- --------------------------------------------------------------------------------
60TH ANNUAL REPORT
- --------------------------------------------------------------------------------
SELIGMAN
GROWTH
FUND, INC.
- --------------------------------------------------------------------------------
DECEMBER 31, 1996
[Logo]
- --------------------------------------------------------------------------------
A GROWTH STOCK FUND
ESTABLISHED IN 1937
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 12/96
<PAGE>
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SELIGMAN GROWTH FUND, INC.
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A mutual fund that seeks to provide longer-term growth in capital value and
an increase in future income for its shareholders. The Fund invests primarily in
the common stocks of companies selected for their growth prospects.
<TABLE>
<CAPTION>
HIGHLIGHTS OF 1996
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DECEMBER 31, 1996 DECEMBER 31, 1995
-------------------------------- -----------------------
CLASS A CLASS B* CLASS D CLASS A CLASS D
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets (in thousands)............................ $675,086 $880 $11,493 $597,510 $6,412
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share............................ $5.85 $5.49 $5.49 $5.22 $4.96
With November 1996 Gain Distribution
Taken in Shares.................................... 6.32 5.96 5.96 -- --
Increase in Net Asset Value with Gain
Distribution Taken in Shares....................... 21.14% 11.45% 20.21% -- --
- ----------------------------------------------------------------------------------------------------------------------
Dividends Paid per Share............................. -- -- -- $0.01 --
Distribution of Realized Gain per Share.............. $0.475 $0.475 $0.475 $0.598 $0.598
- ----------------------------------------------------------------------------------------------------------------------
Total Expenses per Dollar of Average Net Assets...... $0.0120 $0.0199+ $0.0197 $0.0094 $0.0191
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* From April 22, 1996 (commencement of operations).
+ Annualized.
1
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TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Growth Fund posted strong results this year. Though its total return
based on the net asset value of Class A shares slightly lagged that of the
Standard & Poor's 500 Composite Stock Price Index (S&P 500), it outperformed the
average of its peers as measured by the Lipper Growth Funds Average. The Fund's
investment results begin on page 6.
Driven by the outstanding performance of a small number of the largest
stocks, the US equity markets continued to advance in 1996, setting successive
new highs by rebounding from occasional sharp, short-term, setbacks. The S&P
500's total return for the year was 22.96%, and the Dow Jones Industrial Average
(DJIA) posted an exceptional total return of 28.91%.
A constructive economic environment supported strong corporate earnings in
most industries during 1996. In spite of continued corporate downsizing and
restructuring, the unemployment rate fell as low as 5.2% in August and ended the
year at 5.3%, as compared to 5.6% in December 1995. The increased
competitiveness of US industry and the low inflation environment provided strong
fundamental support to higher equity prices.
Currently, there are no clear indications that there will be either runaway
economic expansion or recession in 1997. Looking ahead, the environment for the
US financial markets and investors remains generally positive, given continued
modest economic growth, low inflation, and bipartisan efforts to balance the
federal budget without raising taxes. While we always recognize that there could
be further short-term volatility, we remain positive about the long-term outlook
for the equity markets and your Fund.
On a final note, the activity witnessed in the equity markets in 1996,
where large one-day increases followed abrupt corrections, is not unusual in the
challenging world of investing. We believe the best strategy for growth of
capital is long-term investing. A professional financial advisor can help you
formulate a long-term investment plan to help you seek your financial goals, and
can provide the insight and support needed to weather the day-to-day uncertainty
that accompanies investing. It is time, not timing, that counts when it comes to
investing.
A discussion with your Portfolio Manager and the Fund's portfolio of
investments follow this letter.
We thank you for your continued interest in Seligman Growth Fund, and look
forward to serving your investment needs in the many years to come.
By order of the Board of Directors,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
------------------
Brian T. Zino
President
January 31, 1997
2
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ANNUAL PERFORMANCE OVERVIEW
- --------------------------------------------------------------------------------
The following is a discussion with your Portfolio Manager regarding Seligman
Growth Fund, and a chart and table comparing your Fund's performance to the
performance of the Standard & Poor's 500 Composite Stock Price Index (S&P 500)
and the Lipper Growth Funds Average.
- ---------------
[Photo]
- ---------------
SELIGMAN GROWTH TEAM: (FROM LEFT) LOUISE OH, NATALIE BILLON, LOUISE KNIGHT
(ADMINISTRATIVE ASSISTANT), DAVID LEVY, KENNETH LONDONER, (SEATED) LORIS D.
MUZZATTI (PORTFOLIO MANAGER). MISSING FROM PHOTO: MICHELLE BORRE
YOUR PORTFOLIO MANAGER
LORIS D. MUZZATTI is a Managing Director of J. & W. Seligman & Co. Incorporated,
and has been Vice President and Portfolio Manager of Seligman Growth Fund for
the past year, and Vice President and Portfolio Manager of Seligman Capital Fund
for the past eight years. Mr. Muzzatti is also Vice President of Seligman
Portfolios, Inc. and Portfolio Manager of its Seligman Capital Portfolio and the
US portion of its Seligman Global Growth Opportunities Portfolio, and Vice
President of Seligman Henderson Global Fund Series, Inc. and Portfolio Manager
of the US portion of its Seligman Henderson Global Growth Opportunities Fund. He
also manages a portion of the firm's institutional accounts. Mr. Muzzatti joined
Seligman in 1985 as a Vice President and Portfolio Manager. He is assisted by a
team of seasoned investment professionals who are dedicated to the growth
investment discipline, and to the objectives of Seligman Growth Fund.
IAIN C. CLARK is Chief Investment Officer of Seligman Henderson Co., Seligman
Growth Fund's Subadviser, and is responsible for the international investment
activities of the Fund. Mr. Clark is also head of International Investments for,
and a Director of, Henderson plc, an investment manager in London, England. He
has been with Henderson since 1985.
HOW DID SELIGMAN GROWTH FUND PERFORM IN THE LAST 12 MONTHS?
"Seligman Growth Fund had a solid year, posting a total return of 21.14% based
on the net asset value of Class A shares, which outpaced the 19.31% total return
of its competitive universe, the Lipper Growth Funds Average, as measured by
Lipper Analytical Services. The Fund's results modestly lagged the 22.96% total
return of the S&P 500."
WHICH ECONOMIC FACTORS AFFECTED THE FUND'S PERFORMANCE IN 1996?
"The economy grew steadily in 1996, supported by low levels of inflation. This
constructive economic background helped improve corporate earnings across
several industries, and generally supported both the strong advances of
blue-chip stocks in the equity markets and the Fund's performance. On the other
hand, the interest rate environment was more difficult, as fears of inflation
pushed rates higher in the first half of the year. Interest rates did reverse
course though, trending lower through the second half of the year as low levels
of inflation persisted."
WHICH MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE IN THE LAST 12 MONTHS?
"Investors' tremendous appetite for the largest companies in the equity markets
was reflected in the record highs hit by the S&P 500 and the Dow Jones
Industrial Average. Although smaller and mid-sized companies had solid results
in 1996, they lagged the gains of the larger stocks.
"In 1996, most established international markets did not keep pace with the
remarkable year of the US equity markets. The Fund maintains a 9% allocation in
international companies, seeking quality investment opportunities and stronger
potential returns over the long term. This international weighting did not
improve the Fund's performance in 1996. However, we expect that international
markets should post stronger relative performance in 1997. Further, the fourth
quarter of 1996 marked a restructuring of the international portion of the
portfolio, as we implemented a bottom-up stock selection approach similar to the
one used in the domestic portion of the portfolio."
3
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ANNUAL PERFORMANCE OVERVIEW (CONTINUED)
- --------------------------------------------------------------------------------
WHAT WAS YOUR INVESTMENT STRATEGY?
"Over the last 12 months, we continued to use a thorough and rigorous investment
process in our stock selection, and this discipline was primarily responsible
for the Fund's strong results. We also maintained our selling discipline, taking
profits in companies whose prices appreciated to the high end of their
historical valuation ranges. If a company experienced a significant change in
its structure that could influence the corporate outlook, we reviewed that
position for future viability. For example, we sold our position in PepsiCo, as
the prospects of the restaurant division seemed weak."
WHICH SECTORS IMPROVED THE FUND'S OVERALL PERFORMANCE IN THE PAST YEAR?
"The Fund was overweighted in mid-sized technology stocks in order to capture
their growth and appreciation potential, and these holdings generally improved
overall performance. However, the portfolio's strongest holdings were in the
largest technology companies such as Microsoft, Intel, and Cisco Systems. We
continue to hold these companies, as they are market leaders and still have
strong prospects.
"Another area of strength in the portfolio was the financial sector. Major
banks such as Citicorp and Wells Fargo had a good year, as did financial
services companies such as MBNA. Though we still believe the prospects for the
financial sector are strong, stock selection will become increasingly important
for continued performance. Finally, issues in consumer goods and services
improved the Fund's results, particularly Gillette and Coca-Cola."
WHICH SECTORS IMPAIRED THE FUND'S PERFORMANCE IN 1996?
"The energy sector had very strong results in 1996, due primarily to tight
supply conditions which drove up oil and gas prices, and which led to strong
stock appreciation. Seligman Growth Fund had a minimal investment in energy, as
it is not a growth sector but rather an industry that depends on the supply and
demand conditions of the underlying commodities. Therefore, the Fund did not
capture the appreciation seen in the sector. The Fund will maintain its
underweighting in energy, as we believe that the performance seen in 1996 will
not continue into the new year.
"In health care, we began the year overweighted in HMOs, but shifted assets
in the second half of the year to large pharmaceutical companies which held the
fastest and most stable earnings growth. While the Fund's health care holdings
did not match the sector's gains in the markets, they posted good results and
generally improved the Fund's returns. Pharmaceutical companies had strong
performance due to unit volume growth, as the availability of cutting-edge drugs
led to increases in the number of prescriptions written. Eli Lilly and Pfizer
were the strongest pharmaceutical holdings in the portfolio, and Guidant, a
manufacturer of cardiological equipment, had a solid year. At this time, United
Healthcare, a market leader which is improving its pricing leverage and
administrative abilities, is the only remaining HMO in the Fund. We will
maintain our positions in pharmaceutical and specialty health care companies as
their prospects remain quite positive."
WHAT IS THE OUTLOOK?
"Seligman Growth Fund is well positioned for 1997 as the portfolio has
significantly stronger projected earnings growth than the S&P 500. The Fund's
holdings typically grow earnings at a projected rate of 15% or more a year, and
stocks are invested in fundamentally solid businesses with strong financials and
low levels of debt. We continue to invest in growth companies in expanding
business areas with attractive price-to-earnings ratios and good opportunities
for appreciation. We believe economic growth will remain moderate in 1997, and
that the possibility for a mild reduction in economic growth exists. In an
overall slower growth environment, stable high-quality growth stocks are
generally given greater attention in the marketplace for their abilities to
improve corporate earnings."
4
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SELIGMAN GROWTH FUND, INC.
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<TABLE>
DIVERSIFICATION OF ASSETS
DECEMBER 31, 1996
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
---------------------
ISSUES COST VALUE 1996 1995
------- -------------- -------------- ------- ------
<S> <C> <C> <C> <C> <C>
NET CASH AND SHORT-TERM HOLDINGS ......... 1 $ 5,335,582 $ 5,335,582 0.8 0.2
-- ------------ ------------ ----- -----
COMMON STOCKS AND
CONVERTIBLE SECURITIES:
Aerospace.................................. 1 9,669,962 15,956,250 2.3 2.3
Automotive and Related..................... 4 11,128,151 19,228,685 2.8 2.2
Business Services.......................... 8 50,024,265 82,016,875 11.9 12.4
Chemicals.................................. 3 15,017,494 17,437,906 2.5 2.5
Consumer Goods and Services................ 5 21,210,750 38,402,699 5.6 7.0
Drugs and Health Care...................... 11 65,230,686 86,653,787 12.6 20.0
Electronics................................ 1 753,837 603,613 0.1 0.1
Energy..................................... 1 1,894,123 2,261,250 0.3 0.2
Financial Services......................... 12 58,879,104 114,743,659 16.7 15.5
Industrial Equipment....................... 6 24,718,281 35,804,235 5.2 5.2
Leisure and Entertainment.................. 11 53,219,726 59,247,341 8.6 6.7
Printing and Publishing.................... 1 1,630,509 3,041,139 0.4 0.4
Retail Trade............................... 5 28,772,455 29,232,256 4.3 4.1
Steel...................................... 1 5,555,290 5,100,000 0.7 1.0
Technology................................. 12 62,840,986 103,698,374 15.1 11.9
Telecommunications......................... 9 34,946,651 39,010,791 5.7 4.2
Tobacco.................................... 1 7,615,474 14,078,125 2.1 1.9
Miscellaneous.............................. 2 8,701,092 15,606,758 2.3 2.2
-- ------------ ------------ ----- -----
94 461,808,836 682,123,743 99.2 99.8
-- ------------ ------------ ----- -----
NET ASSETS ................................ 95 $467,144,418 $687,459,325 100.0 100.0
== ============ ============ ===== =====
</TABLE>
5
<PAGE>
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PERFORMANCE COMPARISON CHART December 31, 1996
- --------------------------------------------------------------------------------
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, 1996, to a $10,000 hypothetical
investment made in the Standard & Poor's 500 Composite Stock Price Index (S&P
500) and the Lipper Growth Funds Average (Lipper Growth Average) for the same
period. The performances of Seligman Growth Fund Class B and D shares are not
shown in this chart, but are included in the table on page 7. 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 Average excludes the effect of sales charges.
[The following table represents points that appear on the line chart in the
printed version]
SELIGMAN GROWTH FUND - CLASS A
With Without Lipper
Sales Sales Growth
Charge Charge S&P 500 Average
------ ------ ------- -------
12/31/86 ............ $ 9,528.13 $10,000.00 $10,000.00 $10,000.00
11,669.69 12,247.62 12,135.00 12,094.12
12,067.35 12,664.96 12,744.18 12,389.11
12,615.86 13,240.64 13,585.29 13,144.80
12/31/87 ............ 9,856.79 10,344.93 10,524.53 10,321.94
9,973.30 10,467.21 11,123.37 11,119.35
10,719.27 11,250.13 11,864.19 11,762.48
10,461.26 10,979.34 11,904.53 11,682.65
12/31/88 ............ 10,580.64 11,104.63 12,272.38 11,850.00
11,208.72 11,763.81 13,142.49 12,716.58
12,416.17 13,031.07 14,302.97 13,752.57
14,266.43 14,972.95 15,834.82 15,161.72
12/31/89 ............ 14,150.97 14,851.77 16,161.01 15,042.24
13,401.80 14,065.50 15,674.57 14,719.39
14,816.90 15,550.68 16,660.50 15,783.06
12,100.00 12,699.23 14,371.35 13,245.87
12/31/90 ............ 13,420.50 14,085.14 15,659.02 14,335.74
15,857.93 16,643.27 17,934.27 16,895.57
15,740.46 16,519.98 17,893.03 16,740.43
17,007.95 17,850.25 18,850.30 18,008.82
12/31/91 ............ 18,581.03 19,501.23 20,429.96 19,661.03
18,206.29 19,107.92 19,913.08 19,477.50
17,301.06 18,157.87 20,291.43 18,966.80
18,364.78 19,274.26 20,930.61 19,540.50
12/31/92 ............ 20,679.93 21,704.07 21,983.42 21,341.78
20,577.21 21,596.27 22,944.09 21,897.45
19,927.10 20,913.96 23,056.52 22,071.34
21,710.60 22,785.78 23,651.38 23,164.67
12/31/93 ............ 21,961.10 23,048.69 24,200.09 23,702.20
21,167.83 22,216.13 23,282.91 22,931.93
20,040.55 21,033.02 23,380.69 22,316.30
21,293.09 22,347.59 24,524.01 23,554.60
12/31/94 ............ 21,117.67 22,163.49 24,519.11 23,257.68
22,094.48 23,188.67 26,907.27 24,961.84
23,722.50 24,897.31 29,476.91 27,371.14
26,094.75 27,387.04 31,820.32 29,741.05
12/31/95 ............ 27,130.61 28,474.20 33,735.91 30,446.81
29,001.68 30,437.94 35,547.53 32,099.72
30,404.99 31,910.74 37,140.06 33,557.37
31,600.40 33,165.35 38,287.68 34,545.20
12/31/96 ............ 32,865.36 34,492.96 41,480.88 36,325.49
Performance data quoted represent changes in price and assume that all
distributions within the periods are invested in additional shares. The rates of
return will vary and the principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
6
<PAGE>
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SELIGMAN GROWTH FUND, INC.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION THREE ONE FIVE 10 INCEPTION
4/22/96 MONTHS YEAR YEARS YEARS 5/3/93
-------------- -------- -------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge n/a (0.89)% 15.39% 10.98% 12.64% n/a
Without Sales Charge n/a 4.00 21.14 12.08 13.18 n/a
CLASS B
With 5% CDSL 6.45% (1.08) n/a n/a n/a n/a
Without CDSL 11.45% 3.69 n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a 2.74 19.21 n/a n/a n/a
Without CDSL n/a 3.69 20.21 n/a n/a 13.75%
S&P 500** 15.00+ 8.34 22.96 15.22 15.27 18.29++
LIPPER GROWTH AVERAGE** 9.54+ 5.15 19.31 13.05 13.76 15.76++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE
DECEMBER 31, 1996 SEPTEMBER 30, 1996 JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
-------------------- ------------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
CLASS A $5.85 $6.08 $5.85 $5.58 $5.22
CLASS B 5.49 5.75 5.54 5.35+++ n/a
CLASS D 5.49 5.75 5.54 5.29 4.96
</TABLE>
<TABLE>
<CAPTION>
CAPITAL GAIN INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
CAPITAL GAIN
------------------------------------------------------------
PAID REALIZED UNREALIZED o
--------------- --------------- ---------------
<S> <C> <C> <C>
CLASS A $0.475 $0.389 $1.873
CLASS B 0.475 0.389 1.873
CLASS D 0.475 0.389 1.873
</TABLE>
The performances of Class B and D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
- ----------
* 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 with and without 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 with and
without the effect of the maximum 5% contingent deferred sales load
("CDSL"), charged only on certain redemptions made within one year of the
date of purchase, declining to 1% in the sixth year and 0% thereafter.
Returns for Class D shares are calculated with and without the effect of the
1% CDSL, charged only on redemptions made within one year of the date of
purchase. 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 and the Lipper Growth Average are unmanaged benchmarks that
assume investment of dividends. The S&P 500 does not reflect fees or sales
charges and the Lipper Growth Average does not reflect sales charges. The
monthly performance of the Lipper Growth Average is used in the Performance
Comparison Chart and the Investment Results per Share. Investors may not
invest directly in an index or an average.
+ From April 30, 1996.
++ From April 30, 1993.
+++ As of April 22, 1996.
o Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1996.
7
<PAGE>
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SELIGMAN GROWTH FUND, INC.
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LARGEST PORTFOLIO CHANGES
DURING PAST THREE MONTHS
SHARES
----------------------
HOLDINGS
ADDITIONS INCREASE 12/31/96
- --------- -------- --------
American Home Products............................... 100,000 100,000
Computer Associates
International....................................... 155,000 155,000
Crown Cork & Seal.................................... 100,000 100,000
Disney, Walt......................................... 50,800 115,000
Guidant.............................................. 95,000 195,000
Hewlett-Packard...................................... 85,000 235,000
Honeywell............................................ 50,000 100,000
Lucent Technologies.................................. 135,000 135,000
Seagate Technology................................... 200,000 200,000
Viatel............................................... 250,000 250,000
SHARES
----------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/96
- ---------- -------- --------
Amgen................................................ 55,000 115,000
Eckerd............................................... 200,000 --
HFS.................................................. 40,000 115,000
Informix............................................. 150,000 --
Medtronic............................................ 150,000 --
Nordstrom............................................ 125,000 --
Oxford Health Plans.................................. 50,000 --
PepsiCo.............................................. 300,000 --
Pharmacia & Upjohn................................... 170,000 --
Schering-Plough...................................... 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.
LARGEST PORTFOLIO HOLDINGS
AT DECEMBER 31, 1996
SECURITY VALUE
- ----------- ----------
Intel.................................... $19,640,625
Microsoft................................ 18,191,250
First Data............................... 16,425,000
American International Group............. 16,237,500
Boeing................................... 15,956,250
General Electric......................... 14,831,250
Pfizer................................... 14,503,125
Philip Morris............................ 14,078,125
Gillette................................. 13,606,250
Tyco International....................... 13,218,750
8
<PAGE>
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SELIGMAN GROWTH FUND, INC.
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF 1996
GAIN DISTRIBUTION FOR
TAXABLE ACCOUNTS
A distribution of $0.475 per share, consisting of $0.381 from net long-term and
$0.094 from net short-term gain realized on investments from November 1995 to
October 1996, was paid on November 22, 1996, to Class A, B, and D shareholders.
The distribution from net long-term gain is designated as a "capital gain
dividend" for federal income tax purposes and is taxable to shareholders in 1996
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 additional
shares or 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 the date of purchase, any loss on the sale would be treated as long-term to
the extent it offsets the long-term gain distribution. Net short-term gain is
taxable as ordinary income whether paid to you in cash or shares.
If the distribution was paid in shares, the per share cost basis for
federal income tax purposes was $5.87 for Class A shares and $5.52 for both
Class B and D shares.
A year-end statement of account showing activity for 1996, a Form 1099-DIV,
and if applicable, a Form 1099-B have been mailed to each shareholder. Form
1099-B shows the proceeds of any redemptions paid to the shareholder during the
year and reported to the Internal Revenue Service as required by federal
regulations. Form 1099-DIV shows the amount of the distribution from gain on
investments paid to the shareholder during the year.
9
<PAGE>
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PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCKS 99.1%
AEROSPACE 2.3%
BOEING
Aircraft manufacturer ....... 150,000 $15,956,250
-----------
AUTOMOTIVE AND RELATED 2.8%
AUTOLIV (ADRS)+*
Swedish supplier of safety
restraint systems ........... 55,000 2,392,500
ECHLIN
French manufacturer of motor
vehicle replacement parts ... 163,000 5,154,875
HARLEY-DAVIDSON
Motorcycle manufacturer ..... 200,000 9,400,000
VALEO
Manufacturer of commercial
automotive components in
France ...................... 37,000 2,281,310
-----------
19,228,685
-----------
BUSINESS SERVICES 11.9%
COMPUTER ASSOCIATES
INTERNATIONAL
Software utilities and
databases ................... 155,000 7,711,250
ELECTRONIC DATA SYSTEMS
Computer systems and
services .................... 225,000 9,731,250
FIRST DATA
Credit card processing
services .................... 450,000 16,425,000
HFS*
Hotel and motel franchises .. 115,000 6,871,250
IKON OFFICE SOLUTIONS
Distributor of paper and
office equipment ............ 175,000 9,034,375
INTERPUBLIC GROUP OF COMPANIES
Worldwide advertising
agency ...................... 250,000 11,875,000
REYNOLDS & REYNOLDS (CLASS A)
Supplier of information
systems to the auto and
medical industries .......... 400,000 10,400,000
SUNGARD DATA SYSTEMS*
Backup computer services
for disaster recovery ....... 250,000 9,968,750
-----------
82,016,875
-----------
CHEMICALS 2.5%
AIR PRODUCTS & CHEMICALS
Industrial gases and
chemicals ................... 150,000 10,368,750
BAYER
Producer of specialty
chemicals, pharmaceuticals,
and plastics in Germany ..... 80,000 3,244,156
ENGELHARD
Specialty chemicals
and metals .................. 200,000 3,825,000
-----------
17,437,906
-----------
CONSUMER GOODS
AND SERVICES 5.6%
ADIDAS
German manufacturer of
sporting equipment
and footware ................ 32,000 2,763,636
COCA-COLA
Soft drinks, consumer
products .................... 200,000 10,525,000
CROWN CORK & SEAL
Manufacturer of metal
and plastic containers ...... 100,000 5,437,500
GILLETTE
Personal care products ...... 175,000 13,606,250
MATTEL
Manufacturer of dolls,
games, and action and
activity toys ............... 218,750 6,070,313
-----------
38,402,699
-----------
DRUGS AND HEALTH CARE 12.6%
AMERICAN HOME PRODUCTS
Manufacturer of
pharmaceuticals, food,
and housewares .............. 100,000 5,862,500
AMGEN*
Biotechnology company ....... 115,000 6,260,313
COLUMBIA/HCA HEALTHCARE
Health care facilities
and services ................ 300,000 12,225,000
ELI LILLY
Developer and manufacturer
of pharmaceuticals .......... 100,000 7,300,000
<PAGE>
GUIDANT
Manufacturer of
cardiological equipment ..... 195,000 11,115,000
- ----------
See footnotes on page 13.
10
<PAGE>
================================================================================
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
DRUGS AND HEALTH CARE (continued)
JOHNSON & JOHNSON
Health care products ........ 175,000 $ 8,706,250
MERCK
Developer and manufacturer
of pharmaceuticals .......... 100,000 7,925,000
NOVARTIS
Swiss manufacturer of health
care products ............... 2,000 2,285,501
PFIZER
Health care consumer products;
specialty chemicals ......... 175,000 14,503,125
ROUSSEL-UCLAF
French developer and
manufacturer of specialty
pharmaceuticals ............. 5,000 1,471,098
UNITED HEALTHCARE
Health maintenance
organization ................ 200,000 9,000,000
-----------
86,653,787
-----------
ENERGY 0.3%
HUANENG POWER INTERNATIONAL
(ADRs)*
Diversified Chinese
energy company .............. 100,500 2,261,250
-----------
FINANCIAL SERVICES 16.7%
AMERICAN INTERNATIONAL GROUP
International insurance ..... 150,000 16,237,500
CITICORP
Global commercial bank ...... 100,000 10,300,000
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
Mortgage financing .......... 300,000 11,175,000
GENERAL RE
Property casualty reinsurer . 75,000 11,831,250
GREEN TREE FINANCIAL
Loans for manufactured
homes ....................... 300,000 11,587,500
ING GROEP
Banking and insurance
services group in the
Netherlands ................. 87,396 3,145,305
MBNA
Issuer of bank credit cards . 150,000 6,225,000
MGIC INVESTMENT
Private mortgage insurance .. 150,000 11,400,000
NORWEST
Midwest bank ................ 250,000 10,875,000
SUNAMERICA
Diversified financial services,
specializing in pre-
retirement savings .......... 225,000 9,984,375
UTD OVERSEAS BANK
Singapore bank .............. 228,000 2,541,479
WELLS FARGO
Commercial banking
in California ............... 35,000 9,441,250
-----------
114,743,659
-----------
INDUSTRIAL EQUIPMENT 5.2%
ABB
Swedish manufacturer of
heavy equipment for electric
power generation and
distribution ................ 2,350 2,916,698
FKI BABCOCK
Electrical engineering
company in the UK ........... 875,000 3,026,844
GENERAL ELECTRIC
Supplier of electrical
equipment and other
industrial and consumer
products .................... 150,000 14,831,250
HONEYWELL
Manufacturer of automation
and control systems ......... 100,000 6,575,000
ILLINOIS TOOL WORKS
Fasteners, tools, and
plastic items ............... 75,000 5,990,625
KEYENCE
Japanese producer of
detection devices for the
manufacturing process ....... 20,000 2,463,818
-----------
35,804,235
-----------
LEISURE AND
ENTERTAINMENT 8.6%
CAPITAL RADIO
Commercial radio stations in
the UK ...................... 200,000 1,871,762
CIRCUS CIRCUS ENTERPRISES*
Casino hotels ............... 250,000 8,593,750
<PAGE>
DISNEY, WALT
Theme parks, hotels, films .. 115,000 8,006,875
- ----------
See footnotes on page 13.
11
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
LEISURE AND ENTERTAINMENT (continued)
GRANADA GROUP
Radio and television
broadcasting and publishing
based in the UK ............. 200,000 $ 2,950,637
HILTON HOTELS
Owner, operator, and
manager of hotels ........... 260,000 6,792,500
LADBROKE GROUP
UK hotel and property
investor and developer ...... 500,000 1,977,937
MIRAGE RESORTS*
Manager of casinos in
Las Vegas ................... 360,000 7,785,000
SOL MELIA
Hotel manager and franchise
company in Spain ............ 70,000 2,505,967
SUN INTERNATIONAL HOTELS
Operator of resort and
casino hotels ............... 150,000 5,475,000
VIACOM (CLASS B)
Diverse entertainment
communications company ...... 275,000 9,590,625
WPP GROUP
UK provider of worldwide
marketing services, including
advertising, public relations,
and market research ......... 850,000 3,697,288
-----------
59,247,341
-----------
PRINTING AND PUBLISHING 0.4%
ELSEVIER
Global printer and publisher
of professional trade
journals and magazines, based
in the Netherlands .......... 180,000 3,041,139
-----------
RETAIL TRADE 4.3%
CONSOLIDATED STORES*
Retailer of closed-out
merchandise ................. 250,000 8,031,250
HOME DEPOT
Chain of home improvement
stores ...................... 180,000 9,022,500
LIZ CLAIBORNE
Designer and distributor of
women's apparel ............. 200,000 7,725,000
OFFICE DEPOT*
Office supply retailer ...... 150,000 $ 2,662,500
SCHIMACHU
Japanese retailer of furniture 70,000 1,791,006
-----------
29,232,256
-----------
STEEL 0.7%
NUCOR
Mini-mill steel production .. 100,000 5,100,000
-----------
TECHNOLOGY 15.1%
CISCO SYSTEMS*
Computer network routers .... 200,000 12,737,500
HEWLETT-PACKARD
Computers and peripherals ... 235,000 11,808,750
INTEL
Semiconductor manufacturer .. 150,000 19,640,625
LINEAR TECHNOLOGY
Designer and manufacturer of
analog integrated circuits .. 40,000 1,755,000
MICROSOFT*
Microcomputer software ...... 220,000 18,191,250
SEAGATE TECHNOLOGY*
Global hard-disk drive
supplier .................... 200,000 7,900,000
SECOM
Japanese manufacturer of
electronic instrumentation .. 35,000 2,113,628
SGS-THOMSON
MICROELECTRONICS*
French manufacturer of semi-
conductor integrated circuits 45,000 3,182,081
STERLING COMMERCE*
Developer of electronic data
interchange software ........ 159,260 5,613,915
STERLING SOFTWARE*
Software and network
services; automated program
design software ............. 100,000 3,162,500
3COM*
Supplier of adapter cards,
hubs, and routers for local
area computer networks ...... 100,000 7,331,250
<PAGE>
XEROX
Developer and marketer of
document processing
products and services ....... 195,000 10,261,875
-----------
103,698,374
-----------
- ----------
See footnotes on page 13.
12
<PAGE>
================================================================================
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
TELECOMMUNICATIONS 5.7%
AMERICAN TELEPHONE &
TELEGRAPH
International and domestic
telecommunications services . 150,000 $ 6,525,000
CENTURY TELEPHONE ENTERPRISES
Regional telephone and
cellular services ........... 125,000 3,859,375
L.M. ERICSSON TELEFON (SERIES B)
Global telecommunications
equipment and systems,
wired and mobile, based
in Sweden ................... 75,000 2,312,599
LUCENT TECHNOLOGIES
Designer and developer of
public and private networks . 135,000 6,243,750
MOTOROLA
Producer of wireless
telecommunications
equipment ................... 100,000 6,137,500
NERA (ADSS)
Wireless equipment and
billing services for
INMARSAT global
satellite communications
network and microwave
radio relay, based in Norway 45,000 1,945,067
TELEFONICA DEL PERU (ADRS)
Provider of telecommuni-
cations services in Peru .... 100,000 1,887,500
VIATEL*
Provider of international
and national long-distance
telecommunications services . 250,000 2,281,250
WORLDCOM*
Long distance carrier ....... 300,000 7,818,750
------------
39,010,791
------------
TOBACCO 2.1%
PHILIP MORRIS
Tobacco products manufacturer 125,000 14,078,125
------------
SHARES OR
PRIN. AMT
---------
MISCELLANEOUS 2.3%
HIS
Discount tour operator
in Japan .................... 49,500 shs. 2,388,008
TYCO INTERNATIONAL
Worldwide fire protection
services .................... 250,000 13,218,750
------------
15,606,758
------------
TOTAL COMMON STOCKS
(Cost $461,054,999) ........... 681,520,130
------------
CONVERTIBLE BONDS 0.1%
(Cost $753,837)
ELECTRONICS 0.1%
UNITED METRO ELECTRONICS
(TAIWAN)
1(TM)'%, 6/8/2004 ........... $430,000 603,613
------------
SHORT-TERM HOLDINGS 1.0%
(Cost $7,100,000) ............. 7,100,000
------------
TOTAL INVESTMENTS 100.2%
(Cost $468,908,836) .......... 689,223,743
OTHER ASSETS LESS
LIABILITIES (0.2)% ........... (1,764,418)
------------
NET ASSETS 100.0% .............. $687,459,325
============
- ----------
* Non-income producing security.
+ Rule 144A security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
13
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value:
Common stocks and convertible securities (cost $461,808,836) ... $682,123,743
Short-term holdings (cost $7,100,000)........................... 7,100,000 $689,223,743
------------
Cash ........................................................................... 967,712
Receivable for dividends and interest .......................................... 757,828
Receivable for Capital Stock sold .............................................. 514,017
Investment in, and expenses prepaid to, shareholder service agent .............. 168,458
Other .......................................................................... 66,852
------------
TOTAL ASSETS ................................................................... 691,698,610
------------
LIABILITIES:
Payable for securities purchased ............................................... 2,087,618
Payable for Capital Stock repurchased .......................................... 923,378
Accrued expenses, taxes, and other ............................................. 1,228,289
------------
TOTAL LIABILITIES .............................................................. 4,239,285
------------
NET ASSETS ..................................................................... $687,459,325
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized; ............ 117,643,091
shares outstanding):
Class A ....................................................................... $ 115,391,146
Class B ....................................................................... 160,153
Class D ....................................................................... 2,091,792
Additional paid-in capital ..................................................... 341,416,823
Accumulated net investment loss ................................................ (233,414)
Undistributed net realized gain ................................................ 8,317,206
Net unrealized appreciation of investments ..................................... 220,612,566
Net unrealized depreciation on translation of assets and liabilities
denominated in foreign currencies ........................................... (296,947)
------------
NET ASSETS ..................................................................... $687,459,325
============
NET ASSET VALUE PER SHARE:
CLASS A ($675,086,139 / 115,391,146 SHARES) .................................... $5.85
=====
CLASS B ($879,937 / 160,153 SHARES) ............................................ $5.49
=====
CLASS D ($11,493,249 / 2,091,792 SHARES) ....................................... $5.49
=====
</TABLE>
- ----------
See Notes to Financial Statements.
14
<PAGE>
================================================================================
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $111,424) $ 6,557,285
Interest................................. ....................... 464,525
-----------
TOTAL INVESTMENT INCOME ......................................... $ 7,021,810
EXPENSES:
Management fee................................................... 4,552,474
Distribution and service fees.................................... 1,590,187
Shareholder account services..................................... 997,559
Custody and related services..................................... 245,493
Shareholder reports and communications........................... 146,858
Registration..................................................... 120,280
Auditing and legal fees.......................................... 82,856
Directors' fees and expenses..................................... 40,421
Shareholders' meeting............................................ 28,085
Miscellaneous.................................................... 37,848
-----------
TOTAL EXPENSES .................................................. 7,842,061
------------
NET INVESTMENT LOSS ............................................. (820,251)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments................................. 45,998,438
Net realized loss from foreign currency transactions ............ (192,526)
Net change in unrealized appreciation of investments ............ 80,581,682
Net change in unrealized appreciation on translation of assets and
liabilities denominated in foreign currencies and
forward currency contracts..................................... (1,186,005)
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS ....... 125,201,589
------------
INCREASE IN NET ASSETS FROM OPERATIONS .......................... $124,381,338
============
</TABLE>
- ----------
See Notes to Financial Statements.
15
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995
------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................................................... $ (820,251) $ 922,886
Net realized gain on investments ............................................... 45,998,438 78,316,368
Net realized gain (loss) from foreign currency transactions .................... (192,526) 406,810
Net change in unrealized appreciation of investments ........................... 80,581,682 61,247,607
Net change in unrealized appreciation on translation of assets and liabilities
denominated in foreign currencies and forward currency contracts ............ (1,186,005) 395,616
------------- -------------
Increase in net assets from operations ......................................... 124,381,338 141,289,287
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income-- Class A ................................................ -- (1,048,188)
Net realized gain on investments:
Class A ....................................................................... (51,655,332) (62,681,650)
Class B ....................................................................... (48,869) --
Class D ....................................................................... (833,364) (685,513)
------------- -------------
Decrease in net assets from distributions ...................................... (52,537,565) (64,415,351)
------------- -------------
SHARES
----------------------------
CAPITAL SHARE TRANSACTIONS:* YEAR ENDED DECEMBER 31,
----------------------------
1996 1995
----------- ----------
Net proceeds from sale of shares:
Class A ...................................... 1,555,646 1,963,645 8,910,750 9,903,613
Class B ...................................... 146,621 -- 807,268 --
Class D ...................................... 648,614 881,669 3,516,242 4,318,133
Investment of dividends-- Class A ............. -- 141,801 -- 734,496
Exchanged from associated Funds:
Class A ...................................... 13,065,985 7,453,091 74,567,188 39,381,227
Class B ...................................... 24,435 -- 136,451 --
Class D ...................................... 830,652 207,215 4,521,180 1,088,175
Shares issued in payment of gain distributions:
Class A ...................................... 6,962,221 9,630,233 40,868,393 49,877,844
Class B ...................................... 8,453 -- 46,662 --
Class D ...................................... 147,558 133,979 814,469 659,149
----------- ----------- ------------ ------------
Total ......................................... 23,390,185 20,411,633 134,188,603 105,962,637
----------- ----------- ------------ ------------
Cost of shares repurchased:
Class A ...................................... (7,581,746) (8,896,248) (43,251,632) (45,562,371)
Class B ...................................... (7,314) -- (40,259) --
Class D ...................................... (323,816) (94,062) (1,774,413) (462,501)
Exchanged into associated Funds:
Class A ...................................... (13,094,458) (8,899,690) (74,677,608) (46,762,125)
Class B ...................................... (12,042) -- (65,695) --
Class D ...................................... (503,789) (233,991) (2,685,707) (1,197,160)
----------- ----------- ------------ ------------
Total ......................................... (21,523,165) (18,123,991) (122,495,314) (93,984,157)
----------- ----------- ------------ ------------
Increase in Net Assets from
Capital Share Transactions ................. 1,867,020 2,287,642 11,693,289 11,978,480
=========== =========== ------------ ------------
Increase in Net Assets............................................................ 83,537,062 88,852,416
NET ASSETS:
Beginning of year................................................................. 603,922,263 515,069,847
------------ ------------
End of year (including accumulated net investment loss and dividends in
excess of net investment income of $233,414 and $215,986, respectively)........ $687,459,325 $603,922,263
============ ============
</TABLE>
- ----------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
16
<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 A shares
purchased in an amount of $1,000,000 or more are sold without an initial sales
charge but are subject to a contingent deferred sales load ("CDSL") of 1% on
redemptions within eighteen months of purchase. 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 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 on 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, bonds, and U.S. Government securities are valued at
current market values or, in their absence, at fair values determined in
accordance with procedures approved by the Board of Directors. Securities
traded on national exchanges are valued at last sales prices or, in their
absence and in the case of over-the-counter securities, 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
17
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
that are specifically attributed to a particular class, are charged directly
to such class. For the year ended December 31, 1996, distribution and service
fees were the only class-specific expenses.
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 realized 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 year ended December 31, 1996,
amounted to $167,872,026 and $213,883,151, respectively.
At December 31, 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
$233,991,997 and $13,677,090, respectively.
4. At December 31, 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"), an
entity owned 50% each by the Manager and Henderson plc, 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 the Fund's shares and an affiliate of the Manager, received
concessions of $20,514 from sales of Class A shares after commissions of
$160,989 paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the year ended December 31,
1996, fees paid aggregated $1,499,727 or 0.23% per annum of the average daily
net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, service
organizations can enter into
18
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
agreements with the Distributor and receive a continuing fee for providing
personal services and/or the maintenance of shareholder accounts of up to 0.25%
on an annual basis of the average daily net assets of the Class B and Class D
shares for which the organizations are responsible; and, for Class D shares
only, fees for providing other distribution assistance of up to 0.75% on an
annual basis of such average daily net assets. Such fees are paid monthly by the
Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 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 year ended December 31, 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 $2,455 and $88,005, 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
year ended December 31, 1996, such charges amounted to $4,805.
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 year
ended December 31, 1996, was $1,987.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of shares of the Fund, as well as
distribution and service fees pursuant to the Plan. For the year ended December
31, 1996, Seligman Services, Inc. received commissions of $22,876 from sales of
shares of the Fund. Seligman Services, Inc. also received dis-tribution and
service fees of $568,663, pursuant to the Plan.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $985,009 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 $23,000 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 annual cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at December 31, 1996, of
$233,414 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.
19
<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 each Class'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 each Class'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
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1996o 1995o 1994o 1993 1992
------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of year............. $5.22 $4.54 $5.26 $6.04 $5.95
----- ----- ----- ----- -----
Net investment income (loss)................... (.01) .01 .01 .01 .03
Net realized and unrealized
investment gain (loss)...................... 1.13 1.27 (.22) .35 .64
Net realized and unrealized gain (loss)
on foreign currency transactions............ (.01) .01 -- -- --
----- ----- ----- ----- -----
Increase (decrease) from investment
operations.................................. 1.11 1.29 (.21) .36 .67
Dividends paid ................................ .-- (.01) (.01) (.01) (.03)
Distributions from net gain realized........... (.48) (.60) (.50) (1.13) (.55)
----- ----- ----- ----- -----
Net increase (decrease) in net asset value..... .63 .68 (.72) (.78) .09
----- ----- ----- ----- -----
Net asset value, end of year................... $5.85 $5.22 $4.54 $5.26 $6.04
===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 21.14% 28.47% (3.84)% 6.20% 11.30%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets................. 1.20% .94% .90% .89% .77%
Net investment income (loss)
to average net assets....................... (.12)% .17% .14% .18% .49%
Portfolio turnover............................. 26.05% 102.30% 93.59% 105.64% 46.96%
Average commission rate paid................... $.0437
Net assets, end of year (000s omitted)......... $675,086 $597,510 $513,328 $591,491 $614,860
</TABLE>
- ----------
See footnotes on page 21.
20
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS D
--------- -------------------------------------------------------
4/22/96* 5/3/93*
TO YEAR ENDED DECEMBER 31, TO
----------------------------------------
012/31/96o 1996o 1995o 1994o 12/31/93
--------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period........... $5.35 $4.96 $4.38 $5.23 $5.67
----- ----- ----- ----- -----
Net investment income (loss)................... (.03) (.05) (.04) (.12) (.03)
Net realized and unrealized
investment gain (loss)...................... .65 1.07 1.21 (.23) .72
Net realized and unrealized gain (loss)
on foreign currency transactions............ -- (.01) .01 -- --
----- ----- ----- ----- -----
Increase (decrease) from investment
operations.................................. .62 1.01 1.18 (.35) .69
Dividends paid ................................ .-- .-- .-- .-- .--
Distributions from net gain realized........... (.48) (.48) (.60) (.50) (1.13)
----- ----- ----- ----- -----
Net increase (decrease) in net asset value..... .14 .53 .58 (.85) (.44)
----- ----- ----- ----- -----
Net asset value, end of period................. $5.49 $5.49 $4.96 $4.38 $5.23
===== ===== ===== ===== =====
TOTAL RETURN BASED
ON NET ASSET VALUE: 11.45% 20.21% 27.01% (6.56)% 12.40%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets................. 1.99%+ 1.97% 1.91% 2.93% 2.17%+
Net investment income (loss)
to average net assets....................... (.83)%+ (.88)% (.83)% (2.34)% (1.03)%+
Portfolio turnover............................. 26.05%++ 26.05% 102.30% 93.59% 105.64%+++
Average commission rate paid................... $.0437++ $.0437
Net assets, end of period (000s omitted)....... $880 $11,493 $6,412 $1,742 $1,197
</TABLE>
- ----------
* Commencement of offering of shares.
o Per share amounts for the periods ended December 31, 1996, 1995, and
1994, are calculated based on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
See Notes to Financial Statements.
21
<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,
1996, 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 periods 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, 1996, by correspondence with the Fund's custodians; 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, 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
January 31, 1997
22
<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
SENIOR 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,
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
PRESIDENT AND MANAGING DIRECTOR,
J. & W. Seligman & Co. Incorporated
CHAIRMAN AND PRESIDENT, Seligman Data Corp.
- ----------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
- --------------------------------------------------------------------------------
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
23
