----------
SELIGMAN
[GRAPHIC]
SELIGMAN
COMMUNICATIONS
AND INFORMATION
FUND, INC.
----------
SEEKING CAPITAL GAIN BY INVESTING IN COMPANIES OPERATING IN ALL ASPECTS OF
COMMUNICATIONS, INFORMATION, AND RELATED INDUSTRIES
JUNE 30, 1997 o MID-YEAR REPORT
<PAGE>
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OVER THE LONG TERM -- J. & W. SELIGMAN & CO. INCORPORATED
- --------------------------------------------------------------------------------
TIME IS THE TEST
In an industry that has changed dramatically in recent years, it's
comforting to know that stability, tradition, and consistent professional
service can still be found in an investment management firm.
J. & W. Seligman & Co. Incorporated has been providing financial services
for more than 130 years. From its beginning, Seligman has followed a long-term
approach to making money for its clients, by managing investment products and
services of the highest quality. Today, Seligman manages the Seligman Group of
Funds, which offers investors more than 50 investment options.
A PLACE IN HISTORY
Established in 1864, Seligman played a major role in the geographical
expansion and industrial development of the United States. The firm helped
finance the westward path of the railroads and the building of the Panama Canal.
In the late 1800s and early 1900s, the firm was instrumental in financing the
fledgling automobile and steel industries. Seligman also participated in the
original underwritings for some of the nation's most prominent companies,
including General Motors, Victor Talking Machine, United Artists Theater
Circuit, and Maytag. In 1929, Seligman introduced Tri-Continental Corporation --
which today is the nation's largest diversified closed-end investment company.
In 1930, Seligman began managing its first mutual fund, Broad Street Investing
Co., now known as Seligman Common Stock Fund.
[GRAPHIC]
JAMES, JESSE, AND JOSEPH SELIGMAN
SELIGMAN COMMUNICATIONS AND INFORMATION FUND
Seligman Communications and Information Fund, established June 23, 1983,
seeks capital gain by investing primarily in the securities of companies
operating in all aspects of the communications, information, and related
industries. Since its inception, Seligman Communications and Information Fund
has helped investors pursue their financial goals.
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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 .............................. 12
Statement of Operations .......................................... 13
Statements of Changes in Net Assets .............................. 14
Notes to Financial Statements .................................... 15
Financial Highlights ............................................. 18
Report of Independent Auditors ................................... 20
Board of Directors ............................................... 21
Executive Officers/For More Information .......................... 22
Glossary of Financial Terms ...................................... 23
"Your Fund's broad charter allows it to participate in all aspects of the
information explosion. Portfolio policy focuses on providing a broadly
diversified base of companies with unique products and services and dominant
positions in their niches of the marketplace."
-- FRED E. BROWN,
FUND CHAIRMAN
1984-1988
"Today, we are on the cutting edge of a new world of technology and have entered
into an incredible information revolution that has far reaching potential. The
explosive growth of personal computers in the home, advances in microprocessor
circuitry, the Internet and its proliferating services, and the expansion of
networking capabilities are among the exciting developments offering new
investment opportunities."
-- WILLIAM C. MORRIS,
FUND CHAIRMAN
1989-PRESENT
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TO THE SHAREHOLDERS
Seligman Communications and Information Fund had very strong investment
results for the six months ended June 30, 1997. The Fund's 14.16% total return
based on the net asset value of Class A shares significantly outperformed the
7.65% total return of its peers, as measured by the Lipper Science & Technology
Funds Average. Additional information on the Fund's investment results appears
on page 4.
Thus far, 1997 has shown great promise for both the domestic economy and the
financial markets. The Federal Reserve Board's decision to leave the federal
funds rate unchanged in May helped tame fears of inflation and gave further
support to the already strong financial markets. The advances in the equity
market were led by the performance of the largest, more liquid issues with
stable earnings, and many technology stocks did not fully participate in the
market's appreciation. However, in May, the advances in the equity market
broadened somewhat to include a greater portion of these stocks.
The first half of the year was not without difficulty for the
communications- and information-related stocks in which the Fund invests. In the
first quarter, communications infrastructure companies sold off as their
fundamentals deteriorated, and in the second quarter disappointing earnings
announcements from high-profile companies such as Intel and Seagate also
temporarily reduced valuations. However, the Fund took advantage of the
opportunities found in the temporary market slumps to accumulate positions in
high-quality companies, which contributed to the Fund's strong investment
results.
The outlook for the US economy and the financial markets remains positive.
Productivity improvements, driven in large part by the deployment of technology,
have helped reduce corporate costs and increased profitability. Market
volatility has increased this year, and the possibility of a short-term
correction in the markets is real. Nonetheless, the long-term outlook for
communications infrastructure, semiconductor, and semiconductor capital
equipment companies is strong, and these areas, among others, should continue to
support the Fund's performance over time.
We are pleased to introduce your redesigned Shareholder Report. This change
is part of a corporate effort to enhance the overall clarity and quality of all
communications to our Shareholders. We hope you find the additional information
contained herein helpful.
We thank you for your continued support of Seligman Communications and
Information Fund, and look forward to serving your investment needs in the many
years to come.
A discussion with your Portfolio Manager and the Fund's portfolio of
investments 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
August 1, 1997
1
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INTERVIEW WITH YOUR PORTFOLIO MANAGER, PAUL H. WICK
Q. HOW DID SELIGMAN COMMUNICATIONS AND INFORMATION FUND PERFORM IN THE FIRST
SIX MONTHS OF 1997?
A. Seligman Communications and Information Fund's total return, based on the
net asset value of Class A shares, was 14.16% through June 30, 1997. While
the Fund significantly outperformed its peers as measured by the Lipper
Science &Technology Funds Average, which had a total return of 7.65%, it
lagged the 20.61% total return of Standard & Poor's 500 Composite Stock
Price Index (S&P 500). In general, technology stocks did not keep pace with
the major market indices in the last six months. However, on a one-year
basis, Seligman Communications and Information Fund outperformed the S&P
500, returning 34.84% versus 34.70%.
Q. WHAT INFLUENCED THE FUND'S STRONG YEAR-TO-DATE RESULTS RELATIVE TO OTHER
TECHNOLOGY FUNDS?
A. In January, the Fund significantly reduced its exposure to companies in the
communications infrastructure area, side-stepping the sudden deterioration
in fundamentals and stock prices that swept the industry. In addition, the
Fund's growing exposure to radio broadcasting and semiconductor capital
equipment stocks improved first-half results.
Q. WHAT FACTORS CONTRIBUTED TO THE STRENGTH OF RADIO BROADCASTING STOCKS?
A. Better-than-expected advertising sales growth due to a strong US economy
certainly played a major role. In addition, the US Telecommunications
Reform Act of 1996 positively affected well-managed radio concerns, as they
were able to gain economies of scale by clustering several stations in a
given market.
Q. WHAT IS DRIVING THE STRENGTH IN SEMICONDUCTOR CAPITAL EQUIPMENT STOCKS?
A. The industry rebounded much sooner than expected from a sharp, but
relatively short-lived, downturn in 1996. In addition, profit margins
remained relatively robust during the industry's recession, confounding
semiconductor industry pundits who had predicted dismal earnings for
capital equipment companies. Other noteworthy factors included rising
market shares for US equipment companies and increased barriers to entry in
the industry, which reduced the usual pricing pressure experienced in a
downturn.
Q. WHY DID THE FUND LOWER ITS WEIGHTING IN COMPUTER HARDWARE AND PERIPHERALS
STOCKS?
A. The Fund sold all of its personal computer (PC) company stocks due to high
absolute and relative valuations and evidence that PC unit growth in the
first half of 1997 would be disappointing, particularly in Europe. For
similar reasons, we reduced the Fund's investments in semiconductor
companies that supply the PC market.
Q. HOW WILL THE SLOWDOWN IN THE PC MARKET AFFECT TECHNOLOGY STOCKS?
A. We are hopeful that the current slowdown will be transient, as Intel works
through a difficult transition from Pentium microprocessor chips to Pentium
MMX chips. Moreover, we view the current sales slump in Europe as a
temporary event. However, if the unit growth rate of the PC market were to
- --------------------------------------------------------------------------------
A TEAM APPROACH
Seligman Communications and Information Fund is managed by the Seligman
Technology Team, headed by Paul H. Wick. Mr. Wick and his team of seasoned
research professionals visit with the managements of hundreds of technology
companies each year to identify those that offer the greatest potential for
growth. Stocks purchased for the Fund are continually monitored by the Team, and
disciplined buy and sell policies are followed.
[PHOTO]
SELIGMAN TECHNOLOGY TEAM: (FROM LEFT) PAUL KRIEGER, LAWRENCE ROSSO,
(SEATED) PAUL H. WICK (PORTFOLIO MANAGER), CAROLYN ROGERS, STORM BOSWICK
MISSING FROM PHOTO: PATRICK RENDA
- --------------------------------------------------------------------------------
2
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INTERVIEW WITH YOUR PORTFOLIO MANAGER, PAUL H. WICK
fall significantly from its historic 15% to 20% annual pace, many
technology companies would be negatively affected.
Q. HOW IS THE FUND POSITIONED RELATIVE TO WIRELESS TELEPHONY?
A. In general, the Fund has avoided cellular telecommunications services
companies, given the high degree of competition present in the US and the
speculative nature of many of the companies that are now public.
Year-to-date, the Fund has not directly participated in the booming
wireless handset market, given our fears of ruinous price competition.
However, many of the Fund's semiconductor industry investments have
significant sales in the wireless handset and base-station markets,
allowing the Fund to participate in the industry's growth.
Q. WHICH INVESTMENT AREAS UNDERPERFORMED IN THE FIRST HALF OF 1997?
A. The decline in PC unit growth negatively affected the Fund's holdings in
the multimedia semiconductor industry. Compounding matters, the various
product areas that comprise the multimedia chip sector are not as distinct
as they historically have been. For example, graphics chip companies are
starting to add audio features, and audio chip companies are incorporating
modem functions. These developments caused confusion among the PC
manufacturers and shortened already brief product life-cycles. In addition,
the Fund's investments in ESS Technology and C-Cube Microsystems were
impacted by the intensifying price war among suppliers to the Chinese
video-CD market. Due to the above factors, positions related to the
multimedia semiconductor industry were eliminated or reduced.
Q. WHAT IS THE OUTLOOK?
A. While we remain optimistic for the year as a whole, we are slightly
cautious in the near term. US equities have appreciated significantly in
value year to date, and slower growth in the PC and networking markets
leaves us somewhat concerned about the sustainability of the current rally.
Nevertheless, we anticipate a 13% to 14% rate of PC unit growth for 1997,
as the technology markets rebound in the seasonally-stronger December
quarter. In addition, we remain optimistic about the unit growth outlook
for the communications infrastructure industry, and hence are confident
that the recovery in the broad semiconductor and semiconductor capital
equipment markets will persist.
3
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PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
FOR PERIODS ENDED JUNE 30, 1997
<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 8.75% 28.44% 32.15% 20.02% n/a n/a
Without Sales Charge 14.16 34.84 33.46 20.61 n/a n/a
CLASS B
With CDSL+ 8.75 28.86 n/a n/a 17.76% n/a
Without CDSL 13.75 33.86 n/a n/a 21.02 n/a
CLASS D
With 1% CDSL 12.71 32.76 n/a n/a n/a n/a
Without CDSL 13.71 33.76 n/a n/a n/a 32.72%
S&P 500** 20.61 34.70 19.78 14.64 32.37++ 21.28+++
LIPPER SCIENCE &
TECHNOLOGY FUNDS
AVERAGE*** 7.65 19.29 25.27 15.90 12.25++ 25.17+++
NET ASSET VALUE
JUNE 30, 1997 DECEMBER 31, 1996 JUNE 30, 1996
-------------- -------------------- --------------
<S> <C> <C> <C>
CLASS A $26.84 $23.51 $20.84
CLASS B 25.73 22.62 20.16
CLASS D 25.71 22.61 20.16
</TABLE>
CAPITAL GAIN INFORMATION
FOR SIX MONTHS ENDED JUNE 30, 1997
REALIZED $2.63#
UNREALIZED 3.36##
A fund that concentrates its investments in one economic sector may be subject
to greater share price fluctuations than a more diversified fund.
- ----------
* Return figures reflect any change in price per share and assume the
investment of 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
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 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. Performance data
quoted represent changes in prices 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.
** The S&P 500 is an unmanaged index that assumes investment of dividends and
does not reflect fees and sales charges. Investors cannot invest directly
in an index.
*** The Lipper Science & Technology Funds Average is an average of
40 science and technology funds and does not reflect the sales charges
that may be incurred in connection with purchases or sales. The monthly
performance is used in the Performance Overview. Investors cannot invest
directly in an average.
+ The CDSL is 5% for periods of one year or less, and 4% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
# Excludes 1996 undistributed realized capital gains of $0.45 per share at
June 30, 1997.
## Represents the per share amount of net unrealized appreciation of
portfolio securities as of June 30, 1997.
4
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PERFORMANCE OVERVIEW
[THE FOLLOWING TABLES REPRESENT GRAPH IN THE PRINTER PIECE.]
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN CLASS A SHARES
JUNE 30, 1987, TO JUNE 30, 1997
SELIGMAN COMMUNICATIONS AND INFORMATION FUND- CLASS A
6/30/87 9524
9/30/87 10401
12/31/87 8203
3/31/88 8444
6/30/88 9032
9/30/88 8477
12/31/88 8804
3/31/89 9530
6/30/89 10431
9/30/89 11716
12/31/89 11456
3/31/90 12079
6/30/90 13065
9/30/90 8997
12/31/90 10188
3/31/91 13771
6/30/91 12163
9/30/91 13955
12/31/91 15781
3/31/92 16300
6/30/92 14645
9/30/92 14704
12/31/92 18514
3/31/93 18770
6/30/93 21118
9/30/93 24384
12/31/93 25017
3/31/94 26116
6/30/94 24104
9/30/94 31275
12/31/94 33847
3/31/95 38607
6/30/95 50100
9/30/95 56177
12/31/95 48352
3/31/96 45928
6/30/96 45994
9/30/96 48819
12/31/96 54325
3/31/97 52916
6/30/97 62020
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS B SHARES
APRIL 22, 1996+, TO JUNE 30, 1997
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE]
SELIGMAN COMMUNICATIONS AND INFORMATION FUND- CLASS B
4/22/96 10000
6/30/96 9272
9/30/96 9930
12/31/96 11029
3/31/97 10722
6/30/97 12546
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS D SHARES
MAY 3, 1993+, TO JUNE 30, 1997
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE]
SELIGMAN COMMUNICATIONS AND INFORMATION FUND- CLASS D
5/3/93 10000
6/30/93 11471
9/30/93 13186
12/31/93 13489
3/31/94 14036
6/30/94 12922
9/30/94 16740
12/31/94 18067
3/31/95 20571
6/30/95 26641
9/30/95 30108
12/31/95 25722
3/31/96 24288
6/30/96 24288
9/30/96 25722
12/31/96 28570
3/31/97 27774
6/30/97 32487
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. 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 4% CDSL.
+ Inception date.
5
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PORTFOLIO OVERVIEW
DIVERSIFICATION OF ASSETS
JUNE 30, 1997
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
-----------------------
JUNE 30, DEC. 31,
ISSUES COST VALUE 1997 1996
-------- ------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
Short-Term Holdings and
Other Assets Less Liabilities ........... 1 $ 174,101,212 $ 174,101,212 4.7 0.5
---- -------------- -------------- ----- -----
Common Stocks and Convertible
Securities:
Communications Infrastructure ......... 7 212,954,432 192,712,500 5.2 18.1
Computer Hardware/Peripherals ......... 14 705,078,871 819,603,125 21.9 25.7
Computer Software ..................... 15 430,767,198 477,676,719 12.8 14.7
Contract Manufacturing/Circuit
Boards ............................... 5 84,912,238 96,437,500 2.6 2.7
Electronics Capital Equipment ......... 14 602,676,965 766,368,113 20.5 7.4
Information Services .................. 1 61,384,235 57,700,000 1.5 3.5
Internet/On Line ...................... -- -- -- -- 1.8
Media ................................. 6 201,544,300 276,593,750 7.4 3.6
Semiconductors ........................ 18 725,832,915 804,723,438 21.5 19.8
Telecommunications .................... 3 64,873,098 71,881,250 1.9 0.6
Miscellaneous ......................... -- -- -- -- 1.6
---- -------------- -------------- ----- -----
83 3,090,024,252 3,563,696,395 95.3 99.5
---- -------------- -------------- ----- -----
NET ASSETS .............................. 84 $3,264,125,464 $3,737,797,607 100.0 100.0
==== ============== ============== ===== =====
</TABLE>
LARGEST INDUSTRIES
AT JUNE 30, 1997
[THE FOLLOWING TABLE REPRESENTS A BAR CHART IN THE PRINTED PIECE.]
PERCENT OF
NET ASSETS VALUE
--------- ------------
Computer Hardware/Peripherals 21.9% $819,603,125
Semiconductors 21.5 804,723,438
Electronics Capital Equipment 20.5 766,368,113
Computer Software 12.8 477,676,719
Media 7.4 276,593,750
6
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PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
--------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/97
- ------------ ---------- ----------
Advanced Micro Devices ...................... 2,400,000 3,000,000
American Power Conversion ................... 2,500,000 2,500,000
Analog Devices .............................. 1,700,000 1,700,000
Applied Materials ........................... 800,000 800,000
Kulicke & Soffa Industries .................. 1,500,000 1,500,000
Quantum ..................................... 1,500,000 3,500,000(1)
Read-Rite ................................... 2,200,000 2,600,000
Teradyne .................................... 1,900,000 1,900,000
Western Digital ............................. 2,100,000 2,100,000
Xilinx ...................................... 1,000,000 1,000,000
SHARES
---------------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/97
- -------------- ----------- ----------
America Online .............................. 1,800,000 --
Cabletron Systems ........................... 2,100,000 --
Cisco Systems ............................... 1,900,000 300,000
Compaq Computer ............................. 900,000 --
Compuware ................................... 1,600,000(2) --
Gateway 2000 ................................ 1,450,000 --
Intel ....................................... 1,300,000 --
Seagate Technology .......................... 2,800,000 --
3Com ........................................ 1,300,000 --
U.S. Robotics ............................... 1,300,000 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
(1) Includes 1,400,000 shares received as a result of a 2-for-1 stock split.
(2) Includes 650,000 shares received as a result of a 2-for-1 stock split.
LARGEST PORTFOLIO HOLDINGS
AT JUNE 30, 1997
SECURITY VALUE
- ---------- -------------
EMC ...................................................... $156,000,000
Novellus Systems ......................................... 125,062,500
Westinghouse Electric .................................... 115,625,000
Advanced Micro Devices ................................... 108,000,000
KLA-Tencor ............................................... 107,318,750
Maxim Integrated Products ................................ 102,262,500
Storage Technology ....................................... 97,900,000
BMC Software ............................................. 94,243,750
Lexmark International Group (Class A) .................... 91,125,000
Parametric Technology .................................... 80,809,375
7
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PORTFOLIO OF INVESTMENTS
JUNE 30, 1997
SHARES VALUE
------ -----
COMMON STOCKS 94.4%
COMMUNICATIONS INFRASTRUCTURE 5.2%
ASPECT TELECOMMUNICATIONS*
Developer and manufacturer of
automated call distribution
equipment 1,500,000 $ 33,187,500
CIDCO*@
Manufacturer of telephone
caller identification systems 1,500,000 20,578,125
CISCO SYSTEMS*
Manufacturer of computer
network routers and switches 300,000 20,146,875
ECI TELECOMMUNICATIONS
Provider of digital telecommuni-
cations and data transmissions
systems in Israel 2,250,000 67,007,812
NETSPEAK*
Developer of interactive
communication software 100,000 925,000
NETWORK GENERAL*
Designer and manufacturer of
local area network
management software 1,490,000 22,117,188
OAK INDUSTRIES*@
Manufacturer of cable
television connectors and
fiber optics components 1,000,000 28,750,000
------------
192,712,500
------------
COMPUTER HARDWARE/
PERIPHERALS 21.9%
ADAPTEC*
Supplier of computer
input/output systems 1,500,000 52,125,000
AMERICAN POWER CONVERSION*
Manufacturer of constant
power supply products 2,500,000 47,265,625
CREATIVE TECHNOLOGY*
Producer of PC audio
products 1,500,000 25,312,500
DATA GENERAL*
Multi-processor computers
and data storage systems 800,000 20,800,000
ELECTRONICS FOR IMAGING*
Peripherals for
color copiers 1,600,000 75,550,000
EMC*
Manufacturer of enterprise
data storage systems 4,000,000 156,000,000
HMT TECHNOLOGY*
Supplier of thin-film disks 1,500,000 19,359,375
IN FOCUS SYSTEMS*@
Manufacturer of portable
projection systems 900,000 23,231,250
LEXMARK INTERNATIONAL
GROUP (CLASS A)*
Manufacturer of laser and
inkjet printers and cartridges 3,000,000 91,125,000
MYLEX*@
Supplier of computer
input/output systems 2,000,000 19,125,000
QUANTUM*
Designer of hard-disk and
tape drives 3,500,000 71,203,125
READ-RITE*@
Manufacturer of recording
heads for disk drives 2,600,000 54,193,750
STORAGE TECHNOLOGY*
Tape- and disk-based data
storage equipment 2,200,000 97,900,000
WESTERN DIGITAL*
Manufacturer of computer
hard-disk drives 2,100,000 66,412,500
------------
819,603,125
------------
COMPUTER SOFTWARE 12.8%
ACTIVISION*@
Entertainment software 1,400,000 20,125,000
ANSYS*@
Developer of engineering
analysis software 1,200,000 9,225,000
BMC SOFTWARE*
Developer of mainframe and
Unix utility software 1,700,000 94,243,750
CADENCE DESIGN SYSTEM*
Electronic design
automation software 1,800,000 60,300,000
COMPUTER ASSOCIATES INTERNATIONAL
Designer and marketer of
software utilities and databases 300,000 16,706,250
- ----------
See footnotes on page 11.
8
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PORTFOLIO OF INVESTMENTS
JUNE 30, 1997
SHARES VALUE
------ -----
COMPUTER SOFTWARE (continued)
GEMSTAR INTERNATIONAL*
Developer and marketer of
proprietary VCR programming
software in Bermuda 800,000 $ 14,850,000
INFINITY FINANCIAL TECHNOLOGY*
Client/server software for
financial trading 70,000 1,139,688
PARAMETRIC TECHNOLOGY*
Developer of mechanical
design software 1,900,000 80,809,375
PURE ATRIA*
Developer of Automated
Software Quality (ASQ)
diagnostic products 700,000 9,931,250
RATIONAL SOFTWARE*
Developer of software
development tools 500,000 8,390,625
STRUCTURAL DYNAMICS RESEARCH*@
Developer of mechanical
design software 2,500,000 65,703,125
SYNOPSYS*
Supplier of integrated circuit
design software 1,800,000 66,431,250
3DO*@
Developer of video
game and PC
entertainment software 2,200,000 7,768,750
VANTIVE *
Developer of customer
interaction software 500,000 14,187,500
VIEWLOGIC SYSTEMS*
Developer of electronic design
automation software 535,500 7,865,156
------------
477,676,719
------------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS 2.6%
ADFLEX SOLUTIONS*@
Manufacturer of complex
flexible circuit boards 850,000 12,856,250
ALTRON*@
Manufacturer of complex
printed circuit boards 900,000 13,668,750
CONTRACT MANUFACTURING/
CIRCUIT BOARDS (CONTINUED)
HADCO*
Manufacturer of complex
printed circuit boards 400,000 26,100,000
PRAEGITZER INDUSTRIES*
Manufacturer of complex
printed circuit boards 500,000 5,562,500
SCI SYSTEMS*
Assembler of electronic
circuit boards and PCs 600,000 38,250,000
------------
96,437,500
------------
ELECTRONICS CAPITAL
EQUIPMENT 20.5%
APPLIED MATERIALS
Manufacturer of semiconductor
fabrication equipment 800,000 56,625,000
ASM LITHOGRAPHY*
Manufacturer of
photolithography equipment
in the Netherlands 1,000,000 57,852,082
ASYST TECHNOLOGIES*@
Manufacturer of miniature
clean-room environments
for the manufacture
of silicon wafers 500,000 21,875,000
COGNEX*
Manufacturer of machine
vision systems 2,000,000 53,125,000
CREDENCE SYSTEMS*@
Manufacturer of automated
semiconductor test equipment 1,800,000 53,943,750
ELECTRO SCIENTIFIC INDUSTRIES*0
Manufacturer of memory
circuit repair systems 800,000 33,475,000
ETEC SYSTEMS*@
Designer and manufacturer of
photomask manufacturing
systems 1,643,000 70,392,281
FUSION SYSTEMS*@
Photo-resist strip systems 590,000 23,360,312
- ----------
See footnotes on page 11.
9
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997
SHARES VALUE
------ -----
ELECTRONICS CAPITAL
EQUIPMENT (continued)
INTEGRATED PROCESS EQUIPMENT*@
Manufacturer of chemical
mechanical polishing
equipment 950,000 $ 24,046,875
KLA-TENCOR*
Manufacturer of wafer
inspection and metrology
equipment 2,200,000 107,318,750
KULICKE & SOFFA INDUSTRIES*@
Manufacturer of semiconductor
packaging equipment 1,500,000 48,609,375
NOVELLUS SYSTEMS*@
Manufacturer of chemical vapor
deposition equipment 1,450,000 125,062,500
TERADYNE*
Manufacturer of semiconductor
test equipment 1,900,000 74,575,000
VEECO INSTRUMENTS*@
Ion beam etch and
deposition equipment 415,000 16,107,188
------------
766,368,113
------------
INFORMATION SERVICES 1.5%
COMPUTER SCIENCES*
Computer services and
systems integration 800,000 57,700,000
------------
MEDIA 6.5%
CLEAR CHANNEL COMMUNICATIONS
Owner and operator of radio
and television stations 600,000 36,900,000
COX RADIO (CLASS A)*
Operator of radio stations 900,000 23,062,500
EVERGREEN MEDIA (CLASS A)*
Operator of radio stations 1,500,000 66,843,750
WESTINGHOUSE ELECTRIC
Owner and operator of
radio and television stations
and broadcast and cable
television networks 5,000,000 115,625,000
------------
242,431,250
------------
SEMICONDUCTORS 21.5%
ADVANCED MICRO DEVICES*
Manufacturer of
microprocessors and
FLASH memory circuits 3,000,000 108,000,000
ALTERA*
Designer and manufacturer of
field-programmable logic
devices 1,100,000 55,584,375
ANALOG DEVICES*
Designer and manufacturer of
analog and mixed-signal
integrated circuits 1,700,000 45,156,250
AVX
Manufacturer of capacitors 1,000,000 27,000,000
CYPRESS SEMICONDUCTOR*
Manufacturer of high
performance memory circuits 1,000,000 14,500,000
INTERNATIONAL RECTIFIER*
Manufacturer of power
semiconductors 2,200,000 40,975,000
LATTICE SEMICONDUCTOR*@
Designer and developer of
programmable logic devices 1,400,000 79,012,500
LINEAR TECHNOLOGY
Manufacturer of high-
performance analog circuits 800,000 41,325,000
LSI LOGIC*
Manufacturer of application-
specific semiconductors 700,000 22,400,000
MAXIM INTEGRATED PRODUCTS*
Designer and manufacturer of
linear and mixed-signal
integrated circuits 1,800,000 102,262,500
MICROCHIP TECHNOLOGY*
Supplier of field-programmable
microcontrollers 2,500,000 74,296,875
MICRON TECHNOLOGY*
Manufacturer of semiconductor
memory products 600,000 23,962,500
PMC-SIERRA*
Provider of high-speed
networking circuits 200,000 5,237,500
- ----------
See footnotes on page 11.
10
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997
SHARES VALUE
------ -----
SEMICONDUCTORS (continued)
TEXAS INSTRUMENTS
Manufacturer of analog and
mixed-signal circuits 350,000 $ 29,421,875
TRIDENT MICROSYSTEMS*
Developer of computer
graphics circuits 250,000 2,820,313
VISHAY INTERTECHNOLOGY*
Manufacturer of capacitors 1,100,000 31,831,250
VLSI TECHNOLOGY*
Manufacturer of application-
specific semiconductors 2,200,000 51,906,250
XILINX*
Supplier of field-programmable
gate arrays 1,000,000 49,031,250
--------------
804,723,438
--------------
TELECOMMUNICATIONS 1.9%
METROMEDIA INTERNATIONAL GROUP*
Global entertainment and
telecommunications company 1,000,000 12,687,500
MILLICOM INTERNATIONAL CELLULAR*
Cellular services operator
in Luxembourg 300,000 14,437,500
WORLDCOM*
Provider of local and long
distance telephone and
internet services 1,400,000 44,756,250
--------------
71,881,250
--------------
TOTAL COMMON STOCKS
(Cost $3,062,524,252) 3,529,533,895
--------------
CONVERTIBLE PREFERRED
STOCKS 0.9%
MEDIA 0.9%
CHANCELLOR BROADCASTING, 7%+
Operator of radio stations 250,000 17,625,000
EVERGREEN MEDIA, 6%+
Operator of radio stations 300,000 16,537,500
--------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $27,500,000) 34,162,500
--------------
SHORT-TERM HOLDINGS 4.9%
(Cost $181,500,000) 181,500,000
--------------
TOTAL INVESTMENTS 100.2%
(Cost $3,271,524,252) 3,745,196,395
OTHER ASSETS
LESS LIABILITIES (0.2)% (7,398,788)
--------------
NET ASSETS 100.0% $3,737,797,607
==============
- ----------
* Non-income producing security.
+ Rule 144A security.
@ Affiliated issuers (Fund's holdings representing 5% or more of the outstanding
voting securities).
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
11
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks and convertible securities* (cost $3,090,024,252) ............ $3,563,696,395
Short-term holdings (cost $181,500,000) .................................... 181,500,000 $3,745,196,395
--------------
Cash ............................................................................................................ 3,236,366
Receivable for securities sold .................................................................................. 54,213,663
Receivable for Capital Stock sold ............................................................................... 9,428,921
Expenses prepaid to shareholder service agent ................................................................... 1,204,080
Receivable for interest and dividends ........................................................................... 106,010
Other ........................................................................................................... 349,678
--------------
TOTAL ASSETS .................................................................................................... 3,813,735,113
--------------
LIABILITIES:
Payable for securities purchased ................................................................................ 57,196,185
Payable for Capital Stock repurchased ........................................................................... 12,603,547
Accrued expenses, taxes, and other .............................................................................. 6,137,774
--------------
TOTAL LIABILITIES ............................................................................................... 75,937,506
--------------
NET ASSETS ...................................................................................................... $3,737,797,607
==============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($.10 par value; 1,000,000,000 shares authorized;
140,963,180 shares outstanding):
Class A ....................................................................................................... $ 9,982,372
Class B ....................................................................................................... 923,416
Class D ....................................................................................................... 3,190,530
Additional paid-in capital ...................................................................................... 2,841,671,534
Accumulated net investment loss ................................................................................. (26,087,555)
Undistributed net realized gain ................................................................................. 434,445,167
Net unrealized appreciation of investments ...................................................................... 473,672,143
--------------
NET ASSETS ...................................................................................................... $3,737,797,607
==============
NET ASSET VALUE PER SHARE:
CLASS A ($2,679,766,025 / 99,823,725 shares) .................................................................... $26.84
======
CLASS B ($237,588,528 / 9,234,157 shares) ....................................................................... $25.73
======
CLASS D ($820,443,054 / 31,905,298 shares) ...................................................................... $25.71
======
</TABLE>
- --------
* Includes affiliated issuers (Fund's holdings representing 5% or more of the
outstanding voting securities) with a cost of $705,060,309 and a value of
$771,109,781.
See Notes to Financial Statements.
12
<PAGE>
================================================================================
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest ....................................................... $ 3,300,399
Dividends ...................................................... 1,096,987
-----------
TOTAL INVESTMENT INCOME ....................................................... $ 4,397,386
EXPENSES:
Management fee ................................................. 15,429,460
Distribution and service fees .................................. 7,881,059
Shareholder account services ................................... 5,447,001
Shareholder reports and communications ......................... 755,082
Custody and related services ................................... 439,580
Registration ................................................... 253,791
Auditing and legal fees ........................................ 63,377
Directors' fees and expenses ................................... 31,960
Miscellaneous .................................................. 81,609
-----------
TOTAL EXPENSES ................................................................ 30,382,919
-----------
NET INVESTMENT LOSS ........................................................... (25,985,533)
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments* .............................. 370,905,781
Net change in unrealized appreciation
of investments ................................................. 117,387,875
-----------
NET GAIN ON INVESTMENTS ....................................................... 488,293,656
-----------
INCREASE IN NET ASSETS FROM OPERATIONS ........................................ $462,308,123
===========
</TABLE>
- ---------
* Includes net realized gain from affiliated issuers of $40,591,737.
See Notes to Financial Statements.
13
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss ..................................................................... $ (25,985,533) $ (38,954,438)
Net realized gain on investments ........................................................ 370,905,781 153,061,653
Net change in unrealized appreciation
of investments .......................................................................... 117,387,875 238,743,809
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS .................................................. 462,308,123 352,851,024
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ............................................................................. -- (105,584,145)
Class B ............................................................................. -- (4,686,401)
Class D ............................................................................. -- (33,293,284)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ............................................... -- (143,563,830)
------------- -------------
SHARES
--------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sale of shares:
<S> <C> <C> <C> <C>
Class A ......................................... 11,564,386 34,422,498 287,674,879 749,537,882
Class B ......................................... 4,323,215 5,362,644 103,898,481 113,021,809
Class D ......................................... 3,089,138 11,596,458 74,205,709 243,586,540
Exchanged from associated Funds:
Class A ......................................... 12,145,106 37,176,372 305,838,527 814,655,013
Class B ......................................... 271,447 94,188 6,469,075 1,982,642
Class D ......................................... 3,682,835 3,580,521 88,856,595 75,837,958
Shares issued in payment of
gain distributions:
Class A ......................................... -- 4,368,020 -- 98,062,037
Class B ......................................... -- 201,358 -- 4,351,357
Class D ......................................... -- 1,434,633 -- 30,988,033
----------- ----------- ------------- --------------
Total ............................................... 35,076,127 98,236,692 866,943,266 2,132,023,271
----------- ----------- ------------- --------------
Cost of shares repurchased:
Class A ......................................... (13,581,130) (21,671,916) (338,591,395) (474,588,279)
Class B ......................................... (407,411) (126,718) (9,821,234) (2,780,813)
Class D ......................................... (3,717,743) (7,424,660) (89,173,845) (156,046,056)
Exchanged into associated Funds:
Class A ......................................... (13,006,624) (39,839,103) (328,775,564) (874,567,022)
Class B ......................................... (296,456) (188,110) (7,094,780) (4,005,480)
Class D ......................................... (3,794,328) (5,088,386) (91,496,059) (105,848,538)
----------- ----------- ------------- --------------
TOTAL ............................................... (34,803,692) (74,338,893) (864,952,877) (1,617,836,188)
----------- ----------- -------------- --------------
INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS .................................. 272,435 23,897,799 1,990,389 514,187,083
=========== =========== -------------- --------------
INCREASE IN NET ASSETS .................................................................. 464,298,512 723,474,277
NET ASSETS:
Beginning of period ..................................................................... 3,273,499,095 2,550,024,818
-------------- --------------
END OF PERIOD (including accumulated net
investment loss of $26,087,555 and
$102,022, respectively) ................................................................. $3,737,797,607 $3,273,499,095
============== ==============
</TABLE>
- --------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
14
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Communications and Information 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 18 months
after 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
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 after 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 convertible securities and 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 national exchanges 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. 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.
c. 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. Interest income is recorded on an accrual basis.
d. 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, 1997, distribution and service fees were the only
class-specific expenses.
e. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
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, 1997, amounted to $2,625,344,582 and
$2,805,900,155, respectively.
At June 30, 1997, the cost of investments for federal income tax purposes
was $3,275,008,319, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $606,252,263 and $136,064,187,
respectively.
4. SHORT-TERM INVESTMENTS -- At June 30, 1997, the Fund owned short-term
investments which matured in less than seven days.
5. MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides the necessary personnel and facilities. Compensation of all officers of
the Fund, all directors of the Fund who are employees or consultants of the
Manager, and all personnel of the Fund and the Manager is paid by the Manager.
The Manager receives a fee, calculated daily and payable monthly, equal to 0.90%
per annum of the first $3 billion of the Fund's average daily net assets, 0.85%
per annum of the next $3 billion of the Fund's average daily net assets and
0.75% per annum of the Fund's average daily net assets in excess of $6 billion.
The management fee reflected in the Statement of Operations represents 0.89% per
annum of the Fund's average daily net assets.
15
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $674,866 from sales of Class A shares, after commissions of
$5,476,793 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,
1997, fees incurred aggregated $3,158,286, or 0.25% 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 substantially all
of 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, 1997, 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 $871,885 and $3,850,888, respectively.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions of Class D shares occurring within one year of purchase. For the six
months ended June 30, 1997, such charges amounted to $141,018.
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
and the Class B shares distribution fees retained by the Distributor, for the
six months ended June 30, 1997, was $282,362.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of Fund shares, as well as distribution
and service fees pursuant to the Plan. For the six months ended June 30, 1997,
Seligman Services, Inc. received commissions of $189,277 from the sales of Fund
shares. Seligman Services, Inc. also received distribution and service fees of
$439,735, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $5,447,001 for shareholder account services.
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. Interest is accrued on the deferred
balances. The cost of such fees and interest is included in directors' fees and
expenses and the accumulated balance thereof at June 30, 1997, of $107,835 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.
6. COMMITTED LINE OF CREDIT -- Effective July 23, 1997, the Fund has increased
its committed line of credit facility with a group of banks to $340 million from
$280 million. Borrowings pursuant to the credit facility are subject to interest
at a rate equal to the federal funds rate plus 0.50% per annum. The Fund incurs
a commitment fee of 0.10% per annum on the unused portion of the credit
facility. The credit facility may be drawn upon only for temporary purposes and
is subject to certain other customary restrictions. The credit facility
commitment expires one year from the date of the agreement but is renewable with
the consent of the participating banks. To date, the Fund has not borrowed from
the credit facility.
16
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
7. AFFILIATED ISSUERS -- As defined under the Investment Company Act of 1940, as
amended, affiliated issuers are those issuers in which the Fund's holdings
represent 5% or more of the outstanding voting securities. A summary of the
Fund's transactions in the securities of these issuers during the six months
ended June 30, 1997, is as follows:
<TABLE>
<CAPTION>
BEGINNING GROSS PURCHASES GROSS SALES ENDING
AFFILIATE SHARES AND ADDITIONS AND REDUCTIONS SHARES
- ----------- ------------ ----------------- ---------------- ------------
<S> <C> <C> <C> <C>
ACTIVISION ............................. 1,000,000 400,000 -- 1,400,000
ADFlex Solutions ....................... 750,000 135,000 35,000 850,000
Altron ................................. 900,000 -- -- 900,000
ANSYS .................................. 850,000 350,000 -- 1,200,000
Asyst Technologies ..................... 500,000 -- -- 500,000
CIDCO .................................. 1,500,000 -- -- 1,500,000
Credence Systems ....................... 1,800,000 -- -- 1,800,000
Electro Scientific Industries .......... 800,000 -- -- 800,000
Etec Systems ........................... 1,150,000 1,059,300 566,300 1,643,000
Fusion Systems ......................... 590,000 -- -- 590,000
In Focus Systems ....................... 700,000 200,000 -- 900,000
Integrated Process Equipment ........... 400,000 950,000 400,000 950,000
Kulicke & Soffa Industries ............. -- 1,500,000 -- 1,500,000
Lattice Semiconductor .................. 1,900,000 172,000 672,000 1,400,000
Mylex .................................. 1,750,000 250,000 -- 2,000,000
Novellus Systems ....................... 1,000,000 1,350,000 900,000 1,450,000
Oak Industries ......................... 1,000,000 -- -- 1,000,000
Read-Rite .............................. 400,000 2,600,000 400,000 2,600,000
Structural Dynamics Researc 2,600,000 200,000 300,000 2,500,000
3DO .................................... 2,200,000 -- -- 2,200,000
Veeco Instruments ...................... -- 415,000 -- 415,000
REALIZED
GAIN DIVIDEND ENDING
AFFILIATE (LOSS) INCOME VALUE
- ----------- -------- --------- --------
ACTIVISION ............................. $-- $-- $ 20,125,000
ADFlex Solutions ....................... (453,765) -- 12,856,250
Altron ................................. -- -- 13,668,750
ANSYS .................................. -- -- 9,225,000
Asyst Technologies ..................... -- -- 21,875,000
CIDCO .................................. -- -- 20,578,125
Credence Systems ....................... -- -- 53,943,750
Electro Scientific Industries .......... -- -- 33,475,000
Etec Systems ........................... 3,471,786 -- 70,392,281
Fusion Systems ......................... -- -- 23,360,312
In Focus Systems ....................... -- -- 23,231,250
Integrated Process Equipment ........... 3,186,665 -- 24,046,875
Kulicke & Soffa Industries -- -- 48,609,375
Lattice Semiconductor .................. 14,618,807 -- 79,012,500
Mylex .................................. -- -- 19,125,000
Novellus Systems ....................... 14,422,151 -- 125,062,500
Oak Industries ......................... -- -- 28,750,000
Read-Rite .............................. 4,172,584 -- 54,193,750
Structural Dynamics Researc ............ 1,173,509 -- 65,703,125
3DO .................................... -- -- 7,768,750
Veeco Instruments ...................... -- -- 16,107,188
----------- -------------
TOTAL .................................. $40,591,737 $771,109,781
=========== =============
</TABLE>
17
<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.
"Average commission rate paid" represents the average commission 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
-------------------------------------------------------------------------------
SIX
MONTHS YEAR ENDED DECEMBER 31,
ENDED ---------------------------------------------------------------
6/30/97@ 1996@ 1995@ 1994@ 1993 1992
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD .......... $23.51 $21.99 $16.64 $13.43 $12.30 $11.57
------ ------ ------ ------ ------ ------
Net investment loss ........................... (0.16) (0.26) (0.33) (0.19) (0.14) (0.12)
Net realized and unrealized
investment gain .............................. 3.49 2.84 7.59 4.86 4.37 2.09
------ ------ ------ ------ ------ ------
INCREASE FROM INVESTMENT OPERATIONS ........... 3.33 2.58 7.26 4.67 4.23 1.97
Distributions from net gain realized .......... -- (1.06) (1.91) (1.46) (3.10) (1.24)
------ ------ ------ ------ ------ ------
NET INCREASE IN NET ASSET VALUE ............... 3.33 1.52 5.35 3.21 1.13 0.73
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ................ $26.84 $23.51 $21.99 $16.64 $13.43 $12.30
====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: 14.16% 11.94% 43.39% 35.30% 35.13% 17.31%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................ 1.55%+ 1.68% 1.61% 1.65% 1.63% 1.51%
Net investment loss to average
net assets ................................... (1.30)%+ (1.16)% (1.31)% (1.27)% (1.39)% (1.18)%
Portfolio turnover ............................ 78.19% 121.32% 65.77% 104.08% 137.10% 110.42%
Average commission rate paid .................. $.0545 $.0531
NET ASSETS, END OF PERIOD
(000s omitted) ................................$2,679,766 $2,414,672 $1,940,693 $307,542 $92,987 $57,001
</TABLE>
- ---------
See footnotes on page 19.
18
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
------------------------
SIX
MONTHS 4/22/96*
ENDED TO
6/30/97@ 12/31/96@
------- --------
<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ......................... $22.62 $21.51
------ ------
Net investment loss .......................................... (0.24) (0.28)
Net realized and unrealized investment
gain ......................................................... 3.35 2.45
------ ------
INCREASE FROM INVESTMENT
OPERATIONS ................................................... 3.11 2.17
Distributions from net gain realized ......................... -- (1.06)
------ ------
NET INCREASE IN NET ASSET VALUE .............................. 3.11 1.11
------ ------
NET ASSET VALUE, END OF PERIOD ............................... $25.73 $22.62
====== ======
TOTAL RETURN BASED ON NET
ASSET VALUE: 13.75% 10.30%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ............................... 2.30%+ 2.44%+
Net investment loss to average net assets .................... (2.05)%+ (1.96)%+
Portfolio turnover ........................................... 78.19% 121.32%++
Average commission rate paid ................................. $.0545 $.0531++
NET ASSETS, END OF PERIOD
(000s omitted) ............................................... $237,589 $120,848
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------------------
SIX
MONTHS YEAR ENDED DECEMBER 31, 5/3/93*
ENDED --------------------------------------- TO
6/30/97@ 1996@ 1995@ 1994@ 12/31/93
-------- ---- ----- ----- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............. $22.61 $21.35 $16.31 $13.32 $12.24
------ ------ ------ ------ ------
Net investment loss .............................. (0.24) (0.40) (0.50) (0.33) (0.05)
Net realized and unrealized investment
gain ............................................. 3.34 2.72 7.45 4.78 4.23
------ ------ ------ ------ ------
Increase from Investment
Operations ....................................... 3.10 2.32 6.95 4.45 4.18
Distributions from net gain realized ............. -- (1.06) (1.91) (1.46) (3.10)
------ ------ ------ ------ ------
NET INCREASE IN NET ASSET VALUE .................. 3.10 1.26 5.04 2.99 1.08
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ................... $25.71 $22.61 $21.35 $16.31 $13.32
====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET
ASSET VALUE: 13.71% 11.07% 42.37% 33.94% 34.89%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................... 2.30%+ 2.43% 2.37% 2.50% 2.56%+
Net investment loss to average net assets ........ (2.05)%+ (1.91)% (2.07)% (2.20)% (2.33)%+
Portfolio turnover ............................... 78.19% 121.32% 65.77% 104.08% 137.10%+++
Average commission rate paid ..................... $.0545 $.0531
NET ASSETS, END OF PERIOD
(000s omitted) ...................................$820,443 $737,979 $609,332 $96,100 $7,833
</TABLE>
- --------
* Commencement of offering of shares.
@ Per share amounts for the periods ended June 30, 1997, and 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.
19
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Communications and Information Fund,
Inc. as of June 30, 1997, 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, 1996, 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, 1997, by correspondence with the Fund's custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman
Communications and Information Fund, Inc. as of June 30, 1997, the results of
its operations, the changes in its net assets, and the financial highlights for
the respective stated periods in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
- ---------------------------
DELOITTE & TOUCHE LLP
New York, New York
August 1, 1997
- --------------------------------------------------------------------------------
20
<PAGE>
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
FRED E. BROWN
DIRECTOR EMERITUS
DIRECTOR AND CONSULTANT, J. & W. Seligman & Co. Incorporated
JOHN R. GALVIN 2
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN 3
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum Corporation
BETSY S. MICHEL 2
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
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3
DIRECTOR OR TRUSTEE, Various Organizations
JAMES N. WHITSON 2
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
- --------------------------------------------------------------------------------
21
<PAGE>
================================================================================
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
PAUL H. WICK
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman 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
- --------------------------------------------------------------------------------
22
<PAGE>
================================================================================
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in the fund's portfolio. The fund generates
short-term capital gains when portfolio securities held for less than one year
are sold at a profit. The fund generates long-term capital gains when portfolio
securities held for one year or more are sold at a profit. Short-term capital
gains are taxed as ordinary income. Long-term capital gains are taxed at the
federal capital gains rate appropriate to the shareholder's tax bracket.
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 increase 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. Assuming the same rate of return, 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 the 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 shares can be
purchased. The offering price is the current net asset value per share 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, such as the 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.
SECURITIES AND EXCHANGE COMMISSION (SEC) -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- Document that contains updated or more
detailed information about a mutual fund and supplements the prospectus. It is
available at no charge upon request.
TOTAL RETURN -- A measure of fund 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 -- 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 maximum offering price of the stock.
- -----------
Adapted from the Investment Company Institute's 1996 MUTUAL FUND FACT BOOK.
23
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF SHAREHOLDERS OR THOSE
WHO HAVE RECEIVED THE OFFERING PROSPECTUS COVERING SHARES OF CAPITAL
STOCK OF SELIGMAN COMMUNICATIONS AND INFORMATION FUND, INC., WHICH
CONTAINS INFORMATION ABOUT THE SALES CHARGES, MANAGEMENT FEE,
AND OTHER COSTS. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING OR
SENDING MONEY.
EQCI3 6/97 [LOGO] Printed on Recycled Paper
