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FIRST QUARTER REPORT
SELIGMAN
CAPITAL
FUND, INC.
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March 31, 1996
[Logo]
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A CAPITAL APPRECIATION FUND
ESTABLISHED IN 1969
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.
EQCA3a 3/96
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TO THE SHAREHOLDERS
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Seligman Capital Fund performed favorably in the first quarter of 1996,
outpacing the Standard & Poor's 500 Composite Stock Price Index, as it continued
to successfully provide capital appreciation to its shareholders. For long-term
performance information, please refer to the table that follows the portfolio.
Your Fund's net realized gain from investment transactions for both Class A
and D shares for the three months ended March 31, 1996, totaled $0.63 per share.
At March 31, net unrealized gain totaled $4.92 per share.
The first quarter was one in which the US economy demonstrated its
resilience. Despite a strike at General Motors that spread to manufacturing
plants and companies across the nation, failure of both the Congress and
Administration to reach a budget agreement, disappointment that the Federal
Reserve Board did not continue to reduce short-term interest rates, and a rise
in long-term interest rates, the US economy continued to grow at a moderate
rate.
Capital spending, which had been the strongest sector of the economy, slowed
dramatically during the first quarter. The relationship between new orders and
current shipments in the bellwether semiconductor industry, for example, hit a
nine-year low in March, while consumer cyclicals rebounded by the end of the
quarter, with retail sales advancing at an 8.2% annual rate. Personal income
continued to post solid advances, as employment growth remained on track.
Although there has been a sudden rise in energy and grain prices, which bears
monitoring, the financial markets' quick response to any sign of increased
inflation imparts its own kind of discipline on US policymakers and the Fed.
Therefore, we anticipate that the balance of 1996 will be more noteworthy for
the political debate inherent to a presidential election year than any dramatic
change in the direction of the economy.
Turning to your Fund, the recent rise in long-term interest rates negatively
impacted the portfolio's interest rate sensitive issues, particularly its
insurance holdings. Anticipating this, your Manager trimmed these holdings,
taking gains. Your portfolio's finance sector was also weak during the quarter
due to the rise in interest rates in general, and more specifically because of
the portfolio's current underweighting in bank issues. Your Manager, however,
did not adjust the weighting in bank issues as the near-term outlook for
specialty finance companies exhibits stronger signs of growth potential than for
bank issues.
In contrast, the economy's resilience and improved outlook benefited the
performance of your Fund's cyclical holdings, especially the chemicals sector.
Additionally, your Manager decreased the Fund's electronic and semiconductor
holdings due to con-tinued volatility in certain areas of the technology sector.
The proceeds were shifted to selective telecommunications-related issues that
have higher growth prospects due to increases in demand for new networks and
delivery systems.
For more information about your Fund, or your investment in its shares,
please write, or call Shareholder Services using the toll-free telephone numbers
listed below.
By order of the Board of Directors,
/s/William C. Morris
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
April 26, 1996
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Important Telephone Numbers
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SHAREHOLDER RETIREMENT PLAN 24-HOUR AUTOMATED
SERVICES SERVICES TELEPHONE ACCESS SERVICE
(800) 221-2450 (800) 445-1777 (800) 622-4597
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PORTFOLIO OF INVESTMENTS (unaudited)
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SHARES VALUE
------ -----
COMMON STOCKS 99.7%
AUTOMOTIVE AND RELATED 2.8%
Cooper Tire & Rubber .......... 75,000 $ 1,931,250
Harley-Davidson ............... 120,000 4,665,000
-----------
6,596,250
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BASIC MATERIALS 4.6%
Minerals Technologies ......... 75,000 2,596,875
Nucor ......................... 70,000 4,138,750
Olin .......................... 25,000 2,175,000
Schulman, A. .................. 93,750 1,998,047
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10,908,672
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BUSINESS SERVICES AND SUPPLIES 4.5%
HFS Group* .................... 100,000 4,862,500
Interpublic Group of
Companies ................... 120,000 5,670,000
-----------
10,532,500
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COMPUTER GOODS AND SERVICES 5.8%
Ceridian* ..................... 100,000 4,300,000
Compaq Computer* .............. 45,000 1,738,125
FIserv* ....................... 175,000 4,867,188
Intel ......................... 50,000 2,840,625
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13,745,938
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CONSUMER GOODS AND SERVICES 8.8%
Block (H. & R.) ............... 50,000 1,806,250
Estee Lauder* ................. 65,000 2,323,750
Gucci Group* .................. 29,250 1,404,000
Newell ........................ 150,000 4,012,500
Oakley* ....................... 119,900 4,526,225
Revlon* ....................... 30,000 825,000
Tommy Hilfiger ................ 100,000 4,587,500
UST Inc. ...................... 40,000 1,275,000
-----------
20,760,225
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DRUGS AND HEALTH CARE 20.5%
AmeriSource Health* ........... 100,000 3,275,000
Amgen* ........................ 100,000 5,806,250
BioChem Pharmacy* ............. 25,000 1,021,875
Biogen* ....................... 15,000 890,625
Columbia/HCA Healthcare ....... 75,000 4,331,250
Genome Therapeutics ........... 72,000 738,000
Gilead Sciences* .............. 35,000 1,001,875
Guidant ....................... 110,000 5,953,750
Humana* ....................... 100,000 2,512,500
Mid Atlantic Medical
Services* ................... 125,000 2,890,625
OccuSystems* .................. 25,000 562,500
Optical Sensors* .............. 75,000 932,813
Oxford Health Plans* .......... 40,000 3,515,000
Pfizer* ....................... 50,000 3,350,000
Physio-Control Holding* ....... 145,000 2,881,875
Riscorp ....................... 50,000 959,375
St. Jude Medical .............. 55,000 2,052,187
Tellabs* ...................... 25,000 1,209,375
United Healthcare ............. 75,000 4,612,500
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48,497,375
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FINANCIAL SERVICES 11.4%
Allmerica Financial ........... 62,500 1,648,437
Amerin ........................ 165,000 4,485,937
Donaldson Lufkin & Jenrette
Securities ................. 125,000 4,187,500
Greenpoint Financial .......... 83,500 2,306,688
MBNA .......................... 127,500 3,777,188
Progressive (Ohio) ............ 50,000 2,231,250
Travelers ..................... 125,000 8,250,000
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26,887,000
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FOOD AND FOOD SERVICES 2.9%
PepsiCo ....................... 110,000 6,957,500
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INDUSTRIAL GOODS AND SERVICES 2.1%
UCAR International* ........... 125,000 4,859,375
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LEISURE AND RELATED 8.4%
British Sky Broadcasting
(ADRs)* ..................... 60,000 2,407,500
Circus Circus Enterprises* .... 75,000 2,521,875
Infinity Broadcasting* ........ 100,000 4,337,500
Mirage Resorts* ............... 70,000 3,071,250
Sun International Hotels* ..... 51,000 1,836,000
U.S. Satellite Broadcasting* .. 60,000 1,965,000
Viacom (Class B) .............. 90,000 3,791,250
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19,930,375
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PACKAGING 0.7%
Ball .......................... 50,000 1,550,000
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RETAIL TRADE 5.5%
Home Depot .................... 100,000 4,787,500
Nordstrom ..................... 70,000 3,390,625
Office Depot* ................. 125,000 2,453,125
OfficeMax ..................... 100,000 2,425,000
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13,056,250
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SOFTWARE 13.2%
Activision* ................... 101,000 1,338,250
Arbor Software* ............... 50,000 2,181,250
Bachman Information Systems ... 50,000 425,000
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March 31, 1996
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SHARES VALUE
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Checkfree* .................... 85,400 $ 1,483,825
Comshare* ..................... 150,000 3,450,000
DST Systems* .................. 80,000 2,450,000
Informix* ..................... 95,000 2,511,562
International Game Technology . 175,000 2,384,375
Microsoft* .................... 40,000 4,122,500
Objective Systems
lntegrators* ................ 50,000 2,300,000
Parametric Technology* ........ 70,000 2,734,375
Sterling Software ............. 50,000 3,525,000
Sybase* ....................... 100,000 2,318,750
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31,224,887
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TELECOMMUNICATIONS 7.0%
CenturyTelephone Enterprises .. 100,000 3,175,000
MRV Communications ............ 81,800 3,865,050
Omnipoint* .................... 51,500 1,326,125
PairGain Technologies* ........ 21,400 1,384,312
TCSI* ......................... 60,000 1,830,000
WorldCom* ..................... 105,000 4,836,563
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16,417,050
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MISCELLANEOUS 1.5%
Berg Electronics .............. 43,000 1,010,500
World Color Press* ............ 126,500 2,403,500
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3,414,000
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OTHER 67,720
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TOTAL COMMON STOCKS
(Cost $165,501,860) ................. 235,405,117
SHORT-TERM HOLDINGS 0.4%
(Cost $900,000) ..................... 900,000
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TOTAL INVESTMENTS 100.1%
(Cost $166,401,860) ................. 236,305,117
OTHER ASSETS
LESS LIABILITIES (0.1)% ........... (135,699)
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NET ASSETS 100.0% .................... $236,169,418
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* Non-income producing security.
Note: Investments in stocks are valued at current market values or, in their
absence, at fair values 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.
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SELIGMAN CAPITAL FUND
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INVESTMENT RESULTS
TOTAL RETURNS*
For Periods Ended March 31, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------------------
CLASS D
THREE ONE FIVE 10 SINCE
MONTHS YEAR YEARS YEARS INCEPTION+
---------- ------- ------- ------- ------------
CLASS A
<S> <C> <C> <C> <C> <C>
With Sales Charge ....................... 1.77% 32.37% 14.17% 11.84% n/a
Without Sales Charge .................... 6.86 38.94 15.28 12.39 n/a
CLASS D
With CDSL ............................... 5.69 36.78 n/a n/a n/a
Without CDSL ............................ 6.69 37.78 n/a n/a 13.11%
S&P 500** ............................... 5.37 32.10 14.67 13.95 17.15++
</TABLE>
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NET ASSET VALUE PER SHARE
MARCH 31, 1996 DECEMBER 31, 1995
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CLASS A .......................... $16.66 $15.59
CLASS D .......................... $15.94 $14.94
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* The returns for Class A shares are shown with and without the maximum
initial sales charge of 4.75%. 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 returns for the
periods of one year or less for Class D shares are shown with and without
the effect of the 1% contingent deferred sales load ("CDSL")imposed on
certain shares redeemed within one year of purchase.
** The S&P 500 is an unmanaged index and assumes reinvestment of estimated
dividends, and does not reflect fees and expenses. Investors may not invest
directly in an index.
+ May 3, 1993.
++ From April 30, 1993.
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THESE RATES OF RETURN REFLECT CHANGES IN PRICE AND ASSUME THAT ALL DISTRIBUTIONS
WITHIN THE PERIOD ARE REINVESTED IN ADDITIONAL SHARES. 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.
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LARGEST PORTFOLIO CHANGES++
DURING PAST THREE MONTHS
SHARES
----------------------
HOLDINGS
ADDITIONS INCREASE 3/31/96
- ------------ ---------- ----------
Gilead Sciences ............... 35,000 35,000
Greenpoint Financial .......... 83,500 83,500
International Game Technology . 175,000 175,000
MRV Communications ............ 81,800 81,800
Pfizer ........................ 50,000 50,000
St. Jude Medical .............. 55,000 55,000
Sun International Hotels ...... 51,000 51,000
TCSI .......................... 60,000 60,000
U.S. Satellite Broadcasting ... 60,000 60,000
World Color Press ............. 126,500 126,500
HOLDINGS
REDUCTIONS DECREASE 3/31/96
- ------------ ---------- ----------
Borders Group ................. 90,000 --
Bristol-Myers Squibb .......... 50,000 --
EmCare Holdings ............... 65,000 --
HFS Group ..................... 50,000 100,000+
Lam Research .................. 30,000 --
LSI Logic ..................... 50,000 --
Lumisys ....................... 150,000 --
Meta Group .................... 54,100 --
MSC Industrial Direct ......... 45,000 --
Sunrise Medical ............... 100,000 --
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++ Largest portfolio changes from the previous quarter to the current quarter
are based on cost of purchases and proceeds from sales of securities.
+ Includes 75,000 shares received as a result of a 2-for-1 stock split.
MAJOR PORTFOLIO HOLDINGS
AT MARCH 31, 1996
SECURITY VALUE
- ----------- -----------
Travelers .............................. $8,250,000
PepsiCo ................................ 6,957,500
Guidant ................................ 5,953,750
Amgen .................................. 5,806,250
Interpublic Group of Companies ......... 5,670,000
FIserv ................................. 4,867,188
HFS Group .............................. 4,862,500
UCAR International ..................... 4,859,375
WorldCom ............................... 4,836,563
Home Depot ............................. 4,787,500
