------------------
27th annual Report
------------------
Seligman
Capital
Fund, Inc.
------------------
December 31, 1995
Seligman Financial Services, Inc.
an affiliate of
[Logo]
[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 A Capital Appreciation Fund
Seligman Capital Fund, Inc., which
contains information about the sales Established in 1969
charges, management fee, and other costs.
Please read the prospectus carefully
before investing or sending money.
EQCA2 12/95
<PAGE>
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SELIGMAN CAPITAL FUND
- --------------------------------------------------------------------------------
A mutual fund that invests primarily in common stocks believed to provide
capital appreciation opportunities. Current income is not an objective.
HIGHLIGHTS OF 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------- ----------------------
CLASS A CLASS D CLASS A CLASS D
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets (in thousands)............................ $215,688 $9,137 $162,556 $3,179
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share............................ $15.59 $14.94 $13.17 $12.82
With December 1995 Gain Distribution
Taken in Shares.................................. 18.08 17.43 -- --
Increase in Net Asset Value with Gain
Distribution Taken in Shares..................... 37.32% 35.98% -- --
- ----------------------------------------------------------------------------------------------------------------------
Distribution of Realized Gain per Share.............. $2.298 $2.298 $1.60 $1.60
- ----------------------------------------------------------------------------------------------------------------------
Total Expenses per Dollar of Average Net Assets...... $0.0109 $0.0202 $0.0113 $0.0266
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
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TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Your Fund performed favorably during the past year, though its performance
modestly trailed the Standard & Poor's 500 Composite Stock Price Index (S&P
500). The S&P 500's total return was driven by better-than-average advances by
the companies with the largest market capitalizations, and therfore heaviest
weightings, in the Index. As a result, the S&P 500 outperformed more than 87% of
US equity funds. Long-term performance results and an interview with your
Portfolio Manager begin on page 3.
For Class A and D shares, net realized gain per share from investment
transactions for the 12 months totaled $2.43. Net unrealized gain per share
totaled $4.39 at December 31. A realized gain distribution of $2.298 was paid on
November 22, to shareholders of record November 16.
The US equity markets had a banner year. After a pessimistic start, many
factors including low inflation, falling interest rates, and strong corporate
earnings paved the way for a memorable year.
Overall, the market indices tell the best story. The S&P 500, which had its
second best gain since 1957, was up 34.11%, and other indices such as the New
York Stock Exchange Composite and the Wilshire 5000 were up 30% or more for the
year. The leading market indices have only twice, since the end of World War II,
risen more than 1995's powerful advance.
The equity markets did, however, teeter towards the end of the year due to
the Federal budget stalemate between the White House and Congress, which brought
on fears of higher inflation and interest rates. Nevertheless, the deadlock in
Washington did not deter the Federal Reserve Board from lowering short-term
interest rates on December 19 -- a move that quickly rejuvenated the equity
markets.
Looking forward, the slowing economy, the budget negotiations, and the 1996
Presidential election are a few of the factors that may create somewhat more
volatile markets in the year ahead.
We remain optimistic about your Fund's performance and will continue to
search for, and invest in, those companies that can sustain earnings growth in a
challenging and competitive global business environment -- a strategy we believe
is key to investment performance.
A Special Meeting of Shareholders was held on December 12, at which several
proposals were voted on. The results of the Special Meeting appear on page 18.
We thank you for your continued investment in Seligman Capital Fund, and
look forward to serving your investment needs in 1996 and the years ahead.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
February 2, 1996
2
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SELIGMAN CAPITAL FUND
- --------------------------------------------------------------------------------
ANNUAL PERFORMANCE OVERVIEW
The following is a biography of your Portfolio Manager, a discussion with him
regarding Seligman Capital Fund, and a comparison chart and table 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 &
Co. Incorporated and has been Vice President and Portfolio
Manager of Seligman Capital Fund for the past seven years. Mr.
Muzzatti, who joined Seligman in 1985, also manages Seligman
[photo] Growth Fund, the Capital portfolio of Seligman Portfolios,
Inc., the US portion of Seligman Henderson Global Growth
Opportunities Fund, and a portion of the firm's institutional
accounts. Mr. Muzzatti is assisted by a team of seasoned
research professionals who are responsible for identifying
companies that offer the greatest capital appreciation
potential consistent with Seligman Capital Fund's objective.
Your Manager's Investment Strategy
"OVERWEIGHTING THE TECHNOLOGY SECTOR OF YOUR FUND IN THE FIRST HALF OF 1995,
WHEN THE END-MARKETS IN TELECOMMUNICATIONS AND COMPUTER-RELATED PRODUCTS WERE
STRONG, CONTRIBUTED POSITIVELY TO PERFORMANCE. CONVERSELY, OUR UNDERWEIGHTING OF
THE UTILITIES SECTOR, WHICH BENEFITED FROM THE DECLINE IN INTEREST RATES,
NEGATIVELY AFFECTED YOUR FUND'S PERFORMANCE."
Economic Factors Affecting Seligman Capital Fund
"STRONG GROWTH IN CORPORATE PROFITS, WITH MODEST INFLATION AND LOWER INTEREST
RATES, PROVIDED A BENEFICIAL ECONOMIC ENVIRONMENT FOR THE STRONG US EQUITY
MARKETS IN 1995. THESE FAVORABLE ECONOMIC FACTORS HELPED YOUR FUND'S TECHNOLOGY
AND INTEREST-SENSITIVE ISSUES POST SIGNIFICANT GAINS DURING THE YEAR. ON THE
OTHER HAND, POOR RETAIL SALES, INCLUDING A DOWNHEARTED HOLIDAY PERIOD, MADE IT
VERY DIFFICULT FOR RETAILERS AND INDUSTRIES ASSOCIATED WITH THIS SECTOR."
Individual Sector Performance
"THE FINANCIAL SECTOR WAS THE STRONGEST PERFORMING SECTOR, BENEFITING FROM BOTH
A FAVORABLE ECONOMIC ENVIRONMENT AND STRONG INDIVIDUAL COMPANY PERFORMANCE. THE
BASIC MATERIALS SECTOR, HOWEVER, WAS THE WEAKEST SECTOR, DUE MAINLY TO DECLINING
STEEL PRICES AND GENERALLY POOR EARNINGS RESULTS."
Outlook for the Year Ahead
"LOOKING AHEAD, YOUR FUND IS WELL POSITIONED TO TAKE ADVANTAGE OF CONTINUED
STRENGTH IN THE US EQUITY MARKETS. OUR WELL-DIVERSIFIED PORTFOLIO OF STRONG,
PROFITABLE COMPANIES SHOULD PROVIDE GOOD RELATIVE EARNINGS GAINS IN AN
ENVIRONMENT WHERE THE S&P 500 EARNINGS GROWTH IS EXPECTED TO SLOW."
3
<PAGE>
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PERFORMANCE COMPARISON CHART AND TABLE December 31, 1995
- --------------------------------------------------------------------------------
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, 1995, 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.
<TABLE>
<CAPTION>
Seligman Capital Fund Seligman Capital Fund
--Class A --Class A Lipper
With Sales Charge Without Sales Charge S&P 500 Index Capital
--------------------- --------------------- ------------- --------
<S> <C> <C> <C> <C> <C>
12/31/85 9524.52 10000 10000 10000.00
3/31/86 11534.2 12110.01 11410.50 11609.00
6/30/86 12423.18 13043.36 12083.03 12425.11
9/30/86 11011.28 11560.98 11240.12 11141.60
12/31/86 11220.69 11780.84 11866.53 11460.25
3/31/87 13573.19 14250.78 14400.28 13987.23
6/30/87 14106.87 14811.1 15123.17 14211.03
9/30/87 14756.17 15492.82 16120.85 14935.79
12/31/87 10930.08 11475.72 12489.63 11557.32
3/31/88 11068.93 11621.51 13200.78 12565.11
6/30/88 11723.55 12308.8 14079.96 13247.40
9/30/88 11207.79 11767.3 14127.69 13076.51
12/31/88 11200.57 11759.72 14563.81 13186.35
3/31/89 12104.36 12708.63 15596.38 14206.97
6/30/89 13008.15 13657.54 16973.08 15374.79
9/30/89 15149.28 15905.56 18790.72 16966.08
12/31/89 14833.58 15574.1 19178.56 16691.23
3/31/90 14354.3 15070.9 18601.67 16292.31
6/30/90 16582.94 17410.79 19771.90 17300.80
9/30/90 12832.6 13473.23 17054.65 14351.01
12/31/90 15038.44 15789.19 18583.43 15315.40
3/31/91 18215.24 19124.58 21282.86 18190.10
6/30/91 18360.19 19276.76 21234.12 17935.44
9/30/91 20534.42 21559.54 22369.72 19510.17
12/31/91 23260.56 24421.76 24245.20 21334.37
3/31/92 22953.4 24099.26 23632.77 21443.18
6/30/92 21906.25 22999.85 24082.26 20654.07
9/30/92 23274.52 24436.42 24841.58 21112.59
12/31/92 25950.1 27245.56 26092.60 23348.41
3/31/93 26193.76 27501.39 27232.06 24223.98
6/30/93 25919.64 27213.58 27364.68 24897.41
9/30/93 27579.59 28956.4 28072.06 26635.25
12/31/93 27196.39 28554.07 28722.49 27239.87
3/31/94 26360.89 27676.86 27633.33 26340.95
6/30/94 23308.76 24472.36 27749.67 25208.29
9/30/94 25337.83 26602.73 29106.35 26897.24
12/31/94 25276.46 26538.29 29101.69 26439.99
3/31/95 26696.7 28029.43 31935.32 28198.25
6/30/95 29114.95 30568.4 34983.87 30784.03
9/30/95 31609.97 33187.97 37764.04 33751.61
12/31/95 34709.23 36441.95 40037.43 34477.27
</TABLE>
The table below shows the average annual total returns for the one-, five-, and
10 -year periods through December 31, 1995, 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,
1995, 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 10
YEAR YEARS YEARS
------ ------ -------
Seligman Capital Fund
Class A with sales charge 30.77% 17.07% 13.25%
Class A without sales charge 37.32 18.21 13.80
S&P 500 37.58 16.59 14.86
Lipper Capital 30.40 17.62 13.18
*From 4/30/93.
SINCE
ONE INCEPTION
YEAR 5/3/93
------ -----------
Seligman Capital Fund
Class D with CDSL 34.98% n/a
Class D without CDSL 35.98 11.67%
S&P 500 37.58 16.62*
Lipper Capital 30.40 14.71*
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.
4
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SELIGMAN CAPITAL FUND
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FEDERAL TAX STATUS OF 1995
GAIN DISTRIBUTION FOR
TAXABLE ACCOUNTS
A distribution of $2.298 per share, consisting of $2.006 from net long-term and
$0.292 from net short-term gain realized on investments in 1995, was paid on
November 22, 1995, to both Class A and D shareholders. The distribution from net
long-term gain is designated as a "capital gain dividend" for federal income tax
purposes and is taxable to shareholders in 1995 as a long-term gain from the
sale of capital assets, no matter how long your shares have been owned or
whether the distribution was paid in additional shares or 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 the
date of purchase, any loss would be treated as long-term to the extent it
offsets the long-term gain distribution. Net short-term gain is taxable as
ordinary income whether paid to you in cash or shares.
If the distribution was paid in shares, the per share cost basis for federal
income tax purposes is $14.36 for Class A shares and $13.77 for Class D shares.
A year-end statement of account showing activity for 1995 and a combined
Form 1099-DIV-B have been mailed to each shareholder. The Form 1099-B shows the
proceeds of any redemptions paid to shareholders during the year and reported to
the Internal Revenue Service as required by federal regulations. Form 1099-DIV
shows the amount of the distribution from gain on investments paid during the
year.
5
<PAGE>
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SELIGMAN CAPITAL FUND
- --------------------------------------------------------------------------------
DIVERSIFICATION OF ASSETS December 31, 1995
<TABLE>
<CAPTION>
PERCENT
PERCENT OF
OF NET NET ASSETS
ISSUES COST VALUE ASSETS DEC. 31, 1994
------ ------------ ------------- ------- --------------
<S> <C> <C> <C> <C> <C>
NET CASH AND SHORT-TERM HOLDINGS .......... 2 $ 10,031,556 $ 10,031,556 4.5 6.7
-- ------------ ------------- ----- -----
COMMON STOCKS
Automotive and related...................... 2 5,642,287 6,015,625 2.7 2.5
Basic materials............................. 4 8,898,366 10,691,719 4.8 4.5
Business services and supplies.............. 4 5,551,730 13,595,624 6.0 6.6
Computer goods and services................. 5 8,421,934 16,002,188 7.1 11.5
Consumer goods and services................. 10 14,502,518 21,081,644 9.4 11.4
Drugs and health care....................... 13 31,671,307 42,205,000 18.8 10.4
Financial services.......................... 8 19,441,187 25,946,863 11.5 3.6
Food and food services...................... 2 4,212,938 6,787,500 3.0 2.4
Industrial goods and services............... 2 4,201,094 5,587,500 2.5 2.9
Leisure and related......................... 6 14,105,997 16,350,625 7.3 5.0
Packaging................................... 1 1,645,997 1,375,000 0.6 --
Retail trade................................ 6 9,214,147 14,415,000 6.4 11.5
Software.................................... 11 18,915,691 27,782,874 12.3 10.4
Telecommunications.......................... 2 4,983,776 6,889,375 3.1 10.6
Other....................................... 1 -- 67,570 -- --
-- ------------ ------------ ----- -----
77 151,408,969 214,794,107 95.5 93.3
-- ------------ ------------ ----- -----
NET ASSETS ................................. 79 $161,440,525 $224,825,663 100.0 100.0
== ============ ============ ===== =====
</TABLE>
6
<PAGE>
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SELIGMAN CAPITAL FUND
- --------------------------------------------------------------------------------
SELIGMAN CAPITAL FUND
LARGEST PORTFOLIO CHANGES*
DURING PAST THREE MONTHS
SHARES
--------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/95
- ------------ ----------- -----------
Amerin 165,000 165,000
Compaq Computers 45,000 45,000
Donaldson, Lufkin & Jenrette 125,000 125,000
Guidant 110,000 110,000
Humana 100,000 100,000
MBNA 85,000 85,000
Mid Atlantic Medical Services 125,000 125,000
Oakley 79,650 119,900
OfficeMax 100,000 100,000
Sterling Software 50,000 50,000
HOLDINGS
REDUCTIONS DECREASE 12/31/95
- -------------- ----------- ------------
AVX 100,500 --
CBS 50,000 --
Crown Cork & Seal 70,000 --
DSC Communications 90,000 --
Eaton 65,000 --
HFS Group 50,000 75,000
Intel 50,000 50,000
MEMC Electronic Materials 81,600 --
Motorola 80,000 --
Symantec 150,000 --
* Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
MAJOR PORTFOLIO HOLDINGS
AT DECEMBER 31, 1995
SECURITY VALUE
- ----------- ----------
Travelers................................ $7,859,375
PepsiCo.................................. 6,146,250
HFS Group................................ 6,131,250
Amgen.................................... 5,931,250
FIserv................................... 5,239,063
Interpublic Group of Companies........... 5,205,000
United Healthcare........................ 4,912,500
Home Depot............................... 4,787,500
Guidant.................................. 4,647,500
Amerin................................... 4,403,438
7
<PAGE>
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PORTFOLIO OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
SHARES VALUE
-------- ---------
COMMON STOCKS 95.5%
AUTOMOTIVE AND RELATED 2.7%
Cooper Tire & Rubber
Automobile and truck tires,
rubber products............ 75,000 $ 1,846,875
Harley-Davidson
Motorcycle manufacturer.... 145,000 4,168,750
-----------
6,015,625
-----------
BASIC MATERIALS 4.8%
Minerals Technologies
Marketer of specialty
minerals and products...... 75,000 2,737,500
Nucor
Manufacturer of steel joints,
angles, and rounds......... 70,000 3,998,750
Olin
Chemicals, metals, and defense
products................... 25,000 1,857,813
Schulman, A.
Manufacturer of plastics... 93,750 2,097,656
-----------
10,691,719
-----------
BUSINESS SERVICES AND SUPPLIES 6.0%
CKS Group
Wide range of integrated marketing
communication services..... 15,500 602,562
HFS Group*
Franchiser of hotels and residential
real estate brokerage...... 75,000 6,131,250
Interpublic Group of Companies
Worldwide advertising agency 120,000 5,205,000
Meta Group
Consulting company......... 54,100 1,656,812
-----------
13,595,624
-----------
COMPUTER GOODS AND SERVICES 7.1%
Ceridian*
Computer services.......... 100,000 4,125,000
Compaq Computers
A leading global PC
manufacturer............... 45,000 2,160,000
FIserv*
Data processing services... 175,000 5,239,063
Intel
Semiconductor/memory circuits 50,000 2,840,625
LSI Logic*
Manufacturer of complex logic
circuits................... 50,000 1,637,500
-----------
16,002,188
-----------
CONSUMER GOODS AND SERVICES 9.4%
Block (H.&R.)
Tax, computer, and personal
services................... 50,000 2,025,000
CUC International*
Member-based consumer
goods...................... 30,000 1,023,750
Department 56*
Designer, importer, and
distributor of fine quality
collectibles............... 17,000 652,375
Estee Lauder*
Cosmetics and toiletries... 50,000 1,743,750
Gucci Group*
Manufacturer and marketer of
apparel.................... 29,250 1,137,094
Newell
Home furnishings........... 150,000 3,881,250
Oakley
Manufacturer of sunglasses. 119,900 4,076,600
Tambrands
Manufacturer of feminine
hygiene products........... 20,300 969,325
Tommy Hilfiger
Designer and distributor of
men's apparel.............. 100,000 4,237,500
UST Inc.
Tobacco and pipes.......... 40,000 1,335,000
-----------
21,081,644
-----------
DRUGS AND HEALTH CARE 18.8%
AmeriSource Health*
Distributor of pharmaceutical
supplies................... 100,000 3,300,000
Amgen*
Researcher and developer of
biological products........ 100,000 5,931,250
Bristol-Myers Squibb
Health and personal care products50,000 4,293,750
Columbia/HCA Healthcare
Health care facilities
and services............... 75,000 3,806,250
EmCare Holdings
Physician services......... 65,000 1,535,625
Guidant
Cardiac rhythm management
and coronary artery disease
intervention............... 110,000 4,647,500
Humana*
Provider of managed health
care plans................. 100,000 2,737,500
8
<PAGE>
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PORTFOLIO OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
SHARES VALUE
-------- ---------
Lumisys*
Medical image digitizers... 150,000 $ 1,687,500
Mid Atlantic Medical Services*
Managed health care services 125,000 3,031,250
Oxford Health Plans
Provider of health benefit
services................... 25,000 1,843,750
Physio Control Holding
Manufacturer of integrated line
of non-invasive emergency
cardiac defibrillators..... 145,000 2,628,125
Sunrise Medical*
Manufacturer of home health
care products.............. 100,000 1,850,000
United Healthcare
Health maintenance
organization............... 75,000 4,912,500
-----------
42,205,000
-----------
FINANCIAL SERVICES 11.5%
Allmerica Financial
Property liability insurance 62,500 1,687,500
Amerin
Mortgage insurance provider 165,000 4,403,438
Checkfree*
Electronic commerce........ 85,400 1,825,425
Donaldson Lufkin & Jenrette
Leading investment and
merchant bank.............. 125,000 3,906,250
MBNA
Issuer of bank credit cards 85,000 3,134,375
Meadowbrook Insurance
Alternative risk insurance
company.................... 20,500 686,750
Progressive (Ohio)
High-risk auto insurance... 50,000 2,443,750
Travelers
Diversified financial services 125,000 7,859,375
-----------
25,946,863
-----------
FOOD AND FOOD SERVICES 3.0%
Boston Chicken*
Operator of franchised food service
stores..................... 20,000 641,250
PepsiCo
Soft drinks, consumer
products................... 110,000 6,146,250
-----------
6,787,500
-----------
INDUSTRIAL GOODS AND SERVICES 2.5%
Lam Research*
Manufacturer of plasma-etching
equipment.................. 30,000 1,368,750
UCAR International*
Provider of graphite
electrodes ................ 125,000 4,218,750
-----------
5,587,500
-----------
LEISURE AND RELATED 7.3%
British Sky Broadcasting (ADRs)*
Satellite delivered entertainment
channel in the UK.......... 60,000 2,257,500
Circus Circus Enterprises*
Casino hotels.............. 75,000 2,090,625
Infinity Broadcasting*
Owner/operator of radio
stations................... 115,000 4,283,750
Mirage Resorts*
Hotel/casino complex....... 100,000 3,450,000
Sierra On Line*
Developer of entertainment
software products.......... 25,000 715,625
Viacom (Class B)
Diverse entertainment
communications company..... 75,000 3,553,125
-----------
16,350,625
-----------
PACKAGING 0.6%
Ball
Manufacturer of containers. 50,000 1,375,000
-----------
RETAIL TRADE 6.4%
Borders Group
Leading book superstore.... 90,000 1,665,000
Home Depot
Home improvement stores.... 100,000 4,787,500
MSC Industrial Direct
Catalog marketer of industrial
products................... 45,000 1,237,500
Nordstrom
Department store chain..... 50,000 2,018,750
Office Depot*
Office supply retailer..... 125,000 2,468,750
OfficeMax
Office supplies superstore. 100,000 2,237,500
-----------
14,415,000
-----------
9
<PAGE>
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PORTFOLIO OF INVESTMENTS (continued) December 31, 1995
- --------------------------------------------------------------------------------
SHARES VALUE
-------- ---------
SOFTWARE 12.3%
Activision
PC CD-ROM-based
entertainment.............. 101,000 $ 1,117,312
Arbor Software*
Multidimensional software.. 50,000 2,350,000
Comshare*
Timesharing computer services 150,000 3,975,000
DST Systems*
Mutual fund data processing
services................... 66,500 1,895,250
Informix*
Designer, manufacturer, and
supporter of database
management systems......... 95,000 2,855,937
Microsoft*
Microcomputer software..... 40,000 3,512,500
Objective Systems Integrators*
Client/server software solutions
for network operations support 50,000 2,731,250
Parametric Technology*
Developer of mechanical design
software................... 35,000 2,323,125
Sterling Software
Software and network services,
automated program design
software................... 50,000 3,118,750
Sybase*
Developer of database
management software........ 100,000 3,587,500
UUNET Technologies*
Internet access services... 5,000 316,250
-----------
27,782,874
-----------
TELECOMMUNICATIONS 3.1%
Century Telephone Enterprises
Regional telephone services 100,000 3,175,000
WorldCom*
Long distance carrier...... 105,000 3,714,375
-----------
6,889,375
-----------
OTHER ...................... 67,570
-----------
TOTAL COMMON STOCKS
(Cost $151,408,969) ....... 214,794,107
-------------
PRIN. AMT. VALUE
--------- ---------
SHORT-TERM HOLDINGS 7.0%
ABN-AMRO Bank,
Grand Cayman,
Fixed Time Deposit,
57/8%, 1/2/96 .................$7,890,000 $ 7,890,000
First National Bank of Chicago,
Grand Cayman,
Fixed Time Deposit,
513/16%, 1/2/96 ...............7,890,000 7,890,000
-----------
TOTAL SHORT-TERM HOLDINGS
(Cost $15,780,000) ............ 15,780,000
-----------
TOTAL INVESTMENTS 102.5%
(Cost $167,188,969) ........... 230,574,107
OTHER ASSETS
LESS LIABILITIES (2.5)% ...... (5,748,444)
-----------
NET ASSETS 100.0% .............. $224,825,663
============
- -----------------------------
* Non-income producing security.
Descriptions of companies have not been audited by
Deloitte & Touche LLP.
See notes to financial statements.
10
<PAGE>
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STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments, at value:
Common stocks (cost $151,408,969)....................................... $ 214,794,107
Short-term holdings (cost $15,780,000).................................. 15,780,000 $ 230,574,107
-------------
Cash....................................................................... 500,639
Receivable for Capital Stock sold.......................................... 820,502
Receivable for securities sold............................................. 352,375
Receivable for dividends and interest...................................... 74,280
Investment in, and expenses prepaid to, shareholder service agent.......... 20,919
Other...................................................................... 57,424
------------
Total Assets .............................................................. 232,400,246
------------
LIABILITIES:
Payable for securities purchased........................................... 7,009,916
Payable for Capital Stock repurchased...................................... 141,728
Accrued expenses, taxes, and other......................................... 422,939
------------
Total Liabilities ......................................................... 7,574,583
------------
Net Assets ................................................................ $224,825,663
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 40,000,000 shares authorized; 14,450,324
shares outstanding):
Class A.................................................................. $ 13,838,572
Class D.................................................................. 611,752
Additional paid-in capital................................................. 140,534,028
Accumulated net investment loss............................................ (89,966)
Undistributed net realized gain............................................ 6,546,139
Net unrealized appreciation of investments................................. 63,385,138
------------
Net Assets ................................................................ $224,825,663
============
NET ASSET VALUE PER SHARE:
Class A ($215,688,328 / 13,838,572 shares) ................................ $15.59
======
Class D ($9,137,335 / 611,752 shares) ..................................... $14.94
======
- -----------------------------
See notes to financial statements.
</TABLE>
11
<PAGE>
================================================================================
STATEMENT OF OPERATIONS For the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends (net of foreign taxes withheld of $2,623)..... $ 1,242,192
Interest................................................ 418,108
Other income............................................ 153,259
-----------
Total investment income................................. $ 1,813,559
EXPENSES:
Management fee.......................................... 948,951
Distribution and service fees........................... 453,620
Shareholder account services............................ 383,818
Auditing and legal fees................................. 73,507
Shareholder reports and communications.................. 60,572
Registration............................................ 48,701
Directors' fees and expenses............................ 33,421
Custody and related services............................ 30,000
Shareholders' meeting................................... 11,614
Miscellaneous........................................... 23,808
-----------
Total expenses.......................................... 2,068,012
-----------
Net investment loss .................................... (254,453)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments........................ 35,184,301
Net change in unrealized appreciation of investments.... 24,927,528
-----------
Net gain on investments ................................ 60,111,829
-----------
Increase in net assets from operations ................. $59,857,376
===========
- -----------------------------
See notes to financial statements.
</TABLE>
12
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1995 1994
------------- ------------
OPERATIONS:
<S> <C> <C> <C> <C>
Net investment loss.......................................................... $ (254,453) $ (756,459)
Net realized gain on investments............................................. 35,184,301 18,012,834
Net change in unrealized appreciation of investments......................... 24,927,528 (31,248,422)
------------- ------------
Increase (decrease) in net assets from operations............................ 59,857,376 (13,992,047)
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A.................................................................... (27,349,482) (17,718,531)
Class D.................................................................... (1,044,584) (351,353)
------------- ------------
Decrease in net assets from distributions.................................... (28,394,066) (18,069,884)
------------- ------------
SHARES
--------------------------------
CAPITAL SHARE TRANSACTIONS: YEAR ENDED DECEMBER 31
--------------------------------
1995 1994
------------- ------------
Net proceeds from sale of shares:
Class A................................ 733,030 537,358 10,961,004 8,103,350
Class D................................ 290,741 112,437 4,369,424 1,665,414
Exchanged from associated Funds:
Class A................................ 1,028,684 274,413 15,769,810 4,071,383
Class D................................ 132,768 6,633 1,987,004 93,444
Shares issued in payment of gain distributions:
Class A................................ 1,729,508 1,275,447 24,834,625 16,249,301
Class D................................ 62,511 26,625 860,777 330,484
---------- ---------- ------------ ------------
Total.................................... 3,977,242 2,232,913 58,782,644 30,513,376
---------- ---------- ------------ ------------
Cost of shares repurchased:
Class A................................ (1,250,270) (1,315,179) (18,467,977) (19,543,622)
Class D................................ (62,080) (27,140) (883,945) (388,031)
Exchanged into associated Funds:
Class A................................ (743,367) (734,774) (10,921,916) (11,092,468)
Class D................................ (60,208) (43,927) (881,945) (652,829)
---------- ---------- ------------ ------------
Total.................................... (2,115,925) (2,121,020) (31,155,783) (31,676,950)
---------- ---------- ------------ ------------
Increase (decrease) in net assets
from capital share transactions....... 1,861,317 111,893 27,626,861 (1,163,574)
========== ========== ------------ ------------
Increase (decrease) in net assets............................................ 59,090,171 (33,225,505)
NET ASSETS:
Beginning of year............................................................ 165,735,492 198,960,997
------------ ------------
End of year (including accumulated net investment loss of
$89,966 and $79,609, respectively)........................................ $224,825,663 $165,735,492
============ ============
- -----------------------------
See notes to financial statements.
</TABLE>
13
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Capital Fund, Inc. (the "Fund") offers two classes of shares.
All shares existing prior to May 3, 1993, were 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
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") 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 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.
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 short-term
investments, for the year ended December 31, 1995, amounted to $185,317,577 and
$185,342,268, respectively.
At December 31, 1995, 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 $66,484,439 and $3,099,301, 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
average daily net assets of all the investment companies managed by the Manager.
The management fee for the year ended December 31, 1995, was equivalent to an
annual rate of 0.51% 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
14
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
the Manager, received concessions of $32,091 from sales of Class A shares, after
commissions of $241,684 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 year ended December 31, 1995, fees paid aggregated $406,896,
or 0.22% per annum of the average daily net assets of Class A shares.
The Fund has 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, 1995,
fees paid amounted to $46,724, or 1% per annum of the average net daily 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, 1995, such charges amounted to $3,349.
Effective April 1, 1995, Seligman Services, Inc., an affiliate of the
Manager, became 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
period ended December 31, 1995, Seligman Services, Inc. received commissions of
$2,981 from sales of shares of the Fund. Seligman Services, Inc. also received
distribution and service fees of $39,543, pursuant to the Plan.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $365,118 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 $23,000 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, 1995, of
$89,966 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, 1995, which are included in the corresponding captions of the
Statement of Operations, were as follows:
CLASS A CLASS D
-------- -------
Distribution and service fees..... $406,896 $46,724
Registration...................... 11,724 7,007
Shareholder reports and
communications................. 6,998 154
15
<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.
<TABLE>
<CAPTION>
CLASS A CLASS D
---------------------------------------------- ----------------------------
YEAR ENDED
YEAR ENDED DECEMBER 31 DECEMBER 31 5/3/93*
---------------------------------------------- ----------------- TO
1995** 1994** 1993 1992 1991 1995** 1994** 12/31/93
------ ------ ------ ------ ------ ------ ------ ------
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period...................... $13.17 $15.95 $17.04 $16.66 $12.45 $12.82 $15.86 $16.43
Net investment income (loss)...... (.02) (.06) (.03) .02 .03 (.14) (.33) (.08)
Net realized and unrealized
investment gain (loss)......... 4.74 (1.12) .84 1.89 6.66 4.56 (1.11) 1.41
Increase (decrease) from
investment operations.......... 4.72 (1.18) .81 1.91 6.69 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................ 2.42 (2.78) (1.09) .38 4.21 2.12 (3.04) (.57)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period.... $15.59 $13.17 $15.95 $17.04 $16.66 $14.94 $12.82 $15.86
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED
ON NET ASSET VALUE ........... 37.32% (7.06)% 4.80% 11.56% 54.67% 35.98% (8.75)% 8.12%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.... 1.09% 1.13% 1.13% .96% 1.01% 2.02% 2.66% 2.26%+
Net investment income (loss)
to average net assets.......... (.11)% (.39)% (.17)% .11% .25% (1.06)% (2.28)% (1.32)%+
Portfolio turnover................ 103.60% 70.72% 46.84% 42.32% 42.20% 103.60% 70.72% 46.84%++
Net assets, end of period
(000's omitted)................ $215,688 $162,556 $196,212 $198,063 $172,676 $9,137 $3,179 $2,749
- -----------------------------
*Commencement of offering of Class D shares.
**Per share amounts for the years 1995 and 1994 are calculated based on average shares outstanding.
+Annualized.
++For the year ended December 31, 1993.
See notes to financial statements.
</TABLE>
16
<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,
1995, 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, 1995 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 December 31, 1995, 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
February 2, 1996
17
<PAGE>
================================================================================
PROXY RESULTS
- --------------------------------------------------------------------------------
Seligman Capital Fund Shareholders voted on the following proposals at the
Special Meeting of Shareholders held on December 12, 1995, in New York, New
York. Each Director was elected, and all other proposals were approved except
for the proposals to amend the Management and Subadvisory Agreements. The
description of each proposal and number of shares voted are as follows:
FOR AGAINST NON-VOTE
--- ------- --------
Election of Directors:
Fred E. Brown 8,685,355 286,571 3,137,121
John R. Galvin 8,671,142 300,139 3,137,160
Alice S. Ilchman 8,700,405 282,769 3,137,116
Frank A. McPherson 8,674,329 297,905 3,137,126
John E. Merow 8,702,766 280,690 3,137,115
Betsy S. Michel 8,702,582 283,005 3,137,115
William C. Morris 8,703,180 281,090 3,137,114
James C. Pitney 8,701,135 283,324 3,137,115
James Q. Riordan 8,692,392 292,066 3,137,116
Ronald T. Schroeder 8,698,140 281,090 3,137,114
Robert L. Shafer 8,702,110 282,983 3,137,115
James N. Whitson 8,700,117 284,975 3,137,115
Brian T. Zino 8,699,369 285,725 3,137,114
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
<S> <C> <C> <C> <C>
Ratification of Deloitte & Touche LLP as independent auditors: 8,565,710 119,738 301,077 3,136,962
Approval of amendments to the Management Agreement to increase
management fee payable by the Fund: 5,357,797 3,101,252 530,374 3,134,063
Approval of amendments to the Subadvisory Agreement to increase
the subadvisory fee payable by J. & W. Seligman & Co. Incorporated: 5,413,197 3,015,778 557,449 3,137,063
Approval of amendments of the Fund's fundamental investment policy to
permit mortgaging or pledging of its assets: 7,117,581 1,330,649 538,194 3,137,062
Elimination of Fund's fundamental investment policy prohibiting
participation in a joint securities trading account: 7,338,672 1,043,674 604,078 3,137,063
</TABLE>
18
<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
VICE PRESIDENT, Pfizer Inc.
DIRECTOR, USLIFE Corporation
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
- --------------------------------------------------------------------------------
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
19
<PAGE>
