thereafter provided investment services to individuals, families, institutions,
and corporations. On December 29, 1988, a majority of the outstanding voting
securities of Seligman was purchased by Mr. William C. Morris and a simultaneous
recapitalization of Seligman occurred. See Appendix for further history of
Seligman.
All of the officers of the Fund listed above are officers or employees of
Seligman. Their affiliations with the Fund and with Seligman are provided under
their principal business occupations.
The Fund pays Seligman a management fee for its services, calculated daily and
payable monthly. The management fee is equal to .90% per annum of the Fund's
average daily net assets on the first $3 billion of net assets, .85% per annum
of the Fund's average daily net assets on the next $3 billion of net assets and
.75% per annum of the Fund's average daily net assets in excess of $6 billion.
For the year ended December 31, 1998, the Fund paid Seligman $44,375,965, equal
to 0.88% per annum of its average daily net assets. For the year ended December
31, 1997, the Fund paid Seligman $35,523,038, equal to .89% per annum of its
average daily net assets, and for the year ended December 31, 1996, the Fund
paid Seligman $25,710,954, equal to .89% per annum of its average daily net
assets.
The Fund pays all of its expenses other than those assumed by Seligman,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, including fees and expenses of qualifying 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 record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by or serving as a Director of Seligman or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses.
11
<PAGE>
The Management Agreement provides that Seligman will not be liable to the Fund
for any error of judgment or mistake of law, or for any loss arising out of any
investment, or for any act or omission in performing its duties under the
Agreement, except for willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Agreement.
The Management Agreement was initially approved by the Board of Directors at a
Meeting held on September 30, 1988 and by the shareholders at a special meeting
held on December 16, 1988. Amendments to the Management Agreement, effective
February 8, 1996, to increase the fee rate payable to Seligman by the Fund, were
approved by the Board of Directors on September 21, 1995 and by the shareholders
at a special meeting held on February 7, 1996. 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) Seligman
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 Seligman
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 Seligman's
business.
Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. The Code
of Ethics proscribes certain practices with regard to personal securities
transactions and personal dealings, provides a framework for the reporting and
monitoring of personal securities transactions by Seligman's Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, directors and employees (including all portfolio managers) of
Seligman from purchasing or selling any security that the officer, director, or
employee knows or believes (1) was recommended by Seligman for purchase or sale
by any client, including the Fund, within the preceding two weeks, (2) has been
reviewed by Seligman for possible purchase or sale within the preceding two
weeks, (3) is being purchased or sold by any client, (4) is being considered by
a research analyst, (5) is being acquired in a private placement, unless prior
approval has been obtained from Seligman's Compliance Officer, or (6) is being
acquired during an initial or secondary public offering. The Code of Ethics also
imposes a strict standard of confidentiality and requires portfolio managers to
disclose any interest they may have in the securities or issuers that they
recommend for purchase by any client.
The Code of Ethics also prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages; and (2) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors, and employees are required, except under very limited
circumstances, to engage in personal securities transactions through Seligman's
order desk. The order desk maintains a list of securities that may not be
purchased due to a possible conflict with clients. All officers, directors and
employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
Principal Underwriter
Seligman Advisors, Inc. (Seligman Advisors), an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
the Fund and of the other mutual funds in the Seligman Group. Seligman Advisors
is an "affiliated person" (as defined in the 1940 Act) of Seligman, which is
itself an affiliated person of the Fund. Those individuals identified above
under "Management Information" as directors or officers of both the Fund and
Seligman Advisors are affiliated persons of both entities.
12
<PAGE>
Services Provided by the Investment Manager
Under the Management Agreement, dated December 29, 1988, as amended February 8,
1996, subject to the control of the Board of Directors, Seligman 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. Seligman provides the
Fund with such office space, administrative and other services and executive and
other personnel as are necessary for Fund operations. Seligman pays all of the
compensation of directors of the Fund who are employees or consultants of
Seligman and of the officers and employees of the Fund. Seligman also provides
senior management for Seligman Data Corp., the Fund's shareholder service agent.
Service Agreements
There are no other management-related service contracts under which services are
provided to the Fund.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise the Fund with respect to its investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of the Fund, as set forth below:
Class A shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
As a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more, but you
will be subject to a 1% CDSC if you sell your shares within 18 months.
Class C shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
As a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000 because if
you invest $1,000,000 or more, you will pay less in fees and charges if you
buy Class A shares.
13
<PAGE>
Seligman Services, Inc., (Seligman Services) an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares. For years ended December 31,
1998, 1997 and 1996, Seligman Services received commissions in the amounts of
$404,711, $494,285 and $772,408, respectively.
Rule 12b-1 Plan
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under the 12b-1 Plan, the Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class B, Class C, and Class D shares. Payments under the 12b-1 Plan may include,
but are not limited to: (1) compensation to securities dealers and other
organizations (Service Organizations) for providing distribution assistance with
respect to assets invested in the Fund; (2) compensation to Service
Organizations for providing administration, accounting and other shareholder
services with respect to Fund shareholders; and (3) otherwise promoting the sale
of shares of the Fund, including paying for the preparation of advertising and
sales literature and the printing and distribution of such promotional materials
and prospectuses to prospective investors and defraying Seligman Advisors' costs
incurred in connection with its marketing efforts with respect to shares of the
Fund. Seligman, in its sole discretion, may also make similar payments to
Seligman Advisors from its own resources, which may include the management fee
that Seligman receives from the Fund. Payments made by the Fund under the 12b-1
Plan are intended to be used to encourage sales of the Fund, as well as to
discourage redemptions.
Fees paid by the Fund under the 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of the
Fund are allocated between the classes in accordance with a methodology approved
by the Fund's Board of Directors. Expenses of distribution activities that
benefit both the Fund and other Seligman funds will be allocated among the
applicable funds based on relative gross sales during the quarter in which such
expenses are incurred, in accordance with a methodology approved by the Board.
Class A
Under the 12b-1 Plan, the Fund, with respect to Class A shares, pays quarterly
to Seligman Advisors a service fee at an annual rate of up to .25% of the
average daily net asset value of the Class A shares. These fees are used by
Seligman Advisors exclusively to make payments to Service Organizations which
have entered into agreements with Seligman Advisors. Such Service Organizations
receive from Seligman Advisors a continuing fee of up to .25% on an annual
basis, payable quarterly, of the average daily net assets of Class A shares
attributable to the particular Service Organization for providing personal
service and/or maintenance of shareholder accounts. The fee payable to Service
Organizations from time to time shall, within such limits, be determined by the
Directors of the Fund. The Fund is not obligated to pay Seligman Advisors for
any such costs it incurs in excess of the fee described above. No expense
incurred in one year by Seligman Advisors with respect to Class A shares of the
Fund may be paid from Class A 12b-1 fees received from the Fund in any other
year. If the Fund's 12b-1 Plan is terminated in respect of Class A shares, no
amounts (other than amounts accrued but not yet paid) would be owed by the Fund
to Seligman Advisors with respect to Class A shares. The total amount paid by
the Fund to Seligman Advisors in respect of Class A shares for the year ended
December 31, 1998 was $8,106,817, equivalent to 0.25% per annum of the average
daily net assets of Class A shares.
Class B
Under the 12b-1 Plan, the Fund, with respect to Class B shares, pays monthly a
12b-1 fee at an annual rate of up to 1% of the average daily net asset value of
the Class B shares. The fee is comprised of (1) a distribution fee equal to .75%
per annum, which is paid directly to a third party, FEP Capital, L.P., to
compensate it for having funded, at the time of sale of Class B shares (i) a 4%
sales commission to
14
<PAGE>
Service Organizations and (ii) a payment of up to .25% of sales to Seligman
Advisors to help defray its costs of distributing Class B shares; and (2) a
service fee of up to .25% per annum which is paid to Seligman Advisors. The
service fee is used by Seligman Advisors exclusively to make payments to Service
Organizations which have entered into agreements with Seligman Advisors. Such
Service Organizations receive from Seligman Advisors a continuing service fee of
up to .25% on an annual basis, payable quarterly, of the average daily net
assets of Class B shares attributable to the particular Service Organization for
providing personal service and/or maintenance of shareholder accounts. The
amounts expended by Seligman Advisors or FEP Capital, L.P. in any one year upon
the initial purchase of Class B shares of the Fund may exceed the 12b-1 fees
paid by the Fund in that year. The Fund's 12b-1 Plan permits expenses incurred
in respect of Class B shares in one year to be paid from Class B 12b-1 fees
received from the Fund in any other year; however, in any fiscal year the Fund
is not obligated to pay any 12b-1 fees in excess of the fees described above.
Seligman Advisors and FEP Capital, L.P. are not reimbursed for expenses which
exceed such fees. If the Fund's 12b-1 Plan is terminated in respect of Class B
shares, no amounts (other than amounts accrued but not yet paid) would be owed
by that Fund to Seligman Advisors or FEP Capital, L.P. with respect to Class B
shares. The total amount paid by the Fund in respect of Class B shares for the
year ended December 31, 1998 was $7,384,792, equivalent to 1% per annum of the
average daily net assets of Class B shares.
Class C
Under the 12b-1 Plan, the Fund, with respect to Class C shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class C shares. The fee is used by Seligman Advisors as
follows: During the first year following the sale of Class C shares, a
distribution fee of .75% of the average daily net assets attributable to Class C
shares is used, along with any CDSC proceeds during the first eighteen months,
to (1) reimburse Seligman Advisors for its payment at the time of sale of Class
C shares of a 1.25% sales commission to Service Organizations, and (2) pay for
other distribution expenses, including paying for the preparation of advertising
and sales literature and the printing and distribution of such promotional
materials and prospectuses to prospective investors and other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class C shares, a service fee of up to .25% of the average daily net assets
attributable to such Class C shares is used to reimburse Seligman Advisors for
its prepayment to Service Organizations at the time of sale of Class C shares of
a service fee of .25% of the net asset value of the Class C share sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale). The payment of service fees to
Seligman Advisors is limited to amounts Seligman Advisors actually paid to
Service Organizations at the time of sale as service fees. After the initial
one-year period following a sale of Class C shares, the entire 12b-1 fee
attributable to such Class C shares is paid to Service Organizations for
providing continuing shareholder services and distribution assistance in respect
of the Fund. The Fund did not pay any 12b-1 fees in respect of Class C shares
for the fiscal year ended September 30, 1998 because no Class C shares were
issued or outstanding during such period.
Class D
Under the 12b-1 Plan, the Fund, with respect to Class D shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class D shares. The Fee is used by Seligman Advisors as
follows: During the first year following the sale of Class D shares, a
distribution fee of .75% of the average daily net assets attributable to such
Class D shares is used, along with any CDSC proceeds, to (1) reimburse Seligman
Advisors for its payment at the time of sale of Class D shares of a .75% sales
commission to Service Organizations, and (2) pay for other distribution
expenses, including paying for the preparation of advertising and sales
literature and the printing and distribution of such promotional materials and
prospectuses to prospective investors and other marketing costs of Seligman
Advisors. In addition, during the first year following the sale of Class D
shares, a service fee of up to .25% of the average daily net assets attributable
to such Class D shares is used to reimburse Seligman Advisors for its prepayment
to Service Organizations at the time of sale of Class D shares of a service fee
of .25% of the net asset value of the Class D shares sold (for shareholder
services to be provided to Class D shareholders over the course of the one year
immediately following the sale). The payment of service fees to Seligman
Advisors is limited to amounts Seligman Advisors actually paid to Service
Organizations at the time of sale as service fees. After the initial one-year
period following a
15
<PAGE>
sale of Class D shares, the entire 12b-1 fee attributable to such Class D shares
is paid to Service Organizations for providing continuing shareholder services
and distribution assistance in respect of the Fund. The total amount paid by the
Fund in respect of Class D shares for the year ended December 31, 1998 was
$10,339,390, equivalent to 1% per annum of the average daily net assets of Class
D shares.
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year.
The Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class D shares in one year to be paid from Class D 12b-1 fees in any other
year; however, in any year the Fund is not obligated to pay any 12b-1 fees in
excess of the fees described above.
As of December 31, 1998, Seligman Advisors has incurred $76,119 of unreimbursed
expenses in respect of the Fund's Class D shares. This amount is equal to .01%
of the net assets of Class D shares at December 31, 1998.
If the Fund's 12b-1 Plan is terminated in respect of Class D shares of the Fund,
no amounts (other than amounts accrued but not yet paid) would be owed by the
Fund to Seligman Advisors with respect to Class D shares.
Payments made by the Fund under the 12b-1 Plan for its year ended December 31,
1998, were spent on the following activities in the following amounts (no Class
C shares were outstanding during such fiscal year):
Class A Class B Class D
------- ------- -------
Compensation to underwriters -- -- $2,423,946
Compensation to broker/dealers $8,106,817 $1,861,984 $7,915,444
Other* -- $5,522,808 --
* Payment is made to FEP Capital, L.P. to compensate it for having funded at
the time of sale, payments to broker/dealers and underwriters.
The 12b-1 Plan was approved on July 16, 1992 by the Directors, 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 12b-1 Plan or in any agreement related to the 12b-1 Plan
(the "Qualified Directors") and was approved by shareholders of the Fund at a
Special Meeting of the Shareholders held on November 23, 1992. The 12b-1 Plan
became effective in respect of the Class A shares on January 1, 1993. The 12b-1
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 the Qualified Directors,
and became effective in respect of the Class B shares on April 22, 1996. The
12b-1 Plan was approved in respect of the Class D shares on March 18, 1993 by
the Directors, including a majority of the Qualified Directors, and became
effective in respect of the Class D shares on May 1, 1993. The 12b-1 Plan was
approved in respect of the Class C shares on May 20, 1999 by the Directors,
including a majority of the Qualified Directors, and became effective in respect
of the Class C shares on June 1, 1999. The 12b-1 Plan will continue in effect
until December 31 of each year so long as such continuance is approved annually
by a majority vote of both the Directors of the Fund and the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval. The 12b-1 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 12b-1 Plan is proposed to be
increased materially, the Fund will either (1) permit holders of Class B shares
to vote as a separate class on the proposed increase or (2) establish a new
class of shares subject to the same payment under the 12b-1 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
16
<PAGE>
amendment to the 12b-1 Plan may be made except by vote of a majority of both the
Directors and the Qualified Directors.
The 12b-1 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 therefor) under the 12b-1 Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be made by such disinterested Directors. The
12b-1 Plan is reviewed by the Directors annually.
Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor and receives compensation from
the Fund pursuant to the 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services. For the years
ended December 31, 1998, 1997 and 1996, Seligman Services received distribution
and service fees from the Fund pursuant to its 12b-1 Plan of $980,100, $961,731
and $714,490, respectively.
Brokerage Allocation and Other Practices
Brokerage Transactions
Seligman will seek the most favorable price and execution in the purchase and
sale of portfolio securities of the Fund. When two or more of the investment
companies in the Seligman Group or other investment advisory clients of Seligman
desire to buy or sell the same security at the same time, the securities
purchased or sold are allocated by Seligman in a manner believed to be equitable
to each. There may be possible advantages or disadvantages of such transactions
with respect to price or the size of positions readily obtainable or saleable.
In over-the-counter markets, the Fund deals with responsible 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.
For the years ended December 31, 1998, 1997 and 1996, the Fund paid total
brokerage commissions to others for execution, research and statistical services
in the amounts of $9,044,621, $7,436,884 and $4,496,690, respectively. The
amount of brokerage commissions paid by the Fund has increased materially from
1996 due to the Fund's increase in new assets under management.
Commissions
For the years ended December 31, 1998, 1997 and 1996, the Fund did not execute
any portfolio transactions with, and therefore did not pay any commissions to,
any broker affiliated with either the Fund, Seligman, or Seligman Advisors.
Brokerage Selection
Consistent with seeking the most favorable price and execution when buying or
selling portfolio securities, Seligman may give consideration to the research,
statistical, and other services furnished by brokers or dealers to Seligman for
its use, as well as the general attitude toward and support of investment
companies demonstrated by such brokers or dealers. Such services include
supplemental investment research, analysis, and reports concerning issuers,
industries, and securities deemed by Seligman to be beneficial to the Fund. In
addition, Seligman is authorized to place orders with brokers who provide
supplemental investment and market research and security and economic analysis
although the use of such brokers may result in a higher brokerage charge to the
Fund than the use of brokers selected solely on the basis of seeking the most
favorable price and execution and although such research and analysis may be
useful to Seligman in connection with its services to clients other than the
Fund.
17
<PAGE>
Directed Brokerage
During the year ended December 31, 1998, neither the Fund nor Seligman directed
any of the Fund's brokerage transactions to a broker because of research
services provided.
Regular Broker-Dealers
During the year ended December 31, 1998, the Fund did not acquire securities of
its regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or
of their parents.
Capital Stock and Other Securities
Capital Stock
The Fund is authorized to issue 1,000,000,000 shares of capital stock, each with
a par value of $0.10, divided into three classes, designated Class A common
stock, Class B common stock, Class C common stock, and Class D common stock.
Each share of the Fund's Class A, Class B, Class C, and Class D common stock is
equal as to earnings, assets, and voting privileges, except that each class
bears its own separate distribution and, potentially, certain other class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required by the 1940 Act or Maryland law. The Fund
has adopted a multiclass plan pursuant to Rule 18f-3 under the 1940 Act
permitting the issuance and sale of multiple classes of common stock. In
accordance with the Articles of Incorporation, the Board of Directors may
authorize the creation of additional classes of common stock with such
characteristics as are permitted by the multiclass plan and Rule 18f-3. The 1940
Act requires that where more than one class exists, each class must be preferred
over all other classes in respect of assets specifically allocated to such
class. All shares have noncumulative voting rights for the election of
directors. Each outstanding share is fully paid and non-assessable, and each is
freely transferable. There are no liquidation, conversion, or preemptive rights.
Other Securities
The Fund has no authorized securities other than common stock.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Class A shares may be purchased at a price equal to the next determined net
asset value per share, plus an initial sales charge.
Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:
Volume Discounts are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge schedule set forth in the Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
and the total net asset value of shares of Seligman Cash Management Fund which
were acquired through an exchange of shares of another Seligman mutual fund on
which there was an initial sales charge at the time of purchase to determine
reduced sales charges in accordance with the schedule in the prospectus. The
value of the shares owned, including the value of shares of Seligman Cash
Management Fund
18
<PAGE>
acquired in an exchange of shares of another Seligman mutual fund on which there
was an initial sales charge at the time of purchase will be taken into account
in orders placed through a dealer, however, only if Seligman Advisors is
notified by an investor or a dealer of the amount owned by the investor at the
time the purchase is made and is furnished sufficient information to permit
confirmation.
A Letter of Intent allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales charge of the other Seligman mutual
funds already owned and the total net asset value of shares of Seligman Cash
Management Fund which were acquired through an exchange of shares of another
Seligman mutual fund on which there was an initial sales charge at the time of
purchase. Reduced sales charges also may apply to purchases made within a
13-month period starting up to 90 days before the date of execution of a letter
of intent.
Persons Entitled To Reductions. Reductions in initial sales charges apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
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) of the
Internal Revenue Code, and non-qualified employee benefit plans that satisfy
uniform criteria are considered "single persons" for this purpose. The uniform
criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports, and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The table of sales charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans" which have
at least (1) $500,000 invested in the Seligman Group of mutual funds or (2) 50
eligible employees to whom such plan is made available. Such sales must be made
in connection with a payroll deduction system of plan funding or other systems
acceptable to Seligman Data Corp., the Fund's shareholder service agent.
"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. Section 403(b) plans
sponsored by public educational institutions are not eligible for net asset
value purchases based on the aggregate investment made by the plan or number of
eligible employees.
Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman Data
Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:
(1) to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in Fund
shares;
19
<PAGE>
(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;
(4) to financial institution trust departments;
(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;
(6) to accounts of financial institutions or broker/dealers that charge account
management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts;
(7) pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the
Fund;
(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors;
(9) to certain "eligible employee benefit plans" as discussed above;
(10) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and
(11) in connection with sales pursuant to a 401(k) alliance program which has an
agreement with Seligman Advisors.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge due to a purchase of $1,000,000 or more either alone or through a
Volume Discount, Right of Accumulation, or Letter of Intent are subject to a
CDSC of 1% on redemptions of such shares within eighteen months of purchase.
Employee benefit plans eligible for net asset value sales may be subject to a
CDSC of 1% for terminations at the plan level only, on redemptions of shares
purchased within eighteen months prior to plan termination. The 1% CDSC will be
waived on shares that were purchased through Morgan Stanley Dean Witter & Co. by
certain Chilean institutional investors (i.e., pension plans, insurance
companies, and mutual funds). Upon redemption of such shares within an
eighteen-month period, Morgan Stanley Dean Witter will reimburse Seligman
Advisors a pro rata portion of the fee it received from Seligman Advisors at the
time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Class B
Class B shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class B shares are
subject to a CDSC if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
Years Since Purchase CDSC
Less than 1 year .......................................... 5%
1 year or more but less than 2 years ...................... 4%
2 years or more but less than 3 years ..................... 3%
20
<PAGE>
3 years or more but less than 4 years ..................... 3%
4 years or more but less than 5 years ..................... 2%
5 years or more but less than 6 years ..................... 1%
6 years or more ........................................... 0%
Approximately eight years after purchase, Class B shares will convert
automatically into Class A shares. Shares purchased through reinvestment of
dividends and distribution 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 exchanged for Class B
shares of another Seligman mutual fund, the conversion period applicable to the
Class B shares acquired in the exchange will apply, and the holding period of
the shares exchanged will be tacked onto the holding period of the shares
acquired. Class B shareholders of the Fund exercising the exchange privilege
will continue to be subject to the Fund's CDSC schedule if such schedule is
higher or longer than the CDSC schedule relating to the new Class B shares. In
addition, Class B shares of the Fund acquired by exchange will be subject to the
Fund's CDSC schedule if such schedule is higher or longer than the CDSC schedule
relating to the Class B shares of the Seligman mutual fund from which the
exchange has been made.
Class C
Class C shares may be purchased at a price equal to the next determined net
asset value, plus an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less.
Class D
Class D shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class D shares are
subject to a CDSC of 1% if the shares are redeemed within one year of purchase,
charged as a percentage of the current net asset value or the original purchase
price, whichever is less. Unlike Class B shares, Class D shares do not
automatically convert to Class A shares after eight years.
Systematic Withdrawals. Class B, Class C, and Class D shareholders who reinvest
both their dividends and capital gain distributions to purchase additional
shares of the Fund may use the Systematic Withdrawal Plan to withdraw up to 12%,
10% and 10%, respectively, of the value of their accounts per year without the
imposition of a CDSC. Account value is determined as of the date the systematic
withdrawals begin.
CDSC Waivers. The CDSC on Class B, Class C, and Class D shares (and certain
Class A shares, as discussed above) will be waived or reduced in the following
instances:
(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;
(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue Code when such redemptions are
necessary to make distributions to plan participants (such payments
include, but are not limited to, death, disability, retirement, or
separation of service), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age 70
1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
(3) in whole or in part, in connection with shares sold to current and retired
Directors of the Fund;
21
<PAGE>
(4) in whole or in part, in connection with shares sold to any state, county,
or city or any instrumentality, department, authority, or agency thereof,
which is prohibited by applicable investment laws from paying a sales load
or commission in connection with the purchase of any registered investment
management company;
(5) in whole or in part, in connection with systematic withdrawals;
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class B, Class C, or Class D
shares sold by a dealer, the CDSC is waived because the redemption qualifies for
a waiver as set forth above, the dealer shall remit to Seligman Advisors
promptly upon notice, an amount equal to the payment or a portion of the payment
made by Seligman Advisors at the time of sale of such shares.
Payment in Securities. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales charge), 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 Seligman 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 charges, 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.
Fund Reorganizations
Class A shares and Class C shares may be issued without an initial sales charge
in connection with the acquisition of cash and securities owned by other
investment companies. Any CDSC will be waived in connection with the redemption
of shares of the Fund if the Fund is combined with another Seligman mutual fund,
or in connection with a similar reorganization transaction.
Offering Price
When you buy or sell Fund shares, you do so at the Class's net asset value (NAV)
next calculated after Seligman Advisors accepts your request. Any applicable
sales charge will be added to the purchase price for Class A shares and Class C
shares.
NAV per share of each class of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open for business. The NYSE is currently closed on New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The Fund
will also determine NAV for each class on each day in which there is a
sufficient degree of trading in the Fund's portfolio securities that the NAV of
Fund shares might be materially affected. NAV per share for a class is computed
by dividing such class's 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 management fee,
are accrued daily and taken into account for the purpose of determining NAV. The
NAV of Class B, Class C, and Class D shares will generally be lower than the NAV
of Class A shares as a result of the higher 12b-1 fees with respect to such
shares.
Portfolio securities are valued at the last sales price on the securities
exchange or securities market on which such securities primarily are traded.
Securities not listed on an exchange or securities market, or securities in
which there were no transactions, are valued at the average of the most recent
bid and asked price, except in the case of open short positions where the asked
price is available. Securities traded on a foreign exchange or over-the-counter
market are valued at the last sales price on the primary exchange or
22
<PAGE>
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 or other
assets for which recent market quotations are not readily available are valued
at fair value as determined in accordance with procedures approved by the Board
of Directors. Short-term obligations with less than 60 days remaining to
maturity are generally valued at amortized cost. Short-term obligations with
more than 60 days remaining to maturity will be valued at current market value
until the sixtieth day prior to maturity, and will then be valued on an
amortized cost basis based on the value on such date unless the Board determines
that this amortized cost value does not represent fair market value. Expenses
and fees, including the investment management fee, are accrued daily and taken
into account for the purpose of determining the net asset value of Fund shares.
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of 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 the NYSE.
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 US dollars at the mean between the bid and offer prices of such
currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
Specimen Price Make-Up
Under the current distribution arrangements between the Fund and Seligman
Advisors, Class A shares and Class C shares are sold with a maximum initial
sales charge of 4.75% and 1.00%(1), respectively, and Class B and Class D shares
are sold at NAV(2). Using each Class's NAV at December 31, 1998, (except Class C
shares, which commences operations effective June 1, 1999), the maximum offering
price of the Fund's shares is as follows:
Class A
Net asset value per share $30.73
------
Maximum sales charge (4.75% of offering price) 1.53
------
Offering price to public $32.26
======
Class B
Net asset value and offering price per share(2) $28.75
======
Class D
Net asset value and offering price per share(2) $28.72
======
- --------------
(1) In addition to the front-end sales charge of 1.00%, Class C shares are
subject to a 1% CDSC if you redeem your shares within eighteen months of
purchase.
(2) Class B shares are subject to a CDSC declining from 5% in the first year
after purchase to 0% after six years. Class D shares are also subject to a
1% CDSC if you redeem your shares within one year of purchase.
Redemption in Kind
The procedures for selling 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. Under these
circumstances, redemption proceeds may be made in securities.
23
<PAGE>
If payment is made in securities, a shareholder may incur brokerage expenses in
converting these securities to cash.
Taxation of the Fund
The Fund is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, 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 derived
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 gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in the form of additional shares issued by
the 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. Individual shareholders generally will be
subject to federal tax on distributions of net capital gains at a maximum rate
of 20% if designated as derived from the Fund's capital gains from property held
for more than one year.
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 shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as a 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 (including shares
acquired 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 permitted
to include in the tax basis attributable to such shares the sales charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales charge not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
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 the basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned by the Fund.
Furthermore, dividends declared in October, November or December, payable to
shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January of
the following year.
24
<PAGE>
Shareholders are urged to consult their tax advisors concerning the effect of
federal income taxes in their individual circumstances.
Unless a shareholder includes a certified taxpayer identification number (social
security number for individuals) on the account application and certifies that
the shareholder is not subject to backup withholding, the fund is required to
withhold and remit to the US Treasury a portion of distributions and other
reportable payments to the shareholder. The rate of backup withholding is 31%.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the 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 that may be
deducted from the shareholder's account and offset against any undistributed
dividends and capital gain distributions. The Fund also reserves the right to
close any account which does not have a certified taxpayer identification
number.
Underwriters
Distribution of Securities
The Fund and Seligman Advisors are parties to a Distributing Agreement dated
January 1, 1993 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Fund. Seligman Advisors accepts orders for the
purchase of Fund shares, which are offered continuously. As general distributor
of the Fund's capital stock, Seligman Advisors allows reallowances to all
dealers on sales of Class A shares, as set forth above under "Dealer
Reallowances." Seligman Advisors retains the balance of sales charges and any
CDSCs paid by investors.
Total initial sales charges paid by shareholders of Class A shares of the Fund
for the years ended December 31, 1998, 1997 and 1996, amounted to $14,019,918,
$19,391,260 and $28,814,289, respectively, of which $1,537,225, $2,126,669 and
$3,145,037, respectively, was retained by Seligman Advisors. No Class C shares
of the Fund were issued or outstanding during such fiscal years.
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Fund, received the following commissions and other
compensation from the Fund during its year ended December 31, 1998:
Net Underwriting Compensation on
Discounts and Redemptions and
Commissions Repurchases
(Class A Sales (CDSC on Class A and Brokerage Other
Charge Retained) Class D Retained) Commissions Compensation (1)
---------------- ---------------- ----------- ----------------
$1,537,225 $475,038 $0 $576,783
(1) Seligman Advisors has sold its rights to collect the distribution fees paid
by the Fund in respect of Class B shares and any CDSC imposed on
redemptions of Class B shares to FEP Capital, L.P., in connection with an
arrangement with FEP Capital, L.P. as discussed above under "12b-1 Plan."
In connection with this arrangement, Seligman Advisors receives payments
from FEP Capital, L.P. based on the value of Class B shares sold. Such
payments received for the year ended December 31, 1998 are reflected in the
table.
Other Payments
Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of $1,000,000 or more (NAV sales), calculated as
follows: 1.00% of NAV sales up to but not including $2 million; .80% of NAV
sales from $2 million up to but not including $3 million; .50% of NAV sales from
$3 million up to but not including $5 million; and .25% of NAV sales from $5
million and above. The calculation of the fee will be based on assets held by a
"single person," including an individual, members of a family unit comprising
husband, wife and minor children purchasing securities
25
<PAGE>
for their own account, or a trustee or other fiduciary purchasing for a single
fiduciary account or single trust. Purchases made by a trustee or other
fiduciary for a fiduciary account may not be aggregated purchases made on behalf
of any other fiduciary or individual account.
Seligman Advisors shall also pay broker/dealers, from its own resources, a fee
on assets of certain investments in Class A shares of the Seligman mutual funds
participating in an "eligible employee benefit plan" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 50 eligible employees to whom such plan is made available. Class A
shares representing only an initial purchase of Seligman Cash Management Fund
are not eligible for the fee. Such shares will become eligible for the fee once
they are exchanged for shares of another Seligman mutual fund. The payment is
based on cumulative sales for each Plan during a single calendar year, or
portion thereof. The payment schedule, for each calendar year, is as follows:
1.00% of sales up to but not including $2 million; .80% of sales from $2 million
up to but not including $3 million; .50% of sales from $3 million up to but not
including $5 million; and .25% of sales from $5 million and above.
Seligman Advisors may from time to time assist dealers by, among other things,
providing sales literature to, and holding informational programs for the
benefit of, dealers' registered representatives. Seligman Advisors may from time
to time pay a bonus or other incentive to dealers that sell shares of the
Seligman mutual funds. Such bonus or other incentive may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and members of their
families to places within or outside the United States. The cost to Seligman
Advisors of such promotional activities and payments shall be consistent with
the rules of the National Association of Securities Dealers, Inc., as then in
effect.
Calculation of Performance Data
The average annual total returns for the Fund's Class A shares for the one-,
five-, and ten-year periods through December 31, 1998, were 27.56%, 27.77% and
25.48%, respectively. These returns were computed by subtracting the maximum
sales charge of 4.75% of public offering price and assuming that all of the
dividends and capital gain distributions paid by the Fund over the relevant time
period were reinvested. It was then assumed that at the end of each period, the
entire amount was redeemed. The average annual total return was then calculated
by calculating the annual rate required for the initial payment to grow to the
amount which would have been received upon such redemption (i.e., the average
annual compound rate of return). Table A below illustrates the total return
(income and capital) on Class A shares of the Fund, assuming all dividend and
capital gain distributions are reinvested in additional shares. It shows that a
$1,000 investment in Class A shares, assuming payment of the initial 4.75% sales
charge, made on December 31, 1988, had a value of $9,679 on December 31, 1998,
resulting in an aggregate total return of 867.91%.
The average annual total returns for the Fund's Class B shares for the one-year
period ended December 31, 1998 and for the period from April 22, 1996
(inception) through December 31, 1998, were 27.89% and 23.29%, respectively.
These returns were computed assuming that all dividends and capital gain
distributions paid by the Fund's Class B shares, if any, 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 applicable CDSC. Table B
illustrates the total return (income and capital) on Class B shares of the Fund,
assuming all dividends and capital gain distributions are reinvested in
additional shares. It shows that a $1,000 investment in Class B shares on April
22, 1996 (commencement of operations of Class B shares) had a value of $1,758 on
December 31, 1998, resulting in an aggregate total return of 75.76%.
The average annual total returns for the Fund's Class D shares for the one- and
five-year periods ended December 31, 1998 and for the period from May 3, 1993
(inception) through December 31, 1998, were 31.94%, 27.96% and 31.05%,
respectively. These returns were computed assuming that all of the dividends and
capital gain distributions paid by the Fund's Class D shares, if any, were
reinvested over the relevant time period. It was then assumed that at the end of
each period, the entire amount was redeemed, subtracting for the one year period
the 1% CDSC, if applicable. Table C illustrates the total
26
<PAGE>
return (income and capital) on Class D shares of the Fund, assuming all
dividends and capital gain distributions are reinvested in additional shares. It
shows that a $1,000 investment in Class D shares made on May 3, 1993
(commencement of operations of Class D shares) had a value of $4,628 on December
31, 1998, resulting in an aggregate total return of 362.84%.
Class C shares are a new class, effective June 1, 1999, so no performance data
is presented.
The results shown below should not be considered a representation of the
dividend income or gain or loss in capital value which may be realized from an
investment made in a class of shares of the Fund today.
<TABLE>
<CAPTION>
TABLE A - CLASS A
Value of Value of Total Value
Year Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
12/31/89 $ 957 $ 283 $ -- $1,240
12/31/90 839 263 -- 1,102
12/31/91 1,095 613 -- 1,708
12/31/92 1,164 839 -- 2,003
12/31/93 1,271 1,436 -- 2,707
12/31/94 1,574 2,089 -- 3,663
12/31/95 2,080 3,172 -- 5,252
12/31/96 2,224 3,654 -- 5,878
12/31/97 2,200 5,027 -- 7,227
12/31/98 2,907 6,772 -- 9,679 867.91%
<CAPTION>
TABLE B - CLASS B
Value of Value of Total Value
Period Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
12/31/96 $1,052 $ 51 $ -- $1,103
12/31/97 1,020 325 -- 1,345
12/31/98 1,307 451 -- 1,758 75.76%
<CAPTION>
TABLE C - CLASS D
Value of Value of Total Value
Period Initial Capital Gain Value of Of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
12/31/93 $1,088 $ 261 $ -- $1,349
12/31/94 1,333 474 -- 1,807
12/31/95 1,744 828 -- 2,572
12/31/96 1,847 1,010 -- 2,857
12/31/97 1,790 1,692 -- 3,482
12/31/98 2,346 2,282 -- 4,628 362.84%
</TABLE>
- ----------
(1) For the ten-year period ended December 31, 1998 for Class A shares, from
commencement of operations of Class B shares on April 22, 1996 and from
commencement of operations of Class D shares on May 3, 1993.
(2) The "Value of Initial Investment" as of the date indicated (1) reflects the
effect of the maximum initial sales charge or CDSC, if applicable, (2)
assumes that all dividends and capital gain distributions were taken in
cash, and (3) reflects changes in the net asset value of the shares
purchased with the hypothetical initial investment. "Total Value of
Investment" (1) reflects the effect of the CDSC, if applicable, and (2)
assumes investment of all dividends and capital gain distributions.
(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 charge 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
27
<PAGE>
investment at the end of the period; subtracting the CDSC 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.
The total returns and average annual total returns of Class A shares quoted
through December 31, 1992, do not reflect the deduction of 12b-1 fees because
the 12b-1 Plan was implemented on January 1, 1993. The total returns and average
annual total returns of Class A and Class D shares through February 7, 1996 do
not reflect the increased management fee approved by shareholders on February 7,
1996, and effective February 8, 1996. These fees, if reflected, would reduce the
performance quoted.
From time to time, reference may be made in advertising or promotional material
to performance information, including mutual fund rankings, prepared by Lipper
Analytical Services, Inc., an independent reporting service which monitors the
performance of mutual funds. In calculating the total return of the Fund's Class
A, Class B, Class C, and Class D shares, the Lipper analysis assumes investment
of all dividends and distributions paid but does not take into account
applicable sales charges. The Fund may also refer in advertisements 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/WIESENBERGER
MUTUAL FUNDS INVESTMENT REPORT, CHRISTIAN SCIENCE MONITOR, FINANCIAL PLANNING,
FINANCIAL TIMES, FINANCIAL WORLD, FORBES, FORTUNE, INDIVIDUAL INVESTOR,
INVESTMENT ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S, LOS ANGELES TIMES,
MONEY MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS, SMART MONEY, THE NEW
YORK TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS AND WORLD REPORT,
WORTH MAGAZINE, WASHINGTON POST AND YOUR MONEY.
The Fund's advertising or promotional material may make reference to the Fund's
"Beta," "Standard Deviation," or "Alpha." Beta measures the volatility of the
Fund, as compared to that of the overall market. Standard deviation measures how
widely the Fund's performance has varied from its average performance, and is an
indicator of the Fund's potential for volatility. Alpha measures the difference
between the returns of the Fund and the returns of the market, adjusted for
volatility.
Financial Statements
The Annual Report to shareholders for the year ended December 31, 1998 contains
a schedule of the investments of the Fund as of December 31, 1998, as well as
certain other financial information as of that date. The financial statements
and notes included in the Annual Report, and the Independent Auditors' Report
thereon, are incorporated herein by reference. The Annual Report will be
furnished without charge to investors who request copies of this SAI.
General Information
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, NY
10281.
28
<PAGE>
Appendix
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing businesses in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale of
government securities to help finance the Civil War -Joseph Seligman, with his
brothers, established the international banking and investment firm of J. & W.
Seligman & Co. In the years that followed, the Seligman Complex played a major
role in the geographical expansion and industrial development of the United
States.
The Seligman Complex:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
29
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 50
mutual fund portfolios.
o Helps pioneer state-specific municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
SAICIB699
30
<PAGE>
SELIGMAN
-------------------
COMMUNICATIONS
AND INFORMATION
FUND, INC.
[GRAPHIC]
ANNUAL REPORT
DECEMBER 31, 1998
----------
Seeking Capital Gain
by Investing
in Companies
Operating in the
Communications,
Information, and
Related Industries
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. Seligman & Co. Incorporated is a firm with a long tradition of
investment expertise, offering a broad array of investment choices to help
today's investors seek their long-term financial goals.
[PHOTOGRAPH]
Picture of James, Jesse, and Joseph Seligman, 1870
TIMES CHANGE...
Established in 1864, Seligman's history of providing financial services has been
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 134 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including funds that focus on technology stocks, municipal
bonds, and international securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
To the Shareholders ....................................................... 1
Interview With Your Portfolio Manager ..................................... 2
Federal Tax Status of 1998 Gain Distribution for
Taxable Accounts and For More Information ............................... 5
Performance Overview ...................................................... 6
Portfolio Overview ........................................................ 8
Portfolio of Investments .................................................. 10
Statement of Assets and Liabilities ....................................... 15
Statement of Operations ................................................... 16
Statements of Changes in Net Assets ....................................... 17
Notes to Financial Statements ............................................. 18
Financial Highlights ...................................................... 21
Report of Independent Auditors ............................................ 23
Board of Directors and Executive Officers ................................. 24
Glossary of Financial Terms ............................................... 25
- --------------------------------------------------------------------------------
<PAGE>
TO THE SHAREHOLDERS
Seligman Communications and Information Fund posted a 1998 total return of
33.92% based on the net asset value of Class A shares. The Fund outperformed the
28.58% total return of the Standard & Poor's 500 Composite Stock Price Index
(S&P 500), although it lagged the 52.55% total return of its peers, as measured
by the Lipper Science & Technology Funds Average. A discussion with your
Portfolio Manager regarding the Fund's results begins on page 2.
The past year was one of continued growth for the US economy, with real domestic
growth of 3.9%, marking the eighth year of economic expansion. In the equity
markets, exceptional performance from an extremely narrow list of stocks masked
a year of mediocre investment results in the broad markets. This narrowness, and
the divergence between larger- and smaller-company stocks, affected the
performance of technology stocks, in general, and Seligman Communications and
Information Fund, in particular. While the Fund posted impressive absolute
returns, it underperformed its peer group on a relative basis due to its
underweighted positions in large-cap technology and Internet stocks.
The "flight to quality" among US and international investors and the ongoing
ability of leading technology companies to beat earnings forecasts combined to
drive the valuations of large-cap technology stocks to new highs, at the expense
of many quality smaller technology companies. During this time, we underweighted
large caps to pursue growth opportunities at more reasonable prices. This
decision, while fundamentally sound, caused the Fund to underperform relative to
some of its peers, as large caps continued to lead the market higher through
year end.
In direct contrast to the earnings momentum that helped the largest tech stocks,
many investors disregarded earnings altogether when it came to Internet stocks.
Companies whose main business is the Internet generally have negative cash flows
and their potential for becoming profitable is uncertain. The Fund's lack of
exposure to this area is due to the fact that we look for companies with sound
fundamentals. While this commitment to our investment philosophy hurt the Fund's
relative performance during this time, we are convinced that maintaining a
portfolio of what we believe are quality companies -- including those whose
products and services are the backbone of the Internet, such as software, data
networking, and semiconductor manufacturers -- will serve our shareholders well
over the long term.
At this time, we believe that many of the largest technology stocks are fully
valued. Any broadening of the market in 1999 may negatively affect their share
prices. The Fund is well positioned for such a scenario, as we continue to look
for more reasonably priced mid-capitalization stocks. In terms of Internet
stocks, we don't believe that the current enthusiasm is sustainable. While the
Fund does not have much direct exposure to this group, we are nonetheless
concerned that if this market falls it may adversely affect investor psychology
regarding the broad technology sector. For 1999, we expect a challenging
environment for technology companies, confronted with economic uncertainties and
continued high volatility. However, for investors with a long-term time horizon,
we believe that technology remains one of the premier growth sectors of the
future.
Seligman continues to work to ensure that all of its operations are prepared for
the challenges posed by the Year 2000 (Y2K) computer problem. We are confident
that there will be no disruption in the investment and shareholder services
provided by your Fund as a result of Y2K. In addition, your portfolio management
team considers the potential ramifications of Y2K when making decisions on which
securities should be held by the Fund.
Thank you for your continued support of Seligman Communications and Information
Fund in 1998. We look forward to serving your investment needs in 1999.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
February 5, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. How did Seligman Communications and Information Fund perform in 1998?
A. Seligman Communications and Information Fund's total return based on the
net asset value of Class A shares was 33.92% for the year. While the Fund
outperformed the 28.58% total return of the Standard & Poor's 500 Composite
Stock Price Index (S&P 500), it lagged the 52.55% total return of its
peers, as measured by the Lipper Science & Technology Funds Average.
Q. Why did the Fund underperform its peer group?
A. Within the technology sector, the strongest stock price gains came from the
largest-capitalization companies and from Internet-related companies.
Although Seligman Communications and Information Fund had many
large-capitalization stocks that outperformed the market, it did not own
them to the same magnitude as some competitor funds. In addition, your Fund
generally avoided companies whose main business was the Internet, given
their high valuations, often negative cash flow, and what we believe to be
cloudy outlooks for achieving profitability.
Large-capitalization technology stocks have benefited from a confluence of
events. As segments of the technology industry have matured, larger
companies have frequently gained market share and disproportionate
profitability, as purchasing power, incumbency, and customer preference for
fewer vendors rise in importance. These trends are noteworthy in the
personal computer and data networking segments, where a few large companies
have prospered and everyone else has not. In general, in many areas of
technology, larger companies have had better profit growth than smaller
firms.
In addition, the unprecedented high returns of the S&P 500 since 1995 have
increased investor preference for large-cap domestic equities at the
expense of international and small- or mid-cap US stocks. The increasing
popularity of S&P 500 index funds has added to this trend. Given that the
S&P 500 is not equal-weighted, but market capitalization-weighted, the vast
majority of money flowing into S&P 500 index funds ends up in the 100
largest companies.
Finally, the Fund was negatively affected by its holdings of media stocks.
Although fundamentals were favorable throughout the year and the Fund's
media holdings performed reasonably well, they did not match the
performance of the largest-capitalization technology stocks.
[PHOTOGRAPH]
West Coast Technology Team: (standing from left) Marianne Harlow (Administrative
Assistant), Paul Wick (Portfolio Manager), (seated) Paul Krieger, Patrick Renda
[PHOTOGRAPH]
East Coast Technology Team: (standing from left) Lawrence Rosso, Kei Yamamoto,
Shanean Austin (Administrative Assistant), (seated) Storm Boswick
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. What are some of the underlying dynamics affecting the relative performance
of small-, medium-, and large-capitalization technology stocks?
A. Further aiding the superior relative performance of large-cap technology
companies has been the disappointing performance of large consumer and
industrial companies, whose profits were hurt by the Asian and South
American currency crises. In response to the fundamental problems,
large-company fund managers have shifted assets into big technology
companies that continue to meet Wall Street expectations.
The end result of all of these trends has been a snowballing of valuations,
as already expensive stocks attain ever higher absolute and relative
valuations. A case in point would be America Online, whose market value
tripled between mid-October and year-end. In late December, America Online
was added to the S&P 500 in recognition of its higher market value; of
course, on the day of the announcement, shares of America Online rose 15%
in anticipation of index fund buying. Today, America Online's market value
exceeds that of Walt Disney, a company with significantly greater revenues,
cash flow, profits, and proprietary content.
Q. Given the high valuations, but generally superior profit growth of the
bigger technology companies, what is the Fund's current strategy?
A. We are sticking to our style. There are numerous mid-capitalization
technology companies with excellent fundamentals that have gone
unappreciated by the market. Your Fund has holdings in quite a few of these
companies. In the large-capitalization area, we remain underweighted
relative to the technology indices. We remain enthusiastic about the
prospects for our investments in radio broadcasting and cable TV, as
fundamentals are excellent and valuations reasonable.
Q. Which of the Fund's sectors performed best in 1998?
A. The top-performing area was computer hardware peripherals, which was
positively affected by Year 2000 testing, increased demand for data
storage, and market share consolidation in the computer industry.
Q. Which of the Fund's sectors impaired results in 1998?
A. The weakest areas of the Fund were the semiconductor-related sectors, which
went through a serious recession in the wake of the Asian financial crisis.
However, the semiconductor industry's fundamentals have recently begun to
improve as a result of large reductions made on expenditures for new
capacity over the past year.
Q. Has the Fund changed its stance on Internet-related stocks?
A. While the Fund continues to hold shares of numerous software, data
networking, and semiconductor manufacturers whose products comprise the
physical infrastructure of the Internet, your Manager remains wary of
investing in public Internet stocks whose main business is the Internet.
However, the Fund has made a number of small investments in private
Internet companies, as valuations are much more reasonable than for public
companies.
- --------------------------------------------------------------------------------
A TEAM APPROACH
Seligman Communications and Information Fund is managed by the Seligman
Technology Team, headed by Paul H. Wick. Mr. Wick and his team of seasoned
research professionals visit with the management of hundreds of technology
companies each year to identify those that offer the greatest potential for
growth. Stocks purchased for the Fund are continually monitored by the Team, and
disciplined buy/sell policies are followed.
- --------------------------------------------------------------------------------
3
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. Which sectors appear to have the greatest appreciation potential in 1999?
A. A number of sectors have excellent fundamentals and reasonable valuations:
o Semiconductor and semiconductor capital equipment companies have seen
a significant improvement in business conditions, and appear to be in
the early stages of a broad industry recovery.
o Integrated circuit design software companies are seeing improving
orders fueled by the semiconductor industry recovery.
o Fundamentals for mechanical design software companies have begun to
improve, while stock prices remain modestly valued.
o Entertainment software companies have never had better fundamentals,
as the installed base of consumer PCs and video games continues to
expand.
Q. What is the likely impact of the Year 2000 (Y2K) computer problem on
technology companies in 1999?
A. While it is extraordinarily difficult to predict what will happen as a
result of the passing of the millennium, we can make some educated guesses
regarding government and corporate information technology spending this
year. We believe that the majority of spending on computer software and
hardware will take place in the first half of 1999, with correspondingly
less money spent late in the year. As organizations grapple with final Y2K
testing, they will be less inclined to add new software programs or
computers to their data centers until some time in calendar year 2000.
In recognition of these risks, we have begun to shift investments out of
stocks heavily dependent on corporate technology spending and into
companies more leveraged to consumer spending. Certainly, this is another
reason to have a significant weighting in media stocks.
Q. What is the outlook for technology?
A. As we ended 1998, overall valuations for technology companies had never
been higher. But where do they go from here? Can stock prices on the
largest technology companies continue to go up? They can if these companies
keep beating earnings estimates. What about companies whose main business
is the Internet? As we said earlier, these companies typically have no
earnings, but as long as individual investors shrug off fundamentals, stock
prices for these companies may continue to rise. And, of course, Y2K is
still a big question mark for 1999, with possible ramifications for the
third and fourth quarters.
But despite it all, technology continues to rise as a percentage of the
world economy, and we see no sign of that slowing. Will the technology
market remain volatile? Absolutely. But volatility creates opportunity, and
a well-diversified, professionally managed mutual fund such as Seligman
Communications and Information Fund can help investors who seek to take
advantage of those opportunities.
4
<PAGE>
FEDERAL TAX STATUS OF 1998
GAIN DISTRIBUTION FOR TAXABLE ACCOUNTS
- --------------------------------------------------------------------------------
A long-term capital gain distribution of $0.345 per share from 1997
undistributed net realized gain was paid on November 23, 1998, to Class A, B,
and D shareholders. In 1997, Congress revised the capital gains provisions, so
that depending on how long a security was owned when it was sold, investors may
have been faced with a 28% capital gains rate, a 20% rate, or both. In October
1998, Congress simplified the capital gains provisions so that, generally, all
gains on securities held more the one year are to be taxed at a maximum 20%
rate.
The long-term gain distribution is designated a "capital gain dividend" for
federal income tax purposes and is taxable to shareholders in 1998 as a
long-term gain from the sale of capital assets, no matter how long shares have
been owned, or whether the distribution was received in shares or in cash.
However, if shares on which a capital gain distribution was received are
subsequently sold, and such shares have been held for six months or less, any
loss on the sale would be treated as long-term to the extent that it offsets the
long-term gain distribution.
If the distribution was received in shares, the per share cost basis for federal
income tax purposes is $26.02 for Class A shares, $24.37 for Class B shares and
$24.35 for Class D shares.
A 1998 year-end statement of account activity and a 1998 tax package, which may
include a Form 1099-DIV, a Form 1099-B, and/or a Cost Basis Statement, have been
mailed to each shareholder. Form 1099-DIV shows the distributions paid to the
shareholder during the year. Form 1099-B shows the proceeds of any redemptions
paid to the shareholder during the year. Cost Basis Statements report all sales
or exchanges from a shareholder's account which may have resulted in a capital
gain or loss in 1998. The information shown on Forms 1099-DIV and 1099-B is
reported to the Internal Revenue Service as required by federal regulations.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
- --------------------------------------------------------------------------------
5
<PAGE>
PERFORMANCE OVERVIEW
This chart compares a $10,000 hypothetical investment made in Seligman
Communications and Information Fund Class A shares, with and without the initial
4.75% maximum sales charge, and assumes that all distributions within the period
are invested in additional shares, for the 10-year period ended December 31,
1998, to a $10,000 investment made in the Lipper Science &Technology Funds
Average (Lipper Science &Technology Average) and the Standard &Poor's 500
Composite Stock Price Index (S&P 500) for the same period. The performances of
Seligman Communications and Information Fund Class B and Class D shares are not
shown in this chart but are included in the table on page 7. It is important to
keep in mind that the Lipper Science &Technology Average and the S&P 500 exclude
the effect of fees and/or sales charges.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Seligman Communications
and Information Fund Class A
----------------------------- Lipper
Without Science &
Sales With Sales Technology
Charge Charge Average S&P 500
------ ---------- ---------- -------
12/31/88 $10,000 $9,527 $10,000 $10,000
3/31/89 $10,824 $10,312 $10,278 $10,709
6/30/89 $11,847 $11,287 $11,068 $11,655
9/30/89 $13,307 $12,677 $12,119 $12,903
12/31/89 $13,012 $12,396 $12,062 $13,169
3/31/90 $13,720 $13,071 $12,769 $12,772
6/30/90 $14,839 $14,137 $14,319 $13,576
9/30/90 $10,219 $9,736 $10,516 $11,710
12/31/90 $11,571 $11,024 $12,219 $12,760
3/31/91 $15,642 $14,902 $15,785 $14,614
6/30/91 $13,815 $13,162 $14,501 $14,580
9/30/91 $15,850 $15,101 $16,232 $15,360
12/31/91 $17,925 $17,077 $18,340 $16,647
3/31/92 $18,513 $17,638 $18,503 $16,226
6/30/92 $16,639 $15,852 $17,177 $16,534
9/30/92 $16,701 $15,911 $17,931 $17,055
12/31/92 $21,028 $20,033 $21,308 $17,913
3/31/93 $21,319 $20,310 $21,690 $18,696
6/30/93 $23,986 $22,851 $23,632 $18,787
9/30/93 $27,695 $26,385 $26,035 $19,272
12/31/93 $28,414 $27,070 $26,326 $19,719
3/31/94 $29,662 $28,259 $26,808 $18,972
6/30/94 $27,377 $26,082 $25,037 $19,051
9/30/94 $35,523 $33,842 $29,030 $19,983
12/31/94 $38,444 $36,625 $30,797 $19,979
3/31/95 $43,850 $41,776 $32,924 $21,925
6/30/95 $56,904 $54,212 $39,595 $24,019
9/30/95 $64,412 $61,365 $45,913 $25,928
12/31/95 $55,123 $52,515 $43,334 $27,489
3/31/96 $52,165 $49,697 $43,626 $28,965
6/30/96 $52,240 $49,769 $46,618 $30,266
9/30/96 $55,449 $52,826 $50,420 $31,201
12/31/96 $61,703 $58,784 $52,744 $33,803
3/31/97 $60,102 $57,259 $47,965 $34,709
6/30/97 $70,442 $67,110 $56,739 $40,770
9/30/97 $87,948 $83,788 $67,635 $43,823
12/31/97 $75,862 $72,273 $58,725 $45,082
3/31/98 $85,716 $81,661 $68,725 $51,371
6/30/98 $83,921 $79,951 $70,874 $53,066
9/30/98 $70,021 $66,709 $63,247 $47,786
12/31/98 $101,597 $96,791 $89,584 $57,964
Investments in one economic sector, such as technology, may be subject to
greater price fluctuations than owning a portfolio of diversified investments.
In addition, the securities in which Seligman Communications and Information
Fund invests may be subject to greater government regulation, greater price
fluctuation, and limited liquidity. The stocks of smaller companies may be
subject to above-average risk. The Fund may invest in global technology stocks
which may be subject to additional risks, including currency fluctuations,
foreign taxation, differences in financial reporting practices, and rapid
changes in political and economic conditions.
The performances of Class B and D shares will be greater than or less than
the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
6
<PAGE>
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
Investment Results Per Share
TOTAL RETURNS
For Periods Ended December 31, 1998
AVERAGE ANNUAL
------------------------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
-------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge 15.32% 27.56% 27.77% 25.48% n/a n/a
Without Sales Charge 21.06 33.92 29.02 26.09 n/a n/a
Class B**
With CDSC+ 15.64 27.89 n/a n/a 23.29% n/a
Without CDSC 20.64 32.89 n/a n/a 24.07 n/a
Class D**
With 1% CDSC 19.61 31.94 n/a n/a n/a n/a
Without CDSC 20.61 32.94 27.96 n/a n/a 31.05%
Lipper Science &Technology
Funds Average*** 26.40 52.55 27.75 24.52 25.95++ 29.10+++
S&P500*** 9.22 28.58 24.06 19.21 29.00++ 22.63+++
<CAPTION>
NET ASSET VALUE
DECEMBER 31, 1998 JUNE 30, 1998 DECEMBER 31, 1997
------------------ -------------- -----------------
<S> <C> <C> <C>
Class A $30.73 $25.72 $23.25
Class B 28.75 24.17 21.94
Class D 28.72 24.15 21.91
<CAPTION>
CAPITAL GAIN INFORMATION
For the Year Ended December 31, 1998
<S> <C>
Paid $0.345
Undistributed Realized 1.493#
Unrealized 6.355##
</TABLE>
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their original
cost. Past performance is not indicative of future investment results.
- ---------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price per share and assume the
investment of capital gain distributions. Returns for Class A shares are
calculated with and without the effect of the initial 4.75% maximum sales
charge. Returns for Class A shares also reflect the effect of the service
fee of up to 0.25% under the Administration, Shareholder Services and
Distribution Plan after January 1, 1993, only. Returns for Class B shares
are calculated with and without the effect of the maximum 5% contingent
deferred sales charge ("CDSC"), charged on redemptions made within one year
of the date of purchase, declining to 1% in the sixth year and 0%
thereafter. Returns for Class D shares are calculated with and without the
effect of the 1% CDSC, charged on redemptions made within one year of the
date of purchase.
*** The Lipper Science & Technology Funds Average is an average of 73 science
and technology funds and excludes the effect of the sales charges that may
be incurred in connection with purchases or sales. The monthly performance
is used in the Performance Overview. The S&P 500 is an unmanaged index that
assumes investment of dividends and excludes the effect of fees and sales
charges. Investors cannot invest directly in an average or an index.
+ The CDSC is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
# Represents net gain realized in November and December 1998, payable
in 1999.
## Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1998.
7
<PAGE>
PORTFOLIO OVERVIEW
<TABLE>
<CAPTION>
Diversification of Net Assets
December 31, 1998
PERCENT OF NET ASSETS
DECEMBER 31,
-----------------------
ISSUES COST VALUE 1998 1997
-------- -------------- -------------- --------- ----------
<S> <C> <C> <C> <C> <C>
STOCKS AND CONVERTIBLE ISSUES:
Communications Infrastructure ....................... 12 $ 237,769,223 $ 282,946,230 4.6 6.8
Communications Services ............................. 7 266,018,734 385,111,309 6.3 1.0
Computer and Business Services ...................... 4 113,940,025 140,756,249 2.3 7.6
Computer Hardware/Peripherals ....................... 14 730,569,582 1,030,720,805 16.7 19.1
Computer Software ................................... 25 1,207,572,400 1,514,021,242 24.7 16.1
Contract Manufacturing/Circuit Boards ............... 6 272,090,755 319,384,375 5.2 4.0
Electronics Capital Equipment ....................... 8 424,873,209 442,994,075 7.2 15.8
Media ............................................... 11 763,920,644 1,061,172,188 17.2 11.4
Semiconductors ...................................... 13 731,498,195 875,860,746 14.2 13.3
---- --------------- --------------- ------ ------
100 4,748,252,767 6,052,967,219 98.4 95.1
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES ....................... 2 98,970,584 98,970,584 1.6 4.9
---- --------------- --------------- ------ ------
NET ASSETS ............................................ 102 $4,847,223,351 $6,151,937,803 100.0 100.0
==== =============== =============== ====== ======
</TABLE>
LARGEST INDUSTRIES
December 31, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Percent of Total
Net Assets Dollar Amount
---------- --------------
COMPUTER SOFTWARE 24.60% $1,514,021,242
MEDIA 17.30% $1,061,172,188
COMPUTER HARDWARE/PERIPHERALS 16.70% $1,030,720,805
SEMI-CONDUCTORS 14.20% $875,860,746
ELECTRONICS CAPITAL EQUIPMENT 7.20% $442,994,075
8
<PAGE>
PORTFOLIO OVERVIEW
Largest Portfolio Changes
During Past Six Months
SHARES
---------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- ---------- --------- ---------
Advanced Micro Devices ..................... 3,100,000 3,100,000
Applied Materials .......................... 1,300,000 1,300,000
C-Cube Microsystems ........................ 2,600,000 2,600,000
Check Point Software
Technologies ............................. 3,100,000 3,100,000
Electronic Arts ............................ 1,350,000 3,800,000
Fox Entertainment Group
(Class A) ................................ 2,500,000 2,500,000
Intel ...................................... 1,000,000 1,000,000
MediaOne Group ............................. 2,100,000 2,600,000
Microsoft .................................. 800,000 1,000,000
Tele-Communications
(Series A) TCI Group ..................... 1,500,000 2,500,000
SHARES
---------------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ---------- --------- ---------
American Power Conversion .................. 1,643,000 57,000
Ascend Communications ...................... 1,200,000 --
Cisco Systems .............................. 800,000 100,000
Citrix Systems ............................. 1,100,000 --
EMC ........................................ 4,200,000 2,800,000
International Business
Machines ................................. 450,000 --
Jabil Circuit .............................. 1,000,000 --
Maxim Integrated Products .................. 1,650,000 1,100,000
Novellus Systems ........................... 2,213,700 --
Time Warner ................................ 1,000,000 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
- --------------------------------------------------------------------------------
Largest Portfolio Holdings
December 31, 1998
SECURITY VALUE
- -------- ------------
Network Associates ............................................. $265,375,000
EMC ............................................................ 238,000,000
Chancellor Media ............................................... 227,257,813
CBS ............................................................ 214,512,500
Electronic Arts ................................................ 213,037,500
Electronics for Imaging ........................................ 201,042,812
Lexmark International Group
(Class A) .................................................... 145,725,000
Check Point Software Technologies .............................. 141,728,125
Clear Channel Communications ................................... 141,700,000
SCI Systems .................................................... 141,487,500
- --------------------------------------------------------------------------------
9
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
COMMON STOCKS 97.8%
COMMUNICATIONS
INFRASTRUCTURE 4.5%
ADC Telecommunications*
Provider of
hybrid fiber/coaxial
equipment 800,000 $ 27,700,000
Advanced Fibre Communications*
Provider of digital loop carrier
equipment 500,000 5,468,750
Aspect Telecommunications*
Developer and manufacturer
of automated call
distribution equipment 2,200,000 38,362,500
Cisco Systems*
Manufacturer of computer
network products 100,000 9,284,375
DSP Communications*
Developer of chipsets
used in wireless
communication handsets 1,750,000 26,796,875
ECI Telecommunications (Israel)
Provider of digital
telecommunications and
data transmission systems 1,500,000 53,109,375
Nokia (Class A) (ADRs) (Finland)
Developer and manufacturer
of cellular phones
and base stations 500,000 60,218,750
Oak Industries*@
Manufacturer of cable
television connectors and
fiber optic components 720,000 25,200,000
Tekelec*
Provider of
telecommunications
switching equipment 1,251,000 20,758,781
Xylan*
Provider of local area
networking products 500,000 9,046,875
--------------
275,946,281
--------------
COMMUNICATIONS
SERVICES 6.3%
ICG Communications*
Provider of broad band
telecommunications services 251,200 5,416,500
MCI WorldCom
Provider of long distance,
local, and data
telecommunications services 1,000,000 71,781,250
Pacific Gateway Exchange*@
International
telecommunications carrier 1,120,100 53,869,809
RSL Communications (Class A)*
Provider of international
telecommunications services 1,000,000 29,562,500
Tele-Communications (Series A)
TCI Group*
Owner and operator of
cable television systems 2,500,000 138,359,375
Tele-Communications (Series A)
TCI Ventures Group*
Holding company which
has stakes in international
cable, Internet, and
telephone ventures 2,700,000 63,871,875
Verio*
Provider of Internet
services to small and
mid-sized businesses 1,000,000 22,250,000
--------------
385,111,309
--------------
COMPUTER AND
BUSINESS SERVICES 2.3%
First Data
Information processor of
credit and debit card,
check, wire, and Internet
transactions 2,500,000 79,218,750
Galileo International
Provider of travel
reservation data services 600,000 26,100,000
Unisys*
Integrator of business
information systems 1,000,000 34,437,500
--------------
139,756,250
--------------
COMPUTER HARDWARE/
PERIPHERALS 16.7%
American Power Conversion*
Provider of back-up
power supply equipment
for computers 57,000 2,759,156
Apex PC Solutions@
Manufacturer of
switching systems
for computer network
administrators 1,350,000 38,812,500
- -------------------------
See footnotes on page 14.
10
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
COMPUTER HARDWARE/
PERIPHERALS (CONTINUED)
Apple Computer*
Provider of computer
hardware and software 500,000 $ 20,484,375
Comdisco
World's leading
computer hardware
leasing company 3,000,000 50,625,000
Creative Technology*@ (Singapore)
Provider of PC audio
and graphics products 8,126,000 121,890,000
Discreet Logic*@ (Canada)
Developer of digital
systems for film, television,
and the Internet 1,500,000 28,218,750
Electronics for Imaging*@
Manufacturer of peripherals
for color printers and copiers 5,030,000 201,042,812
EMC*
Manufacturer of enterprise
storage devices 2,800,000 238,000,000
Lexmark International Group
(Class A)*
Manufacturer of laser
and inkjet printers
and cartridges 1,450,000 145,725,000
Splash Technology Holdings*
Manufacturer of peripherals
for color printers and copiers 585,200 4,370,712
Storage Technology*
Manufacturer of tape-
and disk-based
data storage equipment 3,200,000 113,800,000
Western Digital
Manufacturer of magnetic
disk drives used in desktop
personal computers 1,000,000 15,062,500
Xerox
Developer, manufacturer,
and marketer of office
automation products 400,000 47,200,000
--------------
1,027,990,805
--------------
COMPUTER SOFTWARE 24.2%
3DO*@
Developer of
entertainment software 2,600,000 11,943,750
Acclaim Entertainment*@
Developer of
entertainment software 3,100,000 37,975,000
Activision*@
Developer of
entertainment software 1,100,000 12,100,000
Autodesk0
Developer of software for
architectural and mechanical
design, data management,
and mapping 3,235,000 137,992,969
Check Point Software
Technologies*@ (Israel)
Developer of network
"firewall" security systems 3,100,000 141,728,125
Compuware*
Mainframe software and
consulting services 1,000,000 78,093,750
Electronic Arts*@
Developer, marketer,
and distributor of
entertainment software 3,800,000 213,037,500
HNC Software*
Developer and vendor of
software for mission-critical
decision applications 500,000 20,218,750
Hyperion Solutions*
Worldwide provider of
applications software 500,000 9,031,250
The Learning Company*
Developer of education
and reference software
for the PC 4,000,000 103,750,000
Microsoft*
Provider of personal
computer operating system
and application
software products 1,000,000 138,531,250
Network Associates*
Supplier of network
security and anti-virus
utilities 4,000,000 265,375,000
Novell*
Provider of network software 1,000,000 18,156,250
Parametric Technology*
Developer of mechanical
design software 5,500,000 89,375,000
PLATINUM Technology
International*
Provider of systems
management software 3,550,000 68,226,563
- -------------------------
See footnotes on page 14.
11
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
COMPUTER
SOFTWARE (CONTINUED)
Rational Software*
Provider of applications
development and
test software 1,600,000 $ 42,400,000
Structural Dynamics Research*@
Developer of mechanical
design software 3,020,000 59,833,750
Tecnomatix Technologies*@ (Israel)
Developer and retailer of
computer-aided production
engineering software 725,000 12,664,844
VERITAS Software*
Developer and marketer
of back-up storage software
for computer systems 500,000 29,937,500
--------------
1,490,371,251
--------------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS 5.2%
ADFlex Solutions*@
Manufacturer of flexible
circuit boards 1,000,000 6,875,000
DII Group*
Provider of contract
manufacturing services 1,000,000 22,937,500
Hadco*@
Manufacturer of complex
printed circuit boards 850,000 29,696,875
Sanmina*
Manufacturing services for
electronic equipment
manufacturers 300,000 18,712,500
SCI Systems*
Provider of contract
manufacturing services 2,450,000 141,487,500
SMART Modular Technologies*@
Assembler of
memory modules 3,600,000 99,675,000
--------------
319,384,375
--------------
ELECTRONICS CAPITAL
EQUIPMENT 7.2%
Applied Materials*
World's largest manufacturer
of semiconductor wafer
fabrication equipment 1,300,000 55,534,375
Asyst Technologies*@
Manufacturer of
miniature clean-room
environments for the
manufacturing of
silicon wafers 757,600 15,483,450
Cognex*@
Manufacturer of
machine vision systems 2,200,000 43,862,500
Credence Systems*@
Manufacturer of
automated semiconductor
test equipment 1,800,000 33,187,500
Electro Scientific Industries*@
Manufacturer of memory
circuit repair systems
and circuit board
drilling systems 1,000,000 45,312,500
Etec Systems*@
Designer and
manufacturer of
photomask manufacturing
systems 1,300,000 52,000,000
Orbotech*@ (Israel)
Manufacturer of automated
optical inspection systems
for circuit boards and flat
panel displays 1,360,000 64,132,500
Teradyne*
Manufacturer of
automated semiconductor
test equipment 3,150,000 133,481,250
--------------
442,994,075
--------------
MEDIA 17.2%
Cablevision Systems (Class A)*
Owner and operator of
cable television systems 1,100,000 55,206,250
CBS
Radio and television
broadcasting 6,550,000 214,512,500
Chancellor Media*
Radio broadcasting 4,750,000 227,257,813
Clear Channel Communications*
Owner and operator of
radio and television stations 2,600,000 141,700,000
Cox Radio (Class A)*
Operator of radio stations 630,000 26,617,500
Fox Entertainment Group
(Class A)*
Worldwide distributor
of movies and
television programs 2,500,000 62,968,750
Infinity Broadcasting (Class A)*
Operator of radio
stations; provider of
outdoor advertising 2,000,000 54,750,000
- -------------------------
See footnotes on page 14.
12
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
MEDIA (CONTINUED)
MediaOne Group*
Owner and operator of
cable television systems 2,600,000 $ 122,200,000
Sinclair Broadcast Group
(Class A)*
Operator of television
and radio stations 2,300,000 45,496,875
USA Networks*
Operator of cable
television networks 2,000,000 66,187,500
Ziff-Davis*
Integrated media company
focused on computer
and Internet-related
technology 2,800,000 44,275,000
--------------
1,061,172,188
--------------
SEMICONDUCTORS 14.2%
Advanced Micro Devices*
Microprocessor supplier
for the computer industry 3,100,000 89,706,250
Amkor Technology*@
Provider of semiconductor
packaging and test services 8,170,000 88,593,438
Cadence Design Systems*
Electronic design
automation software 1,000,000 29,750,000
C-Cube Microsystems*@
Provider of digital video
compression and
decompression circuits
and systems 2,600,000 70,606,250
Dallas Semiconductor@
Manufacturer of mixed-
signal integrated circuits 1,550,000 63,162,500
Intel
Manufacturer of
microprocessors and
memory circuits 1,000,000 118,531,250
Lattice Semiconductor*@
Designer and manufacturer
of programmable
logic devices 2,050,000 94,107,813
Level One Communications@
Developer of semiconductors
used in data communications
applications 977,400 34,728,244
SHARES OR
PRIN. AMT. VALUE
---------- -------
SEMICONDUCTORS (continued)
Maxim Integrated Products*
Manufacturer of analog
and mixed-signal
integrated circuits 1,100,000 shs.$ 48,021,875
Microchip Technology*@
Supplier of field-
programmable
microcontrollers 2,125,000 78,492,188
Synopsys*
Developer of integrated
circuit design software 2,600,000 140,887,500
Xilinx*
Supplier of field-
programmable
gate arrays 250,000 16,273,438
--------------
872,860,746
--------------
TOTAL COMMON STOCKS
(COST $4,709,199,678) 6,015,587,280
--------------
CONVERTIBLE
BONDS 0.2%
COMPUTER HARDWARE/
PERIPHERALS
Candescent Technologies,
7%, due 5/1/2003
Manufacturer of flat
panel displays $ 3,000,000 2,730,000
--------------
COMPUTER
SOFTWARE 0.2%
Activision,
63/4%, due 1/1/2005+
Developer of
entertainment software 10,000,000 8,600,000
--------------
TOTAL CONVERTIBLE
BONDS
(Cost $13,003,150) 11,330,000
--------------
CONVERTIBLE PREFERRED
STOCKS 0.4%
COMMUNICATIONS
INFRASTRUCTURE 0.1%
Diamond Lane
Communications*#
Designer of high-speed
ADSL modems and related
networking equipment 202,020 shs. 1,999,998
UniSite (Class C)*#
Owner and operator of
telecommunications towers
for wireless phone service 10,796 4,999,951
--------------
6,999,949
--------------
- -------------------------
See footnotes on page 14.
13
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES OR
WARRANTS VALUE
--------- -------
COMPUTER AND
BUSINESS SERVICES
Freegate (Series D)*#
Provider of Internet
access systems 333,333 shs.$ 999,999
--------------
Computer
Software 0.3%
CrossRoads Software*#
Developer of connecting
software to link client/
server applications 800,000 4,000,000
iName*#
Provider of Internet
e-mail services 214,999 wts. 55,285
iName (Class C)*#
Provider of Internet
e-mail services 1,228,570 shs. 4,244,709
iVillage (Series E)*#
Provider of online
content geared to women 1,666,666 4,749,998
Xtra On-Line (Series C)*#
Developer and provider
of Internet-based travel
reservation software 304,878 1,999,999
--------------
15,049,991
--------------
SHARES VALUE
--------- -------
SEMICONDUCTORS
Transmeta (Series E)*#
Designer of low power
microprocessors for
notebook personal
computers 500,000 $ 3,000,000
--------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $26,049,939) 26,049,939
--------------
SHORT-TERM
HOLDINGS 1.9%
(Cost $115,000,000) 115,000,000
--------------
TOTAL
INVESTMENTS 100.3%
(Cost $4,863,252,767) 6,167,967,219
OTHER ASSETS
LESS LIABILITIES (0.3)% (16,029,416)
--------------
NET ASSETS 100.0% $6,151,937,803
==============
- ---------------------------------
* Non-income producing security.
+ Rule 144A security.
# Restricted security.
@ Affiliated issuers (Fund's holdings representing 5% or more of the outstanding
voting securities).
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
14
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Stocks and convertible issues* (cost $4,748,252,767) ......................... $6,052,967,219
Short-term holdings (cost $115,000,000) ...................................... 115,000,000 $6,167,967,219
--------------
Cash ............................................................................................. 5,618,517
Receivable for securities sold ................................................................... 125,153,360
Receivable for Capital Stock sold ................................................................ 37,956,488
Expenses prepaid to shareholder service agent .................................................... 1,428,346
Receivable for interest and dividends ............................................................ 634,076
Other ............................................................................................ 93,937
--------------
Total Assets ..................................................................................... 6,338,851,943
--------------
LIABILITIES:
Payable for securities purchased ................................................................. 150,536,996
Payable for Capital Stock repurchased ............................................................ 26,550,204
Accrued expenses, taxes, and other ............................................................... 9,826,940
--------------
Total Liabilities ................................................................................ 186,914,140
--------------
Net Assets ....................................................................................... $6,151,937,803
==============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value; 1,000,000,000 shares authorized;
205,307,436 shares outstanding):
Class A ........................................................................................ $ 12,660,997
Class B ........................................................................................ 3,593,519
Class D ........................................................................................ 4,276,228
Additional paid-in capital ....................................................................... 4,520,238,679
Accumulated net investment loss .................................................................. (117,642)
Undistributed net realized gain .................................................................. 306,571,570
Net unrealized appreciation of investments ....................................................... 1,304,714,452
--------------
Net Assets ....................................................................................... $6,151,937,803
==============
NET ASSET VALUE PER SHARE:
Class A ($3,890,595,560 / 126,609,972 shares) .................................................... $30.73
======
Class B ($1,033,104,930 / 35,935,185 shares) ..................................................... $28.75
======
Class D ($1,228,237,313 / 42,762,279 shares) ..................................................... $28.72
======
</TABLE>
- ---------
* Includes affiliated issuers (issuers in which the Fund's holdings represent
5% or more of the outstanding voting securities) with a cost of
$1,741,569,712 and a value of $1,916,225,567.
See Notes to Financial Statements.
15
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ....................................................................... $ 10,809,132
Dividends (net of foreign taxes withheld of $95,917) ........................... 4,754,617
--------------
Total Investment Income .......................................................................... $ 15,563,749
EXPENSES:
Management fee ................................................................. 44,375,965
Distribution and service fees .................................................. 25,830,999
Shareholder account services ................................................... 12,787,954
Shareholder reports and communications ......................................... 1,180,712
Custody and related services ................................................... 884,516
Registration ................................................................... 667,237
Auditing and legal fees ........................................................ 134,080
Directors' fees and expenses ................................................... 88,825
Miscellaneous .................................................................. 151,227
--------------
Total Expenses ................................................................................... 86,101,515
--------------
Net Investment Loss .............................................................................. (70,537,766)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments* .............................................. 530,305,943
Net change in unrealized appreciation of investments ........................... 1,092,454,836
--------------
Net Gain on Investments .......................................................................... 1,622,760,779
--------------
Increase in Net Assets from Operations ........................................................... $1,552,223,013
==============
</TABLE>
- --------------------------------------------------------------------------------
* Includes net realized loss from affiliated issuers of $298,715,949.
See Notes to Financial Statements.
16
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment loss ............................................................ $ (70,537,766) $ (57,242,089)
Net realized gain on investments ............................................... 530,305,943 909,728,876
Net change in unrealized appreciation of investments ........................... 1,092,454,836 (144,024,652)
-------------- --------------
Increase in Net Assets from Operations ......................................... 1,552,223,013 708,462,135
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ..................................................................... (43,896,582) (621,494,484)
Class B ..................................................................... (12,119,376) (87,967,545)
Class D ..................................................................... (14,706,286) (196,816,410)
-------------- --------------
Decrease in Net Assets from Distributions ...................................... (70,722,244) (906,278,439)
-------------- --------------
<CAPTION>
SHARES
--------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997
------------ -----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A .................................. 25,111,674 30,847,206 621,592,114 837,264,966
Class B .................................. 16,415,913 14,952,067 386,088,334 391,781,442
Class D .................................. 8,380,790 8,669,975 196,269,419 225,248,842
Exchanged from associated Funds:
Class A .................................. 114,681,500 29,422,861 2,841,379,108 787,728,489
Class B .................................. 2,120,230 1,194,212 49,133,796 29,695,869
Class D .................................. 48,857,178 12,022,132 1,142,557,017 310,543,695
Shares issued in payment of
gain distributions:
Class A .................................. 1,582,669 23,313,230 41,174,599 569,075,182
Class B .................................. 465,356 3,579,064 11,341,088 82,568,805
Class D .................................. 565,338 7,940,049 13,766,096 183,018,029
------------ ------------ -------------- --------------
Total ....................................... 218,180,648 131,940,796 5,303,301,571 3,416,925,319
------------ ------------ -------------- --------------
Cost of shares repurchased:
Class A .................................. (33,032,174) (23,014,559) (817,466,916) (611,914,607)
Class B .................................. (3,508,482) (1,035,991) (81,912,096) (27,730,271)
Class D .................................. (9,348,809) (6,201,793) (216,747,724) (158,791,776)
Exchanged into associated Funds:
Class A .................................. (115,379,614) (29,624,808) (2,870,772,283) (799,242,903)
Class B .................................. (2,592,803) (997,743) (58,649,491) (25,590,755)
Class D .................................. (48,834,512) (11,933,465) (1,145,506,919) (311,146,906)
------------ ------------ -------------- --------------
Total ....................................... (212,696,394) (72,808,359) (5,191,055,429) (1,934,417,218)
------------ ------------ -------------- --------------
Increase in Net Assets from Capital
Share Transactions ....................... 5,484,254 59,132,437 112,246,142 1,482,508,101
============ ============ -------------- --------------
Increase in Net Assets ......................................................... 1,593,746,911 1,284,691,797
NET ASSETS:
Beginning of year .............................................................. 4,558,190,892 3,273,499,095
-------------- --------------
End of Year (including accumulated net investment loss of
$117,642 and $114,234, respectively) ........................................ $6,151,937,803 $4,558,190,892
============== ==============
</TABLE>
- ---------
See Notes to Financial Statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Multiple Classes of Shares -- Seligman Communications and Information Fund,
Inc. (the "Fund") offers three classes of shares. 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 charge ("CDSC") 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 CDSC, 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 CDSC, 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 convertible securities and common
stocks 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. 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.
c. 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.
Interest income is recorded on an accrual basis.
d. 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, 1998, distribution and service fees were the only
class-specific expenses.
e. 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.
For the year ended December 31, 1998, the Fund redeemed 212,696,394 of
its shares from shareholders aggregating $5,191,055,429, of which
approximately $149,500,000 represents capital gain distributions. This
information is provided for federal income tax purposes only.
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, 1998, amounted to $6,324,536,169 and $6,232,299,062,
respectively.
At December 31, 1998, the cost of investments for federal income tax
purposes was $4,886,760,345, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $1,442,272,305 and
$161,065,431, respectively.
4. Short-Term Investments -- At December 31, 1998, the Fund owned short-term
investments which matured in less than seven days.
5. Management Fee, Distribution Services, and Other Transactions -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides the necessary personnel and facilities. 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.
The Manager receives a fee, calculated daily and payable monthly, equal to 0.90%
per annum of the first $3 billion of the Fund's average daily net assets, 0.85%
per annum of the next $3 billion of the Fund's average daily net assets, and
0.75% per annum of the Fund's average daily net assets in excess of $6 billion.
The management fee reflected in the Statement of Operations represents 0.88% per
annum of the Fund's average daily net assets.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Seligman Advisors, Inc. (the "Distributor") (formerly Seligman Financial
Services, Inc.), agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $1,537,225 from sales of Class
A shares, after commissions of $12,482,693 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,
1998, fees incurred under the Plan aggregated $8,106,817, or 0.25% 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 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, 1998, 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 $7,384,792 and $10,339,390, respectively.
The Distributor is entitled to retain any CDSC 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, 1998, such charges amounted to $475,038.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC 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
retained by the Distributor, for the year ended December 31, 1998, amounted to
$576,783.
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, 1998, Seligman Services, Inc. received commissions of $404,711 from the sale
of shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $980,100, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $12,787,954 for shareholder account
services.
Certain officers and directors of the Fund are officers or directors of the
Manager, 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. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in directors' fees and
expenses, and the accumulated balance thereof at December 31, 1998, of $117,642
is included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
6. Committed Line of Credit -- Effective July 1, 1998, the Fund terminated its
$340 million committed line of credit and entered into a joint $800 million
committed line of credit that is shared by substantially all funds in the
Seligman Group of Investment Companies. The Fund's borrowings are limited to 10%
of its net assets. Borrowings pursuant to the credit facility are subject to
interest at a rate equal to the overnight federal funds rate plus 0.50%. The
Fund incurs a commitment fee of 0.08% per annum on its share of the unused
portion of the credit facility. The credit facility may be drawn upon only for
temporary purposes and is subject to certain other customary restrictions. The
credit facility commitment expires one year date of the agreement but is
renewable with the consent of the participating banks. Through December 31,
1998, the Fund has not borrowed from the credit facility.
7. Subsequent Event -- Litigation -- The Fund, certain of its current and former
directors, and the Manager have been named in a lawsuit filed in the United
States District Court for the Northern District of Maryland on February 5, 1999.
The complaint makes various allegations and claims relating to the February 1996
special meeting of the Fund's shareholders at which an increase in the
management fee rate payable to the Manager by the Fund was approved. The Fund
believes the claims to be without merit and intends to defend the action
vigorously.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
8. Affiliated Issuers -- As defined under the Investment Company Act of 1940, as
amended, affiliated issuers are those issuers in which the Fund's holdings
represent 5% or more of the outstanding voting securities of the issuer. A
summary of the Fund's transactions in the securities of these issuers during the
year ended December 31, 1998, is as follows:
<TABLE>
<CAPTION>
GROSS GROSS REALIZED
BEGINNING PURCHASES SALES AND ENDING GAIN ENDING
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES (LOSS) VALUE
- ------------ ---------------------------------------------------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
3DO ........................... 2,200,000 600,000 200,000 2,600,000 $ (2,059,832) $ 11,943,750
Acclaim Entertainment ......... -- 3,100,000 -- 3,100,000 -- 37,975,000
Activision .................... 1,000,000 400,000 300,000 1,100,000 (843,215) 12,100,000
ADFlex Solutions .............. 900,000 1,000,000 900,000 1,000,000 (11,714,281) 6,875,000
Amkor Technology .............. -- 8,170,000 -- 8,170,000 -- 88,593,438
ANSYS ......................... 1,350,000 -- 1,350,000 -- (4,535,331) --
Apex PC Solutions ............. -- 1,350,000 -- 1,350,000 -- 38,812,500
Asyst Technologies ............ 630,000 370,000 242,400 757,600 (4,535,983) 15,483,450
Autodesk ...................... -- 3,535,000 300,000 3,235,000 (7,249,237) 137,992,969
C-Cube Microsystems ........... -- 2,600,000 -- 2,600,000 -- 70,606,250
Check Point Software
Technologies ................ 50,000 3,211,400 161,400 3,100,000 130,973 141,728,125
CIDCO ......................... 1,500,000 -- 1,500,000 -- (31,618,060) --
CKS Group ..................... 1,025,000 100,000 1,125,000 -- 3,758,828 --
Cognex ........................ 2,350,000 250,000 400,000 2,200,000 (7,506,951) 43,862,500
Creative Technology ........... 4,250,000 3,876,000 -- 8,126,000 -- 121,890,000
Credence Systems .............. 2,180,000 -- 380,000 1,800,000 (10,289,172) 33,187,500
Dallas Semiconductor .......... 1,119,400 630,600 200,000 1,550,000 (2,740,871) 63,162,500
Discreet Logic ................ -- 1,500,000 -- 1,500,000 -- 28,218,750
Electro Scientific Industries . 1,110,000 -- 110,000 1,000,000 (3,392,964) 45,312,500
Electronic Arts ............... 1,250,000 3,230,000 680,000 3,800,000 5,258,888 213,037,500
Electronics for Imaging ....... 4,600,000 730,000 300,000 5,030,000 (10,460,413) 201,042,812
Encad ......................... 750,000 550,300 1,300,300 -- (29,442,110) --
Etec Systems .................. 1,800,000 1,150,000 1,650,000 1,300,000 (17,138,356) 52,000,000
Hadco ......................... 1,125,000 125,000 400,000 850,000 (15,300,019) 29,696,875
In Focus Systems .............. 685,000 1,231,200 1,916,200 -- (4,618,874) --
Information Resources ......... 1,000,000 500,000 1,500,000 -- (13,795,114) --
Kulicke & Soffa Industries .... 2,300,000 -- 2,300,000 -- (47,841,685) --
Lattice Semiconductor ......... 2,100,000 350,000 400,000 2,050,000 (7,167,233) 94,107,813
Level One Communications ...... -- 2,000,000 1,022,600 977,400 9,014,067 34,728,244
Microchip Technology .......... 2,950,000 200,000 1,025,000 2,125,000 13,093,179 78,492,188
Novellus Systems .............. 2,725,000 100,000 2,825,000 -- (14,119,704) --
Oak Industries ................ 1,050,000 120,000 450,000 720,000 2,604,442 25,200,000
Orbotech ...................... -- 1,360,000 -- 1,360,000 -- 64,132,500
Pacific Gateway Exchange ...... -- 1,274,900 154,800 1,120,100 1,203,668 53,869,809
Read-Rite ..................... 3,800,000 -- 3,800,000 -- (42,909,092) --
SMART Modular Technologies .... -- 3,600,000 -- 3,600,000 -- 99,675,000
Structural Dynamics Research .. 3,250,000 20,000 250,000 3,020,000 (3,542,290) 59,833,750
Tecnomatix Technologies ....... -- 725,000 -- 725,000 -- 12,664,844
Unitrode ...................... 1,600,000 -- 1,600,000 -- (13,794,642) --
VLSI Technology ............... 2,550,000 450,000 3,000,000 -- (27,164,565) --
------------- --------------
TOTAL ......................... $(298,715,949) $1,916,225,567
============= ==============
</TABLE>
9. Restricted Securities -- At December 31, 1998, the Fund owned eight private
placement investments that were purchased through private offerings and cannot
be sold without prior registration under the Securities Act of 1933 or pursuant
to an exemption therefrom. In addition, the Fund has agreed to further
restrictions on the disposition of its shares as set forth in various agreements
entered into in connection with the purchase of these investments. These
investments are valued at fair value as determined in accordance with procedures
approved by the Board of Directors of the Fund. The acquisition dates of these
investments, along with their cost and values at December 31, 1998, are as
follows:
INVESTMENTS ACQUISITION DATES COST VALUE
- ----------- ----------------- ----------- -----------
Convertible Preferred Stocks:
CrossRoads Software 12/23/97 $ 4,000,000 $ 4,000,000
Diamond Lane Communications 9/4/97 1,999,998 1,999,998
FreeGate (Series D) 6/30/98 999,999 999,999
iName (Class C)* 8/4/98 4,299,994 4,299,994
iVillage (Series E) 11/30/98 4,749,998 4,749,998
Transmeta (Series E) 7/1/98 3,000,000 3,000,000
UniSite (Class C) 12/19/97 4,999,951 4,999,951
Xtra On-Line (Series C) 7/16/98 2,000,000 2,000,000
----------- -----------
$26,049,940 $26,049,940
=========== ===========
- ---------
* Warrants attached.
20
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five years or from its inception if less than five
years. Certain information reflects financial results for a single share of a
Class that was held throughout the periods shown. Per share amounts are
calculated using average shares outstanding. "Total return" shows the rate that
you would have earned (or lost) on an investment in each Class, assuming you
reinvested all your capital gain distributions. Total returns do not reflect any
sales charges, and are not annualized for periods of less than one year.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year ...................... $ 23.25 $ 23.51 $ 21.99 $ 16.64 $ 13.43
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) ............................ (0.28) (0.33) (0.26) (0.33) (0.19)
Net realized and unrealized gain
on investments ........................................ 8.11 6.01 2.84 7.59 4.86
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ........................ 7.83 5.68 2.58 7.26 4.67
---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from net realized capital gain ............ (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Total Distributions ..................................... (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year ............................ $ 30.73 $ 23.25 $ 23.51 $ 21.99 $ 16.64
========== ========== ========== ========== ==========
TOTAL RETURN: 33.92% 22.95% 11.94% 43.39% 35.30%
Ratios/Supplemental Data:
Net assets, end of year (000s omitted) .................. $3,890,596 $3,107,481 $2,414,672 $1,940,693 $ 307,542
Ratio of expenses to average net assets ................. 1.44% 1.53% 1.68% 1.61% 1.65%
Ratio of net income (loss) to average net assets ........ (1.13)% (1.21)% (1.16)% (1.31)% (1.27)%
Portfolio turnover rate ................................. 126.70% 164.57% 121.32% 65.77% 104.08%
</TABLE>
- ---------
See footnotes on page 22.
21
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
----------------------------------------
YEAR ENDED 4/22/96*
DECEMBER 31, TO
------------------------- ----------
1998 1997 12/31/96
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period .................. $ 21.94 $ 22.62 $ 21.51
---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) .......................... (0.44) (0.50) (0.28)
Net realized and unrealized gain
on investments ...................................... 7.60 5.76 2.45
---------- ---------- ----------
Total from Investment Operations ...................... 7.16 5.26 2.17
---------- ---------- ----------
Less Distributions:
Distributions from net realized capital gain .......... (0.35) (5.94) (1.06)
---------- ---------- ----------
Total Distributions (0.35) (5.94) (1.06)
---------- ---------- ----------
Net Asset Value, End of Period ........................ $ 28.75 $ 21.94 $ 22.62
========== ========== ==========
TOTAL RETURN: 32.89% 21.96% 10.30%
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) .............. $1,033,105 $ 505,342 $ 120,848
Ratio of expenses to average net assets ............... 2.19% 2.28% 2.44%+
Ratio of net income (loss) to average net assets ...... (1.88)% (1.96)% (1.96)%+
Portfolio turnover rate ............................... 126.70% 164.57% 121.32%++
<CAPTION>
CLASS D
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year .................... $ 21.91 $ 22.61 $ 21.35 $ 16.31 $ 13.32
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) .......................... (0.44) (0.50) (0.40) (0.50) (0.33)
Net realized and unrealized gain
on investments ...................................... 7.60 5.74 2.72 7.45 4.78
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ...................... 7.16 5.24 2.32 6.95 4.45
---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from net realized capital gain .......... (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Total Distributions ................................... (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year .......................... $ 28.72 $ 21.91 $ 22.61 $ 21.35 $ 16.31
========== ========== ========== ========== ==========
TOTAL RETURN: 32.94% 21.86% 11.07% 42.37% 33.94%
Ratios/Supplemental Data:
Net assets, end of year (000s omitted) ................ $1,228,237 $ 945,368 $ 737,979 $ 609,332 $ 96,100
Ratio of expenses to average net assets ............... 2.19% 2.28% 2.43% 2.37% 2.50%
Ratio of net income (loss) to average net assets ...... (1.88)% (1.96)% (1.91)% (2.07)% (2.20)%
Portfolio turnover rate ............................... 126.70% 164.57% 121.32% 65.77% 104.08%
</TABLE>
- ---------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
See Notes to Financial Statements.
22
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Communications and Information Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Communications and Information Fund,
Inc. as of December 31, 1998, 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, 1998, by correspondence with the Fund's custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. 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
Communications and Information Fund, Inc. as of December 31, 1998, 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
February 5, 1999
- --------------------------------------------------------------------------------
23
<PAGE>
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
John R. Galvin 2, 4
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
Alice S. Ilchman 3, 4
Trustee, Committee for Economic Development
Chairman, The Rockefeller Foundation
Frank A. McPherson 2, 4
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow 2, 4
Retired Chairman and Senior Partner,
Sullivan & Cromwell, Law Firm
Director, Commonwealth Industries, Inc.
Director, New York Presbyterian Hospital
Betsy S. Michel 2, 4
Trustee, The Geraldine R. Dodge Foundation
Chairman of the Board of Trustees, St. George's School
William C. Morris 1
Chairman
Chairman of the Board,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3, 4
Retired Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
James Q. Riordan 3, 4
Director, KeySpan Energy Corporation
Trustee, Committee for Economic Development
Director, Public Broadcasting Service
Richard R. Schmaltz 1
Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated
Trustee Emeritus, Colby College
Robert L. Shafer 3, 4
Retired Vice President, Pfizer Inc.
James N. Whitson 2, 4
Director and Consultant, Sammons Enterprises, Inc.
Director, C-SPAN
Director, CommScope, Inc.
Brian T. Zino 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Director, ICI Mutual Insurance Company
Director Emeritus
Fred E. Brown
Director and Consultant,
J. &W. Seligman &Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
William C. Morris
Chairman
Brian T. Zino
President
Paul H. Wick
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- --------------------------------------------------------------------------------
24
<PAGE>
GLOSSARY OF FINANCIAL TERMS
Capital Gain Distribution -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
Capital Appreciation/Depreciation -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
Compounding -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
Contingent Deferred Sales Charge (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
Dividend -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
Dividend Yield -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
Expense Ratio -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
Investment Objective -- The shared investment goal of a fund and its
shareholders.
Management Fee -- The amount paid by a mutual fund to its investment advisor(s).
Multiple Classes of Shares -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
National Association of Securities Dealers, Inc. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
Net Asset Value (NAV) Per Share -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
Offering Price (OP) -- The price at which a mutual fund's share can be
purchased. The offering price per share is the current net asset value plus any
sales charge.
Portfolio Turnover -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
Prospectus -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC Yield -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
Securities and Exchange Commission -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
Statement of Additional Information -- A document that contains updated or more
detailed information about an investment company and that supplements the
prospectus. It is available at no charge upon request.
Total Return -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
Yield on Securities -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- ---------
Adapted from the Investment Company Institute's 1998 Mutual Fund Fact Book.
25
<PAGE>
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman Communications and Information Fund, Inc., which contains information
about the sales charges, management fee, and other costs. Please read the
prospectus carefully before investing or sending money.
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
EQCI2 12/98 Printed on Recycled Paper
<PAGE>
File No. 2-80168
811-3596
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS.
All Exhibits have been previously filed, except Exhibits marked
with an asterisk (*) which are filed herewith.
(a) *Articles Supplementary dated May 24, 1999.
(a)(1) Amended and Restated Articles of Registrant. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 18 filed on April 29,
1997.)
(b) By-laws of the Corporation. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 18 filed on April 29, 1997.)
(c) Specimen Certificate of Class B Capital Stock. (Incorporated by
Reference to Form SE filed on April 16, 1996.)
(c)(1) Specimen Certificate of Class D Capital Stock. (Incorporated by
Reference to Registrant's Post-Effective Amendment No. 14 filed on April
29, 1993.)
(d) Copy of new Management Agreement between Registrant and J. & W. Seligman
& Co. Incorporated. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 17 filed on April 19, 1996.)
(e) *Addendum to Sales/Bank Agreement. (Incorporated by reference to
Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File #811-1886) filed on May 28, 1999.)
(e)(1) *Form of Bank Agreement between Seligman Advisors, Inc. and Banks.
(Incorporated by reference to Post-Effective Amendment No. 57 to the
Registration Statement of Seligman Capital Fund, Inc. (File #811-1886)
filed on May 28, 1999.)
(e)(2) Form of new Distributing Agreement between Registrant and Seligman
Advisors, Inc. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 18 filed on April 29, 1997.)
(e)(3) Form of Amended Sales Agreement between Seligman Advisors, Inc. and
Dealers. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 17 filed on April 19, 1996.)
(e)(4) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co. (formerly, Dean Witter Reynolds, Inc.)
(Incorporated by reference to Exhibit 6b of Registration Statement No.
2-33566, to Registrant's Post-Effective Amendment No. 53 filed on April
28, 1997.)
(e)(5) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co. (formerly, Dean Witter Reynolds, Inc.) with
respect to certain Chilean institutional investors. (Incorporated by
reference to Exhibit 6c of Registration Statement No. 2-33566, to
Registrant's Post-Effective Amendment No. 53 filed on April 28, 1997.)
(e)(6) Form of Dealer Agreement between Seligman Advisors, Inc. and Salomon
Smith Barney Inc. (formerly, Smith Barney Inc.). (Incorporated by
reference to Exhibit 6d of Registration Statement No. 2-33566, to
Registrant's Post-Effective Amendment No. 53 filed on April 28, 1997.)
(f) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by Reference to Exhibit 7 of Registration Statement No.
2-92487, to Registrant's Post-Effective Amendment No. 21 filed on
January 29, 1997.)
(f)(1) Deferred Compensation Plan for Directors of Seligman Communications and
Information Fund, Inc. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 19 filed on April 29, 1998.)
C-1
<PAGE>
File No. 2-80168
811-3596
PART C. OTHER INFORMATION (CONTINUED)
(g) Copy of Amended Custodian Agreement between Registrant and Investors
Fiduciary Trust Company. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 18 filed on April 29, 1997.)
(h) Not applicable.
(i) *Opinion and Consent of Counsel in respect of Class C shares.
(i)(1) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 18 filed on April 29, 1997.)
(j) *Consent of Independent Auditors.
(k) Not applicable.
(l) *Form of Purchase Agreement (Investment Letter) for Initial Capital
between Registrant's Class C shares and J. & W. Seligman & Co.
Incorporated.
(l)(1) Purchase Agreement (Investment Letter) 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.
17 filed on April 19, 1996.)
(l)(2) Purchase Agreement (Investment Letter) 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.
18 filed on April 29, 1997.)
(m) *Amended Administration, Shareholder Services and Distribution Plan of
Registrant.
(m)(2) *Amended Administration, Shareholder Services and Distribution Agreement
between Seligman Advisors, Inc. and Dealers. Incorporated by reference
to Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File # 811-1886) filed on May 28, 1999.)
(n) Financial Data Schedules. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 21 filed on April 29, 1999.)
(o) *Copy of Multiclass Plan entered into by Registrant pursuant to Rule
18f-3 under the Investment company Act of 1940, as amended.
(Incorporated by reference to Post-Effective Amendment No. 57 to the
Registration Statement of Seligman Capital Fund, Inc. (File #811-1886)
filed on May 28, 1999.)
OTHER EXHIBITS: Power of Attorney for Richard R. Schmaltz. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 19
filed on April 29, 1998.)
Powers of Attorney. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 18 filed on
April 29, 1997.)
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT. None.
ITEM 25. 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. 18 to the Registration
Statement.
C-2
<PAGE>
File No. 2-80168
811-3596
PART C. OTHER INFORMATION (CONTINUED)
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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER. J. & W.
Seligman & Co. Incorporated, a Delaware corporation ("Manager"), is
the Registrant's investment manager. The Manager also serves as
investment manager to eighteen associated investment companies. They
are Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.
Seligman Common Stock 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, 1999.
ITEM 27 PRINCIPAL UNDERWRITERS
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter is currently distributing
securities of the Registrant and also acts as a principal
underwriter, depositor or investment adviser are as follows:
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman 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.
C-3
<PAGE>
File No. 2-80168
811-3596
PART C. OTHER INFORMATION (CONTINUED)
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 20:
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
------------------ --------------------- ---------------------
<S> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the Board and
Chief Executive Officer
BRIAN T. ZINO* Director President and Director
RONALD T. SCHROEDER* Director None
FRED E. BROWN* Director Director Emeritus
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President and Director None
CHARLES W. KADLEC* Chief Investment Strategist None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
EDWARD F. LYNCH* Senior Vice President, National None
Sales Director
JAMES R. BESHER Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
GERALD I. CETRULO, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
MATTHEW A. DIGAN* Senior Vice President, None
Domestic Funds
JONATHAN G. EVANS Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
ROBERT T. HAUSLER* Senior Vice President, International None
Funds
T. WAYNE KNOWLES Senior Vice President, None
104 Morninghills Court Division Sales Director
Cary, NC 27511
JOSEPH LAM Senior Vice President, Regional None
Seligman International Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
BRADLEY W. LARSON Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
MICHELLE L. MCCANN-RAPPA* Senior Vice President, None
Retirement Plans
SCOTT H. NOVAK* Senior Vice President, Insurance None
RICHARD M. POTOCKI Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
</TABLE>
C-4
<PAGE>
File No. 2-80168
811-3596
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
------------------ --------------------- ---------------------
<S> <C> <C>
BRUCE M. TUCKEY Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
ANDREW S. VEASEY Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
CHARLES L. VON BREITENBACH, II* Senior Vice President, None
Managed Money
J. BRERETON YOUNG* Senior Vice President, Director None
of Sales Development
JEFFREY S. DEAN* Vice President, Business Analysis None
MASON S. FLINN Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
MARSHA E. JACOBY* Vice President, Offshore Business None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
JOAN M. O'CONNELL Vice President, Regional Retirement None
3707 Fifth Avenue #136 Plans Manager
San Diego, CA 92103
RONALD W. POND* Vice President, Portfolio Advisor None
JEFFERY C. PLEET* Vice President, Regional Retirement None
Plans Manager
TRACY A. SALOMON* Vice President, Retirement Marketing None
HELEN SIMON* Vice President, Sales Administration None
GARY A. TERPENING* Vice President, Director of Business None
Development
CHARLES E. WENZEL Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
JEFF BOTWINICK Regional Vice President None
11508 Foster Road
Overland Park, KS 66210
KEVIN CASEY Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
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
</TABLE>
C-5
<PAGE>
File No. 2-80168
811-3596
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
------------------ --------------------- ---------------------
<S> <C> <C>
KENNETH DOUGHERTY Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
KELLI A. WIRTH DUMSER Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
EDWARD S. FINOCCHIARO Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
MICHAEL C. FORGEA Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
CATHY DES JARDINS Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
MICHAEL K. LEWALLEN Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
JUDITH L. LYON Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
TIM O'CONNELL Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
GEORGE M. PALMER, JR. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
THOMAS PARNELL Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
CRAIG PRICHARD Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
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
EUGENE P. SULLIVAN Regional Vice President None
4858 Battery Lane
Bethesda, MD 21814
</TABLE>
C-6
<PAGE>
File No. 2-80168
811-3596
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
------------------ --------------------- ---------------------
<S> <C> <C>
JAMES TAYLOR Regional Vice President None
1145 Kenilworth Circle
Naperville, IL 60540
STEVE WILSON Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
GAIL S. CUSHING* Assistant Vice President, National None
Accounts Manager
SANDRA G. FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
ALBERT A. PISANO* Assistant Vice President and None
Compliance Officer
JOYCE PERESS* Assistant Secretary Assistant Secretary
</TABLE>
* The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, NY 10017.
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Custodian: Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105 AND
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
ITEM 29. MANAGEMENT SERVICES. Not Applicable.
ITEM 30. 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 10% 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, as amended.
C-7
<PAGE>
File No. 2-80168
811-3596
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 Registration Statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 22 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 27th day of May, 1999.
SELIGMAN COMMUNICATIONS AND
INFORMATION 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. 22 has been
signed below by the following persons in the capacities indicated on May 27,
1999.
SIGNATURE TITLE
--------- -----
/S/ BRIAN T. ZINO 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 )
James C. Pitney, Director ) /S/ BRIAN T. ZINO
James Q. Riordan, Director ) ----------------------------------
Richard R. Schmaltz, Director ) * Brian T. Zino, Attorney-in-fact
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
POST-EFFECTIVE AMENDMENT NO. 22 TO THE
REGISTRATION STATEMENT OF FORM N-1A
EXHIBIT INDEX
FORM N-1A ITEM NO. DESCRIPTION
Item 23(a) Articles Supplementary
Item 23(i) Opinion and Consent of Counsel
Item 23(j) Consent of Independent Auditors
Item 23(l) Form of Purchase Agreement for Initial Capital
Item 23(m) Amended Administration, Shareholder Services
and Distribution Plan
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
ARTICLES SUPPLEMENTARY
Seligman Communications and Information Fund, Inc., a Maryland
corporation having its principal office in Baltimore City, Maryland (hereinafter
called the "Corporation") and registered as an open-end investment company under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The total number of shares of capital stock of all
classes which the Corporation has authority to issue is 1,000,000,000 shares,
which were previously classified by the Board of Directors of the Corporation
into three classes designated as Class A Common Stock, Class B Common Stock and
Class D Common Stock. The number of authorized shares of Class A Common Stock,
Class B Common Stock and Class D Common Stock each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such class and y equaled
one-third of the authorized but unissued shares of Common Stock of all classes;
PROVIDED that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class B and Class D Common Stock shall not exceed the
authorized number of shares of Common Stock; and, in the event application of
the formula above would have resulted, at any time, in fractional shares, the
applicable number of authorized shares of each class was to have been rounded
down to the nearest whole number of shares of such class.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of capital stock, the Board of Directors
has reclassified the unissued shares of Class A Common Stock, Class B Common
Stock and Class D Common Stock into the following classes and has provided for
the issuance of shares of such classes. The terms of the Common Stock as set by
the Board of Directors are as follows:
(a) The total number of shares of all classes of stock which
the Corporation has authority to issue is 1,000,000,000 shares of
common stock ("Shares") of the par value of $.10 each having an
aggregate par value of $100,000,000. The Common Stock of the
Corporation shall have four classes of shares, which shall be
designated Class A Common Stock, Class B Common Stock, Class C Common
Stock and Class D Common Stock. The number of authorized shares of
Class A Common Stock, of Class B Common Stock, of Class C Common Stock
and of Class D Common Stock shall each consist of the sum of x and y,
where x equals the issued and outstanding shares of such class and y
equals one-fourth of the authorized but unissued shares of Common Stock
of all classes; PROVIDED that at all times the aggregate authorized,
issued and outstanding shares of Class A, Class B, Class C and Class D
Common Stock shall not exceed the authorized number of shares of Common
Stock (I.E., 1,000,000,000 shares of Common Stock until changed by
further action of the Board of Directors in accordance with Section
2-208.1 of the Maryland General Corporation Law, or any successor
provision); and, in the event application of the formula above would
result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest
whole number of
-1-
<PAGE>
shares of such class. Any class of Common Stock shall be referred to
herein individually as a "Class" and collectively, together with any
further class or classes from time to time established, as the
"Classes".
(b) All Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; PROVIDED, HOWEVER, that notwithstanding anything in the charter
of the Corporation to the contrary:
(1) Class A shares may be subject to such front-end
sales loads as may be established by the Board of Directors
from time to time in accordance with the Investment Company
Act and applicable rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD").
(2) Class B shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
Subject to subsection (6) below, each Class B share shall
convert automatically into Class A shares on the last business
day of the month that precedes the eighth anniversary of the
date of issuance of such Class B share; such conversion shall
be effected on the basis of the relative net asset values of
Class B shares and Class A shares as determined by the
Corporation on the date of conversion.
(3) Class C shares may be subject to such front-end
sales loads and such contingent deferred sales charges as may
be established from time to time by the Board of Directors in
accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(4) Class D shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
(5) Expenses related solely to a particular Class
(including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other
arrangement, however designated, which may differ between the
Classes) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board
of Directors) in the net asset value, dividends, distribution
and liquidation rights of the shares of that Class.
(6) At such time as shall be permitted under the
Investment Company Act, any applicable rules and regulations
thereunder and the provisions of any exemptive order
applicable to the Corporation, and as may be determined by the
Board of Directors and disclosed in the then current
prospectus of the Corporation, shares of a
-2-
<PAGE>
particular Class may be automatically converted into shares of
another Class; PROVIDED, HOWEVER, that such conversion shall
be subject to the continuing availability of an opinion of
counsel to the effect that such conversion does not constitute
a taxable event under Federal income tax law. The Board of
Directors, in its sole discretion, may suspend any conversion
rights if such opinion is no longer available.
(7) As to any matter with respect to which a separate
vote of any Class is required by the Investment Company Act or
by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other
arrangement referred to in subsection (5) above), such
requirement as to a separate vote by the Class shall apply in
lieu of single Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders
thereunder and the Maryland General Corporation Law, the
Classes shall vote together as a single Class on any such
matter that shall have the same effect on each such Class. As
to any matter that does not affect the interest of a
particular Class, only the holders of shares of the affected
Class shall be entitled to vote.
THIRD: These Articles Supplementary do not change the total number of
authorized shares of the Corporation.
IN WITNESS WHEREOF, SELIGMAN COMMUNICATIONS AND INFORMATION
FUND, INC. has caused these Articles Supplementary to be signed in its name and
on its behalf by its President and witnessed by its Secretary, and each of said
officers of the Corporation has also acknowledged these Articles Supplementary
to be the corporate act of the Corporation and has stated under penalties of
perjury that to the best of his knowledge, information and belief that the
matters and facts set forth with respect to approval are true in all material
respects, all on May 24, 1999.
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
By: /S/ BRIAN T. ZINO
-------------------------------------------
Brian T. Zino, President
Witness:
/S/ FRANK J. NASTA
- ----------------------------
Frank J. Nasta, Secretary
-3-
SULLIVAN & CROMWELL
May 27, 1999
Seligman Communications and Information Fund, Inc.,
100 Park Avenue,
New York, N.Y. 10017.
Dear Sirs:
In connection with Post-Effective Amendment No.22 to the Registration
Statement on Form N-1A (File No. 2-80168) of Seligman Communications and
Information Fund, Inc., a Maryland corporation (the "Fund"), which you expect to
file under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to an indefinite number of shares of capital stock, par value $0.100 per
share, of the class designated as Class C shares (the "Shares"), we, as your
counsel, have examined such corporate records, certificates and other documents,
and such questions of law, as we have considered necessary or appropriate for
the purposes of this opinion.
The number of shares of each class of capital stock that the Fund is
authorized to issue at any time is determined by adding to the number of shares
of such class then outstanding additional authorized shares in an amount
determined according to a formula set forth in the Fund's charter. The formula
allocates to each class an equal portion of the number of shares representing
the difference between the number of shares that the Fund is authorized to issue
and the total number of shares of all classes outstanding at such time. Upon the
basis of such examination, we advise you that, in our opinion, the Fund is
authorized to issue the number of Shares determined in accordance with the
charter of the Fund as described above and, when the Post-Effective Amendment
referred to above has become effective under the Securities Act and the Shares
have been issued (a) for at least the par value thereof in accordance with the
Registration Statement referred to above, (b) so as not to exceed the then
authorized number of Shares and (c) in accordance with the authorization of the
Board of Directors, the Shares will be duly and validly issued, fully paid and
non-assessable.
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The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of the State of Maryland, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment referred to above. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
SULLIVAN & CROMWELL
-2-
CONSENT OF INDEPENDENT AUDITORS
Seligman Communications and Information Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 22 to Registration
Statement No. 2-80168 of our report dated February 5, 1999, appearing in the
Annual Report to Shareholders for the year ended December 31, 1998, 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
Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
May 26, 1999
INVESTMENT LETTER
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
Seligman Communications and Information Fund, Inc. (the "Fund"), an open-end
diversified management investment company, and the undersigned ("Purchaser"),
intending to be legally bound, hereby agree as follows:
1. The Fund hereby sells to Purchaser and Purchaser purchases 1 Class C
share (the "Share") of Capital Stock (par value $.10) of the Fund at a
price equivalent to the net asset value of one Class D share of the
Fund as of the close of business on May 27, 1999. The Fund hereby
acknowledges receipt from Purchaser of funds in such amount in full
payment for the Share.
2. Purchaser represents and warrants to the Fund that the Share is being
acquired for investment and not with a view to distribution thereof,
and that Purchaser has no present intention to redeem or dispose of the
Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 28th day
of May, 1999 ("Purchase Date").
SELIGMAN COMMUNICATIONS AND
INFORMATION FUND
By:______________________________
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By:______________________________
Name: Brian T. Zino
Title: President
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
----------------------------------------------------------
As amended and restated through June 1, 1999
SECTION 1. Seligman Communications & Information Fund, Inc.
(the "Fund") will pay fees to Seligman Advisors, Inc., the principal underwriter
of its shares (the "Distributor"), for administration, shareholder services and
distribution assistance for the Class A, Class B, Class C and Class D shares of
the Fund. As a result, the Fund is adopting this Administration, Shareholder
Services and Distribution Plan (the "Plan") pursuant to Section 12(b) of the
Investment Company Act of 1940, as amended (the "Act") and Rule 12b-1
thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the
Distributor a shareholder servicing fee of up to .25% on an annual basis of the
average daily net assets of the Fund (payable quarterly with respect to Class A
and monthly with respect to Class B, Class C and Class D) and a distribution fee
of .75% on an annual basis, payable monthly, of the average daily net assets of
the Fund attributable to the Class B Shares and a distribution fee of up to .75%
on an annual basis, payable monthly, of the average daily net assets of the Fund
attributable to Class C and Class D shares. Such fees will be used in their
entirety by the Distributor to make payments for administration, shareholder
services and distribution assistance, including, but not limited to (i)
compensation to securities dealers and other organizations (each, a "Service
Organization" and collectively, the "Service Organizations"), for providing
distribution assistance with respect to assets invested in the Fund, (ii)
compensation to Service Organizations for providing administration, accounting
and other shareholder services with respect to Fund shareholders, and (iii)
otherwise promoting the sale of shares of the Fund, including paying for the
preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Directors of
the Fund.
SECTION 3. J. & W. Seligman & Co. Incorporated, the Fund's
investment manager (the "Manager"), in its sole discretion, may make payments to
the Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Fund.
SECTION 4. This Plan shall continue in effect through December
31 of each year so long as such continuance is specifically approved at least
annually by vote of a majority of both (a) the Directors of the Fund and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
1
<PAGE>
SECTION 5. The Distributor shall provide to the Fund's
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
SECTION 6. This Plan may be terminated by the Fund with
respect to any class at any time by vote of a majority of the Qualified
Directors, or by vote of a majority of the outstanding voting securities of such
class. If this Plan is terminated in respect of a class, no amounts (other than
amounts accrued but not yet paid) would be owed by the Fund to the Distributor
with respect to such class.
SECTION 7. All agreements related to this Plan shall be in
writing, and shall be approved by vote of a majority of both (a) the Directors
of the Fund and (b) the Qualified Directors, cast in person at a meeting called
for the purpose of voting on such approval, provided, however, that the identity
of a particular Service Organization executing any such agreement may be
ratified by such a vote within 90 days of such execution. Any agreement related
to this Plan shall provide:
A. That such agreement may be terminated in respect of any class
of the Fund at any time, without payment of any penalty, by
vote of a majority of the Qualified Directors or by vote of a
majority of the outstanding voting securities of the class, on
not more than 60 days' written notice to any other party to
the agreement; and
B. That such agreement shall terminate automatically in the
event of its assignment.
SECTION 8. This Plan may not be amended to increase materially
the amount of fees permitted pursuant to Section 2 hereof without the approval
of a majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Fund and (b) the Qualified Directors,
cast in person at a meeting called for the purpose of voting on such approval.
This Plan shall not be amended to reduce the distribution fee payable to the
Distributor pursuant to Section 2 hereof in respect of Class B shares, unless
the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated, provided, however that the
distribution fee in respect of Class B shares may be reduced without change to
the shareholder servicing fee, if and to the extent required in order to comply
with any applicable laws or regulations, including applicable rules of the
National Association of Securities Dealers, Inc. regulating maximum sales
charges.
SECTION 9. The Fund is not obligated to pay any
administration, shareholder services or distribution expense in excess of the
fee described in Section 2 hereof, and, in the case of Class A shares, any
expenses of administration, shareholder services and distribution of Class A
shares of the Fund accrued in one fiscal year of the Fund may not be paid from
administration, shareholder services and distribution fees received from the
Fund in respect of Class A shares in any other fiscal year.
2
<PAGE>
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Fund who are not "interested persons" of the
Fund and have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to this Plan.
