Seligman
Core Fixed Income Fund, Inc.
Annual Report
September 30, 2008
Seeking a High Level of
Current Income
Consistent with Prudent
Exposure to Risk and Secondly,
Capital Appreciation
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New
York, NY 10017
[LOGO] SELIGMAN INVESTMENTS
Experience
Seligman has been in business for more than 140 years, at times playing a
central role in the financial development of the country and its markets. Over
that time, the firm has managed clients' wealth through dramatic market changes
and has remained a consistent, reliable presence on Wall Street. Today,
Seligman is drawing on its long history and long-term perspective as we focus
on the future and on developing investment solutions that help clients arrive
at their goals.
Insight
Asset management is driven by insight -- into the direction of the economy, how
companies will perform, how markets will behave, and how investors will
respond. Portfolio managers at the firm have been in the investment business,
on average, for more than 20 years. Over that time, they have refined their
ability to assess a company's prospects, management, and products, while also
weighing the impact of economic and market cycles, new trends, and developing
technologies.
Solutions
Seligman's commitment to the development of innovative investment products --
including the nation's first growth mutual fund, pioneering single-state
municipal funds, and one of the country's premier technology funds -- defines
our past and informs our future. Our ongoing research into the nature of
investment risk -- begun in the early 1990s -- has resulted in the Seligman
Time Horizon MatrixT asset allocation strategy that redefines the relationship
between risk and reward over time. The strategy offers investors a variety of
investment solutions for goals ranging from college savings to retirement
planning. Whether you select Seligman for one investment product, or as a
comprehensive asset manager, we believe we can help you reach your goals.
Table of Contents
To The Shareholders........................................................ 1
Interview With Your Portfolio Managers..................................... 2
Performance and Portfolio Overview......................................... 4
Understanding and Comparing Your Fund's Expenses........................... 7
Portfolio of Investments................................................... 8
Statement of Assets and Liabilities........................................ 15
Statement of Operations.................................................... 16
Statements of Changes in Net Assets........................................ 17
Notes to Financial Statements.............................................. 18
Financial Highlights....................................................... 27
Report of Independent Registered Public Accounting Firm.................... 33
Proxy Results.............................................................. 34
Matters Relating to the Directors' Consideration of the Approval of the
Investment Management Services Agreement................................. 35
Directors and Officers..................................................... 40
Additional Fund Information................................................ 44
To The Shareholders
The annual shareholder report for Seligman Core Fixed Income Fund, Inc. follows
this letter. The report contains a discussion with the Fund's Portfolio
Managers, as well as the Fund's investment results, financial statements, and
portfolio of investments on September 30, 2008.
For the fiscal year ended September 30, 2008, based on the net asset value of
Class A shares, Seligman Core Fixed Income Fund posted a total return of -1.2%.
The Fund outperformed its peers, as measured by the Lipper Intermediate
Investment-Grade Debt Funds Average, which returned -2.4% for the period, but
underperformed its benchmark, the Lehman Brothers U.S. Universal Index, which
returned 2.3% for the period.
A Special Meeting of Shareholders was held on November 3, 2008, at which
shareholders voted in favor of approving a new investment management services
agreement between the Fund and River-Source Investments, LLC. Shareholders also
voted 10 directors to the Fund's Board. Details of the proxy vote can be found
on page 34 of this report.
On November 7, 2008, the acquisition of your Fund's investment manager, J. & W.
Seligman & Co. Incorporated, by RiverSource Investments, a subsidiary of
Ameriprise Financial (NYSE: AMP), will be completed. As a result of the
acquisition, the Fund will be managed by the RiverSource Fixed Income Team.
We believe the acquisition of J. & W. Seligman & Co. Incorporated by
RiverSource Investments will create a stronger combined investment management
business having greater resources, which should no doubt be in the best
interest of shareholders. In conjunction with the acquisition, Stephen Lewis
will become the Chairman of the Fund and Patrick T. Bannigan will assume the
position of President.
We thank you for your continued support of Seligman Core Fixed Income Fund and
for the opportunity to have served as members of your Fund's Board.
By order of the Board of Directors,
/s/ William C. Morris
- -------------------------------------
William C. Morris
Chairman
/s/ Brian T. Zino
- -------------------------------------
Brian T. Zino
President
November 6, 2008
1
Interview With Your Portfolio Managers
Francis L. Mustaro and J. Eric Misenheimer
Q. How did Seligman Core Fixed Income Fund perform for the fiscal year ended
September 30, 2008?
A. For the fiscal year ended September 30, 2008, Seligman Core Fixed Income
Fund posted a total return of -1.2%, based on the net asset value of
Class A shares, outperforming its peers, as measured by the Lipper
Intermediate Investment-Grade Debt Funds Average, which returned -2.4% for
the period. The Fund's benchmark, the Lehman Brothers U.S. Universal Index
returned 2.3%.
Q. What market conditions and economic events materially impacted the Fund's
performance during the period?
A. The economic landscape during the fiscal year ended September 30, 2008 can
be characterized by several major themes: further erosion in the housing
market as prices remained on a downward trend, significant selling pressure
as a result of deflating consumer confidence, continued large bank and
brokerage firm write-offs which accelerated an ongoing flight to quality
and credit contraction, and the significant widening of spreads.
As the period unfolded, concerns regarding the housing market spread to
other asset classes. Fears of spreading credit problems led to an
overwhelming unwillingness by banks and other financial institutions to
lend. Ongoing declines in asset values at financial institutions
effectively resulted in a dysfunctional lending market in the US. The
collapse of credit growth, along with the continued erosion of household
net worth due to weakening housing and equity markets severely hampered
consumer spending.
The US Federal Reserve Board (the Fed) took action during the year to
inject much-needed liquidity into the marketplace with several incremental
reductions in the federal funds target rate (the rate banks charge one
another on overnight loans). This rate decreased from 4.75% at the
beginning of the fiscal year to 2. 0% by the close of the reporting period.
The Fed further decreased the fed funds target rate in October and November
to 1.0%.
The dramatic widening in all quality spreads in the corporate bond market
demonstrated the flight to quality by investors. The credit spread is the
difference in yield between a corporate bond and a government bond at each
point of maturity. The credit spread reflects the extra compensation
investors receive for bearing credit risk. Widening spreads are often
indicative of a waning investor appetite for risk. Despite its aggressive
efforts to expand liquidity avenues for banks and brokerages, the Fed faced
a true seizing up of credit markets, a phenomenon that quickly spread among
global banks.
Q. What investment strategies or techniques materially impacted the Fund's
performance during the period?
A. The Fund's portfolio duration was lengthened throughout the period to
exceed that of the benchmark. This strategy was employed to enable the
portfolio to participate in the ongoing rally in US Treasuries as investors
broadly sought higher quality instruments, as well as in anticipation of
continued sluggish growth. This strategy benefitted the Fund's performance
during the period.
2
Interview With Your Portfolio Managers
Francis L. Mustaro and J. Eric Misenheimer
The Fund's exposure to higher-yielding, lower-quality issues was decreased
throughout the period (from approximately 10% at the start of the fiscal
year to approximately 3% at the close of the fiscal year), in response to
the broad flight-to-quality and our anticipation that growth would remain
sluggish. The Fund's portfolio also remains devoid of any emerging markets
exposure. The Fund's portfolio was also underweight financial issuers, as
the sector was extremely hard-hit throughout the period.
The year presented an extremely difficult environment for credit investing,
and no matter what strategy was employed, the portfolio would always be
exposed in some way to credit. Earlier in the period, there was more of a
gradation of quality that was recognized by the market. Toward the end of
the period, however, there was an almost indiscriminate widening of
spreads. Exposure to anything other than US Treasuries detracted from
performance.
- --------
The views and opinions expressed are those of the Portfolio Managers, are
provided for general information only, and do not constitute specific tax,
legal, or investment advice to, or recommendation for, and person. There
can be no guarantee as to the accuracy of market forecasts. Opinions,
estimates, and forecasts may be changed without notice.
3
Performance and Portfolio Overview
This section of the report is intended to help you understand the performance
of Seligman Core Fixed Income Fund and to provide a summary of the Fund's
portfolio characteristics.
Performance data quoted in this report represents past performance and does not
guarantee or indicate future investment results. 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. Current performance may be
lower or higher than the performance data quoted. Total returns of the Fund
(except for Class I shares) as of the most recent month end will be available
at www.seligman.com/1/ by the seventh business day following that month end.
Calculations assume reinvestment of distributions. Performance data quoted does
not reflect the deduction of taxes that an investor may pay on distributions or
the redemption of shares.
J. & W. Seligman & Co. Incorporated (the "Manager") has contractually
undertaken to waive its management fee and/or reimburse the Fund's expenses to
the extent that the Fund's "other expenses" (i.e., those expenses other than
management fee, distribution and service (12b-1) fees, interest on borrowings,
and extraordinary expenses, including litigation expenses) exceed 0.50% per
annum of the Fund's average daily net assets. This undertaking will remain in
effect until at least January 31, 2009. Similar fee waiver/expense
reimbursement arrangements were in effect since the Fund's inception. Absent
such waiver/reimbursement, returns and yields would have been lower.
Returns for Class A shares are calculated with and without the effect of the
initial 4.5% maximum sales charge that became effective on January 7, 2008.
Although for all periods presented, returns for the Fund's Class A shares
reflect the 4.5% maximum sales charge, the actual returns for periods prior to
January 7, 2008 would have been lower if the 4.75% maximum sales charge then in
effect was incurred. 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 and Class R shares are
calculated with and without the effect of the 1% CDSC, charged on redemptions
made within one year of purchase. Returns for Class C shares would have been
lower for periods prior to June 4, 2007 if the 1% initial sales charge then in
effect was incurred. On May 16, 2008, Class D shares of the Fund were converted
to Class C shares at their respective net asset values. Effective at the close
of business on May 16, 2008, Class D shares are no longer offered by the Fund.
Class I shares do not have sales charges, and returns are calculated
accordingly.
The chart on page 5 compares $10,000 hypothetical investments made in Class A
shares, with and without the initial 4.5% maximum sales charge, Class B shares
and Class C shares, without CDSC, to a $10,000 investment made in the Lehman
Brothers U.S. Universal Index since the commencement of operations on
October 1, 2001 through September 30, 2008. The performance of Class I and
Class R shares, which commenced on later dates, and of Class A, Class B and
Class C shares for other periods, with and without applicable sales charges and
CDSCs, is not shown in the chart but is included in the total returns table
that follows the chart. The performance of Class I and Class R shares will
differ from the performance shown for Class A, Class B and Class C shares,
based on the differences in sales charges and fees paid by shareholders.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
- --------
/1/ The website reference is an inactive textual reference and information
contained in or otherwise accessible through the website does not form a
part of this report or the Fund's prospectuses or statement of additional
information.
4
Performance and Portfolio Overview
[CHART]
Investment Results
Total Returns
For Periods Ended September 30, 2008
Average Annual
------------------------------------------
Class A,
B and C Class I Class R
Since Since Since
Six One Five Inception Inception Inception
Months* Year Years 10/1/01 11/30/01 4/30/03
------- ----- ----- --------- --------- ---------
Class A
With 4.5% Sales Charge....................... (7.74)% (5.68)% 0.65% 2.19% n/a n/a
Without Sales Charge......................... (3.39) (1.24) 1.57 2.87 n/a n/a
Class B
With CDSC+................................... (8.49) (6.71) 0.47 n/a n/a n/a
Without CDSC................................. (3.76) (1.98) 0.82 2.11 n/a n/a
Class C
With 1% CDSC................................. (4.70) (2.90) n/a n/a n/a n/a
Without CDSC................................. (3.75) (1.96) 0.82 2.12 n/a n/a
Class I...................................... (3.27) (0.85) 1.82 n/a 3.13% n/a
Class R
With 1% CDSC................................. (4.46) (2.43) n/a n/a n/a n/a
Without CDSC................................. (3.51) (1.49) 1.34 n/a n/a 1.61%
Benchmarks**
Lehman Brothers Aggregate Bond Index......... (1.50) 3.65 3.78 4.67 4.70 3.78
Lehman Brothers U.S. Universal Index......... (1.96) 2.32 3.90 4.90 4.92 3.96
Lipper Intermediate Investment-Grade
Debt Funds Average........................... (4.84) (2.43) 2.00 3.20 3.16 2.13
- --------
See footnotes on page 6.
5
Performance and Portfolio Overview
Investment Results
Net Asset Value Per Share
9/30/08 3/31/08 9/30/07
------- ------- -------
Class A...................................... $6.63 $7.01 $7.01
Class B...................................... 6.63 7.01 7.01
Class C...................................... 6.63 7.01 7.01
Class I...................................... 6.63 7.01 7.00
Class R...................................... 6.63 7.01 7.01
Dividend Per Share and Yield Information
For Periods Ended September 30, 2008
Dividends/o/ SEC 30-Day Yield/oo/
- ------------ -------------------
$0.303................................................. 3.77%
0.250.................................................. 3.21
0.252.................................................. 3.21
0.320.................................................. 4.21
0.285.................................................. 3.71
Effective Weighted Average Life/1/ 7.0 years
Portfolio Composition
Percent of Total
--------------
9/30/08 9/30/07
------- -------
US Government Securities............................... 14.1% 11.1%
Government Agency Securities........................... 6.1 5.0
Government Agency Mortgage- Backed Securities.......... 30.0 38.1
Corporate Bonds........................................ 26.6 32.9
Collateralized Mortgage Obligations.................... 7.1 5.6
Asset-Backed Securities................................ 4.5 3.4
Foreign Government Agency Securities................... 2.6 1.3
Short-Term Holdings.................................... 9.0 2.6
Total.................................................. 100.0% 100.0%
Ratings#
September 30, 2008
Aaa.................................................... 67.5%
Aa..................................................... 4.3
A...................................................... 7.4
Baa.................................................... 17.1
Ba..................................................... 1.2
B...................................................... 1.7
Caa.................................................... 0.6
Non-Rated.............................................. 0.2
Total.................................................. 100.0%
- --------
* Returns for periods of less than one year are not annualized.
** Effective November 7, 2008, to better align the primary benchmark index
with the investment strategy of the Fund, the Lehman Brothers U.S.
Universal Index (the "LB Universal Index") is replaced with the Lehman
Brothers Aggregate Bond Index (the "LB Aggregate Index"). The LB Aggregate
Index, the LB Universal Index and the Lipper Intermediate Investment-Grade
Debt Funds Average (the "Lipper Average") are unmanaged benchmarks that
assume the reinvestment of all distributions. The LB Aggregate Index is
made up of a representative list of government, corporate, asset-backed and
mortgage-backed securities and is frequently used as a general measure of
bond market performance. The LB Universal Index measures the performance of
US dollar-denominated, taxable bonds that are rated either investment-grade
or below investment grade. The Lipper Average measures the performance of
funds that invest primarily in investment-grade debt issues (rated in the
top four grades) with dollar-weighted average maturities of five to ten
years. The LB Indices exclude the effect of taxes, fees, sales charges and
expenses, and the Lipper Average excludes the effect of taxes, fees, and
sales charges. Investors cannot invest directly in an index or average.
+ The CDSC is 5% if you sell your shares within one year and 2% for five
years.
# Credit ratings are those issued by Moody's Investors Service, Inc.
("Moody's"). Percentages are based on current market values of long-term
holdings at September 30, 2008. Holdings and credit ratings are subject to
change.
/1/ The average time to receive principal payments, in years, weighted based
on principal.
o Represents per share amount paid or declared for the year ended
September 30, 2008.
oo Current yield, representing the annualized yield for the 30-day period
ended September 30, 2008, has been computed in accordance with SEC
regulations and will vary. During the period, the Manager reimbursed
expenses of certain classes. Without these reimbursements, the yields would
have been as follows:
Class A Class B Class C Class I Class R
- -------------- -------------- -------------- -------------- --------------
2.60% 2.14% 1.79% 4.21% 2.83%
6
Understanding and Comparing Your Fund's Expenses
As a shareholder of the Fund, you incur ongoing expenses, such as management
fee, distribution and service (12b-1) fees (if applicable), and other fund
expenses. The information below is intended to help you understand the ongoing
expenses (in dollars) of investing in the Fund and to compare them with the
ongoing expenses of investing in other mutual funds. Please note that the
expenses shown in the table are meant to highlight your ongoing expenses only
and do not reflect any transactional costs, such as sales charges (also known
as loads) on certain purchases or redemptions. Therefore, the table is useful
in comparing ongoing expenses only, and will not help you determine the
relative total expenses of owning different funds. In addition, if
transactional costs were included, your total expenses would have been higher.
The table is based on an investment of $1,000 invested at the beginning of
April 1, 2008 and held for the entire six-month period ended September 30, 2008.
Actual Expenses
The table below provides information about actual expenses and actual account
values. You may use the information, together with the amount you invested, to
estimate the expenses that you paid over the period. Simply divide your account
value at the beginning of the period by $1,000 (for example, an $8,600 account
value divided by $1,000 = 8.6), then multiply the result by the number under
the heading entitled "Expenses Paid During Period" for the Fund's share class
that you own to estimate the expenses that you paid on your account during the
period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical expenses and
hypothetical account values based on the actual expense ratios and an assumed
rate of return of 5% per year before expenses, which is not the actual return
of any class of the Fund. The hypothetical expenses and account values may not
be used to estimate the ending account value or the actual expenses you paid
for the period. You may use this information to compare the ongoing expenses of
investing in the Fund and other mutual funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other mutual funds.
Actual Hypothetical
----------------- -------------------
Expenses Expenses
Paid Paid
Beginning Ending During Ending During
Account Annualized Account Period** Account Period**
Value Expense Value 4/1/08 to Value 4/1/08 to
4/1/08 Ratio* 9/30/08 9/30/08 9/30/08 9/30/08
--------- ---------- ------- --------- --------- ---------
Class A............. $1,000.00 1.25% $966.10 $6.14 $1,018.75 $ 6.31
Class B............. 1,000.00 2.00 962.40 9.81 1,015.00 10.08
Class C............. 1,000.00 1.99 962.50 9.76 1,015.05 10.02
Class I............. 1,000.00 1.02 967.30 5.02 1,019.90 5.15
Class R............. 1,000.00 1.50 964.90 7.37 1,017.50 7.57
- --------
* Expenses of Class B, Class C, Class I and Class R shares differ from the
expenses of Class A shares due to the differences in 12b-1 fees and other
class-specific expenses paid by each share class. See the Fund's
prospectuses for a description of each share class and its fees, expenses
and sales charges. Through at least January 31, 2009, the Manager has
contractually undertaken to waive its management fee and/or reimburse the
Fund's expenses to the extent that the Fund's "other expenses" (i.e., those
expenses other than management fee, 12b-1 fees, interest on borrowings, and
extraordinary expenses, including litigation expenses) exceed 0.50% per
annum of the Fund's average daily net assets. Absent such waiver/expense
reimbursement, the expense ratios and expenses paid by a shareholder for
the period would have been higher.
** Expenses are equal to the annualized expense ratio based on actual expenses
for the period April 1, 2008 to September 30, 2008, multiplied by the
average account value over the period, multiplied by 183/366 (number of
days in the period).
7
Portfolio of Investments
September 30, 2008
Principal
Amount Value
---------- ----------
US Government and Government Agency Securities 56.3%
US Government Securities 15.9%
US Treasury Bonds 5%, 5/15/2037........................ $ 405,000 $ 450,658
US Treasury Inflation-Protected Securities 0.625%,
4/15/2013............................................ 52,025 49,115
US Treasury Notes:
2.125%, 1/31/2010................................... 280,000/oo/ 280,853
3.125%, 9/30/2013................................... 1,085,000 1,092,799
2%, 1/15/2016....................................... 238,233 235,423
2.375%, 1/15/2017................................... 272,638 275,023
3.875%, 5/15/2018................................... 410,000 412,819
4%, 8/15/2018....................................... 530,000 537,702
US Treasury STRIPS Principal 7.5%, 11/15/2024*......... 445,000 214,299
----------
3,548,691
----------
Government Agency Securities/o/ 6.8%
Fannie Mae:
3.255%, 6/9/2010.................................... 200,000/oo/ 200,113
3.25%, 8/12/2010.................................... 530,000/oo/ 531,473
5%, 7/9/2018........................................ 250,000 245,244
Federal Farm Credit 3.4%, 2/7/2013..................... 240,000 234,217
Federal Home Loan Bank:
2.625%, 5/20/2011................................... 250,000/oo/ 244,623
5%, 11/17/2017...................................... 70,000 70,679
----------
1,526,349
----------
Government Agency Mortgage-Backed Securities++/o/ 33.6%
Fannie Mae:
4.5%, 12/1/2020..................................... 510,835 501,886
5.355%, 4/1/2036#................................... 200,603 203,017
6.05%, 4/1/2036#.................................... 758,540/oo/ 772,426
5.961%, 8/1/2036#................................... 285,637/oo/ 294,123
6.5%, 9/1/2037...................................... 354,018 361,270
6.5%, 12/1/2037..................................... 472,736 485,325
6.5%, TBA 10/2008................................... 500,000 512,734
Freddie Mac:
6.165%, 8/1/2036#................................... 358,223/oo/ 367,183
6.113%, 12/1/2036#.................................. 358,270 368,319
- --------
See footnotes on page 14.
8
Portfolio of Investments
September 30, 2008
Principal
Amount Value
---------- -----------
Government Agency Mortgage-Backed Securities++/o/
(continued)
Freddie Mac Gold:
5%, 5/1/2018......................................... $1,118,857 $ 1,120,759
7%, 4/1/2038......................................... 242,556 254,096
4.5%, TBA 10/2008.................................... 700,000 681,407
5.5%, TBA 10/2008.................................... 900,000 895,360
5.5%, TBA 10/2008.................................... 700,000 704,484
-----------
7,522,389
-----------
Total US Government and Government
Agency Securities (Cost $12,551,536).................... 12,597,429
-----------
Corporate Bonds 29.7%
Aerospace and Defense 0.1%
Hawker Beechcraft 9.75%, 4/1/2017....................... 25,000 22,500
-----------
Airlines 0.8%
Continental Airlines (Series A) 5.983%, 4/19/2022....... 245,000 188,650
-----------
Capital Markets 1.5%
Bank of New York Mellon 4.95%, 11/1/2012................ 95,000 90,409
Lehman Brothers Holdings 6.875%, 5/2/2018##............. 95,000 10,011
Merrill Lynch 6.05%, 5/15/2012.......................... 115,000 107,918
Morgan Stanley 6%, 4/28/2015............................ 105,000 71,512
Northern Trust 5.5%, 8/15/2013.......................... 50,000 50,089
-----------
329,939
-----------
Chemicals 0.3%
E.I. duPont de Nemours 5%, 1/15/2013.................... 65,000 64,293
-----------
Computers and Peripherals 0.5%
Hewlett Packard 5.5%, 3/1/2018.......................... 70,000 65,805
Seagate Technology 6.375%, 10/1/2011.................... 50,000 49,375
-----------
115,180
-----------
Consumer Finance 1.8%
National Rural Utilities Cooperative Finance 5.45%,
2/1/2018.............................................. 60,000 55,758
Nissan Motor Acceptance 5.625%, 3/14/2011+.............. 315,000 318,504
Rental Service 9.5%, 12/1/2014.......................... 25,000 19,063
-----------
393,325
-----------
- --------
See footnotes on page 14.
9
Portfolio of Investments
September 30, 2008
Principal
Amount Value
--------- --------
Diversified Financial Services 2.7%
Bank of America 5.65%, 5/1/2018............................. $105,000 $ 88,596
Caterpillar Financial Services 6.2%, 9/30/2013.............. 90,000 90,093
CIT Group 5.4%, 1/30/2016................................... 40,000 19,384
Citigroup:
5.5%, 4/11/2013.......................................... 110,000 96,107
6.5%, 8/19/2013.......................................... 240,000 213,519
JPMorgan Chase 5.375%, 10/1/2012............................ 110,000 106,361
--------
614,060
--------
Diversified Telecommunication Services 0.8%
AT&T 5.5%, 2/1/2018......................................... 65,000 57,986
Citizens Communications 6.625%, 3/15/2015................... 100,000 83,500
Embarq 7.082%, 6/1/2016..................................... 45,000 36,521
--------
178,007
--------
Electric Utilities 2.5%
Edison Mission Energy 7%, 5/15/2017......................... 50,000 45,250
Exelon Generation 6.2%, 10/1/2017........................... 190,000 167,251
Indiana Michigan Power 6.05%, 3/15/2037..................... 150,000 122,724
Southern Power 6.375%, 11/15/2036........................... 120,000 103,352
Union Electric 6.4%, 6/15/2017.............................. 120,000 114,601
--------
553,178
--------
Energy Equipment and Services 1.6%
Complete Production Services 8%, 12/15/2016................. 25,000 23,875
Halliburton 6.7%, 9/15/2038................................. 185,000 178,629
Nabors Industries 6.15%, 2/15/2018+......................... 115,000 109,834
Weatherford International 7%, 3/15/2038..................... 60,000 52,187
--------
364,525
--------
Food and Staples Retailing 0.5%
Kroger 6.9%, 4/15/2038...................................... 80,000 74,457
Wal-Mart Stores 6.2%, 4/15/2038............................. 40,000 36,605
--------
111,062
--------
Food Products 1.5%
Corn Products 6%, 4/15/2017................................. 215,000 222,608
Del Monte 8.625%, 12/15/2012................................ 50,000 49,750
General Mills 5.2%, 3/17/2015............................... 60,000 57,650
--------
330,008
--------
- --------
See footnotes on page 14.
10
Portfolio of Investments
September 30, 2008
Principal
Amount Value
--------- --------
Health Care Providers and Services 1.3%
Cardinal Health 9.5%, 4/15/2015........................ $100,000 $ 78,000
HCA 9.25%, 11/15/2016.................................. 125,000 121,875
UnitedHealth Group 6.625%, 11/15/2037.................. 120,000 101,169
--------
301,044
--------
Household Durables 0.5%
Kimberly-Clark 6.125%, 8/1/2017........................ 110,000 110,360
--------
Industrial Conglomerates 0.8%
General Electric Capital 5.875%, 1/14/2038............. 85,000 62,848
Koninklijke (Royal) Philips Electronics 5.75%,
3/11/2018............................................ 115,000 110,624
--------
173,472
--------
Insurance 0.9%
American General Finance 5.375%, 10/1/2012............. 55,000 30,085
Genworth Global Funding Trust 5.2%, 10/8/2010.......... 95,000/oo/ 86,039
Prudential Financial 5.7%, 12/14/2036.................. 125,000 92,598
--------
208,722
--------
Media 2.0%
Charter Communications Holdings I 0% (13.5%**),
1/15/2014............................................ 40,000 17,000
Comcast 5.7%, 5/15/2018................................ 60,000 52,464
Thomson Reuters 6.5%, 7/15/2018........................ 225,000 215,563
Time Warner Cable 5.4%, 7/2/2012....................... 110,000 104,721
Viacom 6.125%, 10/5/2017............................... 75,000 68,152
--------
457,900
--------
Multi-Utilities 0.9%
Dominion Resources 5.6%, 11/15/2016.................... 205,000 190,435
--------
Multiline Retail 0.8%
J.C. Penney 6.375%, 10/15/2036......................... 220,000 167,794
--------
Office Electronics 1.4%
Xerox:
5.5%, 5/15/2012........................................ 220,000 209,927
7.625%, 6/15/2013...................................... 110,000 111,465
--------
321,392
--------
- --------
See footnotes on page 14.
11
Portfolio of Investments
September 30, 2008
Principal
Amount Value
--------- ----------
Oil, Gas and Consumable Fuels 2.9%
Chesapeake Energy 6.5%, 8/15/2017......................... $150,000 $ 132,000
Encana 5.9%, 12/1/2017.................................... 105,000 93,870
OPTI Canada 7.875%, 12/15/2014............................ 50,000 44,500
Plains Exploration Production 7.75%, 6/15/2015............ 50,000 46,250
Ras Laffan Liquefied Natural Gas 5.298%, 9/30/2020+....... 360,000 322,857
W & T Offshore 8.25%, 6/15/2014+.......................... 25,000 20,125
----------
659,602
----------
Pharmaceuticals 0.3%
Bristol-Myers Squibb 5.45%, 5/1/2018...................... 65,000 61,492
----------
Real Estate Investment Trusts 1.6%
Health Care Properties 6%, 1/30/2017...................... 190,000 152,123
Prologis Trust 5.625%, 11/15/2016......................... 205,000 174,893
Simon Property Group 6.125%, 5/30/2018.................... 30,000 26,621
----------
353,637
----------
Road and Rail 0.3%
Union Pacific 5.7%, 8/15/2018............................. 75,000 69,975
----------
Specialty Retail 0.1%
Asbury Automotive Group 7.625%, 3/15/2017................. 25,000 16,125
----------
Water Utilities 0.6%
American Water Capital 6.085%, 10/15/2017................. 150,000 138,980
----------
Wireless Telecommunication Services 0.7%
Rogers Communications 6.8%, 8/15/2018..................... 175,000 165,846
----------
Total Corporate Bonds (Cost $7,447,492)................... 6,661,503
----------
Collateralized Mortgage Obligations++ 7.9%
Bank of America Mortgage Securities 4.519%, 7/25/2034#.... 82,763 77,891
Bear Stearns Alternate Trust 5.41%, 4/25/2035#............ 92,149 55,289
Chase Mortgage Finance Trust 6.304%, 5/25/2032............ 493,266 481,835
GS Mortgage Loan Trust 5.327%, 7/25/2035#................. 313,662 278,304
Harborview Mortgage Loan Trust 3.27% 1/19/2036#........... 262,687 169,332
Homestar Mortgage Acceptance 3.527%, 3/25/2034#........... 135,129 98,347
Indymac Index Mortgage Loan Trust 6.094%, 3/25/2036#+..... 489,107 313,284
Wells Fargo 4.729%, 7/25/2034#............................ 339,102 303,812
----------
Total Collateralized Mortgage Obligations (Cost
$2,147,308)............................................. 1,778,094
----------
- --------
See footnotes on page 14.
12
Portfolio of Investments
September 30, 2008
Principal
Amount
or Shares Value
----------- -----------
Asset-Backed Securities++ 5.1%
Caterpillar Financial Asset Trust 4.94%,
4/25/2014..................................... $ 110,000/oo/ $ 106,853
Centex Home Equity 5.257%, 12/25/2032#.......... 305,481 119,919
Chase Issuance Trust 2.508%, 10/17/2011#........ 220,000/oo/ 219,267
Citicorp Residential Mortgage Securities
5.872%, 9/25/2036............................. 55,602 55,338
Equifirst Mortgage Loan Trust 3.51%, 12/25/2032. 145,956 133,902
GSAA Home Equity Trust 5.344%, 9/25/2035........ 100,000 69,636
Irwin Home Equity 3.587%, 2/25/2034#............ 85,192 64,690
Structured Asset Securities 4.04%,** 6/25/2033.. 418,545 368,699
-----------
Total Asset-Backed Securities (Cost $1,388,279). 1,138,304
-----------
Foreign Government Agency Securities 2.9%
Corporacion Andina de Fomento 5.75%, 1/12/2017.. 140,000 129,545
Emirate of Abu Dhabi 5.5%, 8/2/2012+............ 200,000 208,172
Export-Import Bank of Korea 5.5%, 10/17/2012.... 165,000 156,687
ICICI Bank 6.625%, 10/3/2012+................... 150,000 144,880
-----------
Total Foreign Government Agency Securities
(Cost $654,083)............................... 639,284
-----------
Preferred Stocks 0.0%
Thrifts and Mortgage Finance 0.0%
Fannie Mae Series S 8.25%/o /(Cost $102,784).... 4,095 shs. 8,927
-----------
Short-Term Holdings 10.1%
Repurchase Agreement 9.6%
State Street Bank 0.05%, dated 9/30/2008,
maturing 10/1/2008, in the amount of
$2,153,003, collateralized by: $2,225,000
US Treasury Bills 1.19%, 12/26/2008, with a
fair market value of $2,222,219............... $ 2,153,000 2,153,000
-----------
Corporate Bonds 0.5%
General Electric Capital 2.687%, 3/2/2009#...... 100,000/oo/ 98,220
Midwest Generation 8.3%, 7/2/2009............... 17,891 18,126
-----------
116,346
-----------
Total Short-Term Holdings (Cost $2,269,167)..... 2,269,346
-----------
Total Investments (Cost $26,560,649) 112.0%..... 25,092,887
-----------
Other Assets Less Liabilities (12.0)%........... (2,695,115)
-----------
Net Assets 100.0%............................... $22,397,772
===========
- --------
See footnotes on page 14.
13
Portfolio of Investments
September 30, 2008
- --------
TBA -- To-be-announced.
* STRIPS (Separate Trading of Registered Interest and Principal of
Securities) Principal is purchased at a discount, receives no interest and
receives a single payment at maturity.
** Current rate of step bond.
+ The security may be offered and sold only to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933.
++ Investments in mortgage-backed securities, collateralized mortgage
obligations and asset-backed securities are subject to principal paydowns.
As a result of prepayments from refinancing or satisfaction of the
underlying instruments, the average life may be less than the original
maturity. This, in turn, may impact the ultimate yield realized from these
instruments.
/o/ Securities issued by these agencies are neither guaranteed nor issued by
the United States Government.
/oo/At September 30, 2008, these securities, with a total value of $3,201,173,
were held as collateral for the TBA securities.
# Floating rate security, the interest rate is reset periodically. The
interest rate disclosed reflects the rate in effect at September 30, 2008.
## Non-income producing security. Security in default.
Industry classifications have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
14
Statement of Assets and Liabilities
September 30, 2008
Assets:
Investments, at value:
US Government and government agency securities (Cost
$12,551,536)................................................. $12,597,429
Corporate bonds (Cost $7,447,492).............................. 6,661,503
Collateralized mortgage obligations (Cost $2,147,308).......... 1,778,094
Asset-backed securities (Cost $1,388,279)...................... 1,138,304
Foreign government agency securities (Cost $654,083)........... 639,284
Preferred stocks (Cost $102,784)............................... 8,927
Repurchase agreement (Cost $2,153,000)......................... 2,153,000
Other short-term holdings (Cost $116,167)...................... 116,346
Total investments (Cost $26,560,649).............................. 25,092,887
Receivable for securities sold.................................... 267,850
Interest receivable............................................... 219,786
Receivable for Capital Stock sold................................. 37,497
Receivable from the Manager (Note 3).............................. 10,194
Expenses prepaid to shareholder service agent..................... 1,046
Other............................................................. 1,141
-----------
Total Assets 25,630,401
-----------
Liabilities:
Payable for securities purchased.................................. 2,803,183
Bank overdraft.................................................... 264,905
Payable for Capital Stock repurchased............................. 68,094
Dividends payable................................................. 33,390
Management fee payable............................................ 9,362
Distribution and service (12b-1) fees payable..................... 4,719
Accrued expenses and other........................................ 48,976
-----------
Total Liabilities 3,232,629
-----------
Net Assets $22,397,772
===========
Composition of Net Assets:
Capital Stock, at par ($0.001 par value; 1,000,000,000 shares
authorized; 3,377,901 shares outstanding):
Class A........................................................ $ 1,058
Class B........................................................ 204
Class C........................................................ 424
Class I........................................................ 1,679
Class R........................................................ 13
Additional paid-in capital........................................ 24,826,694
Dividends in excess of net investment income...................... (1,287)
Accumulated net realized loss..................................... (963,251)
Net unrealized depreciation of investments........................ (1,467,762)
-----------
Net Assets $22,397,772
===========
Net Asset Value Per Share:
Class A ($7,013,409 / 1,057,934 shares)........................... $ 6.63
Class B ($1,354,356 / 204,220 shares)............................. $ 6.63
Class C ($2,809,105 / 423,627 shares)............................. $ 6.63
Class I ($11,132,295 / 1,678,763 shares).......................... $ 6.63
Class R ($88,607 / 13,357 shares)................................. $ 6.63
- --------
See Notes to Financial Statements.
15
Statement of Operations
For the Year Ended September 30, 2008
Investment Income:
Interest.......................................................... $ 1,557,621
Dividends......................................................... 6,110
-----------
1,563,731
-----------
Expenses:
Management fee.................................................... 140,896
Registration...................................................... 107,182
Shareholder account services...................................... 74,648
Distribution and service (12b-1) fees............................. 71,004
Auditing and legal fees........................................... 49,662
Custody and related services...................................... 31,741
Shareholder reports and communications............................ 19,694
Directors' fees and expenses...................................... 4,603
Miscellaneous..................................................... 7,848
Total Expenses Before Reimbursement............................... 507,278
-----------
Reimbursement of expenses (Note 3)................................ (154,207)
Total Expenses After Reimbursement 353,071
-----------
Net Investment Income............................................. 1,210,660
-----------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments.................................. 117,481
Net change in unrealized depreciation of investments.............. (1,453,099)
Net Loss on Investments........................................... (1,335,618)
-----------
Decrease in Net Assets from Operations............................ $ (124,958)
===========
- --------
See Notes to Financial Statements.
16
Statements of Changes in Net Assets
Year Ended September 30,
-------------------------
2008 2007
------------ -----------
Operations:
Net investment income............................... $ 1,210,660 $ 1,282,613
Net realized gain on investments.................... 117,481 312,294
Net change in unrealized appreciation/depreciation
of investments.................................... (1,453,099) (409,890)
------------ -----------
Increase (Decrease) in Net Assets from Operations... (124,958) 1,185,017
------------ -----------
Distributions to Shareholders:
Dividends from net investment income:
Class A.......................................... (538,451) (644,990)
Class B.......................................... (47,200) (62,926)
Class C.......................................... (65,174) (45,565)
Class D.......................................... (31,448) (47,260)
Class I.......................................... (532,575) (474,861)
Class R.......................................... (2,870) (1,129)
------------ -----------
Decrease in Net Assets from Distributions........... (1,217,718) (1,276,731)
------------ -----------
Capital Share Transactions:
Net proceeds from sales of shares................... 3,663,453 4,372,295
Investment of dividends............................. 1,096,118 1,121,538
Exchanged from associated funds..................... 4,055,835 2,765,380
Total............................................... 8,815,406 8,259,213
Cost of shares repurchased.......................... (13,956,328) (3,906,657)
Exchanged into associated funds..................... (1,139,371) (4,011,797)
Total............................................... (15,095,699) (7,918,454)
Increase (Decrease) in Net Assets from Capital
Share Transactions................................ (6,280,293) 340,759
------------ -----------
Increase (Decrease) in Net Assets................... (7,622,969) 249,045
------------ -----------
Net Assets:
Beginning of year................................... 30,020,741 29,771,696
------------ -----------
End of Year (net of dividends in excess of net
investment income of $1,287 and $10,286,
respectively)..................................... $ 22,397,772 $30,020,741
============ ===========
- --------
See Notes to Financial Statements.
17
Notes to Financial Statements
1. Organization and Multiple Classes of Shares -- Seligman Core Fixed Income
Fund, Inc. (the "Fund") is registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a diversified open-end management investment company.
The Fund offers the following five classes of shares:
Class A shares are subject to a continuing service fee of up to 0.25% on an
annual basis and, through January 6, 2008, were sold with an initial sales
charge of up to 4.75% (4.5% effective January 7, 2008). 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. Effective January 7,
2008, eligible employee benefit plans that have at least $2,000,000 in plan
assets may purchase Class A shares at net asset value, but, in the event of
plan termination, will be subject to a CDSC of 1% on redemption of shares
purchased within 18 months prior to plan termination.
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 approximately eight
years after their date of purchase. If Class B shares of the Fund are
exchanged for Class B shares of another Seligman mutual fund, the holding
period of the shares exchanged will be added to the holding period of the
shares acquired, both for determining the applicable CDSC and the
conversion of Class B shares to Class A shares.
Class C 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 Board of Directors (the "Board") of the Fund approved the automatic
conversion of all of the Fund's outstanding Class D shares to Class C
shares at their respective net asset values. The conversion was implemented
on May 16, 2008. Effective at the close of business on May 16, 2008, the
Fund no longer offers Class D shares. The conversion did not affect
individual shareholder account values.
Class I shares are offered to certain institutional clients and other
investors, as described in the Fund's Class I shares prospectus. Class I
shares are sold without any sales charges and are not subject to
distribution or service fees.
Class R shares are offered to certain employee benefit plans and are not
available to all investors. They are sold without an initial sales charge,
but are subject to a distribution fee of up to 0.25% and a service fee of
up to 0.25% on an annual basis, and a CDSC, if applicable, of 1% on
redemptions made within one year of a plan's initial purchase of Class R
shares.
All 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 own 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 accounting principles generally accepted in the
United States of America, which require management to make certain
estimates and assumptions at the date of the financial statements. Actual
results may differ from these estimates. The following summarizes the
significant accounting policies of the Fund:
a. Security Valuation and Risk -- Securities traded on an exchange are
valued at the last sales price on the primary exchange or market on
which they are traded. Securities not listed on an exchange or
security market are valued by independent pricing services based on
bid prices which consider such
18
Notes to Financial Statements
factors as coupons, maturities, credit ratings, liquidity, specific
terms and features, and the US Treasury yield curve or are valued by
the Fund's investment manager (the "Manager") based on quotations
provided by primary market makers in such securities. Securities for
which market quotations are not readily available (or are otherwise no
longer valid or reliable) are valued at fair value determined in
accordance with procedures approved by the Board. This can occur in
the event of, among other things, natural disasters, acts of
terrorism, market disruptions, intra-day trading halts, and extreme
market volatility. The determination of fair value involves subjective
judgments. As a result, using fair value to price a security may
result in a price materially different from the prices used by other
mutual funds to determine net asset value or the price that may be
realized upon the actual sale of the security. Short-term holdings
that mature in 60 days or less are valued at current market quotations
or amortized cost if the Manager believes it approximates fair value.
Short-term holdings that mature in more than 60 days are valued at
current market quotations until the 60th day prior to maturity and are
then valued as described above for securities maturing in 60 days or
less.
US Government and fixed income securities are subject to interest rate
risk, credit risk, prepayment risk and market risk. Securities that
are not guaranteed by the US Government may have increased credit
risk, including, but not limited to, the risk of non-payment of
principal or interest. The Fund may invest a significant portion of
its assets in securities of issuers that hold mortgage- and
asset-backed securities and direct investments in securities backed by
commercial and residential mortgage loans and other financial assets.
Continuing shifts in the market's perception of credit quality on
securities backed by commercial and residential mortgage loans and
other financial assets may result in increased volatility of market
prices and periods of illiquidity that can negatively impact the
valuation of certain issues held by the Fund. The value and related
income of these securities is sensitive to changes in economic
conditions, including delinquencies and/or defaults. High-yield
securities are subject to a greater risk of loss of principal and
interest than higher-rated, investment-grade fixed income securities.
b. Securities Purchased and Sold on a TBA Basis -- The Fund may purchase
or sell securities (typically mortgage-backed securities) on
to-be-announced (TBA) basis, with payment and delivery scheduled for a
future date. These transactions are subject to market fluctuations and
are subject to the risk that the value at delivery may be more or less
than the trade date purchase price. Unsettled TBA commitments are
valued at fair value in accordance with the procedures for security
valuation described above. The Fund segregates securities as
collateral for its obligations to purchase TBA mortgage securities.
c. Mortgage Dollar Rolls -- The Fund may enter into mortgage dollar roll
transactions using TBAs in which the Fund sells a mortgage-backed
security to a counterparty and simultaneously enters into an agreement
with the same counterparty to buy back a similar security on a
specific future date at a predetermined price. Each mortgage dollar
roll is treated as a sale and purchase transaction, with any gain or
loss recognized at the time of each sale. The Fund may be exposed to
market or credit risk if the price of the security changes unfavorably
or the counterparty fails to perform under the terms of the agreement.
d. Repurchase Agreements -- The Fund may enter into repurchase
agreements. Generally, securities received as collateral subject to
repurchase agreements are deposited with the Fund's custodian and,
pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price,
plus accrued interest, at all times. On a daily basis, the market
value of securities held as collateral for repurchase agreements is
monitored to ensure the existence of the proper level of collateral.
e. Bank Overdraft -- The Fund recorded a bank overdraft, which resulted
from estimates of available cash.
19
Notes to Financial Statements
f. 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 September 30, 2008, distribution and
service fees, shareholder account services and registration expenses
were class-specific expenses.
g. 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. Interest income is recorded on an accrual basis.
The Fund amortizes premiums and discounts on bonds and other debt
securities for financial reporting purposes. Dividends receivable are
recorded on ex-dividend dates.
h. Distributions to Shareholders -- Dividends are declared daily and paid
monthly. Other distributions paid by the Fund are recorded on the
ex-dividend date.
i. 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.
Financial Accounting Standards Board ("FASB") Interpretation No. 48
("FIN 48"), "Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement No. 109," 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 of the Fund's open tax years of 2005-2008 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
September 30, 2008.
3. Management Fee, Distribution Services, and Other Transactions -- The
Manager manages the affairs of the Fund (see Note 10) and provides the
necessary personnel and facilities. Compensation of all officers of the
Fund, all directors of the Fund who are employees of the Manager, and all
personnel of the Fund and the Manager is paid by the Manager. The Manager
receives a fee, calculated daily and payable monthly, equal to 0.50% per
annum of the Fund's average daily net assets. Through at least January 31,
2009, the Manager has contractually undertaken to waive its fees and/or
reimburse the Fund's expenses to the extent that the Fund's "other
expenses" (i.e., those expenses other than management fee, 12b-1 fees,
interest on borrowings, and extraordinary expenses, including litigation
expenses) exceed 0.50% per annum of the Fund's average daily net assets.
For the year ended September 30, 2008, the amount of expenses reimbursed by
the Manager to the Fund was $154,207. At September 30, 2008, the Manager
owed the Fund $10,194 relating to the reimbursement.
For the year ended September 30, 2008, 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 $764 from
sales of Class A shares. Commissions of $4,909 were paid to dealers for
sales of Class A shares.
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 September 30, 2008, fees incurred under the Plan aggregated
$30,714 or 0.25% per annum of the average daily net assets of Class A
shares.
20
Notes to Financial Statements
Under the Plan, with respect to Class B shares, Class C shares, Class D
shares (only through May 16, 2008), 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 September 30, 2008, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B
shares, 0.98% per annum of the average daily net assets of Class C shares,
1% per annum of the average daily net assets of Class D shares (only
through May 16, 2008), and 0.50% per annum of the average daily net assets
of Class R shares, amounted to $13,199, $18,055, $8,681 and $355,
respectively.
The Distributor and Seligman Services, Inc., also an affiliate of the
Manager, are eligible to receive distribution and service fees pursuant to
the Plan. For the year ended September 30, 2008, the Distributor and
Seligman Services, Inc. received distribution and service fees of $928.
The Distributor is entitled to retain any CDSC imposed on certain
redemptions of Class A, Class C, Class D (only through May 16, 2008) and
Class R shares. For the year ended September 30, 2008, such charges
amounted to $2,899. The Distributor has sold its rights to third parties to
collect any CDSC imposed on redemptions of Class B shares.
For the year ended September 30, 2008, Seligman Data Corp., which is owned
by certain associated investment companies, charged the Fund at cost
$74,648 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 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 respective
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 a lease entered into by
Seligman Data Corp., including the payment of rent by Seligman Data Corp.
(the "Guaranty"). The lease and the related Guaranty expire in January
2019. The obligation of the Fund to pay any amount due under the Guaranty
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 most recent calendar quarter. At
September 30, 2008, the Fund's potential obligation under the Guaranty is
$28,600. As of September 30, 2008, no event has occurred which would result
in the Fund becoming liable to make any payment under the Guaranty. 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.
21
Notes to Financial Statements
During the year ended September 30, 2008, certain officers and directors of
the Fund were 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/loss accrued thereon is
included in directors' fees and expenses and the accumulated balance
thereof at September 30, 2008, of $733 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 $200
million committed line of credit that is shared by substantially all
open-end funds in the Seligman Funds. 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
0.12% 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 2009, but is renewable annually with the consent
of participating banks. For the year ended September 30, 2008, the Fund did
not borrow from the credit facility.
5. Purchases and Sales of Securities -- Purchases and sales of securities,
excluding US Government and Government agency securities and short-term
holdings, for the year ended September 30, 2008, amounted to $31,258,310
and $28,825,705, respectively; purchases and sales of US Government and
Government agency securities were $32,930,002 and $38,419,533, 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 September 30, 2008, the cost of investments for federal income tax
purposes was $26,566,211. The tax basis cost was greater than the cost for
financial reporting purposes due to the tax deferral of losses on wash
sales in the amount of $4,238 and the amortization of premiums of $1,324
for financial reporting purposes.
The tax basis components of accumulated losses at September 30, 2008 are as
follows:
Gross unrealized appreciation of portfolio securities..... $ 121,962
Gross unrealized depreciation of portfolio securities..... (1,595,286)
Net unrealized depreciation of portfolio securities....... (1,473,324)
Undistributed ordinary income............................. 34,162
Capital loss carryforwards................................ (875,207)
Timing difference (post-October losses)................... (83,810)
Total accumulated losses.................................. $(2,398,179)
22
Notes to Financial Statements
The tax characterization of distributions paid is as follows:
Year Ended September 30,
------------------------
2008 2007
---------- ----------
Ordinary income.................... $1,217,718 $1,276,731
At September 30, 2008, the Fund had net capital loss carryforwards for
federal income tax purposes of $875,207, which are available for offset
against future taxable net capital gains, with $358,598 expiring in 2014
and $516,609 expiring in 2015. Accordingly, no capital gain distribution is
expected to be paid to shareholders of the Fund until future net capital
gains have been realized in excess of the available capital loss
carryforwards. During the fiscal year 2008, the Fund utilized $169,698 of
prior years' capital loss carryforwards to offset current year's net
realized gains. There is no assurance that the Fund will be able to utilize
all of its capital loss carryforward before it expires.
In addition, from November 1, 2007 through September 30, 2008, the Fund
incurred $83,810 of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer these losses and treat them
as arising in the fiscal year ending September 30, 2009. These losses will
be available to offset future taxable net gains.
7. Transactions in Capital Stock -- Transactions in shares of Capital Stock
were as follows:
Year Ended September 30,
-----------------------------------------------
2008 2007
------------------------ ---------------------
Class A Shares Amount Shares Amount
- ------- ---------- ------------ -------- -----------
Net proceeds from sales of shares.... 195,533 $ 1,369,934 143,798 $ 1,011,952
Investment of dividends.............. 62,489 436,882 76,800 539,233
Exchanged from associated funds...... 336,665 2,368,552 235,996 1,664,461
Converted from Class B*.............. 23,592 163,592 47,696 335,139
---------- ------------ -------- -----------
Total................................ 618,279 4,338,960 504,290 3,550,785
---------- ------------ -------- -----------
Cost of shares repurchased........... (1,502,690) (10,449,917) (180,449) (1,266,130)
Exchanged into associated funds...... (108,815) (766,091) (500,449) (3,537,578)
---------- ------------ -------- -----------
Total................................ (1,611,505) (11,216,008) (680,898) (4,803,708)
---------- ------------ -------- -----------
Decrease............................. (993,226) $ (6,877,048) (176,608) $(1,252,923)
========== ============ ======== ===========
Class B Shares Amount Shares Amount
- ------- ---------- ------------ -------- -----------
Net proceeds from sales of shares.... 8,819 $ 60,455 14,625 $ 102,426
Investment of dividends.............. 5,190 36,173 6,098 42,809
Exchanged from associated funds...... 68,165 469,412 117,975 834,385
---------- ------------ -------- -----------
Total................................ 82,174 566,040 138,698 979,620
---------- ------------ -------- -----------
Cost of shares repurchased........... (41,980) (293,922) (100,689) (706,084)
Exchanged into associated funds...... (40,998) (289,274) (29,819) (209,081)
Converted to Class A*................ (23,575) (163,502) (47,675) (334,988)
---------- ------------ -------- -----------
Total................................ (106,553) (746,698) (178,183) (1,250,153)
---------- ------------ -------- -----------
Decrease............................. (24,379) $ (180,658) (39,485) $ (270,533)
========== ============ ======== ===========
- --------
* Automatic conversion of Class B shares to Class A shares approximately eight
years after their initial purchase date. The amount of dividends accrued on
Class B shares between the last dividend payment date and the conversion
date is invested in Class A shares and is included in the converted from
Class B amount.
23
Notes to Financial Statements
Year Ended September 30,
--------------------------------------------
2008+ 2007
--------------------- ---------------------
Class C Shares Amount Shares Amount
- ------- -------- ----------- -------- -----------
Net proceeds from sales of shares.... 29,533 $ 204,867 3,515 $ 24,780
Investment of dividends.............. 7,994 55,410 5,933 41,673
Exchanged from associated funds...... 102,199 716,840 8,764 61,502
Converted from Class D**............. 225,141 1,575,827 -- --
Total................................ 364,867 2,552,944 18,212 127,955
Cost of shares repurchased........... (95,685) (663,699) (46,364) (327,530)
Exchanged into associated funds...... (7,703) (52,799) (12,963) (90,632)
-------- ----------- -------- -----------
Total................................ (103,388) (716,498) (59,327) (418,162)
-------- ----------- -------- -----------
Increase (decrease).................. 261,479 $ 1,836,446 (41,115) $ (290,207)
======== =========== ======== ===========
Class D Shares Amount Shares Amount
- ------- -------- ----------- -------- -----------
Net proceeds from sales of shares.... 46,558 $ 330,679 57,704 $ 406,240
Investment of dividends.............. 4,468 30,177 5,678 39,852
Exchanged from associated funds...... 70,892 501,031 29,113 205,032
Total................................ 121,918 861,887 92,495 651,124
Cost of shares repurchased........... (53,856) (378,347) (119,723) (842,155)
Exchanged into associated funds...... (4,130) (28,996) (24,884) (174,506)
Converted to Class C**............... (225,141) (1,575,827) -- --
-------- ----------- -------- -----------
Total................................ (283,127) (1,983,170) (144,607) (1,016,661)
-------- ----------- -------- -----------
Decrease............................. (161,209) $(1,121,283) (52,112) $ (365,537)
======== =========== ======== ===========
Class I Shares Amount Shares Amount
- ------- -------- ----------- -------- -----------
Net proceeds from sales of shares.... 234,865 $ 1,631,810 403,017 $ 2,825,090
Investment of dividends.............. 76,726 534,703 65,112 456,859
-------- ----------- -------- -----------
Total................................ 311,591 2,166,513 468,129 3,281,949
-------- ----------- -------- -----------
Cost of shares repurchased........... (310,898) (2,170,348) (108,640) (764,496)
Increase (decrease).................. 693 $ (3,835) 359,489 $ 2,517,453
======== =========== ======== ===========
Class R Shares Amount Shares Amount
- ------- -------- ----------- -------- -----------
Net proceeds from sales of shares.... 9,341 $ 65,618 235 $ 1,656
Investment of dividends.............. 400 2,773 158 1,112
-------- ----------- -------- -----------
Total................................ 9,741 68,391 393 2,768
-------- ----------- -------- -----------
Cost of shares repurchased........... (14) (95) (37) (262)
Exchanged into associated funds...... (321) (2,211) -- --
-------- ----------- -------- -----------
Total................................ (335) (2,306) (37) (262)
-------- ----------- -------- -----------
Increase............................. 9,406 $ 66,085 356 $ 2,506
======== =========== ======== ===========
- --------
** Effective May 16, 2008, Class D shares converted to Class C shares.
+ October 1, 2007 to May 16, 2008, in the case of Class D shares.
24
Notes to Financial Statements
8. Other Matters -- In late 2003, J. & W. Seligman & Co. Incorporated ("JWS")
conducted an extensive internal review concerning mutual fund trading
practices. JWS's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies then managed by JWS (the "Seligman Funds"); this
arrangement was in the process of being closed down by JWS before September
2003. JWS identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January
2004, JWS, on a voluntary basis, publicly disclosed these four arrangements
to its clients and to shareholders of the Seligman Funds. JWS also provided
information concerning mutual fund trading practices to 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 JWS and the Distributor relating to frequent
trading in the Seligman Funds. JWS 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 JWS 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 JWS, 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 then managed by JWS is and has been misleading. The NYAG included
other related claims and also claimed that the fees charged by JWS 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 JWS and
not by the Seligman Funds. If the NYAG obtains injunctive relief, each of
JWS, RiverSource Investments, LLC ("RiverSource") and their 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, including
those funds in the RiverSource complex.
Neither JWS nor RiverSource believes that the foregoing legal action or
other possible actions will have a material adverse impact on JWS,
RiverSource or their current and former clients, including the Seligman
Funds and other investment companies managed by RiverSource; 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.
9. Recent Accounting Pronouncements -- 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.
25
Notes to Financial Statements
In March 2008, the FASB issued Statement of Financial Accounting Standards
No. 161 ("SFAS 161"), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires
enhanced disclosures about a fund's derivative and hedging activities.
Funds are required to provide enhanced disclosures about (a) how and why a
fund uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under SFAS 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect a fund's financial position, financial performance, and cash
flows. SFAS 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. As of
September 30, 2008, the Fund does not believe the adoption of SFAS 161 will
impact the financial statement amounts; however, additional footnote
disclosures may be required about the use of derivative instruments and
hedging items.
10. Subsequent Events -- On November 7, 2008, RiverSource, a wholly owned
subsidiary of Ameriprise Financial, Inc., announced the closing of its
acquisition (the "Acquisition") of JWS. With the Acquisition completed and
shareholders of the Fund having previously approved (at a Special Meeting
held on November 3, 2008) a new investment management services agreement
between the Fund and RiverSource, RiverSource is the new investment manager
of the Fund effective November 7, 2008. RiverSource will continue the
contractual fee waiver/expense reimbursement arrangement currently in
effect for the Fund.
26
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 distributions.
Total returns do not reflect any sales charges or transaction costs on your
investment or taxes investors may incur on distributions or on the redemption
of shares, and are not annualized for periods of less than one year.
CLASS A
Year Ended September 30,
--------------------------------------------
2008 2007 2006 2005 2004
------- ------- ------- ------- -------
Per Share Data:
Net Asset Value, Beginning of Year......... $ 7.01 $ 7.03 $ 7.15 $ 7.29 $ 7.48
Income (Loss) from Investment Operations:
Net investment income...................... 0.30 0.32 0.27 0.20 0.17
Net realized and unrealized loss on
investments.............................. (0.38) (0.02) (0.11) (0.12) (0.06)
------- ------- ------- ------- -------
Total from Investment Operations (0.08) 0.30 0.16 0.08 0.11
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income....... (0.30) (0.32) (0.27) (0.20) (0.17)
Dividends in excess of net investment
income................................... -- -- (0.01) (0.02) (0.04)
Distributions from net realized capital
gain..................................... -- -- -- -- (0.09)
------- ------- ------- ------- -------
Total Distributions........................ (0.30) (0.32) (0.28) (0.22) (0.30)
------- ------- ------- ------- -------
Net Asset Value, End of Year............... $ 6.63 $ 7.01 $ 7.03 $ 7.15 $ 7.29
======= ======= ======= ======= =======
Total Return............................... (1.24)% 4.21% 2.31% 1.06% 1.52%
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of year (000s omitted)..... $ 7,013 $14,372 $15,663 $14,288 $17,008
Ratio of expenses to average net assets.... 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of net investment income to average
net assets............................... 4.31% 4.49% 3.90% 2.76% 2.29%
Portfolio turnover rate.................... 225.73% 462.47% 795.65% 444.20% 249.13%
Without expense reimbursement:+
Ratio of expenses to average net assets.... 2.20% 2.00% 2.03% 2.20% 2.27%
Ratio of net investment income to average
net assets............................... 3.36% 3.74% 3.12% 1.81% 1.27%
- --------
See footnotes on page 32.
27
Financial Highlights
CLASS B
Year Ended September 30,
--------------------------------------------
2008 2007 2006 2005 2004
------- ------- ------- ------- -------
Per Share Data:
Net Asset Value, Beginning of Year................ $ 7.01 $ 7.03 $ 7.15 $ 7.29 $ 7.48
Income (Loss) from Investment Operations:
Net investment income............................. 0.25 0.26 0.22 0.15 0.11
Net realized and unrealized loss on investments... (0.38) (0.02) (0.11) (0.13) (0.06)
------- ------- ------- ------- -------
Total from Investment Operations.................. (0.13) 0.24 0.11 0.02 0.05
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income.............. (0.25) (0.26) (0.22) (0.14) (0.11)
Dividends in excess of net investment income...... -- -- (0.01) (0.02) (0.04)
Distributions from net realized capital gain...... -- -- -- -- (0.09)
------- ------- ------- ------- -------
Total Distributions............................... (0.25) (0.26) (0.23) (0.16) (0.24)
------- ------- ------- ------- -------
Net Asset Value, End of Year...................... $ 6.63 $ 7.01 $ 7.03 $ 7.15 $ 7.29
======= ======= ======= ======= =======
Total Return...................................... (1.98)% 3.51% 1.57% 0.31% 0.77%
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of year (000s omitted)............ $ 1,354 $ 1,602 $ 1,885 $ 3,110 $ 4,223
Ratio of expenses to average net assets........... 2.00% 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income to average net
assets.......................................... 3.56% 3.74% 3.15% 2.01% 1.54%
Portfolio turnover rate........................... 225.73% 462.47% 795.65% 444.20% 249.13%
Without expense reimbursement:+
Ratio of expenses to average net assets........... 2.95% 2.75% 2.78% 2.95% 3.02%
Ratio of net investment income to average net
assets.......................................... 2.61% 2.99% 2.37% 1.06% 0.52%
- --------
See footnotes on page 32.
28
Financial Highlights
CLASS C
Year Ended September 30,
--------------------------------------------
2008 2007 2006 2005 2004
------- ------- ------- ------- -------
Per Share Data:
Net Asset Value, Beginning of Year................ $ 7.01 $ 7.03 $ 7.15 $ 7.29 $ 7.48
Income (Loss) from Investment Operations:
Net investment income............................. 0.25 0.26 0.22 0.15 0.11
Net realized and unrealized loss on investments... (0.38) (0.02) (0.11) (0.13) (0.06)
------- ------- ------- ------- -------
Total from Investment Operations.................. (0.13) 0.24 0.11 0.02 0.05
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income.............. (0.25) (0.26) (0.22) (0.14) (0.11)
Dividends in excess of net investment income...... -- -- (0.01) (0.02) (0.04)
Distributions from net realized capital gain...... -- -- -- -- (0.09)
------- ------- ------- ------- -------
Total Distributions............................... (0.25) (0.26) (0.23) (0.16) (0.24)
------- ------- ------- ------- -------
Net Asset Value, End of Year...................... $ 6.63 $ 7.01 $ 7.03 $ 7.15 $ 7.29
======= ======= ======= ======= =======
Total Return...................................... (1.96)% 3.53% 1.55% 0.31% 0.77%
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of year (000s omitted)............ $ 2,809 $ 1,136 $ 1,429 $ 1,509 $ 1,665
Ratio of expenses to average net assets........... 1.98% 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income to average net
assets.......................................... 3.58% 3.74% 3.15% 2.01% 1.54%
Portfolio turnover rate........................... 225.73% 462.47% 795.65% 444.20% 249.13%
Without expense reimbursement:+
Ratio of expenses to average net assets........... 2.93% 2.75% 2.78% 2.95% 3.02%
Ratio of net investment income to average net
assets.......................................... 2.63% 2.99% 2.37% 1.06% 0.52%
- --------
See footnotes on page 32.
29
Financial Highlights
CLASS D
10/1/07 Year Ended September 30,
to ----------------------------------
5/18/08/oo/ 2007 2006 2005 2004
---------- ------- ------- ------- -------
Per Share Data:
Net Asset Value, Beginning of Period............ $ 7.00 $ 7.03 $ 7.15 $ 7.29 $ 7.48
Income (Loss) from Investment
Operations:
Net investment income........................... 0.16 0.26 0.22 0.15 0.11
Net realized and unrealized gain (loss) on
investments................................... -- /o/ (0.03) (0.11) (0.13) (0.06)
------- ------- ------- ------- -------
Total from Investment Operations................ 0.16 0.23 0.11 0.02 0.05
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income............ (0.16) (0.26) (0.22) (0.14) (0.11)
Dividends in excess of net investment income.... -- -- (0.01) (0.02) (0.04)
Distributions from net realized capital gain.... -- -- -- -- (0.09)
------- ------- ------- ------- -------
Total Distributions............................. (0.16) (0.26) (0.23) (0.16) (0.24)
------- ------- ------- ------- -------
Net Asset Value, End of Period.................. $ 7.00 $ 7.00 $ 7.03 $ 7.15 $ 7.29
======= ======= ======= ======= =======
Total Return.................................... 2.31% 3.37% 1.57% 0.31% 0.77%
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000s omitted)........ -- $ 1,129 $ 1,499 $ 1,145 $ 2,221
Ratio of expenses to average net assets......... 2.00%* 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income to average net
assets........................................ 3.64%* 3.74% 3.15% 2.01% 1.54%
Portfolio turnover rate......................... 225.73%++ 462.47% 795.65% 444.20% 249.13%
Without expense reimbursement:+
Ratio of expenses to average net assets......... 2.72%* 2.75% 2.78% 2.95% 3.02%
Ratio of net investment income to average net
assets........................................ 2.92%* 2.99% 2.37% 1.06% 0.52%
- --------
See footnotes on page 32.
30
Financial Highlights
CLASS I
Year Ended September 30,
--------------------------------------------
2008 2007 2006 2005 2004
------- ------- ------- ------- -------
Per Share Data:
Net Asset Value, Beginning of Year................ $ 7.00 $ 7.03 $ 7.15 $ 7.29 $ 7.48
Income (Loss) from Investment Operations:
Net investment income............................. 0.32 0.33 0.29 0.21 0.18
Net realized and unrealized loss on investments... (0.37) (0.03) (0.11) (0.12) (0.06)
------- ------- ------- ------- -------
Total from Investment Operations.................. (0.05) 0.30 0.18 0.09 0.12
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income.............. (0.32) (0.33) (0.29) (0.21) (0.18)
Dividends in excess of net investment income...... -- -- (0.01) (0.02) (0.04)
Distributions from net realized capital gain...... -- -- -- -- (0.09)
------- ------- ------- ------- -------
Total Distributions............................... (0.32) (0.33) (0.30) (0.23) (0.31)
------- ------- ------- ------- -------
Net Asset Value, End of Year...................... $ 6.63 $ 7.00 $ 7.03 $ 7.15 $ 7.29
======= ======= ======= ======= =======
Total Return...................................... (0.85)% 4.38% 2.56% 1.30% 1.76%
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of year (000s omitted)............ $11,132 $11,754 $ 9,270 $ 7,586 $ 5,740
Ratio of expenses to average net assets........... 1.00% 1.00% 1.00% 1.00% 0.98%
Ratio of net investment income to average net
assets.......................................... 4.56% 4.74% 4.15% 3.01% 2.56%
Portfolio turnover rate........................... 225.73% 462.47% 795.65% 444.20% 249.13%
Without expense reimbursement:+
Ratio of expenses to average net assets........... 1.03% 1.09% 1.12%
Ratio of net investment income to average net
assets.......................................... 4.71% 4.06% 2.89%
- --------
See footnotes on page 32.
31
Financial Highlights
CLASS R
Year Ended September 30,
----------------------------------------------
2008 2007 2006 2005 2004
------- ------- ------- ------- -------
Per Share Data:
Net Asset Value, Beginning of Year................ $ 7.01 $ 7.04 $ 7.15 $ 7.29 $ 7.48
Income (Loss) from Investment Operations:
Net investment income............................. 0.28 0.30 0.26 0.18 0.15
Net realized and unrealized loss on investments... (0.38) (0.03) (0.11) (0.12) (0.06)
------- ------- ------- ------- -------
Total from Investment Operations.................. (0.10) 0.27 0.15 0.06 0.09
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income.............. (0.28) (0.30) (0.26) (0.18) (0.15)
Dividends in excess of net investment income...... -- -- -- /o/ (0.02) (0.04)
Distributions from net realized capital gain...... -- -- -- -- (0.09)
------- ------- ------- ------- -------
Total Distributions............................... (0.28) (0.30) (0.26) (0.20) (0.28)
------- ------- ------- ------- -------
Net Asset Value, End of Year...................... $ 6.63 $ 7.01 $ 7.04 $ 7.15 $ 7.29
======= ======= ======= ======= =======
Total Return...................................... (1.49)% 3.90% 2.20% 0.88% 1.31%
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of year (000s omitted)............ $ 89 $ 28 $ 25 $ 2 $ 2
Ratio of expenses to average net assets........... 1.50% 1.46% 1.50% 1.50% 1.50%
Ratio of net investment income to average net
assets.......................................... 4.06% 4.28% 3.65% 2.51% 2.04%
Portfolio turnover rate........................... 225.73% 462.47% 795.65% 444.20% 249.13%
Without expense reimbursement:+
Ratio of expenses to average net assets........... 2.45% 2.21% 2.28% 2.45% 2.52%
Ratio of net investment income to average net
assets.......................................... 3.11% 3.53% 2.87% 1.56% 1.02%
- --------
* Annualized.
+ Since the Fund's inception, the Manager has contractually undertaken to
waive its management fee and/or to reimburse the Fund's expenses to the
extent the Fund's "other expenses" (i.e., those expenses other than
management fee, 12b-1 fees, interest on borrowings, and extraordinary
expenses, including litigation expenses) exceed 0.50% per annum of the
Fund's average daily net assets. This undertaking will remain in effect
until at least January 31, 2009.
++ Computed at the Fund level for the year ended September 30, 2008.
o Less than + or - $0.005.
oo Date of conversion to Class C shares.
See Notes to Financial Statements.
32
Report of Independent Registered
Public Accounting Firm
The Board of Directors and Shareholders,
Seligman Core Fixed Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Seligman Core Fixed Income Fund, Inc. (the "Fund"), including the portfolio of
investments, as of September 30, 2008, 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 September 30, 2008, 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 Core Fixed Income Fund, Inc., as of September 30, 2008, 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 the
respective stated periods, in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
November 26, 2008
33
Proxy Results
Shareholders of Seligman Core Fixed Income Fund, Inc. voted on the following
proposals at a Special Meeting of Shareholders held on November 3, 2008.
Shareholders voted in favor of both proposals. The description of each proposal
and number of shares voted are as follows:
Proposal 1
To consider and vote upon the proposed Investment Management Services Agreement
with RiverSource Investments, LLC:
For Against Abstain
- --- ---------- ----------
2,414,432.835...................... 35,310.565 25,479.686
Proposal 2
To elect ten directors to the Board:
For Withheld
------------- ----------
Kathleen Blatz..................... 2,695,520.317 49,192.769
Arne H. Carlson.................... 2,695,520.317 49,192.769
Pamela G. Carlton.................. 2,695,520.317 49,192.769
Patricia M. Flynn.................. 2,695,520.317 49,192.769
Anne P. Jones...................... 2,695,520.317 49,192.769
Jeffrey Laikind.................... 2,695,520.317 49,192.769
Stephen R. Lewis, Jr............... 2,695,520.317 49,192.769
Catherine James Paglia............. 2,695,520.317 49,192.769
Alison Taunton-Rigby............... 2,693,633.317 51,079.769
William F. Truscott................ 2,695,520.317 49,192.769
34
Matters Relating to the Directors'
Consideration of the Approval of the
Investment Management Services Agreement
Background
On July 7, 2008 RiverSource Investments, LLC ("RiverSource"), a wholly owned
subsidiary of Ameriprise Financial, Inc. ("Ameriprise"), entered into a stock
purchase agreement with the stockholders of J. & W. Seligman & Co. Incorporated
("Seligman") under which RiverSource would acquire all of the outstanding
capital stock of Seligman (the "Transaction"). The consummation of the
Transaction results in the automatic termination of the Fund's management
agreement with Seligman (the "Seligman Management Agreement"). In anticipation
of the termination of the Seligman Management Agreement, at a meeting held on
July 29, 2008, the directors of the Fund unanimously approved an investment
management agreement with RiverSource (the "Proposed Advisory Agreement"). At
the special meeting of shareholders of the Fund held on November 3, 2008, the
shareholders approved the Proposed Advisory Agreement. The Transaction closed
on November 7, 2008 and upon the closing, RiverSource became the investment
adviser to the Fund.
Board Considerations
Prior to their approval of the Proposed Advisory Agreement, the directors
requested and evaluated extensive materials from, and were provided materials
and information about the Transaction and matters related to the proposed
approval by, Seligman, RiverSource and Ameriprise.
In consultation with experienced counsel, who advised on the legal standards
for consideration by the directors, the directors reviewed the Proposed
Advisory Agreement with RiverSource. The independent directors also discussed
the proposed approval with counsel in private sessions.
At their meetings on June 12, 2008, July 17, 2008 and July 29, 2008, the
directors discussed the Transaction with Seligman, and the Transaction and
RiverSource's plans and intentions regarding the Fund with representatives of
Ameriprise and RiverSource.
The directors considered all 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 may have attributed different weights to the various factors. The
directors determined that the selection of RiverSource to advise the Fund, and
the overall arrangements between the Fund and RiverSource as provided in the
Proposed Advisory Agreement, including the proposed advisory fee and the
related administration arrangements between the Fund and Ameriprise, were fair
and reasonable in light of the services to be 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, in addition, the factors discussed in further detail below:
(i) the reputation, financial strength and resources of RiverSource, and its
parent, Ameriprise;
(ii) the capabilities of RiverSource with respect to compliance and its
regulatory histories;
(iii) an assessment of RiverSource's compliance system by the Fund's Chief
Compliance Officer;
(iv) that RiverSource and Ameriprise assured the directors that following the
Transaction there will not be any diminution in the nature, quality and
extent of services provided to the Fund or its shareholders;
35
Matters Relating to the Directors'
Consideration of the Approval of the
Investment Management Services Agreement
(v) that within the past year the directors had performed a full annual
review of the Seligman Management Agreement, as required by the
Investment Company Act of 1940 ("1940 Act"), for the Fund and had
determined that they were satisfied with the nature, extent and quality
of services provided thereunder and that the management fee rate for the
Fund was satisfactory;
(vi) the potential benefits to the Fund of the combination of RiverSource and
Seligman to the Fund, including: greater resources to attract and retain
high quality investment personnel; greater depth and breadth of
investment management capabilities, including a new team of portfolio
managers for the Fund; a continued high level of service to the Fund; and
the potential for realization of economies of scale over time since the
Fund will be part of a much larger fund complex;
(vii) the fact that the Fund's total advisory and administrative fees would not
increase by virtue of the Proposed Advisory Agreement, but would remain
the same;
(viii)that RiverSource, and not the Fund, would bear the costs of obtaining all
approvals of the Proposed Advisory Agreement;
(ix) the qualifications of the personnel of RiverSource and Ameriprise that
would provide advisory and administrative services to the Fund;
(x) the terms and conditions of the Proposed Advisory Agreement, including
the directors' review of differences from the Seligman Management
Agreement;
(xi) that RiverSource and Ameriprise have agreed to refrain from imposing or
seeking to impose, for a period of two years after the Closing, any
"unfair burden" (within the meaning of Section 15(f ) of 1940 Act) on the
Fund; and
(xii) that certain members of RiverSource's management have a significant
amount of experience integrating other fund families.
Nature, Extent and Quality of Services Provided
In considering the nature, extent and quality of the services to be provided
under the Proposed Advisory Agreement, the directors of the Fund considered,
among other things, the expected impact of the Transaction on the operations of
the Fund, the information provided by RiverSource with respect to the nature,
extent and quality of services to be provided by it, RiverSource's compliance
programs and compliance records, and presentations provided on the quality of
RiverSource's investment research capabilities and the other resources it and
Ameriprise have indicated that they would dedicate to performing services for
the Fund.
The directors noted the professional experience and qualifications of the new
portfolio management team proposed for the Fund and other senior personnel of
RiverSource. The directors considered a report by, the Fund's Chief Compliance
Officer, assessing RiverSource's compliance system, which was followed by a
private session with the Fund's Chief Compliance Officer. They also discussed
RiverSource's compliance system with the Chief Compliance Officer for the
RiverSource funds. The directors also considered RiverSource's presentation on
the selection of brokers and dealers for portfolio transactions. As
administrative services (currently provided under the Seligman Management
Agreement) would be provided to the Fund by Ameriprise at no additional cost
under a new
36
Matters Relating to the Directors'
Consideration of the Approval of the
Investment Management Services Agreement
administrative services agreement rather than pursuant to the Proposed Advisory
Agreement, the directors considered Ameriprise's capability to provide such
administrative services as well as River-Source's and Ameriprise's role in
coordinating the activities of the Fund's other service providers. The
directors noted that Ameriprise intended to continue Seligman's practice of
sub-contracting administrative services provided by Seligman for the Fund to
State Street Bank and Trust Company for the foreseeable future. The directors
concluded that, overall, they were satisfied with assurances from RiverSource
and Ameriprise as to the expected nature, extent and quality of the services to
be provided to the Fund under the Proposed Advisory Agreement and the new
administrative services agreement.
Costs of Services Provided and Profitability
In considering the costs of services to be provided by RiverSource under the
Proposed Advisory Agreement, the directors considered, among other things, the
projected pre-tax, pre-distribution expense profitability of RiverSource's
proposed relationship with the Fund and discussed the assumptions of
RiverSource and the limitations of the information provided. The directors
noted that RiverSource had undertaken to provide profitability information in
connection with future contract continuances. The directors also considered
RiverSource's financial condition based on information provided by them.
The directors noted that the proposed fee under the Proposed Advisory Agreement
was the same as provided under the Seligman Management Agreement. The directors
recognized that it is difficult to make comparisons of profitability from fund
advisory contracts because comparative information is not generally publicly
available and is affected by numerous factors. In reviewing the projected
profitability information, the directors considered the effect of fall-out
benefits on RiverSource's expenses. The directors concluded that they were
satisfied that RiverSource's estimated future profitability from its
relationship with the Fund was not excessive.
Fall-Out Benefits
The directors considered that broker dealer affiliates of RiverSource,
including a broker-dealer affili-ate of Seligman (which will become an
affiliate of RiverSource following the Transaction) will receive 12b-1 fees
from the Fund in respect of shares held in certain accounts, and that the
Fund's distributor (which will also become a subsidiary of RiverSource
following the closing of the Transaction) 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 of the Fund. The directors recognized
that RiverSource's profitability would be somewhat lower without these
benefits. The directors noted that RiverSource 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 addition to the information
received for the meeting regarding approval of the Proposed Advisory Agreement.
The directors reviewed performance information on the Fund covering a wide
range of periods, including the first six months of the calendar year, the
preceding six calendar years and annualized one-, three- and five-year rolling
periods ending June 30, 2008.
37
Matters Relating to the Directors'
Consideration of the Approval of the
Investment Management Services Agreement
The directors noted that new portfolio managers were being proposed by
RiverSource for the Fund. The directors discussed the proposed portfolio
management team, its investment strategy and process and historical performance
record with representatives of RiverSource.
The directors reviewed information comparing the Fund to the Lipper
Intermediate Investment-Grade Debt Funds Average and the Lehman Brothers U.S.
Universal Index, as well as performance relative to the other funds in the
Lipper Intermediate Investment-Grade Debt Funds Average and to a group of
competitor funds selected by Seligman. The directors also reviewed annualized
performance information for RiverSource Diversified Bond Fund, which is advised
by the proposed portfolio management team, for annualized one-, three-, five-
and ten-year periods ended June 30, 2008, as well as since inception, the past
five calendar years, as well as year-to-date information as of June 30, 2008.
The directors noted that the Fund's performance for the first six months of
2008 was slightly better than the RiverSource fund's, but otherwise generally
trailed it in the other comparable periods presented. The directors also noted
that the RiverSource fund had outperformed its benchmarks in 2003, 2004, and
2006. RiverSource explained that the RiverSource fund's more recent results had
been negatively impacted by certain positions that were established early from
a market standpoint but were now starting to yield benefits as the market
environment developed. River-Source added that it retained confidence in the
management team.
The directors recognized that it is not possible to predict what effect, if
any, consummation of the Transaction would have on the future performance of
the Fund.
Management Fee and Other Expenses
The directors considered the proposed advisory fee rate to be paid by the Fund
to RiverSource, which is the same as the management fee rate currently paid by
the Fund. In addition to the materials provided by Seligman, RiverSource
provided information regarding the fees for the RiverSource Diversified Bond
Fund. The directors noted that the effective advisory fee rate for the
RiverSource fund was higher than the proposed advisory fee rate for the Fund.
The directors recognized that it is difficult to make comparisons of advisory
and management fees because there are variations in the services that are
included in the fees paid by other funds.
The directors compared the Fund's proposed advisory fee rate to the rate paid
by other funds in its Lipper Intermediate Investment-Grade Debt Funds Average
category (the "peer group"). In considering the proposed advisory fee rate, the
directors noted that the Fund's current management fee rate covers
administrative services provided by Seligman, whereas the Proposed Advisory
Agreement does not include such services, but that Ameriprise will provide such
services to the Fund pursuant to a separate administrative services agreement
initially without a fee. The directors further considered that the
administrative fees, since they are not included in an advisory agreement,
could be increased without shareholder approval, although RiverSource noted
that, at that time, it did not have an intention to seek an increase, and that
any such administrative fee increase would require board approval. The
directors also noted RiverSource's and Ameriprise's covenants in the
Transaction's stock purchase agreement regarding compliance with Section 15(f )
of the 1940 Act.
38
Matters Relating to the Directors'
Consideration of the Approval of the
Investment Management Services Agreement
The directors also reviewed the Fund's total expense ratio as compared to the
fees and expenses of funds within its peer group. In considering the expense
ratios of the Fund, the directors noted that the Fund has elected to have
shareholder services provided at cost by Seligman Data Corp. ("SDC"). 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 RiverSource had previously indicated that no changes to the arrangements
with SDC were being proposed at the time by RiverSource.
The directors noted that they had concluded in their most recent continuance
considerations regarding the Seligman Management Agreement that the management
fee and total expense ratio were at an acceptable level in light of the quality
of services provided to the Fund and in comparison to the Fund's peer group;
that the advisory fee would not be increased and would stay the same for the
Fund; that the total expense ratio had not changed materially since that
determination; and that RiverSource had represented that the overall expenses
for the Fund were not expected to be adversely affected by the Transaction. On
that basis, the directors concluded that the total expense ratio and proposed
advisory fee for the Fund anticipated to result from the proposed arrangements
with RiverSource was acceptable. The directors also noted that the total
expense ratio for the Fund had been reduced since the time of the most recent
consideration approval.
Economies of Scale
The directors noted that the management fee schedules for the Fund does contain
breakpoints that reduce the fee rate on assets above specified levels. The
directors recognized that there is no direct relationship between the economies
of scale realized by funds and those realized by their investment advisers as
assets increase. The directors do not believe that there is a uniform
methodology for establishing breakpoints that give effect to fund-specific
economies of scale with respect to services provided by fund advisers. 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.
The directors noted that RiverSource had indicated that no changes to the
Fund's breakpoint arrangements were proposed to be made at the time. Having
taken these factors into account, the directors concluded that the Fund's
breakpoint arrangements were acceptable under the Fund's circumstances. The
directors also recognized that the Fund may benefit from certain economies of
scale over time from becoming a part of the larger River-Source fund complex,
based on potential future synergies of operations.
39
Directors and Officers
Shareholders elect a Board of Directors that oversees the Fund's operations. In
connection with the acquisition of the Fund's prior investment manager, J. & W.
Seligman & Co. Incorporated, by RiverSource Investments, LLC, shareholders of
the Fund voted at a Special Meeting of Shareholders held on November 3, 2008 to
elect 10 members to the Fund's Board. Messrs. Maher and Richie served on the
Fund's Board prior to the acquisition and will continue to do so.
Each member of the Board oversees 163 portfolios in the fund complex managed by
RiverSource Investments, which includes 59 Seligman Funds and 104 RiverSource
Funds. The address of each Director is 901 S. Marquette Ave., Minneapolis, MN
55402.
Independent Directors
Name, (Age), Position(s) held Principal Occupation(s) During Past Five Years, Directorships and Other
with Fund Information
- ----------------------------- -----------------------------------------------------------------------
Kathleen Blatz (54)/1,2,6,7/ Attorney. Formerly, Chief Justice, Minnesota Supreme Court,
.. Director: From 1998-2006.
November 7, 2008
Arne H. Carlson (73)/1,2,3,5,6/ Formerly, Chairman, RiverSource Funds, 1999-2006; Governor
.. Director: From of Minnesota.
November 7, 2008
Pamela G. Carlton (53)/4,6,7/ President, Springboard -- Partners in Cross Cultural Leadership
.. Director: From (consulting company).
November 7, 2008
Patricia M. Flynn (57)/1,3,6/ Trustee Professor of Economics and Management, Bentley
.. Director: From College. Formerly, Dean, McCallum Graduate School of
November 7, 2008 Business, Bentley College.
Anne P. Jones (73)/1,2,6,7/ Attorney and Consultant.
.. Director: From
November 7, 2008
Jeffrey Laikind, CFA (72)/4,6,7/ Director, American Progressive Insurance. Formerly, Managing
.. Director: From Director, Shikiar Asset Management.
November 7, 2008
Stephen R. Lewis, Jr. (69)/1,2,3,4,6/ President Emeritus and Professor of Economics, Carleton
.. Director and Chairman College; Director, Valmont Industries, Inc. (manufactures
of the Board: From irrigation systems).
November 7, 2008
- --------
See footnotes on page 42.
40
Directors and Officers
Independent Directors (continued)
Principal Occupation(s) During Past
Name, (Age), Position(s) held with Five Years, Directorships and Other
Fund Information
- ---------------------------------- -------------------------------------
John F. Maher (64)/4,6,7/ Retired President and Chief Executive
.. Director: December 2006 to Date Officer, and former Director, Great
Western Financial Corporation (bank
holding company) and its principal
subsidiary, Great Western Bank (a
federal savings bank).
Catherine James Paglia (55)/2,3,4,5,6/ Director, Enterprise Asset
.. Director: From November 7, 2008 Management, Inc. (private real estate
and asset management company).
Leroy C. Richie (66)/3,4,6/ Counsel, Lewis & Munday, P.C. (law
.. Director: 2000 to Date firm); Director, Vibration Control
Technologies, LLC (auto vibration
technology); 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; Director, OGE Energy
Corp. (energy and energy services
provider). 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.
Allison Taunton-Rigby (64)/3,4,5,6/ Chief Executive Officer and Director,
.. Director: From November 7, 2008 RiboNovix, Inc. since 2003
(biotechnology); Director, Idera
Pharmaceutical, Inc. (biotechnology);
Healthways, Inc. (health management
programs). Formerly, President,
Forester Biotech.
- --------
See footnotes on page 42.
41
Directors and Officers
Interested Director*
Principal Occupation(s) During Past
Name, (Age), Position(s) held with Five Years, Directorships and Other
Fund Information
- ---------------------------------- -------------------------------------
William F. Truscott (47)*/6/ President -- US Asset Management and
.. Director and Vice President: From Chief Investment Advisor, Ameriprise
November 7, 2008 Financial, Inc. and President,
Chairman of the Board, and Chief
Investment Officer, RiverSource
Investments, LLC; Director, President
and Chief Executive Officer,
Ameriprise Certificate Company; and
Chairman of the Board, Chief
Executive Officer, and President,
RiverSource Distributors, Inc.
Formerly, Senior Vice President --
Chief Investment Officer, Ameriprise
Financial, Inc.; and Chairman of the
Board and Chief Investment Officer,
RiverSource Investments, LLC,
2001-2005.
- --------
* Mr. Truscott is considered an "interested person" of the Fund, as defined in
the Investment Company Act of 1940, as amended, by virtue of his position
with Ameriprise Financial, Inc. and its affiliates.
Member:. 1 Board Governance Committee 5 Executive Committee
2 Compliance Committee 6 Investment Review Committee
3 Contracts Committee 7 Joint Audit Committee
4 Distribution Committee
Fund Officers
The Board appoints officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is a Director and Vice
President of the Fund, the Fund's other officers are:
Name, (Age), Position(s) held with Principal Occupation(s) During Past
Fund, Address Five Years
- ---------------------------------- -------------------------------------
Patrick T. Bannigan (42) Director and Senior Vice President --
.. President: From November 7, 2008 Asset Management, Products and
.. 172 Ameriprise Financial Center Marketing, RiverSource Investments,
Minneapolis, MN 55474 LLC; Director and Vice President --
Asset Management, Products and
Marketing, RiverSource Distributors,
Inc. Formerly, Managing Director and
Global Head of Product, Morgan
Stanley Investment Management,
2004-2006; President, Touchstone
Investments, 2002-2004.
Michelle M. Keeley (44) Executive Vice President -- Equity
.. Vice President: From November 7, and Fixed Income, Ameriprise
2008 Financial, Inc. and RiverSource
.. 172 Ameriprise Financial Center Investments, LLC; Vice President --
Minneapolis, MN 55474 Investments, Ameriprise Certificate
Company. Formerly, Senior Vice
President -- Fixed Income, Ameriprise
Financial, Inc., 2002-2006 and
RiverSource Investments, LLC,
2004-2006.
42
Directors and Officers
Fund Officers (continued)
Name, (Age), Position(s) held with Principal Occupation(s) During Past
Fund, Address Five Years
- ---------------------------------- --------------------------------------
Amy K. Johnson (42) Vice President -- Asset Management
.. Vice President: From November 7, and Trust Company Services,
2008 RiverSource Investments, LLC.
.. 5228 Ameriprise Financial Center Formerly, Vice President --
Minneapolis, MN 55474 Operations and Compliance,
RiverSource Investments, LLC,
2004-2006; Director of Product
Development -- Mutual Funds,
Ameriprise Financial, Inc., 2001-2004.
Scott R. Plummer (49) Vice President and Chief Counsel --
.. Vice President, General Counsel Asset Management, Ameriprise
and Secretary: From November 7, Financial, Inc.; Chief Counsel,
2008 RiverSource Distributors, Inc. and
.. 5228 Ameriprise Financial Center Chief Legal Officer and Assistant
Minneapolis, MN 55474 Secretarty, RiverSource Investments,
LLC; Vice President, General Counsel,
and Secretary, Ameriprise Certificate
Company. Formerly, Vice President --
Asset Management Compliance,
Ameriprise Financial, Inc.,
2004-2005; Senior Vice President and
Chief Compliance Officer, USBancorp
Asset Management, 2002-2004.
Lawrence P. Vogel (52) Treasurer of each of the investment
.. Treasurer: 2000 to Date companies of the Seligman Group of
.. 100 Park Avenue New York, NY 10017 Funds since 2000; and Treasurer,
Seligman Data Corp. since 2000.
Formerly, Senior Vice President, J. &
W. Seligman & Co. Incorporated and
Vice President of each of the
investment companies of the Seligman
Group of Funds, 1992-2008.
Eleanor T.M. Hoagland (56) Chief Compliance Officer, RiverSource
.. Chief Compliance Officer: 2004 to Investments, LLC (J. & W. Seligman &
Date Co. Incorporated prior to November 7,
.. Money Laundering Prevention 2008), of each of the investment
Officer and Identity Theft companies of the Seligman Group of
Prevention Officer: From Funds since 2004; Money Laundering
November 7, 2008 Prevention Officer and Identity Theft
.. 100 Park Avenue New York, NY 10017 Prevention Officer, RiverSource
Investments, LLC for each of the
investment companies of the Seligman
Group of Funds since November 7,
2008. Formerly, Managing Director, J.
& W. Seligman & Co. Incorporated and
Vice President of each of the
investment companies of the Seligman
Group of Funds, 2004-2008.
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.
43
Additional Fund Information
Fund Symbols General Distributor Independent Registered
- ------------ ------------------------- ----------------------------------------------
Class A: SIVAX Seligman Advisors, Inc. Public Accounting Firm
Class B: SIVBX 100 Park Avenue Deloitte & Touche LLP
Class C: SIVCX New York, NY 10017
Class R: SIVRX Important Telephone Numbers
Shareholder Service Agent (800) 221-2450 Shareholder Services
Manager Seligman Data Corp. (800) 445-1777 Retirement Plan
Until November 6, 2008 100 Park Avenue Services
J. & W. Seligman & Co. New York, NY 10017 (212) 682-760025 Outside the
Incorporated United States
100 Park Avenue Mail Inquiries to: (800) 622-4597 24-Hour Automated
New York, NY 10017 P.O. Box 9759 Telephone Access
Providence, RI 02940-9759 Service
From November 7, 2008
RiverSource Investments,
LLC
200 Ameriprise Financial
Center
Minneapolis, MN 55474
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.
44
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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 Core Fixed Income Fund, Inc., which contains information about the
investment objectives, risks, charges and expenses of the Fund, each of which
should be considered carefully before investing or sending money.
TXCFI2 9/08