SELIGMAN
-------------------
COMMUNICATIONS
AND INFORMATION
FUND, INC.
[GRAPHIC]
ANNUAL REPORT
DECEMBER 31, 1998
----------
Seeking Capital Gain
by Investing
in Companies
Operating in the
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.
[PHOTOGRAPH]
Picture of 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 through 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 that 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
Federal Tax Status of 1998 Gain Distribution for
Taxable Accounts and For More Information ............................... 5
Performance Overview ...................................................... 6
Portfolio Overview ........................................................ 8
Portfolio of Investments .................................................. 10
Statement of Assets and Liabilities ....................................... 15
Statement of Operations ................................................... 16
Statements of Changes in Net Assets ....................................... 17
Notes to Financial Statements ............................................. 18
Financial Highlights ...................................................... 21
Report of Independent Auditors ............................................ 23
Board of Directors and Executive Officers ................................. 24
Glossary of Financial Terms ............................................... 25
- --------------------------------------------------------------------------------
<PAGE>
TO THE SHAREHOLDERS
Seligman Communications and Information Fund posted a 1998 total return of
33.92% based on the net asset value of Class A shares. The Fund outperformed the
28.58% total return of the Standard & Poor's 500 Composite Stock Price Index
(S&P 500), although it lagged the 52.55% total return of its peers, as measured
by the Lipper Science & Technology Funds Average. A discussion with your
Portfolio Manager regarding the Fund's results begins on page 2.
The past year was one of continued growth for the US economy, with real domestic
growth of 3.9%, marking the eighth year of economic expansion. In the equity
markets, exceptional performance from an extremely narrow list of stocks masked
a year of mediocre investment results in the broad markets. This narrowness, and
the divergence between larger- and smaller-company stocks, affected the
performance of technology stocks, in general, and Seligman Communications and
Information Fund, in particular. While the Fund posted impressive absolute
returns, it underperformed its peer group on a relative basis due to its
underweighted positions in large-cap technology and Internet stocks.
The "flight to quality" among US and international investors and the ongoing
ability of leading technology companies to beat earnings forecasts combined to
drive the valuations of large-cap technology stocks to new highs, at the expense
of many quality smaller technology companies. During this time, we underweighted
large caps to pursue growth opportunities at more reasonable prices. This
decision, while fundamentally sound, caused the Fund to underperform relative to
some of its peers, as large caps continued to lead the market higher through
year end.
In direct contrast to the earnings momentum that helped the largest tech stocks,
many investors disregarded earnings altogether when it came to Internet stocks.
Companies whose main business is the Internet generally have negative cash flows
and their potential for becoming profitable is uncertain. The Fund's lack of
exposure to this area is due to the fact that we look for companies with sound
fundamentals. While this commitment to our investment philosophy hurt the Fund's
relative performance during this time, we are convinced that maintaining a
portfolio of what we believe are quality companies -- including those whose
products and services are the backbone of the Internet, such as software, data
networking, and semiconductor manufacturers -- will serve our shareholders well
over the long term.
At this time, we believe that many of the largest technology stocks are fully
valued. Any broadening of the market in 1999 may negatively affect their share
prices. The Fund is well positioned for such a scenario, as we continue to look
for more reasonably priced mid-capitalization stocks. In terms of Internet
stocks, we don't believe that the current enthusiasm is sustainable. While the
Fund does not have much direct exposure to this group, we are nonetheless
concerned that if this market falls it may adversely affect investor psychology
regarding the broad technology sector. For 1999, we expect a challenging
environment for technology companies, confronted with economic uncertainties and
continued high volatility. However, for investors with a long-term time horizon,
we believe that technology remains one of the premier growth sectors of the
future.
Seligman continues to work to ensure that all of its operations are prepared for
the challenges posed by the Year 2000 (Y2K) computer problem. We are confident
that there will be no disruption in the investment and shareholder services
provided by your Fund as a result of Y2K. In addition, your portfolio management
team considers the potential ramifications of Y2K when making decisions on which
securities should be held by the Fund.
Thank you for your continued support of Seligman Communications and Information
Fund in 1998. We look forward to serving your investment needs in 1999.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
February 5, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. How did Seligman Communications and Information Fund perform in 1998?
A. Seligman Communications and Information Fund's total return based on the
net asset value of Class A shares was 33.92% for the year. While the Fund
outperformed the 28.58% total return of the Standard & Poor's 500 Composite
Stock Price Index (S&P 500), it lagged the 52.55% total return of its
peers, as measured by the Lipper Science & Technology Funds Average.
Q. Why did the Fund underperform its peer group?
A. Within the technology sector, the strongest stock price gains came from the
largest-capitalization companies and from Internet-related companies.
Although Seligman Communications and Information Fund had many
large-capitalization stocks that outperformed the market, it did not own
them to the same magnitude as some competitor funds. In addition, your Fund
generally avoided companies whose main business was the Internet, given
their high valuations, often negative cash flow, and what we believe to be
cloudy outlooks for achieving profitability.
Large-capitalization technology stocks have benefited from a confluence of
events. As segments of the technology industry have matured, larger
companies have frequently gained market share and disproportionate
profitability, as purchasing power, incumbency, and customer preference for
fewer vendors rise in importance. These trends are noteworthy in the
personal computer and data networking segments, where a few large companies
have prospered and everyone else has not. In general, in many areas of
technology, larger companies have had better profit growth than smaller
firms.
In addition, the unprecedented high returns of the S&P 500 since 1995 have
increased investor preference for large-cap domestic equities at the
expense of international and small- or mid-cap US stocks. The increasing
popularity of S&P 500 index funds has added to this trend. Given that the
S&P 500 is not equal-weighted, but market capitalization-weighted, the vast
majority of money flowing into S&P 500 index funds ends up in the 100
largest companies.
Finally, the Fund was negatively affected by its holdings of media stocks.
Although fundamentals were favorable throughout the year and the Fund's
media holdings performed reasonably well, they did not match the
performance of the largest-capitalization technology stocks.
[PHOTOGRAPH]
West Coast Technology Team: (standing from left) Marianne Harlow (Administrative
Assistant), Paul Wick (Portfolio Manager), (seated) Paul Krieger, Patrick Renda
[PHOTOGRAPH]
East Coast Technology Team: (standing from left) Lawrence Rosso, Kei Yamamoto,
Shanean Austin (Administrative Assistant), (seated) Storm Boswick
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. What are some of the underlying dynamics affecting the relative performance
of small-, medium-, and large-capitalization technology stocks?
A. Further aiding the superior relative performance of large-cap technology
companies has been the disappointing performance of large consumer and
industrial companies, whose profits were hurt by the Asian and South
American currency crises. In response to the fundamental problems,
large-company fund managers have shifted assets into big technology
companies that continue to meet Wall Street expectations.
The end result of all of these trends has been a snowballing of valuations,
as already expensive stocks attain ever higher absolute and relative
valuations. A case in point would be America Online, whose market value
tripled between mid-October and year-end. In late December, America Online
was added to the S&P 500 in recognition of its higher market value; of
course, on the day of the announcement, shares of America Online rose 15%
in anticipation of index fund buying. Today, America Online's market value
exceeds that of Walt Disney, a company with significantly greater revenues,
cash flow, profits, and proprietary content.
Q. Given the high valuations, but generally superior profit growth of the
bigger technology companies, what is the Fund's current strategy?
A. We are sticking to our style. There are numerous mid-capitalization
technology companies with excellent fundamentals that have gone
unappreciated by the market. Your Fund has holdings in quite a few of these
companies. In the large-capitalization area, we remain underweighted
relative to the technology indices. We remain enthusiastic about the
prospects for our investments in radio broadcasting and cable TV, as
fundamentals are excellent and valuations reasonable.
Q. Which of the Fund's sectors performed best in 1998?
A. The top-performing area was computer hardware peripherals, which was
positively affected by Year 2000 testing, increased demand for data
storage, and market share consolidation in the computer industry.
Q. Which of the Fund's sectors impaired results in 1998?
A. The weakest areas of the Fund were the semiconductor-related sectors, which
went through a serious recession in the wake of the Asian financial crisis.
However, the semiconductor industry's fundamentals have recently begun to
improve as a result of large reductions made on expenditures for new
capacity over the past year.
Q. Has the Fund changed its stance on Internet-related stocks?
A. While the Fund continues to hold shares of numerous software, data
networking, and semiconductor manufacturers whose products comprise the
physical infrastructure of the Internet, your Manager remains wary of
investing in public Internet stocks whose main business is the Internet.
However, the Fund has made a number of small investments in private
Internet companies, as valuations are much more reasonable than for public
companies.
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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 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/sell policies are followed.
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3
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q. Which sectors appear to have the greatest appreciation potential in 1999?
A. A number of sectors have excellent fundamentals and reasonable valuations:
o Semiconductor and semiconductor capital equipment companies have seen
a significant improvement in business conditions, and appear to be in
the early stages of a broad industry recovery.
o Integrated circuit design software companies are seeing improving
orders fueled by the semiconductor industry recovery.
o Fundamentals for mechanical design software companies have begun to
improve, while stock prices remain modestly valued.
o Entertainment software companies have never had better fundamentals,
as the installed base of consumer PCs and video games continues to
expand.
Q. What is the likely impact of the Year 2000 (Y2K) computer problem on
technology companies in 1999?
A. While it is extraordinarily difficult to predict what will happen as a
result of the passing of the millennium, we can make some educated guesses
regarding government and corporate information technology spending this
year. We believe that the majority of spending on computer software and
hardware will take place in the first half of 1999, with correspondingly
less money spent late in the year. As organizations grapple with final Y2K
testing, they will be less inclined to add new software programs or
computers to their data centers until some time in calendar year 2000.
In recognition of these risks, we have begun to shift investments out of
stocks heavily dependent on corporate technology spending and into
companies more leveraged to consumer spending. Certainly, this is another
reason to have a significant weighting in media stocks.
Q. What is the outlook for technology?
A. As we ended 1998, overall valuations for technology companies had never
been higher. But where do they go from here? Can stock prices on the
largest technology companies continue to go up? They can if these companies
keep beating earnings estimates. What about companies whose main business
is the Internet? As we said earlier, these companies typically have no
earnings, but as long as individual investors shrug off fundamentals, stock
prices for these companies may continue to rise. And, of course, Y2K is
still a big question mark for 1999, with possible ramifications for the
third and fourth quarters.
But despite it all, technology continues to rise as a percentage of the
world economy, and we see no sign of that slowing. Will the technology
market remain volatile? Absolutely. But volatility creates opportunity, and
a well-diversified, professionally managed mutual fund such as Seligman
Communications and Information Fund can help investors who seek to take
advantage of those opportunities.
4
<PAGE>
FEDERAL TAX STATUS OF 1998
GAIN DISTRIBUTION FOR TAXABLE ACCOUNTS
- --------------------------------------------------------------------------------
A long-term capital gain distribution of $0.345 per share from 1997
undistributed net realized gain was paid on November 23, 1998, to Class A, B,
and D shareholders. In 1997, Congress revised the capital gains provisions, so
that depending on how long a security was owned when it was sold, investors may
have been faced with a 28% capital gains rate, a 20% rate, or both. In October
1998, Congress simplified the capital gains provisions so that, generally, all
gains on securities held more the one year are to be taxed at a maximum 20%
rate.
The long-term gain distribution is designated a "capital gain dividend" for
federal income tax purposes and is taxable to shareholders in 1998 as a
long-term gain from the sale of capital assets, no matter how long shares have
been owned, 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, any
loss on the sale would be treated as long-term to the extent that it offsets the
long-term gain distribution.
If the distribution was received in shares, the per share cost basis for federal
income tax purposes is $26.02 for Class A shares, $24.37 for Class B shares and
$24.35 for Class D shares.
A 1998 year-end statement of account activity and a 1998 tax package, which may
include a Form 1099-DIV, a Form 1099-B, and/or a Cost Basis Statement, have been
mailed to each shareholder. Form 1099-DIV shows the distributions paid to the
shareholder during the year. Form 1099-B shows the proceeds of any redemptions
paid to the shareholder during the year. Cost Basis Statements report all sales
or exchanges from a shareholder's account which may have resulted in a capital
gain or loss in 1998. The information shown on Forms 1099-DIV and 1099-B is
reported to the Internal Revenue Service as required by federal regulations.
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- --------------------------------------------------------------------------------
FOR MORE INFORMATION
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Advisors, 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
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5
<PAGE>
PERFORMANCE OVERVIEW
This chart compares a $10,000 hypothetical investment made in Seligman
Communications and Information Fund Class A shares, with and without the initial
4.75% maximum sales charge, and assumes that all distributions within the period
are invested in additional shares, for the 10-year period ended December 31,
1998, to a $10,000 investment made in the Lipper Science &Technology Funds
Average (Lipper Science &Technology Average) and the Standard &Poor's 500
Composite Stock Price Index (S&P 500) for the same period. The performances of
Seligman Communications and Information Fund Class B and Class D shares are not
shown in this chart but are included in the table on page 7. It is important to
keep in mind that the Lipper Science &Technology Average and the S&P 500 exclude
the effect of fees and/or sales charges.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Seligman Communications
and Information Fund Class A
----------------------------- Lipper
Without Science &
Sales With Sales Technology
Charge Charge Average S&P 500
------ ---------- ---------- -------
12/31/88 $10,000 $9,527 $10,000 $10,000
3/31/89 $10,824 $10,312 $10,278 $10,709
6/30/89 $11,847 $11,287 $11,068 $11,655
9/30/89 $13,307 $12,677 $12,119 $12,903
12/31/89 $13,012 $12,396 $12,062 $13,169
3/31/90 $13,720 $13,071 $12,769 $12,772
6/30/90 $14,839 $14,137 $14,319 $13,576
9/30/90 $10,219 $9,736 $10,516 $11,710
12/31/90 $11,571 $11,024 $12,219 $12,760
3/31/91 $15,642 $14,902 $15,785 $14,614
6/30/91 $13,815 $13,162 $14,501 $14,580
9/30/91 $15,850 $15,101 $16,232 $15,360
12/31/91 $17,925 $17,077 $18,340 $16,647
3/31/92 $18,513 $17,638 $18,503 $16,226
6/30/92 $16,639 $15,852 $17,177 $16,534
9/30/92 $16,701 $15,911 $17,931 $17,055
12/31/92 $21,028 $20,033 $21,308 $17,913
3/31/93 $21,319 $20,310 $21,690 $18,696
6/30/93 $23,986 $22,851 $23,632 $18,787
9/30/93 $27,695 $26,385 $26,035 $19,272
12/31/93 $28,414 $27,070 $26,326 $19,719
3/31/94 $29,662 $28,259 $26,808 $18,972
6/30/94 $27,377 $26,082 $25,037 $19,051
9/30/94 $35,523 $33,842 $29,030 $19,983
12/31/94 $38,444 $36,625 $30,797 $19,979
3/31/95 $43,850 $41,776 $32,924 $21,925
6/30/95 $56,904 $54,212 $39,595 $24,019
9/30/95 $64,412 $61,365 $45,913 $25,928
12/31/95 $55,123 $52,515 $43,334 $27,489
3/31/96 $52,165 $49,697 $43,626 $28,965
6/30/96 $52,240 $49,769 $46,618 $30,266
9/30/96 $55,449 $52,826 $50,420 $31,201
12/31/96 $61,703 $58,784 $52,744 $33,803
3/31/97 $60,102 $57,259 $47,965 $34,709
6/30/97 $70,442 $67,110 $56,739 $40,770
9/30/97 $87,948 $83,788 $67,635 $43,823
12/31/97 $75,862 $72,273 $58,725 $45,082
3/31/98 $85,716 $81,661 $68,725 $51,371
6/30/98 $83,921 $79,951 $70,874 $53,066
9/30/98 $70,021 $66,709 $63,247 $47,786
12/31/98 $101,597 $96,791 $89,584 $57,964
Investments in one economic sector, such as technology, may be subject to
greater price fluctuations than owning a portfolio of diversified investments.
In addition, the securities in which Seligman Communications and Information
Fund invests may be subject to greater government regulation, greater price
fluctuation, and limited liquidity. The stocks of smaller companies may be
subject to above-average risk. The Fund may invest in global technology stocks
which may be subject to additional risks, including currency fluctuations,
foreign taxation, differences in financial reporting practices, and rapid
changes in political and economic conditions.
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.
6
<PAGE>
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
Investment Results Per Share
TOTAL RETURNS
For Periods Ended December 31, 1998
AVERAGE ANNUAL
------------------------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
-------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Class A**
With Sales Charge 15.32% 27.56% 27.77% 25.48% n/a n/a
Without Sales Charge 21.06 33.92 29.02 26.09 n/a n/a
Class B**
With CDSC+ 15.64 27.89 n/a n/a 23.29% n/a
Without CDSC 20.64 32.89 n/a n/a 24.07 n/a
Class D**
With 1% CDSC 19.61 31.94 n/a n/a n/a n/a
Without CDSC 20.61 32.94 27.96 n/a n/a 31.05%
Lipper Science &Technology
Funds Average*** 26.40 52.55 27.75 24.52 25.95++ 29.10+++
S&P500*** 9.22 28.58 24.06 19.21 29.00++ 22.63+++
<CAPTION>
NET ASSET VALUE
DECEMBER 31, 1998 JUNE 30, 1998 DECEMBER 31, 1997
------------------ -------------- -----------------
<S> <C> <C> <C>
Class A $30.73 $25.72 $23.25
Class B 28.75 24.17 21.94
Class D 28.72 24.15 21.91
<CAPTION>
CAPITAL GAIN INFORMATION
For the Year Ended December 31, 1998
<S> <C>
Paid $0.345
Undistributed Realized 1.493#
Unrealized 6.355##
</TABLE>
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 charge ("CDSC"), 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% CDSC, 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 CDSC is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
# Represents net gain realized in November and December 1998, payable
in 1999.
## Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1998.
7
<PAGE>
PORTFOLIO OVERVIEW
<TABLE>
<CAPTION>
Diversification of Net Assets
December 31, 1998
PERCENT OF NET ASSETS
DECEMBER 31,
-----------------------
ISSUES COST VALUE 1998 1997
-------- -------------- -------------- --------- ----------
<S> <C> <C> <C> <C> <C>
STOCKS AND CONVERTIBLE ISSUES:
Communications Infrastructure ....................... 12 $ 237,769,223 $ 282,946,230 4.6 6.8
Communications Services ............................. 7 266,018,734 385,111,309 6.3 1.0
Computer and Business Services ...................... 4 113,940,025 140,756,249 2.3 7.6
Computer Hardware/Peripherals ....................... 14 730,569,582 1,030,720,805 16.7 19.1
Computer Software ................................... 25 1,207,572,400 1,514,021,242 24.7 16.1
Contract Manufacturing/Circuit Boards ............... 6 272,090,755 319,384,375 5.2 4.0
Electronics Capital Equipment ....................... 8 424,873,209 442,994,075 7.2 15.8
Media ............................................... 11 763,920,644 1,061,172,188 17.2 11.4
Semiconductors ...................................... 13 731,498,195 875,860,746 14.2 13.3
---- --------------- --------------- ------ ------
100 4,748,252,767 6,052,967,219 98.4 95.1
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES ....................... 2 98,970,584 98,970,584 1.6 4.9
---- --------------- --------------- ------ ------
NET ASSETS ............................................ 102 $4,847,223,351 $6,151,937,803 100.0 100.0
==== =============== =============== ====== ======
</TABLE>
LARGEST INDUSTRIES
December 31, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Percent of Total
Net Assets Dollar Amount
---------- --------------
COMPUTER SOFTWARE 24.60% $1,514,021,242
MEDIA 17.30% $1,061,172,188
COMPUTER HARDWARE/PERIPHERALS 16.70% $1,030,720,805
SEMI-CONDUCTORS 14.20% $875,860,746
ELECTRONICS CAPITAL EQUIPMENT 7.20% $442,994,075
8
<PAGE>
PORTFOLIO OVERVIEW
Largest Portfolio Changes
During Past Six Months
SHARES
---------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- ---------- --------- ---------
Advanced Micro Devices ..................... 3,100,000 3,100,000
Applied Materials .......................... 1,300,000 1,300,000
C-Cube Microsystems ........................ 2,600,000 2,600,000
Check Point Software
Technologies ............................. 3,100,000 3,100,000
Electronic Arts ............................ 1,350,000 3,800,000
Fox Entertainment Group
(Class A) ................................ 2,500,000 2,500,000
Intel ...................................... 1,000,000 1,000,000
MediaOne Group ............................. 2,100,000 2,600,000
Microsoft .................................. 800,000 1,000,000
Tele-Communications
(Series A) TCI Group ..................... 1,500,000 2,500,000
SHARES
---------------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ---------- --------- ---------
American Power Conversion .................. 1,643,000 57,000
Ascend Communications ...................... 1,200,000 --
Cisco Systems .............................. 800,000 100,000
Citrix Systems ............................. 1,100,000 --
EMC ........................................ 4,200,000 2,800,000
International Business
Machines ................................. 450,000 --
Jabil Circuit .............................. 1,000,000 --
Maxim Integrated Products .................. 1,650,000 1,100,000
Novellus Systems ........................... 2,213,700 --
Time Warner ................................ 1,000,000 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
- --------------------------------------------------------------------------------
Largest Portfolio Holdings
December 31, 1998
SECURITY VALUE
- -------- ------------
Network Associates ............................................. $265,375,000
EMC ............................................................ 238,000,000
Chancellor Media ............................................... 227,257,813
CBS ............................................................ 214,512,500
Electronic Arts ................................................ 213,037,500
Electronics for Imaging ........................................ 201,042,812
Lexmark International Group
(Class A) .................................................... 145,725,000
Check Point Software Technologies .............................. 141,728,125
Clear Channel Communications ................................... 141,700,000
SCI Systems .................................................... 141,487,500
- --------------------------------------------------------------------------------
9
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
COMMON STOCKS 97.8%
COMMUNICATIONS
INFRASTRUCTURE 4.5%
ADC Telecommunications*
Provider of
hybrid fiber/coaxial
equipment 800,000 $ 27,700,000
Advanced Fibre Communications*
Provider of digital loop carrier
equipment 500,000 5,468,750
Aspect Telecommunications*
Developer and manufacturer
of automated call
distribution equipment 2,200,000 38,362,500
Cisco Systems*
Manufacturer of computer
network products 100,000 9,284,375
DSP Communications*
Developer of chipsets
used in wireless
communication handsets 1,750,000 26,796,875
ECI Telecommunications (Israel)
Provider of digital
telecommunications and
data transmission systems 1,500,000 53,109,375
Nokia (Class A) (ADRs) (Finland)
Developer and manufacturer
of cellular phones
and base stations 500,000 60,218,750
Oak Industries*@
Manufacturer of cable
television connectors and
fiber optic components 720,000 25,200,000
Tekelec*
Provider of
telecommunications
switching equipment 1,251,000 20,758,781
Xylan*
Provider of local area
networking products 500,000 9,046,875
--------------
275,946,281
--------------
COMMUNICATIONS
SERVICES 6.3%
ICG Communications*
Provider of broad band
telecommunications services 251,200 5,416,500
MCI WorldCom
Provider of long distance,
local, and data
telecommunications services 1,000,000 71,781,250
Pacific Gateway Exchange*@
International
telecommunications carrier 1,120,100 53,869,809
RSL Communications (Class A)*
Provider of international
telecommunications services 1,000,000 29,562,500
Tele-Communications (Series A)
TCI Group*
Owner and operator of
cable television systems 2,500,000 138,359,375
Tele-Communications (Series A)
TCI Ventures Group*
Holding company which
has stakes in international
cable, Internet, and
telephone ventures 2,700,000 63,871,875
Verio*
Provider of Internet
services to small and
mid-sized businesses 1,000,000 22,250,000
--------------
385,111,309
--------------
COMPUTER AND
BUSINESS SERVICES 2.3%
First Data
Information processor of
credit and debit card,
check, wire, and Internet
transactions 2,500,000 79,218,750
Galileo International
Provider of travel
reservation data services 600,000 26,100,000
Unisys*
Integrator of business
information systems 1,000,000 34,437,500
--------------
139,756,250
--------------
COMPUTER HARDWARE/
PERIPHERALS 16.7%
American Power Conversion*
Provider of back-up
power supply equipment
for computers 57,000 2,759,156
Apex PC Solutions@
Manufacturer of
switching systems
for computer network
administrators 1,350,000 38,812,500
- -------------------------
See footnotes on page 14.
10
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
COMPUTER HARDWARE/
PERIPHERALS (CONTINUED)
Apple Computer*
Provider of computer
hardware and software 500,000 $ 20,484,375
Comdisco
World's leading
computer hardware
leasing company 3,000,000 50,625,000
Creative Technology*@ (Singapore)
Provider of PC audio
and graphics products 8,126,000 121,890,000
Discreet Logic*@ (Canada)
Developer of digital
systems for film, television,
and the Internet 1,500,000 28,218,750
Electronics for Imaging*@
Manufacturer of peripherals
for color printers and copiers 5,030,000 201,042,812
EMC*
Manufacturer of enterprise
storage devices 2,800,000 238,000,000
Lexmark International Group
(Class A)*
Manufacturer of laser
and inkjet printers
and cartridges 1,450,000 145,725,000
Splash Technology Holdings*
Manufacturer of peripherals
for color printers and copiers 585,200 4,370,712
Storage Technology*
Manufacturer of tape-
and disk-based
data storage equipment 3,200,000 113,800,000
Western Digital
Manufacturer of magnetic
disk drives used in desktop
personal computers 1,000,000 15,062,500
Xerox
Developer, manufacturer,
and marketer of office
automation products 400,000 47,200,000
--------------
1,027,990,805
--------------
COMPUTER SOFTWARE 24.2%
3DO*@
Developer of
entertainment software 2,600,000 11,943,750
Acclaim Entertainment*@
Developer of
entertainment software 3,100,000 37,975,000
Activision*@
Developer of
entertainment software 1,100,000 12,100,000
Autodesk0
Developer of software for
architectural and mechanical
design, data management,
and mapping 3,235,000 137,992,969
Check Point Software
Technologies*@ (Israel)
Developer of network
"firewall" security systems 3,100,000 141,728,125
Compuware*
Mainframe software and
consulting services 1,000,000 78,093,750
Electronic Arts*@
Developer, marketer,
and distributor of
entertainment software 3,800,000 213,037,500
HNC Software*
Developer and vendor of
software for mission-critical
decision applications 500,000 20,218,750
Hyperion Solutions*
Worldwide provider of
applications software 500,000 9,031,250
The Learning Company*
Developer of education
and reference software
for the PC 4,000,000 103,750,000
Microsoft*
Provider of personal
computer operating system
and application
software products 1,000,000 138,531,250
Network Associates*
Supplier of network
security and anti-virus
utilities 4,000,000 265,375,000
Novell*
Provider of network software 1,000,000 18,156,250
Parametric Technology*
Developer of mechanical
design software 5,500,000 89,375,000
PLATINUM Technology
International*
Provider of systems
management software 3,550,000 68,226,563
- -------------------------
See footnotes on page 14.
11
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
COMPUTER
SOFTWARE (CONTINUED)
Rational Software*
Provider of applications
development and
test software 1,600,000 $ 42,400,000
Structural Dynamics Research*@
Developer of mechanical
design software 3,020,000 59,833,750
Tecnomatix Technologies*@ (Israel)
Developer and retailer of
computer-aided production
engineering software 725,000 12,664,844
VERITAS Software*
Developer and marketer
of back-up storage software
for computer systems 500,000 29,937,500
--------------
1,490,371,251
--------------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS 5.2%
ADFlex Solutions*@
Manufacturer of flexible
circuit boards 1,000,000 6,875,000
DII Group*
Provider of contract
manufacturing services 1,000,000 22,937,500
Hadco*@
Manufacturer of complex
printed circuit boards 850,000 29,696,875
Sanmina*
Manufacturing services for
electronic equipment
manufacturers 300,000 18,712,500
SCI Systems*
Provider of contract
manufacturing services 2,450,000 141,487,500
SMART Modular Technologies*@
Assembler of
memory modules 3,600,000 99,675,000
--------------
319,384,375
--------------
ELECTRONICS CAPITAL
EQUIPMENT 7.2%
Applied Materials*
World's largest manufacturer
of semiconductor wafer
fabrication equipment 1,300,000 55,534,375
Asyst Technologies*@
Manufacturer of
miniature clean-room
environments for the
manufacturing of
silicon wafers 757,600 15,483,450
Cognex*@
Manufacturer of
machine vision systems 2,200,000 43,862,500
Credence Systems*@
Manufacturer of
automated semiconductor
test equipment 1,800,000 33,187,500
Electro Scientific Industries*@
Manufacturer of memory
circuit repair systems
and circuit board
drilling systems 1,000,000 45,312,500
Etec Systems*@
Designer and
manufacturer of
photomask manufacturing
systems 1,300,000 52,000,000
Orbotech*@ (Israel)
Manufacturer of automated
optical inspection systems
for circuit boards and flat
panel displays 1,360,000 64,132,500
Teradyne*
Manufacturer of
automated semiconductor
test equipment 3,150,000 133,481,250
--------------
442,994,075
--------------
MEDIA 17.2%
Cablevision Systems (Class A)*
Owner and operator of
cable television systems 1,100,000 55,206,250
CBS
Radio and television
broadcasting 6,550,000 214,512,500
Chancellor Media*
Radio broadcasting 4,750,000 227,257,813
Clear Channel Communications*
Owner and operator of
radio and television stations 2,600,000 141,700,000
Cox Radio (Class A)*
Operator of radio stations 630,000 26,617,500
Fox Entertainment Group
(Class A)*
Worldwide distributor
of movies and
television programs 2,500,000 62,968,750
Infinity Broadcasting (Class A)*
Operator of radio
stations; provider of
outdoor advertising 2,000,000 54,750,000
- -------------------------
See footnotes on page 14.
12
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES VALUE
--------- -------
MEDIA (CONTINUED)
MediaOne Group*
Owner and operator of
cable television systems 2,600,000 $ 122,200,000
Sinclair Broadcast Group
(Class A)*
Operator of television
and radio stations 2,300,000 45,496,875
USA Networks*
Operator of cable
television networks 2,000,000 66,187,500
Ziff-Davis*
Integrated media company
focused on computer
and Internet-related
technology 2,800,000 44,275,000
--------------
1,061,172,188
--------------
SEMICONDUCTORS 14.2%
Advanced Micro Devices*
Microprocessor supplier
for the computer industry 3,100,000 89,706,250
Amkor Technology*@
Provider of semiconductor
packaging and test services 8,170,000 88,593,438
Cadence Design Systems*
Electronic design
automation software 1,000,000 29,750,000
C-Cube Microsystems*@
Provider of digital video
compression and
decompression circuits
and systems 2,600,000 70,606,250
Dallas Semiconductor@
Manufacturer of mixed-
signal integrated circuits 1,550,000 63,162,500
Intel
Manufacturer of
microprocessors and
memory circuits 1,000,000 118,531,250
Lattice Semiconductor*@
Designer and manufacturer
of programmable
logic devices 2,050,000 94,107,813
Level One Communications@
Developer of semiconductors
used in data communications
applications 977,400 34,728,244
SHARES OR
PRIN. AMT. VALUE
---------- -------
SEMICONDUCTORS (continued)
Maxim Integrated Products*
Manufacturer of analog
and mixed-signal
integrated circuits 1,100,000 shs.$ 48,021,875
Microchip Technology*@
Supplier of field-
programmable
microcontrollers 2,125,000 78,492,188
Synopsys*
Developer of integrated
circuit design software 2,600,000 140,887,500
Xilinx*
Supplier of field-
programmable
gate arrays 250,000 16,273,438
--------------
872,860,746
--------------
TOTAL COMMON STOCKS
(COST $4,709,199,678) 6,015,587,280
--------------
CONVERTIBLE
BONDS 0.2%
COMPUTER HARDWARE/
PERIPHERALS
Candescent Technologies,
7%, due 5/1/2003
Manufacturer of flat
panel displays $ 3,000,000 2,730,000
--------------
COMPUTER
SOFTWARE 0.2%
Activision,
63/4%, due 1/1/2005+
Developer of
entertainment software 10,000,000 8,600,000
--------------
TOTAL CONVERTIBLE
BONDS
(Cost $13,003,150) 11,330,000
--------------
CONVERTIBLE PREFERRED
STOCKS 0.4%
COMMUNICATIONS
INFRASTRUCTURE 0.1%
Diamond Lane
Communications*#
Designer of high-speed
ADSL modems and related
networking equipment 202,020 shs. 1,999,998
UniSite (Class C)*#
Owner and operator of
telecommunications towers
for wireless phone service 10,796 4,999,951
--------------
6,999,949
--------------
- -------------------------
See footnotes on page 14.
13
<PAGE>
PORTFOLIO OF INVESTMENTS
December 31, 1998
SHARES OR
WARRANTS VALUE
--------- -------
COMPUTER AND
BUSINESS SERVICES
Freegate (Series D)*#
Provider of Internet
access systems 333,333 shs.$ 999,999
--------------
Computer
Software 0.3%
CrossRoads Software*#
Developer of connecting
software to link client/
server applications 800,000 4,000,000
iName*#
Provider of Internet
e-mail services 214,999 wts. 55,285
iName (Class C)*#
Provider of Internet
e-mail services 1,228,570 shs. 4,244,709
iVillage (Series E)*#
Provider of online
content geared to women 1,666,666 4,749,998
Xtra On-Line (Series C)*#
Developer and provider
of Internet-based travel
reservation software 304,878 1,999,999
--------------
15,049,991
--------------
SHARES VALUE
--------- -------
SEMICONDUCTORS
Transmeta (Series E)*#
Designer of low power
microprocessors for
notebook personal
computers 500,000 $ 3,000,000
--------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $26,049,939) 26,049,939
--------------
SHORT-TERM
HOLDINGS 1.9%
(Cost $115,000,000) 115,000,000
--------------
TOTAL
INVESTMENTS 100.3%
(Cost $4,863,252,767) 6,167,967,219
OTHER ASSETS
LESS LIABILITIES (0.3)% (16,029,416)
--------------
NET ASSETS 100.0% $6,151,937,803
==============
- ---------------------------------
* Non-income producing security.
+ Rule 144A security.
# Restricted security.
@ Affiliated issuers (Fund's holdings representing 5% or more of the outstanding
voting securities).
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
14
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value:
Stocks and convertible issues* (cost $4,748,252,767) ......................... $6,052,967,219
Short-term holdings (cost $115,000,000) ...................................... 115,000,000 $6,167,967,219
--------------
Cash ............................................................................................. 5,618,517
Receivable for securities sold ................................................................... 125,153,360
Receivable for Capital Stock sold ................................................................ 37,956,488
Expenses prepaid to shareholder service agent .................................................... 1,428,346
Receivable for interest and dividends ............................................................ 634,076
Other ............................................................................................ 93,937
--------------
Total Assets ..................................................................................... 6,338,851,943
--------------
LIABILITIES:
Payable for securities purchased ................................................................. 150,536,996
Payable for Capital Stock repurchased ............................................................ 26,550,204
Accrued expenses, taxes, and other ............................................................... 9,826,940
--------------
Total Liabilities ................................................................................ 186,914,140
--------------
Net Assets ....................................................................................... $6,151,937,803
==============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value; 1,000,000,000 shares authorized;
205,307,436 shares outstanding):
Class A ........................................................................................ $ 12,660,997
Class B ........................................................................................ 3,593,519
Class D ........................................................................................ 4,276,228
Additional paid-in capital ....................................................................... 4,520,238,679
Accumulated net investment loss .................................................................. (117,642)
Undistributed net realized gain .................................................................. 306,571,570
Net unrealized appreciation of investments ....................................................... 1,304,714,452
--------------
Net Assets ....................................................................................... $6,151,937,803
==============
NET ASSET VALUE PER SHARE:
Class A ($3,890,595,560 / 126,609,972 shares) .................................................... $30.73
======
Class B ($1,033,104,930 / 35,935,185 shares) ..................................................... $28.75
======
Class D ($1,228,237,313 / 42,762,279 shares) ..................................................... $28.72
======
</TABLE>
- ---------
* Includes affiliated issuers (issuers in which the Fund's holdings represent
5% or more of the outstanding voting securities) with a cost of
$1,741,569,712 and a value of $1,916,225,567.
See Notes to Financial Statements.
15
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ....................................................................... $ 10,809,132
Dividends (net of foreign taxes withheld of $95,917) ........................... 4,754,617
--------------
Total Investment Income .......................................................................... $ 15,563,749
EXPENSES:
Management fee ................................................................. 44,375,965
Distribution and service fees .................................................. 25,830,999
Shareholder account services ................................................... 12,787,954
Shareholder reports and communications ......................................... 1,180,712
Custody and related services ................................................... 884,516
Registration ................................................................... 667,237
Auditing and legal fees ........................................................ 134,080
Directors' fees and expenses ................................................... 88,825
Miscellaneous .................................................................. 151,227
--------------
Total Expenses ................................................................................... 86,101,515
--------------
Net Investment Loss .............................................................................. (70,537,766)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments* .............................................. 530,305,943
Net change in unrealized appreciation of investments ........................... 1,092,454,836
--------------
Net Gain on Investments .......................................................................... 1,622,760,779
--------------
Increase in Net Assets from Operations ........................................................... $1,552,223,013
==============
</TABLE>
- --------------------------------------------------------------------------------
* Includes net realized loss from affiliated issuers of $298,715,949.
See Notes to Financial Statements.
16
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment loss ............................................................ $ (70,537,766) $ (57,242,089)
Net realized gain on investments ............................................... 530,305,943 909,728,876
Net change in unrealized appreciation of investments ........................... 1,092,454,836 (144,024,652)
-------------- --------------
Increase in Net Assets from Operations ......................................... 1,552,223,013 708,462,135
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ..................................................................... (43,896,582) (621,494,484)
Class B ..................................................................... (12,119,376) (87,967,545)
Class D ..................................................................... (14,706,286) (196,816,410)
-------------- --------------
Decrease in Net Assets from Distributions ...................................... (70,722,244) (906,278,439)
-------------- --------------
<CAPTION>
SHARES
--------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997
------------ -----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A .................................. 25,111,674 30,847,206 621,592,114 837,264,966
Class B .................................. 16,415,913 14,952,067 386,088,334 391,781,442
Class D .................................. 8,380,790 8,669,975 196,269,419 225,248,842
Exchanged from associated Funds:
Class A .................................. 114,681,500 29,422,861 2,841,379,108 787,728,489
Class B .................................. 2,120,230 1,194,212 49,133,796 29,695,869
Class D .................................. 48,857,178 12,022,132 1,142,557,017 310,543,695
Shares issued in payment of
gain distributions:
Class A .................................. 1,582,669 23,313,230 41,174,599 569,075,182
Class B .................................. 465,356 3,579,064 11,341,088 82,568,805
Class D .................................. 565,338 7,940,049 13,766,096 183,018,029
------------ ------------ -------------- --------------
Total ....................................... 218,180,648 131,940,796 5,303,301,571 3,416,925,319
------------ ------------ -------------- --------------
Cost of shares repurchased:
Class A .................................. (33,032,174) (23,014,559) (817,466,916) (611,914,607)
Class B .................................. (3,508,482) (1,035,991) (81,912,096) (27,730,271)
Class D .................................. (9,348,809) (6,201,793) (216,747,724) (158,791,776)
Exchanged into associated Funds:
Class A .................................. (115,379,614) (29,624,808) (2,870,772,283) (799,242,903)
Class B .................................. (2,592,803) (997,743) (58,649,491) (25,590,755)
Class D .................................. (48,834,512) (11,933,465) (1,145,506,919) (311,146,906)
------------ ------------ -------------- --------------
Total ....................................... (212,696,394) (72,808,359) (5,191,055,429) (1,934,417,218)
------------ ------------ -------------- --------------
Increase in Net Assets from Capital
Share Transactions ....................... 5,484,254 59,132,437 112,246,142 1,482,508,101
============ ============ -------------- --------------
Increase in Net Assets ......................................................... 1,593,746,911 1,284,691,797
NET ASSETS:
Beginning of year .............................................................. 4,558,190,892 3,273,499,095
-------------- --------------
End of Year (including accumulated net investment loss of
$117,642 and $114,234, respectively) ........................................ $6,151,937,803 $4,558,190,892
============== ==============
</TABLE>
- ---------
See Notes to Financial Statements.
17
<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 charge ("CDSC") 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 CDSC, 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 CDSC, 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 ex-dividend dates.
Interest income is recorded on an accrual basis.
d. Multiple Class Allocations -- All income, expenses (other than
class-specific expenses), and realized and unrealized gains or losses are
allocated daily to each class of shares based upon the relative value of
shares of each class. Class-specific expenses, which include distribution
and service fees and any other items that are specifically attributable to
a particular class, are charged directly to such class. For the year ended
December 31, 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.
For the year ended December 31, 1998, the Fund redeemed 212,696,394 of
its shares from shareholders aggregating $5,191,055,429, of which
approximately $149,500,000 represents capital gain distributions. This
information is provided for federal income tax purposes only.
3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended December 31, 1998, amounted to $6,324,536,169 and $6,232,299,062,
respectively.
At December 31, 1998, the cost of investments for federal income tax
purposes was $4,886,760,345, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $1,442,272,305 and
$161,065,431, respectively.
4. Short-Term Investments -- At December 31, 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 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.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Seligman Advisors, Inc. (the "Distributor") (formerly Seligman Financial
Services, Inc.), agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $1,537,225 from sales of Class
A shares, after commissions of $12,482,693 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 year ended December 31,
1998, fees incurred under the Plan aggregated $8,106,817, 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 year ended December 31, 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 $7,384,792 and $10,339,390, respectively.
The Distributor is entitled to retain any CDSC 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 year ended
December 31, 1998, such charges amounted to $475,038.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC 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 year ended December 31, 1998, amounted to
$576,783.
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, 1998, Seligman Services, Inc. received commissions of $404,711 from the sale
of shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $980,100, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $12,787,954 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 December 31, 1998, of $117,642
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%. 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 date of the agreement but is
renewable with the consent of the participating banks. Through December 31,
1998, the Fund has not borrowed from the credit facility.
7. Subsequent Event -- Litigation -- The Fund, certain of its current and former
directors, and the Manager have been named in a lawsuit filed in the United
States District Court for the Northern District of Maryland on February 5, 1999.
The complaint makes various allegations and claims relating to the February 1996
special meeting of the Fund's shareholders at which an increase in the
management fee rate payable to the Manager by the Fund was approved. The Fund
believes the claims to be without merit and intends to defend the action
vigorously.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
8. Affiliated Issuers -- As defined under the Investment Company Act of 1940, as
amended, affiliated issuers are those issuers in which the Fund's holdings
represent 5% or more of the outstanding voting securities of the issuer. A
summary of the Fund's transactions in the securities of these issuers during the
year ended December 31, 1998, is as follows:
<TABLE>
<CAPTION>
GROSS GROSS REALIZED
BEGINNING PURCHASES SALES AND ENDING GAIN ENDING
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES (LOSS) VALUE
- ------------ ---------------------------------------------------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
3DO ........................... 2,200,000 600,000 200,000 2,600,000 $ (2,059,832) $ 11,943,750
Acclaim Entertainment ......... -- 3,100,000 -- 3,100,000 -- 37,975,000
Activision .................... 1,000,000 400,000 300,000 1,100,000 (843,215) 12,100,000
ADFlex Solutions .............. 900,000 1,000,000 900,000 1,000,000 (11,714,281) 6,875,000
Amkor Technology .............. -- 8,170,000 -- 8,170,000 -- 88,593,438
ANSYS ......................... 1,350,000 -- 1,350,000 -- (4,535,331) --
Apex PC Solutions ............. -- 1,350,000 -- 1,350,000 -- 38,812,500
Asyst Technologies ............ 630,000 370,000 242,400 757,600 (4,535,983) 15,483,450
Autodesk ...................... -- 3,535,000 300,000 3,235,000 (7,249,237) 137,992,969
C-Cube Microsystems ........... -- 2,600,000 -- 2,600,000 -- 70,606,250
Check Point Software
Technologies ................ 50,000 3,211,400 161,400 3,100,000 130,973 141,728,125
CIDCO ......................... 1,500,000 -- 1,500,000 -- (31,618,060) --
CKS Group ..................... 1,025,000 100,000 1,125,000 -- 3,758,828 --
Cognex ........................ 2,350,000 250,000 400,000 2,200,000 (7,506,951) 43,862,500
Creative Technology ........... 4,250,000 3,876,000 -- 8,126,000 -- 121,890,000
Credence Systems .............. 2,180,000 -- 380,000 1,800,000 (10,289,172) 33,187,500
Dallas Semiconductor .......... 1,119,400 630,600 200,000 1,550,000 (2,740,871) 63,162,500
Discreet Logic ................ -- 1,500,000 -- 1,500,000 -- 28,218,750
Electro Scientific Industries . 1,110,000 -- 110,000 1,000,000 (3,392,964) 45,312,500
Electronic Arts ............... 1,250,000 3,230,000 680,000 3,800,000 5,258,888 213,037,500
Electronics for Imaging ....... 4,600,000 730,000 300,000 5,030,000 (10,460,413) 201,042,812
Encad ......................... 750,000 550,300 1,300,300 -- (29,442,110) --
Etec Systems .................. 1,800,000 1,150,000 1,650,000 1,300,000 (17,138,356) 52,000,000
Hadco ......................... 1,125,000 125,000 400,000 850,000 (15,300,019) 29,696,875
In Focus Systems .............. 685,000 1,231,200 1,916,200 -- (4,618,874) --
Information Resources ......... 1,000,000 500,000 1,500,000 -- (13,795,114) --
Kulicke & Soffa Industries .... 2,300,000 -- 2,300,000 -- (47,841,685) --
Lattice Semiconductor ......... 2,100,000 350,000 400,000 2,050,000 (7,167,233) 94,107,813
Level One Communications ...... -- 2,000,000 1,022,600 977,400 9,014,067 34,728,244
Microchip Technology .......... 2,950,000 200,000 1,025,000 2,125,000 13,093,179 78,492,188
Novellus Systems .............. 2,725,000 100,000 2,825,000 -- (14,119,704) --
Oak Industries ................ 1,050,000 120,000 450,000 720,000 2,604,442 25,200,000
Orbotech ...................... -- 1,360,000 -- 1,360,000 -- 64,132,500
Pacific Gateway Exchange ...... -- 1,274,900 154,800 1,120,100 1,203,668 53,869,809
Read-Rite ..................... 3,800,000 -- 3,800,000 -- (42,909,092) --
SMART Modular Technologies .... -- 3,600,000 -- 3,600,000 -- 99,675,000
Structural Dynamics Research .. 3,250,000 20,000 250,000 3,020,000 (3,542,290) 59,833,750
Tecnomatix Technologies ....... -- 725,000 -- 725,000 -- 12,664,844
Unitrode ...................... 1,600,000 -- 1,600,000 -- (13,794,642) --
VLSI Technology ............... 2,550,000 450,000 3,000,000 -- (27,164,565) --
------------- --------------
TOTAL ......................... $(298,715,949) $1,916,225,567
============= ==============
</TABLE>
9. Restricted Securities -- At December 31, 1998, the Fund owned eight 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 December 31, 1998, are as
follows:
INVESTMENTS ACQUISITION DATES COST VALUE
- ----------- ----------------- ----------- -----------
Convertible Preferred Stocks:
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
iName (Class C)* 8/4/98 4,299,994 4,299,994
iVillage (Series E) 11/30/98 4,749,998 4,749,998
Transmeta (Series E) 7/1/98 3,000,000 3,000,000
UniSite (Class C) 12/19/97 4,999,951 4,999,951
Xtra On-Line (Series C) 7/16/98 2,000,000 2,000,000
----------- -----------
$26,049,940 $26,049,940
=========== ===========
- ---------
* Warrants attached.
20
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five years or from its inception if less than five
years. Certain information reflects financial results for a single share of a
Class that was held throughout the periods shown. Per share amounts are
calculated using average shares outstanding. "Total return" shows the rate that
you would have earned (or lost) on an investment in each Class, assuming you
reinvested all your capital gain distributions. Total returns do not reflect any
sales charges, and are not annualized for periods of less than one year.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year ...................... $ 23.25 $ 23.51 $ 21.99 $ 16.64 $ 13.43
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) ............................ (0.28) (0.33) (0.26) (0.33) (0.19)
Net realized and unrealized gain
on investments ........................................ 8.11 6.01 2.84 7.59 4.86
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ........................ 7.83 5.68 2.58 7.26 4.67
---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from net realized capital gain ............ (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Total Distributions ..................................... (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year ............................ $ 30.73 $ 23.25 $ 23.51 $ 21.99 $ 16.64
========== ========== ========== ========== ==========
TOTAL RETURN: 33.92% 22.95% 11.94% 43.39% 35.30%
Ratios/Supplemental Data:
Net assets, end of year (000s omitted) .................. $3,890,596 $3,107,481 $2,414,672 $1,940,693 $ 307,542
Ratio of expenses to average net assets ................. 1.44% 1.53% 1.68% 1.61% 1.65%
Ratio of net income (loss) to average net assets ........ (1.13)% (1.21)% (1.16)% (1.31)% (1.27)%
Portfolio turnover rate ................................. 126.70% 164.57% 121.32% 65.77% 104.08%
</TABLE>
- ---------
See footnotes on page 22.
21
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
----------------------------------------
YEAR ENDED 4/22/96*
DECEMBER 31, TO
------------------------- ----------
1998 1997 12/31/96
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period .................. $ 21.94 $ 22.62 $ 21.51
---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) .......................... (0.44) (0.50) (0.28)
Net realized and unrealized gain
on investments ...................................... 7.60 5.76 2.45
---------- ---------- ----------
Total from Investment Operations ...................... 7.16 5.26 2.17
---------- ---------- ----------
Less Distributions:
Distributions from net realized capital gain .......... (0.35) (5.94) (1.06)
---------- ---------- ----------
Total Distributions (0.35) (5.94) (1.06)
---------- ---------- ----------
Net Asset Value, End of Period ........................ $ 28.75 $ 21.94 $ 22.62
========== ========== ==========
TOTAL RETURN: 32.89% 21.96% 10.30%
Ratios/Supplemental Data:
Net assets, end of period (000s omitted) .............. $1,033,105 $ 505,342 $ 120,848
Ratio of expenses to average net assets ............... 2.19% 2.28% 2.44%+
Ratio of net income (loss) to average net assets ...... (1.88)% (1.96)% (1.96)%+
Portfolio turnover rate ............................... 126.70% 164.57% 121.32%++
<CAPTION>
CLASS D
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Year .................... $ 21.91 $ 22.61 $ 21.35 $ 16.31 $ 13.32
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (loss) .......................... (0.44) (0.50) (0.40) (0.50) (0.33)
Net realized and unrealized gain
on investments ...................................... 7.60 5.74 2.72 7.45 4.78
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ...................... 7.16 5.24 2.32 6.95 4.45
---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from net realized capital gain .......... (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Total Distributions ................................... (0.35) (5.94) (1.06) (1.91) (1.46)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year .......................... $ 28.72 $ 21.91 $ 22.61 $ 21.35 $ 16.31
========== ========== ========== ========== ==========
TOTAL RETURN: 32.94% 21.86% 11.07% 42.37% 33.94%
Ratios/Supplemental Data:
Net assets, end of year (000s omitted) ................ $1,228,237 $ 945,368 $ 737,979 $ 609,332 $ 96,100
Ratio of expenses to average net assets ............... 2.19% 2.28% 2.43% 2.37% 2.50%
Ratio of net income (loss) to average net assets ...... (1.88)% (1.96)% (1.91)% (2.07)% (2.20)%
Portfolio turnover rate ............................... 126.70% 164.57% 121.32% 65.77% 104.08%
</TABLE>
- ---------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
See Notes to Financial Statements.
22
<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, 1998, 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, 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 December 31, 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
February 5, 1999
- --------------------------------------------------------------------------------
23
<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.
Director, New York 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, KeySpan Energy Corporation
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, ICI Mutual Insurance Company
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
- --------------------------------------------------------------------------------
24
<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.
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 Charge (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC 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, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
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 an investment company 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 1998 Mutual Fund Fact Book.
25
<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 ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
EQCI2 12/98 Printed on Recycled Paper
