================================================================================
MID-YEAR REPORT
- --------------------------------------------------------------------------------
SELIGMAN
FRONTIER
FUND, INC.
March 31, 1996
- --------------------------------------------------------------------------------
[Logo]
A CAPITAL APPRECIATION FUND
ESTABLISHED IN 1984
SELIGMAN FINANCIAL SERVICES, INC.
an affiliate of
[Logo]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman Frontier Fund, Inc., which contains information about the sales
charges, management fee, and other costs. Please read the prospectus carefully
before investing or sending money.
EQFR3b 3/96
<PAGE>
================================================================================
TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
Seligman Frontier Fund performed favorably in the first quarter of 1996,
outpacing both the NASDAQ Composite Index and the Russell 2000 Index, as it
continued to successfully provide capital appreciation. For long-term
performance information, please refer to the table on page 3.
Your Fund's net realized gain from investment transactions for both Class A
and D shares for the six months ended March 31, 1996, totaled $0.57 per share.
At March 31, net unrealized gain totaled $1.68 per share.
The first quarter was one in which the US economy demonstrated its
resilience. Despite a strike at General Motors that spread to manufacturing
plants and companies across the nation, failure of both the Congress and
Administration to reach a budget agreement, disappointment that the Federal
Reserve Board did not continue to reduce short-term interest rates, and a rise
in long-term interest rates, the US economy continued to grow at a moderate
rate.
We anticipate that the balance of 1996 will be more noteworthy for the
political debate inherent to a presidential election year than any dramatic
change in the direction of the economy.
Within the small-capitalization market, the wavering performance of
technology issues set the tone for much of the first quarter. Computer-related
issues, including hardware and semiconductors, were battered early in the
quarter following news of weak personal computer sales. However, by quarter's
end technology issues advanced, aiding the small-cap market to close the quarter
on an up note with the benchmark Russell 2000 Index at a record close and the
technology-laden NASDAQ Composite Index up 4.68%.
Turning to your Fund, your Manager pared the portfolio's technology holdings
in response to weakness in certain areas, specifically semiconductors and
semiconductor capital equipment. The proceeds were repositioned to less
susceptible sectors within the technology industry where the near-term outlook
is more positive, such as networking and telecommunications.
In addition, purchases were made in the business goods and services sector,
as your Manager believes this area has strong potential for capital appreciation
and solid earnings growth. Many of these specialized service providers allow
smaller companies to effectively compete with larger corporate entities without
making costly technological investments. Finally, health care was one of your
Fund's strongest sectors, following good earnings and strong valuations in 1995.
For more information about your Fund, or your investment in its shares,
please write, or call Shareholder Services using the toll-free telephone numbers
listed on page 15.
By order of the Board of Directors,
/s/William C. Morris
William C. Morris
Chairman
/s/Brian T. Zino
Brian T. Zino
President
May 3, 1996
1
<PAGE>
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SELIGMAN FRONTIER FUND
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES*
DURING PAST THREE MONTHS
SHARES
---------------------------
HOLDINGS
ADDITIONS INCREASE 3/31/96
- ------------ ----------- -------------
AMRE .......................... 400,000 400,000
Avondale Industries ........... 450,000 450,000
Cognex ........................ 245,000 625,000
CompDent ...................... 200,000 200,000
Control Data Systems .......... 300,000 300,000
Glenayre Technologies ......... 174,000 174,000
Paxson Communications (Class A) 500,000 500,000
Santa Fe Energy Resources ..... 500,000 500,000
Watson Pharmaceuticals ........ 200,000 200,000
Zilog ......................... 228,000 250,000
HOLDINGS
REDUCTIONS DECREASE 3/31/96
- -------------- ----------- -----------
Aspect Telecommunications ..... 180,000 --
Cypress Semiconductors ........ 350,000 100,000
DIMAC ......................... 171,100 --
Falcon Drilling ............... 330,000 --
Lam Research .................. 150,000 --
Madge Networks ................ 99,090 --
SITEL ......................... 244,000 65,000
ThermoLase .................... 200,000 --
US Office Products ............ 200,000 150,000
Xilinx ........................ 100,000 --
- --------------
*Largest portfolio changes from the previous quarter to the current quarter
are based on cost of purchases and proceeds from sales of securities.
MAJOR PORTFOLIO HOLDINGS
AT MARCH 31, 1996
SECURITY VALUE
- -------- ------------
California Energy ..................... $18,637,500
Cognex ................................ 16,171,875
Oakley ................................ 14,911,250
Corporate Express ..................... 13,998,438
United Transnet ....................... 11,821,950
BDM International ..................... 11,780,000
UCAR International .................... 10,496,250
National Data ......................... 10,237,500
Dentsply International ................ 10,031,250
Ceridian .............................. 9,675,000
2
<PAGE>
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SELIGMAN FRONTIER FUND
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
TOTAL RETURNS *
FOR PERIODS ENDED MARCH 31, 1996
AVERAGE ANNUAL
-----------------------------------------
CLASS D
THREE ONE FIVE 10 SINCE
MONTHS YEAR YEARS YEARS INCEPTION+
---------- ------- ------- ------- --------------
CLASS A
With Sales Charge 0.63% 27.28% 21.15% 14.27% n/a
Without Sales Charge 5.65 33.67 22.33 14.83 n/a
CLASS D
With CDSL 4.46 31.53 n/a n/a n/a
Without CDSL 5.46 32.53 n/a n/a 26.01%
RUSSELL 2000** 5.10 29.04 16.00 10.40 16.32++
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
CLASS A $14.41 $13.64
CLASS D $13.90 $13.18
- --------------------------------------------------------------------------------
* The returns for Class A shares are shown with and without the maximum initial
sales charge of 4.75%. No adjustment was made to performance for periods
prior to June 1, 1992, the commencement date for the annual Administration,
Shareholder Services and Distribution Plan fee of up to 0.25% of average
daily net assets of Class A shares. The returns for periods of one year or
less for Class D shares are shown with and without the effect of the 1%
contingent deferred sales load ("CDSL")imposed on certain shares redeemed
within one year of purchase. For periods prior to January 1, 1996, the
returns for both Class A and D shares do not reflect the effect of the
increase in the management fee payable by the Fund, which became effective on
that date.
** The Russell 2000 is an unmanaged index and assumes reinvestment of estimated
dividends, and does not reflect fees and expenses. Investors may not invest
directly in an index.
+ May 3, 1993.
++ From April 30, 1993.
--------------------------------------------------------
These rates of return reflect changes in price and assume that all
distributions within the period are reinvested in additional shares. The
rates of return will vary and the principal value of an investment will
fluctuate. Shares, if redeemed, may be worth more or less than their original
cost. Past performance is not indicative of future investment results.
- --------------------------------------------------------------------------------
3
<PAGE>
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PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
SHARES VALUE
------------ ------------
COMMON STOCKS 96.1%
ADVERTISING 1.4%
Heritage Media (Class A)* ......... 168,000 $ 6,027,000
Katz Media Group* ................. 180,000 2,970,000
------------
8,997,000
------------
AEROSPACE AND DEFENSE 1.8%
BDM International* ................ 310,000 11,780,000
------------
APPAREL 0.8%
St. John Knits .................... 73,500 4,952,063
------------
BUSINESS GOODS AND SERVICES 16.3%
Affiliated Computer Services
(Class A)* ..................... 75,000 3,121,875
Bell & Howell Holdings* ........... 244,600 8,010,650
BISYS Group* ...................... 195,000 6,410,625
Ceridian* ......................... 225,000 9,675,000
Corporate Express* ................ 425,000 13,998,438
DST Systems* ...................... 265,000 8,115,625
Fair Isaac ........................ 110,000 3,368,750
HFS Group* ........................ 120,000 5,835,000
Inter-Tel* ........................ 325,000 5,931,250
May & Speh* ....................... 206,000 2,317,500
National Data ..................... 300,000 10,237,500
Nu-Kote Holdings (Class A)* ....... 310,000 5,541,250
Profit Recovery Group* ............ 136,000 2,159,000
SITEL* ............................ 65,000 2,957,500
SPS Transaction Services* ......... 100,000 3,087,500
US Office Products* ............... 150,000 4,631,250
United Transnet* .................. 500,400 11,821,950
------------
107,220,663
------------
CAPITAL GOODS 6.6%
Carbide/Graphite Group* ........... 500,000 8,875,000
DT Industries ..................... 190,000 3,693,125
Fusion Systems* ................... 110,000 2,736,250
Greenfield Industries ............. 200,000 6,887,500
Oak Industries* ................... 200,000 4,975,000
UCAR International* ............... 270,000 10,496,250
Wolverine Tube* ................... 137,600 5,590,000
------------
43,253,125
------------
COMMUNICATIONS 4.3%
Arch Communications Group* ....... 250,000 5,812,500
Cellular Communications Intl.* ... 15,000 765,937
CIDCO* ........................... 240,000 7,740,000
Glenayre Technologies* ........... 174,000 6,677,250
MobileMedia (Class A)* ........... 150,000 3,084,375
Omnipoint* ....................... 51,500 1,326,125
ProNet* .......................... 100,000 2,481,250
-----------
27,887,437
-----------
COMPUTER HARDWARE
PERIPHERALS 2.1%
Electronics for Imaging* ......... 200,000 8,675,000
Planar System* ................... 418,000 5,225,000
-----------
13,900,000
-----------
COMPUTER SOFTWARE AND
SERVICES 3.8%
Control Data Systems* ............ 300,000 5,943,750
Mentor Graphics* ................. 375,000 5,320,313
Netmanage* ....................... 81,000 891,000
Oak Technology* .................. 48,000 1,014,000
SunGard Data Systems* ............ 125,000 4,234,375
Synopsys* ........................ 235,000 7,520,000
-----------
24,923,438
-----------
CONSTRUCTION AND SERVICES 1.1%
AMRE* ............................. 400,000 7,450,000
----------
CONSUMER GOODS AND SERVICES 3.7%
Barefoot .......................... 290,000 3,135,625
Buckeye Cellulose* ................ 275,000 6,290,625
Oakley* ........................... 395,000 14,911,250
----------
24,337,500
----------
DRUGS AND HEALTH CARE 10.1%
AmeriSource Health (Class A)* ..... 210,000 6,877,500
Clintrials Research* .............. 100,000 3,475,000
Community Psychiatric Centers ..... 485,000 4,061,875
National Surgery Centers* ......... 160,000 5,100,000
Omnicare .......................... 135,000 7,273,125
Protein Design Labs* .............. 100,000 2,462,500
Scherer, (R.P.)* .................. 140,000 6,142,500
Total Renal Care Holdings* ........ 310,000 9,648,750
Vivra ............................. 250,000 7,187,500
Waters* ........................... 250,000 6,062,500
Watson Pharmaceuticals* ........... 200,000 8,025,000
----------
66,316,250
----------
4
<PAGE>
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March 31, 1996
- --------------------------------------------------------------------------------
SHARES VALUE
------------ ------------
ELECTRONICS 10.4%
Cognex* ........................... 625,000 $16,171,875
Credence Systems* ................. 250,000 4,218,750
Cypress Semiconductors* ........... 100,000 1,175,000
Electro Scientific Industries* .... 132,500 2,409,844
Electroglas* ...................... 239,000 3,629,813
Information Storage Device* ....... 200,000 1,650,000
Lattice Semiconductor* ............ 190,000 5,379,375
Maxim Integrated Products* ........ 100,000 3,106,250
Microchip Technology* ............. 160,000 4,360,000
Sanmina* .......................... 230,000 6,785,000
Tencor Instruments* ............... 200,000 3,612,500
Ultratech Stepper* ................ 92,500 1,618,750
Vicor* ............................ 400,000 6,000,000
Zilog* ............................ 250,000 8,437,500
-----------
68,554,657
-----------
FARM EQUIPMENT 0.7%
AGCO .............................. 185,000 4,463,125
-----------
FINANCIAL SERVICES 8.2%
Commerce Bancorp .................. 145,750 3,042,531
ContiFinancial* ................... 150,000 4,687,500
First Investors Financial
Services Group* ................ 150,000 1,425,000
First Savings Bank of Washington* 150,000 1,987,500
Flushing Financial* ............... 150,000 2,250,000
GCR Holdings ...................... 210,000 5,250,000
IPC Holdings* ..................... 120,000 2,497,500
Jayhawk Acceptance* ............... 350,000 4,221,875
Klamath First Bancorp ............. 150,000 1,987,500
Leasing Solutions* ................ 180,000 2,385,000
Meadowbrook* ...................... 285,000 9,120,000
PFF Bancorp* ...................... 100,000 1,143,750
T. Rowe Price ..................... 115,000 6,123,750
Roosevelt Financial Group ......... 300,000 5,568,750
Statewide Financial* .............. 150,000 1,950,000
-----------
53,640,656
-----------
FOOD AND BEVERAGES 1.2%
Canandaigua Wine (Class A)* ....... 200,000 7,700,000
-----------
GAMING 1.4%
GTECH Holdings* ................... 300,000 9,300,000
-----------
MANUFACTURING 1.7%
American Homestar* ................ 175,000 3,510,937
Avondale Industries* .............. 450,000 7,875,000
-----------
11,385,937
-----------
MEDIA AND BROADCASTING 4.9%
Argyle Television ................. 275,000 5,929,688
Chancellor Broadcasting (Class A)* 150,000 3,346,875
Evergreen Media (Class A)* ........ 225,000 8,071,875
Jacor Communications* ............. 230,000 4,513,750
Paxson Communications (Class A)* .. 500,000 7,812,500
United Video Satellite Group
(Class A)* ..................... 125,000 2,687,500
-----------
32,362,188
-----------
MEDICAL PRODUCTS AND
TECHNOLOGY 4.1%
CompDent* ......................... 200,000 7,125,000
Dentsply International ............ 250,000 10,031,250
OccuSystems* ...................... 25,000 562,500
Rispcorp* ......................... 50,000 959,375
Rural/Metro* ...................... 152,300 4,131,137
Sybron International* ............. 175,000 4,287,500
-----------
27,096,762
-----------
OIL AND GAS 1.8%
Pogo Producing .................... 200,000 6,250,000
Santa Fe Energy Resources ......... 500,000 5,250,000
-----------
11,500,000
-----------
PUBLISHING 0.6%
World Color Press* ................ 201,800 3,834,200
-----------
RESTAURANTS 1.4%
Longhorn Steaks* .................. 415,000 9,493,124
-----------
RETAIL TRADE 2.5%
Baby Superstore* .................. 100,000 4,537,500
Casey's General Store ............. 350,000 8,225,000
Wilmar Industries* ................ 155,000 3,429,375
-----------
16,191,875
-----------
SPECIALTY CHEMICALS 2.4%
Minerals Technologies ............. 250,000 8,656,250
Sealed Air* ....................... 215,000 7,336,875
-----------
15,993,125
-----------
UTILITIES 2.8%
California Energy* ................ 700,000 18,637,500
-----------
5
<PAGE>
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PORTFOLIO OF INVESTMENTS (continued) March 31, 1996
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
------------ -------
TOTAL COMMON STOCKS
(Cost $553,696,177) ............ $ 631,170,625
-------------
SHORT-TERM HOLDINGS 6.8%
Canadian Imperial Bank
of Commerce, Grand Cayman,
Fixed Time Deposit,
5 7/16%, 4/1/1996 .............. $ 24,000,000 24,000,000
First National Bank
of Chicago, Grand Cayman,
Fixed Time Deposit,
5 7/16%, 4/1/1996 .............. 20,505,000 20,505,000
-------------
TOTAL SHORT-TERM HOLDINGS
(Cost $44,505,000) $ 44,505,000
-------------
TOTAL INVESTMENTS 102.9%
(Cost $598,201,177) 675,675,625
OTHER ASSETS LESS
LIABILITIES (2.9)% (19,228,031)
-------------
NET ASSETS 100.0% $ 656,447,594
=============
- ---------------------
* Non-income producing security.
See notes to financial statements.
6
<PAGE>
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STATEMENT OF ASSETS AND LIABILITIES March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
Investments, at value:
<S> <C> <C>
Common stocks (cost $553,696,177) ............... $631,170,625
Short-term holdings (cost $44,505,000) .......... 44,505,000
-------------
$675,675,625
Cash ............................................... 2,768,690
Receivable for securities sold ..................... 7,884,210
Receivable for Capital Stock sold .................. 4,130,679
Expenses prepaid to shareholder service agent ...... 125,328
Receivable for dividends and interest .............. 89,206
Other .............................................. 128,389
------------
TOTAL ASSETS ....................................... 690,802,127
------------
LIABILITIES:
Payable for securities purchased ................... 30,516,145
Payable for Capital Stock repurchased .............. 2,861,410
Accrued expenses, taxes, and other ................. 976,978
------------
TOTAL LIABILITIES .................................. 34,354,533
------------
NET ASSETS ......................................... $656,447,594
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value;
500,000,000 shares authorized;
46,194,385 shares outstanding):
Class A ......................................... $ 2,857,734
Class D ......................................... 1,761,704
Additional paid-in capital ......................... 555,551,801
Accumulated net investment loss .................... (2,913,845)
Undistributed net realized gain .................... 21,715,752
Net unrealized appreciation of investments ......... 77,474,448
------------
NET ASSETS ......................................... $656,447,594
============
NET ASSET VALUE PER SHARE:
Class A
($411,657,745 divided by 28,577,344 shares)...... $14.41
======
Class D
($244,789,849 divided by 17,617,041 shares)...... $13.90
======
- ----------------------
See notes to financial statements.
7
<PAGE>
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STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1996
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest ........................................... $ 1,301,356
Dividends .......................................... 512,505
-------------
Total investment income ............................ $ 1,813,861
EXPENSES:
Management fee ..................................... 2,241,969
Distribution and service fees ...................... 1,270,496
Shareholder account services ....................... 896,497
Custody and related services ....................... 70,000
Shareholder reports and communications ............. 63,224
Registration ....................................... 47,364
Shareholders' meeting .............................. 42,700
Auditing and legal fees ............................ 32,653
Directors' fees and expenses ....................... 13,757
Miscellaneous ...................................... 7,639
-------------
Total expenses ..................................... 4,686,299
------------
Net investment loss ................................ (2,872,438)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ................... 26,322,937
Net change in unrealized appreciation of investments 16,079,797
-------------
Net gain on investments ............................ 42,402,734
------------
Increase in net assets from operations ............. $39,530,296
============
- ----------------------
See notes to financial statements.
</TABLE>
8
<PAGE>
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STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1996 SEPT. 30, 1995
----------------- -----------------
OPERATIONS:
<S> <C> <C>
Net investment loss ............................................................ $ (2,872,438) $ (1,269,598)
Net realized gain on investments ............................................... 26,322,937 14,852,097
Net change in unrealized appreciation of investments ........................... 16,079,797 51,312,770
------------ ------------
Increase in net assets from operations ......................................... 39,530,296 64,895,269
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A ..................................................................... (11,089,383) (7,039,282)
Class D ..................................................................... (4,891,389) (1,338,879)
------------ ------------
Decrease in net assets from distributions ...................................... (15,980,772) (8,378,161)
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
CAPITAL SHARE TRANSACTIONS:
SHARES
--------------------------------------
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1996 SEPT. 30, 1995
--------------------------------------
<S> <C> <C> <C> <C>
Net proceeds from sale of shares:
Class A ............................................. 9,784,765 14,343,047 132,837,880 176,507,457
Class D ............................................. 7,243,951 9,799,966 95,066,743 116,142,280
Exchanged from associated Funds:
Class A ............................................. 2,674,959 2,239,426 36,672,273 27,111,701
Class D ............................................. 776,457 977,881 10,182,967 11,153,674
Shares issued in payment of gain distributions:
Class A ............................................. 634,981 630,353 8,603,987 6,606,096
Class D ............................................. 414,333 125,619 5,431,912 1,286,339
------------- ------------- ------------- -------------
Total .................................................. 21,529,446 28,116,292 288,795,762 338,807,547
------------- ------------- ------------- -------------
Cost of shares repurchased:
Class A ............................................. (1,550,056) (1,348,459) (21,282,122) (16,084,996)
Class D ............................................. (683,062) (261,304) (8,969,573) (3,189,105)
Exchanged into associated Funds:
Class A ............................................. (2,354,115) (1,508,671) (32,500,358) (17,704,056)
Class D ............................................. (822,284) (771,800) (10,710,661) (8,577,404)
------------- ------------- ------------- -------------
Total .................................................. (5,409,517) (3,890,234) (73,462,714) (45,555,561)
------------- ------------- ------------- -------------
Increase in net assets from capital
share transactions .................................. 16,119,929 24,226,058 215,333,048 293,251,986
============= ============= ------------- -------------
Increase in net assets ...................................................................... 238,882,572 349,769,094
NET ASSETS:
Beginning of period ......................................................................... 417,565,022 67,795,928
------------- -------------
End of period ............................................................................... $ 656,447,594 $ 417,565,022
============= =============
- ----------------------
See notes to financial statements.
9
</TABLE>
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Seligman Frontier Fund, Inc. (the "Fund") offers two classes of shares. All
shares existing prior to May 3, 1993, were classified as Class A 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 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 contingent deferred sales
load ("CDSL") of 1% imposed on certain redemptions made within one year of
purchase. The two classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain class
expenses and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required.
2. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in stocks are valued at current market values or, in their
absence, at fair value determined in accordance with procedures approved by
the Board of Directors. Securities traded on national exchanges are valued
at last sales prices or, in their absence and in the case of
over-the-counter securities, a mean of bid and asked prices. Short-term
holdings maturing in 60 days or less are valued at amortized cost.
b. There is no provision for federal income or excise tax. The Fund has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
c. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statement and federal income
tax purposes. Dividends receivable and payable are recorded on ex-dividend
dates. Interest income is recorded on an accrual basis.
d. All income, expenses (other than class-specific expenses), and realized and
unrealized gains or losses are allocated daily to each class of shares
based upon the relative value of the shares of each class. Class-specific
expenses, which include distribution and service fees and any other items
that are specifically attributed to a particular class, are charged
directly to such class. For the six months ended March 31, 1996,
distribution and service fees were the only class-specific expenses.
e. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized 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, and 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 portfolio securities, excluding short-term
investments, for the six months ended March 31, 1996, amounted to $372,046,739
and $165,036,273, respectively.
At March 31, 1996, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio securities
amounted to $107,725,018 and $30,250,570, respectively.
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities. Compensation of
all officers of the Fund, all directors of the Fund who are employees or
consultants of the Manager, and all personnel of the Fund and the
10
<PAGE>
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- --------------------------------------------------------------------------------
Manager, is paid by the Manager. Effective January 1, 1996, the Manager receives
a fee, calculated daily and payable monthly, equal to 0.95% per annum of the
Fund's average daily net assets on the first $750 million of net assets and
0.85% per annum of the Fund's average daily net assets in excess of $750
million. Prior to January 1, 1996, the management fee rate was 0.75% per annum
of the average daily net assets of the Fund. The management fee reflected in the
Statement of Operations represents 0.86% per annum of the Fund's average daily
net assets.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the Fund's shares, and an affiliate of the Manager, received
concessions of $419,603 from sales of Class A shares after commissions of
$3,367,947 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to Class A shares under which 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 average daily net assets
of 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 March 31, 1996, fees paid aggregated $328,807, or 0.20% per annum
of average daily net assets of Class A shares.
The Fund has a Plan with respect to Class D shares under which 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 D shares for which the organizations are responsible and
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. For the six months ended March 31,
1996, fees paid amounted to $941,689, or 1% per annum of the average daily net
assets of Class D shares.
The Distributor is entitled to retain any CDSL imposed on certain
redemptions occurring within one year of purchase. For the six months ended
March 31, 1996, such charges amounted to $55,879.
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
March 31, 1996, Seligman Services, Inc. received commissions of $94,029 from
sales of shares of the Fund. Seligman Services, Inc. also received distribution
and service fees of $28,034, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $896,497 for shareholder account services.
Certain officers and directors of the Fund are officers or directors of the
Manager, Seligman Financial Services, Inc., Seligman Services, Inc., and/or
Seligman Data Corp.
Fees of $16,000 were incurred by the Fund for the legal services of
Sullivan & Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The cost of such fees and interest is included in directors' fees and
expenses, and the accumulated balance thereof at March 31, 1996, of $45,166 is
included in other liabilities. Deferred fees and the related accrued interest
are not deductible for federal income tax purposes until such amounts are paid.
11
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Fund's beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item as disclosed in the financial statements
to their equivalent per share amounts.
The total return based on net asset value measures the Fund's performance
assuming investors purchased shares at net asset value as of the beginning of
the period, reinvested dividends and capital gains paid at net asset value, and
then sold their shares at the net asset value per share on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. The total returns for
periods of less than one year are not annualized.
Average commission rate paid represents the average commission paid by the
Fund to purchase or sell portfolio securities. It is determined by dividing the
total commission dollars paid by the number of shares purchased and sold during
the period for which commissions were paid. This rate is provided for fiscal
periods beginning October 1, 1995.
<TABLE>
<CAPTION>
CLASS A CLASS D
--------------------------------------------------------------- ---------------------------------------
SIX MONTHS YEAR ENDED SEPTEMBER 30 SIX MONTHS SEPTEMBER 30 5/3/93*
ENDED ----------------------------------------------- ENDED --------------- TO
3/31/96 1995 1994 1993 1992 1991 3/31/96 1995 1994 9/30/93
----------- ----- ----- ----- ----- ------ -------- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period .... $14.04 $11.62 $12.83 $10.22 $10.71 $ 7.01 $13.61 $11.40 $12.80 $10.12
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment loss ....... (0.05) (0.06) (0.08) (0.03) (0.07) (0.03) (0.10) (0.15) (0.23) (0.04)
Net realized and unrealized
investment gain ........ 0.90 3.87 1.10 4.54 0.58 3.76 0.87 3.75 1.06 2.72
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Increase from
investment operations . 0.85 3.81 1.02 4.51 0.51 3.73 0.77 3.60 0.83 2.68
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Dividends paid ............ -- -- -- -- -- (0.01)** -- -- -- --
Distributions from
net gain realized ..... (0.48) (1.39) (2.23) (1.90) (1.00) (0.02) (0.48) (1.39) (2.23) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease) in
net asset value ........ 0.37 2.42 (1.21) 2.61 (0.49) 3.70 0.29 2.21 (1.40) 2.68
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period .......... $14.41 $14.04 $11.62 $12.83 $10.22 $10.71 $13.90 $13.61 $11.40 $12.80
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON
NET ASSET VALUE ........ 6.25% 36.80% 9.79% 50.67% 4.91% 53.34% 5.85% 35.53% 8.06% 26.48%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average
net assets ............. 1.51%+ 1.43% 1.34% 1.25% 1.37% 1.28% 2.31%+ 2.29% 2.72% 2.24%+
Net investment loss
to average net assets .. (0.81)%+ (0.50)% (0.87)% (0.27)% (0.71)% (0.35)% (1.61)%+ (1.35)% (2.25)% (1.94)%+
Portfolio turnover ........ 33.75% 71.52% 124.76% 129.13% 129.46% 38.56% 33.75% 71.52% 124.76% 129.13%++
Average commission rate paid $0.054 $0.054
Net assets, end of period
(000's omitted) ........ $411,658 $272,122 $58,478 $43,188 $27,178 $23,449 $244,790 $145,443 $9,318 $967
</TABLE>
- -------------------------------
The per share data for the fiscal years 1991 and 1992 have been restated to
reflect the 2-for-1 stock split effected on April 16, 1992, as a 100% stock
dividend. The per share data for the six months ended March 31, 1996 and for the
years ended September 30, 1995 and 1994, are based on average shares outstanding
for the periods.
*Commencement of offering of Class D shares.
**Excess of taxable dividend over net investment income was charged against
additional paid-in capital.
+Annualized.
++For the year ended September 30, 1993.
See notes to financial statements.
12
<PAGE>
================================================================================
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Seligman Frontier Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Seligman Frontier Fund, Inc. as of March 31,
1996, 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
September 30, 1995, and the financial highlights for 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 March
31, 1996, by correspondence with the Fund's custodian and brokers; where replies
were not received from brokers we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Frontier
Fund, Inc. as of March 31, 1996, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods,
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
May 3, 1996
13
<PAGE>
================================================================================
PROXY RESULTS
- --------------------------------------------------------------------------------
Seligman Frontier Fund Shareholders voted on the following proposals at the
Special Meeting of Shareholders held on December 12, 1995, in New York, New
York. Each Director was elected, and all other proposals were approved. The
description of each proposal and number of shares voted are as follows:
FOR WITHHELD VOTE
----- ---------------
Election of Directors:
Fred E. Brown 14,833,917 413,505
John R. Galvin 14,816,572 430,839
Alice S. Ilchman 14,838,792 408,634
Frank A. McPherson 14,822,662 424,747
John E. Merow 14,844,707 402,721
Betsy S. Michel 14,845,377 402,052
William C. Morris 14,845,265 402,166
James C. Pitney 14,844,414 403,016
James Q. Riordan 14,842,632 404,793
Ronald T. Schroeder 14,846,429 401,002
Robert L. Shafer 14,818,209 429,206
James N. Whitson 14,847,029 400,402
Brian T. Zino 14,845,757 401,673
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
----- ---------- ----------
<S> <C> <C> <C>
Approval of amendment to the Management
Agreement to increase management fee
payable by the Fund: 10,351,561 3,845,074 1,051,323
Approval of amendment to the Subadvisory
Agreement to increase the subadvisory fee
payable by J. & W. Seligman & Co. Incorporated: 10,290,366 3,843,269 1,114,322
Approval of amendment of the Fund's fundamental
investment policy to increase the amount that
may be borrowed to 15% of the market value
of the Fund's total assets: 12,284,559 1,968,357 995,001
Approval to eliminate Fund's fundamental
investment policy prohibiting participation
in joint securities trading account: 12,283,291 1,793,062 1,171,667
Approval of amendment of Fund's fundamental
investment policy prohibiting the purchase
of put options: 12,515,453 1,582,692 1,150,733
14
</TABLE>
<PAGE>
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
FRED E. BROWN JAMES C. PITNEY 3
DIRECTOR AND CONSULTANT, PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
J. & W. Seligman & Co. Incorporated DIRECTOR, Public Service Enterprise Group
JOHN R. GALVIN 2 JAMES Q. RIORDAN 3
DEAN, Fletcher School of Law DIRECTOR, The Brooklyn Union Gas Company
and Diplomacy at Tufts University TRUSTEE, Committee for Economic Development
DIRECTOR, USLIFE Corporation DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
ALICE S. ILCHMAN 3
PRESIDENT, Sarah Lawrence College RONALD T. SCHROEDER 1
TRUSTEE, Committee for Economic Development MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
DIRECTOR, NYNEX
CHAIRMAN, The Rockefeller Foundation ROBERT L. SHAFER 3
VICE PRESIDENT, Pfizer Inc.
FRANK A. MCPHERSON 2 DIRECTOR, USLIFE Corporation
Chairman and CEO, Kerr-McGee Corporation
Director, Kimberly-Clark Corporation JAMES N. WHITSON 2
Director, Baptist Medical Center EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
JOHN E. MEROW DIRECTOR, C-SPAN
PARTNER, Sullivan & Cromwell, Law Firm DIRECTOR, Red Man Pipe and Supply Company
DIRECTOR, Commonwealth Aluminum Corporation
BRIAN T. ZINO 1
BETSY S. MICHEL 2 PRESIDENT
DIRECTOR OR TRUSTEE, Various Organizations MANAGING DIRECTOR, J. & W. Seligman & Co. Incorporated
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD AND PRESIDENT,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
- ----------------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
</TABLE>
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
WILLIAM C. MORRIS ARSEN MRAKOVCIC THOMAS G. ROSE
CHAIRMAN VICE PRESIDENT TREASURER
BRIAN T. ZINO LAWRENCE P. VOGEL FRANK J. NASTA
PRESIDENT VICE PRESIDENT SECRETARY
- --------------------------------------------------------------------------------
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 SHAREHOLDER SERVICES
(800) 445-1777 RETIREMENT PLAN SERVICES
(800) 622-4597 24-HOUR AUTOMATED TELEPHONE ACCESS SERVICE
