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Seligman
Capital
Fund, Inc.
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A Capital
Appreciation Fund
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26th Annual Report
1994
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[Logo]
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Seligman Capital Fund
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A mutual fund that invests primarily in common stocks believed to provide
capital appreciation opportunities. Current income is not an objective.
<TABLE>
<CAPTION>
Highlights of 1994
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December 31, 1994 December 31, 1993
-------------------- --------------------
Class A Class D Class A Class D
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets (in thousands)............................ $162,556 $3,179 $196,212 $2,749
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Net Asset Value per Share............................ $13.17 $12.82 $15.95 $15.86
With December 1994 Gain Distribution
Taken in Shares.................................. 14.82 14.47 -- --
Decrease in Net Asset Value with Gain
Distribution Taken in Shares..................... (7.06)% (8.75)% -- --
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Distribution of Realized Gain per Share.............. $1.60 $1.60 $1.90 $1.90
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Total Expenses per Dollar of Average Net Assets...... $0.0113 $0.0266 $0.0113 $0.0226+
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+ Annualized.
</TABLE>
1
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To the Shareholders
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We are pleased to report Seligman Capital Fund's long-term investment
results, portfolio holdings, and audited financial statements at December 31,
1994.
For your Fund's Class A shares, net asset value per share was $13.17 at
December 31, compared to $14.86 at September 30, and $15.95 a year ago. For your
Fund's Class D shares, net asset value per share was $12.82 at December 31,
compared to $14.57 at September 30, and $15.86 a year ago. For both Class A and
D shares, the change in the net asset value is partly caused by the deduction of
the $1.60 per share capital gain payment made on December 20 to Shareholders of
record December 13.
For your Fund's Class A shares, total return was -0.24% for the three months
and -7.06% for the 12 months ended December 31. For your Fund's Class D shares,
total return was -0.67% and -8.75%, respectively, for the same periods. This
compares to the Standard & Poor's 500 Composite Stock Price Index's total return
of -0.02% for the three months and 1.32% for the 12 months ended December 31.
(Total return reflects change in net asset value and assumes any distributions
paid within the period are reinvested in additional shares. Class A returns do
not, however, reflect the effect of the maximum initial sales charge of 4.75%,
and Class D returns do not reflect the effect of the 1% contingent deferred
sales load.)
While your Fund's performance was less favorable in 1994, its longer-term
performance remains strong. Please refer to page 4 for a discussion with your
Portfolio Manager about your Fund's performance in 1994, followed by the chart
and table that analyze longer-term performance.
Looking back on 1994, the one generalization that can be made with
confidence is that it was a turbulent and trying year for equity and bond
investors alike. The Federal Reserve Board exhibited an aggressive stance
against inflation, putting through six short-term interest rate increases by the
end of the year. This caused an upheaval in the bond market, with yields
increasing and bond prices spiraling lower--an event in the financial markets
unmatched in magnitude since 1973-74. The equity market remained hostage to the
bond market and demonstrated lackluster performance for the year.
The U.S. economy continued to grow at a modest yet controlled pace,
accompanied by corporate news of solid growth and strong earnings. This economic
news, although positive, caused the underlying question to remain: Will the
economy overheat, opening the door to increased inflation? We don't believe so.
We believe an economic slowdown is close at hand. In March of 1995, the
current growth cycle will mark its fourth year. The consumer has both increased
debt as a percentage of income and drawn down savings--suggesting nearer-term
caution after a stronger-than-expected pattern of spending in 1994. We also
believe that inflation will remain under control in light of intense global
competition, low unit labor costs, and an aging population that should favor
saving over spending. Job creation remains robust despite gains in productivity,
and U.S. competitiveness in world markets is likely to be enhanced under
G.A.T.T.--General Agreement on Tariffs and Trade.
For more information about Seligman Capital Fund, or your investment in its
shares, please write or call the toll-free telephone numbers listed on page 18.
By order of the Board of Directors,
/s/William C. Morris
William C. Morris
Chairman
/s/Ronald T. Schroeder
Ronald T. Schroeder
President
February 3, 1995
2
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Seligman Capital Fund
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Federal Tax Status of 1994 Gain
Distribution For Taxable Accounts
The distribution of $1.60 per share from taxable net long-term gain realized on
investments during 1994, paid on December 20, 1994, to both Class A and D
shareholders, is designated a "capital gain dividend" for federal income tax
purposes. This distribution is taxable to shareholders in 1994 as a gain from
the sale of capital assets, no matter how long your shares have been owned or
whether the distribution was received in shares or in cash. However, if shares
on which a long-term capital gain distribution was received are subsequently
sold, and such shares were held for six months or less from date of purchase,
any loss would be treated as long-term to the extent it offsets the long-term
gain distribution.
If the distribution was paid in shares, the per share cost basis for federal
income tax purposes is $12.74 for Class A shares and $12.41 for Class D shares.
The tax cost basis of shares previously held is not affected.
A year-end statement of account showing activity for 1994 has been mailed to
each shareholder. Under "Tax Information for Calendar Year," the statement shows
the proceeds of any redemptions paid to the shareholder during the year and
reported to the Internal Revenue Service as required by federal regulations
(Form 1099-B). In addition, a separate Form 1099-DIV showing the amount of the
distribution from gain on investments paid during the year has been mailed to
each shareholder.
3
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Annual Performance Overview
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The following is a biography of your Portfolio Manager, a discussion with him
regarding Seligman Capital Fund, and a comparison chart of your Fund's
performance against the Standard & Poor's 500 Composite Stock Price Index and
the Lipper Capital Appreciation Fund Average.
Your Portfolio Manager
Loris D. Muzzatti is a Managing Director of J. & W. Seligman &
[Photo} Co. Incorporated and has been Vice President and Portfolio
Manager of Seligman Capital Fund for the past six years. Mr.
Muzzatti, who joined Seligman in 1985, also manages a portion
of the firm's institutional accounts.
Economic Factors Affecting Seligman Capital Fund
"Continued solid economic growth, despite the Federal Reserve
Board's six short-term interest rate increases, had a negative
impact on U.S. financial markets in 1994. The bulk of the
damage was sustained in the second quarter of the year, as interest rates were
increased twice within the three-month period. Since then, due to subsided
selling pressure from liquidity-sensitive investors and a rebound in equity
valuations, the financial markets and your Fund have regained strength. In
addition, your Fund's holdings with international exposure benefited from both
the low level of inflation and the devaluation of the U.S. Dollar."
Your Manager's Investment Strategy
"Throughout the year, your Fund maintained a large exposure to companies with
steady predictable earnings growth. Typically, these companies, which are driven
by growth in unit sales, do not rely on significant price increases or strong
economic growth. However, in a period of strong economic growth, like 1994,
cyclical or highly economically sensitive companies can show rapid growth
spurts, which often dwarf the performance of companies with steady earnings
streams. In terms of portfolio construction, the strategy of reducing your
Fund's concentration in a few of its very large positions, despite the large
capital gain's impact, proved beneficial."
Individual Sector Performance
"In 1994, technology was the best performing sector in the market and in your
Fund. Your Fund's large position in Microsoft performed very well, as did its
semiconductor-related issues. Although the technology sector of the market
continues to provide us with a number of attractive investment opportunities,
the sector also tends to exhibit considerable volatility--a characteristic we
feel is worth withstanding. The Fund's consumer cyclical exposure remained heavy
throughout the year, but, again, despite some very strong financial
performances, the stocks continued to remain undervalued."
Looking Ahead
"The expected slowing of the economy in the second half of 1995 should play well
into the Fund's exposure to companies with superior earnings prospects that are
selling at compelling valuations. The unsettled international environment and an
improving Dollar may also bring the U.S. equity markets back into investor
focus, and provide for some good capital appreciation, all of which bodes well
for your Fund."
4
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Ten-Year Performance Comparison Chart and Table December 31, 1994
- --------------------------------------------------------------------------------
This chart compares a $10,000 hypothetical investment made in Seligman Capital
Fund Class A shares, with and without the maximum initial sales charge of 4.75%,
for the 10-year period ended December 31, 1994, to a $10,000 hypothetical
investment made in the Standard & Poor's 500 Composite Stock Price Index (S&P
500) and the Lipper Capital Appreciation Fund Average (Lipper Capital) for the
same period. The performance of Seligman Capital Fund Class D shares is not
shown in this chart, but is included in the table below. It is important to keep
in mind that the S&P 500 excludes the effect of any fees or sales charges, and
the Lipper Capital excludes the effect of any sales charges.
[The table below was represented by a graph in the printed material]
Capital Fund Capital Fund
with sales charge w/o sales charge S&P 500 Lipper Capital
12/31/84 $ 9,524 $10,000 $10,000 $10,000
3/31/85 $10,709 $11,245 $10,919 $10,918
6/30/85 $11,778 $12,367 $11,632 $11,719
9/30/85 $10,787 $11,327 $11,044 $11,239
12/31/85 $12,459 $13,082 $12,836 $13,172
3/31/86 $15,087 $15,842 $14,919 $15,030
6/30/86 $16,250 $17,063 $15,954 $15,916
9/30/86 $14,403 $15,124 $14,309 $14,806
12/31/86 $14,677 $15,411 $14,710 $15,631
3/31/87 $17,755 $18,642 $17,961 $18,969
6/30/87 $18,453 $19,375 $18,221 $19,921
9/30/87 $19,302 $20,267 $19,154 $21,235
12/31/87 $19,302 $15,012 $14,825 $16,452
3/31/88 $14,297 $15,203 $16,083 $17,388
6/30/88 $15,335 $16,102 $16,964 $18,547
9/30/88 $14,661 $15,394 $16,740 $18,610
12/31/88 $14,651 $15,384 $16,899 $19,184
3/31/89 $15,833 $16,625 $18,216 $20,544
6/30/89 $19,816 $17,866 $19,713 $22,358
9/30/89 $19,403 $20,807 $21,759 $24,752
12/31/89 $18,776 $20,373 $21,420 $25,263
3/31/90 $21,692 $19,715 $20,908 $24,503
6/30/90 $16,786 $22,776 $22,238 $26,044
9/30/90 $19,671 $17,625 $18,444 $22,465
12/31/90 $23,827 $20,655 $19,729 $24,479
3/31/91 $24,016 $25,018 $23,446 $28,034
6/30/91 $26,860 $25,217 $23,097 $27,970
9/30/91 $30,426 $28,203 $25,141 $29,466
12/31/91 $30,025 $31,948 $27,532 $31,936
3/31/92 $28,655 $31,526 $27,617 $31,130
6/30/92 $30,445 $30,088 $26,518 $31,722
9/30/92 $33,944 $31,967 $27,099 $32,722
12/31/92 $34,263 $35,642 $29,977 $34,370
3/31/93 $33,905 $35,976 $31,020 $35,871
6/30/93 $36,076 $35,600 $31,879 $36,045
9/30/93 $35,575 $37,880 $34,086 $36,977
12/31/93 $34,482 $37,353 $34,764 $37,834
3/31/94 $30,482 $36,206 $33,592 $36,399
6/30/94 $30,489 $32,014 $32,114 $36,552
9/30/94 $33,144 $34,801 $34,189 $38,339
12/31/94 $33,063 $34,716 $33,574 $38,334
The table below shows the average annual total returns for the one-year,
five-year, and 10-year periods through December 31, 1994, for the Seligman
Capital Fund Class A shares, with and without the maximum initial sales charge
of 4.75%, the S&P 500, and the Lipper Capital. Also included in the table are
the average annual total returns for the one-year and since-inception periods
through December 31, 1994, for the Seligman Capital Fund Class D shares, with
and without the effect of the 1% contingent deferred sales load ("CDSL") imposed
on shares redeemed within one year of purchase, the S&P 500, and the Lipper
Capital.
Average Annual Total Returns
One Five Ten
Year Years Years
-------- -------- --------
Seligman Capital Fund
Class A with sales charge (11.50)% 10.17% 12.70%
Class A without sales charge (7.06) 11.25 13.25
S&P 500 1.32 8.70 14.34
Lipper Capital (3.42) 9.40 12.88
Since
One Inception
Year 5/3/93
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Seligman Capital Fund
Class D with CDSL (9.55)% N/A
Class D without CDSL (8.75) (0.80)%
S&P 500 1.32 5.59
Lipper Capital (3.42) 5.36
No adjustment was made to performance for periods prior to January 1, 1993, the
commencement date for the annual Administration, Shareholder Services and
Distribution Plan fee of up to 0.25% of average daily net assets of Class A
shares. THE PERFORMANCE OF CLASS D SHARES WILL BE GREATER THAN OR LESS THAN THE
PERFORMANCE SHOWN FOR CLASS A SHARES, BASED ON THE DIFFERENCES IN SALES CHARGES
AND FEES PAID BY SHAREHOLDERS. Performance data quoted represent changes in
prices and assume that all distributions within the periods are invested in
additional shares. The investment return and principal value of an investment
will fluctuate so that shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment results.
5
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Seligman Capital Fund
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Diversification of Assets December 31, 1994
<TABLE>
<CAPTION>
Percent
Percent of
of Net Net Assets
Issues Cost Value Assets Dec. 31, 1993
------ ------------ ------------- ------- --------------
<S> <C> <C> <C> <C> <C>
Net Cash and Short-Term Holdings .......... 2 $ 11,028,523 $ 11,028,523 6.7 8.0
-- ------------ ------------- ----- -----
Common Stocks
Automotive and related...................... 1 4,633,197 4,207,500 2.5 6.5
Basic materials............................. 3 6,149,514 7,473,437 4.5 --
Building related............................ -- -- -- -- 4.4
Business services and supplies.............. 3 7,234,581 10,893,750 6.6 6.4
Computer goods and services................. 5 9,051,315 19,056,250 11.5 8.1
Consumer goods and services................. 8 14,116,707 18,915,000 11.4 11.0
Drugs and health care....................... 7 17,545,936 17,214,063 10.4 5.0
Energy...................................... -- -- -- -- 1.1
Financial services.......................... 2 5,111,856 6,050,000 3.6 4.8
Food and food services...................... 1 3,572,938 3,987,500 2.4 4.5
Industrial goods and services............... 2 2,995,939 4,881,250 2.9 1.4
Leisure and related......................... 3 6,575,469 8,221,250 5.0 9.8
Retail trade................................ 7 12,761,547 19,068,750 11.5 13.3
Software.................................... 5 12,999,227 17,204,375 10.4 5.2
Specialty chemicals......................... -- -- -- -- 4.3
Steel....................................... -- -- -- -- 0.6
Telecommunications.......................... 5 13,501,133 17,507,500 10.6 5.3
Other....................................... 1 -- 26,344 -- 0.3
-- ------------ ------------ ----- -----
53 116,249,359 154,706,969 93.3 92.0
-- ------------ ------------ ----- -----
Net Assets ................................. 55 $127,277,882 $165,735,492 100.0 100.0
== ============ ============ ===== =====
</TABLE>
6
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Seligman Capital Fund
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Largest Portfolio Changes*
During Past Three Months
Shares
--------------------
Holdings
Additions Increase 12/31/94
- --------- -------- --------
British Sky Broadcasting
(ADRs)........................ 135,000 135,000
Emcare Holdings................. 75,000 75,000
Jones Apparel Group............. 50,000 50,000
Lam Research.................... 30,000 50,000
Liz Claiborne................... 150,000 150,000
Nordstrom....................... 25,000 100,000
Powersoft....................... 25,000 25,000
Sports & Recreation............. 55,000 100,000
Synopsys........................ 20,000 70,000
TeleWest Communications
(ADRs)........................ 100,000 100,000
Holdings
Reductions Decrease 12/31/94
- --------- -------- --------
Brinker International........... 125,000 --
Chrysler........................ 75,000 --
Grainger (W.W.)................. 30,000 --
Healthsource.................... 50,000 --
Home Depot...................... 50,000 100,000
MCI Communications.............. 125,000 --
Microsoft....................... 25,000 75,000
NEXTEL Communications........... 100,000 --
Staples......................... 90,000+ --
Teva Pharmaceutical (ADRs)...... 125,000 --
*Largest portfolio changes from previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
+Includes 30,000 shares received as a result of a 3-for-2 stock split.
Major Portfolio Holdings
at December 31, 1994
Security Value
- -------- ----------
Motorola................................ $5,208,750
Interpublic Group of Companies.......... 4,818,750
Home Depot.............................. 4,600,000
Microsoft............................... 4,593,750
Sensormatic Electronics................. 4,500,000
Xilinx.................................. 4,434,375
EMC..................................... 4,325,000
Parametric Technology................... 4,296,875
Nordstrom............................... 4,212,500
Eaton................................... 4,207,500
7
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Portfolio of Investments
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Shares Value
------ -----
Common Stocks--93.3%
Automotive and Related--2.5%
Eaton
Electronic systems equipment ............. 85,000 $ 4,207,500
-----------
Basic Materials--4.5%
Louisiana Pacific
Lumber, plywood, and pulp ................ 100,000 2,725,000
Minerals Technologies
Marketer of specialty minerals
and products ............................. 75,000 2,193,750
Schulman, A. ...............................
Manufacturer of plastics ................. 93,750 2,554,687
-----------
7,473,437
-----------
Business Services and Supplies--6.6%
Interpublic Group of Companies
Worldwide advertising agency ............. 150,000 4,818,750
Leggett & Platt
Manufacturer of springs for
furniture and bedding .................... 45,000 1,575,000
Sensormatic Electronics
Electronic article surveillance
systems .................................. 125,000 4,500,000
-----------
10,893,750
-----------
Computer Goods and Services--11.5%
Ceridian*
Computer services ........................ 100,000 2,687,500
EMC*
Mainframe storage devices ................ 200,000 4,325,000
FIserv*
Data processing software ................. 175,000 3,784,375
Intel
Semiconductor/memory circuits ............ 60,000 3,825,000
Xilinx*
Integrated circuits ...................... 75,000 4,434,375
-----------
19,056,250
-----------
Consumer Goods and Services--11.4%
CUC International*
Member-based consumer
services ................................. 80,000 2,680,000
Department 56*
Designer, importer, and
distributor of fine quality
collectibles ............................. 50,000 1,987,500
Jones Apparel Group*
Designer and distributor
of women's apparel ....................... 50,000 1,287,500
Liz Claiborne
Designer and distributor of
women's apparel .......................... 150,000 2,531,250
Newell
Home furnishings ......................... 150,000 3,150,000
Nine West Group*
Manufacturer and retailer of
women's footwear ......................... 50,000 1,418,750
Reebok International
Marketer of athletic
footwear ................................. 50,000 1,975,000
UST Inc. ...................................
Tobacco and pipes ........................ 140,000 3,885,000
-----------
18,915,000
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Drugs and Health Care--10.4%
Beverly Enterprises
Health care facilities ................... 150,000 2,156,250
Columbia/HCA Healthcare
Health care facilities
and services ............................. 100,000 3,650,000
Dentsply International*
Manufacturer of dental
and x-ray equipment ...................... 70,000 2,187,500
Emcare Holdings
Physician services ....................... 75,000 1,096,875
Protein Design Labs*
Antibody technology ...................... 125,000 1,976,563
Sunrise Medical*
Manufacturer of home health
care products ............................ 100,000 2,762,500
United Healthcare
Health maintenance
organization ............................. 75,000 3,384,375
-----------
17,214,063
-----------
Financial Services--3.6%
MGIC Investment
Private mortgage insurance ............... 60,000 1,987,500
Travelers
Diversifed financial services ............ 125,000 4,062,500
-----------
6,050,000
-----------
Food and Food Services--2.4%
PepsiCo
Soft drinks, consumer products ........... 110,000 3,987,500
-----------
Industrial Goods and Services--2.9%
Lam Research*
Manufacturer of plasma-etching
equipment ................................ 50,000 1,856,250
Nordson
Industrial application equipment ......... 50,000 3,025,000
-----------
4,881,250
-----------
Leisure and Related--5.0%
British Sky Broadcasting (ADRs)*
Satellite-delivered entertainment
channel in the U.K ....................... 135,000 3,240,000
Circus Circus Enterprises*
Casino hotels ............................ 100,000 2,325,000
TeleWest Communications (ADRs)*
UK-based cable and
telephone services ....................... 100,000 2,656,250
-----------
8,221,250
-----------
8
<PAGE>
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December 31, 1994
- --------------------------------------------------------------------------------
Shares Value
------ -----
Retail Trade--11.5%
Fingerhut
Catalog marketer ......................... 100,000 $ 1,550,000
Home Depot
Home improvement stores .................. 100,000 4,600,000
Nordstrom
Department stores chain .................. 100,000 4,212,500
Office Depot*
Office supply retailer ................... 100,000 2,400,000
OfficeMax*
Office supplies superstore ............... 50,000 1,325,000
PETsMART*
Pet foods, supplies, and services ........ 70,000 2,406,250
Sports & Recreation*
Operator of sporting equipment
superstores .............................. 100,000 2,575,000
-----------
19,068,750
-----------
Software--10.4%
Informix*
Designer, manufacturer, and
supporter of database
management systems ....................... 100,000 3,206,250
Microsoft*
Microcomputer software ................... 75,000 4,593,750
Parametric Technology*
Developer of mechanical design
software ................................. 125,000 4,296,875
Powersoft*
Developer of application software
products ................................. 25,000 2,062,500
Synopsys*
Developer of design software ............. 70,000 3,045,000
-----------
17,204,375
-----------
Telecommunications--10.6%
Bay Networks*
Computer network products ................ 100,000 2,937,500
Century Telephone Enterprises
Regional telephone services .............. 100,000 2,950,000
Cisco Systems*
Manufacturer of computer network
products ................................. 80,000 2,805,000
DSC Communications*
Digital telephone systems ................ 100,000 3,606,250
Motorola
Wireless telecommunications .............. 90,000 5,208,750
-----------
17,507,500
-----------
Other ...................................... 26,344
-----------
Total Common Stocks
(Cost $116,249,359) ...................... 154,706,969
-----------
Short-Term Holdings--5.7%
ABN-AMRO Bank, Grand Cayman,
Fixed Time Deposit,
5 5/8%, 1/3/1995 ....................... $ 4,400,000 4,400,000
Bank of Montreal,
Fixed Time Deposit,
5 1/2%, 1/3/1995 ....................... 5,000,000 5,000,000
-----------
Total Short-Term Holdings
(Cost $9,400,000) ........................ 9,400,000
-----------
Total Investments--99.0%
(Cost $125,649,359) ...................... 164,106,969
Other Assets Less
Liabilities--1.0% ........................ 1,628,523
------------
Net Assets--100.0% ......................... $165,735,492
============
- -----------
*Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
9
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Statement of Assets and Liabilities December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments, at value:
Common stocks (cost $116,249,359)........................................ $154,706,969
Short-term holdings (cost $9,400,000).................................... 9,400,000 $164,106,969
-------------
Cash....................................................................... 118,032
Receivable for securities sold............................................. 1,553,127
Receivable for Capital Stock sold.......................................... 272,488
Receivable for dividends and interest...................................... 91,806
Investment in, and expenses prepaid to, shareholder service agent.......... 88,732
Other...................................................................... 5,628
-------------
Total Assets .............................................................. 166,236,782
-------------
Liabilities:
Payable for Capital Stock repurchased...................................... 206,183
Accrued expenses, taxes, and other......................................... 295,107
-------------
Total Liabilities ......................................................... 501,290
-------------
Net Assets ................................................................ $165,735,492
=============
Composition of Net Assets:
Capital Stock, at par ($1 par value; 40,000,000 shares authorized;
12,589,007 shares outstanding):
Class A ................................................................. $ 12,340,987
Class D ................................................................. 248,020
Additional paid-in capital................................................. 114,768,484
Accumulated net investment loss............................................ (79,609)
Net unrealized appreciation of investments................................. 38,457,610
-------------
Net Assets ................................................................ $165,735,492
=============
Net Asset Value per share:
Class A ($162,556,212 / 12,340,987 shares) ................................ $13.17
=======
Class D ($3,179,280 / 248,020 shares) ..................................... $12.82
=======
</TABLE>
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See notes to financial statements.
10
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Statement of Operations For the Year Ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividends.................................................................. $ 1,210,181
Interest................................................................... 103,434
------------
Total investment income.................................................... $ 1,313,615
Expenses:
Management fee............................................................. 945,288
Shareholder account services............................................... 485,011
Distribution and service fees.............................................. 381,533
Auditing and legal fees.................................................... 65,747
Registration............................................................... 45,268
Shareholder reports and communications..................................... 43,074
Shareholders' meeting...................................................... 34,959
Directors' fees and expenses............................................... 33,865
Custody and related services............................................... 18,322
Miscellaneous.............................................................. 17,007
------------
Total expenses............................................................. 2,070,074
------------
Net investment loss ....................................................... (756,459)
Net realized and unrealized gain (loss) on investments:
Net realized gain on investments........................................... 18,012,834
Net change in unrealized appreciation of investments....................... (31,248,422)
------------
Net loss on investments ................................................... (13,235,588)
------------
Decrease in net assets from operations .................................... $(13,992,047)
============
</TABLE>
- -----------------
See notes to financial statements.
11
<PAGE>
================================================================================
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------
1994 1993
------------ ------------
<S> <C> <C>
Operations:
Net investment loss.......................................................... $ (756,459) $ (350,390)
Net realized gain on investments............................................. 18,012,834 21,327,854
Net change in unrealized appreciation of investments......................... (31,248,422) (11,433,615)
------------ ------------
Increase (decrease) in net assets from operations............................ (13,992,047) 9,543,849
------------ ------------
Distributions to shareholders:
Net realized gain on investments:
Class A ................................................................... (17,718,531) (21,084,356)
Class D ................................................................... (351,353) (283,102)
------------ ------------
Decrease in net assets from distributions.................................... (18,069,884) (21,367,458)
------------ ------------
<CAPTION>
Shares
------------------------------
Year Ended December 31
------------------------------
Capital share transactions:* 1994 1993
--------- ---------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A................................ 537,358 886,299 8,103,350 14,990,089
Class D................................ 112,437 161,053 1,665,414 2,732,491
Exchanged from associated Funds:
Class A................................ 274,413 213,541 4,071,383 3,619,415
Class D................................ 6,633 -- 93,444 --
Shares issued in payment of gain distributions:
Class A................................ 1,275,447 1,218,300 16,249,301 19,346,255
Class D................................ 26,625 16,557 330,484 261,938
---------- ---------- ------------ ------------
Total.................................... 2,232,913 2,495,750 30,513,376 40,950,188
---------- ---------- ------------ ------------
Cost of shares repurchased:
Class A................................ (1,315,179) (962,224) (19,543,622) (16,432,871)
Class D................................ (27,140) (811) (388,031) (14,178)
Exchanged into associated Funds:
Class A................................ (734,774) (678,500) (11,092,468) (11,721,594)
Class D................................ (43,927) (3,407) (652,829) (59,471)
---------- ---------- ------------ ------------
Total.................................... (2,121,020) (1,644,942) (31,676,950) (28,228,114)
---------- ---------- ------------ ------------
Increase (decrease) in net assets
from capital share transactions........ 111,893 850,808 (1,163,574) 12,722,074
========== ========== ------------ ------------
Increase (decrease) in net assets............................................ (33,225,505) 898,465
Net Assets:
Beginning of year............................................................ 198,960,997 198,062,532
------------ ------------
End of year (including accumulated net investment loss of
$79,609 and $81,029, respectively)......................................... $165,735,492 $198,960,997
============ ============
</TABLE>
- -------------------
* The Fund began offering Class D shares on May 3, 1993.
See notes to financial
statements.
12
<PAGE>
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Effective May 3, 1993, Seligman Capital Fund, Inc. (the "Fund") began
offering two classes of shares. All shares existing prior to May 3, 1993, have
been classified as Class A shares. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an annual
basis. Class D shares are sold without an initial sales charge but are subject
to a higher distribution fee and a contingent deferred sales load ("CDSL") of 1%
imposed on certain redemptions made within one year of purchase. The two classes
of shares represent interests in the same portfolio of investments, have the
same rights and are generally identical in all respects except that each class
bears its separate distribution and certain class expenses and has exclusive
voting rights with respect to any matter to which a separate vote of any class
is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in stocks are valued at current market values or, in their
absence, at fair value determined in accordance with procedures approved by
the Board of Directors. Securities traded on national exchanges are valued
at last sales prices or, in their absence and in the case of
over-the-counter securities, a mean of bid and asked prices. Short-term
holdings maturing in 60 days or less are valued at amortized cost.
b. There is no provision for federal income or excise tax. The Fund has elected
to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income tax
purposes. Dividends receivable and payable are recorded on ex-dividend
dates. Interest income is recorded on an accrual basis.
d. 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 proportion of the value of shares outstanding of each
class. Class-specific expenses, which include distribution and service fees
and any other items that can be specifically attributed to a particular
class, are charged directly to such class.
e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gain may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, or capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset value
per share of the Fund.
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended December 31, 1994, amounted to $124,250,547 and
$139,397,787, respectively.
At December 31, 1994, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities amounted to $42,018,544 and $3,560,934, respectively.
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all directors of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the Manager is
paid by the Manager. The Manager receives a fee, calculated daily and payable
monthly, equal to a per annum percentage of the Fund's daily net assets. The
management fee rate is calculated on a sliding scale of 0.55% to 0.45%, based on
13
<PAGE>
================================================================================
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
average daily net assets of all the investment companies managed by the Manager.
The management fee for the year ended December 31, 1994, was equivalent to an
annual rate of 0.53% of the average daily net assets of the Fund.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of Fund shares and an affiliate of the Manager, received
commissions of $16,143 from sales of Class A shares, after concessions of
$121,768 paid to dealers.
Effective January 1, 1993, the Fund adopted an Administration, Shareholder
Services and Distribution Plan (the "Plan") with respect to Class A shares under
which service organizations can enter into agreements with the Distributor and
receive a continuing fee of up to 0.25% on an annual basis, payable quarterly,
of the average daily net assets of the Class A shares attributable to the
particular service organizations for providing personal services and/or the
maintenance of shareholder accounts. The Distributor charges such fees to the
Fund pursuant to the Plan. For the year ended December 31, 1994, fees paid
aggregated $350,604, or 0.20% per annum of the average daily net assets of Class
A shares.
Effective May 3, 1993, the Fund adopted a Plan with respect to Class D
shares under which 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 D shares for which the organizations are
responsible, and fees for providing other distribution assistance of up to 0.75%
on an annual basis of such average daily net assets. Such fees are paid monthly
by the Fund to the Distributor pursuant to the Plan. For the year ended December
31, 1994, fees paid amounted to $30,929, or 1% per annum of the average daily
net assets of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions occurring within one year of purchase. For the year ended December
31, 1994, such charges amounted to $2,361.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $468,421 for shareholder account services.
The Fund's investment in Seligman Data Corp. is recorded at a cost of $2,199.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, and/or Seligman Data Corp.
Fees of $21,000 were incurred by the Fund for legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at December 31, 1994, of
$79,609 is included in other liabilities. Deferred fees and the related accrued
interest are not deductible for federal income tax purposes until such amounts
are paid.
5. Class-specific expenses charged to Class A and Class D during the year ended
December 31, 1994, which are included in the corresponding captions of the
Statement of Operations, were as follows:
Class A Class D
-------- -------
Distribution and service fees ................ $350,604 $30,929
Registration ................................. 14,925 21,305
Shareholders' meeting ........................ 14,428 828
Shareholder reports and
communications ............................. 10,472 217
14
<PAGE>
================================================================================
Financial Highlights
- --------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Fund's beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment, assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item, as disclosed in the financial statements,
to their equivalent per share amount.
The total return based on net asset value measures the Fund's performance
assuming investors purchased Fund shares at net asset value as of the beginning
of the period, reinvested dividends and capital gains paid at net asset value,
and then sold their shares at the net asset value per share on the last day of
the period. The total return computations do not reflect any sales charges
investors may incur in purchasing or selling shares of the Fund. The total
returns for periods of less than one year are not annualized.
<TABLE>
<CAPTION>
Class A Class D
--------------------------------------------------- ---------------------
Year Ended December 31 Year 5/3/93*
--------------------------------------------------- Ended to
1994** 1993 1992 1991 1990 12/31/94** 12/31/93
------ ------ ------ ------ ------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning
of period...................... $15.95 $17.04 $16.66 $12.45 $12.38 $15.86 $16.43
------ ------ ------ ------ ------ ------ ------
Net investment income (loss)..... (.06) (.03) .02 .03 .06 (.33) (.08)
Net realized and unrealized
investment gain (loss)......... (1.12) .84 1.89 6.66 .11 (1.11) 1.41
------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations.......... (1.18) .81 1.91 6.69 .17 (1.44) 1.33
Distributions from net
gain realized.................. (1.60) (1.90) (1.53) (2.48) (.10) (1.60) (1.90)
------ ------ ------ ------ ------ ------ ------
Net increase (decrease) in
net asset value................ (2.78) (1.09) .38 4.21 .07 (3.04) (.57)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period... $13.17 $15.95 $17.04 $16.66 $12.45 $12.82 $15.86
====== ====== ====== ====== ====== ====== ======
Total return based
on net asset value ............ (7.06)% 4.80% 11.56% 54.67% 1.38% (8.75)% 8.12%
Ratios/Supplemental Data:
Expenses to average net assets... 1.13% 1.13% .96% 1.01% .92% 2.66% 2.26%+
Net investment income (loss)
to average net assets.......... (.39)% (.17)% .11% .25% .47% (2.28)% (1.32)%+
Portfolio turnover............... 70.72% 46.84% 42.32% 42.20% 23.05% 70.72% 46.84%++
Net assets, end of period
(000's omitted)................$162,556 $196,212 $198,063 $172,676 $120,759 $3,179 $2,749
</TABLE>
- -------------------
*Commencement of offering of Class D shares.
**Per share amounts for the year ended December 31, 1994, are calculated based
on average shares outstanding.
+Annualized.
++For the year ended December 31, 1993.
See notes to financial statements.
15
<PAGE>
================================================================================
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Capital Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Capital Fund, Inc. as of December 31,
1994, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the Fund's custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Capital
Fund, Inc. as of December 31, 1994, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
---------------------
DELOITTE & TOUCHE LLP
New York, New York
February 3, 1995
16
<PAGE>
================================================================================
Board of Directors
- --------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
Alice S. Ilchman 3, 4
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Partner, Sullivan & Cromwell, Attorneys
Betsy S. Michel 2, 4
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
Douglas R. Nichols, Jr. 2, 4
Management Consultant
James C. Pitney 3, 4
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group
James Q. Riordan 3, 4
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Herman J. Schmidt 2, 4
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
Ronald T. Schroeder 1
President
Managing Director, J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3, 4
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2, 4
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Brian T. Zino 1
Managing Director, J. & W. Seligman & Co. Incorporated
- -------------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
17
<PAGE>
================================================================================
Executive Officers
- --------------------------------------------------------------------------------
William C. Morris
Chairman
Ronald T. Schroeder
President
Loris D. Muzzatti
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
- --------------------------------------------------------------------------------
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
General Counsel
Sullivan & Cromwell
Independent Auditors
Deloitte & Touche LLP
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
Shareholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour Automated
Telephone Access
Service
18
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[Logo]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
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 Capital Fund, Inc., which contains information about the sales charges,
management fee, and other costs. Please read the prospectus carefully before
investing or sending money.
EQCA2 12/94
