================================================================================
28TH ANNUAL REPORT
- --------------------------------------------------------------------------------
SELIGMAN
CAPITAL
FUND, INC.
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
A Capital Appreciation Fund
Established in 1969
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[GRAPHIC OMITTED]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman Capital Fund, Inc., which contains information about the sales charges,
management fee, and other costs. Please read the prospectus carefully before
investing or sending money.
EQCA2 12/96
<PAGE>
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SELIGMAN CAPITAL FUND, INC.
- --------------------------------------------------------------------------------
A mutual fund that invests primarily in common stocks believed to provide
capital appreciation opportunities. Current income is not an objective.
<TABLE>
<CAPTION>
HIGHLIGHTS OF 1996
- ----------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------------------ -----------------------
CLASS A CLASS B* CLASS D CLASS A CLASS D
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets (in thousands)............................ $259,514 $4,337 $19,974 $215,688 $9,137
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share............................ $16.36 $15.47 $15.47 $15.59 $14.94
With November 1996 Gain Distribution
Taken in Shares.................................. $18.20 $17.31 $17.31 -- --
Increase in Net Asset Value with Gain
Distribution Taken in Shares..................... 16.74% 5.33% 15.84% -- --
- ----------------------------------------------------------------------------------------------------------------------
Distribution of Realized Gain per Share.............. $1.872 $1.872 $1.872 $2.298 $2.298
- ----------------------------------------------------------------------------------------------------------------------
Total Expenses per Dollar of Average Net Assets...... $0.0107 $0.0189+ $0.0183 $0.0109 $0.0202
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* From April 22, 1996 (commencement of operations).
+ Annualized.
1
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TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Capital Fund posted solid gains in 1996. Though its total return based
on the net asset value of Class A shares lagged that of the Standard & Poor's
500 Composite Stock Price Index (S&P 500), it outperformed the Fund's
competitive universe as measured by the Lipper Capital Appreciation Funds
Average. The Fund's investment results begin on page 6.
Driven by the outstanding performance of a small number of the largest
stocks, the US equity markets continued to advance in 1996, setting successive
new highs by rebounding from occasional sharp, short-term, setbacks. The S&P
500's total return for the year was 22.96%, and the Dow Jones Industrial Average
(DJIA) posted an exceptional total return of 28.91%.
In this environment, Seligman Capital Fund lagged the S&P 500 because it
generally invests in companies that are smaller than the large companies that
drove the increases of the S&P 500 in 1996. The Fund's weighted average market
capitalization is $12 billion, significantly less than the $39 billion weighted
average market capitalization of the S&P 500.
While the performance of the smaller-capitalized stocks lagged
larger-capitalized stocks in 1996, 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.
Currently, there are no clear indications that there will be either runaway
economic expansion or recession in 1997. Looking ahead, the environment for the
US financial markets and investors remains generally positive, given continued
modest economic growth, low inflation, and bipartisan efforts to balance the
federal budget without raising taxes. While we always recognize that there could
be further short-term volatility, we remain positive about the long-term outlook
for the equity markets and your Fund.
On a final note, the activity witnessed in the equity markets in 1996, where
large one-day increases followed abrupt corrections, is not unusual in the
challenging world of investing. We believe the best strategy for growth of
capital is long-term investing. A professional financial advisor can help you
formulate a long-term investment plan to help you seek your financial goals, and
can provide the insight and support needed to weather the day-to-day uncertainty
that accompanies investing. It is time, not timing, that counts when it comes to
investing.
A discussion with your Portfolio Manager and your Fund's portfolio of
investments follow this letter.
We thank you for your continued interest in Seligman Capital Fund, and look
forward to serving your investment needs in the many years to come.
By order of the Board of Directors,
/s/ William C. Morris
- ----------------------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-------------------------------
Brian T. Zino
President
January 31, 1997
2
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ANNUAL PERFORMANCE OVERVIEW
- --------------------------------------------------------------------------------
The following is a discussion with your Portfolio Manager regarding Seligman
Capital Fund, and a chart and table comparing your Fund's performance to the
performance of the Standard & Poor's 500 Composite Stock Price Index (S&P 500)
and the Lipper Capital Appreciation Funds Average.
YOUR PORTFOLIO MANAGER
- --------------------------- LORIS D. MUZZATTI is a Managing Director of J. &
W. Seligman & Co. Incorporated, has been Vice
President and Portfolio Manager of Seligman
Capital Fund for the past eight years, and Vice
[Photograph omitted] President and Portfolio Manager of Seligman Growth
Fund for the past year. Mr. Muzzatti is also Vice
President of Seligman Portfolios, Inc. and
Portfolio Manager of its Seligman Capital
Portfolio and the US portion of its Seligman
Global Growth Opportunities Portfolio, and Vice
President of Seligman Henderson Global Fund
Series, Inc. and Portfolio Manager of the US
portion of its Seligman Henderson Global Growth
- --------------------------- Opportunities Fund. He also manages a portion of
Seligman Growth Team: (from the firm's institutional accounts. Mr. Muzzatti
left) Louise Oh, Natalie joined Seligman in 1985 as a Vice President and
Billon, Louise Knight Portfolio Manager. He is assisted by a team of
(Administrative Assistant), seasoned investment professionals who are
David Levy, Kenneth Londoner, responsible for identifying companies that offer
(seated) Loris D. Muzzatti the greatest capital appreciation potential
(Portfolio Manager). Missing consistent with Seligman Capital Fund's
from photo: Michelle Borre objectives.
HOW DID SELIGMAN CAPITAL FUND PERFORM IN THE LAST 12 MONTHS?
"Seligman Capital Fund had a reasonable year, given that the markets were
propelled by the performance of larger-capitalized stocks than the Fund
generally invests in. The Fund's total return of 16.74%, based on the net asset
value of Class A shares, lagged the S&P 500 which posted a total return of
22.96% for the year, but outperformed the 16.11% total return of the Lipper
Capital Appreciation Funds Average."
WHICH ECONOMIC FACTORS AFFECTED THE FUND IN 1996?
"Economic expansion continued throughout 1996, supported by low levels of
inflation. This positive economic environment helped improve the corporate
profit picture, and provided a solid backdrop for the general equity markets and
the Fund's performance. The interest rate environment, however, was somewhat
erratic. Interest rates rose in the first half of the year due to growing fears
of inflation, but reversed course in the second half of the year as a more
complete picture of the economy emerged and no noticeable increases in inflation
occurred."
WHICH MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE OVER THE LAST 12 MONTHS?
"Propelled by the strong appreciation of the largest companies in the markets,
indices such as the Dow Jones Industrial Average and the S&P 500 reached new
highs this year. While the general equity markets finished the year on a
positive note, June, July, and October corrections in the mid-sized company
market slowed the otherwise strong performance of the Fund."
WHAT WAS YOUR INVESTMENT STRATEGY?
"The Fund placed an emphasis on larger mid-sized companies with capitalizations
ranging from $500 million to $5 billion. Mid-sized companies reach earnings
levels that provoke a shift in a company's management style: The entrepreneurial
stage ends and professional management becomes necessary for the successful
completion of the expansion and development stage. Historically, this group has
had strong long-term capital appreciation potential.
3
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ANNUAL PERFORMANCE OVERVIEW (continued)
- --------------------------------------------------------------------------------
"More specifically, the investment strategy for Seligman Capital Fund
focused on purchasing high-quality stocks. We favored companies whose corporate
executives had insider ownership, as this ensured that management goals were
aligned with shareholder interests. Positive cash flow was another key attribute
of the companies in the portfolio. Excess cash flow indicated that companies had
the means to fund their growth internally. Stocks reviewed for purchase also
displayed potential minimum earnings growth per share of 15% a year, and
currently the portfolio has an overall estimated earnings growth per share of
28% for 1997."
WHICH SECTORS IMPROVED THE FUND'S PERFORMANCE IN THE PAST YEAR?
"The Fund's overweighting in technology provided a broadly positive contribution
to the portfolio's performance. The Fund's technology holdings were increased
throughout the second half of the year, primarily by purchasing computer goods
and services companies such as Seagate Technology, and software stocks such as
Symantec. After substantial appreciation we took profits in Compaq Computer,
when the stock reached the high end of its historical valuation range.
"Finance was another strong sector in 1996, as companies benefited from the
decline in interest rates in the second half of the year. The Fund's strongest
performers included MBNA, which was held throughout the year, and Charles
Schwab, which was a new addition.
"The Fund also benefited from the strong performance of the new issue
market. A great part of the Fund's short-term capital gain came from the sale of
these stocks, as they achieved their target sell prices quickly. For example,
positions in Omnipoint and McLeod appreciated quickly and were sold."
WHICH SECTORS IMPAIRED THE FUND'S PERFORMANCE IN 1996?
"Health care was a difficult sector this year. As HMO companies suffered in the
first half of the year, we realigned the Fund's weighting into medical product
and biotechnology companies. Those areas of health care are experiencing strong
unit volume growth, whereas HMOs have been subject to increased utilization and
medical loss ratios. Additionally, the Fund's lack of holdings in the energy
sector prevented it from participating in the sector's strong appreciation.
However, Petroleum Geo-Services, which is a four-dimensional deep-sea mapping
company for the oil drilling industry, was purchased in the fourth quarter and
was a rewarding energy-related position for the portfolio. We will continue to
look for other opportunities in the energy sector in 1997."
WHAT IS THE OUTLOOK?
"Currently, the Fund is well positioned as its holdings have much higher
projected earnings growth for 1997 than the S&P 500. We anticipate that
investors will seek above-average earnings growth potential in 1997 if the
economy sustains its moderate growth levels without reigniting inflation. We
also believe that the performance of mid-sized companies has not met its full
potential. We will maintain a disciplined investment style, continuing to focus
on the highest quality when selecting stocks, as we expect that fundamentals
will become increasingly important to market participants in 1997."
4
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SELIGMAN CAPITAL FUND, INC.
- --------------------------------------------------------------------------------
DIVERSIFICATION OF ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
---------------------
ISSUES COST VALUE 1996 1995
-------- ------------ ------------ ------- -------
<S> <C> <C> <C> <C> <C>
NET CASH AND SHORT-TERM HOLDINGS ............ 2 $ 27,451,161 $ 27,451,161 9.7 4.5
-- ------------ ------------ ----- -----
COMMON STOCKS:
Automotive and Related....................... 1 2,973,797 5,640,000 2.0 2.7
Basic Materials.............................. 4 10,906,374 12,716,094 4.5 4.8
Business Services and Supplies............... 4 5,897,970 12,240,500 4.3 6.0
Computer Goods and Services.................. 14 31,791,363 46,553,750 16.4 7.1
Consumer Goods and Services.................. 7 12,196,825 18,545,313 6.5 9.4
Drugs and Health Care........................ 11 25,017,164 30,805,400 10.9 18.8
Financial Services........................... 11 28,557,424 40,944,687 14.4 11.5
Food and Food Services....................... -- -- -- -- 3.0
Industrial Goods and Services................ 3 7,051,422 8,333,250 2.9 2.5
Leisure and Related.......................... 6 17,258,624 21,796,250 7.7 7.3
Packaging.................................... -- -- -- -- 0.6
Printing and Publishing...................... 1 2,403,500 2,435,125 0.9 --
Retail Trade................................. 3 5,735,317 10,066,250 3.5 6.4
Software..................................... 8 15,677,326 23,788,631 8.4 12.3
Telecommunications........................... 10 18,628,472 22,470,662 7.9 3.1
Other........................................ 1 -- 37,958 -- --
-- ------------ ------------ ----- -----
84 184,095,578 256,373,870 90.3 95.5
-- ------------ ------------ ----- -----
NET ASSETS .................................. 86 $211,546,739 $283,825,031 100.0 100.0
== ============ ============ ===== =====
</TABLE>
5
<PAGE>
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PERFORMANCE COMPARISON CHART December 31, 1996
- --------------------------------------------------------------------------------
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, 1996, 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 Funds Average (Lipper Capital Average)
for the same period. The performances of Seligman Capital Fund Class B and D
shares are not shown in this chart, but are included in the table on page 7. 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 Average excludes the effect of sales
charges.
[The following table represents points that appear on the line chart
in the printed version]
Seligman Capital Fund - Class A
Seligman Seligman Lipper
Capital Fund Capital Fund Capital
With Sales Charge With Sales Charge S&P 500 Average
12/31/86 9,528.09 10,000.00 10,000.00 10,000.00
11,525.73 12,096.59 12,135.00 12,176.02
11,978.90 12,572.21 12,744.18 12,493.18
12,530.26 13,150.88 13,585.29 13,190.06
12/31/87 9,281.32 9,741.02 10,524.53 10,306.30
9,399.23 9,864.77 11,123.37 11,155.87
9,955.10 10,448.17 11,864.19 11,775.21
9,517.14 9,988.52 11,904.53 11,633.44
12/31/88 9,511.01 9,982.09 12,272.38 11,727.38
10,278.47 10,787.56 13,142.49 12,636.37
11,045.93 11,593.03 14,302.97 13,662.10
12,864.08 13,501.23 15,834.82 15,089.77
12/31/89 12,596.01 13,219.87 16,161.01 14,837.47
12,189.03 12,792.74 15,674.57 14,440.58
14,081.48 14,778.92 16,660.50 15,286.20
10,896.87 11,436.58 14,371.35 12,659.17
12/31/90 12,769.97 13,402.45 15,659.02 13,500.02
15,467.56 16,233.65 17,934.27 16,022.49
15,590.64 16,362.83 17,893.03 15,792.57
17,436.90 18,300.53 18,850.30 17,155.53
12/31/91 19,751.81 20,730.10 20,429.96 18,773.11
19,490.98 20,456.36 19,913.08 18,795.78
18,601.80 19,523.13 20,291.43 18,096.47
19,763.67 20,742.55 20,930.61 18,531.17
12/31/92 22,035.63 23,127.05 21,983.42 20,457.77
22,242.54 23,344.20 22,944.09 21,275.99
22,009.77 23,099.90 23,056.52 21,903.64
23,419.33 24,579.27 23,651.38 23,499.40
12/31/93 23,093.93 24,237.76 24,200.09 24,136.47
22,384.46 23,493.16 23,282.91 23,359.42
19,792.72 20,773.06 23,380.69 22,354.24
21,515.72 22,581.39 24,524.01 23,918.26
12/31/94 21,463.60 22,526.69 24,519.11 23,538.70
22,669.60 23,792.43 26,907.27 25,074.08
24,723.06 25,947.60 29,476.91 27,376.82
26,841.72 28,171.19 31,820.32 30,059.92
12/31/95 29,473.47 30,933.29 33,735.91 30,792.87
31,496.35 33,056.36 35,547.53 32,614.04
34,010.76 35,695.31 37,140.06 34,268.50
34,918.22 36,647.71 38,287.68 34,989.77
12/31/96 34,406.63 36,110.79 41,480.88 35,752.80
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.
6
<PAGE>
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SELIGMAN CAPITAL FUND, INC.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS*
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
----------------------------------------------------
CLASS B CLASS D
SINCE SINCE
INCEPTION THREE ONE FIVE 10 INCEPTION
4/22/96 MONTHS YEAR YEARS YEARS 5/3/93
----------- ------- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
With Sales Charge ....................... n/a (6.14)% 11.17% 10.66% 13.15% n/a
Without Sales Charge .................... n/a (1.46) 16.74 11.74 13.70 n/a
CLASS B
With 5% CDSL ............................ 0.63% (6.06) n/a n/a n/a n/a
Without CDSL ............................ 5.33 (1.67) n/a n/a n/a n/a
CLASS D
With 1% CDSL ............................ n/a (2.55) 14.84 n/a n/a n/a
Without CDSL ............................ n/a (1.67) 15.84 n/a n/a 12.78%
S&P 500** ............................... 15.00+ 8.34 22.96 15.22 15.27 18.29++
LIPPER CAPITAL AVERAGE** ................ 4.69+ 2.18 16.11 13.73 13.58 15.91++
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE
DECEMBER 31, 1996 SEPTEMBER 30, 1996 JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
------------------- -------------------- --------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C>
CLASS A $16.36 $18.47 $17.99 $16.66 $15.59
CLASS B 15.47 17.60 17.18 16.43+++ n/a
CLASS D 15.47 17.60 17.18 15.94 14.94
</TABLE>
CAPITAL GAIN INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
CAPITAL GAIN
------------------------------------------------
PAID REALIZED UNREALIZEDo
-------------- -------------- -------------
CLASS A $1.872 $1.615 $4.145
CLASS B 1.872 1.615 4.145
CLASS D 1.872 1.615 4.145
The performances of Class B and 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.
- ----------
* Return figures reflect any change in price per share and assume the
reinvestment of dividends and capital gain distributions. Return figures for
Class A shares are calculated with and without the effect of the initial
4.75% maximum sales charge. Class A share returns reflect the effect of the
0.25% Administration, Shareholder Services and Distribution Plan after
January 1, 1993, only. Returns for Class B shares are calculated 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 certain redemptions made within one year of the
date of purchase.
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their
original cost. Past performance is not indicative of future investment
results.
** The S&P 500 and the Lipper Capital Average are unmanaged benchmarks that
assume investment of dividends. The S&P 500 does not reflect fees and sales
charges and the Lipper Capital Average does not reflect sales charges. The
monthly performance of the Lipper Capital Average is used in the Performance
Comparison Chart and the Investment Results per Share. Investors may not
invest directly in an index or an average.
+ From April 30, 1996.
++ From April 30, 1993.
+++ As of April 22, 1996.
o Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1996.
7
<PAGE>
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SELIGMAN CAPITAL FUND, INC.
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
DURING PAST THREE MONTHS
SHARES
-----------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/96
- ------------ ----------- -----------
Adaptec....................... 90,000 90,000
C-Cube Microsystems........... 80,000 80,000
Linear Technology............. 70,000 70,000
Maxim Integrated Products..... 100,000 100,000
Premisys Communications....... 60,000 60,000
Schwab (Charles).............. 100,000 100,000
Seagate Technology............ 100,000 100,000
Symantec...................... 200,000 200,000
3Com.......................... 50,000 50,000
Washington Mutual............. 100,000 100,000
SHARES
-----------------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/96
- -------------- ----------- ------------
Amgen......................... 30,000 50,000
Compaq Computer............... 40,000 --
EXCEL Communications.......... 125,000 --
Nordstrom..................... 55,000 --
Oxford Health Plans........... 40,000 --
PepsiCo....................... 220,000 --
Pharmacia & Upjohn............ 70,000 --
St. Jude Medical.............. 80,000 --
Travelers..................... 65,000 135,000*
UCAR International............ 125,000 --
Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
* Includes 50,000 shares received as a result of a 4-for-3 stock split.
LARGEST PORTFOLIO HOLDINGS
AT DECEMBER 31, 1996
SECURITY VALUE
- ----------- ----------
Microsoft................................ $8,268,750
Intel.................................... 6,546,875
Fiserv................................... 6,464,062
Travelers................................ 6,125,625
Harley-Davidson.......................... 5,640,000
WorldCom................................. 5,473,125
MBNA..................................... 5,291,250
Guidant.................................. 5,130,000
Infinity Broadcasting (Class A).......... 5,043,750
Home Depot............................... 5,012,500
8
<PAGE>
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SELIGMAN CAPITAL FUND, INC.
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF 1996
GAIN DISTRIBUTION FOR
TAXABLE ACCOUNTS
A distribution of $1.872 per share, consisting of $0.669 from net long-term and
$1.203 from net short-term gain realized on investments from November 1995 to
October 1996, was paid on November 22, 1996, to Class A, B, 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 1996
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 on the sale 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 $16.65 for Class A shares, and $15.77 for Class B
and D shares.
A year-end statement of account showing activity for 1996, a Form 1099-DIV,
and if applicable, a Form 1099-B have been mailed to each shareholder. The Form
1099-B shows the proceeds of any redemptions paid to the shareholder during the
year and reported to the Internal Revenue Service as required by federal
regulations. Form 1099-DIV shows the amount of the distribution from gain on
investments paid to the shareholder during the year.
9
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PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCKS 90.3%
AUTOMOTIVE AND RELATED 2.0%
Harley-Davidson
Motorcycle manufacturer ................... 120,000 $ 5,640,000
------------
BASIC MATERIALS 4.5%
Minerals Technologies
Marketer of specialty
minerals and products ..................... 75,000 3,075,000
Nucor
Manufacturer of steel joints,
angles, and rounds ........................ 70,000 3,570,000
Olin
Chemicals, metals, and defense
products .................................. 100,000 3,762,500
Schulman, A
Manufacturer of plastics .................. 93,750 2,308,594
------------
12,716,094
------------
BUSINESS SERVICES
AND SUPPLIES 4.3%
HFS*
Franchiser of hotels;
residential real estate brokerage ......... 50,000 2,987,500
Interpublic Group of
Companies
Worldwide advertising agency .............. 100,000 4,750,000
Leap Group*
Designer of brand marketing
and advertising campaigns ................. 84,000 588,000
Snyder Communications*
Provider of marketing
services .................................. 145,000 3,915,000
------------
12,240,500
------------
COMPUTER GOODS
AND SERVICES 16.4%
Adaptec*
Manufacturer of computer
input-output systems ...................... 90,000 3,605,625
American Power Conversion
Producer of surge suppressors
and power conditioners .................... 60,000 1,638,750
Arrow Electronics*
Distributor of semiconductors
and other electrical components ........... 60,000 3,210,000
C-Cube Microsystems*
Designer and manufacturer of
video compression circuits ................ 80,000 2,955,000
Ceridian*
Computer services ......................... 100,000 4,050,000
Fiserv*
Data processing services .................. 175,000 6,464,062
Intel
Semiconductor/memory
circuits .................................. 50,000 6,546,875
Linear Technology
Designer and manufacturer of
analog integrated circuits ................ 70,000 3,071,250
Microchip Technology
Field programmable
microcontrollers .......................... 25,000 1,271,875
National Processing*
Provider of low-cost trans-
action processing services ................ 45,000 720,000
Seagate Technology
Global hard-disk drive supplier ........... 100,000 3,950,000
Tencor Instruments
Wafer inspection devices .................. 100,000 2,643,750
3Com
Supplier of adapter cards, hubs,
and routers for local area
computer networks ......................... 50,000 3,665,625
Xilinx*
Designer and manufacturer of
field programmable gate arrays ............ 75,000 2,760,938
------------
46,553,750
------------
CONSUMER GOODS
AND SERVICES 6.5%
Consolidated Cigar
Holdings (Class A)*
Manufacturer and
marketer of cigars ........................ 50,000 1,237,500
Estee Lauder (Class A)*
Cosmetics and toiletries .................. 65,000 3,306,875
Gucci Group
Manufacturer and marketer of
apparel ................................... 40,000 2,555,000
Landry's Seafood Restaurants*
Restaurant operator ....................... 55,000 1,185,938
- ----------
See footnotes on page 13.
10
<PAGE>
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December 31, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
CONSUMER GOODS AND
SERVICES (continued)
Newell
Home furnishings .......................... 150,000 $ 4,725,000
Oakley*
Manufacturer of sunglasses ................ 200,000 2,175,000
Tommy Hilfiger*
Designer and distributor of
men's apparel ............................. 70,000 3,360,000
------------
18,545,313
------------
DRUGS AND HEALTH CARE 10.9%
Amgen*
Researcher and developer of
biological products ....................... 50,000 2,721,875
Biogen*
Developer of genetically
engineered drugs .......................... 40,000 1,545,000
Centocor
Developer of human health
care products for cancer and
cardiovascular diseases ................... 70,000 2,506,875
Columbia/HCA Healthcare
Health care facilities
and services .............................. 112,500 4,584,375
Guidant
Cardiac rhythm management
and coronary artery disease
intervention .............................. 90,000 5,130,000
HCIA*
Developer of integrated
clinical and financial
information systems ....................... 40,000 1,387,500
Humana*
Provider of managed health
care plans ................................ 100,000 1,912,500
Nitinol Medical Technologies*
Designer of medical devices
used in minimally invasive
procedures ................................ 100,000 1,231,250
Pfizer
Manufacturer of health care
consumer products and
specialty chemicals ....................... 50,000 4,143,750
Physio-Control International*
Manufacturer of an integrated
line of non-invasive emer-
gency cardiac defibrillators .............. 101,900 2,267,275
United Healthcare
Health maintenance
organization .............................. 75,000 3,375,000
------------
30,805,400
------------
FINANCIAL SERVICES 14.4%
Allmerica Financial
Property liability insurance .............. 62,500 2,093,750
Amerin*
Mortgage insurance provider ............... 165,000 4,238,437
Donaldson, Lufkin &
Jenrette Securities
Leading investment and
merchant bank ............................. 125,000 4,500,000
Greenpoint Financial
Bank holding company ...................... 100,000 4,725,000
MBNA
Issuer of bank credit cards ............... 127,500 5,291,250
Old Republic International
Holding company; subsidiaries
provide risk management
and reinsurance services .................. 60,000 1,605,000
Progressive (Ohio)
High-risk auto insurance .................. 50,000 3,368,750
St. Paul Bancorp
Holding company for
a savings bank ............................ 50,000 1,465,625
Schwab (Charles)
Financial services firm ................... 100,000 3,200,000
Travelers
Diversified financial services ............ 135,000 6,125,625
Washington Mutual
Regional finance company
for small- and mid-sized
businesses ................................ 100,000 4,331,250
------------
40,944,687
------------
INDUSTRIAL GOODS
AND SERVICES 2.9%
Ionics
Developer and manufacturer
of water treatment systems ................ 20,000 960,000
Maxim Integrated Products*
Linear and mixed-signal
integrated circuits ....................... 100,000 4,331,250
Petroleum Geo-Services
(ADRs)*
Four-dimensional deep-sea
mapping company for the
oil-drilling industry ..................... 78,000 3,042,000
------------
8,333,250
------------
- ----------
See footnotes on page 13.
11
<PAGE>
================================================================================
PORTFOLIO OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
LEISURE AND RELATED 7.7%
British Sky Broadcasting (ADRs)
Satellite-delivered
entertainment channel
in the UK ................................. 60,000 $ 3,150,000
Circus Circus Enterprises*
Casino hotels ............................. 100,000 3,437,500
Infinity Broadcasting (Class A)*
Owner/operator of radio
stations .................................. 150,000 5,043,750
MGM Grand*
Owner and operator of
resort and casino hotels .................. 100,000 3,487,500
Mirage Resorts*
Hotel/casino complex ...................... 140,000 3,027,500
Sun International Hotels*
Owner and operator of
resort and casino hotels .................. 100,000 3,650,000
------------
21,796,250
------------
PRINTING AND
PUBLISHING 0.9%
World Color Press*
Commercial printer and
distributor ............................... 126,500 2,435,125
------------
RETAIL TRADE 3.5%
Home Depot
Home improvement stores ................... 100,000 5,012,500
Office Depot*
Office supply retailer .................... 125,000 2,218,750
Saks Holdings*
Men's and women's
fashion retailer .......................... 105,000 2,835,000
------------
10,066,250
------------
SOFTWARE 8.4%
Activision*
PC CD-ROM-based
entertainment ............................. 80,000 1,010,000
DST Systems*
Mutual fund data processing
services .................................. 100,000 3,137,500
International Game Technology
Designer and manufacturer of
video games ............................... 125,000 2,281,250
Microsoft*
Microcomputer software .................... 100,000 8,268,750
Parametric Technology*
Developer of mechanical
design software ........................... 34,700 1,784,881
Shiva*
Global provider of remote
access solutions .......................... 25,000 868,750
Sterling Commerce*
Developer of electronic data
interchange software ...................... 100,000 3,525,000
Symantec*
Developer, marketer, and
supporter of application
development tools and
systems software products ................. 200,000 2,912,500
------------
23,788,631
------------
TELECOMMUNICATIONS 7.9%
Century Telephone Enterprises
Regional telephone services ............... 100,000 3,087,500
LCC International (Class A)*
Provider of radio frequency
engineering and network
design services to wireless
telecommunications
providers ................................. 65,000 1,174,062
Level One Communications*
Developer of integrated
circuits for high-speed
digital transmission ...................... 45,000 1,597,500
Madge Networks*
Worldwide supplier of
switched networking
solutions ................................. 71,400 709,537
McLeod (Class A)*
Provider of integrated local
and long distance
telecommunications
services .................................. 100,000 2,562,500
MRV Communications*
Manufacturer of
semiconductor laser diodes ................ 145,000 3,162,813
Premisys Communications*
Designer and manufacturer
of integrated access products
for telecommunications
service providers ......................... 60,000 2,025,000
TCSI*
Designer of software
solutions ................................. 58,000 366,125
- ----------
See footnotes on page 13.
12
<PAGE>
================================================================================
December 31, 1996
- --------------------------------------------------------------------------------
SHARES
PRIN. AMT. VALUE
--------- ------------
TELECOMMUNICATIONS (continued)
360(degree) Communications*
Provider of cellular services 100,000shs. $ 2,312,500
WorldCom*
Long distance carrier ..................... 210,000 5,473,125
------------
22,470,662
------------
OTHER ........................................ 37,958
------------
TOTAL COMMON STOCKS
(Cost $184,095,578) ....................... 256,373,870
------------
SHORT-TERM HOLDINGS 9.0%
Canadian Imperial Bank of
Commerce, Grand Cayman,
Fixed Time Deposit,
6 1/2%, 1/2/1997 ...........................$12,465,000 12,465,000
Republic National Bank of
New York, Grand Cayman,
Fixed Time Deposit,
6 3/4%, 1/2/1997 ........................... 13,000,000 13,000,000
------------
TOTAL SHORT-TERM HOLDINGS
(Cost $25,465,000) ........................................ 25,465,000
------------
TOTAL INVESTMENTS 99.3%
(Cost $209,560,578) .................................... $281,838,870
OTHER ASSETS LESS
LIABILITIES 0.7% ...................................... 1,986,161
------------
NET ASSETS 100.0% ........................................ $283,825,031
============
- ----------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
13
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C> <C>
Investments, at value:
Common stocks (cost $184,095,578)....................................... $256,373,870
Short-term holdings (cost $25,465,000).................................. 25,465,000 $ 281,838,870
------------
Cash....................................................................... 480,709
Receivable for securities sold............................................. 3,897,986
Receivable for Capital Stock sold.......................................... 462,218
Investment in, and expenses prepaid to, shareholder service agent.......... 76,973
Receivable for dividends and interest...................................... 53,231
Other...................................................................... 22,608
-----------
Total Assets .............................................................. 286,832,595
-----------
LIABILITIES:
Payable for securities purchased........................................... 2,343,844
Payable for Capital Stock repurchased...................................... 187,822
Accrued expenses, taxes, and other......................................... 475,898
------------
Total Liabilities ......................................................... 3,007,564
------------
Net Assets ................................................................ $283,825,031
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized;
17,438,514 shares outstanding):
Class A.................................................................. $ 15,866,755
Class B.................................................................. 280,418
Class D.................................................................. 1,291,341
Additional paid-in capital................................................. 189,348,315
Accumulated net investment loss............................................ (99,738)
Undistributed net realized gain............................................ 4,859,648
Net unrealized appreciation of investments................................. 72,278,292
------------
Net Assets ................................................................ $283,825,031
============
NET ASSET VALUE PER SHARE:
Class A ($259,513,979 / 15,866,755 shares) ................................ $16.36
======
Class B ($4,337,298 / 280,418 shares) ..................................... $15.47
======
Class D ($19,973,754 / 1,291,341 shares) .................................. $15.47
======
</TABLE>
- ----------
See Notes to Financial Statements.
14
<PAGE>
================================================================================
STATEMENT OF OPERATIONS For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends (net of foreign taxes withheld of $7,223)........................ $ 1,153,257
Interest................................................................... 860,957
Other...................................................................... 62,563
-----------
Total Investment Income ................................................... $ 2,076,777
EXPENSES:
Management fee............................................................. 1,253,672
Distribution and service fees.............................................. 728,864
Shareholder account services............................................... 540,252
Registration............................................................... 83,404
Auditing and legal fees.................................................... 62,844
Shareholder reports and communications..................................... 60,972
Custody and related services............................................... 40,500
Directors' fees and expenses............................................... 28,968
Shareholders' meeting...................................................... 25,689
Miscellaneous.............................................................. 13,855
-----------
Total Expenses ............................................................ 2,839,020
-----------
Net Investment Loss ....................................................... (762,243)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments........................................... 28,165,196
Net change in unrealized appreciation of investments....................... 8,893,154
-----------
Net Gain on Investments ................................................... 37,058,350
-----------
Increase in Net Assets from Operations .................................... $36,296,107
===========
</TABLE>
- ----------
See Notes to Financial Statements.
15
<PAGE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net investment loss.......................................................... $ (762,243) $ (254,453)
Net realized gain on investments............................................. 28,165,196 35,184,301
Net change in unrealized appreciation of investments......................... 8,893,154 24,927,528
----------- -----------
Increase in net assets from operations....................................... 36,296,107 59,857,376
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A.................................................................... (26,567,200) (27,349,482)
Class B.................................................................... (409,321) --
Class D.................................................................... (2,122,695) (1,044,584)
----------- -----------
Decrease in net assets from distributions.................................... (29,099,216) (28,394,066)
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------
YEAR ENDED DECEMBER 31,
-----------------------
CAPITAL SHARE TRANSACTIONS:* 1996 1995
---- ----
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A...................................... 1,942,799 733,030 33,837,665 10,961,004
Class B...................................... 254,282 -- 4,295,072 --
Class D...................................... 557,039 290,741 9,125,387 4,369,424
Exchanged from associated Funds:
Class A...................................... 3,292,043 1,028,684 56,774,849 15,769,810
Class B...................................... 18,524 -- 311,768 --
Class D...................................... 523,994 132,768 8,588,724 1,987,004
Shares issued in payment of gain distributions:
Class A...................................... 1,456,987 1,729,508 24,258,766 24,834,625
Class B...................................... 24,565 -- 387,386 --
Class D...................................... 126,975 62,511 2,002,437 860,777
--------- --------- ---------- ----------
Total.......................................... 8,197,208 3,977,242 139,582,054 58,782,644
--------- --------- ---------- ----------
Cost of shares repurchased:
Class A...................................... (1,456,803) (1,250,270) (25,036,508) (18,467,977)
Class B...................................... (3,999) -- (64,181) --
Class D...................................... (186,463) (62,080) (2,985,744) (883,945)
Exchanged into associated Funds:
Class A...................................... (3,206,843) (743,367) (53,969,312) (10,921,916)
Class B...................................... (12,954) -- (213,574) --
Class D...................................... (341,956) (60,208) (5,510,258) (881,945)
--------- --------- ---------- ----------
Total.......................................... (5,209,018) (2,115,925) (87,779,577) (31,155,783)
--------- --------- ---------- ----------
Increase in net assets from capital
share transactions.......................... 2,988,190 1,861,317 51,802,477 27,626,861
========= ========= ---------- ----------
Increase in net assets....................................................... 58,999,368 59,090,171
NET ASSETS:
Beginning of year............................................................ 224,825,663 165,735,492
------------ ------------
End of year (including accumulated net investment loss of
$99,738 and $89,966, respectively)........................................ $283,825,031 $224,825,663
============ ============
</TABLE>
- ----------
* The Fund began offering Class B shares on April 22, 1996.
See Notes to Financial Statements.
16
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Capital Fund, Inc. (the "Fund") offers three classes of shares. All
shares existing prior to May 3, 1993, the commencement of Class D shares, were
classified as Class A shares. The Fund began offering Class B shares on April
22, 1996. Class A shares are sold with an initial sales charge of up to 4.75%
and a continuing service fee of up to 0.25% on an annual basis. Class 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 eighteen months of purchase. Class B shares are sold without
an initial sales charge but are subject to a distribution fee of up to 0.75% and
a service fee of up to 0.25% on an annual basis, and a CDSL, if applicable, of
5% on redemptions in the first year after purchase, declining to 1% in the sixth
year and 0% thereafter. Class B shares will automatically convert to Class A
shares on the last day of the month that precedes the eighth anniversary of
their date of purchase. Class D shares are sold without an initial sales charge
but are subject to a distribution fee of up to 0.75% and a service fee of up to
0.25% on an annual basis, and a CDSL of 1% imposed on certain redemptions made
within one year of purchase. The three classes of shares represent interests in
the same portfolio of investments, have the same rights and are generally
identical in all respects except that each class bears its separate distribution
and certain class expenses, and has exclusive voting rights with respect to any
matter on 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 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.
b. There is no provision for federal income or excise tax. The Fund has elected
to be taxed as a regulated investment company and intends to distribute
substantially all taxable net income and net gain realized.
c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income tax
purposes. Dividends receivable and payable are recorded on ex-dividend
dates. Interest income is recorded on an accrual basis.
d. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative value of shares of each class. Class-specific expenses,
which include distribution and service fees and any other items that are
specifically attributed to a particular class, are charged directly to such
class. For the year ended December 31, 1996, distribution and service fees
were the only class-specific expenses.
e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gain may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense, or 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 reclassifications
will have no effect on net assets, results of operations, or net asset value
per share of the Fund.
3. Purchases and sales of portfolio securities, excluding US Government
obligations and short-term investments, for the year ended December 31, 1996,
amounted to $231,002,881 and $226,481,468, respectively.
17
<PAGE>
================================================================================
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
At December 31, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities amounted to $78,825,346 and $6,547,054, 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, 1996, was equivalent to an
annual rate of 0.49% of the average daily net assets of the Fund.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $37,555 from sales of Class A shares, after commissions of
$290,069 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 year ended December 31,
1996, fees paid aggregated $567,328, 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 fees, for Class D shares only, for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of up to 0.75% on an
annual basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provided funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the year ended December 31, 1996, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $14,563 and $146,973, 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
year ended December 31, 1996, such charges amounted to $12,736.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B shares distribution fees retained by the Distributor for the
year ended December 31, 1996, was $11,089.
18
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the year ended December 31, 1996,
Seligman Services, Inc. received commissions of $15,257 from sales of shares of
the Fund. Seligman Services, Inc. also received distribution and service fees of
$75,816, pursuant to the Plan.
Seligman Data Corp., owned by the Fund and certain associated investment
companies, charged the Fund at cost $520,962 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 $16,000 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, 1996, of
$99,738 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.
19
<PAGE>
================================================================================
FINANCIAL HIGHTLIGHTS
- --------------------------------------------------------------------------------
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 each Class'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 each Class's performance
assuming investors purchased Fund shares at net asset value as of the beginning
of the period, reinvested dividends and capital gains paid at net asset value,
and then sold their shares at the net asset value per share on the last day of
the period. The total return computations do not reflect any sales charges
investors may incur in purchasing or selling shares of the Fund. The total
returns for periods of less than one year are not annualized.
Average commission rate paid represents the average commissions paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid. This rate is provided for periods
beginning January 1, 1996.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1996o 1995o 1994o 1993 1992
-------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of year.......... $15.59 $13.17 $15.95 $17.04 $16.66
------ ------ ------ ------ ------
Net investment income (loss)................ (.04) (.02) (.06) (.03) .02
Net realized and unrealized
investment gain (loss)................... 2.68 4.74 (1.12) .84 1.89
------ ------ ------ ------ ------
Increase (decrease) from
investment operations.................... 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.......................... .77 2.42 (2.78) (1.09) .38
------ ------ ------ ------ ------
Net asset value, end of year................ $16.36 $15.59 $13.17 $15.95 $17.04
====== ====== ====== ====== ======
TOTAL RETURN BASED
ON NET ASSET VALUE: 16.74% 37.32% (7.06)% 4.80% 11.56%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.............. 1.07% 1.09% 1.13% 1.13% .96%
Net investment income (loss)
to average net assets.................... (.25)% (.11)% (.39)% (.17)% .11%
Portfolio turnover.......................... 94.97% 103.60% 70.72% 46.84% 42.32%
Average commission rate paid................ $.0537
Net assets, end of year (000s omitted)...... $259,514 $215,688 $162,556 $196,212 $198,063
</TABLE>
- ----------
See footnotes on page 21.
20
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS D
--------- -----------------------------------------------------
4/22/96* YEAR ENDED DECEMBER 31, 5/3/93*
TO -------------------------------------- TO
12/31/96o 1996o 1995o 1994o 12/31/93
---------- -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period........ $16.43 $14.94 $12.82 $15.86 $16.43
------ ------ ------ ------ ------
Net investment income (loss)................ (.10) (.16) (.14) (.33) (.08)
Net realized and unrealized
investment gain (loss)................... 1.01 2.56 4.56 (1.11) 1.41
------ ------ ------ ------ ------
Increase (decrease) from
investment operations.................... .91 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.......................... .96 .53 2.12 (3.04) (.57)
------ ------ ------ ------ ------
Net asset value, end of period.............. $15.47 $15.47 $14.94 $12.82 $15.86
====== ====== ====== ====== ======
TOTAL RETURN BASED
ON NET ASSET VALUE: 5.33% 15.84% 35.98% (8.75)% 8.12%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.............. 1.89%+ 1.83% 2.02% 2.66% 2.26%+
Net investment loss
to average net assets.................... (.99)%+ (1.00)% (1.06)% (2.28)% (1.32)%+
Portfolio turnover.......................... 94.97%++ 94.97% 103.60% 70.72% 46.84%+++
Average commission rate paid................ $.0537++ $.0537
Net assets, end of period (000s omitted) ... $4,337 $19,974 $9,137 $3,179 $2,749
</TABLE>
- ----------
*Commencement of offering of shares.
oPer share amounts for the periods ended 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.
21
<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,
1996, 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, 1996 by correspondence with the Fund's custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Capital
Fund, Inc. as of December 31, 1996, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 31, 1997
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BOARD OF DIRECTORS
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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
SENIOR 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,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
DIRECTOR, Public Service Enterprise Group
JAMES Q. RIORDAN 3, 4
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
RONALD T. SCHROEDER 1
MANAGING DIRECTOR, J. & W. Seligman & Co.
Incorporated
ROBERT L. SHAFER 3, 4
DIRECTOR OR TRUSTEE,
Various Organizations
JAMES N. WHITSON 2, 4
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply Company
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT AND MANAGING DIRECTOR,
J. & W. Seligman & Co. Incorporated
CHAIRMAN AND PRESIDENT, Seligman Data Corp.
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Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
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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
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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
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