THIRD QUARTER REPORT
SELIGMAN
INCOME
FUND, INC.
SEPTEMBER 30, 1995
[Logo]
AN INCOME FUND
ESTABLISHED IN 1947
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.
EQIN3c 9/95
1
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TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
We are pleased to update you on Seligman Income Fund with this Third
Quarter Report. Your Fund has performed strongly throughout the past nine
months, and your Manager remains optimistic about performance going forward. For
your convenience, your Fund's investment performance has been consolidated on
page 7. Your Fund's dividend and gain information is as follows: on September
26, your Fund paid a $0.20 per share dividend to Class A, and a $0.165 dividend
to Class D shareholders of record September 21. For both Class A and D shares,
net realized gain per share from investment transactions for the nine months
totaled $0.30. At September 30, net unrealized gain per share totaled $0.90. The
realized gain distribution for 1995 will be declared on December 21 and
distributed before year end.
Third quarter reports and statistics suggest that the U.S. economy is
maintaining its pattern of slow growth; for example, factory orders for consumer
goods rose at a tepid rate, as retailers continued to hold down inventories. In
addition, inflation remained benign and low interest rates prevailed, supported
by growing prospects for a deficit reduction plan that will curb government
spending in areas previously off limits -- such as entitlements. In the past, an
environment marked by such modest but sustained economic growth and subdued
inflation has proven very positive for financial markets.
Equity markets continued to be supported by increases -- albeit at a
decelerated rate -- in corporate earnings. Overall, stock valuations seem
reasonable based on estimated 1996 earnings, and equity markets should continue
to benefit from stable-to-lower interest rates and continued corporate
restructuring.
In the fixed-income markets, even though current returns on these
securities may appear low, they are well above the rate of inflation across the
maturity spectrum. Historically, this suggests that yields may decline, which
would be positive for both the bond and stock markets going forward.
The ongoing strength in the equity and bond markets continued to benefit
your Fund's performance through the third quarter. In particular, issues in the
financial and telecommunications sectors, such as Citicorp and NYNEX, provided
strong returns.
Your Manager is optimistic about your Fund's performance going forward and
remains committed to identifying stock, bond, and convertible issues with both
high current income and growth potential.
For information about your Fund, or your investment in its shares, please
write, or call the toll-free telephone numbers listed below. By order of the
Board of Directors,
/s/ William C. Morris
Chairman
/s/ Brian T. Zino
President
October 27, 1995
- --------------------------------------------------------------------------------
IMPORTANT TELEPHONE NUMBERS
Shareholder
Services
(800) 221-2450
Retirement Plan
Services
(800) 445-1777
24-Hour Automated
Telephone Access Service
(800) 622-4597
2
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PORTFOLIO OF INVESTMENTS (unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------------ ------------
U.S. GOVERNMENT AND
GOVERNMENT AGENCY SECURITIES 11.2%
U.S. Treasury Bonds
12%, 8/15/2013 ............................ $ 10,000,000 $ 14,759,370
U.S. Treasury Notes:
7 3/8%, 5/15/1996 .......................... 3,000,000 3,033,750
9 1/4%, 2/15/2016 .................. 5,000,000 6,459,375
MORTGAGE-BACKED SECURITIES:++
Government National Mortgage
Association Obligations:
7 1/2%, with various maturities from
1/15/2023 to 12/15/2024 ................... 9,476,645 9,574,350
10%, with various maturities from
1/15/2018 to 8/15/2021 .................... 10,066,404 10,984,963
-------------
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY SECURITIES
(Cost $ 43,735,000) ....................... 44,811,808
-------------
CORPORATE BONDS 27.9%
AEROSPACE 1.2%
McDonnell Douglas
6.39%, 5/15/1997 ......................... 5,000,000 5,000,000
-------------
AUTOMOTIVE 1.9%
Chrysler Financial 6 1/2%, 6/15/1998 ...... 3,000,000 2,999,103
General Motors 9 1/8%, 7/15/2001 .......... 4,000,000 4,464,848
-------------
7,463,951
-------------
BANKING AND FINANCE 10.7%
Alco Capital 6 1/4%, 6/24/1998 ............ 5,000,000 4,982,250
Beneficial 6.59%, 7/18/2002 ............... 5,000,000 4,967,635
CAF 7 3/8%, 7/21/2000 ..................... 5,000,000 5,000,190
Capital One Bank 81/8%, 3/1/2000 .......... 5,000,000 5,276,185
Dresdner Bank 7 1/4%, 9/15/2015 ........... 5,000,000 5,003,960
First USA Bank 5 3/4%, 1/15/1999 ......... 4,000,000 3,931,044
Golden West Financial
6.70%, 7/1/2002 .......................... 4,000,000 3,983,328
Midland Bank 7.65%, 5/1/2025 .............. 5,000,000 5,282,960
United Companies Financial
7%, 7/15/1998 ............................ 1,000,000 1,002,168
United Companies Financial
9.35%, 11/1/1999 ......................... 3,000,000 3,172,158
-------------
42,601,878
-------------
BUILDING AND CONSTRUCTION 0.8%
Cemex 6 1/4%, 10/25/1995+ ................ 3,000,000 3,142,500
-------------
CHEMICALS 2.1%
Lyondell Petrochemical
9 1/8%, 3/15/2002 ....................... 4,000,000 4,437,308
Praxair 6.85%, 6/16/2005 .................. 4,000,000 4,004,148
-------------
8,441,456
-------------
ELECTRIC UTILITIES 0.7%
Texas Utilities 5 7/8%, 4/1/1998 .......... 3,000,000 2,965,128
-------------
ENERGY 1.8%
Enron 7 1/8%, 5/15/2007 ................... 3,000,000 3,015,483
Orxy Energy 10%, 4/1/2001 ................. 4,000,000 4,401,424
-------------
7,416,907
-------------
INSURANCE 3.1%
AEGON N.V. 8%, 8/15/2006 .................. 5,000,000 5,399,340
St. Paul Companies
6.74%, 7/18/2005 ......................... 5,000,000 4,968,180
USF&G 7%, 5/15/1998 ....................... 2,000,000 2,017,336
-------------
12,384,856
-------------
PACKAGING AND PAPER 1.0%
James River
6.70%, 11/15/2003 ........................ 4,000,000 3,901,456
-------------
PUBLISHING 1.3%
News America Holdings
8 1/4%, 8/10/2018 ........................ 5,000,000 5,186,945
-------------
TECHNOLOGY 0.5%
Tektronix 7 5/8%, 8/15/2002 ............... 2,000,000 2,047,854
-------------
MISCELLANEOUS 2.8%
CSR America 6 7/8%, 7/21/2005 ............. 3,000,000 3,008,007
Trinova 7.95%, 5/1/1997 ................... 3,000,000 3,067,113
Whitman 7 5/8%, 6/15/2015 ................. 5,000,000 4,981,945
-------------
11,057,065
-------------
TOTAL CORPORATE BONDS
(Cost $114,870,373) ...................... 111,609,996
-------------
CONVERTIBLE BONDS 21.8%
CONSUMER GOODS AND SERVICES 2.3%
Bell Sports 4 1/4%, 11/15/2000 ........... 2,500,000 1,943,750
Unifi 6%, 3/15/2002 ....................... 4,000,000 4,015,000
Wendy's International 7%, 4/1/2006 ........ 2,000,000 3,500,000
-------------
9,458,750
-------------
2
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September 30, 1995
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------------ ------------
DIVERSIFIED 0.8%
Land and General Berhad
4 1/2%, 7/26/2004 ........................ $ 1,000,000 $ 1,160,000
MascoTech 4 1/2%, 12/15/2003 .............. 2,750,000 2,093,438
-------------
3,253,438
-------------
DRUGS AND HEALTH CARE 1.0%
Ciba-Geigy 6 1/4%, 3/15/2016+ ............. 2,000,000 2,015,000
Greenery Rehabilitation Group
8 3/4%, 4/1/2015 ......................... 2,000,000 1,830,000
-------------
3,845,000
-------------
ENERGY 2.3%
Apache 6%, 1/15/2002+ .................... 3,000,000 3,315,000
E. E. Finance 8 3/4%, 6/27/2006 .......... 1,000,000 1,573,593
Kelley Oil & Gas 8 1/2%, 4/1/2000 ........ 1,250,000 992,187
Santa Fe Pipelines
10.418%, 8/15/2010 ...................... 2,500,000 3,162,500
-------------
9,043,280
-------------
ENVIRONMENTAL SERVICES 0.7%
OHM 8%, 10/1/2006 ........................ 3,000,000 2,767,500
-------------
INSURANCE 2.7%
AXA 6%, 1/1/2001 ......................... 2,184,500(not=) 532,298
Leucadia National 5 1/4%, 2/1/2003 ....... 3,000,000 3,330,000
Liberty Life International
6 1/2%, ................................. 9/30/2004 750,000
826,875
SCOR U.S. 5 1/4%, 4/1/2000+ .............. 3,000,000 2,985,000
Trenwick Group 6%, 12/15/1999 ............ 3,000,000 3,348,750
-------------
11,022,923
-------------
MACHINERY 0.9%
Cooper Industries 7.05%, 1/1/2015 ........ 2,724,000 2,754,645
Teco Electric and Machinery
2 3/4%, 4/15/2004 ....................... 1,000,000 810,000
-------------
3,564,645
-------------
RETAILING 1.6%
CML Group 5 1/2%, 1/15/2003 .............. 2,000,000 1,560,000
Price 6 3/4%, 3/1/2001 ................... 3,000,000 3,060,000
Proffitts 4 3/4%, 11/1/2003 .............. 2,000,000 1,730,000
-------------
6,350,000
-------------
TECHNOLOGY 2.8%
Bay Networks 5 1/4%, 5/15/2003+ .......... 2,000,000 2,067,500
Conner Peripheral 6 1/2%, 3/1/2002 ....... 3,000,000 2,793,750
Cray Research 6 1/8%, 2/1/2011 ........... 1,500,000 1,170,000
Data General 7 3/4%, 6/1/2001 ............ 2,000,000 1,835,000
PRIN. AMT
OR SHARES VALUE
------------ ------------
EMC 4 1/4%, 1/1/2001 ..................... $ 1,500,000 $ 1,642,500
Evans & Sutherland Computer
6%, 3/1/2012 ............................ 2,000,000 1,600,000
-------------
11,108,750
-------------
TELECOMMUNICATIONS 3.1%
Carlton Communications
7 1/2%, 8/14/2007 ....................... 2,600,000 6,236,620
LDDS Communications
5%, 8/15/2003 ........................... 2,000,000 2,045,000
Network Equipment
7 1/4%, 5/15/2014 ....................... 3,000,000 3,963,750
-------------
12,245,370
-------------
TRANSPORTATION 2.5%
Airborne Freight 6 3/4%, 8/15/2001 ....... 1,750,000 1,750,000
British Airways 9 3/4%, 6/15/2005 ........ 700,0000 2,091,256
Builders Transport 8%, 8/15/2005 ......... 3,000,000 2,880,000
Interpool 5 1/4%, 12/15/2018 ............. 2,000,000 1,805,000
Nippon Yusen 2%, 9/29/2000 ............... 115,000,000** 1,340,704
-------------
9,866,960
-------------
MISCELLANEOUS 1.1%
General Signal 5 3/4%, 6/1/2002 .......... 2,300,000 2,363,250
TriMas 5%, 8/1/2003 ...................... 2,000,000 2,095,000
-------------
4,458,250
-------------
TOTAL CONVERTIBLE BONDS
(Cost $78,408,549) ............... 86,984,866
-------------
CONVERTIBLE PREFERRED STOCKS 14.5%
Banking and Finance 1.5%
Citicorp $5.375+ ......................... 15,000 shs. 2,936,250
National City $4.00 ...................... 40,000 2,960,000
-------------
5,896,250
-------------
COMPUTERS AND BUSINESS SERVICES 1.5%
Ceridian 5 1/2% .......................... 60,000 5,925,000
-------------
ENERGY 2.4%
Unocal Corp. $3.50+ ...................... 50,000 2,656,250
Snyder Oil (Class A) 6% .................. 150,000 2,981,250
Williams Cos. $3.50 ...................... 50,000 3,450,000
WRT Energy 9% ............................ 40,000 600,000
-------------
9,687,500
-------------
FOOD 0.8%
ConAgra (Series E) $1.6875 ............... 75,000 3,018,750
-------------
3
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September 30, 1995
- --------------------------------------------------------------------------------
SHARES VALUE
----------- -----------
INSURANCE 3.4%
Ahmanson (HF) (Series D) 6% ............... 50,000 $ 2,843,750
Alexander & Alexander
(Series A) $3.625+ ....................... 65,000 3,607,500
American General (Series A) $3.00 ......... 50,000 2,762,500
St. Paul Capital 6% ....................... 75,000 4,387,500
-------------
13,601,250
-------------
RETAILING 0.5%
TJX Companies $3.125 ...................... 30,000 1,200,000
Venture Stores $3.25 ...................... 40,000 955,000
-------------
2,155,000
-------------
STEEL 0.7%
U.S. Steel $3.25 .......................... 60,000 2,820,000
-------------
TECHNOLOGY 0.9%
General Motors (Series E) 61/2% ........... 30,000 1,946,250
Unisys (Series A) $3.75 ................... 40,000 1,500,000
-------------
3,446,250
-------------
TRANSPORTATION 1.6%
GATX $3.875 ............................... 50,000 3,025,000
Sea Containers $4.00 ...................... 70,000 3,412,500
-------------
6,437,500
-------------
UTILITIES/TELECOMMUNICATIONS 0.5%
Mobile Telecommunications
Technology $2.25+ ........................ 50,000 2,100,000
-------------
MISCELLANEOUS 0.7%
Corning (Delaware) 6% ..................... 60,000 2,805,000
-------------
Total Convertible Preferred Stocks
(Cost $49,825,900) ................ 57,892,500
-------------
COMMON STOCKS 15.5%
BANKING AND FINANCE 2.0%
Banco de Santander ........................ 52,732 2,212,741
Grupo Financiera Banamex
Accival (Class B) ........................ 443,000 883,988
Internationale Nederlanden Bank 31,518 .... 1,830,243
National Australia Bank (ADRs) ............ 60,000 2,662,500
Societe Generale .......................... 6,164 630,505
-------------
8,219,977
-------------
CHEMICALS 0.6%
Bayer AG .................................. 5,700 1,455,514
European Vinyls* .......................... 24,700 864,608
-------------
2,320,122
-------------
CONSUMER GOODS AND SERVICES 0.9%
Allied Domecq ............................. 140,000 1,193,400
B.A.T. Industries ......................... 200,000 1,673,227
Christian Dior--ABSA ...................... 7,570 688,287
-------------
3,554,914
-------------
ELECTRIC UTILITIES 5.0%
Central Costanera (ADRs)+ ................. 14,000 364,000
CINergy ................................... 102,300 2,851,613
Detroit Edison ............................ 100,000 3,225,000
Empresa Nacionale
de Electricidad (ADRs) ................... 25,000 1,287,500
Entergy ................................... 100,000 2,612,500
FPL Group ................................. 100,000 4,087,500
Hong Kong Electric ........................ 800,000 2,674,599
Huaneng Power International
(ADRs)* .................................. 35,000 603,750
SCE ....................................... 120,000 2,130,000
-------------
19,836,462
-------------
ENERGY 2.2%
Atlantic Richfield ........................ 20,000 2,147,500
BP Prudhoe Bay Royalty Trust .............. 80,000 1,250,000
British Gas Petroleum (ADRs) .............. 25,000 1,018,750
Shell Transport and Trading (ADRs) ........ 50,000 3,581,250
Total SA (Class B) ........................ 15,000 907,200
-------------
8,904,700
-------------
RETAILING 0.4%
Kmart ..................................... 100,000 1,450,000
-------------
STEEL 0.1%
Pohang Iron & Steel (ADRs) ................ 15,000 493,125
-------------
UTILITIES/TELECOMMUNICATIONS 4.1%
Alcatel Alsthom ........................... 15,000 1,260,642
Bell Atlantic ............................. 40,000 2,455,000
British Telecommunications (ADRs) ......... 30,000 1,845,000
GTE ....................................... 100,000 3,925,000
NYNEX ..................................... 50,000 2,387,500
Tele Danmark (ADSs) ....................... 50,000 1,293,750
Telecom Italia ............................ 878,000 1,057,405
U.S. West ................................. 50,000 2,356,250
-------------
16,580,547
-------------
4
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September 30, 1995
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SHARES OR
PRIN. AMT VALUE
------------- -----------
MISCELLANEOUS 0.2%
Pacific Dunlop ............................ 275,000 shs. $ 684,172
-------------
TOTAL COMMON STOCKS
(Cost $57,145,354) ....................... 62,044,019
-------------
ASSET-BACKED SECURITIES++ 2.5%
AUTOMOTIVE 1.3%
Ford Credit Auto Lease Trust
6.35%, 10/15/1998 ........................ $ 5,000,000 5,025,000
-------------
FINANCE 1.2%
Toyota Auto Receivable Grantor
Trust 5.85%, 1/15/1999 ................... 5,000,000 4,989,850
-------------
TOTAL ASSET-BACKED SECURITIES
(Cost $4,991,406) ........................ 10,014,850
-------------
SHORT-TERM HOLDINGS 3.5%
(Cost $14,018,000) ....................... 14,018,000
-------------
TOTAL INVESTMENTS 96.9%
(Cost $362,994,582) ...................... $387,376,039
OTHER ASSETS
LESS LIABILITIES 3.1% .................... 12,247,621
-------------
NET ASSETS 100.0% ......................... $399,623,660
=============
- -----------
+ 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.
0 Principal amount reported in British pounds.
(not=) Principal amount reported in French francs.
** Principal amount reported in Japanese yen.
* Non-income producing security.
Note: Investments in U.S. and other government securities, bonds and
stocks are valued at current market values or, in their absence, at
fair values determined in accordance with procedures approved by
the Board of Directors. Securities traded on national exchanges are
valued at last sales prices or, in their absence and in the case of
over-the-counter securities, a mean of bid and asked prices. Short-
term holdings maturing in 60 days or less are valued at amortized
cost.
5
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September 30, 1995
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES#
DURING PAST THREE MONTHS
PRINCIPAL AMOUNT
OR SHARES
------------------------------
HOLDINGS
ADDITIONS INCREASE 9/30/95
- --------- ------------- -------------
CORPORATE BONDS
Beneficial 6.59%, 7/18/2002 ............... $ 5,000,000 $ 5,000,000
CAF 7 3/8%, 7/21/2000 ..................... 5,000,000 5,000,000
CSR America 6 7/8%, 7/21/2005 ............. 3,000,000 3,000,000
Dresdner Bank 7 1/4%, 9/15/2015 ........... 5,000,000 5,000,000
Midland Bank 7.65%, 5/1/2025 .............. 2,000,000 5,000,000
St. Paul Companies 6.74%, 7/18/2005 ....... 5,000,000 5,000,000
Tektronix 7 5/8%, 8/15/2002 ............... 2,000,000 2,000,000
Asset-backed Securities
Toyota Auto Receivable Grantor
Trust 5.85%, 1/15/1999 ................... 5,000,000 5,000,000
Convertible Preferred Stocks
Snyder Oil (Class A) 6% ................... 150,000 shs. 150,000 shs.
Common Stocks
FPL Group ................................. 100,000 100,000
HOLDINGS
REDUCTIONS DECREASE 9/30/95
- ---------- ------------ ------------
U.S. GOVERNMENT AGENCY SECURITIES
Federal Home Loan Mortgage Co. ............
10%, 6/15/2020 REMIC 1614-K .............. $ 4,585,701 --
Federal National Mortgage
Association 8%, 3/15/2000 ................ 4,465,000 --
Corporate Bonds
American Home Products
7.90%, 2/15/2005 ......................... 4,000,000 --
Aramark Services 8.15%, 5/1/2005 .......... 2,500,000 --
Beneficial 6.52%, 6/22/2001 ............... 5,000,000 --
Pennzoil 105/8%, 6/1/2001 ................. 4,000,000 --
Convertible Preferred Stocks
Browning-Ferris 7 1/4% ................... 100,000 shs. --
Citicorp $5.375 ........................... 15,000 15,000 shs.
Common Stocks
Dow Chemical .............................. 30,000 --
PacifiCorp ................................ 150,000 --
- ----------
# 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 SEPTEMBER 30, 1995
Security Value
- -------- ------------
U.S. Treasury Bonds 12%, 8/15/2013 ......................... $14,759,370
U.S. Treasury Notes 9 1/4%, 2/15/2016 ...................... 6,459,375
Carlton Communications 7 1/2%, 8/14/2007 ................... 6,236,620
Ceredian 5 1/2% Conv. Pfd. Stock ........................... 5,925,000
AEGON N.V. 8%, 8/15/2006 ................................... 5,399,340
Midland Bank 7.65%, 5/1/2025 ............................... 5,282,960
Capital One Bank 8 1/8%, 3/1/2000 .......................... 5,276,185
News America Holdings 8 1/4%, 8/10/2018 .................... 5,186,945
Ford Credit Auto Lease Trust
6.35%, 10/15/1998 ......................................... 5,025,000
Dresdner Bank 7 1/4%, 9/15/2015 ............................ 5,003,960
6
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INVESTMENT RESULTS
TOTAL RETURNS *
FOR PERIODS ENDED SEPTEMBER 30, 1995
AVERAGE ANNUAL
--------------------------------------
CLASS D
THREE NINE ONE FIVE TEN SINCE
MONTHS MONTHS YEAR YEARS YEARS INCEPTION+
------- ------ ----- ------ ----- ----------
CLASS A
With Sales Charge (0.92)% 12.07% 10.01 14.12% 10.71% --
Without Sales Charge 4.05 17.65 15.47 15.24 11.25 --
CLASS D
With CDSL 2.81 15.92 13.49 n/a n/a n/a
Without CDSL 3.81 16.92 14.49 n/a n/a 7.28%
S&P 500** 7.95 29.77 29.75 17.23 15.98 15.63++
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
SEPTEMBER 30, 1995 JUNE 30, 1995 DECEMBER 31, 1994
------------------ ------------- -----------------
CLASS A $14.74 $14.36 $13.05
CLASS D $14.70 $14.32 $13.01
- --------------------------------------------------------------------------------
* The returns for Class A shares are shown with and without the maximum
initial sales charge of 4.75%. 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 returns for periods
of one year or less 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.
** The S&P 500 is an unmanaged index and assumes reinvestment of estimated
dividends and does not reflect fees and expenses. Investors may not invest
directly in an index.
+ May 3, 1993.
++ From April 30, 1993.
- --------------------------------------------------------------------------------
These rates of return reflect changes in price 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.
7
