<PAGE> 1
FILE NO. 2-33566
811-1886
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. |_|
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POST-EFFECTIVE AMENDMENT NO. 57 |X|
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 32 |X|
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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):
<TABLE>
<S> <C>
|_| IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) |_|ON (DATE) PURSUANT TO PARAGRAPH (a)(1)
-------
|X| ON MAY 28, 1999 PURSUANT TO PARAGRAPH (b) |_| 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2)
-------
|_| 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) |_| ON (DATE) PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
--------
</TABLE>
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
|_| THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
<PAGE> 2
SELIGMAN
CAPITAL
FUND, INC.
[CLOCK GRAPHIC]
PROSPECTUS
JUNE 1, 1999
Seeking Capital
Appreciation
by Investing in
Mid-Capitalization
Growth Stocks
managed by
[J. & W. SELIGMAN & CO. LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in the Fund should be
considered based on the investment objective, strategies and risks described
herein, considered in light of all of the other investments in your portfolio,
as well as your risk tolerance, financial goals and time horizons. We recommend
that you consult your financial advisor to determine if this Fund is suitable
for you.
EQCA1 6/99
<PAGE> 3
Table of Contents
THE FUND
Investment Objective/Principal Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Management 5
Year 2000 6
SHAREHOLDER INFORMATION
Deciding Which Class of Shares to Buy 7
Pricing of Fund Shares 9
Opening Your Account 9
How to Buy Additional Shares 10
How to Exchange Shares Among
the Seligman Mutual Funds 11
How to Sell Shares 11
Important Policies That May Affect
Your Account 12
Dividends and Capital Gain Distributions 13
Taxes 13
The Seligman Mutual Funds 14
FINANCIAL HIGHLIGHTS 15
HOW TO CONTACT US 17
FOR MORE INFORMATION back cover
T I M E S C H A N G E ... V A L U E S E N D U R E
[CLOCK GRAPHIC IN BACKGROUND]
<PAGE> 4
[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
<PAGE> 5
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 by the investment manager 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
<PAGE> 6
PAST PERFORMANCE
The Fund offers four Classes of shares. The information below provides some
indication of the risks of investing in the Fund by showing how the performance
of Class A shares has varied year to year, as well as how the performance of
each Class (except Class C) 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
<PAGE> 7
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 C Class D
---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) on Purchases
(as a % of offering price).......................... 4.75%(1) none 1% none
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
on Redemptions (as a % of original purchase price or
current net asset value, whichever is less)......... none(1) 5% 1% 1%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES FOR 1998
---------------------------------------
<S> <C> <C> <C> <C>
(as a percentage of average net assets)
Management Fees....................................... .48% .48% .48% .48%
Distribution and/or Service (12b-1) Fees.............. .24% 1.00% 1.00% 1.00%
Other Expenses........................................ .27% .27% .27% .27%
----- ----- ----- -----
Total Annual Fund Operating Expenses.................. .99% 1.75% 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 C 376 646 1,039 2,142
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 C 276 646 1,039 2,142
Class D 178 551 949 2,062
</TABLE>
+ Class B shares will automatically convert to Class A shares after eight years.
4
<PAGE> 8
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 $21.5 billion in assets as of April 30, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at April 30, 1999, of approximately $10.2 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
<PAGE> 9
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
<PAGE> 10
SHAREHOLDER INFORMATION
DECIDING WHICH CLASS OF SHARES TO BUY
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule, and its
ongoing 12b-1 fees may differ from other Classes. When deciding which Class of
shares to buy, you should consider, among other things:
- 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
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
</TABLE>
Your purchase of Class B shares
must be for less than $250,000, because
if you invest $250,000 or more, you
will pay less in fees and charges if you buy
another Class of shares.
- 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 when you sell shares purchased with reinvested dividends or capital
gain distributions.
7
<PAGE> 11
CLASS C
- Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
SALES CHARGE AS A % REGULAR DEALER
SALES CHARGE AS A % OF NET DISCOUNT AS A % OF
AMOUNT OF YOUR INVESTMENT OF OFFERING PRICE(1) AMOUNT INVESTED OFFERING PRICE
- ------------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund
shares; it includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000
because if you invest $1,000,000 or more you will pay less in fees
and charges if you buy Class A shares.
- A 1% CDSC on shares sold within eighteen months 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 when you sell shares purchased with reinvested dividends or capital
gain distributions.
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 when you sell shares purchased with reinvested dividends or capital
gain distributions.
* Class D shares are not available to all investors. Beginning June 1,
1999, you may purchase Class D shares only if (1) you already own Class D
shares of the Fund or another Seligman mutual fund, (2) if your financial
advisor of record maintains an omnibus account at SDC, or (3) pursuant to
a 401(k) or other retirement plan program for which Class D shares are
already available or for which the sponsor requests Class D shares
because the sales charge structure of Class D is comparable to the sales
charge structure of the other funds offered under the program.
Because the Fund's 12b-1 fees are paid out of each Class's assets on an ongoing
basis, over time these fees will increase your investment expenses and may cost
you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, Class C, and Class D shares. On an
ongoing basis, the Directors, in the exercise of their fiduciary duties under
the Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
HOW CDSCS ARE CALCULATED
To minimize the amount of the CDSC you may pay when you sell your shares, the
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of the Fund, it will be assumed that you held the shares since the date you
purchased the shares of the Fund.
8
<PAGE> 12
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A shares and Class C
shares. Purchase or sale orders received by an authorized dealer or financial
advisor by the close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) and accepted by Seligman Advisors before the
close of business (5:00 p.m. Eastern time) on the same day will be executed at
the Class's NAV calculated as of the close of regular trading on the NYSE on
that day. Your broker/dealer or financial advisor is responsible for forwarding
your order to Seligman Advisors before the close of business.
If your buy or sell order is received by your
broker/dealer or financial advisor after the close of
regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be
executed at the Class's NAV calculated as of the close
of regular trading on the next NYSE trading day. When
you sell shares, you receive the Class's per share NAV,
less any applicable CDSC.
The NAV of the Fund's shares is determined each day,
Monday through Friday, on days that the NYSE is open for
trading. Because of their higher 12b-1 fees, the NAV of
Class B, Class C and Class D shares will generally be
lower than the NAV of Class A shares of the Fund.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
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.
OPENING YOUR ACCOUNT
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more information,
see "Deciding Which Class of Shares to Buy -- Class D."
To make your initial investment in the Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.
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.
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
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
<PAGE> 13
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 or Class C shares,
you may pay an initial sales charge to buy Fund shares.
AUTOMATIC CD TRANSFER. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit(CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
DIVIDENDS FROM OTHER INVESTMENTS. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
DIRECT DEPOSIT. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
SELIGMAN TIME HORIZON MATRIX(SM). (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
SELIGMAN HARVESTER. 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
<PAGE> 14
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares or
Class C shares of Seligman Cash Management Fund to buy shares of the same Class
of the Fund or another Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
minimum initial investment.
See "The Seligman Mutual Funds" for a list of the funds available for exchange.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all classes of shares.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/ dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares; however, it may take
longer to get your money.
As an additional measure to protect you and the Fund, SDC may confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending you your money.
This will not affect the date on which your redemption request is actually
processed.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than 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, Class C, or Class D
shares and reinvest your dividends and capital gain distributions, you may
withdraw 12%, 10%, or 10%, respectively, of the value of your Fund account (at
the time of election) annually without a CDSC.
11
<PAGE> 15
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
<PAGE> 16
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, Class C, and Class D shares will be lower than the
dividends on Class A shares as a result of their higher 12b-1 fees. Capital
gain distributions will be paid in the same amount for each Class.
TAXES
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
13
<PAGE> 17
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
<PAGE> 18
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. Class C is a new Class, effective June 1,
1999, so financial highlights are not available. 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
<PAGE> 19
CLASS B
<TABLE>
<CAPTION>
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..... $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
<PAGE> 20
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> 21
For More Information
The following information is available without charge upon request: Call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US.
STATEMENT OF ADDITIONAL INFORMATION (SAI) contains additional information about
the Fund. It is on file with the Securities and Exchange Commission (SEC) and
is incorporated by reference into (is legally part of) this prospectus.
ANNUAL/SEMI-ANNUAL REPORTS contain additional information about the Fund's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
SELIGMAN ADVISORS, INC.
an affiliate of
[J. & W. SELIGMAN & CO. LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (800) SEC-0330. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing: Public Reference Section of the SEC, Washington, DC 20549-6009.
SEC FILE NUMBER: 811-1886
<PAGE> 22
SELIGMAN CAPITAL FUND, INC.
Statement of Additional Information
June 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 June 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
<TABLE>
<S> <C>
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................... 17
Capital Stock and Other Securities ........................ 18
Purchase, Redemption, and Pricing of Shares................ 18
Taxation of the Fund....................................... 23
Underwriters............................................... 25
Calculation of Performance Data ........................... 26
Financial Statements....................................... 28
General Information........................................ 28
Appendix .................................................. 29
</TABLE>
<PAGE> 23
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> 24
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 income or receive an agreed
upon amount of interest income from the borrower. Loans made by the
3
<PAGE> 25
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;
- - Purchase or sell commodities and commodity contracts;
4
<PAGE> 26
- - 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> 27
<TABLE>
<CAPTION>
Name, Position(s) Held Principal
(Age) and With Fund Occupation(s) During
Address --------- 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; and Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy company.
Formerly, Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
Brian T. Zino* 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; 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, life insurance; Ambassador, U.S.
State Department for negotiations in Bosnia;
Distinguished Policy Analyst at Ohio State University
and Olin Distinguished Professor of National Security
Studies at the United States Military Academy. From
June 1987 to June 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United
States European Command.
</TABLE>
6
<PAGE> 28
<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> 29
<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 Service Enterprise Group, public utility.
07962
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> 30
<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.
9
<PAGE> 31
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Control Persons
As of May 14, 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 May 14, 1999, _____% 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
_____% 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 May 14, 1999, Directors and officers of the Fund as a group owned directly
or indirectly ____________ Class A shares or _________% 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.
10
<PAGE> 32
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
11
<PAGE> 33
Code of Ethics proscribes certain practices with regard to personal securities
transactions and personal dealings, provides a framework for the reporting and
monitoring of personal securities transactions by Seligman's Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, directors and employees (including all portfolio managers) of
Seligman from purchasing or selling any security that the officer, director, or
employee knows or believes (1) was recommended by Seligman for purchase or sale
by any client, including the Fund, within the preceding two weeks, (2) has been
reviewed by Seligman for possible purchase or sale within the preceding two
weeks, (3) is being purchased or sold by any client, (4) is being considered by
a research analyst, (5) is being acquired in a private placement, unless prior
approval has been obtained from Seligman's Compliance Officer, or (6) is being
acquired during an initial or secondary public offering. The Code of Ethics also
imposes a strict standard of confidentiality and requires portfolio managers to
disclose any interest they may have in the securities or issuers that they
recommend for purchase by any client.
The Code of Ethics also prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages; and (2) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors, and employees are required, except under very limited
circumstances, to engage in personal securities transactions through Seligman's
order desk. The order desk maintains a list of securities that may not be
purchased due to a possible conflict with clients. All officers, directors and
employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
Principal Underwriter
Seligman Advisors, Inc. (Seligman Advisors), an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
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> 34
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of the Fund, as set forth below:
Class A shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
As a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $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.
Class C shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
As a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(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) Your purchase of Class C shares must be for less than $1,000,000 because if
you invest $1,000,000 or more, you will pay less in fees and charges if you
buy Class A shares.
Seligman Services, Inc. (Seligman Services), an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares. For 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, Class C, 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
13
<PAGE> 35
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.
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 Class B shares (i) a 4%
sales commission to Service Organizations and (ii) a payment of up to .25% of
sales to Seligman Advisors to help defray its costs of distributing Class B
shares; and (2) a service fee of up to .25% per annum which is paid to Seligman
Advisors. The service fee is used by Seligman Advisors exclusively to make
payments to Service Organizations which have entered into agreements with
Seligman Advisors. Such Service Organizations receive from Seligman Advisors a
continuing service fee of up to .25% on an annual basis, payable quarterly, of
the average daily net assets of Class B shares 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.
14
<PAGE> 36
Class C
Under the 12b-1 Plan, the Fund, with respect to Class C shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class C shares. The fee is used by Seligman Advisors as
follows: During the first year following the sale of Class C shares, a
distribution fee of .75% of the average daily net assets attributable to Class C
shares is used, along with any CDSC proceeds during the first eighteen months,
to (1) reimburse Seligman Advisors for its payment at the time of sale of Class
C shares of a 1.25% sales commission to Service Organizations, and (2) pay for
other distribution expenses, including paying for the preparation of advertising
and sales literature and the printing and distribution of such promotional
materials and prospectuses to prospective investors and other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class C shares, a service fee of up to .25% of the average daily net assets
attributable to such Class C shares is used to reimburse Seligman Advisors for
its prepayment to Service Organizations at the time of sale of Class C shares of
a service fee of .25% of the net asset value of the Class C share sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale). The payment of service fees to
Seligman Advisors is limited to amounts Seligman Advisors actually paid to
Service Organizations at the time of sale as service fees. After the initial
one-year period following a sale of Class C shares, the entire 12b-1 fee
attributable to such Class C shares is paid to Service Organizations for
providing continuing shareholder services and distribution assistance in respect
of the Fund. The Fund did not pay any 12b-1 fees in respect of Class C shares
for the fiscal year ended September 30, 1998 because no Class C shares were
issued or outstanding during such period.
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 reimburse Seligman Advisors for its prepayment
to Service Organizations at the time of sale of Class D shares of a service fee
of .25% of the net asset value of the Class D shares sold (for shareholder
services to be provided to Class D shareholders over the course of the one year
immediately following the sale). The payment of service fees to Seligman
Advisors is limited to amounts Seligman Advisors actually paid to Service
Organizations at the time of sale as service fees. After the initial one-year
period following a sale of Class D shares, 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 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.
15
<PAGE> 37
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 (no Class
C shares were outstanding during such fiscal year):
<TABLE>
<CAPTION>
Class A Class B Class D
------- ------- -------
<S> <C> <C> <C>
Compensation to underwriters -- -- $ 37,051
Compensation to broker/dealers $680,364 $26,175 $208,622
Other* -- $78,460 --
</TABLE>
* Payment is made to FEP Capital, L.P. to compensate it for having funded at
the time of sale, payments to broker/dealers and underwriters.
The 12b-1 Plan 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 was
approved in respect of the Class C shares on May 20, 1999 by the Directors,
including a majority of the Qualified Directors, and became effective in respect
of the Class C shares on June 1, 1999. 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 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.
16
<PAGE> 38
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.
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.
17
<PAGE> 39
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, Class C common stock, and Class D common stock. Each share
of the Fund's Class A, Class B, Class C, 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 under
"Persons Entitled to Reductions") 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. 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
18
<PAGE> 40
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.
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;
19
<PAGE> 41
(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) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and
(11) in connection with sales pursuant to a 401(k) alliance program which has an
agreement with Seligman Advisors.
CDSC APPLICABLE TO CLASS A SHARES. Class A shares purchased without an initial
sales charge due to a purchase of $1,000,000 or more either alone or through a
Volume Discount, Right of Accumulation, or Letter of Intent are subject to a
CDSC of 1% on redemptions of such shares within eighteen months of purchase.
Employee benefit plans eligible for net asset value sales may be subject to a
CDSC of 1% for terminations at the plan level only, on redemptions of shares
purchased within eighteen months prior to plan termination. The 1% CDSC will be
waived on shares 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.
<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 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%
</TABLE>
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.
20
<PAGE> 42
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 C
Class C shares may be purchased at a price equal to the next determined net
asset value, plus an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less.
Class D
Class D shares 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, Class C, 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%,
10% and 10%, respectively, of the value of their accounts per year without the
imposition of a CDSC. Account value is determined as of the date the systematic
withdrawals begin.
CDSC WAIVERS. The CDSC on Class B, Class C, and Class D shares (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 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.
21
<PAGE> 43
If, with respect to a redemption of any Class A, Class B, Class C 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 and Class C 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 and Class C
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, Class C and Class D shares will generally be lower than the NAV
of Class A shares as a result of the higher 12b-1 fees with respect to such
shares.
Portfolio securities 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 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
22
<PAGE> 44
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 and Class C shares are sold with a maximum initial
sales charge of 4.75% and 1.00%(1), respectively, and Class B and Class D shares
are sold at NAV(2). Using each Class's NAV at December 31, 1998, (except Class C
shares, which commences operations effective June 1, 1999) the maximum offering
price of the Fund's shares is as follows:
<TABLE>
<S> <C>
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(2) .............. $18.44
======
Class D
Net asset value and offering price per share(2) .............. $18.45
------
</TABLE>
- ----------
(1) In addition to the front-end sales charge of 1.00%, Class C shares are
subject to a 1% CDSC if you redeem your shares within eighteen months of
purchase.
(2) Class B shares are subject to a CDSC declining from 5% in the first year
after purchase to 0% after six years. Class D shares are also subject to a
1% CDSC if you redeem your shares within one year of purchase.
Redemption in Kind
The procedures for selling Fund shares under ordinary circumstances are set
forth in the Prospectus. In unusual circumstances, payment may be postponed, or
the right of redemption postponed for more than seven days, if the orderly
liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the NYSE during periods of emergency, or such other
periods as ordered by the Securities and Exchange Commission. Under these
circumstances, redemption proceeds may be made in securities. If payment is made
in securities, a shareholder may incur brokerage expenses in converting these
securities to cash.
TAXATION OF THE 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.
23
<PAGE> 45
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.
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
24
<PAGE> 46
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. No Class C shares of the Fund
were issued or outstanding during such fiscal years.
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
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
25
<PAGE> 47
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 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%.
Class C shares are a new class, effective June 1, 1999, so no performance data
is presented.
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.
26
<PAGE> 48
TABLE A - CLASS A
<TABLE>
<CAPTION>
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%
</TABLE>
TABLE B - CLASS B
<TABLE>
<CAPTION>
Value of Value of Total Value
Period 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%
</TABLE>
TABLE C - CLASS D
<TABLE>
<CAPTION>
Value of Value of Total Value
Period 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 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.
27
<PAGE> 49
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, Class C, 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.
28
<PAGE> 50
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
- - Helps finance America's fledgling railroads through underwritings.
- - 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.
- - Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
- - Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
- - Is appointed U.S. Navy fiscal agent by President Grant.
- - Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
- - Helps Congress finance the building of the Panama Canal.
...1910s
- - Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
- - 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.
- - 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
- - Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
- - Establishes Investment Advisory Service.
29
<PAGE> 51
...1940s
- - Helps shape the Investment Company Act of 1940.
- - 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.
- - Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
- - Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
- - 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.
- - Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
- - Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
- - Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
- - In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global investment products.
- - Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
- - 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. - Launches Seligman Value
Fund Series, Inc., which currently offers two separate series: Seligman
Large-Cap Value Fund and Seligman Small-Cap Value Fund.
30
<PAGE> 52
S E L I G M A N
- ---------------------- [GRAPHIC]
CAPITAL
FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1998
-----------------
SEEKING CAPITAL
APPRECIATION BY
INVESTING IN
MID-CAPITALIZATION
GROWTH STOCKS
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE> 53
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.
[GRAPHIC]
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>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
To the Shareholders .................... 1 Notes to Financial Statements .................. 14
Interview With Your Portfolio Manager .. 2 Financial Highlights ........................... 17
Performance Overview ................... 4 Report of Independent Auditors ................. 19
Portfolio Overview ..................... 6 Federal Tax Status of 1998 Gain Distribution
Portfolio of Investments ............... 8 for Taxable Accounts ......................... 20
Statement of Assets and Liabilities .... 11 Board of Directors ............................. 21
Statement of Operations ................ 12 Executive Officers AND For More Information .... 22
Statements of Changes in Net Assets .... 13 Glossary of Financial Terms .................... 23
</TABLE>
<PAGE> 54
TO THE SHAREHOLDERS
Seligman Capital Fund had strong performance for 1998, posting a total return of
19.12% based on the net asset value of Class A shares. This return outpaced the
11.37% total return of the Fund's peers, as measured by the Lipper Mid Cap Funds
Average, and the 17.86% total return of the Russell Midcap Growth Index, which
measures the performance of medium-sized growth stocks. A discussion with your
Portfolio Manager regarding the Fund's results begins on page 2.
The past year was one of continued growth for the US economy, with real domestic
growth of 3.9%, marking the eighth year of economic expansion. A widely watched
market measure, the Standard & Poor's 500 Composite Stock Price Index (S&P 500),
rose 28.58% in 1998, 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.
In 1998, exceptional performance from an extremely narrow list of stocks masked
the true investment results in the broad market. 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 disparity was almost unprecedented. For example, while
the large-cap S&P 500 rose 28.58%, the Russell 2000 Index, which measures
small-cap stocks, declined 2.55%. Mid-cap stocks had a mixed year, far outpacing
the returns of small-cap stocks, but lagging the extraordinary results of large
caps.
The markets' 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 a 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 Capital Fund in 1998. We look
forward to serving your investment needs in 1999.
By order of the Board of Directors,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------
Brian T. Zino
President
January 29, 1999
1
<PAGE> 55
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
Q. HOW DID SELIGMAN CAPITAL FUND PERFORM IN THE LAST 12 MONTHS?
A. Seligman Capital Fund posted a total return of 19.12% based on the net asset
value of Class A shares for the 12 months ended December 31, 1998. This
return far outpaced the 11.37% total return of its peers, as measured by the
Lipper Mid Cap Funds Average. It also outpaced the 17.86% total return of
the Russell Midcap Growth Index, which measures the performance of
mid-capitalization growth stocks.
Q. WHICH ECONOMIC AND MARKET FACTORS INFLUENCED THE FUND'S RESULTS IN 1998?
A. In 1998, the US economy expanded for the eighth consecutive year as we
experienced a continuation of subdued inflation, low interest rates, and
strong consumer demand. Against this backdrop, mid-capitalization growth
stocks (stocks with market capitalizations between $1 billion and $10
billion) performed well, but not as well as larger-capitalization stocks, as
measured by the Standard & Poor's 500 Composite Stock Price Index (S&P 500),
which was up 28.58%.
As investors worried about everything from deflationary pressures in the US
to devalued currencies in the emerging markets, the largest, most liquid
companies in the US were rewarded in a "flight to quality." This trend,
while positive for the biggest stocks in the market, came at the expense of
small- and mid-cap stocks, which underperformed their large-cap counterparts
despite having attractive fundamentals. The narrowing of the market was so
severe in 1998 that within the S&P 500, 50 stocks accounted for about 94% of
the performance of the index.
Will this narrowness continue in 1999? We do not know, but we did see signs
of a broadening of the market in the fourth quarter of 1998. Seligman
Capital Fund, as a mid-cap growth fund, benefited from this trend in late
1998, and is positioned to do likewise in 1999 if the trend continues.
Q. WHAT WAS YOUR INVESTMENT STRATEGY?
A. What we like most about mid-cap stocks as an asset class is that while they
tend to have growth rates similar to small-cap stocks, they also tend to
have track records that smaller startups lack. Many mid caps also have
breadth of management and multiple products. The companies we look to invest
in are companies that we believe have the potential to outgrow the mid-cap
universe in a few years, if not sooner, and become large-company growth
stocks. At that point, we would generally sell the stock to maintain our
investment discipline, and reinvest those assets in the next promising
mid-cap company.
Specifically, our strategy is to invest in mid-cap stocks with growth rates
at least twice that of the market. Based on our three-year corporate profit
growth projection of 8% to 10%, we are currently looking at companies that
we believe have the ability to grow their earnings by at least 15% per year.
We look to have a fairly concentrated portfolio, with about 60 stocks. This
allows us to really know the companies we own. At year-end, our top 10
holdings accounted for 26% of the Fund's portfolio.
When choosing a stock, we perform both quantitative and fundamental
analysis, so we can screen for both top- and bottom-line growth. If we do
not see a strong
[GRAPHIC] A TEAM APPROACH
GROWTH TEAM: (FROM LEFT) MICHELLE BORRE, Seligman Capital Fund is
DAVE LEVY, SHEILA GRAYSON managed by the Seligman Growth
(ADMINISTRATIVE ASSISTANT), (SEATED) Team, headed by Marion S.
MARION S. SCHULTHEIS (PORTFOLIO Schultheis. Ms. Schultheis is
MANAGER); (NOT PICTURED) CRAIG CHODASH assisted by a team of seasoned
research professionals who are
responsible for identifying
those companies in specific
industries that offer the
greatest potential for growth,
consistent with the Fund's
objective.
2
<PAGE> 56
catalyst for growth going forward, we will not invest in a company.
Evaluating the strength of a company's management is also a major factor in
our investment strategy. We look for managements with vision and consistent
messages, who can deliver on their promises.
The final thing we look at is valuations within an industry group. We
analyze companies based on historical performance, balance sheets, debt
levels, and earnings growth potential. We then decide what we are willing to
pay for the highest-quality companies in any given industry group.
Q. WHAT INDUSTRIES AFFECTED THE FUND'S PERFORMANCE LAST YEAR?
A. While strong earnings in technology, telecommunications, and consumer
cyclicals translated into solid returns for Seligman Capital Fund, overall
performance in 1998 was affected more by moves in individual stocks than by
broad industry trends.
In technology, it is always important to be invested in the right niches. In
1998, anything Internet-related did extremely well. While we do not own
companies whose only business is the Internet -- due to their lofty
valuations and lack of earnings -- we have nonetheless benefited from the
internet boom. Many of the technology companies we hold are actually
involved in building and maintaining the infrastructure of the Internet.
These are real companies, growing real earnings, with real prospects looking
out 18 months.
Telecommunications was another area of strength for the Fund. As with the
technology sector, much of the excitement in telecommunications was
Internet-driven.
Finally, the Fund benefitted from several of its consumer-cyclical holdings.
The Fund's performance was hurt by our exposure to industrial stocks. While
none of our holdings had direct exposure to Asia, many of their customers
did. This, coupled with deflation in commodity prices, made 1998 a tough
year for many of these companies.
Q. WHAT IS YOUR OUTLOOK?
A. Since mid-cap growth stocks did not participate in the market runup in 1998
to the same extent as large caps, valuations of many quality mid-cap stocks
going into 1999 are attractive. And if we see a continued broadening of the
market away from the largest-capitalization stocks, Seligman Capital Fund's
holdings will likely benefit.
Much like last year, 1999 will be a stock-pickers' market. Companies that
can either hit or surpass their earnings estimates will be rewarded, while
companies that fall short will be punished severely. That is positive for
Seligman Capital Fund, where our strategy focuses on looking for companies
with the potential for positive earnings surprises. Some of the areas we are
excited about in 1999 include broadcasting and advertising,
telecommunications, and specialty retailers.
The biggest potential risks to the US market in 1999 come from outside the
country. A continuation of the economic problems in Latin America,
particularly Brazil, could have negative repercussions on some of the
higher-priced growth stocks in the US. And while there are signs of eventual
improvements in Asia in 1999, any slowing of growth in China will also hurt
US stocks.
Fortunately, the mid-cap companies in Seligman Capital Fund are domestic in
nature, relying little on international markets for earnings growth. As long
as the US economy continues to grow modestly, and US consumer demand remains
strong, Seligman Capital Fund should have a positive year.
3
<PAGE> 57
PERFORMANCE OVERVIEW
This chart compares a $10,000 hypothetical investment made in Seligman
Capital 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 Mid Cap Funds Average (Lipper Mid Cap Average) and
the Russell Midcap Growth Index for the same period. The performances of
Seligman Capital 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 Mid Cap Average and the Russell Midcap Growth Index exclude the effect of
fees and/or sales charges.
---------------------------------------------------------------------
[The following table represents a chart in the printed piece.]
<TABLE>
<CAPTION>
W/O Load With load Lipper Russell
<S> <C> <C> <C> <C>
12/31/88 10000 9524 10000 10000
3/31/89 10807 10292 10766 10631
6/30/89 11614 11061 11699 11675
9/30/89 13525 12882 12997 13072
12/31/89 13244 12614 12780 13148
3/31/90 12816 12206 12654 12685
6/30/90 14805 14101 13670 13771
9/30/90 11547 10912 11033 10984
12/31/90 13427 12788 12149 12473
3/31/91 16263 15489 14774 15352
6/30/91 16392 15612 14650 15114
9/30/91 18333 17461 15977 16354
12/31/91 20767 19779 17645 18341
3/31/92 20493 19518 17705 17781
6/30/92 19558 18628 16671 16954
9/30/92 20780 19791 17247 17862
12/31/92 23169 22066 19593 19937
3/31/93 23386 22273 19948 20117
6/30/93 23141 22040 20441 20119
9/30/93 24623 23452 21955 21475
12/31/93 24281 23126 22484 22168
3/31/94 23535 22416 21789 21481
6/30/94 20810 19820 20695 20536
9/30/94 22622 21546 22369 21994
12/31/94 22567 21493 22213 21688
3/31/95 23835 22701 23770 24033
6/30/95 25994 24757 25853 25962
9/30/95 28222 26879 28614 28520
12/31/95 30989 29514 29094 29056
3/31/96 33116 31540 30869 30930
6/30/96 35759 34058 32510 32087
9/30/96 36713 34967 33530 33178
12/31/96 36176 34454 34367 34137
3/31/97 34672 33022 32336 32891
6/30/97 39603 37718 37384 37732
9/30/97 44755 42626 42695 43011
12/31/97 44235 42130 41394 41829
3/31/98 49271 46926 46420 46823
6/30/98 50435 48035 45780 46795
9/30/98 40236 38322 37507 38985
12/31/98 52694 50187 46099 49304
</TABLE>
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> 58
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS 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 (0.47)% 13.48% 15.62% 17.51% n/a n/a
Without Sales Charge 4.48 19.12 16.76 18.08 n/a n/a
CLASS B**
With CDSC+ (0.92) 13.24 n/a n/a 15.68% n/a
Without CDSC 4.08 18.24 n/a n/a 16.54 n/a
CLASS D**
With 1% CDSC 3.07 17.23 n/a n/a n/a n/a
Without CDSC 4.07 18.23 15.57 n/a n/a 15.20%
LIPPER MID CAP FUNDS AVERAGE*** 0.70 11.37 15.44 16.51 13.93++ 16.60+++
RUSSELL MIDCAP GROWTH INDEX*** 5.36 17.86 17.33 17.30 17.02++ 18.01+++
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
DECEMBER 31, 1998 JUNE 30, 1998 DECEMBER 31, 1997
------------------- ------------- -----------------
<S> <C> <C> <C>
CLASS A $20.06 $19.93 $17.48
CLASS B 18.44 18.45 16.24
CLASS D 18.45 18.46 16.25
</TABLE>
CAPITAL GAIN INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
PAID $0.676
UNDISTRIBUTED REALIZED 0.3880
UNREALIZED 6.67200
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 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 Mid Cap Funds Average and the Russell Midcap Growth Index are
unmanaged benchmarks that assume investment of dividends. The Lipper Mid
Cap Funds Average and the Russell Midcap Growth Index exclude the effect of
fees and/or sales charges. Investors cannot invest directly in an average
or an index. The monthly performances are used in the Performance Overview
for the Lipper Mid Cap Funds Average.
+ The CDSC is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
0 Represents net gain realized November and December 1998, payable in 1999.
00 Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1998.
5
<PAGE> 59
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:
Basic Materials .................................... 2 $ 7,502,078 $ 8,681,863 2.5 3.6
Capital Goods ...................................... 7 31,612,864 38,202,950 11.2 3.2
Communications Services ............................ 2 9,445,646 20,686,188 6.1 4.2
Consumer Cyclicals ................................. 16 55,051,019 82,744,675 24.3 12.3
Consumer Staples ................................... 10 33,417,337 55,346,430 16.2 17.2
Energy ............................................. 2 4,922,430 4,752,163 1.4 4.9
Financial Services ................................. 7 18,910,683 35,255,988 10.4 21.5
Health Care ........................................ 5 15,344,142 23,140,138 6.8 10.4
Printing and Publishing ............................ -- -- -- -- 1.1
Savings and Loan Companies ......................... -- -- -- -- 6.7
Technology ......................................... 11 35,145,143 54,674,828 16.1 14.5
Transportation ..................................... 1 4,604,058 5,912,336 1.7 --
Utilities .......................................... 1 1,962,745 3,027,262 0.9 --
Other .............................................. 1 -- 23,328 -- --
----- ------------ ------------ ----- -----
65 217,918,145 332,448,149 97.6 99.6
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES ..................... 1 8,128,214 8,128,214 2.4 0.4
----- ------------ ------------ ----- -----
NET ASSETS ........................................... 66 $226,046,359 $340,576,363 100.0 100.0
===== ============ ============ ===== =====
</TABLE>
LARGEST INDUSTRIES
DECEMBER 31, 1998
[The following table represents a chart in the printed piece.]
<TABLE>
<CAPTION>
<S> <C> <C>
CONSUMER CYCLICALS 24.3% $82,744,675
CONSUMER STAPLES 16.2% 55,346,430
TECHNOLOGY 16.1% 54,674,828
CAPITAL GOODS 11.2% 38,202,950
FINANCIAL SERVICES 10.4% 35,255,988
</TABLE>
6
<PAGE> 60
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
<TABLE>
<CAPTION>
SHARES
------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- ------------- ----------- -----------
<S> <C> <C>
Applied Power (Class A) .......... 241,300 241,300
Deluxe ........................... 195,400 195,400
Electronic Arts .................. 149,800 149,800
General Dynamics ................. 98,000 98,000
Infinity Broadcasting (Class A) .. 325,200 325,200
Leggett & Platt .................. 253,400 253,400
Office Depot ..................... 262,400 262,400
Service Corp. International ...... 158,900 158,900
ServiceMaster .................... 218,900 218,900
VERITAS Software ................. 130,800 130,800
<CAPTION>
SHARES
--------------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- --------------- ------------- -----------
<S> <C> <C>
AutoZone ......................... 250,800 --
BMC Software ..................... 120,000 --
Budget Group (Class A) ........... 218,200 --
Gartner Group (Class A) .......... 203,500 --
Jones Apparel Group .............. 230,000 --
Life Re .......................... 55,000 --
Omnicare ......................... 150,000 --
Proffitt's ....................... 157,000 --
Schwab (Charles) ................. 126,800 105,700(1)
Synopsys ......................... 130,000 --
</TABLE>
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
- -------------------------
(1) Includes 57,500 shares received as a result of 3-for-2 stock split.
LARGEST PORTFOLIO HOLDINGS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY VALUE
- -------- -----------
<S> <C>
Century Telephone Enterprises .......... $12,406,500
Office Depot ........................... 9,692,400
Interpublic Group of Companies ......... 9,147,325
Applied Power (Class A) ................ 9,109,075
Infinity Broadcasting (Class A) ........ 8,902,350
Electronic Arts ........................ 8,398,163
Molex .................................. 8,289,200
Tele-Communications (Series A)
TCI Ventures Group ................... 8,279,688
VERITAS Software ....................... 7,831,650
Deluxe ................................. 7,144,312
</TABLE>
7
<PAGE> 61
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------
<S> <C> <C>
COMMON STOCKS 97.6%
BASIC MATERIALS 2.5%
CROMPTON & KNOWLES
Retailer of specialty chemicals
for the textile and paper
industries 173,300 $ 3,585,144
MINERALS TECHNOLOGIES
Marketer of specialty minerals
and products 124,500 5,096,719
------------
8,681,863
------------
CAPITAL GOODS 11.2%
APPLIED POWER (CLASS A)
Provider of tools and equipment
for the computer and tele-
communication industries 241,300 9,109,075
GENERAL DYNAMICS
Manufacturer of defense
products 98,000 5,745,250
MOLEX
Worldwide manufacturer of
electrical products and systems 217,600 8,289,200
NUCOR
Manufacturer of steel joints,
angles, and rounds 25,000 1,081,250
PALL
Designer and manufacturer of
disposable filters 183,500 4,644,844
RAYOVAC*
Manufacturer of general and
hearing aid batteries 171,700 4,582,244
WASTE MANAGEMENT
Provider of waste management
services 101,900 4,751,087
------------
38,202,950
------------
COMMUNICATIONS SERVICES 6.1%
CENTURY TELEPHONE ENTERPRISES
Provider of regional
telephone services 183,800 12,406,500
TELE-COMMUNICATIONS (SERIES A)
TCI VENTURES GROUP*
Holding company which
has stakes in international
cable, Internet, and telephone
ventures 350,000 8,279,688
------------
20,686,188
------------
CONSUMER CYCLICALS 24.3%
CIRCUIT CITY STORES--CIRCUIT CITY GROUP
Retailer of consumer electronics
and major appliances 98,600 4,923,838
FASTENAL
Industrial and construction
supplies retailer 79,200 3,482,325
CONSUMER CYCLICALS (CONTINUED)
GENERAL NUTRITION*
Vitamin, mineral, and sports
nutrition supplement supplier 161,200 $ 2,614,463
HA-LO INDUSTRIES*
Distributor of specialty
advertising products 114,500 4,308,062
HARLEY-DAVIDSON
Manufacturer of motorcycles 115,000 5,448,125
INTERPUBLIC GROUP OF COMPANIES
Worldwide advertising agency 114,700 9,147,325
ITT EDUCATIONAL SERVICES
Provider of technology-oriented
schooling 175,500 5,967,000
LANCASTER COLONY
Manufacturer of automobile
products, specialty foods,
glassware, and candles 109,600 3,514,050
LEGGETT & PLATT
Manufacturer of home
furnishings 253,400 5,574,800
LOWE'S COMPANIES
Retailer of building materials
and supplies 85,900 4,397,006
OFFICE DEPOT*
Office products retailer 262,400 9,692,400
SERVICE CORP. INTERNATIONAL
Provider of funeral services 158,900 6,048,131
SERVICEMASTER
Provider of lawn care, termite
and pest control, cleaning,
and home inspection services 218,900 4,829,481
SNYDER COMMUNICATIONS*
Provider of marketing services 107,900 3,641,625
TJX COMPANIES
Retailer of discount clothing
and home fashions 176,300 5,112,700
WILLIAMS-SONOMA*
Retailer of cooking equipment,
home furnishings, and garden
accessories 100,300 4,043,344
------------
82,744,675
------------
CONSUMER STAPLES 16.2%
APOLLO GROUP*
Provider of higher education
programs 93,300 3,154,706
CBS
Radio and television
broadcasting 195,000 6,386,250
CARDINAL HEALTH
Distributor of pharmaceutical
products 67,500 5,121,562
CHANCELLOR MEDIA*
Radio broadcasting 97,800 4,679,119
</TABLE>
- -------------------------
See footnotes on page 10.
8
<PAGE> 62
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------
<S> <C> <C>
CONSUMER STAPLES (CONTINUED)
CLOROX
Manufacturer and marketer of
household consumer products 32,900 $ 3,843,131
DELUXE
Provider of information
solutions services to the
financial and retail industries 195,400 7,144,312
DIAL
Manufacturer and marketer of
personal care, household, and
laundry products 220,000 6,352,500
INFINITY BROADCASTING (CLASS A)*
Operator of radio stations;
provider of outdoor advertising 325,200 8,902,350
KROGER*
Operator of supermarkets and
convenience stores 100,000 6,050,000
NEWELL
Manufacturer and marketer
of home furnishings 90,000 3,712,500
------------
55,346,430
------------
ENERGY 1.4%
ANADARKO PETROLEUM
Explorer and producer of oil
and gas 105,700 3,263,488
ENRON OIL & GAS
Explorer and producer of oil
and gas 86,300 1,488,675
------------
4,752,163
------------
FINANCIAL SERVICES 10.4%
AFLAC
Provider of supplemental
insurance at the work site 130,000 5,720,000
NATIONWIDE FINANCIAL SERVICES
(CLASS A)
Insurance provider 115,000 5,944,063
OLD REPUBLIC INTERNATIONAL
Holding company; subsidiaries
provide risk management and
reinsurance services 198,300 4,461,750
PROGRESSIVE (OHIO)
High-risk auto insurance 25,600 4,336,000
PROVIDENT COMPANIES
Provider of health and
life insurance 120,000 4,980,000
SCHWAB (CHARLES)
Financial services firm 105,700 5,939,019
SOUTHTRUST
Operator of SouthTrust
Bank N.A. 105,000 3,875,156
------------
35,255,988
------------
HEALTH CARE 6.8%
ALZA*
Developer of pharmaceutical
products 77,100 $ 4,028,475
BIOGEN*
Developer of genetically
engineered drugs 65,000 5,390,937
COVANCE*
Provider of medical laboratory
and testing services 217,900 6,346,338
UNIVERSAL HEALTH SERVICES (CLASS B)*
Owner and operator of
health care institutions 100,900 5,234,188
WELLPOINT HEALTH NETWORKS*
Provider of health care services 24,600 2,140,200
------------
23,140,138
------------
TECHNOLOGY 16.1%
APPLIED MATERIALS*
Developer, manufacturer, and
marketer of semiconductor
wafer fabrication equipment 70,500 3,011,672
ASCEND COMMUNICATIONS*
Provider of telecommunication
networking products 45,900 3,019,359
CADENCE DESIGN SYSTEMS*
Manufacturer of electronic
design automation software 117,000 3,480,750
COMPUWARE*
Provider of mainframe software
and consulting services 58,200 4,545,056
ELECTRONIC ARTS*
Developer, marketer, and
distributor of entertainment
software 149,800 8,398,163
FISERV*
Provider of data
processing services 96,900 4,981,266
GENERAL INSTRUMENT*
Developer of analog and
digital systems 171,100 5,806,706
MAXIM INTEGRATED PRODUCTS*
Manufacturer of linear and
mixed-signal integrated circuits 73,600 3,213,100
NETWORK ASSOCIATES*
Supplier of network security
and anti-virus utilities 67,800 4,498,106
PARAMETRIC TECHNOLOGY*
Developer of mechanical
design software 362,400 5,889,000
VERITAS SOFTWARE*
Developer and marketer of
storage devices for computer
systems 130,800 7,831,650
------------
54,674,828
------------
</TABLE>
- -------------------------
See footnotes on page 10.
9
<PAGE> 63
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------
<S> <C> <C>
TRANSPORTATION 1.7%
CNF TRANSPORTATION
Provider of transportation
services 157,400 $ 5,912,336
------------
UTILITIES 0.9%
AES*
Electrical supplier 63,900 3,027,262
------------
OTHER 23,328
------------
TOTAL COMMON STOCKS
(Cost $217,918,145) 332,448,149
------------
VALUE
-------
SHORT-TERM HOLDINGS 4.2%
(Cost $14,365,000) $ 14,365,000
------------
TOTAL INVESTMENTS 101.8%
(Cost $232,283,145) 346,813,149
OTHER ASSETS
LESS LIABILITIES (1.8)% (6,236,786)
------------
NET ASSETS 100.0% $340,576,363
============
</TABLE>
- -------------------------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
10
<PAGE> 64
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $217,918,145) $332,448,149
Short-term holdings (cost $14,365,000) 14,365,000 $346,813,149
------------
Cash 415,338
Receivable for securities sold 9,664,448
Receivable for Capital Stock sold 1,029,706
Receivable for interest and dividends 81,346
Investment in, and expenses prepaid to, shareholder service agent 68,837
Other 13,639
------------
TOTAL ASSETS 358,086,463
------------
LIABILITIES:
Payable for securities purchased 15,836,176
Payable for Capital Stock repurchased 1,103,124
Accrued expenses, taxes, and other 570,800
------------
TOTAL LIABILITIES 17,510,100
------------
NET ASSETS $340,576,363
============
Composition of Net Assets:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized;
17,166,192 shares outstanding):
Class A $ 14,874,799
Class B 804,107
Class D 1,487,286
Additional paid-in capital 202,324,325
Accumulated net investment loss (101,130)
Undistributed net realized gain 6,656,972
Net unrealized appreciation of investments 114,530,004
------------
NET ASSETS $340,576,363
============
NET ASSET VALUE PER SHARE:
CLASS A ($298,319,227 / 14,874,799 shares) $20.06
======
CLASS B ($14,824,045 / 804,107 shares) $18.44
======
CLASS D ($27,433,091 / 1,487,286 shares) $18.45
======
</TABLE>
- -------------------------
See Notes to Financial Statements.
11
<PAGE> 65
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,409,055
Interest 949,990
------------
TOTAL INVESTMENT INCOME $ 2,359,045
Expenses:
Management fee 1,504,151
Distribution and service fees 1,030,672
Shareholder account services 503,426
Registration 92,420
Custody and related services 76,294
Shareholder reports and communications 74,602
Auditing and legal fees 69,504
Directors' fees and expenses 12,510
Miscellaneous 14,413
------------
TOTAL EXPENSES 3,377,992
------------
NET INVESTMENT LOSS (1,018,947)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 33,498,209
Net change in unrealized appreciation of investments 26,383,287
------------
NET GAIN ON INVESTMENTS 59,881,496
------------
INCREASE IN NET ASSETS FROM OPERATIONS $ 58,862,549
============
</TABLE>
- -------------------------
See Notes to Financial Statements.
12
<PAGE> 66
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment loss ............................................................ $ (1,018,947) $ (1,121,481)
Net realized gain on investments ............................................... 33,498,209 46,191,130
Net change in unrealized appreciation of investments ........................... 26,383,287 15,868,425
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS ......................................... 58,862,549 60,938,074
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ..................................................................... (10,025,257) (35,225,045)
Class B ..................................................................... (488,970) (1,063,047)
Class D ..................................................................... (936,470) (3,268,410)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ...................................... (11,450,697) (39,556,502)
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997
----------------- --------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A 509,217 722,658 9,432,693 12,694,774
Class B 253,196 203,299 4,232,400 3,394,305
Class D 198,721 282,020 3,380,399 4,666,806
Exchanged from associated Funds:
Class A 17,652,456 7,393,028 318,464,290 134,946,924
Class B 830,239 71,826 13,846,907 1,180,425
Class D 321,693 451,710 5,485,391 7,177,305
Shares issued in payment of gain
distributions:
Class A 513,222 1,869,785 9,125,187 31,392,717
Class B 26,925 62,796 440,484 981,506
Class D 53,532 201,933 876,280 3,156,217
----------- ----------- ------------- -------------
Total 20,359,201 11,259,055 365,284,031 199,590,979
----------- ----------- ------------- -------------
Cost of shares repurchased:
Class A (2,097,094) (2,300,687) (38,074,268) (41,032,182)
Class B (66,337) (24,413) (1,101,885) (414,612)
Class D (303,184) (278,783) (5,083,314) (4,611,613)
Exchanged into associated Funds:
Class A (17,964,860) (7,289,681) (327,416,067) (133,177,110)
Class B (759,346) (74,496) (12,687,007) (1,227,418)
Class D (389,223) (342,474) (6,496,041) (5,595,585)
----------- ----------- ------------- -------------
Total (21,580,044) (10,310,534) (390,858,582) (186,058,520)
----------- ----------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS (1,220,843) 948,521 (25,574,551) 13,532,459
=========== =========== ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS ......................................................... 21,837,301 34,914,031
NET ASSETS:
Beginning of year .............................................................. 318,739,062 283,825,031
------------- -------------
END OF YEAR (including accumulated net investment loss of $101,130
and $106,527, respectively) ................................................. $ 340,576,363 $ 318,739,062
============= =============
</TABLE>
- -------------------------
See Notes to Financial Statements.
13
<PAGE> 67
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Capital 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%, 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 stocks 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 national
exchanges 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. 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.
C. 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. Interest
income is recorded on an accrual basis.
D. 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.
E. 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
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
For the year ended December 31, 1998, the Fund redeemed 21,580,044 of its
shares from shareholders aggregating $390,858,582, of which approximately
$26,900,000 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 $396,272,079 and $441,210,415,
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 $114,822,744 and $292,740, respectively.
14
<PAGE> 68
NOTES TO FINANCIAL STATEMENTS
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 a per
annum percentage of the Fund's daily net assets. The management fee rate is
calculated on a sliding scale of 0.55% to 0.45%, based on average daily net
assets of all the investment companies managed by the Manager. The management
fee reflected in the Statement of Operations represents 0.48% per annum of the
Fund's average daily net assets.
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 $17,323 from sales of Class A
shares, after commissions of $132,668 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 $680,364 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 $104,635 and $245,673, 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 $4,474.
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 from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
retained by the Distributor for the year ended December 31, 1998, amounted to
$5,772.
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 $4,797 from the sale
of shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $84,642, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $482,858 for shareholder account
services. The Fund's investment in Seligman Data Corp. is recorded at a cost of
$2,199.
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 their
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
15
<PAGE> 69
NOTES TO FINANCIAL STATEMENTS
accumulated balance thereof at December 31, 1998, of $101,130 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> 70
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 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 ............... $17.48 $16.36 $15.59 $13.17 $15.95
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ..................... (0.04) (0.06) (0.04) (0.02) (0.06)
Net realized and unrealized gain (loss)
on investments ................................. 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 net realized capital gain ..... (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 YEAR ..................... $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 year (000s omitted) ........... $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 (loss) 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>
- -------------------------
See footnotes on page 18.
17
<PAGE> 71
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 ............ $16.24 $15.47 $16.43
------ ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................... (0.17) (0.18) (0.10)
Net realized and unrealized gain
on investments. ............................... 3.05 3.38 1.01
------ ------- ------
TOTAL FROM INVESTMENT OPERATIONS ................ 2.88 3.20 0.91
------ ------- ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain .... (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 (000s omitted) ........ $14,824 $8,437 $4,337
Ratio of expenses to average net assets ......... 1.75% 1.81% 1.89%+
Ratio of net income (loss) to average net assets (1.00)% (1.05)% (0.99)%+
Portfolio turnover rate ......................... 132.18% 104.33% 94.97%++
</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 ................. $16.25 $15.47 $14.94 $12.82 $15.86
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ....................... (0.17) (0.18) (0.16) (0.14) (0.33)
Net realized and unrealized gain (loss)
on investment .................................... 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 net realized capital gain ....... (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 YEAR ....................... $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 year (000s omitted) ............. $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 (loss) 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>
- -------------------------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
See Notes to Financial Statements.
18
<PAGE> 72
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN CAPITAL FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Capital 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 and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Capital
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.
/s/Deloitte & Touche LLP
- ------------------------
DELOITTE & TOUCHE LLP
New York, New York
January 29, 1999
19
<PAGE> 73
FEDERAL TAX STATUS OF 1998 GAIN DISTRIBUTION FOR TAXABLE ACCOUNTS
A net long-term gain distribution of $0.676 per share, realized on investments
from November 1997 to October 1998, was paid on November 23, 1998, 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 distribution from net long-term gain is designated as a "capital gain
dividend" for federal income tax purposes and is taxable to shareholders in 1998
as a long-term gain from the sale of capital assets, no matter how long 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 gain distribution.
If the distribution was paid in shares, the per share cost basis for federal
income tax purposes is $17.78 for Class A shares, $16.36 for Class B shares, and
$16.37 for Class D shares.
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-B is
reported to the Internal Revenue Service as required by federal regulations.
20
<PAGE> 74
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 Chairmen 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
Chairmen of the Board of Trustees, St. George's School
William C. Morris 1
Chairman
Chairman of the Board,
J. & W. Seligman & Co. Incorporated
Chairmen, 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> 75
EXECUTIVE OFFICERS
William C. Morris
Chairman
Brian T. Zino
President
Marion S. Schultheis
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> 76
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> 77
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 CAPITAL 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
EQCA2 12/98 [LOGO] Printed on Recycled Paper
<PAGE> 78
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.
<TABLE>
<S> <C>
(a) *Articles Supplementary dated May 24, 1999.
(a)(1) Amended and Restated Articles of Incorporation of Registrant.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
53 filed on April 28, 1997.)
(b) Amended and Restated 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) *Addendum to Sales/Bank Agreement.
(e)(1) *Form of Bank Agreement between Seligman Advisors, Inc. and Banks.
(e)(2) Form 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)(3) Form of AmendedSales Agreement between Seligman Advisors, Inc. and
Dealers. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 52 filed on April 19, 1996.)
(e)(4) 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)(5) 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)(6) Form of Dealer Agreement between Seligman Advisors, Inc. and Salomon
Smith Barney Inc. (formerly, 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.)
</TABLE>
C-1
<PAGE> 79
FILE NO. 2-33566
811-1886
PART C. OTHER INFORMATION (CONTINUED)
- ------- -----------------------------
<TABLE>
<S> <C>
(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.
(i) *Opinion and Consent of Counsel in respect of Registrant's Class C
shares.
(i)(1) 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) *Form of Purchase Agreement (Investment Letter) for Initial Capital
between Registrant's Class C shares and J. & W. Seligman & Co.
Incorporated.
(l)(1) 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)(2) 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) *Amended Administration, Shareholder Services and Distribution Plan of
Registrant.
(m)(1) *Amended Form of Administration, Shareholder Services and Distribution
Agreement between Seligman Adviors, Inc. and Dealers.
(n) Financial Data Schedules. (Incorporated by reference to Registrant
Post-Effective Amendment No. 56 filed on April 29, 1999.
(o) *Plan for Multiple Class of Shares (four Classes) pursuant to Rule 18f-3
under the Investment Company Act of 1940, as amended.
</TABLE>
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.
C-2
<PAGE> 80
FILE NO. 2-33566
811-1886
PART C. OTHER INFORMATION (CONTINUED)
- ------- -----------------------------
<TABLE>
<S> <C>
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.
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 eighteen 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.
</TABLE>
C-3
<PAGE> 81
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 April 30, 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, 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, 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> 82
FILE NO. 2-33566
811-1886
PART C. OTHER INFORMATION (CONTINUED)
- ------ -----------------
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of April 30, 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
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> 83
FILE NO. 2-33566
811-1886
PART C. OTHER INFORMATION (CONTINUED)
- ------- -----------------------------
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of April 30, 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
PMB 152
1705 14th Street
Boulder, CO 80302
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> 84
FILE NO. 2-33566
811-1886
PART C. OTHER INFORMATION (CONTINUED)
- ------ -----------------
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of April 30, 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
4858 Battery Lane Bethesda, MD 21814
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> 85
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. 57 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 27th day of May, 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. 57 has been
signed below by the following persons in the capacities indicated on May 27,
1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/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 )
Betsy S. Michel, Director ) /s/ Brian T. Zino
James C. Pitney, Director ) --------------------------------
James Q. Riordan, Director ) *Brian T. Zino, Attorney-in-fact
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
</TABLE>
<PAGE> 86
FILE NO. 2-33566
811-1886
SELIGMAN CAPITAL FUND, INC.
POST-EFFECTIVE AMENDMENT NO. 57 TO THE
REGISTRATION STATEMENT ON FORM N-1A
EXHIBIT INDEX
<TABLE>
<CAPTION>
Form N-1A Item No. Description
- ----------------- -----------
<S> <C>
Item 23(a) Articles Supplementary
Item 23(e) Addendum to Sales/Bank Agreement.
Item 23(e)(1) Form of Bank Agreement between
Seligman Advisors, Inc. and Banks.
Item 23(i) Opinion and Consent of Counsel with respect
to Class C shares
Item 23(j) Consent of Independent Auditors
Item 23(l) Form of Purchase Agreement for Initial Capital
Item 23(m) Amended Administration, Shareholder Services
And Distribution Plan
Item 23(m)(1) Amended Form of Administration, Shareholder
Serivces and Distribution Agreement between
Seligman Adviors, Inc. and Dealers.
Item 23(o) Plan of Multiple Classes of Shares (four Classes)
</TABLE>
<PAGE> 1
Articles 1
EXHIBIT a
SELIGMAN CAPITAL FUND, INC.
---------------------------
ARTICLES SUPPLEMENTARY
Seligman Capital Fund, Inc., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation") and registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The total number of shares of capital stock of all
classes which the Corporation has authority to issue is 500,000,000 shares,
which were previously classified by the Board of Directors of the Corporation
into three classes designated as Class A Common Stock, Class B Common Stock and
Class D Common Stock. The number of authorized shares of Class A Common Stock,
Class B Common Stock and Class D Common Stock each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such class and y equaled
one-third of the authorized but unissued shares of Common Stock of all classes;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class B and Class D Common Stock shall not exceed the
authorized number of shares of Common Stock; and, in the event application of
the formula above would have resulted, at any time, in fractional shares, the
applicable number of authorized shares of each class was to have been rounded
down to the nearest whole number of shares of such class.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of capital stock, the Board of Directors
has reclassified the unissued shares of Class A Common Stock, Class B Common
Stock and Class D Common Stock into the following classes and has provided for
the issuance of shares of such classes. The terms of the Common Stock as set by
the Board of Directors are as follows:
(a) The total number of shares of all classes of stock which the
Corporation has authority to issue is 500,000,000 shares of common
stock ("Shares") of the par value of $1.00 each having an aggregate par
value of $500,000,000. The Common Stock of the Corporation shall have
four classes of shares, which shall be designated Class A Common Stock,
Class B Common Stock, Class C Common Stock and Class D Common Stock.
The number of authorized shares of Class A Common Stock, of Class B
Common Stock, of Class C Common Stock and of Class D Common Stock shall
each consist of the sum of x and y, where x equals the issued and
outstanding shares of such class and y equals one-fourth of the
authorized but unissued shares of Common Stock of all classes; provided
that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class B, Class C and Class D Common Stock shall not
exceed the authorized number of shares of Common Stock (i.e.,
500,000,000 shares of Common Stock until changed by further action of
the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in
the event application of the formula above would result, at any time,
in fractional shares, the applicable number of authorized shares of
each class shall be rounded down to the nearest whole number of shares
of such
-1-
<PAGE> 2
class. Any class of Common Stock shall be referred to herein
individually as a "Class" and collectively, together with any further
class or classes from time to time established, as the "Classes".
(b) All Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the charter
of the Corporation to the contrary:
(1) Class A shares may be subject to such front-end
sales loads as may be established by the Board of Directors
from time to time in accordance with the Investment Company
Act and applicable rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD").
(2) Class B shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
Subject to subsection (6) below, each Class B share shall
convert automatically into Class A shares on the last business
day of the month that precedes the eighth anniversary of the
date of issuance of such Class B share; such conversion shall
be effected on the basis of the relative net asset values of
Class B shares and Class A shares as determined by the
Corporation on the date of conversion.
(3) Class C shares may be subject to such front-end
sales loads and such contingent deferred sales charges as may
be established from time to time by the Board of Directors in
accordance with the Investment Company Act and applicable
rules and regulations of the NASD.
(4) Class D shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
(5) Expenses related solely to a particular Class
(including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other
arrangement, however designated, which may differ between the
Classes) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board
of Directors) in the net asset value, dividends, distribution
and liquidation rights of the shares of that Class.
(6) At such time as shall be permitted under the
Investment Company Act, any applicable rules and regulations
thereunder and the provisions of any exemptive order
applicable to the Corporation, and as may be determined by the
Board of Directors and disclosed in the then current
prospectus of the Corporation, shares of a
-2-
<PAGE> 3
particular Class may be automatically converted into shares
of another Class; provided, however, that such conversion
shall be subject to the continuing availability of an opinion
of counsel to the effect that such conversion does not
constitute a taxable event under Federal income tax law. The
Board of Directors, in its sole discretion, may suspend any
conversion rights if such opinion is no longer available.
(7) As to any matter with respect to which a separate
vote of any Class is required by the Investment Company Act or
by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other
arrangement referred to in subsection (5) above), such
requirement as to a separate vote by the Class shall apply in
lieu of single Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders
thereunder and the Maryland General Corporation Law, the
Classes shall vote together as a single Class on any such
matter that shall have the same effect on each such Class. As
to any matter that does not affect the interest of a
particular Class, only the holders of shares of the affected
Class shall be entitled to vote.
THIRD: These Articles Supplementary do not change the total number of
authorized shares of the Corporation.
IN WITNESS WHEREOF, SELIGMAN CAPITAL FUND, INC. has caused
these Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Secretary, and each of said officers of the
Corporation has also acknowledged these Articles Supplementary to be the
corporate act of the Corporation and has stated under penalties of perjury that
to the best of his knowledge, information and belief that the matters and facts
set forth with respect to approval are true in all material respects, all on May
24, 1999.
SELIGMAN CAPITAL FUND, INC.
By: /s/ Brian T. Zino
----------------------------
Brian T. Zino, President
Witness:
/s/ Frank J. Nasta
- -----------------------------------
Frank J. Nasta, Secretary
-3-
<PAGE> 1
EXHIBIT e
ADDENDUM
TO
SALES/BANK AGREEMENT
covering shares of capital stock or shares of beneficial interest of
the Seligman Mutual Funds
between
SELIGMAN ADVISORS, INC.
and
DEALER/BANK
Dear Dealer/Bank:
Your Sales/Bank Agreement with Seligman Advisors, Inc. (formerly,
Seligman Financial Services, Inc.) ("SAI") is hereby amended to include the
following provisions in connection with the offering by the Seligman Mutual
Funds of Class B shares* and Class C shares as described in each Fund's
prospectus, as applicable:
1. Dealer/Bank agrees to comply with the attached "Policies and
Procedures" with respect to sales of Seligman Mutual Funds.
2. SAI shall be entitled to a contingent deferred sales load ("CDSL") on
redemptions within six years of purchase on any Class B shares sold,
within eighteen months of purchase on any Class C shares sold and
within one year of purchase on any Class D shares sold. SAI shall
also be entitled to a CDSL on redemptions within eighteen months of
purchase on any Class A shares sold at net asset value due to the size
of the purchase. With respect to omnibus accounts in which Class A
shares, Class B shares, Class C shares or Class D shares are held at
Seligman Data Corp. ("SDC") in the Dealer/Bank's name, the Dealer/Bank
agrees that by the tenth day of each month it will furnish to SDC a
report of each redemption in the preceding month to which a CDSL was
applicable, accompanied by a check payable to SAI in payment of the
CDSL due.
3. If, with respect to a redemption of any Class A shares, Class B shares,
Class C shares or Class D shares sold by the Dealer/Bank, the CDSL is
waived because the redemption qualifies for a waiver as set forth in
the Fund's prospectus or statement of additional information, the
Dealer/Bank shall remit to SAI promptly upon notice an amount equal to
the payment or a portion of the payment made by SAI to the Dealer/Bank
at the time of sale with respect to such Class A shares, Class B
shares, Class C shares or Class D shares.
4. On each purchase of Shares by the Dealer/Bank, the Dealer/Bank shall be
entitled, based on the Class of Shares purchased and except as provided
in each Fund's current prospectus, to a concession determined as a
percentage of the price to the investor as set forth in each Fund's
current prospectus. No concessions will be paid to the Dealer/Bank for
the investment of dividends in additional shares.
5. The Dealer/Bank will comply in all respects with Notice to Members
95-80 of the National Association of Securities Dealers, Inc. regarding
member's obligations and responsibilities regarding mutual fund sales
practices.
The sale of any Class A, Class B, Class C or Class D shares of a
Seligman Mutual Fund will constitute Dealer/Bank's acceptance of and agreement
with the terms set forth herein.
* Seligman Municipal Fund Series, Inc., Seligman Municipal Series Trust,
Seligman New Jersey Municipal Fund, Inc. and Seligman Pennsylvania
Municipal Fund Series do not currently offer Class B shares.
<PAGE> 2
POLICIES AND PROCEDURES
In connection with the offering by the Funds of four classes of
shares1, one subject to a front-end sales load and a service fee ("Class A
Shares"), one subject to a service fee, a distribution fee, no front-end sales
load and a contingent deferred sales load on redemptions within six years of
purchase ("Class B Shares"), one subject to service fee, a distribution fee, a
front-end sales load and a contingent deferred sales load on redemptions within
eighteen months of purchase ("Class C Shares) and one subject to a service fee,
a distribution fee, no front-end sales load and a contingent deferred sales load
on redemptions within one year of purchase ("Class D Shares")2, it is important
for an investor to choose the method of purchasing shares which best suits his
or her particular circumstances. To assist investors in these decisions, SAI has
instituted the following policies with respect to orders for Shares:
1. No purchase order may be placed for Class D shares unless the
investor meets one of the qualifications provided for in
Footnote 2 below. The Dealer/Bank is solely responsible for
complying with this restriction.
2. No purchase order may be placed for Class B Shares or Class C
shares for amounts of $250,000 or more.
3. Any other purchase order may be for Class A, Class B, Class C,
or Class D shares in light of the relevant facts and
circumstances, including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his
Shares; and
c. any other relevant circumstances such as the
availability of purchases under a Letter of Intent,
Volume Discount, or Right of Accumulation.
There are instances when one method of purchasing Shares may be more
appropriate than another. For example, an investor who would qualify for a
significant discount from the maximum sales load on Class A Shares may determine
that payment of such a reduced front-end sales load and service fee is
preferable to payment of a higher ongoing distribution fee. On the other hand,
an investor whose order would not qualify for such a discount may wish to have
all of his or her funds invested in Class B or Class C Shares. An investor who
expects to hold his or her shares for longer than eight years might prefer Class
B Shares over Class C Shares because of the conversion feature; once the Class B
Shares have converted to Class A Shares, the ongoing distribution fees will be
reduced. Class C Shares may remain a more attractive choice for shorter-term
investors (especially those who would qualify for a discount from the maximum
sales load) because the front-end sales load is lower than on Class A shares and
the contingent deferred sales load on such shares is only 1%, and it does not
apply if the investor owns his or her shares for at least eighteen months. If an
investor anticipates that he or she will redeem his or her Class B Shares while
still subject to a contingent deferred sales charge, the investor may, depending
on the amount of the purchase, pay an amount greater than the sales load and
service fee attributable to Class A Shares.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of Shares of
a Fund advise the investor of then available pricing structures offered by such
Fund, and the impact of choosing one method over another. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
Questions relating to this policy should be directed to Stephen J.
Hodgdon, President, Seligman Advisors, Inc. at (212) 850-1217.
- ----------------
1 Seligman Municipal Fund Series, Inc, Seligman Municipal Series Trust,
Seligman New Jersey Municipal Fund, Inc. and Seligman Pennsylvania
Municipal Fund Series only offer three classes of shares; Class B shares
are not currently available from these Funds.
2 Class D shares are only available (1) to existing Class D shareholders, (2)
if the Dealer/Bank maintains an omnibus account at Seligman Data Corp., or
(3) pursuant to a 401(k) or other retirement plan program for which Class D
shares are already available or for which the sponsor requests Class D
shares because the sales charge structure of Class D shares is comparable
to the sales charge structure of the other funds offered under the program.
June 1, 1999
<PAGE> 1
Exhibit (e)(1)
Banking Agreement
BANK AGREEMENT
(FULLY DISCLOSED BASIS)
Date
Seligman Advisors, Inc. Re: Name of Bank
100 Park Avenue
New York, New York 10017
Gentlemen:
We are a "bank" (as such term is defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). We desire to
make available to our customers, under an agency relationship with our
customers, shares of beneficial interest or common stock of open-end registered
investment companies managed by J. & W. Seligman & Co. Incorporated (hereinafter
referred to individually as a "Fund" and collectively as the "Funds"). A current
list of the Funds is included with this Agreement as Exhibit A. You are the
exclusive agent for the distribution of such shares pursuant to the terms of a
Distributing Agreement between you and each Fund. Unless the context otherwise
requires, as used herein the term "Prospectus" shall mean the prospectus and
related statement of additional information incorporated therein by reference
(as amended and supplemented) of each of the respective Funds included in the
then currently effective registration statement (or post-effective amendment
thereto) of each such Fund, as filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Registration
Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund pursuant
to this Agreement, it is understood and agreed in each case that (a) we
shall be acting solely as agent for the account of our customer; (b) each
transaction shall be initiated solely upon the order of our customer; (c)
you shall execute transactions only upon receiving instructions from us
acting as agent for our customer; (d) as between us and our customer, our
customer will have full beneficial ownership of all Fund shares; and (e)
each transaction shall be for the account of our customer and not for our
account. Each transaction shall be without recourse to us provided that we
act in accordance with the terms of this Agreement. We represent and
warrant to you that we will have full right, power and authority to effect
transactions (including, without limitation, any purchases and redemptions)
in Fund shares on behalf of all customer accounts provided by us to you or
to any transfer or shareholder servicing agent as such term is defined in
the Prospectus of each Fund (the "Transfer Agent").
2. All orders for the purchase of any Fund shares shall be executed at the
then current public offering price per share (i.e., the net asset value per
share plus the applicable sales load, if any) and all orders for the
redemption of any Fund shares shall be executed at the current price bid by
you, in each case as described in the Prospectus of such Fund. All orders
are subject to acceptance or rejection by you at your sole discretion.
Unless otherwise mutually agreed in writing, each transaction shall be
promptly confirmed in writing directly to the customer on a fully disclosed
basis and a copy of each confirmation shall be sent simultaneously to us.
You reserve the right, at your discretion and without notice, to suspend
the sale of shares or withdraw entirely the sale of shares of any or all of
the Funds.
<PAGE> 2
3. We agree that we shall not make shares of any Fund available to our
customers except in compliance with all applicable federal and state laws
and the rules and regulations of applicable regulatory agencies or
authorities. We agree that we shall not purchase any Fund shares, as agent
for any customer, unless we deliver or cause to be delivered to such
customer, at or prior to the time of such purchase, a copy of the
Prospectus of such Fund, or unless such customer has acknowledged receipt
of the Prospectus of such Fund. We further agree to obtain from each
customer for whom we act as agent for the purchase of Fund shares any
taxpayer identification number certification required under Section 3406 of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder, and to provide you or your designee
with timely written notice of any failure to obtain such taxpayer
identification number certification in order to enable the implementation
of any required backup withholding in accordance with Section 3406 of the
Code and the regulations thereunder. Unless otherwise mutually agreed in
writing, you shall deliver or cause to be delivered to each of the
customers who purchase shares of any Fund through us pursuant to this
Agreement copies of all annual and interim reports, proxy solicitation
materials and any other information and materials relating to such Funds
and prepared by or on behalf of you, the Fund or its investment adviser,
custodian, transfer agent or dividend disbursing agent for distribution to
each such customer. You agree to supply us with copies of the Prospectus,
annual reports, proxy solicitation materials and any such other information
and materials relating to each Fund in reasonable quantities upon request.
4. We shall not make any representations concerning any Fund shares other than
those contained in the Prospectus of such Fund or in any promotional
materials or sales literature furnished to us by you or the Fund. We shall
not furnish or cause to be furnished to any person or display or publish
and information or materials relating to any fund (including, without
limitation, promotional materials and sales literature, advertisements,
press releases, announcements, statements, posters, signs or other similar
material), except such information and materials as may be furnished to us
by you or the Fund, and such other information and materials as may be
approved in writing by you.
5. In the case of purchases by us, as agent for our customers, of Fund shares
sold with a sales load, an account fee shall be payable to us as set forth
in Exhibit A.
6. In the case of any Class A shares sold with a sales load, customers may be
entitled to a reduction in sales load on purchases, in such case, our
account fee will be paid based upon the reduced sales load as described in
each Fund's Prospectus.
7. You shall be entitled to a contingent deferred sales load ("CDSL") on
redemptions within six years of purchase on any Class B shares sold and
within one year of purchase on any Class D shares. With respect to omnibus
accounts in which Class B shares or Class D shares are held at Seligman
Data Corp. ("Seligman Data") in our name, we agree that by the tenth day of
each month we will furnish to Seligman Data a report of each redemption in
the preceding month to which a CDSL was applicable, accompanied by a check
payable to you in payment of the CDSL due.
<PAGE> 3
8. If, with respect to a redemption of any Class B shares or Class D shares
sold by us, the CDSL is waived because the redemption qualifies for a
waiver set forth in the Fund's prospectus, we shall promptly remit to you
an amount equal to the payment made by you to us at the time of sale with
respect to such Class B shares or Class D shares.
9. We agree to comply with the "Policies and Procedures" with respect to sales
of shares of Seligman Mutual Funds offering three classes of shares
attached hereto as exhibit C.
10. The procedures relating to all orders and the handling thereof will be
subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional order will be
accepted.
11. a. We agree to pay for purchase orders of any Fund shares from us as
agent for our customers in accordance with the terms of the Prospectus
of the applicable Fund. On or before the settlement date of each
purchase order for shares of any Fund, we shall either (i) remit to an
account designated by you with the Transfer Agent and amount equal to
the then current public offering price of the shares of such Fund
being purchased less our account fee, if any, with respect to such
purchase order as determined by you in accordance with the terms of
the applicable Fund Prospectus, or (ii) remit to an account designated
by you with the Transfer Agent an amount equal to the then current
public offering price of the shares of such Fund being purchased
without deduction for our account fee, if any, with respect to such
purchase order as determined by you in accordance with the terms of
the applicable Fund Prospectus, in which case our account fee, if any,
shall be payable to us by you on at least a monthly basis. If payment
for any purchase order is not received in accordance with the terms of
the applicable Fund Prospectus, you reserve the right, without notice,
to cancel the sale and to hold us responsible for any loss sustained
as a result thereof.
b. If any shares sold to us as agent for our customers under the terms of
this Agreement are sold with a sales load and are redeemed for the
account of the Fund or are tendered for redemption within seven (7)
days after confirmation of our purchase order for such shares: (i) we
shall forthwith refund to you the full account fee received by us on
the sale; and (ii) you shall forthwith pay to the Fund your portion of
the salesload on the sale which had been retained by you and shall
also pay to the Fund the amount refunded by us.
12. We shall not withhold placing with you orders received from our customers
so as to profit ourselves as a result of such withholding.
13. We hereby represent and warrant to you that (a) we are a "bank" as such
term is defined in Section 3(a)(6) of the Exchange Act; (b) we are a duly
organized and validly existing "bank" in good standing under the laws of
the jurisdiction in which we were organized; (c) all authorizations (if
any) required for our lawful execution of this Agreement and our
performance hereunder have been obtained; (d) as agents for our customers,
we are the only one having a direct relationship with the customer and
therefore, we will be responsible, in that relationship for necessary
compliance with all laws and regulations including those of applicable bank
regulatory authorities and any federal or state regulatory body having
jurisdiction over us or our customers; and (e) upon execution and delivery
by us, and assuming due and valid execution and delivery by you, this
Agreement will constitute a
<PAGE> 4
valid and binding Agreement, enforceable against us in accordance with its
terms. We agree to give written notice to you promptly in the event that we
shall cease to be a "bank" as such term is defined in Section 3 (a)(6) of
the Exchange Act. In such event, this Agreement shall be automatically
terminated upon such written notice.
14. You agree to inform us, upon our request, as to the states in which you
believe the shares of the Funds have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such
states, but you shall have no obligation or responsibility as to our right
to make shares of any Fund available to our customers in any jurisdiction.
15. The names and addresses and other information concerning our customers are
and shall remain our sole property, and neither you nor your affiliates
shall use such names, addresses or other information for any purpose except
in connection with the performance of your duties and responsibilities
hereunder and except for servicing and informational mailings relating to
the Funds. Notwithstanding the foregoing, this Paragraph 12 shall not
prohibit you or any of your affiliates from utilizing for any purpose the
names, addresses or other information concerning any of our customers if
such names, addresses or other information are obtained in any manner other
than form us pursuant to this Agreement. The provisions of this Paragraph
12 shall survive the termination of this Agreement.
16. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture
between you and us. Neither party hereto shall be, act as, or represent
itself as, the agent or representative of the other, nor shall either party
have the right or authority to assume, create or incur any liability or any
obligation of any kind, express or implied, against or in the name of, or
on behalf of, the other party. This Agreement is not intended to, and shall
not, create any rights against either party hereto by any third party
solely on account of this Agreement.
17. Except as otherwise specifically provided herein, all notices required or
permitted to be given pursuant to this Agreement shall be given in writing
and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt requested, or by
telex, telegram or similar means of same day delivery. Notice shall be
deemed to have been given on the date upon which it was either delivered
personally to you or was mailed postage paid. Unless otherwise notified in
writing, all notices to us shall be given or sent to us at our address
shown below.
18. This Agreement shall be effective only when accepted and signed by you, and
may be terminated at any time by either party hereto upon five (5) days
prior written notice to the other party. You may modify this Agreement at
any time by written notice to us. This Agreement constitutes the entire
Agreement and understanding between the parties hereto relating to the
subject matter hereof and supersedes any and all prior agreements between
the parties hereto relating to the subject matter hereof.
<PAGE> 5
19. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
Date: By: _________________________
Title:
NOTE: Please sign and return both copies of this Agreement to Seligman Advisors,
Inc. Upon acceptance one countersigned copy will be returned to you for
your files.
Accepted:
Seligman Advisors, Inc.
Date: By:
-------------------------
Stephen J. Hodgdon
President
<PAGE> 6
EXHIBIT A
THE SELIGMAN FAMILY OF MUTUAL FUNDS
SELIGMAN CAPITAL FUND, INC.
SELIGMAN COMMON STOCK FUND, INC.
SELIGMAN COMMUNICATIONS & INFORMATION FUND, INC.
SELIGMAN INCOME FUND, INC.
SELIGMAN FRONTIER FUND, INC.
SELIGMAN GROWTH FUND, INC.
SELIGMAN VALUE FUND SERIES, INC.
SELIGMAN HENDERSON GLOBAL FUND SERIES, INC.
Seligman Henderson Global Smaller Companies Fund
Seligman Henderson Global Technology Fund
Seligman Henderson International Fund
Seligman Henderson Global Growth Opportunities Fund
Seligman Henderson Emerging Markets Growth Fund
SELIGMAN CASH MANAGEMENT FUND, INC.
SELIGMAN HIGH INCOME FUND SERIES
U.S. Government Securities Series
High Yield Bond Series
SELIGMAN MUNICIPAL FUND SERIES, INC.
National
Colorado
Georgia
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Missouri
New York
Ohio
Oregon
South Carolina
SELIGMAN MUNICIPAL FUND SERIES TRUST
California Quality
California High Yield
Florida
North Carolina
SELIGMAN PENNSYLVANIA MUNICIPAL FUND, SERIES
SELIGMAN NEW JERSEY MUNICIPAL FUND, INC.
<PAGE> 7
EXHIBIT B - SEE SECTION 5
CLASS A SHARES
<TABLE>
<CAPTION>
Sales Dealer
Amount of Purchase Charge Discount
------------------ ------ --------
<S> <C> <C>
Less than $50,000 4.75% 4.25%
$50,000 up to $99,999 4.00% 3.50%
$100,000 up to $249,999 3.50% 3.00%
$250,000 up to $499,999 2.50% 2.25%
$500,000 up to $999,999 2.00% 1.75%
$1,000,000 or more * 0.00% 0.00%
</TABLE>
* Shares acquired at net asset value pursuant to the foregoing ("NAV Sales")
will be subject to a contingent deferred sales load ("CDSL") of 1.00% if the
shares are redeemed within 18 months. Dealers will receive a fee on NAV sales
calculated as follows: 1.00% of NAV sales up to but not including $ 2 million;
.80% of NAV sales from $ 2 million up to but not including $ 3 million; .50% of
NAV sales from $ 3 million up to but not including $ 5 million and .25% of NAV
sales from $ 5 million and above. The calculation of the fee will be based on
assets held by a "single person" as defined in each Fund's prospectus.
CLASS B SHARES
Dealer Discount
4%
CLASS D SHARES
Dealer Discount
1%
<PAGE> 1
SULLIVAN & CROMWELL
May 27, 1999
Seligman Capital Fund, Inc.,
100 Park Avenue,
New York, N.Y. 10017.
Dear Sirs:
In connection with Post-Effective Amendment No.57 to the
Registration Statement on Form N-1A (File No. 2-33566) of Seligman Capital Fund,
Inc., a Maryland corporation (the "Fund"), which you expect to file under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to an
indefinite number of shares of capital stock, par value $1.000 per share, of the
class designated as Class C shares (the "Shares"), we, as your counsel, have
examined such corporate records, certificates and other documents, and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion.
<PAGE> 2
Seligman Capital Fund, Inc. -2-
The number of shares of each class of capital stock that the
Fund is authorized to issue at any time is determined by adding to the number of
shares of such class then outstanding additional authorized shares in an amount
determined according to a formula set forth in the Fund's charter. The formula
allocates to each class an equal portion of the number of shares representing
the difference between the number of shares that the Fund is authorized to issue
and the total number of shares of all classes outstanding at such time.
Upon the basis of such examination, we advise you that, in our
opinion, the Fund is authorized to issue the number of Shares determined in
accordance with the charter of the Fund as described above and, when the
Post-Effective Amendment referred to above has become effective under the
Securities Act and the Shares have been issued (a) for at least the par value
thereof in accordance with the Registration Statement referred to above, (b) so
as not to exceed the then authorized number of Shares and (c) in accordance with
the authorization of the Board of Directors, the Shares will be duly and validly
issued, fully paid and non-assessable.
<PAGE> 3
Seligman Capital Fund, Inc. -3-
The foregoing opinion is limited to the Federal laws of the
United States and the General Corporation Law of the State of Maryland, and we
are expressing no opinion as to the effect of the laws of any other
jurisdiction.
We hereby consent to the filing of this opinion as an exhibit
to the Post-Effective Amendment referred to above. In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act.
Very truly yours,
SULLIVAN & CROMWELL
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
Seligman Capital Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 57 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
May 26, 1999
<PAGE> 1
EXHIBIT L
INVESTMENT LETTER
SELIGMAN CAPITAL FUND, INC.
Seligman Capital Fund, Inc. (the "Fund"), an open-end diversified
management investment company, and the undersigned ("Purchaser"), intending to
be legally bound, hereby agree as follows:
1. The Fund hereby sells to Purchaser and Purchaser purchases 1 Class C
share (the "Share") of Capital Stock (par value $1.00) of the Fund at a
price equivalent to the net asset value of one Class D share of the
Fund as of the close of business on May 27, 1999. The Fund hereby
acknowledges receipt from Purchaser of funds in such amount in full
payment for the Share.
2. Purchaser represents and warrants to the Fund that the Share is being
acquired for investment and not with a view to distribution thereof,
and that Purchaser has no present intention to redeem or dispose of the
Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
28th day of May, 1999 ("Purchase Date").
SELIGMAN CAPITAL FUND, INC.
By:
------------------------------
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By:
------------------------------
Name: Brian T. Zino
Title: President
<PAGE> 1
EXHIBIT m
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
As amended and restated through June 1, 1999
SECTION 1. Seligman Capital Fund, Inc. (the "Fund") will pay
fees to Seligman Advisors, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class B, Class C and Class D shares of the Fund. As
a result, the Fund is adopting this Administration, Shareholder Services and
Distribution Plan (the "Plan") pursuant to Section 12(b) of the Investment
Company Act of 1940, as amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the
Distributor a shareholder servicing fee of up to .25% on an annual basis of the
average daily net assets of the Fund (payable quarterly with respect to Class A
and monthly with respect to Class B, Class C and Class D) and a distribution fee
of .75% on an annual basis, payable monthly, of the average daily net assets of
the Fund attributable to the Class B Shares and a distribution fee of up to .75%
on an annual basis, payable monthly, of the average daily net assets of the Fund
attributable to Class C and Class D shares. Such fees will be used in their
entirety by the Distributor to make payments for administration, shareholder
services and distribution assistance, including, but not limited to (i)
compensation to securities dealers and other organizations (each, a "Service
Organization" and collectively, the "Service Organizations"), for providing
distribution assistance with respect to assets invested in the Fund, (ii)
compensation to Service Organizations for providing administration, accounting
and other shareholder services with respect to Fund shareholders, and (iii)
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 the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Directors of
the Fund.
SECTION 3. J. & W. Seligman & Co. Incorporated, the Fund's
investment manager (the "Manager"), in its sole discretion, may make payments
to the Distributor for similar purposes. These payments will be made by the
Manager from its own resources, which may include the management fee that the
Manager receives from the Fund.
1
<PAGE> 2
SECTION 4. This Plan shall continue in effect through December
31 of each year so long as such continuance is specifically approved at least
annually by vote of a majority of both (a) the Directors of the Fund and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
SECTION 5. The Distributor shall provide to the Fund's
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
SECTION 6. This Plan may be terminated by the Fund with
respect to any class at any time by vote of a majority of the Qualified
Directors, or by vote of a majority of the outstanding voting securities of such
class. If this Plan is terminated in respect of a class, no amounts (other than
amounts accrued but not yet paid) would be owed by the Fund to the Distributor
with respect to such class.
SECTION 7. All agreements related to this Plan shall be in
writing, and shall be approved by vote of a majority of both (a) the Directors
of the Fund and (b) the Qualified Directors, cast in person at a meeting called
for the purpose of voting on such approval, provided, however, that the identity
of a particular Service Organization executing any such agreement may be
ratified by such a vote within 90 days of such execution. Any agreement related
to this Plan shall provide:
A. That such agreement may be terminated in respect of any class
of the Fund at any time, without payment of any penalty, by
vote of a majority of the Qualified Directors or by vote of a
majority of the outstanding voting securities of the class, on
not more than 60 days' written notice to any other party to
the agreement; and
B. That such agreement shall terminate automatically in the
event of its assignment.
SECTION 8. This Plan may not be amended to increase materially
the amount of fees permitted pursuant to Section 2 hereof without the approval
of a majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Fund and (b) the Qualified Directors,
cast in person at a meeting called for the purpose of voting on such approval.
This Plan shall not be amended to reduce the distribution fee payable to the
Distributor pursuant to Section 2 hereof in respect of Class B shares, unless
the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated, provided, however that the
distribution fee in respect of Class B shares may be reduced without change to
the shareholder servicing fee, if and to the extent required in order to comply
with any applicable laws or regulations, including applicable rules of the
National Association of Securities Dealers, Inc. regulating maximum sales
charges.
2
<PAGE> 3
SECTION 9. The Fund is not obligated to pay any
administration, shareholder services or distribution expense in excess of the
fee described in Section 2 hereof, and, in the case of Class A shares, any
expenses of administration, shareholder services and distribution of Class A
shares of the Fund accrued in one fiscal year of the Fund may not be paid from
administration, shareholder services and distribution fees received from the
Fund in respect of Class A shares in any other fiscal year.
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Fund who are not "interested persons" of the
Fund and have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to this Plan.
3
<PAGE> 1
EXHIBIT (m)(1)
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION AGREEMENT, dated as of
_______, _______ between Seligman Advisors, Inc. ("Seligman Advisors") and
________________(the "Service Organization").
The Parties hereto enter into a Administration, Shareholder Services
and Distribution Agreement ("Service Agreement") with respect to the shares of
Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund, Inc.,
Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson
Global Fund Series, Inc., Seligman High Income Fund Series, Seligman Income
Fund, Inc., Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Municipal Fund Series, Inc., Seligman Municipal
Series Trust, Seligman Value Fund Series, Inc. (the "Funds"), and any other
future mutual funds that may become members of the Seligman Group of Investment
Companies which adopt an Administration, Shareholder Services and Distribution
Plan, pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "Act"), and in consideration of the mutual agreements herein made,
agree as follows:
The Service Organization shall make such use of or provide such
information and services as may be necessary or appropriate (i) to provide
shareholder services to shareholders of the Funds and (ii) to assist Seligman
Advisors in any distribution of shares of the Funds, including, without
limitation, making use of the Service Organization's name, client lists, and
publications, for the solicitation of sales of shares of the Funds to Service
Organization clients, and such other assistance as Seligman Advisors reasonably
requests, to the extent permitted by applicable statute, rule or regulation.
1. Except with respect to the Class C and Class D shares of a Fund for the
first year following the sale thereof, Seligman Advisors shall pay to
the Service Organization a service fee (as defined in the National
Association of Securities Dealers, Inc. Rules of Fair Practice) not to
exceed .25 of 1% per annum of the average daily net assets of each
class of shares of each Fund attributable to the clients of the Service
Organization.
2. With respect to the first year following the sale of Class C and Class
D shares of a Fund, Seligman Advisors shall pay to the Service
Organization at or promptly after the time of sale a service fee (as
defined in the National Association of Securities Dealers, Inc. Rules
of Fair Practice) not to exceed .25 of 1% of the net asset value of the
Class C or Class D shares sold by the Service Organization. Such
service fee shall be paid to the Service Organization solely for
personal services and/or the maintenance of shareholder accounts to be
provided by the Service Organization to the purchaser of such Class C
or Class D Shares over the course of the first year following the sale.
3. Any service fee paid hereunder shall be paid solely for personal
services and/or the maintenance of shareholder accounts. For greater
certainty, no part of a service fee shall be paid for subtransfer
agency services, subaccounting services, or administrative services.
<PAGE> 2
4. In addition to payment of the service fee, from time to time Seligman
Advisors may make payments to the Service Organization in addition to
those contemplated above for providing distribution assistance with
respect to assets invested in each Fund by its clients.
5. Neither the Service Organization nor any of its employees or agents are
authorized to make any representation concerning the Funds or the
Funds' shares except those contained in the then current Prospectus,
copies of which will be supplied by Seligman Advisors. The Service
Organization shall have no authority to act as agent for Seligman
Advisors or the Funds.
6. In consideration of the services provided pursuant to paragraphs 1, 2
and/or 4 above, the Service Organization shall be entitled to receive
fees as are set forth in Exhibit A hereto as may be amended from time
to time by Seligman Advisors. Seligman Advisors has no obligation to
make any such payments and the Service Organization agrees to waive
payment of its fee until Seligman Advisors is in receipt of the fee
from the Fund(s). The payment of fees has been authorized pursuant to
Administration, Shareholder Services and Distribution Plans (the
"Plans") approved by the Directors/Trustees and the shareholders of
the Funds pursuant to the requirements of the Act and such
authorizations may be withdrawn at any time.
7. It is understood that the Funds reserve the right, at their discretion
and without notice, to suspend or withdraw the sale of shares of the
Funds. This Agreement shall not be construed to authorize the Service
Organization to perform any act that Seligman Advisors would not be
permitted to perform under the respective Distributing Agreements
between each of the Funds and Seligman Advisors.
8. Subject to the proviso in Section 6 of the Plans, this Agreement shall
continue until December 31 of the year in which any Plan has first
been approved by shareholders and through December 31 of each year
thereafter provided such continuance is specifically approved at least
annually by a vote of a majority of (i) the Fund's Directors/Trustees
and (ii) the Qualified Directors/Trustees cast in person at a meeting
called for the purpose of voting on such approval and provided further
that the Service Organization shall not have notified Seligman
Advisors in writing at least 60 days prior to the anniversary date of
the previous continuance that it does not desire such continuance.
This Agreement may be terminated at any time without payment of any
penalty with respect to any of the Funds by vote of a majority of the
Qualified Directors/Trustees, or by vote of a majority of the
outstanding voting securities of the particular Fund or class or
series of a Fund, on 60 days' written notice to the Service
Organization and Seligman Advisors. Notwithstanding anything
contained herein, in the event that any of the Plans shall be
terminated or any of the Plans or any part thereof shall be found
invalid or ordered terminated by any regulatory or judicial authority,
or the Service Organization shall fail to perform the services
contemplated by this Agreement, such determination to be made in good
faith by Seligman Advisors, this Agreement may be terminated with
respect to such Plan effective upon receipt of written notice thereof
by the Service Organization. This Agreement will also terminate
automatically in the event of its assignment.
9. All communications to Seligman Advisors shall be sent to it at its
offices, 100 Park Avenue, New York, New York 10017.
<PAGE> 3
Any notice to the Service Organization shall be duly given if mailed or
telegraphed to it at the address shown below.
10. As used in this Agreement, the terms "assignment", "interested person"
and "vote of a majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and in the rules and
regulations thereunder and the term "Qualified Directors/Trustees"
shall mean the Directors/Trustees of a Fund who are not interested
persons of the Fund and have no direct or indirect financial interest
in its Plan or in any agreements related to the Plan.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. Anything herein to the contrary
notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, any of the parties to do anything in violation
of any applicable laws or regulations.
IN WITNESS WHEREOF, Seligman Advisors and the Service Organization have caused
this Agreement to be executed by their duly authorized offices as of the date
first above written.
SELIGMAN ADVISORS, INC.
By:
---------------------------------------
Stephen J. Hodgdon, President
SERVICE ORGANIZATION
---------------------------------------
By:
---------------------------------------
Address:
---------------------------------------
---------------------------------------
6/99
<PAGE> 4
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION AGREEMENT
EXHIBIT A
The payment schedule for Service Organizations is set forth immediately below:
<TABLE>
<CAPTION>
FEES AS A PERCENTAGE OF EACH FUND'S/SERIES'
NET ASSETS ATTRIBUTABLE TO SERVICE ORGANIZATIONS*
------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
FUND NAME SHARES SHARES(1) SHARES(2) Shares(2)
- --------- ------- --------- --------- ---------
<S> <C> <C> <C> <C>
Seligman Capital Fund, Inc. .25% .25% 1.00% 1.00%
Seligman Cash Management Fund, Inc. 0% .25% 1.00%+ 1.00%
Seligman Common Stock Fund, Inc. .25% .25% 1.00% 1.00%
Seligman Communications and Information Fund, Inc. .25% .25% 1.00% 1.00%
Seligman Frontier Fund, Inc. .25% .25% 1.00% 1.00%
Seligman Growth Fund, Inc. .25% .25% 1.00% 1.00%
Seligman Henderson Global Fund Series, Inc:
Seligman Henderson Emerging Markets Growth Fund .25% .25% 1.00% 1.00%
Seligman Henderson Global Smaller Companies Fund .25% .25% 1.00% 1.00%
Seligman Henderson Global Growth Opportunities Fund .25% .25% 1.00% 1.00%
Seligman Henderson Global Technology Fund .25% .25% 1.00% 1.00%
Seligman Henderson International Fund .25% .25% 1.00% 1.00%
Seligman High Income Fund Series:
U.S. Government Securities Series .25% .25% 1.00% 1.00%
High-Yield Bond Series .25% .25% 1.00% 1.00%
Seligman Income Fund, Inc. .25% .25% 1.00% 1.00%
Seligman New Jersey Municipal Fund, Inc. .25% -- 1.00% 1.00%
Seligman Pennsylvania Municipal Fund Series .25% -- 1.00% 1.00%
Seligman Municipal Fund Series, Inc:
National Series .10% -- 1.00% 1.00%
Colorado Series .10% -- 1.00% 1.00%
Georgia Series .10% -- 1.00% 1.00%
Louisiana Series .10% -- 1.00% 1.00%
Maryland Series .10% -- 1.00% 1.00%
Massachusetts Series .10% -- 1.00% 1.00%
Michigan Series .10% -- 1.00% 1.00%
Minnesota Series .10% -- 1.00% 1.00%
Missouri Series .10% -- 1.00% 1.00%
New York Series .10% -- 1.00% 1.00%
Ohio Series .10% -- 1.00% 1.00%
Oregon Series .10% -- 1.00% 1.00%
South Carolina Series .10% -- 1.00% 1.00%
Seligman Municipal Series Trust:
California Municipal Quality Series .10% -- 1.00% 1.00%
California Municipal High-Yield Series .10% -- 1.00% 1.00%
Florida Municipal Series .25% -- 1.00% 1.00%
North Carolina Municipal Series .25% -- 1.00% 1.00%
Seligman Value Fund Series, Inc.:
Seligman Large-Cap Value Fund .25% .25% 1.00% 1.00%
Seligman Small-Cap Value Fund .25% .25% 1.00% 1.00%
</TABLE>
- -------------------------------------
* Included in each of the percentages above is the service fee (as
defined in the National Association of Securities Dealers, Inc. Rules
of Fair Practice) with respect to each class of shares referred to in
paragraph 1 of this Agreement. Except as provided in Footnote (2)
below, Seligman Advisors shall pay the fees provided for above to the
Service Organization quarterly.
(1) Class B Shares are not available for the Seligman New Jersey Municipal
Fund, Inc., Seligman Pennsylvania Municipal Fund Series or any Series of
Seligman Municipal Fund Series, Inc. or Seligman Municipal Series Trust.
(2) At or promptly after the time of sale of any Class C or Class D
Shares, a Service Organization shall be paid .25% of the net asset
value of the Class C or Class D Shares sold by it, representing the
service fee referred to in paragraph 2 of this Agreement for services
to be provided to Class C or Class D shareholders, as applicable,
over the course of the one year period immediately following the
sale. Commencing in year two, the Service Organization shall be paid
1.00% of the net asset value of the Class C or Class D shares
invested in a Fund, such fee to be comprised of a .25% service fee
and a .75% fee referred to in paragraph 4 of this Agreement for
providing distribution assistance with respect to assets invested in
such Fund.
+ The fees referred to in Footnote 2 will not be paid on new sales of
Class C shares of Seligman Cash Management Fund, Inc. Such fees will
only be paid on Class C shares of Seligman Cash Management Fund, Inc.
which were purchased by an exchange of Class C shares from another
Seligman Mutual Fund.
June 1, 1999
<PAGE> 1
EXHIBIT o
SELIGMAN GROUP OF MUTUAL FUNDS
Plan for Multiple Classes of Shares (four classes)
--------------------------------------------------
THIS PLAN, as it may be amended from time to time, sets forth
the separate arrangement and expense allocation of each class of shares (a
"Class") of each registered open-end management investment company, or series
thereof, in the Seligman Group of Mutual Funds that offers four classes of
shares (each, a "Fund"). The Plan has been adopted pursuant to Rule 18f-3(d)
under the Investment Company Act of 1940, as amended (the "Act"), by a majority
of the Board of Directors or Trustees, as applicable ("Directors"), of each Fund
listed on Schedule I hereto, including a majority of the Directors who are not
interested persons of such Fund within the meaning of Section 2(a)(19) of the
Act ("Disinterested Directors"). Any material amendment to this Plan is subject
to the prior approval of the Board of Directors of each Fund to which it
relates, including a majority of the Disinterested Directors.
1. General
A. Any Fund may issue more than one Class of voting stock, provided
that each Class:
i. Shall have a different arrangement for shareholder
services or the distribution of securities or both,
and shall pay all of the expenses of that
arrangement;
ii. May pay a different share of other expenses, not
including advisory or custodial fees or other
expenses related to the management of the Fund's
assets, if these expenses are actually incurred in a
different amount by that Class, or if the Class
receives services of a different kind or to a
different degree than other Classes of the same Fund
("Class Level Expenses");
iii. May pay a different advisory fee to the extent that
any difference in amount paid is the result of the
application of the same performance fee provisions in
the advisory contract of the Fund to the different
investment performance of each Class;
iv. Shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its
arrangement;
-1-
<PAGE> 2
v. Shall have separate voting rights on any matter
submitted to shareholders in which the interests of
one Class differ from the interests of any other
Class; and
vi. Shall have in all other respects the same rights and
obligations as each other Class of the Fund.
B. i. Except as expressly contemplated by this paragraph
B., no types or categories of expenses shall be
designated Class Level Expenses.
ii. The Directors recognize that certain expenses
arising in certain sorts of unusual situations are
properly attributable solely to one Class and
therefore should be borne by that Class. These
expenses ("Special Expenses") may include, for
example: (i) the costs of preparing a proxy
statement for, and holding, a special meeting of
shareholders to vote on a matter affecting only one
Class; (ii) the costs of holding a special meeting
of Directors to consider such a matter; (iii) the
costs of preparing a special report relating
exclusively to shareholders of one Class; and (iv)
the costs of litigation affecting one Class
exclusively. J. & W. Seligman & Co. Incorporated
(the "Manager") shall be responsible for identifying
expenses that are potential Special Expenses.
iii. Subject to clause iv. below, any Special Expense
identified by the Manager shall be treated as a Class
Level Expense.
iv. Any Special Expense identified by the Manager that is
material to the Class in respect of which it is
incurred shall be submitted by the Manager to the
Directors of the relevant Fund on a case by case
basis with a recommendation by the Manager as to
whether it should be treated as a Class Level
Expense. If approved by the Directors, such Special
Expense shall be treated as a Class Level Expense of
the affected class.
C. i. Realized and unrealized capital gains and losses
of a Fund shall be allocated to each class of that
Fund on the basis of the aggregate net asset value of
all outstanding shares ("Record Shares") of the Class
in relation to the aggregate net asset value of
Record Shares of the Fund.
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<PAGE> 3
ii. Income and expenses of a Fund not charged directly to
a particular Class shall be allocated to each Class
of that Fund on the following basis:
a. For periodic dividend funds, on the basis of
the aggregate net asset value of Record
Shares of each Class in relation to the
aggregate net asset value of Record Shares
of the Fund.
b. For daily dividend funds, on the basis of
the aggregate net asset value of Settled
Shares of each Class in relation to the
aggregate net asset value of Settled Shares
of the Fund. "Settled Shares" means Record
Shares minus the number of shares of that
Class or Fund that have been issued but for
which payment has not cleared and plus the
number of shares of that Class or Fund which
have been redeemed but for which payment has
not yet been issued.
D. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will
monitor each Fund for the existence of any material conflicts
among the interests of its several Classes. The Directors,
including a majority of the Disinterested Directors, shall
take such action as is reasonably necessary to eliminate any
such conflicts that may develop. The Manager and Seligman
Financial Services, Inc. (the "Distributor") will be
responsible for reporting any potential or existing conflicts
to the Directors. If a conflict arises, the Manager and the
Distributor will be responsible at their own expense for
remedying such conflict by appropriate steps up to and
including separating the classes in conflict by establishing
a new registered management company to operate one of the
classes.
E. The plan of each Fund adopted pursuant to Rule 12b-1 under
the Act (the "Rule 12b-1 Plan") provides that the Directors
will receive quarterly and annual statements complying with
paragraph (b)(3)(ii) of Rule 12b-1, as it may be amended from
time to time. To the extent that the Rule 12b-1 Plan in
respect of a specific Class is a reimbursement plan, then
only distribution expenditures properly attributable to the
sale of shares of that Class will be used in the statements
to support the Rule 12b-1 fee charged to shareholders of such
Class. In such cases expenditures not related to the sale of
a specific Class will not be presented to the Directors to
support Rule 12b-1 fees charged to shareholders of such
Class. The statements, including the allocations upon which
they are based, will be subject to the review of the
Disinterested Directors.
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<PAGE> 4
F. Dividends paid by a Fund with respect to each Class, to the
extent any dividends are paid, will be calculated in the same
manner, at the same time and on the same day and will be in
the same amount, except that fee payments made under the Rule
12b-1 Plan relating to the Classes will be borne exclusively
by each Class and except that any Class Level Expenses shall
be borne by the applicable Class.
G. The Directors of each Fund hereby instruct such Fund's
independent auditors to review expense allocations each year
as part of their regular audit process, to inform the
Directors and the Manager of any irregularities detected and,
if specifically requested by the Directors, to prepare a
written report thereon. In addition, if any Special Expense
is incurred by a Fund and is classified as a Class Level
Expense in the manner contemplated by paragraph B. above, the
independent auditors for such Fund, in addition to reviewing
such allocation, are hereby instructed to report thereon to
the Audit Committee of the relevant Fund and to the Manager.
The Manager will be responsible for taking such steps as are
necessary to remedy any irregularities so detected, and will
do so at its own expense to the extent such irregularities
should reasonably have been detected and prevented by the
Manager in the performance of its services to the Fund.
2. Specific Arrangements for Each Class
------------------------------------
The following arrangements regarding shareholder services,
expense allocation and other indicated matters shall be in effect with respect
to the Class A shares, Class B shares, Class C shares and Class D shares of each
Fund. The following descriptions are qualified by reference to the more detailed
description of such arrangements set forth in the prospectus and statement of
additional information relating to each Fund, as the same may from time to time
be amended or supplemented (collectively for each Fund, the "Relevant
Prospectus"), provided that no Relevant Prospectus may modify the provisions of
this Plan applicable to Rule 12b-1 fees or Class Level Expenses.
(a) Class A Shares
--------------
i. Class A shares are subject to an initial sales load
which varies with the size of the purchase, to a
maximum of 4.75% of the public offering price.
Reduced sales loads shall apply in certain
circumstances. Class A shares of Seligman Cash
Management Fund, Inc. shall not be subject to an
initial sales load.
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<PAGE> 5
ii. Class A shares shall be subject to a Rule 12b-1
service fee of up to 0.25% of average daily net
assets.
iii. Special Expenses attributable to the Class A shares,
except those determined by the Directors not to be
Class Level Expenses of the Class A shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class A
shares. No other expenses shall be treated as Class
Level Expenses of the Class A shares.
iv. The Class A shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
(b) Class B Shares
--------------
i. Class B shares are sold without an initial sales load
but are subject to a contingent deferred sales load
("CDSL") in certain cases. The CDSL in respect of any
Class B share, if applicable, will be in the
following amount (as a percentage of the current net
asset value or the original purchase price, whichever
is less) if the redemption occurs within the
indicated number of years of issuance of such share:
<TABLE>
<CAPTION>
Years since issuance CDSL
-------------------- ----
<S> <C>
less than one 5%
one but less than two 4%
two but less than four 3%
four but less than five 2%
five but less than six 1%
six or more 0%
</TABLE>
ii. Class B shares shall be subject to a Rule 12b-1 fee
of up to 1.00% of average daily net assets,
consisting of an asset-based distribution fee of up
to 0.75% and a service fee of up to 0.25%.
iii. Each Class B share shall automatically convert to a
Class A share on the last day of the month which
precedes the eighth anniversary of its date of issue
occurs.
iv. Special Expenses attributable to the Class B shares,
except those determined by the Directors not to be
Class Level Expenses of the Class B shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class B
shares.
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<PAGE> 6
No other expenses shall be treated as Class Level
Expenses of the Class B shares.
v. The Class B shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
(c) Class C Shares
--------------
i. Class C shares are subject to an initial sales load
which varies with the size of the purchase, to a
maximum of 1.00% of the public offering price, and a
CDSL of 1% of the lesser of the current net asset
value or the original purchase price in certain cases
if the shares are redeemed within eighteen months of
purchase. Reduced sales loads shall apply in certain
circumstances. Class C shares of Seligman Cash
Management Fund, Inc. shall not be subject to an
initial sales load.
ii. Class C shares shall be subject to a Rule 12b-1 fee
of up to 1.00% of average daily net assets,
consisting of an asset-based distribution fee of up
to 0.75% and a service fee of up to 0.25%.
iii. Special Expenses attributable to the Class C shares,
except those determined by the Directors not to be
Class Level Expenses of the Class C shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class C
shares. No other expenses shall be treated as Class
Level Expenses of the Class C shares.
iv. The Class C shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
(d) Class D Shares
--------------
i. Class D shares are sold without an initial sales load
but are subject to a CDSL of 1% of the lesser of the
current net asset value or the original purchase
price in certain cases if the shares are redeemed
within one year.
ii. Class D shares shall be subject to a Rule 12b-1 fee
of up to 1.00% of average daily net assets,
consisting of an asset-based distribution fee of up
to 0.75% and a service fee of up to 0.25%.
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<PAGE> 7
iii. Special Expenses attributable to the Class D shares,
except those determined by the Directors not to be
Class Level Expenses of the Class D shares in
accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class D
shares. No other expenses shall be treated as Class
Level Expenses of the Class D shares.
iv. The Class D shares shall be entitled to the
shareholder services, including exchange privileges,
described in the Relevant Prospectus.
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<PAGE> 8
SCHEDULE I
Seligman Cash Management Fund, Inc.
Seligman Capital Fund, Inc.
Seligman Common Stock, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Frontier Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Income Fund, Inc.
Seligman Henderson Emerging Markets Growth Fund
Seligman Henderson Global Growth Opportunities Fund
Seligman Henderson Global Smaller Companies Fund
Seligman Henderson Global Technology Fund
Seligman Henderson International Fund
Seligman High-Yield Bond Fund
Seligman U.S. Government Securities Fund
Seligman Value Fund Series, Inc.
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