SELIGMAN
-------------------------
COMMUNICATIONS
AND INFORMATION
FUND, INC.
[GRAPHIC OMITTED]
ANNUAL REPORT
DECEMBER 31, 1999
-------------
SEEKING CAPITAL GAIN
BY INVESTING
IN COMPANIES
OPERATING IN THE
COMMUNICATIONS,
INFORMATION, AND
RELATED INDUSTRIES
[SELIGMAN 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.
TIMES CHANGE...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 136 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 equity funds that specialize in small companies,
technology, or international securities, and bond funds that focus on high-yield
issuers, US government bonds, or municipal 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 in the new millennium.
[GRAPHIC OMITTED]
JAMES, JESSE, AND JOSEPH SELIGMAN, 1870
TABLE OF CONTENTS
To the Shareholders ....................................................... 1
Interview With Your Portfolio Manager ..................................... 2
Federal Tax Status of 1999 Gain Distribution
For Taxable Accounts .................................................... 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 ...................................................... 23
Report of Independent Auditors ............................................ 25
Board of Directors ........................................................ 26
Executive Officers AND For More Information ............................... 27
Glossary of Financial Terms ............................................... 28
<PAGE>
TO THE SHAREHOLDERS
Seligman Communications and Information Fund posted a 1999 total return of
74.51% -- the Fund's best fiscal year performance ever. This performance far
outpaced the 21.04% total return delivered by the Standard & Poor's 500
Composite Stock Price Index (S&P 500), but lagged the 137.64% total return
delivered by the Lipper Science and Technology Funds Average. The Fund benefited
from an exceptionally strong market for the technology sector during the period
and from the Fund's skilled investment management. During the past fiscal year,
the Fund's manager welcomed four new members to the investment team: Matthew
Alfano, Gregory M. Cote, Michael J. Guthrie, and Steven Werber.
As the 20th century came to a close, all major US stock indices -- the Dow Jones
Industrial Average, the S&P 500, and the NASDAQ -- stood at record highs. The
broad-based S&P 500 had achieved a fifth consecutive year of greater than 20%
returns -- a record-breaking run. Supporting these impressive markets was the US
economic expansion, which is now the longest in US history. Throughout 1999,
unemployment stood at a near 30-year low, inflation remained tame, and consumer
confidence soared. In addition, the global economy -- which just over one year
ago threatened US growth -- rebounded strongly.
By year-end, global economies were stronger than perhaps anyone had anticipated
at the start of the year. Throughout 1999, the US showed few signs of slowing,
triggering concerns regarding inflation. In response, the Federal Reserve Board
increased the federal funds rate three times, completely reversing its 1998 rate
cuts. So far in the year 2000, the Federal Reserve Board has raised rates once,
for an additional 25 basis points. The Federal Reserve Board's skillful watch
over the economy, both in its response to the worldwide crisis of 1998 and its
vigilance regarding inflation in 1999, has been a key contributor to the
long-term health of this remarkable economy.
While 1999 will certainly be remembered as a positive year for equity investors,
it was also a year of sharp contrasts. Despite stellar performances by the
popular averages, the market was extraordinarily narrow. Just over half the
stocks in the S&P 500 had positive returns. Large-capitalization growth and
technology companies continued to outpace the broader market.
As we look into the 21st century, we believe there is much to be optimistic
about, with several long-term factors that may support equity prices for many
years. First are global demographic trends. The fastest-growing segment of the
population in the US and other developed countries is 45- to 64-year-olds, which
is likely to increase its savings rate as its members mature. We believe that
this will produce a groundswell of savings, which will be a significant support
for equity prices in the coming years.
Second, America has been going through disinflation since 1982, and nominal
interest rates have been in an 18-year downtrend. Despite the uptick in rates
during 1999, we believe that the long-term trend is one of continued benign
inflation and low interest rates -- a positive environment for the stock market.
Third, the global economy has rebounded strongly since the 1998 financial
crisis. We believe that this will continue, allowing investors to benefit from
attractive overseas investment opportunities.
Fourth, new technology has allowed the economy to become vastly more productive,
and the technology sector now accounts for approximately 25% of gross domestic
product growth and approximately 40% of capital spending. Technology has been,
and will continue to be, responsible for substantial changes in business
activity, both business-to-business and business-to-consumer. While J. & W.
Seligman &Co. Incorporated is highly enthusiastic about technology, we believe
that investment behavior in this area has become increasingly speculative and,
as we seek opportunities in this exciting sector, we will remain committed to
finding solid investment value and to considering company fundamentals.
Thank you for your continued confidence in Seligman Communications and
Information Fund. A discussion with your Portfolio Manager, as well as a
performance overview and financial statements, including a portfolio of
investments, follows this letter. We look forward to serving your investment
needs for many years to come.
By order of the Board of Directors,
/s/ WILLIAM C. MORRIS
- --------------------
William C. Morris
Chairman
/s/ BRIAN T. ZINO
-----------------
Brian T. Zino
President
February 11, 2000
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q: HOW DID SELIGMAN COMMUNICATIONS AND INFORMATION FUND PERFORM IN 1999?
A: Nineteen ninety-nine was a record-breaking year for Seligman Communications
and Information Fund, with a total return of 74.51% based on the net asset
value of Class A shares. This performance far outpaced the 21.04% return
posted by the Standard & Poor's 500 Composite Stock Price Index (S&P 500),
but lagged the 137.64% return delivered by the Fund's peers, as measured by
the Lipper Science and Technology Funds Average. The Fund's underperformance
relative to its peers can mostly be attributed to a lackluster first fiscal
quarter, in which a number of the Fund's software investments reported
disappointing results. Although relative performance improved throughout the
year, we were unable to overcome the first quarter deficit. Additionally,
the Lipper Average contains a number of small, start-up funds, which
delivered healthy returns within a short-time period. These funds have not,
however, been tested over a long time period.
Q: WHAT FACTORS CONTRIBUTED TO THE OVERALL STRENGTH OF THE TECHNOLOGY SECTOR IN
1999?
A: Technology was the best-performing sector, and it is playing an
ever-increasing role in the economy and in the stock market. The sector's
importance received public attention when, in November, the Dow Jones
Industrial Average, the most widely watched stock-market index, shed four
old economy stocks to make room for four new economy stocks. Three of these
four -- Intel, Microsoft, and SBC Communications -- are technology stocks.
Q: WHAT PORTFOLIO HOLDINGS INFLUENCED THE FUND'S INVESTMENT RESULTS?
A: We were pleased with the performances of a number of the portfolio's
holdings during 1999. The past year was a record year for takeovers, and 12
of the Fund's holdings, because of their attractive valuations, became
takeover candidates, which benefited the Fund.
Among the sectors that performed well for the Fund were Semiconductors and
Semiconductor Equipment, Satellites, Computer Hardware, Contract
Manufacturing, Radio, and Security Software. The Networking and
Telecommunications Equipment sectors of the portfolio performed extremely
well; however, the Fund's underweighting in these sectors hurt relative
performance. The Fund's holdings in Computer-Aided Design Software performed
poorly over the course of the year due to continued weakness in Asia and a
leveling off in demand in the United States.
Q: WHAT IS YOUR CURRENT OPINION ON INTERNET STOCKS?
A: The Internet is an exciting development that is changing the way business is
conducted, both among businesses, and between businesses and consumers.
However, it is also a highly volatile and often speculative
[PHOTO OMITTED] [PHOTO OMITTED]
WEST COAST TECHNOLOGY TEAM: (FROM EAST COAST TECHNOLOGY TEAM: (FROM
LEFT) MARIANNE HURLOW LEFT) LAWRENCE RUSSO, KEI YAMAMOTO,
(ADMINISTRATIVE ASSISTANT), PAUL SHANEAN AUSTIN (ADMINISTRATIVE
WICK (PORTFOLIO MANAGER), (SEATED) ASSISTANT), (SEATED) STORM BOSWICK;
PATRICK RENDA, (NOT SHOWN) MATT (NOT SHOWN) GREGORY M. COTe,
ALFANO, MICHAEL J. GUTHRIE STEVEN WERBER
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
area. Most Internet companies have not delivered any earnings, and it is
unclear when they will be able to do so. Thus, despite the significant
impact that we believe the Internet will have overall, we are wary of the
risk-reward tradeoffs implicit in purchasing extremely expensive public
Internet stocks. We have, however, found some appropriate opportunities in
this sector among private Internet companies, whose valuations we believe
are reasonable. In 1999, nine of these private companies in the portfolio
went public, which benefited the Fund.
In addition, most of the Fund's investments in semiconductors,
communications software, and hardware are directly or indirectly connected
to the growth of the Internet. Within the semiconductor area, for example,
most of the Fund's investments are in communications and networking-oriented
chip companies. Even our radio holdings have benefited from a surge in
advertising from newly public Internet companies.
Q: WHAT DO YOU BELIEVE WILL BE THE KEY TRENDS IN THE TECHNOLOGY SECTOR DURING
THE YEAR 2000?
A: Microsoft's release of Windows 2000, scheduled for February 17, is an
important development for 2000. The new release of this widely used
operating system requires large amounts of computer memory to operate. This
should be positive for the semiconductor industry as personal computers will
need to be manu- factured with enough memory to accommodate Windows 2000. It
should also be positive for the personal computer industry as consumers
purchasing Windows 2000 will require upgraded computers.
Another major trend, of course, is the Internet. This medium is emerging as
the main engine of growth for the entire sector, and is improving business
productivity in myriad ways: enabling telecommuting, aiding in gathering
cost information, improving communications within organizations, and
generally reducing transaction costs. While the Internet is now widely used
only in the United States and western Europe, we believe that it will
continue to expand to become a truly global phenomenon.
The Internet is also the catalyst for the explosion in bandwidth taking
place throughout the world's wire networks. Technological advances such as
wavelength division multiplexing, optical switches, terabit routers, and
cable modems will serve to accelerate the usefulness of the Internet in the
years ahead.
Other major trends for the technology sector are the growth of wireless
communications and digital consumer electronics. In 1999, the wireless
handset market grew from 150 million to 250 million units -- an increase of
more than 60%. That figure is expected to grow to 400 million in 2000.
In the realm of consumer electronics, new products based on digital
technology are just starting to emerge. They include digital cameras,
digital versatile disk (DVD) players, personal digital assistants, personal
video recorders, global positioning systems, and digital set-top boxes for
cable and satellite television. All of these new technologies consume vast
amounts of electronic components. It is therefore not surprising that the
outlook for the semiconductor industry is the best it has been since 1995.
A TEAM APPROACH
Seligman Communications and Information Fund is managed by the Seligman Global
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.
3
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
PAUL H. WICK
Q: DO YOU HAVE ANY CONCERNS REGARDING THE YEAR AHEAD?
A: Yes, two in particular. First, we are concerned about the US government's
antitrust suit against Microsoft. We believe that an adverse ruling
resulting in a break-up of Microsoft would not only adversely affect its
stock price, but may shake the confidence of technology investors.
The other risk is stock-price valuations. Technology stocks have risen to
valuations never seen before. While in some instances these high valuation
levels may be justified, there are numerous unproven, loss-ridden companies
selling at multi-billion-dollar market capitalizations. We are especially
cautious of the large crop of Internet software and infrastructure companies
which came public in 1999. Insider and venture lock-ups will be expiring
soon, and we anticipate a significant increase in the number of shares of
these companies available in the market, which may depress the prices of
these stocks.
Q: WHAT IS YOUR OUTLOOK?
A: While sector fundamentals are outstanding, valuations are extremely high by
historical standards. Hence, we have become more vigilant in evaluating the
risk of the companies held by the Fund, and we have begun to pare back or
eliminate some of the most expensive securities.
In spite of high valuations of many technology stocks, we continue to find
attractive values, particularly in the semiconductor and software sectors.
We believe that these sectors will benefit during the coming year as
businesses and consumers upgrade their computer systems to accommodate
Windows 2000. We also believe that, as the Internet grows in acceptance and
usage worldwide, those companies that supply the software and equipment that
support this growth will continue to benefit.
In general, technology companies are truly changing global business. We
believe that the world is only in the early stages of technological
expansion, and that the sector will thus continue to offer enormous
opportunities for long-term investors.
4
<PAGE>
FEDERAL TAX STATUS OF 1999
GAIN DISTRIBUTION FOR TAXABLE ACCOUNTS
On November 23, 1999, a distribution of $5.553 per share, consisting of $4.640
from net long-term gain and $0.913 from net short-term gain realized on
investments in 1999, was paid to Class A, B, C, and D shareholders.
The long-term gain distribution is designated a "capital gain dividend" for
federal income tax purposes and is taxable to shareholders in 1999 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. Net short-term gain is taxable as ordinary income
whether paid to you in cash or shares.
If the distribution was received in shares, the per share cost basis for federal
income tax purposes is $41.13 for Class A shares, $37.83 for Class B shares, and
$37.79 for Class C and Class D shares.
A 1999 year-end statement of account activity and a 1999 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 1999. The information shown on Forms 1099-DIV and 1099-B is
reported to the Internal Revenue Service as required by federal regulations.
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,
1999, 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, Class C, 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.
[LINE CHART OMITTED]
SELIGMAN COMMUNICATIONS AND INFORMATION FUND CLASS A
LIPPER
SCIENCE &
DATE WITH WITHOUT TECHNOLOGY
SALES CHARGE SALES CHARGE AVERAGE S&P 500
- ---- ---- ------- ------- -------
12/31/89 9529 10000 10000 10000
10047 10544 10586 9699
10867 11405 11871 10309
7484 7854 8718 8893
12/31/90 8474 8893 10130 9689
11455 12021 13087 11097
10117 10617 12022 11072
11607 12182 13458 11664
12/31/91 13126 13776 15205 12642
13558 14228 15409 12322
12185 12787 14240 12556
12230 12835 14719 12951
12/31/92 15399 16161 17341 13603
15612 16384 17676 14197
17565 18434 19286 14267
20282 21285 21238 14635
12/31/93 20808 21837 21792 14974
21722 22796 21785 14407
20049 21040 20225 14467
26014 27300 23471 15175
12/31/94 28153 29545 24899 15172
32112 33700 26839 16649
41671 43732 32502 18240
47170 49503 37167 19690
12/31/95 40367 42364 35648 20875
38201 40091 36345 21996
38256 40148 39113 22983
40606 42614 41831 23694
12/31/96 45186 47421 43660 25670
44013 46190 39472 26358
51586 54137 46721 30960
64406 67591 55360 33279
12/31/97 55555 58302 48897 34234
62771 65875 57545 39010
61457 64496 59803 40297
51278 53814 53236 36288
12/31/98 74401 78081 75183 44017
74232 77903 88620 46209
86047 90303 100948 49467
89751 94190 108870 46375
12/31/99 129843 136265 178668 53276
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, Class C, and Class 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
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------------
CLASS C CLASS B CLASS D
SINCE SINCE SINCE
SIX INCEPTION ONE FIVE 10 INCEPTION INCEPTION
MONTHS* 5/27/99* YEAR YEARS YEARS 4/22/96 5/3/93
------------ ---------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
CLASS A**
With Sales Charge 43.74% n/a 66.24% 34.45% 29.22% n/a n/a
Without Sales Charge 50.90 n/a 74.51 35.76 29.85 n/a n/a
CLASS B**
With CDSC 45.26 n/a 68.16 n/a n/a 35.43% n/a
Without CDSC 50.26 n/a 73.16 n/a n/a 35.79 n/a
CLASS C**
With Sales Charge and CDSC 47.88 66.63% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC 50.35 69.33 n/a n/a n/a n/a n/a
CLASS D**
With 1% CDSC 49.31 n/a 72.24 n/a n/a n/a n/a
Without CDSC 50.31 n/a 73.24 34.72 n/a n/a 36.65%
LIPPER SCIENCE &TECHNOLOGY
FUNDS AVERAGE*** 76.99 98.19? 137.64 48.31 33.41 50.04 41.94
S&P 500*** 7.70 13.68? 21.04 28.55 18.21 26.78 22.39
<CAPTION>
NET ASSET VALUE
CAPITAL GAIN INFORMATION
DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1998 FOR THE YEAR ENDED DECEMBER 31, 1999
----------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
CLASS A $47.25 $35.54 $30.73
CLASS B 43.41 33.13 28.75 PAID $ 5.553
CLASS C 43.39 33.10 n/a UNDISTRIBUTED REALIZED 2.954(00)
CLASS D 43.38 33.10 28.72 UNREALIZED 15.991(000)
</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 C shares are calculated with and without the
effect of the initial 1% maximum sales charge and the 1% CDSC that is
charged on redemptions made within 18 months of the date of purchase.
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.
0 From May 31, 1999.
00 Represents the net gain realized in November and December 1999, payable in
2000.
000 Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1999.
7
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
----------------------------
DECEMBER 31,
----------------------------
ISSUES COST VALUE 1999 1998
-------------------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C>
STOCKS AND CONVERTIBLE ISSUES:
Communications Infrastructure .................... 10 $ 163,124,251 $ 313,689,323 3.0 4.6
Communications Services .......................... 14 360,382,738 503,769,591 4.7 6.3
Computer and Business Services ................... 8 466,457,159 412,551,881 3.8 2.3
Computer Hardware/Peripherals .................... 15 907,341,500 1,288,482,951 12.0 16.7
Computer Software ................................ 34 1,530,693,741 2,603,995,467 24.3 24.7
Contract Manufacturing/Circuit Boards ............ 3 233,691,439 382,249,063 3.6 5.2
Electronics Capital Equipment .................... 11 605,945,306 1,221,659,693 11.4 7.2
Internet/On-Line ................................. 41 183,262,197 313,341,522 2.9 --
Media ............................................ 15 959,930,398 1,518,335,616 14.2 17.2
Semiconductors ................................... 21 1,199,344,177 1,799,865,488 16.9 14.2
Miscellaneous .................................... 3 33,278,472 36,874,999 0.3 --
---- --------------- ---------------- ------ ------
175 6,643,451,378 10,394,815,594 97.1 98.4
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES .................... 5 311,890,642 311,890,642 2.9 1.6
---- --------------- ---------------- ------ ------
NET ASSETS ......................................... 180 $6,955,342,020 $10,706,706,236 100.0 100.0
==== =============== ================ ====== ======
</TABLE>
LARGEST INDUSTRIES
DECEMBER 31, 1999
Percent of
Net Assets
----------
COMPUTER SOFTWARE 24.3 $2,603,995,467
SEMICONDUCTORS 16.8 $1,799,865,488
MEDIA 14.2 $1,518,335,616
COMPUTER HARDWARE/PERIPHERALS 12 $1,288,482,951
ELECTRONICS 11.4 $1,221,659,693
8
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
-----------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/99
- ------------- -----------------------------
Advanced Micro Devices ......................... 2,500,000 2,500,000
AMFM(1) ........................................ 1,400,000 6,000,000
Charter Communications ......................... 4,500,000 4,500,000
Compuware ...................................... 2,950,000 5,250,000
Intel .......................................... 2,000,000 2,000,000
Micron Technology .............................. 2,000,000 2,000,000
Microsoft ...................................... 1,300,000 3,300,000
SunGard Data Systems ........................... 3,840,000 4,840,000
Synopsys ....................................... 1,475,000 4,800,000
Xircom ......................................... 1,700,000 1,700,000
SHARES
-----------------------------
HOLDINGS
REDUCTIONS INCREASE 12/31/99
- ---------- -----------------------------
ASM Lithography ................................ 1,200,000 --
BMC Software ................................... 950,000 750,000
Check Point Software
Technologies ................................. 1,579,000 1,800,000
Clear Channel
Communications ............................... 1,550,000 450,000
Electronic Arts ................................ 1,600,000 500,000
Gilat Satellite Networks ....................... 600,000 500,000
KLA-Tencor ..................................... 1,500,000 600,000
MediaOne Group ................................. 1,200,000 2,200,000
Solectron(2) ................................... 4,200,000 --
Tellabs ........................................ 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.
(1) Formerly known as Chancellor Media.
(2) Formerly SMARTModular Technologies.
LARGEST PORTFOLIO HOLDINGS
DECEMBER 31, 1999
SECURITY VALUE
- -------- ------------
AMFM .......................................................... $469,500,000
Microsoft ..................................................... 385,171,875
Check Point Software
Technologies ................................................ 357,750,000
Synopsys ...................................................... 319,650,000
Electronics for Imaging ....................................... 282,865,625
SECURITY VALUE
- -------- ------------
Novellus Systems .............................................. $281,821,875
Amkor Technology .............................................. 254,531,250
Parametric Technology ......................................... 229,765,625
American Power Conversion ..................................... 223,927,144
Symantec ...................................................... 220,195,313
9
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------------- ---------------
COMMON STOCKS 95.9%
COMMUNICATIONS
INFRASTRUCTURE 2.9%
ASPECT COMMUNICATIONS*
Provider of call center
systems and software 1,500,000 $ 58,687,500
CISCO SYSTEMS*
Manufacturer of computer
network products 750,000 80,320,312
GILAT SATELLITE NETWORKS*- (Israel)
Manufacturer of small aperture
satellite base stations 500,000 59,312,500
HARRIS
Manufacturer of radio
transmission equipment 1,000,000 26,687,500
OAK INDUSTRIES*
Manufacturer of cable
television connectors and
fiber optic components 700,000 74,287,500
ORCKIT COMMUNICATIONS* (Israel)
Provider of digital
subscriber line equipment 200,000 6,893,750
---------------
306,189,062
---------------
COMMUNICATIONS
SERVICES 4.3%
AMERICAN MOBILE SATELLITE*
Provider of wireless data
broadcasting 1,511,000 31,872,656
AT&T--LIBERTY MEDIA GROUP
(CLASS A)*
Holding company for
AT&T's media assets 2,250,000 127,687,500
CENTURYTEL
Provider of regional
telephone services 1,000,000 47,375,000
ECHOSTAR COMMUNICATIONS*
Satellite television
service operator 800,000 77,900,000
GLOBAL CROSSING* (Bermuda)
Provider of broadband
telecommunications services 500,000 24,984,375
ICG COMMUNICATIONS*
Provider of broadband
telecommunications services 1,500,000 28,078,125
INFONET SERVICES*
Provider of international
communications services 739,000 19,398,750
INTERMEDIA COMMUNICATIONS*
Provider of
telecommunications and
Internet hosting services 500,000 19,375,000
MCI WORLDCOM*
Provider of
telecommunications services 750,000 39,773,437
METROMEDIA FIBER NETWORK*
(CLASS A)
Provider of international
communications services 200,000 9,581,250
PACIFIC GATEWAY EXCHANGE*-
International
telecommunications carrier 637,600 10,859,125
QWEST COMMUNICATIONS
INTERNATIONAL*
Provider of local exchange
voice and broadband data
communications services 500,000 21,484,375
---------------
458,369,593
---------------
COMPUTER AND
BUSINESS SERVICES 3.8%
AMDOCS*
Provider of billing systems
and services for the
communications industry 1,000,000 34,500,000
CSG SYSTEMS INTERNATIONAL*
Provider of billing systems
and services for the cable
television industry 2,000,000 79,125,000
FIRST DATA
Provider of data processing
services for merchants and
credit card companies 1,000,000 49,312,500
GALILEO INTERNATIONAL
Provider of travel
reservation data services 2,000,000 59,875,000
MASTECH*
Provider of technology
staffing services 551,400 13,664,381
MODIS PROFESSIONAL SERVICES*
Provider of technology
staffing services 2,000,000 28,500,000
NAVIGANT CONSULTING*-
Provider of technology
consulting services to the
energy and utilities
industries 3,000,000 32,625,000
SUNGARD DATA SYSTEMS*
Provider of disaster recovery
services for computer data
centers 4,840,000 114,950,000
---------------
412,551,881
---------------
COMPUTER HARDWARE/
PERIPHERALS 11.9%
ADAPTEC*
Provider of input/output
systems for servers 3,310,000 164,982,812
AMERICAN POWER CONVERSION*
Provider of back-up power
supply equipment
for computers 8,500,200 223,927,144
- ----------
See footnotes on page 14.
10
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------------- ---------------
COMPUTER HARDWARE/
PERIPHERALS (CONTINUED)
APEX*-
Manufacturer of
switching systems
for computer network
administrators 1,900,000 $ 61,512,500
COBALT NETWORKS*#
Supplier of products to
Internet service providers
and educational institutions 405,405 34,925,641
COMDISCO
A leading computer
hardware leasing company 1,315,500 49,002,375
CREATIVE TECHNOLOGY- (Singapore)
Provider of PC audio
and graphics products 8,300,000 142,396,875
ELECTRONICS FOR IMAGING*-
Manufacturer of peripherals
for color printers and
copiers 4,825,000 282,865,625
LANIER WORLDWIDE*
Office equipment supplier 1,000,000 3,875,000
LEXMARK INTERNATIONAL GROUP
(CLASS A)*
Manufacturer of laser
and inkjet printers
and cartridges 1,450,000 131,225,000
PITNEY BOWES
Provider of postage meters 1,200,000 57,975,000
XIRCOM*-
Provider of mobile
networking products for
notebook and handheld
personal computers 1,700,000 127,500,000
---------------
1,280,187,972
---------------
COMPUTER SOFTWARE 24.1%
3DO*(0)
Developer of
entertainment software 3,200,000 29,150,000
ACCLAIM ENTERTAINMENT*(0)
Developer of
entertainment software 3,121,500 16,095,234
ACCLAIM ENTERTAINMENT* (Warrants) 2,736 5,558
ACTIVISION*(0)
Developer of
entertainment software 1,300,000 19,987,500
AUTODESK(0)
Developer of software for
architectural and mechanical
design, data management,
and mapping 2,600,000 87,668,750
BLUESTONE SOFTWARE*(#)
Provider of XML software 166,590 15,263,809
BMC SOFTWARE*
Developer of mainframe and
UNIX utility software 750,000 $ 59,929,687
CHECK POINT SOFTWARE
TECHNOLOGIES*(0) (Israel)
Developer of network
"firewall" security systems 1,800,000 357,750,000
CITRIX SYSTEMS*
Provider of thin-client
server software 400,000 49,187,500
COMPUTER ASSOCIATES
INTERNATIONAL
Provider of mainframe
and UNIX utility software 1,250,000 87,421,875
COMPUWARE*
Provider of mainframe
software and consulting
services 5,250,000 195,398,437
ELECTRONIC ARTS*
Developer, marketer,
and distributor of
entertainment software 500,000 42,031,250
ENTRUST TECHNOLOGIES*
Provider of Internet
encryption software 800,000 47,925,000
F-SECURE* (Finland)
Provider of anti-virus, data
security and cryptography
software 26,400 771,342
HNC SOFTWARE*
Developer and vendor of
software for mission-critical
decision applications 500,000 52,984,375
MACROMEDIA*
Developer of software
for web page creation 1,000,000 73,125,000
MICROSOFT*
Provider of personal
computer operating system
and application
software products 3,300,000 385,171,875
PARAMETRIC TECHNOLOGY*
Developer of mechanical
design software 8,500,000 229,765,625
PEREGRINE SYSTEMS*
Developer and marketer of
inventory analysis software 400,000 33,637,500
PREVIEW SYSTEMS*
Provider of Internet software 100,000 6,393,750
PREVIEW SYSTEMS*(#) 297,619 15,223,212
RATIONAL SOFTWARE*
Provider of applications
development and
test software 2,500,000 123,046,875
- ----------
See footnotes on page 14.
11
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------------- ---------------
COMPUTER SOFTWARE (CONTINUED)
SYMANTEC*(0)
Developer, marketer, and
supporter of anti-virus
software 3,750,000 $ 220,195,313
SYNOPSYS*(0)
Developer of integrated
circuit design software 4,800,000 319,650,000
TECNOMATIX TECHNOLOGIES*(0) (Israel)
Developer and retailer of
computer-aided production
engineering software 950,000 27,075,000
VISIO*(0)
Provider of diagramming
software 1,800,000 85,500,000
---------------
2,580,354,467
---------------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS 3.6%
DII GROUP*
Provider of contract
manufacturing services 1,500,000 106,453,125
HADCO*(0)
Manufacturer of complex
printer circuit boards 1,300,000 66,300,000
SCI SYSTEMS*
Provider of contract
manufacturing services 2,549,000 209,495,938
---------------
382,249,063
---------------
ELECTRONICS CAPITAL
EQUIPMENT 11.4%
APPLIED MATERIALS*
Developer, manufacturer, and
marketer of semiconductor
wafer fabrication equipment 900,000 113,990,625
ASYST TECHNOLOGIES*(0)
Manufacturer of
miniature clean-room
environments for the
manufacturing of
silicon wafers 650,000 42,595,313
ASYST TECHNOLOGIES*#(0) 100,000 6,553,130
COGNEX*(0)
Manufacturer of
machine vision systems 2,600,000 101,318,750
CREDENCE SYSTEMS*(0)
Manufacturer of
automated semiconductor
test equipment 1,400,000 120,793,750
ELECTRO SCIENTIFIC INDUSTRIES*(0)
Manufacturer of memory
circuit repair systems
and circuit board
drilling systems 1,250,000 91,015,625
KLA-TENCOR*
Manufacturer of water
inspection and metrology
equipment 600,000 66,806,250
LAM RESEARCH*
Manufacturer of
semiconductor processing
equipment 500,000 55,812,500
NOVELLUS SYSTEMS*(0)
Manufacturer of
semiconductor processing
equipment 2,300,000 281,821,875
ORBOTECH*(0) (Israel)
Manufacturer of automated
optical inspection systems
for circuit boards and flat
panel displays 2,010,000 156,151,875
TERADYNE*
Manufacturer of
automated semiconductor
test equipment 2,800,000 184,800,000
---------------
1,221,659,693
---------------
INTERNET/ON-LINE 2.6%
APPNET*
Provider of Internet
software 1,000,000 43,718,750
EMUSIC*
Internet retailer of music
using the MP3 format 200,000 2,037,500
EMUSIC*(#) 1,000,000 10,187,500
INTERWOVEN*(#)
Provider of Internet software 471,166 46,056,477
IVILLAGE*(#)
Internet community site
for women 555,555 11,197,933
IXL ENTERPRISES*
Provider of Internet strategy
consulting services 929,000 51,443,375
JUNO ONLINE SERVICES*(#)
Provider of Internet
messaging services 779,900 23,637,053
LETSBUYIT.COM*(#) (Netherlands)
Internet retailer that
offers diversified
consumer products 287,130 1,000,654
- ----------
See footnotes on page 14.
12
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------------- ---------------
INTERNET/ON-LINE (CONTINUED)
MAIL.COM*(#)
Provider of Internet
messaging services 631,207 $ 10,126,959
MAIL.COM*(#) 1,320,000 24,915,000
MICROCAST*(#)
Producer of broadcast
capability over the
Internet 208,768 999,999
PSINET*
Provider of Internet access
services and related products 600,000 37,106,250
RX.COM*(#)
Internet distributor
of pharmaceuticals 1,428,572 5,000,002
STAMPS.COM*(#)
Internet stamp retailer 273,225 9,688,804
ZIFF-DAVIS-ZDNET*(#)
Integrated media company
focused on computer and
Internet-related technology 500,000 6,325,000
---------------
283,441,256
---------------
MEDIA 14.2%
ACKERLEY GROUP
Television station
operator 1,000,000 18,125,000
ADELPHIA COMMUNICATIONS
(CLASS A)*
Cable television operator 1,211,500 79,466,828
AMFM*
Owner and operator
of radio stations 6,000,000 469,500,000
CABLEVISION SYSTEMS (CLASS A)*
Owner and operator of
cable television systems 1,000,000 75,500,000
CBS*
Radio and television
broadcasting 3,200,000 204,600,000
CHARTER COMMUNICATIONS*
Owner and operator
of cable television systems 4,500,000 98,437,500
CLEAR CHANNEL COMMUNICATIONS*
Owner and operator of
radio and television stations 450,000 40,162,500
FOX ENTERTAINMENT GROUP
(CLASS A)*
Worldwide distributor
of movies and
television programs 3,000,000 74,812,500
INFINITY BROADCASTING (CLASS A)*
Operator of radio
stations; provider of
outdoor advertising 3,375,000 122,132,813
MEDIAONE GROUP*
Owner and operator of
cable television systems 2,200,000 168,987,500
NETWORK EVENT THEATER*#
Provider of offline and online
media and marketing services 731,708 19,529,726
ROGERS COMMUNICATIONS* (Canada)
Owner and operator of
cable television systems 1,500,000 37,125,000
USA NETWORKS*
Operator of cable
television networks 1,200,000 66,262,500
ZIFF-DAVIS*
Integrated media company
focused on computer
and Internet-related
technology 2,300,000 36,368,750
---------------
1,511,010,617
---------------
SEMICONDUCTORS 16.8%
ADVANCED MICRO DEVICES*
Microprocessor supplier
for the computer industry 2,500,000 72,343,750
AMKOR TECHNOLOGY*(0)
Provider of semiconductor
packaging and test services 9,050,000 254,531,250
ANALOG DEVICES*
Manufacturer of analog
semiconductors and digital
signal processors 400,000 37,200,000
ATMEL*
Manufacturer of FLASH and
other memory circuits and
microcontrollers 2,000,000 59,187,500
AVNET
Distributor of
semiconductors 500,000 30,250,000
C-CUBE MICROSYSTEMS*(0)
Provider of digital video
compression and
decompression circuits
and systems 3,400,000 212,712,500
CYPRESS SEMICONDUCTOR*
Provider of memory
and logic circuits 1,500,000 48,562,500
DALLAS SEMICONDUCTOR
Manufacturer of mixed(0)
signal semiconductors 1,200,000 77,325,000
FAIRCHILD SEMICONDUCTOR
INTERNATIONAL*
Manufacturer of memory and
discrete semiconductors 905,300 26,932,675
INTEGRATED DEVICE TECHNOLOGY
INTERNATIONAL*
Provider of memory and
logic circuits 2,500,000 72,421,875
- ----------
See footnotes on page 14.
13
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------------- ---------------
SEMICONDUCTORS (CONTINUED)
INTEL
Manufacturer of
microprocessors and
memory circuits 2,000,000 $ 164,562,500
LATTICE SEMICONDUCTOR*(0)
Designer of programmable
logic devices 4,600,000 217,781,250
LINEAR TECHNOLOGY
Manufacturer of analog
semiconductors 1,000,000 71,562,500
MAXIM INTEGRATED PRODUCTS*
Manufacturer of analog
and mixed-signal
integrated circuits 1,000,000 47,156,250
MICROCHIP TECHNOLOGY*
Manufacturer of field(0)
programmable
microcontrollers 2,250,000 154,335,938
MICRON TECHNOLOGY*
Manufacturer of DRAM
memory circuits 2,000,000 155,500,000
NATIONAL SEMICONDUCTOR*
Manufacturer of analog
and mixed-signal
integrated circuits 1,500,000 64,218,750
XILINX*
Supplier of field(0)
programmable
gate arrays 600,000 27,281,250
---------------
1,793,865,488
---------------
MISCELLANEOUS 0.3%
SENSORMATIC ELECTRONICS*
Provider of electronic
security, sensing, and
tracking systems 2,000,000 34,875,000
---------------
TOTAL COMMON STOCKS
(Cost $6,513,427,131) 10,264,754,092
---------------
PRINCIPAL
AMOUNT VALUE
------------ ---------------
CONVERTIBLE
BONDS 0.5%
COMMUNICATIONS SERVICES 0.4%
NTL, 5.75%, due 12/15/2009+
Global provider of cable
television, Internet access,
and telephone services $ 40,000,000 $ 43,400,000
---------------
COMPUTER HARDWARE/
PERIPHERALS
CANDESCENT TECHNOLOGIES,
7%, due 5/1/2003
Manufacturer of flat
panel displays 3,000,000 2,295,000
---------------
COMPUTER SOFTWARE 0.1%
ACTIVISION,
6.75%, due 1/1/2005
Developer of
entertainment software 10,000,000 9,950,000
---------------
TOTAL CONVERTIBLE
BONDS
(Cost $53,003,150) 55,645,000
---------------
CONVERTIBLE PREFERRED
STOCKS# 0.7%
(Cost $77,021,097) 74,416,502
---------------
SHORT-TERM
HOLDINGS 2.7%
(Cost $288,800,000) 288,800,000
---------------
TOTAL
INVESTMENTS 99.8%
(Cost $6,932,251,378) 10,683,615,594
OTHER ASSETS
LESS LIABILITIES 0.2% 23,090,642
---------------
NET ASSETS 100.0% $10,706,706,236
===============
- ----------
* Non-income producing security.
+ Rule 144A security.
# Restricted securities (see note 9).
0 Affiliated issuers (Fund's holdings representing 5% or more of the outstanding
voting securities). (See note 10.)
See Notes to Financial Statements.
14
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS:
Investments, at value:
Stocks and convertible issues*
(cost $6,643,451,378) ............... $ 10,394,815,594
Short-term holdings
(cost $288,800,000) ................. 288,800,000 $10,683,615,594
----------------
Cash ..................................................... 4,919,511
Receivable for Capital Stock sold ........................ 39,546,711
Receivable for securities sold ........................... 21,450,377
Expenses prepaid to shareholder service agent ............ 1,378,198
Receivable for interest and dividends .................... 612,579
Other .................................................... 97,710
----------------
TOTAL ASSETS ............................................. 10,751,620,680
----------------
LIABILITIES:
Payable for Capital Stock repurchased .................... 19,409,705
Payable for securities purchased ......................... 9,311,123
Accrued expenses and other ............................... 16,193,616
----------------
TOTAL LIABILITIES ........................................ 44,914,444
----------------
NET ASSETS ............................................... $ 10,706,706,236
================
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value;
1,000,000,000 shares authorized;
234,598,222 shares outstanding):
Class A ................................................. $ 13,661,722
Class B ................................................. 4,937,975
Class C ................................................. 277,521
Class D ................................................. 4,582,604
Additional paid-in capital ............................... 6,239,050,819
Accumulated net investment loss .......................... (134,002)
Undistributed net realized gain .......................... 692,965,381
Net unrealized appreciation of investments ............... 3,751,364,216
----------------
NET ASSETS ............................................... $ 10,706,706,236
================
NET ASSET VALUE PER SHARE:
CLASS A ($6,454,960,791 / 136,617,219 shares) ............ $47.25
======
CLASS B ($2,143,569,653 / 49,379,751 shares) ............. $43.41
======
CLASS C ($120,402,530 / 2,775,211 shares) ................ $43.39
======
CLASS D ($1,987,773,262 / 45,826,041 shares) ............. $43.38
======
- ----------
* Includes affiliated issuers (issuers in which the Fund's holdings represent 5%
or more of the outstanding voting securities) with a cost of $1,935,287,887
and a value of $3,431,718,740.
See Notes to Financial Statements.
15
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME:
Dividends* (net of foreign taxes
withheld of $112,061) ................... $ 10,575,715
Interest ................................. 10,119,941
--------------
TOTAL INVESTMENT INCOME ................................... $ 20,695,656
EXPENSES:
Management fee ........................... 60,149,041
Distribution and service fees ............ 37,540,455
Shareholder account services ............. 16,226,495
Shareholder reports and communications ... 1,345,564
Custody and related services ............. 1,097,856
Registration ............................. 571,791
Auditing and legal fees .................. 229,968
Directors' fees and expenses ............. 113,831
Miscellaneous ............................ 173,498
--------------
TOTAL EXPENSES ............................................ 117,448,499
--------------
NET INVESTMENT LOSS ....................................... (96,752,843)
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments** ....... 2,135,821,529
Net change in unrealized appreciation
of investments .......................... 2,446,649,764
--------------
NET GAIN ON INVESTMENTS .................. 4,582,471,293
--------------
INCREASE IN NET ASSETS FROM OPERATIONS ... $4,485,718,450
==============
- ----------
* Includes dividends from affiliated issuers of $6,936,720.
** Includes net realized gain from affiliated issuers of $169,368,656.
See Notes to Financial Statements.
16
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998
---------------- ---------------
OPERATIONS:
Net investment loss ..................... $ (96,752,843) $ (70,537,766)
Net realized gain on investments ........ 2,135,821,529 530,305,943
Net change in unrealized appreciation
of investments ........................ 2,446,649,764 1,092,454,836
---------------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS .. 4,485,718,450 1,552,223,013
---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ............................... (669,482,230) (43,896,582)
Class B ............................... (229,721,991) (12,119,376)
Class C ............................... (8,035,935) --
Class D ............................... (221,390,219) (14,706,286)
---------------- ---------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS (1,128,630,375) (70,722,244)
---------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares ....... 1,333,651,718 1,203,949,867
Exchanged from associated Funds ......... 4,936,129,014 4,033,069,921
Value of shares issued in payment
of gain distributions ................. 1,046,665,050 66,281,783
---------------- ---------------
Total ................................... 7,316,445,782 5,303,301,571
---------------- ---------------
Cost of shares repurchased .............. (1,200,768,449) (1,116,126,736)
Exchanged into associated Funds ......... (4,917,996,975) (4,074,928,693)
---------------- ---------------
Total ................................... (6,118,765,424) (5,191,055,429)
---------------- ---------------
INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ............ 1,197,680,358 112,246,142
---------------- ---------------
INCREASE IN NET ASSETS .................. 4,554,768,433 1,593,746,911
NET ASSETS:
Beginning of year ....................... 6,151,937,803 4,558,190,892
---------------- ---------------
END OF YEAR (including accumulated
net investment loss of $134,002
and $117,642, respectively) ........... $ 10,706,706,236 $ 6,151,937,803
================ ===============
- ----------
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 four 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% and 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. The Fund began
offering Class C shares on May 27, 1999. Class C shares are sold with an initial
sales charge of up to 1% and 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 18 months 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 four 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-specific 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, 1999,
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 year ended December 31, 1999, amounted to $8,254,302,313 and $8,494,930,878,
respectively.
At December 31, 1999, the cost of investments for federal income tax purposes
was $6,949,622,715, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $3,912,680,797 and
$178,687,918, respectively.
4. SHORT-TERM INVESTMENTS -- At December 31, 1999, 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
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 0.86% per
annum of the Fund's average daily net assets.
Seligman Advisors, Inc. (the "Distributor"), agent for the distribution of
the Fund's shares and an affiliate of the Manager, received concessions of
$1,484,868 from sales of Class A shares. Commissions of $11,908,470 and $900,067
were paid to dealers from sales of Class A and Class C shares, respectively.
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,
1999, fees incurred under the Plan aggregated $10,850,514, or 0.25% per annum of
the average daily net assets of Class A shares.
Under the Plan, with respect to Class B shares, Class C shares, 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, Class C, and Class D shares for which the
organizations are responsible; and, for Class C and Class D shares, 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, 1999, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B, Class C,
and Class D shares, amounted to $12,965,720, $197,188, and $13,527,033,
respectively.
The Distributor is entitled to retain any CDSC imposed on certain redemptions
of Class A and Class C shares occurring within 18 months of purchase and on
redemptions of Class D shares occurring within one year of purchase. For the
year ended December 31, 1999, such charges amounted to $345,403.
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 of such payments
retained by the Distributor, for the year ended December 31, 1999, amounted to
$580,578.
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, 1999,
Seligman Services, Inc. received commissions of $240,973 from the sales of
shares of the Fund. Seligman Services, Inc. also received distribution and
service fees of $1,157,165, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $16,226,495 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, 1999, of $134,002
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 -- The Fund is a participant in a joint $750 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
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 in June 2000, but is
renewable annually with the consent of the participating banks.
During the year ended December 31, 1999, the Fund periodically borrowed from
the credit facility. The average outstanding daily balance of the bank loans
(based on the number of days the loans were outstanding during the year) was
$18,188,889, with a weighted interest rate of 5.21%. The maximum borrowing
during the year was $30,500,000.
7. LITIGATION -- The Fund, certain of its current and former directors, and the
Manager were 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 directors were dismissed from the
lawsuit in March 1999. On May 26, 1999, the District Court granted the remaining
defendants' motion to dismiss the entire complaint. The plaintiff appealed the
case to the US Court of Appeals, which dismissed the appeal on January 14, 2000
pursuant to a stipulation of the parties.
8. CAPITAL SHARE TRANSACTIONS -- The Fund has authorized 1,000,000,000 shares of
$0.10 par value Capital Stock. Transactions in shares of Capital Stock were as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------- ----------------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------------------------------------- ----------------------------------------------------
1999 1998 1999 1998
---------------------------- ---------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 19,191,234 $ 679,313,446 25,111,674 $ 621,592,114 11,573,878 $ 390,212,142 16,415,913 $ 386,088,334
Exchanged from
associated Funds 100,589,099 3,341,263,554 114,681,500 2,841,379,108 3,882,302 129,678,705 2,120,230 49,133,796
Shares issued
in payment
of gain
distributions 15,156,717 623,395,320 1,582,669 41,174,599 5,592,954 211,511,269 465,356 11,341,088
------------ -------------- ------------ -------------- ---------- ------------- ---------- -------------
Total 134,937,050 4,643,972,320 141,375,843 3,504,145,821 21,049,134 731,402,116 19,001,499 446,563,218
------------ -------------- ------------ -------------- ---------- ------------- ---------- -------------
Cost of shares
repurchased (23,534,616) (796,579,119) (33,032,174) (817,466,916) (5,104,898) (163,411,419) (3,508,482) (81,912,096)
Exchanged into
associated Funds (101,395,187) (3,377,883,682) (115,379,614) (2,870,772,283) (2,499,670) (80,325,274) (2,592,803) (58,649,491)
------------ -------------- ------------ -------------- ---------- ------------- ---------- -------------
Total (124,929,803) (4,174,462,801) (148,411,788) (3,688,239,199) (7,604,568) (243,736,693) (6,101,285) (140,561,587)
------------ -------------- ------------ -------------- ---------- ------------- ---------- -------------
Increase
(Decrease) 10,007,247 $ 469,509,519 (7,035,945) $ (184,093,378) 13,444,566 $ 487,665,423 12,900,214 $ 306,001,631
============ ============== ============ ============== ========== ============= ========== =============
<CAPTION>
CLASS C CLASS D
------------------------- -------------------------------------------------------------
YEAR ENDED DECEMBER 31,
MAY 27, 1999* -------------------------------------------------------------
TO DECEMBER 31, 1999 1999 1998
------------------------- ----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 2,611,622 $ 97,637,867 5,110,205 $ 166,488,263 8,380,790 $ 196,269,419
Exchanged from
associated Funds 295,449 11,828,070 46,979,951 1,453,358,685 48,857,178 1,142,557,017
Shares issued
in payment
of gain
distributions 199,577 7,529,722 5,404,317 204,228,739 565,338 13,766,096
---------- ------------ ----------- --------------- ----------- ---------------
Total 3,106,648 116,995,659 57,494,473 1,824,075,687 57,803,306 1,352,592,532
---------- ------------ ----------- --------------- ----------- ---------------
Cost of shares
repurchased (26,765) (1,025,697) (7,678,744) (239,752,214) (9,348,809) (216,747,724)
Exchanged into
associated Funds (304,672) (12,220,680) (46,751,967) (1,447,567,339) (48,834,512) (1,145,506,919)
---------- ------------ ----------- --------------- ----------- ---------------
Total (331,437) (13,246,377) (54,430,711) (1,687,319,553) (58,183,321) (1,362,254,643)
---------- ------------ ----------- --------------- ----------- ---------------
Increase (Decrease) 2,775,211 $103,749,282 3,063,762 $ 136,756,134 (380,015) $ (9,662,111)
---------- ------------ ----------- --------------- ----------- ---------------
</TABLE>
* Commencement of offering of shares
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
9. RESTRICTED SECURITIES -- At December 31, 1999, the Fund owned 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 may have agreed to further restrictions on the
disposition of its holdings 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, 1999, are as follows:
<TABLE>
<CAPTION>
INVESTMENTS ACQUISITION DATES COST VALUE
- ------------- ----------------- ------------ ------------
<S> <C> <C> <C>
COMMON STOCKS:
Asyst Technologies 5/25/99 $ 1,800,000 $ 6,553,130
Bluestone Software 5/25/99 1,450,184 15,263,809
Cobalt Networks 5/3/99 1,500,764 34,925,641
eMusic 3/23/99 3,000,000 10,187,500
Interwoven 6/11/99 4,001,304 46,056,477
iVillage 11/30/98 4,749,995 11,197,933
Juno Online Services 2/26/99 5,000,074 23,637,053
LetsBuyIt.com* 12/22/99 999,118 1,000,654
Mail.com 8/4/98 & 3/10/99 6,695,998 35,041,959
Microcast* 9/15/99 1,001,838 999,999
Network Event Theater 8/13/99 15,000,014 19,529,726
Preview Systems 7/8/99 2,007,323 15,223,212
Rx.com* 5/24/99 & 6/17/99 5,000,002 5,000,002
Stamps.com 2/23/99 1,000,004 9,688,804
Ziff-Davis-ZDNet 3/12/99 7,562,500 6,325,000
------------ ------------
60,769,118 240,630,899
------------ ------------
CONVERTIBLE PREFERRED STOCKS:
Advanced Recognition Technologies (Series D) *12/6/99 1,001,724 1,000,000
Aeneid (Series D)* 10/15/99 1,000,770 1,000,001
AllAdvantage.com (Series C)* 9/22/99 1,002,134 999,999
APB Online (Series B)* 6/10/99 1,000,095 1,101,263
Applied Science Fiction (Series D)* 3/29/99 2,998,693 2,999,985
Bernard Technologies (Series D)* 11/8/99 1,001,774 999,999
Bill Gross' Idealab! (Series D)* 12/22/99 2,000,000 2,000,000
Blaze Software (Series BB)* 12/31/99 999,999 999,999
Buildnet (Series C)* 10/29/99 1,001,560 1,000,001
Centillium Technology (Series C)* 4/30/99 2,000,000 2,000,000
Chorum Technologies (Series D)* 11/10/99 1,001,274 1,000,313
Cielo Communications (Series C)* 11/17/99 1,001,373 999,999
CollegeClub.com (Series C)*(0) 10/28/99 1,013,332 1,013,334
Colo.com (Series C)* 12/17/99 1,999,994 1,999,994
CrossWorlds Software (Series D)* 12/23/97 4,000,000 1,816,000
CrossWorlds Software (Series E)* 10/1/99 374,999 374,999
FlashPoint Technology (Series E)* 9/10/99 1,000,002 1,000,002
FreeGate (Series D)* 6/30/98 999,999 500,000
Geographic Network Affiliates International*(0) 12/29/99 2,000,000 2,000,000
Global Medical Products (Series A)* 9/15/99 1,002,021 1,000,000
HomeGain.com (Series C)* 12/29/99 2,000,000 2,000,000
Impresse (Series C)* 11/15/99 1,001,747 999,997
MaMaMedia (Series D)* 8/6/99 1,001,577 999,999
Mobility Electronics (Series C)*(0) 5/4/99 & 10/29/99 2,999,994 2,999,994
More.com (Series D)* 10/22/99 1,000,000 1,000,001
Multitude (Series E)* 12/10/99 2,000,001 2,000,001
net.Genesis (Series F)* 6/10/99 2,000,066 1,999,998
Optical Networks (Series G)* 12/30/99 999,997 999,997
PointOne Telecommunications (Series B)* 9/24/99 1,999,998 1,999,998
Pointshare (Series C)*(0) 9/9/99 1,000,002 1,000,002
RealEstate.com (Series C)* 10/6/99 1,001,553 999,900
Reciprocal (Series H)* 11/12/99 999,998 999,998
ReleaseNow.com (Series E)* 5/24/99 2,000,000 2,000,000
Screaming Media.net (Series B)* 10/5/99 1,001,447 999,992
Silicon Wave (Series C)* 12/6/99 1,000,000 1,000,000
Softcom (Series B)* 12/23/99 1,000,001 1,000,001
SynQuest (Series G)* 3/3/99 4,500,002 4,500,002
ThirdAge Media (Series D)* 6/30/99 999,999 999,999
Transmeta (Series E)* 7/1/98 3,000,000 3,000,000
UniSite(Class C)* 12/19/97 4,999,951 4,999,951
Verisity (Series D)* 3/1/99 3,999,997 3,999,997
V-store (Series B)* 11/2/99 1,002,038 1,000,001
Vuent (Series D)* 8/12/99 1,000,609 1,000,000
WorldRes (Series D)* 3/18/99 2,499,999 2,499,999
WorldRes.com (Series E)* 11/9/99 612,373 610,782
XTRA On-Line (Series C)* 7/16/98 1,999,999 1,999,999
Yupi Internet (Series C)* 11/5/99 1,000,006 1,000,006
------------ ------------
77,021,097 74,416,502
------------ ------------
PROMISSORY NOTES:
Microcast, 0%-10%, due 12/16/2000* 12/16/2000 200,000 200,000
------------ ------------
$137,990,215 $315,247,401
============ ============
</TABLE>
- ----------
* Private placement investments and non-income producing security.
(0) Warrants attached.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
10. 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.
Asummary of the Fund's transactions in the securities of these issuers during
the year ended December 31, 1999, is as follows:
<TABLE>
<CAPTION>
GROSS GROSS REALIZED
BEGINNING PURCHASES SALES AND ENDING GAIN DIVIDEND ENDING
AFFILIATE SHARES AND ADDITIONSREDUCTIONS SHARES (LOSS) INCOME VALUE
- ------------ -------------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3DO 2,600,000 779,200 179,200 3,200,000 $ (596,318) $29,150,000
Acclaim Entertainment 3,100,000 900,000 878,500 3,121,500 (1,914,806) 16,095,234
Activision 1,100,000 300,000 100,000 1,300,000 412,486 19,987,500
Amkor Technology 8,170,000 2,380,000 1,500,000 9,050,000 9,444,048 254,531,250
Apex* 1,350,000 865,000 315,000 1,900,000 5,075,154 61,512,500
Asyst Technologies 757,600 242,400 250,000 750,000 922,726 49,148,443
Autodesk 3,235,000 1,370,000 2,005,000 2,600,000 (44,969,394) $ 798,720 87,668,750
C-Cube Microsystems 2,600,000 1,265,800 465,800 3,400,000 8,393,617 212,712,500
Check Point Software
Technologies 3,100,000 400,000 1,700,000 1,800,000 186,362,645 357,750,000
Cognex 2,200,000 909,100 509,100 2,600,000 5,028,785 101,318,750
Creative Technology 8,126,000 300,000 126,000 8,300,000 (87,249) 6,138,000 142,396,875
Credence Systems 1,800,000 180,000 580,000 1,400,000 16,444,898 120,793,750
Electro Scientific Industries 1,000,000 340,000 90,000 1,250,000 2,208,145 91,015,625
Electronics for Imaging 5,030,000 125,000 330,000 4,825,000 1,041,136 282,865,625
Gilat Satellite Networks -- 1,100,000 600,000 500,000 24,959,482 59,312,500
Hadco 850,000 450,000 -- 1,300,000 66,300,000
Lattice Semiconductor 2,050,000 2,846,000 296,000 4,600,000 9,963,354 217,781,250
Mentor Graphics -- 4,000,000 4,000,000 -- (21,469,541) --
Navigant Consulting -- 3,000,000 -- 3,000,000 32,625,000
Novellus Systems -- 2,500,000 200,000 2,300,000 4,723,414 281,821,875
Orbotech 1,360,000 670,000 20,000 2,010,000 120,973 156,151,875
Pacific Gateway Exchange 1,120,100 379,900 862,400 637,600 (18,091,522) 10,859,125
Solectron** 3,600,000 600,000 4,200,000 -- 38,706,428 --
Structural Dynamics
Research 3,020,000 180,000 3,200,000 -- (37,720,887) --
Symantec -- 3,750,000 -- 3,750,000 220,195,313
Synopsys 2,600,000 2,325,000 125,000 4,800,000 3,668,598 319,650,000
Tecnomatix Technologies 725,000 225,000 -- 950,000 27,075,000
Veeco Instruments -- 1,200,000 1,200,000 -- (24,589,699) --
Visio -- 1,800,000 -- 1,800,000 85,500,000
Xircom -- 1,772,200 72,200 1,700,000 1,332,183 127,500,000
------------ ---------- --------------
TOTAL $169,368,656 $6,936,720 $3,431,718,740
============ ========== ==============
</TABLE>
- ----------
* Formerly Apex PCSolutions
** Formerly SMART Modular Technologies
22
<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,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR ...................... $ 30.73 $ 23.25 $ 23.51 $ 21.99 $ 16.64
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ..................................... (0.38) (0.28) (0.33) (0.26) (0.33)
Net realized and unrealized gain
on investments ........................................ 22.45 8.11 6.01 2.84 7.59
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS ........................ 22.07 7.83 5.68 2.58 7.26
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ............ (5.55) (0.35) (5.94) (1.06) (1.91)
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS ..................................... (5.55) (0.35) (5.94) (1.06) (1.91)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR ............................ $ 47.25 $ 30.73 $ 23.25 $ 23.51 $ 21.99
========== ========== ========== ========== ==========
TOTAL RETURN: ........................................... 74.51% 33.92% 22.95% 11.94% 43.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) .................. $6,454,961 $3,890,596 $3,107,481 $2,414,672 $1,940,693
Ratio of expenses to average net assets ................. 1.39% 1.44% 1.53% 1.68% 1.61%
Ratio of net income (loss) to average net assets ........ (1.09)% (1.13)% (1.21)% (1.16)% (1.31)%
Portfolio turnover rate ................................. 119.23% 126.70% 164.57% 121.32% 65.77%
</TABLE>
- ----------
See footnotes on page 24.
23
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------- -------------------------
YEAR ENDED DECEMBER 31, 4/22/96* 5/27/99*
---------------------------------------- TO TO
1999 1998 1997 12/31/96 12/31/99
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD .................. $ 28.75 $ 21.94 $ 22.62 $ 21.51 $ 29.39
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ................................... (0.60) (0.44) (0.50) (0.28) (0.32)
Net realized and unrealized gain
on investments ...................................... 20.81 7.60 5.76 2.45 19.87
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS ...................... 20.21 7.16 5.26 2.17 19.55
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain .......... (5.55) (0.35) (5.94) (1.06) (5.55)
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS ................................... (5.55) (0.35) (5.94) (1.06) (5.55)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD ........................ $ 43.41 $ 28.75 $ 21.94 $ 22.62 $ 43.39
========== ========== ========== ========== ==========
TOTAL RETURN: ......................................... 73.16% 32.89% 21.96% 10.30% 69.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) .............. $2,143,570 $1,033,105 $ 505,342 $ 120,848 $ 120,403
Ratio of expenses to average net assets ............... 2.14% 2.19% 2.28% 2.44% 2.07%
Ratio of net income (loss) to average net assets ...... (1.84)% (1.88)% (1.96)% (1.96)% (1.77)%
Portfolio turnover rate ............................... 119.23% 126.70% 164.57% 121.32% 119.23%**
<CAPTION>
CLASS D
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR .................... $ 28.72 $ 21.91 $ 22.61 $ 21.35 $ 16.31
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ................................... (0.60) (0.44) (0.50) (0.40) (0.50)
Net realized and unrealized gain
on investments ...................................... 20.81 7.60 5.74 2.72 7.45
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS ...................... 20.21 7.16 5.24 2.32 6.95
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain .......... (5.55) (0.35) (5.94) (1.06) (1.91)
---------- ---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS ................................... (5.55) (0.35) (5.94) (1.06) (1.91)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR .......................... $ 43.38 $ 28.72 $ 21.91 $ 22.61 $ 21.35
========== ========== ========== ========== ==========
TOTAL RETURN: ......................................... 73.24% 32.94% 21.86% 11.07% 42.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) ................ $1,987,773 $1,228,237 $ 945,368 $ 737,979 $ 609,332
Ratio of expenses to average net assets ............... 2.14% 2.19% 2.28% 2.43% 2.37%
Ratio of net income (loss) to average net assets ...... (1.84)% (1.88)% (1.96)% (1.91)% (2.07)%
Portfolio turnover rate ............................... 119.23% 126.70% 164.57% 121.32% 65.77%
</TABLE>
- ----------
+ Annualized.
++ For the year ended December 31, 1996.
* Commencement of offering of shares.
** For the year ended December 31, 1999.
See Notes to Financial Statements.
24
<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, 1999, 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, 1999, 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 referred to
above present fairly, in all material respects, the financial position of
Seligman Communications and Information Fund, Inc. as of December 31, 1999, 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 11, 2000
25
<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
DIRECTOR, Conoco Inc.
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
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
MEMBER OF THE BOARD OF GOVERNORS,
Investment Company Institute
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
26
<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS PAUL H. WICK THOMAS G. ROSE
CHAIRMAN VICE PRESIDENT TREASURER
BRIAN T. ZINO LAWRENCE P. VOGEL FRANK J. NASTA
PRESIDENT VICE PRESIDENT SECRETARY
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman 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
27
<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 or net asset value.
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 -- 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 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 1999 MUTUAL FUND FACT BOOK.
28
<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
[SELIGMAN LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQC12 12/99 [RECYCLE LOGO] Printed on Recycled Paper
