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.
EQCA3b 6/96
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MID-YEAR REPORT
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SELIGMAN
CAPITAL
FUND, INC.
- --------------------------------------------------------------------------------
JUNE 30, 1996
[LOGO]
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A CAPITAL APPRECIATION FUND
ESTABLISHED IN 1969
<PAGE>
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TO THE SHAREHOLDERS
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Seligman Capital Fund had a rewarding second quarter and outpaced the Standard &
Poor's 500 Composite Stock Price Index (S&P 500). However, in mid-July, the
Fund, along with most equity investors, was affected by the fluctuations in the
equity markets and gave back some of its second quarter gains.
In the first half of 1996, the Federal Reserve Board's continuing efforts
to achieve a "soft landing" -- a healthy moderation of economic growth that does
not slip into recession -- appeared to have come to fruition. Economic data for
the second quarter of 1996 indicated continued growth in output, employment, and
incomes. More than half the early corporate earnings reports reflected the
positive effects of the strong economy, and earnings estimates rose to higher
levels. Inflation remained low and, more important, commodity price indices
declined from their recent eight-year highs, which suggested that future
inflationary pressures were in check. Overall, the economy seemed quite healthy
at the end of the second quarter.
While fundamentals remained strong, a mid-July sell-off in the equity
markets was triggered by disappointing earnings reports from several important
technology and health care companies. This led to an overall negative assessment
that other corporate profits would fall short of expectations and economic
growth would slow, causing future earnings disappointments. A broad decline in
equity prices ensued, which was aggravated by uncertainty over the future
direction of interest rates. This culminated on July 15, when the price of five
out of six companies on the New York Stock Exchange declined.
Although the speed of such an event can unnerve even the most seasoned
investor, it is the very nature of equity markets to fluctuate over short
periods of time. Periodic corrections in stock market prices are an integral
part of US financial history -- the last significant correction in the S&P 500
was triggered by the start of the Gulf War in 1990. While viewpoints differ over
the likely direction of financial markets and the economy over the next year, we
believe that the longer-term outlook for the US economy and the equity markets
remains sound.
We therefore must reiterate the importance of long-term investing. Since
the ups and downs of the market are unavoidable, it benefits you, our Share-
holders, to adopt a long-term investment plan whenever possible. Time is a
powerful investment tool that succeeds where market timing often fails. If you
invest over the long term, short-term market swings, while uncomfortable, have
less of an impact on your overall financial goals. As investors, you have
already taken steps to reduce your overall risk by purchasing shares of a mutual
fund, which provides portfolio diversification by investing in numerous issues
and industries.
With the help of your investment advisor, you can formulate a long-term
investment strategy that further reduces your risk, increases your
diversification, and allows you to benefit from the advantages of mutual fund
investments.
For specific performance information and a discussion with your Portfolio
Manager about the second quarter of 1996, please refer to page 2.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
July 31, 1996
1
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INTERVIEW WITH YOUR PORTFOLIO MANAGER
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LORIS D. MUZZATTI
HOW DID SELIGMAN CAPITAL FUND PERFORM IN THE PAST THREE MONTHS?
Seligman Capital Fund's second quarter was another strong period. As a result,
it outperformed the Standard & Poor's 500 Composite Stock Price Index.
WHAT ECONOMIC FACTORS INFLUENCED THE FUND IN THE PAST THREE MONTHS?
The strong economic and employment growth in the second quarter improved the
equity market's performance, as investors anticipated an increase in corporate
profits. Late in the quarter, however, concerns that the Federal Reserve Board
would raise interest rates to slow economic growth, and reduce potential
inflationary pressures, led to a sell-off in the equity markets. Within the
Fund, we selectively sold some of the smaller, aggressive growth issues to
reduce the Fund's volatility, and reallocated assets into alternative issues.
WHAT MARKET EVENTS HAD A POSITIVE EFFECT ON THE FUND IN THE QUARTER?
Overall, strong consumer spending has driven demand above expectations in both
telecommunications and consumer cyclicals. The passage of the Telecommunications
Deregulation Act has also opened new opportunities in the telecommunications
sector, particularly in the local and long distance markets. Additionally,
increased demand due to Internet access has fueled growth in telephone line
usage, provoking a need for higher capacity and bandwidths in homes. We
responded by increasing our weighing in the telecommunications sector. In
consumer cyclicals, both apparel and textile companies benefited from a pickup
in luxury product spending. As valuations were hitting the high end of their
historic range, we trimmed our positions in both areas, taking profits.
Elsewhere in the portfolio, recreation, and particularly gaming stocks, were
strong due to capacity expansions and good earnings results. Increased
acquisitions and consolidations in the industry have improved the value of the
gaming stocks in the Fund's portfolio, and here too, we have modestly increased
our positions.
WHAT MARKET EVENTS HAD A NEGATIVE EFFECT ON THE FUND IN THE QUARTER?
This quarter, we witnessed a dramatic capacity increase in the semiconductor and
hardware industries, which altered their supply and demand fundamentals,
provoked an oversupply, and eventually a sell-off. This, combined with weak
demand for PCs in Europe, reduced the profitability of many technology
companies. The sectors' problems, however, did not significantly affect the
Fund, as our technology holdings were not in semiconductors or related areas.
Elsewhere, the poor performance of HMOs and related stocks dragged the entire
medical sector's performance down in the second quarter. Higher medical loss
ratios and the lack of growth in medical premiums led to earnings shortfalls.
Strategically, we maintained our position in this area, weathering the storm in
expectation of premium improvements for HMOs in the second half of the year.
2
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WHAT IS YOUR OVERALL OUTLOOK FOR THE FUND?
We are positive for the rest of the year, as the sell-off in a number of stocks
at the end of the second quarter, and the beginning of the third quarter,
presents us with solid appreciation potential. For the largest industries in the
portfolio, which include computer software and telecommunications, the outlook
remains positive. Additionally, medical services, which had a poor second
quarter, are expected to recover in the third quarter. Overall, the Fund is well
positioned, attractively valued in terms of price/earnings and growth rates
versus the broader market, and should perform well. We will continue our
long-term strategy of focusing on individual stock selection, seeking strong
companies in rapid growth industries selling at attractive valuations.
3
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SELIGMAN CAPITAL FUND, INC.
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INVESTMENT RESULTS
TOTAL RETURNS*
FOR PERIODS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION THREE SIX ONE FIVE 10 INCEPTION
4/22/96 MONTHS MONTHS YEAR YEARS YEARS 5/3/93
--------- ------ ------ ------ ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge n/a 2.86% 9.90% 31.01% 15.75% 11.87% n/a
Without Sales Charge n/a 7.98 15.40 37.57 16.88 12.42 n/a
CLASS B
With 5% CDSL (0.44)% n/a n/a n/a n/a n/a n/a
Without CDSL 4.56 n/a n/a n/a n/a n/a n/a
CLASS D
With 1% CDSL n/a 6.78 13.99 35.56 n/a n/a n/a
Without CDSL n/a 7.78 14.99 36.56 n/a n/a 14.70%
S&P 500** 2.97++ 4.49 10.10 26.00 15.73 13.79 17.32+
</TABLE>
NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
-------------- ---------------- --------------------
<S> <C> <C> <C>
CLASS A $17.99 $16.66 $15.59
CLASS B 17.18 16.43+++ n/a
CLASS D 17.18 15.94 14.94
</TABLE>
CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1996
CAPITAL GAIN
------------------------------------
REALIZED UNREALIZEDo
-------------- --------------
CLASS A $1.628 $5.056
CLASS B 1.628 5.056
CLASS D 1.628 5.056
* Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures for
Class A shares are calculated without and with the effect of the initial
4.75% maximum sales charge. Class A share returns reflect the effect of the
0.25% Administration, Shareholder Services and Distribution Plan after
January 1, 1993, only. Returns for Class B shares are calculated without and
with the effect of the maximum 5% contingent deferred sales load ("CDSL"),
charged only on certain redemptions made within one year of the date of
purchase, declining to 1% in the sixth year and 0% thereafter. Returns for
Class D shares are calculated without and with the effect of the 1% CDSL,
charged only on redemptions made within one year of the date of purchase.
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment
results.
** The S&P 500 is an unmanaged index that assumes reinvestment of estimated
dividends, and does not reflect fees and expenses. Investors may not invest
directly in an index.
o Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1996.
+ From April 30, 1993.
++ From April 30, 1996.
+++ As of April 22, 1996.
4
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SELIGMAN CAPITAL FUND, INC.
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LARGEST PORTFOLIO CHANGES
DURING PAST THREE MONTHS
SHARES
--------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/96
- ------------ ----------- -----------
American Portable
Telecommunications ....... 150,000 150,000
Biogen ..................... 20,000 35,000
Excel Communications ....... 125,000 125,000
Express Scripts (Class A) .. 45,000 45,000
InControl .................. 100,000 100,000
Infoseek ................... 91,200 91,200
McLeod ..................... 120,000 120,000
Saks Holdings .............. 67,600 67,600
Sun International Hotels ... 24,000 75,000
360(degrees)Communications .. 100,000 100,000
HOLDINGS
REDUCTIONS DECREASE 6/30/96
- -------------- ----------- ------------
Arbor Software ............. 50,000 --
Guidant .................... 25,000 85,000
HFS ........................ 45,000 55,000
MRV Communications ......... 47,700 75,000+
Omnipoint .................. 51,500 --
PairGain Technologies ...... 21,400 --
Tellabs .................... 25,000 --
Travelers .................. 25,000 150,000++
U.S. Satellite
Broadcasting ............. 60,000 --
UST Inc. ................... 40,000 --
Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
+ Includes 40,900 shares received as a result of a 3-for-2 stock split.
++ Includes 50,000 shares received as a result of a 3-for-2 stock split.
MAJOR PORTFOLIO HOLDINGS
AT JUNE 30, 1996
SECURITY VALUE
- ----------- ----------
PepsiCo.................................. $7,782,500
Travelers................................ 6,843,750
WorldCom................................. 5,807,813
Home Depot............................... 5,400,000
Amgen.................................... 5,387,500
FIserv................................... 5,293,750
UCAR International....................... 5,203,125
Ceridian................................. 5,050,000
Harley-Davidson.......................... 4,935,000
Microsoft................................ 4,802,500
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN CLASS A
JUNE 30, 1986, TO JUNE 30, 1996
[The following table represents a graph in the printed piece.]
June 30 $9,525
1986 Initial Net Asset Value
1986 $9,524.63
1986 $8,442.16
1986 $8,602.71
1987 $10,406.34
1987 $10,815.50
1987 $11,313.32
1987 $8,379.92
1988 $8,486.38
1988 $8,988.26
1988 $8,592.84
1988 $8,587.30
1989 $9,280.23
1989 $9,973.15
1989 $11,614.72
1989 $11,372.68
1990 $11,005.22
1990 $12,713.88
1990 $9,838.56
1990 $11,529.73
1991 $13,965.33
1991 $14,076.46
1991 $15,743.41
1991 $17,833.50
1992 $17,598.00
1992 $16,795.17
1992 $17,844.20
1992 $19,895.51
1993 $20,082.32
1993 $19,872.16
1993 $21,144.82
1993 $20,851.04
1994 $20,210.47
1994 $17,870.45
1994 $19,426.11
1994 $19,379.05
1995 $20,467.93
1995 $22,321.96
1995 $24,234.85
1995 $26,611.01
1996 $28,437.42
1996 $30,707.63
$30,708
Total Value at June 30, 1996
The performance of Class B and Class D shares will be greater or less than the
performance shown for Class A shares, based on the differences in sales charges
and fees paid by shareholders and the length of the holding period.
MAJOR SECTORS
AT JUNE 30, 1996
[The following table represents a pie chart in the printed piece.]
Drugs and Health Care 16.8%
Software 12.5%
Financial Services 9.9%
Telecommunications 9.9%
Leisure and Related 8.4%
Consumer Goods and Services 7.6%
Retail Trade 6.4%
Computer Goods and Services 6.3%
Other 22.2%
5
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PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCKS 92.8%
AUTOMOTIVE AND RELATED 2.5%
Cooper Tire & Rubber.......... 75,000 $ 1,668,750
Harley-Davidson............... 120,000 4,935,000
-----------
6,603,750
-----------
BASIC MATERIALS 4.1%
Minerals Technologies......... 75,000 2,568,750
Nucor......................... 70,000 3,543,750
Olin.......................... 25,000 2,231,250
Schulman, A................... 93,750 2,285,156
-----------
10,628,906
-----------
BUSINESS SERVICES AND
SUPPLIES 3.3%
HFS*.......................... 55,000 3,850,000
Interpublic Group of Companies 100,000 4,687,500
-----------
8,537,500
-----------
COMPUTER GOODS AND
SERVICES 6.2%
Ceridian*..................... 100,000 5,050,000
Compaq Computer*.............. 45,000 2,216,250
FIserv*....................... 175,000 5,293,750
Intel......................... 50,000 3,671,875
-----------
16,231,875
-----------
CONSUMER GOODS AND
SERVICES 7.4%
Block (H. & R.)............... 50,000 1,631,250
Estee Lauder*................. 65,000 2,746,250
Gucci Group*.................. 29,250 1,886,625
Newell........................ 150,000 4,593,750
Oakley*....................... 100,000 4,550,000
Tommy Hilfiger................ 75,000 4,021,875
-----------
19,429,750
-----------
DRUGS AND HEALTH
CARE 16.5%
AmeriSource Health (Class A)*. 75,000 2,493,750
Amgen*........................ 100,000 5,387,500
Arterial Vascular Engineer*... 25,000 900,000
Biogen*....................... 35,000 1,914,062
Columbia / HCA Healthcare..... 75,000 4,003,125
Express Scripts (Class A)*.... 45,000 2,064,375
Guidant....................... 85,000 4,186,250
Humana*....................... 100,000 1,787,500
IDEC Pharmaceuticals*......... 33,500 774,688
InControl*.................... 100,000 1,150,000
Mid Atlantic Medical Services* 125,000 1,781,250
Optical Sensors*.............. 75,000 787,500
Oxford Health Plans*.......... 80,000 3,285,000
Pfizer........................ 50,000 3,568,750
Physio-Control International*. 145,000 2,546,562
St. Jude Medical.............. 80,000 2,670,000
United Healthcare............. 75,000 3,787,500
-----------
43,087,812
-----------
FINANCIAL SERVICES 9.7%
Allmerica Financial........... 62,500 1,859,375
Amerin*....................... 165,000 4,393,125
Donaldson Lufkin & Jenrette
Securities.................. 125,000 3,875,000
Greenpoint Financial.......... 83,500 2,358,875
MBNA.......................... 127,500 3,633,750
Progressive (Ohio)............ 50,000 2,312,500
Travelers..................... 150,000 6,843,750
-----------
25,276,375
-----------
FOOD AND FOOD
SERVICES 3.0%
PepsiCo....................... 220,000 7,782,500
-----------
INDUSTRIAL GOODS AND
SERVICES 2.0%
UCAR International*........... 125,000 5,203,125
-----------
LEISURE AND RELATED 8.2%
British Sky Broadcasting (ADRs)* 60,000 2,437,500
Circus Circus Enterprises*.... 75,000 3,075,000
Infinity Broadcasting*........ 150,000 4,500,000
Mirage Resorts*............... 70,000 3,780,000
Sun International Hotels*..... 75,000 3,637,500
Viacom (Class B).............. 105,000 4,081,875
-----------
21,511,875
-----------
PACKAGING 0.5%
Ball.......................... 50,000 1,437,500
-----------
RETAIL TRADE 6.3%
Designer Holdings*............ 50,150 1,335,244
Home Depot.................... 100,000 5,400,000
Nordstrom..................... 55,000 2,440,625
Office Depot*................. 125,000 2,546,875
OfficeMax*.................... 100,000 2,387,500
Saks Holdings*................ 67,600 2,306,850
-----------
16,417,094
-----------
6
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June 30, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
SOFTWARE 12.2%
Activision*................... 101,000 $ 1,319,312
Checkfree*.................... 85,400 1,702,663
Comshare*..................... 150,000 4,612,500
DST Systems*.................. 80,000 2,560,000
Informix*..................... 95,000 2,131,562
Infoseek*..................... 91,200 894,900
International Game Technology. 175,000 2,953,125
Microsoft*.................... 40,000 4,802,500
Objective Systems Integrators* 50,000 1,825,000
Parametric Tehnology*......... 70,000 3,031,875
Sterling Software*............ 50,000 3,850,000
Sybase*....................... 100,000 2,368,750
-----------
32,052,187
-----------
TELECOMMUNICATIONS 9.7%
American Portable
Telecommunications*......... 150,000 1,575,000
Century Telephone Enterprises. 100,000 3,187,500
Excel Communications*......... 125,000 3,375,000
Harmonics Lightwaves*......... 30,000 678,750
McLeod*....................... 120,000 2,910,000
MRV Communications............ 75,000 3,159,375
TCSI*......................... 90,000 2,160,000
360(degree)Communications*.... 100,000 2,400,000
WorldCom*..................... 105,000 5,807,813
-----------
25,253,438
-----------
MISCELLANEOUS 1.2%
World Color Press*............ 126,500 3,209,938
-----------
OTHER ........................ 68,726
-----------
TOTAL COMMON STOCKS
(Cost $169,025,057)......... 242,732,351
-----------
PRNCIPAL
AMOUNT
----------
SHORT-TERM HOLDINGS 5.2%
Bank of Montreal, Grand Cayman,
Fixed Time Deposit,
5 3/8%, 7/1/1996............$6,600,000 6,600,000
Canadian Imperial Bank of
Commerce, Grand Cayman,
Fixed Time Deposit,
5 1/2%, 7/1/1996............. 7,000,000 7,000,000
------------
TOTAL SHORT-TERM HOLDINGS
(Cost $13,600,000)................... 13,600,000
------------
TOTAL INVESTMENTS 98.0%
(Cost $182,625,057).................. 256,332,351
OTHER ASSETS LESS
LIABILITIES 2.0% .................. 5,143,688
------------
NET ASSETS 100.0% .................... $261,476,039
------------
- -----------------
*Non-income producing security.
See notes to financial statements.
7
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<TABLE>
<CAPTION>
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STATEMENT OF ASSETS AND LIABILITIES June 30, 1996
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<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $169,025,057)....................................... $ 242,732,351
Short-term holdings (cost $13,600,000).................................. 13,600,000 $256,332,351
--------------
Cash....................................................................... 580,945
Receivable for securities sold............................................. 5,383,042
Receivable for Capital Stock sold.......................................... 762,503
Receivable for dividends and interest...................................... 58,148
Investment in, and expenses prepaid to, shareholder service agent.......... 38,833
Other...................................................................... 77,708
------------
Total Assets .............................................................. 263,233,530
------------
LIABILITIES:
Payable for securities purchased........................................... 1,190,462
Payable for Capital Stock repurchased...................................... 159,073
Accrued expenses, taxes, and other......................................... 407,956
------------
Total Liabilities ......................................................... 1,757,491
------------
NET ASSETS ................................................................ $261,476,039
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized; 14,577,065
shares outstanding):
Class A.................................................................. $ 13,614,849
Class B.................................................................. 67,552
Class D.................................................................. 894,664
Additional paid-in capital................................................. 143,504,997
Accumulated net investment loss............................................ (597,758)
Undistributed net realized gain............................................ 30,284,441
Net unrealized appreciation of investments................................. 73,707,294
------------
NET ASSETS ................................................................ $261,476,039
============
NET ASSET VALUE PER SHARE:
CLASS A ($244,947,103 / 13,614,849 SHARES) ................................ $17.99
======
CLASS B ($1,160,414 / 67,552 SHARES) ..................................... $17.18
======
CLASS D ($15,368,522 / 894,664 SHARES) .................................... $17.18
======
- -----------------
See notes to financial statements.
</TABLE>
8
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<TABLE>
<CAPTION>
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STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $2,544)........................ $ 606,481
Interest................................................................... 135,446
Other income............................................................... 28,733
-----------
Total investment income.................................................... $ 770,660
EXPENSES:
Management fee............................................................. 596,097
Distribution and service fees.............................................. 325,245
Shareholder account services............................................... 227,841
Auditing and legal fees.................................................... 33,341
Registration............................................................... 21,799
Shareholder reports and communications..................................... 21,714
Shareholders' meeting...................................................... 16,140
Custody and related services............................................... 15,000
Directors' fees and expenses............................................... 14,306
Miscellaneous.............................................................. 6,969
-----------
Total expenses............................................................. 1,278,452
-----------
NET INVESTMENT LOSS ....................................................... (507,792)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments........................................... 23,738,302
Net change in unrealized appreciation of investments....................... 10,322,156
-----------
NET GAIN ON INVESTMENTS ................................................... 34,060,458
-----------
INCREASE IN NET ASSETS FROM OPERATIONS .................................... $33,552,666
===========
- -----------------
See notes to financial statements.
</TABLE>
9
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<TABLE>
<CAPTION>
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STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
6/30/96 12/31/95
---------------- ----------
<S> <C> <C>
OPERATIONS:
Net investment loss.......................................................... $ (507,792) $ (254,453)
Net realized gain on investments............................................. 23,738,302 35,184,301
Net change in unrealized appreciation of investments......................... 10,322,156 24,927,528
------------ ------------
Increase in net assets from operations....................................... 33,552,666 59,857,376
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A.................................................................... -- (27,349,482)
Class D.................................................................... -- (1,044,584)
------------ ------------
Decrease in net assets from distributions.................................... -- (28,394,066)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------
SIX MONTHS ENDED YEAR ENDED
CAPITAL SHARE TRANSACTIONS:* 6/30/96 12/31/95
---------------- ----------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A................................ 1,007,353 733,030 17,542,809 10,961,004
Class B................................ 66,699 -- 1,168,963 --
Class D................................ 274,886 290,741 4,442,306 4,369,424
Exchanged from associated Funds:
Class A................................ 1,505,808 1,028,684 25,225,888 15,769,810
Class B................................ 853 -- 15,048 --
Class D................................ 235,750 132,768 3,755,438 1,987,004
Shares issued in payment of gain
distributions:
Class A................................ -- 1,729,508 -- 24,834,625
Class D................................ -- 62,511 -- 860,777
----------- ----------- ------------ ------------
Total.................................... 3,091,349 3,977,242 52,150,452 58,782,644
----------- ----------- ------------ ------------
Cost of shares repurchased:
Class A................................ (990,454) (1,250,270) (16,949,359) (18,467,977)
Class D................................ (102,250) (62,080) (1,590,430) (883,945)
Exchanged into associated Funds:
Class A................................ (1,746,430) (743,367) (28,599,337) (10,921,916)
Class D................................ (125,474) (60,208) (1,913,616) (881,945)
----------- ----------- ------------ ------------
Total.................................... (2,964,608) (2,115,925) (49,052,742) (31,155,783)
----------- ----------- ------------ ------------
Increase in net assets
from capital share transactions....... 126,741 1,861,317 3,097,710 27,626,861
=========== =========== ------------ ------------
Increase in net assets....................................................... 36,650,376 59,090,171
NET ASSETS:
Beginning of period.......................................................... 224,825,663 165,735,492
------------ ------------
End of period (including accumulated net investment loss of
$597,758 and $89,966, respectively)....................................... $261,476,039 $224,825,663
============ ============
- -----------------
* The Fund began offering Class B shares on April 22, 1996.
See notes to financial statements.
</TABLE>
10
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NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Capital Fund, Inc. (the "Fund") offers three classes of shares. All
shares existing prior to May 3, 1993, the commencement of Class D shares, were
classified as Class A shares. The Fund began offering Class B shares on April
22, 1996. 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 B 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
contingent deferred sales load ("CDSL"), if applicable, of 5% on redemptions in
the first year after purchase, declining to 1% in the sixth year and 0%
thereafter. Class B shares will automatically convert to Class A shares on the
last day of the month that precedes the eighth anniversary of their date of
purchase. Class D shares are sold without an initial sales charge but are
subject to a distribution fee of up to 0.75% and a service fee of up to 0.25% on
an annual basis, and a CDSL of 1% imposed on certain redemptions made within one
year of purchase. The three 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 value of shares of each class. Class-specific expenses,
which include distribution and service fees and any other items that are
specifically attributed to a particular class, are charged directly to such
class. For the six months ended June 30, 1996, distribution and service fees
were the only class-specific expenses.
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 reclassifications
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 US Government
obligations and short-term investments, for the six months ended June 30, 1996,
amounted to $96,564,567 and $102,686,781, respectively.
At June 30, 1996, 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 $81,999,111 and $8,291,817, 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.
11
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
The management fee rate is calculated on a sliding scale of 0.55% to 0.45%,
based on average daily net assets of all the investment companies managed by the
Manager. The management fee for the six months ended June 30, 1996, was
equivalent to an annual rate of 0.50% 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
concessions of $19,137 from sales of Class A shares, after commissions of
$146,393 paid to dealers.
The Fund has 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 six months ended June 30, 1996, fees paid aggregated $265,645,
or 0.23% per annum of the average daily net assets of Class A shares.
The Fund has a Plan with respect to Class B and 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 B and Class D shares for which the organizations are
responsible; and fees, for Class D shares only, for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of up to 0.75% on an
annual basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provided funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the six months ended June 30, 1996, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $632 and $58,968, respectively.
The Distributor is entitled to retain any CDSL imposed on certain redemptions
of Class D shares occurring within one year of purchase. For the six months
ended June 30, 1996, such charges amounted to $8,692.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B shares distribution fees retained by the Distributor for the six
months ended June 30, 1996, amounted to $2,930.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the six months ended June 30, 1996,
Seligman Services, Inc. received commissions of $9,710 from sales of shares of
the Fund. Seligman Services, Inc. also received distribution and service fees of
$35,077, pursuant to the Plan.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $222,841 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 $10,000 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 cost of such fees and interest is included in directors' fees and
expenses, and the accumulated balance thereof at June 30, 1996, of $94,784 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.
12
<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 amounts.
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.
Average commission rate paid represents the average commissions paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid. This rate is provided for periods
beginning January 1, 1996.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
-------------------------------------------------------- -------- ----------------------------------
SIX SIX YEAR ENDED
MONTHS YEAR ENDED DECEMBER 31, 4/22/96* MONTHS DECEMBER 31 5/3/93*
ENDED --------------------------------------------- TO ENDED ------------- TO
6/30/96o 1995o 1994o 1993 1992 1991 6/30/96o 6/30/96o 1995o 1994o 12/31/93
------- ---- ---- ---- ---- ---- ------- ------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period..... $15.59 $13.17 $15.95 $17.04 $16.66 $12.45 $16.43 $14.94 $12.82 $15.86 $16.43
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment
income (loss)............ (.04) (.02) (.06) (.03) .02 .03 (.02) (.09) (.14) (.33) (.08)
Net realized and
unrealized investment
gain (loss).............. 2.44 4.74 (1.12) .84 1.89 6.66 .77 2.33 4.56 (1.11) 1.41
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Increase (decrease) from
investment operations.... 2.40 4.72 (1.18) .81 1.91 6.69 .75 2.24 4.42 (1.44) 1.33
Distributions from net
gain realized............ -- (2.30) (1.60) (1.90) (1.53) (2.48) -- -- (2.30) (1.60) (1.90)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in net asset value....... 2.40 2.42 (2.78) (1.09) .38 4.21 .75 2.24 2.12 (3.04) (.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period............ $17.99 $15.59 $13.17 $15.95 $17.04 $16.66 $17.18 $17.18 $14.94 $12.82 $15.86
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED
ON NET ASSET VALUE: 15.40% 37.32% (7.06)% 4.80% 11.56% 54.67% 4.56% 14.99% 35.98% (8.75)% 8.12%
RATIOS/
SUPPLEMENTAL DATA:
Expenses to average
net assets............... 1.02%+ 1.09% 1.13% 1.13% .96% 1.01% 1.74%+ 1.79%+ 2.02% 2.66% 2.26%+
Net investment income
(loss) to average
net assets............... (.38)%+ (.11)% (.39)% (.17)% .11% .25% (1.13)%+ (1.15)%+ (1.06)% (2.28)% (1.32)%+
Portfolio turnover.......... 40.68% 103.60% 70.72% 46.84% 42.32% 42.20% 40.68%+++ 40.68% 103.60% 70.72% 46.84%++
Average commission
rate paid................ $.0546 $.0546+++ $.0546
Net assets,
end of period
(000's omitted)..........$244,947 $215,688 $162,556 $196,212 $198,063 $172,676 $1,160 $15,369 $9,137 $3,179 $2,749
- -------------------------
* Commencement of offering of shares.
o Per share amounts for the periods ended June 30, 1996, and for the years
ended December 31, 1995, and 1994, are calculated based on average shares
outstanding.
+ Annualized.
++ For the year ended December 31, 1993.
+++ For the six months ended June 30, 1996.
See notes to financial statements.
</TABLE>
13
<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 June 30,
1996, the related statements of operations for the six months then ended and of
changes in net assets for the six months then ended and for the year ended
December 31, 1995, 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 June
30, 1996 by correspondence with the Fund's custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Capital
Fund, Inc. as of June 30, 1996, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
July 31, 1996
- --------------------------------------------------------------------------------
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
14
<PAGE>
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co. Incorporated
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law
and Diplomacy at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN 3, 4
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic Development
DIRECTOR, NYNEX
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
CHAIRMAN AND CEO, Kerr-McGee Corporation
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
PARTNER, Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum Corporation
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, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
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
RONALD T. SCHROEDER 1
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
ROBERT L. SHAFER 3, 4
DIRECTOR OR TRUSTEE,
Various Organizations
JAMES N. WHITSON 2, 4
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
PRESIDENT
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
- ---------------------
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
LORIS D. MUZZATTI
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
15
