SELIGMAN
--------------
COMMON STOCK
FUND, INC.
[GRAPHIC]
ANNUAL REPORT
DECEMBER 31, 1998
------
Seeking Favorable
Current Income and
Long-Term Growth
of Both Income
and Capital
Without Exposing
Capital to
Undue Risk
[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.
[PHOTOGRAPH]
James, Jesse, and Joseph Seligman, 1870
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 through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including 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 .................. 11
Statement of Operations .............................. 12
Statements of Changes in Net Assets .................. 13
Notes to Financial Statements ........................ 14
Financial Highlights ................................. 17
Report of Independent Auditors ....................... 19
Federal Tax Status of 1998 Dividend and
Gain Distributions for Taxable Accounts ............ 20
Board of Directors ................................... 21
Executive Officers and For More Information .......... 22
Glossary of Financial Terms .......................... 23
- --------------------------------------------------------------------------------
<PAGE>
TO THE SHAREHOLDERS
Seligman Common Stock Fund had a solid year in 1998, posting a total return of
17.40% based on the net asset value of Class A shares. This return outpaced the
15.32% total return of the Fund's peers, as measured by the Lipper Growth &
Income Funds Average. The Fund's return lagged the 28.58% total return of the
Standard & Poor's 500 Composite Stock Price Index (S&P 500). A discussion with
your Portfolio Managers regarding the Fund's results begins on page 2.
The past year was one of continued growth in the US
economy, with real domestic growth of 3.9%, marking the eighth year of economic
expansion. The US large-cap sector of the equity markets responded with another
year of strong performance. 1998 marked the first time in history that the S&P
500 registered more than 20% gains four years in a row. But, despite the strong
year-end numbers, 1998 was the most volatile year for the markets since 1987.
Once again in 1998, exceptional performance from an extremely narrow list of
stocks masked the true investment results in the broad market. Within the S&P
500, the successes of a few stocks blurred the total picture. In fact, 197
stocks within the S&P 500, representing 39% of the Index, actually lost market
value during the last 12 months. Investment results between asset classes were
also more widely dispersed than usual.
The market's volatility can be attributed to a number of factors -- some
domestic, many international. The international economic background in 1998 was
one of steadily deteriorating conditions as the financial crisis, originally
limited to a few Asian countries, spread throughout other regions. Currency
instability and rising global recession/deflation fears exacerbated market
volatility. Anxiety increased following the Russian debt default and the
near-collapse of Long-Term Capital Management LP, a large hedge fund plagued by
a series of bad currency investments. By late August, a stock market correction
threatened to turn into a more significant decline, as the Dow Jones Industrial
Average fell more than 850 points in two days, wiping out all of the year's
gains.
During the second half of the year, the Federal Reserve Board cut the
federal-funds rate three times. These actions confirmed the Fed's resolve to
protect the US economy from the global financial crisis and markets responded
favorably throughout November and December.
Subdued inflation, low interest rates, improving prospects in Asia, and a
Federal Reserve leading the fight against global recession are all positive for
the US markets in 1999. We expect a challenging environment confronted with
economic uncertainties and continued high volatility. Pressure on corporate
profits is likely to continue as the US enters a period of slower growth.
Valuations on some of the largest stocks seem excessive, and any broadening of
the market in 1999 may negatively affect their share prices. In addition, low
commodity prices are impacting much of the world, making it harder for US
multinationals to export. Nonetheless, we see moderately positive returns for
the year in line with our lower growth projections.
Seligman continues to work to ensure that all of its operations are prepared for
the challenges posed by the Year 2000 (Y2K) computer problem. We are confident
that there will be no disruption in the investment and shareholder services
provided by your Fund as a result of Y2K. In addition, your portfolio management
team considers the potential ramifications of Y2K when making decisions on which
securities should be held by the Fund.
Thank you for your continued support of Seligman Common Stock Fund in 1998. we
look forward to serving your investment needs in 1999.
By order of the Board of Directors,
/s/ William Morris
William C. Morris
Chairman
/s/Brian T. Zino
Brian T. Zino
President
January 29, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
CHARLES C. SMITH, JR. AND RODNEY COLLINS
Q. How did Seligman Common Stock Fund perform in the last 12 months?
A. For the 12 months ended December 31, 1998, Seligman Common Stock Fund
posted a total return of 17.40% based on the net asset value of Class A
shares. The Lipper Growth & Income Funds Average, which measures the
results of mutual funds with similar investment objectives, had a total
return of 15.32% through December 31, 1998. The Standard & Poor's 500
Composite Stock Price Index (S&P 500) had a total return of 28.58% for
1998.
Q. Which economic and market factors affected the Fund's investment results in
1998?
A. In 1998, the US economy expanded for the eighth year in a row. Low
inflation, continued corporate earnings growth, and a benign interest rate
environment all helped propel the major US markets higher. The year was one
of tremendous investor demand for US common stocks. Much of this demand was
caused by the continuing "flight to quality," as investors tried to
insulate themselves from troubles in Asia and Latin America by investing in
the largest, most liquid companies in the US. This trend, while positive
for the biggest stocks in the US, caused a narrowing of the market that
left many stocks behind. In fact, 50 stocks in the S&P 500 accounted for
about 94% of the performance of the entire Index.
Seligman Common Stock Fund benefited from the strong demand for US
large-cap stocks. But market performance in 1998 was far from a straight
line that moved continually higher. In the third quarter of the year, the
market weakened significantly. Your Fund did well during this downturn
because of our strategy of emphasizing companies with attractive dividend
yields relative to the market and attractive valuations relative to their
industries.
Q. What is your investment strategy?
A. In an effort to reduce overall volatility, we have repositioned the Fund's
portfolio to emphasize companies with greater earnings stability. While
still diversified among industry groups and individual holdings, the
portfolio has been pared down to focus on companies with dividend yields
equal to, or greater than, the S&P 500. Valuations of the companies we
invest in must be at the lower end of their industry group. Our investment
approach led us to be underweight in many of the excessively valued
large-capitalization stocks that were hit the hardest by last summer's
market downturn. This allowed Seligman Common Stock Fund to outpace the
market and many of its peers in that difficult environment.
Our investment strategy continued to offer a significant yield advantage
and less investment risk than offered by our average competitor. In fact,
1998
- --------------------------------------------------------------------------------
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 Rodney Collins 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.
- --------------------------------------------------------------------------------
[PHOTOGRAPH]
Growth and Income Team: (standing, from left) Amy Fujii, John Roth, Melanie
Ravenell (Administrative Assistant), (seated) Charles Smith (Portfolio Manager),
Rodney Collins (Co-Portfolio Manager)
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGERS,
CHARLES C. SMITH, JR. AND RODNEY COLLINS
marked the 55th consecutive year that Seligman Common Stock Fund was able
to increase its dividend income for shareholders who invested their capital
gains in additional shares. It is the only mutual fund in the nation that
can boast such a record. In uncertain markets, dividends can significantly
reduce volatility.
Q. How was the portfolio constructed, and how did that affect investment
results ?
A. In 1998, we significantly reduced the Fund's international holdings. With
continued problems in the global economy, we felt that the US market
offered greater return potential. The international stocks we still hold in
the portfolio are large, liquid companies, which we believe have attractive
fundamentals. Sectors that produced strong returns for the Fund included
health care, telecommunications, and capital goods. The weakest area of the
portfolio was cyclical stocks. While we generally underweighted these
issues, they did negatively impact results.
The most significant factor that held performance down was our
underweighting in technology stocks. Successful technology companies
usually need to reinvest any earnings to finance research and development
and future growth plans. This means that they rarely distribute dividends.
Since one of Seligman Common Stock Fund's primary investment strategies is
to invest in companies with dividends comparable to, if not higher than,
the overall market, we did not own most of the fastest-growing technology
stocks. Our lack of significant technology exposure (it makes up about 10%
of the portfolio) helped the Fund during the market sell-off that started
in late July, but it hampered overall performance as these same technology
companies rallied strongly in the fourth quarter.
Q. What is your outlook?
A. We continue to believe that the US economy offers an attractive environment
for investing in common stocks. At the same time, we remain cautious, as
the valuations of many of the larger stocks seem to already reflect a
positive economic outlook. As a result, we continue to temper our positions
in some of the larger-capitalization stocks -- the top 20 names in the S&P
500. We feel that the high valuations accorded to many of these stocks have
been driven by liquidity concerns, not fundamentals. Therefore, we are
focusing on identifying companies whose valuations more fully reflect their
future prospects, and where there is a catalyst for earnings acceleration
going forward. Any broadening of the market should benefit these companies
in the next year and beyond.
We believe that difficulties in world markets are likely to continue to
have an impact on US stocks in 1999, and that volatility, which was an
ever-present market factor last year, will not subside quickly. In such an
environment, Seligman Common Stock Fund will continue to adhere to its
disciplined investment strategy based on fundamental analysis.
3
<PAGE>
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, and assumes that all distributions within the period are invested
in additional shares, for the 10-year period ended December 31, 1998, 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 and the S&P500 exclude the effect of fees and/or sales charges.
[THE FOLLOWING TABLE WAS PRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Seligman Common Stock Fund Class A
LIPPER
WITH WITHOUT GROWTH &
SALES SALES INCOME S&P
CHARGE CHARGE AVERAGE 500
------ ------ ------ ------
12/31/88 9,528 10,000 10,000 10,000
3/31/89 10,077 10,577 10,644 10,709
6/30/89 10,662 11,191 11,396 11,655
9/30/89 11,710 12,290 12,387 12,903
12/31/89 12,079 12,677 12,382 13,169
3/31/90 11,961 12,554 12,074 12,772
6/30/90 12,707 13,337 12,291 13,576
9/30/90 10,491 11,011 11,013 11,710
12/31/90 11,609 12,184 11,825 12,760
3/31/91 13,515 14,184 13,511 14,614
6/30/91 13,238 13,894 13,485 14,580
9/30/91 14,261 14,968 14,238 15,360
12/31/91 15,084 15,831 15,254 16,647
3/31/92 15,336 16,096 15,271 16,226
6/30/92 15,434 16,199 15,317 16,534
9/30/92 15,861 16,647 15,692 17,055
12/31/92 16,722 17,551 16,639 17,913
3/31/93 17,533 18,402 17,426 18,696
6/30/93 17,955 18,845 17,587 18,787
9/30/93 18,406 19,319 18,207 19,272
12/31/93 19,206 20,158 18,641 19,719
3/31/94 18,304 19,211 18,064 18,972
6/30/94 18,401 19,313 18,006 19,051
9/30/94 19,124 20,072 18,768 19,983
12/31/94 18,843 19,777 18,485 19,979
3/31/95 20,446 21,460 19,990 21,925
6/30/95 21,933 23,020 21,593 24,019
9/30/95 23,319 24,475 23,178 25,928
12/31/95 24,151 25,348 24,309 27,489
3/31/96 25,376 26,634 25,730 28,965
6/30/96 26,274 27,576 26,619 30,266
9/30/96 26,486 27,798 27,408 31,201
12/31/96 27,880 29,261 29,502 33,803
3/31/97 28,306 29,709 29,844 34,709
6/30/97 32,671 34,290 34,142 40,770
9/30/97 34,893 36,622 37,193 43,823
12/31/97 34,453 36,160 37,482 45,082
3/31/98 38,433 40,338 41,854 51,371
6/30/98 38,317 40,216 41,947 53,066
9/30/98 35,343 37,094 36,706 47,786
12/31/98 40,445 42,450 43,224 57,964
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.
4
<PAGE>
PERFORMANCE OVERVIEW
Investment Results Per Share
TOTAL RETURNS
For Period Ended December 31, 1998
<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 0.52% 11.84% 14.94% 15.00% n/a n/a
Without Sales Charge 5.56 17.40 16.06 15.55 n/a n/a
Class B**
With CDSC+ 0.34 11.53 n/a n/a 17.09% n/a
Without CDSC 5.15 16.48 n/a n/a 17.94 n/a
Class D**
With 1% CDSC 4.25 15.56 n/a n/a n/a n/a
Without CDSC 5.22 16.55 15.05 n/a n/a 14.92%
Lipper Growth & Income Funds Average*** 3.04 15.32 18.32 15.76 20.66++ 17.73+++
S&P 500*** 9.22 28.58 24.06 19.21 29.00++ 22.63+++
</TABLE>
NET ASSET VALUE
DECEMBER 31, 1998 JUNE 30, 1998 DECEMBER 31, 1997
----------------- ------------- -----------------
Class A $15.77 $16.36 $15.92
Class B 15.71 16.31 15.88
Class D 15.73 16.32 15.89
DIVIDEND AND CAPITAL GAIN INFORMATION
For the Year Ended December 31, 1998
DIVIDENDS
PAID CAPITAL GAIN
---- ------------
Class A $0.282 Paid $2.468#
Class B 0.166 Undistributed Realized 0.191##
Class D 0.166 Unrealized 4.098###
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 charge ("CDSC"), 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% CDSC, charged on redemptions made within one
year of the date of purchase.
*** The Lipper Growth &Income Funds Average and the S&P 500 are unmanaged
benchmarks that assume investment of dividends. The Lipper Growth &Income
Funds Average and the S&P 500 exclude the effect of fees and/or sales
charges. The monthly performance of the Lipper Growth &Income Funds Average
is used in the Performance Overview. Investors cannot invest directly in an
index or an average.
+ The CDSC is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
# Includes $1.18 of undistributed realized capital gains from 1997, which
were paid to shareholders on June 24, 1998.
## Represents net gain realized from November and December 1998, payable in
1999.
### Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1998.
5
<PAGE>
PORTFOLIO OVERVIEW
Diversification of Net Assets
December 31, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
------------------
ISSUES COST VALUE 1998 1997
------ ---- ----- ---- ----
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Aerospace/Defense ............................... 1 $ 3,294,465 $ 4,690,000 0.5 0.9
Automotive and Related .......................... 3 34,383,919 47,447,812 5.4 3.4
Basic Materials ................................. 1 4,413,475 4,473,750 0.5 0.8
Business Services and Supplies .................. 2 23,812,859 35,420,000 4.0 0.6
Capital Goods ................................... 1 8,683,765 7,703,125 0.9 --
Chemicals ....................................... 1 8,216,419 7,694,062 0.9 2.8
Computer Goods and Services ..................... -- -- -- -- 3.1
Construction .................................... -- -- -- -- 0.7
Consumer Goods and Services ..................... 3 35,950,412 46,106,562 5.2 5.3
Drugs and Health Care ........................... 5 46,097,965 69,610,312 7.9 7.8
Electric and Gas Utilities ...................... 5 52,325,457 61,368,126 7.0 3.4
Electrical Equipment ............................ -- -- -- -- 0.8
Electronics ..................................... 2 22,352,229 24,765,000 2.8 4.2
Energy .......................................... 6 74,691,053 89,978,437 10.2 8.8
Finance and Insurance ........................... 11 94,727,053 157,839,863 17.9 15.7
Food ............................................ 2 15,277,420 31,128,750 3.5 2.9
Machinery and Industrial Equipment .............. 3 41,127,527 64,168,856 7.3 8.7
Metals and Mining ............................... -- -- -- -- 0.5
Paper and Packaging ............................. 2 17,906,241 20,914,375 2.4 1.9
Printing and Publishing ......................... 1 3,266,337 5,623,750 0.7 0.6
Retail Trade .................................... 1 9,428,316 12,980,625 1.5 2.1
Technology ...................................... -- -- -- -- 1.2
Telecommunications .............................. 4 61,737,793 86,666,563 9.8 6.7
Tobacco ......................................... 1 23,421,083 29,425,000 3.3 4.0
Transportation .................................. 1 11,899,967 11,882,813 1.3 --
Miscellaneous/Diversified ....................... 1 10,766,178 12,850,625 1.5 1.5
--- ------------- ------------- ----- -----
57 603,779,933 832,738,406 94.5 88.4
SHORT-TERM HOLDINGS AND OTHER ASSETS
LESS LIABILITIES 2 48,118,555 48,118,555 5.5 11.6
--- ------------- ------------- ----- -----
NET ASSETS 59 $651,898,488 $880,856,961 100.0 100.0
=== ============= ============= ===== =====
</TABLE>
6
<PAGE>
PORTFOLIO OVERVIEW
Largest Portfolio Changes
During Past Six Months
SHARES
----------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
Chubb .......................... 140,000 140,000
Crown Cork &Seal ............... 250,000 250,000
DQE ............................ 225,000 225,000
Electronic Data Systems ........ 200,000 200,000
Ford Motor ..................... 175,000 175,000
Fort James ..................... 325,000 325,000
Harris ......................... 240,000 240,000
Morgan (J.P.) .................. 70,000 70,000
PepsiCo ........................ 275,000 275,000
Sonat .......................... 275,000 275,000
SHARES
----------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ---------- -------- --------
Bristol-Myers Squibb ........... 90,000 100,000
Edison International ........... 375,000 --
Exxon .......................... 115,000 295,000
General Electric ............... 135,100 264,900
Marsh & McLennan ............... 270,000 --
Mobil .......................... 150,000 145,000
Penney (J.C.) .................. 160,000 --
St. PaulCompanies .............. 270,000 --
Texaco ......................... 260,000 --
US WEST Communications
Group ........................ 320,000 --
Largest portfolio changes from previous period to current period are based on
cost of purchases and proceeds from sales of securities.
Largest Industries
December 31, 1998
[THE FOLLOWING TABLE WAS PRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
Percent of Total Dollar
Net Assets Amount
---------- ------------
FINANCE AND INSURANCE 17.90% $157,839,863
ENERGY 10.20% $ 89,978,437
TELECOMMUNICATIONS 9.80% $ 86,666,563
DRUGS AND HEALTH CARE 7.90% $ 69,610,312
MACHINERY AND INDUSTRIAL EQUIPMENT 7.30% $ 64,168,856
Largest Portfolio Holdings
December 31, 1998
SECURITY VALUE
- -------- -----------
GTE $30,009,688
Philip Morris 29,425,000
Ameritech 27,885,000
General Electric 27,036,356
DaimlerChrysler 25,936,875
Bank of New York 25,760,000
Xerox 25,370,000
United Technologies 25,012,500
Merck 22,891,562
Houston Industries 22,326,875
7
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
------------ ------------
COMMON STOCKS 94.5%
AEROSPACE/DEFENSE 0.5%
General Dynamics
Diversified defense contractor 80,000 $ 4,690,000
------------
AUTOMOTIVE AND
RELATED 5.4%
DaimlerChrysler
Manufacturer of automobiles,
trucks, and related parts 270,000 25,936,875
Dana
Manufacturer and distributor
of products and systems
for automotive and
related industries 275,000 11,240,625
Ford Motor
Manufacturer and distributor
of automobiles, trucks, and
related parts 175,000 10,270,312
------------
47,447,812
------------
BASIC MATERIALS 0.5%
Alcoa
Manufacturer of containers 60,000 4,473,750
------------
BUSINESS SERVICES
AND SUPPLIES 4.0%
Electronic Data Systems
Provider of management
consulting and technology
services 200,000 10,050,000
Xerox
Developer, manufacturer,
and marketer of office
automation products 215,000 25,370,000
------------
35,420,000
------------
CAPITAL GOODS 0.9%
Crown Cork & Seal
Manufacturer of packaging
products 250,000 7,703,125
------------
CHEMICALS 0.9%
duPont (E.I.) de Nemours
Producer of chemicals 145,000 7,694,062
------------
CONSUMER GOODS
AND SERVICES 5.2%
Anheuser-Busch
Brewery; theme park operator;
manufacturer and recycler
of aluminum beverage
containers 300,000 19,687,500
CONSUMER GOODS
AND SERVICES (continued)
General Mills
Manufacturer and marketer
of consumer foods products 195,000 $ 15,161,250
PepsiCo
Manufacturer and marketer
of soft drinks and consumer
products 275,000 11,257,812
------------
46,106,562
------------
DRUGS AND
HEALTH CARE 7.9%
Abbott Laboratories
Developer and manufacturer
of diversified health
care products 160,000 7,840,000
American Home Products
Developer and manufacturer
of pharmaceuticals, food,
and housewares 350,000 19,709,375
Baxter International
Manufacturer and distributor
of hospital and laboratory
products 90,000 5,788,125
Bristol-Myers Squibb
Developer and manufacturer
of health and personal
care products 100,000 13,381,250
Merck
Developer and manufacturer
of pharmaceuticals 155,000 22,891,562
------------
69,610,312
------------
ELECTRIC AND GAS
UTILITIES 7.0%
DQE
Electric energy supplier 225,000 9,885,938
Houston Industries
Worldwide energy provider 695,000 22,326,875
Sonat
Energy company that
operates in the exploration
and production of oil and
natural gas 275,000 7,442,188
Unicom
Electric utility 280,000 10,797,500
The Williams Companies
Transporter and producer
of natural gas;
telecommunications provider 350,000 10,915,625
------------
61,368,126
------------
- ----------
See footnotes on page 10.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
------------ ------------
ELECTRONICS 2.8%
Harris
Developer of electronic
products and services 240,000 $ 8,790,000
Raytheon (Class B)
Producer of defense and
commercial electronics 300,000 15,975,000
------------
24,765,000
------------
ENERGY 10.2%
BP Amoco (ADRs)
(United Kingdom)
Oil producer, refiner, and
distributor 175,000 15,684,375
Chevron
Explorer, developer, and
producer of crude oil
and natural gas 255,000 21,149,062
Exxon
Explorer and producer
of natural gas, oil, and
petroleum products 295,000 21,571,875
Mobil
International oil enterprise 145,000 12,633,125
Royal Dutch Petroleum (Netherlands)
Provider of international
oil services 280,000 13,405,000
Schlumberger
Worldwide provider of
energy services 120,000 5,535,000
------------
89,978,437
------------
FINANCE AND
INSURANCE 17.9%
American General
Provider of insurance
and annuity services 245,000 19,110,000
Bank of New York
Commercial bank 640,000 25,760,000
BankAmerica
Commercial bank 200,000 12,025,000
Chubb
International holding company
specializing in property and
casualty insurance 140,000 9,082,500
Citigroup
Provider of investment
services and insurance 290,000 14,355,000
Fannie Mae
Provider of mortgage financing 215,000 15,910,000
Hartford Financial
Services Group
International insurance
supplier 250,000 13,718,750
Lincoln National
Provider of life insurance and
investment management
services 185,000 15,135,313
Mellon Bank
Provider of financial
services 150,000 10,312,500
Morgan (J.P.)
Provider of financial services 70,000 7,354,375
Washington Mutual
Provider of financial services 394,800 15,076,425
------------
157,839,863
------------
FOOD 3.5%
ConAgra
Producer and manufacturer
of prepared foods and
agricultural products 505,000 15,907,500
Sara Lee
Manufacturer of processed
foods and consumer products 540,000 15,221,250
------------
31,128,750
------------
MACHINERY AND
INDUSTRIAL EQUIPMENT 7.3%
GATX
Railcar leasing; equipment
financing 320,000 12,120,000
General Electric
Supplier of industrial
equipment and consumer
products 264,900 27,036,356
United Technologies
Manufacturer of elevators,
jet engines, flight systems,
and automotive parts 230,000 25,012,500
------------
64,168,856
------------
PAPER AND PACKAGING 2.4%
Fort James
Producer of paper and
related products for consumer
and industrial use 325,000 13,000,000
Mead
Manufacturer of paper,
lumber, and wood products 270,000 7,914,375
------------
20,914,375
------------
PRINTING AND
PUBLISHING 0.7%
Knight-Ridder Newspapers
Newspapers; business
information services 110,000 5,623,750
------------
- ----------
See footnotes on page 10.
9
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
------------ ------------
RETAIL TRADE 1.5%
May Department Stores
Department store operator 215,000 $ 12,980,625
------------
TELECOMMUNICATIONS 9.8%
AT&T
Provider of telecommunications
services 165,000 12,416,250
Ameritech
Provider of telecommunications
services 440,000 27,885,000
GTE
Provider of telephone services,
systems, and equipment 445,000 30,009,688
SBC Communications
Provider of telephone services 305,000 16,355,625
------------
86,666,563
------------
TOBACCO 3.3%
Philip Morris
Manufacturer of tobacco
products, food, and beverages 550,000 29,425,000
------------
TRANSPORTATION 1.3%
Norfolk Southern
Railroad holding company 375,000 11,882,813
------------
SHARES OR
PRINCIPAL
AMOUNT VALUE
------------ ------------
MISCELLANEOUS/
DIVERSIFIED 1.5%
AlliedSignal
Producer of aerospace
and automotive materials 290,000 shs. $ 12,850,625
------------
TOTAL COMMON STOCKS
(Cost $603,779,933) 832,738,406
------------
SHORT-TERM
HOLDINGS 5.1%
Bank of Nova Scotia,
Grand Cayman,
Fixed Time Deposit,
43/4%, 1/4/1999 $22,267,000 22,267,000
Republic National Bank of
New York, Grand Cayman,
Fixed Time Deposit,
45/8%, 1/4/1999 22,268,000 22,268,000
------------
TOTAL SHORT-TERM
HOLDINGS
(Cost $44,535,000) 44,535,000
------------
TOTAL INVESTMENTS 99.6%
(Cost $648,314,933) 877,273,406
OTHER ASSETS
LESS LIABILITIES 0.4% 3,583,555
------------
NET ASSETS 100.0% $880,856,961
============
- ----------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $603,779,933) ................................................... $832,738,406
Short-term holdings (cost $44,535,000) .............................................. 44,535,000 $ 877,273,406
------------
Cash ................................................................................................... 555,660
Receivable for Capital Stock sold ...................................................................... 3,551,188
Receivable for interest and dividends .................................................................. 1,594,596
Investment in, and expenses prepaid to, shareholder service agent ...................................... 176,011
Other .................................................................................................. 54,333
-------------
Total Assets ........................................................................................... 883,205,194
-------------
LIABILITIES:
Payable for Capital Stock repurchased .................................................................. 921,470
Accrued expenses, taxes, and other ..................................................................... 1,426,763
-------------
Total Liabilities ...................................................................................... 2,348,233
-------------
Net Assets ............................................................................................. $ 880,856,961
=============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.50 par value; 500,000,000 shares authorized;
55,866,036 shares outstanding):
Class A .............................................................................................. $ 24,094,902
Class B .............................................................................................. 1,116,138
Class D .............................................................................................. 2,721,978
Additional paid-in capital ............................................................................. 613,458,282
Distributions in excess of net investment income ....................................................... (177,833)
Undistributed net realized gain ........................................................................ 10,684,958
Net unrealized appreciation of investments ............................................................. 228,958,536
-------------
Net Assets ............................................................................................. $ 880,856,961
=============
NET ASSET VALUE PER SHARE:
Class A ($760,175,810 / 48,189,804 shares) ............................................................. $15.77
======
Class B ($35,073,233 / 2,232,277 shares) ............................................................... $15.71
======
Class D ($85,607,918 / 5,443,955 shares) ............................................................... $15.73
======
</TABLE>
- ----------
See Notes to Financial Statements.
11
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................................................ $ 21,888,191
Interest ............................................................................. 2,549,508
-------------
Total Investment Income (net of foreign taxes withheld of $108,141) ................................... $ 24,437,699
EXPENSES:
Management fee ....................................................................... 5,594,520
Distribution and service fees ........................................................ 2,924,109
Shareholder account services ......................................................... 1,241,294
Custody and related services ......................................................... 175,589
Registration ......................................................................... 137,555
Shareholder reports and communications ............................................... 136,745
Auditing and legal fees .............................................................. 88,474
Directors' fees and expenses ......................................................... 21,901
Miscellaneous ........................................................................ 33,102
-------------
Total Expenses ........................................................................................ 10,353,289
-------------
Net Investment Income ................................................................................. 14,084,410
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments ..................................................... 105,122,144
Net realized loss from foreign currency transactions ................................. (1,638,670)
Net change in unrealized appreciation of investments ................................. 18,022,366
Net change in unrealized depreciation on translation of assets and
liabilities denominated in foreign currencies ...................................... 1,231,505
-------------
Net Gain on Investments and Foreign Currency Transactions ............................................. 122,737,345
-------------
Increase in Net Assets from Operations ................................................................ $ 136,821,755
=============
</TABLE>
- ----------
See Notes to Financial Statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................................................. $ 14,084,410 $ 13,966,222
Net realized gain on investments ...................................................... 105,122,144 135,910,283
Net realized loss from foreign currency transactions .................................. (1,638,670) (1,513,242)
Net change in unrealized appreciation of investments .................................. 18,022,366 19,276,740
Net change in unrealized appreciation/depreciation on translation of
assets and liabilities denominated in foreign currencies ........................... 1,231,505 (2,113,562)
------------- -------------
Increase in Net Assets from Operations ................................................ 136,821,755 165,526,441
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ............................................................................ (13,006,242) (13,924,923)
Class B ............................................................................ (301,403) (164,161)
Class D ............................................................................ (851,270) (893,492)
Net realized gain on investments:
Class A ............................................................................ (111,760,141) (87,928,428)
Class B ............................................................................ (4,472,471) (1,905,117)
Class D ............................................................................ (12,434,658) (8,996,490)
------------- -------------
Decrease in Net Assets from Distributions ............................................. (142,826,185) (113,812,611)
------------- -------------
<CAPTION>
SHARES
------------------------------
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997
------------- -------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ............................................ 1,075,908 1,308,404 17,690,194 21,242,046
Class B ............................................ 664,577 626,437 10,829,016 10,275,506
Class D ............................................ 542,815 653,126 8,937,844 10,523,717
Investment of dividends:
Class A ............................................ 467,206 473,066 7,430,217 7,757,656
Class B ............................................ 17,828 9,277 279,506 152,545
Class D ............................................ 49,412 50,194 779,902 821,894
Exchanged from associated Funds:
Class A ............................................ 8,129,002 5,617,352 129,536,299 89,701,736
Class B ............................................ 486,767 213,033 7,903,883 3,448,926
Class D ............................................ 3,098,173 2,927,353 49,213,928 48,648,056
Shares issued in payment of gain
distributions:
Class A ............................................ 5,077,418 3,903,524 79,072,919 61,643,305
Class B ............................................ 271,666 114,620 4,204,415 1,797,496
Class D ............................................ 741,851 534,270 11,512,215 8,416,701
------------- ------------- ------------- -------------
Total ................................................. 20,622,623 16,430,656 327,390,338 264,429,584
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ............................................ (4,342,402) (3,842,001) (70,858,055) (62,421,380)
Class B ............................................ (212,770) (62,983) (3,418,774) (1,046,510)
Class D ............................................ (971,678) (800,763) (15,746,103) (12,923,435)
Exchanged into associated Funds:
Class A ............................................ (8,352,447) (5,397,178) (132,655,143) (86,520,445)
Class B ............................................ (227,709) (102,320) (3,672,827) (1,680,196)
Class D ............................................ (3,108,165) (2,573,135) (49,277,507) (43,101,112)
------------- ------------- ------------- -------------
Total ................................................. (17,215,171) (12,778,380) (275,628,409) (207,693,078)
------------- ------------- ------------- -------------
Increase in Net Assets from Capital
Share Transactions ................................. 3,407,452 3,652,276 51,761,929 56,736,506
============= ============= ------------- -------------
Increase in Net Assets ................................................................ 45,757,499 108,450,336
NET ASSETS:
Beginning of year ..................................................................... 835,099,462 726,649,126
------------- -------------
End of Year (including distributions in excess of net investment income and
undistributed net investment income of $(177,833) and $20,589, respectively) ....... $ 880,856,961 $ 835,099,462
============= =============
</TABLE>
- ----------
See Notes to Financial Statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Multiple Classes of Shares -- Seligman Common Stock Fund, Inc. (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
charge ("CDSC") of 1% on redemptions within 18 months of purchase. Class B
shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75%, a service fee of up to 0.25% on an annual basis, and
a CDSC, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of up
to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSC, if
applicable, of 1% imposed on redemptions made within one year of purchase. The
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 an exchange are valued at last sales prices
or, in their absence and in the case of over-the-counter securities, at the
mean of bid and asked prices. Short-term holdings maturing in 60 days or
less are valued at amortized cost.
b. Foreign Currency Transactions -- The books and records of the Fund are
maintained in 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, 1998, 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
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
will have no effect on net assets, results of operations, or net asset
value per share of the Fund.
For the year ended December 31, 1998, the Fund redeemed 17,215,171 of its
shares from shareholders aggregating $275,628,409, of which approximately
$24,400,000 represents capital gain distributions. This information is
provided for federal income tax purposes only.
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, 1998, amounted to $755,551,791 and $783,919,408,
respectively.
At December 31, 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 $232,238,319 and $3,279,846, respectively.
4. Management Fee, Distribution Services, and Other Transactions -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides the necessary personnel and facilities. Compensation of all officers of
the Fund, all directors of the Fund who are employees or consultants of the
Manager, and all personnel of the Fund and the Manager is paid by the Manager.
The Manager receives a fee, calculated daily and payable monthly, equal to 0.65%
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.
Prior to March 31, 1998, Seligman Henderson Co., an entity owned 50% each
by the Manager and Henderson International, Inc., a subsidiary of Henderson plc,
supervised and directed all or a portion of the Fund's foreign investments. For
this service, the Manager paid Seligman Henderson Co. a monthly fee.
Seligman Advisors, Inc. (the "Distributor") (formerly Seligman Financial
Services, Inc.), agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $58,596 from sales of Class A
shares, after commissions of $449,760 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,
1998, fees incurred under the Plan aggregated $1,818,756 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 year ended December 31, 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 $276,947 and $828,406, respectively.
The Distributor is entitled to retain any CDSC 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, 1998, such charges amounted to $17,980.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC and the distribution fees with respect to Class B
shares described above, the Distributor receives payments
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
from the Purchaser based on the value of Class Bshares sold. The aggregate
amount of such payments retained by the Distributor, for the year ended December
31, 1998, amounted to $16,073.
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, 1998, Seligman Services, Inc. received commissions of $25,939 from the sale
of shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $459,344, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $1,240,581 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 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 the
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in directors' fees and
expenses, and the accumulated balance thereof at December 31, 1998, of $177,833
is included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
5. Committed Line of Credit -- 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%. 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.
16
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five years or from its inception, if less than five
years. Certain information reflects financial results for a single share of a
Class that was held throughout the periods shown. Per share amounts are
calculated using average shares outstanding. "Total return" shows the rate that
you would have earned (or lost) on an investment in each Class, assuming you
reinvested all your dividends and capital gain distributions. Total returns do
not reflect any sales charges and are not annualized for periods of less than
one year.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year ........................... $15.92 $14.89 $14.19 $12.12 $13.47
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income ........................................ 0.28 0.30 0.35 0.36 0.38
Net realized and unrealized gain (loss)
on investments ............................................. 2.32 3.18 1.81 3.00 (0.64)
Net realized and unrealized gain (loss)
from foreign currency transactions ......................... -- (0.07) -- 0.01 --
--------- --------- --------- --------- ---------
Total from Investment Operations ............................. 2.60 3.41 2.16 3.37 (0.26)
--------- --------- --------- --------- ---------
Less Distributions:
Dividends from net investment income ......................... (0.28) (0.32) (0.34) (0.36) (0.37)
Distributions from net realized capital gains ................ (2.47) (2.06) (1.12) (0.94) (0.72)
--------- --------- --------- --------- ---------
Total Distributions .......................................... (2.75) (2.38) (1.46) (1.30) (1.09)
--------- --------- --------- --------- ---------
Net Asset Value, End of Year ................................. $15.77 $15.92 $14.89 $14.19 $12.12
========= ========= ========= ========= =========
TOTAL RETURN: 17.40% 23.58% 15.44% 28.17% (1.89)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) ....................... $760,176 $734,635 $656,260 $614,400 $510,956
Ratio of expenses to average net assets ...................... 1.11% 1.13% 1.15% 0.93% 0.85%
Ratio of net income to average net assets .................... 1.73% 1.83% 2.36% 2.56% 2.93%
Portfolio turnover rate ...................................... 93.67% 106.02% 56.10% 46.08% 57.17%
</TABLE>
- ----------
See footnotes on page 18.
17
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-----------------------------------
YEAR ENDED
DECEMBER 31, 4/22/96*
---------------------- TO
1998 1997 12/31/96
--------- --------- ---------
<S> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period ........................ $15.88 $14.87 $14.80
--------- --------- ---------
Income from Investment Operations:
Net investment income ....................................... 0.16 0.17 0.15
Net realized and unrealized gain
on investments ............................................ 2.31 3.17 1.20
Net realized and unrealized gain (loss)
from foreign currency transactions ........................ -- (0.07) --
--------- --------- ---------
Total from Investment Operations ............................ 2.47 3.27 1.35
--------- --------- ---------
Less Distributions:
Dividends from net investment income ........................ (0.17) (0.20) (0.16)
Distributions from net realized capital gains ............... (2.47) (2.06) (1.12)
--------- --------- ---------
Total Distributions ......................................... (2.64) (2.26) (1.28)
--------- --------- ---------
Net Asset Value, End of Period .............................. $15.71 $15.88 $14.87
========= ========= =========
TOTAL RETURN: 16.48% 22.59% 9.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) .................... $35,073 $19,568 $6,451
Ratio of expenses to average net assets ..................... 1.87% 1.89% 1.92%+
Ratio of net income to average net assets ................... 0.97% 1.07% 1.55%+
Portfolio turnover rate ..................................... 93.67% 106.02% 56.10%++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year .......................... $15.89 $14.87 $14.16 $12.07 $13.46
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income ....................................... 0.16 0.17 0.24 0.24 0.22
Net realized and unrealized gain (loss)
on investments ............................................ 2.32 3.18 1.80 3.00 (0.66)
Net realized and unrealized gain (loss)
from foreign currency transactions ........................ -- (0.07) -- 0.01 --
--------- --------- --------- --------- ---------
Total from Investment Operations ............................ 2.48 3.28 2.04 3.25 (0.44)
--------- --------- --------- --------- ---------
Less Distributions:
Dividends from net investment income ........................ (0.17) (0.20) (0.21) (0.22) (0.23)
Distributions from net realized capital gains ............... (2.47) (2.06) (1.12) (0.94) (0.72)
--------- --------- --------- --------- ---------
Total Distributions ......................................... (2.64) (2.26) (1.33) (1.16) (0.95)
--------- --------- --------- --------- ---------
Net Asset Value, End of Year ................................ $15.73 $15.89 $14.87 $14.16 $12.07
========= ========= ========= ========= =========
TOTAL RETURN: 16.55% 22.66% 14.58% 27.17% (3.24)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) ...................... $85,608 $80,896 $63,938 $46,564 $14,416
Ratio of expenses to average net assets ..................... 1.87% 1.89% 1.91% 1.72% 1.96%
Ratio of net income to average net assets ................... 0.97% 1.07% 1.61% 1.80% 1.68%
Portfolio turnover rate 93.67% 106.02% 56.10% 46.08% 57.17%
</TABLE>
- ----------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
See Notes to Financial Statements.
18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman 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, 1998, 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, 1998, 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, 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
January 29, 1999
- --------------------------------------------------------------------------------
19
<PAGE>
FEDERAL TAX STATUS OF 1998 DIVIDEND AND
GAIN DISTRIBUTIONS FOR TAXABLE ACCOUNTS
- --------------------------------------------------------------------------------
The quarterly dividends paid to Class A, B, and D shareholders in 1998 are
taxable as ordinary income for federal tax purposes, regardless of whether they
were received in cash or in shares. Under the Internal Revenue Code, 77.34% of
the dividends paid to Class A, B, and D shareholders has been designated as
qualifying for the dividends received deduction available to corporate
shareholders. In order to claim the dividends received deduction for these
distributions, corporate shareholders must have held the Fund's shares for at
least 46 days or more during the 90-day period beginning 45 days before each
ex-dividend date.
A distribution of $1.180 per share, from net long-term gain realized on
investments during the period November 1, 1997, to December 31, 1997, was paid
on June 24, 1998, to Class A, B, and D shareholders. On November 23, 1998, a
distribution of $1.288 per share from net long-term gain realized on investments
in 1998, was paid to Class A, B and D shareholders. In 1997, Congress revised
the capital gains provisions, so that depending on how long a security was owned
when it was sold, investors may have been faced with a 28% capital gains rate, a
20% rate, or both. In October 1998, Congress simplified the capital gains
provisions so that, generally, all gains on securities held more than one year
are to be taxed at a maximum 20% rate. The distributions from net long-term gain
are designated as "capital gain dividends" for federal income tax purposes and
are taxable to shareholders in 1998 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, any loss on the sale would be
treated as long-term to the extent it offsets the long-term capital gain
distribution.
If the gain distributions were paid in shares, the per share cost basis for
federal income tax purposes is $16.02 for Class A shares and $15.98 for Class B
and D shares for the June 24 distribution, and $15.19 for Class A shares, $15.12
for Class B shares, and $15.13 for Class D shares for the November 23
distribution.
A 1998 year-end statement of account activity and a 1998 tax package, which may
include a Form 1099-DIV, a Form 1099-B, and/or a Cost Basis Statement, have been
mailed to each shareholder. Form 1099-DIVshows the distributions paid to the
shareholder during the year. Form 1099-B shows the proceeds of any redemptions
paid to the shareholder during the year. Cost Basis Statements report all sales
or exchanges from a shareholder's account which may have resulted in a capital
gain or loss in 1998. The information shown on Forms 1099-DIV and 1099-Bis
reported to the Internal Revenue Service as required by federal regulations.
- --------------------------------------------------------------------------------
20
<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.
Director, New York 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, KeySpan Energy Corporation
Trustee, Committee for Economic Development
Director, Public Broadcasting Service
Richard R. Schmaltz 1
Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated
Trustee Emeritus, Colby College
Robert L. Shafer 3, 4
Retired Vice President, Pfizer Inc.
James N. Whitson 2, 4
Director and Consultant, Sammons Enterprises, Inc.
Director, C-SPAN
Director, CommScope, Inc.
Brian T. Zino 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Director, ICI Mutual Insurance Company
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
- --------------------------------------------------------------------------------
21
<PAGE>
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
William C. Morris
Chairman
Brian T. Zino
President
Charles C. Smith, Jr.
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
- --------------------------------------------------------------------------------
22
<PAGE>
GLOSSARY OF FINANCIAL TERMS
Capital Gain Distribution -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
Capital Appreciation/Depreciation -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
Compounding -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
Contingent Deferred Sales Charge (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
Dividend -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
Dividend Yield -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
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, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC Yield -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
Securities and Exchange Commission -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
Statement of Additional Information -- A document that contains updated or more
detailed information about an investment company and that supplements the
prospectus. It is available at no charge upon request.
Total Return -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
Yield on Securities -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- ----------
Adapted from the Investment Company Institute's 1998 Mutual Fund Fact Book.
23
<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 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.
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
EQCS2 12/98 [LOGO]Printed on Recycled Paper
<PAGE>
