================================================================================
TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Income Fund completed the first six months of 1995 with the net asset
value of CLASS A shares at $14.36 per share at June 30, up from $13.56 at March
31, and $13.05 at December 31, 1994, and the net asset value of CLASS D shares
at $14.32 per share, up from $13.52 and $13.01, respectively, for the same
periods. Total returns for the three- and six-month periods were 7.31% and
13.08%, respectively, for CLASS A shares, and 7.10% and 12.63%, respectively,
for CLASS D shares. (Total return reflects change in net asset value and assumes
any distributions paid within the period are reinvested in additional shares.
CLASS A returns do not, however, reflect the effect of the maximum initial sales
charge of 4.75%, and CLASS D returns do not reflect the effect of the 1%
contingent deferred sales load.)
On June 21, your Fund paid a $0.19 per share dividend to CLASS A
shareholders of record June 15, and a $0.16 per share dividend to CLASS D
shareholders. For both CLASS A and D shares, net realized gain per share from
investment transactions for the six months totaled $0.18. At June 30, net
unrealized gain per share totaled $0.64. Longer-term performance results appear
on page 2 of this report.
After four years of expansion, the recent stream of economic reports shows
that the long awaited slowdown is under way. The Federal Reserve Board (FRB),
concerned that growth at an accelerated rate would swell inflationary pressures,
increased short-term interest rates seven times, beginning in early 1994.
However, evidence of this current slowdown and moderate inflation led the FRB to
lower rates in early July--the first decrease in three years.
In the financial markets, with signs pointing toward a slowing economy and
prospects favoring declining interest rates, the bond market rallied this past
quarter. Investor demand for equities also continued to be strong, as shown by
the Dow Jones Industrial Average moving to new highs and all broad market equity
indices posting positive returns.
Looking ahead, we believe the economy is likely to regain strength later
this year as consumers respond to lower interest rates, exports are stimulated
by a weaker dollar, and business capital spending remains strong.
Undoubtedly, the strength of the bond market significantly benefited
interest-sensitive investment vehicles in the first half of the year. The fixed
income portion of your portfolio was very strong, up approximately 12% for the
six months. The equity section, paced by convertibles, was up 17% at June 30.
Since we last reported, convertible securities, particularly those with
exposure to technology, led performance. Examples include Cray Research,
Quantum, and EMC. A strong weighting in financial issues also contributed to
your Fund's performance.
The international portion of your portfolio experienced good performance in
the past quarter, and your Manager is optimistic about the prospects for the
Fund's overseas investments in the second half of the year.
With a significant decline in interest rates taking place in the first half
of the year, stock selection is key looking forward. Your Manager remains
optimistic about fixed income and convertible securities, in general, and your
Fund's performance, in particular.
By order of the Board of Directors,
/S/ William C. Morris
William C. Morris
Chairman
/s/ Ronald T. Schroeder
Ronald T. Schroeder
President
August 4, 1995
1
<PAGE>
================================================================================
SELIGMAN INCOME FUND
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES*
During Past Three Months
PRINCIPAL AMOUNT
------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/95
- --------- --------- ---------
U.S. Government and
Government Agency Securities
U.S. Treasury Bonds
12%, 8/15/2013.......... $10,000,000 $10,000,000
Federal National Mortgage
Association
8%, 3/15/2000........... 4,465,000 4,465,000
Corporate Bonds
Alco Capital
6 1/4%, 6/24/1998....... 5,000,000 5,000,000
Beneficial 6.52%, 6/22/2001 5,000,000 5,000,000
Ford Credit Auto Lease Trust
6.35%, 10/15/1998....... 5,000,000 5,000,000
Lyondell Petrochemical
9 1/8%, 3/15/2002....... 4,000,000 4,000,000
McDonnell Douglas
6.39%, 5/15/1997........ 5,000,000 5,000,000
Oryx Energy 10%, 4/1/2001. 4,000,000 4,000,000
Pennzoil 10 5/8%, 6/1/2001 4,000,000 4,000,000
Whitman 7 5/8%, 6/15/2015. 5,000,000 5,000,000
HOLDINGS
REDUCTIONS DECREASE 6/30/95
- -------------- -------- --------
U.S. Government and
Government Agency Securities
U.S. Treasury Bonds
10 3/4%, 8/15/2005....... $10,000,000 --
U.S. Treasury Notes
6 7/8%, 2/28/1997...... 10,000,000 --
Corporate Bonds
Coastal Corp.
10 1/4%, 10/15/2004..... 3,000,000 --
Commercial Credit
10%, 5/15/2009.......... 4,000,000 --
GMAC Floating Rate Notes,
7/19/1996............... 5,000,000 --
Household Finance
8 3/8%, 11/15/2001..... 4,000,000 --
Ryder System
7.87%, 11/24/1997....... 4,000,000 --
USX 9 1/8%, 1/15/2013..... 4,000,000 --
Asset-backed Securities
Western Financial
7.10%, 7/1/2000......... 5,000,000 --
Convertible Bonds
Kulicke & Soffa Industries
8%, 3/1/2008............ 2,000,000 --
- ----------------
* Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
MAJOR PORTFOLIO HOLDINGS
at June 30, 1995
SECURITY VALUE
- ----------- -----------
U.S. Treasury Bonds 12%, 8/15/2013...... $14,806,250
U.S. Treasury Notes 9 1/4%, 2/15/2016... 6,428,125
Carlton Communications 7 1/2%,
8/14/2007............................. 5,895,421
AEGON N.V. 8%, 8/15/2006............... 5,408,195
Capital One Bank 8 1/8%, 3/1/2000....... 5,240,305
News America Holdings 8 1/4%, 8/10/2018 5,166,510
Ford Credit Auto Lease Trust
6.35%, 10/15/1998.................... 5,015,650
Ceredian 5 1/2% Conv. Pfd. Stock........ 5,010,000
McDonnell Douglas 6.39%, 5/15/1997...... 5,000,000
Alco Capital 6 1/4%, 6/24/1998......... 4,983,850
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENT RESULTS
AVERAGE ANNUAL TOTAL RETURNS
June 30, 1995
CLASS A*
ONE FIVE TEN
YEAR YEARS YEARS
---- ----- -----
With Sales Charge 7.83% 10.68% 10.06%
Without Sales Charge 13.21 11.76 10.60
CLASS D**
SINCE
ONE INCEPTION
YEAR 5/3/93
----- ---------
With CDSL 11.27% n/a
Without CDSL 12.27 6.31%
* The maximum initial sales charge for Class A shares is 4.75%. No adjustment
was made to performance for periods prior to the commencement date, January
1, 1993, for the continuing Administration, Shareholder Services and
Distribution Plan fee of up to 0.25% on an annual basis of average daily net
assets of Class A shares.
** The returns for the one-year period for Class D shares are shown with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed
on certain shares redeemed within one year of purchase.
--------------------------------------------------------------------------
These rates of return reflect changes in prices and assume that all
distributions within the period are reinvested in additional shares. The rates
of return will vary and the principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
- --------------------------------------------------------------------------------
2
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS June 30, 1995
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
--------- -----
U.S. GOVERNMENT AND GOVERNMENT AGENCY SECURITIES 14.3%
U.S. Treasury Bonds
12%, 8/15/2013..............$10,000,000 $ 14,806,250
U.S. Treasury Notes:
7 1/8%, 5/15/1996........... 3,000,000 3,042,180
9 1/4%, 2/15/2016........... 5,000,000 6,428,125
Mortgage-backed Securities:++
Federal Home Loan Mortgage
Co. 10%, 6/15/2020 REMIC
1614-K ..................... 4,585,701 4,871,850
Federal National Mortgage
Association 8%, 3/15/2000 .. 4,465,000 4,538,092
Government National Mortgage
Association Obligations:
7 1/2%, with various
maturities from
1/15/2023 to 12/15/2024... 9,658,734 9,716,088
10%, with various maturities
from 1/15/2018 to
8/15/2021................ 10,564,221 11,508,397
------------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY SECURITIES
(Cost $54,182,836) ....... 54,910,982
------------
CORPORATE BONDS 27.1%
AEROSPACE 1.3%
McDonnell Douglas
6.39%, 5/15/1997............ 5,000,000 5,000,000
------------
AUTOMOTIVE 1.1%
General Motors
9 1/8%, 7/15/2001 .......... 4,000,000 4,450,952
------------
BANKING AND FINANCE 10.2%
Alco Capital 6 1/4%, 6/24/1998 5,000,000 4,983,850
Beneficial 6.52%, 6/22/2001... 5,000,000 4,982,750
Capital One Bank 8i%, 3/1/2000 5,000,000 5,240,305
Chrysler Financial
6 1/2%, 6/15/1998 .......... 3,000,000 3,002,727
First USA Bank
5ss.%, 1/15/1999 ........... 4,000,000 3,876,232
Ford Credit Auto Lease Trust
6.35%, 10/15/1998........... 5,000,000 5,015,650
Golden West Financial
6.70%, 7/1/2002............. 4,000,000 3,991,000
Midland Bank 7.65%, 5/1/2025 3,000,000 3,206,820
United Companies Financial
9.35%, 11/1/1999 ........ 3,000,000 3,172,773
USF&G 7%, 5/15/1998........... 2,000,000 2,024,060
------------
39,496,167
------------
BUILDING AND CONSTRUCTION 0.8%
Cemex 6 1/4%, 10/25/1995..... $3,000,000 $ 3,000,000
------------
CHEMICALS 2.2%
Lyondell Petrochemical
9 1/8%, 3/15/2002........... 4,000,000 4,408,336
Praxair 6.85%, 6/16/2005...... 4,000,000 3,982,680
------------
8,391,016
------------
DRUGS AND HEALTH CARE 1.1%
American Home Products
7.90%, 2/15/2005............ 4,000,000 4,276,684
------------
ELECTRIC UTILITIES 0.8%
Texas Utilities 5 7/8%,
4/1/1998 ................... 3,000,000 2,956,317
------------
ENERGY 3.1%
Enron 7 1/8%, 5/15/2007....... 3,000,000 2,997,420
Oryx Energy 10%, 4/1/2001..... 4,000,000 4,371,804
Pennzoil 10 5/8%, 6/1/2001.... 4,000,000 4,561,740
------------
11,930,964
------------
INSURANCE 1.4%
AEGON N.V. 8%, 8/15/2006...... 5,000,000 5,408,195
------------
PACKAGING AND PAPER 1.0%
James River 6.70%, 11/15/2003. 4,000,000 3,867,084
------------
PUBLISHING 1.3%
News America Holdings
8 1/4%, 8/10/2018 .......... 5,000,000 5,166,510
------------
MISCELLANEOUS 2.8%
Aramark Services 8.15%,
5/1/2005 ................... 2,500,000 2,638,145
Trinova 7.95%, 5/1/1997...... 3,000,000 3,076,980
Whitman 75/8%, 6/15/2015..... 5,000,000 4,932,450
------------
10,647,575
------------
TOTAL CORPORATE BONDS
(Cost $102,699,473) ........ 104,591,464
------------
3
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued) June 30, 1995
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
--------- -----
CONVERTIBLE BONDS 22.4%
CONSUMER GOODS AND SERVICES 2.3%
Bell Sports 4 1/4%,
11/15/2000 ................. $2,500,000 $ 1,868,750
Unifi 6%, 3/15/2002 .......... 4,000,000 4,005,000
Wendy's International
7%, 4/1/2006 ............... 2,000,000 2,982,500
------------
8,856,250
------------
DIVERSIFIED 0.9%
Land and General Berhad
4 1/2%, 7/26/2004 .......... 1,000,000 1,350,000
MascoTech 4 1/2%, 12/15/2003 2,750,000 2,004,063
------------
3,354,063
------------
DRUGS AND HEALTH CARE 1.0%
Ciba-Geigy 6 1/4%, 3/15/2016+. 2,000,000 1,947,500
Greenery Rehabilitation Group
8 3/4%, 4/1/2015 ........... 2,000,000 1,790,000
------------
3,737,500
------------
ENERGY 2.4%
Apache 6%, 1/15/2002+ ........ 3,000,000 3,345,000
E. E. Finance 8 3/4%,
6/27/2006 .................. 1,000,000 1,570,582
Kelley Oil & Gas
8 1/2%, 4/1/2000 ........... 1,250,000 1,040,625
Santa Fe Pipelines
10.418%, 8/15/2010 ......... 2,500,000 3,212,500
------------
9,168,707
------------
ENVIRONMENTAL SERVICES 1.0%
OHM 8%, 10/1/2006 ............ 3,000,000 2,797,500
U.S.A. Waste Services
8 1/2%, 10/15/2002 ......... 1,000,000 1,182,500
------------
3,980,000
------------
FINANCE AND INSURANCE 2.7%
AXA 6%, 1/1/2001 ............. 2,184,500+++ 526,507
Leucadia National
5 1/4%, 2/1/2003 ........... 3,000,000 3,075,000
Liberty Life International
6 1/2%, 9/30/2004 ....... 750,000 893,906
SCOR U.S. 5 1/4%, 4/1/2000+... 3,000,000 2,640,000
Trenwick Group
6%, 12/15/1999 ............. 3,000,000 3,045,000
------------
10,180,413
------------
MACHINERY 0.7%
Cooper Industries
7.05%, 1/1/2015............. 2,724,000 2,826,150
------------
RETAILING 1.6%
CML Group 5 1/2%, 1/15/2003... 2,000,000 1,500,000
Price 6 3/4%, 3/1/2001 .... 3,000,000 2,985,000
Proffitts 4 3/4%, 11/1/2003... 2,000,000 1,765,000
------------
6,250,000
------------
TECHNOLOGY 3.1%
Bay Networks
5 1/4%, 5/15/2003+.......... 3,000,000 2,853,750
Conner Peripherals
6 1/2%, 3/1/2002 ........... 3,000,000 2,531,250
Cray Research 6 1/8%, 2/1/2011 1,500,000 1,222,500
Data General 7 3/4%, 6/1/2001 2,000,000 1,800,000
EMC 4 1/4%, 1/1/2001 ......... 1,500,000 2,025,000
Evans & Sutherland Computer
6%, 3/1/2012 ............... 2,000,000 1,510,000
------------
11,942,500
------------
TELECOMMUNICATIONS 3.1%
Alcatel Alsthom
6 1/2%, 1/1/2000............ 7,599,680++ 1,352,601
Carlton Communications
7 1/2%, 8/14/2007 .......... 2,600,000 5,895,421
LDDS Communications
5%, 8/15/2003............... 2,000,000 1,910,000
Network Equipment
7 1/4%, 5/15/2014 .......... 3,000,000 2,820,000
------------
11,978,022
------------
TRANSPORTATION 2.4%
Airborne Freight
6 3/4%, 8/15/2001 .......... 1,750,000 1,715,000
British Airways
9 3/4%, 6/15/2005........... 700,000 1,994,408
Builders Transport
8%, 8/15/2005 .............. 3,000,000 2,748,750
Interpool 5(TM)%, 12/15/2018.. 2,000,000 1,570,000
Nippon Yusen 2%, 9/29/2000....115,000,000** 1,399,740
------------
9,427,898
------------
4
<PAGE>
================================================================================
June 30, 1995
- --------------------------------------------------------------------------------
PRIN. AMT
OR SHARES VALUE
--------- -----
MISCELLANEOUS 1.2%
General Signal 5 3/4%,
6/1/2002 ................... $2,300,000 $ 2,466,750
TriMas 5%, 8/1/2003 .......... 2,000,000 2,060,000
------------
4,526,750
------------
TOTAL CONVERTIBLE BONDS
(Cost $80,933,556) ......... 86,228,253
------------
CONVERTIBLE PREFERRED STOCKS 16.1%
BANKING AND FINANCE 3.9%
American General
(Series A) $3.00 ........... 50,000shs. 2,593,750
California Federal Bank 7 3/4% 38,000 864,500
Citicorp $5.375+.............. 30,000 4,781,250
National City $4.00 .......... 40,000 2,820,000
St. Paul Capital 6%........... 75,000 3,918,750
------------
14,978,250
------------
COMPUTER AND BUSINESS SERVICES 1.2%
Ceridian 5(cent)% ............ 60,000 5,010,000
------------
ENERGY 1.7%
Unocal Corp. $3.50+........... 50,000 2,687,500
Williams Cos. $3.50........... 50,000 3,087,500
WRT Energy 9% ................ 40,000 850,000
------------
6,625,000
------------
ENVIRONMENTAL SERVICES 0.9%
Browning Ferris 7 1/4%........ 100,000 3,650,000
------------
FOOD 0.7%
ConAgra (Series E) $1.6875 ... 75,000 2,653,125
------------
INSURANCE 1.5%
Ahmanson (HF) (Series D) 6% .. 50,000 2,556,250
Alexander & Alexander
(Series A) $3.625+.......... 65,000 3,266,250
------------
5,822,500
------------
PACKAGING AND PAPER 0.7%
Federal Paper Board $2.875 ... 40,000 2,585,000
------------
RETAILING 0.6%
TJX Companies $3.125 ......... 30,000 1,265,625
Venture Stores $3.25 ......... 40,000 1,230,000
------------
2,495,625
------------
SHARES VALUE
------ -----
STEEL 0.7%
U.S. Steel $3.25 ............. 60,000 $ 2,850,000
------------
TECHNOLOGY 0.9%
General Motors (Series E) 6 1/2% 30,000 1,890,000
Unisys (Series A) $3.75 ...... 40,000 1,720,000
------------
3,610,000
------------
TRANSPORTATION 1.6%
GATX $3.875 .................. 50,000 2,800,000
Sea Containers $4.00 ........ 70,000 3,185,000
------------
5,985,000
------------
UTILITIES/TELECOMMUNICATIONS 0.7%
Mobile Telecommunications
Technology $2.25+.......... 50,000 1,868,750
Nacional Financiera 11 1/4%... 30,000 933,750
------------
2,802,500
------------
MISCELLANEOUS 0.8%
Corning (Delaware) 6% ........ 60,000 3,067,500
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $55,969,135) ......... 62,134,500
------------
COMMON STOCKS 14.8%
BANKING AND FINANCE 1.8%
Banco de Santander ........... 52,732 2,083,966
Internationale Nederlanden Bank 31,518 1,744,553
National Australia Bank (ADRs) 60,000 2,400,000
Societe Generale.............. 6,000 702,312
------------
6,930,831
------------
CHEMICALS 1.2%
Bayer AG .................... 5,700 1,417,063
Dow Chemical ................. 30,000 2,156,250
European Vinyls*.............. 24,700 1,151,805
------------
4,725,118
------------
CONSUMER GOODS AND SERVICES 0.9%
Allied Domecq................. 140,000 1,219,951
B.A.T. Industries ............ 200,000 1,533,909
Christian Dior-- ABSA ....... 7,570 667,610
------------
3,421,470
------------
5
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (Continued) June 30, 1995
- --------------------------------------------------------------------------------
SHARES VALUE
------- -----
ELECTRIC UTILITIES 4.1%
Central Costanera (ADRs)+..... 14,000 $ 442,750
CINergy ...................... 102,300 2,685,375
Detroit Edison ............... 100,000 2,950,000
Empresa Nacionale de
Electricidad (ADRs) ....... 25,000 1,231,250
Entergy....................... 100,000 2,412,500
Hong Kong Electric ........... 800,000 2,719,154
Huaneng Power International
(ADRs)*.................... 35,000 643,125
PacifiCorp ................... 150,000 2,812,500
------------
15,896,654
------------
ENERGY 2.4%
Atlantic Richfield ........... 20,000 2,195,000
BP Prudhoe Bay Royalty Trust . 80,000 1,360,000
British Gas Petroleum (ADRs) . 25,000 1,134,375
Shell Transport and
Trading (ADRs) ............. 50,000 3,618,750
Total SA (Class B) .......... 15,000 904,211
------------
9,212,336
------------
PACKAGING AND PAPER 0.1%
Pechiney International ... 15,000 379,335
------------
RETAILING 0.4%
Kmart ..................... 100,000 1,462,500
------------
STEEL 0.1%
Pohang Iron & Steel (ADRs).... 15,000 442,500
------------
UTILITIES/TELECOMMUNICATIONS 3.6%
Bell Atlantic ................ 40,000 2,240,000
British Telecommunications
(ADRs) .................... 30,000 1,856,250
GTE .......................... 100,000 3,412,500
NYNEX ........................ 50,000 2,012,500
Tele Danmark (ADSs) .......... 50,000 1,400,000
Telecom Italia ............... 439,000 929,310
U.S. West .................... 50,000 2,081,250
------------
13,931,810
------------
MISCELLANEOUS 0.2%
Pacific Dunlop ............... 275,000 $ 578,224
------------
TOTAL COMMON STOCKS
(Cost $53,823,319) ......... 56,980,778
------------
SHORT-TERM HOLDINGS 2.3%
(Cost $9,000,000) .......... 9,000,000
------------
TOTAL INVESTMENTS 97.0%
(Cost $356,608,319) ........ 373,845,977
OTHER ASSETS LESS
LIABILITIES 3.0% ........ 11,473,125
------------
NET ASSETS 100.0% .......... $ 385,319,102
=============
- ---------------------
+Rule 144A security.
++Investments in mortgage-backed securities are subject to principal paydowns.
As a result of prepayments from refinancing or satisfaction of the underlying
mortgage instruments, the average life may be less than the original
maturity. This in turn may impact the ultimate yield realized from these
instruments.
oPrincipal amount reported in British pounds.
+++Principal amount reported in French francs.
**Principal amount reported in Japanese yen.
*Non-income producing security.
See notes to financial statements.
6
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Bonds and stocks (cost $293,425,483)....................................... $309,934,995
U.S. Government and Government Agency
securities (cost $54,182,836)........................................... 54,910,982
Short-term holdings (cost $9,000,000)...................................... 9,000,000 $ 373,845,977
------------
Cash......................................................................... 4,077,441
Receivable for securities sold............................................... 9,894,903
Receivable for interest and dividends........................................ 4,732,600
Receivable for Capital Stock sold............................................ 1,383,015
Investment in, and expenses prepaid to, shareholder service agent............ 158,539
Other........................................................................ 5,955
-------------
Total Assets ................................................................ 394,098,430
-------------
LIABILITIES:
Payable for securities purchased............................................. 6,696,725
Payable for Capital Stock repurchased........................................ 1,544,070
Accrued expenses, taxes, and other........................................... 538,533
-------------
Total Liabilities ........................................................... 8,779,328
-------------
Net Assets ................................................................. $385,319,102
=============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 100,000,000 shares authorized; 26,842,546
shares outstanding):
Class A.................................................................... $ 21,506,543
Class D.................................................................... 5,336,003
Additional paid-in capital................................................... 335,425,258
Undistributed net investment income............................................ 816,775
Undistributed net realized gain................................................ 4,993,340
Net unrealized appreciation of investments..................................... 15,831,418
Net unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies......................................... 1,409,765
-------------
Net Assets ................................................................. $385,319,102
============
NET ASSET VALUE PER SHARE:
Class A ($308,897,097 / 21,506,543 shares) ................................. $14.36
======
Class D ($76,422,005 / 5,336,003 shares) ................................... $14.32
======
- -----------------
See notes to financial statements.
</TABLE>
7
<PAGE>
================================================================================
STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................................................ $ 8,924,836
Dividends (net of foreign taxes withheld of $41,242)............................ 3,501,305
-----------
Total investment income......................................................... $ 12,426,141
EXPENSES:
Management fee.................................................................. 890,083
Distribution and service fees................................................... 689,476
Shareholder account services.................................................... 330,034
Shareholder reports and communications.......................................... 51,119
Registration.................................................................... 50,306
Auditing and legal fees......................................................... 33,274
Directors' fees and expenses.................................................... 18,839
Miscellaneous................................................................... 25,019
-----------
Total expenses.................................................................. 2,088,150
------------
Net investment income ......................................................... 10,337,991
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments................................................ 4,840,673
Net realized gain from foreign currency transactions............................ 79,831
Net change in unrealized depreciation of investments........................... 28,994,107
Net change in unrealized appreciation on translation of assets
and liabilities denominated in foreign currencies............................ 961,157
-----------
Net gain on investments and foreign currency transactions ..................... 34,875,768
------------
Increase in net assets from operations ........................................ $ 45,213,759
============
- -----------------
See notes to financial statements.
</TABLE>
8
<PAGE>
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................ $ 10,337,991 $ 20,225,018
Net realized gain (loss) on investments...................................... 4,840,673 (617,238)
Net realized gain from foreign currency transactions......................... 79,831 463,795
Net change in unrealized appreciation/depreciation of investments............ 28,994,107 (42,180,630)
Net change in unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies......................................... 961,157 442,628
------------ ------------
Increase (decrease) in net assets from operations............................ 45,213,759 (21,666,427)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A.................................................................... (8,115,259) (16,840,179)
Class D.................................................................... (1,695,185) (3,211,726)
------------ ------------
Decrease in net assets from distributions.................................... (9,810,444) (20,051,905)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------
SIX MONTHS
ENDED YEAR ENDED
CAPITAL SHARE TRANSACTIONS: JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A................................ 1,021,053 2,841,412 14,107,719 39,717,860
Class D................................ 712,825 2,558,453 9,719,152 35,792,197
Investment of dividends:
Class A................................ 387,160 839,174 5,362,208 11,361,860
Class D................................ 95,448 187,366 1,319,519 2,524,974
Exchanged from associated Funds:
Class A................................ 456,651 448,817 6,427,057 6,195,966
Class D................................ 188,801 55,945 2,554,751 745,079
--------- ---------- ----------- -----------
Total.................................... 2,861,938 6,931,167 39,490,406 96,337,936
--------- ---------- ----------- -----------
Cost of shares repurchased:
Class A................................ (1,563,508) (2,914,276) (21,442,076) (39,968,347)
Class D................................ (515,956) (722,706) (7,096,623) (9,798,891)
Exchanged into associated Funds:
Class A................................ (738,314) (1,290,311) (10,232,468) (17,596,183)
Class D................................ (367,956) (288,794) (5,104,786) (3,935,880)
--------- ---------- ----------- -----------
Total.................................... (3,185,734) (5,216,087) (43,875,953) (71,299,301)
--------- ---------- ----------- -----------
Increase (decrease) in net assets
from capital share transactions....... (323,796) 1,715,080 (4,385,547) 25,038,635
========= ========== ----------- ------------
Increase (decrease) in net assets............................................ 31,017,768 (16,679,697)
NET ASSETS:
Beginning of period.......................................................... 354,301,334 370,981,031
------------ ------------
End of period (including undistributed net investment income of $816,775 and
$253,655, respectively)................................................... $385,319,102 $354,301,334
============ ============
</TABLE>
- -----------------
See notes to financial statements.
9
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Income Fund, Inc. (the "Fund") offers two classes of shares. All
shares existing prior to May 3, 1993, were classified as Class A 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 D shares are sold without
an initial sales charge but are subject to a distribution fee of up to 0.75% and
a service fee of up to 0.25% on an annual basis, and a contingent deferred sales
load ("CDSL") of 1% imposed on certain redemptions made within one year of
purchase. The two 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 class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in U.S. Government securities, bonds and stocks are valued at
current market values or, in their absence, at fair value 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, a mean of bid and
asked prices. Short-term holdings maturing in 60 days or less are valued at
amortized cost.
b. The books and records of the Fund are maintained in U.S. dollars. The market
value of investment securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollars at the closing daily
rate of exchange as reported by a pricing service. Purchases and sales of
investment securities, income, and expenses are translated into U.S. dollars
at the rate of exchange prevailing on the respective dates of such
transactions.
The Fund separates that portion of the results of operations resulting from
changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of securities held in the portfolio. Similarly,
the Fund separates the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of portfolio
securities sold during the period.
c. There is no provision for federal income or excise tax. The Fund has elected
to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
d. 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.
e. 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 the shares of each class. Class-specific
expenses, which include distribution and service fees and any other items
that are specifically attributed to a particular class, are charged directly
to such class.
f. The treatment for financial statement purposes of distributions made during
the period from net investment income or net realized gain 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 capital gain and the
recharacterization of foreign exchange gains or losses to either ordinary
income 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 reclassifications will have no effect on net assets,
results of operations, or net asset value per share of the Fund.
10
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the six months ended June 30, 1995, amounted to $244,849,408
and $261,613,523, respectively.
At June 30, 1995, the cost of investments for federal income tax purposes
was $355,930,037, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities, including the effects of foreign currency
translations, amounted to $27,301,935 and $9,385,995, respectively.
4. 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 is calculated on a sliding scale of 0.50% to 0.44%, based on
average daily net assets of all the investment companies managed by the Manager.
The management fee for the six months ended June 30, 1995, was equivalent to an
annual rate of 0.49% of the average daily net assets of the Fund. Seligman
Henderson Co. (the "Subadviser"), a 50% owned affiliate of the Manager, is
entitled to a portion of the Manager's fee for acting as Subadviser for certain
of the international investments of the Fund.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of Fund shares and an affiliate of the Manager, received
concessions of $50,171 from sales of Class A shares, after commissions of
$385,552 paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to Class A shares under which 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 six months ended June 30, 1995, fees paid aggregated $332,567,
or 0.23% per annum of the average daily net assets of Class A shares.
The Fund has a Plan with respect to Class D shares under which 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 D shares for which the organizations are responsible, and
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. For the six months ended June 30, 1995,
fees paid amounted to $356,909, or 1% per annum of the average daily net assets
of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions occurring within one year of purchase. For the six months ended June
30, 1995, such charges amounted to $11,795.
For the six months ended June 30, 1995, Seligman Services, Inc., an
affiliate of the Manager, received commissions of $670 from sales of Class A
shares of the Fund. Seligman Services, Inc. also received $162 from the
Distributor for the sale of Class D shares of the Fund.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $330,034 for shareholder account services.
The Fund's investment in Seligman Data Corp. is recorded at a cost of $3,553.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Subadviser, the Distributor, Seligman Services, Inc., and/or
Seligman Data Corp.
11
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
Fees of $10,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The cost of such fees and interest is included in directors' fees and
expenses, and the accumulated balance thereof at June 30, 1995 of $85,986 is
included in other liabilities. Deferred fees and the related accrued interest
are not deductible for federal income tax purposes until such amounts are paid.
5. Class-specific expenses charged to Class A and Class D during the six months
ended June 30, 1995, which are included in the corresponding captions of the
Statement of Operations, were as follows:
CLASS A CLASS D
------- -------
Distribution and service fees.... $332,567 $356,909
Registration..................... 15,547 8,961
Shareholder reports and
communications................ 8,492 1,022
6. At December 31, 1994, the Fund had a capital loss carryforward of $569,873,
which is available for offset against future taxable net gains through 2002.
Accordingly, no capital gain distribution is expected to be paid to shareholders
until net capital gains have been realized in excess of the available capital
loss carryforward.
12
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Fund's beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment, assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item, as disclosed in the financial statements,
to their equivalent per share amounts.
The total return based on net asset value measures the Fund's performance
assuming investors purchased Fund shares at net asset value as of the beginning
of the period, reinvested dividends and capital gains paid at net asset value,
and then sold their shares at the net asset value per share on the last day of
the period. The total return computations do not reflect any sales charges
investors may incur in purchasing or selling shares of the Fund. The total
returns for periods of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A CLASS D
---------------------------------------------------- ------------------------------
SIX SIX
MONTHS YEAR ENDED DECEMBER 31 MONTHS YEAR 5/3/93*
ENDED ----------------------------------------- ENDED ENDED TO
6/30/95o 1994o 1993 1992 1991 1990 6/30/95o 12/31/94o 12/31/93
-------- ----- ---- ---- ---- ---- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period...................... $13.05 $14.58 $13.69 $12.45 $10.38 $12.44 $13.01 $14.55 $14.42
------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income......... .39 .76 .75 .92 .96 1.02 .34 .65 .45
Net realized and unrealized
investment gain (loss)..... 1.26 (1.57) 1.40 1.21 2.08 (2.02) 1.25 (1.57) .69
Net realized and unrealized
gain on foreign currency
transactions............... .04 .03 -- -- -- -- .04 .03 --
------ ------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations...... 1.69 (.78) 2.15 2.13 3.04 (1.00) 1.63 (.89) 1.14
Dividends paid................ (.38) (.75) (.75) (.89) (.97) (1.06) (.32) (.65) (.50)
Distributions from net gain
realized................... -- -- (.51) -- -- -- -- -- (.51)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease) in
net asset value............ 1.31 (1.53) .89 1.24 2.07 (2.06) 1.31 (1.54) .13
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $14.36 $13.05 $14.58 $13.69 $12.45 $10.38 $14.32 $13.01 $14.55
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED
ON NET ASSET VALUE: 13.08% (5.43)% 15.98% 17.54% 30.12% (8.30)% 12.63% (6.20)% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .99%+ 1.02% 1.03% .84% .85% .76% 1.77%+ 1.82% 1.84%+
Net investment income to
average net assets......... 5.81%+ 5.51% 5.29% 6.88% 8.24% 8.79% 5.02%+ 4.74% 4.42%+
Portfolio turnover............ 68.18% 66.62% 60.62% 70.43% 66.77% 53.27% 68.18% 66.62% 60.62%++
Net assets, end of period
(000's omitted)...............$308,897 $286,355 $321,040 $213,007 $153,511 $127,825 $76,422 $67,946 $49,941
</TABLE>
- -----------------
*Commencement of offering of Class D shares.
oPer share amounts for the six months ended June 30, 1995, and for the year
ended December 31, 1994, are calculated based on average shares outstanding.
+Annualized.
++For the year ended December 31, 1993.
See notes to financial statements.
13
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Income Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the portfolio of investments, of Seligman Income Fund, Inc. as of June 30, 1995,
the related statements of operations for the six months then ended and of
changes in net assets for the six months then ended and for the year ended
December 31, 1994, and the financial highlights for 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 June
30, 1995 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 Income
Fund, Inc. as of June 30, 1995, 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
August 4, 1995
14
<PAGE>
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
John R. Galvin 2, 4
Dean, Fletcher School of Law and Diplomacy at Tufts University
Director, USLIFE Corporation
Alice S. Ilchman 3, 4
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Chairman, The Rockefeller Foundation
Frank A. McPherson 2, 4
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation
Chairman and Director, Baptist Medical Center
John E. Merow
Partner, Sullivan & Cromwell, Law Firm
Betsy S. Michel 2, 4
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
James C. Pitney 3, 4
Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
Director, Public Service Enterprise Group
James Q. Riordan 3, 4
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Ronald T. Schroeder 1
President
Managing Director, J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3, 4
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2, 4
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, Red Man Pipe and Supply Company
Brian T. Zino 1
Managing Director, J. & W. Seligman & Co. Incorporated
- ----------------
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
William C. Morris
Chairman
Ronald T. Schroeder
President
Charles C. Smith, Jr.
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- --------------------------------------------------------------------------------
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 Financial Services, 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
(800) 622-4597 24-Hour Automated
Telephone Access
Service
15
<PAGE>
Seligman Financial Services, Inc.
an affiliate of
[LOGO]
J. & W. Seligman & Co.
incorporated
established 1864
100 Park Avenue, New York, NY 10017
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 Income Fund, Inc., which contains information about the sales charges,
management fee, and other costs. Please read the prospectus carefully before
investing or sending money.
EQIN3b 6/95
- --------------------------------------------------------------------------------
Mid-Year Report
- --------------------------------------------------------------------------------
Seligman
Income
Fund, Inc.
- --------------------------------------------------------------------------------
June 30, 1995
- --------------------------------------------------------------------------------
An Income Fund
Established in 1947
<PAGE>
