March 31, 2010

Technology sector benefits from strengthening demand, well positioned in current economic environment

Performance

For the three months ended March 31, 2010, Class A shares of Seligman Communications and Information Fund outperformed the benchmark, returning 2.53% versus 2.41% for the S&P North American Technology Sector Index.* Our decisions in the internet software and services industry were major contributors to our first quarter performance, while stock choices in the systems software industry detracted. Overall, we remain confident that the Fund’s portfolio is well positioned for the current environment and consistent with our long-term strategy.

The technology sector continues to have a fundamental advantage in the market, and we believe it will continue to perform relatively well as the economy recovers. Technology companies on the whole boast healthy cash reserves, strong balance sheets and low debt levels relative to many other industries. Currently, technology has multiple promising secular growth drivers, including growth of both the wired and wireless internet, increased penetration of PCs and mobile phones and greater disposable income being directed to technology goods and services, particularly in Asia. Key technology end markets, such as mobile phones and PCs, withstood the global recession better than expected. We are currently in the midst of a strong recovery in industry profits, propelled by pent-up demand for storage, increased capital spending on semiconductor capital equipment for manufacturing and design, and a resumption of IT software projects within large organizations.Software remains a key area of focus. Over the past several years, we have seen a lack of significant enterprise spending on software, a trend that has been reversing so far in 2010. Many corporations are increasing budgets as the year progresses, often choosing to allocate spending to software upgrades, which are generally easier to implement and typically offer a faster return on investment than hardware upgrades. Additionally, long-term software licenses necessitate ongoing maintenance payments, which give software providers valuable recurring revenue.

The semiconductor and disk drive industries are also seeing a rebound. During the downturn, capacity additions plummeted, which has set the stage for substantial improvements in pricing and profit margins for a large number of semiconductor companies. Semiconductor capital equipment makers have also been experiencing a sharp rebound as electronics companies invest in manufacturing and design to increase output. Demand is growing for a wide range of electronic products, particularly the new generation of mobile phones and portable computing devices. Equipment providers have already begun to see a major pickup in orders and revenues.

We feel the primary difference between 2009 and 2010 will be the importance of stock selection. Last year there was clear recognition of strong technology fundamentals and investors benefited easily from broad, tactical allocations. This year, we think investors will need to think more strategically, and carefully evaluate specific company and industry characteristics to identify areas of promising return. We suspect that technology IPO and merger and acquisition activity will increase, and we also anticipate cash-on-hand being used to fund a growing number of share repurchase programs. There are potential headwinds; a strengthening dollar and the potential for interest rate increases could dampen returns, along with continued market volatility and uncertainty around financial regulation legislation.

It is in times like these, when investors need to be selective, that we have had our greatest success. We believe our long-term focus, emphasis on fundamentals and research-based process is well suited to the current economic and market environments. We take a disciplined approach that looks at more than just growth rates and broad industry trends. We have a large team of dedicated analysts covering a wide range of technology and technology-related businesses looking for companies with high profit margins, quality management, strong intellectual property and unique competitive advantages. Valuation is also a key factor in our buy decisions, which differentiates us from many of our peers and has helped us perform consistently over the long term.

Seligman Communications and Information Fund
Average annual total returns as of 03/31/10 (%)

The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of an investment will fluctuate so that the shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting seligman.com.

Return figures reflect any change in price per share, and assume the reinvestment of dividends and capital gain distributions, if any. Average annual total return figures for Class A shares are calculated without and with the effect of the maximum initial sales charge. The average annual total returns with sales charge for all periods presented for Class A shares reflect the maximum initial sales charge of 5.75%.

Fund expenses are calculated based on the Fund’s average net assets during the Fund’s most recently completed fiscal year, and have not been adjusted for current asset levels. If adjusted for any decrease or increase in assets, expenses would be higher or lower, respectively, than the number shown. Please see the Fund’s prospectus for a complete list of operating expenses.

The Lipper Science & Technology Funds Index includes the 30 largest science and technology funds tracked by Lipper Inc. The Index’s returns include net reinvested dividends. The S&P (Standard and Poor’s) North American Sector Index is the Technology sub-index of the S&P GSSI™. The Index series includes sub-indices, which are more narrowly based industry benchmarks consisting of twelve or more stocks selected from the universe of stocks in the S&P North American Technology Sector Index. It is not possible to invest in an index.

The products of technology companies may be subject to severe competition and rapid obsolescence, and technology stocks may be subject to greater price fluctuations, government regulation, and limited liquidity as compared to other investments. In addition, investments in one economic sector, such as technology, may result in greater price fluctuations than owning a portfolio of diversified investments. Investments in small- and mid-capitalization companies involve greater risks and potential volatility than investments in larger, more established companies. See the Fund’s prospectus for information on these and other risks associated with the Fund.