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. 28 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 29 |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)
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Registrant's Telephone Number: 212-850-1864 or
Toll Free: 800-221-2450
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THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
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It is proposed that this filing will become effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b)
|X| on April 28, 2000 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.
<PAGE>
S E L I G M A N
---------------
U.S. GOVERNMENT
SECURITIES SERIES
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in the Fund should be
considered based on the investment objective, strategies and risks described in
this Prospectus, considered in light of all of the other investments in your
portfolio, as well as your risk tolerance, financial goals and time horizons. We
recommend that you consult your financial advisor to determine if this Fund is
suitable for you.
[PHOTO]
PROSPECTUS
MAY 1, 2000
-----------
Seeking High Current
Income by Investing in
US Government Securities
managed by
[LOGO]
J. & W.
SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
TXUSG1 5/2000
<PAGE>
Table of Contents
The Fund
Investment Objective 1
Principal Investment Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Management 5
Shareholder Information
Deciding Which Class of Shares to Buy 6
Pricing of Fund Shares 8
Opening Your Account 8
How to Buy Additional Shares 9
How to Exchange Shares Among
the Seligman Mutual Funds 9
How to Sell Shares 10
Important Policies That May Affect
Your Account 11
Dividends and Capital Gain Distributions 12
Taxes 12
The Seligman Mutual Funds 13
Financial Highlights 15
How to Contact Us 17
For More Information back cover
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund
Investment Objective
The Fund's investment objective is high current income.
Principal Investment Strategies
The Fund uses the following principal investment strategies to seek its
investment objective:
The Fund has a fundamental policy that, except for temporary defensive purposes,
it will invest at least 80% of its total assets in direct obligations of the US
Treasury, such as Treasury Bills, Treasury Notes and Treasury Bonds, and in debt
securities issued or guaranteed by the US Government, its agencies or
instrumentalities (USGovernment Securities) which are backed by the full faith
and credit of the US Government and have maturities greater than one year at the
date of purchase by the Fund.
The Fund may invest up to 20% of its total assets in direct obligations of the
US Treasury and in US Government Securities which have maturities of any
duration at the date of purchase by the Fund.
US Government Securities include obligations of the US Government and US
Government agencies, such as the Federal Home Loan Banks, the Federal Home Loan
Mortgage Corporation (Freddie Mac), the Government National Mortgage Association
(Ginnie Mae) and the Federal National Mortgage Association (Fannie Mae). These
include mortgage pass--through securities, collateralized mortgage obligations,
repurchase agreements involving these securities, and obligations that, while
not issued by the US Government or its agencies, are backed by the full faith
and credit of the US Government, such as Title XI bonds.
When selecting individual securities for purchase by the Fund, the investment
manager:
o seeks to determine long-term trends in interest rates and adjust
maturities of portfolio securities accordingly. For example, if the
investment manager believes interest rates will decline or remain flat,
the Fund will seek to purchase securities with longer maturities, and if
the investment manager expects rates to rise, the Fund will seek to
purchase securities with shorter maturities.
o after determining the appropriate maturity, seeks to identify securities
of the same maturity that offer higher yields, which will provide more
income to the Fund.
The Fund generally sells securities in response to its belief in the changing
direction of long-term interest rates; when yield spreads become exceedingly
narrow and the investment manager believes that the Fund is not being amply
rewarded for buying securities with longer maturities (which generally offer
higher yields but are subject to more price volatility than securities with
shorter maturities); or when the Fund must meet cash requirements.
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective.
Except for its fundamental policy, the Fund may change its principal strategies
if the Fund's Board of Directors believes doing so is consistent with the Fund's
investment objective. The Fund's objective and its fundamental policy may be
changed only with shareholder approval.
There is no guarantee that the Fund will achieve its objective.
<PAGE>
Principal Risks
The US Government does not guarantee the market value or the current yield of
government securities. The Fund's net asset value, yield, and total return will
fluctuate and are not guaranteed by the US Government.
The securities in which the Fund invests are considered among the safest of
fixed-income investments. However, their market values, like those of other debt
securities, will fluctuate with changes, real or anticipated, in the level of
interest rates. The Fund's net asset value per share will fluctuate with changes
in the market value of the securities held in its portfolio. Additionally, the
Fund's yield will vary based on the yield of its portfolio securities.
Generally, as interest rates rise, the value of the securities held by the Fund
will decline. Conversely, if interest rates decline, the value of the securities
held by the Fund will increase. This effect is usually more pronounced for
longer-term securities, like those in which the Fund invests. Longer-term
securities generally tend to produce higher yields but are subject to greater
market fluctuations as a result of changes in interest rates than fixed-income
securities with shorter maturities.
Mortgage-backed securities in which the Fund invests may benefit less than other
fixed-income securities from declining interest rates because of the risk of
prepayment. Mortgage prepayments generally increase during a period of declining
interest rates. Prepayments increase the cash amounts available to the Fund for
investment and these amounts would have to be reinvested at lower interest
rates. In addition, prepayments on underlying mortgages result in a loss of
anticipated interest, and, therefore, the actual yield to the Fund may be
different from the quoted yield on the securities. As a result, when interest
rates are declining, mortgage-backed securities may not increase as much as
other fixed-income securities of comparable maturities, although they may have a
similar risk of decline when interest rates rise.
The Fund may purchase securities on a when-issued or forward commitment basis,
in which case delivery and payment take place after the date of the commitment
to purchase the securities. Because the price to be paid and the interest rate
that will be received on the securities are each fixed at the time the Fund
enters into the commitment, there is a risk that yields available in the market
when delivery takes place may be higher than the yields obtained on the
securities. This would tend to reduce the value of these securities. In
addition, the market value of these securities may fluctuate between the time
the Fund commits to purchase the securities and the time of delivery of the
securities.
Repurchase agreements in which the Fund invests could involve certain risks in
the event of the default by the seller, including possible delays and expenses
in liquidating the securities underlying the agreement, decline in the value of
the underlying securities and loss of interest.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
<PAGE>
Past Performance
The Fund offers four Classes of shares. The information below provides some
indication of the risks of investing in the Fund by showing how the performance
of Class A shares has varied year to year, as well as how the performance of
each Class compares to one widely-used measure of US Government Bond performance
and one measure of the performance of mutual funds with investment objectives
similar to the Fund.
The following performance information is designed to assist you in comparing the
returns of the Fund with the returns of other mutual funds. How the Fund has
performed in the past, however, is not necessarily an indication of how the Fund
will perform in the future. Total returns will vary between each Class of shares
due to the different fees and expenses of each Class.
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be lower. The average annual total returns presented in the table below the
chart do reflect the effect of the applicable sales charges. Both the bar chart
and table assume that all dividends and capital gain distributions were
reinvested.
Class A Annual Total Returns
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1990 6.37%
1991 14.05%
1992 5.78%
1993 7.46%
1994 -3.88%
1995 18.15%
1996 -0.29%
1997 8.53%
1998 8.46%
1999 -3.63%
Best quarter return: 6.36% - quarter ended 6/30/95.
Worst quarter return: -3.48% - quarter ended 3/31/96.
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Average Annual Total Returns - Periods Ended 12/31/99
<TABLE>
<CAPTION>
Class B CLASSC Class D
One Five Ten Since Inception Since Inception Since Inception
Year Years Years 1/1/97 5/27/99* 9/21/93
----- ----- ----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Class A -8.16% 4.95% 5.37% -- -- --
Class B -9.05 n/a n/a 2.47% -- --
Class C n/a n/a n/a -- -3.54% --
Class D -5.38 5.13 n/a -- -- 3.11%
Lehman Brothers Government
Bond Index -2.23 7.44 7.48 5.58 -0.17(1) 5.27(2)
Lipper General US Government
Bond Funds Average -3.00 6.54 6.58 4.58 -0.92(1) 4.32(2)
</TABLE>
The Lehman Brothers Government Bond Index and the Lipper General USGovernment
Bond Funds Average are unmanaged benchmarks that assume investment of dividends.
The Lipper General USGovernment Bond Funds Average excludes the effect of sales
charges and the Lehman Brothers Government Bond Index excludes the effect of
fees and sales charges. The Lehman Brothers Government Bond Index measures the
performance of USGovernment Bonds and the Lipper General US Government Bond
Funds Average measures the performance of mutual funds with investment
objectives similar to the Fund.
* Total returns for periods of less than one year are not annualized.
(1) From May 31, 1999.
(2) From September 30, 1993.
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3
<PAGE>
Fees and Expenses
The table below summarizes the fees and expenses that you may pay as a
shareholder of the Fund. Each Class of shares has its own sales charge schedule
and is subject to different ongoing 12b-1 fees. Shareholder fees are charged
directly to your account. Annual fund operating expenses are deducted from Fund
assets and are therefore paid indirectly by you and other shareholders of the
Fund.
<TABLE>
<CAPTION>
Shareholder Fees Class A Class B Class C Class D
- ---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) 4.75% 5% 2% 1%
Maximum Sales Charge (Load) on Purchases
(as a % of offering price) 4.75%(1) none 1% none
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
on Redemptions (as a % of original purchase price or
current net asset value, whichever is less) none(1) 5% 1% 1%
Annual Fund Operating Expenses for 1999
- ---------------------------------------
(as a percentage of average net assets)
Management Fees .50% .50% .50% .50%
Distribution and/or Service (12b-1) Fees .25% 1.00% 1.00% 1.00%
Other Expenses .50% .50% .50% .50%
----- ----- ----- -----
Total Annual Fund Operating Expenses 1.25% 2.00% 2.00% 2.00%
===== ===== ===== =====
</TABLE>
(1) If you buy Class A shares for $1,000,000 or more you will not pay an initial
sales charge, but your shares will be subject to a 1% CDSC if sold within 18
months.
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Management Fees:
Fees paid out of Fund assets to the
investment manager to compensate it for
managing the Fund.
12b-1 Fees:
Fees paid by each Class, pursuant to a
plan adopted by the Fund under Rule
12b-1 of the Investment Company Act of
1940. The plan allows each Class to pay
distribution and/or service fees for the
sale and distribution of its shares and
for providing services to shareholders.
Other Expenses:
Miscellaneous expenses of running the
Fund, including such things as transfer
agency, registration, custody, auditing
and legal fees.
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Example
This example is intended to help you compare the expenses of investing in the
Fund with the expenses of investing in other mutual funds. It assumes (1) you
invest $10,000 in the Fund for each period and then sell all of your shares at
the end of that period, (2) your investment has a 5% return each year, and (3)
the Fund's operating expenses remain the same. Although your actual expenses may
be higher or lower, based on these assumptions your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $596 $853 $1,129 $1,915
Class B 703 927 1,278 2,134+
Class C 400 721 1,167 2,404
Class D 303 627 1,078 2,327
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $596 $853 $1,129 $1,915
Class B 203 627 1,078 2,134+
Class C 301 721 1,167 2,404
Class D 203 627 1,078 2,327
+ Class B shares will automatically convert to Class A shares after eight
years.
4
<PAGE>
Management
The Fund's Board of Directors provides broad supervision over the affairs of the
Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of the Fund. Seligman manages the investment of the
Fund's assets, including making purchases and sales of portfolio securities
consistent with the Fund's investment objective and strategies, and administers
the Fund's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 USregistered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000, of approximately $12 billion.
The Fund pays Seligman a fee for its management services. For the year ended
December 31, 1999, the management fee paid by the Fund to Seligman was equal to
an annual rate of .50% of the Fund's average daily net assets.
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Affiliates of Seligman:
Seligman Advisors, Inc.: The Fund's
general distributor; responsible for
accepting orders for purchases and sales
of Fund shares.
Seligman Services, Inc.:
A limited purpose broker/dealer; acts as
the broker/dealer of record for
shareholder accounts that do not have a
designated broker or financial advisor.
Seligman Data Corp. (SDC):
The Fund's shareholder service agent;
provides shareholder account services to
the Fund at cost.
- --------------------------------------------
Portfolio Management
The Fund is managed by Seligman's Taxable Fixed Income Team, which is headed by
Mr. Gary S. Zeltzer. Mr. Zeltzer joined Seligman in March 1998 as Senior Vice
President, Manager Taxable Fixed Income. He is a Vice President of the Fund and
has been a Portfolio Manager of the Fund since March 1998. Prior to joining
Seligman, Mr. Zeltzer was a Group Vice President and Portfolio Manager at
Schroder Capital Management from July 1979 to March 1998. Mr. Zeltzer also
manages Seligman Cash Management Fund, Inc.; and he manages Seligman Bond
Portfolio and Seligman Cash Management Portfolio, two portfolios of Seligman
Portfolios, Inc.
5
<PAGE>
Shareholder Information
Deciding Which Class of Shares to Buy
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule, and its
ongoing 12b-1 fees may differ from other Classes. When deciding which Class of
shares to buy, you should consider, among other things:
o The amount you plan to invest.
o How long you intend to remain invested in the Fund, or another
Seligman mutual fund.
o If you would prefer to pay an initial sales charge and lower ongoing
12b-1 fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
o Whether you may be eligible for reduced or no sales charges when you
buy or sell shares.
Your financial advisor will be able to help you decide which Class of shares
best meets your needs.
- --------------------------------------------------------------------------------
Class A
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
Sales Charge Regular Dealer
Sales Charge as a % Discount
as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
-------------------------- ---------------- ---------------- --------------
<S> <C> <C> <C>
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 and over(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more,
but you will be subject to a 1% CDSC if you sell your shares within 18
months.
o Annual 12b-1 fee (for shareholder services) of up to 0.25%.
o No sales charge on reinvested dividends or capital gain distributions.
o Certain employer-sponsored defined contribution-type plans can purchase
shares with no initial sales charge.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B
o No initial sales charge on purchases.
o A declining CDSC on shares sold within 6 years of purchase:
Years Since Purchase CDSC
- -------------------- ------
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
- -------------------------------------------
Your purchase of Class B shares must be
for less than $250,000, because if you
invest $250,000 or more, you will pay
less in fees and charges if you buy
another Class of shares.
- -------------------------------------------
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
o No CDSC when you sell shares purchased with reinvested dividends or capital
gain distributions.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
Class C
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Discount
as a % as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
-------------------------- ----------------- ----------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000
because if you invest $1,000,000 or more you will pay less in fees and
charges if you buy Class A shares.
o A 1% CDSC on shares sold within eighteen months of purchase. o Annual
12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class Ashares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No sales charge on reinvested dividends or capital gain distributions.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
Class D*
o No initial sales charge on purchases.
o A 1% CDSC on shares sold within one year of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
* Class D shares are not available to all investors.You may
purchase Class D shares only (1) if you already own Class D
shares of the Fund or another Seligman mutual fund, (2) if your
financial advisor of record maintains an omnibus account at SDC,
or (3) pursuant to a 401(k) or other retirement plan program for
which Class D shares are already available or for which the
sponsor requests Class D shares because the sales charge
structure of Class D shares is comparable to the sales charge
structure of the other funds offered under the program.
Because the Fund's 12b-1 fees are paid out of each Class's assets on an ongoing
basis, over time these fees will increase your investment expenses and may cost
you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, Class C and Class D shares. On an
ongoing basis, the Directors, in the exercise of their fiduciary duties under
the Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
How CDSCs Are Calculated
To minimize the amount of the CDSC you may pay when you sell your shares, the
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of the Fund, it will be assumed that you held the shares since the date you
purchased the shares of the Fund.
7
<PAGE>
Pricing of Fund Shares
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A shares and Class C
shares. Purchase or sale orders received by an authorized dealer or financial
advisor by the close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) and accepted by Seligman Advisors before the
close of business (5:00 p.m. Eastern time) on the same day will be executed at
the Class's NAV calculated as of the close of regular trading on the NYSE on
that day. Your broker/dealer or financial advisor is responsible for forwarding
your order to Seligman Advisors before the close of business.
- --------------------------------------------
NAV:
Computed separately for each Class by
dividing that Class's share of the net
assets of the Fund (i.e., its assets
less liabilities) by the total number of
outstanding shares of the Class.
- --------------------------------------------
If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.
The NAV of the Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because of their higher 12b-1 fees, the
NAV of Class B, Class C and Class D shares will generally be lower than the NAV
of Class A shares of the Fund.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
Opening Your Account
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more information,
see "Deciding Which Class of Shares to Buy-Class D." To make your initial
investment in the Fund, contact your financial advisor or complete an account
application and send it with your check directly to SDC at the address provided
on the account application. If you do not choose a Class, your investment will
automatically be made in Class A shares.
The required minimum initial investments are:
o Regular (non-retirement) accounts: $1,000
o For accounts opened concurrently with Invest-A-Check(R): $100 to open
if you will be making monthly investments $250 to open if you will be
making quarterly investments
- ------------------------------------------
You may buy shares of the Fund for all
types of tax-deferred retirement plans.
Contact Retirement Plan Services at the
address or phone number listed on the
inside back cover of this prospectus for
information and to receive the proper
forms.
- ------------------------------------------
If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to15 calendar days
from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be sent
to you free of charge for the current year and most recent prior year. Copies of
year-end statements for prior years are available for a fee of $10 per year, per
account, with a maximum charge of $150 per account. Send your request and a
check for the fee to SDC.
If you want to be able to buy, sell, or exchange shares by telephone, you should
complete an application when you open your account. This will prevent you from
having to complete a supplemental election form (which may require a signature
guarantee) at a later date.
8
<PAGE>
HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Subsequentinvestments must be for $100
or more.
Shares may be purchased through your authorized financial advisor, or you may
send a check directly to SDC. Please provide either an investment slip or a note
that provides your name(s), Fund name, and account number. Unless you indicate
otherwise, your investment will be made in the Class you already own. Send
investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
Invest-A-Check(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
Automatic Dollar-Cost-Averaging. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares or Class C shares,
you may pay an initial sales charge to buy Fund shares.
Automatic CD Transfer. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
Dividends From Other Investments. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
Direct Deposit. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
Seligman Time Horizon Matrix(SM). (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
Seligman Harvester(SM). If you are a retiree or nearing retirement, this program
is designed to help you establish an investment strategy that seeks to meet your
needs throughout your retirement. The strategy is customized to your personal
financial situation by allocating your assets to seek to address your income
requirements, prioritizing your expenses, and establishing a prudent withdrawal
schedule. Contact your financial advisor for more information.
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares or
Class C shares of Seligman Cash Management Fund to buy shares of the same Class
of the Fund or another Seligman mutual fund.
9
<PAGE>
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
minimum initial investment. See "The Seligman Mutual Funds" for a list of the
funds available for exchange. Before making an exchange, contact your financial
advisor or SDC to obtain the applicable fund prospectus(es). You should read and
understand a fund's prospectus before investing. Some funds may not offer all
classes of shares.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares; however, it may take
longer to get your money.
As an additional measure to protect you and the Fund, SDC may confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending you your money.
This will not affect the date on which your redemption request is actually
processed.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than the account owner; or
(3) mailed to other than your address of record.
- --------------------------------------------------------------------------------
Signature Guarantee:
Protects you and the Fund from fraud. It guarantees that a signature is
genuine. A guarantee must be obtained from an eligible financial
institution. Notarization by a notary public is not an acceptable
guarantee.
- --------------------------------------------------------------------------------
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
You may need to provide additional documents to sell Fund shares if you are:
o a corporation;
o an executor or administrator;
o a trustee or custodian; or
o in a retirement plan.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances. You may
also use the following account services to sell Fund shares:
Systematic Withdrawal Plan. If you have at least $5,000 in the Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class B, Class C, or Class D
shares and reinvest your dividends and capital gain distributions, you may
withdraw 12%, 10%, or 10%, respectively, of the value of your Fund account (at
the time of election) annually without a CDSC.
Check Redemption Service. If you have at least $25,000 in the Fund, you may ask
SDC to provide checks which may be drawn against your account in amounts of $500
or more. You can elect this service on your initial application, or contact SDC
for the appropriate forms to establish this service. If you own Class A shares
that were bought at NAV because of the size of your purchase, or if you own
Class B shares, check redemptions may be subject to a CDSC. If you own Class D
or Class C shares, you may use this service only with respect to shares that you
have held for at least one year or eighteen months, respectively.
10
<PAGE>
IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, the Fund reserves the right to:
o Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month
period;
2. the amount you wish to exchange equals the lesser of $1,000,000
or 1% of the Fund's net assets; or
3. you or your financial advisor have been advised that previous
patterns of purchases and sales or exchanges have been considered
excessive.
o Refuse any request to buy Fund shares;
o Reject any request received by telephone;
o Suspend or terminate telephone services;
o Reject a signature guarantee that SDC believes may be fraudulent; o
Close your fund account if its value falls below $500;
o Close your account if it does not have a certified taxpayer
identification number.
Telephone Services
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account application
that you do not want telephone services:
o Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record);
o Exchange shares between funds; o Change dividend and/or capital gain
distribution options;
o Change your address;
o Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee). Restrictions apply to certain types of accounts:
o Trust accounts on which the current trustee is not listed may not sell
Fund shares by phone;
o Corporations may not sell Fund shares by phone;
o IRAs may only exchange Fund shares or request address changes by
phone;
o Group retirement plans may not sell Fund shares by phone; plans that
allow participants to exchange by phone must provide a letter of
authorization signed by the plan custodian or trustee and provide a
supplemental election form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address of
record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. The Fund's
NAV may fluctuate during this time.
The Fund and SDC will not be liable for processing requests received by phone as
long as it was reasonable to believe that the request was genuine.
Reinstatement Privilege
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
11
<PAGE>
Dividends and Capital Gain Distributions
The Fund generally pays dividends from its net investment income monthly and
distributes any net capital gains realized on investments annually.
- ------------------------------------------------
Dividend:
A payment by a mutual fund, usually
derived from the fund's net investment
income (dividends and interest earned on
portfolio securities less expenses).
Capital Gain Distribution:
A payment to mutual fund shareholders
which represents profits realized on the
sale of securities in a fund's
portfolio.
Ex-dividend Date:
The day on which any declared
distributions (dividends or capital
gains) are deducted from a fund's assets
before it calculates its NAV.
- ------------------------------------------------
You may elect to:
(1) reinvest both dividends and capital gain distributions;
(2) receive dividends in cash and reinvest capital gain distributions; or
(3) receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise or if you own Fund shares in a Seligman tax-deferred
retirement plan.
If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus or, if you have telephone services, you or
your financial advisor may call SDC. Your request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.
Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your predesignated bank account within 3-4 business days from the
payable date.
Dividends and capital gain distributions are reinvested to buy additional Fund
shares on the payable date using the NAV of the ex-dividend date.
Dividends on Class B, Class C and Class D shares will be lower than the
dividends on Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
Taxes
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
12
<PAGE>
The Seligman Mutual Funds
Equity
Specialty
- --------------------------------------------------------------------------------
Seligman Communications and
Information Fund
Seeks capital appreciation by investing in companies operating in all aspects of
the communications, information, and related industries.
Seligman Global Technology Fund
Seeks long-term capital appreciation by investing primarily in global securities
(US and non-US) of companies in the technology and technology-related
industries.
Seligman Emerging Markets Fund
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging markets.
Small Company
- --------------------------------------------------------------------------------
Seligman Frontier Fund
Seeks growth of capital by investing primarily in small company growth stocks.
Seligman Small-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of small
companies, deemed to be "value" companies by the investment manager.
Seligman Global Smaller Companies Fund
Seeks long-term capital appreciation by investing in securities of smaller
companies around the world, including the US.
Medium Company
- --------------------------------------------------------------------------------
Seligman Capital Fund
Seeks capital appreciation by investing in the common stocks of companies with
significant potential for growth.
Large Company
- --------------------------------------------------------------------------------
Seligman Growth Fund
Seeks long-term growth of capital value and an increase in future income.
Seligman Global Growth Fund
Seeks capital appreciation by investing primarily in equity securities of
companies that have the potential to benefit from global economic or social
trends.
Seligman Large-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of large
companies, deemed to be "value" companies by the investment manager.
- --------------------------------------------------------------------------------
Seligman Common Stock Fund
Seeks favorable, but not the highest, current income and long-term growth of
both income and capital, without exposing capital to undue risk.
Seligman International Growth Fund
Seeks long-term capital appreciation by investing in securities of medium- to
large-sized companies, primarily in the developed markets outside the US.
Balanced
- --------------------------------------------------------------------------------
Seligman Income Fund
Seeks high current income and improvement in capital value over the long term,
consistent with prudent risk of capital.
Fixed-Income
Income
- --------------------------------------------------------------------------------
Seligman High-Yield Bond Fund
Seeks to maximize current income by investing in a diversified portfolio of
high-yielding, high-risk corporate bonds, commonly referred to as "junk bonds."
Seligman U.S. Government Securities Fund
Seeks high current income primarily by investing in a diversified portfolio of
securities guaranteed by the US government, its agencies, or instrumentalities,
which have maturities greater than one year.
Municipal
- --------------------------------------------------------------------------------
Seligman Municipal Funds:
National Fund
Seeks maximum income, exempt from regular federal income taxes.
State-specific funds:*
Seek to maximize income exempt from regular federal income taxes and from
regular income taxes in the designated state.
California Louisiana New Jersey
oHigh-Yield Maryland New York
oQuality Massachusetts North Carolina
Colorado Michigan Ohio
Florida Minnesota Oregon
Georgia Missouri Pennsylvania
South Carolina
* A small portion of income may be subject to state taxes.
Money Market
- --------------------------------------------------------------------------------
Seligman Cash Management Fund
Seeks to preserve capital and to maximize liquidity and current income, by
investing only in high-quality money market securities having a maturity of 90
days or less. The fund seeks to maintain a constant net asset value of $1.00 per
share.
13
<PAGE>
Asset Allocation
Seligman Time Horizon/Harvester Series. Inc. is an asset-allocation type mutual
fund. It offers four different asset allocation funds that pursue their
investment objectives by allocating their assets among other mutual funds in the
Seligman Group.
Seligman Time Horizon 30 Fund
Seeks long-term capital appreciation by creating a portfolio of mutual funds
that invests in aggressive growth-oriented domestic and international equity
securities weighted toward small- and medium-capitalization companies.
Seligman Time Horizon 20 Fund
Seeks long-term capital appreciation by creating a portfolio
of mutual funds that invests in growth-oriented domestic and international
equity securities, with a more even weighting among small-, medium- and
large-capitalization companies than Seligman Time Horizon 30 Fund.
Seligman Time Horizon 10 Fund
Seeks capital appreciation by creating a portfolio of mutual funds that invests
in small-, medium- and large-capitalization domestic and international equity
securities as well as domestic fixed-income securities.
Seligman Harvester Fund
Seeks capital appreciation and preservation of capital with current income and
growth of income by creating a portfolio of mutual funds that invests in medium-
and large-capitalization domestic and international equity securities
supplemented by a larger allocation of fixed-income securities and cash than
Seligman Time Horizon 10 Fund.
14
<PAGE>
Financial Highlights
The tables below are intended to help you understand the financial performance
of the Fund's Classes for the past five years or, if less than five years, the
period of the Class's operations. Certain information reflects financial results
for a single share of a Class that was held throughout the periods shown. "Total
return" shows the rate that you would have earned (or lost) on an investment in
the Fund, assuming you reinvested all your dividends and capital gain
distributions. Total returns do not reflect any sales charges. Deloitte & Touche
llp, independent auditors, have audited this information. Their report, along
with the Fund's financial statements, is included in the Fund's Annual Report,
which is available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
Year ended December 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ...... $7.09 $6.88 $6.71 $7.15 $6.47
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ................. 0.34 0.36 0.38 0.41 0.46
Net gains or losses on securities
(both realized and unrealized) ...... (0.59) 0.21 0.17 (0.44) 0.68
---------- ---------- ---------- ---------- ----------
Total from investment operations ........ (0.25) 0.57 0.55 (0.03) 1.14
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income .. (0.34) (0.36) (0.38) (0.41) (0.46)
---------- ---------- ---------- ---------- ----------
Total distributions ..................... (0.34) (0.36) (0.38) (0.41) (0.46)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ............ $6.50 $7.09 $6.88 $6.71 $7.15
========== ========== ========== ========== ==========
Total Return: ........................... (3.63)% 8.46% 8.53% (0.29)% 18.15%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .. $64,575 $55,503 $45,426 $46,889 $55,061
Ratio of expenses to average net assets . 1.25% 1.05% 1.23% 1.14% 1.14%
Ratio of net income to average net assets 4.99% 5.11% 5.68% 6.05% 6.71%
Portfolio turnover rate ................. 51.59% 99.43% 193.90% 175.25% 213.06%
</TABLE>
- ----------
See footnotes on page 16.
15
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------- ---------
Year ended December 31, 1/1/97** 5/27/99**
------------------------- to to
1999 1998 12/31/97 12/31/99
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period .... $7.11 $6.89 $6.73 $6.78
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .......... 0.29 0.30 0.33 0.17
Net gains or losses on securities
(both realized and unrealized) ...... (0.60) 0.22 0.16 (0.27)
---------- ---------- ---------- ----------
Total from investment operations ........ (0.31) 0.52 0.49 (0.10)
---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income .. (0.29) (0.30) (0.33) (0.17)
---------- ---------- ---------- ----------
Total distributions ..................... (0.29) (0.30) (0.33) (0.17)
---------- ---------- ---------- ----------
Net asset value, end of period .......... $6.51 $7.11 $6.89 $6.51
========== ========== ========== ==========
Total Return: ........................... (4.47)% 7.78% 7.32% (1.59)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $25,611 $27,924 $3,219 $2,851
Ratio of expenses to average net assets . 2.00% 1.83% 2.01% 2.03%+
Ratio of net income to average net assets 4.24% 4.33% 4.90% 4.37%+
Portfolio turnover rate ................. 51.59% 99.43% 193.90% 51.59%++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
-----------------------------------------------------------------------------
Year ended December 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year .............. $7.11 $6.89 $6.73 $7.16 $6.48
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .................. 0.29 0.30 0.33 0.36 0.40
Net gains or losses on securities
(both realized and unrealized) .............. (0.60) 0.22 0.16 (0.43) 0.68
---------- ---------- ---------- ---------- ----------
Total from investment operations ................ (0.31) 0.52 0.49 (0.07) 1.08
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income .......... (0.29) (0.30) (0.33) (0.36) (0.40)
---------- ---------- ---------- ---------- ----------
Total distributions ............................. (0.29) (0.30) (0.33) (0.36) (0.40)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .................... $6.51 $7.11 $6.89 $6.73 $7.16
========== ========== ========== ========== ==========
Total Return: ................................... (4.47)% 7.78% 7.53% (0.92)% 17.10%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .......... $17,797 $26,614 $12,350 $9,283 $8,181
Ratio of expenses to average net assets ......... 2.00% 1.83% 2.01% 1.92% 2.01%
Ratio of net income to average net assets ....... 4.24% 4.33% 4.90% 5.27% 5.84%
Portfolio turnover rate ......................... 51.59% 99.43% 193.90% 175.25% 213.06%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1999.
16
<PAGE>
How to Contact Us
The Fund Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
Your Regular
(Non-Retirement)
Account Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
Your Retirement
Account Write: Retirement Plan Services
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 445-1777
----------------------------------------------------------------
24-hour automated telephone access is available by dialing (800)
622-4597 on a touchtone telephone. You will have instant access
to price, yield, account balance, most recent transaction, and
other information.
----------------------------------------------------------------
17
<PAGE>
================================================================================
For More Information
---------------------------------------------------------------------------
The following information is available without charge upon request: Call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US. You
may also call these numbers to request other information about the Fund or
to make shareholder inquiries.
Statement of Additional Information (SAI) contains additional information
about the Fund. It is on file with the Securities and Exchange Commission,
or SEC, and is incorporated by reference into (is legally part of) this
prospectus.
Annual/Semi-Annual Reports contain additional information about the Fund's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
---------------------------------------------------------------------------
SELIGMAN ADVISORS, INC.
an affiliate of
JWS [LOGO]
J.& W. Seligman & Co.
Incorporated
Established 1864
100 Park Avenue, New York, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (202) 942-8090. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the EDGAR Database on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee by
electronic request at the following E-mail address: [email protected], or by
writing: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102.
SEC FILE NUMBER: 811-4103
================================================================================
<PAGE>
S E L I G M A N
---------------
HIGH-YIELD
BOND SERIES
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in the Fund should be
considered based on the investment objective, strategies and risks described in
this Prospectus, considered in light of all of the other investments in your
portfolio, as well as your risk tolerance, financial goals and time horizons. We
recommend that you consult your financial advisor to determine if this Fund is
suitable for you.
TXHY1 5/2000
[PHOTO]
PROSPECTUS
MAY 1, 2000
-----------
Seeking to Maximize Current
Income by Investing
in a Diversified Portfolio
of High-Yielding
Corporate Bonds
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund
Investment Objective 1
Principal Investment Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Management 5
Shareholder Information
Deciding Which Class of Shares to Buy 6
Pricing of Fund Shares 8
Opening Your Account 8
How to Buy Additional Shares 9
How to Exchange Shares Among
the Seligman Mutual Funds 9
How to Sell Shares 10
Important Policies That May Affect
Your Account 11
Dividends and Capital Gain Distributions 12
Taxes 12
The Seligman Mutual Funds 13
Financial Highlights 15
How to Contact Us 17
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund
INVESTMENT OBJECTIVE
The Fund's investment objective is to produce maximum current income.
PRINCIPAL INVESTMENT STRATEGIES
The Fund uses the following principal investment strategies to seek its
investment objective:
The Fund has a fundamental policy which requires that, except for temporary
defensive purposes, it invest at least 80% of the value it its total assets in
high-yielding, income-producing corporate bonds.
The Fund invests in a diversified range of high-yield, high-risk, medium and
lower quality corporate bonds and notes. Generally, bonds and notes providing
the highest yield are unrated or carry lower ratings (Baa or lower by Moody's
Investors Service (Moody's) or BBB or lower by Standard & Poor's Ratings
Services (S&P)). The Fund may purchase restricted securities that may be offered
and sold only to "qualified institutional buyers" under Rule 144A of the
Securities Act of 1933 (Rule 144A Securities).
The Fund uses a bottom-up security selection process. This means the investment
manager concentrates first on individual company fundamentals, before industry
considerations. The investment manager then looks at the particular bond
characteristics of the securities considered for purchase. In selecting
individual securities, the investment manager looks to identify companies that
it believes display one or more of the following:
o Strong operating cash flow and margins
o Improving financial ratios (i.e., creditworthiness)
o Leadership in market share or other competitive advantage
o Superior management
o Attractive relative pricing
The Fund will generally sell a security if the investment manager believes that
the company displays deteriorating cash flows, an ineffective management team,
or an unattractive relative valuation.
The Fund may invest up to 20% 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 FDIC member banks having total assets of
more than $1 billion; bankers' acceptances and interest-bearing savings or time
deposits of such banks; prime commercial paper; securities issued, guaranteed,
or insured by the US Government, its agencies or instrumentalities; and other
income-producing cash items, including repurchase agreements.
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold). Rule 144A Securities deemed to be
liquid by the investment manager are not included in this limitation. The Fund
may invest up to 10% of its total assets in debt securities of foreign issuers.
In accordance with its objective of producing maximum current income, the Fund
may invest up to 10% of its total assets in preferred stock, including
non-investment grade preferred stock. While the Fund favors cash-paying bonds
over deferred pay securities, it may invest in "zero-coupon" bonds (interest
payments accrue until maturity) and "pay-in-kind" bonds (interest payments are
made in additional shares).
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective.
Except for its fundamental policy, the Fund may change its principal strategies
if the Fund's Board of Directors believes doing so is consistent with the Fund's
investment objective. The Fund's objective and its fundamental policy may be
changed only with shareholder approval.
There is no guarantee that the Fund will achieve its objective.
1
<PAGE>
PRINCIPAL RISKS
The Fund's net asset value, yield and total return will fluctuate with
fluctuations in the yield and market value of the individual securities held by
the Fund. The types of securities in which the Fund invests are generally
subject to higher volatility in yield and market value than securities of higher
quality. Factors that may affect the performance of the securities held by the
Fund are discussed below.
Higher-yielding, higher-risk, medium and lower quality corporate bonds and
notes, like the securities in which the Fund invests, are subject to greater
risk 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.
An economic downturn could adversely impact issuers' ability to pay interest and
repay principal and could result in issuers' defaulting on such payments. The
value of the Fund's 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.
Lower-rated and unrated corporate bonds and notes 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 Fund difficulties in valuing and selling its
securities.
Foreign securities or illiquid securities in the Fund's portfolio involve higher
risk and may subject the Fund to higher price volatility. Investing in
securities of foreign issuers involves risks not associated with US investments,
including currency fluctuations, local withholding and other taxes, different
financial reporting practices and regulatory standards, high costs of trading,
changes in political conditions, expropriation, investment and repatriation
restrictions, and settlement and custody risks.
"Zero-coupon" and "pay-in-kind" securities may be subject to greater
fluctuations in value because they tend to be more speculative than income
bearing securities. Fluctuations in the market prices of these securities owned
by the Fund will result in corresponding fluctuations and volatility in the net
asset value of the shares of the Fund. Additionally, because they do not pay
current income, they will detract from the Fund's objective of producing maximum
current income.
The Fund may actively and frequently trade securities in its portfolio to carry
out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Fund's expenses. Frequent and active
trading may cause adverse tax consequences for investors in the Fund due to an
increase in short-term capital gains.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
<PAGE>
PAST PERFORMANCE
The Fund offers four Classes of shares. The information below provides some
indication of the risks of investing in the Fund by showing how the performance
of Class A shares has varied year to year, as well as how the performance of
each Class compares to two widely-used measures of high-yield corporate bond
performance and one measure of the performance of mutual funds with investment
objectives similar to the Fund.
The following performance information is designed to assist you in comparing the
returns of the Fund with the returns of other mutual funds. How the Fund has
performed in the past, however, is not necessarily an indication of how the Fund
will perform in the future. Total returns will vary between each Class of shares
due to the different fees and expenses of each Class.
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be lower. The average annual total returns presented in the table below the
chart do reflect the effect of the applicable sales charges. Both the bar chart
and table assume that all dividends and capital gain distributions were
reinvested.
Class A Annual Total Returns
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1990 -7.27%
1991 30.70%
1992 20.08%
1993 19.19%
1994 0.78%
1995 20.72%
1996 14.82%
1997 14.26%
1998 1.32%
1999 0.09%
Best quarter return: 12.22% - quarter ended 3/31/91.
Worst quarter return: -6.77% - quarter ended 9/30/98.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns - Periods Ended 12/31/99
CLASS B CLASS C CLASS D
SINCE SINCE SINCE
ONE FIVE TEN INCEPTION INCEPTION INCEPTION
YEAR YEARS YEARS 4/22/96 5/27/99* 9/21/93
---- ----- ----- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Class A -4.71% 8.86% 10.33% -- -- --
Class B -5.20 n/a n/a 5.24% -- --
Class C n/a n/a n/a -- -3.63% --
Class D -1.44 9.12 n/a -- -- 7.90%
DLJ High Yield Market Index 3.60 9.60 11.12 7.08(1) 0.52(2) 7.86(3)
Merrill Lynch High Yield Master Index 1.57 9.61 10.79 7.42(1) -0.37(2) 8.00(3)
Lipper High Current Yield Average 4.50 9.49 10.12 7.35(1) 0.94(2) 7.63(3)
</TABLE>
The DLJ High Yield Market Index, the Lipper High Current Yield Average and the
Merrill Lynch High Yield Master Index are unmanaged benchmarks that assume the
reinvestment of dividends and exclude the effect of fees or sales charges. The
Merrill Lynch High Yield Master Index measures the performance of high yield
corporate bonds. The DLJ High Yield Market Index and the Lipper High Current
Yield Average measure the performance of mutual funds with investment objectives
similar to the Fund.
In the future, the Fund will no longer be compared to the Merrill Lynch High
Yield Master Index, which reflects the performance of funds that invest in
corporate high-yield bonds. Instead, the Fund will be compared to the DLJ High
Yield Market Index, which the investment manager believes is a more appropriate
benchmark because it measures the performance of funds that invest in bonds
similar to those in which the Fund primarily invests. Therefore, the Fund will
continue to be compared to the DLJ High Yield Market Index and the Lipper High
Current Yield Average.
- ----------------
* Total returns for periods of less than one year are not annualized.
(1) From April 30, 1996.
(2) From May 31, 1999.
(3) From September 30, 1993.
- --------------------------------------------------------------------------------
3
<PAGE>
Fees and Expenses
The table below summarizes the fees and expenses that you may pay as a
shareholder of the Fund. Each Class of shares has its own sales charge schedule
and is subject to different ongoing 12b-1 fees. Shareholder fees are charged
directly to your account. Annual fund operating expenses are deducted from Fund
assets and are therefore paid indirectly by you and other shareholders of the
Fund.
<TABLE>
<CAPTION>
Shareholder Fees Class A Class B Class C Class D
- ---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) ..................................................... 4.75% 5% 2% 1%
Maximum Sales Charge (Load) on Purchases
(as a % of offering price) .................................................. 4.75%(1) none 1% none
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
on Redemptions (as a % of original purchase price or
current net asset value, whichever is less) ................................. none(1) 5% 1% 1%
Annual Fund Operating Expenses for 1999
- ---------------------------------------
(as a percentage of average net assets)
Management Fees ................................................................. .58% .58% .58% .58%
Distribution and/or Service (12b-1) Fees ........................................ .25% 1.00% 1.00% 1.00%
Other Expenses .................................................................. .25% .25% .25% .25%
---- ---- ---- ----
Total Annual Fund Operating Expenses ............................................ 1.08% 1.83% 1.83% 1.83%
==== ==== ==== ====
</TABLE>
- ----------
(1) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
- ----------------------------------------
Management Fees:
Fees paid out of Fund assets to the
investment manager to compensate it for
managing the Fund.
12b-1 Fees:
Fees paid by each Class, pursuant to a
plan adopted by the Fund under Rule
12b-1 of the Investment Company Act of
1940. The plan allows each Class to pay
distribution and/or service fees for the
sale and distribution of its shares and
for providing services to shareholders.
Other Expenses:
Miscellaneous expenses of running the
Fund, including such things as transfer
agency, registration, custody, auditing
and legal fees.
- ----------------------------------------
Example
This example is intended to help you compare the expenses of investing in the
Fund with the expenses of investing in other mutual funds. It assumes (1) you
invest $10,000 in the Fund for each period and then sell all of your shares at
the end of that period, (2) your investment has a 5% return each year, and (3)
the Fund's operating expenses remain the same. Although your actual expenses may
be higher or lower, based on these assumptions your expenses would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 580 $ 802 $1,042 $1,730
Class B 686 876 1,190 1,951+
Class C 383 670 1,080 2,226
Class D 286 576 990 2,148
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A $ 580 $ 802 $1,042 $1,730
Class B 186 576 990 1,951+
Class C 284 670 1,080 2,226
Class D 186 576 990 2,148
+ Class B shares automatically convert to Class A shares after eight years.
4
<PAGE>
MANAGEMENT
The Fund's Board of Directors provides broad supervision over the affairs of the
Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of the Fund. Seligman manages the investment of the
Fund's assets, including making purchases and sales of portfolio securities
consistent with the Fund's investment objective and strategies, and administers
the Fund's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 USregistered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000, of approximately $12 billion.
The Fund pays Seligman a fee for its management services. The fee rate declines
as the Fund's net assets increase. It is equal to an annual rate of .65% of the
Fund's average daily net assets on the first $1 billion of net assets and .55%
of the average daily net assets in excess of $1 billion. For the year ended
December 31, 1999, the management fee paid by the Fund to Seligman was equal to
an annual rate of .58% of the Fund's average daily net assets.
- -------------------------------------------
Affiliates of Seligman:
Seligman Advisors, Inc.:
The Fund's general distributor;
responsible for accepting orders for
purchases and sales of Fund shares.
Seligman Services, Inc.:
A limited purpose broker/dealer; acts as
the broker/dealer of record for
shareholder accounts that do not have a
designated broker or financial advisor.
Seligman Data Corp. (SDC):
The Fund's shareholder service agent;
provides shareholder account services to
the Fund at cost.
- -------------------------------------------
Portfolio Management
The Fund is managed by Seligman's High-Yield Team, which is headed by Mr. Daniel
J. Charleston. Mr. Charleston, a Managing Director of Seligman, is a Vice
President of the Fund and has been Portfolio Manager of the Fund since January
1990. Mr. Charleston joined Seligman in 1987 as an Assistant Portfolio Manager.
He became Vice President, Investment Officer in August 1991, and Managing
Director in January 1996. Mr. Charleston also manages Seligman High-Yield Bond
Portfolio, a portfolio of Seligman Portfolios, Inc.
5
<PAGE>
Shareholder Information
DECIDING WHICH CLASS OF SHARES TO BUY
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule, and its
ongoing 12b-1 fees may differ from other classes. When deciding which Class of
shares to buy, you should consider, among other things:
o The amount you plan to invest.
o How long you intend to remain invested in the Fund, or another
Seligman mutual fund.
o If you would prefer to pay an initial sales charge and lower ongoing
12b-1 fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
o Whether you may be eligible for reduced or no sales charges when you
buy or sell shares.
Your financial advisor will be able to help you decide which Class of shares
best meets your needs.
- --------------------------------------------------------------------------------
Class A
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Sales Charge Regular Dealer
Sales Charge as a % Discount
as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
------------------------- -------------------- --------------- --------------
<S> <C> <C> <C>
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 and over(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more,
but you will be subject to a 1% CDSC if you sell your shares within 18
months.
o Annual 12b-1 fee (for shareholder services) of up to 0.25%.
o No sales charge on reinvested dividends or capital gain distributions.
o Certain employer-sponsored defined contribution-type plans can
purchase shares with no initial sales charge.
- --------------------------------------------------------------------------------
Class B
o No initial sales charge on purchases.
o A declining CDSC on shares sold within 6 years of purchase:
Years Since Purchase CDSC
-------------------- ----
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
----------------------------------------
Your purchase of Class B shares must be
for less than $250,000, because if you
are investing $250,000 or more you will
pay less in fees and charges if you buy
another Class of shares.
----------------------------------------
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%
o Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
Class C
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Discount
as a % as a % of Net as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
-------------------------- ------------------- ----------------- -------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000-$249,999 0.50 0.50 0.50
$250,000-$1,000,000(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000
because if you invest $1,000,000 or more you will pay less in fees and
charges if you buy Class A shares.
o A 1% CDSC on shares sold within eighteen months of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No sales charge on reinvested dividends or capital gain distributions.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D*
o No initial sales charge on purchases.
o A 1% CDSC on shares sold within one year of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
* Class D shares are not available to all investors. You may
purchase Class D shares only (1) if you already own Class D
shares of the Fund or another Seligman mutual fund, (2) if your
financial advisor of record maintains an omnibus account at SDC,
or (3) pursuant to a 401(k) or other retirement plan program for
which Class D shares are already available or for which the
sponsor requests Class D shares because the sales charge
structure of Class D shares is comparable to the sales charge
structure of the other funds offered under the program.
- --------------------------------------------------------------------------------
Because the Fund's 12b-1 fees are paid out of each Class's assets on an ongoing
basis, over time these fees will increase your investment expenses and may cost
you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, Class C and Class D shares. On an
ongoing basis, the Directors, in the exercise of their fiduciary duties under
the Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
How CDSCs Are Calculated
To minimize the amount of the CDSC you may pay when you sell your shares, the
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of the Fund, it will be assumed that you held the shares since the date you
purchased the shares of the Fund.
7
<PAGE>
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A shares and Class C
shares. Purchase or sale orders received by an authorized dealer or financial
advisor by the close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) and accepted by Seligman Advisors before the
close of business (5:00 p.m. Eastern time) on the same day will be executed at
the Class's NAV calculated as of the close of regular trading on the NYSE on
that day. Your broker/dealer or financial advisor is responsible for forwarding
your order to Seligman Advisors before the close of business.
- ----------------------------------------
NAV:
Computed separately for each Class by
dividing that Class's share of the net
assets of the Fund (i.e., its assets
less liabilities) by the total number of
outstanding shares of the Class.
- ----------------------------------------
If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.
The NAV of the Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because of their higher 12b-1 fees, the
NAV of Class B, Class C and Class D shares will generally be lower than the NAV
of Class A shares of the Fund.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
OPENING YOUR ACCOUNT
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more information,
see "Deciding Which Class of Shares to Buy--Class D."
To make your initial investment in the Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.
The required minimum initial investments are:
o Regular (non-retirement) accounts: $1,000
o For accounts opened concurrently with Invest-A-Check(R):
$100 to open if you will be making monthly investments
$250 to open if you will be making quarterly investments
- ----------------------------------------
You may buy shares of the Fund for all
types of tax-deferred retirement plans.
Contact Retirement Plan Services at the
address or phone number listed on the
inside back cover of this prospectus for
information and to receive the proper
forms.
- ----------------------------------------
If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to 15 calendar days
from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be sent
to you free of charge for the current year and most recent prior year. Copies of
year-end statements for prior years are available for a fee of $10 per year, per
account, with a maximum charge of $150 per account. Send your request and a
check for the fee to SDC.
If you want to be able to buy, sell, or exchange shares by telephone, you should
complete an application when you open your account. This will prevent you from
having to complete a supplemental election form (which may require a signature
guarantee) at a later date.
8
<PAGE>
HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Subsequent investments must be for
$100 or more.
Shares may be purchased through your authorized financial advisor, or you may
send a check directly to SDC. Please provide either an investment slip or a note
that provides your name(s), Fund name, and account number. Unless you indicate
otherwise, your investment will be made in the Class you already own. Send
investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
Invest-A-Check(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
Automatic Dollar-Cost-Averaging. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares or Class C shares,
you may pay an initial sales charge to buy Fund shares.
Automatic CD Transfer. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
Dividends From Other Investments. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
Direct Deposit. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
Seligman Time Horizon Matrix(SM). (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
Seligman Harvester(SM). If you are a retiree or nearing retirement, this program
is designed to help you establish an investment strategy that seeks to meet your
needs throughout your retirement. The strategy is customized to your personal
financial situation by allocating your assets to seek to address your income
requirements, prioritizing your expenses, and establishing a prudent withdrawal
schedule. Contact your financial advisor for more information.
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares or
Class C shares of Seligman Cash Management Fund to buy shares of the same Class
of the Fund or another Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
minimum initial investment.
9
<PAGE>
See "The Seligman Mutual Funds" for a list of the funds available for exchange.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all classes of shares.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares; however, it may take
longer to get your money.
As an additional measure to protect you and the Fund, SDC may confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending you your money.
This will not affect the date on which your redemption request is actually
processed.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than the account owner; or
(3) mailed to other than your address of record.
- --------------------------------------------------------------------------------
Signature Guarantee:
Protects you and the Fund from fraud. It guarantees that a signature is genuine.
A guarantee must be obtained from an eligible financial institution.
Notarization by a notary public is not an acceptable guarantee.
- --------------------------------------------------------------------------------
You may need to provide additional documents to sell Fund shares if you are:
o a corporation;
o an executor or administrator;
o a trustee or custodian; or
o in a retirement plan.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account services to sell Fund shares:
Systematic Withdrawal Plan. If you have at least $5,000 in the Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class B, Class C, or Class D
shares and reinvest your dividends and capital gain distributions, you may
withdraw 12%, 10%, or 10%, respectively, of the value of your Fund account (at
the time of election) annually without a CDSC.
Check Redemption Service. If you have at least $25,000 in the Fund, you may ask
SDC to provide checks which may be drawn against your account in amounts of $500
or more. You can elect this service on your initial application, or contact SDC
for the appropriate forms to establish this service. If you own Class A shares
that were bought at NAV because of the size of your purchase, or if you own
Class B shares, check redemptions may be subject to CDSC. If you own Class D or
Class C shares, you may use this service only with respect to shares that you
have held for at least one year or eighteen months, respectively.
10
<PAGE>
IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, the Fund reserves the right to:
o Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month
period;
2. the amount you wish to exchange equals the lesser of $1,000,000 or
1% of the Fund's net assets; or
3. you or your financial advisor have been advised that previous
patterns of purchases and sales or exchanges have been considered
excessive.
o Refuse any request to buy Fund shares;
o Reject any request received by telephone;
o Suspend or terminate telephone services;
o Reject a signature guarantee that SDC believes may be fraudulent;
o Close your fund account if its value falls below $500;
o Close your account if it does not have a certified taxpayer identification
number.
Telephone Services
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account application
that you do not want telephone services:
o Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record);
o Exchange shares between funds;
o Change dividend and/or capital gain distribution options;
o Change your address;
o Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee).
Restrictions apply to certain types of accounts:
o Trust accounts on which the current trustee is not listed may not sell
Fund shares by phone;
o Corporations may not sell Fund shares by phone;
o IRAs may only exchange Fund shares or request address changes by phone;
o Group retirement plans may not sell Fund shares by phone; plans that allow
participants to exchange by phone must provide a letter of authorization
signed by the plan custodian or trustee and provide a supplemental
election form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address of
record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. The Fund's
NAV may fluctuate during this time. The Fund and SDC will not be liable for
processing requests received by phone as long as it was reasonable to believe
that the request was genuine.
Reinstatement Privilege
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
11
<PAGE>
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund generally pays dividends from its net investment income monthly and
distributes any net capital gains realized on investments annually.
- ----------------------------------------
Dividend:
A payment by a mutual fund, usually
derived from the fund's net investment
income (dividends and interest earned on
portfolio securities less expenses).
Capital Gain Distribution:
A payment to mutual fund shareholders
which represents profits realized on the
sale of securities in a fund's
portfolio.
Ex-dividend Date:
The day on which any declared
distributions (dividends or capital
gains) are deducted from a fund's assets
before it calculates its NAV.
- ----------------------------------------
You may elect to:
(1) reinvest both dividends and capital gain distributions;
(2) receive dividends in cash and reinvest capital gain distributions; or
(3) receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise or if you own Fund shares in a Seligman tax-deferred
retirement plan.
If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus or, if you have telephone services, you or
your financial advisor may call SDC. Your request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.
Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your predesignated bank account within 3-4 business days from the
payable date.
Dividends and capital gain distributions are reinvested to buy additional Fund
shares on the payable date using the NAV of the ex-dividend date.
Dividends on Class B, Class C and Class D shares will be lower than the
dividends on Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
TAXES
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
12
<PAGE>
THE SELIGMAN MUTUAL FUNDS
EQUITY
SPECIALTY
- --------------------------------------------------------------------------------
Seligman Communications and
Information Fund
Seeks capital appreciation by investing in companies operating in all aspects of
the communications, information, and related industries.
Seligman Global Technology Fund
Seeks long-term capital appreciation by investing primarily in global securities
(US and non-US) of companies in the technology and technology-related
industries.
Seligman Emerging Markets Fund
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging markets.
SMALL COMPANY
- --------------------------------------------------------------------------------
Seligman Frontier Fund
Seeks growth of capital by investing primarily in small company growth stocks.
Seligman Small-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of small
companies, deemed to be "value" companies by the investment manager.
Seligman Global Smaller Companies Fund
Seeks long-term capital appreciation by investing in securities of smaller
companies around the world, including the US.
MEDIUM COMPANY
- --------------------------------------------------------------------------------
Seligman Capital Fund
Seeks capital appreciation by investing in the common stocks of companies with
significant potential for growth.
LARGE COMPANY
- --------------------------------------------------------------------------------
Seligman Growth Fund
Seeks long-term growth of capital value and an increase in future income.
Seligman Global Growth Fund
Seeks capital appreciation by investing primarily in equity securities of
companies that have the potential to benefit from global economic or social
trends.
Seligman Large-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of large
companies, deemed to be "value" companies by the investment manager.
Seligman Common Stock Fund
Seeks favorable, but not the highest, current income and long-term growth of
both income and capital, without exposing capital to undue risk.
Seligman International Growth Fund
Seeks long-term capital appreciation by investing in securities of medium- to
large-sized companies, primarily in the developed markets outside the US.
BALANCED
- --------------------------------------------------------------------------------
Seligman Income Fund
Seeks high current income and improvement in capital value over the long term,
consistent with prudent risk of capital.
FIXED-INCOME
INCOME
- --------------------------------------------------------------------------------
Seligman High-Yield Bond Fund
Seeks to maximize current income by investing in a diversified portfolio of
high-yielding, high-risk corporate bonds, commonly referred to as "junk bonds."
Seligman U.S. Government Securities Fund
Seeks high current income primarily by investing in a diversified portfolio of
securities guaranteed by the US government, its agencies, or instrumentalities,
which have maturities greater than one year.
MUNICIPAL
- --------------------------------------------------------------------------------
Seligman Municipal Funds:
National Fund
Seeks maximum income, exempt from regular federal income taxes.
State-specific funds:*
Seek to maximize income exempt from regular federal income taxes and from
regular income taxes in the designated state.
California Louisiana New Jersey
o High-Yield Maryland New York
o Quality Massachusetts North Carolina
Colorado Michigan Ohio
Florida Minnesota Oregon
Georgia Missouri Pennsylvania
South Carolina
* A small portion of income may be subject to state taxes.
MONEY MARKET
- --------------------------------------------------------------------------------
Seligman Cash Management Fund
Seeks to preserve capital and to maximize liquidity and current income, by
investing only in high-quality money market securities having a maturity of 90
days or less. The fund seeks to maintain a constant net asset value of $1.00 per
share.
13
<PAGE>
Asset Allocation
Seligman Time Horizon/Harvester Series, Inc. is an asset-allocation type mutual
fund. It offers four different asset allocation funds that pursue their
investment objectives by allocating their assets among other mutual funds in the
Seligman Group.
Seligman Time Horizon 30 Fund
Seeks long-term capital appreciation by creating a portfolio of mutual funds
that invests in aggressive growth-oriented domestic and international equity
securities weighted toward small- and medium-capitalization companies.
Seligman Time Horizon 20 Fund
Seeks long-term capital appreciation by creating a portfolio of mutual funds
that invests in growth-oriented domestic and international equity securities,
with a more even weighting among small-, medium- and large-capitalization
companies than Seligman Time Horizon 30 Fund.
Seligman Time Horizon 10 Fund
Seeks capital appreciation by creating a portfolio of mutual funds that invests
in small-, medium- and large-capitalization domestic and international equity
securities as well as domestic fixed-income securities.
Seligman Harvester Fund
Seeks capital appreciation and preservation of capital with current income and
growth of income by creating a portfolio of mutual funds that invests in medium-
and large-capitalization domestic and international equity securities
supplemented by a larger allocation of fixed-income securities and cash than
Seligman Time Horizon 10 Fund.
14
<PAGE>
Financial Highlights
The tables below are intended to help you understand the financial performance
of the Fund's Classes for the past five years or, if less than five years, the
period of the Class's operations. Certain information reflects financial results
for a single share of a Class that was held throughout the periods shown. "Total
return" shows the rate that you would have earned (or lost) on an investment in
the Fund, assuming you reinvested all your dividends and capital gain
distributions. Total returns do not reflect any sales charges. Deloitte & Touche
llp, independent auditors, have audited this information. Their report, along
with the Fund's financial statements, is included in the Fund's Annual Report,
which is available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
Year ended December 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year $ 6.95 $ 7.55 $ 7.25 $ 6.96 $ 6.35
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) 0.69 0.70 0.70 0.69 0.65
Net gains or losses on securities (both
realized and unrealized) (0.68) (0.59) 0.28 0.29 0.61
----- ----- ----- ----- -----
Total from investment operations 0.01 0.11 0.98 0.98 1.26
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (0.70) (0.69) (0.68) (0.69) (0.65)
Distributions from capital gains -- (0.02) -- -- --
----- ----- ----- ----- -----
Total distributions (0.70) (0.71) (0.68) (0.69) (0.65)
----- ----- ----- ----- -----
Net asset value, end of year $6.26 $ 6.95 $ 7.55 $ 7.25 $ 6.96
===== ===== ===== ===== =====
Total Return: 0.09% 1.32% 14.26% 14.82% 20.72%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) $923,395 $1,050,340 $750,461 $408,303 $182,129
Ratio of expenses to average net assets 1.08% 1.10% 1.14% 1.16% 1.09%
Ratio of net income (loss) to average
net assets 10.30% 9.46% 9.42% 9.80% 9.73%
Portfolio turnover rate 40.60% 35.34% 61.78% 119.33% 173.39%
- -------------
</TABLE>
See footnotes on page 16.
15
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------- ---------
4/22/96** 5/27/99**
Year ended December 31, to to
-------------------------------------
1999 1998 1997 12/31/96 12/31/99
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period $ 6.95 $ 7.55 $ 7.26 $ 7.06 $ 6.75
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) 0.64 0.64 0.64 0.45 0.32
Net gains or losses on securities (both
realized and unrealized) (0.68) (0.59) 0.28 0.20 (0.41)
----- ----- ----- ----- -----
Total from investment operations (0.04) 0.05 0.92 0.65 (0.09)
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (0.65) (0.63) (0.63) (0.45) (0.39)
Distributions from capital gains -- (0.02) -- -- --
----- ----- ----- ----- -----
Total distributions (0.65) (0.65) (0.63) (0.45) (0.39)
----- ----- ----- ----- -----
Net asset value, end of period $ 6.26 $ 6.95 $ 7.55 $ 7.26 $ 6.27
===== ===== ===== ===== =====
Total Return: (0.69)% 0.57% 13.24% 9.11% (1.71)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $1,073,910 $1,037,994 $581,235 $147,970 $51,815
Ratio of expenses to average net assets 1.83% 1.85% 1.90% 1.90%+ 1.81%+
Ratio of net income (loss) to average net
assets 9.55% 8.71% 8.66% 9.11%+ 9.78%+
Portfolio turnover rate 40.60% 35.34% 61.78% 119.33%++ 40.60%+++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
----------------------------------------------------------------
Year ended December 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year $ 6.95 $ 7.55 $ 7.26 $ 6.96 $ 6.35
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) 0.64 0.64 0.64 0.64 0.60
Net gains or losses on securities (both
realized and unrealized) (0.67) (0.59) 0.28 0.30 0.61
----- ----- ----- ----- -----
Total from investment operations (0.03) 0.05 0.92 0.94 1.21
----- ----- ----- ----- -----
Less Distributions:
Dividends from net investment income (0.65) (0.63) (0.63) (0.64) (0.60)
Distributions from capital gains -- (0.02) -- -- --
----- ----- ----- ----- -----
Total distributions (0.65) (0.65) (0.63) (0.64) (0.60)
----- ----- ----- ----- -----
Net asset value, end of year $ 6.27 $ 6.95 $ 7.55 $ 7.26 $ 6.96
===== ===== ===== ===== =====
Total Return: (0.54)% 0.57% 13.24% 14.10% 19.67%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) $656,727 $769,828 $534,998 $265,528 $90,153
Ratio of expenses to average net assets 1.83% 1.85% 1.90% 1.92% 1.91%
Ratio of net income (loss)to average net
assets 9.55% 8.71% 8.66% 9.02% 8.86%
Portfolio turnover rate 40.60% 35.34% 61.78% 119.33% 173.39%
- --------------
</TABLE>
* Per share amounts are calculated based on average shares outstanding.
** Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31,
1999.
16
<PAGE>
How to Contact Us
The Fund Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
Your Regular
(Non-Retirement)
Account Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
Your Retirement
Account Write: Retirement Plan Services
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 445-1777
----------------------------------------------------------------
24-hour automated telephone access is available by dialing (800)
622-4597 on a touchtone telephone. You will have instant access
to price, yield, account balance, most recent transaction, and
other information.
----------------------------------------------------------------
17
<PAGE>
================================================================================
For More Information
---------------------------------------------------------------------------
The following information is available without charge upon requests: Call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US. You
may also call these numbers to request other informtion about the Fund or
to make shareholder inquiries.
Statement of Additional Information (SAI) contains additional information
about the Fund. It is on file with the Securities and Exchange Commission,
or SEC, and is incorporated by reference into (is legally part of) this
prospectus.
Annual/Semi-Annual Reports contain additional informtion about the Fund's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
---------------------------------------------------------------------------
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[LOGO]
J.& W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (202) 942-8090. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the EDGAR Database on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee by
electronic request at the following E-mail address: [email protected], or by
writing: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102.
SEC FILE NUMBER: 811-4103
================================================================================
<PAGE>
SELIGMAN HIGH INCOME FUND SERIES
Seligman U.S. Government Securities Series
Seligman High-Yield Bond Series
Statement of Additional Information
May 1, 2000
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectuses, dated May 1, 2000, for each
of the Seligman High-Yield Bond Series and the Seligman U.S. Government
Securities Series (individually, a Series), each a separate series of Seligman
High Income Fund Series (the Fund). This SAI, although not in itself a
prospectus, is incorporated by reference into each Series' Prospectus in its
entirety. It should be read in conjunction with each Series' Prospectus, which
you may obtain by writing or calling the Fund at the above address or telephone
numbers.
The financial statements and notes included in each Series' Annual Report, and
the Independent Auditors' Reports thereon, are incorporated herein by reference.
An Annual Report for each Series will be furnished to you without charge if you
request a copy of this SAI.
Table of Contents
Fund History...................................................... 2
Description of the Fund and its Investments and Risks............. 2
Management of the Fund............................................ 7
Control Persons and Principal Holders of Securities............... 11
Investment Advisory and Other Services............................ 12
Portfolio Transactions and Other Practices........................ 18
Shares of Beneficial Interest and Other Securities ............... 19
Purchase, Redemption, and Pricing of Shares....................... 19
Taxation of each Series........................................... 25
Underwriters...................................................... 26
Calculation of Performance Data .................................. 28
Financial Statements.............................................. 32
General Information............................................... 32
Appendix A........................................................ 35
Appendix B........................................................ 38
TX1A
<PAGE>
Fund History
The Fund was organized as a business trust under the laws of the Commonwealth of
Massachusetts on July 27, 1984.
Description of the Fund and its Investments and Risks
Classification
The Fund is a diversified open-end management investment company, or mutual
fund. It consists of two separate series: the Seligman U.S. Government
Securities Series and the Seligman High-Yield Bond Series.
Investment Strategies and Risks
The following information regarding each Series' investments and risks
supplements the information contained in each Series' Prospectus.
US Government Securities. The U.S. Government Securities Series intends to
invest in US Government securities. These securities are considered among the
safest of fixed-income investments; however, their market values, like those of
other debt securities, will fluctuate with changes in interest rates. The net
asset value of the Series' shares will fluctuate with changes in the market
value of its portfolio securities and the Series' yield will vary based on the
yield of its portfolio securities. Generally, as interest rates decline, the
value of the US Government securities held by the Series will increase.
Conversely, if interest rates rise, the value of the securities held by the
Series will decline. This effect is usually more pronounced for longer-term
securities, which generally tend to produce higher yields but are subject to
greater market fluctuations as a result of changes in interest rates than debt
securities with shorter maturities. Neither the Series' net asset value nor its
yield is guaranteed by the US Government.
Foreign Securities. 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 US company, and foreign companies may not be subject to
reporting standards and requirements comparable to those applicable to US
companies. Foreign debt securities and their markets may not be as liquid as US
securities and their markets. Securities of foreign companies may involve
greater market risk than securities of US 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 High-Yield Bond 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
(1933 Act)) and other securities that are not readily marketable, such as
repurchase agreements of more than one week's duration. The Series may purchase
restricted securities that may be offered and sold only to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the investment
manager, acting pursuant to procedures approved by the Fund's Board of Trustees,
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 investment 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.
Mortgage-Related Securities.
Mortgage Pass-Through Securities. The U.S. Government Securities Series may
invest in mortgage pass-through securities. Mortgage pass-through securities
include securities that represent interests in pools of mortgage loans made by
lenders such as savings and loan institutions, mortgage bankers, and commercial
banks. Such securities
2
<PAGE>
provide a "pass-through" of monthly payments of interest and principal made by
the borrowers on their residential mortgage loans (net of any fees paid to the
issuer or guarantor of such securities). Although the residential mortgages
underlying a pool may have maturities of up to 30 years, a pool's effective
maturity may be reduced 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 mortgages. High interest rate mortgages are more likely
to be prepaid than lower-rate mortgages; consequently, the effective maturities
of mortgage-related obligations that pass-through payments of higher-rate
mortgages are likely to be shorter than those of obligations that pass-through
payments of lower-rate mortgages. If such prepayment of mortgage-related
securities in which the Portfolio invests occurs, the Portfolio may have to
invest the proceeds in securities with lower yields.
The Government National Mortgage Association (GNMA) is a US Government
corporation within the Department of Housing and Urban Development, authorized
to guarantee, with the full faith and credit of the US Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of Federal Housing Administration insured or
Veterans Administration guaranteed residential mortgages. These securities
entitle the holder to receive all interest and principal payments owed on the
mortgages in the pool, net of certain fees, regardless of whether or not the
mortgagors actually make the payments. Other government-related issuers of
mortgage-related securities include the Federal National Mortgage Association
(FNMA), a government-sponsored corporation subject to general regulation by the
Secretary of Housing and Urban Development but owned entirely by private
stockholders, and the Federal Home Loan Mortgage Corporation (FHLMC), a
corporate instrumentality of the US Government created for the purpose of
increasing the availability of mortgage credit for residential housing that is
owned by the twelve Federal Home Loan Banks. FHLMC issues Participation
Certificates (PCs), which represent interests in mortgages from FHLMC's national
portfolio. FHLMC guarantees the timely payment of interest and ultimate
collection of principal, but PCs are not backed by the full faith and credit of
the US Government. Pass-through securities issued by FNMA are backed by
residential mortgages purchased from a list of approved seller/servicers and are
guaranteed as to timely payment of principal and interest by FNMA, but are not
backed by the full faith and credit of the US Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through securities based on pools of conventional residential mortgage
loans. Securities created by such non-governmental issuers may offer a higher
rate of interest than government-related securities; however, timely payment of
interest and principal may or may not be supported by insurance or guarantee
arrangements, and there can be no assurance that the private issuers can meet
their obligations.
Collateralized Mortgage Obligations. The U.S. Government Securities Series may
also invest in Collateralized Mortgage Obligations (CMOs), including certain
CMOs that have elected to be treated as Real Estate Mortgage Investment Conduits
(REMICs). CMOs are fixed-income securities collateralized by pooled mortgages
and separated into short-, medium-, and long-term positions (called tranches).
Tranches pay different rates of interest depending upon their maturity. CMOs may
be collateralized by (a) pass through securities issued or guaranteed by GNMA,
FNMA or FHLMC, (b) unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veteran's Affairs, (c)
unsecuritized conventional Mortgages, (d) other mortgage related securities or
(e) any combination thereof.
Each tranche of a CMO is issued at a specific coupon rate and has a stated
maturity. As the payments on the underlying mortgage loans are collected, the
CMO issuer generally pays the coupon rate of interest to the holders of each
tranche. In a common structure referred to as a "Pay" CMO, all scheduled and
unscheduled principal payments generated by the collateral, as loans are repaid
or prepaid, go initially to investors in the first tranches. Investors in later
tranches do not start receiving principal payments until the prior tranches are
paid in full. Sometimes, CMOs are structured so that the prepayment and/or
market risks are transferred from one tranche to another.
Most CMOs are issued by Federal agencies. However, the only CMOs backed by the
full faith and credit of the US Government are CMOs collateralized by pass
through securities guaranteed by GNMA. All CMOs are subject to reinvestment
risk; that is, as prepayments on the underlying pool of mortgages increase, the
maturity of the tranches in the CMO will decrease. As a result, the Series may
have to invest the proceeds that were invested
3
<PAGE>
in such CMOs in securities with lower yields. Factors affecting reinvestment
risk include the level of interest rates, general economic and social conditions
and the location and age of the mortgages.
Preferred Stock. The High-Yield Bond 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 investment manager will try
to minimize this greater risk potential through its investment process. However,
there can be no assurance that losses will not occur.
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 a Series acquires
a money market instrument, generally a US 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 U.S. Government Securities Series may enter into
repurchase agreements with respect to any money market instruments qualified for
purchase, such agreements generally involve only US Government securities and
will only involve securities issued or guaranteed by the US Government. As a
matter of fundamental policy, each 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 and Forward Commitment Securities. Each Series may purchase
securities on a when-issued or forward commitment 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 or
forward commitment basis with the intention of actually acquiring the
securities, the Series may sell these securities before the settlement date if
it is deemed advisable.
Securities purchased on a when-issued or forward commitment 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 or forward commitment 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 or forward
commitment 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 or forward commitment
obligations 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 or forward commitment 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 or forward commitment 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.
Borrowing. Each 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.
4
<PAGE>
Lending of Portfolio Securities. Each Series of the Fund may lend portfolio
securities to brokers or dealers, banks, or other institutional borrowers of
securities. Loaned securities may not be returned by a borrower; however, a
borrower must maintain with a 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 a
Series any income accruing on the loaned securities and a Series may invest the
cash collateral and earn additional income or may receive an agreed upon amount
of interest income from the borrower. Loans will generally be short-term. Loans
are subject to termination at the option of a 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. 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 a Series might be delayed; and 3) the borrower might refuse to
repay the borrowed securities. Each Series may lend portfolio securities to the
extent that the investment manager deems appropriate in seeking to achieve a
Series' investment objective and with only a prudent degree of risk.
Except as otherwise specifically noted above and below, each Series' investment
policies are not fundamental and the Board of Trustees of the Fund may change
such policies without the vote of a majority of each Series' outstanding voting
securities.
Fund Policies
Each Series is subject to fundamental policies that place restrictions on
certain types of investments. These policies cannot be changed except by vote of
a majority of each Series' outstanding voting securities. Under these policies,
each 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 US Government, its agencies or instrumentalities; buy more
than 10% of the voting securities of any one issuer, other than US Government
agencies or instrumentalities; or invest to control or manage any company;
- - Invest more than 25% of the market value of its total assets in securities of
issuers in any one industry; for the purpose of this limitation,
mortgage-related securities do not constitute an industry;
5
<PAGE>
- - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or for
the purpose of hedging the Fund's obligations under its deferred compensation
plan for trustees;
- - 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 1933 Act; 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.
Each Series may not change its investment objective without shareholder
approval.
Under the Investment Company Act of 1940, as amended (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 present at a shareholders' 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 also may not acquire any securities of a registered open-end investment
company or a registered unit investment trust in reliance on subparagraph (F) or
subparagraph (G) of Section 12(d)(1) of the 1940 Act. This policy is not
fundamental.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, the High-Yield Bond Series may invest up to 100% of its assets in
cash or cash equivalents, including, but not limited to, prime commercial paper,
bank certificates of deposit, bankers' acceptances, or repurchase agreements for
such securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. The High-Yield Bond Series' investments in foreign cash equivalents
will be limited to those that, in the opinion of the investment manager, equate
generally to the standards established for US cash equivalents. Investments in
bank obligations will be limited at the time of investment to the obligations of
the 100 largest domestic banks in terms of assets which are subject to
regulatory supervision by the US Government or state governments, and the
obligations of the 100 largest foreign banks in terms of assets with branches or
agencies in the United States. The High-Yield Bond Series may also invest in
high-yield, medium and lower quality corporate notes.
6
<PAGE>
Portfolio Turnover
Each Series' portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the year by the monthly average
of the value of the portfolio securities owned during the year. Securities whose
maturity or expiration date at the time of acquisition were one year or less are
excluded from the calculation. The portfolio turnover rate for the U.S.
Government Securities Series for the years ended December 31, 1999 and 1998 were
51.59% and 99.43%, respectively. The portfolio turnover rate for the High-Yield
Bond Series for the years ended December 31, 1999 and 1998 were 40.60% and
35.34%, respectively.
Management of the Fund
Board of Trustees
The Board of Trustees provides broad supervision over the affairs of each
Series.
Management Information
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.
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ---------------- --------------------
<S> <C> <C>
William C. Morris* Trustee, Chairman of Chairman, J. & W. Seligman & Co. Incorporated, Chairman and Chief
(62) the Board, Chief Executive Officer, the Seligman Group of investment companies;
Executive Officer and Chairman, Seligman Advisors, Inc., Seligman Services, Inc., and
Chairman of the Carbo Ceramics Inc., ceramic proppants for oil and gas industry;
Executive Committee and Director, Seligman Data Corp., Kerr-McGee Corporation,
diversified energy company. Formerly, Director, Daniel
Industries Inc., manufacturer of oil and gas metering equipment.
Brian T. Zino* Trustee, President and Director and President, J. & W. Seligman & Co. Incorporated;
(47) Member of the Executive President (with the exception of Seligman Quality Municipal Fund,
Committee Inc. and Seligman Select Municipal Fund, Inc.) and Director or
Trustee, the Seligman Group of investment companies; Chairman,
Seligman Data Corp.; Member of the Board of Governors of the
Investment Company Institute; and Director, ICI Mutual Insurance
Company, Seligman Advisors, Inc., and Seligman Services, Inc.
Richard R. Schmaltz* Trustee and Member of Director and Managing Director, Director of Investments, J. & W.
(59) the Executive Committee Seligman & Co. Incorporated; Director or Trustee, the Seligman
Group of investment companies (except Seligman Cash Management
Fund, Inc.); and Trustee Emeritus of Colby College. Formerly,
Director, Seligman Henderson Co. and Director, Investment
Research at Neuberger & Berman from May 1993 to September 1996.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ---------------- --------------------
<S> <C> <C>
John R. Galvin Trustee Dean, Fletcher School of Law and Diplomacy at Tufts University;
(70) Director or Trustee, the Seligman Group of investment companies;
Tufts University Chairman Emeritus, American Council on Germany; Governor of the
Packard Avenue, Center for Creative Leadership; Director; Raytheon Co.,
Medford, MA 02155 electronics; National Defense University; and the Institute for
Defense Analyses. Formerly, Director, USLIFE Corporation, life
insurance; Ambassador, U.S. State Department for negotiations in
Bosnia; Distinguished Policy Analyst at Ohio State University and
Olin Distinguished Professor of National Security Studies at the
United States Military Academy. From June 1987 to June 1992, he
was the Supreme Allied Commander, Europe and the
Commander-in-Chief, United States European Command.
Alice S. Ilchman Trustee Retired President, Sarah Lawrence College; Director or Trustee,
(65) the Seligman Group of investment companies; Trustee, the
18 Highland Circle, Committee for Economic Development; and Chairman, The Rockefeller
Bronxville, NY 10708 Foundation, charitable foundation. Formerly, Trustee, The Markle
Foundation, philanthropic organization; and Director, New York
Telephone Company; and International Research and Exchange Board,
intellectual exchanges.
Frank A. McPherson Trustee Retired Chairman and Chief Executive Officer of Kerr-McGee
(67) Corporation; Director or Trustee, the Seligman Group of investment
2601 Northwest Expressway, companies; Director, Kimberly-Clark Corporation, consumer
Suite 805E products; Conoco Inc, oil exploration and production; Bank of
Oklahoma City, OK 73112 Oklahoma Holding Company; Baptist Medical Center; Oklahoma Chapter
of the Nature Conservancy; Oklahoma Medical Research Foundation;
and National Boys and Girls Clubs of America; and Member of the
Business Roundtable and National Petroleum Council. Formerly,
Chairman, Oklahoma City Public Schools Foundation; and Director,
Federal Reserve System's Kansas City Reserve Bank and the Oklahoma
City Chamber of Commerce.
John E. Merow Trustee Retired Chairman and Senior Partner, Sullivan & Cromwell, law
(70) firm; Director or Trustee, the Seligman Group of investment
125 Broad Street, companies; Director, Commonwealth Industries, Inc., manufacturers
New York, NY 10004 of aluminum sheet products; the Foreign Policy Association;
Municipal Art Society of New York; the U.S. Council for
International Business; and New York-Presbyterian Hospital;
Chairman, New York-Presbyterian Healthcare Network, Inc.;
Vice-Chairman, the U.S.-New Zealand Council; and Member of the
American Law Institute and Council on Foreign Relations.
Betsy S. Michel Trustee Attorney; Director or Trustee, the Seligman Group of investment
(57) companies; Trustee, The Geraldine R. Dodge Foundation, charitable
P.O. Box 719, foundation. Formerly, Chairman of the Board of Trustees of St.
Gladstone, NJ 07934 George's School (Newport, RI) and Director, the National
Association of Independent Schools (Washington, DC).
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ---------------- --------------------
<S> <C> <C>
James C. Pitney Trustee Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm; Director
(73) or Trustee, the Seligman Group of investment companies. Formerly,
Park Avenue at Morris Director, Public Service Enterprise Group, public utility.
County,
P.O. Box 1945,
Morristown, NJ 07962
James Q. Riordan Trustee Director or Trustee, the Seligman Group of investment companies;
(72) Director, The Houston Exploration Company, oil exploration; The
2893 S. E. Ocean Brooklyn Museum, KeySpan Energy Corporation; and Public
Boulevard, Broadcasting Service; and Trustee, the Committee for Economic
Stuart, FL 34996 Development. Formerly, Co-Chairman of the Policy Council of the
Tax Foundation; Director, Tesoro Petroleum Companies, Inc. and Dow
Jones & Company, Inc.; Director and President, Bekaert
Corporation; and Co-Chairman, Mobil Corporation.
Robert L. Shafer Trustee Retired Vice President, Pfizer Inc., pharmaceuticals; Director or
(67) Trustee, the Seligman Group of investment companies. Formerly,
96 Evergreen Avenue, Director, USLIFE Corporation, life insurance.
Rye, NY 10580
James N. Whitson Trustee Director and Consultant, Sammons Enterprises, Inc., a diversified
(65) holding company; Director or Trustee, the Seligman Group of
6606 Forestshire Drive, investment companies; Director, C-SPAN, cable television, and
Dallas, TX 75230 CommScope, Inc., manufacturer of coaxial cables. Formerly,
Executive Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.
Daniel J. Charleston Vice President and Managing Director, (formerly, Vice President, Investment Officer),
(40) Portfolio Manager J. & W. Seligman & Co. Incorporated; Vice President and Portfolio
Manager, Seligman Portfolios, Inc.
Gary S. Zeltzer Vice President and Senior Vice President, J. & W. Seligman & Co. Incorporated; Vice
(48) Portfolio Manager President and Portfolio Manager, Seligman Cash Management Fund,
Inc. and Seligman Portfolios, Inc.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman & Co.
(43) Incorporated, Seligman Advisors, Inc., and Seligman Data Corp.;
Vice President, the Seligman Group of investment companies, and
Seligman Services, Inc.; and Vice President and Treasurer,
Seligman International, Inc. Formerly, Treasurer, Seligman
Henderson Co.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ---------------- --------------------
<S> <C> <C>
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and Regulation and
(35) Corporate Secretary, J. & W. Seligman & Co. Incorporated;
Secretary, the Seligman Group of investment companies, Seligman
Advisors, Inc., Seligman Services, Inc., Seligman International,
Inc. and Seligman Data Corp. Formerly, Secretary, Seligman
Henderson Co.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies and
(42) Seligman Data Corp.
</TABLE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available, and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
Trustees and officers of the Fund are also directors and officers of some or all
of the other investment companies in the Seligman Group.
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to Trustees (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
Richard R. Schmaltz, Trustee N/A N/A N/A
John R. Galvin, Trustee $5,259 N/A $82,000
Alice S. Ilchman, Trustee 5,219 N/A 80,000
Frank A. McPherson, Trustee 5,219 N/A 78,000
John E. Merow, Trustee 5,259 N/A 80,000
Betsy S. Michel, Trustee 5,259 N/A 82,000
James C. Pitney, Trustee 5,179 N/A 74,000
James Q. Riordan, Trustee 5,219 N/A 80,000
Robert L. Shafer, Trustee 5,219 N/A 80,000
James N. Whitson, Trustee 5,219(3) N/A 80,000(3)
</TABLE>
(1) For the Fund's year ended December 31, 1999. Effective January 21, 2000,
the per meeting fee for Trustees was increased by $1,000, which is
allocated among all the Funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of twenty investment
companies.
(3) Deferred.
The Fund has a compensation arrangement under which outside trustees may elect
to defer receiving their fees. The Fund has adopted a deferred compensation plan
under which a trustee who has elected deferral of his or her fees may choose a
rate of return equal to either (1) the interest rate on short-term Treasury
Bills, or (2) the rate of return on the shares of certain of the investment
companies advised by J. & W. Seligman & Co. Incorporated (Seligman), as
designated by the trustee. The cost of such fees and earnings is included in
trustees' fees and expenses, and the accumulated balance thereof is included in
other liabilities in the Fund's financial statements. The total amount of
deferred compensation (including earnings) payable in respect of the Fund to Mr.
Whitson as of December 31, 1999 was $26,751.
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation (including earnings) in the amounts of
$43,169 and $17,069, respectively, as of December 31, 1999.
10
<PAGE>
The Fund may, but is not obligated to, purchase shares of the other funds in the
Seligman Group of investment companies to hedge its obligations in connection
with the Fund's Deferred Compensation Plan.
Sales Charges
Class A shares of each Series of the Fund may be issued without a sales charge
to present and retired directors, trustees, officers, employees (and their
family members) of the Fund, the other investment companies in the Seligman
Group, and Seligman and its affiliates. 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 may also be made to employee benefit plans and thrift plans for such
persons and to any investment advisory, custodial, trust or other fiduciary
account managed or advised by Seligman or any affiliate. The sales may be made
for investment purposes only, and shares may be resold only to each Series of
the Fund, respectively.
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.
Code of Ethics
Seligman, Seligman Advisors, Inc. (Seligman Advisors), their subsidiaries and
affiliates, and the Seligman Group of Investment Companies have adopted a Code
of Ethics that sets forth the circumstances under which officers, directors and
employees (collectively, Employees) are permitted to engage in personal
securities transactions. The Code of Ethics 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 Seligman's Director of Compliance, and sets forth a procedure of identifying,
for disciplinary action, those individuals who violate the Code of Ethics. The
Code of Ethics prohibits Employees (including all investment team members) from
purchasing or selling any security or an equivalent security that is being
purchased or sold by any client, or where the Employee intends, or knows of
another's intention, to purchase or sell a security on behalf of a client. The
Code also prohibits all Employees from acquiring securities in a private
placement or in an initial or secondary public offering unless an exemption has
been obtained from Seligman's Director of Compliance.
The Code of Ethics prohibits (1) 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) that the portfolio manager or investment team
manages; (2) each Employee from engaging in short-term trading (a purchase and
sale or vice-versa within 60 days); and (3) each member of an investment team
from engaging in short sales of a security if, at that time, any client managed
by that team has a long position in that security. Any profit realized pursuant
to any of these prohibitions must be disgorged.
Employees are required, except under very limited circumstances, to engage in
personal securities transactions through Seligman's order desk. The order desk
maintains a list of securities that may not be purchased due to a possible
conflict with clients. All Employees are also required to disclose all
securities beneficially owned by them upon commencement of employment and at the
end of each calendar year.
A copy of the Code of Ethics is on public file with, and is available upon
request from, the Securities and Exchange Commission (SEC). You can access it
through the SEC's Internet site, http://www.sec.gov.
Control Persons and Principal Holders of Securities
Control Persons
As of April 7, 2000, there was no person or persons who controlled either the
U.S. Government Securities Series or the High-Yield Bond Series, either through
a significant ownership of shares or any other means of control.
11
<PAGE>
Principal Holders
As of April 7, 2000, 11.74% of the U.S. Government Securities Series' Class A
shares of beneficial interest then outstanding, 53.58% of the U.S. Government
Securities Series' Class B shares of beneficial interest then outstanding and
29.76% of the U.S. Government Securities Series' Class D shares of beneficial
interest then outstanding, were registered in the name of Merrill Lynch, Pierce,
Fenner & Smith Incorporated for the Sole Benefit of Its Customers, Attn. Fund
Administration, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL 32246.
As of the same date, 19.56% of the U.S. Government Securities Series' Class A
shares of beneficial interest then outstanding were registered in the name of
Sterling Trust Company Custodian FBO Plumbers Local Union No 93, 1380 Lawrence
Street, Suite 1400, Denver, CO 80204, 13.18% and 5.07%, respectively, of the
U.S. Government Securities Series' Class C shares of beneficial interest then
outstanding were registered in the name of Salomon Smith Barney Inc, FBO Account
Numbers, 333 West 34th Street, 3rd Floor, New York, NY 10001, respectively, and
7.56% and 5.89%, respectively, of the U.S. Government Securities Series' Class C
shares of beneficial interest then outstanding were registered in the name of
Dean Witter Reynolds Custodian FBO: Westine Kern, PO Box 250, Church Street
Station, New York, NY 91362-3626 and John Gross, PO Box 250, Church Street
Station, New York, NY 91362-3626, respectively.
As of April 7, 2000, 16.90% of the High-Yield Bond Series' Class A shares of
beneficial interest then outstanding, 29.59% of the High-Yield Bond Series'
Class B shares of beneficial interest then outstanding and 37.39% of the
High-Yield Bond Series' Class D shares of beneficial interest then outstanding,
were registered in the name of Merrill Lynch, Pierce, Fenner & Smith
Incorporated for the Sole Benefit of Its Customers, Attn. Fund Administration,
4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL 32246.
As of the same date, there were no shareholders who owned 5% or more of the
High-Yield Bond Series' Class C shares of beneficial interest then outstanding.
Management Ownership
As of April 7, 2000, 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 shares of beneficial interest. As of the same date, no Trustees
or officers owned either Series' Class B shares, Class C shares or Class D
shares of beneficial interest.
Investment Advisory and Other Services
Investment Manager
Seligman manages each Series of the Fund. Seligman is a successor firm to an
investment banking business founded in 1864 which has thereafter provided
investment services to individuals, families, institutions, and corporations.
Mr. William C. Morris owns a majority of the outstanding voting securities of
Seligman. See Appendix B for further history of Seligman.
All of the officers of the Fund listed above are officers or employees of
Seligman. Their affiliations with the Fund and with Seligman are provided under
their principal business occupations.
Seligman 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% per annum of the Series'
average daily net assets on an annual basis. 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% per annum of the Series' average
daily net assets in excess of $1 billion. The management fees paid by the U.S.
Government Securities Series for years ended December 31, 1999, 1998 and 1997
equaled .50% of the average daily net assets of such Series, or $483,670,
$382,195 and $271,995, respectively. The management fees paid by the High-Yield
Bond Series for years ended December 31, 1999, 1998 and 1997 equaled .58%, .59%
and .62%, respectively, of the average daily net assets of such Series or
$17,240,330, $14,375,619 and $8,248,354, respectively.
12
<PAGE>
Each Series of the Fund pays all of its expenses other than those assumed by
Seligman, including brokerage commissions, administration, shareholder services
and distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, including fees and expenses of qualifying the Fund
and its shares under Federal and State securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
trustees of the Fund not employed by or serving as a Director of Seligman 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 provides that Seligman will not be liable to a
Series for any error of judgment or mistake of law, or for any loss arising out
of any investment, or for any act or omission in performing its duties under the
Agreement, except for willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Agreement.
Each Series' Management Agreement was initially approved by the Board of
Trustees at a Meeting held on September 30, 1988 and by the shareholders at a
special meeting held on December 16, 1988. The amendments to the Management
Agreement of the High-Yield Bond Series, to increase the fee rate payable to the
Manager by the Series, were approved by the Board of Trustees on September 21,
1995 and by the shareholders at a special meeting held on December 12, 1995. The
Management Agreements will continue in effect until December 31 of each year if
(1) such continuance is approved in the manner required by the 1940 Act (i.e.,
by a vote of a majority of the Board of 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) Seligman 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 Seligman and will terminate automatically
in the event of its assignment. Each Series has agreed to change its name upon
termination of the Management Agreement if continued use of the name would cause
confusion in the context of Seligman's business.
Principal Underwriter
Seligman Advisors, an affiliate of Seligman, 100 Park Avenue, New York, New York
10017, acts as general distributor of the shares of each Series of the Fund and
of each of the other mutual funds in the Seligman Group. Seligman Advisors is an
"affiliated person" (as defined in the 1940 Act) of Seligman, which is itself an
affiliated person of the Fund. Those individuals identified above under
"Management Information" as trustees or officers of both the Fund and Seligman
Advisors (in which case directors) are affiliated persons of both entities.
Services Provided by the Investment Manager
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 Board of Trustees,
Seligman 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. Seligman provides the Fund with such office space,
administrative and other services and executive and other personnel as are
necessary for Fund operations. Seligman pays all of the compensation of trustees
of the Fund who are employees or consultants of Seligman and of the officers and
employees of the Fund. Seligman also provides senior management for Seligman
Data Corp., the Fund's shareholder service agent.
Service Agreements
There are no other management-related service contracts under which services are
provided to either Series of the Fund.
13
<PAGE>
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise either Series of the Fund with respect to its investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of each Series of the Fund, as set
forth below:
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of As a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested 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 and over 0 0 0
(1) "Offering Price" is the amount that you actually pay for each Series'
shares; it includes the initial sales charge.
Class C shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of as a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 1.00%
$100,000 - $ 249,999 0.50 0.50 0.50
$250,000 - $1,000,000 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
Seligman Services, Inc., an affiliate of Seligman, is a limited purpose
broker/dealer. Seligman Services is eligible to receive commissions from certain
sales of each Series' shares. For the years ended December 31, 1999, 1998 and
1997, Seligman Services received commissions from certain sales of the U.S.
Government Securities Series' shares in the amounts of $2,831, $888 and $954,
respectively. For the years ended December 31, 1999, 1998 and 1997, Seligman
Services received commissions from certain sales of the High-Yield Bond Series'
shares in the amounts of $39,644, $83,013 and $47,851, respectively.
Rule 12b-1 Plan
Each Series of the Fund has adopted an Administration, Shareholder Services and
Distribution Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act
and Rule 12b-1 thereunder.
Under its 12b-1 Plan, each Series may pay to Seligman Advisors an
administration, shareholder services and distribution fee in respect of the
Series' Class A, Class B, Class C and Class D shares, respectively. Payments by
a Series under the 12b-1 Plan may include, but are not limited to: (1)
compensation to securities dealers and other organizations (Service
Organizations) for providing distribution assistance with respect to assets
invested in the Series; (2) compensation to Service Organizations for providing
administration, accounting and other shareholder services with respect to the
Series' shareholders; and (3) 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 Seligman Advisors' costs incurred in
connection with its marketing efforts with respect to shares of the Series.
Seligman, in its sole discretion, may also make similar payments to Seligman
Advisors from its own resources, which may include the management fee
14
<PAGE>
that Seligman receives from each Series, respectively. Payments made by a Series
under its 12b-1 Plan are intended to be used to encourage sales of the Series,
as well as to discourage redemptions.
Fees paid by a Series under its 12b-1 Plan with respect to any class of shares
of the Series may not be used to pay expenses incurred solely in respect of any
other class of the Series or any other Seligman fund. Expenses attributable to
more than one class of a Series are allocated between the classes of the Series
in accordance with a methodology approved by the Fund's Board of Trustees.
Expenses of distribution activities that benefit both a Series and other
Seligman funds are allocated among the applicable Series and funds based on
relative gross sales during the quarter in which such expenses are incurred, in
accordance with a methodology approved by the Board.
Class A
Under the 12b-1 Plan, each Series, with respect to its Class A shares, pays
quarterly to Seligman Advisors a service fee at an annual rate of up to .25% of
the average daily net asset value of the Series' Class A shares. This fee is
used by Seligman Advisors exclusively to make payments to Service Organizations,
which have entered into agreements with Seligman Advisors. Such Service
Organizations receive from Seligman Advisors 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 maintenance of shareholder accounts for each Series,
respectively. The fee payable to Service Organizations from time to time shall,
within such limits, be determined by the Trustees of the Fund. A Series of the
Fund is not obligated to pay Seligman Advisors for any such costs it incurs in
excess of the fee described above. No expense incurred in one year by Seligman
Advisors with respect to Class A shares of a Series may be paid from Class A
12b-1 fees received from the Series in any other year. If a Series' 12b-1 Plan
is terminated in respect of its Class A shares, no amounts (other than amounts
accrued but not yet paid) would be owed by the Series to Seligman Advisors with
respect to its Class A shares. The total amount of service fees paid to Seligman
Advisors in respect of Class A shares of the U.S. Government Securities Series
and the High-Yield Bond Series for the year ended December 31, 1999 was $130,223
and $2,574,351, respectively, equivalent to .25% per annum of each Series' Class
A shares' average daily net assets.
Class B
Under the 12b-1 Plan, each Series, with respect to its Class B shares, pays
monthly a 12b-1 fee at an annual rate of up to 1% of the average daily net asset
value of the Series' Class B shares. This fee is comprised of (1) a distribution
fee equal to .75% per annum, which is paid directly to a third party, FEP
Capital, L.P., to compensate it for having funded, at the time of sale of a
Series' Class B shares (i) a 4% sales commission to Service Organizations and
(ii) a payment of up to .25% of sales to Seligman Advisors to help defray its
costs of distributing Class B shares; and (2) a service fee of up to .25% per
annum which is paid to Seligman Advisors. The service fee is used by Seligman
Advisors exclusively to make payments to Service Organizations which have
entered into agreements with Seligman Advisors. Such Service Organizations
receive from Seligman Advisors a continuing service fee of up to .25% on an
annual basis, payable quarterly, of the average daily net assets of Class B
shares of a Series attributable to the particular Service Organization for
providing personal service and/or maintenance of shareholder accounts for the
Series. The amounts expended by Seligman Advisors or FEP Capital, L.P. in any
one year upon the initial purchase of Class B shares of a Series may exceed the
12b-1 fees paid by the Series in that year. Each Series' 12b-1 Plan permits
expenses incurred in respect of Class B shares in one year to be paid from Class
B 12b-1 fees received from the Series in any other year; however, in any year a
Series is not obligated to pay any 12b-1 fees in excess of the fees described
above. Seligman Advisors and FEP Capital, L.P. are not reimbursed for expenses
that exceed such fees. If a Series' 12b-1 Plan is terminated in respect of Class
B shares, no amounts (other than amounts accrued but not yet paid) would be owed
by the Series to Seligman Advisors or FEP Capital, L.P. with respect to its
Class B shares. The total amount of distribution and service fees paid in
respect of Class B shares of the U.S. Government Securities Series and the
High-Yield Bond Series for the year ended December 31, 1999 was $235,785 and
$11,292,753, respectively, or 1% per annum of each Series' Class B shares'
average daily net assets.
15
<PAGE>
Class C
Under the 12b-1 Plan, the Fund, with respect to Class C shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class C shares. This fee is used by Seligman Advisors as
follows: During the first year following the sale of Class C shares, a
distribution fee of .75% of the average daily net assets attributable to Class C
shares is used, along with any CDSC proceeds during the first eighteen months,
to (1) reimburse Seligman Advisors for its payment at the time of sale of Class
C shares of a 1.25% sales commission to Service Organizations, and (2) pay for
other distribution expenses, 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 other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class C shares, a service fee of up to .25% of the average daily net assets
attributable to such Class C shares is used to reimburse Seligman Advisors for
its prepayment to Service Organizations at the time of sale of Class C shares of
a service fee of .25% of the net asset value of the Class C share sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale). The payment of service fees to
Seligman Advisors is limited to amounts Seligman Advisors actually paid to
Service Organizations at the time of sale as service fees. After the initial
one-year period following a sale of Class C shares, the entire 12b-1 fee
attributable to such Class C shares is paid to Service Organizations for
providing continuing shareholder services and distribution assistance in respect
of the Fund. The total amount of distribution and service fees paid to Seligman
Advisors in respect of Class C shares of the U.S. Government Securities Series
and the High-Yield Bond Series for the year ended December 31, 1999 was $8,752
and $160,308, respectively, or 1% per annum of each Series' Class C shares'
average daily net assets.
The amounts expended by Seligman Advisors in any one year with respect to Class
C shares of a Series may exceed the 12b-1 fees paid by the Series in that year.
Each Series' 12b-1 Plan permits expenses incurred by Seligman Advisors in
respect of Class C shares in one year to be paid from Class C 12b-1 fees in any
other year; however, in any year a Series is not obligated to pay any 12b-1 fees
in excess of the fees described above.
As of December 31, 1999, Seligman Advisors incurred $53,010 and $682,623 of
unreimbursed expenses in respect of the U.S. Government Securities Series' and
the High-Yield Bond Series' Class C shares, respectively, equal to 1.86% and
1.32%, respectively, of each Series' Class C shares' net assets at that date.
If the 12b-1 Plan is terminated in respect of Class C shares of a Series, no
amounts (other than amounts accrued but not yet paid) would be owed by the
Series to Seligman Advisors with respect to its Class C shares.
Class D
Under the 12b-1 Plan, each Series, with respect to its Class D shares, pays
monthly to Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the
average daily net asset value of the Series' Class D shares. This fee is used by
Seligman Advisors as follows: During the first year following the sale of Class
D shares, a distribution fee of .75% of the average daily net assets
attributable to such Class D shares is used, along with any CDSC proceeds, to
(1) reimburse Seligman Advisors for its payment at the time of sale of Class D
shares of a .75% sales commission to Service Organizations, and (2) pay for
other distribution expenses, 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 other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class D shares of a Series, a service fee of up to .25% of the average daily net
assets attributable to such Class D shares is used to reimburse Seligman
Advisors for its prepayment to Service Organizations at the time of sale of
Class D shares of the Series of a service fee of .25% of the net asset value of
the Class D shares sold (for shareholder services to be provided to Class D
shareholders of the Series over the course of the one year immediately following
the sale). The payment of service fees to Seligman Advisors is limited to
amounts Seligman Advisors actually paid to Service Organizations at the time of
sale as service fees. After the initial one-year period following a sale of
Class D shares of a Series, the entire 12b-1 fee attributable to such Class D
shares of the Series is paid to Service Organizations for providing continuing
shareholder services and distribution assistance in respect of assets invested
in the Series. The total amount of distribution and service fees paid to
Seligman Advisors in respect of Class D shares of the U.S. Government Securities
Series and the
16
<PAGE>
High-Yield Bond Series for the year ended December 31, 1999 was $201,377 and
$7,757,830, respectively, or 1% per annum of each Series' Class D shares'
average daily net assets .
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of a Series may exceed the 12b-1 fees paid by the Series in that year.
Each Series' 12b-1 Plan permits expenses incurred by Seligman Advisors in
respect of Class D shares in one year to be paid from Class D 12b-1 fees in any
other year; however, in any year a Series is not obligated to pay any 12b-1 fees
in excess of the fees described above.
As of December 31, 1999, Seligman Advisors incurred $65,138 and $1,139,096,
respectively, of unreimbursed expenses in respect of the U.S. Government
Securities Series' and the High-Yield Bond Series' Class D shares, respectively,
equal to .37% and .17%, respectively, of each Series' Class D shares' net assets
at that date.
If the 12b-1 Plan is terminated in respect of Class D shares of a Series, no
amounts (other than amounts accrued but not yet paid) would be owed by the
Series to Seligman Advisors with respect to its Class D shares.
Payments made by the U.S. Government Securities Series under its 12b-1 Plan for
the year ended December 31, 1999, were spent on the following activities in the
following amounts:
<TABLE>
<CAPTION>
Class A Class B* Class C** Class D
------- -------- --------- -------
<S> <C> <C> <C> <C>
Compensation to underwriters $ -0- $ -0- $8,752 $ 45,147
Compensation to broker/dealers $130,223 $ 59,845 $ -0- $156,230
Other* $ -0- $175,940 $ -0- $ -0-
</TABLE>
* Payment is made to FEP Capital, L.P. to compensate it for having funded at
the time of sale, payments to broker/dealers and underwriters.
** From May 27, 1999 (inception) to December 31, 1999.
Payments made by the High-Yield Bond Series under its 12b-1 Plan for the year
ended December 31, 1999, were spent on the following activities in the following
amounts:
<TABLE>
<CAPTION>
Class A Class B* Class C** Class D
------- -------- --------- -------
<S> <C> <C> <C> <C>
Compensation to underwriters $ -0- $ -0- $160,308 $2,737,490
Compensation to broker/dealers $2,574,351 $2,827,357 $ -0- $5,020,340
Other* $ -0- $8,465,396 $ -0- $ -0-
</TABLE>
* Payment is made to FEP Capital, L. P. to compensate it for having funded at
the time of sale, payments to broker/dealers and underwriters.
** From May 27, 1999 (inception) to December 31, 1999.
The 12b-1 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 12b-1
Plan or in any agreement related to the Plan (Qualified Trustees) and by the
shareholders of each Series at a meeting of shareholders on April 10, 1986. The
Plan was approved with respect to 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 Fund Series on April 22, 1996. The Plan was approved with
respect to 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 Class B shares of the
U.S. Government Securities Series on January 1, 1997. The Plan was approved in
respect of Class C shares of both Series on May 20, 1999 by the Board of
Trustees, including a majority of the Qualified Trustees, and became effective
in respect of Class C shares of both Series on June 1, 1999. 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 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 (1) permit holders of Class B shares to vote as
a separate class on the proposed
17
<PAGE>
increase or (2) establish a new class of shares subject to the same payment
under the Plans as existing Class A shares, in which case the Class B shares
will thereafter convert into the new class instead of into Class A shares. No
material amendment to the Plans may be made except by a majority of both the
Trustees and Qualified Trustees.
The 12b-1 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) 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. The 12b-1 Plan is
reviewed by the Trustees annually.
Seligman Services acts as the broker/dealer of record for shareholder accounts
of each Series that do not have a designated financial advisor and receives
compensation pursuant to each Series' 12b-1 Plan for providing personal services
and account maintenance to such accounts and other distribution services. For
the years ended December 31, 1999, 1998 and 1997, Seligman Services received
distribution and service fees pursuant to the U.S. Government Securities Series'
12b-1 Plan in the amounts of $15,299, $16,822 and $13,630, respectively. For the
years ended December 31, 1999, 1998 and 1997, Seligman Services received
distribution and service fees pursuant to the High-Yield Bond Series' 12b-1 Plan
in the amounts of $61,641, $55,399 and $35,679, respectively.
Portfolio Transactions and Other Practices
Portfolio Transactions
Seligman will seek the most favorable price and execution in the purchase and
sale of portfolio securities for each Series of the Fund. When two or more of
the investment companies in the Seligman Group or other investment advisory
clients of Seligman desire to buy or sell the same security at the same time,
the securities purchased or sold are allocated by Seligman 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.
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, Seligman 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 Seligman for its use in
connection with its services to the Fund as well as to other clients.
For the year ended December 31, 1999, the Seligman High-Yield Bond Series paid
total brokerage commissions to others for execution, research and statistical
services in the amounts of $38,144. For the years ended December 31, 1998 and
1997, the Seligman High-Yield Bond Series did not pay any brokerage commissions
to others for execution, research and statistical services.
Dealer Selection
Consistent with seeking the most favorable price and execution when buying or
selling portfolio securities, Seligman may give consideration to the research,
statistical, and other services furnished by dealers to Seligman for its use, as
well as the general attitude toward and support of investment companies
demonstrated by such dealers. Such services include supplemental investment
research, analysis, and reports concerning issuers, industries, and securities
deemed by Seligman to be beneficial to a Series. In addition, Seligman is
authorized to place orders with dealers who provide supplemental investment and
market research and security and economic analysis although the use of such
dealers may result in a Series paying a higher spread, than the use of dealers
selected solely on the basis of seeking the most favorable price and execution.
18
<PAGE>
Directed Brokerage
During the year ended December 31,1999, neither Series of the Fund nor Seligman,
through an agreement or understanding with a broker, or otherwise through an
internal allocation procedure, directed any of the Fund's portfolio transactions
to a dealer because of research services provided.
Regular Broker-Dealers
During the year ended December 31, 1999, neither Series of the Fund acquired
securities of its regular brokers or dealers (as defined in Rule 10b-1 under the
1940 Act) or of its parents.
Shares of Beneficial Interest and Other Securities
Shares of Beneficial Interest
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. At present, shares of
beneficial interest of two series have been authorized, which shares of
beneficial interest constitute interests in the U.S. Government Securities
Series and the High-Yield Bond Series. Shares of beneficial interest of each
Series are divided into four classes, designated Class A, Class B, Class C, and
Class D shares of beneficial interest. Each share of beneficial interest of the
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 (Multiclass Plan)
pursuant to Rule 18f-3 under the 1940 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 of
each Series entitle their holders to one vote per share. Each Series' 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.
Other Securities
The Fund has no authorized securities other than the above-mentioned shares.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Class A shares of each Series of the Fund may be purchased at a price equal to
the next determined net asset value per share, plus an initial sales charge.
Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:
19
<PAGE>
Volume Discounts are provided if the total amount being invested in Class A
shares of a Series alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge 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 a Series and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
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 charge at the time of purchase to determine
reduced sales charges 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 was an initial sales charge at the time of
purchase will be taken into account in orders placed through a dealer, however,
only if Seligman Advisors is notified by an investor or a dealer of the amount
owned by the investor at the time the purchase is made and is furnished
sufficient information to permit confirmation.
A Letter of Intent allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in each
Series' Prospectus, based on the total amount of Class A shares of the Series
that the letter states the investor intends to purchase plus the total net asset
value of shares that were sold with an initial sales charge 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 charge at
the time of purchase. Reduced sales charges 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.
Persons Entitled To Reductions. Reductions in initial sales charges apply to
purchases of Class A shares of 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, organizations tax exempt under Section 501(c)(3) or (13) of the
Internal Revenue Code, and non-qualified employee benefit plans that satisfy
uniform criteria are considered "single persons" for this purpose. The uniform
criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports, and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The table of sales charges 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 (1) $500,000 invested in the Seligman Group of mutual funds
or (2) 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. "Eligible employee benefit plan" means any plan or arrangement, whether
or not tax qualified, which provides for the purchase of Fund shares. Sales of
shares to such plans must be made in connection with a payroll deduction system
of plan funding or other system acceptable to Seligman Data Corp. Section 403(b)
plans sponsored by public educational institutions are not eligible for net
asset value purchases based on the aggregate investment made by the plan or
number of eligible employees.
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
20
<PAGE>
Data Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:
(1) 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;
(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;
(4) to financial institution trust departments;
(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;
(6) to accounts of financial institutions or broker/dealers that charge account
management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts;
(7) 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;
(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside trustees;
(9) to certain "eligible employee benefit plans" as discussed above;
(10) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and
(11) in connection with sales pursuant to a 401(k) alliance program which has an
agreement with Seligman Advisors.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge due to a purchase of $1,000,000 or more either alone or through a
Volume Discount, Right of Accumulation, or Letter of Intent are subject to a
CDSC of 1% on redemptions of such shares within eighteen months of purchase.
Employee benefit plans eligible for net asset value sales may be subject to a
CDSC of 1% for terminations at the plan level only, on redemptions of shares
purchased within eighteen months prior to plan termination. The 1% CDSC will be
waived on shares of each Series that were purchased through Morgan Stanley Dean
Witter & Co. by certain Chilean institutional investors (i.e., pension plans,
insurance companies, and mutual funds). Upon redemption of such shares within an
eighteen-month period, Morgan Stanley Dean Witter will reimburse Seligman
Advisors a pro rata portion of the fee it received from Seligman Advisors at the
time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Class B
Class B shares of each Series of the Fund may be purchased at a price equal to
the next determined net asset value, without an initial sales charge. However,
Class B shares of each Series are subject to a CDSC 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.
21
<PAGE>
Years Since Purchase CDSC
- -------------------- ----
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%
Approximately eight years after purchase, Class B shares will convert
automatically to Class A shares. Shares purchased through reinvestment of
dividends and capital gain 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 a 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 a Series exercising the exchange privilege
will continue to be subject to the Series' CDSC schedule if such schedule is
higher or longer than the CDSC 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' CDSC schedule if such schedule is higher or longer than the CDSC
schedule relating to the Class B shares of the Seligman mutual fund from which
the exchange has been made.
Class C
Class C shares may be purchased at a price equal to the next determined net
asset value, plus an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less.
Class D
Class D shares of each Series of the Fund may be purchased at a price equal to
the next determined net asset value, without an initial sales charge. However,
Class D shares of each Series are subject to a CDSC of 1% if the shares are
redeemed within one year of purchase, charged as a percentage of the current net
asset value or the original purchase price, whichever is less. Unlike Class B
shares, Class D shares do not automatically convert to Class A shares after
eight years.
Systematic Withdrawals. Class B, Class C and Class D shareholders of each Series
who reinvest both their dividends and capital gain distributions to purchase
additional shares of each Series, respectively, may use the Series' Systematic
Withdrawal Plan to withdraw up to 12%, 10% and 10%, respectively, of the value
of their accounts per year without the imposition of a CDSC. Account value is
determined as of the date the systematic withdrawals begin.
CDSC Waivers. The CDSC on Class B, Class C and Class D shares of each Series
(and certain Class A shares, as discussed above) will be waived or reduced in
the following instances:
(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;
(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue 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), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age 70
1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
22
<PAGE>
(3) in whole or in part, in connection with shares sold to current and retired
Trustees of the Fund;
(4) 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 any registered investment
management company;
(5) in whole or in part, in connection with systematic withdrawals;
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class B, Class C or Class D
shares of a Series sold by a dealer, the CDSC is waived because the redemption
qualifies for a waiver as set forth above, the dealer shall remit to Seligman
Advisors promptly upon notice, an amount equal to the payment or a portion of
the payment made by Seligman Advisors at the time of sale of such 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 and, if applicable, any sales charge), although the Fund does not
presently intend to accept securities in payment for either 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 Seligman 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 charges, 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 that is readily ascertainable.
Fund Reorganizations
Class A shares and Class C shares of each Series may be issued without an
initial sales charge in connection with the acquisition of cash and securities
owned by other investment companies. Any CDSC will be waived in connection with
the redemption of a Series' shares if the Series is combined with another
Seligman mutual fund, or in connection with a similar reorganization
transaction.
Offering Price
When you buy or sell shares of a Series of the Fund, you do so at the Class's
net asset value (NAV) next calculated after Seligman Advisors accepts your
request. Any applicable sales charge will be added to the purchase price for
Class A shares and Class C shares.
NAV per share of each class of a Series is determined as of the close of regular
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open for business. The NYSE is currently closed on New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The Fund
will also determine NAV 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 NAV of
Series shares might be materially affected. NAV per share for a class of a
Series is computed by dividing such class's 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 management fee, are accrued daily and taken into account for the purpose of
determining NAV. The NAV of Class B, Class C and Class D shares will generally
be lower than the NAV of Class A shares as a result of the higher 12b-1 fees
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
23
<PAGE>
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.
Securities traded on a 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 or other assets for which recent market
quotations are not readily available are valued at fair value as determined in
accordance with procedures approved by the Board of Trustees. Short-term
obligations with less than 60 days remaining to maturity are generally valued at
amortized cost. Short-term obligations with more than 60 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. Expenses and fees,
including the investment management fee, are accrued daily and taken into
account for the purpose of determining the net asset value of Series shares.
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the shares of a Series are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE.
For purposes of determining the net asset value per share of a Series of the
Fund, all assets and liabilities initially expressed in foreign currencies will
be converted into US dollars at the mean between the bid and offer prices of
such currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
Specimen Price Make-Up
Under the current distribution arrangements between the Fund and Seligman
Advisors, Class A shares and Class C shares of each Series are sold with a
maximum initial sales charge of 4.75% and 1.00%(1), respectively, and Class B
and Class D shares of each Series are sold at NAV(2). Using each Class's NAV at
December 31, 1999,, the maximum offering price of each Series' shares is as
follows:
<TABLE>
<CAPTION>
U.S. Government High-Yield
Securities Series Bond Series
----------------- -----------
<S> <C> <C>
Class A
Net asset value per share $6.50 $ 6.26
Maximum sales charge (4.75% of offering price) .32 .31
---- -----
Offering price to public $6.82 $ 6.57
==== =====
Class B
Net asset value and offering price per share(2) $6.51 $6.26
===== =====
Class C
Net asset value per share $6.51 $6.27
Maximum sales charge (1.00% of offering price(1)) .07 .06
Offering price to public $6.58 $6.33
===== =====
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Class D
Net asset value and offering price per share(2) $6.51 $6.27
===== =====
</TABLE>
- ------------
(1) In addition to the front-end sales charge of 1.00%, Class C shares are also
subject to a 1% CDSC if you redeem your shares within 18 months of
purchase.
(2) Class B shares are subject to a CDSC declining from 5% in the first year
after purchase to 0% after six years. Class D shares are also subject to a
1% CDSC if you redeem your shares within one year of purchase.
Redemption in Kind
The procedures for selling a Series' 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 SEC. Under these circumstances, redemption proceeds
may be made in securities. If payment is made in securities, a shareholder may
incur brokerage expenses in converting these securities to cash.
Taxation of each Series
Each Series is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, each 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
the Series' net investment income and net short-term capital gains are
distributed to shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to shareholders, whether received
in cash or reinvested in additional shares. To the extent designated as derived
from a Series' dividend income that would be eligible for the dividends received
deduction if the Series were not a regulated investment company, they are
eligible, subject to certain restrictions, for the 70% dividends received
deduction for corporations.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in the form of additional shares issued by
a Series will be treated for federal income tax purposes as having received a
distribution in an amount equal to the fair market value on the date of
distribution of the shares received. Individual shareholders generally will be
subject to federal tax on distributions of net capital gains at a maximum rate
of 20% if designated as derived from a Series capital gains from property held
for more than one year.
Any gain or loss realized upon a sale or redemption of shares in a 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. Individual shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as long-term capital loss to the extent
that it offsets the long-term capital gain distribution. In addition, no loss
will be allowed on the sale or other disposition of shares of a 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 (including shares
acquired through dividend reinvestment) securities that are substantially
identical to the shares of the Series.
In determining gain or loss on shares of a 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 charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Series. Any sales charge not taken into account in
25
<PAGE>
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.
Each Series of the Fund will generally be subject to an excise tax of 4% on the
amount of any income or capital gains, above certain permitted levels,
distributed to shareholders on the basis such that such income or gain is not
taxable to shareholders in the calendar year in which it was earned by the
Series. 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 each 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 US 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 of its
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.
Underwriters
Distribution of Securities
The Fund and Seligman Advisors are parties to a Distributing Agreement dated
January 1, 1993 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of each Series of the Fund. Seligman Advisors accepts
orders for the purchase of Series' shares, which are offered continuously. As
general distributor of each Series' shares, Seligman Advisors allows
reallowances to all dealers on sales of Class A shares and Class C shares, as
set forth above under "Dealer Reallowances." Seligman Advisors retains the
balance of sales charges and any CDSCs paid by investors.
Total initial sales charges paid by shareholders of Class A shares of the U.S.
Government Securities Series for the years ended December 31, 1999, 1998 and
1997 amounted to $45,253, $61,590 and $41,143, respectively, of which $6,203,
$6,123 and $4,683, respectively, was retained by Seligman Advisors. Total
initial sales charges paid by shareholders of Class C shares of the U.S.
Government Securities Series for the period from May 27, 1999 (inception) to
December 31, 1999 amounted to $23,801, none of which was retained by Seligman
Advisors. No Class C shares of the U.S. Government Securities Series were issued
or outstanding during the years ended December 31, 1998 and 1997.
Total initial sales charges paid by shareholders of Class A shares of the
High-Yield Bond Series for the years ended December 31, 1999, 1998 and 1997,
amounted to $4,357,095, $9,774,182 and $9,142,834, respectively, of which
$573,376, $1,128,663 and $1,047,484, respectively, was retained by Seligman
Advisors. Total initial sales charges paid by shareholders of Class C shares of
the High-Yield Bond Series for the period from May 27, 1999 (inception) to
December 31, 1999 amounted to $440,592, none of which was retained by Seligman
Advisors. No Class C shares of the High-Yield Bond Series were issued or
outstanding during the fiscal years ended December 31, 1998 and 1997.
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Fund, received the following commissions and other
compensation from each Series during the year ended December 31, 1999:
26
<PAGE>
<TABLE>
<CAPTION>
Compensation on
Net Underwriting Redemptions and
Discounts and Repurchases
Commissions (CDSC on Class A,
(Class A Sales Class C and Class D Brokerage Other
Fund Charges Retained) Shares Retained) Commissions Compensation(1)
---- ----------------- ------------------- ------------ --------------
<S> <C> <C> <C> <C>
U.S. Government
Securities Series $ 6,203 $ 43,767 $-0- $ 4,427
High-Yield Bond Series $573,376 $536,070 $-0- $329,927
</TABLE>
(1) Seligman Advisors has sold its rights to collect the distribution fees paid
by the Fund in respect of Class B shares and any CDSC imposed on
redemptions of Class B shares to FEP Capital, L.P., in connection with an
arrangement with FEP Capital, L.P. as discussed above under "12b-1 Plan."
In connection with this arrangement, Seligman Advisors receives payments
from FEP Capital, L.P. based on the value of Class B shares sold. Such
payments received for the year ended December 31, 1999 are reflected in the
table.
Other Payments
Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of each Series of $1,000,000 or more (NAV sales),
calculated as follows: 1.00% of NAV sales up to but not including $2 million;
.80% of NAV sales from $2 million up to but not including $3 million; .50% of
NAV sales from $3 million up to but not including $5 million; and .25% of NAV
sales from $5 million and above. The calculation of the fee will be based on
assets held by a "single person," 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 purchases made on behalf of any other
fiduciary or individual account.
Seligman Advisors 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" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 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 for each Plan 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.
Seligman Advisors may from time to time assist dealers by, among other things,
providing sales literature to, and holding informational programs for the
benefit of, dealers' registered representatives. Dealers may limit the
participation of registered representatives in such informational programs by
means of sales incentive programs which may require the sale of minimum dollar
amounts of shares of Seligman mutual funds. Seligman Advisors may from time to
time pay a bonus or other incentive to dealers that sell shares of the Seligman
mutual funds. In some instances, these bonuses or incentives may be offered only
to certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by Seligman during a specified period of time. Such bonus or other
incentive will be made in the form of cash or, if permitted, may take the form
of non-cash payments. The non-cash payments will include (i) business seminars
at Seligman's headquarters or other locations, (ii) travel expenses, including
meals, entertainment and lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families to places
within or outside the United States, or (iii) the receipt of certain
merchandise. The cash payments may include payment of various business expenses
of the dealer. The cost to Seligman Advisors of such promotional activities and
payments shall be consistent with the rules of the National Association of
Securities Dealers, Inc., as then in effect.
27
<PAGE>
Calculation of Performance Data
Class A
The annualized yields for the 30-day period ended December 31, 1999 for the
Class A shares of the U.S. Government Securities Series and the High-Yield Bond
Series were 5.20% and 10.89%, 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 charge of 4.75% of the net amount invested) on December 31,
1999, 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 9,821,716 and 152,408,946, respectively, which was the average daily number
of shares outstanding during the 30-day period that were eligible to receive
dividends.
The average annual total returns for the Class A shares of the U.S. Government
Securities Series for the one-, five-, and ten-year periods ended on December
31, 1999 were (8.16)%, 4.95% and 5.37%, respectively. The average annual total
returns for the Class A shares of the High Yield Bond Series for the one-,
five-, and ten-year periods ended on December 31, 1999 were (4.71)%, 8.86% and
10.33%, respectively. These returns were computed by subtracting the maximum
sales charge of 4.75% of public offering price and assuming that all of the
dividends and capital gain distributions by the Series, 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. The average annual total return was then
determined by calculating the annual rate required for the initial investment to
grow to the amount that would have been received upon redemption (i.e., the
average annual compound rate of return).
Table A below illustrates the total return (income and capital) on Class A
shares of each Series of the Fund, assuming all dividends and capital gain
distributions are reinvested in additional shares. It shows that a $1,000
investment in Class A shares of the U.S. Government Securities Series made on
December 31, 1989 had a value of $1,688 on December 31, 1999, resulting in an
aggregate total return of 68.75%; and a $1,000 investment in Class A shares of
the High-Yield Bond Series made on December 31, 1989 had a value of $2,674 on
December 31, 1999, resulting in an aggregate total return of 167.36%.
Class B
The annualized yields for the 30-day period ended December 31, 1999 for the
Class B shares of the U.S. Government Securities Series and the High-Yield Bond
Series were 4.64% and 10.66%, respectively. The annualized yield was computed by
dividing each Series' net investment income per share earned during the 30-day
period by the maximum offering price per share (i.e., the net asset value) on
December 31, 1999, which was the last day of the period. The average number of
Class B shares of the U.S. Government Securities Series and the High-Yield Bond
Series was 3,675,030 and 174,170,537, respectively, which was the average daily
number of shares outstanding during the 30-day period that were eligible to
receive dividends.
The average annual total return for the Class B shares of the U.S. Government
Securities Series for the one-year period ended December 31, 1999 and for the
period January 1, 1997 (commencement of operations) through December 31, 1999
was (9.05)% and 2.47%, respectively. The average annual total returns for the
Class B shares of the High-Yield Bond Series for the one-year period ended
December 31, 1999and for the period April 22, 1996 (commencement of operations)
through December 31, 1999 were (5.20)% and 5.24%, respectively. These returns
were computed assuming that all of the dividends and capital gain distributions
paid by each Series' 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 applicable CDSC.
Table B illustrates the total return (income and capital) on Class B shares of
the U.S. Government Securities Series and the High-Yield Bond Series, assuming
all dividends and capital gain distributions are reinvested in additional
shares. It shows that a $1,000 investment in Class B shares of the U.S.
Government Securities Series made on January 1, 1997 (commencement of offering
of Class B shares) had a value of $1,076 on December 31, 1999, resulting in an
aggregate total return of 7.59%; and 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 $1,207 on December 31, 1999, resulting in an
aggregate total return of 20.74%.
28
<PAGE>
Class C
The annualized yields for the 30-day period ended December 31, 1999 for the
Class C shares of the U.S. Government Securities Series and the High-Yield Bond
Series were 4.72% and 10.53%, 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, 1999, which was the last day of the period. The average number of
Class C shares of the U.S. Government Securities Series and the High-Yield Bond
Series was 448,214 and 7,531,718, 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 total returns for the Class C shares of the U.S. Government Securities
Series and High-Yield Bond Series for the period from May 27, 1999 (inception)
through December 31, 1999 was (3.54)% and (3.63)%, respectively. These amounts
were computed by subtracting the maximum sales charge of 1.00% of the public
offering price and assuming that all of the dividends and capital gain
distributions by each Series' Class C shares, if any, were reinvested over the
period. It was then assumed that at the end of the period, the entire amount was
redeemed, subtracting the 1% CDSC.
Table C illustrates the total return (income and capital) on Class C shares of
the U.S. Government Securities Series and the High-Yield Bond Series, assuming
all dividends and capital gain distributions are reinvested in additional
shares. It shows that a $1,000 investment in Class C shares of the U. S.
Government Securities Series and the High-Yield Bond Series made on May 27, 1999
(commencement of offering of Class C shares) had a value of $965 and $964,
respectively, on December 31, 1999, resulting in an aggregate total return of
(3.54)% and (3.63)%, respectively.
Class D
The annualized yield for the 30-day period ended December 31, 1999 for the Class
D shares of the U.S. Government Securities Series and the High-Yield Bond Series
was 4.64% and 10.65%, 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, 1999, 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 2,675,314 and 108,844,259, 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 D shares of the U.S. Government
Securities Series for the one- and five-year periods ended December 31, 1999 and
for the period September 21, 1993 (commencement of operations) through December
31, 1999 were (5.38)%, 5.13% and 3.11%, respectively. The average annual total
returns for the Class D shares of the High-Yield Bond Series for the one- and
five-year periods ended December 31, 1999 and for the period September 21, 1993
(commencement of operations) through December 31, 1999 were (1.44)%, 9.12% and
7.90%, respectively. These amounts were computed assuming that all of the
dividends and capital gain 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% CDSC,
if applicable.
Table D illustrates the total return (income and capital) on Class D shares of
the U.S. Government Securities Series and the High-Yield Bond Series, assuming
all dividends and capital gain distributions are reinvested in additional
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 $1,212 on December
29
<PAGE>
31, 1999, resulting in an aggregate total return of 21.18%, 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 $1,612 on
December 31, 1999, resulting in an aggregate total return of 61.22%.
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 either Series today.
<TABLE>
<CAPTION>
TABLE A - CLASS A SHARES
Value of Value
Year Value of Capital Gain of Total
Ended(1) Initial Investment(2) Distributions Dividends Total Value(2) Return(1)(3)
- -------- --------------------- ------------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C>
U.S. Government
Securities Series
12/31/90 $932 $-0- $ 81 $1,013
12/31/91 988 -0- 168 1,156
12/31/92 973 -0- 250 1,223
12/31/93 972 -0- 342 1,314
12/31/94 876 -0- 387 1,263
12/31/95 968 -0- 524 1,492
12/31/96 908 -0- 580 1,488
12/31/97 931 -0- 683 1,614
12/31/98 959 -0- 792 1,751
12/31/99 880 -0- 808 1,688 68.75%
</TABLE>
<TABLE>
<CAPTION>
TABLE A - CLASS A SHARES
Value of Value
Year Value of Capital Gain of Total
Ended(1) Initial Investment(2) Distributions Dividends Total Value(2) Return(1)(3)
- -------- --------------------- ------------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C>
High-Yield
Bond Series
12/31/90 $ 775 $-0- $ 108 $ 883
12/31/91 887 -0- 267 1,154
12/31/92 955 -0- 431 1,386
12/31/93 1,033 -0- 619 1,652
12/31/94 945 -0- 720 1,665
12/31/95 1,036 -0- 974 2,010
12/31/96 1,079 -0- 1,229 2,308
12/31/97 1,124 -0- 1,513 2,637
12/31/98 1,034 7 1,630 2,671
12/31/99 932 6 1,736 2,674 167.36%
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
TABLE B - CLASS B SHARES
Value of Value
Period/Year Value of Capital Gain of Total
Ended(1) Initial Investment(2) Distributions Dividends Total Value(2) Return(1)(3)
- -------- --------------------- ------------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C>
U.S. Government
Securities Series
12/31/97 $1,024 $-0- $ 49 $1,073
12/31/98 1,057 -0- 100 1,157
12/31/99 938 -0- 138 1,076 7.59%
High-Yield
Bond Series
12/31/96 $1,028 $-0- $ 63 $1,091
12/31/97 1,070 -0- 166 1,236
12/31/98 985 3 255 1,243
12/31/99 860 3 344 1,207 20.74%
</TABLE>
<TABLE>
<CAPTION>
TABLE C - CLASS C SHARES
Value of Value
Period/Year Value of Capital Gain of Total
Ended(1) Initial Investment(2) Distributions Dividends Total Value(2) Return(1)(3)
- -------- --------------------- ------------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C>
U.S. Government
Securities Series
12/31/99 $941 $-0- $24 $965 (3.54)%
High-Yield
Bond Series
12/31/99 $910 $-0- $54 $964 (3.63)%
</TABLE>
<TABLE>
<CAPTION>
TABLE D - CLASS D SHARES
Value of Value
Period/Year Value of Capital Gain of Total
Ended(1) Initial Investment(2) Distributions Dividends Total Value(2) Return(1)(3)
- -------- --------------------- ------------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C>
U.S. Government
Securities Series
12/31/93 $982 $-0- $ 12 $ 994
12/31/94 884 -0- 59 943
12/31/95 977 -0- 128 1,105
12/31/96 919 -0- 176 1,095
12/31/97 940 -0- 237 1,177
12/31/98 970 -0- 298 1,268
12/31/99 888 -0- 324 1,212 21.18%
High-Yield
Bond Series
12/31/93 $1,030 $-0- $ 15 $1,045
12/31/94 942 -0- 100 1,042
12/31/95 1,033 -0- 214 1,247
12/31/96 1,077 -0- 346 1,423
12/31/97 1,121 -0- 491 1,612
12/31/98 1,031 4 586 1,621
12/31/99 930 4 678 1,612 61.22%
- --------------------
</TABLE>
31
<PAGE>
(1) For the ten years ended December 31, 1999 for Class A shares, from
commencement of offering of Class B shares of the U.S. Government
Securities Series on January 1, 1997, from commencement of offering of
Class B shares of the High-Yield Bond Series on April 22, 1996, from
commencement of offering of Class C shares on May 27, 1999 and from
commencement of offering of Class D shares on September 21, 1993.
(2) The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales charge or CDSC, if applicable, assumes that all
dividends and capital gain distributions were taken in cash and reflects
changes in the net asset value of the shares purchased with the
hypothetical initial investment. "Total Value" reflects the effect of the
CDSC, 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 charge on Class A shares and Class C 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 CDSC on Class B, Class C 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.
A Series of the Fund may from time to time, make reference in advertising or
promotional material to performance information, including mutual fund rankings,
prepared by Lipper Analytical Services, Inc., an independent reporting service
which monitors the performance of mutual funds. In calculating the total return
of a Series' Class A, Class B, Class C and Class D shares, respectively, the
Lipper analysis assumes investment of all dividends and distributions paid but
does not take into account applicable sales charges. A Series may also refer in
advertisements 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/WIESENBERGER MUTUAL FUNDS INVESTMENT REPORT, CHRISTIAN SCIENCE MONITOR,
FINANCIAL PLANNING, FINANCIAL TIMES, FINANCIAL WORLD, FORBES, FORTUNE,
INDIVIDUAL INVESTOR, INVESTMENT ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S,
LOS ANGELES TIMES, MONEY MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS,
SMART MONEY, THE NEW YORK TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS
AND WORLD REPORT, WORTH MAGAZINE, WASHINGTON POST and YOUR MONEY.
A Series' advertising or promotional material may make reference to the Series'
"Beta," "Standard Deviation," or "Alpha." Beta measures the volatility of a
Series, as compared to that of the overall market. Standard deviation measures
how widely a Series' performance has varied from its average performance, and is
an indicator of a Series' potential for volatility. Alpha measures the
difference between the returns of a Series and the returns of the market,
adjusted for volatility.
Financial Statements
The Annual Reports to shareholders for the year ended December 31, 1999 contains
schedules of the investments of each of the Fund's Series as of December 31,
1999 as well as certain other financial information as of the applicable date.
The financial statements and notes included in the Annual Reports, and the
Independent Auditors' Reports thereon, are incorporated herein by reference.
These Reports will be furnished without charge to investors who request copies
of this Statement of Additional Information.
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
32
<PAGE>
required by the 1940 Act, (c) with respect to any termination or reorganization
of the Fund or any Series to the extent and as provided in the Declaration of
Trust, (d) with respect to any amendment of the Declaration of Trust (other than
amendments establishing and designating new Series, abolishing Series when there
are no units thereof outstanding, changing the name of the Fund or the name of
any Series, supplying any omission, curing any ambiguity or curing, correcting
or supplementing any provision thereof which is internally inconsistent with any
other provision thereof or which is defective or inconsistent with the 1940 Act
or with the requirements of the Code or applicable regulations for the Fund's
obtaining the most favorable treatment thereunder available to regulated
investment companies), which amendments require approval by a majority of the
shares entitled to vote, (e) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding, or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Fund or the shareholders, and (f) with
respect to such additional matters relating to the Fund as may be required by
the 1940 Act, the Declaration of Trust, the By-Laws of the Fund, any
registration of the Fund with the SEC 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 one percent 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 SEC,
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 SEC 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 SEC 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 SEC 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
33
<PAGE>
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, 801 Pennsylvania, 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 each Series of the Fund.
Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, New
York 10281.
34
<PAGE>
Appendix A
MOODY'S INVESTORS SERVICE (MOODY'S)
DEBT SECURITIES
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than Aaa bonds because margins of protection may not
be as large or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds 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 characteristically lacking or may be unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact may have speculative characteristics as well.
Ba: Bonds 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 thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the 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 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 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 which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
35
<PAGE>
COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to repay
punctually promissory senior debt obligations not having an original maturity in
excess of one year. Issuers rated "Prime-1" or "P-1" indicates the highest
quality repayment ability of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
ability for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an acceptable
capacity for repayment of short-term promissory obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high Financial leverage.
Adequate alternate liquidity is maintained.
Issues rated "Not Prime" do not fall within any of the Prime rating categories.
STANDARD & POOR'S RATINGS SERVICES (S&P)
DEBT SECURITIES
AAA: Debt issues rated AAA are highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt issues rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Debt issues rated A are regarded as upper medium grade. They have a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB: Debt issues rated BBB are regarded as having an adequate capacity to pay
interest and re-pay 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 re-pay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC: Debt issues rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and pre-pay
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 exposure to adverse conditions.
C: The rating C is reserved for income bonds on which no interest is being paid.
D: Debt issues 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.
36
<PAGE>
COMMERCIAL PAPER
S&P Commercial Paper ratings are current assessments of the likelihood of timely
payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding timely
payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
The ratings assigned by S&P may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within its major rating categories.
37
<PAGE>
Appendix B
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing businesses in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale of
government securities to help finance the Civil War - Joseph Seligman, with his
brothers, established the international banking and investment firm of J. & W.
Seligman & Co. In the years that followed, the Seligman Complex played a major
role in the geographical expansion and industrial development of the United
States.
The Seligman Complex:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension. o Is appointed U.S. Navy fiscal agent by President
Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
38
<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 50
mutual fund portfolios.
o Helps pioneer state-specific municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Global Fund Series, Inc., which today offers five
separate series: Seligman International Growth Fund, Seligman Global
Smaller Companies Fund, Seligman Global Technology Fund, Seligman Global
Growth Fund and Seligman Emerging Markets 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.
o Launches innovative Seligman New Technologies Fund, Inc., a closed-end
"interval" fund seeking long-term capital appreciation by investing in
technology companies, including venture capital investing.
...2000
o Introduces Seligman Time Horizon/Harvester Series, Inc., an asset
allocation type mutual fund containing four funds: Seligman Time Horizon 30
Fund, Seligman Time Horizon 20 Fund, Seligman Time Horizon 10 Fund and
Seligman Harvester Fund.
39
<PAGE>
File No. 2-93076
811-4103
PART C. OTHER INFORMATION
Item 23. Exhibits
All Exhibits have been previously filed, except Exhibits marked with an
asterisk (*), which are filed herewith.
(a) Instrument of Establishment and Designation dated May 24, 1999.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 27 filed on May 28, 1999.)
(a)(1) Form of Amended and Restated Declaration of Trust. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 22 filed on
December 31, 1996.)
(b) Form of Restatement of Bylaws. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 22 filed on December 31,
1996.)
(c) Specimen Stock Certificate for Class A Shares. (Incorporated by
Reference to Post-Effective Amendment No. 18 filed on April 29, 1994.)
(c)(1) Specimen Stock Certificate for Class B Shares. (Incorporated by
reference to Form SE filed on April 16, 1996).
(c)(2) Specimen Stock Certificate for Class D Shares. (Incorporated by
Reference to Post-Effective Amendment No. 17 filed on September 21,
1993.)
(d) 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.)
(d)(1) 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.)
(e) Addendum to Sales/Bank Agreement. (Incorporated by reference to
Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File No. 811-1886) filed on May 28,
1999.)
(e)(1) Form of Bank Agreement between Seligman Advisors, Inc. and Banks.
(Incorporated by reference to Post-Effective Amendment No. 57 to the
Registration Statement of Seligman Capital Fund, Inc. (File No.
811-1886) filed on May 28, 1999.)
(e)(2) Form of the new Distributing Agreement between Registrant and Seligman
Advisors, Inc. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 23 filed on April 29, 1997.)
(e)(3) Form of amended Sales Agreement between Seligman Advisors, Inc. and
Dealers. (Incorporated by Reference to Post-Effective Amendment No. 20
filed on April 19, 1996.)
(e)(4) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co. (Incorporated by reference to Post-Effective
Amendment No. 53 to the Registration Statement of Seligman Capital
Fund, Inc. (File No. 811-1886) filed on April 28, 1997.)
C-1
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
(e)(5) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co. with respect to certain Chilean
institutional investors. (Incorporated by reference to Post-Effective
Amendment No. 53 to the Registration Statement of Seligman Capital
Fund, Inc. (File No. 811-1886) filed on April 28, 1997.)
(e)(6) Form of Dealer Agreement between Seligman Advisors, Inc. and Salomon
Smith Barney Inc. (Incorporated by reference to Post-Effective
Amendment No. 53 to the Registration Statement of Seligman Capital
Fund, Inc. (File No. 811-1886) filed on April 28, 1997.)
(f) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement of Seligman Frontier Fund, Inc. (File No.
811-4078) filed on January 28, 1997.)
(f)(1) Deferred Compensation Plan for Directors of Seligman High Income Fund,
Inc. (Incorporated by reference to Registrant' Post-Effective
Amendment No. 25 filed on April 30, 1998.)
(g) Form of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 23 filed on April 29, 1997.)
(h) Not Applicable.
(i) Opinion and Consent of Counsel in respect of Class C shares.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 27 filed on May 28, 1999.)
(i)(1) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 23 filed on April 29, 1997.)
(j) *Consent of Independent Auditors.
(k) Not Applicable.
(l) Form of Purchase Agreement (Investment Letter) for Initial Capital
shares between Registrant and J. & W. Seligman & Co. Incorporated with
respect to Class C shares for the Seligman U.S. Government Securities
Series and Seligman High-Yield Bond Series. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 27 filed on May 28,
1999.)
(l)(1) Purchase Agreement (Investment Letter) for Initial Capital between
Registrant and 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.)
(l)(2) Purchase Agreement (Investment Letter) 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 Registrant's Post-Effective Amendment No. 20 filed on
April 19, 1996.)
(l)(32) Purchase Agreement (Investment Letter) for Initial Capital between
Registrant and J. & W. Seligman & Co. Incorporated with respect to
Registrant's Class D shares. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 17 filed on September 21,
1993.)
C-2
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
(m) Amended Administration, Shareholder Services and Distribution Plan of
Registrant. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 27 filed on May 28, 1999.)
(m)(1) Amended Administration, Shareholder Services and Distribution
Agreement between Seligman Advisors, Inc. and Dealers. (Incorporated
by reference to Post-Effective Amendment No. 57 to the Registration
Statement of Seligman Capital Fund, Inc. (File No. 811-1886) filed on
May 28, 1999.)
(o) Plan of Multiple Classes of Shares (four Classes) pursuant to Rule
18f-3 under the Investment Company Act of 1940. (Incorporated by
reference to Post-Effective Amendment No. 57 to the Registration
Statement of Seligman Capital Fund, Inc. (File No. 811-1886) filed on
May 28, 1999.)
(p) *Code of Ethics.
(Other Exhibits) Power of Attorney for Richard R. Schmaltz. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 24
filed on April 29, 1998.)
Powers of Attorney. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 23 filed on April
29, 1997.)
Item 24. Persons Controlled by or Under Common Control with Registrant. None.
Item 25. 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
Registrant's Post-Effective Amendment No. 22 to the Registration
Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, 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 26. Business and Other Connections of Investment Adviser. J. & W. Seligman
& Co. Incorporated, a Delaware corporation (Seligman), is the
Registrant's investment manager. Seligman also serves as investment
manager to nineteen 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 Global Fund Series, Inc., Seligman Income Fund,
Inc., Seligman Municipal Fund Series, Inc., Seligman Municipal Series
Trust, Seligman New Jersey Municipal Fund, Inc., Seligman New
Technologies Fund, Inc., Seligman Pennsylvania Municipal Fund Series,
Seligman Portfolios, Inc., Seligman Quality Municipal Fund, Inc.,
Seligman Select Municipal Fund, Inc., Seligman Time Horizon/Harvester
Series, Inc., Seligman Value Fund Series, Inc. and Tri-Continental
Corporation.
C-3
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
Seligman has an investment advisory service division which provides
investment management or advice to private clients. The list required
by this Item 26 of officers and directors of Seligman, 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 Seligman pursuant to the
Investment Advisers Act of 1940, as amended (SEC File No. 801-15798),
which was filed on March 30, 2000.
Item 27. Principal Underwriters.
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter is currently distributing
securities of the Registrant and also acts as a principal underwriter,
depositor or investment adviser are as follows:
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 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 Time Horizon/Harvester Series, Inc.
Seligman Value Fund Series, Inc.
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 20:
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------- ---------------- ---------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and Chief
Executive Officer
Brian T. Zino* Director President and Director
Ronald T. Schroeder* Director None
Fred E. Brown* Director Director Emeritus
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
Stephen J. Hodgdon* President and Director None
Charles W. Kadlec* Chief Investment Strategist None
Lawrence P. Vogel* Senior Vice President, Finance Vice President
Edward F. Lynch* Senior Vice President, National None
Sales Director
James R. Besher Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
</TABLE>
C-4
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Gerald I. Cetrulo, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
Matthew A. Digan* Senior Vice President, None
Domestic Funds
Jonathan G. Evans Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
T. Wayne Knowles Senior Vice President, Division None
104 Morninghills Court Sales Director
Cary, NC 27511
Joseph Lam Senior Vice President, Regional None
Seligman International, Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
Michelle L. McCann-Rappa* Senior Vice President, Retirement Plans None
Scott H. Novak* Senior Vice President, Insurance None
Jeff Rold Senior Vice President, Product None
181 East 73rd Street, Apt 20B Business Management
New York, New York 10021
Ronald W. Pond* Senior Vice President, Division None
Sales Director
Richard M. Potocki Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
Bruce M. Tuckey Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
Andrew S. Veasey Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
Charles L. von Breitenbach, II* Senior Vice President, Managed None
Money
Gail S. Cushing* Vice President, National Accounts None
Jeffrey S. Dean* Vice President, Business Analysis None
Ron Dragotta* Vice President, Regional Retirement None
Plans Manager
</TABLE>
C-5
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
Mason S. Flinn Vice President, Regional Retirement None
2130 Filmore Street Plans Manager
PMB 280
San Francisco, CA 94115-2224
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
Jody Knapp* Vice President, Regional Retirement None
17011 East Monterey Drive Plans Manager
Fountain Hills, AZ 85268
David W. Mountford* Vice President, Regional Retirement None
7131 NW 46th Street Plans Manager
Lauderhill, FL 33319
Jeffery C. Pleet* Vice President, Regional Retirement None
Plans Manager
Tracy A. Salomon* Vice President, Retirement Marketing None
Helen Simon* Vice President, Sales Administration None
Gary A. Terpening* Vice President, Director of Business None
Development
John E. Skillman* Vice President, Portfolio Advisor None
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Robert McBride Vice President, Marketing Director None
Seligman International, Inc. Latin America
Sucursal Argentina
Edificio Laminar Plaza
Ingeniero Butty No. 240, 4th Floor
C1001ASB Buenos Aires, Argentina
Daniel Chambers Regional Vice President None
4618 Lorraine Avenue
Dallas, TX 75209
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
Kevin Casey Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
Bradford C. Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Cathy Des Jardins Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
Kenneth Dougherty Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
</TABLE>
C-6
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
Kelli A. Wirth Dumser Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
Edward S. Finocchiaro Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
Michael C. Forgea Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
Carla A. Goehring Regional Vice President None
11426 Long Pine Drive
Houston, TX 77077
Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
Leslie A. Mudd Regional Vice President None
5243 East Calle Redonda
Phoenix, AZ 85018
Tim O'Connell Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
George M. Palmer, Jr. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
Thomas Parnell Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
Nicholas Roberts Regional Vice President None
200 Broad Street, Apt. 2451
Stamford, CT 06901
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
James Taylor Regional Vice President None
290 Bellington Lane
Creve Coeur, MO 63141
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
</TABLE>
C-7
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Sandra G. Floris* Assistant Vice President, Order Desk None
Keith Landry* Assistant Vice President, Order Desk None
Albert A. Pisano* Assistant Vice President and None
Compliance Officer
Joyce Peress* Assistant Secretary Assistant Secretary
</TABLE>
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.
PART C. OTHER INFORMATION (continued)
Item 28. Location of Accounts and Records. The accounts, books and documents
required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are kept in the
possession of J. & W. Seligman & Co. Incorporated at its offices at
100 Park Avenue, New York, NY 10017 or at the following locations: (1)
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105 is custodian of the Registrant's cash and securities.
It also is agent to perform certain accounting and record-keeping
functions relating to portfolio transactions and to calculate the net
asset value of the Registrant, and (2) Seligman Data Corp., 100 Park
Avenue, New York, NY 10017, as shareholder servicing agent, maintains
shareholder records for the Registrant.
Item 29. Management Services. Not Applicable.
Item 30. 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 10% 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, as amended.
C-8
<PAGE>
File No. 2-33566
811-1886
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 No. 28 pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 28 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, 2000.
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. 28 has been signed below
by the following persons in the capacities indicated on April 28, 2000.
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 ) -------------------------------
Richard R. Schmaltz, Trustee ) Brian T. Zino, Attorney-In-fact
Robert L. Shafer, Trustee )
James N. Whitson, Trustee )
<PAGE>
File No. 2-33566
811-1886
SELIGMAN HIGH INCOME FUND SERIES
Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
- ------------------ -----------
Item 23(j) Consent of Independent Auditors
Item 23(p) Code of Ethics
CONSENT OF INDEPENDENT AUDITORS
Seligman High Income Fund Series:
We consent to the use in Post-Effective Amendment No. 28 to Registration
Statement No. 2-93076 of our reports dated February 4, 2000, with respect to the
Seligman U.S. Government Securities Series, and February 11, 2000, with respect
to the Seligman High-Yield Bond Series, appearing in the Annual Reports to
Shareholders for the year ended December 31, 1999, which are incorporated by
reference in the Statement of Additional Information, which is included in such
Registration Statement, and to the references to us under the captions
"Financial Highlights" in each of the Prospectuses and "General Information" in
the Statement of Additional Information, which are also included in such
Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 24, 2000
CODE OF ETHICS
J. & W. Seligman & Co. Incorporated
Seligman Advisors, Inc.
Seligman Services, Inc.
Seligman Data Corp.
Seligman International, Inc.
Seligman International UK Limited
The Seligman Group of Investment Companies
I. Introduction
A primary duty of all directors, officers and employees (collectively
"Employees") of J. & W. Seligman & Co. Incorporated, its subsidiaries and
affiliates (collectively, "Seligman") is to be faithful to the interest of the
various Seligman advisory clients, including the registered and unregistered
companies advised by Seligman (collectively, "Clients"). Directors of the
Seligman Registered Investment Companies also have a duty to the Seligman
Registered Investment Companies and their shareholders. Persons who are
Disinterested Directors are "Employees" for purposes of this Code of Ethics.
Through the years, Seligman and its predecessor organizations have had a
reputation of maintaining the highest business and ethical standards and have
been favored with the confidence of investors and the financial community. Such
a reputation and confidence are not easily gained and are among the most
precious assets of Seligman. In large measure, they depend on the devotion and
integrity with which each Employee discharges his or her responsibilities. Their
preservation and development must be a main concern of each Employee, and each
Employee has a primary obligation to avoid any action or activity that could
produce conflict between the interest of the Clients and that Employee's
self-interest.
The purpose of this Code of Ethics ("Code") is to set forth the policies of
Seligman in the matter of conflicts of interest and to provide a formal record
for each Employee's reference and guidance. This Code is also designed to
prevent any act, practice or course of business prohibited by the rules and
regulations governing our industry.
Each Employee owes a fiduciary duty to each Client. Therefore, all Employees
must avoid activities, interests and relationships that might appear to
interfere with making decisions in the best interest of the Clients.
As an Employee, you must at all times:
1. Avoid serving your own personal interests ahead of the interests of
Clients. You may not cause a Client to take action, or not to take action,
for your personal benefit rather than the Client's benefit.
2. Avoid taking inappropriate advantage of your position. The receipt of
investment opportunities, perquisites or gifts from persons seeking
business with Clients or with Seligman could call into question the
exercise of your better judgment. Therefore, you must not give or receive
benefits that would compromise your ability to act in the best interest of
the Clients.
3. Conduct all personal Securities Transactions in full compliance with the
Code, including the pre-authorization and reporting requirements, and
comply fully with the Seligman Insider Trading Policies and Procedures (See
Appendix A).
While Seligman encourages you and your families to develop personal investment
programs, you must not take any action that could cause even the appearance that
an unfair or improper action has been taken. Accordingly, you must follow the
policies set forth below with respect to trading in your Account(s). This Code
places reliance on the good sense and judgment of you as an Employee; however,
if you are unclear as to the Code's meaning, you should seek the advice of the
Law and Regulation Department and assume the Code will be interpreted in the
most restrictive manner. Questionable situations should be resolved in favor of
Clients.
<PAGE>
Technical compliance with the Code's procedures will not insulate from
scrutiny any trades that indicate a violation of your fiduciary duties.
Application of the Code to Disinterested Directors
Disinterested Directors are only subject to the reporting requirements in
Section III.5(b) of the Code. Disinterested Directors are not subject to other
provisions of the Code but are subject to the requirements of the federal
securities laws and other applicable laws, such as the prohibition on trading in
securities of an issuer while in possession of material non-public information.
II. Definitions
(a) "Accounts" means all Employee Accounts and Employee Related Accounts.
(b) "Beneficial Interest" is broadly interpreted. The SEC has said that
the final determination of Beneficial Interest is a question to be
determined in the light of the facts of each particular case. The
terms Employee Account and Employee Related Account, as defined below,
generally define Beneficial Interest. However, the meaning of
"Beneficial Interest" may be broader than that described below. If
there are any questions as to Beneficial Interest, please contact the
Director of Compliance, General Counsel or Associate General Counsel.
(i) "Employee Account" means the following securities Accounts: (i)
any of your personal account(s); (ii) any joint or
tenant-in-common account in which you have an interest or are a
participant; (iii) any account for which you act as trustee,
executor, or custodian; (iv) any account over which you have
investment discretion or otherwise can exercise control,
including the accounts of entities controlled directly or
indirectly by you; (v) any account in which you have a direct or
indirect interest through a contract, arrangement or otherwise
(e.g., economic, voting power, power to buy or sell, or
otherwise); (vi) any account held by pledges, or for a
partnership in which you are a member, or by a corporation which
you should regard as a personal holding company; (vii) any
account held in the name of another person in which you do not
have benefits of ownership, but which you can vest or revest
title in yourself at once or some future time; (viii) any account
of which you have benefit of ownership; and (ix) accounts
registered by custodians, brokers, executors or other fiduciaries
for your benefit.
(ii) "Employee Related Account" means any Account of (i) your spouse
and minor children and (ii) any account of relatives or any other
persons to whose support you materially contribute, directly or
indirectly.
(c) "Disinterested Director" means a director or trustee of a Seligman
Registered Investment Company who is not an "interested person" of
such investment company within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940.
(d) "Equivalent Security" includes, among other things, an option to
purchase or sell a Security or an instrument convertible or
exchangeable into a Security.
(e) "Investment Team" means one or more Investment Teams formed by the
Manager in various investment disciplines to review and approve
Securities for purchase and sale by Client Accounts. This includes a
team's leader, portfolio managers, research analysts, traders and
their direct supervisors.
(f) "Security" includes, among other things, stocks, notes, bonds,
debentures, and other evidences of indebtedness (including loan
participation and assignments), limited partnership interests,
investment contracts, and all derivative instruments (e.g., options
and warrants).
<PAGE>
(g) "Securities Transaction" means a purchase or sale of a Security.
(h) "Seligman Registered Investment Company" means an investment company
registered under the Investment Company Act of 1940 for which Seligman
serves as investment manager or adviser.
III. Personal Securities Transactions
1. Prohibited Transactions
These apply to all of your Accounts.
(a) Seven-Day Blackout: If you are a member of an Investment Team,
Securities Transactions are prohibited within seven calendar days
either before or after the purchase or sale of the relevant security
(or an Equivalent Security) by a Client whose Account is managed by
your Investment Team.
(b) Intention to Buy or Sell for Clients: Securities Transactions are
prohibited at a time when you intend, or know of another's intention,
to purchase or sell that Security (or an Equivalent Security) on
behalf of a Client.
(c) Sixty-Day Holding Period: Profits on Securities Transactions made
within a sixty-day period are prohibited and must be disgorged. This
is a prohibition of short term trading. Specifically,
o Purchase of a Security within 60 days of your sale of the
Security (or an Equivalent Security), at a price that is less
than the price in the previous sale is prohibited.
o Sale of a Security within the 60 day period of your purchase of
the Security (or an Equivalent Security), at a price that is
greater than the price in the previous purchase is prohibited.
Examples are as follows:
1. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee sells 100 shares of XYZ ($15 a share) on February 15.
Employee must disgorge $500.
2. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee purchases 50 shares of XYZ ($12 a share) on January 30.
Employee sells 50 shares of XYZ ($15 a share) on March 15.
Employee must disgorge $150. (The March 15 sale may not be
matched to the January 1 purchase).
3. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee sells 100 shares of XYZ ($10 a share) on February 1.
Employee purchases 100 shares of XYZ ($9 a share) on March 1
Employee must disgorge $100. (The February 1 sale is permissible
because no profit was made. However, the March 1 purchase is
matched against the February 1 sale resulting in a $100 profit).
(d) Restricted Transactions: Transactions in a Security are prohibited (i)
on the day of a purchase or sale of the Security by a Client, or (ii)
anytime a Client's order in the Security is open on the trading desk.
Other Securities may be restricted from time to time as deemed
appropriate by the Law and Regulation Department.
<PAGE>
(e) Short Sales: If you are a member of an Investment Team, you may not
engage in any short sale of a Security if, at the time of the
transaction, any Client managed by your Team has a long position in
that same Security. However, this prohibition does not prevent you
from engaging short sales against the box and covered call writing, as
long as these personal trades are in accordance with the sixty-day
holding period described above.
(f) Public Offerings: Acquisitions of Securities in initial and secondary
public offerings are prohibited, unless granted an exemption by the
Director of Compliance. An exemption for an initial public offering
will only be granted in certain limited circumstances, for example,
the demutualization of a savings bank.
(g) Private Placements: Acquisition of Securities in a private placement
is prohibited absent prior written approval by the Director of
Compliance.
(h) Market Manipulation: Transactions intended to raise, lower, or
maintain the price of any Security or to create a false appearance of
active trading are prohibited.
(i) Inside Information: You may not trade, either personally or on behalf
of others, on material, non-public information or communicate
material, non-public information to another in violation of the law.
This policy extends to activities within and outside your duties at
Seligman. (See Appendix A).
2. Maintenance of Accounts
All Accounts that have the ability to engage in Securities Transactions
must be maintained at Ernst & Company (Investec) and/or the specific
Merrill Lynch branch office located at 712 Fifth Avenue, New York, NY. You
are required to notify the Director of Compliance of any change to your
account status. This includes opening a new Account, converting,
transferring or closing an existing account or acquiring Beneficial
Interest in an Account through marriage or otherwise. You must place all
orders for Securities Transactions in these Account(s) with the Equity
Trading Desk or the appropriate Fixed Income Team as set forth in Section
III.3 ("Trade Pre-authorization Requirements").
The Director of Compliance may grant exceptions to the foregoing
requirements on a case by case basis. All requests for exceptions must be
applied for in writing and submitted for approval to the Director of
Compliance and will be subject to certain conditions.
3. Trade Pre-authorization Requirements
All Securities Transactions in an Employee Account or Employee Related
Account must be pre-authorized, except for Securities Transactions set
forth in Section III.4 ("Exempt Transactions").
(a) Trade Authorization Request Form: Prior to entering an order for a
Securities Transaction in an Employee Account or Employee Related
Account, which is subject to pre-authorization, you must complete a
Trade Authorization Request Form (set forth in Appendix B) and submit
the completed Form (faxed or hand delivered) to the Director of
Compliance (or designee).
(b) Review of the Form and Trade Execution: After receiving the completed
Trade Authorization Request Form, the Director of Compliance (or
designee) will review the information and, as soon as practical,
determine whether to authorize the proposed Securities Transaction.
The authorization, date and time of the authorization must be
reflected on the Form. Once approved the order may then be executed by
Equity Trading Desk or the appropriate Fixed Income Team, except for
accounts for which an exemption was granted under Section III.2.
<PAGE>
(c) Length of Trade Authorization Approval: Any authorization, if granted,
is effective until the earliest of (i) its revocation, (ii) the close
of business on the day from which authorization was granted or (iii)
your discovery that the information in the Trade Authorization Request
Form is no longer accurate. If the Securities Transaction was not
placed or executed within that period, a new pre-authorization must be
obtained. A new pre-authorization need not be obtained for orders
which cannot be filled in one day due to an illiquid market, so long
as such order was placed for execution on the day the original
pre-authorization was given.
No order for a Securities Transaction may be placed prior to the Director
of Compliance (or designee) receiving the completed Trade Pre-authorization
Form and approving the transaction. In some cases, trades may be rejected
for a reason that is confidential.
4. Exempt Transactions
The prohibitions of this Code shall not apply to the following Securities
Transactions in your Account(s):
(a) Purchases or sales of Securities which are non-volitional (i.e., not
involving any investment decision or recommendation).
(b) Purchases of Securities through certain corporate actions (such as
stock dividends, dividend reinvestments, stock splits, mergers,
consolidations, spin-offs, or other similar corporate reorganizations
or distributions generally applicable to all holders of the same class
of Securities).
(c) Purchases of Securities effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its Securities, to the
extent such rights were acquired from the issuer.
(d) Purchases or sales of open-end registered investment companies, U.S.
Government Securities and money market instruments (e.g., U.S.
Treasury Securities, bankers acceptances, bank certificates of
deposit, commercial paper and repurchase agreements).
(e) Purchases of Securities which are part of an automatic dividend
reinvestment plan or stock accumulation plan; however, quarterly
account statement of such plans must be sent to the Director of
Compliance.
(f) Securities Transactions that are granted a prior exemption by the
Director of Compliance, the General Counsel or the Associate General
Counsel.
5. Reporting
(a) You must arrange for the Director of Compliance to receive from the
executing broker, dealer or bank duplicate copies of each confirmation
and account statement for each Securities Transaction in an Employee
Account or Employee Related Account.
(b) If you are a Disinterested Director you are required to report the
information specified below with respect to any Securities Transaction
in any Securities Account in which you have Beneficial Interest, if
you knew, or in the ordinary course of fulfilling your official duties
as a Disinterested Director, should have known, that during 15 days
immediately before or after the date of your transaction, the Security
(or Equivalent Security) was purchased or sold by a Seligman
Registered Investment Company or considered for purchase or sale by a
Seligman Registered Investment Company. Such report shall be made not
later than 10 days after the end of the calendar quarter in which the
Transaction was effected and shall contain the following information:
<PAGE>
(i) The date of the transaction, the name of the company, the number
of shares, and the principal amount of each Security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(v) The date the report is submitted.
(c) You are required to disclose all Securities beneficially owned by you
within ten days of commencement of employment and at the end of each
calendar year within 10 days thereafter (See Appendix C).
(d) You are also required to disclose all Employee and Employee Related
Securities Accounts, Private Securities Transactions and Outside
Activities, Affiliations and Investments upon commencement of
employment and annually thereafter (See Appendix D).
(e) Any report may contain a statement that the report shall not be
construed as an admission by you, that you have any direct or indirect
beneficial ownership in the Security to which the report relates.
(f) The Director of Compliance or his designee will review all reports.
6. Dealings with the Clients
You should not have any direct or indirect investment interest in the
purchase or sale of any Security or property from or to Clients. This is a
prohibition against dealings between you and the Clients and is not
intended to preclude or limit investment transactions by you in Securities
or property, provided such transactions are not in conflict with the
provisions of this Code.
7. Preferential Treatment, Favors and Gifts
You are prohibited from giving and receiving gifts of significant value or
cost from any person or entity that does business with or on behalf of any
Client. You should also avoid preferential treatment, favors, gifts and
entertainment which might, or might appear to, influence adversely or
restrict the independent exercise of your best efforts and best judgments
on behalf of the Clients or which might tend in any way to impair
confidence in Seligman by Clients. Cash Gifts that do not exceed $100 in
value per person for a calendar year are permissible. Ordinary courtesies
of business life, or ordinary business entertainment, and gifts of
inconsequential value are also permissible. However, they should not be so
frequent nor so extensive as to raise any question of impropriety.
8. Outside Business Activities and Service as a Director, Trustee or in a
Fiduciary Capacity of any Organization
You may not engage in any outside business activities or serve as a
Director, Trustee or in a fiduciary capacity of any organization, without
the prior written consent of the Director of Compliance.
<PAGE>
9. Remedies of the Code
Upon discovering a violation of this Code, sanctions may be imposed against
the person concerned as may be deemed appropriate, including, among other
things, a letter of censure, fines, suspension or termination of personal
trading rights and/or employment.
As part of any sanction, you may be required to absorb any loss from the
trade. Any profits realized, as a result of your personal transaction that
violates the Code must be disgorged to a charitable organization, which you
may designate.
10. Compliance Certification
At least once a year, you will be required to certify on the Employee
Certification Form (set forth in Appendix E) that you have read and
understand this Code, that you have complied with the requirements of the
Code, and that you have disclosed or reported all personal Securities
Transactions pursuant to the provisions of the Code.
11. Inquiries Regarding the Code
If you have any questions regarding this Code or any other
compliance-related matter, please call the Director of Compliance, or in
his absence, the General Counsel or Associate General Counsel.
--------------------------------
William C. Morris
Chairman
December 22, 1966
Revised: March 8, 1968 December 7, 1990
January 14, 1970 November 18, 1991
March 21, 1975 April 1, 1993
May 1, 1981 November 1, 1994
May 1, 1982 February 28, 1995
April 1, 1985 November 19, 1999*
March 27, 1989
* Refers to the incorporation of the Code of Ethics of the Seligman
Investment Companies originally adopted June 12, 1962, as amended.
<PAGE>
Appendix A
Amended November 19, 1999
J. & W. Seligman & Co. Incorporated - Insider Trading Policies and Procedures
SECTION I. BACKGROUND
Introduction
United States law creates an affirmative duty on the part of broker-dealers
and investment advisers to establish, maintain and enforce written policies and
procedures that provide a reasonable and proper system of supervision,
surveillance and internal control to prevent the misuse of material, non-public
information by the broker-dealer, investment adviser or any person associated
with them. The purpose of these procedures is to meet those requirements. The
following procedures apply to J. & W. Seligman & Co. Incorporated, its
subsidiaries and affiliates (collectively, "Seligman") and all officers,
directors and employees (collectively, "Employees") thereof.
Statement of Policy
No Employee may trade, either personally or on behalf of others, on
material, non-public information or communicate material, non-public information
to another in violation of the law. This policy extends to activities within and
outside their duties at Seligman. Each Employee must read, acknowledge receipt
and retain a copy of these procedures.
Inside Information
The term "insider trading" is not defined in the federal securities laws,
but generally is used to refer to the use of material, non-public information to
trade in securities or to communicate material, non-public information to
others.
While the law concerning insider trading is not static, it is understood
that the law generally prohibits:
A. trading by an insider, while in possession of material, non-public
information, or
B. trading by a non-insider, while knowingly in possession of material,
non-public information, where the information either was disclosed to
the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated, or
C. communicating material, non-public information to others.
The elements of insider trading and the penalties for such unlawful conduct
are discussed below. If you have any questions after reviewing these procedures,
you should consult the Director of Compliance, General Counsel or Associate
General Counsel.
1. Who Is An Insider?
The concept of "insider" is broad. It includes Employees of a company. In
addition, a person can be a "temporary insider" if he or she enters into a
special confidential relationship in the conduct of a company's affairs and
as a result is given access to information solely for the company's
purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the
Employees of such organizations. In addition, Seligman may become a
temporary insider of a company it advises or for which it performs other
services. According to the Supreme Court, the company must expect the
outsider to keep the disclosed non-public information
<PAGE>
confidential and the relationship must at least imply such a duty before
the outsider will be considered an insider.
2. What Is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment
decisions, or information that is reasonably certain to have a substantial
affect on the price of a company's securities. Information that Employees
should consider material includes, but is not limited to: dividend changes,
earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major
litigation, liquidation problems and extraordinary management developments.
In addition, information about major contracts or new customers could also
qualify as material, depending upon the importance of such developments to
the company's financial condition or anticipated performance.
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S., 408 U.S. 316 (1987), the Supreme Court
considered as material certain information about the contents of a
forthcoming newspaper column that was expected to affect the market price
of a Security. In that case, a Wall Street Journal reporter was found
criminally liable for disclosing to others the dates that reports on
various companies would appear in the Journal and whether those reports
would be favorable or not.
3. What Is Non-Public Information?
Information is non-public until it has been effectively communicated to the
market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services,
The Wall Street Journal or other publications of general circulation would
be considered public. However, see Section II, Paragraph 2.
4. Penalties for Insider Trading
Penalties for trading on or communicating material, non-public information
are severe, both for individuals involved in such unlawful conduct and
their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
- Civil injunctions
- Disgorgement of profits
- Jail sentences
- Fines for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the
person actually benefited, and
- Fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit
gained or loss avoided.
In addition, any violation of policies and procedures set forth herein can
be expected to result in serious sanctions by Seligman, including dismissal of
the persons involved.
<PAGE>
SECTION II. PROCEDURES
Procedures to Implement Policy Against Insider Trading.
The following procedures have been established to assist the Employees of
Seligman in avoiding insider trading, and to aid Seligman in preventing,
detecting and imposing sanctions against insider trading. Every Employee of
Seligman must follow these procedures or risk serious sanctions, including
dismissal, substantial personal liability and criminal penalties. If you have
any questions about these procedures you should consult the Director of
Compliance, the General Counsel or Associate General Counsel.
1. Identifying Inside Information.
Before trading for yourself or others (including investment companies and
private Accounts managed by Seligman), in the securities of a company about
which you may have potential inside information, ask yourself the following
questions:
a. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is
this information that would substantially affect the market price of
the securities if generally disclosed?
b. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace in a publication of general circulation or does it fall
within the circumstances set forth in paragraph 2 below.
If, after consideration of the above, you believe that the information is
material and non-public, or if you have questions as to whether the information
is material and non-public, you should take the following steps:
c. Report the matter immediately to the Director of Compliance, General
Counsel or Associate General Counsel.
d. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private Accounts managed by
Seligman.
e. Do not communicate the information inside or outside Seligman other
than to the Director of Compliance, General Counsel or Associate
General Counsel.
f. After the Director of Compliance, General Counsel or Associate General
Counsel has reviewed the issue, you will be instructed to continue the
prohibitions against trading and communication, or you will be allowed
to trade and communicate the information.
2. Important Specific Examples
a. If you have a telephone or face-to-face conversation with a senior
executive of a publicly-traded company and are provided information
about the company that you have reason to believe has not yet been
disclosed in a widely-disseminated publication such as a press
release, quarterly report or other public filing, you have received
non-public information. This information is considered non-public even
if you believe that the company executive would provide the same
information to other analysts or portfolio managers who call the
company. Until information has been disclosed in a manner that makes
it available to (or capable of being accessed by) the investment
community as a whole, it is considered non-public. If the information
is material, as described above, you may not trade while in possession
of this information unless you first discuss the matter and obtain
approval from the Director of Compliance, General Counsel or Associate
General Counsel. Although it may be lawful for an analyst to act on
the basis of material information that the company's management has
chosen to disclose selectively to that analyst, where the information
is provided in a one-on-one context,
<PAGE>
regulators are likely to question such conduct. Approval from the Law
and Regulation Department will therefore depend on the specific
circumstances of the information and the disclosure. Under the Supreme
Court's important decision of Dirks v. SEC, 463 U.S. 646 (1983),
securities analysts may be free to act on selectively disclosed
material information if it is provided by company executives
exclusively to achieve proper corporate purposes.
b. If you obtain material information in the course of an analysts'
conference call or meeting conducted by a publicly-traded company in
the ordinary course of its business in which representatives of
several other firms or investors are also present (as distinguished
from the one-on-one situation described in the preceding paragraph),
you may act on the basis of that information without need to consult
with the Director of Compliance, General Counsel or Associate General
Counsel, even if the information has not yet been published by the
news media. You should be aware, however, that if there is something
highly unusual about the meeting or conference call that leads you to
question whether it has been authorized by the company or is otherwise
suspect, you should first consult with the Director of Compliance,
General Counsel or Associate General Counsel.
c. If you are provided material information by a company and are
requested to keep such information confidential, you may not trade
while in possession of that information before first obtaining the
approval of the Director of Compliance, General Counsel or the
Associate General Counsel.
As these examples illustrate, the legal requirements governing insider
trading are not always obvious. You should therefore always consult with the
Director of Compliance, General Counsel or Associate General Counsel if you have
any question at all about the appropriateness of your proposed conduct.
3. Restricting Access To Material, Non-Public Information
Information in your possession that you identify as material and non-public
may not be communicated to anyone, including persons within Seligman,
except as provided in paragraphs 1 and 2 above. In addition, care should be
taken so that such information is secure. For example, files containing
material, non-public information should be sealed; access to computer files
containing material, non-public information should be restricted.
4. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in paragraphs 1 and 2, doubt
remains as to whether information is material or non-public, or if there is
any unresolved question as to the applicability or interpretation of the
foregoing procedures, or as to the propriety of any action, it must be
discussed with the Director of Compliance, General Counsel and or the
Associate General Counsel before trading or communicating the information
to anyone.
5. Personal Securities Trading
All Employees shall follow with respect to personal Securities trading the
procedures set forth in the Code of Ethics. In addition, no Employee shall
establish a brokerage Account with a Firm other than those previously
approved without the prior consent of the Director of Compliance and every
Employee shall be subject to reporting requirements under Section III.5 of
the Code of Ethics. The Director of Compliance, or his designee, shall
monitor the personal Securities trading of all Employees.
<PAGE>
Appendix B
Amended November 19, 1999
J. & W. SELIGMAN & CO. INCORPORATED
TRADE AUTHORIZATION REQUEST FORM
1. Name of Employee/Telephone Number: ______________________________
2. If different than #1, name of the person in
whose account the trade will occur: ______________________________
3. Relationship of (2) to (1): ______________________________
4. Name the firm at which the account is held: ______________________________
5. Name of Security: ______________________________
6. Number of shares or units to be bought or
sold or amount of bond: ______________________________
7. Approximate price per share, unit or bond: ______________________________
8. Check those that are applicable: _______ Purchase ______ Sale
_____ Market Order ______ Limit Order (Price of Limit Order: _____)
9. Do you possess material non public
information regarding the Security or the
issuer of the Security? ______ Yes ______ No
10. To your knowledge, are there any outstanding
(purchase or sell) orders for this Security
or any Equivalent Security by a Seligman
Client? ______ Yes ______ No
11. To your knowledge, is this Security or
Equivalent Security being considered for
purchase or sale for one or more Seligman
Clients? ______ Yes ______ No
12. Is this Security being acquired in an initial
or secondary public offering? ______ Yes ______ No
13. Is this Security being acquired in a private
placement? ______ Yes ______ No
14. Have you or any Related Account covered by
the pre- authorization provisions of the Code
purchased or sold this Security within the
past 60 days? ______ Yes ______ No
<PAGE>
- - - - - -
For Investment Team Members Only:
15. Has any Client Account managed by your team
purchased or sold this Security or Equivalent
Security within the past seven calendar days
or do you expect any such account to purchase
or sell this Security or Equivalent Security
within seven calendar days of your purchase
or sale? ______ Yes ______ No
16. Why is this Security Transaction appropriate for you and not for one or
more of your team's Clients?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
----------
I have read the J. & W. Seligman & Co. Incorporated Code of Ethics, as revised
on November 19, 1999, within the prior 12 months and believe that the proposed
trade(s) fully complies with the requirements of the Code of Ethics and Insider
Trading policy.
----------------------------
Employee Signature
----------------------------
Date Submitted
Authorized by: ________________________
Date: ________________________
<PAGE>
Appendix C
Amended November 19, 1999
REPORT OF SECURITIES BENEFICIALLY OWNED
AS OF DECEMBER 31, 1999
The following is a list of all Securities positions (except open-end
investment companies, U.S. Government Securities and money market instruments)
in which I have direct or indirect beneficial ownership, as defined in the Code
of Ethics. This includes Securities held at home, in safe deposit boxes or by an
issuer.
<TABLE>
<CAPTION>
Description of Security No. of Shares Principal Amount Location of Security
<S> <C> <C> <C>
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
- -------------------------- ------------ ------------------- ------------------
</TABLE>
_______ The list above (and any additional sheets I have attached)
represents all my Securities positions in which I have direct or
indirect beneficial ownership as defined in the Code of Ethics.
_______ I only have a beneficial ownership interest in open-end
investment companies, U.S. Government Securities and money market
instruments, and/or I do not beneficially own any Securities.
Date:
------------------------ -----------------------------
First Last, Company
<PAGE>
Appendix D
Amended November 19, 1999
EMPLOYEE REPORTING QUESTIONNAIRE
Employee Name: ____________________ Ext: ______ Department: ___________
Please Print
Company/Affiliate: ______________________________ Supervisor: ___________
1. Securities Accounts
Do you have any Accounts in which Securities can be purchased or sold over
which you have control or in which you have a Beneficial Interest, as
defined in Seligman's Code of Ethics?
Yes _______ No ________
If yes, please list all such Accounts:
<TABLE>
<CAPTION>
Account Account Type of
Institution Number Title Account
----------- ------ ------- -------
<S> <C> <C> <C>
---------------------------- ---------------- -------------------------- --------------
---------------------------- ---------------- -------------------------- --------------
---------------------------- ---------------- -------------------------- --------------
</TABLE>
2. Financial Interests
Do you have any private placements, restricted stock warrants, general or
limited partnerships, or other investment interests in any organization
(public, private or charitable) not held in the accounts listed above?
Please include Securities and certificates held in your custody.
Yes _______No _______
If yes, please describe: __________________________________________________
___________________________________________________________________________
3. Outside Activities/Affiliations
a) Do you have any activities outside Seligman or its affiliates for which
you receive additional compensation:
Yes _______ No _______
If yes, please describe: __________________________________________________
___________________________________________________________________________
b) Do you serve in the capacity of officer, director, partner or employee
(or in any other fiduciary capacity) for any company or organization
(public, private or charitable) other than Seligman or its affiliates.
Yes _______ No _______
If yes, please describe: __________________________________________________
___________________________________________________________________________
I hereby certify that I have read and understand the foregoing statements and
that each of my responses thereto are true and complete. I agree to immediately
inform the Director of Compliance if there is any change in any of the above
answers. I also understand that any misrepresentation or omissions of facts in
response to this questionnaire and failure to immediately inform the Director of
Compliance of any changes to responses provided herein may result in termination
of my employment.
- ------------------------- ---------------------------
Employee's Signature Date
- -------------------------
Title
<PAGE>
Appendix E
Amended November 19, 1999
Annual Certification of Compliance with the Code of Ethics
I acknowledge that I have received and read the Code of Ethics and Insider
Trading Policies and Procedures, as amended on November 19, 1999 and hereby
agree, in consideration of my continued employment by J. & W. Seligman & Co.
Incorporated, or one of its subsidiaries or affiliates, to comply with the Code
of Ethics and Insider Trading Policies and Procedures.
I hereby certify that during the past calendar year:
1. In accordance with the Code of Ethics, I have fully disclosed the
Securities holdings in my Employee Account(s) and Employee Related
Account(s) (as defined in the Code of Ethics).
2. In accordance with the Code of Ethics, I have maintained all Employee
Accounts and Employee Related Accounts at Ernst & Company (Investec) or
Merrill Lynch located at 712 Fifth Avenue, New York, NY except for Accounts
as to which the Director of Compliance has provided written permission to
maintain elsewhere.
3. In accordance with the Code of Ethics, except for transactions exempt from
reporting under the Code of Ethics, I have arranged for the Director of
Compliance to receive duplicate confirmations and statements for each
Securities Transaction of all Employee Accounts and Employee Related
Accounts, and I have reported all Securities Transactions in each of my
Employee Accounts and Employee Related Accounts.
4. I have complied with the Code of Ethics in all other respects.
--------------------------------
Employee Signature
--------------------------------
Date: Print Name
------------
