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. 23 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 25 |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)
|_|on (date) pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| on (date) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) 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 December
20, 1996.
<PAGE>
File No. 2-93076
811-4103
SELIGMAN HIGH INCOME FUND SERIES
FORM N-1A CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 23
Pursuant to Rule 481 (a)
<TABLE>
<CAPTION>
Item in Part A of Form N-1A Location in Prospectus
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of 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*
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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
</TABLE>
* Each of Registrant's two Series has a separate Prospectus; Registrant's
Statement of Additional Information applies to both Series.
<PAGE>
SELIGMAN HIGH-YIELD BOND 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
May 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 High-Yield Bond Series (the
"Series") is to produce maximum current income. The Series seeks to achieve its
objective by investing primarily in high-yielding, high risk corporate bonds and
corporate notes, which, generally, are unrated or carry ratings lower than those
assigned to investment grade bonds by Standard & Poor's Rating Service ("S&P")
or Moody's Investors Service, Inc. ("Moody's"). An investment in the Series is
appropriate for you only if you can bear the high risk inherent in investing in
such securities. There can, of course, be no assurance that the Series will meet
its objective.
THE SERIES WILL INVEST UP TO 100% OF ITS PORTFOLIO IN LOWER RATED BONDS,
COMMONLY KNOWN AS "JUNK BONDS," WHICH ARE SUBJECT TO A GREATER RISK OF LOSS OF
PRINCIPAL AND INTEREST THAN HIGHER RATED INVESTMENT GRADE BONDS. PURCHASERS
SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE SERIES.
SEE "INVESTMENT OBJECTIVE, POLICIES AND RISKS."
The Series offers 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 eighteen 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 redemptions within
one year of purchase, an annual distribution fee of up to .75% and an annual
service fee of up to .25% of the average daily net asset value of the Class D
shares. Any CDSL payable upon redemption of Class B or Class D shares will be
assessed on the lesser of the current net asset value or the original purchase
price of the shares redeemed. 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 THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF SERIES EXPENSES
CLASS A CLASS B CLASS D
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(INITIAL SALES (DEFERRED SALES (DEFERRED SALES
LOAD LOAD LOAD
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES ALTERNATIVE) ALTERNATIVE) ALTERNATIVE)
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% in 4% in 2nd year None thereafter
first 18 months 3% in 3rd and
if initial sales 4th years
load was waived 2% in 5th year
in full due to size 1% in 6th year
of purchase None thereafter
Redemption Fee None None None
Exchange Fees None None None
ANNUAL SERIES OPERATING EXPENSES FOR 1996 CLASS A CLASS B CLASS D
------- ------- -------
(as a percentage of average net assets)
Management Fee ........................................... .65% .65% .65%
12b-1 Fees ............................................... .24% 1.00%* 1.00%*
Other Expenses ........................................... .27% .27% .27%
----- ----- -----
Total Series Operating Expenses .......................... 1.16% 1.92% 1.92%
===== ===== =====
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of the Series may bear directly or
indirectly. The sales load on Class A shares is a one-time charge paid at the
time of purchase of shares. Reductions in initial sales loads are available in
certain circumstances. Class A shares are not subject to an initial sales load
for purchases of $1,000,000 or more; however such shares are subject to a CDSL,
a one-time charge, only if the shares are redeemed within eighteen months of
purchase. The CDSLs on Class B and Class D shares are one-time charges paid only
if shares are redeemed within six years or one year of purchase, respectively.
"Other Expenses" for Class B shares are estimated based on expenses incurred
during 1996. For more information concerning reductions in sales loads and for a
more complete description of the various costs and expenses, see "Purchase of
Shares," "Redemption of Shares" and "Management Services" herein. The Series'
Administration, Shareholder Services and Distribution Plan to which the caption
"12b-1 Fees" relates, is discussed under "Administration, Shareholder Services
and Distribution Plan" herein.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------- ------ ------ ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming
(1) a 5% annual return and (2)
redemption at the end of each time period............ Class A $59 $83 $108 $182
Class B+ $69 $90 $124 $205
Class D $29++ $60 $104 $224
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN AND THE 5%
ANNUAL RETURN USED IN THIS EXAMPLE IS A HYPOTHETICAL RATE.
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* Includes an annual distribution fee of .75% and an annual service fee of
.25%. Pursuant to the Rules of the National Association of Securities
Dealers, Inc., the aggregate deferred sales loads and annual distribution
fees on Class B and Class D shares of the Series may not exceed 6.25% of
total gross sales, subject to certain exclusions. The maximum sales charge
rule is applied separately to each class. The 6.25% limitation is imposed on
the Series rather than on a per shareholder basis. Therefore, a long-term
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) a 5% annual return and (2) no redemption at the end of the
period, the expenses on a $1,000 investment would be $19 for 1 year, $60 for
3 years and $104 for 5 years. The expenses shown for the ten-year period
reflect the conversion of Class B shares to Class A shares after 8 years.
++ Assuming (1) a 5% annual return and (2) no redemption at the end of one
year, the expenses on a $1,000 investment would be $19.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights for the Series' Class A, Class B 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 1996 Annual Report, which
is 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.
The per share operating performance data is designed to allow investors
to trace the operating performance, on a per share basis, from each Class's
beginning net asset value to its ending net asset value so that they may
understand what effect the individual items have on their investment, assuming
it was held throughout the period. Generally, the per share amounts are derived
by converting the actual dollar amounts incurred for each item, as disclosed in
the financial statements, to their equivalent per share amount.
The total return based on net asset value measures each Class's
performance assuming investors purchased shares of the Series at the net asset
value as of the beginning of the period, invested dividends and capital gains
paid at net asset value and then sold their shares at the net asset value per
share on the last day of the period. The total return computations do not
reflect any sales loads investors may incur in purchasing or selling shares of
the Series. Total returns for periods of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A
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YEAR ENDED DECEMBER 31,
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1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year ..... $ 6.96 $ 6.35 $ 6.94 $ 6.42 $ 5.96
------- ------- ------- ------- -------
Net investment income .................. .69 .65 .65 .66 .69
Net realized and unrealized
investment gain (loss) ............... .29 .61 (.59) .52 .46
------- ------- ------- ------- -------
Increase (decrease) from
investment operations ................ .98 1.26 .06 1.18 1.15
Dividends paid or declared ............. (.69) (.65) (.65) (.66) (.69)
Distributions from net gain realized ... -- -- -- -- --
Return of capital ...................... -- -- -- -- --
------- ------- ------- ------- -------
Net increase (decrease) in
net asset value ...................... .29 .61 (.59) .52 .46
------- ------- ------- ------- -------
Net asset value, end of year ........... $ 7.25 $ 6.96 $ 6.35 $ 6.94 $ 6.42
======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 14.82% 20.72% 0.78% 19.19% 20.08%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ......... 1.16% 1.09% 1.13% 1.20% 1.21%
Net investment income to
average net assets ................... 9.80% 9.73% 9.73% 9.68% 10.82%
Portfolio turnover ..................... 119.33% 173.39% 184.75% 193.91% 145.66%
Net assets, end of year
(000s omitted) ....................... $408,303 $182,129 $59,033 $61,333 $40,802
</TABLE>
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The data provided above reflects historical information and therefore
through December 31, 1995 does not reflect the effect of the increase in the
management fee rate payable by the Series, which was approved by shareholders on
December 12, 1995 and became effective on January 1, 1996.
<TABLE>
<CAPTION>
CLASS A
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YEAR ENDED DECEMBER 31,
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1991 1990 1989 1988 1987
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year ..... $ 5.21 $ 6.40 $ 7.02 $ 7.07 $ 7.83
------- ------- -------- ------- -------
Net investment income .................. .77 .78 .89 .82 .79
Net realized and unrealized
investment gain (loss) ............... .75 (1.19) (.62) (.05) (.59)
------- ------- -------- ------- -------
Increase (decrease) from
investment operations ................ 1.52 (.41) .27 .77 .20
Dividends paid or declared ............. (.77) (.78) (.89) (.82) (.79)
Distributions from net gain realized ... -- -- -- -- (.15)
Return of capital ...................... -- -- -- -- (.02)
------- ------- -------- ------- -------
Net increase (decrease) in
net asset value ...................... .75 (1.19) (.62) (.05) (.76)
------- ------- -------- ------- -------
Net asset value, end of year ........... $ 5.96 $ 5.21 $ 6.40 $ 7.02 $ 7.07
======= ======= ======== ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 30.70% (7.27)% 3.84% 11.38% 3.05%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ......... 1.29% 1.21% 1.13% 1.14% 1.20%
Net investment income to
average net assets ................... 13.36% 13.40% 13.02% 11.41% 10.64%
Portfolio turnover ..................... 181.08% 117.51% 135.17% 95.20% 103.01%
Net assets, end of year
(000s omitted) ....................... $32,287 $27,558 $45,511 $62,268 $66,042
</TABLE>
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The data provided above reflects historical information and therefore
through December 31, 1995 does not reflect the effect of the increase in the
management fee rate payable by the Series, which was approved by shareholders on
December 12, 1995 and became effective on January 1, 1996.
3
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
CLASS B CLASS D
-------- -------------------------------------------------------------------
4/22/96* 9/21/93*
TO YEAR ENDED DECEMBER 31, TO
----------------------------------------
12/31/96 1996 1995 1994 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ........ $ 7.06 $ 6.96 $ 6.35 $ 6.94 $ 6.74
-------- ------- -------- -------- --------
Net investment income ....................... .45 .64 .60 .57 .12
Net realized and unrealized
investment gain (loss) .................... .20 .30 .61 (.59) .20
-------- ------- -------- -------- --------
Increase (decrease) from
investment operations ..................... .65 .94 1.21 (.02) .32
Dividends paid or declared .................. (.45) (.64) (.60) (.57) (.12)
Distributions from net gain realized ........ -- -- -- -- --
Return of capital ........................... -- -- -- -- --
-------- ------- -------- -------- --------
Net increase (decrease) in
net asset value ........................... .20 .30 .61 (.59) .20
-------- ------- -------- -------- --------
Net asset value, end of period .............. $ 7.26 $ 7.26 $ 6.96 $ 6.35 $ 6.94
======== ======= ======== ======== ========
TOTAL RETURN BASED ON NET ASSET VALUE: 9.11% 14.10% 19.67% (.30)% 4.53%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .............. 1.90%+ 1.92% 1.91% 2.19% 2.04%+
Net investment income to
average net assets ........................ 9.11%+ 9.02% 8.86% 8.68% 7.93%+
Portfolio turnover .......................... 119.33%+++ 119.33% 173.39% 184.75% 193.91%++
Net assets, end of period
(000s omitted) ............................ $147,970 $265,528 $90,153 $9,249 $2,375
</TABLE>
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* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1993.
+++ For the year ended December 31, 1996.
The data provided above reflects historical information and therefore
through December 31, 1995 does not reflect the effect of the increase in the
management fee rate payable by the Series, which was approved by shareholders on
December 12, 1995 and became effective on January 1, 1996.
4
<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 charges, as discussed below, or to have the
entire initial purchase price invested in the Series with the investment
thereafter being subject to higher ongoing 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 also choose to purchase Class A shares because over time the
accumulated continuing distribution fees of Class B and Class D shares may
exceed the initial sales load and lower ongoing fee of Class A shares. This
consideration must be weighed against the fact that the amount invested in the
Fund will be reduced by the initial sales load on Class A shares deducted at the
time of purchase. Furthermore, the higher distribution fees on Class B and Class
D 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 sales load deducted at the time of purchase would be less or waived in full.
However, investors should consider the effect of the 1% CDSL imposed on shares
on which the initial sales load was waived because the amount of Class A shares
purchased was $1,000,000 or more. In addition, Class B shares will be converted
automatically to Class A shares after a period of approximately eight years, and
thereafter investors will be subject to lower ongoing fees. Shares purchased
through reinvestment of dividends and distributions on Class B shares also will
convert automatically to Class A shares along with the underlying shares on
which they were earned.
Alternatively, some investors might choose to have all of their funds
invested initially in Class B or Class D shares although remaining subject to a
higher continuing distribution fee and, for a six-year or one-year period, a
CDSL as described below. For example, an investor who does not qualify for
reduced sales loads would have to hold Class A shares for more than 6.33 years
for the Class B or Class D distribution fee to exceed the initial sales load
plus the distribution fee on Class A shares. This example does not take into
account the time value of money, which further reduces the impact of the Class B
and Class D shares' 1% distribution fee, other expenses charged to each class,
fluctuations in net asset value or the effect of the return on the investment
over this period of time.
Investors should bear in mind that total asset based sales charges (i.e.,
the higher continuing distribution fee plus the CDSL) on Class B shares that are
redeemed may exceed the total asset based sales charges that would be payable on
the same amount of Class A or Class D shares, particularly if the Class B shares
are redeemed shortly after purchase or if the investor qualifies for a reduced
sales load on the Class A shares.
Investors should understand that the purpose and function of the initial
sales load (and deferred sales load, when applicable) with respect to Class A
shares is the same as those of the deferred sales loads and higher distribution
fees with respect to Class B and Class D shares in that the sales loads and
distribution fees applicable to each class provide for the financing of the
distribution of the shares of the Series.
5
<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 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 Fund or another mutual fund in
the Seligman Group for which the exchange privilege is available. Although Class
D shareholders are subject to a shorter CDSL period at a lower rate, they 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.
Annual 12b-1 Fees
Initial (as a % of average
Sales Load daily net assets) Other Information
---------- --------------- ---------------
CLASS A Maximum initial Service fee of Initial sales loads
sales load of .25%. waived or
4.75% of the reduced for
public offering certain
price. purchases.
CDSL of 1% on
redemptions within
18 months of purchase
on shares on which
initial sales load was
waived in full due to
the size of the
purchase.
CLASS B None Service fee of CDSL of:
.25%; 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 .75%. within one year
of purchase.
*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.
6
<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 U.S. Government Securities Series. The U.S. Government Securities
Series' investment objective and policies and other important information with
respect to its operations are set forth in a separate Prospectus.
The objective of this Series is to produce maximum current income. The
Series seeks to achieve its objective by following a policy of investing in a
diversified range of high-yield, high-risk, medium and lower quality corporate
bonds and notes, commonly referred to as "junk bonds." Generally, bonds and
notes providing the highest yield are unrated or carry lower ratings (Baa or
lower by Moody's or BBB or lower by S&P) than those assigned by S&P or Moody's
to investment-grade bonds and notes. A description of the S&P and Moody's rating
categories is set forth in the Appendix to this Prospectus. While providing
higher yields, these bonds and notes are subject to greater risks of loss of
principal and income than higher-rated bonds and notes and are considered to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. They are also generally considered to be subject to greater
price volatility due to market risks than higher-rated bonds and notes. There
can be no assurance that the Series' investment objective will be attained.
The amount of outstanding high-yield, lower-rated corporate securities has
recently proliferated. Based on industry estimates, the market grew from $20
billion in outstanding securities to an excess of $300 billion, principally over
the past ten years, a period of national economic expansion. An economic
downturn could adversely impact issuers' abilities to pay interest and repay
principal and could result in issuers' defaulting on such payments. The value of
the Series' bonds and notes will be affected like all fixed-income securities by
market conditions relating to changes in prevailing interest rates. However, the
value of lower-rated or unrated corporate bonds and notes is also affected by
investors' perceptions. When economic conditions appear to be deteriorating,
lower-rated or unrated corporate bonds and notes may decline in market value due
to investors' heightened concerns and perceptions over credit quality. If a
security is downgraded, the Series may retain the security. The Series invests
in "zero coupon" (interest payments accrue until maturity) and "pay-in-kind"
(interest payments are made in cash or additional shares) bonds. Such securities
may be subject to greater fluctuations in value as they tend to be more
speculative than income bearing securities. Fluctuations in the market prices of
the securities owned by the Series result in corresponding fluctuations and
volatility in the net asset value of the shares of the Series. Additionally,
because they do not pay current income, these securities will detract from the
Series' objective of producing maximum current income.
Lower-rated and unrated corporate bonds and notes in which the Series
invests are traded principally by dealers in the over-the-counter market. The
market for these securities may be less active and less liquid than for
higher-rated securities. Under adverse market or economic conditions, the
secondary market for these bonds and notes could contract further, causing the
Series difficulties in valuing and selling the securities in its portfolio.
The ratings of fixed-income securities by Moody's and S&P are a generally
accepted barometer of credit risk. They are, however, subject to certain
limitations from an investor's standpoint. The rating on an issuer is heavily
weighted by past developments and does not necessarily reflect probable future
conditions. There is frequently a lag between the time the rating is assigned
and the time it is updated. In addition there may be varying degrees of
difference in credit risk of securities within each rating category.
7
<PAGE>
During the year ended December 31, 1996, the weighted average percentages
of the Series' portfolio invested in each rating category were as follows:
PERCENTAGE OF
S&P/MOODY'S RATINGS TOTAL INVESTMENTS
------------------- ---------------
AAA/Aaa................................ --
AA/Aa.................................. --
A/A.................................... --
BBB/Baa................................ --
BB/Ba.................................. 1.8%
B/B.................................... 84.0%
CCC/Caa................................ 8.4%
Non-rated.............................. 2.5%
The Manager will try to minimize the risk inherent in the Series'
investment objective through credit analysis, diversification and attention to
current developments and trends in interest rates and economic conditions.
However, there can be no assurance that losses will not occur and an investment
in the Series is appropriate for an investor only if the investor can bear the
high risk inherent in seeking maximum current income by investing in
high-yielding corporate bonds and notes which are unrated or carry lower ratings
than those assigned by S&P or Moody's to investment-grade bonds.
Except for temporary defensive purposes, at least 80% of the value of the
Series' total assets will be invested in high-yielding, income-producing
corporate bonds. This investment policy is a fundamental policy and may not be
changed by the Trustees of the Fund without the vote of a majority of the
Series' outstanding voting securities. The Series may invest up to 20% of the
value of its total assets in a range of high-yield, medium and lower quality
corporate notes; short-term money market instruments, including certificates of
deposit of banks having total assets of more than $1 billion and which are
members of the FDIC, bankers' acceptances and interest-bearing savings or time
deposits of such banks; commercial paper of prime quality, rated A-1 or higher
by S&P or Prime-1 or higher by Moody's or, if not rated, issued by companies
which have an outstanding debt issue rated AA or higher by S&P or Aa or higher
by Moody's; securities guaranteed or insured by the U.S. Government, its
agencies and instrumentalities; and other income-producing cash items. The
Series may invest temporarily for defensive purposes without limit in the
foregoing securities.
PREFERRED STOCK. In accordance with its objective of producing maximum
current income, the Series may invest up to 10% of its total assets in preferred
stock, including non-investment grade preferred stock. Certain preferred stock
issues may offer higher yields than similar bond issues because their rights are
subordinated to the bonds. Consequently, such preferred stock issues will have a
greater risk potential. The Manager will try to minimize this greater risk
potential through its investment process. However, there can be no assurance
that losses will not occur and, as stated above, an investment in the Series is
appropriate only for an investor who can bear the high risk in seeking maximum
current income by investing in high-yielding securities, including
non-investment grade preferred stock.
FOREIGN SECURITIES. The Series may invest up to 10% of its total assets in
debt securities of foreign issuers. Foreign investments may be affected
favorably or unfavorably by changes in currency rates and exchange control
regulations. There may be less information available about a foreign company
than about a U.S. company, and foreign companies may not be subject to reporting
standards and requirements comparable to those applicable to U.S. companies.
Foreign debt securities and their markets may not be as liquid as U.S.
securities and their markets. Securities of foreign companies may involve
greater market risk than securities of U.S. companies, and foreign brokerage
commissions and custody fees are generally higher than 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.
ILLIQUID SECURITIES. The Series may invest up to 15% of its net assets in
illiquid securities, including restricted securities (i.e., securities not
readily marketable without registration under the Securities Act of 1933 (the
"1933 Act")) and other securities that are not readily marketable, such as
repurchase agreements of more than one week's duration. A Series may purchase
restricted securities that may be offered and sold only to "qualified
8
<PAGE>
institutional buyers" under Rule 144A of the 1933 Act, and the Manager, acting
pursuant to procedures approved by the Fund's Board of Directors, may determine,
when appropriate, that specific Rule 144A securities are liquid and not subject
to the 15% limitation on illiquid securities. Should this determination be made,
the Manager, acting pursuant to such procedures, will carefully monitor the
security (focusing on such factors, among others, as trading activity and
availability of information) to determine that the Rule 144A security continues
to be liquid. It is not possible to predict with assurance exactly how the
market for Rule 144A securities will further evolve. This investment practice
could have the effect of increasing the level of illiquidity in the Series, if
and to the extent that qualified institutional buyers become for a time
uninterested in purchasing Rule 144A securities.
BORROWING. The Series may borrow money only from banks and only for
temporary or emergency purposes (but not for the purchase of portfolio
securities) in an amount not to exceed 15% of the value of its total assets. The
Series will not purchase additional portfolio securities if the Series has
outstanding borrowings in excess of 5% of the value of its total assets.
LENDING OF PORTFOLIO SECURITIES. The Series may lend portfolio securities
to brokers or dealers, banks or other institutional borrowers of securities. The
borrower must maintain with the Series cash or equivalent collateral such as
Treasury Bills, equal to at least 100% of the market value of the securities
loaned. During the time portfolio securities are on loan, the borrower pays the
Series any income accruing on the loaned securities and the Series may invest
the cash collateral and earn additional income or may receive an agreed upon
amount of interest income from the borrower. The Series may lend portfolio
securities to the extent that the Manager deems appropriate in seeking to
achieve the Series' investment objective.
REPURCHASE AGREEMENTS. The Series may enter into repurchase agreements with
commercial banks and with broker/dealers to invest cash for the short-term. A
repurchase agreement is an agreement under which the Series acquires a money
market instrument, generally a U.S. Government obligation qualified for purchase
by the Series, subject to resale at an agreed upon price and date. Such resale
price reflects an agreed upon interest rate effective for the period of time the
instrument is held by the Series and is unrelated to the interest rate on the
instrument. Repurchase agreements could involve certain risks in the event of
bankruptcy or other default by the seller, including possible delays and
expenses in liquidating the securities underlying the agreement, decline in
value of the underlying securities and loss of interest. Repurchase agreements
usually are for short periods, such as one week or less, but may be for longer
periods. As a matter of fundamental policy, 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 would otherwise be
the case. Purchasing a security on a when-issued basis can involve a risk that
the yields available in the market when the delivery takes place may be higher
than those obtained on the security so purchased.
An account for the Series consisting of cash or liquid high-grade debt
securities equal to the amount of the when-issued commitments will be
established with the Series' Custodian, and marked to market daily, with
additional cash or liquid high-grade debt securities added when necessary. When
the time comes to pay for
9
<PAGE>
when-issued securities, the Series will meet its obligations from then available
cash flow, sale of securities held in the separate account, sale of other
securities or, although the Series 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 maximum
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 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 seventeen 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 Municipal Fund
Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal
Fund, Inc., Seligman Pennsylvania Municipal Fund Series, Seligman Portfolios,
Inc., Seligman Quality Municipal Fund, Inc., Seligman Select Municipal Fund,
Inc., Seligman Value Fund Series, Inc., and Tri-Continental Corporation. The
aggregate assets of the Seligman Group were approximately $14.2 billion at March
31, 1997. The Manager also provides investment management or advice to
institutional accounts having an aggregate value at March 31, 1997 of
approximately $4.2 billion.
Mr. William C. Morris is Chairman of the Manager and Chairman of the Board
and Chief Executive Officer of the Fund. Mr. Morris owns a majority of the
outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a
wholly-owned subsidiary of certain investment companies in the Seligman Group,
which performs, at cost, certain recordkeeping functions for the 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. The management fee is equal to an annual rate of .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. In 1996, the
management fee paid by the Fund was equal to an annual rate of .65% of the
average daily net assets of the Series.
The Fund pays all of its expenses other than those assumed by the Manager.
The Fund's expenses are allocated among the series in a manner determined by the
Trustees to be fair and equitable. Total expenses of the Series' Class A and
Class D shares, respectively, for the year ended December 31, 1996 amounted to
1.16% and 1.92%, respectively, of the average daily net assets of such class.
The annualized total expenses of the Fund's Class B shares for the period ended
December 31, 1996 amounted to 1.90% of the average daily net assets of such
class.
PORTFOLIO MANAGER. Mr. Daniel J. Charleston, a Managing Director of the
Manager, is a Vice President of the Fund and has been Portfolio Manager of the
Series since January 1990. Mr. Charleston is also a Vice
10
<PAGE>
President of Seligman Portfolios, Inc. and Portfolio Manager of its High-Yield
Bond Portfolio.
The Manager's discussion of the Series' performance as well as a line graph
illustrating comparative performance information between the Series, the Merrill
Lynch High-Yield Master Index and the Lipper High-Yield Index is included in the
Fund's 1996 Annual Report to Shareholders. Copies of the 1996 Annual Report may
be obtained, without charge, by calling or writing the Fund at the telephone
numbers or address listed on the cover page of this Prospectus.
PORTFOLIO TRANSACTIONS. Corporate bonds and other fixed-income securities
are generally traded on the over-the-counter market on a "net" basis without a
stated commission, through dealers acting for their own account and not as
brokers. The Series will engage in transactions with these dealers or deal
directly with the issuer. Prices paid to dealers will generally include a
"spread," i.e., the difference between the prices at which a dealer is willing
to purchase or to sell the security at that time. The Management Agreement
recognizes that in the purchase and sale of portfolio securities, the Manager
will seek the most favorable price and execution and, consistent with that
policy, may give consideration to the research, statistical and other services
furnished by dealers to the Manager for its use in connection with its services
to the Fund as well as to other clients.
Consistent with the Rules of the National Association of Securities
Dealers, Inc. 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 is likely to exceed 100% and has
done so in prior years.
PURCHASE OF SHARES
Seligman Financial Services, Inc. ("SFSI"), an affiliate of the Manager,
acts as general distributor of the Series' shares. Its address is 100 Park
Avenue, New York, 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. THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE
SELIGMAN TIME HORIZON MATRIXSM ASSET ALLOCATION PROGRAM IS $10,000. FOR
INFORMATION ABOUT THIS PROGRAM, CONTACT YOUR FINANCIAL ADVISOR.
11
<PAGE>
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 business on the
New York Stock Exchange ("NYSE") (normally, 4:00 p.m. Eastern time) and accepted
by SFSI before the close of business (5:00 p.m. Eastern time) on the same day
will be executed at the Series' net asset value determined as of the close of
the NYSE on that day plus, in the case of the 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 the shareholder purchases shares
is responsible for forwarding the order to SFSI promptly.
Payment for dealer purchases may be made by check or by wire. To wire
payment, dealer orders must first be placed through SFSI's order desk and
assigned a purchase confirmation number. Funds in payment of the purchase may
then be wired to Mellon Bank, N.A. ABA #043000261, A/C Seligman High-Yield Bond
Series (A, B or D), A/C#107-1011. WIRE TRANSFERS MUST INCLUDE THE PURCHASE
CONFIRMATION NUMBER AND CLIENT ACCOUNT REGISTRATION AND ACCOUNT NUMBER. Persons
other than dealers who wish to wire payment should contact Seligman Data Corp.
for specific wire instructions. Although the Fund makes no charge for this
service, the transmitting bank may impose a wire service fee.
Current shareholders may 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. Credit card convenience checks and third party checks (i.e.,
checks made payable to someone other than the "Seligman Group of Funds") may not
be used to open a new fund account or purchase additional shares of the Fund.
The check should be accompanied by an investment slip (provided on the bottom of
shareholder account statements) and include the shareholder's name, address,
account number, Series name and class of shares (A, B or D). If a shareholder
does not provide the required information, Seligman Data Corp. will seek further
clarification and may be forced to return the check to the shareholder. Orders
sent directly to Seligman Data Corp. will be executed at the 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. may charge a $10.00 service fee for checks returned to
it 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 traded on a U.S.
or foreign exchange or over-the-counter market are valued at the last sales
price on the primary exchange or market on which they are traded. United Kingdom
securities and securities for which there are no recent sales transactions are
valued based on quotations provided by primary market makers in such securities.
Any securities for which recent market quotations are not readily available are
valued at fair value determined in accordance with procedures approved by the
Fund's Trustees. Short-term holdings maturing in 60 days or less are generally
valued at amortized cost if their original maturity was 60 days or less.
Short-term holdings with more than 60 days remaining to maturity will be valued
at current market value until the 61st day prior to maturity, and will then be
valued on an amortized cost basis based on the value as of such date unless the
Trustees determine that amortized cost value does not represent fair market
value.
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<PAGE>
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 values 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 shares 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
schedule below, and an annual service fee of up to .25% of the average daily net
asset value of Class A shares. See "Administration, Shareholder Services and
Distribution Plan" below.
- --------------------------------------------------------------------------------
CLASS A SHARES--SALES LOAD SCHEDULE
SALES LOAD
AS A PERCENTAGE OF REGULAR
-------------------- DEALER
NET AMOUNT DISCOUNT
OFFERING INVESTED(NET AS A % OF
AMOUNT OF PURCHASE PRICE ASSET VALUE) OFFERING PRICE
------------------ --------------------- --------------
Less than $ 50,000..... 4.75% 4.99% 4.25%
50,000-- 99,999..... 4.00 4.17 3.50
100,000-- 249,999..... 3.50 3.63 3.00
250,000-- 499,999..... 2.50 2.56 2.25
500,000-- 999,999..... 2.00 2.04 1.75
1,000,000-- or more*..... 0 0 0
-------
*Shares acquired at net asset value pursuant to the above Schedule will be
subject to a CDSL of 1% if redeemed within 18 months of purchase. See
"Purchase of Shares--Contingent Deferred Sales Load."
- --------------------------------------------------------------------------------
There is no initial sales load on purchases of Class A shares of $1,000,000
or more ("NAV sales"); however, such shares are subject to a CDSL of 1% if
redeemed within eighteen months of purchase.
SFSI shall pay broker/dealers, from its own resources, a fee on NAV sales,
calculated as follows: 1.00% of NAV sales up to but not including $2 million;
.80% of NAV sales from $2 million up to but not including $3 million; .50% of
NAV sales from $3 million up to but not including $5 million; and .25% of NAV
sales from $5 million and above. The calculation of the fee wil be based on
assets held by a "single person" as defined below.
SFSI shall also pay broker/dealers, from its own resources, a fee on assets
of certain investments in Class A shares of the Seligman Mutual Funds
participating in an "eligible employee benefit plan" (as defined below under
"Special Programs") that are attributable to the particular broker/dealer. The
shares eligible for the fee are those on which an initial sales load was not
paid because either the participating eligible employee benefit plan has at
least (i) $500,000 invested in the Seligman Mutual Funds or (ii) 50 eligible
employees to whom such plan is made available. Class A shares representing only
an initial purchase of Seligman Cash Management Fund are not eligible for the
fee. Such shares will become eligible for the fee once they are exchanged for
shares of another Seligman Mutual Fund. The payment is based on cumulative sales
during a single calendar year, or portion thereof. The payment schedule, for
each calendar year, is as follows: 1.00% of sales up to but not including $2
million; .80% of sales from $2 million up to but not including $3 million; .50%
of sales from $3 million up to but not including $5 million; and .25% of sales
from $5 million and above.
REDUCED SALES LOADS. Reductions in sales loads apply to purchases of Class
A shares by a "single person," including an individual, members of a family unit
comprising husband, wife, and minor children purchasing securities for their own
account, or a trustee or other fiduciary purchasing for a single fiduciary
account or single trust. Purchases made by a trustee or other fiduciary for a
fiduciary account may not be aggregated with purchases made on behalf of any
other fiduciary or individual account.
Shares purchased without an initial sales load in accordance with the sales
load schedule or pursuant to a Volume Discount, Right of Accumulation or Letter
of Intent are subject to a CDSL of 1% on redemptions within eighteen months of
purchase.
o VOLUME DISCOUNTS are provided if the total amount being invested in Class
A shares of the 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.
13
<PAGE>
o THE RIGHT OF ACCUMULATION allows an investor to combine the amount being
invested in shares of the other Seligman Mutual Funds sold with an initial sales
load with the total net asset value of shares of those Seligman Mutual Funds
already owned that were sold with an initial sales load and the total net asset
value of shares of Seligman Cash Management Fund that were acquired by the
investor through an exchange of shares of another Seligman Mutual Fund on which
there was an initial sales load to determine reduced sales loads in accordance
with the sales load schedule. An investor or a dealer purchasing shares on
behalf of an investor must indicate that the investor has existing accounts when
making investments or opening new accounts.
o 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 the investor intends to purchase plus the total net asset value 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 an investor must indicate that the investor has
existing accounts when making investments or opening new accounts. For more
information concerning terms of Letters of Intent, see "Terms and Conditions" on
page 30.
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 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; 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 (not to exceed the dollar value of
such redemption proceeds); to financial institution trust departments; to
registered investment advisers exercising discretionary investment authority
with respect to the purchase of 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; to other
investment companies in the Seligman Group in connection with a deferred fee
arrangement for outside directors; and to "eligible employee benefit plans"
which have at least (i) $500,000 invested in the Seligman Group of Mutual Funds
or (ii) 50 eligible employees to whom such plan is made available. "Eligible
employee benefit plan" means any plan or arrangement, whether or not tax
qualified, which provides for the purchase of 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 of plan termination. Sales pursuant to a 401(k) alliance program
which has an agreement with SFSI are available at net asset value and are not
subject to a CDSL.
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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 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); however, no CDSL
will be imposed on shares acquired through the investment of dividends or
distributions from any Class B or Class D shares of mutual funds within the
Seligman Group. The amount of any CDSL will initially be used by SFSI to defray
the expense of the payment of 4% (in the case of Class B shares) or 1% (in the
case of Class D Shares) made by it to Service Organizations (as defined under
"Administration, Shareholder Services and Distribution Plan") at the time of
sale. Pursuant to an agreement with FEP Capital, L.P. ("FEP") to fund payments
in respect of Class B shares, SFSI has agreed to pay 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 sales
as described above under "Special Programs" may be subject to a CDSL of 1% for
terminations at the plan level only, or redemption of shares purchased within
eighteen months prior to plan termination.
The 1% CDSL normally imposed on redemptions of certain Class A shares
(i.e., those purchased during the preceding eighteen months at net asset value
pursuant to the sales load schedule provided under "Class A Shares--Initial
Sales Load") will be waived on shares that were purchased through Dean Witter
Reynolds, Inc. ("Dean Witter") by certain Chilean institutional investors (i.e.,
pension plans, insurance companies and mutual funds). Upon redemption of such
shares within an eighteen month period, Dean Witter will reimburse SFSI a pro
rata portion of the fee it received from SFSI at the time of sale of such
shares.
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<PAGE>
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. No CDSL
will be imposed on shares acquired through the investment of dividends or
distributions from any Class A, Class B or Class D shares of Seligman Mutual
Funds.
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
=========
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 (an "IRA") due to death, disability, or attainment
of age 591/2, and (iii) a tax-free return of an excess contribution to an IRA;
(c) in whole or in part, in connection with shares sold to current and retired
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.
For the period from the date Seligman Global Horizon Funds (the "Offshore
Fund") commences offering its shares, until May 31, 1997, SFSI will reimburse
any CDSL charged upon the redemption of Class B or Class D shares of any
Seligman Mutual Fund by a non-U.S. resident alien investor who uses the
redemption proceeds to purchase Class B or Class A shares, respectively, of the
Offshore Fund through Merrill Lynch, Pierce, Fenner & Smith Incorporated, or any
of its affiliates (col-
16
<PAGE>
lectively, "Merrill Lynch"). Merrill Lynch will, in turn, reimburse SFSI for the
amount of CDSL so reimbursed by it over a period of four years.
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 mutual
funds managed by the Manager during a specified period of time. Such bonus or
other incentive may take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives and members of their families to places within or outside the
United States. The cost to SFSI of such promotional activities and payments
shall be consistent with the Rules of the National Association of Securities
Dealers, Inc., as then in effect.
TELEPHONE TRANSACTIONS
A shareholder with telephone transaction privileges, AND THE SHAREHOLDER'S
BROKER/DEALER REPRESENTATIVE, will have the ability to effect the following
transactions via telephone: (i) redemption of 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 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. Group retirement plans that may allow plan
participants to place telephone exchanges directly with the Fund, must first
provide a letter of authorization signed by the plan custodian or trustee, and
provide a telephone services election form signed by each plan participant.
Additionally, group retirement plans are not permitted to change a dividend or
gain distribution option.
All Seligman Mutual Fund accounts with the same account number (i.e.,
registered exactly the same) 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 telephone services
election form.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or requesting
telephone services, authorizes each of the other owners to effect telephone
transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative may experience difficulty in contacting Seligman
Data Corp. to request a redemption or exchange of 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 may
result in the request being processed at a later time than
17
<PAGE>
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 ("uncertificated") form
without charge, except a CDSL, if applicable, at any time by SENDING A WRITTEN
REQUEST to Seligman Data Corp., P.O. Box 3947, New York, NY 10008-3947; or if
request is being sent by overnight delivery service to 100 Park Avenue, New
York, NY 10017. The redemption request must be signed by all persons in whose
name the shares are registered. A shareholder may redeem shares that are not in
book credit form without charge, except a CDSL, if applicable, by surrendering
certificates in proper form to the same address. Certificates should be sent by
registered mail. Share certificates must be endorsed for transfer or accompanied
by an endorsed stock power signed by all share owners exactly as their name(s)
appear(s) on the account registration. The shareholder's letter of instruction
or endorsed stock power should specify the Series or Fund name, account number,
class of shares (A, B or D) and the number of shares or dollar amount to be
redeemed. The Fund cannot accept conditional redemption requests (i.e., requests
to sell shares at a specific price or on a future date). If the redemption
proceeds are (i) $50,000 or more, (ii) to be paid to someone other than the
shareholder of record (regardless of the amount) or (iii) to be mailed to other
than the address of record (regardless of the amount), the signature(s) of the
shareholder(s) must be guaranteed by an eligible financial institution
including, but not limited to, the following: banks, trust companies, credit
unions, securities brokers and dealers, savings and loan associations and
participants in the Securities Transfer Association Medallion Program (STAMP),
the Stock Exchanges Medallion Program (SEMP) 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
18
<PAGE>
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
payable to the address of record may be made once per day, in an amount of up to
$50,000 per fund account. Telephone redemption requests received by Seligman
Data Corp. at (800) 221-2450 between 8:30 a.m. and 4:00 p.m. Eastern time, on
any business day will be processed as of the close of business on that day.
Redemption requests by telephone will not be accepted within 30 days following
an address change. Qualified Plans, IRAs or other retirement plans are not
eligible for telephone redemptions. The Fund reserves the right to suspend or
terminate its telephone redemption service at any time without notice.
For more information about telephone redemptions and the circumstances
under which shareholders may bear the risk of loss for a fraudulent transaction,
see "Telephone Transactions" above.
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 B shares may use
this service although check redemptions of Class B shares will 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. 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.
19
<PAGE>
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 the 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 30.
GENERAL. With respect to shares redeemed, a check for the proceeds will be
sent to the Shareholder's address of record within seven calendar days after
acceptance of the redemption order and will be made payable to all of the
registered owners on the account. With respect to shares repurchased by the
Fund, a check for the proceeds will be sent to the investment dealer within
seven calendar days after acceptance of the repurchase order and will be made
payable to the investment dealer. Payment of redemption proceeds will be delayed
on redemptions of shares purchased by check (unless certified) until Seligman
Data Corp. receives notice that the check has cleared, which may be up to 15
days from the credit of 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 the redemption is processed stating that the value of their
investment in the Series is less than the specified minimum and that they have
sixty days to make an additional investment.
REINSTATEMENT PRIVILEGE. If a shareholder redeems Class A shares and then
decides to reinvest them, or to shift the investment to the other series of the
Fund or 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 the other series of the
Fund or one of the other Seligman Mutual Funds. If a shareholder redeems Class B
or Class D shares and the redemption was subject to a CDSL, the shareholder may
reinstate all or any part of the investment in shares of the same class of the
Series or of any of the other Seligman Mutual Funds within 120 calendar days of
the date of redemption and receive a credit for the applicable CDSL paid. Such
investment will be reinstated at the net asset value per share established as of
the close of the NYSE on the day the request is received. Seligman Data Corp.
must be informed that the purchase is a reinstated investment. Reinstated shares
must be registered exactly as the shares previously redeemed and the Fund's
minimum initial investment amount must be met at the time of reinstatement.
Generally, exercise of the Reinstatement Privilege does not alter the
Federal income tax status of any capital gain realized on a sale of 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")
20
<PAGE>
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 Fund.
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 total amount paid for the year ended December 31, 1996 in respect of
the Series' Class A shares pursuant to the Plan was equal to .24% of the Class A
shares' average daily net assets.
Under the Plan, the Fund reimburses SFSI for its expenses with respect to
Class B and Class D shares at an annual rate of up to 1% of the respective
average daily net asset value of the Class B and Class D shares. Proceeds from
the Class B distribution fees are used to pay Service Organizations a continuing
fee of up to .25% on an annual basis of the average net asset value of Class B
shares attributable to particular Service Organizations for providing personal
service and/or the maintenance of shareholder accounts and will also be used by
SFSI to defray the expense of the payment of 4% made by it to Service
Organizations at the time of sale of Class B shares. In that connection, SFSI
has assigned FEP its interest in most of the fees payable to it in respect of
the Class B shares, other than the portion payable to Service Organizations on a
continuing basis. Proceeds from the Class D distribution fees are used primarily
to compensate Service Organizations for administration, shareholder services and
distribution assistance (including a continuing fee of up to .25% on an annual
basis of the average daily net asset value of Class D shares attributable to
particular Service Organizations for providing personal service and/or the
maintenance of shareholder accounts) and will initially be used by SFSI to
defray the expense of the payment of 1% made by it to Service Organizations at
the time of the sale of Class D shares. The amounts expended by SFSI in any one
year upon the initial purchase of Class 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 respectively, paid from Class B and Class D Plan fees
received in any other fiscal year.
The Plan, as it relates to Class B shares, was approved by the Trustees of
the Fund on March 21, 1996 and became effective April 22, 1996. The Plan, as it
relates to Class D shares, was amended by the Trustees of the Fund on July 15,
1993. The total amount paid for the year ended December 31, 1996 by the Series'
Class B and Class D shares pursuant to the Plan was 1% per annum of the average
daily net assets of the Class B and Class D shares. The Plan is reviewed by the
Fund's Trustees annually.
Seligman Services, Inc. ("SSI"), an affiliate of the Manager, is a limited
purpose broker/dealer. SSI acts as a broker/dealer of record for most
shareholder accounts that do not have a designated broker/dealer of record
including all such shareholder accounts established after April 1, 1995 and
receives compensation for providing personal service and account maintenance to
such accounts of record.
21
<PAGE>
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 another Seligman Mutual Fund on the
basis of relative net asset value.
If shares that are subject to a CDSL are exchanged for shares, of another
Seligman Mutual Fund, then for purposes of assessing the CDSL payable upon
disposition of the exchanged shares, the applicable holding period shall be
reduced by the holding period of the original shares.
Class B shareholders of the 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 use of the exchange
privilege 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.
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 through
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 Seligman
U.S. Government Securities Series.
o SELIGMAN INCOME FUND, INC. seeks high current income and the possibility of
improvement of future income and capital value.
o SELIGMAN MUNICIPAL FUND SERIES, INC. consists of several State Series and a
National Series. The National Municipal Series seeks to provide maximum
income exempt from federal income taxes; individual state series, each
seeking to maximize income exempt from federal income taxes and from personal
income taxes in designated states are available for Colorado, Georgia,
Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New York,
Ohio, Oregon and South Carolina. (Does not currently offer Class B shares.)
o SELIGMAN MUNICIPAL SERIES TRUST includes the Seligman California Municipal
High-Yield Series, the Seligman California Municipal Quality Series, the
Seligman Florida Municipal Series and the Seligman North Carolina Municipal
Series, each of which
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invests in municipal securities of its designated state. (Does not currently
offer Class B shares.)
o SELIGMAN NEW JERSEY MUNICIPAL FUND, INC. invests in investment-grade New
Jersey municipal securities. (Does not currently offer Class B shares.)
o SELIGMAN PENNSYLVANIA MUNICIPAL FUND SERIES invests in investment-grade
Pennsylvania municipal securities. (Does not currently offer Class B shares.)
o SELIGMAN VALUE FUND SERIES, INC. consists of the Seligman Large-Cap Value
Fund and the Seligman Small-Cap Value Fund each of which seeks capital
appreciation by investing in equity securities of value companies.
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 group retirement
plans, although some restrictions may apply. The terms of the Exchange Privilege
described herein may be modified at any time; and not all of the mutual funds in
the Seligman Group are available to residents of all states. Before making any
exchange, a shareholder should contact an authorized investment dealer or
Seligman Data Corp. to obtain prospectuses of any of the Seligman Mutual Funds.
A broker/dealer representative of record will be able to effect exchanges
on behalf of a shareholder only if the shareholder has telephone services or if
the 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 dealer of record listed on the account. SFSI reserves the right to
reject any telephone exchange request. Any rejected telephone exchange order may
be processed by mail. For more information about telephone exchanges, including
the circumstances under which shareholders may bear the risk of loss for a
fraudulent transaction, see "Telephone Transactions."
Exchanges of shares are sales and may result in a gain or loss for federal
income tax purposes.
FURTHER INFORMATION ABOUT
TRANSACTIONS IN THE SERIES
Because excessive trading (including short-term, "market timing" trading)
can hurt the Series' performance, the 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
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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
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, 1996 of
approximately $3,292,211 of which $1,083,833 expires in 1998 and $2,208,378
expires in 2002. Accordingly, the Series may not distribute capital gains
(short-term or long-term) to shareholders until net gains have been realized in
excess of the carryforward.
Shareholders may elect: (1) to receive both dividends and gain
distributions in shares; (2) to receive dividends in cash and gain distributions
in shares; (3) to receive both dividends and gain distributions in cash. Cash
dividends and gain distributions are paid by check. If the payment option you
prefer is not listed, contact Seligman Data Corp. at (800) 221-2450 to request
information on other available options. In the case of prototype retirement
plans, dividends and gain distributions are reinvested in additional shares.
Unless another election is made, dividends and capital gain distributions will
be credited to shareholder accounts in additional shares. Shares acquired
through a dividend or gain distribution and credited to a shareholder's account
are not subject to an initial sales load or a CDSL. Dividends and gain
distributions paid in shares are invested on the payable date using the net
asset value of the payable date. Shareholders may elect to change their dividend
and gain distribution options by writing Seligman Data Corp. at the address
listed below. If the shareholder has 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 electing 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
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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 carryforward before it
may make capital gain distributions to shareholders.
Any gain or loss realized upon a sale or redemption of shares in the Series
by a shareholder who is not a dealer in securities will generally be treated as
a long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. However, if shares on
which a long-term capital gain distribution has been received are subsequently
sold or redeemed and such shares have been held for six months or less, any loss
realized will be treated as long-term capital loss to the extent that it offsets
the long-term capital gain distribution. In addition, no loss will be allowed on
the sale or other disposition of shares of the Series if, within a period
beginning 30 days before the date of such sale or disposition and ending 30 days
after such date, the holder acquires (such as through dividend reinvestment)
securities that are substantially identical to the shares of the Series.
In determining gain or loss on shares of the Series that are sold or
exchanged within 90 days after acquisition, a shareholder generally will not be
permitted to include in the tax basis attributable to such shares the sales load
incurred in acquiring such shares to the extent of any subsequent reduction in
the sales load by reason of the Exchange or Reinstatement Privilege offered by
the Series. Any sales load not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
The Series will generally be subject to an excise tax of 4% on the amount
of any income or capital gains, above certain permitted levels, distributed to
shareholders on a basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned. Furthermore, dividends
declared in October, November or December payable to shareholders of record on a
specified date in such a month and paid in the following January will be treated
as having been paid by the Series and received by each shareholder in December.
Under this rule, therefore, shareholders may be taxed in one year on dividends
or distributions actually received in January of the following year.
Shareholders are urged to consult their tax advisors concerning the effect
of federal income taxes in their individual circumstances.
UNLESS A SHAREHOLDER INCLUDES A CERTIFIED TAXPAYER IDENTIFICATION NUMBER
(SOCIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND
CERTIFIES THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS
REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY A PORTION OF DISTRIBUTIONS
AND OTHER REPORTABLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLDING
IS 31%. SHAREHOLDERS SHOULD BE AWARE THAT, UNDER REGULATIONS PROMULGATED BY THE
INTERNAL REVENUE SERVICE, THE FUND MAY BE FINED $50 ANNUALLY FOR EACH ACCOUNT
FOR WHICH A CERTIFIED TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED. IN THE
EVENT THAT SUCH A FEE IS IMPOSED, THE FUND MAY CHARGE A SERVICE FEE OF UP TO $50
THAT MAY BE DEDUCTED FROM THE SHAREHOLDER'S ACCOUNT AND OFFSET AGAINST ANY
UNDISTRIBUTED DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. THE FUND ALSO RESERVES
THE RIGHT TO CLOSE ANY ACCOUNT WHICH DOES NOT HAVE A CERTIFIED TAXPAYER
IDENTIFICATION NUMBER.
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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, or (212) 682-7600 outside the
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-DIV 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
shareholder's 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 shareholder's checking account at regular monthly intervals in fixed
amounts of $100 or more per fund, or regular quarterly intervals in fixed
amounts of $250 or more per fund, to purchase shares. Accounts may be
established concurrently with the Invest-A-Check(R) Service only if accompanied
by a $100 minimum investment in conjunction with the monthly investment option
or a $250 minimum investment in conjunction with the quarterly investment
option. For investments in the Seligman Time Horizon MatrixSM Asset Allocation
Program, the minimum amount is $500 at regular monthly intervals or $1,000 at
regular quarterly intervals. (See "Terms and Conditions" on page 30.)
o AUTOMATIC DOLLAR-COST-AVERAGING SERVICE permits a shareholder of Seligman
Cash Management Fund to exchange a specified amount, at regular monthly
intervals in fixed amounts of $100 or more per fund, or regular quarterly
intervals in fixed amounts of $250 or more per fund, from shares of any class of
the Cash Management Fund into shares of the same class of any other Seligman
Mutual Fund registered in the same name. For exchanges into the Seligman Time
Horizon MatrixSM Asset Allocation Program, the minimum amount is $500 at regular
monthly intervals or $1,000 at regular quarterly intervals. The shareholder's
Cash Management Fund account must have a 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
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withdrawn prior to maturity. Accordingly, it will not normally be advisable to
liquidate a CD before its maturity.
o AUTOMATIC CASH WITHDRAWAL Service permits payments at regular Intervals
to be made to a shareholder who owns or purchases shares worth $5,000 or more
held as book credits. Holders of Class A shares purchased at net asset value
because the purchase amount was $1,000,000 or more should bear in mind that
withdrawals may be subject to a 1% CDSL if made within eighteen months of
purchase of such shares. Holders of Class B shares may elect to use this service
immediately, although certain withdrawals may be subject to a CDSL. 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 30.)
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 will be debited from a shareholder's account, if requested.
o COPIES OF ACCOUNT STATEMENTS will be sent to each shareholder free of
charge for the current year and most recent prior year. Copies of year-end
statements for prior years back to 1985 are available for a fee of $10.00 per
year, per account, with a maximum charge of $150 per account. Statement requests
should be forwarded, along with a check, to Seligman Data Corp.
TAX-DEFERRED RETIREMENT PLANS. Shares of the Series may be purchased for:
--Individual Retirement Accounts (IRAs);
--Savings Incentive Match Plans for Employees
(SIMPLE IRAs);
--Simplified Employee Pension Plans (SEPs);
--Section 401(k) Plans for corporations and their employees;
--Section 403(b)(7) Plans for employees of public school systems and
certain non-profit organizations who wish to make deferred compensation
arrangements; and
--Money Purchase Pension and Profit Plans for sole proprietorships,
partnerships and corporations.
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 year periods or since inception)
assuming the payment of the maximum sales load, if any, when the investment was
first made (or CDSL upon redemption, if applicable) and that all distributions
and dividends by that class were reinvested on the reinvestment dates during the
period. The "average annual total return" is the annual rate required for the
initial payment to grow to the amount which would be received at the end of the
specified period (one, five and ten year periods or since inception); i.e., the
average annual compound rate of return. The total
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return and average total return for both Class A and Class D shares for periods
prior to January 1, 1996 do not reflect the increase in the management fee
payable by the Fund effective on such date, which if reflected would reduce the
performance quoted. Total return and average annual total return may also be
presented without the effect of the initial sales load or CDSL, as applicable.
From time to time, reference may be made in advertising or promotional
material to performance information, including mutual fund rankings, prepared by
Lipper Analytical Service, Inc. ("Lipper"), an independent reporting service
which monitors the performance of mutual funds. In calculating the total return
of the 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., PENSIONS AND INVESTMENTS,
SMART MONEY, THE NEW YORK TIMES, USA TODAY, U.S. NEWS AND WORLD REPORT, THE WALL
STREET JOURNAL, WASHINGTON POST, WORTH MAGAZINE and YOUR MONEY.
ORGANIZATION AND CAPITALIZATION
The Fund is a diversified, open-end management investment company organized
under the laws of the Commonwealth of Massachusetts by a Declaration of Trust
dated July 27, 1984. The Declaration of Trust permits the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, $.001 par
value, in separate series. The Trustees also have the power to create additional
series of shares.
At present, shares of beneficial interest of two series are authorized,
which shares of beneficial interest constitute interest in the Series and the
Seligman U.S. Government Securities Series. Shares of beneficial interest of the
Series and the Seligman U.S. Government Securities Series are divided into three
classes (Class A, Class B and Class D). Each of the Series' and the Seligman
U.S. Government Securities Series' Class A, Class B and Class D shares of
beneficial interest 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 law. The Fund has adopted a plan (the "Multiclass Plan") pursuant
to Rule 18f-3 under the 1940 Act permitting the issuance and sale of multiple
classes of 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.
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APPENDIX
Moody's Investors Service, Inc.
Bonds and Notes
Baa: Bonds and notes which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds or notes lack outstanding
investment characteristics and in fact may have speculative characteristics as
well.
Ba: Bonds and notes which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and therefore not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds and notes in this class.
B: Bonds and notes which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds and notes which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds and notes which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds and notes which are rated C are the lowest rated class of bonds or
notes, and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Standard & Poor's Rating Service ("S&P")
Bonds
BBB: Bonds rated BBB are regarded as having a satisfactory degree of safety and
capacity to pay principal and interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in higher
rated categories.
BB, B, CCC, CC: Bonds rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the bond. BB indicates the lowest
degree of speculation and CC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
C: The rating C is reserved for bonds on which no interest is being paid.
D: Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
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TERMS AND CONDITIONS
GENERAL ACCOUNT INFORMATION
Investments will be made in as many shares of the Series, including
fractions to the third decimal place, as can be purchased at the net asset value
plus a sales load, if applicable, at the close of business on the day payment is
received. If 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 close of business on the same date.
After the initial investment, the value of shares held in the shareholder's
account must equal not less than two regularly scheduled investments. If an ACH
debit or preauthorized check is not honored by the shareholder's bank, or if the
value of shares held falls below the required minimum, the Invest-A-Check(R)
Service may be suspended. In the event that a check or ACH debit is returned
uncollectable, Seligman Data Corp. will cancel the purchase, redeem shares held
in the shareholder's account for an amount sufficient to reimburse the Fund for
any loss it may have incurred as a result, and charge a $10.00 return check fee.
This fee will be deducted from the shareholder's account. The Invest-A-Check(R)
Service may be reinstated upon written request indicating that the cause of
interruption has been corrected. The Invest-A-Check(R) Service may be terminated
by the shareholder or Seligman Data Corp. at any time by written notice. The
shareholder agrees to hold the Fund and its agents free from all liability which
may result from acts done in good faith and pursuant to these terms.
Instructions for establishing Invest-A-Check(R) Service are given on the Account
Application. In the event the shareholder exchanges all of the shares from one
mutual fund in the Seligman Group to another, the Invest-A-Check(R) Serivce will
be terminated in the Seligman Mutual Fund that was closed as as 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
at least $100 in connection with the monthly investment option or $250 in
connection with the quarterly investment option. If the shareholder uses the
Invest-A-Check(R) Service to make an IRA investment, the purchase will be
credited as a current year contribution. If the shareholder uses the
Invest-A-Check(R) service to make an investment in a pension or profit sharing
plan, the purchase will be credited a current year employer contribution.
AUTOMATIC CASH WITHDRAWAL SERVICE
The Automatic Cash Withdrawal Service is available to Class A shareholders,
to Class B shareholders and to Class D shareholders with respect to Class D
shares held for one year or more. A sufficient number of full and fractional
shares will be redeemed to provide the amount required for a scheduled payment
and any applicable CDSL. Redemptions will be made at the asset value at the
close of business on the specific day designated by the shareholder of each
month (or on the prior business day if the day specified falls on a weekend or
holiday) 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 eighteen months of purchase of such shares. Under this Service, a Class B
shareholder who requests both dividends and distributions in additional shares
may withdraw up to 12% of the value of the shareholder's fund account (at the
time of election) per annum, without the imposition of a CDSL.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 their account.
Upon completion of the specified minimum purchase within the thirteen-month
period, all shares held in escrow will be deposited into the shareholder's
account or delivered to the shareholder. A shareholder may include toward
completion of a Letter of Intent the total asset value of shares of the Seligman
Mutual Funds on which an initial sales load was paid as of the date of the
Letter. If the total amount invested within the thirteen-month period does not
equal or exceed the specified minimum purchase, the shareholder will be
requested to pay the difference between the amount of the sales load paid and
the amount of the sales load applicable to the total purchase made. If, within
20 days following the mailing of a written request, the shareholder has not paid
this additional sales load to Seligman Financial Services, Inc., sufficient
escrowed shares will be redeemed for payment of the additional sales load.
Shares remaining in escrow after this payment will be released to the
shareholder's account. The intended purchase amount may be increased at any time
during the thirteen-month period by filing a revised Agreement for the same
period, provided that the 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.
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 High-Yield Bond
Series and to effect a redemption of sufficient shares in the shareholder's
account to cover payment of the check and, in the case of Class B shares, any
applicable CDSL. The shareholder understands that shares in one series of the
Fund 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 marked "unpaid." This charge may be DEBITED from the
account the check was drawn against. NO REDEMPTION PROCEEDS WILL BE REMITTED TO
A SHAREHOLDER WITH RESPECT TO SHARES PURCHASED BY CHECK (UNLESS CERTIFIED) UNTIL
SELIGMAN DATA CORP. RECEIVES NOTICE THAT THE CHECK HAS CLEARED WHICH MAY BE UP
TO 15 DAYS FROM THE CREDIT OF THE SHARES TO A SHAREHOLDER'S ACCOUNT.
30
5/97
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
31
<PAGE>
SELIGMAN
HIGH-YIELD BOND
SERIES
- --------------------------------------------------------------------------------
100 Park Avenue
New York, New York 10017
TABLE OF CONTENTS
PAGE
----
Summary of Series Expenses ....................................... 2
Financial Highlights ............................................. 3
Alternative Distribution System .................................. 5
Investment Objective, Policies and Risks ......................... 7
Management Services .............................................. 10
Purchase of Shares ............................................... 11
Telephone Transactions ........................................... 17
Redemption of Shares ............................................. 18
Administration, Shareholder Services
EEand Distribution Plan .......................................... 20
Exchange Privilege ............................................... 22
Further Information about Transactions
EEin the Series .................................................. 23
Dividends and Distributions ...................................... 24
Federal Income Taxes ............................................. 24
Shareholder Information .......................................... 26
Advertising the SeriesO Performance .............................. 27
Organization and Capitalization .................................. 28
TXHY1 5/97
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
SELIGMAN
HIGH-YIELD BOND
SERIES
- --------------------------------------------------------------------------------
MAY 1, 1997
[LOGO]
- --------------------------------------------------------------------------------
<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
May 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 eighteen 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 THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF SERIES EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
--------- ----------- -----------
(Initial Sales (Deferred Sales (Deferred Sales
Load Load Load
Alternative) Alternative) Alternative)
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)................................................ 4.75% None None
Sales Load on Reinvested Dividends................................ None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, whichever is lower)..... None; 5% in 1st year 1% in 1st year
except 1% 4% in 2nd year None thereafter
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 1996 CLASS A CLASS B CLASS D
--------- ----------- -----------
(as a percentage of average net assets)
Management Fees................................................... .50% .50% .50%
12b-1 Fees........................................................ .22% 1.00%* 1.00%*
Other Expenses.................................................... .42% .42% .42%
----- ----- -----
Total Series Operating Expenses................................... 1.14% 1.92% 1.92%
===== ===== =====
</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 CDSLs on Class B and Class D shares are one-time
charges paid only if shares are redeemed within six years or one year of
purchase, respectively. 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. Expenses for Class B shares are
estimated because no shares of that Class were outstanding in the year ended
December 31, 1996. For more information concerning reductions in sales loads and
for a more complete description of the various costs and expenses, see "Purchase
of Shares", "Redemption of Shares" and "Management Services" herein. The Series'
Administration, Shareholder Services and Distribution Plan to which the caption
"12b-1 Fees" relates, is discussed under "Administration, Shareholder Services
and Distribution Plan" herein.
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 invest-
ment, assuming (1) a 5% annual return and (2) redemption at
the end of each time period................................Class A $59 $82 $107 $180
Class B+ $69 $90 $124 $204
Class D $29++ $60 $104 $224
</TABLE>
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown and the 5%
annual return used in this example is a hypothetical rate.
*Includes an annual distribution fee of .75% and an annual service fee of
.25%. Pursuant to the Rules of the National Association of Securities
Dealers, Inc. the aggregate deferred sales loads and annual distribution fees
on Class B and Class D shares of the 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) a 5% annual return and (2) no redemption at the end of the
period, the expenses on a $1,000 investment would be $19 for 1 year, $60 for
3 years and $104 for 5 years.
++ Assuming (1) a 5% annual return and (2) no redemption at the end of one
year, the expenses on a $1,000 investment would be $19.
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 1996 Annual Report, which is
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
--------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period $ 7.15 $ 6.47 $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 7.04 $ 7.06 $ 7.12 $ 8.15
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net investment income**........... .41 .46 .44 .53 .51 .51 .59 .65 .60 .59
Net realized and unrealized
investment gain (loss).......... (.44) .68 (.71) (.01) (.11) .41 (.15) (.02) (.06) (.84)
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Increase (decrease) from investment
operations...................... (.03) 1.14 (.27) .52 .40 .92 .44 .63 .54 (.25)
Dividends paid or declared........ (.41) (.46) (.44) (.53) (.51) (.51) (.59) (.65) (.60) (.59)
Distributions from net gain realized -- -- -- -- -- -- -- -- -- (.13)
Return of capital................. -- -- -- -- -- -- -- -- -- (.06)
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net increase (decrease) in net asset
value........................... (.44) .68 (.71) (.01) (.11) .41 (.15) (.02) (.06) (1.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net asset value, end of period ... $ 6.71 $ 7.15 $ 6.47 $ 7.18 $ 7.19 $ 7.30 $ 6.89 $ 7.04 $ 7.06 $ 7.12
====== ====== ====== ====== ====== ====== ====== ====== ====== ========
TOTAL RETURN BASED ON
NET ASSET VALUE: ............... (0.29)% 18.15% (3.88)% 7.46% 5.78% 14.05% 6.37% 9.25% 7.84% (2.84)%
Ratios/Supplemental Data:
Expenses to average net assets** . 1.14% 1.14% 1.10% 1.11% 1.05% 1.10% 1.06% 1.09% 1.09% 1.13%
Net investment income to average
net assets**.................... 6.05% 6.71% 6.49% 7.22% 7.17% 7.39% 8.66% 9.16% 8.33% 7.82%
Portfolio turnover................175.25% 213.06% 445.18% 170.35% 126.17% 95.46% 306.05% 226.25% 263.15% 282.99%
Net assets, end of period
(000s omitted).................$46,889 $55,061 $54,714 $69,805 $55,732 $64,440 $71,735 $83,850 $106,720 $123,556
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------
YEAR ENDED 9/21/93*
DECEMBER 31, TO
---------------------------------------
1996 1995 1994 12/31/93
------ ------- ------- ------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period $ 7.16 $ 6.48 $ 7.20 $ 7.33
------ ------- ------- ------
Net investment income**........... .36 .40 .37 .09
Net realized and unrealized
investment gain (loss).......... (.43) .68 (.72) (.13)
------ ------- ------- ------
Increase (decrease) from investment
operations...................... (.07) 1.08 (.35) (.04)
Dividends paid or declared........ (.36) (.40) (.37) (.09)
Distributions from net gain realized -- -- -- --
Return of capital................. -- -- -- --
------ ------- ------- ------
Net increase (decrease) in net asset
value........................... (.43) .68 (.72) (.13)
------ ------- ------- ------
Net asset value, end of period ... $ 6.73 $ 7.16 $ 6.48 $ 7.20
====== ======= ======= ======
TOTAL RETURN BASED ON
NET ASSET VALUE: ...............% (0.92)% 17.10% (5.05)% (.65)%
Ratios/Supplemental Data:
Expenses to average net assets** . 1.92% 2.01% 2.22% 2.09%+
Net investment income to average
net assets**.................... 5.27% 5.84% 5.40% 5.28%+
Portfolio turnover................ 175.25% 213.06% 445.18% 170.35%++
Net assets, end of period
(000s omitted).................$ $9,283 $8,181 $6,062 $2,317
</TABLE>
- ----------
* Commencement of offering of Class D shares.
**Had the Manager, at its discretion, not waived a portion of its fees for the
year ended December 31, 1987, the net investment income per share, the ratio
of expenses to average net assets and the ratio of net investment income to
average net assets for the Series would have been $.58, 1.15% 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 ongoing 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
was $1,000,000 or more. 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 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.
ANNUAL 12B-1 FEES
INITIAL (AS A % OF AVERAGE
SALES LOAD DAILY NET ASSETS) OTHER INFORMATION
---------- ----------------- -----------------
CLASS A Maximum initial Service fee of Initial sales 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.
*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 seventeen 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 Municipal Fund
Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal
Fund, Inc., Seligman Pennsylvania Municipal Fund Series, Seligman Portfolios,
Inc., Seligman Quality Municipal Fund, Inc., Seligman Select Municipal Fund,
Inc., Seligman Value Fund Series, Inc. and Tri-Continental Corporation. The
aggregate assets of the Seligman Group were approximately $14.2 billion at March
31, 1997. The Manager also provides investment management or advice to
institutional accounts having an aggregate value at March 31, 1997 of
approximately $4.2 billion.
Mr. William C. Morris is Chairman of the Manager and Chairman of the Board
and Chief Executive Officer of the Fund. Mr. Morris owns a majority of the
outstanding voting securities of the Manager.
The Manager provides senior management for Seligman Data Corp., a
wholly-owned subsidiary of certain investment companies in the Seligman Group,
which performs, at cost, certain recordkeeping functions for the 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, 1996
amounted to 1.14% and 1.92%, 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
Lipper General U.S. Government Funds Index and the Lehman Brothers Government
Bond Index is included in the Fund's 1996 Annual Report to Shareholders. Copies
of the 1996 Annual Report may be obtained, without charge, by calling or writing
the Fund at the telephone numbers or address listed on the cover page of this
Prospectus.
PORTFOLIO TRANSACTIONS. Fixed-income securities are generally traded on the
over-the-counter market on a "net" basis without a stated commission, through
dealers acting for their own account and not as brokers. The Series will engage
in transactions with these dealers or deal directly with the issuer. Prices paid
to dealers will generally include a "spread," i.e., the difference between the
prices at which a dealer is willing to purchase or to sell the security at that
time. The Management Agreement recognizes that in the purchase and sale of
portfolio securities, the Manager will seek the most favorable price and
execution and consistent with that policy, may give consideration to the
research, statistical and other services furnished by dealers to the Manager for
its use in connection with its services to the Fund as well as to other clients.
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. THE MINIMUM AMOUNT FOR INITIAL INVESTMENT IN THE
SELIGMAN TIME HORIZON MATRIXSM ASSET ALLOCATION PROGRAM IS $10,000. FOR
INFORMATION ABOUT THIS PROGRAM, CONTACT YOUR FINANCIAL ADVISOR.
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. Al-
9
<PAGE>
though the Fund makes no charge for this service, the transmitting bank may
impose a wire service fee.
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. Credit card convenience checks and third party checks (i.e.,
checks made payable to someone other than the "Seligman Group of Funds,") may
not be used to open a new fund account or purchase additional shares of the
Fund. The check should be accompanied by an investment slip (provided on the
bottom of shareholder account statements 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. may 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.
- --------------------------------------------------------------------------------
CLASS A SHARES--SALES LOAD SCHEDULE
REGULAR
SALES LOAD AS A DEALER
PERCENTAGE OF
------------------
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."
- --------------------------------------------------------------------------------
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
eighteen months of purchase.
SFSI shall pay broker/dealers, from its own resources, a fee on sales of
$1,000,000 or more, calcu-
10
<PAGE>
lated 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. The calculation of the fee will be based on assets held by a "single
person" as defined below.
SFSI shall also pay broker/dealers, from its own resources, 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
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<PAGE>
investment companies in the Seligman Group, the Manager and other companies
affiliated with the Manager. Family members are defined to include lineal
descendants and lineal ancestors, siblings (and their spouses and children) and
any company or organization controlled by any of the foregoing. Such sales also
may be made to employee benefit and thrift plans for such persons and to any
investment advisory, custodial, trust or other fiduciary account managed or
advised by the Manager or any affiliate.
Class A shares also may be issued without an initial sales load in
connection with the acquisition of cash and securities owned by other investment
companies; to any registered unit investment trust which is the issuer of
periodic payment plan certificates, the net proceeds of which are invested in
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 fund (not to exceed the dollar value of
such redemption proceeds); to financial institution trust departments; to
registered investment advisers exercising discretionary investment authority
with respect to the purchase of 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; to other
investment companies in the Seligman Group in connection with a deferred fee
arrangement for outside directors; and to "eligible employee benefit plans"
which have at least (i) $500,000 invested in the Seligman Group of Mutual Funds
or (ii) 50 eligible employees to whom such plan is made available. "Eligible
employee benefit plan" means any plan or arrangement, whether or not tax
qualified, which provides for the purchase of 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
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<PAGE>
Seligman Mutual Fund, the conversion period applicable to the Class B shares
acquired in the exchange will apply, and the holding period of the shares
exchanged will be tacked onto the holding period of the shares acquired. Class B
shareholders of the 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 pay any Class B CDSL to FEP.
A CDSL of 1% will also be imposed on any redemption of Class A shares
purchased during the preceding eighteen months if such shares were acquired at
net asset value pursuant to the sales load schedule provided under "Class A
Shares--Initial Sales Load." Employee benefit plans eligible for net asset value
sales as described above under "Special Programs" may be subject to a CDSL of 1%
for terminations at the plan level only, on redemptions of shares purchased
within eighteen months prior to plan termination.
The 1% CDSL normally imposed on redemptions of certain Class A shares
(i.e., those purchased during the preceding eighteen months at net asset value
pursuant to the sales load schedule provided under "Class A Shares--Initial
Sales Load") will be waived on shares that were purchased through Dean Witter
Reynolds, Inc. ("Dean Witter") by certain Chilean institutional investors (i.e.,
pension plans, insurance companies and mutual funds). Upon redemption of such
shares within an eighteen month period, Dean Witter will reimburse SFSI a pro
rata portion of the fee it received from SFSI at the time of sale of such
shares.
To minimize the application of a CDSL to a redemption, shares acquired
pursuant to the investment of dividends and 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. 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.
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:
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Total shares to be redeemed
(122.449 @ $12.25) as follows: $1,500.00
========
Dividend/Distribution shares
(5 @ $12.25) 61.25
Shares held more than 1 year
(100 @ $12.25) 1,225.00
Shares held less than 1 year subject
to CDSL (17.449 @ $12.25) 213.75
--------
Gross proceeds of redemption $1,500.00
Less CDSL (17.449 shares @ $12.00 =
$209.39 x 1% = $2.09) (2.09)
--------
Net proceeds of redemption $1,497.91
========
For federal income tax purposes, the amount of the CDSL will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.
The CDSL will be waived or reduced in the following instances:
(a) on redemptions following the death or disability of a shareholder, as
defined in section 72 (m)(7) of the Internal Revenue Code of 1986, as amended
(the "Code"); (b) in connection with (i) distributions from retirement plans
qualified under section 401(a) of the Code when such redemptions are necessary
to make distributions to plan participants (such payments include, but are not
limited to death, disability, retirement, or separation of service), (ii)
distributions from a custodial account under section 403 (b)(7) of the Code or
an individual retirement account (an "IRA") due to death, disability, or
attainment of age 591/2, and (iii) a tax-free return of an excess contribution
to an IRA; (c) in whole or in part, in connection with shares sold to current
and retired 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.
For the period from the date Seligman Global Horizon Funds (the "Offshore
Fund") commences offering its shares, until May 31, 1997, SFSI will reimburse
any CDSL charged upon the redemption of Class B or Class D shares of any
Seligman Mutual Fund by a non-U.S. resident alien investor who uses the
redemption proceeds to purchase Class B or Class A shares, respectively, of the
Offshore Fund through Merrill Lynch, Pierce, Fenner & Smith Incorporated, or any
of its affiliates (collectively, "Merrill Lynch"). Merrill Lynch will, in turn,
reimburse SFSI for the amount of CDSL so reimbursed by it over a period of four
years.
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
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<PAGE>
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 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. Group retirement plans that may allow plan
participants to place telephone exchanges directly with the Fund must first
provide a letter of authorization signed by the plan custodian or trustee, and
provide a telephone services election form signed by each plan participant.
Additionally, group retirement plans are not permitted to change a dividend or
gain distribution option.
All Seligman Mutual 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 telephone services election form.
For accounts registered jointly (such as joint tenancies, tenants in common
and community property registrations), each owner, by accepting or requesting
telephone services, authorizes each of the other owners to effect telephone
transactions on his or her behalf.
During times of drastic economic or market changes, a shareholder or the
shareholder's representative may experience difficulty in contacting Seligman
Data Corp. to request a redemption or exchange of 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 may
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
15
<PAGE>
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 ("uncertificated") form
without charge, except a CDSL, if applicable, at any time by sending a written
request to Seligman Data Corp., P.O. Box 3947, New York, NY 10008-3947; or if
request is being sent by overnight delivery service, to 100 Park Avenue, New
York, 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 without charge, except a CDSL, if applicable, by surrendering
certificates in proper form to the same address. Certificates should be sent by
registered mail. Share certificates must be endorsed for transfer or accompanied
by an endorsed stock power signed by all share owners exactly as their name(s)
appear(s) on the account registration. The shareholder's letter of instruction
or endorsed stock power should specify the 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
16
<PAGE>
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
payable to the address of record may be made once per day, in an amount of up to
$50,000 per fund account. Telephone redemption requests received by Seligman
Data Corp. at (800) 221-2450 between 8:30 a.m. and 4:00 p.m. Eastern time, on
any business day will be processed as of the close of business on that day.
Redemption requests by telephone will not be accepted within 30 days following
an address change. Qualified Plans, IRAs or other retirement plans are not
eligible for telephone redemptions. The Fund reserves the right to suspend or
terminate 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.
MAY 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
17
<PAGE>
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. Payment of redemption proceeds will be delayed
on redemptions of shares purchased by check (unless certified) until Seligman
Data Corp. receives notice that the check has cleared, which may be up to 15
days from the credit of 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 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 all or any part of 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 applicable
CDSL paid. Such investment will be reinstated at the net asset value per share
established as of the close of the NYSE on the day the request is received.
Seligman Data Corp. must be informed that the purchase is a reinstated
investment. REINSTATED SHARES MUST BE REGISTERED EXACTLY AND BE OF THE SAME
CLASS AS THE SHARES PREVIOUSLY REDEEMED; AND THE FUND'S MINIMUM 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.
19
<PAGE>
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, 1996 in respect of the Series' Class A shares
pursuant to the Plan was equal to .22% of the Class A shares' average daily net
assets.
Under the Plan, the 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 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. In that connection,
SFSI has assigned FEP its interest in most of the fees payable to it in respect
of the Class B shares, other than the portion payable to Service Organizations
on a continuing basis. 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 total amount paid for the year
ended December 31, 1996 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.
19
<PAGE>
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.
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 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.)
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.)
20
<PAGE>
o SELIGMAN VALUE FUND SERIES, INC. consists of the Seligman Large-Cap Value
Fund and the Seligman Small-Cap Value Fund each of which seeks capital
appreciation by investing in equity securities of value companies.
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; 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
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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, 1996 of
$15,037,132 (including $768,276 transferred from the Seligman Secured Mortgage
Income Series), of which $2,286,339 expires in 1997, $3,877,110 expires in 1998,
$12,467 expires in 2001, $8,470,786 expires in 2002 and $390,430 expires in
2004. 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 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
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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 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 advisors concerning the effect
of federal income taxes in their individual circumstances.
UNLESS A SHAREHOLDER INCLUDES A CERTIFIED TAXPAYER IDENTIFICATION NUMBER
(SOCIAL SECURITY NUMBER FOR INDIVIDUALS) ON THE ACCOUNT APPLICATION AND
CERTIFIES THAT THE SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, THE FUND IS
REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY A PORTION OF DISTRIBUTIONS
AND OTHER REPORTABLE PAYMENTS TO THE SHAREHOLDER. THE RATE OF BACKUP WITHHOLDING
IS 31%. SHAREHOLDERS SHOULD BE AWARE THAT, UNDER REGULATIONS PROMULGATED BY THE
INTERNAL REVENUE SERVICE, THE FUND MAY BE FINED $50 ANNUALLY FOR EACH ACCOUNT
FOR WHICH A CERTIFIED TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED. IN THE
EVENT THAT SUCH A FINE IS IMPOSED, THE FUND MAY CHARGE A SERVICE FEE OF UP TO
$50 THAT MAY BE DEDUCTED FROM THE SHAREHOLDER'S ACCOUNT AND OFFSET AGAINST ANY
UNDISTRIBUTED DIVIDENDS AND CAPITAL 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 Com-
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munications/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, or 212-682-7600 outside the 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-DIV 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 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. Holders of
Class D shares may elect to use this service with re-
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spect 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:
-Individual Retirement Accounts (IRAs);
-Savings Incentive Match Plans for Employees (SIMPLE IRAs);
-Simplified Employee Pension Plans (SEPs);
-Section 401(k) Plans for corporations and their employees;
-Section 403(b)(7) Plans for employees of public school systems and certain
non-profit organizations who wish to make deferred compensation arrangements;
and
-Money Purchase Pension and Profit Plans for sole proprietorships,
partnerships and corporations.
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
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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 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.
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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 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 will be deducted
from the shareholder's account. The Invest-A-Check(R) Service may be reinstated
upon written request indicating that the cause of interruption has been
corrected. The Invest-A-Check(R) Service may be terminated by the shareholder'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
and any applicable CDSL. 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 eighteen months of purchase of such shares. Under this Service, a Class B
shareholder who requests both dividends and distributions in additional shares
may withdraw up to 12% of the value of the shareholder's fund account (at the
time of election) per annum, without the imposition of a CDSL. 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.
5/97
27
<PAGE>
This page intentionally left blank.
<PAGE>
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 ..................................... 15
Redemption of Shares ....................................... 16
Administration, Shareholder Services
EEand Distribution Plan .................................... 18
Exchange Privilege ......................................... 19
Further Information about Transactions
EEin the Series ............................................ 21
Dividends and Distributions ................................ 22
Federal Income Taxes ....................................... 22
Shareholder Information .................................... 23
Advertising the SeriesO Performance ........................ 25
Organization and Capitalization ............................ 26
TXUSG1 5/97
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
SELIGMAN
U.S. GOVERNMENT SECURITIES
SERIES
- --------------------------------------------------------------------------------
MAY 1, 1997
[LOGO]
- --------------------------------------------------------------------------------
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 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 May 1, 1997. It should be read in
conjunction with the Prospectuses, which may be obtained by writing or calling
the Fund at the above address or telephone numbers. This Statement of Additional
Information, although not in itself a Prospectus, is incorporated by reference
into each Prospectus in its entirety.
The Fund consists of the Seligman U.S. Government Securities Series
("U.S. Government Securities Series") and the Seligman High-Yield Bond Series
("High-Yield Bond Series") (the "Series"). 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 eighteen months of purchase. Class B shares may be purchased at net asset
value and are subject to a CDSL, if applicable, in the following amount (as a
percentage of the current net asset value or the original purchase price,
whichever is less), if redemption occurs within the indicated number of years of
purchase of such shares: 5% (less than 1 year), 4% (1 but less than 2 years), 3%
(2 but less than 4 years), 2% (4 but less than 5 years), 1% (5 but less than 6
years) and 0% (6 or more years). Class B shares automatically convert to class A
shares after approximately eight years, resulting in lower ongoing fees. Shares
purchased through reinvestment of dividends and distributions on Class B shares
also will convert automatically to Class A shares along with the underlying
shares on which they were earned. Class D shares may be purchased at net asset
value and are subject to a CDSL of 1% (of the current net asset value or the
original purchase price, whichever is less) if redeemed within one year of
purchase.
Each 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 ongoing 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>
Page
----
Investment Objectives, Policies and Risks...... 2
Investment Limitations......................... 3
Trustees and Officers.......................... 5
Management and Expenses........................ 9
Administration, Shareholder Services
and Distribution Plans...................... 10
Portfolio Transactions......................... 11
Purchase and Redemption of
Fund Shares................................. 11
Distribution Services.......................... 14
Valuation...................................... 15
Performance ................................... 16
General Information............................ 18
Financial Statements........................... 20
Appendix ...................................... 21
TX1A
-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 Rating Service ("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.
-2-
<PAGE>
Securities purchased on a when-issued basis and the securities held in
each Series are subject to changes in market value based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates (which will generally result in
similar changes in value, i.e., both experiencing appreciation when interest
rates decline and depreciation when interest rates rise). Therefore, to the
extent a Series remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be a greater
possibility that the market value of the Series' assets will vary more than
otherwise. Purchasing a security on a when-issued basis can involve a risk that
the yields available in the market when the delivery takes place may be higher
than those obtained on the security so purchased.
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 years
ended 1996 and 1995 were 175.25% and 213.06% and 119.33% and 173.39%,
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;
-3-
<PAGE>
- - Invest more than 25% of the market value of its total assets in securities of
issuers in any one industry; for the purpose of this limitation,
mortgage-related securities do not constitute an industry;
- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization;*
- - 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.
- ----------
* The Fund has applied for, and expects to receive, an exemptive order from the
Securities and Exchange Commission that would permit it to purchase shares of
other investment companies advised by the Manager for the limited purpose of
hedging its obligations in connection with the deferred fee arrangement for
outside directors referred to under "Directors and Officers" below.
-4-
<PAGE>
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
(59) Officer and Chairman of the Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; and Seligman
Advisors, Inc., advisers; Chairman and Chief
Executive Officer, the Seligman Group of
Investment Companies; Chairman, Seligman
Financial Services, Inc., broker/dealer;
Seligman Holdings, Inc., holding company;
Seligman Services, Inc., broker/dealer; and
Carbo Ceramics Inc., ceramic proppants for oil
and gas industry; Director or Trustee, Seligman
Data Corp., shareholder service agent;
Kerr-McGee Corporation, diversified energy
company; and Sarah Lawrence College; and a
Member of the Board of Governors of the
Investment Company Institute; formerly,
President, J. & W. Seligman & Co. Incorporated,
Chairman, Seligman Securities, Inc.,
broker/dealer and J. & W. Seligman Trust
Company, trust company; and Director, Daniel
Industries, Inc., manufacturer of oil and gas
metering equipment.
BRIAN T. ZINO* Trustee, President and Member of the Executive
(44) Committee
Director and President, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
President (with the exception of Seligman
Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.) and Director or
Trustee, the Seligman Group Investment
Companies; and Seligman Advisors, Inc.,
advisers; Chairman and President, Seligman Data
Corp., shareholder service agent; and Director,
Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc.,
broker/dealer; and Seligman Henderson Co.,
advisers; formerly, Director, Seligman
Securities, Inc., broker/dealer and J. & W.
Seligman Trust Company, trust company.
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 Corporation, life 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
(62)
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
(64)
Director, various corporations; Director or
Trustee, the Seligman Group of Investment
Companies; 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; formerly, Chairman of the Board and
Chief Executive Officer, Kerr-McGee
Corporation, energy and chemicals. 123 Robert
S. Kerr Avenue, Oklahoma City, OK 73102
JOHN E. MEROW* Trustee
(67)
Retired 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 The 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)
Retired 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 and Vice Chairman, Mobil Corporation;
Director, Tesoro Petroleum Companies, Inc.; and
Director and President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY
10017
-6-
<PAGE>
RONALD T. SCHROEDER* Trustee and Member of the Executive Committee
(49)
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; 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, Seligman Data Corp., shareholder
service agent; Seligman Henderson Co.,
advisers; J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
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
(62)
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
(37)
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.
-7-
<PAGE>
FRANK J. NASTA Secretary
(32)
Senior Vice President, Law and Regulation and
Corporate Secretary, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
Secretary, the Seligman Group of Investment
Companies; Seligman Advisors, Inc., advisers;
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.
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 (1)(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 $2,625.35 N/A $65,000.00
Alice S. Ilchman, Trustee 2,661.06 N/A 66,000.00
Frank A. McPherson, Trustee 2,625.35 N/A 65,000.00
John E. Merow, Trustee 2,661.06(d) N/A 66,000.00(d)
Betsy S. Michel, Trustee 2,661.06 N/A 66,000.00
James C. Pitney, Trustee 2,625.35 N/A 65,000.00
James Q. Riordan, Trustee 2,661.06 N/A 66,000.00
Robert L. Schafer, Trustee 2,661.06 N/A 66,000.00
James N. Whitson, Trustee 2,661.06(d) N/A 66,000.00(d)
</TABLE>
- ---------------------
(1) Based on remuneration received by the Trustees of the Fund for the year
ended December 31, 1996.
(2) As defined in each Series' Prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
** Retired March 20, 1997.
(d) Deferred.
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. As of December 31,
1996, the total amounts of deferred compensation (including interest) payable in
respect of the Fund to Messrs. Merow and Whitson were $34,201 and $10,617,
respectively. After January 1, 1997, Mr. Merow no
-8-
longer defers current compensation. Mr. Pitney no longer defers current
compensation; however, he has accrued deferred compensation in the amount of
$24,517 as of December 31, 1996. The Fund has applied for, and expects to
receive, exemptive relief that would permit a director who has elected deferral
of his or her fees to choose a rate of return equal to either (i) the interest
rate on short-term Treasury bills, or (ii) the rate of return on the shares of
any of the investment companies advised by the Manager, as designated by the
director. The Fund may, but is not obligated to, purchase shares of such
investment companies to hedge its obligations in connection with this deferral
arrangement.
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 March 31, 1997. As of that date, no Trustees or officers owned
shares of either Series' Class B or Class D capital stock.
As of March 31, 1997, 10,205,923 Class A shares of the High-Yield Bond
Series, which equaled 15.57% of the High-Yield Bond Series' Class A capital
stock then outstanding, 10,576,294 Class B shares of the High-Yield Bond Series,
which equaled 32.05% of the High-Yield Bond Series' Class B capital stock then
outstanding and 18,378,678 Class D shares of the High-Yield Bond Series, which
equaled 40.13% 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.
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 the U.S. Government Series for each of the years 1996, 1995 and 1994
equaled .50% of the average daily net assets of such Series, or $290,879,
$301,343 and $338,362, respectively. The management fees paid by the High-Yield
Bond Series for 1996, 1995 and 1994 equaled .65%, .50% and .50%, respectively,
of the average daily net assets of such Series or $3,107,117, $723,340 and
$329,652, 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.
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
-9-
<PAGE>
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.
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
-10-
<PAGE>
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.
For the year ended December 31, 1996, Seligman Financial Services, Inc.,
("SFSI") received payments under the Plan in respect of Class A shares of the
U.S. Government Securities Series and the High-Yield Bond Series of $107,621 and
$664,216, or 0.22% and 0.24% per annum, respectively, of the average daily net
assets of each Series' Class A shares. This amount was used primarily to pay
Service Organizations on a continuing basis for providing personal services
and/or maintenance of shareholder accounts. For the period ended December 31,
1996, fees incurred by the High-Yield Bond Series in respect of the Series'
Class B shares amounted to $380,684, or 1.00% per annum of the average daily net
assets of the Series' Class B shares. Of this amount, 0.725% per annum was paid
directly to FEP Capital, L.P. ("FEP") to compensate it for having funded, at the
time of sale (i) the 4% commission paid to selling brokers and (ii) a payment of
0.25% of sales to SFSI; 0.025% per annum was paid to SFSI; and the remaining
0.25% per annum was paid to SFSI which, in turn, made an equal payment to
Service Organizations for providing personal services and/or maintenance of
shareholder accounts. For the year ended December 31, 1996, fees incurred in
respect of Class D shares of the U.S. Government Series and the High-Yield Bond
Series amounted to $85,723 and $1,633,741, respectively, or 1.00% per annum of
the average daily net assets of each Series' Class D shares. This amount was
paid to SFSI and, in the first twelve months after a sale, reimbursed it
primarily for the 1% payment made to dealers at the time of sale and for certain
other direct distribution costs. After the first twelve months, fees paid to
SFSI are used to pay a continuing fee to Service Organizations.
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.
PORTFOLIO TRANSACTIONS
No brokerage commissions were paid by the Fund during 1996, 1995 and 1994.
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.
-11-
<PAGE>
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
December 31, 1996 for each class of the Series, the maximum offering price of
each Series' shares (except Class B shares of the U.S. Government Securities
Series, which did not commence operations until January 1, 1997) is as follows:
U.S. GOVERNMENT SECURITIES SERIES
CLASS A
Net asset value per share................................... $6.71
------
Maximum sales load (4.75% of offering price)................ 0.33
------
Maximum offering price per share............................ $ 7.04
======
CLASS D
Net asset value and maximum offering price per share*....... $ 6.73
======
HIGH-YIELD BOND SERIES
CLASS A
Net asset value per share................................... $7.25
-----
Maximum sales load (4.75% of offering price)................ 0.36
-----
Maximum offering price per share............................ $ 7.61
======
CLASS B AND CLASS D
Net asset value and maximum offering price per share*....... $ 7.26
======
- ----------
* 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.
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 Seligman Mutual
Funds 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 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 which were
acquired through an exchange of shares of another Seligman Mutual Fund on which
there was an initial sales load at the time of purchase to determine reduced
sales loads in accordance with the schedule in 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 Seligman Mutual
Fund 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 SFSI is
notified by an investor or a dealer of the
-12-
<PAGE>
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 sales load 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 Seligman Mutual Funds already owned and the
total net asset value of shares of Seligman Cash Management Fund which were
acquired through an exchange of shares of another Seligman Mutual Fund on which
there was an initial sales load at the time of purchase. Reduced sales loads
also may apply to purchases made within a 13-month period starting up to 90 days
before the date of execution of a letter of intent. For more information
concerning the terms of the letter of intent, see "Terms and Conditions --
Letter of Intent" 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 Mutual Funds or (ii)
50 eligible employees to whom such plan is made available. Such sales must be
made in connection with a payroll deduction system of plan funding or other
systems acceptable to Seligman Data Corp., the Fund's shareholder service agent.
Such sales are believed to require limited sales effort and sales related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman Data
Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from investment dealers or SFSI. 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").
-13-
<PAGE>
FURTHER TYPES OF REDUCTIONS. 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 fund shares; to separate
accounts established and maintained by an insurance company which are exempt
from registration under Section 3(c)(11) of the 1940 Act; to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with SFSI; to shareholders of mutual funds
with objectives and policies similar to the Fund who purchase shares with
redemption proceeds of such funds (not to exceed the dollar value of such
redemption proceeds); to financial institution trust departments; to registered
investment advisers exercising discretionary investment authority with respect
to the purchase of Fund shares; to accounts of financial institutions or
broker/dealers that charge account management fees, provided the manager or one
of its affiliates has entered into an agreement with respect to such accounts;
pursuant to sponsored arrangements with organizations which make recommendations
to or permit group solicitations of, its employees, members or participants in
connection with the purchase of shares of the Fund; to other investment
companies in the Seligman Group in connection with a deferred fee arrangement
for outside directors; and to "eligible employee benefit plans" which have at
least (i) $500,000 invested in the Seligman Mutual Funds or (ii) 50 eligible
employees to whom such plan is made available. "Eligible employee benefit plan"
means any plan or arrangement, whether or not tax qualified, which provides for
the purchase of Fund shares. Sales of shares to such plans must be made in
connection with a payroll deduction system of plan funding or other system
acceptable to Seligman Data Corp.
The Fund may sell Class A shares at net asset value to present and retired
directors, trustees, officers, employees and their spouses (and family members
of the foregoing) of the Fund, the other investment companies in the Seligman
Group, the Manager, and other companies affiliated with the Manager. Family
members are defined to include lineal descendants and lineal ancestors, siblings
(and their spouses and children) and any company or organization controlled by
any of the foregoing. Such sales also may be made to employee benefit and thrift
plans for such persons and to any investment advisory, custodial, trust or other
fiduciary account managed or advised by the Manager or any affiliate. 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.
DISTRIBUTION SERVICES
SFSI, an affiliate of the Manager, acts as a general distributor of the shares
of the Fund and of the other Seligman Mutual Funds. 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 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Series SFSI Concessions Dealer Commissions CDSL Retained
- ------ ---------------- ------------------ -------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
Securities Series $ 9,862 $ 11,889 $ 8,580 $ 77,484 $ 87,970 $ 61,645 $ 3,630 $ 2,634 $8,280
High-Yield
Bond Series 709,561 459,779 45,213 5,466,375 3,554,416 353,427 88,949 33,929 8,610
</TABLE>
-14-
SFSI has assigned its rights to collect any CDSL imposed on redemptions
of Class B shares to FEP Capital, L.P. ("FEP"). SFSI has also assigned its
rights to substantially all of the distribution fees with respect of Class B
shares received by it pursuant to the Plans (other than the portion of such fees
used to make ongoing shareholder servicing payments to Service Organizations as
described in the Prospectus) to FEP, which provides funding to SFSI to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares. In connection with the assignment of its rights to collect any CDSL and
the distribution fees with respect to Class B shares, SFSI receives payments
from FEP based on the value of Class B shares sold. The aggregate amounts of
such payments from FEP and the Class B distribution fees retained by SFSI for
the period ended December 31, 1996 was $368,282 for the High-Yield Bond Series.
No Class B shares of the U.S. Government Securities Series were outstanding
during this period.
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
year ended December 31, 1996 and 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:
<TABLE>
<CAPTION>
1996 1995
---- ----
Distribution and Distribution and
Commissions Service Fees Commissions Service Fees
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
U.S. Government
Securities Series $ 3,172 $ 12,113 $ 8,380 $ 2,952
High-Yield
Bond Series 29,500 20,797 7,087 19,702
</TABLE>
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
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.
-15-
<PAGE>
PERFORMANCE
The annualized yield for the 30-day period ended December 31, 1996 for the
Class A shares of the U.S. Government Securities Series and the High-Yield Bond
Series was 5.44% 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,
1996, 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 7,016,990 and 53,834,269, 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, 1996
for the Class B shares of the High-Yield Bond Series was 8.63%. The annualized
yield was computed by dividing the 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, 1996, which was the last day of the period.
The average number of Class B shares of the High-Yield Bond Series was
18,114,394, 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, 1996 for the Class D shares of the U.S.
Government Securities Series and the High-Yield Bond Series was 5.00% and 8.68%,
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, 1996, 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 1,396,375
and 35,058,759, 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, 1996 were (5.07)%, 4.17%
and 5.46%; and 9.32%, 13.74% and 10.65%, 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
investment 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 B shares of the High-Yield Bond Series for the period April 22, 1996
(commencement of operations) to December 31, 1996 was 4.11%. This return was
computed assuming that all of the dividends and distributions paid by the Fund's
Class B shares, if any, were reinvested over the relevant time period. It was
then assumed that at the end of the period the entire amount was redeemed,
subtracting the 5% CDSL. The average annual total returns for the 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, 1996 were (1.86)% and
2.79%; and 13.10% and 11.36%, 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
of the U.S. Government Securities Series because no Class B shares of that
Series 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, if any, 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, 1987 had a value of $1,702 on December 31,
1996, resulting in an aggregate total return of 70.20%; 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 January 1, 1987 had a value of $2,751 on December 31, 1996,
resulting in an aggregate total return of 175.05%. Table B illustrates the total
return (income and capital) on Class B shares of the High-Yield Bond Series with
dividends invested and gain distributions, if any, taken in shares. It shows
that a $1,000 investment in Class B shares of the High-Yield Bond Series, made
on April 22, 1996 (commencement of offering of Class B shares) had a value of
$1,041 on December 31, 1996, after payment of the 5% CDSL, resulting in an
aggregate total return of 4.11%. There were no Class B shares of the U.S.
Government Securities Series outstanding during this period. Table C 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, if any, taken in shares. It shows that a $1,000 investment
in Class D shares of the U.S. Government Securities Series made on September 21,
1993 (commencement of offering of Class D shares) had a value of $1,095 on
December 31, 1996, resulting in an
-16-
<PAGE>
aggregate total return of 9.45% and a $1,000 investment in Class D shares of the
High-Yield Bond Series made on September 21, 1993 (commencement of offering of
Class D shares) had a value of $1,423 on December 31, 1996, resulting in an
aggregate total return of 42.32%. The results shown should not be considered a
representation of the dividend income or gain or loss in capital value which may
be realized from an investment made in a class of shares of the Fund today.
<TABLE>
<CAPTION>
TABLE A - CLASS A SHARES
Value of
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>
12/31/87 $831 $21 $ 73 $ 925
12/31/88 826 20 152 998
12/31/89 823 20 247 1,090
12/31/90 804 20 335 1,159
12/31/91 853 21 448 1,322
12/31/92 840 21 538 1,399
12/31/93 838 21 644 1,503
12/31/94 756 19 670 1,445
12/31/95 835 21 851 1,707
12/31/96 784 19 899 1,702 70.20%
</TABLE>
<TABLE>
<CAPTION>
VALUE OF
YEAR VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT (2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- ---------- ---------------------- ------------- --------- --------------- ----------
High-Yield
Bond Series
- -----------
<S> <C> <C> <C> <C> <C>
12/31/87 $861 $16 $ 105 $ 982
12/31/88 854 16 223 1,093
12/31/89 778 15 342 1,135
12/31/90 634 12 407 1,053
12/31/91 725 14 637 1,376
12/31/92 781 15 856 1,652
12/31/93 844 16 1,109 1,969
12/31/94 772 15 1,197 1,984
12/31/95 846 16 1,533 2,395
12/31/96 882 17 1,852 2,751 175.05%
</TABLE>
<TABLE>
<CAPTION>
TABLE B - CLASS B SHARES
Value of
PERIOD/YEAR VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT (2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- ------------- ---------------------- ------------- --------- --------------- ----------
<S> <C> <C> <C> <C> <C>
High-Yield
Bond Series
12/31/96(1) $ 978 $ -- $ 63 $ 1,041 4.11%
</TABLE>
-17-
<PAGE>
TABLE C - CLASS D SHARES
<TABLE>
<CAPTION>
VALUE OF
PERIOD/YEAR VALUE OF CAPITAL GAIN VALUE OF TOTAL
ENDED INITIAL INVESTMENT (2) DISTRIBUTIONS DIVIDENDS TOTAL VALUE (2) RETURN (3)
- ------------- ---------------------- ------------- --------- --------------- ----------
<S> <C> <C> <C> <C> <C>
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
12/31/96 919 -- 176 1,095 9.45%
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
12/31/96 1,077 -- 346 1,423 42.32%
</TABLE>
(1) For the ten years ended December 31, 1996 for Class A shares; from
commencement of offering of Class B shares on April 22, 1996; from
commencement of offering of Class D shares on September 21, 1993.
(2) The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales load, assumes that all dividends and capital
gain distributions were taken in cash and reflects changes in the net asset
value of the shares purchased with the hypothetical initial investment.
"Total Value" reflects the effect of the CDSL, if applicable, assumes
investment of all dividends and capital gain distributions and reflects
changes in the net asset value.
(3) "Total Return" for each Series is calculated by assuming a hypothetical
initial investment of $1,000 at the beginning of the period specified,
subtracting the maximum sales load on Class A shares; determining total
value of all dividends and capital gain distributions that would have been
paid during the period on such shares assuming that each dividend or
capital gain distribution was invested in additional shares at net asset
value; calculating the total value of the investment at the end of the
period; subtracting the CDSL on Class B or 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
-18-
<PAGE>
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
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.
-19-
<PAGE>
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, 1996 is
incorporated by reference into this Statement of Additional Information. The
Annual Report contains schedules of the investments of each of the Fund's Series
as of December 31, 1996 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.
-20-
<PAGE>
APPENDIX
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in the
sale of government securities to help finance the Civil War - Joseph Seligman,
with his brothers, established the international banking and investment firm of
J. & W. Seligman & Co. In the years that followed, the Seligman complex played a
major role in the geographical expansion and industrial development of the
United States.
THE SELIGMAN COMPLEX:
.... Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New
York Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of 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.
-21-
<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.
o Assumes management of National Investors Corporation, today Seligman
Growth Fund, Inc.
o 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.
o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc., two closed-end funds that invest in high-quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson plc, of London, known
as Seligman Henderson Co., to offer global and international investment
products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap
Value Fund.
-22-
<PAGE>
==============================================================================
SELIGMAN HIGH INCOME FUND SERIES
- ------------------------------------------------------------------------------
SELIGMAN U.S. GOVERNMENT
SECURITIES SERIES
A mutual fund that seeks to produce high current income by investing primarily
in debt obligations issued or guaranteed by the US Government or its agencies
and backed by the full faith and credit of the US Government.
SELIGMAN HIGH-YIELD
BOND SERIES
A mutual fund that seeks to maximize current income by investing in a
diversified portfolio of high-yielding, high-risk corporate bonds, commonly
referred to as "junk bonds."
<TABLE>
HIGHLIGHTS OF 1996
- ------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT
SECURITIES SERIES HIGH-YIELD BOND SERIES
--------------------- ------------------------------
CLASS A CLASS D CLASS A CLASS B CLASS D
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets (millions)............ $46.9 $9.3 $408.3 $148.0 $265.5
- ------------------------------------------------------------------------------------------------------------------
Yield*........................... 5.44% 5.00% 8.99% 8.63% 8.68%
- ------------------------------------------------------------------------------------------------------------------
Dividends**...................... $0.4096 $0.3570 $0.6947 $0.4472 $0.6404
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share........ $6.71 $6.73 $7.25 $7.26 $7.26
- ------------------------------------------------------------------------------------------------------------------
Maximum Offering
Price per Share................. $7.04 $6.73 $7.61 $7.26 $7.26
- ------------------------------------------------------------------------------------------------------------------
Holdings by Market Sector........ US Treasury Securities 64.5% Corporate Bonds 95.1%
USGovernment Convertible Bonds 0.5
Agency Securities 31.2 Net Cash & Short-
Net Cash & Short- Term Holdings 4.4
Term Holdings 4.3
- ------------------------------------------------------------------------------------------------------------------
Weighted Average
Maturity ..................... 16.8 years 8.8 years
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Current yield representing the annualized yield for the 30-day period
ended December 31, 1996. See pages 5 and 9 for investment results.
** Represents per share amount paid or declared for the year ended
December 31, 1996 (from April 22, 1996, for Class B shares of the
High-Yield Bond Series).
Note: The yield has been computed in accordance with SEC regulations and will
vary, and the principal value of an investment will fluctuate. Shares, if
redeemed, may be worth more or less than their original cost. Past performance
is not indicative of future investment results.
1
<PAGE>
=============================================================================
TO THE SHAREHOLDERS
- -----------------------------------------------------------------------------
Seligman High-Yield Bond Series and Seligman U.S. Government Securities Series
had contrasting results in 1996. Seligman High-Yield Bond Series had an
outstanding year, while Seligman U.S. Government Securities Series had a
difficult year. The Series' investment results begin on page 4.
The assets of Seligman High-Yield Bond Series grew significantly in 1996.
The Series posted exceptional performance due to the strength of the
overall high-yield market and the bond selection discipline followed by
the Series' investment team. The optimism in the high-yield market was
fueled by the resiliency of high-yield bonds in the higher interest rate
environment. Record inflows into high-yield mutual funds, very low default
rates, and an abundance of new issue offerings also supported the high-yield
marketplace and the Series.
On the other hand, the U.S. Government Securities Series had a
difficult year. Due to its exposure to long-term bonds, the Series was
particularly vulnerable to the increases in long-term interest rates and the
accompanying decline of bond prices seen in the year. In the first two quarters
of 1996, the bond market was hindered by persistent concerns that the
economy's unexpected vigor would produce higher levels of inflation and
an increase in interest rates. However, the market improved somewhat in the
last two quarters of the year, as the prevalence of low inflation and moderate
economic growth quelled fears of future increases in interest rates. The yield
on the benchmark 30-year Treasury bond reflected the changing perceptions
of inflationary pressure, rising from 5.95% on December 31, 1995, to 6.87%
on June 30, 1996, and ending the year slightly lower at 6.64%.
Currently, there are no clear indications that there will be either
runaway economic expansion or recession in 1997. The environment for the US
high-yield and fixed-income markets remains generally positive, given
continued modest economic growth, low inflation, and bipartisan efforts to
balance the federal budget without raising taxes. While we always
recognize that there could be short-term volatility, we remain positive about
the long-term outlook.
On a final note, the volatility witnessed in the financial markets in 1996
is not unusual in the challenging world of investing. Because it is time,
not timing, that counts, we believe the best strategy is one of long-term
investing. A professional financial advisor can help you formulate a long-term
investment plan to help you seek your financial goals, and can provide the
insight and support needed to weather the day-to-day uncertainty that
accompanies investing.
Discussions with your Portfolio Managers and each Series' portfolio
of investments follow this letter.
We thank you for your continued interest in Seligman High Income Fund
Series and look forward to serving your investment needs in the many years to
come.
By order of the Trustees,
[GRAPHIC OMITTED]
William C. Morris
Chairman
[GRAPHIC OMITTED]
Brian T. Zino
President
January 31, 1997
2
<PAGE>
============================================================================
ANNUAL PERFORMANCE OVERVIEW -- Seligman U.S. Government Securities Series
- ----------------------------------------------------------------------------
[GRAPHIC OMITTED]
Seligman Taxable Fixed Income Team: (from left)
Nicholas Walsh, James Auchterlonie, (seated)
Leonard J. Lovito (Portfolio Manager), Susan Egan
YOUR PORTFOLIO MANAGER
Leonard J. Lovito is a Vice President of J. & W. Seligman & Co. Incorporated,
and Vice President of Seligman High Income Fund Series and Portfolio Manager of
its Seligman U.S. Government Securities Series. Mr. Lovito also serves as Vice
President and Portfolio Manager of Seligman Cash Management Fund, and Vice
President of Seligman Portfolios, Inc. and Portfolio Manager of its Seligman
Bond and Seligman Cash Management Portfolios. Mr. Lovito joined Seligman in
1984 as a fixed-income analyst and has more than 13 years of fixed-income
trading and portfolio management experience. Mr. Lovito is supported by a team
of seasoned research professionals which assists him in selecting investments
in accordance with your Series' objectives.
How did U.S. Government Securities Series perform in the last 12 months?
"In 1996, the U.S. Government Securities Series underperformed its peers for
the first time in three years, due to the higher interest rate environment.
The Series' total return of -0.29% based on the net asset value of Class A
shares lagged both the 2.77% total return of the Lehman Brothers Government
Bond Index and the 2.01% total return of the Lipper US Government Fund Index."
How did the economy affect the performance of the Series?
"It was a year of mixed economic signals for the bond market. The
expectations for slow growth, which predominated in January of 1996,
changed abruptly in early March, resulting in a market decline. The steps the
Federal Reserve Board might take to contain growth were similarly difficult
to predict in the year. After acting in February to maintain slow growth by
reducing the fed funds rate, the Fed refrained from further action despite
market fears of inflation. As a result, yields in the bond market increased,
and prices fell, through the first half of 1996, and then fluctuated through
the remainder of the year. The yield on a 30-year Treasury bond, which is a
good indicator of the overall market, rose from a low of 5.95% in January to
a high of 7.20% in July, to end the year at 6.64%. The long-term bond market
endured similar swings, and the Series, which invests primarily in
long-term bonds, saw the value of its holdings decline."
What was your investment strategy?
"As interest rates increased during the second and third quarters of 1996,
we took two significant steps to protect the Series' portfolio. First, the
average maturity of the portfolio was reduced. The portfolio's exposure
to more intermediate-term issues was increased, as these are less sensitive
to changes in interest rates and have better performance when interest rates
rise. Second, additional mortgage-backed securities were purchased, as they
have higher yields and have historically outperformed Treasury securities in a
rising interest rate environment.
"During the fourth quarter, the economy showed signs of slowing, which helped
bond prices recover through October and November. The portfolio's maturity
was increased to take advantage of the rising bond prices, and the prices
of the Series' holdings appreciated. In December, however, news of renewed
strength in the economy once again drove bond yields higher, negatively
affecting the value of the Series' portfolio."
What is the outlook?
"As we enter 1997, most market analysts expect moderate economic growth
and continued low levels of inflation. The Series will enter the new year
with an average maturity that is in line with its peers, and the portfolio
will be better positioned to respond to any change in economic fundamentals.
Given signs of slower economic growth, the portfolio's average maturity will
be lengthened. If there are signs of stronger-than-expected economic growth,
the portfolio's interest rate risk will be reduced by investing in
securities with shorter maturities."
3
<PAGE>
==============================================================================
PERFORMANCE COMPARISON CHART December 31, 1996
- ------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman
U.S. Government Securities Series Class A shares, with and without the
maximum initial sales charge of 4.75%, for the 10-year period ended December
31, 1996, to a $10,000 investment made in the Lehman Brothers Government
Bond Index (Lehman Bond Index), and the Lipper General US Government Fund
Index (Lipper Index) for the same period. The performance of Seligman
U.S. Government Securities Series Class D shares is not shown in this chart,
but is included in the table on page 5. It is important to keep in mind that
the Lehman Bond Index excludes the effect of fees or sales charges and the
Lipper Index excludes the effect of sales charges.
with without Lehman Government
DATE sales charge sales charge Lipper Index Bond Index
12/31/86 $9,521.03 $10,000.00 $10,000.00 $10,000.00
3/31/87 $9,491.55 $9,969.03 $10,123.00 $10,118.00
6/30/87 $8,996.04 $9,448.59 $9,870.94 $9,940.94
9/30/87 $8,563.55 $8,994.34 $9,534.34 $9,673.52
12/31/87 $9,250.76 $9,716.11 $10,050.15 $10,220.08
3/31/88 $9,644.25 $10,129.40 $10,386.83 $10,557.34
6/30/88 $9,738.01 $10,227.87 $10,485.50 $10,656.58
9/30/88 $9,886.01 $10,383.32 $10,657.46 $10,836.68
12/31/88 $9,976.25 $10,478.11 $10,720.34 $10,938.54
3/31/89 $9,988.84 $10,491.32 $10,805.03 $11,054.49
6/30/89 $10,519.50 $11,048.67 $11,571.11 $11,943.27
9/30/89 $10,585.79 $11,118.30 $11,646.32 $12,042.40
12/31/89 $10,899.38 $11,447.68 $12,051.61 $12,495.19
3/31/90 $10,632.19 $11,167.04 $11,899.76 $12,340.25
6/30/90 $10,937.44 $11,487.64 $12,276.99 $12,772.16
9/30/90 $11,000.00 $11,553.35 $12,348.19 $12,878.17
12/31/90 $11,594.13 $12,177.37 $13,017.46 $13,585.18
3/31/91 $11,779.08 $12,371.62 $13,298.64 $13,879.98
6/30/91 $11,948.74 $12,549.82 $13,442.27 $14,067.36
9/30/91 $12,602.76 $13,236.73 $14,209.82 $14,869.20
12/31/91 $13,222.70 $13,887.86 $14,921.73 $15,666.19
3/31/92 $12,940.97 $13,591.97 $14,656.13 $15,392.03
6/30/92 $13,442.48 $14,118.71 $15,194.01 $16,001.56
9/30/92 $13,991.72 $14,695.58 $15,789.61 $16,792.03
12/31/92 $13,987.27 $14,690.90 $15,833.82 $16,798.75
3/31/93 $14,390.11 $15,114.00 $16,394.34 $17,558.05
6/30/93 $14,725.63 $15,466.40 $16,809.12 $18,065.48
9/30/93 $15,079.58 $15,838.15 $17,204.13 $18,652.61
12/31/93 $15,030.10 $15,786.18 $17,150.80 $18,589.19
3/31/94 $14,720.65 $15,461.16 $16,615.69 $18,029.65
6/30/94 $14,484.88 $15,213.52 $16,293.35 $17,824.12
9/30/94 $14,522.59 $15,253.13 $16,316.16 $17,898.98
12/31/94 $14,447.07 $15,173.81 $16,339.00 $17,961.62
3/31/95 $14,972.49 $15,725.67 $17,077.52 $18,807.62
6/30/95 $15,924.16 $16,725.21 $18,023.62 $19,973.69
9/30/95 $16,169.75 $16,983.16 $18,339.03 $20,327.22
12/31/95 $17,069.18 $17,927.84 $19,105.60 $21,256.18
3/31/96 $16,474.34 $17,303.08 $18,650.89 $20,775.79
6/30/96 $16,410.20 $17,235.72 $18,665.81 $20,875.51
9/30/96 $16,618.15 $17,454.13 $18,960.73 $21,226.22
12/31/96 $17,018.92 $17,875.06 $19,489.73 $21,846.03
Performance data quoted represent changes in prices and assume that all
distributions within the periods are invested in additional shares. The rates
of return will vary and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original stated
cost. Past performance is not indicative of future investment results.
4
<PAGE>
SELIGMAN U.S. GOVERNMENT SECURITIES SERIES*
<TABLE>
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS**
For Periods Ended December 31, 1996
AVERAGE ANNUAL
-------------------------------------------------------------------
CLASS D
SINCE
SIX ONE FIVE 10 INCEPTION
MONTHS YEAR YEARS YEARS 9/21/93
---------- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge (1.18)% (5.07)% 4.17% 5.46% n/a
Without Sales Charge 3.71 (0.29) 5.18 5.98 n/a
CLASS D
With 1% CDSL 2.46 (1.86) n/a n/a n/a
Without CDSL 3.46 (0.92) n/a n/a 2.79%
LEHMAN BOND INDEX*** 3.06 2.77 6.87 8.12 4.98+
LIPPER INDEX*** 2.91 2.01 5.48 6.89 5.41+
NET ASSET VALUE
<S> <C> <C> <C>
DECEMBER 31, 1996 JUNE 30, 1996 DECEMBER 31, 1995
-------------------- -------------- --------------------
CLASS A $6.71 $6.67 $7.15
CLASS D 6.73 6.68 7.16
DIVIDEND INFORMATION
For the Year Ended December 31, 1996
<S> <C> <C>
CLASS A CLASS D
--------- ---------
$0.4096 $0.3570
</TABLE>
The performance of Class D shares will be greater than or less than the
perfomance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
- --------------
* Although the payment of principal and interest with respect to certain
long-term securities held in the U.S. Government Securities Series are
guaranteed by the US Government or its agencies, the rate of return will
vary and the principal value of an investment in the Series will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost.
Past performance is not indicative of future investment results.
** Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures
for Class A shares are calculated with and without the effect of the
initial 4.75% maximum sales charge. Returns for Class D shares are
calculated with and without the effect of the 1% contingent deferred sales
load ("CDSL"), charged only on redemptions made within one year of the date
of purchase.
*** The Lehman Bond Index and the Lipper Index are unmanaged indices that
assume investment of dividends. The Lehman Bond Index does not reflect fees
or sales charges, and the Lipper Index does not reflect sales charges.
Investors may not invest directly in an index.
+ From September 30, 1993.
5
<PAGE>
==============================================================================
ANNUAL PERFORMANCE OVERVIEW -- Seligman High-Yield Bond Series
- ------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Seligman High-Yield Team: (from left)
Timothy Finn, Brian Hessel, (seated)
Daniel J. Charleston (Portfolio Manager)
YOUR PORTFOLIO MANAGER
Daniel J. Charleston is a Managing Director of J. & W. Seligman & Co.
Incorporated and has served as Vice President of Seligman High Income Fund
Series and Portfolio Manager of its Seligman High-Yield Bond Series since
January 1990. In addition, Mr. Charleston is Vice President of Seligman
Portfolios, Inc. and is Portfolio Manager of its Seligman High-Yield Bond
Portfolio. Mr. Charleston joined Seligman in 1987 as a Portfolio Assistant. Mr.
Charleston is supported by a team of research professionals which assists him
in selecting companies whose bonds have the potential for high yields at
acceptable levels of investment risk, consistent with your Series' objective.
How did Seligman High-Yield Bond Series perform in the last 12 months?
"Seligman High-Yield Bond Series had an outstanding year, posting a total return
of 14.82% based on the net asset value of Class A shares, and significantly
outperforming the 12.66% total return of the Lipper High-Yield Bond Index and
the 11.07% total return of the Merrill Lynch High-Yield Master Index."
Which market factors affected the Series' performance in the past 12 months?
"In 1996, high-yield bonds demonstrated tremendous resiliency in a generally
rising interest rate environment. One factor that supported performance was the
more than $15 billion net inflow into high-yield mutual funds. The near-record
levels of new issues offered in 1996 and the historically low default rates also
contributed to an overall positive market sentiment. Further, high-yield
securities continued to deliver outstanding yields versus other taxable
fixed-income investments, and grew in acceptance as a viable institutional asset
class. The Series' assets increased from $272 million at year-end 1995 to $822
million at year-end 1996."
Which sectors improved the Series' performance in 1996?
"Competitive local exchange carriers (CLECs) produced solid performance in 1996.
CLECs provide their customers with an alternative to their local telephone
company for local transport of private lines, special access, and interstate
transport of switched telecommunications services. Though the sector is at an
early stage in its evolution, we believe that as companies build their networks
and sign on new customers they stand poised for growth in both revenues and cash
flow. Some of the Series' strongest holdings in this sector included Brooks
Fiber Properties Inc., NEXTLINK Communications, Inc., and Intermedia
Communications of Florida, Inc.
"In the gaming sector, overall performance was mixed during the year because
of concerns of increased
capacity and promotional wars. However, there were some standout performers in
the Series' portfolio. These included Showboat Marina Casino Partnership, Coast
Hotels & Casinos, Inc., and Trump Hotels & Casino Resorts Funding, Inc. Finally,
within the utility sector, Midland Cogeneration Venture, L.P. posted improved
operating results and delivered high risk-adjusted returns during the year."
Which sector impaired the Series' performance?
"The paging sector experienced a difficult year in the market. The industry
continued to be plagued by declining average revenue per unit and unanticipated
systems integration problems amongst consolidating companies. The portfolio's
holdings in this industry were therefore reduced."
6
<PAGE>
==============================================================================
- ------------------------------------------------------------------------------
What was your investment strategy?
"Investment strategy focused on investing in B-rated domestic corporate issues
and avoiding distressed, defaulted, and foreign dollar-denominated securities.
We placed an emphasis on individual company selection and on non-cyclical
industries such as cable operators and telecommunications providers. The Series'
core positions in cable systems, gaming, and telecommunications were also
expanded as portfolio assets increased. In a year where many high-yield fund
managers had significant exposure to the more volatile emerging markets, the
Series remained a true high-yield fund investing in US corporate issuers."
What is the outlook?
"The outlook for Seligman High-Yield Bond Series continues to be positive.
Strong fundamental and technical factors point to another solid year in the
high-yield bond market. A stable, growing economy with relatively steady
interest rates and strong inflows into high-yield investment vehicles translate
to a positive outlook for the high-yield asset class and your Series."
7
<PAGE>
==============================================================================
PERFORMANCE COMPARISON CHART December 31, 1996
- ------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman
High-Yield Bond Series Class A shares, with and without the maximum initial
sales charge of 4.75%, for the 10-year period ended December 31, 1996, to a
$10,000 investment made in the Lipper High-Yield Bond Index (Lipper High-Yield
Index) and the Merrill Lynch High-Yield Master Index (Merrill Master Index) for
the same period. The performances of Seligman High-Yield Bond Series Class B and
D shares are not shown in this chart, but are included in the table on page 9.
It is important to keep in mind that the Lipper High-Yield Index excludes the
effect of sales charges and the Merrill Master Index excludes the effect of any
fees or sales charges.
Merrill Lynch Lipper
with without High Yield High-Yield
DATE sales charge sales charge Master Index Index
12/31/86 $9,525.55 $10,000.00 $10,000.00 $10,000.00
3/31/87 $9,959.90 $10,455.90 $10,568.00 $10,653.00
6/30/87 $9,701.29 $10,184.50 $10,432.73 $10,542.21
9/30/87 $9,418.62 $9,887.70 $10,350.31 $10,373.53
12/31/87 $9,815.71 $10,304.60 $10,465.20 $10,192.00
3/31/88 $10,285.93 $10,798.20 $11,025.09 $10,810.65
6/30/88 $10,526.47 $11,050.80 $11,327.18 $11,153.35
9/30/88 $10,675.02 $11,206.70 $11,600.16 $11,364.15
12/31/88 $10,932.27 $11,476.70 $11,875.08 $11,576.66
3/31/89 $11,140.06 $11,694.80 $12,123.27 $11,785.04
6/30/89 $11,567.64 $12,143.70 $12,558.50 $12,103.23
9/30/89 $11,572.85 $12,149.20 $12,559.75 $11,863.59
12/31/89 $11,352.11 $11,917.40 $12,377.64 $11,254.99
3/31/90 $10,929.71 $11,474.00 $12,120.18 $10,755.26
6/30/90 $11,305.34 $11,868.40 $12,642.56 $11,238.18
9/30/90 $10,822.30 $11,361.20 $11,875.16 $10,381.83
12/31/90 $10,526.22 $11,050.50 $11,839.53 $10,003.93
3/31/91 $11,812.61 $12,400.90 $13,453.26 $11,575.55
6/30/91 $12,460.80 $13,081.40 $14,281.98 $12,429.82
9/30/91 $13,260.04 $13,920.40 $15,121.76 $13,333.47
12/31/91 $13,757.80 $14,443.00 $15,933.80 $14,028.14
3/31/92 $15,016.62 $15,764.50 $17,136.80 $15,297.69
6/30/92 $15,452.40 $16,221.60 $17,755.44 $15,791.80
9/30/92 $16,298.50 $17,110.10 $18,565.09 $16,415.58
12/31/92 $16,519.60 $17,342.20 $18,828.72 $16,602.72
3/31/93 $17,675.79 $18,556.00 $19,997.98 $17,756.61
6/30/93 $18,421.00 $19,338.30 $20,795.90 $18,608.92
9/30/93 $18,745.62 $19,679.00 $21,324.11 $18,956.91
12/31/93 $19,689.32 $20,669.70 $22,064.06 $19,899.07
3/31/94 $19,570.80 $20,545.40 $21,655.88 $19,688.14
6/30/94 $19,552.19 $20,525.80 $21,404.67 $19,424.32
9/30/94 $19,640.33 $20,618.30 $21,695.77 $19,418.49
12/31/94 $19,843.57 $20,831.70 $21,806.42 $19,166.05
3/31/95 $20,875.77 $21,915.30 $23,121.35 $20,101.35
6/30/95 $22,167.51 $23,271.40 $24,587.24 $21,160.70
9/30/95 $23,191.63 $24,346.50 $25,305.19 $21,890.74
12/31/95 $23,954.15 $25,147.00 $26,145.32 $22,497.11
3/31/96 $24,912.72 $26,153.30 $26,527.04 $23,070.79
6/30/96 $25,466.41 $26,734.50 $26,890.46 $23,442.23
9/30/96 $26,580.75 $27,904.40 $27,939.19 $24,529.95
12/31/96 $27,504.58 $28,874.20 $29,037.20 $25,344.34
Performance data quoted represent changes in prices and assume that all
distributions within the periods are invested in additional shares. The rates of
return will vary and principal value of an investment will fluctuate. Shares,
if redeemed, may be worth more or less than their original stated cost. Past
performance is not indicative of future investment results.
8
<PAGE>
=============================================================================
SELIGMAN HIGH-YIELD BOND SERIES
- -----------------------------------------------------------------------------
<TABLE>
INVESTMENT RESULTS PER SHARE TOTAL RETURNS* For Periods Ended December 31, 1996
AVERAGE ANNUAL
-------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION SIX ONE FIVE 10 INCEPTION
4/22/96 MONTHS YEAR YEARS YEARS 9/21/93
------------ --------- ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge n/a 2.90% 9.32% 13.74% 10.65% n/a
Without Sales Charge n/a 8.00 14.82 14.86 11.19 n/a
CLASS B
With 5% CDSL 4.11% 2.74 n/a n/a n/a n/a
Without CDSL 9.11 7.74 n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a 6.74 13.10 n/a n/a n/a
Without CDSL n/a 7.74 14.10 n/a n/a 11.36%
LIPPER HIGH-YIELD INDEX** 9.01+ 5.32 12.66 12.54 9.74 9.33++
MERRILL MASTER INDEX** 9.42+ 5.23 11.07 12.74 11.24 9.95++
</TABLE>
<TABLE>
NET ASSET VALUE
DECEMBER 31, 1996 JUNE 30, 1996 DECEMBER 31, 1995
-------------------- -------------- --------------------
<S> <C> <C> <C>
CLASS A $7.25 $7.05 $6.96
CLASS B 7.26 7.05 n/a
CLASS D 7.26 7.05 6.96
DIVIDEND INFORMATION
For the Year Ended December 31, 1996
</TABLE>
<TABLE>
CLASS A CLASS B CLASS D
---------- ------------ ---------
<S> <C> <C> <C>
$0.6947 $0.4472+++ $0.6404
</TABLE>
The securities in which the Series invests are subject to greater risk of
loss of principal and interest than are higher-rated investment grade bonds.
Investors should carefully assess the risks associated with an investment
in this Series.
The performances of Class B and D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
- --------------
* Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures
for Class A shares are calculated with and without the effect of the
initial 4.75% maximum sales charge. Returns for Class B shares are
calculated with and without the effect of the maximum 5% contingent
deferred sales load ("CDSL"), charged only on certain redemptions made
within one year of the date of purchase, declining to 1% in the sixth year
and 0% thereafter. Returns for Class D shares are calculated with and
without the effect of the 1% CDSL, charged only on redemptions made within
one year of the date of purchase.
The rates of return will vary and the principal value of an investment
will fluctuate. Shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment
results.
** The Lipper High-Yield Index and the Merrill Master Index are unmanaged
indices that assume investment of dividends. The Lipper High-Yield Index
does not reflect sales charges, and the Merrill Master Index does not
reflect fees or sales charges. Investors may not invest directly in an
index.
+ From April 30, 1996.
++ From September 30, 1993.
+++ For the period April 22, 1996, to December 31, 1996.
9
<PAGE>
==============================================================================
SELIGMAN HIGH-YIELD BOND SERIES
- ------------------------------------------------------------------------------
<TABLE>
DIVERSIFICATION OF ASSETS PERCENT OF NET ASSETS
December 31, 1996 DECEMBER 31,
---------------------
ISSUES COST VALUE 1996 1995
------ ---- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Net Cash and Short-Term Holdings 1 $ 36,522,104 $ 36,522,104 4.4 6.0
--- ------------ ------------ ----- -----
Corporate Bonds and
Convertible Issues:
Aerospace 1 6,082,406 6,450,000 0.8 --
Automotive -- -- -- -- 0.8
Broadcasting 5 42,080,663 43,068,088 5.2 2.9
Cable Systems 15 131,230,962 131,071,750 15.9 13.5
Cellular 4 33,416,371 33,952,500 4.1 4.4
Chemicals 2 16,161,250 16,565,000 2.0 4.2
Computers and Related Services 2 22,932,713 24,418,750 3.0 1.3
Consumer Products 4 32,271,531 33,728,750 4.1 2.3
Containers 2 16,961,350 17,387,500 2.1 1.2
Energy 1 6,540,500 7,003,750 0.9 5.1
Environmental Services 1 8,603,341 8,956,875 1.1 1.0
Financial Services 2 8,652,719 8,864,000 1.1 1.8
Food 3 26,407,169 27,100,625 3.3 --
Funeral 1 6,673,287 7,068,750 0.9 --
Gaming/Hotel 9 100,951,587 104,137,500 12.7 17.1
Health Care/Medical Products 4 32,027,903 33,375,000 4.1 4.6
Industrial 1 5,042,499 4,696,500 0.6 1.0
Insurance -- -- -- -- 1.2
Leisure 2 10,561,500 11,026,250 1.3 1.5
Manufacturing 3 16,661,531 17,342,500 2.1 2.4
Metals 2 20,401,875 20,725,000 2.5 --
Paging 2 26,645,146 24,718,750 3.0 6.0
Paper and Packaging 2 20,221,788 20,857,500 2.5 1.1
Publishing 1 12,140,538 12,600,000 1.5 --
Record Storage 2 10,772,062 11,410,000 1.4 --
Retailing 1 8,616,875 8,797,500 1.1 0.8
Semiconductors -- -- -- -- 3.5
Supermarkets 3 35,381,851 36,875,000 4.5 2.1
Telecommunications 11 83,074,304 88,537,750 10.8 7.0
Theaters 1 7,193,540 7,668,750 0.9 3.3
Utilities 1 15,696,864 16,875,000 2.1 2.9
Miscellaneous -- -- -- -- 1.0
--- ------------ ------------ ----- -----
88 763,404,125 785,279,338 95.6 94.0
--- ------------ ------------ ----- -----
Net Assets 89 $799,926,229 $821,801,442 100.0 100.0
--- ------------ ------------ ----- -----
--- ------------ ------------ ----- -----
</TABLE>
10
<PAGE>
==============================================================================
PORTFOLIOS OF INVESTMENTS December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
U.S. GOVERNMENT SECURITIES SERIES
PRINCIPAL AMOUNT
OR WARRANTS Value
------------- -------
US TREASURY SECURITIES 64.5%
<S> <C> <C>
US Treasury Bonds:
8 3/4%, due 5/15/2020........ ................................................... $ 7,000,000 $ 8,612,191
7 7/8%, due 2/15/2021. .......................................................... 3,000,000 3,390,003
US Treasury Notes:
8%, due 5/15/2001................................................................. 5,000,000 5,343,755
7%, due 7/15/2006................................................................. 9,000,000 9,354,384
6 1/4%, due 10/31/2001... ....................................................... 9,500,000 9,508,911
-----------
TOTAL US TREASURY SECURITIES (Cost $36,505,781)...................................... 36,209,244
-----------
US GOVERNMENT AGENCY SECURITIES 31.2% Mortgage-Backed Pass-through Certificates:
Federal National Mortgage Association 7 1/2%, due 10/1/2026........................ 7,394,914 7,401,850
Government National Mortgage Association Obligations,
7 1/2%, with various maturities from 9/15/2021 to 8/15/2024**................... 10,116,809 10,135,778
-----------
TOTAL US GOVERNMENT AGENCY SECURITIES (Cost $16,927,926).......................... 17,537,628
-----------
SHORT-TERM HOLDINGS 3.2% (Cost $1,800,000)....................................... 1,800,000
-----------
TOTAL INVESTMENTS 98.9% (Cost $55,233,077)....................................... 55,546,872
OTHER ASSETS LESS LIABILITIES 1.1%............................................... 625,136
-----------
NET ASSETS 100.0%................................................................ $56,172,008
-----------
-----------
- ----------------------------------------------------------------------------------------------------------------------
HIGH-YIELD BOND SERIES
CORPORATE BONDS 95.1%
AEROSPACE 0.8%
UNC Inc. 11%, due 6/1/2006........................................................... $ 6,000,000 $ 6,450,000
-----------
BROADCASTING 4.7%
Allbritton Communications Co. 11 1/2%, due 8/15/2004............................... 5,000,000 5,300,000
Jacor Communications Co. 9 3/4%, due 12/15/2006.................................... 2,970,000 3,047,963
Paxson Communications Corp. 11 5/8%, due 10/1/2002................................. 14,000,000 14,700,000
SFX Broadcasting, Inc. 10 3/4%, due 5/15/2006...................................... 15,000,000 15,937,500
-----------
38,985,463
-----------
CABLE SYSTEMS 15.9%
American Telecasting, Inc. 0% ( 14 1/2%+), due 8/15/2005............................ 10,000,000 3,650,000
American Telecasting, Inc. (Warrants expiring 8/15/2000).......................... 5,000 wts. 50,000
Cablevision Systems Corp. 10 1/2%, due 5/15/2016................................... $16,500,000 17,160,000
Charter Communications Southeast L.P. 11 1/4%, due 3/15/2006....................... 12,000,000 12,600,000
Charter Communications Southeast Holdings L.P. 0% (14%+), due 3/15/2007.......... 15,000,000 8,925,000
Comcast Corp. 10 5/8%, due 7/15/2012............................................... 15,000,000 16,725,000
Comcast U.K. Cable Partners Ltd. 0% (11.20%+), due 11/15/2007..................... 10,000,000 7,175,000
Heartland Wireless Communications, Inc. 14%, due 10/15/2004*...................... 8,600,000 8,965,500
Intermedia Capital Partners IV, L.P. 11 1/4%, due 8/1/2006......................... 15,000,000 15,712,500
International CableTel, Inc. 0% (11 1/2%+), due 2/1/2006........................... 10,000,000 6,850,000
</TABLE>
- -----------------------
See footnoes on page 14.
11
<PAGE>
=============================================================================
PORTFOLIOS OF INVESTMENTS (continued) December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
HIGH-YIELD BOND SERIES (continued)
PRINCIPAL AMOUNT
OR WARRANTS Value
------------- -------
<S> <C> <C>
CABLE SYSTEMS (continued)
People's Choice TV Corp. 0% (13 1/8%+), due 6/1/2004............................... $ 10,000,000 $ 4,300,000
Rogers Cablesystems Inc. 11%, due 12/1/2015....................................... 10,000,000 10,775,000
Rogers Communications Inc. 10 7/8%, due 4/15/2004.................................. 7,500,000 7,931,250
Wireless One Inc. 13%, due 10/15/2003............................................. 10,500,000 10,237,500
Wireless One Inc. (Warrants expiring 10/15/2000) 15,000 wts. 15,000
-----------
131,071,750
CELLULAR 4.1%
Centennial Cellular Corp. 10 1/8%, due 5/15/2005................................... $ 7,500,000 7,575,000
Commnet Cellular Corp. 11 1/4%, due 7/1/2005....................................... 6,500,000 6,922,500
PriCellular Wireless Corp. 0%(12 1/4%+), due 10/1/2003............................. 10,500,000 9,030,000
PriCellular Wireless Corp. 10 3/4%, due 11/1/2004* 10,000,000 10,425,000
-----------
33,952,500
-----------
CHEMICALS 2.0%
NL Industries Inc. 11 3/4%, due 10/15/2003......................................... 10,000,000 10,625,000
Texas Petrochemicals Corp. 11 1/8%, due 7/1/2006 5,500,000 5,940,000
-----------
16,565,000
-----------
COMPUTERS AND RELATED SERVICES 3.0%
Unisys Corp. 12%, due 4/15/2003................................................... 12,750,000 13,706,250
Unisys Corp. 11 3/4%, due 10/15/2004 10,000,000 10,712,500
-----------
24,418,750
-----------
CONSUMER PRODUCTS 4.1%
American Pad & Paper Co. 13%, due 11/15/2005...................................... 6,500,000 7,670,000
Ryder TRS Inc. 10%, due 12/1/2006*................................................ 8,500,000 8,861,250
Spinnaker Industries Inc. 103 1/44%, due 10/15/2006*................................. 7,500,000 7,837,500
William Carter Co. 10 3/4%, due 12/1/2006* 9,000,000 9,360,000
-----------
33,728,750
-----------
CONTAINERS 2.1%
Plastic Containers, Inc. 10%, due 12/15/2006*..................................... 10,000,000 10,400,000
Silgan Corp. 11 3/4%, due 6/15/2002 6,500,000 6,987,500
-----------
17,387,500
-----------
ENERGY 0.9%
Abraxas Petroleum Corp. 11 1/2%, due 11/1/2004* 6,500,000 7,003,750
-----------
ENVIRONMENTAL SERVICES 1.1%
Allied Waste North America, Inc. 10 1/4%, due 12/1/2006* 8,500,000 8,956,875
-----------
FINANCIAL SERVICES 1.1 %
Dollar Financial Group, Inc. 10 7/8%, due 11/15/2006*.............................. 6,750,000 6,986,250
Veritas Holdings GmbH 9 5/8%, due 12/15/2003* 1,850,000 1,877,750
-----------
8,864,000
-----------
FOOD 3.3%
AmeriKing Inc. 10 3/4%, due 12/1/2006 .............................................. 7,500,000 7,800,000
Gorges/Quik-to-Fix Foods, Inc. 11 1/2%, due 12/1/2006* ............................. 8,500,000 8,850,625
International Home Foods, Inc. 10 3/8%, due 11/1/2006* 10,000,000 10,450,000
-----------
27,100,625
-----------
- -----------------------
See footnoes on page 14.
</TABLE>
12
<PAGE>
=============================================================================
PORTFOLIOS OF INVESTMENTS (continued) December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
HIGH-YIELD BOND SERIES (continued)
PRINCIPAL AMOUNT
OR WARRANTS Value
------------- -------
<S> <C> <C>
FUNERAL 0.9%
Prime Succession Acquisition Corp. 10 3/4%, due 8/15/2004.......................... $ 6,500,000 $ 7,068,750
-----------
GAMING/HOTEL 12.7%
Alliance Gaming Corp. 12 7/8%, due 6/30/2003 ....................................... 6,500,000 6,922,500
Aztar Corp. 13 3/4%, due 10/1/2004 ................................................. 15,000,000 16,050,000
Casino America, Inc. 12 1/2%, due 8/1/2003 ......................................... 7,500,000 7,153,125
Casino Magic of Louisiana Corp. 13%, due 8/15/2003*............................... 7,500,000 7,443,750
Coast Hotels & Casinos, Inc. 13%, due 12/15/2002..................................... 12,500,000 13,812,500
Showboat, Inc. 13%, due 8/1/2009..................................................... 7,675,000 8,480,875
Showboat Marina Casino Partnership 13 1/4%, due 3/15/2003 .......................... 10,950,000 12,099,750
Trump Atlantic City Funding, Inc. 11 1/4%, due 5/1/2006 ............................ 15,000,000 14,925,000
Trump Hotels & Casino Resorts Funding, Inc. 15 1/2%, due 6/15/2005 ................. 15,000,000 17,250,000
-----------
104,137,500
-----------
HEALTH CARE/MEDICAL PRODUCTS 4.1%
Dade International Inc. 11 1/8%, due 5/1/2006 ...................................... 7,500,000 8,137,500
Graphic Controls Corp. 12%, due 9/15/2005........................................... 5,000,000 5,562,500
IMED Corp. 9 3/4%, due 12/1/2006* .................................................. 10,000,000 10,250,000
Paracelsus Healthcare Corp. 10%, due 8/15/2006....................................... 10,000,000 9,425,000
-----------
33,375,000
-----------
INDUSTRIAL 0.6%
IMO Industries Inc. 11 3/4%, due 5/1/2006 .......................................... 5,050,000 4,696,500
-----------
LEISURE 1.3%
Premier Parks Inc. 12%, due 8/15/2003.............................................. 4,000,000 4,380,000
Stuart Entertainment, Inc. 12 1/2%, due 11/15/2004* ................................ 6,500,000 6,646,250
-----------
11,026,250
-----------
MANUFACTURING 2.1%
Blue Bird Body Co. 10 3/4%, due 11/15/2006 ......................................... 3,500,000 3,692,500
BPC Holding Corp. 12 1/2%, due 6/15/2006 ........................................... 6,500,000 6,890,000
International Knife &Saw, Inc. 11 3/8%, due 11/15/2006* ............................ 6,500,000 6,760,000
-----------
17,342,500
-----------
METALS 2.5%
Renco Metals, Inc. 11 1/2%, due 7/1/2003 ........................................... 10,000,000 10,525,000
Royal Oak Mines, Inc. 11%, due 8/15/2006............................................. 10,000,000 10,200,000
-----------
20,725,000
-----------
PAGING 3.0%
Mobile Telecommunication Technologies Corp. 13 1/2%, due 12/15/2002 ................ 17,500,000 17,631,250
ProNet Inc. 117 1/48%, due 6/15/2005................................................. 7,500,000 7,087,500
-----------
24,718,750
-----------
PAPER AND PACKAGING 2.5%
U.S. Can Corp. 10 1/8%, due 10/15/2006* ............................................ 10,000,000 10,550,000
S.D. Warren Co. 12%, due 12/15/2004.................................................. 9,500,000 10,307,500
-----------
20,857,500
-----------
PUBLISHING 1.5%
Petersen Publishing Co., L.L.C. 11 1/8%, due 11/15/2006* 12,000,000 12,600,000
-----------
</TABLE>
- -----------------------
See footnoes on page 14.
13
<PAGE>
=============================================================================
PORTFOLIOS OF INVESTMENTS (continued) December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH-YIELD BOND SERIES (continued)
PRINCIPAL AMOUNT
OR WARRANTS Value
------------- -------
<S> <C> <C>
RECORD STORAGE 1.4%
Iron Mountain Inc. 10 1/8%, due 10/1/2006 .......................................... $ 3,500,000 $ 3,727,500
Pierce Leahy Corp. 11 1/8%, due 7/15/2006 .......................................... 7,000,000 7,682,500
-----------
11,410,000
-----------
RETAILING 1.1%
Cole National Group, Inc. 9 7/8%, due 12/31/2006* ................................ 8,500,0000 8,797,500
-----------
SUPERMARKETS 4.5%
Grand Union 12%, due 9/1/2004........................................................ 12,500,000 13,312,500
Jitney-Jungle Stores of America, Inc. 12%, due 3/1/2006.............................. 12,500,000 13,312,500
Pathmark Stores Inc. 11 5/8%, due 6/15/2002 ........................................ 10,000,000 10,250,000
-----------
36,875,000
-----------
TELECOMMUNICATIONS 10.8%
Brooks Fiber Properties, Inc. 0% (10 7/8%+), due 3/1/2006* ......................... 5,000,000 3,362,500
Brooks Fiber Properties, Inc. 0% (11 7/8%+), due 11/1/2006 ......................... 5,000,000 3,212,500
Fonorola Inc. 12 1/2%, due 8/15/2002 ............................................... 7,500,000 8,250,000
Intermedia Communications of Florida, Inc. 13 1/2%, due 6/1/2005 ................... 5,000,000 5,737,500
Intermedia Communications of Florida, Inc. 0%(12 1/2%+), due 5/15/2006 ............. 5,000,000 3,350,000
Intermedia Communications of Florida, Inc. (Warrants expiring 6/1/2000).......... 4,000 wts. 160,000
IXC Communications Inc. 12 1/2%, due 10/1/2005 ..................................... $18,500,000 20,442,500
NEXTLINK Communications, Inc. 12 1/2%, due 4/15/2006 ............................... 12,500,000 13,468,750
Omnipoint Corp. 11 5/8%, due 8/15/2006 ............................................. 10,000,000 10,450,000
Phonetel Technologies, Inc. 12%, due 12/15/2006...................................... 2,600,000 2,704,000
Sprint Spectrum L.P. 11%, due 8/15/2006.............................................. 16,000,000 17,400,000
-----------
88,537,750
-----------
THEATERS 0.9%
Plitt Theaters, Inc. 10 7/8%, due 6/15/2004 ...................................... 7,500,000 7,668,750
-----------
UTILITIES 2.1%
Midland Cogeneration Venture, L.P. 11 3/4%, due 7/23/2005 ........................ 15,000,000 16,875,000
-----------
TOTAL CORPORATE BONDS (Cost $759,374,937).......................................... 781,196,713
-----------
CONVERTIBLE PREFERRED STOCKS 0.5% (Cost $4,029,188)
BROADCASTING 0.5%
Paxson Communications Corp. 12 1/2% .............................................. 4,275 shs. 4,082,625
-----------
SHORT-TERM HOLDINGS 1.9% (Cost $15,900,000) ........................................ 15,900,000
-----------
TOTAL INVESTMENTS 97.5% (Cost $779,304,125) ......................................... 801,179,338
OTHER ASSETS LESS LIABILITIES 2.5% ................................................. 20,622,104
-----------
NET ASSETS 100.0% .................................................................. $821,801,442
-----------
-----------
</TABLE>
* Rule 144A security.
**Investments in mortgage-backed securities are subject to principal paydowns.
As a result of prepayments from refinancing or satisfaction of the underlying
mortgage instruments, the average life may be less than the original
maturity. This in turn may impact the ultimate yield realized from these
securities. + Deferred-interest debentures pay no interest for a stipulated
number of years, after which they pay the indicated coupon rate.
See Notes to Financial Statements.
14
<PAGE>
=============================================================================
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
U.S. GOVERNMENT HIGH-YIELD
SECURITIES SERIES BOND SERIES
______________ ____________
<S> <C> <C>
ASSETS:
Investments, at value (see portfolios of investments):
Long-term holdings............................................... $53,746,872 $785,279,338
Short-term holdings.............................................. 1,800,000 15,900,000
----------- ------------
55,546,872 801,179,338
Cash................................................................ 164,514 87,099
Interest receivable................................................. 722,659 17,460,320
Receivable for Shares of Beneficial Interest sold................... 101,286 10,725,096
Expenses prepaid to shareholder service agent....................... 9,970 107,010
Other............................................................... 24,991 89,386
----------- ------------
Total Assets........................................................ 56,570,292 829,648,249
----------- ------------
LIABILITIES:
Payable for Shares of Beneficial Interest repurchased............... 157,573 2,241,823
Dividends payable................................................... 121,753 2,896,003
Payable for securities purchased.................................... -- 1,561,547
Accrued expenses, taxes, and other.................................. 118,958 1,147,434
----------- ------------
Total Liabilities 398,284 7,846,807
----------- ------------
Net Assets.......................................................... $56,172,008 $821,801,442
----------- ------------
----------- ------------
COMPOSITION OF NET ASSETS:
Shares of Beneficial Interest, at par (unlimited shares authorized;
$.001 par value; 8,364,572 and 113,282,926 shares outstanding):
Class A.......................................................... $ 6,984 $ 56,292
Class B.......................................................... -- 20,394
Class D.......................................................... 1,380 36,597
Additional paid-in capital.......................................... 71,027,763 803,180,157
Accumulated net realized loss....................................... (15,177,914) (3,367,211)
Net unrealized appreciation of investments.......................... 313,795 21,875,213
----------- ------------
Net Assets.......................................................... $56,172,008 $821,801,442
----------- ------------
----------- ------------
NET ASSETS:
Class A............................................................. $46,889,264 $408,303,361
Class B............................................................. -- $147,970,334
Class D............................................................. $9,282,744 $265,527,747
SHARES OF BENEFICIAL INTEREST OUTSTANDING:
Class A............................................................. 6,984,440 56,292,402
Class B............................................................. -- 20,393,887
Class D............................................................. 1,380,132 36,596,637
NET ASSET VALUE PER SHARE:
Class A............................................................. $6.71 $7.25
Class B............................................................. -- $7.26
Class D............................................................. $6.73 $7.26
</TABLE>
- ------------------------
See Notes to Financial Statements.
15
<PAGE>
=============================================================================
STATEMENTS OF OPERATIONS For the Year Ended December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
U.S. GOVERNMENT HIGH-YIELD
SECURITIES SERIES BOND SERIES
----------------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................... $ 4,185,228 $52,323,055
----------- -----------
EXPENSES:
Management fees........................................................ 290,879 3,107,117
Distribution and service fees.......................................... 193,344 2,678,641
Shareholder account services........................................... 110,713 899,087
Registration........................................................... 36,495 139,693
Shareholder reports and communications................................. 26,015 41,257
Custody and related services........................................... 20,721 75,100
Shareholders' meeting.................................................. 19,188 14,096
Trustees' fees and expenses............................................ 14,067 16,070
Auditing and legal fees................................................ 11,424 66,715
Miscellaneous.......................................................... 10,557 19,251
----------- -----------
Total Expenses......................................................... 733,403 7,057,027
----------- -----------
Net Investment Income.................................................. 3,451,825 45,266,028
----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments................................ (531,212) 8,372,099
Net change in unrealized appreciation of investments................... (3,266,304) 13,819,543
----------- -----------
Net Gain (Loss) on Investments......................................... (3,797,516) 22,191,642
----------- -----------
Increase (Decrease) in Net Assets from Operations...................... $ (345,691) $67,457,670
----------- -----------
----------- -----------
</TABLE>
- ------------------------
See Notes to Financial Statements.
16
<PAGE>
=============================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
U.S. GOVERNMENT HIGH-YIELD BOND
SECURITIES SERIES SERIES
---------------------------- -----------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.......................... $ 3,451,825 $ 3,990,174 $ 45,266,028 $ 13,558,330
Net realized gain (loss) on investments........ (531,212) 2,039,308 8,372,099 1,610,990
Net change in unrealized appreciation/
depreciation of investments.................. (3,266,304) 4,046,357 13,819,543 9,316,772
----------- ----------- ------------ ------------
Increase (decrease) in net assets from operations (345,691) 10,075,839 67,457,670 24,486,092
----------- ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:.........................
Class A...................................... (2,998,077) (3,598,301) (27,035,063) (10,106,642)
Class B...................................... -- -- (3,418,270) --
Class D...................................... (453,748) (391,873) (14,812,695) (3,451,688)
----------- ----------- ------------ ------------
Decrease in net assets from distributions...... (3,451,825) (3,990,174) (45,266,028) (13,558,330)
----------- ----------- ------------ ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:*
Net proceeds from sale of shares:
Class A...................................... 5,275,155 3,825,303 236,713,393 105,673,183
Class B...................................... -- -- 144,036,057 --
Class D...................................... 2,920,596 2,880,957 173,325,163 73,974,274
Net asset value of shares issued in payment
of dividends:................................
Class A...................................... 1,522,409 1,701,734 13,828,199 4,574,683
Class B...................................... -- -- 1,378,143 --
Class D...................................... 329,724 277,256 9,145,648 1,987,440
Exchanged from associated Funds:
Class A...................................... 3,303,371 7,127,733 92,654,186 40,995,621
Class B...................................... -- -- 3,420,798 --
Class D...................................... 3,947,861 3,553,259 32,988,466 17,689,110
----------- ----------- ------------ ------------
Total.......................................... 17,299,116 19,366,242 707,490,053 244,894,311
----------- ----------- ------------ ------------
Cost of shares repurchased:
Class A...................................... (8,375,696) (11,627,920) (50,385,557) (11,822,223)
Class B...................................... -- -- (1,530,923) --
Class D...................................... (2,247,483) (1,974,060) (20,024,403) (5,891,925)
Exchanged into associated Funds:
Class A...................................... (6,587,848) (6,070,037) (78,716,704) (24,535,126)
Class B...................................... -- -- (2,104,964) --
Class D...................................... (3,360,753) (3,313,843) (27,399,898) (9,572,687)
----------- ----------- ------------ ------------
Total.......................................... (20,571,780) (22,985,860) (180,162,449) (51,821,961)
----------- ----------- ------------ ------------
Increase (decrease) in net assets from transactions
in shares of beneficial interest............. (3,272,664) (3,619,618) 527,327,604 193,072,350
----------- ----------- ------------ ------------
Increase (decrease) in net assets.............. (7,070,180) 2,466,047 549,519,246 204,000,112
NET ASSETS:
Beginning of year.............................. 63,242,188 60,776,141 272,282,196 68,282,084
----------- ----------- ------------ ------------
End of year.................................... $56,172,008 $63,242,188 $821,801,442 $272,282,196
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
* The High-Yield Bond Series began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
17
<PAGE>
=============================================================================
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
1. Seligman High Income Fund Series (the "Fund") consists of two separate series
(collectively, the "Series"): the "U.S. Government Securities Series" which
offers two classes of shares -- Class A and Class D shares, and the "High-Yield
Bond Series" which offers three classes of shares -- Class A, Class B, and Class
D shares. All shares existing prior to September 21, 1993, the commence ment of
Class D shares, were classified as Class A shares. The High-Yield Bond Series
began offering Class B shares on April 22, 1996. Class A shares are sold with an
initial sales charge of up to 4.75% and a continuing service fee of up to 0.25%
on an annual basis. Class A shares purchased in an amount of $1,000,000 or more
are sold without an initial sales charge but are subject to a contingent
deferred sales load ("CDSL") of 1% on redemptions within eighteen months of
purchase. Class B shares are sold without an initial sales charge but are
subject to a distribution fee of up to 0.75% and a service fee of up to 0.25% on
an annual basis, and a CDSL, if applicable, of 5% on redemptions in the first
year after purchase, declining to 1% in the sixth year and 0% thereafter. Class
B shares will automatically convert to Class A shares on the last day of the
month that precedes the eighth anniversary of their date of purchase. Class D
shares are sold without an initial sales charge but are subject to a
distribution fee of up to 0.75% and a service fee of up to 0.25% on an annual
basis, and a CDSL of 1% imposed on certain redemptions made within one year of
purchase. The three classes of shares represent interests in the same portfolio
of investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other class
expenses and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with
generally accepted accounting principles, are given below:
a. All US Government and Government agency securities, bonds,
stocks, and warrants are valued at current market values or, in their
absence, at fair values determined in accordance with procedures approved by
the trustees. Securities traded on national exchanges are valued at last
sales prices or, in their absence and in the case of over-the-counter
securities, based on valuations provided by an independent pricing service
approved by the trustees. Short-term holdings maturing in 60 days or less are
valued at amortized cost.
b. There is no provision for federal income or excise tax. Each Series
has elected to be taxed as a regulated investment company and
intends to distribute sub stantially all taxable net income and net
gain realized. Dividends are declared daily and paid monthly.
c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income tax
purposes. Interest income is recorded on the accrual basis. Each Series
accretes original issue discounts and market discounts on purchases of
portfolio securities.
d. The Fund may enter into repurchase agreements with commercial banks and with
broker/dealers deemed to be creditworthy by J. & W. Seligman & Co.
Incorporated (the "Manager"). Securities received as collateral subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest, at all
times. Procedures have been established to monitor, on a daily basis, the
market value of repurchase agreements' underlying securities to ensure the
existence of the proper level of collateral.
e. All income and expenses (other than class-specific expenses), and realized
and unrealized gains or losses are allocated daily to each class of shares
based upon the relative value of shares of each class. Class-specific
expenses, which include distribution and service fees and any other items
that are specifically attributed to a particular class, are charged directly
to such class. For the year ended December 31, 1996, distribution and service
fees were the only class-specific expenses.
f. The treatment for financial statement purposes of distributions made during
the year from net
18
<PAGE>
=============================================================================
- -----------------------------------------------------------------------------
investment income or net realized gains may differ from their
ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, or realized capital gain for federal
income tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset value
per share of the Series.
3. For the year ended December 31, 1996, the U.S. Government
Securities Series had purchases and sales of US Government obligations
of $92,940,428 and $95,414,903, respectively. The
High-Yield Bond Series had purchases and sales of portfolio securities,
excluding US Government obligations and short-term investments of
$1,055,652,426 and $552,842,346, respectively.
At December 31, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation
of portfolio securities were as follows:
TOTAL TOTAL
UNREALIZED UNREALIZED
SERIES APPRECIATION DEPRECIATION
- --------------------------------------------------------------
U.S. Government
Securities $ 763,000 $ 449,205
High-Yield Bond 29,618,783 7,743,570
4. At December 31, 1996, the Fund owned short-term investments which matured
in less than 7 days.
5. The Man ager manages the affairs of the Fund and provides the necessary
personnel and facilities. Compensation of all officers of the Fund, all
trustees of the Fund who are employees or consultants of the Manager, and all
personnel of the Fund and the Manager is paid by the Manager. The Manager's fee
is calculated daily and payable monthly, equal to 0.50% per annum of the U.S.
Government Securities Series' average daily net assets, and for the High-Yield
Bond Series, the fee is 0.65% of the first $1 billion of the Series' average
daily net assets, and 0.55% of the Series' average daily net assets in excess of
$1 billion. Prior to January 1, 1996, the management fee rate of the High-Yield
Bond Series was 0.50% per annum of the Series' average daily net assets. The
management fees reflected in the Statements of Operations represent 0.50% and
0.65% per annum of the average daily net assets of the U.S. Government
Securities Series and the High-Yield Bond Series, respectively.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of each Series' shares, received the following concessions
after commissions were paid to dealers for sale of Class A shares:
DISTRIBUTOR DEALER
SERIES CONCESSIONS COMMISSIONS
- --------------------------------------------------------------
U.S. Government
Securities $ 9,862 $ 77,484
High-Yield Bond 709,561 5,466,375
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distri bu tion of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continu ing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organ ization for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the year ended December 31,
1996, such fees paid by the U.S. Government Securities and High-Yield Bond
Series aggregated $107,621 and $664,216, or 0.22% and 0.24% per annum,
respectively, of average daily net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily net
assets of the Class B and Class D shares for which the organizations are
responsible; and for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such
19
<PAGE>
=============================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------
average daily net assets. Such fees are paid monthly by the Fund
to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of up to 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; how-ever, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provided funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the year ended December 31, 1996, for the U.S. Government Securities
Series Class D shares, fees in-curred under the Plan amounted to $85,723, or 1%
per annum of average daily assets, and for the High-Yield Bond Series, fees
incurred under the Plan, equivalent to 1% per annum of the average daily net
assets of Class B and Class D shares, amounted to $380,684 and $1,633,741,
respectively.
The Distributor is entitled to retain any CDSL imposed on certain redemptions
of Class D shares occurring within one year of purchase. For the year ended
December 31, 1996, such charges incurred were $3,630 for the U.S. Government
Securities Series and $88,949 for the High-Yield Bond Series.
The Distributor has sold its rights to collect any CDSL imposed on redemptions
of Class B shares to the Purchaser. In connection with the sale of its rights to
collect any CDSL and the distribution fees with respect to Class B shares
described above, the Distributor receives payments from the Purchaser based on
the value of Class B shares sold. The aggregate amount of such payments and the
Class B share distribution fees retained by the Distributor for the year ended
December 31, 1996, was $368,282 for the High-Yield Bond Series.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commission from certain sales of shares of each Series, as well as distribution
and service fees pursuant to the Plan. For the year ended December 31, 1996,
Seligman Services, Inc., received commissions from sales of shares of each
Series and distribution and service fees pursuant to the Plan, as follows:
DISTRIBUTION AND
SERIES COMMISSIONS SERVICE FEES
- ---------------------------------------------------------------
U.S. Government
Securities $ 3,172 $12,113
High-Yield Bond 29,500 20,797
Seligman Data Corp., which is owned by certain associated
investment companies, charged at cost for shareholder account services
the following amounts: U.S. Government Securities Series, $110,713,
and High-Yield Bond Series, $899,087.
Certain officers and trustees of the Fund are officers or directors of the
Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
Fees of $15,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which 1/2rm is a trustee of the Fund.
The Fund has a compensation agreement un der which trustees who receive
fees may elect to defer receiving such fees. Interest is accrued
on the deferred balances. The annual cost of such fees and interest is
included in trustees' fees and expenses, and the accumulated balances thereof at
December 31, 1996, of $41,631 in the U.S. Government Securities Series and
$27,704 in the High-Yield Bond Series are included in other liabilities.
Deferred fees and the related accrued interest are not deductible for federal
income tax purposes until such amounts are paid.
6. In accordance with current federal income tax law, the
net realized capital gains and losses of each Series are
considered separately for purposes of determining taxable capital gains. At
December 31, 1996, net capital loss carryforwards for the U.S. Government
Securities Series and the High-Yield Bond Series amounted to $15,037,132 and
$3,292,211, respectively, which are available for offset against future taxable
net capital gains, expiring in various amounts through 2004 and 2002,
respectively.
Accordingly, no capital gain distributions are expected to be paid to
shareholders of the respective Series until net capital gains have been
realized in excess of the available capital loss carryforwards.
20
<PAGE>
=============================================================================
- -----------------------------------------------------------------------------
7. Transactions in Shares of Bene1/2cial Interest were as follows:
<TABLE>
U.S. GOVERNMENT HIGH-YIELD BOND
SECURITIES SERIES SERIES*
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Sale of shares:
Class A............................... 781,071 563,170 33,317,666 15,520,966
Class B............................... -- -- 20,232,066 --
Class D............................... 428,534 420,595 24,388,635 10,865,793
Shares issued in payment of dividends:
Class A............................... 224,948 250,361 1,948,207 673,431
Class B............................... -- -- 192,948 --
Class D............................... 48,704 40,634 1,287,945 290,559
Exchanged from associated Funds:
Class A............................... 487,261 1,037,221 13,049,554 6,014,478
Class B............................... -- -- 480,781 --
Class D............................... 585,467 519,691 4,652,741 2,589,157
---------- ---------- ---------- ----------
Total................................... 2,555,985 2,831,672 99,550,543 35,954,384
---------- ---------- ---------- ----------
Shares repurchased:
Class A............................... (1,236,706) (1,727,109) (7,112,332) (1,735,886)
Class B............................... -- -- (214,512) --
Class D............................... (333,282) (288,754) (2,819,462) (859,011)
Exchanged into associated Funds:
Class A............................... (972,823) (883,771) (11,079,755) (3,600,993)
Class B............................... -- -- (297,396) --
Class D............................... (491,240) (485,587) (3,862,279) (1,392,998)
---------- ---------- ---------- ----------
Total................................... (3,034,051) (3,385,221) (25,385,736) (7,588,888)
---------- ---------- ---------- ----------
Increase (decrease) in shares........... (478,066) (553,549) 74,164,807 28,365,496
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
- ---------------
* The Series began offering Class B shares on April 22, 1996.
21
<PAGE>
=============================================================================
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
The financial highlights for each Series are presented
below. The per share operating performance data is designed to
allow investors to trace the operating performance, on a per share basis,
from each Class's beginning net asset value to the ending net asset value
so that they can understand what effect the individual items have on their
investments, assuming they were held throughout the period. Generally, the per
share amounts are derived by converting the actual dollar amounts incurred for
each item, as disclosed in the financial statements, to their equivalent per
share amounts.
The total returns based on net asset value measure each Class's performance
assuming investors purchased shares at net asset value as of the beginning of
the period, reinvested dividends and capital gains paid at net asset value, and
then sold their shares at the net asset value per share on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing shares of any Series. The total returns for periods of
less than one year are not annualized.
<TABLE>
U.S. GOVERNMENT SECURITIES SERIES
----------------------------------------------------------------------------------
CLASS A CLASS D
--------------------------------------------- ---------------------------------
YEAR ENDED 9/21/93*
YEAR ENDED DECEMBER 31, DECEMBER 31, TO
--------------------------------------------- ---------------------------------
1996 1995 1994 1993 1992 1996 1995 1994 12/31/93
----- ----- ----- ----- ----- ----- ----- ----- -------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period.................. $7.15 $6.47 $7.18 $7.19 $7.30 $7.16 $6.48 $7.20 $7.33
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income......... .41 .46 .44 .53 .51 .36 .40 .37 .09
Net realized and unrealized
investment gain (loss)..... (.44) .68 (.71) (.01) (.11) (.43) .68 (.72) (.13)
----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from
investment operations...... (.03) 1.14 (.27) .52 .40 (.07) 1.08 (.35) (.04)
Dividends paid or declared.... (.41) (.46) (.44) (.53) (.51) (.36) (.40) (.37) (.09)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in
net asset value............ (.44) .68 (.71) (.01) (.11) (.43) .68 (.72) (.13)
----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period $6.71 $7.15 $6.47 $7.18 $7.19 $6.73 $7.16 $6.48 $7.20
----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN BASED ON NET ASSET
VALUE: (0.29)% 18.15% (3.88)% 7.46% 5.78% (0.92)% 17.10% (5.05)% (0.65)%
RATIOS/SUPPLEMENTAL
DATA:
Expenses to average net assets 1.14% 1.14% 1.10% 1.11% 1.05% 1.92% 2.01% 2.22% 2.09%+
Net investment income
to average net assets...... 6.05% 6.71% 6.49% 7.22% 7.17% 5.27% 5.84% 5.40% 5.28%+
Portfolio turnover............ 175.25% 213.06% 445.18% 170.35% 126.17% 175.25% 213.06% 445.18% 170.35%++
Net assets, end of period
(000s omitted)............. $46,889 $55,061 $54,714 $69,805 $55,732 $9,283 $8,181 $6,062 $2,317
</TABLE>
- -----------------
See page 23 for footnotes.
22
<PAGE>
=============================================================================
- -----------------------------------------------------------------------------
<TABLE>
HIGH-YIELD BOND SERIES
-------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS D
4/22/96* YEAR ENDED 9/21/93*
YEAR ENDED DECEMBER 31, TO DECEMBER 31, TO
1996 1995 1994 1993 1992 12/31/96 1996 1995 1994 12/31/93
----- ----- ----- ----- ----- -------- ---- ---- ---- --------
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $6.96 $6.35 $6.94 $6.42 $5.96 $7.06 $6.96 $6.35 $6.94 $6.74
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income .69 .65 .65 .66 .69 .45 .64 .60 .57 .12
Net realized and unrealized
investment gain (loss) .29 .61 (.59) .52 .46 .20 .30 .61 (.59) .20
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from
investment operations .98 1.26 .06 1.18 1.15 .65 .94 1.21 (.02) .32
Dividends paid or declared (.69) (.65) (.65) (.66) (.69) (.45) (.64) (.60) (.57) (.12)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in
net asset value .29 .61 (.59) .52 .46 .20 .30 .61 (.59) .20
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period $7.25 $6.96 $6.35 $6.94 $6.42 $7.26 $7.26 $6.96 $6.35 $6.94
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN BASED
ON NET ASSET VALUE: 14.82% 20.72% 0.78% 19.19% 20.08% 9.11% 14.10% 19.67% (0.30)% 4.53%
RATIOS/SUPPLEMENTAL
DATA:
Expenses to average net assets 1.16% 1.09% 1.13% 1.20% 1.21% 1.90%+ 1.92% 1.91% 2.19% 2.04%+
Net investment income
to average net assets 9.80% 9.73% 9.73% 9.68% 10.82% 9.11%+ 9.02% 8.86% 8.68% 7.93%+
Portfolio turnover 119.33% 173.39% 184.75% 193.91% 145.66% 119.33%+++ 119.33% 173.39% 184.75% 193.91%++
Net assets, end of period
(000s omitted) $408,303 $182,129 $59,033 $61,333 $40,802 $147,970 $265,528 $90,153 $9,249 $2,375
</TABLE>
* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1993.
+++ For the year ended December 31, 1996.
See Notes to Financial Statements.
23
<PAGE>
=============================================================================
REPORT OF INDEPENDENT AUDITORS
- -----------------------------------------------------------------------------
The Trustees and Shareholders,
Seligman High Income Fund Series:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the U.S. Government Securities Series and the
High-Yield Bond Series of Seligman High Income Fund Series as of December 31,
1996, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the Fund's custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and
financial highlights present fairly, in all material respects, the financial
position of the U.S. Government Securities Series and the High-Yield Bond Series
of Seligman High Income Fund Series as of December 31, 1996, the results of
their operations, the changes in their net assets, and the financial highlights
for the respective stated periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 31, 1997
24
<PAGE>
=============================================================================
TRUSTEES
- -----------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
John R. Galvin 2
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, USLIFE Corporation
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Chairman, The Rockefeller Foundation
Frank A. McPherson 2
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow
Senior Partner, Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation
Betsy S. Michel 2
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
Director, Public Service Enterprise Group
James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Ronald T. Schroeder 1
Managing Director,
J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3
Director or Trustee,
Various Organizations
James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, Red Man Pipe and Supply Company
Brian T. Zino 1
President
President and Managing Director,
J. & W. Seligman & Co. Incorporated
Chairman and President, Seligman Data Corp.
- ------------------
Member: 1 Executive Committee
2 Audit Committee
3 Trustee Nominating Committee
25
<PAGE>
=============================================================================
EXECUTIVE OFFICERS
- -----------------------------------------------------------------------------
William C. Morris
Chairman
Brian T. Zino
President
Daniel J. Charleston
Vice President
Leonard J. Lovito
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- --------------------------------------------
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder
Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour
Automated
Telephone Access
Service
26
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[GRAPHIC OMITTED]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of beneficial interest of
Seligman High Income Fund Series, which contains information about the sales
charges, management fees, and other costs. Please read the prospectus carefully
before investing or sending money.
TX2 12/96
- -----------------------------------------------------------------------------
12TH ANNUAL REPORT
SELIGMAN
HIGH INCOME
FUND SERIES
December 31, 1996
[GRAPHIC OMITTED]
- -----------------------------------------------------------------------------
A High Current Income Series
Established in 1985
<PAGE>
File No. 2-93076
811-4103
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 each Series of
the Registrant for the ten years ended December 31, 1996;
Financial Highlights for the Class B shares of the Seligman
High-Yield Bond Series for the period April 22, 1996
(commencement of offering) to December 31, 1996; and for the
Class D shares of each Series of the Registrant for the
period September 21, 1993 (commencement of offering) to
December 31, 1996.
Part B -Financial Statements for each Series are included in the
Fund's Annual Report to Shareholders, dated December 31,
1996, which is incorporated by reference in the Fund's
Statement of Additional Information. These Financial
Statements are: Portfolios of Investments as of December 31,
1996; Statements of Assets and Liabilities as of December 31,
1996; Statements of Operations for the year ended December
31, 1996; Statements of Changes in Net Assets for the years
ended December 31, 1996 and 1995; Notes to Financial
Statements; Financial Highlights for the five years ended
December 31, 1996 for each Series' Class A shares; for the
period April 22, 1996 (commencement of offering) to December
31, 1996 for the Seligman High-Yield Bond Series' Class B
shares; and for the period September 21, 1993 (commencement
of offering) to December 31, 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. (Incorporated
by reference to Registrant's Post-Effective Amendment No. 23,
filed on December 31, 1996.)
(2) Form of Restatement of Bylaws. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 23, filed on December
31, 1996.)
(3) Not applicable.
(4) Specimen Stock Certificate for Class A Shares. (Incorporated by
Reference to Post-Effective Amendment No. 18 filed on April 29,
1994.)
(4a) Specimen Stock Certificate for Class B Shares. (Incorporated by
reference to Form SE filed on April 16, 1996).
(4b) Specimen Stock Certificate for Class D Shares. (Incorporated by
Reference to Post-Effective Amendment No. 17 filed on September
21, 1993.)
(5) Copy of 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.)
(5a) 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.)
(6) Copy of the new Distributing Agreement between Registrant and
Seligman Financial Services, Inc.*
(6a) 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.)
(6b) Form of Sales Agreement between Seligman Financial Services, Inc.
and Dean Witter Reynolds, Inc. (Incorporated by reference to
Exhibit 6b of Registration Statement No. 2-33566, Post-Effective
Amendment No. 53, filed on April 28, 1997.)
(6c) Form of Sales Agreement between Seligman Financial Services, Inc.
and Dean Witter Reynolds, Inc. with respect to certain Chilean
institutional investors. (Incorporated by reference to Exhibit 6c
of Registration Statement No. 2-33566, Post-Effective Amendment
No. 53, filed on April 28, 1997.)
(6d) Form of Dealer Agreement between Seligman Financial Services,
Inc. and Smith Barney Inc. (Incorporated by reference to Exhibit
6d of Registration Statement No. 2-33566, Post-Effective
Amendment No. 53, filed on April 28, 1997.)
<PAGE>
File No. 2-93076
811-4103
PART C. OTHER INFORMATION
- ------- -----------------------------
Item 24. Financial Statements and Exhibits
(7) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by Reference to Exhibit 7 of Registration
Statement No. 2-92487, Post-Effective Amendment No. 21, filed on
January 29, 1997.)
(7a) Deferred Compensation Plan for Directors of Seligman Group of
Funds. (Incorporated by Reference to Exhibit 7a of Registration
Statement No. 2-92487, Post-Effective Amendment No. 21, filed on
January 29, 1997.)
(8) Copy of Custodian Agreement between Registrant and Investors
Fiduciary Trust Company.*
(9) Not applicable.
(10) Opinion and Consent of Counsel.*
(11) Report and Consent of Independent Auditors.*
(12) Not applicable.
(13) 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. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 22, filed on
December 31, 1996.)
(13a) 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.)
(13b) 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) The Seligman IRA Plan Agreement. (Incorporated by reference to
Exhibit 14 of Registration Statement No. 333-20621, Pre-Effective
Amendment No. 2, filed on April 17, 1997.)
(14a) The Seligman Simple IRA Plan Set-Up Kit. (Incorporated by
reference to Exhibit 14 of Registration Statement No. 333-20621,
Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(14b) The Seligman Simple IRA Plan Agreement. (Incorporated by
reference to Exhibit 14 of Registration Statement No. 333-20621,
Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(15) Form of Administration, Shareholder Services and Distribution
Plan of Registrant. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22, filed on December 31, 1996.)
(15a) Form of Administration, Shareholder Services and Distribution
Agreement between Seligman Financial Services, Inc. and Dealers.
(Incorporated by reference to Registrant's Post-Effective
Amendment No. 22, filed on December 31, 1996.)
(16) Schedule of Computation of Performance Data provided in
Registration Statement in response to Item 22.*
(17) Financial Data Schedules meeting the requirements of Rule 483
under the Securities Act of 1933.*
(18) Copy of Multiclass Plan entered into by Registrant pursuant to
Rule 18f-3 under the Investment Company Act of 1940.
(Incorporated by refererence to Registrant's Post-Effective
Amendment No. 22, filed on December 31, 1996.)
Item 25. Persons Controlled by or Under Common Control with Registrant - None.
- -------- -------------------------------------------------------------
<PAGE>
File No. 2-93076
811-4103
PART C. OTHER INFORMATION (continued)
- ------- -----------------------------
Item 24. Financial Statements and Exhibits (continued)
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders as of March 31, 1997
-------------- ----------------------------
High-Yield Bond Series
Class A Common Stock 17,624
Class B Common Stock 6,846
Class D Common Stock 8,837
U.S. Government Securities Series
Class A Common Stock 2,543
Class B Common Stock 23
Class D Common Stock 478
Item 27. Indemnification
- -------- ---------------
Reference is made to the provisions of Articles Twelfth and
Thirteenth of Registrant's Amended and Restated Articles of
Incorporation filed as Exhibit 24(b)(1) and Article VII of
Registrant's Amended and Restated By-laws filed as Exhibit
24(b)(2) to this Post-Effective Amendment No. 22 to the
Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such
issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER - J. & W.
Seligman & Co. Incorporated, a Delaware corporation ("Manager"),
is the Registrant's investment manager. The Manager also serves as
investment manager to seventeen 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., Seligman Value Fund Series,
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. 801-15798), filed on August 7, 1996.
<PAGE>
PART C. OTHER INFORMATION (continued)
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.
Seligman Value Fund Series, Inc.
(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 MARCH 31, 1997
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the Board and Chief Executive
Officer
BRIAN T. ZINO* Director President and Trustee
RONALD T. SCHROEDER* Director Trustee
FRED E. BROWN* Director None
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, National None
Sales Manager
GERALD I. CETRULO, III Senior Vice President of Sales None
140 West Parkway
Pompton Plains, NJ 07444
BRADLEY W. LARSON Senior Vice President of Sales None
367 Bryan Drive
Danville, CA 94526
</TABLE>
<PAGE>
File No. 2-93076
811-4103
PART C. OTHER INFORMATION (continued)
- ------ -----------------
SELIGMAN FINANCIAL SERVICES, INC.
AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
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
RICHARD B. CALLAGHAN Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
BRADFORD C. DAVIS Regional Vice President None
255 4th Avenue, #2
Kirkland, WA 98033
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
JONATHAN G. EVANS Regional Vice President None
222 Fairmont Way
Ft. Lauderdale, FL 33326
MICHAEL C. FORGEA Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
DAVID L. GARDNER Regional Vice President None
2504 Clublake Trail
McKinney, TX 75070
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
MARK LIEN Regional Vice President None
5904 Mimosa
Sedalia, MO 65301
JUDITH L. LYON Regional Vice President None
163 Haynes Bridge Road, Ste 205
Alpharetta, CA 30201
DAVID L. MEYNCKE Regional Vice President None
4718 Orange Grove Way
Palm Harbor, FL 34684
TIM O'CONNELL Regional Vice President None
14872 Summerbreeze Way
San Diego, CA 92128
</TABLE>
File No. 2-93076
811-4103
PART C. OTHER INFORMATION (continued)
- ------ -----------------
SELIGMAN FINANCIAL SERVICES, INC.
AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
JULIANA PERKINS Regional Vice President None
2348 Adrian Street
Newbury Park, CA 91320
DAVE PETZKE Regional Vice President None
1673 Montelena Court
Carson City, NV 89703
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 Desk None
GAIL S. CUSHING* Assistant Vice President None
National Accounts Manager
FRANK P. MARINO* Assistant Vice President, Mutual
Fund Product Manager None
JOSEPH M. MCGILL* Vice President and None
Compliance Officer
JACK TALVY* Assistant Vice President, Internal None
Marketing Services Manager
JOYCE PERESS* Assistant Secretary None
</TABLE>
* The principal business address of each of these directors and/or
officers is 100 Park Avenue, New York, 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
<PAGE>
PART C. OTHER INFORMATION (continued)
- ------ -----------------
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 years ended
December 31, 1996, 1995 and 1994 the approximate cost of these
services for each Series were:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
U.S. Government Securities Series $17,900 $17,700 $17,132
High-Yield Bond Series 96,000 28,200 15,577
</TABLE>
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>
File No. 2-93076
811-4103
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. 23 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 28th day of April, 1997.
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. 23 has been
signed below by the following persons in the capacities indicated on April 28,
1997.
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
Thomas G. Rose Accounting Officer)
John R. Galvin, Trustee )
Alice S. Ilchman, Trustee )
Frank A. McPherson, Trustee )
John E. Merow, Trustee )
Betsy S. Michel, Trustee )
James C. Pitney, Trustee ) /s/ Brian T. Zino
James Q. Riordan, Trustee ) -----------------------------
Ronald T. Schroeder, Director ) *Brian T. Zino, Attorney-In-Fact
Robert L. Shafer, Trustee )
James N. Whitson, Trustee )
<PAGE>
EXHIBIT INDEX
Form N-1A Item No. Description
- ------------------ -----------
24(b)(6) Distributing Agreement
24(b)(8) Copy of Custodian Agreement
24(b)(10) Opinion and Consent of Counsel
24 (b)(11) Consent of Independent Auditors
24(b)(16) Performance Data Schedules
24(b)(17) Financial Data Schedules
Other Exhibits Power of Attorney
DISTRIBUTING AGREEMENT
DISTRIBUTING AGREEMENT, dated as of January 1, 1993, between SELIGMAN
HIGH INCOME FUND SERIES, a Massachusetts business trust (the "Fund"), and
SELIGMAN FINANCIAL SERVICES, INC., a Delaware corporation ("Seligman Financial
Services").
In consideration of the mutual agreements herein made, the parties
hereto agree as follows:
1. EXCLUSIVE DISTRIBUTOR. The Fund hereby agrees that Seligman Financial
Services shall be for the period of this Agreement exclusive agent for
distribution within the United States and its territories, and Seligman
Financial Services agrees to use its best efforts during such period to
effect such distribution of shares of Capital Stock ("Shares") of the
Fund; PROVIDED, HOWEVER, that nothing herein shall prevent the Fund, if
it so elects, from selling or otherwise distributing its Shares
directly to any persons other than dealers. The Fund understands that
Seligman Financial Services also acts as agent for distribution of the
shares of capital stock or beneficial interest of other open-end
investment companies which have entered into management agreements with
J. & W. Seligman & Co. Incorporated (the "Manager").
2. SALES OF SHARES. Seligman Financial Services is authorized, as agent
for the Fund and not as principal, (a) to sell Shares of the Fund to
such dealers as Seligman Financial Services may select pursuant to the
terms of written sales agreements (which may also relate to sales of
shares of capital stock or shares of beneficial interest of other
open-end investment companies which have entered into management
agreements with the Manager), in form or forms approved by the Fund,
and (b) to sell Shares of the Fund to other purchasers on such terms as
may be provided in the then current prospectus of the Fund relating to
such Shares; PROVIDED, HOWEVER, that no sales of Shares shall be
confirmed by Seligman Financial Services at any time when, according to
advice received by Seligman Financial Services from the Fund, the
officers of the Fund have for any reason sufficient to them temporarily
or permanently suspended or discontinued the sale and issuance of the
Shares. Each sale of Shares shall be effected by Seligman Financial
Services only at the applicable price determined by the Fund in the
manner prescribed in its then current prospectus relating to such
Shares. Seligman Financial Services shall comply with all applicable
laws, rules and regulations including, without limiting the generality
of the foregoing, all rules or regulations made or adopted pursuant to
Section 22 of the Investment Company Act of 1940 (the "1940 Act") by
1
<PAGE>
the Securities and Exchange Commission or any securities association
registered under the Securities Exchange Act of 1934.
2
<PAGE>
The Fund agrees, as long as its Shares may legally be issued, to fill
all orders confirmed by Seligman Financial Services in accordance with
the provisions of this Agreement.
3. Repurchase Agent. Seligman Financial Services is authorized, as agent
for the Fund and not as principal, to accept offers for resale to the
Fund and to repurchase on behalf of the Fund Shares of each series of
the Fund at net asset values determined by the Fund in conformity with
its then current prospectus relating to such Shares.
4. COMPENSATION. As compensation for the services of Seligman Financial
Services under this Agreement, Seligman Financial Services shall be
entitled to receive the sales charge, determined in conformity with the
Fund's then current prospectus relating to such Shares, on all sales of
Shares of the Fund confirmed by Seligman Financial Services hereunder
and for which payment has been received, less the dealers' concession
allowed in respect of such sales. In addition, in accordance with the
terms of the Fund's Administration, Shareholder Services and
Distribution Plans (the "Plans"), each of the series of the Fund may
make payments from time to time to Seligman Financial Services in
accordance with the terms and limitations of, and for the purposes set
forth in the Plans.
5. EXPENSES. Seligman Financial Services agrees promptly to pay or
reimburse the Fund for all expenses (except expenses incurred by the
Fund in connection with the preparation, printing and distribution of
any prospectus or report or other communication to shareholders, to the
extent that such expenses are incurred to effect compliance with any
Federal or State law or to enable such distribution to shareholder(s)
(a) of printing and distributing copies of any prospectus and of
preparing, printing and distributing any other material used by
Seligman Financial Services in connection with offering Shares of the
Fund for sale, and (b) of advertising in connection with such offering.
The Fund agrees to pay all expenses in connection with the registration
of Shares of the Fund under the Securities Act of 1933 (the "Act"), all
fees and related expenses which may be incurred in connection with the
qualification of Shares of the Fund for sale in such States (as well as
the District of Columbia, Puerto Rico and other territories) as
Seligman Financial Services may designate, and all expenses in
connection with maintaining facilities for the issue and transfer of
its Shares, of supplying information, prices and other data to be
furnished by it hereunder, and through Union Data Service Center, Inc.,
of all data processing and related services related to the share
distribution activity contemplated hereby.
3
<PAGE>
The Fund agrees to execute such documents and to furnish such
information as may be reasonably necessary, in the discretion of the
Trustees of the Fund, in connection with the qualification of Shares of
the Fund for sale in such States (as well as the District of Columbia,
Puerto Rico and other territories) as Seligman Financial Services may
designate. Seligman Financial Services also agrees to pay all fees and
related expenses connected with its own qualification as a broker or
dealer under Federal or State laws and, except as otherwise
specifically provided in this Agreement or agreed to by the Fund, all
other expenses incurred by Seligman Financial Services in connection
with the sale of Shares of the Fund as contemplated in this Agreement
(including the expenses of qualifying the Fund as a dealer or broker
under the laws of such States as may be designated by Seligman
Financial Services, if deemed necessary or advisable by the Fund).
It is understood and agreed that any payments made to Seligman
Financial Services pursuant to the Plans may be used to defray some or
all of the expenses incurred by Seligman Financial Services pursuant to
this Agreement.
6. PROSPECTUS AND OTHER INFORMATION. The Fund represents and warrants to
and agrees with Seligman Financial Services that:
(a) A registration statement, including one or more prospectuses
relating to the Shares, has been filed by the Fund under the
Act and has become effective. Such registration statement, as
now in effect and as from time to time hereafter amended, and
also any other registration statement relating to the Shares
which may be filed by the Fund under the Act which shall
become effective, is herein referred to as the "Registration
Statement", and any prospectus or prospectuses filed by the
Fund as a part of the Registration Statement, as the
"Prospectus".
(b) At all times during the term of this Agreement, except when
the officers of the Fund have suspended or discontinued the
sale and issuance of Shares of the Fund as contemplated by
Section 2 hereof, the Registration Statement and Prospectus
will conform in all respects to the requirements of the Act
and the rules and regulations of the Securities and Exchange
Commission, and neither of such documents will include any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statement therein not misleading, except that the
foregoing does not apply to any statements or omissions in
either of such documents based upon written information
furnished to the Fund by Seligman Financial Services
specifically for use therein.
4
<PAGE>
The Fund agrees to prepare and furnish to Seligman Financial Services
from time to time a copy of its Prospectus, and authorizes Seligman
Financial Services to use such Prospectus, in the form furnished to
Seligman Financial Services from time to time, in connection with the
sale of the Fund's Shares. The Fund also agrees to furnish Seligman
Financial Services from time to time, for use in connection with the
sale of such Shares, such information with respect to the Fund and its
Shares as Seligman Financial Services may reasonably request.
7. REPORTS. Seligman Financial Services will prepare and furnish to the
Trustees of the Fund at least quarterly a written report complying with
the requirements of Rule 12b-1 under the 1940 Act setting forth all
amounts expended under the Plans and the purposes for which such
expenditures were made.
8. INDEMNIFICATION. (a) The Fund will indemnify and hold harmless Seligman
Financial Services and each person, if any, who controls Seligman
Financial Services within the meaning of the Act against any losses,
claims, damages or liabilities to which Seligman Financial Services or
such controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Fund's
Registration Statement or Prospectus or any other written sales
material prepared by the Fund which is utilized by Seligman Financial
Services in connection with the sale of Shares or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or (in the case of the Registration
Statement and Prospectus) necessary to make the statements therein not
misleading or (in the case of such other sales material) necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse Seligman
Financial Services and each such controlling person for any legal or
other expenses reasonably incurred by Seligman Financial Services or
such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Fund will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or Prospectus in
conformity with written information furnished to the Fund by Seligman
Financial Services specifically for use therein; and provided, further,
that nothing herein shall be so construed as to protect Seligman
Financial Services against any liability to the Fund or its security
holders to which Seligman Financial Services would otherwise be
5
<PAGE>
subject by reason of willful misfeasance, bad faith or gross
negligence, in the performance of its duties, or by reason of the
reckless disregard by Seligman Financial Services of its obligations
and duties under this Agreement. This indemnity agreement will be in
addition to any liability which the Fund may otherwise have.
(b) Seligman Financial Services will indemnify and hold harmless
the Fund, each of its Trustees and officers and each person,
if any, who controls the Fund within the meaning of the Act,
against any losses, claims, damages or liabilities to which
the Fund or any such Trustee, officer or controlling person
may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement or Prospectus or any
sales material not prepared by the Fund which is utilized in
connection with the sale of Shares or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or (in
the case of the Registration Statement and Prospectus)
necessary to make the statements therein not misleading or (in
the case of such other sales material) necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made, in the case of the
Registration Statement and Prospectus to the extent, but only
to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in
conformity with written information furnished to the Fund by
Seligman Financial Services specifically for use therein; and
Seligman Financial Services will reimburse any legal or other
expenses reasonably incurred by the Fund or any such Trustee,
officer or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any
liability which Seligman Financial Services may otherwise
have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section, notify
the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve
it from liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is
brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein
and, to the extent that it may wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such
indemnified party of its
6
<PAGE>
election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
9. EFFECTIVE DATE. This Agreement shall become effective upon its
execution by an authorized officer of the respective parties to this
Agreement, but in no event prior to shareholder approval of the Plans.
10. TERM OF AGREEMENT. This Agreement shall continue in effect until
December 31 of the year in which it is first effective and through
December 31 of each year thereafter if such continuance is approved in
the manner required by the 1940 Act and the rules thereunder and
Seligman Financial Services shall not have notified the Fund in writing
at least 60 days prior to the anniversary date of the previous
continuance that it does not desire such continuance. This Agreement
may be terminated at any time, without payment of penalty on 60 days'
written notice to the other party by vote of a majority of the Trustees
of the Fund who are not interested persons (as defined in the 1940 Act)
of the Fund and have no direct or indirect financial interest in the
operation of the Plans or any agreement related thereto, or by vote of
a majority of the outstanding voting securities of the Fund (as defined
in the 1940 Act). This Agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act).
11. MISCELLANEOUS. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to
the contrary notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon, either of the parties to do
anything in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and Seligman Financial Services have
caused this Agreement to be executed by their duly authorized officers as of the
date first above written.
SELIGMAN HIGH INCOME FUND SERIES
By
-------------------------------------
Ronald T. Schroeder, President
7
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
By
-------------------------------------
Donald R. Pitti, President
8
CUSTODY AGREEMENT
THIS AGREEMENT made the day of , 19 , by and between INVESTORS
FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of the state
of Missouri, having its trust office located at 127 West 10th Street, Kansas
City, Missouri 64105 ("Custodian"), and SELIGMAN HIGH INCOME FUND SERIES, a
trust organized under the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at One Bankers Trust Plaza, New York, New
York 10006 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian and Recordkeeper of the securities and monies of Fund and its now
existing and future established portfolios (individually referred to herein as
Portfolio); and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints
Custodian as custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at any
time owned by each Portfolio of the Fund; and
B. Appointment as agent to perform certain accounting and
recordkeeping functions required of a duly registered
investment company in compliance with applicable provisions of
federal, state, and local laws, rules and regulations
including, as may be required:
1. Providing information necessary for Fund and each
Portfolio to file required financial reports;
maintaining and preserving required books, accounts
and records as the basis for such reports; and
performing certain daily functions in connection with
such accounts and records, and
1
<PAGE>
2. Calculating daily net asset value of each Portfolio
of the Fund, and
3. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Resolutions of the Board of Trustees of Fund appointing
Custodian as custodian hereunder and approving the form of
this Agreement; and
B. Resolutions of the Board of Trustees of Fund designating certain
persons to give instructions on behalf of Fund to Custodian and
authorizing Custodian to rely upon such instructions.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
------------------
Fund will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as
practicable, and from time to time thereafter, all portfolio
securities acquired by it and monies then owned by it (except
as permitted by the Investment Company Act of 1940) or from
time to time coming into its possession during the time this
Agreement shall continue in effect. Custodian shall have no
responsibility or liability whatsoever for or on account of
securities or monies not so delivered. All securities so
delivered to Custodian (other than bearer securities) shall be
registered in the name of Fund or its nominee, or of a nominee
of Custodian, or shall be properly endorsed and in form for
transfer satisfactory to Custodian.
B. Delivery of Accounts and Records
--------------------------------
Fund shall turn over to Custodian all of the Fund's relevant
accounts and records previously maintained by it. Custodian
shall be entitled to rely conclusively on the completeness and
correctness of the accounts and records turned over to it by
Fund, and Fund shall indemnify and hold Custodian harmless of
and from any
2
<PAGE>
and all expenses, damages and losses whatsoever arising out of
or in connection with any error, omission, inaccuracy or other
deficiency of such accounts and records or in the failure of
Fund to provide any portion of such or to provide any
information needed by the Custodian knowledgeably to perform
its function hereunder.
C. Delivery of Assets to Third Parties
-----------------------------------
Custodian will receive delivery of and keep safely the assets
of Fund delivered to it from time to time and the assets of
each Portfolio segregated in a separate account. Custodian
will not deliver, assign, pledge or hypothecate any such
assets to any person except as permitted by the provisions of
this Agreement or any agreement executed by it according to
the terms of Section 3.S. of this Agreement. Upon delivery of
any such assets to a subcustodian pursuant to Section 3.S. of
this agreement, Custodian will create and maintain records
identifying those assets which have been delivered to the
subcustodian as belonging to the applicable Portfolio of the
Fund. The Custodian is responsible for the safekeeping of the
securities and monies of Fund only until they have been
transmitted to and received by other persons as permitted
under the terms of this Agreement, except for securities and
monies transmitted to United Missouri Bank of Kansas City
(UMBKC) and United Missouri Trust Company of New York (UMBTC),
First National Bank of Chicago (FNBC) for which Custodian
remains responsible. Custodian shall be responsible for the
monies and securities of Fund(s) held by eligible foreign
subcustodians to the extent the domestic custodian with which
the Custodian contracts is responsible to Custodian. Custodian
may participate directly or indirectly through a subcustodian
in the Depository Trust Company, Treasury/Federal Reserve Book
Entry System, Participant Trust Company or other depository
approved by the Fund (as such entities are defined at 17 CFR
Section 270.17f-4(b)).
3
<PAGE>
D. Registration of Securities
--------------------------
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or its
nominee or in the name of any nominee of Custodian for whose
fidelity and liability Custodian will be fully responsible, or
in street certificate form, so-called, with or without any
indication of fiduciary capacity. Unless otherwise instructed,
Custodian will register all such portfolio securities in the
name of its authorized nominee, as defined in the Internal
Revenue Code and any Regulations of the Treasury Department
issued thereunder or in any provision of any subsequent
Federal tax law exempting such transaction from liability for
stock transfer taxes. All securities, and the ownership
thereof by a Portfolio of the Fund, which are held by
Custodian hereunder, however, shall at all times be
identifiable on the records of the Custodian. The Fund agrees
to hold Custodian and its nominee harmless for any liability
as a record holder of securities held in custody.
E. Exchange of Securities
----------------------
Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of the applicable
Portfolio of the Fund for other securities or cash issued or
paid in connection with any reorganization, recapitalization,
merger, consolidation, split-up of shares, change of par
value, conversion or otherwise, and will deposit any such
securities in accordance with the terms of any reorganization
or protective plan. Without instructions, Custodian is
authorized to exchange securities held by it in temporary form
for securities in definitive form, to effect an exchange of
shares when the par value of the stock is changed, and, upon
receiving payment therefor, to surrender bonds or other
securities held by it at maturity or when advised of an
earlier mandatory call for redemption, except that Custodian
shall receive instructions prior to surrendering any
convertible security. Pursuant to this paragraph, the
Custodian will inform the Fund of such corporate
4
<PAGE>
actions and capital changes when it is informed of them
through the publications it subscribes to.
F. Purchases of Investments of the Fund
------------------------------------
Fund will, on each business day on which a purchase of
securities shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such
purchase:
1. The name of the Portfolio making such purchase;
2. The name of the issuer and description of the
security;
3. The number of shares or the principal amount
purchased, and accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage
commission, taxes and other expenses payable in
connection with the purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or
dealer through whom the purchase was made.
In accordance with such instructions, Custodian will pay for
out of monies held for the account of such named Portfolio,
but only insofar as monies are available therein for such
purpose, and receive the portfolio securities so purchased by
such named Portfolio, except that Custodian may in its sole
discretion advance funds to the Fund which may result in an
overdraft because the monies held by the Custodian on behalf
of the Fund are insufficient to pay the total amount payable
upon such purchase. Such payment will be made only upon
receipt by Custodian of the securities so purchased in form
for transfer satisfactory to Custodian. Custodian agrees to
promptly inform Fund of any failures by sellers to make proper
deliveries of securities purchased by the Fund.
5
<PAGE>
G. SALES AND DELIVERIES OF INVESTMENTS OF THE FUND - OTHER THAN
OPTIONS AND FUTURES Fund will, on each business day on which a
sale of investment securities of Fund has been made, deliver
to Custodian instructions specifying with respect to each such
sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of the
securities;
3. The number of shares or principal amount sold, and
accrued interest, if any;
4. The date on which the securities sold were purchased
or other information identifying the securities sold
and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission,
taxes or other expenses payable in connection with
such sale;
8. The total amount to be received by Fund upon such
sale; and
9. The name and address of the broker or dealer through
whom or person to whom the sale was made.
In accordance with such instructions, Custodian will deliver
or cause to be delivered the securities thus designated as
sold for the account of such Portfolio to the broker or other
person specified in the instructions relating to such sale,
such delivery to be made only upon receipt of payment therefor
in such form as is satisfactory to Custodian, with the
understanding that Custodian may deliver or cause to be
delivered securities for payment in accordance with the
customs prevailing among dealers in securities. Custodian
agrees to promptly inform Fund of any failures of purchasers
to make proper payment for securities sold by Fund.
H. PURCHASES OR SALES OF SECURITY OPTIONS, OPTIONS ON INDICES AND
SECURITY INDEX FUTURES CONTRACTS Fund will, on each business
day on which a purchase or sale of the following options
6
<PAGE>
and/or futures shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such
purchase or sale:
1. The name of the Portfolio making such purchase or
sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer
through whom the sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening,
exercising, expiring or closing transaction;
h. Whether the transaction involves a put or
call;
i. Whether the option is written or purchased;
7
<PAGE>
j. The name and address of the broker or dealer
through whom the sale or purchase was made,
or other applicable settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the
contract and, when available, the closing
level, thereof;
b. The index level on the date the contract is
entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in
addition to instructions, and if not already
in the possession of Custodian, Fund shall
deliver a substantially complete and
executed custodial safekeeping account and
procedural agreement which shall be
incorporated by reference into this Custody
Agreement); and
f. The name and address of the futures
commission merchant through whom the sale or
purchase was made, or other applicable
settlement instructions.
5. Option on Index Future Contracts
a. The underlying index futures contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
and
i. The market on which the option is traded.
8
<PAGE>
I. Securities Pledged or Loaned
----------------------------
If specifically allowed for in the prospectus of the
applicable Portfolio of the Fund:
1. Upon receipt of instructions, Custodian will release
or cause to be released securities held in custody to
the pledgee designated in such instructions by way of
pledge or hypothecation to secure any loan incurred
by a Portfolio of the Fund; provided, however, that
the securities shall be released only upon payment to
Custodian of the monies borrowed, except that in
cases where additional collateral is required to
secure a borrowing already made, further securities
may be released or caused to be released for that
purpose upon receipt of instructions. Upon receipt of
instructions, Custodian will pay, but only from funds
available for such purpose, any such loan upon
redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note
or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated
in such instructions; provided, however, that the
securities will be released only upon deposit with
Custodian of full cash collateral as specified in
such instructions, and that Fund will retain the
right to any dividends, interest or distribution on
such loaned securities. Upon receipt of instructions
and the loaned securities, Custodian will release the
cash collateral to the borrower.
J. Routine Matters
---------------
Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with
securities or other property of Fund except as may be
otherwise provided in this Agreement or directed from time to
time by the Board of Trustees of Fund.
9
<PAGE>
K. Deposit Account
---------------
Custodian will open and maintain a special purpose deposit
account(s) in the name of Custodian on behalf of each
Portfolio (Accounts), subject only to draft or order by
Custodian upon receipt of instructions. All monies received by
Custodian from or for the account of a Portfolio shall be
deposited in said Accounts. Barring events not in the control
of the Custodian such as strikes, lockouts or labor disputes,
riots, war or equipment or transmission failure or damage,
fire, flood, earthquake or other natural disaster, action or
inaction of governmental authority or other causes beyond its
control, at 9:00 a.m., Kansas City time, on the second
business day after deposit of any check into Fund's Account,
Custodian agrees to make Fed Funds available to the
appropriate Portfolio of the Fund in the amount of the check.
Deposits made by Federal Reserve wire will be available to the
Fund immediately and ACH wires will be available to the Fund
on the next business day. Income earned on the portfolio
securities will be credited to the applicable Portfolio of the
Fund based on the schedule attached as Exhibit A, except that
income earned on portfolio securities held by domestic
subcustodians other than UMBKC, UMBTC, Bank of New York
(previously Irving Trust Company and hereinafter referred to
as BONY) and Morgan Guaranty and Trust Company (MGT) will be
credited when received. The Custodian will be entitled to
reverse any credited amounts where credits have been made and
monies are not finally collected. If monies are collected
after such reversal, the Custodian will credit the applicable
Portfolio in that amount. Custodian may open and maintain an
Account in such other banks or trust companies as may be
designated by it and by properly authorized resolution of the
Board of Trustees of Fund, such Account, however, to be in the
name of Custodian on behalf of the applicable portfolio of the
Fund and subject only to its draft or order.
L. Income and other Payments to Fund
---------------------------------
Custodian will:
10
<PAGE>
1. Collect, claim and receive and deposit for the
Account of each Portfolio of the Fund all income and
other payments which become due and payable on or
after the effective date of this Agreement with
respect to the securities deposited under this
Agreement, and credit the account of the applicable
Portfolio of the Fund in accordance with the schedule
attached hereto as Exhibit A, except that income
earned on portfolio securities held by domestic
subcustodians other than UMBKC, UMBTC, BONY, and MGT
will be credited when received. Income from foreign
securities and assets held by eligible foreign
subcustodians shall be credited by Custodian upon
receipt of income from the domestic subcustodian
contracting with the foreign eligible subcustodians.
If, for any reason, the Fund is credited with income
that is not subsequently collected, Custodian may
reverse that credited amount;
2. Execute ownership and other certificates and
affidavits for all federal, state and local tax
purposes in connection with the collection of bond
and note coupons; and
3. Take such other action as may be necessary or proper
in connection with:
a. the collection, receipt and deposit of such
income and other payments, including but not
limited to the presentation for payment of:
1. all coupons and other income items
requiring presentation; and
2. all other securities which may
mature or be called, redeemed,
retired or otherwise become payable
and regarding which the Custodian
has actual knowledge, or notice of
which is contained in publications
of the type to which a custodian
for investment companies normally
subscribes for such purpose; and
11
<PAGE>
b. the endorsement for collection, in the name of the
applicable Portfolio of the Fund, of all checks,
drafts or other negotiable instruments.
Custodian, however, will not be required to institute suit or
take other extraordinary action to enforce collection except
upon receipt of instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or
other actions. Custodian will receive, claim and collect all
stock dividends, rights and other similar items and will deal
with the same pursuant to instructions. Unless prior
instructions have been received to the contrary, Custodian
will, without further instructions, sell any rights held for
the account of Fund on the last trade date prior to the date
of expiration of such rights.
M. Payment of Dividends and other Distributions
--------------------------------------------
On the declaration of any dividend or other distribution on
the shares of Beneficial Interest of any Portfolio ("Portfolio
Shares") by the Board of Trustees of Fund, Fund shall deliver
to Custodian instructions with respect thereto, including a
copy of the Resolution of said Board of Trustees certified by
the Secretary or an Assistant Secretary of Fund wherein there
shall be set forth the record date as of which shareholders
entitled to receive such dividend or other distribution shall
be determined, the date of payment of such dividend or
distribution, and the amount payable per share on such
dividend or distribution. Except if the ex-dividend date and
the reinvestment date of any dividend are the same, in which
case funds shall remain in the Custody Account, on the date
specified in such Resolution for the payment of such dividend
or other distribution, Custodian will pay out of the monies
held for the account of the applicable Portfolio of the Fund,
insofar as the same shall be available for such purposes, and
wire to the account of the Dividend Disbursing Agent for Fund,
such amount as may be necessary to pay the amount per share
payable in cash on Portfolio Shares issued and outstanding on
the record date established by such Resolution.
12
<PAGE>
N. Shares of Fund Purchased by Fund
--------------------------------
Whenever any Portfolio Shares are repurchased or redeemed by
Fund, Fund or its agent shall advise Custodian of the
aggregate dollar amount to be paid for such shares and shall
confirm such advice in writing. Upon receipt of such advice,
Custodian shall charge such aggregate dollar amount to the
Account of Portfolio and either deposit the same in the
account maintained for the purpose of paying for the
repurchase or redemption of Portfolio Shares or deliver the
same in accordance with such advice. Custodian shall not have
any duty or responsibility to determine that Fund Shares have
been removed from the proper shareholder account or accounts
or that the proper number of such shares have been canceled
and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
----------------------------------
Whenever Portfolio Shares are purchased from Fund, Fund will
deposit or cause to be deposited with Custodian the amount
received for such shares. Custodian shall not have any duty or
responsibility to determine that Portfolio Shares purchased
from Fund have been added to the proper shareholder account or
accounts or that the proper number of such shares have been
added to the shareholder records.
P. Proxies and Notices
-------------------
Custodian will promptly deliver or mail or have delivered or
mailed to Fund all proxies properly signed, all notices of
meetings, all proxy statements and other notices, requests or
announcements affecting or relating to securities held by
Custodian for Fund and will, upon receipt of instructions,
execute and deliver or cause its nominee to execute and
deliver or mail or have delivered or mailed such proxies or
other authorizations as may be required. Except as provided by
this Agreement or pursuant to instructions hereafter received
by Custodian, neither it nor its nominee will exercise any
power inherent in any such securities, including
13
<PAGE>
any power to vote the same, or execute any proxy, power of
attorney, or other similar instrument voting any of such
securities, or give any consent, approval or waiver with
respect thereto, or take any other similar action.
Q. Disbursements
-------------
Custodian will pay or cause to be paid insofar as funds are
available for the purpose, bills, statements and other
obligations of Fund (including but not limited to obligations
in connection with the conversion, exchange or surrender of
securities owned by Fund, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal
fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting
forth the name of the person to whom payment is to be made,
the amount of the payment, and the purpose of the payment.
R. Daily Statement of Accounts
---------------------------
Custodian will, within a reasonable time, render to Fund as of
the close of business on each day, a detailed statement of the
amounts received or paid and of securities received or
delivered for the account of Fund during said day. Custodian
will, from time to time, upon request by Fund, render a
detailed statement of the securities and monies held for Fund
under this Agreement, and Custodian will maintain such books
and records as are necessary to enable it to do so and will
permit such persons as are authorized by Fund including Fund's
independent public accountants, access to such records or
confirmation of the contents of such records; and if demanded,
will permit federal and state regulatory agencies to examine
the securities, books and records. Upon the written
instructions of Fund or as demanded by federal or state
regulatory agencies, Custodian will instruct any subcustodian
to give such persons as are authorized by Fund including
Fund's independent public accountants, access to such records
or confirmation of the contents of such records; and if
demanded, to
14
<PAGE>
permit federal and state regulatory agencies to examine the
books, records and securities held by subcustodian which
relate to Fund. Fund will be entitled to receive reports
produced by the Custodian's portfolio accounting system,
including without limitation, those listed on Exhibit C
hereof.
S. Appointment of Subcustodians
----------------------------
1. Notwithstanding any other provisions of this
Agreement, all of or any of the monies or securities
of Fund may be held in Custodian's own custody or in
the custody of one or more other banks or trust
companies selected by Custodian and approved by the
Fund's Board of Trustees. Any such subcustodian must
have the qualifications required for custodian under
the Investment Company Act of 1940, as amended. The
subcustodian may participate directly or indirectly
in the Depository Trust Company, Treasury/Federal
Reserve Book Entry System, Participant Trust Company
or other depository approved by the Fund (as such
entities are defined at 17 CFR Sec. 270.17f-4(b)).
The appointment of UMBKC or any other subcustodian,
depository, or clearing agency used by the Custodian
and approved by the Fund will not relieve Custodian
of any of its obligations hereunder except as
provided in Section 3.C hereof. The Custodian will
comply with Section 17f-4 of the Investment Company
Act of 1940, as amended, as to depositories and
clearing agencies used by Custodian and approved by
the Fund. The Custodian will not be entitled to
reimbursement by Fund for any fees or expenses of any
subcustodian, depository or clearing agency.
2. Notwithstanding any other provisions of this
Agreement, Fund's foreign securities (as defined in
Rule 17f-5(c)(1) under the Investment Company Act of
1940) and Fund's cash or cash equivalents, in amounts
reasonably necessary to effect Fund's foreign
securities transactions, may be held in the custody
of one or more banks or trust companies acting as
15
<PAGE>
subcustodians, according to Section 3.S.1; and thereafter,
pursuant to a written contract or contracts as approved by
Fund's Board of Trustees, may be transferred to an account
maintained by such subcustodian with an eligible foreign
custodian, as defined in Rule 17f-5(c)(2), provided that any
such arrangement involving a foreign custodian shall be in
accordance with the provisions of Rule 17f-5 under the
Investment Company Act of 1940 as that Rule may be amended
from time to time.
T. Accounts and Records
--------------------
Custodian, with the direction and as interpreted by the Fund,
Fund's accountants and/or other tax advisors, will prepare and
maintain as complete, accurate and current all accounts and
records required to be maintained by Fund under the Internal
Revenue Code of 1986 ("Code") as amended and under the general
Rules and Regulations under the Investment Company Act of 1940
("Rules") as amended, and as agreed upon between the parties
and will preserve said records in the manner and for the
periods prescribed in said Code and Rules, or for such longer
period as is agreed upon by the parties. Custodian relies upon
Fund to furnish, in writing, accurate and timely information
to complete Fund's records and perform daily calculation of
the Fund's net asset value, as provided in Section 3.W. below.
Custodian shall incur no liability and Fund shall indemnify
and hold harmless Custodian from and against any liability
arising from any failure of Fund to furnish such information
in a timely and accurate manner, even if Fund subsequently
provides accurate but untimely information. It shall be the
responsibility of Fund to furnish Custodian with the
declaration, record and payment dates and amounts of any
dividends or income and any other special actions required
concerning each of its securities when such information is not
readily available from generally accepted securities industry
services or publications.
16
<PAGE>
U. Accounts and Records Property of Fund
-------------------------------------
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to this Agreement are the
property of Fund, and will be made available to Fund for
inspection or reproduction within a reasonable period of time,
upon demand. Custodian will assist Fund's independent
auditors, or upon approval of Fund, or upon demand, any
regulatory body having jurisdiction over the Fund or
Custodian, in any requested review of Fund's accounts and
records but shall be reimbursed for all expenses and employee
time invested in any such review outside of routine and normal
periodic reviews. Upon receipt from Fund of the necessary
information, Custodian will supply necessary data for Fund's
completion of any necessary tax returns, questionnaires,
periodic reports to Shareholders and such other reports and
information requests as Fund and Custodian shall agree upon
from time to time.
17
<PAGE>
V. Adoption of Procedures
----------------------
Custodian and Fund may from time to time adopt procedures as
they agree upon, and Custodian may conclusively assume that no
procedure approved by Fund, or directed by Fund, conflicts
with or violates any requirements of its prospectus,
"Declaration of Trust", Bylaws, or any rule or regulation of
any regulatory body or governmental agency. Fund will be
responsible to notify Custodian of any changes in statutes,
regulations, rules or policies which might necessitate changes
in Custodian's responsibilities or procedures.
W. Calculation of Net Asset Value
------------------------------
Custodian will calculate Fund's net asset value, in accordance
with Fund's prospectus, once daily. Custodian will prepare and
maintain a daily evaluation of securities for which market
quotations are available by the use of outside services
normally used and contracted for this purpose; all other
securities will be evaluated in accordance with Fund's
instructions. Custodian will have no responsibility for the
accuracy of the prices quoted by these outside services or for
the information supplied by Fund or upon instructions.
X. Overdrafts
----------
If Custodian shall in its sole discretion advance funds to the
account of the Fund which results in an overdraft because the
monies held by Custodian on behalf of the Fund are
insufficient to pay the total amount payable upon a purchase
of securities as specified in Fund's instructions or for some
other reason, the amount of the overdraft shall be payable by
the Fund to Custodian upon demand and shall bear an interest
rate determined by Custodian from the date advanced until the
date of payment. Custodian shall have a lien on the assets of
the Fund in the amount of any outstanding overdraft.
4. INSTRUCTIONS.
-------------
A. The term "instructions", as used herein, means written or facsimile
instructions or advice to Custodian from two designated representatives
of Fund. Certified
18
<PAGE>
copies of resolutions of the Board of Trustees of Fund naming two or
more designated representatives to give instructions in the name and on
behalf of Fund, may be received and accepted from time to time by
Custodian as conclusive evidence of the authority of any two designated
representatives to act for Fund and may be considered to be in full
force and effect (and Custodian will be fully protected in acting in
reliance thereon) until receipt by Custodian of notice to the contrary.
Unless the resolution delegating authority to any person to give
instructions specifically requires that the approval of anyone else
will first have been obtained, Custodian will be under no obligation to
inquire into the right of the person giving such instructions to do so.
Notwithstanding any of the foregoing provisions of this Section 4. no
authorizations or instructions received by Custodian from Fund, will be
deemed to authorize or permit any director, trustee, officer, employee,
or agent of Fund to withdraw any of the securities or similar
investments of Fund upon the mere receipt of such authorization or
instructions from such director, trustee, officer, employee or agent.
Notwithstanding any other provision of this Agreement, Custodian, upon
receipt (and acknowledgement if required at the discretion of
Custodian) of the instructions of any two designated representatives of
Fund, will undertake to deliver for Fund's account monies, (provided
such monies are on hand or available) in connection with Fund's
transactions and to wire transfer such monies to such broker, dealer,
subcustodian, bank or other agent specified in such instructions.
B. If oral instructions are permitted pursuant to Section 4.A.
hereunder, no later than the next business day immediately
following such oral instruction the Fund will send Custodian
written confirmation of such oral instruction. At Custodian's
sole discretion, Custodian may record on tape, or otherwise,
any oral instruction whether given in person or via telephone,
each such recording identifying the parties, the date and the
time of the beginning and ending of such oral instruction.
19
<PAGE>
5. LIMITATION OF LIABILITY OF CUSTODIAN.
-------------------------------------
A. Custodian shall hold harmless and indemnify Fund from and
against any loss or liability arising out of Custodian's
failure to comply with the terms of this Agreement or arising
out of Custodian's negligence or bad faith. Custodian may
request and obtain the advice and opinion of counsel for Fund,
or of its own counsel with respect to questions or matters of
law, and it shall be without liability to Fund for any action
taken or omitted by it in good faith, in conformity with such
advice or opinion. If Custodian reasonably believes that it
could not prudently act according to the instructions of the
Fund or the Fund's counsel, it may in its discretion, with
notice to the Fund, not act according to such instructions.
B. Custodian may rely upon the advice of Fund and upon statements
of Fund's public accountants and other persons believed by it
in good faith, to be expert in matters upon which they are
consulted, and Custodian shall not be liable for any actions
taken, in good faith, upon such statements.
C. If Fund requires Custodian in any capacity to take, with
respect to any securities, any action which involves the
payment of money by it, or which in Custodian's opinion might
make it or its nominee liable for payment of monies or in any
other way, Custodian, upon notice to Fund given prior to such
actions, shall be and be kept indemnified by Fund in an amount
and form satisfactory to Custodian against any liability on
account of such action.
D. Custodian shall be protected in acting as custodian hereunder
upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing
to it to be genuine and to have been properly executed and
shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter
required to be ascertained from Fund hereunder, a certificate
signed by the Fund's President, or other officer specifically
authorized for such purpose.
20
<PAGE>
E. Without limiting the generality of the foregoing, Custodian
shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any securities purchased
by or for Fund, the legality of the purchase thereof
or evidence of ownership required by Fund to be
received by Custodian, or the propriety of the
decision to purchase or amount paid therefor;
2. The legality of the sale of any securities by or for
Fund, or the propriety of the amount for which the
same are sold;
3. The legality of the issue or sale of any shares of
the Beneficial Interest of Fund, or the sufficiency
of the amount to be received therefor;
4. The legality of the repurchase or redemption of any
shares of Beneficial Interest of, or the propriety of
the amount to be paid therefor; or
5. The legality of the declaration of any dividend by
Fund, or the legality of the issue of any shares of
Beneficial Interest of Fund in payment of any stock
dividend.
F. Custodian shall not be liable for, or considered to be
Custodian of, any money represented by any check, draft, wire
transfer, clearing house funds, uncollected funds, or
instrument for the payment of money received by it on behalf
of Fund, until Custodian actually receives such money,
provided only that it shall advise Fund promptly if it fails
to receive any such money in the ordinary course of business,
and use its best efforts and cooperate with Fund toward the
end that such money shall be received.
G. Custodian shall not be responsible for loss occasioned by the
acts, neglects, defaults or insolvency of any broker, bank,
trust company, or any other person with whom Custodian may
deal in the absence of negligence, or bad faith on the part of
Custodian, except as provided in Section 3.S.1 hereof.
H. Notwithstanding anything herein to the contrary, Custodian
may, and with respect to any foreign subcustodian appointed
under Section 3.S.2. must, provide Fund
21
<PAGE>
for its approval, agreements with banks or trust companies
which will act as subcustodians for Fund pursuant to Section
3.S of this Agreement.
6. COMPENSATION. Fund will pay to Custodian such compensation as is stated
in the Fee Schedule attached hereto as Exhibit B which may be changed
from time to time as agreed to in writing by Custodian and Fund.
Custodian may charge such compensation against monies held by it for
the account of Fund. Custodian will also be entitled, notwithstanding
the provisions of Sections 5.C. or 5.D. hereof, to charge against any
monies held by it for the account of Fund the amount of any loss,
damage, liability, advance, or expense for which it shall be entitled
to reimbursement under the provisions of this Agreement including fees
or expenses due to Custodian for other services provided to the Fund by
the Custodian. Custodian will not be entitled to reimbursement by Fund
for any loss or expenses of any subcustodian.
7. TERMINATION. Either party to this Agreement may terminate the same by
notice in writing, delivered or mailed, postage prepaid, to the other
party hereto and received not less than ninety (90) days prior to the
date upon which such termination will take effect. If the Custodian
terminates this Agreement, the Fund may extend the effective date of
the termination ninety (90) days by written request to the Custodian
thirty (30) days prior to the end of the initial ninety (90) days
notice period unless the Custodian in good faith could not perform the
duties hereunder. Upon termination of this Agreement, Fund will pay to
Custodian such compensation for its reimbursable disbursements, costs
and expenses paid or incurred to such date and Fund will use its best
efforts to obtain a successor custodian. Unless the holders of a
majority of the outstanding shares of "Beneficial Interest" of Fund
vote to have the securities, funds and other properties held under this
Agreement delivered and paid over to some other person, firm or
corporation specified in the vote, having not less the Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits,
as shown by its last published report, and meeting such other
qualifications for custodian as set forth in the Bylaws of Fund, the
Board of Trustees of Fund will, forthwith upon giving or receiving
notice of termination of this
22
<PAGE>
Agreement, appoint as successor custodian a bank or trust company
having such qualifications. Custodian will, upon termination of this
Agreement, deliver to the successor custodian so specified or
appointed, at Custodian's office, all securities then held by Custodian
hereunder, duly endorsed and in form for transfer, all funds and other
properties of Fund deposited with or held by Custodian hereunder, or
will co-operate in effecting changes in book-entries at the Depository
Trust Company or in the Treasury/Federal Reserve Book-Entry System
pursuant to 31 CFR Sec. 306.118. In the event no such vote has been
adopted by the stockholders of shares of Beneficial Interest of Fund
and no written order designating a successor custodian has been
delivered to Custodian on or before the date when such termination
becomes effective, then Custodian will deliver the securities, funds
and properties of Fund to a bank or trust company at the selection of
Custodian and meeting the qualifications for custodian, if any, set
forth in the Bylaws of Fund and having not less that Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits,
as shown by its last published report. Upon either such delivery to a
successor custodian, Custodian will have no further obligations or
liabilities under this Agreement. Thereafter such bank or trust company
will be the successor custodian under this Agreement and will be
entitled to reasonable compensation for its services. In the event that
no such successor custodian can be found, Fund will submit to its
shareholders, before permitting delivery of the cash and securities
owned by Fund to anyone other than a successor custodian, the question
of whether Fund will be liquidated or function without a custodian.
Notwithstanding the foregoing requirement as to delivery upon
termination of this Agreement, Custodian may make any other delivery of
the securities, funds and property of Fund which is permitted by the
Investment Company Act of 1940, Fund's Deed of Trust and Bylaws then in
effect or apply to a court of competent jurisdiction for the
appointment of a successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received by
Fund at One Bankers Trust Plaza, New York, New York 10006 such other
address as Fund may have designated to Custodian in writing, will be
deemed to have been properly given to Fund
23
<PAGE>
hereunder; and notices, requests, instructions and other writings
received by Custodian at its offices at 127 West 10th Street, Kansas
City, Missouri 64105, or to such other address as it may have
designated to Fund in writing, will be deemed to have been properly
given to Custodian hereunder.
9. MISCELLANEOUS.
--------------
A. This Agreement is executed and delivered in the State of
Missouri and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by
the respective successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in
any manner except by a written agreement properly authorized
and executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement shall become effective at the close of business
on the day of , 19 .
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all
of which together will constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the
courts held to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
H. Custodian will not release the identity of Fund to an issuer
which requests such information pursuant to the Shareholder
Communications Act of 1985 for the
24
<PAGE>
specific purpose of direct communications between such issuer
and Fund unless the Fund directs the Custodian otherwise.
I. This Agreement may not be assigned by either party without
prior written consent of the other party.
J. If any provision of the Agreement, either in its present form
or as amended from time to time, limits, qualifies, or
conflicts with the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, such statutes,
rules and regulations shall be deemed to control and supersede
such provision without nullifying or terminating the remainder
of the provisions of this Agreement.
K. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of the Commonwealth of Massachusetts and notice
is hereby given that the Agreement has been executed on behalf
of Fund by the undersigned officer of Fund in his/her capacity
as an officer of Fund. The obligations of this Agreement shall
only be binding upon the assets and property of Fund and shall
not be binding upon any Trustee, officer or shareholder of
Fund individually.
25
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-----------------------------
Gerard P. Dipoto, Jr.
Senior Vice President
ATTEST:
- ----------------------
Cheryl J. Naegler
Assistant Secretary
SELIGMAN HIGH INCOME FUND SERIES
By:
-----------------------------
Title:
-----------------------------
ATTEST:
- -------------------
Secretary
26
March 5, 1985
Seligman High Income Fund Series
One Bankers Trust Plaza
New York, New York 10006
Dear Sirs:
With respect to the Registration Statement on Form N-1A (File No. 2-93076)
(the "Registration Statement") filed by Seligman High Income Fund Series, an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts (the "Fund"), with the securities and Exchange Commission for the
purpose of registering under the Securities Act of 1933, as amended, an
indefinite number of shares of beneficial interest, $.001 par value (the
"Shares"), we, as your counsel, have examined such corporate records,
certificates and other documents and reviewed such questions of law as we have
considered necessary or appropriate for the purposes of this opinion. On the
basis of such examination and review, we advise you that, in our opinion, when
Shares of each Series have been issued and sold in accordance with the terms of
the Distributing Agreement, dated as of October 9, 1984, between the Fund and
Seligman Marketing, Inc., referred to in the Registration Statement, and as
authorized by the Trustees of the Fund, such Shares of each Series will be
validly issued, fully paid and nonassessable.
We are members only of the New York bar and, in connection with all matters
governed by the laws of the Commonwealth of Massachusetts, we have relied upon
the opinion dated today of Gaston Snow & Ely Bartlett, Boston, Massachusetts,
which opinion we believe you and we are justified in relying upon.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
Very truly yours,
Sullivan & Cromwell
CONSENT OF INDEPENDENT AUDITORS
Seligman High Income Fund Series:
We consent to the use in Post-Effective Amendment No. 23 to Registration
Statement No. 2-93076 of our report dated January 31, 1997, appearing in the
Annual Report to Shareholders for the year ended December 31, 1996, incorporated
by reference in the Statement of Additional Information, and to the reference to
us under the caption "Financial Highlights" in the Prospectus, which is also
part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 25, 1997
<TABLE>
<CAPTION>
SELIGMAN HIGH-YIELD BOND SERIES-CL A
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN COMPUTATION FOR THE 10.00 YEAR PERIOD ENDED 31-Dec-96
LOAD RATE EQUALS 4.75% MAXIMUM OFFERING PRICE EQUALS $8.22
DVD PER # OF SHARES CUMUL
DATE SHARE D/G NAV YRS ACQUIRED SHARES VALUE
---- ----- --- --- --- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
31-Dec-86 0.000000 7.83 121.655 121.655 $952.56
19-Jan-87 0.079660 D 7.79 0.052 1.244 122.899 957.38
19-Jan-87 0.147000 G 7.79 0.052 2.296 125.195 975.27
31-Jan-87 0.000000 7.82 0.085 0.000 125.195 979.02
17-Feb-87 0.066559 D 7.85 0.132 1.062 126.257 991.12
28-Feb-87 0.000000 7.88 0.162 0.000 126.257 994.91
17-Mar-87 0.058897 D 7.86 0.208 0.946 127.203 999.82
31-Mar-87 0.000000 7.83 0.247 0.000 127.203 996.00
20-Apr-87 0.D76398 D 7.69 0.301 1.264 128.467 987.91
30-Apr-87 0.000000 7.56 0.329 0.000 128.467 971.21
18-May-87 0.064264 D 7.49 0.378 1.102 129.569 970.47
31-May-87 0.000000 7.56 0.414 0.000 129.569 979.54
17-Jun-87 0.067616 D 7.44 0.460 1.178 130.747 972.76
30-Jun-87 0.000000 7.42 0.496 0.000 130.747 970.14
19-Jul-87 0.069942 D 7.38 0.548 1.239 131.986 974.06
31-Jul-87 0.000000 7.36 0.581 0.000 131.986 971.42
17-Aug-87 0.061100 D 7.38 0.627 1.093 133.079 982.12
31-Aug-87 0.000000 7.35 0.666 0.000 133.079 978.13
17-Sep-87 0.068730 D 7.13 0.712 1.283 134.362 958.00
30-Sep-87 0.000000 7.01 0.748 0.000 134.362 941.88
19-Oct-87 0.072390 D 6.81 0.800 1.428 135.790 924.73
31-Oct-87 0.000000 6.81 0.833 0.000 135.790 924.73
17-Nov-87 0.063197 D 6.97 0.879 1.231 137.021 955.04
30-Nov-87 0.000000 6.97 0.915 0.000 137.021 955.04
17-Dec-87 0.063066 D 6.94 0.962 1.245 138.266 959.57
31-Dec-87 0.029232 D 7.07 1.000 0.572 138.838 981.58
18-Jan-88 0.039234 D 7.15 1.049 0.762 139.600 998.14
31-Jan-88 0.000000 7.22 1.085 0.000 139.600 1,007.91
17-Feb-88 0.064791 D 7.29 1.132 1.241 140.841 1,026.73
29-Feb-88 0.000000 7.36 1.164 0.000 140.841 1,036.59
17-Mar-88 0.063705 D 7.28 1.211 1.232 142.073 1,034.29
31-Mar-88 0.000000 7.24 1.249 0.000 142.073 1,028.61
18-Apr-88 0.070861 D 7.24 1.299 1.391 143.464 1,038.68
30-Apr-88 0.000000 7.26 1.332 0.000 143.464 1,041.55
17-May-88 0.063516 D 7.23 1.378 1.260 144.724 1,046.35
31-May-88 0.000000 7.21 1.416 0.000 144.724 1,043.46
17-Jun-88 0.000000 D 7.20 1.463 0.000 144.724 1,042.01
19-Jun-88 0.073596 D 7.20 1.468 1.479 146.203 1,052.66
30-Jun-88 0.000000 7.20 1.499 0.000 146.203 1,052.66
18-Jul-88 0.065926 D 7.17 1.548 1.344 147.547 1,057.91
31-Jul-88 0.000000 7.18 1.584 0.000 147.547 1,059.39
17-Aug-88 0.068740 D 7.12 1.630 1.424 148.971 1,060.67
31-Aug-88 0.000000 7.08 1.668 0.000 148.971 1,054.71
19-Sep-88 0.076001 D 7.10 1.721 1.595 150.566 1,069.02
30-Sep-88 0.000000 7.09 1.751 0.000 150.566 1,067.51
17-Oct-88 0.063652 D 7.10 1.797 1.350 151.916 1,078.60
31-Oct-88 0.000000 7.11 1.836 0.000 151.916 1,080.12
17-Nov-88 0.070217 D 7.06 1.882 1.511 153.427 1,083.19
30-Nov-88 0.000000 7.04 1.918 0.000 153.427 1,080.13
<PAGE>
19-Dec-88 0.075323 D 7.04 1.970 1.642 155.069 1,091.69
31-Dec-88 0.030050 D 7.02 2.003 0.664 155.733 1,093.25
17-Jan-89 0.040796 D 7.05 2.049 0.901 156.634 1,104.27
31-Jan-89 0.000000 7.10 2.088 0.000 156.634 1,112.10
20-Feb-89 0.084966 D 7.13 2.142 1.867 158.501 1,130.11
28-Feb-89 0.000000 7.09 2.164 0.000 158.501 1,123.77
19-Mar-89 0.069494 D 7.06 2.216 1.560 160.061 1,130.03
31-Mar-89 0.000000 6.96 2.249 0.000 160.061 1,114.02
17-Apr-89 0.073578 D 6.89 2.296 1.709 161.770 1,114.60
30-Apr-89 0.000000 6.91 2.332 0.000 161.770 1,117.83
17-May-89 0.076478 D 6.88 2.378 1.798 163.568 1,125.35
31-May-89 0.000000 6.92 2.416 0.000 163.568 1,131.89
19-Jun-89 0.082516 D 7.02 2.468 1.923 165.491 1,161.75
30-Jun-89 0.000000 6.99 2.499 0.000 165.491 1,156.78
17-Jul-89 0.066952 D 6.97 2.545 1.590 167.081 1,164.55
31-Jul-89 0.000000 6.95 2.584 0.000 167.081 1,161.21
17-Aug-89 0.076499 D 6.95 2.630 1.839 168.920 1,173.99
31-Aug-89 0.000000 6.93 2.668 0.000 168.920 1,170.62
18-Sep-89 0.081807 D 6.82 2.718 2.026 170.946 1,165.85
30-Sep-89 0.000000 6.77 2.751 0.000 170.946 1,157.30
17-Oct-89 0.068484 D 6.63 2.797 1.766 172.712 1,145.08
31-Oct-89 0.000000 6.54 2.836 0.000 172.712 1,129.54
19-Nov-89 0.076719 D 6.47 2.888 2.048 174.760 1,130.70
30-Nov-89 0.000000 6.44 2.918 0.000 174.760 1,125.45
18-Dec-89 0.067092 D 6.42 2.967 1.826 176.586 1,133.68
31-Dec-89 0.028762 D 6.40 3.003 0.794 177.380 1,135.23
17-Jan-90 0.037811 D 6.38 3.049 1.051 178.431 1,138.39
31-Jan-90 0.000000 6.25 3.088 0.000 178.431 1,115.19
20-Feb-90 0.076329 D 6.05 3.142 2.251 180.682 1,093.13
28-Feb-90 0.000000 6.03 3.164 0.000 180.682 1,089.51
19-Mar-90 0.059241 D 5.99 3.216 1.787 182.469 1,092.99
31-Mar-90 0.000000 5.99 3.249 0.000 182.469 1,092.99
17-Apr-90 0.062180 D 5.98 3.296 1.897 184.366 1,102.51
30-Apr-90 0.000000 5.95 3.332 0.000 184.366 1,096.98
17-May-90 0.062718 D 5.95 3.378 1.943 186.309 1,108.54
31-May-90 0.000000 5.97 3.416 0.000 186.309 1,112.26
18-Jun-90 0.068028 D 5.99 3.466 2.116 188.425 1,128.67
30-Jun-90 0.000000 6.00 3.499 0.000 188.425 1,130.55
17-Jul-90 0.061664 D 6.04 3.545 1.924 190.349 1,149.71
31-Jul-90 0.000000 6.05 3.584 0.000 190.349 1,151.61
17-Aug-90 0.068902 D 5.91 3.630 2.219 192.568 1,138.08
31-Aug-90 0.000000 5.79 3.668 0.000 192.568 1,114.97
17-Sep-90 0.061688 D 5.71 3.715 2.080 194.648 1,111.44
21-Sep-90 0.000000 5.69 3.726 0.000 194.648 1,107.55
30-Sep-90 0.000000 5.56 3.751 0.000 194.648 1,082.24
17-Oct-90 0.065046 D 5.30 3.797 2.389 197.037 1,044.30
31-Oct-90 0.000000 5.22 3.836 0.000 197.037 1,028.53
17-Nov-90 0.069140 D 5.13 3.882 2.656 199.693 1,024.43
30-Nov-90 0.000000 5.24 3.918 0.000 199.693 1,046.39
17-Dec-90 0.061159 D 5.20 3.964 2.349 202.042 1,050.62
31-Dec-90 5.21 4.003 0.000 202.042 1,052.64
17-Jan-91 0.061319 D 5.20 4.049 2.383 204.425 1,063.01
31-Jan-91 0.000000 5.29 4.088 0.000 204.425 1,081.41
15-Feb-91 0.065760 D 5.36 4.129 2.508 206.933 1,109.16
28-Feb-91 0.000000 5.48 4.164 0.000 206.933 1,133.99
15-Mar-91 0.057176 D 5.52 4.205 2.143 209.076 1,154.10
<PAGE>
31-Mar-91 0.000000 5.65 4.249 0.000 209.076 1,181.28
17-Apr-91 0.067628 D 5.76 4.296 2.455 211.531 1,218.42
30-Apr-91 0.000000 5.71 4.332 0.000 211.531 1,207.84
19-May-91 0.070940 D 5.65 4.384 2.656 214.187 1,210.16
31-May-91 0.000000 5.70 4.416 0.000 214.187 1,220.87
17-Jun-91 0.057620 D 5.74 4.463 2.150 216.337 1,241.77
30-Jun-91 0.000000 5.76 4.499 0.000 216.337 1,246.10
17-Jul-91 0.061857 D 5.85 4.545 2.288 218.625 1,278.96
31-Jul-91 0.000000 5.86 4.584 0.000 218.625 1,281.14
16-Aug-91 0.068660 D 5.87 4.627 2.557 221.182 1,298.34
31-Aug-91 0.000000 5.89 4.668 0.000 221.182 1,302.76
17-Sep-91 0.065081 D 5.92 4.715 2.432 223.614 1,323.79
30-Sep-91 0.000000 5.93 4.751 0.000 223.614 1,326.03
17-Oct-91 0.063900 D 6.02 4.797 2.374 225.988 1,360.45
31-Oct-91 0.000000 6.06 4.836 0.000 225.988 1,369.49
15-Nov-91 0.064709 D 6.08 4.877 2.405 228.393 1,388.63
30-Nov-91 0.000000 6.04 4.918 0.000 228.393 1,379.49
17-Dec-91 0.063763 D 5.95 4.964 2.448 230.841 1,373.50
31-Dec-91 5.96 5.003 0.000 230.841 1,375.81
17-Jan-92 0.067055 D 6.06 5.049 2.554 233.395 1,414.37
31-Jan-92 0.000000 6.13 5.088 0.000 233.395 1,430.71
14-Feb-92 0.057329 D 6.21 5.126 2.155 235.550 1,462.77
29-Feb-92 0.000000 6.25 5.167 0.000 235.550 1,472.19
17-Mar-92 0.055020 D 6.29 5.214 2.060 237.610 1,494.57
31-Mar-92 0.000000 6.32 5.252 0.000 237.610 1,501.70
16-Apr-92 0.062672 D 6.29 5.296 2.367 239.977 1,509.46
30-Apr-92 0.000000 6.30 5.334 0.000 239.977 1,511.86
15-May-92 0.052933 D 6.30 5.375 2.016 241.993 1,524.56
31-May-92 0.000000 6.32 5.419 0.000 241.993 1,529.40
17-Jun-92 0.055566 D 6.34 5.466 2.121 244.114 1,547.68
17-Jun-92 0.000000 D 6.34 5.466 0.000 244.114 1,547.68
30-Jun-92 6.33 5.501 0.000 244.114 1,545.24
17-Jul-92 0.059475 D 6.38 5.548 2.276 246.390 1,571.97
31-Jul-92 0.000000 6.43 5.586 0.000 246.390 1,584.29
16-Aug-92 0.055148 D 6.49 5.630 2.094 248.484 1,612.66
31-Aug-92 0.000000 6.47 5.671 0.000 248.484 1,607.69
17-Sep-92 0.059406 D 6.51 5.718 2.268 250.752 1,632.40
21-Sep-92 0.000000 6.51 5.729 0.000 250.752 1,632.40
30-Sep-92 6.50 5.753 0.000 250.752 1,629.89
16-Oct-92 0.057481 D 6.36 5.797 2.266 253.018 1,609.19
31-Oct-92 0.000000 6.33 5.838 0.000 253.018 1,601.60
31-Oct-92 6.33 5.838 0.000 253.018 1,601.60
17-Nov-92 0.054644 D 6.41 5.885 2.157 255.175 1,635.67
30-Nov-92 6.42 5.921 0.000 255.175 1,638.22
17-Dec-92 0.053981 D 6.42 5.967 2.146 257.321 1,652.00
31-Dec-92 6.42 6.005 0.000 257.321 1,652.00
15-Jan-93 0.056563 I 6.49 6.047 2.243 259.564 1,684.57
29-Jan-93 6.55 6.085 0.000 259.564 1,700.14
31-Jan-93 0.000000 6.55 6.090 0.000 259.564 1,700.14
17-Feb-93 0.056803 I 6.60 6.137 2.234 261.798 1,727.87
26-Feb-93 6.63 6.162 0.000 261.798 1,735.72
28-Feb-93 0.000000 6.63 6.167 0.000 261.798 1,735.72
17-Mar-93 0.051789 I 6.69 6.214 2.027 263.825 1,764.99
31-Mar-93 6.70 6.252 0.000 263.825 1,767.63
16-Apr-93 0.058809 D 6.67 6.296 2.326 266.151 1,775.23
30-Apr-93 0.000000 D 6.68 6.334 0.000 266.151 1,777.89
<PAGE>
17-May-93 0.052783 D 6.67 6.381 2.106 268.257 1,789.27
31-May-93 0.000000 D 6.69 6.419 0.000 268.257 1,794.64
17-Jun-93 0.056765 D 6.77 6.466 2.249 270.506 1,831.33
30-Jun-93 0.000000 6.81 6.501 0.000 270.506 1,842.15
16-Jul-93 0.056622 6.85 6.545 2.236 272.742 1,868.28
31-Jul-93 6.82 6.586 0.000 272.742 1,860.10
17-Aug-93 0.053013 6.81 6.633 2.123 274.865 1,871.83
31-Aug-93 6.80 6.671 0.000 274.865 1,869.08
17-Sep-93 0.059837 6.73 6.718 2.444 277.309 1,866.29
30-Sep-93 6.76 6.753 0.000 277.309 1,874.61
15-Oct-93 0.049412 D 6.85 6.795 2.000 279.309 1,913.27
29-Oct-93 6.86 6.833 0.000 279.309 1,916.06
31-Oct-93 0.000000 6.86 6.838 0.000 279.309 1,916.06
17-Nov-93 0.053405 D 6.88 6.885 2.168 281.477 1,936.56
30-Nov-93 6.89 6.921 0.000 281.477 1,939.38
17-Dec-93 0.055089 D 6.93 6.967 2.238 283.715 1,966.14
31-Dec-93 0.000000 6.94 7.005 0.000 283.715 1,968.98
17-Jan-94 0.050932 D 7.00 7.052 2.064 285.779 2,000.45
31-Jan-94 7.06 7.090 0.000 285.779 2,017.60
17-Feb-94 0.053646 D 7.06 7.137 2.172 287.951 2,032.93
28-Feb-94 0.000000 7.01 7.167 0.000 287.951 2,018.54
17-Mar-94 0.047995 D 6.93 7.214 1.994 289.945 2,009.32
31-Mar-94 0.000000 6.75 7.252 0.000 289.945 1,957.13
15-Apr-94 0.053849 D 6.65 7.293 2.348 292.293 1,943.75
30-Apr-94 6.61 7.334 0.000 292.293 1,932.06
17-May-94 0.052530 D 6.57 7.381 2.337 294.630 1,935.72
31-May-94 6.62 7.419 0.000 294.630 1,950.45
17-Jun-94 0.056951 6.65 7.466 2.523 297.153 1,976.07
30-Jun-94 0.000000 6.58 7.501 0.000 297.153 1,955.27
15-Jul-94 0.048143 D 6.50 7.542 2.201 299.354 1,945.80
31-Jul-94 6.52 7.586 0.000 299.354 1,951.79
17-Aug-94 0.054532 D 6.49 7.633 2.515 301.869 1,959.13
31-Aug-94 6.48 7.671 0.000 301.869 1,956.11
16-Sep-94 0.056659 D 6.48 7.715 2.639 304.508 1,973.21
21-Sep-94 0.000000 6.48 7.729 0.000 304.508 1,973.21
30-Sep-94 6.45 7.753 0.000 304.508 1,964.08
17-Oct-94 0.053205 D 6.44 7.800 2.516 307.024 1,977.23
31-Oct-94 6.42 7.838 0.000 307.024 1,971.09
17-Nov-94 0.056513 D 6.42 7.885 2.703 309.727 1,988.45
30-Nov-94 6.34 7.921 0.000 309.727 1,963.67
16-Dec-94 0.056501 D 6.30 7.964 2.778 312.505 1,968.78
31-Dec-94 6.35 8.005 0.000 312.505 1,984.41
17-Jan-95 0.054881 D 6.39 8.052 2.684 315.189 2,014.06
31-Jan-95 6.37 8.090 0.000 315.189 2,007.75
17-Feb-95 0.062432 D 6.47 8.137 3.041 318.230 2,058.95
28-Feb-95 6.50 8.167 0.000 318.230 2,068.50
17-Mar-95 0.049965 D 6.49 8.214 2.450 320.680 2,081.21
31-Mar-95 6.51 8.252 0.000 320.680 2,087.63
17-Apr-95 0.051501 D 6.56 8.299 2.518 323.198 2,120.18
28-Apr-95 0.000000 6.62 8.329 0.000 323.198 2,139.57
30-Apr-95 0.000000 6.62 8.334 0.000 323.198 2,139.57
17-May-95 0.053351 D 6.74 8.381 2.558 325.756 2,195.60
31-May-95 0.000000 6.75 8.419 0.000 325.756 2,198.85
16-Jun-95 0.054784 D 6.71 8.463 2.660 328.416 2,203.67
30-Jun-95 0.000000 6.75 8.501 0.000 328.416 2,216.81
17-Jul-95 0.050453 D 6.88 8.548 2.408 330.824 2,276.07
<PAGE>
31-Jul-95 0.000000 6.90 8.586 0.000 330.824 2,282.69
17-Aug-95 0.053853 D 6.89 8.633 2.586 333.410 2,297.19
31-Aug-95 0.000000 6.87 8.671 0.000 333.410 2,290.53
15-Sep-95 6.89 8.712 0.000 333.410 2,297.19
15-Sep-95 0.055983 D 6.89 8.712 2.709 336.119 2,315.86
21-Sep-95 0.000000 6.91 8.729 0.000 336.119 2,322.58
30-Sep-95 0.000000 6.90 8.753 0.000 336.119 2,319.22
04-Oct-95 0.000000 6.88 8.764 0.000 336.119 2,312.50
17-Oct-95 0.054137 D 6.90 8.800 2.637 338.756 2,337.42
20-Oct-95 0.000000 6.92 8.808 0.000 338.756 2,344.19
31-Oct-95 0.000000 6.90 8.838 0.000 338.756 2,337.42
14-Nov-95 0.000000 6.91 8.877 0.000 338.756 2,340.80
17-Nov-95 0.059456 D 6.92 8.885 2.911 341.667 2,364.34
30-Nov-95 0.000000 6.92 8.921 0.000 341.667 2,364.34
14-Dec-95 0.000000 6.94 8.959 0.000 341.667 2,371.17
15-Dec-95 0.050998 d 6.94 8.962 2.511 344.178 2,388.60
31-Dec-95 6.96 9.005 0.000 344.178 2,395.48
17-Jan-96 0.056699 d 7.02 9.052 2.780 346.958 2,435.65
31-Jan-96 0.000000 7.09 9.090 0.000 346.958 2,459.93
17-Feb-96 0.061428 d 7.19 9.137 2.964 349.922 2,515.94
29-Feb-96 0.000000 7.15 9.170 0.000 349.922 2,501.94
15-Mar-96 0.000000 7.07 9.211 0.000 349.922 2,473.95
15-Mar-96 0.049694 d 7.07 9.211 2.460 352.382 2,491.34
31-Mar-96 0.000000 7.07 9.255 0.000 352.382 2,491.34
17-Apr-96 0.058305 D 7.04 9.301 2.918 355.300 2,501.31
30-Apr-96 0.000000 7.09 9.337 0.000 355.300 2,519.08
17-May-96 0.061304 D 7.10 9.384 3.068 358.368 2,544.41
24-May-96 0.000000 7.13 9.403 0.000 358.368 2,555.16
31-May-96 0.000000 7.12 9.422 0.000 358.368 2,551.58
05-Jun-96 0.000000 7.10 9.436 0.000 358.368 2,544.41
17-Jun-96 0.056251 D 7.03 9.468 2.868 361.236 2,539.49
30-Jun-96 0.000000 7.05 9.504 0.000 361.236 2,546.71
16-Jul-96 0.000000 7.00 9.548 0.000 361.236 2,528.65
17-Jul-96 0.057178 D 7.00 9.551 2.951 364.187 2,549.31
31-Jul-96 0.000000 6.99 9.589 0.000 364.187 2,545.67
06-Aug-96 0.000000 7.05 9.605 0.000 364.187 2,567.52
16-Aug-96 0.059400 D 7.01 9.633 3.086 367.273 2,574.58
31-Aug-96 0.000000 7.02 9.674 0.000 367.273 2,578.26
17-Sep-96 0.056899 D 7.10 9.721 2.943 370.216 2,628.53
30-Sep-96 0.000000 7.18 9.756 0.000 370.216 2,658.15
17-Oct-96 0.056902 D 7.17 9.803 2.938 373.154 2,675.51
17-Oct-96 0.000000 7.17 9.803 0.000 373.154 2,675.51
31-Oct-96 0.000000 7.12 9.841 0.000 373.154 2,656.86
15-Nov-96 0.060195 D 7.16 9.882 3.137 376.291 2,694.24
30-Nov-96 0.000000 7.19 9.923 0.000 376.291 2,705.53
17-Dec-96 0.059101 D 7.19 9.970 3.093 379.384 2,727.77
31-Dec-96 7.25 10.008 0.000 379.384 2,750.53
31-Dec-96 0.000000 7.25 10.008 0.000 379.384 2,750.53
CALCULATION OF
AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN - 10.65%
N = NUMBER OF YEARS - 10
ERV = ENDING REDEEMABLE VALUE $2,750.53
TOTAL RETURN FOR PERIOD 175.05%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN HIGH-YIELD BOND SERIES-CL B
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN (LESS CDSL) FOR THE 0.69 YEAR PERIOD ENDED 31-Dec-96
LOAD RATE EQUALS 0.00% MAXIMUM OFFERING PRICE - $7.0600
DVD PER # OF SHARES CUMUL
DATE SHARE D/G NAV YRS ACQUIRED SHARES VALUE
---- ----- --- --- --- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
22-Apr-96 0.000000 7.0600 141.643 141.643 $1,000.00
30-Apr-96 0.000000 7.1000 0.022 0.000 141.643 1,005.67
17-May-96 0.047730 D 7.1100 0.068 0.951 142.594 1,013.84
31-May-96 7.1200 0.107 0.000 142.594 1,015.27
17-Jun-96 0.052013 D 7.0300 0.153 1.055 143.649 1,009.85
30-Jun-96 0.000000 7.0500 0.189 0.000 143.649 1,012.73
17-Jul-96 0.052651 d 7.0000 0.236 1.080 144.729 1,013.10
31-Jul-96 0.000000 6.9900 0.274 0.000 144.729 1,011.66
16-Aug-96 0.054794 D 7.0100 0.318 1.131 145.860 1,022.48
31-Aug-96 0.000000 7.0300 0.359 0.000 145.860 1,025.40
17-Sep-96 0.052543 D 7.1000 0.405 1.079 146.939 1,043.27
30-Sep-96 0.000000 7.1900 0.441 0.000 146.939 1,056.49
17-Oct-96 0.052592 D 7.1800 0.488 1.076 148.015 1,062.75
15-Nov-96 0.055674 D 7.1600 0.567 1.151 149.166 1,068.03
17-Dec-96 0.054160 D 7.1900 0.655 1.124 150.290 1,080.59
31-Dec-96 7.2600 0.693 0.000 150.290 1,091.11
LESS CDSL 50.00
=================
1,041.11
=================
CALCULATION OF
AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN - N/A
N = NUMBER OF YEARS - 0.693
ERV=ENDING REDEEMABLE VALUE $1,041.11
TOTAL RETURN (LESS CDSL) 4.11%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN HIGH-YIELD BOND SERIES- CL D
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN COMPUTATION FOR THE 3.28 YEAR PERIOD ENDED 31-Dec-96
LOAD RATE EQUALS 0.0% MAXIMUM OFFERING PRICE EQUALS $6.740
DVD PER # OF SHARES CUMUL
DATE SHARE D/G NAV YRS ACQUIRED SHARES VALUE
---- ----- --- --- --- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
21-Sep-93 0.000000 6.74 148.368 148.368 $1,000.00
30-Sep-93 0.000000 6.76 0.025 0.000 148.368 1,002.97
15-Oct-93 0.017783 D 6.85 0.066 0.385 148.753 1,018.96
31-Oct-93 6.87 0.110 0.000 148.753 1,021.93
17-Nov-93 0.037699 D 6.88 0.156 0.815 149.568 1,029.03
30-Nov-93 6.89 0.192 0.000 149.568 1,030.52
17-Dec-93 0.049081 D 6.94 0.238 1.058 150.626 1,045.34
31-Dec-93 0.000000 6.94 0.277 0.000 150.626 1,045.34
17-Jan-94 0.046041 D 7.01 0.323 0.989 151.615 1,062.82
31-Jan-94 0.000000 7.06 0.362 0.000 151.615 1,070.40
17-Feb-94 0.047573 7.07 0.408 1.020 152.635 1,079.13
28-Feb-94 0.000000 7.01 0.438 0.000 152.635 1,069.97
17-Mar-94 0.042066 D 6.94 0.485 0.925 153.560 1,065.71
31-Mar-94 0.000000 6.76 0.523 0.000 153.560 1,038.07
15-Apr-94 0.047192 D 6.66 0.564 1.088 154.648 1,029.96
30-Apr-94 6.62 0.605 0.000 154.648 1,023.77
17-May-94 0.047221 D 6.58 0.652 1.110 155.758 1,024.89
31-May-94 6.63 0.690 0.000 155.758 1,032.68
17-Jun-94 0.050581 D 6.66 0.737 1.183 156.941 1,045.23
30-Jun-94 0.000000 6.59 0.773 0.000 156.941 1,034.24
15-Jul-94 0.042331 I 6.51 0.814 1.021 157.962 1,028.33
31-Jul-94 6.52 0.858 0.000 157.962 1,029.91
17-Aug-94 0.047831 I 6.49 0.904 1.164 159.126 1,032.73
31-Aug-94 6.49 0.942 0.000 159.126 1,032.73
16-Sep-94 0.051028 I 6.49 0.986 1.251 160.377 1,040.85
30-Sep-94 6.46 1.025 0.000 160.377 1,036.04
17-Oct-94 0.047540 I 6.44 1.071 1.184 161.561 1,040.45
31-Oct-94 6.43 1.110 0.000 161.561 1,038.84
17-Nov-94 0.050478 I 6.42 1.156 1.270 162.831 1,045.38
30-Nov-94 6.35 1.192 0.000 162.831 1,033.98
16-Dec-94 0.050397 I 6.31 1.236 1.301 164.132 1,035.67
31-Dec-94 6.35 1.277 0.000 164.132 1,042.24
17-Jan-95 0.049054 D 6.39 1.323 1.260 165.392 1,056.85
31-Jan-95 6.37 1.362 0.000 165.392 1,053.55
17-Feb-95 0.055980 D 6.47 1.408 1.431 166.823 1,079.34
28-Feb-95 6.51 1.438 0.000 166.823 1,086.02
17-Mar-95 0.045751 D 6.49 1.485 1.176 167.999 1,090.31
31-Mar-95 6.51 1.523 0.000 167.999 1,093.67
17-Apr-95 0.047352 D 6.56 1.570 1.213 169.212 1,110.03
28-Apr-95 0.000000 6.63 1.600 0.000 169.212 1,121.88
30-Apr-95 6.63 1.605 0.000 169.212 1,121.88
17-May-95 0.048263 D 6.75 1.652 1.210 170.422 1,150.35
31-May-95 6.75 1.690 0.000 170.422 1,150.35
16-Jun-95 0.049401 D 6.71 1.734 1.255 171.677 1,151.95
30-Jun-95 0.000000 6.75 1.773 0.000 171.677 1,158.82
17-Jul-95 0.046047 d 6.88 1.819 1.149 172.826 1,189.04
31-Jul-95 0.000000 6.90 1.858 0.000 172.826 1,192.50
17-Aug-95 0.049175 d 6.89 1.904 1.233 174.059 1,199.27
31-Aug-95 0.000000 6.87 1.942 0.000 174.059 1,195.79
<PAGE>
15-Sep-95 0.051330 D 6.89 1.984 1.297 175.356 1,208.20
30-Sep-95 0.000000 6.90 2.025 0.000 175.356 1,209.96
17-Oct-95 0.049646 D 6.91 2.071 1.260 176.616 1,220.42
31-Oct-95 0.000000 6.90 2.110 0.000 176.616 1,218.65
17-Nov-95 0.054600 D 6.93 2.156 1.392 178.008 1,233.60
30-Nov-95 0.000000 6.92 2.192 0.000 178.008 1,231.82
15-Dec-95 0.046578 D 6.94 2.233 1.195 179.203 1,243.67
31-Dec-95 0.000000 6.96 2.277 0.000 179.203 1,247.25
17-Jan-96 0.052004 d 7.02 2.323 1.328 180.531 1,267.33
31-Jan-96 0.000000 7.09 2.362 0.000 180.531 1,279.96
16-Feb-96 0.056482 d 7.19 2.405 1.418 181.949 1,308.21
29-Feb-96 0.000000 7.15 2.441 0.000 181.949 1,300.94
15-Mar-96 0.045530 d 7.07 2.482 1.172 183.121 1,294.67
15-Mar-96 0.000000 7.07 2.482 0.000 183.121 1,294.67
31-Mar-96 0.000000 7.08 2.526 0.000 183.121 1,296.50
17-Apr-96 0.053681 D 7.04 2.573 1.396 184.517 1,299.00
30-Apr-96 0.000000 7.10 2.608 0.000 184.517 1,310.07
17-May-96 0.056494 D 7.11 2.655 1.466 185.983 1,322.34
31-May-96 0.000000 7.12 2.693 0.000 185.983 1,324.20
17-Jun-96 0.052048 D 7.03 2.740 1.377 187.360 1,317.14
30-Jun-96 0.000000 7.05 2.775 0.000 187.360 1,320.89
17-Jul-96 0.052727 7.00 2.822 1.411 188.771 1,321.40
31-Jul-96 0.000000 6.99 2.860 0.000 188.771 1,319.51
16-Aug-96 0.054809 D 7.01 2.904 1.476 190.247 1,333.63
31-Aug-96 0.000000 7.03 2.945 0.000 190.247 1,337.44
17-Sep-96 0.052581 D 7.10 2.992 1.409 191.656 1,360.76
30-Sep-96 0.000000 7.19 3.027 0.000 191.656 1,378.01
17-Oct-96 0.052561 D 7.18 3.074 1.403 193.059 1,386.16
15-Nov-96 0.055498 D 7.16 3.153 1.496 194.555 1,393.01
17-Dec-96 0.054484 D 7.19 3.241 1.474 196.029 1,409.45
31-Dec-96 7.26 3.279 0.000 196.029 1,423.17
CALCULATION OF
AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN - 11.36%
N = NUMBER OF YEARS - 3.279
ERV = ENDING REDEEMABLE VALUE $1,423.17
TOTAL RETURN FOR PERIOD 42.32%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN COMPUTATION FOR THE 10.00 YEAR PERIOD ENDED 31-Dec-96
LOAD RATE EQUALS 4.75% MAXIMUM OFFERING PRICE EQUALS $8.56
DVD PER # OF SHARES CUMUL
DATE SHARE D/G NAV YRS ACQUIRED SHARES VALUE
---- ----- --- --- --- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
31-Dec-86 0.000000 8.15 116.822 116.822 $952.10
19-Jan-87 0.045000 D 8.21 0.052 0.640 117.462 964.36
19-Jan-87 0.055000 G 8.21 0.052 0.783 118.245 970.79
17-Feb-87 0.040000 D 8.03 0.132 0.589 118.834 954.24
17-Feb-87 0.060000 G 8.03 0.132 0.884 119.718 961.34
17-Mar-87 0.033000 G 8.06 0.208 0.490 120.208 968.88
17-Mar-87 0.037000 D 8.06 0.208 0.550 120.758 973.31
31-Mar-87 0.000000 7.86 0.247 0.000 120.758 949.16
20-Apr-87 0.023000 G 7.43 0.301 0.374 121.132 900.01
20-Apr-87 0.047000 D 7.43 0.301 0.764 121.896 905.69
18-May-87 0.021000 G 7.14 0.378 0.359 122.255 872.90
18-May-87 0.041000 D 7.14 0.378 0.700 122.955 877.90
17-Jun-87 0.046982 D 7.33 0.460 0.788 123.743 907.04
30-Jun-87 0.000000 7.27 0.496 0.000 123.743 899.61
19-Jul-87 0.054427 D 7.29 0.548 0.924 124.667 908.82
17-Aug-87 0.051735 D 7.25 0.627 0.890 125.557 910.29
17-Sep-87 0.061070 D 6.82 0.712 1.124 126.681 863.96
30-Sep-87 0.000000 6.76 0.748 0.000 126.681 856.36
19-Oct-87 0.053308 D 6.54 0.800 1.033 127.714 835.25
17-Nov-87 0.047686 D 7.17 0.879 0.849 128.563 921.80
17-Dec-87 0.050581 D 7.06 0.962 0.921 129.484 914.16
31-Dec-87 0.024391 D 7.12 1.000 0.444 129.928 925.09
18-Jan-88 0.030627 D 7.25 1.049 0.549 130.477 945.96
17-Feb-88 0.051011 D 7.38 1.132 0.902 131.379 969.58
17-Mar-88 0.051450 D 7.37 1.211 0.917 132.296 975.02
31-Mar-88 0.000000 7.29 1.249 0.000 132.296 964.44
18-Apr-88 0.057916 D 7.23 1.299 1.060 133.356 964.16
17-May-88 0.048559 D 7.13 1.378 0.908 134.264 957.30
19-Jun-88 0.052759 D 7.17 1.468 0.988 135.252 969.76
30-Jun-88 0.000000 7.20 1.499 0.000 135.252 973.81
18-Jul-88 0.045840 D 7.13 1.548 0.870 136.122 970.55
17-Aug-88 0.047996 D 7.05 1.630 0.927 137.049 966.20
19-Sep-88 0.053404 D 7.13 1.721 1.027 138.076 984.48
30-Sep-88 0.000000 7.16 1.751 0.000 138.076 988.62
17-Oct-88 0.045202 D 7.20 1.797 0.867 138.943 1,000.39
17-Nov-88 0.049478 D 7.12 1.882 0.966 139.909 996.15
19-Dec-88 0.051366 D 7.06 1.970 1.018 140.927 994.94
31-Dec-88 0.019225 D 7.06 2.003 0.384 141.311 997.66
17-Jan-89 0.027382 D 7.08 2.049 0.547 141.858 1,004.35
20-Feb-89 0.055125 D 7.00 2.142 1.117 142.975 1,000.83
19-Mar-89 0.046586 D 6.93 2.216 0.961 143.936 997.48
31-Mar-89 0.000000 6.94 2.249 0.000 143.936 998.92
17-Apr-89 0.054337 D 6.96 2.296 1.124 145.060 1,009.62
17-May-89 0.057372 D 7.01 2.378 1.187 146.247 1,025.19
19-Jun-89 0.062486 D 7.05 2.468 1.296 147.543 1,040.18
30-Jun-89 0.000000 7.13 2.499 0.000 147.543 1,051.98
17-Jul-89 0.050812 D 7.14 2.545 1.050 148.593 1,060.95
17-Aug-89 0.056119 D 7.07 2.630 1.179 149.772 1,058.89
18-Sep-89 0.058792 D 7.09 2.718 1.242 151.014 1,070.69
<PAGE>
30-Sep-89 0.000000 7.01 2.751 0.000 151.014 1,058.61
17-Oct-89 0.051313 D 7.06 2.797 1.098 152.112 1,073.91
19-Nov-89 0.056197 D 7.09 2.888 1.206 153.318 1,087.02
18-Dec-89 0.048362 D 7.11 2.967 1.043 154.361 1,097.51
31-Dec-89 0.021209 D 7.04 3.003 0.465 154.826 1,089.98
17-Jan-90 0.027522 D 6.93 3.049 0.615 155.441 1,077.21
20-Feb-90 0.055169 D 6.77 3.142 1.267 156.708 1,060.91
19-Mar-90 0.045090 D 6.76 3.216 1.045 157.753 1,066.41
31-Mar-90 0.000000 6.74 3.249 0.000 157.753 1,063.26
17-Apr-90 0.047319 D 6.69 3.296 1.116 158.869 1,062.83
17-May-90 0.050082 D 6.72 3.378 1.184 160.053 1,075.56
18-Jun-90 0.053875 D 6.78 3.466 1.272 161.325 1,093.78
30-Jun-90 0.000000 6.78 3.499 0.000 161.325 1,093.78
17-Jul-90 0.049170 D 6.78 3.545 1.170 162.495 1,101.72
17-Aug-90 0.053431 D 6.67 3.630 1.302 163.797 1,092.53
17-Sep-90 0.045817 D 6.66 3.715 1.127 164.924 1,098.39
21-Sep-90 0.000000 6.64 3.726 0.000 164.924 1,095.10
30-Sep-90 0.000000 6.67 3.751 0.000 164.924 1,100.04
17-Oct-90 0.046760 D 6.68 3.797 1.154 166.078 1,109.40
17-Nov-90 0.049118 D 6.82 3.882 1.196 167.274 1,140.81
17-Dec-90 0.041530 D 6.90 3.964 1.007 168.281 1,161.14
31-Dec-90 6.89 4.003 0.000 168.281 1,159.46
17-Jan-91 0.044593 D 6.90 4.049 1.088 169.369 1,168.65
15-Feb-91 0.046628 D 6.96 4.129 1.135 170.504 1,186.71
15-Mar-91 0.038678 D 6.87 4.205 0.960 171.464 1,177.96
31-Mar-91 0.000000 6.87 4.249 0.000 171.464 1,177.96
17-Apr-91 0.044365 D 6.91 4.296 1.101 172.565 1,192.42
19-May-91 0.045193 D 6.87 4.384 1.135 173.700 1,193.32
17-Jun-91 0.039129 D 6.82 4.463 0.997 174.697 1,191.43
30-Jun-91 0.000000 6.84 4.499 0.000 174.697 1,194.93
17-Jul-91 0.040446 D 6.83 4.545 1.035 175.732 1,200.25
16-Aug-91 0.046889 D 6.98 4.627 1.181 176.913 1,234.85
17-Sep-91 0.043813 D 7.04 4.715 1.101 178.014 1,253.22
30-Sep-91 0.000000 7.08 4.751 0.000 178.014 1,260.34
17-Oct-91 0.040325 D 7.06 4.797 1.017 179.031 1,263.96
15-Nov-91 0.041443 D 7.12 4.877 1.042 180.073 1,282.12
17-Dec-91 0.042690 D 7.19 4.964 1.069 181.142 1,302.41
31-Dec-91 7.30 5.003 0.000 181.142 1,322.34
17-Jan-92 0.045439 D 7.17 5.049 1.148 182.290 1,307.02
14-Feb-92 0.039976 D 7.08 5.126 1.029 183.319 1,297.90
17-Mar-92 0.039385 D 6.98 5.214 1.034 184.353 1,286.78
31-Mar-92 0.000000 7.02 5.252 0.000 184.353 1,294.16
16-Apr-92 0.044083 D 7.08 5.296 1.148 185.501 1,313.35
15-May-92 0.036546 D 7.13 5.375 0.951 186.452 1,329.40
17-Jun-92 0.039860 D 7.15 5.466 1.039 187.491 1,340.56
30-Jun-92 7.17 5.501 0.000 187.491 1,344.31
17-Jul-92 0.047615 D 7.26 5.548 1.230 188.721 1,370.11
16-Aug-92 0.040560 D 7.33 5.630 1.044 189.765 1,390.98
17-Sep-92 0.043526 D 7.33 5.718 1.127 190.892 1,399.24
21-Sep-92 0.000000 7.32 5.729 0.000 190.892 1,397.33
30-Sep-92 7.33 5.753 0.000 190.892 1,399.24
16-Oct-92 0.046436 D 7.26 5.797 1.221 192.113 1,394.74
31-Oct-92 7.20 5.838 0.000 192.113 1,383.21
17-Nov-92 0.046172 D 7.18 5.885 1.235 193.348 1,388.24
30-Nov-92 7.15 5.921 0.000 193.348 1,382.44
17-Dec-92 0.044514 D 7.18 5.967 1.199 194.547 1,396.85
<PAGE>
31-Dec-92 7.19 6.005 0.000 194.547 1,398.79
15-Jan-93 0.047691 I 7.20 6.047 1.289 195.836 1,410.02
29-Jan-93 7.23 6.085 0.000 195.836 1,415.89
17-Feb-93 0.045847 I 7.24 6.137 1.240 197.076 1,426.83
26-Feb-93 7.30 6.162 0.000 197.076 1,438.65
17-Mar-93 0.042333 I 7.29 6.214 1.144 198.220 1,445.02
31-Mar-93 7.26 6.252 0.000 198.220 1,439.08
16-Apr-93 0.048849 D 7.31 6.296 1.325 199.545 1,458.67
30-Apr-93 7.24 6.334 0.000 199.545 1,444.71
17-May-93 0.043305 D 7.24 6.381 1.194 200.739 1,453.35
31-May-93 7.22 6.419 0.000 200.739 1,449.34
17-Jun-93 0.045890 D 7.26 6.466 1.269 202.008 1,466.58
30-Jun-93 7.29 6.501 0.000 202.008 1,472.64
16-Jul-93 0.044558 7.32 6.545 1.230 203.238 1,487.70
31-Jul-93 7.30 6.586 0.000 203.238 1,483.64
17-Aug-93 0.043853 7.35 6.633 1.213 204.451 1,502.71
31-Aug-93 7.37 6.671 0.000 204.451 1,506.80
17-Sep-93 0.046238 7.36 6.718 1.284 205.735 1,514.21
30-Sep-93 7.33 6.753 0.000 205.735 1,508.04
15-Oct-93 0.044154 D 7.39 6.795 1.229 206.964 1,529.46
29-Oct-93 7.32 6.833 0.000 206.964 1,514.98
17-Nov-93 0.040290 D 7.24 6.885 1.152 208.116 1,506.76
30-Nov-93 7.22 6.921 0.000 208.116 1,502.60
17-Dec-93 0.042421 D 7.19 6.967 1.228 209.344 1,505.18
31-Dec-93 0.000000 7.18 7.005 0.000 209.344 1,503.09
17-Jan-94 0.035364 D 7.20 7.052 1.028 210.372 1,514.68
31-Jan-94 0.000000 7.23 7.090 0.000 210.372 1,520.99
17-Feb-94 0.034595 D 7.13 7.137 1.021 211.393 1,507.23
28-Feb-94 0.000000 7.09 7.167 0.000 211.393 1,498.78
17-Mar-94 0.034402 D 7.01 7.214 1.037 212.430 1,489.13
31-Mar-94 0.000000 6.93 7.252 0.000 212.430 1,472.14
15-Apr-94 0.037351 D 6.88 7.293 1.153 213.583 1,469.45
30-Apr-94 6.83 7.334 0.000 213.583 1,458.77
17-May-94 0.034068 D 6.80 7.381 1.070 214.653 1,459.64
31-May-94 6.75 7.419 0.000 214.653 1,448.91
17-Jun-94 0.038720 D 6.77 7.466 1.228 215.881 1,461.51
30-Jun-94 0.000000 6.71 7.501 0.000 215.881 1,448.56
15-Jul-94 0.032325 I 6.73 7.542 1.037 216.918 1,459.86
31-Jul-94 6.77 7.586 0.000 216.918 1,468.53
17-Aug-94 0.035706 I 6.74 7.633 1.149 218.067 1,469.77
31-Aug-94 6.73 7.671 0.000 218.067 1,467.59
16-Sep-94 0.040149 I 6.64 7.715 1.319 219.386 1,456.72
21-Sep-94 0.000000 6.63 7.729 0.000 219.386 1,454.53
30-Sep-94 6.62 7.753 0.000 219.386 1,452.34
17-Oct-94 0.036865 I 6.59 7.800 1.227 220.613 1,453.84
31-Oct-94 6.57 7.838 0.000 220.613 1,449.43
17-Nov-94 0.039243 I 6.51 7.885 1.330 221.943 1,444.85
30-Nov-94 6.49 7.921 0.000 221.943 1,440.41
16-Dec-94 0.039763 I 6.48 7.964 1.362 223.305 1,447.02
31-Dec-94 6.47 8.005 0.000 223.305 1,444.78
17-Jan-95 0.037327 D 6.50 8.052 1.282 224.587 1,459.82
31-Jan-95 6.54 8.090 0.000 224.587 1,468.80
17-Feb-95 0.043142 D 6.57 8.137 1.475 226.062 1,485.23
28-Feb-95 6.63 8.167 0.000 226.062 1,498.79
17-Mar-95 0.033730 D 6.63 8.214 1.150 227.212 1,506.42
31-Mar-95 6.59 8.252 0.000 227.212 1,497.33
<PAGE>
17-Apr-95 0.036735 D 6.65 8.299 1.255 228.467 1,519.31
28-Apr-95 0.000000 6.64 8.329 0.000 228.467 1,517.02
30-Apr-95 0.000000 6.64 8.334 0.000 228.467 1,517.02
17-May-95 0.038407 D 6.81 8.381 1.289 229.756 1,564.64
31-May-95 0.000000 6.87 8.419 0.000 229.756 1,578.42
16-Jun-95 0.041271 D 6.89 8.463 1.376 231.132 1,592.50
30-Jun-95 0.000000 6.89 8.501 0.000 231.132 1,592.50
17-Jul-95 0.037115 d 6.89 8.548 1.245 232.377 1,601.08
17-Aug-95 0.038909 d 6.73 8.633 1.343 233.720 1,572.94
15-Sep-95 0.038887 d 6.90 8.712 1.317 235.037 1,621.76
15-Sep-95 6.90 8.712 0.000 235.037 1,621.76
21-Sep-95 0.000000 6.86 8.729 0.000 235.037 1,612.35
30-Sep-95 0.000000 6.88 8.753 0.000 235.037 1,617.05
17-Oct-95 0.036572 D 6.98 8.800 1.231 236.268 1,649.15
17-Nov-95 0.040306 D 7.00 8.885 1.360 237.628 1,663.40
15-Dec-95 0.033152 D 7.08 8.962 1.113 238.741 1,690.29
31-Dec-95 7.15 9.005 0.000 238.741 1,707.00
17-Jan-96 0.035978 d 7.14 9.052 1.203 239.944 1,713.20
16-Feb-96 0.038635 d 7.05 9.134 1.315 241.259 1,700.88
15-Mar-96 0.028684 d 6.77 9.211 1.022 242.281 1,640.24
15-Mar-96 0.000000 6.77 9.211 0.000 242.281 1,640.24
31-Mar-96 0.000000 6.80 9.255 0.000 242.281 1,647.51
08-Apr-96 0.000000 6.69 9.277 0.000 242.281 1,620.86
11-Apr-96 0.000000 6.60 9.285 0.000 242.281 1,599.05
11-Apr-96 0.000000 6.67 9.285 0.000 242.281 1,616.01
17-Apr-96 0.033742 D 6.72 9.301 1.217 243.498 1,636.31
17-May-96 0.035992 D 6.69 9.384 1.310 244.808 1,637.77
24-May-96 0.000000 6.70 9.403 0.000 244.808 1,640.21
05-Jun-96 0.000000 6.63 9.436 0.000 244.808 1,623.08
17-Jun-96 0.033268 D 6.60 9.468 1.234 246.042 1,623.88
30-Jun-96 0.000000 6.67 9.504 0.000 246.042 1,641.10
16-Jul-96 0.000000 6.63 9.548 0.000 246.042 1,631.26
17-Jul-96 0.033980 d 6.63 9.551 1.261 247.303 1,639.62
31-Jul-96 0.000000 6.64 9.589 0.000 247.303 1,642.09
06-Aug-96 0.000000 6.72 9.605 0.000 247.303 1,661.88
16-Aug-96 0.035932 D 6.72 9.633 1.322 248.625 1,670.76
31-Aug-96 0.000000 6.57 9.674 0.000 248.625 1,633.47
17-Sep-96 0.034182 D 6.62 9.721 1.284 249.909 1,654.40
30-Sep-96 0.000000 6.65 9.756 0.000 249.909 1,661.89
17-Oct-96 0.033529 D 6.71 9.803 1.249 251.158 1,685.27
15-Nov-96 0.034519 D 6.81 9.882 1.273 252.431 1,719.06
17-Dec-96 0.032431 D 6.73 9.970 1.216 253.647 1,707.04
31-Dec-96 6.71 10.008 0.000 253.647 1,701.97
CALCULATION OF
AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN - 5.46%
N = NUMBER OF YEARS - 10
ERV = ENDING REDEEMABLE VALUE $1,701.97
TOTAL RETURN FOR PERIOD 70.20%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN US GOVT SECURITIES SERIES-CL D
AVERAGE ANNUAL TOTAL RETURN OF AN ASSUMED INVESTMENT OF $1,000.00
RETURN COMPUTATION FOR THE 3.28 YEAR PERIOD ENDED 31-Dec-96
LOAD RATE EQUALS 0.00% MAXIMUM OFFERING PRICE EQUALS $7.330
DVD PER # OF SHARES CUMUL
DATE SHARE D/G NAV YRS ACQUIRED SHARES VALUE
---- ----- --- --- --- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
21-Sep-93 7.33 136.426 136.426 $1,000.00
30-Sep-93 7.33 0.025 0.000 136.426 1,000.00
15-Oct-93 0.015458 D 7.39 0.066 0.285 136.711 1,010.29
31-Oct-93 7.33 0.110 0.000 136.711 1,002.09
17-Nov-93 0.031373 D 7.25 0.156 0.592 137.303 995.45
30-Nov-93 7.23 0.192 0.000 137.303 992.70
17-Dec-93 0.035917 D 7.21 0.238 0.684 137.987 994.89
31-Dec-93 7.20 0.277 0.000 137.987 993.51
17-Jan-94 0.030166 D 7.22 0.323 0.577 138.564 1,000.43
31-Jan-94 7.24 0.362 0.000 138.564 1,003.20
17-Feb-94 0.028440 D 7.14 0.408 0.552 139.116 993.29
28-Feb-94 7.10 0.438 0.000 139.116 987.72
17-Mar-94 0.028646 D 7.02 0.485 0.568 139.684 980.58
31-Mar-94 6.94 0.523 0.000 139.684 969.41
15-Apr-94 0.031670 D 6.89 0.564 0.642 140.326 966.85
30-Apr-94 6.85 0.605 0.000 140.326 961.23
17-May-94 0.028248 D 6.82 0.652 0.581 140.907 960.99
31-May-94 6.77 0.690 0.000 140.907 953.94
17-Jun-94 0.031487 D 6.78 0.737 0.654 141.561 959.78
30-Jun-94 6.72 0.773 0.000 141.561 951.29
15-Jul-94 0.026905 D 6.75 0.814 0.564 142.125 959.34
31-Jul-94 6.78 0.858 0.000 142.125 963.61
17-Aug-94 0.029097 D 6.75 0.904 0.613 142.738 963.48
31-Aug-94 6.75 0.942 0.000 142.738 963.48
16-Sep-94 0.033615 D 6.66 0.986 0.720 143.458 955.43
21-Sep-94 6.64 1.000 0.000 143.458 952.56
30-Sep-94 6.63 1.025 0.000 143.458 951.13
17-Oct-94 0.031153 D 6.61 1.071 0.676 144.134 952.73
31-Oct-94 6.58 1.110 0.000 144.134 948.40
17-Nov-94 0.032829 D 6.53 1.156 0.725 144.859 945.93
30-Nov-94 6.50 1.192 0.000 144.859 941.58
16-Dec-94 0.032453 D 6.49 1.236 0.724 145.583 944.83
31-Dec-94 6.48 1.277 0.000 145.583 943.38
17-Jan-95 0.029237 D 6.51 1.323 0.654 146.237 952.00
31-Jan-95 6.56 1.362 0.000 146.237 959.31
17-Feb-95 0.035726 D 6.58 1.408 0.794 147.031 967.46
28-Feb-95 6.65 1.438 0.000 147.031 977.76
17-Mar-95 0.031700 D 6.65 1.485 0.701 147.732 982.42
31-Mar-95 6.61 1.523 0.000 147.732 976.51
17-Apr-95 0.034866 D 6.66 1.570 0.773 148.505 989.04
28-Apr-95 6.65 1.600 0.000 148.505 987.56
30-Apr-95 6.65 1.605 0.000 148.505 987.56
17-May-95 0.033632 D 6.82 1.652 0.732 149.237 1,017.80
31-May-95 6.88 1.690 0.000 149.237 1,026.75
16-Jun-95 0.034799 D 6.90 1.734 0.753 149.990 1,034.93
30-Jun-95 6.90 1.773 0.000 149.990 1,034.93
17-Jul-95 0.032063 D 6.90 1.819 0.697 150.687 1,039.74
17-Aug-95 0.034213 D 6.75 1.904 0.764 151.451 1,022.29
31-Aug-95 6.85 1.942 0.000 151.451 1,037.44
<PAGE>
15-Sep-95 0.034449 D 6.91 1.984 0.755 152.206 1,051.74
21-Sep-95 6.87 2.000 0.000 152.206 1,045.66
30-Sep-95 6.90 2.025 0.000 152.206 1,050.22
17-Oct-95 0.032047 D 6.99 2.071 0.698 152.904 1,068.80
31-Oct-95 6.98 2.110 0.000 152.904 1,067.27
17-Nov-95 0.035113 D 7.02 2.156 0.765 153.669 1,078.76
30-Nov-95 7.07 2.192 0.000 153.669 1,086.44
15-Dec-95 0.028669 D 7.09 2.233 0.621 154.290 1,093.92
31-Dec-95 7.16 2.277 0.000 154.290 1,104.72
17-Jan-96 0.031090 D 7.15 2.323 0.671 154.961 1,107.97
31-Jan-96 7.14 2.362 0.000 154.961 1,106.42
16-Feb-96 0.033786 D 7.06 2.405 0.742 155.703 1,099.26
29-Feb-96 6.94 2.441 0.000 155.703 1,080.58
15-Mar-96 0.024682 D 6.79 2.482 0.566 156.269 1,061.07
15-Mar-96 6.79 2.482 0.000 156.269 1,061.07
31-Mar-96 6.81 2.526 0.000 156.269 1,064.19
17-Apr-96 0.029349 D 6.73 2.573 0.681 156.950 1,056.27
30-Apr-96 6.69 2.608 0.000 156.950 1,050.00
17-May-96 0.031603 D 6.70 2.655 0.740 157.690 1,056.52
31-May-96 6.63 2.693 0.000 157.690 1,045.48
17-Jun-96 0.029025 D 6.62 2.740 0.691 158.381 1,048.48
30-Jun-96 6.68 2.775 0.000 158.381 1,057.99
17-Jul-96 0.029829 D 6.64 2.822 0.711 159.092 1,056.37
31-Jul-96 6.66 2.860 0.000 159.092 1,059.55
16-Aug-96 0.031246 D 6.73 2.904 0.739 159.831 1,075.66
31-Aug-96 6.58 2.945 0.000 159.831 1,051.69
17-Sep-96 0.029901 D 6.63 2.992 0.721 160.552 1,064.46
30-Sep-96 6.66 3.027 0.000 160.552 1,069.28
17-Oct-96 0.029118 D 6.72 3.074 0.696 161.248 1,083.59
15-Nov-96 0.029738 D 6.82 3.153 0.703 161.951 1,104.51
17-Dec-96 0.028382 D 6.73 3.241 0.683 162.634 1,094.53
31-Dec-96 6.73 3.279 0.000 162.634 1,094.53
CALCULATION OF
AVERAGE ANNUAL TOTAL RETURN
P*(1+T)^N = ERV
P = INITIAL PAYMENT - $1,000.00
T = AVG. ANNUAL TOTAL RETURN - 2.79%
N = NUMBER OF YEARS - 3.279
ERV = ENDING REDEEMABLE VALUE $1,094.53
TOTAL RETURN FOR PERIOD 9.45%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
SELIGMAN HIGH INCOME FUND SERIES
Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> SELIGMAN HIGH-YIELD BOND SERIES CL. A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 779304
<INVESTMENTS-AT-VALUE> 801179
<RECEIVABLES> 28293
<ASSETS-OTHER> 176
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 829648
<PAYABLE-FOR-SECURITIES> 1562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6285
<TOTAL-LIABILITIES> 7847
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 803293
<SHARES-COMMON-STOCK> 56292<F1>
<SHARES-COMMON-PRIOR> 26169<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3367)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21875
<NET-ASSETS> 408303<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 30242<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (3207)<F1>
<NET-INVESTMENT-INCOME> 27035<F1>
<REALIZED-GAINS-CURRENT> 8372
<APPREC-INCREASE-CURRENT> 13820
<NET-CHANGE-FROM-OPS> 67458
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (27035)<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46367<F1>
<NUMBER-OF-SHARES-REDEEMED> (18192)<F1>
<SHARES-REINVESTED> 1948<F1>
<NET-CHANGE-IN-ASSETS> 549519
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11739)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1797<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3207<F1>
<AVERAGE-NET-ASSETS> 275903<F1>
<PER-SHARE-NAV-BEGIN> 6.96<F1>
<PER-SHARE-NII> .69<F1>
<PER-SHARE-GAIN-APPREC> .29<F1>
<PER-SHARE-DIVIDEND> (.69)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.25<F1>
<EXPENSE-RATIO> 1.16<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> SELIGMAN HIGH-YIELD BOND SERIES CL. B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-22-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 779304
<INVESTMENTS-AT-VALUE> 801179
<RECEIVABLES> 28293
<ASSETS-OTHER> 176
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 829648
<PAYABLE-FOR-SECURITIES> 1562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6285
<TOTAL-LIABILITIES> 7847
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 803293
<SHARES-COMMON-STOCK> 20394<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3367)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21875
<NET-ASSETS> 147970<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4130<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (712)<F1>
<NET-INVESTMENT-INCOME> 3418<F1>
<REALIZED-GAINS-CURRENT> 8372
<APPREC-INCREASE-CURRENT> 13820
<NET-CHANGE-FROM-OPS> 67458
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3418)<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20713<F1>
<NUMBER-OF-SHARES-REDEEMED> (512)<F1>
<SHARES-REINVESTED> 193<F1>
<NET-CHANGE-IN-ASSETS> 549519
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11739)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 244<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 712<F1>
<AVERAGE-NET-ASSETS> 54268<F1>
<PER-SHARE-NAV-BEGIN> 7.06<F1>
<PER-SHARE-NII> .45<F1>
<PER-SHARE-GAIN-APPREC> .20<F1>
<PER-SHARE-DIVIDEND> (.45)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.26<F1>
<EXPENSE-RATIO> 1.90<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 034
<NAME> SELIGMAN HIGH-YIELD BOND SERIES CL. D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 779304
<INVESTMENTS-AT-VALUE> 801179
<RECEIVABLES> 28293
<ASSETS-OTHER> 176
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 829648
<PAYABLE-FOR-SECURITIES> 1562
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6285
<TOTAL-LIABILITIES> 7847
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 803293
<SHARES-COMMON-STOCK> 36597<F1>
<SHARES-COMMON-PRIOR> 12949<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3367)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21875
<NET-ASSETS> 265528<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17951<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (3138)<F1>
<NET-INVESTMENT-INCOME> 14813<F1>
<REALIZED-GAINS-CURRENT> 8372
<APPREC-INCREASE-CURRENT> 13820
<NET-CHANGE-FROM-OPS> 67458
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (14813)<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29041<F1>
<NUMBER-OF-SHARES-REDEEMED> (6681)<F1>
<SHARES-REINVESTED> 1288<F1>
<NET-CHANGE-IN-ASSETS> 549519
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11739)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1066<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3138<F1>
<AVERAGE-NET-ASSETS> 164222<F1>
<PER-SHARE-NAV-BEGIN> 6.96<F1>
<PER-SHARE-NII> .64<F1>
<PER-SHARE-GAIN-APPREC> .30<F1>
<PER-SHARE-DIVIDEND> (.64)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 7.26<F1>
<EXPENSE-RATIO> 1.92<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> SELIGMAN U.S.GOVERNMENT SECURITIES CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 55233
<INVESTMENTS-AT-VALUE> 55547
<RECEIVABLES> 834
<ASSETS-OTHER> 189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56570
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 398
<TOTAL-LIABILITIES> 398
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71036
<SHARES-COMMON-STOCK> 6984<F1>
<SHARES-COMMON-PRIOR> 7701<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15178)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 314
<NET-ASSETS> 46889<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3566<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (568)<F1>
<NET-INVESTMENT-INCOME> 2998<F1>
<REALIZED-GAINS-CURRENT> (531)
<APPREC-INCREASE-CURRENT> (3266)
<NET-CHANGE-FROM-OPS> (345)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2998)<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1268<F1>
<NUMBER-OF-SHARES-REDEEMED> (2210)<F1>
<SHARES-REINVESTED> 225<F1>
<NET-CHANGE-IN-ASSETS> (7070)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (16299)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 248<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 568<F1>
<AVERAGE-NET-ASSETS> 49486<F1>
<PER-SHARE-NAV-BEGIN> 7.15<F1>
<PER-SHARE-NII> .41<F1>
<PER-SHARE-GAIN-APPREC> (.44)<F1>
<PER-SHARE-DIVIDEND> (.41)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 6.71<F1>
<EXPENSE-RATIO> 1.14<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 014
<NAME> SELIGMAN U.S.GOVERNMENT SECURITIES CLASS D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 55233
<INVESTMENTS-AT-VALUE> 55547
<RECEIVABLES> 834
<ASSETS-OTHER> 189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56570
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 398
<TOTAL-LIABILITIES> 398
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71036
<SHARES-COMMON-STOCK> 1380<F1>
<SHARES-COMMON-PRIOR> 1142<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15178)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 314
<NET-ASSETS> 9283<F1>
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 619<F1>
<OTHER-INCOME> 0
<EXPENSES-NET> (165)<F1>
<NET-INVESTMENT-INCOME> 454<F1>
<REALIZED-GAINS-CURRENT> (531)
<APPREC-INCREASE-CURRENT> (3266)
<NET-CHANGE-FROM-OPS> (345)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (454)<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1014<F1>
<NUMBER-OF-SHARES-REDEEMED> (825)<F1>
<SHARES-REINVESTED> 49<F1>
<NET-CHANGE-IN-ASSETS> (7070)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (16299)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 43<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 165<F1>
<AVERAGE-NET-ASSETS> 8617<F1>
<PER-SHARE-NAV-BEGIN> 7.16<F1>
<PER-SHARE-NII> .36<F1>
<PER-SHARE-GAIN-APPREC> (.43)<F1>
<PER-SHARE-DIVIDEND> (.36)<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 6.73<F1>
<EXPENSE-RATIO> 1.92<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ John R. Galvin (L.S.)
----------------------------
John R. Galvin
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
her attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in her name and stead, in her capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ Alice S. Ilchman (L.S.)
----------------------------
Alice S. Ilchman
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ Frank A. McPherson (L.S.)
----------------------------
Frank A. McPherson
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ John E. Merow (L.S.)
----------------------------
John E. Merow
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
her attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in her name and stead, in her capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ Betsy S. Michel (L.S.)
----------------------------
Betsy S. Michel
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 1st day of April, 1997.
/s/ William C. Morris (L.S.)
----------------------------
William C. Morris
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 31st day of March, 1997.
/s/ James C. Pitney (L.S.)
----------------------------
James C. Pitney
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ James Q. Riordan (L.S.)
----------------------------
James Q. Riordan
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 1st day of April, 1997.
/s/ Ronald T. Schroeder (L.S.)
----------------------------
Ronald T. Schroeder
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ Robert L. Shafer (L.S.)
----------------------------
Robert L. Shafer
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 20th day of March, 1997.
/s/ James N. Withson (L.S.)
----------------------------
James N. Whitson
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN HIGH
INCOME FUND SERIES, a Massachusetts business trust, which proposes to file with
the Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 1st day of April, 1997.
/s/ Brian T. Zino (L.S.)
----------------------------
Brian T. Zino
