SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[GRAPHIC OMITTED]
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.
================================================================================
EQGR3b 6/96
========================
MID-YEAR REPORT
========================
SELIGMAN
GROWTH
FUND, INC.
========================
June 30, 1996
[LOGO]
========================
A GROWTH STOCK FUND
ESTABLISHED IN 1937
<PAGE>
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Growth Fund had a successful second quarter and outpaced the
Standard & Poor's 500 Composite Stock Price Index (S&P 500). However, in
mid-July, the Fund, along with most equity investors, was affected by the
fluctuations in the equity markets and gave back some of its second quarter
gains.
In the first half of 1996, the Federal Reserve Board's continuing efforts
to achieve a "soft landing" -- a healthy moderation of economic growth that does
not slip into recession -- appeared to have come to fruition. Economic data for
the second quarter of 1996 indicated continued growth in output, employment, and
incomes. More than half the early cor- porate earnings reports reflected the
positive effects of the strong economy, and earnings estimates rose to higher
levels. Inflation remained low and, more important, commodity price indices
declined from their recent eight-year highs, which suggested that future
inflationary pressures were in check. Overall, the economy seemed quite healthy
at the end of the second quarter.
While fundamentals remained strong, a mid-July sell-off in the equity
markets was triggered by disappointing earnings reports from several important
technology and health care companies. This led to an overall negative assessment
that other corporate profits would fall short of expectations and economic
growth would slow, causing future earnings disappointments. A broad decline in
equity prices ensued, which was aggravated by uncertainty over the future
direction of interest rates. This culminated on July 15, when the price of five
out of six companies on the New York Stock Exchange declined.
Although the speed of such an event can unnerve even the most seasoned
investor, it is the very nature of equity markets to fluctuate over short
periods of time. Periodic corrections in stock market prices are an integral
part of US financial history -- the last significant correction in the S&P 500
was triggered by the start of the Gulf War in 1990. While viewpoints differ over
the likely direction of financial markets and the economy over the next year, we
believe that the longer-term outlook for the US economy and the equity markets
remains sound.
We therefore must reiterate the importance of long-term investing. Since
the ups and downs of the market are unavoidable, it benefits you, our Share-
holders, to adopt a long term investment plan whenever possible. Time is a
powerful investment tool that succeeds where market timing often fails. If you
invest over the long term, short-term market swings, while uncomfortable, have
less of an impact on your overall financial goals. As investors, you have
already taken steps to reduce your overall risk by purchasing shares of a mutual
fund, which provides portfolio diversification by investing in numerous issues
and industries.
With the help of your investment advisor, you can formulate a long-term
investment strategy that further reduces your risk, increases your
diversification, and allows you to benefit from the advantages of mutual fund
investments.
For specific performance information and a discussion with your Portfolio
Manager about the second quarter of 1996, please refer to page 2.
By order of the Board of Directors,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------
Brian T. Zino
President
July 31, 1996
1
<PAGE>
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INTERVIEW WITH YOUR PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
LORIS D. MUZZATTI
HOW DID SELIGMAN GROWTH FUND PERFORM IN THE PAST THREE MONTHS?
The second quarter of 1996 was a solid period for Seligman Growth Fund as it
outpaced the Standard & Poor's 500 Composite Stock Price Index.
WHAT ECONOMIC FACTORS INFLUENCED THE FUND IN THE PAST THREE MONTHS?
In the second quarter of 1996, Seligman Growth Fund benefited from increased
consumer spending, strong employment growth, and better-than-expected GDP
growth. In particular, the positive spending environment improved the
performance of all consumer related issues. On the other hand, economically
sensitive issues, including financials and basic materials, were down during the
quarter as certain market participants, anticipating a rise in interest rates
and an economic slowdown, took more defensive positions.
WHAT MARKET TRENDS AFFECTED THE FUND IN THE QUARTER?
Generally, the second quarter marked a triumph for small-capitalization stocks,
which were particularly strong in April and May. Another trend witnessed was the
increased rate of consolidation in the telecommunications industry after the
passing of the Telecommunications Deregulation Act. The Act provides new growth
opportunities, along with the possibility of greater market share, for many of
the Fund's holdings.
WHAT INDUSTRIES, SPECIFICALLY, PERFORMED WELL WITHIN THE PORTFOLIO?
Consumer staples, including beverages and tobacco, had a strong quarter due to
the increase in consumer spending. Additionally, improved consumer spending
propelled consumer cyclical stocks, including lodging which also benefited from
solid earnings growth and higher occupancies. In the retail sector, another
successful cyclical area, valuations hit the high end of their historic range,
and we trimmed our holdings, taking profits. We also took profits in, and
reduced, our insurance holdings over the quarter and increased our weighting in
consumer cyclical and consumer staple stocks, where faster growth companies are
selling at attractive valuations.
Selective technology issues also did very well in the quarter, due to strong
earnings in the computer and related, software, and consulting sectors. However,
as valuations rose for certain holdings, we reduced our positions and shifted
the profits to other strong technology stocks with good growth prospects at more
reasonable valuation levels.
WHAT INDUSTRIES PERFORMED POORLY WITHIN THE PORTFOLIO?
The weakest sectors in the second quarter included health care, and, more
specifically, medical services and products. In health care, poor pricing and
premium growth for HMOs, combined with higher medical utilization, reduced
earnings. We were, however, able to take profits in this area. Otherwise, the
interest rate-sensitive industries in the portfolio, such as financial services
and banks, were weak, fearing an increase in long-term interest rates which
would squeeze profit margins. Here, we maintained our position given our
expectations that interest rates would not move significantly higher.
2
<PAGE>
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- --------------------------------------------------------------------------------
WHAT SPECIAL INVESTMENT STRATEGY DID YOU USE IN THE LAST THREE MONTHS?
We continued to focus on high quality growth stocks in good businesses, selling
at attractive valuations. One purchase which illustrates our strategy is Liz
Claiborne, a strong brand with expanding margins due to a shift in the product
mix and rationalization of operations, which included closing the bulk of their
retail stores.
WHAT IS YOUR OUTLOOK FOR THE FUND?
The recent correction in the market has helped improve the already attractive
valuations of the Fund. Seligman Growth Fund is expected to perform well in what
we anticipate will be an environment of stable inflation and stable interest
rates. In the Fund, important industries, including financial services, should
see their margins benefit from stable interest rates. Technology will also
continue to be important in the portfolio, where we hold a number of companies
which are benefiting from the boom in outsourcing, including Electronic Data
Systems and First Data.
3
<PAGE>
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SELIGMAN GROWTH FUND, INC.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
TOTAL RETURNS*
FOR PERIODS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION THREE SIX ONE FIVE 10 INCEPTION
4/22/96 MONTHS MONTHS YEAR YEARS YEARS 5/3/93
-------------- ---------- ---------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge n/a (0.17)% 6.75% 22.18% 12.95% 10.53% n/a
Without Sales Charge n/a 4.84 12.07 28.17 14.07 11.08 n/a
CLASS B
With 5% CDSL (1.45)% n/a n/a n/a n/a n/a n/a
Without CDSL 3.55 n/a n/a n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a 3.73 10.69 26.06 n/a n/a n/a
Without CDSL n/a 4.73 11.69 27.06 n/a n/a 13.44%
S&P 500** 2.97++ 4.49 10.10 26.00 15.73 13.79 17.32+++
</TABLE>
NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
--------------- ----------------- ---------------------
<S> <C> <C> <C>
CLASS A $5.85 $5.58 $5.22
CLASS B 5.54 5.35+ n/a
CLASS D 5.54 5.29 4.96
</TABLE>
CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
CAPITAL GAIN
----------------------------------------
REALIZED UNREALIZED***
-------------- ---------------
<S> <C> <C>
CLASS A $0.227 $1.678
CLASS B 0.227 1.678
CLASS D 0.227 1.678
</TABLE>
* Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures for
Class A shares are calculated without and with the effect of the initial
4.75% maximum sales charge. Class A share returns reflect the effect of the
0.25% Administration, Shareholder Services and Distribution Plan after
January 1, 1993, only. Returns for Class B shares are calculated without and
with the effect of the maximum 5% contingent deferred sales load ("CDSL"),
charged only on certain redemptions made within one year of the date of
purchase, declining to 1% in the sixth year and 0% thereafter. Returns for
Class D shares are calculated without and with the effect of the 1% CDSL,
charged only on redemptions made within one year of the date of purchase.
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment
results.
** The S&P 500 is an unmanaged index that assumes reinvestment of estimated
dividends, and does not reflect fees and expenses. Investors may not invest
directly in an index.
*** Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1996.
+ As of April 22, 1996.
++ From April 30, 1996.
+++ From April 30, 1993.
4
<PAGE>
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SELIGMAN GROWTH FUND, INC.
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
DURING PAST THREE MONTHS
SHARES
-------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/96
- ------------ ---------- -----------
ABB......................... 350 2,350
Accor....................... 7,200 7,200
American Portable
Telecommunications........ 150,000 150,000
American Telephone &
Telegraph................. 50,000 150,000
Capital Radio............... 190,900 190,900
Consolidated Stores......... 200,000 200,000
Liz Claiborne............... 200,000 200,000
Merck....................... 100,000 100,000
Sun International Hotels.... 75,000 150,000
Viacom (Class B)............ 25,000 275,000
HOLDINGS
REDUCTIONS DECREASE 6/30/96
- -------------- ----------- -----------
American International Group 75,000 150,000
Cisco Systems............... 100,000 200,000
Duracell International...... 100,000 50,000
HFS......................... 135,000 115,000
Interpublic Group of
Companies................. 50,000 250,000
Office Depot................ 100,000 150,000
Oxford Health Plans......... 50,000 200,000(1)
Pfizer...................... 50,000 175,000
Pohang Iron & Steel (ADSs).. 100,000 --
Schering-Plough............. 150,000 100,000
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
(1) Includes 125,000 shares received as a result of a 2-for-1 stock split.
MAJOR PORTFOLIO HOLDINGS
AT JUNE 30, 1996
SECURITY VALUE
- --------- -----------
First Data.............................. $17,915,625
American International Group............ 14,793,750
Columbia/HCA Healthcare................. 13,343,750
Boeing.................................. 13,068,750
Philip Morris........................... 13,000,000
General Electric........................ 12,975,000
Pfizer.................................. 12,490,625
Johnson & Johnson....................... 12,375,000
Circus Circus Enterprises............... 12,300,000
Electronic Data Systems................. 12,093,750
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS A
JUNE 30, 1986, TO JUNE 30, 1996
[The following table represents a graph in the printed piece.]
$ 9,521
Initial Net Asset Value at June 30, 1986
1986 9,520.64
1986 7,936.09
1986 8,531.22
1987 10,448.71
1987 10,804.76
1987 11,295.89
1987 8,825.49
1988 8,929.81
1988 9,597.74
1988 9,366.72
1988 9,473.62
1989 10,035.98
1989 11,117.1
1989 12,773.77
1989 12,670.39
1990 11,999.6
1990 13,266.64
1990 10,834.01
1990 12,016.35
1991 14,198.75
1991 14,093.58
1991 15,228.46
1991 16,636.94
1992 16,301.41
1992 15,490.89
1992 16,443.31
1992 18,516.24
1993 18,424.27
1993 17,842.27
1993 19,439.07
1993 19,663.37
1994 18,953.09
1994 17,943.76
1994 19,065.24
1994 18,908.18
1995 19,782.79
1995 21,240.47
1995 23,364.52
1995 24,292
1996 25,967.31
1996 27,223.79
$27,224
Total Value at June 30, 1996
The performance of Class B and Class D shares will be greater or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders and the length of the holding period.
MAJOR SECTORS
AT JUNE 30, 1996
[The following table represents a pie chart in the printed piece.]
Drugs and Health Care 16.9%
Financial Services 14.5%
Other 13.3%
Business Services 12.0%
Technology 10.8%
Leisure and Entertainment 9.7%
Consumer Goods and Services 7.0%
Retail Trade 6.0%
Telecommunications 5.8%
Industrial Equipment 4.0%
5
<PAGE>
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PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
SHARES VALUE
-------- -------
COMMON STOCKS 98.7%
AEROSPACE 2.0%
Boeing........................ 150,000 $ 13,068,750
------------
AUTOMOTIVE AND
RELATED 2.5%
Autoliv (ADRs)+*.............. 80,000 2,400,000
Echlin........................ 150,000 5,681,250
Harley-Davidson............... 200,000 8,225,000
------------
16,306,250
------------
BUSINESS SERVICES 11.9%
Alco Standard................. 175,000 7,918,750
Electronic Data Systems....... 225,000 12,093,750
First Data.................... 225,000 17,915,625
HFS*.......................... 115,000 8,050,000
Interpublic Group of Companies 250,000 11,718,750
Reynolds & Reynolds (Class A). 200,000 10,650,000
SunGard Data Systems*......... 250,000 10,015,625
------------
78,362,500
------------
CHEMICALS 2.4%
Air Products & Chemicals...... 150,000 8,662,500
Bayer......................... 80,000 2,810,747
Engelhard..................... 200,000 4,600,000
------------
16,073,247
------------
CONSUMER GOODS AND
SERVICES 7.0%
Adidas........................ 44,000 3,659,089
Coca-Cola..................... 200,000 9,775,000
Duracell International........ 50,000 2,156,250
Gillette...................... 175,000 10,915,625
LVMH (Louis Vuitton,
Moet-Hennessy)............. 10,000 2,369,194
Mattel........................ 218,750 6,261,719
PepsiCo....................... 300,000 10,612,500
------------
45,749,377
------------
DRUGS AND HEALTH
CARE 16.8%
Amgen*........................ 200,000 10,775,000
Columbia/HCA Healthcare....... 250,000 13,343,750
Genzyme*...................... 75,000 3,778,125
Guidant....................... 100,000 4,925,000
Johnson & Johnson............. 250,000 12,375,000
Medtronic..................... 150,000 8,400,000
Merck......................... 100,000 6,462,500
Oxford Health Plans*.......... 200,000 8,212,500
PacifiCare Health
Systems (Class B)*......... 150,000 10,181,250
Pfizer........................ 175,000 12,490,625
Roussel-UCLAF................. 12,000 2,875,632
Schering-Plough............... 100,000 6,275,000
United Healthcare............. 200,000 10,100,000
------------
110,194,382
------------
ENERGY 0.3%
Huaneng Power International
(ADRs)*.................... 100,500 1,796,438
------------
FINANCIAL SERVICES 14.5%
American International Group.. 150,000 14,793,750
Citicorp...................... 100,000 8,262,500
Federal National Mortgage
Association................ 300,000 10,050,000
General Re.................... 75,000 11,418,750
Green Tree Financial.......... 300,000 9,375,000
ING Groep..................... 86,072 2,563,375
MBNA.......................... 150,000 4,275,000
MGIC Investment............... 150,000 8,418,750
Norwest....................... 250,000 8,718,750
SunAmerica.................... 112,500 6,356,250
UTD Overseas Bank............. 228,000 2,181,122
Wells Fargo................... 35,000 8,360,625
------------
94,773,872
------------
INDUSTRIAL
EQUIPMENT 4.0%
ABB........................... 2,350 2,902,114
FKI Babcock................... 875,000 2,307,856
General Electric.............. 150,000 12,975,000
Illinois Tool Works........... 75,000 5,071,875
Keyence....................... 20,000 2,718,358
------------
25,975,203
------------
LEISURE AND
ENTERTAINMENT 9.6%
Accor......................... 7,200 1,005,889
Capital Radio................. 190,900 1,937,026
Circus Circus Enterprises*.... 300,000 12,300,000
Disney, Walt.................. 100,000 6,287,500
Granada Group................. 230,000 3,076,004
Hilton Hotels................. 65,000 7,312,500
Mirage Resorts*............... 180,000 9,720,000
Sun International Hotels...... 150,000 7,275,000
Viacom (Class B).............. 275,000 10,690,625
WPP Group..................... 1,000,000 3,335,725
------------
62,940,269
------------
6
<PAGE>
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June 30, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
-------- -------
PRINTING AND
PUBLISHING 0.5%
Elsevier...................... 215,000 $ 3,258,148
-----------
RETAIL TRADE 6.0%
Consolidated Stores*.......... 200,000 7,350,000
Eckerd*....................... 200,000 4,525,000
Home Depot.................... 150,000 8,100,000
Hornbach Baumarkt............. 35,000 1,573,008
Liz Claiborne*................ 200,000 6,925,000
Nordstrom..................... 125,000 5,546,875
Office Depot*................. 150,000 3,056,250
Schimachu..................... 70,000 2,075,257
-----------
39,151,390
-----------
STEEL 0.8%
Nucor......................... 100,000 5,062,500
-----------
TECHNOLOGY 10.7%
Cisco Systems*................ 200,000 11,337,500
Hewlett-Packard............... 75,000 7,471,875
Informix...................... 150,000 3,365,625
Intel......................... 150,000 11,015,625
Microsoft*.................... 100,000 12,006,250
Secom......................... 35,000 2,311,517
Sterling Software............. 100,000 7,700,000
3Com*......................... 100,000 4,568,750
Xerox......................... 195,000 10,432,500
-----------
70,209,642
-----------
TELECOMMUNICATIONS 5.7%
American Portable
Telecommunications......... 150,000 1,575,000
American Telephone & Telegraph 150,000 9,300,000
Century Telephone Enterprises. 125,000 3,984,375
L.M. Ericsson (Series B)...... 100,000 2,153,971
Motorola...................... 100,000 6,287,500
Nera (ADSs)................... 45,000 1,433,884
Scientific-Atlanta............ 300,000 4,650,000
WorldCom*..................... 150,000 8,296,875
-----------
37,681,605
-----------
TOBACCO 2.0%
Philip Morris................. 125,000
shs. $ 13,000,000
------------
MISCELLANEOUS 2.0%
HIS........................... 45,000 2,737,970
Tyco International............ 250,000 10,187,500
------------
12,925,470
------------
TOTAL COMMON STOCKS
(Cost $458,328,873) ........ 646,529,043
------------
CONVERTIBLE BONDS 0.1%
(Cost $753,837)
ELECTRONICS 0.1%
United Micro Electronics
11/4%, 6/8/2004............ $430,000 554,700
------------
SHORT-TERM
HOLDINGS 0.8%
(Cost $5,100,000) ......... 5,100,000
------------
TOTAL INVESTMENTS 99.6%
(Cost $464,182,710) ................. 652,183,743
OTHER ASSETS LESS
LIABILITIES 0.4% .................. 2,770,190
------------
NET ASSETS 100.0% .................... $654,953,933
============
- -----------------------
+ Rule 144A security.
* Non-income producing security.
See notes to financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
STATEMENT OF ASSETS AND LIABILITIES June 30, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks and convertible securities (cost $459,082,710).................. $ 647,083,743
Short-term holdings (cost $5,100,000)........................................ 5,100,000 $ 652,183,743
-------------
Cash.......................................................................................... 3,066,115
Receivable for dividends and interest......................................................... 543,877
Investment in, and expenses prepaid to, shareholder service agent............................. 121,799
Receivable for Capital Stock sold............................................................. 106,500
Other......................................................................................... 172,860
-------------
Total Assets ................................................................................. 656,194,894
-------------
LIABILITIES:
Payable for Capital Stock repurchased......................................................... 127,477
Accrued expenses, taxes, and other............................................................ 1,113,484
-------------
Total Liabilities ............................................................................ 1,240,961
-------------
NET ASSETS .................................................................................. $ 654,953,933
=============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized; 112,054,495
shares outstanding):
Class A..................................................................................... $ 110,394,485
Class B..................................................................................... 24,573
Class D..................................................................................... 1,635,437
Additional paid-in capital.................................................................... 315,119,451
Accumulated net investment loss............................................................... (689,350)
Undistributed net realized gain............................................................... 40,467,696
Net unrealized appreciation of investments.................................................... 188,277,624
Net unrealized depreciation on translation of assets and liabilities
denominated in foreign currencies.......................................................... (275,983)
-------------
Net Assets .................................................................................. $ 654,953,933
=============
NET ASSET VALUE PER SHARE:
CLASS A ($645,756,068 / 110,394,485 SHARES) .................................................. $5.85
=====
CLASS B ($136,161 / 24,573 SHARES) ........................................................... $5.54
=====
CLASS D ($9,061,704 / 1,635,437 SHARES) ...................................................... $5.54
=====
- -------------------------
See notes to financial statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1996
- -------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $81,549)............................ $3,223,603
Interest........................................................................ 110,010
----------
<S> <C> <C>
Total Investment Income......................................................... $ 3,333,613
EXPENSES:
Management fee.................................................................. 2,219,612
Distribution and service fees................................................... 759,049
Shareholder account services.................................................... 475,820
Custody and related services.................................................... 115,377
Registration.................................................................... 61,633
Shareholder reports and communications.......................................... 60,810
Auditing and legal fees......................................................... 44,584
Directors' fees and expenses.................................................... 20,068
Shareholders' meeting........................................................... 15,951
Miscellaneous................................................................... 19,737
----------
Total expenses.................................................................. 3,792,641
-----------
Net Investment Loss ........................................................... (459,028)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments................................................ 25,577,563
Net realized loss from foreign currency transactions............................ (143,074)
Net change in unrealized appreciation of investments............................ 48,246,740
Net change in unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies and
forward currency contracts.................................................. (1,165,041)
----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS ...................... 72,516,188
-----------
INCREASE IN NET ASSETS FROM OPERATIONS ......................................... $72,057,160
===========
</TABLE>
- ------------------
See notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)................................................. $ (459,028) $ 922,886
Net realized gain on investments............................................. 25,577,563 78,316,368
Net realized gain (loss) from foreign currency transactions.................. (143,074) 406,810
Net change in unrealized appreciation of investments......................... 48,246,740 61,247,607
Net change in unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies and forward currency contracts.......... (1,165,041) 395,616
------------
Increase in Net Assets from Operations....................................... 72,057,160 141,289,287
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income-- Class A.............................................. -- (1,048,188)
Net realized gain on investments:
Class A.................................................................... -- (62,681,650)
Class D.................................................................... -- (685,513)
------------ ------------
Decrease in Net Assets from Distributions.................................... -- (64,415,351)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
CAPITAL SHARE TRANSACTIONS:* JUNE 30, 1996 DECEMBER 31, 1995
---------------- -----------------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A................................ 734,177 1,963,645 4,088,700 9,903,613
Class B................................ 23,052 -- 126,209 --
Class D................................ 318,265 881,669 1,674,012 4,318,133
Investment of dividends-- Class A........ -- 141,801 -- 734,496
Exchanged from associated Funds:
Class A................................ 7,735,009 7,453,091 43,295,165 39,381,227
Class B................................ 5,205 -- 28,523 --
Class D................................ 519,700 207,215 2,768,092 1,088,175
Shares issued in payment of
gain distributions:
Class A................................ -- 9,630,233 -- 49,877,844
Class D................................ -- 133,979 -- 659,149
---------- ------------ ------------ ------------
Total.................................... 9,335,408 20,411,633 51,980,701 105,962,637
---------- ------------ ------------ ------------
Cost of shares repurchased:
Class A................................ (4,430,631) (8,896,248) (24,730,973) (45,562,371)
Class D................................ (124,240) (94,062) (659,548) (462,501)
Exchanged into associated Funds:
Class A................................ (8,127,568) (8,899,690) (45,644,062) (46,762,125)
Class B................................ (3,684) -- (20,741) --
Class D................................ (370,861) (233,991) (1,950,867) (1,197,160)
---------- ------------ ------------ ------------
Total.................................... (13,056,984) (18,123,991) (73,006,191) (93,984,157)
---------- ------------ ------------ ------------
Increase (Decrease) in Net Assets from
Capital Share Transactions............ (3,721,576) 2,287,642 (21,025,490) 11,978,480
========== ============ ------------ ------------
Increase in Net Assets....................................................... 51,031,670 88,852,416
NET ASSETS:
Beginning of period.......................................................... 603,922,263 515,069,847
------------ ------------
End of period (including accumulated net investment loss and dividends in excess
of net investment income of $689,350 and $215,986, respectively).......... $654,953,933 $603,922,263
============ ============
</TABLE>
- ---------------------
* The Fund began offering Class B shares on April 22, 1996.
See notes to financial statements.
10
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Growth Fund, Inc. (the "Fund") offers three classes of shares. All
shares existing prior to May 3, 1993, the commencement of Class D shares, were
classified as Class A shares. The Fund began offering Class B shares on April
22, 1996. Class A shares are sold with an initial sales charge of up to 4.75%
and a continuing service fee of up to 0.25% on an annual basis. Class B 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
contingent deferred sales load ("CDSL"), if applicable, of 5% on certain
redemptions in the first year after purchase, declining to 1% in the sixth year
and 0% thereafter. Class B shares will automatically convert to Class A shares
on the last day of the month that precedes the eighth anniversary of their date
of purchase. Class D shares are sold without an initial sales charge but are
subject to a distribution fee of up to 0.75% and a service fee of up to 0.25% on
an annual basis, and a CDSL of 1% imposed on certain redemptions made within one
year 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
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 US dollars. The market
value of investment securities and other assets and liabilities denominated in
foreign currencies are translated into US 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 US dollars at the rate of
exchange prevailing on the respective dates of such transactions.
The Fund separates that portion of the results of operations resulting from
changes in the foreign exchange rates from the fluctuations arising from changes
in the market prices of securities held in the portfolio. Similarly, the Fund
separates the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of portfolio securities sold during
the period.
c. 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 value of shares of each class. Class-specific expenses, which
include distribution and service fees and any other items that are specifically
attributed to a particular class, are charged directly to such class. For the
six months ended June 30, 1996, distribution and service fees were the only
class-specific expenses.
11
<PAGE>
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 income or realized capital gains 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 reclassifications
will have no effect on net assets, results of operations, or net asset value per
share of the Fund.
3. Purchases and sales of portfolio securities, excluding US Government
obligations and short-term investments, for the six months ended June 30, 1996,
amounted to $59,789,417 and $88,139,593, respectively.
At June 30, 1996, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio
securities, including the effects of foreign currency translations, amounted to
$197,841,088 and $9,840,055, respectively.
4. At June 30, 1996, the Fund owned short-term investments which matured in less
than 7 days.
5. 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 .70% per annum of the first $1 billion of the Fund's average
daily net assets, 0.65% per annum of the next $1 billion of the Fund's average
daily net assets, and 0.60% per annum of the Fund's average daily net assets in
excess of $2 billion. Prior to January 1, 1996, the management fee rate was
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
reflected in the Statement of Operations represents 0.70% per annum of the
Fund's average daily net assets. 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
concessions of $12,491 from sales of Class A shares after commissions of $97,649
paid to dealers.
The Fund has 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 six months ended June 30, 1996, fees paid aggregated $718,874
or 0.23% per annum of the average daily net assets of Class A shares.
The Fund has a Plan with respect to Class B and Class D shares under which
service organizations can enter into agreements with the Distributor and
re-ceive 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
12
<PAGE>
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 up to 0.75% on an
annual basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provided funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the six months ended June 30, 1996, 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 $140 and $40,035, respectively.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For the six
months ended June 30, 1996, such charges amounted to $1,982.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B share distribution fees retained by the Distributor for the
period ended June 30, 1996, amounted to $231.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of shares of the Fund, as well as
distribution and service fees pursuant to the Plan. For the six months ended
June 30, 1996, Seligman Services, Inc. received commissions of $12,318 from
sales of shares of the Fund. Seligman Services, Inc. also received distribution
and service fees of $291,017, pursuant to the Plan.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $475,820 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, Seligman Services, Inc., and/or
Seligman Data Corp.
Fees of $14,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The cost of such fees and interest is included in directors' fees and
expenses, and the accumulated balance thereof at June 30, 1996, of $224,574 is
included in other liabilities. Deferred fees and the related accrued interest
are not deductible for federal income tax purposes until such amounts are paid.
13
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's financial highlights are presented below. 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 amounts.
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.
Average commission rate paid represents the average commissions paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid. This rate is provided for periods
beginning January 1, 1996.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------------------------------------------------------------ ------- -----------------------------------
SIX SIX YEAR ENDED
MONTHS YEAR ENDED DECEMBER 31, 4/22/96 MONTHS DECEMBER 31, 5/3/93*
ENDED ------------------------------------------------- TO ENDED ------------- TO
6/30/96o 1995o 1994o 1993 1992 1991 6/30/96o 6/30/96o 1995o 1994o 12/31/93
------- ---- ---- ---- ---- ---- ------- ------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period............ $5.22 $4.54 $5.26 $6.04 $5.95 $4.57 $5.35 $4.96 $4.38 $5.23 $5.67
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment
income (loss)..... (.01) .01 .01 .01 .03 .04 (.01) (.02) (.04) (.12) (.03)
Net realized and
unrealized
investment gain
(loss)............ .64 1.27 (.22) .35 .64 1.70 .20 .60 1.21 (.23) .72
Net realized and
unrealized gain on
foreign currency
transactions...... -- .01 -- -- -- -- -- -- .01 -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease)
from investment
operations ....... .63 1.29 (.21) .36 .67 1.74 .19 .58 1.18 (.35) 69
Dividends paid ...... -- (.01) (.01) (.01) (.03) (.04) -- -- -- -- --
Distributions from
net gain
realized.......... -- (.60) (.50) (1.13) (.55) (.32) -- -- (.60) (.50) (1.13)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net increase
(decrease)in net
asset value ...... .63 .68 (.72 ) (.78) .09 1.38 .19 .58 .58 (.85) (.44)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value,
end of period..... $5.85 $5.22 $4.54 $5.26 $6.04 $5.95 $5.54 $5.54 $4.96 $4.38 $5.23
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 12.07% 28.47% (3.84)% 6.20% 11.30% 38.45% 3.55% 11.69% 27.01% (6.56)% 12.40%
RATIOS/
SUPPLEMENTAL DATA:
Expenses to average
net assets........ 1.19%+ .94% .90% .89% .77% .76% 2.03%+ 1.96%+ 1.91% 2.93% 2.17%+
Net investment
income (loss) to
average net assets (.14)%+ .17% .14% .18% .49% .77% (.87)%+ (.91)%+ (.83)% (2.34)% (1.03)%+
Portfolio turnover... 9.40% 102.30% 93.59% 105.64% 46.96% 12.60% 9.40%+++ 9.40% 102.30 %93.59% 105.64%++
Average commission
rate paid......... $.0315 $.0315+++ $.0315
Net assets, end of
period (000's
omitted) ......... $645,756 $597,510 $513,328 $591,491 $614,860 $598,423 $136 $9,062 $6,412 $1,742 $1,197
</TABLE>
* Commencement of offering of shares.
o Per share amounts for the periods ended June 30, 1996, and for the years
ended December 31, 1995, and 1994, are calculated based on
average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1993.
+++ For the six months ended June 30, 1996.
See notes to financial statements.
14
<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 June 30, 1996,
the related statements of operations for the six months then ended and of
changes in net assets for the six months then ended and for the year ended
December 31, 1995, 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 June
30, 1996, by correspondence with the Fund's custodians. 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 June 30, 1996, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
July 31, 1996
15
<PAGE>
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co. Incorporated
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and
Diplomacy at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN 3, 4
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic Development
DIRECTOR, NYNEX
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
CHAIRMAN AND CEO, Kerr-McGee Corporation
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
PARTNER, Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum Corporation
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, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
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
RONALD T. SCHROEDER 1
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
ROBERT L. SHAFER 3, 4
DIRECTOR OR TRUSTEE,
Various Organizations
JAMES N. WHITSON 2, 4
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
PRESIDENT
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
- ---------------------
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
16
<PAGE>
================================================================================
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
LORIS D. MUZZATTI
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
17
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