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Seligman
Growth
Fund, Inc.
- - --------------------------------------------------------------------------------
A Growth Stock Fund
- - --------------------------------------------------------------------------------
58th Annual Report
1994
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[LOGO]
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Seligman Growth Fund
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A mutual fund that seeks to provide longer-term growth in capital value for its
shareholders and an increase in future income. The Fund invests primarily in the
common stocks of companies selected for their growth prospects.
<TABLE>
<CAPTION>
Highlights of 1994
- - -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 December 31, 1993
------------------------- ------------------------
Class A Class D Class A Class D
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets (in thousands) ...................................... $513,328 $1,742 $591,491 $1,197
- - -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ...................................... $4.54 $4.38 $5.26 $ 5.23
With December 1994 Gain Distribution
Taken in Shares ............................................ 5.05 4.89 -- --
Decrease in Net Asset Value with Gain
Distribution Taken in Shares ............................... (4.03)%(1) (6.56)% -- --
- - -----------------------------------------------------------------------------------------------------------------------------------
Dividends Paid per Share ....................................... $0.01 -- $0.01 --
Distribution of Realized Gain per Share ........................ 0.50 $0.50 1.13 $ 1.13
- - -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses per Dollar of Average Net Assets ................ $0.0090 $0.0293 $0.0089 $0.0217+
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excluding effect of dividend paid.
+ Annualized.
1
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To the Shareholders
- - --------------------------------------------------------------------------------
We are pleased to report Seligman Growth Fund's long-term investment results,
portfolio holdings, and audited financial statements at December 31, 1994.
For your Fund's Class A shares, net asset value per share was $4.54 at
December 31, compared to $5.10 at September 30, and $5.26 a year ago. For your
Fund's Class D shares, net asset value per share was $4.38 at December 31,
compared to $4.95 at September 30, and $5.23 a year ago. For both Class A and D
shares, the change in net asset value is partly caused by the deduction of the
$0.50 per share capital gain payment made on December 20 to Shareholders of
record December 13.
On December 20, your Fund paid a $0.01 per share dividend to Class A
shareholders of record December 13. No dividend was paid to Class D
shareholders.
For your Fund's Class A shares, total return was -0.82% for the three
months and -3.84% for the 12 months ended December 31. For your Fund's Class D
shares, total return was -1.27% and -6.56%, respectively, for the same periods.
This compares to the Standard & Poor's 500 Composite Stock Price Index's total
return of -0.02% for the three months and 1.32% for the 12 months ended December
31. (Total return reflects change in net asset value and assumes any
distributions paid within the period are reinvested in additional shares. Class
A returns do not, however, reflect the effect of the maximum initial sales
charge of 4.75%, and Class D returns do not reflect the effect of the 1%
contingent deferred sales load.)
While your Fund's performance in 1994 was less favorable, its longer-term
performance remains strong. Please refer to page 4 for a discussion with your
Portfolio Manager about your Fund's performance in 1994, followed by the chart
and table that analyze longer-term performance.
Looking back on 1994, the one generalization that can be made with
confidence is that it was a turbulent and trying year for equity and bond
investors alike. The Federal Reserve Board exhibited an aggressive stance
against inflation, putting through six short-term interest rate increases by the
end of the year. This caused an upheaval in the bond market, with yields
increasing and bond prices spiraling lower--an event in the financial markets
unmatched in magnitude since 1973-74. The equity market remained hostage to the
bond market and demonstrated lackluster performance for the year.
The U.S. economy continued to grow at a modest yet controlled pace,
accompanied by corporate news of solid growth and strong earnings. This economic
news, although positive, caused the underlying question to remain: Will the
economy overheat, opening the door to increased inflation? We don't believe so.
We believe an economic slowdown is close at hand. In March of 1995, the
current growth cycle will mark its fourth year. The consumer has both increased
debt as a percentage of income and drawn down savings--suggesting nearer-term
caution after a stronger-than-expected pattern of spending in 1994. We also
believe that inflation will remain under control in light of intense global
competition, low unit labor costs, and an aging population that should favor
saving over spending. Job creation remains robust despite gains in productivity,
and U.S. competitiveness in world markets is likely to be enhanced under
G.A.T.T.--General Agreement on Tariffs and Trade.
For more information about Seligman Growth Fund, or your investment in its
shares, please write or call the toll-free telephone numbers listed on page 19.
By order of the Board of Directors,
s/ William C. Morris
William C. Morris
Chairman
s/ Ronald T. Schroeder
Ronald T. Schroeder
President
February 3, 1995
2
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Seligman Growth Fund
- - --------------------------------------------------------------------------------
Federal Tax Information for 1994
Dividend and Gain Distributions
For Taxable Accounts
The dividend of $0.01 per share, paid on December 20, 1994, to Class A
shareholders, is taxable as ordinary dividend income for federal tax purposes.
It makes no difference whether you received it in cash or in shares. Under the
Internal Revenue Code, 69.42% of the dividend paid to Class A shareholders has
been designated as qualifying for the dividend received deduction available to
corporate shareholders. In order to claim the dividends received deduction for
this distribution, corporate shareholders must have held the Fund's shares for
at least 46 days.
The distribution of $0.50 per share from taxable net long-term gain
realized on investment transactions during 1994, paid on December 20, 1994, to
both Class A and D shareholders, is designated a "capital gain dividend" for
federal income tax purposes and is taxable to shareholders in 1994 as a
long-term gain from the sale of capital assets, no matter how long the shares
may have been owned or whether the distribution was paid in shares or in cash.
However, if shares on which a capital gain distribution was received are
subsequently sold, and such shares were held for six months or less from date of
purchase, any loss would be treated as long term to the extent it offsets the
long-term gain distribution.
If the gain distribution was received in shares, the per share cost basis
for federal income tax purposes was $4.47 for Class A and $4.32 for Class D. The
tax cost basis of shares previously held is not affected.
A year-end statement of account showing activity for 1994 has been mailed
to each shareholder. Under "Tax Information for Calendar Year," the statement
shows the proceeds of any redemptions paid to shareholders during the year and
reported to the Internal Revenue Service as required by federal regulations
(Form 1099-B). In addition, a separate Form 1099-DIV, showing the amounts of
dividends and the distribution from gain on investments paid during the year,
has been mailed to each shareholder.
3
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Annual Performance Overview
- - --------------------------------------------------------------------------------
The following is a biography of your Portfolio Manager, a discussion with him
regarding Seligman Growth Fund, and a comparison chart of your Fund's
performance against the Standard & Poor's 500 Composite Stock Price Index and
the Lipper Growth Fund Average.
Your Portfolio Manager
[PHOTOGRAPH] David Watts is a Managing Director of J. & W. Seligman & Co.
Incorporated and Portfolio Manager and Vice President of Seligman
Growth Fund. He has more than 37 years of investment research and
portfolio management experience and has been with Seligman since
1957. Mr. Watts is supported by a group of investment
professionals dedicated to the growth investment discipline, and
to the objectives of Seligman Growth Fund.
Iain C. Clark, Chief Investment Officer of Seligman Henderson
Co., is responsible for the investment activities of Seligman
Growth Fund's Subadviser, Seligman Henderson Co. Mr. Clark is
also head of International Investments for, and a Director of,
Henderson Administration Group plc, an investment manager in
London, England. He has been with Henderson since 1985.
Economic Factors Affecting Seligman Growth Fund
"Your Fund's results in the first half of 1994 were negatively affected by
rising interest rates in the U.S. and fears of increased inflation. Higher U.S.
interest rates also negatively affected most stock markets around the world.
Following a sharp downdraft in June, growth stocks in the U.S. began to recover.
Along with the natural snapback in prices, the turnaround of growth stocks
reflected the growing belief in a possible slowing of both the economy and
corporate profits in 1995, and increased confidence that, under these
conditions, stocks of many growth companies with strong earnings trends will
perform relatively well. As a result, after a lackluster first half of the year,
your Fund's Class A shares rose 5.4% in the second half."
Your Manager's Investment Strategy
"During the year, our investment strategy for the domestic portion of the
portfolio took several forms: 1) continued increase in technology holdings,
reflecting the strength of the productivity-driven capital equipment cycle and
the rash of new product cycles; 2) rebuilding your portfolio's health care
sector, emphasizing those companies in the forefront of cost-containment efforts
under managed care; and 3) increased emphasis on consumer-staple companies with
well-known brand names and major exposure overseas, where unit growth and
pricing power are far greater than in the U.S. As a source of capital, we
reduced holdings of consumer-cyclical stocks, as well as certain financial
companies that have been squeezed by the sharp increase in short-term interest
rates.
"In the international portion of the portfolio, which represents 9.7%, we
significantly increased the diversification, both by country and by the number
of holdings, with investments in Continental Europe and in a broad range of
countries in the Pacific."
4
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- - --------------------------------------------------------------------------------
Looking Ahead
"Looking ahead, it is believed that the economic recovery in the U.S., as it
moves past its fourth anniversary this March, will slow somewhat and that
inflation will be somewhat higher in 1995, as compared to 1994. Under these
circumstances, growth stocks should come into their own after being out of favor
for the better part of 1993 and 1994. In addition, the economies of most
countries outside the U.S. seem set to continue to improve in 1995. Inflation
should remain under control and the growth in corporate profits should continue
to be strong. This backdrop suggests a reasonably positive outlook for the
international markets over the next year. Your Fund seems well structured to
participate fully in such a shift in conditions.
"Our strategy in 1995 will be to seek further opportunities in stable growth
sectors, such as consumer staples, and, at the same time, to not overlook stocks
of companies involved in productivity improvements and the buildup of
infrastructure throughout the world. We will also continue to identify
individual opportunities for growth, which are likely to appear throughout all
market sectors."
5
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Ten-Year Performance Comparison Chart and Table December 31, 1994
- - --------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman Growth
Fund Class A shares, with and without the maximum initial sales charge of 4.75%,
for the 10-year period ended December 31, 1994, to a $10,000 hypothetical
investment made in the Standard & Poor's 500 Composite Stock Price Index (S&P
500) and the Lipper Growth Fund Average (Lipper Growth) for the same period. The
performance of Seligman Growth Fund Class D shares is not shown in this chart,
but is included in the table below. It is important to keep in mind that the S&P
500 excludes the effect of any fees or sales charges, and the Lipper Growth
excludes the effects of any sales charges.
[The table below was represented as a graph in the printed material]
<TABLE>
<CAPTION>
Lipper Seligman Growth Seligman Growth
Growth Fund w/o Load with Load S & P Index
----------- -------- --------- -----------
<S> <C> <C> <C> <C>
12/31/84 $10,000 $10,000 $9,523 $10,000
12/31/85 $12,828 $12,950 $12,332 $13,164
12/31/86 $14,651 $15,054 $14,336 $15,615
12/31/87 $15,091 $15,574 $14,831 $16,424
12/31/88 $17,241 $16,717 $15,920 $19,133
12/31/89 $21,801 $22,358 $21,292 $25,177
12/31/90 $20,841 $21,204 $20,193 $24,393
12/31/91 $28,497 $29,358 $27,957 $31,793
12/31/92 $30,783 $32,674 $31,115 $34,212
12/31/93 $34,076 $34,698 $33,043 $37,645
12/31/94 $33,752 $33,365 $31,774 $38,334
</TABLE>
The table below shows the average annual total returns for the one-year,
five-year, and 10-year periods through December 31, 1994, for the Seligman
Growth Fund Class A shares, with and without the maximum initial sales charge of
4.75%, the S&P 500, and the Lipper Growth. Also included in the table are the
average annual total returns for the one-year and since-inception periods
through December 31, 1994, for the Seligman Growth Fund Class D shares, with and
without the effect of the 1% contingent deferred sales load ("CDSL") imposed on
shares redeemed within one year of purchase, the S&P 500, and the Lipper Growth.
Average Annual Total Return
One Five Ten
Year Years Years
-------- -------- ---------
Seligman Growth Fund
Class A with sales charge (8.37)% 7.30% 12.26%
Class A without sales charge (3.84) 8.34 12.81
S&P 500 1.32 8.70 14.34
Lipper Growth (2.17) 8.82 12.94
Since
One Inception
Year 5/3/93
------ ---------
Seligman Growth Fund
Class D with CDSL (7.40)% N/A
Class D without CDSL (6.56) 2.99%
S&P 500 1.32 5.59
Lipper Growth (2.17) 4.39
No adjustment was made to performance for periods prior to January 1, 1993, the
commencement date for the annual Administration, Shareholder Services and
Distribution Plan fee of up to 0.25% of average daily net assets of Class A
shares. THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES CHARGES
AND FEES PAID BY SHAREHOLDERS. Performance data quoted represent changes in
price and assume that all distributions within the periods are invested in
additional shares. The investment return and principal value of an investment
will fluctuate so that shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment results.
6
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Seligman Growth Fund
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<TABLE>
<CAPTION>
Diversification of Assets December 31, 1994 Percent Percent of
of Net Net Assets
Issues Cost Value Assets Dec. 31, 1993
------ ------------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C>
Net Cash and Short-Term Holdings .......... 1 $ 20,767,894 $ 20,767,894 4.0 1.1
--- ------------- ------------- ----- -----
Common Stocks
Apparel ................................... -- -- -- -- 0.3
Automotive and Related .................... 8 33,402,092 41,348,438 8.0 12.5
Building and Construction ................. 1 1,277,266 1,225,395 0.2 3.7
Business Services ......................... 6 30,471,190 39,014,979 7.6 4.9
Chemicals ................................. 2 2,146,955 2,090,138 0.4 --
Consumer Goods and Services ............... 7 44,844,794 48,348,289 9.4 5.4
Drugs and Health Care ..................... 12 65,875,412 73,529,741 14.3 10.7
Energy .................................... 2 3,269,375 2,679,875 0.5 0.8
Financial Services ........................ 6 25,870,523 40,048,464 7.8 8.0
Industrial Equipment ...................... 8 13,984,834 13,614,376 2.7 --
Insurance ................................. -- -- -- -- 0.5
Leisure and Entertainment ................. 6 27,847,110 35,229,495 6.8 13.3
Metals .................................... 2 3,805,888 5,131,356 1.0 2.5
Printing and Publishing ................... 1 1,725,354 2,087,659 0.4 --
Retail Trade .............................. 8 46,426,248 61,159,553 11.9 10.3
Technology ................................ 12 63,411,584 73,155,625 14.2 9.5
Telecommunications ........................ 9 31,258,301 35,634,104 6.9 11.8
Transportation ............................ 2 2,105,145 2,298,674 0.4 1.6
Miscellaneous ............................. 6 17,300,682 17,705,792 3.5 3.1
--- ------------- ------------- ----- -----
98 415,022,753 494,301,953 96.0 98.9
--- ------------- ------------- ----- -----
Net Assets ................................ 99 $ 435,790,647 $ 515,069,847 100.0 100.0
=== ============= ============= ===== =====
</TABLE>
Largest Portfolio Changes*
During Past Three Months
Shares
--------------------------
Holdings
Additions Increase 12/31/94
- - --------- -------- ----------
Chrysler.................... 100,000 100,000
COMPAQ Computer............. 125,000 125,000
Diebold..................... 125,000 125,000
Johnson & Johnson........... 100,000 100,000
Liz Claiborne............... 275,000 275,000
Microsoft................... 125,000 225,000
Pfizer...................... 50,000 50,000
Procter & Gamble............ 100,000 100,000
TeleWest Communications
(ADRs).................... 150,000 150,000
Viacom (Class B)............ 100,000 100,000
Holdings
Reductions Decrease 12/31/94
- - ----------- -------- ----------
Comcast (Class A)........... 255,000 45,000
Eaton....................... 125,000 --
Enron....................... 175,000 --
Federal National
Mortgage Association...... 50,000 --
Ford Motor.................. 200,000 --
General Signal.............. 125,000 --
Grace (W.R.)................ 125,000 --
Leggett & Platt............. 100,000 --
Lotus Development........... 130,000 20,000
PETsMART.................... 125,000 75,000
* Largest portfolio changes from the previous quarter to the current quarter
are based on cost of purchases and proceeds from sales of securities.
Major Portfolio Holdings
at December 31, 1994
Security Value
- - ------- -----------
Home Depot.............................. $21,850,000
United Healthcare....................... 21,434,375
Columbia/HCA Healthcare................. 19,162,500
Motorola................................ 19,098,750
Nordstrom............................... 18,956,250
American International Group............ 18,375,000
Coca-Cola............................... 15,450,000
Harley-Davidson......................... 14,000,000
Microsoft............................... 13,781,250
Disney, Walt............................ 11,531,250
7
<PAGE>
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Portfolio of Investments
- - --------------------------------------------------------------------------------
Shares Value
------ -----
Common Stocks--96.0%
Automotive and Related--8.0%
Autoliv (ADRs)+*
Swedish supplier of safety
restraint systems ........................ 70,000 $ 2,699,375
Automotive Industries (Class A)*
Manufacturer of automobile
interiors ................................ 75,000 1,537,500
Breed Technologies*
Supplier of air bags to the
automotive industry ...................... 100,000 2,837,500
Chrysler
The third largest producer of
automobiles .............................. 100,000 4,900,000
Echlin
Manufacturer of motor vehicle
replacement parts ........................ 300,000 9,000,000
Exide
Manufacturer of ignition
batteries ................................ 75,000 4,214,063
Harley-Davidson
Motorcycle manufacturer .................. 500,000 14,000,000
Standard Products
Producer of rubber and plastic
automotive products ...................... 90,000 2,160,000
------------
41,348,438
------------
Building and Construction--0.2%
Wolseley
Supplier of building materials ........... 100,000 1,225,395
------------
Business Services--7.6%
Asatsu
Japanese advertising agency .............. 27,000 1,324,354
First Data
Credit card processing services .......... 225,000 10,659,375
General Motors (Class E)
Worldwide automotive
manufacturer ............................. 100,000 3,850,000
Interpublic Group of Companies
Worldwide advertising
agency ................................... 250,000 8,031,250
Reynolds & Reynolds (Class A)
Supplier of information systems
to auto and medical industries ........... 300,000 7,500,000
SunGard Data Systems*
Back-up computer services for
disaster recovery ........................ 200,000 7,650,000
------------
39,014,979
------------
Chemicals--0.4%
Bayer AG
Producer of specialty chemicals,
pharmaceuticals, and plastics ............ 5,700 1,321,046
Toyo Ink Manufacturing
Ink manufacturer ......................... 119,000 769,092
------------
2,090,138
------------
Consumer Goods and Services--9.4%
Coca-Cola
Soft drinks, consumer
products ................................. 300,000 15,450,000
Colgate-Palmolive
Household and personal care
products ................................. 150,000 9,506,250
Gillette
Personal care products ................... 100,000 7,475,000
Liz Claiborne
Manufacturer and distributor
of women's apparel ....................... 275,000 4,640,625
LVMH Moet-Hennessy
Producers of wine, spirits,
and luxury products ...................... 10,000 1,579,539
Outback Steakhouse*
Steak house style restaurant
chain .................................... 150,000 3,496,875
Procter & Gamble
Household and personal care
products ................................. 100,000 6,200,000
------------
48,348,289
------------
Drugs and Health Care--14.3%
Arjo
Manufacturer of patient
handling equipment ....................... 97,750 1,790,679
Beverly Enterprises
Health care facilities ................... 200,000 2,875,000
Cardinal Health
Leading wholesale distributor
of pharmaceuticals ....................... 40,000 1,855,000
Columbia/HCA Healthcare
Health care facilities and services ...... 525,000 19,162,500
Cordis*
Specialized medical devices .............. 50,000 3,012,500
Healthcare Compare
Health care utilization
review services .......................... 125,000 4,250,000
Johnson & Johnson
Health care products ..................... 100,000 5,475,000
Pfizer
Health care consumer
products; specialty
chemicals ................................ 50,000 3,862,500
Protein Design Laboratories*
Antibody technology ...................... 125,000 1,976,562
United Healthcare
Health maintenance
organization ............................. 475,000 21,434,375
U.S. Healthcare
Health maintenance
organization ............................. 125,000 5,140,625
Warner-Lambert
Drugs, toiletries, and foods ............. 35,000 2,695,000
------------
73,529,741
------------
8
<PAGE>
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December 31, 1994
- - --------------------------------------------------------------------------------
Shares Value
------ -----
Energy--0.5%
Huaneng Power (ADRs)*
The flagship power company
of China ................................. 73,000 $ 1,076,750
YPF Sociedad Anonima (ADRs)
Argentinean oil and gas
company .................................. 75,000 1,603,125
------------
2,679,875
------------
Financial Services--7.8%
American International Group
International insurance .................. 187,500 18,375,000
Den Norske Bank*
Largest bank in Norway ................... 850,000 2,274,542
General Re
Property casualty reinsurer .............. 75,000 9,281,250
Green Tree Financial
Loans for manufactured homes ............. 200,000 6,075,000
Internationale Nederlanden Bank
Insurance and banking group .............. 43,050 2,035,813
UTD Overseas Bank
Second largest bank in Singapore ......... 190,000 2,006,859
------------
40,048,464
------------
Industrial Equipment--2.7%
BBC Brown Boverie
Manufacturer of heavy
equipment for electric power
generation and distribution .............. 2,000 1,721,925
Caterpillar
Earth moving machinery ................... 50,000 2,756,250
FKI Babcock plc
Electrical engineering
company .................................. 700,000 1,632,295
Foster Electric*
Manufacturer of speakers
and microphones .......................... 98,000 742,708
Glory Kogyo
Highly specialized company
servicing banking automations ............ 25,000 811,639
Illinois Tool Works
Fasteners, tools, and
plastic items ............................ 75,000 3,281,250
Keyence
Producer of detection devices for
the manufacturing process ................ 11,500 1,306,162
Tsudakoma
Largest producer of general
textile machines ......................... 140,000 1,362,147
------------
13,614,376
------------
Leisure and Entertainment--6.8%
Capital Cities/ABC
Radio and television broadcasting ........ 125,000 10,656,250
Disney, Walt
Theme parks, hotels, films ............... 250,000 11,531,250
Gaylord Entertainment (Class A)
Theme parks, hotels,
cable television ......................... 200,000 4,550,000
Granada Group
Radio and television broadcasting;
publishing ............................... 230,000 1,835,745
Scandinavian Broadcast System
Television broadcasting in
Scandinavia .............................. 125,000 2,593,750
Viacom (Class B)
Diverse entertainment
communications company ................... 100,000 4,062,500
------------
35,229,495
------------
Metals--1.0%
Nucor
Steel producer ........................... 70,000 3,885,000
Sumitomo Sitix
Titanium producer ........................ 80,000 1,246,356
------------
5,131,356
------------
Printing and Publishing--0.4%
Elsevier
Global printer and publisher
of professional trade
journals and magazines ................... 200,000 2,087,659
------------
Retail Trade--11.9%
Aiya
Restaurant chain in Japan ................ 40,000 743,793
Barnes & Noble*
Retail bookstores ........................ 270,000 8,437,500
Home Depot
Chain of home improvement
stores ................................... 475,000 21,850,000
Hornbach Baumarkt
A large home improvement
and garden center retailer
in Germany ............................... 2,500 1,283,086
Michaels Stores*
Specialty retail stores .................. 180,000 6,232,500
Nordstrom
Department stores ........................ 450,000 18,956,250
PETsMART*
Pet foods, supplies, and
services ................................. 75,000 2,578,125
Renown*
Japanese clothing
manufacturer ............................. 240,000 1,078,299
------------
61,159,553
------------
Technology--14.2%
AMP
Solderless electrical
wire terminals ........................... 25,000 1,818,750
COMPAQ Computer*
Personal computers ....................... 125,000 4,937,500
Compuware*
Developer of systems
software products ........................ 70,000 2,511,250
EMC*
Manufacturer of computer
storage products ......................... 500,000 10,812,500
Intel
Semiconductor manufacturer ............... 100,000 6,375,000
Lam Research*
Manufacturer of plasma-
etching equipment ........................ 175,000 6,496,875
9
<PAGE>
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Portfolio of Investments (continued) December 31, 1994
- - --------------------------------------------------------------------------------
Shares Value
------ -----
Technology (continued)
Linear Technology
Producer of high-
performance semiconductors ............... 100,000 $ 4,937,500
Lotus Development*
Personal computer software ............... 20,000 822,500
Microsoft*
Microcomputer software ................... 225,000 13,781,250
Oracle Systems*
Database management
software ................................. 150,000 6,637,500
Parametric Technology*
Producer of mechanical
design software .......................... 150,000 5,156,250
Xilinx*
Specialized semiconductors ............... 150,000 8,868,750
------------
73,155,625
------------
Telecommunications--6.9%
Century Telephone Enterprises
Regional telephone and cellular
services ................................. 200,000 5,900,000
Comcast (Class A)
Cable company and medium-
sized cellular operator .................. 45,000 705,938
Indosat (ADSs)*
International telecommunications
to the Indonesian market ................ 15,500 554,125
Motorola
Producer of wireless
telecommunications equipment ............. 330,000 19,098,750
New World Communications
Television programming and
broadcasting ............................. 100,000 1,181,250
Telecom Italia
Telecommunications services
in Italy ................................. 600,000 1,561,517
Telefonica de Espana
Domestic international tele-
phone services in Spain .................. 120,000 1,418,149
Telefonos de Mexico, S.A. (ADRs)
Telephone services in Mexico ............. 30,000 1,230,000
TeleWest Communications (ADRs)*
UK-based cable and telephone
services ................................. 150,000 3,984,375
------------
35,634,104
------------
Transportation--0.4%
Kvaerner Industries
Norwegian engineering company
specializing in shipbuilding ............. 40,000 1,809,580
Namura Shipbuilding
Shipbuilding ............................. 60,000 489,094
------------
2,298,674
------------
Miscellaneous--3.5%
Alco Standard
Distributor of paper products
and office equipment ..................... 75,000 4,706,250
Diebold
Automatic teller machines ................ 125,000 5,140,625
European Vinyls*
Market leader in PVC
industry ................................. 32,300 1,432,451
Jurong Shipyard
Leading ship repair company
in Singapore ............................. 180,000 1,382,716
Mark IV Industries*
Electronic industrial equipment ........... 75,000 1,481,250
Tyco International
Fire protection services
worldwide ................................ 75,000 3,562,500
------------
17,705,792
------------
Total Common Stocks
(Cost $415,022,753) ...................... 494,301,953
Short-Term Holdings--3.0%
(Cost $15,705,000) ....................... 15,705,000
------------
Total Investments--99.0%
(Cost $430,727,753) ...................... 510,006,953
Other Assets Less
Liabilities--1.0% ........................ 5,062,894
------------
Net Assets--100.0% ......................... $515,069,847
============
- - ------------
* Non-income producing security.
+ Rule 144A 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, 1994
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments, at value:
Common stocks (cost $415,022,753)........................................ $494,301,953
Short-term holdings (cost $15,705,000)................................... 15,705,000 $510,006,953
------------
Cash....................................................................... 4,334,978
Receivable for securities sold............................................. 7,917,295
Receivable for dividends and interest...................................... 305,336
Investment in, and expenses prepaid to, shareholder service agent.......... 260,676
Receivable for Capital Stock sold.......................................... 50,662
Other...................................................................... 99,137
------------
Total Assets .............................................................. 522,975,037
------------
Liabilities:
Payable for securities purchased........................................... 6,570,569
Payable for Capital Stock repurchased...................................... 365,393
Accrued expenses, taxes, and other......................................... 969,228
------------
Total Liabilities ......................................................... 7,905,190
------------
Net Assets ................................................................ $515,069,847
============
Composition of Net Assets:
Capital Stock, at par ($1 par value; 150,000,000 shares authorized;
113,488,429 shares outstanding):
Class A.................................................................. $113,090,666
Class D.................................................................. 397,763
Additional paid-in capital................................................. 322,732,527
Dividends in excess of net investment income............................... (196,776)
Distribution in excess of net realized gain................................ (231,052)
Net unrealized appreciation of investments................................. 78,783,277
Net unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies....................................... 493,442
------------
Net Assets ................................................................ $515,069,847
============
Net Asset Value per share:
Class A ($513,327,657 / 113,090,666 shares) ............................... $4.54
=====
Class D ($1,742,190 / 397,763 shares) ..................................... $4.38
=====
</TABLE>
- - -----------------
See notes to financial statements.
11
<PAGE>
================================================================================
Statement of Operations For the Year Ended December 31, 1994
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividends (net of foreign taxes withheld of $37,128)....................... $ 4,342,405
Interest................................................................... 1,438,309
-----------
Total investment income.................................................... $ 5,780,714
Expenses:
Management fee............................................................. 2,732,091
Shareholder account services............................................... 1,104,332
Distribution and service fees.............................................. 760,095
Shareholder reports and communications..................................... 101,034
Auditing and legal fees.................................................... 88,110
Registration............................................................... 65,653
Shareholders' meeting...................................................... 58,855
Directors' fees and expenses............................................... 51,632
Custody and related services............................................... 23,810
Miscellaneous.............................................................. 47,406
-----------
Total expenses............................................................. 5,033,018
------------
Net investment income ..................................................... 747,696
Net realized and unrealized gain (loss) on investments
and foreign currency transactions:
Net realized gain on investments........................................... 51,360,333
Net realized loss from foreign currency transactions....................... (32,375)
Net change in unrealized appreciation of investments....................... (75,155,232)
Net change in unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies........................... 493,442
-----------
Net loss on investments and foreign currency transactions ................. (23,333,832)
------------
Decrease in net assets from operations .................................... $(22,586,136)
============
</TABLE>
- - -----------------
See notes to financial statements.
12
<PAGE>
================================================================================
Statements of Changes in Net Assets
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------
1994 1993
-------------- -------------
<S> <C> <C>
Operations:
Net investment income........................................................ $ 747,696 $ 1,078,773
Net realized gain on investments............................................. 51,360,333 108,765,963
Net realized loss from foreign currency transactions......................... (32,375) --
Net change in unrealized appreciation of investments......................... (75,155,232) (74,083,465)
Net change in unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies......................................... 493,442 --
------------ ------------
Increase (decrease) in net assets from operations............................ (22,586,136) 35,761,271
------------ ------------
Distributions to shareholders:
Net investment income -- Class A ............................................ (1,043,314) (994,063)
Net realized gain on investments:
Class A ................................................................... (52,165,692) (108,717,902)
Class D ................................................................... (180,695) (201,168)
------------ ------------
Decrease in net assets from distributions.................................... (53,389,701) (109,913,133)
------------ ------------
<CAPTION>
Shares
-------------------------------
Year Ended December 31
-------------------------------
Capital share transactions:* 1994 1993
----------- ----------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A................................ 1,199,567 1,515,551 6,135,690 8,969,809
Class D................................ 183,876 200,292 922,899 1,174,566
Investment of dividends-- Class A........ 164,106 121,457 733,553 697,177
Exchanged from associated Funds:
Class A................................ 4,032,992 1,548,269 20,642,340 9,340,688
Class D................................ 14,699 2,424 70,526 14,748
Shares issued in payment of gain distributions:
Class A................................ 9,228,545 16,457,149 41,252,296 85,577,953
Class D................................ 40,305 37,616 173,521 194,477
----------- ---------- ------------ ------------
Total.................................... 14,864,090 19,882,758 69,930,825 105,969,418
----------- ---------- ------------ ------------
Cost of shares repurchased:
Class A................................ (9,117,651) (6,678,398) (46,398,985) (39,667,501)
Class D................................ (33,070) (6,068) (164,282) (38,067)
Exchanged into associated Funds:
Class A................................ (4,857,920) (2,356,036) (24,834,019) (14,251,483)
Class D................................ (37,097) (5,214) (176,395) (32,393)
----------- ---------- ------------ ------------
Total.................................... (14,045,738) (9,045,716) (71,573,681) (53,989,444)
----------- ---------- ------------ ------------
Increase (decrease) in net assets from
capital share transactions............ 818,352 10,837,042 (1,642,856) 51,979,974
========== ========== ------------ ------------
Decrease in net assets....................................................... (77,618,693) (22,171,888)
Net Assets:
Beginning of year............................................................ 592,688,540 614,860,428
------------- ------------
End of year (including dividends in excess of net investment income of
$196,776 and $207,539, respectively)....................................... $515,069,847 $592,688,540
============ ============
</TABLE>
- - -----------------
* The Fund began offering Class D shares on May 3, 1993.
See notes to financial statements.
13
<PAGE>
================================================================================
Notes to Financial Statements
- - --------------------------------------------------------------------------------
1. Effective May 3, 1993, Seligman Growth Fund, Inc. (the "Fund") began offering
two classes of shares. All shares existing prior to May 3, 1993, have been
classified as Class A 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 D shares are sold without an initial sales charge but are subject
to a higher distribution fee and a contingent deferred sales load ("CDSL") of 1%
imposed on certain redemptions made within one year of purchase. The two 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 class expenses and has exclusive
voting rights with respect to any matter to which a separate vote of any class
is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in stocks and U.S. Government securities are valued at current
market values or, in their absence, at fair value 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, a mean of bid and asked prices.
Short-term holdings maturing in 60 days or less are valued at amortized
cost.
b. The books and records of the Fund are maintained in U.S. dollars. The
market value of investment securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at the
closing daily rate of exchange as reported by a pricing service. Purchases
and sales of investment securities, income, and expenses are translated
into U.S. dollars at the rate of exchange prevailing on the respective
dates of such transactions.
The Fund separates that portion of the results of operations resulting
from changes in the foreign exchange rates from the fluctuations arising
from changes in the market prices of securities held in the portfolio.
Similarly, the Fund separates the effect of changes in foreign exchange
rates from the fluctuations arising from changes in the market prices of
portfolio securities sold during the period.
c. There is no provision for federal income or excise 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. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income
tax purposes. Dividends receivable and payable are recorded on ex-dividend
dates. Interest income is recorded on an accrual basis.
e. 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 proportion of the value of shares outstanding of
each class. Class-specific expenses, which include distribution and service
fees and any other items that can be specifically attributed to a
particular class, are charged directly to such class.
f. The treatment for financial statement purposes of distributions made 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 capital gain, and the
recharacterization of foreign exchange gains or losses to either ordinary
or realized capital gain for federal income tax purposes. Where such
differences are permanent in nature, they are reclassified in the
components of net assets based on their ultimate characterization for
federal income tax purposes. Any such reclassification will have no effect
on net assets, results of operations, or net asset value per share of the
Fund.
14
<PAGE>
================================================================================
- - --------------------------------------------------------------------------------
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended December 31, 1994, amounted to $495,244,033 and
$563,898,690, respectively.
At December 31, 1994, the cost of investments for federal income tax
purposes was $430,958,805, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities, including the effects of foreign currency
transactions, amounted to $87,872,688 and $8,824,540, respectively.
4. 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 a per annum percentage of the Fund's average daily net assets.
The management fee is calculated on a sliding scale of 0.50% to 0.44%, based on
average daily net assets of all investment companies managed by the Manager. The
management fee for the year ended December 31, 1994, was equivalent to an annual
rate of 0.49% of the average daily net assets of the Fund. Effective June 1,
1994, Seligman Henderson Co. (the "Subadviser"), a 50% owned affiliate of the
Manager, is entitled to a portion of the Manager's fee for acting as subadviser
for certain of the international investments of the Fund.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of Fund shares and an affiliate of the Manager, received
commissions of $13,797 from sales of Class A shares after concessions of
$108,097 paid to dealers.
Effective January 1, 1993, the Fund adopted an Administration, Shareholder
Services and Distribution Plan (the "Plan") with respect to Class A shares under
which 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, 1994, fees paid
aggregated $744,162, or 0.13% per annum of the average daily net assets of Class
A shares.
Effective May 3, 1993, the Fund adopted a Plan with respect to Class D
shares under which 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 D shares for which the organizations are
responsible, and 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. For the year ended December
31, 1994, fees paid amounted to $15,933, or 1% per annum of the average daily
net assets of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions occurring within one year of purchase. For the year ended December
31, 1994, such charges amounted to $855.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $1,088,974 for shareholder account services.
The Fund's investment in Seligman Data Corp. is recorded at a cost of $43,170.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Subadviser, the Distributor, and/or Seligman Data Corp.
Fees of $28,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
15
<PAGE>
================================================================================
Notes to Financial Statements (continued)
- - --------------------------------------------------------------------------------
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, 1994, of
$196,776 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.
5. Class-specific expenses charged to Class A and Class D during the year
ended December 31, 1994, which are included in the corresponding captions of the
Statement of Operations, were as follows:
Class A Class D
------- -------
Distribution and service fees .............. $744,162 $15,933
Shareholders' meeting ...................... 31,741 362
Registration ............................... 30,349 17,141
Shareholder reports and
communications ........................... 26,328 493
16
<PAGE>
- - --------------------------------------------------------------------------------
Financial Highlights
- - --------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Fund's beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment, assuming it was held throughout the
period. Generally, the 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 amount.
The total return based on net asset value measures the Fund's performance
assuming investors purchased Fund shares at net asset value as of the beginning
of the period, reinvested dividends and capital gains paid at net asset value,
and then sold their shares at the net asset value per share 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. The total
returns for periods of less than one year are not annualized.
<TABLE>
<CAPTION>
Class A Class D
------------------------------------------------------- -----------------------
Year Ended December 31 Year 5/3/93*
------------------------------------------------------- Ended to
1994(0) 1993 1992 1991 1990 12/31/94(0) 12/31/93
------ ---- ---- ---- ---- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning
of period ................................ $5.26 $6.04 $5.95 $4.57 $5.10 $5.23 $5.67
----- ----- ----- ----- ----- ----- -----
Net investment income (loss) ............... .01 .01 .03 .04 .10 (.12) (.03)
Net realized and unrealized
investment gain (loss) ................... (.22) .35 .64 1.70 (.36) (.23) .72
----- ----- ----- ----- ----- ----- -----
Increase (decrease) from
investment operations .................... (.21) .36 .67 1.74 (.26) (.35) .69
Dividends paid ............................. (.01) (.01) (.03) (.04) (.10) -- --
Distributions from
net gain realized ........................ (.50) (1.13) (.55) (.32) (.17) (.50) (1.13)
----- ----- ----- ----- ----- ----- -----
Net increase (decrease) in
net asset value .......................... (.72) (.78) .09 1.38 (.53) (.85) (.44)
----- ----- ----- ----- ----- ----- -----
Net asset value, end of period ............. $4.54 $5.26 $6.04 $5.95 $4.57 $4.38 $5.23
===== ===== ===== ===== ===== ===== =====
Total return based
on net asset value ....................... (3.84)% 6.20% 11.30% 38.45% (5.16)% (6.56)% 12.40%
Ratios/Supplemental Data:
Expenses to average net assets ............. .90% .89% .77% .76% .71% 2.93% 2.17%+
Net investment income (loss)
to average net assets .................... .14% .18% .49% .77% 2.04% (2.34)% (1.03)%+
Portfolio turnover ......................... 93.59% 105.64% 46.96% 12.60% 26.39% 93.59% 105.64%++
Net assets, end of period
(000's omitted) .......................... $513,328 $591,491 $614,860 $598,423 $478,063 $1,742 $ 1,197
</TABLE>
- - --------------------
(0) Per share amounts for the year ended December 31, 1994, are calculated based
on average shares outstanding.
* Commencement of offering of Class D shares.
+ Annualized.
++ For the year ended December 31, 1993.
See notes to financial statements.
17
<PAGE>
================================================================================
Report of Independent Auditors
- - --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Growth Fund, Inc. as of December 31,
1994, 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, 1994 by correspondence with the Fund's custodians and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Growth
Fund, Inc. as of December 31, 1994, 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.
/S/ Deloitte & Touche LLP
---------------------
DELOITTE & TOUCHE LLP
New York, New York
February 3, 1995
18
<PAGE>
================================================================================
Board of Directors
- - --------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
Alice S. Ilchman 3, 4
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Partner, Sullivan & Cromwell, Attorneys
Betsy S. Michel 2, 4
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
Douglas R. Nichols, Jr. 2, 4
Management Consultant
James C. Pitney 3, 4
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group
James Q. Riordan 3, 4
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Herman J. Schmidt 2, 4
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
Ronald T. Schroeder 1
President
Managing Director, J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3, 4
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2, 4
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Brian T. Zino 1
Managing Director, J. & W. Seligman & Co. Incorporated
- - -------------------
Member: 1 Executive Committee; 2 Audit Committee; 3 Director Nominating
Committee; 4 Board Operations Committee
- - --------------------------------------------------------------------------------
Executive Officers
William C. Morris
Chairman
Ronald T. Schroeder
President
David Watts
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- - --------------------------------------------------------------------------------
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
Subadviser
Seligman Henderson Co.
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder
Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour Automated
Telephone Access
Service
19
<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 Growth Fund, Inc., which contains information about the sales charges,
management fee, and other costs. Please read the prospectus carefully before
investing or sending money.
EQGR2 12/94
