SELIGMAN
-----------
GROWTH
FUND, INC.
[GRAPHIC]
MID-YEAR REPORT
JUNE 30, 1998
SEEKING LONGER-TERM
GROWTH OF CAPITAL
VALUE AND AN
INCREASE IN FUTURE
INCOME
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
[PHOTO]
JAMES, JESSE, AND JOSEPH SELIGMAN, 1870
TIMES CHANGE...
Established in 1864, Seligman's history of providing financial services has been
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 134 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions for these changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest, diversified, publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance investment companies could have in building wealth for individual
investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including funds that focus on technology stocks, municipal
bonds, and international securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
TABLE OF CONTENTS
To the Shareholders .................................. 1
Interview With Your Portfolio Manager ................ 2
Performance Overview ................................. 4
Portfolio Overview ................................... 6
Portfolio of Investments ............................. 8
Statement of Assets and Liabilities .................. 10
Statement of Operations .............................. 11
Statements of Changes in Net Assets .................. 12
Notes to Financial Statements ........................ 13
Financial Highlights ................................. 16
Report of Independent Auditors ....................... 18
Board of Directors ................................... 19
Executive Officers AND For More Information .......... 20
Glossary of Financial Terms .......................... 21
<PAGE>
TO THE SHAREHOLDERS
Seligman Growth Fund had outstanding performance in the first half of the year,
posting a total return of 20.40% based on the net asset value of Class A shares.
This return outpaced the 15.10% total return of the Fund's peers, as measured by
the Lipper Growth Funds Average. The Fund's return also outpaced the 20.38%
total return of the Russell 1000 Growth Index, which measures the performance of
large-capitalization growth stocks.
Throughout the first half of the year, the US economy continued to grow,
bringing the expansion into an unprecedented eighth year. US companies again
benefited from an environment of low inflation, steady wage increases, strong
consumer spending, a tight labor market, and healthy consumer confidence.
According to the Conference Board, consumer confidence rose to a 29-year high in
June, reflecting these positive fundamentals. Further, the supply of consumer
goods kept pace with demand, which helped the economic expansion remain
balanced.
However, some economic indicators suggested the start of a deceleration in the
pace of economic growth. This expectation of slower growth, combined with fears
about the effects of the Asian financial crisis, heightened investor demand for
"safe haven" equities. Both domestic and overseas investors stressed the
importance of well-known, liquid, large-capitalization growth stocks, which have
a history of providing stable earnings and dividends.
Looking ahead, while the Asian crisis has just begun to impact the US economy,
the effect it has had on the domestic equity market could be reversed. Although
the crisis caused investors to favor the safety of large-cap growth stocks, it
may begin to pressure the earnings of these companies, and in turn their stock
prices, in the months to come.
Beginning in May, the portfolio management responsibilities of Seligman Growth
Fund were fully assumed by Ms. Marion S. Schultheis, a Managing Director of J. &
W. Seligman & Co. Incorporated, and head of the Seligman Growth Team. Ms.
Schultheis is supported by a group of investment professionals dedicated to the
objectives of Seligman Growth Fund.
As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, the Seligman Investment Companies, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that there will be no disruption in the
services provided by your Fund.
Thank you for your continued interest in Seligman Growth Fund. We look forward
to serving your investment needs in the many years to come. A discussion with
your Portfolio Manager, the Fund's portfolio of investments, and financial
statements follow this letter.
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, 1998
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
Q. HOW DID SELIGMAN GROWTH FUND PERFORM IN THE FIRST HALF OF 1998?
A. We are pleased with Seligman Growth Fund's strong results in the first half
of the year. The Fund posted a total return of 20.40% based on the net asset
value of Class A shares, which outpaced the 15.10% total return of its
peers, as measured by the Lipper Growth Funds Average. The Fund's return
also outpaced the 20.38% total return of the Russell 1000 Growth Index,
which measures the performance of large-capitalization growth stocks.
Q. WHICH ECONOMIC AND MARKET FACTORS INFLUENCED THE FUND'S RESULTS IN THE FIRST
HALF OF 1998?
A. The strong economy of the first six months provided a solid environment for
many domestic companies to reinvest earnings, improve credit, and strengthen
their core businesses to position themselves for even stronger future
growth.
However, the Asian financial crisis began to impact corporate profits in
some industries. The crisis depressed demand for consumer products,
high-tech equipment, and commodities throughout Asia. US companies that sell
into these markets suffered from lower-than-anticipated earnings, while
overseas companies flooded the US with inexpensive imports. Additionally,
some economic indicators toward the end of the first half suggested the
start of a deceleration in the pace of US economic growth. These factors
heightened investor demand for "safe haven" large-capitalization growth
stocks.
Q. WHAT WAS YOUR INVESTMENT STRATEGY?
A. Our strategy is to identify, and invest in, growth stocks that are offered
at attractive valuations and above-trend returns while maintaining the
portfolio's diversification. Even though equity valuations were increasing
in the first half of the year, the large-cap market was sufficiently
broad-based to enable us to identify opportunities to purchase fairly valued
stocks of well-managed companies that are building their businesses.
During the first half of 1998, some American companies saw their profit
margins squeezed due to the long-term nature of domestic business cycles,
coupled with the decline in export markets, as a result of the Asian
financial crisis. This led us to increase our focus on domestic companies
with less global and cyclical exposure. We believe that these companies are
capable of producing higher sales at better profit margins than their
competitors, despite market conditions. Further, we emphasized companies
that had standout performances because of their positive business practices,
even in industries where slow performances were anticipated.
Throughout the period, we applied our strategic analysis to identify several
attractively valued, growth-oriented companies whose performance potential
and underlying stock values were unrecognized by the investment community.
We purchased these stocks when they were competitively priced, and ensuing
investor interest vindicated our analysis when the share prices rose. Our
stringent and disciplined stock selection process, coupled with our
dedication to enhancing analytical control, strengthened the overall
portfolio mix and enabled us to pick strong stocks.
[PICTURE]
SELIGMAN GROWTH TEAM: (FROM LEFT) MICHELLE BORRE, SHELIA GRAYSON
(ADMINISTRATIVE ASSISTANT), DAVID LEVY, (SEATED) RICHARD SCHMALTZ,
MARION SCHULTHEIS (PORTFOLIO MANAGER)
A TEAM APPROACH
Seligman Growth Fund is managed by the Seligman Growth Team, headed by Marion S.
Schultheis. Ms. Schultheis is assisted in the management of the Fund by a group
of seasoned professionals who are responsible for identifying those companies in
specific industries that offer the greatest potential for growth, consistent
with the Fund's objective.
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
Q. WHICH INDUSTRIES AFFECTED THE FUND'S PERFORMANCE IN THE FIRST HALF?
A. The portfolio's holdings in capital goods, consumer cyclicals, health care,
and energy all added to the Fund's results.
The Fund benefited from its significant position in the health care sector,
particularly due to the portfolio's holdings in companies that manufacture
medical products and pharmaceuticals. The market for these products is
expanding because of advances in medicine and the overall aging of the US
population. Additionally, these companies are attractive because their
products have recurring revenue. Moreover, we recognize that the release of
new patented pharmaceuticals and other health care products is exerting a
growing influence upon the share prices of their parent companies. This
enabled us to take advantage of positive first-half performances in the
share prices of well-known companies such as Pfizer and Warner-Lambert.
We also took advantage of the competitive prices of some energy stocks. In
addition to being priced well, they possessed attractive yields and
reasonable valuations, and the companies had good long-term prospects and
strong operating environments. Despite recent declines in energy prices,
this sector outperformed expectations, enhancing the Fund's overall
performance.
The portfolio was underweighted in the technology sector to avoid the
negative impact of depressed Asian demand for high-tech consumer products
such as disk drives, personal computers, and infrastructure equipment. In
these businesses, lower demand in the first half led to slower sales and
depressed earnings among many companies. However, the technology sector
performed better than we had anticipated, as demand for software and
computer services was very high. Despite its underweighting, the Fund still
benefited because we concentrated the portfolio's holdings in companies that
manufacture software and computer services, as well as in those with little
Asian exposure.
Finally, low interest rates, deregulation, and consolidation among companies
contributed to general strength in the financial industry, and led many of
the Fund's financial stocks to strong returns. However, this sector as a
whole underperformed our expectations. Additionally, we believe the strength
of the market has put a valuation cap on some financial stocks, at least
temporarily. Although we remain committed to the long-term growth potential
of these companies, we reduced our holdings in this sector.
Q. WHAT IS THE OUTLOOK?
A. Global economic uncertainty as a result of the Asian crisis fueled a "flight
to quality," which drove large-cap growth stock valuations to near record
levels. However, we believe the full impact of the crisis has not yet been
absorbed by the US equity market. Investors may begin to retreat from large
caps as these stocks begin to feel the maximum impact of the crisis.
Additionally, because of depressed overseas export markets, corporate
earnings may come under pressure, and although we think companies should
still have earnings growth, it may be modest. However, we believe that
continuing strong domestic consumer confidence and healthy economic
conditions should help overall corporate performance, despite the ongoing
ramifications of the Asian crisis and the slowdown in growth. We also
believe that US companies should benefit from a benign economic environment.
The second half of 1998 brings with it the first anniversary of the Asian
crisis. Many of the companies that absorbed its initial impact have had a
year to adjust their businesses, and those who are surviving in the
depressed Asian markets may now be worth consideration. Many obviously have
strong enough business practices and operations to function in even the
worst economic environment. While other investors have retreated from
overseas investments in recent months, we believe the period of maximum
uncertainty is the precise time to consider them. Additionally, investor
sentiment is poor, and we think that the low prices of many of these stocks
may make them attractive. These factors could make the second half of the
year an ideal time for us to reconsider companies with Asian exposure.
Valuations are now falling to low levels in a few niche areas, and we
believe growth opportunities will be greater than ever in the coming months.
We will look for opportunities to make strategic investments in high-quality
companies with fairly valued stocks. Therefore, we believe the Fund is
well-positioned to benefit from both weakness in the Asian markets, and the
continuing strength of the US economy.
3
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
For Periods Ended June 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
---------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge 14.73% 20.21% 17.44% 15.30% n/a n/a
Without Sales Charge 20.40 26.23 18.59 15.86 n/a n/a
CLASS B**
With CDSL+ 15.00 20.44 n/a n/a 21.66% n/a
Without CDSL 20.00 25.44 n/a n/a 22.74 n/a
CLASS D**
With 1% CDSL 19.00 24.44 n/a n/a n/a n/a
Without CDSL 20.00 25.44 17.03 n/a n/a 17.04%
LIPPER GROWTH FUNDS AVERAGE*** 15.10 25.38 18.91 16.13 23.46++ 19.18+++
RUSSELL 1000 GROWTH INDEX*** 20.38 31.39 23.48 19.15 30.77++ 23.24+++
</TABLE>
NET ASSET VALUE
JUNE 30, 1998 DECEMBER 31, 1997 JUNE 30, 1997
-------------- -------------------- --------------
CLASS A $7.32 $6.08 $6.59
CLASS B 6.72 5.60 6.15
CLASS D 6.72 5.60 6.15
CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1998
REALIZED $0.873
UNREALIZED 2.276o
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their original
cost. Past performance is not indicative of future investment results.
- -----------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price per share and assume the
investment of dividend and capital gain distributions. Returns for Class A
shares are calculated with and without the effect of the initial 4.75%
maximum sales charge. Returns for Class A shares reflect the effect of the
service fee of up to 0.25% under the Administration, Shareholder Services
and Distribution Plan after January 1, 1993, only. Returns for Class B
shares are calculated with and without the effect of the maximum 5%
contingent deferred sales load ("CDSL"), charged on redemptions made within
one year of the date of purchase, declining to 1% in the sixth year and 0%
thereafter. Returns for Class D shares are calculated with and without the
effect of the 1% CDSL, charged on redemptions made within one year of the
date of purchase.
*** The Lipper Growth Funds Average excludes the effect of sales charges that
may be incurred in connection with purchases or sales. The monthly
performance is used in the Performance Overview. The Russell 1000 Growth
Index is an unmanaged benchmark that assumes investment of dividends and
excludes the effect of fees and sales charges. Investors cannot invest
directly in an average or an index.
+ The CDSL is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
o Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1998.
4
<PAGE>
PERFORMANCE OVERVIEW
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS A SHARES
JUNE 30, 1988, TO
JUNE 30, 1998
[The following table represents a Mountain chart in the printed report]
SELIGMAN GROWTH FUND -- CLASS A SHARES
Class A
6/30/88 $9,521* Initial Amount Invested
9/30/88 9,292
12/31/88 9,398
3/31/89 9,956
6/30/89 11,028
9/30/89 12,671
12/31/89 12,569
3/31/90 11,903
6/30/90 13,160
9/30/90 10,921
12/31/90 11,920
3/31/91 14,085
6/30/91 13,981
9/30/91 15,106
12/31/91 16,504
3/31/92 16,171
6/30/92 15,367
9/30/92 16,312
12/31/92 18,368
3/31/93 18,277
6/30/93 17,699
9/30/93 19,283
12/31/93 19,283
3/31/94 18,801
6/30/94 17,800
9/30/94 18,912
12/31/94 18,757
3/31/95 19,624
6/30/95 21,070
9/30/95 23,177
12/31/95 24,097
3/31/96 25,759
6/30/96 27,006
9/30/96 28,067
12/31/96 29,191
3/31/97 28,792
6/30/97 32,883
9/30/97 34,331
12/31/97 34,477
3/31/98 40,090
6/30/98 $41,508 Total Value at June 30, 1998
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN
CLASS B SHARES
APRIL 22, 1996,+ TO
JUNE 30, 1998
[The following table represents a Mountain chart in the printed report]
SELIGMAN GROWTH FUND -- CLASS B SHARES
Class B
4/22/96 $10,000 Initial Amount Invested
5/31/96 10,505
6/30/96 10,355
7/31/96 9,794
8/31/96 10,075
9/30/96 10,748
10/31/96 10,729
11/30/96 11,206
12/31/96 11,145
1/31/97 11,815
2/28/97 11,733
3/31/97 10,962
4/30/97 11,409
5/31/97 12,018
6/30/97 12,485
7/31/97 13,439
8/31/97 12,464
9/30/97 13,012
10/31/97 12,545
11/30/97 12,957
12/31/97 13,050
1/31/98 13,493
2/28/98 14,542
3/31/98 15,147
4/30/98 15,450
5/31/98 14,961
6/30/98 $15,660** Total Value at June 30, 1998
<PAGE>
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN
CLASS D SHARES
MAY 3, 1993,+ TO
JUNE 30, 1998
[The following table represents a Mountain chart in the printed report]
SELIGMAN GROWTH FUND -- CLASS D SHARES
Class D
5/3/93 $10,000 Initial Amount Invested
6/30/93 10,265
9/30/93 11,146
12/31/93 11,240
3/31/94 10,724
6/30/94 10,037
9/30/94 10,638
12/31/94 10,503
3/31/95 10,958
6/30/95 11,726
9/30/95 12,877
12/31/95 13,339
3/31/96 14,227
6/30/96 14,899
9/30/96 15,464
12/31/96 16,035
3/31/97 15,772
6/30/97 17,963
9/30/97 18,722
12/31/97 18,777
3/31/98 21,794
6/30/98 $22,532 Total Value at June 30, 1998
These charts reflect the growth of a $10,000 investment for a 10-year period for
Class A shares and since inception for Class B and Class D shares, assuming that
all distributions within the periods are invested in additional shares. Since
the measured periods vary, the charts are plotted using different scales and are
not comparable.
- -------------
* Net of the 4.75% maximum initial sales charge.
** Excludes the effect of the 3% CDSL.
+ Inception date.
5
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
JUNE 30, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
-----------------------
JUNE DECEMBER
ISSUES COST VALUE 30, 1998 31, 1997
------- ---------------- ---------------- --------- ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Basic Materials .................................... -- -- -- -- 1.1
Capital Goods ...................................... 3 $ 27,468,587 $ 53,852,813 6.0 9.0
Communication Services ............................. 2 5,866,033 15,249,750 1.7 1.9
Consumer Cyclicals ................................. 7 71,000,660 116,300,469 13.1 12.9
Consumer Staples ................................... 13 126,594,023 169,399,906 19.0 14.9
Energy ............................................. 2 14,706,180 11,925,050 1.3 1.1
Financial Services ................................. 7 54,771,961 101,804,667 11.4 18.3
Health Care ........................................ 10 115,954,742 169,872,813 19.1 19.0
Industrial Equipment ............................... -- -- -- -- 0.8
Printing and Publishing ............................ -- -- -- -- 0.1
Technology ......................................... 10 85,728,546 140,711,059 15.8 18.9
Utilities .......................................... 1 8,703,340 9,461,250 1.1 --
Miscellaneous ...................................... -- -- -- -- 0.1
----- ------------ -------------- ------ -----
55 510,794,072 788,577,777 88.5 98.1
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES ...................... 3 102,514,438 102,514,438 11.5 1.9
----- ------------ ------------- ------ -----
NET ASSETS ............................................. 58 $613,308,510 $891,092,215 100.0 100.0
===== ============ ============= ====== =====
</TABLE>
LARGEST INDUSTRIES
JUNE 30, 1998
[The following table represents a Bar chart in the printed report]
Percent of
Net Assets Amount
---------- ------------
HEALTH CARE 19.1% $169,872,813
CONSUMER STAPLES 19.0% 169,399,906
TECHNOLOGY 15.8% 140,711,059
CONSUMER CYCLICALS 13.1% 116,300,469
FINANCIAL SERVICES 11.4% 101,804,668
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
----------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/98
- ----------- ----------- -----------
AES ........................... 180,000 180,000
AutoZone ...................... 507,500 507,500
Computer Associates
International .............. 160,000 160,000
ConAgra ....................... 430,000 430,000
EMC ........................... 240,000 240,000
Kroger ........................ 275,000 275,000
Schering-Plough ............... 160,000 160,000
Time Warner ................... 115,000 115,000
Union Pacific Resources
Group ...................... 360,000 360,000
U.S.Filter .................... 325,000 325,000
SHARES
----------------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/98
- ---------- ----------- -----------
Boeing ........................ 200,000 --
Compaq Computer ............... 330,000(1) --
Eaton ......................... 125,000 --
Honeywell ..................... 135,000 --
Intel ......................... 300,000 --
Lucent Technologies ........... 125,000 245,000(2)
Morgan Stanley Dean Witter .... 200,000 --
Motorola ...................... 220,000 --
Pfizer ........................ 125,000 250,000
Sun America ................... 216,100 --
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 165,000 shares received as a result of a 2-for-1 stock split.
(2) Includes 185,000 shares received as a result of a 2-for-1 stock split.
LARGEST PORTFOLIO HOLDINGS
JUNE 30, 1998
SECURITY VALUE
- ---------- ---------------
Merck ............................. $36,112,500
General Electric .................. 31,395,000
Pfizer ............................ 27,171,875
Microsoft ......................... 27,101,562
Cisco Systems ..................... 25,556,016
Dayton Hudson ..................... 23,765,000
Travelers ......................... 23,189,062
Bristol-Myers Squibb .............. 22,987,500
Interpublic Group of Companies .... 22,757,813
Philip Morris ..................... 22,361,062
7
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998
SHARES VALUE
--------- ------------
COMMON STOCKS 88.5%
CAPITAL GOODS 6.0%
General Electric 345,000 $ 31,395,000
Illinois Tool Works 200,000 13,337,500
U.S. Filter* 325,000 9,120,313
------------
53,852,813
------------
COMMUNICATION SERVICES 1.7%
Grupo Iusacell (ADRs)* (Mexico) 54,300 746,625
WorldCom* 300,000 14,503,125
------------
15,249,750
------------
CONSUMER CYCLICALS 13.1%
AutoZone* 507,500 16,208,281
Dayton Hudson 490,000 23,765,000
Harley-Davidson 300,000 11,625,000
Interpublic Group of Companies 375,000 22,757,813
Jones Apparel Group* 280,000 10,237,500
Lowes Companies 250,000 10,140,625
Wal-Mart Stores 355,000 21,566,250
------------
116,300,469
------------
CONSUMER STAPLES 19.0%
BestFoods 180,000 10,451,250
Cardinal Health 195,000 18,281,250
Chancellor Media* 170,000 8,441,563
Clear Channel Communications* 37,000 4,037,625
Colgate-Palmolive 180,000 15,840,000
ConAgra 430,000 13,625,625
Disney, Walt 97,000 10,191,063
Gillette 311,600 17,663,825
Kroger* 275,000 11,790,625
PepsiCo 210,700 8,678,206
Philip Morris 567,900 22,361,062
Procter & Gamble 200,000 18,212,500
Time Warner 115,000 9,825,312
------------
169,399,906
------------
ENERGY 1.3%
Transocean Offshore 125,900 5,602,550
Union Pacific Resources Group 360,000 6,322,500
------------
11,925,050
------------
FINANCIAL SERVICES 11.4%
American International Group 110,000 16,060,000
Federal Home Loan
Mortgage Association 160,000 7,530,000
Federal National Mortgage
Association 240,000 14,580,000
MBNA 450,000 14,850,000
Norwest 500,000 18,687,500
Travelers 382,500 23,189,062
Washington Mutual 159,150 6,908,105
------------
101,804,667
------------
HEALTH CARE 19.1%
American Home Products 250,400 12,958,200
Bristol-Myers Squibb 200,000 22,987,500
HEALTHSOUTH* 304,600 8,129,013
Johnson & Johnson 250,000 18,437,500
Eli Lilly 162,800 10,754,975
Merck 270,000 36,112,500
Pfizer 250,000 27,171,875
Schering-Plough 160,000 14,660,000
United Healthcare 130,000 8,255,000
Warner-Lambert 150,000 10,406,250
------------
169,872,813
------------
TECHNOLOGY 15.8%
Applied Materials* 195,000 5,758,594
Cisco Systems* 277,500 25,556,016
Computer Associates International 160,000 8,890,000
Compuware 185,000 9,452,344
Creative Technologies*
(Singapore) 375,000 4,652,344
EMC* 240,000 10,755,000
Hewlett-Packard 147,900 8,855,512
Lucent Technologies 245,000 20,380,937
Microsoft* 250,000 27,101,562
Xerox 190,000 19,308,750
------------
140,711,059
------------
UTILITIES 1.1%
AES* 180,000 9,461,250
------------
TOTAL COMMON STOCKS
(Cost $510,794,072) 788,577,777
------------
See footnotes on page 9.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998
PRINCIPAL
AMOUNT VALUE
-------------- -------------
SHORT-TERM HOLDINGS 10.5%
Bank of Montreal, Grand
Cayman Fixed Time Deposit,
6%, 7/1/1998 $31,000,000 $ 31,000,000
Canadian Imperial Bank of
Commerce, Grand Cayman
Fixed Time Deposit,
6 1/8%, 7/1/1998 31,700,000 31,700,000
Republic National Bank of
New York, Grand Cayman
Fixed Time Deposit,
6 1/8%, 7/1/1998 31,000,000 31,000,000
------------
TOTAL SHORT-TERM HOLDINGS
(Cost $93,700,000) $ 93,700,000
------------
TOTAL INVESTMENTS 99.0%
(Cost $604,494,072) 882,277,777
OTHER ASSETS
LESS LIABILITIES 1.0% 8,814,438
------------
NET ASSETS 100.0% $891,092,215
============
- --------
* Non-income producing security.
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $510,794,072) ............................................. $788,577,777
Short-term holdings (cost $93,700,000) ........................................ 93,700,000 $882,277,777
------------
Cash ............................................................................................. 363,659
Receivable for securities sold ................................................................... 6,949,820
Receivable for Capital Stock sold ................................................................ 6,597,625
Receivable for interest and dividends ............................................................ 706,499
Investment in, and expenses prepaid to, shareholder service agent ............................... 170,500
Other ............................................................................................ 102,656
------------
TOTAL ASSETS ..................................................................................... 897,168,536
------------
LIABILITIES:
Payable for Capital Stock repurchased ............................................................ 4,627,766
Accrued expenses, taxes, and other ............................................................... 1,448,555
------------
TOTAL LIABILITIES ................................................................................ 6,076,321
------------
NET ASSETS ....................................................................................... $891,092,215
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized;
122,075,884 shares outstanding):
Class A ........................................................................................ $117,667,393
Class B ........................................................................................ 1,190,132
Class D ........................................................................................ 3,218,359
Additional paid-in capital ....................................................................... 354,933,078
Accumulated net investment loss .................................................................. (83,875)
Undistributed net realized gain .................................................................. 136,383,674
Net unrealized appreciation of investments ....................................................... 277,783,705
Net unrealized depreciation on translation of assets and liabilities
denominated in foreign currencies .............................................................. (251)
------------
NET ASSETS ....................................................................................... $891,092,215
============
NET ASSET VALUE PER SHARE:
CLASS A ($861,482,664 / 117,667,393 shares) ...................................................... $7.32
=====
CLASS B ($7,993,579 / 1,190,132 shares) .......................................................... $6.72
=====
CLASS D ($21,615,972 / 3,218,359 shares) ......................................................... $6.72
=====
</TABLE>
- -------------------
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................................... $ 3,467,690
Interest ...................................................................... 1,520,505
-----------
TOTAL INVESTMENT INCOME (net of foreign taxes withheld of $5,665) ............................. $ 4,988,195
EXPENSES:
Management fee ................................................................ 2,903,219
Distribution and service fees ................................................. 1,067,443
Shareholder account services .................................................. 512,898
Custody and related services .................................................. 82,000
Registration .................................................................. 70,630
Shareholder reports and communications ........................................ 67,159
Auditing and legal fees ....................................................... 43,602
Directors' fees and expenses .................................................. 9,133
Miscellaneous ................................................................. 16,293
-----------
TOTAL EXPENSES ................................................................................ 4,772,377
------------
NET INVESTMENT INCOME ......................................................................... 215,818
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments ............................................... 109,685,505
Net realized loss from foreign currency transactions ........................... (3,182,810)
Net change in unrealized appreciation of investments ........................... 43,569,941
Net change in unrealized depreciation on translations of assets
and liabilities denominated in foreign currencies ............................ 3,073,530
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS ..................................... 153,146,166
------------
INCREASE IN NET ASSETS FROM OPERATIONS ........................................................ $153,361,984
============
</TABLE>
- -------------
See Notes to Financial Statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................................................... $ 215,818 $ (281,431)
Net realized gain on investments ............................................... 109,685,505 112,859,384
Net realized loss from foreign currency transactions ........................... (3,182,810) (896,184)
Net change in unrealized appreciation of investments ........................... 43,569,941 13,601,198
Net change in unrealized depreciation of assets and liabilities
denominated in foreign currencies ............................................ 3,073,530 (2,776,834)
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS ......................................... 153,361,984 122,506,133
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ..................................................................... -- (88,125,334)
Class B ..................................................................... -- (436,521)
Class D ..................................................................... -- (1,908,912)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ...................................... -- (90,470,767)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- ------------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ..................................... 1,605,873 1,803,217 11,318,557 11,441,313
Class B ..................................... 309,368 445,150 1,988,523 2,599,277
Class D ..................................... 224,976 574,002 1,425,566 3,413,694
Exchanged from associated Funds:
Class A ..................................... 26,861,249 31,958,901 184,326,760 206,157,045
Class B ..................................... 279,183 276,718 1,786,861 1,652,977
Class D ..................................... 5,160,966 7,361,738 32,221,008 43,996,593
Shares issued in payment of gain distributions:
Class A ..................................... -- 11,845,991 -- 69,654,414
Class B ..................................... -- 75,334 -- 408,312
Class D ..................................... -- 325,908 -- 1,766,426
------------ ------------ ------------- -------------
Total .......................................... 34,441,615 54,666,959 233,067,275 341,090,051
------------ ------------ ------------- -------------
Cost of shares repurchased:
Class A ..................................... (4,865,208) (8,524,026) (33,357,282) (54,800,294)
Class B ..................................... (63,123) (127,571) (397,846) (798,290)
Class D ..................................... (346,743) (545,926) (2,165,471) (3,268,572)
Exchanged into associated Funds:
Class A ..................................... (26,501,210) (31,908,540) (182,640,648) (206,538,604)
Class B ..................................... (88,868) (76,212) (558,910) (447,915)
Class D ..................................... (4,638,340) (6,990,014) (28,955,303) (41,992,651)
------------ ------------ ------------- -------------
Total .......................................... (36,503,492) (48,172,289) (248,075,460) (307,846,326)
------------ ------------ ------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ................... (2,061,877) 6,494,670 (15,008,185) 33,243,725
============ ============ ------------- -------------
INCREASE IN NET ASSETS ................................................................. 138,353,799 65,279,091
NET ASSETS:
Beginning of period .................................................................... 752,738,416 687,459,325
------------- -------------
END OF PERIOD (including accumulated net investment
loss of $83,875 and $247,853, respectively) ......................................... $891,092,215 $752,738,416
============= =============
</TABLE>
- ----------------
See Notes to Financial Statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Growth Fund, Inc. (the "Fund") offers
three classes of shares. Class A shares are sold with an initial sales charge of
up to 4.75% and a continuing service fee of up to 0.25% on an annual basis.
Class A shares purchased in an amount of $1,000,000 or more are sold without an
initial sales charge but are subject to a contingent deferred sales load
("CDSL") of 1% on redemptions within 18 months of purchase. Class B shares are
sold without an initial sales charge but are subject to a distribution fee of
0.75%, a service fee of up to 0.25% on an annual basis, and a CDSL, if
applicable, of 5% on redemptions in the first year of purchase, declining to 1%
in the sixth year and 0% thereafter. Class B shares will automatically convert
to Class A shares on the last day of the month that precedes the eighth
anniversary of their date of purchase. Class D shares are sold without an
initial sales charge but are subject to a distribution fee of up to 0.75% and a
service fee of up to 0.25% on an annual basis, and a CDSL, if applicable, of 1%
imposed on redemptions made within one year of purchase. The three classes of
shares represent interests in the same portfolio of investments, have the same
rights and are generally identical in all respects except that each class bears
its separate distribution and certain other class expenses, and has exclusive
voting rights with respect to any matter on which a separate vote of any class
is required.
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. SECURITY VALUATION -- Investments in common stocks are valued at current
market values or, in their absence, at fair values determined in accordance
with procedures approved by the Board of Directors. Securities traded on an
exchange are valued at last sales prices or, in their absence and in the case
of over-the-counter securities, at the mean of bid and asked prices.
Short-term holdings maturing in 60 days or less are valued at amortized cost.
b. FOREIGN CURRENCY TRANSACTIONS -- The books and records of the Fund are
maintained in US dollars. The market value of investment securities, other
assets and liabilities denominated in foreign currencies are translated into
US dollars at the daily rate of exchange as reported by a pricing service.
Purchases and sales of investment securities, income, and expenses are
translated into 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. FEDERAL TAXES -- There is no provision for federal income tax. The Fund has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
d. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Investment
transactions are recorded on trade dates. Identified cost of investments sold
is used for both financial statement and federal income tax purposes.
Dividends receivable and payable are recorded on ex-dividend dates, except
that certain dividends from foreign securities where the ex-dividend dates
may have passed are recorded as soon as the Fund is informed of the dividend.
Interest income is recorded on an accrual basis.
e. MULTIPLE CLASS ALLOCATIONS -- All income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses are allocated daily to
each class of shares based upon the relative value of shares of each class.
Class-specific expenses, which include distribution and service fees and any
other items that are specifically attributable to a particular class, are
charged directly to such class. For the six months ended June 30, 1998,
distribution and service fees were the only class-specific expenses.
f. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
timing of the recognition of certain components of income, expense, or
realized capital gain for federal income tax purposes. Where such differences
are permanent in nature, they are reclassified in the components of net
assets based on their ultimate characterization for federal income tax
purposes. Any such reclassification will have no effect on net assets,
results of operations, or net asset value per share of the Fund.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the six months ended June 30, 1998, amounted to $227,849,032 and $330,929,148,
respectively.
At June 30, 1998, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes, and the tax
basis gross unrealized appreciation and depreciation of portfolio securities
amounted to $287,444,212 and $9,660,507, respectively.
4. MANAGEMENT FEE, DISTRIBUTION SERVICES, AND OTHER TRANSACTIONS -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides for the necessary personnel and facilities. Compensation of all
officers of the Fund, all directors of the Fund who are employees or consultants
of the Manager, and all personnel of the Fund and the Manager is paid by the
Manager. The Manager receives a fee, calculated daily and payable monthly, equal
to 0.70% 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. The management fee reflected in the Statement of Operations
represents 0.70% per annum of the Fund's average daily net assets.
Prior to March 31, 1998, Seligman Henderson Co., an entity owned 50% each by
the Manager and Henderson International, Inc., a subsidiary of Henderson plc,
supervised and directed all or a portion of the Fund's foreign investments. For
this service, the Manager paid Seligman Henderson Co. a monthly fee.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $10,640 from sales of Class A shares, after commissions of
$80,229 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the six months ended June 30,
1998, fees incurred under the Plan aggregated $949,029, or 0.24% per annum of
the average daily net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily net
assets of the Class B and Class D shares for which the organizations are
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to this fee to a third
party (the "Purchaser"), which provides funding to the Distributor to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares.
For the six months ended June 30, 1998, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $27,363 and $91,051, respectively.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the six months
ended June 30, 1998, such charges amounted to $5,551.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class Bshares sold. The aggregate amount of such payments
retained by the Distributor for the six months ended June 30, 1998, amounted to
$2,973.
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, 1998,
Seligman Services, Inc. received commissions of $16,302 from the sale of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $337,686, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $503,398 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 Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in directors' fees and
expenses, and the accumulated balance thereof at June 30, 1998, of $226,996 is
included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
5. COMMITTED LINE OF CREDIT -- Effective July 1, 1998, the Fund entered into a
joint $800 million committed line of credit that is shared by substantially all
funds in the Seligman Group of Investment Companies. The Fund's borrowings are
limited to 10% of its net assets. Borrowings pursuant to the credit facility are
subject to interest at a rate equal to the overnight federal funds rate plus
0.50% on an overnight basis. The Fund incurs a commitment fee of 0.08% per annum
on its share of the unused portion of the credit facility. The credit facility
may be drawn upon only for temporary purposes and is subject to certain other
customary restrictions. The credit facility commitment expires one year from the
date of the agreement but is renewable with the consent of the participating
banks. To date, the Fund has not borrowed from the credit facility.
15
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. Total returns for periods
of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------------------------------
06/30/98o 1997o 1996o 1995o 1994o 1993
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ................. $6.08 $5.85 $5.22 $4.54 $5.26 $6.04
------ ------ ------ ------ ------ ------
Net investment income (loss) ......................... -- -- (0.01) 0.01 0.01 0.01
Net realized and unrealized investment gain (loss) ... 1.24 1.06 1.13 1.27 (0.22) 0.35
Net realized and unrealized investment gain (loss)
from foreign currency transactions ................. -- (0.03) (0.01) 0.01 -- --
------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ......................................... 1.24 1.03 1.11 1.29 (0.21) 0.36
Dividends paid ....................................... -- -- -- (0.01) (0.01) (0.01)
Distributions from net gain realized ................. -- (0.80) (0.48) (0.60) (0.50) (1.13)
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSET VALUE ........... 1.24 0.23 0.63 0.68 (0.72) (0.78)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ....................... $7.32 $6.08 $5.85 $5.22 $4.54 $5.26
====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: ............... 20.40% 18.11% 21.14% 28.47% (3.84)% 6.20%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ....................... 1.13%+ 1.16% 1.20% 0.94% 0.90% 0.89%
Net investment income (loss) to average net assets ... 0.07%+ (0.02)% (0.12)% 0.17% 0.14% 0.18%
Portfolio turnover ................................... 29.27% 54.15% 26.05% 102.30% 93.59% 105.64%
NET ASSETS, END OF PERIOD (000s omitted) ............. $861,483 $732,754 $675,086 $597,510 $513,328 $591,491
</TABLE>
- ------------------
See footnotes on page 17.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
---------------------------------------
SIX MONTHS YEAR 4/22/96*
ENDED ENDED TO
06/30/98o 12/31/97o 12/31/96o
-------------- --------- ---------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD .............. $5.60 $5.49 $5.35
----- ----- -----
Net investment loss ............................... (0.02) (0.05) (0.03)
Net realized and unrealized investment gain ....... 1.14 0.99 0.65
Net realized and unrealized gain (loss)
from foreign currency transactions .............. -- (0.03) --
----- ----- -----
INCREASE FROM INVESTMENT OPERATIONS ............... 1.12 0.91 0.62
Distributions from net gain realized .............. -- (0.80) (0.48)
----- ----- -----
NET INCREASE IN NET ASSET VALUE ................... 1.12 0.11 0.14
----- ----- -----
NET ASSET VALUE, END OF PERIOD .................... $6.72 $5.60 $5.49
===== ===== =====
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 20.00% 17.10% 11.45%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 1.89%+ 1.93% 1.99%+
Net investment loss to average net assets ......... (0.69)%+ (0.79)% (0.83)%+
Portfolio turnover ................................ 29.27% 54.15% 26.05%++
NET ASSETS, END OF PERIOD (000s omitted) .......... $7,993 $4,219 $880
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31, *5/3/93*
ENDED ---------------------------------------------- TO
6/30/98o 1997o 1996o 1995o 1994o 12/31/93
------------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD .............. $5.60 $5.49 $4.96 $4.38 $5.23 $5.67
------ ------ ------ ------ ------ ------
Net investment loss ............................... (0.02) (0.05) (0.05) (0.04) (0.12) (0.03)
Net realized and unrealized investment gain (loss). 1.14 0.99 1.07 1.21 (0.23) 0.72
Net realized and unrealized gain (loss)
from foreign currency transactions .............. -- (0.03) (0.01) 0.01 -- --
------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ...................................... 1.12 0.91 1.01 1.18 (0.35) 0.69
Distributions from net gain realized .............. -- (0.80) (0.48) (0.60) (0.50) (1.13)
NET INCREASE (DECREASE) IN NET ASSET VALUE ........ 1.12 0.11 0.53 0.58 (0.85) (0.44)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD .................... $6.72 $5.60 $5.49 $4.96 $4.38 $5.23
====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 20.00% 17.10% 20.21% 27.01% (6.56)% 12.40%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 1.89%+ 1.93% 1.97% 1.91% 2.93% 2.17%+
Net investment loss to average net assets ......... (0.69)%+ (0.79)% (0.88)% (0.83)% (2.34)% (1.03)%+
Portfolio turnover ................................ 29.27% 54.15% 26.05% 102.30% 93.59% 105.64%+++
NET ASSETS, END OF PERIOD (000s omitted) .......... $21,616 $15,765 $11,493 $6,412 $1,742 $1,197
</TABLE>
- -------------
* Commencement of offering of shares.
o Per share amounts for the six months ended June 30, 1998, and the years
ended December 31, 1997, 1996, 1995, and 1994, are calculated based on
average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
See Notes to Financial Statements.
17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN GROWTH FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Growth Fund, Inc. as of June 30, 1998,
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, 1997, 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, 1998, by correspondence with the Fund's custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Growth
Fund, Inc. as of June 30, 1998, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
July 31, 1998
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<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
TRUSTEE, The New York and Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD, J. & W. Seligman & Co.
Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, CommScope, Inc.
DIRECTOR, C-SPAN
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT, J. & W. Seligman &Co.
Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
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<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS MARION S. SCHULTHEIS THOMAS G. ROSE
CHAIRMAN VICE PRESIDENT TREASURER
BRIAN T. ZINO LAWRENCE P. VOGEL FRANK J. NASTA
PRESIDENT VICE PRESIDENT SECRETARY
FOR MORE INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
MANAGER GENERAL DISTRIBUTOR IMPORTANT TELEPHONE NUMBERS
J. & W. Seligman & Co. Incorporated Seligman Financial Services, Inc. (800) 221-2450 Shareholder
100 Park Avenue 100 Park Avenue Services
New York, NY 10017 New York, NY 10017
(800) 445-1777 Retirement Plan
Services
(212) 682-7600 Outside the
United States
GENERAL COUNSEL SHAREHOLDER SERVICE AGENT
Sullivan & Cromwell Seligman Data Corp. (800) 622-4597 24-Hour Automated
100 Park Avenue Telephone Access
INDEPENDENT AUDITORS New York, NY 10017 Service
Deloitte & Touche LLP
</TABLE>
20
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio. For tax purposes,
these profits may be taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES LOAD (CDSL) -- Depending on the class of shares owned,
a fee charged by a mutual fund when shares are sold back to the fund (the CDSL
expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE (OP) -- The price at which a mutual fund's share can be
purchased. The offering price per share is the current net asset value plus any
sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains updated or more
detailed information about a mutual fund and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The AVERAGE ANNUAL TOTAL
RETURN represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- -------------------
Adapted from the Investment Company Institute's 1997 MUTUAL FUND FACT BOOK.
21
