File No. 2-93076
811-4103
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 19 |X|
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 21 |X|
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SELIGMAN HIGH INCOME FUND SERIES
(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)
Registrant's Telephone Number: 212-850-1864 or Toll Free: 800-221-2450
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THOMAS G. ROSE, Treasurer, 100 Park Avenue, New York, New York 10017
(Name and address of agent for service)
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It is proposed that this filing will become effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b) of rule 485
|X| on May 1, 1995 pursuant to paragraph (b) of rule 485
|_| 60 days after filing pursuant to paragraph (a)(i) of rule 485
|_| on (date) pursuant to paragraph (a)(i) of rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii) of rule 485
|_| on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on February
27, 1995
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File No. 2-93076
811-4103
SELIGMAN HIGH INCOME FUND SERIES
FORM N-1A CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 19
PURSUANT TO RULE 481 (A)
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ITEM IN PART A OF FORM N-1A LOCATION IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Summary of Series' Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Organization And Capitalization
5. Management of the Fund Management Services
5a. Manager's Discussion of Fund Performance Management Services
6. Capital Stock and Other Securities Cover Page; Organization and Capitalization
7. Purchase of Securities Being Offered Alternative Distribution System; Purchase of Shares; Administration,
Shareholder Services and Distribution Plan
8. Redemption or Repurchase Telephone Transactions; Redemption of Shares; Exchange Privilege
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 General Information; Organization and Capitalization (Prospectus); Appendix
13. Investment Objectives and Policies Investment Objective, Policies And Risks; Investment Limitations
14. Management of the Registrant Management And Expenses
15. Control Persons and Principal Trustees and Officers; General Information
Holders of Services
16. Investment Advisory and Other Services Management and Expenses; Distribution Services
17. Brokerage Allocation Portfolio Transactions; Administration, Shareholder Services and Distribution
Plan
18. Capital Stock and Other Securities General Information; Organization And Capitalization (Prospectus)
19. Purchase, Redemption and Pricing Purchase and Redemption of Series' Shares; Valuation
of Securities being Offered
20. Tax Status Federal Income Taxes (Prospectus)
21. Underwriters Distribution Services
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
* Each of Registrant's two Series has a separate Prospectus; Registrant's
Statement of Additional Information applies to both Series.
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Prospectus
Seligman
U.S. Government Securities
Series
May 1, 1995
[J&W SELIGMAN LOGO]
<PAGE>
SELIGMAN U.S. GOVERNMENT SECURITIES SERIES
a series of
Seligman High Income Fund Series
100 Park Avenue o New York, NY 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
May 1, 1995
Seligman High Income Fund Series (the "Fund") is a diversified, open-end
management investment company that offers two different series each of which
seeks to earn high current income by investing in debt securities but has
differing investment objectives and investment policies. Investment advisory and
management services are provided to the Fund by J. & W. Seligman & Co.
Incorporated (the "Manager"); the Fund's distributor is Seligman Financial
Services, Inc., an affiliate of the Manager.
The investment objective of the Seligman U.S. Government Securities Series
(the "Series") is to produce high current income. The Series seeks to achieve
its objective by investing primarily in debt obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities and by writing
covered call options against such securities. In order to reduce risks that may
be associated with changes in interest rates, the Series may also purchase put
options on such securities and may engage in transactions involving interest
rate futures contracts and options on such contracts. While certain debt
obligations in the Series are issued or guaranteed by the United States
Government or by United States Government-related instrumentalities, such
investments are still subject to the risk of market value fluctuations. For a
description of the Series' investment objective and policies, including the risk
factors associated with an investment in the Series, see "Investment Objective,
Policies And Risks." There can be no assurance that the Series' investment
objective will be achieved.
The Series offers two 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 1% of the average daily net asset value of the Class A
shares. Class D shares are sold without an initial sales load but are subject to
a contingent deferred sales load ("CDSL") of 1% imposed on certain redemptions
within one year of purchase, an annual distribution fee of up to .75 of 1% and
an annual service fee of up to .25 of 1% of the average daily net asset value of
the Class D shares. See "Alternative Distribution System." Shares of the Series
may be purchased through any authorized investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Series before investing. Please read it carefully before
you invest and keep it for future reference. Additional information about the
Series, including a Statement of Additional Information, has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
available upon request and without charge by calling or writing the Fund at the
telephone numbers or the address set forth above. The Statement of Additional
Information is dated the same date as this Prospectus and is incorporated herein
by reference in its entirety.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
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Summary Of Series' Expenses ......................... 2
Financial Highlights ................................ 3
Alternative Distribution System ..................... 4
Investment Objective, Policies And Risks ............ 5
Management Services ................................. 7
Purchase Of Shares .................................. 8
Telephone Transactions .............................. 12
Redemption Of Shares ................................ 13
Administration, Shareholder Services And Distribution
Plan 15
Exchange Privilege .................................. 16
Further Information About Transactions In The Series. 18
Dividends And Distributions ......................... 18
Federal Income Taxes ................................ 19
Shareholder Information ............................. 20
Advertising The Series' Performance ................. 22
Organization And Capitalization ..................... 22
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SUMMARY OF SERIES' EXPENSES
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CLASS A CLASS D
SHARES SHARES
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(Initial Sales (Deferred Sales
Load Load
Alternative) Alternative)
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SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price) 4.75% None
Sales Load on Reinvested Dividends None None
Deferred Sales Load (as a percentage of original 1% during the
purchase price or redemption proceeds, first year;
whichever is lower) None None thereafter
Redemption Fees None None
Exchange Fees None None
ANNUAL FUND OPERATING EXPENSES FOR 1994 Class A Class D
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(as a percentage of average net assets)
Management Fees .50% .50%
12b-1 Fees .22% 1.00%*
Other Expenses .38% .72%
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Total Fund Operating Expenses 1.10% 2.22%
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The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of the Series bear directly or
indirectly. The sales load on Class A shares is a one-time charge paid at the
time of purchase of shares. Reductions in sales loads are available in certain
circumstances. The contingent deferred sales load on Class D shares is a
one-time charge paid only if shares are redeemed within one year of purchase.
For more information concerning reduction in sales loads and for a more complete
description of the various costs and expenses, see "Purchase Of Shares" and
"Redemption Of Shares" and "Management Services" herein. The Series'
Administration, Shareholder Services and Distribution Plan to which the caption
"12b-1 Fees" relates, is discussed under "Administration, Shareholder Services
and Distribution Plan" herein.
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EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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You would pay the following expenses on a $1,000 invest-
ment, assuming (1) 5% annual return and (2) redemption at
the end of each time period................................Class A $58 $81 $105 $175
Class D $33+ $69 $119 $255
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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 of 1% and an annual service fee of
.25 of 1%. Pursuant to the Rules of the National Association of Securities
Dealers, Inc. the aggregate deferred sales loads and annual distribution fees
on Class D shares of the Fund may not exceed 6.25% of total gross sales,
subject to certain exclusions. The 6.25% limitation is imposed on the Fund
rather than on a per shareholder basis. Therefore, a long-term Class D
shareholder of the Fund may pay more in total sales loads (including
distribution fees) than the economic equivalent of 6.25% of such shareholder's
investment in the shares.
+ 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
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FINANCIAL HIGHLIGHTS
The Series' financial highlights for the periods presented below have been
audited by Deloitte & Touche LLP, independent auditors. This information which
is derived from the financial and accounting records of the Series should be
read in conjunction with the 1994 financial statements and notes contained in
the 1994 Annual Report, which may be obtained from the Series at the telephone
numbers or address provided on the cover page of this Prospectus.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from the Series'
beginning net asset value to its ending net asset value so that investors may
understand what effect the individual items have on their investment, assuming
it was held throughout the period. Generally, the per share amounts are derived
by converting the actual dollar amounts incurred for each item, as disclosed in
the financial statements, to their equivalent per share amount. The total return
based on net asset value measures the Series' performance assuming investors
purchased shares of the Series 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 the 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 shares of the Series. Total returns for periods of less
than one year are not annualized.
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Class A Class D
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Year Ended December 31 3/11/85* Year 9/21/93**
----------------------------------------------------------------------- to Ended to
1994 1993 1992 1991 1990 1989 1988 1987 1986 12/31/85 12/31/94 12/31/93
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Per Share Operating Performance:
Net asset value, beginning
of period ...................... $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 7.04 $ 7.06 $ 7.12 $ 8.15 $ 8.12 $ 7.14 $ 7.20 $7.33
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Net investment income***......... .44 .53 .51 .51 .59 .65 .60 .59 .65 .63 .37 .09
Net realized and unrealized
investment gain (loss)......... (.71) (.01) (.11) .41 (.15) (.02) (.06) (.84) .56 .99 (.72) (.13)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Increase (decrease) from
investment operations......... (.27) .52 .40 .92 .44 .63 .54 (.25) 1.21 1.62 (.35) (.04)
Dividends paid or declared....... (.44) (.53) (.51) (.51) (.59) (.65) (.60) (.59) (.65) (.63) (.37) (.09)
Distributions from net gain
realized ....................... -- -- -- -- -- -- -- (.13) (.53) (.01) -- --
Return of capital................ -- -- -- -- -- -- -- (.06) -- -- - --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Net increase (decrease) in
net asset value.....................(.71) (.01) (.11) .41 (.15) (.02) (.06) (1.03) .03 .98 (.72) (.13)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Net asset value, end of period... $ 6.47 $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 7.04 $ 7.06 $ 7.12 $ 8.15 $ 8.12 $ 6.48 $ 7.20
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ========
Total return based on net asset
value ......................... (3.88) %7.46 %5.78 %14.05% 6.37% 9.25% 7.84% (2.84)% 16.08% 23.34 %(5.05)% (.65)%
Ratios/Supplemental Data:***
Expenses to average net assets... 1.10% 1.11% 1.05% 1.10% 1.06% 1.09% 1.09% 1.13% 1.10% .57%+ 2.22% 2.09%+
Net investment income to average
net assets..................... 6.49% 7.22% 7.17% 7.39% 8.66% 9.16% 8.33% 7.82% 7.19% 7.99%+ 5.40% 5.28%+
Portfolio turnover............... 445.18% 170.35% 126.17% 95.46% 306.05% 226.25% 263.15% 282.99% 245.86% -- 445.18%170.35%++
Net assets, end of period
(000's omitted)................$54,714 $69,805 $55,732 $64,440 $71,735 $83,850 $106,720 $123,556 $154,919 $34,959 $6,062 $2,317
----
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* Commencement of operations.
**Commencement of offering of Class D shares.
*** Had the Manager, at its discretion, not waived portions of its fees and not
reimbursed certain expenses, the net investment income per share would have
been $.60, $.65 and $.58 for the Series for the periods ended December 31,
1985, 1986 and 1987, respectively. For the same periods, the ratios of
expenses to average net assets for the Series would have been .95%+, 1.14%,
and 1.15%, respectively. For the same periods, the ratios of net investment
income to average net assets for the Series would have been 7.61%+, 7.16% and
7.79%, respectively.
+ Annualized.
++For the year ended December 31, 1993.
3
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ALTERNATIVE DISTRIBUTION SYSTEM
The Series offers two 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 charges. 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
charges, as discussed below, or to have the entire initial purchase price
invested in the Series with the investment thereafter being subject to higher
ongoing charges and, for a one-year period, a CDSL.
Investors who qualify for reduced sales loads, as described under "Purchase
Of Shares" below, might choose to purchase Class A shares because Class A shares
would be subject to lower ongoing fees. The amount invested in the Fund,
however, is reduced by the initial sales load deducted at the time of purchase.
Investors who do not qualify for reduced initial sales loads but expect to
maintain their investment for an extended period of time might also choose to
purchase Class A shares because over time the accumulated continuing
distribution fee of 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 deducted at the time of purchase. Furthermore, the distribution fees
will be offset to the extent any return is realized on the additional funds
initially invested under the Class D alternative.
Alternatively, some investors might choose to have all of their funds
invested initially in Class D shares, although remaining subject to a higher
continuing distribution fee and, for a 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 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 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.
The two classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required by the Investment Company Act of 1940, as
amended (the "1940 Act"), or Massachusetts 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 fee and other expenses of each class. Class D shares
bear higher distribution fees, which will cause the Class D shares to pay lower
dividends than the Class A shares. The two classes also have separate exchange
privileges.
The Trustees of the Fund believe that no conflict of interest currently
exists between the Class A and Class D shares of the Series. On an ongoing
basis, the Trustees, in the exercise of their fiduciary duties under the 1940
Act and Massachusetts law, will seek to ensure that no such conflict arises. For
this purpose, the Trustees will monitor the Series 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 distinctions between Class A and
Class D shares are their sales load structures and ongoing expenses as set forth
below. Each class has advantages and disadvantages for different investors, and
investors should choose the class that best suits their circumstances and their
objectives.
4
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ANNUAL 12B-1 FEES
INITIAL (AS A % OF AVERAGE
SALES LOAD DAILY NET ASSETS) OTHER INFORMATION
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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.
CLASS D None Service fee of CDSL of 1% on
.25%; Distribution redemptions
fee of .75%. within one year of
purchase.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund is a diversified open-end management investment company organized
under the laws of the Commonwealth of Massachusetts by a Declaration of Trust
dated July 27, 1984. The Fund offers one other separate investment series: the
Seligman High-Yield Bond Series. The High-Yield Bond Series' investment
objectives and policies and other important information with respect to its
operations are set forth in a separate Prospectus.
The objective of the Series is to produce high current income. The Series
seeks to achieve its objective by investing at least 80% of the value of its
total assets in direct obligations of the U.S. Treasury, such as Treasury Bills,
Treasury Notes and Treasury Bonds, and in debt securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and backed by the full
faith and credit of the U.S. Government which have maturities greater than one
year at the date of purchase by the Series, except for temporary defensive
purposes. This investment policy is a fundamental policy and may not be changed
by the Trustees of the Fund without the vote of a majority of the Series'
outstanding voting securities (as defined below). The Series may invest up to
20% of the value of its total assets in direct obligations of the U.S. Treasury
and in securities issued or guaranteed by the United States Government, its
agencies or instrumentalities which have maturities of less than one year at the
date of purchase by the Series. Obligations issued by U.S. Government agencies
include obligations issued by such entities as Federal Land Banks, Federal Home
Loan Banks and the Government National Mortgage Association ("GNMA"). "GNMA
Certificates" or "GNMAs," represent interests in pools of residential mortgages.
The timely payment of principal and interest is guaranteed by GNMA and backed by
the full faith and credit of the United States Government. GNMAs differ from
other forms of debt securities which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified call
dates. Instead, GNMAs provide a "pass through" of monthly payments of interest
and principal made by the borrowers on their residential mortgage loans, net of
certain expenses. A pools stated maturity may be shortened by prepayments of
principal on the underlying mortgage obligations. Factors affecting mortgage
prepayments include, among other things, the level of interest rates, general
economic and social conditions and the location and age of the mortgage. Such
prepayments may shorten the effective maturity of GNMAs. High interest rate
mortgages are more likely to be prepaid than lower rate mortgages; consequently,
the effective maturities of GNMAs with pass through payments of higher rate
mortgages are likely to be shorter than those of obligations with pass through
payments of lower rate mortgages.
LENDING OF PORTFOLIO SECURITIES. The Series may lend portfolio securities
to brokers or dealers, banks, or other institutional borrowers of securities.
The borrower must maintain with the Series cash or equivalent collateral such as
Treasury Bills, 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
Series any income accruing on the loaned securities and the Series may invest
the cash collateral and earn additional income or may receive an agreed upon
amount of interest income from the borrower. The lending of portfolio securities
may involve certain risks such as: 1) an increase in the market value of the
borrowed securities without a corresponding increase in the value of the posted
collateral might result in an imbalance in value between the borrowed securities
and the collateral; 2) in the event the borrower sought protection under the
Federal bankruptcy laws, repayment of the borrowed securities to the Fund might
5
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be delayed; and 3) the borrower might refuse to repay the borrowed securities.
The Series may lend portfolio securities to the extent that the Manager deems
appropriate in seeking to achieve the Series' investment objective and with only
a prudent degree of risk.
REPURCHASE AGREEMENTS. The Series 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 Series acquires a money
market instrument, generally a U.S. Government obligation qualified for purchase
by the Series, 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 Series 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. Repurchase agreements
usually are for short periods, such as one week or less, but may be for longer
periods. Although the Series may enter into repurchase agreements with respect
to any money market instruments qualified for purchase, such agreements
generally involve U.S. Government securities and will only involve securities
issued or guaranteed by the U.S. Government. As a matter of fundamental policy,
the Series will not enter into repurchase agreements of more than one week's
duration if more than 10% of its total assets would be invested in such
agreements and in restricted and other illiquid securities.
WHEN-ISSUED SECURITIES. The Series may purchase securities on a when-issued
basis, in which case delivery and payment normally take place within 45 days
after the date of the commitment to purchase. The payment obligation and the
interest rate that will be received on the securities are each fixed at the time
the buyer enters into the commitment. Although the Series will only purchase a
security on a when-issued basis with the intention of actually acquiring the
securities, the Series may sell these securities before the purchase settlement
date if it is deemed advisable.
Securities held by the Series and securities purchased on a when-issued
basis are subject to changes in market value based upon investors' perceptions
of the creditworthiness of the issuer and upon changes, real or anticipated, in
the level of interest rates. If the Series remains substantially fully invested
at the same time that it has purchased securities on a when-issued basis, the
market value of the Series' assets may fluctuate more than otherwise would be
the case. Purchasing a security on a when-issued basis can involve a risk that
the yields available in the market when the delivery takes place may be higher
than those obtained on the security so purchased.
An account for the Series consisting of cash or liquid high-grade debt
securities equal to the amount of the when-issued commitments will be
established with the Series' Custodian, and marked to market daily, with
additional cash or liquid high-grade debt securities added when necessary. When
the time comes to pay for when-issued securities, the Series will meet its
respective obligations from then available cash flow, sale of securities held in
the separate account, sale of other securities or, although they would not
normally expect to do so, from the sale of the when-issued securities themselves
(which may have a value greater or less than the Series' payment obligations).
Sale of securities to meet such obligations carries with it a greater potential
for the realization of capital gain or loss.
Except as noted above or in the Statement of Additional Information, the
foregoing investment policies are not fundamental and the Trustees of the Fund
may change such policies without the vote of a majority of the outstanding
voting securities of the Fund or the Series. As a matter of policy, the Trustees
will not change the Series' investment objective of producing high current
income without such a vote. Under the 1940 Act a "vote of a majority of the
outstanding voting securities" of the Fund or of a particular series means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
6
<PAGE>
the Fund or of the series or (2) 67% or more of the shares of the Fund or of the
series present at a shareholders' meeting if more than 50% of the outstanding
shares of the Fund or of the series are represented at the meeting in person or
by proxy.
MANAGEMENT SERVICES
The Trustees provide broad supervision over the affairs of the Series and
the Fund as a whole. Pursuant to a Management Agreement approved by the Trustees
and the shareholders of the Series, the Manager manages the investments of the
Series and administers the business and other affairs of the Series. The address
of the Manager is 100 Park Avenue, New York, NY 10017.
The Manager also serves as manager of sixteen other investment companies
which, together with the Fund, comprise the "Seligman Group." These companies
are: Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund, Inc.,
Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson
Global Fund Series, Inc., Seligman Income Fund, Inc., Seligman New Jersey
Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund Series, Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman Select
Municipal Fund, Inc., Seligman Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt
Series Trust and Tri-Continental Corporation. The aggregate assets of the
Seligman Group are approximately $7.3 billion. The Manager also provides
investment management or advice to institutional accounts having an aggregate
value of more than $3.3 billion.
Mr. William C. Morris is Chairman and President of the Manager and Chairman
of the Board and Chief Executive Officer of the Fund. Mr. Morris owns a majority
of the outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a
wholly-owned subsidiary of certain investment companies in the Seligman Group,
which performs, at cost, certain recordkeeping functions for the Series,
maintains the records of shareholder accounts and furnishes dividend paying,
redemption and related services.
The Manager is entitled to receive a management fee, calculated daily and
payable monthly, equal to .50% of the daily average net assets of the series on
an annual basis. The Fund pays all of its expenses other than those assumed by
the Manager. The Fund's expenses are allocated among the series in a manner
determined by the Trustees to be fair and equitable. Total expenses of the
Series' Class A and Class D shares, respectively, for the year ended December
31, 1994 amounted to 1.10% and 2.22%, respectively, of the average daily net
assets of each class.
PORTFOLIO MANAGER. Mr. Leonard J. Lovito, Vice President of the Manager,
has been the Portfolio Manager of the Series since January 1994. Mr. Lovito also
serves as Portfolio Manager of Seligman Cash Management Fund, Inc. and the
Seligman Cash Management Portfolio and Seligman Fixed Income Securities
Portfolio of Seligman Portfolios, Inc. Mr. Lovito joined the Manager in 1984 as
a fixed income trader and has more than 11 years of fixed income trading and
portfolio management experience.
The Manager's discussion of the Series' performance as well as a line graph
illustrating comparative performance information between the Series and the
Lehman Brothers Government/Mortgage Index is included in the Fund's 1994 Annual
Report to Shareholders. Copies of the 1994 Annual Report may be obtained,
without charge, by calling or writing the Fund at the telephone numbers or
address listed on the front page of this Prospectus.
PORTFOLIO TRANSACTIONS. Fixed-income securities are generally traded on the
over-the-counter market on a "net" basis without a stated commission, through
dealers acting for their own account and not as brokers. The Series will engage
in transactions with these dealers or deal directly with the issuer. Prices paid
to dealers will generally include a "spread," i.e., the difference between the
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<PAGE>
prices at which a dealer is willing to purchase or to sell the security at that
time. The Management Agreement recognizes that in the purchase and sale of
portfolio securities, the Manager 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 dealers to the Manger for
its use in connection with its services to the Fund as well as to other clients.
Consistent with the rules of the National Association of Securities
Dealers, Inc. ("NASD") and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, the
Manager may consider sales of shares of the Fund and, if permitted under
applicable laws, may consider sales of shares of the other mutual funds in the
Seligman Group as a factor in the selection of brokers or dealers to execute
portfolio transactions for the Series.
PORTFOLIO TURNOVER. A change in securities held by the Series is known as
"portfolio turnover" which may result in the payment by the Series of dealer
spreads or underwriting commissions and other transactions costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
Although it is the policy of the Series to hold securities for investment,
changes will be made from time to time when the Manager believes such changes
will strengthen the Series' portfolio. The portfolio turnover rate will vary
from year to year as well as within a year and may exceed 100% and has done so
in prior years.
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the Series' shares. Its address is 100 Park
Avenue, New York, New York 10017.
The Fund issues two classes of shares: Class A shares are sold to investors
choosing the initial sales load alternative; 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 Series 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 SERIES IS $1,000 (EXCEPT
FOR AN ACCOUNT BEING ESTABLISHED PURSUANT TO THE INVEST-A-CHECK(R) SERVICE);
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 WHICH DO NOT MEET THESE MINIMUMS.
Orders received by an authorized dealer before the close of business on the
New York Stock Exchange ("NYSE") (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 Series' net asset value determined as of the close of the NYSE
on that day plus, in the case of Class A shares, the applicable sales load.
Orders accepted by dealers after the close of the NYSE, or received by SFSI
after the close of business, will be executed at the Series' net asset value as
next determined plus, in the case of Class A shares, the applicable sales load.
The authorized dealer through which a shareholder purchases shares is
responsible for forwarding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire
payment, dealer orders must first be placed through SFSI'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 U.S. Government
Securities Series (A or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE
PURCHASE CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER.
8
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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.
Existing shareholders may purchase additional shares of the Series through
any authorized dealer or by sending a check payable to the "Seligman Group of
Mutual Funds" directly to P.O. BOX 3936, NEW YORK, NY 10008-3936. Checks for
investment must be in U.S. dollars drawn on a domestic bank. The check should
include the shareholder's name, address, account number, name of Series and
class of shares. IF A SHAREHOLDER DOES NOT INDICATE 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 Series net asset value next
determined after the order is accepted plus, in the case of Class A shares, the
applicable sales load.
Seligman Data Corp. will charge a $10.00 service fee for checks returned to
it marked "unpaid." This charge may be deducted from the account that requested
the purchase. For the protection of the Fund and its shareholders, no redemption
proceeds will be remitted to a shareholder with respect to 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 the shares to
the shareholder's account.
VALUATION. The net asset value of the Series' shares is determined each
day, Monday through Friday, as of the close of trading on the NYSE (usually 4:00
p.m. Eastern time) on each day that the NYSE is open for business. Net asset
value is calculated separately for each class. Securities are valued at market
value or, in the absence thereof, at fair value as determined in accordance with
procedures approved by the Trustees. Short-term holdings maturing in 60 days or
less are 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.
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 REGULAR
PERCENTAGE OF DEALER
------------------- DISCOUNT
NET AMOUNT AS A
INVESTED %OF
OFFERING (NET ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE) PRICE
----------------------- ------- --------- -------
Less than - $ 50,000 4.75% 4.99% 4.25%
$ 50,000- 99,999 4.00 4.17 3.50
100,000- 249,999 3.50 3.63 3.00
250,000- 499,999 2.50 2.56 2.25
500,000- 999,999 2.00 2.04 1.75
1,000,000- 3,999,999 1.00 1.01 .90
4,000,000- or more* 0 0 0
* Dealers will receive a fee of .15% on sales of $4,000,000 or more.
REDUCED SALES LOADS. Reductions in sales loads apply to purchases of Class
A shares by a "single person," including an individual, members of a family unit
comprising husband, wife, and minor children purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any
other fiduciary or individual account.
o VOLUME DISCOUNTS are provided if the total amount being invested in Class
A shares of the Series alone, or in any combination of shares of the other
mutual funds in the Seligman Group that are sold with a sales load reaches
levels indicated in the above sales load schedule.
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o THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of the other mutual funds in the Seligman Group sold
with a sales load with the total net asset value of shares of those funds
already owned that were sold with a sales load and the total net asset value of
shares of Seligman Cash Management Fund that were acquired by the investor
through an exchange of shares of another mutual fund in the Seligman Group on
which there was a sales load to determine reduced sales loads in accordance with
the sales load schedule. An investor or a dealer purchasing shares on behalf of
any investor must indicate that 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 of the
Series over a 13-month period at reduced sales loads, based on the total amount
of shares the investor intends to purchase plus the total net asset value of
shares of the other mutual funds in the Seligman Group already owned that were
sold with a sales load and the total net asset value of shares of Seligman Cash
Management Fund that were acquired through an exchange of shares of another
mutual fund in the Seligman Group on which there was a sales load. An investor
or a dealer purchasing Class A shares on behalf of any investor must indicate
that the investor has existing accounts when making investments or opening new
accounts. For more information concerning terms of Letters of Intent, see "Terms
and Conditions" on page 24.
SPECIAL PROGRAMS. The Series may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees (and their spouses
and minor children) of the Series, the other investment companies in the
Seligman Group, the Manager and other companies affiliated with the Manager.
Such sales also may be made to employee benefit and thrift plans for such
persons and to any investment advisory, custodial, trust or other fiduciary
account managed or advised by the Manager or any affiliate.
Class A shares also may be issued without a sales load in connection with
the acquisition of cash and securities owned by other investment companies and
personal holding companies; to any registered unit investment trust which is the
issuer of periodic payment plan certificates, the net proceeds of which are
invested in Series shares; to separate accounts established and maintained by an
insurance company which are exempt from registration under Section 3(c)(11) of
the 1940 Act; to registered representatives and employees (and their spouses and
minor children) of any dealer that has a sales agreement with SFSI; to
shareholders of mutual funds, with objectives and policies similar to the Series
who purchase shares with redemption proceeds of such funds; to financial
institution trust departments; to registered investment advisers exercising
discretionary investment authority with respect to the purchase of Series'
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
solicitations of, its employees, members or participants in connection with the
purchase of shares of the Series; and to "eligible employee benefit plans" of
employers who have at least 2,000 U.S. employees to whom such plan is made
available and, regardless of the number of employees, if such plan is
established and maintained by any dealer that has a sales agreement with SFSI.
"Eligible employee benefit plans" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Series 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.
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 of 1% and an annual service fee of up to .25 of
1%, 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.
A CDSL will be imposed on any redemption of Class D shares which were
purchased during the preceding twelve months; however, no such charge will be
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<PAGE>
imposed on shares acquired through the investment of dividends or distributions
from any Class D shares within the Seligman Group . The amount of any CDSL will
be paid to and retained by SFSI.
To minimize the application of CDSL to a redemption, shares acquired
pursuant to the investment of dividends and distributions will be redeemed
first; followed by shares purchased at least one year prior to the redemption.
Shares held for the longest period of time within the applicable one year period
will then be redeemed. Additionally, for those shares determined to be subject
to the CDSL, the application of the 1% CDSL will be made to the current net
asset value or original purchase price, whichever is less.
For example, assume an investor purchased 100 shares in January at a price
of $10.00 per share. During the first year, 5 additional shares were acquired
through investment of dividends and distributions. In January of the following
year, an additional 50 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 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 held more than 1 year
(100 @ $12.25) 1,225.00
Shares held less than 1 year subject
to CDSL (17.449 @ $12.25) 213.75
---------
Gross proceeds of redemption $1,500.00
Less CDSL (17.449 shares @ $12.00 =
$209.39 x 1% = $2.09) (2.09)
---------
Net proceeds of redemption $1,497.91
=========
For Federal income tax purposes, the amount of the CDSL will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as
defined in section 72 (m)(7) of the Internal Revenue Code of 1986, as amended
(the "Code"); (b) in connection with (i) distributions from retirement plans
qualified under section 401(a) of the Code when such redemptions are necessary
to make distributions to plan participants (such payments include, but are not
limited to death, disability, retirement, or separation of service), (ii)
distributions from a custodial account under Code section 403 (b)(7) or an
individual retirement account ("IRA") due to death, disability, or attainment of
age 591/2, and (iii) a tax-free return of an excess contribution to an IRA; (c)
in whole or in part, in connection with shares sold to current and retired
Trustees of the Fund; (d) in whole or in part, in connection with shares sold to
any state, county, or city or any instrumentality, department, authority, or
agency thereof, which is prohibited by applicable investment laws from paying a
sales load or commission in connection with the purchase of shares of any
registered investment management company; (e) pursuant to an automatic cash
withdrawal service; (f) in connection with the redemption of Class D shares of
the Series if it is combined with another mutual fund in the Seligman Group, or
another similar reorganization transaction; and (g) in connection with the
Series' right to redeem or liquidate an account that holds below a certain
minimum number or dollar amount of shares (currently $500).
If, with respect to a redemption of any 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 1% payment or a portion of the 1% payment paid on such shares.
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<PAGE>
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the mutual funds in the Seligman Group. SFSI may from time to time pay
a bonus or other incentive to dealers that sell shares of the Seligman Mutual
Funds. In some instances, these bonuses or incentives may be offered only to
certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other 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 whose account has either an individual or joint tenancy
registration may elect to effect the following transactions via telephone by
completing the Telephone Service Election portion of the Account Application or
a separate Telephone Service Election Form: (i) redemption of Series shares,
(ii) exchange of Series shares for shares of another Seligman Mutual Fund, (iii)
change of a dividend and/or capital gain distribution option, and (iv) change of
address. IRA accounts may only elect to effect exchanges or address changes. By
completing the appropriate section of the Account Application or separate
Election Form, all Seligman Mutual Funds with the same account number (i.e.,
registered in exactly the same names), including any new fund in which the
shareholder invests in the future, will automatically have telephone services.
All telephone transactions are effected through Seligman Data Corp. at (800)
221-2450.
For accounts registered as joint tenancies, each joint tenant, by electing
telephone transaction services, authorizes each of the other tenants to effect
telephone transactions on his or her behalf.
During times or drastic economic or market changes, a shareholder may
experience difficulty in contacting Seligman Data Corp. to request a redemption
of exchange of Series shares. 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 will result
in the redemption request being processed at a later time than if telephone
transactions had been used, and the Series' net asset value may fluctuate during
such periods.
The Series 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 Series 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. Shareholders are, or course,
under no obligation to apply for telephone transaction services. In any instance
where the Series 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 Series or Seligman Data Corp. does not follow the procedures described
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<PAGE>
above, the Series or Seligman Data Corp. may be liable for any losses due to
unauthorized or fraudulent instructions. Telephone services 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.
Telephone transaction services may be terminated by a shareholder at any time by
sending a written request to Seligman Data Corp. Written acknowledgment of
termination of telephone transaction services will be sent to the shareholder.
REDEMPTION OF SHARES
A shareholder may redeem shares held in book credit form without charge,
(except a CDSL, if applicable) at any time by SENDING A WRITTEN REQUEST to
Seligman Data Corp., 100 Park Avenue, New York, New York 10017. The redemption
request must be signed by all persons in whose name the shares are registered. A
shareholder may redeem shares that are not in book credit form by surrendering
certificates in proper form to the same address. Certificates should be sent by
registered mail. Share certificates must be endorsed for transfer or accompanied
by an endorsed stock power signed by all share owners exactly as their name(s)
appear(s) on the account registration. The shareholder's letter of instruction
or endorsed stock power should specify the account number, class of shares (A or
D) and the number of shares or dollar amount to be redeemed. The Fund cannot
accept conditional redemption requests. If the redemption proceeds are (i)
$50,000 or more, (ii) to be paid to someone other than the shareholder of record
(regardless of the amount) or (iii) to be mailed to other than the address of
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) and 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 ALSO BE REQUIRED BY SELIGMAN DATA CORP.
IN THE EVENT OF A REDEMPTION BY CORPORATIONS, EXECUTORS, ADMINISTRATORS,
TRUSTEES, CUSTODIANS OR RETIREMENT PLANS. FOR FURTHER INFORMATION WITH RESPECT
TO NECESSARY REDEMPTION REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES
DEPARTMENT OF SELIGMAN DATA CORP. FOR ASSISTANCE.
In the case of Class A shares, and in the case of Class D shares redeemed
after one year, a shareholder will receive the net asset value per share next
determined after receipt of a request in good order. If Class D shares are
redeemed within one year of purchase, a shareholder will receive the net asset
value per share next determined after receipt of the 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 Series 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. The Series makes no charge for this transaction, but
the dealer may charge a service fee. "Sell" or repurchase orders received from
an authorized dealer before the close of the NYSE and received by SFSI, the
repurchase agent, before the close of business on the same day will be executed
at the net asset value per share determined as of the close of the NYSE on that
day. 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. Shares held in a "street name" account with a broker/dealer may be sold to
the Fund only through a broker/dealer.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares may
be made in an amount of up to $50,000 per day, per account. One telephone
13
<PAGE>
redemption request per day is permitted. Telephone redemption requests must be
received by Seligman Data Corp. at (800) 221-2450 between 8:30 a.m. and 4:00
p.m. Eastern time, on any business day and will be processed as of the close of
business on that day. Redemption requests by telephone will not be accepted
within 30 days following an address change. Keogh Plans, IRAs or other
retirement plans are not eligible for telephone redemptions. The Series reserves
the right to suspend or terminate its telephone redemption service at any time
without notice.
For more information about telephone redemptions, including the procedure
for electing such service and the circumstances under which shareholders may
bear the risk of loss for a fraudulent transaction, see "Telephone Transactions"
above.
CHECK REDEMPTION SERVICE. The Check Redemption Service allows a shareholder
of Class A shares who owns or purchases shares in the Series worth $25,000 or
more to request Seligman Data Corp. to provide redemption checks to be drawn on
the shareholder's account in amounts of $500 or more. The shareholder may elect
to use this Service on the Account Application or by later written request to
Seligman Data Corp. Shares for which certificates have been issued will not be
available for redemption under this Service. Dividends continue to be earned
through the date preceding the date the check clears for payment. Use of this
Service is subject to Mellon Bank, N.A. rules and regulations covering checking
accounts. Separate checkbooks will be furnished for each series.
There is no charge for use of checks. When honoring a check that was
processed for payment, Mellon Bank, N.A. will cause the Series to redeem exactly
enough full and fractional shares from an account to cover the amount of the
check. If shares are owned jointly, redemption checks must be signed by all
persons, unless otherwise elected on the Account Application, in which case a
single signature will be acceptable.
In view of daily fluctuations in share value, the shareholder should be
certain that the amount of shares in the account is sufficient to cover the
amount of checks written. If insufficient shares are in the account, the check
will be returned, marked "insufficient funds." THE FUND WILL NOT REDEEM SHARES
IN ONE SERIES TO COVER A CHECK WRITTEN ON ANOTHER SERIES. SELIGMAN DATA CORP.
WILL CHARGE A $10.00 PROCESSING FEE FOR ANY CHECK REDEMPTION DRAFT RETURNED
MARKED "UNPAID." THIS CHARGE MAY BE DEBITED FROM THE ACCOUNT THE CHECK WAS DRAWN
AGAINST.
Check redemption books cannot be reordered unless the shareholder's account
has a value of $25,000 or more and the Fund has a certified Taxpayer
Identification Number on file.
Cancelled checks will be returned to a shareholder under separate cover the
month after they clear. The Check Redemption Service may be terminated at any
time by the Fund or Mellon Bank, N.A. See "Terms and Conditions" on page 24 for
further information. The Check Redemption Service is not available with respect
to Class D shares.
FOR THE PROTECTION OF THE SERIES AND ITS SHAREHOLDERS, NO PROCEEDS WILL BE
REMITTED TO A SHAREHOLDER WITH RESPECT TO 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 THE SHARES TO THE SHAREHOLDER'S
ACCOUNT.
GENERAL. Whether shares are redeemed or repurchased, a check for the
proceeds will be sent to the address of record within seven calendar days after
acceptance of the redemption or repurchase order and will be made payable to all
of the registered owners on the account. The Series will not permit redemptions
of shares with respect to 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 the shares to the shareholder's account. The
proceeds of a redemption or repurchase may be more or less than the
shareholder's cost.
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<PAGE>
The Fund reserves the right to redeem shares owned by a shareholder whose
investment in the Series has a value of less than a minimum amount specified by
the Fund's Board of Trustees, which is presently $500. Shareholders are sent a
notice before the redemption is processed stating that the value of their
investment in the Series 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 not to redeem them, or to shift the investment to one of the other
series in the Fund or one of the other mutual funds in the Seligman Group, the
shareholder may, within 120 calendar days of the date of redemption, use all or
any part of the proceeds of the redemption to reinstate, free of sales load, all
or any part of the investment in shares of the Series or, in shares of any of
the other series of the Fund or one of the other mutual funds in the Seligman
Group. If a shareholder redeems Class D shares and the redemption was subject to
a CDSL, the shareholder may reinstate the investment in shares of the same class
of the Series or any of the other mutual funds in the Seligman Group within 120
calendar days of the date of redemption and receive a credit for the CDSL paid.
Such investment will be reinstated at the net asset value per share established
as of the close of the NYSE on the day the request is received. Seligman Data
Corp. must be informed that the purchase is a reinstated investment. REINSTATED
SHARES MUST BE REGISTERED EXACTLY AS THE SHARES PREVIOUSLY REDEEMED.
Generally, exercise of the Reinstatement Privilege does not alter the
Federal income tax status of any capital gain realized on a sale of Series
shares, but to the extent that any shares are sold at a loss and the proceeds
are reinvested in shares of the same Series, 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 Series may pay to SFSI an administration, shareholder services
and distribution fee in respect of the Series' Class A 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 Series,
(ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Series shareholders,
and (iii) otherwise promoting the sale of shares of the Series, 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 SFSI's costs incurred in connection with its marketing
efforts with respect to shares of the Series. 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 Series.
Under the Plan, the Series reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of Class A shares. It is expected that the proceeds from the fee in
respect of Class A shares will be used primarily to compensate Service
Organizations which enter into agreements with SFSI. Such Service Organizations
will receive from SFSI a continuing fee of up to .25% on an annual basis,
payable quarterly, of the average daily net assets of Class A shares
attributable to the particular Service Organization for providing personal
service and/or the maintenance of shareholder accounts. The fee payable from
time to time is, within such limit, determined by the Trustees of the Fund.
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The Plan, as it relates to Class A shares was approved by the Trustees on
October 9, 1984 and was approved by the shareholders of the Series on April 10,
1986. The Plan is reviewed by the Trustees annually. The total amount paid for
the year ended December 31, 1994 in respect of the Series' 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 D shares at an annual rate of up to 1% of the average daily net asset
value of the Class D shares. Proceeds from the Class D distribution fee 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 1% payment made by it to Service Organizations
at the time of the sale of Class D shares. The amounts expended by SFSI in any
one year upon the initial purchase of Class D shares may exceed the amounts
received by it from Plan payments retained. Expenses of administration,
shareholder services and distribution of Class D shares in one fiscal year of
the Series may be paid from Class D Plan fees received from the Series in any
other fiscal year.
The Plan, as it relates to class D shares, was amended by the Trustees of
the Fund on July 15, 1993. The Plan is reviewed by the Trustees annually. The
total amount paid for the year ended December 31, 1994 by the Series' Class D
shares pursuant to the Plan was 1% per annum of the average daily net assets of
Class D shares.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI shall act as broker/dealer of record for most
shareholder accounts that do not have a designated broker/dealer of record
including all such shareholder accounts established after April 1, 1995 and will
receive compensation for providing personal service and account maintenance to
its account of record.
EXCHANGE PRIVILEGE
A shareholder of the Series may, without charge, exchange at net asset
value any or all of an investment in the Series for shares of another series of
the Fund or for shares of any of the other mutual funds in the Seligman Group.
Exchanges may be made by mail, or by telephone, if telephone services are
elected by the shareholder.
Class A and Class D shares may be exchanged only for Class A and Class D
shares respectively, of another series of the Fund or another mutual fund in the
Seligman Group on the basis of relative net asset value.
If Class D shares that are subject to a CDSL are exchanged for Class D
shares of another fund, for purposes of assessing the CDSL payable upon
disposition of the exchanged Class D shares, the one year holding period shall
be reduced by the holding period of the original Class D shares.
Aside from the Series described in this Prospectus, the mutual funds in the
Seligman Group 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. The Fund will be closing to new
investors on June 30, 1995.
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O SELIGMAN FRONTIER FUND, INC: seeks to produce growth in capital value.
Income may be considered but will only be incidental to the fund's investment
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 International Fund, the Seligman Henderson Global Smaller Companies
Fund and the Seligman Henderson Global Technology Fund, which seek long-term
capital appreciation primarily through investing either in companies globally or
internationally.
O SELIGMAN HIGH INCOME FUND SERIES: seeks high current income by investing
in debt securities. In addition to the U.S. Government Securities Series, the
Fund consists of the High-Yield Bond Series.
O SELIGMAN INCOME FUND, INC.: seeks high current income and the possibility
of improvement of future income and capital value.
O SELIGMAN NEW JERSEY TAX-EXEMPT FUND, INC: invests in investment grade New
Jersey tax-exempt securities.
O SELIGMAN PENNSYLVANIA TAX-EXEMPT FUND SERIES: invests in investment grade
Pennsylvania tax-exempt securities.
O SELIGMAN TAX-EXEMPT FUND SERIES, INC: consists of several State Series
and a National Series. The National Tax-Exempt Series seeks to provide maximum
income exempt from Federal income taxes; individual state series, each seeking
to maximize income exempt from Federal income taxes and from personal income
taxes in designated states are available for Colorado, Georgia, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon
and South Carolina.
O SELIGMAN TAX-EXEMPT SERIES TRUST: includes a California Tax-Exempt High
Yield Series, a California Tax-Exempt Quality Series, a Florida Tax-Exempt
Series and a North Carolina Tax-Exempt Series each of which invests in
tax-exempt securities of it's designated state.
All permitted exchanges will be based on the then current net asset values
of the respective funds. Telephone requests for exchanges must be received
between 8:30 a.m. and 4:00 p.m. Eastern time, on any business day, by Seligman
Data Corp. at (800) 221-2450, and will be processed as of the close of business
on that day. The registration of an account into which an exchange is made must
be identical to the registration of the account from which shares are exchanged.
When establishing a new account by an exchange of shares, the shares being
exchanged must have a value of at least the minimum initial investment required
by the mutual 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. Account services, such as Invest-A-Check(R) Service, Directed
Dividends, Automatic Cash Withdrawal Service and Check Writing Privilege 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 a written exchange request together with certificates representing
shares to be exchanged in form of transfer.
Telephone exchanges are only available to shareholders whose accounts are
registered individually, as joint tenancies or IRAs. The Exchange Privilege via
mail is generally applicable to investments in an IRA and other retirement
plans, although some restrictions may apply and may be applicable to other
mutual funds in the Seligman Group that may be organized by the Manager in the
future. The terms of the Exchange Privilege 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
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contact an authorized investment dealer or Seligman Data Corp. to obtain
prospectuses of any of the mutual funds in the Seligman Group.
A broker/dealer of record will be able to effect exchanges on behalf of a
shareholder only if the broker/dealer has entered into a Telephone Exchange
Agreement with SFSI wherein the broker/dealer must agree to indemnify SFSI and
the mutual funds in the Seligman Group 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 dealer of record listed on the account. SFSI reserves the right to
reject a telephone exchange request. The Series reserves the right to reject any
telephone requests for transactions with a share value exceeding $250,000. Any
rejected telephone exchange order may be processed by mail. For more information
about telephone exchanges, including the procedure for electing such service 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 SERIES
Because excessive trading (including short-term, "market timing" trading)
can hurt the Series' performance, the Series 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 Series' net assets. The Series 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 Series reserves the right to
refuse any order for the purchase of shares.
DIVIDENDS AND DISTRIBUTIONS
The Series' net investment income is distributed to shareholders monthly in
the form of additional shares, unless you elect otherwise. Payments vary in
amount depending on income received from the Series' investments and the costs
of operations. Shares begin earning dividends on the day on which the Series
receives payment. Shares continue to earn dividends through the date preceding
the date they are redeemed.
The Series distributes substantially all of any taxable net long-term and
short-term gain realized on investments, to shareholders at least annually. In
determining amounts of capital gains to be distributed, any capital loss
carryforwards from prior years will offset capital gains. For Federal income tax
purposes, the Series had a capital loss carryforward as of December 31, 1994 of
$30,698,968 (including $3,138,246 transferred from the Seligman Secured Mortgage
Income Series), of which $14,399,706 expires in 1995, $1,652,560 expires in
1996, $2,286,339 expires in 1997, $3,877,110 expires in1998, $12,467 expires in
2001 and $8,470,786 expires in 2002. Accordingly, the Series may not distribute
capital gains (short-term or long-term) to shareholders until net gains have
been realized in excess of the capital loss carryforward.
Shareholders may elect: (1) to receive both dividends and gain
distributions in shares; (2) to receive dividends in cash and gain distributions
in shares; (3) to receive both dividends and gain distributions in cash. In the
case of prototype retirement plans, dividends and gain distributions are
reinvested in additional shares. Unless another election is made, dividends and
capital gain distributions will be credited to shareholder accounts in
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additional shares. 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 at the net
asset value on the payable date. Shareholders may elect to change their dividend
and gain distribution options by calling or writing Seligman Data Corp. at the
telephone numbers or address listed below. If the shareholder has elected
telephone services, changes may also be telephoned to Seligman Data Corp.
between 8:00 a.m. and 5:30 p.m. Eastern time, by either the shareholder or the
broker/dealer of record on the account. For information about electing telephone
services, see "Telephone Transactions." These elections must be received by
Seligman Data Corp. at least five days prior to the payable date, otherwise
payment will be made in accordance with the current option on the shareholder's
account.
The per share dividends from net investment income on 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 D shares. Per share
dividends of the two classes may also differ as a result of differing class
expenses. Distributions of net capital gains, if any, will be paid in the same
amount for Class A and Class D shares. See "Purchase of Shares--Valuation."
Shareholders exchanging shares of a mutual fund for shares of another
series of the Fund or of another mutual fund in the Seligman Group will continue
to receive dividends and gains as elected prior to such exchange unless
otherwise specified. In the event that a shareholder redeems all shares in an
account between the record date and the payable date, the value of any dividends
or gain distributions declared will be paid in cash regardless of the existing
election.
FEDERAL INCOME TAXES
The Series intends to continue to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended. For each year so qualified,
the Series will not be subject to Federal income taxes on its net investment
income and capital gains, if any, realized during any taxable year, which it
distributes to its shareholders, provided that at least 90% of its net
investment income and net short-term capital gains are distributed to
shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to the shareholders, whether
received in cash or reinvested in additional shares, and are, generally, not
eligible for the dividends received deduction for corporations.
Distributions of net capital gain, i.e., the excess of net long-term
capital gains over any net short-term losses, are taxable as long-term capital
gain, whether received in cash or invested in additional shares, regardless of
how long shares have been held by the shareholders; such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
As noted above, the Series must exhaust its capital loss carry forward before it
may make capital gain distributions to shareholders.
Any gain or loss realized upon a sale or redemption of shares in the Series
by a shareholder who is not a dealer in securities will generally be treated as
a long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. 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 Series 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 Series.
In determining gain or loss on shares of the Series that are sold or
exchanged within 90 days after acquisition, a shareholder generally will not be
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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 in
the sales load by reason of the Exchange or Reinstatement Privilege offered by
the Series. 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 Series 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. 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 Series and received by each shareholder in December.
Under this rule, therefore, shareholders may be taxed in one year on dividends
or distributions actually received in January of the following year.
Shareholders are urged to consult their tax advisers concerning the effect
of Federal income taxes in their individual circumstances.
UNLESS A SHAREHOLDER INCLUDES A CERTIFIED TAXPAYER IDENTIFICATION NUMBER
(SOCIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND
CERTIFIES THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS
REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY A PORTION OF DISTRIBUTIONS
AND OTHER REPORTABLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLDING
IS 31%. SHAREHOLDERS SHOULD BE AWARE THAT, UNDER REGULATIONS PROMULGATED BY THE
INTERNAL REVENUE SERVICE, THE FUND MAY BE FINED $50 ANNUALLY FOR EACH ACCOUNT
FOR WHICH A CERTIFIED TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED. IN THE
EVENT THAT SUCH A FINE IS IMPOSED, THE FUND MAY CHARGE A SERVICE FEE OF UP TO
$50 THAT MAY BE DEBITED FROM THE SHAREHOLDER'S ACCOUNT AND OFFSET AGAINST ANY
UNDISTRIBUTED DIVIDENDS AND CAPITAL GAINS 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 Series.
General information about the Series may be requested by writing the Corporate
Communications/Investor Relations Department, J. & W. Seligman & Co.
Incorporated, 100 Park Avenue, New York, New York 10017 or by 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
shareholder accounts may be requested by writing Shareholder Services, Seligman
Data Corp. at the same address or by toll-free telephone by dialing (800)
221-2450 from all continental United States. Seligman Data Corp. may be
telephoned Monday through Friday (except holidays), between the hours of 8:30
a.m. and 5:30 p.m. Eastern time, and calls will be answered by service
representatives.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING 1 (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,
FORM 1099-DIVS AND CHECKBOOKS MAY 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 ELECTED
TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE
"TELEPHONE TRANSACTIONS" ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial
transactions in their Account.
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Other investor services are available. These include:
O INVEST-A-CHECK(R) SERVICE enables a shareholder to authorize checks to be
drawn on a regular checking account at regular monthly intervals in fixed
amounts of $100 or more, or regular quarterly intervals in fixed amounts of $250
or more, to purchase Class A shares. (See "Terms and Conditions" on page 24.)
O AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder to exchange
a specified amount, at regular monthly intervals in fixed amounts of $100 or
more, or regular quarterly intervals in fixed amounts of $250 or more, from
Class A shares of the Series into Class A shares of any other Seligman Mutual
Fund(s) registered in the same name. The shareholder's account must have a value
of at least $5,000 at the initiation of the service. Exchanges will be made at
the public offering price.
O DIVIDENDS FROM OTHER INVESTMENTS permits a shareholder to order dividends
payable on shares of other companies to be paid to and invested in additional
shares of the Series. (Dividend checks must meet or exceed the required minimum
purchase amount and include the shareholder's name, the name of the Fund and the
Class of shares in which the investment is to be made and the shareholder's Fund
account number.)
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 PAYMENTS AT REGULAR INTERVALS can be made to a shareholder who owns or
purchases Class A shares worth $5,000 or more held as book credits under the
Automatic Cash Withdrawal Service. Holders of Class D shares may elect to use
this service with respect to shares that have been held for at least one year.
(See "Terms and Conditions" on page 24.)
O DIRECTED DIVIDENDS allows a shareholder to pay dividends to another
person or to direct the payment of such dividends to another mutual fund in the
Seligman Group for purchase at net asset value. Dividends on Class A and Class D
shares may only be directed to shares of the same class of another mutual fund
in the Seligman Group.
O OVERNIGHT DELIVERY to service shareholder requests is available for a
$15.00 fee which may be debited from a shareholder's account, if requested.
O COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for prior years back to 1985 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.
O TAX-DEFERRED RETIREMENT PLANS. Shares of the Series may be purchased for
all types of tax-deferred retirement plans. SFSI makes available plans, plan
forms and custody agreements for:
-Individual Retirement Accounts (IRAs);
-Simplified Employee Pension Plans (SEPs);
-Section 401(k) Plans for corporations and their employees;
-Section 403(b)(7) Plans for employees of public school systems and certain
non-profit organizations who wish to make deferred compensation arrangements;
and
-Pension and Profit Plans for sole proprietorships, partnerships and
corporations.
These types of plans may be established only upon receipt of a written
application form.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, New York 10017. You may telephone toll-free by
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dialing (800) 445-1777 from all continental United States or you may receive
information through an authorized dealer.
ADVERTISING THE SERIES' PERFORMANCE
From time to time the Series advertises its "yield," "total return" and
"average annual total return," each of which are calculated separately for Class
A and Class D shares. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. The "yield" of a class of the Series
refers to the income generated by an investment in that class over a 30-day
period. This income is then "annualized." That is, the amount of income
generated by the investment during that 30-day period is assumed to be generated
each 30-day period for twelve periods and is shown as a percentage of the
investment. The income earned on the investment is also assumed to be reinvested
at the end of the sixth 30-day period. The "total return" shows what an
investment in shares of a class of the Series would have earned over a specified
period of time (for example, one, five and ten years or from the inception)
assuming the payment of the maximum sales load, if any, when the investment was
first made and that all distributions and dividends by that class 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 years or from the inception); i.e., the average annual compound rate of
return. 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 Series' Class A 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 Series may also refer in advertisements or
in other promotional material to articles, comments, listings and columns in the
financial press pertaining to the Series' performance. Examples of such
financial and other press publications include Barron's, Business Week,
CDA/Weisenberger 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, USA Today, U.S. News and World Report, The Wall
Street Journal, Washington Post, Worth Magazine and Your Money.
ORGANIZATION AND CAPITALIZATION
The Fund is a diversified, open-end management investment company organized
under the laws of the Commonwealth of Massachusetts by a Declaration of Trust
dated July 27, 1984. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, $.001 par
value. The Trustees also have the power to create additional series of shares.
Shares of beneficial interest of two series have been authorized, which
shares of beneficial interest constitute interests in the Series and Seligman
High-Yield Bond Series. Shares of beneficial interest of the Series and Seligman
High-Yield Bond Series are divided into two classes. Each share of beneficial
interest of the Series' and Seligman High-Yield Bond Series' Class A and Class D
is equal as to earnings, assets and voting privileges, except that each class
bears its own separate distribution and 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 Massachusetts law. The Fund has
received an order from the Securities and Exchange Commission permitting the
issuance and sale of multiple classes of shares of beneficial interest. In
accordance with the Declaration of Trust, the Trustees may authorize the
creation of additional classes of shares of beneficial interest with such
characteristics as are permitted by the order received from the Securities and
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Exchange Commission. 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. Shares entitle their holders to one vote
per share. Shares have noncumulative voting rights, do not have preemptive or
subscription rights and are transferable. It is the intention of the Trust not
to hold Annual Meetings of Shareholders. The Trustees may call Special Meetings
of Shareholders for action by shareholder vote as may be required by the 1940
Act or Declaration of Trust. Pursuant to the 1940 Act, shareholders have to
approve the adoption of any management contract, distribution plan and any
changes in fundamental investment policies. Shareholders also have the right to
call a meeting of shareholders for the purpose of voting on the removal of one
or more Trustees. Such removal can be effected upon the action of two-thirds of
the outstanding shares of the Fund.
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TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares of the Series, 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 your check received in payment of a purchase of shares is
dishonored for any reason, Seligman Data Corp. may cancel the purchase and may
also redeem additional shares, if any, held in your 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 notifying Seligman Data Corp. in writing at least five business days prior to
the payable date. 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. Your
application is subject to acceptance by your bank and Seligman Data Corp. Checks
in the amount specified will be drawn automatically on your bank on the fifth
day of each month (or on the prior business day if the fifth day of the month
falls on a weekend or holiday) in which an investment is scheduled and invested
at the public offering price at the close of business on the same date. After
the initial investment, the value of shares held in your Account must equal not
less than two regularly scheduled investments. If a check is not honored by your
bank, or if the value of shares held falls below the required minimum, the
Service will be suspended. In the event that a check is returned marked
"unpaid," Seligman Data Corp. will cancel the purchase, redeem shares held in
your account for an amount sufficient to reimburse the Fund for any loss it may
have incurred as a result, and charge a $10.00 return check fee. This fee may be
debited from your account. Service will be reinstated upon written request
indicating that the cause of interruption has been corrected. The Service may be
terminated by you or Seligman Data Corp. at any time by written notice. You
agree to hold the Funds and their 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 you exchange all of your shares from one mutual fund in the
Seligman Group to another, you must re-apply for the Invest-A-Check(R) Service
in the Seligman Fund into which your 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 Fund from which the exchange was made.
AUTOMATIC CASH WITHDRAWAL SERVICE
Automatic Cash Withdrawal Service is available to Class A shareholders and
to Class D shareholders with respect to Class D shares held for one year or
more. A sufficient number of full and fractional shares will be redeemed to
provide the amount required for a scheduled payment. Redemptions will be made at
the asset value at the close of business on the specific day designated by the
shareholder of each month (or on the prior business day if the day specified
falls on a weekend or holiday). 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. This Service is considered terminated in
the event a withdrawal of shares, other than to make scheduled withdrawal
payments, reduces the value of shares remaining on deposit to less than $5,000.
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 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 their 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 the total
asset value of shares of the Seligman Funds (on which a sales load was paid)
owned as of the date of a Letter of Intent toward the completion 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, within 20 days following
the mailing of a written request, the shareholder has not paid this additional
sales load to Seligman Financial Services, 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 a 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 and that the required additional escrowed shares are
being furnished by the shareholder.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another Mutual Fund on which there is a sales load may be
taken into account in completing a Letter of Intent, or for Right of
Accumulation. However, shares of the Fund which have been purchased directly may
not be used for purposes of determining reduced sales loads on additional
purchases of the other Mutual Funds in the Seligman Group.
CHECK REDEMPTION SERVICE -- CLASS A SHARES ONLY
If shares are held in joint names, all shareholders must sign the Check
Redemption section of the Account Application. All checks will require all
signatures unless a lesser number is indicated in the Check Redemption section.
Accounts in the names of corporations, trusts, partnerships, etc. must list all
authorized signatories.
In all cases, each signature guarantees the genuineness of the other
signatures. Checks may not be drawn for less than $500. I hereby authorize
Mellon Bank, N.A. to honor checks drawn by me on my account of Class A shares
and to effect a redemption of sufficient shares in my Fund account to cover
payment of the check. I understand that shares in one Series cannot be redeemed
to cover a check written on another Series.
Mellon Bank, N.A. shall be liable only for its own negligence. The Fund will
not be liable for any loss, expense or cost arising out of check redemptions.
The Fund reserves the right to change, modify or terminate this service at any
time upon notification mailed to the address of record of the shareholder(s).
SELIGMAN DATA CORP. WILL CHARGE A $10.00 PROCESSING FEE FOR ANY CHECK
REDEMPTION DRAFT RETURNED MARKED "UNPAID." THIS CHARGE MAY BE DEBITED FROM THE
ACCOUNT THE CHECK WAS DRAWN AGAINST. NO REDEMPTION PROCEEDS WILL BE REMITTED TO
A SHAREHOLDER WITH RESPECT TO 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 THE SHARES TO A SHAREHOLDER'S ACCOUNT.
5/95
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
THE SELIGMAN GROUP OF FUNDS
ACCOUNT APPLICATION
Please make your investment check payable to the
"Seligman Group of Funds" and mail it
with this completed Application to:
Seligman Data Corp. TO OPEN A SELIGMAN IRA, SEP OR PENSION/
100 Park Avenue/2nd Floor PROFIT SHARING PLAN, A SEPARATE ADOPTION
New York, NY 10017 AGREEMENT IS REQUIRED. PLEASE CALL
(800) 221-2450 RETIREMENT PLAN SERVICES FOR MORE
INFORMATION AT (800) 445-1777.
1. ACCOUNT REGISTRATION
TYPE OF ||INDIVIDUAL ||MULTIPLE OWNERS ||GIFT/TRANSFER TO MINOR ||OTHER (Corporations, Trusts, Organizations,
Partnerships, etc.)
ACCOUNT Use Line 1 Use Lines 1, 2 & 3 Use Line 4 Use Line 5 Multiple Owners
will be registered as Joint Tenants with Right of Survivorship.
The first name and Social Security or Taxpayer ID Number on line 1, 4, or 5
below will be used for IRS reporting. NAME (Minors cannot be legal owners)
PLEASE PRINT OR TYPE
1._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
2._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
3._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
4.______________________________, as custodian for ____________________ under the _______________
Custodian (one only) Minor (one only) State
Uniform Gift/Transfer to Minors Act_______________________________until age____________________ _________________
Minor's Social Security Number (Not more than 21) Minor's Birthdate
5._______________________________________________________________________ _____________________
Name of Corporation or Other Entity. If a Trust, also complete below. Taxpayer ID Number
TYPE OF TRUST ACCOUNT: ||Trust ||Guardianship ||Conservatorship ||Estate ||Other
Trustee/Fiduciary Name__________________________________ Trust Date__________________________
Trust Name ______________________________,for the benefit of (FBO)_______________________________
2. MAILING ADDRESS
ADDRESS TELEPHONE
___________________________________________ (_______)__________________(_______)_________________
Street Address or P.O. Box Daytime Evening
___________________________________________ U.S. CITIZEN? ||Yes ||No _________________________
City State Zip If no, indicate country
3. INVESTMENT SELECTION
Please indicate the dollar amount(s) you would like to invest in the space
provided below. Minimum initial investment is $1,000 per Fund except for
accounts established pursuant to the Invest-A-Check(R) Service (see section
6-I. of this application). IF MORE THAN ONE FUND IS SELECTED, ACCOUNTS MUST
HAVE IDENTICAL REGISTRATIONS AND CLASS OF SHARES (except for Seligman Cash
Management Fund). PLEASE CHOOSE ONE: || Class A Shares || Class D Shares
MAKE CHECK PAYABLE TO: SELIGMAN GROUP OF FUNDS
$_____________ TOTAL AMOUNT,
INVESTED AS FOLLOWS:
$_____________ *Seligman Communications $_____________ Seligman Common Stock Fund
and Information Fund $_____________ Seligman Income Fund
$_____________ Seligman Henderson $_____________ Seligman High-Yield Bond Fund
Global Technology Fund $_____________ Seligman U.S. Government Securities Fund
$_____________ Seligman Frontier Fund $_____________ Seligman National Tax-Exempt Fund
$_____________ Seligman Henderson Global $_____________ Seligman Tax-Exempt Fund (choose one):
Smaller Companies Fund CA-Qlty.|| FL|| MD|| MN|| NY|| OR||
$_____________ Seligman Capital Fund CA-Hy. || GA|| MA|| MO|| NC|| PA||
$_____________ Seligman Growth Fund CO || LA|| MI|| NJ|| OH|| SC||
$_____________ Seligman Henderson
International Fund $_____________ Seligman Cash Management Fund (Class A only)
*Closed indefinitely to new investors after June 30, 1995; please contact
your financial advisor for information on current availability. NO
REDEMPTION PROCEEDS WILL BE REMITTED TO A SHAREHOLDER WITH RESPECT TO
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 THE SHARES TO THE SHAREHOLDER'S ACCOUNT.
4. SIGNATURE AND CERTIFICATION
Under penalties of perjury I certify that the number shown on this form is
my correct Taxpayer Identification Number (Social Security Number) and that
I am not subject to backup withholding either because I have not been
notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or the Internal Revenue Service has
notified me that I am no longer subject to backup withholding. I certify to
my legal capacity to purchase or redeem shares of each Fund for my own
Account, or for the Account of the organization named below. I have
received and read the current Prospectus of each Fund in which I am
investing and appoint Seligman Data Corp. as my agent to act in accordance
with my instructions herein.
A. ________________________________________________________________________
Date Signature of Investor
B. ________________________________________________________________________
Date Signature of Co-Investor, if any
5. BROKER/DEALER OR FINANCIAL ADVISOR DESIGNATION
________________________________________ _____________________________
Firm Name Representative's Nam
________________________________________ _____________________________
Branch Office Address Representative's ID Number
________________________________________ (______)_____________________
City State Zip Representative's Telephone Number
________________________________________
Branch Number
<PAGE>
6. ACCOUNT OPTIONS AND SERVICES
________________________________________________________________________________
A. DIVIDENDS AND GAIN DISTRIBUTION OPTIONS
I choose the following options for each Fund listed: OPTION
------
1 2 3
Option 1. Dividends in shares, gain distributions in shares. || || || FUND NAME
Option 2. Dividends in cash, gain distributions in shares. || || || FUND NAME
Option 3. Dividends in cash, gain distributions in cash. || || || FUND NAME
__________________________________________________________________________________________
NOTE: IF NO ELECTION IS MADE, OPTION 1. WILL AUTOMATICALLY BE PUT INTO EFFECT.
All dividend and/or gain distributions taken in shares will be invested at net asset value.
__________________________________________________________________________________________
________________________________________________________________________________
B. DIVIDEND DIRECTION OPTION
If you wish to have your dividend payments made to another
party or Seligman Fund, please complete the following. I
hereby authorize and request that my dividend payments from
the following Fund(s)
__________________ __________________ __________________ be made payable to:
Fund Name Fund Name Fund Name
Name______________________ Seligman Fund__________________
Address___________________ (If opening a new account, a minimum of $1,000 is required.)
City______________________ Account Number_________________
State, Zip________________ (For an existing account.)
________________________________________________________________________________
C. LETTER OF INTENT SERVICE (CLASS A ONLY)
I intend to purchase, although I am not obligated to do so,
additional shares of Seligman _________________________
Fund within a 13-month period which, together with the
total asset value of shares owned, will aggregate at least:
||$50,000 ||$100,000 ||$250,000 ||$500,000 ||$1,000,000
||$4,000,000
I AGREE TO THE ESCROW PROVISION LISTED UNDER "TERMS AND CONDITIONS"
IN THE BACK OF EACH PROSPECTUS.
________________________________________________________________________________
D. RIGHT OF ACCUMULATION (CLASS A ONLY)
Please identify any additional Seligman Fund accounts
eligible for the Right of Accumulation or to be used toward
completion of a Letter of Intent, and check applicable box:
|| I am a trustee for the following accounts, which are
held by the same trust, estate, or under the terms of a
pension, profit sharing or other employee benefit trust
qualified under section 401 of the Internal Revenue Code.
|| In calculating my holdings for Right of Accumulation or
Letter of Intent purposes, I am including the following
additional accounts which are registered in my name, in my
spouse's name, or in the name(s) of my child(ren) under
the age of 21.
Name______________ Fund______________ Account#_____________
Name______________ Fund______________ Account#_____________
Name______________ Fund______________ Account#_____________
________________________________________________________________________________
E. AUTOMATIC CASH WITHDRAWAL SERVICE
(CLASS A, OR CLASS D ONLY AFTER CLASS D SHARES ARE HELD FOR ONE YEAR)
Please send a check for $ withdrawn from Seligman
________________________ Fund, beginning on the day of 19,
and thereafter on the day specified of every:
||Month ||3rd Month ||6th Month ||12th Month
Make payments to: Name___________________________________
Address________________________________
City___________State________Zip________
Shares having a current value at offering price of $5,000
or more must be held in the account at initiation of
Service, and all shares must be in "book credit" form.
________________________________________________________________________________
F. AUTOMATIC DOLLAR-COST-AVERAGING SERVICE
I authorize Seligman Data Corp. to withdraw $ _____________
(minimum: $100 monthly or $250 quarterly) from my Seligman
Cash Management Fund Class A account || Monthly or
|| Quarterly to purchase Class A shares of Seligman
________________________________ Fund, beginning on the
_____ day of __________ 19 ____. Shares in the Seligman
Cash Management Fund Class A account must have a current
value of $5,000 at the initiation of Service and all shares
must be in "book credit" form.
________________________________________________________________________________
G. EXPEDITED REDEMPTION SERVICE, FOR SELIGMAN CASH MGMT. FUND ONLY
I hereby authorize Seligman Data Corp. to honor telephone
or written instructions received from me without a
signature and believed by Seligman Data Corp. to be genuine
for redemption. Proceeds will be wired ONLY to the
commercial bank listed below for credit to my account, or
to my address of record. If Expedited Redemption Service is
elected, no certificates for shares will be issued. I also
understand and agree to the risks and procedures outlined
for all telephone transactions set forth in section 6-H. of
this Application.
Investment by ||Check ______________________________________________________________________
||Wire Name of Commercial Bank (Savings Bank May Not Be Used)
_________________________ ______________________ ______________________
Bank Account Name Bank Account No. Bank Routing No.
_______________________________________________________________________________________
Address of Bank City State Zip Code
X________________________________ X____________________________________________
Signature of Investor Date Signature of Co-Investor, if any Date
______________________________________________________________________________________________________________________
<PAGE>
H. TELEPHONE SERVICE ELECTION
AVAILABLE FOR INDIVIDUAL OR JOINT TENANT ACCOUNTS ONLY
By completing this section, I understand that I may place
the following requests by telephone:
o Redemptions up to $50,000 o Exchanges
o Address Changes o Dividend and/or Capital
Gain Distribution Option
changes
AUTHORIZATION
I understand that the telephone services are optional and
that by signing below I authorize the Funds, all other
Seligman Funds with the same account number and
registration which I currently own or in which I invest in
the future, and Seligman Data Corp. ("SDC"), to act upon
instructions received by telephone from me or any other
person in accordance with the provisions regarding
telephone services as set forth in the current prospectus
of each such Fund, as amended from time to time. I
understand that redemptions of uncertificated shares of up
to $50,000 will be sent only to my account address of
record, and only if such address has not changed within the
30 days preceding such request. Any telephone instructions
given in respect of this account and any account into which
exchanges are made are hereby ratified and I agree that
neither the Fund(s) nor SDC will be liable for any loss,
cost or expense for acting upon such telephone instructions
reasonably believed to be genuine and in accordance with
the procedures described in each prospectus, as amended
from time to time. Such procedures include recording of
telephone instructions, requesting personal and/or account
information to verify a caller's identity and sending
written confirmations of transactions. As a result of this
policy, I may bear the risk of any loss due to unauthorized
or fraudulent telephone instructions; provided, however,
that if the Fund(s) or SDC fail to employ such procedures,
the Fund(s) and/or SDC may be liable. TO ELECT TELEPHONE
SERVICES, PLEASE SIGN YOUR NAME(S) AS IT APPEARS ON THE
FIRST PAGE OF THIS ACCOUNT APPLICATION.
X________________________________ X____________________________________
Signature of Investor Date Signature of Co-Investor, if any Date
<PAGE>
I. INVEST-A-CHECK(R) SERVICE
To start your Invest-A-Check(R) Service, fill out the "Bank
Authorization to Honor Pre-Authorized Checks" below, and
forward it with an unsigned bank check from your regular
checking account (marked "void", if you wish). Please
arrange with my bank to draw pre-authorized checks and
invest the following dollar amounts (minimum: $100 monthly
or $250 quarterly) in the designated Seligman Fund(s) as
indicated:
_______________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
I understand that my checks will be drawn on the fifth day
of the month, or prior business day, for the period
designated. I have completed the "Bank Authorization to
Honor Pre-Authorized Checks" below and have read and agree
to the Terms and Conditions applicable to the
Invest-A-Check(R) Service as set forth in each Prospectus
and as set forth below in the Bank Authorization.
X__________________________________________________________________
Signature of Investor (Please also sign Bank Authorization below.)
X__________________________________________________________________
Signature of Co-Investor, if any
________________________________________________________________________________________
BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED CHECKS
________________________________________________________________________________________
To:_____________________________________________________________________________________
(Name of Bank)
________________________________________________________________________________________
Address of Bank or Branch (Street, City, State and Zip)
Please honor pre-authorized checks drawn on my account by Seligman Data Corp.,
100 Park Avenue, New York, N.Y. 10017, to the order of the Fund(s) designated
below:
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
and charge them to my regular checking account. Your authority to do so shall
continue until you receive written notice from me revoking it. You may
terminate your participation in this arrangement at any time by written notice
to me. I agree that your rights with respect to each pre-authorized check
shall be the same as if it were a check drawn and signed by me. I further
agree that should any such check be dishonored, with or without cause,
intentionally or inadvertently, you shall be under no liability whatsoever.
___________________________________ _________________________________________________
Checking Account Number Name(s) of Depositor(s) -- Please Print
X__________________________________________________
Signature(s) of Depositor(s) -- As Carried by Bank
X__________________________________________________
________________________________________________________________________________________
Address (Street) (City) (State, Zip)
________________________________________________________________________________________
To the Bank Designated above:
Your depositor(s) named in the above form has instructed us to establish the
Invest-A-Check(R) Service for his convenience. Under the terms of the Service,
your depositor(s) has pre-authorized checks to be drawn against his account in
a specific amount at regular intervals to the order of the designated Fund(s).
Checks presented to you will be magnetic-ink coded and will otherwise conform
to specifications of the American Bankers Association. A letter of
indemnification addressed to you and signed by Seligman Financial Services,
Inc., general distributor of the Seligman Mutual Funds, appears below. If
there is anything we can do to help you in giving your depositor(s) this
additional Service which he has requested, please let us know.
SELIGMAN DATA CORP.
INDEMNIFICATION AGREEMENT
To the Bank designated above:
SELIGMAN FINANCIAL SERVICES, INC., distributor of the shares of the Seligman
Mutual Funds, hereby agrees:
(1) To indemnify and hold you harmless against any loss, damage, claim or
suit, and any costs or expenses reasonably incurred in connection therewith,
either (a) arising as a consequence of your actions in connection with the
execution and issuance of any check or draft, whether or not genuine,
purporting to be executed by Seligman Data Corp. and received by you in the
regular course of business for the purpose of payment, or (b) resulting from
the dishonor of any such check or draft, with or without cause and
intentionally or inadvertently, even though such dishonor results in
suspension or termination of the Invest-A-Check(R) Service pursuant to which
such checks or drafts are drawn. (2) To refund to you any amount erroneously
paid by you on any such check or draft, provided claim for any such payment is
made within 12 months after the date of payment.
SELIGMAN FINANCIAL SERVICES, INC.
/S/Stephen J. Hodgdon
President
________________________________________________________________________________
<PAGE>
J. CHECK REDEMPTION SERVICE (CLASS A ONLY)
Available to shareholders who own or purchase shares having
a value of at least $25,000 invested in any of the
following: Seligman High-Yield Bond Fund, Seligman Income
Fund, Seligman U.S. Government Securities Fund, and any
Seligman Tax-Exempt Fund, or $2,000 invested in Seligman
Cash Management Fund. IF YOU WISH TO USE THIS SERVICE, YOU
MUST COMPLETE SECTION 4 AND THE SIGNATURE CARD BELOW.
SHAREHOLDERS ELECTING THIS SERVICE ARE SUBJECT TO THE
CONDITIONS OF THE TERMS AND CONDITIONS IN THE BACK OF EACH
PROSPECTUS.
CHECK WRITING SIGNATURE CARD Authorized Signature(s)
___________________________________________ 1.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 2.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 3.______________________________
Name of Fund for Check Redemption Service
__________________________________________ 4.______________________________
Account Number (If known)
__________________________________________ 5.______________________________
Account Registration (Please Print)
|| Check here if only one signature is required on checks.
|| Check here if a combination of signatures is required and specify the number:___________________.
ACCOUNTS IN THE NAMES OF CORPORATIONS, TRUSTS, PARTNERSHIPS, ETC., MUST
INDICATE THE LEGAL TITLES OF ALL AUTHORIZED SIGNATORIES. SHAREHOLDERS
ELECTING THIS SERVICE ARE SUBJECT TO THE TERMS AND CONDITIONS LISTED IN THE
PROSPECTUS.
<PAGE>
MANAGED BY
[J&W SELIGMAN LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864
>
</TABLE>
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
SELIGMAN
U.S. GOVERNMENT
SECURITIES
SERIES
- -------------------------------------------------------------------------------
100 Park Avenue
New York, New York 10017
INVESTMENT MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, New York 10017
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, New York 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York, 10004
TXUSG1
- -------------------------------------------------------------------------------
PROSPECTUS
SELIGMAN
HIGH-YIELD BOND
SERIES
May 1, 1995
[J&W SELIGMAN LOGO]
- -------------------------------------------------------------------------------
<PAGE>
SELIGMAN HIGH-YIELD BOND SERIES
a series of
Seligman High Income Fund Series
100 Park Avenue o 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
May 1, 1995
Seligman High Income Fund Series (the "Fund") is a diversified, open-end
management investment company that offers two different series each of which
seeks to earn high current income by investing in debt securities but has
differing investment objectives and investment policies. Investment advisory and
management services are provided to the Fund by J. & W. Seligman & Co.
Incorporated (the "Manager"); the Fund's distributor is Seligman Financial
Services, Inc., an affiliate of the Manager.
The investment objective of the Seligman High-Yield Bond Series (the
"Series") is to produce maximum current income. The Series seeks to achieve its
objective by investing primarily in high-yielding, high risk corporate bonds and
corporate notes, which, generally, are unrated or carry ratings lower than those
assigned to investment grade bonds by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's"). An investment in the Series is
appropriate for you only if you can bear the high risk inherent in investing in
such securities. There can, of course, be no assurance that the Series will meet
its objective.
The Series will invest up to 100% of its portfolio in lower rated bonds,
commonly known as "junk bonds," which are subject to a greater risk of loss of
principal and interest than higher rated investment grade bonds. Purchasers
should carefully assess the risks associated with an investment in the Series.
See "Investment Objective, Policies And Risks."
The Series offers two 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 1% of the average daily net asset value of the Class A
shares. Class D shares are sold without an initial sales load but are subject to
a contingent deferred sales load ("CDSL") of 1% imposed on certain redemptions
within one year of purchase, an annual distribution fee of up to .75 of 1% and
an annual service fee of up to .25 of 1% of the average daily net asset value of
the Class D shares. See "Alternative Distribution System." Shares of the Series
may be purchased through any authorized investment dealer.
This Prospectus sets forth concisely the information a prospective investor
should know about the Series before investing. Please read it carefully before
you invest and keep it for future reference. Additional information about the
Series, including a Statement of Additional Information, has been filed with the
Securities and Exchange Commission. The Statement of Additional Information is
available upon request and without charge by calling or writing the Fund at the
telephone numbers or the 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 Series' Expenses ......................... 2
Financial Highlights ................................ 3
Alternative Distribution System ..................... 4
Investment Objective, Policies And Risks ............ 5
Management Services ................................. 7
Purchase Of Shares .................................. 9
Telephone Transactions .............................. 13
Redemption Of Shares ................................ 13
Administration, Shareholder Services
And Distribution Plan.............................. 16
Exchange Privilege .................................. 17
Further Information About Transactions
In The Series...................................... 18
Dividends And Distributions ......................... 18
Federal Income Taxes ................................ 19
Shareholder Information ............................. 20
Advertising The Series' Performance ................. 22
Organization And Capitalization ..................... 22
<PAGE>
SUMMARY OF SERIES' EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS D
SHARES SHARES
------------- ---------------
(INITIAL SALES (DEFERRED SALES
LOAD LOAD
ALTERNATIVE) ALTERNATIVE)
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) ....... 4.75% None
Sales Load on Reinvested Dividends ................................................ None None
Deferred Sales Load (as a percentage of original purchase price or redemption
proceeds, whichever is lower) ................................................... None 1% during the
first year; None
thereafter
Redemption Fee .................................................................... None None
Exchange Fees ..................................................................... None None
CLASS A CLASS D
------- -------
ANNUAL SERIES OPERATING EXPENSES FOR 1994 (as a percentage of average net assets)
Management Fee .................................................................... .50% .50%
12b-1 Fees ........................................................................ .21% 1.00%*
Other Expenses .................................................................... .42% .69%
----- -----
Total Series Operating Expenses ................................................... 1.13% 2.19%
===== =====
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of the Series may bear directly or
indirectly. The sales load on Class A shares is a one-time charge paid at the
time of purchase of shares. Reductions in sales loads are available in certain
circumstances. The contingent deferred sales load on Class D shares is a
one-time charge paid only if shares are redeemed within one year of purchase.
For more information concerning reduction 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 Series'
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>
You 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 $58 $82 $107 $178
Class D $32+ $69 $117 $252
</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 of 1% and an annual service fee of
.25 of 1%. Pursuant to the Rules of the National Association of Securities
Dealers, Inc., the aggregate deferred sales loads and annual distribution
fees on Class D shares of the Fund may not exceed 6.25% of total gross sales,
subject to certain exclusions. The 6.25% limitation is imposed on the Fund
rather than on a per shareholder basis. Therefore, a long-term Class D
shareholder of the Fund may pay more in total sales loads (including
distribution fees) than the economic equivalent of 6.25% of such
shareholder's investment in the shares.
+ Assuming (1) 5% annual return and (2) no redemption at the end of one
year, the expenses on a $1,000 investment would be $22.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Series' financial highlights for the periods presented below have been
audited by Deloitte & Touche LLP, independent auditors. This information which
is derived from the financial and accounting records of the Series should be
read in conjunction with the 1994 financial statements and notes contained in
the 1994 Annual Report, which may be obtained from the Fund at the telephone
numbers or address provided on the cover page of this Prospectus.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from the Series'
beginning net asset value to its ending net asset value so that investors may
understand what effect the individual items have on their investment, assuming
it was held throughout the period. Generally, the per share amounts are derived
by converting the actual dollar amounts incurred for each item, as disclosed in
the financial statements, to their equivalent per share amount. The total return
based on net asset value measures the Series' performance assuming investors
purchased shares of the Series 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 the 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 Series. Total returns for
periods of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A CLASS D
--------------------------------------------------------------------------------- ------------------
YEAR ENDED DECEMBER 31 3/11/85* YEAR 9/21/93**
--------------------------------------------------------------------- TO ENDED TO
1994 1993 1992 1991 1990 1989 1988 1987 1986 12/31/85 12/31/94 12/31/93
------- -------------- ------- -------------- ------- ------- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of period .............. $ 6.94 $ 6.42 $ 5.96 $ 5.21 $ 6.40 $ 7.02 $ 7.07 $ 7.83 $ 7.59 $ 7.14 $6.94 $ 6.74
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------
Net investment income*** .65 .66 .69 .77 .78 .89 .82 .79 .90 .80 .57 .12
Net realized and unrealized
investment gain (loss) (.59) .52 .46 .75 (1.19) (.62) (.05) (.59) .24 .45 (.59) .20
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------
Increase (decrease) from
investment operations .. .06 1.18 1.15 1.52 (.41) .27 .77 .20 1.14 1.25 (.02) .32
Dividends paid or declared (.65) (.66) (.69) (.77) (.78) (.89) (.82) (.79) (.90) (.80) (.57) (.12)
Distributions from net gain
realized ............... -- -- -- -- -- -- -- (.15) -- -- -- --
Return of capital ........ -- -- -- -- -- -- -- (.02) -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------
Net increase (decrease) in
net asset value ........ (.59) .52 .46 .75 (1.19) (.62) (.05) (.76) .24 .45 (.59) .20
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------
Net asset value, end of
period ................... $ 6.35 $ 6.94 $ 6.42 $ 5.96 $ 5.21 $ 6.40 $ 7.02 $ 7.07 $ 7.83 $ 7.59 $ 6.35 $ 6.94
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET
ASSET VALUE .............. 0.78% 19.19% 20.08% 30.70% (7.27)% 3.84% 11.38% 3.05% 15.74% 17.83% (.30)% 4.53%
RATIOS/SUPPLEMENTAL DATA***
Expenses to average
net assets ............. 1.13% 1.20% 1.21% 1.29% 1.21% 1.13% 1.14% 1.20% 1.08% .75%+ 2.19% 2.04%+
Net investment income to
average net assets ..... 9.73% 9.68% 10.82% 13.36% 13.40% 13.02% 11.41% 10.64% 11.32% 10.85%+ 8.68% 7.93%+
Portfolio turnover ....... 184.75% 193.91% 145.66% 181.08% 117.51% 135.17% 95.20% 103.01% 110.30% -- 184.75% 193.91%++
Net assets, end of period
(000's omitted) ....... $59,033 $61,333 $40,802 $32,287 $27,558 $45,511 $62,268 $66,042 $71,904 $32,630 $9,249 $2,375
</TABLE>
- ----------------
* Commencement of operations.
** Commencement of offering of Class D shares.
***Had the Manager, at its discretion, not waived portions of its fees and not
reimbursed certain expenses, the net investment income per share for the
Series would have been $.78 and $.90, respectively, for the periods ended
December 31, 1985 and December 31, 1986. The annualized ratios of expenses to
average net assets for the Series would have been 1.12% and 1.12%,
respectively, for the same periods. The annualized ratios of net investment
income to average net assets for the Series would have been 10.48% and
11.28%, respectively, for the same periods.
+ Annualized.
++ For the year ended December 31, 1993.
3
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM
The Series offers two 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 charges. 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
charges, as discussed below, or to have the entire initial purchase price
invested in the Series with the investment thereafter being subject to higher
ongoing charges and, for a one-year period, a CDSL.
Investors who qualify for reduced sales loads, as described under "Purchase
Of Shares" below, might choose to purchase Class A shares because Class A shares
would be subject to lower ongoing fees. The amount invested in the Fund,
however, is reduced by the initial sales load deducted at the time of purchase.
Investors who do not qualify for reduced initial sales loads but expect to
maintain their investment for an extended period of time might also choose to
purchase Class A shares because over time the accumulated continuing
distribution fee of 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 deducted at the time of purchase. Furthermore, the distribution fees
will be offset to the extent any return is realized on the additional funds
initially invested under the Class D alternative.
Alternatively, some investors might choose to have all of their funds
invested initially in Class D shares although remaining subject to a higher
continuing distribution fee and, for a 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 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 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.
The two classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required by the Investment Company Act of 1940, as
amended (the "1940 Act"), or Massachusetts 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 fee and other expenses of each class. Class D shares
bear higher distribution fees, which will cause the Class D shares to pay lower
dividends than the Class A shares. The two classes also have separate exchange
privileges.
The Trustees of the Fund believe that no conflict of interest currently
exists between the Class A and Class D shares of the Series. On an ongoing
basis, the Trustees, in the exercise of their fiduciary duties under the 1940
Act and Massachusetts law, will seek to ensure that no such conflict arises. For
this purpose, the Trustees will monitor the Series 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 distinctions between Class A and
Class D shares are their sales load structures and ongoing expenses as set forth
below. Each class has advantages and disadvantages for different investors, and
investors should choose the class that best suits their circumstances and their
objectives.
4
<PAGE>
ANNUAL 12B-1 FEES
INITIAL (AS A % OF AVERAGE
SALES LOAD DAILY NET ASSETS) OTHER INFORMATION
---------- --------------- ---------------
CLASS A Maximum initial Service fee of Initial sales loads
sales load of .25%. waived or
4.75% of the reduced for
public offering certain
price. purchases.
CLASS D None Service fee of CDSL of 1% on
.25%; Distribution redemptions
fee of .75%. within one year
of purchase.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund is a diversified open-end management investment company organized
under the laws of the Commonwealth of Massachusetts by a Declaration of Trust
dated July 27, 1984. The Fund offers one other separate investment series: the
Seligman U.S. Government Securities Series. The U.S. Government Securities
Series' investment objectives and policies and other important information with
respect to its operations are set forth in a separate Prospectus.
The objective of this Series is to produce maximum current income. The
Series seeks to achieve its objective by following a policy of investing in a
diversified range of high-yield, high-risk, medium and lower quality corporate
bonds and notes, commonly referred to as "junk bonds". Generally, bonds and
notes providing the highest yield are unrated or carry lower ratings (Baa or
lower by Moody's or BBB or lower by S&P) than those assigned by S&P or Moody's
to investment-grade bonds and notes. A description of the S&P and Moody's rating
categories is set forth in the Appendix to this Prospectus. While providing
higher yields, these bonds and notes are subject to greater risks of loss of
principal and income than higher-rated bonds and notes and are considered to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. They are also generally considered to be subject to greater
price volatility due to market risks than higher-rated bonds and notes.
The amount of outstanding high-yield, lower-rated corporate securities has
recently proliferated. Based on industry estimates, the market grew from $20
billion in outstanding securities to an excess of $270 billion, principally over
the past ten years, a period of national economic expansion. An economic
downturn could adversely impact issuers' abilities to pay interest and repay
principal and could result in issuers' defaulting on such payments. The value of
the Series' bonds and notes will be affected like all fixed-income securities by
market conditions relating to changes in prevailing interest rates. However, the
value of lower-rated or unrated corporate bonds and notes is also affected by
investors' perceptions. When economic conditions appear to be deteriorating,
lower-rated or unrated corporate bonds and notes may decline in market value due
to investors' heightened concerns and perceptions over credit quality. If the
security is downgraded, the Series may retain the security. The Series invests
in "zero coupon" (interest payments accrue until maturity) and "pay-in-kind"
(interest payments are made in cash or additional shares) bonds. Such securities
may be subject to greater fluctuations in value as they tend to be more
speculative than income bearing securities. Fluctuations in the market prices of
the securities owned by the Series result in corresponding fluctuations and
volatility in the net asset value of the shares of the Series. Additionally,
because they do not pay current income, these securities will detract from the
Series' objective of producing maximum current income.
Lower-rated and unrated corporate bonds and notes in which the Series
invests are traded principally by dealers in the over-the-counter market. The
market for these securities may be less active and less liquid than for
higher-rated securities. Under adverse market or economic conditions, the
secondary market for these bonds and notes could contract further, causing the
Series difficulties in valuing and selling the securities in its portfolio.
The ratings of fixed-income securities by Moody's and S&P are a generally
accepted barometer of credit risk. They are, however, subject to certain
limitations from an investor's standpoint. The rating on an issuer is heavily
weighted by past developments and does not necessarily reflect probable future
conditions. There is frequently a lag between the time the rating is assigned
and the time it is updated. In addition there may be varying degrees of
difference in credit risk of securities within each rating category.
5
<PAGE>
During the year ended December 31, 1994, the weighted average percentages
of the Series' portfolio invested in each rating category were as follows:
PERCENTAGE OF
S&P/MOODY'S RATINGS TOTAL INVESTMENTS
------------------- -----------------
AAA/Aaa................................ --
AA/Aa.................................. --
A/A.................................... --
BBB/Baa................................ --
BB/Ba.................................. 3.9%
B/B.................................... 83.5%
CCC/Caa................................ 7.6%
Non-rated.............................. .8%
The Manager will try to minimize the risk inherent in the Series'
investment objective through credit analysis, diversification and attention to
current developments and trends in interest rates and economic conditions.
However, there can be no assurance that losses will not occur and an investment
in the Series is appropriate for you only if you can bear the high risk inherent
in seeking maximum current income by investing in high-yielding corporate bonds
and notes which are unrated or carry lower ratings than those assigned by S&P or
Moody's to investment-grade bonds.
Except for temporary defensive purposes, at least 80% of the value of the
Series' total assets will be invested in high-yielding, income-producing
corporate bonds. This investment policy is a fundamental policy and may not be
changed by the Trustees of the Fund without the vote of a majority of the
Series' outstanding voting securities. The Series may invest up to 20% of the
value of its total assets in a range of high-yield, medium and lower quality
corporate notes, short-term money market instruments, including certificates of
deposit of banks having total assets of more than $1 billion and which are
members of the FDIC, bankers' acceptances and interest-bearing savings or time
deposits of such banks, commercial paper of prime quality rated A-1 or higher by
S&P or Prime-1 or higher by Moody's or, if not rated, issued by companies which
have an outstanding debt issue rated AA or higher by S&P or Aa or higher by
Moody's, securities issued guaranteed or insured by the U.S. Government, its
agencies and instrumentalities and other income-producing cash items. The Series
may invest temporarily for defensive purposes without limit in the foregoing
securities.
The Series may invest up to 10% of its total assets in debt 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 debt securities and
their markets may not be as liquid as U.S. securities and their markets.
Securities and some foreign companies may involve greater market risk than
securities of U.S. companies, and foreign brokerage commissions and custody fees
are generally higher than in the United States. Investments in foreign debt
securities may also be subject to local economic or political risks, such as
political instability of some foreign governments and the possibility of
nationalization of issuers.
LENDING OF PORTFOLIO SECURITIES. The Series may lend portfolio securities
to brokers or dealers, banks or other institutional borrowers of securities. The
borrower must maintain with the Series cash or equivalent collateral such as
Treasury Bills, 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
Series any income accruing on the loaned securities and the Series may invest
the cash collateral and earn additional income or may receive an agreed upon
amount of interest income from the borrower. The Series may lend portfolio
securities to the extent that the Manager deems appropriate in seeking to
achieve the Series' investment objective.
6
<PAGE>
REPURCHASE AGREEMENTS. The Series 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 Series acquires a money
market instrument, generally a U.S. Government obligation qualified for purchase
by the Series, 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 Series 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. Repurchase agreements
usually are for short periods, such as one week or less, but may be for longer
periods. As a matter of fundamental policy, a Series will not enter into
repurchase agreements of more than one week's duration if more than 10% of its
total assets would be invested in such agreements and in restricted and other
illiquid securities.
WHEN-ISSUED SECURITIES. The Series may purchase securities on a when-issued
basis, in which case delivery and payment normally take place within 45 days
after the date of the commitment to purchase. The payment obligation and the
interest rate that will be received on the securities are each fixed at the time
the buyer enters into the commitment. Although the Series will only purchase a
security on a when-issued basis with the intention of actually acquiring the
securities, the Series may sell these securities before the purchase settlement
date if it is deemed advisable.
Securities held by the Series and securities purchased on a when-issued
basis are subject to changes in market value based upon investors' perceptions
of the creditworthiness of the issuer and upon changes, real or anticipated, in
the level of interest rates. If the Series remains substantially fully invested
at the same time that it has purchased securities on a when-issued basis, the
market value of the Series' assets may fluctuate more than would otherwise be
the case. Purchasing a security on a when-issued basis can involve a risk that
the yields available in the market when the delivery takes place may be higher
than those obtained on the security so purchased.
An account for the Series consisting of cash or liquid high-grade debt
securities equal to the amount of the when-issued commitments will be
established with the Series' Custodian, and marked to market daily, with
additional cash or liquid high-grade debt securities added when necessary. When
the time comes to pay for when-issued securities, the Series will meet its
obligations from then available cash flow, sale of securities held in the
separate account, sale of other securities or, although they would not normally
expect to do so, from the sale of the when-issued securities themselves (which
may have a value greater or less than the Series' payment obligations). Sale of
securities to meet such obligations carries with it a greater potential for the
realization of capital gain or loss.
Except as noted above or in the Statement of Additional Information, the
foregoing investment policies are not fundamental and the Trustees of the Fund
may change such policies without the vote of a majority of the outstanding
voting securities of the Fund or the Series. As a matter of policy, the Trustees
will not change the Series' investment objective of producing maximum current
income without such a vote. Under the 1940 Act, a "vote of a majority of the
outstanding voting securities" of the Fund or of a particular series means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or of the series or (2) 67% or more of the shares of the Fund or of the
series present at a shareholders' meeting if more than 50% of the outstanding
shares of the Fund or of the series are represented at the meeting in person or
by proxy.
MANAGEMENT SERVICES
The Trustees provide broad supervision over the affairs of the Series and
the Fund as a whole. Pursuant to a Management Agreement approved by the Trustees
and the shareholders of the Series, the Manager manages the investments of the
Series and administers the business and other affairs of the Series. The address
of the Manager is 100 Park Avenue, New York, NY 10017.
7
<PAGE>
The Manager also serves as manager of sixteen other investment companies
which, together with the Fund, comprise the "Seligman Group." These companies
are: Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund Inc., Seligman Communications and Information Fund, Inc.,
Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson
Global Fund Series, Inc., Seligman Income Fund, Inc., Seligman New Jersey
Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund Series, Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman Select
Municipal Fund, Inc., Seligman Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt
Series Trust and Tri-Continental Corporation. The aggregate assets of the
Seligman Group are approximately $7.3 billion. The Manager also provides
investment management or advice to institutional accounts having an aggregate
value of more than $3.3 billion.
Mr. William C. Morris is Chairman and President of the Manager and Chairman
of the Board and Chief Executive Officer of the Fund. Mr. Morris owns a majority
of the outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a
wholly-owned subsidiary of certain investment companies in the Seligman Group,
which performs, at cost, certain recordkeeping functions for the Series,
maintains the records of shareholder accounts and furnishes dividend paying,
redemption and related services.
The Manager is entitled to receive a management fee, calculated daily and
payable monthly, equal to .50% of the average daily net assets of the Series on
an annual basis. The Fund pays all of its expenses other than those assumed by
the Manager. The Fund's expenses are allocated among the series in a manner
determined by the Trustees to be fair and equitable. Total expenses of the
Series' Class A and Class D shares, respectively, for the year ended December
31, 1994 amounted to 1.13% and 2.19%, respectively, of the average daily net
assets of each class.
PORTFOLIO MANAGER. Mr. Daniel J. Charleston, Vice President of the Manager,
is a Vice President of the Fund and has been Portfolio Manager of the Series
since 1989. He is also Vice President and Portfolio Manager of the Seligman
High-Yield Bond Portfolio of Seligman Portfolios, Inc.
The Manager's discussion of the Series' performance as well as a line graph
illustrating comparative performance information between the Series, Merrill
Lynch Master Index and the Lipper High-Yield Index is included in the Fund's
1994 Annual Report to Shareholders. Copies of the 1994 Annual Report may be
obtained, without charge, by calling or writing the Fund at the telephone
numbers or address listed on the front page of this Prospectus.
PORTFOLIO TRANSACTIONS. Corporate bonds and other fixed-income securities
are generally traded on the over-the-counter market on a "net" basis without a
stated commission, through dealers acting for their own account and not as
brokers. The Series will engage in transactions with these dealers or deal
directly with the issuer. Prices paid to dealers will generally include a
"spread," i.e., the difference between the prices at which a dealer is willing
to purchase or to sell the security at that time. The Management Agreement
recognizes that in the purchase and sale of portfolio securities, the Manager
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 dealers to the Manager for its use in connection with its services
to the Fund as well as to other clients.
Consistent with the rules of the National Association of Securities
Dealers, Inc. ("NASD") and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, the
Manager may consider sales of shares of the Fund and, if permitted under
applicable laws, may consider sales of shares of the other mutual funds in the
Seligman Group as a factor in the selection of brokers or dealers to execute
portfolio transactions for the Series.
8
<PAGE>
PORTFOLIO TURNOVER. A change in securities held by the Series is known as
"portfolio turnover" which may result in the payment by the Series of dealer
spreads or underwriting commissions and other transactions costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
Although it is the policy of the Series to hold securities for investment,
changes will be made from time to time when the Manager believes such changes
will strengthen the Series' portfolio. The portfolio turnover rate will vary
from year to year as well as within a year and is likely to exceed 100% and has
done so in prior years.
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the Series' shares. Its address is 100 Park
Avenue, New York, New York 10017.
The Fund issues two classes of shares: Class A shares are sold to investors
choosing the initial sales load alternative; 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 Series 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 SERIES IS $1,000 (EXCEPT
FOR AN ACCOUNT BEING ESTABLISHED PURUANT TO THE INVEST-A-CHECK(R) SERVICE);
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 WHICH DO NOT MEET THESE MINIMUMS.
Orders received by an authorized dealer before the close of business on the
New York Stock Exchange ("NYSE") (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 Series' net asset value determined as of the close of the NYSE
on that day plus, in the case of the Class A shares, the applicable sales load.
Orders accepted by dealers after the close of the NYSE, or received by SFSI
after the close of business, will be executed at the Series' net asset value as
next determined plus, in the case of Class A shares, the applicable sales load.
The authorized dealer through which the 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 SFSI'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 High-Yield Bond
Series (A or D), A/C#107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE
CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons
other than dealers who wish to wire payment should contact Seligman Data Corp.
for specific wire instructions. Although the Fund makes no charge for this
service, the transmitting bank may impose a wire service fee.
Existing shareholders may purchase additional shares of the Series through
any authorized dealer or by sending a check payable to the "Seligman Group of
Mutual Funds" directly to P.O. BOX 3936, NEW YORK, N.Y. 10008-3936. Checks for
investment must be in U.S. dollars drawn on a domestic bank. The check should
include the shareholder's name, address, account number, name of Series and
class of shares. IF A SHAREHOLDER DOES NOT INDICATE 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 Series net asset value next
determined after the order is accepted plus, in the case of Class A shares, the
applicable sales load.
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Seligman Data Corp. will charge a $10.00 service fee for checks returned to
it marked "unpaid." This charge may be deducted from the account that requested
the purchase. For the protection of the Fund and its shareholders, no redemption
proceeds will be remitted to a shareholder with respect to 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 the shares to
the shareholder's account.
VALUATION. The net asset value of the Series' shares is determined each
day, Monday through Friday, as of the close of trading on the NYSE (usually 4:00
p.m. Eastern time) on each day that the NYSE is open for business. Net asset
value is calculated separately for each class. Securities traded on a U.S. or
foreign exchange or over-the-counter market are valued at the last sales price
on the primary exchange or market on which they are traded. United Kingdom
securities and securities for which there are no recent sales transactions are
valued based on quotations provided by primary market makers in such securities.
Any securities for which recent market quotations are not readily available are
valued at fair value determined in accordance with procedures approved by the
Board of Directors. Short-term holdings maturing in 60 days or less are
generally valued at amortized cost if their original maturity was 60 days or
less. Short-term holdings with more than 60 days remaining to maturity will be
valued at current market value until the 61st day prior to maturity, and will
then be valued on an amortized cost basis based on the value as of such date
unless the Board determines that amortized cost value does not represent fair
market value.
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
schedule below, 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
OFFERING INVESTED (NET AS A % OF
AMOUNT OF PURCHASE PRICE ASSET VALUE) OFFERING PRICE
------------------ ------------------------ --------------
Less than $ 50,000..... 4.75% 4.99% 4.25%
50,000-- 99,999..... 4.00 4.17 3.50
100,000-- 249,999..... 3.50 3.63 3.00
250,000-- 499,999..... 2.50 2.56 2.25
500,000-- 999,999..... 2.00 2.04 1.75
1,000,000--3,999,999..... 1.00 1.01 .90
4,000,000-- or more...... 0 0 0
-------
* Dealers will receive a fee of .15% on sales of $4,000,000 or more.
REDUCED SALES LOADS. Reductions in sales loads apply to purchases of Class
A shares by a "single person," including an individual, members of a family unit
comprising husband, wife, and minor children purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any
other fiduciary or individual account.
O VOLUME DISCOUNTS are provided if the total amount being invested in Class
A shares of the Series alone, or in any combination of shares of the other
mutual funds in the Seligman Group that are sold with a sales load, reaches
levels indicated in the above sales load schedule.
O THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of the mutual funds in the Seligman Group sold with a
sales load with the total net asset value of shares of those funds already owned
that were sold with a sales load and the total net asset value of shares of
Seligman Cash Management Fund that were acquired by the investor through an
exchange of shares of another mutual fund in the Seligman Group on which there
is a 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 that the investor has existing accounts when making
investments or opening new accounts.
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<PAGE>
O LETTER OF INTENT allows an investor to purchase Class A shares of the
Series over a 13-month period at reduced sales loads, based on the total amount
the investor intends to purchase plus the total net asset value of the other
mutual funds in the Seligman Group already owned that were sold with a sales
load and the total net asset value of shares of Seligman Cash Management Fund
that were acquired through an exchange of shares of another mutual fund in the
Seligman Group on which there was a sales load. An investor or a dealer
purchasing Class A shares on behalf of an investor must indicate that the
investor has existing accounts when making investments or opening new accounts.
For more information concerning terms of Letters of Intent, see "Terms and
Conditions" on page 25.
SPECIAL PROGRAMS. The Series may sell Class A shares at net asset value to
present and retired directors, trustees, officers, employees (and their spouses
and minor children) of the Series, the other investment companies in the
Seligman Group, the Manager and other companies affiliated with the Manager.
Such sales also may be made to employee benefit and thrift plans for such
persons and to any investment advisory, custodial, trust or other fiduciary
account managed or advised by the Manager or any affiliate.
Class A shares also may be issued without a sales load in connection with
the acquisition of cash and securities owned by other investment companies and
personal holding companies; to any registered unit investment trust which is the
issuer of periodic payment plan certificates, the net proceeds of which are
invested in Series shares; to separate accounts established and maintained by an
insurance company which are exempt from registration under Section 3(c)(11) of
the 1940 Act; to registered representatives and employees (and their spouses and
minor children) of any dealer that has a sales agreement with SFSI, to
shareholders of mutual funds with objectives and policies similar to the Series
who purchase shares with redemption proceeds of such funds; to financial
institution trust departments; to registered investment advisers exercising
discretionary investment authority with respect to the purchase of Series'
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
solicitations of, its employees, members or participants in connection with the
purchase of shares of the Series; and to "eligible employee benefit plans" of
employers who have at least 2,000 U.S. employees to whom such plan is made
available and, regardless of the number of employees, if such plan is
established and maintained by any dealer that has a sales agreement with SFSI.
"Eligible employee benefit plans" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Series 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.
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 of 1% and an annual service of up to .25 of 1%, 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.
A CDSL will be imposed on any redemption of Class D shares which were
purchased during the preceding twelve months; however, no such charge will be
imposed on shares acquired through the investment of dividends or distributions
from any Class D shares within the Seligman Group. The amount of any CDSL will
be paid to and retained by SFSI.
To minimize the application of CDSL to a redemption, shares acquired
pursuant to the investment of dividends and distributions will be redeemed
11
<PAGE>
first; followed by shares purchased at least one year prior to the redemption.
Shares held for the longest period of time within the applicable one year period
will then be redeemed. Additionally, for those shares determined to be subject
to the CDSL, the application of the 1% CDSL will be made to the current net
asset value or original purchase price, whichever is less.
For example, assume an investor purchased 100 shares in January at a price
of $10.00 per share. During the first year, 5 additional shares were acquired
through investment of dividends and distributions. In January of the following
year, an additional 50 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 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 held more than 1 year
(100 @ $12.25) 1,225.00
Shares held less than 1 year subject to
CDSL (17.449 @ $12.25) 213.75
---------
Gross proceeds of redemption 1,500.00
Less CDSL
(17.449 shares @ $12.00 =
$209.39 x 1% = $2.09) (2.09)
--------
Net proceeds of redemption $1,497.91
=========
For Federal income tax purposes, the amount of the CDSL will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as
defined in section 72(m)(7) of the Internal Revenue Code of 1986, as amended
(the "Code"); (b) in connection with (i) distributions from retirement plans
qualified under section 401 (a) of the Code when such redemptions are necessary
to make distributions to plan participants (such payments include, but are not
limited to death, disability, retirement, or separation of service), (ii)
distributions from a custodial account under Code section 403(b)(7) or an
individual retirement account ("IRA") due to death, disability, or attainment of
age 591/2, and (iii) a tax-free return of an excess contribution to an IRA; (c)
in whole or in part, in connection with shares sold to current and retired
Trustees of the Fund; (d) in whole or in part, in connection with shares sold to
any state, county, or city or any instrumentality, department, authority, or
agency thereof, which is prohibited by applicable investment laws from paying a
sales load or commission in connection with the purchase of shares of any
registered investment management company; (e) pursuant to an automatic cash
withdrawal service; (f) in connection with the redemption of Class D shares of
the Series if it is combined with another mutual fund in the Seligman Group, or
another similar reorganization transaction; and (g) in connection with the
Series' right to redeem or liquidate an account that holds below a certain
minimum number or dollar amount of shares (currently $500).
If, with respect to a redemption of any 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 1 % payment or a portion of the 1% payment paid on such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the mutual funds in the Seligman Mutual Funds. SFSI may from time to
time pay a bonus or other incentive to dealers that sell shares of the Seligman
Group. 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 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
12
<PAGE>
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 whose account has either an individual or joint tenancy
registration may elect to effect the following transactions via telephone by
completing the Telephone Service Election portion of the Account Application or
a separate Telephone Service Election Form: (i) redemption of Series shares,
(ii) exchange of Series shares for shares of another Seligman Mutual Fund, (iii)
change of a dividend and/or capital gain distribution option, and (iv) change of
address. IRA accounts may only elect to effect exchanges or address changes. By
completing the appropriate section of the Account Application or separate
Election Form, all Seligman Mutual Funds with the same account number (i.e.,
registered in exactly the same names), including any new fund in which the
shareholder invests in the future, will automatically have telephone services.
All telephone transactions are effected through Seligman Data Corp. at (800)
221-2450.
For accounts registered as joint tenancies, each joint tenant, by electing
telephone transaction services, authorizes each of the other tenants to effect
telephone transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder may
experience difficulty in contacting Seligman Data Corp. to request a redemption
or exchange of Series shares. 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 will result
in the redemption request being processed at a later time than if telephone
transactions had been used, and the Series' net asset value may fluctuate during
such periods.
The Series 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 Series 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. Shareholders are, of course,
under no obligation to apply for telephone transaction services. In any instance
where the Series 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 Series or Seligman Data Corp. does not follow the procedures described
above, the Series or Seligman Data Corp. may be liable for any losses due to
unauthorized or fraudulent instructions. Telephone services 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.
Telephone transaction services may be terminated by a shareholder at any time by
sending a written request to Seligman Data Corp. Written acknowledgment of
termination of telephone transaction services will be sent to the shareholder.
REDEMPTION OF SHARES
A shareholder may redeem shares held in book credit form without charge
(except a CDSL, if applicable) at any time by SENDING A WRITTEN REQUEST to
Seligman Data Corp., 100 Park Avenue, New York, New York 10017. The redemption
request must be signed by all persons in whose name the shares are registered. A
shareholder may redeem shares that are not in book credit form by surrendering
certificates in proper form to the same address. Certificates should be sent by
registered mail. Share certificates must be endorsed for transfer or accompanied
by an endorsed stock power signed by all share owners exactly as their name(s)
appear(s) on the account registration. The shareholder's letter of instruction
13
<PAGE>
or endorsed stock power should specify the account number, class of shares (A or
D) and the number of shares or dollar amount to be redeemed. The Fund cannot
accept conditional redemption requests. If the redemption proceeds are (i)
$50,000 or more, (ii) to be paid to someone other than the shareholder of record
(regardless of the amount) or (iii) to be mailed to other than the address of
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) and 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 ALSO BE REQUIRED BY SELIGMAN DATA CORP.
IN THE EVENT OF A REDEMPTION BY CORPORATIONS, EXECUTORS, ADMINISTRATORS,
TRUSTEES, CUSTODIANS OR RETIREMENT PLANS. FOR FURTHER INFORMATION WITH RESPECT
TO NECESSARY REDEMPTION REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES
DEPARTMENT OF SELIGMAN DATA CORP. FOR ASSISTANCE.
In the case of Class A shares and in the case of Class D shares redeemed
after one year, a shareholder will receive the net asset value per share next
determined after receipt of the request in good order. 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 the 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 Series 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. The Series makes no charge for this transaction, but
the dealer may charge a service fee. "Sell" or repurchase orders received from
an authorized dealer before the close of the NYSE and received by SFSI, the
repurchase agent, before the close of business on the same day will be executed
at the net asset value per share determined as of the close of the NYSE on that
day. 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. Shares held in a "street name" account with a broker/dealer may be sold to
the Fund only through a broker/dealer.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares may
be made in an amount of up to $50,000 per day, per account. One telephone
redemption request per day is permitted. Telephone redemption requests must be
received by Seligman Data Corp. at (800) 221-2450 between 8:30 a.m. and 4:00
p.m. Eastern time, on any business day and will be processed as of the close of
business on that day. Redemption requests by telephone will not be accepted
within 30 days following an address change. Keogh Plans, IRAs or other
retirement plans are not eligible for telephone redemptions. The Series reserves
the right to suspend or terminate its telephone redemption service at any time
without notice.
For more information about telephone redemptions, including the procedure
for electing such service and the circumstances under which shareholders may
bear the risk of loss for a fraudulent transaction, see "Telephone Transactions"
above.
CHECK REDEMPTION SERVICE. The Check Redemption Service allows a shareholder
of Class A shares who owns or purchases shares in the Series worth $25,000 or
more to request Seligman Data Corp. to provide redemption checks to be drawn on
the shareholder's account in amounts of $500 or more. The shareholder may elect
to use this Service on the Account Application or by later written request to
Seligman Data Corp. Shares for which certificates have been issued will not be
available for redemption under this Service. Dividends continue to be earned
14
<PAGE>
through the date preceding the date the check clears for payment. Use of this
Service is subject to Mellon Bank, N.A. rules and regulations covering checking
accounts. Separate checkbooks will be furnished for each series.
There is no charge for use of checks. When honoring a check that was
processed for payment, Mellon Bank, N.A. will cause the Series to redeem exactly
enough full and fractional shares from an account to cover the amount of the
check. If shares are owned jointly, redemption checks must be signed by all
persons, unless otherwise elected on the Account Application, in which case a
single signature will be acceptable.
In view of daily fluctuations in share value, the shareholder should be
certain that the amount of shares in the account is sufficient to cover the
amount of checks written. If insufficient shares are in the account, the check
will be returned, marked "insufficient funds." THE FUND WILL NOT REDEEM SHARES
IN ONE SERIES TO COVER A CHECK WRITTEN ON ANOTHER SERIES. SELIGMAN DATA CORP.
WILL CHARGE A $10.00 PROCESSING FEE FOR ANY CHECK REDEMPTION DRAFT RETURNED
"UNPAID." THIS CHARGE MAY BE DEBITED FROM THE ACCOUNT THE CHECK WAS DRAWN
AGAINST.
Check Redemption books cannot be reordered unless the shareholder's account
has a value of $25,000 or more and the Fund has a certified Taxpayer
Identification Number on file.
Cancelled checks will be returned to the shareholder under separate cover
the month after they clear. The Check Redemption Service may be terminated at
any time by the Fund or Mellon Bank, N.A. See "Terms and Conditions" on page for
further information.The Check Redemption Service is not available with respect
to Class D shares.
FOR THE PROTECTION OF THE SERIES AND ITS SHAREHOLDERS, NO PROCEEDS WILL BE
REMITTED TO A SHAREHOLDER WITH RESPECT TO SHARES PURCHASED BY CHECK (UNLESS
CERTIFIED) UNTIL THE SELIGMAN DATA CORP. RECEIVES NOTICE THAT THE CHECK HAS
CLEARED, WHICH MAY BE UP TO 15 DAYS FROM THE CREDIT OF THE SHARES TO THE
SHAREHOLDER'S ACCOUNT.
GENERAL. Whether shares are redeemed or repurchased, a check for the
proceeds will be sent to the address of record within seven calendar days after
acceptance of the redemption or repurchase order and will be made payable to all
of the registered owners on the account. The Series will not permit redemptions
of shares with respect to 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 the shares to the shareholder's account. The
proceeds of a redemption or repurchase may be more or less than the
shareholder's cost.
The Fund reserves the right to redeem shares owned by a shareholder whose
investment in the Series has a value of less than a minimum amount specified by
the Fund's Trustees which is presently $500. Shareholders are sent a notice
before the redemption is processed stating that the value of their investment in
the Series 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 not to redeem them, or to shift the investment to one of the other
series in the Fund or one of the other mutual funds in the Seligman Group the
shareholder may, within 120 calendar days of the date of redemption, use all or
any part of the proceeds of the redemption to reinstate, free of sales load, all
or any part of the investment in shares of the Series or in shares of any other
series of the Fund or one of the other mutual funds in the Seligman Group. If a
shareholder redeems Class D shares and the redemption was subject to a CDSL, the
shareholder may reinstate the investment in shares of the same class of the
Series or of any of the other mutual funds in the Seligman Group within 120
calendar days of the date of redemption and receive a credit for the CDSL paid.
Such investment will be reinstated at the net asset value per share established
as of the close of the NYSE on the day the request is received. Seligman Data
Corp. must be informed that the purchase is a reinstated investment. REINSTATED
SHARES MUST BE REGISTERED EXACTLY AS THE SHARES PREVIOUSLY REDEEMED.
Generally, exercise of the Reinstatement Privilege does not alter the
Federal income tax status of any capital gain realized on a sale of Series
15
<PAGE>
shares, but to the extent that any shares are sold at a loss and the proceeds
are reinvested in shares of the same Series, 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 Series may pay to SFSI an administration, shareholder services
and distribution fee in respect of the Series' Class A 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 Series,
(ii) compensation to Service Organizations for providing administration,
accounting and other shareholder services with respect to Series shareholders,
and (iii) otherwise promoting the sale of shares of the Series, 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 SFSI's costs incurred in connection with its marketing
efforts with respect to shares of the Series. 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 Series.
Under the Plan, the Series reimburses SFSI for its expenses with respect to
Class A shares at an annual rate of up to .25% of the average daily net asset
value of Class A shares. It is expected that the proceeds from the fee in
respect of Class A shares will be used primarily to compensate Service
Organizations which enter into agreements with SFSI. Such Service Organizations
will receive from SFSI a continuing fee of up to .25% on an annual basis,
payable quarterly, of the average daily net assets of Class A shares
attributable to the particular Service Organization for providing personal
service and/or the maintenance of shareholder Accounts. The fee payable from
time to time is, within such limit, determined by the Trustees of the Fund.
The Plan, as it relates to Class A shares, was approved by the Trustees on
October 9, 1984 and was approved by the shareholders of the Series on April 10,
1986. The Plan is reviewed by the Trustees annually. The total amount paid for
the year ended December 31, 1994 in respect of the Series' Class A shares
pursuant to the Plan was equal to .21% of the Class A shares' average daily net
assets.
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class D shares at an annual rate of up to 1% of the average daily net asset
value of the Class D shares. Proceeds from the Class D distribution fee 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 1% payment made by it to Service Organizations
at the time of the sale of Class D shares. The amounts expended by SFSI in any
one year upon the initial purchase of Class D shares may exceed the amounts
received by it from Plan payments retained. Expenses of administration,
shareholder services and distribution of Class D shares in one fiscal year of
the Series may be paid from Class D Plan fees received from the Series in any
other fiscal year.
The Plan, as it relates to Class D shares, was amended by the Trustees of
the Fund on July 15, 1993. The Plan is reviewed by the Trustees annually. The
total amount paid for the year ended December 31, 1994 by the Series' Class D
shares pursuant to the Plan was 1% per annum of the average daily net assets of
Class D shares.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI shall act as broker/dealer of record for most
shareholder accounts that do not have a designated broker/dealer of record
including all such shareholder accounts established after April 1, 1995 and will
receive compensation for providing personal service and account maintenance to
its accounts of record.
16
<PAGE>
EXCHANGE PRIVILEGE
A shareholder of the Series may, without charge, exchange at net asset
value any or all of an investment in the Series for shares of another series of
the Fund or for shares of any of the other mutual funds in the Seligman Group.
Exchanges may be made by mail, or by telephone if telephone services are elected
by the shareholder.
Class A and Class D shares may be exchanged only for Class A and Class D
shares, respectively, of another series of the Fund or another mutual fund in
the Seligman Group on the basis of relative net asset value.
If Class D shares that are subject to a CDSL are exchanged for Class D
shares of another fund, for purposes of assessing the CDSL payable upon
disposition of the exchanged Class D shares the one year holding period shall be
reduced by the holding period of the original Class D shares. Aside from the
Series described in this Prospectus, the mutual funds in the Seligman Group
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. The Fund will be closing to new
investors on June 30, 1995.
O SELIGMAN FRONTIER FUND, INC: seeks to produce growth in capital value.
Income may be considered but will only be incidental to the fund's investment
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 International Fund, the Seligman Henderson Global Smaller Companies
Fund and Seligman Henderson Global Technology Fund, which seek long-term capital
appreciation primarily through investing either in companies globally or
internationally.
O SELIGMAN HIGH INCOME FUND SERIES: seeks high current income by investing
in debt securities. In addition to the High-Yield Bond Series, the Fund consists
of the U.S. Government Securities Series.
O SELIGMAN INCOME FUND, INC: seeks high current income and the possibility
of improvement of future income and capital value.
O SELIGMAN NEW JERSEY TAX-EXEMPT FUND, INC: invests in investment-grade New
Jersey tax-exempt securities.
O SELIGMAN PENNSYLVANIA TAX-EXEMPT FUND SERIES: invests in investment-grade
Pennsylvania tax-exempt securities.
O SELIGMAN TAX-EXEMPT FUND SERIES, INC: consists of several State Series
and a National Series. The National Tax-Exempt Series seeks to provide maximum
income exempt from Federal income taxes; individual state series, each seeking
to maximize income exempt from Federal income taxes and from personal income
taxes in designated states are available for Colorado, Georgia, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York, Ohio, Oregon
and South Carolina.
O SELIGMAN TAX-EXEMPT SERIES TRUST: includes a California Tax-Exempt
High-Yield Series, a California Tax-Exempt Quality Series, a Florida Tax-Exempt
Series and a North Carolina Tax-Exempt Series, each of which invests in
tax-exempt securities of its designated state.
All permitted exchanges will be based on the then current net asset values
of the respective funds. Telephone requests for exchanges must be received
between 8:30 a.m. and 4:00 p.m. Eastern time, on any business day, by Seligman
Data Corp. at (800) 221-2450, and will be processed as of the close of business
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on that day. The registration of an account into which an exchange is made must
be identical to the registration of the account from which shares are exchanged.
When establishing a new account by an exchange of shares, the shares being
exchanged must have a value of at least the minimum initial investment required
by the mutual 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. Account services, such as Invest-A-Check(R) Service, Directed
Dividends, Automatic Cash Withdrawal Service and Check Writing Privilege 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 a written exchange request together with certificates representing
shares to be exchanged in form for transfer.
Telephone exchanges are only available to shareholders whose accounts are
registered individually, as joint tenancies or IRAs. The Exchange Privilege via
mail is generally applicable to investments in an IRA and other retirement
plans, although some restrictions may apply, and may be applicable to other
mutual funds in the Seligman Group that may be organized in the future. The
terms of the Exchange Privilege 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 mutual funds in the Seligman Group.
A broker/dealer of record will be able to effect exchanges on behalf of a
shareholder only if the broker/dealer has entered into a Telephone Exchange
Agreement with SFSI wherein the broker/dealer must agree to indemnify SFSI and
the mutual funds in the Seligman Group 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 dealer of record listed on the account. SFSI reserves the right to
reject a telephone exchange request. The Series reserves the right to reject any
telephone requests for transactions with a share value exceeding $250,000. Any
rejected telephone exchange order who may be processed by mail. For more
information about telephone exchanges, including the procedure for electing such
service and the circumstances under which shareholders may bear the risk of loss
for a fraudulent transaction, see "Telephone Transactions"
Exchanges of shares are sales and may result in a gain or loss for Federal
income tax purposes.
FURTHER INFORMATION ABOUT TRANSACTIONS IN THE SERIES
Because excessive trading (including short-term, "market timing" trading)
can hurt the Series' performance, the Series 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 Series' net assets. The Series 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 Series reserves the right to
refuse any order for the purchase of shares.
DIVIDENDS AND DISTRIBUTIONS
The Series' net investment income is distributed to shareholders monthly in
the form of additional shares, unless you elect otherwise. Payments vary in
amount depending on income received from the Series' investments and costs of
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operations. Shares begin earning dividends on the day on which the Series
receives payment. Shares continue to earn dividends through the date preceding
the date they are redeemed.
The Series distributes substantially all of any taxable net long-term and
short-term gain realized on investments, to shareholders at least annually. In
determining amounts of capital gains to be distributed, any capital loss
carryforwards from prior years will offset capital gains. For Federal income tax
purposes, the Series had a capital loss carryforward as of December 31, 1994 of
approximately $13,350,300 of which $3,855,771 expires in 1997, $7,286,151
expires in 1998 and $2,208,378 expires in 2002. Accordingly, the Series may not
distribute capital gains (short-term or long-term) to shareholders until net
gains have been realized in excess of the carryforward.
Shareholders may elect: (1) to receive both dividends and gain
distributions in shares; (2) to receive dividends in cash and gain distributions
in shares; (3) to receive both dividends and gain distributions in cash. In the
case of prototype retirement plans, dividends and 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. 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 at the net
asset value on the payable 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 elected telephone services, changes may
also be telephoned to Seligman Data Corp. between 8:00 a.m. and 5:30 p.m.
Eastern time, by either the shareholder or the broker/dealer of record on the
account. For information about electing telephone services, see "Telephone
Transactions." These elections must be received by Seligman Data Corp. at least
five days prior to the payable date; otherwise payment will be made in
accordance with the current option on the shareholder's account.
The per share dividends from net investment income on 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 D shares. Per share
dividends of the two classes may also differ as a result of differing class
expenses. Distributions of net capital gains, if any, will be paid in the same
amount for Class A and Class D shares. See "Purchase Of Shares --Valuation."
Shareholders exchanging shares of a mutual fund for shares of another
series of the Fund or of another mutual fund in the Seligman Group will continue
to receive dividends and gains as elected prior to such exchange unless
otherwise specified. In the event that a shareholder redeems all shares in an
account between the record date and the payable date, the value of any dividends
or gain distributions declared will be paid in cash regardless of the existing
election.
FEDERAL INCOME TAXES
The Series intends to continue to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended. For each year so qualified,
the Series will not be subject to Federal income taxes on its net investment
income and capital gains, if any, realized during any taxable year which it
distributes to its shareholders, provided that at least 90% of its net
investment income and net short-term capital gains are distributed to
shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to the shareholders, whether
received in cash or reinvested in additional shares, and are, generally, not
eligible for the dividends received deduction for corporations.
Distributions of net capital gain, i.e., the excess of net long-term
capital gains over any net short-term losses, are taxable as long-term capital
gain, whether received in cash or invested in additional shares, regardless of
how long shares have been held by the shareholders; such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
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As noted above, the Series must exhaust its capital loss carryforward before it
may make capital gain distributions to shareholders.
Any gain or loss realized upon a sale or redemption of shares in the Series
by a shareholder who is not a dealer in securities will generally be treated as
a long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. 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 Series 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 Series.
In determining gain or loss on shares of the Series 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 in
the sales load by reason of the Exchange or Reinstatement Privilege offered by
the Series. 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 Series 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. 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 Series and received by each shareholder in December.
Under this rule, therefore, shareholders may be taxed in one year on dividends
or distributions actually received in January of the following year.
Shareholders are urged to consult their tax advisers concerning the effect
of Federal income taxes in their individual circumstances.
UNLESS A SHAREHOLDER INCLUDES A CERTIFIED TAXPAYER IDENTIFICATION NUMBER
(SOCIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND
CERTIFIES THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS
REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY A PORTION OF DISTRIBUTIONS
AND OTHER REPORTABLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLDING
IS 31%. SHAREHOLDERS SHOULD BE AWARE THAT, UNDER REGULATIONS PROMULGATED BY THE
INTERNAL REVENUE SERVICE, THE FUND MAY BE FINED $50 ANNUALLY FOR EACH ACCOUNT
FOR WHICH A CERTIFIED TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED. IN THE
EVENT THAT SUCH A FEE IS IMPOSED, THE FUND MAY CHARGE A SERVICE FEE OF UP TO $50
THAT MAY BE DEBITED 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 Series.
General information about the Series, may be requested by writing the Corporate
Communications/Investor Relations Department, J. & W. Seligman & Co.
Incorporated, 100 Park Avenue, New York, New York 10017 or by 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
shareholder accounts may be requested by writing Shareholder Services, Seligman
Data Corp. at the same address or by toll-free telephone by dialing (800)
221-2450 from all continental United States. Seligman Data Corp. may be
telephoned Monday through Friday (except holidays), between the hours of 8:30
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a.m. and 5:30 p.m. Eastern time, and calls will be answered by service
representatives.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING 1 (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,
FORM 1099-DIVS AND CHECKBOOKS MAY 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 ELECTED
TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEVISION SERVICES, SEE
"TELEPHONE TRANSACTIONS" ABOVE.
Account Services. Shareholders are sent confirmation of financial
transactions in your Account.
Other investor services are available. These include:
INVEST-A-CHECK(R) SERVICE enables a shareholder to authorize checks to be
drawn on a regular checking account at regular monthly intervals in fixed
amounts of $100 or more, or regular quarterly intervals in fixed amounts of $250
or more, to purchase Class A shares. (See "Terms and Conditions" on page 25.)
AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder to exchange a
specified amount, at regular monthly intervals in fixed amounts of $100 or more,
or regular quarterly intervals in fixed amounts of $250 or more, from Class A
shares of the Series into Class A shares of any other Seligman Mutual Fund(s)
registered in the same name. The shareholder's account must have a value of at
least $5,000 at the initiation of the service. Exchanges will be made at the
public offering price.
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 Series. (Dividend checks must meet or exceed the required minimum
purchase amount and include the shareholder's name, the name of the Fund and the
class of shares in which the investment is to be made and the shareholder's Fund
account number.)
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.
PAYMENTS AT REGULAR INTERVALS can be made to a shareholder who owns or
purchases Class A shares worth $5,000 or more held as book credits under the
Automatic Cash Withdrawal Service. Holders of Class D shares may elect to use
this service with respect to shares that have been held for at least one year.
(See "Terms and Conditions" on page 25.)
DIRECTED DIVIDENDS allows a shareholder to pay dividends to another person
or to direct the payment of such dividends to another mutual fund in the
Seligman Group for purchase at net asset value. Dividends on Class A and Class D
shares may only be directed to shares of the same class of another mutual fund
in the Seligman Group.
OVERNIGHT DELIVERY to service shareholder requests is available for a
$15.00 fee which may be debited from a shareholder's account, if requested.
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 back to 1985 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 Series may be purchased for
all types of tax-deferred retirement plans. SFSI makes available plans, plan
forms and custody agreements for:
--Individual Retirement Accounts (IRAs);
--Simplified Employee Pension Plans (SEPs);
--Section 401 (k) Plans for corporations and their employees;
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--Section 403(b)(7) Plans for employees of public school systems and
certain non-profit organizations who wish to make deferred compensation
arrangements; and
--Pension and Profit Plans for sole proprietorships, partnerships and
corporations.
These types of plans may be established only upon receipt of a written
application form.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, New York 10017. You may telephone toll-free by
dialing (800) 445-1777 from all continental United States or you may receive
information through an authorized dealer.
ADVERTISING THE SERIES' PERFORMANCE
From time to time the Series advertises its "yield," "total return" and
"average annual total return", each of which are calculated separately for Class
A and Class D shares. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. The "yield" of a class of the Series
refers to the income generated by an investment in that class over a 30-day
period. This income is then "annualized." That is, the amount of income
generated by the investment during that 30-day period is assumed to be generated
each 30-day period for twelve periods and is shown as a percentage of the
investment. The income earned on the investment is also assumed to be reinvested
at the end of the sixth 30-day period. The "total return" shows what an
investment in shares of a class of the Series 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, when the investment was
first made and that all distributions and dividends by that class 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. 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 a Series' Class A 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 Series may also refer in advertisements or in other
promotional material to articles, comments, listings and columns in the
financial press pertaining to the Series' performance. Examples of such
financial and other press publications include BARRON'S, BUSINESS WEEK,
CDA/WEISENBERGER 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., PENSIONS AND INVESTMENTS,
SMART MONEY, THE NEW YORK TIMES, USA TODAY, U.S. NEWS AND WORLD REPORT, THE WALL
STREET JOURNAL, WASHINGTON POST, WORTH MAGAZINE and YOUR MONEY.
ORGANIZATION AND CAPITALIZATION
The Fund is a diversified, open-end management investment company organized
under the laws of the Commonwealth of Massachusetts by a Declaration of Trust
dated July 27, 1984. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, $.001 par
value, in separate series. The Trustees also have the power to create additional
series of shares.
At present, shares of beneficial interest of two series have been
authorized, which shares of beneficial interest constitute interest in the
Series and Seligman U.S. Government Securities Series. Shares of beneficial
interest of the Series and Seligman U.S. Government Securities Series are
divided into two classes. Each share of beneficial interest of the Series' and
Seligman U.S. Government Securities Series' Class A and Class D is equal as to
earnings, assets and voting privileges, except that each class bears its own
separate distribution and certain other class expenses and has exclusive voting
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rights with respect to any matter to which a separate vote of any class is
required by the 1940 Act or Massachusetts law. The Fund has received an order
from the Securities and Exchange Commission permitting the issuance and sale of
multiple classes of beneficial interest. In accordance with the Declaration of
Trust, the Trustees may authorize the creation of additional classes of shares
of beneficial interest with such characteristics as are permitted by the order
received from the Securities and Exchange Commission. 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. Shares
entitle their holders to one vote per share. Shares have noncumulative voting
rights, do not have preemptive or subscription rights and are transferable. It
is the intention of the Trust not to hold Annual Meetings of Shareholders. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the 1940 Act or Declaration of Trust. Pursuant to the
1940 Act, shareholders have to approve the adoption of any management contract,
distribution plan and any changes in fundamental investment policies.
Shareholders also have the right to call a meeting of shareholders for the
purpose of voting on the removal of one or more Trustees. Such removal can be
effected upon the action of two-thirds of the outstanding shares of the Fund.
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APPENDIX
Moody's Investors Service
Bonds and Notes
BAA: Bonds and notes which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds or notes lack outstanding
investment characteristics and in fact may have speculative characteristics as
well.
BA: Bonds and notes which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and therefore not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds and notes in this class.
B: Bonds and notes which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
CAA: Bonds and notes which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
CA: Bonds and notes which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds and notes which are rated C are the lowest rated class of bonds or
notes, and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Standard & Poor's Corporation
Bonds
BBB: Bonds rated BBB are regarded as having a satisfactory degree of safety and
capacity to pay principal and interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in higher
rated categories.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the bond. BB indicates the lowest
degree of speculation and CC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
C: The rating C is reserved for bonds on which no interest is being paid.
D: Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
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TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares of the Series, 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 your check received in payment of a purchase of shares is
dishonored for any reason, Seligman Data Corp. may cancel the purchase and may
also redeem additional shares, if any, held in your 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 notifying Seligman Data Corp. in writing at least five business days prior to
the payable date. 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. Your
application is subject to acceptance by your bank and Seligman Data Corp. Checks
in the amount specified will be drawn automatically on your bank on the fifth
day of each month (or on the prior business day if the fifth day of the month
falls on a weekend or holiday) in which an investment is scheduled and invested
at the public offering price at the close of business on the same date. After
the initial investment, the value of shares held in your Account must equal not
less than two regularly scheduled investments. If a check is not honored by your
bank, or if the value of shares held falls below the required minimum, the
Service will be suspended. In the event that a check is returned marked
"unpaid," Seligman Data Corp. will cancel the purchase, redeem shares held in
your account for an amount sufficient to reimburse the Fund for any loss it may
have incurred as a result, and charge a $10.00 return check fee. This fee may be
debited from your account. Service will be reinstated upon written request
indicating that the cause of interruption has been corrected. The Service may be
terminated by you or Seligman Data Corp. at any time by written notice. You
agree to hold the Funds and their 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 you exchange all of your shares from one mutual fund in the
Seligman Group to another, you must re-apply for the Invest-A-Check(R) Service
in the Seligman Fund into which your 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 Fund from which the exchange was made.
AUTOMATIC CASH WITHDRAWAL SERVICE
Automatic Cash Withdrawal Service is available to Class A shareholders and
to Class D shareholders with respect to Class D shares held for one year or
more. A sufficient number of full and fractional shares will be redeemed to
provide the amount required for a scheduled payment. Redemptions will be made at
the asset value at the close of business on the specific day designated by the
shareholder of each month (or on the prior business day if the day specified
falls on a weekend or holiday). 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. This Service is considered terminated in
the event a withdrawal of shares, other than to make scheduled withdrawal
payments, reduces the value of shares remaining on deposit to less than $5,000.
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 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 their Account.
Upon completion of the specified minimum purchase within the thirteen-month
period, all shares held in escrow will be deposited to the shareholder's Account
or delivered to the shareholder. A shareholder may include the total asset value
of shares of the Seligman Funds (on which a sales load was paid) owned as of the
date of a Letter of Intent toward the completion 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, within 20 days following the
mailing of a written request, the shareholder has not paid this additional sales
load to Seligman Financial Services, 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 a 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 and that the required additional escrowed shares are being
furnished by the shareholder.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another Mutual Fund on which there is a sales load may be
taken into account in completing a Letter of Intent, or for Right of
Accumulation. However, shares of the Fund which have been purchased directly may
not be used for purposes of determining reduced sales loads on additional
purchases of the other Mutual Funds in the Seligman Group.
CHECK REDEMPTION SERVICE -- CLASS A SHARES ONLY
If shares are held in joint names, all shareholders must sign the Check
Redemption section of the Account Application. All checks will require all
signatures unless a lesser number is indicated in the Check Redemption section.
Accounts in the names of corporations, trusts, partnerships, etc. must list all
authorized signatories.
In all cases, each signature guarantees the genuineness of the other
signatures. Checks may not be drawn for less than $500.
I hereby authorize Mellon Bank, N.A. to honor checks drawn by me on my
account of Class A shares and to effect a redemption of sufficient shares in my
Fund account to cover payment of the check. I understand that shares in one
Series cannot be redeemed to cover a check written on another Series.
Mellon Bank, N.A. shall be liable only for its own negligence. The Fund will
not be liable for any loss, expense or cost arising out of check redemptions.
The Fund reserves the right to change, modify or terminate this service at any
time upon notification mailed to the address of record of the shareholder(s).
SELIGMAN DATA CORP. WILL CHARGE A $10.00 PROCESSING FEE FOR ANY CHECK
REDEMPTION DRAFT RETURNED MARKED "UNPAID." THIS CHARGE MAY BE DEBITED FROM THE
ACCOUNT THE CHECK WAS DRAWN AGAINST. NO REDEMPTION PROCEEDS WILL BE REMITTED TO
A SHAREHOLDER WITH RESPECT TO 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 THE SHARES TO A SHAREHOLDER'S ACCOUNT.
5/95
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
THE SELIGMAN GROUP OF FUNDS
ACCOUNT APPLICATION
Please make your investment check payable to the
"Seligman Group of Funds" and mail it
with this completed Application to:
Seligman Data Corp. TO OPEN A SELIGMAN IRA, SEP OR PENSION/
100 Park Avenue/2nd Floor PROFIT SHARING PLAN, A SEPARATE ADOPTION
New York, NY 10017 AGREEMENT IS REQUIRED. PLEASE CALL
(800) 221-2450 RETIREMENT PLAN SERVICES FOR MORE
INFORMATION AT (800) 445-1777.
1. ACCOUNT REGISTRATION
TYPE OF ||INDIVIDUAL ||MULTIPLE OWNERS ||GIFT/TRANSFER TO MINOR ||OTHER (Corporations, Trusts, Organizations,
Partnerships, etc.)
ACCOUNT Use Line 1 Use Lines 1, 2 & 3 Use Line 4 Use Line 5 Multiple Owners
will be registered as Joint Tenants with Right of Survivorship.
The first name and Social Security or Taxpayer ID Number on line 1, 4, or 5
below will be used for IRS reporting. NAME (Minors cannot be legal owners)
PLEASE PRINT OR TYPE
1._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
2._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
3._______________________________________________________________ ___________________________ _________
First Middle Last Social Security Number Birthdate
4.______________________________, as custodian for ____________________ under the _______________
Custodian (one only) Minor (one only) State
Uniform Gift/Transfer to Minors Act_______________________________until age____________________ _________________
Minor's Social Security Number (Not more than 21) Minor's Birthdate
5._______________________________________________________________________ _____________________
Name of Corporation or Other Entity. If a Trust, also complete below. Taxpayer ID Number
TYPE OF TRUST ACCOUNT: ||Trust ||Guardianship ||Conservatorship ||Estate ||Other
Trustee/Fiduciary Name__________________________________ Trust Date__________________________
Trust Name ______________________________,for the benefit of (FBO)_______________________________
2. MAILING ADDRESS
ADDRESS TELEPHONE
___________________________________________ (_______)__________________(_______)_________________
Street Address or P.O. Box Daytime Evening
___________________________________________ U.S. CITIZEN? ||Yes ||No _________________________
City State Zip If no, indicate country
3. INVESTMENT SELECTION
Please indicate the dollar amount(s) you would like to invest in the space
provided below. Minimum initial investment is $1,000 per Fund except for
accounts established pursuant to the Invest-A-Check(R) Service (see section
6-I. of this application). IF MORE THAN ONE FUND IS SELECTED, ACCOUNTS MUST
HAVE IDENTICAL REGISTRATIONS AND CLASS OF SHARES (except for Seligman Cash
Management Fund). PLEASE CHOOSE ONE: || Class A Shares || Class D Shares
MAKE CHECK PAYABLE TO: SELIGMAN GROUP OF FUNDS
$_____________ TOTAL AMOUNT,
INVESTED AS FOLLOWS:
$_____________ *Seligman Communications $_____________ Seligman Common Stock Fund
and Information Fund $_____________ Seligman Income Fund
$_____________ Seligman Henderson $_____________ Seligman High-Yield Bond Fund
Global Technology Fund $_____________ Seligman U.S. Government Securities Fund
$_____________ Seligman Frontier Fund $_____________ Seligman National Tax-Exempt Fund
$_____________ Seligman Henderson Global $_____________ Seligman Tax-Exempt Fund (choose one):
Smaller Companies Fund CA-Qlty.|| FL|| MD|| MN|| NY|| OR||
$_____________ Seligman Capital Fund CA-Hy. || GA|| MA|| MO|| NC|| PA||
$_____________ Seligman Growth Fund CO || LA|| MI|| NJ|| OH|| SC||
$_____________ Seligman Henderson
International Fund $_____________ Seligman Cash Management Fund (Class A only)
*Closed indefinitely to new investors after June 30, 1995; please contact
your financial advisor for information on current availability. NO
REDEMPTION PROCEEDS WILL BE REMITTED TO A SHAREHOLDER WITH RESPECT TO
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 THE SHARES TO THE SHAREHOLDER'S ACCOUNT.
4. SIGNATURE AND CERTIFICATION
Under penalties of perjury I certify that the number shown on this form is
my correct Taxpayer Identification Number (Social Security Number) and that
I am not subject to backup withholding either because I have not been
notified that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or the Internal Revenue Service has
notified me that I am no longer subject to backup withholding. I certify to
my legal capacity to purchase or redeem shares of each Fund for my own
Account, or for the Account of the organization named below. I have
received and read the current Prospectus of each Fund in which I am
investing and appoint Seligman Data Corp. as my agent to act in accordance
with my instructions herein.
A. ________________________________________________________________________
Date Signature of Investor
B. ________________________________________________________________________
Date Signature of Co-Investor, if any
5. BROKER/DEALER OR FINANCIAL ADVISOR DESIGNATION
________________________________________ _____________________________
Firm Name Representative's Nam
________________________________________ _____________________________
Branch Office Address Representative's ID Number
________________________________________ (______)_____________________
City State Zip Representative's Telephone Number
________________________________________
Branch Number
<PAGE>
6. ACCOUNT OPTIONS AND SERVICES
________________________________________________________________________________
A. DIVIDENDS AND GAIN DISTRIBUTION OPTIONS
I choose the following options for each Fund listed: OPTION
------
1 2 3
Option 1. Dividends in shares, gain distributions in shares. || || || FUND NAME
Option 2. Dividends in cash, gain distributions in shares. || || || FUND NAME
Option 3. Dividends in cash, gain distributions in cash. || || || FUND NAME
__________________________________________________________________________________________
NOTE: IF NO ELECTION IS MADE, OPTION 1. WILL AUTOMATICALLY BE PUT INTO EFFECT.
All dividend and/or gain distributions taken in shares will be invested at net asset value.
__________________________________________________________________________________________
________________________________________________________________________________
B. DIVIDEND DIRECTION OPTION
If you wish to have your dividend payments made to another
party or Seligman Fund, please complete the following. I
hereby authorize and request that my dividend payments from
the following Fund(s)
__________________ __________________ __________________ be made payable to:
Fund Name Fund Name Fund Name
Name______________________ Seligman Fund__________________
Address___________________ (If opening a new account, a minimum of $1,000 is required.)
City______________________ Account Number_________________
State, Zip________________ (For an existing account.)
________________________________________________________________________________
C. LETTER OF INTENT SERVICE (CLASS A ONLY)
I intend to purchase, although I am not obligated to do so,
additional shares of Seligman _________________________
Fund within a 13-month period which, together with the
total asset value of shares owned, will aggregate at least:
||$50,000 ||$100,000 ||$250,000 ||$500,000 ||$1,000,000
||$4,000,000
I AGREE TO THE ESCROW PROVISION LISTED UNDER "TERMS AND CONDITIONS"
IN THE BACK OF EACH PROSPECTUS.
________________________________________________________________________________
D. RIGHT OF ACCUMULATION (CLASS A ONLY)
Please identify any additional Seligman Fund accounts
eligible for the Right of Accumulation or to be used toward
completion of a Letter of Intent, and check applicable box:
|| I am a trustee for the following accounts, which are
held by the same trust, estate, or under the terms of a
pension, profit sharing or other employee benefit trust
qualified under section 401 of the Internal Revenue Code.
|| In calculating my holdings for Right of Accumulation or
Letter of Intent purposes, I am including the following
additional accounts which are registered in my name, in my
spouse's name, or in the name(s) of my child(ren) under
the age of 21.
Name______________ Fund______________ Account#_____________
Name______________ Fund______________ Account#_____________
Name______________ Fund______________ Account#_____________
________________________________________________________________________________
E. AUTOMATIC CASH WITHDRAWAL SERVICE
(CLASS A, OR CLASS D ONLY AFTER CLASS D SHARES ARE HELD FOR ONE YEAR)
Please send a check for $ withdrawn from Seligman
________________________ Fund, beginning on the day of 19,
and thereafter on the day specified of every:
||Month ||3rd Month ||6th Month ||12th Month
Make payments to: Name___________________________________
Address________________________________
City___________State________Zip________
Shares having a current value at offering price of $5,000
or more must be held in the account at initiation of
Service, and all shares must be in "book credit" form.
________________________________________________________________________________
F. AUTOMATIC DOLLAR-COST-AVERAGING SERVICE
I authorize Seligman Data Corp. to withdraw $ _____________
(minimum: $100 monthly or $250 quarterly) from my Seligman
Cash Management Fund Class A account || Monthly or
|| Quarterly to purchase Class A shares of Seligman
________________________________ Fund, beginning on the
_____ day of __________ 19 ____. Shares in the Seligman
Cash Management Fund Class A account must have a current
value of $5,000 at the initiation of Service and all shares
must be in "book credit" form.
________________________________________________________________________________
G. EXPEDITED REDEMPTION SERVICE, FOR SELIGMAN CASH MGMT. FUND ONLY
I hereby authorize Seligman Data Corp. to honor telephone
or written instructions received from me without a
signature and believed by Seligman Data Corp. to be genuine
for redemption. Proceeds will be wired ONLY to the
commercial bank listed below for credit to my account, or
to my address of record. If Expedited Redemption Service is
elected, no certificates for shares will be issued. I also
understand and agree to the risks and procedures outlined
for all telephone transactions set forth in section 6-H. of
this Application.
Investment by ||Check ______________________________________________________________________
||Wire Name of Commercial Bank (Savings Bank May Not Be Used)
_________________________ ______________________ ______________________
Bank Account Name Bank Account No. Bank Routing No.
_______________________________________________________________________________________
Address of Bank City State Zip Code
X________________________________ X____________________________________________
Signature of Investor Date Signature of Co-Investor, if any Date
______________________________________________________________________________________________________________________
<PAGE>
H. TELEPHONE SERVICE ELECTION
AVAILABLE FOR INDIVIDUAL OR JOINT TENANT ACCOUNTS ONLY
By completing this section, I understand that I may place
the following requests by telephone:
o Redemptions up to $50,000 o Exchanges
o Address Changes o Dividend and/or Capital
Gain Distribution Option
changes
AUTHORIZATION
I understand that the telephone services are optional and
that by signing below I authorize the Funds, all other
Seligman Funds with the same account number and
registration which I currently own or in which I invest in
the future, and Seligman Data Corp. ("SDC"), to act upon
instructions received by telephone from me or any other
person in accordance with the provisions regarding
telephone services as set forth in the current prospectus
of each such Fund, as amended from time to time. I
understand that redemptions of uncertificated shares of up
to $50,000 will be sent only to my account address of
record, and only if such address has not changed within the
30 days preceding such request. Any telephone instructions
given in respect of this account and any account into which
exchanges are made are hereby ratified and I agree that
neither the Fund(s) nor SDC will be liable for any loss,
cost or expense for acting upon such telephone instructions
reasonably believed to be genuine and in accordance with
the procedures described in each prospectus, as amended
from time to time. Such procedures include recording of
telephone instructions, requesting personal and/or account
information to verify a caller's identity and sending
written confirmations of transactions. As a result of this
policy, I may bear the risk of any loss due to unauthorized
or fraudulent telephone instructions; provided, however,
that if the Fund(s) or SDC fail to employ such procedures,
the Fund(s) and/or SDC may be liable. TO ELECT TELEPHONE
SERVICES, PLEASE SIGN YOUR NAME(S) AS IT APPEARS ON THE
FIRST PAGE OF THIS ACCOUNT APPLICATION.
X________________________________ X____________________________________
Signature of Investor Date Signature of Co-Investor, if any Date
<PAGE>
I. INVEST-A-CHECK(R) SERVICE
To start your Invest-A-Check(R) Service, fill out the "Bank
Authorization to Honor Pre-Authorized Checks" below, and
forward it with an unsigned bank check from your regular
checking account (marked "void", if you wish). Please
arrange with my bank to draw pre-authorized checks and
invest the following dollar amounts (minimum: $100 monthly
or $250 quarterly) in the designated Seligman Fund(s) as
indicated:
_______________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
________________ $_________ ||Monthly ||Quarterly
Fund Name
I understand that my checks will be drawn on the fifth day
of the month, or prior business day, for the period
designated. I have completed the "Bank Authorization to
Honor Pre-Authorized Checks" below and have read and agree
to the Terms and Conditions applicable to the
Invest-A-Check(R) Service as set forth in each Prospectus
and as set forth below in the Bank Authorization.
X__________________________________________________________________
Signature of Investor (Please also sign Bank Authorization below.)
X__________________________________________________________________
Signature of Co-Investor, if any
________________________________________________________________________________________
BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED CHECKS
________________________________________________________________________________________
To:_____________________________________________________________________________________
(Name of Bank)
________________________________________________________________________________________
Address of Bank or Branch (Street, City, State and Zip)
Please honor pre-authorized checks drawn on my account by Seligman Data Corp.,
100 Park Avenue, New York, N.Y. 10017, to the order of the Fund(s) designated
below:
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
____________________________________ $ ___________ ||Monthly ||Quarterly
Fund Name
and charge them to my regular checking account. Your authority to do so shall
continue until you receive written notice from me revoking it. You may
terminate your participation in this arrangement at any time by written notice
to me. I agree that your rights with respect to each pre-authorized check
shall be the same as if it were a check drawn and signed by me. I further
agree that should any such check be dishonored, with or without cause,
intentionally or inadvertently, you shall be under no liability whatsoever.
___________________________________ _________________________________________________
Checking Account Number Name(s) of Depositor(s) -- Please Print
X__________________________________________________
Signature(s) of Depositor(s) -- As Carried by Bank
X__________________________________________________
________________________________________________________________________________________
Address (Street) (City) (State, Zip)
________________________________________________________________________________________
To the Bank Designated above:
Your depositor(s) named in the above form has instructed us to establish the
Invest-A-Check(R) Service for his convenience. Under the terms of the Service,
your depositor(s) has pre-authorized checks to be drawn against his account in
a specific amount at regular intervals to the order of the designated Fund(s).
Checks presented to you will be magnetic-ink coded and will otherwise conform
to specifications of the American Bankers Association. A letter of
indemnification addressed to you and signed by Seligman Financial Services,
Inc., general distributor of the Seligman Mutual Funds, appears below. If
there is anything we can do to help you in giving your depositor(s) this
additional Service which he has requested, please let us know.
SELIGMAN DATA CORP.
INDEMNIFICATION AGREEMENT
To the Bank designated above:
SELIGMAN FINANCIAL SERVICES, INC., distributor of the shares of the Seligman
Mutual Funds, hereby agrees:
(1) To indemnify and hold you harmless against any loss, damage, claim or
suit, and any costs or expenses reasonably incurred in connection therewith,
either (a) arising as a consequence of your actions in connection with the
execution and issuance of any check or draft, whether or not genuine,
purporting to be executed by Seligman Data Corp. and received by you in the
regular course of business for the purpose of payment, or (b) resulting from
the dishonor of any such check or draft, with or without cause and
intentionally or inadvertently, even though such dishonor results in
suspension or termination of the Invest-A-Check(R) Service pursuant to which
such checks or drafts are drawn. (2) To refund to you any amount erroneously
paid by you on any such check or draft, provided claim for any such payment is
made within 12 months after the date of payment.
SELIGMAN FINANCIAL SERVICES, INC.
/S/Stephen J. Hodgdon
President
________________________________________________________________________________
<PAGE>
J. CHECK REDEMPTION SERVICE (CLASS A ONLY)
Available to shareholders who own or purchase shares having
a value of at least $25,000 invested in any of the
following: Seligman High-Yield Bond Fund, Seligman Income
Fund, Seligman U.S. Government Securities Fund, and any
Seligman Tax-Exempt Fund, or $2,000 invested in Seligman
Cash Management Fund. IF YOU WISH TO USE THIS SERVICE, YOU
MUST COMPLETE SECTION 4 AND THE SIGNATURE CARD BELOW.
SHAREHOLDERS ELECTING THIS SERVICE ARE SUBJECT TO THE
CONDITIONS OF THE TERMS AND CONDITIONS IN THE BACK OF EACH
PROSPECTUS.
CHECK WRITING SIGNATURE CARD Authorized Signature(s)
___________________________________________ 1.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 2.______________________________
Name of Fund for Check Redemption Service
___________________________________________ 3.______________________________
Name of Fund for Check Redemption Service
__________________________________________ 4.______________________________
Account Number (If known)
__________________________________________ 5.______________________________
Account Registration (Please Print)
|| Check here if only one signature is required on checks.
|| Check here if a combination of signatures is required and specify the number:___________________.
ACCOUNTS IN THE NAMES OF CORPORATIONS, TRUSTS, PARTNERSHIPS, ETC., MUST
INDICATE THE LEGAL TITLES OF ALL AUTHORIZED SIGNATORIES. SHAREHOLDERS
ELECTING THIS SERVICE ARE SUBJECT TO THE TERMS AND CONDITIONS LISTED IN THE
PROSPECTUS.
</TABLE>
<PAGE>
MANAGED BY
[J&W SELIGMAN LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864
<PAGE>
Seligman
High-Yield Bond
Series
- -------------------------------------------------------------------------------
100 Park Avenue
New York, New York 10017
INVESTMENT MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, New York 10017
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, New York 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
127 West 10th
Street Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
TXHY1
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1995
SELIGMAN HIGH INCOME FUND SERIES
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 for each Series of the
Seligman High Income Fund Series (the "Fund"). The date of the Seligman U.S.
Government Securities Series and Seligman High-Yield Bond Series Prospectus is
May 1, 1995. It should be read in conjunction with the Prospectuses, 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 each Prospectus in its entirety.
The Fund offers two classes of shares for the Seligman U.S. Government
Securities Series and Seligman High-Yield Bond Series. Class A shares may be
purchased at net asset value plus a sales load of up to 4.75%. Class D shares
may be purchased at net asset value and are subject to a contingent deferred
sales load ("CDSL") of 1% if redeemed within one year.
Each Class A and Class D share represents an identical legal interest
in the investment portfolio of the Seligman U.S. Government Securities Series
and Seligman High-Yield Bond Series and has the same rights except for certain
class expenses and except that Class D shares bear a higher distribution fee
that generally will cause the Class D shares to have a higher expense ratio and
pay lower dividends than Class A shares. Each Class has exclusive voting rights
with respect to its distribution plan. Although holders of Class A 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 two classes also
have different exchange privileges.
TABLE OF CONTENTS
<PAGE>
Page
Investment Objectives, Policies And Risks...... 2
Investment Limitations......................... 3
Trustees And Officers.......................... 4
Management And Expenses........................
............................................... 8
Administration, Shareholder Services
And Distribution Plan....................... 9
Portfolio Transactions......................... 10
Page
Purchase And Redemption Of
Fund Shares................................. 10
Distribution Services.......................... 13
Valuation...................................... 13
Performance Information........................ 13
General Information............................ 16
Financial Statements........................... 17
Appendix ...................................... 17
TX1A
-1-
<PAGE>
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The investment objective of each Series is a fundamental policy and may
not be changed by the Trustees of the Fund without the vote of a majority of the
Series' outstanding voting securities. The objective of each Series is as
follows.
The Seligman U.S. Government Securities Series seeks to produce high
current income. To achieve its objective, the Series invests primarily in debt
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and backed by the full faith and credit of the U.S. Government
which have maturities greater than one year at the date of purchase by the
Series.
The Seligman High-Yield Bond Series seeks to produce maximum current
income. To achieve its objective, the Series invests primarily in high-yielding,
high-risk corporate bonds and notes, which generally are unrated or carry lower
ratings (Baa or lower by Moody's or BBB or lower by S&P) than those assigned by
S&P or Moody's to investment grade bonds and notes. Except for temporary
defensive purposes, the Series will invest at least 80% of the value of its
assets in high-yielding, income-producing corporate bonds and notes. Investments
other than in such corporate bonds will be in short-term money market
instruments, including certificates of deposit, commercial paper, securities
issued, guaranteed or insured by the U.S. Government, its agencies and
instrumentalities, and other income producing cash items. The Seligman
High-Yield Bond Series may invest up to 10% of its total assets in debt
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 debt
securities and their markets may not be as liquid as U.S. securities and their
markets. Securities and some foreign companies may involve greater market risk
than securities of U.S. companies, and foreign brokerage commissions and custody
fees are generally higher than in the United States. Investments in foreign debt
securities may also be subject to local economic or political risks, such as
political instability of some foreign governments and the possibility of
nationalization of issuers.
LENDING OF SECURITIES. Each Series of 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 will generally be short-term. Loans are subject to
termination at the option of the Series or the borrower. Each Series 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. Loaned securities may not be
returned by a borrower; however, a borrower must maintain with the Series from
which it has borrowed securities, cash, or equivalent collateral, equal to at
least 100% of the market value of the securities borrowed.
REPURCHASE AGREEMENTS. Each Series of 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 Series
acquires a money market instrument, generally a U.S. Government obligation,
qualified for purchase by the Series, 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 Series and is unrelated to the
interest rate on the instrument. Repurchase agreements usually are for short
periods, such as one week or less, but may be for longer periods. As a matter of
fundamental policy, a Series will not enter into repurchase agreements of more
than one week's duration if more than 10% of its total assets would be invested
in such agreements and in "restricted" and other illiquid securities.
WHEN-ISSUED SECURITIES. Each Series may purchase securities on a when-issued
basis, in which case delivery and payment normally take place within 45 days
after the date of the commitment to purchase. The payment obligation and the
interest rate that will be received on the securities are each fixed at the time
the buyer enters into the commitment. Although a Series will only purchase a
security on a when-issued basis with the intention of actually acquiring the
securities, the Series may sell these securities before the settlement date if
it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in
each Series are subject to changes in market value based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates (which will generally result in
similar changes in value, i.e., both experiencing appreciation when interest
rates decline and depreciation when interest rates rise). Therefore, to the
extent a Series remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be a greater
possibility that the market value of the Series' assets will vary more than
otherwise. Purchasing a security on a when-issued basis can involve a risk that
the yields available in the market when the delivery takes place may be higher
than those obtained on the security so purchased.
-2-
<PAGE>
A separate account of each of the Series consisting of cash or liquid
high-grade debt securities equal to the amount of the when-issued commitments
will be established with Investors Fiduciary Trust Company, the Fund's portfolio
securities custodian, and marked to market daily, with additional cash or liquid
high grade debt securities added when necessary. When the time comes to pay for
when-issued securities, each Series will meet its respective obligations from
then available cash flow, sale of securities held in the separate account, sale
of other securities or, although they would not normally expect to do so, from
the sale of the when-issued securities themselves (which may have a value
greater or less than the Series' payment obligations). Sale of securities to
meet such obligations carries with it a greater potential for the realization of
capital gain or loss.
Except as described above and under Investment Limitations below, the
foregoing investment policies are not fundamental and the Trustees of the Fund
may change such policies without the vote of a majority of the outstanding
voting securities of the Fund or any Series (as defined on page 7).
PORTFOLIO TURNOVER. Each Series' portfolio turnover rate is calculated by
dividing the lesser of purchases or sales of portfolio securities of the Series
for the fiscal year by the monthly average value of the portfolio securities of
the Series owned during the fiscal year. The portfolio turnover rates for the
Seligman U.S. Government Securities Series and the Seligman High-Yield Bond
Series, respectively, for the fiscal years ended 1994 and 1993 were 445.18% and
170.35%; and 184.75% and 193.91% respectively. Securities whose maturities or
expiration dates at the time of acquisition were one year or less are excluded
from the calculation. High portfolio turnover involves correspondingly greater
transactions costs and a possible increase in short-term capital gains or
losses. The increase in portfolio turnover of the U.S. Government Securities
Series during 1994 was due to a rising interest rate environment throughout the
year. In response to this, the portfolio manager shortened the maturity of the
portfolio by selling long-term bonds and purchased shorter maturity securities
in order to reduce the interest rate exposure of the portfolio.
INVESTMENT LIMITATIONS
Under each Series' fundamental policies, which cannot be changed except by
a vote of a majority of its outstanding voting securities, a Series may not:
- - Borrow money, except from banks for temporary purposes (but not for the
purchase of portfolio securities) in an amount not to exceed 10% of the value
of the total assets of the Series. A Series will not purchase additional
portfolio securities if such Series has outstanding borrowings in excess of
5% of the value of its total assets;
- - Mortgage or pledge any of its assets, except to secure borrowings permitted
by the preceding paragraph and provided that this limitation does not
prohibit escrow, collateral or margin arrangements in connection with (a) the
writing of covered call options by the U.S. Government Securities Series; (b)
the purchase of put options by the U.S. Government Securities Series or (c)
the sale of interest rate futures contracts and the purchase or sale of
options on such contracts by the U.S. Government Securities Series;
- - Make "short" sales of securities, or purchase securities on "margin" except
that for purposes of this limitation, initial and variation payments or
deposits in connection with interest rate futures contracts and related
options by the U.S. Government Securities Series will not be deemed to be the
purchase of securities on margin; write or purchase put or call options
except that the U.S. Government Securities Series may write covered call
options and the U.S. Government Securities Series may purchase put options
and may purchase and sell options on interest rate futures and may engage in
closing transactions with respect to such options. The Series has no present
intention of investing in these types of securities, and will not do so
without the prior approval of the Fund's Board of Trustees;
- - Purchase securities of any issuer if immediately thereafter more than 5% of
total assets at market would be invested in the 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 one issuer, other than U.S.
Government agencies or instrumentalities, or invest to control or manage any
company;
- - Invest more than 25% of the market value of its total assets in securities of
issuers in any one industry; for the purpose of this limitation,
mortgage-related securities do not constitute an industry;
- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
-3-
<PAGE>
- - Purchase or hold any real estate including limited partnership interests in
real property;
- - Purchase or sell commodities and commodity futures contracts except that the
U.S. Government Securities Series may sell interest rate futures contracts
and may write call options and may purchase put options with respect to such
contracts and may engage in closing transactions with respect to all such
transactions. The Series has no present intention of investing in these types
of securities, and will not do so without the prior approval of the Fund's
Board of Trustees;
- - 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 are guaranteed by a company that (including predecessors) has been
in operation at least three continuous years shall be excluded from this
calculation;
- - Purchase or hold the securities of any issuer, if to its knowledge, Trustees
or officers of the Fund individually owning beneficially more than 0.5% of
the securities of that other company own in the aggregate more than 5% of
such securities;
- - Engage in transactions with its Trustees and officers, or firms they are
associated with, in connection with the purchase or sale of securities,
except as broker;
- - Underwrite the securities of other issuers, except the Series may invest in
securities that are not readily marketable without registration under the
Securities Act of 1933 ("restricted" securities) and other illiquid
securities and repurchase agreements with maturities in excess of seven days
if immediately after the making of such investment not more than 10% of the
value of its total assets (taken at cost) would be so invested and except
that in connection with the disposition of a security a Series may be deemed
to be an underwriter as defined in the Securities Act of 1933; or
- - Make loans, except loans of securities of the Series and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, or the entry
into repurchase agreements may be considered loans.
Although not fundamental policies subject to shareholder vote, as long as the
Fund's shares are registered in certain states, a Series may not mortgage,
pledge or hypothecate its assets to the extent that the value of such encumbered
assets exceed 10% of the per share offering price of shares of the Series, it
may not invest in interests in oil, gas, mineral leases or other mineral
exploration or development programs and it must limit to 5% of its gross assets
at market value its combined investments in securities of companies in operation
for less than three years (excluding securities guaranteed by a company which,
including predecessors, has been in operation at least three continuous years).
Under the Investment Company Act of 1940 (the "1940 Act"), a "vote of a
majority of the outstanding voting securities" of the Fund or of a particular
Series means the affirmative vote of the lesser of (l) more than 50% of the
outstanding shares of the Fund or of such Series or (2) 67% or more of the
shares of the Fund or of such Series present at a shareholder's meeting if more
than 50% of the outstanding shares of the Fund or of such Series are represented
at the meeting in person or by proxy.
TRUSTEES AND OFFICERS
Trustees and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below. Each
Trustee 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* Trustee, Chairman of the Board, Chief Executive
(56) Officer and Chairman ofthe Executive Committee
Managing Director, Chairman and President, J. &
W. Seligman & Co. Incorporated, investment
managers and advisors; and Seligman Advisors,
Inc., advisors; Chairman and Chief Executive
Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial
Services, Inc., distributor; Seligman Holdings,
Inc., holding company; Seligman Services, Inc.,
broker/dealer; and Carbo Ceramics Inc., ceramic
proppants for oil and gas industry; Director or
Trustee, Seligman Data Corp. (formerly Union
Data Service Center, Inc.), shareholder service
agent; Daniel Industries, Inc., manufacturer of
-4-
<PAGE>
oil and gas metering equipment; Kerr-McGee
Corporation, diversified energy company; and
Sarah Lawrence College; and a Member of the
Board of Governors of the Investment Company
Institute; formerly, Chairman, Seligman
Securities, Inc., broker/dealer; and J. & W.
Seligman Trust Company, trust company.
RONALD T. SCHROEDER* Trustee, President and Member of the Executive
(47) Committee
Director, Managing Director and Chief
Investment Officer, J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Managing Director and Chief Investment Officer,
Seligman Advisors, Inc., advisors; Director or
Trustee and President and Chief Investment
Officer, Tri-Continental Corporation,
closed-end investment company and the open-end
investment companies in the Seligman Group of
Investment Companies; Director and President,
Seligman Holdings, Inc., holding company;
Director, Seligman Financial Services, Inc.,
distributor; Seligman Data Corp., shareholder
service agent; Seligman Quality Municipal Fund,
Inc. and Seligman Select Municipal Fund, Inc.,
closed-end investment companies; Seligman
Henderson Co., advisors; and Seligman Services,
Inc., broker/dealer; formerly, Director, J. &
W. Seligman Trust Company, trust company; and
Seligman Securities, Inc., broker/dealer.
FRED E. BROWN* Trustee
(81)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, Tri-Continental
Corporation, closed-end investment company; and
the open-end investment companies in the
Seligman Group of Investment Companies;
Director, Seligman Financial Services, Inc.,
distributor; Seligman Quality Municipal Fund,
Inc. and Seligman Select Municipal Fund, Inc.,
closed-end investment companies; Seligman
Services Inc., broker/dealer; Trustee, Trudeau
Institute, nonprofit bio-medical research
organization; Lake Placid Center for the Arts,
cultural organization; Lake Placid Education
Foundation, education foundation; formerly,
Director, J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
ALICE S. ILCHMAN Trustee
(59)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; NYNEX (formerly, New York Telephone
Company), telephone company; The Rockefeller
Foundation, charitable foundation; and The
Committee for Economic Development; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, International
Research and Exchange Board, intellectual
exchanges.
Sarah Lawrence College, Bronxville, NY 10708
JOHN E. MEROW* Trustee
(65)
Partner, Sullivan & Cromwell, law firm;
Director or Trustee, the Commonwealth Aluminum
Corporation; the Seligman Group of Investment
Companies; the Municipal Art Society of New
York; the U. S. Council for International
Business and the U. S.-New Zealand Council;
Chairman, American Australian Association; the
Municipal Art Society of New York; Member of
the American Law Institute and Council on
Foreign Relations; and Member of the Board of
Governors of the Foreign Policy Association and
New York Hospital.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Trustee
(52)
Attorney; Director or Trustee, the Seligman
Group of Investment Companies; National
Association of Independent Schools (Washington,
D.C.), education; Chairman of the Board of
Trustees of St. George's School (Newport, RI).
St. Bernard's Road, P.O. Box 449, Gladstone, NJ
07934
-5-
<PAGE>
DOUGLAS R. NICHOLS, JR. Trustee
(75)
Management Consultant; Director or Trustee, the
Seligman Group of Investment Companies;
formerly, Trustee, Drew University.
790 Andrews Avenue, Delray Beach, FL 33483
JAMES C. PITNEY Trustee
(68)
Partner, Pitney, Hardin, Kipp & Szuch, law
firm; Director or Trustee, the Seligman Group
of Investment Companies; Public Service
Enterprise Group, public utility. Park Avenue
at Morris County, P.O. Box 1945, Morristown, NJ
07962-1945
JAMES Q. RIORDAN Trustee
(67)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; The Brooklyn
Union Gas Company; The Committee for Economic
Development; Dow Jones & Co., Inc.; Public
Broadcasting Service; formerly, Co-Chairman of
the Policy Council of the Tax Foundation;
Director and Vice Chairman, Mobil Corporation;
Director, Tesoro Petroleum Companies, Inc.; and
Director and President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY
10017
HERMAN J. SCHMIDT Trustee
(78)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; H. J. Heinz Company; HON Industries,
Inc.; and MAPCO, Inc; formerly, Director,
MetLife Series Fund, Inc. and MetLife
Portfolios, Inc.; and Ryder System, Inc. 15
Oakley Lane, Greenwich, CT 06830
ROBERT L. SHAFER Trustee
(62)
Vice President, Pfizer Inc., pharmaceuticals;
Director or Trustee, the Seligman Group of
Investment Companies; and USLIFE Corporation,
life insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Trustee
(60)
Executive Vice President, Chief Operating
Officer and Director, Sammons Enterprises,
Inc.; Director or Trustee, Red Man Pipe and
Supply Company, piping and other materials; the
Seligman Group of Investment Companies;
Director, C-SPAN.
300 Crescent Court, Suite 700, Dallas, TX 75201
BRIAN T. ZINO* Trustee and Member of the Executive Committee
(42)
Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Director or Trustee, the
Seligman Group of Investment Companies;
Chairman, Seligman Data Corp., shareholder
service agent; Director, Seligman Financial
Services, Inc., distributor; Seligman Services,
Inc., broker/dealer; Senior Vice President,
Seligman Henderson Co., advisors; formerly,
Director and Secretary, Chuo Trust - JWS
Advisors, Inc., advisors; and Director,
Seligman Securities, Inc., broker/dealer; and
J. & W. Seligman Trust Company, trust company.
-6-
<PAGE>
DANIEL J. CHARLESTON Portfolio Manager
(35)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; and Vice President and
Portfolio Manager of one other open-end
investment company in the Seligman Group of
Investment Companies.
LEONARD J. LOVITO Vice President and Portfolio Manager
(34)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Vice President and
Portfolio Manager, two other open-end
investment companies in the Seligman Group of
Investment Companies.
LAWRENCE P. VOGEL Vice President
(38)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Seligman Financial
Services, Inc., distributor; and Seligman
Advisors, Inc., advisors; Vice President, the
Seligman Group of Investment Companies; Senior
Vice President, Finance (formerly, Treasurer),
Seligman Data Corp., shareholder service agent;
Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisors;
formerly, Senior Audit Manager at Price
Waterhouse, independent accountants.
FRANK J. NASTA Secretary
(30)
Secretary, the Seligman Group of Investment
Companies; J. & W. Seligman & Co.,
Incorporated, investment managers and advisers;
Seligman Financial Services, Inc., distributor;
Seligman Henderson Co., advisers; Seligman
Services, Inc., broker/dealers; Seligman Data
Corp.; Vice President, Law and Regulation, J. &
W. Seligman & Co. Incorporated, investment
managers and advisers; formerly, attorney,
Seward & Kissel.
THOMAS G. ROSE Treasurer
(37)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc.
The Executive Committee of the Trustees acts on behalf of the Trustees
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 Trustees.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Fund and
POSITION WITH REGISTRANT FROM FUND (1) FUND EXPENSES FUND COMPLEX (2)
------------------------ ------------- ------------- ----------------
<S> <C> <C> <C>
William C. Morris, Director N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director N/A N/A N/A
Alice S. Ilchman, Director $2650.73 N/A $67,000.00
John E. Merow, Director 2615.02(d) N/A 66,000.00(d)
Betsy S. Michel, Director 2615.02 N/A 66,000.00
Douglas R. Nichols, Jr., Director 2615.02 N/A 66,000.00
James C. Pitney, Director 2650.73 N/A 67,000.00
James Q. Riordan, Director 2615.02 N/A 66,000.00
Herman J. Schmidt, Director 2615.02 N/A 66,000.00
Robert L. Shafer, Director 2615.02 N/A 66,000.00
James N. Whitson, Director 2615.02(d) N/A 66,000.00(d)
Brian T. Zino, Director N/A N/A N/A
</TABLE>
-7-
<PAGE>
- ----------------------
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1994.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
(d) Deferred. As of December 31, 1994, the total amounts of deferred
compensation (including interest) payable to Messrs. Merow, Pitney and Whitson
were $25,833, $22,065 and $4,333, respectively. Mr. Pitney no longer defers
current compensation.
The Fund has a compensation arrangement under which outside Trustees may
elect to defer receiving their fees. Under this arrangement, interest would be
accrued on the deferred balances.
Trustees and officers of the Fund are also directors, trustees and
officers of some or all of the other investment companies in the Seligman Group.
Trustees and officers of the Fund as a group owned directly or indirectly
9,374 shares of Seligman High-Yield Bond Series and -0- shares of the Seligman
U.S. Government Securities Series as of March 31, 1995, or less than 1% of each
Series' Class A capital stock. As of that date, no Directors or officers owned
shares of either Series' Class D capital stock.
MANAGEMENT AND EXPENSES
As indicated in each Series Prospectus, under the Management Agreements,
dated December 29, 1988, subject to the control of the Trustees, J. & W.
Seligman & Co. Incorporated (the "Manager") manages the investment of the assets
of each Series, including making purchases and sales of portfolio securities
consistent with the Series' 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
Trustees of the Fund who are employees or consultants of the Manager and the
officers and employees of the Fund. The Manager also provides senior management
for Seligman Data Corp., the Fund's shareholder service agent.
The Manager is entitled to receive a management fee for its services,
calculated daily and payable monthly, equal to .50% of the average daily net
assets of the Series on an annual basis. The management fees paid by each Series
for each of 1994, 1993 and 1992 equaled .50% of the average daily net assets of
each Series; or for the Seligman U.S. Government Series and the Seligman
High-Yield Bond Series, respectively $338,362, $296,325 and $296,978 and
$329,652, $251,812 and $185,376, respectively.
The Fund pays all its expenses other than those assumed by the Manager,
including brokerage commissions, administration, shareholder services and
distribution fees, if any, 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 and prospectuses
to existing shareholders, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of shareholders' meetings,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services, fees and disbursements of
transfer agents and custodians, expenses of disbursing dividends and
distributions, fees payable under the Administration, Shareholder Services and
Distribution Plan described below, fees and expenses of Trustees of the Fund not
employed by (or serving as a Trustee of) the Manager or its affiliates,
insurance premiums and extraordinary expenses such as litigation expenses. The
Fund's expenses are allocated among the Series in a manner determined by the
Trustees to be fair and equitable.
The Manager has undertaken to one state securities administrators, so long
as required, to reimburse each Series for each year in the amount by which total
expenses, including the management fee but excluding interest, taxes, brokerage
commissions, distribution fees and extraordinary expenses, exceed 2 1/2% of the
first $30,000,000 of average net assets, 2% of the next $70,000,000 of average
net assets, and 1 1/2% thereafter. Such reimbursement, if any, will be paid
monthly.
-8-
<PAGE>
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.
Each Management Agreement was approved by the Board of Directors on
September 30, 1988 and by the shareholders at a Special Meeting held on December
16, 1988. The Management Agreement will continue 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 Trustees or of the outstanding voting securities of
the Series and by a vote of a majority of the Trustees 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 Series at least 60 days prior to
December 31 of any year that it does not desire such continuance. Each
Management Agreement may be terminated by the appropriate Series, without
penalty, on 60 days' written notice to the Manager and will terminate
automatically in the event of its assignment. Each Series has agreed to change
its name upon termination of its Management Agreement if continued use of the
name would cause confusion in the context of the Manager's business.
The Manager is a successor firm to an investment banking business founded
in 1864 which has thereafter provided investment services to individuals,
families, institutions and corporations. See the Appendix for further history of
the Manager.
Officers, directors and employees of the Manager are permitted to
engage in personal securities transactions, subject to the Manager's Code of
Ethics (the "Code"). The 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 Code. The Code prohibits
each of the officers, directors and employees (including all portfolio managers)
of the Manager from purchasing or selling any security that the officer,
director or employee knows or believes (i) was recommended by the Manager for
purchase or sale by any client, including the Fund, within the preceding two
weeks, (ii) has been reviewed by the Manager for possible purchase or sale
within the preceding two weeks, (iii) is being purchased or sold by any client,
(iv) is being considered by a research analyst, (v) is being acquired in a
private placement, unless prior approval has been obtained from the Manager's
Director of Compliance, or (vi) is being acquired during an initial or secondary
public offering. The 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 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
As indicated in each Series Prospectus, the Fund has adopted an
Administration, Shareholder Services and Distribution Plan (the "Plan") under
Section 12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Rule") for each
Series.
The Plan was last approved on November 19, 1992 by the Board of Trustees
of the Fund, including a majority of the Trustees who are not "interested
persons" (as defined in the Act) 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 Trustees") and by the shareholders of each Series at a meeting
of shareholders on April 10, 1986. Amendments to the Plan were approved in
respect of the Class D shares on July 15, 1993 by the Board of Trustees of the
Fund, including a majority of the Qualified Trustees, and became effective with
respect to the Class D shares of the Seligman U.S. Government Securities Series
and Seligman High-Yield Bond Series on September 21, 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 Trustees and the Qualified
Trustees of the Fund, 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 (as defined in each Series' Prospectus)
-9-
<PAGE>
with respect to a class of shares of the Seligman U.S. Government Securities
Series and Seligman High-Yield Bond Series without the approval of a majority of
the outstanding voting securities of a class and no material amendment to the
Plan may be made except by a majority of both the Trustees and the Qualified
Trustees.
The Plan requires that the Treasurer of the Fund shall provide to the
Trustees, and the Trustees 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 Trustees who are not "interested
persons" of the Fund be made by such disinterested Trustees.
PORTFOLIO TRANSACTIONS
No brokerage commissions were paid by the Fund during 1994, 1993, and
1992. 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.
PURCHASE AND REDEMPTION OF FUND SHARES
The Seligman U.S. Government Securities Series and Seligman High-Yield
Bond Series of the Fund issues two 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 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" as
applicable in each Series' respective 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 each Series' net asset value at
December 31, 1994, the maximum offering price of a Series' shares is as follows:
SELIGMAN U.S. GOVERNMENT SECURITIES SERIES
CLASS A
Net asset value per share .............................................. $6.47
Maximum sales load (4.75% of offering price) ........................... .32
-----
Maximum offering price per share ....................................... $6.79
=====
CLASS D
Net asset value and maximum offering price per share* .................. $6.48
=====
SELIGMAN HIGH-YIELD BOND SERIES
CLASS A
Net asset value per share .............................................. $6.35
Maximum sales load (4.75% of offering price) ........................... .32
-----
Maximum offering price per share ....................................... $6.67
=====
CLASS D
Net asset value and maximum offering price per share* .................. $6.35
=====
-10-
<PAGE>
- -------------
* Class D shares are subject to a CDSL of 1% on redemptions within one year of
purchase. See "Redemption Of Shares" in the Seligman U.S.Government Securities
Series and Seligman High-Yield Bond Series Prospectuses.
CLASS A SHARES - REDUCED SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman mutual fund sold with a 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 Seligman U.S. Government Securities Series and Seligman High-Yield
Bond Series or in any combination of shares of the other mutual funds in the
Seligman Group which are sold with a sales load, reaches levels indicated in the
sales load schedule set forth in the Prospectuses.
THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in Class A shares of the Seligman U.S. Government Securities Series and
Seligman High-Yield Bond Series, Seligman Capital Fund, Seligman Common Stock
Fund, Seligman Communications and Information Fund, Seligman Frontier Fund,
Seligman Growth Fund, Seligman Henderson Global Fund Series, Seligman Income
Fund, Seligman New Jersey Tax-Exempt Fund, Seligman Pennsylvania Tax-Exempt Fund
Series, Seligman Tax-Exempt Fund Series or Seligman Tax-Exempt Series Trust that
were sold with a sales load with the total net asset value of shares of those
Seligman mutual funds already owned that were sold with a sales load and the
total net asset value of shares of Seligman Cash Management Fund which were
acquired through an exchange of shares of another mutual fund in the Seligman
Group on which there was a sales load at the time of purchase to determine
reduced sales loads in accordance with the schedule in the Prospectuses. The
value of the shares owned, including the value of shares of Seligman Cash
Management Fund acquired in an exchange of shares of another mutual fund in the
Seligman Group on which there is a sales load at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Financial Services, Inc. ("SFSI") is notified by an investor or a dealer of the
amount owned at the time the purchase is made and is furnished sufficient
information to permit confirmation.
A LETTER OF INTENT allows an investor to purchase Class A shares of the
Seligman U.S. Government Securities Series and Seligman High-Yield Bond Series
shares over a 13-month period at reduced sales loads in accordance with the
schedule in the Prospectuses, based on the total amount of Class A shares of the
Seligman U.S. Government Securities Series and Seligman High-Yield Bond Series
that the letter states the investor intends to purchase plus the total net asset
value of shares that were sold with a sales load of Seligman Capital Fund,
Seligman Common Stock Fund, Seligman Communications and Information Fund,
Seligman Frontier Fund, Seligman Growth Fund, Seligman Henderson Global Fund
Series, Seligman Income Fund, Seligman New Jersey Tax-Exempt Fund, Seligman
Pennsylvania Tax-Exempt Fund Series, Seligman Tax-Exempt Fund Series and
Seligman Tax-Exempt Series Trust already owned and the total net asset value of
shares of Seligman Cash Management Fund which were acquired through an exchange
of shares of another mutual fund in the Seligman Group on which there was a
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" accompanying
the Account Application in each Series Prospectus.
PERSONS ENTITLED TO REDUCTIONS. Reductions in sales loads apply to purchases of
Class A shares of the Seligman U.S. Government Securities Series and Seligman
High-Yield Bond Series 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, tax-exempt
organizations under Section 501 (c)(3) or (13), and non-qualified employee
benefit plans that satisfy uniform criteria are considered "single persons" for
this purpose. The uniform criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to receive
in bulk and to distribute to each participant on a timely basis the Fund
prospectuses, 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.
-11-
<PAGE>
3. The employer must solicit its employees for participation in such an employee
benefit plan or authorize and assist an investment dealer in making enrollment
solicitations.
ELIGIBLE EMPLOYEE BENEFIT PLANS. The table of sales loads in the Prospectuses
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans," of
employers who have at least 2,000 U.S. employees to whom such plan is made
available or, regardless of the number of employees, if such plan is established
or maintained by any dealer which has a sales agreement with Seligman Financial
Services, Inc. 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 Union Data by methods which it accepts. Additional information
about "eligible employee benefit plans" is available from investment dealers or
SFSI. The term "eligible employee benefit plan" means any plan or arrangement,
whether or not tax qualified, which provides for the purchase of Fund shares.
PAYMENT IN SECURITIES. In addition to cash, a Series may accept securities in
payment for shares of the Series sold at the applicable public offering price
(net asset value plus any applicable sales load) although the Series do not
presently intend to accept securities in payment for Series' shares. Generally,
a Series will only consider accepting securities (l) to increase its holdings in
a portfolio security of the Series, or (2) if the Manager determines that the
offered securities are a suitable investment for the Series and in a sufficient
amount for efficient management. Although no minimum has been established, it is
expected that a Series would not accept securities with a value of less than
$100,000 per issue in payment for shares. A Series may reject in whole or in
part offers to pay for shares of the Series with securities, may require partial
payment in cash for applicable sales loads, and may discontinue accepting
securities as payment for shares of the Series at any time without notice. The
Fund will not accept restricted securities in payment for Series shares. The
Fund will value accepted securities in the manner provided for valuing portfolio
securities of the Fund. Any securities accepted by the Fund in payment for Fund
shares will have an active and substantial market and have a value which is
readily ascertainable (See "Valuation"). In accordance with Texas securities
regulations, should the Fund accept securities in payment for shares, such
transactions would be limited to a bona fide reorganization, statutory merger,
or to other acquisitions of portfolio securities (except for municipal debt
securities issued by state political subdivisions or their agencies or
instrumentalities) which meet the investment objectives and policies of the
investment company; are acquired for investment and not for resale; are liquid
securities which are not restricted as to transfer either by law or liquidity of
market; and have a value which is readily ascertainable (and not established
only by evaluation procedures) as evidenced by a listing on the American Stock
Exchange, the New York Stock Exchange or NASDAQ.
FURTHER TYPES OF REDUCTIONS. Class A shares of Seligman U.S. Government
Securities Series and Seligman High Yield Bond Series may be issued without a
sales load in connection with the acquisition of cash and securities owned by
other investment companies and personal holding companies to financial
institution trust departments, to registered investment advisers exercising
discretionary investment 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, to shareholders of mutual funds
with investment objectives and policies similar to the Series' who purchase
shares with redemption proceeds of such funds and to certain unit investment
trusts as described in each Series Prospectus.
Class A shares of Seligman U.S. Government Securities Series and Seligman
High-Yield Bond Series 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 Prospectuses. In unusual
circumstances, payment may be postponed, if the orderly liquidation of portfolio
securities is prevented by the closing of, or restricted trading on the New York
Stock Exchange ("NYSE") during periods of emergency, or such other periods as
ordered by the Commission. Payment may be made in securities, subject to the
review of some state securities commissions. If payment is made in securities, a
shareholder may incur brokerage expenses in converting these securities to cash.
-12-
<PAGE>
DISTRIBUTION SERVICES
Seligman Financial Services, Inc. an affiliate of the Manager, acts as a
general distributor of the shares of the Fund and of the other mutual funds in
the Seligman Group. As general distributor of the Fund's share of beneficial
interest, SFSI allows concessions to dealers as indicated in each Series
Prospectus. SFSI receives the balance of sales loads and any CDSL, if
applicable, paid by investors. The following table sets forth the commissions
received by SFSI and dealers concessions by a Series for 1994, 1993, and 1992.
<TABLE>
<CAPTION>
Seligman Financial Dealer
SERIES SERVICES COMMISSIONS CONCESSIONS
------ -------------------- -----------
1994 1993 1992 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Seligman U.S.
Government Securities $ 8,580 $ 12,563 $ 8,054 $ 61,645 $ 91,712 $ 65,507
Seligman High-
Yield Bond 45,213 67,466 24,545 353,427 519,151 193,612
</TABLE>
Class A shares of the Seligman U.S. Government Securities Series and
Seligman High-Yield Bond Series may be sold at net asset value to present and
retired Trustees, directors, officers, employees (and spouses and minor
children) of the Fund, the other mutual funds in the Seligman Group, the Manager
and other companies affiliated with the Manager. Such sales also may be made to
employee benefit and thrift plans for such persons and to any investment
advisory, custodial, trust or other fiduciary account managed or advised by the
Manager or any affiliate. These sales may be made for investment purposes only,
and shares may be resold only to the Fund.
VALUATION
Net asset value per share of each Series is determined as of the close of
trading on the NYSE, (usually 4:00 p.m., Eastern time), each day that the NYSE
is open. The NYSE is currently closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The fair value of any restricted securities held by a Series will
be determined by the Manager in accordance with procedures approved by the
Trustees. This value generally is determined as the amount which the Series
could reasonably expect to receive from an orderly disposition of these
securities over a reasonable period of time. The net asset value of Class D
shares will generally be lower than the net asset value of Class A shares as a
result of the larger distribution fee with respect to Class D shares.
The net asset value per share is determined by dividing the market value of
each Series' class' securities as of the close of trading plus any cash or other
assets (including dividends and accrued interest receivable) less all
liabilities (including accrued expenses), by the number of class shares
outstanding. 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 for which recent market quotations are not readily available,
including restricted securities, 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 Series shares. Premiums received on the sale
of call options will be included in the net asset value, and current market
value of the option sold by the Fund will be subtracted from net asset value.
PERFORMANCE INFORMATION
The Class A shares of the U.S. Government Securities Series and High-Yield
Bond Series annualized yield for the 30-day period ended December 31, 1994 was
6.41% and 10.31%, respectively. The annualized yield was computed by dividing
each Series' net investment income per share earned during the 30-day period by
-13-
<PAGE>
the maximum offering price per share (i.e., the net asset value plus the maximum
sales load of 4.75% of the net amount invested) on December 31, 1994, which was
the last day of this period. The average number of Class A shares of the U.S.
Government Securities Series and High-Yield Bond Series was 8,524,246 and
9,073,209, respectively which was the average daily number of shares outstanding
during the 30-day period that were eligible to receive dividends. The Class D
shares of the U.S. Government Securities Series and High-Yield Bond Series
annualized yield for the 30-day period ended December 31, 1994 was 5.23% and
9.73%, respectively. The annualized yield was computed by dividing each Series'
net investment income per share earned during the 30-day period by the maximum
offering price per share (i.e., the net asset value) on December 31, 1994, which
was the last day of this period. The average number of Class D shares of the
U.S. Government Securities Series and High-Yield Bond Series was 962,500 and
1,386,469, respectively which was the average daily number of shares outstanding
during the 30-day period that were eligible to receive dividends. Income was
computed by totaling the interest earned on all debt obligations during the
30-day period and subtracting from that amount the total of all recurring
expenses incurred during the period. The 30-day yield was then annualized on a
bond-equivalent basis assuming semi-annual reinvestment and compounding of net
investment income, as described in each Series Prospectus.
The average annual total returns for Class A shares of the U.S. Government
Securities Series and High-Yield Bond Series, respectively, for the one-year,
five-year and since inception through the period ended December 31, 1994 were
(8.47)%, 4.78% and 7.68%; and (4.06)%, 10.73% and 10.67%, respectively. These
amounts were computed by assuming a hypothetical initial payment of $1,000,
subtracting the maximum sales load of $47.50 (4.75% of public offering price)
and assuming that all of the dividends and distributions by the Series over the
relevant time period were reinvested. It was then assumed that at the end of
these periods ended December 31, 1994 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 redemption (i.e., the average annual compound rate of return).
Total return for Class D shares of the U.S. Government Securities Series and
High-Yield Bond Series, respectively, for the one-year period and since
inception through December 31, 1994 were (5.95)% and (4.46)% and (1.21)% and
3.29%, respectively. These amounts were computed assuming hypothetical initial
payments of $1,000 and that all of the dividends and distributions paid by each
Series' Class D shares, if any, were reinvested over the relevant time period.
For the one-year period ended December 31, 1994, it was then assumed that at the
end of the period, entire amount was redeemed, subtracting the applicable 1%
CDSL.
Table A below illustrates the total return on a $1,000 investment in Class A
shares of the U.S. Government Securities Series and High-Yield Bond Series from
the commencement of their operations through December 31, 1994, assuming
investment of all dividends and capital gain distributions. Table B illustrates
the total return (income and capital) on Class D shares of the U.S. Government
Securities Series and High-Yield Bond Series with dividends invested and gain
distributions taken in shares.
<TABLE>
<CAPTION>
TABLE A - CLASS A SHARES
VALUE OF
PERIOD VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT(2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- ------ --------------------- ------------- --------- --------------- ----------
Seligman U.S.
GOVERNMENT SECURITIES
- ---------------------
<S> <C> <C> <C> <C> <C>
12/31/85(1) $ 1,083 $ 2 $ 89 $ 1,174
12/31/86 1,087 85 191 1,363
12/31/87 949 104 271 1,324
12/31/88 941 103 384 1,428
12/31/89 939 103 518 1,560
12/31/90 919 101 640 1,660
12/31/91 973 107 813 1,893
12/31/92 958 105 939 2,002
12/31/93 958 105 1,089 2,152
12/31/94 863 94 1,111 2,068 106.81%
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
VALUE OF
PERIOD VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT(2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- ------ --------------------- ------------- --------- --------------- ----------
Seligman High-
YIELD BOND
- ----------
<S> <C> <C> <C> <C> <C>
12/31/85(1) $ 1,012 $ 0 $ 110 $ 1,122
12/31/86 1,044 0 254 1,298
12/31/87 943 22 373 1,338
12/31/88 936 22 532 1,490
12/31/89 853 20 674 1,547
12/31/90 695 16 724 1,435
12/31/91 794 19 1,062 1,875
12/31/92 856 20 1,375 2,251
12/31/93 925 22 1,736 2,683
12/31/94 846 20 1,838 2,704 170.44%
</TABLE>
<TABLE>
TABLE B - CLASS D SHARES
<CAPTION>
VALUE OF
PERIOD VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT(2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- ------ --------------------- ------------- --------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Seligman U.S.
GOVERNMENT SECURITIES
12/31/93(1) $ 982 $ -- $ 12 $ 994
12/31/94 884 -- 59 943 (5.66)%
Seligman High-
YIELD BOND
12/31/93(1) $ 1,030 $ -- $ 15 $ 1,045
12/31/94 942 -- 100 1,042 4.22%
</TABLE>
1 From commencement of operations of Class A shares on March 11, 1985; and from
commencement of offering of Class D shares on September 21, 1993.
2 The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales load, assumes that all dividends and capital gain
distributions were taken in cash and reflects changes in the net asset value
of the shares purchased with the hypothetical initial investment. "Total
Value" reflects the effect of the CDSL, if applicable, assumes investment of
all dividends and capital gain distributions and reflects changes in the net
asset value.
3 "Total Return" for each Series is calculated by assuming a hypothetical
initial investment of $1,000 at the beginning of the period specified,
subtracting the maximum sales load or Class A shares; determining total value
of all dividends and distributions that would have been paid during the
period on such shares assuming that each dividend or distribution was
invested in additional shares at net asset value; calculating the total value
of the investment at the end of the period; subtracting the CDSL on Class D
shares, if applicable; and finally, by dividing the difference between the
amount of the hypothetical initial investment at the beginning of the period
and its total value at the end of the period by the amount of the
hypothetical initial investment.
No adjustments have been made for any income taxes payable by investors on
dividends invested or gain distributions taken in shares.
Each of the Series may also include its aggregate total return over a
specified period in advertisements or in information furnished to present or
prospective shareholders.
-15-
<PAGE>
GENERAL INFORMATION
INFORMATION ABOUT BUSINESS TRUSTS. As indicated in each Series Prospectus, the
Fund is organized as a business trust under the laws of the Commonwealth of
Massachusetts. Under the Declaration of Trust, the Trustees are authorized to
classify or reclassify and issue any shares of beneficial interest of the Fund
into any number of other Series without further action by shareholders. The 1940
Act requires that where more than one Series exists, each Series must be
preferred over all other Series in respect of assets specifically allocated to
such Series.
As a general matter, the Fund will not hold annual or other meetings of the
shareholders. This is because the Declaration of Trust provides for shareholder
voting only (a) for the election or removal of one or more Trustees if a meeting
is called for that purpose, (b) with respect to any contract as to which
shareholder approval is required by the 1940 Act, (c) with respect to any
termination or reorganization of the Fund or any Series to the extent and as
provided in the Declaration of Trust, (d) with respect to any amendment of the
Declaration of Trust (other than amendments establishing and designating new
Series, abolishing Series when there are no units thereof outstanding, changing
the name of the Fund or the name of any Series, supplying any omission, curing
any ambiguity or curing, correcting or supplementing any provision thereof which
is internally inconsistent with any other provision thereof or which is
defective or inconsistent with the 1940 Act or with the requirements of the Code
or applicable regulations for the Fund's obtaining the most favorable treatment
thereunder available to regulated investment companies), which amendments
require approval by a majority of the shares entitled to vote, (e) to the same
extent as the stockholders of a Massachusetts business corporation as to whether
or not a court action, proceeding, or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Fund or the
shareholders, and (f) with respect to such additional matters relating to the
Fund as may be required by the 1940 Act, the Declaration of Trust, the By-laws
of the Fund, any registration of the Fund with the Securities and Exchange
Commission or any state, or as the Trustees may consider necessary or desirable.
Each Trustee serves until the next meeting of shareholders, if any, called for
the purpose of considering the election or reelection of such Trustee or of a
successor to such Trustee, and until the election and qualification of his
successor, if any, elected at such meeting, or until such Trustee sooner dies,
resigns, retires or is removed by the shareholders or two-thirds of the
Trustees.
The shareholders of the Fund have the right, upon the declaration in writing
or vote of more than two-thirds of the Fund's outstanding shares, to remove a
Trustee. The Trustees will call a meeting of shareholders to vote on the removal
of a Trustee upon the written request of the record holders of ten percent of
its shares. In addition, whenever ten or more shareholders of record who have
been such for at least six months preceding the date of application, and who
hold in the aggregate either shares having a net asset value of at least $25,000
or at least 1 per centum of the outstanding shares, whichever is less, shall
apply to the Trustees in writing, stating that they wish to communicate with
other shareholders with a view to obtaining signatures to a request for a
meeting for the purpose of voting upon the question of removal of any Trustee or
Trustees and accompanied by a form of communication and request which they wish
to transmit, the Trustee shall within five business days after receipt of such
application either: (1) afford to such applicants access to a list of the names
and addresses of all shareholders as recorded on the books of the Fund; or (2)
inform such applicants as to the approximate number of shareholders of record,
and the approximate cost of mailing to them the proposed communication and form
of requests. If the Trustees elect to follow the latter course, the Trustees,
upon the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all shareholders of record at their
addresses as recorded on the books, unless within five business days after such
tender the Trustees shall mail to such applicants and file with the Securities
and Exchange Commission (the "Commission"), together with a copy of the material
to be mailed, a written statement signed by at least a majority of the Trustees
to the effect that in their opinion either such material contains untrue
statements of fact or omits to state facts necessary to make the statements
contained therein not misleading, or would be in violation of applicable law,
and specifying the basis of such opinion. After opportunity for hearing upon the
objections specified in the written statement so filed, the Commission may, and
if demanded by the Trustees or by such applicants shall, enter an order either
sustaining one or more of such objections or refusing to sustain any of them. If
the Commission shall enter an order refusing to sustain any of such objections,
or if, after the entry of an order sustaining one or more of such objections,
the Commission shall find, after notice and opportunity for hearing, that all
objections so sustained have been met, and shall enter an order so declaring,
the Trustees shall mail copies of such material to all shareholders with
reasonable promptness after the entry of such order and the renewal of such
tender.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of the 1940 Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an investment
-16-
<PAGE>
company such as the Fund shall not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of each
Series affected by such matter. Rule 18f-2 further provides that a Series shall
be deemed to be affected by a matter unless it is clear that the interests of
each Series in the matter are substantially identical or that the matter does
not significantly affect any interest of such Series. However, the Rule exempts
the selection of independent auditors, the approval of principal distributing
contracts and the election of trustees from the separate voting requirements of
the Rule.
The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust. The Declaration of Trust also
provides for indemnification and reimbursement of expenses out of a Series'
assets for any shareholder held personally liable for obligations of such
Series.
CUSTODIAN. Investor Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, serves as custodian for the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset values 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 year ended December 31, 1994 is
incorporated by reference into this Statement of Additional Information. The
Annual Report contains schedules of the investments of each of the Fund's Series
as of December 31, 1994, as well as certain other financial information as of
that date. The Annual Report will be furnished, without charge, to investors who
request copies of the Fund's Statement of Additional Information.
APPENDIX
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in the
sale of government securities to help finance the Civil War - Joseph Seligman,
with his brothers, established the international banking and investment firm of
J. & W. Seligman & Co. In the years that followed, Seligman played a major role
in the geographical expansion and industrial development of the United States.
SELIGMAN:
.... Prior to 1900
o Helps finance America's fledgling railroads through underwriting.
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 Plays a significant role in raising capital for America's industrial
and urban development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
-17-
<PAGE>
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping finance World War I.
...1920s
o Participates in hundreds of 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.
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.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund.
...1950-1989
o Develops new open-end investment companies. Today, manages 44 mutual
fund portfolios with combined assets of $7.3 billion.
o Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt 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 and Seligman Quality
Municipal Fund, two closed-end funds that invest in high-quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global
investment products.
o Introduces Seligman Frontier Fund, Inc., a small capitalization mutual
fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today
offers three separate series: Seligman Henderson International Fund,
Seligman Henderson Global Smaller Companies Fund and Seligman Henderson
Global Technology Fund.
-18-
<PAGE>
=================================================================
Seligman
High
Income
Fund
Series
-----------------------------------------------------------------
10th Annual Report
1994
=================================================================
J&WS
<PAGE>
================================================================================
To the Shareholders
- --------------------------------------------------------------------------------
We are pleased to provide you with Seligman High Income Fund Series' Annual
Report, and to update you on the U.S. Government Securities Series and the
High-Yield Bond Series for the year ended December 31, 1994.
Economic Comment
Looking back on 1994, the one generalization that can be made with
confidence is that it was a turbulent and trying year for investors. The Federal
Reserve Board (FRB) exhibited an aggressive stance against inflation, putting
through six short-term interest rate hikes by the end of the year. The federal
funds rate--the interest rate charged for interbank loans--increased from 3.00%
on January 3, 1994, to 5.50% on January 3, 1995, and the discount rate--the
interest rate the FRB charges member banks--rose from 3.00% on December 31,
1993, to 4.75% on December 31, 1994. These increases reverberated into the
fixed-income markets and sent the benchmark 30-year Treasury bond yield from
6.35% on December 31, 1993, up to 7.88% at December 31, 1994. Due to the inverse
relationship between price and yield of fixed-income securities, the prices of
these securities declined during the period.
U.S. Government Securities Series
For your Series' Class A shares, net asset value per share was $6.47 at
December 31, compared to $6.71 at June 30, and $7.18 a year ago. Dividends
totaling $0.4386 per share were paid during the year. The total return, assuming
the investment of all dividends paid in additional shares, was -0.26% for the
six months and -3.88% for the 12 months ended December 31. Current annualized
yield for the 30 days ended December 31 was 6.41%, calculated at the maximum
offering price of $6.79 per share on December 31.
For your Fund's Class D shares, net asset value per share was $6.48 at
December 31, compared to $6.72 at June 30, and $7.20 a year ago. Dividends
totaling $0.3647 per share were paid during the year. The total return, assuming
the investment of all dividends paid in additional shares, was -0.83% for the
six months and -5.05% for the 12 months ended December 31. Current annualized
yield for the 30 days ended December 31 was 5.23%, calculated at the net asset
value on December 31.
The U.S. Government Securities Series' net assets totaled $61 million at
year end.
High-Yield Bond Series
For your Series' Class A shares, net asset value per share was $6.35 at
December 31, compared to $6.58 at June 30, and $6.94 a year ago. Dividends
totaling $0.6415 per share were paid during the year. The total return, assuming
the investment of all dividends paid in additional shares, was 1.49% for the six
months and 0.78% for the 12 months ended December 31. Current annualized yield
for the 30 days ended December 31 was 10.31%, calculated at the maximum offering
price of $6.67 per share on December 31.
For your Series' Class D shares, net asset value per share was $6.35 at
December 31, compared to $6.59 at June 30, and $6.94 a year ago. Dividends
totaling $0.5703 per share were paid during the year. The total return, assuming
the investment of all dividends paid in additional shares, was 0.77% for the six
months and -0.30% for the 12 months ended December 31. Current annualized yield
for the 30 days ended December 31 was 9.73%, calculated at the net asset value
on December 31.
The High-Yield Bond Series' net assets totaled $68 million at year end.
Please refer to page 3 for discussions with your Portfolio Managers about
your Series' performance in 1994, followed by the charts and tables that analyze
longer-term performance.
By order of the Trustees,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Ronald T. Schroeder
Ronald T. Schroeder
President
February 3, 1995
1
<PAGE>
================================================================================
Seligman High Income Fund Series
- --------------------------------------------------------------------------------
HIGHLIGHTS December 31, 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
U.S. Government High-Yield
Securities Series Bond Series
-------------------------------------------------------------------------------
Class A Class D Class A Class D
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets (millions) $54.7 $6.1 $59.0 $9.2
- ---------------------------------------------------------------------------------------------------------------
Yield* 6.41% 5.23% 10.31% 9.73%
- ---------------------------------------------------------------------------------------------------------------
Dividends** $0.4414 $0.3662 $0.6447 $0.5731
- ---------------------------------------------------------------------------------------------------------------
Net asset value per share $6.47 $6.48 $6.35 $6.35
- ---------------------------------------------------------------------------------------------------------------
Maximum offering
price per share $6.79 $6.48 $6.67 $6.35
- ---------------------------------------------------------------------------------------------------------------
Holdings by U.S. Treasury Securities 94.7% Corporate Bonds 90.0%
Market Sector Net Cash & Short- Convertible Bonds 2.6
Term Holdings 5.3 Net Cash & Short-
Term Holdings 7.4
- ---------------------------------------------------------------------------------------------------------------
Weighted Average
Maturity 12.3 years 8.2 years
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Current yield representing the annualized yield based upon maximum offering
price for the 30-day period ended December 31, 1994.
** Represents per share amount paid or declared for the year ended December
31, 1994.
Note: Results reflect past performance, which is not indicative of future
results. The yield has been computed in accordance with SEC regulations and will
vary, and the principal value of an investment will fluctuate. Shares, if
redeemed, may be worth more or less than their original cost.
2
<PAGE>
================================================================================
Performance Overview -- Seligman U.S. Government Securities Series
- --------------------------------------------------------------------------------
Your Portfolio Manager
Leonard J. Lovito is a Vice President of J. & W. Seligman & Co. Incorporated and
Portfolio Manager of Seligman U.S. Government Securities Series. Mr. Lovito also
serves as Portfolio Manager of Seligman Cash Management Fund. Mr. Lovito joined
Seligman in 1984 as a fixed-income trader and has more than 11 years of
fixed-income trading and portfolio management experience.
Economic Factors Affecting Seligman U.S. Government
Securities Series
"Stronger economic growth and anticipation of higher
inflation, which prompted the Federal Reserve Board to raise
[PICTURE] short-term interest rates six times, adversely
affected all bond funds in 1994. However, because your
Series held issues with shorter maturities than its peers,
it outperformed the average return of all Government bond
funds for the year."
Your Manager's Investment Strategy
"Once the Federal Reserve Board raised short-term interest rates for the first
time on February 4, 1994, we began to shorten the maturity of your Series'
holdings. This was done in order to lessen the impact of the rate increase, as
short-term bonds react with less volatility than long-term bonds in a period of
changing interest rates. Shorter maturities were kept throughout the year,
resulting in your Series' stronger relative performance. In addition, we favored
U.S. Treasury issues over GNMA securities, as we felt liquidity was somewhat
more important than yield, given the volatile investment environment. Finally,
we did not invest in `risky' derivative securities as a means of achieving
greater yields, nor are we permitted to do so under your Series' investment
policies."
Looking Ahead
"Because the Federal Reserve Board is expected to continue to raise short-term
interest rates until it believes they are high enough to slow the economy's
growth to a non-inflationary pace, the short term may remain difficult for bond
markets. However, the higher interest rates should slow the economy's growth in
1995, resulting in a stabilized bond market in which valuations can begin to
recover. In this situation, we may then begin to purchase longer-term bonds to
take advantage of the possible increase in prices."
3
<PAGE>
================================================================================
Performance Comparison Chart and Table December 31, 1994
- --------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman U.S.
Government Securities Series Class A shares, with and without the maximum
initial sales charge of 4.75%, since inception on March 11, 1985, through
December 31, 1994, to a $10,000 investment made in the Lehman Brothers
Government/ Mortgage Index (Lehman Index) for the same period. The performance
of Seligman U.S. Government Securities Series Class D shares is not shown in
this chart, but is included in the table below. It is important to keep in mind
that the Index excludes the effect of any fees or sales charges.
[The Table below was represented as a graph in the printed material]
Lehman Brothers
Government/
with sales charge without sales charge Mortgage Index
3/31/85 $ 9,520 $10,000 $10,000
6/30/85 $10,460 $10,987 $10,820
9/30/85 $10,585 $11,118 $11,058
12/31/85 $11,742 $12,334 $11,886
3/31/86 $13,301 $13,972 $12,793
6/30/86 $13,349 $14,022 $12,943
9/30/86 $13,304 $13,975 $13,261
12/31/86 $13,629 $14,316 $13,663
3/31/87 $13,587 $14,272 $13,867
6/30/87 $12,878 $13,527 $13,642
9/30/87 $12,259 $12,877 $13,301
12/31/87 $13,242 $13,910 $14,052
3/31/88 $13,806 $14,502 $14,561
6/30/88 $13,940 $14,643 $14,733
9/30/88 $14,152 $14,865 $15,014
12/31/88 $14,281 $15,001 $15,118
3/31/89 $14,299 $15,020 $15,287
6/30/89 $15,059 $15,818 $16,504
9/30/89 $15,153 $15,917 $16,686
12/31/89 $15,602 $16,389 $17,328
3/31/90 $15,220 $15,987 $17,195
6/30/90 $15,657 $16,446 $17,814
9/30/90 $15,746 $16,540 $18,003
12/31/90 $16,597 $17,434 $18,960
3/31/91 $16,862 $17,712 $19,431
6/30/91 $17,104 $17,967 $19,732
9/30/91 $18,041 $18,950 $20,843
12/31/91 $18,928 $19,883 $21,893
3/31/92 $18,525 $19,459 $21,580
6/30/92 $19,243 $20,213 $22,439
9/30/92 $20,029 $21,039 $23,390
12/31/92 $20,023 $21,032 $23,458
3/31/93 $20,599 $21,638 $24,387
6/30/93 $21,080 $22,142 $25,002
9/30/93 $21,586 $22,675 $25,612
12/31/93 $21,515 $22,600 $25,637
3/31/94 $21,072 $22,135 $24,927
6/30/94 $20,735 $21,780 $24,693
9/30/94 $20,789 $21,837 $24,836
12/31/94 $20,681 $21,724 $24,930
- --------------------------------------------------------------------------------
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through December 31, 1994, for Seligman
U.S. Government Securities Series Class A shares, with and without the maximum
initial sales charge of 4.75%, and for the Lehman Index. Also included in the
table are the average annual total returns for the one-year and since-inception
periods through December 31, 1994, for Seligman U.S. Government Securities
Series Class D shares, with and without the effect of the 1% contingent deferred
sales load ("CDSL") imposed on shares redeemed within one year of purchase, and
the Lehman Index. Average
<TABLE>
<CAPTION>
Annual Total Returns
Since Since
One Five Inception One Inception
Year Years 3/11/85 Year 9/21/93
---- ----- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Seligman U.S. Government Seligman U.S. Government
Securities Series+ Securities Series+
Class A with sales charge (8.47)% 4.78% 7.68% Class D with CDSL (5.95)% N/A
Class A without sales charge (3.88) 5.80 8.23 Class D without CDSL (5.05) (4.46)%
Lehman Index (2.76) 7.55 9.81* Lehman Index (2.76) (2.13)**
*Calculated from 3/31/85. **Calculated from 9/30/93.
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES CHARGES
AND FEES PAID BY SHAREHOLDERS. Performance data quoted represent changes in
prices and assume that all distributions within the period are invested in
additional shares. The investment return and principal value of an investment
will fluctuate so that shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment results.
+ Although the payment of principal and interest with respect to certain
long-term securities held in the U.S. Government Securities Series is guaranteed
by the U.S. Government or its agencies, the rate of return will vary and the
principal value of an investment in the Series will fluctuate.
4
<PAGE>
================================================================================
Performance Overview -- Seligman High-Yield Bond Series
- --------------------------------------------------------------------------------
Your Portfolio Manager
Daniel Charleston is a Vice President of J. & W. Seligman & Co. Incorporated and
has served as Portfolio Manager of Seligman High-Yield Bond Series since
November 1988. Dan joined Seligman in 1987 as a Portfolio Assistant with
responsibility for valuation analysis of U.S. Treasury instruments and
mortgage-backed securities.
Economic Factors Affecting Seligman High-Yield Bond Series
"The Federal Reserve Board's decision to tighten monetary
policy by raising short-term interest rates had a negative
impact on fixed-income markets in 1994. However, the
[PICTURE] high-yield market in general, and your Series in
particular, outperformed other fixed-income asset classes on
a relative basis."
Your Manager's Investment Strategy
"As a result of several successful strategies, your Series finished 1994 as one
of the top-performing high-yield bond mutual funds. Your portfolio's assets were
significantly invested in `single B' rated issues whose market valuations rely
on the issuing company's financial performance more than the movement of
interest rates. Therefore, these issues are less susceptible to decreasing
values in a rising interest rate environment. In addition, decisions to maintain
a low weighting in zero coupon bonds and to avoid foreign markets contributed to
your Series' strong performance."
Individual Sector Performance
"The continued consolidation in the health care industry resulted in the
improved credit rating of several health care issuers. Many high-yield health
care companies were acquired by investment-grade strategic buyers, leading to
the improvement of their credit ratings. An example is OrNda HealthCorp, the
Series' largest holding, which was upgraded to a `B2' rating from a `B3' rating
due to the company's improved financials. Within cyclical issues, producers of
paper products are enjoying very favorable industry conditions; we continue to
view the credit prospects of both Stone Container and Gaylord Container as very
positive.
"The gaming sector, on the other hand, experienced a turbulent year because of
concerns of overexpansion in riverboat properties--primarily surrounding the
Mississippi Gulf Coast region. Atlantic City issues also performed poorly due to
the threat of an increase in competition from the growing number of gaming
properties in the surrounding areas. Due to poor financial performance and
increased pressure on valuations, we eliminated several gaming positions from
the portfolio."
Looking Ahead
"We believe the high-yield market to be attractive based on its current premium
to U.S. Treasuries, especially within `single B' rated issues. In the year
ahead, we will continue to screen the `single B' rated segment of the market for
fundamentally sound credits with the prospect for future appreciation."
5
<PAGE>
================================================================================
Performance Comparison Chart and Table December 31, 1994
- --------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman
High-Yield Bond Series Class A shares, with and without the maximum initial
sales charge of 4.75%, since inception on March 11, 1985, through December 31,
1994, to a $10,000 investment made in the Merrill Lynch Master Index and the
Lipper High-Yield Index for the same period. The performance of Seligman
High-Yield Bond Series Class D shares is not shown in this chart, but is
included in the table below. It is important to keep in mind that the Indices
exclude the effect of any fees or sales charges.
[The Table below was represented as a graph in the printed material]
<TABLE>
<CAPTION>
High Income Fund High Income Fund Merrill Lynch Lipper
with sales charge without sales charge Master Index High-Yield Index
----------------- -------------------- ------------ ----------------
<S> <C> <C> <C> <C>
3/31/85 $ 9,507 $ 9,986 $10,000 $10,000
6/30/85 $10,276 $10,794 $10,793 $10,675
9/30/85 $10,623 $11,158 $11,171 $10,942
12/31/85 $11,217 $11,783 $11,847 $11,603
3/31/86 $12,056 $12,664 $12,706 $12,329
6/30/86 $12,475 $13,104 $13,187 $12,731
9/30/86 $12,653 $13,291 $13,363 $12,718
12/31/86 $12,982 $13,637 $13,783 $13,068
3/31/87 $13,574 $14,259 $14,566 $13,915
6/30/87 $13,222 $13,888 $14,380 $13,783
9/30/87 $12,837 $13,484 $14,268 $13,978
12/31/87 $13,378 $14,052 $14,427 $14,255
3/31/88 $14,019 $14,725 $15,199 $15,061
6/30/88 $14,346 $15,070 $15,615 $15,523
9/30/88 $14,549 $15,282 $15,991 $15,812
12/31/88 $14,899 $15,651 $16,370 $16,115
3/31/89 $15,183 $15,948 $16,713 $16,421
6/30/89 $15,765 $16,560 $17,312 $16,926
9/30/89 $15,773 $16,568 $17,314 $16,700
12/31/89 $15,472 $16,252 $17,063 $16,034
3/31/90 $14,896 $15,647 $16,709 $15,425
6/30/90 $15,408 $16,185 $17,428 $16,090
9/30/90 $14,750 $15,493 $16,371 $14,888
12/31/90 $14,346 $15,069 $16,321 $14,359
3/31/91 $16,099 $16,911 $18,545 $16,483
6/30/91 $16,983 $17,839 $19,687 $17,614
9/30/91 $18,072 $18,983 $20,845 $18,818
12/31/91 $18,750 $19,696 $21,964 $19,759
3/31/92 $20,466 $21,498 $23,622 $21,427
6/30/92 $21,059 $22,121 $24,474 $22,100
9/30/92 $22,213 $23,333 $25,589 $22,982
12/31/92 $22,514 $23,649 $25,953 $23,246
3/31/93 $24,090 $25,305 $27,566 $24,817
6/30/93 $25,106 $26,371 $28,666 $26,021
9/30/93 $25,548 $26,836 $29,394 $26,526
12/31/93 $26,835 $28,188 $30,413 $27,757
3/31/94 $26,673 $28,018 $29,850 $27,475
6/30/94 $26,648 $27,991 $29,504 $27,105
9/30/94 $26,768 $28,117 $29,905 $27,089
12/31/94 $27,045 $28,408 $30,058 $26,726
</TABLE>
- --------------------------------------------------------------------------------
The table below shows the average annual total returns for the one-year,
five-year, and since-inception periods through December 31, 1994, for Seligman
High-Yield Bond Series Class A shares, with and without the maximum initial
sales charge of 4.75%, the Merrill Lynch Master Index, and the Lipper High-Yield
Index. Also included in the table are the average annual total returns for the
one-year and since-inception periods through December 31, 1994, for Seligman
High-Yield Bond Series Class D shares, with and without the effect of the 1%
contingent deferred sales load ("CDSL") imposed on shares redeemed within one
year of purchase, the Merrill Lynch Master Index, and the Lipper High-Yield
Index.
<TABLE>
<CAPTION>
Average Annual Total Returns
Since Since
One Five Inception One Inception
Year Years 3/11/85 Year 9/21/93
---- ----- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Seligman High-Yield Bond Series Seligman High-Yield Bond Series
Class A with sales charge (4.06)% 10.73% 10.67% Class D with CDSL (1.21)% N/A
Class A without sales charge 0.78 11.82 11.23 Class D without CDSL (0.30) 3.29%
Merrill Lynch Master Index (1.17) 11.99 11.94* Merrill Lynch Master Index (1.17) 1.80**
Lipper High-Yield Index (3.71) 10.76 10.60* Lipper High-Yield Index (3.71) 0.60**
*Calculated from 3/31/85. **Calculated from 9/30/93.
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES CHARGES
AND FEES PAID BY SHAREHOLDERS. Performance data quoted represent changes in
prices and assume that all distributions within the periods are invested in
additional shares. The investment return and principal value of an investment
will fluctuate so that shares, if redeemed, may be worth more or less than their
original stated cost. Past performance is not indicative of future investment
results.
6
<PAGE>
================================================================================
Portfolios of Investments December 31, 1994
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES SERIES
Principal
Amount Value
--------- -----------
U.S. Treasury Securities--94.7%
U.S. Treasury Bonds:
8 1/2%, due 2/15/2020 .......................... $10,000,000 $10,531,250
8 7/8%, due 2/15/2019 .......................... 15,000,000 16,368,750
U.S. Treasury Notes:
8 3/4%, due 10/15/1997 ......................... 15,000,000 15,346,875
8 1/2%, due 4/15/1997 .......................... 10,000,000 10,153,120
9 3/8%, due 4/15/1996 .......................... 5,000,000 5,114,060
-----------
Total U.S. Treasury Securities
(Cost $57,980,313) ............................. 57,514,055
Repurchase Agreement--3.4%
(Cost $2,085,000) .............................. 2,085,000
-----------
Total Investments--98.1%
(Cost $60,065,313) ............................. 59,599,055
Other Assets Less Liabilities--1.9% ............... 1,177,086
-----------
Net Assets--100.0% ................................ $60,776,141
===========
HIGH-YIELD BOND SERIES
Corporate Bonds--90.0%
Aluminum--2.2%
Kaiser Aluminum Corp. 12 3/4%, due 2/1/2003 ....... $ 1,500,000 $ 1,511,250
-----------
Automotive and Related--2.2%
SPX Corp. 11 3/4%, due 6/1/2002 .................. 1,500,000 1,501,875
-----------
Broadcasting--8.1%
Allbritton Communications Co. 11 1/2%, due 8/15/2004 1,500,000 1,503,750
Chancellor Communications Corp. 12 1/2%,
due 10/1/2004 .................................. 1,000,000 985,000
SFX Broadcasting, Inc. 11 3/8%, due 10/1/2000 ..... 1,500,000 1,492,500
Young Broadcasting, Inc. 11 3/4%, due 11/15/2004 .. 1,500,000 1,522,500
-----------
5,503,750
-----------
Building Materials--1.4%
Associated Materials, Inc. 11 1/2%, due 8/15/2003 . 1,000,000 945,000
-----------
Cable Systems--6.6%
Cablevision Systems, Inc. 10 3/4%, due 4/1/2004 ... 1,500,000 1,507,500
Comcast Corp. 10 5/8%, due 7/15/2012 .............. 1,500,000 1,473,750
Continental Cablevision, Inc. 11%, due 6/1/2007 ... 1,500,000 1,530,000
-----------
4,511,250
-----------
Cellular--1.0%
Pricellular Corp. 0%/14%, due 11/15/2001 .......... 1,000,000 662,500
-----------
Chemicals--2.0%
Arcadian Partners L.P. 10 1/4%, due 5/1/2005 ...... 1,500,000 1,402,500
-----------
- ----------
See notes to financial statements.
7
<PAGE>
================================================================================
Portfolios of Investments (continued)
- --------------------------------------------------------------------------------
HIGH-YIELD BOND SERIES (continued)
Principal
Amount Value
--------- -----------
Container--2.3%
Silgan Corp. 11 3/4%, due 6/15/2002 ............... $ 1,500,000 $ 1,552,500
-----------
Environmental Services--2.1%
Allied Waste Industries 10 3/4%, due 2/1/2004 ..... 1,500,000 1,402,500
-----------
Financial Services--4.0%
Bell & Howell Co. 10 3/4%, due 10/1/2002 .......... 1,500,000 1,417,500
Comdata Network, Inc. 13 1/4%, due 12/15/2002 ..... 1,250,000 1,350,000
-----------
2,767,500
-----------
Food Products--2.8%
Pilgrim's Pride Corp. 10 7/8%, due 8/1/2003 ....... 2,000,000 1,900,000
-----------
Food Wholesale--2.1%
Di Giorgio Corp. 12%, due 2/15/2003 ............... 1,500,000 1,410,000
-----------
Gaming/Hotel--10.5%
Aztar Corp. 133/4%, due 10/1/2004 ................. 2,500,000 2,537,500
Casino America, Inc. 11 1/2%, due 11/15/2001 ...... 1,500,000 1,275,000
Showboat, Inc. 9 1/4%, due 5/1/2008 ............... 1,000,000 850,000
Showboat, Inc. 13%, due 8/1/2009 .................. 1,000,000 960,000
Trump Plaza Funding, Inc. 10 7/8%, due 6/15/2001 .. 2,000,000 1,530,000
-----------
7,152,500
-----------
Health Care--7.5%
Dade International 13%, due 2/1/2005* ............. 1,500,000 1,511,250
Hillhaven Corp. 10 1/8%, due 9/1/2001 ............. 1,000,000 1,002,500
OrNda HealthCorp 12 1/4%, due 5/15/2002 ........... 1,500,000 1,597,500
OrNda HealthCorp 11 3/8%, due 8/15/2004 ........... 1,000,000 1,040,000
-----------
5,151,250
-----------
Home Building and Land Development--2.1%
Continental Homes Holding Corp. 12%, due 8/1/1999 . 1,500,000 1,462,500
-----------
Leisure--3.5%
Icon Health & Fitness, Inc. 13%, due 7/15/2002* ... 1,000,000 980,000
Roadmaster Industries 11 3/4%, due 7/15/2002 ...... 1,500,000 1,408,125
-----------
2,388,125
-----------
Manufacturing--5.1%
Applied Extrusion Technologies 11 1/2%, due 4/1/2002 1,500,000 1,492,500
IMO Industries 12%, due 11/1/2001 ................. 2,000,000 2,010,000
-----------
3,502,500
-----------
Motion Pictures--1.5%
Act III Theatres, Inc. 11 7/8%, due 2/1/2003 ...... 1,000,000 1,040,000
-----------
- ----------
* Rule 144A security.
See notes to financial statements.
8
<PAGE>
================================================================================
December 31, 1994
- --------------------------------------------------------------------------------
HIGH-YIELD BOND SERIES (continued)
Principal
Amount Value
--------- -----------
Paper and Packaging--9.9%
Crown Packaging Ltd. 10 3/4%, due 11/1/2000 ....... $ 1,500,000 $ 1,455,000
Gaylord Container 0%/12 3/4%, due 5/15/2005 ....... 2,000,000 1,775,000
Stone Container 10 3/4%, due 10/1/2002 ............ 1,500,000 1,500,000
Stone Container 11 1/2%, due 10/1/2004 ............ 1,000,000 1,005,000
Warren (S.D.) Co. 12%, due 12/15/2004* ............ 1,000,000 1,022,500
-----------
6,757,500
-----------
Publishing--5.2%
Affinity Group, Inc. 11 1/2%, due 10/15/2003 ...... 1,000,000 960,000
American Media Operations, Inc. 11 5/8%,
due 11/15/2004 ................................. 1,000,000 1,025,000
Marvel Holdings, Inc. 0%/11 1/4%, due 4/15/1998 ... 2,500,000 1,550,000
-----------
3,535,000
-----------
Restaurants--2.1%
Flagstar Corp. 10 3/4%, due 9/15/2001 ............. 1,500,000 1,406,250
-----------
Retailing--2.1%
Finlay Fine Jewelry Corp. 10 5/8%, due 5/1/2003 ... 1,500,000 1,421,250
-----------
Supermarkets--3.7%
Mayfair Supermarkets, Inc. 11 3/4%, due 3/30/2003 . 1,500,000 1,252,500
Pathmark Stores, Inc. 0%/10 1/4%, due 11/1/2003 ... 2,500,000 1,287,500
-----------
2,540,000
-----------
Total Corporate Bonds (Cost $62,795,477) .......... 61,427,500
-----------
Convertible Bonds--2.6% (Cost $1,710,000)
Computers and Related Services--2.6%
EMC Corp. 4 1/4%, due 1/1/2001 .................... 1,500,000 1,816,875
-----------
Short-Term Holdings--5.0% (Cost $3,395,000)
Bank of Nova Scotia, Grand Cayman, Fixed Time
Deposit, 5 1/2%, due 1/3/1995 .................. 3,395,000 3,395,000
-----------
Total Investments--97.6% (Cost $67,900,477) ....... 66,639,375
Other Assets Less Liabilities--2.4% ............... 1,642,709
-----------
Net Assets--100.0% ................................ $68,282,084
===========
- ----------
*Rule 144A security.
See notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statements of Assets and Liabilities December 31, 1994
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government High-Yield
Securities Series Bond Series
----------------- -----------
<S> <C> <C>
Assets:
Investments, at value (see portfolios of investments):
Long-term holdings .......................................................... $ 57,514,055 $ 63,244,375
Short-term holdings ......................................................... 2,085,000 3,395,000
----------- ------------
59,599,055 66,639,375
Cash ........................................................................... 62,808 55,869
Interest receivable ............................................................ 1,388,349 1,613,095
Receivable for Shares of Beneficial Interest sold .............................. 115,075 544,049
Expenses prepaid to shareholder service agent .................................. 21,513 27,249
Other .......................................................................... 2,323 8,984
------------ ------------
Total Assets ................................................................... 61,189,123 68,888,621
------------ ------------
Liabilities:
Payable for Shares of Beneficial Interest repurchased .......................... 151,729 257,766
Dividends payable .............................................................. 146,018 252,725
Accrued expenses, taxes, and other ............................................. 115,235 96,046
------------ ------------
Total Liabilities .............................................................. 412,982 606,537
------------ ------------
Net Assets ..................................................................... $ 60,776,141 $ 68,282,084
============ ============
Composition of Net Assets:
Shares of Beneficial Interest, at par (unlimited shares authorized; $.001 par
value; 9,396,187 and 10,752,623 shares outstanding):
Class A ..................................................................... $ 8,461 $ 9,297
Class D ..................................................................... 935 1,456
Additional paid-in capital ..................................................... 88,793,725 82,882,733
Accumulated net realized loss .................................................. (27,560,722)
(13,350,300)
Net unrealized depreciation of investments ..................................... (466,258) (1,261,102)
------------ ------------
Net Assets ..................................................................... $ 60,776,141 $ 68,282,084
============ ============
Net Assets:
Class A ........................................................................ $ 54,713,957 $ 59,032,776
Class D ........................................................................ $ 6,062,184 $ 9,249,308
Shares of Beneficial Interest outstanding:
Class A ........................................................................ 8,460,817 9,297,066
Class D ........................................................................ 935,370 1,455,557
Net Asset Value per share:
Class A ........................................................................ $6.47 $6.35
===== =====
Class D ........................................................................ $6.48 $6.35
===== =====
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statements of Operations For the year ended December 31, 1994
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government High-Yield
Securities Series Bond Series
----------------- -----------
<S> <C> <C>
Investment Income:
Interest ......................................................................... $ 5,138,684 $ 7,160,270
----------- -----------
Expenses:
Management fees .................................................................. 338,362 329,652
Distribution and service fees .................................................... 174,946 176,546
Shareholder account services ..................................................... 128,293 158,110
Registration ..................................................................... 58,515 58,469
Auditing and legal fees .......................................................... 42,226 43,192
Custody and related services ..................................................... 28,349 17,798
Trustees' fees and expenses ...................................................... 14,419 13,940
Shareholder reports and communications ........................................... 5,591 8,059
Miscellaneous .................................................................... 19,512 9,900
----------- -----------
Total expenses ................................................................... 810,213 815,666
----------- -----------
Net investment income ............................................................ 4,328,471 6,344,604
----------- -----------
Net realized and unrealized gain (loss) on investments:
Net realized loss on investments ................................................. (8,470,786) (2,208,378)
Net change in unrealized appreciation/depreciation
of investments ................................................................. 1,282,482 (3,676,736)
----------- -----------
Net loss on investments .......................................................... (7,188,304) (5,885,114)
----------- -----------
Increase (decrease) in net assets from operations ................................ $(2,859,833) $ 459,490
=========== ===========
</TABLE>
- ----------------
See notes to financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statements of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government High-Yield Bond
Securities Series Series
Year Ended December 31 Year Ended December 31
------------------------------ ------------------------------
1994 1993 1994 1993
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ...................................... $ 4,328,471 $ 4,272,919 $ 6,344,604 $ 4,869,514
Net realized gain (loss) on investments .................... (8,470,786) 2,657,296 (2,208,378) 2,662,860
Net change in unrealized appreciation/depre-
ciation of investments ................................... 1,282,482 (2,848,730) (3,676,736) 1,013,074
------------ ------------ ------------ ------------
Increase (decrease) in net assets from operations .......... (2,859,833) 4,081,485 459,490 8,545,448
------------ ------------ ------------ ------------
Distributions to shareholders:
Net investment income:
Class A .................................................. (4,008,490) (4,256,437) (5,767,970) (4,848,219)
Class D .................................................. (319,981) (16,482) (576,634) (21,295)
------------ ------------ ------------ ------------
Decrease in net assets from distributions .................. (4,328,471) (4,272,919) (6,344,604) (4,869,514)
------------ ------------ ------------ ------------
Transactions in shares of beneficial interest:*
Net proceeds from sale of shares:
Class A .................................................. 4,137,872 7,502,107 11,688,898 19,348,362
Class D .................................................. 6,115,820 2,419,886 8,015,004 2,338,480
Net proceeds from transfer of
Secured Mortgage Income Series-Class A ................... -- 14,239,034 -- --
Net asset value of shares issued in payment
of dividends:
Class A .................................................. 1,780,986 1,958,778 2,261,113 2,130,339
Class D .................................................. 217,588 4,906 302,588 8,193
Exchanged from associated Funds:
Class A .................................................. 933,673 2,667,271 6,483,870 4,487,520
Class D .................................................. 677,329 29,766 1,164,394 18,106
------------ ------------ ------------ ------------
Total ...................................................... 13,863,268 28,821,748 29,915,867 28,331,000
------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A .................................................. (12,487,426) (9,903,241) (11,886,183) (7,437,727)
Class D .................................................. (1,068,325) (59,119) (1,040,965) --
Exchanged into associated Funds:
Class A .................................................. (2,888,033) (2,230,375) (5,594,008) (1,653,137)
Class D .................................................. (1,577,342) (46,890) (935,241) (10,667)
------------ ------------ ------------ ------------
Total ...................................................... (18,021,126) (12,239,625) (19,456,397) (9,101,531)
------------ ------------ ------------ ------------
Increase (decrease) in net assets from trans-
actions in shares of beneficial interest ................. (4,157,858) 16,582,123 10,459,470 19,229,469
------------ ------------ ------------ ------------
Increase (decrease) in net assets .......................... (11,346,162) 16,390,689 4,574,356 22,905,403
Net Assets:
Beginning of year .......................................... 72,122,303 55,731,614 63,707,728 40,802,325
------------ ------------ ------------ ------------
End of year ................................................ $ 60,776,141 $ 72,122,303 $ 68,282,084 $ 63,707,728
============ ============ ============ ============
</TABLE>
- ----------------
*The Fund began offering Class D shares on September 21, 1993.
See notes to financial statements.
12
<PAGE>
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Seligman High Income Fund Series (the "Fund") consists of two separate series
(collectively the "Series"): the "U.S. Government Securities Series" and the
"High-Yield Bond Series." Effective September 21, 1993, the Fund began offering
two classes of shares for each Series. All shares existing prior to September
21, 1993, have been classified as Class A shares. Class A shares are sold with
an initial sales charge of up to 4.75% and a continuing service fee of up to
0.25% on an annual basis. Class D shares are sold without an initial sales
charge but are subject to a higher distribution fee and a contingent deferred
sales load ("CDSL") of 1% imposed on certain redemptions made within one year of
purchase. The two classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with
generally accepted accounting principles, are given below:
a. All U.S. Government and Government agency securities and bonds are valued
at current market values or, in their absence, at fair value determined in
accordance with procedures approved by the trustees. Securities traded on
national exchanges are valued at last sales prices or, in their absence and
in the case of over-the-counter securities, based on valuations provided by
an independent pricing service approved by the trustees. Short-term
holdings maturing in 60 days or less are valued at amortized cost.
b. There is no provision for federal income or excise tax. Each Series has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
Dividends are declared daily and paid monthly.
c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income
tax purposes. Interest income is recorded on the accrual basis. Each Series
accretes original issue discounts and market discounts on purchases of
portfolio securities.
d. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares
based upon the relative proportion of the value of settled shares
outstanding of each class. Class-specific expenses, which include
distribution and service fees and any other items that can be specifically
attributed to a particular class, are charged directly to such class.
e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gains may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, or capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such
reclasssification will have no effect on net assets, results of operations,
or net asset value per share of the Fund.
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended December 31, 1994, were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
U.S. Government
Securities $293,960,475 $299,893,486
High-Yield Bond 123,730,644 114,642,687
At December 31, 1994, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio securities
were as follows:
Total Total
Unrealized Unrealized
Series Appreciation Depreciation
- --------------------------------------------------------------------------------
U.S. Government
Securities $134,374 $ 600,632
High-Yield Bond 636,070 1,897,172
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all trustees of the Fund who are employees or
13
<PAGE>
================================================================================
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
consultants of the Manager, and all personnel of the Fund and the Manager is
paid by the Manager. The Manager's fee is calculated daily and payable monthly,
equal to 0.50% per annum of each Series' average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of each Series' shares, received the following commissions after
concessions were paid to dealers for sale of Class A shares:
Seligman
Financial Services' Dealer
Series Commissions Concessions
- --------------------------------------------------------------------------------
U.S. Government
Securities $ 8,580 $ 61,645
High-Yield Bond 45,213 353,427
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to Class A shares under which service organizations
can enter into agreements with the Distributor and receive a continuing fee of
up to 0.25% on an annual basis, payable quarterly, of the average daily net
assets of the Class A shares attributable to the particular service organization
for providing personal services and/or the maintenance of shareholder accounts.
The Distributor charges such fees to the Fund pursuant to the Plan. For the year
ended December 31, 1994, such fees paid by the U.S. Government Securities Series
and the High-Yield Bond Series aggregated $115,296 and $109,232, or 0.22% and
0.21% per annum, respectively, of average daily net assets of Class A shares.
Effective September 21, 1993, the Fund adopted a Plan with respect to Class
D shares under which service organizations can enter into agreements with the
Distributor and receive a continuing fee for providing personal services and/or
the maintenance of shareholder accounts of up to 0.25% on an annual basis of the
average daily net assets of the Class D shares for which the organizations are
responsible, and fees for providing other distribution assistance of up to 0.75%
on an annual basis of such average daily net assets. Such fees are paid monthly
by the Fund to the Distributor pursuant to the Plan. For the year ended December
31, 1994, fees paid by the U.S. Government Securities Series and the High-Yield
Bond Series aggregated $59,650 and $67,314, respectively, or 1% per annum of the
average daily net assets of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain redemptions
occurring within one year of purchase. For the year ended December 31, 1994,
such charges imposed were $8,280 for the U.S. Government Securities Series and
$8,610 for the High-Yield Bond Series.
Seligman Data Corp., which is owned by certain associated investment
companies, charged at cost for shareholder account services the following
amounts: U.S. Government Securities Series $128,293 and High-Yield Bond Series
$158,110.
Certain officers and trustees of the Fund are officers or directors of the
Manager, the Distributor, and/or Seligman Data Corp.
Fees of $18,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a trustee of the Fund.
The Fund has a compensation agreement under which trustees who receive fees
may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in trustees'
fees and expenses, and the accumulated balances thereof at December 31, 1994, of
$33,419 in the U.S. Government Securities Series and $18,812 in the High-Yield
Bond Series are included in other liabilities. Deferred fees and the related
accrued interest are not deductible for federal income tax purposes until such
amounts are paid.
5. Class-specific expenses charged to Class A and Class D during the year ended
December 31, 1994, which are included in the corresponding captions of the
Statements of Operations, were as follows:
U.S. Government High-Yield
Securities Series Bond Series
-------------------- --------------------
Class A Class D Class A Class D
------- ------- ------- -------
Distribution and
service fees $115,296 $59,650 $109,232 $67,314
Registration 21,946 20,340 21,843 17,749
Shareholder reports
and communications 2,550 73 2,256 261
14
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
6. In accordance with current federal income tax law, the net realized capital
gains and losses of each Series are considered separately for purposes of
determining taxable capital gains. At December 31, 1994, net capital loss
carryforwards for the U.S. Government Securities Series and the High-Yield Bond
Series amounted to $30,698,968 (including $3,138,246 transferred from the
Secured Mortgage Income Series) and $13,350,300, respectively, which are
available for offset against future taxable net capital gains, expiring in
various amounts through 2002.
Accordingly, no capital gain distributions are expected to be paid to
shareholders of the respective Series until net capital gains have been realized
in excess of the available capital loss carryforwards.
7. Transactions in Shares of Beneficial Interest were as follows:
<TABLE>
<CAPTION>
U.S. Government High-Yield Bond
Securities Series Series
----------------------------- -----------------------------
Year Ended December 31 Year Ended December 31
----------------------------- -----------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sale of shares:
Class A .............................................. 602,628 1,033,362 1,760,781 2,856,884
Class D .............................................. 879,410 331,787 1,191,967 339,838
Class A shares issued in transfer of
Secured Mortgage Income Series ....................... -- 1,965,329 -- --
Shares issued in payment of dividends:
Class A .............................................. 262,571 269,033 341,325 315,616
Class D .............................................. 32,428 679 46,166 1,185
Exchanged from associated Funds:
Class A .............................................. 139,088 368,217 986,393 662,388
Class D .............................................. 99,435 4,121 177,753 2,622
---------- ---------- ---------- ----------
Total .................................................. 2,015,560 3,972,528 4,504,385 4,178,533
---------- ---------- ---------- ----------
Shares repurchased:
Class A .............................................. (1,835,575) (1,363,719) (1,793,114) (1,100,482)
Class D .............................................. (159,362) (8,177) (161,121) --
Exchanged into associated Funds:
Class A .............................................. (426,650) (306,327) (840,972) (244,261)
Class D .............................................. (238,485) (6,466) (141,316) (1,537)
---------- ---------- ---------- ----------
Total .................................................. (2,660,072) (1,684,689) (2,936,523) (1,346,280)
---------- ---------- ---------- ----------
Increase (decrease) in shares .......................... (644,512) 2,287,839 1,567,862 2,832,253
========== ========== ========== ==========
</TABLE>
8. On November 3, 1993, shareholders of the Secured Mortgage Income Series
approved a transfer of its net assets to the U.S. Government Securities Series
in a tax-free exchange, whereby 1,965,329 shares of the U.S. Government
Securities Series valued at $14,239,034 were exchanged for the net assets of the
Secured Mortgage Income Series. For each share of beneficial interest owned,
shareholders of the Secured Mortgage Income Series received .9061 of a share of
beneficial interest of the U.S. Government Securities Series.
15
<PAGE>
================================================================================
Financial Highlights
- --------------------------------------------------------------------------------
The financial highlights for each Series are presented below. The per share
operating performance data is designed to allow investors to trace the operating
performance, on a per share basis, from a Series' beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investments, assuming they were 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.
<TABLE>
<CAPTION>
U.S. Government Securities Series
-------------------------------------------------------------------------------
Class A Class D
------------------------------------------------------ --------------------
Year Ended December 31 Year 9/21/93*
------------------------------------------------------ Ended to
1994 1993 1992 1991 1990 12/31/94 12/31/93
------- ------- ------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning
of period .................................. $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 7.04 $ 7.20 $ 7.33
------- ------- ------- ------ ------- ------- -------
Net investment income ......................... .44 .53 .51 .51 .59 .37 .09
Net realized and unrealized
investment gain (loss) ..................... (.71) (.01) (.11) .41 (.15) (.72) (.13)
------- ------- ------- ------ ------- ------- -------
Increase (decrease) from
investment operations ...................... (.27) .52 .40 .92 .44 (.35) (.04)
Dividends paid or declared .................... (.44) (.53) (.51) (.51) (.59) (.37) (.09)
------- ------- ------- ------ ------- ------- -------
Net increase (decrease) in
net asset value ............................ (.71) (.01) (.11) .41 (.15) (.72) (.13)
------- ------- ------- ------ ------- ------- -------
Net asset value, end of period ................ $ 6.47 $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 6.48 $ 7.20
======= ======= ======= ====== ======= ======= =======
Total return based on
net asset value ............................ (3.88)% 7.46% 5.78% 14.05% 6.37% (5.05)% (.65)%
Ratios/Supplemental Data:
Expenses to average net assets ................ 1.10% 1.11% 1.05% 1.10% 1.06% 2.22% 2.09%+
Net investment income
to average net assets ...................... 6.49% 7.22% 7.17% 7.39% 8.66% 5.40% 5.28%+
Portfolio turnover ............................ 445.18% 170.35% 126.17% 95.46% 306.05% 445.18% 170.35%++
Net assets, end of period
(000's omitted) ............................ $54,714 $69,805 $55,732 $64,440 $71,735 $ 6,062 $ 2,317
</TABLE>
- ----------------
* Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended December 31, 1993.
See notes to financial statements.
16
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
The total returns based on net asset value measure a Series' performance
assuming investors purchased shares at net asset value as of the beginning of
the period, reinvested dividends and capital gains paid at net asset value, and
then sold their shares at the net asset value per share on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing shares of any Series. Total returns for periods of less
than one year are not annualized.
<TABLE>
<CAPTION>
High-Yield Bond Series
--------------------------------------------------------------------------------
Class A Class D
------------------------------------------------------- --------------------
Year Ended December 31 Year 9/21/93*
------------------------------------------------------- Ended to
1994 1993 1992 1991 1990 12/31/94 12/31/93
------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning
of period ................................. $ 6.94 $ 6.42 $ 5.96 $ 5.21 $ 6.40 $ 6.94 $ 6.74
------- ------- ------- ------- ------- ------- -------
Net investment income ........................ .65 .66 .69 .77 .78 .57 .12
Net realized and unrealized
investment gain (loss) .................... (.59) .52 .46 .75 (1.19) (.59) .20
------- ------- ------- ------- ------- ------- -------
Increase (decrease) from
investment operations ..................... .06 1.18 1.15 1.52 (.41) (.02) .32
Dividends paid or declared ................... (.65) (.66) (.69) (.77) (.78) (.57) (.12)
------- ------- ------- ------- ------- ------- -------
Net increase (decrease) in
net asset value ........................... (.59) .52 .46 .75 (1.19) (.59) .20
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period ............... $ 6.35 $ 6.94 $ 6.42 $ 5.96 $ 5.21 $ 6.35 $ 6.94
======= ======= ======= ======= ======= ======= =======
Total return based on
net asset value ........................... 0.78% 19.19% 20.08% 30.70% (7.27)% (.30)% 4.53%
Ratios/Supplemental Data:
Expenses to average net assets ............... 1.13% 1.20% 1.21% 1.29% 1.21% 2.19% 2.04%+
Net investment income
to average net assets ..................... 9.73% 9.68% 10.82% 13.36% 13.40% 8.68% 7.93%+
Portfolio turnover ........................ 184.75% 193.91% 145.66% 181.08% 117.51% 184.75% 193.91%++
Net assets, end of period
(000's omitted) ........................... $59,033 $61,333 $40,802 $32,287 $27,558 $ 9,249 $ 2,375
</TABLE>
- ----------------
* Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended December 31, 1993.
See notes to financial statements.
17
<PAGE>
================================================================================
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Trustees and Shareholders,
Seligman High Income Fund Series:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the U.S. Government Securities Series and the
High-Yield Bond Series of Seligman High Income Fund Series as of December 31,
1994, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the Fund's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the U.S. Government
Securities Series and the High-Yield Bond Series of Seligman High Income Fund
Series as of December 31, 1994, the results of their operations, the changes in
their net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 3, 1995
18
<PAGE>
================================================================================
Trustees
- --------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Partner, Sullivan & Cromwell, Attorneys
Betsy S. Michel 2
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
Douglas R. Nichols, Jr. 2
Management Consultant
James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group
James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Herman J. Schmidt 2
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
Ronald T. Schroeder 1
President
Managing Director,
J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Brian T. Zino 1
Managing Director,
J. & W. Seligman & Co. Incorporated
- ----------
Member: 1 Executive Committee; 2 Audit Committee; 3 Trustee Nominating
Committee.
- --------------------------------------------------------------------------------
Executive Officers
William C. Morris Leonard J. Lovito Frank J. Nasta
Chairman Vice President Secretary
Ronald T. Schroeder Lawrence P. Vogel
President Vice President
Daniel J. Charleston Thomas G. Rose
Vice President Treasurer
- --------------------------------------------------------------------------------
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour Automated
Telephone Access
Service
19
<PAGE>
Seligman Financial Services, Inc.
an affiliate of
J&WS
J. & W. Seligman & Co.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of beneficial interest of
Seligman High Income Fund Series, which contains information about the sales
charges, management fees, and other costs. Please read the prospectus carefully
before investing or sending money.
TX2 12/94
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements and Schedules:
Part A Financial Highlights for Class A shares from March 11, 1985
(commencement of operations of each Series) to December 31,
1994; Financial Highlights for Class D shares for the period
from September 21, 1993 (commencement of offering) to
December 31, 1994.
Part B Required Financial Statements for each Series are included
in the Fund's Annual Report to Shareholders, dated December
31, 1994, which are incorporated by reference in the
Statement of Additional Information. These Financial
Statements are: Portfolios of Investments as of December 31,
1994; Statements of Assets and Liabilities as of December 31,
1994; Statements of Operations for the year ended December
31, 1994; Statements of Changes in Net Assets for the years
ended December 31, 1994 and 1993; Notes to Financial
Statements; Financial Highlights for the five years ended
through December 31, 1994 for each Series' Class A shares and
for the period September 21, 1993 (commencement of offering)
through December 31, 1994 for each Series' Class D shares;
Report of Independent Auditors.
(b) Exhibits: All Exhibits have been previously filed except
Exhibits marked with an asterisk (*) which are incorporated
herein.
(1a) Declaration of Trust
(Incorporated by Reference to Pre-Effective Amendment No. 1
filed on March 8, 1985.)
(1b) Certificate of Amendment to the Declaration of Trust of the
Registrant.
(Incorporated by Reference to Post-Effective Amendment No. 17
filed on September 21, 1993.)
(2) Bylaws.
(Incorporated by Reference to Pre-Effective No. 1 filed on
March 8, 1985.)
(3) N/A
(4a) Specimen Stock Certificate for Class A Shares.
(Incorporated by Reference to Post-Effective Amendment No. 18
filed on April 29, 1994.)
(4b) Specimen Stock Certificate for Class D Shares.
(Incorporated by Reference to Post-Effective Amendment No. 17
filed on September 21, 1993.)
(5) Copy of new Management Agreement between each Series of the
Registrant and J. & W. Seligman & Co. Incorporated.*
(6a) Copy of the new Distributing Agreement between Registrant and
Seligman Marketing, Inc.
(Incorporated by Reference to Post-Effective Amendment No. 15
filed on April 30, 1993.)
(6b) Copy of amended Sales Agreement between Seligman Marketing,
Inc. and Dealers.
(Incorporated by Reference to Post-Effective Amendment No. 15
filed on April 30, 1993.)
(7a) Amendments to the Amended Retirement Income Plan of J. & W.
Seligman & Co. Incorporated and Trust.
(Incorporated by Reference to Post-Effective Amendment No. 18
filed on April 29, 1994.)
(7b) Amendments to the Amended Employees' Thrift Plan of Union
Data Service Center, Inc. and Trust.
(Incorporated by Reference to Post-Effective Amendment No. 18
filed on April 29, 1994.)
(8) Copy of Custodian Agreement between Registrant and Investors
Fiduciary Trust Company.
(Incorporated by Reference to Post-Effective Amendment No. 13
filed on April 30, 1991.)
(10) Opinion and Consent of Counsel.
(Incorporated by Reference to Pre-Effective Amendment No. 2
filed on February 14, 1985.)
PART C. OTHER INFORMATION (continued)
(11) Report and Consent of Independent Auditors.*
(12) N/A
(13) Purchase Agreement for Initial Capital between Registrant 's
Class D Shares and J. & W. Seligman & Co. Incorporated.
(Incorporated by Reference to Post-Effective Amendment No. 17
filed on September 21, 1993.)
(14) Copy of Amended Individual Retirement Account Trust and
Related Documents.
(Incorporated by Reference to Post-Effective Amendment No. 14
filed on April 30, 1992.)
(14a) Copy of Amended Comprehensive Retirement Plans for Money
Purchase and/or Prototype Profit Sharing Plan.
(Incorporated by Reference to Seligman New Jersey Tax-Exempt
Fund, Inc., File No. 33-13401, Pre-Effective Amendment No. 1
filed on January 11, 1988.)
(14b) Copy of Amended Basic Business Retirement Plans for Money
Purchase and/or Profit Sharing Plans.
(Incorporated by Reference to Seligman New Jersey Tax-Exempt
Fund, Inc., File No. 33-13401, Pre-Effective Amendment No. 1
filed on January 11, 1988.)
(14c) Copy of Amended 403(b)(7) Custodial Account Plan.
(Incorporated by Reference to Seligman New Jersey Tax-Exempt
Fund, Inc., File No. 33-13401, Pre-Effective Amendment No. 1
filed on January 11, 1988.)
(14d) Copy of Amended Simplified Employee Pension Plan (SEP).
(Incorporated by Reference to Post-Effective Amendment No. 14
filed on April 30, 1992.)
(14e) Copy of the amended J. & W. Seligman & Co. Incorporated
(SARSEP) Salary Reduction and Other Elective Simplified
Employee Pension-Individual Retirement Accounts Contribution
Agreement (Under Section 408(k) of the Internal Revenue
Code).
(Incorporated by Reference to Post-Effective Amendment No. 14
filed on April 30, 1992.)
(15) Copy of amended Administration, Shareholder Service and
Distribution Plan and form of Agreement of Registrant.
(Incorporated by Reference to Post-Effective Amendment No. 15
filed on April 30, 1993.)
(16) Schedule for Computation of each Performance Quotation
provided in Registration Statement to Item 22.
(Incorporated by Reference to Post-Effective Amendment No. 11
filed on April 30, 1990.)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT - None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES - As of March 31, 1995, there
were 2,998 and 3,278 recordholders of Class A shares of beneficial
interest of the U.S. Government Securities Series and the
High-Yield Bond Series, respectively; and 187 and 666 record
holders of Class D shares of beneficial interest of the U.S.
Government Securities Series and the High-Yield Bond Series,
respectively, of the Registrant.
ITEM 27. INDEMNIFICATION - Incorporated by reference to Registrant's
Post-Effective Amendment No. 13 filed on May 1, 1991.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER - J. & W.
Seligman & Co. Incorporated, a Delaware corporation ("Manager"),
is the Registrant's investment manager. The Manager also serves as
investment manager to sixteen other 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 Frontier Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman Income Fund, Inc., Seligman New Jersey
Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund
Series, Seligman Portfolios, Inc., Seligman Quality Municipal
Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman
Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt Series Trust and
Tri-Continental Corporation.
<PAGE>
PART C. OTHER INFORMATION (continued)
The Manager has an investment advisory service division which
provides investment management or advice to private clients. The
list required by this Item 28 of officers and directors of the
Manager, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged
in by such officers and directors during the past two years, is
incorporated by reference to Schedules A and D of Form ADV, filed
by the Manager pursuant to the Investment Advisers Act of 1940
(SEC File No. 801-5798 which was filed on March 30, 1994).
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The names of each investment company (other than the Registrant)
for which each principal underwriter currently distributing
securities of the Registrant also acts as a principal underwriter,
depositor or investment adviser follow:
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman Growth Fund, Inc.
Seligman Income Fund, Inc.
Seligman New Jersey Tax-Exempt Fund, Inc.
Seligman Pennsylvania Tax-Exempt Fund Series
Seligman Portfolios, Inc.
Seligman Tax-Exempt Fund Series, Inc.
Seligman Tax-Exempt Series Trust
(b) Name of each trustee, officer or partner of each principal underwriter
named in the answer to Item 21:
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF APRIL 1, 1995
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- ---------------
WILLIAM C. MORRIS* Director Chairman of the Board and
Chief Executive Officer
RONALD T. SCHROEDER* Director President and Director
FRED E. BROWN* Director Director
MICHAEL J. DEL PRIORE* Director None
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
DAVID WATTS* Director None
BRIAN T. ZINO* Director Director
STEPHEN J. HODGDON* President None
MARK R. GORDON Senior Vice President, None
Director of Marketing
GERALD I. CETRULO, III Senior Vice President of Sales None
140 West Parkway and Regional Sales Manager
Pompton Plains, NJ 07444
BRAD DAVIS Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF APRIL 1, 1995
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
--------------- ---------------- ---------------
JONATHAN G. EVANS Regional Vice President None
222 Fairmont Way
Ft. Lauderdale, FL 33326
SUSAN GUTTERUD Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
BRADLEY F. HANSON Senior Vice President of Sales None
9707 Xylon Court and Regional Sales Manager
Bloomington, MN 55438
BRADLEY W. LARSON Senior Vice President of Sales None
367 Bryan Drive and Regional Sales Manager
Danville, CA 94526
RANDY D. LIERMAN Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
JUDITH L. LYON Regional Vice President None
163 Haynes Bridge Rd, Ste. 205
Alpharetta, GA 30201
DAVID MEYNCKE Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
HERB W. MORGAN Regional Vice President None
11308 Monticook Court
San Diego, CA 92127
MELINDA NAWN Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
ROBERT H. RUHM Regional Vice President None
167 Derby Street
Melrose, MA 02176
DIANE SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
LYNDA M. SOLEIM* Regional Vice President None
14074 Rue St. Raphael Street
Del Mar, CA 92014
BRUCE TUCKEY Regional Vice President None
23477 Haggerty Road
Building No. 7
Novi, MI 48375
D. IAN VALENTINE Senior Vice President of Sales None
307 Braehead Drive and Regional Sales Manager
Fredericksburg, VA 22401
ANDREW VEASEY Regional Vice President None
40 Goshawk Court
Voorhees, NJ 08043
TODD VOLKMAN Regional Vice President None
4650 Cole Avenue, #216
Dallas, TX 75205
KELLI A. DUMSER Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF APRIL 1, 1995
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- --------------
JAMES R. BESHER Regional Vice President None
1400 Margaux Lane
Town & Country, MO 63017
LAWRENCE P. VOGEL* Senior Vice President - Finance Vice President
HELEN SIMON* Vice President None
MARSHA E. JACOBY* Vice President, National Accounts None
Manager
VITO GRAZIANO* Assistant Secretary Assistant Secretary
WILLIAM W. JOHNSON* Vice President, Order Desk None
FRANK P. MARINO* Assistant Vice President, Mutual
Fund Product Manager None
AURELIA LACSAMANA* Treasurer None
FRANK J. NASTA, ESQ.* Secretary Secretary
</TABLE>
* The principal business address of each of these directors and/or
officers is 100 Park Avenue, NY, NY 10017.
(c) Not applicable.
Item 30. Location of Accounts and Records
Custodian Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105 AND
Seligman High Income Fund Series
100 Park Avenue
New York, NY 10017
ITEM 31. MANAGEMENT SERVICES - Seligman Data Corp. ("SDC") the
Registrant's shareholder service agent, has an agreement with
The Shareholder Services Group ("TSSG") pursuant to which TSSG
provides a data processing system for certain shareholder
accounting and recordkeeping functions performed by SDC, which
commenced in July 1990. For the fiscal years ended December
31, 1994, 1993 and 1992 the approximate cost of these services
for each Series were:
1994 1993 1992
------- ------- -------
U.S. Government Securities Series
Class A $16,274 $18,400 $18,650
Class D $858 N/A N/A
High-Yield Bond Series
Class A $13,980 $15,400 $14,700
Class D 1,597 N/A N/A
Item 32. Undertakings - The Registrant undertakes, (1) to furnish a
copy of the Registrant's latest annual report, upon request and
without charge, to every person to whom a prospectus is delivered
and (2) if requested to do so by the holders of at least 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 19 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 28th day of April, 1995.
SELIGMAN HIGH INCOME FUND SERIES
By: /S/ WILLIAM C. MORRIS
William C. Morris, Chairman*
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 19 has been signed below by the following persons
in the capacities indicated on April 28, 1995.
SIGNATURE TITLE
/S/ WILLIAM C. MORRIS Chairman of the Trustees (Principal
William C. Morris* executive officer) and Trustee
/S/ RONALD T. SCHROEDER Trustee and President
Ronald T. Schroeder*
/S/ THOMAS G. ROSE Treasurer (Principal financial and
Thomas G. Rose Accounting Officer)
Fred E. Brown, Trustee )
Alice S. Ilchman, Trustee )
John E. Merow, Trustee )
Betsy S. Michel, Trustee )
Douglas R. Nichols, Jr., Trustee )
James C. Pitney, Trustee ) /S/ BRIAN T. ZINO
-------------------------------------
James Q. Riordan, Trustee ) *Brian T. Zino, Attorney-In-Fact
Herman J. Schmidt, Trustee )
Robert L. Shafer, Trustee )
James N. Whitson, Trustee )
Brian T. Zino, Trustee )
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> HIGH-YIELD BOND SERIES CL. A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 67900
<INVESTMENTS-AT-VALUE> 66639
<RECEIVABLES> 2184
<ASSETS-OTHER> 66
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 68889
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 607
<TOTAL-LIABILITIES> 607
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82893
<SHARES-COMMON-STOCK> 9297<F1>
<SHARES-COMMON-PRIOR> 8843<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (13350)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1261)
<NET-ASSETS> 59033<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6438<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 670<F1>
<NET-INVESTMENT-INCOME> 5768<F1>
<REALIZED-GAINS-CURRENT> (2208)
<APPREC-INCREASE-CURRENT> (3677)
<NET-CHANGE-FROM-OPS> 459
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5768<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2747<F1>
<NUMBER-OF-SHARES-REDEEMED> 2634<F1>
<SHARES-REINVESTED> 342<F1>
<NET-CHANGE-IN-ASSETS> 4574
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11142)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 297<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 670<F1>
<AVERAGE-NET-ASSETS> 61742<F1>
<PER-SHARE-NAV-BEGIN> 6.94<F1>
<PER-SHARE-NII> .65<F1>
<PER-SHARE-GAIN-APPREC> (.59)<F1>
<PER-SHARE-DIVIDEND> .65<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 6.35<F1>
<EXPENSE-RATIO> 1.13<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
FINANCIAL DATA STATEMENT
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> HIGH-YIELD BOND SERIES CL. D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 67900
<INVESTMENTS-AT-VALUE> 66639
<RECEIVABLES> 2184
<ASSETS-OTHER> 66
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 68889
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 607
<TOTAL-LIABILITIES> 607
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82893
<SHARES-COMMON-STOCK> 1456<F1>
<SHARES-COMMON-PRIOR> 342<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (13350)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1261)
<NET-ASSETS> 9249<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 723<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 146<F1>
<NET-INVESTMENT-INCOME> 577<F1>
<REALIZED-GAINS-CURRENT> (2208)
<APPREC-INCREASE-CURRENT> (3677)
<NET-CHANGE-FROM-OPS> 459
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 577<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1370<F1>
<NUMBER-OF-SHARES-REDEEMED> 302<F1>
<SHARES-REINVESTED> 46<F1>
<NET-CHANGE-IN-ASSETS> 4574
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11142)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 146<F1>
<AVERAGE-NET-ASSETS> 5929<F1>
<PER-SHARE-NAV-BEGIN> 6.94<F1>
<PER-SHARE-NII> .57<F1>
<PER-SHARE-GAIN-APPREC> (.59)<F1>
<PER-SHARE-DIVIDEND> .57<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 6.35<F1>
<EXPENSE-RATIO> 2.19<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
DESCRIPTION> FINANCIAL DATA STATEMENT
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> U.S.GOVERNMENT SECURITIES SERIES A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 60065
<INVESTMENTS-AT-VALUE> 59599
<RECEIVABLES> 1525
<ASSETS-OTHER> 65
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61189
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 413
<TOTAL-LIABILITIES> 413
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88803
<SHARES-COMMON-STOCK> 18486<F1>
<SHARES-COMMON-PRIOR> 9719<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (27561)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (466)
<NET-ASSETS> 54714<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4687<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 679<F1>
<NET-INVESTMENT-INCOME> 4008<F1>
<REALIZED-GAINS-CURRENT> (8471)
<APPREC-INCREASE-CURRENT> 1283
<NET-CHANGE-FROM-OPS> (2860)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4008<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 742<F1>
<NUMBER-OF-SHARES-REDEEMED> 2262<F1>
<SHARES-REINVESTED> 263<F1>
<NET-CHANGE-IN-ASSETS> (11346)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (19090)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 308<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 679<F1>
<AVERAGE-NET-ASSETS> 61742<F1>
<PER-SHARE-NAV-BEGIN> 7.18<F1>
<PER-SHARE-NII> .44<F1>
<PER-SHARE-GAIN-APPREC> (.71)<F1>
<PER-SHARE-DIVIDEND> .44<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 6.47<F1>
<EXPENSE-RATIO> 1.10<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<DESCRIPTION> FINANCIAL DATA STATEMENTS
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> U.S.GOVERNMENT SECURITIES SERIES D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 60065
<INVESTMENTS-AT-VALUE> 59599
<RECEIVABLES> 1525
<ASSETS-OTHER> 65
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61189
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 413
<TOTAL-LIABILITIES> 413
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88803
<SHARES-COMMON-STOCK> 5891<F1>
<SHARES-COMMON-PRIOR> 322<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (27561)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (466)
<NET-ASSETS> 6062<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 452<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> 132<F1>
<NET-INVESTMENT-INCOME> 320<F1>
<REALIZED-GAINS-CURRENT> (8471)
<APPREC-INCREASE-CURRENT> 1283
<NET-CHANGE-FROM-OPS> (2860)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 320<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 979<F1>
<NUMBER-OF-SHARES-REDEEMED> 398<F1>
<SHARES-REINVESTED> 32<F1>
<NET-CHANGE-IN-ASSETS> (11346)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (19090)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 132<F1>
<AVERAGE-NET-ASSETS> 5929<F1>
<PER-SHARE-NAV-BEGIN> 7.20<F1>
<PER-SHARE-NII> .37<F1>
<PER-SHARE-GAIN-APPREC> (.72)<F1>
<PER-SHARE-DIVIDEND> .37<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 6.48<F1>
<EXPENSE-RATIO> 2.22<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of December 29, 1988, between THE
SELIGMAN HIGH INCOME FUND SERIES, a Massachusetts business trust (the "Fund") on
behalf of the HIGH-YIELD BOND SERIES (the "Series"), and J. & W.
SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager").
In consideration of the mutual agreements herein made, the parties
hereto agree as follows:
1. DUTIES OF THE MANAGER. The Manager shall manage the affairs of the
Series including, but not limited to, continuously providing the Series with
investment management, including investment research, advice and supervision,
determining which securities shall be purchased or sold by the Series, making
purchases and sales of securities on behalf of the Series and determining how
voting and other rights with respect to securities of each Series shall be
exercised, subject in each case to the control of the trustees of the Fund and
in accordance with the objectives, policies and principles set forth in the
Registration Statement and Prospectus of the Series and the requirements of the
Investment Company Act of 1940 (the "Act") and other applicable law. In
performing such duties, the Manager shall provide such office space, such
bookkeeping, accounting, internal legal, clerical, secretarial and
administrative services (exclusive of, and in addition to, any such services
provided by any others retained by the Series) and such executive and other
personnel as shall be necessary for the operations of the Series. The Series
understands that the Manager also acts as the manager of all of the investment
companies in the Seligman Group.
Subject to Section 36 of the Act, the Manager shall not be liable to
the Series 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 the management of the Series
and the performance of its duties under this Agreement except for willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under this
Agreement.
2. EXPENSES. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1 and shall pay such Series'
proportional share or any salaries, fees and expenses of the trustees of the
Fund who are employees of the Manager or its affiliates. The Manager shall not
be required to pay any other expenses of the Series, including, but not limited
to, direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent attorneys and auditors, taxes
and governmental fees, cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase or redemption of
shares, expenses of registering and qualifying shares of the Series for sale
under federal and state securities laws, expenses of printing and distributing
reports, notices and proxy materials to existing shareholders, expenses of
corporate data processing and related services, shareholder recordkeeping and
shareholder account services, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses, expenses of annual and special shareholders'
meetings, fees and disbursements of transfer agents and custodians, expenses of
disbursing dividends and distributions, fees payable under the Administration,
Shareholder Service and Distribution Plan between the Fund and service
organizations, fees and expenses of trustees of the Fund who are not employees
of the Manager or its affiliates, membership dues in the Investment Company
Institute, insurance premiums and extraordinary expenses such as litigation
expenses.
3. COMPENSATION. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Series will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month, at an annual rate of 0.50% of the
Series' average daily net assets.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. PURCHASE AND SALE OF SECURITIES. The Manager shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with respect to
allocation of portfolio transactions as set forth in the Registration Statement
and Prospectus(es) of the Series or as the trustees of the Fund may direct from
time to time. In providing the Series with investment management and
supervision, it is recognized that the Manager will seek the most favorable
price and execution, and, consistent with such policy, may give consideration to
the research, statistical and other services furnished by brokers or dealers to
the Manager for its use, to the general attitude of brokers or dealers toward
investment companies and their support of them, and to such other considerations
as the trustees of the Fund may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Series that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers who execute
brokerage transactions at a higher cost to the Series than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and execution. Therefore, the Manager is authorized to place orders for
the purchase and sale of securities for the Series with such brokers, subject to
review by the trustees of the Series from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Manager in connection with its
services to other clients as well as the Series.
The placing of purchase and sale orders may be carried out by the
Manager or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Series, the Manager or any subsidiary of the Manager may, without material risk,
arrange to receive a soliciting dealer's fee or other underwriter's or dealer's
discount or commission, the Manager shall, unless otherwise directed by the
trustees of the Fund, obtain such fee, discount or commission and the amount
thereof shall be applied to reduce the compensation to be received by the
Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the trustees of the Fund from approving
the payment by the Series of additional compensation to others for consulting
services, supplemental research and security and economic analysis.
5. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect until the earlier of December 29, l989, and from year to year thereafter
if such continuance is approved in the manner required by the Act if the Manager
shall not have notified the Series in writing at least 60 days prior to such
December 29 or prior to December 29 of any year thereafter that it does not
desire such continuance. This agreement may be terminated at any time, without
payment of penalty by the Series, on 60 days' written notice to the Manager by
vote of the trustees of the Fund or by vote of a majority of the outstanding
voting securities of the Series (as defined by the Act). This Agreement will
automatically terminate in the event of its assignment (as defined by the Act).
6. RIGHT OF MANAGER IN CORPORATE NAME. The Manager and the Series each
agree that the word "Seligman", which comprises a component of the Series' name,
is a property right of the Manager. The Series agrees and consents that (i) it
will only use the word "Seligman" as a component of its corporate name and for
no other purpose, (ii) it will not purport to grant to any third party the right
to use the word "Seligman" for any purpose, (iii) the Manager or any corporate
affiliate of the Manager may use or grant to others the right to use the word
"Seligman", or any combination or abbreviation thereof, as all or a portion of a
corporate or business name or for any commercial purpose, including a grant of
such right to any other investment company, and at the request of the Manager,
the Series will take such action as may be required to provide its consent to
the use of the word "Seligman", or any combination or abbreviation thereof, by
the Manager or any corporate affiliate of the Manager, or by any person to whom
the Manager or an affiliate of the Manager shall have granted the right to such
use; and (iv) upon the termination of any management agreement into which the
Manager and the Series may enter, the Series shall, upon request by the Manager,
promptly take such action, at its own expense, as may be necessary to change its
corporate name to one not containing the word "Seligman" and following such
change, shall not use the word Seligman, or any combination thereof, as a part
of its corporate name or for any other commercial purpose, and shall use its
best efforts to cause its officers, trustees and stockholders to take any and
all actions which the Manager may request to effect the foregoing and to
reconvey to the Manager any and all rights to such word.
7. MISCELLANEOUS. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
(b) The Trustees of the Fund have authorized the execution of this
Agreement in their capacity as Trustees and not individually and the Manager
agrees that neither the shareholders nor the Trustees nor any officer, employee,
representative or agent of the Fund shall be personally liable upon, nor shall
resort be had to their private property for the satisfaction of, obligations
given, executed or delivered on behalf of or by the Fund, that the shareholders,
Trustees, officers, employees, representatives and agents of the Fund shall not
be personally liable hereunder, and that the Manager shall look solely to the
property of the Fund for the satisfaction of any claim hereunder.
IN WITNESS WHEREOF, the Fund on behalf of the Series and the Manager
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SELIGMAN HIGH INCOME FUND SERIES
BY_________________________________________
Ronald T. Schroeder
J. & W. SELIGMAN & CO. INCORPORATED
BY_________________________________________
Brian T. Zino
<PAGE>
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of December 29, 1988, between THE
SELIGMAN HIGH INCOME FUND SERIES, a Massachusetts business trust (the "Fund") on
behalf of the U.S. GOVERNMENT GUARANTEED SECURITIES SERIES (the "Series"), and
J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager").
In consideration of the mutual agreements herein made, the parties
hereto agree as follows:
1. DUTIES OF THE MANAGER. The Manager shall manage the affairs of the
Series including, but not limited to, continuously providing the Series with
investment management, including investment research, advice and supervision,
determining which securities shall be purchased or sold by the Series, making
purchases and sales of securities on behalf of the Series and determining how
voting and other rights with respect to securities of each Series shall be
exercised, subject in each case to the control of the trustees of the Fund and
in accordance with the objectives, policies and principles set forth in the
Registration Statement and Prospectus of the Series and the requirements of the
Investment Company Act of 1940 (the "Act") and other applicable law. In
performing such duties, the Manager shall provide such office space, such
bookkeeping, accounting, internal legal, clerical, secretarial and
administrative services (exclusive of, and in addition to, any such services
provided by any others retained by the Series) and such executive and other
personnel as shall be necessary for the operations of the Series. The Series
understands that the Manager also acts as the manager of all of the investment
companies in the Seligman Group.
Subject to Section 36 of the Act, the Manager shall not be liable to
the Series 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 the management of the Series
and the performance of its duties under this Agreement except for willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under this
Agreement.
2. EXPENSES. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1 and shall pay such Series'
proportional share or any salaries, fees and expenses of the trustees of the
Fund who are employees of the Manager or its affiliates. The Manager shall not
be required to pay any other expenses of the Series, including, but not limited
to, direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent attorneys and auditors, taxes
and governmental fees, cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase or redemption of
shares, expenses of registering and qualifying shares of the Series for sale
under federal and state securities laws, expenses of printing and distributing
reports, notices and proxy materials to existing shareholders, expenses of
corporate data processing and related services, shareholder recordkeeping and
shareholder account services, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses, expenses of annual and special shareholders'
meetings, fees and disbursements of transfer agents and custodians, expenses of
disbursing dividends and distributions, fees payable under the Administration,
Shareholder Service and Distribution Plan between the Fund and service
organizations, fees and expenses of trustees of the Fund who are not employees
of the Manager or its affiliates, membership dues in the Investment Company
Institute, insurance premiums and extraordinary expenses such as litigation
expenses.
3. COMPENSATION. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Series will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month, at an annual rate of 0.50% of the
Series' average daily net assets.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. PURCHASE AND SALE OF SECURITIES. The Manager shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with respect to
allocation of portfolio transactions as set forth in the Registration Statement
and Prospectus(es) of the Series or as the trustees of the Fund may direct from
time to time. In providing the Series with investment management and
supervision, it is recognized that the Manager will seek the most favorable
price and execution, and, consistent with such policy, may give consideration to
the research, statistical and other services furnished by brokers or dealers to
the Manager for its use, to the general attitude of brokers or dealers toward
investment companies and their support of them, and to such other considerations
as the trustees of the Fund may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Series that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers who execute
brokerage transactions at a higher cost to the Series than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and execution. Therefore, the Manager is authorized to place orders for
the purchase and sale of securities for the Series with such brokers, subject to
review by the trustees of the Series from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Manager in connection with its
services to other clients as well as the Series.
The placing of purchase and sale orders may be carried out by the
Manager or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Series, the Manager or any subsidiary of the Manager may, without material risk,
arrange to receive a soliciting dealer's fee or other underwriter's or dealer's
discount or commission, the Manager shall, unless otherwise directed by the
trustees of the Fund, obtain such fee, discount or commission and the amount
thereof shall be applied to reduce the compensation to be received by the
Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the trustees of the Fund from approving
the payment by the Series of additional compensation to others for consulting
services, supplemental research and security and economic analysis.
5. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect until the earlier of December 29, l989, and from year to year thereafter
if such continuance is approved in the manner required by the Act if the Manager
shall not have notified the Series in writing at least 60 days prior to such
December 29 or prior to December 29 of any year thereafter that it does not
desire such continuance. This agreement may be terminated at any time, without
payment of penalty by the Series, on 60 days' written notice to the Manager by
vote of the trustees of the Fund or by vote of a majority of the outstanding
voting securities of the Series (as defined by the Act). This Agreement will
automatically terminate in the event of its assignment (as defined by the Act).
6. RIGHT OF MANAGER IN CORPORATE NAME. The Manager and the Series each
agree that the word "Seligman", which comprises a component of the Series' name,
is a property right of the Manager. The Series agrees and consents that (i) it
will only use the word "Seligman" as a component of its corporate name and for
no other purpose, (ii) it will not purport to grant to any third party the right
to use the word "Seligman" for any purpose, (iii) the Manager or any corporate
affiliate of the Manager may use or grant to others the right to use the word
"Seligman", or any combination or abbreviation thereof, as all or a portion of a
corporate or business name or for any commercial purpose, including a grant of
such right to any other investment company, and at the request of the Manager,
the Series will take such action as may be required to provide its consent to
the use of the word "Seligman", or any combination or abbreviation thereof, by
the Manager or any corporate affiliate of the Manager, or by any person to whom
the Manager or an affiliate of the Manager shall have granted the right to such
use; and (iv) upon the termination of any management agreement into which the
Manager and the Series may enter, the Series shall, upon request by the Manager,
promptly take such action, at its own expense, as may be necessary to change its
corporate name to one not containing the word "Seligman" and following such
change, shall not use the word Seligman, or any combination thereof, as a part
of its corporate name or for any other commercial purpose, and shall use its
best efforts to cause its officers, trustees and stockholders to take any and
all actions which the Manager may request to effect the foregoing and to
reconvey to the Manager any and all rights to such word.
7. MISCELLANEOUS. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
(b) The Trustees of the Fund have authorized the execution of this
Agreement in their capacity as Trustees and not individually and the Manager
agrees that neither the shareholders nor the Trustees nor any officer, employee,
representative or agent of the Fund shall be personally liable upon, nor shall
resort be had to their private property for the satisfaction of, obligations
given, executed or delivered on behalf of or by the Fund, that the shareholders,
Trustees, officers, employees, representatives and agents of the Fund shall not
be personally liable hereunder, and that the Manager shall look solely to the
property of the Fund for the satisfaction of any claim hereunder.
IN WITNESS WHEREOF, the Fund on behalf of the Series and the Manager
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SELIGMAN HIGH INCOME FUND SERIES
BY_________________________________________
Ronald T. Schroeder
J. & W. SELIGMAN & CO. INCORPORATED
BY_________________________________________
Brian T. Zino
<PAGE>
Consent of Independent Auditors
Seligman High Income Fund Series:
We consent to the incorporation by reference in the Statement of
Additional Information in this Post-Effective Amendment No. 19 to Registration
Statement No. 2-93076 of our report dated February 3, 1995, appearing in the
Annual Report to shareholders for the year ended December 31, 1994, and to the
reference to us under the caption "Financial Highlights" in the Prospectus,
which is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 28, 1995