SELIGMAN
- ----------------
INCOME
FUND, INC.
[PHOTO OMITTED]
MID-YEAR REPORT
JUNE 30, 1999
[GRAPHIC OMITTED]
SEEKING HIGH
CURRENT INCOME
AND IMPROVEMENT OF INCOME AND
CAPITAL VALUE OVER
THE LONGER TERM
[LOGO OMITTED]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
[PHOTO OMITTED]
JAMES, JESSE, AND JOSEPH SELIGMAN, 1870
TIMES CHANGE...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 135 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including equity funds that specialize in small companies,
technology, or international securities, and bond funds that focus on high-yield
issuers, US government bonds, or municipal securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
To the Shareholders 1
Interview With Your Portfolio Managers 2
Performance Overview 4
Portfolio Overview 6
Portfolio of Investments 8
Statement of Assets and Liabilities 11
Statement of Operations 12
Statements of Changes in Net Assets 13
Notes to Financial Statements 14
Financial Highlights 17
Report of Independent Auditors AND
For More Information 19
Board of Directors AND Executive Officers 20
Glossary of Financial Terms 21
- --------------------------------------------------------------------------------
<PAGE>
TO THE SHAREHOLDERS
During the first six months of 1999, Seligman Income Fund posted a total return
of 0.15% based on the net asset value of Class A shares. During the same period,
the Lipper Income Funds Average returned 3.90% and the Lehman Brothers Aggregate
Bond Index returned -1.37%. A full discussion with your Portfolio Managers
regarding the Fund's results begins on page 2.
The past six months were difficult for the Fund as continued concerns regarding
inflation pushed bond yields higher and bond prices lower. While the equity
portion of the Fund's portfolio performed well, the portfolio's overall
performance suffered as a result of the Fund's exposure to the bond market.
During the period, economic data had indicated a benign inflationary
environment, but market participants correctly anticipated that the Federal
Reserve Board would raise rates at its June 30 meeting in response to the
improved global outlook and continued US economic strength. This tightening was
a partial reversal of the Fed's actions last fall when it lowered interest rates
three times in response to the global financial crisis.
As we move into the second half of the fiscal year, US economic growth remains
strong, the rest of the world is showing solid signs of economic recovery, and
inflation appears benign. The Fund's equity portfolio is well positioned to
continue to benefit in such an environment. Furthermore, we expect that interest
rates will stabilize, which would benefit the Fund's fixed-income holdings.
As the millennium approaches, we have become concerned that the media's focus on
the Year 2000 (Y2K) computer issue, and the fears that this attention may spark,
will cause some investors to take actions that are not in their best long-term
interests. In our view, the primary danger to investors is losing sight of their
long-term financial goals, and altering their portfolios and asset allocations
in an attempt to respond to the confusion surrounding this issue.
In the US, governments and businesses have committed substantial resources to
this issue and, while there may be scattered inconveniences, we believe that the
US will enter the year 2000 relatively seamlessly, and that much of the rest of
the developed world is also well positioned to deal with the new millennium.
For the past several years, J. & W. Seligman & Co. Incorporated (Seligman), your
Fund's manager, and Seligman Data Corp. (Seligman Data), your Fund's shareholder
service agent, have been working to ensure that shareholders do not experience
any Y2K-related inconveniences. We are pleased to report that the early start
has paid off. During the spring of this year, Seligman and Seligman Data
participated in Y2K testing conducted by the Securities Industry Association.
These tests were completed without any Y2K-related problems on the part of
Seligman or Seligman Data. Tests with key service providers were also conducted,
all of which were successfully completed in a Y2K environment.
Thank you for your continued support of Seligman Income Fund. We look forward to
continuing to serve your investment needs.
By order of the Board of Directors,
/s/ William C. Morris
- ----------------------
William C. Morris
Chairman
/s/ Brian T. Zino
------------------
Brian T. Zino
President
August 6, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
CHARLES C. SMITH, JR. AND RODNEY COLLINS
Q: HOW DID SELIGMAN INCOME FUND PERFORM DURING THE FIRST SIX MONTHS OF 1999?
A: For the six-month period ended June 30, 1999, Seligman Income Fund posted a
total return of 0.15% based on the net asset value of Class A shares. This
compares to 3.90% for the Lipper Income Funds Average and -1.37% for the
Lehman Brothers Aggregate Bond Index. The Fund underperformed the Lipper
Average because many of the Fund's peers have more exposure to equities,
while more than half of the Fund's holdings are in bonds, which
underperformed significantly during the period.
Q: WHAT ECONOMIC AND MARKET FACTORS AFFECTED THE FUND DURING THE PAST SIX
MONTHS?
A: Fixed-income securities suffered during the past six months because of
steadily rising rates. In May, the Federal Reserve Board announced that it
was leaning toward a tighter monetary policy. This immediately sent rates
higher and the bond market began to price in not only a June rate hike but
another one in August.
Bond holders didn't get any relief until the last day of the period, June
30, when the Fed did indeed raise the federal funds rate by 25 basis points,
but surprised markets by announcing a bias shift to neutral. This sparked a
bond market rally and caused the yield on the 30-year US Treasury bond to
fall back below 6% that day.
While interest rates have increased dramatically (long-term rates rose by
100 basis points during the six-month period), they have only moved to the
levels that prevailed before last fall's global economic crisis. Central
banks around the world, led by the US Federal Reserve Board, were successful
in coordinating a looser monetary policy that enabled the world economy to
recover and, for a time, lower interest rates provided some support for
equity markets. Now, with global growth on the rebound, interest rates have
moved higher, but a more positive overall environment of continued benign
inflation, strong corporate profit growth, and accelerating worldwide
demand, has allowed stocks to flourish nonetheless. In this environment, the
equity side of the Fund fared much better than the Fund's fixed-income
holdings.
Q: WHAT WAS YOUR INVESTMENT STRATEGY?
A: At the beginning of the period, the continued strength of the US economy and
increasing economic activity in the rest of the world led us to anticipate
that the Fed would likely reverse its looser monetary policy of last year,
and raise rates. In an effort to limit the effect that higher rates would
have on the Fund's fixed-income holdings, we upgraded the bond portfolio's
[PHOTO OMITTED]
GROWTH AND INCOME TEAM: (FROM LEFT) AMY FUJII, JOHN ROTH, MELANIE RAVENELL
(ADMINISTRATIVE ASSISTANT), (SEATED) CHARLES SMITH (PORTFOLIO MANAGER),
RODNEY COLLINS (CO-PORTFOLIO MANAGER)
A TEAM APPROACH
Seligman Income Fund is managed by the Seligman Growth and Income Team, headed
by Charles C. Smith, Jr. Mr. Smith and Rodney Collins are assisted in the
management of the Fund by seasoned research professionals who are responsible
for identifying the most attractive corporate and government securities and
dividend-paying common stocks, consistent with the Fund's objective.
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
CHARLES C. SMITH, JR. AND RODNEY COLLINS
credit quality by selling non-investment-grade issues, and we shortened the
portfolio's duration. These actions did protect the Fund to a degree, but in
a period of rising rates, all fixed-income securities lose value, even those
of higher credit quality and shorter duration.
The weakness in bonds, however, was partially offset by the strength of the
equity side of the portfolio. The balanced nature of the Fund is an
advantage when an asset class goes through a difficult period, as was the
case for bonds these past six months.
The common stocks the Fund holds remain well-diversified across industry
groups. We continue to look for issues that are selling at reasonable prices
and that have attractive dividend yields within their industry groups. While
select equity valuations still seem quite high, we are finding opportunities
in the stock market.
The equity portion of the Fund benefited from renewed strength in cyclical
stocks during the period. Basic materials and diversified companies were
particularly strong performers.
The Fund's health care holdings performed poorly. Health care stocks have
suffered lately because of a new Medicare proposal which would put pricing
pressure on some health care companies. We have not reduced the Fund's
holdings in this area, however, because we believe that health care still
offers attractive long-term opportunities.
Over the last three months, we took advantage of some of the price weakness
in technology and increased the Fund's weighting in large-cap technology
names. At the same time, we reduced the Fund's weighting in energy and
utilities.
Q: WHAT IS YOUR OUTLOOK?
A: We believe that interest rate movements, whose upward trend negatively
impacted the Fund's overall performance during the past six months, will
moderate and possibly trend lower for the balance of the year. Markets are
expecting an August interest rate hike, and this increase is already mostly
reflected in market rates. In addition, we believe that US economic growth
will slow over the balance of the year, which should allow the Fed to hold
rates steady after its August meeting.
American business fundamentals remain strong and should gain additional
support from growing world demand. Therefore, we believe that corporate
profits will grow and may even exceed expectations. This, in addition to a
continued benign inflation outlook, should provide support for common
stocks. We believe that the equity portion of the Fund is well positioned to
benefit in such an environment.
3
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS C CLASS B CLASS D
SINCE SINCE SINCE
INCEPTION SIX ONE FIVE 10 INCEPTION INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
----------- ----------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge n/a (4.64)% (3.51)% 8.81% 9.34% n/a n/a
Without Sales Charge n/a 0.15 1.30 9.87 9.88 n/a n/a
CLASS B**
With CDSC+ n/a (5.12) (4.16) n/a n/a 7.60% n/a
Without CDSC n/a (0.21) 0.47 n/a n/a 8.37 n/a
CLASS C**
With Sales Charge and CDSC (1.84)% n/a n/a n/a n/a n/a n/a
Without Sales Charge and CDSC 0.14 n/a n/a n/a n/a n/a n/a
CLASS D**
With 1% CDSC n/a (1.19) (0.39) n/a n/a n/a n/a
Without CDSC n/a (0.21) 0.54 9.01 n/a n/a 7.53%
LEHMAN BROS. AGGREGATE BOND INDEX*** (0.32)o (1.37) 3.15 7.83 8.15 7.22++ 6.40+++
LIPPER INCOME FUNDS AVERAGE*** 1.38o 3.90 5.83 12.45 10.83 11.41++ 10.40+++
S&P 500*** 5.55o 12.38 22.76 27.87 18.78 28.57++ 22.92+++
NET ASSET VALUE
</TABLE>
JUNE 30, 1999 DECEMBER 31, 1998 JUNE 30, 1998
---------------- ---------------------- ----------------
CLASS A $14.09 $14.35 $15.23
CLASS B 14.05 14.30 15.19
CLASS C 14.05 n/a n/a
CLASS D 14.05 14.30 15.18
DIVIDEND AND CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1999
DIVIDENDS
PAID CAPITAL GAIN
------------- ----------------
CLASS A $0.280 REALIZED $0.022
CLASS B 0.220 UNREALIZED 0.808oo
CLASS C 0.110
CLASS D 0.220
Performance data quoted represent changes in prices and assume that all
distributions within the periods are invested 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.
- --------------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price per share and assume the
investment of dividend and capital gain distributions. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class A shares reflect the effect of the
service fee of up to 0.25% under the Administration, Shareholder Services
and Distribution Plan after January 1, 1993, only. Returns for Class B
shares are calculated with and without the effect of the maximum 5%
contingent deferred sales charge ("CDSC"), charged on certain redemptions
made within one year of the date of purchase, declining to 1% in the sixth
year and 0% thereafter. Returns for Class C shares are calculated with and
without the effect of the initial 1% maximum sales charge and the 1% CDSC
that is charged on redemptions made within 18 months of the date of
purchase. Returns for Class D shares are calculated with and without the
effect of the 1% CDSC, charged on redemptions made within one year of the
date of purchase.
*** The Lehman Bros. Aggregate Bond Index, the Lipper Income Funds Average, and
the S&P 500 are unmanaged benchmarks that assume investment of dividends.
The Lipper Income Funds Average excludes the effect of sales charges. The
monthly performance of the Lipper Income Funds Average is used in the
Performance Overview. The Lehman Bros. Aggregate Bond Index and the S&P 500
exclude the effect of fees and sales charges. Investors cannot invest
directly in an index or an average.
+ The CDSC is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
o From May 31, 1999.
oo Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1999.
4
<PAGE>
PERFORMANCE OVERVIEW
GROWTH OF AN ASSUMED $10,000 INVESTMENT
CLASS A SHARES
JUNE 30, 1989 TO JUNE 30, 1999
[FIGURES BELOW REPRESENT PLOTPOINTS IN PRINTED PIECE]
"6/30/89" 9523
9708
9930
9850
"6/30/90" 9908
8841
9106
10106
"6/30/91" 10418
11333
11849
12457
"6/30/92" 12943
13535
13927
14833
"6/30/93" 15205
15739
16152
15506
"6/30/94" 15256
15563
15275
16096
"6/30/95" 17272
17971
18422
18510
"6/30/96" 18777
19039
19936
20081
"6/30/97" 21265
22250
22738
24012
"6/30/98" 24112
23621
24390
24014
"6/30/99" 24426
CLASS B SHARES
APRIL 22, 1996+ TO JUNE 30, 1999
[FIGURES BELOW REPRESENT PLOTPOINTS IN PRINTED PIECE]
4/22/96 10000
10097
6/30/96 10166
9976
10067
10286
10479
10785
12/31/96 10758
10881
10931
10808
10932
11237
6/30/97 11425
11843
11552
11934
11851
11976
12/31/97 12183
12290
12587
12833
12767
12833
6/30/98 12862
12667
12176
12582
12625
12848
12/31/98 12948
12858
12595
12721
13086
12959
6/30/99 12922
CLASS C SHARES
MAY 27, 1999+ TO JUNE 30, 1999
[FIGURES BELOW REPRESENT PLOTPOINTS IN PRINTED PIECE]
5/27/99 9900
5/28/99 9942
5/31/99 9942
6/3/99 9921
6/10/99 9795
6/17/99 9949
6/24/99 9759
6/30/99 9914
CLASS D SHARES
MAY 3, 1993+ TO JUNE 30, 1999
[FIGURES BELOW REPRESENT PLOTPOINTS IN PRINTED PIECE]
"5/3/93" 10000
"6/30/93" 10209
10546
10802
10347
"6/30/94" 10165
10347
10132
10655
"6/30/95" 11412
11847
12124
12158
"6/30/96" 12309
12455
13026
13086
"6/30/97" 13833
14450
14741
15528
"6/30/98" 15563
15225
15678
15414
"6/30/99" 15646
These charts reflect the growth of a $10,000 investment for a 10-year period for
Class A shares and since inception for Class B, Class C, and Class D shares,
assuming that all distributions within the periods are invested in additional
shares. Since the measured periods vary, the charts are plotted using different
scales and are not comparable.
- -------------------
* Net of the 4.75% or 1% maximum initial sales charge for Class A or Class C
shares, respectively.
** Excludes the effects of the 3% or 1% CDSC for Class B or Class C shares,
respectively.
+ Inception date.
5
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
PERCENT OF TOTAL
--------------------
JUNE 30, DEC. 31,
1999 1998
--------- ---------
Aerospace ...................... 0.8 0.7
Automotive and Related ......... 2.2 1.2
Capital Goods .................. -- 0.2
Chemicals ...................... 2.1 1.8
Communications ................. 9.4 9.3
Computer and Business
Services .................... 7.4 8.9
Consumer Goods and Services .... 9.9 11.8
Drugs and Health Care .......... 7.0 4.4
Electric and Gas Utilities ..... 6.3 4.4
Electronics .................... 0.3 --
Energy ......................... 9.0 7.1
Finance and Insurance .......... 13.7 18.5
Funeral Services ............... -- 1.3
Leisure ........................ 1.4 1.4
Media .......................... 4.1 4.8
Paper and Forest Products ...... 0.4 0.2
Real Estate .................... 0.5 --
Retail Trade ................... 5.1 5.0
Transportation ................. 1.1 1.8
------ ------
Total Corporate
Fixed-Income Securities
and Common Stocks ........... 80.7 82.8
US Government and
Government Agency
Securities .................. 13.4 13.1
Short-Term Holdings
and Other Assets
Less Liabilities ............ 5.9 4.1
------ ------
TOTAL .......................... 100.0 100.0
====== ======
LARGEST INDUSTRIES+
JUNE 30, 1999
[FIGURES BELOW REPRESENT PLOTPOINTS IN PRINTED PIECE]
FINANCE AND INSURANCE 13.7% $44,929,714
CONSUMER GOODS AND SERVICES 9.9% $32,372,995
COMMUNICATIONS 9.4% $30,459,547
ENERGY 9.0% $29,714,405
COMPUTER AND BUSINESS SERVICES 7.4% $24,158,450
- --------------------
+ Excludes US Government and Government Agency securities.
COMPOSITION OF NET ASSETS
PERCENT OF TOTAL
-----------------------
JUNE 30, DEC. 31,
1999 1998
----------- ----------
Corporate Bonds .................... 39.7 43.9
Convertible Preferred Stocks ....... -- 3.1
Asset-Backed Securities ............ 0.4 --
- -------------------------------------------------------------
Total Corporate
Fixed-Income Securities .......... 40.1 47.0
- -------------------------------------------------------------
Common Stocks ...................... 40.6 35.8
- -------------------------------------------------------------
US Government and
Government Agency
Securities ....................... 13.4 13.1
- -------------------------------------------------------------
Short-Term Holdings and
Other Assets Less Liabilities .... 5.9 4.1
- -------------------------------------------------------------
TOTAL .............................. 100.0 100.0
- -------------------------------------------------------------
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
PRINCIPAL AMOUNT
---------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/99
- --------- ------------ -------------
US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES:
US Treasury Notes
6.50%, 10/15/2006 .......... $5,000,000 $5,000,000
Government National
Mortgage Association
6.50%, 12/15/2028 .......... 3,043,361 8,043,361
CORPORATE BONDS:
Dana 6.50%, 3/1/2009 ......... 3,500,000 3,500,000
Delphi Automotive Systems
6.50%, 5/1/2009 ............ 2,500,000 2,500,000
Enron Oil & Gas
6%, 12/15/2008 ............. 5,200,000 5,200,000
Ford Motor Credit
5.80%, 1/12/2009 ........... 4,400,000 4,400,000
Guidant
6.15%, 2/15/2006 ........... 3,000,000 3,000,000
Household Finance
6%, 5/1/2004 ............... 3,000,000 3,000,000
National City
6.875%, 5/15/2019 .......... 3,000,000 3,000,000
Nordstrom
5.625%, 1/15/2009 .......... 4,000,000 4,000,000
PRINCIPAL AMOUNT
OR SHARES
---------------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/99
- ---------- ------------ -------------
US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES:
Federal National Mortgage
Association
6.35%, 5/18/2005 ........... $5,000,000 --
CORPORATE BONDS:
AT&T Capital
6.25%, 5/15/2001 ........... 5,000,000 --
Capital One Bank
8.125%, 3/1/2000 ........... 5,000,000 --
Franchise Finance
7%, 11/30/2000 ............. 5,000,000 --
GMAC
6.50%, 12/5/2005 ........... 4,200,000 --
Lexmark International
6.75%, 5/15/2008 ........... 5,000,000 --
Raytheon
6.55%, 3/15/2010 ........... 5,000,000 --
Woolworth
7%, 6/1/2000 ............... 5,000,000 --
CONVERTIBLE PREFERRED
STOCKS:
St. Paul Capital 6% .......... 75,000 shs. --
COMMON STOCKS:
Anheuser-Busch ............... 60,100 23,000 shs.
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
LARGEST PORTFOLIO HOLDINGS
JUNE 30, 1999
SECURITY VALUE
- ---------- ---------------
FHLMC Gold 5.50%, 7/1/2013 .......... $8,453,399
Government National
Mortgage Association
6.50%, 12/15/2028 ................. 7,763,638
GTE ................................. 7,082,625
Tele-Communications
9.80%, 2/1/2012 ................... 6,118,830
Time Warner
9.125%, 1/15/2013 ................. 5,710,605
SBC Communications .................. 5,637,600
Federal National Mortgage
Association 6%, 12/1/2028 ......... 5,356,821
Williams Companies (The) ............ 5,269,237
MCI WorldCom 7.75%, 4/1/2007 ........ 5,232,860
US Treasury Notes
6.50%, 10/15/2006 ................. 5,160,940
7
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
PRINCIPAL
AMOUNT VALUE
---------- ------------
US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES 13.4%
US Treasury Notes:
6.25%, 8/31/2002 $ 800,000 $ 813,000
6.50%, 10/15/2006 5,000,000 5,160,940
FHLMC Gold
5.50%, 7/1/2013+ 8,923,893 8,453,399
Federal National Mortgage
Association:
5.90%, 6/19/2003 5,000,000 4,918,615
5.795%, 1/1/2009+ 4,778,257 4,504,931
6%, 12/1/2028 5,684,166 5,356,821
Government National Mortgage
Association, Mortgage-backed
Pass-through Certificates:+
6.50%, 12/15/2028 8,043,361 7,763,638
6%, 12/20/2028 5,420,803 5,063,177
US Government Gtd. Title XI
(Bay Transportation)
7.30%, 6/1/2021 1,750,000 1,747,429
-----------
TOTAL US GOVERNMENT
AND GOVERNMENT
AGENCY SECURITIES
(Cost $45,458,529) 43,781,950
-----------
CORPORATE BONDS 39.7%
AUTOMOTIVE AND
RELATED 1.7%
Dana 6.50%, 3/1/2009 3,500,000 3,321,370
Delphi Automotive Systems
6.50%, 5/1/2009 2,500,000 2,356,593
-----------
5,677,963
-----------
CHEMICALS 1.5%
Praxair 6.625%, 10/15/2007 5,000,000 4,814,295
-----------
COMMUNICATIONS 4.8%
MCI WorldCom
7.75%, 4/1/2007 5,000,000 5,232,860
Sprint Capital
6.125%, 11/15/2008 4,500,000 4,201,047
Tele-Communications
9.80%, 2/1/2012 5,000,000 6,118,830
-----------
15,552,737
-----------
COMPUTER AND BUSINESS
SERVICES 4.7%
Dell Computer
6.55%, 4/15/2008 5,000,000 4,807,140
First Data
5.80%, 12/15/2008 2,400,000 2,186,782
International Business Machines
5.37%, 9/22/2003 4,500,000 4,319,078
Solectron
7.375%, 3/1/2006 $4,000,000 3,906,316
-----------
15,219,316
-----------
CONSUMER GOODS AND
SERVICES 5.0%
Equifax
6.30%, 7/1/2005 1,500,000 1,475,554
Philip Morris
7.125%, 8/15/2002 5,000,000 5,063,430
Service Corp. International
6.50%, 3/15/2008 5,000,000 4,630,340
Whitman 7.50%, 2/1/2003 5,000,000 5,126,740
-----------
16,296,064
-----------
DRUGS AND
HEALTH CARE 2.0%
Boston Scientific
6.625%, 3/15/2005 2,000,000 1,925,292
Cardinal Health
6.25%, 7/15/2008 2,000,000 1,886,244
Guidant 6.15%, 2/15/2006 3,000,000 2,827,734
-----------
6,639,270
-----------
ELECTRIC AND GAS
UTILITIES 1.4%
Consumers Energy
6.375%, 2/1/2008 5,000,000 4,717,220
-----------
ENERGY 3.3%
Enron Oil & Gas
6%, 12/15/2008 5,200,000 4,771,135
Petroleum Geo-Services
7.50%, 3/31/2007 5,000,000 5,010,160
Phillips Petroleum
6.375%, 3/30/2009 1,200,000 1,148,892
-----------
10,930,187
-----------
FINANCE AND
INSURANCE 5.2%
American General Finance
6.20%, 3/15/2003 4,000,000 3,958,500
Aristar 6%, 5/15/2002 1,300,000 1,284,833
First USA Bank
6.125%, 6/25/2001 2,000,000 1,992,364
Ford Motor Credit
5.80%, 1/12/2009 4,400,000 4,033,920
Household Finance
6%, 5/1/2004 3,000,000 2,909,697
National City
6.875%, 5/15/2019 3,000,000 2,825,355
-----------
17,004,669
-----------
- -----------------
See footnotes on page 10.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
PRINCIPAL
AMOUNT
OR SHARES VALUE
---------- ------------
LEISURE 1.4%
Royal Caribbean Cruises
6.75%, 3/15/2008 $5,000,000 $ 4,710,620
------------
MEDIA 4.1%
News America Holdings
7.43%, 10/1/2026 5,000,000 5,061,220
Time Warner
9.125%, 1/15/2013 5,000,000 5,710,605
Viacom
7.75%, 6/1/2005 2,500,000 2,574,807
------------
13,346,632
------------
REAL ESTATE 0.5%
Mack-Cali Realty
7%, 3/15/2004 1,600,000 1,572,234
------------
RETAIL TRADE 4.1%
Nordstrom
5.625%, 1/15/2009 4,000,000 3,649,948
Sears, Roebuck
6%, 3/20/2003 5,000,000 4,925,875
Staples
7.125%, 8/15/2007 5,000,000 4,964,195
------------
13,540,018
------------
TOTAL CORPORATE BONDS
(Cost $134,378,486) 130,021,225
------------
COMMON STOCKS 40.6%
AEROSPACE 0.8%
General Dynamics 40,000shs. 2,740,000
------------
AUTOMOTIVE AND
RELATED 0.5%
DaimlerChrysler 20,000 1,777,500
------------
CHEMICALS 0.6%
duPont (E.I.) de Nemours 26,400 1,803,450
------------
COMMUNICATIONS 4.6%
AT&T 27,000 1,506,938
GTE 93,500 7,082,625
MCI WorldCom* 7,900 679,647
SBC Communications 97,200 5,637,600
------------
14,906,810
------------
COMPUTER AND BUSINESS
SERVICES 2.7%
Cisco Systems* 9,000 579,656
Dell Computer* 5,400 199,631
Electronic Data Systems 29,000 1,640,312
Harris 25,000 979,688
Intel 15,700 933,659
International Business Machines 9,400 1,214,950
Microsoft* 21,900 1,973,738
Xerox 24,000 1,417,500
-----------
8,939,134
-----------
CONSUMER GOODS
AND SERVICES 4.9%
Anheuser-Busch 23,000 1,631,562
Bestfoods 16,100 796,950
Coca-Cola 6,100 381,250
ConAgra 60,000 1,597,500
Fortune Brands 7,600 314,450
Philip Morris 90,200 3,624,913
Procter & Gamble 4,300 383,775
Russell 100,000 1,950,000
Sara Lee 177,000 4,015,687
Stanley Works (The) 42,900 1,380,844
-----------
16,076,931
-----------
DRUGS AND HEALTH CARE 5.0%
Abbott Laboratories 80,000 3,640,000
American Home Products 75,000 4,312,500
Baxter International 19,000 1,151,875
Bristol-Myers Squibb 60,400 4,254,425
Johnson & Johnson 5,800 568,400
Pfizer 3,700 406,075
Pharmacia & Upjohn 26,000 1,477,125
Schering-Plough 8,500 450,500
-----------
16,260,900
-----------
ELECTRIC AND GAS
UTILITIES 4.5%
DQE 45,000 1,805,625
Sonat 115,000 3,809,375
Unicom 96,300 3,713,569
Williams Companies (The) 123,800 5,269,237
-----------
14,597,806
-----------
ELECTRONICS 0.3%
Raytheon (Class B) 12,500 879,688
-----------
ENERGY 5.7%
BP Amoco (ADRs)
(United Kingdom) 17,500 1,898,750
Exxon 49,000 3,779,125
Mobil 43,200 4,276,800
Royal Dutch Petroleum
(Netherlands) 47,700 2,873,925
Schlumberger 27,500 1,751,406
Unocal 106,100 4,204,212
-----------
18,784,218
-----------
- -----------------
See footnotes on page 10.
9
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
SHARES VALUE
---------- ------------
FINANCE AND INSURANCE 8.5%
Allstate 38,000 $ 1,363,250
American General 55,900 4,213,463
American International Group 5,000 585,313
Bank of America 21,387 1,567,934
Bank of New York 91,000 3,338,562
Chubb 30,000 2,085,000
Citigroup 65,250 3,099,375
Hartford Financial Services Group 60,400 3,522,075
Lincoln National 77,600 4,059,450
Morgan (J.P.) 7,500 1,053,750
Washington Mutual 85,848 3,036,873
------------
27,925,045
------------
PAPER AND FOREST
PRODUCTS 0.4%
Mead 28,800 1,202,400
------------
RETAIL TRADE 1.0%
May Department Stores 57,900 2,366,663
Wal-Mart Stores 17,300 834,725
------------
3,201,388
------------
TRANSPORTATION 1.1%
GATX 97,600 3,714,900
------------
TOTAL COMMON STOCKS
(Cost $107,947,440) 132,810,170
------------
PRINCIPAL
AMOUNT VALUE
---------- ------------
ASSET-BACKED
SECURITIES+ 0.4%
(Cost $1,498,074)
ELECTRIC AND GAS
UTILITIES 0.4%
PECO Energy
6.05%, 3/1/2009 $1,500,000 $ 1,437,307
--------------
SHORT-TERM
HOLDINGS 5.1%
Canadian Imperial Bank of
Commerce,Grand Cayman,
5.50%, 7/1/1999 8,300,000 8,300,000
First National Bank of
Chicago, Grand Cayman,
5.50%, 7/1/1999 8,300,000 8,300,000
--------------
TOTAL SHORT-TERM
HOLDINGS
(Cost $16,600,000) 16,600,000
--------------
TOTAL INVESTMENTS 99.2%
(Cost $305,882,529) 324,650,652
OTHER ASSETS
LESS LIABILITIES 0.8% 2,496,774
--------------
NET ASSETS 100.0% $327,147,426
==============
- ----------------
* Non-income producing 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.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Bonds and stocks (cost $243,824,000) .............. $264,268,702
US Government and Government Agency securities
(cost $45,458,529) .............................. 43,781,950
Short-term holdings (cost $16,600,000) ............ 16,600,000 $324,650,652
-------------
Cash ................................................................ 226,545
Receivable for interest and dividends ............................... 3,254,220
Receivable for Capital Stock sold ................................... 287,869
Investment in, and expenses prepaid to,
shareholder service agent ........................................ 63,375
Other ............................................................... 31,466
--------------
TOTAL ASSETS ........................................................ 328,514,127
--------------
LIABILITIES:
Payable for Capital Stock repurchased ............................... 757,648
Accrued expenses and other .......................................... 609,053
--------------
TOTAL LIABILITIES ................................................... 1,366,701
--------------
NET ASSETS .......................................................... $327,147,426
==============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares
authorized; 23,239,137 shares outstanding):
Class A .......................................................... $ 16,754,100
Class B .......................................................... 1,589,762
Class C .......................................................... 12,867
Class D .......................................................... 4,882,408
Additional paid-in capital .......................................... 285,731,055
Undistributed net investment income ................................. 209,545
Accumulated net realized loss ....................................... (800,434)
Net unrealized appreciation of investments .......................... 18,768,123
--------------
NET ASSETS .......................................................... $327,147,426
==============
NET ASSET VALUE PER SHARE:
CLASS A ($236,037,998 / 16,754,100 shares) .......................... $14.09
=======
CLASS B ($22,328,565 / 1,589,762 shares) ............................ $14.05
=======
CLASS C ($180,764 / 12,867 shares) .................................. $14.05
=======
CLASS D ($68,600,099 / 4,882,408 shares) ............................ $14.05
=======
</TABLE>
- -----------------
See Notes to Financial Statements.
11
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest .......................................................... $ 6,692,571
Dividends ......................................................... 1,713,341
------------
TOTAL INVESTMENT INCOME (net of foreign tax withheld of $17,944) ................ $8,405,912
EXPENSES:
Management fee .................................................... 1,015,832
Distribution and service fees ..................................... 774,309
Shareholder account services ...................................... 302,914
Registration ...................................................... 46,406
Shareholder reports and communications ............................ 40,868
Custody and related services ...................................... 35,776
Auditing and legal fees ........................................... 30,999
Directors' fees and expenses ...................................... 12,246
Miscellaneous ..................................................... 17,090
------------
TOTAL EXPENSES .................................................................. 2,276,440
----------
NET INVESTMENT INCOME ........................................................... 6,129,472
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments .................................. 507,044
Net change in unrealized appreciation of investments .............. (6,619,414)
------------
NET LOSS ON INVESTMENTS ......................................................... (6,112,370)
----------
INCREASE IN NET ASSETS FROM OPERATIONS .......................................... $ 17,102
==========
</TABLE>
- -----------------
See Notes to Financial Statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
--------------------- --------------------
<S> <C> <C>
OPERATIONS:
Net investment income ......................................... $ 6,129,472 $ 14,594,886
Net realized gain on investments .............................. 507,044 20,162,078
Net realized loss from foreign currency transactions .......... -- (1,061,463)
Net change in unrealized appreciation of investments .......... (6,619,414) (10,362,195)
Net change in unrealized depreciation on translation of
assets and liabilities denominated in foreign currencies .... -- 904,932
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS ........................ 17,102 24,238,238
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ..................................................... (4,780,125) (11,531,796)
Class B ..................................................... (337,923) (532,468)
Class C ..................................................... (247) --
Class D ..................................................... (1,118,996) (2,819,673)
Net realized gain on investments:
Class A ..................................................... -- (14,780,662)
Class B ..................................................... -- (1,022,227)
Class D ..................................................... -- (4,478,944)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ..................... (6,237,291) (35,165,770)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares ............................. 10,715,519 30,957,362
Investment of dividends ....................................... 4,423,046 10,650,400
Exchanged from associated Funds ............................... 8,588,816 27,824,267
Shares issued in payment of gain distributions ................ -- 17,023,382
------------- -------------
Total ......................................................... 23,727,381 86,455,411
------------- -------------
Cost of shares repurchased .................................... (35,796,886) (50,351,680)
Exchanged into associated Funds ............................... (9,981,739) (25,246,214)
------------- -------------
Total ......................................................... (45,778,625) (75,597,894)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ............................ (22,051,244) 10,857,517
------------- -------------
DECREASE IN NET ASSETS ........................................ (28,271,433) (70,015)
NET ASSETS:
Beginning of period ........................................... 355,418,859 355,488,874
------------- -------------
END OF PERIOD (including undistributed net investment income
of $209,545 and $317,364, respectively) ..................... $327,147,426 $355,418,859
============= =============
</TABLE>
- -------------------
See Notes to Financial Statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Income Fund, Inc. (the "Fund") offers
four classes of shares. Class A shares are sold with an initial sales charge of
up to 4.75% and a continuing service fee of up to 0.25% on an annual basis.
Class A shares purchased in an amount of $1,000,000 or more are sold without an
initial sales charge but are subject to a contingent deferred sales charge
("CDSC") of 1% on redemptions within 18 months of purchase. Class B shares are
sold without an initial sales charge but are subject to a distribution fee of
0.75% and a service fee of up to 0.25% on an annual basis, and a CDSC, if
applicable, of 5% on redemptions in the first year of purchase, declining to 1%
in the sixth year and 0% thereafter. Class B shares will automatically convert
to Class A shares on the last day of the month that precedes the eighth
anniversary of their date of purchase. The Fund began offering Class C shares on
May 27, 1999. Class C shares are sold with an initial sales charge of up to 1%
and 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 CDSC, if applicable, of 1% imposed on
redemptions made within 18 months 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 CDSC, if applicable, of
1% imposed on redemptions made within one year of purchase. The four classes of
shares represent interests in the same portfolio of investments, have the same
rights and are generally identical in all respects except that each class bears
its separate distribution and certain other class expenses, and has exclusive
voting rights with respect to any matter on which a separate vote of any class
is required.
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
A. SECURITY VALUATION -- Investments in US Government and Government agency
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 an exchange are
valued at last sales prices or, in their absence and in the case of
over-the-counter securities, at the mean of bid and asked prices. Short-term
holdings maturing in 60 days or less are valued at amortized cost.
B. FOREIGN CURRENCY TRANSACTIONS -- The books and records of the Fund are
maintained in US dollars. The market value of investment securities, other
assets and liabilities denominated in foreign currencies are translated into
US dollars at the 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. FEDERAL TAXES -- There is no provision for federal income tax. The Fund has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
D. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Investment
transactions are recorded on trade dates. Identified cost of investments sold
is used for both financial statement and federal income tax purposes.
Dividends receivable and payable are recorded on ex-dividend dates, except
that certain dividends from foreign securities where the ex-dividend dates
may have passed are recorded as soon as the Fund is informed of the dividend.
Interest income is recorded on an accrual basis.
E. MULTIPLE CLASS ALLOCATIONS -- All income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses are allocated daily to
each class of shares based upon the relative value of shares of each class.
Class-specific expenses, which include distribution and service fees and any
other items that are specifically attributable to a particular class, are
charged directly to such class. For the six months ended June 30, 1999,
distribution and service fees were the only class-specific expenses.
F. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the six months ended June 30, 1999, amounted to $77,299,393 and $100,213,188,
respectively; purchases and sales of US Government obligations were $5,104,688
and $8,308,172, respectively.
At June 30, 1999, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes, and the tax
basis gross unrealized appreciation and depreciation of portfolio securities
amounted to $27,572,950 and $8,804,827, respectively.
4. MANAGEMENT FEE, DISTRIBUTION SERVICES, AND OTHER TRANSACTIONS -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides the necessary personnel and facilities. Compensation of all officers of
the Fund, all directors of the Fund who are employees or consultants of the
Manager, and all personnel of the Fund and the Manager is paid by the Manager.
The Manager receives a fee, calculated daily and payable monthly, equal to 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.
The management fee reflected in the Statement of Operations represents 0.60% per
annum of the Fund's average daily net assets.
Seligman Advisors, Inc. (the "Distributor"), agent for the distribution of
the Fund's shares and an affiliate of the Manager, received concessions of
$11,807 from sales of Class A shares. Commissions of $88,125 and $1,057 were
paid to dealers for sales of Class A and Class C shares, respectively.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the six months ended June 30,
1999, fees incurred under the Plan aggregated $303,692, or 0.25% per annum of
the average daily net assets of Class A shares.
Under the Plan, with respect to Class B shares, Class C shares, and Class D
shares, service organizations can enter into agreements with the Distributor and
receive a continuing fee for providing personal services and/or the maintenance
of shareholder accounts of up to 0.25% on an annual basis of the average daily
net assets of the Class B, Class C, and Class D shares for which the
organizations are responsible; and, for Class C and Class D shares, fees for
providing other distribution assistance of up to 0.75% on an annual basis of
such average daily net assets. Such fees are paid monthly by the Fund to the
Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to this fee to a third
party (the "Purchaser"), which provides funding to the Distributor to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares.
For the six months ended June 30, 1999, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B, Class C,
and Class D shares, amounted to $106,502, $47, and $364,068, respectively.
The Distributor is entitled to retain any CDSC imposed on certain redemptions
of Class A and Class C shares occurring within 18 months of purchase and on
redemptions of Class D shares occurring within one year of purchase. For the six
months ended June 30, 1999, such charges amounted to $5,564.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate of such payments
retained by the Distributor, for the six months ended June 30, 1999, amounted to
$4,891.
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, 1999,
Seligman Services, Inc. received commissions of $2,027 from the sales of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $24,277, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $302,914 for shareholder account
services. The
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in directors' fees and
expenses, and the accumulated balance thereof at June 30, 1999, of $102,859 is
included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
5. COMMITTED LINE OF CREDIT -- The Fund is a participant in a joint $750 million
committed line of credit that is shared by substantially all funds in the
Seligman Group of Investment Companies. The Fund's borrowings are limited to 10%
of its net assets. Borrowings pursuant to the credit facility are subject to
interest at a rate equal to the overnight federal funds rate plus 0.50%. The
Fund incurs a commitment fee of 0.08% per annum on its share of the unused
portion of the credit facility. The credit facility may be drawn upon only for
temporary purposes and is subject to certain other customary restrictions. The
credit facility commitment expires one year from the date of the agreement but
is renewable with the consent of the participating banks. To date, the Fund has
not borrowed from the credit facility.
6. CAPITAL SHARE TRANSACTIONS -- The Fund has authorized 500,000,000 shares of
$1 par value Capital Stock. Transactions in shares of Capital Stock were as
follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
--------------------- -----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------- -----------------------
Net proceeds from
sales of shares 386,637 $ 5,477,116 917,312 $13,784,723
Investment of
dividends 233,520 3,293,769 536,032 7,981,473
Exchanged from
associated Funds 201,058 2,861,260 811,991 12,301,020
Shares issued in
payment of gain
distributions -- -- 848,226 12,180,374
- --------------------------------------------------- -----------------------
Total 821,215 11,632,145 3,113,561 46,247,590
- --------------------------------------------------- -----------------------
Cost of shares
repurchased (1,657,628) (23,521,464) (2,451,497) (36,932,180)
Exchanged into
associated Funds (254,521) (3,615,183) (1,088,419) (16,267,382)
- --------------------------------------------------- -----------------------
Total (1,912,149) (27,136,647) (3,539,916) (53,199,562)
- --------------------------------------------------- -----------------------
Decrease in Shares (1,090,934) $(15,504,502) (426,355 $(6,951,972)
- --------------------------------------------------- -----------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
--------------------- -----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------- -----------------------
Net proceeds from
sales of shares 231,146 $3,269,960 582,101 $ 8,737,987
Investment of
dividends 16,863 237,092 25,995 383,370
Exchanged from
associated Funds 165,751 2,345,338 443,306 6,464,374
Shares issued in
payment of gain
distributions -- -- 56,336 803,601
- --------------------------------------------------- -----------------------
Total 413,760 5,852,390 1,107,738 16,389,332
- --------------------------------------------------- -----------------------
Cost of shares
repurchased (108,841) (1,536,753) (91,901) (1,368,093)
Exchanged into
associated Funds (190,589) (2,686,431) (122,524) (1,801,440)
- --------------------------------------------------- -----------------------
Total (299,430) (4,223,184) (214,425) (3,169,533)
- --------------------------------------------------- -----------------------
Increase in Shares 114,330 $1,629,206 893,313 $13,219,799
- --------------------------------------------------- -----------------------
MAY 27, 1999*
TO JUNE 30, 1999
- ---------------------------------------------------
CLASS C SHARES AMOUNT
- ---------------------------------------------------
Net proceeds from
sales of shares 12,858 $180,857
Investment of
dividends 9 131
- ---------------------------------------------------
Increase in Shares 12,867 $180,988
- ---------------------------------------------------
* Commencement of offering of shares.
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
--------------------- -----------------------
CLASS D SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------- -----------------------
Net proceeds from
sales of shares 126,400 $ 1,787,586 559,494 $ 8,434,652
Investment of
dividends 63,412 892,054 153,899 2,285,557
Exchanged from
associated Funds 239,445 3,382,218 605,553 9,058,873
Shares issued in
payment of gain
distributions -- -- 282,564 4,039,407
- --------------------------------------------------- -----------------------
Total 429,257 6,061,858 1,601,510 23,818,489
- --------------------------------------------------- -----------------------
Cost of shares
repurchased (759,588) (10,738,669) (807,198) (12,051,407)
- --------------------------------------------------- -----------------------
Exchanged into
associated Funds (258,680) (3,680,125) (478,295) (7,177,392)
- --------------------------------------------------- -----------------------
Total (1,018,268) (14,418,794) (1,285,493) (19,228,799)
- --------------------------------------------------- -----------------------
Increase (Decrease)
in Shares (589,011) $(8,356,936) 316,017 $ 4,589,690
- --------------------------------------------------- -----------------------
16
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five and one-half years or from its inception if less
than five and one-half years. Certain information reflects financial results for
a single share of a Class that was held throughout the periods shown. Per share
amounts are calculated using average shares outstanding. "Total return" shows
the rate that you would have earned (or lost) on an investment in each Class,
assuming you reinvested all your dividends and capital gain distributions. Total
returns do not reflect any sales charges and are not annualized for periods of
less than one year.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------
6/30/99 1998 1997 1996 1995 1994
------------ -------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $14.35 $14.81 $14.97 $14.63 $13.05 $14.58
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................... 0.27 0.64 0.71 0.74 0.76 0.76
Net realized and unrealized gain (loss) on
investments .................................... (0.25) 0.41 1.41 0.38 1.89 (1.57)
Net realized and unrealized gain (loss) from
foreign currency transactions .................. -- -- (0.10) 0.04 (0.01) 0.03
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... 0.02 1.05 2.02 1.16 2.64 (0.78)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................ (0.28) (0.65) (0.74) (0.73) (0.78) (0.75)
Distributions from net realized capital gain ........ -- (0.86) (1.44) (0.09) (0.28) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. (0.28) (1.51) (2.18) (0.82) (1.06) (0.75)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $14.09 $14.35 $14.81 $14.97 $14.63 $13.05
====== ====== ====== ====== ====== ======
TOTAL RETURN: ....................................... 0.15% 7.26% 14.06% 8.22% 20.60% (5.43)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............ $236,038 $256,060 $270,688 $296,291 $318,307 $286,355
Ratio of expenses to average net assets ............. 1.14%+ 1.10% 1.14% 1.14% 1.00% 1.02%
Ratio of net income to average net assets ........... 3.83%+ 4.25% 4.66% 5.11% 5.38% 5.51%
Portfolio turnover rate ............................. 24.85% 124.79% 138.90% 125.92% 111.78% 66.62%
</TABLE>
- -------------
See footnotes on page 18.
17
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------------------------- -------------
SIX MONTHS YEAR ENDED DECEMBER 31, 4/22/96* 5/27/99*
ENDED ------------------------ TO TO
6/30/99 1998 1997 12/31/96 6/30/99
--------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD .................... $14.30 $14.79 $14.95 $14.43 $14.14
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................... 0.22 0.52 0.59 0.43 0.03
Net realized and unrealized gain (loss) on investments .. (0.25) 0.39 1.41 0.59 (0.01)
Net realized and unrealized gain (loss) from
foreign currency transactions ...................... -- -- (0.10) 0.05 --
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ........................ (0.03) 0.91 1.90 1.07 0.02
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .................... (0.22) (0.54) (0.62) (0.46) (0.11)
Distributions from net realized capital gain ............ -- (0.86) (1.44) (0.09) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ..................................... (0.22) (1.40) (2.06) (0.55) (0.11)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD .......................... $14.05 $14.30 $14.79 $14.95 $14.05
====== ====== ====== ====== ======
TOTAL RETURN: ........................................... (0.21)% 6.28% 13.24% 7.58% 0.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ................ $22,328 $21,096 $8,607 $2,961 $181
Ratio of expenses to average net assets ................. 1.89%+ 1.86% 1.90% 1.89%+ 1.91%+
Ratio of net income to average net assets ............... 3.08%+ 3.49% 3.90% 4.36%+ 3.41%+
Portfolio turnover rate ................................. 24.85% 124.79% 138.90% 125.92%++ 24.85%**
</TABLE>
<TABLE>
<CAPTION>
CLASS D
------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------
6/30/99 1998 1997 1996 1995 1994
------------ -------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $14.30 $14.78 $14.95 $14.60 $13.01 $14.55
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.22 0.52 0.59 0.63 0.65 0.65
Net realized and unrealized gain (loss) on investments (0.25) 0.40 1.40 0.38 1.88 (1.57)
Net realized and unrealized gain (loss) from
foreign currency transactions -- -- (0.10) 0.04 (0.01) 0.03
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.03) 0.92 1.89 1.05 2.52 (0.89)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.22) (0.54) (0.62) (0.61) (0.65) (0.65)
Distributions from net realized capital gain -- (0.86) (1.44) (0.09) (0.28) --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.22) (1.40) (2.06) (0.70) (0.93) (0.65)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.05 $14.30 $14.78 $14.95 $14.60 $13.01
====== ====== ====== ====== ====== ======
TOTAL RETURN: (0.21)% 6.36% 13.17% 7.43% 19.66% (6.20)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $68,600 $78,263 $76,194 $81,957 $86,701 $67,946
Ratio of expenses to average net assets 1.89%+ 1.86% 1.90% 1.90% 1.79% 1.82%
Ratio of net income to average net assets 3.08%+ 3.49% 3.90% 4.37% 4.58% 4.74%
Portfolio turnover rate 24.85% 124.79% 138.90% 125.92% 111.78% 66.62%
</TABLE>
- -------------------
* Commencement of offering of shares.
** For the six months ended June 30, 1999.
+ Annualized.
++ For the year ended December 31, 1996.
See Notes to Financial Statements.
18
<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 June 30, 1999,
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, 1998, 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, 1999, by correspondence with the Fund's custodian. 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 referred to
above present fairly, in all material respects, the financial position of
Seligman Income Fund, Inc. as of June 30, 1999, 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
August 6, 1999
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
19
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
DIRECTOR, Conoco Inc.
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
DIRECTOR, KeySpan Energy Corporation
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR, ICI Mutual Insurance Company
MEMBER OF THE BOARD OF GOVERNORS,
Investment Company Institute
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. &W. Seligman &Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
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
20
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES CHARGE (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund. The
CDSC expires after a fixed time period.
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price or net asset value.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE -- The price at which a mutual fund's share can be purchased. The
offering price per share is the current net asset value plus any sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains more detailed
information about an investment company and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The AVERAGE ANNUAL TOTAL
RETURN represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- -----------------
Adapted from the Investment Company Institute's 1999 MUTUAL FUND FACT BOOK.
21
<PAGE>
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.
SELIGMAN ADVISORS, INC.
AN AFFILIATE OF
[LOGO OMITTED]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQIN3 6/99 [GRAPHIC OMITTED[Printed on Recycled Paper
