================================================================================
Seligman
Income
Fund, Inc.
- - --------------------------------------------------------------------------------
An Income Fund
- - --------------------------------------------------------------------------------
48th Annual Report
1994
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[LOGO]
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Seligman Income Fund
- - --------------------------------------------------------------------------------
A mutual fund that seeks to provide shareholders with high current income
consistent with prudent risk of capital, and with the possibility of improvement
in income and capital value over the longer term. The Fund invests in a changing
blend of fixed-income securities and common stocks.
<TABLE>
<CAPTION>
Highlights of 1994
- - -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 December 31, 1993
--------------------------- --------------------------
Class A Class D Class A Class D
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets (in thousands) ................................. $286,355 $67,946 $321,040 $49,941
- - -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ................................. $13.05 $13.01 $14.58 $14.55
- - -----------------------------------------------------------------------------------------------------------------------------------
Dividends Paid per Share .................................. $0.75 $0.65 $0.75 $0.50
With December 1993 Gain Distribution
Taken in Shares ....................................... 0.78 0.67 -- --
Distribution of Realized Gain per Share ................... -- -- 0.51 0.51
- - -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses per Dollar of
Average Net Assets ...................................... $0.0102 $0.0182 $0.0103 $0.0184+
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
1
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To the Shareholders
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We are pleased to report Seligman Income Fund's long-term investment results,
portfolio holdings, and audited financial statements at December 31, 1994.
For your Fund's Class A shares, net asset value per share was $13.05 at
December 31, compared to $13.49 at September 30, and $14.58 a year ago. For your
Fund's Class D shares, net asset value per share was $13.01 at December 31,
compared to $13.46 at September 30, and $14.55 a year ago.
On December 20, your Fund paid a fourth quarter dividend to shareholders of
record December 13. Class A shareholders were paid $0.19 per share, bringing the
total dividends for the year to $0.75 per share. Class D shareholders were paid
$0.17 per share, bringing the total dividends for the year to $0.65 per share.
For your Fund's Class A shares, total return was -1.85% for the three months
and -5.43% for the 12 months ended December 31. For your Fund's Class D shares,
total return was -2.08% and -6.20%, respectively, for the same periods. This
compares to the Standard & Poor's 500 Composite Stock Price Index's total return
of -0.02% for the three months and 1.32% for the 12 months ended December 31.
(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.)
While your Fund's performance was less favorable in 1994, its longer-term
performance remains strong. Please refer to page 3 for a discussion with your
Portfolio Managers about your Fund's performance in 1994, followed by the chart
and table that analyze longer-term performance.
Looking back on 1994, the one generalization that can be made with
confidence is that it was a turbulent and trying year for equity and bond
investors alike. The Federal Reserve Board exhibited an aggressive stance
against inflation, putting through six short-term interest rate increases by the
end of the year. This caused an upheaval in the bond market, with yields
increasing and bond prices spiraling lower--an event in the financial markets
unmatched in magnitude since 1973-74. The equity market remained hostage to the
bond market and demonstrated lackluster performance for the year.
The U.S. economy continued to grow at a modest yet controlled pace,
accompanied by corporate news of solid growth and strong earnings. This economic
news, although positive, caused the underlying question to remain: Will the
economy overheat, opening the door to increased inflation? We don't believe so.
We believe an economic slowdown is close at hand. In March of 1995, the
current growth cycle will mark its fourth year. The consumer has both increased
debt as a percentage of income and drawn down savings--suggesting nearer-term
caution after a stronger-than-expected pattern of spending in 1994. We also
believe that inflation will remain under control in light of intense global
competition, low unit labor costs, and an aging population that should favor
saving over spending. Job creation remains robust despite gains in productivity,
and U.S. competitiveness in world markets is likely to be enhanced under
G.A.T.T.--General Agreement on Tariffs and Trade.
For more information about Seligman Income Fund, or your investment in its
shares, please write or call the toll-free telephone numbers listed on page 19.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/Ronald T. Schroeder
Ronald T. Schroeder
President
February 3, 1995
2
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Annual Performance Overview
- - --------------------------------------------------------------------------------
The following are biographies of your Portfolio Managers, a discussion with them
regarding Seligman Income Fund, and a comparison chart of your Fund's
performance against the Standard & Poor's 500 Composite Stock Price Index, the
Lehman Brothers Aggregate Bond Index, and the Lipper Income Fund Average.
Your Portfolio Managers
[PHOTOGRAPH] Charles C. Smith, Jr. is a Managing Director of J. & W. Seligman
& Co. Incorporated and Portfolio Manager of Seligman Common Stock
Fund and Seligman Income Fund. Mr. Smith joined Seligman in 1985
as Vice President, Investment Officer. He was promoted to Senior
Vice President, Senior Investment Officer in August 1992, and to
Managing Director in January 1994. Stacey G. Navin, Vice
President of J. & W. Seligman & Co. Incorporated, serves as
Co-Portfolio Manager of Seligman Common Stock Fund and Seligman
Income Fund. She spent 1994 with Seligman Henderson Co. in London
and will continue to do so to specifically focus on the
international investments in the portfolio. Mr. Smith is
supported by a group of investment professionals dedicated to the
income and growth investment discipline, and to the objectives of
Seligman Income Fund.
Iain C. Clark, Chief Investment Officer of Seligman Henderson Co., is
responsible for the investment activities of Seligman Income Fund's Subadviser,
Seligman Henderson Co. Mr. Clark is also head of International Investments for,
and a Director of, Henderson Administration Group plc, an investment manager in
London, England. He has been with Henderson since 1985.
Economic Factors Affecting Seligman Income Fund
"The rise in short-term interest rates and investors' concerns over the
possibility of an increase in the future rate of inflation had a tremendous
effect on both the equity and bond markets in the U.S. Higher U.S. interest
rates also negatively affected most stock markets around the world. However, at
the same time, the U.S. Dollar weakened against many main currencies,
particularly in Europe and Japan, thus mitigating some of the stock markets'
falls. Overall though, these conditions made 1994 a challenging year for
investors."
Your Manager's Investment Strategy
"Our strategy in 1994 was to lessen the impact of rising interest rates on the
portfolio. We began the year with a relatively large cash position and a reduced
exposure to convertible securities. Throughout the year we avoided domestic
electric utilities and focused instead on other issues with stronger
fundamentals and attractive yields. In hindsight though, cash proved to be the
only true safe haven for yield-oriented investors.
"In the international portion of the portfolio we significantly increased the
diversification, both by country and by the number of holdings. In the third
quarter, the largest portion of the investments were in Mexico and Hong Kong.
Later in the year, however, the weightings were significantly reduced and
investments were made in Continental Europe and in a broader range of countries
in the Pacific."
(continued)
3
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Annual Performance Overview (continued)
- - --------------------------------------------------------------------------------
Individual Sector Performance
"Stock selection was the key to performance in 1994 and should remain important
in 1995. Within the difficult market conditions, few sectors saw strong stock
price appreciation in 1994, except for select technology and cyclical issues.
The interest-sensitive nature of the Income Fund was the main reason for its
lackluster performance, as 1994 was a year in which interest rates were
dramatically increased.
"Internationally, there was no particular `sector theme,' as the investments
covered a broad range of issues. The Fund was able to take advantage of a number
of attractively priced new issues such as Tele Danmark and Land & General
Berhad, both of which present opportunities for strong long-term investments."
Looking Ahead
"With the majority of the interest rate increases behind us, we expect 1995 to
be a better year for interest-sensitive assets, which should benefit Seligman
Income Fund. Within the international portion of the portfolio, we may increase
the Fund's low weighting in Japan as the economic activity picks up following
the Kobe earthquake. Overall, we believe that economic growth should continue to
improve, with inflation rising only slightly, which should provide a positive
backdrop for equity markets around the world. In 1995 we remain committed to
identifying companies that represent good value and have strong potential for
future earnings growth, a strategy that has served us well over the years."
4
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Ten-Year Performance Comparison Chart and Table December 31, 1994
- - --------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman Income
Fund Class A shares, with and without the maximum initial sales charge of 4.75%,
for the 10-year period ended December 31, 1994, to a $10,000 hypothetical
investment made in the Standard & Poor's 500 Composite Stock Price Index (S&P
500), the Lehman Brothers Aggregate Bond Index (Lehman Index), and the Lipper
Income Fund Average (Lipper Income) for the same period. The performance of
Seligman Income Fund Class D shares is not shown in this chart, but is included
in the table below. It is important to keep in mind that the indices exclude the
effects of any fees or sales charges, and the Lipper Income excludes the effects
of any sales charges.
[THE FOLLOWING DATA IS PRESENTED AS A GRAPH IN THE PRINTED REPORT]
Seligman Seligman
Income Fund with Income Fund w/o S&P Stock Lehman Brothers Lipper
Date sales charge sales charge Index Aggregate Index Income
12/31/84 9528 10000 10000 10000 10000
3/31/85 9904 10395 10918 10223 10482
6/30/85 10998 11543 11715 11096 11469
9/30/85 10797 11331 11238 11333 11201
12/31/85 12109 12709 13164 12212 12398
3/31/86 13331 13992 15013 13161 13625
6/30/86 13708 14387 15894 13317 14033
9/30/86 13710 14389 14790 13633 13871
12/31/86 14180 14883 15615 14076 14382
3/31/87 14652 15378 18945 14308 15436
6/30/87 14264 14971 19890 14052 15425
9/30/87 14001 14694 21203 13669 15527
12/31/87 13614 14288 16424 14463 14397
3/31/88 14383 15095 17358 15006 15212
6/30/88 14841 15576 18508 15184 15636
9/30/88 14961 15702 18567 15486 15871
12/31/88 15047 15792 19133 15603 16063
3/31/89 15562 16332 20487 15781 16589
6/30/89 16609 17432 22291 17039 17507
9/30/89 16933 17772 24675 17232 18181
12/31/89 17320 18178 25177 17873 18368
3/31/90 17181 18032 24416 17730 18063
6/30/90 17280 18136 25945 18377 18605
9/30/90 15420 16184 22396 18535 17580
12/31/90 15882 16668 24393 19473 18354
3/31/91 17626 18499 27923 20018 19972
6/30/91 18171 19071 27862 20342 20318
9/30/91 19767 20746 29351 21498 21620
12/31/91 20666 21690 31793 22588 22775
3/31/92 21728 22804 30993 22298 23003
6/30/92 22575 23693 31584 23197 23674
9/30/92 23607 24777 32579 24194 24503
12/31/92 24291 25494 34212 24260 24991
3/31/93 25871 27152 35701 25262 26185
6/30/93 26520 27834 35870 25931 26766
9/30/93 27452 28811 36794 26608 27596
12/31/93 28172 29567 37645 26624 27903
3/31/94 27044 28384 36229 25860 27012
6/30/94 26609 27927 36384 25593 26926
9/30/94 27145 28489 38162 25750 27502
12/31/94 26642 27961 38334 25847 27104
- - --------------------------------------------------------------------------------
The table below shows the average annual total returns for the one-year,
five-year, and 10-year periods through December 31, 1994, for the Seligman
Income Fund Class A shares, with and without the maximum initial sales charge of
4.75%, the S&P 500, the Lehman Index, and the Lipper Income. Also included in
the table are the average annual total returns for the one-year and
since-inception periods through December 31, 1994, for the Seligman Income Fund
Class D shares, with and without the effect of the 1% contingent deferred sales
load ("CDSL") imposed on shares redeemed within one year of purchase, the S&P
500, the Lehman Index, and the Lipper Income.
Average Annual Total Returns
One Five Ten
Year Years Years
---- ----- -----
Seligman Income Fund
Class A with sales charge (9.94)% 7.94% 10.30%
Class A without sales charge (5.43) 8.99 10.83
S&P 500 1.32 8.70 14.34
Lehman Index (2.92) 7.66 9.96
Lipper Income (2.86) 8.09 10.48
Since
One Inception
Year 5/3/93
--------- ---------
Seligman Income Fund
Class D with CDSL (7.09)% N/A
Class D without CDSL (6.20) 0.79%
S&P 500 1.32 5.59
Lehman Index (2.92) 0.96
Lipper Income (2.86) 1.71
- - --------------------------------------------------------------------------------
No adjustment was made to performance for periods prior to January 1, 1993, the
commencement date for the annual Administration, Shareholder Services and
Distribution Plan fee of up to 0.25% of average daily net assets of Class A
shares. THE PERFORMANCE OF CLASS 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. Performance data quoted represent changes in
prices and assume that all distributions within the periods are invested in
additional shares. The investment return and principal value of an investment
will fluctuate so that shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment results.
5
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Seligman Income Fund
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Composition of Net Assets
Percent of total
December 31
---------------------
1994 1993
- - --------------------------------------------------------------------------------
U.S. Government and Government
Agency Securities .............................. 12.6 16.5
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Foreign Government Securities .................... 0.6 0.8
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Corporate Bonds .................................. 23.6 16.9
Convertible Bonds ................................ 27.4 26.1
Convertible Preferred Stocks ..................... 16.8 15.8
Asset-backed Securities .......................... 1.4 --
- - --------------------------------------------------------------------------------
Total Corporate Fixed Income ..................... 69.2 58.8
- - --------------------------------------------------------------------------------
Common Stocks .................................... 16.0 18.2
- - --------------------------------------------------------------------------------
Net Cash and Short-Term
Holdings ....................................... 1.6 5.7
- - --------------------------------------------------------------------------------
Total ............................................ 100.0 100.0
- - --------------------------------------------------------------------------------
Federal Tax Information for 1994
Dividends For Taxable Accounts
A year-end statement of account showing activity for 1994 has been mailed
to each shareholder. Under "Tax Information for Calendar Year" it shows the
proceeds of any redemptions paid to the shareholder during the year and reported
to the Internal Revenue Service as required by federal regulations (Form
1099-B). In addition, a separate Form 1099-DIV showing the amounts of dividends
and the distribution from gain on investments paid during the year has been
mailed to each shareholder. For federal tax information regarding your 1994
dividend distributions, please refer to the "Important Tax Information" notice
that accompanied your Form 1099-DIV.
Diversification of Net Assets by Industry
Percent of Total
December 31
---------------------
1994 1993
- - --------------------------------------------------------------------------------
Automotive ....................................... 2.7 4.3
Banking and Finance .............................. 10.5 9.7
Biotechnology .................................... -- 0.5
Building and Construction ........................ 1.2 0.6
Chemicals ........................................ 1.1 0.4
Computers and Business Services .................. 1.7 3.5
Consumer Goods and Services ...................... 2.8 --
Diversified ...................................... 0.8 1.3
Drugs and Health Care ............................ 1.7 2.7
Electric Utilities ............................... 4.0 8.4
Electronics ...................................... -- 2.3
Energy ........................................... 8.6 6.0
Environmental Services ........................... 1.6 1.0
Finance and Insurance ............................ 9.6 2.2
Food ............................................. 0.7 1.2
Leasing .......................................... 0.8 --
Leisure/Entertainment ............................ -- 1.4
Machinery ........................................ 0.7 --
Manufacturing .................................... 0.2 --
Minerals ......................................... 0.7 0.7
Office Equipment and Services .................... 0.6 1.4
Packaging and Paper .............................. 0.7 --
Publishing ....................................... 1.0 1.1
Restaurants ...................................... -- 0.8
Retailing ........................................ 5.1 3.7
Spirits, Wines, and Ciders ....................... 0.3 --
Steel ............................................ 1.8 1.0
Technology ....................................... 5.8 2.7
Textiles ......................................... -- 0.9
Tobacco .......................................... -- 0.8
Transportation ................................... 8.3 7.1
Utilities/Telecommunications ..................... 8.6 7.0
Miscellaneous .................................... 3.6 4.3
- - --------------------------------------------------------------------------------
Total Corporate Fixed Income and
Common Stocks .................................. 85.2 77.0
- - --------------------------------------------------------------------------------
U.S. Government and Government
Agency Securities .............................. 12.6 16.5
- - --------------------------------------------------------------------------------
Foreign Government Securities .................... 0.6 0.8
- - --------------------------------------------------------------------------------
Net Cash and Short-Term
Holdings ....................................... 1.6 5.7
- - --------------------------------------------------------------------------------
Total ............................................ 100.0 100.0
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6
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Seligman Income Fund
- - --------------------------------------------------------------------------------
Major Portfolio Holdings
at December 31, 1994
Security Value
- - ------- -----------
U.S. Treasury Notes 7 7/8%, 11/15/2004 ..................... $10,031,250
Carlton Communications 71/2%, 8/14/2007 ................... 5,451,781
Federal Home Loan Mortgage Co.
10%, 6/15/2020 REMIC 1614-K .............................. 5,198,596
U.S. Treasury Notes 8 1/2%, 5/15/1997 ...................... 5,075,000
GMAC Floating Rate Notes, 7/19/1996 ........................ 5,000,000
Ford Credit Grantor Trust 7.30%,
due 10/15/1999 ........................................... 4,826,444
Federal National Mortgage
Association 7%, 7/25/2007 G-92-40L ....................... 4,478,500
General Motors 9 1/8%, 7/15/2001 ........................... 4,084,496
Ryder System 7.87%, 11/24/1997 ............................. 3,952,440
First Security Bank 6.88%, 10/4/1996 ....................... 3,931,812
Largest Portfolio Changes*
During Past Three Months
Principal Amount
or Shares
-----------------------------------
Holdings
Additions Increase 12/31/94
- - --------- ------------ ---------------
U.S. Government Securities
U.S. Treasury Notes 7 7/8%,
11/15/2004 ..................... $10,000,000 $ 10,000,000
Corporate Bonds
First Security Bank 6.88%,
10/4/1996 ...................... 4,000,000 4,000,000
Midland Bank 8 5/8%,
12/15/2004 ..................... 3,000,000 3,000,000
Ryder System 7.87%,
11/24/1997 ..................... 4,000,000 4,000,000
Santa Fe Pacific 8 5/8%,
11/1/2004 ...................... 3,000,000 3,000,000
United Companies Financial
9.35%, 11/1/1999 ............... 3,000,000 3,000,000
Asset-backed Securities
Ford Credit Grantor Trust
7.30%, due 10/15/1999 .......... 4,862,475 4,862,475
Convertible Bonds
Apache 6%, 1/15/2002 ............. 3,000,000 3,000,000
Convertible Preferred Stocks
Cooper Industries $1.60 .......... 120,000 shs. 120,000 shs.
Unisys $3.75 ..................... 40,000 40,000
Holdings
Reductions Decrease 12/31/94
- - ---------- ------------ ---------------
U.S. Government and Government
Agency Securities
U.S. Treasury Notes 8 1/2%,
5/15/1997 ...................... $ 5,000,000 $ 5,000,000
U.S. Treasury Notes 7 1/4%,
11/15/1996 ..................... 5,000,000 --
Federal Home Loan Mortgage
Co. 7%, 5/15/2005
REMIC 1257-F ................... 5,000,000 --
Federal National Mortgage
Association
6 3/4%, 8/25/1999
1992-158-DB .................... 5,000,000 --
Corporate Bonds
Ford Motor Credit 9 1/4%,
6/15/1998 ...................... 3,000,000 --
HSBC Financial 7.40%,
4/15/2003 ...................... 3,000,000 --
Ryder System 6.92%, 3/29/1997 .... 3,000,000 --
Time Warner Entertainment
7 1/4%, 9/1/2008 ............... 4,000,000 --
Convertible Bonds
IBM France 5 3/4%, 1/1/1998 ...... 15,975,000+ --
Convertible Preferred Stock
Great Western Financial 8 3/4% ... 50,000 shs. --
* Largest portfolio changes from the previous quarter to the current quarter
are based on cost of purchases and proceeds from sales of securities.
+ Principal amount reported in French francs.
7
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Portfolio of Investments
- - --------------------------------------------------------------------------------
Principal
Amount Value
--------- ------
U.S. Government and
Government Agency
Securities--12.6%
U.S. Treasury Notes:
7 7/8%, 11/15/2004 ..................... $10,000,000 $ 10,031,250
8 1/2%, 5/15/1997 ...................... 5,000,000 5,075,000
Mortgage-backed Securities:**
Federal Home Loan Mortgage
Co. 10%, 6/15/2020 REMIC
1614-K ................................. 5,041,014 5,198,596
Federal National Mortgage
Association Obligations:
7%, 7/25/2007 G-92-40-L ................ 5,000,000 4,478,500
7 1/2%, 6/25/2017 1991-8-E ............. 3,000,000 2,939,640
Government National Mortgage
Association Obligations:
8 1/2%, with various maturities
from 10/15/2021
to 8/15/2024 ......................... 4,948,350 4,864,847
10%, with various maturities
from 1/15/2018
to 8/15/2021 ......................... 11,435,795 12,039,755
------------
Total U.S. Government and
Government Agency Securities
(Cost $46,770,525) ..................... 44,627,588
------------
Foreign Government Securities--0.6%
(Cost $2,981,040)
Argentina Global Bonds
8 3/8%, 12/20/2003 ..................... 3,000,000 2,145,000
------------
Corporate Bonds--23.6%
Automotive--1.9%
Chrysler Financial 6 1/2%,
6/15/1998 .............................. 3,000,000 2,819,745
General Motors 9 1/8%,
7/15/2001 .............................. 4,000,000 4,084,496
------------
6,904,241
------------
Banking and Finance--8.8%
Banco Nacional de Comercio
Exterior 7 1/4%, 2/2/2004* ............. 3,000,000 2,133,795
Citicorp 9 1/2%, 2/1/2002 ................ 3,000,000 3,156,543
First Security Bank 6.88%,
10/4/1996 .............................. 4,000,000 3,931,812
First U.S.A. Bank 5 3/4%, 1/15/1999 ...... 4,000,000 3,617,408
GMAC Floating Rate Notes,
7/19/1996 .............................. 5,000,000 5,000,000
Great Western Financial 8.60%,
2/1/2002 ............................... 3,000,000 2,982,297
Midland Bank 8 5/8%, 12/15/2004 .......... 3,000,000 2,979,060
National Westminster 9 3/8%,
11/15/2003 ............................. 2,190,000 2,298,847
NationsBank 9 1/8%, 10/15/2001 ........... 2,000,000 2,057,948
United Companies Financial
9.35%, 11/1/1999 ....................... 3,000,000 2,983,311
------------
31,141,021
------------
Building and Construction--0.8%
Cemex 6 1/4%, 10/25/1995* ................ 3,000,000 2,971,470
------------
Chemicals--0.2%
Dow Corning 9 3/8%, 2/1/2008 ............. 1,000,000 757,687
------------
Computers and Business Services--0.6%
Comdisco 9 3/4%, 1/15/1997 ............... 2,000,000 2,048,716
------------
Electric Utilities--0.8%
Texas Utilities 5 7/8%,
4/1/1998 ............................... 3,000,000 2,788,149
------------
Energy--1.8%
Coastal 10 1/4%, 10/15/2004 .............. 3,000,000 3,225,000
McDermott 9 3/8%, 3/15/2002 .............. 3,000,000 3,053,724
------------
6,278,724
------------
Insurance--1.1%
AEGON N.V. 8%, 8/15/2006 ................. 4,000,000 3,825,000
------------
Leasing--0.8%
Hertz 7%, 4/15/2001 ...................... 3,000,000 2,776,914
------------
Publishing--1.0%
News America Holdings 8 1/4%,
8/10/2018 .............................. 4,000,000 3,541,668
------------
Retailing--1.0%
Sears, Roebuck 9 3/8%, 11/1/2011 ......... 3,500,000 3,697,834
------------
Steel--1.1%
USX 9 1/8%, 1/15/2013 .................... 4,000,000 3,874,056
------------
Transportation--3.4%
Delta Air Lines 10 3/8%, 2/1/2011 ........ 3,000,000 2,989,152
Ryder System 7.87%,
11/24/1997 ............................. 4,000,000 3,952,440
Santa Fe Pacific 8 5/8%, 11/1/2004 ....... 3,000,000 3,018,576
Transportacion Maritima Mexicana
9 1/4%, 5/15/2003 ...................... 2,850,000 2,016,375
------------
11,976,543
------------
Miscellaneous--0.3%
Service Corp. International
8 3/8%, 12/15/1995 ..................... 1,000,000 990,310
------------
Total Corporate Bonds
(Cost $89,773,758) ..................... 83,572,333
------------
Asset-backed Securities**--1.4%
(Cost $4,858,297)
Finance--1.4%
Ford Credit Grantor Trust
7.30%, due 10/15/1999 .................. 4,862,475 4,826,444
------------
Convertible Bonds--27.4%
Automotive--0.8%
Arvin Industries 7 1/2%, 9/30/2014 ....... 3,000,000 2,951,250
------------
Consumer Goods and Services--1.8%
Unifi 6%, 3/15/2002 ...................... 4,000,000 3,895,000
Wendy's International 7%,
4/1/2006 ............................... 2,000,000 2,510,000
------------
6,405,000
------------
8
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Principal
Amount Value
--------- ------
Diversified--0.8%
Land & General Berhad
4 1/2%, 7/26/2004 ...................... $ 1,000,000 $ 1,142,500
MascoTech 4 1/2%, 12/15/2003 ............. 2,750,000 1,849,375
------------
2,991,875
------------
Drugs and Health Care--1.0%
Ciba-Geigy 6 1/4%, 3/15/2016* ............ 2,000,000 1,690,000
Greenery Rehabilitation Group
8 3/4%, 4/1/2015 ....................... 2,000,000 1,800,000
------------
3,490,000
------------
Energy--3.3%
Apache 6%, 1/15/2002 ..................... 3,000,000 3,071,250
E. E. Finance 8 3/4%, 6/27/2006 .......... 1,000,000+ 1,547,394
Kelley Oil & Gas 8 1/2%,
4/1/2000 ............................... 1,250,000 1,035,938
Santa Fe Pipelines 10.418%,
8/15/2010 .............................. 2,500,000 2,962,500
Western Co. of North America
7 1/4%, 1/15/2015 ...................... 3,000,000 3,150,000
------------
11,767,082
------------
Environmental Services--1.6%
Browning-Ferris 6 1/4%, 8/15/2012 ........ 2,500,000 2,290,624
OHM 8%, 10/1/2006 ........................ 3,000,000 2,392,500
U.S.A. Waste Services 8 1/2%,
10/15/2002 ............................. 1,000,000 1,003,750
------------
5,686,874
------------
Finance and Insurance--3.3%
AXA 6%, 1/1/2001 ......................... 2,184,500++ 479,919
Bank of Boston 7 3/4%, 6/15/2011 ......... 2,000,000 2,240,000
Leucadia National 5 1/4%, 2/1/2003 ....... 3,000,000 2,775,000
Liberty Life International
6 1/2%, 9/30/2004 ...................... 750,000 770,625
SCOR U.S. 5 1/4%, 4/1/2000* .............. 3,000,000 2,550,000
Trenwick Group 6%, 12/15/1999 ........... 3,000,000 2,985,000
------------
11,800,544
------------
Retailing--2.2%
CML Group 5 1/2%, 1/15/2003 .............. 2,000,000 1,440,000
Federated Department Stores
0%/6%, 2/15/2004 ....................... 2,000,000 1,932,500
Price 6 3/4%, 3/1/2001 ................... 3,000,000 2,700,000
Proffitts 4 3/4%, 11/1/2003 .............. 2,000,000 1,550,000
------------
7,622,500
------------
Technology--5.0%
Bay Networks
5 1/4%, 5/15/2003* ..................... 3,000,000 2,272,500
Conner Peripheral 61/2%,
3/1/2002 .............................. 3,000,000 2,096,250
Cray Research 6 1/8%, 2/1/2011 .......... 1,500,000 990,000
Data General 7 3/4%, 6/1/2001 ............ 2,000,000 1,740,000
EMC 4 1/4%, 1/1/2001 ..................... 1,500,000 1,816,875
Evans & Sutherland Computer
6%, 3/1/2012 ........................... 2,000,000 1,490,000
Kulicke & Soffa Industries
8%, 3/1/2008 ........................... 3,000,000 3,240,000
Quantum 6 3/8%, 4/1/2002 ................. 2,500,000 2,418,750
Principal
Amount
or Shares
---------
Seagate Technology
6 3/4%, 5/1/2012 ....................... $ 2,000,000 1,652,500
------------
17,716,875
------------
Telecommunications--3.4%
Alcatel Alsthom 6 1/2%, 1/1/2000 ......... 7,599,680++ 1,368,017
Carlton Communications 7 1/2%,
8/14/2007 .............................. 2,600,000 5,451,781
Century Telephone 6%,
2/1/2007* .............................. 2,000,000 2,365,000
Network Equipment 7 1/4%,
5/15/2014 .............................. 3,000,000 2,726,250
------------
11,911,048
------------
Transportation--2.5%
Airborne Freight 6 3/4%, 8/15/2001 ....... 1,750,000 1,601,250
British Airways 9 3/4%, 6/15/2005 ........ 700,000+ 1,761,412
Builders Transport 8%, 8/15/2005 ......... 3,000,000 2,587,500
Interpool 5 1/4%, 12/15/2018 ............. 2,000,000 1,530,000
Nippon Yusen 2%, 9/29/2000 ............... 115,000,000# 1,444,869
------------
8,925,031
------------
Miscellaneous--1.7%
Bell Sports 4 1/4%, 11/15/2000 .......... 2,500,000 1,609,375
General Signal 5 3/4%, 6/1/2002 .......... 2,300,000 2,288,500
TriMas 5%, 8/1/2003 ...................... 2,000,000 1,980,000
------------
5,877,875
------------
Total Convertible Bonds
(Cost $97,292,324) ..................... 97,145,954
------------
Convertible Preferred Stocks--16.8%
Computers and Business Services--1.1%
Ceridian 5 1/2% .......................... 60,000 shs. 3,780,000
------------
Drugs and Health Care--0.7%
Beverly Enterprises $2.75 ................ 40,000 2,360,000
------------
Energy--1.0%
Unocal $3.50* ............................ 50,000 2,506,250
WRT Energy 9% ............................ 40,000 975,000
------------
3,481,250
------------
Finance and Insurance--3.8%
Ahmanson (HF)(Series D) 6% ............... 50,000 2,012,500
Alexander & Alexander (Series A)
$3.625* ................................ 65,000 2,600,000
California Federal Bank 7 3/4% .......... 38,000 760,000
Chemical Banking 10% ..................... 30,000 2,066,250
Citicorp $5.375* ......................... 30,000 3,438,750
National City $4.00 ...................... 40,000 2,500,000
------------
13,377,500
------------
Food--0.7%
ConAgra (Series E) $1.6875 ............... 75,000 2,456,250
------------
Machinery--0.7%
Cooper Industries $1.60 .................. 120,000 2,460,000
------------
Minerals--0.7%
Freeport-McMoRan 4 3/8%* ................. 50,000 2,387,500
------------
Office Equipment and Services--0.6%
Alco Standard 4 3/4% ..................... 30,000 2,175,000
------------
9
<PAGE>
================================================================================
Portfolio of Investments (continued) December 31, 1994
- - --------------------------------------------------------------------------------
Shares Value
------ ------
Packaging and Paper--0.6%
Federal Paper Board $2.875 ............... 40,000 $ 2,140,000
------------
Retailing--1.5%
Sears, Roebuck $3.75 ..................... 50,000 2,781,250
TJX Companies $3.125 ..................... 30,000 1,162,500
Venture Stores $3.25 ..................... 40,000 1,300,000
------------
5,243,750
------------
Steel--0.7%
U.S. Steel $3.25 ......................... 60,000 2,685,000
------------
Technology--0.8%
General Motors (Series E) 6 1/2% ......... 30,000 1,721,250
Unisys $3.75 ............................. 40,000 1,270,000
------------
2,991,250
------------
Transportation--2.4%
Consolidated Freightways $1.54 ........... 140,000 3,132,500
GATX $3.875 .............................. 50,000 2,700,000
Sea Containers 8% ........................ 70,000 2,843,750
------------
8,676,250
------------
Utilities/Telecommunications--0.7%
Mobile Telecommunications
Technology $2.25* ...................... 50,000 1,400,000
Nacional Financiera 11 1/4% .............. 30,000 1,245,000
------------
2,645,000
------------
Miscellaneous--0.8%
Corning 6% ............................... 60,000 2,805,000
------------
Total Convertible Preferred Stocks
(Cost $60,034,574) ..................... 59,663,750
------------
Common Stocks--16.0%
Banking and Finance--1.7%
Banco de Santander ....................... 52,732 2,019,831
Internationale Nederlanden Bank .......... 30,750 1,454,153
National Australia Bank (ADRs) ........... 60,000 2,430,000
------------
5,903,984
------------
Building and Construction--0.4%
Hopewell Holdings ........................ 1,500,000 1,240,631
------------
Chemicals--0.9%
Bayer AG ................................. 5,700 1,321,046
Dow Chemical ............................. 30,000 2,017,500
------------
3,338,546
------------
Consumer Goods and Services--1.0%
B.A.T Industries PLC ..................... 200,000 1,350,595
Christian Dior-- ABSA .................... 7,570 592,891
Christian Dior (Warrants)(0).............. 7,570 63,828
Semi-Tech (Global) ....................... 1,000,000 1,686,482
------------
3,693,796
------------
Electric Utilities--3.2%
Central Costanera (ADRs)* ................ 14,000 374,500
CINergy .................................. 102,300 2,391,263
Detroit Edison ........................... 100,000 2,612,500
Empresa Nacional de
Electricidad (ADRs) .................... 25,000 1,006,250
PacifiCorp ............................... 150,000 2,718,750
Unicom ................................... 100,000 2,400,000
------------
11,503,263
------------
Energy--2.5%
Atlantic Richfield ....................... 20,000 2,035,000
BP Prudhoe Bay Royalty Trust ............. 80,000 1,360,000
European Vinyls(0) ....................... 17,100 758,357
Huaneng Power International
(ADRs)(0) .............................. 35,000 516,250
Shell Transport and Trading
(ADRs) ................................. 50,000 3,268,750
Total SA (Class B) ....................... 15,000 871,838
------------
8,810,195
------------
Manufacturing--0.2%
Pacific Dunlop ........................... 275,000 731,019
------------
Packaging and Paper--0.1%
Pechiney International ................... 15,000 449,691
------------
Retailing--0.4%
K Mart ................................... 100,000 1,300,000
------------
Spirits, Wines, and Ciders--0.3%
Allied Domecq ............................ 140,000 1,183,140
------------
Utilities/Telecommunications--4.5%
Bell Atlantic ............................ 40,000 1,990,000
British Telecommunications
(ADRs) ................................. 30,000 1,792,500
GTE ...................................... 100,000 3,037,500
Hong Kong Electric ....................... 800,000 2,186,611
NYNEX .................................... 50,000 1,837,500
Tele Danmark (ADSs) ...................... 50,000 1,275,000
Telecom Italia ........................... 439,000 875,834
Telefonica de Espana ..................... 85,000 1,004,522
U.S. West ................................ 50,000 1,781,250
------------
15,780,717
------------
Miscellaneous--0.8%
Ogden .................................... 150,000 2,812,500
------------
Total Common Stocks
(Cost $59,735,087) ..................... 56,747,482
------------
Short-Term Holdings--1.2%
(Cost $4,095,000) ...................... 4,095,000
------------
Total Investments--99.6%
(Cost $365,540,605) .................... 352,823,551
Other Assets
Less Liabilities--0.4% .................. 1,477,783
------------
Net Assets--100.0% ....................... $354,301,334
============
- - ----------
* Rule 144A Security.
** Investments in mortgage-backed and asset-backed securities are subject to
principal paydowns. As a result of prepayments from refinancing or
satisfaction of the underlying instruments, the average life may be less
than the original maturity. This in turn may impact the ultimate yield
realized from these instruments.
+ Principal amount reported in British pounds.
++ Principal amount reported in French francs.
# Principal amount reported in Japanese yen.
(0) Non-income producing security.
See notes to financial statements.
10
<PAGE>
================================================================================
Statement of Assets and Liabilities December 31, 1994
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments, at value:
Bonds and stocks (cost $311,694,040)..................................... $301,955,963
U.S. Government and Government Agency
securities (cost $46,770,525).......................................... 44,627,588
Foreign Government securities (cost $2,981,040).......................... 2,145,000
Short-term holdings (cost $4,095,000).................................... 4,095,000 $352,823,551
------------
Cash....................................................................... 1,356,931
Receivable for interest and dividends...................................... 4,729,880
Receivable for Capital Stock sold.......................................... 653,006
Investment in, and expenses prepaid to, shareholder service agent.......... 154,857
Receivable for securities sold............................................. 101,572
Other...................................................................... 33,779
------------
Total Assets .............................................................. 359,853,576
------------
Liabilities:
Payable for securities purchased........................................... 3,000,000
Payable for Capital Stock repurchased...................................... 2,066,170
Accrued expenses, taxes, and other......................................... 486,072
------------
Total Liabilities ......................................................... 5,552,242
------------
Net Assets ................................................................ $354,301,334
============
Composition of Net Assets:
Capital Stock, at par ($1 par value; 100,000,000 shares authorized;
27,166,342 shares outstanding):
Class A.................................................................. $ 21,943,501
Class D.................................................................. 5,222,841
Additional paid-in capital................................................. 339,487,009
Undistributed net investment income........................................ 253,655
Undistributed net realized gain............................................ 108,409
Net unrealized depreciation of investments................................. (13,162,689)
Net unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies........................................ 448,608
------------
Net Assets ................................................................ $354,301,334
============
Net Asset Value per share:
Class A ($286,355,334 / 21,943,501 shares) ................................ $13.05
======
Class D ($67,946,000 / 5,222,841 shares) .................................. $13.01
======
</TABLE>
- - -----------------
See notes to financial statements.
11
<PAGE>
================================================================================
Statement of Operations For the Year Ended December 31, 1994
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest .................................................................. $ 17,536,232
Dividends (net of foreign taxes withheld of $97,109)....................... 7,050,783
------------
Total investment income.................................................... $ 24,587,015
Expenses:
Management fee............................................................. 1,846,289
Distribution and service fees.............................................. 1,326,355
Shareholder account services............................................... 719,631
Registration............................................................... 106,379
Custody and related services............................................... 90,455
Shareholder reports and communications..................................... 78,984
Auditing and legal fees.................................................... 67,151
Shareholders' meeting...................................................... 52,877
Directors' fees and expenses............................................... 38,049
Miscellaneous.............................................................. 35,827
------------
Total expenses............................................................. 4,361,997
------------
Net investment income ..................................................... 20,225,018
Net realized and unrealized gain (loss) on investments and
foreign currency transactions:
Net realized loss on investments........................................... (617,238)
Net realized gain from foreign currency transactions....................... 463,795
Net change in unrealized appreciation of investments....................... (42,180,630)
Net change in unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies............................ 442,628
------------
Net loss on investments ................................................... (41,891,445)
------------
Decrease in net assets from operations .................................... $(21,666,427)
============
</TABLE>
- - -----------------
See notes to financial statements.
12
<PAGE>
================================================================================
Statements of Changes in Net Assets
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------
1994 1993
------------ ------------
Operations:
<S> <C> <C>
Net investment income............................................................ $ 20,225,018 $ 15,156,696
Net realized gain on investments................................................. (617,238) 12,478,602
Net realized gain from foreign currency transactions............................. 463,795 --
Net change in unrealized appreciation of investments............................. (42,180,630) 13,459,494
Net change in unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies.............................................. 442,628 --
------------ ------------
Increase (decrease) in net assets from operations................................ (21,666,427) 41,094,792
------------ ------------
Distributions to shareholders:
Net investment income:
Class A........................................................................ (16,840,179) (14,292,268)
Class D........................................................................ (3,211,726) (907,326)
Net realized gain on investments:
Class A........................................................................ -- (10,754,450)
Class D........................................................................ -- (1,586,425)
------------ ------------
Decrease in net assets from distributions........................................ (20,051,905) (27,540,469)
------------ ------------
<CAPTION>
Shares
---------------------------
Year Ended December 31
---------------------------
Capital share transactions:* 1994 1993
--------- ----------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A...................................... 2,841,412 6,635,338 39,717,860 96,376,060
Class D...................................... 2,558,453 3,411,206 35,792,197 50,296,419
Investment of dividends:
Class A...................................... 839,174 652,988 11,361,860 9,503,764
Class D...................................... 187,366 48,890 2,524,974 715,009
Exchanged from associated Funds:
Class A...................................... 448,817 569,325 6,195,966 8,279,792
Class D...................................... 55,945 15,011 745,079 225,075
Shares issued in payment of gain distributions:
Class A...................................... -- 601,817 -- 8,774,520
Class D...................................... -- 95,145 -- 1,384,373
---------- ---------- ------------ ------------
Total.......................................... 6,931,167 12,029,720 96,337,936 175,555,012
---------- ---------- ------------ ------------
Cost of shares repurchased:
Class A...................................... (2,914,276) (1,502,649) (39,968,347) (21,940,661)
Class D...................................... (722,706) (128,932) (9,798,891) (1,927,301)
Exchanged into associated Funds:
Class A...................................... (1,290,311) (497,671) (17,596,183) (7,137,064)
Class D...................................... (288,794) (8,743) (3,935,880) (130,231)
---------- ---------- ------------ ------------
Total.......................................... (5,216,087) (2,137,995) (71,299,301) (31,135,257)
---------- ---------- ------------ ------------
Increase in net assets
from capital share transactions.............. 1,715,080 9,891,725 25,038,635 144,419,755
========== ========== ------------ ------------
Increase (decrease) in net assets................................................ (16,679,697) 157,974,078
Net Assets:
Beginning of year................................................................ 370,981,031 213,006,953
------------ ------------
End of year (including undistributed net investment income of $253,655 and
dividends in excess of net investment income of $74,881)....................... $354,301,334 $370,981,031
============ ============
</TABLE>
- - -----------------
* The Fund began offering Class D shares on May 3, 1993.
See notes to financial statements.
13
<PAGE>
================================================================================
Notes to Financial Statements
- - --------------------------------------------------------------------------------
1. Effective May 3, 1993, Seligman Income Fund, Inc. (the "Fund") began offering
two classes of shares. All shares existing prior to May 3, 1993, have been
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 higher distribution fee 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. and other 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 proportion of the value of the shares outstanding
of each class. Class-specific expenses, which include distribution and
service fees and any other items that can be specifically attributed to a
particular class, are charged directly to such class.
f. The treatment for financial statement purposes of distributions made during
the year 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 reclassification will have no effect
on net assets, results of operations, or net asset value per share of the
Fund.
14
<PAGE>
================================================================================
- - --------------------------------------------------------------------------------
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended December 31, 1994, amounted to $277,660,328 and
$229,105,469, respectively.
At December 31, 1994, the cost of investments for federal income tax
purposes was $364,862,323, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities, including the effect of foreign currency
transactions, amounted to $13,651,437 and $25,690,209, 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 year ended December 31, 1994, was equivalent to an
annual rate of 0.49% of the average daily net assets of the Fund. Effective June
1, 1994, 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
commissions of $156,975 from sales of Class A shares, after concessions of
$1,211,633 paid to dealers.
Effective January 1, 1993, the Fund adopted 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 year ended December 31, 1994, fees paid
aggregated $672,700, or 0.22% per annum of the average daily net assets of Class
A shares.
Effective May 3, 1993, the Fund adopted 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 year ended December
31, 1994, fees paid amounted to $653,655, 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 year ended December
31, 1994, such charges amounted to $48,151.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $719,631 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, and/or Seligman Data Corp.
Fees of $15,500 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
15
<PAGE>
================================================================================
Notes to Financial Statements (continued)
- - --------------------------------------------------------------------------------
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 annual cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at December 31, 1994, of
$80,375 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 year ended
December 31, 1994, which are included in the corresponding captions of the
Statement of Operations, were as follows:
Class A Class D
-------- --------
Distribution and service fees.... $672,700 $653,655
Registration..................... 48,146 20,772
Shareholders' meeting............ 17,133 1,859
Shareholder reports and
communications................ 13,006 2,037
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.
16
<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 amount.
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
-------------------------------------------------- --------------------
Year Ended December 31 Year 5/3/93*
-------------------------------------------------- Ended to
1994(0) 1993 1992 1991 1990 12/31/94(0) 12/31/93
------ ------ ------ ------ ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period... $14.58 $13.69 $12.45 $10.38 $12.44 $14.55 $14.42
------ ------ ------ ------ ------ ------ ------
Net investment income.................. .76 .75 .92 .96 1.02 .65 .45
Net realized and unrealized investment
gain (loss).......................... (1.57) 1.40 1.21 2.08 (2.02) (1.57) .69
Net realized and unrealized gain on
foreign currency transactions........ .03 -- -- -- -- .03 --
------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations................ (.78) 2.15 2.13 3.04 (1.00) (.89) 1.14
Dividends paid......................... (.75) (.75) (.89) (.97) (1.06) (.65) (.50)
Distributions from net gain realized... -- (.51) -- -- -- -- (.51)
------ ------ ------ ------ ------ ------ ------
Net increase (decrease) in
net asset value...................... (1.53) .89 1.24 2.07 (2.06) (1.54) .13
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period......... $13.05 $14.58 $13.69 $12.45 $10.38 $13.01 $14.55
====== ====== ====== ====== ====== ====== ======
Total return based
on net asset value .................. (5.43)% 15.98% 17.54% 30.12% (8.30)% (6.20)% 8.02%
Ratios/Supplemental Data:
Expenses to average net assets......... 1.02% 1.03% .84% .85% .76% 1.82% 1.84%+
Net investment income to
average net assets................... 5.51% 5.29% 6.88% 8.24% 8.79% 4.74% 4.42%+
Portfolio turnover..................... 66.62% 60.62% 70.43% 66.77% 53.27% 66.62% 60.62%++
Net assets, end of period
(000's omitted)...................... $286,355 $321,040 $213,007 $153,511 $127,825 $67,946 $49,941
</TABLE>
- - --------------------
* Commencement of offering of Class D shares.
(0) Per share amounts 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.
17
<PAGE>
================================================================================
Report of Independent Auditors
- - --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Income Fund, Inc. as of December 31,
1994, 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, 1994 by correspondence with the Fund's custodians 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 December 31, 1994, 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
February 3, 1995
18
<PAGE>
================================================================================
Board of Directors
- - --------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
Alice S. Ilchman 3, 4
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Partner, Sullivan & Cromwell, Attorneys
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
Douglas R. Nichols, Jr. 2, 4
Management Consultant
James C. Pitney 3, 4
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
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
Herman J. Schmidt 2, 4
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
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
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
David Watts
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
Subadviser
Seligman Henderson Co.
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
19
<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.
EQIN2 12/94
