SELIGMAN
-----------
LARGE-CAP
VALUE FUND
[GRAPHIC]
MID-YEAR REPORT
JUNE 30, 1998
A VALUE APPROACH
TO SEEKING THE
CAPITAL APPRECIATION
POTENTIAL OF
LARGER COMPANIES
[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's history of providing financial services has been
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 134 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions for these changing times.
[PHOTO]
JAMES, JESSE AND JOSEPH SELIGMAN, 1870
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 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 funds that focus on technology stocks, municipal
bonds, and international 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 .................. 9
Statement of Operations .............................. 10
Statements of Changes in Net Assets .................. 11
Notes to Financial Statements ........................ 12
Financial Highlights ................................. 15
Report of Independent Auditors ....................... 16
Board of Directors ................................... 17
Executive Officers and For More Information .......... 18
Glossary of Financial Terms .......................... 19
<PAGE>
TO THE SHAREHOLDERS
In the first six months of 1998, Seligman Large-Cap Value Fund posted a total
return of 13.75% based on the net asset value of Class A shares. This return
compares to the 17.71% total return of the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) and the 16.21% total return of the Russell 1000 Index,
another broad-based large-cap stock index. The Fund's return lagged that of the
S&P 500 because that Index is comprised primarily of large-capitalization growth
stocks, which appreciated in price during the first half. Your Fund invests in
large-capitalization value stocks, which overall did not fare well in the
period. In general, investors favored growth stocks over value stocks, which is
discussed in more detail below.
The US economy continued to grow throughout the first half of the year, bringing
the expansion into an unprecedented eighth year. Inflation was low, wages high,
consumer spending strong, and the labor market tight. According to the
Conference Board, consumer confidence rose to a 29-year high in June, reflecting
these positive fundamentals. Further, the supply of consumer goods kept pace
with demand, which helped the economic expansion remain balanced.
This environment was not ideal for large-capitalization value investments,
however. In the US equity market, the dominant trend was a "flight to quality,"
as investors stressed the importance of quality, liquidity, and safety. Fear of
a growing impact of the Asian financial crisis, coupled with lower corporate
profits, caused investors to favor large-cap growth stocks, believing these
offered more stability than other investment vehicles. This came at the expense
of large-cap value stocks. The market effectively became two-tiered, as the 30
largest companies in the S&P 500 accounted for more than half of its gains.
Looking ahead, the Asian crisis has just begun to affect the US economy, and it
may eventually have a negative impact on the domestic equity market. While the
crisis caused investors to retreat into large-cap growth stocks, it may begin to
pressure these companies, and their stock prices, in the months to come. In
general, we believe that domestic economic fundamentals will remain positive,
which should benefit the companies in which your Fund invests. However, we also
believe that investor expectations for a continued strong appreciation in the
prices of equities may be too optimistic. As the market for large-cap growth
stocks is currently fully valued, we believe that reasonably valued large-cap
value stocks, such as those held by your Fund, should come back into favor.
As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, the Seligman Investment Companies, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that there will be no disruption in the
services provided by your Fund.
Thank you for your continued interest in Seligman Large-Cap Value Fund. We look
forward to serving your investment needs in the many years to come. A discussion
with your Portfolio Managers, the Fund's portfolio of investments, and financial
statements follow this letter.
By order of the Board of Directors,
/s/William C. Morris
- --------------------
William C. Morris
Chairman
/s/Brian T. Zino
----------------
Brian T. Zino
President
July 31, 1998
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
NEIL T. EIGEN AND RICHARD S. ROSEN
Q. HOW DID SELIGMAN LARGE-CAP VALUE FUND PERFORM IN THE FIRST HALF OF 1998?
A. In the first six months of 1998, Seligman Large-Cap Value Fund posted a
total return of 13.75% based on net asset value of Class A shares, compared
to the 17.71% total return of the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) and the 16.21% total return of the Russell 1000 Index,
another broad-based large-cap stock index.
Q. WHICH ECONOMIC AND MARKET FACTORS INFLUENCED THE FUND'S RESULTS IN THE FIRST
HALF OF 1998?
A. The investment environment continued to benefit from low inflation, steady
wage increases, strong consumer spending, and low unemployment. The Asian
financial crisis actually had positive effects on the overall US equity
market in the first half, but it began to negatively impact corporate
profits in some industries. The Asian markets have historically been strong
areas of business, but the crisis depressed demand for consumer products,
infrastructure equipment, and commodities throughout the region. As a
result, companies flooded the US with inexpensive imports. This effectively
suppressed inflationary pressures that usually emerge during periods of
sustained economic expansion. However, the Asian crisis increased demand for
"safe haven" US equities, as both domestic and overseas investors purchased
recognized, liquid, large-capitalization growth stocks. This often came at
the expense of large-cap value stocks.
Q. WHICH SECTORS AFFECTED THE FUND'S PERFORMANCE IN THE FIRST HALF?
A. The factors that strengthened the US equity market also led to improved
performances by many of the Fund's holdings, especially retail stocks in the
consumer cyclicals sector. The Fund's retail holdings, including Sears,
Roebuck, J.C. Penney, and May Department Stores, performed well. The
outstanding performer in consumer cyclicals, however, was auto maker Ford
Motor Company, which gained 82.9% in the first six months. The company
benefited from the continued effects of restructuring, as well as earnings
that exceeded the market's expectations. Overall, we anticipate favorable
performance from the consumer cyclicals sector in the second half of the
year.
[PHOTO]
SELIGMAN VALUE TEAM: (FROM LEFT) NEVIS GEORGE (ADMINISTRATIVE ASSISTANT), MILTON
RUBIN (CLIENT SERVICES), RICHARD S. ROSEN (CO-PORTFOLIO MANAGER), (SEATED) NEIL
T. EIGEN (PORTFOLIO MANAGER)
A TEAM APPROACH
Seligman Large-Cap Value Fund is managed by the Seligman Value Team, headed by
Neil T. Eigen, who has 29 years of experience as a value investor. Mr. Eigen and
Richard S. Rosen are assisted in the management of the Fund by seasoned research
professionals who are responsible for identifying reasonably valued
large-capitalization companies with the potential for high returns on equity.
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
NEIL T. EIGEN AND RICHARD S. ROSEN
Results in the financial sector were mixed in the first half. The
portfolio's holdings benefited from general strength in the financial
sector, as low interest rates, deregulation, and consolidation among
companies had positive effects on many financial stocks. Well- publicized
merger announcements of several large financial institutions caused an
overall rise in financial companies' share prices. The appreciation in the
stock prices of Equitable Companies and BankAmerica enhanced the Fund's
performance. However, Summit Bancorp, Federal National Mortgage Association,
Bank of New York, St. Paul Companies, and Washington Mutual failed to meet
expectations.
Q. WHAT WAS THE INVESTMENT STRATEGY?
A. We maintained a long-term investment strategy of seeking superior capital
appreciation by identifying high-quality, value-oriented companies that
possess an agent for change. A company's improving prospects should attract
investors and create a positive attitude about its stock. Rather than
focusing on specific economic factors, market forces, or industrial sectors,
and working backwards to choose investments (the top-down approach), we
judge each investment on its own merit. Using the bottom-up approach, we buy
stocks because we think a company's prospects are improving significantly,
and, therefore, its stock's value will rise over a long period of time.
Q. WHAT IS THE OUTLOOK?
A. There are indications that the Asian financial crisis has only just begun to
impact the US economy, and it may negatively affect the US equity market in
the future. While the crisis led investors to large-cap growth stocks,
lifting share prices to fully valued levels, the crisis may begin to exert a
negative impact on these same companies, and their stock prices, in the
months to come.
In general, US economic fundamentals remain positive, yet we believe
expectations for the continued appreciation in the price of growth stocks
may be too optimistic. The conditions that fueled demand for growth stocks
and sent valuations higher may not exist to support the fully valued market
levels in the second half of the year.
By June 30, the stock market, as measured by the S&P 500, was selling at
roughly 23 times anticipated earnings, suggesting that the market for
large-cap growth stocks as a whole is richly valued. We think that value
stocks should come back into favor as investors recognize that they are
competitively priced. Seligman Large-Cap Value Fund's portfolio has an
overall price-to-earnings ratio that is below that of the market in general,
yet has a predicted earnings growth rate over the next 12 months in excess
of that of the overall market. Therefore, we believe the Fund is
well-positioned for improved performance in the second half of 1998.
3
<PAGE>
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED JUNE 30, 1998
AVERAGE ANNUAL
-------------------------
SINCE
SIX ONE INCEPTION
MONTHS* YEAR 4/25/97
---------- ------- -----------
<S> <C> <C> <C>
CLASS A**
With Sales Charge 8.39% 23.39% 32.97%
Without Sales Charge 13.75 29.47 38.62
CLASS B**
With CDSL+ 8.38 23.55 34.29
Without CDSL 13.38 28.55 37.49
CLASS D**
With 1% CDSL 12.38 27.55 n/a
Without CDSL 13.38 28.55 37.49
RUSSELL 1000 INDEX*** 16.21 30.15 36.87++
S&P 500*** 17.71 30.16 36.91++
NET ASSET VALUE
JUNE 30, 1998 DECEMBER 31, 1997 JUNE 30, 1997
-------------- -------------------- --------------
CLASS A $10.34 $9.09 $8.11
CLASS B 10.25 9.04 8.09
CLASS D 10.25 9.04 8.09
</TABLE>
CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1998
REALIZED $0.112
UNREALIZED 0.881+++
Performance data quoted represent changes in price 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. Return figures for
Class A shares are calculated with and without the effect of the initial
4.75% maximum sales charge. Returns for Class B shares are calculated with
and without the effect of the maximum 5% contingent deferred sales load
("CDSL"), charged on redemptions made within one year of the date of
purchase, declining to 1% in the sixth year and 0% thereafter. Returns for
Class D shares are calculated with and without the effect of the 1% CDSL,
charged on redemptions made within one year of the date of purchase.
***The Russell 1000 Index and the S&P 500 are unmanaged benchmarks that assume
investment of dividends and exclude the effect of fees and sales charges.
Investors cannot invest directly in an index.
+The CDSL is 5% for periods of one year or less, and 4% since inception.
++From April 30, 1997.
+++Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1998.
4
<PAGE>
PERFORMANCE OVERVIEW
GROWTH OF AN
ASSUMED $10,000 INVESTMENT IN
CLASS A SHARES
APRIL 25, 1997,+ TO
JUNE 30, 1998
[The following table represents a chart in the printed report]
4/25/97 9,520.00* Initial Amount Invested
5/31/97 10,173.00
6/30/97 10,813.00
7/31/97 11,813.00
8/31/97 11,333.00
9/30/97 11,813.00
10/31/97 11,360.00
11/30/97 12,120.00
12/31/97 12,308.00
1/31/98 12,335.00
2/28/98 13,432.00
3/31/98 13,906.00
4/30/98 13,973.00
5/31/98 14,095.00
6/30/98 14,000.00 Total Value at June 30, 1998
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN
CLASS B SHARES
APRIL 25, 1997,+ TO
JUNE 30, 1998
[The following table represents a chart in the printed report]
4/25/97 10,000.00 Initial Amount Invested
5/31/97 10,672.00
6/30/97 11,331.00
7/31/97 12,381.00
8/31/97 11,863.00
9/30/97 12,367.00
10/31/97 11,891.00
11/30/97 12,661.00
12/31/97 12,846.00
1/31/98 12,874.00
2/28/98 14,011.00
3/31/98 14,494.00
4/30/98 14,551.00
5/31/98 14,664.00
6/30/98 14,565.00 **Total Value at June 30, 1998
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN
CLASS D SHARES
APRIL 25, 1997,+ TO
JUNE 30, 1998
[The following table represents a chart in the printed report]
4/25/97 10,000.00 Initial Amount Invested
5/31/97 10,672.00
6/30/97 11,331.00
7/31/97 12,381.00
8/31/97 11,863.00
9/30/97 12,367.00
10/31/97 11,891.00
11/30/97 12,661.00
12/31/97 12,846.00
1/31/98 12,874.00
2/28/98 14,011.00
3/31/98 14,494.00
4/30/98 14,551.00
5/31/98 14,664.00
6/30/98 14,565.00 Total Value at June 30, 1998
These charts reflect the growth of a $10,000 investment for Class A, Class B,
and Class D shares since inception, assuming that all distributions within the
period are invested in additional shares.
- ----------------
* Net of the 4.75% maximum initial sales charge.
** Excludes the effect of the 4% CDSL.
+ Inception date.
5
<PAGE>
PORTFOLIO OVERVIEW
<TABLE>
<CAPTION>
DIVERSIFICATION OF NET ASSETS
JUNE 30, 1998
PERCENT OF NET ASSETS
---------------------
JUNE DECEMBER
ISSUES COST VALUE 30, 1998 31, 1997
------ ------------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Aerospace ............................... 2 $ 7,252,307 $ 7,791,875 6.3 6.6
Automotive and Related .................. 2 6,407,422 8,046,344 6.5 5.9
Banking ................................. 3 12,459,861 13,796,437 11.2 11.2
Drugs and Health Care ................... 1 2,806,735 3,551,569 2.9 6.1
Electric Utilities ...................... 1 3,534,934 3,708,250 3.0 3.2
Energy .................................. 1 3,771,157 3,927,437 3.2 3.4
Finance and Insurance ................... 5 16,404,831 19,196,738 15.5 15.2
Food .................................... 1 3,701,815 4,049,531 3.3 2.7
Household Products and Furnishings ...... 3 10,854,769 11,135,812 9.0 9.6
Industrial Equipment .................... 1 3,339,294 4,095,000 3.3 3.0
Medical Products and Technology ......... 2 6,883,939 7,965,694 6.4 6.8
Office Equipment ........................ 1 3,174,823 3,912,562 3.2 3.3
Packaging ............................... 1 3,895,260 3,800,000 3.1 3.4
Paper and Forest Products ............... 2 6,002,727 6,133,088 5.0 --
Retail Trade ............................ 3 9,336,369 10,644,813 8.6 10.9
Specialty Materials ..................... 1 4,559,780 3,399,688 2.8 3.3
Tobacco ................................. 1 4,151,330 3,957,188 3.2 3.4
------ ------------ ------------ ------ -----
31 108,537,353 119,112,026 96.5 98.0
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES 1 4,338,437 4,338,437 3.5 2.0
------ ------------ ------------ ------ -----
NET ASSETS 32 $112,875,790 $123,450,463 100.0 100.0
====== ============ ============ ===== =====
</TABLE>
[The following table represents a graph in the printed report]
LARGEST INDUSTRIES
JUNE 30, 1998
INDUSTRY PERCENT NET ASSETS
- -------- ------- -----------
FINANCE AND INSURANCE 15.5% $19,196,738
BANKING 11.2% $13,796,437
HOUSEHOLD PRODUCTS AND FURNISHINGS 9.0% $11,135,812
RETAIL TRADE 8.6% $10,644,813
AUTOMOTIVE AND RELATED 6.5% $ 8,046,344
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
-------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/98
- ----------- ----------- -----------
Champion International .......... 49,200 49,200
Crown Cork &Seal ................ 45,000 80,000
Dole Food ....................... 51,000 81,500
General Motors .................. 38,000 59,500
Georgia-Pacific ................. 63,000 63,000
Kimberly-Clark .................. 54,500 84,500
Philip Morris ................... 62,000 100,500
Raychem ......................... 76,000 115,000
Summit Bancorp .................. 85,000 129,350
Washington Mutual ............... 45,900 90,500*
SHARES
-------------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/98
- ------------- ----------- -----------
GAP ............................. 37,500 --
Humana .......................... 82,300 --
USF&G ........................... 83,800 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
- ---------------
* Includes 23,500 shares received as a result of a 2-for-1 stock split.
LARGEST PORTFOLIO HOLDINGS
JUNE 30, 1998
SECURITY VALUE
- ---------- ----------
Summit Bancorp ........................ $6,144,125
Medtronic ............................. 4,462,500
The Equitable Companies ............... 4,121,562
General Electric ...................... 4,095,000
Ford Motor ............................ 4,071,000
United Technologies ................... 4,070,000
Dole Food ............................. 4,049,531
General Motors ........................ 3,975,344
Philip Morris ......................... 3,957,188
Washington Mutual ..................... 3,928,266
7
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998
SHARES VALUE
---------- ------------
COMMON STOCKS 96.5%
AEROSPACE 6.3%
Goodrich (B.F.) 75,000 $ 3,721,875
United Technologies 44,000 4,070,000
------------
7,791,875
------------
AUTOMOTIVE AND RELATED 6.5%
Ford Motor 69,000 4,071,000
General Motors 59,500 3,975,344
------------
8,046,344
------------
BANKING 11.2%
BankAmerica 45,000 3,889,687
Bank of New York 62,000 3,762,625
Summit Bancorp 129,350 6,144,125
------------
13,796,437
------------
DRUGS AND HEALTH CARE 2.9%
Bristol-Myers Squibb 30,900 3,551,569
------------
ELECTRIC UTILITIES 3.0%
Dominion Resources 91,000 3,708,250
------------
ENERGY 3.2%
Texaco 65,800 3,927,437
------------
FINANCE AND INSURANCE 15.5%
THE EQUITABLE COMPANIES 55,0004,121,562
Federal National Mortgage
Association 60,100 3,651,075
St. Paul Companies 88,846 3,737,085
Travelers 62,000 3,758,750
Washington Mutual 90,500 3,928,266
------------
19,196,738
------------
FOOD 3.3%
Dole Food 81,500 4,049,531
------------
HOUSEHOLD PRODUCTS
AND FURNISHINGS 9.0%
Armstrong World Industries 50,000 3,368,750
Dial 150,000 3,890,625
Kimberly-Clark 84,500 3,876,437
------------
11,135,812
------------
INDUSTRIAL EQUIPMENT 3.3%
General Electric 45,000 4,095,000
------------
MEDICAL PRODUCTS AND
TECHNOLOGY 6.4%
Baxter International 65,100 3,503,194
Medtronic 70,000 4,462,500
------------
7,965,694
------------
<PAGE>
SHARES VALUE
---------- ------------
OFFICE EQUIPMENT 3.2%
Xerox 38,500 $ 3,912,562
------------
PACKAGING 3.1%
Crown Cork & Seal 80,000 3,800,000
------------
PAPER AND FOREST
PRODUCTS 5.0%
CHAMPION INTERNATIONAL 49,200 2,420,025
Georgia-Pacific 63,000 3,713,063
------------
6,133,088
------------
RETAIL TRADE 8.6%
May Department Stores 53,000 3,471,500
Penney (J.C.) 46,000 3,326,375
Sears, Roebuck 63,000 3,846,938
------------
10,644,813
------------
SPECIALTY MATERIALS 2.8%
Raychem 115,000 3,399,688
------------
TOBACCO 3.2%
Philip Morris 100,500 3,957,188
------------
TOTAL COMMON STOCKS
(Cost $108,537,353) 119,112,026
SHORT-TERM HOLDINGS 3.6%
(Cost $4,500,000) 4,500,000
------------
TOTAL INVESTMENTS 100.1%
(Cost $113,037,353) 123,612,026
OTHER ASSETS
LESS LIABILITIES (0.1)% (161,563)
------------
NET ASSETS 100.0% $123,450,463
============
- --------------
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
ASSETS:
<S> <C> <C>
Investments, at value:
Common stocks (cost $108,537,353) ..................... $119,112,026
Short-term holdings (cost $4,500,000) ................. 4,500,000 $123,612,026
------------
Cash ................................................................... 51,270
Receivable for Capital Stock sold ...................................... 1,660,708
Receivable for dividends and interest .................................. 172,542
Expenses prepaid to shareholder service agent 16,334
Deferred organization expenses ......................................... 9,877
Other .................................................................. 31,376
------------
TOTAL ASSETS ........................................................... 125,554,133
------------
LIABILITIES:
Payable for securities purchased ....................................... 1,750,804
Payable for Capital Stock repurchased .................................. 107,414
Accrued expenses, taxes, and other ..................................... 245,452
------------
TOTAL LIABILITIES ...................................................... 2,103,670
------------
NET ASSETS ............................................................. $123,450,463
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.001 par value; 1,000,000,000 shares authorized;
12,006,571 shares outstanding):
Class A ............................................................. $ 4,745
Class B ............................................................. 4,379
Class D ............................................................. 2,883
Additional paid-in capital ............................................. 110,652,506
Undistributed net investment income .................................... 43,916
Undistributed net realized gain ........................................ 2,167,361
Net unrealized appreciation of investments ............................. 10,574,673
------------
NET ASSETS ............................................................. $123,450,463
============
NET ASSET VALUE PER SHARE:
CLASS A ($49,042,598 / 4,744,963 shares) ............................... $10.34
======
CLASS B ($44,860,337 / 4,378,525 shares) ............................... $10.25
======
CLASS D ($29,547,528 / 2,883,083 shares) ............................... $10.25
======
</TABLE>
- --------------
See Notes to Financial Statements.
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<S> <C> <C>
INVESTMENT INCOME:
Dividends ......................................................... $ 809,970
Interest .......................................................... 43,237
---------
TOTAL INVESTMENT INCOME ........................................................ $ 853,207
EXPENSES:
Management fee .................................................... 341,332
Distribution and service fees ..................................... 287,866
Shareholder account services ...................................... 96,698
Registration ...................................................... 60,774
Shareholder reports and communications ............................ 29,440
Auditing and legal fees ........................................... 12,847
Custody and related services ...................................... 11,490
Directors' fees and expenses ...................................... 2,500
Amortization of deferred organization expenses .................... 1,288
Miscellaneous ..................................................... 2,341
---------
Total expenses before management fee waiver ....................... 846,576
Management fee waiver ............................................. (25,379)
---------
TOTAL EXPENSES AFTER MANAGEMENT FEE WAIVER ..................................... 821,197
----------
NET INVESTMENT INCOME........................................................... 32,010
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................... 1,343,779
Net change in unrealized appreciation of investments............... 7,391,402
---------
NET GAIN ON INVESTMENTS............................................ 8,735,181
----------
INCREASE IN NET ASSETS FROM OPERATIONS............................. $8,767,191
==========
</TABLE>
- --------------
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED APRIL 25, 1997* TO
JUNE 30, 1998 DECEMBER 31, 1997
---------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment income .............................. $ 32,010 $ 34,008
Net realized gain on investments ................... 1,343,779 1,395,588
Net change in unrealized appreciation of investments 7,391,402 3,183,271
----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS ............. 8,767,191 4,612,867
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ......................................... -- (22,102)
Net realized gain on investments:
Class A ......................................... -- (268,929)
Class B ......................................... -- (188,489)
Class D ......................................... -- (114,588)
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS .......... -- (594,108)
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------- ------------------
SIX MONTHS ENDED APRIL 25, 1997* TO
JUNE 30, 1998 DECEMBER 31, 1997
--------------- ------------------
CAPITAL SHARE TRANSACTIONS:
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A ............................................ 1,628,843 2,081,806 16,256,836 17,203,013
Class B ............................................ 2,245,345 1,758,227 22,568,412 14,700,536
Class D ............................................ 1,114,726 769,857 11,264,200 6,526,662
Investment of dividends:
Class A ............................................ -- 2,282 -- 20,514
Exchanged from associated Funds:
Class A ............................................ 1,148,187 673,049 11,487,564 5,675,733
Class B ............................................ 452,253 216,546 4,485,912 1,850,949
Class D ............................................ 925,796 538,684 9,034,262 4,563,959
Shares issued in payment of gain distributions:
Class A ............................................ -- 28,791 -- 248,471
Class B ............................................ -- 19,544 -- 167,688
Class D ............................................ -- 12,598 -- 108,094
------------- ------------- ------------- -------------
Total ................................................. 7,515,150 6,101,384 75,097,186 51,065,619
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ............................................ (291,647) (117,118) (2,949,416) (997,479)
Class B ............................................ (127,261) (52,380) (1,293,863) (455,672)
Class D ............................................ (89,751) (30,230) (868,102) (264,838)
Exchanged into associated Funds:
Class A ............................................ (348,876) (67,357) (3,503,257) (583,297)
Class B ............................................ (64,080) (69,669) (638,367) (594,926)
Class D ............................................ (213,452) (145,145) (2,148,094) (1,250,982)
------------- ------------- ------------- -------------
Total ................................................. (1,135,067) (481,899) (11,401,099) (4,147,194)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS .................................... 6,380,083 5,619,485 63,696,087 46,918,425
============= ============= ------------- -------------
INCREASE IN NET ASSETS ................................................................ 72,463,278 50,937,184
NET ASSETS:
Beginning of period ................................................................... 50,987,185 50,001
------------- -------------
END OF PERIOD (including undistributed net investment income of $43,916
and $11,906, respectively) ............................................................ $ 123,450,463 $ 50,987,185
============= =============
</TABLE>
- ------------------------
* Commencement of operations.
See Notes to Financial Statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION -- Seligman Large-Cap Value Fund (the "Fund") is a series of
Seligman Value Fund Series, Inc., which was incorporated in the State of
Maryland on January 27, 1997, and subsequently was registered under the
Investment Company Act of 1940 as an open-end, diversified management investment
company. The Fund had no operations prior to April 25, 1997 (commencement of
operations),other than those related to organizational matters, and the sale and
issuance to Seligman Financial Services, Inc. (the "Distributor")of 7,003 Class
A shares of Capital Stock for $50,001 on April 4, 1997.
2. MULTIPLE CLASSES OF SHARES -- The Fund offers three 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 load ("CDSL") 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%, a service fee of up to 0.25% on
an annual basis, and a CDSL, 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. Class D shares
are sold without an initial sales charge but are subject to a distribution fee
of up to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSL,
if applicable, of 1% imposed on redemptions made within one year of purchase.
The three classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other class
expenses, and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required.
3. 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 common stocks are valued at current
market values or, in their absence, at fair values determined in accordance
with procedures approved by the Board of Directors. Securities traded on
national exchanges are valued at last sales prices or, in their absence and
in the case of over-the-counter securities, at the mean of bid and asked
prices. Short-term holdings maturing in 60 days or less are valued at
amortized cost.
b. FEDERAL TAXES -- There is no provision for federal income tax. The Fund will
elect to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
c. 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. Interest
income is recorded on an accrual basis.
d. 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, 1998,
distribution and service fees were the only class-specific expenses.
e. 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.
f. ORGANIZATION EXPENSES -- Deferred organization expenses are being amortized
on a straight-line basis over a period of 60 months beginning with the
commencement of operations of the Fund.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. SHORT-TERM INVESTMENTS -- At June 30, 1998, the Fund owned short-term
investments which matured in less than seven days.
5. 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, 1998, amounted to $67,525,063 and $7,120,125,
respectively.
At June 30, 1998, 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 $12,735,811 and $2,161,138, respectively.
6. 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 0.80%
per annum of the Fund's average daily net assets. For the six months ended June
30, 1998, the Manager, at its discretion, waived a portion of its fees equal to
$25,379. The management fees reflected in the Statement of Operations represent
0.74% per annum of the Fund's average daily net assets.
The Distributor, agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $36,569 from sales of Class A
shares, after commissions of $284,976 were paid to dealers.
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,
1998, fees incurred under the Plan aggregated $43,715, or 0.24% per annum of the
average daily net assets of Class A shares.
Under the Plan, with respect to Class B 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 and Class D shares for which the organizations are
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 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, 1998, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $146,128 and $98,023, respectively.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the six months
ended June 30, 1998, such charges amounted to $4,283. The Distributor has sold
its rights to collect any CDSL imposed on redemptions of Class B shares to the
Purchaser. In connection with the sale of its rights to collect any CDSL and the
distribution fees with respect to Class B shares described above, the
Distributor receives payments from the Purchaser based on the value of Class
Bshares sold. The aggregate amount of such payments retained by the Distributor
for the six months ended June 30, 1998, amounted to $33,837.
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, 1998,
Seligman Services, Inc. received commissions of $2,019 from the sale of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $4,330, pursuant to the Plan.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $93,398 for shareholder account services.
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, 1998, of $688 is
included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
7. COMMITTED LINE OF CREDIT -- Effective July 1, 1998, the Fund entered into a
joint $800 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% on an overnight basis. 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.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of eachClass, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts, using average shares
outstanding.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. Total returns for periods
of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
---------------------- ----------------------- -----------------------
SIX MONTHS 4/25/97* SIX MONTHS 4/25/97* SIX MONTHS 4/25/97*
ENDED TO ENDED TO ENDED TO
6/30/98 12/31/97 6/30/98 12/31/97 6/30/98 12/31/97
---------------------- ------------ --------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ...... $ 9.09 $ 7.14 $ 9.04 $ 7.14 $ 9.04 $ 7.14
------ ------ ------ ------- ------- -------
Net investment income (loss)** ............ 0.03 0.03 (0.01) (0.01) (0.01) (0.01)
Net realized and unrealized investment gain 1.22 2.06 1.22 2.04 1.22 2.04
------ ------ ------ ------- ------- -------
INCREASE FROM INVESTMENT OPERATIONS ....... 1.25 2.09 1.21 2.03 1.21 2.03
Dividend paid ............................. -- (0.01) -- -- -- --
Distributions from net gain realized ...... -- (0.13) -- (0.13) -- (0.13)
------ ------ ------ ------- ------- -------
NET INCREASE IN NET ASSET VALUE ........... 1.25 1.95 1.21 1.90 1.21 1.90
------ ------ ------ ------- ------- -------
NET ASSET VALUE, END OF PERIOD ............ $10.34 $ 9.09 $10.25 $ 9.04 $10.25 $ 9.04
====== ====== ====== ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: .... 13.75% 29.28% 13.38% 28.46% 13.38% 28.46%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ............ 1.49%+ 1.47%+ 2.25%+ 2.25%+ 2.25%+ 2.25%+
Net investment income (loss) to average
net assets .............................. 0.51%+ 0.58%+ (0.25)%+ (0.20)%+ (0.25)%+ (0.20)%+
Portfolio turnover ........................ 8.39% 38.74% 8.39% 38.74% 8.39% 38.74%
NET ASSETS, END OF PERIOD (000s omitted) .. $49,043 $23,699 $44,860 $16,930 $29,547 $10,358
Without management fee waiver:**
Net investment gain (loss) per share .... $0.02 -- $(0.02) $(0.05) $(0.02) $(0.05)
Ratios:
Expenses to average net assets .......... 1.55%+ 2.07%+ 2.31%+ 2.85%+ 2.31%+ 2.85%+
Net investment income (loss) to average
net assets ............................ 0.45%+ (0.02)%+ (0.31)%+ (0.80)%+ (0.31)%+ (0.80)%+
</TABLE>
- -------------------
* Commencement of operations.
** The Manager, at its discretion, waived a portion of its fees for the
periods presented.
+ Annualized.
See Notes to Financial Statements.
15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN LARGE-CAP VALUE FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Large-Cap Value Fund as of June 30,
1998, the related statements of operations for the six months then ended, and of
changes in net assets and the financial highlights for the six months then ended
and for the period from April 25, 1997 (commencement of operations)to December
31, 1997. 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, 1998, by correspondence with the Fund's custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Large-Cap
Value Fund as of June 30, 1998, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
July 31, 1998
16
<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
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
TRUSTEE, The New York and Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
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, The Brooklyn Union Gas Company
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, J.& W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
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
17
<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
NEIL T. EIGEN
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
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 Financial Services, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
18
<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. For tax purposes,
these profits may be taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
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 LOAD (CDSL) -- Depending on the class of shares owned,
a fee charged by a mutual fund when shares are sold back to the fund (the CDSL
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.
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 (OP) -- 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, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
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 updated or more
detailed information about a mutual fund 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 1997 MUTUAL FUND FACT BOOK.
19
<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 LARGE-CAP VALUE FUND, WHICH CONTAINS INFORMATION ABOUT THE SALES
CHARGES, MANAGEMENT FEE, AND OTHER COSTS. PLEASE READ THE PROSPECTUS
CAREFULLY BEFORE INVESTING OR SENDING MONEY.
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
J.& W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQVL3 6/98 Logo Printed on Recycled Paper
================================================================================
SELIGMAN
[PICTURE]
SELIGMAN
SMALL-CAP
VALUE FUND
================================================================================
A VALUE APPROACH TO SEEKING THE CAPITAL
APPRECIATION POTENTIAL OF SMALLER COMPANIES
JUNE 30, 1997 o MID-YEAR REPORT
<PAGE>
================================================================================
OVER THE LONG TERM -- J. & W. SELIGMAN & CO. INCORPORATED
- --------------------------------------------------------------------------------
TIME IS THE TEST
In an industry that has changed dramatically in recent years, it's comforting
to know that stability, tradition, and consistent professional service can still
be found in an investment management firm.
J. & W. Seligman & Co. Incorporated has been providing financial services for
more than 130 years. From its beginning, Seligman has followed a long-term
approach to making money for its clients, by managing investment products and
services of the highest quality. Today, Seligman manages the Seligman Group of
Funds, which offers investors more than 50 investment options.
A PLACE IN HISTORY
Established in 1864, Seligman played a major role in the geographical
expansion and industrial development of the United States. The firm helped
finance the westward path of the railroads and the building of the Panama Canal.
In the late 1800s and early 1900s, the firm was instrumental in financing the
fledgling automobile and steel industries. Seligman also participated in the
original underwritings for some of the nation's most prominent companies,
including General Motors, Victor Talking Machine, United Artists Theater
Circuit, and Maytag. In 1929, Seligman introduced Tri-Continental Corporation --
which today is the nation's largest diversified closed-end investment company.
In 1930, Seligman began managing its first mutual fund, Broad Street Investing
Co., now known as Seligman Common Stock Fund.
------------------------
[PHOTO]
------------------------
James, Jesse, and
Joseph Seligman
SELIGMAN SMALL-CAP VALUE FUND
Seligman Small-Cap Value Fund, which commenced operations on April 25, 1997,
is designed for long-term investors seeking capital appreciation. What makes the
Fund different from many other small-company mutual funds is its adherence to a
value discipline. The Value Team will only invest in as many stocks as they can
closely follow. Because of this attention, buy decisions tend to be made with
the long term in mind.
- --------------------------------------------------------------------------------
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 .................. 9
Statement of Operations .............................. 10
Statement of Changes in Net Assets ................... 11
Notes to Financial Statements ........................ 12
Financial Highlights ................................. 14
Report of Independent Auditors ....................... 15
Board of Directors/Executive Officers ................ 16
Glossary of Financial Terms .......................... 17
"As value managers, the Value Team looks to buy a stock at a lower price than it
believes the stock is worth. As such, the team examines companies that are
overlooked or undiscovered by the investment community, as reflected in the
stock price. The team employs fundamental research to analyze company
characteristics, such as price-to-book ratio, price-to-earnings ratio, growth,
and return on equity."
-- WILLIAM C. MORRIS,
FUND CHAIRMAN
<PAGE>
================================================================================
TO THE SHAREHOLDERS
In its first two months, Seligman Small-Cap Value Fund posted outstanding
results. Its total return of 20.45% based on the net asset value of Class A
shares significantly outperformed both the Russell 2000 Index and the Standard
and Poor's 500 Composite Stock Price Index. Additional information on the Fund's
results appears on page 4.
We are pleased to introduce and welcome the Seligman Value Team. Their
arrival at the Seligman Group of Funds formalizes J. & W. Seligman's commitment
to value investing and now allows us to offer our Shareholders a more complete
selection of investment choices. The Value Team's outstanding long-term record
and years of experience are well known in the industry.
Why invest in a value fund? Because value investing is complementary to
growth investing, and a prudent strategy for investing in small-company stocks
may be to include both investment disciplines. A value manager seeks
out-of-favor and/or undiscovered companies, whose stock prices tend to be
inexpensive, with overlooked potential for earnings acceleration. A value
manager buys a stock believing either that there is a catalyst for change which
will dramatically increase earnings, or that the company will be discovered and
become attractive to other investors. A value investment style means the manager
will want to buy a stock before these changes occur in order to take advantage
of the full appreciation of a holding.
We believe the current market environment is uniquely suited to value
investing. While there has been tremendous appreciation in a select group of the
largest-capitalization stocks in the equity market in the last two years, many
small-capitalization stocks have lagged and their valuations have remained
inexpensive relative to those large-capitalization stocks. The recent
outperformance of small-capitalization stocks, which began in May, could be
indicative of greater investor interest in reasonable valuations. As a value
investor, the Fund should be uniquely positioned if this trend continues.
As the Fund constructed its portfolio before the renewed interest in small
companies occurred, it was able to take advantage of the undervaluations of
small-capitalization stocks relative to their larger peers. Rising investor
interest, reasonable valuations, and the higher earnings growth found in the
small-company arena should support the performance of Seligman Small-Cap Value
Fund going forward.
We thank you for your support of Seligman Small-Cap Value Fund, and look
forward to serving your investment needs in the many years to come.
A discussion with your Portfolio Managers and the Fund's portfolio of
investments follow this letter.
By order of the Board of Directors,
/s/William C. Morris
- --------------------
William C. Morris
Chairman
/s/ Brian T. Zino
----------------------
Brian T. Zino
President
August 1, 1997
1
<PAGE>
================================================================================
INTERVIEW WITH YOUR PORTFOLIO MANAGERS, NEIL T. EIGEN AND RICHARD S. ROSEN
Q. HOW DID SELIGMAN SMALL-CAP VALUE FUND PERFORM THROUGH JUNE 30, 1997?
A. Seligman Small-Cap Value Fund has had very competitive results thus far in
1997. The Fund's total return of 20.45% since inception on April 25, 1997,
based on the net asset value of Class A shares, easily surpassed the May and
June 13.42% total return of the Russell 2000 Value Index, a benchmark for
small-company value stocks. The Fund's total return also outperformed the
15.89% two-month total return of the Russell 2000 Index, a leading
small-company stock benchmark. Further, the Fund's total return was
significantly ahead of the 10.84% two-month total return for the
large-company Standard and Poor's 500 Composite Stock Price Index (S&P 500).
Q. WHICH ECONOMIC FACTORS AFFECTED THE FUND'S PERFORMANCE IN ITS FIRST MONTHS?
A. Moderate, yet vibrant, economic growth, low inflation, and strong
profitability throughout corporate America spurred the performance of the
equity markets throughout the second quarter of 1997. The Fund's stocks were
positively affected by this economic background, as many of the companies in
the portfolio announced positive earnings surprises, meaning that their
quarterly earnings reports were stronger than analysts' consensus estimates.
Q. WHICH MARKET FACTORS AFFECTED THE FUND'S PERFORMANCE IN ITS FIRST MONTHS?
A. While there was some improvement in the second quarter, the
small-capitalization area has been lagging in performance since mid-1996. In
one of the largest disparities in the past 30 years, the Russell 2000 has
underperformed the S&P 500 for the past 12 months. However, we were able to
identify stocks that we felt offered incredible value in this market
environment.
While large companies continued to dramatically outperform
smaller-companies through April, there was a significant broadening of the
market midway through the second quarter. The undervaluation of the
small-capitalization group versus large-capitalization stocks resulted in
very strong upward moves when these stocks found more investor support. The
recognition of small-capitalization value in May and June was very important
to the Fund's overall performance.
Another factor contributing to the Fund's results was the strong
performance of small-capitalization industrial, capital equipment, and
outsourcing companies. These companies benefited from the profitability of
their major customers, which continued spending on equipment upgrades and
modernization. This trend benefited small companies that provide goods and
services to large companies.
There have been, and there will always be, times when the performance of
small-capitalization stocks is different from large-capitalization stocks.
We continue to manage the portfolio with the full understanding that
small-capitalization stocks have, over longer periods of time, outperformed
large-capitalization stocks. However, past performance is not indicative of
future results.
- --------------------------------------------------------------------------------
[PHOTO]
SELIGMAN VALUE TEAM:(FROM LEFT) NEVIS GEORGE (ADMINISTRATIVE ASSISTANT), MILTON
RUBIN (CLIENT SERVICES), RICHARD S. ROSEN (CO-PORTFOLIO MANAGER), (SEATED) NEIL
T. EIGEN (CO-PORTFOLIO MANAGER)
TEAM APPROACH
Seligman Small-Cap Value Fund is managed by the Seligman Value Team, headed by
Neil T. Eigen. Mr. Eigen, who has 29 years of experience as a value investor, is
assisted in the management of the Fund by seasoned research professionals who
are responsible for identifying reasonably valued small-capitalization companies
with the potential for high returns on equity.
- --------------------------------------------------------------------------------
2
<PAGE>
================================================================================
INTERVIEW WITH YOUR PORTFOLIO MANAGERS, NEIL T. EIGEN AND RICHARD S. ROSEN
Q. WHAT WAS YOUR INVESTMENT STRATEGY?
A. We looked at companies with market capitalizations of less than $1 billion
with a product line and a management team that would drive the companies to
new heights of prosperity. Most stocks in the portfolio are under-followed,
with few analysts reviewing results, and under-owned, with few new
institutional investors purchasing these stocks. This usually results in
what we consider to be outstanding buying opportunities. In constructing the
portfolio, we look for stocks with low price-to-earnings ratios relative to
the Russell 2000 universe, and companies with vibrant and focused
managements with vision. Generally, we want to invest prior to the large
acceleration in earnings that we expect to see.
Q. WHAT IS THE OUTLOOK?
A. We are very positive about the long-term outlook for Seligman Small-Cap
Value Fund. We believe that the continuing undervaluation of the group will
result in a period of outperformance as the pricing discrepancy corrects
going forward. Additionally, we expect that we will continue to find
small-capitalization companies selling at discounts to their estimated
growth rates -- something more difficult to find in the large-capitalization
sector.
3
<PAGE>
================================================================================
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
FOR THE PERIOD ENDED JUNE 30, 1997
SINCE
INCEPTION
4/25/97
------------
CLASS A
With Sales Charge 14.67%
Without Sales Charge 20.45
CLASS B
With 5% CDSL 15.31
Without CDSL 20.31
CLASS D
With 1% CDSL 19.31
Without CDSL 20.31
RUSSELL 2000 VALUE INDEX** 13.42+
RUSSELL 2000 INDEX** 15.89+
NET ASSET VALUE
JUNE 30, 1997 APRIL 25, 1997
-------------- ---------------
CLASS A $8.60 $7.14
CLASS B 8.59 7.14
CLASS D 8.59 7.14
CAPITAL GAIN INFORMATION
FOR THE PERIOD ENDED JUNE 30, 1997
REALIZED $0.073
UNREALIZED 0.549++
- ----------
* Return figures reflect any change in price per share and assume the
investment of dividend and capital gain distributions. Return figures for
Class A shares are calculated with and without the effect of the initial
4.75% maximum sales charge. Returns for Class B shares are calculated with
and without the effect of the maximum 5% contingent deferred sales load
("CDSL"), charged only on certain redemptions made within one year of the
date of purchase, declining to 1% in the sixth year and 0% thereafter.
Returns for Class D shares are calculated with and without the effect of the
1% CDSL, charged only on redemptions made within one year of the date of
purchase. Performance data quoted represent changes in price 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.
** The Russell 2000 Value Index and the Russell 2000 Index are unmanaged
benchmarks that assume investment of dividends, and do not reflect fees and
sales charges. Investors cannot invest directly in an index.
+ From April 30, 1997.
++ Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1997.
4
<PAGE>
================================================================================
PERFORMANCE OVERVIEW
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS A SHARES
APRIL 25, 1997+, TO JUNE 30, 1997
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE]
4/25/97 .............. 9,520*
4/30/97 .............. 9,600
5/5/97 .............. 9,920
5/12/97 .............. 9,973
5/19/97 .............. 10,280
5/27/97 .............. 10,360
5/31/97 .............. 10,547
6/2/97 .............. 10,653
6/9/97 .............. 10,973
6/16/97 .............. 11,267
6/23/97 .............. 11,253
6/30/97 .............. 11,467
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS B SHARES
APRIL 25, 1997+, TO JUNE 30, 1997
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE]
4/25/97 .............. 10,000
4/30/97 .............. 10,084
5/5/97 .............. 10,420
5/12/97 .............. 10,476
5/19/97 .............. 10,798
5/27/97 .............. 10,882
5/31/97 .............. 11,064
6/2/97 .............. 11,176
6/9/97 .............. 11,527
6/16/97 .............. 11,821
6/23/97 .............. 11,821
6/30/97 .............. 12,031**
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS D SHARES
APRIL 25, 1997+, TO JUNE 30, 1997
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE]
4/25/97 .............. 10,000
4/30/97 .............. 10,084
5/5/97 .............. 10,420
5/12/97 .............. 10,476
5/19/97 .............. 10,798
5/27/97 .............. 10,882
5/31/97 .............. 11,064
6/2/97 .............. 11,176
6/9/97 .............. 11,527
6/16/97 .............. 11,821
6/23/97 .............. 11,821
6/30/97 .............. 12,031**
- ----------
* Net of the 4.75% maximum initial sales charge.
** Excludes the effect of the 5% and 1% CDSL for Class B and Class D shares,
respectively.
+ Inception date.
5
<PAGE>
================================================================================
PORTFOLIO OVERVIEW
DIVERSIFICATION OF ASSETS
JUNE 30, 1997
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
ISSUES COST VALUE JUNE 30, 1997
-------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Other Assets Less Liabilities ...... -- $ 54,636 $ 54,636 0.1
-------- ----------- ----------- -----
Common Stocks:
Apparel and Textiles .......... 1 1,083,031 1,432,813 2.9
Appliances .................... 1 1,653,526 1,842,188 3.8
Automotive and Trucking ....... 1 1,202,900 1,533,125 3.1
Banking ....................... 2 2,158,263 2,392,175 4.9
Building and Construction ..... 1 1,166,868 1,397,756 2.8
Chemicals ..................... 2 2,569,353 2,663,125 5.4
Computer Software ............. 1 1,521,341 1,601,250 3.3
Distributors .................. 2 2,055,446 2,307,188 4.7
Energy ........................ 1 1,673,076 1,519,375 3.1
Finance and Insurance ......... 3 3,563,201 3,954,375 8.1
Garden Products ............... 1 1,546,000 1,546,875 3.1
Industrial Goods and Services . 1 1,034,435 1,207,938 2.5
Machinery ..................... 1 1,773,623 1,785,281 3.6
Manufacturing ................. 4 4,150,761 4,480,813 9.1
Medical Products and Technology 2 2,511,825 2,424,734 4.9
Oil and Gas ................... 1 1,470,737 1,418,750 2.9
Packaging/Containers .......... 1 893,062 925,350 1.9
Plastics ...................... 1 1,049,123 1,088,938 2.2
Printing and Publishing ....... 1 1,399,121 1,490,312 3.0
Restaurants ................... 2 2,148,228 2,415,165 4.9
Retail Trade .................. 2 2,684,184 2,551,750 5.2
Shipbuilding .................. 1 1,084,792 1,218,281 2.5
Specialty Metals/Steel ........ 1 1,286,550 1,320,619 2.7
Telephone Utilities ........... 1 227,887 290,812 0.6
Tobacco ....................... 1 1,282,332 1,470,750 3.0
Transportation ................ 1 1,370,100 1,406,250 2.9
Miscellaneous ................. 1 1,361,444 1,370,625 2.8
------ ----------- ----------- -------
38 45,921,209 49,056,613 99.9
------ ----------- ----------- -------
NET ASSETS ......................... 38 $45,975,845 $49,111,249 100.0
====== =========== =========== =======
6
</TABLE>
<PAGE>
================================================================================
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO HOLDINGS
AT JUNE 30, 1997
SECURITY VALUE
- ---------- --------------
Windmere-Durable Holdings .............. $1,842,188
Stewart & Stevenson Services ........... 1,785,281
HomeSide ............................... 1,640,625
Dialogic ............................... 1,601,250
Acorn Products ......................... 1,546,875
Wabash National ........................ 1,533,125
Ziegler Coal Holding ................... 1,519,375
Cadmus Communications .................. 1,490,312
DIMON .................................. 1,470,750
Dexter ................................. 1,440,000
LARGEST INDUSTRIES
AT JUNE 30, 1997
[THE FOLLOWING TABLE REPRESENTS A BAR CHART IN THE PRINTED PIECE]
PERCENT OF
NET ASSETS VALUE
---------- ----------
Manufacturing ........................ 9.1% $4,480,813
Finance and Insurance ................ 8.1% 3,954,375
Chemicals ............................ 5.4% 2,663,125
Retail Trade ......................... 5.2% 2,551,750
Medical Products and Technology ...... 4.9% 2,424,734
7
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS
June 30, 1997
SHARES VALUE
---------- ----------
COMMON STOCKS 99.9%
APPAREL AND TEXTILES 2.9%
Cutter & Buck* 87,500 $ 1,432,813
-----------
APPLIANCES 3.8%
Windmere-Durable Holdings 112,500 1,842,188
-----------
AUTOMOTIVE AND TRUCKING 3.1%
Wabash National 55,000 1,533,125
-----------
BANKING 4.9%
Bank United (Class A) 28,800 1,099,800
Bay View Capital 49,000 1,292,375
-----------
2,392,175
-----------
BUILDING AND
CONSTRUCTION 2.8%
Dal-Tile International* 75,300 1,397,756
-----------
CHEMICALS 5.4%
Applied Extrusion Technologies* 103,000 1,223,125
Dexter 45,000 1,440,000
-----------
2,663,125
-----------
COMPUTER SOFTWARE 3.3%
Dialogic* 60,000 1,601,250
-----------
DISTRIBUTORS 4.7%
Cubic 37,500 975,000
Elsag Bailey Process Auto* 72,500 1,332,188
-----------
2,307,188
-----------
ENERGY 3.1%
Ziegler Coal Holding 65,000 1,519,375
-----------
FINANCE AND INSURANCE 8.1%
Berkley (W.R.) 20,000 1,170,000
HomeSide* 75,000 1,640,625
RenaissanceRe Holdings 30,000 1,143,750
-----------
3,954,375
-----------
GARDEN PRODUCTS 3.1%
Acorn Products 110,000 1,546,875
-----------
INDUSTRIAL GOODS AND
SERVICES 2.5%
Furon 38,500 1,207,938
-----------
MACHINERY 3.6%
Stewart & Stevenson Services 68,500 1,785,281
-----------
MANUFACTURING 9.1%
Furniture Brands International* 61,700 1,195,438
Giant Cement Holding* 64,000 1,188,000
Mueller Industries* 20,000 875,000
Triangle Pacific* 38,500 1,222,375
-----------
4,480,813
-----------
MEDICAL PRODUCTS
AND TECHNOLOGY 4.9%
Cephalon* 90,500 1,043,578
ChiRex* 114,500 1,381,156
-----------
2,424,734
-----------
OIL AND GAS 2.9%
Equitable Resources 50,000 1,418,750
-----------
PACKAGING/CONTAINERS 1.9%
BWAY* 39,800 925,350
-----------
PLASTICS 2.2%
Lamson & Sessions* 131,000 1,088,938
-----------
PRINTING AND PUBLISHING 3.0%
Cadmus Communications 95,000 1,490,312
-----------
RESTAURANTS 4.9%
Apple South 70,500 1,077,328
Foodmaker* 81,700 1,337,837
-----------
2,415,165
-----------
RETAIL TRADE 5.2%
Abercrombie & Fitch (Class A)* 71,000 1,313,500
Ann Taylor Stores* 63,500 1,238,250
-----------
2,551,750
-----------
SHIPBUILDING 2.5%
Avondale Industries* 57,500 1,218,281
-----------
SPECIALTY METALS/STEEL 2.7%
Universal Stainless
& Alloy Products* 101,100 1,320,619
-----------
TELEPHONE UTILITIES 0.6%
Davel Communications Group* 16,500 290,812
-----------
TOBACCO 3.0%
DIMON 55,500 1,470,750
-----------
TRANSPORTATION 2.9%
Pittston Burlington Group 50,000 1,406,250
-----------
MISCELLANEOUS 2.8%
VWR Scientific Products* 85,000 1,370,625
-----------
TOTAL INVESTMENTS 99.9%
(Cost $45,921,209) 49,056,613
OTHER ASSETS
LESS LIABILITIES 0.1% 54,636
-----------
NET ASSETS--100.0% $49,111,249
===========
- -----------
* Non-income producing security.
See Notes to Financial Statements.
8
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
ASSETS:
Investments, at value:
Common stocks (cost $45,921,209) ......................... $49,056,613
Receivable for Capital Stock sold ............................. 3,130,894
Deferred organizational expenses .............................. 15,859
Receivable for interest and dividends ......................... 12,825
Receivable from associated companies .......................... 1,511
Other ......................................................... 55,338
-----------
TOTAL ASSETS .................................................. 52,273,040
-----------
LIABILITIES:
Payable for securities purchased .............................. 2,198,668
Payable to custodian .......................................... 804,505
Payable for Capital Stock repurchased ......................... 62,153
Accrued expenses, taxes, and other ............................ 96,465
-----------
TOTAL LIABILITIES ............................................. 3,161,791
-----------
NET ASSETS .................................................... $49,111,249
===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($.001 par value; 1,000,000,000 shares
authorized; 5,716,318 shares outstanding):
Class A ................................................... $ 2,573
Class B ................................................... 1,881
Class D ................................................... 1,262
Additional paid-in capital .................................... 45,622,834
Accumulated net investment loss ............................... (67,488)
Undistributed net realized gain ............................... 414,783
Net unrealized appreciation of investments .................... 3,135,404
-----------
Net Assets .................................................... $49,111,249
===========
NET ASSET VALUE PER SHARE:
CLASS A ($22,115,201 / 2,572,846 shares) ...................... $8.60
=====
CLASS B ($16,152,479 / 1,880,891 shares) ...................... $8.59
=====
CLASS D ($10,843,569 / 1,262,581 shares) ...................... $8.59
=====
- -------------
See Notes to Financial Statements.
9
<PAGE>
================================================================================
STATEMENT OF OPERATIONS
For the Period April 25, 1997,* to June 30, 1997
INVESTMENT INCOME:
Dividends ...................................... $ 29,109
Interest ....................................... 4,372
----------
TOTAL INVESTMENT INCOME ........................................... $ 33,481
EXPENSES:
Management fee ................................. 36,181
Distribution and service fees .................. 23,396
Auditing and legal fees ........................ 12,275
Registration ................................... 11,203
Shareholder account services ................... 8,628
Shareholder reports and communications ......... 3,362
Custody and related services ................... 3,137
Directors' fees and expenses ................... 910
Deferred organizational expenses ............... 500
Miscellaneous .................................. 1,377
----------
TOTAL EXPENSES .................................................... 100,969
----------
NET INVESTMENT LOSS ............................................... (67,488)
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments ............... 414,783
Net change in unrealized appreciation
of investments ................................. 3,135,404
----------
NET GAIN ON INVESTMENTS ........................................... 3,550,187
----------
INCREASE IN NET ASSETS FROM OPERATIONS ............................ $3,482,699
==========
- -----------------
* Commencement of operations.
See Notes to Financial Statements.
10
<PAGE>
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
APRIL 25, 1997*
TO
JUNE 30, 1997
--------------
OPERATIONS:
Net investment loss ........................................... $ (67,488)
Net realized gain on investments .............................. 414,783
Net change in unrealized appreciation of investments .......... 3,135,404
-----------
INCREASE IN NET ASSETS FROM OPERATIONS ........................ 3,482,699
-----------
SHARES
--------------
APRIL 25, 1997*
TO
JUNE 30, 1997
--------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A .................................. 2,026,414 16,059,987
Class B .................................. 1,815,433 14,532,546
Class D .................................. 979,174 7,805,714
Exchanged from associated Funds:
Class A .................................. 572,724 4,676,285
Class B .................................. 80,487 641,062
Class D .................................. 290,843 2,311,231
--------- -----------
Total ....................................... 5,765,075 46,026,825
--------- -----------
Cost of shares repurchased:
Class A .................................. (21,843) (179,140)
Class B .................................. (5,077) (42,468)
Class D .................................. (5,381) (44,248)
Exchanged into associated Funds:
Class A .................................. (11,452) (89,791)
Class B .................................. (9,952) (75,445)
Class D .................................. (2,055) (17,184)
--------- -----------
Total ....................................... (55,760) (448,276)
--------- -----------
INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ............... 5,709,315 45,578,549
========= ===========
INCREASE IN NET ASSETS ......................................... 49,061,248
NET ASSETS:
Beginning of period ............................................ 50,001
-----------
END OF PERIOD (including accumulated
net investment loss of $67,488) ............................. $49,111,249
===========
- ------------------
* Commencement of operations.
See Notes to Financial Statements.
11
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION -- Seligman Small-Cap Value Fund (the "Fund") is a series of
Seligman Value Fund Series, Inc., which was incorporated in the State of
Maryland on January 27, 1997, and subsequently was registered under the
Investment Act of 1940 as an open-end, diversified management investment
company. The Fund had no operations prior to April 25, 1997 (commencement of
operations), other than those related to organizational matters, and the sale
and issuance to Seligman Financial Services, Inc. (the "Distributor") of 7,003
Class A shares of Capital Stock for $50,001 on April 4, 1997.
2. MULTIPLE CLASSES OF SHARES -- The Fund offers three 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 load ("CDSL") of 1% on redemptions within
18 months after purchase. Class B shares are sold without an initial sales
charge but are subject to a distribution fee of 0.75%, a service fee of up to
0.25% on an annual basis, and a CDSL, if applicable, of 5% on redemptions in the
first year after purchase, declining to 1% in the sixth year and 0% thereafter.
Class B shares will automatically convert to Class A shares on the last day of
the month that precedes the eighth anniversary of their date of purchase. Class
D shares are sold without an initial sales charge but are subject to a
distribution fee of up to 0.75% and a service fee of up to 0.25% on an annual
basis, and a CDSL of 1% imposed on certain redemptions made within one year
after purchase. The three classes of shares represent interests in the same
portfolio of investments, have the same rights and are generally identical in
all respects except that each class bears its separate distribution and certain
other class expenses, and has exclusive voting rights with respect to any matter
on which a separate vote of any class is required.
3. 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 common stocks are valued at current
market values or, in their absence, at fair values determined in accordance
with procedures approved by the Board of Directors. Securities traded on
national exchanges are valued at last sales prices or, in their absence and
in the case of over-the-counter securities, at the mean of bid and asked
prices. Short-term holdings maturing in 60 days or less are valued at
amortized cost.
b. FEDERAL TAXES -- There is no provision for federal income tax. The Fund will
elect to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
c. 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. Interest
income is recorded on an accrual basis.
d. 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 period ended June 30, 1997,
distribution and service fees were the only class-specific expenses.
e. 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.
f. ORGANIZATIONAL EXPENSES -- Deferred organizational expenses are being
amortized on a straight-line basis over a period of 60 months beginning with
the commencement of operation of the Fund.
4. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the period ended June 30, 1997, amounted to $47,818,459 and $2,312,033,
respectively.
At June 30, 1997, 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 $3,686,072 and $550,668, respectively.
12
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
5. MANAGEMENT FEE, ADMINISTRATIVE 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 1.00%
per annum of the Fund's average daily net assets.
The Distributor, agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $7,632 from sales of Class A
shares, after commissions of $432,189 paid to dealers.
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 period ended June 30, 1997,
fees incurred aggregated $3,717, or 0.22% per annum of the average daily net
assets of Class A shares.
Under the Plan, with respect to Class B 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 and Class D shares for which the organizations are
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which 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 period ended June 30, 1997, fees incurred under the Plan, equivalent
to 1% per annum of the average daily net assets of Class B and Class D shares,
amounted to $11,481 and $8,198, respectively.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For the
period ended June 30, 1997, such charges amounted to $395.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class Bshares sold. The aggregate amount of such payments
and the Class B shares distribution fees retained by the Distributor, for the
period ended June 30, 1997, was $36,615.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of Fund shares, as well as distribution and
service fees pursuant to the Plan. For the period ended June 30, 1997, Seligman
Services, Inc. received commissions from the sales of Fund shares and
distribution and service fees pursuant to the Plan, aggregating $475.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $8,628 for shareholder account services.
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. Interest is accrued on the deferred
balances. The cost of such fees and interest is included in directors' fees and
expenses and the accumulated balance thereof at June 30, 1997, of $86 is
included in other liabilities. Deferred fees and the related accrued interest
are not deductible for federal income tax purposes until such amounts are paid.
13
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts, using average shares
outstanding.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. Total returns for periods
of less than one year are not annualized.
"Average commission rate paid" represents the average commission paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------- ------- -------
4/25/97* 4/25/97* 4/25/97*
TO TO TO
6/30/97 6/30/97 6/30/97
------- ------- ------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ...... $ 7.14 $ 7.14 $ 7.14
------- ------- -------
Net investment loss ....................... (.02) (.03) (.03)
Net realized and unrealized investment gain 1.48 1.48 1.48
------- ------- -------
INCREASE FROM INVESTMENT OPERATIONS ....... 1.46 1.45 1.45
Distributions from net gain realized ...... -- -- --
------- ------- -------
NET INCREASE IN NET ASSET VALUE ........... 1.46 1.45 1.45
------- ------- -------
NET ASSET VALUE, END OF PERIOD ............ $ 8.60 $ 8.59 $ 8.59
======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: .... 20.45% 20.31% 20.31%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ............ 2.36%+ 3.14%+ 3.14%+
Net investment loss to average net assets . (1.44)%+ (2.22)%+ (2.22)%+
Portfolio turnover ........................ 10.12% 10.12% 10.12%
Average commission rate paid .............. $ .0564 $ .0564 $ .0564
NET ASSETS, END OF PERIOD
(000s omitted) ............................ $22,115 $16,152 $10,844
- ------------------------
* Commencement of operations.
+ Annualized.
See Notes to Financial Statements.
</TABLE>
14
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN SMALL-CAP VALUE FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Small-Cap Value Fund as of June 30,
1997, the related statements of operations and of changes in net assets, and the
financial highlights for the period from April 25, 1997 (commencement of
operations) to June 30, 1997. 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 audit.
We conducted our audit 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, 1997, by
correspondence with the Fund's custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Small-Cap
Value Fund as of June 30, 1997, the results of its operations, the changes in
its net assets, and the financial highlights for the respective
stated period in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
August 1, 1997
- --------------------------------------------------------------------------------
15
<PAGE>
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
FRED E. BROWN
DIRECTOR EMERITUS
DIRECTOR AND CONSULTANT, J. & W. Seligman & Co.
Incorporated
JOHN R. GALVIN 2
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN 3
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum Corporation
BETSY S. MICHEL 2
DIRECTOR OR TRUSTEE, Various Organizations
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
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3
DIRECTOR OR TRUSTEE, Various Organizations
JAMES N. WHITSON 2
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
NEIL T. EIGEN
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
- --------------------------------------------------------------------------------
16
<PAGE>
================================================================================
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in the fund's portfolio. The fund generates
short-term capital gains when portfolio securities held for less than one year
are sold at a profit. The fund generates long-term capital gains when portfolio
securities held for one year or more are sold at a profit. Short-term capital
gains are taxed as ordinary income. Long-term capital gains are taxed at the
federal capital gains rate appropriate to the shareholder's tax bracket.
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 increase 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. Assuming the same rate of return, 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 LOAD (CDSL) -- Depending on the class of shares owned,
a fee charged by a mutual fund when shares are sold back to the fund (the CDSL
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.
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 the 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 (OP) -- The price at which a mutual fund's shares can be
purchased. The offering price is the current net asset value per share 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, such as the fund's investment objective and policies, services,
investment restrictions, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
SECURITIES AND EXCHANGE COMMISSION (SEC) -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- Document that contains updated or more
detailed information about a mutual fund and supplements the prospectus. It is
available at no charge upon request.
TOTAL RETURN -- A measure of fund 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 -- 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 maximum offering price of the stock.
- -----------------
Adapted from the Investment Company Institute's 1996 MUTUAL FUND
FACT BOOK.
17
<PAGE>
- --------------------------------------------------------------------------------
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 Financial Services, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour Automated
Telephone Access
Service
- --------------------------------------------------------------------------------
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[LOGO]
J.& W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF
SHAREHOLDERS OR THOSE WHO HAVE RECEIVED THE OFFERING
PROSPECTUS COVERING SHARES OF CAPITAL STOCK OF SELIGMAN
SMALL-CAP VALUE FUND,
WHICH CONTAINS INFORMATION ABOUT THE SALES CHARGES,
MANAGEMENT FEE, AND OTHER COSTS. PLEASE READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING OR SENDING MONEY.
[LOGO]
EQVS3 6/97 Printed on Recycled Paper
