SELIGMAN
--------
CAPITAL
FUND, INC.
MID-YEAR REPORT
JUNE 30, 1999
--------
SEEKING CAPITAL
APPRECIATION BY
INVESTING IN
MID-CAPITALIZATION
GROWTH STOCKS
[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.
[PHOTO]
James, Jesse, and Joseph Seligman, 1870
TIMES CHANGE...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 135 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
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 that 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 equity funds that specialize in small companies,
technology, or international securities, and bond funds that focus on high-yield
issuers, US government bonds, or municipal 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 ................... 9
Statement of Operations ............................... 10
Statements of Changes in Net Assets ................... 11
Notes to Financial Statements ......................... 12
Financial Highlights .................................. 15
Report of Independent Auditors ........................ 17
Board of Directors .................................... 18
Executive Officers AND For More Information ........... 19
Glossary of Financial Terms ........................... 20
<PAGE>
TO THE SHAREHOLDERS
During the first six months of 1999, Seligman Capital Fund posted a total return
of 8.13% based on the net asset value of Class A shares. During the same period,
the Lipper Mid Cap Funds Average returned 12.01% and the Russell Midcap Growth
Index returned 14.19%. The Fund's lackluster total return relative to its
benchmarks is primarily the result of the Fund's underexposure to
technology-related stocks and to disappointments in operating results for
several of the Fund's holdings. A full discussion with your Portfolio Manager
regarding the Fund's results begins on page 2.
The economic environment of the past six months has been supportive for common
stocks. Inflation remained benign, corporate profits were strong, and the global
economy continued to recover, which should begin to lift some of the pressure
for world economic growth off the US. During this time, the US economy entered
its ninth year of expansion, with the pace of growth remarkably strong.
The robust US economy, coupled with improved business prospects in most of the
rest of the world, caused the Federal Reserve Board to announce in May that it
was leaning toward a tighter monetary policy. Thus, market participants were not
surprised when the Fed increased the federal funds rate by 25 basis points on
June 30. However, markets did not expect the Fed to also announce that it was
changing its bias from tightening to neutral. This news immediately pushed the
Dow Jones Industrial Average 155 points higher and pushed the 30-year Treasury
bond yield back below 6%. Since then, however, fears of additional interest rate
hikes have surfaced, sending the market averages lower and the 30-year Treasury
bond yield above 6%.
During this period, the market broadened considerably, which was good news for
value stocks. It appeared that investors were once again looking beyond richly
valued growth stocks for securities with more reasonable valuations. Looking
ahead, we believe that this positive trend will continue. In addition, we expect
that the economic environment will remain a constructive one for common stocks
in general, and for value stocks in particular.
As the millennium approaches, we have become concerned that the media's focus on
the Year 2000 (Y2K) computer issue, and the fears that this attention may spark,
will cause some investors to take actions that are not in their best long-term
interests. In our view, the primary danger to investors is losing sight of their
long-term financial goals, and altering their portfolios and asset allocations
in an attempt to respond to the confusion surrounding this issue.
In the US, governments and businesses have committed substantial resources to
this issue and, while there may be scattered inconveniences, we believe that the
US will enter the year 2000 relatively seamlessly, and that much of the rest of
the developed world is also well positioned to deal with the new millennium.
For the past several years, J. & W. Seligman & Co. Incorporated (Seligman), your
Fund's manager, and Seligman Data Corp. (Seligman Data), your Fund's shareholder
service agent, have been working to ensure that shareholders do not experience
any Y2K-related inconveniences. We are pleased to report that the early start
has paid off. During the spring of this year, Seligman and Seligman Data
participated in Y2K testing conducted by the Securities Industry Association.
These tests were completed without any Y2K-related problems on the part of
Seligman or Seligman Data. Tests with key service providers were also conducted,
all of which were successfully completed in a Y2K environment.
Thank you for your continued support of Seligman Capital Fund. We look forward
to serving your investment needs for many years to come.
By order of the Board of Directors,
/s/William Morris
- -----------------
William C. Morris
Chairman
/s/Brian T. Zino
----------------
Brian T. Zino
President
August 6, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
Q: HOW DID SELIGMAN CAPITAL FUND PERFORM DURING THE FIRST SIX MONTHS OF 1999.
A: For the six-month period ended June 30, 1999, Seligman Capital Fund posted a
total return of 8.13% based on the net asset value of Class A shares. This
compares to 12.01% for the Lipper Mid Cap Funds Average and 14.19% for the
Russell Midcap Growth Index.
Q: WHY DID THE FUND UNDERPERFORM RELATIVE TO ITS BENCHMARKS DURING THE FIRST
HALF OF ITS FISCAL YEAR?
A: The Fund underperformed versus its benchmarks for two reasons. The first,
and most significant, reason for underperformance was the poor performance
of some individual holdings. We held several stocks, across industries, that
underperformed because of disappointing earnings or management changes.
Depending on the reason for a stock's price decline and our six-month
outlook, we made decisions on an individual basis. In some cases, we
eliminated the position. In other cases, we used the price decline as an
opportunity to buy additional shares. Some of these holdings have recovered
already, and we believe that, in many cases, the market overreacted to
short-term information.
Second, the portfolio's underweighting in technology hurt relative
performance. At the beginning of the period, we had been concerned about
issues surrounding the Year 2000 (Y2K) computer issue. Over the past two to
three years, many software and hardware companies benefited from increased
technology spending as companies sought to correct Y2K-related problems.
Because of this increased spending, we believed that the high levels of
earnings growth posted by many technology companies in 1998 would be an
anomaly and that earnings for these companies would slow, making it
difficult for them to meet growth expectations for 1999. We also anticipated
that many corporations would slow their technology spending in the second
half of 1999 to avoid any additional Y2K problems. We also had no direct
Internet exposure because of continued high valuations for these stocks.
The rally in the technology and Internet sectors did not slow but continued,
at least for the first four months of this fiscal year, and hurt the Fund's
relative returns. Upon review, we began a program to increase the Fund's
weighting in technology and invested in select Internet opportunities.
Q: WHAT ECONOMIC AND MARKET FACTORS INFLUENCED THE FUND'S RESULTS DURING THE
FIRST HALF OF ITS FISCAL YEAR?
A: The past six months have been positive for common stocks in general. While
interest rates moved considerably higher during the period, they are only
back to the levels they were at last year, before the near-meltdown of the
world financial system last fall. Although
- --------------------------------------------------------------------------------
A TEAM APPROACH
Seligman Capital Fund is managed by the Seligman Growth Team, headed by Marion
S. Schultheis. Ms. Schultheis is assisted by a team of 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.
- --------------------------------------------------------------------------------
[photo]
GROWTH TEAM: (FROM LEFT) DAVE LEVY, SHEILA GRAYSON (ADMINISTRATIVE ASSISTANT),
(SEATED) MARION S. SCHULTHEIS (PORTFOLIO MANAGER); (NOT PICTURED) CRAIG CHODASH
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
rates have bounced back, so has the global economy. The significantly
improved outlook, and the increased investor confidence that has accompanied
it, has driven stocks to new highs.
In addition, the healthier environment and improved market sentiment has
allowed a greater number of stocks to participate in the rally. Last year,
the market narrowed to an almost unprecedented degree as investors sought
safety from the global turmoil in US Treasury securities and large-cap
growth stocks.
During the second quarter of this year, however, that trend reversed as
investors once again searched for value. Because many stocks had been driven
down almost entirely by sentiment, they enjoyed a significant rebound once
sentiment began to change and investors pursued a broader universe of
stocks.
Q: WHAT WAS YOUR INVESTMENT STRATEGY?
A: During the six-month period under review, we sold a number of holdings
because of our commitment to the Fund's strategy of investing in mid-cap
stocks. When a company's market capitalization grows so much that its stock
is no longer within the mid-cap universe, we sell it in order to purchase
attractive stocks that fall within the Fund's capitalization range.
In addition, we repositioned the portfolio somewhat to take advantage of the
improved outlook for economies around the world. This led us to increase the
Fund's weighting in cyclical growth companies with foreign exposure, while
selling some domestically oriented companies and US financial companies
whose earnings we believe will slow as a result of decelerating economic
growth in the US.
The actions we took during the period -- both to maintain a mid-cap
portfolio and to take advantage of the improved global outlook -- led to the
realization by the Fund of capital gains on stocks that had been purchased
at attractive prices.
We also increased the Fund's weighting in technology and the Internet. As
Y2K becomes less of a concern, we believe that companies will begin to focus
their information technology budgets on building infrastructure for
e-commerce, installing software that will enable them to deal more
effectively with their customers, and using the Internet for
business-to-business transactions as a way of reducing costs. In other
words, we believe technology will continue to be a driving force in the
economy by reducing the costs of doing business and increasing productivity.
Q: WHAT INDUSTRIES AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD UNDER
REVIEW?
A: The best-performing industry sectors of the Fund during the period were
communications and energy, followed by basic materials and technology. The
worst-performing sectors were health care and consumer staples. Health care
stocks have underperformed in 1999 because of investor concerns that the
government's plans to reform health care reimbursements will put pricing
pressure on drugs and health care services.
Q: WHAT IS YOUR OUTLOOK?
A: We believe that the economic environment will remain supportive for common
stocks in general. In addition, we believe that the broadening of the market
that took place during the first half of the fiscal year will continue, a
trend which would be positive for the mid-cap stocks the Fund owns.
Although the Fund underperformed relative to its benchmarks in the first
half of the fiscal year, almost all of the underperformance was in the first
quarter. Performance began to improve as the market broadened during the
second quarter, and we expect the improved relative performance will be
sustained.
3
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
------------------------------------------------------------
CLASS C CLASS B CLASS D
SINCE SINCE SINCE
INCEPTION SIX ONE FIVE 10 INCEPTION INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
---------- ----------- ------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge n/a 2.99% 7.62% 21.13% 16.67% n/a n/a
Without Sales Charge n/a 8.13 12.97 22.32 17.24 n/a n/a
CLASS B**
With CDSC+ n/a 2.70 7.09 n/a n/a 15.80% n/a
Without CDSC n/a 7.70 12.09 n/a n/a 16.48 n/a
CLASS C**
With Sales Charge and CDSC 7.57% n/a n/a n/a n/a n/a n/a
Without Sales Charge and CDSC 9.66 n/a n/a n/a n/a n/a n/a
CLASS D**
With 1% CDSC n/a 6.70 11.08 n/a n/a n/a n/a
Without CDSC n/a 7.70 12.08 21.25 n/a n/a 15.28%
LIPPER MID CAP FUNDS AVERAGE*** 5.84++ 12.01 13.20 20.30 16.08 16.17+++ 17.47o
RUSSELL MIDCAP GROWTH INDEX*** 6.98++ 14.19 20.31 22.35 17.04 19.03+++ 18.97o
NET ASSET VALUE CAPITAL GAIN INFORMATION
JUNE 30, 1999 DECEMBER 31, 1998 JUNE 30, 1998 FOR THE SIX MONTHS ENDED JUNE 30, 1999
------------- ----------------- -------------
CLASS A $21.69 $20.06 $19.93 REALIZED $4.229oo
CLASS B 19.86 18.44 18.45 UNREALIZED 4.380ooo
CLASS C 19.87 n/a n/a
CLASS D 19.87 18.45 18.46
</TABLE>
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
charge ("CDSC"), 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 C shares are calculated with and without the effect of the initial 1%
maximum sales charge and the 1% CDSC that is charged on redemptions made
within 18 months of the date of purchase. Returns for Class D shares are
calculated with and without the effect of the 1% CDSC, charged on
redemptions made within one year of the date of purchase.
*** The Lipper Mid Cap Funds Average and the Russell Midcap Growth Index are
unmanaged benchmarks that assume investment of dividends. The Lipper Mid
Cap Funds Average and the Russell Midcap Growth Index exclude the effect of
fees and/or 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 CDSC is 5% for periods of one year or less, and 3% since inception.
++ From May 31, 1999.
+++ From April 30, 1996.
o From April 30, 1993.
oo Excludes $0.405 per share of net gain realized in November and December
1998, payable in 1999.
ooo Represents the per share amount of net unrealized
appreciation of portfolio securities as of June 30, 1999.
4
<PAGE>
PERFORMANCE OVERVIEW
GROWTH OF AN ASSUMED $10,000 INVESTMENT
CLASS A SHARES
JUNE 30, 1989 TO JUNE 30, 1999
[The following tables represent plot points for four line charts in the printed
piece]
6/30/89 9527
11095
10864
10513
6/30/90 12145
9399
11014
13341
6/30/91 13447
15039
17036
16811
6/30/92 16044
17046
19006
19184
6/30/93 18984
20199
19919
19307
6/30/94 17071
18557
18513
19553
6/30/95 21324
23151
25421
27166
6/30/96 29335
30117
29676
28442
6/30/97 32488
36714
36287
40418
6/30/98 41373
33007
43226
42106
6/30/99 46739
CLASS B SHARES
APRIL 22, 1996+ TO JUNE 30, 1999
4/22/96 10000
10286
10864
6/30/96 10456
9604
10006
10712
10310
10881
12/31/96 10533
11085
10867
10077
10356
11248
6/30/97 11487
12542
12222
12957
12413
12537
12/31/97 12773
12388
13544
14205
14401
14024
6/30/98 14512
13788
11035
11554
12765
13522
12/31/98 15103
14931
14063
14685
15259
14980
6/30/99 16266
CLASS C SHARES
MAY 27, 1999+ TO JUNE 30, 1999
5/27/99 9900
6/3/99 10244
6/10/99 10113
6/17/99 10403
6/24/99 10299
6/30/99 10856
CLASS D SHARES
MAY 3, 1993+ TO JUNE 30, 1999
5/3/93 10000
10438
10438
10438
6/30/93 10353
10152
10712
10998
10822
10645
10812
11119
11126
10437
10178
9858
6/30/94 9163
9449
10172
9933
10178
11924
9867
9905
10128
10390
10452
10629
6/30/95 11298
11883
12076
12245
12106
12771
13417
13597
13983
14315
15178
16031
6/30/96 15429
14172
14764
15806
15213
16055
15543
16356
16035
14869
15281
16597
6/30/97 16949
18506
18034
19119
18315
18499
18859
18291
19985
20960
21250
20704
6/30/98 21424
20356
16294
17060
18848
19964
22297
22043
20762
21680
22538
22115
6/30/99 24013
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, Class C, 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% or 1% maximum initial sales charge for Class A or Class C
shares, respectively.
** Excludes the effects of the 3% or 1% CDSC for Class B or Class C shares,
respectively.
+ Inception date.
5
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
JUNE 30, 1999
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
----------------------
JUNE 30, DECEMBER 31,
ISSUES COST VALUE 1999 1998
------ ------------ ------------ ----- -----
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Basic Materials ....................................... 3 $ 14,762,209 $ 19,241,481 5.5 2.5
Capital Goods ......................................... 9 37,299,078 42,716,613 12.1 11.2
Communications Services ............................... 2 3,677,791 6,160,812 1.7 6.1
Consumer Cyclicals .................................... 16 66,090,461 80,957,281 23.0 24.3
Consumer Staples ...................................... 6 22,811,865 32,840,263 9.3 16.2
Energy ................................................ 3 9,569,629 11,052,819 3.1 1.4
Financial Services .................................... 5 13,480,286 22,285,861 6.3 10.4
Health Care ........................................... 8 31,515,015 37,891,115 10.7 6.8
Technology ............................................ 14 46,646,247 60,238,848 17.1 16.1
Transportation ........................................ 1 4,604,058 6,040,225 1.7 1.7
Utilities ............................................. 1 4,138,970 7,242,375 2.1 0.9
-- ------------ ------------ ----- -----
68 254,595,609 326,667,693 92.6 97.6
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES ......................... 1 25,958,942 25,958,942 7.4 2.4
-- ------------ ------------ ----- -----
NET ASSETS ............................................... 69 $280,554,551 $352,626,635 100.0 100.0
== ============ ============ ===== =====
</TABLE>
LARGEST INDUSTRIES
JUNE 30, 1999
[The following table represents a bar chart in the printed piece]
PERCENT OF DOLLAR
NET ASSETS AMOUNT
---------- ------
CONSUMER CYCLICALS 22.96% $80,957,281
TECHNOLOGY 17.08% $60,238,848
CAPITAL GOODS 12.11% $42,716,613
HEALTH CARE 10.75% $37,891,115
CONSUMER STAPLES 9.31% $32,840,263
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
------------------------
HOLDINGS
ADDITIONS INCREASE 6/30/99
- --------- ----------- ------------
Apollo Group (Class A) ........... 187,900 281,200
Boston Scientific ................ 172,800 172,800
Federated Department Stores ...... 129,200 129,200
Gateway .......................... 75,400 75,400
Health Management
Associates ..................... 660,900 660,900
ISSGroup ......................... 107,200 168,700(1)
MSCIndustrial Direct (Class A) ... 442,900 442,900
Sealed Air ....................... 134,000 134,000
Snyder Communications ............ 188,100 296,000
Vitesse Semiconductor ............ 106,100 106,100
SHARES
------------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/99
- ---------- ----------- ------------
Cardinal Health .................. 67,500 --
CBS .............................. 195,000 --
CenturyTel (formerly, Century
Telephone Enterprises) ......... 139,500 120,000(2)
Deluxe ........................... 195,400 --
Electronic Arts .................. 149,800 --
Interpublic Group of
Companies ...................... 84,300 30,400
Kroger ........................... 100,000 --
Leggett &Platt ................... 253,400 --
Schwab (Charles) ................. 105,700 --
Veritas Software ................. 130,800 --
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 61,500 shares received as a result of a 2-for-1 stock split.
(2) Includes 75,700 shares received as a result of a 3-for-2 stock split.
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO HOLDINGS
JUNE 30, 1999
SECURITY VALUE
- -------- -----------
Molex ................................ $11,147,737
Circuit City Stores-Circuit City Group 11,132,100
Alza ................................. 9,798,525
Snyder Communications ................ 9,694,000
Office Depot ......................... 9,566,300
AT&T-Liberty Media Group (Class A) ... 8,783,250
Sealed Air ........................... 8,693,250
Comdisco ............................. 8,299,937
Williams-Sonoma ...................... 8,180,937
Boston Scientific .................... 7,592,400
- --------------------------------------------------------------------------------
7
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
SHARES VALUE
------- ------------
COMMON STOCKS 92.6%
BASIC MATERIALS 5.5%
Cintas 53,600 $ 3,599,575
Minerals Technologies 124,500 6,948,656
Sealed Air* 134,000 8,693,250
------------
19,241,481
------------
CAPITAL GOODS 12.1%
American Power Conversion 268,800 5,401,200
Applied Power (Class A) 241,400 6,593,237
Corning 53,300 3,737,663
General Dynamics 46,700 3,198,950
Molex 301,800 11,147,737
Nucor 117,800 5,588,138
Rayovac* 142,500 3,232,969
Symbol Technologies 26,250 967,969
Waste Management 53,000 2,848,750
------------
42,716,613
------------
COMMUNICATIONS SERVICES 1.7%
CenturyTel 120,000 4,770,000
Rhythms Netconnections* 23,800 1,390,812
------------
6,160,812
------------
CONSUMER CYCLICALS 23.0%
Circuit City Stores-Circuit
City Group 119,700 11,132,100
Danaher 25,000 1,453,125
Doubleclick* 38,100 3,487,341
Etoys* 9,700 396,184
Federated Department Stores* 129,200 6,839,525
Fluor 59,200 2,397,600
HA-LO Industries* 296,650 2,929,419
Harley-Davidson 98,600 5,361,375
Interpublic Group of Companies 30,400 2,633,400
ITT Educational Services* 175,500 4,573,969
MSC Industrial Direct (Class A)* 442,900 4,539,725
Office Depot* 433,600 9,566,300
Snyder Communications* 296,000 9,694,000
TJX Companies 176,300 5,872,994
Williams-Sonoma* 235,000 8,180,937
Young & Rubicam 41,800 1,899,287
------------
80,957,281
------------
CONSUMER STAPLES 9.3%
Apollo Group (Class A)* 281,200 7,460,588
AT&T-Liberty Media Group
(Class A)* 239,000 8,783,250
Dial 146,300 5,440,531
Infinity Broadcasting (Class A)* 225,200 6,699,700
Solectron* 35,300 2,354,069
Suiza Foods* 50,200 2,102,125
------------
32,840,263
------------
ENERGY 3.1%
Anadarko Petroleum 189,100 6,961,244
Enron Oil & Gas 86,300 1,747,575
Weatherford International* 64,000 2,344,000
------------
11,052,819
------------
FINANCIAL SERVICES 6.3%
AFLAC 130,000 6,223,750
Capital One Financial 51,300 2,856,769
Comdisco 323,900 8,299,937
DLJ Direct* 29,000 855,500
SouthTrust 105,621 4,049,905
------------
22,285,861
------------
HEALTH CARE 10.7%
ALZA* 192,600 9,798,525
Biogen* 71,200 4,581,275
Boston Scientific* 172,800 7,592,400
Elan* 117,100 3,249,525
Forest Laboratories* 76,500 3,538,125
Health Management Associates* 660,900 7,435,125
Laser Vision Centers* 26,000 1,636,375
Matria Healthcare* 8,208 59,765
------------
37,891,115
------------
TECHNOLOGY 17.1%
Ariba* 3,200 312,600
At Home Corp. (Series A)* 60,600 3,270,506
Broadcom (Class A)* 39,600 5,723,437
Compuware* 208,900 6,639,103
Gateway* 75,400 4,448,600
General Instrument* 157,000 6,672,500
ISS Group* 168,700 6,357,881
JDS Uniphase* 15,600 2,591,550
NCR* 81,400 3,973,338
PE Biosystems Group 14,800 1,698,300
Siebel Systems* 75,250 4,987,664
Software.com* 80,100 1,859,822
Vitesse Semiconductor* 106,100 7,178,328
Xilinx* 79,000 4,525,219
------------
60,238,848
------------
TRANSPORTATION 1.7%
CNF Transportation 157,400 6,040,225
------------
UTILITIES 2.1%
AES* 124,600 7,242,375
------------
TOTAL COMMON STOCKS
(Cost $254,595,609) 326,667,693
------------
SHORT-TERM HOLDINGS 3.8%
(Cost $13,470,000) 13,470,000
------------
TOTAL INVESTMENTS 96.4%
(Cost $268,065,609) 340,137,693
OTHER ASSETS
LESS LIABILITIES 3.6% 12,488,942
------------
NET ASSETS 100.0% $352,626,635
============
- ----------
* Non-income producing security.
See Notes to Financial Statements.
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS:
Investments, at value:
Common stocks (cost $254,595,609) ............ $326,667,693
Short-term holdings (cost $13,470,000) ....... 13,470,000 $340,137,693
------------
Cash ............................................................ 22,641
Receivable for securities sold .................................. 15,415,290
Receivable for Capital Stock sold ............................... 2,573,088
Receivable for interest and dividends ........................... 97,101
Investment in, and expenses prepaid to, shareholder service agent 70,126
Other ........................................................... 27,854
------------
TOTAL ASSETS .................................................... 358,343,793
------------
LIABILITIES:
Payable for securities purchased ................................ 4,005,242
Payable for Capital Stock repurchased ........................... 1,119,449
Accrued expenses and other ...................................... 592,467
------------
TOTAL LIABILITIES ............................................... 5,717,158
------------
NET ASSETS ...................................................... $352,626,635
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value; 500,000,000 shares
authorized; 16,456,259 shares outstanding):
Class A ..................................................... $ 14,091,222
Class B ..................................................... 914,083
Class C ..................................................... 47,782
Class D ..................................................... 1,403,172
Additional paid-in capital ...................................... 188,838,306
Accumulated net investment loss ................................. (987,954)
Undistributed net realized gain ................................. 76,247,940
Net unrealized appreciation of investments ...................... 72,072,084
------------
NET ASSETS ...................................................... $352,626,635
============
NET ASSET VALUE PER SHARE:
CLASS A ($305,635,127 / 14,091,222 shares) ...................... $21.69
======
CLASS B ($18,155,013 / 914,083 shares) .......................... $19.86
======
CLASS C ($949,576 / 47,782 shares) .............................. $19.87
======
CLASS D ($27,886,919 / 1,403,172 shares) ........................ $19.87
======
- -------
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
INVESTMENT INCOME:
Dividends ...................................... $ 616,662
Interest ....................................... 352,331
-----------
TOTAL INVESTMENT INCOME ........................................ $ 968,993
EXPENSES:
Management fee .................................... 772,672
Distribution and service fees ..................... 559,851
Shareholder account services ...................... 334,467
Shareholder reports and communications ............ 52,647
Registration ...................................... 43,432
Custody and related services ...................... 41,617
Auditing and legal fees ........................... 28,296
Directors' fees and expenses ...................... 11,809
Miscellaneous ..................................... 11,026
-----------
TOTAL EXPENSES ................................................. 1,855,817
-----------
NET INVESTMENT LOSS ............................................ (886,824)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments .................. 69,590,968
Net change in unrealized appreciation
of investments ................................. (42,457,920)
-----------
NET GAIN ON INVESTMENTS ........................................ 27,133,048
-----------
INCREASE IN NET ASSETS FROM OPERATIONS ......................... $26,246,224
===========
- ----------
See Notes to Financial Statements.
10
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
---------------- -----------------
OPERATIONS:
Net investment loss ...................... $ (886,824) $ (1,018,947)
Net realized gain on investments ......... 69,590,968 33,498,209
Net change in unrealized appreciation
of investments ........................ (42,457,920) 26,383,287
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS ... 26,246,224 58,862,549
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ............................... -- (10,025,257)
Class B ............................... -- (488,970)
Class D ............................... -- (936,470)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS -- (11,450,697)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares ........ 11,227,415 17,045,492
Exchanged from associated Funds .......... 215,042,890 337,796,588
Shares issued in payment of gain
distributions ......................... -- 10,441,951
------------- -------------
Total .................................... 226,270,305 365,284,031
------------- -------------
Cost of shares repurchased ............... (37,042,383) (44,259,467)
Exchanged into associated Funds .......... (203,423,874) (346,599,115)
------------- -------------
Total .................................... (240,466,257) (390,858,582)
------------- -------------
DECREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ............ (14,195,952) (25,574,551)
------------- -------------
INCREASE IN NET ASSETS ................... 12,050,272 21,837,301
NET ASSETS:
Beginning of period ...................... 340,576,363 318,739,062
------------- -------------
END OF PERIOD (including accumulated
net investment loss of $987,954
and $101,130, respectively) ........... $ 352,626,635 $ 340,576,363
============= =============
- ----------
See Notes to Financial Statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Capital Fund, Inc. (the "Fund") offers
four 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 charge
("CDSC") 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% and a service fee of up to 0.25% on an annual basis, and a CDSC, 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. The Fund began offering Class C shares on
May 27, 1999. Class C shares are sold with an initial sales charge of up to 1%
and 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 CDSC, if applicable, of 1% imposed on
redemptions made within 18 months 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 CDSC, if applicable, of
1% imposed on redemptions made within one year of purchase. The four 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, 1999,
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, 1999, amounted to $254,921,897 and $287,835,401,
respectively.
At June 30, 1999, 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 $82,678,557 and $10,606,473, respectively.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. SHORT-TERM INVESTMENTS -- At June 30, 1999, the Fund owned short-term
investments which matured in less than seven days.
5. CAPITAL SHARE TRANSACTIONS -- The Fund has authorized 500,000,000 shares of
$1 par value Capital Stock. Transactions in shares of Capital Stock were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
----------------------------- -------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Net proceeds from
sales of shares 313,422 $6,103,556 509,217 $9,432,693
Exchanged from
associated Funds 10,003,056 198,891,145 17,652,456 318,464,290
Shares issued in
payment of gain
distributions -- -- 513,222 9,125,187
- ----------------------------------------------------- -------------------------------
Total 10,316,478 204,994,701 18,674,895 337,022,170
- ----------------------------------------------------- -------------------------------
Cost of shares
repurchased (1,620,420) (32,378,315) (2,097,094) (38,074,268)
Exchanged into
associated Funds (9,479,635) (188,148,071) (17,964,860) (327,416,067)
- ----------------------------------------------------- -------------------------------
Total (11,100,055) (220,526,386) (20,061,954) (365,490,335)
- ----------------------------------------------------- -------------------------------
Decrease in Shares (783,577) $(15,531,685) (1,387,059) $(28,468,165)
- ----------------------------------------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
----------------------------- -------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Net proceeds from
sales of shares 122,836 $2,241,978 253,196 $4,232,400
Exchanged from
associated Funds 703,873 12,802,606 830,239 13,846,907
Shares issued in
payment of gain
distributions -- -- 26,925 440,484
- ----------------------------------------------------- -------------------------------
Total 826,709 15,044,584 1,110,360 18,519,791
- ----------------------------------------------------- -------------------------------
Cost of shares
repurchased (67,330) (1,234,511) (66,337) (1,101,885)
Exchanged into
associated Funds (649,403) (11,836,451) (759,346) (12,687,007)
- ----------------------------------------------------- -------------------------------
Total (716,733) (13,070,962) (825,683) (13,788,892)
- ----------------------------------------------------- -------------------------------
Increase in Shares 109,976 $1,973,622 284,677 $4,730,899
- ----------------------------------------------------- -------------------------------
MAY 27, 1999*
TO JUNE 30, 1999
-------------------------
CLASS C SHARES AMOUNT
- -----------------------------------------------------
Net proceeds from
sales of shares 47,782 $906,428
- -----------------------------------------------------
Increase in Shares 47,782 $906,428
- -----------------------------------------------------
* Commencement of offering of shares.
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
----------------------------- -------------------------------
CLASS D SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Net proceeds from
sales of shares 108,657 $1,975,453 198,721 $3,380,399
Exchanged from
associated Funds 186,609 3,349,139 321,693 5,485,391
Shares issued in
payment of gain
distributions -- -- 53,532 876,280
- ----------------------------------------------------- -------------------------------
Total 295,266 5,324,592 573,946 9,742,070
- ----------------------------------------------------- -------------------------------
Cost of shares
repurchased (189,529) (3,429,557) (303,184) (5,083,314)
Exchanged into
associated Funds (189,851) (3,439,352) (389,223) (6,496,041)
- ----------------------------------------------------- -------------------------------
Total (379,380) (6,868,909) (692,407) (11,579,355)
- ----------------------------------------------------- -------------------------------
Decrease in Shares (84,114) $(1,544,317) (118,461) $(1,837,285)
- ----------------------------------------------------- -------------------------------
</TABLE>
6. 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 Advisors, Inc. (the "Distributor"), agent for the distribution of
the Fund's shares and an affiliate of the Manager, received concessions of
$9,907 from sales of Class A shares. Commissions of $74,272 and $7,916 were paid
to dealers for sales of Class A and Class C shares, respectively.
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,
1999, fees incurred under the Plan aggregated $355,988 or 0.25% per annum of the
average daily net assets of Class A shares.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Under the Plan, with respect to Class B shares, Class C shares, 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, Class C, and Class D shares for which the
organizations are responsible; and, for Class C and Class D shares, 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, 1999, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B, Class C,
and Class D shares, amounted to $76,749, $221, and $126,893, respectively.
The Distributor is entitled to retain any CDSC imposed on certain
redemptions of Class A and Class C shares occurring within 18 months of purchase
and on redemptions of Class D shares occurring within one year of purchase. For
the six months ended June 30, 1999, such charges amounted to $2,180.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC 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 of such payments
retained by the Distributor, for the six months ended June 30, 1999, amounted to
$3,253.
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, 1999,
Seligman Services, Inc. received commissions of $2,795 from the sale of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $42,546, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $316,708 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 thereon is included in directors' fees and
expenses, and the accumulated balance thereof at June 30, 1999, of $99,457 is
included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
7. COMMITTED LINE OF CREDIT -- The Fund is a participant in a joint $750 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%. 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.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five and one-half years or from its inception if less
than five and one-half years. Certain information reflects financial results for
a single share of a Class that was held throughout the periods shown. Per share
amounts are calculated using average shares outstanding. "Total return" shows
the rate that you would have earned (or lost) on an investment in each Class,
assuming you reinvested all your capital gain distributions. Total returns do
not reflect any sales charges and are not annualized for periods of less than
one year.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ------ ------ ------ ------ ------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................. $20.06 $17.48 $16.36 $15.59 $13.17 $15.95
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ......................... (0.04) (0.04) (0.06) (0.04) (0.02) (0.06)
Net realized and unrealized gain (loss)
on investments ..................................... 1.67 3.30 3.61 2.68 4.74 (1.12)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ..................... 1.63 3.26 3.55 2.64 4.72 (1.18)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ......... -- (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS .................................. -- (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ....................... $21.69 $20.06 $17.48 $16.36 $15.59 $13.17
====== ====== ====== ====== ====== ======
TOTAL RETURN: 8.13% 19.12% 22.28% 16.74% 37.32% (7.06)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $305,635 $298,319 $284,214 $259,514 $215,688 $162,556
Ratio ofexpenses to average net assets ............... 1.05%+ 0.99% 1.05% 1.07% 1.09% 1.13%
Ratio of net income (loss) toaverage net assets ...... (0.45)%+ (0.24)% (0.29)% (0.25)% (0.11)% (0.39)%
Portfolio turnover rate .............................. 80.87% 132.18% 104.33% 94.97% 103.60% 70.72%
</TABLE>
- ----------
See footnotes on page 16.
15
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------- --------
YEAR ENDED
SIX MONTHS DECEMBER 31, 4/22/96* 5/27/99*
ENDED ----------------- TO TO
6/30/99 1998 1997 12/31/96 6/30/99
------ ------ ------ ------ ------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................. $18.44 $16.24 $15.47 $16.43 $18.12
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ......................... (0.11) (0.17) (0.18) (0.10) (0.02)
Net realized and unrealized gain
on investments ..................................... 1.53 3.05 3.38 1.01 1.77
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ..................... 1.42 2.88 3.20 0.91 1.75
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain -- (0.68) (2.43) (1.87) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS .................................. -- (0.68) (2.43) (1.87) --
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ....................... $19.86 $18.44 $16.24 $15.47 $19.87
====== ====== ====== ====== ======
TOTAL RETURN: 7.70% 18.24% 21.26% 5.33% 9.66%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............. $18,155 $14,824 $8,437 $4,337 $950
Ratio of expenses to average net assets .............. 1.80%+ 1.75% 1.81% 1.89%+ 2.06%+
Ratio of net income (loss) to average net assets ..... (1.20)%+ (1.00)% (1.05)% (0.99)%+ (1.29)%+
Portfolio turnover rate .............................. 80.87% 132.18% 104.33% 94.97%++ 80.87%+++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
---------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ------ ------ ------ ------ ------
PER SHARE DATA:
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................. $18.45 $16.25 $15.47 $14.94 $12.82 $15.86
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ......................... (0.11) (0.17) (0.18) (0.16) (0.14) (0.33)
Net realized and unrealized gain (loss)
on investment ...................................... 1.53 3.05 3.39 2.56 4.56 (1.11)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ..................... 1.42 2.88 3.21 2.40 4.42 (1.44)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ......... -- (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS .................................. -- (0.68) (2.43) (1.87) (2.30) (1.60)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ....................... $19.87 $18.45 $16.25 $15.47 $14.94 $12.82
====== ====== ====== ====== ====== ======
TOTAL RETURN: 7.70% 18.23% 21.34% 15.84% 35.98% (8.75)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $27,887 $27,433 $26,088 $19,974 $9,137 $3,179
Ratio of expenses toaverage net assets ............... 1.80%+ 1.75% 1.81% 1.83% 2.02% 2.66%
Ratio of net income (loss) toaverage net assets ...... (1.20)%+ (1.00)% (1.05)% (1.00)% (1.06)% (2.28)%
Portfolio turnover rate .............................. 80.87% 132.18% 104.33% 94.97% 103.60% 70.72%
</TABLE>
- ----------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the six months ended June 30, 1999.
See Notes to Financial Statements.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN CAPITAL FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Capital Fund, Inc. as of June 30,
1999, 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, 1998, 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, 1999, 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 referred to
above present fairly, in all material respects, the financial position of
Seligman Capital Fund, Inc. as of June 30, 1999, 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
August 6, 1999
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17
<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
DIRECTOR, Conoco Inc.
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
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, KeySpan Energy Corporation
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, ICI Mutual Insurance Company
MEMBER OF THE BOARD OF GOVERNORS,
Investment Company Institute
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
- --------------------------------------------------------------------------------
18
<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 Advisors, 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
- --------------------------------------------------------------------------------
19
<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.
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 CHARGE (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund.The
CDSC 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 or net asset value.
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 -- 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, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
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 more detailed
information about an investment company 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.
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Adapted from the Investment Company Institute's 1999 MUTUAL FUND FACT BOOK.
20
<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 ADVISORS, INC.
AN AFFILIATE OF
[LOGO]
J.& W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQCA3 6/99 [LOGO] Printed on Recycled Paper
