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 6/96
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MID-YEAR REPORT
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SELIGMAN
INCOME
FUND, INC.
- --------------------------------------------------------------------------------
JUNE 30, 1996
[LOGO]
- --------------------------------------------------------------------------------
AN INCOME FUND
ESTABLISHED IN 1947
<PAGE>
================================================================================
TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Income Fund had a modest second quarter, outpacing the Lehman Brothers
Aggregate Bond Index but lagging the Standard & Poor's 500 Composite Stock Price
Index (S&P 500). In mid-July, the Fund, along with most investors with equity
exposure, was somewhat affected by the fluctuations in the equity markets and
gave back part of its second quarter gains.
In the first half of 1996, the Federal Reserve Board's continuing efforts to
achieve a "soft landing" -- a healthy moderation of economic growth that does
not slip into recession -- appeared to have come to fruition. Inflation remained
low and, more important, commodity price indices declined from their recent
eight-year highs, which suggested that future inflationary pressures were in
check. Additionally, economic data for the second quarter of 1996 indicated
continued growth in output, employment, and incomes. More than half the early
corporate earnings reports reflected the positive effects of the strong economy,
and earnings estimates rose to higher levels. Overall, the economy seemed quite
healthy at the end of the second quarter.
However, in the fixed-income markets, the economic and interest rate
environment created much confusion. The benchmark 30-year Treasury bond yield
widely fluctuated in the quarter, reacting to the shifting perceptions of
economic growth, the direction of interest rates, and inflationary pressures. In
spite of the fluctuations, it ended the month of June at 6.87%, relatively
unchanged from the 6.67% yield at the beginning of the quarter.
A mid-July sell-off in the equity markets, which was triggered by
disappointing earnings reports from several important technology and health care
companies, led to a broad decline in equity prices. Your Fund remained
relatively sheltered from the decline, however, as it has modest exposure to
equity securities.
The events in the equity markets, though, remind us of the importance of
long-term investing. Since the ups and downs of the markets are unavoidable, it
benefits you, our Shareholders, to adopt a long-term investment plan whenever
possible. Time is a powerful investment tool that succeeds where market timing
often fails. If you invest over the long term, short-term market swings, while
uncomfortable, have less of an impact on your overall financial goals. As
investors, you have already taken steps to reduce your overall risk by
purchasing shares of a mutual fund, which provides portfolio diversification by
investing in numerous issues and industries.
With the help of your investment advisor, you can formulate a long-term
investment strategy that further reduces your risk, increases your
diversification, and allows you to benefit from the advantages of mutual fund
investments.
For specific performance information and a discussion with your Portfolio
Manager about the second quarter of 1996, please refer to page 2.
By order of the Board of Directors,
/S/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
July 31, 1996
1
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INTERVIEW WITH YOUR PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
CHARLES C. SMITH, JR.
HOW DID SELIGMAN INCOME FUND PERFORM IN THE PAST THREE MONTHS?
In the second quarter of 1996, Seligman Income Fund outperformed most of its
competitors due to the strength of the portfolio's equity holdings, which
countered the negative effect of rising interest rates on the portfolio's bond
holdings. Due to its portfolio composition of both equity and fixed-income
securities, the Fund lagged the S&P 500 while it outpaced the Lehman Brothers
Aggregate Bond Index.
WHAT MARKET FACTORS INFLUENCED THE FUND IN THE QUARTER?
The Fund's exposure to the equity market through its convertible bonds, common
stocks, and foreign equity securities benefited the portfolio as those markets
were stronger than the fixed-income markets. The accelerating economy drove up
corporate earnings, which in turn led to strong stock prices. Additionally, many
of the convertible securities in the portfolio benefited from their exposure to
technology, which did very well during the quarter. Currently, convertibles make
up approximately 38% of the portfolio, which is slightly lower than the Fund's
historic weighting. At the moment, however, we are not aggressively purchasing
in the convertible market, as valuations seem too expensive.
WHAT IS YOUR OUTLOOK FOR THE FUND?
The Federal Reserve Board's actions will have a decisive impact on the Fund's
performance over the next three months. If the economy's growth continues to
accelerate, the Fed may have to tighten short-term interest rates to slow down
the rate of growth, and to counter possible inflationary pressure. This would
continue to dampen the Fund's overall investment results. If, however, the
economy slows down in the third quarter, the Fed may lower rates to spur growth,
which would improve the Fund's performance.
We are long-term investors, and our focus remains as such. Currently, the
portfolio is positioned to take advantage of declining interest rates. However,
the common stock and convertible issues in the port-folio should continue to tap
into the strength of the equity markets, thus mitigating the impact of any
increase in short-term interest rates.
2
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SELIGMAN INCOME FUND, INC.
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INVESTMENT RESULTS
TOTAL RETURNS*
FOR PERIODS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION THREE SIX ONE FIVE 10 INCEPTION
4/22/96 MONTHS MONTHS YEAR YEARS YEARS 5/3/93
--------- ------ ------ ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge n/a (3.35)% (2.92)% 3.52% 11.41% 8.57% n/a
Without Sales Charge n/a 1.44 1.93 8.71 12.50 9.10 n/a
CLASS B
With 5% CDSL (3.34)% n/a n/a n/a n/a n/a n/a
Without CDSL 1.66 n/a n/a n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a 0.24 0.53 6.85 n/a n/a n/a
Without CDSL n/a 1.24 1.52 7.85 n/a n/a 6.79%
S&P 500** 2.97++ 4.49 10.10 26.00 15.73 13.79 17.32+++
LEHMAN BROTHERS
AGGREGATE BOND INDEX** 1.14++ 0.57 (1.21) 5.02 8.26 8.55 5.62+++
</TABLE>
NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
------------- -------------- -----------------
<S> <C> <C> <C>
CLASS A $14.46 $14.52 $14.63
CLASS B 14.43 14.43+ n/a
CLASS D 14.43 14.49 14.60
</TABLE>
DIVIDENDS AND CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
CAPITAL GAIN (LOSS)
----------------------------
DIVIDENDS PAID CAPITAL GAIN PAID REALIZED UNREALIZED0
-------------- ----------------- -------- -----------
<S> <C> <C> <C> <C>
CLASS A $0.360 $0.087 $(0.080) $1.002
CLASS B 0.150*** 0.087 (0.080) 1.002
CLASS D 0.300 0.087 (0.080) 1.002
</TABLE>
* Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures for
Class A shares are calculated without and with the effect of the initial
4.75% maximum sales charge. Class A share returns reflect the effect of the
0.25% Administration, Shareholder Services and Distribution Plan after
January 1, 1993, only. Returns for Class B shares are calculated without and
with the effect of the maximum 5% contingent deferred sales load ("CDSL"),
charged only on certain redemptions made within one year of the date of
purchase, declining to 1% in the sixth year and 0% thereafter. Returns for
Class D shares are calculated without and with the effect of the 1% CDSL,
charged only on redemptions made within one year of the date of purchase.
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.
** The S&P 500 and Lehman Brothers Aggregate Bond Index are unmanaged indices
that assume reinvestment of estimated dividends, and do not reflect fees and
expenses. Investors may not invest directly in an index.
*** For the period April 22, 1996, to June 30, 1996.
+ As of April 22, 1996.
++ From April 30, 1996.
+++ From April 30, 1993.
0 Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1996.
3
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SELIGMAN INCOME FUND, INC.
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LARGEST PORTFOLIO CHANGES
DURING THE PAST THREE MONTHS
PRINCIPAL AMOUNT
---------------------
HOLDINGS
ADDITIONS INCREASE 6/30/96
- --------- -------- --------
U.S. Government Securities
U.S. Treasury Notes 5 3/4%,
10/31/2000................ $10,000,000 $10,000,000
Corporate Bonds
American Savings Bank
6 5/8%, 2/15/2006......... 5,000,000 5,000,000
Coastal 9 3/4%, 8/1/2003.... 5,000,000 5,000,000
Conseco 10 1/2%, 12/15/2004. 5,000,000 5,000,000
Continental Cablevision
8.30%, 5/15/2006.......... 5,000,000 5,000,000
Empresa Electrica Pehuenche
7.30%, 5/1/2003........... 5,000,000 5,000,000
First USA Bank 5.85%,
2/22/2001................. 5,000,000 5,000,000
Tosco 7 5/8%, 5/15/2006..... 5,000,000 5,000,000
Asset-backed Securities
Advanta 1996-2 7.44%,
4/15/2009................. 5,000,000 5,000,000
Money Store 1996-B 7.55%,
7/15/2002................. 5,000,000 5,000,000
HOLDINGS
REDUCTIONS DECREASE 6/30/96
- ---------- -------- ---------
U.S. Government Securities
U.S. Treasury Bonds 8 1/8%,
8/15/2021................. $ 5,000,000 --
U.S. Treasury Notes 5 1/4%,
1/31/2001................. 10,000,000 --
U.S. Treasury Notes 7 1/4%,
8/15/2004................. 8,000,000 $2,000,000
Corporate Bonds
Finova Capital 6.54%,
11/15/2002................ 5,000,000 --
First Union 6.55%, 10/15/2035 5,000,000 --
General Motors Acceptance
6 3/4%, 3/15/2003......... 5,000,000 --
Tosco 7%, 7/15/2000......... 5,000,000 --
USAA Capital 5.30%,
2/9/1999.................. 5,000,000 --
Woolworth 7%, 10/15/2002.... 5,000,000 --
Asset-backed Securities
Chase 96-A 5.20%, 2/15/2002. 9,656,330 --
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, 1996
SECURITY VALUE
- -------- -----
Federal National Mortgage Association
7%, 5/1/2026.......................... $13,546,750
U.S. Treasury Notes 5 3/4%, 10/31/2000.. 9,740,620
Federal National Mortgage Association
7%, 4/1/2026.......................... 7,816,362
Carlton Communications
7 1/2%, 8/14/2007 .................... 7,334,912
Conseco 10 1/2%, 12/15/2004............. 5,725,635
Coastal 9 3/4%, 8/1/2003................ 5,642,890
Orxy Energy 10%, 4/1/2001............... 5,440,810
General Signal 5 3/4%, 6/1/2002......... 5,275,000
Time Warner 9 1/8%, 1/15/2013........... 5,235,395
AEGON N.V. 8%, 8/15/2006................ 5,224,895
4
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SELIGMAN INCOME FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
AT JUNE 30, 1996
[THE FOLLOWING TABLE REPRESENTS A PIE CHART IN THE PRINTED REPORT.]
Corporate Bonds ........................................... 25.5%
Convertible Bonds ......................................... 20.8%
Common Stocks ............................................. 19.4%
Convertible Preferred Stocks .............................. 16.4%
U.S. Government and Government Agency Securities .......... 13.5%
Asset-backed Securities ................................... 2.7%
Short-Term Holdings ....................................... 1.7%
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS A
JUNE 30, 1986, TO JUNE 30, 1996
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED REPORT.]
1986 9527.67
1986 9529.53
1986 9856.17
1987 10184.09
1987 9914.57
1987 9731.53
1987 9462.14
1988 9996.91
1988 10315.10
1988 10399.03
1988 10458.50
1989 10816.25
1989 11544.30
1989 11769.35
1989 12038.37
1990 11941.60
1990 12010.80
1990 10717.80
1990 11038.82
1991 12251.17
1991 12630.06
1991 13739.28
1991 14364.05
1992 15101.82
1992 15690.64
1992 16408.44
1992 16883.41
1993 17981.53
1993 18433.18
1993 19080.43
1993 19580.85
1994 18797.29
1994 18495.00
1994 18867.19
1994 18517.55
1995 19513.44
1995 20939.05
1995 21786.16
1995 22332.46
1996 22439.69
1996 22763.34
The performance of Class B and Class D shares will be greater or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders and the length of the holding period.
5
<PAGE>
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PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES 13.4%
U.S. Treasury Notes
7 1/4%, 8/15/2004 ................. $ 2,000,000 $ 2,071,250
U.S. Treasury Notes
5 3/4%, 10/31/2000 ................ 10,000,000 9,740,620
MORTGAGE-BACKED SECURITIES:++
Federal National Mortgage
Association Obligations:
7%, 5/1/2026 ..................... 14,060,959 13,546,750
7%, 4/1/2026 ..................... 8,113,056 7,816,362
Government National Mortgage
Association Obligations:
7 1/2%, with various
maturities from
1/15/2023 to 12/15/2024 ........... 8,835,919 8,717,120
10%, with various maturities
from 1/15/2018 to 8/15/2021 ....... 8,118,968 8,854,710
-----------
TOTAL U.S. GOVERNMENT
AND GOVERNMENT
AGENCY SECURITIES
(Cost $50,766,247) .............. 50,746,812
-----------
CORPORATE BONDS 25.4%
BANKING AND FINANCE 10.5%
Alco Capital 5.435%, 2/22/1999 ...... 5,000,000 4,846,200
American Savings Bank
6 5/8%, 2/15/2006+ ............... 5,000,000 4,686,850
CAF 7 3/8%, 7/21/2000 ............... 5,000,000 5,002,510
Capital One Bank 8 1/8%, 3/1/2000 ... 5,000,000 5,167,310
First USA Bank 5.85%, 2/22/2001 ..... 5,000,000 4,759,365
Franchise Finance 7%, 11/30/2000 .... 5,000,000 4,871,665
Midland Bank 7.65%, 5/1/2025 ........ 5,000,000 5,128,660
United Companies Financial
9.35%, 11/1/1999 .................. 5,000,000 5,214,945
-----------
39,677,505
-----------
CABLE SYSTEMS 1.4%
Continental Cablevision
8.30%, 5/15/2006 ................. 5,000,000 5,182,460
-----------
ELECTRIC UTILITIES 1.3%
Empresa Electrica Pehuenche
7.30%, 5/1/2003 .................. 5,000,000 4,938,715
-----------
ENERGY 4.2%
Coastal 9 3/4%, 8/1/2003 ............ 5,000,000 5,642,890
Orxy Energy 10%, 4/1/2001 ........... 5,000,000 5,440,810
Tosco 7 5/8%, 5/15/2006 ............. 5,000,000 4,997,400
-----------
16,081,100
-----------
INSURANCE 2.9%
AEGON N.V. 8%, 8/15/2006 ............ 5,000,000 5,224,895
Conseco 10 1/2%, 12/15/2004 ......... 5,000,000 5,725,635
-----------
10,950,530
-----------
MEDIA 2.6%
Time Warner 9 1/8%, 1/15/2013 ....... 5,000,000 5,235,395
Viacom 6 3/4%, 1/15/2003 ............ 5,000,000 4,723,695
-----------
9,959,090
-----------
TECHNOLOGY 1.5%
Solectron 7 3/8%, 3/1/2006+ ......... 4,000,000 3,830,520
Tektronix 7 1/2%, 8/1/2003 .......... 2,000,000 1,989,900
-----------
5,820,420
-----------
TRANSPORTATION 1.0%
Mayme Nickless 6 1/4%, 2/1/2006 ..... 4,000,000 3,703,512
-----------
TOTAL CORPORATE BONDS
(Cost $97,178,492) ................ 96,313,332
-----------
CONVERTIBLE BONDS 20.7%
CONSUMER GOODS
AND SERVICES 0.5%
Bell Sports 4 1/4%, 11/15/2000 ..... 2,500,000 1,881,250
-----------
DIVERSIFIED 0.6%
MascoTech 4 1/2%, 12/15/2003 ........ 2,750,000 2,186,250
-----------
DRUGS AND
HEALTH CARE 1.0%
Ciba-Geigy 6 1/4%, 3/15/2016 ........ 2,000,000 2,060,000
Greenery Rehabilitation Group
8 3/4%, 4/1/2015 .................. 2,000,000 1,715,000
-----------
3,775,000
-----------
- ---------------
See footnotes on page 9.
6
<PAGE>
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JUNE 30, 1996
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PRINCIPAL
AMOUNT VALUE
------ -----
ENERGY 1.7%
Apache 6%, 1/15/2002+ ............... $ 3,000,000 $ 3,592,500
Santa Fe Pipelines
11.162%, 8/15/2010 ................ 2,500,000 3,062,500
-----------
6,655,000
-----------
ENVIRONMENTAL
SERVICES 1.5%
Molten Metals 5 1/2%,
5/1/2006+ ......................... 3,000,000 2,970,000
OHM 8%, 10/1/2006 ................... 3,000,000 2,625,000
-----------
5,595,000
-----------
FINANCE 0.2%
Finance One 2%, 8/31/2001 ........... 750,000 742,500
-----------
INSURANCE 2.0%
Leucadia National
5 1/4%, 2/1/2003 .................. 3,000,000 3,135,000
LibLife International
6 1/2%, 9/30/2004 ................. 750,000 1,033,125
Trenwick Group
6%, 12/15/1999 .................... 3,000,000 3,273,750
-----------
7,441,875
-----------
MACHINERY 1.0%
Cooper Industries
7.05%, 1/1/2015 ................... 2,724,000 2,907,870
Teco Electric and Machinery
2 3/4%, 4/15/2004 ................ 1,000,000 862,500
-----------
3,770,370
-----------
MEDIA 1.9%
Carlton Communications
7 1/2%, 8/14/2007 ................ 2,600,000 7,334,912
-----------
RETAILING 1.7%
CML Group 5 1/2%, 1/15/2003+ ........ 2,000,000 1,370,000
Price Co. 6 3/4%, 3/1/2001 .......... 3,000,000 3,213,750
Proffitts 4 3/4%, 11/1/2003 ......... 2,000,000 1,950,000
-----------
6,533,750
-----------
TECHNOLOGY 3.3%
Bay Networks
5 1/4%, 5/15/2003+ ................ 2,000,000 1,827,500
Conner Peripherals
6 1/2%, 3/1/2002 .................. 3,000,000 3,135,000
Cray Research 6 1/8%, 2/1/2011 ...... 1,500,000 1,200,000
Data General 7 3/4%, 6/1/2001 ....... 2,000,000 1,960,000
EMC 4 1/4%, 1/1/2001 ................ 1,500,000 1,616,250
Evans & Sutherland Computer
6%, 3/1/2012 ...................... 2,000,000 1,730,000
Xilinx 5 1/4%, 11/1/2002+ ........... 1,000,000 915,000
-----------
12,383,750
-----------
TELECOMMUNICATIONS 1.1%
LDDS Communications
5%, 8/15/2003 ..................... 2,000,000 2,885,000
Network Equipment
7 1/4%, 5/15/2014 ................. 1,470,000 1,379,963
-----------
4,264,963
-----------
TRANSPORTATION 2.2%
Airborne Freight
6 3/4%, 8/15/2001 ................. 1,750,000 1,754,375
British Airways
9 3/4%, 6/15/2005 ................. 700,000+++ 2,498,007
Builders Transport
8%, 8/15/2005 ..................... 3,000,000 2,692,500
Nippon Yusen 2%,
9/29/2000 ......................... 115,000,000** 1,279,818
-----------
8,224,700
-----------
MISCELLANEOUS 2.0%
General Signal 5 3/4%,
6/1/2002 .......................... 5,000,000 5,275,000
TriMas 5%, 8/1/2003 ................. 2,000,000 2,285,000
-----------
7,560,000
-----------
TOTAL CONVERTIBLE BONDS
(Cost $69,326,223) ................ 78,349,320
-----------
- ----------------
See footnotes on page 9.
7
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PORTFOLIO OF INVESTMENTS (continued)
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SHARES VALUE
------ -----
CONVERTIBLE PREFERRED
STOCKS 16.3%
COMPUTER AND
BUSINESS SERVICES 1.2%
Ceridian 5 1/2% ..................... 40,000shs. $ 4,440,000
-----------
CONSUMER GOODS
AND SERVICES 0.9%
RJR Nabisco Holdings $0.6012 ........ 500,000 3,250,000
-----------
ENERGY 2.6%
Snyder Oil (Class A) 6% ............. 150,000 2,850,000
Unocal $3.50+ ....................... 50,000 2,831,250
Williams Cos. $3.50 ................. 50,000 3,975,000
WRT Energy 9%* ...................... 40,000 80,000
-----------
9,736,250
-----------
ENVIRONMENTAL
SERVICES 0.8%
Browning-Ferris Industries 7 1/4% ... 100,000 3,175,000
-----------
INSURANCE 4.3%
Ahmanson (H.F.) (Series D) 6% ....... 50,000 2,968,750
Alexander & Alexander
(Series A) $3.625+ ................ 65,000 3,055,000
American General
(Series A) $3.00 .................. 50,000 2,625,000
FSA 7 5/8% .......................... 137,500 3,729,688
St. Paul Capital 6% ................. 75,000 3,937,500
-----------
16,315,938
-----------
PAPER 0.9%
International Paper 5 1/4%+ ......... 80,000 3,480,000
-----------
RETAILING 1.6%
Kmart Financing 7 3/4% .............. 58,000 3,146,500
TJX Companies $3.125 ................ 30,000 1,935,000
Venture Stores $3.25 ................ 40,000 1,055,000
-----------
6,136,500
-----------
STEEL 0.7%
U.S. Steel $3.25 .................... 60,000 2,617,500
-----------
TRANSPORTATION 2.1%
GATX $3.875 ......................... 50,000 2,912,500
Interpool 5 3/4% .................... 20,000 1,867,500
Sea Containers $4.00 ................ 70,000 3,290,000
-----------
8,070,000
-----------
UTILITIES/
TELECOMMUNICATIONS 0.3%
Mobile Telecommunication
Technologies $2.25+ .............. 50,000 1,243,750
-----------
MISCELLANEOUS 0.9%
Corning (Delaware) 6% ............... 60,000 3,427,500
-----------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $59,160,858) 61,892,438
-----------
COMMON STOCKS 19.3%
BANKING AND FINANCE 4.6%
Banco de Santander .................. 52,732 2,457,525
Citicorp ............................ 44,999 3,718,042
Grupo Financiera Banamex
Accival (Class B) ................ 443,000 922,795
HSBC Holdings ....................... 70,000 1,058,044
ING Groep ........................... 80,200 2,388,497
National Australia Bank (ADRs) ...... 60,000 2,782,500
National City ....................... 95,352 3,349,225
Societe Generale .................... 6,360 698,488
-----------
17,375,116
-----------
CHEMICALS 0.7%
Bayer AG ............................ 57,000 2,002,657
European Vinyls ..................... 24,700 765,959
-----------
2,768,616
-----------
CONSUMER GOODS
AND SERVICES 1.7%
Allied Domecq ....................... 140,000 981,789
B.A.T. Industries ................... 200,000 1,554,603
Christian Dior--ABSA ................ 7,570 984,138
Wendy's International ............... 162,602 3,028,455
-----------
6,548,985
-----------
ELECTRIC UTILITIES 4.9%
Central & South West ................ 60,100 1,742,900
Central Costanera (ADRs)+ ........... 14,000 518,000
CINergy ............................. 102,300 3,273,600
Empresa Nacionale de
Electricidad (ADRs) .............. 25,000 1,565,625
Entergy ............................. 100,000 2,837,500
FPL Group ........................... 100,000 4,600,000
Hong Kong Electric .................. 800,000 2,439,056
VEBA ................................ 30,000 1,592,363
-----------
18,569,044
-----------
- ---------------
See footnotes on page 9.
8
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JUNE 30, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
ENERGY 2.4%
Atlantic Richfield .................. 20,000 $ 2,370,000
BP Prudhoe Bay Royalty Trust ........ 80,000 1,200,000
Shell Transport and Trading (ADRs) .. 50,000 4,400,000
Total SA (Class B) ................. 15,000 1,111,251
-----------
9,081,251
-----------
FOOD 0.4%
Tesco ............................... 287,400 1,310,949
-----------
INSURANCE 0.8%
AXA ................................. 9,738 532,093
GCR Holdings ........................ 57,000 1,503,375
Irish Life .......................... 250,000 989,081
-----------
3,024,549
-----------
STEEL 0.1%
Pohang Iron & Steel (ADRs) .......... 15,000 365,625
-----------
UTILITIES/
TELECOMMUNICATIONS 3.5%
Alcatel Alsthom ..................... 15,000 1,306,841
British Telecommunications (ADRs) ... 30,000 1,612,500
GTE ................................. 100,000 4,475,000
NYNEX ............................... 50,000 2,375,000
Tele Danmark (ADSs) ................. 50,000 1,268,750
Telecom Italia-Di Risp .............. 439,000 756,670
U.S. West ........................... 50,000 1,593,750
-----------
13,388,511
-----------
MISCELLANEOUS 0.2%
Pacific Dunlop ...................... 275,000 619,015
-----------
OTHER 140,000
-----------
TOTAL COMMON STOCKS
(Cost $57,799,608) 73,191,661
-----------
PRINCIPAL
AMOUNT VALUE
------ -----
ASSET-BACKED
SECURITIES++ 2.6%
FINANCE 2.6%
Advanta 1996-2 7.44%, 4/15/2009 ..... $5,000,000 $ 5,003,500
Money Store 1996-B 7.55%,
7/15/2002 ........................ 5,000,000 5,042,190
------------
TOTAL ASSET-BACKED
SECURITIES
(Cost $9,998,438) ................. 10,045,690
------------
SHORT-TERM HOLDINGS 1.7%
(Cost $6,600,000) ................. 6,600,000
------------
TOTAL INVESTMENTS 99.4%
(Cost $350,829,866) ............... 377,139,253
OTHER ASSETS LESS
LIABILITIES 0.6% ............... 2,288,066
------------
NET ASSETS 100.0% ................. $379,427,319
============
- ---------------------
* Non-income producing, security in default.
** Principal amount reported in Japanese yen.
+ 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.
See notes to financial statements.
9
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1996
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value:
Bonds and stocks (cost $293,463,619)......... $319,792,441
U.S. Government and Government Agency
securities (cost $50,766,247)............. 50,746,812
Short-term holdings (cost $6,600,000)........ 6,600,000 $377,139,253
------------
Cash........................................... 2,148,848
Receivable for securities sold................. 7,009,230
Receivable for interest and dividends.......... 4,325,986
Receivable for Capital Stock sold.............. 453,026
Investment in, and expenses prepaid to,
shareholder service agent ................... 66,262
Other.......................................... 80,659
------------
Total Assets .................................. 391,223,264
------------
LIABILITIES:
Payable for securities purchased............... 10,378,342
Payable for Capital Stock repurchased.......... 802,473
Accrued expenses, taxes, and other............. 615,130
------------
Total Liabilities ............................. 11,795,945
------------
NET ASSETS ................................... $379,427,319
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value;
500,000,000 shares authorized; 26,260,515
shares outstanding):
Class A...................................... $ 20,476,469
Class B...................................... 47,321
Class D...................................... 5,736,725
Additional paid-in capital..................... 327,392,453
Undistributed net investment income............ 851,898
Accumulated net realized loss.................. (1,389,147)
Net unrealized appreciation of investments..... 26,468,845
Net unrealized appreciation on translation of
assets and liabilities denominated in foreign
currencies................................... (157,245)
------------
NET ASSETS ................................... $379,427,319
============
NET ASSET VALUE PER SHARE:
Class A ($295,990,532 / 20,476,469 shares) ... $14.46
======
Class B ($682,637 / 47,321 shares) ........... $14.43
======
Class D ($82,754,150 / 5,736,725 shares) ..... $14.43
======
- -----------------
See notes to financial statements.
10
<PAGE>
================================================================================
STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest ........................................................ $ 8,987,997
Dividends ....................................................... 3,608,071
Other income..................................................... 32,044
-----------
Total investment income (net of foreign taxes
withheld of $67,977).............. ............................ $12,628,112
EXPENSES:
Management fee................................................... 1,191,918
Distribution and service fees.................................... 787,919
Shareholder account services..................................... 323,998
Custody and related services..................................... 87,682
Shareholder reports and communications........................... 74,864
Registration..................................................... 60,851
Auditing and legal fees.......................................... 34,797
Shareholders' meeting ........................................... 17,457
Directors' fees and expenses..................................... 15,510
Miscellaneous.................................................... 20,421
-----------
Total expenses................................................... 2,615,417
-----------
NET INVESTMENT INCOME ........................................... 10,012,695
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments................................. (2,052,246)
Net realized loss from foreign currency transactions............. (12,005)
Net change in unrealized appreciation of investments............. (758,194)
Net change in unrealized appreciation on translation of assets
and liabilities denominated in foreign currencies............. (289,228)
-----------
Net Loss on Investments and Foreign Currency Transactions ....... (3,111,673)
-----------
Increase in Net Assets from Operations .......................... $ 6,901,022
===========
</TABLE>
- -----------------
See notes to financial statements.
11
<PAGE>
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................ $ 10,012,695 $ 19,965,581
Net realized gain (loss) on investments...................................... (2,052,246) 10,209,134
Net realized gain (loss) from foreign currency transactions.................. (12,005) 124,087
Net change in unrealized appreciation/depreciation of investments............ (758,194) 40,389,728
Net change in unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies......................................... (289,228) (316,625)
------------ ------------
Increase in net assets from operations....................................... 6,901,022 70,371,905
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A.................................................................... (7,585,902) (16,607,821)
Class B.................................................................... (6,297) --
Class D.................................................................... (1,739,783) (3,554,476)
Net realized gain on investments:
Class A.................................................................... (1,799,539) (5,854,791)
Class B.................................................................... (3,653) --
Class D.................................................................... (494,274) (1,589,987)
------------ ------------
Decrease in net assets from distributions.................................... (11,629,448) (27,607,075)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------------
SIX MONTHS
ENDED YEAR ENDED
CAPITAL SHARE TRANSACTIONS:* JUNE 30, 1996 DECEMBER 31, 1995
------------ -----------------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A................................ 954,824 2,037,105 13,986,798 29,059,201
Class B................................ 46,775 -- 678,465 --
Class D................................ 606,658 1,319,539 8,863,844 18,613,132
Investment of dividends:
Class A................................ 356,049 769,996 5,132,682 10,950,044
Class B................................ 366 -- 5,232 --
Class D................................ 97,753 193,425 1,406,289 2,746,592
Exchanged from associated Funds:
Class A................................ 2,097,362 2,629,077 30,671,696 38,414,916
Class B................................ 6 -- 87 --
Class D................................ 249,814 785,959 3,636,977 11,323,047
Shares issued in payment of
gain distributions:
Class A................................ 102,600 340,918 1,470,259 4,950,128
Class B................................ 222 -- 3,179 --
Class D................................ 30,811 104,206 440,625 1,509,952
---------- ---------- ------------ ------------
Total.................................... 4,543,240 8,180,225 66,296,133 117,567,012
---------- ---------- ------------ ------------
Cost of shares repurchased:
Class A................................ (2,185,813) (3,019,135) (31,845,911) (42,874,377)
Class B................................ (13) -- (187) --
Class D................................ (657,735) (921,962) (9,585,628) (13,046,572)
Exchanged into associated Funds:
Class A................................ (2,601,923) (2,948,092) (37,998,579) (42,763,690)
Class B................................ (35) -- (500) --
Class D................................ (529,122) (765,462) (7,717,186) (10,940,934)
---------- ---------- ------------ ------------
Total.................................... (5,974,641) (7,654,651) (87,147,991) (109,625,573)
---------- ---------- ------------ ------------
Increase (decrease) in net assets from
capital share transactions........... (1,431,401) 525,574 (20,851,858) 7,941,439
========== ========== ------------ ------------
Increase (decrease) in net assets............................................ (25,580,284) 50,706,269
NET ASSETS:
Beginning of period.......................................................... 405,007,603 354,301,334
------------ ------------
End of period (including undistributed net investment income of $851,898 and
$131,568, respectively)................................................... $379,427,319 $405,007,603
============ ============
</TABLE>
- -------------------
*The Fund began offering Class B shares on April 22, 1996.
See notes to financial statements.
12
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Income Fund, Inc. (the "Fund") offers three classes of shares. All
shares existing prior to May 3, 1993, the commencement of Class D shares, were
classified as Class A shares. The Fund began offering Class B shares on April
22, 1996. 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 B 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"), if applicable, of 5% on redemptions in
the first year after purchase, declining to 1% in the sixth year and 0%
thereafter. Class B shares will automatically convert to Class A shares on the
last day of the month that precedes the eighth anniversary of their date of
purchase. Class D shares are sold without an initial sales charge but are
subject to a distribution fee of up to 0.75% and a service fee of up to 0.25% on
an annual basis, and a CDSL of 1% imposed on certain redemptions made within one
year of purchase. The three classes of shares represent interests in the same
portfolio of investments, have the same rights and are generally identical in
all respects except that each class bears its separate distribution and certain
other class expenses, and has exclusive voting rights with respect to any matter
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 US Government securities and Government agency 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 US dollars. The market
value of investment securities and other assets and liabilities denominated
in foreign currencies are translated into US 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 US 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. For the six months ended June 30, 1996, distribution and
service fees were the only class-specific expenses.
13
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
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
recharacteriza-tion of foreign exchange gains or losses to either ordinary
income or realized capital gains 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.
3. For the six months ended June 30, 1996, purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments,
amounted to $212,764,049 and $237,855,619, respectively; purchases and sales of
US Government obligations were $62,124,435 and $49,943,066, respectively.
At June 30, 1996, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio
securities, including the effects of foreign currency translations, amounted to
$36,199,966 and $9,890,579, respectively.
4. At June 30, 1996, the Fund owned short-term investments which matured in less
than 7 days.
5. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all directors of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the Manager is
paid by the Manager. The Manager receives a fee, calculated daily and payable
monthly, equal to 0.60% per annum of the first $1 billion of the Fund's average
daily net assets, 0.55% per annum of the next $1 billion of the Fund's average
daily net assets, and 0.50% per annum of the Fund's average daily net assets in
excess of $2 billion. Prior to January 1, 1996, the management fee rate was
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 reflected in the Statement of Operations represents 0.60% per annum of the
Fund's average daily net assets. 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 $45,325 from sales of Class A shares, after commissions of
$347,314 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, 1996, fees incurred aggregated
$358,114, or 0.23% per annum of the average daily net assets of Class A shares.
The Fund has a Plan with respect to Class B and 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 B and Class D shares for which the organizations are
14
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of up to 0.75% on an
annual basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provided funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the six months ended June 30, 1996, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $725 and $429,080, respectively.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For the six
months ended June 30, 1996, such charges amounted to $15,948.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Dis-tributor received payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B shares distribution fees retained by the Distributor for the six
months ended June 30, 1996, amounted to $1,515.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the six months ended June 30, 1996,
Seligman Services, Inc. received commissions of $5,345 from sales of shares of
the Fund. Seligman Services, Inc. also received distribution and service fees of
$31,515, pursuant to the Plan.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $323,998 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.
Fees of $9,000 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, 1996, of $97,092 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.
15
<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.
Average commission rate paid represents the average commission paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid. This rate is provided for periods
beginning January 1, 1996.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
--------------------------------------------------- -------- ----------------------------------
SIX SIX YEAR ENDED
MONTHS YEAR ENDED DECEMBER 31, 4/22/96* MONTHS DECEMBER 31, 5/3/93*
ENDED ---------------------------------------- TO ENDED -------------- TO
6/30/960 19950 19940 1993 1992 1991 6/30/960 6/30/960 19950 19940 12/31/93
-------- ----- ----- ---- ---- ---- -------- -------- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of period .................... $14.63 $13.05 $14.58 $13.69 $12.45 $10.38 $14.43 $14.6 $13.01 $14.55 $14.42
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income .......... .38 .76 .76 .75 .92 .96 .09 .32 .65 .65 .45
Net realized and unrealized
investment gain (loss) ...... (.09) 1.89 (1.57) 1.40 1.21 2.08 .15 (.09) 1.88 (1.57) .69
Net realized and unrealized
gain (loss) on foreign
currency transactions ........ (.01) (.01) .03 -- -- -- -- (.01) (.01) .03 --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations ........ .28 2.64 (.78) 2.15 2.13 3.04 .24 .22 2.52 (.89) 1.14
Dividends paid ................. (.36) (.78) (.75) (.75) (.89) (.97) (.15) (.30) (.65) (.65) (.50)
Distributions from net
gain realized ................ (.09) (.28) -- (.51) -- -- (.09) (.09) (.28) -- (.51)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value ........... (.17) 1.58 (1.53) .89 1.24 2.07 -- (.17) 1.59 (1.54) .13
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period ....................... $14.46 $14.63 $13.05 $14.58 $13.69 $12.45 $14.43 $14.43 $14.60 $13.01 $14.55
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED
ON NET ASSET VALUE: 1.93% 20.60% (5.43)% 15.98% 17.54% 30.12% 1.66% 1.52% 19.66% (6.20)% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets . 1.15%+ 1.00% 1.02% 1.03% .84% .85% 1.98%+ 1.92%+ 1.79% 1.82% 1.84%+
Net investment income to
average net assets ........... 5.21%+ 5.38% 5.51% 5.29% 6.88% 8.24% 4.88%+ 4.44%+ 4.58% 4.74% 4.42%+
Portfolio turnover ............. 71.14% 111.78% 66.62% 60.62% 70.43% 66.77% 71.14%+++ 71.14% 111.78% 66.62% 60.62%++
Average commission rate paid ... $.0266 $.0266+++ $.0266
Net assets, end of period
(000's omitted) ..............$295,990 $318,307 $286,355 $321,040 $213,007 $153,511 $683 $82,754 $86,701 $67,946 $49,941
- --------------------
* Commencement of offering of shares.
0 Per share amounts for the periods ended June 30, 1996, and for the years
ended December 31, 1995, and 1994, are calculated based on
average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1993.
+++ For the six months ended June 30, 1996.
See notes to financial statements.
16
<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, 1996,
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, 1995, 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 June
30, 1996 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, 1996, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
July 31, 1996
17
<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
Director, Baptist Medical Center
JOHN E. MEROW
Partner, Sullivan & Cromwell, Law Firm
Director, Commonwealth Aluminum Corporation
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, 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
Managing Director, J. & W. Seligman & Co. Incorporated
ROBERT L. SHAFER 3, 4
Director or Trustee,
Various Organizations
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
President
Managing Director, J. & W. Seligman & Co. Incorporated
- -----------------
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
18
<PAGE>
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Executive Officers
- --------------------------------------------------------------------------------
WILLIAM C. MORRIS
Chairman
BRIAN T. ZINO
President
CHARLES C. SMITH, JR.
Vice President
LAWRENCE P. VOGEL
Vice President
THOMAS G. ROSE
Treasurer
FRANK J. NASTA
Secretary
- --------------------------------------------------------------------------------
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
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