S E L I G M A N
---------------
FRONTIER
FUND, INC.
[PICTURE]
MID-YEAR REPORT
MARCH 31, 1998
SEEKING GROWTH
IN CAPITAL VALUE
THROUGH
INVESTMENTS IN
SMALL-COMPANY
GROWTH STOCKS
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
TIMES CHANGE...
Established in 1864, Seligman's history of
providing financial services has been marked not
by fanfare, but rather by a quiet and firm
adherence to managing investments prudently. While
the world has changed dramatically in the 134
years since Seligman first opened its doors, the
firm has continued to offer its clients
high-quality investment solutions for these
changing times.
[PICTURE] In the late 19th century, as the country grew,
JAMES, JESSE, AND JOSEPH Seligman helped finance the westward expansion of
SELIGMAN, 1870 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 mutual funds could play in building wealth for individual
investors and launched its first open-end fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including funds that focus on technology stocks, municipal
bonds, and international securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
TABLE OF CONTENTS
To the Shareholders .................................... 1
Interview With Your Portfolio Manager .................. 2
Performance Overview ................................... 4
Portfolio Overview ..................................... 6
Portfolio of Investments ............................... 8
Statement of Assets and Liabilities .................... 10
Statement of Operations ................................ 11
Statements of Changes in Net Assets .................... 12
Notes to Financial Statements .......................... 13
Financial Highlights ................................... 16
Report of Independent Auditors ......................... 18
Board of Directors ..................................... 19
Executive Officers AND For More Information ............ 20
Glossary of Financial Terms ............................ 21
<PAGE>
TO THE SHAREHOLDERS
For the six months ended March 31, 1998, Seligman Frontier Fund's total return,
of 5.56% based on the net asset value of Class A shares, outpaced the 5.32%
total return of its peer group, as measured by the Lipper Small Cap Funds
Average. For the same period, the Fund also outperformed the 2.71% return of the
Russell 2000 Growth Index.
During the past six months, the economy and the stock markets tracked in two
distinctly different Directions. In the fourth calendar quarter of 1997,
Seligman Frontier Fund's first fiscal quarter, the Asian financial crisis muted
business activity and share price performance, placing a damper on an otherwise
very good year. In the first quarter of 1998, interest rates basically
stabilized, domestic economic activity exceeded expectations, and common stocks
broadly moved to record highs.
The stock markets delivered improved absolute returns in the past six months.
Large-cap stocks continued to lead the market advances because of the perceived
safety of their higher liquidity in the uncertain environment triggered by the
Asian financial crisis. However, the markets began to broaden as strong investor
sentiment and confidence in the US economy reduced concerns about liquidity.
Indeed, in the three months ended March 31, 1998, the gap between the
performance of small-cap and large-cap stocks narrowed.
While the earnings of large caps may be increasingly impacted by the Asian
recession, the revenues of smaller companies are primarily linked to the strong
domestic economy and, therefore, should be more insulated. Market participants
have begun to pay attention to the attractive valuations found in small caps,
and we believe this trend should be further supported by the positive earnings
outlook for US small caps. Since Seligman Frontier Fund's portfolio focuses on
smaller companies that derive a majority of their earnings domestically and have
superior projected earnings growth, we feel that the Fund is well positioned
regardless of future international turmoil or earnings disappointments in the
large-cap arena.
The Asian financial crisis is not behind us, and the ramifications of the
reduction in Asian demand on domestic profits and growth are unclear. We believe
that a US economic slowdown is likely in 1998. Corporate profits have begun to
show the influence of the Asian financial crisis, as witnessed particularly in
the technology sector. Increased global competitiveness and a highly competitive
domestic and global business environment may produce more earnings
disappointments than positive surprises for the year as a whole. Nonetheless, we
believe American businesses and financial markets are well positioned to
overcome temporary turbulence.
We thank you for your continued interest in Seligman Frontier Fund, and look
forward to serving your investment needs in the many years to come. A discussion
with your Portfolio Manager and the Fund's portfolio of investments follow this
letter. The Fund's investment results appear starting on page 4.
By order of the Board of Directors,
/s/ William C. Morris /s/ Brian T. Zino
- ------------------------- ----------------------------
William C. Morris Brian T. Zino
Chairman President
May 1, 1998
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
ARSEN MRAKOVCIC
Q. HOW DID SELIGMAN FRONTIER FUND PERFORM IN THE PAST SIX MONTHS?
A. For the six months ended March 31, 1998, Seligman Frontier Fund posted a
5.56% total return based on the net asset value of Class A shares,
outperforming its peer group, as measured by the Lipper Small Cap Funds
Average, and outpacing its market benchmark, as measured by the Russell 2000
Growth Index.
Q. WHICH ECONOMIC AND MARKET FACTORS INFLUENCED SELIGMAN FRONTIER FUND IN THE
PAST SIX MONTHS?
A. The onset of the Asian financial crisis in the fourth calendar quarter of
1997 prompted a shift of investor assets into large-cap stocks, as investors
sought the perceived safety of securities with higher liquidity. This
short-term trend impaired the performance of small-cap stocks, even though
smaller companies were generally better positioned to weather the reduction
in corporate earnings that could accompany the Asian recession. However, the
small-cap stocks in which the Fund invests generally benefited from the
strong US economy, and have seen positive earnings news and improved
performance thus far in 1998.
Q. WHAT WAS YOUR INVESTMENT STRATEGY?
A. We are growth managers seeking companies that are valued at a discount to
their projected earnings growth rate. We look for companies with revenue and
reported earnings growth of 20% or more with attractive valuations relative
to their growth rates. We prefer companies that use excess operating cash
flow to finance growth rather than companies that rely on debt. In addition
to our quantitative screens, we look for attractive fundamentals when
selecting stocks, including a strong management team, a good product line,
market niche dominance, proprietary technology, and significant management
ownership.
The investment process also incorporates an element of price sensitivity,
which caused the Fund's relative underweighting in technology over the
period. The valuations of stocks in technology-related industries frequently
stood at high-multiples of the underlying companies' growth rates,
indicating momentum rather than solid fundamentals. The Fund's strong
performance in the last six months can be attributed to portfolio
diversification and a light investment in technology relative
[PICTURE]
[CAPTION]
Seligman Small Company Team: (from left) Rick Ruvkun, Sonia Thomas
(Administrative Assistant), Bruce Zirman, Hilary Shane, Ted Hillenmeyer,
(seated) Arsen Mrakovcic (Portfolio Manager)
A TEAM APPROACH
Seligman Frontier Fund is managed by the Seligman Small Company Team, headed by
Arsen Mrakovcic. Mr. Mrakovcic is assisted in the management of the Fund by a
group of seasoned research professionals who are responsible for identifying
small companies in specific industry groups that offer the greatest potential
for growth.
2
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
ARSEN MRAKOVCIC
to its peers. Additionally, we have been careful to structure current
holdings so as to limit our exposure to international markets and potential
overseas volatility.
Q. WHICH INDUSTRY GROUP MOST INFLUENCED THE FUND'S PERFORMANCE?
A. The retail industry performed very well in the
first three months of 1998 and we took profits. Specifically, the Fund's
holdings in certain specialty retailers, such as Party City and Borders
Group, were reduced, or completely sold, as these stocks reached our price
targets.
After the correction in technology stocks in the last three months of 1997,
we slowly increased our exposure to electronics and computer software and
services stocks, focusing on those companies with proprietary technology and
strong domestic earnings. Certain stocks with exposure to the Japanese
market were also added, as we believed that those stocks had seen their
values unfairly reduced relative to their future prospects. However, the
Fund's exposure to Asia as a whole remains quite low. Generally, the Fund's
increased weighting in technology stocks in the first calendar quarter of
1998 has been beneficial, as several of these stocks have seen improved
performance.
The business goods and services industry, mostly within the consumer
cyclicals sector, remains a profitable investment area. We continue to find
reasonable valuations relative to growth rates in this group. These stocks,
particularly staffing companies, have also benefited from the strong
domestic economy. Additionally, the Fund's weighting in health care stocks
continues to improve performance. We tend to place assets in companies that
dominate a specific market niche.
Q. WHAT IS YOUR OUTLOOK?
A. Thus far in 1998, the new market highs have been fueled by significant
domestic and foreign liquidity. Investors have continued to focus primarily
on large-cap stocks, although the performance gap between large and small
companies, as measured by broad market benchmarks, has been reduced. At this
time, both the valuations and the earnings prospects of small-cap stocks are
favorable, particularly in light of the possibility that large-cap stocks
will experience continued earnings pressure later this year. We therefore
believe that, regardless of a potential slowdown in the rate of US economic
growth or any lingering after-effects tied to the Asian recession, small-cap
stocks are well positioned in the markets and should be rewarded with
increased investor attention.
3
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
---------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge 0.52% 37.02% 20.37% 18.05% n/a n/a
Without Sales Charge 5.56 43.83 21.56 18.62 n/a n/a
CLASS B**
With CDSL 0.44 37.60 n/a n/a 11.89% n/a
Without CDSL 5.15 42.60 n/a n/a 13.73 n/a
CLASS D**
With 1% CDSL 4.14 41.59 n/a n/a n/a n/a
Without CDSL 5.08 42.59 n/a n/a n/a 21.80%
LIPPER SMALL CAP FUNDS AVERAGE*** 5.32 43.53 18.34 16.77 19.24++ 18.88+++
RUSSELL 2000 GROWTH INDEX*** 2.71 41.17 15.72 12.95 11.630o 16.77oo
RUSSELL 2000 INDEX*** 6.37 42.01 17.67 14.85 19.940o 18.67oo
</TABLE>
NET ASSET VALUE
MARCH 31, 1998 SEPTEMBER 30, 1997 MARCH 31, 1997
---------------- --------------------- ----------------
CLASS A $16.69 $17.55 $12.88
CLASS B 15.71 16.68 12.30
CLASS D 15.71 16.69 12.30
CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED MARCH 31, 1998
Paid $1.634
Realized 1.375
Unrealized 2.525ooo
Performance data quoted represent changes in prices and assume that all
distributions within the periods are invested in additional shares. The rates of
return will vary and the principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
- -----------------
* 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 dividends and 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 also reflect the effect of
the service fee of up to 0.25% under the Administration, Shareholder
Services and Distribution Plan after June 1, 1992, only. Returns for Class
B shares are calculated with and without the effect of the maximum 5%
contingent deferred sales load ("CDSL"), charged on redemptions made within
one year of the date of purchase, declining to 1% in the sixth year and 0%
thereafter. Returns for Class D shares are calculated with and without the
effect of the 1% CDSL, charged on redemptions made within one year of the
date of purchase.
*** The Lipper Small Cap Funds Average (Lipper Average), the Russell 2000
Growth Index, and the Russell 2000 Index are unmanaged benchmarks that
assume investment of all dividends. The Lipper Average does not reflect
sales charges, and the Russell 2000 Growth Index and the Russell 2000 Index
do not reflect fees and sales charges. The monthly performance of the
Lipper Average is used in the Performance Overview. Investors cannot invest
directly in an average or an index. The CDSL is 5% for periods of one year
or less, and 4% since inception. From April 25, 1996. From May 6, 1993.
o From April 30, 1996.
oo From April 30, 1993.
ooo Represents the per share amount of net unrealized appreciation of portfolio
securities as of March 31, 1998.
4
<PAGE>
PERFORMANCE OVERVIEW
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS A SHARES
MARCH 31, 1988, TO
MARCH 31, 1998
[CHART OF CLASS A SHARES]
$52,581
Total Value At March 31, 1998
$9,531*
Initial Amount Invested
3/31/88 3/31/89 3/31/90 3/31/91 3/31/92 3/31/93
- -------- ------- ------- ------- ------- -------
$9,531.25 10,596.59 12,144.89 14,056.81 17,208.21 19,807.71
3/31/94 3/31/95 3/31/96 3/31/97 3/31/98
------- ------- ------- ------- -------
24,650.88 28,812.26 38,512.58 36,558.06 52,581.24
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS B SHARES
APRIL 22, 1996,+ TO
MARCH 31, 1998
[CHART OF CLASS B SHARES]
$12,436**
Total Value at March 31, 1988
$10,000
Initial Amount Invested
4/22/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
------- ------- -------- -------- ------- --------
10,000 10,206.18 10,158.07 10,003.82 9,001.24 10,808.80
9/30/97 12/31/97 3/31/98
------- -------- --------
12,206.56 11,683.64 12,435.67
GROWTH OF AN
ASSUMED $10,000
INVESTMENT IN
CLASS D SHARES
MAY 3, 1993,+ TO
MARCH 31, 1998
[CHART OF CLASS D SHARES]
$26,342
Total Value at March 31, 1998
$10,000
Initial Amount Invested
5/3/93 3/31/94 3/31/95 3/31/96 3/31/97 3/31/98
------ ------- ------- ------- ------- -------
10,000.00 12,804.27 14,794.70 19,607.05 18,474.07 26,341.85
These charts reflect the growth of a $10,000 investment for a 10-year period for
Class A shares and since inception for Class B and Class D shares. Since the
measured periods vary, the charts are plotted using different scales and are not
comparable.
- ------------
* Net of the 4.75% maximum initial sales charge.
** Excludes the effect of the 4% CDSL.
+ Inception date.
5
<PAGE>
Portfolio Overview
DIVERSIFICATION OF NET ASSETS
MARCH 31, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
------------------------
MARCH SEPTEMBER
ISSUES COST VALUE 31, 1998 30, 1997
------- ---------------- ------------------ --------- ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Basic Materials ....................... 1 $ 15,346,323 $ 14,539,175 1.4 1.8
Capital Goods ......................... 15 109,423,595 116,549,400 11.2 10.9
Communication Services ................ 1 4,204,315 1,319,859 0.1 0.3
Consumer Cyclicals .................... 29 140,777,294 194,385,744 18.6 18.1
Consumer Staples ...................... 10 69,676,463 95,093,951 9.1 6.4
Energy ................................ 8 48,878,456 49,825,294 4.8 3.3
Financial Services .................... 23 88,299,401 116,345,955 11.1 8.6
Health Care ........................... 23 138,231,062 164,747,612 15.8 17.3
Technology ............................ 30 188,135,586 208,249,119 19.9 22.9
Transportation ........................ 4 17,346,937 19,621,790 1.9 2.2
Utilities ............................. 1 13,801,103 15,989,500 1.5 1.9
Other ................................. 1 -- 24,063 -- --
----- ------------ -------------- ----- -----
146 834,120,535 996,691,462 95.4 93.7
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES ......... 1 47,625,054 47,625,054 4.6 6.3
----- ------------ -------------- ----- -----
NET ASSETS .............................. 147 $881,745,589 $1,044,316,516 100.0 100.0
===== ============ ============== ===== =====
</TABLE>
LARGEST INDUSTRIES
MARCH 31, 1998
Percent of
Net Assets
- ---------- $208,249,119 $194,385,744 $164,747,612 $116,549,400 $116,345,955
TECHNOLOGY CONSUMER HEALTH CAPITAL FINANCIAL
CYCLICALS CARE GOODS SERVICES
19.9% 18.6% 15.8% 11.2% 11.1%
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING PAST SIX MONTHS
SHARES
----------------------------
HOLDINGS
ADDITIONS INCREASE 3/31/98
- ----------- ----------- -----------
Avant! ............................ 593,000 593,000
Burr-Brown ........................ 206,100 619,350(1)
Credence Systems .................. 309,400 561,700
Imperial Credit Industries ........ 279,700 444,600
Ivex Packaging .................... 321,900 321,900
KEMET ............................. 501,500 801,500
McDermott International ........... 258,900 258,900
PSS World Medical ................. 341,800 341,800
Quorum Health Group ............... 267,800 267,800
UCAR International ................ 223,800 463,400
SHARES
----------------------------
HOLDINGS
REDUCTIONS DECREASE 3/31/98
- ------------- ----------- -----------
AmeriSource Health (Class A) 240,500 --
BDM International 334,000 --
Ceridian ................... 296,000 394,100
Chancellor Media(2) ........ 208,146 --
DONCASTERS (ADRs) .......... 500,000 --
DST Systems ................ 169,900 192,700
General Cable .............. 215,700 134,300
Interstate Hotels .......... 200,000 --
Pittston Brink's Group ..... 264,000 236,000
Sybron International ....... 275,000 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
- -------------
(1) Includes 206,450 shares received as a result of a 3-for-2 stock split.
(2) Formerly Chancellor Broadcasting (Class A).
LARGEST PORTFOLIO HOLDINGS
MARCH 31, 1998
SECURITY VALUE
- ---------- -----------
AccuStaff ............................. $30,580,800
Ceridian .............................. 21,256,769
Scherer (R.P.) ........................ 20,256,750
Jacor Communications .................. 18,545,484
Total Renal Care Holdings ............. 17,289,187
Credence Systems ...................... 16,271,747
CalEnergy ............................. 15,989,500
Burr-Brown ............................ 15,406,331
Allied Waste Industries ............... 15,063,647
KEMET ................................. 14,802,703
7
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1998
SHARES VALUE
--------- -------------
COMMON STOCKS 95.4%
BASIC MATERIALS 1.4%
UCAR International* 463,400 $ 14,539,175
------------
CAPITAL GOODS 11.2%
Allied Waste Industries* 603,300 15,063,647
American Pad & Paper* 188,500 1,366,625
Avondale Industries* 266,800 7,662,162
Cognex* 569,800 12,215,088
Corporate Express* 1,122,600 11,208,459
Flanders* 405,300 2,267,147
General Cable 134,300 6,093,863
Innovative Valve Tech* 121,900 2,300,862
Integrated Electrical Services* 234,200 4,654,725
Ivex Packaging* 321,900 7,886,550
KEMET* 801,500 14,802,703
Oak Industries* 446,900 14,524,250
Omniquip International 164,900 4,070,969
Vishay Intertechnology* 380,100 8,932,350
Waterlink* 250,000 3,500,000
------------
116,549,400
------------
COMMUNICATION SERVICES 0.1%
Arch Communications* 228,300 1,319,859
------------
CONSUMER CYCLICALS 18.6%
AccuStaff* 886,400 30,580,800
ADVO* 163,400 4,513,925
American Homestar* 585,500 13,265,234
Analysis International 187,500 5,402,344
Barnes & Noble* 304,900 11,891,100
Borders Group* 150,100 5,112,781
Career Education* 100,000 2,193,750
CMP Media (Class A)* 97,000 2,479,563
Copart* 218,000 3,665,125
Duane Reade* 293,400 7,500,038
Group 1 Automotive* 160,000 1,750,000
GTECH Holding* 207,300 8,058,787
HA-LO Industries* 250,000 8,734,375
Hibbett Sporting Goods* 101,100 2,792,888
Hospitality Worldwide Services* 75,000 735,937
Industrial Distribution Group* 24,700 461,581
Journal Register* 521,700 10,890,488
Market Facts* 224,600 4,463,925
Nutraceutical International* 48,800 1,070,550
Personnel Group of America* 500,000 11,375,000
Petersen Companies* 295,900 7,397,500
Pittston Brink's Group 236,000 8,997,500
PMT Services* 767,900 13,750,209
Polymer Group* 503,100 6,571,744
Primark* 179,700 7,682,175
RDO Equipment (Class A)* 83,700 1,255,500
Regal Cinemas* 227,900 6,822,756
ScanSource* 100,000 2,131,250
Zindart* 200,100 2,838,919
------------
194,385,744
------------
CONSUMER STAPLES 9.1%
Carriage Services (Class A)* 382,200 9,160,856
Coinmach Laundry* 600,000 12,768,750
Educational Medical* 605,000 7,146,563
EduTrek International (Class A)* 304,500 6,603,844
Equity Corporation* 337,700 8,083,694
Hearst-Argyle Television
(Class A)* 330,348 11,727,354
Jacor Communications* 313,500 18,545,484
Premier Parks* 81,000 4,698,000
US Food Service* 327,500 12,056,094
Youth Services International* 233,400 4,303,312
------------
95,093,951
------------
ENERGY 4.8%
Bayard Drilling Technologies* 100,000 1,462,500
Cabot Oil & Gas 172,500 3,902,812
Calpine* 646,600 11,517,563
Eagle Geophysical 252,600 4,041,600
McDermott International 258,900 10,695,806
Pogo Producing 196,600 6,242,050
Pride International* 270,700 6,462,963
Santa Fe Energy Resources* 500,000 5,500,000
------------
49,825,294
------------
FINANCIAL SERVICES 11.1%
Affiliated Managers Group* 172,500 6,015,938
American Capital Strategies 275,100 6,035,006
Astoria Financial 5,000 309,062
Cabot Industrial Trust 196,400 4,676,775
CMAC Investment 108,000 7,209,000
Commerce Bancorp* 32,031 1,763,707
Crusader Holding* 71,800 1,103,925
DST Systems* 192,700 10,128,794
First Investors Financial
Services Group* 150,000 1,040,625
FirstService* 278,900 3,468,819
First Sierra Financial* 300,000 7,725,000
HCC Insurance Holdings 153,000 3,519,000
Imperial Credit Commercial
Mortgage 257,550 3,871,298
- --------------
See footnotes on page 9.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
SHARES VALUE
--------- -------------
FINANCIAL SERVICES (CONTINUED)
Imperial Credit Industries* 444,600 $ 10,420,312
Insignia Financial Group* 464,300 11,607,500
Medallion Financial 50,000 1,353,125
Ocwen Financial* 253,400 7,031,850
PFF Bancorp* 100,000 2,056,250
Prison Realty Trust 297,200 12,315,225
Statewide Financial 150,000 3,431,250
STIRLING COOKE BROWN HOLDINGS 40,000 1,070,000
T&W Financial* 310,900 8,763,494
Waddell & Reed Financial
(Class A) 55,000 1,430,000
------------
116,345,955
------------
HEALTH CARE 15.8%
American HomePatient* 400,000 7,787,500
Castle Dental Centers* 250,000 2,890,625
Centocor* 96,000 4,296,000
CompDent* 420,000 6,470,625
Dentsply International 275,000 8,567,969
Hanger Orthopedic Group* 410,500 6,901,531
HealthCor Holdings* 300,000 703,125
Imnet Systems* 232,300 5,212,231
Medicis Pharmaceuticals
(Class A)* 45,000 1,964,531
National Surgery Centers* 577,800 14,751,956
NCS Healthcare (Class A)* 207,200 6,967,100
Ocular Sciences* 200,000 6,350,000
Omnicare 208,600 8,265,775
Orthalliance (Class A)* 300,000 4,181,250
PMR* 225,000 3,592,969
Province Healthcare* 326,000 8,577,875
PSS World Medical* 341,800 7,978,894
Quorum Health Group* 267,800 9,013,144
Renex* 250,000 1,671,875
Scherer (R.P.)* 300,100 20,256,750
Somnus Medical Tech* 200,000 2,337,500
Total Renal Care Holdings* 519,000 17,289,187
Watson Pharmaceuticals* 242,200 8,719,200
------------
164,747,612
------------
TECHNOLOGY 19.9%
ADE* 64,100 1,085,694
Affiliated Computer Services
(Class A)* 252,400 8,376,525
American Management Systems* 250,000 6,859,375
Antec* 437,700 6,551,822
Applied Micro Circuits* 32,900 746,419
Avant!* 593,000 12,415,937
BISYS Group* 320,500 11,267,578
Black Box* 275,000 10,089,063
Burr-Brown* 619,350 15,406,331
Ceridian* 394,100 21,256,769
CIDCO* 168,400 1,584,013
Credence Systems* 561,700 16,271,747
Exodus Communications* 43,000 1,195,938
General Semiconductors* 654,800 7,816,675
Glenayre Technologies* 455,200 5,647,325
Inso* 213,600 3,791,400
Integrated Device Technology* 358,000 5,045,562
Lattice Semiconductor* 167,500 8,615,781
Microchip Technology* 241,600 5,088,700
Micrografx* 64,000 852,000
Omnipoint* 356,100 10,493,822
Pierce Leahy* 72,900 1,845,281
PMC-Sierra* 350,700 13,337,559
PSW Technologies* 518,500 3,726,719
SPR* 176,200 5,759,537
Stanford Telecommunications* 79,800 1,361,587
Synopsys* 213,300 6,992,241
Thermoquest* 250,000 4,354,650
Vestcom International* 180,000 1,878,750
Waters* 170,900 8,534,319
------------
208,249,119
------------
TRANSPORTATION 1.9%
Jevic Transportation* 70,000 1,058,750
OMI* 512,700 4,614,300
US Xpress Enterprises (Class A)* 263,900 5,451,184
Wisconsin Central Transport* 301,800 8,497,556
------------
19,621,790
------------
UTILITIES 1.5%
CalEnergy 566,000 15,989,500
------------
OTHER 24,063
------------
TOTAL COMMON STOCKS 95.4%
(Cost $834,120,535) 996,691,462
SHORT-TERM HOLDINGS 3.3%
(Cost $34,400,000) 34,400,000
------------
TOTAL INVESTMENTS 98.7%
(Cost $868,520,535) 1,031,091,462
OTHER ASSETS
LESS LIABILITIES 1.3% 13,225,054
------------
NET ASSETS 100.0% $1,044,316,516
==============
- -----------------
* Non-income producing security.
+ Affiliated issuers (Fund's holdings representing 5% or more of the outstanding
voting securities).
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks* (cost $834,120,535) $996,691,462
Short-term holdings (cost $34,400,000) 34,400,000 $1,031,091,462
------------
Cash 94,002
Receivable for Capital Stock sold 13,414,944
Receivable for securities sold 12,689,428
Expenses prepaid to shareholder service agent 246,109
Receivable for dividends and interest 243,395
Other 83,679
--------------
Total Assets 1,057,863,019
--------------
LIABILITIES:
Payable for securities purchased 8,149,981
Payable for Capital Stock repurchased 3,570,247
Accrued expenses, taxes, and other 1,826,275
--------------
Total Liabilities 13,546,503
--------------
Net Assets $1,044,316,516
==============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value; 500,000,000
shares authorized; 64,383,866 shares outstanding):
Class A $ 3,353,498
Class B 570,116
Class D 2,514,773
Additional paid-in capital 820,970,142
Accumulated net investment loss (6,880,579)
Undistributed net realized gain 61,217,639
Net unrealized appreciation of investments 162,570,927
--------------
Net Assets $1,044,316,516
==============
NET ASSET VALUE PER SHARE:
Class A ($559,599,324 / 33,534,985 shares) $16.69
======
Class B ($89,543,973 / 5,701,155 shares) $15.71
======
Class D ($395,173,219 / 25,147,726 shares) $15.71
======
</TABLE>
- -----------------
* Includes affiliated issuers (issuers in which the Fund's holdings represent 5%
or more of the outstanding voting securities) with a cost of $15,450,219 and a
value of $19,915,313. See Notes to Financial Statements.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest .............................................. $ 1,354,266
Dividends ............................................. 763,149
------------
Total Investment Income .............................................. $ 2,117,415
EXPENSES:
Management fee ........................................ 4,519,675
Distribution and service fees ......................... 2,836,784
Shareholder account services .......................... 1,130,266
Shareholder reports and communications ................ 152,470
Registration .......................................... 138,023
Custody and related services .......................... 105,812
Auditing and legal fees ............................... 31,016
Directors' fees and expenses .......................... 12,569
Miscellaneous ......................................... 16,144
------------
Total Expenses ....................................................... 8,942,759
-----------
Net Investment Loss .................................................. (6,825,344)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments* ...................... 88,558,275
Net change in unrealized appreciation of
investments .......................................... (30,336,032)
------------
Net Gain on Investments .............................................. 58,222,243
-----------
Increase in Net Assets from Operations ............................... $51,396,899
===========
</TABLE>
- --------------
* Includes net realized gain from affiliated issuers of $509,806.
See Notes to Financial Statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30, 1997
----------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment loss .............................................................. $ (6,825,344) $ (12,505,119)
Net realized gain on investments ................................................. 88,558,275 91,955,538
Net change in unrealized appreciation of investments ............................. (30,336,032) 93,832,612
------------ -------------
Increase in Net Assets from Operations ........................................... 51,396,899 173,283,031
------------ -------------
DISTRIBUTION TO SHAREHOLDERS:
Net realized gain on investments:
Class A ....................................................................... (53,153,741) (29,080,493)
Class B ....................................................................... (7,202,049) (1,712,339)
Class D ....................................................................... (37,501,083) (20,123,337)
------------ -------------
Decrease in Net Assets from Distributions ........................................ (97,856,873) (50,916,169)
------------ -------------
<CAPTION>
SHARES
------------------------------------
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30, 1997
---------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ..................................... 2,861,886 8,188,436 45,401,338 120,301,313
Class B ..................................... 1,246,999 2,700,791 18,831,803 38,590,991
Class D ..................................... 1,683,908 5,459,136 25,253,726 76,822,163
Exchanged from associated Funds:
Class A ..................................... 5,959,151 10,428,910 93,073,651 150,564,472
Class B ..................................... 983,419 442,678 14,190,304 6,149,856
Class D ..................................... 4,564,825 2,960,507 67,894,693 41,877,344
Shares issued in payment of gain
distributions:
Class A ..................................... 3,197,765 1,789,620 47,518,782 25,108,371
Class B ..................................... 474,360 114,153 6,655,274 1,533,070
Class D ..................................... 2,484,487 1,400,777 34,882,197 18,812,429
----------- ------------ ----------------- -----------------
TOTAL .......................................... 23,456,800 33,485,008 353,701,768 479,760,009
----------- ------------ ----------------- -----------------
Cost of shares repurchased:
Class A ..................................... (5,053,053) (10,676,096) (78,270,984) (155,515,563)
Class B ..................................... (255,302) (208,490) (3,775,870) (2,970,321)
Class D ..................................... (2,593,276) (5,321,563) (38,582,763) (73,595,265)
Exchanged into associated Funds:
Class A ..................................... (5,810,069) (11,414,103) (91,135,617) (165,114,909)
Class B ..................................... (936,096) (486,787) (13,840,056) (6,666,931)
Class D ..................................... (4,411,781) (3,910,240) (66,353,829) (54,310,345)
----------- -------------- ----------------- -----------------
Total .......................................... (19,059,577) (32,017,279) (291,959,119) (458,173,334)
----------- -------------- -------------- --------------
Increase in Net Assets from Capital
Share Transactions ............................. 4,397,223 1,467,729 61,742,649 21,586,675
=========== ============== -------------- --------------
Increase in Net Assets ......................................................... 15,282,675 143,953,537
NET ASSETS:
Beginning of period ............................................................ 1,029,033,841 885,080,304
-------------- --------------
End of Period (including accumulated net
investment loss of $6,880,579
and $55,235, respectively) .................................................... $1,044,316,516 $1,029,033,841
============== ==============
</TABLE>
- ---------------------
See Notes to Financial Statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Frontier Fund, Inc. (the "Fund")
offers three classes of shares. All shares existing prior to May 3, 1993, the
commencement date of Class D shares, were classified as Class A shares. The Fund
began offering Class B shares on April 22, 1996. Class A shares are sold with an
initial sales charge of up to 4.75% and a continuing service fee of up to 0.25%
on an annual basis. Class A shares purchased in an amount of $1,000,000 or more
are sold without an initial sales charge but are subject to a contingent
deferred sales load ("CDSL") of 1% on redemptions within 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 CDSL, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of up
to 0.75% and a service fee of up to 0.25% on an annual basis, and a CDSL, if
applicable, of 1% imposed on redemptions made within one year of purchase. The
three classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other class
expenses, and has exclusive voting rights with respect to any matter on which a
separate vote of any class is required.
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. SECURITY VALUATION -- Investments in stocks are valued at current market
values or, in their absence, at fair values determined in accordance with
procedures approved by the Board of Directors. Securities traded on national
exchanges are valued at last sales prices or, in their absence and in the
case of over-the-counter securities, at the mean of bid and asked prices.
Short-term holdings maturing in 60 days or less are valued at amortized cost.
b. FEDERAL TAXES -- There is no provision for federal income tax. The Fund has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
c. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Investment
transactions are recorded on trade dates. Identified cost of investments sold
is used for both financial statement and federal income tax purposes.
Dividends receivable and payable are recorded on ex-dividend dates. Interest
income is recorded on an accrual basis.
d. MULTIPLE CLASS ALLOCATIONS -- All income, expenses (other than class-specific
expenses), and realized and unrealized gains or losses are allocated daily to
each class of shares based upon the relative value of the shares of each
class. Class-specific expenses, which include distribution and service fees
and any other items that are specifically attributable to a particular class,
are charged directly to such class. For the six months ended March 31, 1998,
distribution and service fees were the only class-specific expenses.
e. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset value
per share of the Fund.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the six months ended March 31, 1998, amounted to $391,764,163 and $417,561,369,
respectively.
At March 31, 1998, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio securities
amounted to $210,166,271 and $47,595,344, respectively.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. MANAGEMENT FEE, ADMINISTRATIVE 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 0.95%
per annum of the first $750 million of the Fund's average daily net assets and
0.85% per annum of the Fund's average daily net assets in excess of $750
million. The management fee reflected in the Statement of Operations represents
0.93% 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 $69,617 from sales of Class A shares after commissions of
$548,310 were paid to dealers.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of 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, 1998, fees
incurred under the Plan aggregated $624,048, or 0.23% per annum of average daily
net assets of Class A shares.
Under the Plan, with respect to Class B and Class D shares, service
organizations can enter into agreements with the Distributor and receive a
continuing fee for providing personal services and/or the maintenance of
shareholder accounts of up to 0.25% on an annual basis of the average daily net
assets of the Class B and Class D shares for which the organizations are
responsible; and, for Class D shares only, fees for providing other distribution
assistance of up to 0.75% on an annual basis of such average daily net assets.
Such fees are paid monthly by the Fund to the Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to substantially all
of this fee to a third party (the "Purchaser"), which provides funding to the
Distributor to enable it to pay commissions to dealers at the time of the sale
of the related Class B shares.
For the six months ended March 31, 1998, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $373,912 and $1,838,824, respectively.
The Distributor is entitled to retain any CDSL imposed on redemptions of
Class D shares occurring within one year of purchase and on certain redemptions
of Class A shares occurring within 18 months of purchase. For the six months
ended March 31, 1998, such charges amounted to $63,578.
The Distributor has sold its rights to collect any CDSL imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSL and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B shares' distribution fees retained by the Distributor for the
six months ended March 31, 1998, amounted to $43,482.
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, 1998,
Seligman Services, Inc. received commissions of $7,020 from the sales of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $47,100, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $1,130,266 for shareholder account services.
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 March 31, 1998, of $57,774 is
included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
5. COMMITTED LINE OF CREDIT -- The Fund has a $78 million committed line of
credit facility with a group of banks. Borrowings pursuant to the credit
facility are subject to interest at a rate equal to the federal funds rate plus
0.50% per annum. The Fund incurs a commitment fee of 0.10% per annum on the
unused portion of the credit facility.The credit facility may be drawn upon only
for temporary purposes and is subject to certain other customary restrictions.
The credit facility commitment expires one year from the date of the agreement
but is renewable with the consent of the participating banks. To date, the Fund
has not borrowed from the credit facility.
6. Affiliated Issuers -- As defined under the Investment Company Act of 1940, as
amended, affiliated issuers are those issuers in which the Fund's holdings of an
issuer represent 5% or more of the outstanding voting securities of the issuer.
A summary of the Fund's transactions in the securities of these issuers during
the six months ended March 31, 1998, is as follows:
<TABLE>
<CAPTION>
GROSS GROSS
BEGINNING PURCHASES SALES AND ENDING REALIZED DIVIDEND ENDING
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES GAIN INCOME VALUE
- ---------- --------- ------------- -------------- ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Coinmach Laundry ....... 600,000 -- -- 600,000 $ -- -- $12,768,750
DONCASTERS (ADRs) ...... 500,000 -- 500,000 -- 509,806 -- --
Educational Medical .... 605,000 -- -- 605,000 -- -- 7,146,563
-------- -----------
TOTAL .................. $509,806 $19,915,313
======== ===========
</TABLE>
15
<PAGE>
FINANCIAL HIGHLIGHTS
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance of eachClass, on a per share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. Generally, per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per share amounts.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. Total returns for periods
of less than one year are not annualized.
"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 the commissions were paid. This rate is provided for
periods beginning October 1, 1995.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED -----------------------------------------------------------
3/31/98o 1997o 1996o 1995o 1994o 1993
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Period ................ $ 17.55 $15.38 $14.04 $11.62 $12.83 $10.22
-------- ------ ------ ------ ------ ------
Net investment loss ................................. (0.08) (0.16) (0.13) (0.06) (0.08) (0.03)
Net realized and unrealized investment gain ......... 0.85 3.20 1.95 3.87 1.10 4.54
-------- ------ ------ ------ ------ ------
Increase from Investment Operations ................. 0.77 3.04 1.82 3.81 1.02 4.51
Distributions from net gain realized ................ (1.63) (0.87) (0.48) (1.39) (2.23) (1.90)
-------- ------ ------ ------ ------ ------
Net Increase (Decrease) in Net Asset Value .......... (0.86) 2.17 1.34 2.42 (1.21) 2.61
-------- ------ ------ ------ ------ ------
Net Asset Value, End of Period ...................... $ 16.69 $17.55 $15.38 $14.04 $11.62 $12.83
======== ======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET VALUE: .............. 5.56% 21.19% 13.40% 36.80% 9.79% 50.67%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ...................... 1.48%+ 1.52% 1.56% 1.43% 1.34% 1.25%
Net investment loss to average net assets ........... (1.05)%+ (1.10)% (0.91)% (0.50)% (0.87)% (0.27)%
Portfolio turnover .................................. 41.64% 97.37% 59.36% 71.52% 124.76% 129.13%
Average commission rate paid ........................ $0.0553 $0.0540 $0.0538
Net Assets, End of Period (000s omitted) ............ $559,599 $568,261 $523,737 $272,122 $58,478 $43,188
</TABLE>
- ------------------
See footnotes on page 17.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-------------------------------------
SIX MONTHS YEAR 4/22/96*
ENDED ENDED TO
3/31/98o 9/30/97o 9/30/96o
---------- --------- ---------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Period .............. $16.68 $14.78 $14.55
------ ------ ------
Net investment loss ............................... (0.13) (0.27) (0.11)
Net realized and unrealized investment gain ....... 0.79 3.04 0.34
------ ------ ------
Increase from Investment Operations ............... 0.66 2.77 0.23
Distributions from net gain realized (1.63) (0.87) --
------ ------ ------
Net Increase (Decrease) in Net Asset Value ........ (0.97) 1.90 0.23
------ ------ ------
Net Asset Value, End of Period .................... $15.71 $16.68 $14.78
====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: 5.15% 20.17% 1.58%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................... 2.25%+ 2.30% 2.45%+
Net investment loss to average net assets ......... (1.82)%+ (1.88)% (1.80)%+
Portfolio turnover ................................ 41.64% 97.37% 59.36%++
Average commission rate paid ...................... $0.0553 $0.0540 $0.0538++
Net Assets, End of Period (000s omitted) $89,544 $69,869 $24,016
<CAPTION>
CLASS D
-------------------------------------------------------------------------------
5/3/93*
SIX MONTHS YEAR ENDED SEPTEMBER 30, TO
ENDED -----------------------------------------------------------
3/31/98o 1997o 1996o 1995o 1994o 9/30/93
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period $16.69 $14.77 $13.61 $11.40 $12.80 $10.12
------ ------ ------ ------ ------ ------
Net investment loss (0.13) (0.27) (0.24) (0.15) (0.23) (0.04)
Net realized and unrealized investment gain 0.78 3.06 1.88 3.75 1.06 2.72
------ ------ ------ ------ ------ ------
Increase from Investment Operations 0.65 2.79 1.64 3.60 0.83 2.68
Distributions from net gain realized (1.63) (0.87) (0.48) (1.39) (2.23) --
------ ------ ------ ------ ------ ------
Net Increase (Decrease) in Net Asset Value (0.98) 1.92 1.16 2.21 (1.40) 2.68
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $15.71 $16.69 $14.77 $13.61 $11.40 $12.80
====== ====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: 5.08% 20.32% 12.47% 35.53% 8.06% 26.48%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets 2.25%+ 2.30% 2.35% 2.29% 2.72% 2.24%+
Net investment loss to average net assets (1.82)%+ (1.88)% (1.70)% (1.35)% (2.25)% (1.94)%+
Portfolio turnover 41.64% 97.37% 59.36% 71.52% 124.76% 129.13%+++
Average commission rate paid $0.0553 $0.0540 $0.0538
Net Assets, End of Period (000s omitted) $395,173 $390,904 $337,327 $145,443 $9,318 $967
</TABLE>
- --------------
o The per share amounts for the periods ended March 31, 1998,and September 30,
1997, 1996, 1995, and 1994, are calculated based on average shares
outstanding.
* Commencement of offering of shares.
+ Annualized.
++ For the year ended September 30, 1996.
+++ For the year ended September 30, 1993.
See Notes to Financial Statements.
17
<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,
1998, the related statements of operations for the six months then ended and of
changes in net assets for the six months then ended and for the year ended
September 30, 1997, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998, by correspondence with the Fund's custodian and brokers; where replies
were not received from brokers we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Seligman
Frontier Fund, Inc. as of March 31, 1998, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
/s/DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
New York, New York
May 1, 1998
18
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
TRUSTEE, The New York and Presbyterian Hospital
BETSY S. MICHEL 2
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD, J. & W. Seligman & Co.
Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, J. & W. Seligman & Co.
Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT, J. &W. Seligman &Co.
Incorporated
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Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
19
<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
ARSEN MRAKOVCIC
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman Financial Services, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan Services
(212) 682-7600 Outside the Continental United States
(800) 622-4597 24-Hour Automated Telephone Access Service
20
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GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio. For tax purposes,
these profits may be taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES LOAD (CDSL) -- Depending on the class of shares owned,
a fee charged by a mutual fund when shares are sold back to the fund (the CDSL
expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE (OP) -- The price at which a mutual fund's share can be
purchased. The offering price per share is the current net asset value plus any
sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, officers and directors, how shares are bought and
redeemed, fund fees and other charges, and the fund's financial statements.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains updated or more
detailed information about a mutual fund and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The AVERAGE ANNUAL TOTAL
RETURN represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
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Adapted from the Investment Company Institute's 1997 MUTUAL FUND FACT BOOK.
21
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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.
SELIGMAN FINANCIAL SERVICES, INC.
AN AFFILIATE OF
[LOGO]
J.& W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK
EQF3 3/98 Printed on Recycled Paper
