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 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 22 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 24 |X|
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SELIGMAN 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):
|X| immediately upon filing pursuant to paragraph (b) of rule 485
|_| on (Date) pursuant to paragraph (b) of rule 485
-------------------------
|_| 60 days after filing pursuant to paragraph (a)(i) of rule 485
|_| on (date) pursuant to paragraph (a)(i) of rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii) of rule 485
|_| on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year was filed with the Commission on February
28, 1996.
<PAGE>
File No. 2-93076
811-4103
SELIGMAN HIGH INCOME FUND SERIES
FORM N-1A CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 22
PURSUANT TO RULE 481 (A)
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<CAPTION>
<S> <C>
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; Appendix
13. Investment Objectives and Policies Investment Objectives, 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
Plans
18. Capital Stock and Other Securities General Information
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
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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<PAGE>
SELIGMAN U.S. GOVERNMENT SECURITIES SERIES
a series of
Seligman High Income Fund Series
100 Park Avenue o New York, NY 10017 o 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
January 1, 1997
Seligman High Income Fund Series (the "Fund") is a diversified, open-end
management investment company that offers two different series which seek to
earn high current income by investing in debt securities but have 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 three classes of shares. Class A shares are sold subject
to an initial sales load of up to 4.75% and an annual service fee currently
charged at a rate of up to .25% of the average daily net asset value of the
Class A shares. Class A shares purchased in an amount of $1,000,000 or more are
sold without an initial sales load but are subject to a contingent deferred
sales load ("CDSL") of 1% on redemptions within 18 months of purchase. Class B
shares are sold without an initial sales load but are subject to a CDSL, if
applicable, of 5% on redemptions in the first year after purchase of such
shares, declining to 1% in the sixth year and 0% thereafter, an annual
distribution fee of .75% and an annual service fee of up to .25% of the average
daily net asset value of the Class B shares. Class B shares will convert
automatically to Class A shares on the last day of the month that precedes the
eighth anniversary of their date of purchase. Class D shares are sold without an
initial sales load but are subject to a CDSL of 1% imposed on certain
redemptions within one year of purchase, an annual distribution fee of up to
.75% and an annual service fee of up to .25% of the average daily net asset
value of the Class D shares. Any CDSL payable upon redemption of shares will be
assessed on the lesser of the current net asset value or the original purchase
price of the shares redeemed. No CDSL will be imposed on shares acquired through
the reinvestment of dividends or distributions received from any class of
shares. See "Alternative Distribution System." Shares of the 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 THECONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF SERIES EXPENSES
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<CAPTION>
CLASS A CLASS B CLASS D
--------- ----------- -----------
(Initial Sales (Deferred Sales (Deferred Sales
Load Load Load
Alternative) Alternative) Alternative)
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)............................................. 4.75% None None
Sales Load on Reinvested Dividends............................. None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, whichever is lower).. None; 5% in 1st year 1% in 1st year
except 1% 4% in 2nd year None thereafter
for 18 months 3% in 3rd and
if initial sales 4th years
load was waived 2% in 5th year
due to size 1% in 6th year
of purchase None thereafter
Redemption Fees................................................ None None None
Exchange Fees.................................................. None None None
ANNUAL SERIES OPERATING EXPENSES FOR 1995 CLASS A CLASS B* CLASS D
--------- ----------- -----------
(as a percentage of average net assets)
Management Fees................................................ .50% .50% .50%
12b-1 Fees..................................................... .21% 1.00%** 1.00%**
Other Expenses................................................. .45% .45% .45%
----- ----- -----
Total Series Operating Expenses................................ 1.16% 1.95% 1.95%
===== ===== =====
</TABLE>
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 initial sales loads are available in
certain circumstances. The contingent deferred sales loads on Class B and Class
D shares are one-time charges paid only if shares are redeemed within six years
or one year of purchase, respectively. Class A shares are not subject to an
initial sales load for purchases of $1,000,000 or more; however, such shares are
subject to a contingent deferred sales load, a one-time charge, only if the
shares are redeemed within eighteen months of purchase. The "Other Expenses"
disclosed for Class A and Class D shares have been restated to reflect the
expense allocation methodology currently being used by the Series. For more
information concerning reductions in sales loads and for a more complete
description of the various costs and expenses, see "Purchase Of Shares",
"Redemption Of Shares" and "Management Services" herein. The 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.
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
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 $59 $83 $108 $182
Class B+ $70 $91 $125 $207
Class D $30++ $61 $105 $227
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown and the 5%
annual return used in this example is a hypothetical rate.
* Expenses for Class B shares are estimated because no shares of that Class
were outstanding in the year ended December 31, 1995.
** Includes an annual distribution fee of up to .75% and an annual service fee
of up to .25%. Pursuant to the Rules of the National Association of
Securities Dealers, Inc. the aggregate deferred sales loads and annual
distribution fees on Class B and Class D shares of the Series may not exceed
6.25% of total gross sales, subject to certain exclusions. The 6.25%
limitation is imposed on the Series rather than on a per shareholder basis.
Therefore, a long-term Class B or Class D shareholder of the Series may pay
more in total sales loads (including distribution fees) than the economic
equivalent of 6.25% of such shareholder's investment in such shares.
+ Assuming (1) 5% annual return and (2) no redemption at the end of the period,
the expenses on a $1,000 investment would be $20 for 1 year, 61 for 3 years
and $105 for 5 years.
++ Assuming (1) 5% annual return and (2) no redemption at the end of one year,
the expenses on a $1,000 investment would be $20.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights for the Series' Class A and Class D shares for the
periods presented below have been audited by Deloitte & Touche LLP, independent
auditors. This information, which is derived from the financial and accounting
records of the Series should be read in conjunction with the financial
statements and notes contained in the Fund's 1995 Annual Report and June 30,
1996 Mid-Year Report, which are incorporated by reference in the Fund's
Statement of Additional Information, copies of which may be obtained free of
charge from the Fund at the telephone numbers or address provided on the cover
page of this Prospectus. Financial Highlights are not presented for the Class B
shares because no shares of that Class were outstanding during the periods set
forth below.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from a Class' beginning
net asset value to its ending net asset value so that they may understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, the per share amounts are derived by
converting the actual dollar amounts incurred for each item, as disclosed in the
financial statements, to their equivalent per share amount. The total return
based on net asset value measures the Class' performance assuming investors
purchased shares of the Class 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 any Class. Total returns for periods of less
than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------------------------------------------
6/30/96 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period...... $ 7.15 $ 6.47 $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 7.04 $ 7.06 $ 7.12 $ 8.15 $ 8.12
------- ------- ------ ------- ------- ------- ------- ------ ------- -------- --------
Net investment income**.... .20 .46 .44 .53 .51 .51 .59 .65 .60 .59 .65
Net realized and
unrealized investment
gain (loss).............. (.48) .68 (.71) (.01) (.11) .41 (.15) (.02) (.06) (.84) .56
Increase (decrease) from
investment operations.... (.28) 1.14 (.27) .52 .40 .92 .44 .63 .54 (.25) 1.21
Dividends paid or
declared................. (.20) (.46) (.44) (.53) (.51) (.51) (.59) (.65) (.60) (.59) (.65)
Distributions from
net gain realized........ -- -- -- -- -- -- -- -- -- (.13) (.53)
Return of capital.......... -- -- -- -- -- -- -- -- -- (.06) --
------- ------- ------ ------- ------- ------- ------- ------ ------- ------- --------
Net increase (decrease)
in net asset value....... (.48) .68 (.71) (.01) (.11) .41 (.15) (.02) (.06) (1.03) .03
Net asset value,
end of period............ $ 6.67 $ 7.15 $ 6.47 $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 7.04 $ 7.06 $ 7.12 $ 8.15
======= ======= ====== ======= ======= ======= ======= ======= ======= ======== ========
TOTAL RETURN BASED ON
NET ASSET VALUE ......... (3.86)% 18.15% (3.88)% 7.46% 5.78% 14.05% 6.37% 9.25% 7.84% (2.84)% 16.08%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average
net assets**............. 1.20%+ 1.14% 1.10% 1.11% 1.05% 1.10% 1.06% 1.09% 1.09% 1.13% 1.10%
Net investment income to
average net assets**..... 6.03%+ 6.71% 6.49% 7.22% 7.17% 7.39% 8.66% 9.16% 8.33% 7.82% 7.19%
Portfolio turnover......... 109.72% 213.06% 445.18% 170.35% 126.17% 95.46 306.05% 226.25% 263.15% 282.99% 245.86%
Net assets, end of period
(000's omitted).......... $48,258 $55,061 $54,714 $69,805 $55,732 $64,440 $71,735 $83,850 $106,720 $123,556 $154,919
</TABLE>
CLASS D
-------------------------------------
YEAR ENDED
SIX MONTHS DECEMBER 31, 9/21/93*
ENDED ------------- TO
6/30/96 1995 1994 12/31/93
------- ---- ---- --------
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period...... $7.16 $ 6.48 $ 7.20 $ 7.33
----- ------- ------ ------
Net investment income**.... .18 .40 .37 .09
Net realized and
unrealized investment
gain (loss).............. (.48) .68 (.72) (.13)
Increase (decrease) from
investment operations.... (.30) 1.08 (.35) (.04)
Dividends paid or
declared................. (.18) (.40) (.37) (.09)
Distributions from
net gain realized........ -- -- -- --
Return of capital.......... -- -- -- --
----- ------ ------ ------
Net increase (decrease)
in net asset value....... (.48) .68 (.72) (.13)
Net asset value,
end of period............ $6.68 $ 7.16 $ 6.48 $ 7.20
===== ======= ====== ======
TOTAL RETURN BASED ON
NET ASSET VALUE ......... (4.23)% 17.10% (5.05)% (.65)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average
net assets**............. 1.98% +2.01% 2.22% 2.09%+
Net investment income to
average net assets**..... 5.25%+ 5.84% 5.40% 5.28%+
Portfolio turnover......... 109.72% 213.06% 445.18% 170.35%++
Net assets, end of period
(000's omitted).......... $8,151 $ 8,181 $6,062 $2,317
- -----------------
*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 $.65 and $.58 for the Series for the years ended December 31, 1986 and
1987, respectively. For the same years, the ratios of expenses to average net
assets for the Series would have been 1.14%, and 1.15%, respectively, and the
ratios of net investment income to average net assets for the Series would
have been 7.16% and 7.79%, respectively.
+Annualized.
++For the year ended December 31, 1993.
3
<PAGE>
ALTERNATIVE DISTRIBUTION SYSTEM
The Series offers three classes of shares. Class A shares are sold to
investors who have concluded that they would prefer to pay an initial sales load
and have the benefit of lower continuing fees. Class B shares are sold to
investors choosing to pay no initial sales load, a higher distribution fee and a
CDSL with respect to redemptions within six years of purchase and who desire
shares to convert automatically to Class A shares after eight years. Class D
shares are sold to investors choosing to pay no initial sales load, a higher
distribution fee and, with respect to redemptions within one year of purchase, a
CDSL. The Alternative Distribution System allows investors to choose the method
of purchasing shares that is most beneficial in light of the amount of the
purchase, the length of time the shares are expected to be held and other
relevant circumstances. Investors should determine whether under their
particular circumstances it is more advantageous to incur an initial sales load
and be subject to lower ongoing fees, as discussed below, or to have the entire
initial purchase price invested in the Series with the investment thereafter
being subject to higher ongoing fees and either a CDSL for a six-year period
with automatic conversion to Class A shares after eight years or a CDSL for a
one-year period with no automatic conversion to Class A shares.
Investors who expect to maintain their investment for an extended period of
time might choose to purchase Class A shares because over time the accumulated
continuing distribution fees of Class B and Class D shares may exceed the
initial sales load and lower distribution fee of Class A shares. This
consideration must be weighed against the fact that the amount invested in the
Series will be reduced by the initial sales load on Class A shares deducted at
the time of purchase. Furthermore, the higher distribution fees on Class B and
Class D shares will be offset to the extent any return is realized on the
additional funds initially invested therein that would have been equal to the
amount of the initial sales load on Class A shares.
Investors who qualify for reduced initial sales loads, as described under
"Purchase Of Shares" below, might also choose to purchase Class A shares because
the initial sales load deducted at the time of purchase would be less. However,
investors should consider the effect of the 1% CDSL imposed on shares on which
the initial sales load was waived because the amount of Class A shares purchased
reached $1,000,000. In addition, Class B shares will be converted into Class A
shares after a period of approximately eight years, and thereafter investors
will be subject to lower ongoing fees. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Alternatively, some investors might choose to have all of their funds
invested initially in Class B or Class D shares, although remaining subject to a
higher continuing distribution fee and, for a six-year or one-year period, a
CDSL as described below. For example, an investor who does not qualify for
reduced sales loads would have to hold Class A shares for more than 6.33 years
for the Class B or Class D distribution fee to exceed the initial sales load
plus the distribution fee on Class A shares. This example does not take into
account the time value of money, which further reduces the impact of the Class B
and Class D shares' 1% distribution fee, other expenses charged to each class,
fluctuations in net asset value or the effect of the return on the investment
over this period of time.
Investors should bear in mind that the total asset based sales charges
(i.e., the higher continuing distribution fee plus the CDSL) on Class B shares
that are redeemed may exceed the total asset based sales charges that would be
payable on the same amount of Class A or Class D shares, particularly if the
Class B shares are redeemed shortly after purchase or if the investor qualifies
for a reduced sales load on the Class A shares.
Investors should understand that the purpose and function of the initial
sales load (and deferred sales load, when applicable) with respect to Class A
shares is the same as those of the deferred sales loads and higher distribution
fees with respect to Class B and Class D shares in that the sales loads and
distribution fees applicable to each class provide for the financing of the
distribution of the shares of the Series.
4
<PAGE>
Class B and Class D shares are subject to the same ongoing distribution
fees but Class D shares are subject to a CDSL for a shorter period of time (one
year as opposed to six years) than Class B shares. However, unlike Class D
shares, Class B shares automatically convert to Class A shares, which are
subject to lower ongoing distribution fees.
The three classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and, potentially, certain
other class expenses and has exclusive voting rights with respect to any matter
to which a separate vote of any class is required by the Investment Company Act
of 1940, as amended (the "1940 Act"), or 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 and other expenses of each class.
Class B and Class D shares bear higher distribution fees, which will cause the
Class B and Class D shares to pay lower dividends than the Class A shares. The
three classes also have separate exchange privileges.
The Trustees of the Fund believe that no conflict of interest currently
exists between the Class A, Class B 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 differences between Class A, Class
B and Class D shares are their sales load structures and ongoing expenses as set
forth below. The primary differences between Class B and Class D shares are that
Class D shares are subject to a shorter CDSL period and a lower CDSL rate but
Class B shares automatically convert to Class A shares after eight years,
resulting in a reduction in ongoing fees. Investors in Class B shares should
take into account whether they intend to redeem their shares within the CDSL
period and, if not, whether they intend to remain invested until the end of the
conversion period and thereby take advantage of the reduction in ongoing fees
resulting from the conversion to Class A shares. Other investors, however, may
elect to purchase Class D shares if they determine that it is advantageous to
have all their assets invested initially and they are uncertain as to the length
of time they intend to hold their assets in the Series or another mutual fund in
the Seligman Group for which the exchange privilege is available. Although Class
D shareholders are subject to a shorter CDSL period at a lower rate, they forgo
the Class B automatic conversion feature, making their investment subject to
higher distribution fees for an indefinite period of time. Each class has
advantages and disadvantages for different investors, and investors should
choose the class that best suits their circumstances and their objectives.
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES
INITIAL (AS A % OF AVERAGE
SALES LOAD DAILY NET ASSETS) OTHER INFORMATION
---------- --------------- ---------------
<S> <C> <C> <C>
CLASS A Maximum initial Service fee of Initial sales load
sales load of 4.75% .25%. waived or reduced
of the public for certain
offering price. purchases.
CDSL of 1% on redemptions within 18
months of purchase on shares on which
initial sales load was waived due to
size of purchase.
CLASS B None Service fee of CDSL of:
.25%; Distribution 5% in 1st year
fee of .75% until 4% in 2nd year
conversion.* 3% in 3rd and
4th years 2% in 5th year 1% in 6th
year 0% after 6th year.
CLASS D None Service fee of CDSL of 1% on
.25%; Distribution redemptions
fee of up to .75%. within one year of
purchase.
</TABLE>
*Conversion occurs at the end of the month which precedes the 8th anniversary of
the purchase date. If Class B shares of the Series are exchanged for Class B
shares of another Seligman Mutual Fund, the conversion period applicable to the
Class B shares acquired in the exchange will apply, and the holding period of
the shares exchanged will be tacked onto the holding period of the shares
acquired.
5
<PAGE>
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
objective 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). There can be no assurance that
the Series' investment objective will be obtained.
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 U.S. 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 pool's
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
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
6
<PAGE>
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.
GENERAL. 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 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 Series means the affirmative vote of
the lesser of (1) more than 50% of the outstanding shares of the Series or (2)
67% or more of the shares of the Series present at a shareholders' meeting if
more than 50% of the outstanding shares 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
7
<PAGE>
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 were approximately $14.4 billion at November 30, 1996. The
Manager also provides investment management or advice to institutional accounts
having an aggregate value at November 30, 1996 of approximately $4.2 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 of the Fund in a
manner determined by the Trustees to be fair and equitable. Total expenses of
the Series' Class A and Class D shares for the year ended December 31, 1995
amounted to 1.14% and 2.01%, respectively, of the average daily net assets of
each class. No Class B shares of the Series were outstanding during this period.
PORTFOLIO MANAGER. Mr. Leonard J. Lovito, Vice President of the Manager,
has been Vice President and Portfolio Manager of the Series since January 1994.
Mr. Lovito also serves as Vice President and Portfolio Manager of Seligman Cash
Management Fund, Inc. and Vice President of Seligman Portfolios, Inc. ("SPI")
and Portfolio Manager of SPI's Seligman Cash Management Portfolio and Seligman
Fixed Income Securities Port-folio. 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, the Lipper General U.S. Government
Funds Index and the Lehman Brothers Government Bond Index is included in the
Fund's 1995 Annual Report to Shareholders. Copies of the 1995 Annual Report may
be obtained, without charge, by calling or writing the Fund at the telephone
numbers or address listed on the cover page of this Prospectus.
PORTFOLIO TRANSACTIONS. 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 Manger for
its use in connection with its services to the Fund as well as to other clients.
8
<PAGE>
Consistent with the Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees of the Fund may determine, the
Manager may consider sales of shares of the Series 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, NY 10017.
The Fund issues three classes of shares: Class A shares are sold to
investors choosing the initial sales load alternative; Class B shares are sold
to investors choosing to pay no initial sales load, a higher distribution fee
and a CDSL with respect to redemptions within six years of purchase and who
desire shares to convert automatically to Class A shares after eight years; and
Class D shares are sold to investors choosing no initial sales load, a higher
distribution fee and a CDSL on redemptions within one year of purchase. See
"Alternative Distribution System" above.
Shares of the 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;
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. EXCEPTIONS TO
THESE MINIMUMS ARE AVAILABLE FOR ACCOUNTS BEING ESTABLISHED CONCURRENTLY WITH
THE INVEST-A-CHECK(R) SERVICE OR THE SELIGMAN TIME HORIZON MATRIXSM.
No purchase order may be placed for Class B shares for an amount of
$250,000 or more.
Orders received by an authorized dealer before the close of the New York
Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern time) and accepted by SFSI
before the close of business (5:00 p.m. Eastern time) on the same day will be
executed at the Series' net asset value determined as of the close of the NYSE
on that day plus, in the case of Class A shares, any applicable sales load.
Orders 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, any applicable sales load.
The authorized dealer through which a shareholder purchases shares is
responsible for forwarding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire
payment, dealer orders must first be placed through 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, B or D), A/C #107-1011. WIRE TRANSFERS MUST INCLUDE THE
PURCHASE CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER.
Persons other than dealers who wish to wire payment should contact Seligman Data
Corp. for specific wire instructions. Although the Fund makes no charge for this
service, the transmitting bank may impose a wire service fee.
9
<PAGE>
Current shareholders may purchase additional shares of the Series through
any authorized dealer or by sending a check payable to the "Seligman Group of
Funds" in our postage-paid return envelope or directly to P.O. BOX 3947, NEW
YORK, NY 10008-3947. Checks for investment must be in U.S. dollars drawn on a
domestic bank. The check should be accompanied by an investment slip (provided
on the bottom of shareholder account statements or with periodic reports) and
include the shareholder's name, address, account number, name of Series and
class of shares (A, B or D). If a shareholder does not provide the required
information, Seligman Data Corp. will seek further clarification and may be
forced to return the check to the shareholder. Orders sent directly to Seligman
Data Corp. will be executed at the Series' net asset value next determined after
the order is accepted plus, in the case of Class A shares, any applicable sales
load.
Seligman Data Corp. will charge a $10.00 service fee for checks returned to
it as uncollectable. This charge may be deducted from the shareholder's account.
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 (normally,
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 Fund's 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.
Although the legal rights of Class A, Class B and Class D shares are
substantially identical, the different expenses borne by each class will result
in different net asset values and dividends. The net asset value of Class B and
Class D shares will generally be lower than the net asset value of Class A
shares as a result of the higher distribution fees charged to Class B and Class
D shares. In addition, net asset value per share of the three classes will be
affected to the extent any other expenses differ among classes.
CLASS A SHARES--INITIAL SALES LOAD. Class A shares are subject to an
initial sales load which varies with the size of the purchase as shown in the
following schedule, and an annual service fee of up to .25% of the average daily
net asset value of Class A shares. See "Administration, Shareholder Services and
Distribution Plan" below. There is no initial sales load on purchases of Class A
shares of $1,000,000 or more; however, such shares are subject to a CDSL of 1%
if redeemed within 18 months of purchase.
CLASS A SHARES--SALES LOAD SCHEDULE
SALES LOAD AS A REGULAR
PERCENTAGE OF DEALER
------------------ DISCOUNT
NET AMOUNT AS A
INVESTED %OF
OFFERING (NET ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE) PRICE
----------------------- ------- --------- -------
Less than -$ 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- or more* 0 0 0
* Shares acquired at net asset value pursuant to the above schedule will be
subject to a CDSL of 1% if redeemed within 18 months of purchase. See
"Purchase of Shares--Contingent Deferred Sales Load."
SFSI shall pay broker/dealers, from its own resources, a fee on sales of
$1,000,000 or more, calculated as follows: 1.00% of sales up to but not
including $2 million; .80% of sales from $2 million up to but not including $3
million; .50% of sales from $3 million up to
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<PAGE>
but not including $5 million; and .25% of sales from $5 million and above. The
calculation of the fee will be based on assets held by a "single person" as
defined below.
SFSI shall pay broker/dealers, from its own resources, an additional fee on
assets of certain Class A shares of the Seligman Mutual Funds, including the
Series, participating in an "eligible employee benefit plan" (as defined below
under "Special Programs") that are attributable to the particular broker/dealer.
The shares eligible for the fee are those on which an initial sales load was not
paid because either the participating eligible employee benefit plan has at
least (i) $500,000 invested in the Seligman Group of Mutual Funds or (ii) 50
eligible employees to whom such plan is made available. Class A shares
representing only an initial purchase of Seligman Cash Management Fund are not
eligible for the fee. Such shares will become eligible for the fee once they are
exchanged for shares of another Seligman Mutual Fund. The payment is based on
cumulative sales during a calendar year, or portion thereof. The payment
schedule, for each calendar year, is as follows: 1.00% of sales up to but not
including $2 million; .80% of sales from $2 million up to but not including $3
million; .50% of sales from $3 million up to but not including $5 million; and
.25% of sales from $5 million and above.
REDUCED SALES LOADS. Reductions in initial sales loads apply to purchases
of Class A shares by a "single person," including an individual, members of a
family unit comprising husband, wife, and minor children purchasing securities
for their own account, or a trustee or other fiduciary purchasing for a single
fiduciary account or single trust. Purchases made by a trustee or other
fiduciary for a fiduciary account may not be aggregated with purchases made on
behalf of any other fiduciary or individual account.
Shares purchased without an initial sales load in accordance with the sales
load schedule or pursuant to a Volume Discount, Right of Accumulation or Letter
of Intent are subject to a CDSL of 1% on redemptions within eighteen months of
purchase.
o VOLUME DISCOUNTS are provided if the total amount being invested in Class
A shares of the Series alone, or in any combination of shares of the Seligman
Mutual Funds that are sold with an initial sales load, reaches levels indicated
in the above sales load schedule.
o THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in shares of the other Seligman Mutual Funds sold with an initial sales
load with the total net asset value of shares of those Seligman Mutual Funds
already owned that were sold with an initial sales load and the total net asset
value of shares of Seligman Cash Management Fund that were acquired by the
investor through an exchange of shares of another Seligman Mutual Fund on which
there was an initial sales load to determine reduced sales loads in accordance
with the sales load schedule. An investor or a dealer purchasing shares on
behalf of 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 initial 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 Seligman Mutual Funds already owned that were sold with
an initial sales load and the total net asset value of shares of Seligman Cash
Management Fund that were acquired through an exchange of shares of another
Seligman Mutual Fund on which there was an initial sales load. An investor or a
dealer purchasing Class A shares on behalf of 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 27.
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 family members of the foregoing) of the Fund, the other investment
companies in the Seligman Group, the Manager and other companies affiliated with
the
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<PAGE>
Manager. Family members are defined to include lineal descendants and lineal
ancestors, siblings (and their spouses and children) and any company or
organization controlled by any of the foregoing. Such sales also may be made to
employee benefit and thrift plans for such persons and to any investment
advisory, custodial, trust or other fiduciary account managed or advised by the
Manager or any affiliate.
Class A shares also may be issued without an initial sales load in
connection with the acquisition of cash and 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" which have at least (i) $500,000 invested in
the Seligman Group of Mutual Funds or (ii) 50 eligible employees to whom such
plan is made available. "Eligible employee benefit plan" means any plan or
arrangement, whether or not tax qualified, which provides for the purchase of
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.
Section 403(b) plans sponsored by public educational institutions are not
eligible for net asset value purchases based on the aggregate investment made by
the plan or number of eligible employees. Employee benefit plans eligible for
net asset value sales, as described above, will be subject to a CDSL of 1% for
terminations at the plan level only, on redemptions of shares purchased within
eighteen months prior to plan termination. Sales pursuant to the Merrill Lynch
MLII multi-manager 401(k) product are available at net asset value and are not
subject to a CDSL.
CLASS B SHARES. Class B shares are sold without an initial sales load but
are subject to a CDSL if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
YEARS SINCE PURCHASE CDSL
- --------------- ----
less than 1 year...................................... 5%
1 year or more but less than 2 years.................. 4%
2 years or more but less than 3 years................. 3%
3 years or more but less than 4 years................. 3%
4 years or more but less than 5 years................. 2%
5 years or more but less than 6 years................. 1%
6 years or more....................................... 0%
Class B shares are also subject to an annual distribution fee of .75% and
an annual service fee of up to .25% of the average daily net asset value of the
Class B shares. SFSI will make a 4% payment to dealers in respect of purchases
of Class B shares. Approximately eight years after purchase, Class B shares will
convert automatically to Class A shares, which are subject to an annual service
fee of .25% but no distribution fee. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Conversion occurs at the end of the month which precedes the eighth anniversary
of the purchase date. If Class B shares of the Series are exchanged for Class B
shares of another Seligman Mutual Fund, the conversion period applicable to the
Class B shares acquired in the exchange will apply, and the holding period of
the shares exchanged
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<PAGE>
will be tacked onto the holding period of the shares acquired. Class B
shareholders of the Series exercising the exchange privilege will continue to be
subject to the Series' CDSL schedule if such schedule is higher or longer than
the CDSL schedule relating to the new Class B shares. In addition, Class B
shares of the Series acquired by exchange will be subject to the Series' CDSL
schedule if such schedule is higher or longer than the CDSL schedule relating to
the original Class B shares.
CLASS D SHARES. Class D shares are sold without an initial sales load but
are subject to a CDSL if the shares are redeemed within one year, an annual
distribution fee of up to .75% and an annual service fee of up to .25%, of the
average daily net asset value of the Class D shares. SFSI will make a 1% payment
to dealers in respect of purchases of Class D shares. Unlike Class B shares,
Class D shares do not automatically convert to Class A shares after eight years.
CONTINGENT DEFERRED SALES LOAD. A CDSL will be imposed on any redemption of
Class B or Class D shares which were purchased during the preceding six years
(for Class B shares) or twelve months (for Class D shares). The amount of any
CDSL will be used by SFSI to defray the expense of the payment of 4% (in the
case of Class B shares) or 1% (in the case of Class D shares) made by it to
Service Organizations (as defined under "Administration, Shareholder Services
and Distribution Plan") at the time of sale. Pursuant to an agreement with FEP
Capital, L.P. ("FEP") to fund payments in respect of Class B shares, SFSI has
agreed to sell any Class B CDSL to FEP.
A CDSL of 1% will also be imposed on any redemption of Class A shares
purchased during the preceding eighteen months if such shares were acquired at
net asset value pursuant to the sales load schedule provided under "Class A
Shares--Initial Sales Load." Employee benefit plans eligible for net asset value
sales as described above under "Special Programs" may be subject to a CDSL of 1%
for terminations at the plan level only, on redemptions of shares purchased
within eighteen months prior to plan termination. No CDSL will be imposed on
shares acquired though the investment of dividends or distributions from any
Class A, Class B or Class D shares of mutual funds in the Seligman Group.
To minimize the application of a CDSL to a redemption, shares acquired
pursuant to the investment of dividends and distributions (which are not subject
to a CDSL) will be redeemed first; followed by shares held for a period of time
longer than the applicable CDSL period. Shares held for the longest period of
time within the applicable period will then be redeemed. Additionally, for those
shares determined to be subject to a CDSL, the CDSL will be assessed on the
current net asset value or original purchase price, whichever is less.
For example, assume an investor purchased 100 Class D shares in January at
a price of $10.00 per share. During the first year, 5 additional Class D shares
were acquired through investment of dividends and distributions. In January of
the following year, an additional 50 Class D shares were purchased at a price of
$12.00 per share. In March of that year, the investor chooses to redeem
$1,500.00 from the account which now holds 155 Class D shares with a total value
of $1,898.75 ($12.25 per share). The CDSL for this transaction would be
calculated as follows:
Total shares to be redeemed
(122.449 @ $12.25) as follows: $1,500.00
=========
Dividend/Distribution shares
(5 @ $12.25) $ 61.25
Shares 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
=========
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For Federal income tax purposes, the amount of the CDSL will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as
defined in section 72 (m)(7) of the Internal Revenue Code of 1986, as amended
(the "Code"); (b) in connection with (i) distributions from retirement plans
qualified under section 401(a) of the Code when such redemptions are necessary
to make distributions to plan participants (such payments include, but are not
limited to death, disability, retirement, or separation of service), (ii)
distributions from a custodial account under section 403 (b)(7) of the Code or
an individual 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; and (f) in connection with the redemption of shares of the
Series if the Series is combined with another mutual fund in the Seligman Group,
or another similar reorganization transaction.
If, with respect to a redemption of any Class A, Class B or Class D shares
sold by a dealer, the CDSL is waived because the redemption qualifies for a
waiver as set forth above, the dealer shall remit to SFSI promptly upon notice,
an amount equal to the payment or a portion of the payment made by SFSI at the
time of sale of such shares.
SFSI may from time to time assist dealers by, among other things, providing
sales literature to, and holding informational programs for the benefit of,
dealers' registered representatives. Dealers may limit the participation of
registered representatives in such informational programs by means of sales
incentive programs which may require the sale of minimum dollar amounts of
shares of the mutual funds in the Seligman Group. SFSI may from time to time pay
a bonus or other incentive to dealers that sell shares of the Seligman Mutual
Funds. In some instances, these bonuses or incentives may be offered only to
certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Series 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 with telephone transaction privileges, AND THE SHAREHOLDER'S
BROKER/DEALER REPRESENTATIVE, will have the ability to effect the following
transactions via telephone: (i) redemption of Series shares, (ii) exchange of
Series shares for shares of the same class of another Seligman Mutual Fund,
(iii) change of a dividend and/or capital gain distribution option, and (iv)
change of address. All telephone transactions are effected through Seligman Data
Corp. at (800) 221-2450.
FOR INVESTORS WHO PURCHASE SHARES BY COMPLETING AND SUBMITTING AN ACCOUNT
APPLICATION (EXCEPT THOSE ACCOUNTS REGISTERED AS TRUSTS (UNLESS THE TRUSTEE AND
SOLE BENEFICIARY ARE THE SAME PERSON), CORPORATIONS OR GROUP RETIREMENT PLANS):
Unless an election is made otherwise on the Account Application, a shareholder
and the shareholder's broker/dealer of record, as designated on the Account
Application, will automatically receive telephone services.
FOR INVESTORS WHO PURCHASE SHARES THROUGH A BROKER/DEALER: Telephone
services for a shareholder and the shareholder's representative may be elected
by
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completing a supplemental election application available from the broker/dealer
of record.
FOR ACCOUNTS REGISTERED AS IRAS: Telephone services will include only
exchanges or address changes.
FOR ACCOUNTS REGISTERED AS TRUSTS (UNLESS THE TRUSTEE AND SOLE BENEFICIARY
ARE THE SAME PERSON), CORPORATIONS OR GROUP RETIREMENT PLANS: Telephone
redemptions are not permitted. Additionally, group retirement plans are not
permitted to change a dividend or gain distribution option.
All Seligman Mutual Funds with the same account number (i.e., registered
exactly the same) as an existing account, including any new fund in which the
shareholder invests in the future, will automatically include telephone services
if the existing account has telephone services. Telephone services may also be
elected at any time on a supplemental election application.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or requesting
telephone services, authorizes each of the other owners to effect telephone
transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative may experience difficulty in contacting Seligman
Data Corp. to request a redemption or exchange of Series shares via telephone.
In these circumstances, the shareholder or the shareholder's representative
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 request being processed at a later time than if a telephone
transaction had been used, and the Series' net asset value may fluctuate during
such periods.
The Fund and Seligman Data Corp. will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These will
include: recording all telephone calls requesting account activity, requiring
that the caller provide certain requested personal and/or account information at
the time of the call for the purpose of establishing the caller's identity, and
sending a written confirmation of redemptions, exchanges or address changes to
the address of record each time activity is initiated by telephone. As long as
the Fund and Seligman Data Corp. follow instructions communicated by telephone
that were reasonably believed to be genuine at the time of their receipt,
neither they nor any of their affiliates will be liable for any loss to the
shareholder caused by an unauthorized transaction. In any instance where the
Fund or Seligman Data Corp. is not reasonably satisfied that instructions
received by telephone are genuine, the requested transaction will not be
executed, and neither they nor any of their affiliates will be liable for any
losses which may occur due to a delay in implementing the transaction. If the
Fund or Seligman Data Corp. does not follow the procedures described above, the
Fund or Seligman Data Corp. may be liable for any losses due to unauthorized or
fraudulent instructions. Telephone transactions must be effected through a
representative of Seligman Data Corp., i.e., requests may not be communicated
via Seligman Data Corp.'s automated telephone answering system. Shareholders, of
course, may refuse or cancel telephone services. Telephone services may be
terminated by a shareholder at any time by sending a written request to Seligman
Data Corp. TELEPHONE SERVICES MAY NOT BE ESTABLISHED BY A SHAREHOLDER'S
BROKER/DEALER WITHOUT THE WRITTEN AUTHORIZATION OF THE SHAREHOLDER. Written
acknowledgment of the addition of telephone services to an existing account or
termination of telephone services will be sent to the shareholder at the address
of record.
REDEMPTION OF SHARES
A shareholder may redeem shares held in book credit form without charge,
(except a CDSL, if applicable) at any time by SENDING A WRITTEN REQUEST to
Seligman Data Corp., P.O. Box 3947, New York, NY 10008-3947; or if request is
being sent by overnight delivery service, to 100 Park Avenue, New York, N Y
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 certifi-
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<PAGE>
cates 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 Series name, account number, class of shares (A, B or D) and
the number of shares or dollar amount to be redeemed. The Fund cannot accept
conditional redemption requests (i.e., requests to sell shares at a specific
price or on a future date). If the redemption proceeds are (i) $50,000 or more,
(ii) to be paid to someone other than the shareholder of record (regardless of
the amount) or (iii) to be mailed to other than the address of record
(regardless of the amount), the signature(s) of the shareholder(s) must be
guaranteed by an eligible financial institution including, but not limited to,
the following: banks, trust companies, credit unions, securities brokers and
dealers, savings and loan associations and participants in the Securities
Transfer Association Medallion Program (STAMP), the Stock Exchanges Medallion
Program (SEMP) 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 A CORPORATION, EXECUTOR, ADMINISTRATOR, TRUSTEE,
CUSTODIAN OR RETIREMENT PLAN. FOR FURTHER INFORMATION WITH RESPECT TO REDEMPTION
REQUIREMENTS, PLEASE CONTACT THE SHAREHOLDER SERVICES DEPARTMENT OF SELIGMAN
DATA CORP. FOR ASSISTANCE.
In the case of Class A shares (except for shares purchased without an
initial sales load due to the size of the purchase), and in the case of Class B
shares redeemed after six years and Class D shares redeemed after one year, a
shareholder will receive the net asset value per share next determined after
receipt of a request in good order. If Class A shares which were purchased
without an initial sales load because the purchase amount was $1,000,000 or
more, are redeemed within eighteen months of purchase, a shareholder will
receive the net asset value per share next determined after receipt of a request
in good order, less a CDSL of 1% as described under "Purchase Of Shares--Class A
Shares-- Initial Sales Load" above. If Class B shares are redeemed within six
years of purchase, A shareholder will receive the net asset value per share next
determined after receipt of a request in good order, less the applicable CDSL as
described under "Purchase Of Shares--Class B Shares" above. If Class D shares
are redeemed within one year of purchase, a shareholder will receive the net
asset value per share next determined after receipt of a request in good order,
less a CDSL of 1% as described under "Purchase Of Shares--Class D Shares" above.
A shareholder also may "sell" shares to the Fund through an investment
dealer and, in that way, be certain, providing the order is timely, of receiving
the net asset value established at the end of the day on which the dealer is
given the repurchase order (less any applicable CDSL). The Fund 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, less any applicable CDSL. Repurchase orders
received from authorized dealers after the close of the NYSE or not received by
SFSI prior to the close of business, will be executed at the net asset value
determined as of the close of the NYSE on the next trading day, less any
applicable CDSL. Shares held in a "street name" account with a broker/dealer may
be sold to the Fund only through a broker/dealer.
TELEPHONE REDEMPTIONS. Telephone redemptions of uncertificated shares may
be made once per day, in an amount of up to $50,000 per account. Telephone
redemption requests received by Seligman Data Corp. at (800) 221-2450 between
8:30 a.m. and 4:00 p.m. Eastern time, on any business day will be processed as
of the close of business on that day. Redemption requests by telephone will not
be accepted within 30 days follow-
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<PAGE>
ing an address change. Keogh Plans, IRAs or other retirement plans are not
eligible for telephone redemptions. The Fund reserves the right to suspend or
terminate the telephone redemption service at any time without notice.
For more information about telephone redemptions and the circumstances under
which a shareholder may bear the risk of loss for a fraudulent transaction, see
"Telephone Transactions" above.
CHECK REDEMPTION SERVICE. The Check Redemption Service allows a shareholder
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. Holders of Class A shares should
bear in mind that check redemptions of Class A shares acquired at net asset
value due to the size of the purchase may be subject to a CDSL. Holders of Class
B shares may use this service although check redemptions of Class B shares may
be subject to a CDSL. Holders of Class D shares may use this service with
respect to shares that have been held for at least one year. Dividends continue
to be earned through the date preceding the date the check clears for payment.
Use of this service is subject to Boston Safe Deposit and Trust Co. rules and
regulations covering checking accounts. Separate checkbooks will be furnished
for each series of the Fund.
There is no charge for use of checks. When honoring a check that was
processed for payment, Boston Safe Deposit and Trust Co. will cause the Series
to redeem exactly enough full and fractional shares from an account to cover the
amount of the check and any applicable CDSL. 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 AS
UNCOLLECTABLE. THIS CHARGE MAY BE DEDUCTED FROM THE SHAREHOLDER'S
ACCOUNT.
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 Boston Safe Deposit and Trust Co. See "Terms and Conditions"
on page 27.
GENERAL. With respect to shares redeemed, a check for the proceeds will be
sent to the shareholders' address of record within seven calendar days after
acceptance of the redemption order and will be made payable to all of the
registered owners on the account. With respect to shares repurchased by the
Fund, a check for the proceeds will be sent to the investment dealer within
seven calendar days after acceptance of the repurchase order and will be made
payable to the investment dealer. The Fund will not permit redemptions of shares
with respect to shares purchased by check (unless certified) until 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 would be sent a
notice before such redemption is processed stating that the value of their
17
<PAGE>
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 to reinvest them, or to shift the investment to one of the other
Seligman Mutual Funds, the shareholder may, within 120 calendar days of the date
of redemption, use all or any part of the proceeds of the redemption to
reinstate, free of an initial sales load, all or any part of the investment in
shares of the Series or in shares of one of the other Seligman Mutual Funds. If
a shareholder redeems shares and the redemption was subject to a CDSL, the
shareholder may reinstate the investment in shares of the same class of the
Series or any of the other Seligman Mutual Funds within 120 calendar days of the
date of redemption and receive a credit for the CDSL paid. Such investment will
be reinstated at the net asset value per share established as of the close of
the NYSE on the day the request is received. Seligman Data Corp. must be
informed that the purchase is a reinstated investment. REINSTATED SHARES MUST BE
REGISTERED EXACTLY AND BE OF THE SAME CLASS AS THE SHARES PREVIOUSLY REDEEMED;
AND THE MINIMUM INVESTMENT MUST BE MET AT THE TIME OF REINSTATEMENT.
Generally, exercise of the Reinstatement Privilege does not alter the
Federal income tax status of any capital gain realized on a sale of 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 Series' 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, Class B and
Class D shares. Payments under the Plan may include, but are not limited to: (i)
compensation to securities dealers and other organizations ("Service
Organizations") for providing distribution assistance with respect to assets
invested in the 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, 1995 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 Series reimburses SFSI for its expenses with respect to
Class B and Class D shares at an annual rate of up to 1% of the respective
average daily net asset value of the Class B and Class D shares. Proceeds from
the Class B distribution fees
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<PAGE>
are used to pay Service Organizations a continuing fee of up to .25% on an
annual basis of the average daily net asset value of Class B shares attributable
to particular Service Organizations for providing personal service and/or the
maintenance of shareholder accounts and will also be used by SFSI to defray the
expense of the payment of 4% made by it to Service Organizations at the time of
the sale of Class B shares. Proceeds from the Class D distribution fees are used
primarily to compensate Service Organizations for administration, shareholder
services and distribution assistance (including a continuing fee of up to .25%
on an annual basis of the average daily net asset value of Class D shares
attributable to particular Service Organizations for providing personal service
and/or maintenance of shareholder accounts) and will initially be used by SFSI
to defray the expense of the payment of 1% made by it to Service Organizations
at the time of sale of Class D shares. The amounts expended by SFSI in any one
year upon the initial purchase of Class B and Class D shares may exceed the
amounts received by it from Plan payments retained. Expenses of administration,
shareholder services and distribution of Class B and Class D shares in one
fiscal year may be paid from Class B and Class D Plan fees, respectively,
received in any other fiscal year.
The Plan, as it relates to Class B shares, was approved by the Trustees on
September 19, 1996. 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, 1995 by the
Series' Class D shares pursuant to the Plan was 1% per annum of the average
daily net assets of the Class D shares.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI acts 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.
EXCHANGE PRIVILEGE
A shareholder of the Series may, without charge, exchange at net asset
value any part or all of an investment in the Series for shares of the other
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 the
shareholder has telephone services.
Class A, Class B and Class D shares may be exchanged only for Class A,
Class B and Class D shares, respectively, of the other series of the Fund or
another mutual fund in the Seligman Group on the basis of relative net asset
value.
If shares that are subject to a CDSL are exchanged for shares of another
Seligman Mutual Fund, then for purposes of assessing the CDSL payable upon
disposition of the exchanged shares, the applicable holding period shall be
reduced by the holding period of the original shares.
Class B shareholders of the Series exercising the exchange privilege will
continue to be subject to the Series' CDSL schedule if such schedule is higher
or longer than the CDSL schedule relating to the new Class B shares. In
addition, Class B shares of the Series acquired through exchange will be subject
to the Series' CDSL schedule if such schedule is higher or longer than the CDSL
schedule relating to the Class B shares of the Fund from which the exchange has
been made.
The Seligman Mutual Funds available under the Exchange Privilege are:
o SELIGMAN CAPITAL FUND, INC. seeks aggressive capital appreciation.
Current income is not an objective.
o SELIGMAN CASH MANAGEMENT FUND, INC. invests in high quality money market
instruments. Shares are sold at net asset value.
o SELIGMAN COMMON STOCK FUND, INC. seeks favorable current income and
long-term growth of both income and capital value without exposing capital to
undue risk.
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o SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC. invests in shares of
companies in the communications, information and related industries to produce
capital gain. Income is not an objective.
o SELIGMAN 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 Emerging Markets Growth
Fund, the Seligman Henderson Global Growth Opportunities Fund, the Seligman
Henderson Global Smaller Companies Fund and the Seligman Henderson Global
Technology Fund, which seek long-term capital appreciation primarily by
investing in companies either globally or internationally.
o SELIGMAN HIGH INCOME FUND SERIES seeks high current income by investing
in debt securities. In addition to the 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 MUNICIPAL FUND, INC. invests in investment grade New
Jersey municipal securities. (Does not currently offer Class B shares.)
o SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES invests in investment grade
Pennsylvania municipal securities. (Does not currently offer Class B shares.)
o SELIGMAN MUNICIPAL FUND SERIES, INC. consists of several State Series
and a National Series. The National Municipal Series seeks to provide maximum
income exempt from regular Federal income taxes; individual state series, each
seeking to maximize income exempt from regular Federal income taxes and from
personal income taxes in designated states are available for Colorado, Georgia,
Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York,
Ohio, Oregon and South Carolina. (Does not currently offer Class B shares.)
o SELIGMAN MUNICIPAL SERIES TRUST includes the California Municipal
High-Yield Series, the California Municipal Quality Series, the Florida
Municipal Series and the North Carolina Municipal Series, each of which invests
in municipal securities of its designated state. (Does not currently offer Class
B shares.)
All permitted exchanges will be based on the net asset values of the
respective funds determined at the close of the NYSE on that day. Telephone
requests for exchanges received between 8:30 a.m. and 4:00 p.m. Eastern time, on
any business day, by Seligman Data Corp. at (800) 221-2450, will be processed as
of the close of business on that day. The registration of an account into which
an exchange is made must be identical to the registration of the account from
which shares are exchanged. When establishing a new account by an exchange of
shares, the shares being exchanged must have a value of at least the minimum
initial investment required by the 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, AS WILL TELEPHONE SERVICES. 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 proper form.
The Exchange Privilege via mail is generally applicable to investments in
group retirement plans, although some restrictions may apply. The terms of the
exchange offers described herein may be modified at any time;
20
<PAGE>
and not all of the mutual funds in the Seligman Group are available to residents
of all states. Before making any exchange, a shareholder should contact an
authorized investment dealer or Seligman Data Corp. to obtain prospectuses of
any of the Seligman Mutual Funds.
A broker/dealer representative of record will be able to effect exchanges
on behalf of a shareholder only if the shareholder has telephone services or the
broker/dealer has entered into a Telephone Exchange Agreement with SFSI wherein
the broker/dealer must agree to indemnify SFSI and the Seligman Mutual Funds
from any loss or liability incurred as a result of the acceptance of telephone
exchange orders.
Written confirmation of all exchanges will be forwarded to the shareholder
to whom the exchanged shares are registered and a duplicate confirmation will be
sent to the broker/dealer of record listed on the account. SFSI reserves the
right to reject any telephone exchange request. Any rejected telephone exchange
order may be processed by mail. For more information about telephone exchange
privileges, which unless objected to, are assigned to most shareholders
automatically, and the circumstances under which shareholders may bear the risk
of loss for a fraudulent transaction, see "Telephone Transactions" above.
Exchanges of shares are sales and may result in a gain or loss for Federal
income tax purposes.
FURTHER INFORMATION ABOUT TRANSACTIONS IN THE SERIES
Because excessive trading (including short-term, "market timing" trading)
can hurt the series' performance, the fund may refuse any exchange (1) from any
shareholder account from which there have been two exchanges in the preceding
three month period, or (2) where the exchanged shares equal in value the lesser
of $1,000,000 or 1% of the series' net assets. The fund may also refuse any
exchange or purchase order from any shareholder account if the shareholder or
the shareholder's broker/dealer has been advised that previous patterns of
purchases and redemptions or exchanges have been considered excessive. Accounts
under common ownership or control, including those with the same taxpayer id
number and those administered so as to redeem or purchase shares based upon
certain predetermined market indicators, will be considered one account for this
purpose. Additionally, the fund reserves the right to refuse any order for the
purchase of shares.
DIVIDENDS AND DISTRIBUTIONS
The Series' net investment income is distributed to shareholders monthly in
the form of additional shares, unless the shareholder elects 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 Fund
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, 1995 of
$16,299,262 (including $2,420,836 transferred from the Seligman Secured Mortgage
Income Series), of which $1,652,560 expires in 1996, $2,286,339 expires in 1997,
$3,877,110 expires in 1998, $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. Cash
dividends and gain distributions are paid by check. In the case of prototype
retirement plans, dividends and gain
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<PAGE>
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 on the payable date using the net asset value of the ex-dividend
date. Shareholders may elect to change their dividend and gain distribution
options by writing Seligman Data Corp. at the address listed below. If the
shareholder has telephone services, changes may also be telephoned to Seligman
Data Corp. between 8:30 a.m. and 6:00 p.m. Eastern time, by either the
shareholder or the broker/dealer of record on the account. For information about
telephone services, see "Telephone Transactions." These elections must be
received by Seligman Data Corp. before the record date for the dividend or
distribution in order to be effective for such dividend or distribution.
The per share dividends from net investment income on Class B and Class D
shares will be lower than the per share dividends on Class A shares as a result
of the higher distribution fees applicable with respect to Class B and Class D
shares. Per share dividends of the three classes may also differ as a result of
differing class expenses. Distributions of net capital gains, if any, will be
paid in the same amount for Class A, Class B and Class D shares. See "Purchase
Of Shares--Valuation."
Shareholders exchanging shares of one mutual fund for shares of another
mutual fund in the Seligman Group will continue to receive dividends and gains
as elected prior to such exchange unless otherwise specified. In the event that
a shareholder redeems, transfers, or exchanges 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 Code. 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
permitted to
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<PAGE>
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 DEDUCTED 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, NY 10017 or by telephoning the
Corporate Communications/Investor Relations Department toll-free at (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 6:00 p.m. Eastern time, and calls will be answered by a service
representative.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, YIELD, ACCOUNT BALANCE,
MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT STATEMENTS,
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
TELEPHONE SERVICES. FOR MORE INFORMATION ABOUT TELEPHONE SERVICES, SEE
"TELEPHONE TRANSACTIONS" ABOVE.
ACCOUNT SERVICES. Shareholders are sent confirmation of financial
transactions in their account.
Other investor services are available. These include:
o INVEST-A-CHECK(R) SERVICE enables a shareholder to authorize additional
purchases of shares automatically by electronic fundS transfer from the
shareholders savings or checking account, if the shareholder's bank is a member
of the Automated Clearing House ("ACH"), or by preauthorized checks to be drawn
on the
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shareholder's checking account at regular monthly intervals in fixed amounts of
$100 or more per fund, or regular quarterly intervals in fixed amounts of $250
or more per fund, to purchase shares. Accounts may be established concurrently
with the Invest-A-Check(R) Service only if accompanied by a $100 minimum in
conjunction with the monthlY investment option or a $250 minimum in conjunction
with the quarterly investment option. (See "Terms and Conditions" on page 27.)
o AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder of the
Seligman Cash Management Fund to exchange a specified amount, at regular monthly
intervals in fixed amounts of $100 or more per fund, or regular quarterly
intervals in fixed amounts of $250 or more per fund, from shares of any class of
the Cash Management Fund into shares of the same class of any other Seligman
Mutual Fund registered in the same name. The shareholder's Cash Management Fund
account must have a 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 or another Seligman Mutual Fund. (Dividend
checks must meet or exceed the required minimum purchase amount and include the
shareholder's name, account number, the name of the fund and the class of shares
in which the investment is to be made.)
o AUTOMATIC CD TRANSFER SERVICE permits a shareholder to instruct a bank
to invest the proceeds of a maturing bank certificate of deposit ("CD") in
shares of any designated Seligman Mutual Fund. Shareholders who wish to use this
service should contact Seligman Data Corp. or a broker to obtain the necessary
documentation. Banks may charge a penalty on CD assets withdrawn prior to
maturity. Accordingly, it will not normally be advisable to liquidate a CD
before its maturity.
o AUTOMATIC CASH WITHDRAWAL SERVICE permits payments at regular intervals
to be made to a shareholder who owns or purchases shares worth $5,000 or more
held as book credits. Holders of Class A shares purchased at net asset value
because the purchase amount was $1,000,000 or more should bear in mind that
withdrawals will be subject to a CDSL if made within eighteen months of purchase
of such shares. Holders of Class B shares may elect to use this service
immediately, although certain withdrawals may be subject to a CDSL. Please
contact Seligman Data Corp. at (800) 221-2450 for more information. Holders of
Class D shares may elect to use this service with respect to shares that have
been held for at least one year. (See "Terms and Conditions" on page 27.)
o DIRECTED DIVIDENDS allows a shareholder to pay dividends to another
person or to direct the payment of such dividends to another Seligman Mutual
Fund for purchase at net asset value. Dividends on Class A, Class B and Class D
shares may only be directed to shares of the same class of another Seligman
Mutual Fund.
o OVERNIGHT DELIVERY to service shareholder requests is available for a
$15.00 fee which may be deducted from a shareholder's account, if requested.
o COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for prior years 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.
24
<PAGE>
These types of plans may be established only upon receipt of a written
application form. The Fund may register an IRA investment for which an account
application has not been received as an ordinary taxable account.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, NY 10017 or telephone toll-free (800) 445-1777 from
all continental United States. You also may receive information through an
authorized dealer.
ADVERTISING THE 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, Class B 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, Class B and Class D shares, the Lipper analysis assumes
investment of all dividends and distributions paid but does not take into
account applicable sales loads. The 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 the
Seligman High-Yield Bond Series. Shares of beneficial interest of the Series and
the Seligman High-Yield Bond Series are divided into three classes (Class A,
Class B and Class D). Each share of beneficial interest of the Series' and the
Seligman High-Yield Bond Series' respective classes is equal as to earnings,
assets and voting privileges, except that each class bears its own separate
distribution and, potentially, certain other class expenses and has exclusive
voting rights with respect to any matter to which a separate vote of any class
is required by the 1940 Act or Massachusetts
25
<PAGE>
law. The Fund has adopted a plan (the `Multiclass Plan") pursuant to Rule 18f-3
under the 1990 Act 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 Multiclass
Plan and Rule 18f-3. The 1940 Act requires that where more than one class
exists, each class must be preferred over all other classes in respect of assets
specifically allocated to such class. 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 Fund 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.
26
<PAGE>
TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares, including fractions to the third
decimal place, as can be purchased at the net asset value plus a sales load, if
applicable, at the close of business on the day payment is received. If a check
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 the shareholder's account in an amount sufficient to
reimburse the Fund for any loss it may have incurred and charge a $10.00 return
check fee. Shareholders will receive dividends from investment income and any
distributions from gain realized on investments in shares or in cash according
to the option elected. Dividend and gain options may be changed by notifying
Seligman Data Corp. These option changes must be received by Seligman Data Corp.
before the record date for the dividend or distribution to be effective for such
dividend or distribution. Stock certificates will not be issued unless
requested. Replacement stock certificates will be subject to a surety fee.
INVEST-A-CHECK(R) SERVICE
The Invest-A-Check(R) Service is available to all shareholders. The
application is subject to acceptance by the shareholder's banK and Seligman Data
Corp. The electronic funds transfer ("ACH debit") or preauthorized check in the
amount specified will be drawn automatically on the shareholder's bank on the
fifth day (unless otherwise specified) of each month (or on the prior business
day if such day of the month falls on a weekend or holiday) in which an
investment is scheduled and invested at the public offering price at the close
of business on the same date. After the initial investment, the value of shares
held in the shareholder's account must equal not less than two regularly
scheduled investments. If a check is not honored by the shareholder's bank, or
if the value of shares held falls below the required minimum, the
Invest-A-Check(R) Service may be suspended. In the event that a check or ACH
debit iS returned as uncollectable, Seligman Data Corp. will cancel the
purchase, redeem shares held in the shareholder's account for an amount
sufficient to reimburse the Fund for any loss it may have incurred as a result,
and charge a $10.00 return check fee. This fee may be deducted from the
shareholder's account. The Invest-A-Check(R) Service may be reinstated upon
written request indicating thaT the cause of interruption has been corrected.
The Invest-A-Check(R) Service may be terminated by the shareholder's or Seligman
DatA Corp. at any time by written notice. The shareholder agrees to hold the
Fund and its agents free from all liability which may result from acts done in
good faith and pursuant to these terms. Instructions for establishing
Invest-A-Check(R) Service are given on thE Account Application. In the event a
shareholder exchanges all of the shares from one Seligman Mutual Fund to
another, the Invest-A-Check(R) Service will be terminated in the Seligman Mutual
Fund that was closed as a result of the exchange of all shares anD the
shareholder must re-apply for the Invest-A-Check(R) Service in the Seligman
Mutual Fund into which the exchange was made. In thE event of a partial
exchange, the Invest-A-Check(R) Service will be continued, subject to the above
conditions, in the Seligman MutuaL Fund from which the exchange was made.
Accounts established in conjunction with the Invest-A-Check(R) Service must be
accompanied by A minimum initial investment of $100 in connection with the
monthly investment option or $250 in connection with the quarterly investment
option. If a shareholder uses the Invest-A-Check(R) Service to make an IRA
investment, the purchase will be credited as A current year contribution. If a
shareholder uses the Invest-A-Check(R) to make an investment in a pension or
profit sharing plan, thE purchase will be credited as a current year employer
contribution.
AUTOMATIC CASH WITHDRAWAL SERVICE
The Automatic Cash Withdrawal Service is available to Class A shareholders,
to Class B shareholders and to Class D shareholders with respect to Class D
shares held for one year or more. A sufficient number of full and fractional
shares will be redeemed to provide the amount required for a scheduled payment.
Redemptions will be made at the net asset value at the close of business on the
specific day designated by the shareholder of each month (or on the prior
business day if the day specified falls on a weekend or holiday), less, in the
case of Class B shares, any applicable CDSL. Automatic withdrawals of Class A
shares which were purchased at net asset value because the purchase amount was
$1,000,000 or more will be subject to a CDSL if made within 18 months of
purchase of such shares. 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 Series shares are discouraged when the Withdrawal Service is in
effect.
LETTER OF INTENT -- CLASS A SHARES ONLY
Seligman Financial Services, Inc. will hold in escrow shares equal to 5% of
the minimum purchase amount specified. Dividends and distributions on the
escrowed shares will be paid to the shareholder or credited to the shareholder's
account. Upon completion of the specified minimum purchase within the
thirteen-month period, all shares held in escrow will be deposited into the
shareholder's account or delivered to the shareholder. A shareholder may include
toward the completion of a Letter of Intent the total asset value of shares of
the Seligman Mutual Funds on which an initial sales load was paid as of the date
of the Letter. If the total amount invested within the thirteen-month period
does not equal or exceed the specified minimum purchase, the shareholder will be
requested to pay the difference between the amount of the sales load paid and
the amount of the sales load applicable to the total purchase made. If, within
20 days following the mailing of a written request, the shareholder has not paid
this additional sales load to Seligman Financial Services Inc., sufficient
escrowed shares will be redeemed for payment of the additional sales load.
Shares remaining in escrow after this payment will be released to the
shareholder's account. The intended purchase amount may be increased at any time
during the thirteen-month period by filing a revised Agreement for the same
period, provided that 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 to the
Fund and that the required additional escrowed shares will be purchased by the
shareholder.
Shares of Seligman Cash Management Fund, Inc. which have been acquired by an
exchange of shares of another Seligman Mutual Fund on which there is an initial
sales load may be taken into account in completing a Letter of Intent, or for
Right of Accumulation. However, shares of the Seligman Cash Management Fund
which have been purchased directly may not be used for purposes of determining
reduced sales loads on additional purchases of the other Seligman Mutual Funds.
CHECK REDEMPTION SERVICE
The Check Redemption Service is available to Class A shareholders, to Class
B shareholders and to Class D shareholders with respect to Class D shares held
for one year or more. For Class A shares which were purchased at net asset value
because the purchase amount was $1,000,000 or more, check redemptions within 18
months of purchase may be subject to a CDSL. Check redemptions of Class B shares
also may be subject to a CDSL. 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.
The shareholder authorizes Boston Safe Deposit and Trust Co. to honor checks
drawn by the shareholder on the account of Seligman U.S. Government Securities
Series and to effect a redemption of sufficient shares in the shareholder's Fund
account to cover payment of the check and any applicable CDSL. The shareholder
understands that shares in one series cannot be redeemed to cover a check
written on another series.
Boston Safe Deposit and Trust Co. 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 as uncollectable. This charge may be deducted from the
account against which the check was drawn. 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.
1/97
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SELIGMAN
U.S. GOVERNMENT SECURITIES
SERIES
- --------------------------------------------------------------------------------
100 PARK AVENUE
NEW YORK, NEW YORK 10017
TABLE OF CONTENTS
PAGE
----
Summary Of Series Expenses 2
Financial Highlights 3
Alternative Distribution System 4
Investment Objective, Policies And Risks 6
Management Services 7
Purchase Of Shares 9
Telephone Transactions 14
Redemption Of Shares 15
Administration, Shareholder Services
And Distribution Plan 18
Exchange Privilege 19
Further Information About Transactions
In The Series 21
Dividends And Distributions 21
Federal Income Taxes 22
Shareholder Information 23
Advertising The Series' Performance 25
Organization And Capitalization 25
TXUSG1 10/96
================================================================================
PROSPECTUS
SELIGMAN
U.S. GOVERNMENT SECURITIES
January 1, 1997
[LOGO]
================================================================================
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
SELIGMAN U.S. GOVERNMENT SECURITIES SERIES
SELIGMAN HIGH-YIELD BOND SERIES
series of
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 Seligman
High Income Fund Series (the "Fund"), dated April 22, 1996 for the Seligman
High-Yield Bond Series ("High-Yield Bond Series") and January 1, 1997 for the
Seligman U.S. Government Securities Series ("U.S. Government Securities
Series"). 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.
Each Series of the Fund offers three classes of shares. Class A shares
may be purchased at net asset value plus an initial sales load of up to 4.75%.
Class A shares purchased in an amount of $1,000,000 or more are sold without an
initial sales load but are subject to a contingent deferred sales load ("CDSL")
of 1% (of the current net asset value or the original purchase price, whichever
is less) if such shares are redeemed within 18 months of purchase. Class B
shares may be purchased at net asset value and are subject to a CDSL, if
applicable, in the following amount (as a percentage of the current net asset
value or the original purchase price, whichever is less, if redemption occurs
within the indicated number of years of purchase of such shares: 5% (less than 1
year), 4% (1 but less than 2 years), 3% (2 but less than 4 years), 2% (4 but
less than 5 years), 1% (5 but less than 6 years) and 0% (6 or more years). Class
B shares automatically convert to class A shares after approximately eight years
resulting in lower ongoing fees. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned. Class
D shares may be purchased at net asset value and are subject to a CDSL of 1% (of
the current net asset value or the original purchase price, whichever is less)
if redeemed within one year of purchase.
Each Series' Class A, Class B and Class D shares represent an identical
legal interest in the investment portfolio of such Series and has the same
rights except for certain class expenses and except that Class B and Class D
shares bear higher distribution fees that generally will cause the Class B and
Class D shares to have a higher expense ratio and pay lower dividends than Class
A shares. Each Class has exclusive voting rights with respect to its
distribution plan. Although holders of Class A, Class B and Class D shares have
identical legal rights, the different expenses borne by each Class will result
in different net asset values and dividends. The three classes also have
different exchange privileges.
TABLE OF CONTENTS
PAGE
Investment Objectives, Policies And Risks...... 2
Investment Limitations......................... 3
Trustees And Officers.......................... 4
Management And Expenses........................ 9
Administration, Shareholder Services
And Distribution Plans...................... 10
Portfolio Transactions......................... 11
TX1A
PAGE
Purchase And Redemption Of
Fund Shares................................. 11
Distribution Services.......................... 14
Valuation...................................... 14
Performance ................................... 15
General Information............................ 17
Financial Statements........................... 18
Appendix ...................................... 19
-1-
<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
such Series' outstanding voting securities. The objective of each Series is as
follows:
The 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 of greater than one year at the date of purchase by the
Series.
The 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 Investors Service, Inc. ("Moody's") or BBB or lower by
Standard & Poor's Corporation ("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 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.
The following information regarding the investment policies of each Series
supplements the information contained in each Series' Prospectus.
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
securities 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
-2-
<PAGE>
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.
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 4).
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
U.S. Government Securities Series and the High-Yield Bond Series for the fiscal
years ended 1995 and 1994 were 213.06% and 445.18%, and 173.39% and 184.75%,
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.
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 or emergency purposes (but not
for the purchase of portfolio securities) in an amount not to exceed 15% 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 the extent necessary to
effect 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;
-3-
<PAGE>
- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;
- - 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 its predecessors, has been in operation
less than three continuous years, provided, however, that securities
guaranteed by a company that (including predecessors) has been in operation
at least three continuous years shall be excluded from this calculation;
- - 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 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.
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
(58) Officer and Chairman of the Executive Committee
Managing Director, Chairman and President, J. &
W. Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors,
Inc., advisers; Chairman and Chief Executive
Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial
Services, Inc., broker/dealer; Seligman
Holdings, Inc., holding company; Seligman
Services, Inc., broker/dealer; and Carbo
Ceramics Inc., ceramic proppants for oil and
gas industry; Director or Trustee, Seligman
Data Corp., shareholder service agent;
Kerr-McGee Corporation, diversified energy
company; and Sarah Lawrence College; and a
Member of the Board of Governors of the
Investment Company Institute; formerly,
Chairman, Seligman Securities, Inc.,
broker/dealer and J. & W. Seligman Trust
Company, trust company; and Director, Daniel
Industries, Inc., manufacturer of oil and gas
metering equipment.
-4-
<PAGE>
BRIAN T. ZINO* Trustee, President and Member of the Executive
(44) Committee
Director and Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W.
Seligman & Co. Incorporated, investment
managers and advisers and Seligman Advisors,
Inc., advisers; President (with the exception
of Seligman Quality Municipal Fund, Inc. and
Seligman Select Municipal Fund, Inc.) and
Director or Trustee, the Seligman Group
Investment Companies; Chairman, Seligman Data
Corp., shareholder service agent; Director,
Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc.,
broker/dealer; and Senior Vice President,
Seligman Henderson Co., advisers; formerly,
Director and Secretary, Chuo Trust - JWS
Advisors, Inc., advisers; and Director,
Seligman Securities, Inc., broker/dealer and J.
& W. Seligman Trust Company, trust company.
FRED E. BROWN* Trustee
(83)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisers
and Seligman Advisors, Inc., advisers; Director
or Trustee, the Seligman Group of Investment
Companies; Seligman Financial Services, Inc.,
broker/dealer; Seligman Services Inc.,
broker/dealer; Trudeau Institute, nonprofit
biomedical research organization; Lake Placid
Center for the Arts, cultural organization; and
Lake Placid Education Foundation, education
foundation; formerly, Director, Seligman
Securities, Inc., broker/dealer and J. & W.
Seligman Trust Company, trust company.
JOHN R. GALVIN Trustee
(67)
Dean, Fletcher School of Law and Diplomacy at
Tufts University; Director or Trustee, the
Seligman Group of Investment Companies;
Chairman, American Council on Germany; a
Governor of the Center for Creative Leadership;
Director, USLIFE, insurance; National Committee
on U.S.-China Relations; National Defense
University; the Institute for Defense Analysis;
and Raytheon Co., electronics; and Consultant,
Thomson CSF, electronics; formerly, Ambassador,
U.S. State Department; Distinguished Policy
Analyst at Ohio State University and Olin
Distinguished Professor of National Security
Studies at the United States Military Academy.
From June, 1987 to June, 1992, he was the
Supreme Allied Commander, Europe and the
Commander-in-Chief, United States European
Command.
Tufts University, Packard Avenue, Medford, MA
02105.
ALICE S. ILCHMAN Trustee
(61)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; Chairman, The Rockefeller
Foundation, charitable foundation; and
Director, NYNEX, telephone company; and the
Committee for Economic Development; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, International
Research and Exchange Board, intellectual
exchanges.
Sarah Lawrence College, Bronxville, NY 10708
-5-
<PAGE>
FRANK A. McPHERSON Trustee
(63)
Chairman of the Board and Chief Executive
Officer, Kerr-McGee Corporation, energy and
chemicals; Director or Trustee, the Seligman
Group of Investment Companies; Director,
Kimberly-Clark Corporation, consumer products,
Bank of Oklahoma Holding Company, American
Petroleum Institute, Oklahoma City Chamber of
Commerce, Baptist Medical Center, Oklahoma
Chapter of the Nature Conservancy, Oklahoma
Medical Research Foundation and United Way
Advisory Board; Chairman, Oklahoma City Public
Schools Foundation; and Member of the Business
Roundtable and National Petroleum Council.
123 Robert S. Kerr Avenue, Oklahoma City, OK
73102
JOHN E. MEROW* Trustee
(67)
Chairman and Senior Partner, Sullivan &
Cromwell, law firm; Director or Trustee, the
Seligman Group of Investment Companies;
Municipal Art Society of New York; Commonwealth
Aluminum Corporation; U.S. Council for
International Business; and U. S.-New Zealand
Council; Chairman, American Australian
Association; Member of the American Law
Institute and Council on Foreign Relations; and
Member of the Board of Governors of the Foreign
Policy Association and New York Hospital.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Trustee
(54)
Attorney; Director or Trustee, the Seligman
Group of Investment Companies; Trustee,
Geraldine R. Dodge Foundation, charitable
foundation; and Chairman of the Board of
Trustees of St. George's School (Newport, RI);
formerly, Director, The National Association of
Independent Schools (Washington, DC).
St. Bernard's Road, P.O. Box 449, Gladstone, NJ
07934
JAMES C. PITNEY Trustee
(70)
Partner, Pitney, Hardin, Kipp & Szuch, law
firm; Director or Trustee, the Seligman Group
of Investment Companies and Public Service
Enterprise Group, public utility. Park Avenue
at Morris County, P.O. Box 1945, Morristown, NJ
07962-1945
JAMES Q. RIORDAN Trustee
(69)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies, The Houston Exploration Company, The
Brooklyn Museum, The Brooklyn Union Gas
Company, The Committee for Economic
Development, Dow Jones & Co., Inc. and Public
Broadcasting Service; formerly, Co-Chairman of
the Policy Council of the Tax Foundation;
Director, Tesoro Petroleum Companies, Inc.; and
Director and President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY
10017
RONALD T. SCHROEDER* Trustee and Member of the Executive Committee
(48)
Director, Managing Director and Chief
Investment Officer, Institutional, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors,
Inc., advisers; Director or Trustee, the
Seligman Group of Investment Companies;
Director, Seligman Holdings, Inc., holding
company; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co.,
advisers; and Seligman Services, Inc.,
broker/dealer; formerly, President, the
Seligman Group of Investment Companies, except
Seligman Quality Municipal Fund, Inc. and
Seligman Select Municipal Fund, Inc.; and
Director, J. & W. Seligman Trust Company, trust
company; Seligman Data Corp., shareholder
service agent; and Seligman Securities, Inc.,
broker/dealer.
-6-
<PAGE>
ROBERT L. SHAFER Trustee
(64)
Director, various corporations; Director or
Trustee, the Seligman Group of Investment
Companies and USLIFE Corporation, life
insurance; formerly, Vice President, Pfizer,
Inc., pharmaceuticals. 235 East 42nd Street,
New York, NY 10017
JAMES N. WHITSON Trustee
(61)
Executive Vice President, Chief Operating
Officer and Director, Sammons Enterprises,
Inc.; Director or Trustee, the Seligman Group
of Investment Companies; Red Man Pipe and
Supply Company, piping and other materials; and
C-SPAN. 300 Crescent Court, Suite 700, Dallas,
TX 75201
DANIEL J. CHARLESTON Vice President and Portfolio Manager
(37)
Vice President, Investment Officer and a
Managing Director of J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
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
(36)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; Vice President and
Portfolio Manager, two other open-end
investment companies in the Seligman Group of
Investment Companies.
LAWRENCE P. VOGEL Vice President
(40)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; Seligman Financial
Services, Inc., broker/dealer; Seligman
Advisors, Inc., advisers and Seligman Data
Corp., shareholder service agent; Vice
President, the Seligman Group of Investment
Companies and Seligman Services, Inc.,
broker/dealer; and Treasurer, Seligman
Holdings, Inc., holding company; and Seligman
Henderson Co., advisers; formerly, Senior Vice
President, Seligman Securities, Inc.,
broker/dealer; and Vice President, Finance, J.
& W. Seligman Trust Company, trust company.
FRANK J. NASTA Secretary
(32)
Senior Vice President, Law and Regulation and
Corporate Secretary, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
and Seligman Advisors, Inc., advisers;
Secretary, the Seligman Group of Investment
Companies; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co.,
advisers; Seligman Services, Inc.,
broker/dealer; and Seligman Data Corp.,
shareholder service agent; formerly, Secretary,
J. & W. Seligman Trust Company, trust company;
and attorney, Seward and Kissel, law firm.
THOMAS G. ROSE Treasurer
(39)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisers, Inc. and the American
Investors Family of Funds.
-7-
<PAGE>
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.
COMPENSATION TABLE
<TABLE>
<CAPTION>
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, Trustee and Chairman N/A N/A N/A
Brian T. Zino, Trustee and President N/A N/A N/A
Ronald T. Schroeder N/A N/A N/A
Fred E. Brown, Trustee N/A N/A N/A
John R. Galvin, Trustee $ 1,618.32 N/A $ 41,252.75
Alice S. Ilchman, Trustee 2,662.12 N/A 68,000.00
Frank A. McPherson, Trustee 1,618.32 N/A 41,252.75
John E. Merow, Trustee 2,590.70(d) N/A 66,000.00(d)
Betsy S. Michel, Trustee 2,840.73 N/A 67,000.00
Douglas R. Nichols, Jr., Trustee* 972.38 N/A 24,747.25
James C. Pitney, Trustee 2,662.12 N/A 68,000.00(d)
James Q. Riordan, Trustee 2,947.80 N/A 70,000.00
Herman J. Schmidt, Trustee* 972.38 N/A 24,747.25
Robert L. Schafer, Trustee 2,947.86 N/A 70,000.00
James N. Whitson, Trustee 2,876.38(d) N/A 68,000.00(d)
</TABLE>
- ---------------------
(1) Based on remuneration received by the Trustees of the Fund for the year
ended December 31, 1995.
(2) As defined in each Series' Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
* Retired May 18, 1995.
(d) Deferred. As of December 31, 1995, the total amounts of deferred
compensation (including interest) payable by the Fund to Messrs. Merow, Pitney
and Whitson were $29,945, $23,316 and $7,516, 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. The actual cost of such interest is included
in the Trustee's fees and expenses, and the accumulated balance thereof is
included in "Liabilities" in the Fund's financial statements.
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 less than 1% of both the U.S.
Government Securities Series' and the High-Yield Bond Series' Class A capital
stock as of December 16, 1996. As of that date, no Trustees or officers owned
shares of either Series' Class B or Class D capital stock.
As of December 16, 1996, 7,769,918 Class A shares of the High-Yield Bond
Series, which equaled 14.42% of the High-Yield Bond Series' Class A capital
stock then outstanding and 13,169,787 Class D shares of the High-Yield Bond
Series, which equaled 37.59% of the High-Yield Bond Series' Class D capital
stock then outstanding, were owned of record by MLPF&S For the Sole Benefit of
Its Customers, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL 32246.
-8-
<PAGE>
MANAGEMENT AND EXPENSES
Under each Series' Management Agreement, dated December 29, 1988 for the
U.S. Government Securities Series and December 29, 1988, as amended January 1,
1996, for the High-Yield Bond Series, 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 each Series' investment objectives and policies, and
administers the business and other affairs of each Series. 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 from each Series for
its services to such Series, calculated daily and payable monthly. For the U.S.
Government Securities Series, the fee is equal to .50% of the average daily net
assets of the Series on an annual basis. Effective January 1, 1996, the
management fee for the High-Yield Bond Series is equal to .65% of the Series'
average daily net assets on the first $1 billion of net assets and .55% of the
Series' average daily net assets in excess of $1 billion. The management fees
paid by each Series for each of 1995, 1994 and 1993 equaled .50% of the average
daily net assets of each Series; or for the U.S. Government Securities Series
and the High-Yield Bond Series, $301,343, $338,362 and $296,325; and $723,340,
$329,652 and $251,812, 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 administrator, 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.
Each Series' Management Agreement was initially approved by the Board of
Trustees on September 30, 1988 and by the shareholders at a special meeting held
on December 16, 1988. The amendments to the Management Agreement of the
High-Yield Bond Series, to increase the fee rate payable to the Manager by the
Series, were approved by the Board of Trustees on September 21, 1995 and by the
shareholders at a special meeting held on December 12, 1995. The Management
Agreements 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 each 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 a 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. On December 29, 1988, a majority of the
outstanding voting securities of the Manager was purchased by Mr. William C.
Morris and a simultaneous recapitalization of the Manager occurred. See the
Appendix for further history of the Manager.
-9-
<PAGE>
Officers, directors and employees of the Manager are permitted to
engage in personal securities transactions, subject to the Manager's Code of
Ethics (the "Ethics Code"). The Ethics Code proscribes certain practices with
regard to personal securities transactions and personal dealings, provides a
framework for the reporting and monitoring of personal securities transactions
by the Manager's Director of Compliance, and sets forth a procedure of
identifying, for disciplinary action, those individuals who violate the Ethics
Code. The Ethics Code prohibits each of the officers, directors and employees
(including all portfolio managers) of the Manager from purchasing or selling any
security that the officer, director or employee knows or believes (i) was
recommended by the Manager for purchase or sale by any client, including the
Fund, within the preceding two weeks, (ii) has been reviewed by the Manager for
possible purchase or sale within the preceding two weeks, (iii) is being
purchased or sold by any client, (iv) is being considered by a research analyst,
(v) is being acquired in a private placement, unless prior approval has been
obtained from the Manager's Director of Compliance, or (vi) is being acquired
during an initial or secondary public offering. The Ethics Code also imposes a
strict standard of confidentiality and requires portfolio managers to disclose
any interest they may have in the securities or issuers that they recommend for
purchase by any client.
The Ethics Code also prohibits (i) each portfolio manager or member of
an investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages and (ii) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors and employees are required, except under very
limited circumstances, to engage in personal securities transactions through the
Manager's order desk. The order desk maintains a list of securities that may not
be purchased due to a possible conflict with clients. All officers, directors
and employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLANS
Each Series of the Fund has adopted an Administration, Shareholder
Services and Distribution Plan for each Class (the "Plan") under Section 12(b)
of the 1940 Act and Rule 12b-1 thereunder.
The Plan was originally approved with respect to each Series on April 8,
1986 by the Board of Trustees of the Fund, including a majority of the Trustees
who are not "interested persons" (as defined in the 1940 Act) of the Fund and
who had 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. The
Plan was approved in respect of the Class D shares of both Series on July 15,
1993 by the Board of Trustees of the Fund, including a majority of the Qualified
Trustees, and became effective in respect of the Class D shares of both Series
on September 21, 1993. The Plan was approved in respect of the Class B shares of
the High-Yield Bond Series on March 21, 1996 by the Board of Trustees of the
Fund, including a majority of the Qualified Trustees, and became effective in
respect of the Class B shares of the High-Yield Bond Series on April 22, 1996.
The Plan was approved in respect of the Class B shares of the U.S. Government
Securities Series on September 19, 1996 by the Board of Trustees of the Fund,
including a majority of the Qualified Trustees, and became effective in respect
of the Class B shares of the U.S. Government Securities Series on January 1,
1997. The Plans 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) with respect to a class without the approval of a majority
of the outstanding voting securities of such class. If the amount payable in
respect of Class A shares under the Plans is proposed to be increased
materially, the Fund will either (i) permit holders of Class B shares to vote as
a separate class on the proposed increase or (ii) establish a new class of
shares subject to the same payment under the Plans as existing Class A shares,
in which case the Class B shares will thereafter convert into the new class
instead of into Class A shares. No material amendment to the Plans may be made
except by a majority of both the Trustees and Qualified Trustees.
The Plans require 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) for each Series under the Plans.
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.
-10-
<PAGE>
PORTFOLIO TRANSACTIONS
No brokerage commissions were paid by the Fund during 1995, 1994 and 1993.
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
Each Series offers three classes of shares. Class A shares may be
purchased at a price equal to the next determined net asset value per share,
plus an initial sales load. Class A shares purchased at net asset value without
an initial sales load due to the size of the purchase are subject to a CDSL if
such shares are redeemed within eighteen months of purchase. Class B shares may
be purchased at a price equal to the next determined net asset value without an
initial sales load, but a CDSL may be charged on redemptions within 6 years of
purchase. Class D shares may be purchased at a price equal to the next
determined net asset value without an initial sales load, but a CDSL may be
charged on redemptions within one year of purchase. See "Alternative
Distribution System," "Purchase Of Shares," and "Redemption Of Shares" as
applicable, in each Series' 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
B and Class D shares are sold at net asset value.* Using the net asset value at
June 30, 1996 for each class of the Series, the maximum offering price of each
Series' shares is as follows:
U.S. GOVERNMENT SECURITIES SERIES
CLASS A
Net asset value per share......................................... $6.67
-----
Maximum sales load (4.75% of offering price)...................... 0.33
------
Maximum offering price per share.................................. $ 7.00
======
CLASS D
Net asset value and maximum offering price per share*............. $ 6.68
======
HIGH-YIELD BOND SERIES
CLASS A
Net asset value per share......................................... $ 7.05
------
Maximum sales load (4.75% of offering price)...................... 0.35
------
Maximum offering price per share.................................. $ 7.40
======
CLASS B AND CLASS D
Net asset value and maximum offering price per share*............. $ 7.05
======
- ----------
* Class B shares are subject to a CDSL declining from 5% in the first year
after purchase to 0% after six years. Class D shares are subject to a CDSL
of 1% on redemptions within one year of purchase. See "Redemption Of
Shares" in each Series' Prospectus.
-11-
<PAGE>
CLASS A SHARES - REDUCED INITIAL SALES LOADS
REDUCTIONS AVAILABLE. Shares of any Seligman Mutual Fund sold with an initial
sales load in a continuous offering will be eligible for the following
reductions:
VOLUME DISCOUNTS are provided if the total amount being invested in Class A
shares of a Series or in any combination of shares of the other mutual funds in
the Seligman Group which are sold with an initial sales load, reaches levels
indicated in the sales load schedule set forth in each Series' Prospectus.
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 an initial sales load with the total net asset value of shares of those
Seligman Mutual Funds already owned that were sold with an initial sales load
and the total net asset value of shares of Seligman Cash Management Fund which
were acquired through an exchange of shares of another mutual fund in the
Seligman Group on which there was an initial sales load at the time of purchase
to determine reduced sales loads in accordance with the schedule in each Series'
Prospectus. The value of the shares owned, including the value of shares of
Seligman Cash Management Fund acquired in an exchange of shares of another
mutual fund in the Seligman Group on which there is an initial sales load at the
time of purchase, will be taken into account in orders placed through a dealer,
however, only if Seligman Financial Services, Inc. ("SFSI") is notified by an
investor or a dealer of the amount owned by the investor at the time the
purchase is made and is furnished sufficient information to permit confirmation.
A LETTER OF INTENT allows an investor to purchase Class A shares of a
Series' shares over a 13-month period at reduced initial sales loads in
accordance with the schedule in each Series' Prospectus, based on the total
amount of Class A shares of the Series that the letter states the investor
intends to purchase plus the total net asset value of shares that were sold with
an initial sales load of the other mutual funds in the Seligman Group already
owned and the total net asset value of shares of Seligman Cash Management Fund
which were acquired through an exchange of shares of another mutual fund in the
Seligman Group on which there was an initial sales load at the time of purchase.
Reduced sales loads also may apply to purchases made within a 13-month period
starting up to 90 days before the date of execution of a letter of intent. For
more information concerning the terms of the letter of intent, see "Terms and
Conditions -- Letter of Intent" accompanying the Account Application.
Class A shares purchased without an initial sales load in accordance with
the sales load schedule in each Series' Prospectus, or pursuant to a Volume
Discount, Right of Accumulation or Letter of Intent are subject to a CDSL of 1%
on redemptions of such shares within eighteen months of purchase.
PERSONS ENTITLED TO REDUCTIONS. Reductions in initial sales loads apply to
purchases of Class A shares of a 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 of 1986, as amended, 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.
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 each Series'
Prospectus applies to sales to "eligible employee benefit plans," except that
the Fund may sell shares at net asset value to "eligible employee benefit
plans," which have at least (i) $500,000 invested in the Seligman Group of
Mutual Funds or (ii) 50 eligible employees to whom such plan is made available.
Such sales must be made in connection with a payroll deduction system of plan
-12-
<PAGE>
funding or other systems acceptable to Seligman Data Corp., the Fund's
shareholder service agent. Such sales are believed to require limited sales
effort and sales related expenses and therefore are made at net asset value.
Contributions or account information for plan participation also should be
transmitted to Seligman Data Corp. by methods which it accepts. Additional
information about "eligible employee benefit plans" is available from investment
dealers or SFSI. 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, the Fund may accept securities in
payment for shares of a Series sold at the applicable public offering price (net
asset value plus any applicable sales load) although the Fund does not presently
intend to accept securities in payment for Series shares. Generally, the Fund
will only consider accepting securities (l) to increase its holdings in a
portfolio security of a Series, or (2) if the Manager determines that the
offered securities are a suitable investment for a Series and in a sufficient
amount for efficient management. Although no minimum has been established, it is
expected that the Fund would not accept securities with a value of less than
$100,000 per issue in payment for shares. The Fund may reject in whole or in
part offers to pay for shares of a 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 ("NYSE") or NASDAQ.
FURTHER TYPES OF REDUCTIONS. Class A shares of each 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 a 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 each Series also may be issued without a sales load to
present and retired directors, trustees, officers, employees (and their family
members, as defined in each Series' Prospectus) of the Funds, the other
investment companies in the Seligman Group, the Manager and other companies
affiliated with the Manager. Such sales may also be made to employee benefit
plans and thrift plans for such persons and to any investment advisory,
custodial, trust or other fiduciary account managed or advised by the Manger or
any affiliate. These sales may be made for investment purposes only, and shares
may be resold only to the Fund.
Class A shares may be sold at net asset value to these persons since such
sales require less sales effort and lower sales related expenses as compared
with sales to the general public.
MORE ABOUT REDEMPTIONS. The procedures for redemption of Fund shares under
ordinary circumstances are set forth in each Series' Prospectus. In unusual
circumstances, payment may be postponed, or the right of redemption postponed
for more than seven days, if the orderly liquidation of portfolio securities is
prevented by the closing of, or restricted trading on the NYSE during periods of
emergency, or such other periods as ordered by the Securities and Exchange
Commission. 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.
-13-
<PAGE>
DISTRIBUTION SERVICES
SFSI, 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. The Fund and
SFSI are parties to a Distributing Agreement dated January 1, 1993. As general
distributor of the Fund's shares of beneficial interest, SFSI allows commissions
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 concessions received by SFSI, dealer commissions, and CDSL
retained for each Series for 1995, 1994 and 1993.
<TABLE>
<CAPTION>
SERIES SFSI CONCESSIONS DEALER COMMISSIONS CDSL RETAINED
------ ---------------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1995 1994 1993 1995 1994 1993*
---- ---- ---- ---- ---- ---- ---- ---- -----
U.S. Government
Securities Series $ 11,889 $ 8,580 $12,563 $ 87,970 $ 61,645 $ 91,712 $ 2,634 $8,280 --
High-Yield
Bond Series 459,779 45,213 67,466 3,554,416 353,427 519,151 33,929 8,610 --
</TABLE>
- ----------
* For the period 9/21/93 to 12/31/93.
No Class B shares were outstanding throughout the 3 year period ended
December 31, 1995.
Effective April 1, 1995, Seligman Services, Inc. ("SSI"), an affiliate of
the Manager, became eligible to receive commissions from certain sales of Series
shares, as well as distribution and service fees pursuant to the Plan. For the
period ended December 31, 1995, SSI received commissions from sales of Series
shares and distribution and service fees pursuant to the Plan as follows:
DISTRIBUTION AND
COMMISSIONS SERVICE FEES
----------- ----------------
U.S. Government
Securities Series $ 8,380 $ 2,952
High-Yield
Bond Series 7,087 19,702
VALUATION
Net asset value per share of each class of a Series is determined as of the
close of trading on the NYSE, (normally, 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 Fund will also determine net asset value for each class
of a Series on each day in which there is a sufficient degree of trading in a
Series' portfolio securities that the net asset value of Series shares might be
materially affected. Net asset value per share for a class of a Series is
computed by dividing that class' share of the value of the net assets of such
Series (i.e., the value of its assets less liabilities) by the total number of
outstanding shares of such class. All expenses of a Series, including the
Manager's fee, are accrued daily and taken into account for the purpose of
determining net asset value. The net asset value of Class B and Class D shares
will generally be lower than the net asset value of Class A shares as a result
of the larger distribution fee with respect to such shares.
Portfolio securities, including open short positions and options written,
are valued at the last sale price on the securities exchange or securities
market on which such securities primarily are traded. Securities not listed on
an exchange or securities market, or securities in which there were no
transactions, are valued at the average of the most recent bid and asked price,
except in the case of open short positions where the asked price is available.
Any securities 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 Fund's Trustees. This value generally
is determined as the amount which a Series could reasonably expect to receive
from an orderly disposition of these securities over a reasonable period of
time. Short-term obligations with less than sixty days remaining to maturity are
-14-
<PAGE>
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. Premiums received on
the sale of call options will be included in the net asset value, and current
market value of the options sold by a Series will be subtracted from net asset
value.
PERFORMANCE
The annualized yield for the 30-day period ended December 31, 1995 for the
Class A shares of the U.S. Government Securities Series and the High-Yield Bond
Series was 5.09% and 8.99%, 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 plus
the maximum sales load of 4.75% of the net amount invested) on December 31,
1995, which was the last day of this period. The average number of Class A
shares of the U.S. Government Securities Series and the High-Yield Bond Series
was 7,762,497 and 25,045,807, respectively, which was the average daily number
of shares outstanding during the 30-day period that were eligible to receive
dividends. The annualized yield for the 30-day period ended December 31, 1995
for the Class D shares of the U.S. Government Securities Series and the
High-Yield Bond Series was 4.50% and 8.66%, 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, 1995, which was the last day of this period. The
average number of Class D shares of the U.S. Government Securities Series and
the High-Yield Bond Series was 1,122,691 and 12,328,074, 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 the Class A shares of the U.S.
Government Securities Series and the High-Yield Bond Series for the one-year,
five-year and ten-year periods ended on December 31, 1995 were 12.58%, 7.01% and
7.09%; and 14.92%, 16.73% and 10.73%, respectively. These returns were computed
by subtracting the maximum sales load of 4.75% of public offering price and
assuming that all of the dividends and distributions by the Series over the
relevant time period were reinvested. It was then assumed that at the end of
each period, the entire amount was redeemed. The average annual total return was
then calculated by calculating the annual rate required for the initial payment
to grow to the amount which would have been received upon redemption (i.e., the
average annual compound rate of return). The total return for the Class D shares
of the U.S. Government Securities Series and the High-Yield Bond Series for the
one-year period and since inception through December 31, 1995 were 16.10% and
4.47%; and 18.67% and 10.19%, respectively. These amounts were computed assuming
that all of the dividends and distributions paid by each Series' Class D shares,
if any, were reinvested over the relevant time period. It was then assumed that
at the end of each period, the entire amount was redeemed, subtracting the 1%
CDSL, if applicable. Performance information is not provided for Class B shares
because no Class B shares were outstanding during the quoted periods.
Table A below illustrates the total return (income and capital) on Class A
shares of each Series of the Fund with dividends invested and gain distributions
taken in shares. It shows that a $1,000 investment in Class A shares of the U.S.
Government Securities Series, assuming payment of the 4.75% sales load, made on
January 1, 1986 had a value of $1,983 on December 31, 1995, resulting in an
aggregate total return of 98.33%; and a $1,000 investment in Class A shares of
the High-Yield Bond Series, assuming payment of the 4.75% sales load, made on
September 21, 1993 (commencement of operations) had a value of $2,772 on
December 31, 1995, resulting in an aggregate total return of 177.17%. Table B
illustrates the total return (income and capital) on Class D shares of the U.S.
Government Securities Series and the High-Yield Bond Series with dividends
invested and gain distributions taken in shares.
-15-
<PAGE>
<TABLE>
<CAPTION>
TABLE A - CLASS A SHARES
VALUE OF
PERIOD/YEAR VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT(2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- -------------- --------------------- ------------- --------- --------------- ----------
U.S. Government
SECURITIES SERIES
- -----------------
<S> <C> <C> <C> <C> <C>
12/31/86 $956 $68 $82 $1,106
12/31/87 836 83 156 1,075
12/31/88 829 82 248 1,159
12/31/89 826 82 358 1,266
12/31/90 809 80 458 1,347
12/31/91 857 85 594 1,536
12/31/92 844 83 698 1,625
12/31/93 843 83 820 1,746
12/31/94 759 76 844 1,679
12/31/95 839 83 1,061 1,983 98.33%
High-Yield
BOND SERIES
- -----------
12/31/86 $982 $ 0 $120 $1,102
12/31/87 887 19 230 1,136
12/31/88 881 19 365 1,265
12/31/89 803 17 494 1,314
12/31/90 654 14 550 1,218
12/31/91 748 16 828 1,592
12/31/92 805 17 1,089 1,911
12/31/93 871 18 1,389 2,278
12/31/94 797 17 1,482 2,296
12/31/95 874 18 1,880 2,772 177.17%
TABLE B - CLASS D SHARES
VALUE OF
PERIOD/YEAR VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT(2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- ------------- --------------------- ------------- --------- --------------- ----------
U.S. Government
SECURITIES SERIES
- -----------------
12/31/93(1) $ 982 $ -- $ 12 $ 994
12/31/94 884 59 943
12/31/95 977 -- 128 1,105 (10.47)%
High-Yield
BOND SERIES
12/31/93(1) $ 1,030 $ -- $ 15 $ 1,045
12/31/94 942 -- 100 1,042
12/31/95 1,033 -- 214 1,247 24.73%
</TABLE>
1 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.
-16-
<PAGE>
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 on 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.
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 Fund's 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
Internal Revenue Code of 1986, as amended, 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 (the
"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 Trustees 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
-17-
<PAGE>
tender the Trustees shall mail to such applicants and file with 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 by the
provisions of the 1940 Act or applicable state law, or otherwise, to be
submitted to the holders of the outstanding voting securities of an investment
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
such 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. Investors 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, 1995 and
the Mid-Year Report for the six months ended June 30, 1996, are incorporated by
reference into this Statement of Additional Information. The Annual Report and
Mid-Year Report contain schedules of the investments of each of the Fund's
Series as of December 31, 1995 and June 30, 1996, respectively, as well as
certain other financial information as of the applicable date. These Reports
will be furnished, without charge, to investors who request copies of this
Statement of Additional Information.
-18-
<PAGE>
APPENDIX
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in the
sale of government securities to help finance the Civil War - Joseph Seligman,
with his brothers, established the international banking and investment firm of
J. & W. Seligman & Co. In the years that followed, the Seligman complex played a
major role in the geographical expansion and industrial development of the
United States.
THE SELIGMAN COMPLEX:
.... Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New
York Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
ward her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
.... 1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
.... 1920s
o Participates in hundreds of underwritings including those for some of the
country's largest companies: Briggs Manufacturing, Dodge Brothers, General
Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company, United
Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
.... 1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
-19-
<PAGE>
.... 1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
Assumes management of National Investors Corporation, today Seligman
Growth Fund, Inc.
Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
.... 1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific municipal funds.
Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
.... 1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc., two closed-end funds that invest in high-quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global and
international investment products.
o Introduces Seligman Frontier Fund, Inc., a small capitalization mutual
fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
-20-
<PAGE>
File No. 2-93076
811-4103
The Registrant's Annual Report to Shareholders, dated December 31, 1995 and
Mid-Year Report, dated June 30, 1996, are incorporated into this Registration
Statement by reference to Registrant's Form N-30D filings, filed with the
Securities and Exchange Commission on March 8, 1996 and August 23, 1996,
respectively.
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements and Schedules:
Part A- Financial Highlights for the Class A shares of the U.S.
Government Securities Series of the Registrant for the ten
years ended December 31, 1995 and for the six months ended
June 30, 1996; and for the Class D shares of the U.S.
Government Securities Series of the Registrant for the period
September 21, 1993 (commencement of offering) to December 31,
1995 and for the six months ended June 30, 1996.
Part B- Financial Statements for each Series are included in the
Fund's Annual Report to Shareholders, dated December 31, 1995
and the Fund's Mid-Year Report dated June 30, 1996, which are
incorporated by reference in the Fund's Statement of
Additional Information. These Financial Statements are:
Portfolios of Investments as of December 31, 1995 and as of
June 30, 1996; Statements of Assets and Liabilities as of
December 31, 1995 and as of June 30, 1996; Statements of
Operations for the year ended December 31, 1995 and for the
six months ended June 30, 1996; Statements of Changes in Net
Assets for the years ended December 31, 1995 and 1994 and for
the six months ended June 30, 1996; Notes to Financial
Statements; Financial Highlights for the five years ended
December 31, 1995 and for the six months ended June 30, 1996
for each Series' Class A shares; for the period April 22,
1996 (commencement of offering) to June 30, 1996 for the
Seligman High-Yield Bond Series' Class B shares; and for the
period September 21, 1993 (commencement of offering) to
December 31, 1995 and for the six months ended June 30, 1996
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.
(1) Form of Amended and Restated Declaration of Trust.*
(2) Form of Restatement of Bylaws.*
(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 B Shares.
(Incorporated by reference to Form SE filed on April 16, 1996).
(4c) Specimen Stock Certificate for Class D Shares.
(Incorporated by Reference to Post-Effective Amendment No. 17 filed
on September 21, 1993.)
(5a) Copy of Management Agreement between Seligman High-Yield Bond Series
of the Registrant and J. & W. Seligman & Co. Incorporated.
(Incorporated by Reference to Post-Effective Amendment No. 20 filed
April 19, 1996.)
(5b) Copy of Management Agreement between U.S. Government Securities
Series of the Registrant and J & W. Seligman & Co. Incorporated.
(Incorporated by Reference to Post-Effective Amendment No. 19 filed
on May 1, 1995.)
(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 Financial Services,
Inc. and Dealers.
(Incorporated by Reference to Post-Effective Amendment No. 20 filed
April 19, 1996.)
(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.)
<PAGE>
PART C. OTHER INFORMATION (continued)
(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.)
(9) N/A
(10) Opinion and Consent of Counsel.
(Incorporated by Reference to Pre-Effective Amendment No. 2 filed on
February 14, 1985.)
(11) Report and Consent of Independent Auditors.*
(12) N/A
(13a) Purchase Agreement for Initial Capital between Registrant & J. & W.
Seligman & Co. Incorporated with respect to Class B shares of the
U.S. Government Securities Series.*
(13b) Purchase Agreement for Initial Capital between Registrant and J. & W.
Seligman & Co. Incorporated with respect to Class B shares of the
Seligman High-Yield Bond Series.
(Incorporated by Reference to Post-Effective Amendment No. 20 filed
on April 19, 1996.)
(13c) Purchase Agreement for Initial Capital between Registrant and J. & W.
Seligman & Co. Incorporated with respect to Registrants' Class D
shares.
(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) Amended Administration, Shareholder Services and Distribution Plans
for Registrant's Series and form of Agreement of Registrant.**
(16) Schedule of Computation of Performance Data provided in Registration
Statement in response to Item 22.
(Incorporated by Reference to Post-Effective Amendment No. 11 filed
on April 30, 1990.)
(17) N/A (no new financial statements are filed herewith)
(18) Copy of Multiclass Plan entered into by Registrant pursuant to Rule
18f-3 under the Investment Company Act of 1940.*
<PAGE>
PART C. OTHER INFORMATION (continued)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT - None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of Record
TITLE OF CLASS HOLDERS AS OF DECEMBER 16, 1996
-------------- -------------------------------
High-Yield Bond Series
Class A Common Stock 14,291
Class B Common Stock 3,833
Class D Common Stock 7,234
U.S. Government Securities Series
Class A Common Stock 2,631
Class D Common Stock 437
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 Municipal Fund Series, Inc., Seligman
Municipal Series Trust, Seligman New Jersey Municipal Fund, Inc.,
Seligman Pennsylvania Municipal Fund Series, Seligman Portfolios, Inc.,
Seligman Quality Municipal Fund, Inc., Seligman Select Municipal Fund,
Inc., and Tri-Continental Corporation.
The 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), filed on
August 7, 1996.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The names of each investment company (other than the Registrant)
for which Registrant's principal underwriter currently
distributing securities of the Registrant also acts as a principal
underwriter, depositor or investment adviser 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 Municipal Fund Series, Inc.
Seligman Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
<PAGE>
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in the answer to Item 21:
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF NOVEMBER 30, 1996
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the Board and
Chief Executive Officer
BRIAN T. ZINO* Director President and Trustee
RONALD T. SCHROEDER* Director Trustee
FRED E. BROWN* Director Trustee
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
ED LYNCH* Senior Vice President, Director None
of Marketing
MARK R. GORDON* Senior Vice President, Director None
of Marketing
GERALD I. CETRULO, III Senior Vice President of Sales None
140 West Parkway
Pompton Plains, NJ 07444
BRADLEY W. LARSON Senior Vice President of Sales None
367 Bryan Drive
Danville, CA 94526
D. IAN VALENTINE Senior Vice President of Sales None
307 Braehead Drive
Fredericksburg, VA 22401
BRADLEY F. HANSON Senior Vice President of Sales, None
9707 Xylon Court Regional Sales Manager
Bloomington, MN 55438
KAREN J. BULLOT* Vice President, Retirement Plans None
JOHN CARL* Vice President, Marketing None
MARSHA E. JACOBY* Vice President, National Accounts None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
HELEN SIMON* Vice President, Sales None
Administration Manager
JAMES R. BESHER Regional Vice President None
14000 Margaux Lane
Town & Country, MO 63017
BRADFORD C. DAVIS Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
JONATHAN G. EVANS Regional Vice Pesident None
222 Fairmont Way
Ft. Lauderdale, FL 33326
DAVID L. GARDNER Regional Vice President None
2504 Clublake Trail
McKinney, TX 75070
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
</TABLE>
<PAGE>
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF NOVEMBER 30, 1996
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
SUSAN R. GUTTERUD Regional Vice President None
820 Humboldt, #6
Denver, CO 80218
MARK LIEN Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
RANDY D. LIERMAN Regional Vice President None
2627 R.D. Mize Road
Independence, MO 64057
JUDITH L. LYON Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
DAVID L. MEYNCKE Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
MELINDA A. NAWN Regional Vice President None
5850 Squire Hill Court
Cincinnati, OH 45241
TIM O'CONNELL Regional Vice President None
14872 Summerbreeze Way
San Diego, CA 92128
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
ROBERT H. RUHM Regional Vice President None
167 Derby Street
Melrose, MA 02176
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
BRUCE M. TUCKEY Regional Vice President None
41644 Chathman Drive
Novi, MI 48375
ANDREW S. VEASEY Regional Vice President None
14 Woodside
Rumson, NJ 07760
KELLI A. WIRTH-DUMSER Regional Vice President None
8618 Hornwood Court
Charlotte, NC 28215
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
JEFFREY S. DEAN* Assistant Vice President, None
Annuity Product Manager
SANDRA FLORIS* Assistant Vice President,
Order Desk None
KEITH LANDRY* Assistant Vice President,
Order Deak None
</TABLE>
<PAGE>
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
SELIGMAN FINANCIAL SERVICES, INC.
AS OF NOVEMBER 30, 1996
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
FRANK P. MARINO* Assistant Vice President, Mutual
Fund Product Manager None
JOSEPH M. MCGILL* Assistant Vice President and None
Compliance Officer
JOYCE PERESS* Assistant Secretary None
</TABLE>
* The principal business address of each of these directors and/or
officers is 100 Park Avenue, New York, NY 10017.
(c) Not applicable.
Item 30. Location of Accounts and Records
(1) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105 AND
(2) Seligman Data Corp.
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 First Data Investor
Services Group ("FDISG") pursuant to which FDISG 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, 1995, 1994 and 1993 the approximate
cost of these services for each Series were:
1995 1994 1993
---- ---- ----
U.S. Government Securities Series $17,700 $17,132 $18,400
High-Yield Bond Series $28,200 $15,577 $15,400
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. 22 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the day 31st of December, 1996.
SELIGMAN HIGH INCOME FUND SERIES
By: /S/ WILLIAM C. MORRIS
--------------------------------
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Post-Effective Amendment No. 22 has been
signed below by the following persons in the capacities indicated on
December 31 , 1996.
SIGNATURE TITLE
--------- -----
/S/ WILLIAM C. MORRIS Chairman of the Trustees (Principal
- -------------------------------- executive officer) and Trustee
William C. Morris*
/S/ BRIAN T. ZINO Trustee and President
- --------------------------------
Brian T. Zino
/S/ THOMAS G. ROSE Treasurer (Principal financial and
- -------------------------------- Accounting Officer)
Thomas G. Rose
Fred E. Brown, Trustee )
Alice S. Ilchman, Trustee )
John E. Merow, Trustee )
Betsy S. Michel, Trustee ) /S/ BRIAN T. ZINO
James C. Pitney, Trustee ) ------------------
James Q. Riordan, Trustee ) *Brian T. Zino, Attorney-In-Fact
Ronald T. Schroeder, Director )
Robert L. Shafer, Trustee )
James N. Whitson, Trustee )
<PAGE>
SELIGMAN HIGH INCOME FUND SERIES
Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
FORM N-1A ITEM NO. DESCRIPTION
- ------------------ -----------
24(b)(1) Form of Amended and Restated Declaration of Trust
24(b)(2) Form of Restatement of Bylaws
24(b)(11) Consent of Independent Auditors
24(b)(13)(a) Purchase Agreement for intitial capital with respect to
Class B shares of U.S. Government Securities Series
24(b)(18) Copy of Multiclass Plan pursuant to Rule 18f-3
SELIGMAN HIGH INCOME FUND SERIES
FORM OF AMENDED AND RESTATED
DECLARATION OF TRUST
DATED AS OF JULY 25, 1984
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I -- NAME AND DEFINITIONS 2
Section 1.1. Name 2
Section 1.2. Definitions 2
ARTICLE II -- TRUSTEES 5
Section 2.1. Number of Trustees 5
Section 2.2. Election and Term 5
Section 2.3. Resignation and Removal 5
Section 2.4. Vacancies 5
Section 2.5. Delegation of Power to Other Trustees 6
ARTICLE III -- POWER OF TRUSTEES 7
Section 3.1. General 7
Section 3.2. Investments 7
Section 3.3. Legal Title 8
Section 3.4. Issuance and Repurchase of Securities 8
Section 3.5. Borrowing Money; Lending Trust Assets 9
Section 3.6. Delegation; Committees 9
Section 3.7. Collection and Payment 9
Section 3.8. Expenses 9
Section 3.9. Manner of Acting; By-Laws 9
Section 3.10. Miscellaneous Powers 10
Section 3.11. Principal transactions 10
ARTICLE IV -- ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT 12
Section 4.1. Adviser 12
Section 4.2. Distributor 12
Section 4.3. Custodian 13
Section 4.4. Transfer Agent 13
Section 4.5. Parties to Contract 13
ARTICLE V -- Limitations of Liability of Shareholders, Trustees and Others 14
Section 5.1. No Personal Liability of Shareholders,
Trustees, etc. 14
Section 5.2. Non-Liability of Trustees, etc. 14
Section 5.3. Indemnification 14
Section 5.4. No Bond Required of Trustees 15
Section 5.5. No Duty of Investigation; Notice in Trust
Instruments, etc. 15
Section 5.6. Reliance on Experts, etc. 16
<PAGE>
PAGE
----
ARTICLE VI -- SHARES OF BENEFICIAL INTEREST 17
Section 6.1. Beneficial Interest 17
Section 6.2. Rights of Shareholders 17
Section 6.3. Trust Only 17
Section 6.4. Issuance of Shares 18
Section 6.5. Register of Shares 18
Section 6.6. Transfer of Shares 19
Section 6.7. Notices 19
Section 6.8. Voting Powers 19
Section 6.9. Series or Classes of Shares 20
ARTICLE VII -- REDEMPTIONS 24
Section 7.1. Redemptions 24
Section 7.2. Redemption of Shares; Disclosure of Holdings 24
Section 7.3. Redemptions of Accounts 25
Section 7.4. Redemptions Pursuant to Constant Net Asset Value
Provisions 25
ARTICLE VII -- DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS 26
Section 8.1. Net Asset Value 26
Section 8.2. Distribution to Shareholders 26
Section 8.3. Determination of Net Income; Constant Net Asset Value
of Shares of Certain Series; Reduction of Outstanding
Shares 26
Section 8.4. Power to Modify Foregoing Procedures 27
ARTICLE IX -- DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC. 29
Section 9.1. Duration 29
Section 9.2. Termination of Trust 29
Section 9.3. Amendment Procedures 30
Section 9.4. Merger, Consolidation and Sale of Assets 31
Section 9.5. Incorporation 31
ARTICLE X -- REPORTS TO SHAREHOLDERS 33
ARTICLE XI -- MISCELLANEOUS 34
Section 11.1. Filing 34
Section 11.2 Resident Agent 34
Section 11.3. Governing Law 34
<PAGE>
PAGE
----
Section 11.4. Counterparts 34
Section 11.5 Reliance by Third Parties 34
Section 11.6 Provisions in Conflict with Laws of Regulations 35
SIGNATURE PAGE
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DECLARATION OF TRUST
OF
SELIGMAN HIGH INCOME FUND SERIES
Dated as of July 25, 1984
THE DECLARATION OF TRUST of Seligman High Income Fund Series is made as
of the 25th day of July, 1984 by the parties signatory hereto, as Trustees.
W I T N E S S E T H
WHEREAS, the Trustees desire to form a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed thereto;
and
WHEREAS, it is proposed that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest as hereinafter
provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all money and property contributed to the trust fund to manage and dispose
of the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof, to
wit:
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ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust created hereby is Seligman
High Income Fund Series.
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "ADVISER" means any party, other than the Trust or any series
thereof, to any contract described in Section 4.1 hereof.
(b) "BY-LAWS" means the By-Laws referred to in Section 3.8 hereof, as
from time to time amended.
(c) The terms "COMMISSION", "AFFILIATED PERSON" and "INTERESTED PERSON"
have the meanings given them in the 1940 Act.
(d) "CUSTODIAN" means any party, other than the Trust or any series
thereof, to any contract described in Section 4.3 hereof.
(e) "DECLARATION" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "DECLARATION" , "HEREOF" and
"HEREUNDER" shall be deemed to refer to this Declaration rather than the article
or section in which such words appear.
(f) "DISTRIBUTOR" means any party, other than the Trust or any series
thereof, to any contract described in Section 4.2 hereof.
(g) "FUNDAMENTAL POLICIES" shall mean the investment restrictions as
applicable to shares of any series or class thereof set forth in the Prospectus
and designated as fundamental policies therein.
(h) "MAJORITY SHAREHOLDER VOTE" means, unless otherwise determined by
the Trustees in accordance with Section 6.8 hereof in conjunction with the
establishment of any series or classes of shares, the vote of the holders of a
majority of Shares, which shall consist of: (i) a majority of Shares represented
in person or by proxy and entitled to vote at a meeting of Shareholders at which
a quorum, as determined in accordance with the By-Laws, is present; (ii) a
majority of Shares issued and outstanding and entitled to vote when action is
taken by written consent of Shareholders; and (iii) a "majority of the
outstanding voting securities", as that phrase is defined in the 1940 Act, when
action is taken by Shareholders with respect to any matter as to which the vote
of "a majority of the outstanding voting securities" is required under the 1940
Act; provided that in cases required or permitted under the 1940 Act or Section
6.9 hereof to be submitted to the holders of the Shares of one or more but not
all series or classes of Shares, a "Majority Shareholder Vote" means the vote of
"a majority of the outstanding voting securities," as that phrase is defined in
the 1940 Act, of the Shares of the particular series or class.
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(i) "1940 ACT" means the Investment Company Act of 1940 and the rules
and regulations thereunder as amended from time to time
(j) "PERSON" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(k) "PROSPECTUS" means the prospectus, including any statement of
additional information and any information or document incorporated by reference
therein, constituting part of the Registration Statement of the Trust under the
Securities Act of 1933 as such prospectus, including any statement of additional
information and any information or document incorporated by reference therein,
may be amended or supplemented and filed with the Commission from time to time,
and, in the event that there is more than one Prospectus, each relating to the
shares of any one or more series or classes of shares, "Prospectus" means the
Prospectus relating to such series or classes of shares.
(l) "SHAREHOLDER" means a record owner of outstanding Shares.
(m) "SHARES" means the units of interest into which the beneficial
interest in the Trust shall be divided from time to time, including the shares
of any and all series or classes which may be established by the Trustees, and
includes fractions of Shares as well as whole Shares. Shares shall have a
designated par value of $.001 per Share.
(n) "TRANSFER AGENT" means any party, other than the Trust or any
series thereof, to any contract described in Section
4.4 hereof.
(o) "TRUST" means Seligman High Income Fund Series.
(p) "TRUST PROPERTY" or "TRUST ESTATE" means any and all property, real
or personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
(q) "TRUSTEES" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly elected or appointed,
qualified and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as trustees hereunder.
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ARTICLE II
TRUSTEES
SECTION 2.1. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees then in office, provided, however, that the number of
Trustees shall in no event be less than two.
SECTION 2.2. ELECTION AND TERM. The Trustees shall be elected by a
Majority Shareholder Vote at the first meeting of Shareholders following the
initial offering of Shares of the Trust. The Trustees shall have the power to
set and alter the terms of the office of the Trustees, and they may at any time
lengthen or lessen their own terms or make their terms of unlimited duration,
subject to the resignation and removal provisions of Section 2.3 hereof. Subject
to Section 16 (a) of the 1940 Act, the Trustees may elect their own successors
and may, pursuant to Section 2.4 hereof, appoint Trustees to fill vacancies. The
Trustees shall adopt By-Laws not inconsistent with this Declaration or any
provision of law to provide for election of Trustees by Shareholders at such
time or times as the Trustees shall determine to be necessary or advisable.
SECTION 2.3. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate number of
Trustees after such removal shall not be less than the number required by
Section 2.1 hereof) with cause, by the action of two-thirds of the remaining
Trustees. Upon the resignation or removal of a Trustee, or his otherwise ceasing
to be a Trustee, he shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust (or appropriate
series thereof) or the remaining Trustees any Trust Property or property of any
series thereof held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
SECTION 2.4. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject to the
provisions of Section 16 (a) of the 1940 Act, the remaining Trustees or, prior
to the public offering of Shares of the Trust, if only one Trustee shall them
remain in office, the remaining Trustee, shall fill such vacancy by the
appointment of such other person as they or he, in their or his discretion,
shall see fit, made by a written instrument signed by a majority of the
remaining Trustees or by the remaining Trustee, as the case may be. Any such
appointment shall not become effective, however, until the person named in the
written instrument of appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of the Declaration.
An appointment of a Trustee may be made in anticipation of a vacancy to occur at
a later date by reason of retirement, resignation or increase in the number of
Trustees, provided that such appointment shall not become effective prior to
such retirement, resignation or increase in the number of Trustees. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in this Section 2.4, the Trustee in office, regardless of their number,
shall have all the powers granted to the Trustees and shall discharge all the
duties imposed upon the Trustees by the Declaration. A written instrument
certifying the existence of such vacancy signed by a majority of the Trustees
shall be conclusive evidence of the existence of such vacancy.
SECTION 2.5. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly provided.
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ARTICLE III
POWER OF TRUSTEES
SECTION 3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property, including the property of any series of the
Trust, and over the business of the Trust to the same extent as if the Trustees
were the sole owners of such property and business in their own right, but with
such powers of delegation as may be permitted by the Declaration. The Trustees
shall have power to conduct the business of the Trust and carry on its
operations in any and all of its branches and maintain offices both within and
without the Commonwealth of Massachusetts, in any and all states of the United
States of America, in the District of Columbia, in foreign countries and in any
and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as
they deem necessary, proper or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of the
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2. INVESTMENTS. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute,
lend or otherwise deal in or dispose of securities, negotiable or
non-negotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, options and other securities
and commodities and commodities futures contracts of any kind,
including without limitation, those issued, guaranteed or sponsored by
any and all Persons including, without limitation, states, territories
and possessions of the United States, the District of Columbia and any
of the political subdivisions, agencies or instrumentalities thereof,
and by the United States Government or its agencies or
instrumentalities, or international instrumentalities, or by any bank
or savings institution, or by any corporation or organization organized
under the laws of the United States or of any state, territory or
possession thereof, and of corporations or organizations organized
under foreign laws, or in "when issued" or "delayed delivery" contracts
for any such securities, or retain Trust assets in cash and from time
to time change the investments of the assets of the Trust; and to
exercise any and all rights, powers and privileges of ownership of
interest in respect of any and all such investments of every kind and
description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more
persons, firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any of said instruments;
and the Trustees shall be deemed to have the foregoing powers with
respect to any additional securities in which the Trust may invest
should the Fundamental Policies be amended.
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The Trustees shall not be limited to investing in obligations maturing before
the possible termination of the Trust, nor shall the Trustees be limited by any
law limiting the investments which may be made by fiduciaries.
SECTION 3.3. LEGAL TITLE. Legal title to all the Trust Property,
including the Property, including the property of any series of the Trust, shall
be vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person as nominee, on such terms as the Trustees may determine, provided
that the interest of the Trust therein is appropriately protected. The right,
title and interest of the Trustees in the Trust Property and the property of
each series of the Trust shall vest automatically in each Person who may
hereafter become a Trustee. Upon the resignation, removal or death of a Trustee
he shall automatically cease to have any right, title or interest in any of the
Trust Property or the property of any series of the Trust, and the right, title
and interest of such Trustee in such property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
SECTION 3.4. ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VII, VIII and IX and Section 6.9
hereof, to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the particular series of the
Trust with respect to which such shares are issued, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporations.
SECTION 3.5. BORROWING MONEY; LENDING TRUST ASSETS. Subject to the
Fundamental Policies, the Trustees shall have the power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, to endorse, guarantee,
or undertake the performance of any obligation, contract or engagement or any
other Person and to lend Trust assets.
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SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or the
names of the Trustees or otherwise as the Trustees may deem expedient.
SECTION 3.7. COLLECTION AND PAYMENT. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
SECTION 3.8. EXPENSES. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
SECTION 3.9. MANNER OF ACTING; BY-LAWS. Except as otherwise provided
herein or in the By-Laws or by any provisions of law, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of all the Trustees. The Trustees may adopt By-Laws not
inconsistent with this Declaration to provide for the conduct of the business of
the Trust and may amend or repeal such By-Laws to the extent such power is not
reserved to the Shareholders.
SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property or the
property of the appropriate series of the Trust, insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, managers, investment
advisers, distributors or independent contractors of the Trust against all
claims arising by reason of holding any such position or by reason of any action
taken or omitted to be taken by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (e) establish pension,
profit-sharing, Share purchase, and other retirement, incentive and benefit
plans for any Trustees, officers, employees and agents, of the Trust; (f) to the
extent permitted by law, indemnify any person with whom the Trust has dealings,
including the Adviser, Custodian, Distributor and Transfer Agent, to such extent
as the Trustees shall determine; (g) guarantee indebtedness or contractual
obligations of others; (h) determine and change the fiscal year of the Trust and
the method by which its accounts shall be kept; and (i) adopt a seal for the
Trust, but the absence of such seal shall not impair the validity of any
instrument executed on behalf of the Trust.
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SECTION 3.11. PRINCIPAL TRANSACTIONS. Except in transactions permitted
by the 1940 Act or any order of exemption issued by the Commission, or effected
to implement the provisions of any agreement to which the Trust is a party, the
Trustees shall not, on behalf of the Trust, buy any securities (other than
Shares) from or sell any securities (other than Shares) to, or lend any assets
of the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with the Adviser or Distributor or with any Affiliated Person of such
Person; but the Trust may employ any such Person, or firm or company in which
such Person is an Interested Person, as broker, legal counsel, registrar,
transfer agent, dividend disbursing agent or custodian upon customary terms.
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ARTICLE IV
ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT
SECTION 4.1. ADVISER. Subject to approval by a Majority Shareholder
Vote, the Trustees may in their discretion from time to time enter into an
investment advisory contract or contracts whereby the other party to such
contract shall undertake to furnish to the Trust or any series thereof such
investment advisory, statistical and research facilities and services, and such
other facilities and services, if any, as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine. Notwithstanding any provisions of the Declaration,
the Trustees may authorize the Adviser (subject to such general or specific
instructions as the Trustees may from time to time adopt ) to effect purchases,
sales, loans or exchanges of portfolio securities of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of the Adviser
(and all without further action by the Trustees). Any such purchases, sales,
loans and exchanges shall be deemed to have been authorized by all of the
Trustees. The Trustees may, in their sole discretion, call a meeting of
Shareholders in order to submit to a vote of Shareholders at such meeting the
approval or continuance of any such investment advisory contract.
SECTION 4.2. DISTRIBUTOR. The Trustees may in their discretion from
time to time enter into a distribution contract or contracts providing for the
sale of Shares to net the Trust or any series thereof not less than the net
asset value per share (as described in Article VIII hereof) and pursuant to
which the Trust or any series of the Trust may either agree to sell the Shares
to the other party to the contract or appoint such other party its sales agent
for such Shares. In either case, any such contract shall be on such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the provisions of this Article IV.
SECTION 4.3. CUSTODIAN. The Trustees may in their discretion from time
to time enter into a custodian contract or contracts whereby the other party to
any such contract shall undertake to furnish custodian services to the Trust or
any series thereof, including holding the Trust's or any such series portfolio
securities and cash and maintaining books and records with respect to the
Trust's or any such series portfolio transactions. Any such contract shall have
such terms and conditions as the Trustees may in their discretion determine not
inconsistent with the Declaration. The By-Laws may make further provisions as to
the duties and appointment of any Custodian.
SECTION 4.4. TRANSFER AGENT. The Trustees may in their discretion from
time to time enter into a transfer agency and shareholder service contract or
contracts whereby the other party to any such contract shall undertake to
furnish transfer agency and shareholder services to the Trust or any series
thereof. Any such contract shall have such terms and conditions as the Trustees
may in their discretion determine not inconsistent with the Declaration. Such
services may be provided by one or more Persons.
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SECTION 4.5. PARTIES TO CONTRACT. Any contract of the character
described in Section 4.1, 4.2, 4.3 or 4.4 of this Article IV and any other
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Trust may be such other party to the contract or an
officer, director, trustee, shareholder, or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable by
reason of the existence of any such relationship nor shall any Person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable for
any profit realized directly or indirectly therefrom, provided that the contract
when entered into was not inconsistent with the provisions of this Article IV.
The same Person may be the other party to any contracts entered into pursuant to
Section 4.1, 4.2, 4.3 or 4.4 above or otherwise, and any Trustee, officer,
employee or agent of the Trust may be financially interested or otherwise
affiliated with Persons who are parties to any or all of the contracts mentioned
in this Section 4.5.
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ARTICLE V
LIMITATIONS OF LIABILITY OF
SHAREHOLDERS, TRUSTEES AND OTHERS
SECTION 5.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, wilful misfeasance, gross negligence or
reckless disregard for his or its duty to such Person; and all such Persons
shall look solely to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee or agent, as such, of the Trust is made a party to
any suit or proceeding to enforce any such liability, he or it shall not, on
account thereof, be held to any personal liability. The Trust shall indemnify
and hold each Shareholder harmless from and against all claims and liabilities
to which such Shareholder may become subject by reason of his being or having
been a Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability, and, upon request of such Shareholder, the Trust shall assume the
defense of any claim made against such Shareholder by reason of his being or
having been a Shareholder; provided that any such expenses shall be paid solely
out of the funds and property of the series of the Trust with respect to which
such Shareholder's Shares are issued. The rights accruing to a Shareholder under
this Section 5.1 shall not exclude any other right to which such Shareholder may
be lawfully entitled, nor shall anything herein contained restrict the right of
the Trust to indemnify or reimburse a Shareholder in any appropriate situation
even though not specifically provided herein.
SECTION 5.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, or agent thereof for any
action or failure to act (including without limitation the failure to compel in
any way any former or acting Trustee to redress any breach of trust) except for
his or its own bad faith, wilful misfeasance, gross negligence or reckless
disregard of his or its duties.
SECTION 5.3. INDEMNIFICATION.
(a) The Trustees shall provide for indemnification by the Trust of
every person who is, or has been, a Trustee or officer of the Trust
against all liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof, in such manner not otherwise
prohibited or limited by law as the Trustees may provide from time to
time in the By-Laws.
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(b) The words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
SECTION 5.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
SECTION 5.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS,
ETC. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed or done in
connection with the Trust shall be conclusively presumed to have been executed
or done by the executors thereof only in their capacity as Trustees under the
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees shall recite
that the same is executed or made by them not individually, but as Trustees
under the Declaration, and that the obligations of any such instrument are not
binding upon any of the Trustees or Shareholders, individually, but bind only
the Trust Estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees or Shareholders individually. The Trustees shall at all times maintain
insurance for the protection of the Trust Property, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
SECTION 5.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Adviser, the Distributor, the
Custodian, the Transfer Agent, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
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ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1. BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest of
$.001 par value of two separate investment series, designated as " Seligman
High-Yield Bond Series: and "Seligman U.S. Government Securities Series". The
number of shares of beneficial interest authorized hereunder is limited. The
Trustees may initially issue whole and fractional shares of three classes within
each series, designated " Class A Shares", "Class B Shares" and "Class D
Shares", each of which shall represent an equal proportionate share in the
series of the Trust with each other Share. The Trustees may divide or combine
the shares into a greater or lesser number of shares without thereby changing
the proportionate beneficial interests in the Trust. Subject to the provisions
of Section 6.9 hereof, the Trustees may also authorize the creation of an
additional series of shares (the proceeds of which may be invested in separate,
independently managed portfolios) and additional classes of shares within any
series. All Shares issued hereunder including, without limitation, Shares issued
in connection with a dividend in Shares or a split in Shares, shall be fully
paid and nonassessable.
SECTION 6.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust
Property and the property of each series of the Trust of every description and
the right to conduct any business hereinbefore described are vested exclusively
in the Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no right
to call for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to assume any losses of the
Trust or suffer an assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights in the
Declaration specifically set forth. The Shares shall not entitle the holder to
preference, preemptive, appraisal, conversion or exchange rights, except as the
Trustees may determine with respect to any series or class of Shares. Upon
liquidation of the Trust, holders of the Shares are entitled to share pro rata
in the net assets of the Trust available for distribution to the holders except
as provided by Section 6.9 (f) with respect to the holders of different series
or classes of Shares as provided in Section 6.9.
SECTION 6.3. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
<PAGE>
SECTION 6.4. ISSUANCE OF SHARES. The Trustees, in their discretion,
may, from time to time without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
Treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day in accordance with the maintenance of a
constant net asset value per Share), and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares. The Trustees may from time to time divide or combine the
Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust. Reductions in the number of
outstanding Shares may be made pursuant to the provisions of Section 8.3 in
order to maintain a constant net asset value per Share of any series attempting
to maintain such a constant net asset value. Contributions to the Trust may be
accepted for, and the Shares shall be redeemed as, whole Shares and/or fractions
of a Share as described in the Prospectus.
SECTION 6.5. REGISTER OF SHARES. A register shall be kept at the
principal office of the Trust or at an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
may be in written form or any other form capable of being converted into written
form within a reasonable time for visual inspection. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as herein or in the
By-Laws provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to their use.
SECTION 6.6. TRANSFER OF SHARES. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law, except as may otherwise be provided by the laws of
the Commonwealth of Massachusetts.
<PAGE>
SECTION 6.7. NOTICES. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
SECTION 6.8. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.2 hereof, (ii)
with respect to any investment advisory contract as provided in Section 4.2,
(iii) with respect to termination of the Trust as provided in Section 9.2, (iv)
with respect to any amendment of the Declaration to the extent and as provided
in Section 9.3, (v) with respect to any merger, consolidation or sale of assets
as provided in Section 9.4, (vi) with respect to incorporation of the Trust to
the extent and as provided in Section 9.5, (vii) 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 Trust or the Shareholders,
and (viii) with respect to such additional matters relating to the Trust as may
be required by law, the Declaration, the By-Laws or any registration of the
Trust with the Commission (or any successor agency) or any state, or as and when
the Trustees may consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote, except
that Shares held in the Treasury of the Trust as of the record date, as
determined in accordance with the By-Laws, shall not be voted and except that
the Trustees may, in conjunction with the establishment of any series or classes
of Shares, establish conditions under which the several series or classes shall
have separate voting rights or no voting rights. There shall be no cumulative
voting in the election of Trustees. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration or the By-Laws to be taken by Shareholders. The By-Laws may include
further provisions for Shareholders' votes and meetings and related matters.
SECTION 6.9. SERIES OR CLASSES OF SHARES. If the Trustees shall divide
the Shares of the Trust into two or more series or two or more classes of any
series, as provided in Section 6.1 hereof, the following provisions shall be
applicable:
(a) All provisions herein relating to the Trust shall apply equally to
each series of the Trust except as the context otherwise requires.
<PAGE>
(b) The number of authorized Shares and the number of Shares of each
series or of each class that may be issued shall be unlimited. The
Trustees may classify or reclassify any unissued Shares or any Shares
previously issued and reacquired of any series or class into one or
more series or one or more classes that may be established and
designated from time to time. The Trustees may hold as treasury shares
(of the same or some other series or class), reissue for such
consideration and on such terms as they may determine, or cancel any
Shares of any series or any class reacquired by the Trust at their
discretion from time to time.
(c) The power of the Trustees to invest and reinvest the Trust Property
shall be governed by Section 3.2 of this Declaration with respect to
any one or more series which represents the interests in the assets of
the Trust immediately prior to the establishment of two or more series
and the power of the Trustees to invest and reinvest assets applicable
to any other series shall be as set forth in the instrument of the
Trustees establishing such series.
(d) All consideration received by the Trust for the issue or sale of
Shares of a particular series or class together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that series or class
for all purposes, subject only to the rights or creditors of such
series, and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular series or class, the
Trustees shall allocate them among any one or more of the series or
classes established and designated from time to time in such manner and
on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all series or classes for all
purposes.
(e) The assets belonging to each particular series shall be charged
with the liabilities of the Trust in respect of that series and all
expenses, costs, charges and reserves attributable to that series, and
any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular
series shall be allocated among the series on the basis of their
relative average daily net assets except where allocations of direct
expenses can otherwise be fairly made. The Trustees may from time to
time in particular cases make specific allocations of assets or
liablilities among series. Each allocation of liabilities, expenses,
costs, charges and reserves by the Trustees shall be conclusive and
binding upon the holders of all series for all purposes. The Trustees
shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders. The assets of a
particular series of the Trust shall under no circumstances be charged
with liabilities attributable to any other series of the Trust. All
persons extending credit to, or contracting with or having any claim
against a particular series of the Trust shall look only to the assets
of that particular series for payment of such credit, contract or
claim.
<PAGE>
(f) Each Share of a series of the Trust shall represent a beneficial
interest in the net assets of such series. Each holder of Shares of a
series shall be entitled to receive his pro rata share of distributions
of income and capital gains made with respect to such series. Upon
redemption of his Shares or indemnification for liabilities incurred by
reason of his being or having been a Shareholder of a series, such
shareholder shall be paid solely out of the funds and property of such
series of the Trust. Upon liquidation or termination of a series of the
Trust, Shareholders of such series shall be entitled to receive a pro
rata share of the net assets of such series. A Shareholder of a
particular series of the Trust shall not be entitled to participate in
a derivative or class action on behalf of any other series or the
Shareholders of any other series of the Trust.
(g) Notwithstanding any other provisions hereof, on any matter
submitted to a vote of Shareholders of the Trust, all Shares then
entitled to vote shall be voted by individual series, except that (1)
when required by the 1940 Act, Shares shall be voted in the aggregate
and not by individual series, and (2) when the Trustees have determined
that the matter affects only the interests of Shareholders of a limited
number of series, then only the Shareholders of such series shall be
entitled to vote thereon. Classes within a series shall vote with all
other Shares of the series except that the Trustees may provide that
any Class shall vote separately as a Class as to any matter when (i)
required by law, rule or exemptive order, (ii) they determine that such
matter affects only the interest of Shares of such Class or affects the
interests of Shares of such Class in a manner different from that of
the other Classes or (iii) they otherwise determine that to do so is
desirable and in the best interests of the Shareholders of such Class
under the circumstances.
(h) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 8.2 of this Declaration with respect to
any one or more series or classes which represents the interests in the
assets of the Trust immediately prior to the establishment of two or
more series or classes. With respect to any other series or class,
dividends and distributions on Shares of a particular series or class
may be paid with such frequency as the Trustees may determine, which
may be daily or otherwise, pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees
may determine, to the holders of Shares of that series or class, from
such of the income and capital gains, accrued or realized, from the
assets belonging to that series or class, as the Trustees may
determine, after providing for actual and accrued liabilities belonging
to that series or class. All dividends and distributions on Shares of a
particular series or class shall be distributed pro rata to the holders
of that series or class in proportion to the number of Shares of that
series or class held by such holders at the date and time of record
established for the payment of such dividends or distributions.
<PAGE>
(i) The Trustees shall have the power to determine the designations,
preferences, privileges, limitations and rights, including voting and
dividend rights, of each class and series of Shares. The Trustees
(including any successor Trustees) shall have the right at any time and
from time to time to reallocate assets and expenses or to change the
designation of any series now or hereafter created, or to otherwise
change the special and relative rights of any such series, provided
that such change shall not adversely affect the rights of shareholders
of a series.
(j) The establishment and designation of any series or class of Shares
shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such series or
class, or as otherwise provided in such instrument. At any time that
there are no Shares outstanding of any particular series or class
previously established and designated, the Trustees may by an
instrument executed by a majority of their number abolish that series
or class and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to
this Declaration.
<PAGE>
ARTICLE VII
REDEMPTIONS
SECTION 7.1. REDEMPTIONS. All outstanding Shares may be redeemed at the
option of the holders thereof, upon and subject to the terms and conditions
provided in this Article VII. The Trust shall, upon application of any
Shareholder or pursuant to authorization from any Shareholder, redeem or
repurchase from such Shareholder outstanding Shares for an amount per share
determined by the Trustees in accordance with any applicable laws and
regulations; provided that (a) such amount per share shall not exceed the cash
equivalent of the proportionate interest of each Share of any class or series of
Shares in the assets of the Trust attributable to such class or series at the
time of the redemption or repurchase and (b) if so authorized by the Trustees,
the Trust may, at any time and from time to time, charge fees for effecting such
redemption or repurchase, at such rates as the Trustees may establish, as and to
the extent permitted under the 1940 Act, and may, at any time and from time to
time, pursuant to the 1940 Act, suspend such right of redemption. The procedures
for and fees, if any, chargeable in connection with effecting and suspending
redemption shall be as set forth in the Prospectus from time to time. Payment
will be made in such manner as described in the Prospectus.
SECTION 7.2. REDEMPTION OF SHARES; DISCLOSURE OF HOLDINGS. If the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares or other securities of the Trust has or may become
concentrated in any Person to an extent which would disqualify the Trust or any
series thereof as a regulated investment company under the Internal Revenue
Code, then the Trustees shall have the power by lot or other means deemed
equitable by them (i) to call for redemption by any such Person a number, or
principal amount, of Shares or other securities of the Trust or the series
sufficient, in the opinion of the Trustees, to maintain or bring the direct or
indirect ownership of Shares or other securities of the Trust or the series into
conformity with the requirements for such qualification and (ii) to refuse to
transfer or issue Shares or other securities of the Trust or the series to any
Person whose acquisition of the Shares or other securities of the Trust in
question could in the opinion of the Trustees result in disqualification. The
redemption shall be effected at a redemption price determined in accordance with
Section 7.1.
The holders of Shares or other securities of the Trust or any series
thereof shall upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other securities of
the Trust as the Trustees deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other
authority.
<PAGE>
SECTION 7.3. REDEMPTIONS OF ACCOUNTS. The Trustees may redeem Shares of
any Shareholder at a redemption price determined in accordance with Section 7.1
if the aggregate net asset value of the Shares in such Shareholder's account is
less than an amount set from time to time by the Trustees, subject to such terms
and conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all Shareholders of its intention to avail itself of such
right , either by publication in the Trust's Prospectus, if any, or by such
means as the Trustees may determine. Similarly, the Trustees may redeem Shares
of any Shareholder at a redemption price determined in accordance with 7.1 to
recover any account charges, as permitted by or disclosed in the Trust's
Prospectus.
SECTION 7.4. REDEMPTIONS PURSUANT TO CONSTANT NET ASSET VALUE
PROVISIONS. The Trust may also reduce the number of outstanding Shares of any
series pursuant to the provisions of Section 8.3.
<PAGE>
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
SECTION 8.1. NET ASSET VALUE. The net asset value of each outstanding
Share of the Trust shall be determined on such days and at such time or times as
the Trustees may determine. The method of determination of net asset value shall
be determined by the Trustees and shall be as set forth in the Prospectus. The
power and duty to make the daily calculations may be delegated by the Trustees
to the Administrator, the Adviser, the Custodian, the Transfer Agent or such
other person as the Trustees by resolution may determine. The Trustees may
suspend the daily determination of net asset value to the extent permitted by
the 1940 Act.
SECTION 8.2. DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall from
time to time distribute ratably among the Shareholders such proportion of the
net profits, surplus (including paid-in surplus), capital, or assets held by the
Trustees as they may deem proper. Such distribution may be made in cash or
property (including without limitation any type of obligations of the Trust or
any assets thereof), and the Trustees may distribute ratably among the
Shareholders additional Shares issuable hereunder in such manner, at such times,
and on such terms as the Trustees may deem proper. Such distributions may be
among the Shareholders of record at the time of declaring a distribution or
among the Shareholders of record at the time of declaring a distribution or
among the Shareholders of record at such later date as the Trustees shall
determine. The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses attributable to the
relevant series of the Trust or to meet obligations of such series or as they
may deem desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
<PAGE>
SECTION 8.3. DETERMINATION OF NET INCOME; CONSTANT NET ASSET VALUE OF
SHARES OF CERTAIN SERIES; REDUCTION OF OUTSTANDING SHARES. The Trustees shall
have the power to determine the net income of each series of the Trust one or
more times on each business day and at each such determination declare such net
income as dividends in additional Shares of such series. The determination of
net income and the resultant declaration of dividends shall be as set forth in
the Prospectus. In the event that any series of the Trust attempts to maintain a
constant net asset value per share of such series, if, for any reason, the net
income of such series of the Trust determined at any time is a negative amount,
the Trustees shall have the power to (i) to offset each Shareholder's pro rata
share of such negative amount from the accrued dividend account of such
Shareholder, or (ii) to reduce the number of outstanding shares of such series
of the Trust by reducing the number of Shares in the account of such Shareholder
by that number of full and fractional Shares which represents the amount of such
excess negative net income, or (iii) to cause to be recorded on the books of the
Trust an asset account in the amount of such negative net income, which account
may be reduced by the amount, provided that the same shall thereupon become the
property of the Trust and shall not be paid to any Shareholder, of dividends
declared thereafter upon the outstanding shares on the day such negative net
income is experienced, until such asset account is reduced to zero, or (iv) to
combine the methods described in clauses (i) and (ii) and (iii) of this
sentence, in order to cause the net asset value per Share of such series of the
Trust to remain at a constant amount per outstanding share immediately after
each such determination and declaration. The Trustees shall also have the power
to fail to declare a dividend out of net income for the purposes of causing the
net asset value per Share of any such series to be increased to a constant
amount. The Trustees shall have full discretion to determine whether any cash or
property received shall be treated as income or as principal and whether any
item of expense shall be charged to the income or the principal account, and
their determination made in good faith shall be conclusive upon the
Shareholders. In the case of stock dividends received, the Trustees shall have
full discretion to determine, in the light of the particular circumstances, how
much, if any, of the value thereof shall be treated as income, the balance, if
any, to be treated as principal. The Trustees shall not be required to adopt,
but may at any time adopt, discontinue or amend the practice of maintaining the
net asset value per Share of any series of the Trust at a constant amount.
SECTION 8.4. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or desirable
to enable the Trust to comply with any provisions of the 1940 Act, including any
rule or regulation adopted pursuant to Section 22 of the 1940 Act by the
Commission or any securities association registered under the Securities
Exchange Act of 1934, or any order of exemption issued by said Commission, all
as in effect now or hereafter amended or modified. Without limiting the
generality of the foregoing, the Trustees may establish classes or series of
Shares in accordance with Section 6.9.
<PAGE>
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
SECTION 9.1 DURATION. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
SECTION 9.2. TERMINATION OF TRUST. (a) The Trust may be terminated (i)
by the affirmative vote of the holders of not less than two-thirds of the Shares
outstanding and entitled to vote at any meeting of Shareholders, or (ii) by an
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of not less than two-thirds of such Shares, or
by such other vote as may be established by the Trustees with respect to any
class or series of Shares, or (iii) by the Trustees by written notice to the
Shareholders. Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and
all of the powers of the Trustees under this Declaration shall continue
until the affairs of the Trust shall have been wound up, including the
power to fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, transfer or otherwise dispose
of all or any part of the remaining Trust Property to one or more
persons at public or private sale for consideration which may consist
in whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate
to liquidate its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property shall require Shareholder approval
in accordance with Section 9.4 hereof.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property, in cash or in
kind or partly each, among the Shareholders according to their
respective rights.
(b) After termination of the Trust and distribution to the Shareholders
as herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth
the fact of such termination, and the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and the
rights and interests of all Shareholders shall thereupon cease.
<PAGE>
SECTION 9.3. AMENDMENT PROCEDURE. (a) This Declaration may be amended
by a Majority Shareholder Vote. The Trustees may also amend this Declaration
without the vote or consent of Shareholders to change the name of the Trust, to
supply any omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or if they deem it necessary to conform this
Declaration to the requirements of, or to reduce or eliminate the payment of
taxes by the Trust or any series thereof under applicable federal or state laws
or regulations or the requirements of the regulated investment company
provisions of the Internal Revenue Code, but the Trustees shall not be liable
for failing so to do.
(b) No amendment may be made under this Section 9.3 which would change
any rights with respect to any Shares of the Trust by reducing the amount
payable thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or consent of the
holders of two-thirds of the Shares outstanding and entitled to vote, or by such
other vote as may be established by the Trustees with respect to any series or
class of Shares. Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from personal liability of
the Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by Secretary
or any Assistant Secretary of the Trust, setting forth an amendment and reciting
that it was duly adopted by the Shareholders or by the Trustees as aforesaid or
a copy of the Declaration, as amended, and executed by a majority of the
Trustees or certified by the Secretary or any Assistant Secretary of the Trust,
shall be conclusive evidence of such amendment when lodged among the records of
the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.
SECTION 9.4. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property, including its goodwill, upon such terms and conditions and for
such consideration when and as authorized, at any meeting of Shareholders called
for the purpose, by the affirmative vote of the holders of not less than
two-thirds of the Shares outstanding and entitled to vote, or by an instrument
or instruments in writing without a meeting, consented to by the holders of not
less than two-thirds of such Shares, or by such other vote as may be established
by the Trustees with respect to any series or class of Shares; provided,
however, that, if such merger, consolidation, sale, lease or exchange is
recommended by the Trustees, a Majority Shareholder Vote shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange shall
be deemed for all purposes to have been accomplished under and pursuant to the
statutes of the Commonwealth of Massachusetts. In respect of any such merger,
consolidation, sale or exchange of assets, any Shareholder shall be entitled to
rights of appraisal of his Shares to the same extent as a shareholder of a
Massachusetts business corporation in respect of a merger, consolidation, sale
or exchange of assets of a Massachusetts business corporation, and such rights
shall be his exclusive remedy in respect of his dissent from any such action.
<PAGE>
SECTION 9.5. INCORPORATION. With approval of a Majority Shareholder
Vote, or by such other vote as may be established by the Trustees with respect
to any series or class of Shares, the Trustees may cause to be organized or
assist in organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other organization
to take over all of the Trust Property or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell, convey and
transfer the Trust Property to any such corporation, trust, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Trust holds or is about to acquire shares or any other
interest. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.
<PAGE>
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. FILING. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee or by the Secretary or any Assistant Secretary of the
Trust stating that such action was duly taken in a manner provided herein, and
unless such amendment or such certificate sets forth some later time for the
effectiveness of such amendment, such amendment shall be effective upon its
filing. A restated Declaration, integrating into a single instrument all of the
provisions of the Declaration which are then in effect and operative, may be
executed from time to time by a majority of the Trustees and shall, upon filing
with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence
of all amendments contained therein and may thereafter be referred to in lieu of
the original Declaration and the various amendments thereto.
SECTION 11.2. RESIDENT AGENT. The name of the Trust's resident agent is
CT Corporation System, and its post office address is 2 Oliver Street, Boston,
Massachusetts 02109.
SECTION 11.3. GOVERNING LAW. This Declaration is executed by the
Trustees with reference to the laws of the Commonwealth of Massachusetts, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of said State.
SECTION 11.4. COUNTERPARTS. The Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
SECTION 11.5. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust, appears to be a Trustee
hereunder, or Secretary or Assistant Secretary of the Trust, certifying to: (a)
the number or identity of Trustees or Shareholders, (b) the due authorization of
the execution of any instrument or writing, (c) the form of any vote passed at a
meeting of Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust, shall be conclusive evidence as to the matters so certified in favor of
any Person dealing with the Trustees and their successors.
<PAGE>
SECTION 11.6. PROVISIONS IN CONFLICT WITH LAWS OR REGULATIONS. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed never to have constituted a part of the
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of the Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attain only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this
25th day of July, 1984.
/S/ FRED E. BROWN, as Trustee
-------------------
and not individually
/S/ RONALD T. SCHROEDER, as Trustee
-------------------------
and not individually
, as Trustee
-------------------------
and not individually
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 25th day of July, 1984, Fred E. Brown, known to me and known to
be the individual described in and who executed the foregoing instrument,
personally appeared before me and he acknowledged the foregoing instrument to be
his free act and deed.
/S/ JANICE E. CHILDS
---------------------
Notary Public
[SEAL]
My commission expires: MARCH 30, 1986
--------------
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 25th day of July, 1984, Ronald T. Schroeder, known to me and
known to be the individual described in and who executed the foregoing
instrument, personally appeared before me and he acknowledged the foregoing
instrument to be his free act and deed.
/S/ JANICE E. CHILDS
---------------------
Notary Public
[SEAL]
My commission expires: MARCH 30, 1986
--------------
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this
27th day of July, 1984.
/S/ JOHN W. BELASH as Trustee
------------------
and not individually
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston, MA
July 27, 1984
Then personally appeared the above-named who acknowledged the foregoing
instrument to be his free act and deed, before me.
/S/ PAULINE FRANCES MAITEN
--------------------------
Notary Public
[SEAL]
My commission expires: 10/31/86
----------
RESTATEMENT
OF THE
BY-LAWS
OF
SELIGMAN HIGH INCOME FUND SERIES
AS ADOPTED OCTOBER 9, 1984
AND AMENDED: DECEMBER 11, 1984
MARCH 10, 1987
DECEMBER 20, 1990
JANUARY 18, 1991
NOVEMBER 19, 1992
<PAGE>
SELIGMAN HIGH INCOME FUND SERIES
BY-LAWS
ARTICLE I
SHAREHOLDERS
SECTION 1. PLACE OF MEETING. All meetings of the Shareholders shall be
held at the principal office of the Trust in the Commonwealth of Massachusetts
or at such other place within the United States as may from time to time be
designated by the Trustees and stated in the notice of such meeting.
SECTION 2. SPECIAL OR EXTRAORDINARY MEETINGS. Special or extraordinary
meetings of the Shareholders for any purpose or purposes may be called by the
Chairman or a majority of the Trustees, and shall be called by the Secretary
upon receipt of the request in writing signed by Shareholders holding not less
than twenty-five per cent (25%) of the Shares issued and outstanding and
entitled to vote thereat. Such request shall state the purpose or purposes of
the proposed meeting. The Secretary shall inform such Shareholders of the
reasonably estimated costs of preparing and mailing such notice of meeting and
upon payment to the Trust of such costs, the Secretary shall give notice stating
the purpose or purposes of the meeting as required in this Article and By-Law to
all Shareholders entitled to notice of such meeting. No special meeting need be
called upon the request of the holders of Shares entitled to cast less than a
majority of all votes entitled to be cast at such meeting to consider any matter
which is substantially the same as a matter voted upon at any special meeting of
Shareholders held during the preceding twelve months.
SECTION 3. NOTICE OF MEETINGS. Not less than ten days' or more than
ninety days' written or printed notice of every meeting of Shareholders, stating
the time and place thereof (and the general nature of the business proposed to
be transacted at any special or extraordinary meeting), shall be given to each
Shareholder entitled to vote thereat by leaving the same with him or at his
residence or usual place of business by mailing it, postage prepaid, and
addressed to him at his address as it appears upon the books of the Trust. If
mailed, notice shall be deemed to be given when deposited in the United Stated
mail addressed to the Shareholder as aforesaid.
No notice of the time, place or purpose of any meeting of Shareholders
need be given to any Shareholder who attends in person or by proxy or to any
Shareholder who executes a written waiver of such notice, either before or after
the meeting is held, and which notice is filed with the records of the meeting.
SECTION 4. RECORD DATES. The Trustees may fix, in advance, a date not
more than ninety (90) or less than ten (10) days preceding the date of any
meeting of Shareholders as a record date for the determination of the
Shareholders entitled to notice of and to vote at such meeting; and only
Shareholders of record on such date shall be entitled to notice of and to vote
at such meeting.
SECTION 5. QUORUM AND ADJOURNMENT OF MEETINGS. The presence in person
or by proxy of the holders of record of a majority of the Shares of the Trust
issued and outstanding and entitled to vote thereat shall constitute a quorum at
<PAGE>
all meetings of the Shareholders except as otherwise provided in the Declaration
of Trust. If, however, such quorum shall not be present or represented at any
meeting of the Shareholders, the holders of a majority of the Shares present in
person or by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the requisite
amount of Shares entitled to vote at such meeting shall be present. At such
adjourned meeting at which the requisite amount of Shares entitled to vote
thereat shall be represented any business may be transacted which might have
been transacted at the meeting as originally notified.
SECTION 6. VOTING AND INSPECTORS. At all meetings, Shareholders of
record entitled to vote thereat shall have one vote for each Share standing in
his name on the books of the Trust (and such Shareholders of record holding
fractional shares, if any, shall have proportionate voting rights) on the date
of the determination of Shareholders entitled to vote at such meeting, either in
person or by proxy appointed by instrument in writing subscribed by such
Shareholder or his duly authorized attorney. No proxy shall be valid eleven
months after its date. Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of one or more Trustees or officers of the
Trust.
All elections shall be had and all questions decided by a majority of
the votes cast at a duly constituted meeting, except as otherwise provided by
statute or by the Declaration of Trust or by these By-Laws.
At any election of Trustees, the Chairman of the meeting may, and upon
the request of the holders of ten percent (10%) of the Shares entitled to vote
at such election shall, appoint two inspectors of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of inspectors
at such election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result of the
vote taken.
No candidate for the office of Trustee shall be appointed such inspector.
SECTION 7. CONDUCT OF MEETINGS. The meetings of the Shareholders shall
be presided over by the Chairman, or if he is not present, by the President, or
if none of them is present, by a Chairman to be elected at the meeting. The
Secretary of the Trust, if present, shall act as a Secretary of such meetings,
or if he is not present, an Assistant Secretary shall so act; if neither the
Secretary nor any Assistant Secretary is present, then the meeting shall elect
its Secretary.
SECTION 8. CONCERNING VALIDITY OF PROXIES, BALLOTS, ETC. At every
meeting of the Shareholders, all proxies shall be required and taken in charge
of and all ballots shall be required and canvassed by the Secretary of the
meeting, who shall decide all questions touching the qualification of voters,
the validity of the proxies and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed by the Chairman of the meeting,
in which event such inspectors of election shall decide all such questions.
SECTION 9. ACTION WITHOUT MEETINGS. Except as otherwise provided by
law, the provisions of these By-Laws relating to notices and meetings to the
contrary notwithstanding, any action required or permitted to be taken at any
meeting of Shareholders may be taken without a meeting if a majority of the
Shareholders entitled to vote upon the action consent to the action in writing
2
<PAGE>
and such consents are filed with the records of the Trust. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
ARTICLE II
TRUSTEES
SECTION 1. NUMBER AND TENURE OF OFFICE. The property of the Trust shall
be controlled by and the business and affairs of the Trust shall be conducted
and managed by not less than two (2) or more than thirteen (13) Trustees, as may
be fixed from time to time by a written instrument signed by a majority of the
Trustees then in office. Trustees need not be Shareholders. The tenure of office
of each Trustee shall be set by resolution of the Trustees, except that any
Trustee may resign his office or be removed from office for cause pursuant to
the provisions of the Declaration of Trust.
SECTION 2. VACANCIES. In the case of any vacancy or vacancies in the
office of Trustee through death, resignation or other cause, other than an
increase in the number of Trustees, a majority of the remaining Trustees
although a majority is less than a quorum, by an affirmative vote, or the sole
remaining Trustee, may elect a successor or successors, as the case may be, to
hold office.
SECTION 3. INCREASE OR DECREASE IN NUMBER OF DIRECTORS. The Trustees,
by the vote of a majority of all the Trustees then in office, may increase the
number of Trustees and may elect Trustees to fill the vacancies created by any
such increase in the number of Trustees. The Trustees, by the vote of a majority
of all the Trustees then in office, may likewise decrease the number of Trustees
to a number not less than two.
SECTION 4 PLACE OF MEETING. The Trustees may hold their meetings, have
one or more offices, and keep the books of the Trust, outside the Commonwealth
of Massachusetts, at any office or offices of the Trust or at any other place as
they may from time to time by resolution determine, or in the case of meetings,
as they may from time to time by resolution determine or as shall be specified
or fixed in the respective notices or waivers of notice thereof.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Trustees shall be
held at such time and on such notice as the Trustees may from time to time
determine.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Trustees may be
held from time to time upon call of the Chairman, the Secretary or two or more
of the Trustees, by oral or telegraphic or written notice duly served on or sent
or mailed to each Trustee not less than one day before such meeting. No notice
of any special meeting need be given to any Trustee who attends in person or to
any Trustee who executes a written waiver of such notice, either before or after
the meeting is held, and which notice is filed with the records of the meeting.
Such notice or waiver of notice need not state the purpose or purposes of such
meeting.
SECTION 7. QUORUM. One-third of the Trustees then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Trustees. If at any meeting of Trustees there
shall be less than a quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The act of
the majority of the Trustees present at any meeting at which there is a quorum
3
<PAGE>
shall be the act of the Trustees, except as otherwise specifically provided by
statute or by the Declaration of Trust or by these By-Laws.
SECTION 8. COMMITTEES. The Trustees, by the majority vote of all the
Trustees then in office, may appoint from the Trustees committees which shall in
each case consist of such number of Trustees (not less than two) and shall have
and may exercise such powers as the Trustees may determine in the resolution
appointing them. A majority of all the members of any such committee may
determine its action and fix the time and place of its meetings, unless the
Trustees shall otherwise provide. The Trustees shall have power at any time to
change the members and powers of any such committee, to fill vacancies and to
discharge any such committee.
SECTION 9. TELEPHONE MEETINGS. Trustees or a committee of the Trustees
may participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitute presence in person at the meeting.
SECTION 10. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Trustees or any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all the
Trustees then in office or all members of such committee, as the case may be,
and such written consent is filed with the minutes of the proceedings of the
Trustees or committee.
SECTION 11. COMPENSATION. No Trustee shall receive any stated salary or
fees from the Trust for his services as such if such trustee is, otherwise than
by reason of being such Trustee, an interested person (as such term is defined
by the Investment Company Act of 1940) of the Trust or of its investment adviser
or principal underwriter. Except as provided in the preceding sentence, Trustees
shall be entitled to receive such compensation from the Trust for their services
as may from time to time be voted by the Trustees.
ARTICLE III
OFFICERS
SECTION 1. EXECUTIVE OFFICERS. The executive officers of the Trust
shall be chosen by the Trustees. These shall include a Chairman (who shall be a
Trustee), a President, one or more Vice Presidents (the number thereof to be
determined by the Trustees), a Secretary and a Treasurer. The Trustees may also
in their discretion appoint Assistant Secretaries, Assistant Treasurers and
other officers, agents and employees, who shall have such authority and perform
such duties as the Trustees may determine. The Trustees may fill any vacancy
which may occur in any office. Any two offices, except those of Chairman and any
President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law or these By-Laws to be executed, acknowledged or
verified by two or more officers.
SECTION 2. TERM OF OFFICE. The term of office of all officers shall be
one year and until their respective successors are chosen and qualified. Any
officer may be removed from office at any time with or without cause by the vote
of a majority of all the Trustees then in office.
4
<PAGE>
SECTION 3. POWERS AND DUTIES. The officers of the Trust shall have such
powers and duties as generally pertain to their respective offices, as well as
such powers and duties as may from time to time be conferred by the Trustees.
ARTICLE IV
SHARE INTERESTS
SECTION 1. CERTIFICATES FOR SHARES. Shareholders are not entitled to
receive certificates evidencing their Share ownership, unless the Trustees shall
by resolution otherwise determine.
SECTION 2. TRANSFER OF SHARES. Shares of the Trust shall be
transferable on the register of the Trust by the holder thereof in person or by
his agent duly authorized in writing, upon delivery to the Trustees or the
Transfer Agent of a duly executed instrument of transfer, together with such
evidence of the genuineness of each such execution and authorization of such
other matters as the Trust or its agents may reasonably require.
SECTION 3. REGISTER OF SHARES. A register of the Trust, containing the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof, shall be kept at the
principal offices of the Trust or, if the Trust employs a Transfer Agent, at the
offices of the Transfer Agent of the Trust.
ARTICLE V
SEAL
The Trustees may provide for a suitable seal, in such form and bearing
such inscriptions as they may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of January and
shall end on the last day of December in each year.
ARTICLE VII
INDEMNIFICATION
A representative of the Trust shall be indemnified by the Trust with
respect to each proceeding against such representative, except a proceeding
brought by or on behalf of the Trust, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such representative in connection with such proceeding, provided
that such representative to be in or not opposed to the best interests of the
5
<PAGE>
Trust and, with respect to any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith in a manner which reasonably believed to be in or not opposed
to the best interests of the Trust and, with respect to any criminal proceeding,
had reasonable cause to believe that his conduct was unlawful.
A representative of the Trust shall be indemnified by the Trust, with
respect to each proceeding brought by or on behalf of the Trust to obtain a
judgment or decree in its favor, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust;
except that no indemnification shall be made in respect of any claim, issue, or
matter as to which such representative has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Trust, unless and
only to the extent that the court in which the proceeding was brought, or a
court of equity in the county in which the Trust has its principal office,
determines upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such corporate representative is fairly
and reasonably entitled to indemnity for the expenses which the court considers
proper.
To the extent that the representative of the Trust has been successful
on the merits or otherwise in defense of any proceeding referred to in the
preceding two paragraphs, or in defense of any claim, issue or matter therein,
the Trust shall indemnify him against all expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Except as provided in the preceding paragraph any indemnification under
the first two paragraphs of this Article (unless ordered by a court) shall be
made by the Trust only as authorized in the specific case upon a determination
that indemnification of the representative of the Trust is proper in the
circumstances because he has met the applicable standard of conduct set forth in
such paragraphs. The determination shall be made (1) by the Trustees by a
majority vote of a quorum consisting of Trustees who were not parties to the
proceeding, or (2) if a quorum is not obtainable or if a quorum of disinterested
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Shareholders.
Expenses (including attorneys' fees) incurred in defending a proceeding
may be paid by the Trust in advance of the final disposition thereof if (1)
authorized by the Trustees in the specific case, and (2) the Trust receives an
undertaking by or on behalf of the representative of the Trust to repay the
advance if it is not ultimately determined that he is entitled to be indemnified
by the Trust as authorized in this Article.
The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which a representative of the Trust or other
person may be entitled under any agreement, vote of Shareholders or
disinterested Trustees or otherwise, both as to action in his official capacity
and as to action in another capacity while holding the office, and shall
continue as to a person who has ceased to be a Trustee, officer, employee or
agent and inure to the benefit of his heirs and personal representatives.
The Trust may purchase and maintain insurance on behalf of any person
who is or was a Trustee, officer, employee or agent of the Trust, or is or was
serving at the request of the Trust as a trustee, director, officer, employee or
6
<PAGE>
agent of another trust, corporation, partnership, joint venture or other
enterprise against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, regardless of whether the
Trust would have the power to indemnify him against the liability under the
provisions of this Article.
Nothing contained in the Section shall be construed to indemnify any
representative of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
As used in this Article "representative of the Trust" means an
individual (1) who is a present or former Trustee, officer, agent or employee of
the Trust or who serves or has served another trust corporation, partnership,
joint venture or other enterprise in one of such capacities at the request of
the Trust, and (2) who by reason of his position is, has been or is threatened
to be made a party to a proceeding; and "proceeding" includes any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative.
ARTICLE VIII
CUSTODIAN
SECTION 1. The Trust shall have as custodian or custodians one or more
trust companies or banks of good standing, each having a capital, surplus and
undivided profits aggregating not less than fifty million dollars ($50,000,000),
and, to the extent required by the Investment Company Act of 1940, the funds and
securities held by the Trust shall be kept in the custody of one or more such
custodians, provided such custodian or custodians can be found ready and willing
to act, and further provided that the Trust may use as subcustodians, for the
purpose of holding any foreign securities and related funds of the Trust such
foreign banks as the Trustees may approve and as shall be permitted by law.
SECTION 2. The Trust shall upon the resignation or inability to serve
of its custodian or upon change of the custodian:
(i) in case of such resignation or inability to serve, use its
best efforts to obtain a successor custodian;
(ii) require that the cash and securities owned by the Trust be
delivered directly to the successor custodian; and
(iii) in the event that no successor custodian can be found, submit
to the Shareholders before permitting delivery of the cash and
securities owned by the Trust otherwise than to a successor
custodian, the question whether the Trust shall be liquidated
or shall function without a custodian.
7
<PAGE>
ARTICLE IX
REMOVAL OF TRUSTEES BY SHAREHOLDERS
SECTION 1. REMOVAL BY SHAREHOLDERS. No person shall serve as Trustee
after the holders of record of not less than two-thirds of the outstanding
shares of beneficial interest in the Trust (without regard to Series) have
declared that he be removed from the office either by declaration in writing
filed with the Secretary of the Trust or by votes cast in person or by proxy at
a meeting called for the purpose.
SECTION 2. MEETING. The Trustees shall promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Trustee or Trustees when requested in writing so to do by the record holders of
not less than 10 per centum of outstanding shares.
SECTION 3. PROCEDURES. 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 pursuant to this Article IX and accompanied by a form of communication
and request which they wish to transmit, the Trustees shall within five business
days after receipt of such applications either --
(1) afford to such applications access to a list of the names and
addresses of all Shareholders as recorded on the books of the
Trust; or
(2) inform such applicants as to the approximate number of
Shareholders of record and the approximate cost of mailing to
them the proposed communications and form of request.
(3) If the Trustees elect to follow the course specified in
paragraph (2) of Section (3) of this Article IX, 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 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. The trustees shall have a right to demand a
hearing before the Commission with regard to such material and
shall comply with an order of the Commission relating thereto.
8
<PAGE>
ARTICLE X
AMENDMENT OF BY-LAWS
The By-Laws of the Trust may be altered, amended, added to or repealed
by the Shareholders or by majority vote of all the Trustees then in office; but
any such alteration, amendment, addition or repeal of the By-Laws by action of
the Trustees may be altered or repealed by Shareholders.
9
CONSENT OF INDEPENDENT AUDITORS
Seligman High Income Fund Series:
We consent to the use in this Post-Effective Amendment No. 22 to Registration
Statement No. 2-93076 of our reports dated July 31, 1996, appearing in the
Mid-Year Report to shareholders for the six months ended June 30, 1996, and
February 2, 1996, appearing in the Annual Report to shareholders for the
year-ended December 31, 1995, incorporated by reference in the Statement of
Additional Information, which is part of such Registration Statement, and to the
reference to us under the heading "Financial Highlights" in the Prospectus,
which is also part of such Registration Statement.
/s/ Deloitte & Touche LLP
- ----------------------------
DELOITTE & TOUCHE LLP
New York, New York
December 26, 1996
INVESTMENT LETTER
SELIGMAN HIGH INCOME FUND SERIES
Seligman High Income Fund Series (the "Trust"), an open-end diversified
management investment company, and the undersigned ("Purchaser"), intending to
be legally bound, hereby agree as follows:
1. The Trust hereby sells to Purchaser and Purchaser purchases 1 Class B
share (the "Share") of Capital Stock (each par value $.001) of the
Seligman U.S. Government Securities Series (the "Series"), a series of the
Trust, at a price equivalent to the net asset value of one share of the
series as of the close of business on December 20, 1996. The Trust hereby
acknowledges receipt from the Purchaser of funds in such amount in full
payment for the Share.
2. Purchaser represents and warrants to the Trust that the Share is being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of the Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 20th day
of December, 1996 ("Purchase Date").
SELIGMAN HIGH INCOME FUND SERIES
By: /S/ LAWRENCE P. VOGEL
------------------------------
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By: /S/ LAWRENCE P. VOGEL
------------------------------
Name: Lawrence P. Vogel
Title: Senior Vice President
SELIGMAN GROUP OF MUTUAL FUNDS
PLAN FOR MULTIPLE CLASSES OF SHARES (THREE CLASSES)
THIS PLAN, as it may be amended from time to time, sets forth the
separate arrangement and expense allocation of each class of shares (a "Class")
of each registered open-end management investment company, or series thereof, in
the Seligman Group of Mutual Funds that offers multiple classes of shares (each,
a "Fund"). The Plan has been adopted pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "Act"), by a majority of the
Board of Directors or Trustees, as applicable ("Directors"), of each Fund listed
on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.
1. GENERAL
A. Any Fund may issue more than one Class of voting stock, provided
that each Class:
i. Shall have a different arrangement for shareholder services or
the distribution of securities or both, and shall pay all of
the expenses of that arrangement;
ii. May pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are
actually incurred in a different amount by that Class, or if
the Class receives services of a different kind or to a
different degree than other Classes of the same Fund ("Class
Level Expenses");
iii. May pay a different advisory fee to the extent that any
difference in amount paid is the result of the application of
the same performance fee provisions in the advisory contract
of the Fund to the different investment performance of each
Class;
iv. Shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement;
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v. Shall have separate voting rights on any matter submitted to
shareholders in which the interests of one Class differ from
the interests of any other Class; and
vi. Shall have in all other respects the same rights and
obligations as each other Class of the Fund.
B. i. Except as expressly contemplated by this paragraph B., no
types or categories of expenses shall be designated Class
Level Expenses.
ii. The Directors recognize that certain expenses arising in
certain sorts of unusual situations are properly attributable
solely to one Class and therefore should be borne by that
Class. These expenses ("Special Expenses") may include, for
example: (i) the costs of preparing a proxy statement for, and
holding, a special meeting of shareholders to vote on a matter
affecting only one Class; (ii) the costs of holding a special
meeting of Directors to consider such a matter; (iii) the
costs of preparing a special report relating exclusively to
shareholders of one Class; and (iv) the costs of litigation
affecting one Class exclusively. J. & W. Seligman & Co.
Incorporated (the "Manager") shall be responsible for
identifying expenses that are potential Special Expenses.
iii. Subject to clause iv. below, any Special Expense identified by
the Manager shall be treated as a Class Level Expense.
iv. Any Special Expense identified by the Manager that is material
to the Class in respect of which it is incurred shall be
submitted by the Manager to the Directors of the relevant Fund
on a case by case basis with a recommendation by the Manager
as to whether it should be treated as a Class Level Expense.
If approved by the Directors, such Special Expense shall be
treated as a Class Level Expense of the affected class.
C. i. Realized and unrealized capital gains and losses of a Fund
shall be allocated to each class of that Fund on the basis of
the aggregate net asset value of all outstanding shares
("Record Shares") of the Class in relation to the aggregate
net asset value of Record Shares of the Fund.
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ii. Income and expenses of a Fund not charged directly to a
particular Class shall be allocated to each Class of that Fund
on the following basis:
a. For periodic dividend funds, on the basis of the
aggregate net asset value of Record Shares of each Class
in relation to the aggregate net asset value of Record
Shares of the Fund.
b. For daily dividend funds, on the basis of the aggregate
net asset value of Settled Shares of each Class in
relation to the aggregate net asset value of Settled
Shares of the Fund. "Settled Shares" means Record Shares
minus the number of shares of that Class or Fund that
have been issued but for which payment has not cleared
and plus the number of shares of that Class or Fund
which have been redeemed but for which payment has not
yet been issued.
D. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the Act and otherwise, will monitor each Fund
for the existence of any material conflicts among the interests of
its several Classes. The Directors, including a majority of the
Disinterested Directors, shall take such action as is reasonably
necessary to eliminate any such conflicts that may develop. The
Manager and Seligman Financial Services, Inc. (the "Distributor")
will be responsible for reporting any potential or existing
conflicts to the Directors. If a conflict arises, the Manager and
the Distributor will be responsible at their own expense for
remedying such conflict by appropriate steps up to and including
separating the classes in conflict by establishing a new registered
management company to operate one of the classes.
E. The plan of each Fund adopted pursuant to Rule 12b-1 under the Act
(the "Rule 12b-1 Plan") provides that the Directors will receive
quarterly and annual statements complying with paragraph (b)(3)(ii)
of Rule 12b-1, as it may be amended from time to time. To the extent
that the Rule 12b-1 Plan in respect of a specific Class is a
reimbursement plan, then only distribution expenditures properly
attributable to the sale of shares of that Class will be used in the
statements to support the Rule 12b-1 fee charged to shareholders of
such Class. In such cases expenditures not related to the sale of a
specific Class will not be presented to the Directors to support
Rule 12b-1 fees charged to shareholders of such Class. The
statements, including the allocations upon which they are based,
will be subject to the review of the Disinterested Directors.
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F. Dividends paid by a Fund with respect to each Class, to the extent
any dividends are paid, will be calculated in the same manner, at
the same time and on the same day and will be in the same amount,
except that fee payments made under the Rule 12b-1 Plan relating to
the Classes will be borne exclusively by each Class and except that
any Class Level Expenses shall be borne by the applicable Class.
G. The Directors of each Fund hereby instruct such Fund's independent
auditors to review expense allocations each year as part of their
regular audit process, to inform the Directors and the Manager of
any irregularities detected and, if specifically requested by the
Directors, to prepare a written report thereon. In addition, if any
Special Expense is incurred by a Fund and is classified as a Class
Level Expense in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing such
allocation, are hereby instructed to report thereon to the Audit
Committee of the relevant Fund and to the Manager. The Manager will
be responsible for taking such steps as are necessary to remedy any
irregularities so detected, and will do so at its own expense to the
extent such irregularities should reasonably have been detected and
prevented by the Manager in the performance of its services to the
Fund.
2. SPECIFIC ARRANGEMENTS FOR EACH CLASS
The following arrangements regarding shareholder services, expense
allocation and other indicated matters shall be in effect with respect to the
Class A shares, Class B shares and Class D shares of each Fund. The following
descriptions are qualified by reference to the more detailed description of such
arrangements set forth in the prospectus relating to each Fund, as the same may
from time to time be amended or supplemented (for each Fund, the "Relevant
Prospectus"), PROVIDED that no Relevant Prospectus may modify the provisions of
this Plan applicable to Rule 12b-1 fees or Class Level Expenses.
(a) CLASS A SHARES
i. Class A shares are subject to an initial sales load which varies
with the size of the purchase, to a maximum of 4.75% of the public
offering price. Reduced sales loads shall apply in certain
circumstances. Class A shares of Seligman Cash Management Fund, Inc.
shall not be subject to an initial sales load.
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ii. Class A shares shall be subject to a Rule 12b-1 service fee of up to
0.25% of average daily net assets.
iii. Special Expenses attributable to the Class A shares, except those
determined by the Directors not to be Class Level Expenses of the
Class A shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class A shares. No other
expenses shall be treated as Class Level Expenses of the Class A
shares.
iv. The Class A shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
(b) CLASS B SHARES
i. Class B shares are sold without an initial sales load but are
subject to a contingent deferred sales load ("CDSL") in certain
cases. The CDSL in respect of any Class B share, if applicable, will
be in the following amount (as a percentage of the current net asset
value or the original purchase price, whichever is less) if the
redemption occurs within the indicated number of years of issuance
of such share:
YEARS SINCE ISSUANCE CDSL
-------------------- ----
less than one 5%
one but less than two 4%
two but less than four 3%
four but less than five 2%
five but less than six 1%
six or more 0%
ii. Class B shares shall be subject to a Rule 12b-1 fee of up to 1.00%
of average daily net assets, consisting of an asset-based
distribution fee of up to 0.75% and a service fee of up to 0.25%.
iii. Each Class B share shall automatically convert to a Class A share on
the last day of the month which precedes the eighth anniversary of
its date of issue occurs.
iv. Special Expenses attributable to the Class B shares, except those
determined by the Directors not to be Class Level Expenses of the
Class B shares in accordance with paragraph 1.B.iv., shall be Class
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Level Expenses and attributed solely to the Class B shares. No other
expenses shall be treated as Class Level Expenses of the Class B
shares.
v. The Class B shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
(c) CLASS D SHARES
i. Class D shares are sold without an initial sales load but are
subject to a CDSL of 1% of the lesser of the current net asset value
or the original purchase price in certain cases if the shares are
redeemed within one year.
ii. Class D shares shall be subject to a Rule 12b-1 fee of up to 1.00%
of average daily net assets, consisting of an asset-based
distribution fee of up to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class D shares, except those
determined by the Directors not to be Class Level Expenses of the
Class D shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class D shares. No other
expenses shall be treated as Class Level Expenses of the Class D
shares.
iv. The Class D shares shall be entitled to the shareholder services,
including exchange privileges, described in the Relevant Prospectus.
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SCHEDULE I
Seligman Cash Management Fund, Inc.
Seligman Capital Fund, Inc.
Seligman Common Stock, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Income Fund, Inc.
Seligman Henderson Emerging Markets Growth Fund
Seligman Henderson Global Growth Opportunities Fund
Seligman Henderson Global Smaller Companies Fund
Seligman Henderson Global Technology Fund
Seligman Henderson International Fund
Seligman High-Yield Bond Fund
Seligman U.S. Government Securities Fund
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