File No. 2-33566
811-1886
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - --------------------------------------------------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 56 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 31 |X|
- - --------------------------------------------------------------------------------
SELIGMAN CAPITAL FUND, INC.
(Exact name of registrant as specified in charter)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
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Registrant's Telephone Number: 212-850-1864 or
Toll Free: 800-221-2450
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THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
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It is proposed that this filing will become effective (check appropriate
box):
|_| immediately upon filing pursuant to paragraph (b)
|X| on May 1, 1999 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| on (date) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
[THE FUND]
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Fund's objective is capital appreciation.
The Fund uses the following principal strategies to seek its objective:
Medium-Sized Companies:
Companies with market
capitalizations at the time
of purchase by the Fund
of between $1 billion and
$10 billion.
Generally, the Fund invests primarily in the common stock of medium-sized US
companies. The investment manager chooses common stocks for the Fund using both
quantitative and fundamental analysis. This means the investment manager first
screens companies for past growth in sales and earnings, as well as a strong
balance sheet (e.g., low ratio of debt to total capital). In selecting
individual securities for investment, the investment manager then looks to
identify medium-sized companies that it believes display one or more of the
following:
- Proven track record
- Strong management
- Multiple product lines
- Potential for improvement in overall operations (a
catalyst for growth in revenues and/or earnings)
- Positive supply and demand outlook for its industry
The investment manager also looks at the forecasted earnings of a company
considered for investment to determine if the company has the potential for
above-average growth.
The Fund will generally sell a stock when the investment manager believes that
the company or industry fundamentals have deteriorated or the company's catalyst
for growth is already reflected in the stock's price (i.e., the stock is fully
valued).
The Fund primarily invests in common stocks. However, the Fund may also invest
in preferred stocks, securities convertible into common stocks, common stock
rights or warrants, and debt securities if the investment manager believes they
offer capital appreciation opportunities. The Fund may also hold cash, US
Government securities, commercial paper, or other investment grade debt
securities.
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold) and may invest up to 10% of its total
assets directly in foreign securities. The Fund generally does not invest a
significant amount, if any, in illiquid or foreign securities. The Fund may
borrow money from time to time to purchase securities.
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective.
The Fund may change its principal strategies if the Fund's Board of Directors
believes doing so is consistent with the Fund's investment objective. The Fund's
objective may be changed only with shareholder approval.
The Fund's Board of Directors may change the parameters by which "medium-sized
companies" are defined if they conclude such a change is appropriate.
As with any mutual fund, there is no guarantee the Fund will achieve its
objective.
1
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Fund's net asset value will fluctuate, especially in the short term. You may
experience a decline in the value of your investment and you could lose money if
you sell your shares at a price lower than you paid for them.
The Fund's performance may be affected by the broad investment environment in
the US or international securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
The Fund may not invest more than 25% of its total assets in securities of
companies in any one industry. The Fund may, however, invest more heavily in
certain industries believed to offer good investment opportunities. If an
industry in which the Fund is invested falls out of favor, the Fund's
performance may be negatively affected.
Foreign securities or illiquid securities in the Fund's portfolio involve higher
risk and may subject the Fund to higher price volatility. Investing in
securities of foreign issuers involves risks not associated with US investments,
including settlement risks, currency fluctuations, foreign taxation, differences
in financial reporting practices, and changes in political conditions.
The Fund may actively and frequently trade securities in its portfolio to carry
out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Fund's expenses. There may also be
adverse tax consequences for investors in the Fund due to an increase in
short-term capital gains.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
PAST PERFORMANCE
The Fund offers three Classes of shares. The information below provides some
indication of the risks of investing in the Fund by showing how the performance
of Class A shares has varied year to year, as well as how each Class's
performance compares to one widely-used measure of midcap stock performance and
one measure of performance of mutual funds with investment objectives similar to
the Fund.
The following performance information is designed to assist you in comparing the
returns of the Fund with the returns of other mutual funds. How the Fund has
performed in the past, however, is not necessarily an indication of how the Fund
will perform in the future. Total returns will vary between each Class of shares
due to the different fees and expenses of each Class.
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table below the chart
do reflect the effect of the applicable sales charges. Both the bar chart and
table assume that all dividends and capital gain distributions were reinvested.
CLASS A ANNUAL TOTAL RETURNS
[SELIGMAN CALENDAR GRAPH]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
32.44% 1.38% 54.67% 11.56% 4.80% -7.06% 37.32% 16.74% 22.28% 19.12%
</TABLE>
Best quarter return: 30.96% - quarter ended 12/31/98
Worst quarter return: -22.62% - quarter ended 9/30/90
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
CLASS B CLASS D
ONE FIVE TEN SINCE INCEPTION SINCE INCEPTION
YEAR YEARS YEARS 4/22/96 5/3/93
----- ----- ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Class A 13.48% 15.62% 17.51% -- --
Class B 13.24 n/a n/a 15.68% --
Class D 17.23 15.57 n/a -- 15.20%
Russell Midcap Growth Index 17.86 17.33 17.30 17.02(1) 18.01(2)
Lipper Mid Cap Funds Average 11.37 15.44 16.51 13.93(1) 16.60(2)
</TABLE>
The Russell Midcap Growth Index and the Lipper Mid Cap Funds Average are
unmanaged benchmarks that assume the reinvestment of dividends and capital gain
distributions. The Lipper Mid Cap Funds Average does not reflect any sales
charges and the Russell Midcap Growth Index does not reflect any fees or sales
charges. The Russell Midcap Growth Index measures the performance of mid-cap
growth stocks, and the Lipper Mid Cap Funds Average measures the performance of
mutual funds with investment objectives similar to the Fund.
(1) From April 30, 1996.
(2) From April 30, 1993.
3
FEES AND EXPENSES
The table below summarizes the fees and expenses that you may pay as a
shareholder of the Fund. Each Class of shares has its own sales charge schedule
and is subject to different ongoing 12b-1 fees. Shareholder fees are charged
directly to you. Annual fund operating expenses are deducted from Fund assets
and are therefore paid indirectly by you and other shareholders of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees Class A Class B Class D
---------------- ------- ------- -------
<S> <C> <C> <C>
Maximum Sales Charge (Load) on Purchases
(as a % of offering price)................................ 4.75%(1) none none
Maximum Contingent Deferred Sales Charge (Load) (CDSC) on
Redemptions (as a % of original purchase price or current
net asset value, whichever is less)....................... none(1) 5% 1%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES FOR 1998
---------------------------------------
(as a percentage of average net assets)
<S> <C> <C> <C>
Management Fees............................................. .48% .48% .48%
Distribution and/or Service (12b-1) Fees.................... .24% 1.00% 1.00%
Other Expenses.............................................. .27% .27% .27%
----- ----- -----
Total Annual Fund Operating Expenses........................ .99% 1.75% 1.75%
===== ===== =====
</TABLE>
(1) If you buy Class A shares for $1,000,000 or more you will not pay an initial
sales charge, but your shares will be subject to a 1% CDSC if sold within 18
months.
Management Fees:
Fees paid out of Fund assets to
the investment manager to
compensate it for managing
the Fund.
12b-1 Fees:
Fees paid by each Class,
pursuant to a plan adopted
by the Fund under Rule 12b-1
of the Investment Company
Act of 1940. The plan allows
each Class to pay
distribution and/or service
fees for the sale and
distribution of its shares
and for providing services
to shareholders.
Other Expenses:
Miscellaneous expenses of
running the Fund, including
such things as transfer
agency, registration,
custody, and auditing and
legal fees.
Example
This example is intended to help you compare the
expenses of investing in the Fund with the
expenses of investing in other mutual funds. It
assumes (1) you invest $10,000 in the Fund for
each period and then sell all of your shares at
the end of that period, (2) your investment has
a 5% return each year, and (3) the Fund's
operating expenses remain the same. Although
your actual expenses may be higher or lower,
based on these assumptions your expenses would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $571 $775 $ 996 $1,630
Class B 678 851 1,149 1,862+
Class D 278 551 949 2,062
</TABLE>
If you did not sell your shares at the end of
each period, your expenses would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $571 $775 $ 996 $1,630
Class B 178 551 949 1,862+
Class D 178 551 949 2,062
</TABLE>
+ Class B shares will automatically convert to
Class A shares after eight years.
4
MANAGEMENT
The Fund's Board of Directors provides broad supervision over the affairs of the
Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of the Fund. Seligman manages the investment of the
Fund's assets, including making purchases and sales of portfolio securities
consistent with the Fund's investment objective and strategies, and administers
the Fund's business and other affairs.
Established in 1864, Seligman currently serves as manager to 18 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $21.1 billion in assets as of March 31, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at March 31, 1999, of approximately $9.6 billion.
The Fund pays Seligman a fee for its management services. The fee rate equals a
percentage of the daily net assets of the Fund. The rate is calculated on a
sliding scale of 0.55% to 0.45% based on the average daily net assets of all US
registered investment companies managed by Seligman. For the year ended December
31, 1998, the management fee paid by the Fund to Seligman was .48% of the Fund's
average daily net assets.
AFFILIATES OF SELIGMAN:
Seligman Advisors, Inc.:
The Fund's general distributor; responsible for accepting orders for
purchases and sales of Fund shares.
Seligman Services, Inc.:
A limited purpose broker/dealer; acts as the broker/dealer of record
for shareholder accounts that do not have a designated broker or
financial advisor.
Seligman Data Corp. (SDC):
The Fund's shareholder service agent; provides shareholder account
services to the Fund at cost.
PORTFOLIO MANAGEMENT
The Fund is managed by the Seligman Growth Team, headed by Ms. Marion S.
Schultheis. Ms. Schultheis joined Seligman in May 1998 as a Managing Director.
She is a Vice President of the Fund and has been Portfolio Manager of the Fund
since joining Seligman. Prior to joining Seligman, Ms. Schultheis was a Managing
Director at Chancellor LGT from October 1997 to May 1998. Prior thereto, she was
Senior Portfolio Manager at IDS Advisory Group Inc. from August 1987 to October
1997. Ms. Schultheis also manages Seligman Growth Fund, Inc. and co-manages
Seligman Henderson Global Growth Opportunities Fund, a series of Seligman
Henderson Global Fund Series, Inc; and she manages the Seligman Capital
Portfolio and the Seligman Large-Cap Growth Portfolio and co-manages the
Seligman Henderson Global Growth Opportunities Portfolio, three portfolios of
Seligman Portfolios, Inc.
5
YEAR 2000
As the millennium approaches, mutual funds, financial and business
organizations, and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other mutual funds, the Fund relies upon
service providers and their computer systems for its day-to-day operations. Many
of the Fund's service providers in turn depend upon computer systems of their
vendors. Seligman and SDC have established a year 2000 project team. The team's
purpose is to assess the state of readiness of Seligman and SDC and the Fund's
other service providers and vendors. The team is comprised of several
information technology and business professionals as well as outside
consultants. The Project Manager of the team reports directly to the
Administrative Committee of Seligman. The Project Manager and other members of
the team also report to the Board of Directors of the Fund and its Audit
Committee.
The team has identified the service providers and vendors who furnish critical
services or software systems to the Fund, including securities firms that
execute portfolio transactions for the Fund and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Fund. The team will
assess the feasibility of their year 2000 plans. The team has made progress on
its year 2000 contingency plans - recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Fund. The team anticipates
finalizing these plans in the near future.
The Fund anticipates the team will implement all significant components of the
team's year 2000 plans by mid-1999, including appropriate testing of critical
systems and receipt of satisfactory assurances from critical service providers
and vendors regarding their year 2000 compliance. The Fund believes that the
critical systems on which it relies will function properly on and after the year
2000, but this is not guaranteed. If these systems do not function properly, or
the Fund's critical service providers are not successful in implementing their
year 2000 plans, the Fund's operations may be adversely affected, including
pricing, securities trading and settlement, and the provision of shareholder
services.
In addition, the Fund may hold securities of issuers whose underlying business
leaves them susceptible to year 2000 issues. The Fund may also hold securities
issued by governmental or quasi-governmental issuers, which, like other
organizations, are also susceptible to year 2000 concerns. Year 2000 issues may
affect an issuer's operations, creditworthiness, and ability to make timely
payment on any indebtedness and could have an adverse impact on the value of its
securities. If the Fund holds these securities, the Fund's performance could be
negatively affected. Seligman seeks to identify an issuer's state of year 2000
readiness as part of the research it employs. However, the perception of an
issuer's year 2000 preparedness is only one of the many factors considered in
determining whether to buy, sell, or continue to hold a security. Information
provided by issuers concerning their state of readiness may or may not be
accurate or readily available. Further, the Fund may be adversely affected if
the domestic or foreign exchanges, markets, depositories, clearing agencies, or
governments or third parties responsible for infrastructure needs do not address
their year 2000 issues in a satisfactory manner.
SDC has informed the Fund that it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The Fund will not pay to remediate the
systems of Seligman or bear directly the costs to remediate the systems of any
other service providers or vendors, other than SDC.
6
[SHAREHOLDER INFORMATION]
DECIDING WHICH CLASS OF SHARES TO BUY
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule and is
subject to different ongoing 12b-1 fees. When deciding which Class of shares to
buy, you should consider, among other things:
- The amount you plan to invest.
- How long you intend to remain invested in the Fund, or another Seligman
mutual fund.
- If you would prefer to pay an initial sales charge and lower ongoing 12b-1
fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
- Whether you may be eligible for reduced or no sales charges when you buy or
sell shares.
Your financial advisor will be able to help you decide which Class of shares
best meets your needs.
CLASS A
- Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE REGULAR DEALER
AS A % AS A % DISCOUNT
OF OFFERING OF NET AS A % OF
AMOUNT OF YOUR INVESTMENT PRICE(1) AMOUNT INVESTED OFFERING PRICE
------------------------- ------------ --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 - $99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund
shares; it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or
more, but you will be subject to a 1% CDSC if you sell your shares
within 18 months.
- Annual 12b-1 fee (for shareholder services) of up to 0.25%.
- No sales charge on reinvested dividends or capital gain distributions.
- Certain employer-sponsored defined contribution-type plans can purchase
shares with no initial sales charge.
CLASS B
- No initial sales charge on purchases.
- A declining CDSC on shares sold within 6 years of purchase:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CDSC
-------------------- ----
<S> <C>
Less than 1 year 5%
1 year or more but less than 2
years 4
2 years or more but less than 3 Your purchase of Class B shares
years 3 must be for less than $250,000, because
3 years or more but less than 4 if you are investing $250,000 or more you
years 3 will pay less in fees and charges if you buy
4 years or more but less than 5 another Class of shares.
years 2
5 years or more but less than 6
years 1
6 years or more 0
</TABLE>
- Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
- Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
- No CDSC on redemptions of shares purchased with reinvested dividends or
capital gain distributions.
7
CLASS D
- No initial sales charge on purchases.
- A 1% CDSC on shares sold within one year of purchase.
- Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
- No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
- No CDSC on redemptions of shares purchased with reinvested dividends or
capital gain distributions.
Because the Fund's 12b-1 fees are paid out of each Class's assets on an ongoing
basis, over time these fees will increase your investment expenses and may cost
you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, and Class D shares. On an ongoing
basis, the Directors, in the exercise of their fiduciary duties under the
Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
HOW CDSCS ARE CALCULATED
To minimize the amount of the CDSC you may pay when you sell your shares, the
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of the Fund, it will be assumed that you held the shares since the date you
purchased the shares of the Fund.
8
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A shares. Purchase or sale
orders received by an authorized dealer or financial advisor by the close of
regular trading on the New York Stock Exchange (NYSE) (normally 4:00 p.m.
Eastern time) and accepted by Seligman Advisors before the close of business
(5:00 p.m. Eastern time) on the same day will be executed at the Class's NAV
calculated as of the close of regular trading on the NYSE on that day. Your
broker/dealer or financial advisor is responsible for forwarding your order to
Seligman Advisors before the close of business.
NAV:
Computed separately for
each Class by dividing
that Class's share of
the net assets of the
fund (i.e., its assets
less liabilities) by the
total number of
outstanding shares of
the Class.
If your buy or sell order is received by your
broker/dealer or financial advisor after the close of
regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be
executed at the Class's NAV calculated as of the close
of regular trading on the next NYSE trading day. When
you sell shares, you receive the Class's per share NAV,
less any applicable CDSC.
The NAV of the Fund's shares is determined each day,
Monday through Friday, on days that the NYSE is open for
trading. Because of their higher 12b-1 fees, the NAV of
Class B and Class D shares will generally be lower than
the NAV of Class A shares of the Fund.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
OPENING YOUR ACCOUNT
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you.
To make your initial investment in the Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.
The required minimum initial investments are:
- Regular (non-retirement) accounts: $1,000
- For accounts opened concurrently with Invest-A-Check(R):
$100 to open if you will be making monthly investments
$250 to open if you will be making quarterly investments
YOU MAY BUY SHARES OF THE FUND
FOR ALL
TYPES OF TAX-DEFERRED
RETIREMENT PLANS.
CONTACT RETIREMENT PLAN
SERVICES AT
THE ADDRESS OR PHONE NUMBER
LISTED ON
THE INSIDE BACK COVER OF THIS
PROSPECTUS
FOR INFORMATION AND TO RECEIVE
THE
PROPER FORMS.
If you buy shares by check and subsequently sell the shares, SDC will not
send your proceeds until your check clears, which could take up to 15 calendar
days from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be sent
to you free of charge for the current year and most recent prior year. Copies of
year-end statements for prior years are available for a fee of $10 per year, per
account, with a maximum charge of $150 per account. Send your request and a
check for the fee to SDC.
IF YOU WANT TO BE ABLE TO BUY, SELL, OR EXCHANGE SHARES BY TELEPHONE,
YOU SHOULD COMPLETE AN APPLICATION WHEN YOU OPEN YOUR ACCOUNT. THIS
WILL PREVENT YOU FROM HAVING TO COMPLETE A SUPPLEMENTAL ELECTION FORM
(WHICH MAY REQUIRE A SIGNATURE GUARANTEE) AT A LATER DATE.
9
HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Subsequent purchases must be for $100
or more.
Shares may be purchased through your authorized financial advisor, or you may
send a check directly to SDC. Please provide either an investment slip or a note
that provides your name(s), Fund name, and account number. Unless you indicate
otherwise, your investment will be made in the Class you already own. Send
investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
INVEST-A-CHECK(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
AUTOMATIC DOLLAR-COST-AVERAGING. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares, you may pay an
initial sales charge to buy Fund shares.
AUTOMATIC CD TRANSFER. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit(CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
DIVIDENDS FROM OTHER INVESTMENTS. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
DIRECT DEPOSIT. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
SELIGMAN TIME HORIZON MATRIX(SM). (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
SELIGMAN HARVESTER. If you are a retiree or nearing retirement, this program is
designed to help you establish an investment strategy that seeks to meet your
needs throughout your retirement. The strategy is customized to your personal
financial situation by allocating your assets to seek to address your income
requirements, prioritizing your expenses, and establishing a prudent withdrawal
schedule. Contact your financial advisor for more information.
10
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares of
Seligman Cash Management Fund to buy Class A shares of the Fund or another
Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
minimum initial investment.
See "The Seligman Mutual Funds" for a list of the funds available for exchange.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all classes of shares.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares; however, it may take
longer to get your money.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than all account owners; or
(3) mailed to other than your address of record.
Signature Guarantee:
Protects you and the Fund from fraud.
It guarantees that a signature is genuine.
A guarantee must be obtained from an
eligible financial institution. Notarization
by a notary public is not an acceptable
guarantee.
You may need to provide additional documents to sell Fund shares if you are:
- a corporation;
- an executor or administrator;
- a trustee or custodian; or
- in a retirement plan.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account service to sell Fund shares:
SYSTEMATIC WITHDRAWAL PLAN. If you have at least $5,000 in the Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class B or Class D shares and
reinvest your dividends and capital gain distributions, you may withdraw 12% or
10%, respectively, of the value of your Fund account (at the time of election)
annually without a CDSC.
11
IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, the Fund reserves the right to:
- Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month
period;
2. the amount you wish to exchange equals the lesser of $1,000,000 or
1% of the Fund's net assets; or
3. you or your financial advisor have been advised that previous
patterns of purchases and sales or exchanges have been considered
excessive.
- Refuse any request to buy Fund shares;
- Reject any request received by telephone;
- Suspend or terminate telephone services;
- Reject a signature guarantee that SDC believes may be fraudulent;
- Close your fund account if its value falls below $500;
- Close your account if it does not have a certified taxpayer
identification number.
TELEPHONE SERVICES
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account application
that you do not want telephone services:
- Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record);
- Exchange shares between funds;
- Change dividend and/or capital gain distribution options;
- Change your address;
- Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee).
Restrictions apply to certain types of accounts:
- Trust accounts on which the current trustee is not listed may not sell
Fund shares by phone;
- Corporations may not sell Fund shares by phone;
- IRAs may only exchange Fund shares or request address changes by phone;
- Group retirement plans may not sell Fund shares by phone; plans that
allow participants to exchange by phone must provide a letter of
authorization signed by the plan custodian or trustee and provide a
supplemental election form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address of
record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. The Fund's
NAV may fluctuate during this time.
The Fund and SDC will not be liable for processing requests received by phone as
long as it was reasonable to believe that the request was genuine.
REINSTATEMENT PRIVILEGE
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
12
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund generally pays any dividends from its net investment income and
distributes net capital gains realized on investments annually. It is expected
that the Fund's distributions will be primarily capital gains.
Dividend:
A payment by a mutual
fund, usually derived
from the fund's net
investment income
(dividends and interest
earned on portfolio
securities less
expenses).
Capital Gain Distribution:
A payment to mutual fund
shareholders which
represents profits
realized on the sale of
securities in a fund's
portfolio.
Ex-dividend Date:
The day on which any
declared distributions
(dividends or capital
gains) are deducted
from a fund's assets
before it calculates
its NAV.
You may elect to:
(1) reinvest both dividends and capital gain
distributions;
(2) receive dividends in cash and reinvest capital
gain distributions; or
(3) receive both dividends and capital gain
distributions in cash.
Your dividends and capital gain distributions will be
reinvested if you do not instruct otherwise or if you
own Fund shares in a Seligman tax-deferred retirement
plan.
If you want to change your election, you may write
SDC at the address listed on the back cover of this
prospectus or, if you have telephone services, you or
your financial advisor may call SDC. Your request
must be received by SDC before the record date to be
effective for that dividend or capital gain
distribution.
Cash dividends or capital gain distributions will be
sent by check to your address of record or, if you
have current ACH bank information on file, directly
deposited into your predesignated bank account within
3-4 business days from the payable date.
Dividends and capital gain distributions are
reinvested to buy additional Fund shares on the
payable date using the NAV of the ex-dividend date.
Dividends on Class B and Class D shares will be lower
than the dividends on Class A shares as a result of
their higher 12b-1 fees. Capital gain distributions
will be paid in the same amount for each Class.
TAXES
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
13
THE SELIGMAN MUTUAL FUNDS
EQUITY
SPECIALTY
- - ---------------------------------------------------------
SELIGMAN COMMUNICATIONS AND
INFORMATION FUND
Seeks capital appreciation by investing in companies operating in all aspects of
the communications, information, and related industries.
SELIGMAN HENDERSON GLOBAL TECHNOLOGY FUND
Seeks long-term capital appreciation by investing primarily in global securities
(US and non-US) of companies in the technology and technology-related
industries.
SELIGMAN HENDERSON EMERGING MARKETS GROWTH FUND
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging markets.
SMALL COMPANY
- - ---------------------------------------------------------
SELIGMAN FRONTIER FUND
Seeks growth of capital by investing primarily in small company growth stocks.
SELIGMAN SMALL-CAP VALUE FUND
Seeks long-term capital appreciation by investing in equities of small
companies, deemed to be "value" companies by the investment manager.
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES FUND
Seeks long-term capital appreciation by investing in securities of smaller
companies around the world, including the US.
MEDIUM COMPANY
- - ---------------------------------------------------------
SELIGMAN CAPITAL FUND
Seeks capital appreciation by investing in the common stocks of companies with
significant potential for growth.
LARGE COMPANY
- - ---------------------------------------------------------
SELIGMAN GROWTH FUND
Seeks long-term growth of capital value and an increase in future income.
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES FUND
Seeks capital appreciation by investing primarily in equity securities of
companies that have the potential to benefit from global economic or social
trends.
SELIGMAN LARGE-CAP VALUE FUND
Seeks long-term capital appreciation by investing in equities of large
companies, deemed to be "value" companies by the investment manager.
SELIGMAN COMMON STOCK FUND
Seeks favorable, but not the highest, current income and long-term growth of
both income and capital, without exposing capital to undue risk.
SELIGMAN HENDERSON INTERNATIONAL FUND
Seeks long-term capital appreciation by investing in securities of medium- to
large-sized companies, primarily in the developed markets outside the US.
BALANCED
- - ---------------------------------------------------------
SELIGMAN INCOME FUND
Seeks high current income and improvement in capital value over the long term,
consistent with prudent risk of capital.
FIXED-INCOME
INCOME
- - ---------------------------------------------------------
SELIGMAN HIGH-YIELD BOND FUND
Seeks to maximize current income by investing in a diversified portfolio of
high-yielding, high-risk corporate bonds, commonly referred to as "junk bonds."
SELIGMAN U.S. GOVERNMENT SECURITIES FUND
Seeks high current income primarily by investing in a diversified portfolio of
securities guaranteed by the US government, its agencies, or instrumentalities,
which have maturities greater than one year.
MUNICIPAL
- - ---------------------------------------------------------
SELIGMAN MUNICIPAL FUNDS:
NATIONAL FUND
Seeks maximum income, exempt from regular federal income taxes.
STATE-SPECIFIC FUNDS:*
Seek to maximize income exempt from regular federal income taxes and from
regular income taxes in the designated state.
<TABLE>
<S> <C> <C>
California Louisiana New Jersey
-High-Yield Maryland New York
-Quality Massachusetts North Carolina
Colorado Michigan Ohio
Florida Minnesota Oregon
Georgia Missouri Pennsylvania
South Carolina
* A small portion of income may be subject to state
taxes.
</TABLE>
MONEY MARKET
- - ---------------------------------------------------------
SELIGMAN CASH MANAGEMENT FUND
Seeks to preserve capital and to maximize liquidity and current income, by
investing only in high-quality money market securities having a maturity of 90
days or less. The fund seeks to maintain a constant net asset value of $1.00 per
share.
14
[FINANCIAL HIGHLIGHTS]
The tables below are intended to help you understand the financial performance
of the Fund's Classes for the past five years or, if less than five years, the
period of the Class's operations. Certain information reflects financial results
for a single share of a Class that was held throughout the periods shown. "Total
return" shows the rate that you would have earned (or lost) on an investment in
the Fund, assuming you reinvested all your dividends and capital gain
distributions. Total returns do not reflect any sales charges. Deloitte & Touche
LLP, independent auditors, have audited this information. Their report, along
with the Fund's financial statements, is included in the Fund's annual report,
which is available upon request.
CLASS A
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period...... $17.48 $16.36 $15.59 $13.17 $15.95
------ ------ ------ ------ ------
Income from investment operations:
Net investment income................... (0.04) (0.06) (0.04) (0.02) (0.06)
Net gains or losses on securities (both
realized and unrealized)............. 3.30 3.61 2.68 4.74 (1.12)
------ ------ ------ ------ ------
Total from investment operations.......... 3.26 3.55 2.64 4.72 (1.18)
------ ------ ------ ------ ------
Less distributions:
Distributions (from capital gains)...... (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------
Total distributions....................... (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------
Net asset value, end of period............ $20.06 $17.48 $16.36 $15.59 $13.17
====== ====== ====== ====== ======
TOTAL RETURN: 19.12% 22.28% 16.74% 37.32% (7.06)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).............................. $298,319 $284,214 $259,514 $215,688 $162,556
Ratio of expenses to average
net assets.............................. 0.99% 1.05% 1.07% 1.09% 1.13%
Ratio of net income to average net
assets.................................. (0.24)% (0.29)% (0.25)% (0.11)% (0.39)%
Portfolio turnover rate................... 132.18% 104.33% 94.97% 103.60% 70.72%
</TABLE>
- - ---------------
* Per share amounts are calculated based on average shares outstanding.
15
CLASS B
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 4/22/96**
-------------------- TO
1998 1997 2/31/96
---- ---- ---------
<S> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period..... $16.24 $15.47 $16.43
------ ------ ------
Income from investment operations:
Net investment income.................. (0.17) (0.18) (0.10)
Net gains or losses on securities (both
realized and unrealized)............. 3.05 3.38 1.01
------ ------ ------
Total from investment operations......... 2.88 3.20 0.91
------ ------ ------
Less distributions:
Distributions (from capital gains)..... (0.68) (2.43) (1.87)
------ ------ ------
Total distributions...................... (0.68) (2.43) (1.87)
------ ------ ------
Net asset value, end of period........... $18.44 $16.24 $15.47
====== ====== ======
TOTAL RETURN: 18.24% 21.26% 5.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................. $14,824 $8,437 $4,337
Ratio of expenses to average net
assets................................. 1.75% 1.81% 1.89%+
Ratio of net income to average net
assets................................. (1.00)% (1.05)% (.99)%+
Portfolio turnover rate.................. 132.18% 104.33% 94.97%++
</TABLE>
CLASS D
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period..... $16.25 $15.47 $14.94 $12.82 $15.86
------ ------ ------ ------ ------
Income from investment operations:
Net investment income.................. (0.17) (0.18) (0.16) (0.14) (0.33)
Net gains or losses on securities (both
realized and unrealized)............. 3.05 3.39 2.56 4.56 (1.11)
------ ------ ------ ------ ------
Total from investment operations......... 2.88 3.21 2.40 4.42 (1.44)
------ ------ ------ ------ ------
Less distributions:
Distributions (from capital gains)..... (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------
Total distributions...................... (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------
Net asset value, end of period........... $18.45 $16.25 $15.47 $14.94 $12.82
====== ====== ====== ====== ======
TOTAL RETURN: 18.23% 21.34% 15.84% 35.98% (8.75)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................. $27,433 $26,088 $19,974 $9,137 $3,179
Ratio of expenses to average
net assets............................. 1.75% 1.81% 1.83% 2.02% 2.66%
Ratio of net income to average net
assets................................. (1.00)% (1.05)% (1.00)% (1.06)% (2.28)%
Portfolio turnover rate.................. 132.18% 104.33% 94.97% 103.60% 70.72%
</TABLE>
- - ---------------
* Per share amounts are calculated based on average shares outstanding.
** Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
16
[HOW TO CONTACT US]
<TABLE>
<S> <C> <C>
THE FUND Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
YOUR REGULAR
(NON-RETIREMENT)
ACCOUNT Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
YOUR RETIREMENT
ACCOUNT Write: Retirement Plan Services
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 445-1777
</TABLE>
24-hour telephone access is available by dialing (800) 622-4597 on a touchtone
telephone. You will have instant access to price, yield, account balance, most
recent transaction, and other information.
17
<PAGE>
SELIGMAN CAPITAL FUND, INC.
Statement of Additional Information
May 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 Capital Fund, Inc.,
dated May 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 Fund at the above address or telephone numbers.
The financial statements and notes included in the Fund's 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 Fund and its Investments and Risks................. 2
Management of the Fund................................................ 5
Control Persons and Principal Holders of Securities................... 10
Investment Advisory and Other Services................................ 10
Brokerage Allocation and Other Practices.............................. 16
Capital Stock and Other Securities ................................... 17
Purchase, Redemption, and Pricing of Shares........................... 17
Taxation of the Fund.................................................. 23
Underwriters.......................................................... 24
Calculation of Performance Data ...................................... 25
Financial Statements.................................................. 27
General Information................................................... 27
Appendix ............................................................. 28
EQCA1A
<PAGE>
Fund History
The Fund was incorporated under the laws of the state of Maryland in 1968.
Description of the Fund and its Investments and Risks
Classification
The Fund is a diversified open-end management investment company, or mutual
fund.
Investment Strategies and Risks
The following information regarding the Fund's investments and risks supplements
the information contained in the Fund's Prospectus.
Foreign Securities. The Fund may invest in commercial paper and certificates of
deposit issued by foreign banks and may invest either directly or through
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), or
Global Depositary Receipts (GDRs) (collectively, Depositary Receipts) in other
securities of foreign issuers. Foreign investments may be affected favorably or
unfavorably by changes in currency rates and exchange control regulations. There
may be less information available about a foreign company than about a US
company and foreign companies may not be subject to reporting standards and
requirements comparable to those applicable to US companies. Foreign securities
may not be as liquid as US securities and there may be delays and risks
attendant in local settlement procedures. Securities of foreign companies may
involve greater market risk than securities of US companies, and foreign
brokerage commissions and custody fees are generally higher than those in the
United States. Investments in foreign securities may also be subject to local
economic or political risks, political instability, the possible nationalization
of issuers and the risk of expropriation or restrictions on the repatriation of
proceeds of sale. In addition, foreign investments may be subject to withholding
and other taxes.
Depositary Receipts are instruments generally issued by domestic banks or trust
companies that represent the deposits of a security of a foreign issuer. ADRs,
which are traded in dollars on US Exchanges or over-the-counter, are issued by
domestic banks and evidence ownership of securities issued by foreign
corporations. EDRs are typically traded in Europe. GDRs are typically traded in
both Europe and the United States. Depositary Receipts may be issued under
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 issuers may not be directly involved in the
creation of the program. Although regulatory requirements with respect to
sponsored and unsponsored Depositary Receipt programs are generally similar, the
issuers of securities represented by 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
receipts. The Fund may invest up to 10% of its total assets in foreign
securities that it holds directly, but this 10% limit does not apply to foreign
securities held through Depositary Receipts which are traded in the United
States or to commercial paper and certificates of deposit issued by foreign
banks.
Investment income received by the Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the 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
amounts of the Fund's assets to be invested within various countries is not
known.
Repurchase Agreements. The 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 the Fund acquires a security,
generally a US Government obligation, subject to resale at an agreed upon price
and date. The resale price reflects an agreed upon interest rate effective for
the period of time
2
<PAGE>
the Fund holds the security and is unrelated to the interest rate on the
security. The Fund's repurchase agreements 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 the securities underlying the agreement, a decline in value of the
underlying securities and a loss of interest. Repurchase agreements are
typically entered into for periods of one week or less. As a matter of
fundamental policy, the Fund will not enter into repurchase agreements of more
than one week's duration if more than 10% of its net assets would be so
invested.
Illiquid Securities. The 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. The Fund may purchase
restricted securities that can be offered and sold to "qualified institutional
buyers" under Rule 144A of the 1933 Act, and the Fund's Board of Directors may
determine, when appropriate, that specific Rule 144A securities are liquid and
not subject to the 15% limitation on illiquid securities. Should 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 the Fund, if and to the extent that
qualified institutional buyers become for a time uninterested in purchasing Rule
144A securities.
Borrowing. The Fund may from time to time borrow money to increase its portfolio
of securities. It may borrow only from banks and may not borrow in excess of
one-third of the market value of its assets, less liabilities other than such
borrowing. The Fund may pledge its assets only to the extent necessary to effect
permitted borrowings of up to 15% of its total assets on a secured basis. These
limits may be changed only by a vote of the shareholders. Current asset value
coverage of three times any amount borrowed is required at all times.
Borrowed money creates an opportunity for greater capital appreciation, but at
the same time increases exposure to capital risk. The net cost of any money
borrowed would be an expense that otherwise would not be incurred, and this
expense will limit the Fund's net investment income in any given period.
Any gain in the value of securities purchased with money borrowed in excess of
the cost of amounts borrowed would cause the net asset value of the Fund's
shares to increase more than otherwise would be the case. Conversely, any
decline in the value of securities purchased with money borrowed or any gain in
value less than the cost of amounts borrowed would cause net asset value to
decline more than would otherwise be the case.
Rights and Warrants. The 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 the Fund's investment restrictions regarding such securities.
The 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 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.
Lending of Portfolio Securities. The Fund may lend portfolio securities to
broker/dealers or other institutions, if the investment manager believes such
loans will be beneficial to the 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 dividends or interest paid on the securities. The
Fund may invest the collateral and earn additional
3
<PAGE>
income or receive an agreed upon amount of interest income from the borrower.
Loans made by the 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 that 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, the Fund's investment strategies
are not fundamental and the Fund, with the approval of the Board of Directors,
may change such strategies without the vote of shareholders.
Fund Policies
The 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, the
Fund may not:
- - - Borrow money, except in an amount not to exceed one-third of the value of
its total assets less liabilities other than borrowings;
- - - Mortgage or pledge any of its assets, except to the extent necessary to
effect permitted borrowings of up to 15% its total assets on a secured
basis and except to enter into escrow arrangements in connection with the
sales of permitted call options. The Fund has no present intention of
selling call options, and will not do so without the prior approval of the
Fund's Board of Directors;
- - - Purchase securities on "margin," or sell "short";
- - - Invest more than 5% of the value of its total assets, at market value, in
securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided, however, that
securities guaranteed by a company that (including predecessors) has been
in operation at least three continuous years shall be excluded from this
calculation;
- - - Invest more than 5% of its total assets (taken at market) in securities of
any one issuer, other than the US Government, its agencies or
instrumentalities, buy more than 10% of the outstanding voting securities
or more than 10% of all the securities of any issuer, or invest to control
or manage any company;
- - - Invest more than 25% of total assets at market value in any one industry;
- - - Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
for the purpose of hedging the Fund's obligations under the Deferred
Compensation Plan for Directors;
- - - Purchase or hold any real estate, except the Fund may invest in securities
secured by real estate or interests therein or issued by persons (other
than real estate investment trusts) which deal in real estate or interests
therein;
- - - Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the Fund individually owning beneficially more
than 0.5% of the securities of that issuer own in the aggregate more than
5% of such securities;
- - - Deal with its directors or officers, or firms they are associated with, in
the purchase or sale of securities of other issuers, except as broker;
4
<PAGE>
- - - Purchase or sell commodities and commodity contracts;
- - - Underwrite the securities of other issuers, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security;
- - - Make loans, except loans of portfolio securities and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, the entry
into repurchase agreements or deposits with banks may be considered loans;
or
- - - Write or purchase put, call, straddle or spread options except that the
Fund may sell covered call options listed on a national securities exchange
or quoted on NASDAQ and purchase closing call options so listed or quoted.
The Fund has no present intention of entering into these types of
transactions, and will not do so without the prior approval of the Fund's
Board of Directors.
The 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 the 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 by
proxy.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, the Fund may invest up to 100% of its assets in cash or cash
equivalents, including, but not limited to, prime commercial paper, bank
certificates of deposit, bankers' acceptances, or repurchase agreements for such
securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. The Fund's investments in foreign cash equivalents will be limited
to those that, in the opinion of the investment manager, equate generally to the
standards established for US cash equivalents. Investments in bank obligations
will be limited at the time of investment to the obligations of the 100 largest
domestic banks in terms of assets which are subject to regulatory supervision by
the US Government or state governments, and the obligations of the 100 largest
foreign banks in terms of assets with branches or agencies in the United States.
Portfolio Turnover
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the year by the monthly average
of the value of the portfolio securities owned during the year. Securities whose
maturity or expiration date at the time of acquisition were one year or less are
excluded from the calculation. The Fund's portfolio turnover rates for the years
ended December 31, 1998 and 1997 were 132.18% and 104.33%, respectively.
Management of the Fund
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Fund.
Management Information
Directors and officers of the Fund, 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 Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
5
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(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,
(61) 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.; Member of the Board of Governors
of the Investment Company Institute; and Director,
ICI Mutual Insurance Company, Seligman Advisors,
Inc., and Seligman Services, Inc.
Richard R. Schmaltz* 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 (except Seligman Cash Management Fund, Inc.);
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 Tufts
(69) University; Director or Trustee, the Seligman Group
Tufts University of investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; a Governor of the Center for
Medford, MA 02155 Creative Leadership; Director; Raytheon Co.,
electronics; National Defense University; and the
Institute for Defense Analyses. 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>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director
(64) or Trustee, the Seligman Group of investment
18 Highland Circle, companies; Trustee, the Committee for Economic
Bronxville, NY 10708 Development; and Chairman, The Rockefeller
Foundation, charitable foundation. Formerly, Trustee, The
Markle Foundation, philanthropic organization; and Director,
New York Telephone Company; and International Research and
Exchange Board, intellectual exchanges.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(66) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Suite Seligman Group of investment companies; Director,
805E Kimberly-Clark Corporation, consumer products; Bank
Oklahoma City, OK 73112 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 Seligman
125 Broad Street, Group of investment companies; Director, Commonwealth
New York, NY 10004 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 of
(56) investment companies; Trustee, The Geraldine R. Dodge
P.O. Box 449, Foundation, charitable foundation; and Chairman of
Gladstone, NJ 07934 the Board of Trustees of St. George's School
(Newport, RI). Formerly, Director, the National
Association of Independent Schools (Washington, DC).
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
James C. Pitney 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 07962 Service Enterprise Group, public utility.
James Q. Riordan Director Director or Trustee, the Seligman Group of investment
(71) companies; Director, The Houston Exploration Company;
675 Third Avenue, The Brooklyn Museum, KeySpan Energy Corporation; and
Suite 3004 Public Broadcasting Service; and Trustee, the
New York, NY 10017 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 companies.
96 Evergreen Avenue, Formerly, Director, USLIFE Corporation.
Rye, NY 10580
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc.;
(64) Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive, companies; Director, C-SPAN and CommScope, Inc.,
Dallas, TX 75230 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.
Marion S. Schultheis Vice President and Portfolio Managing Director, J. & W. Seligman & Co.
(53) Manager Incorporated since May 1998; Vice President and
Portfolio Manager, three other 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.
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.; Vice President and Treasurer, Seligman
International, Inc.; and Treasurer, Seligman
Henderson Co.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(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.,
Seligman International, Inc. and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(41) and Seligman Data Corp.
</TABLE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available, and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
Directors and officers of the Fund are also directors and officers of some or
all of the other investment companies in the Seligman Group.
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to 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 $1,030 N/A $79,000
Alice S. Ilchman, Director 969 N/A 73,000
Frank A. McPherson, Director 1,030 N/A 79,000
John E. Merow, Director 1,010 N/A 77,000
Betsy S. Michel, Director 1,030 N/A 79,000
James C. Pitney, Director 990 N/A 75,000
James Q. Riordan, Director 990 N/A 75,000
Robert L. Shafer, Director 1,030 N/A 75,000
James N. Whitson, Director 1,030(d) N/A 79,000(d)
</TABLE>
- - ----------
(1) For the Fund's year ended December 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.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. The Fund 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 Fund's financial statements. The total amount of deferred compensation
(including earnings) payable in respect of the Fund to Mr. Whitson as of
December 31, 1998 was $15,469. Messrs. Merow and Pitney no longer defer current
compensation; however, they have accrued deferred
9
<PAGE>
compensation (including earnings) in the amounts of $49,096 and $36,565,
respectively, as of December 31, 1998.
The Fund may, but is not obligated to, purchase shares of the Seligman Group of
investment companies to hedge its obligations in connection with the Fund's
Deferred Compensation Plan.
Sales Charges
Class A shares of the Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Fund, the other investment companies in the Seligman Group, and 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 the Fund.
Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.
Control Persons and Principal Holders of Securities
Control Persons
As of March 31, 1999, there was no person or persons who controlled the Fund,
either through a significant ownership of shares or any other means of control.
Principal Holders
As of March 31, 1999, 9.72% of the Fund's Class A capital stock then outstanding
were registered in the name of State of Wisconsin Public Emp. Def. Comp. Plan,
c/o National Defined Compensation, P.O. Box 20629, Columbus, OH 43220-0629, and
34.31% of the Fund's Class B capital stock then outstanding and 13.88% of the
Fund's Class D capital stock then outstanding, were owned of record by MLPF&S
for the Sole Benefit of Its Customers, Attn Fund Administrator, 4800 Deer Lake
Drive East, 3rd Floor, Jacksonville, FL 32246.
Management Ownership
As of March 31, 1999, Directors and officers of the Fund as a group owned
directly or indirectly 223,249 Class A shares or 1.56% of the outstanding shares
of the Class A capital stock of the Fund. As of the same date, no Directors or
officers owned shares of the Fund's Class B or Class D capital stock.
Investment Advisory and Other Services
Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages the Fund. Seligman is a
successor firm to an investment banking business founded in 1864 which has
thereafter provided investment services to individuals, families, institutions,
and corporations. 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 for further history of
Seligman.
All of the officers of the Fund listed above are officers or employees of
Seligman. Their affiliations with the Fund and with Seligman are provided under
their principal business occupations.
10
<PAGE>
As compensation for the services performed and the facilities and personnel
provided by Seligman, the Fund pays to Seligman promptly after the end of each
month a fee, calculated on each day during such month, equal to the Applicable
Percentage of the daily net assets of the Fund at the close of business on the
previous business day. The term "Applicable Percentage" means the amount
(expressed as a percentage and rounded to the nearest one millionth of one
percent) obtained by dividing (i) the Fee Amount by (ii) the Fee Base. The term
"Fee Amount" means the sum on an annual basis of:
.55 of 1% of the first $4 billion of Fee Base,
.50 of 1% of the next $2 billion of Fee Base,
.475 of 1% of the next $2 billion of Fee Base, and
.45 of 1% of Fee Base in excess of $8 billion.
The term "Fee Base" as of any day means the sum of the net assets at the close
of business on the previous day of each of the investment companies registered
under the 1940 Act for which Seligman or any affiliated company acts as
investment adviser or manager (including the Fund). For the year ended December
31, 1998, the Fund paid Seligman $1,504,151, equal to .48% of its average daily
net assets. For the year ended December 31, 1997, the Fund paid Seligman
$1,470,669, equal to .48% of its average daily net assets, and for the year
ended December 31, 1996, the Fund paid Seligman $1,253,672, equal to .49% of its
average daily net assets.
The Fund pays all of its expenses other than those assumed by Seligman,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, including fees and expenses of qualifying the Fund
and its shares under Federal and State securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by or serving as a Director of Seligman or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses.
The Management Agreement provides that Seligman will not be liable to the Fund
for any error of judgment or mistake of law, or for any loss arising out of any
investment, or for any act or omission in performing its duties under the
Agreement, except for willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Agreement.
The Management Agreement was initially approved by the Board of Directors at a
Meeting held on September 30, 1988 and by the shareholders at a special meeting
held on December 16, 1988. Amendments to the Management Agreement, effective
April 10, 1991, to increase the fee rate payable to Seligman by the Fund, were
approved by the Board of Directors on January 17, 1991 and by the shareholders
at a special meeting held on April 10, 1991. 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 the 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
shall not have notified the Fund 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 the Fund, without penalty, on 60 days' written notice to Seligman
and will terminate automatically in the event of its assignment. The Fund 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
11
<PAGE>
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.
Principal Underwriter
Seligman Advisors, Inc. (formerly, Seligman Financial Services, Inc.), an
affiliate of Seligman, 100 Park Avenue, New York, New York 10017, acts as
general distributor of the shares of the 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 Fund.
Those individuals identified above under "Management Information" as directors
or officers of both the Fund and Seligman Advisors are affiliated persons of
both entities.
Services Provided by the Investment Manager
Under the Management Agreement, dated December 29, 1988, as amended April 10,
1991, subject to the control of the Board of Directors, Seligman manages the
investment of the assets of the Fund, including making purchases and sales of
portfolio securities consistent with the 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 Fund.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise the Fund with respect to its investments.
12
<PAGE>
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares of the Fund, 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 18 months.
Seligman Services, Inc., an affiliate of Seligman, is a limited purpose
broker/dealer. Seligman Services is eligible to receive commissions from certain
sales of Fund shares. For years ended December 31, 1998, 1997 and 1996, Seligman
Services received commissions in the amounts of $4,797, $7,630 and $15,257,
respectively.
Rule 12b-1 Plan
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under the 12b-1 Plan, the 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 the Fund. Payments made by the Fund under the 12b-1 Plan
are intended to be used to encourage sales of the Fund, as well as to discourage
redemptions.
Fees paid by the Fund under the 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 the
Fund are allocated between the classes in accordance with a methodology approved
by the Fund's Board of Directors. Expenses of distribution activities that
benefit both the Fund and other Seligman funds will be allocated among the
applicable funds based on relative gross sales during the quarter in which such
expenses are incurred, in accordance with a methodology approved by the Board.
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<PAGE>
Class A
Under the 12b-1 Plan, the 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 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 of the Fund. The Fund is not obligated to pay Seligman Advisors for
any such costs it incurs in excess of the fee described above. No expense
incurred in one year by Seligman Advisors with respect to Class A shares of the
Fund may be paid from Class A 12b-1 fees received from the Fund in any other
year. If the 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 the Fund
to Seligman Advisors with respect to Class A shares. The total amount paid by
the Fund to Seligman Advisors in respect of Class A shares for the year ended
December 31, 1998 was $680,364, equivalent to .24% per annum of the average
daily net assets of Class A shares.
Class B
Under the 12b-1 Plan, the 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 the Fund may exceed the 12b-1 fees paid by
the Fund in that year. The Fund's 12b-1 Plan permits expenses incurred in
respect of Class B shares in one year to be paid from Class B 12b-1 fees
received from the Fund in any other year; however, in any fiscal year the Fund
is not obligated to pay any 12b-1 fees in excess of the fees described above.
Seligman Advisors and FEP Capital, L.P. are not reimbursed for expenses which
exceed such fees. If the 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 the Fund in respect of Class B shares for the
year ended December 31, 1998 was $104,635, equivalent to 1% per annum of the
average daily net assets of Class B shares.
Class D
Under the 12b-1 Plan, the 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 the Class D shares. The Fee is used by Seligman Advisors as
follows: During the first year following the sale of Class D shares, a
distribution fee of .75% of the average daily net assets attributable to such
Class D shares is used, along with any CDSC proceeds, to (1) reimburse Seligman
Advisors for its payment at the time of sale of Class D shares of a .75% sales
commission to Service Organizations, and (2) pay for other distribution
expenses, including paying for the preparation of advertising and sales
literature and the printing and distribution of such promotional materials and
prospectuses to prospective investors and other marketing costs of Seligman
Advisors. In addition, during the first year following the sale of Class D
shares, a service fee of up to .25% of the average daily net assets attributable
to such Class D shares is used to
14
<PAGE>
reimburse Seligman Advisors for its prepayment to Service 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 shares 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 the Fund. The total amount paid by the Fund in
respect of Class D shares for the year ended December 31, 1998 was $245,673,
equivalent to 1% per annum of the average daily net assets of Class D shares.
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year.
The Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class D shares in one year to be paid from Class D 12b-1 fees in any other
year; however, in any year the Fund is not obligated to pay any 12b-1 fees in
excess of the fees described above.
As of December 31, 1998, Seligman Advisors has incurred $52,081 of unreimbursed
expenses in respect of the Fund's Class D shares. This amount is equal to .19%
of the net assets of Class D shares at December 31, 1998.
If the Fund's 12b-1 Plan is terminated in respect of Class D shares of the Fund,
no amounts (other than amounts accrued but not yet paid) would be owed by the
Fund to Seligman Advisors with respect to Class D shares.
Payments made by the Fund under the 12b-1 Plan for its year ended December 31,
1998, were spent on the following activities in the following amounts:
Class A Class B Class D
------- ------- -------
Compensation to underwriters -- -- $37,051
Compensation to broker/dealers $680,364 $26,175 $208,622
Other* -- $78,460 --
* 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 was approved on July 16, 1992 by the Directors, including a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund and who have no direct or indirect financial interest in
the operation of the 12b-1 Plan or in any agreement related to the 12b-1 Plan
(the "Qualified Directors") and was approved by shareholders of the Fund at a
Special Meeting of the Shareholders held on November 23, 1992. The 12b-1 Plan
became effective in respect of the Class A shares on January 1, 1993. The 12b-1
Plan was approved in respect of the Class B shares on March 21, 1996 by the
Board of Directors of the Fund, including a majority of the Qualified Directors,
and became effective in respect of the Class B shares on April 22, 1996. The
12b-1 Plan was approved in respect of the Class D shares on March 18, 1993 by
the Directors, including a majority of the Qualified Directors, and became
effective in respect of the Class D shares on May 1, 1993. The 12b-1 Plan will
continue in effect until December 31 of each year so long as such continuance is
approved annually by a majority vote of both the Directors of the Fund and the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval. The 12b-1 Plan 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 the
class. If the amount payable in respect of Class A shares under the 12b-1 Plan
is proposed to be increased materially, the Fund will either (1) permit holders
of Class B shares to vote as a separate class on the proposed increase or (2)
establish a new class of shares subject to
15
<PAGE>
the same payment under the 12b-1 Plan as existing Class A shares, in which case
the Class B shares will thereafter convert into the new class instead of into
Class A shares. No material amendment to the 12b-1 Plan may be made except by
vote of a majority of both the Directors and the Qualified Directors.
The 12b-1 Plan requires that the Treasurer of the Fund 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 Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be made by such disinterested Directors. The
12b-1 Plan is reviewed by the Directors annually.
Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor and receives compensation from
the Fund pursuant to the 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services. For the years
ended December 31, 1998, 1997 and 1996, Seligman Services received distribution
and service fees from the Fund pursuant to its 12b-1 Plan of $84,642, $90,061
and $75,816, respectively.
Brokerage Allocation and Other Practices
Brokerage Transactions
Seligman will seek the most favorable price and execution in the purchase and
sale of portfolio securities of the Fund. When two or more of the investment
companies in the Seligman Group or other investment advisory clients of Seligman
desire to buy or sell the same security at the same time, the securities
purchased or sold are allocated by Seligman in a manner believed to be equitable
to each. There may be possible advantages or disadvantages of such transactions
with respect to price or the size of positions readily obtainable or saleable.
In over-the-counter markets, the Fund deals with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
The 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 years ended December 31, 1998, 1997 and 1996, the Fund paid total
brokerage commissions to others for execution, research and statistical services
in the amounts of $1,181,343, $583,515 and $333,393, respectively. The amount of
brokerage commissions paid by the Fund has increased materially from 1996 due to
the Fund's increase in portfolio turnover and the Fund's increase in portfolio
transactions on public exchanges as opposed to over-the-counter markets.
Commissions
For the years ended December 31, 1998, 1997 and 1996, the Fund did not execute
any portfolio transactions with, and therefore did not pay any commissions to,
any broker affiliated with either the Fund, Seligman, or Seligman Advisors.
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 Fund. 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 the
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
Fund.
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<PAGE>
Directed Brokerage
During the year ended December 31, 1998, neither the Fund nor Seligman directed
any of the Fund's brokerage transactions to a broker because of research
services provided.
Regular Broker-Dealers
During the year ended December 31, 1998, the Fund did not acquire securities 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
The Fund is authorized to issue 500,000,000 shares of capital stock, each with a
par value of $1.00, divided into three classes, designated Class A common stock,
Class B common stock and Class D common stock. Each share of the Fund's Class A,
Class B and Class D common 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. The Fund 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
The Fund has no authorized securities other than common stock.
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 the 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 the 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.
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<PAGE>
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.
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 under Section 501(c)(3) or (13) of the
Internal Revenue Code, and non-qualified employee benefit plans that satisfy
uniform criteria are considered "single persons" for this purpose. The uniform
criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports, and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The table of sales charges in 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 Fund's shareholder service agent.
"Eligible employee benefit plan" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Fund shares. Sales of shares
to such plans must be made in connection with a payroll deduction system of plan
funding or other system acceptable to Seligman Data Corp. Section 403(b) plans
sponsored by public educational institutions are not eligible for net asset
value purchases based on the aggregate investment made by the plan or number of
eligible employees.
Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman Data
Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
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<PAGE>
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:
(1) to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in Fund
shares;
(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;
(4) to financial institution trust departments;
(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;
(6) to accounts of financial institutions or broker/dealers that charge account
management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts;
(7) pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the
Fund;
(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors;
(9) to certain "eligible employee benefit plans" as discussed above;
(10) and in connection with sales pursuant to a 401(k) alliance program which
has an agreement with Seligman Advisors.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge due to a purchase of $1,000,000 or more either alone or through a
Volume Discount, Right of Accumulation, or Letter of Intent are subject to a
CDSC of 1% on redemptions of such shares within eighteen months of purchase.
Employee benefit plans eligible for net asset value sales may be subject to a
CDSC of 1% for terminations at the plan level only, on redemptions of shares
purchased within eighteen months prior to plan termination. The 1% CDSC will be
waived on shares that were purchased through Morgan Stanley Dean Witter & Co. by
certain Chilean institutional investors (i.e., pension plans, insurance
companies, and mutual funds). Upon redemption of such shares within an
eighteen-month period, Morgan Stanley Dean Witter will reimburse Seligman
Advisors a pro rata portion of the fee it received from Seligman Advisors at the
time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Class B
Class B shares 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.
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Years Since Purchase CDSC
- - -------------------- ----
Less than 1 year .......................................... 5%
1 year or more but less than 2 years ...................... 4%
2 years or more but less than 3 years ..................... 3%
3 years or more but less than 4 years ..................... 3%
4 years or more but less than 5 years ..................... 2%
5 years or more but less than 6 years ..................... 1%
6 years or more ........................................... 0%
Approximately eight years after purchase, Class B shares will convert
automatically into Class A shares. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Conversion occurs at the end of the month which precedes the eighth anniversary
of the purchase date. If Class B shares of the Fund are exchanged for Class B
shares of another Seligman Mutual Fund, the conversion period applicable to the
Class B shares acquired in the exchange will apply, and the holding period of
the shares exchanged will be tacked onto the holding period of the shares
acquired. Class B shareholders of the Fund exercising the exchange privilege
will continue to be subject to the Fund's CDSC schedule if such schedule is
higher or longer than the CDSC schedule relating to the new Class B shares. In
addition, Class B shares of the Fund acquired by exchange will be subject to the
Fund's CDSC schedule if such schedule is higher or longer than the CDSC schedule
relating to the Class B shares of the Seligman mutual fund from which the
exchange has been made.
Class 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. Unlike Class B shares, Class D shares do not
automatically convert to Class A shares after eight years.
Systematic Withdrawals. Class B and Class D shareholders who reinvest both their
dividends and capital gain distributions to purchase additional shares of the
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 Fund;
(4) in whole or in part, in connection with shares sold to any state, county,
or city or any instrumentality, department, authority, or agency thereof,
which is prohibited by applicable
20
<PAGE>
investment laws from paying a sales load or commission in connection with
the purchase of any registered investment management company;
(5) in whole or in part, in connection with systematic withdrawals;
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class B, 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 Fund 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 Fund does not
presently intend to accept securities in payment for Fund shares. Generally, the
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 the
Fund would not accept securities with a value of less than $100,000 per issue in
payment for shares. The Fund may reject in whole or in part offers to pay for
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 Fund will not accept restricted
securities in payment for shares. The Fund will value accepted securities in the
manner provided for valuing portfolio securities of the Fund.
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 the 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 the 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. The 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 are valued at the last sale price on the securities
exchange or securities market on which such securities primarily are traded.
Securities not listed on an exchange or securities market, or securities in
which there were no transactions, are valued at the average of the most recent
bid and asked price, except in the case of open short positions where the asked
price is available. Securities traded on a foreign exchange or over-the-counter
market are valued at the last sales price on the primary exchange or market on
which they are traded. United Kingdom securities and securities for which there
are no recent
21
<PAGE>
sales transactions are valued based on quotations provided by primary market
makers in such securities. Any securities or other assets for which recent
market quotations are not readily available are valued at fair value as
determined in accordance with procedures approved by the Board of Directors.
Short-term obligations with less than 60 days remaining to maturity are
generally valued at amortized cost. Short-term obligations with more than 60
days remaining to maturity will be valued at current market value until the
sixtieth day prior to maturity, and will then be valued on an amortized cost
basis based on the value on such date unless the Board determines that this
amortized cost value does not represent fair market value. Expenses and fees,
including the investment management fee, are accrued daily and taken into
account for the purpose of determining the net asset value of Fund shares.
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the shares of the Fund are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into US dollars at the mean between the bid and offer prices of such
currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
Specimen Price Make-Up
Under the current distribution arrangements between the Fund and Seligman
Advisors, Class A shares 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
December 31, 1998, the maximum offering price of the Fund's shares is as
follows:
Class A
Net asset value per share ............................................ $20.06
Maximum sales charge (4.75% of offering price) .................. 1.00
------
Offering price to public......................................... $21.06
======
Class B
Net asset value and offering price per share(1) ................. $18.44
======
Class D
Net asset value and offering price per share(1) ................. $18.45
======
- - ----------
(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.
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.
22
<PAGE>
Taxation of the Fund
The Fund is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, the Fund will not be subject to federal income taxes on its
net investment income and capital gains, if any, realized during any taxable
year, which it distributes to its shareholders, provided that at least 90% of
its net investment income and net short-term capital gains are distributed to
shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to shareholders, whether received
in cash or reinvested in additional shares. To the extent designated as derived
from the Fund's dividend income that would be eligible for the dividends
received deduction if the Fund were not a regulated investment company, they are
eligible, subject to certain restrictions, for the 70% dividends received
deduction for corporations.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in the form of additional shares issued by
the Fund will be treated for federal income tax purposes as having received a
distribution in an amount equal to the fair market value on the date of
distribution of the shares received. Individual shareholders generally will be
subject to federal tax on distributions of net capital gains at a maximum rate
of 20% if designated as derived from the Fund's capital gains from property held
for more than one year.
Any gain or loss realized upon a sale or redemption of shares in the Fund by a
shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Individual shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as long-term capital loss to the extent
that it offsets the long-term capital gain distribution. In addition, no loss
will be allowed on the sale or other disposition of shares of the Fund if,
within a period beginning 30 days before the date of such sale or disposition
and ending 30 days after such date, the holder acquires (including shares
acquired through dividend reinvestment) securities that are substantially
identical to the shares of the Fund.
In determining gain or loss on shares of the Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales charge not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
The Fund will generally be subject to an excise tax of 4% on the amount of any
income or capital gains, above certain permitted levels, distributed to
shareholders on the basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned by the Fund.
Furthermore, dividends declared in October, November or December, payable to
shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January of
the following year.
Shareholders are urged to consult their tax advisors concerning the effect of
federal income taxes in their individual circumstances.
23
<PAGE>
Unless a shareholder includes a certified taxpayer identification number (social
security number for individuals) on the account application and certifies that
the shareholder is not subject to backup withholding, the fund is required to
withhold and remit to the US Treasury a portion of distributions and other
reportable payments to the shareholder. The rate of backup withholding is 31%.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed, the Fund may charge a service fee of up to $50 that may be
deducted from the shareholder's account and offset against any undistributed
dividends and capital gain distributions. The Fund also reserves the right to
close any account which does not have a certified taxpayer identification
number.
Underwriters
Distribution of Securities
The Fund and Seligman Advisors are parties to a Distributing Agreement dated
January 1, 1993 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Fund. 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
CDSCs paid by investors.
Total initial sales charges paid by shareholders of Class A shares of the Fund
for the years ended December 31, 1998, 1997 and 1996, amounted to $149,991,
$194,349 and $327,624, respectively, of which $17,323, $22,246 and $37,555,
respectively, was retained by Seligman Advisors.
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Fund, received the following commissions and other
compensation from the Fund during its year ended December 31, 1998:
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Discounts and Redemptions and
Commissions Repurchases
(Class A Sales (CDSC on Class A and Brokerage Other
Charge Retained) Class D Retained) Commissions Compensation (1)
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C>
$17,323 $4,474 $0 $5,772
</TABLE>
(1) Seligman Advisors has sold its rights to collect the distribution fees paid
by the Fund in respect of Class B shares and any CDSC imposed on
redemptions of Class B shares to FEP Capital, L.P., in connection with an
arrangement with FEP Capital, L.P. as discussed above under "12b-1 Plan."
In connection with this arrangement, Seligman Advisors receives payments
from FEP Capital, L.P. based on the value of Class B shares sold. Such
payments received for the year ended December 31, 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 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
24
<PAGE>
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. Seligman Advisors may from time
to time pay a bonus or other incentive to dealers that sell shares of the
Seligman mutual funds. 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
The average annual total returns for the Fund's Class A shares for the one-,
five-, and ten-year periods through December 31, 1998, were 13.48%, 15.62% and
17.51%, respectively. These returns were computed by subtracting the maximum
sales charge of 4.75% of public offering price and assuming that all of the
dividends and capital gain distributions paid by the Fund over the relevant time
period were reinvested. It was then assumed that at the end of each period, the
entire amount was redeemed. The average annual total return was then calculated
by calculating the annual rate required for the initial payment to grow to the
amount which would have been received upon such redemption (i.e., the average
annual compound rate of return). Table A below illustrates the total return
(income and capital) on Class A shares of the Fund, assuming all dividend and
capital gain distributions are reinvested in additional shares. It shows that a
$1,000 investment in Class A shares, assuming payment of the initial 4.75% sales
charge, made on December 31, 1988, had a value of $5,019 on December 31, 1998,
resulting in an aggregate total return of 401.86%.
The average annual total returns for the Fund's Class B shares for the one-year
period ended December 31, 1998 and for the period from April 22, 1996
(inception) through December 31, 1998, were 13.24% and 15.68%, respectively.
These returns were computed assuming that all dividends and capital gain
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. Table B
illustrates the total return (income and capital) on Class B shares of the Fund,
assuming all dividends and capital gain distributions are reinvested in
additional shares. It shows that a $1,000 investment in Class B shares on April
22, 1996 (commencement of operations of Class B shares) had a value of $1,480 on
December 31, 1998, resulting in an aggregate total return of 48.03%.
The average annual total returns for the Fund's Class D shares for the one- and
five-year periods ended December 31, 1998 and for the period from May 3, 1993
(inception) through December 31, 1998, were 17.23%, 15.57% and 15.20%,
respectively. These returns were computed assuming that all of the dividends and
capital gain 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. Table C illustrates the total
25
<PAGE>
return (income and capital) on Class D shares of the Fund, assuming all
dividends and capital gain distributions are reinvested in additional shares. It
shows that a $1,000 investment in Class D shares made on May 3, 1993
(commencement of operations of Class D shares) had a value of $2,230 on December
31, 1998, resulting in an aggregate total return of 122.97%.
The results shown below should not be considered a representation of the
dividend income or gain or loss in capital value which may be realized from an
investment made in a class of shares of the Fund today.
<TABLE>
<CAPTION>
TABLE A - CLASS A
Value of Value of Total Value
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>
12/31/89 $1,132 $ 129 $--- $1,261
12/31/90 1,139 140 --- 1,279
12/31/91 1,524 454 --- 1,978
12/31/92 1,559 648 --- 2,207
12/31/93 1,459 854 --- 2,313
12/31/94 1,205 944 --- 2,149
12/31/95 1,426 1,525 --- 2,951
12/31/96 1,497 1,948 --- 3,445
12/31/97 1,599 2,614 --- 4,213
12/31/98 1,835 3,184 --- 5,019 401.86%
<CAPTION>
TABLE B - CLASS B
Value of Value of Total Value
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>
12/31/96 $ 942 $111 $-- $1,053
12/31/97 988 289 -- 1,277
12/31/98 1,092 388 -- 1,480 48.03%
<CAPTION>
TABLE C - CLASS D
Value of Value of Total Value
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>
12/31/93 $ 965 $ 116 $-- $1,081
12/31/94 780 207 -- 987
12/31/95 909 433 -- 1,342
12/31/96 942 612 -- 1,554
12/31/97 989 897 -- 1,886
12/31/98 1,123 1,107 -- 2,230 122.97%
</TABLE>
- - ----------
(1) For the ten-year period ended December 31, 1998 for Class A shares, from
commencement of operations of Class B shares on April 22, 1996 and from
commencement of operations of Class D shares on May 3, 1993.
(2) The "Value of Initial Investment" as of the date indicated (1) reflects the
effect of the maximum initial sales charge or CDSC, if applicable, (2)
assumes that all dividends and capital gain distributions were taken in
cash, and (3) reflects changes in the net asset value of the shares
purchased with the hypothetical initial investment. "Total Value of
Investment" (1) reflects the effect of the CDSC, if applicable, and (2)
assumes investment of all dividends and capital gain distributions.
(3) Total return for each Class of shares of the Fund is calculated by assuming
a hypothetical initial investment of $1,000 at the beginning of the period
specified; subtracting the maximum sales charge 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
26
<PAGE>
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 total returns and average annual total returns of Class A shares quoted from
time to time for periods through December 31, 1992, do not reflect the deduction
of 12b-1 fees because the 12b-1 Plan was implemented on January 1, 1993. The
total returns and average annual total returns of Class A shares quoted from
time to time for periods through April 10, 1991, do not reflect the increased
management fee approved by shareholders on April 10, 1991. These fees, if
reflected, would reduce the performance quoted.
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. The 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.
The 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 year ended December 31, 1998 contains
a schedule of the investments of the Fund as of December 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
Custodian. Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105 serves as custodian of the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for the Fund.
Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, NY
10281.
27
<PAGE>
Appendix
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing businesses in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale of
government securities to help finance the Civil War - Joseph Seligman, with his
brothers, established the international banking and investment firm of J. & W.
Seligman & Co. In the years that followed, the Seligman Complex played a major
role in the geographical expansion and industrial development of the United
States.
The Seligman Complex:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
28
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 50
mutual fund portfolios. o Helps pioneer state-specific municipal bond
funds, today managing a national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
29
<PAGE>
SELIGMAN
--------------
COMMON STOCK
FUND, INC.
[GRAPHIC]
ANNUAL REPORT
DECEMBER 31, 1998
------
Seeking Favorable
Current Income and
Long-Term Growth
of Both Income
and Capital
Without Exposing
Capital to
Undue Risk
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. Seligman & Co. Incorporated is a firm with a long tradition of
investment expertise, offering a broad array of investment choices to help
today's investors seek their long-term financial goals.
[PHOTOGRAPH]
James, Jesse, and Joseph Seligman, 1870
TIMES CHANGE...
Established in 1864, Seligman's history of providing financial services has been
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 134 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including funds that focus on technology stocks, municipal
bonds, and international securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
- - --------------------------------------------------------------------------------
TABLE OF CONTENTS
To the Shareholders .................................. 1
Interview With Your Portfolio Managers ............... 2
Performance Overview ................................. 4
Portfolio Overview ................................... 6
Portfolio of Investments ............................. 8
Statement of Assets and Liabilities .................. 11
Statement of Operations .............................. 12
Statements of Changes in Net Assets .................. 13
Notes to Financial Statements ........................ 14
Financial Highlights ................................. 17
Report of Independent Auditors ....................... 19
Federal Tax Status of 1998 Dividend and
Gain Distributions for Taxable Accounts ............ 20
Board of Directors ................................... 21
Executive Officers and For More Information .......... 22
Glossary of Financial Terms .......................... 23
- - --------------------------------------------------------------------------------
<PAGE>
TO THE SHAREHOLDERS
Seligman Common Stock Fund had a solid year in 1998, posting a total return of
17.40% based on the net asset value of Class A shares. This return outpaced the
15.32% total return of the Fund's peers, as measured by the Lipper Growth &
Income Funds Average. The Fund's return lagged the 28.58% total return of the
Standard & Poor's 500 Composite Stock Price Index (S&P 500). A discussion with
your Portfolio Managers regarding the Fund's results begins on page 2.
The past year was one of continued growth in the US
economy, with real domestic growth of 3.9%, marking the eighth year of economic
expansion. The US large-cap sector of the equity markets responded with another
year of strong performance. 1998 marked the first time in history that the S&P
500 registered more than 20% gains four years in a row. But, despite the strong
year-end numbers, 1998 was the most volatile year for the markets since 1987.
Once again in 1998, exceptional performance from an extremely narrow list of
stocks masked the true investment results in the broad market. Within the S&P
500, the successes of a few stocks blurred the total picture. In fact, 197
stocks within the S&P 500, representing 39% of the Index, actually lost market
value during the last 12 months. Investment results between asset classes were
also more widely dispersed than usual.
The market's volatility can be attributed to a number of factors -- some
domestic, many international. The international economic background in 1998 was
one of steadily deteriorating conditions as the financial crisis, originally
limited to a few Asian countries, spread throughout other regions. Currency
instability and rising global recession/deflation fears exacerbated market
volatility. Anxiety increased following the Russian debt default and the
near-collapse of Long-Term Capital Management LP, a large hedge fund plagued by
a series of bad currency investments. By late August, a stock market correction
threatened to turn into a more significant decline, as the Dow Jones Industrial
Average fell more than 850 points in two days, wiping out all of the year's
gains.
During the second half of the year, the Federal Reserve Board cut the
federal-funds rate three times. These actions confirmed the Fed's resolve to
protect the US economy from the global financial crisis and markets responded
favorably throughout November and December.
Subdued inflation, low interest rates, improving prospects in Asia, and a
Federal Reserve leading the fight against global recession are all positive for
the US markets in 1999. We expect a challenging environment confronted with
economic uncertainties and continued high volatility. Pressure on corporate
profits is likely to continue as the US enters a period of slower growth.
Valuations on some of the largest stocks seem excessive, and any broadening of
the market in 1999 may negatively affect their share prices. In addition, low
commodity prices are impacting much of the world, making it harder for US
multinationals to export. Nonetheless, we see moderately positive returns for
the year in line with our lower growth projections.
Seligman continues to work to ensure that all of its operations are prepared for
the challenges posed by the Year 2000 (Y2K) computer problem. We are confident
that there will be no disruption in the investment and shareholder services
provided by your Fund as a result of Y2K. In addition, your portfolio management
team considers the potential ramifications of Y2K when making decisions on which
securities should be held by the Fund.
Thank you for your continued support of Seligman Common Stock Fund in 1998. we
look forward to serving your investment needs in 1999.
By order of the Board of Directors,
/s/ William Morris
William C. Morris
Chairman
/s/Brian T. Zino
Brian T. Zino
President
January 29, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
CHARLES C. SMITH, JR. AND RODNEY COLLINS
Q. How did Seligman Common Stock Fund perform in the last 12 months?
A. For the 12 months ended December 31, 1998, Seligman Common Stock Fund
posted a total return of 17.40% based on the net asset value of Class A
shares. The Lipper Growth & Income Funds Average, which measures the
results of mutual funds with similar investment objectives, had a total
return of 15.32% through December 31, 1998. The Standard & Poor's 500
Composite Stock Price Index (S&P 500) had a total return of 28.58% for
1998.
Q. Which economic and market factors affected the Fund's investment results in
1998?
A. In 1998, the US economy expanded for the eighth year in a row. Low
inflation, continued corporate earnings growth, and a benign interest rate
environment all helped propel the major US markets higher. The year was one
of tremendous investor demand for US common stocks. Much of this demand was
caused by the continuing "flight to quality," as investors tried to
insulate themselves from troubles in Asia and Latin America by investing in
the largest, most liquid companies in the US. This trend, while positive
for the biggest stocks in the US, caused a narrowing of the market that
left many stocks behind. In fact, 50 stocks in the S&P 500 accounted for
about 94% of the performance of the entire Index.
Seligman Common Stock Fund benefited from the strong demand for US
large-cap stocks. But market performance in 1998 was far from a straight
line that moved continually higher. In the third quarter of the year, the
market weakened significantly. Your Fund did well during this downturn
because of our strategy of emphasizing companies with attractive dividend
yields relative to the market and attractive valuations relative to their
industries.
Q. What is your investment strategy?
A. In an effort to reduce overall volatility, we have repositioned the Fund's
portfolio to emphasize companies with greater earnings stability. While
still diversified among industry groups and individual holdings, the
portfolio has been pared down to focus on companies with dividend yields
equal to, or greater than, the S&P 500. Valuations of the companies we
invest in must be at the lower end of their industry group. Our investment
approach led us to be underweight in many of the excessively valued
large-capitalization stocks that were hit the hardest by last summer's
market downturn. This allowed Seligman Common Stock Fund to outpace the
market and many of its peers in that difficult environment.
Our investment strategy continued to offer a significant yield advantage
and less investment risk than offered by our average competitor. In fact,
1998
- - --------------------------------------------------------------------------------
A TEAM APPROACH
Seligman Common Stock Fund is managed by the Seligman Growth and Income Team,
headed by Charles C. Smith, Jr. Mr. Smith and Rodney Collins are assisted in the
management of the Fund by seasoned research professionals who are responsible
for identifying companies in specific industry groups that offer the greatest
total return potential, consistent with the Fund's objective.
- - --------------------------------------------------------------------------------
[PHOTOGRAPH]
Growth and Income Team: (standing, from left) Amy Fujii, John Roth, Melanie
Ravenell (Administrative Assistant), (seated) Charles Smith (Portfolio Manager),
Rodney Collins (Co-Portfolio Manager)
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
CHARLES C. SMITH, JR. AND RODNEY COLLINS
marked the 55th consecutive year that Seligman Common Stock Fund was able
to increase its dividend income for shareholders who invested their capital
gains in additional shares. It is the only mutual fund in the nation that
can boast such a record. In uncertain markets, dividends can significantly
reduce volatility.
Q. How was the portfolio constructed, and how did that affect investment
results ?
A. In 1998, we significantly reduced the Fund's international holdings. With
continued problems in the global economy, we felt that the US market
offered greater return potential. The international stocks we still hold in
the portfolio are large, liquid companies, which we believe have attractive
fundamentals. Sectors that produced strong returns for the Fund included
health care, telecommunications, and capital goods. The weakest area of the
portfolio was cyclical stocks. While we generally underweighted these
issues, they did negatively impact results.
The most significant factor that held performance down was our
underweighting in technology stocks. Successful technology companies
usually need to reinvest any earnings to finance research and development
and future growth plans. This means that they rarely distribute dividends.
Since one of Seligman Common Stock Fund's primary investment strategies is
to invest in companies with dividends comparable to, if not higher than,
the overall market, we did not own most of the fastest-growing technology
stocks. Our lack of significant technology exposure (it makes up about 10%
of the portfolio) helped the Fund during the market sell-off that started
in late July, but it hampered overall performance as these same technology
companies rallied strongly in the fourth quarter.
Q. What is your outlook?
A. We continue to believe that the US economy offers an attractive environment
for investing in common stocks. At the same time, we remain cautious, as
the valuations of many of the larger stocks seem to already reflect a
positive economic outlook. As a result, we continue to temper our positions
in some of the larger-capitalization stocks -- the top 20 names in the S&P
500. We feel that the high valuations accorded to many of these stocks have
been driven by liquidity concerns, not fundamentals. Therefore, we are
focusing on identifying companies whose valuations more fully reflect their
future prospects, and where there is a catalyst for earnings acceleration
going forward. Any broadening of the market should benefit these companies
in the next year and beyond.
We believe that difficulties in world markets are likely to continue to
have an impact on US stocks in 1999, and that volatility, which was an
ever-present market factor last year, will not subside quickly. In such an
environment, Seligman Common Stock Fund will continue to adhere to its
disciplined investment strategy based on fundamental analysis.
3
<PAGE>
PERFORMANCE OVERVIEW
This chart compares a $10,000 hypothetical investment made in Seligman
Common Stock Fund Class A shares, with and without the initial 4.75% maximum
sales charge, and assumes that all distributions within the period are invested
in additional shares, for the 10-year period ended December 31, 1998, to a
$10,000 investment made in the Lipper Growth &Income Funds Average (Lipper
Growth &Income Average) and the Standard &Poor's 500 Composite Stock Price Index
(S&P 500) for the same period. The performances of Seligman Common Stock Fund
Class B and Class D shares are not shown in this chart but are included in the
table on page 5. It is important to keep in mind that the Lipper Growth &Income
Average and the S&P500 exclude the effect of fees and/or sales charges.
[THE FOLLOWING TABLE WAS PRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Seligman Common Stock Fund Class A
LIPPER
WITH WITHOUT GROWTH &
SALES SALES INCOME S&P
CHARGE CHARGE AVERAGE 500
------ ------ ------ ------
12/31/88 9,528 10,000 10,000 10,000
3/31/89 10,077 10,577 10,644 10,709
6/30/89 10,662 11,191 11,396 11,655
9/30/89 11,710 12,290 12,387 12,903
12/31/89 12,079 12,677 12,382 13,169
3/31/90 11,961 12,554 12,074 12,772
6/30/90 12,707 13,337 12,291 13,576
9/30/90 10,491 11,011 11,013 11,710
12/31/90 11,609 12,184 11,825 12,760
3/31/91 13,515 14,184 13,511 14,614
6/30/91 13,238 13,894 13,485 14,580
9/30/91 14,261 14,968 14,238 15,360
12/31/91 15,084 15,831 15,254 16,647
3/31/92 15,336 16,096 15,271 16,226
6/30/92 15,434 16,199 15,317 16,534
9/30/92 15,861 16,647 15,692 17,055
12/31/92 16,722 17,551 16,639 17,913
3/31/93 17,533 18,402 17,426 18,696
6/30/93 17,955 18,845 17,587 18,787
9/30/93 18,406 19,319 18,207 19,272
12/31/93 19,206 20,158 18,641 19,719
3/31/94 18,304 19,211 18,064 18,972
6/30/94 18,401 19,313 18,006 19,051
9/30/94 19,124 20,072 18,768 19,983
12/31/94 18,843 19,777 18,485 19,979
3/31/95 20,446 21,460 19,990 21,925
6/30/95 21,933 23,020 21,593 24,019
9/30/95 23,319 24,475 23,178 25,928
12/31/95 24,151 25,348 24,309 27,489
3/31/96 25,376 26,634 25,730 28,965
6/30/96 26,274 27,576 26,619 30,266
9/30/96 26,486 27,798 27,408 31,201
12/31/96 27,880 29,261 29,502 33,803
3/31/97 28,306 29,709 29,844 34,709
6/30/97 32,671 34,290 34,142 40,770
9/30/97 34,893 36,622 37,193 43,823
12/31/97 34,453 36,160 37,482 45,082
3/31/98 38,433 40,338 41,854 51,371
6/30/98 38,317 40,216 41,947 53,066
9/30/98 35,343 37,094 36,706 47,786
12/31/98 40,445 42,450 43,224 57,964
The performances of Class B and D shares will be greater than or less than
the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
4
<PAGE>
PERFORMANCE OVERVIEW
Investment Results Per Share
TOTAL RETURNS
For Period Ended December 31, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
------- ----- ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge 0.52% 11.84% 14.94% 15.00% n/a n/a
Without Sales Charge 5.56 17.40 16.06 15.55 n/a n/a
Class B**
With CDSC+ 0.34 11.53 n/a n/a 17.09% n/a
Without CDSC 5.15 16.48 n/a n/a 17.94 n/a
Class D**
With 1% CDSC 4.25 15.56 n/a n/a n/a n/a
Without CDSC 5.22 16.55 15.05 n/a n/a 14.92%
Lipper Growth & Income Funds Average*** 3.04 15.32 18.32 15.76 20.66++ 17.73+++
S&P 500*** 9.22 28.58 24.06 19.21 29.00++ 22.63+++
</TABLE>
NET ASSET VALUE
DECEMBER 31, 1998 JUNE 30, 1998 DECEMBER 31, 1997
----------------- ------------- -----------------
Class A $15.77 $16.36 $15.92
Class B 15.71 16.31 15.88
Class D 15.73 16.32 15.89
DIVIDEND AND CAPITAL GAIN INFORMATION
For the Year Ended December 31, 1998
DIVIDENDS
PAID CAPITAL GAIN
---- ------------
Class A $0.282 Paid $2.468#
Class B 0.166 Undistributed Realized 0.191##
Class D 0.166 Unrealized 4.098###
Performance data quoted represent changes in price and assume that all
distributions within the periods are invested in additional shares. The rates of
return will vary and the principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
- - ----------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price per share and assume the
investment of dividend and capital gain distributions. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class A shares reflect the effect of the
service fee of up to 0.25% under the Administration, Shareholder Services
and Distribution Plan after January 1, 1993, only. Returns for Class B
shares are calculated with and without the effect of the maximum 5%
contingent deferred sales charge ("CDSC"), charged on redemptions made
within one year of the date of purchase, declining to 1% in the sixth year
and 0% thereafter. Returns for Class D shares are calculated with and
without the effect of the 1% CDSC, charged on redemptions made within one
year of the date of purchase.
*** The Lipper Growth &Income Funds Average and the S&P 500 are unmanaged
benchmarks that assume investment of dividends. The Lipper Growth &Income
Funds Average and the S&P 500 exclude the effect of fees and/or sales
charges. The monthly performance of the Lipper Growth &Income Funds Average
is used in the Performance Overview. Investors cannot invest directly in an
index or an average.
+ The CDSC is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
# Includes $1.18 of undistributed realized capital gains from 1997, which
were paid to shareholders on June 24, 1998.
## Represents net gain realized from November and December 1998, payable in
1999.
### Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1998.
5
<PAGE>
PORTFOLIO OVERVIEW
Diversification of Net Assets
December 31, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
------------------
ISSUES COST VALUE 1998 1997
------ ---- ----- ---- ----
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Aerospace/Defense ............................... 1 $ 3,294,465 $ 4,690,000 0.5 0.9
Automotive and Related .......................... 3 34,383,919 47,447,812 5.4 3.4
Basic Materials ................................. 1 4,413,475 4,473,750 0.5 0.8
Business Services and Supplies .................. 2 23,812,859 35,420,000 4.0 0.6
Capital Goods ................................... 1 8,683,765 7,703,125 0.9 --
Chemicals ....................................... 1 8,216,419 7,694,062 0.9 2.8
Computer Goods and Services ..................... -- -- -- -- 3.1
Construction .................................... -- -- -- -- 0.7
Consumer Goods and Services ..................... 3 35,950,412 46,106,562 5.2 5.3
Drugs and Health Care ........................... 5 46,097,965 69,610,312 7.9 7.8
Electric and Gas Utilities ...................... 5 52,325,457 61,368,126 7.0 3.4
Electrical Equipment ............................ -- -- -- -- 0.8
Electronics ..................................... 2 22,352,229 24,765,000 2.8 4.2
Energy .......................................... 6 74,691,053 89,978,437 10.2 8.8
Finance and Insurance ........................... 11 94,727,053 157,839,863 17.9 15.7
Food ............................................ 2 15,277,420 31,128,750 3.5 2.9
Machinery and Industrial Equipment .............. 3 41,127,527 64,168,856 7.3 8.7
Metals and Mining ............................... -- -- -- -- 0.5
Paper and Packaging ............................. 2 17,906,241 20,914,375 2.4 1.9
Printing and Publishing ......................... 1 3,266,337 5,623,750 0.7 0.6
Retail Trade .................................... 1 9,428,316 12,980,625 1.5 2.1
Technology ...................................... -- -- -- -- 1.2
Telecommunications .............................. 4 61,737,793 86,666,563 9.8 6.7
Tobacco ......................................... 1 23,421,083 29,425,000 3.3 4.0
Transportation .................................. 1 11,899,967 11,882,813 1.3 --
Miscellaneous/Diversified ....................... 1 10,766,178 12,850,625 1.5 1.5
--- ------------- ------------- ----- -----
57 603,779,933 832,738,406 94.5 88.4
SHORT-TERM HOLDINGS AND OTHER ASSETS
LESS LIABILITIES 2 48,118,555 48,118,555 5.5 11.6
--- ------------- ------------- ----- -----
NET ASSETS 59 $651,898,488 $880,856,961 100.0 100.0
=== ============= ============= ===== =====
</TABLE>
6
<PAGE>
PORTFOLIO OVERVIEW
Largest Portfolio Changes
During Past Six Months
SHARES
----------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- - --------- -------- --------
Chubb .......................... 140,000 140,000
Crown Cork &Seal ............... 250,000 250,000
DQE ............................ 225,000 225,000
Electronic Data Systems ........ 200,000 200,000
Ford Motor ..................... 175,000 175,000
Fort James ..................... 325,000 325,000
Harris ......................... 240,000 240,000
Morgan (J.P.) .................. 70,000 70,000
PepsiCo ........................ 275,000 275,000
Sonat .......................... 275,000 275,000
SHARES
----------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- - ---------- -------- --------
Bristol-Myers Squibb ........... 90,000 100,000
Edison International ........... 375,000 --
Exxon .......................... 115,000 295,000
General Electric ............... 135,100 264,900
Marsh & McLennan ............... 270,000 --
Mobil .......................... 150,000 145,000
Penney (J.C.) .................. 160,000 --
St. PaulCompanies .............. 270,000 --
Texaco ......................... 260,000 --
US WEST Communications
Group ........................ 320,000 --
Largest portfolio changes from previous period to current period are based on
cost of purchases and proceeds from sales of securities.
Largest Industries
December 31, 1998
[THE FOLLOWING TABLE WAS PRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Percent of Total Dollar
Net Assets Amount
---------- ------------
FINANCE AND INSURANCE 17.90% $157,839,863
ENERGY 10.20% $ 89,978,437
TELECOMMUNICATIONS 9.80% $ 86,666,563
DRUGS AND HEALTH CARE 7.90% $ 69,610,312
MACHINERY AND INDUSTRIAL EQUIPMENT 7.30% $ 64,168,856
Largest Portfolio Holdings
December 31, 1998
SECURITY VALUE
- - -------- -----------
GTE $30,009,688
Philip Morris 29,425,000
Ameritech 27,885,000
General Electric 27,036,356
DaimlerChrysler 25,936,875
Bank of New York 25,760,000
Xerox 25,370,000
United Technologies 25,012,500
Merck 22,891,562
Houston Industries 22,326,875
7
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
------------ ------------
COMMON STOCKS 94.5%
AEROSPACE/DEFENSE 0.5%
General Dynamics
Diversified defense contractor 80,000 $ 4,690,000
------------
AUTOMOTIVE AND
RELATED 5.4%
DaimlerChrysler
Manufacturer of automobiles,
trucks, and related parts 270,000 25,936,875
Dana
Manufacturer and distributor
of products and systems
for automotive and
related industries 275,000 11,240,625
Ford Motor
Manufacturer and distributor
of automobiles, trucks, and
related parts 175,000 10,270,312
------------
47,447,812
------------
BASIC MATERIALS 0.5%
Alcoa
Manufacturer of containers 60,000 4,473,750
------------
BUSINESS SERVICES
AND SUPPLIES 4.0%
Electronic Data Systems
Provider of management
consulting and technology
services 200,000 10,050,000
Xerox
Developer, manufacturer,
and marketer of office
automation products 215,000 25,370,000
------------
35,420,000
------------
CAPITAL GOODS 0.9%
Crown Cork & Seal
Manufacturer of packaging
products 250,000 7,703,125
------------
CHEMICALS 0.9%
duPont (E.I.) de Nemours
Producer of chemicals 145,000 7,694,062
------------
CONSUMER GOODS
AND SERVICES 5.2%
Anheuser-Busch
Brewery; theme park operator;
manufacturer and recycler
of aluminum beverage
containers 300,000 19,687,500
CONSUMER GOODS
AND SERVICES (continued)
General Mills
Manufacturer and marketer
of consumer foods products 195,000 $ 15,161,250
PepsiCo
Manufacturer and marketer
of soft drinks and consumer
products 275,000 11,257,812
------------
46,106,562
------------
DRUGS AND
HEALTH CARE 7.9%
Abbott Laboratories
Developer and manufacturer
of diversified health
care products 160,000 7,840,000
American Home Products
Developer and manufacturer
of pharmaceuticals, food,
and housewares 350,000 19,709,375
Baxter International
Manufacturer and distributor
of hospital and laboratory
products 90,000 5,788,125
Bristol-Myers Squibb
Developer and manufacturer
of health and personal
care products 100,000 13,381,250
Merck
Developer and manufacturer
of pharmaceuticals 155,000 22,891,562
------------
69,610,312
------------
ELECTRIC AND GAS
UTILITIES 7.0%
DQE
Electric energy supplier 225,000 9,885,938
Houston Industries
Worldwide energy provider 695,000 22,326,875
Sonat
Energy company that
operates in the exploration
and production of oil and
natural gas 275,000 7,442,188
Unicom
Electric utility 280,000 10,797,500
The Williams Companies
Transporter and producer
of natural gas;
telecommunications provider 350,000 10,915,625
------------
61,368,126
------------
- - ----------
See footnotes on page 10.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
------------ ------------
ELECTRONICS 2.8%
Harris
Developer of electronic
products and services 240,000 $ 8,790,000
Raytheon (Class B)
Producer of defense and
commercial electronics 300,000 15,975,000
------------
24,765,000
------------
ENERGY 10.2%
BP Amoco (ADRs)
(United Kingdom)
Oil producer, refiner, and
distributor 175,000 15,684,375
Chevron
Explorer, developer, and
producer of crude oil
and natural gas 255,000 21,149,062
Exxon
Explorer and producer
of natural gas, oil, and
petroleum products 295,000 21,571,875
Mobil
International oil enterprise 145,000 12,633,125
Royal Dutch Petroleum (Netherlands)
Provider of international
oil services 280,000 13,405,000
Schlumberger
Worldwide provider of
energy services 120,000 5,535,000
------------
89,978,437
------------
FINANCE AND
INSURANCE 17.9%
American General
Provider of insurance
and annuity services 245,000 19,110,000
Bank of New York
Commercial bank 640,000 25,760,000
BankAmerica
Commercial bank 200,000 12,025,000
Chubb
International holding company
specializing in property and
casualty insurance 140,000 9,082,500
Citigroup
Provider of investment
services and insurance 290,000 14,355,000
Fannie Mae
Provider of mortgage financing 215,000 15,910,000
Hartford Financial
Services Group
International insurance
supplier 250,000 13,718,750
Lincoln National
Provider of life insurance and
investment management
services 185,000 15,135,313
Mellon Bank
Provider of financial
services 150,000 10,312,500
Morgan (J.P.)
Provider of financial services 70,000 7,354,375
Washington Mutual
Provider of financial services 394,800 15,076,425
------------
157,839,863
------------
FOOD 3.5%
ConAgra
Producer and manufacturer
of prepared foods and
agricultural products 505,000 15,907,500
Sara Lee
Manufacturer of processed
foods and consumer products 540,000 15,221,250
------------
31,128,750
------------
MACHINERY AND
INDUSTRIAL EQUIPMENT 7.3%
GATX
Railcar leasing; equipment
financing 320,000 12,120,000
General Electric
Supplier of industrial
equipment and consumer
products 264,900 27,036,356
United Technologies
Manufacturer of elevators,
jet engines, flight systems,
and automotive parts 230,000 25,012,500
------------
64,168,856
------------
PAPER AND PACKAGING 2.4%
Fort James
Producer of paper and
related products for consumer
and industrial use 325,000 13,000,000
Mead
Manufacturer of paper,
lumber, and wood products 270,000 7,914,375
------------
20,914,375
------------
PRINTING AND
PUBLISHING 0.7%
Knight-Ridder Newspapers
Newspapers; business
information services 110,000 5,623,750
------------
- - ----------
See footnotes on page 10.
9
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
------------ ------------
RETAIL TRADE 1.5%
May Department Stores
Department store operator 215,000 $ 12,980,625
------------
TELECOMMUNICATIONS 9.8%
AT&T
Provider of telecommunications
services 165,000 12,416,250
Ameritech
Provider of telecommunications
services 440,000 27,885,000
GTE
Provider of telephone services,
systems, and equipment 445,000 30,009,688
SBC Communications
Provider of telephone services 305,000 16,355,625
------------
86,666,563
------------
TOBACCO 3.3%
Philip Morris
Manufacturer of tobacco
products, food, and beverages 550,000 29,425,000
------------
TRANSPORTATION 1.3%
Norfolk Southern
Railroad holding company 375,000 11,882,813
------------
SHARES OR
PRINCIPAL
AMOUNT VALUE
------------ ------------
MISCELLANEOUS/
DIVERSIFIED 1.5%
AlliedSignal
Producer of aerospace
and automotive materials 290,000 shs. $ 12,850,625
------------
TOTAL COMMON STOCKS
(Cost $603,779,933) 832,738,406
------------
SHORT-TERM
HOLDINGS 5.1%
Bank of Nova Scotia,
Grand Cayman,
Fixed Time Deposit,
43/4%, 1/4/1999 $22,267,000 22,267,000
Republic National Bank of
New York, Grand Cayman,
Fixed Time Deposit,
45/8%, 1/4/1999 22,268,000 22,268,000
------------
TOTAL SHORT-TERM
HOLDINGS
(Cost $44,535,000) 44,535,000
------------
TOTAL INVESTMENTS 99.6%
(Cost $648,314,933) 877,273,406
OTHER ASSETS
LESS LIABILITIES 0.4% 3,583,555
------------
NET ASSETS 100.0% $880,856,961
============
- - ----------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $603,779,933) ................................................... $832,738,406
Short-term holdings (cost $44,535,000) .............................................. 44,535,000 $ 877,273,406
------------
Cash ................................................................................................... 555,660
Receivable for Capital Stock sold ...................................................................... 3,551,188
Receivable for interest and dividends .................................................................. 1,594,596
Investment in, and expenses prepaid to, shareholder service agent ...................................... 176,011
Other .................................................................................................. 54,333
-------------
Total Assets ........................................................................................... 883,205,194
-------------
LIABILITIES:
Payable for Capital Stock repurchased .................................................................. 921,470
Accrued expenses, taxes, and other ..................................................................... 1,426,763
-------------
Total Liabilities ...................................................................................... 2,348,233
-------------
Net Assets ............................................................................................. $ 880,856,961
=============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.50 par value; 500,000,000 shares authorized;
55,866,036 shares outstanding):
Class A .............................................................................................. $ 24,094,902
Class B .............................................................................................. 1,116,138
Class D .............................................................................................. 2,721,978
Additional paid-in capital ............................................................................. 613,458,282
Distributions in excess of net investment income ....................................................... (177,833)
Undistributed net realized gain ........................................................................ 10,684,958
Net unrealized appreciation of investments ............................................................. 228,958,536
-------------
Net Assets ............................................................................................. $ 880,856,961
=============
NET ASSET VALUE PER SHARE:
Class A ($760,175,810 / 48,189,804 shares) ............................................................. $15.77
======
Class B ($35,073,233 / 2,232,277 shares) ............................................................... $15.71
======
Class D ($85,607,918 / 5,443,955 shares) ............................................................... $15.73
======
</TABLE>
- - ----------
See Notes to Financial Statements.
11
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................................................ $ 21,888,191
Interest ............................................................................. 2,549,508
-------------
Total Investment Income (net of foreign taxes withheld of $108,141) ................................... $ 24,437,699
EXPENSES:
Management fee ....................................................................... 5,594,520
Distribution and service fees ........................................................ 2,924,109
Shareholder account services ......................................................... 1,241,294
Custody and related services ......................................................... 175,589
Registration ......................................................................... 137,555
Shareholder reports and communications ............................................... 136,745
Auditing and legal fees .............................................................. 88,474
Directors' fees and expenses ......................................................... 21,901
Miscellaneous ........................................................................ 33,102
-------------
Total Expenses ........................................................................................ 10,353,289
-------------
Net Investment Income ................................................................................. 14,084,410
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments ..................................................... 105,122,144
Net realized loss from foreign currency transactions ................................. (1,638,670)
Net change in unrealized appreciation of investments ................................. 18,022,366
Net change in unrealized depreciation on translation of assets and
liabilities denominated in foreign currencies ...................................... 1,231,505
-------------
Net Gain on Investments and Foreign Currency Transactions ............................................. 122,737,345
-------------
Increase in Net Assets from Operations ................................................................ $ 136,821,755
=============
</TABLE>
- - ----------
See Notes to Financial Statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................................................. $ 14,084,410 $ 13,966,222
Net realized gain on investments ...................................................... 105,122,144 135,910,283
Net realized loss from foreign currency transactions .................................. (1,638,670) (1,513,242)
Net change in unrealized appreciation of investments .................................. 18,022,366 19,276,740
Net change in unrealized appreciation/depreciation on translation of
assets and liabilities denominated in foreign currencies ........................... 1,231,505 (2,113,562)
------------- -------------
Increase in Net Assets from Operations ................................................ 136,821,755 165,526,441
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ............................................................................ (13,006,242) (13,924,923)
Class B ............................................................................ (301,403) (164,161)
Class D ............................................................................ (851,270) (893,492)
Net realized gain on investments:
Class A ............................................................................ (111,760,141) (87,928,428)
Class B ............................................................................ (4,472,471) (1,905,117)
Class D ............................................................................ (12,434,658) (8,996,490)
------------- -------------
Decrease in Net Assets from Distributions ............................................. (142,826,185) (113,812,611)
------------- -------------
<CAPTION>
SHARES
------------------------------
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997
------------- -------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................................ 1,075,908 1,308,404 17,690,194 21,242,046
Class B ............................................ 664,577 626,437 10,829,016 10,275,506
Class D ............................................ 542,815 653,126 8,937,844 10,523,717
Investment of dividends:
Class A ............................................ 467,206 473,066 7,430,217 7,757,656
Class B ............................................ 17,828 9,277 279,506 152,545
Class D ............................................ 49,412 50,194 779,902 821,894
Exchanged from associated Funds:
Class A ............................................ 8,129,002 5,617,352 129,536,299 89,701,736
Class B ............................................ 486,767 213,033 7,903,883 3,448,926
Class D ............................................ 3,098,173 2,927,353 49,213,928 48,648,056
Shares issued in payment of gain
distributions:
Class A ............................................ 5,077,418 3,903,524 79,072,919 61,643,305
Class B ............................................ 271,666 114,620 4,204,415 1,797,496
Class D ............................................ 741,851 534,270 11,512,215 8,416,701
------------- ------------- ------------- -------------
Total ................................................. 20,622,623 16,430,656 327,390,338 264,429,584
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ............................................ (4,342,402) (3,842,001) (70,858,055) (62,421,380)
Class B ............................................ (212,770) (62,983) (3,418,774) (1,046,510)
Class D ............................................ (971,678) (800,763) (15,746,103) (12,923,435)
Exchanged into associated Funds:
Class A ............................................ (8,352,447) (5,397,178) (132,655,143) (86,520,445)
Class B ............................................ (227,709) (102,320) (3,672,827) (1,680,196)
Class D ............................................ (3,108,165) (2,573,135) (49,277,507) (43,101,112)
------------- ------------- ------------- -------------
Total ................................................. (17,215,171) (12,778,380) (275,628,409) (207,693,078)
------------- ------------- ------------- -------------
Increase in Net Assets from Capital
Share Transactions ................................. 3,407,452 3,652,276 51,761,929 56,736,506
============= ============= ------------- -------------
Increase in Net Assets ................................................................ 45,757,499 108,450,336
NET ASSETS:
Beginning of year ..................................................................... 835,099,462 726,649,126
------------- -------------
End of Year (including distributions in excess of net investment income and
undistributed net investment income of $(177,833) and $20,589, respectively) ....... $ 880,856,961 $ 835,099,462
============= =============
</TABLE>
- - ----------
See Notes to Financial Statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Multiple Classes of Shares -- Seligman Common Stock Fund, Inc. (the "Fund")
offers three classes of shares. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an annual
basis. Class A shares purchased in an amount of $1,000,000 or more are sold
without an initial sales charge but are subject to a contingent deferred sales
charge ("CDSC") of 1% on redemptions within 18 months of purchase. Class B
shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75%, a service fee of up to 0.25% on an annual basis, and
a CDSC, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of up
to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSC, if
applicable, of 1% imposed on redemptions made within one year of purchase. The
three classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other class
expenses, and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required.
2. Significant Accounting Policies -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. Security Valuation -- Investments in common stocks and convertible issues
are valued at current market values or, in their absence, at fair values
determined in accordance with procedures approved by the Board of
Directors. Securities traded on an exchange are valued at last sales prices
or, in their absence and in the case of over-the-counter securities, at the
mean of bid and asked prices. Short-term holdings maturing in 60 days or
less are valued at amortized cost.
b. Foreign Currency Transactions -- The books and records of the Fund are
maintained in USdollars. The market value of investment securities, other
assets and liabilities denominated in foreign currencies are translated
into US dollars at the daily rate of exchange as reported by a pricing
service. Purchases and sales of investment securities, income, and expenses
are translated into USdollars at the rate of exchange prevailing on the
respective dates of such transactions.
The Fund separates that portion of the results of operations resulting
from changes in the foreign exchange rates from the fluctuations arising
from changes in the market prices of securities held in the portfolio.
Similarly, the Fund separates the effect of changes in foreign exchange
rates from the fluctuations arising from changes in the market prices of
portfolio securities sold during the period.
c. Federal Taxes -- There is no provision for federal income tax. The Fund has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
d. Security Transactions and Related Investment Income -- Investment
transactions are recorded on trade dates. Identified cost of investments
sold is used for both financial statement and federal income tax purposes.
Dividends receivable and payable are recorded on ex-dividend dates, except
that certain dividends from foreign securities where the ex-dividend dates
may have passed are recorded as soon as the Fund is informed of the
dividend. Interest income is recorded on an accrual basis.
e. Multiple Class Allocations -- All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares based upon the relative value of
shares of each class. Class-specific expenses, which include distribution
and service fees and any other items that are specifically attributable to
a particular class, are charged directly to such class. For the year ended
December 31, 1998, distribution and service fees were the only
class-specific expenses.
f. Distributions to Shareholders -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
will have no effect on net assets, results of operations, or net asset
value per share of the Fund.
For the year ended December 31, 1998, the Fund redeemed 17,215,171 of its
shares from shareholders aggregating $275,628,409, of which approximately
$24,400,000 represents capital gain distributions. This information is
provided for federal income tax purposes only.
3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended December 31, 1998, amounted to $755,551,791 and $783,919,408,
respectively.
At December 31, 1998, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities amounted to $232,238,319 and $3,279,846, respectively.
4. Management Fee, Distribution Services, and Other Transactions -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides the necessary personnel and facilities. Compensation of all officers of
the Fund, all directors of the Fund who are employees or consultants of the
Manager, and all personnel of the Fund and the Manager is paid by the Manager.
The Manager receives a fee, calculated daily and payable monthly, equal to 0.65%
per annum of the first $1 billion of the Fund's average daily net assets, 0.60%
per annum of the next $1 billion of the Fund's average daily net assets, and
0.55% per annum of the Fund's average daily net assets in excess of $2 billion.
The management fee reflected in the Statement of Operations represents 0.65% per
annum of the Fund's average daily net assets.
Prior to March 31, 1998, Seligman Henderson Co., an entity owned 50% each
by the Manager and Henderson International, Inc., a subsidiary of Henderson plc,
supervised and directed all or a portion of the Fund's foreign investments. For
this service, the Manager paid Seligman Henderson Co. a monthly fee.
Seligman Advisors, Inc. (the "Distributor") (formerly Seligman Financial
Services, Inc.), agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $58,596 from sales of Class A
shares, after commissions of $449,760 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the year ended December 31,
1998, fees incurred under the Plan aggregated $1,818,756 or 0.24% per annum of
the average daily net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily net
assets of the Class B and Class D shares for which the organizations are
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to this fee to a third
party (the "Purchaser"), which provides funding to the Distributor to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares.
For the year ended December 31, 1998, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $276,947 and $828,406, respectively.
The Distributor is entitled to retain any CDSC imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the year ended
December 31, 1998, such charges amounted to $17,980.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC and the distribution fees with respect to Class B
shares described above, the Distributor receives payments
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
from the Purchaser based on the value of Class Bshares sold. The aggregate
amount of such payments retained by the Distributor, for the year ended December
31, 1998, amounted to $16,073.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of shares of the Fund, as well as
distribution and service fees pursuant to the Plan. For the year ended December
31, 1998, Seligman Services, Inc. received commissions of $25,939 from the sale
of shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $459,344, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $1,240,581 for shareholder
account services. The Fund's investment in Seligman Data Corp. is recorded at a
cost of $22,506.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Directors may elect to have the
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in directors' fees and
expenses, and the accumulated balance thereof at December 31, 1998, of $177,833
is included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
5. Committed Line of Credit -- Effective July 1, 1998, the Fund entered into a
joint $800 million committed line of credit that is shared by substantially all
funds in the Seligman Group of Investment Companies. The Fund's borrowings are
limited to 10% of its net assets. Borrowings pursuant to the credit facility are
subject to interest at a rate equal to the overnight federal funds rate plus
0.50%. The Fund incurs a commitment fee of 0.08% per annum on its share of the
unused portion of the credit facility. The credit facility may be drawn upon
only for temporary purposes and is subject to certain other customary
restrictions. The credit facility commitment expires one year from the date of
the agreement but is renewable with the consent of the participating banks. To
date, the Fund has not borrowed from the credit facility.
16
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five years or from its inception, if less than five
years. Certain information reflects financial results for a single share of a
Class that was held throughout the periods shown. Per share amounts are
calculated using average shares outstanding. "Total return" shows the rate that
you would have earned (or lost) on an investment in each Class, assuming you
reinvested all your dividends and capital gain distributions. Total returns do
not reflect any sales charges and are not annualized for periods of less than
one year.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year ........................... $15.92 $14.89 $14.19 $12.12 $13.47
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income ........................................ 0.28 0.30 0.35 0.36 0.38
Net realized and unrealized gain (loss)
on investments ............................................. 2.32 3.18 1.81 3.00 (0.64)
Net realized and unrealized gain (loss)
from foreign currency transactions ......................... -- (0.07) -- 0.01 --
--------- --------- --------- --------- ---------
Total from Investment Operations ............................. 2.60 3.41 2.16 3.37 (0.26)
--------- --------- --------- --------- ---------
Less Distributions:
Dividends from net investment income ......................... (0.28) (0.32) (0.34) (0.36) (0.37)
Distributions from net realized capital gains ................ (2.47) (2.06) (1.12) (0.94) (0.72)
--------- --------- --------- --------- ---------
Total Distributions .......................................... (2.75) (2.38) (1.46) (1.30) (1.09)
--------- --------- --------- --------- ---------
Net Asset Value, End of Year ................................. $15.77 $15.92 $14.89 $14.19 $12.12
========= ========= ========= ========= =========
TOTAL RETURN: 17.40% 23.58% 15.44% 28.17% (1.89)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) ....................... $760,176 $734,635 $656,260 $614,400 $510,956
Ratio of expenses to average net assets ...................... 1.11% 1.13% 1.15% 0.93% 0.85%
Ratio of net income to average net assets .................... 1.73% 1.83% 2.36% 2.56% 2.93%
Portfolio turnover rate ...................................... 93.67% 106.02% 56.10% 46.08% 57.17%
</TABLE>
- - ----------
See footnotes on page 18.
17
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-----------------------------------
YEAR ENDED
DECEMBER 31, 4/22/96*
---------------------- TO
1998 1997 12/31/96
--------- --------- ---------
<S> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period ........................ $15.88 $14.87 $14.80
--------- --------- ---------
Income from Investment Operations:
Net investment income ....................................... 0.16 0.17 0.15
Net realized and unrealized gain
on investments ............................................ 2.31 3.17 1.20
Net realized and unrealized gain (loss)
from foreign currency transactions ........................ -- (0.07) --
--------- --------- ---------
Total from Investment Operations ............................ 2.47 3.27 1.35
--------- --------- ---------
Less Distributions:
Dividends from net investment income ........................ (0.17) (0.20) (0.16)
Distributions from net realized capital gains ............... (2.47) (2.06) (1.12)
--------- --------- ---------
Total Distributions ......................................... (2.64) (2.26) (1.28)
--------- --------- ---------
Net Asset Value, End of Period .............................. $15.71 $15.88 $14.87
========= ========= =========
TOTAL RETURN: 16.48% 22.59% 9.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) .................... $35,073 $19,568 $6,451
Ratio of expenses to average net assets ..................... 1.87% 1.89% 1.92%+
Ratio of net income to average net assets ................... 0.97% 1.07% 1.55%+
Portfolio turnover rate ..................................... 93.67% 106.02% 56.10%++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year .......................... $15.89 $14.87 $14.16 $12.07 $13.46
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income ....................................... 0.16 0.17 0.24 0.24 0.22
Net realized and unrealized gain (loss)
on investments ............................................ 2.32 3.18 1.80 3.00 (0.66)
Net realized and unrealized gain (loss)
from foreign currency transactions ........................ -- (0.07) -- 0.01 --
--------- --------- --------- --------- ---------
Total from Investment Operations ............................ 2.48 3.28 2.04 3.25 (0.44)
--------- --------- --------- --------- ---------
Less Distributions:
Dividends from net investment income ........................ (0.17) (0.20) (0.21) (0.22) (0.23)
Distributions from net realized capital gains ............... (2.47) (2.06) (1.12) (0.94) (0.72)
--------- --------- --------- --------- ---------
Total Distributions ......................................... (2.64) (2.26) (1.33) (1.16) (0.95)
--------- --------- --------- --------- ---------
Net Asset Value, End of Year ................................ $15.73 $15.89 $14.87 $14.16 $12.07
========= ========= ========= ========= =========
TOTAL RETURN: 16.55% 22.66% 14.58% 27.17% (3.24)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) ...................... $85,608 $80,896 $63,938 $46,564 $14,416
Ratio of expenses to average net assets ..................... 1.87% 1.89% 1.91% 1.72% 1.96%
Ratio of net income to average net assets ................... 0.97% 1.07% 1.61% 1.80% 1.68%
Portfolio turnover rate 93.67% 106.02% 56.10% 46.08% 57.17%
</TABLE>
- - ----------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
See Notes to Financial Statements.
18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- - --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Common Stock Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Common Stock Fund, Inc. as of December
31, 1998, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the Fund's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Common
Stock Fund, Inc. as of December 31, 1998, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 29, 1999
- - --------------------------------------------------------------------------------
19
<PAGE>
FEDERAL TAX STATUS OF 1998 DIVIDEND AND
GAIN DISTRIBUTIONS FOR TAXABLE ACCOUNTS
- - --------------------------------------------------------------------------------
The quarterly dividends paid to Class A, B, and D shareholders in 1998 are
taxable as ordinary income for federal tax purposes, regardless of whether they
were received in cash or in shares. Under the Internal Revenue Code, 77.34% of
the dividends paid to Class A, B, and D shareholders has been designated as
qualifying for the dividends received deduction available to corporate
shareholders. In order to claim the dividends received deduction for these
distributions, corporate shareholders must have held the Fund's shares for at
least 46 days or more during the 90-day period beginning 45 days before each
ex-dividend date.
A distribution of $1.180 per share, from net long-term gain realized on
investments during the period November 1, 1997, to December 31, 1997, was paid
on June 24, 1998, to Class A, B, and D shareholders. On November 23, 1998, a
distribution of $1.288 per share from net long-term gain realized on investments
in 1998, was paid to Class A, B and D shareholders. In 1997, Congress revised
the capital gains provisions, so that depending on how long a security was owned
when it was sold, investors may have been faced with a 28% capital gains rate, a
20% rate, or both. In October 1998, Congress simplified the capital gains
provisions so that, generally, all gains on securities held more than one year
are to be taxed at a maximum 20% rate. The distributions from net long-term gain
are designated as "capital gain dividends" for federal income tax purposes and
are taxable to shareholders in 1998 as a long-term gain from the sale of capital
assets, no matter how long your shares have been owned or whether the
distribution was paid in additional shares or cash. However, if shares on which
a long-term capital gain distribution was received are subsequently sold, and
such shares were held for six months or less, any loss on the sale would be
treated as long-term to the extent it offsets the long-term capital gain
distribution.
If the gain distributions were paid in shares, the per share cost basis for
federal income tax purposes is $16.02 for Class A shares and $15.98 for Class B
and D shares for the June 24 distribution, and $15.19 for Class A shares, $15.12
for Class B shares, and $15.13 for Class D shares for the November 23
distribution.
A 1998 year-end statement of account activity and a 1998 tax package, which may
include a Form 1099-DIV, a Form 1099-B, and/or a Cost Basis Statement, have been
mailed to each shareholder. Form 1099-DIVshows the distributions paid to the
shareholder during the year. Form 1099-B shows the proceeds of any redemptions
paid to the shareholder during the year. Cost Basis Statements report all sales
or exchanges from a shareholder's account which may have resulted in a capital
gain or loss in 1998. The information shown on Forms 1099-DIV and 1099-Bis
reported to the Internal Revenue Service as required by federal regulations.
- - --------------------------------------------------------------------------------
20
<PAGE>
BOARD OF DIRECTORS
- - --------------------------------------------------------------------------------
John R. Galvin 2, 4
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
Alice S. Ilchman 3, 4
Trustee, Committee for Economic Development
Chairman, The Rockefeller Foundation
Frank A. McPherson 2, 4
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
John E. Merow 2, 4
Retired Chairman and Senior Partner,
Sullivan & Cromwell, Law Firm
Director, Commonwealth Industries, Inc.
Director, New York Presbyterian Hospital
Betsy S. Michel 2, 4
Trustee, The Geraldine R. Dodge Foundation
Chairman of the Board of Trustees, St. George's School
William C. Morris 1
Chairman
Chairman of the Board,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3, 4
Retired Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
James Q. Riordan 3, 4
Director, KeySpan Energy Corporation
Trustee, Committee for Economic Development
Director, Public Broadcasting Service
Richard R. Schmaltz 1
Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated
Trustee Emeritus, Colby College
Robert L. Shafer 3, 4
Retired Vice President, Pfizer Inc.
James N. Whitson 2, 4
Director and Consultant, Sammons Enterprises, Inc.
Director, C-SPAN
Director, CommScope, Inc.
Brian T. Zino 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Director, ICI Mutual Insurance Company
Director Emeritus
Fred E. Brown
Director and Consultant,
J. & W. Seligman &Co. Incorporated
- - ----------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
- - --------------------------------------------------------------------------------
21
<PAGE>
EXECUTIVE OFFICERS
- - --------------------------------------------------------------------------------
William C. Morris
Chairman
Brian T. Zino
President
Charles C. Smith, Jr.
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
FOR MORE INFORMATION
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
- - --------------------------------------------------------------------------------
22
<PAGE>
GLOSSARY OF FINANCIAL TERMS
Capital Gain Distribution -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
Capital Appreciation/Depreciation -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
Compounding -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
Contingent Deferred Sales Charge (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
Dividend -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
Dividend Yield -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
Expense Ratio -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
Investment Objective -- The shared investment goal of a fund and its
shareholders.
Management Fee -- The amount paid by a mutual fund to its investment advisor(s).
Multiple Classes of Shares -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
National Association of Securities Dealers, Inc. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
Net Asset Value (NAV) Per Share -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
Offering Price (OP) -- The price at which a mutual fund's share can be
purchased. The offering price per share is the current net asset value plus any
sales charge.
Portfolio Turnover -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
Prospectus -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC Yield -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
Securities and Exchange Commission -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
Statement of Additional Information -- A document that contains updated or more
detailed information about an investment company and that supplements the
prospectus. It is available at no charge upon request.
Total Return -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
Yield on Securities -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- - ----------
Adapted from the Investment Company Institute's 1998 Mutual Fund Fact Book.
23
<PAGE>
This report is intended only for the information of shareholders or those
who have received the offering prospectus covering shares of Capital Stock
of Seligman Common Stock Fund, Inc., which contains information about the
sales charges, management fee, and other costs. Please read the prospectus
carefully before investing or sending money.
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
EQCS2 12/98 [LOGO]Printed on Recycled Paper
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION
Item 23. Exhibits.
All Exhibits have been previously filed, except Exhibits marked with an
asterisk (*) which are filed herewith.
(a) Articles of Incorporation of Registrant. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 53 filed on April 28, 1997.)
(b) By-laws of the Corporation. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 53 filed on April 28, 1997.)
(c) Specimen Certificate of Class D Capital Stock. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 46 filed on April
23, 1993.)
(c)(1) Specimen Certificate of Class B Capital Stock. (Incorporated by
reference to Form SE, filed on behalf of the Registrant on April 16,
1996)
(d) Amended Management Agreement between Registrant and J. & W. Seligman &
Co. Incorporated. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 49 filed on May 1, 1995.)
(e) Copy of Amended Distributing Agreement between Registrant and Seligman
Advisors, Inc. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 53 filed on April 28, 1997.)
(e)(1) Copy of Amended Sales Agreement between Seligman Advisors, Inc. and
Dealers. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 52 filed on April 19, 1996.)
(e)(2) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co. (formerly, Dean Witter Reynolds, Inc.)
(Incorporated by reference to Registrant's Post-Effective Amendment No.
53 filed on April 28, 1997.)
(e)(3) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co. (formerly, Dean Witter Reynolds, Inc.) with
respect to certain Chilean institutional investors. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 53 filed on April
28, 1997.)
(e)(4) Form of Dealer Agreement between Seligman Advisors, Inc. and Smith
Barney Inc. (Incorporated by reference to Registrant's Post-Effective
Amendment No 53 filed on April 28, 1997.)
(f) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Exhibit 7 of Registration Statement No.
2-92487, of Registrant's Post-Effective Amendment No. 21 filed on
January 29, 1997.)
(f)(1) Deferred Compensation Plan for Directors of Seligman Capital Fund, Inc..
(Incorporated by reference to Registrant's Post-Effective Amendment No.
54 filed on April 29, 1998.)
(g) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 53 filed on April 28, 1997.)
(h) Not applicable.
C-1
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
(i) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 53 filed on April 28, 1997.)
(j) *Consent of Independent Auditors.
(k) Not applicable.
(l) Purchase Agreement (Investment Letter) for Initial Capital between
Registrant's Class B shares and J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
52 filed on April 19, 1996.)
(l)(1) Purchase Agreement (Investment Letter) for Initial Capital between
Registrant's Class D shares and J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
53 filed on April 28, 1997.)
(m) Form of Administration, Shareholder Services and Distribution Plan of
Registrant. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 52 filed on April 19, 1996.)
(m)(1) Form of Administration, Shareholder Services and Distribution Agreement
between Seligman Advisors, Inc. (formerly, Seligman Financial Services,
Inc.) and Dealers. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 52 filed on April 19, 1996.)
(n) *Financial Data Schedules.
(o) Copy of Multi-class Plan entered into by Registrant pursuant to Rule
18f-3 under the Investment Company Act of 1940. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 50 filed on
February 15, 1996.)
Other Exhibits: Power of Attorney for Richard R. Schmaltz. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 54 filed
on April 28, 1998.)
Powers of Attorney. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 53 filed on April 28, 1997.)
Item 24. Persons Controlled by or Under Common Control with Registrant.
Seligman Data Corp. ("SDC"), a New York Corporation, is owned by the
Registrant and certain associated investment companies. The
Registrant's investment in SDC is recorded at a cost of $2,199.
Item 25. Indemnification. Reference is made to the provisions of Articles
Twelfth and Thirteenth of Registrant's Amended and Restated Articles
of Incorporation filed as Exhibit 24(b)(1) and Article IV of
Registrant's Amended and Restated By-laws filed as Exhibit 24(b)(2) to
Registrant's Post-Effective Amendment No. 53 to the Registration
Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
C-2
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
Item 26. Business and Other Connections of Investment Adviser. J. & W. Seligman
& Co. Incorporated, a Delaware corporation, ("Manager"), is the
Registrant's investment manager. The Manager also serves as investment
manager to seventeen associated investment companies. They are
Seligman Cash Management Fund, Inc., Seligman Common Stock Fund, Inc.,
Seligman Communications and Information Fund, Inc., Seligman Frontier
Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund,
Inc., Seligman Municipal Fund Series, Inc., Seligman Municipal Series
Trust, Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Portfolios, Inc., Seligman Quality
Municipal Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman
Value Fund Series, Inc. and Tri-Continental Corporation.
The Manager has an investment advisory service division which provides
investment management or advice to private clients. The list required
by this Item 28 of officers and directors of the Manager, together
with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by the Manager, pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-15798), which was
filed on March 31, 1999.
Item 27. Principal Underwriters
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter is currently distributing
securities of the Registrant and also acts as a principal underwriter,
depositor or investment adviser are as follows:
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman Municipal Fund Series, Inc.
Seligman Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
Seligman Value Fund Series, Inc.
C-3
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 20:
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 1999
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------- ----------------------- ----------------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and Chief
Executive Officer
Brian T. Zino* Director President and Director
Ronald T. Schroeder* Director None
Fred E. Brown* Director Director Emeritus
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
Stephen J. Hodgdon* President and Director None
Charles W. Kadlec* Chief Investment Strategist None
Lawrence P. Vogel* Senior Vice President, Finance Vice President
Edward F. Lynch* Senior Vice President, National None
Sales Director
James R. Besher Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
Gerald I. Cetrulo, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
Matthew A. Digan* Senior Vice President, Director of None
Domestic Funds
Jonathan G. Evans Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
Robert T. Hausler* Senior Vice President, International None
Funds
T. Wayne Knowles Senior Vice President, None
104 Morninghills Court Division Sales Director
Cary, NC 27511
Joseph Lam Senior Vice President, Regional None
Seligman International Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
Michelle L. McCann-Rappa* Senior Vice President, Director of None
Retirement Plans
Scott H. Novak* Senior Vice President, Insurance None
Richard M. Potocki Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
</TABLE>
C-4
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 1999
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------- ----------------------- ----------------------
<S> <C> <C>
Bruce M. Tuckey Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
Andrew S. Veasey Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
Charles L. von Breitenbach, II* Senior Vice President, None
Managed Money
J. Brereton Young* Senior Vice President, Director None
of Sales Development
Peter J. Campagna Vice President, Regional Retirement None
1130 Green Meadow Court Plans Manager
Acworth, GA 30102
Jeffrey S. Dean* Vice President, Business Analysis None
Mason S. Flinn Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
William W. Johnson* Vice President, Order Desk None
Joan M. O'Connell Vice President, Regional Retirement None
3707 Fifth Avenue #136 Plans Manager
San Diego, CA 92103
Ronald W. Pond* Vice President, Portfolio Advisor None
Jeffery C. Pleet* Vice President, Regional Retirement None
Plans Manager
Tracy A. Salomon* Vice President, Retirement Marketing None
Helen Simon* Vice President, Sales Administration None
Gary A. Terpening* Vice President, Director of Business None
Development
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Jeff Botwinick Regional Vice President None
11508 Foster Road
Overland Park, KS 66210
Kevin Casey Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
</TABLE>
C-5
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 1999
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------- ----------------------- ----------------------
<S> <C> <C>
Bradford C. Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Christopher J. Derry Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
Kenneth Dougherty Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
Kelli A. Wirth Dumser Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
Edward S. Finocchiaro Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
Michael C. Forgea Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
Carla A. Goehring Regional Vice President None
11426 Long Pine
Houston, TX 77077
Cathy Des Jardins Regional Vice President None
2601 South Lemay, #7-103
Fort Collins, CO 80525
Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
Tim O'Connell Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
George M. Palmer, Jr. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
Thomas Parnell Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
</TABLE>
C-6
<PAGE>
File No. 2-33566
811-1886
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 1999
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------- ----------------------- ----------------------
<S> <C> <C>
Nicholas Roberts Regional Vice President None
200 Broad Street, Apt. 2225
Stamford, CT 06901
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
Eugene P. Sullivan Regional Vice President None
8 Charles Street, Apt. 603
Baltimore, MD 21201
James Taylor Regional Vice President None
1145 Kenilworth Circle
Naperville, IL 60540
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
Gail S. Cushing* Assistant Vice President, National None
Accounts Manager
Sandra G. Floris* Assistant Vice President, Order Desk None
Keith Landry* Assistant Vice President, Order Desk None
Albert A. Pisano* Assistant Vice President and None
Compliance Officer
Joyce Peress* Assistant Secretary Assistant Secretary
</TABLE>
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.
Item 28. Location of Accounts and Records.
Custodian: Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105 and
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Item 29. Management Services. Not applicable.
Item 30. Undertakings. The Registrant undertakes: (1) to furnish a copy of the
Registrant's latest annual report, upon request and without charge, to
every person to whom a prospectus is delivered and (2) if requested to
do so by the holders of at least 10% of its outstanding shares, to
call a meeting of shareholders for the purpose of voting upon the
removal of a director or directors and to assist in communications
with other shareholders as required by Section 16(c) of the Investment
Company Act of 1940, as amended.
C-7
<PAGE>
File No. 2-33566
811-1886
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 56 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 28th day of April, 1999.
SELIGMAN CAPITAL FUND, INC.
By: /s/ William C. Morris
---------------------------
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940 this Post-Effective Amendment No. 56 has been
signed below by the following persons in the capacities indicated on April
28, 1999.
Signature Title
/s/ Brian T. Zino Chairman of the Board
- - --------------------------- (Principal executive officer)
William C. Morris* and Director
/s/ Brian T. Zino Director and President
- - ---------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- - ---------------------------
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director ) /s/ Brian T. Zino
Betsy S. Michel, Director ) -----------------------------------
James C. Pitney, Director ) *Brian T. Zino, Attorney-in-fact
James Q. Riordan, Director )
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
File No. 2-33566
811-1886
SELIGMAN CAPITAL FUND, INC.
Post-Effective Amendment No. 56 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
- - ------------------ -----------
Item 23 (j) Consent of Independent Auditors
Item 23 (n) Financial Data Schedule
CONSENT OF INDEPENDENT AUDITORS
Seligman Capital Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 56 to Registration
Statement No. 2-33566 of our report dated January 29, 1999, appearing in the
Annual Report to Shareholders for the year ended December 31, 1998, which is
incorporated by reference in the Statement of Additional Information, which is
included in such Registration Statement, and to the references to us under the
captions "Financial Highlights" in the Prospectus and "General Information" in
the Statement of Additional Information, which are also included in such
Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 26, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> SELIGMAN CAPITAL FUND, INC. CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 232283
<INVESTMENTS-AT-VALUE> 346813
<RECEIVABLES> 10858
<ASSETS-OTHER> 415
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 358086
<PAYABLE-FOR-SECURITIES> 15836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1674
<TOTAL-LIABILITIES> 17510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 219490
<SHARES-COMMON-STOCK> 14875<F1>
<SHARES-COMMON-PRIOR> 16262<F1>
<ACCUMULATED-NII-CURRENT> (101)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6657
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 114530
<NET-ASSETS> 298319<F1>
<DIVIDEND-INCOME> 1253<F1>
<INTEREST-INCOME> 844<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2767)<F1>
<NET-INVESTMENT-INCOME> (670)<F1>
<REALIZED-GAINS-CURRENT> 33499
<APPREC-INCREASE-CURRENT> 26383
<NET-CHANGE-FROM-OPS> 58863
<EQUALIZATION> (26885)
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> (10025)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18162<F1>
<NUMBER-OF-SHARES-REDEEMED> (20062)<F1>
<SHARES-REINVESTED> 513<F1>
<NET-CHANGE-IN-ASSETS> 21837
<ACCUMULATED-NII-PRIOR> (107)
<ACCUMULATED-GAINS-PRIOR> 11494
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1337<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2767)<F1>
<AVERAGE-NET-ASSETS> 279500<F1>
<PER-SHARE-NAV-BEGIN> 17.48<F1>
<PER-SHARE-NII> (0.04)<F1>
<PER-SHARE-GAIN-APPREC> 3.30<F1>
<PER-SHARE-DIVIDEND> 0<F1>
<PER-SHARE-DISTRIBUTIONS> (0.68)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 20.06<F1>
<EXPENSE-RATIO> .99<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> SELIGMAN CAPITAL FUND, INC. CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 232283
<INVESTMENTS-AT-VALUE> 346813
<RECEIVABLES> 10858
<ASSETS-OTHER> 415
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 358086
<PAYABLE-FOR-SECURITIES> 15836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1674
<TOTAL-LIABILITIES> 17510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 219490
<SHARES-COMMON-STOCK> 804<F1>
<SHARES-COMMON-PRIOR> 519<F1>
<ACCUMULATED-NII-CURRENT> (101)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6657
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 114530
<NET-ASSETS> 14824<F1>
<DIVIDEND-INCOME> 46<F1>
<INTEREST-INCOME> 32<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (182)<F1>
<NET-INVESTMENT-INCOME> (104)<F1>
<REALIZED-GAINS-CURRENT> 33499
<APPREC-INCREASE-CURRENT> 26383
<NET-CHANGE-FROM-OPS> 58863
<EQUALIZATION> (26885)
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> (489)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1084<F1>
<NUMBER-OF-SHARES-REDEEMED> (826)<F1>
<SHARES-REINVESTED> 27<F1>
<NET-CHANGE-IN-ASSETS> 21837
<ACCUMULATED-NII-PRIOR> (107)
<ACCUMULATED-GAINS-PRIOR> 11494
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 117<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (182)<F1>
<AVERAGE-NET-ASSETS> 10464<F1>
<PER-SHARE-NAV-BEGIN> 16.24<F1>
<PER-SHARE-NII> (0.17)<F1>
<PER-SHARE-GAIN-APPREC> 3.05<F1>
<PER-SHARE-DIVIDEND> 0<F1>
<PER-SHARE-DISTRIBUTIONS> (0.68)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 18.44<F1>
<EXPENSE-RATIO> 1.75<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B only. All other data are fund level.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> SELIGMAN CAPITAL FUND, INC. CLASS D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 232283
<INVESTMENTS-AT-VALUE> 346813
<RECEIVABLES> 10858
<ASSETS-OTHER> 415
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 358086
<PAYABLE-FOR-SECURITIES> 15836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1674
<TOTAL-LIABILITIES> 17510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 219490
<SHARES-COMMON-STOCK> 1487<F1>
<SHARES-COMMON-PRIOR> 1606<F1>
<ACCUMULATED-NII-CURRENT> (101)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6657
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 114530
<NET-ASSETS> 27433<F1>
<DIVIDEND-INCOME> 110<F1>
<INTEREST-INCOME> 74<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (429)<F1>
<NET-INVESTMENT-INCOME> (245)<F1>
<REALIZED-GAINS-CURRENT> 33499
<APPREC-INCREASE-CURRENT> 26383
<NET-CHANGE-FROM-OPS> 58863
<EQUALIZATION> (26885)
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> (937)<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 520<F1>
<NUMBER-OF-SHARES-REDEEMED> (693)<F1>
<SHARES-REINVESTED> 54<F1>
<NET-CHANGE-IN-ASSETS> 21837
<ACCUMULATED-NII-PRIOR> (107)
<ACCUMULATED-GAINS-PRIOR> 11494
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 50<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (429)<F1>
<AVERAGE-NET-ASSETS> 24587<F1>
<PER-SHARE-NAV-BEGIN> 16.25<F1>
<PER-SHARE-NII> (0.17)<F1>
<PER-SHARE-GAIN-APPREC> 3.05<F1>
<PER-SHARE-DIVIDEND> 0<F1>
<PER-SHARE-DISTRIBUTIONS> (0.68)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 18.45<F1>
<EXPENSE-RATIO> 1.75<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
