SELIGMAN
-----------------
INCOME
FUND, INC.
[GRAPHIC OMITTED]
ANNUAL REPORT
DECEMBER 31, 1999
----------
SEEKING HIGH
CURRENT INCOME
AND IMPROVEMENT OF
INCOME AND
CAPITAL VALUE OVER
THE LONGER TERM
[SELIGMAN LOGO]
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.
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 136 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 in 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
For the fiscal year ended December 31, 1999, Seligman Income Fund posted a total
return of -1.76% based on the net asset value of Class A shares. During the same
time, the Lehman Brothers Aggregate Bond Index, which measures the results of
the bond markets, posted a total return of -0.82%, which the Fund's peers, as
measured by the Lipper Income Funds Average, posted a total return of 4.99%. The
Fund's underperformance against its peer group was primarily the result of the
Fund's relatively high allocation to fixed-income securities for much of the
year.
During fiscal year 1999, Seligman Income Fund made an important asset allocation
shift. At the beginning of the year, the Fund had a 60% weighting in bonds. By
year-end, that weighting had been reduced to 38%. Meanwhile, the Fund's equity
portfolio increased from 36% at the beginning of the year to 55% at year-end.
This reflects a change in the Fund's investment strategy. We believe that, over
the long term, the Fund's increased exposure to equities will provide additional
capital gain potential, while the Fund's still-significant bond holdings will
help to ease overall volatility and help the Fund pursue current income.
Nineteen ninety-nine was an unusual investment environment and a difficult year
for Seligman Income Fund. At the end of 1999, all major US stock indices were at
record high levels. Despite this stellar overall performance, the US market was
extraordinarily narrow. Just over half of the stocks in the S&P 500 had positive
returns. The outsized returns of a few stocks also skewed the indices. Just
seven stocks were responsible for half of the S&P 500's return; five of these
were technology companies, with four of those delivering astounding triple-digit
returns. Large-cap growth and technology companies continued to dominate, while
value stocks underperformed considerably. In such an environment, the Fund's
stock portfolio, which contains companies chosen for their attractive valuations
and strong fundamentals, lagged behind. The market was driven, to an
extraordinary degree, by momentum and, in such a market, valuations and
fundamentals are largely ignored.
The past fiscal year was also one of the most difficult ever for fixed-income
securities, including those held by Seligman Income Fund. During this period,
the Federal Reserve Board increased the federal funds rate three times in
attempt to slow the US economy. These increases reversed all of the Federal
Reserve Board's 1998 actions when it eased monetary policy as a result of the
worldwide economic crisis. These moves by the Federal Reserve Board, in addition
to heightened inflation fears in the market, caused bond yields to move
significantly higher and, thus, bond prices fell considerably. The 30-year
Treasury bond yield moved significantly higher from 5.08% on December 31, 1998,
to 6.48% on December 31, 1999. So far in the year 2000, the Federal Reserve
Board has increased the federal funds rate once again, by an additional 25 basis
points.
Looking ahead, we believe that the US economy will slow moderately in 2000,
which would be positive for the long-term health of the stock market. A more
sedate economy should also allow interest rates to stabilize, which should be
positive for bonds.
Thank you for your continued support of Seligman Income Fund. A discussion with
your Fund's Portfolio Managers, as well as a performance overview and financial
statements, including a portfolio of investments, follows this letter. We look
forward to continuing to serve your investment needs.
By order of the Board of Directors,
/s/ William Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
February 11, 2000
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
CHARLES C. SMITH, JR. AND RODNEY COLLINS
Q: HOW DID SELIGMAN INCOME FUND PERFORM FOR THE FISCAL YEAR ENDED DECEMBER 31,
1999?
A: For the 12 months ended December 31, 1999, Seligman Income Fund posted a
total return of -1.76% based on the net asset value of Class A shares.
During the same time, the Lipper Income Funds Average posted a total return
of 4.99% and the Lehman Brothers Aggregate Bond Index, which measures the
results of the bond markets, posted a total return of -0.82%.
Q: WHAT ECONOMIC AND MARKET FACTORS AFFECTED THE FUND'S EQUITY INVESTMENTS IN
1999?
A: The stock market's strong overall performance last year was the result of
the outsized returns of a small number of high-priced growth stocks. The
technology sector, in particular, had a disproportionate impact on the
market's overall performance. This single industry, which at year-end
constituted 30% of the market cap of the S&P 500, accounted for 70% of the
Index's performance. Without technology, the S&P 500's return would have
been just 7.50%.
This extreme narrowness made last year's environment one of the most
challenging ever for value investors such as your Fund's managers. We focus
on seeking to find companies that have attractive yields, stable earnings
growth, strong fundamentals, and reasonable valuations. We believe that such
a strategy is the best way to build a portfolio of stocks that will deliver
solid performance over the long term. Over the short term, however, markets
can ignore fundamentals as we believe they did in 1999. Investors seemed
willing to pay any price for stocks that appeared to be on an upward trend,
with little or no regard for valuations and fundamentals. It was largely a
momentum-driven market. While we were disappointed with the Fund's
performance, we remain true to our discipline, avoiding stocks that seem to
be moving higher on momentum alone. We believe that this consistent strategy
will best serve the Fund's shareholders over the long term.
[GRAPHIC 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, the Fund's Co-Portfolio
Manager, 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.
- --------------------------------------------------------------------------------
Q: WHAT ECONOMIC AND MARKET FACTORS AFFECTED THE FUND'S FIXED-INCOME HOLDINGS
IN 1999?
A: The past fiscal year was also difficult for fixed-income securities, and
Seligman Income Fund's bond portfolio suffered as a result. During this
time, the Federal Reserve Board increased the federal funds rate three times
in an attempt to slow the US economy. These increases reversed all of the
Federal Reserve Board's 1998 actions. In 1998, the Federal Reserve Board
eased monetary policy as a result of a worldwide economic crisis, which many
feared could disrupt US economic growth, possibly even pulling the US into a
recession. Not only did the US economy avoid reces-
2
<PAGE>
sion, it continued to expand at a remarkable pace. Growth was so robust that
it surpassed the predictions of most economic commentators.
By the beginning of 1999, the world was recovering strongly and the US
entered its ninth year of uninterrupted expansion. This positive global and
domestic economic environment caused the Federal Reserve Board to quickly
resume its vigilance regarding inflation. As early as May 1999, the Federal
Reserve Board announced its bias toward a more restrictive monetary policy,
and in June voted to raise the federal funds rate 25 basis points -- the
first of three identical hikes which would leave this key rate 75 basis
points higher by year end. The 30-year Treasury bond yield also moved
significantly higher from 5.08% on December 31, 1998, to 6.48% on December
31, 1999.
The 12 months ended December 31, 1999, was the most challenging year for the
bond markets since 1994. Throughout 1999, yields moved steadily higher and
bonds across the yield curve lost value. The continued remarkable strength
of the US economy, the markedly improved global outlook, and a tighter
Federal Reserve Board policy were the key factors behind this rising-rate
environment.
Q: WHAT WAS YOUR INVESTMENT STRATEGY DURING THE 12 MONTHS ENDED DECEMBER 31,
1999?
A: During the past fiscal year, we significantly reduced the Fund's exposure to
fixed-income securities from 60.1% on December 31, 1998, to 38.4% on
December 31, 1999. Over the same period, we increased the Fund's exposure to
the stock market. The Fund's equity holdings moved from 35.8% on December
31, 1998, to 54.9% on December 31, 1999. We believe that this heavier stock
weighting will provide the Fund with more opportunities for capital
appreciation. The Fund will continue to maintain substantial exposure to
investment-grade corporate bonds and government bonds to cushion the
portfolio from the historically higher volatility of the stock market and to
pursue the Fund's objective of providing current income.
Q: WHAT IS YOUR OUTLOOK?
A: We are cautiously optimistic regarding the outlook for the stock market for
the year 2000. We do not believe that the type of market that prevailed in
1999 -- one in which economic and company-specific fundamentals were
partially ignored -- can continue. Many good companies languished in 1999
and are now trading at what we believe are exceptionally attractive prices.
It should be only a matter of time before these stocks are recognized and
Seligman Income Fund's value philosophy is rewarded.
In the coming year, we believe that yields will likely stabilize, which
should allow bonds to post positive total returns. While the Federal Reserve
Board is likely to remain cautious regarding inflationary pressures, we
believe it is unlikely to be as aggressive as it was in 1999. Markets have
already priced in several future rate increases by the Federal Reserve
Board; thus, long-term bond yields are unlikely to move significantly
higher.
3
<PAGE>
PERFORMANCE OVERVIEW
This chart compares a $10,000 hypothetical investment made in Seligman Income
Fund Class A shares, with and without the initial 4.75% maximum sales charge,
and assumes that all distributions within the period are invested in additional
shares, for the 10-year period ended December 31, 1999, to a $10,000 investment
made in the Lehman Brothers Aggregate Bond Index (Lehman Bond Index), the Lipper
Income Funds Average and the Standard & Poor's 500 Composite Stock Price Index
(S&P 500) for the same period. The performance of Seligman Income Fund Class B,
Class C, and Class D shares are not shown in this chart but are included in the
table on page 5. It is important to keep in mind that the Lehman Bond Index, the
Lipper Income Funds Average, and the S&P 500 exclude the effect of fees and/or
sales charges.
SELIGMAN INCOME FUND CLASS A
------------------------------------------------------------------
Date With Without S&P Lipper Income Lehman
Sales Charge Sales Charge 500 Funds Average Bond Index
------------ ------------ --- ------------- ----------
12/31/89 9525 10000 10000 10000 10000
12/31/90 8734 9170 9689 9866 10896
12/31/91 11365 11932 12642 12345 12639
12/31/92 13359 14025 13603 13486 13576
12/31/93 15493 16265 14974 15214 14899
12/31/94 14652 15382 15172 14625 14465
12/31/95 17670 18551 20875 18127 17135
12/31/96 19123 20076 25670 20099 17758
12/31/97 21811 22898 34234 23438 19471
12/31/98 23395 24561 44017 25240 21165
12/31/99 22983 24128 53276 26501 20991
The performances of Class B, Class C, and Class D shares will be greater
than or less than the performance shown for Class A shares, based on the
differences in sales charges and fees paid by shareholders.
4
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS C CLASS B CLASS D
SINCE SINCE SINCE
SIX INCEPTION ONE FIVE 10 INCEPTION INCEPTION
MONTHS* 5/27/99* YEAR YEARS YEARS 4/22/96 5/3/93
----------- ----------- -------- ------ ----- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (6.55)% n/a (6.46)% 8.36% 8.68% n/a n/a
Without Sales Charge (1.91) n/a (1.76) 9.42 9.21 n/a n/a
CLASS B**
With CDSC+ (7.08) n/a (7.20) n/a n/a 5.88% n/a
Without CDSC (2.27) n/a (2.47) n/a n/a 6.52 n/a
CLASS C**
With Sales Charge and CDSC (4.19) (4.04)% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC (2.27) (2.13) n/a n/a n/a n/a n/a
CLASS D**
With 1% CDSC (3.23) n/a (3.42) n/a n/a n/a n/a
Without CDSC (2.27) n/a (2.47) 8.58 n/a n/a 6.58%
LEHMAN BROS. AGGREGATE BOND INDEX*** 0.56 0.240 (0.82) 7.73 7.70 6.37++ 6.00+++
LIPPER INCOME FUNDS AVERAGE*** 0.87 2.260 4.99 12.62 10.24 10.17++ 9.69+++
S&P 500*** 7.70 13.680 21.04 28.55 18.21 26.78++ 22.39+++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE DIVIDEND AND CAPITAL GAIN INFORMATION
FOR PERIODS ENDED DECEMBER 31, 1999
DIVIDENDS
DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1998 PAID CAPITAL GAIN (LOSS)
----------------- ------------- ----------------- --------- -------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A $13.57 $14.09 $14.35 $0.530 REALIZED $(0.123)
CLASS B 13.52 14.05 14.30 0.430 UNREALIZED 0.494 00
CLASS C 13.52 14.05 N/A 0.320
CLASS D 13.52 14.05 14.30 0.430
</TABLE>
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. 0From May 31, 1999.
00Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1999.
5
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
PERCENT OF TOTAL
DECEMBER 31,
-------------------
1999 1998
--------- ---------
Aerospace/Defense............. 0.3 0.7
Automotive and Related........ 2.2 1.2
Capital Goods................. -- 0.2
Chemicals..................... 1.5 1.8
Communications................ 7.7 9.3
Communications Equipment...... 1.4 --
Computers and Business
Services.................. 11.7 8.9
Consumer Goods and Services 8.5 8.4
Diversified................... 0.5 --
Drugs and Health Care......... 8.8 4.4
Electric and Gas Utilities.... 3.4 4.4
Electrical Equipment.......... 2.8 --
Electronics................... 2.3 --
Energy........................ 4.3 7.1
Finance and Insurance......... 14.9 18.5
Food.......................... -- 0.5
Funeral Services.............. -- 1.3
Industrial Goods and Services 0.3 --
Leisure....................... -- 1.4
Machinery and Industrial
Equipment.................. 1.7 1.0
Media......................... 1.4 4.8
Office Equipment.............. 0.7 --
Paper and Forest Products..... 0.7 0.2
Publishing.................... 0.5 --
Real Estate................... 0.5 --
Retail Trade.................. 4.8 5.0
Tobacco....................... -- 2.9
Transportation................ 0.6 0.8
------- -------
Total Corporate
Fixed-Income Securities
and Common Stocks.......... 81.5 82.8
US Government and
Government
Agency Securities.......... 11.8 13.1
Short-Term Holdings
and Other Assets
Less Liabilities........... 6.7 4.1
------- -------
TOTAL......................... 100.0 100.0
======= =======
LARGEST INDUSTRIES+
DECEMBER 31, 1999
[GRAPHIC OMITTED]
[FIGURES BELOW REPRESENT BAR CHART IN ITS PRINTED FORM.]
(Percent of Net Assets)
Finance and Insurance...................... $42,097,917
Computers and Business Services............ $32,943,567
Drugs and Health Care ..................... $24,597,860
Consumer Goods and Services ............... $23,742,843
Communications ............................ $21,601,536
+ Excludes US Government and Government Agency securities.
COMPOSITION OF NET ASSETS
PERCENT OF TOTAL
DECEMBER 31,
----------------------
1999 1998
--------- --------
Common Stocks..................... 54.9 35.8
Corporate Bonds................... 26.1 43.9
Convertible Preferred Stocks...... -- 3.1
Asset-Backed Securities........... 0.5 --
Total Corporate
Fixed-Income Securities........ 26.6 47.0
US Government and
Government Agency
Securities..................... 11.8 13.1
Short-Term Holdings and
Other Assets Less Liabilities.. 6.7 4.1
TOTAL............................. 100.0 100.0
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
PRINCIPAL AMOUNT
OR SHARES
-----------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/99
- ------------- ----------- --------------
COMMON STOCKS:
Applied Materials............. 28,100 shs. 28,100 shs.
General Electric.............. 41,200 41,200
Microsoft..................... 49,400 71,300
United Technologies........... 74,100 74,100
CORPORATE BONDS:
American Home Products
7.90%, 2/15/2005........... $3,100,000 $3,100,000
Bank of New York
7.30%, 12/1/2009........... 3,200,000 3,200,000
PP&L Transition 6.83%,
3/25/2007.................. 4,000,000 4,000,000
US West Communications
7.20%, 11/1/2004........... 3,600,000 3,600,000
Wal-Mart Stores
6.55%, 8/10/2004........... 3,000,000 3,000,000
US GOVERNMENT
SECURITIES:
US Treasury Notes
6.25%, 8/31/2002........... 3,000,000 3,800,000
PRINCIPAL AMOUNT
--------------------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/99
- ---------- -------- --------
CORPORATE BONDS:
Consumers Energy
6.375%, 2/1/2008.............. $5,000,000 --
Enron Oil & Gas
6%, 12/15/2008................ 5,200,000 --
MCI WorldCom
7.75%, 4/1/2007............... 5,000,000 --
News America Holdings
7.43%, 10/1/2026.............. 5,000,000 --
Petroleum Geo-Services
7.50%, 3/31/2007.............. 5,000,000 --
Praxair
6.625%, 10/15/2007............ 5,000,000 --
Royal Caribbean Cruises
6.75%, 3/15/2008.............. 5,000,000 --
Sears, Roebuck
6%, 3/20/2003................. 5,000,000 --
US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES:
US Treasury Notes
6.50%, 10/15/2006............. 5,000,000 --
Federal National Mortgage
Association
5.90%, 6/19/2003.............. 5,000,000 --
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
DECEMBER 31, 1999
SECURITY VALUE
- -------- -----------
Microsoft.............................. $8,322,047
FHLMC Gold
5.50%, 7/1/2013..................... 7,986,598
Government National
Mortgage Association
6.50%, 12/15/2028 7,296,831
General Electric....................... 6,375,700
Wal-Mart Stores........................ 5,039,213
Federal National
Mortgage Association
6%, 12/1/2028....................... $5,011,809
United Technologies.................... 4,816,500
Government National
Mortgage Association
6%, 12/20/2028 4,797,518
Intel.................................. 4,179,887
Exxon Mobil............................ 4,040,209
7
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
PRINCIPAL
AMOUNT OR
SHARES VALUE
----------- --------------
COMMON STOCKS 54.9%
AEROSPACE/DEFENSE 0.3%
General Dynamics 15,700 $ 828,175
------------
AUTOMOTIVE AND RELATED 1.4%
DaimlerChrysler 23,600 1,846,700
Ford Motor 37,400 1,998,563
------------
3,845,263
------------
CHEMICALS 0.6%
duPont (E.I.) de Nemours 25,900 1,706,163
------------
COMMUNICATIONS 4.4%
AT&T 71,600 3,633,700
GTE 36,700 2,589,644
MCI WorldCom* 48,900 2,593,228
SBC Communications 72,600 3,539,250
------------
12,355,822
------------
COMMUNICATIONs
EQUIPMENT 1.4%
Lucent Technologies 31,300 2,341,631
Nortel Networks 17,200 1,737,200
------------
4,078,831
------------
COMPUTERS AND
BUSINESS SERVICES 10.1%
America Online* 19,200 1,448,400
Cisco Systems* 36,100 3,866,084
Dell Computer* 33,900 1,727,841
Electronic Data Systems 52,400 3,507,525
Hewlett-Packard 14,400 1,640,700
Intel 50,800 4,179,887
International Business Machines 29,300 3,164,400
Microsoft* 71,300 8,322,047
Xerox 27,500 623,906
------------
28,480,790
------------
CONSUMER GOODS
AND SERVICES 6.7%
Anheuser-Busch 24,300 1,722,262
Bestfoods 39,900 2,097,244
Clorox 45,100 2,271,913
Coca-Cola 25,900 1,508,675
ConAgra 65,200 1,471,075
Gillette 44,100 1,816,369
PepsiCo 62,600 2,206,650
Philip Morris 57,500 1,333,281
Procter & Gamble 24,000 2,629,500
Sara Lee 77,300 1,705,431
------------
18,762,400
------------
DRUGS AND
HEALTH CARE 5.2%
Abbott Laboratories 43,500 $ 1,579,594
American Home Products 51,800 2,042,862
Baxter International 26,500 1,664,531
Bristol-Myers Squibb 27,700 1,777,994
Johnson & Johnson 27,800 2,588,875
Merck 35,100 2,353,894
Pfizer 34,500 1,119,094
Schering-Plough 32,900 1,387,969
------------
14,514,813
------------
ELECTRICAL EQUIPMENT 2.8%
General Electric 41,200 6,375,700
Honeywell International 24,300 1,401,806
------------
7,777,506
------------
ELECTRIC AND GAS
UTILITIES 1.5%
Unicom 45,700 1,530,950
Williams Companies (The) 89,200 2,726,175
------------
4,257,125
------------
ELECTRONICS 2.3%
Agilent Technologies* 23,000 1,778,187
Applied Materials* 28,100 3,559,041
Raytheon (Class B) 49,800 1,322,813
------------
6,660,041
------------
ENERGY 3.9%
BP Amoco (ADRs)
(United Kingdom) 41,500 2,461,469
Exxon Mobil 50,150 4,040,209
Royal Dutch Petroleum
(Netherlands) 42,200 2,550,462
Schlumberger 32,600 1,833,750
Transocean Sedco Forex 6,324 208,236
------------
11,094,126
------------
FINANCE AND INSURANCE 8.4%
American General 39,600 3,004,650
American International Group 23,350 2,524,719
Bank of America 60,803 3,051,551
Bank of New York 85,600 3,424,000
Chubb 24,600 1,385,287
Citigroup 57,800 3,211,512
Fannie Mae 28,400 1,773,225
Mellon Financial 59,400 2,023,312
Merrill Lynch 22,000 1,837,000
Morgan (J.P.) 12,100 1,532,162
------------
23,767,418
------------
- ----------
See footnotes on page 10.
8
<PAGE>
PRINCIPAL
AMOUNT VALUE
----------- --------------
MACHINERY AND INDUSTRIAL
EQUIPMENT 1.7%
United Technologies 74,100 shs. $ 4,816,500
-----------
OFFICE EQUIPMENT 0.7%
Pitney Bowes 38,200 1,845,538
-----------
PAPER AND FOREST
PRODUCTS 0.7%
Mead 42,800 1,859,125
------------
PUBLISHING 0.5%
Gannett 15,700 1,280,531
------------
RETAIL TRADE 2.3%
May Department Stores 47,500 1,531,875
Wal-Mart Stores 72,900 5,039,213
------------
6,571,088
------------
TOTAL COMMON STOCKS
(Cost $139,294,306) 154,501,255
------------
CORPORATE BONDS 26.1%
AUTOMOTIVE AND
RELATED 0.8%
Dana 6.50%, 3/1/2009 $2,500,000 2,278,235
------------
CHEMICALS 0.9%
Lyondell Chemical
9.625%, 5/1/2007 2,500,000 2,568,750
------------
COMMUNICATIONS 3.3%
AT&T Canada 7.65%, 9/15/2006 825,000 822,462
Qwest Communications 0%
(9.47%++), 10/15/2007 2,350,000 1,915,250
Tele-Communications
9.80%, 2/1/2012 2,500,000 2,925,645
US West Communications
7.20%, 11/1/2004 3,600,000 3,582,357
------------
9,245,714
------------
COMPUTERS AND BUSINESS
SERVICES 1.6%
Dell Computer
6.55%, 4/15/2008 2,500,000 2,346,095
First Data
5.80%, 12/15/2008 2,400,000 2,116,682
------------
4,462,777
------------
CONSUMER GOODS AND
SERVICES 1.8%
Philip Morris
7.125%, 8/15/2002 $2,500,000 $ 2,460,965
Whitman
7.50%, 2/1/2003 2,500,000 2,519,478
------------
4,980,443
------------
DIVERSIFIED 0.5%
Textron
6.375%, 7/15/2004 1,600,000 1,544,827
------------
DRUGS AND
HEALTH CARE 3.6%
American Home Products
7.90%, 2/15/2005 3,100,000 3,184,450
Boston Scientific
6.625%, 3/15/2005 2,500,000 2,306,265
Cardinal Health
6.25%, 7/15/2008 2,000,000 1,821,424
Guidant
6.15%, 2/15/2006 3,000,000 2,770,908
------------
10,083,047
------------
ELECTRIC AND GAS
UTILITIES 1.4%
PP&L Transition
6.83%, 3/25/2007 4,000,000 3,978,500
------------
ENERGY 0.4%
Phillips Petroleum
6.375%, 3/30/2009 1,200,000 1,111,288
------------
FINANCE AND
INSURANCE 6.5%
Allstate
7.20%, 12/01/2009 1,600,000 1,556,464
Aristar
6%, 5/15/2002 1,300,000 1,262,425
Bank of New York
7.30%, 12/1/2009 3,200,000 3,140,557
Dime Bancorp
7%, 7/25/2001 2,900,000 2,860,685
First USA Bank
6.125%, 6/25/2001 2,000,000 1,981,526
Ford Motor Credit
5.80%, 1/12/2009 2,500,000 2,222,500
Heller Financial
6.50%, 7/22/2002 2,500,000 2,455,073
Household Finance
6%, 5/1/2004 3,000,000 2,851,269
------------
18,330,499
------------
- ----------
See footnotes on page 10.
9
<PAGE>
INDUSTRIAL GOODS
AND SERVICES 0.3%
Deere
6.55%, 7/15/2004 $1,000,000 $ 972,625
------------
MEDIA 1.4%
CSC Holdings
7.25%, 7/15/2008 1,200,000 1,143,000
Time Warner
9.125%, 1/15/2013 2,500,000 2,748,007
------------
3,891,007
------------
REAL ESTATE 0.5%
Mack-Cali Realty
7%, 3/15/2004 1,600,000 1,543,190
------------
RETAIL TRADE 2.5%
Nordstrom
5.625%, 1/15/2009 2,000,000 1,738,364
Staples
7.125%, 8/15/2007 2,500,000 2,384,700
Wal-Mart Stores
6.55%, 8/10/2004 3,000,000 2,953,224
------------
7,076,288
------------
TRANSPORTATION 0.6%
Delta Airlines
7.70%, 12/15/2000 1,600,000 1,575,405
------------
TOTAL CORPORATE BONDS
(Cost $76,454,040) 73,642,595
------------
US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES 11.8%
US Treasury Notes
6.25%, 8/31/2002 3,800,000 3,798,814
Bay Transportation
7.30%, 6/1/2021 1,710,000 1,672,298
FHLMC GOLD
5.50%, 7/1/2013+ 8,589,661 7,986,598
Federal National Mortgage
Association:+
6%, 11/1/2010 2,754,156 2,657,199
6%, 12/1/2028 5,472,405 5,011,809
Government National Mortgage
Association, Mortgage-backed
Passed-through Certificates:+
6%, 12/20/2028 5,283,418 4,797,518
6.50%, 12/15/2028 7,765,164 7,296,831
------------
TOTAL US GOVERNMENT
AND GOVERNMENT
AGENCY SECURITIES
(Cost $35,257,524) 33,221,067
------------
ASSET-BACKED
SECURITIES+ 0.5%
(Cost $1,498,074)
ELECTRIC AND GAS
UTILITIES 0.5%
PECO Energy
6.05%, 3/1/2009 $1,500,000 $ 1,401,907
------------
FIXED TIME
DEPOSITS 6.2%
Bank of Montreal,
Grand Cayman,
5%, 1/3/2000 8,700,000 8,700,000
Canadian Imperial Bank of
Commerce, Grand Cayman
4.50%, 1/3/2000 8,700,000 8,700,000
------------
TOTAL FIXED TIME DEPOSITS
(Cost $17,400,000) 17,400,000
------------
TOTAL INVESTMENTS 99.5%
(Cost $269,903,944) 280,166,824
OTHER ASSETS
LESS LIABILITIES 0.5% 1,477,266
------------
NET ASSETS 100.0% $281,644,090
============
- ----------
* 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.
++ Deferred-interest debentures pay no interest for a stipulated number of
years, after which they pay the indicated coupon rate. See Notes to
Financial Statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value:
Stocks and Bonds (cost $217,246,420)............................... $229,545,757
US Government and Government Agency securities
(cost $35,257,524) ................................................. 33,221,067
Short-term holdings (cost $17,400,000)............................... 17,400,000 $280,166,824
------------
Cash.............................................................................................. 354,950
Receivable for interest and dividends............................................................. 2,003,628
Receivable for Capital Stock sold................................................................. 409,673
Investment in, and expenses prepaid to, shareholder service agent................................. 56,574
Other............................................................................................. 7,432
------------
TOTAL ASSETS ..................................................................................... 282,999,081
------------
LIABILITIES:
Payable for Capital Stock repurchased............................................................. 782,975
Accrued expenses and other........................................................................ 572,016
------------
TOTAL LIABILITIES ................................................................................ 1,354,991
------------
NET ASSETS ....................................................................................... $281,644,090
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized; 20,776,148
shares outstanding):
Class A......................................................................................... $ 14,897,973
Class B......................................................................................... 1,713,356
Class C......................................................................................... 124,211
Class D......................................................................................... 4,040,608
Additional paid-in capital........................................................................ 254,440,976
Undistributed net investment income .............................................................. 18,079
Accumulated net realized loss..................................................................... (3,853,993)
Net unrealized appreciation of investments........................................................ 10,262,880
------------
NET ASSETS ....................................................................................... $281,644,090
============
NET ASSET VALUE PER SHARE:
CLASS A ($202,170,325 / 14,897,973 shares)........................................................ $13.57
======
CLASS B ($23,159,356 / 1,713,356 shares).......................................................... $13.52
======
CLASS C ($1,679,555 / 124,211 shares)............................................................. $13.52
======
CLASS D ($54,634,854 / 4,040,608 shares).......................................................... $13.52
======
</TABLE>
- ----------
See Notes to Financial Statements.
11
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest .............................................................. $12,441,820
Dividends ............................................................. 3,046,799
-----------
TOTAL INVESTMENT INCOME (net of foreign tax withheld of $20,972).................................. $15,488,619
EXPENSES:
Management fee......................................................... 1,932,905
Distribution and service fees.......................................... 1,476,313
Shareholder account services........................................... 600,134
Shareholder reports and communications................................. 110,220
Registration........................................................... 93,842
Custody and related services........................................... 71,620
Auditing and legal fees................................................ 60,909
Directors' fees and expenses........................................... 24,210
Miscellaneous.......................................................... 24,478
-----------
TOTAL EXPENSES ................................................................................... 4,394,631
----------
NET INVESTMENT INCOME ............................................................................ 11,093,988
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments....................................... (2,546,515)
Net change in unrealized appreciation of investments................... (15,124,657)
-----------
NET LOSS ON INVESTMENTS .......................................................................... (17,671,172)
-----------
DECREASE IN NET ASSETS FROM OPERATIONS ........................................................... $(6,577,184)
================
</TABLE>
- ----------
See Notes to Financial Statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1999 1998
------------------------------------
OPERATIONS:
<S> <C> <C>
Net investment income........................................................... $ 11,093,988 $ 14,594,886
Net realized gain (loss) on investments......................................... (2,546,515) 20,162,078
Net realized loss from foreign currency transactions............................ -- (1,061,463)
Net change in unrealized appreciation of investments............................ (15,124,657) (10,362,195)
Net change in unrealized depreciation on translation of
assets and liabilities denominated in foreign currencies...................... -- 904,932
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .............................. (6,577,184) 24,238,238
------------- -------------
Distributions to shareholders:
Net investment income:
Class A...................................................................... (8,648,995) (11,531,796)
Class B...................................................................... (676,932) (532,468)
Class C...................................................................... (17,317) --
Class D...................................................................... (2,050,029) (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 ...................................... (11,393,273) (35,165,770)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares............................................... 17,385,798 30,957,362
Investment of dividends......................................................... 7,714,842 10,650,400
Exchanged from associated Funds................................................. 21,307,395 27,824,267
Value of shares issued in payment of gain distributions......................... -- 17,023,382
------------- -------------
Total........................................................................... 46,408,035 86,455,411
------------- -------------
Cost of shares repurchased...................................................... (74,365,590) (50,351,680)
Exchanged into associated Funds................................................. (27,846,757) (25,246,214)
------------- -------------
Total........................................................................... (102,212,347) (75,597,894)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS .............. (55,804,312) 10,857,517
------------- -------------
DECREASE IN NET ASSETS ......................................................... (73,774,769) (70,015)
NET ASSETS:
Beginning of year............................................................... 355,418,859 355,488,874
---------------- ----------------
END OF YEAr (including undistributed net investment income of
$18,079 and $317,364, respectively) $281,644,090 $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-specific 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 year ended December 31, 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 of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset value
per share of the Fund.
14
<PAGE>
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended December 31, 1999, amounted to $212,702,234 and $258,729,273,
respectively; purchases and sales of US Government obligations were $13,953,806
and $26,813,838, respectively.
At December 31, 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 $21,528,334 and $11,416,312, 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
$16,505 from sales of Class A shares. Commissions of $124,745 and $15,659 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 year ended December 31,
1999, fees incurred under the Plan aggregated $572,874, 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 year ended December 31, 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 $219,064, $4,927, and $679,448, 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
year ended December 31, 1999, such charges amounted to $10,439.
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 year ended December 31, 1999, amounted to
$6,671.
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 year ended December 31, 1999,
Seligman Services, Inc. received commissions of $2,392 from the sales of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $46,574, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $600,134 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 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
15
<PAGE>
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
December 31, 1999, of $109,803 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 in June 2000, but is renewable annually with
the consent of the participating banks. For the year ended December 31, 1999,
the Fund did not borrow from the credit facility.
6. CAPITAL LOSS CARRYFORWARD -- At December 31, 1999, the Fund had a net capital
loss carryforward for federal income tax purposes of $910,188, which is
available for offset against future taxable net capital gains, expiring in 2007.
Accordingly, no capital gains distributions are expected to be paid to
shareholders until net capital gains have been realized in excess of the
available capital loss carryforwards.
7. 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:
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998
-------------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Net proceeds from
sales of shares 565,664 $ 7,939,220 917,312 $13,784,723
Investment of
dividends 419,754 5,819,830 536,032 7,981,473
Exchanged from
associated Funds 418,979 5,837,391 811,991 12,301,020
Shares issued in
payment of gain
distributions -- -- 848,226 12,180,374
----------- ------------ ----------- -----------
Total 1,404,397 19,596,441 3,113,561 46,247,590
----------- ------------ ----------- -----------
Cost of shares
repurchased (3,583,345) (49,986,020) (2,451,497) (36,932,180)
Exchanged into
associated Funds (768,113) (10,626,971) (1,088,419) (16,267,382)
----------- ------------ ----------- ------------
Total (4,351,458) (60,612,991) (3,539,916) (53,199,562)
----------- ------------ ----------- ------------
Decrease (2,947,061) $(41,016,550) (426,355) $ (6,951,972)
=========== ============= =========== ============
CLASS B
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998
-------------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- -------------- ----------- -----------
Net proceeds from
sales of shares 322,181 $ 4,512,993 582,101 $ 8,737,987
Investment of
dividends 30,340 419,190 25,995 383,370
Exchanged from
associated Funds 652,151 8,968,18 443,306 6,464,374
Shares issued in
payment of gain
distributions -- -- 56,336 803,601
----------- ------------ ----------- ------------
Total 1,004,672 13,900,201 1,107,738 16,389,332
----------- ------------ ----------- ------------
Cost of shares
repurchased (256,101) (3,552,206) (91,901) (1,368,093)
Exchanged into
associated Funds (510,647) (7,032,194) (122,524) (1,801,440)
----------- ------------ ----------- ------------
Total (766,748) (10,584,400) (214,425) (3,169,533)
----------- ------------ ----------- ------------
Increase 237,924 $ 3,315,801 893,313 $13,219,799
=========== ============ =========== ============
</TABLE>
CLASS C
-------------------------------------
MAY 27, 1999* TO
DECEMBER 31, 1999
-------------------------------------
SHARES AMOUNT
------------- --------------
Net proceeds from
sales of shares 175,185 $2,386,354
Investment of
dividends 1,160 15,660
Exchanged from
associated funds 8,274 110,789
----------- ------------
Total 184,619 2,512,803
----------- ------------
Cost of shares
repurchased (6,083) (82,721)
Exchanged into
associated funds (54,325) (728,111)
----------- ------------
Total (60,408) (810,832)
----------- ------------
Increase 124,211 $1,701,971
=========== ============
* Commencement of offering of shares.
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998
-------------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Net proceeds from
sales of shares 181,969 $ 2,547,231 559,494 $ 8,434,652
Investment of
dividends 105,410 1,460,162 153,899 2,285,557
Exchanged from
associated Funds 457,887 6,391,197 605,553 9,058,873
Shares issued in
payment of gain
distributions -- -- 282,564 4,039,407
----------- ------------ ----------- ------------
Total 745,266 10,398,590 1,601,510 23,818,489
----------- ------------ ----------- ------------
Cost of shares
repurchased (1,491,727) (20,744,643) (807,198) (12,051,407)
Exchanged into
associated Funds (684,350) (9,459,481) (478,295) (7,177,392)
----------- ------------ ----------- ------------
Total (2,176,077) (30,204,124) (1,285,493) (19,228,799)
----------- ------------ ----------- ------------
Increase
(Decrease) (1,430,811) $(19,805,534) 316,017 $ 4,589,690
=========== ============= ============ ============
</TABLE>
16
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five years or from its inception if less than five
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
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR............................... $14.35 $14.81 $14.97 $14.63 $13.05
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................ 0.51 0.64 0.71 0.74 0.76
Net realized and unrealized gain (loss) on investments........... (0.76) 0.41 1.41 0.38 1.89
Net realized and unrealized gain (loss) from
foreign currency transactions -- -- (0.10) 0.04 (0.01)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................................. (0.25) 1.05 2.02 1.16 2.64
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............................. (0.53) (0.65) (0.74) (0.73) (0.78)
Distributions from net realized capital gain..................... -- (0.86) (1.44) (0.09) (0.28)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.............................................. (0.53) (1.51) (2.18) (0.82) (1.06)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR..................................... $13.57 $14.35 $14.81 $14.97 $14.63
====== ====== ====== ====== ======
TOTAL RETURN: (1.76)% 7.26% 14.06% 8.22% 20.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)........................... $202,170 $256,060 $270,688 $296,291 $318,307
Ratio of expenses to average net assets.......................... 1.15% 1.10% 1.14% 1.14% 1.00%
Ratio of net income to average net assets........................ 3.65% 4.25% 4.66% 5.11% 5.38%
Portfolio turnover rate.......................................... 72.46% 124.79% 138.90% 125.92% 111.78%
</TABLE>
- ----------
See footnotes on page 18.
17
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------- -----------
YEAR ENDED DECEMBER 31, 4/22/96* 5/27/99*
---------------------------------- to to
1999 1998 1997 12/31/96 12/31/99
--------- --------- --------- --------- ----------
<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............................................ 0.40 0.52 0.59 0.43 0.19
Net realized and unrealized gain (loss) on investments........... (0.75) 0.39 1.41 0.59 (0.49)
Net realized and unrealized gain (loss) from
foreign currency transactions................................. -- -- (0.10) 0.05 --
------ ------ ------ ------ ------
Total From Investment Operations................................. (0.35) 0.91 1.90 1.07 (0.30)
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income............................. (0.43) (0.54) (0.62) (0.46) (0.32)
Distributions from net realized capital gain..................... -- (0.86) (1.44) (0.09) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.............................................. (0.43) (1.40) (2.06) (0.55) (0.32)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD................................... $13.52 $14.30 $14.79 $14.95 $13.52
====== ====== ====== ====== ======
TOTAL RETURN: (2.47)% 6.28% 13.24% 7.58% (2.13)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)......................... $23,159 $21,096 $8,607 $2,961 $1,680
Ratio of expenses to average net assets ......................... 1.90% 1.86% 1.90% 1.89%+ 1.95%+
Ratio of net income to average net assets ....................... 2.90% 3.49% 3.90% 4.36%+ 2.73%+
Portfolio turnover rate.......................................... 72.46% 124.79% 138.90% 125.92%++ 72.46%**
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR............................... $14.30 $14.78 $14.95 $14.60 $13.01
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................ 0.40 0.52 0.59 0.63 0.65
Net realized and unrealized gain (loss) on investments .......... (0.75) 0.40 1.40 0.38 1.88
Net realized and unrealized gain (loss) from
foreign currency transactions -- -- (0.10) 0.04 (0.01)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................................. (0.35) 0.92 1.89 1.05 2.52
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............................. (0.43) (0.54) (0.62) (0.61) (0.65)
Distributions from net realized capital gain .................... -- (0.86) (1.44) (0.09) (0.28)
TOTAL DISTRIBUTIONS.............................................. (0.43) (1.40) (2.06) (0.70) (0.93)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR..................................... $13.52 $14.30 $14.78 $14.95 $14.60
====== ====== ====== ====== ======
TOTAL RETURN: (2.47)% 6.36% 13.17% 7.43% 19.66%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)........................... $54,635 $78,263 $76,194 $81,957 $86,701
Ratio of expenses to average net assets.......................... 1.90% 1.86% 1.90% 1.90% 1.79%
Ratio of net income to average net assets........................ 2.90% 3.49% 3.90% 4.37% 4.58%
Portfolio turnover rate.......................................... 72.46% 124.79% 138.90% 125.92% 111.78%
</TABLE>
- ----------
* Commencement of offering of shares. ** For the year ended December 31, 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 December 31,
1999, the related 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>
- -----------------------------------
J. & W. SELIGMAN & CO. INCORPORATED
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.
