File No. 2-92487
811-4078
As filed with the Securities and Exchange Commission on January 28, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
--
Post-Effective Amendment No. 21 [X]
--
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23 [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).
[X] immediately upon filing pursuant to paragraph (b) of rule 485
[ ] on (date) pursuant to paragraph (b) of rule 485
[ ] 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 for its fiscal year ended September 30, 1996 on November 26,
1996.
<PAGE>
File No. 2-92487
811-4078
CROSS REFERENCE SHEET
Post-Effective Amendment No. 21
Pursuant to Rule 481(a)
-----------------------
<TABLE>
<CAPTION>
Item in Part A of Form N-1A Location in Prospectus
- --------------------------- ----------------------
<S> <C>
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
</TABLE>
<PAGE>
================================================================================
PROSPECTUS
SELIGMAN
FRONTIER
FUND, INC.
FEBRUARY 1, 1997
[LOGO]
================================================================================
A CAPITAL APPRECIATION FUND
IN ITS 13TH YEAR
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 2/97
<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
February 1, 1997
Seligman Frontier Fund, Inc. (the "Fund") is an open-end, diversified
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 A shares purchased in an amount of $1,000,000 or more are
sold without an initial sales load but are subject to a contingent deferred
sales load ("CDSL") of 1% on redemptions within 18 months of purchase. Class B
shares are sold without an initial sales load but are subject to a CDSL of 5% on
redemptions in the first year after purchase of such shares, declining to 1% in
the sixth year and 0% thereafter, an annual distribution fee of .75% and an
annual service fee of up to .25% of the average daily net asset value of the
Class B shares. Class B shares will automatically convert to Class A shares on
the last day of the month that precedes the eighth anniversary of their date of
purchase. Class D shares are sold without an initial sales load but are subject
to a CDSL of 1% imposed on redemptions within one year of purchase, an annual
distribution fee of up to .75% and an annual service fee of up to .25% of the
average daily net asset value of the Class D shares. Any CDSL payable upon
redemption of shares will be assessed on the lesser of the current net asset
value or the original purchase price of the shares redeemed. No CDSL will be
imposed on shares acquired through the reinvestment of dividends or
distributions received from any class of shares. See "Alternative Distribution
System." Shares of the Fund may be purchased through any authorized investment
dealer.
This Prospectus sets forth concisely the information a prospective
investor should know about the Fund before investing. Please read it carefully
before you invest and keep it for future reference. Additional information about
the Fund, including a Statement of Additional Information, has been filed with
the Securities and Exchange Commission. The Statement of Additional Information
is available upon request without charge by calling or writing the Fund at the
telephone numbers or 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.
-----------------
TABLE OF CONTENTS
PAGE
-----
Summary of Fund Expenses ............................................. 2
Financial Highlights ................................................. 3
Alternative Distribution System....................................... 5
Investment Objective, Policies and Risks.............................. 7
Management Services................................................... 9
Purchase of Shares ................................................... 11
Telephone Transactions................................................ 16
Redemption of Shares.................................................. 17
Administration, Shareholder Services and
Distribution Plan................................................... 19
Exchange Privilege.................................................... 20
Further Information about Transactions in the Fund.................... 22
Dividends and Distributions .......................................... 22
Federal Income Taxes.................................................. 23
Shareholder Information .............................................. 24
Advertising the Fund's Performance ................................... 26
Organization and Capitalization ...................................... 26
<PAGE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
---------------- ---------------- ----------------
(INITIAL SALES (DEFERRED SALES (DEFERRED SALES
LOAD ALTERNATIVE) LOAD ALTERNATIVE) LOAD ALTERNATIVE)
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............. 4.75% None None
Sales Load on Reinvested Dividends ............... None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds,
whichever is lower) ............................ None; 5% in 1st year 1% in 1st year
except 1% 4% in 2nd year None thereafter
in first 18 months 3% in 3rd and
if initial sales 4th years
load was waived 2% in 5th year
in full due to size 1% in 6th year
of purchase None thereafter
Redemption Fees .................................. None None None
Exchange Fees .................................... None None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES FOR FISCAL 1996 CLASS A CLASS B* CLASS D
------- -------- -------
<S> <C> <C> <C>
(as a percentage of average net assets)
Management Fees .95% .95% .95%
12b-1 Fees .21% 1.00%** 1.00%**
Other Expenses .43% .43% .43%
---- ---- ----
Total Fund Operating Expenses 1.59% 2.38% 2.38%
==== ==== ====
</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 initial sales loads are available in
certain circumstances. Class A shares are not subject to an initial sales load
for purchases of $1,000,000 or more; however, such shares are subject to a CDSL,
a one time charge, only if the shares are redeemed within eighteen months of
purchase. The CDSLs on Class B and Class D shares are one-time charges paid only
if shares are redeemed within six years or one year of purchase, respectively.
The management fees 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>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
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 $ 95 $130 $227
Class B+ 74 104 147 252
Class D 34++ 74 127 272
</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.
- ----------
* Estimated based on expenses incurred during fiscal 1996.
** 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 B or 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 and (2) no redemption at the end of the
period, the expenses on a $1,000 investment would be $24 for 1 year, $74
for 3 years and $127 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 $24.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights 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 1996 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.
The per share operating performance data is designed to allow investors
to trace the operating performance, on a per share basis, from each Class'
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 each Class' 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.
Average commission rate paid represents the average commissions paid by
the Fund to purchase or sell securities. It is determined by dividing the total
commission dollars paid by the number of shares purchased and sold during the
period for which commissions were paid.
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------------------
Year Ended September 30
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating 1996 1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ----
Performance:
Net asset value, beginning of year... $14.04 $11.62 $12.83 $10.22 $10.71 $ 7.01 $ 8.99 $ 6.90
------ ------ ------ ------ ------ ------ ------ ------
Net investment loss.................. (0.13) (0.06) (0.08) (0.03) (0.07) (0.03) -- --
Net realized and unrealized
investment gain (loss)............. 1.95 3.87 1.10 4.54 0.58 3.76 (1.98) 2.09
------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations.............. 1.82 3.81 1.02 4.51 0.51 3.73 (1.98) 2.09
Dividends paid....................... -- -- -- -- -- (0.01)* -- --
Distributions from net gain realized. (0.48) (1.39) (2.23) (1.90) (1.00) (0.02) -- --
------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value................. 1.34 2.42 (1.21) 2.61 (0.49) 3.70 (1.98) 2.09
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year......... $15.38 $14.04 $11.62 $12.83 $10.22 $10.71 $ 7.01 $ 8.99
====== ====== ====== ====== ====== ====== ====== ======
Total Return Based on
Net Asset Value: 13.40% 36.80% 9.79% 50.67% 4.91% 53.34% (22.02)% 30.29%
Ratios/Supplemental Data:
Expenses to average net assets....... 1.56% 1.43 % 1.34% 1.25% 1.37% 1.28% 1.26% 1.32%
Net investment income (loss)
to average net assets.............. (0.91)% (0.50)% (0.87)% (0.27)% (0.71)% (0.35)% -- 0.02%
Portfolio turnover................... 59.36% 71.52 % 124.76% 129.13% 129.46% 38.56% 38.55% 50.60%
Average commission rate paid......... $0.0538
Net assets, end of period
(000's omitted)....................$523,737 $272,122 $58,478 $43,188 $27,178 $23,449 $17,127 $22,966
</TABLE>
<TABLE>
<CAPTION>
Class A
- --------------------------------------------------------------------------------
Year Ended September 30
- --------------------------------------------------------------------------------
<S> <C> <C>
Per Share Operating 1988 1987
---- ----
Performance:
Net asset value, beginning of year... $ 9.35 $ 7.58
------ ------
Net investment loss.................. (0.02) --
Net realized and unrealized
investment gain (loss)............. (1.44) 2.07
------ ------
Increase (decrease) from
investment operations.............. (1.46) 2.07
Dividends paid....................... -- --
Distributions from net gain realized. (0.99) (0.30)
------ ------
Net increase (decrease)
in net asset value................. (2.45) 1.77
------ ------
Net asset value, end of year......... $ 6.90 $ 9.35
====== ======
Total Return Based on
Net Asset Value: (12.25)% 28.29%
Ratios/Supplemental Data:
Expenses to average net assets....... 1.19% 1.11%
Net investment income (loss)
to average net assets.............. (0.20)% 0.03%
Portfolio turnover................... 80.03% 109.06%
Average commission rate paid.........
Net assets, end of period
(000's omitted).................... $19,205 $22,534
</TABLE>
- ----------
All per share data for fiscal years 1987 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 through 1996, 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.
* Excess of taxable dividend over net investment income was charged against
paid-in capital.
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
September 30, 1996 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>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class B Class D
------- ------------------------------------------------------------------
4/22/96* Year Ended September 30, 5/3/93*
to ------------------------------------------ to
9/30/96 1996 1995 1994 9/30/93
------ ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of year... $14.55 $13.61 $11.40 $12.80 $10.12
------ ------ ------ ------ ------
Net investment loss.................. (0.11) (0.24) (0.15) (0.23) (0.04)
Net realized and unrealized
investment gain.................... 0.34 1.88 3.75 1.06 2.72
------ ------ ------ ------ ------
Increase from investment operations.. 0.23 1.64 3.60 0.83 2.68
Dividends paid....................... -- -- -- -- --
Distributions from net gain realized. -- (0.48) (1.39) (2.23) --
------ ------ ------ ------ ------
Net increase (decrease)
in net asset value................. 0.23 1.16 2.21 (1.40) 2.68
------ ------ ------ ------ ------
Net asset value, end of year......... $14.78 $14.77 $13.61 $11.40 $12.80
====== ====== ====== ====== ======
Total Return Based on
Net Asset Value: .................. 1.58% 12.47% 35.53% 8.06% 26.48%
Ratios/Supplemental Data:
Expenses to average net assets....... 2.45%o 2.35% 2.29% 2.72% 2.24%o
Net investment income (loss)
to average net assets.............. (1.80)%o (1.70)% (1.35)% (2.25)% (1.94)%o
Portfolio turnover................... 59.36%+ 59.36)% 71.52% 124.76% 129.13%++
Average commission rate paid.........$0.0538+ $0.0538
Net assets, end of period
(000's omitted).................... $24,016 $337,327 $145,443 $9,318 $967
</TABLE>
- ----------
* Commencement of offering of shares
+ For the year ended September 30, 1996.
++ For the year ended September 30, 1993.
o Annualized.
The data provided above reflects historical information and therefore
has not been adjusted to reflect, through September 30, 1996 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.
4
<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 expect to maintain their investment for an extended period of
time might choose to purchase Class A shares because over time the accumulated
continuing distribution fees of Class B and Class D shares may exceed the
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.
Investors who qualify for reduced initial sales loads, as described under
"Purchase of Shares" below, might also choose to purchase Class A shares because
the sales load deducted at the time of purchase would be less. However,
investors should consider the effect of the 1% CDSL imposed on shares on which
the initial sales load was waived in full because the amount of Class A shares
purchased reached $1,000,000 or more. 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
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 load (and deferred sales load, when applicable) 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
as
5
<PAGE>
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 and a lower CDSL rate but
Class B shares automatically convert to Class A shares after eight years,
resulting in a reduction in ongoing fees. Investors in Class B shares should
take into account whether they intend to redeem their shares within the CDSL
period and, if not, whether they intend to remain invested until the end of the
conversion period and thereby take advantage of the reduction in 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 4.75% .25%. waived or reduced
of the public for certain
offering price. purchases. CDSL
of 1% on
redemptions within
18 months of
purchase on
shares on which
initial sales load
was waived in full
due to the size of
the purchase.
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 up to.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.
6
<PAGE>
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.
The Fund seeks to produce growth in capital value; income may be considered
but will be only incidental to the Fund's investment 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. There can be no
assurance that the Fund will achieve its objective.
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 100
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 Rule 144A securities will further evolve. This investment practice
could have the effect of increasing the level of illiquidity in the Fund, if and
to the extent that qualified institutional buyers become for a time uninterested
in purchasing Rule 144A securities.
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. com-
7
<PAGE>
panies, 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 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 on the
Fund's investment activities which cannot be changed without such a vote,
appears in the Statement of Additional Information. Under the 1940 Act, a "vote
of a majority of the outstanding voting securities" of the Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or (2) 67% or more of the shares present at a shareholders' meeting if
more than 50% of the outstanding shares are represented at the meeting in person
or by proxy.
8
<PAGE>
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.
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 Municipal
Fund Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey
Municipal Fund, Inc., Seligman Pennsylvania Municipal Fund Series, Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman Select
Municipal Fund, Inc. and Tri-Continental Corporation. The aggregate assets of
the Seligman Group were approximately $14.2 billion at December 31, 1996. The
Manager also provides investment management or advice to individual and
institutional accounts having an aggregate value at December 31, 1996 of
approximately $4.2 billion.
Mr. William C. Morris is Chairman of the Manager and Chairman of the Board
and Chief Executive Officer of the Fund. Mr. Morris owns a majority of the
outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a
wholly-owned subsidiary of 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. 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, 1996 amounted to 1.56% and 2.35%, respectively, of the
average daily net assets of such class. The annualized total expenses of the
Fund's Class B shares for the period ended September 30, 1996 amounted to 2.45%
of the average daily net assets of such class.
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 Subadviser, 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
9
<PAGE>
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, 1996, 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
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. 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 International Portfolio, Global Growth Opportunities Portfolio, Global
Smaller Companies Portfolio and Global Technology 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. Mrakovcic also serves as Vice
President of Seligman Henderson Global Fund Series, Inc. and Co-Portfolio
Manager of its Seligman Henderson Global Smaller Companies Fund and Vice
President of Seligman Portfolios, Inc. and Co-Portfolio Manager of its Seligman
Henderson Global Smaller Companies Portfolio.
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, the Lipper Small Company Growth Fund Index and the Russell 2000
Index is included in the Fund's 1996 Annual Report to Shareholders. Copies of
the 1996 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 turn-
10
<PAGE>
over 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 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 FUND ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH THE
INVEST-A-CHECK(R) SERVICE. THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE
SELIGMAN TIME HORIZON MATRIXSM ASSET ALLOCATION PROGRAM IS $10,000. FOR
INFORMATION ABOUT THIS PROGRAM, CONTACT SELIGMAN DATA CORP.
No purchase order may be placed for Class B shares for an amount of $250,000
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, any 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, any 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, B 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 of the Fund at any time
through any authorized dealer or by sending a check payable to "Seligman Group
of Funds" in our postage-paid return envelope or directly to Seligman Data
Corp., P.O. BOX 3947, NEW YORK, NY 10008-3947. 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
11
<PAGE>
the bottom of shareholder account statements) and include the shareholder's
name, address, account number, fund name 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, any applicable sales load.
Seligman Data Corp. may 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
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- or more* 0 0 0
* Shares acquired at net asset value pursuant to the above schedule will be
subject to a CDSL of 1% if redeemed within 18 months of purchase. See
"Purchase Of Shares--Contingent Deferred Sales Load."
There is no initial sales load on purchases of Class A shares of $1,000,000
or more ("NAV sales"); however, such shares are subject to a CDSL of 1% if
redeemed within eighteen months of purchase.
SFSI shall pay broker/dealers, from its own resources, a fee on NAV sales,
calculated as follows: 1.00% of NAV sales up to but not including $2 million;
.80% of NAV sales from $2 million up to but not including $3 million; .50% of
NAV sales from $3 million up to but not including $5 million; and .25% of NAV
sales from $5 million and above. The calculation of the fee will be based on
assets held by a "single person" as defined below.
SFSI shall also pay broker/dealers, from its own resources, a fee on assets
of certain investments in Class A shares of the Seligman Mutual Funds
participating in an "eligible employee benefit plan" (as
12
<PAGE>
defined below under "Special Programs") that are attributable to the particular
broker/dealer. The shares eligible for the fee are those on which an initial
sales load was not paid because either the participating eligible employee
benefit plan has at least (i) $500,000 invested in the Seligman Mutual Funds or
(ii) 50 eligible employees to whom such plan is made available. Class A shares
representing only an initial purchase of Seligman Cash Management Fund are not
eligible for the fee. Such shares will become eligible for the fee once they are
exchanged for shares of another Seligman Mutual Fund. The payment is based on
cumulative sales during a single calendar year, or portion thereof. The payment
schedule, for each calendar year, is as follows: 1.00% of sales up to but not
including $2 million; .80% of sales from $2 million up to but not including $3
million; .50% of sales from $3 million up to but not including $5 million; and
.25% of sales from $5 million and above.
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.
Class A shares purchased without an initial sales load in accordance with
the sales load schedule or pursuant to a Volume Discount, Right of Accumulation
or Letter of Intent are subject to a CDSL of 1% on redemptions within eighteen
months of purchase.
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 an initial 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 an initial sales
load with the total net asset value of shares of those Seligman Mutual Funds
already owned that were sold with an initial sales load and the total net asset
value of shares of Seligman Cash Management Fund that were acquired by the
investor through an exchange of shares of another Seligman Mutual Fund on which
there was an initial sales load to determine reduced sales loads in accordance
with the 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.
o A Letter Of Intent allows an investor to purchase Class A shares over a
13-month period at reduced initial sales loads, based upon the total amount 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 an initial 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
an initial 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 27.
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 an initial sales load in
connection with the acquisition of cash and
13
<PAGE>
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 (not to exceed the dollar value of such redemption proceeds); 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; to other investment companies in the Seligman
Group; and to "eligible employee benefit plans" which have at least (i) $500,000
invested in the Seligman Group of Mutual Funds or (ii) 50 eligible employees to
whom such plan is made available. "Eligible employee benefit plan" means any
plan or arrangement, whether or not tax qualified, which provides for the
purchase of Fund shares. Sales of shares to such plans must be made in
connection with a payroll deduction system of plan funding or other system
acceptable to Seligman Data Corp.
Section 403(b) plans sponsored by public educational institutions are not
eligible for net asset value purchases based on the aggregate investment made by
the plan or number of eligible employees. Employee benefit plans eligible for
net asset value sales, as described above, will be subject to a CDSL of 1% for
terminations at the plan level only, on redemptions of shares purchased within
eighteen months prior to plan termination. Sales pursuant to a 401(k) alliance
program which has an agreement with SFSI are available at net asset value and
are not subject to a CDSL.
Class B Shares. Class B shares are sold without an initial sales load but
are subject to a CDSL if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
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%
Class B shares are also subject to an annual distribution fee of 75% and an
annual service fee of up to .25% of the average daily net asset value of the
Class B shares. SFSI will make a 4% payment to dealers in respect of purchases
of Class B shares. Approximately eight years after purchase, Class B shares will
convert automatically into Class A shares, 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.
14
<PAGE>
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). The amount of any
CDSL will initially be used by SFSI to defray the expense of the payment of 4%
(in the case of Class B shares) or 1% (in the case of Class D shares) made by it
to Service Organizations (as defined under "Administration, Shareholder Services
And Distribution Plan") at the time of sale. Pursuant to an agreement with FEP
Capital, L.P. ("FEP") to fund payments in respect of Class B shares, SFSI has
agreed to sell any Class B CDSL to FEP.
A CDSL of 1% will also be imposed on any redemption of Class A shares
purchased during the preceding eighteen months if such shares were acquired at
net asset value pursuant to the sales load schedule provided under "Class A
Shares--Initial Sales Load." Employee benefit plans eligible for net asset value
sales as described above under "Special Programs" may be subject to a CDSL of 1%
for terminations at the plan level only, on redemptions of shares purchased
within eighteen months prior to plan termination. No CDSL will be imposed on
shares acquired through the investment of dividends of distributions from any
Class A, Class B or Class D shares of mutual funds in the Seligman Group.
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 held for a period of time
longer than the applicable CDSL period. Shares held for the longest period of
time within the applicable CDSL period will then be redeemed. Additionally, for
those shares determined to be subject to a CDSL, the CDSL will be assessed on
the current net asset value or original purchase price, 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.
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 retire-
15
<PAGE>
ment 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 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 A, Class B or Class D shares
sold by a dealer, the CDSL is waived because the redemption qualifies for a
waiver as set forth above, the dealer shall remit to SFSI promptly upon notice,
an amount equal to the payment or a portion of the payment made by SFSI at the
time of sale of such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the 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.
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 dividend or gain distribution option.
All Seligman Mutual Fund accounts with the same account number (i.e.,
registered exactly the same), including any new 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 telephone services election form.
16
<PAGE>
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 may
result in the request being processed at a later time than if a telephone
transaction had been used, and the Fund's net asset value may fluctuate during
such periods.
The Fund and Seligman Data Corp. will employ reasonable procedures to
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 the addition of telephone services to an existing account or
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 ("uncertificated")
without charge, except a CDSL, if applicable, at any time by SENDING A WRITTEN
REQUEST to Seligman Data Corp., P.O. Box 3947, New York, NY 10008-3947; or if
request is being sent by overnight delivery service, to 100 Park Avenue, New
York, NY 10017. The redemption request must be signed by all persons in whose
name the shares are registered. A shareholder may redeem shares that are not in
book credit form 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 (i.e., requests to sell shares at a specific price or on a future
date).
If the redemption proceeds are (i) $50,000 or more, (ii) to be paid to
someone other than the shareholder of record (regardless of the amount) or (iii)
to be mailed to other than the address of record (regardless of the amount), the
signature(s) of the shareholder(s) must be guaranteed by an eligible 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
17
<PAGE>
(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 A CORPORATION, EXECUTOR,
ADMINISTRATOR, TRUSTEE, CUSTODIAN OR RETIREMENT PLAN. FOR FURTHER INFORMATION
WITH RESPECT TO REDEMPTION REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES
DEPARTMENT OF SELIGMAN DATA CORP. FOR ASSISTANCE.
In the case of Class A shares (except for shares purchased without an
initial sales load due to the size of the purchase), and in the case of Class B
shares redeemed after six years and 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 A shares which were purchased
without an initial sales load because the purchase amount was $1,000,000 or
more, are redeemed within eighteen months of purchase, a shareholder will
receive the net asset value per share next determined after receipt of a request
in good order, less a CDSL of 1% described under "Purchase Of Shares--Class A
shares--Initial Sales Load" above. If Class B shares are redeemed within six
years of purchase, a shareholder will receive the net asset value per share next
determined after receipt of 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
payable to the address of record 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. Qualified 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
18
<PAGE>
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. 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 an initial sales load, all or any part of the investment in
Class A shares of the Fund or any of the other Seligman Mutual Funds. If a
shareholder redeems 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;
AND THE FUND'S MINIMUM INITIAL INVESTMENT AMOUNT MUST BE MET AT THE TIME OF
REINSTATEMENT.
Generally, exercise of the Reinstatement Privilege does not alter the
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 total amount paid for
the year ended September
19
<PAGE>
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.
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
distribution fees are used to pay Service Organizations a continuing fee of up
to .25% on an annual basis of the average net asset value of Class B shares
attributable to particular Service Organizations for providing personal service
and/or the maintenance of shareholder accounts and will also be used by SFSI to
defray the expense of the payment of 4% made by it to Service Organizations at
the time of sale of Class B shares. Proceeds from the 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 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 or 1% made by it to Service
Organizations at the time of sale of Class D shares. The amounts expended by
SFSI in any one year upon the initial purchase of Class B and Class D shares may
exceed the amounts received by it from Plan payments retained. Expenses of
administration, shareholder services and distribution of Class B and Class D
shares in one fiscal year of the Fund may be paid from Class B and Class D Plan
fees, respectively, received from the Fund in any other fiscal year.
The Plan, as it relates to Class B shares was approved by the Directors on
March 21, 1996 and became effective April 22, 1996. The Plan as it relates to
Class D shares, was approved by the Directors on March 18, 1993 and became
effective May 1,1993. The total amount paid for the year ended September 30,
1996 by the Fund's Class B and Class D shares pursuant to the Plan was 1% per
annum of the average daily net assets of Class B and Class D shares. 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 shares that are subject to a CDSL are exchanged for shares of another
Seligman Mutual Fund, then for purposes of assessing the CDSL payable upon
disposition of the exchanged shares, the applicable holding period shall be
reduced by the holding period of the original 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 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.
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.
20
<PAGE>
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.
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 Emerging Markets Growth Fund, 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 Seligman U.S. Government Securities
Series and the Seligman 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 MUNICIPAL FUND, INC. invests in investment grade New
Jersey municipal securities. (Does not currently offer Class B shares.)
o SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES invests in investment grade
Pennsylvania municipal securities. (Does not currently offer Class B shares.)
o SELIGMAN MUNICIPAL FUND SERIES, INC. consists of several State Series and
a National Series. The National Municipal Series seeks to provide maximum income
exempt from regular federal income taxes; individual state series, each seeking
to maximize income exempt from regular federal income taxes and from personal
income taxes in designated states, are available for Colorado, Georgia,
Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York,
Ohio, Oregon and South Carolina. (Does not currently offer Class B shares.)
o SELIGMAN MUNICIPAL SERIES TRUST includes the Seligman California Municipal
Quality Series, the Seligman California Municipal High-Yield Series, the
Seligman Florida Municipal Series and the Seligman North Carolina Municipal
Series, each of which invests in municipal 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 avail-
21
<PAGE>
able 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 the
broker/dealer has entered into a Telephone Exchange Agreement with SFSI wherein
the broker/dealer must agree to indemnify SFSI and the Seligman Mutual Funds
from any loss or liability incurred as a result of the acceptance of 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 exchange
privileges, 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.
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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
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
Seligman Mutual Fund will continue to receive dividends and gains as elected
prior to such exchange unless otherwise specified. In the event that a
shareholder redeems, sells, transfers or exchanges 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
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shareholders in the calendar year in which it was earned by the Fund.
Furthermore, dividends declared in October, November or December, payable to
shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January of
the following year.
Shareholders are urged to consult their tax advisors concerning the effect
of federal income taxes in their individual circumstances.
UNLESS A SHAREHOLDER INCLUDES A CERTIFIED TAXPAYER IDENTIFICATION NUMBER
(SOCIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND
CERTIFIES THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS
REQUIRED TO WITHHOLD AND REMIT TO THE 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-DIVS CAN BE ORDERED. TO INSURE PROMPT DELIVERY OF DISTRIBUTION
CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION, SELIGMAN DATA CORP. SHOULD BE
NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS CHANGE. ADDRESS CHANGES MAY BE
TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS 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) SERVICE 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. For investments
into the Seligman Time Horizon MatrixSM Asset Allocation Pro-
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gram, the minimum amount is $500 at regular monthly intervals or $1,000 at
regular quarterly intervals. (See "Terms and Conditions" on page 27.)
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. For exchanges into the Seligman Time Horizon
MatrixSM Asset Allocation Program, the minimum amount is $500 at regular monthly
intervals or $1,000 at regular quarterly intervals. The shareholder's Cash
Management Fund account must have a dollar value of at least $5,000 at the
initiation of the service and all shares must be in "book credit" form.
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 or another Seligman Mutual 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 A shares purchased at net asset value because
the purchase amount was $1,000,000 or more should bear in mind that withdrawals
may be subject to a 1% CDSL if made within eighteen months of purchase of such
shares. Holders of Class B 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 27.)
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 will be deducted 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.
o 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.
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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.
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.
26
<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 shares is dishonored for any reason, Seligman Data
Corp. will cancel the purchase and may redeem additional shares, if any, held in
the shareholder's account in an amount sufficient to reimburse the Fund for any
loss it may have incurred and charge a $10.00 return check fee. Shareholders
will receive dividends from investment income and any 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 such 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 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 will be deducted from the shareholder's Account. The Invest-A-Check(R)
Service may be reinstated upon written request indicating that the cause of
interruption has been corrected. The Invest-A-Check(R) Service may be 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
and any applicable CDSL. 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). Redemptions of Class A shares which were purchased at net asset value
because the purchase amount was $1,000,000 or more may be subject to a CDSL if
made within 18 months of purchase of such shares. Redemptions of Class B shares
also may be subject to a 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 into 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 an initial sales load was paid as of the date of
the Letter. If the total amount invested within the thirteen-month period does
not equal or exceed the specified minimum purchase, 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.
2/97
27
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 1997
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 February 1, 1997. It should be read in
conjunction with the Prospectus, which may be obtained by writing or calling the
Fund at the above address or telephone numbers. This Statement of Additional
Information, although not in itself a Prospectus, is incorporated by reference
into the Prospectus in its entirety.
The Fund offers three classes of shares. Class A shares may be
purchased at net asset value plus a sales load of up to 4.75%. Class A shares
purchased in an amount of $1,000,000 or more are sold without an initial sales
load but are subject to a contingent deferred sales load ("CDSL") of 1% (of the
current net asset value or the original purchase price, whichever is less) if
such shares are redeemed within eighteen months of purchase. Class B shares may
be purchased at net asset value and are subject to a CDSL, if applicable, in the
following amount (as a percentage of the current net asset value 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 higher distribution fees that generally will cause the Class B and Class D
shares to have higher expense ratios and pay lower dividends than Class A
shares. Each Class has exclusive voting rights with respect to its distribution
plan. Although holders of Class A, Class B and Class D shares have identical
legal rights, the different expenses borne by each Class will result in
different net asset values and dividends. The three classes also have different
exchange privileges.
TABLE OF CONTENTS
Page
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................................................... 10
Purchase And Redemption Of Fund Shares................................... 11
Distribution Services.................................................... 14
Valuation................................................................ 14
Performance.............................................................. 15
General Information...................................................... 16
Financial Statements..................................................... 17
Appendix................................................................. 18
EQFR1A
<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 below).
-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, 1996 and 1995
were 59.36% and 71.52%, 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.
o 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
(58) Officer and Chairman of the Executive Committee
Managing Director and Chairman, J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
and Seligman Advisors, 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, President, J. & W. Seligman &
Co. Incorporated; Chairman, Seligman Securities,
Inc., broker/dealer and J. & W. Seligman Trust
Company, trust company; and Director, Daniel
Industries Inc., manufacturer of oil and gas
metering equipment.
BRIAN T. ZINO* Director, President and Member of the Executive
(44) Committee
Director, President and Managing Director), J. & W.
Seligman & Co. Incorporated, investment managers
and advisers; and Seligman Advisors, Inc.,
advisers; President (with the exception of Seligman
Quality Municipal Fund, Inc. and Seligman Select
Municipal Fund, Inc.) and Director or Trustee, the
Seligman Group of Investment Companies; Chairman,
Seligman Data Corp., shareholder service agent;
Director, Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc.,
broker/dealer; and Senior Vice President, Seligman
Henderson Co., advisers; formerly, Director and
Secretary, Chuo Trust - JWS Advisors, Inc.,
advisers; and Director, Seligman Securities, Inc.,
broker/dealer and J. & W. Seligman Trust Company,
trust company.
FRED E. BROWN* Director
(83)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Seligman Advisors, Inc, advisers; Director or
Trustee, the Seligman Group of Investment
Companies; Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc.,
broker/dealer; Trudeau Institute, nonprofit
biomedical research organization; Lake Placid
Center for the Arts, cultural organization; 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
(67)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group
of Investment Companies; Chairman, American Council
on Germany; a Governor of the Center for Creative
Leadership; Director, USLIFE, insurance; National
Committee on U.S.-China Relations, National Defense
University; the Institute for Defense Analysis;
Raytheon Co., electronics; and Consultant, Thomson
CSF, electronics; and 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
(61)
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
(63)
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
(67)
Chairman and Senior Partner, Sullivan & Cromwell,
law firm; Director or Trustee, the Seligman Group
of Investment Companies; 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; and
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
(54)
Attorney; Director or Trustee, the Seligman Group
of Investment Companies; Trustee, Geraldine R.
Dodge Foundation, charitable foundation; and
Chairman of the Board of Trustees of St. George's
School (Newport, RI); formerly, Director, the
National Association of Independent Schools
(Washington, DC). St. Bernard's Road, P.O. Box 449,
Gladstone, NJ 07934
-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
(69)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Houston Exploration Company; The
Brooklyn Museum; The Brooklyn Union Gas Company;
the Committee for Economic Development; Dow Jones &
Co., Inc. and Public Broadcasting Service;
formerly, Co-Chairman of the Policy Council of the
Tax Foundation; Director, Tesoro Petroleum
Companies, Inc.; and Director and President,
Bekaert Corporation. 675 Third Avenue, Suite 3004,
New York, NY 10017
RONALD T. SCHROEDER* Director and Member of the Executive Committee
(48)
Director, Managing Director and Chief Investment
Officer, Institutional, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Seligman Advisors, Inc., advisers; Director or
Trustee, the Seligman Group of Investment
Companies; Director, Seligman Holdings, Inc.,
holding company; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co., advisers;
and Seligman Services, Inc., broker/dealer;
formerly, President, the Seligman Group of
Investment Companies, except Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc.; and Director, J. & W. Seligman Trust
Company, trust company; Seligman Data Corp.,
shareholder service agent; and Seligman Securities,
Inc., broker/dealer.
ROBERT L. SHAFER Director
(64)
Director, various corporations, Director or
Trustee, the Seligman Group of Investment Companies
and USLIFE Corporation, life insurance; formerly,
Vice President, Pfizer Inc., pharmaceuticals. 235
East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(61)
Executive Vice President, Chief Operating Officer
and Director, Sammons Enterprises, Inc.; Director
or Trustee, the Seligman Group of Investment
Companies; Red Man Pipe and Supply Company, piping
and other materials; and C-SPAN. 300 Crescent
Court, Suite 700, Dallas, TX 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, two other
open-end investment companies in the Seligman Group
of Investment Companies; formerly, Portfolio
Assistant, J. & W. Seligman & Co. Incorporated.
-6-
<PAGE>
LAWRENCE P. VOGEL Vice President
(40)
Senior Vice President, Finance, J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
Seligman Financial Services, Inc., broker/dealer;
Seligman Advisors, Inc., advisers; and Seligman
Data Corp., shareholder service agent; Vice
President, the Seligman Group of Investment
Companies; and Seligman Services, Inc.,
broker/dealer; and Treasurer, Seligman Holdings,
Inc., holding company; and Seligman Henderson Co.,
advisers; formerly, Senior Vice President, Seligman
Securities, Inc., broker/dealer and J. & W.
Seligman Trust Company, trust company.
FRANK J. NASTA Secretary
(32)
Senior Vice President, Law and Regulation and
Corporate Secretary, J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Seligman Advisors, Inc., advisers; Secretary, the
Seligman Group of Investment Companies, Seligman
Financial Services, Inc., broker/dealer; Seligman
Henderson Co., advisers; Seligman Services, Inc.,
broker/dealer; and Seligman Data Corp., shareholder
service agent; formerly, Secretary, J. & W.
Seligman Trust Company, trust company; and
attorney, Seward & Kissel, law firm.
THOMAS G. ROSE Treasurer
(39)
Treasurer, the Seligman Group of Investment
Companies and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc. and the American Investors
Family of Funds.
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
<TABLE>
<CAPTION>
Compensation Table
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as part of Fund Complex Paid
Position with Registrant from Fund (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 $2,745.97 N/A $65,000.00
Alice S. Ilchman, Director 2,781.68 N/A 66,000.00
Frank A. McPherson, Director 2,781.68 N/A 66,000.00
John E. Merow, Director 2,781.68(d) N/A 66,000.00(d)
Betsy S. Michel, Director 2,781.68 N/A 66,000.00
James C. Pitney, Director 2,745.97 N/A 65,000.00
James Q. Riordan, Director 2,781.68 N/A 66,000.00
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund 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>
Robert L. Shafer, Director $2,781.68 N/A $66,000.00
James N. Whitson, Director 2,781.68(d) N/A 66,000.00(d)
</TABLE>
(1) For the fiscal year ended September 30, 1996.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
(d) Deferred. The total amounts of deferred compensation (including interest)
payable in respect of the Fund to Messrs. Merow and Whitson as of
September 30, 1996 were $24,660 and $9,225, respectively. Mr. Pitney no
longer defers current compensation; however, he has accrued deferred
compensation in the amount of $15,361 as of September 30, 1996.
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 fees and interest is
included in the directors' fees and expenses, and the accumulated balance
thereof is included in "Liabilities" in the Fund's financial statements.
Directors and officers of the Fund are also directors 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 January 10, 1997. As of that date, no Directors or officers owned
shares of the Fund's Class B or Class D Capital Stock.
As of January 10, 1997, 5,586,973 Class A shares, or 15.89% of the Fund's
Class A capital stock then outstanding, and 11,774,211 Class D shares, or 48.14%
of the Fund's Class D capital stock then outstanding, were registered in the
name of MLPF&S, 4800 Deer Lake Drive East, Jacksonville, FL 32246.
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, 1994 and
1995, the Fund paid management fees of $390,476 and $1,260,769, respectively,
each equal to .75% per annum of the Fund's average daily net assets. For the
fiscal year ended September 30, 1996, the Fund paid $6,014,692, equal to 92% per
annum of its average daily net assets.
The Fund pays all its expenses other than those assumed by the Manager and
Seligman Henderson Co. (the "Subadviser"), including brokerage commissions,
administration, shareholder services and distribution fees, fees and expenses of
independent attorneys and auditors, taxes and governmental fees, including fees
and expenses 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, ex-
-8-
<PAGE>
penses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by or serving as a Director of the Manager or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses.
The Management Agreement was initially approved by the Board of Directors
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, effective
January 1, 1996, 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. On December 29, 1988, a majority of the
outstanding voting securities of the Manager was purchased by Mr. William C.
Morris and a simultaneous recapitalization of the Manager occurred. See Appendix
for further history of the Manager.
Under the Subadvisory Agreement, dated June 1, 1994, as amended January 1,
1996, the Subadviser supervises and directs a portion of the Fund's investment
in foreign securities and Depositary Receipts, as designated by the Manager,
consistent with the Fund's investment objectives, policies and principles. For
these services, the Subadviser is paid a fee by the Manager, as described in the
Fund's Prospectus. The Subadvisory Agreement was initially approved by the Board
of Directors at a meeting held on January 20, 1994 and by the shareholders 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 held on December 12, 1995. The Subadvisory
Agreement will continue in effect until December 31 of each year (1) if such
continuance is approved in the manner required by the 1940 Act (by a vote of a
majority of the Board of Directors or of the outstanding voting securities of
the Fund and by a vote of a majority of the Directors who are not parties to the
Subadvisory Agreement or interested persons of any such party) and (2) if the
Subadviser shall not have notified the Manager in writing at least 60 days prior
to December 31 of any year that it does not desire such continuance. The
Subadvisory Agreement may be terminated at any time by the Fund, on 60 days
written notice to the Subadviser. The Subadvisory Agreement will terminate
automatically in the event of its assignment or upon the termination of the
Management Agreement.
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 $2 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
years ended September 30, 1995 and 1996, the Fund did not require the services
of the Subadviser.
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
-9-
<PAGE>
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.
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
-10-
<PAGE>
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, 1996, 1995 and
1994 were $956,356, $337,655 and $86,871, respectively.
PURCHASE AND REDEMPTION OF FUND SHARES
The Fund issues three classes of shares: Class A shares may be purchased
at a price equal to the next determined net asset value per share, plus a sales
load. Class A shares purchased at net asset value without an initial sales load
due to the size of the purchase are subject to a CDSL of 1% if such shares are
redeemed within eighteen months of purchase. Class B shares may be purchased at
a price equal to the next determined net asset value without an initial sales
load, but a CDSL may be charged on redemptions within 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 a CDSL may be charged on
redemptions within one year of purchase. See "Alternative Distribution System,"
"Purchase of Shares," and "Redemption of Shares" in the Prospectus.
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales load of 4.75% and Class
D shares are sold at net asset value*. Using the Fund's net asset value at
September 30, 1996, the maximum offering price of the Fund's shares is as
follows:
CLASS A
Net asset value and redemption price per Class A share...... $ 15.38
------
Maximum sales load (4.75% of offering price)................ $ .77
------
Offering price to public.................................... $ 16.15
======
CLASS B
Net asset value and offering price per share *.............. $ 14.78
======
CLASS D
Net asset value and offering price per share *.............. $ 14.77
======
- --------------
-11-
<PAGE>
* 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 INITIAL SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Mutual Fund sold with an initial
sales load in a continuous offering will be eligible for the following
reductions:
VOLUME DISCOUNTS are provided if the total amount being invested in Class
A shares of the Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales load, reaches
levels indicated in the sales load schedule set forth in the Prospectus.
THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other mutual funds in
the Seligman Group that were sold with an initial sales load with the total net
asset value of shares of those Seligman Mutual Funds already owned that were
sold with an initial sales load and the total net asset value of shares of
Seligman Cash Management Fund which were acquired through an exchange of shares
of another mutual fund in the Seligman Group on which there was an initial 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 an
initial 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 by the
investor at the time the purchase is made and is furnished sufficient
information to permit confirmation.
A LETTER OF INTENT allows an investor to purchase Class A shares over a
13-month period at reduced initial sales loads in accordance with the schedule
in the Prospectus, based on the total amount of Class A shares of the Fund that
the letter states the investor intends to purchase plus the total net asset
value of shares that were sold with an initial sales 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 an
initial 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.
Class A shares purchased without an initial sales load in accordance with
the sales load schedule in the Fund's prospectus, or pursuant to a Volume
Discount, Right of Accumulation or Letter of Intent are subject to a CDSL of 1%
on redemptions of such shares within eighteen months of purchase.
PERSONS ENTITLED TO REDUCTIONS. Reductions in initial sales loads apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code, of 1986
(the "Code"), as amended, organizations tax exempt under Section 501 (c)(3) or
(13) of the Code, and non-qualified employee benefit plans that satisfy uniform
criteria are considered "single persons" for this purpose. The uniform criteria
are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
Prospectus, reports and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
-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 (i) $500,000 invested in
the Seligman Group of Mutual Funds or (ii) 50 eligible employees to whom such
plan is made available. Such sales must be made in connection with a payroll
deduction system of plan funding or other systems acceptable to Seligman Data
Corp, the Fund's shareholder service agent. 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".)
FURTHER TYPES OF REDUCTIONS. Class A shares may be issued without an initial
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 1940 Act, 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 family members, as defined
in the Prospectus) of the Funds, the other investment companies in the Seligman
Group, the Manager and other companies affiliated with the Manager. Such sales
may also be made to employee benefit plans and thrift plans for such persons and
to any investment advisory, custodial, trust or other fiduciary account managed
or advised by the Manager or any affiliate. 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.
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. If payment is made in securities, a shareholder may incur brokerage
expenses in converting these securities to cash.
-13-
<PAGE>
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, 1994, 1995 and 1996, respectively, amounted to $254,283, $5,489,669 and
$6,222,709, respectively, of which $225,716, $4,882,246 and $5,532,809,
respectively, was paid as commissions to dealers. SFSI receives the balance of
sales loads and any CDSLs paid by investors on Class D shares. For the fiscal
years ended September 30, 1994, 1995 and 1996, SFSI retained CDSL charges on
Class D shares amounting to $1,240, $22,116 and $117,636, respectively.
SFSI has sold its rights to collect any CDSL imposed on redemptions of
Class B shares to FEP Capital, L.P. ("FEP"). SFSI has also sold its rights to
substantially all of the distribution fee in respect of Class B shares received
by it pursuant to the Plan to FEP, which provides funding to SFSI to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares. In connection with the sale of its rights to collect any CDSL and the
distribution fees with respect to Class B shares, SFSI receives payments form
FEP based on the value of Class B shares sold. The aggregate amount of such
payments and the Class B distribution fees retained by SFSI for the period ended
September 30, 1996, amounted to $61,955.
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. For the fiscal year ended September 30, 1996, SSI received
commissions on $156,157 from sales of Fund shares, and received distribution and
service fees of $73,340, 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. Eastern 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 such securities used in computing the net asset value of the shares of the
Fund are determined as of such times.
-14-
<PAGE>
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, 1996 were 8.02%,
20.73%, and 16.22%, 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 return for the Fund's
Class B shares for the period from April 22, 1996 (inception) through September
30, 1996 was (3.42)%. This return was computed assuming that all dividends and
distributions paid by the Fund's Class B shares, if any, were reinvested over
the period. It was then assumed that at the end of the period, the entire amount
was redeemed, subtracting the 5% CDSL. The average annual total returns for the
Fund's Class D shares for the one-year period ended September 30, 1996 and from
May 3, 1993 (inception) through September 30, 1996 were 11.47% and 23.99%,
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.
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, 1986 had a value of $4,496 on September
30, 1996 resulting in an aggregate total return of 349.60%. Table B illustrates
the total return (income and capital) on Class B shares of the Fund with
dividends and gain distributions taken in shares. It shows that a $1,000
investment in Class B shares on April 22, 1996 (commencement of operations of
Class B shares) had a value of $966 on September 30, 1996 resulting in an
aggregate total return of (3.42)%. Table C illustrates the total return (income
and capital) on Class D shares of the Fund with dividends invested and gain
distributions taken in shares. It shows that a $1,000 investment in Class D
shares made on May 3, 1993 (commencement of operations of Class D shares) had a
value of $2,083 on September 30, 1996 resulting in an aggregate total return of
108.34%. 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 INVESTMENT2 RETURN 1,3
- ----- ------------ ------------- --------- ----------- ---------
9/30/87 $ 1,175 $ 47 $ -- $ 1,222
9/30/88 867 205 -- 1,072
9/30/89 1,129 268 -- 1,397
9/30/90 881 208 -- 1,089
9/30/91 1,345 324 1 1,670
9/30/92 1,284 467 1 1,752
9/30/93 1,612 1,026 2 2,640
-15-
<PAGE>
<TABLE>
<CAPTION>
VALUE OF
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT2 RETURN 1,3
- ----- ------------ ------------- --------- ----------- ---------
<S> <C> <C> <C> <C>
9/30/94 $ 1,460 $ 1,436 $ 2 $ 2,898
9/30/95 1,764 2,199 2 3,965
9/30/96 1,932 2,562 2 4,496 349.60%
</TABLE>
TABLE B - CLASS B SHARES
<TABLE>
<CAPTION>
VALUE OF
VALUE OF CAPITAL VALUE TOTAL VALUE
PERIOD INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT2 RETURN3
- ------- ------------ ------------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
9/30/96 $ 966 $ -- $ -- $ 966 (3.42)%
</TABLE>
<TABLE>
<CAPTION>
TABLE C - CLASS D SHARES
VALUE OF
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR/PERIOD INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT2 RETURN3
- ----------- ------------ ------------- --------- ----------- -------
<S> <C> <C> <C> <C>
9/30/93 $ 1,265 $ - - $ 1,265
9/30/94 1,126 241 - 1,367
9/30/95 1,345 507 - 1,852
9/30/96 1,459 624 - 2,083 108.34%
</TABLE>
1 For the ten-year period ended September 30, 1996 for Class A shares, from
commencement of operations of Class B shares on April 22, 1996 and from
commencement of operations of Class D shares on May 3, 1993.
2 The "Value of Initial Investment" as of the date indicated 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 B and Class D shares, if applicable;
and finally, by dividing the difference between the amount of the
hypothetical initial investment at the beginning of the period and its
total value at the end of the period by the amount of the hypothetical
initial investment.
The Fund's total return and average annual total return of Class A shares
quoted from time to time through June 1, 1992 do 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.
-16-
<PAGE>
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,
1996 is incorporated by reference into this Statement of Additional Information.
The Annual Report contains a schedule of the investments of the Fund as of
September 30, 1996, as well as certain other financial information as of that
date. The Annual Report will be furnished without charge to investors who
request copies of the Fund's Statement of Additional Information.
-17-
<PAGE>
APPENDIX
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in
the sale of government securities to help finance the Civil War - Joseph
Seligman, with his brothers, established the international banking and
investment firm of J. & W. Seligman & Co. In the years that followed, the
Seligman Complex played a major role in the geographical expansion and
industrial development of the United States.
THE SELIGMAN COMPLEX:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New
York Mutual Gas Light Company, later part of Consolidated Edison.
Provides financial assistance to Mary Todd Lincoln and urges the Senate
to award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the Country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company,
Maytag Company United Artists Theater Circuit and Victor Talking Machine
Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman
Growth Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
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<PAGE>
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman
Valuations Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global
investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
-19-
<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 9/96
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
SELIGMAN FRONTIER FUND, INC.
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
[LOGO]
- --------------------------------------------------------------------------------
A CAPITAL APPRECIATION FUND
ESTABLISHED IN 1984
<PAGE>
================================================================================
TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Frontier Fund had a rewarding fiscal year, outpacing the Russell 2000
Index for the 12 months ended September 30, 1996.
After reducing interest rates twice in 1995, and again in January 1996, the
Federal Reserve Board left rates unchanged for the next eight months. The
economy, which slowed in the last quarter of 1995, bounced back in the second
quarter of 1996 and maintained a healthy, non-inflationary pace thereafter.
Economic reports issued in September of 1996 reflected the economy's strength,
showing increases in production, new home sales, wages, and spending.
With the lowest unemployment rate since June 1990, strong personal incomes,
interest rates far below their 1980s levels, and few signs of inflationary
pressure, consumer confidence as measured by The Conference Board rose 25% above
its January 1996 level.
In the last 12 months, the growing economy propelled the Russell 2000 and
Nasdaq indices to record highs through May 1996. While the economy continued to
grow with very little actual inflation, ongoing apprehension created a difficult
market environment for small-cap stocks. There were corrections in the equity
markets in June and July which reduced small-cap valuations. However, the
markets recovered most of their lost ground by September. With small-cap stocks
now trading at more reasonable valuations relative to earnings, we expect the
positive economic environment to prove beneficial for the small-cap market.
Going forward, we foresee continued, albeit moderate, economic growth and a
benign level of inflation. This environment of modest growth, combined with
relatively stable interest rates, should be beneficial for financial markets in
the months ahead. As always, there could be short-term volatility, but we remain
confident in the long-term outlook.
As we near the end of the year, we encourage you to review your overall
investment portfolio. When doing so, you may wish to consult your financial
advisor to discuss financial issues such as tax planning, and to ensure that you
are following the best investment strategy to help you seek your financial
goals.
Specific performance information, including a discussion with your Portfolio
Manager, and a chart and table that analyze longer-term performance, follows
this letter.
We thank you for your continued interest in Seligman Frontier Fund, and look
forward to serving your investment needs in the many years to come. By order of
the Board of Directors,
/s/William C. Morris
- --------------------
William C. Morris
Chairman /s/Brian T. Zino
----------------
Brian T. Zino
President
October 30, 1996
1
<PAGE>
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ANNUAL PERFORMANCE OVERVIEW
- --------------------------------------------------------------------------------
The following is a discussion with your Portfolio Manager regarding Seligman
Frontier Fund, Inc. and a chart and table comparing your Fund's performance to
the performance of the Russell 2000 Index, the Nasdaq Composite Index, and the
Lipper Small Company Growth Fund Index.
YOUR PORTFOLIO MANAGER
- ----------------------------
[PHOTO]
- ----------------------------
ARSEN MRAKOVCIC is a Managing Director of J. & W. Seligman & Co. Incorporated
and has been Portfolio Manager and Vice President of Seligman Frontier Fund
since September 1995. Mr. Mrakovcic began working with Seligman Frontier Fund as
a portfolio assistant in 1992. Mr. Mrakovcic also manages the US portion of
Seligman Henderson Global Smaller Companies Fund, a global small-cap fund.
Additional responsibilities include portfolio management of Seligman Frontier
Portfolio and the US portion of Seligman Henderson Global Smaller Companies
Portfolio within Trillium, Seligman's variable annuity product, and management
of institutional assets within the small-cap discipline.
HOW DID SELIGMAN FRONTIER FUND PERFORM IN THE PAST 12 MONTHS?
The Fund had positive results over the last 12 months. It outpaced the Russell
2000 Index but underperformed the Lipper Small Company Growth Fund Index due
mainly to its relative overweighting in the electronics sector.
WHAT ECONOMIC FACTORS INFLUENCED SELIGMAN FRONTIER FUND IN THE PAST 12 MONTHS?
Seligman Frontier Fund generally benefited from the economy's growth thus far in
1996. However, reports of continued high employment and robust housing figures
created fears of inflation. These fears culminated in a July correction of the
equity markets which depressed small-cap stocks. The equity markets as a whole
bounced back from the setback over the summer as economic reports continued to
show signs of strong growth and inflationary indicators remained stable.
WHAT MARKET EVENTS AFFECTED THE FUND IN THE PAST 12 MONTHS?
The economic growth that characterized the last 12 months supported new market
highs in May for small-cap companies. The Fund's portfolio broadly benefited
from the market advances throughout this period. The July sell-off, however,
deflated small-cap valuations, and reduced the Fund's gains. A recovery was
initiated later in the summer and small-cap stocks improved gradually through
September.
HOW WAS THE PERFORMANCE OF THE FUND'S LARGER SECTORS?
The Fund's holdings in the electronics sector performed poorly, dampening the
portfolio's investment results in the first six months of 1996. The July
correction further reduced the value of these holdings, even though we had pared
the portfolio's exposure through June. The summer correction did, however,
result in the most attractive electronics valuations in ten months, presenting
us with a good buying opportunity.
Conversely, the Fund's business goods and services stocks performed well over
the last 12 months. The corporate outsourcing trend continues to benefit the
holdings in this sector. During the last three months, we trimmed some of the
positions that had seen significant gains, taking profits. We will maintain the
Fund's exposure to business goods and services, as the sector still has strong
long-term prospects.
2
<PAGE>
This quarter, we increased the Fund's positions in independent power
producers -- a very promising industry -- by purchasing Calpine to complement
the CalEnergy holding. These alternative energy companies are particularly
appealing, as they have recurring revenue from fixed multi-year contracts in an
industry with very high barriers to entry. Both companies have outstanding
growth prospects and fit the Fund's investment strategy of purchasing viable
corporate entities, with expanding products and markets, in the early stages of
their profitability.
Finally, health care was another growing investment focus for the Fund over
the past 12 months. We added pharmaceutical companies with good earnings growth
potential and selectively purchased issues that should continue to prosper
despite potential health care reform. In financial services, another of the
Fund's larger weightings, we added new positions in smaller banks that should
benefit from banking's industry-wide consolidation trend.
WHAT IS YOUR INVESTMENT STRATEGY?
Seligman Frontier Fund remains a true small-cap investment. Its investment
strategy continues to focus on companies that are growing quickly, and that have
increasing earnings and high liquidity. Further, we maintain a bottom-up
approach to investing, researching more than 1,000 individual companies a year
and selecting each stock in the portfolio on individual merit. While the last 12
months have been mixed for the small-cap universe, the Fund's stock selection
has been quite rewarding -- the majority of the top holdings met or exceeded
Wall Street's earnings expectations this past quarter.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Though small-cap stocks have trailed large-cap stocks' performance this quarter,
we used these market conditions as a buying opportunity. Looking ahead, the
Fund's holdings seem well positioned, and valuations are currently attractive.
Further, we believe the small-cap market continues to offer high growth
potential. Historically, small-cap companies have outperformed large-cap
companies over long holdings periods, and we anticipate continued solid
investment performance and growth going forward.
3
<PAGE>
================================================================================
PERFORMANCE COMPARISON CHART September 30, 1996
- --------------------------------------------------------------------------------
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, 1996, to a $10,000 investment made in
the Nasdaq Composite Index, the Lipper Small Company Growth Fund Index, and the
Russell 2000 Index for the same period. The performances of Seligman Frontier
Fund Class B and Class D shares are not shown in this chart but are included in
the table on page 5. It is important to keep in mind that the indices do not
include any fees or sales charges.
Seligman Frontier Fund will no longer be compared to the Nasdaq Composite
Index after September 30, 1996, as this Index measures the performance of 4,500
over-the-counter stocks but is heavily influenced by the performance of 100 of
the largest Nasdaq stocks, and your Fund invests primarily in smaller companies.
Your Manager believes the Russell 2000 Index is a more appropriate benchmark for
your Fund, as it is widely regarded as the premier measure of
small-capitalization stocks. Therefore, your Fund will continue to be compared
to the Lipper Small Company Growth Fund Index and the Russell 2000 Index.
[THE FOLLOWING TABLE REPRESENTS A GRAPHIC CHART]
<TABLE>
<CAPTION>
SELIGMAN FRONTIER FUND CLASS A
WITHOUT SALES WITH SALES NASDAQ LIPPER SMALL COMPANY
CHARGE CHARGE COMPOSITE INDEX GROWTH FUND INDEX RUSSELL 2000
------ ------ --------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
9/30/86 10000.00 9522.61 10000.00 10000.00 10000.00
12/31/86 10420.97 9923.49 9946.96 10201.00 10061.62
3/31/87 12678.05 12072.82 12263.67 12183.05 12508.11
6/30/87 12472.23 11876.83 12110.25 12039.29 12419.54
9/30/87 12828.98 12216.54 12669.75 12603.94 12939.58
12/31/87 9618.13 9158.98 9423.96 9639.49 9179.30
3/31/88 10947.86 10425.23 10683.55 11026.61 10930.03
6/30/88 11943.12 11372.98 11254.46 11846.99 11650.45
9/30/88 11257.86 10720.43 11056.27 11598.21 11540.72
12/30/88 11225.23 10689.36 10875.76 11644.60 11464.38
3/31/89 12171.54 11590.50 11598.66 12534.25 12347.58
6/30/89 12905.75 12289.66 12413.10 13350.23 13133.72
9/30/89 14667.85 13967.64 13486.19 14502.35 14020.48
12/29/89 14382.32 13695.74 12970.03 14062.93 13326.59
3/30/90 13949.96 13284.02 12420.23 13764.80 13031.88
6/29/90 14928.90 14216.23 13183.05 14565.91 13534.51
9/30/90 11437.33 10891.34 9824.34 11281.30 10213.46
12/31/90 13083.86 12459.26 10660.74 12114.98 10726.87
3/28/91 16146.05 15375.26 13753.67 14972.91 13916.79
6/28/91 15818.54 15063.39 13571.74 14821.68 13701.07
9/30/91 17537.95 16700.71 15024.96 16308.30 14818.13
12/31/91 19577.49 18642.89 16720.57 17981.53 15666.78
3/31/92 19766.51 18822.89 17217.62 18251.25 16841.87
6/30/92 17822.27 16971.46 16072.09 16743.70 15692.91
9/30/92 18398.34 17520.03 16633.00 17299.59 16142.57
12/31/92 22708.46 21624.40 19304.48 20067.52 18551.29
3/31/93 22751.68 21665.55 19680.33 20324.39 19344.24
6/30/93 24393.77 23229.25 20074.43 20932.08 19766.54
9/30/93 27721.18 26397.81 21752.08 22834.81 21494.75
12/31/93 28681.38 27312.17 22151.88 23462.77 22058.75
3/31/94 28314.68 26962.97 21201.13 22613.42 21473.39
6/30/94 26428.78 25167.10 20131.75 21392.29 20637.11
9/30/94 30436.31 28983.32 21795.14 23388.19 22069.69
12/30/94 30692.53 29227.31 21443.53 23357.79 21656.94
3/31/95 33094.56 31514.67 23304.25 24668.16 22655.37
6/30/95 36534.49 34790.39 26619.05 26952.43 24779.01
9/30/95 41635.09 39647.49 29758.47 30321.48 27226.21
12/29/95 41872.82 39873.87 30003.43 30739.92 27816.21
3/29/96 44236.61 42124.81 31408.46 32470.58 29235.34
6/28/96 47337.16 45077.35 33793.03 35064.98 30697.90
9/30/96 47214.37 44960.42 34987.89 35510.30 30801.86
</TABLE>
THE PERFORMANCE OF CLASS B AND D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES CHARGES
AND FEES PAID BY SHAREHOLDERS.
Performance data quoted represent changes in prices and assume that all
distributions within the periods are invested in additional shares. The rates of
return will vary and the principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
4
<PAGE>
===============================================================================
SELIGMAN FRONTIER FUND, INC.
- -------------------------------------------------------------------------------
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
FOR PERIODS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION ONE FIVE 10 INCEPTION
4/22/96 YEAR YEARS YEARS 5/3/93
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge n/a 8.02% 20.73% 16.22% n/a
Without Sales Charge n/a 13.40 21.90 16.79 n/a
CLASS B
With 5% CDSL (3.42)% n/a n/a n/a n/a
Without CDSL 1.58 n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a 11.47 n/a n/a n/a
Without CDSL n/a 12.47 n/a n/a 23.99%
RUSSELL 2000 INDEX** 0.01+ 13.13 15.76 11.91 15.52++
LIPPER SMALL COMPANY
GROWTH FUND INDEX** 1.28+ 17.12 16.84 13.51 18.88++
NASDAQ COMPOSITE
INDEX*** 3.06+ 17.57 18.42 13.34 19.82++
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995 SEPTEMBER 30, 1995
---------------------- -------------- ----------------- -------------------- ---------------------
<S> <C> <C> <C> <C> <C>
CLASS A $15.38 $15.42 $14.41 $13.64 $14.04
CLASS B 14.78 14.85 14.55+++ n/a n/a
CLASS D 14.77 14.85 13.90 13.18 13.61
</TABLE>
CAPITAL GAIN INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 1996
CAPITAL GAIN
-----------------------------------
REALIZED UNREALIZEDo
------------ -------------
CLASS A $0.933 $1.693
CLASS B 0.933 1.693
CLASS D 0.933 1.693
- ----------
* Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures for
Class A shares are calculated with and without the effect of the initial
4.75% maximum sales charge. Class A share returns reflect the effect of the
0.25% Administration, Shareholder Services and Distribution Plan after June
1, 1992, only. Returns for Class B shares are calculated with and without
the effect of the maximum 5% contingent deferred sales load ("CDSL"),
charged only on certain redemptions made within one year of the date of
purchase, declining to 1% in the sixth year and 0% thereafter. Returns for
Class D shares are calculated with and without the effect of the 1% CDSL,
charged only on redemptions made within one year of the date of purchase.
Performance data quoted represent changes in prices and assume that all
distributions within the periods are invested in additional shares. The
rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment
results.
** The Russell 2000 Index and the Lipper Small Company Growth Fund Index are
unmanaged indices that assume reinvestment of estimated dividends and do not
reflect fees and expenses. Investors may not invest directly in an index.
*** The Nasdaq Composite Index is an unmanaged index that does not reflect fees
and expenses. Investors may not invest directly in an index.
+ From April 30, 1996.
++ From April 30, 1993.
+++ As of April 22, 1996.
o Represents the per share amount of net unrealized appreciation of portfolio
securities as of September 30, 1996.
5
<PAGE>
================================================================================
SELIGMAN FRONTIER FUND, INC.
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
DURING PAST THREE MONTHS
SHARES
----------------------------
HOLDINGS
ADDITIONS INCREASE 9/30/96
- ------------ ----------- ------------
American Pad & Paper 600,000 600,000
Calpine 420,000 420,000
Coinmach Laundry 370,000 370,000
Health Management
Associates (Class A) 500,000 500,000
International Rectifier 400,000 400,000
Memtec (ADRs) 300,000 300,000
Omnipoint 225,000 475,000
Polymer Group 400,000 400,000
SCI Systems 150,000 150,000
Saks Holdings 150,000 216,000
SHARES
----------------------------
HOLDINGS
REDUCTIONS DECREASE 9/30/96
- -------------- ----------- ------------
BDM International 100,000 250,000
Corporate Express 100,000 330,000
Electronics for Imaging 175,000 --
General Nutrition 475,000 --
Genesis Health Ventures 200,000 --
Meadowbrook Insurance Group 201,000 94,100
Oakley 250,000 --
St. John Knits 147,000 --
United Transnet 595,000 --
SunGard Data Systems 125,000 --
Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
MAJOR PORTFOLIO HOLDINGS
AT SEPTEMBER 30, 1996
SECURITY VALUE
- -------- -----------
CalEnergy .............................................. $22,312,500
Watson Pharmaceuticals ................................. 20,693,750
Ceridian ............................................... 17,500,000
DST Systems ............................................ 16,480,000
Scherer (R.P.) ......................................... 16,428,750
BDM International ...................................... 14,937,500
Total Renal Care Holdings .............................. 14,707,500
HFS .................................................... 14,217,625
UCAR International ..................................... 14,175,000
Omnipoint .............................................. 13,656,250
MAJOR SECTORS
AT SEPTEMBER 30, 1996
[THE FOLLOWING TABLE REPRESENTS A PIE CHART.]
Business Goods and Services ...........20.8%
Drugs and Health Care ................. 9.6%
Electronics ........................... 8.3%
Financial Services .................... 6.8%
Capital Goods ......................... 6.2%
Medical Products and Technology ....... 5.5%
Pharmaceuticals ....................... 4.8%
Short-Term Holdings ................... 4.5%
Media and Broadcasting ................ 4.2%
Communications ........................ 4.0%
Retail Trade .......................... 3.4%
Computer Software and Services ........ 3.3%
Independent Power Producers ........... 3.3%
Consumer Goods and Services ........... 2.2%
Manufacturing ......................... 2.1%
Specialty Chemicals ................... 2.0%
Oil and Gas ........................... 1.7%
Other ................................. 7.3%
6
<PAGE>
===============================================================================
PORTFOLIO OF INVESTMENTS September 30, 1996
- -------------------------------------------------------------------------------
SHARES VALUE
-------- -------
COMMON STOCKS 96.7%
ADVERTISING 0.7%
Heritage Media (Class A)*
Broadcasting, in-store media ............... 336,000 $ 6,342,000
------------
AEROSPACE AND DEFENSE 1.2%
Avondale Industries*
Ship construction for military
and commercial uses ........................ 600,000 11,100,000
------------
BUSINESS GOODS AND
SERVICES 20.8%
Abacus Direct*
Information products and
marketing research ......................... 45,500 938,437
AccuStaff*
Temporary personnel
services ................................... 410,000 10,634,375
American Pad & Paper*
Manufacturer of paper-based
office products ............................ 600,000 12,750,000
BDM International*
Information systems
software and services ...................... 250,000 14,937,500
Bell & Howell Holdings*
Publishing and information
services ................................... 309,600 9,829,800
BISYS Group*
Data processing services ................... 220,000 9,075,000
Ceridian*
Data processing services ................... 350,000 17,500,000
Coinmach Laundry*
Coin-operated laundry and
equipment services ......................... 370,000 7,608,125
Corporate Express*
Supplier of office products ................ 330,000 12,787,500
DST Systems*
Information processing
and software services ...................... 515,000 16,480,000
Fiserv*
Data processing services ................... 70,000 2,686,250
Inter-Tel*
Manufacturer of electronic
telecommunications
equipment .................................. 433,000 8,849,438
May & Speh*
Computer-based information
management systems ......................... 220,000 4,427,500
MetroMail*
Direct mail marketing
information services ....................... 300,000 6,487,500
National Data
Transaction processor ...................... 300,000 13,087,500
National Processing*
Transaction processor ...................... 250,000 4,875,000
Nu-Kote Holdings (Class A)*
Manufacturer of copier
toner supplies ............................. 310,000 3,293,750
Personnel Group of America*
Personnel staffing services ................ 125,000 3,250,000
TeleSpectrum Worldwide*
Telemarketing and marketing
research services .......................... 350,000 6,781,250
US Office Products*
Supplier of office products ................ 335,000 12,080,937
Wilmar Industries*
Distributor of repair and
maintenance products ....................... 252,000 5,859,000
------------
184,218,862
------------
CAPITAL GOODS 6.2%
Carbide/Graphite Group*
Producer of graphite
electrodes ................................. 475,000 8,728,125
DT Industries
Manufacturer of custom
machines and metal products ................ 150,000 5,100,000
Fusion Systems*
Manufacturer of ultraviolet
curing systems ............................. 110,000 1,952,500
Greenfield Industries
Manufacturer of expendable
cutting tools .............................. 200,000 4,850,000
Oak Industries*
Manufacturer of electrical
controls ................................... 400,000 13,300,000
UCAR International*
Producer of graphite
electrodes ................................. 350,000 14,175,000
Wolverine Tube*
Manufacturer of copper and
copper-alloy tubing ....................... 150,000 6,450,000
------------
54,555,625
------------
7
<PAGE>
===============================================================================
PORTFOLIO OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
SHARES VALUE
-------- -------
COMMUNICATIONS 4.0%
Arch Communications Group*
Provider of nationwide
paging services ............................ 400,000 $ 5,475,000
CIDCO*
Designer and developer of
network service equipment .................. 340,000 7,012,500
Glenayre Technologies*
Manufacturer of paging
infrastructure equipment ................... 300,000 6,862,500
Omnipoint*
Personal communications
services ................................... 475,000 13,656,250
Western Wireless (Class A)*
Wireless communications
services ................................... 126,750 2,138,906
------------
35,145,156
------------
COMPUTER HARDWARE
PERIPHERALS 0.5%
Planar Systems*
Manufacturer of electro-
luminescent displays ....................... 418,000 4,284,500
------------
COMPUTER SOFTWARE
AND SERVICES 3.3%
CompuServe*
Interactive/Internet
services ................................... 280,000 3,815,000
Control Data Systems*
Developer of tailored
computer systems ........................... 480,000 11,130,000
Mentor Graphics*
Developer of integrated
circuit design software .................... 525,000 4,692,187
Synopsys*
Developer of integrated circuit
design software ............................ 200,000 9,225,000
------------
28,862,187
------------
CONSTRUCTION AND
SERVICES 0.8%
AMRE*
Siding and cabinet refacing ................ 520,000 7,215,000
------------
CONSUMER GOODS AND
SERVICES 2.2%
Barefoot
Lawn care services ......................... 290,000 2,972,500
Carriage Services (Class A)*
Funeral services and products .............. 125,000 2,390,625
HFS*
Hotel and motel franchises ................. 212,600 14,217,625
------------
19,580,750
------------
DRUGS AND HEALTH CARE
SERVICES 9.6%
American HomePatient*
Provider of home health
care services .............................. 290,750 6,396,500
AmeriSource Health (Class A)*
Distributor of pharmaceutical
supplies ................................... 260,000 11,570,000
Community Psychiatric Centers*
Owner and operator of acute
psychiatric hospitals ...................... 485,000 4,546,875
Health Management
Associates (Class A)*
Operator of acute care
hospitals .................................. 500,000 12,437,500
Healthcor Holdings*
Home health care services .................. 300,000 3,581,250
National Surgery Centers*
Operator of ambulatory
surgery centers ............................ 200,000 5,475,000
Omnicare
Provider of pharmacy services
to long-term care institutions ............. 370,000 11,285,000
Paracelsus Healthcare*
Owner and operator of
health care facilities ..................... 200,000 2,025,000
RISCORP (Class A)*
Managed-care worker
compensation ............................... 50,000 846,875
Schein (Henry)*
Marketer of health care
products and services ...................... 100,000 3,875,000
Total Renal Care Holdings*
Provider of dialysis services .............. 370,000 14,707,500
Vivra*
Dialysis and health care
centers .................................... 250,000 8,156,250
------------
84,902,750
------------
- ---------
See footnotes on page 11.
8
<PAGE>
===============================================================================
September 30, 1996
- -------------------------------------------------------------------------------
SHARES VALUE
-------- -------
ELECTRONICS 8.3%
Cognex*
Manufacturer of machine
vision systems ............................. 700,000 $ 11,462,500
Credence Systems*
Automated semiconductor
testing equipment .......................... 250,000 3,906,250
Electro Scientific Industries*
Computer controlled laser
systems .................................... 132,500 2,467,812
Electroglas*
Manufacturer of semiconductor
wafer probing equipment .................... 239,000 3,301,188
International Rectifier*
Power semiconductors ....................... 400,000 5,550,000
Lattice Semiconductor*
Manufacturer of programmable
logic devices .............................. 290,000 8,391,875
Maxim Integrated Products*
Linear and mixed signal
integrated circuits ........................ 250,000 8,859,375
Sanmina*
Manufacturer of electronic
circuit boards and back planes ............. 230,000 9,315,000
Ultratech Stepper*
Photolithography systems for
the manufacture of semi-
conductors and their film
recording heads ............................ 80,000 1,505,000
Vicor*
Manufacturer of modular power
converters ................................. 350,000 8,684,375
Xilinx*
Field programmable gate
arrays ..................................... 125,000 4,242,188
Zilog*
Application-specific
microcontrollers ........................... 300,000 5,737,500
------------
73,423,063
------------
ENVIRONMENTAL
MANAGEMENT 0.5%
Allied Waste Industries*
Integrated waste disposal .................. 500,000 4,593,750
------------
FARM EQUIPMENT 0.5%
AGCO
Manufacturer and distributor
of farm equipment .......................... 185,000 4,717,500
------------
FINANCIAL SERVICES 6.8% Bank United (Class A)
General banking company .................... 100,000 2,462,500
CMAC Investment
Private mortgage insurance ................. 145,000 9,207,500
Commerce Bancorp
Commercial bank ............................ 150,000 3,956,250
First Investors Financial
Services Group*
Consumer finance company ................... 150,000 1,425,000
First Savings Bank
of Washington
Savings bank ............................... 150,000 2,512,500
Flushing Financial*
Savings bank ............................... 200,000 3,662,500
GCR Holdings
Property and casualty
insurance .................................. 210,000 5,092,500
Jayhawk Acceptance*
Consumer finance company ................... 350,000 4,943,750
KlamathFirst Bancorp
Savings and loan ........................... 150,000 2,146,875
Leasing Solutions*
Lessor of processing and
communications equipment. .................. 230,000 6,540,625
Meadowbrook Insurance Group
Marketer of risk management
insurance .................................. 94,100 2,634,800
PFF Bancorp*
Holding company ............................ 100,000 1,225,000
T. Rowe Price
Investment management ...................... 230,000 7,503,750
Roosevelt Financial Group
Savings bank ............................... 300,000 5,156,250
Statewide Financial
Savings bank ............................... 150,000 1,940,625
------------
60,410,425
------------
FOOD AND BEVERAGES 0.5%
Canandaigua Wine (Class A)*
Domestic wine producer ..................... 200,000 4,175,000
------------
- ---------
See footnotes on page 11.
9
<PAGE>
===============================================================================
PORTFOLIO OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
SHARES VALUE
-------- -------
GAMING 1.3%
GTECH Holdings*
Operator of state and local
lottery systems ............................ 350,000 $ 11,243,750
------------
INDEPENDENT POWER
PRODUCERS 3.3%
CalEnergy*
Developer of geothermal
energy power ............................... 700,000 22,312,500
Calpine*
Developer of power
generation facilities ...................... 420,000 6,720,000
------------
29,032,500
------------
INDUSTRIAL GOODS
AND SERVICES 0.9%
Memtec (ADRs)
Researcher, developer, and
producer of filtration and
separation products ........................ 300,000 8,456,250
------------
MANUFACTURING 2.1%
American Homestar*
Retailer and producer of
manufactured homes ......................... 200,000 4,825,000
Polymer Group*
Manufacturer and marketer
of polyolefin products ..................... 400,000 5,600,000
SCI Systems*
Assembler of electronic
circuit boards ............................. 150,000 8,446,875
------------
18,871,875
------------
MEDIA AND BROADCASTING 4.2%
Argyle Television (Class A)*
Owner, operator, and manager
of TV stations ............................. 395,000 11,208,125
Chancellor Broadcasting
(Class A)*
Radio broadcasting ......................... 100,000 4,175,000
Evergreen Media (Class A)*
Radio broadcasting ......................... 337,500 10,631,250
Jacor Communications*
Radio broadcasting ......................... 130,000 4,452,500
Paxson Communications
(Class A)*
Radio and TV broadcasting .................. 600,000 6,750,000
------------
37,216,875
------------
MEDICAL PRODUCTS AND
TECHNOLOGY 5.5%
CompDent*
Provider of managed care
dental services ............................ 275,000 10,450,000
Dentsply International
Manufacturer of dental and
medical x-ray equipment .................... 290,000 12,868,750
Rural/Metro*
Emergency ambulance and
fire services .............................. 202,300 7,308,088
Sybron International*
Laboratory and dental
supplies ................................... 325,000 9,425,000
Waters*
Manufacturer of liquid
chromatography instruments ................ 275,000 9,006,250
------------
49,058,088
------------
METALS 0.2%
NN Ball & Roller
Manufacturer of steel balls
and rollers ................................ 100,000 1,425,000
------------
OIL AND GAS 1.7%
Pogo Producing
Oil and gas exploration,
production, and development ................ 225,000 8,043,750
Santa Fe Energy Resources*
Oil and gas exploration,
production, and development ................ 500,000 7,125,000
------------
15,168,750
------------
PHARMACEUTICALS 4.8%
Protein Design Labs*
Antibody technology research
and development ............................ 200,000 5,012,500
Scherer (R.P.)*
Developer and producer of
pharmaceutical delivery
systems .................................... 337,000 16,428,750
Watson Pharmaceuticals*
Manufacturer of off-patent
medications ................................ 550,000 20,693,750
------------
42,135,000
------------
PLASTICS 0.4%
Spartech
PVC compounds; plastic
sheeting ................................... 400,000 3,850,000
------------
- ---------
See footnotes on page 11.
10
<PAGE>
===============================================================================
September 30, 1996
- -------------------------------------------------------------------------------
SHARES VALUE
-------- -------
PUBLISHING 0.5%
World Color Press*
Commercial printer and
distributor ................................ 201,800 $ 4,490,050
------------
RESTAURANTS 0.5%
Longhorn Steaks*
Operator of full-service
restaurants ................................ 300,000 4,500,000
------------
RETAIL TRADE 3.4%
Borders Group*
Operator of book
superstores ................................ 125,000 4,656,250
Casey's General Store
Operator of convenience stores ............. 350,000 6,103,125
Consolidated Stores*
Retailer of close-out
merchandise ................................ 100,000 4,000,000
Friedman's (Class A)*
Retailer of fine jewelry ................... 400,000 7,425,000
Saks Holdings*
Men and women's fashion
retailer ................................... 216,000 7,560,000
------------
29,744,375
------------
SPECIALTY CHEMICALS 2.0%
Minerals Technologies
Manufacturer of specialty
minerals and products ..................... 250,000 9,343,750
------------
Sealed Air*
Manufacturer of protective
packaging .................................. 215,000 8,008,750
------------
17,352,500
------------
TOTAL COMMON STOCKS
(Cost $756,997,234 ) ............................... 856,071,581
------------
SHORT-TERM HOLDINGS4.5%
(Cost $39,550,000) ................................ 39,550,000
------------
TOTAL INVESTMENTS 101.2%
(Cost $796,547,234) ............................... 895,621,581
OTHER ASSETS LESS
LIABILITIES (1.2)% .............................. (10,541,277)
------------
NET ASSETS 100.0% ................................... $885,080,304
============
- ---------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
11
<PAGE>
===============================================================================
STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value:
Common stocks (cost $756,997,234) .......... $856,071,581
Short-term holdings (cost $39,550,000) ..... 39,550,000
------------
$895,621,581
Cash 289,471
Receivable for securities sold ................. 3,425,342
Receivable for Capital Stock sold .............. 3,035,411
Expenses prepaid to shareholder service agent .. 192,809
Receivable for dividends and interest .......... 108,545
Other .......................................... 24,184
------------
Total Assets ................................... 902,697,343
------------
LIABILITIES:
Payable for securities purchased ............... 14,050,498
Payable for Capital Stock repurchased .......... 2,130,695
Accrued expenses, taxes, and other ............. 1,435,846
------------
Total Liabilities .............................. 17,617,039
------------
Net Assets ..................................... $885,080,304
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value;
500,000,000 shares authorized; 58,518,914
shares outstanding):
Class A .................................... $ 3,406,254
Class B .................................... 162,543
Class D .................................... 2,283,094
Additional paid-in capital ..................... 738,269,579
Accumulated net investment loss ................ (49,246)
Undistributed net realized gain ................ 41,933,733
Net unrealized appreciation of investments ..... 99,074,347
------------
NET ASSETS ..................................... $885,080,304
============
NET ASSET VALUE PER SHARE:
Class A ($523,736,760 / 34,062,538 shares) ..... $15.38
======
Class B ($24,016,368 / 1,625,430 shares) ....... $14.78
======
Class D ($337,327,176 / 22,830,946 shares) ..... $14.77
======
- ---------
See Notes to Financial Statements.
12
<PAGE>
===============================================================================
STATEMENT OF OPERATIONS For the Year Ended September 30, 1996
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest ....................................... $ 3,015,125
Dividends ...................................... 1,274,156
------------
Total investment income ........................ $ 4,289,281
EXPENSES:
Management fee ................................. 6,014,692
Distribution and service fees .................. 3,383,181
Shareholder account services ................... 1,991,428
Registration ................................... 274,156
Shareholder reports and communications ......... 209,012
Custody and related services ................... 187,378
Shareholders' meeting .......................... 83,801
Auditing and legal fees ........................ 61,604
Directors' fees and expenses ................... 28,359
Miscellaneous .................................. 15,414
------------
Total expenses ................................. 12,249,025
-----------
Net investment loss ............................ (7,959,744)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ............... 54,587,427
Net change in unrealized appreciation
of investments 37,679,696
-----------
Net gain on investments ........................ 92,267,123
-----------
INCREASE IN NET ASSETS FROM OPERATIONS ......... $84,307,379
===========
- ---------
See Notes to Financial Statements.
13
<PAGE>
===============================================================================
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------
1996 1995
------------ ------------
OPERATIONS:
Net investment loss ......................... $ (7,959,744) $ (1,269,598)
Net realized gain on investments ............ 54,587,427 14,852,097
Net change in unrealized appreciation
of investments ......................... 37,679,696 51,312,770
------------- -------------
Increase in net assets from operations ...... 84,307,379 64,895,269
------------- -------------
DISTRIBUTION TO SHAREHOLDERS:
Net realized gain on investments:
Class A ................................ (10,171,960) (7,039,282)
Class D ................................ (5,808,812) (1,338,879)
------------- -------------
Decrease in net assets from distributions .. (15,980,772) (8,378,161)
------------- -------------
CAPITAL SHARE TRANSACTIONS:*
SHARES
--------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------
1996 1995
------------ ------------
Net proceeds from sale of shares:
Class A ................................ 16,492,254 14,343,047
Class B ................................ 1,620,257 --
Class D ................................ 13,296,830 9,799,966
Exchanged from associated Funds:
Class A ................................ 9,570,832 2,239,426
Class B ................................ 46,856 --
Class D ................................ 2,094,306 977,881
Shares issued in payment of gain distributions:
Class A ................................ 634,890 630,353
Class D ................................ 414,331 125,619
------------ -------------
Total ...................................... 44,170,556 28,116,292
------------ -------------
Cost of shares repurchased:
Class A ................................ (3,546,560) (1,348,459)
Class B ................................ (11,460) --
Class D ................................ (1,773,522) (261,304)
Exchanged into associated Funds:
Class A ................................ (8,475,688) (1,508,671)
Class B ................................ (30,223) --
Class D ................................ (1,888,645) (771,800)
------------ -------------
Total ...................................... (15,726,098) (3,890,234)
------------ -------------
Increase in net assets from capital
share transactions ..................... 28,444,458 24,226,058
============ =============
YEAR ENDED SEPTEMBER 30,
--------------------------------
1996 1995
------------ ------------
Net proceeds from sale of shares:
Class A ................................ 234,133,389 176,507,457
Class B ................................ 23,578,876 --
Class D ................................ 183,469,155 116,142,280
Exchanged from associated Funds:
Class A ................................ 139,553,114 27,111,701
Class B ................................ 666,508 --
Class D ................................ 29,327,262 11,153,674
Shares issued in payment of gain distributions:
Class A ................................ 8,602,756 6,606,096
Class D ................................ 5,431,884 1,286,339
------------ -------------
Total ...................................... 624,762,944 338,807,547
------------ -------------
Cost of shares repurchased:
Class A ................................ (50,876,224) (16,084,996)
Class B ................................ (168,482) --
Class D ................................ (24,524,473) (3,189,105)
Exchanged into associated Funds:
Class A ................................ (123,710,010) (17,704,056)
Class B ................................ (427,330) --
Class D ................................ (25,867,750) (8,577,404)
------------ -------------
Total (225,574,269) (45,555,561)
------------ -------------
Increase in net assets from capital
share transactions ..................... 399,188,675 293,251,986
------------ -------------
Increase in net assets ..................... 467,515,282 349,769,094
NET ASSETS:
Beginning of year .......................... 417,565,022 67,795,928
------------ -------------
End of year ................................ $885,080,304 $417,565,022
============ =============
- ---------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
14
<PAGE>
===============================================================================
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. Seligman Frontier Fund, Inc. (the "Fund") offers three classes of shares. All
shares existing prior to May 3, 1993, the commencement date of Class D shares,
were classified as Class A shares. The Fund began offering Class B shares on
April 22, 1996. Class A shares are sold with an initial sales charge of up to
4.75% and a continuing service fee of up to 0.25% on an annual basis. Class A
shares purchased in an amount of $1,000,000 or more are sold without an initial
sales charge but are subject to a contingent deferred sales load ("CDSL") of 1%
on redemptions within 18 months of purchase. Class B shares are sold without an
initial sales charge but are subject to a distribution fee of up to 0.75% and a
service fee of up to 0.25% on an annual basis, and a CDSL, if applicable, of 5%
on redemptions in the first year after purchase, declining to 1% in the sixth
year and 0% thereafter. Class B shares will automatically convert to Class A
shares on the last day of the month that precedes the eighth anniversary of
their date of purchase. Class D shares are sold without an initial sales charge
but are subject to a distribution fee of up to 0.75% and a service fee of up to
0.25% on an annual basis, and a CDSL of 1% imposed on certain redemptions made
within one year of purchase. The three classes of shares represent interests in
the same portfolio of investments, have the same rights and are generally
identical in all respects except that each class bears its separate distribution
and certain other class expenses, and has exclusive voting rights with respect
to any matter on which a separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in stocks are valued at current market values or, in their
absence, at fair values determined in accordance with procedures approved by
the Board of Directors. Securities traded on national exchanges are valued
at last sales prices or, in their absence and in the case of
over-the-counter securities, 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 are specifically attributed to a particular class, are charged directly
to such class. For the year ended September 30, 1996, distribution and
service fees were the only class-specific expenses.
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 U.S. Government
obligations and short-term investments, for the year ended September 30, 1996,
amounted to $744,928,633 and $362,881,600, respectively.
15
<PAGE>
===============================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
At September 30, 1996, 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 $159,533,436 and $60,459,089, 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
paid by the Manager. Effective January 1, 1996, the Manager receives a fee,
calculated daily and payable monthly, equal to 0.95% per annum of the first $750
million of the Fund's average daily net assets and 0.85% per annum of the Fund's
average daily net assets in excess of $750 million. Prior to January 1, 1996,
the management fee rate was 0.75% per annum of the Fund's average daily net
assets. The management fee reflected in the Statement of Operations represents
0.92% 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 $689,900 from sales of Class A shares after commissions of
$5,532,809 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, 1996, fees paid aggregated $882,717, or 0.21% per annum of
average daily net assets of Class A shares.
The Fund has a Plan with respect to Class B and 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 B and Class D shares for which the organizations are
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of up to 0.75% on an
annual basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provided funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the year ended September 30, 1996, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $54,086 and $2,446,378, respectively.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For the
year ended September 30, 1996, such charges amounted to $117,636.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B shares distribution fees retained by the Distributor for the
period ended September 30, 1996, amounted to $61,955.
16
<PAGE>
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the year ended September 30, 1996,
Seligman Services, Inc. received commissions of $156,157 from sales of shares of
the Fund. Seligman Services, Inc. also received distribution and service fees of
$73,340, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $1,991,428 for shareholder account services.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
Fees of $28,000 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 annual cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at September 30, 1996, of
$49,246 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. Effective July 31, 1996, the Fund entered into an $80 million committed line
of credit facility with a group of banks. Borrowings pursuant to the credit
facility are subject to interest at a rate equal to the federal funds rate plus
0.75% per annum. The Fund incurs a commitment fee of 0.10% per annum on the
unused portion of the credit facility. The credit facility may be drawn upon
only for temporary purposes and is subject to certain other customary
restrictions. The credit facility commitment expires one year from the date of
the agreement but is renewable with the consent of the participating banks. The
Fund made no borrowings during the period ended September 30, 1996.
17
<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 each Class' 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 each Class' performance
assuming investors purchased Fund 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
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------
1996o 1995o 1994o 1993 1992
------ ----- ----- ----- -----
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $14.04 $11.62 $12.83 $10.22 $10.71
------ ------ ------ ------ ------
Net investment loss .............................. (0.13) (0.06) (0.08) (0.03) (0.07)
Net realized and unrealized
investment gain ............................... 1.95 3.87 1.10 4.54 0.58
------ ------ ------ ------ ------
Increase from investment operations .............. 1.82 3.81 1.02 4.51 0.51
Distributions from net gain realized ............. (0.48) (1.39) (2.23) (1.90) (1.00)
------ ------ ------ ------ ------
Net increase (decrease) in net asset value ....... 1.34 2.42 (1.21) 2.61 (0.49)
------ ------ ------ ------ ------
Net asset value, end of period ................... $15.38 $14.04 $11.62 $12.83 $10.22
====== ====== ====== ====== ======
TOTAL RETURN BASED ON
NET ASSET VALUE: .............................. 13.40% 36.80% 9.79% 50.67% 4.91%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................... 1.56% 1.43% 1.34% 1.25% 1.37%
Net investment loss to average net assets ........ (0.91)% (0.50)% (0.87)% (0.27)% (0.71)%
Portfolio turnover ............................... 59.36% 71.52% 124.76% 129.13% 129.46%
Average commission rate paid ..................... $0.0538
Net assets, end of period
(000s omitted) ................................ $523,737 $272,122 $58,478 $43,188 $27,178
</TABLE>
- ----------
The per share data for the fiscal year 1992 have been restated to reflect the
2-for-1 stock split effected on April 16, 1992, as a 100% stock dividend. 0
The per share data for the years/periods ended September 30, 1996, 1995, and
1994 are based on average shares outstanding for the periods.
* Commencement of offering of shares.
** For the year ended September 30, 1996.
+ Annualized.
++ For the year ended September 30, 1993.
See Notes to Financial Statements.
18
<PAGE>
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.
Average commission rate paid represents the average commission paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid. This rate is provided for fiscal
periods beginning October 1, 1995.
<TABLE>
<CAPTION>
CLASS B CLASS D
-------- --------------------------------------
4/22/96* YEAR ENDED SEPTEMBER 30, 5/3/93*
TO -------------------------------------- TO
9/30/96o 1996o 1995o 1994o 9/30/93
------- ------- ----- ----- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period .......... $14.55 $13.61 $11.40 $12.80 $10.12
------ ------ ------ ------ ------
Net investment loss ........................... (0.11) (0.24) (0.15) (0.23) (0.04)
Net realized and unrealized
investment gain ............................ 0.34 1.88 3.75 1.06 2.72
------ ------ ------ ------ ------
Increase from investment operations ........... 0.23 1.64 3.60 0.83 2.68
Distributions from net gain realized .......... -- (0.48) (1.39) (2.23) --
------ ------ ------ ------ ------
Net increase (decrease) in net asset value .... 0.23 1.16 2.21 (1.40) 2.68
------ ------ ------ ------ ------
Net asset value, end of period ................ $14.78 $14.77 $13.61 $11.40 $12.80
====== ====== ====== ====== ======
TOTAL RETURN BASED ON
NET ASSET VALUE: ........................... 1.58% 12.47% 35.53% 8.06% 26.48%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................ 2.45%+ 2.35% 2.29% 2.72% 2.24%+
Net investment loss to average net assets ..... (1.80)%+ (1.70)% (1.35)% (2.25)% (1.94)%+
Portfolio turnover ............................ 59.36%** 59.36% 71.52% 124.76% 129.13%++
Average commission rate paid .................. $0.0538** $0.0538
Net assets, end of period
(000s omitted) ............................. $24,016 $337,327 $145,443 $9,318 $967
</TABLE>
19
<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, 1996, 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, 1996, 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, 1996, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
October 30, 1996
20
<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 A. 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, 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
Director or Trustee,
Various Organizations
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
Chairman, Seligman Data Corp.
- ---------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
21
<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
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 SHAREHOLDER SERVICES
(800) 445-1777 RETIREMENT PLAN
SERVICES
(800) 622-4597 24-HOUR AUTOMATED
TELEPHONE ACCESS
SERVICE
22
<PAGE>
File No. 2-92487
811-4078
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, 1996.
Financial Highlights for Class B shares for the period April 22,
1996 (commencement of operations) to September 30, 1996.
Financial Highlights for Class D shares for the period May 3, 1993
(commencement of operations) to September 30, 1996.
Part B - Required Financial Statements are included in the Fund's Annual
Report to shareholders, dated September 30, 1996, which in
incorporated by reference in the Statement of Additional
Information. These Financial Statements are: Portfolio of
Investments as of September 30, 1996. Statement of Assets and
Liabilities as of September 30, 1996; Statement of Operations for
the year ended September 30, 1996; Statement of Changes in Net
Assets for the years ended September 30, 1996 and September 30,
1995; Notes to Financial Statements; Financial Highlights for the
five years ended September 30, 1996 for the Fund's Class A shares,
for the period April 22, 1996 (commencement of operations) to
September 30, 1996 for the Fund's Class B shares and for the period
May 3, 1993 (commencement of operations) to September 30, 1996 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.
(1) Form of Amended and Restated Articles of Incorporation.*
(2) Amended and Restated Bylaws of Registrant.*
(3) Not applicable
(4) Copy of Specimen Stock Certificate.
(Incorporated by Reference to Form SE filed on April 16, 1996.)
(5) Management Agreement between the Registrant and J. & W. Seligman &
Co. Incorporated. (Incorporated by reference to Registrant's
Post-Effective Amendment No 20, filed April 19, 1996.)
(5)(a) Subadvisory Agreement between J.& W. Seligman & Co. Incorporated and
Seligman Henderson Co. (Incorporated by referenced to Registrant's
Post-Effective Amendment No. 20, filed April 19, 1996.)
(6) Distributing Agreement between Registrant and Seligman Financial
Services, Inc.*
(6)(a) Amended Sales Agreement between Seligman Financial Services, Inc.
and Dealer. (Incorporated by reference to Registrant's
Post-Effective Amendment No 20, filed April 19, 1996.)
(7) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.*
(7)(a) Deferred Compensation Plan for Directors of Seligman Group of
Funds.*
(8) Custody Agreement between Registrant and Investors Fiduciary Trust
Company.*
(9) Not applicable
(10) Opinion and Consent of Counsel. *
(11) Consent of Independent Auditors.*
(12) Not applicable
(13)(a) Copy of Purchase Agreement for Initial Capital for Class B shares.
(Incorporated by referenced ot Registrant's Post-Effective Amendment
No. 20, filed April 19, 1996.)
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
(13)(b) Copy of Purchase Agreement for Initial Capital for Class D shares*
(14) Copy of amended Individual Retirement Account Trust and Related
Documents. (Incorporated by reference to Seligman Municipal Fund
Series, Inc., File No. 2-86008, Post-Effective Amendment No. 24
filed on November 30, 1992.)
(14)(a) Copy of amended Comprehensive Retirement Plans for Money Purchase
and/or Prototype Profit Sharing Plan. (Incorporated by reference to
Seligman Municipal Fund Series, Inc., File No. 2-86008,
Post-Effective Amendment No. 24 filed on November 30, 1992.)
(14)(b) Copy of amended Basic Business Retirement Plans for Money Purchase
and/or Profit Sharing Plans. (Incorporated by reference to Seligman
Municipal Fund Series, Inc., File No. 2-86008, Post-Effective
Amendment No. 24 filed on November 30, 1992.)
(14)(c) Copy of amended 403(b)(7) Custodial Account Plan. (Incorporated by
reference to Seligman New Jersey Municipal Fund Series, Inc., File
No. 33-13401, Pre-Effective Amendment No. 1 filed on January 11,
1988.)
(14)(d) Copy of amended Simplified Employee Pension Plan (SEP).
(Incorporated by reference to Seligman Municipal Fund Series, Inc.,
File No. 2-86008, Post-Effective Amendment No. 24 filed on November
30, 1992.)
(14)(e) 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 Municipal 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. (Incorporated
by referenced to Registrant's Post-Effective Amendment No. 20 filed
April 19, 1996.)
(16) Schedules of computation of Performance Data provided in
Registration Statement in response to Item 22.*
(17) Financial Data Schedules meeting the requirements of Rule 483 under
the Securities Act of 1933.*
(18) Copy of Multiclass Plan for Seligman Group of Funds pursuant to Rule
18f-3 under the Investment Company Act of 1940.*
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
- NONE.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of Record
Title of Class Holders as of January 10, 1997
-------------- ------------------------------
Class A Common Stock 30,897
Class B Common Stock 2,260
Class D Common Stock 17,524
ITEM 27. INDEMNIFICATION - Reference is made to the provisions of Articles
Twelfth and Thirteenth of Registrant's Amended and Restated Articles
of Incorporation filed as Exhibit 24(b)(1) and Article IV of
Registrant's Amended and Restated By-laws filed as Exhibit 24(b)(2)
to this Post-Effective Amendment No. 21 to the Registration
Statement.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER - 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 Municipal Fund Series,
Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal
Fund, Inc., Seligman Pennsylvania Municipal Fund Series, Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman
Select Municipal Fund, Inc. and Tri-Continental Corporation.
Seligman Henderson Co. ("Subadviser") 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), which were
filed on August 7, 1996 and October 3, 1996, respectively.
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 Municipal Fund Series, Inc.
Seligman Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 21:
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF DECEMBER 31, 1996
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
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
ED LYNCH* Senior Vice President, Director None
Of Marketing
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
KAREN J. BULLOT* Vice President, Retirement Plans None
JOHN CARL* Vice President, Marketing None
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
BRADFORD C. DAVIS Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
ANDREW DRALUCK Regional Vice President None
4215 N. Civic Center
Blvd #273
Scottsdale, AZ 85251
JONATHAN G. EVANS Regional Vice President None
222 Fairmont Way
Ft. Lauderdale, FL 33326
</TABLE>
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
ELIGMAN FINANCIAL SERVICES, INC.
AS OF DECEMBER 31, 1996
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
SUSAN GUTTERUD Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
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
MELINDA NAWN Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
TIM O'CONNELL Regional Vice President None
14872 Summerbreeze Way
San Diego, CA 92128
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
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
KELLI A. WIRTH-DUMSER Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
JEFFREY S. DEAN* Assistant Vice President, None
Annuity Product Manager
SANDRA FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
FRANK P. MARINO* Assistant Vice President, Mutual None
Fund Product Manager
JOSEPH M. MCGILL* Assistant Vice President and None
Compliance Officer
</TABLE>
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF DECEMBER 31, 1996
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
JOYCE PERESS* Assistant Secretary None
</TABLE>
* 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
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,
1996, 1995 and 1994 the approximate cost of these services was
$198,600, $64,500 and $15,342, respectively.
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>
File No. 2-92487
811-4078
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 21 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 28th day of January, 1997.
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. 21 to
Registration Statement has been signed below by the following persons in the
capacities indicated on January 28, 1997.
SIGNATURE TITLE
/s/ William C. Morris Chairman of the Board (Principal
- ---------------------------------- executive officer) and Director
William C. Morris*
/s/ Brian T. Zino President and Director
- ----------------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer (Principal financial
- ---------------------------------- and accounting officer)
Thomas G. Rose
Fred E. Brown, Director )
Alice S. Ilchman, Director )
John E. Merow, Director ) /s/ Brian T. Zino
Betsy S. Michel, Director ) --------------------------------------
James C. Pitney, Director ) *Brian T. Zino, Attorney-in-fact
James Q. Riordan, Director )
Ronald T. Schroeder, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
File No. 2-92487
811-4078
SELIGMAN FRONTIER FUND, INC.
Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
ITEM NO. DESCRIPTION
24 (b) (1) Amended and Restated Articles of Incorporation of
Registrant
24 (b) (2) Restatement of By-Laws of Registrant
24 (b) (6) Distributing Agreement between Registrant and
Seligman Financial Services, Inc.
24 (b) (7) Matched Accumulation Plan of J. & W. Seligman & Co.
Incorporated
24 (b) (7) (a) Deferred Compensation Plan for Directors of
Seligman Group of Funds
24 (b) (8) Custody Agreement between Registrant and Investors
Fiduciary Trust Company
24 (b) (10) Opinion and Consent of Counsel.
24 (b) (11) Consent of Independent Auditors.
24 (b) (13) (b) Purchase Agreement for Initial Capital for Class D
Shares.
24 (b) (16) Performance Data Computation Schedules
24 (b) (17) Financial Data Schedules
24 (b) (18) Multiclass Plan for Seligman Group of Funds
FORM OF AMENDMED AND RESTATED
ARTICLES OF INCORPORATION
of
SELIGMAN FRONTIER FUND, INC.
FIRST: I, the subscriber, John T. Bostelman, whose post office
address is 125 Broad Street, New York, New York 10004, being more than 18 years
of age, do, under and by virtue of the General Laws of the State of Maryland
authorizing the formation of corporations, form a corporation.
SECOND: NAME. The name of the corporation (which is hereinafter
called the "Corporation") is
SELIGMAN FRONTIER FUND, INC.
THIRD: PURPOSES AND POWERS. The purposes for which the Corporation
is formed and the business or objects to be carried on or promoted by it are to
engage in the business of an investment company, and in connection therewith, to
hold part or all of its funds in cash, to acquire by purchase, subscription,
contract, exchange or otherwise, and to own, hold for investment, resale or
otherwise, sell, assign, negotiate, exchange, transfer or otherwise dispose of,
or turn to account or realize upon, and generally to deal in and with, all forms
of stocks, bonds, debentures, notes, evidences of interest, evidences of
indebtedness, warrants, certificates of deposit, bankers' acceptances,
repurchase agreements and other securities, irrespective of their form, the name
by which they may be described, or the character or form of the entities by
which they are issued or created (hereinafter sometimes called "Securities"),
and to make payment therefor by any lawful means; to exercise any and all
rights, powers and privileges of individual ownership or interest in respect of
any and all such Securities, including the right to vote thereon and to consent
and otherwise act with respect thereto; to do any and all acts and things for
the preservation, protection, improvement and enhancement in value of any and
all such Securities; to acquire or become interested in any such Securities as
aforesaid, irrespective of whether or not such Securities be fully paid or
subject to further payments, and to make payments thereon as called for or in
advance of calls or otherwise;
And, in general, to do any or all such other things in connection
with the objects and purposes of the Corporation hereinbefore set forth, as are,
in the opinion of the Board of Directors of the Corporation, necessary,
incidental, relative or conducive to the attainment of such objects and
purposes; and to do such acts and things; and to exercise any and all such
powers to the same extent authorized or permitted to a Corporation under any
laws that may be now or hereafter applicable or available to the Corporation.
In addition, the Corporation may issue, sell, acquire through
purchase, exchange, or otherwise hold, dispose of, resell, transfer, reissue or
cancel shares of its capital stock in any manner and to the extent now or
hereafter permitted by the laws of Maryland and by these Articles of
Incorporation.
1
<PAGE>
The foregoing matters shall each be construed as purposes, objects
and powers, and none of such matters shall be in any wise limited by reference
to, or inference from, any other of such matters or any other Article of these
Articles of Incorporation, but shall be regarded as independent purposes,
objects and powers and the enumeration of specific purposes, objects and powers
shall not be construed to limit or restrict in any manner the meaning of general
terms or the general powers of the Corporation now or hereafter conferred by the
laws of the State of Maryland, nor shall the expression of one thing be deemed
to exclude another, although it be of like nature, not expressed.
Nothing herein contained shall be construed as giving the
Corporation any rights, powers or privileges not permitted to it by law.
FOURTH: PRINCIPAL OFFICE. The post office address of the principal
office of the Corporation in this State is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202. The resident agent of
the Corporation is The Corporation Trust Incorporated, the post office address
of which is 32 South Street, Baltimore, Maryland 21202. Said resident agent is a
Corporation of the State of Maryland.
FIFTH: CAPITAL STOCK. A. The total number of shares of all classes
of stock which the Corporation has authority to issue is 500,000,000 shares of
common stock ("Shares") of the par value of $.10 each having an aggregate par
value of $50,000,000. The Board of Directors of the Corporation shall have the
power and authority to further classify or reclassify any unissued shares from
time to time by setting or changing the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, or
terms or conditions of redemption of such unissued Shares. Upon the creation of
any further class or classes, the Board of Directors shall, for purposes of
identification, also have the power and authority to designate a name for the
existing class that includes issued Shares of Common Stock.
B. A description of the relative preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of all Classes of Shares is as follows,
unless otherwise set forth in the Articles Supplementary filed with the Maryland
State Department of Assessments and Taxation describing any further Class or
Classes from time to time created by the Board of Directors:
1. ASSETS BELONGING TO CLASS. All consideration received by
the Corporation for the issue or sale of Shares of a particular
Class, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that Class for all purposes, subject
only to the rights of creditors, and shall be so recorded upon the
books of the account of the Corporation. Such consideration, assets,
income, earnings, profits and proceeds, including any proceeds
derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any
General Items (as hereinafter defined) allocated to that Class as
provided in the following sentence, are herein referred to as
"assets belonging to" that Class. In the event that there are any
assets, income, earnings, profits or proceeds thereof, funds or
payments which are not readily identifiable as
2
<PAGE>
belonging to any particular Class (collectively, "General Items"),
the Board of Directors shall allocate such General Items to and
among any one or more of the Classes created from time to time in
such manner and on such basis as it, in its sole discretion, deems
fair and equitable; and any General Items so allocated to a
particular Class shall belong to that Class. Each such allocation by
the Board of Directors shall be conclusive and binding upon the
stockholders of all Classes for all purposes.
2. LIABILITIES BELONGING TO CLASS. The assets belonging to
each particular Class shall be charged with the liabilities of the
Corporation in respect of that Class and with all expenses, costs,
charges and reserves attributable to that Class, and shall be so
recorded upon the books of account of the Corporation. Such
liabilities, expenses, costs, charges and reserves, together with
any General Items (as hereinafter defined) allocated to that Class
as provided in the following sentence, so charged to that Class are
herein referred to as "liabilities belonging to" that Class. In the
event three are any general liabilities, expenses, costs, charges or
reserves of the Corporation which are not readily identifiable as
belonging to any particular Class (collectively, "General Items"),
the Board of Directors shall allocate and charge such General Items
to and among any one or more of the Classes created from time to
time in such manner and on such basis as the Board of Directors in
its sole discretion deems fair and equitable; and any General Items
so allocated and charged to a particular Class shall belong to that
Class. Each such allocation by the Board of Directors shall be
conclusive and binding upon the stockholders of all Classes for all
purposes.
3. DIVIDENDS. Dividends and distributions on Shares of a
particular Class may be paid to the holders of Shares of that Class
at such times, in such manner and from such of the income and
capital gains, accrued or realized, from the assets belonging to
that Class, after providing for actual and accrued liabilities
belonging to that Class, as the Board of Directors may determine.
4. LIQUIDATION. In event of the liquidation or dissolution
of the Corporation, the stockholders of each Class that has been
created shall be entitled to receive, as a Class, when and as
declared by the Board of Directors, the excess of the assets
belonging to that Class over the liabilities belonging to that
Class. The assets so distributable to the stockholders of any
particular Class shall be distributed among such stockholders in
proportion to the number of Shares of that Class held by them and
recorded on the books of the Corporation.
5. VOTING. On each matter submitted to vote of the
stockholders, each holder of a Share shall be entitled to one vote
for each such Share standing in his name on the books of the
Corporation irrespective of the Class thereof and all Shares of all
Classes shall vote as a single class ("Single Class Voting");
provided, however, that (A) as to any matter with respect to which a
separate vote by that Class shall apply in lieu of Single Class
Voting as described above; (B) in the event that the separate vote
requirements referred to in (A) above apply with respect to one or
more Classes, then, subject to (C) below, the Shares of all other
Classes shall vote as a single class; and (C) as to any matter which
does not affect the interest of a particular Class, only the holders
of Shares of the one or more affected Classes shall be entitled to
vote.
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6. EQUALITY. All Shares of each particular Class shall
represent an equal proportionate interest in the assets belonging to
that Class (subject to the liabilities belonging to that Class), and
each Share of any particular Class shall be equal to each other
Share of that Class; but the provisions of this sentence shall not
restrict any distinctions permissible under these Articles of
Incorporation that may exist with respect to stockholder elections
to receive dividends or distributions in cash or Shares of the same
Class or that may otherwise exist with respect to dividends and
distributions on Shares of the same Class.
C. No holder of shares shall be entitled as such, as a matter of
right, to purchase or subscribe for any part of any new or additional issue of
shares or securities of the Corporation.
All Shares now or hereafter authorized, and of any Class, shall be
"subject to redemption" and "redeemable", in the sense used in the General Laws
of the State of Maryland authorizing the formation of corporations, at the
redemption or repurchase price for shares of that Class, determined in the
manner set out in these Articles of Incorporation or in any amendment thereto.
In the absence of any contrary specification as to the purpose for which Shares
are repurchased by it, all Shares so repurchased shall be deemed to be "acquired
for retirement" in the sense contemplated by the laws of the State of Maryland.
Shares retired by repurchase or retired by redemption shall thereafter have the
status of authorized by unissued Shares of the Corporation.
All persons who shall acquire Shares shall acquire the same subject
to the provisions of these Articles of Incorporation.
D. The terms of the common stock of the Corporation as further set
by the Board of Directors are as follows:
(1) 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
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." 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:
(2) 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:
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(a) 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").
(b) 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 (e) 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 and Class A shares as determined by the Corporation on
the date of conversion.
(c) 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.
(d) 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.
(e) At such time as shall be permitted under the
Investment Company Act, any applicable rules and regulations
thereunder and the provision 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.
(f) 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
manner that shall have the same effect on each such Class. As
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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.
SIXTH: DIRECTORS. The Corporation has ten directors in office, and
the names of the ten directors in office are as follows:
Lane W. Adams Douglas R. Nichols, Jr.
Fred E. Brown Robert G. Olmsted
Stanley R. Currie James C. Pitney
William McBride Love Ronald T. Schroeder
John E. Merow Robert L. Shafer
Betsy S. Michel
The number of directors in office may be changed from time to time in such
lawful manner as the By-Laws of the Corporation shall provide.
SEVENTH: PROVISIONS FOR DEFINING, LIMITING AND REGULATING THE
POWERS OF THE CORPORATION, DIRECTORS AND STOCKHOLDERS.
----------------------------------------------------------
A. BOARD OF DIRECTORS: The Board of Directors shall have the general
management and control of the business and property of the Corporation, and may
exercise all the powers of the Corporation, except such as are by statute or by
these Articles of Incorporation or by the By-Laws conferred upon or reserved to
the stockholders. In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is hereby empowered:
1. To authorize the issuance and sale, from time to time,
of Shares of any Class whether for cash at not less than the
par value thereof or for such other consideration as the Board
of Directors may deem advisable, in the manner and to the
extent now or hereafter permitted by the laws of Maryland;
provided, however, the consideration (or the value thereof as
determined by the Board of Directors) per share to be received
by the Corporation upon the sale of shares of any Class
(including treasury Shares) shall not be less than the net
asset value (determined as provided in Article NINTH hereof)
per Share of that Class outstanding at the time (determined by
the Board of Directors) as of which the computation of such net
asset value shall be made.
2. To authorize the execution and performance by the
Corporation of an agreement or agreements, which may be
exclusive contracts, with J. & W. Seligman & Co. Marketing,
Inc. a Delaware corporation, or any other person, as
distributor, providing for the distribution of Shares of any
Class.
3. To specify, in instances in which it may be desirable,
that Shares of any Class repurchased by the Corporation are not
acquired for retirement and to specify the purposes for which
such Shares are repurchased.
4. To authorize the execution and performance by the
Corporation of an agreement or agreements with J. & W. Seligman
& Co. Incorporation, a
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Delaware corporation, or any successor to the corporation
("Seligman") providing for the investment and other
operations of the Corporation.
The Corporation may in its By-Laws confer powers on the Board of
Directors in addition to the powers expressly conferred by statute.
B. QUORUM; ADJOURNMENT; MAJORITY VOTE: The presence in person or by
proxy of the holders of one-third of the Shares of all Classes issued and
outstanding and entitled to vote thereat shall constitute a quorum for the
transaction of any business at all meetings of the shareholders except as
otherwise provided by law or in these Articles of Incorporation and except that
where the holders of Shares of any Class are entitled to a separate vote as a
Class (a "Separate Class") or where the holders of Shares of two or more (but
not all) Classes are required to vote as a single Class (a "Combined Class"),
the presence in person or by proxy of the holders of one-third of the Shares of
that Separate Class or Combined Class, as the case may be, issued and
outstanding and entitled to vote thereat shall constitute a quorum for such
vote. If, however, a quorum with respect to all Classes, a Separate Class or a
Combined Class, as the case may be, shall not be present or represented at any
meeting of the shareholders, the holders of a majority of the Shares of all
Classes, such Separate Class or such Combined Class, as the case may be, present
in person or by proxy and entitled to vote shall have power to adjourn the
meeting from time to time as to all Classes, such Separate Class or such
Combined Class, as the case may be, without notice other than announcement at
the meeting, until the requisite number of Shares entitled to vote at such
meeting shall be present. At such adjourned meeting at which the requisite
number of Shares entitled to vote thereat shall be represented any business may
be transacted which might have been transacted at the meeting as originally
notified. The absence from any meeting of stockholders of the number of Shares
in excess of one-third of the Shares of all Classes or of the affected Class or
Classes, as the case may be, which may be required by the laws of the State of
Maryland, the Investment Company Act of 1940 or any other applicable law, these
Articles of Incorporation, for action upon any given matter shall not prevent
action of such meeting upon any other matter or matters which may properly come
before the meeting, if there shall be present thereat, in person or by proxy,
holders of the number of Shares required for action in respect of such other
matter or matters. Notwithstanding any provision of law requiring any action to
be taken or authorized by the holders of a greater proportion than a majority of
the Shares of all Classes or of the Shares of a particular Class or Classes, as
the case may be, entitled to vote thereon, such action shall be valid and
effective if taken or authorized by the affirmative vote of the holders of a
majority of the Shares of all Classes or of such Class or Classes, as the case
may be, outstanding and entitled to vote thereon.
EIGHTH: REDEMPTIONS AND REPURCHASES.
A. The Corporation shall under some circumstances redeem, and may
under other circumstances redeem or repurchase, Shares as follows:
1. OBLIGATION OF THE CORPORATION TO REDEEM SHARES: Each
holder of Shares of any Class shall be entitled at his option
to require the Corporation to redeem all or any part of the
Shares of that Class owned by such holder, upon written or
telegraphic request to the Corporation or its designated agent,
accompanied by surrender of the certificate or certificates for
such shares, or such other evidence of ownership as shall
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be specified by the Board of Directors, for the proportionate
interest per Share in the assets of the Corporation belonging
to that Class, or the cash equivalent thereof (being the net
asset value per Share of that Class determined as provided in
Article NINTH hereof, less the amount of any applicable
contingent deferred sales load payable on such redemption),
subject to and in accordance with the provisions of paragraph B
of this Article.
2. RIGHT OF THE CORPORATION TO REDEEM SHARES. In addition
the Board of Directors may, from time to time in its
discretion, authorize the Corporation to require the redemption
of all or any part of the outstanding Shares of any Class, for
the proportionate interest per Share in the assets of the
Corporation belonging to that Class, or the cash equivalent
thereof (being the net asset value per Share of that Class
determined as provided in Article NINTH hereof), subject to and
in accordance with the provisions of paragraph B of this
Article, upon the sending of written notice thereof to each
stockholder any of whose Shares are so redeemed and upon such
terms and conditions as the Board of Directors shall deem
advisable.
3. RIGHT OF THE CORPORATION TO REPURCHASE SHARES. In
addition the Board of Directors may, from time to time in its
discretion, authorize the officers of the Corporation to
repurchase Shares of any Class, either directly or through an
agent, subject to and in accordance with the provision of
paragraph B of this Article. The price to be paid by the
Corporation upon any such repurchase shall be determined, in
the discretion of the Board of Directors, in accordance with
any provision of the Investment Company Act of 1940 or any rule
or regulation thereunder, including any rule to regulation made
or adopted pursuant to section 22 of the Investment Company Act
of 1940 by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange
Act of 1934.
B. The following provisions shall be applicable with respect to
redemptions and repurchases of Shares of any Class pursuant to paragraph A
hereof:
1. The time as of which the net asset value per Share of a
particular Class applicable to any redemption pursuant to
subparagraph A(1) or A(2) of this Article shall be computed
shall be such time as may be determined by or pursuant to the
direction of the Board of Directors (which time may differ from
Class to Class).
2. Certificates for Shares of any Class to be redeemed or
repurchased shall be surrendered in proper form for transfer,
together with such proof of the authenticity of signatures as
may be required by resolution of the Board of Directors.
3. Payment of the redemption or repurchase price by the
Corporation or its designated agent shall be made in cash
within seven days after the time used for determination of the
redemption or repurchase price, but in no event
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prior to delivery to the Corporation or its designated agent of
the certificate or certificates for the Shares of the
particular Class so redeemed or repurchased, or of such other
evidence of ownership as shall be specified by the Board of
Directors; except that any payment may be made in whole or in
part in securities or other assets of the Corporation belonging
to that Class if, in the event of the closing of the New York
Stock Exchange or the happening of any event at any time prior
to actual payment which makes the liquidation of Securities in
orderly fashion impractical or impossible, the Board of
Directors shall determine that payment in cash would be
prejudicial to the best interests of the remaining stockholders
of that Class. In making any such payment in whole or in part
in Securities or other assets of the Corporation belong to that
Class, the Corporation shall, as nearly as may be practicable,
deliver Securities or other assets of a gross value (determined
in the manner provided in Article NINTH hereof) representing
the same proportionate interest in the Securities and other
assets of the Corporation belonging to that Class as is
represented by the Shares of that Class so to be paid for.
Delivery of the Securities included in any such payment shall
be made as promptly as any necessary transfers on the books of
the several corporations whose Securities are to be delivered
may be made.
4. The right of the holder of Shares of any Class redeemed
or repurchased by the Corporation as provided in this Article
to receive dividends thereon and all other rights of such
holder with respect to such Shares shall forthwith cease and
terminate from and after the time as of which the redemption or
repurchase price of such Shares has been determined (except the
right of such holder to receive (a) the redemption or
repurchase price of such Shares from the Corporation or its
designated agent, in cash and/or in securities or other assets
of the Corporation belonging to that Class, and (b) any
dividend to which such holder had previously become entitled as
the record holder of such Shares on the record date for such
dividend, and, with respect to Shares otherwise entitled to
vote, except the right of such holder to vote at a meeting of
stockholders such Shares owned of record by him on the record
date for such meeting).
NINTH: DETERMINATION OF NET ASSET VALUE. For the purposes referred
to in Articles SEVENTH and EIGHTH hereof, the net asset value per Share of any
Class shall be determined by or pursuant to the direction of the Board of
Directors in accordance with the following provisions:
A. Such net asset value per Share of a particular Class on any day
shall be computed as follows:
The net asset value per Share of that Class shall be the
quotient obtained by dividing the "net value of the assets" of
the Corporation belonging to that Class by the total number of
Shares of that Class at the time deemed to be outstanding
(including Shares sold whether paid for and issued or not, and
excluding Shares redeemed or repurchased
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on the basis of previously determined values, whether paid for,
received and held in treasury, or not).
The "net value of the assets" of the Corporation belonging
to a particular Class shall be the "gross value" of the assets
belonging to that Class after deducting the amount of all
expenses incurred and accrued and unpaid belonging to that
Class, such reserves belonging to that Class as may be set up
to cover taxes and any other liabilities, and such other
deductions belonging to that Class as in the opinion of the
officers of the Corporation are in accordance with accepted
accounting practice.
The "gross value" of the assets belonging to a particular
Class shall be the amount of all cash and receivables and the
market value of all Securities and other assets held by the
Corporation and belonging to that Class at the time as of which
the determination is made. Securities held shall be valued at
market value or, in the absence of readily available market
quotations, at fair value, both as determined pursuant to
methods approved by the Board of Directors and in accordance
with applicable statutes and regulations.
B. The Board of Directors is empowered, in its absolute discretion,
to establish other methods for determining such net asset value whenever such
other methods are deemed by it to be necessary or desirable and are consistent
with the provisions of the Investment Company Act of 1940 and the rules and
regulations thereunder.
TENTH: DETERMINATION BINDING. Any determination made by or pursuant
to the direction of the Board of Directors in good faith, and so far as
accounting matters are involved in accordance with accepted accounting practice,
as to the amount of the assets, obligations or liabilities of the Corporation
belonging to any Class, as to the amount of the net income of the Corporation
belonging to any Class for any period or amounts that are any time legally
available for the payment of dividends of shares of any Class, as to the amount
of any reserves or charges set up with respect to any Class and the propriety
thereof, as to the time of or purpose for creating any reserves or charges with
respect to any Class, as to the use, alteration or cancellation of any reserves
or charges with respect to any Class (whether or not any obligation or liability
for which such reserves or charges shall have been created shall have been paid
or discharged or shall be then or thereafter required to be paid or discharged),
as to the price or closing bid or asked price of any security owned or held by
the Corporation and belonging to any Class, as to the market value of any
security or fair value of any other asset owned by the Corporation and belonging
to any Class, as to the number of Shares of any Class outstanding or deemed to
be outstanding, as to the impracticability or impossibility of liquidating
Securities in orderly fashion, as to the extent to which it is impracticable to
deliver the proportionate interest in the Securities and other assets of the
Corporation belonging to any Class represented by any Shares belonging to any
Class redeemed or repurchased in payment for any such Shares, as to the method
of payment for any such Shares redeemed or repurchased, or as to any other
matters relating to the issue, sale, redemption, repurchase, and/or other
acquisition or disposition of Securities or Shares of the Corporation shall be
final and conclusive and shall be binding upon the Corporation and all holders
of Shares of all Classes past, present and future, and shares of all Classes are
issued and
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sold on the condition and understanding that any and all such determinations
shall be binding as aforesaid. No provision of these Articles of Incorporation
shall be effective to (a) bind any person to waive compliance with any provision
of the Securities Act of 1933 or the Investment Company Act of 1940 or of any
valid rule, regulation or order of the Securities and Exchange Commission
thereunder, or (b) protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
ELEVENTH: AMENDMENTS. The Corporation reserves the right to take any
lawful action and to make any amendment of these Articles of Incorporation,
including the right to make any amendment which changes the terms of any Shares
of any Class now or hereafter authorized by classification, reclassification, or
otherwise, and to make any amendment authorizing any sale, lease, exchange or
transfer of the property and assets of the Corporation or belonging to any Class
or Classes as an entirety, or substantially as an entirety, with or without its
good will and franchise, if a majority of all the Shares of all Classes or of
the affected Class or Classes, as the case may be, at the time issued and
outstanding and entitled to vote, vote in favor of any such action or amendment,
or consent thereto in writing, and reserves the right to make any amendment of
these Articles of Incorporation in any form, manner or substance now or
hereafter authorized or permitted by law.
TWELFTH: LIABILITY. A director or officer of the Corporation shall
not be liable to the Corporation or its shareholders for monetary damages for
breach of fiduciary duty as a Director or Officer, except to the extent such
exemption from liability or limitation thereof is not permitted by law
(including the Investment Company Act of 1940 as currently in effect or as the
same may hereafter be amended).
No amendment, modification or repeal of this Article Twelfth shall adversely
affect any right or protection of a Director or Officer that exists at the time
of such amendment, modification or repeal.
THIRTEENTH: INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES.
The Corporation shall indemnify to the fullest extent permitted by law
(including the Investment Company Act of 1940 as currently in effect or as the
same may hereafter be amended) any person made or threatened to be made a party
to any action, suit or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a Director, Officer or employee of the Corporation or
serves or served at the request of the Corporation any other enterprise as a
Director, Officer or employee. To the fullest extent permitted by law (including
the Investment Company Act of 1940 as currently in effect or as the same may
hereafter be amended), expenses incurred by any such person in defending any
such action, suit or proceeding shall be paid or reimbursed by the Corporation
promptly upon receipt by it of an undertaking of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the Corporation. The rights provided to any person by this
Article shall be enforceable against the Corporation by such person who shall be
presumed to have relied upon it in serving or continuing to serve as a Director,
Officer or employee as provided above. No amendment of this Article Thirteenth
shall impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Article Thirteenth, the
term "Corporation" shall include any predecessor of
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the Corporation and any constituent corporation (including any constituent of a
constituent) absorbed by the Corporation in a consolidation or merger; the term
"other enterprise" shall include any corporation, partnership, joint venture,
trust or employee benefit plan; service "at the request of the Corporation"
shall include service as a Director, Officer or employee of the Corporation
which imposes duties on, or involves services by, such Director, Officer or
employee with respect to an employee benefit plan, its participants or
beneficiaries; any excise taxes assessed on a person with respect to an employee
benefit plan shall be deemed to be indemnifiable expenses; and action by a
person with respect to any employee benefit plan which such person reasonably
believes to be in the interest of the participants and beneficiaries of such
plan shall be deemed to be action not opposed to the best interests of the
Corporation.
I acknowledge this document to be my act, and state under penalties
of perjury that with respect to all matters and facts therein, to the best of my
knowledge, information and belief such matters and facts are true in all
material respects.
DATE: July 5, 1984 /s/ John T. Bostelman
------------ -------------------------
JOHN T. BOSTELMAN
AMENDED AND RESTATED
BY-LAWS
of
SELIGMAN FRONTIER FUND, INC.
<PAGE>
SELIGMAN FRONTIER FUND, INC.
BY-LAWS
ARTICLE I.
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF HOLDING MEETINGS. Each meeting of shareholders shall
be held at the office of the Corporation in the City of Baltimore, Maryland, or
at such other place within the United States as may be fixed by the Board of
Directors.
SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders of the
Corporation shall be held during the 31-day period commencing April 15 of each
year on such day and at such hour as may from time to time be designated by the
Board of Directors and stated in the notice of such meeting, for the transaction
of such business as may properly be brought before the meeting; provided,
however, that an annual meeting of shareholders shall not be required to be held
in any year in which none of the following is required to be acted on by
shareholders pursuant to the Investment Company Act of 1940: election of
directors; approval of the investment advisory agreement; ratification of the
selection of independent public accountants and approval of a distribution
agreement.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes may be called by the Chairman of the Board, the President, a
majority of the Board of Directors or a majority of the Executive Committee and
shall be called by the Secretary upon the written request of the holders of
shares entitled to not less than twenty-five percent of all the votes entitled
to be cast at such meeting. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. The Secretary
shall inform such shareholders of the reasonably estimated cost of preparing and
mailing such notice of meeting, and upon payment to the Corporation of such
costs the Secretary shall give notice stating the purpose or purposes of the
meeting, as required in this Article and by law, to all shareholders entitled to
notice of such meeting. No special meeting need be called upon the request of
the holders of shares entitled to cast less than a majority of all votes
entitled to be cast at such meeting, to consider any matter which is
substantially the same as a matter voted upon at any special meeting of
shareholders held during the preceding twelve months.
SECTION 4. NOTICE OF SHAREHOLDERS' MEETINGS. Not less than ten days nor
more than ninety days before the date of every shareholders' meeting, the
Secretary shall give to each shareholder entitled to vote at or to notice of
such meeting, written or printed notice stating the time and place of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called, either by mail or presenting it to him personally or by
leaving it at his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the shareholder at his post office address as it appears on the records of
the Corporation, with postage thereon prepaid.
<PAGE>
SECTION 5. QUORUM; ADJOURNMENT; MAJORITY VOTE. The presence in person or
by proxy of the holders of one-third of the Shares of all Classes issued and
outstanding and entitled to vote thereat shall constitute a quorum for the
transaction of any business at all meetings of the shareholders except as
otherwise provided by law or in the Articles of Incorporation and except that
where the holders of Shares of any Class are entitled to a separate vote as a
Class (a "Separate Class") or where the holders of Shares of two or more (but
not all) Classes are required to vote as a single Class (a "Combined Class"),
the presence in person or by proxy of the holders of one-third of the Shares of
that Separate Class or Combined Class, as the case may be, issued and
outstanding and entitled to vote thereat shall constitute a quorum for such
vote. If, however, a quorum with respect to all Classes, a Separate Class or a
Combined Class, as the case may be, shall not be present or represented at any
meeting of the shareholders, the holders of a majority of the Shares of all
Classes, such Separate Class or such Combined Class, as the case may be, present
in person or by proxy and entitled to vote shall have power to adjourn the
meeting from time to time as to all Classes, such Separate Class or such
Combined Class, as the case may be, without notice other than announcement at
the meeting, until the requisite number of Shares entitled to vote at such
meeting shall be present. At such adjourned meeting at which the requisite
number of Shares entitled to vote thereat shall be represented any business may
be transacted which might have been transacted at the meeting as originally
notified. The absence from any meeting of stockholders of the number of Shares
in excess of one-third of the Shares of all Classes or of the affected Class or
Classes, as the case may be, which may be required by the laws of the State of
Maryland, the Investment Company Act of 1940 or any other applicable law, the
Articles of Incorporation, for action upon any given matter shall not prevent
action of such meeting upon any other matter or matters which may properly come
before the meeting, if there shall be present thereat, in person or by proxy,
holders of the number of Shares required for action in respect of such other
matter or matters.
SECTION 6. VOTING. All elections shall be had and all questions decided
by a majority of the votes cast, without regard to Class, at a duly constituted
meeting, except as otherwise provided by law or by the Articles of Incorporation
or by these By-Laws and except that with respect to a question as to which the
holders of Shares of any Class or Classes are entitled or required to vote as a
Separate Class or a Combined Class, as the case may be, such question shall be
decided as to such Separate Class or such Combined Class, as the case may be, by
a majority of the votes cast by Shares of such Separate Class or such Combined
Class, as the case may be.
With respect to all Shares having voting rights (a) a shareholder may
vote the Shares owned of record by him either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact, provided
that no proxy shall be valid after eleven months from its date unless otherwise
provided in the proxy and (b) in all elections for directors every shareholder
shall have the right to vote, in person or by proxy, the Shares owned of record
by him, for as many persons as there are directors to be elected and for whose
election he has a right to vote.
SECTION 7. CONDUCT OF SHAREHOLDERS' MEETINGS. Each meeting of
shareholders shall be presided over by the Chairman of the Board, or if he is
not present, by the President or a Vice-President of the Corporation designated
by the Chairman of the Board to act as Chairman of the meeting, or if none of
the foregoing is present, by a Chairman to be elected at the meeting. The
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Secretary of the Corporation, or if he is not present, an Assistant Secretary,
or if neither is present, a secretary to be named at the meeting, shall act as
secretary of the meeting.
ARTICLE II.
BOARD OF DIRECTORS.
SECTION 1. NUMBER; TERM. The business and affairs of the Corporation
shall be managed under the direction of a Board of ten members, but from time to
time such number may be increased to not more than twenty or decreased to not
less than three, by vote of a majority of the entire Board of Directors,
provided that the tenure of office of a director shall not be affected by any
decrease in the number of directors so made by the Board.
At each annual meeting of shareholders the shareholders shall elect
directors to hold office until the next annual meeting or until their successors
are elected and qualify, subject to the right of removal granted by law.
Directors need not be shareholders.
SECTION 2. VACANCIES. Subject to Section 5 of this Article II, any
vacancy occurring in the Board of Directors for any cause other than by reason
of an increase in the number of directors may be filled by the vote of a
majority of the remaining directors, although such majority is less than a
quorum. Any vacancy occurring by reason of an increase in the number of
directors may be filled by action of a majority of the entire Board of
Directors. A director elected by the Board of Directors to fill a vacancy shall
be elected to hold office until the next annual meeting of shareholders or until
his successor is elected and qualifies.
SECTION 3. MEETINGS. Meetings of the Board of Directors, regular or
special, may be held at any place in or out of the State of Maryland as the
Board may from time to time determine or as shall be specified or filed in the
respective notices or waivers of notice thereof.
Regular meetings of the Board shall be held at such time as the Board may
from time to time determine. No notice need be given of regular meetings of the
Board.
Special meetings of the Board may be held at any time upon call of the
Chairman of the Board, at the request of the Executive Committee or of a
majority of the directors, by the Secretary, by oral, telegraphic or written
notice duly served on or sent or mailed to each director not less than two days
before such meeting. Such notice need not include a statement of the business to
be transacted at, or the purpose of, such special meeting. A written waiver of
notice, signed by the director entitled to such notice and filed with the
records of the meeting, whether before or after the holding thereof, or actual
attendance at the meeting, shall be deemed equivalent to the giving of notice to
such director.
At all meetings of the Board, a majority of the entire Board, but not
less than two directors, shall constitute a quorum for the transaction of
business. If there be less than a quorum present at any meeting of the Board, a
majority of those present may adjourn the meeting from time to time.
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The action of a majority of the directors present at a meeting at which a
quorum is present shall be the action of the Board unless the concurrence of a
greater proportion is required for such action by statute, the Articles of
Incorporation or these By-Laws.
SECTION 4. AUDIT COMMITTEE. The Board of Directors may by the affirmative
vote of a majority of the entire Board appoint from its members an Audit
Committee composed of two or more directors, who are not "interested persons"
(as defined in the Investment Company Act of 1940) of the Corporation, as the
Board may from time to time determine. The Audit Committee shall (a) recommend
independent public accountants for selection by the Board, (b) review the scope
of audit, accounting and financial internal controls and the quality and
adequacy of the Corporation's accounting staff with the independent public
accountants and such other persons as may be deemed appropriate, (c) review with
the accounting staff and the independent public accountants the compliance of
transactions of the Corporation with J. & W. Seligman & Co. Incorporated or any
other manager of the affairs of the Corporation and with any affiliate of such
firm or manager with the financial terms of applicable agreements, (d) review
reports of the independent public accountants and comment to the Board when
warranted, (e) report to the Board at least once each year and at such other
times as the committee deems desirable, and (f) be directly available at all
times to the independent public accountants and responsible officers of the
Corporation for consultation on audit, accounting and related financial matters.
SECTION 5. DIRECTOR NOMINATING COMMITTEE. The Board of Directors may by
the affirmative vote of a majority of the entire Board appoint from its members
a Director Nominating Committee composed of two or more directors. The Director
Nominating Committee shall recommend to the Board a slate of persons to be
nominated for election as directors by the shareholders at each annual meeting
of shareholders and a person to be elected to fill any vacancy occurring for any
reason in the Board.
SECTION 6. PORTFOLIO TRANSACTIONS COMMITTEE. The Board of Directors may
by the affirmative vote of a majority of the entire Board appoint from its
members a Portfolio Transactions Committee composed of two or more directors who
are not "interested persons" of the Corporation as the Board may from time to
time determine. The Portfolio Transactions Committee shall maintain familiarity
with, report to the Board concerning, and make such recommendations to the Board
as it may deem appropriate with respect to, the practices followed in the
handling of orders to buy and sell portfolio securities for the Corporation and
the commissions or other compensation paid in respect of portfolio transactions.
SECTION 7. EXECUTIVE COMMITTEE. The Board of Directors may appoint from
its members an Executive Committee composed of those directors, as the Board may
from time to time determine, of which committee the Chairman of the Board shall
be a member. In the intervals between meetings of the Board, the Executive
Committee shall have the power of the Board to (a) determine the value of
securities and assets owned by the Corporation, (b) elect or appoint officers of
the Corporation to serve until the next meeting of the Board and (c) take such
action as may be necessary to manage the portfolio security loan business of the
Corporation.
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All action by the Executive Committee shall be recorded and reported to
the Board at its meeting next succeeding such action.
SECTION 8. OTHER COMMITTEES. The Board of Directors may appoint from
among its members other committees composed of two or more of its directors
which shall have such powers as may be delegated or authorized by the resolution
appointing them.
SECTION 9. COMMITTEE PROCEDURES. The Board of Directors may at any time,
change the members of any committee, fill vacancies or discharge any committee.
In the absence of any member of any committee, the member or members
thereof present at any meeting, whether or not they constitute a quorum, may
appoint to act in the place of such absent member a member of the Board who,
except in the case of the Executive Committee, is not an "interested person" of
the Corporation.
Each committee may fix its own rules of procedure and may meet as and
when provided by those rules.
Two or more members of any committee, shall constitute a quorum unless
the Board shall otherwise provide.
Copies of the minutes of all meetings of committees other than the
Nominating Committee and the Executive Committee shall be distributed to the
Board unless the Board shall otherwise provide.
SECTION 10. TELEPHONE MEETINGS. Members of the Board of Directors or a
committee of the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means constitutes presence in person at the meeting.
SECTION 11. ACTION WITHOUT A MEETING. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent to such action is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
SECTION 12. COMPENSATION OF DIRECTORS. The Board of Directors shall have
the authority to fix the compensation of directors for services in any capacity.
ARTICLE III.
OFFICERS.
SECTION 1. OFFICERS. The executive officers of the Corporation shall be
elected by the Board of Directors and shall be a Chairman of the Board, who
shall be the chief executive officer of the Corporation, a President, one or
more Vice-Presidents, a Secretary and a Treasurer. The Chairman
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of the Board shall be selected from among the directors. The Board may also
appoint such other officers, employees and agents as it may deem appropriate.
Any two or more offices, except those of President and Vice-President, may be
held by the same person but no person shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law, the
Articles of Incorporation or these By-Laws to be executed, acknowledged or
verified by two or more officers.
SECTION 2. TERM. Officers shall serve for one year and until their
successors are elected and shall qualify, but any officer may be removed (except
as a director) by action of a majority of the entire Board of Directors
whenever, in the judgment of the Board, the best interests of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contractual rights, if any, of the person so removed.
SECTION 3. AUTHORITY AND DUTIES. All officers and agents of the
Corporation shall have such authority and perform such duties in the management
of the property and affairs of the Corporation as generally pertain to their
respective offices, as well as such authority and duties as may be determined by
resolution of the Board of Directors.
Without limiting the generality of the foregoing and subject to the
provisions of the Articles of Incorporation of the Corporation and to the order
of the Board of Directors, the Treasurer shall be the chief financial and
accounting officer of the Corporation and as such shall receive, or cause to be
received, and give, or cause to be given, receipt for all funds and securities
paid or delivered to, or for the account of the Corporation; shall cause such
funds and securities to be deposited for the account of the Corporation with
such custodians as may be designated by the Board of Directors; shall pay or
cause to be paid out of the funds of the Corporation all just debts of the
Corporation upon their maturity; shall maintain, or cause to be maintained,
accurate records of all receipts, disbursements, assets, liabilities and
transactions of the Corporation; shall see that adequate audits thereof are
regularly made; and shall, when required by the Board of Directors, render
accurate statements of the condition of the Corporation.
SECTION 4. COMPENSATION OF OFFICERS. The Board of Directors may determine
what, if any, compensation shall be paid to officers of the Corporation.
ARTICLE IV.
INDEMNIFICATION.
The Corporation shall indemnify directors, officers, employees and
agents of the Corporation against judgments, fines, settlements, penalties and
expenses to the fullest extent authorized, and in the manner permitted by
applicable federal and state law.
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ARTICLE V.
CAPITAL STOCK.
SECTION 1. CERTIFICATES OF STOCK. Each shareholder of a particular Class
shall be entitled to a certificate or certificates which shall represent and
certify the number of whole Shares of that Class of Stock owned by him in the
Corporation. Each certificate shall be signed by the Chairman of the Board,
President or a Vice-President and countersigned by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer and shall be sealed with
the corporate seal. The signatures may be either manual or facsimile signatures
and the seal may be either facsimile or any other form of seal. In case any
officer who has signed any certificate ceases to be an officer of the
Corporation before the certificate is issued, the certificate may nevertheless
be issued by the Corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue.
SECTION 2. LOST CERTIFICATES. The Board of Directors may determine the
conditions upon which a new certificate of Shares may be issued in place of a
certificate which is alleged to have been lost, destroyed or stolen. It may, in
its discretion, require the owner of such certificate to give bond, with
sufficient surety, to the Corporation to indemnify it against any loss or claim
which may arise by reason of the issuance of a new certificate.
SECTION 3. RECORD DATES; CLOSING OF TRANSFER BOOKS. The Board of
Directors may fix, in advance, a date as the record date for the purpose of
determining shareholders of any Class entitled to notice of, or to vote at, any
meeting of shareholders of any Class or shareholders entitled to receive payment
of any dividend or the allotment of any rights to that Class, or in order to
make a determination of shareholders of any Class for any other proper purpose.
Such date in any case shall be not more than sixty days, and in the case of a
meeting of shareholders, not less than ten days, prior to the date the
particular action requiring such determination of shareholders, is to be taken.
SECTION 4. STOCK LEDGER. An original or duplicate stock ledger
containing the names and addresses of all shareholders and the number of Shares
of each Class held by each shareholder, shall be kept by the Secretary at the
office of the Corporation in the City of New York, or in Jersey City, New
Jersey, or at such other office or agency of the Corporation in the City of New
York and Jersey City, as the Board of Directors may from time to time by
resolution determine.
ARTICLE VI.
CHECKS, NOTES, ETC.
All checks and drafts on the Corporation's bank accounts and all bills of
exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such officer or
officers, or agent or agents, as shall be thereunto authorized from time to time
by the Board of Directors.
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ARTICLE VII.
BOOKS AND RECORDS.
The books of the Corporation other than the original or duplicate stock
ledger may be kept at such place or places in or out of the State of Maryland as
the Board of Directors may from time to time determine.
ARTICLE VIII.
SEAL.
The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as they may determine.
ARTICLE IX.
FISCAL YEAR.
The fiscal year of the Corporation shall be the calendar year, subject,
however, to change from time to time by the Board of Directors.
ARTICLE X.
CUSTODIAN.
All securities and funds of the Corporation shall be held by one or more
custodians each of which shall be a bank or trust company having not less than
$2,500,000 aggregate capital, surplus and undivided profits, as shown by its
last published report, provided any such custodian can be found ready and
willing to act.
The terms of custody of such securities and funds shall include
provisions to the effect that the custodian shall deliver securities owned by
the Corporation only (a) upon sales of such securities for the account of the
Corporation and receipt by the custodian of payment therefor, (b) when such
securities are called, redeemed or retired or otherwise become payable, (c) in
exchange for or upon conversion into other securities alone or other securities
and cash, whether pursuant to any plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise, (d) upon conversion of such
securities pursuant to their terms into other securities, (e) upon exercise of
subscription, purchase or other similar rights represented by such securities,
(f) for the purpose of exchanging interim receipts or temporary securities for
definitive securities, (g) for the purpose of redeeming in kind Shares of the
Corporation, (h) for loans of securities by the Corporation, or (i) for other
proper corporate purposes.
Such terms of custody shall also include provisions to the effect that
the custodian shall deliver funds of the Corporation only (a) upon the purchase
of securities for the portfolio of the Corporation and the delivery of such
securities to the custodian, (b) for the repurchase or redemption of Shares of
the
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Corporation, (c) for the payment of dividends, taxes, management or supervisory
fees or operating expenses, (d) for payments in connection with the conversion,
exchange or surrender of securities owned by the Corporation, (e) for payments
in connection with the return of securities loaned by the Corporation or the
reduction of cash collateral, or (f) for other proper corporate purposes.
Upon the resignation or inability of any such custodian to serve, the
Corporation shall (a) use its best efforts to obtain a successor custodian, (b)
require the funds and securities of the Corporation held by the custodian to be
delivered to the successor custodian, and (c) in the event that no successor
custodian can be found, submit to the shareholders of the Corporation, before
permitting delivery of such funds and securities to anyone other than a
successor custodian, the question whether the Corporation shall be dissolved or
shall function without a custodian; provided, however, that nothing herein
contained shall prevent the termination of any agreement between the Corporation
and any such custodian with respect to any Class of the Corporation's Shares
(and with respect to the assets and liabilities belonging to such Class) by the
affirmative vote of the holders of a majority of the outstanding Shares of such
Class or Classes (voting as single Class) entitled to vote.
Such terms of custody shall further provide that, pending appointment of
a successor custodian or a vote of the shareholders of the affected Class or
Classes to function without a custodian, a custodian shall not deliver funds and
other property of the Corporation to the Corporation, but may deliver them to a
bank or trust company of its own selection having not less than $2,500,000
aggregate capital, surplus, and undivided profits, as shown by its last
published report, as custodian for the Corporation to be held under terms
similar to those under which they were held by the retiring custodian.
Subject to such rules, regulations and orders as the Securities and
Exchange Commission may adopt, the Corporation may authorize or direct a
custodian to deposit all or any part of the securities owned by the Corporation
in a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, or
such other person as may be permitted by the Commission, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
custodian.
The Corporation may also have such transfer agents and registrars of its
shares as the Board of Directors shall from time to time determine. The Board of
Directors may employ and fix the powers, rights, duties, responsibilities,
privileges, immunities, and compensation of any such custodian, transfer agent,
or registrar, subject, however, in the case of any such custodian, to the
foregoing provisions of this paragraph.
As used herein, the term "receipt by the custodian of payment" shall
include the receipt of (a) a certified or official bank check, (b) any advice
that funds have been or will be credited to the account of the custodian at a
clearing agency registered under the Securities Exchange Act of 1934, or (c) a
bank wire from a correspondent bank of the custodian. As used herein, the term
"delivery of such securities to the custodian" shall include the receipt of (a)
securities in bearer form or in proper form for transfer, or (b)
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any advice that securities have been credited to the account of the custodian at
a clearing agency registered under the Securities Exchange Act of 1934, or at
the Federal Reserve Bank of New York.
The Corporation may make such other arrangements for the custody of its
assets (including deposit arrangements) as may be required by any applicable
law, rule or regulation.
ARTICLE XI.
Amendments.
The Board of Directors is authorized and empowered to make, alter or
repeal the By-Laws of the Corporation, in any manner not inconsistent with the
laws of the State of Maryland or the Articles of Incorporation of the
Corporation.
10
DISTRIBUTING AGREEMENT
DISTRIBUTING AGREEMENT, dated as of January 1, 1993, between
SELIGMAN FRONTIER FUND, INC., a Maryland corporation (the "Fund"), and SELIGMAN
FINANCIAL SERVICES, INC., a Delaware corporation ("Seligman Financial
Services").
In consideration of the mutual agreements herein made, the parties
hereto agree as follows:
1. EXCLUSIVE DISTRIBUTOR. The Fund hereby agrees that Seligman
Financial Services shall be for the period of this Agreement
exclusive agent for distribution within the United States and its
territories, and Seligman Financial Services agrees to use its best
efforts during such period to effect such distribution of shares of
Capital Stock ("Shares") of the Fund; provided, however, that
nothing herein shall prevent the Fund, if it so elects, from selling
or otherwise distributing its Shares directly to any persons other
than dealers. The Fund understands that Seligman Financial Services
also acts as agent for distribution of the shares of capital stock
or beneficial interest of other open-end investment companies which
have entered into management agreements with J. & W.
Seligman & Co. Incorporated (the "Manager").
2. SALES OF SHARES. Seligman Financial Services is authorized, as agent
for the Fund and not as principal, (a) to sell Shares of the Fund to
such dealers as Seligman Financial Services may select pursuant to
the terms of written sales agreements (which may also relate to
sales of shares of capital stock or shares of beneficial interest of
other open-end investment companies which have entered into
management agreements with the Manager), in form or forms approved
by the Fund, and (b) to sell Shares of the Fund to other purchasers
on such terms as may be provided in the then current prospectus of
the Fund relating to such Shares; provided, however, that no sales
of Shares shall be confirmed by Seligman Financial Services at any
time when, according to advice received by Seligman Financial
Services from the Fund, the officers of the Fund have for any reason
sufficient to them temporarily or permanently suspended or
discontinued the sale and issuance of the Shares. Each sale of
Shares shall be effected by Seligman Financial Services only at the
applicable price determined by the Fund in the manner prescribed in
its then current prospectus relating to such Shares. Seligman
Financial Services shall comply with all applicable laws, rules and
regulations including, without limiting the generality of the
foregoing, all rules or regulations made or adopted pursuant to
Section 22 of the Investment Company Act of 1940 (the "1940 Act") by
the
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Securities and Exchange Commission or any securities association
registered under the Securities Exchange Act of 1934.
The Fund agrees, as long as its Shares may legally be issued, to
fill all orders confirmed by Seligman Financial Services in
accordance with the provisions of this Agreement.
3. REPURCHASE AGENT. Seligman Financial Services is authorized, as
agent for the Fund and not as principal, to accept offers for resale
to the Fund and to repurchase on behalf of the Fund Shares of each
series of the Fund at net asset values determined by the Fund in
conformity with its then current prospectus relating to such Shares.
4. COMPENSATION. As compensation for the services of Seligman Financial
Services under this Agreement, Seligman Financial Services shall be
entitled to receive the sales charge, determined in conformity with
the Fund's then current prospectus relating to such Shares, on all
sales of Shares of the Fund confirmed by Seligman Financial Services
hereunder and for which payment has been received, less the dealers'
concession allowed in respect of such sales. In addition, in
accordance with the terms of the Fund's Administration, Shareholder
Services and Distribution Plan(s) (the "Plan(s)"), each of the
series of the Fund may make payments from time to time to Seligman
Financial Services in accordance with the terms and limitations of,
and for the purposes set forth in the Plan(s).
5. EXPENSES. Seligman Financial Services agrees promptly to pay or
reimburse the Fund for all expenses (except expenses incurred by the
Fund in connection with the preparation, printing and distribution
of any prospectus or report or other communication to shareholders,
to the extent that such expenses are incurred to effect compliance
with any Federal or State law or to enable such distribution to
shareholder(s) (a) of printing and distributing copies of any
prospectus and of preparing, printing and distributing any other
material used by Seligman Financial Services in connection with
offering Shares of the Fund for sale, and (b) of advertising in
connection with such offering. The Fund agrees to pay all expenses
in connection with the registration of Shares of the Fund under the
Securities Act of 1933 (the "Act"), all fees and related expenses
which may be incurred in connection with the qualification of Shares
of the Fund for sale in such States (as well as the District of
Columbia, Puerto Rico and other territories) as Seligman Financial
Services may designate, and all expenses in connection with
maintaining facilities for the issue and transfer of its Shares, of
supplying information, prices and other data to be furnished by it
hereunder,
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and through Union Data Service Center, Inc., of all data processing
and related services related to the share distribution activity
contemplated hereby.
The Fund agrees to execute such documents and to furnish such
information as may be reasonably necessary, in the discretion of the
Directors of the Fund, in connection with the qualification of
Shares of the Fund for sale in such States (as well as the District
of Columbia, Puerto Rico and other territories) as Seligman
Financial Services may designate. Seligman Financial Services also
agrees to pay all fees and related expenses connected with its own
qualification as a broker or dealer under Federal or State laws and,
except as otherwise specifically provided in this Agreement or
agreed to by the Fund, all other expenses incurred by Seligman
Financial Services in connection with the sale of Shares of the Fund
as contemplated in this Agreement (including the expenses of
qualifying the Fund as a dealer or broker under the laws of such
States as may be designated by Seligman Financial Services, if
deemed necessary or advisable by the Fund).
It is understood and agreed that any payments made to Seligman
Financial Services pursuant to the Plan(s) may be used to defray
some or all of the expenses incurred by Seligman Financial Services
pursuant to this Agreement.
6. Prospectus and Other Information. The Fund represents and warrants
to and agrees with Seligman Financial Services that:
(a) A registration statement, including one or more
prospectuses relating to the Shares, has been filed by
the Fund under the Act and has become effective. Such
registration statement, as now in effect and as from
time to time hereafter amended, and also any other
registration statement relating to the Shares which may
be filed by the Fund under the Act which shall become
effective, is herein referred to as the "Registration
Statement", and any prospectus or prospectuses filed by
the Fund as a part of the Registration Statement, as the
"Prospectus".
(b) At all times during the term of this Agreement, except
when the officers of the Fund have suspended or
discontinued the sale and issuance of Shares of the Fund
as contemplated by Section 2 hereof, the Registration
Statement and Prospectus will conform in all respects to
the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission,
and neither of such documents will include any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or necessary
to make the statement therein not misleading, except
that the foregoing does not apply to any
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statements or omissions in either of such documents
based upon written information furnished to the Fund by
Seligman Financial Services specifically for use
therein.
The Fund agrees to prepare and furnish to Seligman Financial
Services from time to time a copy of its Prospectus, and authorizes
Seligman Financial Services to use such Prospectus, in the form
furnished to Seligman Financial Services from time to time, in
connection with the sale of the Fund's Shares. The Fund also agrees
to furnish Seligman Financial Services from time to time, for use in
connection with the sale of such Shares, such information with
respect to the Fund and its Shares as Seligman Financial Services
may reasonably request.
7. REPORTS. Seligman Financial Services will prepare and furnish to the
Directors of the Fund at least quarterly a written report complying
with the requirements of Rule 12b-1 under the 1940 Act setting forth
all amounts expended under the Plan(s) and the purposes for which
such expenditures were made.
8. INDEMNIFICATION. (a) The Fund will indemnify and hold harmless
Seligman Financial Services and each person, if any, who controls
Seligman Financial Services within the meaning of the Act against
any losses, claims, damages or liabilities to which Seligman
Financial Services or such controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Fund's Registration Statement or
Prospectus or any other written sales material prepared by the Fund
which is utilized by Seligman Financial Services in connection with
the sale of Shares or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or (in the case of the Registration Statement and
Prospectus) necessary to make the statements therein not misleading
or (in the case of such other sales material) necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made; and will reimburse Seligman Financial
Services and each such controlling person for any legal or other
expenses reasonably incurred by Seligman Financial Services or such
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however,
that the Fund will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or Prospectus
in conformity with written information furnished to the Fund by
Seligman Financial Services specifically for use
4
<PAGE>
therein; and provided, further, that nothing herein shall be so
construed as to protect Seligman Financial Services against any
liability to the Fund or its security holders to which Seligman
Financial Services would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence, in the performance of
its duties, or by reason of the reckless disregard by Seligman
Financial Services of its obligations and duties under this
Agreement. This indemnity agreement will be in addition to any
liability which the Fund may otherwise have.
(b) Seligman Financial Services will indemnify and hold
harmless the Fund, each of its Directors and officers
and each person, if any, who controls the Fund within
the meaning of the Act, against any losses, claims,
damages or liabilities to which the Fund or any such
Director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or
Prospectus or any sales material not prepared by the
Fund which is utilized in connection with the sale of
Shares or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated therein or (in the case of the
Registration Statement and Prospectus) necessary to make
the statements therein not misleading or (in the case of
such other sales material) necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made, in the case of
the Registration Statement and Prospectus to the extent,
but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission
was made in conformity with written information
furnished to the Fund by Seligman Financial Services
specifically for use therein; and Seligman Financial
Services will reimburse any legal or other expenses
reasonably incurred by the Fund or any such Director,
officer or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in
addition to any liability which Seligman Financial
Services may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any
action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party
of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from
liability which it may have to any indemnified party
otherwise than under this Section. In case any such
action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to
5
<PAGE>
participate therein and, to the extent that it may wish,
to assume the defense thereof, with counsel satisfactory
to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under
this Section for any legal or other expenses
subsequently incurred by such indemnified party in
connection with the defense thereof other than
reasonable costs of investigation.
9. EFFECTIVE DATE. This Agreement shall become effective upon its
execution by an authorized officer of the respective parties to this
Agreement, but in no event prior to shareholder approval of the
Plan(s).
10. TERM OF AGREEMENT. This Agreement shall continue in effect until
December 31 of the year in which it is first effective and through
December 31 of each year thereafter if such continuance is approved
in the manner required by the 1940 Act and the rules thereunder and
Seligman Financial Services shall not have notified the Fund 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 penalty
on 60 days' written notice to the other party by vote of a majority
of the Directors of the Fund who are not interested persons (as
defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Plan(s) or any agreement
related thereto, or by vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act). This Agreement
shall automatically terminate in the event of its assignment (as
defined in the 1940 Act).
11. MISCELLANEOUS. 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, either of the
parties to do anything in violation of any applicable laws or
regulations.
6
<PAGE>
IN WITNESS WHEREOF, the Fund and Seligman Financial Services have
caused this Agreement to be executed by their duly authorized officers as of the
date first above written.
SELIGMAN FRONTIER FUND, INC.
By
-------------------------------
Ronald T. Schroeder, President
SELIGMAN FINANCIAL SERVICES, INC.
By
-------------------------------
Donald R. Pitti, President
7
[1/7/97]
- --------------------------------------------------------------------------------
J. & W. SELIGMAN & CO. INCORPORATED
MATCHED ACCUMULATION PLAN
(As amended and restated to include
all amendments through January 1, 1995)
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
PREAMBLE ................................................... 1
ARTICLE I Definitions .................................... 1
1.1 Definitions ...................... 1
1.2 Gender ........................... 17
ARTICLE II Participation .................................. 17
2.1 Initial Participation ............ 17
2.2 Reemployment ..................... 17
ARTICLE III Profit Sharing Contributions ................... 17
3.1 Amount of Profit Sharing
Contributions .................... 17
3.2 Participants Eligible for
Profit Sharing Contributions ..... 18
3.3 Allocation of Profit Sharing
Contributions .................... 18
3.4 Cash Election .................... 19
ARTICLE IV Salary Reduction, Voluntary, Matching
and Rollover Contributions ..................... 19
4.1. Salary Reduction Contributions ... 19
4.2 Limitation on Optional Deferrals
and Salary Reduction
Contributions .................... 20
<PAGE>
4.3 Voluntary Contributions .......... 22
4.4 Changes in Rates of Salary
Reduction Contributions and/or
Voluntary Contributions .......... 22
4.5 Matching Contributions ........... 23
4.6 Limitation on Voluntary
Contributions and Matching
Contributions .................... 23
4.7 Rollover Contributions ........... 26
4.8 Maximum Annual Addition .......... 26
ARTICLE V Investment of the Trust Fund ................... 28
5.1 Funds ............................ 28
5.2 Investment of Prospective
Contributions .................... 28
5.3 Investment In Funds .............. 29
5.4 Transfers Among Funds ............ 29
5.5 Reinvestments of Income
and Gains ........................ 30
5.6 Limitation on Investments
in a Fund ........................ 30
ARTICLE VI Vesting ........................................ 30
6.1 Certain Participants Hired Before
May 31, 1993 ..................... 30
6.2 Other Participants ............... 30
<PAGE>
ARTICLE VII Withdrawals During Service ..................... 32
7.1 In-Service Withdrawals (Other
Than for Hardship) ............... 32
7.2 Hardship Withdrawals ............. 33
7.3 Complete Withdrawal .............. 35
7.4 Payments ......................... 35
7.5 Rollover Contributions ........... 35
ARTICLE VIII Loans ......................................... 35
8.1 Amount of Loans .................. 35
8.2 Payment of Loan .................. 36
8.3 Terms of Loan .................... 36
8.4 Repayment of Loan ................ 36
8.5 Default .......................... 37
8.6 Termination of Service or Plan ... 37
8.7 Maximum Number of Loans .......... 37
ARTICLE IX Distributions Upon Termination
of Service ..................................... 37
9.1 Termination of Service ........... 37
9.2 Deferred Distributions ........... 38
9.3 Commencement of Benefits ......... 38
ARTICLE X Payments of Distributions and
<PAGE>
Withdrawals .................................... 39
10.1 Distributions .................... 39
10.2 Payments ......................... 39
10.3 Designation of Beneficiary ....... 39
10.4 Death Benefits ................... 39
10.5 Payments to Minors or Other
Persons Under a Disability ....... 40
10.6 Dividends or Capital Gain
Distributions .................... 40
10.7 Predecessor Plan ................. 40
10.8 Direct Rollovers ................. 40
ARTICLE XI The Trust Fund ................................. 41
11.1 Trust Fund ....................... 41
11.2 Trustee .......................... 41
11.3 Prohibition Against Diversion .... 41
11.4 Recordkeeping .................... 41
11.5 Expenses ......................... 42
11.6 Voting ........................... 42
ARTICLE XII Valuation of Interests and Statements
of Accounts .................................... 42
12.1 Valuation ........................ 42
<PAGE>
12.2 Changes in Valuation ............. 42
12.3 Statement of Account ............. 42
ARTICLE XIII Administration ................................ 43
13.1 Appointment of Committee ........ 43
13.2 Powers of the Committee ......... 43
13.3 Procedures of the Committee ..... 43
13.4 Delegation of Duties ............ 43
13.5 Payment of Expenses ............. 44
13.6 Duties and Responsibilities
of the Committee ................ 44
13.7 Indemnification ................. 44
ARTICLE XIV Claims Procedure .............................. 45
ARTICLE XV Amendment or Termination of the Plan
or Discontinuance of Employer
Contributions ................................. 46
15.1 Amendment ....................... 46
15.2 Termination ..................... 46
15.3 Merger, Consolidation or
Transfer of Assets or
Liabilities ..................... 46
15.4 Withdrawal of Employer .......... 46
ARTICLE XVI General Provisions............................. 47
16.1 Plan Is Not a Contract of
Employment ...................... 47
16.2 Plan Is for the Exclusive
Benefit of Beneficiaries ........ 47
16.3 Nonalienation of Benefits ....... 47
16.4 Applicable Law .................. 47
EXHIBIT A .................................................. 48
<PAGE>
PREAMBLE
J. & W. Seligman & Co. Incorporated, in order to establish a systematic
method by which its employees may both share in current profits and earn and
accumulate benefits payable upon termination of employment or retirement,
adopted this profit-sharing plan now known as the J. & W. Seligman & Co.
Incorporated Matched Accumulation Plan, effective January 1, 1981.
The Plan was amended from time to time and was last restated effective
January 1, 1989. Effective January 1, 1994, the Plan is again restated in this
Plan document. Except where the context expressly provides otherwise, this Plan,
as amended and restated as of January 1, 1994, applies to employees of an
Employer employed on or after such date; changes effected by any amendments
included in this restated Plan shall not be applicable to any Participant who
retired or died or whose employment otherwise terminated prior to January 1,
1994; all rights and benefits payable with respect to him shall be determined in
accordance with the provisions of the Plan and Trust as in effect on such date
of termination of employment.
<PAGE>
2
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Wherever used herein, unless the context otherwise
indicates, the following terms shall have the meanings set forth below:
Accounts: The account or accounts established and maintained in
the Trust Fund pursuant to Article V on behalf of
each Participant, representing his interest in one or
more of the Funds established hereunder.
Act: The Employee Retirement Income Security Act of 1974.
All references to any section of the Act shall be
deemed to refer not only to such section but also to
any amendment thereof and any successor statutory
provision.
Affiliate: (a) Any corporation or other business entity (other
than the Corporation) that is included in a
controlled group of corporations within which the
Corporation is also included, as provided in Section
414(b) of the Code, or which is a trade or business
under common control with the Corporation, as
provided in Section 414(c) of the Code, determined
for purposes of Section 4.8, as if the phrase
<PAGE>
3
"more than 50 percent" was substituted for the phrase
"at least 80 percent" each place it appears in
Section 1563(a)(1) of the Code, (b) Union Data
Service Center, Inc., (c) any organization (whether
or not incorporated) which is a member of an
affiliated service group (as defined in Section
414(m) of the Code) which includes the Corporation
and any other entity required to be aggregated with
the Corporation pursuant to regulations under Section
414(o) of the Code and (d) any other corporation or
entity which has been so designated by the Board for
one or more purposes under the Plan.
Agent: Union Data Service Center, Inc.
Anniversary Year: A period of 365 days beginning on the date an
individual first receives credit for an Hour of
Service beginning with his initial Service or his
reemployment date following a Break in Service.
Average Contribution: With respect to any group of eligible Employees for
Percentage: a Year, the average of the ratios (calculated
separately for each eligible Employee in the
<PAGE>
4
group) of (a) the aggregate of Voluntary
Contributions and Matching Contributions (excluding
any amounts used to satisfy the minimum allocation
described in Article II of Appendix A) made on behalf
of such eligible Employees for such Year to (b) such
eligible Employees' 414(s) Compensation for such
Year. Such Average Contribution Percentage shall be
computed to the nearest one-hundredth of one percent
of the eligible Employee's 414(s) Compensation.
Average Deferral With respect to any specified group of
Percentage: eligible Employees for a Year, the average of the
ratios (calculated separately for each eligible
Employee in the group) of (a) the Optional Deferrals
and Salary Reduction Contributions contributed on
behalf of such eligible Employees for such Year to
(b) such eligible Employees' 414(s) Compensation.
Such Average Deferral Percentage shall be computed to
the nearest one-hundredth of one percent of the
eligible Employee's 414(s) Compensation.
Beneficiary: The person or persons designated by a Participant as
his beneficiary
<PAGE>
5
in accordance with Section 10.3.
Board: The board of directors of the Corporation.
Break in Service: An Anniversary Year during which an individual is
credited with no more than 500 Hours of Service.
Solely for the purpose of determining whether a Break
in Service has occurred, the individual shall be
credited with one Hour of Service (up to 501 such
hours) for each hour for which he is absent from work
because of (a) pregnancy, (b) birth of a child, (c)
placement of a child in connection with his adoption
by the individual or (d) caring for a child
immediately following such child's birth or placement
for adoption. Such hours shall be credited in the
Anniversary Year in which the absence from work began
if necessary to prevent a Break in Service in that
year or, in any other case, in the next following
Anniversary Year.
Cash Distribution: The amount that a Participant elects to receive in
cash rather than to have contributed to the Plan as
an Optional Deferral pursuant to Section 3.4.
<PAGE>
6
Code: The Internal Revenue Code of 1986. All references to
any section of the Code shall be deemed to refer not
only to such section but also to any amendment
thereof and any successor statutory provision.
Committee: The committee appointed by the Board pursuant to
Article XIII.
Compensation: The aggregate cash remuneration (exclusive of any
commissions from sales, institutional advisory,
brokerage or wrap fee incentive plans, bonuses,
overtime or any payment made under this Plan or any
other employee benefit plan) received by an
individual from an Employer during the Year for
services rendered for the portion of a Year during
which he is a Participant; PROVIDED, HOWEVER, that if
commissions from sales and/or incentive payments are
part of an individual's compensation arrangement,
Compensation for such individual shall include such
commissions from sales and/or incentive payments
although, except as provided in the following
sentence, Compensation for such Employees shall not
exceed $100,000 ($75,000 prior to 1993) for any Year.
Solely for the purpose of determining
<PAGE>
7
the maximum amount of Salary Reduction Contributions
and/or Voluntary Contributions that may be made on
behalf of or by a Participant, the $100,000 limit
included in the preceding sentence shall not apply.
In any event, effective January 1, 1994, Compensation
for any Participant shall not exceed $150,000, as
adjusted by the Secretary of the Treasury or his
delegate at the same time and in the same manner as
under Section 415(d) of the Code.
Continuous Service: An Employee's employment with one or more Employers
or Affiliates commencing on the date an Employee
completes one Hour of Service, measured in years and
completed months, and any period of time included in
any leave of absence of up to two years authorized by
an Employer or an Affiliate and any absence due to
service in the armed forces, provided that the
individual returns to service with an Employer or
Affiliate immediately after the expiration of such
leave of absence or within 90 days after discharge
from the armed forces (but, if he does not so return,
his Continuous Service shall be deemed to have
terminated at the commencement
<PAGE>
8
of such period). In the case of an Employee's
severance from the Service of an Employer or
Affiliate by reason of the resignation, discharge,
retirement, or death, of such Employee, Continuous
Service of the Employee will end on the date of such
severance. In the case of an Employee's severance
from the Service of an Employer or Affiliate for any
reason other than those described in the preceding
sentence (including, without limitation, the
disability, vacation, or layoff of the Employee),
Continuous Service of the Employee will end on the
first anniversary of the date of such severance if
the Employee has not performed an Hour of Service
during such period.
Corporation: J. & W. Seligman & Co. Incorporated, a Delaware
corporation, and any successor thereto.
Disability:
Physical or mental incapacity which is likely to be
permanent and which prevents an Employee from
engaging in any occupation or performing any work for
compensation or profit for which he is qualified by
education, training or experience, as
<PAGE>
9
determined by the Committee in its sole discretion on
the basis of medical evidence certified by a
physician or physicians designated by it.
Effective Date: January 1, 1981.
Employee: Any individual who is employed by an Employer other
than any individual who (a) is designated as a
temporary employee by the Committee based on uniform
rules consistently applied to all persons similarly
situated or (b) has an employment agreement in effect
which provides that he will not be eligible for the
Plan.
Employer: The Corporation, any Affiliate or other subsidiary
that (a) has been designated by the Board as an
Employer, (b) has adopted the Plan with the approval
of its board or directors and (c) has not ceased to
be an Employer. In adopting the Plan for the benefit
of its Employees, an entity may limit the application
of the Plan to specified employees or a group of
employees of one or more of its locations, operations
or divisions. In designating an entity as an
Employer, the Board may limit the participation of
all or a
<PAGE>
10
portion of the Employees of such Employer so that
they are eligible only for (a) Profit Sharing
Contributions as described in Article III or (b)
Salary Reduction Contributions, Voluntary
Contributions, Matching Contributions and Rollover
Contributions as described in Article IV.
Employer Contributions: For any Year, the sum of Profit Sharing
Contributions, Matching Contributions and Salary
Reduction Contributions contributed under
the Plan by one or more Employers on behalf of a
Participant as provided in Articles III and IV.
Family Member: With respect to any Highly Compensated Employee who
is in the group consisting of the ten employees who
receive the highest total pay from the Corporation or
any Affiliate for the Year (determined without regard
to Sections 125 and 402(e)(3) of the Code), or a Five
Percent Shareholder, such individual's spouse, lineal
ascendants or descendants and the spouses of any
lineal ascendants or descendants.
Fiduciary: Any person to the extent that he (a) exercises any
<PAGE>
11
discretionary authority or discretionary control
respecting management of the Plan or exercises any
authority or control respecting management or
disposition of its assets, (b) renders investment
advice for a fee or other compensation, direct or
indirect, with respect to any moneys or other
property of the Plan, or has any authority or
responsibility to do so, or (c) has any discretionary
authority or responsibility in the administration of
the Plan. Such term includes persons designated by
fiduciaries named in the Plan to carry out fiduciary
responsibilities under the Plan.
Five Percent Shareholder: Any person who owned (or is considered to own within
the meaning of Code Section 318) more than five
percent of the outstanding stock of an Employer or
stock possessing more than five percent of the total
combined voting power of all stock of an Employer.
414(s) Compensation: The total pay paid to an Employee by an Employer or
Affiliate for the portion of a Year during which he
was eligible to be a Participant hereunder prior to
reduction
<PAGE>
12
for any contributions made on a salary reduction
basis and excluded from income under Code Sections
125 and 402(e)(3); provided, however, that the
Committee may select another definition of 414(s)
Compensation so long as such definition complies with
Section 414(s) of the Code.
Fund: One of the funds established pursuant to Section 5.1,
and Funds shall mean all such funds.
Highly Compensated For any Year, an eligible
Employee: Employee who:
(a) in the previous Year:
(i) was a Five Percent Shareholder;
(ii) had compensation in excess of $75,000;
(iii) had compensation in excess of $50,000
and was in the group consisting of the top 20%
of employees of an Employer or Affiliate
(excluding for such purpose all employees
described in Code Section 414(g)(8)) when
ranked in order of compensation for the
previous Year; or
<PAGE>
13
(iv) was an officer of an Employer or an
Affiliate and had compensation in excess of 50
percent of the dollar limitation in effect
under Section 415(b)(1)(A) of the Code;
provided, however, that no more than 50
employees (or, if lesser, the greater of three
employees or 10 percent of the employees)
shall be treated as officers; or
<PAGE>
14
(b) in the current Year:
(i) is a Five Percent Shareholder; or
(ii) is one of the 100 employees of an
Employer or Affiliate with the greatest
compensation for such Year and is described in
subparagraphs (a)(ii)-(iv) above for the
current Year. The $75,000 and $50,000
thresholds in the preceding sentence shall be
adjusted at the same time and in the same
manner as the dollar limit on benefits under a
defined benefit plan is adjusted pursuant to
Section 415(d) of the Code. The dollar
threshold for a particular look-back year is
based on the dollar threshold in effect for
the look-back year.
A former Employee shall be considered a Highly
Compensated Employee if he was a Highly
Compensated Employee for either the Year in
which his separation from Service began or for
any Year ending on or after the former
Employee's 55th birthday.
The determination of who is a Highly
Compensated Employee, including the
determinations of the number and identity of
<PAGE>
15
Employees in the top-paid group, the top 100
Employees, the number of Employees treated as
officers and the compensation that is
considered, will be made in accordance with
Section 414(q) of the Code and the regulations
thereunder.
Hours of Service: An individual shall be credited with Hours of
Service as follows: (a) if a record is kept of
his actual hours of Service, one Hour of
Service for each hour for which he is directly
or indirectly paid or entitled to payment
(including such time as paid vacations,
holidays, sickness or layoffs and including
back pay, if any, irrespective of mitigation
of damages) from the Corporation or an
Affiliate; (b) if no record is kept of his
actual hours of Service, 45 Hours of Service
for each week for which he would otherwise be
entitled to receive credit for an Hour of
Service under (a) above; and (c) 40 Hours of
Service for each week included in any leave of
absence of up to two years authorized by the
Corporation or an Affiliate and in any absence
due to service in the armed forces of the
United States, provided that he returns to
Service
<PAGE>
16
with the Corporation or an Affiliate
immediately after the expiration of such leave
of absence or within 90 days after discharge
from the armed forces. In the event he does
not so return, his Service shall be deemed to
have terminated at the commencement of such
period. The foregoing shall be construed so as
to avoid duplication of Hours of Service for a
single hour. The rules issued by the U.S.
Department of Labor relating to the
determination of Hours of Service for reasons
other than the performance of duties and the
crediting of Hours of Service to computation
periods, found in DOL Regulation
2530.20Ob-2(b) and (c), are hereby
incorporated by reference.
Matching Contributions: Contributions made by the Employers on behalf
of Participants in respect of Salary Reduction
Contributions and Voluntary Contributions made
after May 1, 1993, pursuant to Section 4.5.
Nonhighly Compensated For any Year an eligible
Employee: Employee who is not a Highly Compensated
Employee.
Notice to the Committee: Written notice on a form provided by the
Committee which is properly completed
<PAGE>
17
and delivered to the Committee or any member
thereof by hand or mail. Notice to the
Committee shall be deemed to have been given
when it is actually received by the Committee
or any member thereof.
Nonelective Deferral: The portion of the Profit Sharing Contribution
for any Year made on behalf of a Participant
that is not subject to an election to receive
a Cash Distribution.
Optional Deferral: The portion of the Profit Sharing Contribution
for any Year made on behalf of a Participant
that is paid to the Trust Fund by reason of
his failure to elect to receive a Cash
Distribution.
Participant: An Employee who is at the time participating
in the Plan as provided in Article II or where
required by the context, an individual who
formerly participated in the Plan.
Plan: The J. & W. Seligman & Co. Incorporated
Matched Accumulation Plan, as set forth in
this document and as it may be amended from
time to time.
Predecessor Plan: The J. & W. Seligman & Co. Profit Sharing
Plan, and,
<PAGE>
18
where the context requires, the Union Service
Corporation Employees' Thrift Plan.
Profit Sharing Contributions made by Employers on behalf of
Contributions: Participants pursuant to Article III including
Optional Deferrals and contributions not
subject to an election to receive a Cash
Distribution. Profit Sharing Contributions
made by or on behalf of each Employer shall be
divided by the Board between Basic
Contributions and Supplemental Contributions.
Profits: In respect of any Year, the current or
accumulated profits of the Corporation and its
subsidiaries, as determined under generally
accepted accounting principles, before (a)
provision for Federal, state or local income
taxes based on net income and (b) any
contributions under the Plan.
Retirement: Retirement of a Participant on or after
attainment of an age established pursuant to
the uniform policy of his Employer.
Rollover Contributions: Contributions transferred or contributed to
the Trust Fund pursuant to Section 4.7.
<PAGE>
19
Salary Reduction Contributions made on behalf Contributions:of
Participants pursuant to Section 4.1.
Service: Service by an individual as an employee of the
Corporation or an Affiliate (including service
prior to the time it became such to the extent
determined by the Board or as otherwise
required by law) or as a leased employee
within the meaning of Section 414(n)(2) of the
Code if the Corporation or an Affiliate was
the recipient of such leased employee's
services.
Trust Agreement: The agreement of trust as in effect at any
time between the Corporation and the Trustee
relating to the Plan, which Trust Agreement
shall form a part of the Plan.
Trust Fund: The property which is from time to time held
by the Trustee under the Trust Agreement, as
provided in Article XI.
Trustee: The trustee or trustees under the Trust
Agreement at the particular time.
Valuation Date: The end of each business day.
<PAGE>
20
Voluntary Contributions: After-tax contributions made by Participants
pursuant to Section 4.3.
Year: A calendar year.
Year of Vesting Service: An Anniversary Year during which an individual
is credited with at least 1,000 Hours of
Service, whether or not he performs Service
throughout such Anniversary Year. If an
individual who was a leased employee within
the meaning of Section 414(n)(2) of the Code
becomes an Employee, and an Employer or
Affiliate was the recipient of such
individual's services as a leased employee,
his period of service as a leased employee
shall be counted in determining his Years of
Vesting Service, provided that the requirement
described in the preceding sentence would have
been satisfied if he had been an Employee
during such period. If an individual has a
Break in Service, his Years of Vesting Service
before such break shall be disregarded unless
either (a) at the time of the Break in
Service, he was vested in any portion of his
Account attributable to Profit Sharing
Contributions or Matched Contributions or (b)
the number of consecutive
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21
one-year Breaks in Service was less than the
greater of five or the number of his Years of
Vesting Service prior to such Break in
Service.
1.2 GENDER. Wherever used herein, words in the masculine form shall be
deemed to refer to females as well as to males.
ARTICLE II
PARTICIPATION
2.1 INITIAL PARTICIPATION. An individual who was an Employee on the
Effective Date and who was a participant in a Predecessor Plan became a
Participant on such Date. Thereafter, except as provided in the following
sentence, an Employee shall become a Participant on the first day of the month
coinciding with or next following his completion of six months of Continuous
Service. In the case of an Employee whose participation is limited to the
contributions made under Article IV, he shall be eligible to become a
Participant on the first day of any month coinciding with or next following his
completion of six months of Continuous Service. Solely for the purposes of this
Article II, the term "Service" shall include service with an entity that had
adopted a Predecessor Plan.
2.2 REEMPLOYMENT. A Participant shall remain such until his
termination of Service. An Employee who was (or was eligible to be) a
Participant and whose Service resumes shall again become a Participant on the
date on which he again becomes an Employee. Each other Employee who resumes
employment shall be eligible to become a Participant upon the first day of the
month in which he meets the requirements of Section 2.1.
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22
ARTICLE III
PROFIT SHARING CONTRIBUTIONS
3.1 AMOUNT OF PROFIT SHARING CONTRIBUTIONS. Subject to the right of
the Board to modify, amend or terminate the Plan, the rights of the Employers to
modify, suspend or discontinue their respective Profit Sharing Contributions
under the Plan and the provisions of this Article III, each Employer shall
contribute to the Plan for each Year out of Profits the amount that the Board
shall determine to be its Profit Sharing Contribution for such Year; PROVIDED,
HOWEVER, that any Profit Sharing Contribution for such Year shall not be greater
than the amount which is allowable as a deduction for Federal income tax
purposes. Notwithstanding the foregoing, if any Employer, which with any other
Employer is includible in an "affiliated group" of corporations within the
meaning of Section 1504(a) of the Code, is prevented from making a contribution
which it would otherwise have made under the Plan by reason of having no current
or accumulated earnings or profits because such earnings or profits are less
than the contribution which it would otherwise have made, then so much of the
Employer Contribution which such Employer was so prevented from making shall be
made for the benefit of the Participants who are Employees of such Employer by
any other Employer or Affiliates includible in such "affiliated group" to the
extent of their respective current or accumulated earnings or profits. Such
Profit Sharing Contributions shall be allocated in accordance with Sections 3.2,
3.3 and 3.4.
3.2 PARTICIPANTS ELIGIBLE FOR PROFIT SHARING CONTRIBUTIONS. Basic
Contributions and Supplemental Contributions for any Year shall be allocated as
of December 31 of such Year, in the manner provided in Section 3.3, to
individuals who are Participants on such December 31, or whose Service as
Participants terminated during such Year by Retirement, Disability or death;
provided, however, that Supplemental Contributions shall
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23
only be allocated to a Participant or former Participant who is not entitled to
receive a bonus for such Year, as determined by his Employer. In the case of any
such individual whose Service terminated during such Year by Retirement,
Disability or death and the value of whose Accounts has been paid pursuant to
Article IX prior to the end of such Year, he (or his Beneficiary) shall receive
a distribution of the amount equal to his allocable share of Profit Sharing
Contributions for such Year. In the case of each other such individual, his
allocable share of Profit Sharing Contributions (less his Cash Distribution, if
any) for such Year shall be credited to his Accounts.
3.3 ALLOCATION OF PROFIT SHARING CONTRIBUTIONS. Subject to Sections
3.4 and 4.2, the Basic Contribution and Supplemental Contribution of each
Employer for any Year shall be allocated among the individuals employed by such
Employer and described in Section 3.2 as entitled to receive an allocation of
Basic Contributions and/or Supplemental Contributions, respectively, in an
amount which bears the same ratio to each such Contribution as the Compensation
for such Year of each such individual as a Participant bears to the total
Compensation of all such individuals as Participants and Employees of such
Employer for such Year.
3.4 CASH ELECTION. Each Participant, in lieu of having his entire
share of Profit Sharing Contributions for any Year paid to the Trust Fund and
applied for his benefit as provided in Article V, may elect, by Notice to the
Committee not later than December 31 of such Year or such other date as the
Committee may in its discretion determine, to receive a Cash Distribution in an
amount equal to 33-l/3%, 50% or 66-2/3% of his share of Basic Contributions
and/or 33-1/3%, 50%, 66-2/3% or 100% of his share of Supplemental Contributions.
Cash Distributions shall be paid by the Employers to Participants who have
elected in any Year to receive them as soon as practicable after the close of
such Year. An election to receive a Cash Distribution for any Year shall be
irrevocable. Upon the death of a Participant prior to the payment of a Cash
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24
Distribution which he has elected, such Cash Distribution shall be payable to
his Beneficiary.
ARTICLE IV
SALARY REDUCTION, VOLUNTARY, MATCHING
AND ROLLOVER CONTRIBUTIONS
4.1 SALARY REDUCTION CONTRIBUTIONS. (a) Effec- tive May 1, 1993,
subject to the limits specified below and in Sections 4.2 and 4.8, each
Participant may elect to have his Compensation for each pay period reduced from
1% to 10% (in whole integers) and such amount shall be contributed to the Trust
Fund by his Employer on his behalf. At any time, the Committee may reduce the
rate of future Salary Reduction Contributions to be made on behalf of Highly
Compensated Employees in order to satisfy the test described in Section 4.2.
(b) In any event, the aggregate of a Partici- pant's Salary Reduction
Contributions, Optional Deferrals and any other elective deferral contributions
(within the meaning of Code Section 402(g)(3)) contributed on behalf of a
Participant for any Year under the Plan or any other plan maintained by the
Corporation or an Affiliate may not exceed $7,000 (or such greater amount as may
be permitted pursuant to Code Section 402(g)(5)). In the event a Participant's
Optional Deferrals and Salary Reduction Contributions exceeds the applicable
limit described in the preceding sentence, such excess (plus any income or minus
any loss allocable thereto, calculated in accordance with regulations issued by
the Secretary of the Treasury) shall be returned to the Participant by April
15th of the following Year.
(c) Salary Reduction Contributions for any pay period will be paid by
the Participant's Employer to the
<PAGE>
25
Trust Fund as soon as feasible after the end of each pay period.
4.2 LIMITATION ON OPTIONAL DEFERRALS AND SALARY REDUCTION
CONTRIBUTIONS. (a) If the aggregate of Optional Deferrals and Salary Reduction
Contributions made on behalf of Highly Compensated Employees for any Year is in
excess of the amount permitted under the following provisions for such Highly
Compensated Employees, such excess amounts plus the pro rata share of income and
losses thereon determined in accordance with regulations issued by the Secretary
of the Treasury, shall be distributed to such Highly Compensated Employees by
March 15 of the following Year.
(b) All or a portion of the aggregate of Optional Deferrals and Salary
Reduction Contributions for the Highly Compensated Employees shall be deemed to
be excessive for any Year unless one of the following tests is satisfied:
(i) the Average Deferral Percentage of Highly Compensated Employees is
not more than the Average Deferral Percentage of Nonhighly Compensated
Employees multiplied by 1.25, or
(ii) the Average Deferral Percentage of Highly Compensated Employees
is not more than the Average Deferral Percentage of Nonhighly Compensated
Employees multiplied by 2.0; provided, however, that the Average Deferral
Percentage for the Highly Compensated Employees may not exceed the Average
Deferral Percentage for the Nonhighly Compensated Employees by more than
two percentage points.
(c) In the event any portion of a Participant's Optional Deferrals and
Salary Reduction Contributions are returned pursuant to Section 4.1(b) as a
result of the $7,000 (as adjusted by the Secretary of the Treasury) limit
applicable to such contributions, (i) any excess Optional Deferrals and Salary
Reduction Contributions required to be returned pursuant to this Section 4.2
shall be reduced by
<PAGE>
26
the amount of such excess deferrals and (ii) such Participant's Average Deferral
Percentage shall be determined before such excess deferral is returned;
PROVIDED, HOWEVER, that excess deferrals made on behalf of Nonhighly Compensated
Employees under plans of the Corporation or an Affiliate shall be excluded in
determining such Employee's Average Deferral Percentage.
The amount of Optional Deferrals and Salary Reduction Contributions to
be distributed shall be determined by reducing the maximum amount of Optional
Deferrals and Salary Reduction Contributions to an adjusted maximum percentage,
which shall be the percentage that would cause one of the tests described in
Section 4.2(b) to be satisfied if each Highly Compensated Employee who
designated a percentage greater than such adjusted maximum percentage had
instead designated such percentage. The deferral percentage for each Highly
Compensated Employee shall be the lesser of the percentage otherwise applicable
or the adjusted maximum percentage determined under this subparagraph.
In the event a Participant's Salary Reduction Contributions and/or
Optional Deferrals are distributed to the Participant pursuant to Section 4.1(b)
as a result of being in excess of the dollar limitation applicable to such
contributions or pursuant to this Section 4.2, the value of the related Matching
Contributions plus the pro rata share of income and losses thereon, determined
in accordance with regulations issued by the Secretary of the Treasury, shall be
distributed to the Participant.
In determining the Average Deferral Percentage of a Highly Compensated
Employee who has a Family Member who is an Employee, the Average Deferral
Percentage for the family group (which is treated as one Highly Compensated
Employee) shall be the Average Deferral Percentage determined by combining the
Optional Deferrals, Salary Reduction Contributions and 414(s) Compensation for
all the eligible Family Members. The determination of the Average Deferral
<PAGE>
27
Percentage and the treatment of excess deferrals of Highly Compensated Employees
with Family Members who are Employees shall satisfy such other requirements as
may be prescribed in regulations issued by the Secretary of the Treasury.
The Average Deferral Percentage for any Highly Compensated Employee
for any Year who is eligible to have pre-tax contributions allocated to his
account under one or more plans described in Code Section 401(k) (other than an
employee stock ownership plan described in Code Section 4975(a)(7)) maintained
by the Corporation or an Affiliate in addition to this Plan shall be determined
as if all such contributions were made to this Plan. In the event this Plan must
be combined with one or more plans (other than an employee stock ownership plan
described in Code Section 4975(e)(7)) in order to satisfy the requirements of
Sections 401(a)(4) or 410(b) of the Code (other than the average benefits test
described in Code Section 410(b)(1) (A)(ii)), then all cash or deferred
arrangements that are included in such plans shall be treated as a single
arrangement for purposes of this Section 4.2.
4.3 VOLUNTARY CONTRIBUTIONS. (a) Effective May 1, 1993, subject to the
limits specified below and in Sections 4.6 and 4.8, each Participant may elect
to make Voluntary Contributions to the Plan equal to 1% to 10% of his
Compensation (in whole integers) for each pay period; provided, however, that in
no event may a Participant's Voluntary Contributions exceed the difference
between (i) 10% of his Compensation and (ii) the percentage of his Compensation
contributed as a Salary Reduction Contribution. At any time, the Committee may
reduce the rate of future Contributions to be made by Highly Compensated
Employees in order to satisfy the test described in Section 4.6.
(b) Voluntary Contributions for any pay period will be paid by the
Participant's Employer to the Trust Fund as soon as feasible after the end of
each pay period.
<PAGE>
28
4.4 CHANGES IN RATES OF SALARY REDUCTION CONTRIBUTIONS AND/OR
VOLUNTARY CONTRIBUTIONS. A Participant may change the percentage of his
Compensation contributed as a Salary Reduction Contribution and/or Voluntary
Contribution; PROVIDED, HOWEVER, that such change may not be made more
frequently than once in any calendar quarter. In addition, such a Participant
may completely suspend Salary Reduction Contributions and/or Voluntary
Contributions at any time, PROVIDED, HOWEVER, that in the event a Participant
suspends making Basic Contributions he shall not be eligible to resume any
contribution until his Basic Contributions have been suspended for at least
three months. Such changes shall be effective with the first payroll period
commencing at least five days after receipt of the Participant's election by the
Committee. If the Compensation of a Participant is changed, the dollar amount of
his Salary Reduction Contributions and Voluntary Contributions will
automatically be changed so that the percentage contributed is not changed.
4.5 MATCHING CONTRIBUTIONS. Subject to Section 4.6 and 4.8 and to the
right of the Board to modify, amend or terminate the Plan and to the right of
the Employers to modify, suspend or discontinue their respective Matching
Contributions under the Plan, each Employer shall contribute to the Plan for
each pay period on behalf of each Participant in its employ an amount equal to
100% of the first 3% of his Compensation contributed on behalf of or by a
Participant as a Salary Reduction Contribution or Voluntary Contribution for
such pay period; PROVIDED, HOWEVER, that in the case of a Participant for whom
commissions from sales and/or incentive payments are part of his compensation
arrangement, Compensation used to determine the maximum amount of his Matching
Contributions shall not exceed $100,000 for any Year.
4.6 LIMITATION ON VOLUNTARY CONTRIBUTIONS AND MATCHING CONTRIBUTIONS.
(a) If the aggregate of Voluntary Contributions and Matching Contributions made
on behalf of the Highly Compensated Employees for any Year is in excess
<PAGE>
29
of the amount permitted under the following provisions for such Highly
Compensated Employees, such excess contributions plus the pro rata share of
income and losses thereon determined in accordance with regulations issued by
the Secretary of the Treasury shall be returned or distributed to such Highly
Compensated Employees to the extent required to satisfy such limitations by
March 15 of the following Year.
(b) All or a portion of the aggregate of Voluntary Contributions and
Matching Contributions for the Highly Compensated Employees shall be deemed to
be excessive for any Year unless one of the following tests is satisfied:
(i) the Average Contribution Percentage of Highly Compensated
Employees is not more than the Average Contribution Percentage of Nonhighly
Compensated Employees multiplied by 1.25, or
(ii) the Average Contribution Percentage of Highly Compensated
Employees is not more than the Average Contribution Percentage of Nonhighly
Compensated Employees multiplied by 2.0; provided, however, that the
Average Contribution Percentage for the Highly Compensated Employees may
not exceed the Average Contribution Percentage for the Nonhighly
Compensated Employees by more than two percentage points.
To the extent permitted by law and to the extent elected by the
Corporation, Optional Deferrals and Salary Reduction Contributions (in excess of
the amount of such contributions used to satisfy the test described in Section
4.2) allocated to a Participant's Account may be aggregated with the Voluntary
Contributions and Matching Contributions allocated to his Account in determining
his Average Contribution Percentage provided that the requirements contained in
Treas. Reg. Section 1.401(m)-1(b)(5) are satisfied. An eligible Employee's
Average Contribution Percentage for purposes of this Section 4.6
<PAGE>
30
shall be determined after a Participant's excess Optional Deferrals and Salary
Reduction Contributions are distributed to the Participant.
(c) The amount of Voluntary Contributions and Matching Contributions
to be distributed shall be determined by reducing the maximum amount of
Voluntary Contributions and Matching Contributions to an adjusted maximum
percentage, which shall be the percentage that would cause the requirements
described in Section 4.6(b) to be satisfied if each Highly Compensated
Employee's Average Contribution Percentage was reduced to such percentage. The
contribution percentage for each Highly Compensated Employee shall be the lesser
of the percentage otherwise applicable or the adjusted maximum percentage
determined under this subparagraph. A Highly Compensated Employee's contribution
percentage shall be reduced by distributing (i) first, unmatched Voluntary
Contributions, (ii) second, matched Voluntary Contributions and the related
Matching Contributions and (iii) third, other Matching Contributions.
In determining the Average Contribution Percentage of a Highly
Compensated Employee who has a Family Member who is an Employee, the Average
Contribution Percentage for the family group (which is treated as one Highly
Compensated Employee) shall be the Average Contribution Percentage determined by
combining Voluntary Contributions, Matching Contributions, 414(s) Compensation
and, to the extent elected by the Corporation, Optional Deferrals and Salary
Reduction Contributions, of all the eligible Family Members. The determination
of the Average Contribution Percentage and the treatment of excess contributions
of Highly Compensated Employees with Family Members who are Employees shall
satisfy such other requirements as may be prescribed in regulations issued by
the Secretary of the Treasury.
The Average Contribution Percentage for any Highly Compensated
Employee for any Year who is eligible to have matching employer contributions
made on his behalf or to make after-tax contributions under one or more plans
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31
described in Code Section 401(a) (other than an employee stock ownership plan
described in Code Section 4975(e)(7)) maintained by the Corporation or an
Affiliate in addition to this Plan shall be determined as if all such
contributions were made to this Plan. In the event that this Plan must be
combined with one or more other plans (other than an employee stock ownership
plan described in Code Section 4975(e)(7)) in order to satisfy the requirements
of Code Section 401(a)(4) or 410(b) (other than the average benefits test
described in Code Section 410(b)(2)(A)(ii)), all employee and matching
contributions are treated as made under a single plan for purposes of Section
401(m) of the Code.
(d) In the event that both of the tests described in Sections 4.2(b)
and 4.6(b) are satisfied only by using the "2.0/two point" test described in
Sections 4.2(b)(i) and 4.6(b)(i) respectively, the Average Contribution
Percentage for Highly Compensated Employees shall be reduced to the extent
necessary to satisfy the aggregate limit described in the following sentence.
The aggregate limit shall equal the greater of (i) or (ii):
(i) the sum of (A) 1.25 multiplied by the greater of the Average
Contribution Percentage or the Average Deferral Percentage for the Year for
Nonhighly Compensated Employees plus (B) the lesser of the Average
Contribution Percentage or the Average Deferral Percentage for the Year for
Nonhighly Compensated Employees plus two percentage points; provided,
however, that the amount determined under this clause may not exceed the
product of 2.0 multiplied by the lesser of the Average Contribution
Percentage or the Average Deferral Percentage for Nonhighly Compensated
Employees; or
(ii) the sum of (A) 1.25 multiplied by the lesser of the Average
Contribution Percentage or the Average Deferral Percentage for the Year for
Nonhighly Compensated Employees plus (B) the greater of the
<PAGE>
32
Average Contribution Percentage or the Average Deferral Percentage for the
Year for Nonhighly Compensated Employees plus two percentage points;
provided, however, that the amount determined under this clause (B) may not
exceed the product of 2.0 multiplied by the greater of the Average
Contribution Percentage or the Average Deferral Percentage for Nonhighly
Compensated Employees.
4.7 ROLLOVER CONTRIBUTIONS. Subject to procedures established by the
Committee, each Employee shall be entitled to transfer to the Trust Fund all or
part of his balance in excess of his own contributions from an employees' trust
described in Section 401(a) of the Code if such transfer is made (a) within 60
days of the day he receives such balance from such trust or from an individual
retirement account described in Section 408(a) of the Code or an individual
retirement annuity described in Section 408(b) of the Code to which he had
contributed part or all of such balance within 60 days following the day he
received such balance or (b) pursuant to a direct rollover of an eligible
rollover distribution (as defined in Code Section 402(c)(4)) other than a
distribution which the Employee is entitled to receive as a beneficiary. Except
for purposes of Section 7.1, Rollover Contributions shall be treated as Profit
Sharing Contributions. An Employee who has made a Rollover Contribution shall be
considered a Participant for all purposes hereunder except that he shall not be
eligible to share in Profit Sharing Contributions, to have Salary Reduction
Contributions made on his behalf or to make Voluntary Contributions until he
becomes a Participant in accordance with Section 2.1.
4.8 MAXIMUM ANNUAL ADDITION. Notwithstanding anything to the contrary
in the Plan, the maximum "annual addition" (as hereinafter defined) on behalf of
any Participant for any Year shall not exceed (and, if necessary, shall be
reduced to) the lesser of $30,000 (or, if greater, 25% of the dollar limitation
in effect under Section 415(b)(1)(A) of the Code for the Year) or 25% of his
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33
total compensation (within the meaning of Code Section 415(c)(3)) for such Year.
The 25% of compensation limitation shall not apply to any contributions
considered "annual additions" pursuant to Code Section 419A(d)(2) after the
Participant's separation from service or Code Section 415(l)(1). The "annual
addition" for a Participant in a Year shall be the sum of (a) the Employer
Contributions allocated to his Account on his behalf for such Year, (b) the
Participant's Voluntary Contributions for such Year and (c) any other amounts
considered an "annual addition" pursuant to Code Section 415(c)(2) under any
plan qualified under Code Section 401(a) maintained by an Employer or Affiliate
or under Code Sections 415(l)(1) and 419A(d)(2).
In any case where a Participant also participates in a defined benefit
plan (as defined in Section 414(j) of the Code) of the Corporation or an
Affiliate in addition to being a Participant in this Plan, the sum of his
defined benefit plan fraction and the defined contribution plan fraction (both
as defined hereinafter) for any Year may not exceed 1.0. The defined benefit
plan fraction for any Year is a fraction the numerator of which is the projected
annual benefit of the Participant under such plan (determined as of the close of
the Year), and the denominator of which is the lesser of:
(a) the product of 1.25, multiplied by the dollar limitation in effect
under Section 415(b)(1)(A) of the Code for such Year; or
(b) the product of 1.4, multiplied by the amount which may be taken
into account under Section 415(b)(1) (B) of the Code with respect to the
Participant under the plan for such Year.
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34
The defined contribution plan fraction for any Year is a fraction the numerator
of which is the sum of the annual additions to the Participant's Account as of
the close of the Year, and the denominator of which is the sum of the lesser of
the following amounts determined for such Year and for each prior year of
Service with the Corporation or an Affiliate:
(i) the product of 1.25, multiplied by the dollar limitation in effect
under Section 415(c)(1)(A) of the Code for such Year; or
(ii) the product of 1.4, multiplied by the amount which may be taken
into account under Section 415(c)(1)(B) of the Code with respect to the
Participant under the Plan for such Year.
Prior to the end of each Year, the Committee shall determine whether, and to
what extent, the limitation of this Section 4.8 will prohibit the making of
Voluntary Contributions by a Participant or, after all such Voluntary
Contributions by a Participant have been prevented from being made, of Employer
Contributions for such Year on behalf of such Participant. The Committee shall
advise any affected Participant accordingly. Employer Contributions for any Year
which cannot be allocated to Participants and credited to their Accounts within
the limitation of this Section 4.8 shall not be contributed by the Employer for
such Year.
If as a result of a reasonable error in determining the amount of a
Participant's Compensation, the annual addition for a Participant would exceed
the limits described in this Section 4.8, the amount in excess of the
permissible annual addition shall be distributed to the Participant. In
addition, Optional Deferrals, Salary Reduction Contributions and Voluntary
Contributions may be distributed or returned to a Participant to the extent
necessary so that the limitation on annual additions is satisfied.
<PAGE>
35
ARTICLE V
INVESTMENT OF THE TRUST FUND
5.1 FUNDS. The Trustee shall maintain such Funds, as are selected by
the Committee; provided that the Corporation must serve as manager and provide
investment management and administrative services to each Fund available under
the Plan.
5.2 INVESTMENT OF PROSPECTIVE CONTRIBUTIONS. Upon first becoming a
Participant, an individual shall select (a) one or more of Funds in which all
his Profit Sharing Contributions shall be invested, (b) one or more Funds in
which his Salary Reduction Contributions shall be invested, (c) one or more
Funds in which his Matching Contributions shall be invested and (d) one or more
Funds in which his Voluntary Contributions shall be invested. Each investment
direction shall be made in 5% increments and a minimum of l0% of any specified
type of contribution must be invested in any one Fund. It shall be the
responsibility of the Committee and not the Trustee, to ensure compliance with
such limits. Any investment direction given by a Participant shall be deemed to
be a continuing direction with respect to all subsequent contributions until
changed. Not more than once in any calendar quarter with respect to each
investment election, a Participant may change his investment direction with
respect to future contributions by Notice to the Committee. In the absence of an
investment direction by the Participant, his Salary Reduction Contributions,
Matching Contributions, Participant Contributions and Rollover Contributions
shall be invested in the Seligman Cash Management Fund (or any successor fund
with similar investments as selected by the Committee).
<PAGE>
36
5.3 INVESTMENT IN FUNDS. As soon as practicable after the end of each
Year, in respect of Profit Sharing Contributions, and as soon as practicable
after the end of each pay period, in respect of Salary Reduction Contributions,
Matching Contributions, and Voluntary Contributions in accordance with the
investment directions of Participants, each Employer shall:
(i) except as provided in subparagraph (ii) below, forward the
contributions made by or on behalf of Participants in its employ, to the
respective Funds on behalf of the Trustee and the Trustee will be advised
by the Agent of the total amount contributed to each such Fund and the
number of shares in each such Fund to be credited to the Accounts of
Participants; and
(ii) in the event that the Tri-Continental Fund is available under the
Plan, with respect to such Fund, forward the contributions made by or on
behalf of Participants in its employ, to the Trustee for investment in such
Fund, in accordance with the methods of purchase described in the current
prospectus of Tri-Continental Corporation, whereupon the Trustee shall
advise the Agent as to the number of shares of common stock of
Tri-Continental Corporation purchased and the value of such shares and
shall deliver such shares to the Agent, and the Agent shall determine the
number of such shares to be credited to the Accounts of Participants, shall
so credit such shares and shall advise the Trustee that it has so credited
such shares.
5.4 TRANSFERS AMONG FUNDS. A Participant may, by Notice to the
Committee given at least five business days in advance of any Valuation Date,
direct the Trustee to convert all or any part of his interest in any one or more
Funds into an interest equivalent in value in one or more other Funds; provided,
however, that any transfer involving the Tri-Continental Fund shall be made as
soon as practicable following receipt of such notice. Except as provided in
<PAGE>
37
Sections 5.6 and 7.4, such direction to the Trustee to convert may be given at
any time but not more than once during any calendar quarter.
5.5 REINVESTMENT OF INCOME AND GAINS. Income and gains from
investments in each Fund will be reinvested by the Trustee in the same Fund.
5.6 LIMITATION ON INVESTMENTS IN A FUND. Anything herein to the
contrary notwithstanding, the Committee shall not permit the investment or
reinvestment of moneys in any Fund if to do so would result in the Trustee's
holdings of securities in such Fund to exceed 5% of the total number of such
securities then outstanding. It shall be the responsibility of the Committee and
not the Trustee to ensure that such limit is not exceeded. Whenever it shall
appear to any Employer that the Trustee could not, by reason of the preceding
sentence, be able to invest the contributions to be made to any Fund in the next
succeeding pay period, or to make a transfer permitted by Section 5.4, each
Participant who shall have directed the investment of contributions in such Fund
or the transfer of all or any part of his Account to such Fund shall be notified
by the Committee and shall change his direction with respect to the investment
of future contributions in such Fund, or shall withdraw or change his direction
to transfer all or any part of his interest to such Fund. A change of direction
pursuant to this Section 5.6 shall not in itself disqualify a Participant from
again changing his investment direction in the same quarter.
<PAGE>
38
ARTICLE VI
VESTING
6.1 CERTAIN PARTICIPANTS HIRED BEFORE MAY 31, 1993. Each Participant
employed by the Corporation or an Affiliate before May 31, 1993, who elects to
have Salary Reduction Contributions made on his behalf and/or to make Voluntary
Contributions by May 31, 1993, or when first eligible, if later, shall at all
times have a fully vested and nonforfeitable interest in his Accounts.
6.2 OTHER PARTICIPANTS. (a) Except as provided in this Section 6.2,
the interest of any Participant not described in Section 6.1 in the portion of
his Accounts attributable to Matching Contributions shall be vested in
accordance with the following schedule:
MONTHS OF PARTICIPATION VESTED PERCENTAGE
At least 12 but less than 24 33-l/3%
At least 24 but less than 36 66-2/3%
At least 36 or more 100%
A Participant shall receive credit for one "month of participation" for each
calendar month for which he elects to have Salary Reduction Contributions
contributed on his behalf and/or to make Voluntary Contributions (or elects to
have similar contributions made under the Union Data Service Center Inc.
Employees' Thrift Plan) for any part of such month. However, the interest of any
Participant in the portion of his Accounts attributable to Matching
Contributions who is credited with at least five Years of Vesting Service or who
dies, incurs a Disability or attains age 65 while in the employ of the
Corporation or an Affiliate shall be fully vested and nonforfeitable. In any
event, the interest of any Participant in his Accounts attributable to Profit
Sharing Contributions, Salary Reduction Contributions, Rollover Contributions
and
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39
Voluntary Contributions shall at all times be fully vested and nonforfeitable.
(b) The unvested portion of a former Participant's Account shall be
forfeited as of the earlier of the date as of which the former Participant
received a distribution of the vested portion of his Accounts pursuant to
Article IX or he incurs five consecutive one-year Breaks in Service. If 100% of
the vested portion of his Accounts is zero, the individual shall be deemed to
have received a distribution of such amount. All such forfeited amounts, reduced
by any forfeited amounts restored to Participant's Accounts pursuant to
paragraph (c) below, shall be applied to reduce future contributions required of
participating Employers.
(c) Following his termination of Service, if a Participant receives a
distribution from his Account in an amount less than 100% of the balance in that
Account and he subsequently resumes employment with an Employer, he may repay to
the Trust Fund the full amount of his prior distribution from his Account
provided that (a) he has not incurred five one-year Breaks in Service and (b)
the repayment is made prior to five years after his resumption of employment. In
the event of such repayment, the amount of his prior distribution plus any
amounts forfeited shall be restored to his Account and upon his subsequent
termination of Service, his vested interest shall include amounts previously
forfeited. In the event such a Participant does not repay the amount of his
prior distribution, his vested interest shall be based only on contributions
made subsequent to his date of reemployment.
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40
(d) If a Participant who has withdrawn all or a portion of his
Accounts attributable to Matching Contributions pursuant to Section 7.2, his
vested interest in his Accounts attributable to Matching Contributions shall be
equal to:
P (AB + D)- D
where P equals the vesting percentage determined under the schedule in
subparagraph (a) at the relevant time, AB equals his account balance
attributable to Matching Contributions at the relevant time and D equals the
amount of the distribution.
ARTICLE VII
WITHDRAWALS DURING SERVICE
7.1 IN-SERVICE WITHDRAWALS (OTHER THAN FOR HARDSHIP). Upon Notice to
the Committee a Participant, while he is still an Employee, shall be entitled to
withdraw in cash as of such Valuation Date, in the following order:
(a) up to the amount of his Voluntary Contributions made prior to
January 1, 1987, under the Plan (not including earnings thereon) not
previously withdrawn;
(b) up to the amount attributable to his unmatched Voluntary
Contributions (including earnings thereon) made subsequent to December 31,
1986, under the Plan not previously withdrawn;
(c) an amount, as designated by the Participant, up to the value of
the earnings on the amount referred to in (a) above;
(d) up to the amount attributable to matched Voluntary Contributions
(including earnings thereon)
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41
made on or subsequent to May 1, 1993; provided, however, that in the event
of a withdrawal of such amount, the Participant shall not be eligible to
receive a Matching Contribution until the expiration of the three-month
period immediately following the receipt of the withdrawal (although he
will be eligible to share in Profit Sharing Contributions, have Salary
Reduction Contributions contributed on his behalf and contribute Voluntary
Contributions);
(e) in the case of a Participant who has attained age 59-1/2, amounts
attributable to that portion of the Profit Sharing Contributions made on
his behalf at least two years prior to the date of withdrawal (except that
such two-year limitation shall not apply if he has been a Participant in
the Plan--including participation in a Predecessor Plan--for a continuous
period of at least five years); and
(f) up to the amount attributable to his Rollover Contributions
(including earnings thereon) under the Plan not previously withdrawn.
The minimum amount of any withdrawal by a Participant under this Section 7.1
shall be equal to the lesser of (i) 10% of the Participant's interest in the
Funds, or (ii) $1,000.
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42
7.2 HARDSHIP WITHDRAWALS. If a Participant has withdrawn the maximum
amount permitted under Section 7.1, the Committee, under uniform rules
prescribed by it, shall permit a withdrawal of the remaining amount allocated to
his Accounts other than (i) Profit Sharing Contributions not subject to a Cash
Distribution election, (ii) any earnings attributable to Profit Sharing
Contributions that were credited to his Accounts after December 31, 1988, or
(iii) earnings attributable to Salary Reduction Contributions. A withdrawal for
hardship shall be made from the Participant's Accounts in the following order:
(a) up to the amount attributable to unmatched Salary Reduction
Contributions and Optional Deferrals (including earnings thereon credited
to his Accounts on or prior to December 31, 1988);
(b) up to the amount of matched Salary Reduction Contributions; and
(c) up to the amount attributable to vested Matching Contributions
(including earnings thereon).
For these purposes, a withdrawal for financial hardship may be made
only if it is on account of an immediate and heavy financial need of the
Participant and is necessary to satisfy such financial need. An immediate and
heavy financial need shall be considered to exist only if it arises from one or
more of the following circumstances:
(1) medical expenses, as described in Section 213(d) of the Code,
incurred or to be incurred by his spouse, child or other dependent (as
defined in Code Section 152);
(2) costs directly related to the purchase of a principal residence,
excluding mortgage payments, for the Participant or former Participant;
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43
(3) tuition payments and educational fees for the next 12 months of
post-secondary education for the Participant, his spouse, children or other
dependents;
(4) the need to prevent eviction from, or foreclosure on the mortgage
of, the Participants principal residence; and
(5) any other financial need as may be deemed by the Internal Revenue
Service to constitute an immediate and heavy financial need.
The following conditions must be satisfied for a hardship withdrawal:
(A) the withdrawal may not exceed the amount needed to satisfy the Participant's
immediate financial need created by the hardship (including any taxes or
penalties reasonably anticipated to result from the hardship withdrawal); (B)
the Participant must have obtained all distributions (other than hardship
distributions under other plans) and all nontaxable loans under all plans
maintained by the Corporation or an Affiliate; (C) the Participant will be
suspended from having Optional Deferrals and Salary Reduction Contributions made
on his behalf and from making Voluntary Contributions under the Plan and from
making before-tax contributions or after-tax contributions under any other plan
(other than a welfare plan) maintained by the Corporation or an Affiliate until
the expiration of the 12-month period immediately following the receipt of the
withdrawal; and (D) the maximum dollar amount applicable to Optional Deferrals
and Salary Reduction Contributions for the Year immediately following the Year
in which the hardship withdrawal occurs shall be reduced by the aggregate of the
Participant's Optional Deferrals and Salary Reduction Contributions for the Year
in which the hardship withdrawal occurs.
7.3 COMPLETE WITHDRAWAL. In the event of a complete withdrawal, there
shall be paid in cash to the Participant an amount equal to his payroll
deductions made
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44
subsequent to the applicable Valuation Date for such withdrawal.
7.4 PAYMENTS. All withdrawals pursuant to Sections 7.1 and 7.2 shall
be made by Notice to the Committee. The Participant shall designate the Fund or
Funds from which the withdrawal is to be made. The withdrawal shall be made
promptly but in no event later than 30 days following Notice to the Committee.
Payments of such withdrawals shall be made as provided in Article X.
7.5 ROLLOVER CONTRIBUTIONS. Rollover Contributions shall be treated as
Profit Sharing Contributions, except that solely for the purposes of this
Article VII, amounts transferred under the terms of the Plan in existence
immediately prior to January 1, 1985, shall be treated as Voluntary
Contributions to the extent that they represent the Participant's own
contributions from an employees' trust described in Section 401(a) of the Code.
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45
ARTICLE VIII
LOANS
8.1 AMOUNT OF LOANS. On the request of a Participant, the Committee
may, in its sole discretion and on such terms and conditions as it shall
prescribe under uniform rules, direct the Trustee to make a loan to the
Participant from the Trust Fund. Any such loan shall be secured by 50% of the
value of the Participant's Accounts in the Plan and shall be for a minimum
amount of $500. The maximum aggregate amount of any loan outstanding with
respect to a Participant at any time shall not exceed the lesser of (i) $50,000,
reduced with respect to loans made, modified or extended after December 31,
1986, by the excess of the highest outstanding loan balance during the one-year
period preceding the date of such loan, over the outstanding loan balance on the
date of such loan or (ii) for loans granted or renewed after October 18, 1989,
50% of the value of such Participant's Accounts.
8.2 PAYMENT OF LOAN. Upon the granting of a loan to a Participant,
that portion of the Participant's interest in his Account shall be redeemed in
the manner described in Section 10.1 and transferred to the Participant. The
Participant shall designate the Fund or Funds from which the loan is to be made.
Upon repayment of principal amounts of the loan and interest, such amounts shall
be reinvested in the same Fund or Funds as current contributions of the same
character as are used to secure the loan are invested or as the Participant
directs, if the Participant is not making current contributions.
8.3 TERMS OF LOAN. Each loan shall be for a period of not more than
five years; PROVIDED, HOWEVER, that such five-year maximum period shall not
apply to a loan used to acquire a dwelling unit used as a principal residence of
the Participant. In no event will the term of any loan exceed 10 years. Each
loan shall bear interest on the unpaid balance thereof at a rate for each
successive
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46
calendar year or part thereof, beginning with the year in which the loan is
made, equal to a rate determined by the Committee; provided, however, that
effective January 1, 1990, such rate shall be equal to one percentage point
above the prime interest rate charged by J. P. Morgan & Co. Incorporated on the
date the application for the loan is received by the Committee (or its
delegatee).
8.4 REPAYMENT OF LOAN. Each loan shall be repaid by whichever of the
following methods shall be requested by the Participant and agreed to by the
Committee:
(a) equal installment payments of principal and interest (although the
amount of principal and interest in each installment may vary), to be
deducted from the Participant's Compensation in each of his pay periods; or
(b) with respect to loans other than loans made, modified or extended
after December 31, 1986, payment of principal at the conclusion of the term
of the loan and annual payments of interest.
Any loan may be prepaid in full at any time by payment by the Participant of the
unpaid principal and accrued interest of such loan.
8.5 DEFAULT. If a Participant defaults on any installment payment of
principal or interest on a loan, the entire unpaid principal amount of such
loan, together with any unpaid accrued interest thereon, shall immediately
become due and payable and shall be satisfied from his interest in his Accounts
determined as of the Valuation Date next preceding the date of default;
PROVIDED, HOWEVER, that no amount in the individual's Accounts will be debited
prior to his termination of employment to the extent such amounts cannot be
withdrawn pursuant to Article VII.
8.6 TERMINATION OF SERVICE OR PLAN. In the absence of a default and in
the event that (a) a Participant
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47
who has a loan outstanding shall terminate Service for any reason or (b) the
Plan is terminated, the entire unpaid principal amount of such loan, together
with any unpaid interest thereon, shall become immediately due and payable and
shall be paid by payment of such amounts in cash by or on behalf of the
Participant. If such cash payment is not made, the loan shall be satisfied as if
a default had occurred.
8.7 MAXIMUM NUMBER OF LOANS. Anything in the Plan to the contrary
notwithstanding, a Participant shall not have more than one loan made pursuant
to this Article VIII outstanding at any time.
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48
ARTICLE IX
DISTRIBUTIONS UPON TERMINATION OF SERVICE
9.1 TERMINATION OF SERVICE. A Participant whose Service terminates for
any reason shall receive his interest in the Funds. Such interest shall be
distributed as soon as practicable following his termination of employment;
PROVIDED, HOWEVER, that if the value of the Participant's Accounts exceeds
$3,500 such distribution shall not be made prior to the Valuation Date
coinciding with or next following his 65th birthday without his consent. Subject
to Section 9.2, in the event the Participant does not consent to an immediate
distribution of his Accounts, he may elect to receive his distribution as of any
Valuation Date up to the Valuation Date coinciding with or next following his
65th birthday. Such distribution shall be made in a lump sum unless prior to his
distribution date he has elected by Notice to the Committee to receive his
interest in the Funds in annual, quarterly, or monthly installments; PROVIDED,
HOWEVER, that the period over which such installments shall be paid may not
exceed the life expectancy of the Participant or the joint life expectancy of
the Participant and his Beneficiary, determined as of the date of the
Participant's benefit commencement date. The minimum amount of such installments
required to be distributed in any Year shall be determined in accordance with
Code Section 401(a)(9) and the regulations issued thereunder. To the extent any
provision of the Plan is inconsistent with such Code section or such
regulations, the Plan provisions shall be disregarded.
9.2 DEFERRED DISTRIBUTION. Notwithstanding anything to the contrary
contained in Section 9.1, if the value of a Participant's Accounts exceeds
$3,500, and his Service terminates (a) because of Disability or (b) for any
reason other than Disability after attainment of his early retirement date as
defined in the J. & W. Seligman & Co. Incorporated Retirement Income Plan, he
may elect by Notice to the Committee to defer his distribution until any
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49
specified date no later than April 1 of the Year following the Year in which he
attains age 70-1/2. The period of deferral may later be reduced upon his
request.
9.3 COMMENCEMENT OF BENEFITS. Notwithstanding anything herein
contained to the contrary, the distribution of a Participant's interest in the
Funds shall commence no later than the April 1 of the Year following the Year in
which such Participant attains age 70-1/2, even though he continues to be a
Participant after such date. Unless a Participant (or former Participant) elects
otherwise by Notice to the Committee, distributions to a former Participant
shall be made or installment payments shall commence not later than the 60th day
after the end of the Plan Year in which occurs the later of (i) his attainment
of age 65 or (ii) the date on which his employment with an Employer terminates.
ARTICLE X
PAYMENTS OF DISTRIBUTIONS AND WITHDRAWALS
10.1 DISTRIBUTIONS. Subject to Section 10.6, all distributions and
withdrawals shall be equal to the value of the number of shares and fractions
thereof which are withdrawn, valued as of the close of business on the Valuation
Date as of which payment is made. Payment of distributions shall be made as soon
as is reasonably practicable after the date of the event giving rise to the
distribution.
10.2 PAYMENTS. Distributions and withdrawals shall be paid in cash.
10.3 DESIGNATION OF BENEFICIARY. A Participant may by Notice to the
Committee designate one or more Beneficiaries to receive his interest on his
death. Such a designation may be changed or revoked from time to time by Notice
to the Committee and the last designation received by
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50
the Committee shall be controlling. However, a change or revocation shall not be
effective prior to its receipt by the Committee prior to the Participant's
death. The Beneficiary of a married Participant shall be his surviving spouse,
unless such spouse consents to the designation of someone else as Beneficiary in
a document filed with the Committee that acknowledges the effect of such
election and is witnessed by a notary public or a Plan representative. Such
consent shall not be required if it is established to the satisfaction of the
Committee that the consent cannot be obtained because there is no surviving
spouse, the spouse cannot be located or because of such other circumstances as
may be prescribed in regulations issued by the Secretary of the Treasury. In the
event that a Participant dies without a surviving spouse and without having in
effect at the time of his death a designation of a Beneficiary made as
aforesaid, the Beneficiary shall be, in the following order of priority, his (a)
child or children, PER STIRPES, (b) parents in equal shares or (c) estate.
10.4 DEATH BENEFITS. Upon the death of a Participant, his Account
shall be paid to his Beneficiary in a lump sum. If there is doubt as to the
right of any Beneficiary to receive any amount, the Trustee may either retain
such amount until the rights thereto are determined or pay such amount into any
court of appropriate jurisdiction with no further liability to anyone.
10.5 PAYMENTS TO MINORS OR OTHER PERSONS UNDER A DISABILITY. If any
person to whom benefits are otherwise payable is under the age of 18 or is, in
the opinion of the Committee, not able to care for his affairs because of
physical or mental disability, the Committee may, in its sole discretion, direct
the benefits otherwise payable to such person to be made to a third person who,
in the opinion of the Committee, may be expected to apply the payments for the
benefit of the minor or disabled person, without any responsibility on the part
of the Committee or the Trustee in respect of the application of such payments.
Payments so made shall operate as a complete discharge of any and all
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51
obligations of the Committee, the Trustee and the Trust Fund.
10.6 DIVIDENDS OR CAPITAL GAIN DISTRIBUTIONS. Anything in the Plan to
the contrary notwithstanding, in the event of the intended distribution or
withdrawal of the total interest of a Participant in any Fund during the period
between (a) the record date for payment of any dividend or capital gains
distribution declared in respect of shares of such Fund and (b) the date
additional shares shall have been credited to such Participant on account of
such dividend or capital gains distribution, then one share of such Participant
shall remain in such Fund, unless such retention in such Fund would prevent the
Participant from receiving a "lump-sum distribution" within the meaning of
Section 402 of the Code.
10.7 PREDECESSOR PLAN. Amounts transferred to the Trust Fund by a
participant or former participant in a Predecessor Plan and not otherwise
payable under this Plan shall be distributed in accordance with the applicable
provisions of such Predecessor Plan.
10.8 DIRECT ROLLOVERS. Effective for distributions equal to or more
than $200 made on or after January 1, 1993, notwithstanding anything contained
in the Plan to the contrary, a distributee, as defined below, may elect, in
accordance with procedures established by the Committee, to have all or any
portion of an eligible rollover distribution (as defined in Code Section
402(c)(4)) paid directly into an individual retirement account, individual
retirement annuity or a qualified trust in a direct rollover, provided that in
the case of a qualified trust, the terms of the related plan permit the
acceptance of such distributions and the eligible distributee is not the
Participant's surviving spouse.
A distributee includes a Participant, former Participant, the
surviving spouse of a Participant or former Participant or an alternate payee
under a qualified domestic
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52
relations order who is the spouse or former spouse of the Participant or former
Participant.
ARTICLE XI
THE TRUST FUND
11.1 TRUST FUND. The Trust Fund shall be held, invested, reinvested,
used and disbursed by the Trustee in accordance with the directions of the
Participants which shall be in accordance with the provisions of the Plan and
the Trust Agreement. Subject to the provisions of the Act, no person shall have
any interest in, or right to, the Trust Fund or any part thereof, except as
expressly provided in the Plan or the Trust Agreement.
11.2 TRUSTEE. The Board may remove the Trustee at any time upon the
notice required by the provisions of the Trust Agreement, and if the Trustee
resigns or is so removed, the Board shall designate a successor trustee.
11.3 PROHIBITION AGAINST DIVERSION. Except as provided in this Section
11.3, no part of the assets of the Trust Fund shall, by reason of any
modification, amendment, termination or otherwise, be used for or diverted to
purposes other than for the exclusive benefit of Participants and their
Beneficiaries. Any contribution made by an Employer under a mistake of fact may
be returned to the Employer within one year after the payment of the
contribution. All contributions are conditioned on their deductibility and to
the extent any deduction is disallowed, the contribution may be returned to the
Employer within one year after the disallowance of the deduction. Both such
returned contributions shall be reduced by Trust Fund losses attributable
thereto but shall not be increased by Trust Fund gains attributable thereto.
11.4 RECORDKEEPING. Interests in the Funds may, pursuant to directions
of the Trustee, be maintained by the
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53
Agent in book credit form. Interest in the Funds may be registered in the name
of the Trustee or its nominee or held in such other form as will pass by
delivery.
11.5 EXPENSES. Brokerage commissions and transfer taxes incurred in
connection with the purchase or sale of securities shall be added to the cost
thereof or deducted from the proceedst thereof, as the case may be. All other
costs and expenses, including administrative expenses, of the Plan shall be paid
by the Employers in proportion to the value of the assets held by the Trustee
attributable to Participants employed by each Employer if not paid out of the
Trust Fund.
11.6 VOTING. Each Participant shall be entitled to instruct the
Trustee as to the manner in which the securities in the Funds represented by
shares credited to his Account in the Funds are to be voted. The Trustee, either
itself or by such proxy as it may select, shall vote the securities in
accordance with such instructions, if any, or in the absence of such
instructions, in accordance with the instructions of the Committee. If no such
instructions are received from the Committee, the shares shall not be voted.
ARTICLE XII
VALUATION OF INTERESTS AND STATEMENTS OF ACCOUNTS
12.1 VALUATION. The value of a Participant's interest in each Fund as
of any Valuation Date shall be determined by multiplying the number of shares or
units (carried to three decimal places) to his credit in such Fund on such Date
by the value of a share or unit in such Fund at the close of business on such
Date.
12.2 CHANGES IN VALUATION. In the event a Participant's interest in a
Fund is increased by a contribution or reduced by a distribution or withdrawal
on a
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54
Valuation Date, the number of shares or units to his credit in such Fund shall
be increased or reduced, as the case may be, on the basis of the value of a
share or unit in such Fund on the close of business on such Date. All
calculations for a Valuation Date shall be made as soon as practicable after
such Date.
12.3 STATEMENT OF ACCOUNT. As soon as practicable after the end of
each Year, the Committee shall deliver to each Participant a statement setting
forth his interest in the Funds as of the last day of such Year. At the time of
any distribution or withdrawal of a Participant's interest in the Funds, the
Committee shall deliver to the person receiving the payment a statement showing
how the amount of the payment was computed. To the extent permitted by law, any
statement given by the Committee pursuant to this Section 12.3 shall be deemed
correct unless Notice to the Committee is given to the contrary within 90 days
after delivery of the statement.
ARTICLE XIII
ADMINISTRATION
13.1 APPOINTMENT OF COMMITTEE. The Plan shall be administered by a
Committee consisting of three or more Employees who shall be appointed or
removed from time to time with the approval of the boards of directors of each
of the Employers. A Participant may be a member of the Committee. No member of
the Committee shall receive compensation for his services as such. The Committee
shall report to the Employers annually and at such other times as they may
request.
13.2 POWERS OF THE COMMITTEE. The Committee shall have all powers
necessary to administer the Plan except to the extent that any such powers are
vested in any other person by the Plan or the Committee. The Committee may from
time to time establish rules for the administration
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55
of the Plan, and it shall have the exclusive right to interpret the Plan and to
decide any matters arising in connection with the administration and operation
of the Plan. All its rules, interpretations and decisions shall be applied in a
uniform manner to all persons similarly situated, and shall be conclusive and
binding on the Employers and on Participants and their Beneficiaries to the
extent permitted by law.
13.3 PROCEDURES OF THE COMMITTEE. A majority of the members of the
Committee at the time in office shall constitute a quorum for the transaction of
business. All resolutions or other action taken by the Committee shall be by
vote of a majority of its members present at any meeting or, without a meeting,
by an instrument in writing signed by all its members.
13.4 DELEGATION OF DUTIES. The members of the Committee shall elect
one of their number as chairman, and shall elect a secretary who may, but need
not, be one of their number. The Committee may allocate any of its powers or
duties among its members or designate others to carry out any of its powers or
duties. It may authorize one or more of its members to execute or deliver any
instrument or to make any payment on its behalf. It may employ such counsel and
agents and require such clerical, medical, accounting and actuarial services as
it may require to carry out the provisions of the Plan, and to the extent
permitted by law it shall be entitled to rely upon all tables, valuations,
certificates, opinions or other reports furnished by such persons.
13.5 PAYMENT OF EXPENSES. All expenses that arise in connection with
the administration of the Plan and the Trust Agreement shall be paid by the
Employers if not paid out of the Trust Fund in accordance with Section 11.5.
13.6 DUTIES AND RESPONSIBILITIES OF THE COMMITTEE. (a) Every person
who has any responsibilities with respect to the Plan shall discharge such
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56
responsibilities solely in the interest of the Participants and their
Beneficiaries, for the exclusive purpose of providing benefits to such persons
and defraying reasonable expenses of administering the Plan, and with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of like character and with like aims.
(b) The members of the Board, the members of the Committee and any
person the Committee may designate to carry out any of its duties under the Plan
may employ persons to render advice with regard to any responsibility they may
have under the Plan.
(c) No person shall be liable for any of his own acts or omissions
with respect to the Plan, or for the acts or omissions of any other person with
respect to the Plan, except to the extent required by the Act.
(d) Any person or group of persons may serve in more than one
fiduciary capacity under the Plan.
13.7 INDEMNIFICATION. The Employers shall indemnify each member of the
Committee against all liabilities and expenses, including attorneys' fees,
reasonably incurred by him in connection with any actual or threatened legal
action to which he is or might be a party by reason of his membership on the
Committee, except with respect to any matters as to which he shall be adjudged
to be liable for gross negligence or willful misconduct in the performance of
his duty as such a member.
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57
ARTICLE XIV
CLAIMS PROCEDURE
<PAGE>
58
All claims for benefits under the Plan by a Participant or Beneficiary
shall be made in writing to a person designated by the Committee for such
purpose. If the designated person receiving a claim for benefits believes that
the claim should be denied, he shall notify the claimant in writing of the
denial of the claim within 90 days (180 days, if the claimant is notified within
the initial 90 day period that an extension is necessary) after his receipt
thereof. Such notice shall (a) set forth the specific reason or reasons for the
denial, making reference to the pertinent provisions of the Plan or the Plan
documents on which the denial is based, (b) describe any additional material or
information that should be received before the claim request may be acted upon
favorably, and explain why such material or information, if any, is needed and
(c) inform the person making the claim of his right pursuant to this Article XIV
to request review of the decision by the Committee. Any such person who believes
that he has submitted all available and relevant information may appeal the
denial of a claim to the Committee by submitting a written request for review to
the Committee within 60 days after the date on which such denial is received.
Such period may be extended by the Committee for good cause shown. The person
making the request for review may examine pertinent Plan documents. The request
for review may discuss any issues relevant to the claim. The Committee shall
decide whether or not to grant the claim within 60 days after receipt of the
request for review, but this period may be extended by the Committee for up to
an additional 60 days in special circumstances. If such an extension of time for
review is required because of special circumstances, written notice of the
extension shall be furnished to the claimant prior to the commencement of the
extension. The Committee's decision shall be in writing, shall include specific
reasons for the decision and shall refer to pertinent provisions of the Plan or
of Plan documents on which the decision is based.
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ARTICLE XV
AMENDMENT OR TERMINATION OF THE PLAN OR
DISCONTINUANCE OF EMPLOYER CONTRIBUTIONS
15.1 AMENDMENT. The Corporation (for itself and the other Employers)
may at any time amend the Plan by action of the Board, but no such amendment
shall have the effect of revesting in any Employer any part of the Trust Fund or
of diverting the Trust Fund to purposes other than for the exclusive benefit of
Participants and their Beneficiaries or of reducing the interest in the Trust
Fund of Participants and their Beneficiaries at the date of such amendment.
15.2 TERMINATION. The Employers expect to continue the Plan
indefinitely, but the continuance of the Plan and the payment of Employer
Contributions for any Year are not contractual obligations. The Corporation
reserves the right, by action of the Board, to terminate the Plan or to
discontinue contributions thereunder. On the complete discontinuance of Employer
Contributions or on the total or partial termination of the Plan, the interest
of each affected Participant shall become immediately fully vested and
nonforfeitable and shall become payable as of the Valuation Date coinciding with
or next following the date of such discontinuance or termination.
15.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS OR LIABILITIES. In
the event of any merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Plan to, any other plan,
each Participant shall (if such other plan then terminates) be entitled to
receive a benefit immediately after such merger, consolidation or transfer which
is equal to or greater than the benefit he would have been entitled to receive
immediately before such merger, consolidation or transfer (if the Plan had then
terminated).
15.4 WITHDRAWAL OF EMPLOYER. Anything in the Plan to the contrary
notwithstanding, if at any time a
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60
corporation which is an Employer hereunder shall cease to be an Employer, the
Trustee shall determine that portion of the Trust Fund which is applicable to
any employees of such corporation who were Participants and shall pay such
portion to, or for the benefit of, such employees or apply such portion by
payment thereof to the trustee of any profit sharing or similar plan of such
corporation (or any successor thereto) or otherwise, all as such corporation
shall direct.
ARTICLE XVI
GENERAL PROVISIONS
16.1 PLAN IS NOT A CONTRACT OF EMPLOYMENT. The Plan shall not be
deemed to constitute a contract between any Employer and any Employee or to be a
consideration for, or an inducement for, the employment of any Employee by an
Employer. Nothing contained in the Plan shall be deemed to give any Employee the
right to be retained in the employ of an Employer or to interfere with the right
of an Employer to discharge or to terminate the employment of any Employee at
any time without regard to the effect that such discharge or termination may
have on any rights under the Plan.
16.2 PLAN IS FOR THE EXCLUSIVE BENEFIT OF BENEFICIARIES. Anything in
the Plan to the contrary notwithstanding, no part of the property of the Trust
Fund shall, by reason of any modification, amendment or termination, or
otherwise, be used for or diverted to purposes other than for the exclusive
benefit of Participants and their Beneficiaries.
16.3 NONALIENATION OF BENEFITS. Except as may be required to comply
with a qualified domestic relations order under Section 414(p) of the Code, any
benefit payable under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, lien
or charge, and any attempt to cause any such benefit to
<PAGE>
61
be so subjected shall not be recognized except to such extent as may be required
by law.
16.4 APPLICABLE LAW. The Plan shall be construed and its provisions
enforced and administered in accordance with the laws of the State of New York
except as any of such laws may be superseded by the Act. Anything in the Plan or
any amendment thereof to the contrary notwithstanding, no provision of the Plan
shall be so construed as to violate the requirements of the Act or the
requirements of the Code necessary for qualification of the Plan under Section
401(a) thereof.
<PAGE>
62
EXHIBIT A
TOP-HEAVY PROVISIONS
Effective January 1, 1984, the following special provisions shall
apply to determine if the Plan is a Top Heavy Plan in accordance with Section
416 of the Code and any special rules that will apply based on such status. In
the event that the provisions contained in this Exhibit A are inconsistent with
the terms contained in the remainder of the Plan, the provisions contained in
this Exhibit A shall take precedence.
ARTICLE I
DEFINITIONS
Aggregation Group: All plans maintained by the Corporation or an
Affiliate that are qualified under the Code,
provided that each such plan satisfies at
least one of the following requirements:
(a) one or more Key Employees are
participants;
(b) the plan enables any plan in which a
Key Employee is a participant to comply with
the coverage and nondiscrimination
requirements of Sections 401(a)(4) and 410 of
the Code; or
(c) such plan has been designated as part
of the Aggregation Group, provided
<PAGE>
63
that the resulting Aggregation Group meets the
coverage and nondiscrimination requirements of
Sections 401(a)(4) and 410 of the Code.
Determination Date: With respect to any Year, the last day of the
preceding Year.
Key Employee: With respect to any Year, an employee or
former employee of the Corporation or an
Affiliate (or beneficiary of such individual)
who is a key employee determined in accordance
with Section 416 of the Code and any
regulations issued thereunder. The
determination as to whether an individual is a
Key Employee shall be based, where applicable,
on a Participant's annual total pay as
described in Code Section 414(q)(7).
Non-Key Employee: With respect to any Year, a Participant who is
not a Key Employee.
Top-Heavy Plan: With respect to any Year, the Plan, if it is
included in the Aggregation Group, and as of
the Determination Date for such Year, the sum
of:
(a) the aggregate Accounts for all Key
Employees under the Plan; and
<PAGE>
64
(b) the aggregate account values and the
aggregate present values of accrued benefits
(excluding amounts attributable to rollover
contributions) for all Key Employees under all
other plans in the Aggregation Group, exceeds
60% of all such aggregate values for all
individuals under all plans in the Aggregation
Group. In determining the value of any
individual's account or the present value of
his accrued benefits:
(1) the value of such account or the
present value of such accrued benefits shall
be increased by the sum of the distributions
made with respect to such individual from such
plan during the five-year period ending on the
Determination Date; and
(2) the present value of his accrued
benefits under a defined benefit plan shall be
determined by using a five percent interest
rate assumption and the mortality table used
to determine a benefit that is the actuarial
equivalent of another benefit under such plan.
Effective January 1, 1985, the value of an
individual's account or the present value of
his accrued
<PAGE>
65
benefits shall not be considered in
determining if the Plan is a Top-Heavy Plan if
the individual has not performed any services
for an Employer at any time within the
five-year period ending on the Determination
Date.
Effective January 1, 1987, the accrued benefit
of a Non-Key Employee shall be determined
under the method that is used for accrual
purposes under all plans in the Aggregation
Group, or if there is no such method, as if
such benefit accrued not more rapidly than the
slowest accrual rate determined under Section
411(b)(1)(C) of the Code.
Top-Heavy Year: A year in which the Plan is a Top-Heavy Plan.
<PAGE>
66
ARTICLE II
MINIMUM ALLOCATION
Each Participant who on the last day of any Top-Heavy Year (a) is a
Non-Key Employee and (b) does not participate in a defined benefit plan
maintained by the Corporation or an Affiliate that provides that the minimum
benefit requirements applicable to top-heavy plans will be satisfied in such
other plan shall receive a minimum allocation of aggregate Employer
Contributions (excluding Optional Deferrals and Salary Reduction Contributions)
for such Year equal to a percentage of his total pay (as described in Treasury
Regulation Section 1.415-2(d)) up to $150,000 (as adjusted by the Secretary of
the Treasury to reflect increases in the cost of living) received in such Year.
Such percentage shall be equal to the lesser of three percent or the highest
percentage at which Employer Contributions (including Optional Deferrals and
Salary Reduction Contributions) are allocated to the Accounts of any Key
Employee for such Year (when expressed as a percentage of such Key Employee's
total pay up to $150,000, as adjusted). To the extent necessary to provide this
minimum allocation, the allocations to the Accounts of Key Employees shall be
reduced proportionately.
ARTICLE III
DUAL PLAN LIMIT
For any Top-Heavy Year, the denominator of the "defined contribution
plan fraction" and the "defined benefit plan fraction" (as determined under
Section 415(e) of the Code and the regulations promulgated thereunder) shall be
calculated by using a factor of 1.0 rather than 1.25.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
OF EACH OF:
<TABLE>
<CAPTION>
<S> <C>
Seligman Capital Fund, Inc. Seligman International Fund Series, Inc.
Seligman Cash Management Fund, Inc. Seligman Mutual Benefit Portfolios, Inc.
Seligman Common Stock Fund, Inc. Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Communications & Seligman Pennsylvania Tax-Exempt Fund Series
Information Fund, Inc. Seligman Quality Municipal Fund, Inc.
Seligman Frontier Fund, Inc. Seligman Select Municipal Fund, Inc.
Seligman Growth Fund, Inc. Seligman Tax-Exempt Fund Series, Inc.
Seligman High Income Fund Series Tri-Continental Corporation
Seligman Income Fund,Inc.
</TABLE>
1. ELECTION TO DEFER PAYMENTS. Any member of the Board of
Directors/Trustees of the Fund/Series may elect to have payment
of the director's/trustees' annual retainer or meeting fees or
both for Board service deferred as provided in this Plan. The
election shall be made in writing prior to, and to take effect
from, the beginning of a calendar year, or for any
director/trustee in the year in which this Plan is adopted or
for a person elected a director/trustee in other than the last
calendar quarter of a year, prior to, and to take effect from,
the beginning of the calendar quarter next ensuing after that
event. Elections shall continue in effect until terminated in
writing, any such termination to take effect on the first day
of the calendar year beginning after receipt of the notice of
termination. An election shall be irrevocable as to payments
deferred in conformity with that election.
2. DEFERRED PAYMENT ACCOUNT. Each deferred retainer or fee shall
be credited at the time when it otherwise would have been
payable to an account to be established in the name of the
director/trustee on the books of the Fund/Series. All amounts
in such account, including interest credited thereto, shall
bear interest at a rate equivalent to the rate of return earned
on 90-day Treasury Bills in each calendar quarter. Such
interest shall be credited to the account quarterly at the end
of each calendar quarter. Amounts in the account shall not be
evidenced by any note or other security, funded or secured in
any way.
3. PAYMENT OF DEFERRED AMOUNTS. All amounts credited to an account
pursuant to any election by the director/trustee made as
provided in (1) above shall be paid to the director/trustee.
(a) in, or beginning in, the calendar year following
the calendar year in which the director/trustee
ceases to be a director/trustee of the
Fund/Series, or
(b) in, or beginning in, the calendar year following
the earlier of the calendar year in which the
director/trustee ceases to be a director/trustee
of the Fund/Series or attains age 70, and shall
be paid
<PAGE>
(c) in a lump sum payable on the first day of the
calendar year in which payment is to be made, or
(d) in 10 or fewer installments, payable on the
first day of each year commencing with the
calendar year in which payment is to begin,
all as the director/trustee shall specify in making the
election. If the payment is to be made in installments, the
amount of each installment shall be equal to a fraction of the
total of the amounts in the account at the date of the payment,
the numerator of which shall be one and the denominator of
which shall be the then remaining number of unpaid installments
(including the installment then to be paid). If the
director/trustee dies at any time before all amounts in the
account have been paid, such amounts shall be paid at that time
in a lump sum to the estate of the director/trustee.
4. ASSIGNMENT. No deferred amount or unpaid portion thereof may be
assigned or transferred by the director/trustee except by will
or the laws of descent and distribution.
5. WITHHOLDING TAXES. The Fund/Series shall deduct from all
payments any federal, state or local taxes and other charges
required by law to be withheld with respect to such payments.
6. AMENDMENTS AND ACCELERATION. The Board of Directors/Trustees of
the Fund/Series may at any time at its sole discretion
accelerate the payment of any unpaid amount for any or all
directors/trustees or terminate this Plan, provided that no
such amendment or termination shall adversely affect the right
of directors/trustees to receive deferred amounts credited to
their account.
Revised: March 19, 1992
CUSTODY AGREEMENT
THIS AGREEMENT made the -------- day of -----------, 19--, by and
between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the
laws of the state of Missouri, having its trust office located at 127 West 10th
Street, Kansas City, Missouri 64105 ("Custodian"), and SELIGMAN FRONTIER FUND,
INC. a Maryland corporation, having its principal office and place of business
at One Bankers Trust Plaza, New York, New York 10006 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company
as Custodian and Recordkeeper of the securities and monies of Fund and its now
existing and future established portfolios (individually referred to herein as
Portfolio); and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints
Custodian as custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at
any time owned by each Portfolio of the Fund; and
B. Appointment as agent to perform certain accounting and
recordkeeping functions required of a duly registered
investment company in compliance with applicable
provisions of federal, state, and local laws, rules and
regulations including, as may be required:
1
<PAGE>
1. Providing information necessary for Fund and
each Portfolio to file required financial
reports; maintaining and preserving required
books, accounts and records as the basis for
such reports; and performing
2
<PAGE>
certain daily functions in connection with
such accounts and records, and
2. Calculating daily net asset value of each
Portfolio of the Fund, and
3. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver
to Custodian prior to the effective date of this Agreement, copies
of the following documents and all amendments or supplements
thereto, properly certified or authenticated:
A. Resolutions of the Board of Directors of Fund appointing
Custodian as custodian hereunder and approving the form
of this Agreement; and
B. Resolutions of the Board of Directors of Fund
designating certain persons to give instructions on
behalf of Fund to Custodian and authorizing Custodian to
rely upon such instructions.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. DELIVERY OF ASSETS
Fund will deliver or cause to be delivered to Custodian
on the effective date of this Agreement, or as soon
thereafter as practicable, and from time to time
thereafter, all portfolio securities acquired by it and
monies then owned by it (except as permitted by the
Investment Company Act of 1940) or from time to time
coming into its possession during the time this
Agreement shall continue in effect. Custodian shall have
no responsibility or liability whatsoever for or on
account of securities or monies not so delivered. All
securities so delivered to Custodian (other than bearer
securities) shall be registered in the name of Fund or
its nominee, or of a nominee of Custodian, or shall be
properly endorsed and in form for transfer satisfactory
to Custodian.
B. DELIVERY OF ACCOUNTS AND RECORDS
3
<PAGE>
Fund shall turn over to Custodian all of the Fund's
relevant accounts and records previously maintained by
it. Custodian shall be entitled to rely conclusively on
the completeness and correctness of the accounts and
records turned over to it by Fund, and Fund shall
indemnify and hold Custodian harmless of and from any
and all expenses, damages and losses whatsoever arising
out of or in connection with any error, omission,
inaccuracy or other deficiency of such accounts and
records or in the failure of Fund to provide any portion
of such or to provide any information needed by the
Custodian knowledgeably to perform its function
hereunder.
C. DELIVERY OF ASSETS TO THIRD PARTIES
Custodian will receive delivery of and keep safely the
assets of Fund delivered to it from time to time and the
assets of each Portfolio segregated in a separate
account. Custodian will not deliver, assign, pledge or
hypothecate any such assets to any person except as
permitted by the provisions of this Agreement or any
agreement executed by it according to the terms of
section 3.S. of this Agreement. Upon delivery of any
such assets to a subcustodian pursuant to Section 3.S.
of this agreement, Custodian will create and maintain
records identifying those assets which have been
delivered to the subcustodian as belonging to the
applicable Portfolio of the Fund. The Custodian is
responsible for the safekeeping of the securities and
monies of Fund only until they have been transmitted to
and received by other persons as permitted under the
terms of this Agreement, except for securities and
monies transmitted to United Missouri Bank of Kansas
City, N.A. (UMBKC), United Missouri Trust Company of New
York (UMBTC), First National Bank of Chicago (FNBC) for
which Custodian remains responsible. Custodian shall
also be responsible for the monies and securities of
Fund(s) held by
4
<PAGE>
eligible foreign subcustodians to the extent the
domestic custodian with which the Custodian contracts is
responsible to Custodian. Custodian may participate
directly or indirectly through a subcustodian in the
Depository Trust Company, Treasury/Federal Reserve Book
Entry System, Participant Trust Company or other
depository approved by the Fund (as such entities are
defined at 17 CFR Section 270.17f-4(b)).
5
<PAGE>
D. REGISTRATION OF SECURITIES
Custodian will hold stocks and other registerable
portfolio securities of Fund registered in the name of
Fund or its nominee or in the name of any nominee of
Custodian for whose fidelity and liability Custodian
will be fully responsible, or in street certificate
form, so-called, with or without any indication of
fiduciary capacity. Unless otherwise instructed,
Custodian will register all such portfolio securities in
the name of its authorized nominee, as defined in the
Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder or in any
provision of any subsequent Federal tax law exempting
such transaction from liability for stock transfer
taxes. All securities, and the ownership thereof by a
Portfolio of the Fund, which are held by Custodian
hereunder, however, shall at all times be identifiable
on the records of the Custodian. The Fund agrees to hold
Custodian and its nominee harmless for any liability as
a record holder of securities held in custody.
E. EXCHANGE OF SECURITIES
Upon receipt of instructions as defined herein in
Section 4.A, Custodian will exchange, or cause to be
exchanged, portfolio securities held by it for the
account of the applicable Portfolio of the Fund for
other securities or cash issued or paid in connection
with any reorganization, recapitalization, merger,
consolidation, split-up of shares, change of par value,
conversion or otherwise, and will deposit any such
securities in accordance with the terms of any
reorganization or protective plan. Without instructions,
Custodian is authorized to exchange securities held by
it in temporary form for securities in definitive form,
to effect an exchange of shares when the par value of
the stock is changed, and, upon receiving payment
therefor, to surrender bonds or other securities held by
it at maturity
6
<PAGE>
or when advised of an earlier mandatory call for
redemption, except that Custodian shall receive
instructions prior to surrendering any convertible
security. Pursuant to this paragraph, the Custodian will
inform the Fund of such corporate actions and capital
changes when it is informed of them through the
publications it subscribes to.
F. PURCHASES OF INVESTMENTS OF THE FUND
Fund will, on each business day on which a purchase of
securities shall be made by it, deliver to Custodian
instructions which shall specify with respect to each
such purchase:
1. The name of the Portfolio making such
purchase;
2. The name of the issuer and description of
the security;
3. The number of shares or the principal amount
purchased, and accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the
brokerage commission, taxes and other
expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase;
and
8. The name of the person from whom or the
broker or dealer through whom the purchase
was made.
In accordance with such instructions, Custodian will pay
for out of monies held for the account of such named
Portfolio, but only insofar as monies are available
therein for such purpose, and receive the portfolio
securities so purchased by such named Portfolio, except
that Custodian may in its sole discretion advance funds
to the Fund which may result in an overdraft because the
monies held by the Custodian on behalf of the Fund are
insufficient to pay the total amount payable upon such
purchase. Such payment will be made
7
<PAGE>
only upon receipt by Custodian of the securities so
purchased in form for transfer satisfactory to
Custodian. Custodian agrees to promptly inform Fund of
any failures by sellers to make proper deliveries of
securities purchased by the Fund.
G. SALES AND DELIVERIES OF INVESTMENTS OF THE FUND - OTHER
THAN OPTIONS AND FUTURES
Fund will, on each business day on which a sale of
investment securities of Fund has been made, deliver to
Custodian instructions specifying with respect to each
such sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of
the securities;
3. The number of shares or principal amount
sold, and accrued interest, if any;
4. The date on which the securities sold were
purchased or other information identifying
the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage
commission, taxes or other expenses payable
in connection with such sale;
8. The total amount to be received by Fund upon
such sale; and
9. The name and address of the broker or dealer
through whom or person to whom the sale was
made.
In accordance with such instructions, Custodian will
deliver or cause to be delivered the securities thus
designated as sold for the account of such Portfolio to
the broker or other person specified in the instructions
relating to such sale, such delivery to be made only
upon receipt of payment therefor in such form as is
satisfactory to Custodian, with the understanding that
Custodian may deliver or cause to be delivered
securities for payment in accordance with the
8
<PAGE>
customs prevailing among dealers in securities.
Custodian agrees to promptly inform Fund of any failures
of purchasers to make proper payment for securities sold
by Fund.
H. PURCHASES OR SALES OF SECURITY OPTIONS, OPTIONS ON
INDICES AND SECURITY INDEX FUTURES CONTRACTS
Fund will, on each business day on which a purchase or
sale of the following options and/or futures shall be
made by it, deliver to Custodian instructions which
shall specify with respect to each such purchase or
sale:
1. The name of the Portfolio making such
purchase or sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening,
exercising, expiring or closing
transaction;
g. Whether the transaction involves a put
or call;
h. Whether the option is written or
purchased;
i. Market on which option traded;
j. Name and address of the broker or
dealer through whom the sale or
purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
9
<PAGE>
f. The expiration date;
g. Whether the transaction is an opening,
exercising, expiring or closing
transaction;
h. Whether the transaction involves a put
or call;
i. Whether the option is written or
purchased;
j. The name and address of the broker or
dealer through whom the sale or
purchase was made, or other applicable
settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the
contract and, when available, the
closing level, thereof;
b. The index level on the date the
contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin
account (in addition to instructions,
and if not already in the possession
of Custodian, Fund shall deliver a
substantially complete and executed
custodial safekeeping account and
procedural agreement which shall be
incorporated by reference into this
Custody Agreement); and
f. The name and address of the futures
commission merchant through whom the
sale or purchase was made, or other
applicable settlement instructions.
5. Option on Index Future Contracts
a. The underlying index futures contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
10
<PAGE>
f. Whether the transaction involves an
opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put
or call;
h. Whether the option is written or
purchased; and
i. The market on which the option is
traded.
I. SECURITIES PLEDGED OR LOANED
If specifically allowed for in the prospectus of the
applicable Portfolio of the Fund:
1. Upon receipt of instructions, Custodian will
release or cause to be released securities
held in custody to the pledgee designated in
such instructions by way of pledge or
hypothecation to secure any loan incurred by
a Portfolio of the Fund; provided, however,
that the securities shall be released only
upon payment to Custodian of the monies
borrowed, except that in cases where
additional collateral is required to secure
a borrowing already made, further securities
may be released or caused to be released for
that purpose upon receipt of instructions.
Upon receipt of instructions, Custodian will
pay, but only from funds available for such
purpose, any such loan upon redelivery to it
of the securities pledged or hypothecated
therefor and upon surrender of the note or
notes evidencing such loan.
2. Upon receipt of instructions, Custodian will
release securities held in custody to the
borrower designated in such instructions;
provided, however, that the securities will
be released only upon deposit with Custodian
of full cash collateral as specified in such
instructions, and that Fund will retain the
right to any dividends, interest or
distribution on such loaned securities. Upon
receipt of instructions and the
11
<PAGE>
loaned securities, Custodian will release
the cash collateral to the borrower.
J. ROUTINE MATTERS
Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale,
exchange, substitution, purchase, transfer, or other
dealings with securities or other property of Fund
except as may be otherwise provided in this Agreement or
directed from time to time by the Board of Directors of
Fund.
K. DEPOSIT ACCOUNT
Custodian will open and maintain a special purpose
deposit account(s) in the name of Custodian on behalf of
each Portfolio (Accounts), subject only to draft or
order by Custodian upon receipt of instructions. All
monies received by Custodian from or for the account of
a Portfolio shall be deposited in said Accounts. Barring
events not in the control of the Custodian such as
strikes, lockouts or labor disputes, riots, war or
equipment or transmission failure or damage, fire,
flood, earthquake or other natural disaster, action or
inaction of governmental authority or other causes
beyond its control, at 9:00 a.m., Kansas City time, on
the second business day after deposit of any check into
Fund's Account, Custodian agrees to make Fed Funds
available to the appropriate Portfolio of the Fund in
the amount of the check. Deposits made by Federal
Reserve wire will be available to the Fund immediately
and ACH wires will be available to the Fund on the next
business day. Income earned on the portfolio securities
will be credited to the applicable Portfolio of the Fund
based on the schedule attached as Exhibit A, except that
income earned on portfolio securities held by domestic
subcustodians other than UMBKC, UMBTC, Bank of New York
(previously Irving Trust
12
<PAGE>
Company and hereinafter referred to as BONY) and Morgan
Guaranty and Trust Company (MGT) will be credited when
received. The Custodian will be entitled to reverse any
credited amounts where credits have been made and monies
are not finally collected. If monies are collected after
such reversal, the Custodian will credit the applicable
Portfolio in that amount. Custodian may open and
maintain an Account in such other banks or trust
companies as may be designated by it and by properly
authorized resolution of the Board of Directors of Fund,
such Account, however, to be in the name of Custodian on
behalf of the applicable portfolio of the Fund and
subject only to its draft or order.
L. INCOME AND OTHER PAYMENTS TO FUND
Custodian will:
1. Collect, claim and receive and deposit for
the Account of each Portfolio of the Fund
all income and other payments which become
due and payable on or after the effective
date of this Agreement with respect to the
securities deposited under this Agreement,
and credit the account of the applicable
Portfolio of the Fund in accordance with the
schedule attached hereto as Exhibit A,
except that income earned on portfolio
securities held by domestic subcustodians
other than UMBKC, UMBTC, BONY, and MGT will
be credited when received. Income from
foreign securities and assets held by
eligible foreign subcustodians shall be
credited by Custodian upon receipt of income
from the domestic subcustodian contracting
with the foreign eligible subcustodians. If,
for any reason, the Fund is credited with
income that is not subsequently collected,
Custodian may reverse that credited amount;
13
<PAGE>
2. Execute ownership and other certificates and
affidavits for all federal, state and local
tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary
or proper in connection with:
a. the collection, receipt and deposit of
such income and other payments,
including but not limited to the
presentation for payment of:
1. all coupons and other income
items requiring presentation;
and
2. 2. all other securities which may
mature or be called, redeemed,
retired or otherwise become
payable and regarding which the
Custodian has actual knowledge,
or notice of which is contained
in publications of the type to
which a custodian for investment
companies normally subscribes
for such purpose; and
b. the endorsement for collection, in the
name of the applicable Portfolio of
the Fund, of all checks, drafts or
other negotiable instruments.
Custodian, however, will not be required to institute
suit or take other extraordinary action to enforce
collection except upon receipt of instructions and upon
being indemnified to its satisfaction against the costs
and expenses of such suit or other actions. Custodian
will receive, claim and collect all stock dividends,
rights and other similar items and will deal with the
same pursuant to instructions. Unless prior instructions
have been received to the contrary, Custodian will,
without further instructions, sell any rights held for
the account of
14
<PAGE>
Fund on the last trade date prior to the date of
expiration of such rights.
M. PAYMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS
On the declaration of any dividend or other distribution
on the shares of Capital Stock of any Portfolio
("Portfolio Shares") by the Board of Directors of Fund,
Fund shall deliver to Custodian instructions with
respect thereto, including a copy of the Resolution of
said Board of Directors certified by the Secretary or an
Assistant Secretary of Fund wherein there shall be set
forth the record date as of which shareholders entitled
to receive such dividend or other distribution shall be
determined, the date of payment of such dividend or
distribution, and the amount payable per share on such
dividend or distribution. Except if the ex-dividend date
and the reinvestment date of any dividend are the same,
in which case funds shall remain in the Custody Account,
on the date specified in such Resolution for the payment
of such dividend or other distribution, Custodian will
pay out of the monies held for the account of the
applicable Portfolio of the Fund, insofar as the same
shall be available for such purposes, and wire to the
account of the Dividend Disbursing Agent for Fund, such
amount as may be necessary to pay the amount per share
payable in cash on Portfolio Shares issued and
outstanding on the record date established by such
Resolution.
N. SHARES OF FUND PURCHASED BY FUND
Whenever any Portfolio Shares are repurchased or
redeemed by Fund, Fund or its agent shall advise
Custodian of the aggregate dollar amount to be paid for
such shares and shall confirm such advice in writing.
Upon receipt of such advice, Custodian shall charge such
aggregate dollar amount to the Account of Portfolio and
either deposit the same in the account maintained for
the purpose of paying
15
<PAGE>
for the repurchase or redemption of Portfolio Shares or
deliver the same in accordance with such advice.
Custodian shall not have any duty or responsibility to
determine that Fund Shares have been removed from the
proper shareholder account or accounts or that the
proper number of such shares have been canceled and
removed from the shareholder records.
O. SHARES OF FUND PURCHASED FROM FUND
Whenever Portfolio Shares are purchased from Fund, Fund
will deposit or cause to be deposited with Custodian the
amount received for such shares. Custodian shall not
have any duty or responsibility to determine that
Portfolio Shares purchased from Fund have been added to
the proper shareholder account or accounts or that the
proper number of such shares have been added to the
shareholder records.
P. PROXIES AND NOTICES
Custodian will promptly deliver or mail or have
delivered or mailed to Fund all proxies properly signed,
all notices of meetings, all proxy statements and other
notices, requests or announcements affecting or relating
to securities held by Custodian for Fund and will, upon
receipt of instructions, execute and deliver or cause
its nominee to execute and deliver or mail or have
delivered or mailed such proxies or other authorizations
as may be required. Except as provided by this Agreement
or pursuant to instructions hereafter received by
Custodian, neither it nor its nominee will exercise any
power inherent in any such securities, including any
power to vote the same, or execute any proxy, power of
attorney, or other similar instrument voting any of such
securities, or give any consent, approval or waiver with
respect thereto, or take any other similar action.
Q. DISBURSEMENTS
16
<PAGE>
Custodian will pay or cause to be paid insofar as funds
are available for the purpose, bills, statements and
other obligations of Fund (including but not limited to
obligations in connection with the conversion, exchange
or surrender of securities owned by Fund, interest
charges, dividend disbursements, taxes, management fees,
custodian fees, legal fees, auditors' fees, transfer
agents' fees, brokerage commissions, compensation to
personnel, and other operating expenses of Fund)
pursuant to instructions of Fund setting forth the name
of the person to whom payment is to be made, the amount
of the payment, and the purpose of the payment.
R. DAILY STATEMENT OF ACCOUNTS
Custodian will, within a reasonable time, render to Fund
as of the close of business on each day, a detailed
statement of the amounts received or paid and of
securities received or delivered for the account of Fund
during said day. Custodian will, from time to time, upon
request by Fund, render a detailed statement of the
securities and monies held for Fund under this
Agreement, and Custodian will maintain such books and
records as are necessary to enable it to do so and will
permit such persons as are authorized by Fund including
Fund's independent public accountants, access to such
records or confirmation of the contents of such records;
and if demanded, will permit federal and state
regulatory agencies to examine the securities, books and
records. Upon the written instructions of Fund or as
demanded by federal or state regulatory agencies,
Custodian will instruct any subcustodian to give such
persons as are authorized by Fund including Fund's
independent public accountants, access to such records
or confirmation of the contents of such records; and if
demanded, to permit federal and state regulatory
agencies to examine the books, records and securities
held by subcustodian
17
<PAGE>
which relate to Fund. Fund will be entitled to receive
reports produced by the Custodian's portfolio accounting
system, including without limitation, those listed on
Exhibit C hereof.
S. APPOINTMENT OF SUBCUSTODIANS
1. Notwithstanding any other provisions of this
Agreement, all of or any of the monies or
securities of Fund may be held in
Custodian's own custody or in the custody of
one or more other banks or trust companies
selected by Custodian and approved by the
Fund's Board of Directors. Any such
subcustodian must have the qualifications
required for custodian under the Investment
Company Act of 1940, as amended. The
subcustodian may participate directly or
indirectly in the Depository Trust Company,
Treasury/Federal Reserve Book Entry System,
Participant Trust Company or other
depository approved by the Fund (as such
entities are defined at 17 CFR Sec.
270.17f-4(b)). The appointment of UMBKC or
any other subcustodian, depository or
clearing agency used by the Custodian and
approved by the Fund will not relieve
Custodian of any of its obligations
hereunder except as provided in Section 3.C
hereof. The Custodian will comply with
Section 17f-4 of the Investment Company Act
of 1940, as amended, as to depositories and
clearing agencies used by Custodian and
approved the Fund. The Custodian will not be
entitled to reimbursement by Fund for any
fees or expenses of any subcustodian,
depository or clearing agency.
2. Notwithstanding any other provisions of this
Agreement, Fund's foreign securities (as
defined in Rule 17f-5(c)(1) under the
Investment Company Act of 1940) and Fund's
cash or cash equivalents, in amounts
reasonably necessary to effect Fund's
18
<PAGE>
foreign securities transactions, may be held
in the custody of one or more banks or trust
companies acting as subcustodians, according
to Section 3.S.1; and thereafter, pursuant
to a written contract or contracts as
approved by Fund's Board of Directors, may
be transferred to an account maintained by
such subcustodian with an eligible foreign
custodian, as defined in Rule 17f-5(c)(2),
provided that any such arrangement involving
a foreign custodian shall be in accordance
with the provisions of Rule 17f-5 under the
Investment Company Act of 1940 as that Rule
may be amended from time to time.
T. ACCOUNTS AND RECORDS
Custodian, with the direction and as interpreted by the
Fund, Fund's accountants and/or other tax advisors, will
prepare and maintain as complete, accurate and current
all accounts and records required to be maintained by
Fund under the Internal Revenue Code of 1986 ("Code") as
amended and under the general Rules and Regulations
under the Investment Company Act of 1940 ("Rules") as
amended, and as agreed upon between the parties and will
preserve said records in the manner and for the periods
prescribed in said Code and Rules, or for such longer
period as is agreed upon by the parties. Custodian
relies upon Fund to furnish, in writing, accurate and
timely information to complete Fund's records and
perform daily calculation of the Fund's net asset value,
as provided in Section 3.W. below. Custodian shall incur
no liability and Fund shall indemnify and hold harmless
Custodian from and against any liability arising from
any failure of Fund to furnish such information in a
timely and accurate manner, even if Fund subsequently
provides accurate but untimely information. It shall be
the responsibility of Fund to furnish Custodian
19
<PAGE>
with the declaration, record and payment dates and
amounts of any dividends or income and any other special
actions required concerning each of its securities when
such information is not readily available from generally
accepted securities industry services or publications.
U. ACCOUNTS AND RECORDS PROPERTY OF FUND
Custodian acknowledges that all of the accounts and
records maintained by Custodian pursuant to this
Agreement are the property of Fund, and will be made
available to Fund for inspection or reproduction within
a reasonable period of time, upon demand. Custodian will
assist Fund's independent auditors, or upon approval of
Fund, or upon demand, any regulatory body having
jurisdiction over the Fund or Custodian, in any
requested review of Fund's accounts and records but
shall be reimbursed for all expenses and employee time
invested in any such review outside of routine and
normal periodic reviews. Upon receipt from Fund of the
necessary information, Custodian will supply necessary
data for Fund's completion of any necessary tax returns,
questionnaires, periodic reports to Shareholders and
such other reports and information requests as Fund and
Custodian shall agree upon from time to time.
V. ADOPTION OF PROCEDURES
Custodian and Fund may from time to time adopt
procedures as they agree upon, and Custodian may
conclusively assume that no procedure approved by Fund,
or directed by Fund, conflicts with or violates any
requirements of its prospectus, "Articles of
Incorporation", Bylaws, or any rule or regulation of any
regulatory body or governmental agency. Fund will be
responsible to notify Custodian of any changes in
statutes, regulations, rules or policies
20
<PAGE>
which might necessitate changes in Custodian's
responsibilities or procedures.
W. CALCULATION OF NET ASSET VALUE
Custodian will calculate Fund's net asset value, in
accordance with Fund's prospectus, once daily. Custodian
will prepare and maintain a daily evaluation of
securities for which market quotations are available by
the use of outside services normally used and contracted
for this purpose; all other securities will be evaluated
in accordance with Fund's instructions. Custodian will
have no responsibility for the accuracy of the prices
quoted by these outside services or for the information
supplied by Fund or upon instructions.
X. OVERDRAFTS
If Custodian shall in its sole discretion advance funds
to the account of the Fund which results in an overdraft
because the monies held by Custodian on behalf of the
Fund are insufficient to pay the total amount payable
upon a purchase of securities as specified in Fund's
instructions or for some other reason, the amount of the
overdraft shall be payable by the Fund to Custodian upon
demand and shall bear an interest rate determined by
Custodian from the date advanced until the date of
payment. Custodian shall have a lien on the assets of
the Fund in the amount of any outstanding overdraft.
21
<PAGE>
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written
or facsimile instructions or advice to Custodian from
two designated representatives of Fund. Certified copies
of resolutions of the Board of Directors of Fund naming
two or more designated representatives to give
instructions in the name and on behalf of Fund, may be
received and accepted from time to time by Custodian as
conclusive evidence of the authority of any two
designated representatives to act for Fund and may be
considered to be in full force and effect (and Custodian
will be fully protected in acting in reliance thereon)
until receipt by Custodian of notice to the contrary.
Unless the resolution delegating authority to any person
to give instructions specifically requires that the
approval of anyone else will first have been obtained,
Custodian will be under no obligation to inquire into
the right of the person giving such instructions to do
so. Notwithstanding any of the foregoing provisions of
this Section 4. no authorizations or instructions
received by Custodian from Fund, will be deemed to
authorize or permit any director, trustee, officer,
employee, or agent of Fund to withdraw any of the
securities or similar investments of Fund upon the mere
receipt of such authorization or instructions from such
director, trustee, officer, employee or agent.
Notwithstanding any other provision of this Agreement,
Custodian, upon receipt (and acknowledgement if required
at the discretion of Custodian) of the instructions of
any two designated representatives of Fund, will
undertake to deliver for Fund's account monies,
(provided such monies are on hand or available) in
connection with Fund's transactions and to wire transfer
such monies to such broker, dealer, subcustodian, bank
or other agent specified in such instructions.
22
<PAGE>
B. If oral instructions are permitted pursuant to Section
4.A. hereunder, no later than the next business day
immediately following such oral instruction the Fund
will send Custodian written confirmation of such oral
instruction. At Custodian's sole discretion, Custodian
may record on tape, or otherwise, any oral instruction
whether given in person or via telephone, each such
recording identifying the parties, the date and the time
of the beginning and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall hold harmless and indemnify Fund from
and against any loss or liability arising out of
Custodian's failure to comply with the terms of this
Agreement or arising out of Custodian's negligence or
bad faith. Custodian may request and obtain the advice
and opinion of counsel for Fund, or of its own counsel
with respect to questions or matters of law, and it
shall be without liability to Fund for any action taken
or omitted by it in good faith, in conformity with such
advice or opinion. If Custodian reasonably believes that
it could not prudently act according to the instructions
of the Fund or the Fund's counsel, it may in its
discretion, with notice to the Fund, not act according
to such instructions.
B. Custodian may rely upon the advice of Fund and upon
statements of Fund's public accountants and other
persons believed by it in good faith, to be expert in
matters upon which they are consulted, and Custodian
shall not be liable for any actions taken, in good
faith, upon such statements.
C. If Fund requires Custodian in any capacity to take, with
respect to any securities, any action which involves the
payment of money by it, or which in Custodian's opinion
might make it or its nominee liable for payment of
monies or in any other way, Custodian, upon notice to
23
<PAGE>
Fund given prior to such actions, shall be and be kept
indemnified by Fund in an amount and form satisfactory
to Custodian against any liability on account of such
action.
D. Custodian shall be protected in acting as custodian
hereunder upon any instructions, advice, notice,
request, consent, certificate or other instrument or
paper reasonably appearing to it to be genuine and to
have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be
ascertained from Fund hereunder, a certificate signed by
the Fund's President, or other officer specifically
authorized for such purpose.
E. Without limiting the generality of the foregoing,
Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
1. The validity of the issue of any securities
purchased by or for Fund, the legality of
the purchase thereof or evidence of
ownership required by Fund to be received by
Custodian, or the propriety of the decision
to purchase or amount paid therefor;
2. The legality of the sale of any securities
by or for Fund, or the propriety of the
amount for which the same are sold;
3. The legality of the issue or sale of any
shares of the Capital Stock of Fund, or the
sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption
of any Fund Shares, or the propriety of the
amount to be paid therefor; or
5. The legality of the declaration of any
dividend by Fund, or the legality of the
issue of any Fund Shares in payment of any
stock dividend.
24
<PAGE>
F. Custodian shall not be liable for, or considered to be
Custodian of, any money represented by any check, draft,
wire transfer, clearing house funds, uncollected funds,
or instrument for the payment of money received by it on
behalf of Fund, until Custodian actually receives such
money, provided only that it shall advise Fund promptly
if it fails to receive any such money in the ordinary
course of business, and use its best efforts and
cooperate with Fund toward the end that such money shall
be received.
G. Custodian shall not be responsible for loss occasioned
by the acts, neglects, defaults or insolvency of any
broker, bank, trust company, or any other person with
whom Custodian may deal in the absence of negligence, or
bad faith on the part of Custodian, except as provided
in Section 3.S.1 hereof.
H. Notwithstanding anything herein to the contrary,
Custodian may, and with respect to any foreign
subcustodian appointed under Section 3.S.2. must,
provide Fund for its approval, agreements with banks or
trust companies which will act as subcustodians for Fund
pursuant to Section 3.S of this Agreement.
6. COMPENSATION. Fund will pay to Custodian such compensation as is
stated in the Fee Schedule attached hereto as Exhibit B which may be
changed from time to time as agreed to in writing by Custodian and
Fund. Custodian may charge such compensation against monies held by
it for the account of Fund. Custodian will also be entitled,
notwithstanding the provisions of Sections 5.C. or 5.D. hereof, to
charge against any monies held by it for the account of Fund the
amount of any loss, damage, liability, advance, or expense for which
it shall be entitled to reimbursement under the provisions of this
Agreement including fees or expenses due to Custodian for other
services provided to the Fund by the Custodian.
25
<PAGE>
Custodian will not be entitled to reimbursement by Fund for any loss
or expenses of any subcustodian.
7. TERMINATION. Either party to this Agreement may terminate the same
by notice in writing, delivered or mailed, postage prepaid, to the
other party hereto and received not less than ninety (90) days prior
to the date upon which such termination will take effect. If the
Custodian terminates this Agreement, the Fund may extend the
effective date of the termination ninety (90) days by written
request to the Custodian thirty (30) days prior to the end of the
initial ninety (90) days notice period unless the Custodian in good
faith could not perform the duties hereunder. Upon termination of
this Agreement, Fund will pay to Custodian such compensation for its
reimbursable disbursements, costs and expenses paid or incurred to
such date and Fund will use its best efforts to obtain a successor
custodian. Unless the holders of a majority of the outstanding
shares of "Capital Stock" of Fund vote to have the securities, funds
and other properties held under this Agreement delivered and paid
over to some other person, firm or corporation specified in the
vote, having not less the Two Million Dollars ($2,000,000) aggregate
capital, surplus and undivided profits, as shown by its last
published report, and meeting such other qualifications for
custodian as set forth in the Bylaws of Fund, the Board of Directors
of Fund will, forthwith upon giving or receiving notice of
termination of this Agreement, appoint as successor custodian a bank
or trust company having such qualifications. Custodian will, upon
termination of this Agreement, deliver to the successor custodian so
specified or appointed, at Custodian's office, all securities then
held by Custodian hereunder, duly endorsed and in form for transfer,
all funds and other properties of Fund deposited with or held by
Custodian hereunder, or will co-operate in effecting changes in
book-entries at the Depository Trust Company or in the
Treasury/Federal Reserve Book-Entry System pursuant to 31 CFR
26
<PAGE>
Sec. 306.118. In the event no such vote has been adopted by the
stockholders of Fund and no written order designating a successor
custodian has been delivered to Custodian on or before the date when
such termination becomes effective, then Custodian will deliver the
securities, funds and properties of Fund to a bank or trust company
at the selection of Custodian and meeting the qualifications for
custodian, if any, set forth in the Bylaws of Fund and having not
less that Two Million Dollars ($2,000,000) aggregate capital,
surplus and undivided profits, as shown by its last published
report. Upon either such delivery to a successor custodian,
Custodian will have no further obligations or liabilities under this
Agreement. Thereafter such bank or trust company will be the
successor custodian under this Agreement and will be entitled to
reasonable compensation for its services. In the event that no such
successor custodian can be found, Fund will submit to its
shareholders, before permitting delivery of the cash and securities
owned by Fund to anyone other than a successor custodian, the
question of whether Fund will be liquidated or function without a
custodian. Notwithstanding the foregoing requirement as to delivery
upon termination of this Agreement, Custodian may make any other
delivery of the securities, funds and property of Fund which is
permitted by the Investment Company Act of 1940, Fund's Certificate
of Incorporation and Bylaws then in effect or apply to a court of
competent jurisdiction for the appointment of a successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received
by Fund at One Bankers Trust Plaza, New York, New York 10006 such
other address as Fund may have designated to Custodian in writing,
will be deemed to have been properly given to Fund hereunder; and
notices, requests, instructions and other writings received by
Custodian at its offices at 127 West 10th Street, Kansas City,
Missouri 64105, or to such
27
<PAGE>
other address as it may have designated to Fund in writing, will be
deemed to have been properly given to Custodian hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of
Missouri and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by
the respective successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified,
in any manner except by a written agreement properly
authorized and executed by both parties hereto.
D. The captions in this Agreement are included for convenience
of reference only, and in no way define or delimit any of
the provisions hereof or otherwise affect their construction
or effect.
E. This Agreement shall become effective at the close of
business on the day of ------, 19--.
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but
all of which together will constitute one and the same
instrument.
G. If any part, term or provision of this Agreement is by the
courts held to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall
be considered severable and not be affected, and the rights
and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
H. Custodian will not release the identity of Fund to an issuer
which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of
direct
28
<PAGE>
communications between such issuer and Fund unless the Fund
directs the Custodian otherwise.
I. This Agreement may not be assigned by either party without
prior written consent of the other party.
J. If any provision of the Agreement, either in its present
form or as amended from time to time, limits, qualifies, or
conflicts with the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, such statutes,
rules and regulations shall be deemed to control and
supersede such provision without nullifying or terminating
the remainder of the provisions of this Agreement.
29
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-----------------------------
Gerard P. Dipoto, Jr.
Senior Vice President
ATTEST:
- -----------------
Cheryl J. Naegler
Assistant Secretary
SELIGMAN FRONTIER FUND, INC.
By:
-----------------------------
Title:
--------------------------
ATTEST:
- -----------------
Secretary
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
December 5, 1984
Seligman Frontier Fund, Inc.
One Bankers Trust Plaza
New York, New York 10006
Dear Sirs:
With respect to the Registration Statement on Form N-1A (File No.
2-92487) (the "Registration Statement") filed by Seligman Frontier Fund, Inc., a
Maryland Corporation (the "Company"), with the Securities and Exchange
Commission for the purpose of registering under the Securities Act of 1933, as
amended, an indefinite number of shares of Common Stock, $.10 par value (the
"Common Stock"), we, as your counsel, have examined such corporate records,
certificates and other documents and reviewed such questions of law as we have
considered necessary or appropriate for the purpose of this opinion. On the
basis of such examination and review, we advise you that, in our opinion, when
shares of the Common Stock have been issued and sold in accordance with the
terms of the Distributing Agreement, dated as of August 30, 1984, between the
Company and Seligman Marketing, Inc., referred to in the Registration Statement,
and as authorized by the Board of Directors of the Fund, such shares will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit of the
Registration Statement. In giving this consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
Very truly yours,
/s/Sullivan & Cromwell
------------------------
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. 21 to Registration Statement
No. 2-92487 of our report dated October 30, 1996, appearing in the annual report
to shareholders for the year ended September 30, 1996, and to the reference to
us under the caption "Financial Highlights" in the Prospectus, which is part of
such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
January 24, 1997
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 D
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 30, 1993. 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 __ day of
April, 1993 ("Purchase Date").
SELIGMAN FRONTIER FUND, INC.
By:
-----------------------------------
Name:
Title:
J. & W. SELIGMAN & CO. INCORPORATED
By:
-----------------------------------
Name:
Title:
SELIGMAN FRONTIER FUND, INC. - CLASS A
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN COMPUTATION FOR THE 97.00 YEAR PERIOD ENDED 30-Sep-96
LOAD RATE EQUALS 4.7% MAXIMUM OFFERING PRICE EQUALS $7.96
DISTR. PER # OF
DATE SHARE D/G NAV YRS
---- ----- --- --- ---
30-Sep-86 7.58
19-Oct-86 0.3055 G 7.63 86.860
31-Oct-86 7.69 86.893
30-Nov-86 7.75 86.975
31-Dec-86 7.60 87.060
31-Jan-87 8.50 87.145
28-Feb-87 9.24 87.222
31-Mar-87 9.24 87.307
30-Apr-87 8.93 87.389
31-May-87 8.82 87.474
30-Jun-87 9.09 87.556
31-Jul-87 9.25 87.641
31-Aug-87 9.68 87.726
30-Sep-87 9.35 87.808
31-Oct-87 6.59 87.893
20-Nov-87 0.9910 G 5.24 87.948
30-Nov-87 5.08 87.975
31-Dec-87 5.90 88.060
31-Jan-88 5.97 88.145
28-Feb-88 6.42 88.222
31-Mar-88 6.71 88.310
30-Apr-88 6.94 88.392
31-May-88 6.73 88.477
30-Jun-88 7.32 88.559
31-Jul-88 7.06 88.644
31-Aug-88 6.70 88.729
30-Sep-88 6.90 88.811
31-Oct-88 6.75 88.896
30-Nov-88 6.61 88.978
31-Dec-88 6.88 89.063
30-Mar-89 7.46 89.307
31-Mar-89 7.46 89.310
30-Jun-89 7.91 89.559
30-Jun-89 7.91 89.559
30-Sep-89 8.99 89.811
30-Sep-89 8.99 89.811
31-Dec-89 8.82 90.063
31-Dec-89 8.82 90.063
31-Mar-90 8.55 90.310
31-Mar-90 8.55 90.310
30-Jun-90 9.15 90.559
30-Jun-90 9.15 90.559
29-Sep-90 7.01 90.808
Page 1
<PAGE>
30-Sep-90 7.01 90.811
16-Nov-90 0.0065 D 7.26 90.940
16-Nov-90 0.0200 G 7.26 90.940
31-Dec-90 7.99 91.063
30-Mar-91 9.86 91.307
31-Mar-91 9.86 91.310
29-Jun-91 9.66 91.556
30-Jun-91 9.66 91.559
29-Sep-91 10.71 91.808
30-Sep-91 10.71 91.811
15-Nov-91 1.0035 G 10.10 91.937
31-Dec-91 10.88 92.063
29-Mar-92 10.98 92.307
31-Mar-92 10.98 92.312
29-Jun-92 9.90 92.559
30-Jun-92 9.90 92.562
29-Sep-92 10.22 92.811
30-Sep-92 10.22 92.814
31-Oct-92 10.84 92.899
17-Nov-92 1.9040 G 9.51 92.945
30-Nov-92 10.02 92.981
31-Dec-92 10.51 93.066
01-Jan-93 10.51 93.068
31-Mar-93 10.53 93.312
28-May-93 10.96 93.471
30-Jun-93 11.29 93.562
31-Jul-93 11.16 93.647
31-Aug-93 11.96 93.732
30-Sep-93 12.83 93.814
31-Oct-93 12.86 93.899
17-Nov-93 2.2310 G 10.51 93.945
30-Nov-93 10.27 93.981
30-Dec-93 10.75 94.063
31-Dec-93 10.95 94.066
31-Jan-94 11.36 94.151
28-Feb-94 11.49 94.227
31-Mar-94 10.81 94.312
30-Apr-94 10.98 94.395
31-May-94 10.55 94.479
30-Jun-94 10.09 94.562
31-Jul-94 10.54 94.647
31-Aug-94 11.40 94.732
15-Sep-94 11.70 94.773
30-Sep-94 11.62 94.814
17-Nov-94 1.3850 G 10.48 94.945
31-Dec-94 10.35 95.066
28-Feb-95 10.71 95.227
31-Mar-95 11.16 95.312
Page 2
<PAGE>
28-Apr-95 11.43 95.389
31-May-95 11.67 95.479
30-Jun-95 12.32 95.562
31-Jul-95 13.50 95.647
31-Aug-95 13.55 95.732
30-Sep-95 14.04 95.814
31-Oct-95 13.95 95.899
17-Nov-95 0.4770 G 13.55 95.945
30-Nov-95 13.49 95.981
31-Dec-95 13.64 96.066
31-Jan-96 13.38 96.151
29-Feb-96 14.01 96.230
31-Mar-96 14.41 96.315
30-Apr-96 15.64 96.397
31-May-96 16.18 96.482
30-Jun-96 15.42 96.564
29-Jul-96 13.89 96.644
31-Jul-96 13.89 96.649
31-Aug-96 14.53 96.734
30-Sep-96 15.38 96.816
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN -
N = NUMBER OF YEARS - 97
ERV = ENDING REDEEMABLE VALUE
TOTAL RETURN FOR PERIOD
Page 3
<PAGE>
SELIGMAN FRONTIER FUND, INC. - CLASS B
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN COMPUTATION FOR THE 0.44 YEAR PERIOD ENDED 30-Sep-96
LOAD RATE EQUALS 0.0 MAXIMUM OFFERING PRICE - $14.55
<TABLE>
<CAPTION>
DVD PER # OF SHARES CUMUL
DATE SHARE D/G NAV YRS ACQUIRED SHARES VALUE
- ---- ----- --- --- --- -------- ------ -----
<C> <C> <C> <C> <C> <C>
22-Apr-96 14.55 68.729 68.729 $1,000.00
30-Apr-96 15.08 0.022 0.000 68.729 $1,036.43
31-May-96 15.59 0.107 0.000 68.729 $1,071.49
30-Jun-96 14.85 0.189 0.000 68.729 $1,020.63
31-Jul-96 13.36 0.274 0.000 68.729 $918.22
31-Aug-96 13.97 0.359 0.000 68.729 $960.14
30-Sep-96 14.78 0.441 0.000 68.729 $1,015.81
LESS CDSL -50.00
965.81
</TABLE>
<TABLE>
<CAPTION>
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
<S> <C> <C>
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN - N/A
N = NUMBER OF YEARS - 0.441
ERV=ENDING REDEEMABLE VALUE WITHOUT CDSL $1,015.81
WITH CDSL $965.81
TOTAL RETURN FOR PERIOD WITHOUT CDSL 1.58%
WITH CDSL -3.42%
</TABLE>
Page 1
<PAGE>
SELIGMAN FRONTIER FUND, INC. CLASS D
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN COMPUTATION FOR THE 3.41 YEAR PERIOD ENDED 30-Sep-96
LOAD RATE EQUALS 0.0 MAXIMUM OFFERING PRICE - $10.1200
<TABLE>
<CAPTION>
GAIN PER # OF SHARES CUMUL
DATE SHARE D/G NAV YRS ACQUIRED SHARES VALUE
- ---- ----- --- --- --- -------- ------ -----
<C> <C> <C> <C> <C> <C> <C>
3-May-93 10.12 98.814 98.814 $1,000.00
31-May-93 10.96 0.077 0.000 98.814 $1,083.00
30-Jun-93 11.28 0.159 0.000 98.814 $1,114.62
31-Jul-93 11.14 0.244 0.000 98.814 $1,100.79
31-Aug-93 11.92 0.329 0.000 98.814 $1,177.86
30-Sep-93 12.80 0.411 0.000 98.814 $1,264.82
31-Oct-93 12.81 0.496 0.000 98.814 $1,265.81
17-Nov-93 $2.231 G 10.46 0.542 21.076 119.890 $1,254.05
30-Nov-93 10.21 0.578 0.000 119.890 $1,224.08
31-Dec-93 10.87 0.663 0.000 119.890 $1,303.20
31-Jan-94 11.26 0.748 0.000 119.890 $1,349.96
28-Feb-94 11.38 0.825 0.000 119.890 $1,364.35
31-Mar-94 10.68 0.910 0.000 119.890 $1,280.43
30-Apr-94 10.84 0.992 0.000 119.890 $1,299.61
31-May-94 10.39 1.077 0.000 119.890 $1,245.66
30-Jun-94 9.92 1.159 0.000 119.890 $1,189.31
31-Jul-94 10.34 1.244 0.000 119.890 $1,239.66
31-Aug-94 11.18 1.329 0.000 119.890 $1,340.37
21-Sep-94 11.28 1.386 0.000 119.890 $1,352.36
30-Sep-94 11.40 1.411 0.000 119.890 $1,366.75
31-Oct-94 11.79 1.496 0.000 119.890 $1,413.50
17-Nov-94 $1.385 G 10.24 1.542 16.216 136.106 $1,393.73
30-Nov-94 10.04 1.578 0.000 136.106 $1,366.50
31-Dec-94 10.10 1.663 0.000 136.106 $1,374.67
31-Jan-95 9.88 1.748 0.000 136.106 $1,344.73
28-Feb-95 10.43 1.825 0.000 136.106 $1,419.59
31-Mar-95 10.87 1.910 0.000 136.106 $1,479.47
28-Apr-95 11.12 1.986 0.000 136.106 $1,513.50
31-May-95 11.35 2.077 0.000 136.106 $1,544.80
30-Jun-95 11.96 2.159 0.000 136.106 $1,627.83
31-Jul-95 13.11 2.244 0.000 136.106 $1,784.35
31-Aug-95 13.15 2.329 0.000 136.106 $1,789.79
21-Sep-95 13.72 2.386 0.000 136.106 $1,867.37
30-Sep-95 13.61 2.411 0.000 136.106 $1,852.40
31-Oct-95 13.51 2.496 0.000 136.106 $1,838.79
17-Nov-95 $0.477 G 13.11 2.542 4.952 141.058 $1,849.27
30-Nov-95 13.05 2.578 0.000 141.058 $1,840.81
31-Dec-95 13.18 2.663 0.000 141.058 $1,859.14
31-Jan-96 12.93 2.748 0.000 141.058 $1,823.88
29-Feb-96 13.52 2.827 0.000 141.058 $1,907.10
31-Mar-96 13.90 2.912 0.000 141.058 $1,960.71
30-Apr-96 15.08 2.995 0.000 141.058 $2,127.15
</TABLE>
Page 1
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C> <C>
31-May-96 15.59 3.079 0.000 141.058 $2,199.09
30-Jun-96 14.85 3.162 0.000 141.058 $2,094.71
31-Jul-96 13.36 3.247 0.000 141.058 $1,884.53
31-Aug-96 13.97 3.332 0.000 141.058 $1,970.58
30-Sep-96 14.77 3.414 0.000 141.058 $2,083.43
</TABLE>
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN - 23.99%
N = NUMBER OF YEARS - 3.414
ERV=ENDING REDEEMABLE VALUE $2,083.43
TOTAL RETURN FOR PERIOD 108.34%
Page 2
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> SELIGMAN FRONTIER FUND, INC.-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 796547
<INVESTMENTS-AT-VALUE> 895621
<RECEIVABLES> 6786
<ASSETS-OTHER> 290
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 902697
<PAYABLE-FOR-SECURITIES> 14050
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3567
<TOTAL-LIABILITIES> 17617
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 744121
<SHARES-COMMON-STOCK> 34063<F1>
<SHARES-COMMON-PRIOR> 19387<F1>
<ACCUMULATED-NII-CURRENT> (49)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 99074
<NET-ASSETS> 523737<F1>
<DIVIDEND-INCOME> 791<F1>
<INTEREST-INCOME> 1866<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (6363)<F1>
<NET-INVESTMENT-INCOME> (3706)<F1>
<REALIZED-GAINS-CURRENT> 54587
<APPREC-INCREASE-CURRENT> 37680
<NET-CHANGE-FROM-OPS> 84307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (10172)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26063<F1>
<NUMBER-OF-SHARES-REDEEMED> (12022)<F1>
<SHARES-REINVESTED> 635<F1>
<NET-CHANGE-IN-ASSETS> 467515
<ACCUMULATED-NII-PRIOR> (41)
<ACCUMULATED-GAINS-PRIOR> 11373
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3718<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6363<F1>
<AVERAGE-NET-ASSETS> 406826<F1>
<PER-SHARE-NAV-BEGIN> 14.04<F1>
<PER-SHARE-NII> (.13)<F1>
<PER-SHARE-GAIN-APPREC> 1.95<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.48)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.38<F1>
<EXPENSE-RATIO> 1.56<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> SELIGMAN FRONTIER FUND, INC.-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 796547
<INVESTMENTS-AT-VALUE> 895621
<RECEIVABLES> 6786
<ASSETS-OTHER> 290
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 902697
<PAYABLE-FOR-SECURITIES> 14050
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3567
<TOTAL-LIABILITIES> 17617
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 744121
<SHARES-COMMON-STOCK> 1625<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> (49)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 99074
<NET-ASSETS> 24016
<DIVIDEND-INCOME> 11<F1>
<INTEREST-INCOME> 24<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (132)<F1>
<NET-INVESTMENT-INCOME> (97)<F1>
<REALIZED-GAINS-CURRENT> 54587
<APPREC-INCREASE-CURRENT> 37680
<NET-CHANGE-FROM-OPS> 84307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1667<F1>
<NUMBER-OF-SHARES-REDEEMED> (42)<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> 467515
<ACCUMULATED-NII-PRIOR> (41)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 52<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 132<F1>
<AVERAGE-NET-ASSETS> 12295<F1>
<PER-SHARE-NAV-BEGIN> 14.55<F1>
<PER-SHARE-NII> (.11)<F1>
<PER-SHARE-GAIN-APPREC> 0.34<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.78<F1>
<EXPENSE-RATIO> 2.45<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> SELIGMAN FRONTIER FUND, INC.-CLASS D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 796547
<INVESTMENTS-AT-VALUE> 895621
<RECEIVABLES> 6786
<ASSETS-OTHER> 290
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 902697
<PAYABLE-FOR-SECURITIES> 14050
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3567
<TOTAL-LIABILITIES> 17617
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 744121
<SHARES-COMMON-STOCK> 22831<F1>
<SHARES-COMMON-PRIOR> 10687<F1>
<ACCUMULATED-NII-CURRENT> (49)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 99074
<NET-ASSETS> 337327<F1>
<DIVIDEND-INCOME> 472<F1>
<INTEREST-INCOME> 1125<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (5754)<F1>
<NET-INVESTMENT-INCOME> (4157)<F1>
<REALIZED-GAINS-CURRENT> 54587
<APPREC-INCREASE-CURRENT> 37680
<NET-CHANGE-FROM-OPS> 84307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (5808)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15391<F1>
<NUMBER-OF-SHARES-REDEEMED> (3662)<F1>
<SHARES-REINVESTED> 415<F1>
<NET-CHANGE-IN-ASSETS> 467515
<ACCUMULATED-NII-PRIOR> (41)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2245<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5754<F1>
<AVERAGE-NET-ASSETS> 244638<F1>
<PER-SHARE-NAV-BEGIN> 13.61<F1>
<PER-SHARE-NII> (.24)<F1>
<PER-SHARE-GAIN-APPREC> 1.88<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.48)<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.77<F1>
<EXPENSE-RATIO> 2.35<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
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;
-1-
<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.
-2-
<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.
-3-
<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.
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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
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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.
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.
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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
Seligman U.S. Government Securities Fund
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