Supplement, dated September 29, 2005,
which supersedes and replaces the
Supplement, dated September 21, 2005, to the following Prospectuses:
Seligman Municipal Funds Prospectus, dated February 1, 2005, for Seligman
Municipal Fund Series, Inc., Seligman Municipal Series Trust, Seligman New
Jersey Municipal Fund, Inc. and Seligman Pennsylvania Municipal Fund Series
Prospectuses, each dated February 1, 2005, for Seligman Investment Grade
Fixed Income Fund, Inc.
Prospectuses, each dated March 1, 2005, for Seligman Frontier Fund, Inc.
and Seligman Global Fund Series, Inc.
Prospectuses, each dated May 2, 2005, for Seligman Capital Fund, Inc.,
Seligman Cash Management Fund, Inc., Seligman Common Stock Fund, Inc.,
Seligman Communications and Information Fund, Inc., Seligman Growth Fund, Inc.,
Seligman High-Yield Bond Series, Seligman
Income and Growth Fund, Inc.,
Seligman LaSalle Monthly Dividend Real Estate Fund, Seligman Portfolios, Inc.,
Seligman Time Horizon/Harvester Series, Inc.,
Seligman U.S. Government Securities Series,
Tri-Continental Corporation and Seligman Value Fund Series, Inc.
In late 2003, Seligman conducted an extensive internal review in response to
public announcements concerning mutual fund trading practices. The following
discussion has been prepared to provide shareholders with important information.
For purposes of this discussion, J. & W. Seligman & Co. Incorporated and its
affiliates and related parties are referred to as "Seligman" or the "Manager,"
and the Seligman registered investment companies are referred to as the
"Seligman Funds."
Q1. Have any Seligman employees engaged in improper trading?
A. The Manager conducted an internal review of employee trading in shares of the
Seligman Funds in the fall of 2003 and continues to monitor employee trading in
the Seligman Funds. The Manager has not found any improper trading activity by
Seligman employees.
Q2. Does Seligman have any policies relating to employee investment in the
Seligman Funds?
A. A majority of Seligman employees invest in the Seligman Funds, either
directly or through the Seligman 401(k) plans. Trading by employees is monitored
by the Manager's legal department and is subject to the Manager's Code of
Ethics. In addition, unlike many 401(k) plans that permit daily trading, the
Seligman 401(k) plans permit only weekly trading activity. All Seligman
employees have been informed that excessive trading with respect to the Seligman
Funds, or trading in the Seligman Funds based upon inside information, is
inappropriate and may, in certain cases, be illegal. Employees who engage in
inappropriate trading will be subject to disciplinary action, which may include
termination of employment.
Q3. Has Seligman engaged in improper disclosure of a Fund's portfolio holdings?
A. The Manager has found no improprieties relating to the disclosure of a Fund's
portfolio holdings. The Manager has not disclosed and does not disclose a Fund's
portfolio holdings prior to public dissemination, unless such disclosure is made
for legitimate business purposes and only if the Manager believes that such
disclosure will not be detrimental to a Fund's interest. A description of the
policies and procedures with respect to the disclosure of each Fund's portfolio
securities is set forth in each Fund's Statement of Additional Information.
Q4. What is Seligman's policy with regard to receipt of late trades (i.e., after
4:00 pm Eastern Time)?
A. Seligman does not accept late trades directly from Fund shareholders or
prospective shareholders. The large majority of mutual fund trades submitted to
Seligman are from broker-dealer firms and other financial intermediaries on
behalf of their clients. These intermediaries have an obligation to ensure that
trades submitted to the Seligman Funds after 4:00 pm on a trading day for that
day's net asset value were, in fact, received by those entities by 4:00 pm on
that day. This applies to all trades from intermediaries, including those that
are transmitted electronically to Seligman after the market closes. Although the
Seligman Funds and the Manager, like other mutual fund groups, cannot determine
the time at which orders received through financial intermediaries were placed,
the Manager expects mutual fund trades submitted to Seligman by financial
intermediaries to comply with all applicable laws and regulations. Seligman has
contacted every financial intermediary that offers, sells, or purchases shares
of the Seligman Funds in order to remind all of them of their responsibility to
have reasonable policies and procedures to ensure that they comply with their
legal and contractual obligations. The Manager has found no instances of Fund
shareholders engaging in late trading directly with the Seligman Funds. Seligman
will cooperate with and support any governmental or regulatory investigation to
identify and hold accountable any financial intermediary that has submitted
orders in violation of applicable laws or regulations.
Q5. What is Seligman's policy regarding market timing?
A. Seligman has policies and procedures in place to restrict trades that, in its
judgment, could prove disruptive in the management of portfolios of the Seligman
Funds. As part of the Manager's procedures, the Manager frequently rejects
trades, issues warning letters, and prohibits accounts from making further
exchanges. Since September 2003, when the first proceedings relating to trading
practices within the mutual fund industry were publicly announced, Seligman has
taken additional steps to strengthen its policies and procedures. A general
description of the Seligman Funds' policies is set forth in each Fund's
prospectus.
Q6. Has Seligman conducted an internal review relating to market timing?
A. The Manager completed its internal review in the fall of 2003. As of
September 2003, the Manager had one arrangement that permitted frequent trading.
This arrangement was in the process of being closed down by the Manager before
September 2003. Based on a review of the Manager's records for 2001 through
2003, the Manager identified three other arrangements that had permitted
frequent trading in the Seligman Funds. All three had already been terminated
prior to the end of September 2002. The results of the Manager's internal review
were presented to the Independent Directors of the Seligman Funds. In order to
resolve matters with the Independent Directors relating to the four
arrangements, the Manager in May 2004 paid approximately
$75,000 to Seligman Global Growth Fund, $300,000 to Seligman Global Smaller
Companies Fund and $1.6 million to Seligman Global Technology Fund in
recognition that these global investment funds presented some potential for time
zone arbitrage. The amounts paid by the Manager represented less than 1/2 of 1%
of each such Fund's net asset value as of the date such payments were made. In
addition, with respect to Seligman Communications and Information Fund and
notwithstanding that time zone arbitrage opportunities did not exist, the
Manager, at the request of the Independent Directors, agreed to waive a portion
of its management fee, amounting to five basis points (0.05%) per annum, for
that Fund for a period of two years commencing on June 1, 2004.
Q7. Does Seligman disclose its internal market timing control procedures?
A. Seligman's market timing control procedures are proprietary. The Manager
believes that disclosing these procedures will reduce their effectiveness.
Q8. What new practices are being considered to prevent market timing abuses?
A. Like other members of the mutual fund industry, Seligman has considered, and
continues to consider, numerous options, including the implementation of
redemption fees. Seligman also has contacted every financial intermediary that
offers, sells, or purchases shares of the Seligman Funds in order to inform all
of them that they must have reasonable policies and procedures to ensure that
they do not knowingly permit or facilitate excessive trading of the Seligman
Funds or knowingly use or facilitate any methods designed to disguise such
trading in the Seligman Funds.
Q9. Is Seligman involved with any federal or state investigation relating to
market timing or late trading?
A. Since February 2004, Seligman has been in discussion with the New York staff
of the SEC and the Office of the New York Attorney General ("Attorney General")
in connection with their review of frequent trading in certain of the Seligman
mutual funds. No late trading is involved. This review was apparently stimulated
by Seligman's voluntary public disclosure of the foregoing arrangements in
January 2004. In March 2005, negotiations to settle the matter were initiated by
the New York staff of the SEC. After several months of negotiations, tentative
agreement was reached, both with the New York staff of the SEC and the Attorney
General, on the financial terms of a settlement. However, settlement discussions
with the Attorney General ended when the Attorney General sought to impose
operating conditions on Seligman that were unacceptable to Seligman, would have
applied in perpetuity and were not requested or required by the SEC.
Subsequently, the New York staff of the SEC indicated that, in lieu of moving
forward under the terms of the tentative financial settlement, the staff was
considering recommending to the Commissioners of the SEC the instituting of a
formal action against Seligman. Seligman believes that any action would be both
inappropriate and unnecessary, especially in light of the fact that Seligman
previously resolved the underlying issue with the Independent Directors of the
Seligman Funds and made recompense to the affected Funds.
Immediately after settlement discussions with the Attorney General ended, the
Attorney General issued subpoenas to certain of the Seligman Funds and their
directors. The subpoenas seek various Board materials and information relating
to the deliberations of the Independent Directors as to the advisory fees paid
by the Seligman mutual funds to Seligman. Seligman has objected to the Attorney
General's seeking of such information and, on September 6, 2005, filed suit in
federal district court seeking to enjoin the Attorney General from pursuing a
fee inquiry. Seligman believes that the Attorney General's inquiry is improper
because Congress has vested exclusive regulatory oversight of investment company
advisory fees in the SEC.
At the end of September 2005, the Attorney General indicated that it intends to
file an action at some point in the future alleging, in substance, that Seligman
permitted other persons to engage in frequent trading other than the
arrangements described above and, as a result, this supplement is and has been
misleading. Seligman believes any such action would be without merit.
Any resolution of these matters with regulatory authorities may include, but not
be limited to, sanctions, penalties, injunctions regarding Seligman, restitution
to mutual fund shareholders or changes in procedures. Any penalties or
restitution will be paid by Seligman and not by the Seligman Funds.
Seligman does not believe that the foregoing possible actions or any threatened
legal actions should have a material adverse impact on Seligman or the Seligman
Funds; however, there can be no assurance of this or that these matters and any
related publicity will not result in reduced demand for shares of the Seligman
Funds or other adverse consequences.
Q10. Does Seligman have any market timing arrangements at the current time?
A. Market timing arrangements in the Seligman Funds have been prohibited. In
addition, Seligman has strengthened existing controls to discourage and help
prevent market timing.
Q11. Have any other matters come to Seligman's attention in the course of its
internal inquiry?
A. In the fall of 2003, the Manager also reviewed its practice of placing some
of the Seligman Funds' orders to buy and sell portfolio securities with
brokerage firms in recognition of their sales of the Seligman Funds. At the time
such orders were placed, the practice was permissible when done properly;
however, the Manager believes that it may have violated applicable requirements
for certain of such orders as a result of compensation arrangements the Manager
had with certain brokerage firms. The Manager discontinued this practice
entirely in October 2003 and has reported these matters to the Independent
Directors of the Seligman Funds. The Manager is confident that the execution of
all such orders was consistent with its best execution obligations and that the
Seligman Funds did not pay higher brokerage commissions in connection with those
orders than they would otherwise have paid for comparable transactions.
Nonetheless, in order to resolve matters with the Independent Directors, the
Manager made payments in May 2004 to each of twenty-four funds in an amount
equal to the commissions paid by each such fund during the period from 1998
through 2003 to certain brokerage firms in recognition of sales of fund shares.
Amounts paid by the Manager to the affected funds (which in the aggregate,
including interest, equaled approximately $1.7 million) represented at the time
of payment less than $0.01 per share for each such fund. The Manager has also
responded fully to information requests from the SEC and the NASD relating to
Seligman's use of revenue sharing and fund portfolio brokerage commissions and
will continue to provide additional information if, and as, requested.
Q12. Have any employees been disciplined in connection with the Manager's
overall internal review?
A. One employee has left Seligman.