- --------------------------------------------------------------------------------
SELIGMAN
SELIGMAN
COMMUNICATIONS
AND INFORMATION
FUND, INC.
================================================================================
SEEKING CAPITAL GAIN BY INVESTING IN COMPANIES OPERATING IN ALL ASPECTS OF
COMMUNICATIONS, INFORMATION, AND RELATED INDUSTRIES.
DECEMBER 31, 1996 . 14th ANNUAL REPORT
<PAGE>
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J. & W. SELIGMAN & CO. INCORPORATED
OVER THE
LONG TERM
1986...
"Your Fund's broad charter allows it to participate in all aspects of the
INFORMATION EXPLOSION. During the year, portfolio policy focused 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
1983-1988
1996...
"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
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 40 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.
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.
[Photo]
[Photo Caption]
JAMES, JESSE, AND JOSEPH SELIGMAN
<PAGE>
================================================================================
FELLOW
SHAREHOLDERS
In 1996, Seligman Communications and Information Fund noticeably underperformed
the Standard & Poor's 500 Composite Stock Price Index and its peers, as measured
by the Lipper Science and Technology Funds Average. Much of the difficulty was
encountered in the first half of the year; investment performance in the third
and fourth quarters improved dramatically. The Fund's investment results as of
December 31, 1996, begin on page 4.
In the market for technology stocks, as in equity markets generally, the
largest companies were the strongest performers in 1996. The first two quarters
of 1996 were generally disappointing for technology stocks because the
semiconductor and semiconductor capital equipment industries experienced reduced
product demand after a rapid inventory build-up. This particularly affected the
Fund because of its weighting in these areas. In the second half of the year,
the growing strength of the global personal computer market helped improve
market psychology, and quelled fears of reduced future earnings in the
technology sector. Strong third quarter earnings reports also contributed to
positive investor sentiment. Further, excessive memory chip inventories, which
had lingered for most of the year, ended in the fourth quarter.
This year, your Fund's Manager, J. & W. Seligman & Co. Incorporated, has
taken several steps to increase the resources available to the Fund, including
the addition of senior investment personnel. Two seasoned technology investment
professionals, Storm Boswick and Paul Krieger, were added to the Seligman
Technology Team in New York; they provide specialized knowledge in the
telecommunications, media, newspaper, cellular services, cable television,
computer services, networking, and communications equipment sectors. A third new
team member, Carolyn Rogers, is based in Silicon Valley to provide the
Technology Team with closer access to key corporate officers in the
semiconductor and semiconductor capital equipment industries. These additions to
your Fund's team should help meet the challenges of investing in the growing
technology-based industries.
Though 1996 was a difficult year, we remain positive about the long-term
outlook for the technology market and for your Fund. We believe that long-term
capital appreciation opportunities remain in the technology sector. As 1996
illustrates, however, there can be short-term volatility. Accordingly, we
believe the best strategy for growth of capital is long-term investing. A
professional financial advisor can help you formulate a long-term investment
plan to help you seek your financial goals, as it is time, not timing, that
counts when it comes to investing.
A discussion with your Portfolio Manager and the Fund's portfolio of
investments follow this letter.
We thank you for your continued interest in Seligman Communications and
Information Fund, and look forward to serving your investment needs in the many
years to come.
By order of the Board of Directors,
/s/ William C. Morris /s/ Brian T. Zino
- --------------------------- -----------------
William C. Morris Brian T. Zino
Chairman President
January 31, 1997
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1
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SELIGMAN
COMMUNICATIONS AND
INFORMATION FUND, INC.
[Photo]
{Photo Caption]
SELIGMAN TECHNOLOGY TEAM: (FROM LEFT) PAUL KRIEGER, SHANEAN AUSTIN
(ADMINISTRATIVE ASSISTANT), CAROLYN ROGERS, LAWRENCE ROSSO, (SEATED) PAUL WICK
(PORTFOLIO MANAGER), STORM BOSWICK
A TEAM APPROACH
SELIGMAN COMMUNICATIONS AND INFORMATION FUND IS MANAGED BY THE SELIGMAN
TECHNOLOGY TEAM, HEADED BY PAUL WICK. MR. WICK AND HIS TEAM OF SEASONED RESEARCH
PROFESSIONALS VISIT WITH THE MANAGEMENT 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.
INTERVIEW WITH PAUL WICK, PORTFOLIO MANAGER
Q. HOW DID SELIGMAN COMMUNICATIONS AND INFORMATION FUND PERFORM IN THE LAST 12
MONTHS?
A. Seligman Communications and Information Fund's total return, based on the
net asset value of Class A shares, was 11.94% for the year. Overall, the
Fund lagged its peers and the broad market indices in 1996. In the first
half of the year, the Fund underperformed primarily due to its weighting in
semiconductors and semiconductor-related stocks, which suffered from a
lengthy inventory correction. However, the Fund's results improved in the
second half of the year, and particularly so in the fourth quarter -- the
semiconductor and semiconductor capital equipment sectors rebounded, and
the strength of the global personal computer (PC) market became evident.
The Fund was also strengthened by its increased sector diversification,
particularly by the performance of personal computer and peripheral stocks.
The Fund posted a total return in excess of 38% based on the net asset
value of Class A shares, from its July 23, 1996, low through December 31,
1996.
Q. WHAT INFLUENCE DID THE PC MARKET HAVE ON TECHNOLOGY STOCKS IN GENERAL IN
1996?
A. The resilience of the PC market was a major factor in the resurgence of US
technology stocks late in 1996. PC unit sales expanded roughly 18% to
approximately 75 million units in 1996, with much of the growth taking
place in the second half of the year. Moreover, American companies like
Compaq Computer gained market share throughout the world, increasing their
rates of growth. The strength in the PC market also extended to suppliers,
benefiting manufacturers of disk drives and semiconductors in particular.
Q. HOW COULD THE PC MARKET HAVE BEEN SO STRONG IF US RETAILERS GENERALLY
REPORTED POOR SALES TO CONSUMERS IN 1996?
A. The US retail PC market is only 15% of the total world market. Strong sales
to US corporations and excellent international sales growth compensated for
any weakness seen at US retail stores. In addition, the average purchase
price for retail PCs was down approximately 12%, or $400, due to the 80%
decline in Dynamic Random Access Memory (DRAM) circuit prices. This drop in
retail prices hurt sales figures for retailers, but had little effect on
the profits of PC manufacturers. Finally, direct marketers of PCs, such as
Gateway 2000, took significant market share away from the retail computer
chains in the US.
Q. WHAT OTHER FACTORS INFLUENCED THE RECOVERY OF TECHNOLOGY STOCKS IN THE
SECOND HALF OF 1996?
A. Among the most significant factors were the following:
o In the third quarter, computer and other electronic systems companies began
to rebuild inventories, which helped stabilize both prices and lead times
in the semiconductor, capacitor, and circuit board markets.
o The rebound in semiconductor orders, which was due to the rebuilding of
inventories, also breathed new life into semiconductor capital equipment
stocks. While capital spending in the chip industry will likely be reduced
15% in 1997 from 1996 levels, orders now appear to have stabilized to
levels that are still profitable for most equipment companies. We believe
the favorable order outlook in the chip industry increases the likelihood
of a sustained recovery in the semiconductor capital equipment industry.
o DRAM circuit prices began to stabilize after falling 80% in the first eight
months of 1996. The demand for increased memory per PC and production
cutbacks by DRAM manufacturers were the two key catalysts for this change.
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2
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o Microsoft's WindowsNT operating system was adopted by businesses much more
quickly than expected. This spurred a corporate upgrade cycle to more
powerful PCs, which also benefited software vendors selling applications
for WindowsNT.
o The Initial Public Offering (IPO) frenzy, so apparent in the first half of
1996, cooled dramatically. Not only were fewer new issues brought to
market, but speculative offerings of unprofitable companies were rare.
Q. HOW DID THE PORTFOLIO CHANGE IN THE FOURTH QUARTER OF 1996?
A. The portfolio became more fully invested, and now holds very little of its
assets in cash. In addition, the Fund's weighting in the computer
hardware/peripherals area, particularly in the disk drive industry, was
increased. New holdings here include Quantum and Read-Rite. Finally, in
early January, the Fund's weighting in software stocks was reduced. Profits
were taken in Informix, Oracle Systems, Sterling Software, and Microsoft,
primarily due to high valuations.
Q. WHAT IS YOUR INVESTMENT STRATEGY WITH REGARD TO THE INTERNET?
A. Internet service providers and Internet-related software vendors have been
notably unprofitable, extraordinarily richly valued, or both. Therefore, we
generally have avoided most Internet-related stocks with few exceptions.
Many of the Fund's investments in the communications infrastructure area,
however, are closely linked to the build-out of the Internet.
Q. WHAT IS YOUR OUTLOOK FOR MEDIA AND TECHNOLOGY STOCKS IN 1997?
A. We believe that the best growth opportunities remain in the technology
sector, as the fundamentals of most media companies are uninspiring. The
exception lies in the US radio broadcasting industry, where strong
same-station cash flow growth, favorable deregulatory trends, economies of
scale, and reasonable valuations combine to offer an appealing backdrop for
investment.
In the technology sector, we expect that major trends seen in 1996 will
persist in 1997: PC unit growth in the mid-teens, continued explosive
growth of the Internet, steady expansion of network bandwidth around the
world, and escalating business adoption of the WindowsNT operating system.
In addition, we are quite optimistic about the recovery in the electronic
component markets, in particular for semiconductors. While valuations on
forward earnings estimates for semiconductor stocks are not inexpensive, we
believe that profit margins are poised to expand significantly over the
next year.
Q. WHAT OTHER DEVELOPMENTS ARE TAKING PLACE IN THE TECHNOLOGY MARKET?
A. Several developments in the technology market, which were discussed in last
year's Annual Report, have provided us with reasons for an optimistic
outlook going forward. Many of the new products are now being shipped.
o 64-bit video game systems are just starting to ship in quantity to the US,
invigorating the depressed video game hardware and software markets.
o Digital Video Disk (DVD) players are expected to finally hit US markets
early in 1997 after unexpected delays. These new machines can play audio
CDs, video game disks, and full-length movies on a single, small disk at
high resolution.
o Personal Communications Services (PCS) wireless networks are being built
all over America, with activity accelerating in 1997. As part of this
service offering, pagers will be capable of storing voice mail messages for
the first time.
o The direct broadcast satellite (DBS) industry continues to grow at
explosive rates in the US and around the world.
o Intel's early 1997 launch of its multimedia extension (MMX) technology will
greatly improve the on-screen graphics of PC games, helping augment PC
sales to consumers.
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3
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SELIGMAN
COMMUNICATIONS AND
INFORMATION FUND, INC.
PERFORMANCE COMPARISON CHART
DECEMBER 31, 1996
This chart compares a $10,000 hypothetical investment made in Seligman
Communications and Information Fund Class A shares, with and without the maximum
initial sales charge of 4.75%, for the 10-year period ended December 31, 1996,
to a $10,000 hypothetical investment made in the Standard & Poor's 500 Composite
Stock Price Index (S&P 500) and the Lipper Science and Technology Funds Average
(Lipper Science & Technology Average) for the same period. The performances of
Seligman Communications and Information Fund Class B and D shares are not shown
in this chart, but are included in the table on page 5. It is important to keep
in mind that the S&P 500 excludes the effect of any fees or sales charges and
the Lipper Science & Technology Average excludes the effect of sales charges.
[The following table represents points that appear in the line chart in the
printed version]
SELIGM COMMUNICATIONS AND INFORMATION FUND - CLASS A
Lipper Science
With Without S&P 500 & Technology
Sales Charge Sales Charge Index Average
------------ ------------ ----- -------
12/31/86 ...... 9,523.41 10,000.00 10,000.00 10,000.00
12,349.49 12,967.51 12,135.00 13,021.31
12,717.39 13,353.82 12,744.18 13,109.90
13,887.95 14,582.97 13,585.29 14,212.87
12/31/87 ...... 10,953.15 11,501.28 10,524.53 10,589.32
11,275.61 11,839.88 11,123.37 11,130.10
12,060.28 12,663.82 11,864.19 12,157.88
11,318.60 11,885.03 11,904.53 11,224.20
12/31/88 ...... 11,756.32 12,334.66 12,272.38 11,280.61
12,725.31 13,362.15 13,142.49 11,680.13
13,927.80 14,624.81 14,302.97 12,622.27
15,643.96 16,426.86 15,834.82 13,865.82
12/31/89 ...... 15,297.10 16,062.64 16,161.01 13,845.09
16,129.28 16,936.47 15,674.57 14,490.77
17,445.65 18,318.71 16,660.50 16,131.28
12,013.74 12,614.97 14,371.35 11,908.70
12/31/90 ...... 13,603.70 14,284.50 15,659.02 13,824.22
18,388.76 19,309.03 17,934.27 17,661.88
16,241.62 17,054.43 17,893.03 16,312.26
18,634.15 19,566.70 18,850.30 18,240.11
12/31/91 ...... 21,072.75 22,127.34 20,429.96 20,558.91
21,764.86 22,854.08 19,913.08 20,700.57
19,561.05 20,539.98 20,291.43 19,323.89
19,633.91 20,616.48 20,930.61 20,193.68
12/31/92 ...... 24,721.09 25,958.25 21,983.42 23,894.90
25,062.77 26,317.02 22,944.09 24,441.31
28,198.13 29,609.29 23,056.52 26,638.46
32,559.49 34,188.92 23,651.38 29,376.74
12/31/93 ...... 33,404.16 35,075.86 24,200.09 29,709.51
34,871.65 36,616.79 23,282.91 30,321.10
32,185.39 33,796.10 23,380.69 28,428.60
41,761.41 43,851.35 24,524.01 32,847.74
12/31/94 ...... 45,195.94 47,457.76 24,519.11 34,775.85
51,551.62 54,131.51 26,907.27 37,162.91
66,897.59 70,245.47 29,476.91 44,648.98
75,724.92 79,514.57 31,820.32 51,750.32
12/31/95 ...... 64,804.29 68,047.42 33,735.91 48,839.07
61,326.84 64,395.94 35,547.53 49,141.77
61,415.25 64,488.78 37,140.06 52,546.25
65,187.40 68,449.70 38,287.68 55,817.24
12/31/96 ...... 72,539.59 76,169.81 41,480.88 58,471.33
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 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.
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4
<PAGE>
SELIGMAN
COMMUNICATIONS AND
INFORMATION FUND, INC.
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION THREE ONE FIVE 10 INCEPTION
4/22/96 MONTHS YEAR YEARS YEARS 5/3/93
---------- ---------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge n/a 6.01% 6.60% 26.80% 21.92% n/a
Without Sales Charge n/a 11.28 11.94 28.05 22.51 n/a
CLASS B
With 5% CDSL 5.30% 6.07 n/a n/a n/a n/a
Without CDSL 10.30 11.07 n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a 10.07 10.07 n/a n/a n/a
Without CDSL n/a 11.07 11.07 n/a n/a 33.16%
S&P 500** 15.00+ 8.34 22.96 15.22 15.27 18.29++
LIPPER SCIENCE &
TECHNOLOGY AVERAGE*** 7.37+ 4.75 19.72 23.22 19.30 27.80++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE
DECEMBER 31, 1996 SEPTEMBER 30, 1996 JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
----------------- ------------------ ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
CLASS A $23.51 $22.12 $20.84 $20.81 $21.99
CLASS B 22.62 21.36 20.16 21.51+++ n/a
CLASS D 22.61 21.35 20.16 20.16 21.35
</TABLE>
CAPITAL GAIN INFORMATION
FOR YEAR ENDED DECEMBER 31, 1996
CAPITAL GAIN
-----------------------------------------------------
PAID REALIZED UNREALIZED0
---- -------- -----------
CLASS A $1.055 $1.088 $2.532
CLASS B 1.055 1.088 2.532
CLASS D 1.055 1.088 2.532
A fund that concentrates its investments in one economic sector may be subject
to greater share price fluctuations than a more diversified fund.
The performances of Class B and D shares will be greater than or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders.
- --------------------------------------------------------------------------------
* Return figures reflect any change in price per share and assume the
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
0.25% Administration, Shareholder Services and Distribution Plan after
January 1, 1993, only. Returns for Class B shares are calculated with and
without the effect of the maximum 5% contingent deferred sales load
("CDSL"), charged only on certain redemptions made within one year of the
date of purchase, declining to 1% in the sixth year and 0% thereafter.
Returns for Class D shares are calculated with and without the effect of
the 1% CDSL, charged only on redemptions made within one year of the date
of purchase. The rates of return will vary and the principal value of an
investment will fluctuate. Shares, if redeemed, may be worth more or less
than their original cost. Past performance is not indicative of future
investment results.
** The S&P 500 is an unmanaged index that assumes reinvestment of estimated
dividends, and does not reflect fees and sales charges. Investors may not
invest directly in an index.
*** The Lipper Science & Technology Average is an average of 40 science and
technology funds and does not reflect sales charges that may be incurred
in connection with purchases or sales. The monthly performance is used in
the Performance Comparison Chart and the Investment Results per Share.
Investors may not invest directly in an average.
+ From April 30, 1996.
++ From April 30, 1993.
+++ As of April 22, 1996.
0 Represents the per share amount of net unrealized appreciation of
portfolio securities as of December 31, 1996.
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5
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SELIGMAN
COMMUNICATIONS AND
INFORMATION FUND, INC.
FEDERAL TAX STATUS OF 1996 GAIN DISTRIBUTION FOR TAXABLE ACCOUNTS
The distribution of $1.055 per share, consisting of $0.861 from net long-term
gain and $0.194 from net short-term gain, realized on investments from November
1995 to October 1996, was paid on November 22, 1996, to Class A, B, and D
shareholders.
The long-term gain distribution is designated a "capital gain dividend" for
federal income tax purposes and is taxable to shareholders in 1996 as a
long-term gain from the sale of capital assets, no matter how long you may have
owned your shares, or whether the distribution was received in shares or in
cash. However, if shares on which a capital gain distribution was received are
subsequently sold, and such shares have been held for six months or less from
the date of purchase, any loss on the sale would be treated as long-term to the
extent that it offsets the long-term gain distribution. The net short-term gain
is taxable as ordinary income whether paid to you in shares or in cash.
If the distribution was received in shares, the per share cost basis for
federal income tax purposes is $22.45 for Class A shares, and $21.61 and $21.60
for Class B and D shares, respectively.
A year-end statement of account showing activity for 1996, a Form 1099-DIV,
and if applicable, a Form 1099-B has been mailed to each shareholder. Form
1099-B shows the proceeds of any redemptions paid to the shareholder during the
year and reported to the Internal Revenue Service as required by federal
regulations. Form 1099-DIV shows the amount of the distribution from gain on
investments paid to the shareholder during the year.
DIVERSIFICATION OF ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
----------------
ISSUES COST VALUE 1996 1995
-------- ------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
NET CASH AND SHORT-TERM HOLDINGS 1 $ 17,540,783 $ 17,540,783 0.5 1.6
--- -------------- -------------- ----- -----
COMMON STOCKS:
Broadcasting -- -- -- -- 1.7
Communications Infrastructure 10 525,090,188 593,616,375 18.1 9.1
Computer Hardware/Peripherals 14 669,944,554 840,106,250 25.7 14.5
Computer Software 16 450,743,918 482,383,437 14.7 16.0
Contract Manufacturing/Circuit Boards 5 78,044,187 89,258,750 2.7 2.9
Information Services 4 116,537,811 114,606,250 3.5 --
Internet/On Line 1 66,536,997 59,850,000 1.8 --
Media 4 114,433,325 116,446,000 3.6 --
Publishing -- -- -- -- 1.8
Semiconductors 12 506,973,590 646,393,750 19.8 31.9
Semiconductor Capital Equipment 8 290,006,488 243,353,750 7.4 18.1
Telecommunications 2 24,747,110 19,493,750 0.6 --
Miscellaneous 2 56,615,876 50,450,000 1.6 2.4
--- -------------- -------------- ----- -----
78 2,899,674,044 3,255,958,312 99.5 98.4
--- -------------- -------------- ----- -----
NET ASSETS 79 $2,917,214,827 $3,273,499,095 100.0 100.0
=== ============== ============== ===== =====
</TABLE>
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6
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SELIGMAN
COMMUNICATIONS AND
INFORMATION FUND, INC.
LARGEST PORTFOLIO CHANGES
DURING PAST THREE MONTHS
SHARES
-------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/96
- --------- --------- ---------
C-Cube Microsystems ...................... 1,300,000 1,300,000
Computer Associates
International .......................... 950,000 950,000
Computer Sciences ........................ 600,000 600,000
Compuware ................................ 950,000 950,000
Electronics for Imaging .................. 450,000 900,000
Etec Systems ............................. 850,000 1,150,000
Evergreen Media (Class A) ................ 1,632,000 1,632,000
Gateway 2000 ............................. 650,000 1,450,000
Structural Dynamics
Research ............................... 1,400,000 2,600,000
U.S. Robotics ............................ 600,000 1,300,000
SHARES
-------------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/96
- ---------- --------- ---------
Analog Devices ........................... 1,000,000 --
Bay Networks ............................. 1,500,000 --
Hadco .................................... 510,000 540,000
Informix ................................. 1,300,000 --
Microsoft ................................ 375,000(1) 150,000
News Corp. (ADRs-Voting
Preference Shares) ..................... 2,000,000 --
Oracle Systems ........................... 1,200,000 --
Western Digital .......................... 500,000 --
Xerox .................................... 900,000 --
Xilinx ................................... 2,400,000 --
Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
(1)Includes 175,000 shares received as a result of a 3-for-2 stock split.
LARGEST PORTFOLIO HOLDINGS
ATDECEMBER 31, 1996
SECURITY VALUE
- ---------- ------------
Intel ...................................................... $170,218,750
EMC ........................................................ 165,625,000
Cisco Systems .............................................. 140,112,500
Seagate Technology ......................................... 110,600,000
3Com ....................................................... 95,306,250
U.S. Robotics .............................................. 93,681,250
Parametric Technology ...................................... 87,443,750
Lattice Semiconductor ...................................... 87,162,500
Maxim Integrated Products .................................. 82,293,750
Gateway 2000 ............................................... 77,665,625
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7
<PAGE>
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
SHARES VALUE
------ -----
COMMON STOCKS 99.5%
COMMUNICATIONS
INFRASTRUCTURE 18.1%
ASPECT TELECOMMUNICATIONS*
Automated call
distribution equipment 151,000 $ 9,550,750
CABLETRON SYSTEMS*
Manufacturer of computer
interconnection equipment 2,100,000 69,825,000
CIDCO*
Caller identification systems
and telephones 1,500,000 26,062,500
CISCO SYSTEMS*
Computer network routers 2,200,000 140,112,500
ECI TELECOMMUNICATIONS
Provider of digital
telecommunications and data
transmissions systems 2,250,000 47,671,875
GLENAYRE TECHNOLOGIES*
Manufacturer of paging
infrastructure equipment 2,000,000 43,125,000
NETWORK GENERAL*
Developer of network
diagnostic software 1,500,000 45,281,250
OAK INDUSTRIES*
Manufacturer of cable
television connectors 1,000,000 23,000,000
3COM*
Supplier of adapter cards, hubs,
and routers for local area
computer networks 1,300,000 95,306,250
U.S. ROBOTICS*
Modems and remote access
routers 1,300,000 93,681,250
--------------
593,616,375
--------------
COMPUTER HARDWARE/
PERIPHERALS 25.7%
ADAPTEC*
Computer input/output
systems 800,000 32,050,000
COMPAQ COMPUTER*
Global PC manufacturer 900,000 66,825,000
ELECTRONICS FOR IMAGING*
Peripherals for color copiers 900,000 73,687,500
EMC*
Enterprise storage equipment 5,000,000 165,625,000
GATEWAY 2000*
Manufacturer and direct
marketer of personal computers 1,450,000 77,665,625
IN FOCUS SYSTEMS*
Liquid crystal display systems 700,000 15,006,250
KOMAG*
Manufacturer of thin film
magnetic media for hard-
disk drives 2,550,000 69,009,375
LEXMARK INTERNATIONAL GROUP (CLASS A)*
Manufacturer of laser and
inkjet printers and cartridges 2,650,000 73,206,250
MYLEX*
Data storage management
devices 1,750,000 21,875,000
QUANTUM*
Storage products for computer
platforms 600,000 17,100,000
READ-RITE*
Manufacturer of thin film
magnetic read-write heads
for hard disk drives 400,000 10,050,000
SEAGATE TECHNOLOGY*
Storage products for computer
platforms 2,800,000 110,600,000
STORAGE TECHNOLOGY*
Enterprise storage equipment 1,450,000 69,056,250
VERIFONE*
Transaction automation systems
and Internet commerce solutions 1,300,000 38,350,000
--------------
840,106,250
--------------
COMPUTER SOFTWARE 14.7%
ACTIVISION*
Entertainment software 1,000,000 12,625,000
ANSYS*
Engineering analysis software 850,000 11,368,750
APPLIX*
Applixware family of software
applications for "real time"
decision making 225,000 4,879,687
BMC SOFTWARE*
Developer of utility software 800,000 33,250,000
CADENCE DESIGN SYSTEMS*
Electronic design
automation software 1,400,000 55,650,000
COMPUTER ASSOCIATES INTERNATIONAL*
Software utilities and databases 950,000 47,262,500
COMPUWARE*
Mainframe software and
consulting services 950,000 47,618,750
GEMSTAR INTERNATIONAL*
VCR programming software 345,000 5,994,375
INFINITY FINANCIAL TECHNOLOGY*
Client/server software for
financial trading 200,000 3,400,000
MENTOR GRAPHICS*
Electronic design
automation software 3,400,000 33,362,500
MICROSOFT*
Personal computer software 150,000 12,403,125
PARAMETRIC TECHNOLOGY*
Developer of mechanical
design software 1,700,000 87,443,750
PURE ATRIA*
Automated Software Quality
(ASQ) diagnostic products 400,000 9,825,000
- -----
8
<PAGE>
SHARES VALUE
------ -----
COMPUTER SOFTWARE (Continued)
STRUCTURAL DYNAMICS RESEARCH*
Developer of mechanical
design software 2,600,000 $ 51,512,500
SYNOPSYS*
Integrated circuit
design software 1,200,000 55,200,000
3DO*
Developer of video game
software and game platforms 2,200,000 10,587,500
--------------
482,383,437
--------------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS 2.7%
ADFLEX SOLUTIONS*
Flexible circuit boards 750,000 7,500,000
ALTRON*
Printed circuit boards 900,000 19,012,500
HADCO*
Printed circuit boards 540,000 26,358,750
PRAEGITZER INDUSTRIES*
Printed circuit boards 500,000 5,062,500
SCI SYSTEMS*
Assembler of electronic
circuit boards 700,000 31,325,000
--------------
89,258,750
--------------
INFORMATION SERVICES 3.5%
COMPUTER SCIENCES*
Computer services 600,000 49,275,000
ELECTRONIC DATA SYSTEMS
Computer systems and services 700,000 30,275,000
FIRST USA PAYMENTECH*
Credit card transaction
processing services 550,000 18,631,250
METROMAIL*
Direct mail marketing
information services 900,000 16,425,000
--------------
114,606,250
--------------
INTERNET/ON LINE 1.8%
AMERICA ONLINE*
Interactive/Internet services 1,800,000 59,850,000
--------------
MEDIA 3.6%
COX RADIO*
Operator of radio stations 900,000 15,750,000
EVERGREEN MEDIA (CLASS A)*
Operator of radio stations 1,632,000 40,596,000
INFINITY BROADCASTING (CLASS A)*
Operator of radio stations 1,700,000 57,162,500
YOUNG BROADCASTING (CLASS A)*
Network-affiliated TV stations 100,000 2,937,500
--------------
116,446,000
--------------
SEMICONDUCTORS 19.8%
ADVANCED MICRO DEVICES*
Microprocessors and
FLASH memory circuits 600,000 15,450,000
ALTERA*
Field programmable logic
devices 300,000 21,806,250
ATMEL*
Manufacturer of non-volatile
memory circuits 1,200,000 39,900,000
C-CUBE MICROSYSTEMS*
Video compression circuits 1,300,000 48,018,750
ESS TECHNOLOGY*
Mixed-signal semiconductor
audio solutions 1,425,000 40,078,125
INTEL
Producer of microprocessor
circuits for PCs 1,300,000 170,218,750
INTERNATIONAL RECTIFIER*
Power semiconductors 2,100,000 32,025,000
LATTICE SEMICONDUCTOR*
Programmable logic devices 1,900,000 87,162,500
MAXIM INTEGRATED PRODUCTS*
Linear and mixed-signal
integrated circuits 1,900,000 82,293,750
MICROCHIP TECHNOLOGY*
Field programmable
microcontrollers 1,325,000 67,409,375
S3*
Supplier of multi-media
acceleration solutions for PCs 2,350,000 38,334,375
TOWER SEMICONDUCTOR
Semiconductor foundry services 350,000 3,696,875
--------------
646,393,750
--------------
SEMICONDUCTOR CAPITAL
EQUIPMENT 7.4%
ASYST TECHNOLOGIES*
Miniature clean-room
environment devices for the
manufacture of silicon wafers 500,000 8,500,000
CREDENCE SYSTEMS*
Semiconductor test equipment 1,800,000 35,887,500
ETEC SYSTEMS*
Photomask manufacturing
systems 1,150,000 43,412,500
FUSION SYSTEMS*
Photo-resist strip systems 590,000 12,685,000
INTEGRATED PROCESS EQUIPMENT*
Chemical mechanical
planarization equipment 400,000 7,175,000
NOVELLUS SYSTEMS*
Chemical vapor
deposition equipment 1,000,000 54,187,500
TENCOR INSTRUMENTS*
Wafer inspection devices 2,100,000 55,518,750
ULTRATECH STEPPER*
Photolithography systems
for the manufacture of
semiconductors and thin
film recording heads 1,100,000 25,987,500
--------------
243,353,750
--------------
-----
9
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued)
DECEMBER 31, 1996
SHARES VALUE
------ -----
TELECOMMUNICATIONS 0.6%
METROMEDIA INTERNATIONAL GROUP*
Wireless cable TV and
telephone services in
Eastern Europe 1,000,000 $ 9,875,000
MILLICOM INTERNATIONAL CELLULAR*
Cellular telephone service in
developing countries 300,000 9,618,750
--------------
19,493,750
--------------
MISCELLANEOUS 1.6%
COGNEX*
Manufacturer of machine
vision systems 1,600,000 29,500,000
ELECTRO SCIENTIFIC INDUSTRIES*
Capacitor production systems
and memory chip repair devices 800,000 20,950,000
--------------
50,450,000
--------------
VALUE
-------
TOTAL COMMON STOCKS
(Cost $2,899,674,044) $3,255,958,312
SHORT-TERM HOLDINGS 1.7%
(Cost $56,000,000) 56,000,000
--------------
TOTAL INVESTMENTS 101.2%
(Cost $2,955,674,044) 3,311,958,312
OTHER ASSETS
LESS LIABILITIES (1.2)% (38,459,217)
--------------
NET ASSETS 100.0% $3,273,499,095
==============
- --------------------------------------------------------------------------------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
- -----
10
<PAGE>
================================================================================
STATEMENT OF ASSETS
AND LIABILITIES
DECEMBER 31, 1996
ASSETS:
Investments, at value:
Common stocks (cost $2,899,674,044) $3,255,958,312
Short-term holdings (cost $56,000,000) 56,000,000 $ 3,311,958,312
--------------
Cash 22,895,875
Receivable for Capital Stock sold 8,597,025
Receivable for securities sold 12,697,424
Expenses prepaid to shareholder service agent 1,213,991
Receivable for interest and dividends 55,111
Other 85,201
--------------
TOTAL ASSETS 3,357,502,939
--------------
LIABILITIES:
Payable for securities purchased 65,404,198
Payable for Capital Stock repurchased 13,373,204
Accrued expenses, taxes, and other 5,226,442
--------------
TOTAL LIABILITIES 84,003,844
--------------
NET ASSETS $3,273,499,095
==============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($.10 par value; 1,000,000,000 shares
authorized; 140,690,745 shares outstanding):
Class A $ 10,270,199
Class B 534,336
Class D 3,264,540
Additional paid-in capital 2,839,708,388
Accumulated net investment loss (102,022)
Undistributed net realized gain 63,539,386
Net unrealized appreciation of investments 356,284,268
--------------
NET ASSETS $3,273,499,095
==============
NET ASSET VALUE PER SHARE:
CLASS A ($2,414,671,963 / 102,701,987 SHARES) $23.51
======
CLASS B ($120,848,251 / 5,343,362 SHARES) $22.62
======
CLASS D ($737,978,881 / 32,645,396 SHARES) $22.61
======
- --------------
See Notes to Financial Statements.
-----
11
<PAGE>
================================================================================
STATEMENT OF
OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 1996
INVESTMENT INCOME:
Interest $ 10,694,818
Dividends 4,208,864
Other 66,502
------------
TOTAL INVESTMENT INCOME $ 14,970,184
EXPENSES:
Management fee 25,710,954
Distribution and service fees 12,519,068
Shareholder account services 11,841,402
Shareholder reports and communications 1,449,324
Registration 896,964
Custody and related services 741,000
Shareholders' meeting 500,353
Auditing and legal fees 124,893
Directors' fees and expenses 62,253
Miscellaneous 78,411
------------
TOTAL EXPENSES 53,924,622
------------
NET INVESTMENT LOSS (38,954,438)
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments 153,061,653
Net change in unrealized appreciation
of investments 238,743,809
------------
NET GAIN ON INVESTMENTS 391,805,462
------------
INCREASE IN NET ASSETS FROM OPERATIONS $352,851,024
============
- -------------
See Notes to Financial Statements.
- ----
12
<PAGE>
================================================================================
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (38,954,438) $ (28,171,024)
Net realized gain on investments 153,061,653 286,492,658
Net change in unrealized appreciation of investments 238,743,809 57,543,372
--------------- ---------------
Increase in net assets from operations 352,851,024 315,865,006
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A (105,584,145) (154,214,314)
Class B (4,686,401) --
Class D (33,293,284) (50,053,285)
--------------- ---------------
Decrease in net assets from distributions (143,563,830) (204,267,599)
--------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995
--------------- ---------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sale of shares:
Class A 34,422,498 76,561,941 749,537,882 1,737,333,556
Class B 5,362,644 -- 113,021,809 --
Class D 11,596,458 25,510,043 243,586,540 562,173,487
Exchanged from associated Funds:
Class A 37,176,372 13,483,088 814,655,013 330,495,561
Class B 94,188 -- 1,982,642 --
Class D 3,580,521 2,341,411 75,837,958 56,510,269
Shares issued in payment of gain distributions:
Class A 4,368,020 6,353,670 98,062,037 142,362,980
Class B 201,358 -- 4,351,357 --
Class D 1,434,633 2,144,837 30,988,033 46,674,570
------------- ------------- -------------- --------------
Total 98,236,692 126,394,990 2,132,023,271 2,875,550,423
------------- ------------- -------------- --------------
Cost of shares repurchased:
Class A (21,671,916) (11,847,319) (474,588,279) (290,139,169)
Class B (126,718) -- (2,780,813) --
Class D (7,424,660) (3,422,232) (156,046,056) (83,392,097)
Exchanged into associated Funds:
Class A (39,839,103) (14,791,476) (874,567,022) (372,155,193)
Class B (188,110) -- (4,005,480) --
Class D (5,088,386) (3,918,130) (105,848,538) (95,078,586)
------------- ------------- -------------- --------------
Total (74,338,893) (33,979,157) (1,617,836,188) (840,765,045)
------------- ------------- -------------- --------------
Increase in net assets from capital
share transactions 23,897,799 92,415,833 514,187,083 2,034,785,378
============= ============= -------------- --------------
Increase in net assets 723,474,277 2,146,382,785
NET ASSETS:
Beginning of year 2,550,024,818 403,642,033
-------------- --------------
End of year (including accumulated net
investment loss o $102,022 and
$84,925, respectively) $3,273,499,095 $2,550,024,818
============== ==============
</TABLE>
- ----------------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
-----
13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. 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 eighteen months of purchase. Class B shares
are sold without an initial sales charge but are subject to a distribution fee
of up to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSL,
if applicable, of 5% on redemptions in the first year after purchase, declining
to 1% in the sixth year and 0% thereafter. Class B shares will automatically
convert to Class A shares on the last day of the month that precedes the eighth
anniversary of their date of purchase. Class D shares are sold without an
initial sales charge but are subject to a distribution fee of up to 0.75% and a
service fee of up to 0.25% on an annual basis, and a CDSL of 1% imposed on
certain redemptions made within one year of purchase. The three classes of
shares represent interests in the same portfolio of investments, have the same
rights and are generally identical in all respects except that each class bears
its separate distribution and certain other class expenses, and has exclusive
voting rights with respect to any matter on which a separate vote of any class
is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in 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, a mean of bid and
asked prices. Short-term holdings maturing in 60 days or less are valued at
amortized cost.
b. There is no provision for federal income or excise tax. The Fund has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
c. 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. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares
based upon the relative value of shares of each class. Class-specific
expenses, which include distribution and service fees and any other items
that are specifically attributed to a particular class, are charged
directly to such class. For the year ended December 31, 1996, distribution
and service fees were the only class-specific expenses.
e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gains may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, or realized capital gain 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 portfolio securities, excluding US Government
obligations and short-term investments, for the year ended December 31, 1996,
amounted to $3,675,226,964 and $3,320,787,027, respectively.
At December 31, 1996, the cost of investments for federal income tax
purposes was $2,970,854,990 and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $577,562,542 and $236,459,220,
respectively.
4. At December 31, 1996, the Fund owned short-term investments which matured in
less than 7 days.
5. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all directors of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the Manager is
paid by the Manager. Effective February 8, 1996, the Manager receives a fee,
calculated daily and payable monthly, equal to 0.90% 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. Prior to February 8, 1996, the
management fee rate was 0.75% per annum of the Fund's average daily net assets.
The management fee reflected in the Statement of Operations represents 0.89% per
annum of Fund's average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $3,145,037 from sales of Class A shares, after commissions of
$25,669,252 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
- ----
14
<PAGE>
- --------------------------------------------------------------------------------
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the year ended December 31,
1996, fees incurred aggregated $5,387,056 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 share only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of up to 0.75% on an
annual basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provided funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the year ended December 31, 1996, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $432,778 and $6,699,234, respectively. The Distributor is
entitled to retain any CDSL imposed on certain redemptions of Class D shares
occurring within one year of purchase. For the year ended December 31, 1996,
such charges amounted to $581,998.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B share distribution fees retained by the Distributor for the year
ended December 31, 1996, was $287,656.
Seligman Services, Inc., an affiliate of the Manager, is eligible to
receive commissions from certain sales of shares of the Fund, as well as
distribution and service fees pursuant to the Plan. For the year ended December
31, 1996, Seligman Services, Inc. received commissions of $772,408 from the
sales of shares of the Fund. Seligman Services, Inc. also received distribution
and service fees of $714,490, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $11,833,406 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.
Fees of $60,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in directors'
fees and expenses and the accumulated balance thereof at December 31, 1996, of
$102,022 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. Effective July 31, 1996, the Fund entered into a $280 million committed line
of credit facility with a group of banks. Borrowings pursuant to the credit
facility are subject to interest at a rate equal to the federal funds rate plus
0.75% 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. The
Fund made no borrowings during the period ended December 31, 1996.
-----
15
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from each Class's beginning net asset value
to the ending net asset value so that they can understand what effect the
individual items have on their investment assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item, as disclosed in the financial statements,
to their equivalent per share amounts. The total return based on net asset value
measures each Class's performance assuming investors purchased Fund shares at
net asset value as of the beginning of the period, reinvested dividends and
capital gains paid at net asset value, and then sold their shares at the net
asset value per share on the last day of the period. The total return
computations do not reflect any sales charges investors may incur in purchasing
or selling shares of the Fund. The total returns for periods of less than one
year are not annualized. Average commission rate paid represents the average
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 CLASS B CLASS D
----------------------------------------------- --------- -------------------------
YEAR ENDED DECEMBER 31, 4/22/96* YEAR ENDED DECEMBER 31, 5/3/93*
----------------------------------------------- TO ------------------------- TO
19960 19950 19940 1993 1992 12/31/960 19960 19950 19940 12/31/93
------ ------ ------ ------ ------ --------- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $21.99 $16.64 $13.43 $12.30 $11.57 $21.51 $21.35 $16.31 $13.32 $12.24
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment loss (0.26) (0.33) (0.19) (0.14) (0.12) (0.28) (0.40) (0.50) (0.33) (0.05)
Net realized and
unrealized
investment gain 2.84 7.59 4.86 4.37 2.09 2.45 2.72 7.45 4.78 4.23
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Increase from investment
operations 2.58 7.26 4.67 4.23 1.97 2.17 2.32 6.95 4.45 4.18
Distributions from
net gain realized (1.06) (1.91) (1.46) (3.10) (1.24) (1.06) (1.06) (1.91) (1.46) (3.10)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase in net
asset value 1.52 5.35 3.21 1.13 0.73 1.11 1.26 5.04 2.99 1.08
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $23.51 $21.99 $16.64 $13.43 $12.30 $22.62 $22.61 $21.35 $16.31 $13.32
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED
ON NET ASSET VALUE: 11.94% 43.39% 35.30% 35.13% 17.31% 10.30% 11.07% 42.37% 33.94% 34.89%
RATIOS/SUPPLEMENTAL
DATA:
Expenses to average net
assets 1.68% 1.61% 1.65% 1.63% 1.51% 2.44%+ 2.43% 2.37% 2.50% 2.56%+
Net investment loss to
average net assets (1.16)% (1.31)% (1.27)% (1.39)% (1.18)% (1.96)%+ (1.91)% (2.07)% (2.20)% (2.33)%+
Portfolio turnover 121.32% 65.77% 104.08% 137.10% 110.42% 121.32%++ 121.32% 65.77% 104.08% 137.10%+++
Average commission
rate paid $.0531 $.0531++ $.0531
Net assets, end
of period
(000s omitted) $2,414,672 $1,940,693 $307,542 $92,987 $57,001 $120,848 $737,979 $609,332 $96,100 $7,833
</TABLE>
- ------------------
* Commencement of offering of shares.
0 Per share amounts for the periods ended December 31, 1996, 1995, and 1994,
are calculated based on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
See Notes to Financial Statements.
- ----
16
<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 December 31, 1996, the related statements of operations for the year
then ended and of changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, 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 December 31, 1996, the results
of its operations, the changes in its net assets, and the financial highlights
for the respective stated periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 31, 1997
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17
<PAGE>
BOARD OF
DIRECTORS
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FRED E. BROWN
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
DIRECTOR, NYNEX
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2
CHAIRMAN AND CEO, Kerr-McGee Corporation
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
SENIOR PARTNER, Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum Corporation
BETSY S. MICHEL 2
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
PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
DIRECTOR, Public Service Enterprise Group
JAMES Q. RIORDAN 3
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
RONALD T. SCHROEDER 1
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
ROBERT L. SHAFER 3
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 AND MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
CHAIRMAN AND PRESIDENT, Seligman Data Corp.
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Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
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18
<PAGE>
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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
- --------------------------------------------------------------------------------
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
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19
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[Logo]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF SHAREHOLDERS OR THOSE
WHO HAVE RECEIVED THE OFFERING PROSPECTUS COVERING SHARES OF CAPITAL STOCK OF
SELIGMAN 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.
[LOGO]
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