File No. 2-92487
811-4078
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. __ |_|
Post-Effective Amendment No. 22 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 24 |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).
|_| immediately upon filing pursuant |_| on (date) pursuant to paragraph
to paragraph (b) of rule 485 (a)(i) of rule 485
|_| on (date) pursuant to paragraph (b) |_| 75 days after filing pursuant
of rule 485 to paragraph(a)(ii) of rule 485
|X| 60 days after filing pursuant to |_| on (date) pursuant to paragraph
paragraph (a)(i) of rule 485 (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, 1997 on December 10,
1997.
<PAGE>
File No. 2-92487
811-4078
CROSS REFERENCE SHEET
Post-Effective Amendment No. 22
Pursuant to Rule 481(a)
----------------------
<TABLE>
<CAPTION>
Item in Part A of Form N-1A Location in Prospectus
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<S> <C> <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 Taxes
21. Underwriters Distribution Services
22. Calculation of Performance Data Performance
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
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PROSPECTUS
SELIGMAN
FRONTIER
FUND, INC.
February 1, 1998
[LOGO]
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A CAPITAL APPRECIATION FUND
IN ITS 14TH YEAR
<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, 1998
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 Gain Distributions ..................................... 22
Federal Income Taxes.................................................. 23
Shareholder Information .............................................. 24
Advertising the Fund's Performance ................................... 26
Organization and Capitalization ...................................... 27
<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)
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 4.75% None None
Sales Load on Reinvested Dividends ............... None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds,
whichever is lower) ............................ None; 5% in 1st year 1% in 1st year
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>
CLASS A CLASS B CLASS D
------- ------- -------
<S> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES FOR FISCAL 1997
(as a percentage of average net assets)
Management Fees................................... .94% .94% .94%
12b-1 Fees ....................................... .22% 1.00%* 1.00%*
Other Expenses ................................... .36% .36% .36%
Total Fund Operating Expenses .................... 1.52% 2.30% 2.30%
</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.
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>
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) redemption
at the end of each time period..............................Class A $62 $ 93 $126 $220
Class B+ 73 102 143 244
Class D 33++ 72 123 264
</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.
- ----------
* Includes an annual distribution fee of .75% and an annual service fee of
.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 $23 for 1 year, $72 for 3 years
and $123 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 $23.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights for the periods presented below have been
audited by , 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 1997 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.
"Per share operating performance" data is designed to allow investors to
trace the operating performance of each Class, on a per share basis, from the
beginning net asset value to the ending net asset value so that 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 amount.
"Total return based on net asset value" measures each Class's performance
assuming investors purchased shares of the Fund at the net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value and then sold their shares at net asset value per share on the last day of
the period. The total return computations do not reflect any sales loads
investors may incur in purchasing or selling shares of the Fund. Total returns
for periods of less than one year are not annualized.
"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,
------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
PER SHARE OPERATING ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year . $15.38 $14.04 $11.62 $12.83 $10.22 $10.71 $7.01 $8.99 $6.90 $9.35
------ ------ ------ ------ ------ ------ ------ ----- ----- -----
Net investment loss ................ (.16) (.13) (.06) (.08) (.03) (.07) (.03) -- -- (.02)
Net realized and unrealized
investment gain (loss) ........... 3.20 1.95 3.87 1.10 4.54 .58 3.76 (1.98) 2.09 (1.44)
------ ------ ------ ------ ------ ------ ------ ----- ----- -----
Increase (decrease) from
investment operations ............ 3.04 1.82 3.81 1.02 4.51 .51 3.73 (1.98) 2.09 (1.46)
Dividends paid ..................... -- -- -- -- -- -- (.01)* -- -- --
Distributions from net gain realized (.87) (.48) (1.39) (2.23) (1.90) (1.00) (.02) -- -- (.99)
------ ------ ------ ------ ------ ------ ------ ----- ----- -----
Net increase (decrease)
in net asset value ............... 2.17 1.34 2.42 (1.21) 2.61 (.49) 3.70 (1.98) 2.09 (2.45)
------ ------ ------ ------ ------ ------ ------ ----- ----- -----
Net asset value, end of year ....... $17.55 $15.38 $14.04 $11.62 $12.83 $10.22 $10.71 $7.01 $8.99 $6.90
====== ====== ====== ====== ====== ====== ====== ===== ===== =====
TOTAL RETURN BASED ON
NET ASSET VALUE: ................... 21.19% 13.40% 36.80% 9.79% 50.67% 4.91% 53.34% (22.02)% 30.29% (12.25)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets...... 1.52% 1.56% 1.43% 1.34% 1.25% 1.37% 1.28% 1.26% 1.32% 1.19%
Net investment income (loss)
to average net assets............. (1.10)% (.91)% (.50)% (.87)% (.27)% (.71)% (.35)% -- .02% (.20)%
Portfolio turnover.................. 97.37% 59.36% 71.52% 124.76% 129.13% 129.46% 38.56% 38.55% 50.60% 80.03%
Average commission rate paid........ $.0540 $.0538
Net assets, end of year
(000s omitted).................... $568,261 $523,737 $272,122 $58,478 $43,188 $27,178 $23,449 $17,127 $22,966 $19,205
</TABLE>
- ----------------
All per share data for fiscal years 1988 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 1997, 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
------------------ ------------------------------------------------
YEAR 4/22/96* YEAR ENDED SEPTEMBER 30, 5/3/93*
ENDED TO ------------------------------------ TO
9/30/97 9/30/96 1997 1996 1995 1994 9/30/93
------- ------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period ... $14.78 $14.55 $14.77 $13.61 $11.40 $12.80 $10.12
------ ------ ------ ------ ------ ------ ------
Net investment loss .................... (.27) (.11) (.27) (.24) (.15) (.23) (.04)
Net realized and unrealized
investment gain ...................... 3.04 .34 3.06 1.88 3.75 1.06 2.72
------ ------ ------ ------ ------ ------ ------
Increase from investment operations 2.77 .23 2.79 1.64 3.60 .83 2.68
Dividends paid ......................... -- -- -- -- -- -- --
Distributions from net gain realized ... (.87) -- (.87) (.48) (1.39) (2.23) --
------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value ................... 1.90 .23 1.92 1.16 2.21 (1.40) 2.68
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period ......... $16.68 $14.78 $16.69 $14.77 $13.61 $11.40 $12.80
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON
NET ASSET VALUE: ....................... 20.17% 1.58% 20.32% 12.47% 35.53% 8.06% 26.48%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ......... 2.30% 2.45%0 2.30% 2.35% 2.29% 2.72% 2.24%0
Net investment income (loss)
to average net assets ................ (1.88)% (1.80)%0 (1.88)% (1.70)% (1.35)% (2.25)% (1.94)%0
Portfolio turnover ..................... 97.37% 59.36%+ 97.37% 59.36% 71.52% 124.76% 129.13%++
Average commission rate paid ........... $.0540 $.0538+ $.0540 $.0538
Net assets, end of period
(000s omitted) ....................... $69,869 $24,016 $390,904 $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.
0 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 or waived in full.
However, investors should consider the effect of the 1% CDSL imposed on shares
on which the initial sales load was waived 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.
Under normal conditions, the Fund will invest at least 65% of the value of
its total assets in equity securities of companies with market capitalizations,
at the time of purchase by the Fund, of up to $1.25 billion. 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. Securities of these 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. companies, and foreign brokerage
commissions and custody fees are generally higher than those in the
7
<PAGE>
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 seventeen other investment companies
which, together with the Fund, make up the "Seligman Group." These 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., Seligman Value Fund Series, Inc. and Tri-Continental
Corporation. The aggregate assets of the Seligman Group were approximately $18.0
billion at December 31, 1997. The Manager also provides investment management or
advice to institutional and other accounts having an aggregate value at December
31, 1997 of approximately $6.3 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, Class B and Class D shares
for the year ended September 30, 1997 amounted to 1.52%, 2.30% and 2.30%,
respectively, 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 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
9
<PAGE>
by the Manager), is the same as the overall rate paid to the Manager by the
Fund. For the fiscal year ended September 30, 1997, 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 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., certain
portfolios of Seligman Portfolios, Inc., each series of Seligman Value Fund
Series, 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 plc.
The Manager's discussion of the Fund's performance as well as a line graph
illustrating comparative performance information between the Fund, the Lipper
Small Company Growth Fund Index, the Russell 2000 Growth Index and the Russell
2000 Index is included in the Fund's 1997 Annual Report to Shareholders. Copies
of the 1997 Annual Report may be obtained, without charge, by calling or writing
the Fund at the telephone numbers or address listed on the cover page of this
Prospectus.
PORTFOLIO TRANSACTIONS. The Management Agreement 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 Seligman Mutual Funds
as a factor in the selection of brokers or dealers to execute portfolio
transactions for the Fund.
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover." Portfolio turnover may result in the payment by the Fund
of dealer spreads or underwriting commissions and other transactions costs from
the sale of securities held by the Fund and the reinvestment of the proceeds in
other securities. While it is the policy of the Fund to hold securities for
investment, changes in the securities held
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<PAGE>
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 YOUR FINANCIAL ADVISOR.
The minimum amount for initial investment in the Fund is $500 for investors
who purchase shares of the Fund through Merrill Lynch's MFA and MFA Select
programs.
There is no minimum investment required for investors who purchase shares
of the Fund through wrap fee programs.
No purchase order may be placed for Class B shares for an amount of
$250,000 or more.
Orders received by an authorized dealer by the close of regular trading on
the New York Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern time) and
accepted by SFSI before the close of business (5:00 p.m. Eastern time) on the
same day will be executed at the Fund's net asset value determined as of the
close of regular trading on the NYSE on that day plus, in the case of Class A
shares, any applicable sales load. Orders received by dealers after the close of
regular trading 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
11
<PAGE>
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. Credit card
convenience checks and third party checks (i.e., checks made payable to someone
other than the "Seligman Group of Funds") may not be used to open a new fund
account or purchase additional shares of the Fund. The check should be
accompanied by an investment slip (provided on the bottom of shareholder account
statements) and include the shareholder's name, address, account number, 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. IF ONLY THE CLASS
DESIGNATION IS MISSING, THE INVESTMENT WILL AUTOMATICALLY BE MADE IN CLASS A
SHARES. 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 by the
close of regular 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. 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.
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.
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
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<PAGE>
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 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.
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 any Seligman Mutual Fund sold with an initial sales load
with the total net asset value of shares sold with an initial sales load,
including shares of Seligman Cash Management Fund that were acquired by the
investor through an exchange of shares of another Seligman Mutual Fund on which
there was an initial sales load, to determine reduced sales loads in accordance
with the 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."
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
13
<PAGE>
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 securities owned by other investment
companies; to any registered unit investment trust which is the issuer of
periodic payment plan certificates, the net proceeds of which are invested in
Fund shares; to separate accounts established and maintained by an insurance
company which are exempt from registration under Section 3(c)(11) of the 1940
Act; to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with SFSI; to financial
institution trust departments; to registered investment advisers exercising
discretionary investment authority with respect to the purchase of Fund shares;
to accounts of financial institutions or broker/dealers that charge account
management fees, provided the Manager or one of its affiliates has entered into
an agreement with respect to such accounts; pursuant to sponsored arrangements
with organizations which make recommendations to, or permit group 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 in
connection with a deferred fee arrangement for outside directors; and to
"eligible employee benefit plans" which have at least (i) $500,000 invested in
the Seligman 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
14
<PAGE>
higher or longer than the CDSL schedule relating to the Class B shares of the
fund from which the exchange has been made.
CLASS D SHARES. Class D shares are sold without an initial sales load but
are subject to a CDSL if the shares are redeemed within one year, an annual
distribution fee of up to .75% and an annual service fee of up to .25%, of the
average daily net asset value of the Class D shares. SFSI will make a 1% payment
to dealers in respect of purchases of Class D shares. Unlike Class B shares,
Class D shares do not automatically convert to Class A shares after eight years.
CONTINGENT DEFERRED SALES LOAD. A CDSL will be imposed on redemptions of
Class B or Class D shares which were purchased during the preceding six years
(for Class B shares) or twelve months (for Class D shares). The amount of any
CDSL will initially be used by SFSI to defray the expense of the payment of 4%
(in the case of Class B shares) or 1% (in the case of Class D shares) made by it
to Service Organizations (as defined under "Administration, Shareholder Services
And Distribution Plan") at the time of sale. Pursuant to an agreement with FEP
Capital, L.P. ("FEP") to fund payments in respect of 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.
The 1% CDSL normally imposed on redemptions of certain Class A shares
(i.e., those purchased during the preceding eighteen months at net asset value
pursuant to the sales load schedule provided under "Class A Shares--Initial
Shares Load") will be waived on shares that were purchased through Dean Witter
Reynolds, Inc. ("Dean Witter") by certain Chilean institutional investors (i.e.
pension plans, insurance companies and mutual funds). Upon redemption of such
shares within an eighteen month period, Dean Witter will reimburse SFSI a pro
rata portion of the fee it received from SFSI at the time of sale of such
shares.
To minimize the application of a CDSL to a redemption, shares acquired
pursuant to the investment of dividends and capital gain distributions (which
are not subject to a CDSL) will be redeemed first; followed by shares held for a
period of time longer than the applicable CDSL period. Shares held for the
longest period of time within the applicable 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. 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.
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.
15
<PAGE>
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability (as defined in section
72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code")) of a
shareholder or beneficial owner; (b) in connection with (i) distributions from
retirement plans qualified under section 401(a) of the Code when such
redemptions are necessary to make distributions to plan participants (such
payments include, but are not limited to, death, disability, retirement, or
separation of service), (ii) distributions from a custodial account under
section 403 (b)(7) of the Code or an individual retirement account (an "IRA")
due to, death, disability, minimum distribution requirements after age 701/2 or,
for accounts established prior to January 1, 1998, 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) in whole or in part, in connection with
automatic cash withdrawals; (f) in connection with participation in the Merrill
Lynch Small Market 401(k) Program; and (g) 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 Seligman Mutual Funds. SFSI may from time to time pay a bonus or other
incentive to dealers that sell shares of the Seligman Mutual Funds. In some
instances, these bonuses or incentives may be offered only to certain dealers
which employ registered representatives who have sold or may sell a significant
amount of shares of the Fund and/or certain other mutual funds managed by the
Manager during a specified period of time. Such bonus or other incentive may
take the form of payment for travel expenses, including lodging, incurred in
connection with trips taken by qualifying registered 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.
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
16
<PAGE>
not permitted. Group retirement plans that may allow plan participants to place
telephone exchanges directly with the Fund must first provide a letter of
authorization signed by the plan custodian or trustee, and provide a telephone
services election form signed by each plan participant. 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.
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. (See "Redemption of Shares" below.) Use of these other
redemption or exchange procedures may result in the request being processed at a
later time than if a telephone transaction had been used, and the Fund's net
asset value may fluctuate during such periods.
The Fund and Seligman Data Corp. will employ reasonable procedures to
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 ("uncertificated") form
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 without charge, except a CDSL, if applicable by surrendering
certificates in proper form to the same address. Certificates should be sent
certified or registered mail, return receipt is advisable (may increase mailing
time). 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 en-
17
<PAGE>
dorsed 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 (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 regular trading on the NYSE (normally,
4:00 p.m. Eastern Time) and received by SFSI, the repurchase agent, before the
close of business on the same day will be executed at the net asset value per
share determined as of the close of 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 fund account. Telephone redemption requests received by Seligman
Data Corp. at (800) 221-2450 by the close of regular trading on the NYSE
(normally, 4:00 p.m. Eastern Time) 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. IRAs, group retirement plans and corporations
are not eligible for telephone redemptions. The Fund reserves the right to
suspend or terminate its telephone redemption service at any time without
notice.
18
<PAGE>
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. Payment of redemption proceeds will be delayed
on redemptions of shares purchased by check (unless certified) until Seligman
Data Corp. receives notice that the check has cleared, which may be up to 15
days from the credit of such shares to the shareholder's account. The proceeds
of a redemption or repurchase may be more or less than the share-holder'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 applicable CDSL paid. Such investment
will be reinstated at the net asset value per share established as of the close
of the NYSE on the day the request is received. Seligman Data Corp. must be
informed that the purchase represents a reinstated investment. REINSTATED SHARES
MUST BE REGISTERED EXACTLY AND BE OF THE SAME CLASS AS THE SHARES 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
19
<PAGE>
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 30, 1997 in respect of the Fund's Class A shares
pursuant to the Plan was equal to .22% 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,
1997 by the Fund's Class B and Class D shares pursuant to the Plan was 1% per
annum of the average daily net assets of 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 period for which the original shares were held.
Class B shareholders of the Fund exercising the exchange privilege will
continue to be subject to the
20
<PAGE>
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 such shares were exchanged.
The Seligman Mutual Funds available under the Exchange Privilege are:
o SELIGMAN CAPITAL FUND, INC. seeks aggressive capital appreciation.
Current income is not an objective.
o SELIGMAN CASH MANAGEMENT FUND, INC. invests in high-quality money market
instruments. Shares are sold at net asset value.
o SELIGMAN COMMON STOCK FUND, INC. seeks favorable current income and
long-term growth of both income and capital value without exposing capital to
undue risk.
o SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC. invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective.
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 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.)
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 VALUE FUND SERIES, INC. consists of the Seligman Large-Cap Value
Fund and the Seligman Small-Cap Value Fund, each of which seeks long-term
capital appreciation by investing in equity securities of value companies
primarily located in the U.S.
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 by the close of regular trading on the NYSE
(normally, 4:00 p.m. Eastern Time) by Seligman Data Corp. at (800) 221-2450 will
be processed as of the close of business on that day. Requests received after
the close of regular trading on the NYSE (normally, 4:00 p.m. Eastern Time) will
be processed at the net asset values per share calculated the following business
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
21
<PAGE>
least the minimum initial investment required by the fund into which the
exchange is being made. THE METHOD OF RECEIVING DISTRIBUTIONS, UNLESS OTHERWISE
INDICATED, WILL BE CARRIED OVER TO THE NEW FUND ACCOUNT, AS WILL TELEPHONE
SERVICES. ACCOUNT SERVICES, SUCH AS INVEST-A-CHECK(R) SERVICE, DIRECTED
DIVIDENDS AND AUTOMATIC CASH WITHDRAWAL SERVICE WILL NOT BE CARRIED OVER TO THE
NEW FUND ACCOUNT UNLESS SPECIFICALLY REQUESTED AND PERMITTED BY THE NEW FUND.
Exchange orders may be placed to effect an exchange of a specific number of
shares, an exchange of shares equal to a specific dollar amount or an exchange
of all shares held. Shares for which certificates have been issued may not be
exchanged via telephone and may be exchanged only upon receipt of an exchange
request together with certificates representing shares to be exchanged in proper
form.
The Exchange Privilege via mail is generally applicable to investments in
group retirement plans, although some restrictions may apply. The terms of the
exchange offer described herein may be modified at any time; and not all of the
mutual funds in the Seligman Group are available to residents of all states.
Before making any exchange, a shareholder should contact an authorized
investment dealer or Seligman Data Corp. to obtain prospectuses of any of the
Seligman Mutual Funds.
A broker/dealer representative of record will be able to effect exchanges
on behalf of a shareholder only if the shareholder has telephone services or 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 GAIN 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.
22
<PAGE>
Cash dividends and gain distributions are paid by check. If the payment option
you prefer is not listed, contact Seligman Data Corp. to request information on
other available options. In the case of prototype retirement plans, dividends
and capital gain distributions are reinvested in additional shares. Unless
another election is made, dividends and capital gain distributions will be
credited to shareholder accounts in additional shares of the Fund. Shares
acquired through a dividend or gain distribution and credited to a shareholder's
account are not subject to an initial sales load or a CDSL. Dividends and gain
distributions paid in shares are invested on the payable date using the net
asset value of the ex-dividend date. Shareholders may elect to change their
dividend and gain distribution options by writing Seligman Data Corp. at the
address listed below. If the shareholder has telephone services, changes may
also be telephoned to Seligman Data Corp. between 8:30 a.m. and 6:00 p.m.
Eastern time, by either the shareholder or the broker/dealer of record on the
account. For information about telephone services, see "Telephone Transactions."
These elections must be received by Seligman Data Corp. before the record date
for the dividend or distribution in order to be effective for such dividend or
distribution.
The per share dividends from net investment income on Class B and Class D
shares will be lower than the per share dividends on Class A shares as a result
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 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. A transfer or exchange
for all shares (closing an account), between the record date and payable date,
will result in the value of dividends or gain distributions being paid to the
new fund account in accordance with the option on the closed account, unless we
are instructed otherwise.
FEDERAL INCOME TAXES
The Fund intends to continue to qualify as a regulated investment company
under the Code. For each year so qualified, the Fund will not be subject to
federal income taxes on its net investment income and capital gains, if any,
realized during any taxable year, which it distributes to its shareholders,
provided that at least 90% of its net investment income and net short-term
capital gains are distributed to shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to shareholders, whether received
in cash or reinvested in additional shares. To the extent designated as 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 a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in the form of additional shares issued by
the Fund will be treated for federal income tax purposes as having received a
distribution in an amount equal to the fair market value on the date of
distribution of the shares received. Distributions of net capital gain in
respect of assets held for more than eighteen months may be eligible for a
further reduced rate of tax to individuals.
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
23
<PAGE>
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. Capital gains in respect of assets held for more than eighteen
months may be eligible for a further reduced rate of tax to individuals.
In determining gain or loss on shares of the Fund that are sold or
exchanged within 90 days after acquisition, a shareholder generally will not be
permitted to include in the tax basis attributable to such shares the sales load
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales load by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales load not taken into account in determining the tax basis of
shares sold or exchanged within 90 days after acquisition will be added to the
shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
The Fund will generally be subject to an excise tax of 4% on the amount of
any income or capital gains, above certain permitted levels, distributed to
shareholders on a basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned by the Fund.
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 semi-annually 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, or (212) 682-7600 outside the 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
24
<PAGE>
through Friday (except holidays) between the hours of 8:30 a.m. and 6:00 p.m.
Eastern time and calls will be answered by a service representative.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, YIELD, ACCOUNT BALANCE,
MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT STATEMENTS
AND FORM 1099-DIV CAN BE ORDERED. TO INSURE PROMPT DELIVERY OF DISTRIBUTION
CHECKS, ACCOUNT STATEMENTS AND OTHER INFORMATION, SELIGMAN DATA CORP. SHOULD BE
NOTIFIED IMMEDIATELY IN WRITING OF ANY ADDRESS CHANGE. ADDRESS CHANGES MAY BE
TELEPHONED TO SELIGMAN DATA CORP. IF THE SHAREHOLDER HAS TELEPHONE SERVICES. FOR
MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE "TELEPHONE TRANSACTIONS" ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial
transactions. Special investor services are available. These include:
o INVEST-A-CHECK(R) 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 check for $100 in
conjunction with thE monthly investment option, or a check for $250 in
conjunction with the quarterly investment option. For investments 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. By
utilizing the Invest-A-Check Service to establish an account, you are agreeing
to continue the service until the Fund's minimum investment amount is met. If
you elect to cancel the service prior to meeting the minimum, your account may
be subject to closure. (See "Terms and Conditions.")
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 in fixed amounts of
$50 or more at regular intervals to be made to a shareholder who owns or
purchases shares worth $5,000 or more held as book credits. Holders of Class A
shares purchased at net asset value because the purchase amount was $1,000,000
or more should bear in mind that withdrawals may be subject to a 1% CDSL if made
within eighteen months of purchase of such shares. Holders of Class B and Class
D shares may elect to use this service immediately, although certain withdrawals
may be subject to CDSL. (See "Terms and Conditions.")
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<PAGE>
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. 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);
--Savings Incentive Match Plans for Employees (Simple IRAs);
--Simplified Employee Pension Plans (SEPs);
--Section 401(k) Plans for corporations and their employees;
--Section 403(b)(7) Plans for employees of public school systems and
certain non-profit organizations who wish to make deferred compensation
arrangements; and
--Money Purchase Pension and Profit Sharing Plans for sole proprietorships,
corporations and partnerships.
These types of plans may be established only upon receipt of a written
application form. The Fund may register an IRA investment for which an account
application has not been received as an ordinary taxable account.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, NY 10017 or telephone toll-free (800) 445-1777 from
all continental United States. You also may receive information through an
authorized dealer.
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
26
<PAGE>
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.
27
<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. By utilizing
the Invest-A-Check(R) Service to establish an account, you are agreeing to
continue the Service until the Fund's minimuM investment amount is met. If you
elect to cancel the service prior to meeting the minimum, your account may be
subject to closure. 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 $100 check iN connection with the monthly investment option or
a $250 check 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
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), less, in the
case of Class B or Class D shares, any applicable CDSL. Automatic withdrawal 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. Under this Service, a Class B or Class D shareholder
who requests both dividends and capital gain distributions in additional shares
may withdraw up to 12%, or 10%, respectively, of the value of the Shareholder's
fund account (at the time of election) per annum, without the imposition of a
CDSL. A minimum payment amount of $50 per cycle is needed to establish this
Service. A 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 Seligman
Mutual Funds.
2/98
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<PAGE>
SELIGMAN
FRONTIER
FUND, INC.
- --------------------------------------------------------------------------------
100 Park Avenue
New York, New York 10017
INVESTMENT MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, New York 10017
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, New York 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
EQFR1 2/98
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1998
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, 1998. It should be read in conjunction with the
Prospectus, which may be obtained by writing or calling the Fund at the above
address or telephone numbers. This Statement of Additional Information, although
not in itself a Prospectus, is incorporated by reference into the Prospectus in
its entirety.
The Fund offers three classes of shares. Class A shares may be purchased at
net asset value plus a sales load of up to 4.75%. Class A shares purchased in an
amount of $1,000,000 or more are sold without an initial sales load but are
subject to a contingent deferred sales load ("CDSL") of 1% (of the current net
asset value or 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.................................................... 13
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, 1997 and 1996
were 97.37% and 59.36%, 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 Officer
(59) and Chairman of the Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; Chairman and Chief
Executive Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Advisors, Inc., advisers;
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,
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
(45) Committee
Director and President, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
President (with the exception of Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal Fund,
Inc.) and Director or Trustee, the Seligman Group of
Investment Companies; and Seligman Advisors, Inc.,
advisers; Chairman and President, Seligman Data Corp.,
shareholder service agent; Director, Seligman Financial
Services, Inc., broker/dealer; Seligman Services, Inc.,
broker/dealer; and Seligman Henderson Co., advisers;
formerly, Director, Seligman Securities, Inc.,
broker/dealer and J. & W. Seligman Trust Company, trust
company.
RICHARD R. SCHMALTZ* Director and Member of the Executive Committee
(57)
Managing Director, Director of Investments, J. & W.
Seligman & Co. Incorporated; Director of Seligman
Henderson Co. and Trustee Emeritus of Colby College;
formerly, Director of Research at Neuberger & Berman
from 1993 to 1996 and Executive Vice President of
McGlinn Capital from 1987 to 1993.
-4-
<PAGE>
JOHN R. GALVIN Director
(68)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group of
Investment Companies; Chairman, American Council on
Germany; a Governor of the Center for Creative
Leadership; Director, USLIFE Corporation, life
insurance; Raytheon Co., electronics; National Defense
University; and the Institute for Defense Analysis; and
formerly, Ambassador, U.S. State Department for
negotiations in Bosnia; Distinguished Policy Analyst at
Ohio State University and Olin Distinguished Professor
of National Security Studies at the United States
Military Academy. From June, 1987 to June, 1992, he was
the Supreme Allied Commander, Europe and the
Commander-in-Chief, United States European Command.
Tufts University, Packard Avenue, Medford, MA 02155
ALICE S. ILCHMAN Director
(62)
President, Sarah Lawrence College; Director or Trustee,
the Seligman Group of Investment Companies; and the
Committee for Economic Development; and Chairman, The
Rockefeller Foundation, charitable foundation; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, NYNEX, telephone company;
and International Research and Exchange Board,
intellectual exchanges.
Sarah Lawrence College, Bronxville, New York 10708
FRANK A. McPHERSON Director
(64)
Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; Director,
Kimberly-Clark Corporation, consumer products; Bank of
Oklahoma Holding Company; Oklahoma City Chamber of
Commerce; Baptist Medical Center; Oklahoma Chapter of
the Nature Conservancy; Oklahoma Medical Research
Foundation; and National Boys and Girls Clubs of
America; Chairman, Oklahoma City Public Schools
Foundation; and Member of the Business Roundtable and
National Petroleum Council; formerly, Chairman of the
Board and Chief Executive Officer, Kerr-McGee
Corporation, energy and chemicals.
123 Robert S. Kerr Avenue, Oklahoma City, OK 73102
JOHN E. MEROW Director
(68)
Retired Chairman and Senior Partner, Sullivan &
Cromwell, law firm; Director or Trustee, the Seligman
Group of Investment Companies; Director, Commonwealth
Industries, Inc.; the Foreign Policy Association;
Municipal Art Society of New York; the U.S. Council for
International Business; and The New York and
Presbyterian Hospital; Chairman, American Australian
Association; The New York and Presbyterian Hospital Care
Network, Inc.; Vice-Chairman, the U.S.-New Zealand
Council; and Member of the American Law Institute and
Council on Foreign Relations.
125 Broad Street, New York, NY 10004
-5-
<PAGE>
BETSY S. MICHEL Director
(55)
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
JAMES C. PITNEY Director
(71)
Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm;
Director or Trustee, the Seligman Group of Investment
Companies; formerly, Director, Public Service Enterprise
Group, public utility.
Park Avenue at Morris County, P.O. Box 1945, Morristown,
NJ 07962-1945
JAMES Q. RIORDAN Director
(70)
Director, various corporations; Director or Trustee, the
Seligman Group of Investment Companies; The Houston
Exploration Company; The Brooklyn Museum; The Brooklyn
Union Gas Company; the Committee for Economic
Development; 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
ROBERT L. SHAFER Director
(65)
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
(62)
Executive Vice President, Chief Operating Officer and
Director, Sammons Enterprises, Inc.; Director or
Trustee, the Seligman Group of Investment Companies;
C-SPAN; and Commscope, manufacturer of coaxial cables;
formerly, Director, Red Man Pipe and Supply Company,
piping and other materials.
300 Crescent Court, Suite 700, Dallas, TX 75202
ARSEN MRAKOVCIC Vice President and Portfolio Manager
(32)
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
(41)
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.
FRANK J. NASTA Secretary
(33)
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, an
attorney at Seward & Kissel, law firm.
THOMAS G. ROSE Treasurer
(40)
Treasurer, the Seligman Group of Investment Companies
and Seligman Data Corp., shareholder service agent.
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
<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
Richard R. Schmaltz, Director N/A N/A N/A
Ronald T. Schroeder, Director** N/A N/A N/A
Fred E. Brown, Director Emeritus*** N/A N/A N/A
John R. Galvin, Director $2,633.09 N/A $67,000.00
Alice S. Ilchman, Director 2,586.74 N/A 65,000.00
Frank A. McPherson, Director 2,597.38 N/A 66,000.00
John E. Merow, Director 2,586.74 N/A 65,000.00
Betsy S. Michel, Director 2,633.09 N/A 67,000.00
James C. Pitney, Director 2,576.10 N/A 64,000.00
James Q. Riordan, Director 2,622.45 N/A 66,000.00
Robert L. Shafer, Director 2,622.45 N/A 66,000.00
James N. Whitson, Director 2,608.02(d) N/A $67,000.00(d)
</TABLE>
- -------------
(1) For the fiscal year ended September 30, 1997.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
-7-
<PAGE>
** Retired May 15, 1997.
*** Retired March 20, 1997.
(d) Deferred.
The Fund has a compensation arrangement under which outside directors may
elect to defer receiving their fees. Under this arrangement, interest 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. The
total amount of deferred compensation (including interest) payable in respect of
the Fund to Mr. Whitson as of September 30, 1997 was $12,396. Messrs. Merow and
Pitney no longer defer current compensation; however, they have accrued deferred
compensation in the amounts of $26,678 and $16,161, respectively, as of
September 30, 1997.
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 2, 1998. As of that date, no Directors or officers owned shares
of the Fund's Class B or Class D Capital Stock.
As of January 2, 1998, 5,072,496 Class A shares, or 14.63% of the Fund's
Class A capital stock then outstanding, and 12,180,497 Class D shares, or 47.63%
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 year ended September 30, 1997, the
Fund paid $8,127,464, equal to .94% per annum of its 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. For the fiscal years ended
September 30, 1995, the Fund paid management fees of $1,260,769, equal to .75%
per annum of the Fund's 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, expenses of printing and filing reports and
other documents with governmental agencies, expenses of shareholders' meetings,
expenses of corporate data processing and related services, shareholder record
keeping and shareholder account services, fees and disbursements of transfer
agents and custodians, expenses of disbursing dividends and distributions, fees
and expenses of directors of the Fund not employed by or serving as a Director
of the Manager or its affiliates, insurance premiums and extraordinary expenses
such as litigation expenses.
-8-
<PAGE>
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 plc.
Henderson plc, headquartered in London, is one of the largest independent money
managers in Europe.
For the fiscal years ended September 30, 1997, 1996 and 1995, 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 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
-9-
<PAGE>
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 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
-10-
<PAGE>
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, 1997, 1996 and
1995 were $1,446,040, $956,356 and $337,655, 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, 1997, the maximum offering price of the Fund's shares is as
follows:
CLASS A
Net asset value and redemption price per Class A share......... $17.55
Maximum sales load (4.75% of offering price)................... .88
-----
Offering price to public....................................... $18.43
=====
CLASS B
Net asset value and offering price per share *................. $16.68
=====
CLASS D
Net asset value and offering price per share *................. $16.69
=====
- --------------
* 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.
-11-
<PAGE>
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 Seligman Mutual
Funds sold with an initial sales load with the total net asset value of shares
of those 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 Seligman Mutual Fund 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 Seligman Mutual Fund on which
there was an initial sales load at the time of purchase will be taken into
account in orders placed through a dealer, however, only if 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 Seligman
Mutual Funds already owned and the total net asset value of shares of Seligman
Cash Management Fund which were acquired through an exchange of shares of
another Seligman Mutual Fund on which there was an initial sales load at the
time of purchase. Reduced 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.
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
-12-
<PAGE>
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.
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, 1997, 1996 and 1995, respectively, amounted to $1,825,779, $6,222,709 and
$5,489,669, respectively, of which $1,621,883, $5,532,809 and $4,882,246,
respectively, was paid as commissions to dealers. SFSI receives the balance of
sales loads and any CDSLs paid by investors on Class
-13-
<PAGE>
D shares. For the fiscal years ended September 30, 1997, 1996 and 1995, SFSI
retained CDSL charges on Class D shares amounting to $147,084, $117,636 and
$22,116, respectively. For the fiscal year ended September 30, 1997, SFSI
retained CDSL charges on Class A shares amounting to $1,089.
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 from
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 fiscal year
ended September 30, 1997 and for the period ended September 30, 1996 amounted to
$106,996 and $61,955, respectively.
Effective April 1, 1995, Seligman Services, Inc. ("SSI"), an affiliate of
the Manager, became eligible to receive commissions from certain sales of Fund
shares, as well as distribution and service fees pursuant to the Plan. For the
fiscal years ended September 30, 1997 and 1996, SSI received commissions of
$25,093 and $156,157, respectively, from sales of Fund shares, and received
distribution and service fees of $65,586 and $73,340, respectively, pursuant to
the Plan. For the period ended September 30, 1995, SSI received commissions of
$104,682 from sales of Fund shares and received distribution and service fees of
$11,821, pursuant to the Plan.
VALUATION
Net asset value per share of each class of the Fund is determined by the
close of regular trading on 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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Fund
will also determine net asset value for each class on each day in which there is
a sufficient degree of trading in the Fund's portfolio securities that the net
asset value of Fund shares might be materially affected. Net asset value per
share for a class is computed by dividing such class' share of the value of the
net assets of the Fund (i.e., the value of its assets less liabilities) by the
total number of outstanding shares of such class. All expenses of the Fund,
including the Manager's fee, are accrued daily and taken into account for the
purpose of determining net asset value. The net asset value of Class B and Class
D shares will generally be lower than the net asset value of Class A shares as a
result of the higher distribution fee with respect to such shares.
Portfolio securities, including open short positions and options written,
are valued at the last sale price on the securities exchange or securities
market on which such securities primarily are traded. Securities 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. 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
-14-
<PAGE>
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, 1997 were
15.41%, 24.26%, and 15.56%, 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 one-year period and for the period from April
22, 1996 (inception) through September 30, 1997 was 15.17% and 12.21%,
respectively. 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, 1997 and from
May 3, 1993 (inception) through September 30, 1997 were 19.32% and 23.15%,
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, 1987 had a value of $4,246 on September
30, 1997 resulting in an aggregate total return of 324.65%. 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 $1,181 on September 30, 1997 resulting in an
aggregate total return of 18.07%. 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 $2,507 on September 30, 1997 resulting in an aggregate total return of
150.68%. 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>
<CAPTION>
TABLE A - CLASS A SHARES
VALUE OF
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT 2 RETURN 1,3
- ------- ------------ ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
9/30/88 $ 703 $ 133 $ -- $ 836
9/30/89 916 173 -- 1,089
9/30/90 714 135 -- 849
9/30/91 1,091 210 1 1,302
9/30/92 1,040 324 1 1,365
9/30/93 1,306 750 1 2,057
9/30/94 1,184 1,074 1 2,259
9/30/95 1,429 1,659 2 3,090
9/30/96 1,566 1,936 2 3,504
9/30/97 1,787 2,457 2 4,246 324.65%
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
TABLE B - CLASS B SHARES
VALUE OF
VALUE OF CAPITAL VALUE TOTAL VALUE
YEAR/PERIOD INITIAL GAIN OF OF TOTAL
ENDED 1 INVESTMENT 2 DISTRIBUTIONS DIVIDENDS INVESTMENT 2 RETURN 3
- ------- ------------ ------------- --------- ------------ --------
<S> <C> <C> <C> <C> <C>
9/30/96 $1,016 $ -- $ -- $1,016
9/30/97 1,107 74 -- 1,181 18.07%
</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 INVESTMENT 2 RETURN 3
- ------- ------------ ------------- --------- ------------ --------
<S> <C> <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
9/30/97 1,649 858 -- 2,507 150.68%
</TABLE>
1 For the ten-year period ended September 30, 1997 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 or CDSL, if applicable, assumes that all
dividends and capital gain distributions were taken in cash and reflects
changes in the net asset value of the shares purchased with the
hypothetical initial investment. "Total Value of Investment" reflects the
effect of the CDSL, if applicable, and assumes investment of all dividends
and capital gain distributions.
3 Total return for each Class of shares of the Fund is calculated by
assuming a hypothetical initial investment of $1,000 at the beginning of
the period specified; subtracting the maximum sales 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.
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.
-16-
<PAGE>
CUSTODIAN. Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105 serves as custodian of the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for the Fund.
AUDITORS. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, New
York 10281.
FINANCIAL STATEMENTS
The Annual Report to shareholders for the fiscal year ended September 30,
1997 contains a schedule of the investments of the Fund as of September 30,
1997, as well as certain other financial information as of that date. The
financial statements and notes included in the Annual Report, and the
Independent Auditor's Report thereon, are incorporated herein by reference. The
Annual Report will be furnished without charge to investors who request copies
of this Statement of Additional Information.
-17-
<PAGE>
APPENDIX
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in
the sale of government securities to help finance the Civil War - Joseph
Seligman, with his brothers, established the international banking and
investment firm of J. & W. Seligman & Co. In the years that followed, the
Seligman Complex played a major role in the geographical expansion and
industrial development of the United States.
The Seligman Complex:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the Country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
...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 plc, of London, known as
Seligman Henderson Co., to offer global investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value
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<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 1997.
Financial Highlights for Class B shares for the period April 22, 1996
(commencement of operations) to September 30, 1997.
Financial Highlights for Class D shares for the period May 3, 1993
(commencement of operations) to September 30, 1997.
Part B - Required Financial Statement will be filed by amendment.
(b) Exhibits: All Exhibits have been previously filed and are incorporated
herein by reference, except Exhibits marked with an asterisk (*) which
will be filed by amendment.
(1) Form of Amended and Restated Articles of Incorporation. (Incorporated
by reference to Registrant's Post-Effective Amendment No. 21 filed on
January 28, 1997.)
(2) Amended and Restated Bylaws of Registrant. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 21 filed on January 28,
1997.)
(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. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 21 filed on January 28, 1997.)
(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.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 21 filed on January 28, 1997.)
(7)(a) Deferred Compensation Plan for Directors of Seligman Group of Funds.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 21 filed on January 28, 1997.)
(8) Custody Agreement between Registrant and Investors Fiduciary Trust
Company. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 21 filed on January 28, 1997.)
(9) Not applicable
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
(10) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 21 filed on January 28,
1997.)
(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.)
(13)(b) Copy of Purchase Agreement for Initial Capital for Class D shares.
(Incorporated by reference to Registrant's Post- Effective Amendment
No. 21 filed on January 28, 1997.)
(14) The Seligman IRA Plan Agreement.
(Incorporated by reference to Exhibit 14 of Registration Statement No.
333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(14a) The Seligman Simple IRA Plan Set-Up Kit.
(Incorporated by reference to Exhibit 14 of Registration Statement No.
333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(14b) The Seligman Simple IRA Plan Agreement.
(Incorporated by reference to Exhibit 14 of Registration Statement No.
333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(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. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 21 filed on January 28,
1997.)
(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. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 21 filed on
January 28, 1997.)
Other Exhibits: Powers of Attorney*
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 2, 1998
-------------- -----------------------------
Class A Common Stock 29,082
Class B Common Stock 4,548
Class D Common Stock 17,409
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
Item 27. Indemnification
Reference is made to the provisions of Articles Twelfth and
Thirteenth of Registrant's Amended and Restated Articles of
Incorporation filed as Exhibit 24(b)(1) and Article IV of
Registrant's Amended and Restated By-laws filed as Exhibit
24(b)(2) to Registrant's Post-Effective Amendment No. 21 to the
Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised by the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
as 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 seventeen 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., Seligman Value Fund Series, Inc. and Tri-Continental
Corporation.
Seligman Henderson Co. ("Subadviser") is the Registrant's subadviser.
The Subadviser also serves as subadviser to nine 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., Seligman Value Fund Series, 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. 801-15798 and SEC File No. 801-40670), which were
filed on June 3, 1997.
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
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
Seligman Portfolios, Inc.
Seligman Value Fund Series, Inc.
(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, 1997
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the Board and Chief
Executive Officer
BRIAN T. ZINO* Director President and Director
RONALD T. SCHROEDER* Director None
FRED E. BROWN* Director Director Emeritus
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President and Director None
CHARLES W. KADLEC* Chief Investment Strategist None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
ED LYNCH* Senior Vice President, Director None
of Marketing
MARK R. GORDON* Senior Vice President, National None
Sales Manager
GERALD I. CETRULO, III Senior Vice President of Sales None
140 West Parkway
Pompton Plains, NJ 07444
BRADLEY W. LARSON Senior Vice President of Sales None
367 Bryan Drive
Alamo, CA 94526
MICHELLE L. MCCANN Vice President, Manager, Retirement None
Plans Marketing
MICHAEL R. SANDERS Vice President, Product Manager None
Managed Money Services
CHARLES L. VON BREITENBACH, II* Vice President, Product Manager None
Managed Money Services
ROBERT T. HAUSLER* Global Mutual Funds, None
Product Management
MARSHA E. JACOBY* Vice President, National Accounts None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
TRACY A. SALOMON* Vice President, Retirement None
Marketing Manager
HELEN SIMON* Vice President, Sales None
Administration Manager
J. BRERETON YOUNG* Vice President, Mutual Funds None
Product Manager
PETER J. CAMPAGNA Vice President, Regional Retirement None
1130 Green Meadow Court Plans Manager
Acworth, GA 30102
CHARLES E. WENZEL Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
</TABLE>
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
As of December 31, 1997
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
JAMES R. BESHER Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
RICHARD B. CALLAGHAN Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
BRADFORD C. DAVIS Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
KENNETH DOUGHERTY Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
ANDREW DRALUCK Regional Vice President None
4032 E. Williams Drive
Phoenix, AZ 85024
JONATHAN G. EVANS Senior Vice President of Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
EDWARD S. FINOCCHIARO Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
MICHAEL C. FORGEA Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
DAVID L. GARDNER Regional Vice President None
2504 Clublake Trail
McKinney, TX 75070
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
MARK LIEN Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
JUDITH L. LYON Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
DAVID L. MEYNCKE Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
TIM O'CONNELL Regional Vice President None
14872 Summerbreeze Way
San Diego, CA 92128
THOMAS PARNELL Regional Vice President None
5250 Greystone Drive #107
Inver Grove Heights, MN 55077
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
</TABLE>
<PAGE>
File No. 2-92487
811-4078
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Financial Services, Inc.
As of December 31, 1997
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
DAVID K. PETZKE Regional Vice President None
2714 Winding Trail Place
Boulder, CO 80304
NICHOLAS ROBERTS Regional Vice President None
200 Broad Street, Apt. 2225
Stamford, CT 06901
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
BRUCE M. TUCKEY Senior Vice President of Sales None
41644 Chathman Drive
Novi, MI 48375
ANDREW S. VEASEY Senior Vice President of Sales None
14 Woodside
Rumson, NJ 07760
STEVE WILSON Regional Vice President None
83 Kaydeross Park
Saratoga Springs, NY 12866
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, Marketing None
SANDRA FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
GAIL S. CUSHING* Assistant Vice President, None
National Accounts Manager
JOSEPH M. MCGILL* Assistant Vice President and None
Compliance Officer
JACK TALVY* Assistant Vice President, Internal None
Marketing Services Manager
JOYCE PERESS* Assistant Secretary None
</TABLE>
* The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, N Y 10017.
(c) Not Applicable
Item 30.
Location of Accounts and Records
(1) Investors Fiduciary Trust Company
801 Pennsylvania
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, 1997, 1996 and 1995 the
approximate cost of these services was $263,000, $198,600 and $64,500,
respectively.
<PAGE>
File No. 2-92487
811-4078
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 has duly caused this
Post-Effective Amendment No. 22 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 13th day of January, 1998.
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. 22 to
Registration Statement has been signed below by the following persons in the
capacities indicated on January 13, 1998.
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
Alice S. Ilchman, Director )
John E. Merow, Director ) /s/ Brian T. Zino
-------------------
Betsy S. Michel, Director ) *Brian T. Zino, Attorney-in-fact
James C. Pitney, Director )
James Q. Riordan, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
