<PAGE>
SELIGMAN HENDERSON GLOBAL FUND SERIES, INC.
Seligman Henderson International Fund
Seligman Henderson Emerging Markets Growth Fund
Seligman Henderson Global Growth Opportunities Fund
Seligman Henderson Global Smaller Companies Fund
Seligman Henderson Global Technology Fund
Statement of Additional Information
March 1, 1999
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 Prospectus of Seligman Henderson Global
Fund Series, Inc., dated March 1, 1999. This SAI, although not in itself a
prospectus, is incorporated by reference into the Prospectus in its entirety. It
should be read in conjunction with the Prospectus, which you may obtain by
writing or calling the Funds at the above address or telephone numbers.
The financial statements and notes included in the Funds' Annual Report, and the
Independent Auditors' Report thereon, are incorporated herein by reference. The
Annual Report will be furnished to you without charge if you request a copy of
this SAI.
Table of Contents
Fund History ............................................................. 2
Description of the Funds and Their Investments and Risks ................. 2
Management of the Funds .................................................. 10
Control Persons and Principal Holders of Securities....................... 16
Investment Advisory and Other Services ................................... 16
Brokerage Allocation and Other Practices ................................. 24
Capital Stock and Other Securities ....................................... 25
Purchase, Redemption, and Pricing of Shares .............................. 26
Taxation of the Funds .................................................... 31
Underwriters.............................................................. 33
Calculation of Performance Data .......................................... 35
Financial Statements...................................................... 40
General Information....................................................... 40
Appendix A ............................................................... 42
Appendix B................................................................ 45
Appendix C................................................................ 47
<PAGE>
Fund History
Seligman Henderson Global Fund Series, Inc. was incorporated in Maryland on
November 22, 1991 under the name Seligman International Fund Series, Inc. It
changed its name to its present name on May 25, 1993.
Description of the Funds and Their Investments and Risks
Classification
Seligman Henderson Global Fund Series, Inc. is a diversified, open-end
management investment company, or mutual fund. It consists of five separate and
distinct series, or funds:
Seligman Henderson International Fund (International Fund)
Seligman Henderson Emerging Markets Growth Fund (Emerging Markets Growth Fund)
Seligman Henderson Global Growth Opportunities Fund (Global Growth Opportunities
Fund)
Seligman Henderson Global Smaller Companies Fund (Global Smaller Companies Fund)
Seligman Henderson Global Technology Fund (Global Technology Fund)
Investment Strategies and Risks
The following information regarding the Funds' investments and risks supplements
the information contained in the Prospectus.
General. In allocating each Fund's investments among geographic regions and
individual countries, the investment manager will consider such factors as the
relative economic growth potential of the various economies and securities
markets; expected levels of inflation; financial, social and political
conditions influencing investment opportunities; and the outlook for currency
relationships.
Each Fund may invest in all types of securities, many of which will be
denominated in currencies other than the US dollar. Each Fund will normally
invest its assets in equity securities, including common stock, securities
convertible into or exchangeable for common stock, depositary receipts and
warrants. A Fund may, however, invest up to 25% of its assets in preferred stock
and debt securities. A Fund that invests "primarily" in a certain type of
security invests at least 65% of its total assets in that type of security.
Dividends or interest income are considered only when the investment manager
believes that such income will favorably influence the market value of a
security in light of each Fund's objective of capital appreciation. Equity
securities in which each Fund invests may be listed on a US or foreign
stock exchange or traded in US or foreign over-the-counter markets.
Debt securities in which each Fund may invest are not required to be rated by a
recognized rating agency. As a matter of policy, each Fund, with the exception
of the Emerging Markets Growth Fund, will invest only in "investment grade" debt
securities or, in the case of unrated securities, debt securities that are, in
the opinion of the investment manager, of equivalent quality to "investment
grade" securities. "Investment grade" debt securities are rated within the four
highest rating categories as determined by Moody's Investors Service, Inc.
(Moody's) or Standard & Poor's Rating Service (S&P). Securities rated within the
highest of the four investment grade categories (i.e., Aaa by Moody's and AAA by
S&P) are judged to be of the best quality and carry the smallest degree of risk.
For capital appreciation, the Emerging Markets Growth Fund may invest up to 5%
of its assets in governmental and corporate debt securities that, at the time of
purchase by the Fund, are rated Baa or lower by Moody's and BBB or lower by S&P
or, if unrated, deemed by the investment manager to be of comparable quality.
The Emerging Markets Growth Fund will not invest in debt securities rated lower
than C by Moody's or C by S&P or, if unrated, deemed by the investment manager
to be of comparable quality. Securities rated Baa/BBB or lower lack high quality
investment characteristics and may also have speculative characteristics.
(Appendix A to the Statement of Additional Information contains a description of
these rating categories.) Debt securities are interest-rate sensitive, so their
value tends to decrease when interest rates rise and increase when interest
rates fall.
2
<PAGE>
Each Fund may invest in securities represented by European Depositary Receipts
(EDRs), American Depositary Receipts (ADRs) and Global Depositary Receipts
(GDRs) (collectively, Depositary Receipts). ADRs are receipts generally issued
by a domestic bank or trust company that represent the deposit of a security of
a foreign issuer. ADRs may be publicly traded on exchanges or over-the-counter
in the United States and are quoted and settled in US dollars at a price that
generally reflects the US dollar equivalent of the home country share price.
EDRs and GDRs are receipts similar to ADRs and are typically issued by foreign
banks or trust companies and traded in Europe. Depositary Receipts may be issued
as sponsored or unsponsored programs. In sponsored programs, the issuer has made
arrangements to have its securities traded in the form of a Depositary Receipt.
In unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, the issuers of unsponsored
Depositary Receipts are not obligated to disclose material information in the
United States and, therefore, the import of such information may not be
reflected in the market value of such securities. For purposes of a Fund's
investment policies, an investment in Depositary Receipts will be deemed to be
an investment in the underlying security.
By investing in foreign securities, a Fund will attempt to take advantage of
differences among economic trends and the performance of securities markets in
various countries. To date, the market values of securities of issuers located
in different countries have moved relatively independently of each other,
although markets in certain regions tend to move in the same direction. During
certain periods, the return on equity investments in some countries has exceeded
the return on similar investments in the United States. The investment manager
believes that, in comparison with investment companies investing solely in
domestic securities, it may be possible to obtain significant appreciation from
a portfolio of foreign investments and securities from various markets that
offer different investment opportunities and are affected by different economic
trends. International and global diversification reduces the effect events in
any one country will have on a Fund's entire investment portfolio. Of course, a
decline in the value of a Fund's investments in one country may offset potential
gains from investments in another country.
Foreign Investment Risk Factors. Investments in securities of foreign issuers
may involve risks that are not associated with domestic investments, and there
can be no assurance that a Fund's foreign investments will present less risk
than a portfolio of domestic securities. Foreign issuers may lack uniform
accounting, auditing and financial reporting standards, practices and
requirements, and there is generally less publicly available information about
foreign issuers than there is about US issuers. Governmental regulation and
supervision of foreign stock exchanges, brokers and listed companies may be less
pervasive than is customary in the United States. Securities of some foreign
issuers are less liquid, and their prices are more volatile, than securities of
comparable domestic issuers. Foreign securities settlement practices may in some
instances be subject to delays and related administrative uncertainties which
could result in temporary periods when assets of a Fund are uninvested and no
return is earned thereon and may involve a risk of loss to a Fund. Foreign
securities markets may have substantially less trading volume than US markets
and far fewer traded issues. Fixed brokerage commissions on foreign securities
exchanges are generally higher than in the United States and transaction costs
with respect to smaller capitalization companies may be higher than those of
larger capitalization companies. Income from foreign securities may be reduced
by a withholding tax at the source or other foreign taxes. In some countries,
there may also be the possibility of expropriation or confiscatory taxation (in
which case a Fund could lose its entire investment in a certain market);
limitations on the removal of moneys or other assets of a Fund; political or
social instability or revolution; or diplomatic developments that could affect
investments in those countries. In addition, it may be difficult to obtain and
enforce a judgment in a court outside the United States.
Each Fund may invest in sovereign debt. The actions of governments concerning
their respective economies could have an important effect on their ability or
willingness to service their sovereign debt. Such actions could have significant
effects on market conditions and on the prices of securities and instruments
held by a Fund, including the securities and instruments of foreign private
issuers. Factors which may influence the ability or willingness of foreign
sovereigns to service debt include, but are not limited to: the availability of
sufficient foreign exchange on the date payment is due; the relative size of
its debt service burden to the economy as a whole; its balance of payments
(including export performance) and cash flow situation; its
3
<PAGE>
access to international credits and investments; fluctuations in interest and
currency rates and reserves; and its government's policies towards the
International Monetary Fund, the World Bank and other internationalagencies. If
a foreign sovereign defaults on all or a portion of its foreign debt, a Fund may
have limited legal recourse against the issuer and/or guarantor. In some cases,
remedies must be pursued in the courts of the defaulting party itself, and the
ability of the holder of foreign sovereign debt securities to obtain recourse
may be subject to the political climate in the prevailing country.
Foreign Currency Risk Factors. Investments in foreign securities will usually be
denominated in foreign currency, and each Fund may be affected, favorably or
unfavorably, by the relative strength of the US dollar, changes in foreign
currency and US dollar exchange rates, and exchange control regulations. A Fund
may incur costs in connection with conversions between various currencies. A
Fund's net asset value per share will be affected by changes in currency
exchange rates. Changes in foreign currency exchange rates may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the US dollar and other
currencies is generally determined by the forces of supply and demand in the
foreign exchange markets (which in turn are affected by interest rates, trade
flow, and numerous other factors, including, in some countries, local
governmental intervention), but can sometimes be affected by the imposition of
fixed exchange rates that may overvalue a foreign currency, to the detriment of
foreign investors.
Emerging Market Investment Risk Factors. Some of the risks described in the
preceding paragraphs may be more severe for investments in emerging countries.
By comparison with the United States and other developed countries, emerging
countries may have relatively unstable governments, economies based on a less
diversified industrial base and securities markets that trade a smaller number
of securities. Companies in emerging markets may generally be smaller, less
seasoned and more recently organized than many domestic companies. Prices of
securities traded in the securities markets of emerging countries tend to be
volatile. Furthermore, foreign investors are subject to many restrictions in
emerging countries. These restrictions may require, among other things,
governmental approval prior to making investments or repatriating income or
capital or the payment of special levies or taxes, or may impose limits on the
amount or type of securities held by foreigners or on the companies in which
the foreigners may invest.
The economies of individual emerging countries may differ favorably or
unfavorably from the US economy in such respects as growth of gross domestic
product, rates of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency, and balance of payment position and may be based on a
substantially less diversified industrial base. Further, the economies of
emerging countries generally are heavily dependent upon international trade and,
accordingly, have been, and may continue to be, adversely affected by trade
barriers, exchange controls, managed adjustments in relative currency values,
and other protectionist measures imposed or negotiated by the countries with
which they trade. These economies also have been, and may continue to be,
adversely affected by economic conditions in the countries with which they
trade.
Smaller Company Investment Risk Factors. The investment manager believes that
smaller companies generally have greater earnings and sales growth potential
than larger companies. However, investments in such companies may involve
greater risks, such as limited product lines, limited markets and limited
financial or managerial resources. Less frequently traded securities may be
subject to more abrupt price movements than securities of larger companies.
Technology Investment Risk Factors. The value of Global Technology Fund shares
may be susceptible to factors affecting technology and technology-related
industries and to greater risk and market fluctuation than an investment in a
fund that invests in a broader range of portfolio securities. Technology and
technology-related industries may be subject to greater governmental
regulation than many other industries in certain countries, as well as changes
in governmental policies, and the need for regulatory approvals may have a
material adverse effect on these industries. Additionally, these companies may
be subject to risks of developing technologies, competitive pressures, and other
factors and are dependent upon consumer and business acceptance as new
technologies evolve. Securities of smaller, less experienced companies also may
involve greater risks, such as limited product lines, limited markets and
limited financial or managerial
4
<PAGE>
resources, and trading in such securities may be subject to more abrupt price
movements than trading in the securities of larger companies.
Derivatives. Each Fund may invest in financial instruments commonly known as
"derivatives" only for hedging or investment purposes. A Fund will not invest in
derivatives for speculative purposes, which means where the derivative
investment exposes the Fund to undue risk of loss, such as where the risk of
loss is greater than the cost of the investment.
A derivative is generally defined as an instrument whose value is derived from,
or based upon, some underlying index, reference rate (e.g., interest rates or
currency exchange rates), security, commodity, or other asset. A Fund will not
invest in a specific type of derivative without prior approval from the Funds'
Board of Directors after consideration of, among other things, how the
derivative instrument serves the Fund's investment objective, and the risks
associated with the investment. The only types of derivatives in which each Fund
is currently permitted to invest are forward foreign currency exchange
contracts, stock purchase rights and warrants, and put options.
Forward Foreign Currency Exchange Contracts. The investment manager will
consider changes in exchange rates in making investment decisions. As one way of
managing exchange rate risk, each Fund may enter into forward currency exchange
contracts. A forward foreign currency exchange contract is an agreement to
purchase or sell a specific currency at a future date and at a price set at the
time the contract is entered into. A Fund will usually enter into these
contracts to fix the US dollar value of a security that it has agreed to buy or
sell for the period between the date the trade was entered into and the date the
security is delivered and paid for. A Fund may also use these contracts to hedge
the US dollar value of securities it already owns. A Fund may be required to
cover certain forward currency contract positions by establishing a segregated
account with its custodian that will contain only liquid assets, such as US
Government securities or other liquid high-grade debt obligations.
A Fund may enter into a forward contract to sell or buy the amount of a foreign
currency it believes may experience a substantial movement against another
currency (including the US dollar). In this case the contract would approximate
the value of some or all of a Fund's portfolio securities denominated in such
foreign currency. If appropriate, a Fund may hedge all or part of its foreign
currency exposure through the use of a basket of currencies or a proxy currency
where such currencies or proxy currency act as an effective proxy for other
currencies. In these circumstances, a Fund may enter into a forward contract
where the amount of the foreign currency to be sold exceeds the value of the
securities denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into separate
forward contracts for each currency held in a Fund. The precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movement in the value of those
securities between the date the forward contract is entered into and the date it
matures. The projection of short-term currency market movement is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Under certain circumstances, a Fund may commit a substantial
portion or the entire value of its assets to the consummation of these
contracts. The investment manager will consider the effect a substantial
commitment of its assets to forward contracts would have on the investment
program of each Fund and its ability to purchase additional securities.
Except as set forth above and immediately below, a Fund will also not enter into
such forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts would oblige a Fund to deliver an amount of
foreign currency in excess of the value of such Fund's portfolio securities or
other assets denominated in that currency. A Fund, in order to avoid excess
transactions and transaction costs, may nonetheless maintain a net exposure to
forward contracts in excess of the value of its portfolio securities or other
assets denominated in that currency provided the excess amount is "covered" by
cash or liquid, high-grade debt securities, denominated in any currency, having
a value at least equal at all times to the amount of such excess. Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated into the longer-term investment decisions made with regard to
overall diversification strategies.
5
<PAGE>
However, the investment manager believes that it is important to have the
flexibility to enter into such forward contracts when it determines that the
best interests of a Fund will be served.
At the maturity of a forward contract, a Fund may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency such
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency a
Fund is obligated to deliver. However, a Fund may use liquid, high-grade debt
securities, denominated in any currency, to cover the amount by which the value
of a forward contract exceeds the value of the securities to which it relates.
If a Fund retains the portfolio security and engages in an offsetting
transaction, such Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If a Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between a Fund's entering into a forward contract for the sale
of a foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, such Fund will realize a gain to the extent
the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, a Fund will
suffer a loss to the extent the price of the currency it has agreed to purchase
exceeds the price of the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange contracts will generally
be limited to the transactions described above. However, each Fund reserves the
right to enter into forward foreign currency contracts for different purposes
and under different circumstances. Of course, a Fund is not required to enter
into forward contracts with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by the investment
manager.
Although a Fund will seek to benefit by using forward contracts, anticipated
currency movements may not be accurately predicted and the Fund may therefore
incur a gain or loss on a forward contract. A forward contract may help reduce a
Fund's losses on securities denominated in foreign currency, but it may also
reduce the potential gain on the securities depending on changes in the
currency's value relative to the US dollar or other currencies. Additionally,
this method of hedging against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange at a future date. Foreign currency forward
contracts may not be available to a Fund on reasonable terms in many situations
and a Fund may frequently choose not to enter into such contracts even when they
are available.
Investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit or
"spread" based on the difference between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to a Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
Rights and Warrants. Each Fund may invest in common stock rights and warrants
believed by the investment manager to provide capital appreciation
opportunities. Common stock rights and warrants received as part of a unit or
attached to securities purchased (i.e., not separately purchased) are not
included in a Fund's investment restrictions regarding such securities.
6
<PAGE>
A Fund may not invest in rights and warrants if, at the time of acquisition, the
investment in rights and warrants would exceed 5% of the Fund's net assets
(valued at the lower of cost or market). In addition, no more than 2% of net
assets of a Fund may be invested in warrants not listed on the New York or
American Stock Exchanges. For purposes of this restriction, rights and warrants
acquired by the Fund in units or attached to securities may be deemed to have
been purchased without cost.
Put Options. Each Fund may purchase put options on portfolio securities in an
attempt to provide a hedge against a decrease in the market price of an
underlying security held by the Fund. A Fund will not purchase options for
speculative purposes.
Purchasing a put option gives a Fund the right to sell, and obligates the writer
to buy, the underlying security at the exercise price at any time during the
option period. This hedge protection is provided during the life of the put
option since the Fund, as holder of the put option, can sell the underlying
security at the put exercise price regardless of any decline in the underlying
security's market price.
In order for a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner, a Fund will reduce
any profit it might otherwise have realized in the underlying security by the
premium paid for the put option and by transaction costs.
Because a purchased put option gives the purchaser a right and not an
obligation, the purchaser is not required to exercise the option. If the
underlying position incurs a gain, a Fund would let the put option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option.
When the Fund purchases an option, it is required to pay a premium to the party
writing the option and a commission to the broker selling the option. If the
option is exercised by the Fund, the premium and the commission paid may be
greater than the amount of the brokerage commission charged if the security were
to be purchased or sold directly. The cost of the put option is limited to the
premium plus commission paid. The Fund's maximum financial exposure will be
limited to these costs.
A Fund may purchase both listed and over-the-counter put options. The Fund will
be exposed to the risk of counterparty nonperformance in the case of
over-the-counter put options.
Put options on securities may not be available to a Fund on reaonable terms in
many situations and a Fund may frequently choose not to purchase options even
when they are available. A Fund's ability to engage in option transactions may
be limited by tax considerations.
Other Investment Companies. Certain emerging markets have restrictions that
preclude or limit direct foreign investment in the securities of their
companies. However, indirect foreign investment is permitted in certain emerging
markets through governmentally authorized investment vehicles or companies,
including closed-end investment companies, which may be acquired at prices in
excess of their net asset values. In accordance with the 1940 Act, each Fund may
invest up to 10% of its assets in shares of other investment companies. If a
Fund invests in other investment companies, shareholders would bear not only
their proportionate share of that Fund's expenses (including operating expenses
and advisory fees), but also similar expenses of the underlying investment
companies.
Short Sales. Each Fund may sell securities short "against-the-box." A short sale
"against-the-box" is a short sale in which a Fund owns an equal amount of the
securities sold short or securities convertible into or exchangeable without
payment of further consideration for securities of the same issuer as, and equal
in amount to, the securities sold short.
Repurchase Agreements. Each Fund may enter into repurchase agreements with
commercial banks and broker/dealers as a short-term cash management tool. A
repurchase agreement is an agreement under which a Fund acquires a security ,
generally a US Government obligation, subject to resale at a mutually
agreed-upon price and time. The resale price reflects an agreed upon interest
rate effective for the period of time a Fund
7
<PAGE>
holds the security and is unrelated to the interest rate on the security.
A Fund's repurchase agreement will at all times be fully collateralized.
Repurchase agreements could involve certain risks in the event of bankruptcy or
other default by the seller, including possible delays and expenses in
liquidating securities underlying the agreement, a decline in the value of the
underlying securities and a loss of interest. Repurchase agreements are
typically entered into forperiods of one week or less. A Fund will not enter
into repurchase agreements of more than one week's duration if more than 10%
of its net assets would be invested in such agreements and other illiquid
securities.
Illiquid Securities. Each Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities (i.e., securities not
readily marketable without registration under the Securities Act of 1933
(1933 Act)) and other securities that are not readily marketable. Each Fund
does not currently expect to invest more than 5% of its assets in such
securities. A Fund may purchase restricted securities that can be offered and
sold to "qualified institutional buyers" under Rule 144A of the 1933 Act, and,
the Funds' Board of Directors, may determine, when appropriate, that specific
Rule 144A securities are liquid and not subject to the 15% limitation on
illiquid securities. Should the Board of Directors make this determination, it
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 a Fund, if and to the extent that qualified institutional buyers
become for a time uninterested in purchasing Rule 144A securities.
Borrowing. Each Fund may borrow money only from banks and only for temporary or
emergency purposes (but not for the purchase of portfolio securities) in an
amount not in excess of 5% of each Fund's total assets (except the Emerging
Markets Growth Fund, where such borrowings will not exceed 10% of the Fund's
total assets) and will be made at prevailing interest rates. Each Fund's
borrowings are limited so that immediately after such borrowing the value of its
assets (including borrowings) less its liabilities (not including borrowings) is
at least three times the amount of the borrowings. Should a Fund, for any
reason, have borrowings that do not meet the above test, that Fund must reduce
its borrowings so as to meet the foregoing test within three business days.
Under these circumstances, a Fund may have to liquidate portfolio securities at
a time when it is disadvantageous to do so. Gains made with additional funds
borrowed will generally cause the net asset value of a Fund's shares to rise
faster than could be the case without borrowings. Conversely, if investment
results fail to cover the cost of borrowings, the net asset value of a Fund
could decrease faster than if there had been no borrowings.
Lending of Portfolio Securities. Each Fund may lend portfolio securities to
broker/dealers or other institutions, if the investment manager believes such
loans will be beneficial to a Fund. The borrower must maintain with the Fund
cash or equivalent collateral equal to at least 100% of the market value of the
securities loaned. During the time portfolio securities are on loan, the
borrower pays the Fund any dividend or interest paid on the securities. The Fund
may invest the collateral and earn additional income or receive an agreed upon
amount of interest income from the borrower. Loans made by a Fund will generally
be short-term. Loans are subject to termination at the option of the Fund or the
borrower. The Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the interest earned
on the collateral to the borrower or placing broker. The Fund does not have the
right to vote securities on loan, but would terminate the loan and regain the
right to vote if it were considered important with respect to the investment.
The Fund may lose money if a borrower defaults on its obligation to return
securities and the value of the collateral held by the Fund is insufficient to
replace the loaned securities. In addition, the Fund is responsible for any loss
that might result from its investment of the borrower's collateral.
Except as otherwise specifically noted above, a Fund's investment strategies are
not fundamental and the Funds, with the approval of the Board of Directors, may
change such strategies without the vote of shareholders.
8
<PAGE>
Fund Policies
Each Fund 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 the Fund's outstanding voting securities. Under these policies, each
Fund may not:
1. As to 75% of the value of its total assets, invest more than 5% of its
total assets, at market value, in the securities of any one issuer
(except securities issued or guaranteed by the US Government, its
agencies or instrumentalities).
2. Invest more than 25% of its total assets, at market value, in the
securities of issuers principally engaged in the same industry (except
securities issued or guaranteed by the US Government, its agencies or
instrumentalities).
3. Own more than 10% of the outstanding voting securities of any issuer, or
more than 10% of any class of securities of one issuer.
4. Invest more than 5% of the value of its total assets, at market value, in
the securities of issuers which, with their predecessors, have been in
business less than three 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
limitation.
5. Purchase securities of open-end or closed-end investment companies,
except as permitted by the Investment Company Act of 1940, as amended, and
other applicable law or for the purpose of hedging the Fund's obligations
under the Deferred Compensation Plan for Directors.
6. Invest in warrants if, at the time of acquisition, the investment in
warrants, valued at the lower of cost or market value, would exceed 5% of
the Fund's net assets. For purposes of this restriction, warrants
acquired by a Fund in units or attached to securities may be deemed to
have been purchased without cost.
7. Make loans of money or securities other than (a) through the purchase of
securities in accordance with a Fund's investment objective, (b) through
repurchase agreements and (c) by lending portfolio securities in an
amount not to exceed 33 1/3% of its total assets.
8. Issue senior securities or borrow money except from banks and then in
amounts not in excess of 5% (10% for Emerging Markets Growth Fund) of its
total assets. as described above.
9. Buy any securities or other property on margin (except for such
short-term credits as are necessary for the clearance of transactions).
10. Invest in companies for the purpose of exercising control or management.
11. Underwrite securities of other issuers except to the extent that a Fund
may be deemed an underwriter when purchasing or selling portfolio
securities.
12. Purchase or retain securities of any issuer (other than the shares of the
Fund) if to the Fund's knowledge, those officers and directors of the
Fund and the officers and directors of the investment manager or
subadviser, who individually own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer, together own beneficially more
than 5% of such outstanding securities.
13. Purchase or sell real estate (although it may purchase securities secured
by real estate or interests therein, or issued by companies or investment
trusts that invest in real estate or interests therein).
14. Make short sales except short sales against-the-box.
9
<PAGE>
Each Fund also 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 a Fund means the affirmative
vote of the lesser of (l) more than 50% of the outstanding shares of the Fund;
or (2) 67% or more of the shares present at a shareholders' meeting if more than
50% of the outstanding shares are represented at the meeting in person or b
proxy.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, a Fund may invest up to 100% of its assets in short-term
instruments such as 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. Investments in domestic bank
certificates of deposit and bankers' acceptances will be limited to banks that
have total assets in excess of $500 million and are subject to regulatory
supervision by the US Government or state governments. A Fund's investments in
commercial paper of US issuers will be limited to (1) obligations rated Prime-1
by Moody's or A-1 by S&P or (2) unrated obligations issued by companies having
an outstanding unsecured debt issue currently rated A or better by S&P. A
description of various commercial paper ratings and debt securities ratings
appears in Appendix A. A Fund's investments in foreign short-term instruments
will be limited to those that, in the opinion of the investment manager, equate
generally to the standards established for US short-term instruments.
Portfolio Turnover
A Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned during the fiscal year.
Securities whose maturity or expiration date at the time of acquisition were one
year or less are excluded from the calculation. The Funds' portfolio turnover
rates for the fiscal years ended October 31, 1998 and 1997 were:
Fund 1998 1997
---- ---- ----
International Fund 81.37% 83.11%
Emerging Markets Growth Fund 94.09 84.09
Global Growth Opportunities Fund 45.43 79.32
Global Smaller Companies Fund 50.81 57.24
Global Technology Fund 87.55 94.06
Management of the Funds
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Funds.
Management Information
Directors and officers of the Funds, together with information as to their
principal business occupations during the past five years are shown below. Each
Director who is an "interested person" of the Funds, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
10
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
William C. Morris* Director, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(60) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc, Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy
company; and Sarah Lawrence College. Formerly,
Director, Daniel Industries Inc., manufacturer of
oil and gas metering equipment.
Brian T. Zino* Director, President and Director and President, J. & W. Seligman & Co.
(46) Member of the Executive Incorporated; President (with the exception of
Committee Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.) and Director or
Trustee, the Seligman Group of investment
companies; Chairman, Seligman Data Corp.;
Director, ICI Mutual Insurance Company; Seligman
Advisors, Inc., and Seligman Services, Inc.
Richard R. Schmaltz* Director and Member of the Director and Managing Director, Director of
(58) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of
investment companies; Director, Seligman Henderson
Co., and Trustee Emeritus of Colby College.
Formerly, Director, Investment Research at
Neuberger & Berman from May 1993 to September
1996.
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at
(69) Tufts University; Director or Trustee, the
Tufts University Seligman Group of investment companies; Chairman,
Packard Avenue, American Council on Germany; a Governor of the
Medford, MA 02155 Center for Creative Leadership; Director; Raytheon
Co., electronics; National Defense University; and
the Institute for Defense Analysis. Formerly,
Director, USLIFE Corporation; 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.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
Alice S. Ilchman Director Retired President, Sarah Lawrence College;
(63) Director or Trustee, the Seligman Group of
18 Highland Circle investment companies; Director, the Committee for
Bronxville, NY 10708 Economic Development; and Chairman, The
Rockefeller Foundation, charitable foundation.
Formerly, Trustee, The Markle Foundation,
philanthropic organization; and Director, NYNEX,
telephone company; and International Research and
Exchange Board, intellectual exchanges.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(65) Kerr-McGee Corporation; Director or Trustee, the
123 Robert S. Kerr Ave. Seligman Group of investment companies; Director,
Oklahoma City, OK 73112 Kimberly-Clark Corporation, consumer products;
Bank of 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 Director Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the
125 Broad Street, Seligman Group of investment companies; Director,
New York, NY 10004 Commonwealth Industries, Inc., manufacturers 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, American
Australian Association; and 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 Director Attorney; Director or Trustee, the Seligman Group
(56) of investment companies; Trustee, The Geraldine R.
P.O. Box 449 Dodge Foundation, charitable foundation; and
Gladstone, NJ 07934 Chairman of the Board of Trustees of St. George's
School (Newport, RI). Formerly, Director, the
National Association of Independent Schools
(Washington, DC).
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris County, investment companies. Formerly, Director, Public
P.O. Box 1945, Morristown, NJ Service Enterprise Group, public utility.
07962
James Q. Riordan Director Director or Trustee, the Seligman Group of
(71) investment companies; Director, The Houston
675 Third Avenue, Exploration Company; The Brooklyn Museum, KeySpan
Suite 3004 Energy Corporation; and Public Broadcasting
New York, NY 10017 Service; and Trustee, the Committee for Economic
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 Director Retired Vice President, Pfizer Inc.; Director or
(66) Trustee, the Seligman Group of investment
96 Evergreen Avenue, companies. Formerly, Director, USLIFE Corporation.
Rye, NY 10580
James N. Whitson Director Director and Consultant, Sammons Enterprises,
(63) Inc.; Director or Trustee, the Seligman Group of
6606 Forestshire Drive investment companies; Director, C-SPAN and
Dallas, TX 75230 CommScope, Inc., manufacturer of coaxial cables.
Formerly, Executive Vice President, Chief
Operating Officer, Sammons Enterprises, Inc.; and
Director, Red Man Pipe and Supply Company, piping
and other materials.
Peter Bassett Vice President and Portfolio Portfolio Manager, Henderson Investment Management
(43) Manager Limited. He has been a portfolio manager at
Henderson plc since December, 1992.
Iain C. Clark Vice President and Portfolio Chief Investment Officer, Henderson Investment
(48) Manager Management Limited since April 1992. He has been
a Director at Henderson International Limited and
Senior Portfolio Manager at Henderson plc,
respectively, since April 1985.
Nitin Mehta Vice President and Portfolio Portfolio Manager, Henderson Investment Management
(38) Manager Limited. He has been a portfolio manager at
Henderson plc since September 1994. From
May 1993 to September 1994, he was Head of
Currency Management and Derivatives at Quorum
Capital Management.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Positions(s) Held Occupation(s) During
Address With Fund Past 5 Years
--------- ----------------- --------------------
<S> <C> <C>
Arsen Mrakovcic Vice President and Portfolio Managing Director, J. & W. Seligman & Co.
(33) Manager Incorporated; Vice President and Portfolio
Manager, two other open-end investment companies
in the Seligman Group of investment companies.
Formerly, Vice President, Investment Officer, J. &
W. Seligman & Co. Incorporated from January 1995
to January 1996 and Portfolio Assistant, J. & W.
Seligman & Co. Incorporated from June 1992 to
January 1995.
Marion S. Schultheis Vice President and Portfolio Managing Director, J. & W. Seligman & Co.
(45) Manager Incorporated since May 1998; Vice President and
Portfolio Manager, three open-end investment
companies in the Seligman Group of investment
companies. Formerly, Managing Director at
Chancellor LGT from October 1997 until May 1998;
and Senior Portfolio Manager at IDS Advisory Group
Inc. from August 1987 until October 1997.
Brian Ashford-Russell Vice President and Portfolio Portfolio Manager, Henderson Investment Management
(40) Manager Limited. He has been a portfolio manager at
Henderson plc since February 1993.
Paul H. Wick Vice President and Portfolio Director and Managing Director, J. & W. Seligman &
(36) Manager Co. Incorporated, since January 1995 and November
1997, respectively; Vice President and Portfolio
Manager, two other open-end investment companies
in the Seligman Group of investment companies;
Portfolio Manager, Henderson Investment Management
Limited. He joined J. & W. Seligman & Co.
Incorporated in 1987 as an Associate, Investment
Research.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(42) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies and Seligman
Services, Inc.; and Treasurer, Seligman Henderson
Co.
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(34) Regulation and Corporate Secretary, J. & W.
Seligman & Co. Incorporated; Secretary, the
Seligman Group of investment companies, Seligman
Advisors, Inc., Seligman Henderson Co., Seligman
Services, Inc., and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment
(41) companies and Seligman Data Corp.
</TABLE>
14
<PAGE>
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 Funds for
which no market valuation is available, and to elect or appoint officers of the
Funds to serve until the next meeting of the Board.
Directors and officers of the Funds 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 Funds and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund From Funds (1) Fund Expenses to Directors (1)(2)
------------------ -------------- ------------- -------------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Richard R. Schmaltz, Director N/A N/A N/A
John R. Galvin, Director $6,265.18 N/A $77,000
Alice S. Ilchman, Director 5,905.83 N/A 70,000
Frank A. McPherson, Director 6,158.78 N/A 75,000
John E. Merow, Director 6,109.93 N/A 74,000
Betsy S. Michel, Director 6,265.18 N/A 77,000
James C. Pitney, Director 6,007.88 N/A 72,000
James Q. Riordan, Director 6,007.88 N/A 72,000
Robert L. Shafer, Director 6,007.88 N/A 72,000
James N. Whitson, Director 6,265.18 (d) N/A 77,000(d)
</TABLE>
- ----------
(1) For the Fund's fiscal year ended October 31, 1998. Effective January 16,
1998, the per meeting fee for Directors was increased by $1,000, which is
allocated among all Funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of eighteen investment
companies.
(d) Deferred.
Seligman Henderson Global Fund Series, Inc. has a compensation arrangement under
which outside directors may elect to defer receiving their fees. Seligman
Henderson Global Fund Series, Inc. has adopted a Deferred Compensation Plan
under which a director 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 any of the investment
companies advised by J. & W. Seligman & Co. Incorporated, as designated by the
director. The cost of such fees and earnings is included in directors' fees and
expenses, and the accumulated balance thereof is included in other liabilities
in the Funds' financial statements. The total amount of deferred compensation
(including earnings) payable in respect of the Funds to Mr. Whitson as of
October 31, 1998 was $22,159. Messrs. Merow and Pitney no longer defer current
compensation; however, they have accrued deferred compensation in the amounts of
$12,364 and $1,501, respectively, as of October 31, 1998.
The Funds may, but are not obligated to, purchase shares of Seligman Group of
investment companies to hedge their obligations in connection with the Deferred
Compensation Plan.
Sales Charges
Class A shares of each Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Funds, the other investment companies in the Seligman Group, and J. & W.
Seligman & Co. Incorporated 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 J. & W. Seligman & Co. Incorporated or any
affiliate. The sales may be made for investment purposes only, and shares may be
resold only to a Fund.
Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.
15
<PAGE>
Control Persons and Principal Holders of Securities
Control Persons
As of January 31, 1999, there was no person or persons who controlled any of the
Funds, either through a significant ownership of shares or any other means of
control.
Principal Holders
As of January 31, 1999, MLPF&S for the Sole Benefit of Its Customers, Attn Fund
Administration, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL 32246,
owned of record more than 5% of the outstanding shares of a class of the
following Funds:
Percentage of Total
Outstanding Shares of
Fund Class the Class of the Fund
---- ----- ---------------------
International Fund A 18.74%
B 35.37%
D 31.14%
Emerging Markets Growth Fund A 12.47%
B 36.68%
D 32.51%
Global Growth Opportunities Fund A 36.20%
B 41.19%
D 46.55%
Global Smaller Companies Fund A 21.86%
B 34.31%
D 45.30%
Global Technology Fund A 18.47%
B 32.01%
D 28.64%
Management Ownership
As of January 31, 1999, Directors and officers of the Funds as a group owned
3.57% of the Class A shares of the International Fund; 1.62% of the Class A
shares of the Emerging Markets Growth Fund; 1.86% of the Class A shares of the
Global Growth Opportunities Fund; and less than 1% of the Class A shares of each
of the Global Smaller Companies Fund and the Global Technology Fund. As of the
same date, no Directors or officers of the Funds owned any Class B or Class D
capital stock of any Fund.
Investment Advisory and Other Services
Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages the Funds. 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. On December 29, 1988, a majority of the outstanding voting
securities of Seligman was purchased by Mr. William C. Morris and a simultaneous
recapitalization of Seligman occurred. See Appendix B for further history of
Seligman.
16
<PAGE>
All of the officers of the Funds listed above are officers or employees of
Seligman. Their affiliations with the Funds and with Seligman are provided under
their principal business occupations.
Each Fund pays Seligman a management fee for its services, calculated daily and
payable monthly. The management fee is equal to 1.00% per annum of the Fund's
average daily net assets for each of the International Fund, the Global Growth
Opportunities Fund, the Global Smaller Companies Fund and the Global Technology
Fund. The management fee is equal to 1.25% per annum of the Fund's average daily
net assets for the Emerging Markets Growth Fund. The following chart indicates
the management fees paid by each Fund as well as the percentage such fees
represents of each Fund's average daily net assets for the fiscal years ended
October 31, 1998, 1997, and 1996.
<TABLE>
<CAPTION>
Fiscal % of
Year/Period Management Average Daily
Fund Ended Fee Paid ($) Net Assets (%)
---- ----- ------------ --------------
<S> <C> <C> <C>
International Fund 10/31/98 $954,634 1.00%
10/31/97 993,229 1.00
10/31/96 963,308 1.00
Emerging Markets Growth Fund 10/31/98 $1,034,015 1.25%
10/31/97 1,110,307 1.25
10/31/96* 66,785** .45**
Global Growth Opportunities Fund 10/31/98 $1,982,193 1.00%
10/31/97 1,903,374 1.00
10/31/96 1,318,826 1.00
Global Smaller Companies Fund 10/31/98 $9,995,944 1.00%
10/31/97 9,494,033 1.00
10/31/96 4,279,964 1.00
Global Technology Fund 10/31/98 $8,247,297 1.00%
10/31/97 8,488,410 1.00
10/31/96 7,054,213 1.00
</TABLE>
* For the period 5/28/96 (commencement of operations) to 10/31/96.
** During the period, Seligman and/or Seligman Henderson Co., the prior
subadviser, at their discretion, elected to waive a portion of their fees.
Under a Subadvisory Agreement dated July 1, 1998, Henderson Investment
Management Limited (HIML) furnishes investment advice, research and assistance
with respect to each Fund's non-US investments.
HIML, headquartered in the United Kingdom, was incorporated in 1984 and is a
registered investment adviser under the Investment Advisers Act of 1940. HIML is
a wholly owned subsidiary of Henderson plc. Henderson plc is a subsidiary of AMP
Limited, an Australian life insurance and financial services company. Henderson
plc, headquartered in London, is one of the largest money managers in Europe.
See Appendix C for further history of Henderson plc.
HIML receives a fee from Seligman, in respect of each Fund, based on the
"applicable percentage" of the average monthly assets of such Fund under its
supervision. The "applicable percentage" is an annual rate of 0.90% for the
period July 1, 1998 to June 30, 1999; 0.70% for the period July 1, 1999 to June
30, 2000; and 0.50% thereafter. The Subadvisory Agreement provides that it will
continue until December 31, 1999; and, thereafter, is subject to the annual
approval of the Funds' Board of Directors.
17
<PAGE>
Each Fund pays all of its expenses, other than those assumed by Seligman or
HIML, 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
Funds and their shares under federal and state securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Funds not employed by or serving as a director of Seligman or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses. These expenses are allocated between each Fund and between the classes
of each Fund in a manner determined by the Board of Directors to be fair and
equitable.
The Management Agreement provides that Seligman will not be liable to the Funds
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 Agreements.
The Management Agreement was initially approved by the Board of Directors at a
meeting held on March 19, 1992 and by the shareholders on May 20, 1993. The
Management Agreement will continue in effect until December 31 of each year if
(1) such continuance is approved in the manner required by the 1940 Act (i.e.,
by a vote of a majority of the Board of Directors or of the outstanding voting
securities of each Fund and by a vote of a majority of the Directors who are not
parties to the Management Agreement or interested persons of any such party) and
(2) Seligman has not notified the Funds at least 60 days prior to December 31 of
any year that it does not desire such continuance. The Management Agreement may
be terminated by a Fund, without penalty, on 60 days' written notice to Seligman
and will terminate automatically in the event of its assignment. Seligman
Henderson Global Fund Series, Inc. 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.
Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. 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 Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, directors and employees (including all portfolio managers) of
Seligman from purchasing or selling any security that the officer, director, or
employee knows or believes (1) was recommended by Seligman for purchase or sale
by any client, including the Fund, within the preceding two weeks, (2) has been
reviewed by Seligman for possible purchase or sale within the preceding two
weeks, (3) is being purchased or sold by any client, (4) is being considered by
a research analyst, (5) is being acquired in a private placement, unless prior
approval has been obtained from Seligman's Compliance Officer, or (6) is being
acquired during an initial or secondary public offering. The Code of Ethics also
imposes a strict standard of confidentiality and requires portfolio managers to
disclose any interest they may have in the securities or issuers that they
recommend for purchase by any client.
The Code of Ethics also 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) for which the portfolio manager or investment team
manages; and (2) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors, and employees are required, except under very limited
circumstances, to engage in personal securities transactions through 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 officers, directors and
employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
18
<PAGE>
Principal Underwriter
Seligman Advisors, Inc., (Seligman Advisors) an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
each Fund and 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 Funds. Those individuals identified above
under "Management Information" as directors or officers of both the Funds and
Seligman Advisors are affiliated persons of both entities.
Services Provided by the Investment Manager
Under the Management Agreement, dated March 19, 1992, subject to the control of
the Board of Directors, Seligman manages the investment of the assets of each
Fund, including making purchases and sales of portfolio securities consistent
with each Fund's investment objectives and policies, and administers its
business and other affairs. 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
directors 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 the Funds.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman
or HIML, regularly advise the Funds with respect to their investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares of the Funds, as set forth below:
<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 $ 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 0 0
</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 eighteen months.
19
<PAGE>
Seligman Services, Inc. (Seligman Services), an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares. For fiscal years ended October
31, 1998, 1997, and 1996, Seligman Services received commissions in the
following amounts:
Fund 1998 1997 1996
- ---- ---- ---- ----
International Fund $ 8,971 $ 1,009 $ 3,204
Emerging Markets Growth Fund 647 7,957 2,722*
Global Growth Opportunities Fund 10,047 1,921 9,362
Global Smaller Companies Fund 45,438 35,359 137,567
Global Technology Fund 90,491 38,720 190,014
* For the period 5/28/96 (commencement of operations) to 10/31/96.
Rule 12b-1 Plans
Each 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 Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class B, and Class D shares. Payments 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 Fund; (2) compensation to Service Organizations for
providing administration, accounting and other shareholder services with respect
to Fund shareholders; and (3) otherwise promoting the sale of shares of the
Fund, including paying for the preparation of advertising and sales literature
and the printing and distribution of such promotional materials and prospectuses
to prospective investors and defraying Seligman Advisors' costs incurred in
connection with its marketing efforts with respect to shares of the Fund.
Seligman, in its sole discretion, may also make similar payments to Seligman
Advisors from its own resources, which may include the management fee that
Seligman receives from each Fund. Payments made by each Fund under its Rule
12b-1 Plan are intended to be used to encourage sales of such Fund, as well as
to discourage redemptions.
Fees paid by each Fund under its 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of a Fund
will be allocated between the classes in accordance with a methodology approved
by the Funds' Board of Directors. Each Fund may participate in joint
distribution activities with other Seligman funds, and the expenses of such
activities will be allocated among the applicable funds based on relative sales,
in accordance with a methodology approved by the Board.
Class A
Under its 12b-1 Plan, each Fund, with respect to 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 Class A shares. These fees are 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 A
shares attributable to the particular Service Organization for providing
personal service and/or maintenance of shareholder accounts. The fee payable to
Service Organizations from time to time shall, within such limits, be determined
by the Directors. The Funds are not obligated to pay Seligman Advisors for any
such costs it incurs in excess of the fee described above. No expenses incurred
in one fiscal year by Seligman Advisors with respect to Class A shares of a Fund
may be paid from Class A 12b-1 fees received from that Fund in any other fiscal
year. If a Fund's 12b-1 Plan is terminated in respect of Class A shares, no
amounts (other than amounts accrued but not yet paid) would be owed by that Fund
to Seligman Advisors with
20
<PAGE>
respect to Class A shares. The total amount paid by each Fund to Seligman
Advisors in respect of Class A shares for the fiscal year ended October 31, 1998
was as follows:
Total % of Average
Fund Fees Paid Net Assets
---- --------- ----------
International Fund $ 97,702 .21%
Emerging Markets Growth Fund 80,916 .23
Global Growth Opportunities Fund 261,123 .24
Global Smaller Companies Fund 982,147 .24
Global Technology Fund 1,334,768 .24
Class B
Under its 12b-1 Plan, each Fund, with respect to 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 Class B shares. The 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 Fund shares (i) a 4%
commission payment to Service Organizations in connection with the sale of the
Class B shares 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 attributable to the particular Service Organization for providing
personal service and/or maintenance of shareholder accounts. 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 Fund may exceed the 12b-1 fees paid by
that Fund in that year. Each Fund's 12b-1 Plan permits expenses incurred in
respect of Class B shares in one fiscal year to be paid from Class B 12b-1 fees
received from the Fund in any other fiscal year; however, in any fiscal year the
Funds are 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
which exceed such fees. If a Fund's 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 that Fund to Seligman Advisors or FEP Capital, L.P. with respect to Class B
shares. The total amount paid by each Fund in respect of Class B shares for the
fiscal year ended October 31, 1998, was equal to 1% per annum of the average
daily net assets of Class B shares, as follows:
Fund Total Fees Paid
---- ---------------
International Fund $ 84,989
Emerging Markets Growth Fund 242,231
Global Growth Opportunities Fund 214,020
Global Smaller Companies Fund 2,534,097
Global Technology Fund 599,016
Class D
Under its 12b-1 Plan, each Fund, with respect to 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 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 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, 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
21
<PAGE>
Organizations at the time of sale of Class D shares of a service fee of up to
.25% of the net asset value of the Class D share sold (for shareholder services
to be provided to Class D shareholders over the course of the one year
immediately following the sale). The payment 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, the entire 12b-1 fee attributable to such Class D shares is paid
to Service Organizations for providing continuing shareholder services and
distribution assistance in respect of assets invested in each Fund. The total
amount paid by each Fund in respect of Class D shares for the fiscal year ended
October 31, 1998 was equal to 1% per annum of the average daily net assets of
Class D shares, as follows:
Fund Total Fees Paid
---- ---------------
International Fund $ 408,081
Emerging Markets Growth Fund 230,636
Global Growth Opportunities Fund 675,874
Global Smaller Companies Fund 3,401,501
Global Technology Fund 2,183,150
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of a Fund may exceed 12b-1 fees paid by the Fund in that year. Each
Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect of
Class D shares in one fiscal year to be paid from Class D 12b-1 fees received
from the Fund in any other fiscal year; however, in any fiscal year the Funds
are not obligated to pay any 12b-1 fees in excess of the fees described above.
As of September 30, 1998 (the most recent calendar quarter for which such
information was reported), Seligman Advisors has incurred the following amounts
of unreimbursed expenses in respect of each Fund's Class D shares:
<TABLE>
<CAPTION>
Amount of Unreimbursed
Expenses Incurred with % of the Net Assets of
Respect to Class D Class D at
Fund Shares October 31, 1998
---- ------ ----------------
<S> <C> <C>
International Fund $41,767 .11%
Emerging Markets Growth Fund 16,429 .12
Global Growth Opportunities Fund -- --
Global Smaller Companies Fund 714,746 .26
Global Technology Fund 21,862 .01
</TABLE>
If a Fund's 12b-1 Plan is terminated in respect of Class D shares, no amounts
(other than amounts accrued but not yet paid) would be owed by that Fund to
Seligman Advisors with respect to Class D shares.
Payments made by each Fund under its 12b-1 Plan for the fiscal year ended
October 31, 1998, were spent on the following activities in the following
amounts:
<TABLE>
<CAPTION>
Compensation to Compensation to Other
Fund/Class Underwriters Broker/Dealers Compensation*
- ---------- ------------ -------------- -------------
<S> <C> <C> <C>
International Fund/Class A -- $97,702 --
International Fund/Class B $16,882 4,649 $63,458
International Fund/Class D 60,430 347,651 --
Emerging Markets Growth Fund/Class A -- $80,916 --
Emerging Markets Growth Fund/Class B $46,877 15,014 $180,340
Emerging Markets Growth Fund/Class D 77,013 153,623 --
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Compensation to Compensation to Other
Fund/Class Underwriters Broker/Dealers Compensation*
- ---------- ------------ -------------- -------------
<S> <C> <C> <C>
Global Growth Opportunities Fund/Class A -- $261,123 --
Global Growth Opportunities Fund/Class B $42,110 12,271 $159,639
Global Growth Opportunities Fund/Class D 84,005 591,869 --
Global Smaller Companies Fund/Class A -- $982,147 --
Global Smaller Companies Fund/Class B $498,374 145,280 $1,890,443
Global Smaller Companies Fund/Class D 709,878 2,691,623 --
Global Technology Fund/Class A -- $1,334,768 --
Global Technology Fund/Class B $119,146 32,898 $446,972
Global Technology Fund/Class D 147,575 2,035,575 --
</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.
The 12b-1 Plan with respect to the International Fund was originally approved on
July 15, 1993 by the Board of Directors, including a majority of the Directors
who are not "interested persons" (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of the Fund (Qualified
Directors) and by the shareholders of such Fund on September 21, 1993. The 12b-1
Plan with respect to the Emerging Markets Growth Fund was originally approved on
March 21, 1996 by the Board of Directors, including a majority of the Qualified
Directors, and by the sole shareholder of each Class of shares of the Fund on
May 10, 1996. The 12b-1 Plan with respect to the Global Growth Opportunities
Fund was originally approved on September 21, 1995 by the Board of Directors,
including a majority of the Qualified Directors, and by the sole shareholder of
such Fund on October 30, 1995. The 12b-1 Plan with respect to the Global Smaller
Companies Fund was originally approved on July 16, 1992 by the Board of
Directors, including a majority of the Qualified Directors. Amendments to the
12b-1 Plan in respect of Class D shares of the Global Smaller Companies Fund
were approved by the Board of Directors of the Fund, including a majority of the
Qualified Directors, on March 18, 1993 and the amended 12b-1 Plan was approved
by the shareholders of the Global Smaller Companies Fund on May 20, 1993. The
12b-1 Plan with respect to the Global Technology Fund was originally approved on
March 17, 1994 by the Board of Directors, including a majority of the Qualified
Directors, and by the sole shareholder of such Fund on that date. The 12b-1
Plans were approved in respect of the Class B shares of each Fund other than the
Emerging Markets Growth Fund on March 21, 1996 by the Board of Directors,
including a majority of the Qualified Directors, and by the sole shareholder of
each such Fund's Class B shares on that date, and became effective in respect of
such Class B shares on April 22, 1996.
The 12b-1 Plans will continue in effect through December 31 of each year so long
as such continuance is approved annually by a majority vote of both the
Directors and the Qualified Directors, cast in person at a meeting called for
the purpose of voting on such approval. No material amendment to the 12b-1 Plans
may be made except by a majority of both the Directors and Qualified Directors.
The 12b-1 Plans may not be amended to increase materially the amounts payable to
Service Organizations with respect to a Class without the approval of a majority
of the outstanding voting securities of such Class. If the amount payable in
respect of Class A shares under a Fund's 12b-1 Plan is proposed to be increased
materially, the Fund will either (i) permit holders of Class B shares to vote as
a separate class on the proposed increase or (ii) establish a new class of
shares subject to the same payment under the 12b-1 Plan as existing Class A
shares, in which case Class B shares will thereafter convert into the new class
instead of into Class A shares.
The 12b-1 Plans require that the Treasurer of the Funds shall provide to the
Directors and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the 12b-1 Plans. Rule
12b-1 also requires that the selection and nomination of Directors who are not
"interested persons" of the Funds be made by such disinterested Directors. The
12b-1 Plans are reviewed by the Directors annually.
23
<PAGE>
Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor. As such, it receives
compensation from each Fund pursuant to its 12b-1 Plan for providing personal
services and account maintenance to such accounts and other distribution
services. For the fiscal years ended October 31, 1998, 1997, and 1996, Seligman
Services received distribution and service fees from each Fund pursuant to its
12b-1 Plan as follows:
Fund 1998 1997 1996
---- ---- ---- ----
International Fund $ 20,727 $ 18,533 $ 15,809
Emerging Markets Growth Fund 6,219 5,900 568*
Global Growth Opportunities Fund 2,295 6,876 3,281
Global Smaller Companies Fund 11,939 45,222 25,474
Global Technology Fund 26,484 86,328 36,015
* For the period 5/28/96 (commencement of operations) to 10/31/96.
Brokerage Allocation and Other Practices
Brokerage Transactions
Seligman and HIML will seek the most favorable price and execution in the
purchase and sale of portfolio securities of each Fund. When two or more of the
investment companies in the Seligman Group or other investment advisory clients
of Seligman or HIML desire to buy or sell the same security at the same
time, the securities purchased or sold are allocated by Seligman or HIML 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.
In over-the-counter markets, the Funds deal with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
Each Fund may buy securities from or sell securities to dealers acting as
principal, except dealers with which its directors and/or officers are
affiliated.
For the fiscal years ended October 31, 1998, 1997, and 1996, the Funds paid
total brokerage commissions to others for execution, research and statistical
services in the following amounts:
Total Brokerage Commissions Paid
--------------------------------
Fund 1998 1997 1996
- ---- ---- ---- ----
International Fund $ 344,771 $ 409,545 $ 337,391
Emerging Markets Growth Fund 392,683 419,950 151,798*
Global Growth Opportunities Fund 378,349 585,985 635,930
Global Smaller Companies Fund 1,801,953 1,910,979 1,558,525
Global Technology Fund 1,234,913 936,431 1,072,773
* For the period 5/28/96 (commencement of operations) to 10/31/96.
Commissions
For the fiscal years ended October 31, 1998, 1997, and 1996, the Funds did not
execute any portfolio transactions with, and therefore did not pay any
commissions to, any broker affiliated with the Funds, Seligman, HIML, or
Seligman Advisors.
24
<PAGE>
Brokerage 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 brokers or dealers to Seligman for
its use, as well as the general attitude toward and support of investment
companies demonstrated by such brokers or dealers. Such services include
supplemental investment research, analysis, and reports concerning issuers,
industries, and securities deemed by Seligman to be beneficial to the Funds. In
addition, Seligman is authorized to place orders with brokers who provide
supplemental investment and market research and security and economic analysis
although the use of such brokers may result in a higher brokerage charge to a
Fund than the use of brokers selected solely on the basis of seeking the most
favorable price and execution and although such research and analysis may be
useful to Seligman in connection with its services to clients other than the
Funds.
Directed Brokerage
During the Funds' fiscal year ended October 31, 1998, neither the Funds,
Seligman, nor HIML directed any of the Funds' brokerage transactions to a broker
because of research services provided.
Regular Broker-Dealers
During the Funds' fiscal year ended October 31, 1998, the Funds did not acquire
securities of any of its regular brokers or dealers (as defined in Rule 10b-1
under the 1940 Act) or of their parents.
Capital Stock and Other Securities
Capital Stock
Seligman Henderson Global Fund Series, Inc. is authorized to issue 2,000,000,000
shares of common stock, each with a par value of $.001 each, divided into five
different series (which represent each of the Funds). Each Fund has three
classes, designated Class A, Class B, and Class D shares. Each share of a Fund's
Class A, Class B, and Class D capital stock is equal as to earnings, assets, and
voting privileges, except that each class bears its own separate distribution
and, potentially, certain other class expenses and has exclusive voting rights
with respect to any matter to which a separate vote of any class is required by
the 1940 Act or Maryland law. Seligman Henderson Global Fund Series, Inc. has
adopted a multiclass plan pursuant to Rule 18f-3 under the 1940 Act permitting
the issuance and sale of multiple classes of common stock. In accordance with
the Articles of Incorporation, the Board of Directors may authorize the creation
of additional classes of common stock with such characteristics as are permitted
by the multiclass plan and Rule 18f-3. The 1940 Act requires that where more
than one class exists, each class must be preferred over all other classes in
respect of assets specifically allocated to such class. All shares have
noncumulative voting rights for the election of directors. Each outstanding
share is fully paid and non-assessable, and each is freely transferable. There
are no liquidation, conversion, or preemptive rights.
Other Securities
Seligman Henderson Global Fund Series, Inc. has no authorized securities other
than common stock.
25
<PAGE>
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Class A shares 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) may be
eligible for the following reductions in initial sales charges:
Volume Discounts are provided if the total amount being invested in Class A
shares of a Fund 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 the Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of a Fund 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 the prospectus. The
value of the shares owned, including the value of shares of Seligman Cash
Management Fund acquired in an exchange of shares of another Seligman mutual
fund on which there was an initial sales 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 the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales 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.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge in accordance with the sales charge schedule in the Funds'
Prospectus, or pursuant to 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 (as described below) 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 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.
Persons Entitled To Reductions. Reductions in initial sales charges apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code of 1986,
as amended, organizations tax exempt
26
<PAGE>
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 a 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 the 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 Funds' 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.
Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman Data
Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge to any registered unit investment trust which is the issuer
of periodic payment plan certificates, the net proceeds of which are invested in
Fund shares; to separate accounts established and maintained by an insurance
company which are exempt from registration under Section 3(c)(11) of the 1940
Act; to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors; to
financial institution trust departments; to registered investment advisers
exercising discretionary investment authority with respect to the purchase of
Fund shares; to accounts of financial institutions or broker/dealers that charge
account management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts; pursuant to sponsored
arrangements with organizations which make recommendations to, or permit group
solicitations of, its employees, members or participants in connection with the
purchase of shares of a Fund; to other investment companies in the Seligman
Group in connection with a deferred fee arrangement for outside directors; and
to "eligible employee benefit plans" which have at least (1) $500,000 invested
in the Seligman mutual funds or (2) 50 eligible employees to whom such plan is
made available.
27
<PAGE>
Class B
Class B shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class B shares 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.
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%
Class D
Class D shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class D shares 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.
Systematic Withdrawals. Class B and Class D shareholders who reinvest both their
dividends and capital gain distributions to purchase additional shares of a
Fund, may use the Systematic Withdrawal Plan to withdraw up to 12% 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 and Class D shares (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;
(3) in whole or in part, in connection with shares sold to current and retired
Directors of the Funds;
(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.
28
<PAGE>
If, with respect to a redemption of any Class A, Class B, or Class D shares 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 Funds may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales charge), although the Funds do not presently
intend to accept securities in payment for Fund shares. Generally, a Fund will
only consider accepting securities (l) to increase its holdings in a portfolio
security, or (2) if Seligman determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that a Fund
would not accept securities with a value of less than $100,000 per issue in
payment for shares. A Fund may reject in whole or in part offers to pay for Fund
shares with securities, may require partial payment in cash for applicable sales
charges, and may discontinue accepting securities as payment for Fund shares at
any time without notice. The Funds will not accept restricted securities in
payment for shares. The Funds will value accepted securities in the manner
provided for valuing portfolio securities.
Fund Reorganizations
Class A shares 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 shares of a Fund if the
Fund is combined with another Seligman mutual fund, or in connection with a
similar reorganization transaction.
Offering Price
When you buy or sell Fund 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.
NAV per share of each class of a Fund 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. A Fund
will also determine NAV for each class on each day in which there is a
sufficient degree of trading in the Fund's portfolio securities that the NAV of
Fund shares might be materially affected. NAV per share for a class is computed
by dividing such class's share of the value of the net assets of the Fund (i.e.,
the value of its assets less liabilities) by the total number of outstanding
shares of such class. All expenses of the Fund, including the management fee,
are accrued daily and taken into account for the purpose of determining NAV. The
NAV of Class B 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 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 not recent sales transactions are valued
based on quotations provided by primary market maker in such securities. Other
securities not listed on an exchange or securities market, or securities in
which there were no transactions, are valued at the average of the most recent
bid and asked price, except in the case of open short positions where the asked
price is available. Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as determined in
accordance with procedures approved by the Board of Directors. Short-term
obligations with less than sixty days remaining to maturity are generally valued
at amortized cost. Short-term obligations with more than sixty days remaining to
maturity will be valued at current market value until the sixtieth day prior to
maturity, and will then be valued on an amortized cost basis
29
<PAGE>
based on the value on such date unless the Board determines that this amortized
cost value does not represent fair market value.
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 regular trading on the NYSE. The
values of such securities used in computing the net asset value of the shares of
each Fund are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of regular trading on the NYSE.
For purposes of determining the net asset value per share of a 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 Funds and Seligman
Advisors, Class A shares are sold with a maximum initial sales charge of 4.75%
and Class B and Class D shares are sold at NAV(1). Using each Class's NAV at
October 31, 1998, the maximum offering price of each Fund's shares is as
follows:
<TABLE>
<CAPTION>
Class A
Global Global
Emerging Growth Smaller Global
International Markets Opportunities Companies Technology
Fund Fund Fund Fund Fund
--------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value per share ......... $ 17.75 $ 5.18 $ 9.62 $ 14.11 $ 12.48
Maximum sales charge
(4.75% of offering price) ....... .89 .26 .48 .70 .62
--------- -------- --------- --------- ---------
Offering price to public .......... $ 18.64 $ 5.44 $ 10.10 $ 14.81 $ 13.10
========= ======== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Class B
Global Global
Emerging Growth Smaller Global
International Markets Opportunities Companies Technology
Fund Fund Fund Fund Fund
--------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value and
offering price per share(1) ..... $ 16.93 $ 5.09 $ 9.40 $ 13.46 $ 11.98
========= ======== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Class D
Global Global
Emerging Growth Smaller Global
International Markets Opportunities Companies Technology
Fund Fund Fund Fund Fund
--------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value and
Offering price per share(1) ..... $ 16.93 $ 5.09 $ 9.40 $ 13.47 $ 11.96
========= ======== ========= ========= =========
</TABLE>
- ----------
(1) 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 subject to a CDSC of 1%
on redemptions within one year of purchase.
30
<PAGE>
Redemption in Kind
The procedures for selling Fund shares under ordinary circumstances are set
forth in the Prospectus. In unusual circumstances, payment may be postponed, or
the right of redemption postponed for more than seven days, if the orderly
liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the NYSE during periods of emergency, or such other
periods as ordered by the Securities and Exchange Commission. Under these
circumstances, redemption proceeds may be made in securities. If payment is made
in securities, a shareholder may incur brokerage expenses in converting these
securities to cash.
Taxation of the Funds
Foreign Income Taxes. Investment income received by the Fund from sources within
foreign countries may be subject to foreign income taxes withheld at source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of such taxes or exemption from taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of each Fund's assets to be invested within various
countries is not known.
US Federal Income Taxes. Each Fund is qualified and intends to continue to
qualify for each taxable year for tax treatment as a "regulated investment
company" under the Internal Revenue Code. Qualification relieves a Fund of
Federal income tax liability on that part of its net ordinary income and net
realized capital gains which it pays out to its shareholders. Such qualification
does not, of course, involve governmental supervision of management or
investment practices or policies. Investors should consult their own counsel for
a complete understanding of the requirements a Fund must meet to qualify for
such treatment. The information set forth in the Prospectus and the following
discussion relate solely to the US Federal income taxes on dividends and
distributions by a Fund and assumes that each Fund qualifies as a regulated
investment company. Investors should consult their own counsel for further
details, including their possible entitlement to foreign tax credits that might
be "passed through" to them under the rules described below, and the application
of state and local tax laws to his or her particular situation.
Each Fund intends to declare and distribute dividends in the amounts and at the
times necessary to avoid the application of the 4% Federal excise tax imposed on
certain undistributed income of regulated investment companies. Each Fund will
be required to pay the 4% excise tax to the extent it does not distribute to its
shareholders during any calendar year at least 98% of its ordinary income for
the calendar year plus 98% of its capital gain net income for the twelve months
ended October 31 of such year. Certain distributions of the Fund which are paid
in January of a given year but are declared in the prior October, November or
December to shareholders of record as of a specified date during such a month
will be treated as having been distributed to shareholders and will be taxable
to shareholders as if received in December.
Dividends of net ordinary income and distributions of any net realized
short-term capital gain are taxable to shareholders as ordinary income. Since
each Fund expects to derive a substantial portion of its gross income (exclusive
of capital gains) from sources other than qualifying dividends, it is expected
that only a portion of each Fund's dividends or distributions will qualify for
the dividends received deduction for corporations.
The excess of net long-term capital gains over the net short-term capital losses
realized and distributed by each Fund to its shareholders will be taxable to the
shareholders as long-term capital gains, irrespective of the length of time a
shareholder may have held Fund shares. Individual shareholders will be subject
to federal income tax on net capital gain 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. Any dividend or distribution
received by a shareholder on shares of a Fund shortly after the purchase of such
shares will have the effect of reducing the net asset value of such shares by
the amount of such dividend or distribution. Furthermore, such dividend or
distribution, although in effect a return of capital, would be taxable to the
shareholder as described above. If a shareholder has held shares in a Fund for
six months or less and during that period has received a distribution taxable to
the shareholder as a long-term capital gain, any loss
31
<PAGE>
recognized by the shareholder on the sale of those shares during that period
will be treated as a long-term capital loss to the extent of the distribution.
Dividends and distributions are taxable in the manner discussed regardless of
whether they are paid to the shareholder in cash or are reinvested in additional
shares of a Fund's common stock.
Income received by a Fund from sources within various foreign countries may be
subject to foreign income tax. If more than 50% of the value of a Fund's total
assets at the close of its taxable year consists of the stock or securities of
foreign corporations, such Fund may elect to "pass through" to its shareholders
the amount of foreign income taxes paid by such Fund. Pursuant to such election,
shareholders would be required: (i) to include in gross income, even though not
actually received, their respective pro-rata shares of a Fund's gross income
from foreign sources; and (ii) either to deduct their pro-rata share of foreign
taxes in computing their taxable income, or to use such share as a foreign tax
credit against Federal income tax (but not both). No deduction for foreign taxes
could be claimed by a shareholder who does not itemize deductions.
Shareholders who choose to utilize a credit (rather than a deduction) for
foreign taxes will be subject to the limitation that the credit may not exceed
the shareholder's US tax (determined without regard to the availability of the
credit) attributable to his or her total foreign source taxable income. For this
purpose, the portion of dividends and distributions paid by a Fund from its
foreign source income will be treated as foreign source income. Each Fund's
gains from the sale of securities will generally be treated as derived from US
sources, however, and certain foreign currency gains and losses likewise will be
treated as derived from US sources. The limitation on the foreign tax credit is
applied separately to foreign source "passive income," such as the portion of
dividends received from a Fund which qualifies as foreign source income. In
addition, the foreign tax credit is allowed to offset only 90% of the
alternative minimum tax imposed on corporations and individuals. Because of
these limitations, shareholders may be unable to claim a credit for the full
amount of their proportionate shares of the foreign income taxes paid by a Fund.
Each Fund intends for each taxable year to meet the requirements of the Code to
"pass through" to its shareholders foreign income taxes paid, but there can be
no assurance that a Fund will be able to do so. Each shareholder will be
notified within 60 days after the close of each taxable year of each Fund
whether the foreign taxes paid by such Fund will "pass through" for that year,
and, if so, the amount of each shareholder's pro-rata share (by country) of (i)
the foreign taxes paid, and (ii) such Fund's gross income from foreign sources.
Of course, shareholders who are not liable for Federal income taxes, such as
retirement plans qualified under Section 401 of the Code, will not be affected
by any such "pass through" of foreign tax credits.
Investments in Passive Foreign Investment Companies. If a Fund purchases shares
in certain foreign investment entities, referred to as "passive foreign
investment companies," the Fund itself may be subject to US Federal income tax,
and an additional charge in the nature of interest, on a portion of any "excess
distribution" from such company or gain from the disposition of such shares,
even if the distribution or gain is paid by such Fund as a dividend to its
shareholders. If a Fund were able and elected to treat a passive foreign
investment company as a "qualified electing fund," in lieu of the treatment
described above, such Fund would be required each year to include in income, and
distribute to shareholders in accordance with the distribution requirements set
forth above, its pro rata share of the ordinary earnings and net capital gains
of the company, whether or not distributed to such Fund.
Certain Foreign Currency Transactions. Gains or losses attributable to foreign
currency contracts, or to fluctuations in exchange rates that occur between the
time a Fund accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables or pays such liabilities are treated as ordinary
income or ordinary loss. Similarly, gains or losses on disposition of debt
securities denominated in a foreign currency attributable to fluctuations in the
value of the foreign currency between the date of acquisition of the security
and the date of disposition also are treated as ordinary gain or loss. These
gains or losses increase or decrease the amount of a Fund's net investment
income available to be distributed to its shareholders as ordinary income.
32
<PAGE>
Options Transactions. A special "marked-to-market" system governs the taxation
of "section 1256 contracts," which include certain listed options. Each Fund may
invest in such section 1256 contracts. In general, gain or loss on section 1256
contracts will be taken into account for tax purposes when actually realized. In
addition, any section 1256 contracts held at the end of a taxable year will be
treated as sold at fair market value (that is, marked-to-market), and the
resulting gain or loss will be recognized for tax purposes. In general, gain or
loss recognized by a Fund on the actual or deemed disposition of a section 1256
contract will be treated as 60% long-term and 40% short-term capital gain or
loss, regardless of the period of time the section 1256 contract is actually
held by such Fund. Each Fund can elect to exempt its section 1256 contracts
which are part of a "mixed" straddle from the application of section 1256.
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 Funds are 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, a Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that suc
a fine is imposed, the Fund may charge a service fee of up to $50 that may be
deducted from the shareholder's account and offset against any undistributed
dividends and capital gain distributions. The Funds also reserve the right to
close any account which does not have a certified taxpayer identification
number.
Underwriters
Distribution of Securities
Seligman Henderson Global Fund Series, Inc. 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 the Funds. Seligman
Advisors accepts orders for the purchase of Fund shares, which are offered
continuously. As general distributor of the Fund's capital stock, Seligman
Advisors allows reallowances to all dealers on sales of Class A shares, as set
forth above under "Dealer Reallowances." Seligman Advisors retains the balance
of sales charges and any CDSC paid by investors.
Total sales charges paid by shareholders of Class A shares of the Funds for the
fiscal years ended October 31, 1998, 1997, and 1996 are shown below, as well as
the amounts of Class A sales charges that were retained by Seligman Advisors:
<TABLE>
<CAPTION>
1998
Amount of Class A
Total Sales Charges Sales Charges Retained
Paid by Shareholders by
Fund On Class A Shares Seligman Advisors
---- ----------------- -----------------
<S> <C> <C>
International Fund $117,729 $13,622
Emerging Markets Growth Fund 101,075 11,459
Global Growth Opportunities Fund 176,957 19,994
Global Smaller Companies Fund 848,066 94,085
Global Technology Fund 1,099,378 121,127
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
1997
Amount of Class A
Total Sales Charges Sales Charges Retained
Paid by Shareholders by
Fund On Class A Shares Seligman Advisors
---- ----------------- -----------------
<S> <C> <C>
International Fund $152,666 $17,927
Emerging Markets Growth Fund 622,098 69,894
Global Growth Opportunities Fund 403,744 44,965
Global Smaller Companies Fund 3,632,126 400,220
Global Technology Fund 1,923,733 210,590
</TABLE>
<TABLE>
<CAPTION>
1996
Amount of Class A
Total Sales Charges Sales Charges Retained
Paid by Shareholders by
Fund On Class A Shares Seligman Advisors
---- ----------------- -----------------
<S> <C> <C>
International Fund $374,305 $42,719
Emerging Markets Growth Fund* 780,777 31,761
Global Growth Opportunities Fund 4,381,479 201,990
Global Smaller Companies Fund 7,309,493 810,616
Global Technology Fund 8,466,372 930,729
</TABLE>
* For the period 5/28/96 (commencement of operations) to 10/31/96.
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Funds, received the following commissions and other
compensation from the Funds during fiscal year ended October 31, 1998:
<TABLE>
<CAPTION>
Compensation on
Net Underwriting Redemptions and
Discounts and Repurchases
Commissions (CDSC on Class A
(Class A Sales and Class D Brokerage Other
Fund Charge Retained) Retained) Commissions Compensation(1)
- ---- ---------------- --------- ----------- ---------------
<S> <C> <C> <C> <C>
International Fund $13,622 $ 7,109 $-- $7,600
Emerging Markets Growth Fund 11,459 16,136 -- 8,034
Global Growth Opportunities Fund 19,994 15,178 -- 8,743
Global Smaller Companies Fund 94,085 118,278 -- 82,534
Global Technology Fund 121,127 42,732 -- 28,886
</TABLE>
(1) Seligman Advisors has sold its rights to collect the distribution fees
paid by each 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
Plans". 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 fiscal year 1998 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 $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
34
<PAGE>
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 the Manager during a specified period of time. Such bonus or
other incentive may take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives and members of their families to places within or outside the
United States. The cost to 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.
Calculation of Performance Data
Class A
The average annual total returns for the one-year and five-year periods ended
October 31, 1998 and for the period April 7, 1992 (inception) through October
31, 1998 for the Class A shares of the International Fund were 1.46%, 6.12% and
9.34%, respectively.
The average annual total returns for the one-year period ended October 31, 1998
and for the period May 28, 1996 (inception) through October 31, 1998 for the
Class A shares of the Emerging Markets Growth Fund were (32.81%) and (14.14%),
respectively.
The average annual total returns for the one-year period ended October 31, 1998
and for the period November 1, 1995 (inception) through October 31, 1998 for the
Class A shares of the Global Growth Opportunities Fund were 4.31% and 10.34%,
respectively.
The average annual total returns for the one-year and five-year periods ended
October 31, 1998 and for the period September 9, 1992 (inception) through
October 31, 1998 for the Class A shares of the Global Smaller Companies Fund
were (10.30)%, 10.41% and 14.49%, respectively.
35
<PAGE>
The average annual total returns for the one-year period ended October 31, 1998
and for the period May 23, 1994 (inception) through October 31, 1998 for the
Class A shares of the Global Technology Fund were (5.53)% and 18.93%,
respectively.
The average annual total returns for each Fund's Class A shares were computed
by assuming a hypothetical initial investment of $1,000 in Class A shares of the
Fund, subtracting the maximum sales charge of 4.75% of public offering price,
and assuming that all dividends and distributions paid by the Fund's Class A
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. The
average annual total return was then calculated by calculating the annual rate
required for the initial payment to grow to the amount which would have been
received upon such redemption (i.e., the average annual compound rate of
return).
Class B
The average annual total returns for the one-year period ended October 31, 1998
and for the period April 22, 1996 (inception) to October 31, 1998 for the Class
B shares of the International Fund were 0.62% and 3.00%, respectively.
The average annual total returns for the one-year period ended October 31, 1998
and for the period May 28, 1996 (inception) to October 31, 1998 for the Class B
shares of the Emerging Markets Growth Fund were (33.49)% and (14.10)%,
respectively.
The average annual total returns for the one-year period ended October 31, 1998
and for the period April 22, 1996 (inception) to October 31, 1998 for the Class
B shares of the Global Growth Opportunities Fund were 3.76% and 7.33%,
respectively.
The average annual total returns for the one-year period ended October 31, 1998
and for the period April 22, 1996 (inception) to October 31, 1998 for the Class
B shares of the Global Smaller Companies Fund were (11.01)% and (0.19)%,
respectively.
The average annual total returns for the one-year period ended October 31, 1998
and for the period April 22, 1996 (inception) to October 31, 1998 for the Class
B shares of the Global Technology Fund were (5.62)% and 8.69%, respectively.
The average annual total returns for each Fund's Class B shares were computed
by assuming a hypothetical initial investment of $1,000 in Class B shares of the
Fund, and assuming that all dividends and distributions paid by the Fund's Class
B shares, if any, were reinvested over the relevant time period. It was then
assumed that at the end of each period, the entire amount was redeemed,
subtracting the applicable CDSC.
Class D
The average annual total returns for the one-year and five-year periods ended
October 31, 1998 and for the period September 21, 1993 (inception) through
October 31, 1998 for the Class D shares of the International Fund were 4.53%,
6.29%, and 7.12%, respectively.
The average annual total returns for the one-year period ended October 31, 1998
and for the period May 28, 1996 (inception) through October 31, 1998 for the
Class D shares of the Emerging Markets Growth Fund were (30.69)% and (13.02)%,
respectively.
The average annual total returns for the one-year period ended October 31, 1998
and the period November 1, 1995 (inception) through October 31, 1998 for the
Class D shares of the Global Growth Opportunities Fund were 7.76% and 11.33%,
respectively.
The average annual total returns for the one-year and five-year periods ended
October 31, 1998 and for the period May 3, 1993 (inception) through October 31,
1998 for Class D shares of the Global Smaller Companies Fund were (7.43)%,
10.66% and 12.77%, respectively.
36
<PAGE>
The average annual total returns for the one-year period ended October 31, 1998
and for the period May 23, 1994 (inception) through October 31, 1998 for the
Class D shares of the Global Technology Fund were (2.51)% and 19.25%,
respectively.
The average annual total returns for each Fund's Class D shares were computed
by assuming a hypothetical initial investment of $1,000 in Class D shares of the
Fund, and assuming that all dividends and distributions paid by the Fund's Class
D shares, if any, were reinvested over the relevant time period. It was then
assumed that at the end of each period, the entire amount was redeemed,
subtracting for the one-year period the 1% CDSC, if applicable.
The tables below illustrate the total returns on a $1,000 investment in each of
the Fund's Class A, Class B and Class D shares from the commencement of a Fund's
operations through October 31, 1998, assuming investment of all dividends and
capital gain distributions and deduction of any applicable sales charges or
CDSC. Average annual total returns are determined by calculating the annual rate
of return required for the initial $1,000 investment to grow to the amount which
would have been received upon redemption. (i.e., the average annual compound
rate of return).
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 any Fund today.
<TABLE>
<CAPTION>
Class A
Value of Value of Total Value
Fund/Year Initial Capital Gain Value of of Total
Ended (1) Investment (2) Distributions Dividends Investment (2) Return (1)(3)
- --------- -------------- ------------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
International Fund
10/31/92 $ 944 $--- $--- $ 944
10/31/93 1,268 --- 4 1,272
10/31/94 1,402 28 5 1,435
10/31/95 1,326 87 5 1,418
10/31/96 1,363 169 5 1,537
10/31/97 1,422 261 5 1,688
10/31/98 1,409 384 5 1,798 79.79%
Emerging Markets Growth
Fund
10/31/96 $904 $--- $--- $904
10/31/97 979 --- --- 979
10/31/98 691 --- --- 691 (30.93)%
Global Growth
Opportunities Fund
10/31/96 $1,077 $--- $--- $1,077
10/31/97 1,227 --- --- 1,227
10/31/98 1,282 61 --- 1,343 34.35%
Global Smaller Companies
Fund
10/31/92 $ 953 $--- $--- $ 953
10/31/93 1,330 --- 3 1,333
10/31/94 1,591 10 3 1,604
10/31/95 1,853 69 4 1,926
10/31/96 2,019 230 4 2,253
10/31/97 2,083 352 4 2,439
10/31/98 1,881 412 4 2,297 129.72%
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Class A
Value of Value of Total Value
Fund/Year Initial Capital Gain Value of of Total
Ended (1) Investment (2) Distributions Dividends Investment (2) Return (1)(3)
- --------- -------------- ------------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Global Technology Fund
10/31/94 $1,116 $--- $--- $1,116
10/31/95 1,740 16 --- 1,756
10/31/96 1,508 116 3 1,627
10/31/97 2,019 156 3 2,178
10/31/98 1,664 494 3 2,161 116.06%
</TABLE>
<TABLE>
<CAPTION>
Class B
Value of Value of Total Value
Fund/Year Initial Capital Gain Value of of Total
Ended (1) Investment (2) Distributions Dividends Investment (2) Return (1)(3)
- --------- -------------- ------------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
International Fund
10/31/96 $963 $--- $--- $963
10/31/97 995 54 --- 1,049
10/31/98 945 133 --- 1,078 7.75%
Emerging Markets Growth
Fund
10/31/96 $947 $--- $--- $ 947
10/31/97 1,018 --- --- 1,018
10/31/98 692 --- --- 692 (30.85)%
Global Growth
Opportunities Fund
10/31/96 $998 $--- $--- $998
10/31/97 1,127 --- --- 1,127
10/31/98 1,140 56 --- 1,196
19.55%
Global Smaller Companies
Fund
10/31/96 $1,019 $--- $--- $1,019
10/31/97 1,042 --- 53 1,095
10/31/98 904 43 48 995 (0.48)%
Global Technology Fund
10/31/96 $967 $--- $--- $967
10/31/97 1,284 --- --- 1,284
10/31/98 1,014 220 --- 1,234 23.43%
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Class D
Value of Value of Total Value
Fund/Year Initial Capital Gain Value of of Total
Ended (1) Investment (2) Distributions Dividends Investment (2) Return (1)(3)
- --------- -------------- ------------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
International Fund
10/31/93 $1,048 $--- $--- $1,048
10/31/94 1,151 23 --- 1,174
10/31/95 1,079 71 --- 1,150
10/31/96 1,099 138 --- 1,237
10/31/97 1,136 211 --- 1,347
10/31/98 1,112 310 --- 1,422 42.16%
Emerging Markets Growth
Fund
10/31/96 $947 $--- $--- $947
10/31/97 1,018 --- --- 1,018
10/31/98 713 --- --- 713
(28.71)%
Global Growth
Opportunities Fund
10/31/96 $1,123 $--- $--- $1,123
10/31/97 1,269 --- --- 1,269
10/31/98 1,317 63 --- 1,350 38.00%
Global Smaller Companies
Fund
10/31/93 $1,167 $--- $--- $1,167
10/31/94 1,385 9 --- 1,394
10/31/95 1,600 60 --- 1,660
10/31/96 1,728 200 --- 1,928
10/31/97 1,767 305 --- 2,072
10/31/98 1,581 355 --- 1,936 93.62%
Global Technology Fund
10/31/94 $1,164 $--- $--- $1,168
10/31/95 1,806 16 --- 1,822
10/31/96 1,554 121 --- 1,675
10/31/97 2,063 161 --- 2,224
10/31/98 1,675 511 --- 2,186 118.63%
</TABLE>
- ---------------
1. From commencement of operations on:
<TABLE>
<CAPTION>
Fund Class A Shares Class B Shares Class D Shares
---- -------------- -------------- --------------
<S> <C> <C> <C>
International Fund 4/7/92 4/22/96 9/21/93
Emerging Markets Growth Fund 5/28/96 5/28/96 5/28/96
Global Growth Opportunities Fund 11/1/95 4/22/96 11/1/95
Global Smaller Companies Fund 9/9/92 4/22/96 5/3/93
Global Technology Fund 5/23/94 4/22/96 5/23/94
</TABLE>
2. The "Value of Initial Investment" as of the date indicated reflects the
effect of the maximum sales load 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 of Investment" reflects the
effect of the CDSC, if applicable, and assumes investment of all dividends
and capital gain distributions.
39
<PAGE>
3. "Total Return" for each class of shares of a Fund is calculated by assuming
a hypothetical initial investment of $1,000 at the beginning of the period
specified; subtracting the maximum sales load for Class A shares;
determining total value of all dividends and 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 and Class D shares,
if applicable; and finally, by dividing the difference between the amount
of the hypothetical initial investment at the beginning of the period and
its total value at the end of the period by the amount of the hypothetical
initial investment. The International Fund's total return and average
annual total return quoted from time to time through September 21, 1993 for
Class A shares does not reflect the deduction of the administration,
shareholder services and distribution fee effective on that date, which fee
if reflected would reduce the performance quoted.
No adjustments have been made for any income taxes payable by investors on
dividends invested or gain distributions taken in shares.
Seligman and/or the prior subadviser waived its fees and reimbursed certain
expenses during some of the periods above, which positively affected the
performance results presented.
From time to time, reference may be made 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 the Fund's Class
A, Class B and Class D shares, the Lipper analysis assumes investment of all
dividends and distributions paid but does not take into account applicable sales
charges. Each Fund may also refer in advertisements in other promotional
material to articles, comments, listings and columns in the financial press
pertaining to the Fund's performance. Examples of such financial and other press
publications include BARRON'S, BUSINESS WEEK, CDA/WIESENBERGER MUTUAL FUNDS
INVESTMENT REPORT, CHRISTIAN SCIENCE MONITOR, FINANCIAL PLANNING, FINANCIAL
TIMES, FINANCIAL WORLD, FORBES, FORTUNE, INDIVIDUAL INVESTOR, INVESTMENT
ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S, LOS ANGELES TIMES, MONEY
MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS, SMART MONEY, THE NEW YORK
TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS AND WORLD REPORT, WORTH
MAGAZINE, WASHINGTON POST AND YOUR MONEY.
A Fund's advertising or promotional material may make reference to the Fund's
"Beta," "Standard Deviation," or "Alpha." Beta measures the volatility of the
Fund, as compared to that of the overall market. Standard deviation measures how
widely the Fund's performance has varied from its average performance, and is an
indicator of the Fund's potential for volatility. Alpha measures the difference
between the returns of the Fund and the returns of the market, adjusted for
volatility.
Financial Statements
The Annual Report to shareholders for the fiscal year ended October 31, 1998
contains a schedule of the investments of the Funds as of October 31, 1998, as
well as certain other financial information as of that date. The financial
statements and notes included in the Annual Report, and the Independent
Auditors' Report thereon, are incorporated herein by reference. The Annual
Report will be furnished without charge to investors who request copies of this
SAI.
General Information
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
by the provisions of the 1940 Act or applicable state law, or otherwise, to the
holders of the outstanding voting securities of an investment 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 class or Fund
affected by such matter. Rule 18f-2 further provides that a class or Fund shall
be deemed to be affected by a matter unless it is clear that the interests of
each class or Fund in the matter are substantially identical or that the matter
does not affect any interest of such class or Fund. However, the Rule exempts
the selection of independent public accountants, the approval of principal
distributing contracts and the election of directors from the separate voting
requirements of the Rule.
40
<PAGE>
Custodian and Recordkeeping Agents. Chase Manhattan Bank, One Pierrepont Plaza,
Brooklyn, New York 11201, serves as custodian for the Fund. Investors Fiduciary
Trust Company, 801 Pennsylvania, Kansas City, Missouri 64105, maintains, under
the general supervision of Seligman, certain accounting records and determines
the net asset value for the each Fund.
Accountants. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Funds. Their address is Two World Financial Center, New York, NY
10281.
41
<PAGE>
Appendix A
Moody's Investors Service, Inc. ("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 a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds 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.
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" indicate the highest
quality repayment ability of the rated issue.
42
<PAGE>
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 Rating Service ("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 high degree of safety and 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
degree of safety and capacity to pay interest and repay principal although it is
somewhat more susceptible in the long term 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 a satisfactory degree of
safety and 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.
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."
43
<PAGE>
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.
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.
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.
44
<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 $3 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.
45
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global and international investment
products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate Funds: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund, Inc., which currently offers two separate
Fund: Seligman Large-Cap Value Fund and Seligman Small-Cap Value Fund.
46
<PAGE>
Appendix C
HISTORY OF HENDERSON PLC
Henderson plc's origins can be traced back to the year 1872, when its founder,
Sir Alexander Henderson, joined the London Stock Exchange. In the years that
followed, Sir Alexander and the Henderson brothers began a long tradition of
global investing.
...Prior to 1900
o Alexander Henderson joins the London Stock Exchange in 1872.
o Invests in railways in South America and Spain, mining and gold interests
in Mexico, Australia, and Chile, and wheat field developments in Canada and
the United States.
o Invests in the Argentine Transandine Railway in 1887.
o Helps finance the building of Manchester Ship Canal in England in 1887.
o Launches TR Smaller Companies Investment Trust in 1887.
o Launches The Bankers Investment Trust in 1888.
o Launches Electric and General Investment Company in 1890.
o Launches TR City of London Trust in 1891.
o Helps finance the building of the Great Central Railway in England in 1894.
o Alexander Henderson is elected to British Parliament in 1898.
...1900-1910
o Alexander Henderson is knighted in 1902.
o Finances British Central African Company in 1902 to build railways across
Africa.
o Launches TR Property Investment Trust in 1905.
o Helps establish the National Bank of Turkey in 1909.
o Establishes Witan Investment Company in 1909.
...1910s
o Alexander Henderson achieves peerage as the first Lord Faringdon in 1916.
o Helps establish The British Trade Corporation in 1917, dedicated to
developing international trade for English companies.
...1920-1989
o Presides over the 1922 merger of the Great Central Railway with the London
and North Eastern Railway.
o Henderson Administration, today Henderson plc, is formally incorporated in
1934.
o Henderson is one of the first United Kingdom investors in Occidental
Petroleum in 1959.
o Begins managing a Fund of retail unit trusts in 1974 that are focused on
international markets, including Japan, North America, Europe, and the
Pacific. Today, Henderson manages 22 retail unit trusts, eight exempt unit
trusts, and 20 investment trusts.
o Launches the Luxembourg-based Henderson Horizon Funds in 1983, including
European Smaller Companies Fund and Global Bond Fund. Today, Henderson
offers 12 Henderson Horizon Funds.
o Henderson is listed on the London Stock Exchange in 1983.
47
<PAGE>
...1990s
o Establishes a joint venture in 1991 with New York-based J. & W. Seligman &
Co., known as Seligman Henderson Co., to offer global investment products.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate Funds: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund, and
Seligman Henderson Emerging Markets Growth Fund.
o Has been the recipient of Micropal's "Best Investment Trust Manager of the
Year" award for the years 1994, 1995, and 1996.
o In 1998, Henderson plc was acquired by AMP Limited, an Australian life
insurance and financial services company.
48
