------------------------------------
S E L I G M A N
[PHOTO OMITTED]
SELIGMAN
COMMON STOCK
FUND, INC.
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Seeking Favorable Current Income and Long-Term Growth
of Both Income and Capital Without Exposing Capital to Undue Risk
DECEMBER 31, 1997 o ANNUAL REPORT
<PAGE>
================================================================================
Over the Long Term -- J. & W. Seligman & Co. Incorporated
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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.
[PHOTO OMITTED]
James, Jesse, and Joseph Seligman
SELIGMAN COMMON STOCK FUND
Seligman began managing its first mutual fund, Broad Street Investing Co.,
now known as Seligman Common Stock Fund, in 1930. Though far from the best of
times -- the stock market had crashed and the country was experiencing a long
depression -- Seligman Common Stock Fund survived its infancy. Seligman Common
Stock Fund has helped investors seek their financial goals through all market
conditions by staying true to its objective of growth and income without undue
risk.
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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 ....................................... 13
Statement of Operations ................................................... 14
Statements of Changes in Net Assets ....................................... 15
Notes to Financial Statements ............................................. 16
Financial Highlights ...................................................... 18
Report of Independent Auditors ............................................ 20
Tax Status of 1997 Distributions .......................................... 21
Board of Directors ........................................................ 22
Executive Officers and For More Information ............................... 23
Glossary of Financial Terms ............................................... 24
"The uncertainties of war and its effects on particular industries make
imperative a careful balancing of risks and a continued broad diversification of
investments."
-- Earle Bailie,
Fund Chairman
1932-1940
"The Fund continues to be a true growth and income fund. Investment strategy
focuses on increasing dividends and identifying undervalued stocks with strong
potential for long-term growth."
-- William C. Morris,
Fund Chairman
1989-Present
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To the Shareholders
In 1997, Seligman Common Stock Fund posted a total return of 23.58% based
on the net asset value of Class A shares, lagging the 27.19% total return of its
peers, as measured by the Lipper Growth & Income Funds Average. In the 12-month
period, the Standard & Poor's 500 Composite Stock Price Index (S&P 500) had a
total return of 33.36%, driven by the gains of the largest "brand names" in the
group. A discussion with your Portfolio Managers, including constructive
measures being taken to improve the Fund's performance, begins on page 2.
This was the seventh year of economic expansion in the US, with real
domestic growth of 3.8%. Consumer price inflation slowed to under 2%, interest
rates moved steadily lower, productivity rose, and unemployment levels reached
27-year lows. Meanwhile, the federal budget deficit virtually disappeared and
corporate profits posted a third consecutive year of strong gains. Despite
year-end problems in Asia, the domestic business environment was positive.
The domestic equity markets, as measured by the Dow Jones Industrial
Average (DJIA), brought equity investors returns in excess of 20% for a third
consecutive year -- a feat unmatched in the DJIA's 101-year history. The
majority of these advances occurred in the first seven months of the year, as
Asian troubles increased uncertainty in the equity markets in the last quarter.
Investors also had to contend with repeated cracks in share prices and unusual
volatility throughout the year, as nearly a third of the trading days brought
changes of one percent or more in the DJIA. Nonetheless, the S&P 500, the DJIA,
the Nasdaq, and the Russell 2000 all ended the year with returns of 20% or more.
Beginning in the summer, investor interest broadened beyond the largest,
most popular stocks in America, as reflected by the outperformance of stocks
other than the 50-largest in the S&P 500. This trend changed abruptly in October
due to the Southeast Asian crisis. Thereafter, investor bias toward the largest,
or "mega-cap," stocks resumed even though these companies' exports and corporate
earnings were the most vulnerable to the effects of the Asian crisis. As the
mega caps neared historic highs in their valuations, Seligman Common Stock Fund
began to implement a strategy of seeking more reasonable valuations relative to
earnings expectations. While the Fund's shift away from the largest of the
large-cap stocks had a negative effect on performance in 1997, we believe this
was a short-term setback and that the Fund's investment strategy will prove
beneficial going forward.
The outlook for US corporate profits in 1998 is more uncertain due to
expectations of modest economic growth and the unforeseeable effects of the
Asian crisis on corporate profitability and the economy. There is also a risk of
temporary price deflation linked to the Asian crisis, as those economies seek to
export their way out of trouble. Barring problems caused by the tightness of the
labor market, we expect a continuation of the current low-inflation and
low-interest-rate environment, but no deflation.
Seligman Common Stock Fund offers a diversified portfolio with consistent
performance and lower volatility than the market, focusing both on favorable
current income and long-term growth of capital and income. We believe the Fund's
conservative investment approach and its 54-year dividend history make it a
solid investment choice in an environment of growing earnings uncertainty. Such
conditions could produce a "stock-picker's" market where active money management
becomes even more important.
Thank you for your continued interest in Seligman Common Stock Fund. We
look forward to serving your investment needs in the many years to come. The
Fund's portfolio of investments and financial statements follow this letter.
Additional information on the Fund's investment results appears starting on page
4.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
January 30, 1998
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1
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Interview With Your Portfolio Managers, Charles C. Smith, Jr. and Odette Galli
Q. How did Seligman Common Stock Fund perform in the last 12 months?
A. Seligman Common Stock Fund posted a total return of 23.58% based on the
net asset value of Class A shares for the year ending December 31, 1997.
The Fund's peers, as measured by the Lipper Growth & Income Funds Average,
posted a total return of 27.19%. The Standard & Poor's 500 Composite Stock
Price Index (S&P 500) had a total return of 33.36% for the year.
Q. Which economic and market factors influenced the Fund's performance?
A. While the equity markets ended the year on a down note, overtaken by
concerns that future corporate earnings would be impacted by the Asian
financial crisis, the year as a whole was a success. Economic growth
continued without prompting an increase in the rate of inflation despite
the tightening labor markets. Investors' appetite for stocks was
unrelenting, and corporate earnings, benefiting from a surge in
productivity, continued to grow.
The Fund was well positioned to participate in the appreciation of
the equity markets and saw particularly improved relative results in the
third quarter when the markets broadened. However, in the fourth quarter,
domestic and foreign investors seeking refuge from the impact of the Asian
financial crisis funneled assets into the largest US stocks. Since the
Fund was not substantially invested in these types of stocks, as their
valuations were expensive, this underweighting dampened the Fund's results
relative to the S&P 500.
Q. What is your investment strategy?
A. Seligman Common Stock Fund continues to offer investors a higher yield
than the S&P 500 and lower volatility. We have been restructuring the
portfolio to further enhance these attributes. We have selectively reduced
the number of US common stocks in the portfolio from about 90 in June to
nearly 70 at December 31, 1997. We continue to identify
attractively-valued stocks with the potential for accelerating earnings
that have a significant yield advantage relative to other companies in
their industry. Our growth-at-a-reasonable-price approach has been
maintained. Further, the average price-to-earnings ratio of the issues in
the portfolio remains lower than the S&P 500 while providing higher
projected earnings growth.
Q. What sectors improved the Fund's results?
A. The strength of the economy and the low levels of inflation provided a
positive backdrop, which improved the performance of the Fund's holdings
in the aerospace/defense and machinery and industrial equipment
industries. These stocks were further supported by substantial corporate
capital spending. As valuations rose, profits were taken in some of these
stocks. Our exposure to these industries will probably be further reduced
in 1998, as certain companies may see reduced corporate earnings growth if
the economy's rate of expansion slows.
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A TEAM APPROACH
Seligman Common Stock Fund is managed by the Seligman Growth and Income Team,
headed by Charles C. Smith, Jr. Mr. Smith and Odette Galli are assisted in the
management of the Fund by seasoned research professionals who are responsible
for identifying companies in specific industry groups that offer the greatest
total return potential, consistent with the Fund's objective.
[PHOTO OMITTED]
Seligman Growth and Income Team: (from left) Rodney Collins, Margaret Doyle,
Jonathan Roth, Odette Galli (Co-Portfolio Manager), (seated) Melanie Ravenell
(Administrative Assistant), Charles C. Smith, Jr. (Portfolio Manager), Amy Fujii
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2
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Interview With Your Portfolio Managers, Charles C. Smith, Jr. and Odette Galli
Two other areas of strength were found in health care and financial
stocks. The Fund's pharmaceutical stocks performed well due to the success
of new products and the growth of sales. Therefore, their profitability
increased, making pharmaceutical companies attractive relative to the
ailing HMOs. Financial stocks -- supported by the low-interest-rate
environment, consolidation in the industry, the public's interest in
equities, and the growth of the retirement-planning industry -- fared
particularly well.
Q. What sectors impaired the Fund's results?
A. The two most significant areas of weakness in the Fund's portfolio were in
electric and gas utilities and technology-related stocks such as
electronics and semiconductors. In keeping with the emphasis on reasonable
valuations within the portfolio, utility stocks were underweighted as
their valuations were high relative to their earnings growth. As the Asian
financial crisis grew in magnitude, some investors were drawn to the
stable earnings record of utilities, which offered a safe haven in an
environment of future earnings uncertainty. The Fund did not participate
to any great degree in this area's improved performance.
Additionally, the technology sector was disappointing in 1997,
suffering from the negative earnings reports of several industry leaders.
In the fourth quarter, valuations were significantly reduced by the
developing Asian financial crisis, as investors feared that reduced
technology spending in the region would significantly impact the earnings
of technology companies.
Q. What is the outlook?
A. It is likely that a difficult investment environment will persist in 1998.
The Asian financial crisis may reduce domestic corporate profits,
impacting both large multinational companies and their suppliers. The
potential slowdown in the rate of economic expansion would also increase
the importance of sound stock selection. The recent run-up in the
valuations of the largest, most liquid multinational companies -- despite
their exposure to Asia -- may compel investors to change their focus.
Market participants may begin to look for consistent earnings and sound
valuations. Such a change in sentiment would be beneficial to Seligman
Common Stock Fund, as the portfolio holds companies with strong earnings
records, good future earnings growth potential, reasonable valuations, and
attractive dividend yields.
----
3
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Performance Overview
This chart compares a $10,000 hypothetical investment made in Seligman
Common Stock Fund Class A shares, with and without the initial 4.75% maximum
sales charge, for the 10-year period ended December 31, 1997, to a $10,000
investment made in the Lipper Growth &Income Funds Average (Lipper Growth
&Income Average) and the Standard &Poor's 500 Composite Stock Price Index (S&P
500) for the same period. The performances of Seligman Common Stock Fund Class B
and Class D shares are not shown in this chart but are included in the table on
page 5. It is important to keep in mind that the Lipper Growth &Income Average
excludes the effect of sales charges and the S&P500 excludes the effect of fees
and sales charges.
[THE FOLLOWING TABLE WAS DEPICTED AS A LINE GRAPH IN THE PRINTED MATERIAL]
Seligman Common Stock Fund Class A
Lipper
With Without Growth &
Sales Sales Income
Charge Charge Average S&P 500
------ ------- -------- -------
12/31/87 9,526 10,000 10,000 10,000
3/31/88 10,005 10,502 10,723 10,569
6/30/88 10,526 11,049 11,334 11,273
9/30/88 10,421 10,940 11,374 11,311
12/31/88 10,486 11,008 11,618 11,661
3/31/89 11,091 11,642 12,367 12,487
6/30/89 11,735 12,319 13,241 13,590
9/30/89 12,888 13,528 14,382 15,046
12/31/89 13,294 13,955 14,377 15,356
3/31/90 13,165 13,819 14,029 14,893
6/30/90 13,986 14,681 14,751 15,830
9/30/90 11,546 12,121 12,785 13,655
12/31/90 12,777 13,412 13,740 14,879
3/31/91 14,874 15,614 15,701 17,040
6/30/91 14,570 15,295 15,670 17,001
9/30/91 15,696 16,476 16,545 17,911
12/31/91 16,601 17,427 17,733 19,412
3/31/92 16,879 17,718 17,750 18,921
6/30/92 16,987 17,831 17,805 19,280
9/30/92 17,457 18,325 18,246 19,887
12/31/92 18,404 19,320 19,345 20,888
3/31/93 19,297 20,257 20,249 21,801
6/30/93 19,762 20,744 20,431 21,907
9/30/93 20,258 21,266 21,151 22,473
12/31/93 21,138 22,189 21,649 22,994
3/31/94 20,146 21,147 20,991 22,123
6/30/94 20,252 21,259 20,931 22,215
9/30/94 21,048 22,095 21,828 23,302
12/31/94 20,739 21,770 21,492 23,297
3/31/95 22,503 23,623 23,239 25,566
6/30/95 24,140 25,340 25,096 28,008
9/30/95 25,665 26,942 26,928 30,234
12/31/95 26,581 27,903 28,230 32,055
3/31/96 27,929 29,318 29,865 33,776
6/30/96 28,917 30,355 30,869 35,292
9/30/96 29,151 30,600 31,779 36,383
12/31/96 30,685 32,211 34,185 39,417
3/31/97 31,154 32,703 34,571 40,474
6/30/97 35,958 37,746 39,545 47,540
9/30/97 38,403 40,313 43,137 51,101
12/31/97 37,919 39,805 43,478 52,569
The performances of Class B and D shares will be greater than or less than
the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
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4
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Performance Overview
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
For Periods Ended December 31, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL
------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
------- ---- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge 0.42% 17.73% 14.43% 14.26% n/a n/a
Without Sales Charge 5.45 23.58 15.55 14.81 n/a n/a
CLASS B**
With CDSL+ 0.32 17.59 n/a n/a 16.70% n/a
Without CDSL 5.07 22.59 n/a n/a 18.81 n/a
CLASS D**
With 1% CDSL 4.18 21.66 n/a n/a n/a n/a
Without CDSL 5.13 22.66 n/a n/a n/a 14.57%
LIPPER GROWTH & INCOME AVERAGE*** 9.95 27.19 17.58 15.83 23.93++ 18.21+++
S&P 500*** 10.58 33.36 20.27 18.05 29.25++ 21.39+++
</TABLE>
NET ASSET VALUE
DECEMBER 31, 1997 JUNE 30, 1997 DECEMBER 31, 1996
----------------- ------------- -----------------
CLASS A $15.92 $16.76 $14.89
CLASS B 15.88 16.73 14.87
CLASS D 15.89 16.73 14.87
DIVIDEND AND CAPITAL GAIN INFORMATION
For the Year Ended December 31, 1997
DIVIDENDS CAPITAL
PAID GAIN
--------- -------
CLASS A $0.320 PAID $2.064 o
CLASS B 0.201 REALIZED 2.564
CLASS D 0.201 UNREALIZED 3.998 oo
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. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class A shares reflect the effect of the
service fee of up to 0.25% under the Administration, Shareholder Services
and Distribution Plan after January 1, 1993, only. Returns for Class B
shares are calculated with and without the effect of the maximum 5%
contingent deferred sales 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 Lipper Growth &Income Average and the S&P 500 are unmanaged benchmarks
that assume investment of dividends. The Lipper Growth &Income Average
excludes the effect of sales chargesand the S&P 500 excludes the effect of
fees and sales charges. The monthly performance of the Lipper Growth
&Income Average is used in the Performance Overview. Investors cannot
invest directly in an index or an average.
+ The CDSL is 5% for periods of one year or less, and 4% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
o Includes the $0.514 of undistributed realized capital gains from 1996,
which were paid to shareholders on June 25, 1997.
oo Represents the per share amount of net unrealized appreciation of
portfolio securities as of December 31, 1997.
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5
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Portfolio Overview
DIVERSIFICATION OF NET ASSETS
December 31, 1997
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
---------------------
ISSUES COST VALUE 1997 1996
------ ------------ ----- -------- --------
<S> <C> <C> <C> <C> <C>
SHORT-TERM HOLDINGS AND OTHER ASSETS
Less Liabilities ......................... 3 $ 96,707,710 $ 96,707,710 11.6 12.9
--- ------------ ------------ ----- -----
Common Stocks and Convertible Issues:
Advertising ........................... -- -- -- -- 1.2
Aerospace/Defense ..................... 2 15,045,862 20,157,500 2.4 3.0
Apparel and Textiles ................. -- -- -- -- 0.8
Automotive and Related ................ 4 20,162,807 22,289,938 2.7 2.6
Basic Materials ....................... 1 7,362,520 7,037,500 0.8 --
Business Services and Supplies ........ 1 4,666,606 4,768,287 0.6 --
Chemicals ............................. 4 22,242,884 23,348,750 2.8 2.5
Computer Goods and Services ........... 3 22,513,466 25,678,750 3.1 1.2
Construction .......................... 1 3,606,295 5,550,000 0.7 0.8
Consumer Goods and Services ........... 5 27,697,024 43,856,276 5.3 6.8
Drugs and Health Care ................. 8 42,479,810 65,454,009 7.8 3.0
Electric and Gas Utilities ............ 6 18,479,762 28,060,639 3.4 5.9
Electrical Equipment .................. 1 6,835,558 7,087,500 0.8 --
Electronics ........................... 6 32,806,342 34,713,750 4.2 2.7
Energy ................................ 8 46,658,261 73,516,973 8.8 7.6
Environmental Services ................ -- -- -- -- 0.3
Finance and Insurance ................. 21 63,804,377 131,777,650 15.7 13.8
Food .................................. 2 7,697,220 23,921,875 2.9 5.8
Leisure and Entertainment ............. -- -- -- -- 0.5
Machinery and Industrial Equipment..... 7 47,686,295 65,941,625 7.9 5.6
Metals and Mining ..................... 1 4,587,284 4,528,125 0.5 0.8
Office Equipment and Services ......... -- -- -- -- 1.1
Paper and Packaging ................... 2 15,430,988 16,050,000 1.9 2.9
Printing and Publishing ............... 1 2,710,587 5,200,000 0.6 1.4
Restaurants ........................... -- -- -- -- 0.5
Retail Trade .......................... 4 12,522,208 17,262,154 2.1 3.1
Steel ................................. -- -- -- -- 1.2
Technology ............................ 1 11,157,194 10,181,719 1.2 1.7
Telecommunications .................... 5 16,677,827 19,316,993 2.3 0.8
Telephone Utilities ................... 4 30,808,685 36,377,500 4.4 2.2
Tobacco ............................... 3 31,732,384 33,472,002 4.0 1.1
Transportation ........................ -- -- -- -- 2.0
Miscellaneous/Diversified ............. 2 13,312,306 12,842,237 1.5 4.2
--- ------------ ------------ ----- -----
103 528,684,552 738,391,752 88.4 87.1
--- ------------ ------------ ----- -----
Net Assets ............................... 106 $625,392,262 $835,099,462 100.0 100.0
=== ============ ============ ===== =====
</TABLE>
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6
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Portfolio Overview
LARGEST PORTFOLIO CHANGES
During Past Six Months
SHARES
--------------------
HOLDINGS
ADDITIONS INCREASE 12/31/97
- --------- -------- --------
Amoco......................... 100,000 100,000
Applied Materials............. 235,000 235,000
Coca-Cola..................... 185,000 185,000
Exxon......................... 160,000 260,000
General Electric.............. 165,000 335,000
Johnson & Johnson............. 150,000 150,000
Microsoft..................... 62,000 92,000
Philip Morris................. 345,000 345,000
RJR Nabisco Holdings.......... 400,000 400,000
Unicom........................ 260,000 260,000
SHARES
--------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/97
- ---------- -------- --------
Aon........................... 150,000 --
Colgate-Palmolive............. 200,000 --
Corning....................... 200,000 --
CPC International............. 100,000 --
Magna International (Class A). 125,000 --
Omnicom Group................. 200,000 --
PacifiCorp.................... 500,000 --
Parker-Hannifin............... 187,500(1) --
Pitney Bowes.................. 150,000 --
The Pep Boys.................. 275,000 --
Largest portfolio changes from previous period to the current period are based
on cost of purchases and proceeds from sales of securities.
(1) Includes 62,500 shares received as a result of a 3-for-2 stock split.
[THE FOLLOWING TABLE WAS DEPICTED AS A BAR GRAPH IN THE PRINTED MATERIAL]
LARGEST INDUSTRIES
At December 31, 1997
Percent of
Net Assets
----------
Finance and Insurance 15.7% $131,777,650
Energy 8.8% $ 73,516,973
Machinery and Industrial Equipment 7.9% $ 65,941,625
Drugs and Health Care 7.8% $ 65,545,009
Consumer Goods and Services 5.3% $ 43,856,276
LARGEST PORTFOLIO HOLDINGS
At December 31, 1997
SECURITY VALUE
- -------- -----
General Electric...................... $24,580,625
Bank of New York...................... 17,343,750
Exxon................................. 15,908,750
Ahmanson (H.F.)....................... 15,730,313
Philip Morris......................... 15,632,812
RJRNabisco Holdings................... 15,000,000
Royal Dutch Petroleum................. 14,088,750
Sara Lee.............................. 14,078,125
Bristol-Myers Squibb.................. 13,720,625
United Technologies................... 12,378,125
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7
<PAGE>
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Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
COMMON STOCKS 88.3%
AEROSPACE/DEFENSE 2.4%
General Dynamics
Diversified defense contractor 90,000 $ 7,779,375
-------------
United Technologies
Nanufacturer of jet engines,
flight systems, elevators,
and automotive parts 170,000 12,378,125
-------------
20,157,500
-------------
AUTOMOTIVE AND
RELATED 2.7%
Chrysler
Nanufacturer of automobiles,
trucks, and related parts 210,000 7,389,375
Eaton
Diversified manufacturer,
including truck transmissions
and axles 51,000 4,551,750
Harley-Davidson
Manufacturer of motorcycles 300,000 8,212,500
Volkswagen (ADRs) (Germany)
Manufacturer of automobiles 19,000 2,136,313
-------------
22,289,938
-------------
BASIC MATERIALS 0.8%
Aluminum Company of America
Aluminum producer 100,000 7,037,500
-------------
BUSINESS SERVICES
AND SUPPLIES 0.6%
Xerox
Developer and marketer of
document processing
products and services 64,600 4,768,287
-------------
CHEMICALS 2.8%
Bayer (Germany)
Producer of specialty chemicals,
pharmaceuticals, and plastics 66,000 4,256,999
duPont (E.I.) de Nemours
Producer of chemicals 133,000 7,988,313
Goodrich (B.F.)
Chemical manufacturer; supplier
of systems and component
parts for the aerospace industry 185,000 7,665,938
Morton International
Manufacturer and marketer
of adhesives, coatings, salt,
and specialty products 100,000 3,437,500
-------------
23,348,750
-------------
COMPUTER GOODS
AND SERVICES 3.1%
Computer Associates International
Developer of software
utilities and databases 112,500 5,948,437
International Business Machines
Manufacturer of micro and
personal computers 75,000 7,842,188
Microsoft*
Developer of computer software 92,000 11,888,125
-------------
25,678,750
-------------
CONSTRUCTION 0.7%
Sherwin-Williams
Manufacturer of paints and
related products 200,000 5,550,000
-------------
CONSUMER GOODS
AND SERVICES 5.3%
Allied Domecq (UK)
International food, drink, and
hospitality group 230,000 2,089,401
Anheuser-Busch
Brewery; theme park operator;
manufacturer and recycler
of aluminum beverage containers 190,000 8,360,000
Coca-Cola
Manufacturer and marketer
of soft drinks and consumer
products 185,000 12,325,625
PepsiCo
Manufacturer and marketer
of soft drinks and
consumer products 250,000 9,109,375
Procter & Gamble
Manufacturer and distributor
of household and personal
care products 150,000 11,971,875
-------------
43,856,276
-------------
- ----------
See footnotes on page 12.
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8
<PAGE>
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Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
DRUGS AND
HEALTH CARE 7.8%
Abbott Laboratories
Developer and manufacturer
of diversified health
care products 75,000 $ 4,917,187
American Home Products
Developer and manufacturer
of pharmaceuticals, food,
and housewares 70,000 5,355,000
Bristol-Myers Squibb
Developer and manufacturer
of health and personal
care products 145,000 13,720,625
Johnson & Johnson
Health care products 150,000 9,881,250
Merck
Manufacturer of pharmaceuticals 98,300 10,444,375
Novartis (Switzerland)
Manufacturer of pharmaceuticals 2,000 3,242,134
Pfizer
Manufacturer of health care and
consumer products 115,000 8,574,688
Schering-Plough
Manufacturer of
pharmaceuticals and health
and personal care products 150,000 9,318,750
-------------
65,454,009
-------------
ELECTRIC AND GAS
UTILITIES 3.4%
Companhia Energetica de
Minas Gerais (ADRs) "CEMIG"
(Brazil)
Provider of electricity 22,700 1,021,500
Electricidade de Portugal
(ADRs) (Portugal)
Generator and distributor
of electricity 62,200 2,410,250
Endesa (ADRs) (Spain)
Provider of electric energy 200,000 3,637,500
Unicom
Electric utility 260,000 7,995,000
Veba (Germany)
Provider of electric energy 45,000 3,065,139
Williams Companies
Natural gas and
telecommunications utility 350,000 9,931,250
-------------
28,060,639
-------------
ELECTRICAL EQUIPMENT 0.8%
Thomas & Betts
Manufacturer of electronic
connectors and components 150,000 7,087,500
-------------
ELECTRONICS 4.2%
AMP
Manufacturer of electronic
connectors and systems 165,000 6,930,000
Applied Materials*
Developer, manufacturer, and
marketer of semiconductor
wafer fabrication equipment 235,000 7,072,031
KLA Tencor*
Manufacturer of wafer
inspection and metrology
equipment 155,000 5,982,031
Motorola
Producer of semiconductors
and communications equipment 75,000 4,279,688
Philips Lamps Holdings (ADRs)
(Netherlands)
Worldwide manufacturer
of consumer electronics
and components 35,000 2,117,500
Raytheon
Producer of defense and
commercial electronics 165,000 8,332,500
-------------
34,713,750
-------------
ENERGY 8.8%
Amoco
Producer of oil and gas 100,000 8,512,500
Atlantic Richfield
Oil producer and
west coast marketer 100,000 8,012,500
-------------
- ----------
See footnotes on page 12.
----
9
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
ENERGY (continued)
Exxon
Explorer and producer
of natural gas, oil, and
petroleum products 260,000 $ 15,908,750
Mobil
International oil enterprise 100,000 7,218,750
Royal Dutch Petroleum (Netherlands)
Provider of international
oil services 260,000 14,088,750
Schlumberger
Worldwide provider of
energy services 100,000 8,050,000
Texaco
Explorer, producer, transporter,
refiner, and marketer of
natural gas, oil, and
petroleum products 166,000 9,026,250
Total (Class B) (France)
International oil enterprise 24,796 2,699,473
-------------
73,516,973
-------------
FINANCE AND
INSURANCE 15.6%
Ahmanson (H.F.)
Provider of savings and loan
services throughout the us 235,000 15,730,313
American General
Provider of insurance
and annuity services 100,000 5,406,250
American International Group
International insurance
holding company 112,500 12,234,375
ASA-UAP (France)
Provider of financial
services and insurance 42,845 3,316,366
Banco Bilbao Vizcaya (Spain)
Provider of banking services 62,100 2,009,471
Bank of Ireland (Ireland)
Financial services provider 258,900 3,989,742
Bank of New York
Commercial bank 300,000 17,343,750
Bankers Trust
Commercial bank 100,000 11,243,750
Citicorp
Global commercial bank 50,000 6,321,875
Federal National
Nortgage Association
Provider of mortgage financing 200,000 11,412,500
First Union
Commercial bank 170,000 8,712,500
General Re
Property casualty reinsurer 20,000 4,240,000
ING Groep (Netherlands)
Provider of banking and
insurance services 76,136 3,208,495
Irish Life (Ireland)
Provider of insurance and
related products 380,000 2,165,379
Mellon Bank
Financial services provider 80,000 4,850,000
National Australia Bank
(ADRs) (Australia)
Commercial bank 50,000 3,531,250
St. Paul Companies
Property and casualty insurance 60,000 4,923,750
Societe Generale (France)
Provider of full banking and
financial services 13,000 1,771,794
TIG Holdings
Insurance provider 135,000 4,480,313
Zurich Versicherungs (Switzerland)
Provider of insurance services 7,800 3,713,269
-------------
130,605,142
-------------
FOOD 2.9%
ConAgra
Prepared foods and
agricultural products 300,000 9,843,750
Sara Lee
Manufacturer of processed
foods and consumer products 250,000 14,078,125
-------------
23,921,875
-------------
- ----------
See footnotes on page 12.
- ----
10
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
MACHINERY AND
INDUSTRIAL EQUIPMENT 7.9%
Dana
Manufacturer and distributor
of products and systems
for automotive and
related industries 125,000 $ 5,937,500
Deere
Manufacturer, distributor,
and financier of
farm machinery 111,500 6,501,844
GATX
Railcar leasing; equipment
financing 150,000 10,884,375
General Electric
Supplier of electrical
equipment and other
industrial and
consumer products 335,000 24,580,625
Harnischfeger Industries
Manufacturer and distributor
of machinery and
mining equipment 119,000 4,202,187
Illinois Tool Works
Manufacturer of fasteners,
tools, and plastic items 180,000 10,822,500
Mannesmann (Germany)
Manufacturer of plant
and machinery equipment;
automotive technology 6,000 3,012,594
-------------
65,941,625
-------------
METALS AND MINING 0.5%
Allegheny Teledyne
Manufacturer of specialty
metals 175,000 4,528,125
-------------
PAPER AND PACKAGING 1.9%
Fort James
Producer of paper and
related products for consumer
and industrial use 200,000 7,650,000
Mead
Manufacturer of paper,
lumber, and wood products 300,000 8,400,000
-------------
16,050,000
-------------
PRINTING AND PUBLISHING 0.6%
Knight-Ridder Newspapers
Newspapers; business
information services 100,000 5,200,000
-------------
RETAIL TRADE 2.1%
May Department Stores
Department store operator 100,000 5,268,750
Penney (J.C.)
Operator of retail department
stores and drugstores 76,000 4,583,750
Tesco (UK)
Food retailer 184,600 1,494,029
Wal-Mart Stores
Discount retailer 150,000 5,915,625
-------------
17,262,154
-------------
TECHNOLOGY 1.2%
Intel
Manufacturer of
semiconductors/memory circuits 145,000 10,181,719
-------------
TELECOMMUNICATIONS 2.3%
Alcatel Alsthom (France)
Developer of equipment and
systems for public
telecommunications 17,000 2,161,556
Sprint
Global communications company 93,100 5,457,987
Telecomunicacoes Brasileiras
(ADRs) "Telebras" (Brazil)
Provider of telecommunications
services 7,000 815,062
Telecom Italia-Di Risp (Italy)
Provider of the whole spectrum
of telecommunications services 400,000 2,555,044
Worldcom*
Diversified telecommunications
company 275,000 8,327,344
-------------
19,316,993
-------------
TELEPHONE UTILITIES 4.4%
AmeriTech
Provider of
telecommunications services 105,000 8,452,500
- ----------
See footnotes on page 12.
----
11
<PAGE>
================================================================================
Portfolio of Investments
December 31, 1997
SHARES VALUE
------ -----
TELEPHONE UTILITIES (continued)
Bell Atlantic
Provider of telephone services
in the atlantic region 100,000 $ 9,100,000
GTE
Provider of telephone services,
systems, and equipment 150,000 7,837,500
SBC Communications
Provider of telephone services,
primarily in the midwest 150,000 10,987,500
-------------
36,377,500
-------------
TOBACCO 4.0%
B.A.T Industries (UK)
Financial services and
tobacco company 310,000 2,839,190
Philip Morris
Manufacturer of tobacco
products 345,000 15,632,812
RJR Nabisco Holdings
Manufacturer of processed
foods and tobacco products 400,000 15,000,000
-------------
33,472,002
-------------
MISCELLANEOUS/DIVERSIFIED 1.5%
AlliedSignal
Producer of aerospace
and automotive materials 270,000 10,513,125
Pacific Dunlop (Australia)
Diversified manufacturer 1,100,000 2,329,112
-------------
12,842,237
-------------
TOTAL COMMON STOCKS
(Cost $527,684,552) 737,219,244
-------------
PRIN. AMT. VALUE
---------- -----
CONVERTIBLE BONDS 0.1%
(Cost $1,000,000)
FINANCE AND INSURANCE 0.1%
LibLife International (UK),
6 1/2%, 9/30/2004
Provider of life and
casualty insurance $1,000,000 $ 1,172,508
-------------
SHORT-TERM HOLDINGS 11.0%
Canadian Imperial Bank of
Commerce, Grand Cayman
Fixed Time Deposit,
6 5/8%, 1/2/1998 31,605,000 31,605,000
First National Bank of Chicago,
Grand Cayman Fixed
Time Deposit,
6 5/8%, 1/2/1998 30,000,000 30,000,000
National Westminster Bank,
Nassau Fixed Time Deposit,
6 1/2%, 1/2/1998 30,000,000 30,000,000
-------------
TOTAL SHORT-TERM HOLDINGS
(Cost $91,605,000) 91,605,000
-------------
TOTAL INVESTMENTS 99.4%
(Cost $620,289,552) 829,996,752
OTHER ASSETS
LESS LIABILITIES 0.6% 5,102,710
-------------
NET ASSETS 100.0% $ 835,099,462
=============
- ----------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
- ----
12
<PAGE>
================================================================================
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value:
Common stocks and convertible issues (cost $528,684,552)..... $738,391,752
Short-term holdings (cost $91,605,000) ...................... 91,605,000 $ 829,996,752
------------
Cash ......................................................................... 1,892,521
Receivable for securities sold ............................................... 1,952,447
Receivable for interest and dividends ........................................ 1,768,595
Receivable for Capital Stock sold ............................................ 1,270,396
Expenses prepaid to shareholder service agent ................................ 165,317
Other ........................................................................ 61,950
-------------
Total Assets ................................................................. 837,107,978
-------------
LIABILITIES:
Payable for Capital Stock repurchased ........................................ 677,601
Accrued expenses, taxes, and other ........................................... 1,330,915
-------------
Total Liabilities ............................................................ 2,008,516
-------------
Net Assets ................................................................... $ 835,099,462
=============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.50 par value; 500,000,000 shares
authorized; 52,458,584 shares outstanding):
Class A .................................................................... $ 23,067,560
Class B .................................................................... 615,959
Class D .................................................................... 2,545,773
Additional paid-in capital ................................................... 539,104,537
Undistributed net investment income .......................................... 20,589
Undistributed net realized gain .............................................. 60,040,379
Net unrealized appreciation of investments ................................... 210,936,107
Net unrealized depreciation on translation of assets and
liabilities denominated in foreign currencies ................................ (1,231,442)
-------------
Net Assets ................................................................... $ 835,099,462
=============
NET ASSET VALUE PER SHARE:
Class A ($734,634,930 / 46,135,119 shares) ................................... $15.92
======
Class B ($19,567,807 / 1,231,918 shares) ..................................... $15.88
======
Class D ($80,896,725 / 5,091,547 shares) ..................................... $15.89
======
</TABLE>
- ----------
See Notes to Financial Statements.
----
13
<PAGE>
================================================================================
Statement of Operations
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends ......................................................... $ 20,401,956
Interest .......................................................... 3,123,709
Other ............................................................. 125,741
-------------
Total Investment Income (net of foreign taxes withheld of $212,716)............... $ 23,651,406
EXPENSES:
Management fee .................................................... 5,192,858
Distribution and service fees ..................................... 2,567,026
Shareholder account services ...................................... 1,227,231
Custody and related services ...................................... 212,000
Shareholder reports and communications ............................ 205,382
Registration ...................................................... 109,091
Auditing and legal fees ........................................... 83,355
Directors' fees and expenses ...................................... 37,509
Miscellaneous ..................................................... 50,732
-------------
Total Expenses ................................................................... 9,685,184
-------------
Net Investment Income ............................................................ 13,966,222
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments .................................. 135,910,283
Net realized loss from foreign currency transactions .............. (1,513,242)
Net change in unrealized appreciation of investments .............. 19,276,740
Net change in unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies ..................... (2,113,562)
-------------
Net Gain on Investments and Foreign Currency Transactions ........................ 151,560,219
-------------
Increase in Net Assets from Operations ........................................... $ 165,526,441
=============
</TABLE>
- ----------
See Notes to Financial Statements.
- ----
14
<PAGE>
================================================================================
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 13,966,222 $15,992,537
Net realized gain on investments ................................ 135,910,283 62,861,837
Net realized loss from foreign currency transactions ............ (1,513,242) (9,298)
Net change in unrealized appreciation of investments ............ 19,276,740 20,969,267
Net change in unrealized appreciation on translation of
assets and liabilities denominated in foreign currencies ........ (2,113,562) (158,076)
------------ ------------
Increase in Net Assets from Operations .......................... 165,526,441 99,656,267
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ...................................................... (13,924,923) (14,590,224)
Class B ...................................................... (164,161) (34,814)
Class D ...................................................... (893,492) (813,879)
Net realized gain on investments:
Class A ...................................................... (87,928,428) (47,224,171)
Class B ...................................................... (1,905,117) (297,882)
Class D ...................................................... (8,996,490) (4,385,491)
------------ ------------
Decrease in Net Assets from Distributions ....................... (113,812,611) (67,346,461)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------
YEAR ENDED DECEMBER 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sale of shares:
Class A ....................... 1,308,404 2,178,472 21,242,046 32,299,564
Class B ....................... 626,437 430,908 10,275,506 6,449,796
Class D ....................... 653,126 1,319,042 10,523,717 19,486,806
Investment of dividends:
Class A ....................... 473,066 527,914 7,757,656 7,838,581
Class B ....................... 9,277 2,114 152,545 31,288
Class D ....................... 50,194 50,273 821,894 745,246
Exchanged from associated Funds:
Class A ....................... 5,617,352 5,995,029 89,701,736 89,181,764
Class B ....................... 213,033 9,871 3,448,926 146,507
Class D ....................... 2,927,353 481,390 48,648,056 7,120,548
Shares issued in payment of
gain distributions:
Class A ....................... 3,903,524 2,201,193 61,643,305 33,016,448
Class B ....................... 114,620 17,548 1,797,496 262,950
Class D ....................... 534,270 273,306 8,416,701 4,087,158
----------- ----------- ------------ ------------
Total ............................ 16,430,656 13,487,060 264,429,584 200,666,656
----------- ----------- ------------ ------------
Cost of shares repurchased:
Class A ....................... (3,842,001) (4,436,075) (62,421,380) (65,928,248)
Class B ....................... (62,983) (5,175) (1,046,510) (77,652)
Class D ....................... (800,763) (502,645) (12,923,435) (7,458,967)
Exchanged into associated Funds:
Class A ....................... (5,397,178) (5,701,122) (86,520,445) (84,564,193)
Class B ....................... (102,320) (21,412) (1,680,196) (324,343)
Class D ....................... (2,573,135) (610,189) (43,101,112) (8,937,833)
----------- ----------- ------------ ------------
Total ............................ (12,778,380) (11,276,618) (207,693,078) (167,291,236)
----------- ----------- ------------ ------------
Increase in Net Assets
from Capital Share Transactions .. 3,652,276 2,210,442 56,736,506 33,375,420
=========== =========== ------------ ------------
Increase in Net Assets .......................................... 108,450,336 65,685,226
NET ASSETS:
Beginning of year ............................................... 726,649,126 660,963,900
------------ ------------
End of Year (including undistributed net investment income of
$20,589 and $1,123,357, respectively) ........................... $835,099,462 $726,649,126
============ ============
</TABLE>
- ----------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
----
15
<PAGE>
================================================================================
Notes to Financial Statements
1. Multiple Classes of Shares -- Seligman Common Stock Fund, Inc. (the "Fund")
offers three classes of shares. All shares existing prior to May 3, 1993, the
commencement of Class D shares, were classified as Class A shares. The Fund
began offering Class B shares on April 22, 1996. Class A shares are sold with an
initial sales charge of up to 4.75% and a continuing service fee of up to 0.25%
on an annual basis. Class 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.
2. Significant Accounting Policies -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. Security Valuation -- Investments in common stocks and convertible issues
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. Foreign Currency Transactions -- The books and records of the Fund are
maintained in USdollars. The market value of investment securities, other
assets and liabilities denominated in foreign currencies are translated
into US dollars at the daily rate of exchange as reported by a pricing
service. Purchases and sales of investment securities, income, and
expenses are translated into USdollars at the rate of exchange prevailing
on the respective dates of such transactions.
The Fund separates that portion of the results of operations
resulting from changes in the foreign exchange rates from the fluctuations
arising from changes in the market prices of securities held in the
portfolio. Similarly, the Fund separates the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market
prices of portfolio securities sold during the period.
c. Federal Taxes -- There is no provision for federal income tax. The Fund
has elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
d. Security Transactions and Related Investment Income -- Investment
transactions are recorded on trade dates. Identified cost of investments
sold is used for both financial statement and federal income tax purposes.
Dividends receivable and payable are recorded on ex-dividend dates, except
that certain dividends from foreign securities where the ex-dividend dates
may have passed are recorded as soon as the Fund is informed of the
dividend. Interest income is recorded on an accrual basis.
e. Multiple Class Allocations -- All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares based upon the relative value of
shares of each class. Class-specific expenses, which include distribution
and service fees and any other items that are specifically attributable to
a particular class, are charged directly to such class. For the year ended
December 31, 1997, distribution and service fees were the only
class-specific expenses.
f. Distributions to Shareholders -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such
reclassification will have no effect on net assets, results of operations,
or net asset value per share of the Fund.
3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended December 31, 1997, amounted to $785,313,672 and $831,457,378,
respectively.
At December 31, 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, including
- ----
16
<PAGE>
================================================================================
Notes to Financial Statements
the effects of foreign currency translations, amounted to $217,178,514 and
$7,471,314, respectively.
4. Management Fee, Administrative Services, and Other Transactions -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides or arranges for the necessary personnel and facilities. Seligman
Henderson Co. (the "Subadviser"), an entity owned 50% each by the Manager and
Henderson plc, supervises and directs all or a portion of the Fund's foreign
investments. For this service, the Subadviser receives a fee from the Manager,
payable monthly. 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 or by Henderson plc. The Manager
receives a fee, calculated daily and payable monthly, equal to 0.65% per annum
of the first $1 billion of the Fund's average daily net assets, 0.60% per annum
of the next $1 billion of the Fund's average daily net assets, and 0.55% per
annum of the Fund's average daily net assets in excess of $2 billion. The
management fee reflected in the Statement of Operations represents 0.65% per
annum of the Fund's average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $65,673 from sales of Class A shares, after commissions of
$512,897 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 year ended December 31,
1997, fees incurred aggregated $1,715,126 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 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 year ended December 31, 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 $126,148 and $725,752, 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 year ended
December 31, 1997, such charges amounted to $20,009.
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
year ended December 31, 1997, amounted to $28,801.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of shares of the Fund, as well as
distribution and service fees pursuant to the Plan. For the year ended December
31, 1997, Seligman Services, Inc. received commissions of $22,385 from the sales
of shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $468,360, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $1,227,231 for shareholder
account services. The Fund's investment in Seligman Data Corp. is recorded at a
cost of $22,506.
Certain officers and directors of the Fund are officers or directors of
the Manager, the Subadviser, the Distributor, Seligman Services, Inc., and/or
Seligman Data Corp.
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 annual cost of such fees and interest is included in directors'
fees and expenses and the accumulated balance thereof at December 31, 1997, of
$188,372 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.
----
17
<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.
"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. This rate is provided for
periods beginning January 1, 1996.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1997(o) 1996(o) 1995(o) 1994(o) 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year ................ $ 14.89 $ 14.19 $ 12.12 $ 13.47 $ 12.79
--------- --------- --------- --------- ---------
Net investment income ............................. .30 .35 .36 .38 .39
Net realized and unrealized investment gain (loss) 3.18 1.81 3.00 (.64) 1.49
Net realized and unrealized gain (loss)from foreign
currency transactions ............................. (.07) -- .01 -- --
--------- --------- --------- --------- ---------
Increase (Decrease) From Investment Operations .... 3.41 2.16 3.37 (.26) 1.88
Dividends paid .................................... (.32) (.34) (.36) (.37) (.38)
Distributions from net gain realized .............. (2.06) (1.12) (.94) (.72) (.82)
--------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Asset Value ........ 1.03 .70 2.07 (1.35) .68
--------- --------- --------- --------- ---------
Net Asset Value, End of Year ...................... $ 15.92 $ 14.89 $ 14.19 $ 12.12 $ 13.47
========= ========= ========= ========= =========
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 23.58% 15.44% 28.17% (1.89)% 14.86%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 1.13% 1.15% .93% .85% .87%
Net investment income to average net assets ....... 1.83% 2.36% 2.56% 2.93% 2.86%
Portfolio turnover ................................ 106.02% 56.10% 46.08% 57.17% 54.37%
Average commission rate paid ...................... $ .0426 $ .0554
Net Assets, End of Year (000S Omitted) ............ $ 734,635 $ 656,260 $ 614,400 $ 510,956 $ 553,222
</TABLE>
- ----------
See footnotes on page 19.
- ----
18
<PAGE>
================================================================================
Financial Highlights
<TABLE>
<CAPTION>
CLASS B CLASS D
---------------------- ---------------------------------------------------
YEAR 4/22/96* YEAR ENDED DECEMBER 31, 5/3/93*
ENDED TO ---------------------------------------- TO
12/31/97(o) 12/31/96(o) 1997(o) 1996(o) 1995(o) 1994(o) 12/31/93
----------- ----------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year ................ $ 14.87 $14.80 $ 14.87 $ 14.16 $ 12.07 $ 13.46 $13.29
------- ------ ------- ------- ------- ------- ------
Net investment income ............................. .17 .15 .17 .24 .24 .22 .18
Net realized and unrealized investment gain
(loss) ............................................ 3.17 1.20 3.18 1.80 3.00 (.66) 1.02
Net realized and unrealized gain (loss)from
foreign currency transactions ..................... (.07) -- (.07) -- .01 -- --
------- ------ ------- ------- ------- ------- ------
Increase (Decrease) from Investment
Operations ........................................ 3.27 1.35 3.28 2.04 3.25 (.44) 1.20
Dividends paid .................................... (.20) (.16) (.20) (.21) (.22) (.23) (.21)
Distributions from net gain realized .............. (2.06) (1.12) (2.06) (1.12) (.94) (.72) (.82)
------- ------ ------- ------- ------- ------- ------
Net Increase (Decrease) in Net Asset Value ........ 1.01 .07 1.02 .71 2.09 (1.39) .17
------- ------ ------- ------- ------- ------- ------
Net Asset Value, End of Year ...................... $ 15.88 $14.87 $ 15.89 $ 14.87 $ 14.16 $ 12.07 $13.46
======= ====== ======= ======= ======= ======= ======
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 22.59% 9.21% 22.66% 14.58% 27.17% (3.24)% 9.09%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net asset ..................... 1.89% 1.92%+ 1.89% 1.91% 1.72% 1.96% 2.02%+
Net investment income to average net assets ....... 1.07% 1.55%+ 1.07% 1.61% 1.80% 1.68% 1.83%+
Portfolio turnover ................................ 106.02% 56.10%++ 106.02% 56.10% 46.08% 57.17% 54.37%+++
Average commission rate paid ...................... $ .0426 $.0554++ $ .0426 $ .0554
Net Assets, End of Year (000s omitted) ............ $19,568 $6,451 $80,896 $63,938 $46,564 $14,416 $5,667
</TABLE>
- ----------
* Commencement of offering of shares.
(o) Per share amounts for the years ended December 31, 1997, 1996, 1995, and
1994, are calculated based on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
See Notes to Financial Statements.
----
19
<PAGE>
================================================================================
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Common Stock Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Common Stock Fund, Inc. as of December
31, 1997, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the Fund's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Common
Stock Fund, Inc. as of December 31, 1997, 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
January 30, 1998
- --------------------------------------------------------------------------------
- ----
20
<PAGE>
================================================================================
Federal Tax Status of 1997 Dividend and Gain Distributions
For Taxable Accounts
The quarterly dividends paid to Class A, B, and D shareholders in 1997 are
taxable as ordinary income for federal tax purposes. It makes no difference
whether you received them in cash or in shares. Under the Internal Revenue Code,
79% of the dividends paid to Class A, B, and D shareholders has been designated
as qualifying for the dividend received deduction available to corporate
shareholders. In order to claim the dividend received deduction for these
distributions, corporate shareholders must have held the Fund's shares for 46
days or more during the 90-day period beginning 45 days before each ex-dividend
date.
A distribution of $0.514 per share from 1996 undistributed net realized gain,
consisting of $0.468 from net long-term and $0.046 from net short-term gain
realized on investments, was paid June 25, 1997, to Class A, B, and D
shareholders. On November 21, 1997, a net long-term distribution of $1.55 per
share from gain realized on investments in 1997, was paid to Class A, B, and D
shareholders. The federal Taxpayer Relief Act of 1997 modified the
classification of long-term capital gains to include a "28% Rate Gain" category.
Please note that 100% of the Fund's June 1997 long-term capital gain
distribution is categorized as "28% Rate Gain," while 41% of the November 1997
long-term capital gain distribution is categorized as "28% Rate Gain." The
distributions from net long-term gain are designated as "capital gain dividends"
for federal income tax purposes and are taxable to shareholders in 1997 as a
long-term gain from the sale of capital assets, no matter how long your shares
have been owned or whether the distribution was paid in additional shares or
cash. However, if shares on which a long-term capital gain distribution was
received are subsequently sold, and such shares were held for six months or less
from date of purchase, any loss on the sale would be treated as long-term to the
extent it offsets the long-term gain distribution. Net short-term gain is
taxable as ordinary income whether paid to you in cash or shares.
If the gain distributions were paid in shares, the per share cost basis for
federal income tax purposes is $16.94 for Class A shares, and $16.92 for Class B
and D shares for the June 25 distribution, and $15.45 for Class A shares, $15.40
for Class B shares, and $15.41 for Class D shares for the November 21
distribution.
A year-end statement of account showing activity for 1997, a Form 1099-DIV, and
if applicable, a Form 1099-B have been mailed to each shareholder. The Form
1099-B shows the proceeds of any redemptions paid to the shareholder during the
year and reported to the Internal Revenue Service as required by federal
regulations. Form 1099-DIV shows the amounts of the distributions on investments
paid to the shareholder during the year.
----
21
<PAGE>
================================================================================
Board of Directors
- --------------------------------------------------------------------------------
John R. Galvin(2)
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
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 Industries, Inc.
Betsy S. Michel(2)
Trustee, 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)
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)
Retired Vice President, Pfizer, Inc.
Director, USLIFE Corporation
James N. Whitson(2)
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, CommScope, Inc.
Brian T. Zino(1)
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Director Emeritus
Fred E. Brown
Director and Consultant, J. & W. Seligman & Co.
Incorporated
- ----------
Member: (1) Executive Committee
(2) Audit Committee
(3) Director Nominating Committee
- --------------------------------------------------------------------------------
- ----
22
<PAGE>
================================================================================
Executive Officers
- --------------------------------------------------------------------------------
William C. Morris Charles C. Smith, Jr. Thomas G. Rose
Chairman Vice President Treasurer
Brian T. Zino Lawrence P. Vogel Frank J. Nasta
President Vice President 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
Continental
United States
(800) 622-4597 24-Hour Automated
Telephone Access
Service
- --------------------------------------------------------------------------------
----
23
<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. 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 -- 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 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.
- ----
24
<PAGE>
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 Common Stock Fund, Inc., which contains information about the sales
charges, management fee, and other costs. Please read the prospectus carefully
before investing or sending money.
[RECYCLE
LOGO]
EQCS2 12/97 Printed on Recycled Paper
