On January 1, 2007, the Fund adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.” FIN 48 requires the Fund to measure and recognize in its financial statements the benefit of a tax position taken (or expected to be taken) on an income tax return if such position will more likely than not be sustained upon examination based on the technical merits of the position. The Fund files income tax returns in the US Federal jurisdiction, as well as the New York State and New York City jurisdictions. Based upon its review of tax positions for the Fund’s open tax years of 2004–2007 in these jurisdictions, the Fund has determined that FIN 48 did not have a material impact on the Fund’s financial statements for the year ended December 31, 2007.
For the year ended December 31, 2007, Seligman Advisors, Inc. (the “Distributor”), agent for the distribution of the Fund’s shares and an affiliate of the Manager, received commissions and concessions of $6,666 from sales of Class A and (prior to June 4, 2007) Class C shares. Commissions of $34,912 and $217 were also paid to dealers for 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 monthly, 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, 2007, fees incurred under the Plan aggregated $520,298, or 0.25% per annum of the average daily net assets of Class A shares.
Notes to Financial Statements
Under the Plan, with respect to Class B shares, Class C shares, Class D shares, and Class R 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, Class D, and Class R shares for which the organizations are responsible; and, for Class C, Class D and Class R shares, fees for providing other distribution assistance of up to 0.75% (0.25%, in the case of Class R shares) 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.
For the year ended December 31, 2007, 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, and 0.50% per annum of the average daily net assets of Class R shares, amounted to $49,919, $41,212, $130,771, and $7,042, respectively.
The Distributor and Seligman Services, Inc., also an affiliate of the Manager, are eligible to receive distribution and service (12b-1) fees pursuant to the Plan. For the year ended December 31, 2007, the Distributor and Seligman Services, Inc. received distribution and service (12b-1) fees of $126,861.
The Distributor is entitled to retain any CDSC imposed on certain redemptions of Class A, Class C, Class D and Class R shares. For the year ended December 31, 2007, such charges amounted to $3,548. The Distributor has sold to third parties its rights to collect any CDSC imposed on redemptions of Class B shares.
For the year ended December 31, 2007, Seligman Data Corp., which is owned by the Fund and certain associated investment companies, charged the Fund at cost $706,228 for shareholder account services in accordance with a methodology approved by the Fund’s directors. Class I shares receive more limited shareholder services than the Fund’s other classes of shares (the “Retail Classes”). Seligman Data Corp. does not allocate to Class I the costs of any of its departments that do not provide services to the Class I shareholders.
Costs of Seligman Data Corp. directly attributable to the Retail Classes of the Fund were charged to those classes in proportion to their relative net asset values. Costs directly attributable to Class I shares were charged to Class I. The remaining charges were allocated to the Retail Classes and Class I by Seligman Data Corp. pursuant to a formula based on their net assets, shareholder transaction volumes and number of shareholder accounts.
The Fund and certain other associated investment companies (together, the “Guarantors”) have severally but not jointly guaranteed the performance and observance of all the terms and conditions of two leases entered into by Seligman Data Corp., including the payment of rent by Seligman Data Corp. (the “Guaranties”). The leases and the related Guaranties expire in September 2008 and January 2019, respectively. The obligation of the Fund to pay any amount due under the Guaranties is limited to a specified percentage of the full amount, which generally is based on the Fund’s percentage of the expenses billed by Seligman Data Corp. to all Guarantors in the preceding calendar quarter. As of December 31, 2007, the Fund’s potential obligation under the Guaranties is $353,400. As of December 31, 2007, no event has occurred which would result in the Fund becoming liable to make any payment under the Guaranties. A portion of the rent paid by Seligman Data Corp. is charged to the Fund as part of Seligman Data Corp.’s shareholder account services cost.
As of December 31, 2007, the Fund’s investment in Seligman Data Corp. is recorded at a cost of $22,506.
Certain officers and directors of the Fund are officers or directors of the Manager, the Distributor, Seligman Services, Inc., and/or Seligman Data Corp.
26
Notes to Financial Statements
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/loss accrued thereon is included in directors’ fees and expenses and the accumulated balance thereof at December 31, 2007, of $1,268 is included in accrued expenses and other liabilities. Deferred fees and related accrued earnings are not deductible by the Fund for federal income tax purposes until such amounts are paid.
4. | | Committed Line of Credit — The Fund is a participant in a joint $375 million committed line of credit that is shared by substantially all open-end funds in the Seligman Group of Investment Companies. The directors have currently limited the Fund’s borrowings 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 0.10% 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 2008, but is renewable annually with the consent of the participating banks. For the year ended December 31, 2007, the Fund did not borrow from the credit facility. |
5. | | Purchases and Sales of Securities — Purchases and sales of portfolio securities, excluding short-term investments, for the year ended December 31, 2007, amounted to $251,984,740 and $295,162,776, respectively. |
6. | | Federal Tax Information — Certain components of income, expense and realized capital gain and loss are recognized at different times or have a different character for federal income tax purposes and for financial reporting purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset value per share of the Fund. As a result of the differences described above, the treatment for financial reporting purposes of distributions made during the year from net investment income or net realized gains may differ from their treatment for federal income tax purposes. Further, the cost of investments also can differ for federal income tax purposes. |
At December 31, 2007, the cost of investments for federal income tax purposes was $220,214,554. The tax basis cost was greater than the cost for financial reporting purposes due to the tax deferral of losses on wash sales of $1,061,045.
The tax basis components of accumulated earnings at December 31, 2007 are presented below. Undistributed ordinary income primarily consists of net investment income and net short-term capital gains.
| Gross unrealized appreciation of portfolio securities | | | | $ | 16,519,662 | |
| Gross unrealized depreciation of portfolio securities | | | | | (28,033,031 | ) |
| Net unrealized depreciation of portfolio securities | | | | | (11,513,369 | ) |
| Undistributed ordinary income | | | | | 525,577 | |
| Undistributed net realized gains | | | | | 4,513,919 | |
| Total accumulated losses | | | | $ | (6,473,873 | ) |
For the year ended December 31, 2007, the tax characterization of distributions paid is ordinary income of $15,580,474 and long-term capital gain of $10,620,557. The Fund repurchased 3,201,008 shares from shareholders aggregating $41,205,462, of which approximately $2,250,000 represents capital gain distributions. This information is provided for federal tax purposes only.
27
Notes to Financial Statements
7. | | Options Written — Transactions in options written during the year ended December 31, 2007, were as follows: |
|
|
|
| Shares Subject
To Call/Put
|
| Premiums
|
|---|
| Options outstanding, December 31, 2006 | | | | | 12,700 | | | $ | 112,773 | |
| Options written | | | | | 472,600 | | | | 846,052 | |
| Options expired | | | | | (152,300 | ) | | | (269,449 | ) |
| Options exercised | | | | | (330,900 | ) | | | (683,433 | ) |
| Options terminated in closing purchase transactions | | | | | (2,100 | ) | | | (5,943 | ) |
| Options outstanding, December 31, 2007 | | | | | — | | | $ | — | |
8. | | Capital Share Transactions — The Fund has authorized 500,000,000 shares of $0.50 par value Capital Stock. Transactions in shares of Capital Stock were as follows: |
| | | | Year Ended December 31,
| |
|---|
| | | | 2007
| | 2006
| |
|---|
Class A
|
|
|
| Shares
|
| Amount
|
| Shares
|
| Amount
|
|---|
| Net proceeds from sales of shares | | | | | 194,974 | | | $ | 2,562,851 | | | | 215,617 | | | $ | 2,716,093 | |
| Investment of dividends | | | | | 253,765 | | | | 3,288,401 | | | | 64,733 | | | | 843,455 | |
| Exchanged from associated funds | | | | | 67,798 | | | | 902,296 | | | | 63,963 | | | | 784,998 | |
| Converted from Class B* | | | | | 90,142 | | | | 1,192,556 | | | | 168,715 | | | | 2,061,910 | |
| Investment of gain distribution | | | | | 1,035,053 | | | | 12,902,409 | | | | 361,369 | | | | 4,636,357 | |
| Total | | | | | 1,641,732 | | | | 20,848,513 | | | | 874,397 | | | | 11,042,813 | |
| Cost of shares repurchased | | | | | (2,329,652 | ) | | | (31,051,541 | ) | | | (2,960,580 | ) | | | (36,198,317 | ) |
| Exchanged into associated funds | | | | | (104,428 | ) | | | (1,359,094 | ) | | | (259,440 | ) | | | (3,197,818 | ) |
| Total | | | | | (2,434,080 | ) | | | (32,410,635 | ) | | | (3,220,020 | ) | | | (39,396,135 | ) |
| Decrease | | | | | (792,348 | ) | | $ | (11,562,122 | ) | | | (2,345,623 | ) | | $ | (28,353,322 | ) |
| | | | | | | | | | | | | | | | | | | |
Class B
|
|
|
| Shares
|
| Amount
|
| Shares
|
| Amount
|
|---|
| Net proceeds from sales of shares | | | | | 23,644 | | | $ | 302,735 | | | | 38,641 | | | $ | 461,979 | |
| Investment of dividends | | | | | 5,423 | | | | 68,978 | | | | — | | | | — | |
| Exchanged from associated funds | | | | | 43,908 | | | | 523,464 | | | | 30,502 | | | | 378,814 | |
| Investment of gain distribution | | | | | 27,525 | | | | 336,428 | | | | 13,788 | | | | 171,931 | |
| Total | | | | | 100,500 | | | | 1,231,605 | | | | 82,931 | | | | 1,012,724 | |
| Cost of shares repurchased | | | | | (115,603 | ) | | | (1,506,990 | ) | | | (206,499 | ) | | | (2,471,910 | ) |
| Exchanged into associated funds | | | | | (28,316 | ) | | | (352,012 | ) | | | (20,834 | ) | | | (249,307 | ) |
| Converted to Class A* | | | | | (92,275 | ) | | | (1,192,556 | ) | | | (172,745 | ) | | | (2,061,910 | ) |
| Total | | | | | (236,194 | ) | | | (3,051,558 | ) | | | (400,078 | ) | | | (4,783,127 | ) |
| Decrease | | | | | (135,694 | ) | | $ | (1,819,953 | ) | | | (317,147 | ) | | $ | (3,770,403 | ) |
| * | | Automatic conversion of Class B shares to Class A shares approximately eight years after their initial purchase date. |
28
Notes to Financial Statements
| | | | Year Ended December 31,
| |
|---|
| | | | 2007
| | 2006
| |
|---|
Class C
|
|
|
| Shares
|
| Amount
|
| Shares
|
| Amount
|
|---|
| Net proceeds from sales of shares | | | | | 7,340 | | | $ | 95,107 | | | | 17,641 | | | $ | 201,800 | |
| Investment of dividends | | | | | 4,901 | | | | 62,054 | | | | — | | | | — | |
| Exchanged from associated funds | | | | | 9,370 | | | | 120,650 | | | | 11,568 | | | | 149,695 | |
| Investment of gain distribution | | | | | 25,387 | | | | 309,282 | | | | 9,098 | | | | 113,541 | |
| Total | | | | | 46,998 | | | | 587,093 | | | | 38,307 | | | | 465,036 | |
| Cost of shares repurchased | | | | | (74,545 | ) | | | (981,174 | ) | | | (92,527 | ) | | | (1,083,383 | ) |
| Exchanged into associated funds | | | | | (9,385 | ) | | | (120,127 | ) | | | (12,121 | ) | | | (171,833 | ) |
| Total | | | | | (83,930 | ) | | | (1,101,301 | ) | | | (104,648 | ) | | | (1,255,216 | ) |
| Decrease | | | | | (36,932 | ) | | $ | (514,208 | ) | | | (66,341 | ) | | $ | (790,180 | ) |
| | | | | | | | | | | | | | | | | | | |
Class D
|
|
|
| Shares
|
| Amount
|
| Shares
|
| Amount
|
|---|
| Net proceeds from sales of shares | | | | | 162,959 | | | $ | 2,111,477 | | | | 139,298 | | | $ | 1,668,485 | |
| Investment of dividends | | | | | 15,146 | | | | 193,072 | | | | — | | | | — | |
| Exchanged from associated funds | | | | | 13,023 | | | | 166,580 | | | | 25,724 | | | | 306,120 | |
| Investment of gain distribution | | | | | 86,663 | | | | 1,054,800 | | | | 30,912 | | | | 385,478 | |
| Total | | | | | 277,791 | | | | 3,525,929 | | | | 195,934 | | | | 2,360,083 | |
| Cost of shares repurchased | | | | | (320,391 | ) | | | (4,166,341 | ) | | | (283,481 | ) | | | (3,415,311 | ) |
| Exchanged into associated funds | | | | | (16,848 | ) | | | (212,989 | ) | | | (49,636 | ) | | | (594,976 | ) |
| Total | | | | | (337,239 | ) | | | (4,379,330 | ) | | | (333,117 | ) | | | (4,010,287 | ) |
| Decrease | | | | | (59,448 | ) | | $ | (853,401 | ) | | | (137,183 | ) | | $ | (1,650,204 | ) |
| | | | | | | | �� | | | | | | | | | | | |
Class I
|
|
|
| Shares
|
| Amount
|
| Shares
|
| Amount
|
|---|
| Net proceeds from sales of shares | | | | | 118,049 | | | $ | 1,530,621 | | | | 113,072 | | | $ | 1,434,150 | |
| Investment of dividends | | | | | 14,798 | | | | 192,584 | | | | 3,783 | | | | 49,549 | |
| Investment of gain distribution | | | | | 46,978 | | | | 587,906 | | | | 11,266 | | | | 145,560 | |
| Total | | | | | 179,825 | | | | 2,311,111 | | | | 128,121 | | | | 1,629,259 | |
| Cost of shares repurchased | | | | | (38,578 | ) | | | (508,773 | ) | | | (31,030 | ) | | | (381,807 | ) |
| Increase | | | | | 141,247 | | | $ | 1,802,338 | | | | 97,091 | | | $ | 1,247,452 | |
| | | | | | | | | | | | | | | | | | | |
Class R
|
|
|
| Shares
|
| Amount
|
| Shares
|
| Amount
|
|---|
| Net proceeds from sales of shares | | | | | 194,890 | | | $ | 2,669,609 | | | | 25,568 | | | $ | 316,651 | |
| Investment of dividends | | | | | 1,415 | | | | 19,543 | | | | 3 | | | | 39 | |
| Exchanged from associated funds | | | | | 273 | | | | 3,576 | | | | 246 | | | | 2,970 | |
| Investment of gain distribution | | | | | 14,538 | | | | 181,399 | | | | 1,205 | | | | 15,434 | |
| Total | | | | | 211,116 | | | | 2,874,127 | | | | 27,022 | | | | 335,094 | |
| Cost of shares repurchased | | | | | (70,987 | ) | | | (946,421 | ) | | | (14,028 | ) | | | (175,061 | ) |
| Exchanged into associated funds | | | | | — | | | | — | | | | (175 | ) | | | (2,182 | ) |
| Total | | | | | (70,987 | ) | | | (946,421 | ) | | | (14,203 | ) | | | (177,243 | ) |
| Increase | | | | | 140,129 | | | $ | 1,927,706 | | | | 12,819 | | | $ | 157,851 | |
29
Notes to Financial Statements
9. | | Other Matters — In late 2003, the Manager conducted an extensive internal review concerning mutual fund trading practices. The Manager’s review, which covered the period 2001-2003, noted one arrangement that permitted frequent trading in certain open-end registered investment companies managed by the Manager (the “Seligman Funds”); this arrangement was in the process of being closed down by the Manager before September 2003. The Manager identified three other arrangements that permitted frequent trading, all of which had been terminated by September 2002. In January 2004, the Manager, on a voluntary basis, publicly disclosed these four arrangements to its clients and to shareholders of the Seligman Funds. The Manager also provided information concerning mutual fund trading practices to the Securities and Exchange Commission (the “SEC”) and the Office of the Attorney General of the State of New York (“NYAG”). |
In September 2005, the New York staff of the SEC indicated that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against the Manager and the Distributor relating to frequent trading in the Seligman Funds. The Manager responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that the Manager had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds.
In September 2006, the NYAG commenced a civil action in New York State Supreme Court against the Manager, the Distributor, Seligman Data Corp. and Brian T. Zino (collectively, the “Seligman Parties”), alleging, in substance, that, in addition to the four arrangements noted above, the Seligman Parties permitted other persons to engage in frequent trading and, as a result, the prospectus disclosure used by the registered investment companies managed by the Manager is and has been misleading. The NYAG included other related claims and also claimed that the fees charged by the Manager to the Seligman Funds were excessive. The NYAG is seeking damages of at least $80 million and restitution, disgorgement, penalties and costs and injunctive relief. The Seligman Parties answered the complaint in December 2006 and believe that the claims are without merit.
Any resolution of these matters may include the relief noted above or other sanctions or changes in procedures. Any damages would be paid by the Manager and not by the Seligman Funds. If the NYAG obtains injunctive relief, the Manager and its affiliates could, in the absence of the SEC in its discretion granting exemptive relief, be enjoined from providing advisory and underwriting services to the Seligman Funds and other registered investment companies.
The Manager does not believe that the foregoing legal action or other possible actions will have a material adverse impact on the Manager or its clients, including the Seligman Funds and other investment companies managed by it; however, there can be no assurance of this or that these matters and any related publicity will not affect demand for shares of the Seligman Funds and such other investment companies or have other adverse consequences.
10. | | Recently Issued Accounting Pronouncement — In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value of assets and liabilities and expands disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Fund is currently evaluating the impact of the adoption of SFAS No. 157 but believes the impact will be limited to expanded disclosures in the Fund’s financial statements. |
30
Financial Highlights
The tables below are intended to help you understand each Class’s financial performance for the periods presented. 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 during the period. Total return shows the rate that you would have earned (or lost) on an investment in each Class, assuming you reinvested all your dividend and capital gain distributions, if any. Total returns do not reflect any taxes or sales charges and are not annualized for periods of less than one year.
CLASS A
|
|
|---|
| | | | Year Ended December 31,
|
|
|---|
|
|
|
| 2007
|
| 2006
|
| 2005
|
| 2004
|
| 2003
|
|---|
Per Share Data: | | | | | | | | | | | | | | | | | | | | | | |
Net Asset Value, Beginning of Year | | | | $ | 13.08 | | | $ | 11.67 | | | $ | 11.58 | | | $ | 10.42 | | | $ | 8.49 | |
Income (Loss) from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | | | 0.33 | | | | 0.09 | | | | 0.06 | | | | 0.07 | | | | 0.03 | |
| Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions | | | | | (0.49 | ) | | | 1.80 | | | | 0.09 | | | | 1.16 | | | | 1.93 | |
Total from Investment Operations | | | | | (0.16 | ) | | | 1.89 | | | | 0.15 | | | | 1.23 | | | | 1.96 | |
Less Distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment income | | | | | (0.33 | ) | | | (0.09 | ) | | | (0.06 | ) | | | (0.07 | ) | | | (0.03 | ) |
| Distributions from net realized capital gain | | | | | (1.15 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Total Distributions | | | | | (1.48 | ) | | | (0.48 | ) | | | (0.06 | ) | | | (0.07 | ) | | | (0.03 | ) |
Net Asset Value, End of Year | | | | $ | 11.44 | | | $ | 13.08 | | | $ | 11.67 | | | $ | 11.58 | | | $ | 10.42 | |
| |
Total Return | | | | | (1.84 | )% | | | 16.23 | % | | | 1.26 | % | | | 11.82 | %# | | | 23.11 | % |
| |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s omitted) | | | | $ | 183,449 | | | $ | 220,152 | | | $ | 223,800 | | | $ | 264,142 | | | $ | 271,692 | |
| Ratio of expenses to average net assets | | | | | 1.33 | % | | | 1.33 | % | | | 1.29 | % | | | 1.28 | % | | | 1.31 | % |
| Ratio of net investment income to average net assets | | | | | 2.47 | % | | | 0.71 | % | | | 0.50 | % | | | 0.66 | % | | | 0.38 | % |
| Portfolio turnover rate | | | | | 119.23 | % | | | 93.45 | % | | | 68.31 | % | | | 43.50 | % | | | 140.33 | % |
See footnotes on page 36.
31
Financial Highlights
CLASS B
|
|
|---|
| | | | Year Ended December 31,
|
|
|---|
|
|
|
| 2007
|
| 2006
|
| 2005
|
| 2004
|
| 2003
|
|---|
| |
Per Share Data: | | | | | | | | | | | | | | | | | | | | | | |
Net Asset Value, Beginning of Year | | | | $ | 12.79 | | | $ | 11.43 | | | $ | 11.37 | | | $ | 10.25 | | | $ | 8.39 | |
Income (Loss) from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | | | 0.22 | | | | (0.01 | ) | | | (0.03 | ) | | | (0.01 | ) | | | (0.03 | ) |
| Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions | | | | | (0.46 | ) | | | 1.76 | | | | 0.09 | | | | 1.13 | | | | 1.89 | |
Total from Investment Operations | | | | | (0.24 | ) | | | 1.75 | | | | 0.06 | | | | 1.12 | | | | 1.86 | |
Less Distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment income | | | | | (0.22 | ) | | | — | | | | — | | | | — | | | | — | |
| Dividends in excess of net investment income | | | | | (0.01 | ) | | | — | | | | — | | | | — | | | | — | |
| Distributions from net realized capital gain | | | | | (1.15 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Total Distributions | | | | | (1.38 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Net Asset Value, End of Year | | | | $ | 11.17 | | | $ | 12.79 | | | $ | 11.43 | | | $ | 11.37 | | | $ | 10.25 | |
| |
Total Return | | | | | (2.54 | )% | | | 15.38 | % | | | 0.53 | % | | | 10.93 | %# | | | 22.17 | % |
| |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s omitted) | | | | $ | 3,784 | | | $ | 6,068 | | | $ | 9,049 | | | $ | 13,581 | | | $ | 16,312 | |
| Ratio of expenses to average net assets | | | | | 2.08 | % | | | 2.08 | % | | | 2.05 | % | | | 2.04 | % | | | 2.07 | % |
| Ratio of net investment income (loss) to average net assets | | | | | 1.72 | % | | | (0.04 | )% | | | (0.26 | )% | | | (0.10 | )% | | | (0.38 | )% |
| Portfolio turnover rate | | | | | 119.23 | % | | | 93.45 | % | | | 68.31 | % | | | 43.50 | % | | | 140.33 | % |
See footnotes on page 36.
32
Financial Highlights
CLASS C
|
|
|---|
| | | | Year Ended December 31,
|
|
|---|
|
|
|
| 2007
|
| 2006
|
| 2005
|
| 2004
|
| 2003
|
|---|
| |
Per Share Data: | | | | | | | | | | | | | | | | | | | | | | |
Net Asset Value, Beginning of Year | | | | $ | 12.80 | | | $ | 11.44 | | | $ | 11.38 | | | $ | 10.26 | | | $ | 8.39 | |
Income (Loss) from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | | | 0.22 | | | | (0.01 | ) | | | (0.03 | ) | | | (0.01 | ) | | | (0.03 | ) |
| Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions | | | | | (0.46 | ) | | | 1.76 | | | | 0.09 | | | | 1.13 | | | | 1.90 | |
Total from Investment Operations | | | | | (0.24 | ) | | | 1.75 | | | | 0.06 | | | | 1.12 | | | | 1.87 | |
Less Distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment income | | | | | (0.22 | ) | | | — | | | | — | | | | — | | | | — | |
| Dividends in excess of net investment income | | | | | (0.01 | ) | | | — | | | | — | | | | — | | | | — | |
| Distributions from net realized capital gain | | | | | (1.15 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Total Distributions | | | | | (1.38 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Net Asset Value, End of Year | | | | $ | 11.18 | | | $ | 12.80 | | | $ | 11.44 | | | $ | 11.38 | | | $ | 10.26 | |
| |
Total Return | | | | | (2.54 | )% | | | 15.37 | % | | | 0.53 | % | | | 10.92 | %# | | | 22.29 | % |
| |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s omitted) | | | | $ | 3,412 | | | $ | 4,381 | | | $ | 4,674 | | | $ | 5,227 | | | $ | 6,671 | |
| Ratio of expenses to average net assets | | | | | 2.08 | % | | | 2.08 | % | | | 2.05 | % | | | 2.04 | % | | | 2.07 | % |
| Ratio of net investment income (loss) to average net assets | | | | | 1.72 | % | | | (0.04 | )% | | | (0.26 | )% | | | (0.10 | )% | | | (0.38 | )% |
| Portfolio turnover rate | | | | | 119.23 | % | | | 93.45 | % | | | 68.31 | % | | | 43.50 | % | | | 140.33 | % |
See footnotes on page 36.
33
Financial Highlights
CLASS D
|
|
|---|
| | | | Year Ended December 31,
|
|
|---|
|
|
|
| 2007
|
| 2006
|
| 2005
|
| 2004
|
| 2003
|
|---|
| |
Per Share Data: | | | | | | | | | | | | | | | | | | | | | | |
Net Asset Value, Beginning of Year | | | | $ | 12.79 | | | $ | 11.43 | | | $ | 11.37 | | | $ | 10.25 | | | $ | 8.39 | |
Income (Loss) from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | | | 0.22 | | | | (0.01 | ) | | | (0.03 | ) | | | (0.01 | ) | | | (0.03 | ) |
| Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions | | | | | (0.46 | ) | | | 1.76 | | | | 0.09 | | | | 1.13 | | | | 1.89 | |
Total from Investment Operations | | | | | (0.24 | ) | | | 1.75 | | | | 0.06 | | | | 1.12 | | | | 1.86 | |
Less Distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment income | | | | | (0.22 | ) | | | — | | | | — | | | | — | | | | — | |
| Dividends in excess of net investment income | | | | | (0.01 | ) | | | — | | | | — | | | | — | | | | — | |
| Distributions from net realized capital gain | | | | | (1.15 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Total Distributions | | | | | (1.38 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Net Asset Value, End of Year | | | | $ | 11.17 | | | $ | 12.79 | | | $ | 11.43 | | | $ | 11.37 | | | $ | 10.25 | |
| |
Total Return | | | | | (2.54 | )% | | | 15.38 | % | | | 0.53 | % | | | 10.93 | %# | | | 22.17 | % |
| |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of year (000s omitted) | | | | $ | 11,189 | | | $ | 13,578 | | | $ | 13,704 | | | $ | 16,370 | | | $ | 17,800 | |
| Ratio of expenses to average net assets | | | | | 2.08 | % | | | 2.08 | % | | | 2.05 | % | | | 2.04 | % | | | 2.07 | % |
| Ratio of net investment income (loss) to average net assets | | | | | 1.72 | % | | | (0.04 | )% | | | (0.26 | )% | | | (0.10 | )% | | | (0.38 | )% |
| Portfolio turnover rate | | | | | 119.23 | % | | | 93.45 | % | | | 68.31 | % | | | 43.50 | % | | | 140.33 | % |
See footnotes on page 36.
34
Financial Highlights
CLASS I
|
|
|---|
| | | | Year Ended December 31,
|
|
|---|
|
|
|
| 2007
|
| 2006
|
| 2005
|
| 2004
|
| 2003
|
|---|
| |
Per Share Data: | | | | | | | | | | | | | | | | | | | | | | |
Net Asset Value, Beginning of Year | | | | $ | 13.16 | | | $ | 11.71 | | | $ | 11.61 | | | $ | 10.44 | | | $ | 8.49 | |
Income (Loss) from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | | | 0.39 | | | | 0.14 | | | | 0.10 | | | | 0.11 | | | | 0.07 | |
| Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions | | | | | (0.49 | ) | | | 1.81 | | | | 0.10 | | | | 1.17 | | | | 1.94 | |
Total from Investment Operations | | | | | (0.10 | ) | | | 1.95 | | | | 0.20 | | | | 1.28 | | | | 2.01 | |
Less Distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment income | | | | | (0.38 | ) | | | (0.11 | ) | | | (0.10 | ) | | | (0.11 | ) | | | (0.06 | ) |
| Distributions from net realized capital gain | | | | | (1.15 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Total Distributions | | | | | (1.53 | ) | | | (0.50 | ) | | | (0.10 | ) | | | (0.11 | ) | | | (0.06 | ) |
Net Asset Value, End of Year | | | | $ | 11.53 | | | $ | 13.16 | | | $ | 11.71 | | | $ | 11.61 | | | $ | 10.44 | |
| |
Total Return | | | | | (1.42 | )% | | | 16.74 | % | | | 1.69 | % | | | 12.23 | %# | | | 23.72 | % |
| |
Ratios/Supplemental Data:
|
| Net assets, end of year (000s omitted) | | | | $ | 6,818 | | | $ | 5,923 | | | $ | 4,134 | | | $ | 4,005 | | | $ | 3,265 | |
| Ratio of expenses to average net assets | | | | | 0.88 | % | | | 0.91 | % | | | 0.93 | % | | | 0.90 | % | | | 0.98 | % |
| Ratio of net investment income to average net assets | | | | | 2.92 | % | | | 1.13 | % | | | 0.86 | % | | | 1.04 | % | | | 0.71 | % |
| Portfolio turnover rate | | | | | 119.23 | % | | | 93.45 | % | | | 68.31 | % | | | 43.50 | % | | | 140.33 | % |
See footnotes on page 36.
35
Financial Highlights
CLASS R
|
|
|---|
| | | | Year Ended December 31,
| |
|---|
|
|
|
| 2007
|
| 2006
|
| 2005
|
| 2004
|
| 4/30/03*
to
12/31/03
|
|---|
| |
Per Share Data: | | | | | | | | | | | | | | | | | | | | | | |
Net Asset Value, Beginning of Period | | | | $ | 13.09 | | | $ | 11.67 | | | $ | 11.58 | | | $ | 10.42 | | | $ | 8.66 | |
Income from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | | | 0.29 | | | | 0.06 | | | | 0.03 | | | | 0.04 | | | | 0.01 | |
| Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions | | | | | (0.49 | ) | | | 1.80 | | | | 0.09 | | | | 1.17 | | | | 1.77 | |
Total from Investment Operations | | | | | (0.20 | ) | | | 1.86 | | | | 0.12 | | | | 1.21 | | | | 1.78 | |
Less Distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment income | | | | | (0.27 | ) | | | (0.05 | ) | | | (0.03 | ) | | | (0.05 | ) | | | (0.02 | ) |
| Distributions from net realized capital gain | | | | | (1.15 | ) | | | (0.39 | ) | | | — | | | | — | | | | — | |
Total Distributions | | | | | (1.42 | ) | | | (0.44 | ) | | | (0.03 | ) | | | (0.05 | ) | | | (0.02 | ) |
Net Asset Value, End of Period | | | | $ | 11.47 | | | $ | 13.09 | | | $ | 11.67 | | | $ | 11.58 | | | $ | 10.42 | |
| |
Total Return | | | | | (2.15 | )% | | | 15.99 | % | | | 1.01 | % | | | 11.57 | %# | | | 20.50 | % |
| |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (000s omitted) | | | | $ | 2,133 | | | $ | 600 | | | $ | 385 | | | $ | 321 | | | $ | 2 | |
| Ratio of expenses to average net assets | | | | | 1.58 | % | | | 1.58 | % | | | 1.55 | % | | | 1.54 | % | | | 1.58 | %† |
Ratio of net investment income to average
net assets | | | | | 2.22 | % | | | 0.46 | % | | | 0.24 | % | | | 0.40 | % | | | 0.09 | %† |
| Portfolio turnover rate | | | | | 119.23 | % | | | 93.45 | % | | | 68.31 | % | | | 43.50 | % | | | 140.33 | %ø |
| * | | Commencement of offering of shares. |
| † | | Annualized. |
| ø | | Computed at the Fund level for the year ended December 31, 2003. |
# | | Excluding the effect of certain payments received from the Manager in 2004, total return would have been as follows: Class A 11.79%; Class B 10.90%; Class C 10.89%; Class D 10.90%; Class I 12.20%; and Class R 11.54%. |
See Notes to Financial Statements.
36
Report of Independent Registered
Public Accounting Firm
The Board of Directors and Stockholders,
Seligman Common Stock Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of Seligman Common Stock Fund, Inc. (the “Fund”), including the portfolio of investments, as of December 31, 2007, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the 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 the standards of the Public Company Accounting Oversight Board (United States). 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. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodian and brokers; where replies were not received from brokers we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Seligman Common Stock Fund, Inc. as of December 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
February 28, 2008
37
Matters Relating to the Directors’
Consideration of the Continuance of the
Management Agreement
The directors of Seligman Common Stock Fund, Inc. unanimously approved the continuance of the Management Agreement with the Manager at a meeting held on November 15, 2007.
Prior to approval of the continuance of the Management Agreement, the directors requested and evaluated extensive materials from the Manager. They reviewed the proposed continuance of the Management Agreement with the Manager and with experienced counsel who advised on the legal standards for their consideration. The independent directors also discussed the proposed continuance in a private session with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Manager gained from their experience as directors or trustees of each fund in the Seligman Group of Funds, their overall confidence in the Manager’s integrity and competence gained from that experience, the Manager’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Manager’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the Seligman Group of Funds. The directors noted that the Board has six regular meetings each year, at each of which they receive presentations from the Manager on the investment results of the Fund and review extensive materials and information presented by the Manager.
The directors also considered all other factors they believed relevant, including the specific matters discussed below. In their deliberations, the directors did not identify any particular information that was all-important or controlling, and directors attributed different weights to the various factors. The directors determined that the selection of the Manager to manage the Fund, and the overall arrangements between the Fund and the Manager as provided in the Management Agreement, including the management fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant. The material factors and conclusions that formed the basis for the directors’ determination included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Manager under the Management Agreement. The directors considered the quality of the investment research capabilities of the Manager and the other resources it has dedicated to performing services for the Fund. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Manager. The directors also considered the Manager’s selection of brokers and dealers for portfolio transactions and noted that they receive regular reports from the Manager concerning such selection. The quality of administrative and other services, including the Manager’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Management Agreement.
On an ongoing basis, the Manager reports to the directors on the status of various matters described in the Fund’s prospectuses relating to market timing activity, allegations of excessive fees and related matters for certain funds in the Seligman Group of Funds. In connection with the
38
Matters Relating to the Directors’
Consideration of the Continuance of the
Management Agreement
continuance review, the Manager provides an update on those matters. After discussion with the Manager, the Manager’s counsel, the directors’ special counsel and other counsel independent of the Manager, and consideration of the potential consequences of the various matters, the independent directors concluded that they retained confidence in the integrity of the Manager and its ability to provide management services to the Fund.
Costs of Services Provided and Profitability
The directors reviewed information on profitability of the Manager’s investment advisory and investment company activities and its financial condition based on historical information and estimates for the current year, as well as historical and estimated profitability data for the Fund. The directors reviewed with the Manager’s Chief Financial Officer, the assumptions and methods of allocation used by the Manager in preparing the profitability data. The directors recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors. In reviewing profitability information, the directors considered the effect of fall-out benefits on the Manager’s expenses, as well as the “revenue sharing” arrangements the Manager has entered into with certain entities that distribute shares of the Seligman Group of Funds. The directors focused on profitability of the Manager’s relationships with the Fund before taxes and distribution expenses. The directors concluded that they were satisfied that the Manager’s level of profitability from the relationship with the Fund was not excessive.
Fall-Out Benefits
The directors considered that the Manager benefits from soft dollar arrangements whereby it receives brokerage and research services from brokers that execute the Seligman Group of Funds’ purchases and sales of securities on an agency basis. They reviewed information about the Manager’s practices with respect to allocating portfolio brokerage for brokerage and research services. The directors also considered that a broker-dealer affiliate of the Manager receives 12b-1 fees from the Fund in respect of shares held in certain accounts, and that the Fund’s distributor (another affiliate of the Manager) retains a portion of the 12b-1 fees from the Fund and receives a portion of the sales charges on sales or redemptions of certain classes of shares. The directors further recognized that the Manager’s profitability would be somewhat lower without these benefits. The directors noted that the Manager may derive reputational and other benefits from its association with the Fund.
Investment Results
The directors receive and review detailed performance information on the Fund at each regular Board meeting during the year in additional to the information received for the meeting regarding the continuance of the Management Agreement. The directors reviewed performance information for the Fund for the first nine months of 2007, the preceding seven calendar years and annualized one-, three-, five- and ten-year rolling periods ending September 30, 2007. The directors also reviewed information about the portfolio turnover rate of the Fund compared to other investment companies with similar investment objectives.
39
Matters Relating to the Directors’
Consideration of the Continuance of the
Management Agreement
The directors reviewed information showing performance of the Fund compared to the Lipper Large-Cap Core Funds Average and the Standard & Poor’s 500 Composite Stock Price Index (“S&P 500”), as well as performance relative to the other funds in the Lipper Large-Cap Core Funds Average and to a group of competitor funds selected by the Manager. The directors noted that the Fund’s results were below its benchmarks for the five-year period, although its relative performance had improved in recent periods and the Fund’s results were above each of its benchmarks in 2006. For the first nine months of 2007, the Fund’s results trailed that of its benchmarks by relatively small amounts. Taking into account these comparisons and the other factors considered, the directors concluded that the Fund’s investment results were satisfactory.
Management Fees and Other Expenses
The directors considered the management fee rate paid by the Fund to the Manager. The directors recognized that it is difficult to make comparisons of management fees because there are variations in the services that are included in the fees paid by other funds.
The directors noted that the Manager manages a registered investment company that is a “clone” of the Fund but is sold exclusively to insurance company separate accounts. The directors further noted that the management fee rate paid by the Fund is higher than the management fee rate paid by its “clone” portfolio. The Manager explained that the lower fee rate applicable to the clone portfolio was the result of a fee rate increase at the Fund that had not been sought for the clone portfolio. This was because, in view of the small size of the clone portfolio and the fact that, at various times, the clone portfolio had been subsidized by the Manager, the Manager had determined not to recommend a fee rate increase for the clone portfolio to match that recommended for the Fund.
The directors compared the Fund’s management fee rate to the rate paid by a subset of funds, with assets more nearly comparable to those of the Fund in its Lipper category (the “peer group”). The information showed that the Fund’s current effective management fee rate was lower than the peer group median and average.
The directors also considered the total expense ratio of the Fund in comparison to the fees and expenses of funds within its peer group. In considering the expense ratio of the Fund, the directors noted that the Fund elected to have shareholder services provided at cost by Seligman Data Corp. (“SDC”), a company owned by certain of the investment companies in the Seligman Group of Funds that provides shareholder services to the Fund and other investment companies in the Seligman Group of Funds at cost. SDC provides services exclusively to the Seligman Group of Funds, and the directors believed that the arrangement with SDC has provided the Fund and its shareholders with a consistently high level of service.
The directors noted that the Fund’s expense ratio was slightly higher than the Lipper median and average. The directors concluded that the expense ratio was reasonable.
40
Matters Relating to the Directors’
Consideration of the Continuance of the
Management Agreement
Economies of Scale
The directors noted that the management fee schedule for the Fund contains breakpoints that reduce the fee rate on assets above specified levels, although, at the Fund’s current asset levels, it was unlikely to benefit from them in the next year. The directors recognized that there is no direct relationship between the economies of scale realized by funds and those realized by their investment adviser as assets increase. The directors do not believe that there is a uniform methodology for establishing breakpoints that give effect to fund specific services provided by the Manager. The directors also observed that in the investment company industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply, and that the advisory agreements for many competitor funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s breakpoint arrangements were acceptable under the Fund’s circumstances.
41
Directors and Officers
Information pertaining to the Directors and Officers of Seligman Common Stock Fund, Inc. is set forth below.
Independent Directors
Name, (Age), Position(s)
held with Fundø
|
|
|
| Principal Occupation(s) During Past Five Years, Directorships
and Other Information
|
|---|
Maureen Fonseca (52)3
• Director: July 2007 to Date
• Oversees 59 Portfolios in Fund Complex | | | | Head of School, The Masters School (educational training); Director or Trustee of each of the investment companies of the Seligman Group of Funds† (with the exception of Seligman New Technologies Fund, Inc. and Seligman New Technologies Fund II, Inc.); Trustee, New York State Association of Independent Schools and Greens Farms Academy (educational training); and Commissioner, Middle States Association (educational training). |
John R. Galvin (78)1,3
• Director: 1995 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Dean Emeritus, Fletcher School of Law and Diplomacy at Tufts University; Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Chairman Emeritus, American Council on Germany. Formerly, Director, Raytheon Co. (defense and commercial electronics), Governor of the Center for Creative Leadership, and Trustee, Institute for Defense Analyses. From February 1995 until June 1997, Director, USLIFE Corporation (life insurance). From June 1987 to June 1992, Supreme Allied Commander, NATO, and Commander-in-Chief, United States European Command. |
John F. Maher (64)1,3
• Director: December 2006 to Date
• Oversees 59 Portfolios in Fund Complex | | | | Retired President and Chief Executive Officer, and former Director, Great Western Financial Corporation (bank holding company) and its principal subsidiary, Great Western Bank (a federal savings bank); and Director or Trustee of each of the investment companies of the Seligman Group of Funds† (with the exception of Seligman New Technologies Fund, Inc. and Seligman New Technologies Fund II, Inc.). From 1989 to 1999, Director, Baker Hughes (energy products and services). |
Frank A. McPherson (74)2,3
• Director: 1995 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Retired Chairman of the Board and Chief Executive Officer of Kerr-McGee Corporation (diversified energy and chemical company); Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Director, DCP Midstream GP, LLP (natural gas processing and transporting), Integris Health (owner of various hospitals), Oklahoma Medical Research Foundation, Oklahoma Foundation for Excellence in Education, National Cowboy and Western Heritage Museum, and Oklahoma City Museum of Art. Formerly, Director, ConocoPhillips (integrated international oil corporation), Kimberly-Clark Corporation (consumer products), Oklahoma Chapter of the Nature Conservancy, Boys and Girls Clubs of Oklahoma, Oklahoma City Public Schools Foundation, Oklahoma City Chamber of Commerce and BOK Financial (bank holding company). From 1990 until 1994, Director, the Federal Reserve System’s Kansas City Reserve Bank. |
See footnotes on page 45.
42
Directors and Officers
Independent Directors (continued)
Name, (Age), Position(s)
held with Fundø
|
|
|
| Principal Occupation(s) During Past Five Years, Directorships
and Other Information
|
|---|
Betsy S. Michel (65)2,3
• Director: 1984 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Attorney; Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Trustee, The Geraldine R. Dodge Foundation (charitable foundation), and Drew University (Madison, NJ). Formerly, Chairman of the Board of Trustees of St. George’s School (Newport, RI); and Trustee, World Learning, Inc. (international educational training), and Council of New Jersey Grantmakers. |
Leroy C. Richie (66)1,3
• Director: 2000 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Counsel, Lewis & Munday, P.C. (law firm); Director or Trustee of each of the investment companies of the Seligman Group of Funds†; Director, Vibration Control Technologies, LLC (auto vibration technology) and OGE Energy Corp.; Lead Outside Director, Digital Ally Inc. (digital imaging) and Infinity, Inc. (oil and gas exploration and production); Director and Chairman, Highland Park Michigan Economic Development Corp.; and Chairman, Detroit Public Schools Foundation. Formerly, Chairman and Chief Executive Officer, Q Standards Worldwide, Inc. (library of technical standards); Director, Kerr-McGee Corporation (diversified energy and chemical company); Trustee, New York University Law Center Foundation; and Vice Chairman, Detroit Medical Center and Detroit Economic Growth Corp. From 1990 until 1997, Vice President and General Counsel, Automotive Legal Affairs, Chrysler Corporation. |
Robert L. Shafer (75)2,3
• Director: 1980 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Ambassador and Permanent Observer of the Sovereign Military Order of Malta to the United Nations; and Director or Trustee of each of the investment companies of the Seligman Group of Funds†. From May 1987 until June 1997, Director, USLIFE Corporation (life insurance) and from December 1973 until January 1996, Vice President, Pfizer Inc. (pharmaceuticals). |
James N. Whitson (72)1,3
• Director: 1993 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Retired Executive Vice President and Chief Operating Officer, Sammons Enterprises, Inc. (a diversified holding company); Director or Trustee of each of the investment companies of the Seligman Group of Funds†; and Director, CommScope, Inc. (manufacturer of coaxial cable). Formerly, Director and Consultant, Sammons Enterprises, Inc. and Director, C-SPAN (cable television networks). |
See footnotes on page 45.
43
Directors and Officers
Interested Directors and Principal Officers
Name, (Age), Position(s)
held with Fundø
|
|
|
| Principal Occupation(s) During Past Five Years, Directorships
and Other Information
|
|---|
William C. Morris (69)*
• Director and Chairman of the Board: 1988 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Chairman and Director, J. & W. Seligman & Co. Incorporated; Chairman of the Board and Director or Trustee of each of the investment companies of the Seligman Group of Funds†; Chairman and Director, Seligman Advisors, Inc., Seligman Services, Inc. and Carbo Ceramics Inc. (manufacturer of ceramic proppants for oil and gas industry); Director, Seligman Data Corp.; and President and Chief Executive Officer of The Metropolitan Opera Association. Formerly, Director, Kerr-McGee Corporation (diversified energy and chemical company) and Chief Executive Officer of each of the investment companies of the Seligman Group of Funds. |
Brian T. Zino (55)*
• Director: 1993 to Date
• President: 1995 to Date
• Chief Executive Officer: 2002 to Date
• Oversees 61 Portfolios in Fund Complex | | | | Director and President, J. & W. Seligman & Co. Incorporated; President, Chief Executive Officer, and Director or Trustee of each of the investment companies of the Seligman Group of Funds†; Director, Seligman Advisors, Inc. and Seligman Services, Inc.; Chairman, Seligman Data Corp.; and Member of the Board of Governors of the Investment Company Institute. Formerly, Director, ICI Mutual Insurance Company. |
John B. Cunningham (43)
• Vice President and Portfolio Manager: 2004 to Date | | | | Managing Director and Chief Investment Officer, J. & W. Seligman & Co. Incorporated; Vice President and Portfolio Manager, Tri-Continental Corporation and Seligman Income and Growth Fund, Inc.; Vice President, Seligman Portfolios, Inc. and Portfolio Manager of its Common Stock Portfolio; and Vice President and Co-Portfolio Manager of Seligman TargetHorizon ETF Portfolios, Inc. Formerly, Managing Director, Senior Portfolio Manager, Salomon Brothers Asset Management. |
Eleanor T.M. Hoagland (56)
• Vice President and Chief Compliance Officer: 2004 to Date | | | | Managing Director, J. & W. Seligman & Co. Incorporated; Vice President and Chief Compliance Officer of each of the investment companies of the Seligman Group of Funds†. |
Thomas G. Rose (50)
• Vice President: 2000 to Date | | | | Managing Director, Chief Financial Officer, and Treasurer, J. & W. Seligman & Co. Incorporated; Senior Vice President, Finance, Seligman Advisors, Inc. and Seligman Data Corp.; Vice President of each of the investment companies of the Seligman Group of Funds†, Seligman Services, Inc. and Seligman International, Inc. |
Lawrence P. Vogel (51)
• Vice President: 1992 to Date
• Treasurer: 2000 to Date | | | | Senior Vice President and Treasurer, Investment Companies, J. & W. Seligman & Co. Incorporated; Vice President and Treasurer of each of the investment companies of the Seligman Group of Funds† and Treasurer, Seligman Data Corp. |
See footnotes on page 45.
44
Directors and Officers
Interested Directors and Principal Officers (continued)
Name, (Age), Position(s)
held with Fundø
|
|
|
| Principal Occupation(s) During Past Five Years, Directorships
and Other Information
|
|---|
Frank J. Nasta (43)
• Secretary: 1994 to Date | | | | Director, Managing Director, General Counsel and Corporate Secretary, J. & W. Seligman & Co. Incorporated; Secretary of each of the investment companies of the Seligman Group of Funds†; Director and Corporate Secretary, Seligman Advisors, Inc. and Seligman Services, Inc.; and Corporate Secretary, Seligman International, Inc. and Seligman Data Corp. |
The Fund’s Statement of Additional Information (SAI) includes additional information about Fund directors and is available, without charge, upon request. You may call toll-free (800) 221-2450 in the US or call collect (212) 682-7600 outside the US to request a copy of the SAI, to request other information about the Fund, or to make shareholder inquiries.
ø | | The address for each of the directors and officers is 100 Park Avenue, 8th Floor, New York, NY 10017. Each director serves for an indefinite term, until the election and qualification of a successor or until his or her earlier death, resignation, or removal. Each officer is elected annually by the Board of Directors. |
| † | | The Seligman Group of Funds consists of 24 registered investment companies. |
| * | | Messrs. Morris and Zino are considered “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended, by virtue of their positions with
J. & W. Seligman & Co. Incorporated and its affiliates. |
| Member: | | 1 Audit Committee
2 Director Nominating Committee
3 Board Operations Committee |
45
Required Federal Income Tax Information
(unaudited)
Dividends paid for the year ended December 31, 2007, other than qualified dividend income, are subject to federal income tax as “ordinary income.” In order to claim the dividends received deduction for these distributions, corporate shareholders must have held their shares for 46 days or more during the 90-day period beginning 45 days before each ex-dividend date. Under the Internal Revenue Code, the dividends paid to corporate shareholders that qualify for the dividends received deduction were as follows:
|
|
|
| Dividends Received
Deduction Percent
|
|---|
| Class A | | | | | 18.53 | % |
| Class B | | | | | 23.79 | |
| Class C | | | | | 21.66 | |
| Class D | | | | | 20.91 | |
| Class I | | | | | 16.03 | |
| Class R | | | | | 13.53 | |
For the year ended December 31, 2007, the Fund designates the following as qualified dividends to individual shareholders:
|
|
|
| Qualified Dividends
Percent
|
|
|---|
| Class A | | | | | 18.48 | % |
| Class B | | | | | 23.72 | |
| Class C | | | | | 21.60 | |
| Class D | | | | | 20.86 | |
| Class I | | | | | 15.99 | |
| Class R | | | | | 13.50 | |
In order for an individual to claim dividends received as qualified dividends, individual shareholders must have held their shares for more than 60 days during the 121-day period beginning 60 days before each ex-dividend date.
46
Additional Fund Information
Quarterly Schedule of Investments
A complete schedule of portfolio holdings owned by the Fund will be filed with the SEC for the first and third quarters of each fiscal year on Form N-Q, and will be available to shareholders (i) without charge, upon request, by calling toll-free (800) 221-2450 in the US or collect (212) 682-7600 outside the US or (ii) on the SEC’s website at www.sec.gov. 1 In addition, the Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. Certain of the information contained on the Fund’s Form N-Q is also made available to shareholders on Seligman’s website at www.seligman.com. 1
Proxy Voting
A description of the policies and procedures used by the Fund to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30 of each year will be available (i) without charge, upon request, by calling toll-free (800) 221-2450 in the US or collect (212) 682-7600 outside the US and (ii) on the SEC’s website at www.sec.gov. 1 Information for each new 12-month period ending June 30 will be available no later than August 31 of that year.
| | |
1 | |
These website references are inactive textual references and information contained in or otherwise accessible through these websites does not form a part of this report or the Fund’s prospectuses or statement of additional information. |
47
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As of December 31, 2007, the registrant has adopted a code of ethics that applies to its principal executive and principal financial officers.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The registrant’s board of directors has determined that Mr. James N. Whitson, a member of its audit committee, is an audit committee financial expert. Mr. Whitson is “independent” as such term is defined in Form N-CSR.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:
| 2007 | | 2006 |
Audit Fees | $44,189 | | $41,170 |
Audit-Related Fees | – | | – |
Tax Fees | 2,650 | | 2,500 |
All Other Fees | 2,333 | | – |
Audit fees include amounts related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other fees include the registrant’s pro-rata share of amounts for services related to the assessment of procedures for compliance with anti-money laundering regulations by the registrant and certain other associated investment companies.
Aggregate fees billed by the registrant’s principal accountant for the last two fiscal years for non-audit services provided to the registrant’s investment adviser (not including a sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser) and any entity controlling,
controlled by, or under common control with the investment adviser that provides ongoing services to the registered investment company, where the engagement relates directly to the operations and financial reporting of the registrant, were as follows:
| 2007 | | 2006 |
Audit-Related Fees | $141,440 | | $141,710 |
Tax Fees | 9,000 | | 11,955 |
All Other Fees | 15,000 | | – |
Audit-related fees include amounts for (i) attestation services for the registrant’s shareholder service agent; (ii) testing of the registrant’s shareholder service agent’s conversion to a new record-keeping system and (iii) performance of certain agreed-upon procedures relating to certain services performed by the registrant’s distributor. Tax fees include amounts related to tax compliance, tax planning, and tax advice for and an evaluation of certain tax reporting procedures of the registrant’s shareholder service agent. Other fees include the amounts for services related to the assessment of procedures for compliance with anti-money laundering regulations by certain of the registrant’s affiliates.
(e) (1) The Audit Committee is required to preapprove audit and non-audit services performed for the registrant by the principal accountant in order to assure that the provision of such services does not impair the principal accountant’s independence. The Audit Committee also is required to preapprove certain non-audit services performed by the registrant’s principal accountant for the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and certain of the adviser’s affiliates that provide services directly related to the operations and financial reporting of the registrant. Unless a type of service to be provided by the principal accountant has received preapproval, it will require specific preapproval by the Audit Committee.
The Audit Committee may delegate preapproval authority to one or more of its members. The member or members to whom such authority is delegated shall report any preapproval decisions to the Audit Committee at its next scheduled meeting.
Notwithstanding the foregoing, under certain circumstances, preapproval of non-audit services of a de minimis amount is not required.
(2) No services included in (b) – (d) above were approved pursuant to the waiver provisions of paragraphs (c)(7)(i)(C) or (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant’s principal accountant for non-audit services rendered to the registrant, its investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $170,423 and $156,165, respectively.
(h) All non-audit services rendered in (g) above were pre-approved by the registrant’s audit committee. Accordingly, the audit committee considered whether these services were compatible with maintaining the principal accountant’s independence.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
ITEM 6. | SCHEDULE OF INVESTMENTS. |
Included in Item 1 above.
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
Not applicable.
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) The registrant's principal executive officer and principal financial officer have concluded, based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures provide reasonable assurance that material information required to be disclosed by the registrant in the report it files or submits on Form N-CSR is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and that such material information is accumulated and communicated to the registrant's management, including its principal executive officer and principal financial officer, as appropriate, in order to allow timely decisions regarding required disclosure.
(b) The registrant’s principal executive officer and principal financial officer are aware of no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| (a)(1) | Code of Ethics for Principal Executive and Principal Financial Officers. |
| (a)(2) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. |
| (b) | Certifications of chief executive officer and chief financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SELIGMAN COMMON STOCK FUND, INC.
| President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| President and Chief Executive Officer |
| Vice President, Treasurer and Chief Financial Officer |
SELIGMAN COMMON STOCK FUND, INC.
EXHIBIT INDEX
(a)(1) | Code of Ethics for Principal Executive and Principal Financial Officers. |
(a)(2) | Certifications of principal executive officer and principal financial officer as
required by Rule 30a-2(a) under the Investment Company Act of 1940. |
(b) | Certification of chief executive officer and chief financial officer as required by
Rule 30a-2(b) of the Investment Company Act of 1940. |
