SELIGMAN
----------------
CAPITAL
FUND, INC.
[GRAPHIC OMITTED]
ANNUAL REPORT
DECEMBER 31, 1999
------------
SEEKING CAPITAL
APPRECIATION BY
INVESTING IN
MID-CAPITALIZATION
GROWTH STOCKS
[SELIGMAN LOGO OMITTED]
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 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 136 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 in the new millennium.
[GRAPHIC OMITTED]
JAMES, JESSE, AND JOSEPH SELIGMAN, 1870
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 ....................................... 11
Statement of Operations ................................................... 12
Statements of Change in Net Assets ........................................ 13
Notes to Financial Statements ............................................. 14
Financial Highlights ...................................................... 17
Report of Independent Auditors ............................................ 19
Federal Tax Status of 1999 Gain Distribution
for Taxable Accounts .................................................... 20
Board of Directors ........................................................ 21
Executive Officers AND For More Information ............................... 22
Glossary of Financial Terms ............................................... 23
<PAGE>
TO THE SHAREHOLDERS
The 20th century ended on an extraordinarily optimistic note for the US stock
markets, with all major indices -- the Dow Jones Industrial Average, the S&P
500, and the NASDAQ -- at record highs. The broad-based S&P 500 had achieved a
fifth consecutive year of greater than 20% returns -- a record-breaking run.
Supporting these impressive markets was the US economic expansion -- now the
longest in US history. Throughout 1999, unemployment stood at a near 30-year
low, inflation remained tame, and consumer confidence soared. In addition, the
global economy -- which just over one year ago threatened US growth -- rebounded
strongly. In this positive environment, Seligman Capital Fund delivered a total
return of 50.71% based on the net asset value of Class A shares.
While 1999 was a positive year for equity investors, it was also a year of sharp
contrasts. Despite stellar performances by the popular indices, the market was
once again extraordinarily narrow. Just over half of the stocks in the S&P 500
had positive returns. Large-cap growth and technology companies continued to
dominate, while value stocks lagged considerably. However, the market did show
signs of a broadening trend, which we believe will continue; 1999 was the first
year since 1994 that small- and mid-cap stocks delivered returns approaching
those of large caps. Further, in response to concerns regarding inflation, the
Federal Reserve Board increased the federal funds rate three times, completely
reversing its 1998 rate cuts.
There was also a dramatic divergence between stocks and bonds. The bond market
had one of its worst years ever, and 30-year US government bond yields increased
from 5.08% at the beginning of the year to 6.48% by year-end. Unfazed, the stock
market hit several new highs. This sharp divergence cannot continue; our view is
that interest rates will stabilize and equity price increases will be more
modest.
As we look into the 21st century, we believe there is much to be optimistic
about, with several long-term factors that should support equity prices for many
years. First are global demographic trends. The fastest growing segment of the
population in the US and other developed countries are 45- to 64-year-olds. As
this group matures, they are likely to spend less, both of necessity for
retirement savings and because, while they are in their peak earning years,
consumption needs often decrease. We believe that this will produce a
groundswell of savings, which will be a significant support for equity prices in
the coming years.
Second, America has been experiencing disinflation since 1982 and nominal
interest rates have been in an 18-year secular downtrend. Despite the uptick in
rates during 1999, we believe that the long-term trend is one of continued
benign inflation and low interest rates, a positive environment for the stock
market. Third, the global economy has rebounded strongly since the 1998
financial crisis. We believe that this will continue, allowing investors to
benefit from attractive overseas investment opportunities.
Fourth, new technology has allowed the economy to become vastly more productive,
and the sector now accounts for approximately 25% of gross domestic product
growth and approximately 40% of capital spending. Technology has been, and will
continue to be, responsible for substantial changes in business activity, both
business-to-business, and business-to-consumer. While J. & W. Seligman & Co.
Incorporated is highly enthusiastic about technology, we have taken a
conservative approach since we believe that investment behavior in this area has
become increasingly speculative. As we seek opportunities in this exciting
sector, we will remain committed to finding solid investment value and to
considering company fundamentals.
We thank you for your continued confidence in the Seligman Capital Fund and look
forward to serving you in a new century. A discussion with your Fund's Portfolio
Manager, as well as a performance overview and financial statements, including a
portfolio of investments, follows 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
February 11, 2000
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
Q: HOW DID SELIGMAN CAPITAL FUND PERFORM IN THE LAST 12 MONTHS?
A: Seligman Capital Fund posted a total return of 50.71% based on the net asset
value of Class A shares for the 12 months ended December 31, 1999. This was
significantly better than the 36.29% total return posted by the Fund's
peers, as measured by the Lipper Mid Cap Funds Average, but was slightly
behind the 51.29% total return posted by the Russell Midcap Growth Index.
Q: WHAT ECONOMIC AND MARKET FACTORS INFLUENCED THE FUND'S RESULTS IN 1999?
A: During 1999, growth stocks of all sizes generally delivered strong returns,
while value stocks of all sizes generally lagged. A continued strong US
economy and improving world economies, combined with low inflation, provided
a positive environment for growth stocks. Within the growth-stock universe,
technology, driven by increased Internet demand and an explosion in wireless
communications, was by far the best performing. The growth stocks in
Seligman Capital Fund's portfolio delivered strong performances within this
supportive environment.
- --------------------------------------------------------------------------------
A TEAM APPROACH
Seligman Capital Fund is managed by the Seligman Global 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 OMITTED]
GLOBAL GROWTH TEAM: (FROM LEFT) DAVE LEVY, SHEILA GRAYSON (ADMINISTRATIVE
ASSISTANT), (SEATED) MARION S. SCHULTHEIS (PORTFOLIO MANAGER); (NOT PICTURED)
JACK CHANG, CRAIG CHODASH
Q: WHAT INDUSTRIES AFFECTED THE FUND'S PERFORMANCE LAST YEAR?
A: The technology industry was the single most positive influence on Fund
performance during the fiscal year. Despite the fact that the Fund was
underweighted in the sector during the period, the technology stocks that
the Fund did hold delivered exceptional returns.
Q: WHAT WAS YOUR INVESTMENT STRATEGY DURING THE FISCAL YEAR?
A: At the beginning of the Fund's fiscal year, we avoided Internet stocks
because of the seemingly excessive valuations for the group as a whole.
However, as growth managers, we had to reevaluate our strategy for this
industry since, while the stocks are expensive, we believe that the group
has the potential to deliver above-average growth rates. We developed a
valuation process for this unique industry where revenue growth sometimes
exceeds 40%. This process includes analyzing a company's business strategy
and evaluating price-to-revenue multiples, rather than price-to-earnings
multiples.
Following this strategy shift, we purchased what we believe are several
"best-of-class" Internet companies that focus on the business-to-business
applications that allow companies to reduce expenses and increase sales. We
believe that such companies, which contribute to increased efficiency in the
rest of the econo-
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
MARION S. SCHULTHEIS
my, will continue to have opportunities for growth for years to come.
We maintained low exposure to health care because we believed the group had
become overvalued following a very strong 1998, and there were uncertainties
over pricing pressure due to potential changes in Medicare drug benefits.
This underweighting benefited the Fund's overall performance since this
sector was a poor performer for the year.
During the fiscal year, we focused on middle-to-larger capitalized names
within the mid-cap arena, with particular emphasis on those with longer-term
track records. In general, we are attracted to companies with strong
price-to-earnings growth rates looking two years ahead.
Q: DO YOU PLAN TO MAKE ANY STRATEGY CHANGES DURING THE YEAR 2000?
A: Going forward, we expect to place greater emphasis on technology. In
particular, we will look for companies that use information technology to
increase sales and data warehousing, and companies that are developing
innovative or improved products, especially in telecommunications. Within
technology, we anticipate remaining underweighted in hardware stocks and
plan to focus on software stocks, particularly those of companies involved
in business-to-business e-commerce. We will also be looking for
opportunities to gain more exposure to wireless application protocol, which
allows Internet access without a personal computer.
We are concerned about American consumer strength. Following a very strong
1999, with the best holiday season in a decade, we believe that spending
must slow along with the rest of the economy. For this reason, we expect to
further reduce the Fund's exposure to consumer cyclicals. At the same time,
we will look for opportunities to increase the Fund's exposure to health
care. We think health care stocks, in general, should rebound due to
improved valuations and new PRODUCTS. Generic drug companies, in particular,
should benefit from patent expirations and a possible Medicare drug benefit.
Q: WHAT IS YOUR OUTLOOK?
A: We feel that Seligman Capital Fund is well positioned as we head into the
new year. We believe that technology will continue to be a key driver of
economic and market strength, and will thus continue to be a high-growth
area and a strong market performer. In such a scenario, the Fund's
increasing exposure to the industry would be a benefit. We believe that our
analysis of the business plans of these companies will allow us to choose
the best companies within this industry.
In addition, it appears that a favorable climate for continued global growth
lies ahead, based on several factors, including the advent of the euro,
reduced barriers to trade, and Japan's economic progress and financial
reforms. Such an environment should benefit mid-cap companies with
export-driven revenues. We will seek to gain additional exposure to stocks
that are positioned to benefit from the recoveries abroad, particularly in
Japan.
3
<PAGE>
PERFORMANCE OVERVIEW
This chart compares a $10,000 hypothetical investment made in Seligman
Capital Fund Class A shares, with and without the initial 4.75% maximum sales
charge, and assumes that all distributions within the period are invested in
additional shares, for the 10-year period ended December 31, 1999, to a $10,000
investment made in the Lipper Mid Cap Funds Average (Lipper Mid Cap Average) and
the Russell Midcap Growth Index for the same period. The performances of
Seligman Capital Fund Class B, Class C, and Class D shares are not shown in this
chart but are included in the table on page 5. It is important to keep in mind
that the Lipper Mid Cap Average and the Russell Midcap Growth Index exclude the
effect of fees and/or sales charges.
[LINE CHART OMITTED]
With Without Lipper Mid Cap Russell Midcap
Date Sales Charge Sales Charge Average Growth Index
12/31/89 9523 10000 10000 10000
12/31/90 9655 10138 9502 9487
12/31/91 14933 15681 13761 13949
12/31/92 16660 17494 15306 15163
12/31/93 17460 18334 17537 16860
12/31/94 16227 17040 17344 16495
12/31/95 22283 23399 22708 22099
12/31/96 26013 27316 26884 25963
12/31/97 31808 33401 32464 31813
12/31/98 37890 39788 36338 37499
12/31/99 57106 59966 49525 56732
The performances of Class B, Class C, and Class D shares will be greater than
or less than the performance shown for Class A shares, based on the differences
in sales charges and fees paid by shareholders.
4
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------
CLASS C CLASS B CLASS D
SINCE SINCE SINCE
SIX INCEPTION ONE FIVE 10 INCEPTION INCEPTION
MONTHS* 5/27/99* YEAR YEARS YEARS 4/22/96 5/3/93
----- ----- ----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge 32.78% n/a 43.56% 27.36% 19.03% n/a n/a
Without Sales Charge 39.39 n/a 50.71 28.61 19.62 n/a n/a
CLASS B**
With CDSC 33.81 n/a 44.51 n/a n/a 24.22% n/a
Without CDSC 38.81 n/a 49.51 n/a n/a 24.68 n/a
CLASS C**
With Sales Charge and CDSC 36.54 49.84% n/a n/a n/a n/a n/a
Without Sales Charge and CDSC 38.91 52.33 n/a n/a n/a n/a n/a
CLASS D**
With 1% CDSC 37.91 n/a 48.60 n/a n/a n/a n/a
Without CDSC 38.91 n/a 49.60 27.58 n/a n/a 19.81%
LIPPER MID CAP FUNDS AVERAGE*** 21.47 31.46 36.29 23.35 17.35 19.99 19.51?
RUSSELL MIDCAP GROWTH INDEX*** 32.49 41.74 51.29 28.02 18.95 25.51 22.49?
<CAPTION>
NET ASSET VALUE CAPITAL GAIN INFORMATION
DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1998 FOR THE YEAR ENDED DECEMBER 31, 1999
------------------ --------------- ------------------
<S> <C> <C> <C> <C> <C>
CLASS A $27.01 $21.69 $20.06 PAID $2.772
CLASS B 24.35 19.86 18.44 UNDISTRIBUTED REALIZED 1.727(00)
CLASS C 24.38 19.87 N/A UNREALIZED 8.740(000)
CLASS D 24.38 19.87 18.45
</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.
0 From April 30, 1993.
00 Represents net gain realized in November and December 1999, payable in
2000.
000 Represents the per share amount of net unrealized appreciation of portfolio
securities as of December 31, 1999.
5
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
DECEMBER 31, 1999
PERCENT
OF NET ASSETS
DECEMBER 31,
-------------
ISSUES COST VALUE 1999 1998
---- ------------ ------------ ----- -----
COMMON STOCKS:
Basic Materials ......... 3 $ 14,013,781 $ 15,845,812 3.4 2.5
Capital Goods ........... 6 38,192,432 52,192,863 11.3 11.2
Communications
Services .............. 1 1,939,983 3,614,712 0.8 6.1
Consumer Cyclicals ...... 12 46,957,797 70,010,045 15.2 24.3
Consumer Staples ........ 2 9,570,855 9,468,012 2.1 16.2
Electronic Technology ... 13 40,790,914 75,244,131 16.3 7.2
Energy .................. 2 10,176,307 11,126,200 2.4 1.4
Financial Services ...... 6 25,752,627 29,408,968 6.4 10.4
Health Care ............. 10 38,244,673 47,892,832 10.4 6.8
Technology Services ..... 15 48,613,255 104,258,977 22.6 8.9
Transportation .......... 1 6,660,036 7,091,138 1.5 1.7
Utilities ............... 1 9,145,652 15,921,750 3.4 0.9
---- ------------ ------------ ----- -----
72 290,058,312 442,075,440 95.8 97.6
SHORT-TERM HOLDINGS
AND OTHER ASSETS
LESS LIABILITIES ........ 1 19,382,813 19,382,813 4.2 2.4
---- ------------ ------------ ----- -----
NET ASSETS ................ 73 $309,441,125 $461,458,253 100.0 100.0
==== ============ ============ ===== =====
LARGEST INDUSTRIES
DECEMBER 31, 1999
[BAR CHART OMITTED]
Percent of
Net Assets
----------
TECHNOLOGY SERVICES $104,258,977 22.6
ELECTRONIC TECHNOLOGY $ 75,244,131 16.3
CONSUMER CYCLICALS $ 70,010,045 15.2
CAPITAL GOODS $ 52,192,863 11.3
HEALTH CARE $ 47,892,832 10.4
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
------------------------
HOLDINGS
ADDITIONS INCREASE 12/31/99
- --------- -------- --------
Avery Dennison .................................... 122,200 122,200
BMC Software ...................................... 92,200 92,200
Cadence Design Systems ............................ 527,700 527,700
Ciena ............................................. 155,300 155,300
Concord ........................................... 274,400 274,400
Limited ........................................... 220,200 220,200
Quintiles Transnational ........................... 180,300 180,300
Reader's Digest Association ....................... 182,300 182,300
Royal Caribbean Cruises ........................... 143,800 143,800
Symbol Technologies ............................... 183,400 209,650
SHARES
------------------------
HOLDINGS
REDUCTIONS INCREASE 12/31/99
- --------- -------- --------
Apollo Group (Class A) ............................ 281,200 --
Applied Power (Class A) ........................... 241,400 --
AT&T--Liberty Media
Group (Class A) ................................. 239,000 --
Comdisco .......................................... 323,900 --
General Instrument ................................ 157,000 --
Infinity Broadcasting
(Class A) ....................................... 225,200 --
Molex ............................................. 203,900 97,900
Sealed Air ........................................ 134,000 --
Snyder Communications ............................. 296,000 --
Williams-Sonoma ................................... 160,000 75,000
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
LARGEST PORTFOLIO HOLDINGS
DECEMBER 31, 1999
SECURITY VALUE
- -------- -----------
AES .............................................................. $15,921,750
ISS Group ........................................................ 15,107,888
Symbol Technologies .............................................. 13,325,878
Cadence Design Systems ........................................... 12,664,800
Siebel Systems ................................................... 10,170,713
JDS Uniphase ..................................................... 10,065,900
Circuit City Stores--Circuit
City Group ..................................................... 9,787,575
Limited .......................................................... 9,537,412
Corning .......................................................... 9,296,394
Broadcom (Class A) ............................................... 8,987,344
7
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
------- ---------
COMMON STOCKS 95.8%
BASIC MATERIALS 3.4%
MINERALS TECHNOLOGIES
Marketer of specialty minerals
and products 83,800 $ 3,357,237
NUCOR
Manufacturer of steel joints,
angles, and rounds 141,100 7,734,044
PRAXAIR
Distributor of atmospheric gases 94,500 4,754,531
------------
15,845,812
------------
CAPITAL GOODS 11.3%
AMERICAN POWER CONVERSION*
Provider of back-up power supply
equipment for computers 273,600 7,207,650
AVERY DENNISON
International provider of
office supplies 122,200 8,905,325
CINTAS
Designer and manufacturer
of corporate uniforms 149,000 7,910,969
CORNING
Producer of diversified components
for the telecommunications and
television industries 72,100 9,296,394
MOLEX
Worldwide manufacturer of
electrical products and systems 97,900 5,546,647
SYMBOL TECHNOLOGIES
Retailer of bar code scanner
products 209,650 13,325,878
------------
52,192,863
------------
COMMUNICATIONS SERVICES 0.8%
CENTURY TEL
Provider of regional
telephone services 76,300 3,614,712
------------
CONSUMER CYCLICALS 15.2%
BJ'S WHOLESALE CLUB*
Discount retailer 114,000 4,161,000
CIRCUIT CITY STORES--CIRCUIT CITY GROUP
Retailer of consumer electronics
and major appliances 217,200 9,787,575
DOUBLECLICK*
Provider of Internet
advertising solutions for
marketers and Web publishers 25,100 6,357,359
FASTENAL
Industrial and construction
supplies retailer 116,800 5,252,350
FLUOR
Provider of engineering services
for diversified industries 121,800 5,587,575
GENTEX*
Developer of products that use
electro-optic technology,
including automatic-dimming
rearview mirrors 278,500 $ 7,763,187
HARLEY-DAVIDSON
Manufacturer of motorcycles 98,600 6,316,562
INTERPUBLIC GROUP OF COMPANIES
Worldwide advertising agency 60,800 3,507,400
LIMITED
Clothing retailer 220,200 9,537,412
READER'S DIGEST ASSOCIATION
Publisher of magazines, books,
music, and home video 182,300 5,332,275
WILLIAMS-SONOMA*
Retailer of cooking equipment,
home furnishings, and garden
accessories 75,000 3,450,000
YOUNG & RUBICAM
Advertising agency 41,800 2,957,350
------------
70,010,045
------------
CONSUMER STAPLES 2.1%
CLOROX
Manufacturer and marketer of
household consumer products 88,300 4,448,112
NEWELL RUBBERMAID
Manufacturer and marketer of
diversified consumer products 173,100 5,019,900
------------
9,468,012
------------
ELECTRONIC TECHNOLOGY 16.3%
APPLIED MICRO CIRCUITS*
Designer of silicon products
for the communications industry 18,800 2,394,650
BROADCOM (CLASS A)*
Circuit supplier for the cable
and telecommunications
industries 33,000 8,987,344
CIENA*
Provider of multiplexing
systems for fiber optic
communication networks 155,300 8,934,603
FINISAR*
Provider of fiber optic and
network performance test
systems for the data
communications industry 57,600 5,155,200
FOUNDRY NETWORKS*
Developer of networking
products for Internet service
providers 20,200 6,092,825
- ----------
See footnotes on page 10.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
------- ---------
ELECTRONIC TECHNOLOGY (CONTINUED)
GATEWAY*
Manufacturer and direct
marketer of personal computers 58,100 $ 4,186,831
JDS UNIPHASE*
Worldwide provider of fiber optic
components and modules for
the cable television and tele-
communications industries 62,400 10,065,900
MAXIM INTEGRATED PRODUCTS*
Manufacturer of analog and
mixed-signal integrated circuits 49,300 2,324,803
NETWORK APPLIANCES*
Designer, manufacturer, and
marketer of network data
storage devices 23,600 1,959,538
PMC-SIERRA*
Provider of high-speed
networking circuits 21,100 3,381,934
VERITAS SOFTWARE*
Developer and marketer of
back-up storage software for
computer systems 49,900 7,140,378
VITESSE SEMICONDUCTOR*
Provider of equipment for
the data communications and
telecommunications industries 142,500 7,467,891
XILINX*
Supplier of field-programmable
gate arrays 157,300 7,152,234
------------
75,244,131
------------
ENERGY 2.4%
EOG RESOURCES
Explorer and producer of oil
and gas 198,500 3,486,156
WEATHERFORD INTERNATIONAL*
Provider of oil field machinery
and equipment 191,300 7,640,044
------------
11,126,200
------------
FINANCIAL SERVICES 6.4%
ACE
Provider of liability insurance 256,800 4,285,350
AFLAC
Provider of supplemental
insurance at the work site 130,000 6,134,375
ALLIED CAPITAL
Provider of financial services 223,800 4,091,344
CAPITAL ONE FINANCIAL
Provider of financial services 79,900 3,850,181
CONCORD*
Provider of financial services 274,400 7,057,225
SOUTHTRUST
Operator of SouthTrust
Bank N.A 105,621 $ 3,990,493
------------
29,408,968
------------
HEALTH CARE 10.4%
ALZA*
Developer of pharmaceutical
products 136,700 4,733,238
BIOGEN*
Developer of genetically
engineered drugs 71,200 6,014,175
BIOMET
Designer and manufacturer of
medical supplies and equipment 64,300 2,569,991
ELAN*
Developer, manufacturer, and
marketer of pharmaceutical
delivery systems 254,200 7,498,900
FOREST LABORATORIES*
Manufacturer of pharma-
ceutical products 114,200 7,016,163
GUIDANT
Provider of medical
instruments used for
cardiovascular treatment 89,300 4,197,100
IMSHEALTH
Provider of medical information
to the pharmaceutical and
healthcare industries 66,700 1,813,406
PE CORP.-PE BIOSYSTEMS GROUP
Provides instrument
systems support, reagents, and
software for pharmaceutical,
biotechnology and other
industries 50,600 6,087,812
QUINTILES TRANSNATIONAL*
Provider of services to the
biotechology, medical device,
and pharmaceutical industries 180,300 3,363,722
WATSON PHARMACEUTICALS*
Manufacturer of off-patent
medications 128,400 4,598,325
------------
47,892,832
------------
TECHNOLOGY SERVICES 22.6%
ARIBA*
Provider of Internet software 28,500 5,049,844
BMC SOFTWARE*
Developer of mainframe
utility software 92,200 7,367,356
CADENCE DESIGN SYSTEMS*
Manufacturer of electronic
design automation software 527,700 12,664,800
COMMERCE ONE*
Provider of Internet software 16,800 3,305,925
- ----------
See footnotes on page 10.
9
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
------- ---------
TECHNOLOGY SERVICES (CONTINUED)
COMPUWARE*
Provider of mainframe software
and consulting services 223,900 $ 8,333,278
CSG SYSTEMS INTERNATIONAL*
Provider of customer service
for the media and tele-
communications industries 97,500 3,857,344
FISERV*
Provider of data
processing services 77,300 2,956,725
I2 TECHNOLOGIES*
Provider of products used to
assist in the manufacturing and
scheduling plans of companies 21,400 4,168,988
ISS GROUP*
Provider of computer network
security monitoring, detection,
and response software 212,600 15,107,888
NBC INTERNET (CLASS A)*
Global media company that
integrates the Internet, broadcast
and cable television, and radio 86,000 6,643,500
RATIONAL SOFTWARE*
Provider of applications
development and test software 130,900 6,442,734
SIEBEL SYSTEMS*
Provider of applications
software 120,900 10,170,713
SOFTWARE.COM*
Developer of software for
Internet providers 53,600 5,122,150
VERISIGN*
Provider of computer data
security 26,600 5,082,263
VIGNETTE*
Provider of Internet software 49,000 7,985,469
------------
104,258,977
------------
TRANSPORTATION 1.5%
ROYAL CARIBBEAN CRUISES
International cruise operator 143,800 $ 7,091,138
------------
UTILITIES 3.4%
AES*
Supplier of electricity 213,000 15,921,750
------------
TOTAL COMMON STOCKS
(Cost $290,058,312) 442,075,440
SHORT-TERM HOLDINGS 4.3%
(Cost $19,700,000) 19,700,000
------------
TOTAL INVESTMENTS 100.1%
(COST $309,758,312) 461,775,440
OTHER ASSETS
LESS LIABILITIES (0.1)% (317,187)
------------
NET ASSETS 100.0%
$461,458,253
============
- ----------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS:
Investments, at value:
Common stocks (cost $290,058,312) ........ $442,075,440
Short-term holdings (cost $19,700,000) ... 19,700,000 $461,775,440
------------
Cash ........................................................ 493,155
Receivable for securities sold .............................. 6,521,975
Receivable for Capital Stock sold ........................... 934,856
Receivable for interest and dividends ....................... 124,612
Investment in, and expenses prepaid to,
shareholder service agent ................................. 71,589
Other ....................................................... 4,741
------------
TOTAL ASSETS ................................................ 469,926,368
------------
LIABILITIES:
Payable for securities purchased ............................ 6,464,266
Payable for Capital Stock repurchased ....................... 1,252,426
Accrued expenses and other .................................. 751,423
------------
TOTAL LIABILITIES ........................................... 8,468,115
------------
NET ASSETS .................................................. $461,458,253
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($1 par value;
500,000,000 shares authorized;
17,392,989 shares outstanding):
Class A ..................................................... $14,270,632
Class B ..................................................... 1,194,855
Class C ..................................................... 295,455
Class D ..................................................... 1,632,047
Additional paid-in capital .................................. 262,112,221
Accumulated net investment loss ............................. (106,241)
Undistributed net realized gain ............................. 30,042,156
Net unrealized appreciation of investments .................. 152,017,128
------------
NET ASSETS .................................................. $461,458,253
============
NET ASSET VALUE PER SHARE:
CLASS A ($385,378,545 O 14,270,632 shares) .................. $27.01
======
CLASS B ($29,096,609 O 1,194,855 shares) .................... $24.35
======
CLASS C ($7,201,730 O 295,455 shares) ....................... $24.38
======
CLASS D ($39,781,369 O 1,632,047 shares) .................... $24.38
======
- ----------
See Notes to Financial Statements.
11
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME:
Dividends ................................ $1,138,775
Interest ................................. 1,019,439
----------
TOTAL INVESTMENT INCOME ....................................... $2,158,214
EXPENSES:
Management fee .............................. 1,623,132
Distribution and service fees ............... 1,204,747
Shareholder account services ................ 712,777
Registration ................................ 113,754
Shareholder reports and communications ...... 108,820
Custody and related services ................ 88,806
Auditing and legal fees ..................... 68,438
Directors' fees and expenses ................ 22,836
Miscellaneous ............................... 14,662
------------
TOTAL EXPENSES ................................................ 3,957,972
------------
NET INVESTMENT LOSS ........................................... (1,799,758)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ............ 121,498,199
Net change in unrealized appreciation
of investments ............................ 37,487,124
----------
NET GAIN ON INVESTMENTS ....................................... 158,985,323
------------
INCREASE IN NET ASSETS FROM OPERATIONS ........................ $157,185,565
============
- ----------
See Notes to Financial Statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998
------------- -------------
OPERATIONS:
Net investment loss .......................... $ (1,799,758) $ (1,018,947)
Net realized gain on investments ............. 121,498,199 33,498,209
Net change in unrealized
appreciation of investments ................ 37,487,124 26,383,287
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS ....... 157,185,565 58,862,549
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A .................................... (36,375,675) (10,025,257)
Class B .................................... (2,808,369) (488,970)
Class C .................................... (517,034) --
Class D .................................... (3,925,756) (936,470)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS .... (43,626,834) (11,450,697)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares ............ 28,920,645 17,045,492
Exchanged from associated Funds .............. 424,053,053 337,796,588
Value of shares issued in payment
of gain distributions ...................... 39,215,129 10,441,951
------------- -------------
Total ........................................ 492,188,827 365,284,031
------------- -------------
Cost of shares repurchased ................... (66,378,922) (44,259,467)
Exchanged into associated Funds .............. (418,486,746) (346,599,115)
------------- -------------
Total ........................................ (484,865,668) (390,858,582)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS ............ 7,323,159 (25,574,551)
------------- -------------
INCREASE IN NET ASSETS ....................... 120,881,890 21,837,301
NET ASSETS:
Beginning of year ............................ 340,576,363 318,739,062
------------- -------------
END OF YEAR (including accumulated
net investment loss of $106,241
and $101,130, respectively) ................ $ 461,458,253 $ 340,576,363
============= =============
- ----------
See Notes to Financial Statements.
13
<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-specific 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 year ended December 31, 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 year ended December 31, 1999, amounted to $573,103,867 and $622,461,899,
respectively.
At December 31, 1999, the cost of investments for federal income tax purposes
was $310,460,407, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $155,069,762 and $3,754,729,
respectively.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. SHORT-TERM INVESTMENTS -- At December 31, 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:
CLASS A
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
Sale of shares 648,005 $ 13,780,619 509,217 $ 9,432,693
Exchanged from
associated Funds 18,244,569 377,466,453 17,652,456 318,464,290
Shares issued in
payment of gain
distributions 1,404,287 32,621,486 513,222 9,125,187
----------- ------------ ----------- ------------
Total 20,296,861 423,868,558 18,674,895 337,022,170
----------- ------------ ----------- ------------
Cost of shares
repurchased (2,709,116) (57,492,741) (2,097,094) (38,074,268)
Exchanged into
associated Funds (18,191,912) (376,121,834) (17,964,860) (327,416,067)
----------- ------------ ----------- ------------
Total (20,901,028) (433,614,575) (20,061,954) (365,490,335)
----------- ------------ ----------- ------------
Decrease (604,167) $ (9,746,017) (1,387,059) $(28,468,165)
=========== ============ =========== ============
CLASS B
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
Sale of shares 273,780 $ 5,404,724 253,196 $ 4,232,400
Exchanged from
associated Funds 1,682,235 33,058,593 830,239 13,846,907
Shares issued in
payment of gain
distributions 120,691 2,530,887 26,925 440,484
----------- ------------ ----------- ------------
Total 2,076,706 40,994,204 1,110,360 18,519,791
----------- ------------ ----------- ------------
Cost of shares
repurchased (143,649) (2,781,912) (66,337) (1,101,885)
Exchanged into
associated Funds (1,542,309) (30,464,814) (759,346) (12,687,007)
----------- ------------ ----------- ------------
Total (1,685,958) (33,246,726) (825,683) (13,788,892)
----------- ------------ ----------- ------------
Increase 390,748 $ 7,747,478 284,677 $ 4,730,899
=========== ============ =========== ============
CLASS C
-----------------------
MAY 27, 1999* TO
DECEMBER 31, 1999
-----------------------
SHARES AMOUNT
-------- -----------
Sale of shares 280,002 $ 5,703,121
Exchanged from
associated Funds 1,938 42,021
Shares issued in
payment of gain
distributions 23,962 502,721
-------- -----------
Total 305,902 6,247,863
-------- -----------
Cost of shares
repurchased (6,589) (133,481)
Exchanged into
associated Funds (3,858) (79,244)
-------- -----------
Total (10,447) (212,725)
-------- -----------
Increase 295,455 $ 6,035,138
======== ===========
* Commencement of offering of shares.
CLASS C
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
Sale of shares 207,659 $ 4,032,181 198,721 $ 3,380,399
Exchanged from
associated Funds 682,324 13,485,986 321,693 5,485,391
Shares issued in
payment of gain
distributions 169,688 3,560,035 53,532 876,280
----------- ------------ ----------- ------------
Total 1,059,671 21,078,202 573,946 9,742,070
----------- ------------ ----------- ------------
Cost of shares
repurchased (314,527) (5,970,788) (303,184) (5,083,314)
Exchanged into
associated Funds (600,383) (11,820,854) (389,223) (6,496,041)
----------- ------------ ----------- ------------
Total (914,910) (17,791,642) (692,407) (11,579,355)
----------- ------------ ----------- ------------
Increase (Decrease) 144,761 $ 3,286,560 (118,461) $ (1,837,285)
=========== ============ =========== ============
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 0.47% 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
$20,410 from sales of Class A shares. Commissions of $153,479 and $50,444 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 year ended December 31,
1999, fees incurred under the Plan aggregated $734,721 or 0.25% per annum of the
average daily net assets of Class A shares.
15
<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 year ended December 31, 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 $179,166, $15,316 and $275,544, 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
year ended December 31, 1999, such charges amounted to $10,551.
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 B shares sold. The aggregate of such payments
retained by the Distributor, for the year ended December 31, 1999, amounted to
$7,646.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the year ended December 31, 1999,
Seligman Services, Inc. received commissions of $5,149 from the sale of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $90,047, pursuant to the Plan.
Seligman Data Corp., which is owned by the Fund and certain associated
investment companies, charged the Fund at cost $698,620 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 December 31, 1999, of $106,241
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 in June 2000, but is renewable annually with
the consent of the participating banks. For the year ended December 31, 1999,
the Fund did not borrow from the credit facility.
16
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's
financial performance for the past five years or from its inception if less than
five 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
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR ..................... $ 20.06 $ 17.48 $ 16.36 $ 15.59 $ 13.17
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................................... (0.08) (0.04) (0.06) (0.04) (0.02)
Net realized and unrealized gain
on investments ....................................... 9.80 3.30 3.61 2.68 4.74
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS ....................... 9.72 3.26 3.55 2.64 4.72
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ........... (2.77) (0.68) (2.43) (1.87) (2.30)
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS .................................... (2.77) (0.68) (2.43) (1.87) (2.30)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR ........................... $ 27.01 $ 20.06 $ 17.48 $ 16.36 $ 15.59
======== ======== ======== ======== ========
TOTAL RETURN: .......................................... 50.71% 19.12% 22.28% 16.74% 37.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) ................. $385,379 $298,319 $284,214 $259,514 $215,688
Ratio of expenses to average net assets ................ 1.02% 0.99% 1.05% 1.07% 1.09%
Ratio of net income (loss) to average net assets ....... (0.39)% (0.24)% (0.29)% (0.25)% (0.11)%
Portfolio turnover rate ................................ 174.68% 132.18% 104.33% 94.97% 103.60%
</TABLE>
- --------
See footnotes on page 18.
17
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------- ---------
YEAR ENDED DECEMBER 31, 4/22/96* 5/27/99*
-------------------------------------- TO TO
1999 1998 1997 12/31/96 12/31/99
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................. $ 18.44 $ 16.24 $ 15.47 $ 16.43 $ 18.12
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................................. (0.22) (0.17) (0.18) (0.10) (0.11)
Net realized and unrealized gain
on investments ..................................... 8.90 3.05 3.38 1.01 9.14
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ..................... 8.68 2.88 3.20 0.91 9.03
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ......... (2.77) (0.68) (2.43) (1.87) (2.77)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS .................................. (2.77) (0.68) (2.43) (1.87) (2.77)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ....................... $ 24.35 $ 18.44 $ 16.24 $ 15.47 $ 24.38
======= ======= ======= ======= =======
TOTAL RETURN: ........................................ 49.51% 18.24% 21.26% 5.33% 52.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............. $29,097 $14,824 $ 8,437 $ 4,337 $ 7,202
Ratio of expenses to average net assets .............. 1.77% 1.75% 1.81% 1.89% 1.75%
Ratio of net income (loss) to average net assets ..... (1.14)% (1.00)% (1.05)% (0.99)% (1.02)%
Portfolio turnover rate .............................. 174.68% 132.18% 104.33% 94.97% 174.68%
<CAPTION>
CLASS D
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR ................... $ 18.45 $ 16.25 $ 15.47 $ 14.94 $ 12.82
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................................. (0.22) (0.17) (0.18) (0.16) (0.14)
Net realized and unrealized gain
on investments ..................................... 8.92 3.05 3.39 2.56 4.56
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS ..................... 8.70 2.88 3.21 2.40 4.42
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
DISTRIBUTIONS FROM NET REALIZED CAPITAL GAIN ......... (2.77) (0.68) (2.43) (1.87) (2.30)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS .................................. (2.77) (0.68) (2.43) (1.87) (2.30)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF YEAR ......................... $ 24.38 $ 18.45 $ 16.25 $ 15.47 $ 14.94
======= ======= ======= ======= =======
TOTAL RETURN: ........................................ 49.60% 18.23% 21.34% 15.84% 35.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted) ............... $39,781 $27,433 $26,088 $19,974 $ 9,137
Ratio of expenses to average net assets .............. 1.77% 1.75% 1.81% 1.83% 2.02%
Ratio of net loss to average net assets .............. (1.14)% (1.00)% (1.05)% (1.00)% (1.06)%
Portfolio turnover rate .............................. 174.68% 132.18% 104.33% 94.97% 103.60%
</TABLE>
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* Commencement of offering of shares.
+ Annualized.
++ For the year ended December 31, 1996.
+++ For the year ended December 31, 1999.
See Notes to Financial Statements.
18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN CAPITAL FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Capital Fund, Inc. as of December 31,
1999, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 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 December 31, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for all
the respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
February 11, 2000
19
<PAGE>
FEDERAL TAX STATUS OF 1999
GAIN DISTRIBUTION FOR TAXABLE ACCOUNTS
On November 23, 1999, a distribution of $2.772 per share, from net long-term
gain realized on investments through October 31, 1999, was paid to Class A, B,
C, and D shareholders.
The long-term gain distribution is designated a "capital gain dividend" for
federal income tax purposes and is taxable to shareholders in 1999 as a
long-term gain from the sale of capital assets, no matter how long shares have
been owned, or whether the distribution was received in shares or in cash.
However, if shares on which a capital gain distribution was received are
subsequently sold, and such shares have been held for six months or less, any
loss on the sale would be treated as long-term to the extent that it offsets the
long-term gain distribution.
If the distribution was received in shares, the per share cost basis for federal
income tax purposes is $23.23 for Class A shares, $20.97 for Class B shares, and
$20.98 for Class C and for Class D shares.
A 1999 year-end statement of account activity and a 1999 tax package, which may
include a Form 1099-DIV, a Form 1099-B, and/or a Cost Basis Statement, have been
mailed to each shareholder. Form 1099-DIV shows the distributions paid to the
shareholder during the year. Form 1099-B shows the proceeds of any redemptions
paid to the shareholder during the year. Cost Basis Statements report all sales
or exchanges from a shareholder's account which may have resulted in a capital
gain or loss in 1999. The information shown on Forms 1099-DIV and 1099-B is
reported to the Internal Revenue Service as required by federal regulations.
20
<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
21
<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS MARION S. SCHULTHEIS THOMAS G. ROSE
CHAIRMAN VICE PRESIDENT TREASURER
BRIAN T. ZINO LAWRENCE P. VOGEL FRANK J. NASTA
PRESIDENT VICE PRESIDENT 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
22
<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.
- ----------
Adapted from the Investment Company Institute's 1999 MUTUAL FUND FACT BOOK.
23
<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
[SELIGMAN LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQCA2 12/99 [RECYCLE LOGO] Printed on Recycled Paper
