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. 23 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 23 |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):
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<S> <C>
|_| immediately upon filing pursuant to paragraph (b) |_| on (date) pursuant to paragraph (a)(1)
|X| on April 28, 2000 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:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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S E L I G M A N
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COMMUNICATIONS AND INFORMATION
FUND, INC.
PROSPECTUS
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 in
this Prospectus, considered in light of all of the other investments in your
portfolio, as well as your risk tolerance, financial goals and time horizons. We
recommend that you consult your financial advisor to determine if this Fund is
suitable for you.
EQCI1 5/2000
[PHOTO]
MAY 1, 2000
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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
<PAGE>
Table of Contents
The Fund
Investment Objective 1
Principal Investment Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Management 5
Shareholder Information
Deciding Which Class of Shares to Buy 6
Pricing of Fund Shares 8
Opening Your Account 8
How to Buy Additional Shares 9
How to Exchange Shares Among
the Seligman Mutual Funds 10
How to Sell Shares 10
Important Policies That May Affect
Your Account 11
Dividends and Capital Gain Distributions 12
Taxes 12
The Seligman Mutual Funds 13
Financial Highlights 15
How to Contact Us 17
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES
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The Fund
INVESTMENT OBJECTIVE
The Fund's investment objective is capital gain.
PRINCIPAL INVESTMENT STRATEGIES
The Fund uses the following principal investment strategies to seek its
investment 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 investment objective. The Fund's
objective may be changed only with shareholder approval.
There is no guarantee that the Fund will achieve its objective.
1
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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.
Stocks of companies in the technology sector, like those in which the Fund may
invest, have recently experienced a period of strong performance. However, if
investor sentiment changes, the value of technology stocks may decline. There
can be no assurances that the Fund will continue to consistently achieve, by
investing in initial public offerings or otherwise, substantially similar
performance that the Fund had previously experienced.
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 currency fluctuations, local withholding and other taxes,
different financial reporting practices and regulatory standards, high costs of
trading, changes in political conditions, expropriation, investment and
repatriation restrictions, and settlement and custody risks.
The 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. Frequent and active
trading may cause 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
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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 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.
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 lower. 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 IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 74.51%
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 12/31/99
CLASS B CLASS C CLASS D
ONE FIVE TEN SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION
YEAR YEARS YEARS 4/22/96 5/27/99* 5/3/93
---- ----- ----- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Class A 66.24% 34.45% 29.22% -- -- --
Class B 68.16 n/a n/a 35.43% -- --
Class C n/a n/a n/a -- 66.63% --
Class D 72.24 34.72 n/a -- -- 36.65%
S&P 500 Index 21.04 28.55 18.21 26.78(1) 13.68(2) 22.39(3)
Lipper Science & Technology
Funds Average 137.64 48.31 33.41 50.04(1) 98.19(2) 41.94(3)
The Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) and the
Lipper Science & Technology Funds 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&P 500
Index does not reflect any fees or sales charges. The S&P 500 Index measures the
performance of 500 of the largest US companies based on market capitalizations.
The Lipper Science & Technology Funds Average measures the performance of mutual
funds with objectives similar to the Fund.
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* Total returns for periods of less than one year are not annualized.
(1) From April 30, 1996.
(2) From May 31, 1999.
(3) From April 30, 1993.
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3
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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 your account. Annual fund operating expenses are deducted from Fund
assets and are therefore paid indirectly by you and other shareholders of the
Fund.
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Shareholder Fees Class A Class B Class C Class D
- ---------------- ------- ------- ------- ------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) ............................................. 4.75% 5% 2% 1%
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 1999
- ---------------------------------------
(as a percentage of average net assets)
Management Fees ......................................................... .86% .86% .86% .86%
Distribution and/or Service (12b-1) Fees ................................ .25% 1.00% 1.00% 1.00%
Other Expenses .......................................................... .28% .28% .28% .28%
---- ---- ---- ----
Total Annual Fund Operating Expenses .................................... 1.39% 2.14% 2.14% 2.14%
==== ==== ==== ====
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(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, auditing and legal fees.
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Example
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 $610 $894 $1,199 $2,064
Class B 717 970 1,349 2,282+
Class C 414 763 1,238 2,548
Class D 317 670 1,149 2,472
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 $610 $894 $1,199 $2,064
Class B 217 670 1,149 2,282+
Class C 315 763 1,238 2,548
Class D 217 670 1,149 2,472
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+ 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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000, of approximately $12 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, 1999, the management fee paid by the Fund to Seligman
was equal to .86% of the Fund's average daily net assets.
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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 Seligman's Technology Group, which is 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 is a Vice-President and Co-Portfolio Manager of
Seligman New Technologies Fund, Inc. Mr. Wick also co-manages Seligman Global
Technology Fund, a series of Seligman Global Fund Series, Inc.; and he manages
Seligman Communications and Information Portfolio and co-manages Seligman Global
Technology Portfolio, two portfolios of Seligman Portfolios, Inc.
5
<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:
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
(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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</TABLE>
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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
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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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.
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6
<PAGE>
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Class C
o Initial sales charge on Fund purchases, as set forth below:
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
(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 A shares, so you will be subject to higher ongoing 12b-1 fees
indefinitely.
o No sales charge on reinvested dividends or capital gain distributions.
o No CDSC when you sell shares purchased with reinvested dividends or capital gain distributions.
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</TABLE>
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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. You may
purchase Class D shares only (1) if 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.
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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.
7
<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.
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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
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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.
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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.
8
<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 investments must be for $100 or more. Shares may be purchased through
your authorized financial advisor, or you may send a check directly to SDC.
Please provide either an investment slip or a note that provides your name(s),
Fund name, and account number. Unless you indicate otherwise, your investment
will be made in the Class you already own. Send investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
Invest-A-Check(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $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 $2,500 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(SM). 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.
9
<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.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
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 the account owner, 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.
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.
10
<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.
11
<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.
12
<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 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 Emerging Markets 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 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 Global Growth 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 International Growth 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
o High-Yield Maryland New York
o Quality 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.
13
<PAGE>
ASSET ALLOCATION
Seligman Time Horizon/Harvester Series. Inc. is an asset-allocation type mutual
fund. It offers four different asset allocation funds that pursue their
investment objectives by allocating their assets among other mutual funds in the
Seligman Group.
Seligman Time Horizon 30 Fund
Seeks long-term capital appreciation by creating a portfolio of mutual funds
that invests in aggressive growth-oriented domestic and international equity
securities weighted toward small- and medium-capitalization companies.
Seligman Time Horizon 20 Fund
Seeks long-term capital appreciation by creating a portfolio of mutual funds
that invests in growth-oriented domestic and international equity securities,
with a more even weighting among small-, medium- and large-capitalization
companies than Seligman Time Horizon 30 Fund.
Seligman Time Horizon 10 Fund
Seeks capital appreciation by creating a portfolio of mutual funds that invests
in small-, medium- and large-capitalization domestic and international equity
securities as well as domestic fixed-income securities.
Seligman Harvester Fund
Seeks capital appreciation and preservation of capital with current income and
growth of income by creating a portfolio of mutual funds that invests in medium-
and large-capitalization domestic and international equity securities
supplemented by a larger allocation of fixed-income securities and cash than
Seligman Time Horizon 10 Fund.
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. 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.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
Year ended December 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ....... $30.73 $23.25 $23.51 $21.99 $16.64
------------- ------------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss) ........... (0.38) (0.28) (0.33) (0.26) (0.33)
Net gains or losses on securities
(both realized and unrealized) ....... 22.45 8.11 6.01 2.84 7.59
------------- ------------- ------------- ------------- -------------
Total from investment operations ......... 22.07 7.83 5.68 2.58 7.26
------------- ------------- ------------- ------------- -------------
Less distributions:
Dividends from net investment income ... -- -- -- -- --
Distributions from capital gains ....... (5.55) (0.35) (5.94) (1.06) (1.91)
------------- ------------- ------------- ------------- -------------
Total distributions ...................... (5.55) (0.35) (5.94) (1.06) (1.91)
------------- ------------- ------------- ------------- -------------
Net asset value, end of year ............. $47.25 $30.73 $23.25 $23.51 $21.99
============= ============= ============= ============= =============
Total Return: ............................ 74.51% 33.92% 22.95% 11.94% 43.39%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ... $6,454,961 $3,890,596 $3,107,481 $2,414,672 $1,940,693
Ratio of expenses to average net assets .. 1.39% 1.44% 1.53% 1.68% 1.61%
Ratio of net income (loss) to average
net assets ............................. (1.09)% (1.13)% (1.21)% (1.16)% (1.31)%
Portfolio turnover rate .................. 119.23% 126.70% 164.57% 121.32% 65.77%
</TABLE>
- ----------
See footnotes on page 16.
15
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------------------- -------------
Year ended December 31, 4/22/96** 5/27/99**
------------------------------------------------ to to
1999 1998 1997 12/31/96 12/31/99
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period ...... $28.75 $21.94 $22.62 $21.51 $29.39
------------- ------------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss) ............ (0.60) (0.44) (0.50) (0.28) (0.32)
Net gains or losses on securities
(both realized and unrealized) ........ 20.81 7.60 5.76 2.45 19.87
------------- ------------- ------------- ------------- -------------
Total from investment operations .......... 20.21 7.16 5.26 2.17 19.55
------------- ------------- ------------- ------------- -------------
Less distributions:
Dividends from net investment income .... -- -- -- -- --
Distributions from capital gains ........ (5.55) (0.35) (5.94) (1.06) (5.55)
------------- ------------- ------------- ------------- -------------
Total distributions ....................... (5.55) (0.35) (5.94) (1.06) (5.55)
------------- ------------- ------------- ------------- -------------
Net asset value, end of period ............ $43.41 $28.75 $21.94 $22.62 $43.39
============= ============= ============= ============= =============
Total Return: ............................. 73.16% 32.89% 21.96% 10.30% 69.33%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) .. $2,143,570 $1,033,105 $505,342 $120,848 $120,403
Ratio of expenses to average net assets ... 2.14% 2.19% 2.28% 2.44%+ 2.07%+
Ratio of net income (loss) to average
net assets .............................. (1.84)% (1.88)% (1.96)% (1.96)%+ (1.77)%+
Portfolio turnover rate ................... 119.23% 126.70% 164.57% 121.32%++ 119.23%+++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------------------------
Year ended December 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ............. $28.72 $21.91 $22.61 $21.35 $16.31
------------- ------------- ------------- ------------- -------------
Income from investment operations:
Net investment income (loss) ................. (0.60) (0.44) (0.50) (0.40) (0.50)
Net gains or losses on securities
(both realized and unrealized) ............. 20.81 7.60 5.74 2.72 7.45
------------- ------------- ------------- ------------- -------------
Total from investment operations ............... 20.21 7.16 5.24 2.32 6.95
------------- ------------- ------------- ------------- -------------
Less distributions:
Dividends from net investment income ......... -- -- -- -- --
Distributions from capital gains ............. (5.55) (0.35) (5.94) (1.06) (1.91)
------------- ------------- ------------- ------------- -------------
Total distributions ............................ (5.55) (0.35) (5.94) (1.06) (1.91)
------------- ------------- ------------- ------------- -------------
Net asset value, end of year ................... $43.38 $28.72 $21.91 $22.61 $21.35
============= ============= ============= ============= =============
Total Return: .................................. 73.24% 32.94% 21.86% 11.07% 42.37%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ......... $1,987,773 $1,228,237 $945,368 $737,979 $609,332
Ratio of expenses to average net assets ........ 2.14% 2.19% 2.28% 2.43% 2.37%
Ratio of net income (loss) to average
net assets ................................... (1.84)% (1.88)% (1.96)% (1.91)% (2.07)%
Portfolio turnover rate ........................ 119.23% 126.70% 164.57% 121.32% 65.77%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1999.
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 automated 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 collect (212) 682-7600 outside the
US. You may also call these numbers to request other information about the
Fund or to make shareholder inquiries.
Statement of Additional Information (SAI) contains additional information
about the Fund. It is on file with the Securities and Exchange Commission,
or SEC, and is incorporated by reference into (is legally part of) this
prospectus.
Annual/Semi-Annual Reports contain additional information about the Fund
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.
---------------------------------------------------------------------------
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (202) 942-8090. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the EDGAR Database on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained , upon payment of a duplicating fee,
by electronic request at the following E-mail address: [email protected], or by
writing: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102.
SEC FILE NUMBER: 811-3596
================================================================================
<PAGE>
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
Statement of Additional Information
May 1, 2000
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of Seligman Communications and
Information Fund, Inc., dated May 1, 2000. 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 ........................................... 5
Control Persons and Principal Holders of Securities .............. 10
Investment Advisory and Other Services ........................... 11
Brokerage Allocation and Other Practices ......................... 16
Capital Stock and Other Securities ............................... 16
Purchase, Redemption, and Pricing of Shares ...................... 17
Taxation of the Fund ............................................. 22
Underwriters ..................................................... 23
Calculation of Performance Data .................................. 25
Financial Statements ............................................. 27
General Information .............................................. 27
Appendix ......................................................... 28
EQCI1A
<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 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
2
<PAGE>
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 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.
3
<PAGE>
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;
- - 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 its deferred
compensation plan for directors;
4
<PAGE>
- - 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 1933 Act 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.
The Fund also may not acquire any securities of a registered open-end investment
company or a registered unit investment trust in reliance on subparagraph (F) or
subparagraph (G) of Section 12(d)(1) of the 1940 Act. This policy is not
fundamental.
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, 1999 and 1998 were 119.23% and 126.70%, respectively.
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.
5
<PAGE>
<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 Chairman, J. & W. Seligman & Co. Incorporated, Chairman and Chief
(62) the Board, Chief Executive Officer, the Seligman Group of investment companies;
Executive Officer and Chairman, Seligman Advisors, Inc., Seligman Services, Inc., and Carbo
Chairman of the Ceramics Inc., ceramic proppants for oil and gas industry; and
Executive Committee 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 Director and President, J. & W. Seligman & Co. Incorporated;
(47) and Member of the President (with the exception of Seligman Quality Municipal Fund,
Executive Committee 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 Director and Managing Director, Director of Investments, J. & W.
(59) of the Executive Seligman & Co. Incorporated; Director or Trustee, the Seligman Group
Committee of investment companies (except Seligman Cash Management Fund, Inc.);
and Trustee Emeritus of Colby College. Formerly, Director, Seligman
Henderson Co. and Director, Investment Research at Neuberger & Berman
from May 1993 to September 1996.
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts University;
(70) Director or Trustee, the Seligman Group of investment companies;
Tufts University Chairman Emeritus, American Council on Germany; Governor of the
Packard Avenue, Center for Creative Leadership; Director; Raytheon Co., electronics;
Medford, MA 02155 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 or Trustee, the
(65) Seligman Group of investment companies; Trustee, the Committee for
18 Highland Circle, Economic Development; and Chairman, The Rockefeller Foundation,
Bronxville, NY 10708 charitable foundation. Formerly, Trustee, The Markle Foundation,
philanthropic organization; and Director, New York Telephone Company;
and International Research and Exchange Board, intellectual exchanges.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of Kerr-McGee
(67) Corporation; Director or Trustee, the Seligman Group of investment
2601 Northwest Expressway, companies; Director, Kimberly-Clark Corporation, consumer products;
Suite 805E Conoco Inc, oil exploration and production; Bank of Oklahoma Holding
Oklahoma City, OK 73112 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.
John E. Merow Director Retired Chairman and Senior Partner, Sullivan & Cromwell, law firm;
(70) Director or Trustee, the Seligman Group of investment companies;
125 Broad Street, Director, Commonwealth Industries, Inc., manufacturers of aluminum
New York, NY 10004 sheet products; the Foreign Policy Association; Municipal Art Society
of New York; the U.S. Council for International Business; and New
York-Presbyterian Hospital; Chairman, New York-Presbyterian Healthcare
Network, Inc; Vice-Chairman, the U.S.-New Zealand Council; and Member
of the American Law Institute and Council on Foreign Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of investment
(57) companies; Trustee, The Geraldine R. Dodge Foundation, charitable
P.O. Box 719, foundation. Formerly, Chairman of the Board of Trustees of St.
Gladstone, NJ 07934 George's School (Newport, RI) and Director, the National Association
of Independent Schools (Washington, DC).
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm; Director or
(73) Trustee, the Seligman Group of investment companies. Formerly,
Park Avenue at Morris Director, Public Service Enterprise Group, public utility.
County,
P.O. Box 1945,
Morristown, NJ 07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment companies;
(72) Director, The Houston Exploration Company, oil exploration; The
2893 S. E. Ocean Brooklyn Museum, KeySpan Energy Corporation; and Public Broadcasting
Boulevard, Service; and Trustee, the Committee for Economic Development.
Stuart, FL 34996 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., pharmaceuticals; Director or
(67) Trustee, the Seligman Group of investment companies. Formerly,
96 Evergreen Avenue, Director, USLIFE Corporation, life insurance.
Rye, NY 10580
</TABLE>
7
<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., a diversified
(65) holding company; Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive, companies; Director, C-SPAN, cable television, and CommScope, Inc.,
Dallas, TX 75230 manufacturer of coaxial cables. Formerly, Executive Vice President,
Chief Operating Officer, Sammons Enterprises, Inc.
Paul H. Wick Vice President and Director and Managing Director, J. & W. Seligman & Co. Incorporated,
(37) Portfolio Manager since January 1995 and November 1997, respectively; Vice President and
Portfolio Manager, Seligman Global Fund Series, Inc., Seligman
Portfolios, Inc. and Seligman New Technologies Fund, Inc. 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 & Co. Incorporated,
(43) Seligman Advisors, Inc., and Seligman Data Corp.; Vice President, the
Seligman Group of investment companies, and Seligman Services, Inc.;
and Vice President and Treasurer, Seligman International, Inc.
Formerly, Treasurer, Seligman Henderson Co.
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and Regulation and
(35) Corporate Secretary, J. & W. Seligman & Co. Incorporated; Secretary,
the Seligman Group of investment companies, Seligman Advisors, Inc.,
Seligman Services, Inc., Seligman International, Inc. and Seligman
Data Corp. Formerly, Secretary, Seligman Henderson Co.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies and Seligman
(42) 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.
8
<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 $9,100 N/A $82,000
Alice S. Ilchman, Director 9,080 N/A 80,000
Frank A. McPherson, Director 9,080 N/A 78,000
John E. Merow, Director 9,100 N/A 80,000
Betsy S. Michel, Director 9,100 N/A 82,000
James C. Pitney, Director 9,060 N/A 74,000
James Q. Riordan, Director 9,080 N/A 80,000
Robert L. Shafer, Director 9,080 N/A 80,000
James N. Whitson, Director 9,080(3) N/A 80,000(3)
</TABLE>
- ----------
(1) For the Fund's year ended December 31, 1999. Effective January 21, 2000,
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 twenty investment
companies.
(3) 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 certain of the investment
companies advised by J. & W. Seligman & Co. Incorporated (Seligman), 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, 1999 was $44,934.
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation (including earnings) in the amounts of
$62,706 and $26,362, respectively, as of December 31, 1999.
The Fund may, but is not obligated to, purchase shares of the other funds in 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 Seligman 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
Seligman 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.
9
<PAGE>
Code of Ethics
Seligman, Seligman Advisors, Inc. (Seligman Advisors), their subsidiaries and
affiliates, and the Seligman Group of Investment Companies have adopted a Code
of Ethics that sets forth the circumstances under which officers, directors and
employees (collectively, Employees) are permitted to engage in personal
securities transactions. 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 Director of Compliance, and sets forth a procedure of identifying,
for disciplinary action, those individuals who violate the Code of Ethics. The
Code of Ethics prohibits Employees (including all investment team members) from
purchasing or selling any security or an equivalent security that is being
purchased or sold by any client, or where the Employee intends, or knows of
another's intention, to purchase or sell a security on behalf of a client. The
Code also prohibits all Employees from acquiring securities in a private
placement or in an initial or secondary public offering, unless an exemption has
been obtained from Seligman's Director of Compliance.
The Code of Ethics prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) that the portfolio manager or investment team
manages; (2) each Employee from engaging in short-term trading (a purchase and
sale or vice-versa within 60 days); and (3) each member of an investment team
from engaging in short sales of a security if, at that time, any client managed
by that team has a long position in that security. Any profit realized pursuant
to any of these prohibitions must be disgorged.
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 Employees are also required to disclose all
securities beneficially owned by them upon commencement of employment and at the
end of each calendar year.
A copy of the Code of Ethics is on public file with, and is available upon
request from, the Securities and Exchange Commission (SEC). You can access it
through the SEC's Internet site, http://www.sec.gov.
Control Persons and Principal Holders of Securities
Control Persons
As of April 7, 2000, 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 April 7, 2000, 18.33% of the Fund's Class A shares of capital stock then
outstanding, 23.37% of the Fund's Class B shares of capital stock then
outstanding and 33.92% of the Fund's Class D shares of capital stock then
outstanding, were registered in the name of Merrill Lynch, Pierce, Fenner &
Smith Incorporated for the Sole Benefit of Its Customers, Attn. Fund
Administration, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL 32246. As
of the same date, there were no shareholders who owned 5% or more of the Fund's
Class C shares of the capital stock then outstanding.
Management Ownership
As of April 7, 2000, Directors and officers of the Fund as a group owned less
than 1% of the Fund's Class A shares of capital stock . As of the same date, no
Directors or officers owned shares of the Fund's Class B shares, Class C shares
or Class D shares of capital stock.
10
<PAGE>
Investment Advisory and Other Services
Investment Manager
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. Mr. William C. Morris
owns a majority of the outstanding voting securities of Seligman. 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, 1999, the Fund paid Seligman $60,149,041, equal
to .86% per annum of its average daily net assets. For the year ended December
31, 1998, the Fund paid Seligman $44,375,965, equal to .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.
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.
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.
Principal Underwriter
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 each 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
11
<PAGE>
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.
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:
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
Less than $50,000 4.75% 4.99% 4.25%
$50,000 - $99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over 0 0 0
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
Class C shares:
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000 0 0 0
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
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 the years ended December 31,
1999, 1998 and 1997, Seligman Services received commissions in the amounts of
$240,973, $404,711 and $494,285, respectively.
12
<PAGE>
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. This 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 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, 1999 was $10,850,514, equivalent to .25% per annum of the Class A
shares' average daily net assets.
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. This 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 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
13
<PAGE>
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, 1999 was $12,965,720, equivalent to 1%
per annum of the Class B shares' average daily net assets.
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. This 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 total amount paid by the Fund to Seligman Advisors in respect
of Class C shares for the year ended December 31, 1999 was $197,188, equivalent
to 1% per annum of the Class C shares' average daily net assets.
The amounts expended by Seligman Advisors in any one year with respect to Class
C 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 C shares in one year to be paid from Class C 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, 1999, Seligman Advisors incurred $1,334,942 of unreimbursed
expenses in respect of the Fund's Class C shares. This amount is equal to 1.11%
of the net assets of Class C shares at December 31, 1999.
If the Fund's 12b-1 Plan is terminated in respect of Class C 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 C shares.
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. This 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 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
14
<PAGE>
total amount paid by the Fund to Seligman Advisors in respect of Class D shares
for the year ended December 31, 1999 was $13,527,033, equivalent to 1% per annum
of the Class D shares' average daily net assets.
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, 1999, Seligman Advisors did not incur unreimbursed expenses
in respect of the Fund's Class D shares.
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 the year ended December 31,
1999, were spent on the following activities in the following amounts:
<TABLE>
<CAPTION>
Class A Class B* Class C** Class D
------- -------- --------- -------
<S> <C> <C> <C> <C>
Compensation to underwriters $ -0- $ -0- $197,188 $ 1,712,569
Compensation to broker/dealers $10,850,514 $3,244,219 $ -0- $11,814,464
Other* $ -0- $9,721,501 $ -0- $ -0-
</TABLE>
* 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.
** From May 27, 1999 (inception) to December 31, 1999.
The 12b-1 Plan was approved on July 16, 1992 by the Board of 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 (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 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 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 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 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
pursuant to the Fund's 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services. For the years
ended December 31, 1999, 1998 and 1997, Seligman Services received distribution
and service fees pursuant to the Fund's 12b-1 Plan of $1,157,165, $980,100 and
$961,731, respectively.
15
<PAGE>
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, 1999, 1998 and 1997, the Fund paid total
brokerage commissions to others for execution, research and statistical services
in the amounts of $8,948,178, $9,044,621 and $7,436,884, respectively. The
amount of brokerage commissions paid by the Fund has increased materially from
1997 due to the Fund's increase in new assets under management.
Commissions
For the years ended December 31, 1999, 1998 and 1997, 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.
Directed Brokerage
During the year ended December 31, 1999, neither the Fund nor Seligman, through
an agreement or understanding with a broker, or otherwise through an internal
allocation procedure, 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, 1999, 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
16
<PAGE>
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 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:
17
<PAGE>
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;
(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;
18
<PAGE>
(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%
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.
19
<PAGE>
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;
(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
20
<PAGE>
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 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, 1999, the maximum
offering price of the Fund's shares is as follows:
21
<PAGE>
Class A
Net asset value per share .................................... $47.25
Maximum sales charge (4.75% of offering price) ............... 2.36
------
Offering price to public ..................................... $49.61
======
Class B
Net asset value and offering price per share(2) .............. $43.41
======
Class C
Net asset value per share .................................... $43.39
Maximum sales charge (1.00% of offering price(1)) ............ .44
------
Offering price to public ..................................... $43.83
======
Class D
Net asset value and offering price per share(2) .............. $43.38
======
- --------------
(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 18 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 SEC. Under these circumstances, redemption proceeds
may be made in securities. If payment is made in securities, a shareholder may
incur brokerage expenses in converting these securities to cash.
Taxation of the 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.
22
<PAGE>
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.
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 and Class C 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, 1999, 1998 and 1997 amounted to $11,908,470,
$14,019,918 and $19,391260, respectively, of which $1,484,868, $1,537,225 and
$2,126,669, respectively, was retained by Seligman Advisors. Total initial sales
charges paid by shareholders of Class C shares of the Fund for the period from
May 27, 1999 (inception) to December 31, 1999 amounted to $900,067, none of
which was retained by Seligman Advisors. No Class C shares of the Fund were
issued or outstanding during the years ended December 31, 1998 and 1997.
23
<PAGE>
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 the year ended December 31, 1999:
<TABLE>
<CAPTION>
Compensation on
Net Underwriting Redemptions and Repurchases
Discounts and (CDSC on Class A, Class C
Commissions (Class A Sales and Class D Shares Retained) Brokerage Other
Charges Retained) Commissions Compensation (1)
----------------- ----------------------------- ----------- ----------------
<S> <C> <C> <C>
$1,484,868 $345,403 $-0- $580,578
</TABLE>
(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, 1999 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 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. Dealers may limit the
participation of registered representatives in such informational programs by
means of sales incentive programs which may require the sale of minimum dollar
amounts of shares of Seligman mutual funds. Seligman Advisors may from time to
time pay a bonus or other incentive to dealers that sell shares of the Seligman
mutual funds. In some instances, these bonuses or incentives may be offered only
to certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by Seligman during a specified period of time. Such bonus or other
incentive will be made in the form of cash or, if permitted, may take the form
of non-cash payments. The non-cash payments will include (i) business seminars
at Seligman's headquarters or other locations, (ii) travel expenses, including
meals, entertainment and lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families to places
within or outside the United States, or (iii) the receipt of certain
merchandise. The cash payments may include payment of various business expenses
of the dealer. 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.
24
<PAGE>
Calculation of Performance Data
Class A
The average annual total returns for the Fund's Class A shares for the one-,
five-, and ten-year periods through December 31, 1999, were 66.24%, 34.45% and
29.22%, respectively. These returns were computed by subtracting the maximum
sales charge of 4.75% of the 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 the Fund's Class A shares, assuming all dividend and
capital gain distributions are reinvested in additional shares. It shows that a
$1,000 investment in Class A shares made on December 31, 1989 had a value of
$12,984 on December 31, 1999, resulting in an aggregate total return of
1,198.44%.
Class B
The average annual total returns for the Fund's Class B shares for the one-year
period ended December 31, 1999 and for the period from April 22, 1996
(inception) through December 31, 1999, were 68.16% and 35.43%, respectively.
These returns were computed assuming that all of the 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 the Fund's Class B shares,
assuming all dividends and capital gain distributions are reinvested in
additional shares. It shows that a $1,000 investment in Class B shares made on
April 22, 1996 (commencement of operations of Class B shares) had a value of
$3,065 on December 31, 1999, resulting in an aggregate total return of 206.53%.
Class C
The total return for the Fund's Class C shares for the period from May 27, 1999
(inception) through December 31, 1999, was 66.63%. This return was computed by
subtracting the maximum sales charge of 1.00% of the public offering price and
assuming that all of the dividends and capital gain distributions paid by the
Fund's Class C shares over the period were reinvested. It was then assumed that
at the end of the period, the entire amount was redeemed, subtracting the 1%
CDSC. Table C below illustrates the total return (income and capital) on the
Fund's Class C shares, assuming all dividends and capital gain distributions are
reinvested in additional shares. It shows that a $1,000 investment in Class C
shares, made on May 27, 1999 (commencement of operations of Class C shares) had
a value of $1,666 on December 31, 1999, resulting in an aggregate total return
of 66.63%.
Class D
The average annual total returns for the Fund's Class D shares for the one- and
five-year periods ended December 31, 1999 and for the period from May 3, 1993
(inception) through December 31, 1999, were 72.24%, 34.72% and 36.65%,
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 the 1% CDSC, if
applicable. Table D illustrates the total return (income and capital) on the
Fund's Class D shares, 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 $8,018 on December 31, 1999, resulting in an aggregate total return of
701.82%.
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.
25
<PAGE>
<TABLE>
<CAPTION>
TABLE A - CLASS A
Value of Value of Value Total Value
Year Initial Capital Gain of of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
12/31/90 $836 $11 $-0- $ 847
12/31/91 1,090 222 -0- 1,312
12/31/92 1,159 381 -0- 1,540
12/31/93 1,266 815 -0- 2,081
12/31/94 1,568 1,247 -0- 2,815
12/31/95 2,073 1,964 -0- 4,037
12/31/96 2,216 2,303 -0- 4,519
12/31/97 2,191 3,364 -0- 5,555
12/31/98 2,896 4,544 -0- 7,440
12/31/99 4,453 8,531 -0- 12,984 1,198.44%
</TABLE>
<TABLE>
<CAPTION>
TABLE B - CLASS B
Value of Value of Value Total Value
Period Initial Capital Gain 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 $-0- $1,103
12/31/97 1,020 325 -0- 1,345
12/31/98 1,337 451 -0- 1,788
12/31/99 1,988 1,077 -0- 3,065 206.53%
</TABLE>
<TABLE>
<CAPTION>
TABLE C - CLASS C
Value of Value of Value Total Value
Period Initial Capital Gain of of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
12/31/99 $1,451 $215 $-0- $1,666 66.63%
</TABLE>
<TABLE>
<CAPTION>
TABLE D - CLASS D
Value of Value of Value Total Value
Period Initial Capital Gain 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 $-0- $1,349
12/31/94 1,333 474 -0- 1,807
12/31/95 1,744 828 -0- 2,572
12/31/96 1,847 1,010 -0- 2,857
12/31/97 1,790 1,692 -0- 3,482
12/31/98 2,346 2,282 -0- 4,628
12/31/99 3,544 4,474 -0- 8,018 701.82%
</TABLE>
- -------------------------
(1) For the ten-year period ended December 31, 1999 for Class A shares, from
commencement of operations of Class B shares on April 22, 1996, from
commcement of operations of Class C shares on May 27, 1999 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 and
Class C shares; determining total value of all dividends and capital gain
distributions that would have been paid during the period on such shares
assuming that each dividend or capital gain distribution was invested in
additional shares at net asset value; calculating the total value of the
investment at the end of the period; subtracting the CDSC on Class B, Class
C 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.
26
<PAGE>
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, 1999 contains
a schedule of the investments of the Fund as of December 31, 1999, 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.
27
<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.
28
<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 Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Global Fund Series, Inc., which today offers five
separate series: Seligman International Growth Fund, Seligman Global
Smaller Companies Fund, Seligman Global Technology Fund, Seligman Global
Growth Fund and Seligman Emerging Markets Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
o Launches innovative Seligman New Technologies Fund, Inc., a closed-end
"interval" fund seeking long-term capital appreciation by investing in
technology companies, including venture capital investing.
...2000
o Introduces Seligman Time Horizon/Harvester Series, Inc., an asset
allocation type mutual fund containing four funds: Seligman Time Horizon 30
Fund, Seligman Time Horizon 20 Fund, Seligman Time Horizon 10 Fund and
Seligman Harvester Fund.
29
<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. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 22 filed on May 28,
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 No. 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 No.
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. (Incorporated by reference to of
Post-Effective Amendment No. 53 to the Registration Statement of
Seligman Capital Fund, Inc. (File No. 811-1886) filed on April 28,
1997.)
(e)(5) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co. with respect to certain Chilean
institutional investors. (Incorporated by reference to Post-Effective
Amendment No. 53 to the Registration Statement of Seligman Capital
Fund, Inc. (File No. 811-1886) filed on April 28, 1997.)
(e)(6) Form of Dealer Agreement between Seligman Advisors, Inc. and Salomon
Smith Barney Inc. (Incorporated by reference to Post-Effective
Amendment No. 53 to the Registration Statement of Seligman Capital
Fund, Inc. (File No. 811-1886) filed on April 28, 1997.)
(f) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement of Seligman Frontier Fund, Inc. (File No.
811-4078) filed on January 28, 1997.)
C-1
<PAGE>
PART C. OTHER INFORMATION (continued)
(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.)
(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.
(Incorporated by reference to Post-Effective Amendment No. 22 filed
on May 28, 1999.)
(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. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on May 28, 1999.)
(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. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 22 filed on May 28, 1999.)
(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 No. 811-1886) filed on
May 28, 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 No.
811-1886) filed on May 28, 1999.)
(p) *Code of Ethics.
(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.
C-2
<PAGE>
PART C. OTHER INFORMATION (continued)
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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, 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
(Seligman), is the Registrant's investment manager. Seligman also
serves as investment manager to nineteen 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 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 New Technologies Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Portfolios, Inc., Seligman Quality
Municipal Fund, Inc., Seligman Select Municipal Fund, Inc.,
Seligman Time Horizon/Harvester Series, Inc., Seligman Value Fund
Series, Inc. and Tri-Continental Corporation.
Seligman has an investment advisory service division which
provides investment management or advice to private clients. The
list required by this Item 26 of officers and directors of
Seligman, 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 Seligman, pursuant to the Investment Advisers Act of 1940, as
amended (SEC File No. 801-15798), which was filed on March 30,
2000.
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 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 Time Horizon/Harvester Series, Inc., Seligman Value
Fund Series, Inc.
C-3
<PAGE>
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 March 31, 2000
(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
T. Wayne Knowles Senior Vice President, Division None
104 Morninghills Court Sales Director
Cary, NC 27511
Joseph Lam Senior Vice President, Regional None
Seligman International, Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
Michelle L. McCann-Rappa* Senior Vice President, Retirement Plans None
Scott H. Novak* Senior Vice President, Insurance None
Jeff Rold Senior Vice President, Product None
181 East 73rd Street, Apt 20B Business Management
New York, New York 10021
Ronald W. Pond* Senior Vice President, Division None
Sales Director
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>
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of March 31, 2000
(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, Managed None
Money
Gail S. Cushing* Vice President, National Accounts None
Jeffrey S. Dean* Vice President, Business Analysis None
Ron Dragotta* Vice President, Regional Retirement None
Plans Manager
Mason S. Flinn Vice President, Regional Retirement None
2130 Filmore Street Plans Manager
PMB 280
San Francisco, CA 94115-2224
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
Jody Knapp* Vice President, Regional Retirement None
17011 East Monterey Drive Plans Manager
Fountain Hills, AZ 85268
David W. Mountford* Vice President, Regional Retirement None
7131 NW 46th Street Plans Manager
Lauderhill, FL 33319
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
John E. Skillman* Vice President, Portfolio Advisor None
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Robert McBride Vice President, Marketing Director None
Seligman International, Inc. Latin America
Sucursal Argentina
Edificio Laminar Plaza
Ingeniero Butty No. 240, 4th Floor
C1001ASB Buenos Aires, Argentina
Daniel Chambers Regional Vice President None
4618 Lorraine Avenue
Dallas, TX 75209
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
Kevin Casey Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
</TABLE>
C-5
<PAGE>
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of March 31, 2000
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Bradford C. Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Cathy Des Jardins Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
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 Drive
Houston, TX 77077
Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
Leslie A. Mudd Regional Vice President None
5243 East Calle Redonda
Phoenix, AZ 85018
Tim O'Connell Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
George M. Palmer, Jr. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
Thomas Parnell Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
Nicholas Roberts Regional Vice President None
200 Broad Street, Apt. 2451
Stamford, CT 06901
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
</TABLE>
C-6
<PAGE>
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
As of March 31, 2000
(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
290 Bellington Lane
Creve Coeur, MO 63141
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
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. The accounts, books and documents
required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are kept in the
possession of J. & W. Seligman & Co. Incorporated at its offices at
100 Park Avenue, New York, NY 10017 or at the following locations: (1)
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105 is custodian of the Registrant's cash and securities.
It also is agent to perform certain accounting and record-keeping
functions relating to portfolio transactions and to calculate the net
asset value of the Registrant, and (2) Seligman Data Corp., 100 Park
Avenue, New York, NY 10017, as shareholder servicing agent, maintains
shareholder records for the Registrant.
Item 29. Management Services. 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment No. 23 pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 23 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 28th day of April, 2000.
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. 23 has been signed below
by the following persons in the capacities indicated on April 28, 2000.
Signature Title
/s/ William C. Morris Chairman of the Board (Principal
- ------------------------------------ executive officer) and Director
William C. Morris
/s/ Brian T. Zino Director and President
- -------------------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- -------------------------------------
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director )
Betsy S. Michel, Director )
James C. Pitney, Director )
James Q. Riordan, Director ) /s/ Brian T. Zino
Richard R. Schmaltz, Director ) ------------------
Robert L. Shafer, Director ) Brian T. Zino,
James N. Whitson, Director ) Attorney-in-fact
<PAGE>
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.
Post-Effective Amendment No. 23 to the
Registration Statement of Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
Item 23(j) Consent of Independent Auditors
Item 23(p) Code of Ethics
CONSENT OF INDEPENDENT AUDITORS
Seligman Communications and Information Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 23 to Registration
Statement No. 2-80168 of our report dated February 11, 2000, appearing in the
Annual Report to Shareholders for the year ended December 31, 1999, 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
April 24, 2000
CODE OF ETHICS
J. & W. Seligman & Co. Incorporated
Seligman Advisors, Inc.
Seligman Services, Inc.
Seligman Data Corp.
Seligman International, Inc.
Seligman International UK Limited
The Seligman Group of Investment Companies
I. Introduction
A primary duty of all directors, officers and employees (collectively
"Employees") of J. & W. Seligman & Co. Incorporated, its subsidiaries and
affiliates (collectively, "Seligman") is to be faithful to the interest of the
various Seligman advisory clients, including the registered and unregistered
companies advised by Seligman (collectively, "Clients"). Directors of the
Seligman Registered Investment Companies also have a duty to the Seligman
Registered Investment Companies and their shareholders. Persons who are
Disinterested Directors are "Employees" for purposes of this Code of Ethics.
Through the years, Seligman and its predecessor organizations have had a
reputation of maintaining the highest business and ethical standards and have
been favored with the confidence of investors and the financial community. Such
a reputation and confidence are not easily gained and are among the most
precious assets of Seligman. In large measure, they depend on the devotion and
integrity with which each Employee discharges his or her responsibilities. Their
preservation and development must be a main concern of each Employee, and each
Employee has a primary obligation to avoid any action or activity that could
produce conflict between the interest of the Clients and that Employee's
self-interest.
The purpose of this Code of Ethics ("Code") is to set forth the policies of
Seligman in the matter of conflicts of interest and to provide a formal record
for each Employee's reference and guidance. This Code is also designed to
prevent any act, practice or course of business prohibited by the rules and
regulations governing our industry.
Each Employee owes a fiduciary duty to each Client. Therefore, all Employees
must avoid activities, interests and relationships that might appear to
interfere with making decisions in the best interest of the Clients.
As an Employee, you must at all times:
1. Avoid serving your own personal interests ahead of the interests of
Clients. You may not cause a Client to take action, or not to take action,
for your personal benefit rather than the Client's benefit.
2. Avoid taking inappropriate advantage of your position. The receipt of
investment opportunities, perquisites or gifts from persons seeking
business with Clients or with Seligman could call into question the
exercise of your better judgment. Therefore, you must not give or receive
benefits that would compromise your ability to act in the best interest of
the Clients.
3. Conduct all personal Securities Transactions in full compliance with the
Code, including the pre-authorization and reporting requirements, and
comply fully with the Seligman Insider Trading Policies and Procedures (See
Appendix A).
While Seligman encourages you and your families to develop personal investment
programs, you must not take any action that could cause even the appearance that
an unfair or improper action has been taken. Accordingly, you must follow the
policies set forth below with respect to trading in your Account(s). This Code
places reliance on the good sense and judgment of you as an Employee; however,
if you are unclear as to the Code's meaning, you should seek the advice of the
Law and Regulation Department and assume the Code will be interpreted in the
most restrictive manner. Questionable situations should be resolved in favor of
Clients.
<PAGE>
Technical compliance with the Code's procedures will not insulate from scrutiny
any trades that indicate a violation of your fiduciary duties.
Application of the Code to Disinterested Directors
Disinterested Directors are only subject to the reporting requirements in
Section III.5(b) of the Code. Disinterested Directors are not subject to other
provisions of the Code but are subject to the requirements of the federal
securities laws and other applicable laws, such as the prohibition on trading in
securities of an issuer while in possession of material non-public information.
II. Definitions
(a) "Accounts" means all Employee Accounts and Employee Related
Accounts.
(b) "Beneficial Interest" is broadly interpreted. The SEC has said
that the final determination of Beneficial Interest is a question
to be determined in the light of the facts of each particular
case. The terms Employee Account and Employee Related Account, as
defined below, generally define Beneficial Interest. However, the
meaning of "Beneficial Interest" may be broader than that
described below. If there are any questions as to Beneficial
Interest, please contact the Director of Compliance, General
Counsel or Associate General Counsel.
(i) "Employee Account" means the following securities Accounts:
(i) any of your personal account(s); (ii) any joint or
tenant-in-common account in which you have an interest or
are a participant; (iii) any account for which you act as
trustee, executor, or custodian; (iv) any account over which
you have investment discretion or otherwise can exercise
control, including the accounts of entities controlled
directly or indirectly by you; (v) any account in which you
have a direct or indirect interest through a contract,
arrangement or otherwise (e.g., economic, voting power,
power to buy or sell, or otherwise); (vi) any account held
by pledges, or for a partnership in which you are a member,
or by a corporation which you should regard as a personal
holding company; (vii) any account held in the name of
another person in which you do not have benefits of
ownership, but which you can vest or revest title in
yourself at once or some future time; (viii) any account of
which you have benefit of ownership; and (ix) accounts
registered by custodians, brokers, executors or other
fiduciaries for your benefit.
(ii) "Employee Related Account" means any Account of (i) your
spouse and minor children and (ii) any account of relatives
or any other persons to whose support you materially
contribute, directly or indirectly.
(c) "Disinterested Director" means a director or trustee of a
Seligman Registered Investment Company who is not an "interested
person" of such investment company within the meaning of Section
2(a)(19) of the Investment Company Act of 1940.
(d) "Equivalent Security" includes, among other things, an option to
purchase or sell a Security or an instrument convertible or
exchangeable into a Security.
(e) "Investment Team" means one or more Investment Teams formed by
the Manager in various investment disciplines to review and
approve Securities for purchase and sale by Client Accounts. This
includes a team's leader, portfolio managers, research analysts,
traders and their direct supervisors.
(f) "Security" includes, among other things, stocks, notes, bonds,
debentures, and other evidences of indebtedness (including loan
participation and assignments), limited partnership interests,
investment contracts, and all derivative instruments (e.g.,
options and warrants).
<PAGE>
(g) "Securities Transaction" means a purchase or sale of a Security.
(h) "Seligman Registered Investment Company" means an investment
company registered under the Investment Company Act of 1940 for
which Seligman serves as investment manager or adviser.
III. Personal Securities Transactions
1. Prohibited Transactions
These apply to all of your Accounts.
(a) Seven-Day Blackout: If you are a member of an Investment Team,
Securities Transactions are prohibited within seven calendar days
either before or after the purchase or sale of the relevant security
(or an Equivalent Security) by a Client whose Account is managed by
your Investment Team.
(b) Intention to Buy or Sell for Clients: Securities Transactions are
prohibited at a time when you intend, or know of another's intention,
to purchase or sell that Security (or an Equivalent Security) on
behalf of a Client.
(c) Sixty-Day Holding Period: Profits on Securities Transactions made
within a sixty-day period are prohibited and must be disgorged. This
is a prohibition of short term trading. Specifically,
o Purchase of a Security within 60 days of your sale of the
Security (or an Equivalent Security), at a price that is less
than the price in the previous sale is prohibited.
o Sale of a Security within the 60 day period of your purchase of
the Security (or an Equivalent Security), at a price that is
greater than the price in the previous purchase is prohibited.
Examples are as follows:
1. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee sells 100 shares of XYZ ($15 a share) on February 15.
Employee must disgorge $500.
2. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee purchases 50 shares of XYZ ($12 a share) on January 30.
Employee sells 50 shares of XYZ ($15 a share) on March 15.
Employee must disgorge $150.
(The March 15 sale may not be matched to the January 1
purchase).
3. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee sells 100 shares of XYZ ($10 a share) on February 1.
Employee purchases 100 shares of XYZ ($9 a share) on March 1
Employee must disgorge $100.
(The February 1 sale is permissible because no profit was made.
However, the March 1 purchase is matched against the February 1
sale resulting in a $100 profit).
(d) Restricted Transactions: Transactions in a Security are prohibited (i)
on the day of a purchase or sale of the Security by a Client, or (ii)
anytime a Client's order in the Security is open on the trading desk.
Other Securities may be restricted from time to time as deemed
appropriate by the Law and Regulation Department.
<PAGE>
(e) Short Sales: If you are a member of an Investment Team, you may not
engage in any short sale of a Security if, at the time of the
transaction, any Client managed by your Team has a long position in
that same Security. However, this prohibition does not prevent you
from engaging short sales against the box and covered call writing, as
long as these personal trades are in accordance with the sixty-day
holding period described above.
(f) Public Offerings: Acquisitions of Securities in initial and secondary
public offerings are prohibited, unless granted an exemption by the
Director of Compliance. An exemption for an initial public offering
will only be granted in certain limited circumstances, for example,
the demutualization of a savings bank.
(g) Private Placements: Acquisition of Securities in a private placement
is prohibited absent prior written approval by the Director of
Compliance.
(h) Market Manipulation: Transactions intended to raise, lower, or
maintain the price of any Security or to create a false appearance of
active trading are prohibited.
(i) Inside Information: You may not trade, either personally or on behalf
of others, on material, non-public information or communicate
material, non-public information to another in violation of the law.
This policy extends to activities within and outside your duties at
Seligman. (See Appendix A).
2. Maintenance of Accounts
All Accounts that have the ability to engage in Securities Transactions
must be maintained at Ernst & Company (Investec) and/or the specific
Merrill Lynch branch office located at 712 Fifth Avenue, New York, NY. You
are required to notify the Director of Compliance of any change to your
account status. This includes opening a new Account, converting,
transferring or closing an existing account or acquiring Beneficial
Interest in an Account through marriage or otherwise. You must place all
orders for Securities Transactions in these Account(s) with the Equity
Trading Desk or the appropriate Fixed Income Team as set forth in Section
III.3 ("Trade Pre-authorization Requirements").
The Director of Compliance may grant exceptions to the foregoing
requirements on a case by case basis. All requests for exceptions must be
applied for in writing and submitted for approval to the Director of
Compliance and will be subject to certain conditions.
3. Trade Pre-authorization Requirements
All Securities Transactions in an Employee Account or Employee Related
Account must be pre-authorized, except for Securities Transactions set
forth in Section III.4 ("Exempt Transactions").
(a) Trade Authorization Request Form: Prior to entering an order for a
Securities Transaction in an Employee Account or Employee Related
Account, which is subject to pre-authorization, you must complete a
Trade Authorization Request Form (set forth in Appendix B) and submit
the completed Form (faxed or hand delivered) to the Director of
Compliance (or designee).
(b) Review of the Form and Trade Execution: After receiving the completed
Trade Authorization Request Form, the Director of Compliance (or
designee) will review the information and, as soon as practical,
determine whether to authorize the proposed Securities Transaction.
The authorization, date and time of the authorization must be
reflected on the Form. Once approved the order may then be executed by
Equity Trading Desk or the appropriate Fixed Income Team, except for
accounts for which an exemption was granted under Section III.2.
<PAGE>
(c) Length of Trade Authorization Approval: Any authorization, if granted,
is effective until the earliest of (i) its revocation, (ii) the close
of business on the day from which authorization was granted or (iii)
your discovery that the information in the Trade Authorization Request
Form is no longer accurate. If the Securities Transaction was not
placed or executed within that period, a new pre-authorization must be
obtained. A new pre-authorization need not be obtained for orders
which cannot be filled in one day due to an illiquid market, so long
as such order was placed for execution on the day the original
pre-authorization was given.
No order for a Securities Transaction may be placed prior to the Director
of Compliance (or designee) receiving the completed Trade Pre-authorization
Form and approving the transaction. In some cases, trades may be rejected
for a reason that is confidential.
4. Exempt Transactions
The prohibitions of this Code shall not apply to the following Securities
Transactions in your Account(s):
(a) Purchases or sales of Securities which are non-volitional (i.e., not
involving any investment decision or recommendation).
(b) Purchases of Securities through certain corporate actions (such as
stock dividends, dividend reinvestments, stock splits, mergers,
consolidations, spin-offs, or other similar corporate reorganizations
or distributions generally applicable to all holders of the same class
of Securities).
(c) Purchases of Securities effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its Securities, to the
extent such rights were acquired from the issuer.
(d) Purchases or sales of open-end registered investment companies, U.S.
Government Securities and money market instruments (e.g., U.S.
Treasury Securities, bankers acceptances, bank certificates of
deposit, commercial paper and repurchase agreements).
(e) Purchases of Securities which are part of an automatic dividend
reinvestment plan or stock accumulation plan; however, quarterly
account statement of such plans must be sent to the Director of
Compliance.
(f) Securities Transactions that are granted a prior exemption by the
Director of Compliance, the General Counsel or the Associate General
Counsel.
5. Reporting
(a) You must arrange for the Director of Compliance to receive from the
executing broker, dealer or bank duplicate copies of each confirmation
and account statement for each Securities Transaction in an Employee
Account or Employee Related Account.
(b) If you are a Disinterested Director you are required to report the
information specified below with respect to any Securities Transaction
in any Securities Account in which you have Beneficial Interest, if
you knew, or in the ordinary course of fulfilling your official duties
as a Disinterested Director, should have known, that during 15 days
immediately before or after the date of your transaction, the Security
(or Equivalent Security) was purchased or sold by a Seligman
Registered Investment Company or considered for purchase or sale by a
Seligman Registered Investment Company. Such report shall be made not
later than 10 days after the end of the calendar quarter in which the
Transaction was effected and shall contain the following information:
<PAGE>
(i) The date of the transaction, the name of the company, the number
of shares, and the principal amount of each Security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(v) The date the report is submitted.
(c) You are required to disclose all Securities beneficially owned by you
within ten days of commencement of employment and at the end of each
calendar year within 10 days thereafter (See Appendix C).
(d) You are also required to disclose all Employee and Employee Related
Securities Accounts, Private Securities Transactions and Outside
Activities, Affiliations and Investments upon commencement of
employment and annually thereafter (See Appendix D).
(e) Any report may contain a statement that the report shall not be
construed as an admission by you, that you have any direct or indirect
beneficial ownership in the Security to which the report relates.
(f) The Director of Compliance or his designee will review all reports.
6. Dealings with the Clients
You should not have any direct or indirect investment interest in the
purchase or sale of any Security or property from or to Clients. This is a
prohibition against dealings between you and the Clients and is not
intended to preclude or limit investment transactions by you in Securities
or property, provided such transactions are not in conflict with the
provisions of this Code.
7. Preferential Treatment, Favors and Gifts
You are prohibited from giving and receiving gifts of significant value or
cost from any person or entity that does business with or on behalf of any
Client. You should also avoid preferential treatment, favors, gifts and
entertainment which might, or might appear to, influence adversely or
restrict the independent exercise of your best efforts and best judgments
on behalf of the Clients or which might tend in any way to impair
confidence in Seligman by Clients. Cash Gifts that do not exceed $100 in
value per person for a calendar year are permissible. Ordinary courtesies
of business life, or ordinary business entertainment, and gifts of
inconsequential value are also permissible. However, they should not be so
frequent nor so extensive as to raise any question of impropriety.
8. Outside Business Activities and Service as a Director, Trustee or in a
Fiduciary Capacity of any Organization
You may not engage in any outside business activities or serve as a
Director, Trustee or in a fiduciary capacity of any organization, without
the prior written consent of the Director of Compliance.
<PAGE>
9. Remedies of the Code
Upon discovering a violation of this Code, sanctions may be imposed against
the person concerned as may be deemed appropriate, including, among other
things, a letter of censure, fines, suspension or termination of personal
trading rights and/or employment.
As part of any sanction, you may be required to absorb any loss from the
trade. Any profits realized, as a result of your personal transaction that
violates the Code must be disgorged to a charitable organization, which you
may designate.
10. Compliance Certification
At least once a year, you will be required to certify on the Employee
Certification Form (set forth in Appendix E) that you have read and
understand this Code, that you have complied with the requirements of the
Code, and that you have disclosed or reported all personal Securities
Transactions pursuant to the provisions of the Code.
11. Inquiries Regarding the Code
If you have any questions regarding this Code or any other
compliance-related matter, please call the Director of Compliance, or in
his absence, the General Counsel or Associate General Counsel.
--------------------------------
William C. Morris
Chairman
December 22, 1966
Revised: March 8, 1968 December 7, 1990
January 14, 1970 November 18, 1991
March 21, 1975 April 1, 1993
May 1, 1981 November 1, 1994
May 1, 1982 February 28, 1995
April 1, 1985 November 19, 1999*
March 27, 1989
* Refers to the incorporation of the Code of Ethics of the Seligman
Investment Companies originally adopted June 12, 1962, as amended.
<PAGE>
Appendix A
Amended November 19, 1999
J. & W. Seligman & Co. Incorporated - Insider Trading Policies and Procedures
SECTION I. BACKGROUND
Introduction
United States law creates an affirmative duty on the part of
broker-dealers and investment advisers to establish, maintain and enforce
written policies and procedures that provide a reasonable and proper system of
supervision, surveillance and internal control to prevent the misuse of
material, non-public information by the broker-dealer, investment adviser or any
person associated with them. The purpose of these procedures is to meet those
requirements. The following procedures apply to J. & W. Seligman & Co.
Incorporated, its subsidiaries and affiliates (collectively, "Seligman") and all
officers, directors and employees (collectively, "Employees") thereof.
Statement of Policy
No Employee may trade, either personally or on behalf of others, on
material, non-public information or communicate material, non-public information
to another in violation of the law. This policy extends to activities within and
outside their duties at Seligman. Each Employee must read, acknowledge receipt
and retain a copy of these procedures.
Inside Information
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material, non-public
information to trade in securities or to communicate material, non-public
information to others.
While the law concerning insider trading is not static, it is
understood that the law generally prohibits:
A. trading by an insider, while in possession of material,
non-public information, or
B. trading by a non-insider, while knowingly in possession of
material, non-public information, where the information either
was disclosed to the non-insider in violation of an insider's
duty to keep it confidential or was misappropriated, or
C. communicating material, non-public information to others.
The elements of insider trading and the penalties for such unlawful
conduct are discussed below. If you have any questions after reviewing these
procedures, you should consult the Director of Compliance, General Counsel or
Associate General Counsel.
1. Who Is An Insider?
The concept of "insider" is broad. It includes Employees of a company.
In addition, a person can be a "temporary insider" if he or she enters
into a special confidential relationship in the conduct of a company's
affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a
company's attorneys, accountants, consultants, bank lending officers,
and the Employees of such organizations. In addition, Seligman may
become a temporary insider of a company it advises or for which it
performs other services. According to the Supreme Court, the company
must expect the outsider to keep the disclosed non-public information
<PAGE>
confidential and the relationship must at least imply such a duty
before the outsider will be considered an insider.
2. What Is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment
decisions, or information that is reasonably certain to have a substantial
affect on the price of a company's securities. Information that Employees
should consider material includes, but is not limited to: dividend changes,
earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major
litigation, liquidation problems and extraordinary management developments.
In addition, information about major contracts or new customers could also
qualify as material, depending upon the importance of such developments to
the company's financial condition or anticipated performance.
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S., 408 U.S. 316 (1987), the Supreme Court
considered as material certain information about the contents of a
forthcoming newspaper column that was expected to affect the market price
of a Security. In that case, a Wall Street Journal reporter was found
criminally liable for disclosing to others the dates that reports on
various companies would appear in the Journal and whether those reports
would be favorable or not.
3. What Is Non-Public Information?
Information is non-public until it has been effectively communicated to the
market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services,
The Wall Street Journal or other publications of general circulation would
be considered public. However, see Section II, Paragraph 2.
4. Penalties for Insider Trading
Penalties for trading on or communicating material, non-public information
are severe, both for individuals involved in such unlawful conduct and
their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
- Civil injunctions
- Disgorgement of profits
- Jail sentences
- Fines for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the person
actually benefited, and
- Fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
In addition, any violation of policies and procedures set forth herein can
be expected to result in serious sanctions by Seligman, including dismissal of
the persons involved.
<PAGE>
SECTION II. PROCEDURES
Procedures to Implement Policy Against Insider Trading.
The following procedures have been established to assist the Employees
of Seligman in avoiding insider trading, and to aid Seligman in preventing,
detecting and imposing sanctions against insider trading. Every Employee of
Seligman must follow these procedures or risk serious sanctions, including
dismissal, substantial personal liability and criminal penalties. If you have
any questions about these procedures you should consult the Director of
Compliance, the General Counsel or Associate General Counsel.
1. Identifying Inside Information.
Before trading for yourself or others (including investment companies and
private Accounts managed by Seligman), in the securities of a company about
which you may have potential inside information, ask yourself the following
questions:
a. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is
this information that would substantially affect the market price of
the securities if generally disclosed?
b. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace in a publication of general circulation or does it fall
within the circumstances set forth in paragraph 2 below.
If, after consideration of the above, you believe that the information
is material and non-public, or if you have questions as to whether the
information is material and non-public, you should take the following steps:
c. Report the matter immediately to the Director of Compliance, General
Counsel or Associate General Counsel.
d. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private Accounts managed by
Seligman.
e. Do not communicate the information inside or outside Seligman other
than to the Director of Compliance, General Counsel or Associate
General Counsel.
f. After the Director of Compliance, General Counsel or Associate General
Counsel has reviewed the issue, you will be instructed to continue the
prohibitions against trading and communication, or you will be allowed
to trade and communicate the information.
2. Important Specific Examples
a. If you have a telephone or face-to-face conversation with a senior
executive of a publicly-traded company and are provided information
about the company that you have reason to believe has not yet been
disclosed in a widely-disseminated publication such as a press
release, quarterly report or other public filing, you have received
non-public information. This information is considered non-public even
if you believe that the company executive would provide the same
information to other analysts or portfolio managers who call the
company. Until information has been disclosed in a manner that makes
it available to (or capable of being accessed by) the investment
community as a whole, it is considered non-public. If the information
is material, as described above, you may not trade while in possession
of this information unless you first discuss the matter and obtain
approval from the Director of Compliance, General Counsel or Associate
General Counsel. Although it may be lawful for an analyst to act on
the basis of material information that the company's management has
chosen to disclose selectively to that analyst, where the information
is provided in a one-on-one context, regulators are likely to question
<PAGE>
such conduct. Approval from the Law and Regulation Department will
therefore depend on the specific circumstances of the information and
the disclosure. Under the Supreme Court's important decision of Dirks
v. SEC, 463 U.S. 646 (1983), securities analysts may be free to act on
selectively disclosed material information if it is provided by
company executives exclusively to achieve proper corporate purposes.
b. If you obtain material information in the course of an analysts'
conference call or meeting conducted by a publicly-traded company in
the ordinary course of its business in which representatives of
several other firms or investors are also present (as distinguished
from the one-on-one situation described in the preceding paragraph),
you may act on the basis of that information without need to consult
with the Director of Compliance, General Counsel or Associate General
Counsel, even if the information has not yet been published by the
news media. You should be aware, however, that if there is something
highly unusual about the meeting or conference call that leads you to
question whether it has been authorized by the company or is otherwise
suspect, you should first consult with the Director of Compliance,
General Counsel or Associate General Counsel.
c. If you are provided material information by a company and are
requested to keep such information confidential, you may not trade
while in possession of that information before first obtaining the
approval of the Director of Compliance, General Counsel or the
Associate General Counsel.
As these examples illustrate, the legal requirements governing insider
trading are not always obvious. You should therefore always consult with the
Director of Compliance, General Counsel or Associate General Counsel if you have
any question at all about the appropriateness of your proposed conduct.
3. Restricting Access To Material, Non-Public Information
Information in your possession that you identify as material and non-public
may not be communicated to anyone, including persons within Seligman,
except as provided in paragraphs 1 and 2 above. In addition, care should be
taken so that such information is secure. For example, files containing
material, non-public information should be sealed; access to computer files
containing material, non-public information should be restricted.
4. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in paragraphs 1 and 2, doubt
remains as to whether information is material or non-public, or if there is
any unresolved question as to the applicability or interpretation of the
foregoing procedures, or as to the propriety of any action, it must be
discussed with the Director of Compliance, General Counsel and or the
Associate General Counsel before trading or communicating the information
to anyone.
5. Personal Securities Trading
All Employees shall follow with respect to personal Securities trading the
procedures set forth in the Code of Ethics. In addition, no Employee shall
establish a brokerage Account with a Firm other than those previously
approved without the prior consent of the Director of Compliance and every
Employee shall be subject to reporting requirements under Section III.5 of
the Code of Ethics. The Director of Compliance, or his designee, shall
monitor the personal Securities trading of all Employees.
<PAGE>
Appendix B
Amended November 19, 1999
J. & W. SELIGMAN & CO. INCORPORATED
TRADE AUTHORIZATION REQUEST FORM
1. Name of Employee/Telephone Number: ________________
2. If different than #1, name of the person in whose
account the trade will occur: ________________
3. Relationship of (2) to (1): ________________
4. Name the firm at which the account is held: ________________
5. Name of Security: ________________
6. Number of shares or units to be bought or
sold or amount of bond: ________________
7. Approximate price per share, unit or bond: ________________
8. Check those that are applicable: _______ Purchase ______ Sale
_____ Market Order ______ Limit Order
(Price of Limit Order: _____)
9. Do you possess material non public information regarding
the Security or the issuer of the Security? ______ Yes ______ No
10. To your knowledge, are there any outstanding (purchase or
sell) orders for this Security or any Equivalent Security by
a Seligman Client? ______ Yes ______ No
11. To your knowledge, is this Security or Equivalent Security
being considered for purchase or sale for one or more
Seligman Clients? ______ Yes ______ No
12. Is this Security being acquired in an initial or secondary public
offering? ______ Yes ______ No
13. Is this Security being acquired in a private placement?
______ Yes ______ No
14. Have you or any Related Account covered by the pre-
authorization provisions of the Code purchased or sold
this Security within the past 60 days? ______ Yes ______ No
<PAGE>
- - - - - -
For Investment Team Members Only:
15. Has any Client Account managed by your team purchased or sold this
Security or Equivalent Security within the past seven calendar days or
do you expect any such account to purchase or sell this Security or
Equivalent Security within seven calendar days of your purchase or sale?
______ Yes ______ No
16. Why is this Security Transaction appropriate for you and not for one or
more of your team's Clients?
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
- - - - - -
I have read the J. & W. Seligman & Co. Incorporated Code of Ethics, as revised
on November 19, 1999, within the prior 12 months and believe that the proposed
trade(s) fully complies with the requirements of the Code of Ethics and Insider
Trading policy.
----------------------------
Employee Signature
----------------------------
Date Submitted
Authorized by: ________________________
Date: ________________________
<PAGE>
Appendix C
Amended November 19, 1999
REPORT OF SECURITIES BENEFICIALLY OWNED
AS OF DECEMBER 31, 1999
The following is a list of all Securities positions (except open-end
investment companies, U.S. Government Securities and money market instruments)
in which I have direct or indirect beneficial ownership, as defined in the Code
of Ethics. This includes Securities held at home, in safe deposit boxes or by an
issuer.
<TABLE>
<CAPTION>
Description of Security No. of Shares Principal Amount Location of Security
<S> <C> <C> <C>
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
</TABLE>
_______ The list above (and any additional sheets I have attached)
represents all my Securities positions in which I have direct
or indirect beneficial ownership as defined in the Code of
Ethics.
_______ I only have a beneficial ownership interest in open-end
investment companies, U.S. Government Securities and money
market instruments, and/or I do not beneficially own any
Securities.
Date: ________________________ _____________________________
First Last, Company
<PAGE>
Appendix D
Amended November 19, 1999
EMPLOYEE REPORTING QUESTIONNAIRE
Employee Name: ___________________________ Ext: ______
Please Print
Department: ___________________
Company/Affiliate: ______________________________
Supervisor: ___________________
1. Securities Accounts
Do you have any Accounts in which Securities can be purchased or sold over
which you have control or in which you have a Beneficial Interest, as
defined in Seligman's Code of Ethics? Yes _______ No ________
If yes, please list all such Accounts:
<TABLE>
<CAPTION>
Account Account Type of
Institution Number Title Account
<S> <C> <C> <C>
---------------------------- ---------------- -------------------------- --------------
---------------------------- ---------------- -------------------------- --------------
---------------------------- ---------------- -------------------------- --------------
</TABLE>
2. Financial Interests
Do you have any private placements, restricted stock warrants, general or
limited partnerships, or other investment interests in any organization
(public, private or charitable) not held in the accounts listed above?
Please include Securities and certificates held in your custody.
Yes _______ No _______
If yes, please describe:
______________________________________________________________________________
______________________________________________________________________________
3. Outside Activities/Affiliations
a) Do you have any activities outside Seligman or its affiliates for which
you receive additional compensation:
Yes _______ No _______
If yes, please describe: ____________________________________________
______________________________________________________________________________
b) Do you serve in the capacity of officer, director, partner or employee
(or in any other fiduciary capacity) for any company or organization
(public, private or charitable) other than Seligman or its affiliates.
Yes ________ No _______
If yes, please describe:_____________________________________________
______________________________________________________________________________
I hereby certify that I have read and understand the foregoing statements and
that each of my responses thereto are true and complete. I agree to immediately
inform the Director of Compliance if there is any change in any of the above
answers. I also understand that any misrepresentation or omissions of facts in
response to this questionnaire and failure to immediately inform the Director of
Compliance of any changes to responses provided herein may result in termination
of my employment.
- ------------------------------------ -----------------------------------
Employee's Signature Date
- ------------------------------------
Title
<PAGE>
Appendix E
Amended November 19, 1999
Annual Certification of Compliance with the Code of Ethics
I acknowledge that I have received and read the Code of Ethics and Insider
Trading Policies and Procedures, as amended on November 19, 1999 and hereby
agree, in consideration of my continued employment by J. & W. Seligman & Co.
Incorporated, or one of its subsidiaries or affiliates, to comply with the Code
of Ethics and Insider Trading Policies and Procedures.
I hereby certify that during the past calendar year:
1. In accordance with the Code of Ethics, I have fully disclosed the
Securities holdings in my Employee Account(s) and Employee Related
Account(s) (as defined in the Code of Ethics).
2. In accordance with the Code of Ethics, I have maintained all Employee
Accounts and Employee Related Accounts at Ernst & Company (Investec) or
Merrill Lynch located at 712 Fifth Avenue, New York, NY except for Accounts
as to which the Director of Compliance has provided written permission to
maintain elsewhere.
3. In accordance with the Code of Ethics, except for transactions exempt from
reporting under the Code of Ethics, I have arranged for the Director of
Compliance to receive duplicate confirmations and statements for each
Securities Transaction of all Employee Accounts and Employee Related
Accounts, and I have reported all Securities Transactions in each of my
Employee Accounts and Employee Related Accounts.
4. I have complied with the Code of Ethics in all other respects.
--------------------------------
Employee Signature
--------------------------------
Date:____________ Print Name
