S E L I G M A N
- --------------- [Graphic]
CAPITAL
FUND, INC.
MID-YEAR REPORT
JUNE 30, 1998
SEEKING CAPITAL
APPRECIATION BY
INVESTING IN THE
COMMON STOCKS OF
COMPANIES WITH
SIGNIFICANT POTENTIAL
FOR GROWTH
[Logo]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
TIMES CHANGE...
Established in 1864, Seligman's history of providing financial
services has been marked not by fanfare, but rather by a quiet
and firm adherence to financial prudence. While the world has
[GRAPHIC] changed dramatically in the 134 years since Seligman first opened
JAMES, JESSE, its doors, the firm has continued to offer its clients
AND JOSEPH high-quality investment solutions for these changing times.
SELIGMAN, 1870
In the late 19th century, as the country grew, Seligman helped
finance the westward expansion of the railroads, the construction
of the Panama Canal, and the launching of urban transit systems.
In the first part of the 20th century, as America became an
industrial power, the firm helped fund the growing capital needs
of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 --
today, the nation's largest, diversified, publicly-traded closed-end investment
company -- Seligman began shifting its emphasis from investment banking to
investment management. Despite the stock market crash and ensuing depression,
Seligman was convinced of the importance investment companies could have in
building wealth for individual investors and began managing its first mutual
fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including funds that focus on technology stocks, municipal
bonds, and international securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
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 ................................................... 16
Report of Independent Auditors ......................................... 18
Board of Directors ..................................................... 19
Executive Officers AND For More Information ............................ 20
Glossary of Financial Terms ............................................ 21
[Caption]
<PAGE>
TO THE SHAREHOLDERS
In the first six months of 1998, Seligman Capital Fund posted a total return of
14.02% based on the net asset value of Class A shares. This return outpaced the
10.66% total return of the Fund's competitor universe, as measured by the Lipper
Mid Cap Funds Average, as well as the 11.87% total return of the Russell Midcap
Growth Index, which measures the performance of mid-capitalization growth
stocks.
Over the past six months, the economic expansion continued into its eighth year.
US companies again benefited from low inflation, steady wage increases, strong
consumer spending, a tight labor market, and healthy consumer confidence.
Further, the supply of consumer goods kept pace with demand, which helped the
economic expansion remain balanced. These positive factors improved the
environment for mid-capitalization companies, as they were able to reinvest
earnings, improve credit, and strengthen their core businesses to position
themselves for even stronger future growth. Overall, positive domestic economic
fundamentals fueled above-expectation performances by many of the portfolio's
holdings.
Toward the end of the first half of the year, however, some economic indicators
suggested the start of a deceleration in the pace of economic growth. The
expectation of slower growth, combined with fears about the effects of the Asian
financial crisis, heightened investor demand for "safe haven" equities. Both
domestic and overseas investors favored well-known, liquid, large-capitalization
growth stocks, which have a history of providing stable earnings and dividends.
The strong investor interest in large-capitalization growth stocks left mid-cap
stocks on the sidelines in the first six months of the year, as the US equity
market effectively became two-tiered. For example, in the first half, the S&P
500 Index, which is dominated by growth-oriented large-capitalization companies,
returned 17.71%, as opposed to the 11.87% total return of the Russell Midcap
Growth Index. The Russell Midcap Growth Index is comprised of mid-cap companies
with market capitalizations similar to those of the companies in your Fund.
Looking ahead, the Asian crisis has just begun to impact the US economy, and
ultimately the bolstering effect it has had on the domestic equity market may be
reversed. While the crisis caused investors to favor large-cap growth stocks,
its effects may begin to pressure the earnings of these companies, and in turn
their stock prices, in the months to come. We believe that reasonably priced
mid-cap stocks, such as those held by your Fund, should gain favor, as these
generally have a significantly lower direct exposure to Asia.
Beginning in May, the portfolio management responsibilities of Seligman Capital
Fund were fully assumed by Ms. Marion S. Schultheis, a Managing Director of J. &
W. Seligman & Co. Incorporated, and head of the Seligman Growth Team. Ms.
Schultheis is supported by a group of investment professionals dedicated to the
objectives of Seligman Capital Fund.
As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, the Seligman Investment Companies, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that there will be no disruption in the
services provided by your Fund.
Thank you for your continued interest in Seligman Capital Fund. We look forward
to serving your investment needs in the many years to come. A discussion with
your Portfolio Manager, the Fund's portfolio of investments, and financial
statements 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
July 31, 1998
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
Q. HOW DID SELIGMAN CAPITAL FUND PERFORM IN THE FIRST HALF OF 1998?
A. In the first six months of 1998, Seligman Capital Fund had strong
performance, posting a total return of 14.02% based on the net asset value
of Class A shares. This return outpaced the 10.66% total return of its
competitor universe, as measured by the Lipper Mid Cap Funds Average. The
Russell Midcap Growth Index, which measures the performance of
mid-capitalization growth stocks, had a total return of 11.87% in the same
period.
Q. WHICH ECONOMIC AND MARKET FACTORS INFLUENCED THE FUND'S RESULTS IN THE FIRST
HALF OF 1998?
A. Increasing demand for large-cap growth stocks as a "safe haven" investment
lifted the stock market throughout the first six months. Despite the high
valuations of many well-known, liquid, large- capitalization growth stocks,
domestic and overseas investors continued to flock to these instruments
because they have a history of providing stable earnings and dividends. This
"flight to quality" drove valuations even higher in large-cap growth stocks,
but mid-cap growth stocks did not experience the same run-up in valuations.
Overall, valuations in the large-cap market continued to rise, while mid-cap
stocks were still, by comparison, competitively priced.
Although the retreat of domestic and overseas investors into defensive
large-cap growth stocks came at the expense of mid-cap growth stocks, mid
caps were the beneficiaries of an increase in overall investor interest and
the continuing strength of the equity market. Furthermore, the healthy
economy in the first half provided a solid environment for profit growth
among many of the domestic mid-cap companies in which your Fund invests.
Despite the suggestion by some economic indicators that the rate of economic
growth is beginning to slow, we believe that the ongoing positive business
conditions could provide further opportunities for the appreciation of
mid-cap growth stocks.
Q. WHAT WAS THE INVESTMENT STRATEGY?
A. The ongoing effects of the Asian financial crisis led us to focus on more
domestically oriented mid-cap growth companies with less global and cyclical
exposure, while maintaining the portfolio's diversification. The broad-based
mid-cap stock sector was sufficiently diversified, and valuations were low
enough to enable us to purchase fairly valued stocks of well-managed
companies.
Moreover, the strength of the economy in the first six months furnished a
solid business environment for many domestic mid-cap companies. These
factors benefited the Fund, as we were able to identify undervalued, yet
healthy, growth-oriented companies whose performance potential and
underlying stock values were unrecognized. We purchased these when they were
competitively priced, and the stock prices rose when the rest of the market
recognized the value of these investments. We remain confident in our
strategy of using a disciplined stock-selection process and enhanced
analytical control to find mid-cap stocks offered at attractive valuations.
A TEAM APPROACH
Seligman Capital Fund is managed by the Seligman Growth Team, headed by Ms.
Marion S. Schultheis. Ms. Schultheis is assisted 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.
[Caption]
SELIGMAN CAPITAL TEAM: (FROM LEFT) MICHELLE BORRE, SHELIA GRAYSON
(ADMINISTRATIVE ASSISTANT), DAVID LEVY, (SEATED) RICHARD SCHMALTZ,
MARION SCHULTHEIS (PORTFOLIO MANAGER)
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
Q. WHICH INDUSTRIES AFFECTED THE FUND'S PERFORMANCE IN THE FIRST HALF?
A. Overall positive domestic economic fundamentals fueled above-expectation
performances by many of the consumer cyclical holdings in the portfolio.
Prudent stock selection also led to positive performances in the capital
goods, energy, finance, and health care sectors.
Energy stocks were priced competitively in the first half of the year. This
was due to negative investor sentiment caused by declining energy prices
from the mild winter, and a global oversupply. The stocks possessed
attractive yields and reasonable valuations, and the companies had good
long-term prospects and strong operating environments. Despite continuing
declines in energy prices, this sector outperformed our expectations.
Well-publicized merger announcements of several large financial institutions
caused an overall rise in financial companies' share prices in the first
half. Low interest rates, deregulation, and consolidation among companies
also contributed to general strength, which led many of the Fund's financial
stocks to post solid returns.
A significant position in the health care sector also improved the
portfolio's performance, as companies that manufacture medical products and
pharmaceuticals did very well. These companies were attractive for several
reasons: their products have recurring revenue; the market for their
products is expanding due to advances in medicine and the aging US
population; and the release of new patented pharmaceuticals and other health
care products is exerting a growing influence upon the share prices of
parent companies. We took advantage of these factors, and your Fund
benefited from positive first-half performances in share prices of
well-known health care companies such as Pfizer.
Despite an underweighting, the Fund still benefited from the technology
sector because we concentrated the portfolio's holdings in companies that
manufacture software and services, as well as in those with little Asian
exposure. The portfolio was underweight in the technology sector to avoid
the negative impact of depressed Asian demand for products such as disk
drives, personal computers, infrastructure equipment, electronics capital
equipment, and wireless software. However, the Fund's holdings in the
technology sector performed better than we had anticipated, as demand for
software and services was high.
Q. WHAT IS THE OUTLOOK?
A. The second half of 1998 brings with it the first anniversary of the Asian
financial crisis. Many US companies with exposure to Asia have had a year to
adjust their businesses, and those domestic companies who are surviving the
depressed Asian markets may now be worth consideration. Many obviously have
strong enough business practices and operations to function in even the
worst economic environment. While some investors have avoided US companies
with Asian exposure in recent months, we believe the period of maximum
uncertainty is the precise time to consider them. Investor sentiment is
negative, and we think that the valuations of many of these companies may
finally be reaching a bottom.
Further, the "flight to quality" trend depressed mid-cap stock valuations to
bargain levels over the past few months. However, we believe the full impact
of the Asian financial crisis has not yet been absorbed by the US equity
market. Investors may begin to retreat from large caps, as these stocks
begin to feel the maximum impact of the crisis. This is an opportune time to
reconsider US-based mid-cap companies with exposure to Asia. Valuations are
low in some areas, and growth opportunities are greater than ever. We will
look for opportunities to make strategic investments in high-quality,
low-priced stocks in the second half.
We believe that the US economy will remain healthy in the second half of the
year, despite the ongoing impact of the Asian financial crisis and an
overall slowing of economic growth. US companies should again benefit from
positive economic fundamentals in the second half, even though corporate
earnings may come under pressure. Many of the portfolio's holdings have
significant domestic exposure, and their profits are dependent on domestic
economic conditions. Therefore, we believe the Fund is well-positioned to
benefit from the weakness in the Asian markets and the continuing strength
of the US economy.
3
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED JUNE 30, 1998
<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 8.61% 21.32% 15.73% 16.46% n/a n/a
Without Sales Charge 14.02 27.35 16.86 17.03 n/a n/a
CLASS B**
With CDSL+ 8.61 21.33 n/a n/a 17.42% n/a
Without CDSL 13.61 26.33 n/a n/a 18.54 n/a
CLASS D**
With 1% CDSL 12.60 25.40 n/a n/a n/a n/a
Without CDSL 13.60 26.40 15.66 n/a n/a 15.91%
LIPPER MID CAP FUNDS AVERAGE*** 10.66 22.22 16.72 15.56 16.23++ 17.39+++
RUSSELL MIDCAP GROWTH INDEX*** 11.87 24.02 18.39 16.31 18.45++ 18.71+++
S&P 500*** 17.71 30.16 23.08 18.56 31.34++ 22.95+++
</TABLE>
NET ASSET VALUE
JUNE 30, 1998 DECEMBER 31, 1997 JUNE 30, 1997
-------------- -------------------- --------------
CLASS A $19.93 $17.48 $17.91
CLASS B 18.45 16.24 16.87
CLASS D 18.46 16.25 16.87
CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1998
REALIZED $3.443
UNREALIZED 4.380o
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.
- -----------
* Returns for periods of less than one year are not annualized.
** Return figures reflect any change in price per share and assume the
investment of capital gain distributions. Returns for Class A shares are
calculated with and without the effect of the initial 4.75% maximum sales
charge. Returns for Class A shares 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 on 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 on redemptions made within one year of the date of purchase.
*** The Lipper Mid Cap Funds Average, the Russell Midcap Growth Index, and the
S&P 500 are unmanaged benchmarks that assume investment of dividends. The
Lipper Mid Cap Funds Average excludes the effect of sales charges and the
Russell Midcap Growth Index and the S&P 500 exclude the effect of fees and
sales charges. Investors cannot invest directly in an average or an index.
The monthly performances are used in the Performance Overview for the
Lipper Mid Cap Funds Average.
+ The CDSL is 5% for periods of one year or less, and 3% since inception.
++ From April 30, 1996.
+++ From April 30, 1993.
o Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1998.
4
<PAGE>
PERFORMANCE OVERVIEW
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS A SHARES
JUNE 30, 1988, TO
JUNE 30, 1998
[The Following Table Represents a Chart in the Printed piece]
6/30/88 9,525 Initial Amount Invested
9/30/88 9,106
12/31/88 9,100
3/31/89 9,834
6/30/89 10,568
9/30/89 12,308
12/31/89 12,051
3/31/90 11,662
6/30/90 13,473
9/30/90 10,426
12/31/90 12,218
3/31/91 14,799
6/30/91 14,916
9/30/91 16,683
12/31/91 18,898
3/31/92 18,648
6/30/92 17,797
9/30/92 18,909
12/31/92 21,083
3/31/93 21,281
6/30/93 21,058
9/30/93 22,407
12/31/93 22,095
3/31/94 21,416
6/30/94 18,937
9/30/94 20,585
12/31/94 20,536
3/31/95 21,689
6/30/95 23,654
9/30/95 25,681
12/31/95 28,199
3/31/96 30,134
6/30/96 32,540
9/30/96 33,408
12/31/96 32,919
3/31/97 31,551
6/30/97 36,038
9/30/97 40,726
12/31/97 40,253
3/31/98 44,835
6/30/98 45,894 Total Value of 6/30/98
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN
CLASS B SHARES
APRIL 22, 1996,+ TO
JUNE 30, 1998
[The Following Table Represents a Chart in the Printed piece]
4/22/96 10,000 Initial Amount Invested
5/31/96 10,864
6/30/96 10,456
7/31/96 9,604
8/31/96 10,006
9/30/96 10,712
10/31/96 10,310
11/30/96 10,881
12/31/96 10,533
1/31/97 11,085
2/28/97 10,867
3/31/97 10,077
4/30/97 10,356
5/31/97 11,248
6/30/97 11,487
7/31/97 12,542
8/31/97 12,222
9/30/97 12,957
10/31/97 12,413
11/30/97 12,537
12/31/97 12,773
1/31/98 12,388
2/28/98 13,544
3/31/98 14,205
4/30/98 14,401
5/31/98 14,024
6/30/98 14,512 Total Amount at 6/30/98
GROWTH OF AN ASSUMED $10,000
INVESTMENT IN
CLASS D SHARES
MAY 3, 1993,+ TO
JUNE 30, 1998
[The Following Table Represents a Chart in the Printed piece]
5/3/93 10,000 Initial Amount Invested
6/30/93 10,353
9/30/93 10,998
12/31/93 10,812
3/31/94 10,437
6/30/94 9,163
9/30/94 9,933
12/31/94 9,867
3/31/95 10,390
6/30/95 11,298
9/30/95 12,245
12/31/95 13,417
3/31/96 14,315
6/30/96 15,429
9/30/96 15,806
12/31/96 15,543
3/31/97 14,869
6/30/97 16,949
9/30/97 19,119
12/31/97 18,859
3/31/98 20,960
6/30/98 21,424 Total Amount at 6/30/98
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, assuming that
all distributions within the periods are invested in additional 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 3% CDSL.
+ Inception date,
5
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
JUNE 30, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
---------------------------
JUNE DECEMBER
ISSUES COST VALUE 30, 1998 31, 1997
------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Basic Materials 2 $ 4,464,996 $ 6,061,538 1.8 3.6
Capital Goods 6 26,382,262 24,896,317 7.4 3.2
Communication Services 3 8,425,244 14,867,812 4.5 --
Consumer Cyclicals 13 58,581,436 76,295,431 22.8 12.3
Consumer Staples 10 29,098,298 43,532,225 13.0 17.2
Energy 5 16,118,122 17,775,181 5.3 4.9
Financial Services 9 29,121,358 44,024,375 13.2 21.5
Health Care 5 23,711,812 29,608,100 8.9 10.4
Printing and Publishing -- -- -- -- 1.1
Savings and Loan Companies -- -- -- -- 6.7
Technology 10 39,847,866 52,510,687 15.7 14.5
Telecommunications -- -- -- -- 4.2
Utilities 1 3,389,137 3,679,375 1.1 --
Other 2 3,285,600 3,314,307 1.0 --
----- ------------ ------------ ------ ------
66 242,426,131 316,565,348 94.7 99.6
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES 2 17,752,734 17,752,734 5.3 0.4
----- ------------ ------------ ------ ------
NET ASSETS 68 $260,178,865 $334,318,082 100.0 100.0
===== ============ ============ ====== ======
</TABLE>
LARGEST INDUSTRIES
JUNE 30, 1998
The following represents a bar chart in the printed piece
PERCENT OF
INDUSTRY NET ASSETS AMOUNT
- -------- ----------- -------
Consumer Cyclicals 22.8 $76,295,431
Technology 15.7 52,510,687
Financial Services 13.2 44,024,375
Consumer Staples 13.0 43,532,225
Health Care 8.9 29,608,100
6
<PAGE>
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
--------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/98
- ----------- ----------- -----------
AutoZone ........................ 250,800 250,800
Budget Group (Class A) .......... 218,200 218,200
Diebold ......................... 131,300 131,300
Laidlaw (Canada) ................ 403,600 403,600
Liz Claiborne ................... 132,900 132,900
Microchip Technology ............ 185,000 185,000
Network Associates .............. 85,000 127,500(1)
Omnicare ........................ 150,000 150,000
Proffitt's ...................... 157,000 157,000
TJXCompanies .................... 135,000 270,000(2)
SHARES
--------------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/98
- ------------- ----------- -----------
Coca-Cola Enterprises ........... 280,000 --
GreenPoint Financial ............ 100,000 --
Gulfstream Aerospace ............ 170,000 --
Humana .......................... 200,000 --
MBNA ............................ 270,000 --
McKesson ........................ 90,000(3) --
Pfizer .......................... 60,000 --
Travelers ....................... 180,000 --
USSurgical ...................... 170,000 --
Washington Mutual ............... 100,000 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
- --------------
(1) Includes 42,500 shares received as a result of a 3-for-2 stock split.
(2) Includes 135,000 shares received as a result of a 2-for-1 stock split.
(3) Includes 45,000 shares received as a result of a 2-for-1 stock split.
LARGEST PORTFOLIO HOLDINGS
JUNE 30, 1998
SECURITY VALUE
- -------- -----------
Universal Health Services (Class B) ................ $10,215,625
Interpublic Group of Companies ..................... 9,103,125
Jones Apparel Group ................................ 8,409,375
CBS ................................................ 8,039,100
AutoZone ........................................... 8,009,925
Covance ............................................ 7,425,000
Gartner Group (Class A) ............................ 7,116,141
Progressive (Ohio) ................................. 7,050,000
Budget Group (Class A) ............................. 6,968,762
Liz Claiborne ...................................... 6,944,025
7
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998
SHARES VALUE
----------- -----------
COMMON STOCKS 94.7%
BASIC MATERIALS 1.8%
Corn Products International* 66,300 $ 2,245,913
Minerals Technologies 75,000 3,815,625
-----------
6,061,538
-----------
CAPITAL GOODS 7.4%
Diebold 131,300 3,791,288
Molex 106,600 2,671,663
Rayovac* 304,300 6,903,806
RELTEC* 91,100 4,099,500
U.S. Filter* 140,000 3,928,750
Vishay Intertechnology* 195,195 3,501,310
-----------
24,896,317
-----------
COMMUNICATION SERVICES 4.5%
Century Telephone Enterprises 150,000 6,881,250
Frontier 120,000 3,780,000
Tele-Communications (Series A)
TCI Ventures Group* 210,000 4,206,562
-----------
14,867,812
-----------
CONSUMER CYCLICALS 22.8%
Authentic Fitness 197,100 3,116,644
AutoZone* 250,800 8,009,925
Budget Group (Class A)* 218,200 6,968,762
Echlin 49,200 2,413,875
Harley-Davidson 115,000 4,456,250
Interpublic Group of Companies 150,000 9,103,125
Jones Apparel Group* 230,000 8,409,375
Laidlaw (Canada) 403,600 4,918,875
Liz Claiborne 132,900 6,944,025
Lowe's Companies 140,000 5,678,750
Proffitt's* 157,000 6,338,875
Snyder Communications* 77,800 3,423,200
TJX Companies 270,000 6,513,750
-----------
76,295,431
-----------
CONSUMER STAPLES 13.0%
Aurora Foods* 140,000 2,957,500
CARDINAL HEALTH 45,000 4,218,750
CBS 253,200 8,039,100
Clear Channel Communications* 15,800 1,724,175
Clorox 50,000 4,768,750
Dial 220,000 5,706,250
ITT Educational Services* 144,200 4,650,450
Kroger* 100,000 4,287,500
Newell 90,000 4,483,125
Sinclair Broadcast Group (Class A)* 94,000 2,696,625
-----------
43,532,225
-----------
ENERGY 5.3%
Barrett Resources* 142,100 $5,319,869
Camco International 50,000 3,893,750
Cooper Cameron* 55,000 2,805,000
Tosco 97,500 2,864,062
Transocean Offshore 65,000 2,892,500
-----------
17,775,181
-----------
FINANCIAL SERVICES 13.2%
AFLAC 130,000 3,940,625
Life Re 55,000 4,510,000
Nationwide Financial Services
(Class A) 115,000 5,865,000
Ocwen Financial* 160,000 4,300,000
Old Republic International 135,000 3,957,188
Progressive (Ohio) 50,000 7,050,000
Provident Companies 120,000 4,140,000
Schwab (Charles) 175,000 5,687,500
SouthTrust 105,000 4,574,062
-----------
44,024,375
-----------
HEALTH CARE 8.9%
Biogen* 65,000 3,185,000
Covance* 330,000 7,425,000
HEALTHSOUTH* 114,800 3,063,725
Omnicare 150,000 5,718,750
Universal Health Services
(Class B)* 175,000 10,215,625
-----------
29,608,100
-----------
TECHNOLOGY 15.7%
ADC Telecommunications* 104,500 3,817,516
BMC Software* 120,000 6,236,250
Cadence Design Systems* 110,000 3,437,500
Fiserv* 142,500 6,051,797
Gartner Group (Class A)* 203,500 7,116,141
HNC Software* 95,000 3,880,156
Maxim Integrated Products* 160,000 5,075,000
MICROCHIP TECHNOLOGY* 185,000 4,844,687
Network Associates* 127,500 6,100,078
Synopsys* 130,000 5,951,562
-----------
52,510,687
-----------
UTILITIES 1.1%
AES* 70,000 3,679,375
------------
OTHER 1.0% 3,314,307
------------
TOTAL COMMON STOCKS
(Cost $242,426,131) 316,565,348
------------
- ---------
See footnotes on page 9.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998
PRINCIPAL
AMOUNT VALUE
---------- ------------
SHORT-TERM HOLDINGS 8.6%
Bank of Montreal, Grand
Cayman Fixed Time Deposit,
6%, 7/1/1998 $14,000,000 $ 14,000,000
Bank of Nova Scotia, Grand
Cayman Fixed Time Deposit,
61/8%, 7/1/1998 14,700,000 14,700,000
------------
TOTAL SHORT-TERM HOLDINGS
(Cost $28,700,000) 28,700,000
------------
TOTAL INVESTMENTS 103.3%
(Cost $271,126,131) $345,265,348
OTHER ASSETS
LESS LIABILITIES (3.3)% (10,947,266)
------------
NET ASSETS 100.0% $334,318,082
============
- -------------
* Non-income producing security.
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $242,426,131) ............................................ $316,565,348
Short-term holdings (cost $28,700,000) 28,700,000 $345,265,348
............................................................................... -------------
Cash .............................................................................................. 226,492
Receivable for Capital Stock sold ................................................................. 113,010
Receivable for interest and dividends ............................................................. 75,706
Investment in, and expenses prepaid to, shareholder service agent ................................. 65,307
Other ............................................................................................. 44,661
------------
TOTAL ASSETS ...................................................................................... 345,790,524
------------
LIABILITIES:
Payable for securities purchased .................................................................. 6,225,600
Payable for Capital Stock repurchased ............................................................. 4,688,674
Accrued expenses, taxes, and other ................................................................ 558,168
------------
TOTAL LIABILITIES ................................................................................. 11,472,442
------------
NET ASSETS ........................................................................................ $334,318,082
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares authorized; 16,926,303
shares outstanding):
Class A ......................................................................................... $ 14,877,675
Class B ......................................................................................... 607,797
Class D ......................................................................................... 1,440,831
Additional paid-in capital ........................................................................ 174,165,411
Accumulated net investment loss ................................................................... (691,127)
Undistributed net realized gain ................................................................... 69,778,278
Net unrealized appreciation of investments ........................................................ 74,139,217
------------
NET ASSETS ........................................................................................ $334,318,082
============
NET ASSET VALUE PER SHARE:
CLASS A ($296,509,695 / 14,877,675 shares) ........................................................ $19.93
======
CLASS B ($11,214,615 / 607,797 shares) ............................................................ $18.45
======
CLASS D ($26,593,772 / 1,440,831 shares) .......................................................... $18.46
======
</TABLE>
- ----------------
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998
INVESTMENT INCOME:
Dividends ........................................................................ $ 702,032
Interest ......................................................................... 422,847
------------
TOTAL INVESTMENT INCOME ........................................................................... $ 1,124,879
EXPENSES:
Management fee ................................................................... 780,809
Distribution and service fees .................................................... 528,620
Shareholder account services ..................................................... 219,014
Registration ..................................................................... 54,324
Shareholder reports and communications ........................................... 47,164
Custody and related services ..................................................... 34,800
Auditing and legal fees .......................................................... 33,044
Directors' fees and expenses ..................................................... 4,421
Miscellaneous .................................................................... 7,283
------------
TOTAL EXPENSES .................................................................................... 1,709,479
---------
NET INVESTMENT LOSS ............................................................................... (584,600)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ................................................. 58,284,002
Net change in unrealized appreciation of investments ............................. (14,007,500)
------------
NET GAIN ON INVESTMENTS ........................................................................... 44,276,502
-----------
INCREASE IN NET ASSETS FROM OPERATIONS ............................................................ $43,691,902
===========
</TABLE>
- -------------
See Notes to Financial Statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
----------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment loss ................................................................ $ (584,600) $ (1,121,481)
Net realized gain on investments ................................................... 58,284,002 46,191,130
Net change in unrealized appreciation of investments ............................... (14,007,500) 15,868,425
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS ............................................. 43,691,902 60,938,074
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ......................................................................... -- (35,225,045)
Class B ......................................................................... -- (1,063,047)
Class D ......................................................................... -- (3,268,410)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS .......................................... -- (39,556,502)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ................................. 256,941 722,658 4,841,690 12,694,774
Class B ................................. 101,903 203,299 1,780,108 3,394,305
Class D ................................. 103,719 282,020 1,828,834 4,666,806
Exchanged from associated Funds:
Class A ................................. 7,045,717 7,393,028 132,368,682 134,946,924
Class B ................................. 157,292 71,826 2,812,272 1,180,425
Class D ................................. 88,712 451,710 1,514,597 7,177,305
Shares issued in payment of gain
distributions:
Class A ................................. -- 1,869,785 -- 31,392,717
Class B ................................. -- 62,796 -- 981,506
Class D ................................. -- 201,933 -- 3,156,217
---------- ----------- ------------- -------------
Total ...................................... 7,754,284 11,259,055 145,146,183 199,590,979
---------- ----------- ------------- -------------
Cost of shares repurchased:
Class A ................................. (1,124,501) (2,300,687) (20,871,655) (41,032,182)
Class B ................................. (31,532) (24,413) (548,733) (414,612)
Class D ................................. (171,687) (278,783) (2,966,269) (4,611,613)
Exchanged into associated Funds:
Class A ................................. (7,562,340) (7,289,681) (143,213,329) (133,177,110)
Class B ................................. (139,296) (74,496) (2,486,933) (1,227,418)
Class D ................................. (185,660) (342,474) (3,172,146) (5,595,585)
---------- ----------- ------------- --------------
Total ...................................... (9,215,016) (10,310,534) (173,259,065) (186,058,520)
---------- ----------- ------------- --------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS (1,460,732) 948,521 (28,112,882) 13,532,459
========== =========== ------------- -------------
INCREASE IN NET ASSETS ......................................................... 15,579,020 34,914,031
NET ASSETS:
Beginning of period ............................................................ 318,739,062 283,825,031
------------- -------------
END OF PERIOD (including accumulated net investment loss of $691,127
and $106,527, respectively) .................................................... $334,318,082 $318,739,062
============ ============
</TABLE>
- ---------------
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. 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 of 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 of 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, if applicable, of 1%
imposed on 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 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, 1998,
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, 1998, amounted to $172,046,863 and $217,263,006,
respectively.
At June 30, 1998, 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 $80,003,360 and $5,864,143, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. MANAGEMENT FEE, DISTRIBUTION 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 0.48% per annum of the
Fund's average daily net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares and an affiliate of the Manager, received
concessions of $10,831 from sales of Class A shares, after commissions of
$81,971 were 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,
1998, fees incurred under the Plan aggregated $352,844 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 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, 1998, 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 $47,659 and $128,117, respectively.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the six months
ended June 30, 1998, such charges amounted to $3,830.
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
retained by the Distributor for the six months ended June 30, 1998, amounted to
$2,655.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the six months ended June 30, 1998,
Seligman Services, Inc. received commissions of $3,465 from the sale of shares
of the Fund. Seligman Services, Inc.
also received distribution and service fees of $45,093, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $211,814 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. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
Fund or other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
thereon is included in directors' fees and expenses, and the accumulated balance
thereof at June 30, 1998, of $98,028 is included in other liabilities. Deferred
fees and related accrued earnings are not deductible for federal income tax
purposes until such amounts are paid.
5. COMMITTED LINE OF CREDIT -- Effective July 1, 1998, the Fund entered into a
joint $800 million committed line of credit that is shared by substantially all
funds in the Seligman Group of Investment Companies. The Fund's borrowings are
limited to 10% of its net assets. Borrowings pursuant to the credit facility are
subject to interest at a rate equal to the overnight federal funds rate plus
0.50% on an overnight basis. The Fund incurs a commitment fee of 0.08% per annum
on its share of the unused portion of the credit facility. The credit facility
may be drawn upon only for temporary purposes and is subject to certain other
customary restrictions. The credit facility commitment expires one year from the
date of the agreement but is renewable with the consent of the participating
banks. To date, the Fund has not borrowed from the credit facility.
15
<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 eachClass, 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.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
6/30/98o 1997o 1996o 1995o 1994o 1993
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............... $17.48 $16.36 $15.59 $13.17 $15.95 $17.04
------ ------ ------ ------ ------ ------
Net investment loss ................................ (0.03) (0.06) (0.04) (0.02) (0.06) (0.03)
Net realized and unrealized investment
gain (loss) ...................................... 2.48 3.61 2.68 4.74 (1.12) 0.84
------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS ..... 2.45 3.55 2.64 4.72 (1.18) 0.81
Distributions from net gain realized ............... -- (2.43) (1.87) (2.30) (1.60) (1.90)
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSET VALUE ......... 2.45 1.12 0.77 2.42 (2.78) (1.09)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ..................... $19.93 $17.48 $16.36 $15.59 $13.17 $15.95
====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: ............. 14.02% 22.28% 16.74% 37.32% (7.06)% 4.80%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ..................... 0.96%+ 1.05% 1.07% 1.09% 1.13% 1.13%
Net investment loss to average net assets .......... (0.27)%+ (0.29)% (0.25)% (0.11)% (0.39)% (0.17)%
Portfolio turnover ................................. 54.33% 104.33% 94.97% 103.60% 70.72% 46.84%
NET ASSETS, END OF PERIOD (000s omitted) ........... $296,510 $284,214 $259,514 $215,688 $162,556 $196,212
</TABLE>
- ----------------
See footnotes on page 17.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-------------------------------------
SIX MONTHS YEAR 4/22/96*
ENDED ENDED TO
6/30/980 12/31/970 12/31/960
----------- --------- ---------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............. $16.24 $15.47 $16.43
------ ------ ------
Net investment loss .............................. (0.09) (0.18) (0.10)
Net realized and unrealized investment gain ...... 2.30 3.38 1.01
------ ------ ------
INCREASE FROM INVESTMENT OPERATIONS .............. 2.21 3.20 0.91
Distributions from net gain realized ............. -- (2.43) (1.87)
------ ------ ------
NET INCREASE (DECREASE) IN NET ASSET VALUE ....... 2.21 0.77 (0.96)
------ ------ ------
NET ASSET VALUE, END OF PERIOD ................... $18.45 $16.24 $15.47
====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: ........... 13.61% 21.26% 5.33%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................... 1.72%+ 1.81% 1.89%+
Net investment loss to average net assets ........ (1.03)%+ (1.05)% (0.99)%+
Portfolio turnover ............................... 54.33% 104.33% 94.97%++
NET ASSETS, END OF PERIOD (000s omitted) ......... $11,214 $8,437 $4,337
</TABLE>
<TABLE>
<CAPTION>
CLASS D
------------------------------------------------------------------------
SIX MONTHS 5/3/93*
ENDED YEAR ENDED DECEMBER 31, TO
----------------------------------------------
6/30/98o 1997o 1996o 1995o 1994o 12/31/93
---------- ----- ----- ----- ------ --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD .............. $16.25 $15.47 $14.94 $12.82 $15.86 $16.43
------ ------ ------ ------ ------ ------
Net investment loss ............................... (0.09) (0.18) (0.16) (0.14) (0.33) (0.08)
Net realized and unrealized investment
gain (loss) ..................................... 2.30 3.39 2.56 4.56 (1.11) 1.41
------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS ............................. 2.21 3.21 2.40 4.42 (1.44) 1.33
Distributions from net gain realized .............. -- (2.43) (1.87) (2.30) (1.60) (1.90)
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSET VALUE ........ 2.21 0.78 0.53 2.12 (3.04) (0.57)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD .................... $18.46 $16.25 $15.47 $14.94 $12.82 $15.86
====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: ............ 13.60% 21.34% 15.84% 35.98% (8.75)% 8.12%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 1.72%+ 1.81% 1.83% 2.02% 2.66% 2.26%+
Net investment loss to average net assets ......... (1.03)%+ (1.05)% (1.00)% (1.06)% (2.28)% (1.32)%+
Portfolio turnover 54.33% 104.33% 94.97% 103.60% 70.72% 46.84%+++
NET ASSETS, END OF PERIOD (000s omitted) $26,594 $26,088 $19,974 $9,137 $3,179 $2,749
</TABLE>
- --------------
* Commencement of offering of shares.
o Per share amounts for the six months ended June 30, 1998,and the years ended
December 31, 1997, 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.
17
<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,
1998, 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, 1997, 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, 1998, 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, 1998, 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
July 31, 1998
18
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
TRUSTEE, The New York and Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
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
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT, J. & W. Seligman & Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
19
<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
MARION S. SCHULTHEIS
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
(212) 682-7600 Outside the
United States
(800) 622-4597 24-Hour Automated
Telephone Access
Service
20
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio. For tax purposes,
these profits may be taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
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 change 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.
If the return is compounded, 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 a 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 share can be
purchased. The offering price per share is the current net asset value 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 (SEC), such as a 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.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains updated or more
detailed information about a mutual fund and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's 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 ON SECURITIES -- 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 market price of the stock.
- --------------
Adapted from the Investment Company Institute's 1997 MUTUAL FUND FACT BOOK.
21
<PAGE>
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.
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQCA3 6/98 [LOGO]Printed on Recycled Paper
