SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. __ |_|
Post-Effective Amendment No. 20 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 22 |X|
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SELIGMAN FRONTIER 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 the
appropriate box).
<PAGE>
|_| immediately upon filling pursuant to paragraph (b) of rule 485
|X| on April 22, 1996 pursuant to paragraph (b) of rule 485f
|_| 60 days after filing pursuant to paragraph (a)(i) of rule 485
|_| on (date) pursuant to paragraph (a)(i) of rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii) of rule 485
|_| on (date) pursuant to paragraph (a)(ii) 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.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice was
filed by Registrant on November 22, 1995.
<PAGE>
CROSS REFERENCE SHEET
Post-Effective Amendment No. 20
PURSUANT TO RULE 481(A)
ITEM IN PART A OF FORM N-1A LOCATION IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of the Registrant Cover Page; Organization And
Capitalization
5. Management of the Fund Management Services
5a. Management's Discussion of Fund Management Services
Performance
6. Capital Stock and Other Securities Organization and Capitalization
7. Purchase of Securities Being Offered Alternative Distribution System;
Purchases of Shares;
Administration, Shareholder
Services and Distribution Plan
8. Redemption or Repurchase Telephone Transactions;
Redemption of Shares; Exchange
Privilege; Further
Information About Transactions
In The Fund
9. Pending Legal Proceedings Not Applicable
ITEM IN PART B OF FORM N-1A LOCATION IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Investment Objective, Policies
and Risks;General Information;
Appendix
13. Investment Objectives and Policies Investment Objective, Policies
And Risks; Investment
Limitations
14. Management of the Fund Directors and Officers;
Management and Expenses
15. Control Persons and Principal Holders Directors and Officers
of Securities
16. Investment Advisory and Other Services Management and Expenses;
Distribution Services
17. Brokerage Allocations Administration, Shareholder
Services and Distribution Plan;
Portfolio Transactions
18. Capital Stock and Other Securities General Information
19. Purchase, Redemption and Pricing Purchase and Redemption of Fund
shares; Valuation
of Securities being Offered
20. Tax Status Not Applicable
21. Underwriters Distribution Services
22. Calculation of Performance Data Performance
23. Financial Statements Financial Statements
<PAGE>
SELIGMAN FRONTIER FUND, INC.
100 Park Avenue o New York, N.Y. 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 221-2450--all continental United States
For Retirement Plan Information--Toll-Free Telephone: (800) 445-1777
April 22, 1996
Seligman Frontier Fund, Inc. (the "Fund") is a diversified, open-end
management investment company that invests to produce growth in capital value.
Income may be considered but will only be incidental to the Fund's investment
objective of growth in capital value. For a description of the Fund's investment
objective and policies, including the risk factors associated with an investment
in the Fund, see "Investment Objective, Policies And Risks." There can be no
assurance that the Fund's investment objective will be achieved.
Investment advisory and management services are provided to the Fund by J.
& W. Seligman & Co. Incorporated (the "Manager") and, to the extent requested by
the Manager in respect of foreign assets, Seligman Henderson Co. (the
"Subadviser"). The Fund's distributor is Seligman Financial Services, Inc., an
affiliate of the Manager.
The Fund offers three classes of shares. Class A shares are sold subject to
an initial sales load of up to 4.75% and an annual service fee currently charged
at a rate of up to .25% of the average daily net asset value of the Class A
shares. Class B shares are sold without an initial sales load but are subject to
a contingent deferred sales load ("CDSL"), if applicable, of 5% on redemptions
in the first year after purchase of such shares, declining to 1% in the sixth
year and 0% thereafter, an annual distribution fee of up to .75% and an annual
service fee of up to .25% of the average daily net asset value of the Class B
shares. Class B shares will automatically convert to Class A shares on the last
day of the month that precedes the eighth anniversary of their date of purchase.
Class D shares are sold without an initial sales load but are subject to a CDSL
of 1% imposed on certain redemptions within one year of purchase, an annual
distribution fee of up to .75% and an annual service fee of up to .25% of the
average daily net asset value of the Class D shares. Any CDSL payable upon
redemption of Class B or Class D shares will be assessed on the lesser of the
current net asset value or the original purchase price of the shares redeemed.
See "Alternative Distribution System." Shares of the Fund may be purchased
through any authorized investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Fund before investing. Please read it carefully before you
invest and keep it for future reference. Additional information about the Fund,
including a Statement of Additional Information, has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
available upon request without charge by calling or writing the Fund at the
telephone numbers or address set forth above. The Statement of Additional
Information is dated the same date as this Prospectus and is incorporated herein
by reference in its entirety.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
-----
Summary Of Fund Expenses ........................... 2
Financial Highlights ............................... 3
Alternative Distribution System..................... 4
Investment Objective, Policies and Risks............ 5
Management Services................................. 7
Purchase Of Shares ................................. 9
Telephone Transactions.............................. 14
Redemption Of Shares................................ 15
Administration, Shareholder Services And
Distribution Plan................................. 17
Exchange Privilege.................................. 18
Further Information About Transactions In The Fund.. 20
Dividends And Distributions ........................ 20
Federal Income Taxes................................ 21
Shareholder Information ............................ 22
Advertising The Fund's Performance ................. 24
Organization And Capitalization .................... 24
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF FUND EXPENSES
CLASS A CLASS B CLASS D
---------------- ----------------- -----------------
(INITIAL SALES (DEFERRED SALES (DEFERRED SALES
LOAD ALTERNATIVE) LOAD ALTERNATIVE) LOAD ALTERNATIVE)
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...................... 4.75% None None
Sales Load on Reinvested Dividends ........................ None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds,
whichever is lower) ..................................... None 5% in 1st year 1% in 1st year
4% in 2nd year None thereafter
3% in 3rd and
4th years
2% in 5th year
1% in 6th year
None thereafter
Redemption Fees ........................................... None None None
Exchange Fees ............................................. None None None
ANNUAL FUND OPERATING EXPENSES FOR FISCAL 1995 CLASS A CLASS B* CLASS D
------- -------- -------
(as a percentage of average net assets)
Management Fees .95% .95% .95%
12b-1 Fees .16% 1.00%** 1.00%**
Other Expenses .52% .54% .54%
---- ---- ----
Total Fund Operating Expenses 1.63% 2.49% 2.49%
==== ==== ====
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of the Fund may bear directly or
indirectly. The sales load on Class A shares is a one-time charge paid at the
time of purchase of shares. Reductions in sales loads are available in certain
circumstances. The CDSL on Class B and Class D shares are one-time charges paid
only if shares are redeemed within six years or one year of purchase,
respectively. The management fees for Class A and Class D shares have been
restated to reflect the increase in the management fee rate payable by the Fund,
which was approved by shareholders on December 12, 1995 and became effective
January 1, 1996. For more information concerning reductions in sales loads and
for a more complete description of the various costs and expenses, see "Purchase
Of Shares," "Redemption Of Shares" and "Management Services" herein. The Fund's
Administration, Shareholder Services and Distribution Plan, to which the caption
"12b-1 Fees" relates, is discussed under "Administration, Shareholder Services
and Distribution Plan" herein.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
An investor would pay the following expenses on a $1,000 ------ ------- ------- --------
investment, assuming (1) 5% annual return and (2) redemp-
tion at the end of each time period.......................Class A $63 $96 $132 $232
Class B+ $75 $108 $153 $261
Class D $35++ $78 $133 $283
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN AND THE 5%
ANNUAL RETURN USED IN THIS EXAMPLE IS A HYPOTHETICAL RATE.
- --------------
*Expenses for Class B shares are estimated because no shares of that class were
outstanding in the year ended September 30, 1995.
**Includes an annual distribution fee of up to .75% and an annual service fee
of up to .25%. Pursuant to the Rules of the National Association of Securities
Dealers, Inc., the aggregate deferred sales loads and annual distribution fees
on Class B and Class D shares of the Fund may not exceed 6.25% of total gross
sales, subject to certain exclusions. The maximum sales charge rule is applied
separately to each class. The 6.25% limitation is imposed on the Fund rather
than on a per shareholder basis. Therefore, a long-term Class D shareholder of
the Fund may pay more in total sales loads (including distribution fees) than
the economic equivalent of 6.25% of such shareholder's investment in such
shares.
+ Assuming (1) 5% annual return on (2) no redemption at the end of the period,
the expenses on a $1,000 investment would be $25 for 1 year, $78 for 3 years
and $133 for 5 years. The expenses shown for the ten-year period reflect the
conversion of Class B shares to Class A shares after 8 years.
++Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be $25.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights for Class A and Class D shares for the
periods presented below have been audited by Deloitte & Touche LLP, independent
auditors. This information, which is derived from the financial and accounting
records of the Fund, should be read in conjunction with the financial statements
and notes contained in the Fund's 1995 Annual Report, which is incorporated by
reference in the Fund's Statement of Additional Information, copies of which may
be obtained by calling or writing the Fund at the telephone numbers or address
provided on the cover page of this Prospectus. Financial highlights are not
presented for the Class B shares because no shares of that class were
outstanding during the periods set forth below.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from the Fund's beginning
net asset value to its ending net asset value so that they may understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, the per share amounts are derived by
converting the actual dollar amounts incurred for each item, as disclosed in the
financial statements, to their equivalent per share amount. The total return
based on net asset value measures the Fund's performance assuming investors
purchased shares of the Fund at the net asset value as of the beginning of the
period, invested dividends and capital gains paid at net asset value and then
sold their shares at net asset value per share on the last day of the period.
The total return computations do not reflect any sales loads investors may incur
in purchasing or selling shares of the Fund. Total returns for periods of less
than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A CLASS D
------------------------------------------------------------------------- --------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30 SEPTEMBER 30 5/3/93*
------------------------------------------------------------------------- ------------ TO
PER SHARE OPERATING 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1995 1994 9/30/93
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PERFORMANCE:
Net asset value,
beginning of period.. $11.62 $12.83 $10.22 $10.71 $ 7.01 $ 8.99 $ 6.90 $ 9.35 $ 7.58 $ 5.90 $11.40 $12.80 $10.12
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment loss.... (0.06) (0.08) (0.03) (0.07) (0.03) -- -- (0.02) -- --+ (0.15) (0.23) (0.04)
Net realized and
unrealized investment
gain (loss) ......... 3.87 1.10 4.54 0.58 3.76 (1.98) 2.09 (1.44 )2.07 1.69 3.75 1.06 2.72
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations 3.81 1.02 4.51 0.51 3.73 (1.98) 2.09 (1.46 )2.07 1.69 3.60 0.83 2.68
Dividends paid......... -- -- -- -- (0.01)** -- -- -- -- (0.01) -- -- --
Distributions from net
gain realized........ (1.39) (2.23) (1.90) (1.00) (0.02) -- -- (0.99) (0.30) -- (1.39) (2.23) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value... 2.42 (1.21) 2.61 (0.49) 3.70 (1.98) 2.09 (2.45) 1.77 1.68 2.21 (1.40) 2.68
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period ....... $14.04 $11.62 $12.83 $10.22 $10.71 $ 7.01 $ 8.99 $ 6.90 $ 9.35 $ 7.58 $13.61 $11.40 $12.80
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON
NET ASSET VALUE ..... 36.80% 9.79% 50.67% 4.91% 53.34%(22.02)%30.29% (12.25)% 28.29% 28.64% 35.53% 8.06% 26.48%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net
assets............... 1.43% 1.34% 1.25% 1.37% 1.28% 1.26% 1.32% 1.19% 1.11% 1.06%+ 2.29% 2.72% 2.24%0
Net investment income
(loss) to average
net assets ......... (0.50)% (0.87)% (0.27)% (0.71)% (0.35)% -- 0.02% (0.20)% 0.03% -- + (1.35)%(2.25)% (1.94)%0
Portfolio turnover..... 71.52% 124.76% 129.13% 129.46% 38.56% 38.55% 50.60% 80.03% 109.06% 89.14% 71.52%124.76% 129.13%++
Net assets, end of
period (000's
omitted) ............$272,122 $58,478 $43,188 $27,178 $23,449 $17,127 $22,966 $19,205 $22,534 $16,207 $145,443 $9,318 $967
</TABLE>
- -------------
All per share data for fiscal years 1986 through 1992 have been restated to
reflect the 2-for-1 stock split effected as a 100% stock dividend which occurred
on April 16,1992. For fiscal years 1994 and 1995, the above per share amounts of
net investment loss and net realized and unrealized investment gain (loss) have
been calculated based upon average shares outstanding for the periods.
* Commencement of distribution of Class D shares.
** Excess of taxable dividend over net investment income was charged against
paid-in capital.
+ During the year ended September 30, 1986, the Manager waived a portion of
its fees. Had the Manager, at its discretion, not done so, the net
investment loss per share, ratio of net investment income (loss) to average
net assets and ratio of expenses to average net assets would have been $.01,
(.06)%, and 1.12%, respectively.
++ For the year ended September 30, 1993.
0 Annualized.
The data provided above reflects historical information and therefore has
not been adjusted to reflect, for the periods prior to its implementation, the
effect of the Administration, Shareholder Services and Distribution Plan
approved by shareholders on May 1, 1992 and effective June 1,1992 or through
December 31, 1995 does not reflect the effect of the increase in the management
fee rate payable by the Fund, approved by shareholders on December 12, 1995 and
effective January 1, 1996.
3
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM
The Fund offers three classes of shares. Class A shares are sold to investors
who have concluded that they would prefer to pay an initial sales load and have
the benefit of lower continuing fees. Class B shares are sold to investors
choosing to pay no initial sales load, a higher distribution fee and a CDSL with
respect to redemptions within six years of purchase and who desire shares to
convert automatically to Class A shares after eight years. Class D shares are
sold to investors choosing to pay no initial sales load, a higher distribution
fee and, with respect to redemptions within one year of purchase, a CDSL. The
Alternative Distribution System allows investors to choose the method of
purchasing shares that is most beneficial in light of the amount of the
purchase, the length of time the shares are expected to be held and other
relevant circumstances. Investors should determine whether under their
particular circumstances it is more advantageous to incur an initial sales load
and be subject to lower ongoing fees, as discussed below, or to have the entire
initial purchase price invested in the Fund with the investment thereafter being
subject to higher ongoing fees and either a CDSL for a six year period with
automatic conversion to Class A shares after eight years or a CDSL for a
one-year period with no automatic conversion to Class A shares.
Investors who qualify for reduced sales loads, as described under "Purchase
Of Shares" below, might choose to purchase Class A shares because Class A shares
would be subject to lower ongoing fees. The amount invested in the Fund,
however, is reduced by the initial sales load deducted at the time of purchase.
Investors who do not qualify for reduced initial sales loads but expect to
maintain their investment for an extended period of time might also choose to
purchase Class A shares because over time the accumulated continuing
distribution fees of Class B and Class D shares may exceed the initial sales
load and lower distribution fee of Class A shares. This consideration must be
weighed against the fact that the amount invested in the Fund will be reduced by
the initial sales load on Class A shares deducted at the time of purchase.
Furthermore, the higher distribution fees on Class B and Class D will be offset
to the extent any return is realized on the additional funds initially invested
therein that would have been equal to the amount of the initial sales load on
Class A shares. In addition, Class B shares will be converted automatically to
Class A shares after a period of approximately eight years, and thereafter
investors will be subject to lower ongoing fees. Shares purchased through
reinvestment of dividends and distributions on Class B shares also will convert
automatically to Class A shares along with the underlying shares on which they
were earned.
Alternatively, some investors might choose to have all of their funds
invested initially in Class B or Class D shares although remaining subject to a
higher continuing distribution fee and for a six-year or one-year period, a CDSL
as described below. For example, an investor who does not qualify for reduced
sales loads would have to hold Class A shares for more than 6.33 years for the
Class B or Class D distribution fee to exceed the initial sales load plus the
distribution fee on Class A shares. This example does not take into account the
time value of money, which further reduces the impact of the Class B and Class D
shares' 1% distribution fee, other expenses charged to each class, fluctuations
in net asset value or the effect of the return on the investment over this
period of time.
Investors should bear in mind that total asset based sales charges (i.e., the
higher continuing distribution fee plus the CDSL) on Class B shares that are
redeemed may exceed the total asset based sales charges that would be payable on
a purchase of the same amount of Class A or Class D shares, particularly if the
Class B shares are redeemed shortly after purchase or if the investor qualifies
for a reduced sales load on the Class A shares.
Investors should understand that the purpose and function of the initial
sales loads with respect to Class A shares is the same as those of the deferred
sales loads and higher distribution fees with respect to Class B and Class D
shares in that the sales loads and distribution fees applicable to each class
provide for the financing of the distribution of the shares of the Fund.
Class B and Class D shares are subject to the same ongoing distribution fees
but Class D shares are subject to a CDSL for a shorter period of time (one year
4
<PAGE>
as opposed to six years) than Class B shares. However, unlike Class D shares,
Class B shares automatically convert to Class A shares, which are subject to
lower ongoing distribution fees.
The three classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and, potentially, certain
other class expenses and has exclusive voting rights with respect to any matter
to which a separate vote of any class is required by the Investment Company Act
of 1940, as amended (the "1940 Act"), or Maryland law. The net income
attributable to each class and dividends payable on the shares of each class
will be reduced by the amount of distribution and other expenses to be paid by
each class. Class B and Class D shares bear higher distribution fees, which will
cause the Class B and Class D shares to pay lower dividends than the Class A
shares. The three classes also have separate exchange privileges.
The Directors of the Fund believe that no conflict of interest currently
exists between the Class A, Class B and Class D shares. On an ongoing basis, the
Directors in the exercise of their fiduciary duties under the 1940 Act and
Maryland law, will seek to ensure that no such conflict arises. For this
purpose, the Directors will monitor the Fund for the existence of any material
conflict among the classes and will take such action as is reasonably necessary
to eliminate any such conflicts that may develop.
DIFFERENCES BETWEEN CLASSES. The primary differences between Class A, Class B
and Class D shares are their sales load structures and ongoing expenses as set
forth below. The primary differences between Class B and Class D shares are that
Class D shares are subject to a shorter CDSL period but Class B shares
automatically convert to Class A shares after eight years, resulting in a
reduction in ongoing fees. Investors in Class B shares should take into account
whether they intend to redeem their shares within the CDSL period and, if not,
whether they intend to remain invested until the end of the conversion period
and thereby take advantage of the reduction in ongoing fees resulting from the
conversion to Class A shares. Other investors, however, may elect to purchase
Class D shares if they determine that it is advantageous to have all their
assets invested initially and they are uncertain as to the length of time they
intend to hold their assets in the Fund or another mutual fund in the Seligman
Group for which the exchange privilege is available. Although Class D
shareholders are subject to a shorter CDSL period at a lower rate, they forego
the Class B automatic conversion feature, making their investment subject to
higher distribution fees for an indefinite period of time. Each class has
advantages and disadvantages for different investors, and investors should
choose the class that best suits their circumstances and their objectives.
ANNUAL 12B-1 FEES
(AS A % OF AVERAGE
SALES LOAD DAILY NET ASSETS) OTHER INFORMATION
---------- ------------------ -----------------
CLASS A Maximum initial Service fee of Initial sales load
sales load of .25%. waived or reduced
4.75% of the for certain
public offering purchases.
price.
CLASS B None Service fee of CDSL of:
.25%; 5% in 1st year
Distribution fee 4% in 2nd year
of .75% until 3% in 3rd and
conversion* 4th years
2% in 5th year 1%
in 6th year 0%
after 6th year.
CLASS D None Service fee of CDSL of 1% on
.25%; Distribution redemptions within
fee of .75%. one year of
purchase.
* 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.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund is an open-end diversified management investment company, as defined
in the 1940 Act, or mutual fund, incorporated in Maryland in 1984.
5
<PAGE>
The Fund seeks to produce growth in capital value; income may be considered
but will be only incidental to the Fund's investment objective. There can be no
assurance that the Fund will achieve its objective. The Fund seeks to achieve
its objective by investing in a portfolio consisting of securities of companies
selected for their growth prospects. The Fund invests primarily in common
stocks. It may also invest in securities that may be exchanged for or converted
into common stock, preferred stock and common stock purchase warrants believed
by the Manager to provide capital growth opportunities.
Stocks of companies believed by the Manager to have special characteristics
(such as a high growth rate of unit sales, an important opportunity in a
developing industry or a distinct competitive advantage) are favored. In
general, securities owned are likely to be those issued by companies of small to
medium size with annual revenues of $400 million or less. Except when investing
for temporary, defensive purposes, the Fund will invest at least 65% of its net
assets, exclusive of government securities, short-term notes, cash and cash
items, in securities of such companies. Securities of small or medium sized
companies may be subject to above average market price fluctuation and business
risk; however, the Manager will seek to temper such risks by diversification of
investments and by avoiding concentration of investments in any one industry.
Investments other than in securities of the companies discussed above will be
substantially in securities issued or guaranteed by the United States Government
(such as Treasury bills, notes and bonds), its agencies, instrumentalities or
authorities; highly-rated corporate debt securities (rated AA-, or better, by
Standard & Poor's Corporation ("Standard & Poor's") or Aa3, or better, by
Moody's Investors Service, Inc. ("Moody's")); prime commercial paper (rated
A-1+/A-1 by Standard & Poor's or P-1 by Moody's); and certificates of deposit of
the 100 largest (based on assets) banks that are subject to regulatory
supervision by the U.S. Government or state governments and the 50 largest
(based on assets) foreign banks with branches or agencies in the United States.
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 (the
"1933 Act")) and other securities that are not readily marketable. The Fund may
purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the Manager, acting
pursuant to procedures approved by the Fund's Board of Directors, may determine,
when appropriate, that specific Rule 144A securities are liquid and not subject
to the 15% limitation on illiquid securities. Should this determination be made,
the Manager, acting pursuant to such procedures, 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 restricted securities offered and sold under Rule 144A will develop.
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.
FOREIGN SECURITIES. The Fund may invest in commercial paper and certificates
of deposit issued by foreign banks and may invest directly and through American
Depositary Receipts ("ADRs") 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 U.S. company and foreign companies may not
be subject to reporting standards and requirements comparable to those
applicable to U.S. companies. Foreign securities may not be as liquid as U.S.
securities. Securities of foreign companies may involve greater market risk than
securities of U.S. companies, and foreign brokerage commissions and custody fees
are generally higher than those in the United States. Investments in foreign
securities may also be subject to local economic or political risks, political
instability and possible nationalization of issuers. ADRs, which are traded in
6
<PAGE>
dollars on U.S. exchanges or over-the-counter, are issued by domestic banks and
evidence ownership of securities issued by foreign corporations. 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
ADRs or to commercial paper and certificates of deposit issued by foreign banks.
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 money
market instrument 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
instrument is held by the Fund. Repurchase agreements could involve certain
risks in the event of bankruptcy or other default by the seller, including
possible delays and expenses in liquidating the securities underlying the
agreement, decline in value of the underlying securities and loss of interest.
Repurchase agreements are typically entered into for periods of one week or
less. 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 invested in such agreements
and other illiquid securities.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
broker/dealers or other institutions, if, in the opinion of the Manager, such
loans would 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 dividend or interest paid on the securities. The Fund
may invest the cash collateral and earn additional income or receive an agreed
upon amount of interest income from the borrower.
BORROWING. The Fund may borrow money only from banks and only for temporary
or emergency purposes (but not for the purchase of portfolio securities) in an
amount not in excess of 15% of the value of its total assets. The Fund will not
purchase additional portfolio securities if the Fund has outstanding borrowings
in excess of 5% of the value of its total assets.
OPTIONS TRANSACTIONS. The Fund may purchase put options on portfolio
securities in an attempt to provide a hedge against a decrease in the price of a
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.
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. See "Investment Objective, Policies and Risks"
in the Statement of Additional Information.
GENERAL. Except as noted above, the foregoing investment policies are not
fundamental and the Board of Directors of the Fund may change them without the
vote of a majority of the Fund's outstanding voting securities. As a matter of
policy, the Board would not change the Fund's investment objective of seeking to
produce growth in capital value without such a vote. A more detailed description
of the Fund's investment policies, including a list of those restrictions of the
Fund's investment activities which cannot be changed without such a vote,
appears in the Statement of Additional Information. Under the 1940 Act, a "vote
of a majority of the outstanding voting securities" of the Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or (2) 67% or more of the shares present at a shareholders' meeting if
more than 50% of the outstanding shares are represented at the meeting in person
or by proxy.
MANAGEMENT SERVICES
THE MANAGER. The Board of Directors provides broad supervision over the
affairs of the Fund. Pursuant to a Management Agreement approved by the Board
and the shareholders of the Fund, the Manager manages the investments of the
Fund and administers the business and other affairs of the Fund. The address of
the Manager is 100 Park Avenue, New York, NY 10017.
7
<PAGE>
The Manager also serves as manager of sixteen other investment companies
which, together with the Fund, make up the "Seligman Group." The sixteen other
companies are: Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc.,
Seligman High Income Fund Series, Seligman Income Fund, Inc., Seligman New
Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund Series,
Seligman Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman
Select Municipal Fund, Inc., Seligman Tax-Exempt Fund Series, Inc., Seligman
Tax-Exempt Series Trust and Tri-Continental Corporation. The aggregate assets of
the Seligman Group were approximately $11.9 billion at February 29, 1996. The
Manager also provides investment management or advice to individual and
institutional accounts having an aggregate value at February 29, 1996 of
approximately $3.9 billion.
Mr. William C. Morris is Chairman and President of the Manager and Chairman
of the Board and Chief Executive Officer of the Fund. Mr. Morris owns a majority
of the outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a
wholly-owned subsidiary of certain investment companies in the Seligman Group,
which performs, at cost, certain recordkeeping functions for the Fund, maintains
the records of shareholder accounts and furnishes dividend paying, redemption
and related services.
The Fund pays the Manager a management fee, calculated daily and payable
monthly. The management fee, which became effective on January 1, 1996, is equal
to an annual rate of .95% of the Fund's average daily net assets on the first
$750 million of net assets and .85% of the Fund's average daily net assets in
excess of $750 million. Although the management fee is higher than that paid by
most mutual funds, the Manager believes that such fee is comparable to the
management fee paid by a significant percentage of mutual funds with investment
objectives similar to that of the Fund. During the fiscal year ended September
30,1995, prior to effectiveness of the new management fee schedule, the
management fee was .75% of the average daily net assets of the Fund. The Fund
pays all of its expenses other than those assumed by the Manager. Total expenses
of the Fund's Class A and Class D shares for the year ended September 30, 1995
amounted to 1.43% and 2.29%, respectively, of the average daily net assets of
such class. No Class B shares of the Fund were outstanding during this period.
THE SUBADVISER. The Subadviser provides investment management services to the
Fund with respect to all or a portion of the Fund's foreign investments, as
designated by the Manager (the "Qualifying Assets"). The Fund has a
non-fundamental policy under which it may invest up to 10% of its total assets
in foreign securities that are held directly. The 10% limit does not apply to
foreign securities held through ADRs or to commercial paper and certificates of
deposit issued by foreign banks. The Subadviser serves the Fund pursuant to a
Subadvisory Agreement with the Manager (the "Subadvisory Agreement"), dated June
1, 1994. Pursuant to the Subadvisory Agreement, the Sub- adviser, with respect
to the Qualifying Assets, provides investment management services including
investment research, advice and supervision, determines which securities will be
purchased or sold, makes purchases and sales on behalf of the Fund and
determines how voting and other rights with respect to securities held by the
Fund shall be exercised, subject in each case to the control of the Board of
Directors and in accordance with the Fund's investment objective, policies and
principles. For this service, the Subadviser receives a fee from the Manager,
payable monthly. The subadvisory fee rate, which is applied to the average
monthly net Qualifying Assets of the Fund (i.e., the Qualifying Assets less any
related liabilities as designated by the Manager), is the same as the overall
rate paid to the Manager by the Fund. For the fiscal year ended September 30,
1995, the Fund did not require the services of the Subadviser and therefore, no
fees were paid by the Manager to the Subadviser.
The Subadviser was founded in 1991 as a joint venture between the Manager and
Henderson International, Inc., a controlled affiliate of Henderson
8
<PAGE>
Administration Group plc. The Subadviser, headquartered in New York, was created
to provide international and global investment advice to institutional and
individual investors and investment companies in the United States. The
Subadviser also currently serves as subadviser to Seligman Capital Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc.,
Seligman Income Fund, Inc., the Global Portfolio and Global Smaller Companies
Portfolio of Seligman Portfolios, Inc., and Tri-Continental Corporation. The
address of the Subadviser is 100 Park Avenue, New York, NY 10017.
PORTFOLIO MANAGER. Mr. Arsen Mrakovcic, a Managing Director of the Manager,
is Vice President and Portfolio Manager of the Fund, a position he has held
since October 1, 1995. Mr. Mrakovcic, who joined the Manager in 1992 as a
Portfolio Assistant, was named Vice President, Investment Officer on January 1,
1995 and Managing Director on January 1, 1996.
Mr. Iain C. Clark is responsible for the Subadviser's day-to-day investment
activity with respect to the Qualifying Assets of the Fund. Mr. Clark is a
Managing Director and Chief Investment Officer of Seligman Henderson Co. He is
also a Director of Henderson Administration Group plc.
The Manager's discussion of the Fund's performance as well as a line graph
illustrating comparative performance information between the Fund, the NASDAQ
Composite Index and the Lipper Small Company Growth Fund Index is included in
the Fund's 1995 Annual Report to Shareholders. Copies of the 1995 Annual Report
may be obtained, without charge, by calling or writing the Fund at the telephone
numbers or address listed on the cover page of this Prospectus.
PORTFOLIO TRANSACTIONS. The Management Agreement and Subadvisory Agreement
each recognize that in the purchase and sale of portfolio securities for the
Fund, the Manager and the Subadviser will seek the most favorable price and
execution and, consistent with that policy, may give consideration to the
research, statistical and other services furnished by brokers or dealers to the
Manager or the Subadviser. The use of brokers who provide supplemental
investment and market research and securities and economic analysis may result
in a higher brokerage charge to the Fund than the use of brokers selected on the
basis of seeking the most favorable price and execution and such research and
analysis received may be useful to the Manager and the Subadviser in connection
with their services to other clients as well as to the Fund. In over-the-counter
markets, orders are placed with responsible primary market makers unless a more
favorable execution or price is believed to be obtainable.
Consistent with the Rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution available
and such other policies as the Directors of the Fund may determine, the Manager
may consider sales of shares of the Fund and, if permitted by applicable laws,
may consider sales of shares of the other mutual funds in the Seligman Group as
a factor in the selection of brokers or dealers to execute portfolio
transactions for the Fund.
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover." Portfolio turnover may result in the payment by the Fund
of dealer spreads or underwriting commissions and other transactions costs from
the sale of securities held by the Fund and the reinvestment of the proceeds in
other securities. While it is the policy of the Fund to hold securities for
investment, changes in the securities held by the Fund will be made from time to
time when the Manager believes such changes will strengthen the Fund's
portfolio. The portfolio turnover of the Fund may exceed 100%.
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager, acts
as general distributor of the Fund's shares. Its address is 100 Park Avenue, New
York, NY 10017.
The Fund issues three classes of shares: Class A shares are sold to investors
choosing the initial sales load alternative; Class B shares are sold to
investors choosing to pay no initial sales load, a higher distribution fee and a
CDSL with respect to redemptions within six years of purchase and who desire
9
<PAGE>
shares to convert automatically to Class A shares after eight years; and Class D
shares are sold to investors choosing no initial sales load, a higher
distribution fee and a CDSL on redemptions within one year of purchase. See
"Alternative Distribution System" above.
Shares of the Fund may be purchased through any authorized investment dealer.
All orders will be executed at the net asset value per share next computed after
receipt of the purchase order plus, in the case of Class A shares, a sales load
which, except for shares purchased under one of the reduced sales load plans,
will vary with the size of the purchase as shown in the schedule under "Class A
Shares--Initial Sales Load" below.
THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE FUND IS $1,000; SUBSEQUENT
INVESTMENTS MUST BE IN THE MINIMUM AMOUNT OF $100 (EXCEPT FOR INVESTMENT OF
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS). THE FUND RESERVES THE RIGHT TO RETURN
INVESTMENTS THAT DO NOT SATISFY THESE MINIMUMS. EXCEPTIONS TO THESE MINIMUMS ARE
AVAILABLE FOR ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH THE INVEST-A-CHECK(R)
SERVICE OR THE SELIGMAN TIME HORIZON MATRIX(SM).
No purchase order may be placed for Class B shares for an amount of $250,000
or more; or for Class D shares for an amount of $4,000,000 or more.
Orders received by an authorized dealer before the close of the New York
Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern time) and accepted by SFSI
before the close of business (5:00 p.m. Eastern time) on the same day will be
executed at the Fund's net asset value determined as of the close of the NYSE on
that day plus, in the case of Class A shares, the applicable sales load. Orders
received by dealers after the close of the NYSE, or accepted by SFSI after the
close of business, will be executed at the Fund's net asset value as next
determined plus, in the case of Class A shares, the applicable sales load. The
authorized dealer through which a shareholder purchases shares is responsible
for forwarding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire
payment, dealer orders must first be placed through SFSl's order desk and
assigned a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A., ABA #043000261, A/C Seligman Frontier Fund,
Inc. (A or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE
CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons
other than dealers who wish to wire payment should contact Seligman Data Corp.
for specific wire instructions. Although the Fund makes no charge for this
service, the transmitting bank may impose a wire service fee.
Current shareholders may buy additional shares at any time through any
authorized dealer or by sending a check payable to "Seligman Group of Funds"
directly to SELIGMAN DATA CORP., P.O. BOX 3936, NEW YORK, NY 10008-3936. Checks
for investment must be in U.S. dollars drawn on a domestic bank. The check
should be accompanied by an investment slip (provided on the bottom of
shareholder account statements) and include the shareholder's name, address,
account number and class of shares (A, B or D). If a shareholder does not
provide the required information, Seligman Data Corp. will seek further
clarification and may be forced to return the check to the shareholder. Orders
sent directly to Seligman Data Corp. will be executed at the net asset value
next determined after the order is accepted plus, in the case of Class A shares,
the applicable sales load.
Seligman Data Corp. will charge a $10.00 service fee for checks returned to
it as uncollectable. This fee may be deducted from the shareholder's account.
For the protection of the Fund and its shareholders, no redemption of shares
will be permitted with respect to shares purchased by check (unless certified)
until the Fund receives notice that the check has cleared, which may be up to 15
days from the credit of such shares to the shareholder's account.
VALUATION. The net asset value of the Fund's shares is determined as of the
close of trading on the NYSE (normally, 4:00 p.m. Eastern time) each day, Monday
through Friday, except on days that the NYSE is closed. The net asset value is
calculated separately for each class. Securities are valued at current market
prices or, in the absence thereof, at fair value as determined in accordance
with procedures approved by the Fund's Board of Directors. Short-term holdings
maturing in 60 days or less are generally valued at amortized cost if their
10
<PAGE>
original maturity was 60 days or less and securities purchased with maturities
in excess of 60 days which currently have maturities of 60 days or less are
valued by amortizing their fair market value on the 61st day prior to maturity.
Although the legal rights of Class A, Class B and Class D shares are
substantially identical, the different expenses borne by each class will result
in different net asset values and dividends. The net asset value of Class B and
Class D shares will generally be lower than the net asset value of Class A
shares as a result of the higher distribution fee charged to Class B and Class D
shares. In addition, net asset value per share of the three classes will be
affected to the extent any other class expenses differ among classes.
CLASS A SHARES--INITIAL SALES LOAD. Class A shares are subject to an initial
sales load which varies with the size of the purchase as shown in the following
schedule, and an annual service fee of up to .25% of the average daily net asset
value of Class A shares. See "Administration, Shareholder Services and
Distribution Plan" below.
- --------------------------------------------------------------------------------
CLASS A SHARES -- SALES LOAD SCHEDULE
SALES LOAD AS A
PERCENTAGE OF REGULAR
------------------------ DEALER
NET AMOUNT DISCOUNT
INVESTED AS A % OF
OFFERING (NET ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE) 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- 3,999,999 1.00 1.01 .90
4,000,000- or more* 0 0 0
*Dealers may receive a fee of .15% on sales made without a sales load.
- --------------------------------------------------------------------------------
SFSI shall pay broker/dealers, from its own resources, an additional fee in
respect of certain investments in Class A shares of the Seligman Mutual Funds by
an "eligible employee benefit plan" (as defined below under "Special Programs")
which are attributable to the particular broker/dealer. The shares eligible for
the fee are those on which an initial front-end sales load was not paid because
either (i) the participating eligible employee benefit plan has at least $1
million invested in the Seligman Mutual Funds or (ii) the participating employer
has at least 50 eligible employees to whom such plan is made available. The fee,
which is paid monthly, is a percentage of the average daily net asset value of
eligible shares based on the length of time the shares have been invested in a
Seligman Mutual Fund, as follows: for shares held up to 1 year, .50% per annum;
for shares held more than 1 year up to 2 years, .25% per annum; for shares held
from 2 years up to 5 years, .10% per annum; and nothing thereafter.
REDUCED SALES LOADS. Reductions in sales loads apply to purchases of Class A
shares by a "single person," including an individual, members of a family unit
comprising husband, wife and minor children purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any
other fiduciary or individual account.
o VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the Seligman Mutual
Funds that are sold with a front-end sales load reaches levels indicated in the
sales load schedule.
o THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in shares of the other Seligman Mutual Funds sold with a front-end
sales load with the total net asset value of shares of those Seligman Mutual
Funds already owned that were sold with a front-end sales load and the total net
asset value of shares of Seligman Cash Management Fund that were acquired by the
investor through an exchange of shares of another Seligman Mutual Fund on which
there was a front-end sales load to determine reduced sales loads in accordance
with the sales load schedule. An investor or a dealer purchasing shares on
behalf of an investor must indicate whether the investor has existing accounts
when making investments or opening new accounts.
11
<PAGE>
o A LETTER OF INTENT allows an investor to purchase Class A shares over a
13-month period at reduced sales loads, based upon the total amount of shares
the investor expresses an interest in purchasing plus the total net asset value
of shares of the other Seligman Mutual Funds already owned by such investor that
were sold with a front-end sales load and the total net asset value of shares of
Seligman Cash Management Fund that were acquired by an investor through an
exchange of shares of another Seligman Mutual Fund on which there was a
front-end sales load. An investor or a dealer purchasing Class A shares on
behalf of an investor must indicate whether the investor has existing accounts
when making investments or opening new accounts. For more information concerning
terms of Letters of Intent, see "Terms and Conditions" on page 25.
SPECIAL PROGRAMS. The Fund may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees and their spouses
(and family members of the foregoing) of the Fund, the other investment
companies in the Seligman Group, the Manager and other companies affiliated with
the Manager. Family members are defined to include lineal descendants and lineal
ancestors, siblings (and their spouses and children) and any company or
organization controlled by any of the foregoing. Such sales also may be made to
employee benefit and thrift plans for such persons and to any investment
advisory, custodial, trust or other fiduciary account managed or advised by the
Manager or any affiliate.
Class A shares also may be issued without a sales load in connection with the
acquisition of cash and securities owned by other investment companies and
personal holding companies; to any registered unit investment trust which is the
issuer of periodic payment plan certificates, the net proceeds of which are
invested in Fund shares; to separate accounts established and maintained by an
insurance company which are exempt from registration under Section 3(c)(11) of
the 1940 Act; to registered representatives and employees (and their spouses and
minor children) of any dealer that has a sales agreement with SFSI; to
shareholders of mutual funds with objectives similar to the Fund who purchase
shares with redemption proceeds of such funds; to financial institution trust
departments; to registered investment advisers exercising discretionary
investment authority with respect to the purchase of Fund shares; to accounts of
financial institutions or broker/dealers that charge account management fees,
provided the Manager or one of its affiliates has entered into an agreement with
respect to such accounts; pursuant to sponsored arrangements with organizations
which make recommendations to, or permit group solicitation of, its employees,
members or participants in connection with the purchase of shares of the Fund;
and to "eligible employee benefit plans" (i) which have at least $1 million
invested in the Seligman Group of Mutual Funds or (ii) of employers who have at
least 50 eligible employees to whom such plan is made available and, regardless
of the number of employees, if such plan is established and maintained by any
dealer that has a sales agreement with SFSI. An "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. Participants in such plans are
eligible for reduced sales loads based solely on their individual investments.
CLASS B SHARES. Class B shares are sold without an initial sales load but are
subject to a CDSL if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
YEARS SINCE PURCHASE CDSL
- -------------------- ----
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%
12
<PAGE>
Class B shares are also subject to an annual distribution fee of up to .75%
and an annual service fee of up to .25% of the average daily net asset value of
the Class B shares. SFSI will make a 4% payment to dealers in respect of
purchases of Class B shares. Approximately eight years after purchase, Class B
shares will convert automatically into Class A shares of the Fund, which are
subject to an annual service fee of .25% but no distribution fee. Shares
purchased through reinvestment of dividends and distributions on Class B shares
also will convert automatically to Class A shares along with the underlying
shares on which they were earned. Conversion occurs at the end of the month
which precedes the eighth anniversary of the purchase date. If Class B shares of
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 CDSL
schedule if such schedule is higher or longer than the CDSL schedule relating to
the new Class B shares. In addition, Class B shares of the Fund acquired by
exchange will be subject to the Fund's CDSL schedule if such schedule is higher
or longer than the CDSL schedule relating to the Class B shares of the fund from
which the exchange has been made.
CLASS D SHARES. Class D shares are sold without an initial sales load but are
subject to a CDSL if the shares are redeemed within one year, an annual
distribution fee of up to .75% and an annual service fee of up to .25%, of the
average daily net asset value of the Class D shares. SFSI will make a 1% payment
to dealers in respect of purchases of Class D shares. Unlike Class B shares,
Class D shares do not automatically convert to Class A shares after eight years.
CONTINGENT DEFERRED SALES LOAD. A CDSL will be imposed on any redemption of
Class B or Class D shares which were purchased during the preceding six years
(for Class B shares) or twelve months (for Class D shares); however, no such
charge will be imposed on shares acquired through the investment of dividends or
distributions from any Class B or Class D shares of mutual funds within the
Seligman Group. The amount of any CDSL will initially be used by SFSI to defray
the expense of the payment of 4% (in the case of Class B shares) or 1% (in the
case of Class D shares) made by it to Service Organizations (as defined under
"Administration, Shareholder Services And Distribution Plan") at the time of
sale.
To minimize the application of a CDSL to a redemption, shares acquired
pursuant to the investment of dividends and distributions (which are not subject
to a CDSL) will be redeemed first; followed by shares purchased at least six
years prior to redemption (in the case of Class B shares) or one year prior to
redemption (in the case of Class D shares). Shares held for the longest period
of time within the applicable one year period will then be redeemed.
Additionally, for those shares determined to be subject to the CDSL, the
application of the 1% CDSL will be made to the current net asset value or
original purchase price, whichever is less.
For example, assume an investor purchased 100 Class D shares in January at a
price of $10.00 per share. During the first year, 5 additional Class D shares
were acquired through investment of dividends and distributions. In January of
the following year, an additional 50 Class D shares are purchased at a price of
$12.00 per share. In March of that year, the investor chooses to redeem
$1,500.00 from the account which now holds 155 Class D shares with a total value
of $1,898.75 ($12.25 per share). The CDSL for this transaction would be
calculated as follows:
Total shares to be redeemed
(122.449 @ $12.25) as follows: $1,500.00
=========
Dividend/Distribution shares
(5 @ $12.25) $ 61.25
Shares over 1 year old
(100 @ $12.25) 1,225.00
Shares less than 1 year old subject to
CDSL (17.449 @ $12.25) 213.75
---------
Gross proceeds of redemption $1,500.00
Less CDSL (17.449 shares @ $12.00 =
$209.39 x 1% = $2.09) (2.09)
Net proceeds of redemption $1,497.91
=========
For federal income tax purposes, the amount of the CDSL will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
13
<PAGE>
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as
defined in section 72(m)(7) of the Internal Revenue Code of 1986, as amended
(the "Code"); (b) in connection with (i) distributions from retirement plans
qualified under section 401(a) of the 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), (ii)
distributions from a custodial account under section 403 (b)(7) of the Code or
an individual retirement account (an "IRA") due to death, disability, or
attainment of age 591/2, and (iii) a tax-free return of an excess contribution
to an IRA; (c) in whole or in part, in connection with shares sold to current
and retired Directors of the Fund; (d) in whole or in part, in connection with
shares sold to any state, county, or city or any instrumentality, department,
authority, or agency thereof, which is prohibited by applicable investment laws
from paying a sales load or commission in connection with the purchase of shares
of any registered investment management company; (e) pursuant to an automatic
cash withdrawal service; and (f) in connection with the redemption of Class B or
Class D shares of the Fund if the Fund is combined with another mutual fund in
the Seligman Group, or another similar reorganization transaction.
If, with respect to a redemption of any Class B or Class D shares sold by a
dealer, the CDSL is waived because the redemption qualifies for a waiver as set
forth above, the dealer shall remit to SFSI promptly upon notice, an amount
equal to the payment or a portion of the payment made by SFSI at the time of
sale of such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the mutual funds in the Seligman Group. SFSI may from time to time pay
a bonus or other incentive to dealers that sell shares of the Seligman Mutual
Funds. In some instances, these bonuses or incentives may be offered only to
certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by the Manager during a specified period of time. Such bonus or
other incentive may take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives and members of their families to places within or outside the
United States. The cost to SFSI of such promotional activities and payments
shall be consistent with the rules of the National Association of Securities
Dealers, Inc., as then in effect.
TELEPHONE TRANSACTIONS
A shareholder with telephone transaction privileges, AND THE SHAREHOLDER'S
BROKER/DEALER REPRESENTATIVE, will have the ability to effect the following
transactions via telephone: (i) redemption of Fund shares, (ii) exchange of Fund
shares for shares of the same class of another Seligman Mutual Fund, (iii)
change of a dividend and/or capital gain distribution option, and (iv) change of
address. All telephone transactions are effected through Seligman Data Corp. at
(800) 221-2450.
For investors who purchase shares by completing and submitting an Account
Application (except those accounts registered as trusts (unless the trustee and
sole beneficiary are the same person), corporations or group retirement plans):
Unless an election is made otherwise on the Account Application, a shareholder
and the shareholder's broker/dealer of record, as designated on the Account
Application, will automatically receive telephone services.
For investors who purchase shares through a broker/dealer: Telephone services
for a shareholder and the shareholder's broker/dealer representative may be
elected by completing a supplemental election application available from the
broker-dealer of record.
For accounts registered as IRAs: Telephone services will include only
exchanges or address changes.
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For accounts registered as trusts (unless the trustee and sole beneficiary
are the same person), corporations or group retirement plans: Telephone
redemptions are not permitted. Additionally, group retirement plans are not
permitted to change a divident or gain distribution option.
All Seligman Mutual Fund accounts with the same account number (i.e.,
registered exactly the same), including any new Seligman Mutual Fund in which
the shareholder invests in the future, will automatically include telephone
services if the existing account has telephone services. Telephone services may
also be elected at any time on a supplemental application.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or requesting
telephone services, authorizes each of the other owners to effect telephone
transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative may experience difficulty in contacting Seligman
Data Corp. to request a redemption or exchange of Fund shares via telephone. In
these circumstances, the shareholder should consider using other redemption or
exchange procedures. Use of these other redemption or exchange procedures will
result in the request being processed at a later time than if a telephone
transaction had been used, and the Fund's net asset value may fluctuate during
such periods.
The Fund and Seligman Data Corp. will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. These will include
recording all telephone calls requesting account activity, requiring that the
caller provide certain requested personal and/or account information at the time
of the call for the purpose of establishing the caller's identity, and sending a
written confirmation of redemptions, exchanges or address changes to the address
of record each time activity is initiated by telephone. As long as the Fund and
Seligman Data Corp. follow instructions communicated by telephone that were
reasonably believed to be genuine at the time of their receipt, neither they nor
any of their affiliates will be liable for any loss to the shareholder caused by
an unauthorized transaction. In any instance where the Fund or Seligman Data
Corp. is not reasonably satisfied that instructions received by telephone are
genuine, the requested transaction will not be executed, and neither they nor
any of their affiliates will be liable for any losses which may occur due to a
delay in implementing the transaction. If the Fund or Seligman Data Corp. does
not follow the procedures described above, the Fund or Seligman Data Corp. may
be liable for any losses due to unauthorized or fraudulent instructions.
Telephone transactions must be effected through a representative of Seligman
Data Corp., i.e., requests may not be communicated via Seligman Data Corp.'s
automated telephone answering system. Shareholders, of course, may refuse or
cancel telephone services. Telephone services may be terminated by a shareholder
at any time by sending a written request to Seligman Data Corp. TELEPHONE
SERVICES MAY NOT BE ESTABLISHED BY A SHAREHOLDER'S BROKER/DEALER WITHOUT THE
WRITTEN AUTHORIZATION OF THE SHAREHOLDER. Written acknowledgment of termination
of telephone transaction services will be sent to the shareholder at the address
of record.
REDEMPTION OF SHARES
A shareholder may redeem shares held in book credit form without charge,
except a CDSL, if applicable, at any time by SENDING A WRITTEN REQUEST to
Seligman Data Corp., 100 Park Avenue, New York, NY 10017. The redemption request
must be signed by all persons in whose name the shares are registered. A
shareholder may redeem shares that are not in book credit form by surrendering
certificates in proper form to the same address. Certificates should be sent by
registered mail. Share certificates must be endorsed for transfer or accompanied
by an endorsed stock power signed by the person(s) whose name(s) appear(s) on
the face of the certificate. The shareholder's letter of instruction or endorsed
stock power should specify the Fund name, account number, class of shares (A, B
or D) and the number of shares or dollar amount to be redeemed. The Fund cannot
accept conditional redemption requests. If the redemption proceeds are (i)
$50,000 or more, (ii) to be paid to someone other than the shareholder of record
(regardless of the amount) or (iii) to be mailed to other than the address of
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record (regardless of the amount), the signature(s) of the shareholder(s) must
be guaranteed by an eligible financial institution including, but not limited
to, the following: banks, trust companies, credit unions, securities brokers and
dealers, savings and loan associations and participants in the Securities
Transfer Association Medallion Program (STAMP), the Stock Exchanges Medallion
Program (SEMP) or the New York Stock Exchange Medallion Signature Program (MSP).
The Fund reserves the right to reject a signature guarantee where it is believed
that the Fund will be placed at risk by accepting such guarantee. A signature
guarantee is also necessary in order to change the account registration.
Notarization by a notary public is not an acceptable signature guarantee.
ADDITIONAL DOCUMENTATION MAY BE REQUIRED BY SELIGMAN DATA CORP. IN THE EVENT OF
A REDEMPTION BY CORPORATIONS, EXECUTORS, ADMINISTRATORS, TRUSTEES, CUSTODIANS OR
RETIREMENT PLANS. FOR FURTHER INFORMATION WITH RESPECT TO REDEMPTION
REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES DEPARTMENT OF SELIGMAN
DATA CORP. FOR ASSISTANCE.
In the case of Class A shares and in Class B shares redeemed after six years
and the case of Class D shares redeemed after one year, a shareholder will
receive the net asset value per share next determined after receipt of a request
in good order. If Class B shares are redeemed within six years of purchase, a
shareholder will receive the net asset value per share next determined after
receipt of a request in good order less the applicable CDSL as described under
"Purchase Of Shares--Class B shares" above. If Class D shares are redeemed
within one year of purchase, a shareholder will receive the net asset value per
share next determined after receipt of a request in good order, less a CDSL of
1% as described under "Purchase Of Shares--Class D Shares" above.
A shareholder also may "sell" shares to the Fund through an investment dealer
and, in that way, be certain, providing the order is timely, of receiving the
net asset value established at the end of the day on which the dealer is given
the repurchase order (less any applicable CDSL in the case of Class D shares).
The Fund makes no charge for this transaction, but the unaffiliated dealer may
charge a service fee. "Sell" or repurchase orders received from an authorized
dealer before the close of the NYSE and received by SFSI, the repurchase agent,
before the close of business on the same day will be executed at the net asset
value per share determined as of the close of the NYSE on that day, less any
applicable CDSL. Repurchase orders received from authorized dealers after the
close of the NYSE or not received by SFSI prior to the close of business will be
executed at the net asset value determined as of the close of the NYSE on the
next trading day, less any applicable CDSL. Shares held in a "street name"
account with a broker/dealer may be sold to the Fund only through a
broker/dealer.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares may be
made once per day, in an amount of up to $50,000 per account. Telephone
redemption requests received by Seligman Data Corp. at (800) 221-2450 between
8:30 a.m. and 4:00 p.m. Eastern time, on any business day will be processed as
of the close of business on that day. Redemption requests by telephone will not
be accepted within 30 days following an address change. Keogh Plans, IRAs or
other retirement plans are not eligible for telephone redemptions. The Fund
reserves the right to suspend or terminate its telephone redemption service at
any time without notice.
For more information about telephone redemptions, and the circumstances under
which shareholders may bear the risk of loss for a fraudulent transaction, see
"Telephone Transactions" above.
GENERAL. With respect to shares redeemed, a check for the proceeds will be
sent to the shareholder's address of record within seven calendar days after
acceptance of the redemption order and will be made payable to all of the
registered owners on the account. With respect to shares repurchased by the
Fund, a check for the proceeds will be sent to the investment dealer within
seven calendar days after acceptance of the repurchase order and will be made
payable to the investment dealer. The Fund will not permit redemptions of shares
with respect to shares purchased by check (unless certified) until the Fund
receives notice that the check has cleared, which may be up to 15 days from the
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<PAGE>
credit of such shares to the shareholder's account. The proceeds of a redemption
or repurchase may be more or less than the shareholder's cost.
The Fund reserves the right to redeem shares of the Fund owned by a
shareholder whose investment in the Fund has a value of less than a minimum
amount specified by the Fund's Board of Directors, which is presently $500.
Shareholders would be sent a notice before such redemption is processed stating
that the value of the investment in the Fund is less than the specified minimum
and that they have sixty days to make an additional investment.
REINSTATEMENT PRIVILEGE. If a shareholder redeems Class A shares and then
decides to reinvest them, or to shift the investment to one of the other
Seligman Mutual Funds, the shareholder may, within 120 calendar days of the date
of redemption, use all or any part of the proceeds of the redemption to
reinstate, free of sales load, all or any part of the investment in shares of
the Fund or in shares of any of the other Seligman Mutual Funds. If a
shareholder redeems Class B or Class D shares and the redemption was subject to
a CDSL, the shareholder may reinstate the investment in shares of the same class
of the Fund or any of the other Seligman Mutual Funds within 120 calendar days
of the date of redemption and receive a credit for the CDSL paid. Such
investment will be reinstated at the net asset value per share established as of
the close of the NYSE on the day the request is received. Seligman Data Corp.
must be informed that the purchase represents a reinstated investment.
REINSTATED SHARES MUST BE REGISTERED EXACTLY AND BE OF THE SAME CLASS AS THE
SHARES PREVIOUSLY REDEEMED.
Generally, exercise of the Reinstatement Privilege does not alter the federal
income tax status of any capital gain realized on a sale of Fund shares, but to
the extent that any shares are sold at a loss and the proceeds are reinvested in
shares of the same fund, some or all of the loss will not be allowed as a
deduction, depending upon the percentage of the proceeds reinvested.
ADMINISTRATION, SHAREHOLDER SERVICES
AND DISTRIBUTION PLAN
Under the Fund's Administration, Shareholder Services and Distribution Plan
(the "Plan") the Fund may pay to SFSI an administration, shareholder services
and distribution fee in respect of the Fund's Class A, Class B and Class D
shares. Payments under the Plan may include, but are not limited to: (i)
compensation to securities dealers and other organizations ("Service
Organizations") for providing distribution assistance with respect to assets
invested in the Fund, (ii) compensation to Service Organizations for providing
administration, accounting and other shareholder services with respect to Fund
shareholders, and (iii) otherwise promoting the sale of shares of the Fund,
including paying for the preparation of advertising and sales literature and the
printing and distribution of such promotional materials and prospectuses to
prospective investors and defraying SFSl's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. The Manager, in its sole
discretion, may also make similar payments to SFSI from its own resources, which
may include the management fee that the Manager receives from the Fund.
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of Class A shares. It is expected that the proceeds from the fee in
respect of Class A shares will be used primarily to compensate Service
Organizations which enter into agreements with SFSI. Such Service Organizations
will receive from SFSI a continuing fee of up to .25% on an annual basis,
payable quarterly, of the average daily net assets of Class A shares
attributable to the particular Service Organization for providing personal
service and/or the maintenance of shareholder accounts. The fee payable from
time to time is, within such limit, determined by the Directors of the Fund.
The Plan as it relates to Class A shares, was approved by the Directors on
March 19, 1992 and by the shareholders of the Fund at a special meeting held on
May 1,1992. The Plan became effective on June 1,1992. The Plan is reviewed by
the Directors annually. The total amount paid for the year ended September 30,
1995 in respect of the Fund's Class A shares pursuant to the Plan was equal to
.16% of the Class A shares' average daily net assets.
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<PAGE>
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class B and Class D shares at an annual rate of up to 1% of the average daily
net asset value of the Class B and Class D shares. Proceeds from the Class B and
Class D distribution fees are used primarily to compensate Service Organizations
for administration, shareholder services and distribution assistance (including
a continuing fee of up to .25% on an annual basis of the average daily net asset
value of Class B and Class D shares attributable to particular Service
Organizations for providing personal service and/or the maintenance of
shareholder accounts) and will initially be used by SFSI to defray the expense
of the payment of 4% (in the case of Class B shares) or 1% (in the case of Class
D shares) made by it to Service Organizations at the time of the sale. The
amounts expended by SFSI in any one year upon the initial purchase of Class B
and Class D shares may exceed the amounts received by it from Plan payments
retained. Expenses of administration, shareholder services and distribution of
Class B and Class D shares in one fiscal year of the Fund may be paid from Class
B and Class D Plan fees, respectively, received from the Fund in any other
fiscal year.
The Plan as it relates to Class D shares, was approved by the Directors on
March 18, 1993 and became effective May 1,1993. The Plan is reviewed by the
Directors annually. The total amount paid for the year ended September 30, 1995
by the Fund's Class D shares pursuant to the Plan was 1% per annum of the
average daily net assets of Class D shares. The Plan as it relates to Class B
shares was approved by the Directors on March 21, 1996. The Plan is reviewed by
the Directors annually.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI acts as a broker/dealer of record for shareholder
accounts that do not have a designated broker/dealer of record and receives
compensation from the Fund pursuant to the Plan for providing personal services
and account maintenance to such accounts and other distribution services.
EXCHANGE PRIVILEGE
A shareholder of the Fund may, without charge, exchange at net asset value
any part or all of an investment in the Fund for shares of any of the other
mutual funds in the Seligman Group. Exchanges may be made by mail, or by
telephone if the shareholder has telephone services.
Class A, Class B and Class D shares may be exchanged only for Class A, Class
B and Class D shares, respectively, of another Seligman Mutual Fund on the basis
of relative net asset value.
If Class B or Class D shares that are subject to a CDSL are exchanged for
Class B or Class D shares, respectively, of another Seligman Mutual Fund, then
for purposes of assessing the CDSL payable upon disposition of the exchanged
Class B or Class D shares, the applicable holding period shall be reduced by the
holding period of the original Class B or Class D shares.
Class B shareholders of the Fund exercising the exchange privilege will
continue to be subject to the Fund's CDSL schedule if such schedule is higher or
longer than the CDSL schedule relating to the new Class B shares. In addition,
Class B shares of the Fund acquired through use of the exchange privilege will
be subject to the Fund's CDSL schedule if such schedule is higher or longer than
the CDSL schedule relating to the Class B shares of the fund from which the
exchange has been made.
The Seligman Mutual Funds available under the Exchange Privilege are:
o SELIGMAN CAPITAL FUND, INC. seeks aggressive capital appreciation. Current
income is not an objective.
o SELIGMAN CASH MANAGEMENT FUND, INC. invests in high-quality money market
instruments. Shares are sold at net asset value.
o SELIGMAN COMMON STOCK FUND, INC. seeks favorable current income and
long-term growth of both income and capital value without exposing capital to
undue risk.
o SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC. invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective.
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<PAGE>
o SELIGMAN GROWTH FUND, INC. seeks longer term growth in capital value and an
increase in future income.
o SELIGMAN HENDERSON GLOBAL FUND SERIES, INC. consists of the Seligman
Henderson Global Growth Opportunities Fund, the Seligman Henderson Global
Smaller Companies Fund, the Seligman Henderson Global Technology Fund and the
Seligman Henderson International Fund, all of which seek long-term capital
appreciation primarily through investing in companies either globally or
internationally.
o SELIGMAN HIGH INCOME FUND SERIES seeks high current income by investing in
debt securities. The fund consists of the U.S. Government Securities Series
(which does not currently offer Class B shares) and the High-Yield Bond Series.
o SELIGMAN INCOME FUND, INC. seeks high current income and the possibility of
improvement of future income and capital value.
o SELIGMAN NEW JERSEY TAX-EXEMPT FUND, Inc. invests in investment grade New
Jersey tax-exempt securities. (Does not currently offer Class B shares.)
o SELIGMAN PENNSYLVANIA TAX-EXEMPT FUND SERIES invests in investment grade
Pennsylvania tax-exempt securities. (Does not currently offer Class B shares.)
o SELIGMAN TAX-EXEMPT FUND SERIES, INC. consists of several State Series and
a National Series. The National Tax-Exempt Series seeks to provide maximum
income exempt from Federal income taxes; individual state series, each seeking
to maximize income exempt from Federal income taxes and from personal income
taxes in designated states, are available for Colorado, Georgia, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon
and South Carolina. (Does not currently offer Class B shares.)
o SELIGMAN TAX-EXEMPT SERIES TRUST includes the California Tax-Exempt Quality
Series, the California Tax- Exempt High-Yield Series, the Florida Tax-Exempt
Series and the North Carolina Tax-Exempt Series, each of which invests in
tax-exempt securities of its designated state. (Does not currently offer Class B
shares.)
All permitted exchanges will be based on the net asset values of the
respective funds determined at the close of the NYSE on that day. Telephone
requests for exchanges received between 8:30 a.m. and 4:00 p.m. Eastern time on
any business day, by Seligman Data Corp. at (800) 221-2450 will be processed as
of the close of business on that day. The registration of an account into which
an exchange is made must be identical to the registration of the account from
which shares are exchanged. When establishing a new account by an exchange of
shares, the shares being exchanged must have a value of at least the minimum
initial investment required by the fund into which the exchange is being made.
The method of receiving distributions, unless otherwise indicated, will be
carried over to the new fund account, as will telephone services. Account
services, such as Invest-A-Check(R) Service, Directed Dividends and Automatic
Cash Withdrawal Service will not be carried over to the new fund account unless
specifically requested and permitted by the new fund. Exchange orders may be
placed to effect an exchange of a specific number of shares, an exchange of
shares equal to a specific dollar amount or an exchange of all shares held.
Shares for which certificates have been issued may not be exchanged via
telephone and may be exchanged only upon receipt of an exchange request together
with certificates representing shares to be exchanged in proper form.
The Exchange Privilege via mail is generally applicable to investments in
group retirement plans, although some restrictions may apply. The terms of the
exchange offer described herein may be modified at any time; and not all of the
mutual funds in the Seligman Group are available to residents of all states.
Before making any exchange, a shareholder should contact an authorized
investment dealer or Seligman Data Corp. to obtain prospectuses of any of the
Seligman Mutual Funds.
A broker/dealer representative of record will be able to effect exchanges on
behalf of a shareholder only if the shareholder has telephone services or if the
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broker/dealer has entered into a Telephone Exchange Agreement with SFSI wherein
the broker/dealer must agree to indemnify SFSI and the Seligman Mutual Funds
from any loss or liability incurred as a result of the acceptance of telephone
exchange orders.
Written confirmation of all exchanges will be forwarded to the shareholder to
whom the exchanged shares are registered and a duplicate confirmation will be
sent to the broker/dealer of record listed on the account. SFSI reserves the
right to reject any telephone exchange request. Any rejected telephone exchange
order may be processed by mail. For more information about telephone exchanges,
which, unless objected to, are assigned to certain shareholders automatically,
and the circumstances under which shareholders may bear the risk of loss for a
fraudulent transaction, see "Telephone Transactions" above.
Exchanges of shares are sales and may result in a gain or loss for Federal
income tax purposes.
FURTHER INFORMATION ABOUT TRANSACTIONS IN THE FUND
Because excessive trading (including short-term, "market timing" trading) can
hurt the Fund's performance, the Fund may refuse any exchange (1) from any
shareholder account from which there have been two exchanges in the preceding
three month period, or (2) where the exchanged shares equal in value the lesser
of $1,000,000 or 1% of the Fund's net assets. The Fund may also refuse any
exchange or purchase order from any shareholder account if the shareholder or
the shareholder's broker/dealer has been advised that previous patterns of
purchases and redemptions or exchanges have been considered excessive. Accounts
under common ownership or control, including those with the same taxpayer ID
number and those administered so as to redeem or purchase shares based upon
certain predetermined market indicators, will be considered one account for this
purpose. Additionally, the Fund reserves the right to refuse any order for the
purchase of shares.
DIVIDENDS AND DISTRIBUTIONS
Dividends payable from the Fund's net investment income, if any, are
distributed annually. Payments vary in amount depending on income received from
portfolio securities and the cost of operations. The Fund distributes
substantially all of any taxable net long-term and short-term gain realized on
investments to shareholders at least annually; such distributions will generally
be taxable to shareholders in the year in which they are declared by the Fund if
paid before February 1 of the following year.
Shareholders may elect: (1) to receive both dividends and gain distributions
in shares; (2) to receive dividends in cash and gain distributions in shares; or
(3) to receive both dividends and gain distributions in cash. Cash dividends and
gain distributions are paid by check. If the payment option you prefer is not
listed, contact Seligman Data Corp. to request information on other available
options. In the case of prototype retirement plans, dividends and capital gain
distributions are reinvested in additional shares. Unless another election is
made, dividends and capital gain distributions will be credited to shareholder
accounts in additional shares of the Fund. Shares acquired through a dividend or
gain distribution and credited to a shareholder's account are not subject to an
initial sales load or a CDSL. Dividends and gain distributions paid in shares
are invested on the payable date using the net asset value of the ex-dividend
date. Shareholders may elect to change their dividend and gain distribution
options by writing Seligman Data Corp. at the address listed below. If the
shareholder has telephone services, changes may also be telephoned to Seligman
Data Corp. between 8:30 a.m. and 6:00 p.m. Eastern time, by either the
shareholder or the broker/dealer of record on the account. For information about
telephone services, see "Telephone Transactions." These elections must be
received by Seligman Data Corp. before the record date for the dividend or
distribution in order to be effective for such dividend or distribution.
The per share dividends from net investment income on Class B and Class D
shares will be lower than the per share dividends on Class A shares as a result
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<PAGE>
of the higher distribution fee applicable with respect to Class B and Class D
shares. Per share dividends of the three classes may also differ as a result of
differing class expenses, if any. Distributions of net capital gains, if any,
will be paid in the same amount for Class A, Class B and Class D shares. See
"Purchase Of Shares--Valuation."
Shareholders exchanging shares of a mutual fund for shares of another mutual
fund in the Seligman Group will continue to receive dividends and gains as
elected prior to such exchange unless otherwise specified. In the event that a
shareholder redeems all shares in an account between the record date and the
payable date, the value of dividends or gain distributions declared and payable
will be paid in cash regardless of the existing election.
FEDERAL INCOME TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Code. For each year so qualified, the Fund will not be subject to
Federal income taxes on its net investment income and capital gains, if any,
realized during any taxable year, which it distributes to its shareholders,
provided that at least 90% of its net investment income and net short-term
capital gains are distributed to shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to the shareholders, whether
received in cash or reinvested in additional shares and, 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 shares have been held by the shareholders; 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.
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
28%. Net capital gain of a corporate shareholder is taxed at the same rate as
ordinary income. However, if shares on which a long-term capital gain
distribution has been received are subsequently sold or redeemed and such shares
have been held for six months or less, any loss realized will be treated as
long-term capital loss to the extent that it offsets the long-term capital gain
distribution. In addition, no loss will be allowed on the sale or other
disposition of shares of the Fund if, within a period beginning 30 days before
the date of such sale or disposition and ending 30 days after such date, the
holder acquires (such as through dividend reinvestment) securities that are
substantially identical to the shares of the Fund.
In determining gain or loss on shares of the Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales load incurred
in acquiring such shares to the extent of any subsequent reduction of the sales
load by reason of the Exchange or Reinstatement Privilege offered by the Fund.
Any sales load not taken into account in determining the tax basis of shares
sold or exchanged within 90 days after acquisition will be added to the
shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
The Fund will generally be subject to an excise tax of 4% on the amount of
any income or capital gains, above certain permitted levels, distributed to
shareholders on a basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned by the Fund.
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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 advisers 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 U.S. 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.
SHAREHOLDER INFORMATION
Shareholders will be sent reports quarterly regarding the Fund. General
information about the Fund may be requested by writing the Corporate
Communications/Investor Relations Department, J. & W. Seligman & Co.
Incorporated, 100 Park Avenue, New York, NY 10017 or telephoning the Corporate
Communications/Investor Relations Department toll-free by dialing (800) 221-7844
from all continental United States, except New York or (212) 850-1864 in New
York State and the Greater New York City area. Information about a shareholder
account (other than a retirement plan account), may be requested by writing the
Shareholder Services Department, Seligman Data Corp. at the same address or by
toll-free telephone by dialing (800) 221-2450 from all continental United
States. For information about a retirement account, call Pension Plan Services
toll-free by dialing (800) 445-1777 or write Pension Plan Services, Seligman
Data Corp. at the address above. Seligman Data Corp. may be telephoned Monday
through Friday (except holidays) between the hours of 8:30 a.m. and 6:00 p.m.
Eastern time and calls will be answered by a service representative.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, YIELD, ACCOUNT BALANCE,
MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT STATEMENTS
AND FORM 1099-DIV CAN BE ORDERED. TO INSURE PROMPT DELIVERY OF DISTRIBUTION
CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION, SELIGMAN DATA CORP. SHOULD BE
NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS CHANGE. ADDRESS CHANGES MAY BE
TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS TELEPHONE SERVICES. FOR
MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE "TELEPHONE TRANSACTIONS" ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial
transactions. Special investor services are available. These include:
o INVEST-A-CHECK(R) enables a shareholder to authorize additional purchases
of shares automatically by electronic funds transfer from a savings or checking
account if the bank that maintains the account is a member of the Automated
Clearing House ("ACH"), or by preauthorized checks to be drawn on the
shareholder's checking account at regular monthly intervals in fixed amounts of
$100 or more per fund, or regular quarterly intervals in fixed amounts of $250
or more per fund, to purchase shares. Accounts may be established concurrently
with the Invest-A-Check(R) Service only if accompanied by a $100 minimum
investment in conjunction with the monthly investment option, or a $250 minimum
investment in conjunction with the quarterly investment option. (See "Terms and
Conditions" on page 25.)
22
<PAGE>
o AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder of Seligman
Cash Management Fund to exchange a specified amount at regular monthly intervals
in fixed amounts of $100 or more per fund, or regular quarterly intervals in
fixed amounts of $250 or more per fund, from shares of any class of the Cash
Management Fund, into shares of the same class of any other Seligman Mutual
Fund, registered in the same name. The shareholder's Cash Management Fund
account must have a dollar value of at least $5,000 at the initiation of the
service. Exchanges will be made at the public offering price.
o DIVIDENDS FROM OTHER INVESTMENTS permits a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Fund. (Dividend checks must meet or exceed the required minimum
purchase amount and include the shareholder's name, account number, the name of
the fund and the class of shares in which the investment is to be made.)
o AUTOMATIC CD TRANSFER SERVICE permits a shareholder to instruct a bank to
invest the proceeds of a maturing bank certificate of deposit ("CD") in shares
of any designated Seligman Mutual Fund. Shareholders who wish to use this
service should contact Seligman Data Corp. or a broker to obtain the necessary
documentation. Banks may charge a penalty on CD assets withdrawn prior to
maturity. Accordingly, it will not normally be advisable to liquidate a CD
before its maturity.
o AUTOMATIC CASH WITHDRAWAL SERVICE permits payments at regular intervals to
be made to a shareholder who owns or purchases shares worth $5,000 or more held
as book credits. Holders of Class B shares may elect to use this service
immediately, although certain withdrawals may be subject to CDSL. Please contact
Seligman Data Corp. at (800) 221-2450 for more information. Holders of Class D
shares may elect to use this service with respect to shares that have been held
for at least one year. (See "Terms and Conditions" on page 25.)
o DIRECTED DIVIDENDS allows a shareholder to pay dividends to another person
or to direct the payment of such dividends to another Seligman Mutual Fund for
purchase at net asset value. Dividends on Class A, Class B and Class D shares
may be directed only to shares of the same class of another Seligman Mutual
Fund.
o OVERNIGHT DELIVERY to service shareholder requests is available for a
$15.00 fee which may be debited from a shareholder's account, if requested.
o COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for prior years are available for a fee of $10.00 per year, per
account, with a maximum charge of $150 per account. Statement requests should be
forwarded, along with a check, to Seligman Data Corp.
TAX-DEFERRED RETIREMENT PLANS. Shares of the Fund may be purchased for all
types of tax-deferred retirement plans. SFSI makes available plans, plan forms
and custody agreements for:
--Individual Retirement Accounts (IRAs);
--Simplified Employee Pension Plans (SEPs);
--Section 401(k) Plans for corporations and their employees;
--Section 403(b)(7) Plans for employees of public school systems and certain
non-profit organizations who wish to make deferred compensation arrangements;
and
--Pension and Profit Sharing Plans for sole proprietorships, corporations and
partnerships.
These types of plans may be established only upon receipt of a written
application form. The Fund may register an IRA investment for which an account
application has not been received as an ordinary taxable account.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, NY 10017 or telephone toll-free (800) 445-1777 from
all continental United States. You also may receive information through an
authorized dealer.
23
<PAGE>
ADVERTISING THE FUND'S PERFORMANCE
From time to time the Fund advertises its "total return" and "average annual
total return," each of which is calculated separately for Class A, Class B and
Class D shares. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" shows what an
investment in shares of Class A, Class B and Class D of the Fund would have
earned over a specified period of time (for example, one, five and ten year
periods or since inception) assuming the payment of the maximum sales load, if
any (or CDSL upon redemption, if applicable), when the investment was made and
that all distributions and dividends paid by the Fund were reinvested on the
reinvestment dates during the period. The "average annual total return" is the
annual rate required for the initial payment to grow to the amount which would
be received at the end of the specified period (one, five and ten year periods
or since inception); i.e., the average annual compound rate of return. The total
return and average annual total return of Class A shares quoted from time to
time including periods through June 1,1992, do not reflect the deduction of the
administration, shareholder services and distribution fee, which if reflected
would reduce the performance quoted. The total return and average annual return
quoted from time to time for both Class A and Class D shares for periods prior
to January 1, 1996 do not reflect the increase in the management fee payable by
the Fund effective on such date, which if reflected would reduce the performance
quoted. Total return and average annual total return may also be presented
without the effect of the initial sales load or CDSL, as applicable.
From time to time, reference may be made in advertising or promotional
material to performance information, including mutual fund rankings, prepared by
Lipper Analytical Service, Inc. ("Lipper"), an independent reporting service
which monitors the performance of mutual funds. In calculating the total return
of the Fund's Class A, Class B and Class D shares, the Lipper analysis assumes
investment of all dividends and distributions paid but does not take into
account applicable sales loads. The Fund may also refer in advertisements or in
other promotional material to articles, comments, listings and columns in the
financial press pertaining to the Fund's performance. Examples of such financial
and other press publications include Barron's, Business Week, CDA/ 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.
ORGANIZATION AND CAPITALIZATION
The Fund is an open-end investment company incorporated under the laws of the
state of Maryland on July 9, 1984. The Fund is authorized to issue 500,000,000
shares of capital stock, each with a par value of $0.10 divided into three
classes. Each share of the Fund's Class A, Class B and Class D common stock is
equal as to earnings, assets and voting privileges, except that each class bears
its own separate distribution and, potentially, certain other class expenses and
has exclusive voting rights with respect to any matter to which a separate vote
of any class is required by the 1940 Act or Maryland law. The Fund has adopted a
plan (the "Multiclass Plan") pursuant to Rule 18f-3 under the 1940 Act
permitting the issuance and sale of multiple classes of common stock. In
accordance with the Articles of 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.
24
<PAGE>
TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares, including fractions to the third
decimal place, as can be purchased at the net asset value plus a sales load, if
applicable, at the close of business on the day payment is received. If a check
in payment of a purchase of Fund shares is dishonored for any reason, Seligman
Data Corp. will cancel the purchase and may redeem additional shares, if any,
held in a shareholder's account in an amount sufficient to reimburse the Fund
for any loss it may have incurred and charge a $10.00 return check fee.
Shareholders will receive dividends from investment income and any distributions
from gain realized on investments in shares or in cash according to the option
elected. Dividend and gain options may be changed by notice to Seligman Data
Corp. These option changes must be received by Seligman Data Corp. before the
record date for the dividend or distribution in order to be effective for that
dividend or distribution. Stock certificates will not be issued, unless
requested. Replacement stock certificates will be subject to a surety fee.
INVEST-A-CHECK(R) SERVICE
The Invest-A-Check(R) Service is available to all shareholders. The
application is subject to acceptance by the shareholder's bank and Seligman Data
Corp. The electronic funds transfer ("ACH debit") or preauthorized check in the
amount specified will be invested in the shareholder's account on the fifth day
(unless otherwise specified) of each month (or on the prior business day if such
day of the month falls on a weekend or holiday) in which an investment is
scheduled and invested at the public offering price, if applicable, at the close
of business on the same date. After the initial investment, the value of shares
held in the shareholder's Account must equal not less than two regularly
scheduled investments. If an ACH debit or preauthorized check is not honored by
the shareholder's bank, or if the value of shares held falls below the required
minimum, the Invest-A-Check(R) Service may be suspended. In the event that a
check or ACH debit is returned uncollectable, Seligman Data Corp. will cancel
the purchase, redeem shares held in the shareholder's account for an amount
sufficient to reimburse the Fund for any loss it may have incurred as a result,
and charge a $10.00 return check fee. This fee may be debited to the
shareholder's Account. The Invest-A-Check(R) Service may be reinstated upon
written request indicating that the cause of interruption has been corrected.
The Invest-A-Check(R) Service may be terminated by the shareholder or Seligman
Data Corp. at any time by written notice. The shareholder agrees to hold the
Fund and its agents free from all liability which may result from acts done In
good faith and pursuant to these terms. Instructions for establishing
Invest-A-Check(R) Service are given on the Account Application. In the event a
shareholder exchanges all of the shares from one Seligman Mutual Fund to
another, the Invest-A-Check(R) Service will be terminated in the Seligman Mutual
Fund that was closed as a result of the exchange of all shares and the
shareholder must re-apply for the Invest-A- Check(R) Service in the Seligman
Mutual Fund into which the exchange was made. In the event of a partial
exchange, the Invest-A-Check(R) Service will be continued, subject to the above
conditions, in the Seligman Mutual Fund from which the exchange was made.
Accounts established in conjunction with the Invest-A-Check(R) Service must be
accompanied by a minimum initial investment of $100 in connection with the
monthly investment option or $250 in connection with the quarterly investment
option. If the shareholder uses the Invest-A-Check(R) Service to make an IRA
investment, the purchase will be credited as a current year contribution. If the
shareholder uses the Invest-A-Check(R) Service to make an investment in a
pension or profit sharing plan, the purchase will be credited as a current year
employer contribution.
AUTOMATIC CASH WITHDRAWAL SERVICE
The Automatic Cash Withdrawal Service is available to Class A shareholders,
to Class B shareholders and to Class D shareholders with respect to Class D
shares held for one year or more. A sufficient number of full and fractional
shares will be redeemed to provide the amount required for a scheduled payment.
Redemptions will be made at the asset value at the close of business on the
specific day designated by the shareholder of each month (or on the prior
business day if the day specified falls on a weekend or holiday), less, in the
case of Class B shares, any applicable CDSL. The shareholder may change the
amount of scheduled payments or may suspend payments by written notice to
Seligman Data Corp. at least ten days prior to the effective date of such a
change or suspension. The service may be terminated by the shareholder or
Seligman Data Corp. at any time by written notice. It will be terminated upon
proper notification of the death or legal incapacity of the shareholder.
Continued payments in excess of dividend income invested will reduce and
ultimately exhaust capital. Withdrawals, concurrent with purchases of shares of
this or any other investment company, will be disadvantageous to you because of
the payment of duplicative sales loads, if applicable. For this reason,
additional purchases of Fund shares are discouraged when the Withdrawal Service
is in effect.
LETTER OF INTENT--CLASS A SHARES ONLY
Seligman Financial Services, Inc. will hold in escrow shares equal to 5% of
the minimum purchase amount specified. Dividends and distributions on the
escrowed shares will be paid to the shareholder or credited to the shareholder's
account. Upon completion of the specified minimum purchase within the
thirteen-month period, all shares held in escrow will be deposited in the
shareholder's account or delivered to the shareholder. A shareholder may include
toward completion of a Letter of Intent the total asset value of shares of the
Seligman Mutual Funds on which a front-end sales load was paid as of the date of
the Letter. If the total amount invested within the thirteen-month period does
not equal or exceed the specified minimum purchase, the shareholder will be
requested to pay the difference between the amount of the sales load paid and
the amount of the sales load applicable to the total purchase made if
applicable. If, within 20 days following the mailing of a written request, the
shareholder has not paid this additional sales load to Seligman Financial
Services, Inc., sufficient escrowed shares will be redeemed for payment of the
additional sales load. Shares remaining in escrow after this payment will be
released to the shareholder's Account. The intended purchase amount may be
increased at any time during the thirteen-month period by filing a revised
Agreement for the same period, provided that the shareholder's Dealer furnishes
evidence that an amount representing the reduction in sales load under the new
Agreement which becomes applicable on purchases already made under the original
Agreement, will be refunded to the Fund and that the required additional
escrowed shares will be purchased by the shareholder.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another mutual fund in the Seligman Group on which there
is a front-end sales load may be taken into account in completing a Letter of
Intent, or for Right of Accumulation. However, shares of the Seligman Cash
Management Fund which have been purchased directly may not be used for purposes
of determining reduced sales loads on additional purchases of the other mutual
funds in the Seligman Group.
4/96
25
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<PAGE>
SELIGMAN
FRONTIER
FUND, INC.
100 Park Avenue
New York, New York 10017
INVESTMENT MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, New York 10017
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, New York 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
EQFR1 4/96
- --------------------------------------------------------------------------------
PROSPECTUS
--------------------------------------------
SELIGMAN
FRONTIER
FUND, INC.
--------------------------------------------
APRIL 22, 1996
[LOGO]
A Capital Appreciation Fund
In Its 12th Year
- --------------------------------------------------------------------------------
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April 22, 1996
SELIGMAN FRONTIER FUND, INC.
100 Park Avenue
New York, New York 10017
New York City Telephone (212) 850-1864
Toll Free Telephone (800) 221-2450 - all continental United States
For Retirement Plan Information - Toll-Free Telephone (800) 445-1777
This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of Seligman Frontier Fund,
Inc. (the "Fund"), dated April 22, 1996. It should be read in conjunction with
the Prospectus, which may be obtained by writing or calling the Fund at the
above address or telephone numbers. This Statement of Additional Information,
although not in itself a Prospectus, is incorporated by reference into the
Prospectus in its entirety.
The Fund offers three classes of shares. Class A shares may be
purchased at net asset value plus a sales load of up to 4.75%. Class B shares
may be purchased at net asset value and are subject to a contingent deferred
sales load ("CDSL"), if applicable, in the following amount (as a percentage of
the current net asset value or the original purchase price, whichever is less,
if redemption occurs within the indicated number of years of purchase of such
shares: 5% (less than 1 year), 4% (1 but less than 2 years), 3% (2 but less than
4 years), 2% (4 but less than 5 years), 1% (5 but less than 6 years) and 0% (6
or more years). Class B shares automatically convert to Class A shares after
approximately eight years resulting in lower ongoing fees. Shares purchased
through reinvestment of dividends and distributions on Class B shares also will
convert automatically to Class A shares along with the underlying shares on
which they were earned. Class D shares may be purchased at net asset value and
are subject to a CDSL of 1% (of the current net asset value or the original
purchase price whichever is less) if redeemed within one year of purchase.
Each Class A, Class B and Class D share represents an identical legal
interest in the investment portfolio of the Fund and has the same rights except
for certain class expenses and except that Class B and Class D shares bear a
higher distribution fee that generally will cause the Class B and Class D shares
to have a higher expense ratio and pay lower dividends than Class A shares. Each
Class has exclusive voting rights with respect to its distribution plan.
Although holders of Class A, Class B and Class D shares have identical legal
rights, the different expenses borne by each Class will result in different net
asset values and dividends. The three classes also have different exchange
privileges.
TABLE OF CONTENTS
Page
Investment Objective, Policies and Risks............. 2
Investment Limitations............................... 3
Directors And Officers............................... 4
Management And Expenses ............................. 8
Administration, Shareholder Services And
Distribution Plan................................. 10
Portfolio Transactions............................... 11
Page
Purchase And Redemption Of Fund Shares............... 11
Distribution Services................................ 14
Valuation............................................ 14
Performance.......................................... 15
General Information.................................. 16
Financial Statements................................. 16
Appendix............................................. 17
EQFR1A
-1-
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund seeks to produce growth in capital value. Income may be considered
but will only be incidental to the Fund's investment objective of growth in
capital value. The following information regarding the Fund's investment
policies supplements the information contained in the Prospectus.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
certain institutional borrowers of securities and may invest the cash collateral
and obtain additional income or receive an agreed upon amount of interest from
the borrower. Loans 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 cash or equivalent
collateral to the borrower or placing broker. The Fund does not have the right
to vote securities on loan, but would terminate the loan and regain the right to
vote if that were considered important with respect to the investment.
RIGHTS AND WARRANTS. The Fund may invest in common stock rights and warrants
believed by the Manager to provide capital appreciation opportunities. Common
stock rights and warrants received as part of a unit or attached to securities
purchased (i.e., not separately purchased) are not included in the Fund's
investment restrictions regarding such securities.
The Fund may not invest in rights and warrants if, at the time of
acquisition, the investment in rights and warrants would exceed 5% of the Fund's
net assets, valued at the lower of cost or market. In addition, no more than 2%
of net assets may be invested in warrants not listed on the New York or American
Stock Exchanges. For purposes of this restriction, rights and warrants acquired
by the Fund in units or attached to securities may be deemed to have been
purchased without cost.
PURCHASING PUT OPTIONS ON SECURITIES. The Fund may purchase put options to
protect its portfolio holdings in an underlying security against a decline in
market value. 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. 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's ability to engage in option transaction may be limited by tax
considerations.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
commercial banks and with broker/dealers to invest cash for the short-term. A
repurchase agreement is an agreement under which the Fund acquires a money
market instrument, generally a U.S. Government obligation, subject to resale at
an agreed upon price and date. Such resale price reflects an agreed upon
interest rate effective for the period of time the instrument is held by the
Fund and is unrelated to the interest rate on the instrument. Repurchase
agreements could involve certain risks in the event of bankruptcy or other
default by the seller, including possible delays and expenses in liquidating the
securities underlying the agreement, decline in value of the underlying
securities and loss of interest.
Except as otherwise specifically noted above, the Fund's investment policies
are not fundamental and the Board of Directors of the Fund may change such
policies without the vote of a majority of its outstanding voting securities (as
defined on page 4).
-2-
<PAGE>
PORTFOLIO TURNOVER. The Fund's portfolio turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities for the fiscal year by
the monthly average of the value of the portfolio securities owned during the
fiscal 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 fiscal years ended September 30, 1995 and 1994
were 71.52% and 124.76%, respectively.
INVESTMENT LIMITATIONS
Under the Fund's fundamental policies, which cannot be changed except by
vote of a majority of its outstanding voting securities, the Fund may not:
o Borrow money, except from banks for temporary or emergency purposes (but not
for the purchase of portfolio securities) in an amount not to exceed 15% of
the value of its total assets. The Fund will not purchase additional
portfolio securities if the Fund has outstanding borrowings in excess of 5%
of the value of its total assets;
o Purchase securities on "margin," or sell "short", or write or purchase put,
call, straddle or spread options, except that the Fund may make margin
deposits on future contracts, and may purchase put options solely for the
purpose of hedging against a decline in the price of securities held in the
Fund's portfolio;
o Invest more than 5% of its total assets, at market value, in securities of
any one issuer other than the U.S. Government, its agencies or
instrumentalities, buy more than 10% of the voting securities of any issuer,
or invest to control or manage any company;
o Invest more than 5% of the value of its total assets, at market value, in
securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided, however, that
securities guaranteed by a company that (including predecessors) has been in
operation at least three continuous years shall be excluded from this
calculation;
o Invest more than 25% of the value of its total assets in any one industry;
o Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
o Purchase or sell commodities and commodity contracts other than stock index
futures contracts or purchase or hold real estate;
o Purchase or hold the securities of any issuer, if to its knowledge, directors
or officers of the Fund individually owning beneficially more than 0.5% of
the securities of that issuer own in the aggregate more than 5% of such
securities;
o Underwrite the securities of other issuers except insofar as the Fund may be
deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security; or
o Make loans, except loans of portfolio securities (which loans would be fully
collateralized and marked to market daily) 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.
Although not fundamental policies subject to shareholder vote, as long as the
Fund's shares are registered in certain states, it may not (l) mortgage, pledge
or hypothecate its assets to the extent that the value of such encumbered assets
exceeds 10% of the per share offering price (net asset value) of shares of the
Fund and (2) invest in interests in oil, gas or other mineral exploration or
development programs. The Fund may not invest more than 5% of the value of its
net assets, valued at the lower of cost or market, in warrants, of which no more
than 2% of net assets may be invested in warrants not listed on the New York or
American Stock Exchanges.
-3-
<PAGE>
Under the Investment Company Act of 1940 (the "1940 Act"), a "vote of a
majority of the outstanding voting securities" of the Fund means the affirmative
vote of the lesser of (l) more than 50% of the outstanding shares of the Fund or
(2) 67% or more of the shares present at a shareholders' meeting if more than
50% of the outstanding shares are represented at the meeting in person or by
proxy.
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years are shown below. Each
Director who is an "interested person" of the Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive Officer
(57) and Chairman of the Executive Committee
Managing Director, Chairman and President, J. & W.
Seligman & Co. Incorporated, investment managers and
advisers; and Seligman Advisers, Inc., advisers; Chairman
and Chief Executive Officer, the Seligman Group of
Investment Companies; Chairman, Seligman Financial
Services, Inc., broker/dealer; Seligman Holdings, Inc.,
holding company; Seligman Services, Inc., broker/dealer;
and Carbo Ceramics Inc., ceramic proppants for oil and gas
industry; Director or Trustee, Seligman Data Corp.,
shareholder service agent; Kerr-McGee Corporation,
diversified energy company; and Sarah Lawrence College;
and a Member of the Board of Governors of the Investment
Company Institute; formerly, Chairman, Seligman
Securities, Inc., broker/dealer and J. & W. Seligman Trust
Company, trust company.
BRIAN T. ZINO* Director, President and Member of the Executive Committee
(43)
Director and Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W. Seligman &
Co. Incorporated, investment managers and advisers; and
Seligman Advisers, Inc., advisers; Director or Trustee,
the Seligman Group of Investment Companies; President, the
Seligman Group of Investment Companies, except Seligman
Quality Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc.; Chairman, Seligman Data Corp., shareholder
service agent; Director, Seligman Financial Services,
Inc., broker/ dealer; Seligman Services, Inc.,
broker/dealer; and Senior Vice President, Seligman
Henderson Co., advisers; formerly, Director and Secretary,
Chuo Trust - JWS Advisers, Inc., advisers; and Director,
Seligman Securities, Inc., broker/dealer. and J. & W.
Seligman Trust Company, trust company.
FRED E. BROWN* Director
(82)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Seligman Advisers, Inc, advisers; Director or Trustee, the
Seligman Group of Investment Companies; Seligman Financial
Services, Inc., broker/dealer; Seligman Services, Inc.,
broker/dealer; Trudeau Institute, Inc., nonprofit
biomedical research organization; Lake Placid Center for
the Arts, cultural organization; and Lake Placid Education
Foundation, education foundation; formerly, Director,
Seligman Securities, Inc., broker/dealer and J. & W.
Seligman Trust Company, trust company.
-4-
<PAGE>
JOHN R. GALVIN Director
(66)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group of
Investment Companies; Chairman of the American Council on
Germany; a Governor of the Center for Creative Leadership;
Director of USLIFE, insurance; National Committee on
U.S.-China Relations, National Defense University and the
Institute for Defense Analysis; and Consultant of Thomson
CSF, electronics. Formerly, Ambassador, U.S. State
Department; Distinguished Policy Analyst at Ohio State
University and Olin Distinguished Professor of National
Security Studies at the United States Military Academy.
From June, 1987 to June, 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United
States European Command. Tufts University, Packard Avenue,
Medford, MA 02155
ALICE S. ILCHMAN Director
(60)
President, Sarah Lawrence College; Director or Trustee,
the Seligman Group of Investment Companies; Chairman, The
Rockefeller Foundation, charitable foundation; and
Director, NYNEX, telephone company; and the Committee for
Economic Development; formerly, Trustee, The Markle
Foundation, philanthropic organization; and Director,
International Research and Exchange Board, intellectual
exchanges.
Sarah Lawrence College, Bronxville, New York 10708
FRANK A. McPHERSON Director
(62)
Chairman of the Board and Chief Executive Officer,
Kerr-McGee Corporation, energy and chemicals; Director or
Trustee, the Seligman Group of Investment Companies;
Director, Kimberly-Clark Corporation, consumer products,
Bank of Oklahoma Holding Company, American Petroleum
Institute, Oklahoma City Chamber of Commerce, Baptist
Medical Center, Oklahoma Chapter of the Nature
Conservancy, Oklahoma Medical Research Foundation and
United Way Advisory Board; Chairman, Oklahoma City Public
Schools Foundation; and Member of the Business Roundtable
and National Petroleum Council. 123 Robert S. Kerr Avenue,
Oklahoma City, OK 73102
JOHN E. MEROW* Director
(66)
Chairman and Senior Partner, Sullivan & Cromwell, law
firm; Director or Trustee, the Seligman Group of
Investment Companies; The Municipal Art Society of New
York, Commonwealth Aluminum Corporation, the U.S. Council
for International Business and the U.S.-New Zealand
Council; Chairman, American Australian Association; Member
of the American Law Institute and Council on Foreign
Relations; Member of the Board of Governors of Foreign
Policy Association and New York Hospital. 125 Broad
Street, New York, NY 10004
BETSY S. MICHEL Director
(53)
Attorney; Director or Trustee, the Seligman Group of
Investment Companies; and Chairman of the Board of
Trustees of St. George's School (Newport, RI).
St. Bernard's Road, Gladstone, NJ 07934
-5-
<PAGE>
JAMES C. PITNEY Director
(69)
Partner, Pitney, Hardin, Kipp & Szuch, law firm; Director
or Trustee, the Seligman Group of Investment Companies and
Public Service Enterprise Group, public utility.
Park Avenue at Morris County, P.O. Box 1945, Morristown,
NJ 07962-1945
JAMES Q. RIORDAN Director
(68)
Director, Various Corporations; Director or Trustee, the
Seligman Group of Investment Companies; The Brooklyn
Museum; The Brooklyn Union Gas Company; the Committee for
Economic Development; Dow Jones & Co. Inc. and Public
Broadcasting Service; formerly, Co-Chairman of the Policy
Council of the Tax Foundation; Director and Vice Chairman,
Mobil Corporation; Director, Tesoro Petroleum Companies,
Inc. and Director and President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY 10017
RONALD T. SCHROEDER* Director and Member of the Executive Committee
(48)
Director, Managing Director and Chief Investment Officer,
Institutional, J.&W. Seligman & Co. Incorporated,
investment managers and advisers; and Seligman Advisers,
Inc., advisers; Director or Trustee, the Seligman Group of
Investment Companies; Director, Seligman Holdings, Inc.,
holding company; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co., advisers; and
Seligman Services, Inc., broker/dealer; formerly,
President, the Seligman Group of Investment Companies,
except Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.; and Director, J. & W.
Seligman Trust Company, trust company; Seligman Data
Corp., shareholder service agent; and Seligman Securities,
Inc., broker/dealer.
ROBERT L. SHAFER Director
(63)
Vice President, Pfizer Inc., pharmaceuticals; Director or
Trustee, the Seligman Group of Investment Companies; and
USLIFE Corporation, life insurance.
230 Park Avenue, New York, NY 10169 - 0079
JAMES N. WHITSON Director
(60)
Executive Vice President, Chief Operating Officer and
Director, Sammons Enterprises, Inc., Director or Trustee,
the Seligman Group of Investment Companies, Red Man Pipe
and Supply Company, piping and other materials; and
C-SPAN.
300 Crescent Court, Suite 700, Dallas, TX 75202
ARSEN MRAKOVCIC Vice President and Portfolio Manager
(31)
Managing Director (formerly, Vice President, Investment
Officer), J. & W. Seligman & Co. Incorporated, investment
managers and advisers; and Vice President and Portfolio
Manager, one other open-end investment company in the
Seligman Group of Investment Companies; formerly,
Portfolio Assistant, J. & W. Seligman & Co. Incorporated.
-6-
<PAGE>
LAWRENCE P. VOGEL Vice President
(39)
Senior Vice President, Finance, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; Seligman
Financial Services, Inc., broker/dealer; and Seligman
Advisers, Inc., advisers; Vice President , the Seligman
Group of Investment Companies; Senior Vice President,
Finance (formerly, Treasurer) Seligman Data Corp.,
shareholder service agent, Treasurer, Seligman Holdings,
Inc., holding company; and Seligman Henderson Co.
advisers; formerly, Senior Vice President, Seligman
Securities, Inc., broker/dealer; and Vice President,
Finance, J. & W. Seligman Trust Company, trust company.
FRANK J. NASTA Secretary
(31)
Senior Vice President, Law and Regulation and Corporate
Secretary, J. & W. Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisers, Inc,
advisers; Corporate Secretary, the Seligman Group of
Investment Companies, Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co., advisers; Seligman
Services, Inc., broker/dealer; Chuo Trust - JWS Advisers,
Inc., advisers; and Seligman Data Corp., shareholder
service agent; formerly, Secretary, J. & W. Seligman Trust
Co., trust company and attorney, Seward & Kissel, law
firm.
THOMAS G. ROSE Treasurer
(38)
Treasurer, the Seligman Group of Investment Companies and
Seligman Data Corp., shareholder service agent; formerly,
Treasurer, American Investors Advisers, Inc. and the
American Investors Family of Funds.
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
Compensation Table
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Registrant and
Name and Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Registrant (1) Fund Expenses to Directors (2)
------------------------ ------------------- ------------- ----------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director N/A N/A N/A
John R. Galvin, Director $1,516.02 N/A $41,252.75
Alice S. Ilchman, Director 2,497.36 N/A 68,000.00
Frank A. McPherson, Director 1,516.02 N/A 41,252.75
John E. Merow, Director 2,425.94(d) N/A 66,000.00(d)
Betsy S. Michel, Director 2,675.94 N/A 67,000.00
Douglas R. Nichols, Jr., Director* 909.92 N/A 24,747.25
James C. Pitney, Director 2,497.36 N/A 68,000.00
James Q. Riordan, Director 2,783.08 N/A 70,000.00
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Registrant and
Name and Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Registrant (1) Fund Expenses to Directors (2)
------------------------ ------------------- ------------- ----------------
<S> <C> <C> <C>
Herman J. Schmidt, Director* 909.92 N/A 24,747.25
Robert L. Shafer, Director 2,783.07 N/A 70,000.00
James N. Whitson, Director 2,711.66(d) N/A 68,000.00(d)
</TABLE>
- --------------------------
(1) For the year ended December 31, 1995.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
* Retired May 18, 1995.
(d) Deferred.
The Fund has a compensation arrangement under which outside directors may
elect to defer receiving their fees. Under this arrangement, interest will be
accrued on the deferred balances. The annual cost of such interest will be
included in the directors' fees and expenses, and the accumulated balance
thereof at September 30, 1995, of $41,407, is included in "Other Liabilities" in
the Fund's financial statements.
Directors and officers of the Fund are also directors and officers of some or
all of the other investment companies in the Seligman Group. Directors and
officers of the Fund as a group owned less than 1% of the Fund's Class A Capital
Stock at March 29, 1996. As of that date, no Directors or officers owned shares
of the Fund's Class D Capital Stock.
As of March 29, 1996, 4,749,508 Class A shares, or 10.3% of the Fund's
capital stock and 16.7% of the Fund's Class A capital stock then outstanding,
and 7,995,335 Class D shares, or 17.4% of the Fund's capital stock and 45.6% of
the Fund's Class D capital stock then outstanding, were registered in the name
of Merrill Lynch Pierce Fenner & Smith, P.O.
Box 45286, Jacksonville, FL 32232-5286
MANAGEMENT AND EXPENSES
Under the Management Agreement, dated December 29, 1988, as amended January
1, 1996, subject to the control of the Board of Directors, J. & W. Seligman &
Co. Incorporated (the "Manager") manages the investment of the assets of the
Fund, including making purchases and sales of portfolio securities consistent
with the Fund's investment objectives and policies, and administers its business
and other affairs. The Manager provides the Fund with such office space,
administrative and other services and executive and other personnel as are
necessary for Fund operations. The Manager pays all of the compensation of
directors of the Fund who are employees or consultants of the Manager and of the
officers and employees of the Fund. The Manager also provides senior management
for Seligman Data Corp., the Fund's shareholder service agent.
The Fund pays the Manager a management fee for its services, calculated daily
and payable monthly. Effective January 1, 1996, the management fee is equal to
.95% per annum of the Fund's average daily net assets on the first $750 million
of net assets and .85% per annum of the Fund's average daily net assets in
excess of $750 million. For the fiscal years ended September 30, 1993, 1994 and
1995, the Fund paid .75% per annum of its average daily net assets or $259,663,
$390,476 and $1,260,769, respectively.
The Fund pays all its expenses other than those assumed by the Manager and
Subadviser, including brokerage commissions, administration, shareholder
services and distribution fees, fees and expenses of independent attorneys and
auditors, taxes and governmental fees, including fees and expenses 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
-8-
<PAGE>
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 the Manager or its affiliates, insurance
premiums and extraordinary expenses such as litigation expenses. The Fund may be
subject to certain state expense limitations, the most stringent of which
currently requires reimbursement of total expenses (including the management
fee, but excluding interest, taxes, brokerage commissions, distribution fees and
extraordinary expenses) in any year that they exceed 2 1/2% of the first $30
million of average net assets, 2% of the next $70 million of average net assets
and 1 1/2% thereafter.
The Management Agreement was initially approved by the Board of Directors at
a Meeting held on October 11, 1988 and by the shareholders at a meeting held on
December 15, 1988. The amendments to the Management Agreement, to increase the
fee rate payable to the Manager by the Fund, were approved by the Board of
Directors on September 21, 1995 and by the shareholders at a special meeting
held on December 12, 1995. The Management Agreement will continue in effect
until December 31 of each year if (1) such continuance is approved in the manner
required by the 1940 Act (i.e. by a vote of a majority of the Board of Directors
or of the outstanding voting securities of the Fund and by a vote of a majority
of the Directors who are not parties to the Management Agreement or interested
persons of any such party) and (2) if the Manager shall not have notified the
Fund at least 60 days prior to December 31 of any year that it does not desire
such continuance. The Management Agreement may be terminated by the Fund or by
the Manager, without penalty, on 60 days' written notice to the Manager and will
terminate automatically in the event of its assignment. The Fund has agreed to
change its name upon termination of the Management Agreement if continued use of
the name would cause confusion in the context of the Manager's business. The
Management Agreement provides that the Manager 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 Manager is a successor firm to an investment banking business founded
in 1864 which has thereafter provided investment services to individuals,
families, institutions and corporations. See Appendix for further history of the
Manager. On December 29, 1988, a majority of the outstanding voting securities
of the Manager was purchased by Mr. William C. Morris and a simultaneous
recapitalization of the Manager occurred.
Under the Subadvisory Agreement, dated June 1, 1994, as amended January 1,
1996, Seligman Henderson Co. (the "Subadviser") supervises and directs a portion
of the Fund's investment in foreign securities and Depositary Receipts, as
designated by the Manager, consistent with the Fund's investment objectives,
policies and principles. For these services, the Subadviser is paid a fee as
described in the Fund's Prospectus. The Subadvisory Agreement was initially
approved by the Board of Directors at a meeting held on January 20, 1994 and by
the shareholders on May 19, 1994. The amendments to the Subadvisory Agreement,
effective January 1, 1996, to increase the subadvisory fee rate payable by the
Manager to the Subadviser, were approved by the Board of Directors on September
21, 1995 and by the shareholders at a special meeting on December 12, 1995. The
Subadvisory Agreement will continue in effect until December 31of each year, and
from year to year thereafter if such continuance is approved in the manner
required by the 1940 Act (by a vote of a majority of the Board of Directors or
of the outstanding voting securities of the Fund and by a vote of a majority of
the Directors who are not parties to the Subadvisory Agreement or interested
persons of any such party) and (2) if the Subadviser shall not have notified the
Manager in writing at least 60 days prior to December 31 of any year that it
does not desire such continuance. The Subadvisory Agreement may be terminated at
any time by the Fund, on 60 days written notice to the Subadviser. The
Subadvisory Agreement will terminate automatically in the event of its
assignment or upon the termination of the Management Agreement.
The Subadviser is a New York general partnership formed by the Manager and
Henderson International, Inc., a controlled affiliate of Henderson
Administration Group plc. Henderson Administration Group plc, headquartered in
London, is one of the largest independent money managers in Europe. The firm
currently manages approximately $19 billion in assets and is recognized as a
specialist in global equity investing.
For the period June 1, 1994 through September 30, 1994 and for the fiscal
year ended September 30, 1995, the Fund did not require the services of the
Subadviser.
-9-
<PAGE>
Officers, directors and employees of the Manager are permitted to engage in
personal securities transactions, subject to the Manager's Code of Ethics (the
"Ethics Code"). The Ethics Code proscribes certain practices with regard to
personal securities transactions and personal dealings, provides a framework for
the reporting and monitoring of personal securities transactions by the
Manager's Director of Compliance, and sets forth a procedure of identifying, for
disciplinary action, those individuals who violate the Ethics Code. The Ethics
Code prohibits each of the officers, directors and employees (including all
portfolio managers) of the Manager from purchasing or selling any security that
the officer, director or employee knows or believes (i) was recommended by the
Manager for purchase or sale by any client, including the Fund, within the
preceding two weeks, (ii) has been reviewed by the Manager for possible purchase
or sale within the preceding two weeks, (iii) is being purchased or sold by any
client, (iv) is being considered by a research analyst, (v) is being acquired in
a private placement, unless prior approval has been obtained from the Manager's
Director of Compliance, or (vi) is being acquired during an initial or secondary
public offering. The Ethics Code also imposes a strict standard of
confidentiality and requires portfolio managers to disclose any interest they
may have in the securities or issuers that they recommend for purchase by any
client.
The Ethics Code also prohibits (i) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages and (ii) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors and employees are required, except under very limited
circumstances, to engage in personal securities transactions through the
Manager's order desk. The order desk maintains a list of securities that may not
be purchased due to a possible conflict with clients. All officers, directors
and employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan for each Class (the "Plan") in accordance with Section 12(b) of the 1940
Act and Rule 12b-1 thereunder.
The Plan was approved on March 19, 1992 by the Directors, including a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund and who have no direct or indirect financial interest in
the operation of the Plan or in any agreement related to the Plan (the
"Qualified Directors") and was approved by shareholders of the Fund at a Special
Meeting of the Shareholders held on May 1, 1992. The Plan became effective in
respect of the Class A shares on June 1, 1992. The Plan was approved in respect
of the Class B shares on March 21, 1996 by the Board of Directors of the Fund
including a majority of the Qualified Directors, and became effective in respect
of the Class B shares on April 22, 1996. The Plan was approved in respect of the
Class D shares on March 18, 1993 by the Directors, including a majority of the
Qualified Directors, and became effective in respect of the Class D shares on
May 1, 1993. The Plan will continue in effect 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 Plan may not be amended
to increase materially the amounts payable to Service Organizations with respect
to a Class without the approval of a majority of the outstanding voting
securities of the class. If the amount payable in respect of Class A shares
under the Plan is proposed to be increased materially, the Fund will either (i)
permit holders of Class B shares to vote as a separate class on the proposed
increase or (ii) establish a new class of shares subject to the same payment
under the Plan as existing Class A shares, in which case the Class B shares will
thereafter convert into the new class instead of into Class A shares. No
material amendment to the Plan may be made except by a majority of both the
Directors and the Qualified Directors.
The Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plan. Rule 12b-1 also
requires that the selection and nomination of Directors who are not "interested
persons" of the Fund be made by such disinterested Directors.
-10-
<PAGE>
PORTFOLIO TRANSACTIONS
The Management and Subadvisory Agreements recognize that in the purchase and
sale of portfolio securities of the Fund, the Manager and Subadviser will seek
the most favorable price and execution, and, consistent with that policy, may
give consideration to the research, statistical and other services furnished by
brokers or dealers to the Manager and Subadviser for 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 the
Manager and Subadviser to be beneficial to the Fund. In addition, the Manager
and Subadviser 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 the Manager and Subadviser in connection with its services to clients
other than the Fund.
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.
When two or more of the investment companies in the Seligman Group or other
investment advisory clients of the Manager desire to buy or sell the same
security at the same time, the securities purchased or sold are allocated by the
Manager in a manner believed to be equitable to each. There may be possible
advantages or disadvantages of such transactions with respect to price or the
size of positions readily obtainable or saleable.
The total brokerage commissions paid to others for execution and research
and statistical services for the fiscal years ended September 30, 1995, 1994 and
1993, respectively were $ 337,655, $86,871 and $54,608, of which Seligman
Securities, Inc. received $13,878 in 1993. Seligman Securities, Inc. ceased
functioning as a broker for the Fund and its other clients on March 31, 1993.
PURCHASE AND REDEMPTION OF FUND SHARES
The Fund issues three classes of shares: Class A shares may be purchased at
a price equal to the next determined net asset value per share, plus a sales
load. Class B shares may be purchased at a price equal to the next determined
net asset value without an initial sales load, but a CDSL may be charged on
redemptions within six years of purchase. Class D shares may be purchased at a
price equal to the next determined net asset value without an initial sales
load, but CDSL may be charged on redemptions within one year of purchase. See
"Alternative Distribution System," "Purchase of Shares," and "Redemption of
Shares" in the Prospectus.
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales load of 4.75% and Class
D shares are sold at net asset value*. Using the Fund's net asset value at
September 30, 1995, the maximum offering price of the Fund's shares is as
follows:
CLASS A
Net asset value and redemption price per Class A share................$ 14.04
Maximum sales load (4.75% of offering price).......................... $ .70
-----
Offering price to public.............................................. $14.74
======
-11-
<PAGE>
CLASS B AND CLASS D
Net asset value and offering price per share *............... $13.66
======
- --------------
* Class B shares are subject to a CDSL declining from 5% in the first year
after purchase to 0% after six years. Class D shares are subject to a CDSL
of 1% on redemptions within one year of purchase. See "Redemption Of
Shares" in the Fund's Prospectus.
CLASS A SHARES - REDUCED FRONT-END SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Mutual Fund sold with a front-end
sales load in a continuous offering will be eligible for the following
reductions:
VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other Funds in
the Seligman Group which are sold with a front-end sales load, reaches levels
indicated in the sales load schedule set forth in the Prospectus.
THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other Mutual Funds in
the Seligman Group that were sold with a front-end sales load with the total net
asset value of shares of those Seligman Mutual Funds already owned that were
sold with a front-end sales load and the total net asset value of shares of
Seligman Cash Management Fund which were acquired through an exchange of shares
of another Mutual Fund in the Seligman Group on which there was a front-end
sales load at the time of purchase to determine reduced sales loads in
accordance with the schedule in the Prospectus. The value of the shares owned,
including the value of shares of Seligman Cash Management Fund acquired in an
exchange of shares of another Mutual Fund in the Seligman Group on which there
was a front-end sales load at the time of purchase will be taken into account in
orders placed through a dealer, however, only if Seligman Financial Services,
Inc. ("SFSI") is notified by an investor or a dealer of the amount owned at the
time the purchase is made and is furnished sufficient information to permit
confirmation.
A LETTER OF INTENT allows an investor to purchase Class A shares over a
13-month period at reduced sales loads in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with a front-end sales load of the other Mutual Funds in
the Seligman Group already owned and the total net asset value of shares of
Seligman Cash Management Fund which were acquired through an exchange of shares
of another Mutual Fund in the Seligman Group on which there was a front-end
sales load at the time of purchase. Reduced sales loads also may apply to
purchases made within a 13-month period starting up to 90 days before the date
of execution of a letter of intent. For more information concerning the terms of
the letter of intent see "Terms and Conditions - Letter of Intent - Class A
Shares Only" in the back of the Prospectus.
PERSONS ENTITLED TO REDUCTIONS. Reductions in sales loads apply to purchases of
Class A shares by a "single person," including an individual; members of a
family unit comprising husband, wife and minor children; or a trustee or other
fiduciary purchasing for a single fiduciary account. Employee benefit plans
qualified under Section 401 of the Internal Revenue Code, of 1986, as amended,
organizations tax exempt under Section 501 (c)(3) or (13), and non-qualified
employee benefit plans that satisfy uniform criteria are considered "single
persons" for this purpose. The uniform criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
Prospectus, reports and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
-12-
<PAGE>
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
ELIGIBLE EMPLOYEE BENEFIT PLANS. The table of sales loads in the Prospectus
applies to sales to "eligible employee benefit plans" (as defined in the
Prospectus), except that the Fund may sell shares at net asset value to
"eligible employee benefit plans," which have at least $1 million invested in
the Seligman Group of Mutual Funds or (ii) of employers who have at least 50
eligible employees to whom such plan is made available or, regardless of the
number of employees, if such plan is established or maintained by any dealer
which has a sales agreement with SFSI. Such sales must be made in connection
with a payroll deduction system of plan funding or other systems acceptable to
Seligman Data Corp, the Fund's shareholder service agent. Such sales are
believed to require limited sales effort and sales-related expenses and
therefore are made at net asset value. Contributions or account information for
plan participation also should be transmitted to Seligman Data Corp. by methods
which it accepts. Additional information about "eligible employee benefit plans"
is available from investment dealers or SFSI.
PAYMENT IN SECURITIES. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales load), although the Fund does not presently
intend to accept securities in payment for Fund shares. Generally, the Fund will
only consider accepting securities (l) to increase its holdings in a portfolio
security, or (2) if the Manager determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than $100,000 per issue in
payment for shares. The Fund may reject in whole or in part offers to pay for
Fund shares with securities, may require partial payment in cash for applicable
sales loads, and may discontinue accepting securities as payment for Fund shares
at any time without notice. The Fund will not accept restricted securities in
payment for shares. The Fund will value accepted securities in the manner
provided for valuing portfolio securities of the Fund. (See "Valuation"). In
accordance with Texas securities regulations, should the Fund accept securities
in payment for shares, such transactions would be limited to a bona fide
reorganization, statutory merger, or to other acquisitions of portfolio
securities (except for municipal debt securities issued by state political
subdivisions or their agencies or instrumentalities) which meet the investment
objectives and policies of the investment company; are acquired for investment
and not for resale; are liquid securities which are not restricted as to
transfer either by law or liquidity of market; and have a value which is readily
ascertainable (and not established only by evaluation procedures) as evidenced
by a listing on the American Stock Exchange, the New York Stock Exchange
("NYSE") or NASDAQ.
FURTHER TYPES OF REDUCTIONS. Class A shares may be issued without a sales load
in connection with the acquisition of cash and securities owned by other
investment companies and other personal holding companies to financial
institution trust departments, to registered investment advisers exercising
investment discretionary authority with respect to the purchase of Fund shares,
or pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitation of, its employees, members or
participants in connection with the purchase of shares of the Fund, to separate
accounts established and maintained by an insurance company which are exempt
from registration under Section 3(c)(11) of the Investment Company Act of 1940,
to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with SFSI and shareholders of
mutual funds with investment objectives similar to the Fund's who purchase
shares with redemption proceeds of such funds and to certain unit investment
trusts as described in the Prospectus.
Class A shares may be issued without a sales load to present and retired
directors, trustees, officers, employees and their spouses (and family member of
the foregoing) of the Funds, the other investment companies in the Seligman
Group, the Manager and other companies affiliated with the Manager. Family
members are defined to include lineal descendants and lineal ancestors, siblings
(and their spouses and children) and any company or organization controlled by
any of the foregoing. Such sales may also be made to employee benefit plans and
thrift plans for such persons and to any investment advisory, custodial, trust
or other fiduciary account managed or advised by the Manager or any affiliate.
The sales may be made for investment purposes only, and shares may be resold
only to the 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.
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<PAGE>
MORE ABOUT REDEMPTIONS. The procedures for redemption of Fund shares under
ordinary circumstances are set forth in the Prospectus. In unusual
circumstances, payment may be postponed, or the right of redemption postponed
for more than seven days, if the orderly liquidation of portfolio securities is
prevented by the closing of, or restricted trading on the NYSE during periods of
emergency, or such other periods as ordered by the Securities and Exchange
Commission. Under these circumstances, redemption proceeds may be made in
securities, subject to the review of some state securities commissions. If
payment is made in securities, a shareholder may incur brokerage expenses in
converting these securities to cash.
DISTRIBUTION SERVICES
SFSI, an affiliate of the Manager, acts as general distributor of the
shares of the Fund and of the other Mutual Funds in the Seligman Group. The Fund
and SFSI are parties to a Distributing Agreement dated January 1, 1993. As
general distributor of the Fund's Capital Stock, SFSI allows commissions on
sales of Fund shares to all dealers of up to 4.25% on purchases of Class A
Shares to which the 4.75% sales load applies. Total sales loads paid by
shareholders of Class A shares of the Fund for the fiscal years ended September
30, 1993, 1994 and 1995, respectively, amounted to $96,613, $254,283 and
$5,489,668, respectively, of which $86,097, $225,716 and $4,882,246,
respectively, was paid as commissions to dealers. No Class B shares were
outstanding throughout the 3 year period ended September 30, 1995. SFSI receives
the balance of sales loads and any CDSLs paid by investors. For the period May
1, 1993 through September 30, 1993, SFSI retained CDSL charges amounting to $50.
For the fiscal years ended September 30, 1994 and 1995, SFSI retained CDSL
charges amounting to $1,240 and $22,116, respectively.
Effective April 1, 1995, Seligman Services, Inc. ("SSI"), an affiliate of
the Manager, became eligible to receive commissions from certain sales of Fund
shares, as well as distribution and service fees pursuant to the Plan. For the
period ended September 30, 1995, SSI received commissions of $104,682 from sales
of Fund shares. SSI also received distribution and service fees of $11,821,
pursuant to the Plan.
VALUATION
Net asset value per share of each class of the Fund is determined as of the
close of the NYSE (normally, 4:00 p.m. New York City time), on each day that the
NYSE is open for business. The NYSE is currently closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Fund will also determine net asset value
for each class on each day in which there is a sufficient degree of trading in
the Fund's portfolio securities that the net asset value of Fund shares might be
materially affected. Net asset value per share for a class is computed by
dividing such class' share of the value of the net assets of the Fund (i.e., the
value of its assets less liabilities) by the total number of outstanding shares
of such class. All expenses of the Fund, including the Manager's fee, are
accrued daily and taken into account for the purpose of determining net asset
value. The net asset value of Class B and Class D shares will generally be lower
than the net asset value of Class A shares as a result of the higher
distribution fee with respect to such shares.
Portfolio securities, including open short positions and options written,
are valued at the last sale price on the securities exchange or securities
market on which such securities primarily are traded. Securities 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.
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 sixty days remaining to maturity are generally valued at amortized cost.
Short-term obligations with more than sixty days remaining to maturity will be
valued 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 U.S. Government
securities, money market instruments and repurchase agreements, is substantially
completed each day at various times prior to the close of the NYSE. The values
of
-14-
<PAGE>
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. Occasionally, events
affecting the value of such securities and such exchange rates may occur between
the times at which they are determined and the close of the NYSE, which will not
be reflected in the computation of net asset value. If during such periods
events occur which materially affect the value of such securities, the
securities will be valued at their fair market value as determined in accordance
with procedures approved by the Board of Directors.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the mean between the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
PERFORMANCE
The average annual total returns for the Fund's Class A shares for the
one-year, five-year, and ten-year periods through September 30, 1995 were
30.29%, 28.23%, and 17.71%, respectively. These returns were computed by
subtracting the maximum sales load of 4.75% of public offering price and
assuming that all of the dividends and 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). The average annual total returns
for the Fund's Class D shares for the one-year period ended September 30, 1995
and since inception through September 30, 1995 were 34.53% and 29.14%,
respectively. These returns were computed assuming that all of the dividends and
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% CDSL, if applicable.
Performance information is not provided for Class B shares because no Class B
shares were outstanding prior to April 22, 1996.
Table A below illustrates the total return (income and capital) on Class A
shares of the Fund with dividends invested and gain distributions taken in
shares. It shows that a $1,000 investment in Class A shares, assuming payment of
the 4.75% sales load, made on October 1, 1985 had a value of $5,105 on September
30, 1995 resulting in an aggregate total return of 410.48%. Table B illustrates
the total return (income and capital) on Class D shares of the Fund with
dividends invested and gain distributions taken in shares. It shows that a
$1,000 investment in Class D shares made on May 1, 1993 (commencement of
operations of Class D shares) had a value of $1,852 on September 30, 1995
resulting in an aggregate total return of 85.24%. The results shown should not
be considered a representation of the dividend income or gain or loss in capital
value which may be realized from an investment made in a class of shares of the
Fund today.
TABLE A - CLASS A SHARES
VALUE OF
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED INVESTMENT(2) DISTRIBUTIONS DIVIDENDS INVESTMENT(2) RETURN(1,3)
- ----- ------------ ------------- --------- ----------- ---------
9/30/86 $ 1,124 $ - $ 2 $ 1,226
9/30/87 1,510 61 2 1,573
9/30/88 1,115 264 1 1,380
9/30/89 1,452 344 2 1,798
9/30/90 1,133 268 1 1,402
9/30/91 1,730 416 4 2,150
9/30/92 1,622 630 4 2,256
9/30/93 2,073 1,321 5 3,399
9/30/94 1,878 1,850 4 3,732
9/30/95 2,269 2,831 5 5,105 410.48%
-15-
<PAGE>
TABLE B - CLASS D SHARES
VALUE OF
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR/PERIOD INITIAL GAIN OF OF TOTAL
ENDED(1) INVESTMENT(2) DISTRIBUTIONS DIVIDENDS INVESTMENT(2) RETURN(3)
- ----------- ------------ ------------- --------- ----------- --------
9/30/93 $1,265 $ - - $1,265
9/30/94 1,127 240 - 1,367
9/30/95 1,344 508 - 1,852 85.24%
1 For the ten-year period ended September 30, 1995 for Class A shares; and
from commencement of operations of Class D shares on May 3, 1993.
2 The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales load, assumes that all dividends and capital
gain distributions were taken in cash and reflects changes in the net asset
value of the shares purchased with the hypothetical initial investment.
"Total Value of Investment" reflects the effect of the CDSL, if applicable,
assumes investment of all dividends and capital gain distributions and
reflects changes in the net asset value.
3 Total return for each Class of shares of the Fund is calculated by assuming
a hypothetical initial investment of $1,000 at the beginning of the period
specified; subtracting the maximum sales load for Class A shares;
determining total value of all dividends and distributions that would have
been paid during the period on such shares assuming that each dividend or
distribution was invested in additional shares at net asset value;
calculating the total value of the investment at the end of the period;
subtracting the CDSL on Class D shares, if applicable; and finally, by
dividing the difference between the amount of the hypothetical initial
investment at the beginning of the period and its total value at the end of
the period by the amount of the hypothetical initial investment.
The Fund's total return and average annual total return of Class A shares
quoted from time to time through June 1, 1992 does not reflect the deduction of
the administration, shareholder services and distribution fee, and through
December 31, 1995 for Class A and Class D shares does not reflect the increased
management fee approved by shareholders on December 12, 1995 and effective on
January 1, 1996; which fees if reflected would reduce the performance quoted.
The Fund may also include its aggregate total return over a specified period
in advertisements or in information furnished to present or prospective
shareholders.
GENERAL INFORMATION
CAPITAL STOCK. The Board of Directors is authorized to classify or reclassify
and issue any unissued Capital Stock of the Fund into any number of other
classes without further action by shareholders. The 1940 Act requires that where
more than one class exists, each class must be preferred over all other classes
in respect of assets specifically allocated to such class.
CUSTODIAN. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105 serves as custodian of the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for the Fund.
AUDITORS. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, New
York 10281.
FINANCIAL STATEMENTS
The Annual Report to shareholders for the fiscal year ended September 30,
1995 is incorporated by reference into this Statement of Additional Information.
The Annual Report contains a schedule of the investments of the Fund as of
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<PAGE>
September 30, 1995, as well as certain other financial information as of that
date. The Annual Report will be furnished without charge to investors who
request copies of the Fund's Statement of Additional Information.
APPENDIX
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in the
sale of government securities to help finance the Civil War - Joseph Seligman,
with his brothers, established the international banking and investment firm of
J. & W. Seligman & Co. In the years that followed, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.
THE SELIGMAN COMPLEX:
...Prior to 1900
Helps finance America's fledgling railroads through underwritings.
Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
Becomes a prominent underwriter of corporate securities, including New
York Mutual Gas Light Company, later part of Consolidated Edison.
Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension. Is appointed U.S. Navy fiscal agent by President
Grant.
Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
Helps Congress finance the building of the Panama Canal.
...1910s
Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
Participates in hundreds of 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.
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
Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
Establishes Investment Advisory Service.
...1940s
Helps shape the Investment Company Act of 1940.
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<PAGE>
Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
Assumes management of National Investors Corporation, today Seligman
Growth Fund, Inc.
Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt funds.
Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global
investment products.
Introduces Seligman Frontier Fund, Inc., a small capitalization mutual
fund.
Launches Seligman Henderson Global Fund Series, Inc., which today offers
four separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund and Seligman Henderson Global Growth Opportunities Fund.
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TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
We are pleased to update you on Seligman Frontier Fund with this 1995
Annual Report. We are also happy to report that your Fund's outstanding
performance continued through its fiscal fourth quarter, resulting in another
stellar year. Specific performance information, including a discussion with your
Portfolio Managers, and a chart and table that analyze longer-term performance
follow this letter.
Your Fund's gain information is as follows: for Class A and D shares, net
realized gain per share from investment transactions for the year totaled $0.49.
At September 30, net unrealized gain per share totaled $2.04. The realized gain
distribution for 1995 will be paid on November 17.
Third quarter reports and statistics suggest that the U.S. economy is
maintaining its pattern of slow growth; for example, factory orders for consumer
goods rose at a tepid rate, as retailers continued to hold down inventories. In
addition, inflation remained benign and low interest rates prevailed, supported
by growing prospects for a deficit reduction plan that will curb government
spending in areas previously off limits -- such as entitlements. In the past, an
environment marked by such modest but sustained economic growth and subdued
inflation has proven very positive for financial markets.
Equity markets continued to be supported by increases in corporate
earnings, and demand for the types of companies your Fund invests in should
remain strong. Overall, we remain optimistic about the prospects for the
small-cap market. In particular, the possibility of a decrease in capital gains
tax bodes well for your Fund. A lower capital gains tax coupled with moderate
economic growth and low interest rates has in the past encouraged small-cap
investing.
For more information about Seligman Frontier Fund, or your investment in
its shares, please write or call the toll-free telephone numbers listed below.
By order of the Board of Directors,
/S/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------
Brian T. Zino
President
November 3, 1995
- --------------------------------------------------------------------------------
Important Telephone Numbers
SHAREHOLDER RETIREMENT PLAN 24-HOUR AUTOMATED
SERVICES SERVICES TELEPHONE ACCESS SERVICE
(800) 221-2450 (800) 445-1777 (800) 622-4597
<PAGE>
================================================================================
PERFORMANCE OVERVIEW
- --------------------------------------------------------------------------------
The following are biographies of your Portfolio Managers, a discussion with them
regarding Seligm an Frontier Fund, and a chart and tabl e comparing your Fund's
performance to the per formance of the NASDAQ Composite Index and the Lipper
Small Company Growth Fund Index.
[PHOTO OF MESSRS. WICK AND MRAKOVCIC GOES HERE]
PORTFOLIO MANAGEMENT
The Portfolio Managers of Seligman Frontier Fund this past year were Paul H.
Wick and Arsen Mrakovcic. On September 21, 1995, Mr. Mrakovcic became the sole
Portfolio Manager of your Fund. He began working with Seligman Frontier Fund in
1992 as a portfolio assistant and became co-Portfolio Manager in 1995. In
addition, Mr. Mrakovcic is Portfolio Manager of the U.S. portion of Seligman
Henderson Global Smaller Companies Fund. Mr. Wick began managing the Fund in
1991 and is also the Portfolio Manager of Seligman Communications and
Information Fund and of the U.S. portion of Seligman Henderson Global
Technologies Fund. Messrs. Wick and Mrakovcic are assisted by a team of seasoned
research professionals who are responsible for identifying small companies in
specific industry groups that offer the greatest potential for growth.
ECONOMIC FACTORS AFFECTING SELIGMAN FRONTIER FUND
"Over the past 12 months, the overall economic environment of moderate inflation
and low interest rates presented a positive backdrop for equity investing.
Furthermore, economic growth and consumer demand in 1995, although slightly
slower than last year's pace, remained strong for the companies in your Fund,
leading to its superior returns as shown in the chart and table on page 3."
INDIVIDUAL SECTOR PERFORMANCE
"During the past quarter, retail sales slowed, which prompted retailers to
adjust inventories. These adjustments, in turn, had a negative impact on the
trucking industry as the need for new shipments and deliveries abated.
Consequently, both the retail and trucking industries had a difficult year, and
while we took action as quickly as possible, the Fund experienced some losses in
these areas.
"On the up side, the continued demand for personal computers, pagers, computer
networking, and electronics in automobiles, created strong growth in earnings
and share prices for the companies in the technology segment of your portfolio.
"Also, the ongoing trend in business outsourcing resulted in superior returns
for the business services sector of your portfolio. Many corporations are
becoming aware of the economic benefits of contracting outside firms to manage a
diverse range of business demands such as fulfilling payroll, tax reporting,
computer management, and telemarketing needs, and are consequently `outsourcing'
to specialized firms.
"Finally, the financial sector also performed well as it benefited from the
benign interest rate environment and strong demand for new loans. In addition,
the media/broadcasting sector did well, due to growing advertising rates and
increasing cash flows."
LOOKING AHEAD
"The outlook for 1996 is similar to what we have seen thus far in 1995. Moderate
inflation and low interest rates make for a favorable investment environment.
Valuations in the small-cap universe are reasonable. This is especially true of
the stocks in your portfolio. Corporate earnings continue to look good, and the
managements of the corporations in your portfolio continue to express positive
outlooks for the coming year."
2
<PAGE>
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PERFORMANCE COMPARISON CHART AND TABLE September 30, 1995
- --------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman Frontier
Fund Class A shares, with and without the maximum initial sales charge of 4.75%,
for the 10-year period ended September 30, 1995, to a $10,000 investment made in
the NASDAQ Composite Index and Lipper Small Company Growth Fund Index for the
same period. The performance of Seligman Frontier Fund Class D shares is not
shown in this chart but is included in the table below. It is important to keep
in mind that the indices exclude the effects of any fees or sales charges.
(The following table is the source data for the line chart which appears
at this point in the printed document. This table is not part of the
original printed document and is shown for reference only. The same is
also true for this descriptive paragraph.)
SELIGMAN FRONTIER FUND (CLASS A)
without with NASDAQ Lipper Small
sales sales Composite Company Growth
charge charge Index Fund Index
Sep-85 $10,000 $9,532 $10,000 $10,000
Dec-85 $11,599 $11,056 $11,592 $11,439
Mar-86 $14,272 $13,603 $13,369 $12,953
Jun-86 $15,969 $15,221 $14,466 $13,531
Sep-86 $12,863 $12,261 $12,509 $11,923
Dec-86 $13,405 $12,777 $12,443 $12,164
Mar-87 $16,308 $15,544 $15,340 $14,528
Jun-87 $16,044 $15,292 $15,148 $14,357
Sep-87 $16,503 $15,729 $15,849 $15,032
Dec-87 $12,372 $11,793 $11,789 $11,488
Mar-88 $14,083 $13,423 $13,364 $13,140
Jun-88 $15,363 $14,643 $14,078 $14,115
Sep-88 $14,482 $13,803 $13,831 $13,820
Dec-88 $14,440 $13,763 $13,605 $13,876
Mar-89 $15,657 $14,923 $14,509 $14,937
Jun-89 $16,601 $15,824 $15,528 $15,913
Sep-89 $18,868 $17,984 $16,870 $17,285
Dec-89 $18,501 $17,634 $16,225 $16,762
Mar-90 $17,945 $17,104 $15,537 $16,409
Jun-90 $19,204 $18,304 $16,491 $17,365
Sep-90 $14,712 $14,023 $12,290 $13,450
Dec-90 $16,830 $16,042 $13,336 $14,442
Mar-91 $20,769 $19,796 $17,205 $17,850
Jun-91 $20,348 $19,395 $16,977 $17,671
Sep-91 $22,560 $21,503 $18,795 $19,445
Dec-91 $25,183 $24,004 $20,916 $21,427
Mar-92 $25,427 $24,235 $21,538 $21,747
Jun-92 $22,926 $21,852 $20,105 $19,951
Sep-92 $23,667 $22,558 $20,807 $20,614
Dec-92 $29,211 $27,843 $24,149 $23,912
Mar-93 $29,267 $27,895 $24,619 $24,218
Jun-93 $31,379 $29,909 $25,112 $24,944
Sep-93 $35,659 $33,989 $27,210 $27,212
Dec-93 $36,894 $35,166 $27,710 $27,961
Mar-94 $36,423 $34,716 $26,521 $26,950
Jun-94 $33,997 $32,404 $25,183 $25,495
Sep-94 $39,152 $37,317 $27,264 $27,873
Dec-94 $39,481 $37,632 $26,824 $27,837
Mar-95 $42,571 $40,577 $29,152 $29,398
Jun-95 $46,996 $44,794 $33,299 $32,121
Sep-95 $53,557 $51,048 $37,227 $36,137
The table below shows the average annual total returns for the one-, five-, and
10-year periods ended September 30, 1995, for Seligman Frontier Fund Class A
shares, with and without the maximum initial sales charge of 4.75%, for the
NASDAQ Composite Index and the Lipper Small Company Growth Fund Index. Also
included in the table are the average annual total returns for the one-year and
since-inception periods through September 30, 1995, for Seligman Frontier Fund
Class D shares, with and without the effect of the 1% contingent deferred sales
load ("CDSL") imposed on shares redeemed within one year of purchase, for the
NASDAQ Composite Index and the Lipper Small Company Growth Fund Index.
AVERAGE ANNUAL TOTAL RETURNS
ONE FIVE 10
YEAR YEARS YEARS
---- ----- -----
Seligman Frontier Fund
Class A with Sales Charge 30.29% 28.23% 17.71%
Class A without Sales Charge 36.80 29.49 18.27
NASDAQ Composite Index 36.54 24.81 14.05
Lipper Small Company
Growth Fund Index 29.65 21.86 13.71
SINCE
ONE INCEPTION
YEAR 5/3/93
---- ---------
Seligman Frontier Fund
Class D with CDSL 34.53% n/a
Class D without CDSL 35.53 29.14%
NASDAQ Composite Index 36.54 20.74*
Lipper Small Company
Growth Fund Index 29.65 19.58*
* From April 30, 1993.
No adjustment was made to performance for periods prior to June 1, 1992, the
commencement date for the annual Administration, Shareholder Services and
Distribution Plan fee of up to 0.25% of average daily net assets of Class A
shares. THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES CHARGES
AND FEES PAID BY SHAREHOLDERS. Performance data quoted represent changes in
prices and assume that all distributions within the periods are invested in
additional shares. The investment return and principal value of an investment
will fluctuate so that shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment results.
SELIGMAN FRONTIER FUND, INC. Largest Portfolio Changes* During Past Three Months
3
<PAGE>
================================================================================
SELIGMAN FRONTIER FUND, INC.
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES*
DURING PAST THREE MONTHS
SHARES
--------------------------
HOLDINGS
ADDITIONS INCREASE 9/30/95
- --------- -------- --------
Alliance Semiconductor ............ 150,000 150,000
Carbide/Graphite Group ............ 300,000 300,000
Ceridian .......................... 155,000 155,000
Corporate EXPRESS ................. 215,000 215,000
Jayhawk Acceptance ................ 325,000 325,000
Minerals Technologies ............. 120,000 120,000
Tencor Instruments ................ 115,000 115,000
ThermoLase ........................ 250,000 250,000
UCAR International ................ 200,000 200,000
US Office Products ................ 325,000 325,000
HOLDINGS
REDUCTIONS DECREASE 9/30/95
- ---------- -------- -------
Benson Eyecare .................... 199,200 --
Cypress Semiconductor ............. 55,000 --
EZ Communications (Class A) ....... 80,700 13,300
Equity Inns ....................... 150,000 --
T. Rowe Price ..................... 40,000 100,000
ProNet ............................ 35,000 100,000
Storemedia ........................ 112,000 --
Trigen Energy ..................... 75,000 --
Werner Enterprises ................ 105,000 --
World Acceptance .................. 150,000** --
MAJOR PORTFOLIO HOLDINGS
AT SEPTEMBER 30, 1995
SECURITY VALUE
- -------- -----
Electronics for Imaging ............. $10,743,750
California Energy ................... 8,200,000
Electroglas ......................... 7,126,875
Ceridian ............................ 6,878,125
Lam Research ........................ 6,856,875
Cognex .............................. 6,846,125
SITEL ............................... 6,806,250
Nu-Kote Holdings (Class A) .......... 6,781,250
Vicor ............................... 6,755,000
Credence Systems .................... 6,610,875
- -----------
* Largest portfolio changes from the previous quarter to the current quarter
are based on cost of purchases and proceeds from sales of securities.
** Includes 100,000 shares received as a result of a 3-for-1 stock split. Major
Portfolio Holdings at September 30, 1995
4
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS September 30, 1995
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCKS 91.4%
ADVERTISING 2.7%
DIMAC*
Direct marketing services ............. 175,000 $3,303,125
Heritage Media (Class A)*
Broadcasting, in-store media .......... 168,000 5,061,000
Katz Media Group*
Advertising broker .................... 150,000 3,056,250
-----------
11,420,375
-----------
AEROSPACE AND DEFENSE 1.4%
BDM International*
Information systems software
and services .......................... 208,000 5,720,000
-----------
APPAREL 1.8%
Nautica Enterprises*
Manufacturer of men's
sportswear ............................ 87,000 3,001,500
St. John Knits
Manufacturer of high-end
women's apparel ....................... 88,500 4,314,375
-----------
7,315,875
-----------
Broadcasting 2.3%
Evergreen Media (Class A)*
Radio broadcasting .................... 130,000 3,672,500
EZ Communications (Class A)*
Radio broadcasting .................... 13,300 251,038
Jacor Communications*
Radio broadcasting .................... 180,000 2,857,500
United Video Satellite
Group (Class A)*
Media programming
and services .......................... 90,000 2,767,500
-----------
9,548,538
-----------
BUSINESS GOODS AND SERVICES 16.6%
Barefoot
Lawncare service ...................... 290,000 3,842,500
Bell & Howell Holdings*
Publishing and information
services .............................. 236,800 6,038,400
Bisys Group*
Data processing service to
banks ................................. 220,000 5,555,000
Ceridian*
Data processing services .............. 155,000 6,878,125
Corporate EXPRESS*
Supplier of office products ........... 215,000 5,213,750
HFS Group*
Hotel and motel franchises ............ 85,000 4,451,875
Holophane*
Manufacturer of lighting
systems/fixtures ...................... 127,000 3,524,250
Interim Services*
Temporary employment
services .............................. 100,000 2,675,000
Inter-Tel*
Manufacturer of electronic
telecommunications
equipment ............................. 250,000 4,375,000
National Data
Transaction processor ................. 200,000 5,362,500
Nu-Kote Holdings (Class A)*
Manufacturer of copier
toner supplies ........................ 310,000 6,781,250
SITEL*
Outsourcer of outbound
telemarketing ......................... 275,000 6,806,250
SPS Transaction Services*
Transaction processing
services .............................. 100,000 2,900,000
US Office Products*
Supplier of office products ........... 325,000 4,895,312
-----------
69,299,212
-----------
CAPITAL GOODS 6.9%
Carbide/Graphite Group*
Producer of graphite
electrodes ............................ 300,000 4,350,000
DT Industries
Manufacturer of custom
machines and metal products ........... 190,000 2,588,750
Fusion Systems*
Manufacturer of ultraviolet
curing systems ........................ 110,000 3,190,000
Greenfield Industries
Manufacturer of expendable
cutting tools ......................... 100,000 3,050,000
Kennametal
Tungsten-base carbide
products .............................. 100,000 3,625,000
Oak Industries*
Manufacturer of electrical
controls .............................. 115,000 3,464,375
5
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
CAPITAL GOODS (continued)
UCAR International*
Provider of graphite
electrodes ............................ 200,000 $ 5,450,000
Wolverine Tube*
Manufacturer of copper and
copper-alloy tube ..................... 80,000 3,020,000
-----------
28,738,125
-----------
COMMUNICATIONS 6.2%
Arch Communications Group*
Provider of nationwide
paging services ...................... 145,000 3,806,250
Aspect Telecommunications*
Manufacturer of telephone
processing systems ................... 230,000 6,210,000
Cellular Communications Intl.*
Operator of cellular telephone
services ............................. 15,000 813,750
CIDCO*
Designer and developer of
network service equipment ............. 126,000 4,425,750
Lannet Data Communications*
Computer network switches
and hubs .............................. 135,000 3,510,000
MobileMedia (Class A)*
Provider of paging services ........... 150,000 4,087,500
ProNet*
Telecommunications services ........... 100,000 2,900,000
-----------
25,753,250
-----------
Computer Hardware Peripherals 3.6%
Electronics for Imaging*
Color-copier peripherals .............. 150,000 10,743,750
Planar System*
Manufacturer of electro-
luminescent displays .................. 219,500 4,390,000
-----------
15,133,750
-----------
COMPUTER SOFTWARE AND SERVICES 5.1%
Mentor Graphics*
Integrated circuit design
software .............................. 255,000 5,291,250
Netmanage*
Manufacturer of connectivity
software .............................. 250,000 5,921,875
SunGard Data Systems*
Provider of data processing
services .............................. 150,000 4,350,000
Synopsys*
Developer of integrated circuit
design software ....................... 180,000 5,580,000
-----------
21,143,125
-----------
CONSUMER GOODS AND SERVICES 3.3%
Custom Chrome*
Wholesaler of Harley-Davidson
products .............................. 70,000 1,570,625
Martin Industries
Manufacturer of gas fireplaces ........ 290,000 3,008,750
ThermoLase*
Developer of hair removal
systems ............................... 250,000 5,109,375
USA Detergents*
Manufacturer of low priced
brand detergent ....................... 200,000 4,150,000
-----------
13,838,750
-----------
DRUGS AND HEALTH CARE 6.1%
AmeriSource Health*
Distributor of pharmaceutical
supplies .............................. 193,500 5,151,937
Clintrials Research*
Contract drug research
organization .......................... 150,000 3,009,375
Community Psychiatric Centers
Owner/operator of acute
psychiatric hospitals ................. 290,000 3,407,500
Lincare Holdings*
In-home respiratory services .......... 120,000 3,067,500
Living Centers of America*
Operator of long-term health
care centers .......................... 110,000 3,657,500
Omnicare
Long-term care pharmacy
services .............................. 120,000 4,680,000
Protein Design Labs*
Antibody technology research
and development ....................... 132,000 2,598,750
-----------
25,572,562
-----------
ELECTRONICS 15.3%
Alliance Semiconductor*
Designer of high speed
memory circuits ....................... 150,000 5,981,250
Cognex*
Manufacturer of machine
vision systems ........................ 143,000 6,846,125
6
<PAGE>
================================================================================
September 30, 1995
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
Credence Systems*
Automated semiconductor
testing equipment ..................... 183,000 $ 6,610,875
Electro Scientific Industries*
Computer controlled laser
systems ............................... 120,000 4,215,000
Electroglas*
Manufacturer of semiconductor
wafer probing equipment ............... 105,000 7,126,875
Information Storage Device*
Audio recording circuits .............. 200,000 4,500,000
Lam Research*
Manufacturer of plasma
etching equipment ..................... 115,000 6,856,875
Lattice Semiconductor*
Manufacturer of programmable
logic devices ......................... 110,000 4,455,000
Sanmina*
Manufacturer of electronic
circuit boards and back planes ........ 120,000 5,700,000
Tencor Instruments*
Wafer inspection devices .............. 115,000 5,074,375
Vicor*
Manufacturer of modular power
converters ............................ 280,000 6,755,000
-----------
64,121,375
-----------
FARM EQUIPMENT 1.1%
AGCO
Manufacturer and distributor
of farm equipment ..................... 105,000 4,777,500
-----------
FINANCIAL SERVICES 6.0%
Commerce Bancorp
Commercial bank ....................... 115,000 2,724,063
Jayhawk Acceptance*
Consumer finance company .............. 325,000 4,692,187
Leasing Solutions*
Lessor of processing and
communications equipment .............. 180,000 2,576,250
T. Rowe Price
Investment management ................. 100,000 5,137,500
Roosevelt Financial Group
Savings bank .......................... 250,000 4,437,500
Sirrom Capital
Business specialty lender ............. 250,000 4,468,750
WFS Financials*
Consumer finance company .............. 40,000 920,000
-----------
24,956,250
-----------
FOOD AND BEVERAGES 0.8%
Canandaigua Wine (Class A)*
Domestic wine producer ................ 70,000 $ 3,412,500
-----------
GAMING 0.6%
GTECH Holdings*
Operator of state/local
lottery systems ....................... 90,000 2,711,250
-----------
MEDICAL PRODUCTS AND TECHNOLOGY 2.3%
Dentsply International
Manufacturer of dental and
medical x-ray equipment ............... 150,000 5,175,000
Patterson Dental*
Distributor of dental supplies
and equipment ......................... 60,000 1,575,000
Sybron International*
Laboratory and dental
supplies .............................. 75,000 3,018,750
-----------
9,768,750
-----------
OIL AND GAS 1.9%
Falcon Drilling*
Lessor of oil and gas drilling
equipment ............................. 300,000 3,787,500
Pogo Producing
Oil and gas exploration,
production, and development ........... 175,000 3,981,250
-----------
7,768,750
-----------
RESTAURANTS 1.8%
Consolidated Products*
Owner/operator of restaurants ......... 140,000 2,073,750
International House of Pancakes*
Operator of International
House of Pancake restaurants .......... 80,000 2,070,000
Longhorn Steaks*
Operator of full-service
restaurants ........................... 200,000 3,500,000
-----------
7,643,750
-----------
RETAIL TRADE 1.3%
Casey's General Store
Operator of convenience store ......... 220,000 4,950,000
Central Tractor Farm & Country*
Building products and retail
agriculture hardware and related ...... 28,900 328,738
-----------
5,278,738
-----------
7
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued) September 30, 1995
- --------------------------------------------------------------------------------
SHARES OR
PRIN. AMT. VALUE
---------- -----
SPECIALTY CHEMICALS 1.9%
Minerals Technologies
Manufactures specialty
minerals and products ................. 120,000shs $ 4,515,000
Sealed Air*
Manufacturer of protective
packaging ............................. 60,000 3,307,500
-----------
7,822,500
-----------
TRANSPORTATION 0.4%
US Xpress Enterprises (Class A)*
Trucking operator ..................... 200,000 1,812,500
-----------
UTILITIES 2.0%
California Energy*
Developer of geothermal
energy power .......................... 400,000 8,200,000
-----------
TOTAL COMMON STOCKS
(Cost $320,362,774 ) .......... 381,757,425
-----------
SHORT-TERM HOLDINGS 12.1%
First National Bank of Chicago,
Grand Cayman Fixed Time
Deposit 61/2%, 10/2/1995 .............. $17,000,000 17,000,000
National Westminster Bank,
Grand Cayman Fixed Time
Deposit 61/2%, 10/2/1995 .............. 16,253,000 16,253,000
State Street Bank and Trust,
Grand Cayman Fixed Time
Deposit 63/8%, 10/2/1995 .............. 17,000,000 17,000,000
-----------
TOTAL SHORT-TERM HOLDINGS
(Cost $50,253,000) .......................... 50,253,000
TOTAL INVESTMENTS 103.5%
(Cost $370,615,774) ......................... 432,010,425
OTHER ASSETS LESS
LIABILITIES (3.5)% .................................. (14,445,403)
------------
NET ASSETS 100.0% ................................... $417,565,022
============
- ---------------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
8
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES September 30, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value:
Common stocks (cost $320,362,774) ......... $381,757,425
Short-term holdings (cost $50,253,000) .... 50,253,000
------------
$432,010,425
Cash ........................................ 777,871
Receivable for Capital Stock sold ........... 6,243,598
Receivable for securities sold .............. 1,046,218
Receivable for dividends and interest ....... 69,106
Expenses prepaid to shareholder service
agent .................................... 50,520
Other ....................................... 35,207
------------
TOTAL ASSETS ................................ 440,232,945
------------
LIABILITIES:
Payable for securities purchased ............ 21,643,454
Payable for Capital Stock repurchased ....... 369,702
Accrued expenses, taxes, and other .......... 654,767
------------
TOTAL LIABILITIES ........................... 22,667,923
------------
NET ASSETS .................................. $417,565,022
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value;
50,000,000 shares authorized; 30,074,456
shares outstanding):
Class A ................................... $ 1,938,681
Class D ................................... 1,068,764
Additional paid-in capital .................. 341,830,746
Accumulated net investment loss ............. (41,407)
Undistributed net realized gain ............. 11,373,587
Net unrealized appreciation of investments .. 61,394,651
------------
Net Assets .................................. $417,565,022
============
NET ASSET VALUE PER SHARE
CLASS A ($272,121,727 + 19,386,810 SHARES) $14.04
======
CLASS D ($145,443,295 + 10,687,646 SHARES) $13.61
======
- ----------------
See notes to financial statements.
9
<PAGE>
================================================================================
STATEMENT OF OPERATIONS For the Year Ended September 30, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest ........................................... $ 1,219,691
Dividends .......................................... 307,097
Other income ....................................... 44,190
------------
Total investment income ............................ $ 1,570,978
EXPENSES:
Management fee ..................................... 1,260,769
Distribution and service fees ...................... 690,067
Shareholder account services ....................... 583,110
Registration ....................................... 167,174
Shareholder reports and communications ............. 51,859
Auditing and legal fees ............................ 41,595
Directors| fees and expenses ....................... 26,372
Custody and related services ....................... 13,518
Miscellaneous ...................................... 6,112
------------
Total expenses ..................................... 2,840,576
------------
NET INVESTMENT LOSS ................................ (1,269,598)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ................... 14,852,097
Net change in unrealized appreciation of investments 51,312,770
------------
Net gain on investments ............................ 66,164,867
------------
Increase in net assets from operations ............. $ 64,895,269
============
- ---------------
See notes to financial statements.
10
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------
1995 1994
---- ----
OPERATIONS:
Net investment loss ................................ $ (1,269,598) $ (511,703)
Net realized gain on investments ................... 14,852,097 7,083,185
Net change in unrealized appreciation of investments 51,312,770 (1,269,713)
------------ -----------
Increase in net assets from operations ............. 64,895,269 5,301,769
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A .................................... (7,039,282) (7,595,277)
Class D .................................... (1,338,879) (243,455)
------------ -----------
Decrease in net assets from distributions .......... (8,378,161) (7,838,732)
------------ -----------
<TABLE>
<CAPTION>
CAPITAL SHARE TRANSACTIONS:
SHARES
--------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------
1995 1994
---------- ---------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A ................................ 14,343,047 1,149,853 176,507,457 12,717,598
Class D ................................ 9,799,966 753,094 116,142,280 8,168,738
Exchanged from associated Funds:
Class A ................................ 2,239,426 422,026 27,111,701 4,766,454
Class D ................................ 977,881 41,042 11,153,674 436,688
Shares issued in payment of gain
distributions:
Class A ................................ 630,353 694,769 6,606,096 7,302,029
Class D ................................ 125,619 21,147 1,286,339 221,199
---------- --------- ----------- ----------
Total .................................... 28,116,292 3,081,931 338,807,547 33,612,706
---------- --------- ----------- ----------
Cost of shares repurchased:
Class A ................................ (1,348,459) (419,801) (16,084,996) (4,586,161)
Class D ................................ (261,304) (15,175) (3,189,105) (161,528)
Exchanged into associated Funds:
Class A ................................ (1,508,671) (181,131) (17,704,056) (2,054,292)
Class D ................................ (771,800) (58,422) (8,577,404) (633,007)
---------- --------- ----------- ----------
Total .................................... (3,890,234) (674,529) (45,555,561) (7,434,988)
---------- --------- ----------- ----------
Increase in net assets from capital
share transactions ..................... 24,226,058 2,407,402 293,251,986 26,177,718
========== ========= ----------- ----------
Increase in net assets ................... 349,769,094 23,640,755
NET ASSETS:
Beginning of year ........................ 67,795,928 44,155,173
------------- -------------
End of year .............................. $ 417,565,022 $ 67,795,928
============= =============
- --------------
See notes to financial statements.
</TABLE>
11
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Frontier Fund, Inc. (the "Fund") offers two classes of shares. All
shares existing prior to May 3, 1993, were classified as Class A shares. Class A
shares are sold with an initial sales charge of up to 4.75% and a continuing
service fee of up to 0.25% on an annual basis. Class D shares are sold without
an initial sales charge but are subject to a distribution fee of up to 0.75% and
a service fee of up to 0.25% on an annual basis, and a contingent deferred sales
load ("CDSL") of 1% imposed on certain redemptions made within one year of
purchase. The two classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with ge nerally
accepted accounting principles, are given below:
a. Investments in stocks are valued at current market values or, in their
absence, at fair value determined in accordance with procedures approved by
the Board of Directors. Securities traded on national exchanges are valued at
last sales prices or, in their absence and in the case of over-the-counter
securities, a mean of bid and asked prices. Short-term holdings maturing in
60 days or less are valued at amortized cost.
b. There is no provision for federal income or excise tax. The Fund has elected
to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income tax
purposes. Dividends receivable and payable are recorded on ex-dividend dates.
Interest income is recorded on an accrual basis.
d. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative value of the shares of each class. Class-specific expenses,
which include distribution and service fees and any other items that can be
specifically attributed to a particular class, are charged directly to such
class.
e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gains may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, and realized capital gain for federal
income tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset value
per share of the Fund.
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended September 30, 1995, amounted to $367,165,577 and
$109,596,144, respectively.
At September 30, 1995, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, aNd the tax basis gross unrealized appreciation and depreciation of
portfolio securities amounted to $64,019,403 and $2,624,752, respectively.
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all directors of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the Manager is
12
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
paid by the Manager. The Manager receives a fee, calculated daily and payable
monthly, equal to 0.75% per annum of the Fund's average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares, and an affiliate of the Manager, received
concessions of $607,423 from sales of Class A shares after commissions of
$4,882,246 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to Class A shares under which service organizations
can enter into agreements with the Distributor and receive a continuing fee of
up to 0.25% on an annual basis, payable quarterly, of average daily net assets
of Class A shares attributable to the particular service organizations for
providing personal services and/or the maintenance of shareholder accounts. The
Distributor charges such fees to the Fund pursuant to the Plan. For the year
ended September 30, 1995, fees paid aggregated $182,395, or 0.16% per annum of
average daily net assets of Class A shares.
The Fund has a Plan with respect to Class D shares under which service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily net
assets of the Class D shares for which the organizations are responsible and
fees for providing other distribution assistance of up to 0.75% on an annual
basis of such average daily net assets. Such fees are paid monthly by the Fund
to the Distributor pursuant to the Plan. For the year ended September 30, 1995,
fees paid amounted to $507,672, or 1% per annum of the average daily net assets
of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions occurring within one year of purchase. For the year ended September
30, 1995, such charges amounted to $22,116.
Effective April 1, 1995, Seligman Services, Inc., an affiliate of the
Manager, became eligible to receive commissions from certain sales of shares of
the Fund, as well as distribution and service fees pursuant to the Plan. For the
period ended September 30, 1995, Seligman Services, Inc. received commissions of
$104,682 from sales of shares of the Fund. Seligman Services, Inc. also received
distribution and service fees of $11,821, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $583,110 for shareholder account services.
Certain officers and directors of the Fund are officers or directors of the
Manager, Seligman Financial Services, Inc., Seligman Services, Inc., and/or
Seligman Data Corp.
Fees of $15,500 were incurred by the Fund for the legal services of
Sullivan & Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The cost of such fees and interest is included in directors' fees and
expenses, and the accumulated balance thereof at September 30, 1995, of $41,407
is included in other liabilities. Deferred fees and the related accrued interest
are not deductible for federal income tax purposes until such amounts are paid.
5. Class-specific expenses charged to Class A and Class D during the year
ended September 30, 1995, which are included in the corresponding captions of
the Statement of Operations, were as follows:
CLASS A CLASS D
------- -------
Distribution and service fees ...... $182,395 $507,672
Registration ....................... 22,531 17,232
Shareholder reports and
communications .................. 3,007 1,720
13
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Fund's beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item as disclosed in the financial statements
to their equivalent per share amounts.
The total return based on net asset value measures the Fund's performance
assuming investors purchased shares at net asset value as of the beginning of
the period, reinvested dividends and capital gains paid at net asset value, and
then sold their shares at the net asset value per share on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. The total returns for
periods of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A CLASS D
------------------------------------------------ -------------------------
YEAR ENDED
YEAR ENDED SEPTEMBER 30 SEPTEMBER 30 5/3/93*
------------------------------------------------ -------------- to
1995 1994 1993 1992 1991 1995 1994 9/30/93
---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $11.62 $12.83 $10.22 $10.71 $ 7.01 $11.40 $12.80 $10.12
Net investment loss (0.06) (0.08) (0.03) (0.07) (0.03) (0.15) (0.23) (0.04)
Net realized and unrealized investment gain 3.87 1.10 4.54 0.58 3.76 3.75 1.06 2.72
------ ------ ------ ------ ------ ------ ------ ------
Increase from investment operations 3.81 1.02 4.51 0.51 3.73 3.60 0.83 2.68
Dividends paid -- -- -- -- (0.01)** -- -- --
Distributions from net gain realized (1.39) (2.23) (1.90) (1.00) (0.02) (1.39) (2.23) --
Net increase (decrease) in net asset value 2.42 (1.21) 2.61 (0.49) 3.70 2.21 (1.40) 2.68
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $14.04 $11.62 $12.83 $10.22 $10.71 $13.61 $11.40 $12.80
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE 36.80% 9.79% 50.67% 4.91% 53.34% 35.53% 8.06% 26.48%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average
net assets 1.43% 1.34% 1.25% 1.37% 1.28% 2.29% 2.72% 2.24%+
Net investment loss to average net assets (0.50)% (0.87)% (0.27)% (0.71)% (0.35)% (1.35)% (2.25)% (1.94)%+
Portfolio turnover 71.52% 124.76% 129.13% 129.46% 38.56% 71.52% 124.76% 129.13%++
Net assets, end of period (000's omitted) $272,122 $58,478 $43,188 $27,178 $23,449 $145,443 $9,318 $967
</TABLE>
- -----------------
The per share data for the fiscal years 1991 and 1992 have been restated to
reflect the 2-for-1 stock split effected on April 16, 1992, as a 100% stock
dividend. The per share data for the years ended September 30, 1994 and 1995,
are based on average shares outstanding for the periods.
* Commencement of offering of Class D shares.
** Excess of taxable dividend over net investment income was charged against
additional paid-in capital.
+ Annualized.
++ For the year ended September 30, 1993.
See notes to financial statements.
14
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Frontier Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Frontier Fund, Inc. as of September
30, 1995, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the Fund's custodian and brokers;
where replies were not received from brokers we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Frontier
Fund, Inc. as of September 30, 1995, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
---------------------
DELOITTE & TOUCHE LLP
New York, New York
November 3, 1995
15
<PAGE>
================================================================================
THE SELIGMAN GROUP OF FUNDS' SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
Seligman Data Corp. (SDC) takes pride in providing superior customer service for
all Seligman Fund accounts.
SHAREHOLDER SERVICES
One of the most important services SDC provides the Seligman Group of Funds is
shareholder services. Trained professionals respond quickly and thoroughly to
all shareholder inquiries and requests, whether by telephone or written
correspondence. Each representative is selected based on his or her sincere
interest in providing meaningful and prompt responses to a variety of requests.
RETIREMENT PLAN SERVICES
Similar to Shareholder Services, this specialized group is trained to answer
your questions about Seligman's Qualified Retirement Plans. For information
about Retirement Plan Services, please call 1-800-445-1777.
FOR INFORMATION AND ASSISTANCE
For any inquiries or concerns you may have about your Fund or your investment in
its shares,
please call our
SHAREHOLDER SERVICES DEPARTMENT
toll-free at:
1-800-221-2450
or write:
SHAREHOLDER SERVICES
SELIGMAN DATA CORP.
100 PARK AVENUE
NEW YORK, NY 10017
Experienced customer service professionals are available to assist you Monday
through Friday 8:30 am to 6:00 pm, Eastern Standard Time.
24-HOUR AUTOMATED TELEPHONE ACCESS
You may obtain account information via our automated 24-Hour Telephone Access
Service by calling 1-800-622-4JWS, which gives you important information
regarding your account any time, any day, whenever you need it. Using a
touch-tone telephone you will recieve up-to-date information on:
O FUND PRICES
O TOTAL RETURNS
O ACCOUNT BALANCES
O RECENT TRANSACTIONS
O CAPITAL GAIN DISTRIBUTIONS
For a brochure that explains this service and lists Fund access codes, please
call our Literature Department at 1-800-597-1120.
J. & W. SELIGMAN'S RICH HISTORY
Established in 1864, Seligman played a major role in the geographical expansion
and industrial development of the United States. The firm helped finance the
westward path of the railroads and the building of the Panama Canal. In the late
1800s and early 1900s, the firm was instrumental in financing the fledgling
automobile and steel industries. Seligman also participated in the original
underwritings for some of the nation's most prominent companies, including
General Motors, Victor Talking Machine Company, United Artists Theater Circuit,
and Maytag.
J. & W. Seligman & Co. Incorporated has been providing financial services for
more than 130 years. From its beginning, Seligman has adopted a long-term
approach to making money for its clients, by managing investment products and
services of the highest quality. Today, with approximately $13 billion in assets
under management, Seligman manages institutional accounts--including some of the
nation's largest public funds, endowments, and foundations--and offers
individual investors more than 30 fund options.
16
<PAGE>
================================================================================
Board of Directors
- --------------------------------------------------------------------------------
FRED E. BROWN
Director and Consultant,
J. & W. Seligman & Co. Incorporated
JOHN R. GALVIN 2
Dean, Fletcher School of Law
and Diplomacy at Tufts University
Director, USLIFE Corporation
ALICE S. ILCHMAN 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Chairman, The Rockefeller Foundation
FRANK MCPHERSON 2
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
JOHN E. MEROW
Partner, Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation
BETSY S. MICHEL 2
Director or Trustee, Various Organizations
WILLIAM C. MORRIS 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
JAMES C. PITNEY 3
Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
Director, Public Service Enterprise Group
JAMES Q. RIORDAN 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
RONALD T. SCHROEDER 1
Managing Director, J. & W. Seligman & Co. Incorporated
ROBERT L. SHAFER 3
Vice President, Pfizer Inc.
Director, USLIFE Corporation
JAMES N. WHITSON 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
President
Managing Director, J. & W. Seligman & Co. Incorporated
- -------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
17
<PAGE>
================================================================================
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
WILLIAM C. MORRIS
Chairman
BRIAN T. ZINO
President
ARSEN MRAKOVCIC
Vice President
LAWRENCE P. VOGEL
Vice President
THOMAS G. ROSE
Treasurer
FRANK J. NASTA
Secretary
- --------------------------------------------------------------------------------
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
18
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
{LOGO}
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman Frontier Fund, Inc., which contains information about the sales
charges, management fee, and other costs. Please read the prospectus carefully
before investing or sending money.
EQFR2 9/95
- --------------------------------------------------------------------------------
ANNUAL REPORT
SELIGMAN
FRONTIER
FUND, INC.
SEPTEMBER 30, 1995
[LOGO]
- --------------------------------------------------------------------------------
A Capital Appreciation Fund
Established in 1984
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Part A - Financial Highlights for Class A shares for the ten years ended
September 30, 1995.
Financial Highlights for Class D shares for the period May 3, 1993
(commencement of operations) to September 30, 1995.
Part B - Required Financial Statements are included in the Fund's Annual
Report to shareholders, dated September 30, 1995, which in incorporated
by reference in the Statement of Additional Information. These
Financial Statements are: Portfolio of Investments as of September 30,
1995. Statement of Assets and Liabilities as of September 30, 1995;
Statement of Operations for the year ended September 30, 1995;
Statements of Changes in Net Assets for the years ended September 30,
1995 and September 30, 1994; Notes to Financial Statements; Financial
Highlights for the five years ended September 30, 1995 for the Fund's
Class A shares and for the period May 3, 1993 (commencement of
operations) to September 30, 1995 for the Fund's Class D shares; Report
of Independent Auditors.
(b) Exhibits: All Exhibits have been previously filed and are incorporated
herein by reference, except Exhibits marked with an asterisk (*) which
are attached hereto.
(1a) Copy of Articles Supplementary to Articles of Incorporation of
Registrant dated April 29, 1993. (Incorporated by reference to
Post-Effective Amendment No. 15 filed on April 23, 1993.)
(1b) Articles Supplementary to Articles of Incorporation of Registrant,
dated February 8, 1996.*
(1c) Articles Supplementary to Articles of Incorporation of Registrant,
dated April 10, 1996.*
(2) Copy of Bylaws of Registrant.
(Incorporated by reference to Registrant's Registration Statement filed
July 31, 1984.)
(3) N/A
(4a) Copy of Specimen certificate of Class B Capital Stock.
(Incorporated by Reference to Form SE filed on April 16, 1996.)
(4b) Copy of Specimen certificate of Class D Capital Stock.
(Incorporated by reference to Post-Effective Amendment No. 15 filed on
April 23, 1993.)
(5) Copy of amended Management Agreement between the Registrant and J. & W.
Seligman & Co. Incorporated. (Incorporated by reference to
Post-Effective Amendment No.19 filed on January 29, 1996.)
(5a) Copy of amended Subadvisory Agreement between the Manager and Seligman
Henderson Co. (Incorporated by reference to Post-Effective Amendment
No. 19 filed on January 29, 1996.)
(6) Copy of Distributing Agreement between Registrant and Seligman
Financial Services, Inc. (Incorporated by reference to Post-Effective
Amendment No. 14 filed on January 29, 1993.)
(6a) Copy of amended Sales Agreement between Seligman Financial Services,
Inc. and Dealer.*
(7) Copy of amendments to the Amended Retirement Income Plan of J. & W.
Seligman & Co. Incorporated and Trust. (Incorporated by reference to
Post-Effective Amendment No. 17 filed on April 29, 1994.)
(7a) Copy of amendments to the Amended Employees' Thrift Plan of Union Data
Service Center, Inc. and Trust. (Incorporated by reference to
Post-Effective Amendment No. 17 filed on April 29, 1994.)
(8) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company. (Incorporated by reference to Post-Effective Amendment
No. 9 filed on November 30, 1990.)
<PAGE>
PART C OTHER INFORMATION
(9) N/A
(10) Opinion and Consent of Counsel.
(Incorporated by Reference to Post-Effective Amendment No. 19 filed on
January 29, 1996.)
(11) Consent of Independent Auditors.*
(12) N/A
(13a) Copy of Purchase Agreement for Initial Capital for Class B shares.*
(13b) Copy of Purchase Agreement for Initial Capital for Class D shares.
(Incorporated by reference to Post-Effective Amendment No. 15 filed on
April 23, 1993.)
(14) Copy of amended Individual Retirement Account Trust and Related
Documents. (Incorporated by reference to Seligman Tax-Exempt Fund
Series, Inc., File No. 2-86008, Post-Effective Amendment No. 24 filed
on November 30, 1992.)
(14a) Copy of amended Comprehensive Retirement Plans for Money Purchase
and/or Prototype Profit Sharing Plan. (Incorporated by reference to
Seligman Tax-Exempt Fund Series, Inc., File No. 2-86008, Post-Effective
Amendment No. 24 filed on November 30, 1992.)
(14b) Copy of amended Basic Business Retirement Plans for Money Purchase
and/or Profit Sharing Plans. (Incorporated by reference to Seligman
Tax-Exempt Fund Series, Inc., File No. 2-86008, Post-Effective
Amendment No. 24 filed on November 30, 1992.)
(14c) Copy of amended 403(b)(7) Custodial Account Plan. (Incorporated by
reference to Seligman New Jersey Tax-Exempt Fund Series, Inc., File No.
33-13401, Pre-Effective Amendment No. 1 filed on January 11, 1988.)
(14d) Copy of amended Simplified Employee Pension Plan (SEP). (Incorporated
by reference to Seligman Tax-Exempt Fund Series, Inc., File No.
2-86008, Post-Effective Amendment No. 24 filed on November 30, 1992.)
(14e) Copy of amended J. & W. Seligman & Co. Incorporated (SARSEP) Salary
Reduction and Other Elective Simplified Employee Pension-Individual
Retirement Accounts Contribution Agreement (Under Section 408(k) of the
Internal Revenue Code).
(Incorporated by reference to Seligman Tax-Exempt Fund Series, Inc.,
File No. 2-86008, Post-Effective Amendment No. 24 filed on November 30,
1992.)
(15) Copy of amended Administration, Shareholder Services and Distribution
Plan and Form of Agreement of Registrant.*
(16) Schedule of computation of Performance Data provided in Registration
Statement in reponse to Item 22. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 12 filed on March 23, 1993.)
(17) Financial Data Schedule meeting the requirements of Rule 483 under the
Securities Act of 1933. (Incorporated by reference to Post-Effective
Amendment No. 19 filed on January 29, 1996.)
(18) Copy of Multiclass Plan entered into by Registrant pursuant to Rule
18f-3 under the Investment Company Act of 1940.*
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT - None.
<PAGE>
PART C. OTHER INFORMATION
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of Record
TITLE OF CLASS HOLDERS AS OF MARCH 29, 1996
-------------- ----------------------------
Class A Common Stock 24,906
Class B Common Stock 0
Class D Common Stock 13,406
ITEM 27. INDEMNIFICATION - Incorporated by reference to the Registrant's
Registration Statement on Form N-1A and Pre-Effective Amendment Nos. 1
and 2 thereto; File No. 2-92487.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER - J. & W. Seligman
& Co. Incorporated, a Delaware corporation ("Manager"), is the
Registrant's investment manager. The Manager also serves as investment
manager to sixteen associated investment companies. They are Seligman
Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund,
Inc., Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania
Tax-Exempt Fund Series, Seligman Portfolios, Inc., Seligman Quality
Municipal Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman
Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt Series Trust and
Tri-Continental Corporation.
Seligman Henderson Co. ("Subadvisor") is the Registrant's subadviser.
The Subadviser also serves as subadviser to eight other associated
investment companies. They are Seligman Capital Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Growth Fund, Inc., Seligman Frontier Fund, Inc.Seligman
Henderson Global Fund Series, Inc., Seligman Income Fund, Inc., the
Global and Global Smaller Companies Portfolios of Seligman Portfolios,
Inc. and Tri-Continental Corporation.
The Manager and Subadviser have an investment advisory service division
which provides investment management or advice to private clients. The
list required by this Item 28 of officers and directors of the Manager
and the Subadviser, respectively, 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 or Form ADV,
filed by the Manager and the Subadviser, respectively, pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-5798 and SEC File No.
801-4067), both of which were filed on December 5, 1995.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter currently distributing
securities of the Registrant also acts as a principal underwriter,
depositor or investment adviser are:
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Pennsylvania Tax-Exempt Fund Series
Seligman Portfolios, Inc.
Seligman Tax-Exempt Fund Series, Inc.
Seligman Tax-Exempt Series Trust.
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 21:
<PAGE>
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF MARCH 29, 1996
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
---------------- ---------------- ---------------
<C> <C> <C>
William C. Morris* Director Chairman of the Board
and Chief Executive
Officer
BRIAN T. ZINO* Director Director and President
RONALD T. SCHROEDER* Director Director
FRED E. BROWN* Director Director
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
MARK R. GORDON* Senior Vice President, Director None
of Marketing
GERALD I. CETRULO, III Senior Vice President of Sales, None
140 West Parkway Regional Sales Manager
Pompton Plains, NJ 07444
BRADLEY F. HANSON Senior Vice President of Sales, None
9707 Xylon Court Regional Sales Manager
Bloomington, MN 55438
BRADLEY W. LARSON Senior Vice President of Sales, None
367 Bryan Drive Regional Sales Manager
Danville, CA 94526
D. IAN VALENTINE Senior Vice President of Sales, None
307 Braehead Drive Regional Sales Manager
Fredericksburg, VA 22401
HELEN SIMON* Vice President, Sales None
Administration Manager
MARSHA E. JACOBY* Vice President, National Accounts None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
JAMES R. BESHER Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
BRAD DAVIS Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
ANDREW DRALUCK Regional Vice President None
4215 N. Civic Center
Blvd #273
Scottsdale, AZ 85251
JONATHAN EVANS Regional Vice Pesident None
222 Fairmont Way
Ft. Lauderdale, FL 33326
CARLA GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
SUSAN GUTTERUD Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
SELIGMAN FINANCIAL SERVICES, INC.
AS OF MARCH 29, 1996
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
- ---------------- ---------------- ---------------
Mark Lien Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
RANDY D. LIERMAN Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
JUDITH L. LYON Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
DAVID MEYNCKE Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
HERB W. MORGAN Regional Vice President None
11308 Monticook Court
San Diego, CA 92127
MELINDA NAWN Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
ROBERT H. RUHM Regional Vice President None
167 Derby Street
Melrose, MA 02176
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
BRUCE TUCKEY Regional Vice President None
41644 Chathman Drive
Novi, MI 48375
ANDREW VEASEY Regional Vice President None
14 Woodside
Rumson, NJ 07760
TODD VOLKMAN Regional Vice President None
4650 Cole Avenue, #216
Dallas, TX 75205
KELLI A. WIRTH-DUMSER Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
FRANK P. MARINO* Assistant Vice President, Mutual
Fund Product Manager None
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
* The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, N Y 10017.
(c) Not Applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
(1) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105 AND
(2) Seligman Data Corp.
100 Park Avenue
New York, NY 10017
<PAGE>
PART C. OTHER INFORMATION
ITEM 31. MANAGEMENT SERVICES - Seligman Data Corp., the Registrant's shareholder
service agent, has an agreement with First Data Investor Services Group
("FDISG") pursuant to which FDISG provides a data processing system for
certain shareholder accounting and recordkeeping functions performed by
Seligman Data Corp, which commenced in July 1990. For the fiscal years
ended September 30, 1995, 1994 and 1993 the approximate cost of these
services was $64,500, $15,342, and $6,290, respectiviely.
ITEM 32. UNDERTAKINGS - The Registrant undertakes: (1) if requested to do so by
the holders of at least ten percent of its outstanding shares, to call
a meeting of shareholders for the purpose of voting upon the removal of
a director or directors and to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company Act
of 1940; and (2) to furnish to each person to whom a prospectus is
delivered, a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<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 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 20 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 19th day of
April, 1996.
SELIGMAN FRONTIER 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. 20 to
Registration Statement has been signed below by the following persons in the
capacities indicated on April 19, 1996
SIGNATURE TITLE
/s/ William C. Morris Chairman of the Board (Principal
- ----------------------------
William C. Morris* executive officer) and Director
/s/ Brian T. Zino President and Director
- ---------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer (Principal financial
- ---------------------------
Thomas G. Rose and accounting officer)
Fred E. Brown, Director )
Alice S. Ilchman, Director )
John E. Merow, Director ) /s/ Brian T. Zino
--------------------------------
Betsy S. Michel, Director ) *Brian T. Zino, Attorney-in-fact
James C. Pitney, Director )
James Q. Riordan, Director )
Ronald T. Schroeder, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
Exhibit 1B
SELIGMAN FRONTIER FUND, INC.
----------------------------
ARTICLES SUPPLEMENTARY
Seligman Frontier Fund, Inc., a Maryland corporation having
its principal office in Baltimore City, Maryland (hereinafter called the
"Corporation") and registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The total number of shares of capital stock of all
classes which the Corporation has authority to issue is 500,000,000 shares,
which were previously classified by the Board of Directors of the Corporation
into two classes designated as Class A Common Stock and Class D Common Stock.
The number of authorized shares of Class A Common Stock and of Class D Common
Stock each consisted of the sum of x and y, where x equalled the issued and
outstanding shares of such class and y equalled one-half of the authorized but
unissued shares of Common Stock of all classes; provided that at all times the
aggregate authorized, issued and outstanding shares of Class A and Class D
Common Stock shall not exceed the authorized number of shares of Common Stock;
and, in the event application of the formula above would have resulted, at any
time, in fractional shares, the applicable number of authorized shares of each
class was to have been rounded down to the nearest whole number of shares of
such class.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of capital stock, the Board of Directors
has reclassified the unissued shares of Class A Common Stock and Class D Common
Stock into the following classes and has provided for the issuance of shares of
such classes. The terms of the Common Stock as set by the Board of Directors are
as follows:
(a) The Common Stock of the Corporation shall have three
classes of shares, which shall be designated Class A Common Stock,
Class B Common Stock and Class D Common Stock. The number of authorized
shares of Class A Common Stock, of Class B Common Stock and of Class D
Common Stock shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such class and y equals one-third
of the authorized but unissued shares of Common Stock of all classes;
provided that at all times the aggregate authorized, issued and
outstanding shares of Class A, Class B and Class D Common Stock shall
not exceed the authorized number of shares of Common Stock (i.e.,
500,000,000 shares of Common Stock until changed by further action of
the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in
the event application of the formula above would result, at any time,
in fractional shares, the applicable number of authorized shares of
each class shall be rounded down to the nearest whole number of shares
of such class. Any class of Common Stock shall be referred to herein
individually as a "Class" and collectively, together with any further
class or classes from time to time established, as the "Classes".
(b) All Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter
of the Corporation to the contrary:
(1) Class A shares may be subject to such front-end
sales loads as may be established by the Board of Directors
from time to time in accordance with the Investment Company
Act and applicable rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD").
(2) Class B shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
Subject to subsection (5) below, each Class B share shall
convert automatically into Class A shares on the last business
day of the month that precedes the eighth anniversary of the
date of issuance of such Class B share; such conversion shall
be effected on the basis of the relative net asset values of
Class B shares and Class A shares as determined by the
Corporation on the date of conversion.
-1-
<PAGE>
(3) Class D shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
(4) Expenses related solely to a particular Class
(including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other
arrangement, however designated, which may differ between the
Classes) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board
of Directors) in the net asset value, dividends, distribution
and liquidation rights of the shares of that Class.
(5) At such time as shall be permitted under the
Investment Company Act, any applicable rules and regulations
thereunder and the provisions of any exemptive order
applicable to the Corporation, and as may be determined by the
Board of Directors and disclosed in the then current
prospectus of the Corporation, shares of a particular Class
may be automatically converted into shares of another Class;
provided, however, that such conversion shall be subject to
the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable
event under Federal income tax law. The Board of Directors, in
its sole discretion, may suspend any conversion rights if such
opinion is no longer available.
(6) As to any matter with respect to which a separate
vote of any Class is required by the Investment Company Act or
by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other
arrangement referred to in subsection (4) above), such
requirement as to a separate vote by the Class shall apply in
lieu of single Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders
thereunder and the Maryland General Corporation Law, the
Classes shall vote together as a single Class on any such
matter that shall have the same effect on each such Class. As
to any matter that does not affect the interest of a
particular Class, only the holders of shares of the affected
Class shall be entitled to vote.
THIRD: These Articles Supplementary do not change the total number
of authorized shares of the Corporation.
IN WITNESS WHEREOF, SELIGMAN FRONTIER FUND, INC. has caused
these Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Secretary, and each of said officers of the
Corporation has also acknowledged these Articles Supplementary to be the
corporate act of the Corporation and has stated under penalties of perjury that
to the best of his knowledge, information and belief that the matters and facts
set forth with respect to approval are true in all material respects, all on
April 10, 1996.
SELIGMAN FRONTIER FUND, INC.
By: /s/ Brian T. Zino
-----------------
Brian T. Zino, President
Witness:
/s/ Frank J. Nasta
- ------------------
Frank J. Nasta
Secretary
-2-
<PAGE>
SELIGMAN FRONTIER FUND, INC.
----------------------------
ARTICLES SUPPLEMENTARY
Seligman Frontier Fund, Inc., a Maryland Corporation having its
principal office in Baltimore City, Maryland and registered as an open-end
investment company under the Investment Company Act of 1940 (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The total number of shares of capital stock of all classes which
the Corporation has authority to issue is hereby increased to 500,000,000 shares
of capital stock (par value $.10 per share), amounting to an aggregate par value
of $50,000,000.
SECOND: The Board of Directors of the Corporation on September 21,
1995, duly adopted and approved a resolution in accordance with Section 2-105(c)
of Maryland Corporations and Associations Code, in which was set forth the
foregoing increase in capital stock of the Corporation.
THIRD: (a) The total number of shares of capital stock of all classes
which the Corporation was heretofore authorized to issue was 50,000,000 shares
of capital stock (par value $.10), amounting to an aggregate par value of
$5,000,000.
(b) The total number of shares of Common Stock is increased by
this amendment to 500,000,000 shares of the par value of $.10 each and of the
aggregate par value of $50,000,000.
(c) The Corporation currently has only one class of Common
Stock outstanding.
IN WITNESS WHEREOF, SELIGMAN FRONTIER FUND, INC. has caused these
Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Secretary, and each of said officers of the
Corporation has also acknowledged these Articles Supplementary to be the
corporate act of the Corporation and has stated under penalties of perjury that
to the best of his knowledge, information and belief that the matters and facts
set forth with respect to approval are true in all material respects, all on
February 8, 1996.
SELIGMAN FRONTIER FUND, INC.
By /S/ BRIAN T. ZINO
------------------------------
Brian T. Zino, President
Witness:
/S/ FRANK J. NASTA
- -----------------------
Frank J. Nasta
Secretary
Exhibit 6A
ADDENDUM
TO
Sales Agreement
covering shares of capital stock
or shares of beneficial interest of
the Seligman Mutual Funds
between
SELIGMAN FINANCIAL SERVICES, INC.
and
DEALER
Dear Dealer:
Your Sales Agreement with Seligman Financial Services, Inc. ("SFSI") is
hereby amended to include the following provisions in connection with the
offering by certain of the Seligman Mutual Funds of Class B shares as described
in each applicable prospectus:
1. Dealer agrees to comply with the attached "Policies and Procedures"
with respect to sales of Seligman Mutual Funds offering three classes
of shares.
2. SFSI shall be entitled to a contingent deferred sales load ("CDSL") on
redemptions within six years of purchase on any Class B shares sold and
within one year of purchase on any Class D shares sold. With respect to
omnibus accounts in which Class B shares or Class D shares are held at
Seligman Data Corp. ("SDC") in Dealer's name, Dealer agrees that by the
tenth day of each month it will furnish to SDC a report of each
redemption in the preceding month to which a CDSL was applicable,
accompanied by a check payable to SFSI in payment of the CDSL due.
3. If, with respect to a redemption of any Class B shares or Class D
shares sold by Dealer, the CDSL is waived because the redemption
qualifies for a waiver set forth in the Fund's prospectus, Dealer shall
promptly remit to SFSI an amount equal to the payment made by SFSI to
Dealer at the time of sale with respect to such Class B shares or Class
D Shares.
4. The Dealer will comply in all respects with Notice to Members 95-80 of
the National Association of Securities Dealers, Inc. regarding members
obligations and responsibilities regarding mutual fund sales practices.
The sale of any Class A,Class B or Class D shares of a Seligman Mutual
Fund will constitute Dealer's acceptance of and agreement with the terms set
forth herein.
<PAGE>
EXHIBIT C
POLICIES AND PROCEDURES
In connection with the offering by the Funds of three classes of
shares, one subject to a front-end sales load and a service fee ("Class A
Shares"), one subject to a service fee, a distribution fee, no front-end sales
load and a contingent deferred sales load on redemptions within six years of
purchase ("Class B Shares") and one subject to a service fee, a distribution
fee, no front-end sales load and a contingent deferred sales load on redemptions
within one year of purchase ("Class D Shares"), it is important for an investor
to choose the method of purchasing shares which best suits his or her particular
circumstances. To assist investors in these decisions, Seligman Financial
Services has instituted the following policies with respect to orders for
Shares:
1. No purchase order may be placed for Class B Shares or Class D
Shares for amounts of $4,000,000 or more.
2. Any purchase order for less than $4,000,000 may be for either
Class A, Class B or Class D Shares in light of the relevant
facts and circumstances, including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his
Shares; and
c. any other relevant circumstances such as the
availability of purchases under a Letter of Intent,
Volume Discount, or Right of Accumulation.
There are instances when one method of purchasing Shares may be more
appropriate than another. For example, an investor who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of higher ongoing distribution fee. On the other hand, an
investor whose order would not qualify for such a discount may wish to have all
of his or her funds invested in Class B or Class D Shares. An investor who
expects to hold his or her shares for longer than eight years might prefer Class
B Shares over Class D Shares because of the conversion feature; once the Class B
Shares have converted to Class A Shares, the ongoing distribution fees will be
reduced. Class D Shares may remain a more attractive choice for shorter-term
investors because of the contingent deferred sales load on such shares is only
1%, and it does not apply if the investor owns his or her shares for at least
one year. If an investor anticipates that he or she will redeem his or her Class
B Shares or Class D Shares while still subject to a contingent deferred sales
charge, the investor may, depending on the amount of the purchase, pay an amount
greater than the sales load and service fee attributable to Class A Shares.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of Shares of
a Fund advise the investor of then available pricing structures offered by the
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
Questions relating to this policy should be directed to Stephen J.
Hodgdon, President, Seligman Financial Services at (212) 850-1217.
<PAGE>
SALES AGREEMENT
covering shares of capital stock
and/or shares of beneficial interest of
THE SELIGMAN MUTUAL FUNDS
Seligman Capital Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Pennsylvania Tax-Exempt Fund Series
Seligman Tax-Exempt Fund Series, Inc.
Seligman Tax-Exempt Series Trust
between
SELIGMAN FINANCIAL SERVICES, INC.
and
----------------------------------------------------------------------------
Dealer
The Dealer named above and Seligman Financial Services, Inc., exclusive agent
for distribution of shares of capital stock of Seligman Capital Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman
Henderson Global Fund Series, Inc., Seligman Income Fund, Inc., Seligman New
Jersey Tax-Exempt Fund, Inc., and Seligman Tax-Exempt Fund Series, Inc., and
shares of beneficial interest of Seligman High Income Fund Series, Seligman
Pennsylvania Tax-Exempt Fund, and Seligman Tax-Exempt Series Trust, agree to the
terms and conditions set forth in this agreement.
DEALER SIGNATURE SELIGMAN FINANCIAL SERVICES, INC. ACCEPTANCE
- -------------------------- ---------------------------------------------
Principal Officer Stephen J. Hodgdon, President
SELIGMAN FINANCIAL SERVICES, INC.
- -------------------------- 100 Park Avenue
Address New York, New York 10017
- -------------------------- ---------------------------------------------
Employer Identification No. Date
REV 1/95
<PAGE>
The Dealer and Seligman Financial Services, Inc. ("Seligman Financial
Services"), as exclusive agent for distribution of Class A and Class D Shares
(as described in the "Policies and Procedures," as set forth below) of the
Capital Stock and/or Class A and Class D Shares of beneficial interest
(collectively, the "Shares") of Seligman Capital Fund, Inc., Seligman Common
Stock Fund, Inc., Seligman Communications and Information Fund, Inc., Seligman
Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund, Inc.,
Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt
Fund, Seligman Tax-Exempt Fund Series, Inc. and Seligman Tax-Exempt Series Trust
and or any other mutual fund for which Seligman Financial Services is exclusive
agent for distribution (herein called the Funds), agree as follows:
1. The Dealer agrees to comply with the attached "Policies and Procedures"
with respect to sales of Seligman Mutual Funds offering two classes of
shares, as set forth below.
2. An order for Shares of one or more of the Funds, placed by the Dealer
with Seligman Financial Services, will be confirmed at the public
offering price as described in each Fund's current prospectus. Unless
otherwise agreed when an order is placed, the Dealer shall remit the
purchase price to the Fund, or Funds, with issuing instruction, within
the period of time prescribed by existing regulations. No wire orders
under $1,000 may be placed for initial purchases.
3. Shares of the Funds shall be offered for sale and sold by the Dealer
only at the applicable public offering price currently in effect,
determined in the manner prescribed in each Fund's prospectus. Seligman
Financial Services will make a reasonable effort to notify the Dealer
of any redetermination or suspension of the current public offering
price, but Seligman Financial Services shall be under no liability for
failure to do so.
4. On each purchase of Shares by the Dealer, the Dealer shall be entitled,
based on the Class of Shares purchased and except as provided in each
Fund's current prospectus, to a concession determined as a percentage
of the price to the investor as set forth in each Fund's current
prospectus. On each purchase of Class A Shares, Seligman Financial
Services reserves the right to receive a minimum concession of $.75 per
transaction. No concessions will be paid to the Dealer for the
investment of dividends in additional shares.
5. Except for sales to and purchases from the Dealer's retail customers,
all of which shall be made at the applicable current public offering
price or the current price bid by Seligman Financial Services on behalf
of the Fund, the Dealer agrees to buy Shares only through Seligman
Financial Services and not from any other sources and to sell shares
only to Seligman Financial Services, the Fund or its redemption agent
and not to any other purchasers.
6. By signing this Agreement, both Seligman Financial Services and the
Dealer warrant that they are members of the National Association of
Securities Dealers, Inc., and agree that termination of such membership
at any time shall terminate this Agreement forthwith regardless of the
provisions of paragraph 10 hereof. Each party further agrees to comply
with all rules and regulations of such Association and specifically to
observe the following provisions:
(a) Neither Seligman Financial Services nor the Dealer shall
withhold placing customers' orders for Shares so as to profit
itself as a result of such withholding.
(b) Seligman Financial Services shall not purchase Shares from any
of the Funds except for the purpose of covering purchase
orders already received, and the Dealer shall not purchase
Shares of any of the Funds through Seligman Financial Services
other than for investment, except for the purpose of covering
purchase orders already received.
<PAGE>
(c) Seligman Financial Services shall not accept a conditional
order for Shares on any basis other than at a specified
definite price. The Dealer shall not, as principal, purchase
Shares of any of the Funds from a recordholder at a price
lower than the bid price, if any, then quoted by or for the
Fund, but the Dealer shall not be prevented from selling
Shares for the account of a record owner to Seligman Financial
Services, the Fund or its redemption agent at the bid price
currently quoted by or for such Fund, and charging the
investor a fair commission for handling the transaction.
(d) If Class A Shares are repurchased by a Fund or by Seligman
Financial Services as its agent, or are tendered for
redemption within seven business days after confirmation by
Seligman Financial Services of the original purchase order of
the Dealer for such Shares, (i) the Dealer shall forthwith
refund to Seligman Financial Services the full concession
allowed to the Dealer on the original sales and (ii) Seligman
Financial Services shall forthwith pay to the Fund Seligman
Financial Services' share of the "sales load" on the original
sale by Seligman Financial Services, and shall also pay to the
Fund the refund which Seligman Financial Services received
under (i) above. The Dealer shall be notified by Seligman
Financial Services of such repurchase or redemption within ten
days of the date that such redemption or repurchase is placed
with Seligman Financial Services, the Fund or its authorized
agent. Termination or cancellation of this Agreement shall not
relieve the Dealer or Seligman Financial Services from the
requirements of this clause (d).
7. (a) Seligman Financial Services shall be entitled to a
contingent deferred sales load ("CDSL") on redemptions within
one year of purchase on any Class D Shares sold. With respect
to omnibus accounts in which Class D Shares are held at
Seligman Data Corp. ("SDC") in the Dealer's name, the Dealer
agrees that by the tenth day of each month it will furnish to
SDC a report of each redemption in the preceding month to
which a CDSL was applicable, accompanied by a check payable to
Seligman Financial Services in payment of the CDSL due.
(b) If, with respect to a redemption of any Class D Shares sold by
the Dealer, the CDSL is waived because the redemption
qualifies for a waiver set forth in the Fund's prospectus, the
Dealer shall promptly remit to Seligman Financial Services an
amount equal to the payment made by Seligman Financial
Services to the Dealer at the time of sale with respect to
such Class D Shares.
8. In all transactions between Seligman Financial Services and
the Dealer under this Agreement, the Dealer will act as
principal in purchasing from or selling to Seligman Financial
Services. The dealer is not for any purposes employed or
retained as or authorized to act as broker, agent or employee
of any Fund or of Seligman Financial Services and the Dealer
is not authorized in any manner to act for any Fund or
Seligman Financial Services or to make any representations on
behalf of Seligman Financial Services. In purchasing and
selling Shares of any Fund under this Agreement, the Dealer
shall be entitled to rely only upon matters stated in the
current offering prospectus of the applicable Fund and upon
such written representations, if any, as may be made by
Seligman Financial Services to the Dealer over the signature
of Seligman Financial Services.
9. Seligman Financial Services will furnish to the Dealer,
without charge, reasonable quantities of the current offering
prospectus of each Fund and sales material issued from time to
time by Seligman Financial Services.
10. Either Party to this Agreement may cancel this Agreement by
written notice to the other party. Such cancellation shall be
effective at the close of business on the 5th day following
the date on which such notice was given. Seligman Financial
Services may modify this Agreement at any time by written
notice to the Dealer. Such notice shall be deemed to have been
given on the date upon which it was either delivered
personally to the other party or any officer or member
thereof, or was mailed postage-paid, or delivered to a
telegraph office for transmission to the other party at his or
its address as shown herein.
<PAGE>
11. This Agreement shall be construed in accordance with the laws
of the State of New York and shall be binding upon both
parties hereto when signed by Seligman Financial Services and
by the Dealer in the spaces provided on the cover of this
Agreement. This Agreement shall not be applicable to Shares of
a Fund in a state in which such Fund Shares are not qualified
for sale.
POLICIES AND PROCEDURES
In connection with the offering by the Funds of three classes of
shares, one subject to a front-end sales load and a service fee ("Class A
Shares"), one subject to a service fee, a distribution fee, no front-end sales
load and a contingent deferred sales load on redemptions within six years of
purchase ("Class B Shares") and one subject to a service fee, a distribution
fee, no front-end sales load and a contingent deferred sales load on redemptions
within one year of purchase ("Class D Shares"), it is important for an investor
to choose the method of purchasing shares which best suits his or her particular
circumstances. To assist investors in these decisions, Seligman Financial
Services has instituted the following policies with respect to orders for
Shares:
1. No purchase order may be placed for Class B Shares or Class D
Shares for amounts of $4,000,000 or more.
2. Any purchase order for less than $4,000,000 may be for either
Class A, Class B or Class D Shares in light of the relevant
facts and circumstances, including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his
Shares; and
c. any other relevant circumstances such as the
availability of purchases under a
Letter of Intent, Volume Discount, or Right of
Accumulation.
There are instances when one method of purchasing Shares may be more
appropriate than another. For example, an investor who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of higher ongoing distribution fee. On the other hand, an
investor whose order would not qualify for such a discount may wish to have all
of his or her funds invested in Class B or Class D Shares. An investor who
expects to hold his or her shares for longer than eight years might prefer Class
B Shares over Class D Shares because of the conversion feature; once the Class B
Shares have converted to Class A Shares, the ongoing distribution fees will be
reduced. Class D Shares may remain a more attractive choice for shorter-term
investors because of the contingent deferred sales load on such shares is only
1%, and it does not apply if the investor owns his or her shares for at least
one year. If an investor anticipates that he or she will redeem his or her Class
B Shares or Class D Shares while still subject to a contingent deferred sales
charge, the investor may, depending on the amount of the purchase, pay an amount
greater than the sales load and service fee attributable to Class A Shares.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of Shares of
a Fund advise the investor of then available pricing structures offered by the
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
Questions relating to this policy should be directed to Stephen J.
Hodgdon, President, Seligman Financial Services at (212) 850-1217.
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
Seligman Frontier Fund, Inc.:
We consent to the incorporation by reference in the Statement of Additional
Information in this Post-Effective Amendment No. 20 to Registration Statement
No. 2-92487 of our report dated November 3, 1995, appearing in the Annual Report
to shareholders for the year ended September 30, 1995, and to the reference to
us under the caption "Financial Highlights" in the Prospectus, which is a part
of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 17, 1996
Exhibit 13A
INVESTMENT LETTER
SELIGMAN FRONTIER FUND, INC.
Seligman Frontier Fund, Inc. (the "Fund"), an open-end diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. The Fund hereby sells to Purchaser and Purchaser purchases 1 Class B
share (the "Share") of Capital Stock (par value $.10) of the Fund at a
price equivalent to the net asset value of one share of the Fund as of
the close of business on April 18, 1996. The Fund hereby acknowledges
receipt from Purchaser of funds in such amount in full payment for the
Share.
2. Purchaser represents and warrants to the Fund that the Shares are being
acquired for investment and not with a view to distribution thereof,
and that Purchaser has no present intention to redeem or dispose of the
Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 17th day
of April, 1996 ("Purchase Date").
SELIGMAN FRONTIER FUND, INC.
By: /s/ Lawrence P. Vogel
---------------------
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By: /s/ Lawrence P. Vogel
---------------------
Name: Lawrence P. Vogel
Title: Senior Vice President
Exhibit 15
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
SECTION 1. Seligman Frontier Fund, Inc. (the "Fund") will pay fees to
Seligman Financial Services, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class B and Class D shares of the Fund. As a result,
the Fund is adopting this Administration, Shareholder Services and Distribution
Plan (the "Plan") pursuant to Section 12(b) of the Investment Company Act of
1940, as amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the Distributor a
shareholder servicing fee of up to .25% on an annual basis of the average daily
net assets of the Fund (payable quarterly with respect to Class A and monthly
with respect to Class B and Class D) and a distribution fee of .75% on an annual
basis, payable monthly, of the average daily net assets of the Fund attributable
to the Class B Shares and a distribution fee of up to .75% on an annual basis,
payable monthly, of the average daily net assets of the Fund attributable to
Class D shares. Such fees will be used in their entirety by the Distributor to
make payments for administration, shareholder services and distribution
assistance, including, but not limited to (i) compensation to securities dealers
and other organizations (each, a "Service Organization" and collectively, the
"Service Organizations"), for providing distribution assistance with respect to
assets invested in the Fund, (ii) compensation to Service Organizations for
providing administration, accounting and other shareholder services with respect
to Fund shareholders, and (iii) otherwise promoting the sale of shares of the
Fund, including paying for the preparation of advertising and sales literature
and the printing and distribution of such promotional materials and prospectuses
to prospective investors and defraying the Distributor's costs incurred in
connection with its marketing efforts with respect to shares of the Fund. To the
extent a Service Organization provides administration, accounting and other
shareholder services, payment for which is not required to be made pursuant to a
plan meeting the requirements of Rule 12b-1, a portion of the fee paid by the
Fund shall be deemed to include compensation for such services. The fees
received from the Fund hereunder in respect of the Class A shares may not be
used to pay any interest expense, carrying charges or other financing costs, and
fees received hereunder may not be used to pay any allocation of overhead of the
Distributor. The fees of any particular class of the Fund may not be used to
subsidize the sale of shares of any other class. The fees payable to Service
Organizations from time to time shall, within such limits, be determined by the
Directors of the Fund.
SECTION 3. J. & W. Seligman & Co. Incorporated, the Fund's investment
manager (the "Manager"), in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Fund.
SECTION 4. This Plan shall continue in effect through December 31 of
each year so long as such continuance is specifically approved at least annually
by vote of a majority of both (a) the Directors of the Fund and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
<PAGE>
SECTION 5. The Distributor shall provide to the Fund's Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
so expended and the purposes for which such expenditures were made.
SECTION 6. This Plan may be terminated by the Fund with respect to any
class at any time by vote of a majority of the Qualified Directors, or by vote
of a majority of the outstanding voting securities of such class. If this Plan
is terminated in respect of a class, no amounts (other than amounts accrued but
not yet paid) would be owed by the Fund to the Distributor with respect to such
class.
SECTION 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Fund
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval, provided, however, that the identity of a
particular Service Organization executing any such agreement may be ratified by
such a vote within 90 days of such execution. Any agreement related to this Plan
shall provide:
A. That such agreement may be terminated in respect of any class
of the Fund at any time, without payment of any penalty, by
vote of a majority of the Qualified Directors or by vote of a
majority of the outstanding voting securities of the class, on
not more than 60 days' written notice to any other party to
the agreement; and
B. That such agreement shall terminate automatically in the event
of its assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Fund and (b) the Qualified Directors,
cast in person at a meeting called for the purpose of voting on such approval.
This Plan shall not be amended to reduce the distribution fee payable to the
Distributor pursuant to Section 2 hereof in respect of Class B shares, unless
the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated, provided, however that the
distribution fee in respect of Class B shares may be reduced without change to
the shareholder servicing fee, if and to the extent required in order to comply
with any applicable laws or regulations, including applicable rules of the
National Association of Securities Dealers, Inc. regulating maximum sales
charges.
SECTION 9. The Fund is not obligated to pay any administration,
shareholder services or distribution expense in excess of the fee described in
Section 2 hereof, and, in the case of Class A shares, any expenses of
administration, shareholder services and distribution of Class A shares of the
Fund accrued in one fiscal year of the Fund may not be paid from administration,
shareholder services and distribution fees received from the Fund in respect of
Class A shares in any other fiscal year.
<PAGE>
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Fund who are not "interested persons" of the
Fund and have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to this Plan.
<PAGE>
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION AGREEMENT, dated as of
______, 19__ between Seligman Financial Services, Inc. ("Seligman Financial
Services") and ______________________________ (the "Service Organization").
The Parties hereto enter into a Administration, Shareholder Services
and Distribution Agreement ("Service Agreement") with respect to the shares of
Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund, Inc.,
Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson
Global Fund Series, Inc., Seligman High Income Fund Series, Seligman Income
Fund, Inc., Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania
Tax-Exempt Fund Series, Seligman Tax-Exempt Fund Series, Inc., Seligman
Tax-Exempt Series Trust (the "Funds"), and any other future mutual funds that
may become members of the Seligman Group of Investment Companies which adopt an
Administration, Shareholder Services and Distribution Plan, pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "Act"), and in
consideration of the mutual agreements herein made, agree as follows:
The Service Organization shall make such use of or provide such
information and services as may be necessary or appropriate (i) to provide
shareholder services to shareholders of the Funds and (ii) to assist Seligman
Financial Services in any distribution of shares of the Funds, including,
without limitation, making use of the Service Organization's name, client lists,
and publications, for the solicitation of sales of shares of the Funds to
Service Organization clients, and such other assistance as Seligman Financial
Services reasonably requests, to the extent permitted by applicable statute,
rule or regulation.
1. Except with respect to the Class D shares of a Fund for the first year
following the sale thereof, Seligman Financial Services shall pay to
the Service Organization a service fee (as defined in the National
Association of Securities Dealers, Inc. Rules of Fair Practice) not to
exceed .25 of 1% per annum of the average daily net assets of each
class of shares of each Fund attributable to the clients of the Service
Organization.
2. With respect to the first year following the sale of Class D shares of
a Fund, Seligman Financial Services shall pay to the Service
Organization at or promptly after the time of sale a service fee (as
defined in the National Association of Securities Dealers, Inc. Rules
of Fair Practice) not to exceed .25 of 1% of the net asset value of the
Class D shares sold by the Service Organization. Such service fee shall
be paid to the Service Organization solely for personal services and/or
the maintenance of shareholder accounts to be provided by the Service
Organization to the purchaser of such Class D Shares over the course of
the first year following the sale.
3. Any service fee paid hereunder shall be paid solely for personal
services and/or the maintenance of shareholder accounts. For greater
certainty, no part of a service fee shall be paid for subtransfer
agency services, subaccounting services, or administrative services.
<PAGE>
4. In addition to payment of the service fee, from time to time Seligman
Financial Services may make payments to the Service Organization in
addition to those contemplated above for providing distribution
assistance with respect to assets invested in each Fund by its clients.
5. Neither the Service Organization nor any of its employees or agents are
authorized to make any representation concerning the Funds or the
Funds' shares except those contained in the then current Prospectus,
copies of which will be supplied by Seligman Financial Services. The
Service Organization shall have no authority to act as agent for
Seligman Financial Services or the Funds.
6. In consideration of the services provided pursuant to paragraphs 1, 2
and/or 4 above, the Service Organization shall be entitled to receive
fees as are set forth in Exhibit A hereto as may be amended from time
to time by Seligman Financial Services. Seligman Financial Services has
no obligation to make any such payments and the Service Organization
agrees to waive payment of its fee until Seligman Financial Services is
in receipt of the fee from the Fund(s). The payment of fees has been
authorized pursuant to an Administration, Shareholder Services and
Distribution Plans (the "Plans") approved by the Directors/Trustees and
the shareholders of the Funds pursuant to the requirements of the Act
and such authorizations may be withdrawn at any time.
7. It is understood that the Funds reserve the right, at their discretion
and without notice, to suspend or withdraw the sale of shares of the
Funds. This Agreement shall not be construed to authorize the Service
Organization to perform any act that Seligman Financial Services would
not be permitted to perform under the respective Distributing
Agreements between each of the Funds and Seligman Financial Services.
8. Subject to the proviso in Section 6 of the Plans, this Agreement shall
continue until December 31 of the year in which any Plan has first been
approved by shareholders and through December 31 of each year
thereafter provided such continuance is specifically approved at least
annually by a vote of a majority of (i) the Fund's Directors/Trustees
and (ii) the Qualified Directors/Trustees cast in person at a meeting
called for the purpose of voting on such approval and provided further
that the Service Organization shall not have notified Seligman
Financial Services in writing at least 60 days prior to the anniversary
date of the previous continuance that it does not desire such
continuance. This Agreement may be terminated at any time without
payment of any penalty with respect to any of the Funds by vote of a
majority of the Qualified Directors/Trustees, or by vote of a majority
of the outstanding voting securities of the particular Fund or class or
series of a Fund, on 60 days' written notice to the Service
Organization and Seligman Financial Services. Notwithstanding anything
contained herein, in the event that any of the Plans shall be
terminated or any of the Plans or any part thereof shall be found
invalid or ordered terminated by any regulatory or judicial authority,
or the Service Organization shall fail to perform the services
contemplated by this Agreement, such determination to be made in good
faith by Seligman Financial Services, this Agreement may be terminated
with respect to such Plan effective upon receipt of written notice
thereof by the Service Organization. This Agreement will also terminate
automatically in the event of its assignment.
<PAGE>
9. All communications to Seligman Financial Services shall be sent to it
at its offices, 100 Park Avenue,
New York, New York 10017.
Any notice to the Service Organization shall be duly given if mailed or
telegraphed to it at the address shown below.
10. As used in this Agreement, the terms "assignment", "interested person"
and "vote of a majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and in the rules and
regulations thereunder and the term "Qualified Directors/Trustees"
shall mean the Directors/Trustees of a Fund who are not interested
persons of the Fund and have no direct or indirect financial interest
in its Plan or in any agreements related to the Plan.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Anything herein to the contrary
notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, any of the parties to do anything in violation
of any applicable laws or regulations.
IN WITNESS WHEREOF, Seligman Financial Services and the Service Organization
have caused this Agreement to be executed by their duly authorized offices as of
the date first above written.
SELIGMAN FINANCIAL SERVICES, INC.
By
-------------------------------
Stephen J. Hodgdon, President
SERVICE ORGANIZATION
By
------------------------------
Address
-------------------------
--------------------------------
1/95
<PAGE>
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION AGREEMENT
EXHIBIT A
The payment schedule for Service Organizations is set forth immediately below:
<TABLE>
<CAPTION>
FEES AS A PERCENTAGE
OF EACH FUND'S/SERIES'
AVERAGE DAILY NET ASSETS ATTRIBUTABLE
NET ASSETS TO SERVICE ORGANIZATIONS*
ATTRIBUTABLE TO ---------------------------------
SERVICE ORGANIZATIONS CLASS A SHARES/ CLASS D
---------------------
FUND NAME CLASS A SHARES CLASS B SHARES+ SHARES**
- --------- --------------------- --------------- --------
<S> <C> <C> <C>
Seligman Capital Fund, Inc. $100,000 or more .25% 1.00%
Seligman Cash Management Fund, Inc: $100,000 or more -0-/.25% 1.00%
Seligman Common Stock Fund, Inc. $100,000 or more .25% 1.00%
Seligman Communications and Information Fund, Inc. $100,000 or more .25% 1.00%
Seligman Frontier Fund, Inc. $100,000 or more .25% 1.00%
Seligman Growth Fund, Inc. $100,000 or more .25% 1.00%
Seligman Henderson Global Fund Series, Inc:
Seligman Henderson Emerging Markets Growth Fund $100,000 or more .25% 1.00%
Seligman Henderson Global Smaller Companies Fund $100,000 or more .25% 1.00%
Seligman Henderson Global Growth Opportunities Fund $100,000 or more .25% 1.00%
Seligman Henderson Global Technology Fund $100,000 or more .25% 1.00%
Seligman Henderson International Fund $100,000 or more .25% 1.00%
Seligman High Income Fund Series:
U.S. Government Securities Portfolio $100,000 or more .25% 1.00%
High-Yield Bond Portfolio $100,000 or more .25% 1.00%
Seligman Income Fund, Inc. $100,000 or more .25% 1.00%
Seligman New Jersey Tax-Exempt Fund, Inc. $100,000 or more .25% 1.00%
Seligman Pennsylvania Tax-Exempt Fund Series $100,000 or more .25% 1.00%
Seligman Tax-Exempt Fund Series, Inc:
National Series $100,000 or more .10% 1.00%
Colorado Series $100,000 or more .10% 1.00%
Georgia Series $100,000 or more .10% 1.00%
Louisiana Series $100,000 or more .10% 1.00%
Maryland Series $100,000 or more .10% 1.00%
Massachusetts Series $100,000 or more .10% 1.00%
Michigan Series $100,000 or more .10% 1.00%
Minnesota Series $100,000 or more .10% 1.00%
Missouri Series $100,000 or more .10% 1.00%
New York Series $100,000 or more .10% 1.00%
Ohio Series $100,000 or more .10% 1.00%
Oregon Series $100,000 or more .10% 1.00%
South Carolina Series $100,000 or more .10% 1.00%
Seligman Tax-Exempt Series Trust:
California Tax-Exempt Quality Series $100,000 or more .10% 1.00%
California Tax-Exempt High-Yield Series $100,000 or more .10% 1.00%
Florida Tax-Exempt Series $100,000 or more .25% 1.00%
North Carolina Tax-Exempt Series $100,000 or more .25% 1.00%
</TABLE>
March 21, 1996
* Included in each of the percentages above is the service fee (as defined in
the National Association of Securities Dealers, Inc. Rules of Fair Practice)
with respect to each class of shares referred to in paragraph 1 of this
Agreement. Except as provided in Footnote ** below, Seligman Financial
Services shall pay the fees provided for above to the Service Organization
quarterly.
** At or promptly after the time of sale of any Class D Shares, a Service
Organization shall be paid 1.00% of the net asset value of the Class D Shares
sold by it. The difference between .75% and the amount paid is comprised of
the service fee referred to in paragraph 1 of this Agreement for services to
be provided to Class D shareholders over the course of the one year period
immediately following the sale.
+ Class B Shares are not available for the U.S. Government Securities Portfolio
of Seligman High Income Fund Series, Selligman New Jersey Tax-Exempt Fund,
Inc., Seligman Pennsylvania Tax-Exempt Fund Series or any Series of Seligman
Tax-Exempt Fund Series, Inc. or Seligman Tax-Exempt Series Trust.
Exhibit 18
SELIGMAN GROUP OF MUTUAL FUNDS
PLAN FOR MULTIPLE CLASSES OF SHARES (THREE CLASSES)
---------------------------------------------------
THIS PLAN, as it may be amended from time to time, sets forth the
separate arrangement and expense allocation of each class of shares (a "Class")
of each registered open-end management investment company, or series thereof, in
the Seligman Group of Mutual Funds that offers multiple classes of shares (each,
a "Fund"). The Plan has been adopted pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "Act"), by a majority of the
Board of Directors or Trustees, as applicable ("Directors"), of each Fund listed
on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.
1. GENERAL
-------
A. Any Fund may issue more than one Class of voting stock,
provided that each Class:
i. Shall have a different arrangement for shareholder
services or the distribution of securities or both,
and shall pay all of the expenses of that
arrangement;
ii. May pay a different share of other expenses, not
including advisory or custodial fees or other
expenses related to the management of the Fund's
assets, if these expenses are actually incurred in a
different amount by that Class, or if the Class
receives services of a different kind or to a
different degree than other Classes of the same Fund
("Class Level Expenses");
iii. May pay a different advisory fee to the extent that
any difference in amount paid is the result of the
application of the same performance fee provisions in
the advisory contract of the Fund to the different
investment performance of each Class;
iv. Shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its
arrangement;
<PAGE>
v. Shall have separate voting rights on any matter
submitted to shareholders in which the interests of
one Class differ from the interests of any other
Class; and
vi. Shall have in all other respects the same rights and
obligations as each other Class of the Fund.
B. i. Except as expressly contemplated by this paragraph
B., no types or categories of expenses shall be
designated Class Level Expenses.
ii. The Directors recognize that certain expenses arising
in certain sorts of unusual situations are properly
attributable solely to one Class and therefore should
be borne by that Class. These expenses ("Special
Expenses") may include, for example: (i) the costs of
preparing a proxy statement for, and holding, a
special meeting of shareholders to vote on a matter
affecting only one Class; (ii) the costs of holding a
special meeting of Directors to consider such a
matter; (iii) the costs of preparing a special report
relating exclusively to shareholders of one Class;
and (iv) the costs of litigation affecting one Class
exclusively. J. & W. Seligman & Co. Incorporated (the
"Manager") shall be responsible for identifying
expenses that are potential Special Expenses.
iii. Subject to clause iv. below, any Special Expense
identified by the Manager shall be treated as a Class
Level Expense.
iv. Any Special Expense identified by the Manager that is
material to the Class in respect of which it is
incurred shall be submitted by the Manager to the
Directors of the relevant Fund on a case by case
basis with a recommendation by the Manager as to
whether it should be treated as a Class Level
Expense. If approved by the Directors, such Special
Expense shall be treated as a Class Level Expense of
the affected class.
C. i. Realized and unrealized capital gains and losses of
a Fund shall be allocated to each class of that Fund
on the basis of the aggregate net asset value of all
outstanding shares ("Record Shares") of the Class in
relation to the aggregate net asset value of Record
Shares of the Fund.
<PAGE>
ii. Income and expenses of a Fund not charged directly to
a particular Class shall be allocated to each Class
of that Fund on the following basis:
a. For periodic dividend funds, on the basis of
the aggregate net asset value of Record
Shares of each Class in relation to the
aggregate net asset value of Record Shares
of the Fund.
b. For daily dividend funds, on the basis of
the aggregate net asset value of Settled
Shares of each Class in relation to the
aggregate net asset value of Settled Shares
of the Fund. "Settled Shares" means Record
Shares minus the number of shares of that
Class or Fund that have been issued but for
which payment has not cleared and plus the
number of shares of that Class or Fund which
have been redeemed but for which payment has
not yet been issued.
D. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will
monitor each Fund for the existence of any material conflicts
among the interests of its several Classes. The Directors,
including a majority of the Disinterested Directors, shall
take such action as is reasonably necessary to eliminate any
such conflicts that may develop. The Manager and Seligman
Financial Services, Inc. (the "Distributor") will be
responsible for reporting any potential or existing conflicts
to the Directors. If a conflict arises, the Manager and the
Distributor will be responsible at their own expense for
remedying such conflict by appropriate steps up to and
including separating the classes in conflict by establishing a
new registered management company to operate one of the
classes.
E. The plan of each Fund adopted pursuant to Rule 12b-1 under the
Act (the "Rule 12b-1 Plan") provides that the Directors will
receive quarterly and annual statements complying with
paragraph (b)(3)(ii) of Rule 12b-1, as it may be amended from
time to time. To the extent that the Rule 12b-1 Plan in
respect of a specific Class is a reimbursement plan, then only
distribution expenditures properly attributable to the sale of
shares of that Class will be used in the statements to support
the Rule 12b-1 fee charged to shareholders of such Class. In
such cases expenditures not related to the sale of a specific
Class will not be presented to the Directors to support Rule
12b-1 fees charged to shareholders of such Class. The
statements, including the allocations upon which they are
based, will be subject to the review of the Disinterested
Directors.
<PAGE>
F. Dividends paid by a Fund with respect to each Class, to the
extent any dividends are paid, will be calculated in the same
manner, at the same time and on the same day and will be in
the same amount, except that fee payments made under the Rule
12b-1 Plan relating to the Classes will be borne exclusively
by each Class and except that any Class Level Expenses shall
be borne by the applicable Class.
G. The Directors of each Fund hereby instruct such Fund's
independent auditors to review expense allocations each year
as part of their regular audit process, to inform the
Directors and the Manager of any irregularities detected and,
if specifically requested by the Directors, to prepare a
written report thereon. In addition, if any Special Expense is
incurred by a Fund and is classified as a Class Level Expense
in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing
such allocation, are hereby instructed to report thereon to
the Audit Committee of the relevant Fund and to the Manager.
The Manager will be responsible for taking such steps as are
necessary to remedy any irregularities so detected, and will
do so at its own expense to the extent such irregularities
should reasonably have been detected and prevented by the
Manager in the performance of its services to the Fund.
2. SPECIFIC ARRANGEMENTS FOR EACH CLASS
------------------------------------
The following arrangements regarding shareholder services, expense
allocation and other indicated matters shall be in effect with respect to the
Class A shares, Class B shares and Class D shares of each Fund. The following
descriptions are qualified by reference to the more detailed description of such
arrangements set forth in the prospectus relating to each Fund, as the same may
from time to time be amended or supplemented (for each Fund, the "Relevant
Prospectus"), PROVIDED that no Relevant Prospectus may modify the provisions of
this Plan applicable to Rule 12b-1 fees or Class Level Expenses.
(a) CLASS A SHARES
--------------
i. Class A shares are subject to an initial sales load
which varies with the size of the purchase, to a
maximum of 4.75% of the public offering price.
Reduced sales loads shall apply in certain
circumstances. Class A shares of Seligman Cash
Management Fund, Inc. shall not be subject to an
initial sales load.
<PAGE>
ii. Class A shares shall be subject to a Rule 12b-1
service fee of up to 0.25% of average daily net
assets.
iii. Special Expenses attributable to the Class A shares,
except those determined by the Directors not to be
Class Level Expenses of the Class A shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class A
shares. No other expenses shall be treated as Class
Level Expenses of the Class A shares.
iv. The Class A shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
(b) CLASS B SHARES
--------------
i. Class B shares are sold without an initial sales load
but are subject to a contingent deferred sales load
("CDSL") in certain cases. The CDSL in respect of any
Class B share, if applicable, will be in the
following amount (as a percentage of the current net
asset value or the original purchase price, whichever
is less) if the redemption occurs within the
indicated number of years of issuance of such share:
YEARS SINCE ISSUANCE CDSL
-------------------- ----
less than one 5%
one but less than two 4%
two but less than four 3%
four but less than five 2%
five but less than six 1%
six or more 0%
ii. Class B shares shall be subject to a Rule 12b-1 fee
of up to 1.00% of average daily net assets,
consisting of an asset-based distribution fee of up
to 0.75% and a service fee of up to 0.25%.
iii. Each Class B share shall automatically convert to a
Class A share on the last day of the month which
precedes the eighth anniversary of its date of issue
occurs.
iv. Special Expenses attributable to the Class B shares,
except those determined by the Directors not to be
Class Level Expenses of the Class B shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class B
shares. No other expenses shall be treated as Class
Level Expenses of the Class B shares.
<PAGE>
v. The Class B shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
(c) CLASS D SHARES
--------------
i. Class D shares are sold without an initial sales load
but are subject to a CDSL of 1% of the lesser of the
current net asset value or the original purchase
price in certain cases if the shares are redeemed
within one year.
ii. Class D shares shall be subject to a Rule 12b-1 fee
of up to 1.00% of average daily net assets,
consisting of an asset-based distribution fee of up
to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class D shares,
except those determined by the Directors not to be
Class Level Expenses of the Class D shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class D
shares. No other expenses shall be treated as Class
Level Expenses of the Class D shares.
iv. The Class D shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
<PAGE>
SCHEDULE I
Seligman Cash Management Fund, Inc.
Seligman Capital Fund, Inc.
Seligman Common Stock, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Income Fund, Inc.
Seligman Henderson Emerging Markets Growth Fund
Seligman Henderson Global Growth Opportunities Fund
Seligman Henderson Global Smaller Companies Fund
Seligman Henderson Global Technology Fund
Seligman Henderson International Fund
Seligman High-Yield Bond Fund
