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SELIGMAN
[GRAPHIC]
SELIGMAN
CAPITAL
FUND, INC.
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SEEKING CAPITAL APPRECIATION BY INVESTING IN THE COMMON STOCKS
OF COMPANIES WITH SIGNIFICANT POTENTIAL FOR GROWTH
JUNE 30, 1997 o MID-YEAR REPORT
<PAGE>
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OVER THE LONG TERM -- J. & W. SELIGMAN & CO. INCORPORATED
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TIME IS THE TEST
In an industry that has changed dramatically in recent years, it's comforting
to know that stability, tradition, and consistent professional service can still
be found in an investment management firm.
J. & W. Seligman & Co. Incorporated has been providing financial services
for more than 130 years. From its beginning, Seligman has followed a long-term
approach to making money for its clients, by managing investment products and
services of the highest quality. Today, Seligman manages the Seligman Group of
Funds, which offers investors more than 50 investment options.
A PLACE IN HISTORY
Established in 1864, Seligman played a major role in the geographical
expansion and industrial development of the United States. The firm helped
finance the westward path of the railroads and the building of the Panama Canal.
In the late 1800s and early 1900s, the firm was instrumental in financing the
fledgling automobile and steel industries. Seligman also participated in the
original underwritings for some of the nation's most prominent companies,
including General Motors, Victor Talking Machine, United Artists Theater
Circuit, and Maytag. In 1929, Seligman introduced Tri-Continental Corporation --
which today is the nation's largest diversified closed-end investment company.
In 1930, Seligman began managing its first mutual fund, Broad Street Investing
Co., now known as Seligman Common Stock Fund.
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[PHOTO]
-------------------------
JAMES, JESSE, AND
JOSEPH SELIGMAN
SELIGMAN CAPITAL FUND
Seligman Capital Fund, established October 9, 1969, is a mutual fund that
seeks capital appreciation by investing primarily in common stocks. Since its
inception more than a quarter of a century ago, Seligman Capital Fund has helped
investors seek their financial goals by providing growth of capital in a
well-diversified portfolio of common stocks.
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TABLE OF CONTENTS
To the Shareholders ....................................................... 1
Interview with Your Portfolio Manager ..................................... 2
Performance Overview ...................................................... 4
Portfolio Overview ........................................................ 6
Portfolio of Investments .................................................. 8
Statement of Assets and Liabilities ....................................... 10
Statement of Operations ................................................... 11
Statements of Changes in Net Assets ....................................... 12
Notes to Financial Statements ............................................. 13
Financial Highlights ...................................................... 15
Report of Independent Auditors ............................................ 17
Board of Directors ........................................................ 18
Executive Officers/For More Information ................................... 19
Glossary of Financial Terms ............................................... 20
"As always...investment results are achieved by the individual common stocks
owned. Emphasis continues on fundamental equity research and stock selectivity
to identify companies with strong business and financial characteristics, and
good earnings visibility."
-- FRED E. BROWN,
FUND CHAIRMAN
1969-1988
"We remain confident that the Fund will benefit from the strong long-term
capital appreciation potential of its investments. We believe that market
participants will increasingly focus on earnings growth and that Seligman
Capital Fund's portfolio, which has a superior overall projected earnings growth
rate compared to the S&P 500, should therefore benefit."
-- WILLIAM C. MORRIS,
FUND CHAIRMAN
1989-PRESENT
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TO THE SHAREHOLDERS
For the six months ended June 30, 1997, Seligman Capital Fund posted a total
return of 9.48% based on the net asset value of Class A shares, which outpaced
the 8.20% total return of its peers, as measured by the Lipper Mid Cap Fund
Index. This index is appropriate as it reflects the performance of funds which,
like Seligman Capital Fund, invest primarily in mid-capitalization companies.
These companies generally have capitalizations ranging from $1 billion to $8
billion. Additional information on the Fund's investment results appears on page
4.
Thus far, 1997 has shown great promise for both the domestic economy and the
financial markets. Instead of increasing inflation, the growing economy actually
generated lower producer prices for six consecutive months. The Federal Reserve
Board's decision to leave the federal funds rate unchanged in May also helped
tame inflation fears and gave further support to the already strong financial
markets. Low unemployment and high consumer confidence levels continued, while
consumer spending was relatively restrained.
For much of the first six months, the appreciation of the equity market was
concentrated in a small number of large-capitalization, more liquid stocks. The
rally was not reflected in the performance of mid-capitalization stocks until
May, when the market began to broaden and include a greater number of small- and
mid-capitalization stocks in the advances. The Fund's investment results, which
were muted in the large-capitalization-oriented market, improved in conjunction
with this positive trend.
The long-term outlook for the US economy, the financial markets, and the Fund
remains positive. Productivity improvements, driven in large part by the
deployment of technology, have helped reduce corporate costs and have increased
profitability. Market volatility has increased this year, and the possibility of
a short-term correction in the markets is real. Nonetheless, we believe the
Fund's performance should continue to improve if the broadening of the market
persists, as more attractive valuations can be found in the mid-capitalization
area of the equity market.
We are pleased to introduce your redesigned Shareholder Report. This change
is part of a corporate effort to enhance the overall clarity and quality of all
communications to our Shareholders. We hope you find the additional information
contained herein helpful.
We thank you for your continued support of Seligman Capital Fund, and look
forward to serving your investment needs in the many years to come.
A discussion with your Portfolio Manager and the Fund's portfolio of
investments follow this letter.
By order of the Board of Directors,
/s/ William C. Morris
- ---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------
Brian T. Zino
President
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1
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INTERVIEW WITH YOUR PORTFOLIO MANAGER, LORIS MUZZATTI
Q. HOW DID SELIGMAN CAPITAL FUND PERFORM IN THE LAST SIX MONTHS?
A. Seligman Capital Fund outperformed its peer group in the first half of 1997,
posting a total return of 9.48% based on the net asset value of Class A
shares, which compares favorably to the 8.20% total return of the Lipper Mid
Cap Fund Index. The Fund lagged the 10.54% total return of the Russell
Midcap Growth Index, a leading index that measures the performance of the
mid-cap growth stocks in the broader Russell Midcap Index.
Q. WHICH ECONOMIC FACTORS AFFECTED THE FUND'S PERFORMANCE IN THE FIRST HALF OF
THE YEAR?
A. A positive economic background, combining steady growth and low levels of
inflation, improved corporate earnings in the first half of the year.
Further, the Federal Reserve Board only increased the federal funds rate
once in the period, leaving the rate unchanged in May despite the
historically low unemployment levels. The Fed's decision to leave the rate
unchanged in the second quarter provided further support to the already
positive equity market, and brought about a reduction in interest rate
levels. Otherwise, the continued strength of the US Dollar somewhat reduced
the earnings of corporations with significant international sales, as
overseas revenues translated into lower US earnings.
Q. WHICH MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE?
A. While the equity market had very strong performance thus far in 1997, gains
were focused in large, liquid issues rather than the small- to
mid-capitalization companies that emphasize solid earnings growth.
Therefore, the market environment did not specifically benefit the Fund's
portfolio of quality mid-capitalization stocks. This environment finally
changed, though slightly, in May and June as the markets broadened to
include a greater portion of small- and mid-capitalization stocks in the
advances. It seemed that investors were beginning to look for earnings that
were more closely in line with valuations.
Q. WHAT WAS YOUR INVESTMENT STRATEGY?
A. We maintained our rigorous fundamental research process, investing in
mid-sized companies with market capitalizations generally in the $500
million to $6 billion range. We looked for companies that were selling at
attractive valuations with strong future growth prospects, exceptional
managements, strong balance sheets, and high returns on equity and invested
capital. Therefore, we focused on fundamentals and avoided momentum-driven
stocks. Additionally, to offset the potential impact of the strong US
Dollar, the Fund's holdings were focused in companies that hedged their
foreign currency exposure and managed their costs effectively.
Q. WHICH SECTORS IMPROVED THE FUND'S PERFORMANCE?
A. Stocks related to the financial sector were extremely important to the
Fund's performance in the last six months. The Fund's best performers in the
financial services industry included the brokerage company of Donaldson,
Lufkin & Jenrette, and saving and loan companies, such as Washington Mutual
and GreenPoint Financial. As the interest rate environment improved after
the Fed's May decision to leave short-term interest rates unchanged, the
Fund's holdings in interest rate-sensitive stocks were increased.
Specifically, the Fund's exposure to life and health insurers was increased
with the addition of AFLAC, Hartford Life, and Nationwide Financial
Services.
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[PHOTO]
SELIGMAN GROWTH TEAM: (FROM LEFT) MICHELLE BORRE, LOUISE KNIGHT
(ADMINISTRATIVE ASSISTANT), DAVID LEVY, LOUISE OH, (SEATED) LORIS MUZZATTI
(PORTFOLIO MANAGER)
A TEAM APPROACH
Seligman Capital Fund is managed by the Seligman Growth Team, headed by Loris
Muzzatti. Mr. Muzzatti is assisted in the management of the Fund by seasoned
research professionals who are responsible for identifying those companies in
specific industries that offer the greatest potential for growth, consistent
with the Fund's objective.
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2
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INTERVIEW WITH YOUR PORTFOLIO MANAGER, LORIS MUZZATTI
Health care stocks were also strong in the last six months. Additions were
made in the segments of the health care industry that are growing the
fastest and that service the needs of the aging baby-boomer population while
emphasizing efficiency and cost management. Health care companies are also
attractive because the maturing population has driven significant increases
in health care consumption. The portfolio's weighting in health care was
increased with the purchase of KOS Pharmaceuticals, Cardinal Health,
Covance, and McKesson. The Fund's position in Humana was also increased.
Another area where the Fund's investments outperformed their peers in the
equity markets was telecommunications. WorldCom, for example, continued to
gain market share and posted strong results.
Q. WHICH SECTORS IMPAIRED THE FUND'S OVERALL PERFORMANCE?
A. Generally, the cyclical stocks in the portfolio did not do well in the
period. Despite high consumer confidence levels, the portfolio's leisure and
retail stocks were particularly affected. Holdings in Tommy Hilfiger,
International Gaming Technology, and MGM Grand were therefore reduced.
Mixed results in the Fund's technology stocks also impaired the Fund's
returns. In the first quarter, there was weakness in the networking and
client-server software companies, particularly in MRV Communications and
3Com. In May, reports of slowing growth from certain bellwether technology
corporations, including Intel and Seagate Technology, also set these stocks
back. Semiconductor stocks suffered, as did communications equipment makers
such as EchoStar Communications and QUALCOMM. Due to the significant
increases in the valuations of the blue-chip technology stocks, the Fund's
exposure to the sector was reduced with the sale of Microsoft and Intel,
both of which had strongly contributed to the portfolio's results.
Q. WHAT IS THE OUTLOOK?
A. The low inflation and moderate economic growth background has created a very
optimistic market environment. We continue to believe that companies that
combine good revenue growth and efficient structures will outperform the
market in the long term. Further, we believe that Seligman Capital Fund's
sound strategy of investing in mid-capitalization growth stocks should be
rewarded in a market where earnings growth becomes a priority for investors.
The recent broadening of the market suggests that investors may be
re-examining their portfolios and may begin to more aggressively seek
earnings growth. A further broadening of the market, including more
mid-capitalization stocks, should improve the Fund's performance in the long
term.
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3
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PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
FOR PERIODS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS YEAR YEARS YEARS 4/22/96 5/3/93
---------- ---------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge 4.25% 5.47% 14.04% 11.59% n/a n/a
Without Sales Charge 9.48 10.75 15.15 12.14 n/a n/a
CLASS B
With CDSL+ 4.05 4.94 n/a n/a 9.06% n/a
Without CDSL 9.05 9.85 n/a n/a 12.36 n/a
CLASS D
With 1% CDSL 8.05 8.87 n/a n/a n/a n/a
Without CDSL 9.05 9.85 n/a n/a n/a 13.52%
LIPPER MID CAP FUND INDEX** 8.20 12.06 17.43 13.39 10.07++ 17.31+++
RUSSELL MIDCAP GROWTH INDEX** 10.54 17.59 17.35 13.22 13.87++ 17.47+++
</TABLE>
NET ASSET VALUE
JUNE 30, 1997 DECEMBER 31, 1996 JUNE 30, 1996
-------------- -------------------- --------------
CLASS A $17.91 $16.36 $17.99
CLASS B 16.87 15.47 17.18
CLASS D 16.87 15.47 17.18
CAPITAL GAIN INFORMATION
FOR SIX MONTHS ENDED JUNE 30, 1997
REALIZED $1.65#
UNREALIZED 4.20##
- ---------------
* Return figures reflect any change in price per share and assume the
investment of capital gain distributions. Return figures for Class A shares
are calculated with and without the effect of the initial 4.75% maximum
sales charge. Class A shares returns reflect the effect of the service fee
of up to 0.25% under the Administration, Shareholder Services and
Distribution Plan after January 1, 1993, only. Returns for Class B shares
are calculated with and without 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 with and
without the effect of the 1% CDSL, charged only on redemptions made within
one year of the date of purchase. Performance data quoted represent changes
in prices and assume that all distributions within the periods are invested
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.
** The Lipper Mid Cap Fund Index and the Russell Midcap Growth Index are
unmanaged benchmarks that assume investment of dividends. The Lipper Mid Cap
Fund Index does not reflect sales charges and the Russell Midcap Growth
Index does not reflect fees and sales charges. Investors cannot invest
directly in an index.
+ The CDSL is 5% for periods of one year or less, and 4% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
# Excludes 1996 undistributed realized capital gains of $0.29 per share at
June 30, 1997.
## Represents the per share amount of net unrealized
appreciation of portfolio securities as of June 30, 1997.
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4
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PERFORMANCE OVERVIEW
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN CLASS A SHARES
JUNE 30, 1987, TO JUNE 30, 1997
[The following table represents a graph in the printed piece.]
6/30/87 9526*
9/30/87 9964
12/31/87 7380
3/31/88 7474
6/30/88 7916
9/30/88 7568
12/31/88 7563
3/31/89 8173
6/30/89 8784
9/30/89 10229
12/31/89 10016
3/31/90 9693
6/30/90 11197
9/30/90 8665
12/31/90 10155
3/31/91 12300
6/30/91 12398
9/30/91 13866
12/31/91 15706
3/31/92 15499
6/30/92 14792
9/30/92 15716
12/31/92 17523
3/31/93 17687
6/30/93 17502
9/30/93 18623
12/31/93 18364
3/31/94 17800
6/30/94 15739
9/30/94 17109
12/31/94 17068
3/31/95 18027
6/30/95 19660
9/30/95 21344
12/31/95 23437
3/31/96 25046
6/30/96 27045
9/30/96 27767
12/31/96 27360
3/31/97 26223
6/30/97 29952
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN CLASS B SHARES
APRIL 22, 1996+, TO JUNE 30, 1997
[The following table represents a graph in the printed piece.]
4/22/96 10000
5/31/96 10371
6/30/96 10456
7/31/96 10541
8/31/96 10626
9/30/96 10712
10/31/96 10652
11/30/96 10592
12/31/96 10533
1/31/97 10381
2/28/97 10229
3/31/97 10077
4/30/97 10547
5/31/97 11017
6/30/97 11487**
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN CLASS D SHARES
MAY 3, 1993+, TO JUNE 30, 1997
[The following table represents a graph in the printed piece.]
5/3/93 10000
6/30/93 10353
9/30/93 10998
12/31/93 10812
3/31/94 10437
6/30/94 9163
9/30/94 9933
12/31/94 9867
3/31/95 10390
6/30/95 11298
9/30/95 12245
12/31/95 13417
3/31/96 14315
6/30/96 15429
9/30/96 15806
12/31/96 15543
3/31/97 14869
6/30/97 16949
These charts reflect the growth of a $10,000 investment for a 10-year period for
Class A shares and since inception for Class B and Class D shares. Since the
measured periods vary, the charts are plotted using different scales and are not
comparable.
- --------------------
* Net of the 4.75% maximum initial sales charge.
** Excludes the effect of the 4% CDSL.
+ Inception date.
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5
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PORTFOLIO OVERVIEW
DIVERSIFICATION OF ASSETS
JUNE 30, 1997
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
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ISSUES COST VALUE JUNE 30, 1997 DEC. 31, 1996
-------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Short-Term Holdings and Other Assets
Less Liabilities .................................. 1 $ 3,593,580 $ 3,593,580 1.2 9.7
-- ------------ ------------ ----- -----
COMMON STOCKS:
Automotive and Related ........................ 1 2,973,797 5,752,500 1.9 2.0
Basic Materials ............................... 4 10,695,939 12,991,133 4.3 4.5
Business Services and Supplies ................ 5 17,038,466 19,245,568 6.4 4.3
Capital Goods ................................. 1 3,235,762 5,931,562 2.0 --
Consumer Goods and Services ................... 3 7,849,148 14,539,100 4.8 6.5
Drugs and Health Care ......................... 15 51,107,727 57,440,847 19.1 10.9
Energy ........................................ 4 11,413,221 13,563,500 4.5 --
Financial Services ............................ 15 40,301,728 64,215,000 21.4 14.4
Industrial Goods and Services ................. 1 894,592 910,000 0.3 2.9
Leisure and Related ........................... 4 11,911,503 12,366,250 4.1 7.7
Printing and Publishing ....................... 1 2,280,000 2,850,000 1.0 0.9
Retail Trade .................................. 4 11,348,886 13,500,937 4.5 3.5
Technology .................................... 16 45,582,439 60,046,798 20.0 24.8
Telecommunications ............................ 4 9,354,027 13,411,875 4.5 7.9
Other ......................................... 1 -- 32,327 -- --
-- ------------ ------------ ----- -----
79 225,987,235 296,797,397 98.8 90.3
-- ------------ ------------ ----- -----
NET ASSETS ........................................ 80 $229,580,815 $300,390,977 100.0 100.0
== ============ ============ ===== =====
</TABLE>
LARGEST INDUSTRIES
AT JUNE 30, 1997
[The following table represents a chart in the printed piece.]
Percent of
Net Assets
----------
Financial Services 21.4% $64,215,000
Technology 20.0 60,046,798
Drugs and Health Care 19.1 57,440,847
Business Services and Supplies 6.4 19,245,568
Consumer Goods and Services 4.8 14,539,100
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6
<PAGE>
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PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
---------------------
HOLDINGS
ADDITIONS INCREASE 6/30/97
- --------- -------- -------
Cardinal Health ......................................... 85,000 85,000
Coca-Cola ............................................... 231,700 231,700
Covance ................................................. 345,000 345,000
IKON Office Solutions ................................... 95,900 95,900
Lowe's .................................................. 120,000 120,000
Newbridge Networks ...................................... 100,000 100,000
Quantum ................................................. 200,000 200,000
Reynolds & Reynolds
(Class A) ............................................ 200,000 200,000
US Surgical ............................................. 115,000 115,000
Universal Health Services
(Class B) ............................................ 140,000 140,000
SHARES
---------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/97
- --------- -------- -------
Guidant ................................................. 65,000 25,000
Home Depot .............................................. 100,000 --
Intel ................................................... 50,000 --
MGM Grand ............................................... 100,000 --
Microsoft ............................................... 100,000 --
MRV Communications ...................................... 145,000 --
Saks Holdings ........................................... 105,000 --
Seagate Technology ...................................... 100,000 --
Tencor Instruments ...................................... 100,000 --
United Healthcare ....................................... 75,000 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
LARGEST PORTFOLIO HOLDINGS
AT JUNE 30, 1997
SECURITY VALUE
- -------- ----------
Travelers .............................................. $8,513,438
Fiserv ................................................. 7,831,250
WorldCom ............................................... 6,713,438
Covance ................................................ 6,662,812
GreenPoint Financial ................................... 6,656,250
MBNA ................................................... 6,592,500
Interpublic Group of Companies ......................... 6,131,250
Washington Mutual ...................................... 5,978,125
Pfizer ................................................. 5,975,000
Newell ................................................. 5,943,750
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7
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PORTFOLIO OF INVESTMENTS
June 30, 1997
SHARES VALUE
------ -----
COMMON STOCKS 98.8%
AUTOMOTIVE AND
RELATED 1.9%
Harley-Davidson 120,000 $ 5,752,500
-----------
BASIC MATERIALS 4.3%
Minerals Technologies 75,000 2,812,500
Nucor 70,000 3,955,000
Olin 100,000 3,906,250
Schulman, A. 93,750 2,317,383
-----------
12,991,133
-----------
BUSINESS SERVICES
AND SUPPLIES 6.4%
AccuStaff 115,000 2,724,062
IKON Office Solutions 95,900 2,391,506
Interpublic Group of Companies 100,000 6,131,250
Reynolds & Reynolds (Class A) 200,000 3,150,000
Snyder Communications 180,000 4,848,750
-----------
19,245,568
-----------
CAPITAL GOODS 2.0%
Westinghouse Electric 256,500 5,931,562
------------
CONSUMER GOODS
AND SERVICES 4.8%
Coca-Cola 231,700 5,329,100
Estee Lauder (Class A)* 65,000 3,266,250
Newell 150,000 5,943,750
------------
14,539,100
------------
DRUGS AND HEALTH CARE 19.1%
Amgen* 20,000 1,161,875
Biogen* 40,000 1,356,250
Boston Scientific 50,000 3,071,875
Cardinal Health 85,000 4,866,250
Centocor 85,500 2,653,172
Columbia/HCA Healthcare 150,000 5,896,875
Covance* 345,000 6,662,812
Guidant 25,000 2,125,000
HCIA* 140,000 4,690,000
Humana* 150,000 3,468,750
KOS Pharmaceuticals* 86,700 2,351,738
McKesson 45,000 3,487,500
Pfizer 50,000 5,975,000
US Surgical 115,000 4,283,750
Universal Health Services
(Class B)* 140,000 5,390,000
------------
57,440,847
------------
ENERGY 4.5%
Barrett Resources* 80,000 2,395,000
ENSCO International* 75,000 3,956,250
Petroleum Geo-Services
(ADRs) (Norway)* 78,000 3,812,250
Santa Fe International* 100,000 3,400,000
------------
13,563,500
------------
FINANCIAL SERVICES 21.4%
AFLAC* 50,000 2,362,500
Amerin* 165,000 4,001,250
Donaldson, Lufkin & Jenrette
Securities 65,000 3,883,750
GreenPoint Financial 100,000 6,656,250
Hartford Life (Class A) 90,000 3,375,000
MBNA 180,000 6,592,500
Nationwide Financial Services
(Class A) 155,000 4,117,187
Old Republic International 60,000 1,818,750
Progressive (Ohio) 50,000 4,350,000
Provident Companies 60,000 3,210,000
St. Paul Bancorp 62,500 2,078,125
Schwab (Charles) 100,000 4,068,750
TCF Financial 65,000 3,209,375
Travelers 135,000 8,513,438
Washington Mutual 100,000 5,978,125
------------
64,215,000
------------
INDUSTRIAL GOODS AND SERVICES 0.3%
Ionics* 20,000 910,000
------------
LEISURE AND RELATED 4.1%
British Sky Broadcasting
(ADRs) (UK) 60,000 2,681,250
Circus Circus* 110,000 2,708,750
Mirage Resorts* 130,000 3,282,500
Sun International Hotels* 100,000 3,693,750
------------
12,366,250
------------
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8
<PAGE>
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PORTFOLIO OF INVESTMENTS
June 30, 1997
SHARES VALUE
------ -----
PRINTING AND PUBLISHING 1.0%
World Color Press* 120,000 $ 2,850,000
-----------
RETAIL TRADE 4.5%
Barnes & Noble* 75,000 3,225,000
Gucci Group (Netherlands) 40,000 2,575,000
Lowe's 120,000 4,455,000
Nine West Group* 85,000 3,245,937
-----------
13,500,937
-----------
TECHNOLOGY 20.0%
Activision 80,000 1,150,000
Adaptec* 90,000 3,127,500
Arrow Electronics* 60,000 3,187,500
BMC Software 60,000 3,326,250
Ceridian* 100,000 4,225,000
DST Systems* 100,000 3,331,250
Fiserv* 175,000 7,831,250
Linear Technology 55,000 2,841,094
Maxim Integrated Products* 55,000 3,124,688
Newbridge Networks* 100,000 4,350,000
Quantum 200,000 4,068,750
Read-Rite 50,000 1,042,188
Sterling Commerce* 170,000 5,588,750
Symantec 200,000 3,906,250
Vishay Intertechnology* 131,250 3,798,047
Xilinx* 105,000 5,148,281
------------
60,046,798
------------
TELECOMMUNICATIONS 4.5%
Century Telephone Enterprises 100,000 3,368,750
EchoStar Communications 50,000 784,375
QUALCOMM 50,000 2,545,312
WorldCom* 210,000 6,713,438
------------
13,411,875
------------
OTHER 32,327
------------
TOTAL COMMON STOCKS
(Cost $225,987,235) 296,797,397
SHORT-TERM HOLDINGS 3.2%
(Cost $9,500,000) 9,500,000
------------
TOTAL INVESTMENTS 102.0%
(Cost $235,487,235) 306,297,397
OTHER ASSETS
LESS LIABILITIES (2.0)% (5,906,420)
------------
NET ASSETS 100.0% $300,390,977
============
- -----------------
* Non-income producing security.
See Notes to Financial Statements.
----
9
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $225,987,235) ............................................ $296,797,397
Short-term holdings (cost $9,500,000) ........................................ 9,500,000 $306,297,397
-----------
Cash ............................................................................................. 131,754
Receivable for securities sold ................................................................... 3,259,157
Receivable for Capital Stock sold ................................................................ 277,165
Expenses prepaid to shareholder service agent .................................................... 71,607
Receivable for interest and dividends ............................................................ 58,592
Other 56,226
------------
TOTAL ASSETS ..................................................................................... 310,151,898
------------
LIABILITIES:
Payable for securities purchased ................................................................. 8,618,966
Payable for Capital Stock repurchased ............................................................ 637,527
Accrued expenses, taxes, and other ............................................................... 504,428
------------
TOTAL LIABILITIES ................................................................................ 9,760,921
------------
NET ASSETS ....................................................................................... $300,390,977
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares
authorized; 16,878,868 shares outstanding):
Class A ........................................................................................ $ 15,083,072
Class B ........................................................................................ 390,487
Class D ........................................................................................ 1,405,309
Additional paid-in capital ....................................................................... 180,559,329
Accumulated net investment loss .................................................................. (520,984)
Undistributed net realized gain .................................................................. 32,663,602
Net unrealized appreciation of investments ....................................................... 70,810,162
------------
NET ASSETS ....................................................................................... $300,390,977
============
NET ASSET VALUE PER SHARE:
CLASS A ($270,093,227 / 15,083,072 shares) ....................................................... $17.91
======
CLASS B ($6,588,157 / 390,487 shares) ............................................................ $16.87
======
CLASS D ($23,709,593 / 1,405,309 shares) ......................................................... $16.87
======
</TABLE>
- ------------------
See Notes to Financial Statements.
- ----
10
<PAGE>
================================================================================
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $3,015) .............................. $ 655,917
Interest ......................................................................... 444,527
Other ............................................................................ 108,448
----------
TOTAL INVESTMENT INCOME .......................................................................... $ 1,208,892
EXPENSES:
Management fee ................................................................... 698,721
Distribution and service fees .................................................... 454,066
Shareholder account services ..................................................... 295,646
Registration ..................................................................... 55,162
Shareholder reports and communications ........................................... 40,677
Custody and related services ..................................................... 33,000
Auditing and legal fees .......................................................... 31,599
Directors' fees and expenses ..................................................... 12,472
Miscellaneous .................................................................... 8,795
----------
TOTAL EXPENSES .................................................................................... 1,630,138
----------
NET INVESTMENT LOSS ............................................................................... (421,246)
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ................................................. 27,803,954
Net change in unrealized appreciation of investments ............................. (1,468,130)
----------
NET GAIN ON INVESTMENTS ........................................................................... 26,335,824
-----------
INCREASE IN NET ASSETS FROM OPERATIONS ............................................................ $25,914,578
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
----
11
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss ............................................................ $ (421,246) $ (762,243)
Net realized gain on investments ............................................... 27,803,954 28,165,196
Net change in unrealized appreciation of investments ........................... (1,468,130) 8,893,154
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS ......................................... 25,914,578 36,296,107
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ..................................................................... -- (26,567,200)
Class B ..................................................................... -- (409,321)
Class D ..................................................................... -- (2,122,695)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ...................................... -- (29,099,216)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sale of shares:
Class A .................................... 435,375 1,942,799 7,294,666 33,837,665
Class B .................................... 118,986 254,282 1,889,253 4,295,072
Class D .................................... 179,271 557,039 2,850,986 9,125,387
Exchanged from associated Funds:
Class A .................................... 2,918,389 3,292,043 49,705,572 56,774,849
Class B .................................... 40,280 18,524 643,019 311,768
Class D .................................... 302,389 523,994 4,620,299 8,588,724
Shares issued in payment of
gain distributions:
Class A .................................... -- 1,456,987 -- 24,258,766
Class B .................................... -- 24,565 -- 387,386
Class D .................................... -- 126,975 -- 2,002,437
--------- --------- ------------ ------------
Total ......................................... 3,994,690 8,197,208 67,003,795 139,582,054
--------- --------- ------------ ------------
Cost of shares repurchased:
Class A .................................... (1,171,097) (1,456,803) (19,625,787) (25,036,508)
Class B .................................... (8,674) (3,999) (137,507) (64,181)
Class D .................................... (172,319) (186,463) (2,728,912) (2,985,744)
Exchanged into associated Funds:
Class A .................................... (2,966,350) (3,206,843) (50,224,861) (53,969,312)
Class B .................................... (40,523) (12,954) (639,769) (213,574)
Class D .................................... (195,373) (341,956) (2,995,591) (5,510,258)
---------- --------- ------------ ------------
Total ......................................... (4,554,336) (5,209,018) (76,352,427) (87,779,577)
---------- ---------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ............... (559,646) 2,988,190 (9,348,632) 51,802,477
========== ========== ------------ ------------
INCREASE IN NET ASSETS ......................................................... 16,565,946 58,999,368
NET ASSETS:
Beginning of period ............................................................ 283,825,031 224,825,663
------------ ------------
END OF PERIOD (including accumulated net investment loss of
$520,984 and $99,738, respectively) ............................................ $300,390,977 $283,825,031
============ ============
</TABLE>
- ----------------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
- ----
12
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- 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 A shares purchased in an amount of $1,000,000 or more
are sold without an initial sales charge but are subject to a contingent
deferred sales load ("CDSL") of 1% on redemptions within 18 months after
purchase. Class B shares are sold without an initial sales charge but are
subject to a distribution fee of 0.75%, a service fee of up to 0.25% on an
annual basis, and a 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%, 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 after 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 other class expenses, and has
exclusive voting rights with respect to any matter on which a separate vote of
any class is required.
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. SECURITY VALUATION -- 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, at the mean of bid and asked prices.
Short-term holdings maturing in 60 days or less are valued at amortized
cost.
b. FEDERAL TAXES -- There is no provision for federal income 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. SECURITY TRANSACTIONS AND RELATED INVESTMENT
INCOME -- 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. MULTIPLE CLASS ALLOCATIONS -- 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 attributable to a
particular class, are charged directly to such class. For the six months
ended June 30, 1997, distribution and service fees were the only
class-specific expenses.
e. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains 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 realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset value
per share of the Fund.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the six months ended June 30, 1997, amounted to $151,663,432 and $137,575,729,
respectively.
At June 30, 1997, 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 $79,352,457 and $8,542,295, respectively.
4. SHORT-TERM INVESTMENTS -- At June 30, 1997, the Fund owned short-term
investments which matured in less than seven days.
5. MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS -- 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 reflected in the Statement of Operations represents 0.49% per annum of the
Fund's average daily net assets.
----
13
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $12,551 from sales of Class A shares, after commissions of
$97,743 paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, 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,
1997, fees incurred aggregated $318,318, or 0.24% per annum of the average daily
net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, 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, for Class D shares only, 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.
With respect to Class B shares, a distribution fee of 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 provides 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, 1997, 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 $27,571 and $108,177, 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, 1997, such charges amounted to $4,578.
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 Bshares 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, 1997, was $5,402.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of Fund shares, as well as distribution and
service fees pursuant to the Plan. For the six months ended June 30, 1997,
Seligman Services, Inc. received commissions of $3,938 from the sales of Fund
shares. Seligman Services, Inc. also received distribution and service fees of
$42,525, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $277,005 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, Seligman Services, Inc., and/or Seligman Data Corp.
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, 1997, of $103,339 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.
- ----
14
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of each Class, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, 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.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value 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. Total returns for periods
of less than one year are not annualized.
"Average commission rate paid" represents the average commission 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
-----------------------------------------------------------------
SIX
MONTHS YEAR ENDED DECEMBER 31,
ENDED ---------------------------------------------------
6/30/97@ 1996@ 1995@ 1994@ 1993@ 1992@
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ...................... $16.36 $15.59 $13.17 $15.95 $17.04 $16.66
------ ------ ------ ------ ------ ------
Net investment income (loss) .............................. (.02) (.04) (.02) (.06) (.03) .02
Net realized and unrealized investment gain (loss) ........ 1.57 2.68 4.74 (1.12) .84 1.89
------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ................................................ 1.55 2.64 4.72 (1.18) .81 1.91
Distributions from net gain realized ...................... -- (1.87) (2.30) (1.60) (1.90) (1.53)
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSET VALUE ................ 1.55 .77 2.42 (2.78) (1.09) .38
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ............................ $17.91 $16.36 $15.59 $13.17 $15.95 $17.04
====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: 9.48% 16.74% 37.32% (7.06)% 4.80% 11.56%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ............................ 1.06%+ 1.07% 1.09% 1.13% 1.13% .96%
Net investment income (loss) to average net assets ........ (.22)%+ (.25)% (.11)% (.39)% (.17)% .11%
Portfolio turnover ........................................ 50.16% 94.97% 103.60% 70.72% 46.84% 42.32%
Average commission rate paid .............................. $.0553 $.0537
NET ASSETS, END OF PERIOD
(000s omitted) ............................................ $270,093 $259,514 $215,688 $162,556 $196,212 $198,063
- -------------------
See footnotes on page 16.
</TABLE>
----
15
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B CLASS D
------------------------------- -------------------------------------
SIX SIX
MONTHS 4/22/96* MONTHS YEAR ENDED DECEMBER 31, 5/3/93*
ENDED TO ENDED ------------------------ TO
6/30/97@ 12/31/96@ 6/30/97@ 1996@ 1995@ 1994@ 12/31/93
------- -------- ------- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............. $15.47 $16.43 $15.47 $14.94 $12.82 $15.86 $16.43
------ ------ ------ ------ ------ ------ ------
Net investment loss (.08) (.10) (.08) (.16) (.14) (.33) (.08)
Net realized and unrealized investment gain (loss) 1.48 1.01 1.48 2.56 4.56 (1.11) 1.41
------ ------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM INVESTMENT
OPERATIONS ....................................... 1.40 .91 1.40 2.40 4.42 (1.44) 1.33
Distributions from net gain realized ............. -- (1.87) -- (1.87) (2.30) (1.60) (1.90)
------ ------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSET VALUE ....... 1.40 (.96) 1.40 .53 2.12 (3.04) (.57)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ................... $16.87 $15.47 $16.87 $15.47 $14.94 $12.82 $15.86
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: ........... 9.05% 5.33% 9.05% 15.84% 35.98% (8.75)% 8.12%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................... 1.82%+ 1.89%+ 1.82%+ 1.83% 2.02% 2.66% 2.26%+
Net investment loss to average net assets ........ (.98)%+ (.99)%+ (.98)%+ (1.00)% (1.06)% (2.28)% (1.32)%+
Portfolio turnover ............................... 50.16% 94.97%++ 50.16% 94.97% 103.60% 70.72% 46.84%+++
Average commission rate paid ..................... $.0553 $.0537++ $.0553 $.0537
NET ASSETS, END OF PERIOD
(000s omitted) ................................... $6,588 $4,337 $23,710 $19,974 $9,137 $3,179 $2,749
- --------------
* Commencement of offering of shares.
@ Per share amounts for the periods
ended June 30, 1997, and December 31, 1996, 1995, and 1994, are calculated
based on average shares outstanding.
+ Annualized.
++ For the year ended December 31, 1996.
+++ 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 June 30,
1997, 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, 1996, 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, 1997, 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, 1997, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
New York, New York
August 1, 1997
----
17
<PAGE>
================================================================================
BOARD OF DIRECTORS
FRED E. BROWN
DIRECTOR EMERITUS
DIRECTOR AND CONSULTANT, J. & W. Seligman & Co. Incorporated
JOHN R. GALVIN 2
DEAN, Fletcher School of Law and Diplomacy at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN 3
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum Corporation
BETSY S. MICHEL 2
DIRECTOR OR TRUSTEE, Various Organizations
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3
DIRECTOR OR TRUSTEE, Various Organizations
JAMES N. WHITSON 2
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
- ----
18
<PAGE>
================================================================================
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
FOR MORE INFORMATION
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>
================================================================================
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in the fund's portfolio. The fund generates
short-term capital gains when portfolio securities held for less than one year
are sold at a profit. The fund generates long-term capital gains when portfolio
securities held for one year or more are sold at a profit. Short-term capital
gains are taxed as ordinary income. Long-term capital gains are taxed at the
federal capital gains rate appropriate to the shareholder's tax bracket.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The increase in the value of an investment as shareholders
receive earnings on their investment's earnings. For example, if $1,000 is
invested at a fixed rate of 7% a year, the initial investment is worth $1,070
after one year. Assuming the same rate of return, second year earnings will not
be based on the original $1,000, but on the $1,070, which includes the first
year's earnings.
CONTINGENT DEFERRED SALES LOAD (CDSL) -- Depending on the class of shares owned,
a fee charged by a mutual fund when shares are sold back to the fund (the CDSL
expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of the fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE (OP) -- The price at which a mutual fund's shares can be
purchased. The offering price is the current net asset value per share plus any
sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission, such as the fund's investment objective and policies, services,
investment restrictions, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
SECURITIES AND EXCHANGE COMMISSION (SEC) -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- Document that contains updated or more
detailed information about a mutual fund and supplements the prospectus. It is
available at no charge upon request.
TOTAL RETURN -- A measure of fund performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The AVERAGE ANNUAL TOTAL
RETURN represents the average annual compounded rate of return for the periods
presented.
YIELD -- For bonds, the current yield is the coupon rate of interest, divided by
the purchase price. For stocks, the yield is measured by dividing dividends paid
by the maximum offering price of the stock.
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Adapted from the Investment Company Institute's 1996 MUTUAL FUND FACT BOOK.
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20
<PAGE>
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK NY 10017
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF SHAREHOLDERS OR THOSE WHO
HAVE RECEIVED THE OFFERING PROSPECTUS COVERING SHARES OF CAPITAL STOCK OF
SELIGMAN CAPITAL FUND, INC., WHICH CONTAINS INFORMATION ABOUT THE SALES
CHARGES, MANAGEMENT FEE, AND OTHER COSTS. PLEASE READ THE PROSPECTUS CAREFULLY
BEFORE INVESTING OR SENDING MONEY.
[LOGO]
EQCA3 6/97 Printed on Recycled Paper
