SELIGMAN
- --------------------------------------------------------------------------------
COMMUNICATIONS
AND INFORMATION FUND,
INC.
[GRAPHICS LOGO]
MID-YEAR REPORT
JUNE 30, 1998
SEEKING CAPITAL GAIN
BY INVESTING IN
COMPANIES OPERATING
IN ALL ASPECTS OF
COMMUNICATIONS,
INFORMATION, AND
RELATED INDUSTRIES
[logo]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
[photo]
JAMES, JESSE, AND JOSEPH SELIGMAN, 1870
TIMES CHANGE...
Established in 1864, Seligman's history of providing financial services has been
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 134 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions for these changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest, diversified, publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance investment companies could have in building wealth for individual
investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including funds that focus on technology stocks, municipal
bonds, and international securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
TABLE OF CONTENTS
To the Shareholders ................................... 1
Interview With Your Portfolio Manager ................. 2
Performance Overview .................................. 5
Portfolio Overview .................................... 7
Portfolio of Investments .............................. 9
Statement of Assets and Liabilities ................... 11
Statement of Operations ............................... 12
Statements of Changes in Net Assets ................... 13
Notes to Financial Statements ......................... 14
Financial Highlights .................................. 17
Report of Independent Auditors AND Additional
Information ......................................... 19
Board of Directors AND Executive Officers ............. 20
Glossary of Financial Terms ........................... 21
<PAGE>
TO THE SHAREHOLDERS
For the first six months of 1998, Seligman Communications and Information Fund
posted a total return of 10.62% based on the net asset value of Class A shares.
The Fund's performance lagged the 20.98% total return of its peers, as measured
by the Lipper Science & Technology Funds Average. It also lagged the 17.71%
total return of the Standard & Poor's 500 Composite Stock Price Index (S&P 500).
Seligman Communications and Information Fund's underperformance in the first
half of the year was due mainly to its heavy weighting in small-capitalization
stocks. The growing impact of the Asian financial crisis led investors to favor
large-capitalization stocks, leaving small-cap stocks on the sidelines. The
Fund's performance was also compromised by its holdings in companies that
manufacture semiconductors, electronics capital equipment, and contract
manufacturing. These companies experienced significant stock price declines due
to unfavorable business conditions arising from the Asian financial crisis.
However, many technology companies in your Fund's portfolio have little exposure
to Asia, so we are optimistic regarding the Fund's long-term appreciation
potential and anticipate more positive returns in the second half of the year.
In the first half of 1998, the US economy continued to grow, bringing the
economic expansion into its eighth year. Domestic companies benefited from low
inflation, steady wage increases, strong consumer spending, a tight labor
market, and healthy consumer confidence. Toward the end of the period, however,
some economic indicators suggested the start of a deceleration in the pace of
economic growth. This expectation, combined with the effects of the Asian
financial crisis, heightened investor demand for "safe haven" equities. Both
domestic and overseas investors flocked into well-known, liquid,
large-capitalization growth stocks, which have a history of providing stable
earnings and dividend growth.
While the Asian financial crisis fueled the "flight to quality" into
large-capitalization growth stocks, it negatively impacted corporate profits in
some sectors of the technology industry. The crisis depressed demand for
consumer products, infrastructure equipment, and high-tech components throughout
Asia. US-based technology companies had fewer export opportunities, and
therefore lower-than-anticipated earnings. Finally, negative investor sentiment
pressured stock prices of those technology companies with significant
manufacturing infrastructure in Asia, even in areas of stable demand and sound
economic fundamentals.
As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, the Seligman Investment Companies, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that there will be no disruption in the
services provided by your Fund.
Thank you for your continued interest in Seligman Communications and Information
Fund. We look forward to serving your investment needs in the years to come. A
discussion with your Portfolio Manager, the Fund's portfolio of investments, and
financial statements follow this letter.
By order of the Board of Directors,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
------------------
Brian T. Zino
President
July 31, 1998
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. HOW DID SELIGMAN COMMUNICATIONS AND INFORMATION FUND PERFORM IN THE FIRST
HALF OF 1998?
A. For the first six months of 1998, Seligman Communications and Information
Fund posted a total return of 10.62% based on the net asset value of Class A
shares. This return lagged the 20.98% total return of the Fund's peers, as
measured by the Lipper Science & Technology Funds Average, and the 17.71%
total return of the S&P 500.
Q. WHAT FACTORS INFLUENCED THE FUND'S INVESTMENT RESULTS?
A. The strong economy of the first six months provided a solid environment for
many US companies to reinvest earnings, improve credit, and strengthen their
core businesses to position themselves for even stronger future growth.
However, the Asian financial crisis began to impact corporate profits in
many sectors of the technology industry. The crisis depressed demand
throughout Asia for high-tech equipment, as well as many other consumer
products. US companies that sell into these markets suffered from
lower-than-anticipated earnings, and many overseas companies flooded the US
with inexpensive imports.
Additionally, economic indicators began to suggest the start of a deceleration
in the pace of economic growth. The expectation of slower growth, combined with
fears about the effects of the Asian financial crisis, heightened investor
demand for well-known, liquid, large-capitalization growth stocks, which have a
history of providing stable earnings and dividends. The market effectively
became two-tiered, as the 30 largest companies in the S&P 500 accounted for more
than half of its gain. Overall, year-to-date stock performance has been highly
variable and dependent on specific industries and market capitalizations.
The portfolio holds many large-capitalization stocks and maintains significant
software and telecommunications industry investments, which did very well. On
the other hand, the portfolio's overall performance was compromised by its
exposure to small-cap stocks, and by its investments in semiconductors,
electronics capital equipment, and contract manufacturing, which experienced
significant stock price declines due to falling demand and unfavorable business
conditions.
SELIGMAN TECHNOLOGY TEAM
Shanean Austin (Administrative Assistant), Storm Boswick, Paul Krieger, Patrick
Renda, Lawrence Rosso, Paul H. Wick (Portfolio Manager), Kei Yamamoto
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.
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. HOW DID THE ASIAN FINANCIAL CRISIS IMPACT CERTAIN TECHNOLOGY SECTORS IN THE
FIRST HALF OF 1998?
A. The financial crisis in Asia and the continuing recession in Japan clearly
reduced the unit growth rate of the personal computer (PC) market, and
negatively impacted corporate profits of companies in other technology
sectors. This caused some of the companies held by the Fund to suffer from
lower-than-anticipated corporate earnings. Depressed Asian markets and
subsequent reduced sales have been cited frequently in disappointing results
reported by US-based companies in the semiconductor, electronics capital
equipment, mechanical design software, and wireless equipment industries.
Consequent negative investor sentiment also pressured the stock prices of
those companies with significant manufacturing infrastructure in Asia, even
in areas where demand was stable and the economic fundamentals were sound.
Q. WHAT IS THE STATE OF THE PC MARKET?
A. PC unit sales growth was disappointing, as sales grew by only 10% in the
first six months of 1998, compared to 14% in the same period of 1997, and
18% in the first six months of 1996. Unit growth has decelerated despite the
fact that the average price of PC desktops has fallen from $2,700 in 1995 to
$1,600 - $1,700 today. Price declines have been driven by rapidly falling
component prices, particularly in memory, disk drives, and monitors. These
trends have clearly pressured the earnings of component suppliers, PC
contract manufacturers, and the PC manufacturers themselves.
Q. HOW DID THE STATE OF THE SEMICONDUCTOR MARKET AFFECT THE FUND'S PERFORMANCE
IN THE FIRST HALF?
A. The semiconductor industry today is suffering through its worst recession
ever. Prices for DRAM (dynamic random access memory) chips have fallen by
98% in price per bit terms in the last two and one-half years, and overall
DRAM industry revenues are expected to drop for an unprecedented third year
in a row. In fact, analysts calculate that the DRAM industry will lose an
estimated $9 billion on total sales of $14 billion for the year.
While the rest of the semiconductor industry has fared far better than the
memory segment, the Asian financial crisis and slowing PC unit sales have
taken a toll. In general, demand for commodity parts like capacitors has
fallen the most, while demand for more proprietary products like
programmable logic, high performance analog, and microprocessors has been
less adversely affected.
However, the electronics capital equipment industry has endured the worst
recession of any segment of the portfolio. Over the span of the last nine
months leading up to June 30, order rates fell 50% throughout the industry.
Although Seligman Communications and Information Fund reduced its
semiconductor and related equipment exposure late in 1997, and further in
the first half of this year, the Fund was still negatively impacted by the
semiconductor recession. Currently, the Fund has roughly 7% invested in
semiconductors and 10% in electronics capital equipment. We maintained these
holdings because we believe the stocks represent good value, and possess
strong opportunities for appreciation, despite current adverse business
conditions.
Q. WHAT AREAS OF THE FUND PERFORMED STRONGLY IN THE FIRST HALF OF THE YEAR?
A. In general, the same areas that powered the portfolio's performance in late
1997 also led the way in the first six months of 1998. Notable areas of
performance included enterprise software, entertainment software, cable
television, radio
3
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER, PAUL H. WICK
broadcasting, and data storage systems. The radio broadcasting industry
continued to benefit from ongoing consolidation and a strong advertising
market, which itself was boosted by low inflation and healthy consumer
spending.
Additionally, the Fund's data storage systems holdings continued to benefit
from high demand, stable prices, and gains in market share.
Q. WHAT IS THE FUND'S STANCE REGARDING INTERNET STOCKS?
A. We maintained strong indirect exposure to companies driving the growth of
the Internet for the last few years. The portfolio holds shares of numerous
networking equipment and semiconductor manufacturers whose products comprise
the physical infrastructure of the Internet.
For example, the Fund has a significant position in MCI Communications. In
November 1997, MCI and WorldCom announced a merger agreement to form a
company that will provide facilities-based and fully integrated local, long
distance, data, Internet, and global communications services. The combined
entity will be among the first to explore the synergy of technology
platforms and telephony and data applications.
Nevertheless, the Fund has generally avoided direct investment in
Internet-related stocks, due to the speculative nature of the industry, an
overall lack of profitability at many companies, and the exorbitant
valuations of most stocks. The only exception has been America Online, which
the Fund held because of the company's growing franchise and strong cash
flow.
Q. WHAT IS YOUR OUTLOOK FOR THE SECOND HALF OF 1998?
A. Despite the ongoing impact of the Asian financial crisis, we anticipate a
favorable environment for technology stocks in the second half of the year.
Several factors underpin our optimism:
o Microsoft began shipping Windows 98, its new operating system, on June 25th.
Many consumers had delayed new PC purchases in May and June to avoid having
to upgrade their systems later.
o Compaq, IBM, and 3Com appear to have succeeded in paring their excess
inventories of PCs and modems, which should clear the way for these vendors
to resume normal component orders.
o Technology industry revenues tend to be seasonally strongest in the second
half of the year, reflecting back-to-school and holiday consumer purchases,
as well as year-end "use-it-or-lose-it" corporate budgets.
o Out-of-favor stocks in industries such as disk drives, semiconductors, and
electronics capital equipment have stopped falling in price, even on bad
news. This caused many to surmise that these stocks have reached a valuation
bottom, and that when the business environment improves, stock prices will
rise.
o Many technology companies have recently announced share repurchases, which
may boost the value of many of the portfolio's holdings.
o Finally, the merger of America's largest long distance telephone service
firm, AT&T, with Tele-Communications (TCI), the nation's leading cable TV
provider, could accelerate the availability of high bandwidth Internet
access via cable modems. This could boost investor interest in
Internet-related companies, and increase demand for peripheral services.
4
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
---------- -------- -------- -------- ----------- -----------
CLASS A**
<S> <C> <C> <C> <C>
With Sales Charge 5.37% 13.47% 27.22% 22.79% n/a n/a
Without Sales Charge 10.62 19.13 28.46 23.39 n/a n/a
CLASS B**
With CDSL+ 5.16 13.41 n/a n/a 18.57% n/a
Without CDSL 10.16 18.11 n/a n/a 19.68 n/a
Class D**
With 1% CDSL 9.22 17.19 n/a n/a n/a n/a
Without CDSL 10.22 18.13 27.32 n/a n/a 29.76%
Lipper Science & Technology
Funds Average*** 20.98 22.70 22.36 19.69 15.24++ 24.00+++
S&P 500*** 17.71 30.16 23.08 18.56 31.34++ 22.95+++
</TABLE>
NET ASSET VALUE
JUNE 30, 1998 DECEMBER 31, 1997 JUNE 30, 1997
--------------- --------------------- --------------
CLASS A $25.72 $23.25 $26.84
CLASS B 24.17 21.94 25.73
CLASS D 24.15 21.91 25.71
CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1998
REALIZED $1.036
UNREALIZED 2.452o
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their original
cost. Past performance is not indicative of future investment results.
- --------------------------------------------------------------------------------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price per share and assume the
investment of capital gain distributions. Returns for Class A shares are
calculated with and without the effect of the initial 4.75% maximum sales
charge. Returns for Class A shares also reflect the effect of the service
fee of up to 0.25% under the Administration, Shareholder Services and
Distribution Plan after January 1, 1993, only. Returns for Class B shares
are calculated with and without the effect of the maximum 5% contingent
deferred sales load ("CDSL"), charged on redemptions made within one year
of the date of purchase, declining to 1% in the sixth year and 0%
thereafter. Returns for Class D shares are calculated with and without the
effect of the 1% CDSL, charged on redemptions made within one year of the
date of purchase.
*** The Lipper Science & Technology Funds Average is an average of 73 science
and technology funds and excludes the effect of the sales charges that may
be incurred in connection with purchases or sales. The monthly performance
is used in the Performance Overview. The S&P 500 is an unmanaged index that
assumes investment of dividends and excludes the effect of fees and sales
charges. Investors cannot invest directly in an average or an index.
+ The CDSL is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
o Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1998.
5
<PAGE>
PERFORMANCE OVERVIEW
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS A SHARES
JUNE 30, 1988, TO
JUNE 30, 1998
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS B SHARES
APRIL 22, 1996, TO
JUNE 30, 1998
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS D SHARES
MAY 3, 1993, TO
JUNE 30, 1998
SELIGMAN COMM & INFO FUND, INC. - CLASS A
6/30/88 9,525 Initial Amount Invested
9/30/88 8,939
12/31/88 9,285
3/31/89 10,050
6/30/89 11,000
9/30/89 12,355
12/31/89 12,081
3/31/90 12,738
6/30/90 13,778
9/30/90 9,488
12/31/90 10,744
3/31/91 14,523
6/30/91 12,827
9/30/91 14,716
12/31/91 16,642
3/31/92 17,189
6/30/92 15,448
9/30/92 15,506
12/31/92 19,524
3/31/93 19,793
6/30/93 22,270
9/30/93 25,714
12/31/93 26,381
3/31/94 27,540
6/30/94 25,418
9/30/94 32,981
12/31/94 35,694
3/31/95 40,713
6/30/95 52,832
9/30/95 59,804
12/31/95 51,179
3/31/96 48,433
6/30/96 48,503
9/30/96 51,482
12/31/96 57,288
3/31/97 55,802
6/30/97 65,403
9/30/97 81,656
12/31/97 70,434
3/31/98 79,583
6/30/98 77,917 Total Value
SELIGMAN COMM & INFO FUND, INC. - CLASS B
4/22/96 10,000 Initial Amount Invested
5/31/96 10,558
6/30/96 9,372
7/31/96 8,554
8/31/96 9,228
9/30/96 9,930
10/31/96 9,833
11/30/96 11,283
12/31/96 11,029
1/31/97 12,317
2/28/97 11,483
3/31/97 10,722
4/30/97 11,039
5/31/97 12,458
6/30/97 12,546
7/31/97 14,384
8/31/97 15,111
9/30/97 15,632
10/31/97 14,038
11/30/97 14,039
12/31/97 13,451
1/31/98 13,488
2/28/98 15,431
3/31/98 15,168
4/30/98 15,768
5/31/98 14,358
6/30/98 14,818 Total Value
SELIGMAN COMM & INFO FUND, INC. - CLASS D
5/3/93 10,000 Initial Amount Invested
6/30/93 11,471
9/30/93 13,186
12/31/93 13,489
3/31/94 14,036
6/30/94 12,922
9/30/94 16,740
12/31/94 18,067
3/31/95 20,571
6/30/95 26,641
9/30/95 30,108
12/31/95 25,722
3/31/96 24,288
6/30/96 24,288
9/30/96 25,722
12/31/96 28,570
3/31/97 27,774
6/30/97 32,487
9/30/97 40,486
12/31/97 34,817
3/31/98 39,266
6/30/98 38,376 Total Value
These charts reflect the growth of a $10,000 investment for a 10-year period for
Class A shares and since inception for Class B and Class D shares, assuming that
all distributions within the periods are invested in additional shares. Since
the measured periods vary, the charts are plotted using different scales and are
not comparable.
- --------------------------------------------------------------------------------
* Net of the 4.75% maximum initial sales charge.
** Excludes the effect of the 3% CDSL.
+ Inception date.
6
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
JUNE 30, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
------------------------
JUNE 30, DEC. 31,
ISSUES COST VALUE 1998 1997
------- ---------------- ------------------ --------- ------------
STOCKS AND CONVERTIBLE ISSUES:
<S> <C> <C> <C> <C> <C>
Communications Infrastructure ........................ 9 $ 222,904,310 $ 288,424,993 5.4 6.8
Computer Hardware/Peripherals ........................ 15 808,194,842 989,878,750 18.7 19.1
Computer Software .................................... 27 1,066,547,518 1,240,983,525 23.4 16.1
Contract Manufacturing/Circuit Boards ................ 5 202,805,304 165,825,125 3.1 4.0
Electronics Capital Equipment ........................ 12 733,749,016 536,365,909 10.1 15.8
Information Services ................................. 7 265,480,212 324,073,437 6.1 7.6
Media ................................................ 16 640,432,685 926,457,900 17.4 11.4
Semiconductors ....................................... 9 437,465,995 388,322,141 7.3 13.3
Telecommunications ................................... 10 332,149,190 367,663,328 6.9 1.0
Other ................................................ 1 4,000,000 4,000,000 0.1 --
----- ------------- ------------- ------- -------
111 4,713,729,072 5,231,995,108 98.5 95.1
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES ........................ 1 80,712,293 80,712,293 1.5 4.9
----- ------------- ------------- ------- -------
NET ASSETS ............................................. 112 $4,794,441,365 $5,312,707,401 100.0 100.0
===== ============== ============== ======= =======
</TABLE>
Largest Industries
JUNE 30, 1998
COMPUTER SOFTWARE 23.4%
COMPUTER HARDWARE/PERIPHERALS 18.6%
MEDIA 17.4%
ELECTRONICS CAPITAL EQUIPMENT 10.1%
SEMI-CONDUCTORS 7.3%
7
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
$ DURING PAST SIX MONTHS
SHARES
------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/98
- --------- ----------- -----------
Amkor Technologies ........... 4,900,000 4,900,000
Ascend Communications ........ 1,200,000 1,200,000
Autodesk ..................... 1,900,000 1,900,000
Creative Technology .......... 2,750,000 7,000,000
International Business
Machines ................... 450,000 450,000
SCI Systems .................. 1,600,000 1,600,000
Sinclair Broadcast Group
(Class A) .................. 1,200,000 2,400,000(1)
SMART Modular Technologies ... 2,200,000 2,200,000
Xerox ........................ 600,000 600,000
Ziff-Davis ................... 3,000,000 3,000,000
SHARES
------------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/98
- --------- ----------- -----------
Adaptec ...................... 1,850,000 --
Applied Materials ............ 2,000,000 --
ASM Lithography .............. 600,000 --
Computer Sciences ............ 500,000 --
Gateway 2000 ................. 1,050,000 --
Mastech ...................... 1,150,000 --
Parametric Technology ........ 2,300,000 2,000,000(2)
Read-Rite .................... 3,800,000 --
Storage Technology ........... 900,000 3,000,000(3)
VLSI Technology .............. 2,550,000 --
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 1,200,000 shares received as a result of a 2-for-1 stock split.
(2) Includes 1,700,000 shares received as a result of a 2-for-1 stock split.
(3) Includes 1,500,000 shares received as a result of a 2-for-1 stock split.
LARGEST PORTFOLIO HOLDINGS
JUNE 30, 1998
SECURITY VALUE
- -------- --------------
EMC ................................. $313,687,500
CBS ................................. 190,500,000
Network Associates .................. 181,806,250
Chancellor Media .................... 162,375,938
Electronic Arts ..................... 132,453,125
Storage Technology .................. 130,125,000
Synopsys ............................ 125,898,437
Clear Channel Communications ........ 120,037,500
Lexmark International Group
(Class A) ......................... 103,700,000
Electronics for Imaging ............. 101,100,000
8
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998
SHARES VALUE
--------- ----------
COMMON STOCKS 97.8%
COMMUNICATIONS
INFRASTRUCTURE 5.3%
Aspect Telecommunications* 1,447,300 $ 39,710,294
Cisco Systems* 900,000 82,884,375
DSP Communications* 500,000 6,875,000
ECI Telecommunications
(Israel) 2,350,000 89,006,250
Excel Switching* 890,000 22,194,375
General Communications* 1,781,000 10,686,000
Oak Industries*o 850,000 30,068,750
------------
281,425,044
------------
COMPUTER HARDWARE/
PERIPHERALS 18.6%
American Power Conversion* 1,700,000 50,787,500
Apex PC Solutionso 770,000 21,463,750
Creative Technology*o
(Singapore) 7,000,000 86,843,750
Electronics for Imaging*o 4,800,000 101,100,000
EMC* 7,000,000 313,687,500
Encad*o 899,700 12,230,297
In Focus Systems*o 796,700 5,651,591
Lexmark International Group
(Class A)* 1,700,000 103,700,000
SMART Modular Technologies* 2,200,000 32,381,250
Splash Technology Holdings* 902,400 15,481,800
STB Systems* 1,075,000 13,370,312
Storage Technology* 3,000,000 130,125,000
Unisys* 1,348,000 38,081,000
Xerox 600,000 60,975,000
------------
985,878,750
------------
COMPUTER SOFTWARE 23.1%
3Dfx Interactive* 1,100,000 18,803,125
3DO*0 2,200,000 7,046,875
Activision*o 800,000 8,275,000
America Online* 200,000 21,025,000
ANSYS*o 1,076,900 10,499,775
Autodesk 1,900,000 73,209,375
Broderbund Software* 500,000 11,406,250
Cadence Design System* 2,000,000 62,500,000
Citrix Systems* 1,100,000 75,246,875
Computer Associates
International 1,000,000 55,562,500
Compuware* 1,900,000 97,078,125
Electronic Arts* 2,450,000 132,453,125
Inktomi*# 314,000 12,461,875
Integrated Device Technology* 2,000,000 14,281,250
Intuit* 300,000 18,384,375
SHARES VALUE
--------- ----------
COMPUTER SOFTWARE (CONTINUED)
The Learning Company* 2,000,000 $ 59,250,000
Microsoft* 200,000 21,681,250
Network Associates* 3,800,000 181,806,250
Parametric Technology* 2,000,000 54,187,500
Platinum Technology* 1,800,000 51,468,750
Structural Dynamics Research*o 3,250,000 74,851,563
SYNOPSYS* 2,750,000 125,898,437
Tecnomatix Technologies*o
(Israel) 500,000 10,015,625
VERITAS Software* 700,000 28,940,625
-------------
1,226,333,525
-------------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS 3.1%
ADFlex Solutions*o 414,000 3,700,125
Hadco*o 1,100,000 25,643,750
Jabil Circuit* 1,000,000 33,062,500
Sanmina* 1,000,000 43,218,750
SCI Systems* 1,600,000 60,200,000
-------------
165,825,125
-------------
ELECTRONICS CAPITAL
EQUIPMENT 10.1%
Asyst Technologies*o 1,000,000 12,562,500
Cognex*o 2,600,000 48,506,250
Credence Systems*o 2,180,000 41,488,125
Electro Scientific Industries*o 1,110,000 35,138,437
Etec Systems*o 1,900,000 66,915,625
International Business Machines 450,000 51,665,625
KLA-Tencor* 1,500,000 41,578,125
Kulicke & Soffa Industries*o 1,500,000 25,406,250
Novellus Systems*o 2,213,700 79,070,597
Orbotech* (Israel) 1,300,000 47,165,625
Photronics* 300,000 6,618,750
Teradyne* 3,000,000 80,250,000
-------------
536,365,909
-------------
INFORMATION SERVICES 6.1%
BISYS Group* 1,000,000 41,031,250
First Data 2,500,000 83,281,250
Galileo International 800,000 36,050,000
Gartner Group (Class A)* 2,750,000 96,164,063
Information Resources*o 1,500,000 27,796,875
Whittman-Hart* 800,000 38,750,000
-------------
323,073,438
-------------
MEDIA 17.2%
Belo (A.H.) (Class A) 2,000,000 48,750,000
Cablevision Systems (Class A)* 332,400 27,755,400
9
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998
SHARES VALUE
--------- ----------
MEDIA (CONTINUED)
CBS 6,000,000 $ 190,500,000
Chancellor Media* 3,270,000 162,375,938
CKS Group*o 800,000 14,350,000
Clear Channel Communications* 1,100,000 120,037,500
Cox Radio (Class A)* 650,000 28,112,500
Cumulus Media (Class A)* 450,000 6,595,312
Lamar Advertising (Class A)* 900,000 32,118,750
MediaOne Group* 500,000 21,968,750
Outdoor Systems* 1,500,000 42,000,000
Sinclair Broadcast Group
(Class A)* 2,400,000 68,850,000
Time Warner 1,000,000 85,437,500
USA Networks* 1,000,000 25,156,250
Ziff-Davis* 3,000,000 41,625,000
-------------
915,632,900
-------------
SEMICONDUCTORS 7.3%
Amkor Technologies* 4,900,000 45,784,375
Dallas Semiconductoro 1,750,000 54,250,000
Lattice Semiconductor*o 2,000,000 56,812,500
Maxim Integrated Products* 2,750,000 87,226,563
Microchip Technology*o 2,950,000 77,253,125
MMC Networks* 471,500 15,014,328
PMC-Sierra* (Canada) 200,000 9,362,500
SIPEX* 400,000 8,587,500
Xilinx* 1,000,000 34,031,250
-------------
388,322,141
-------------
TELECOMMUNICATIONS 6.9%
AirTouch Communications* 600,000 35,062,500
Ascend Communications* 1,200,000 59,437,500
Cincinnati Bell 500,000 14,312,500
Level One Communications*o 1,700,000 40,003,125
MCI Communications 1,500,000 87,140,625
Nextel Communications
(Class A)* 1,000,000 24,843,750
Qwest Communications
International* 141,100 4,916,453
Tekelec* 300,000 13,462,500
Tele-Communications
(Series A) TCI Group* 1,000,000 38,406,250
Tele-Communications (Series A)
TCI Ventures Group* 2,500,000 50,078,125
-------------
367,663,328
-------------
OTHER 0.1% 4,000,000
-------------
TOTAL COMMON STOCKS
(Cost $4,675,725,974) 5,194,520,160
-------------
SHARES OR
PRIN. AMT. VALUE
------------- -----------
CONVERTIBLE BONDS 0.5%
COMPUTER HARDWARE/
PERIPHERALS 0.1%
Candescent Technologies,
7%, due 5/1/2003 $ 4,000,000 $ 4,000,000
-------------
COMPUTER SOFTWARE 0.2%
Activision,
6 3/4%, due 1/1/2005+ 10,000,000 8,650,000
-------------
MEDIA 0.2%
Clear Channel Communi-
cations,
2 5/8%, due 4/1/2003 10,000,000 10,825,000
-------------
TOTAL CONVERTIBLE
BONDS (Cost $24,003,150) 23,475,000
-------------
CONVERTIBLE
PREFERRED STOCKS 0.2%
COMMUNICATIONS
INFRASTRUCTURE 0.1%
Diamond Lane
Communications*# 202,020 shs. 1,999,998
UniSite (Class C)*# 10,796 4,999,951
--------------
6,999,949
--------------
COMPUTER SOFTWARE 0.1%
Ambit Design Systems*# 500,000 2,000,000
CrossRoads Software*# 800,000 4,000,000
--------------
6,000,000
--------------
INFORMATION SERVICES
FreeGate (Series D)*# 333,333 999,999
--------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $13,999,948) 13,999,948
--------------
SHORT-TERM HOLDINGS 2.1%
(Cost $109,700,000) 109,700,000
--------------
TOTAL INVESTMENTS 100.6%
(Cost $4,823,429,072) 5,341,695,108
OTHER ASSETS
LESS LIABILITIES (0.6)% (28,987,707)
--------------
NET ASSETS 100.0% $5,312,707,401
==============
- --------------
* Non-income producing security.
+ Rule 144A security.
# Restricted securities.
o Affiliated issuers (Fund's holdings representing 5% or more of the outstanding
voting securities).
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
ASSETS:
Investments, at value:
<S> <C> <C>
Stocks and convertible issues* (cost $4,713,729,072) .................... $5,231,995,108
Short-term holdings (cost $109,700,000) ................................. 109,700,000 $5,341,695,108
--------------
Cash .................................................................................................... 1,822,084
Receivable for securities sold .......................................................................... 58,962,536
Receivable for Capital Stock sold ....................................................................... 21,826,730
Expenses prepaid to shareholder service agent ........................................................... 1,399,514
Receivable for interest and dividends ................................................................... 849,060
Other ................................................................................................... 363,121
--------------
TOTAL ASSETS ............................................................................................ 5,426,918,153
--------------
LIABILITIES:
Payable for securities purchased ........................................................................ 53,682,894
Payable for Capital Stock repurchased ................................................................... 51,858,785
Accrued expenses, taxes, and other ...................................................................... 8,669,073
--------------
TOTAL LIABILITIES ....................................................................................... 114,210,752
--------------
NET ASSETS .............................................................................................. $5,312,707,401
==============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value; 1,000,000,000 shares authorized;
211,335,527 shares outstanding):
Class A ............................................................................................... $ 13,308,668
Class B ............................................................................................... 3,304,171
Class D ............................................................................................... 4,520,714
Additional paid-in capital .............................................................................. 4,577,781,455
Accumulated net investment loss ......................................................................... (33,255,721)
Undistributed net realized gain ......................................................................... 228,782,078
Net unrealized appreciation of investments .............................................................. 518,266,036
--------------
NET ASSETS .............................................................................................. $5,312,707,401
==============
NET ASSET VALUE PER SHARE:
CLASS A ($3,422,494,972 / 133,086,677 shares) ........................................................... $25.72
======
CLASS B ($798,669,303 / 33,041,710 shares) .............................................................. $24.17
======
CLASS D ($1,091,543,126 / 45,207,140 shares) ............................................................ $24.15
======
- ------------
* Includes affiliated issuers (issuers in which the Fund's holdings represent 5%
or more of the outstanding voting securities) with a cost of $1,364,715,262 and
a value of $976,944,260.
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<S> <C> <C>
INVESTMENT INCOME:
Interest .................................................................... $ 6,862,823
Dividends (net of foreign taxes withheld of $39,363) ........................ 2,793,846
-----------
TOTAL INVESTMENT INCOME .......................................................................... $ 9,656,669
EXPENSES:
Management fee .............................................................. 22,369,920
Distribution and service fees ............................................... 12,839,186
Shareholder account services ................................................ 5,971,822
Shareholder reports and communications ...................................... 623,886
Custody and related services ................................................ 471,120
Registration ................................................................ 363,522
Auditing and legal fees ..................................................... 55,178
Directors' fees and expenses ................................................ 41,141
Miscellaneous ............................................................... 62,381
-----------
TOTAL EXPENSES ................................................................................... 42,798,156
------------
NET INVESTMENT LOSS .............................................................................. (33,141,487)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments* ........................................... 219,022,132
Net change in unrealized appreciation of investments ........................ 306,006,420
-----------
NET GAIN ON INVESTMENTS .......................................................................... 525,028,552
------------
INCREASE IN NET ASSETS FROM OPERATIONS ........................................................... $491,887,065
============
- ---------------
* Includes net realized loss from affiliated issuers of $115,356,213.
See Notes to Financial Statements.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss ............................................................... $ (33,141,487) $ (57,242,089)
Net realized gain on investments .................................................. 219,022,132 909,728,876
Net change in unrealized appreciation of investments .............................. 306,006,420 (144,024,652)
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS ............................................ 491,887,065 708,462,135
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ........................................................................ -- (621,494,484)
Class B ........................................................................ -- (87,967,545)
Class D ........................................................................ -- (196,816,410)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ......................................... -- (906,278,439)
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
<S> <C> <C> <C> <C>
Class A ................................ 16,156,435 30,847,206 406,564,601 837,264,966
Class B ................................ 11,155,952 14,952,067 265,174,732 391,781,442
Class D ................................ 5,764,013 8,669,975 136,149,418 225,248,842
Exchanged from associated Funds:
Class A ................................ 47,526,035 29,422,861 1,204,223,667 787,728,489
Class B ................................ 865,947 1,194,212 20,402,882 29,695,869
Class D ................................ 19,461,698 12,022,132 463,673,629 310,543,695
Shares issued in payment of gain distributions:
Class A ................................ -- 23,313,230 -- 569,075,182
Class B ................................ -- 3,579,064 -- 82,568,805
Class D ................................ -- 7,940,049 -- 183,018,029
------------ ------------ -------------- --------------
TOTAL ..................................... 100,930,080 131,940,796 2,496,188,929 3,416,925,319
------------ ------------ -------------- --------------
Cost of shares repurchased:
Class A ................................ (16,702,872) (23,014,559) (421,008,843) (611,914,607)
Class B ................................ (1,232,070) (1,035,991) (29,531,807) (27,730,271)
Class D ................................ (3,912,364) (6,201,793) (93,426,941) (158,791,776)
Exchanged into associated Funds:
Class A ................................ (47,538,838) (29,624,808) (1,210,137,773) (799,242,903)
Class B ................................ (783,090) (997,743) (18,598,985) (25,590,755)
Class D ................................ (19,248,501) (11,933,465) (460,855,136) (311,146,906)
------------ ------------ -------------- --------------
Total ..................................... (89,417,735) (72,808,359) (2,233,559,485) (1,934,417,218)
------------ ------------ -------------- --------------
INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ..................... 11,512,345 59,132,437 262,629,444 1,482,508,101
============ ============ ============== ==============
INCREASE IN NET ASSETS ............................................................ 754,516,509 1,284,691,797
NET ASSETS:
Beginning of period ............................................................... 4,558,190,892 3,273,499,095
-------------- --------------
END OF PERIOD (including accumulated net investment loss of
$33,255,721 and $114,234, respectively) ........................................ $5,312,707,401 $4,558,190,892
============== ==============
- ------------
See Notes to Financial Statements.
</TABLE>
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Communications and Information Fund,
Inc. (the "Fund") offers three classes of shares. Class A shares are sold with
an initial sales charge of up to 4.75% and a continuing service fee of up to
0.25% on an annual basis. Class A shares purchased in an amount of $1,000,000 or
more are sold without an initial sales charge but are subject to a contingent
deferred sales load ("CDSL") of 1% on redemptions within 18 months of purchase.
Class B shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75%, a service fee of up to 0.25% on an annual basis, and
a CDSL, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of up
to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSL, if
applicable, of 1% imposed on redemptions made within one year of purchase. The
three classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other class
expenses, and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. SECURITY VALUATION -- Investments in 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 exdividend 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, 1998,
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, 1998, amounted to $3,305,315,188 and
$2,936,317,965, respectively.
At June 30, 1998, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes, and the tax
basis gross unrealized appreciation and depreciation of portfolio securities
amounted to $1,124,204,582 and $605,938,546, respectively.
4. SHORT-TERM INVESTMENTS -- At June 30, 1998, the Fund owned short-term
investments which matured in less than seven days.
5. MANAGEMENT FEE, DISTRIBUTION 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
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 0.88% per annum of the
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 $1,078,138 from sales of Class A shares, after commissions of
$8,761,951 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of the average daily net assets of the Class A shares
attributable to the particular service organizations for providing personal
services and/or the maintenance of shareholder accounts. The Distributor charges
such fees to the Fund pursuant to the Plan. For the six months ended June 30,
1998, fees incurred under the Plan aggregated $4,174,840, 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 this fee to a third
party (the "Purchaser"), which provides funding to the Distributor to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares.
For the six months ended June 30, 1998, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $3,386,109 and $5,278,237, respectively.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the six months
ended June 30, 1998, such charges amounted to $201,217.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class Bshares sold. The aggregate amount of such payments
retained by the Distributor, for the six months ended June 30, 1998, amounted to
$397,161.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the six months ended June 30, 1998,
Seligman Services, Inc. received commissions of $303,670 from the sale of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $518,881, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $5,971,822 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. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in directors' fees and
expenses, and the accumulated balance thereof at June 30, 1998, of $110,418 is
included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
6. COMMITTED LINE OF CREDIT -- Effective July 1, 1998, the Fund terminated its
$340 million committed line of credit and entered into a joint $800 million
committed line of credit that is shared by substantially all funds in the
Seligman Group of Investment Companies. The Fund's borrowings are limited to 10%
of its net assets. Borrowings pursuant to the credit facility are subject to
interest at a rate equal to the overnight federal funds rate plus 0.50% on an
overnight basis. The Fund incurs a commitment fee of 0.08% per annum on its
share of the unused portion of the credit facility. The credit facility may be
drawn upon only for temporary purposes and is subject to certain other customary
restrictions. The credit facility commitment expires one year from the date of
the agreement but is renewable with the consent of the participating banks. To
date, the Fund has not borrowed from the credit facility.
15
<PAGE>
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 of an
issuer represent 5% or more of the outstanding voting securities of the issuer.
A summary of the Fund's transactions in the securities of these issuers during
the six months ended June 30, 1998, is as follows:
<TABLE>
<CAPTION>
GROSS GROSS REALIZED
BEGINNING PURCHASES SALES AND ENDING GAIN DIVIDEND ENDING
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES (LOSS) INCOME VALUE
- ---------- --------- ------------- ------------- -------- ---------- ---------- ---------
<C> <C> <C> <C> <C> <C> <C> <C>
3DO 2,200,000 2,200,000 $ 7,046,875
Activision 1,000,000 200,000 800,000 $ (277,059) 8,275,000
ADFlex Solutions 900,000 486,000 414,000 (5,637,136) 3,700,125
ANSYS 1,350,000 273,100 1,076,900 (756,534) 10,499,775
Apex PC Solutions -- 770,000 770,000 21,463,750
Asyst Technologies 630,000 370,000 1,000,000 12,562,500
CIDCO 1,500,000 1,500,000 -- (31,618,060) --
CKS Group 1,025,000 100,000 325,000 800,000 2,994,226 14,350,000
Cognex 2,350,000 250,000 2,600,000 48,506,250
Creative Technology 4,250,000 2,750,000 7,000,000 86,843,750
Credence Systems 2,180,000 2,180,000 41,488,125
Dallas Semiconductor 1,119,400 630,600 1,750,000 54,250,000
Electro Scientific Industries 1,110,000 1,110,000 35,138,437
Electronics for Imaging 4,600,000 200,000 4,800,000 101,100,000
Encad 750,000 450,000 300,300 899,700 (4,532,972) 12,230,297
Etec Systems 1,800,000 600,000 500,000 1,900,000 5,247,169 66,915,625
Hadco 1,125,000 75,000 100,000 1,100,000 (1,793,785) 25,643,750
In Focus Systems 685,000 1,231,200 1,119,500 796,700 3,586,499 5,651,591
Information Resources 1,000,000 500,000 1,500,000 27,796,875
Kulicke & Soffa Industries 2,300,000 800,000 1,500,000 (10,828,821) 25,406,250
Lattice Semiconductor 2,100,000 100,000 2,000,000 2,228,026 56,812,500
Level One Communications -- 1,700,000 1,700,000 40,003,125
Microchip Technology 2,950,000 2,950,000 77,253,125
Novellus Systems 2,725,000 100,000 611,300 2,213,700 9,356,392 79,070,597
Oak Industries 1,050,000 200,000 850,000 544,141 30,068,750
Read-Rite 3,800,000 3,800,000 -- (42,909,092) --
Structural Dynamics Research 3,250,000 3,250,000 74,851,563
Tecnomatix Technologies -- 500,000 500,000 10,015,625
Unitrode 1,600,000 1,600,000 -- (13,794,642) --
VLSI Technology 2,550,000 450,000 3,000,000 -- (27,164,565) --
------------- ------------
TOTAL $(115,356,213) $976,944,260
============= ============
</TABLE>
8. RESTRICTED SECURITIES -- At June 30, 1998, the Fund owned six private
placement investments that were purchased through private offerings and cannot
be sold without prior registration under the Securities Act of 1933 or pursuant
to an exemption therefrom. In addition, the Fund has agreed to further
restrictions on the disposition of its shares as set forth in various agreements
entered into in connection with the purchase of these investments. These
investments are valued at fair value as determined in accordance with procedures
approved by the Board of Directors of the Fund. The acquisition dates of these
investments, along with their cost and values at June 30, 1998, are as follows:
<TABLE>
<CAPTION>
INVESTMENTS ACQUISITION DATES COST VALUE
- ----------- ----------------- ---- -----
Convertible Preferred Stocks:
<S> <C> <C> <C>
Ambit Design Systems 12/4/97 $ 2,000,000 $ 2,000,000
CrossRoads Software 12/23/97 4,000,000 4,000,000
Diamond Lane Communications 9/4/97 1,999,998 1,999,998
FreeGate (Series D) 6/30/98 999,999 999,999
UniSite (Class C) 12/19/97 4,999,951 4,999,951
Common Stocks:
Inktomi 2/13/98 2,001,750 12,461,875
----------- -----------
$16,001,698 $26,461,823
=========== ===========
</TABLE>
16
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. Total returns for periods
of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
----------------------------------------------------------
6/30/98? 1997? 1996? 1995? 1994? 1993
------------ ------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ............. $23.25 $23.51 $21.99 $16.64 $13.43 $12.30
------- ------- ------- ------- ------- -------
Net investment loss .............................. (0.13) (0.33) (0.26) (0.33) (0.19) (0.14)
Net realized and unrealized investment gain ...... 2.60 6.01 2.84 7.59 4.86 4.37
------- ------- ------- ------- ------- -------
INCREASE FROM INVESTMENT OPERATIONS .............. 2.47 5.68 2.58 7.26 4.67 4.23
Distributions from net gain realized ............. -- (5.94) (1.06) (1.91) (1.46) (3.10)
------- ------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSET VALUE ....... 2.47 (0.26) 1.52 5.35 3.21 1.13
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ................... $25.72 $23.25 $23.51 $21.99 $16.64 $13.43
======= ======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: ........... 10.62% 22.95% 11.94% 43.39% 35.30% 35.13%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................... 1.43% 1.53% 1.68% 1.61% 1.65% 1.63%
Net investment loss to average net assets ........ (1.05)%+ (1.21)% (1.16)% (1.31)% (1.27)% (1.39)%
Portfolio turnover ............................... 59.16% 164.57% 121.32% 65.77% 104.08% 137.10%
NET ASSETS, END OF PERIOD (000s omitted) ......... $3,422,495 $3,107,481 $2,414,672 $1,940,693 $307,542 $92,987
- --------------
See footnotes on page 18.
</TABLE>
17
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
------------------------------------
SIX MONTHS YEAR 4/22/96*
ENDED ENDED TO
6/30/98o 12/31/97o 12/31/96o
---------- --------- ---------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD .............. $21.94 $22.62 $21.51
-------- -------- --------
Net investment loss ............................... (0.21) (0.50) (0.28)
Net realized and unrealized investment gain ....... 2.44 5.76 2.45
-------- -------- --------
INCREASE FROM INVESTMENT OPERATIONS ............... 2.23 5.26 2.17
Distributions from net gain realized .............. -- (5.94) (1.06)
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSET VALUE ........ 2.23 (0.68) 1.11
-------- -------- --------
NET ASSET VALUE, END OF PERIOD .................... $24.17 $21.94 $22.62
======== ======== ========
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 10.16% 21.96% 10.30%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 2.18% 2.28% 2.44%
Net investment loss to average net assets ......... (1.80)%+ (1.96)% (1.96)%+
Portfolio turnover ................................ 59.16% 164.57% 121.32%++
NET ASSETS, END OF PERIOD (000s omitted) .......... $798,669 $505,342 $120,848
</TABLE>
<TABLE>
<CAPTION>
CLASS D
--------------------------------------------------------------------------
SIX MONTHS 5/3/93*
ENDED YEAR ENDED DECEMBER 31, TO
------------------------------------------------------------
6/30/98o 1997o 1996o 1995o 1994o 12/31/93
------------ -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD .............. $21.91 $22.61 $21.35 $16.31 $13.32 $12.24
------- ------- ------- ------- ------- -------
Net investment loss (0.21) (0.50) (0.40) (0.50) (0.33) (0.05)
Net realized and unrealized investment gain ....... 2.45 5.74 2.72 7.45 4.78 4.23
------- ------- ------- ------- ------- -------
INCREASE FROM INVESTMENT OPERATIONS ............... 2.24 5.24 2.32 6.95 4.45 4.18
Distributions from net gain realized .............. -- (5.94) (1.06) (1.91) (1.46) (3.10)
------- ------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSET VALUE ........ 2.24 (0.70) 1.26 5.04 2.99 1.08
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD .................... $24.15 $21.91 $22.61 $21.35 $16.31 $13.32
======= ======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 10.22% 21.86% 11.07% 42.37% 33.94% 34.89%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 2.18% 2.28% 2.43% 2.37% 2.50% 2.56%
Net investment loss to average net assets ......... (1.80)%+ (1.96)% (1.91)% (2.07)% (2.20)% (2.33)%+
Portfolio turnover ................................ 59.16% 164.57% 121.32% 65.77% 104.08% 137.10%+++
NET ASSETS, END OF PERIOD (000s omitted) .......... $1,091,543 $945,368 $737,979 $609,332 $96,100 $7,833
* Commencement of offering of shares.
o Per share amounts for the six months ended June 30, 1998, and the years
ended December 31, 1997, 1996, 1995, and 1994, are calculated based on average
shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1993.
See Notes to Financial Statements.
</TABLE>
18
<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, 1998, the related statements of operations for the six
months then ended and of changes in net assets for the six months then ended and
for the year ended December 31, 1997, and the financial highlights for each of
the periods presented. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1998, by correspondence with the Fund's custodian 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, 1998, the results of
its operations, the changes in its net assets, and the financial highlights for
the respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
July 31, 1998
ADDITIONAL 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
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
19
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, BAPTIST MEDICAL CENTER
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
TRUSTEE, The New York and Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD, J. & W. Seligman & Co.
Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT, J. & W. Seligman &Co.
Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
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
20
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio. For tax purposes,
these profits may be taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES LOAD (CDSL) -- Depending on the class of shares owned,
a fee charged by a mutual fund when shares are sold back to the fund (the CDSL
expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE (OP) -- The price at which a mutual fund's share can be
purchased. The offering price per share is the current net asset value plus any
sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains updated or more
detailed information about a mutual fund and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The AVERAGE ANNUAL TOTAL
RETURN represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- --------------
Adapted from the Investment Company Institute's 1997 MUTUAL FUND FACT BOOK.
21
<PAGE>
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.
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[GRAPHIC]
J & W SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE,
NEW YORK, NY 10017
EQCI3 6/98
[LOGO] Printed on Recycled Paper
