SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. __ |_|
POST-EFFECTIVE AMENDMENT NO. 28 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 30 |X|
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SELIGMAN FRONTIER FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER: 212-850-1864 OR
TOLL-FREE 800-221-2450
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THOMAS G. ROSE, TREASURER
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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IT IS PROPOSED THAT THIS FILING WILL BECOME
EFFECTIVE (CHECK APPROPRIATE BOX):
<TABLE>
<CAPTION>
<S> <C>
|_| IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) |_| ON (DATE) PURSUANT TO PARAGRAPH (A)(1)
------
|X| ON MAY 28, 1999 PURSUANT TO PARAGRAPH (B) |_| 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
------------
|_| 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1) |_| ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485.
--------
</TABLE>
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
|_| THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
<PAGE>
SELIGMAN
- ----------
FRONTIER
FUND, INC.
[GRAPHIC]
PROSPECTUS
JUNE 1, 1999
-----------------
Seeking Growth
In Capital Value
Through Investments
In Small-Company
Growth Stocks
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in the Fund should be
evaluated based on the investment objective, strategies and risks described
herein, considered in light of all of the other investments in your portfolio,
as well as your risk tolerance, financial goals, and time horizons. We recommend
that you consult your financial advisor to determine if this Fund is suitable
for you.
EQFR1 6/99
<PAGE>
TABLE OF CONTENTS
THE FUND
Investment Objective/Principal Strategies 1
Principal Risks 2
Past Performance 3
Fees and Expenses 4
Management 5
Year 2000 6
SHAREHOLDER INFORMATION
Deciding Which Class of Shares to Buy 7
Pricing of Fund Shares 9
Opening Your Account 9
How to Buy Additional Shares 10
How to Exchange Shares Among
the Seligman Mutual Funds 11
How to Sell Shares 11
Important Policies That May Affect
Your Account 12
Dividends and Capital Gain Distributions 13
Taxes 13
The Seligman Mutual Funds 14
FINANCIAL HIGHLIGHTS 15
HOW TO CONTACT US 17
FOR MORE INFORMATION back cover
TIMES CHANGE ... VALUES ENDURE
<PAGE>
THE FUND
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Fund seeks growth of capital. Income may be considered but is incidental to
the Fund's investment objective.
The Fund uses the following strategies to pursue its objective of growth of
capital:
The Fund generally invests at least 65% of its total assets in equity securities
of small US companies. Companies are selected for their growth prospects. The
Fund uses a bottom-up stock selection approach. This means that the investment
manager concentrates on individual company fundamentals, rather than on a
particular market sector. The Fund maintains a disciplined investment process
that focuses on downside risks as well as upside potential. In selecting
investments, the investment manager looks to identify companies that it believes
display one or more of the following:
o Positive operating cash flows
o Quality management
o Unique competitive advantages
o Historically high returns on capital
- --------------------------------------------------------------------------------
Small Companies: Companies with market capitalizations, at the time of purchase
by the Fund, of $1.25 billion or less.
- --------------------------------------------------------------------------------
The Fund generally sells a stock if the investment manager believes its target
price is reached, its earnings are disappointing, its revenue growth has slowed,
or its underlying fundamentals have deteriorated.
The Fund generally invests primarily in common stocks, however, it may also
invest in preferred stocks, securities convertible into common stocks, and stock
purchase warrants if the manager believes they offer capital growth
opportunities. The Fund may invest in American Depositary Receipts (ADRs), which
are publicly-traded instruments generally issued by domestic banks or trust
companies that represent a security of a foreign issuer. ADRs are quoted and
settled in USdollars. The Fund uses the same criteria in evaluating these
securities as it does for common stocks.
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot be readily sold) and may invest up to 10% of its total
assets directly in foreign securities. The limit on foreign securities does not
include ADRs, or commercial paper or certificates of deposit issued by foreign
banks. The Fund may also purchase put options in an attempt to hedge against a
decline in the price of securities it holds. A put option gives the Fund the
right to sell an underlying security at a particular price during a fixed period
of time. The Fund generally does not invest a significant amount of its assets,
if any, in illiquid securities, foreign securities, or put options.
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its objective. The Fund's objective may be
changed only with shareholder approval.
The Fund may change its principal strategies if the Fund's Board of Directors
believes doing so is consistent with the Fund's objective.
The Fund's Board of Directors may change the parameters by which "small
companies" are defined if they conclude such a change is appropriate.
As with any mutual fund, there is no guarantee the Fund will achieve its
objective.
1
<PAGE>
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Fund's net asset value will fluctuate, especially in the short term. You may
experience a decline in the value of your investment and you could lose money if
you sell your shares at a price lower than you paid for them.
Small-company stocks, as a whole, may experience larger price fluctuations than
large-company stocks or other types of investments. Small companies tend to have
shorter operating histories and may have less experienced management. During
periods of investor uncertainty, investor sentiment may favor larger, well-known
companies over small, lesser-known companies.
The Fund seeks to reduce the risks of investing in small company stocks by
adhering to its disciplined investment process and by diversifying its
investments typically among more than 100 stocks and avoiding concentration in
any one industry. The Fund may, however, invest more heavily in certain
industries believed to offer good investment opportunities. To the extent that
an industry in which the Fund is invested falls out of favor, the Fund's
performance may be negatively affected.
The Fund's performance may also be affected by the broad investment environment
in the US or international securities markets, which is influenced by, among
other things, interest rates, inflation, politics, fiscal policy, and current
events.
Foreign securities, illiquid securities, or options in the Fund's investments
involve higher risk and may subject the Fund to higher price volatility.
Investing in securities of foreign issuers involves risks not associated with US
investments, including settlement risks, currency fluctuations, foreign
taxation, differences in financial reporting practices, and changes in political
conditions.
The Fund may actively and frequently trade securities in its portfolio to carry
out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Fund's expenses. There may also be
adverse tax consequences for investors in the Fund due to an increase in
short-term capital gains.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
<PAGE>
PAST PERFORMANCE
The Fund offers four Classes of shares. The information below provides some
indication of the risks of investing in the Fund by showing how the performance
of Class A shares has varied year to year, as well as how the performance of
each Class (except Class C) compares to three widely-used measures of small
company stock performance. Class C is a new class of shares, effective June 1,
1999, so no performance information is available.
Although the Fund's fiscal year ends on September 30, the following performance
information is provided on a calendar year basis to assist you in comparing the
returns of the Fund with the returns of other mutual funds. How the Fund has
performed in the past, however, is not necessarily an indication of how the Fund
will perform in the future. Total returns will vary between each Class of shares
due to the different fees and expenses of each Class.
The Class A annual total returns presented in the bar chart do not reflect the
effect of any sales charges. If these charges were included, the returns would
be less. The average annual total returns presented in the table below the chart
do reflect the effect of the applicable sales charges. Both the bar chart and
table assume that all dividends and capital gain distributions were reinvested.
CLASS A ANNUAL TOTAL RETURNS - CALENDAR YEARS
[The following table represents a chart in the printed piece.]
1989 28.13%
1990 -9.03%
1991 49.63%
1992 15.99%
1993 26.30%
1994 7.01%
1995 36.43%
1996 11.26%
1997 17.83%
1998 -2.24%
Best calendar quarter return: 23.43% - quarter ended 12/31/92
Worst calendar quarter return: -23.39% - quarter ended 9/30/90
Class A annual total return for the quarter ended 3/31/99: -18.88%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
<TABLE>
<CAPTION>
CLASS B CLASS D
ONE FIVE TEN SINCE INCEPTION SINCE INCEPTION
YEAR YEARS YEARS 4/22/96 5/3/93
------- ------- ------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Class A -6.90% 12.24% 16.37% -- --
Class B -7.79 n/a n/a 3.79% --
Class D -3.91 12.31 n/a -- 16.09%
Russell 2000 Index -2.55 11.86 12.92 8.88(1) 13.54(2)
Russell 2000 Growth Index 1.23 10.22 11.54 4.25(1) 12.39(2)
Lipper Small Cap Funds Average -0.31 12.87 14.98 8.66(1) 14.41(2)
</TABLE>
The Russell 2000 Index, Russell 2000 Growth Index, and the Lipper Small Cap
Funds Average are unmanaged benchmarks that assume the reinvestment of dividends
and capital gain distributions. The Lipper Average does not reflect any sales
charges and the Russell Indices do not reflect any fees or sales charges. The
Russell 2000 Index measures the performance of small-cap stocks, the Russell
2000 Growth Index measures the performance of small-cap growth stocks, and the
Lipper Average measures the performance of mutual funds with investment
objectives similar to the Fund.
(1) From April 30, 1996.
(2) From April 30, 1993.
- --------------------------------------------------------------------------------
3
<PAGE>
FEES AND EXPENSES
The table below summarizes the fees and expenses that you may pay as a
shareholder of the Fund. Each Class of shares has its own sales charge schedule
and is subject to different ongoing 12b-1 fees. Shareholder fees are charged
directly to you. Annual fund operating expenses are deducted from Fund assets
and are therefore paid indirectly by you and other shareholders of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES Class A Class B Class C Class D
- ---------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Maxcimum Sales Charge (Load) on Purchases
(as a % of offering price) ....................................... 4.75%(1) none 1% none
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
on Redemptions (as a % of original purchase price or
current net asset value, whichever is less) ...................... none(1) 5% 1% 1%
ANNUAL FUND OPERATING EXPENSES FOR FISCAL YEAR 1998
(as a percentage of average net assets)
Management Fees .................................................... .93% .93% .93% .93%
Distribution and/or Service (12b-1) Fees ........................... .23% 1.00% 1.00% 1.00%
Other Expenses ..................................................... .31% .31% .31% .31%
----- ----- ----- -----
Total Annual Fund Operating Expenses ............................... 1.47% 2.24% 2.24% 2.24%
===== ===== ===== =====
</TABLE>
(1) If you buy Class A shares for $1,000,000 or more you will not pay an initial
sales charge, but your shares will be subject to a 1% CDSC if sold within 18
months.
- --------------------------------------------------------------------------------
MANAGEMENT FEES:
Fees paid out of Fund assets to the investment manager to compensate it for
managing the Fund.
12B-1 FEES:
Fees paid by each Class, pursuant to a plan adopted by the Fund under Rule 12b-1
of the Investment Company Act of 1940. The plan allows each Class to pay
distribution and/or service fees for the sale and distribution of its shares and
for providing services to shareholders.
OTHER EXPENSES:
Miscellaneous expenses of running the Fund, including such things as transfer
agency, registration, custody, and auditing and legal fees.
- --------------------------------------------------------------------------------
Example
- -------
This example is intended to help you compare the expenses of investing in the
Fund with the expenses of investing in other mutual funds. It assumes (1) you
invest $10,000 in the Fund for each period and then sell all of your shares at
the end of that period, (2) your investment has a 5% return each year, and (3)
the Fund's operating expenses remain the same. Although your actual expenses may
be higher or lower, based on these assumptions your expenses would be:
1 Year 3 Years 5 Years 10 Years
----- ------- ------- -------
Class A $617 $ 918 $1,240 $2,149
Class B 727 1,000 1,400 2,381+
Class C 425 793 1,288 2,649
Class D 327 700 1,200 2,575
If you did not sell your shares at the end of each period, your expenses would
be:
1 Year 3 Years 5 Years 10 Years
----- ------- ------- -------
Class A $617 $918 $1,240 $2,149
Class B 227 700 1,200 2,381+
Class C 325 793 1,288 2,649
Class D 227 700 1,200 2,575
+ Class B shares will automatically convert to Class A shares after eight years.
4
<PAGE>
MANAGEMENT
The Fund's Board of Directors provides broad supervision over the affairs of the
Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of the Fund. Seligman manages the investment of the
Fund's assets, including making purchases and sales of portfolio securities
consistent with the Fund's investment objective and strategies, and administers
the Fund's business and other affairs.
Established in 1864, Seligman currently serves as manager to 18 USregistered
investment companies, which offer more than 50 investment portfolios with
approximately $21.5 billion in assets as of April 30, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at April 30, 1999, of approximately $10.2 billion.
The Fund pays Seligman a fee for its management services. The fee rate declines
as the Fund's net assets increase. It is equal to an annual rate of .95% of the
Fund's average daily net assets on the first $750 million of net assets and .85%
of the Fund's average daily net assets in excess of $750 million. For the Fund's
fiscal year ended September 30, 1998, the management fee paid by the Fund to
Seligman was equal to an annual rate of .93% of the Fund's average daily net
assets.
- --------------------------------------------------------------------------------
AFFILIATES OF SELIGMAN:
SELIGMAN ADVISORS, INC.:
The Fund's general distributor; responsible for accepting orders for purchases
and sales of Fund shares.
SELIGMAN SERVICES, INC.:
A limited purpose broker/dealer; acts as the broker/dealer of record for
shareholder accounts that do not have a designated financial advisor.
SELIGMAN DATA CORP. (SDC):
The Fund's shareholder service agent; provides shareholder account services to
the Fund at cost.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The Fund is managed by the Seligman Small Company Team, headed by Mr. Arsen
Mrakovcic. Mr. Mrakovcic, a Managing Director of Seligman, has been Vice
President and Portfolio Manager of the Fund since October 1, 1995. Mr. Mrakovcic
joined Seligman in June 1992 as a Portfolio Assistant. He was named Vice
President, Investment Officer on January 1, 1995, and Managing Director on
January 1, 1996. Mr. Mrakovcic also co-manages Seligman Henderson Global Smaller
Companies Fund; and he manages the Seligman Frontier Portfolio and co-manages
the Seligman Henderson Global Smaller Companies Portfolio, two portfolios of
Seligman Portfolios, Inc.
5
<PAGE>
YEAR 2000
As the millennium approaches, mutual funds, financial and business
organizations, and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other mutual funds, the Fund relies upon
service providers and their computer systems for its day-to-day operations. Many
of the Fund's service providers in turn depend upon computer systems of their
vendors. Seligman and SDC have established a year 2000 project team. The team's
purpose is to assess the state of readiness of Seligman and SDC and the Fund's
other service providers and vendors. The team is comprised of several
information technology and business professionals as well as outside
consultants. The Project Manager of the team reports directly to the
Administrative Committee of Seligman. The Project Manager and other members of
the team also report to the Board of Directors of the Fund and its Audit
Committee.
The team has identified the service providers and vendors who furnish critical
services or software systems to the Fund, including securities firms that
execute portfolio transactions for the Fund and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Fund. The team will
assess the feasibility of their year 2000 plans. The team has made progress on
its year 2000 contingency plans - recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Fund. The team anticipates
finalizing these plans in the near future.
The Fund anticipates the team will implement all significant components of the
team's year 2000 plans by mid-1999, including appropriate testing of critical
systems and receipt of satisfactory assurances from critical service providers
and vendors regarding their year 2000 compliance. The Fund believes that the
critical systems on which it relies will function properly on and after the year
2000, but this is not guaranteed. If these systems do not function properly, or
the Fund's critical service providers are not successful in implementing their
year 2000 plans, the Fund's operations may be adversely affected, including
pricing, securities trading and settlement, and the provision of shareholder
services.
In addition, the Fund may hold securities of issuers whose underlying business
leaves them susceptible to year 2000 issues. The Fund may also hold securities
issued by governmental or quasi-governmental issuers, which, like other
organizations, are also susceptible to year 2000 concerns. Year 2000 issues may
affect an issuer's operations, creditworthiness, and ability to make timely
payment on any indebtedness and could have an adverse impact on the value of its
securities. If the Fund holds these securities, the Fund's performance could be
negatively affected. Seligman seeks to identify an issuer's state of year 2000
readiness as part of the research it employs. However, the perception of an
issuer's year 2000 preparedness is only one of the many factors considered in
determining whether to buy, sell, or continue to hold a security. Information
provided by issuers concerning their state of readiness may or may not be
accurate or readily available. Further, the Fund may be adversely affected if
the domestic or foreign exchanges, markets, depositories, clearing agencies, or
governments or third parties responsible for infrastructure needs do not address
their year 2000 issues in a satisfactory manner.
SDC has informed the Fund that it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The Fund will not pay to remediate the
systems of Seligman or bear directly the costs to remediate the systems of any
other service providers or vendors, other than SDC.
6
<PAGE>
SHAREHOLDER INFORMATION
DECIDING WHICH CLASS OF SHARES TO BUY
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule, and its
ongoing 12b-1 fees may differ from other Classes. When deciding which Class of
shares to buy, you should consider, among other things:
o The amount you plan to invest.
o How long you intend to remain invested in the Fund, or another Seligman
mutual fund.
o If you would prefer to pay an initial sales charge and lower ongoing 12b-1
fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
o Whether you may be eligible for reduced or no sales charges when you buy or
sell shares. Your financial advisor will be able to help you decide which
Class of shares best meets your needs.
- --------------------------------------------------------------------------------
CLASS A
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
SALES CHARGE REGULAR DEALER
SALES CHARGE AS A % DISCOUNT
AS A % OF NET AS A % OF
AMOUNT OF YOUR INVESTMENT OF OFFERING PRICE(1) AMOUNT INVESTED OFFERING PRICE
-------------------------- ---------------- ---------------- --------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.25%
$50,000 - $ 99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more,
but you will be subject to a 1% CDSC if you sell your shares within
18 months.
o Annual 12b-1 fee (for shareholder services) of up to 0.25%.
o No sales charge on reinvested dividends or capital gain distributions.
o Certain employer-sponsored defined contribution-type plans can purchase
shares with no initial sales charge.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS B
o No initial sales charge on purchases.
o A declining CDSC on shares sold within 6 years of purchase:
YEARS SINCE PURCHASE CDSC
-------------------- ------
Less than 1 year 5%
1 year or more but less than 2 years 4
2 years or more but less than 3 years 3
3 years or more but less than 4 years 3
4 years or more but less than 5 years 2
5 years or more but less than 6 years 1
6 years or more 0
- --------------------------------------------------------------------------------
Your purchase of Class B shares must be for less than $250,000, because if you
invest $250,000 or more, you will pay less in fees and charges if you buy
another Class of shares.
- --------------------------------------------------------------------------------
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
o No CDSC when you sell shares purchased with reinvested dividends or capital
gain distributions.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
CLASS C
o Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
REGULAR DEALER
SALES CHARGE SALES CHARGE DISCOUNT
AS A % AS A % OF NET AS A % OF
AMOUNT OF YOUR INVESTMENT OF OFFERING PRICE(1) AMOUNT INVESTED OFFERING PRICE
-------------------------- ----------------- ----------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000
because if you invest $1,000,000 or more you will pay less in fees
and charges if you buy Class A shares.
o A 1% CDSC on shares sold within eighteen months of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class Ashares, so you will be subject to higher
ongoing 12b-1 fees indefinitely.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CLASS D*
o No initial sales charge on purchases.
o A 1% CDSC on shares sold within one year of purchase.
o Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
o No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
o No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
*Class D shares are not available to all investors. Beginning June 1,
1999, you may purchase Class D shares only if (1) you already own Class D
shares of the Fund or another Seligman mutual fund, (2) if your financial
advisor of record maintains an omnibus account at SDC, or (3) pursuant
to a 401(k) or other retirement plan program for which Class D shares are
already available or for which the sponsor requests Class D shares because
the sales charge structure of Class D shares is comparable to the sales
charge structure of the other funds offered under the program.
- --------------------------------------------------------------------------------
Because the Fund's 12b-1 fees are paid out of each Class's assets on an ongoing
basis, over time these fees will increase your investment expenses and may cost
you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, Class C, and Class D shares. On an
ongoing basis, the Directors, in the exercise of their fiduciary duties under
the Investment Company Act of 1940 and Maryland law, will seek to ensure that no
such conflict arises.
HOW CDSCS ARE CALCULATED
To minimize the amount of the CDSC you may pay when you sell your shares, the
Fund assumes that shares acquired through reinvested dividends and capital gain
distributions (which are not subject to a CDSC) are sold first. Shares that have
been in your account long enough so they are not subject to a CDSC are sold
next. After these shares are exhausted, shares will be sold in the order they
were purchased (oldest to youngest). The amount of any CDSC that you pay will be
based on the shares' original purchase price or current net asset value,
whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging shares
of the Fund, it will be assumed that you held the shares since the date you
purchased the shares of the Fund.
8
<PAGE>
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Class's net asset value (NAV) next
calculated after Seligman Advisors accepts your request. Any applicable sales
charge will be added to the purchase price for Class A shares and Class C
shares. Purchase or sale orders received by an authorized dealer or financial
advisor by the close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) and accepted by Seligman Advisors before the
close of business (5:00 p.m. Eastern time) on the same day will be executed at
the Class's NAV calculated as of the close of regular trading on the NYSE on
that day. Your broker/dealer or financial advisor is responsible for forwarding
your order to Seligman Advisors before the close of business.
If your buy or sell order is received by your broker/dealer or financial advisor
after the close of regular trading on the NYSE, or is accepted by Seligman
Advisors after the close of business, the order will be executed at the Class's
NAV calculated as of the close of regular trading on the next NYSE trading day.
When you sell shares, you receive the Class's per share NAV, less any applicable
CDSC.
The NAV of the Fund's shares is determined each day, Monday through Friday, on
days that the NYSE is open for trading. Because of their higher 12b-1 fees, the
NAV of Class B, Class C, and Class D shares will generally be lower than the NAV
of Class A shares of the Fund.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
- --------------------------------------------------------------------------------
NAV:
Computed separately for each Class by dividing that Class's share of the net
assets of the Fund (i.e., its assets less liabilities) by the total number of
outstanding shares of the Class.
- --------------------------------------------------------------------------------
OPENING YOUR ACCOUNT
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more information,
see "Deciding Which Class of Shares to Buy -- Class D."
To make your initial investment in the Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.
- --------------------------------------------------------------------------------
YOU MAY BUY SHARES OF THE FUND FOR ALL TYPES OF TAX-DEFERRED RETIREMENT PLANS.
CONTACT RETIREMENT PLAN SERVICES AT THE ADDRESS OR PHONE NUMBER LISTED ON THE
INSIDE BACK COVER OF THIS PROSPECTUS FOR INFORMATION AND TO RECEIVE THE PROPER
FORMS.
- --------------------------------------------------------------------------------
The required minimum initial investments are:
o Regular (non-retirement) accounts: $1,000
o For Accounts Opened concurrently with Invest-A-Check(R):
$100 to open if you will be making monthly investments
$250 to open if you will be making quarterly investments
If you buy shares by check and subsequently sell the shares, SDC will not send
your proceeds until your check clears, which could take up to 15 calendar days
from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be sent
to you free of charge for the current year and most recent prior year. Copies of
year-end statements for prior years are available for a fee of $10 per year, per
account, with a maximum charge of $150 per account. Send your request and a
check for the fee to SDC.
IF YOU WANT TO BE ABLE TO BUY, SELL, OR EXCHANGE SHARES BY TELEPHONE, YOU
SHOULD COMPLETE AN APPLICATION WHEN YOU OPEN YOUR ACCOUNT. THIS WILL PREVENT
YOU FROM HAVING TO COMPLETE A SUPPLEMENTAL ELECTION FORM (WHICH MAY REQUIRE A
SIGNATURE GUARANTEE) AT A LATER DATE.
9
<PAGE>
HOW TO BUY ADDITIONAL SHARES
After you have made your initial investment, there are many options available to
make additional purchases of Fund shares. Subsequent investments must be for
$100 or more.
Shares may be purchased through your authorized financial advisor, or you may
send a check directly to SDC. Please provide either an investment slip or a note
that provides your name(s), Fund name, and account number. Your investment will
be made in the Class you already own. Send investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
INVEST-A-CHECK(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
AUTOMATIC DOLLAR-COST-AVERAGING. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares or Class C shares,
you may pay an initial sales charge to buy Fund shares.
AUTOMATIC CD TRANSFER. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
DIVIDENDS FROM OTHER INVESTMENTS. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
DIRECT DEPOSIT. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
SELIGMAN TIME HORIZON MATRIX(SM). (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It considers
your financial needs, and helps frame a personalized asset allocation strategy
around the cost of your future commitments and the time you have to meet them.
Contact your financial advisor for more information.
SELIGMAN HARVESTER. If you are a retiree or nearing retirement, this program is
designed to help you establish an investment strategy that seeks to meet your
needs throughout your retirement. The strategy is customized to your personal
financial situation by allocating your assets to seek to address your income
requirements, prioritizing your expenses, and establishing a prudent withdrawal
schedule. Contact your financial advisor for more information.
10
<PAGE>
HOW TO EXCHANGE SHARES AMONG THE SELIGMAN MUTUAL FUNDS
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares or
Class C shares of Seligman Cash Management Fund to buy shares of the same Class
of the Fund or another Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to carry
over any other account options (for example, Invest-A-Check(R) or Systematic
Withdrawals) to the new fund, you must specifically request so at the time of
your exchange.
If you exchange into a new fund, you must exchange enough to meet the new fund's
minimum initial investment.
See "The Seligman Mutual Funds" for a list of the funds available for exchange.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all Classes of shares.
HOW TO SELL SHARES
The easiest way to sell Fund shares is by phone. If you have telephone services,
you may be able use this service to sell Fund shares. Restrictions apply to
certain types of accounts. Please see "Important Policies That May Affect Your
Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction, however, the dealer or financial advisor
may charge a fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares, however, it may take
longer to get your money.
As an additional measure to protect you and the Fund, SDC may confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be paid
to an alternate payee or sent to an address other than the address of record,
with you or your financial advisor by telephone before sending you your money.
This will not effect the date on which your redemption is actually processed.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than all account owners, or
(3) mailed to other than your address of record.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
SIGNATURE GUARANTEE:
PROTECTS YOU AND THE FUND FROM FRAUD. IT GUARANTEES THAT A SIGNATURE IS GENUINE.
A GUARANTEE MUST BE OBTAINED FROM AN ELIGIBLE FINANCIAL INSTITUTION.
NOTARIZATION BY A NOTARY PUBLIC IS NOT AN ACCEPTABLE GUARANTEE.
You may need to provide additional documents to sell Fund shares if you are:
o a corporation;
o an executor or administrator;
o a trustee or custodian; or
o in a retirement plan.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account service to sell Fund shares:
SYSTEMATIC WITHDRAWAL PLAN. If you have at least $5,000 in the Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days after
your shares are sold. If you bought $1,000,000 or more of Class A shares without
an initial sales charge, your withdrawals may be subject to a 1% CDSC if they
occur within 18 months of purchase. If you own Class B, Class C, or Class D
shares and reinvest your dividends and capital gain distributions, you may
withdraw 12%, 10%, or 10%, respectively, of the value of your Fund account (at
the time of election) annually without a CDSC.
11
<PAGE>
IMPORTANT POLICIES THAT MAY AFFECT YOUR ACCOUNT
To protect you and other shareholders, the Fund reserves the right to:
o Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month period;
2. the amount you wish to exchange equals the lesser of $1,000,000 or 1% of
the Fund's net assets; or
3. you or your financial advisor have been advised that previous patterns
of purchases and sales or exchanges have been considered excessive.
o Refuse any request to buy Fund shares.
o Reject any request received by telephone.
o Suspend or terminate telephone services.
o Reject a signature guarantee that SDC believes may be fraudulent.
o Close your fund account if its value falls below $500.
o Close your account if it does not have a certified taxpayer identification
number.
TELEPHONE SERVICES
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account application
that you do not want telephone services:
o Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record).
o Exchange shares between funds.
o Change dividend and/or capital gain distribution options.
o Change your address.
o Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form.
Restrictions apply to certain types of accounts:
o Trust accounts on which the current trustee is not listed may not sell Fund
shares by phone.
o Corporations may not sell Fund shares by phone.
o IRAs may only exchange Fund shares or request address changes by phone.
o Group retirement plans may not sell Fund shares by phone; plans that allow
participants to exchange by phone must provide a letter of authorization
signed by the plan custodian or trustee and provide a supplemental
election form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address of
record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. The Fund's
NAV may fluctuate during this time.
The Fund and SDC will not be liable for processing requests received by phone as
long as it was reasonable to believe that the request was genuine.
REINSTATEMENT PRIVILEGE
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax advisor
concerning possible tax consequences of exercising this privilege.
12
<PAGE>
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund generally pays any dividends from its net investment income and
distributes net capital gains realized on investments annually. It is expected
that the Fund's distributions will be primarily capital gains.
You may elect to:
(1) reinvest both dividends and capital gain distributions;
(2) receive dividends in cash and reinvest capital gain distributions; or
(3) receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise or if you own Fund shares in a Seligman tax-deferred
retirement plan.
If you want to change your election, you may write SDC at the address listed on
the back cover of this prospectus, or, if you have telephone services, you or
your financial advisor may call SDC. Your request must be received by SDC before
the record date to be effective for that dividend or capital gain distribution.
Cash dividends or capital gain distributions will be sent by check to your
address of record or, if you have current ACH bank information on file, directly
deposited into your predesignated bank account within 3-4 business days from the
payable date.
Dividends and capital gain distributions are reinvested to buy additional Fund
shares on the payable date using the NAV of the ex-dividend date.
Dividends on Class B, Class C, and Class D shares will be lower than the
dividends on Class A shares as a result of their higher 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
- --------------------------------------------------------------------------------
DIVIDEND:
A PAYMENT BY A MUTUAL FUND, USUALLY DERIVED FROM THE FUND'S NET INVESTMENT
INCOME (DIVIDENDS AND INTEREST EARNED ON PORTFOLIO SECURITIES LESS EXPENSES).
CAPITAL GAIN DISTRIBUTION:
A PAYMENT TO MUTUAL FUND SHAREHOLDERS WHICH REPRESENTS PROFITS REALIZED ON THE
SALE OF SECURITIES IN A FUND'S PORTFOLIO.
EX-DIVIDEND DATE:
THE DAY ON WHICH ANY DECLARED DISTRIBUTIONS (DIVIDENDS OR CAPITAL GAINS) ARE
DEDUCTED FROM A FUND'S ASSETS BEFORE IT CALCULATES ITS NAV.
- --------------------------------------------------------------------------------
TAXES
The tax treatment of dividends and capital gain distributions is the same
whether you take them in cash or reinvest them to buy additional Fund shares.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the Fund holds its assets.
When you sell Fund shares, any gain or loss you realize will generally be
treated as a long-term capital gain or loss if you held your shares for more
than one year, or as a short-term capital gain or loss if you held your shares
for one year or less. However, if you sell Fund shares on which a long-term
capital gain distribution has been received and you held the shares for six
months or less, any loss you realize will be treated as a long-term capital loss
to the extent that it offsets the long-term capital gain distribution.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
13
<PAGE>
THE SELIGMAN MUTUAL FUNDS
EQUITY
SPECIALTY
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND
INFORMATION FUND
SEEKS CAPITAL APPRECIATION BY INVESTING IN COMPANIES OPERATING IN ALL ASPECTS OF
THE COMMUNICATIONS, INFORMATION, AND RELATED INDUSTRIES.
SELIGMAN HENDERSON GLOBAL TECHNOLOGY FUND
SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING PRIMARILY IN GLOBAL SECURITIES
(US AND NON-US) OF COMPANIES IN THE TECHNOLOGY AND TECHNOLOGY-RELATED
INDUSTRIES.
SELIGMAN HENDERSON EMERGING MARKETS GROWTH FUND
SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING PRIMARILY IN EQUITY SECURITIES
OF COMPANIES IN EMERGING MARKETS.
SMALL COMPANY
- --------------------------------------------------------------------------------
SELIGMAN FRONTIER FUND
SEEKS GROWTH OF CAPITAL BY INVESTING PRIMARILY IN SMALL COMPANY GROWTH STOCKS.
SELIGMAN SMALL-CAP VALUE FUND
SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING IN EQUITIES OF SMALL
COMPANIES, DEEMED TO BE "VALUE" COMPANIES BY THE INVESTMENT MANAGER.
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES FUND
SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING IN SECURITIES OF SMALLER
COMPANIES AROUND THE WORLD, INCLUDING THE US.
MEDIUM COMPANY
- --------------------------------------------------------------------------------
SELIGMAN CAPITAL FUND
SEEKS CAPITAL APPRECIATION BY INVESTING IN THE COMMON STOCKS OF COMPANIES WITH
SIGNIFICANT POTENTIAL FOR GROWTH.
LARGE COMPANY
- --------------------------------------------------------------------------------
SELIGMAN GROWTH FUND
SEEKS LONG-TERM GROWTH OF CAPITAL VALUE AND AN INCREASE IN FUTURE INCOME.
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES FUND
SEEKS CAPITAL APPRECIATION BY INVESTING PRIMARILY IN EQUITY SECURITIES OF
COMPANIES THAT HAVE THE POTENTIAL TO BENEFIT FROM GLOBAL ECONOMIC OR SOCIAL
TRENDS.
SELIGMAN LARGE-CAP VALUE FUND
SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING IN EQUITIES OF LARGE
COMPANIES, DEEMED TO BE "VALUE" COMPANIES BY THE INVESTMENT MANAGER.
SELIGMAN COMMON STOCK FUND
SEEKS FAVORABLE, BUT NOT THE HIGHEST, CURRENT INCOME AND LONG-TERM GROWTH OF
BOTH INCOME AND CAPITAL, WITHOUT EXPOSING CAPITAL TO UNDUE RISK.
SELIGMAN HENDERSON INTERNATIONAL FUND SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING IN SECURITIES OF MEDIUM- TO LARGE-SIZED COMPANIES, PRIMARILY IN THE
DEVELOPED MARKETS OUTSIDE THE US.
BALANCED
- --------------------------------------------------------------------------------
SELIGMAN INCOME FUND
SEEKS HIGH CURRENT INCOME AND IMPROVEMENT IN CAPITAL VALUE OVER THE LONG TERM,
CONSISTENT WITH PRUDENT RISK OF CAPITAL.
FIXED-INCOME
INCOME
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND FUND
SEEKS TO MAXIMIZE CURRENT INCOME BY INVESTING IN A DIVERSIFIED PORTFOLIO OF
HIGH-YIELDING, HIGH-RISK CORPORATE BONDS, COMMONLY REFERRED TO AS "JUNK BONDS."
SELIGMAN U.S. GOVERNMENT SECURITIES FUND
SEEKS HIGH CURRENT INCOME PRIMARILY BY INVESTING IN A DIVERSIFIED PORTFOLIO OF
SECURITIES GUARANTEED BY THE US GOVERNMENT, ITS AGENCIES, OR INSTRUMENTALITIES,
WHICH HAVE MATURITIES GREATER THAN ONE YEAR.
MUNICIPAL
- --------------------------------------------------------------------------------
SELIGMAN MUNICIPAL FUNDS:
NATIONAL FUND
SEEKS MAXIMUM INCOME, EXEMPT FROM REGULAR FEDERAL INCOME TAXES.
STATE-SPECIFIC FUNDS:*
SEEK TO MAXIMIZE INCOME EXEMPT FROM REGULAR FEDERAL INCOME TAXES AND FROM
REGULAR INCOME TAXES IN THE DESIGNATED STATE.
CALIFORNIA LOUISIANA NEW JERSEY
OHIGH-YIELD MARYLAND NEW YORK
OQUALITY MASSACHUSETTS NORTH CAROLINA
COLORADO MICHIGAN OHIO
FLORIDA MINNESOTA OREGON
GEORGIA MISSOURI PENNSYLVANIA
SOUTH CAROLINA
* A small portion of income may be subject to state taxes.
MONEY MARKET
- --------------------------------------------------------------------------------
SELIGMAN CASH MANAGEMENT FUND
SEEKS TO PRESERVE CAPITAL AND TO MAXIMIZE LIQUIDITY AND CURRENT INCOME, BY
INVESTING ONLY IN HIGH-QUALITY MONEY MARKET SECURITIES HAVING A MATURITY OF 90
DAYS OR LESS. THE FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER
SHARE.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand the financial performance
of the Fund's Classes for the past five and one-half years or, if less than five
and one-half years, the period of the Class's operations. Class C is a new
Class, effective June 1, 1999, so financial highlights are not available.
Certain information reflects financial results for a single share of a Class
that was held throughout the periods shown. "Total return" shows the rate that
you would have earned (or lost) on an investment in the Fund, assuming you
reinvested all your capital gain distributions. Total returns do not reflect any
sales charges. Deloitte & Touche LLP, independent auditors, have audited this
information. Their reports, along with the Fund's financial statements, are
included in the Fund's Annual and Mid-Year Reports, which are available upon
request.
CLASS A
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED -----------------------------------------------------
MARCH 31, 1999 1998 1997 1996 1995 1994
-------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period $12.44 $17.55 $15.38 $14.04 $11.62 $12.83
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (0.07) (0.16) (0.16) (0.13) (0.06) (0.08)
Net gains or losses on securities (both
realized and unrealized) (0.34) (3.32) 3.20 1.95 3.87 1.10
------ ------ ------ ------ ------ ------
Total from investment operations (0.41) (3.48) 3.04 1.82 3.81 1.02
------ ------ ------ ------ ------ ------
Less distributions:
Distributions (from capital gains) -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
Total distributions -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
Net asset value, end of period $12.03 $12.44 $17.55 $15.38 $14.04 $11.62
====== ====== ====== ====== ====== ======
TOTAL RETURN: (3.30)% (21.32)% 21.19% 13.40% 36.80% 9.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $274,680 $379,945 $568,261 $523,737 $272,122 $58,478
Ratio of expenses to average net assets 1.56%+ 1.47% 1.52% 1.56% 1.43% 1.34%
Ratio of net income to average
net assets (1.07)%+ (1.05)% (1.10)% (0.91)% (0.50)% (0.87)%
Portfolio turnover rate 31.33% 83.90% 97.37% 59.36% 71.52% 124.76%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
+ Annualized
15
<PAGE>
<TABLE>
<CAPTION>
CLASS B YEAR ENDED
SIX MONTHS SEPTEMBER 30, 4/22/96**
ENDED ------------------ TO
MARCH 31, 1999 1998 1997 9/30/96
-------------- ------ ------ -------
<S> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period $11.66 $16.68 $14.78 $14.55
------ ------ ------ ------
Income from investment operations:
Net investment income (0.11) (0.27) (0.27) (0.11)
Net gains or losses on securities (both
realized and unrealized) (0.31) (3.12) 3.04 0.34
------ ------ ------ ------
Total from investment operations (0.42) (3.39) 2.77 0.23
------ ------ ------ ------
Less Distributions:
Distributions (from capital gains) -- (1.63) (0.87) --
------ ------ ------ ------
Total distributions -- (1.63) (0.87) --
------ ------ ------ ------
Net asset value, end of period $11.24 $11.66 $16.68 $14.78
====== ====== ====== ======
TOTAL RETURN: (3.60)% (21.95)% 20.17% 1.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $55,851 $67,199 $69,869 $24,016
Ratio of expenses to average net assets 2.32%+ 2.24% 2.30% 2.45%+
Ratio of net income to average net assets (1.83)%+ (1.82)% (1.88)% (1.80)%+
Portfolio turnover rate 31.33% 83.90% 97.37% 59.36%++
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Commencement of offering of shares.
+ Annualized.
++ For the year ended September 30, 1996.
<TABLE>
<CAPTION>
CLASS D SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED -----------------------------------------------------
MARCH 31, 1999 1998 1997 1996 1995 1994
-------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period $11.67 $16.69 $14.77 $13.61 $11.40 $12.80
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (0.11) (0.27) (0.27) (0.24) (0.15) (0.23)
Net gains or losses on securities (both
realized and unrealized) (0.32) (3.12) 3.06 1.88 3.75 1.06
------ ------ ------ ------ ------ ------
Total from investment operations (0.43) (3.39) 2.79 1.64 3.60 0.83
------ ------ ------ ------ ------ ------
Less Distributions:
Distributions (from capital gains) -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
Total distributions -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
Net asset value, end of period $11.24 $11.67 $16.69 $14.77 $13.61 $11.40
====== ====== ====== ====== ====== ======
TOTAL RETURN: (3.68)% (21.94)% 20.32% 12.47% 35.53% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $179,299 $263,900 $390,904 $337,327 $145,443 $9,318
Ratio of expenses to average net assets 2.32%+ 2.24% 2.30% 2.35% 2.29% 2.72%
Ratio of net income to average net assets (1.83)%+ (1.82)% (1.88)% (1.70)% (1.35)% (2.25)%
Portfolio turnover rate 31.33% 83.90% 97.37% 59.36% 71.52% 124.76%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
+ Annualized
16
<PAGE>
HOW TO CONTACT US
THE FUND Write: Corporate Communications/
Investor Relations Department
J.& W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
YOUR REGULAR
(NON-RETIREMENT)
ACCOUNT Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
YOUR RETIREMENT
ACCOUNT Write: Retirement Plan Services
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 445-1777
- --------------------------------------------------------------------------------
24-hour telephone access is available by dialing (800) 622-4597 on a touchtone
telephone. You will have instant access to price, yield, account balance, most
recent transaction, and other information.
- --------------------------------------------------------------------------------
17
<PAGE>
FOR MORE INFORMATION
THE FOLLOWING INFORMATION IS AVAILABLE WITHOUT CHARGE UPON REQUEST: CALL
TOLL-FREE (800) 221-2450 IN THE US OR (212) 682-7600 OUTSIDE THE US.
STATEMENT OF ADDITIONAL INFORMATION (SAI) CONTAINS ADDITIONAL INFORMATION ABOUT
THE FUND. IT IS ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) AND IS
INCORPORATED BY REFERENCE INTO (IS LEGALLY PART OF) THIS PROSPECTUS.
ANNUAL/SEMI-ANNUAL REPORTS CONTAIN ADDITIONAL INFORMATION ABOUT THE FUND'S
INVESTMENTS. IN THE FUND'S ANNUAL REPORT, YOU WILL FIND A DISCUSSION OF THE
MARKET CONDITIONS AND INVESTMENT STRATEGIES THAT SIGNIFICANTLY AFFECTED THE
FUND'S PERFORMANCE DURING ITS LAST FISCAL YEAR.
SELIGMAN ADVISORS, INC.
AN AFFILIATE OF
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (800) SEC-0330. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing: Public Reference Section of the SEC, Washington, DC 20549-6009.
SEC FILE NUMBER: 811-4078
<PAGE>
SELIGMAN FRONTIER FUND, INC.
Statement of Additional Information
June 1, 1999
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of Seligman Frontier Fund, Inc.,
dated June 1, 1999. This SAI, although not in itself a prospectus, is
incorporated by reference into the Prospectus in its entirety. It should be read
in conjunction with the Prospectus, which you may obtain by writing or calling
the Fund at the above address or telephone numbers.
The financial statements and notes included in the Fund's Annual Report and
Mid-Year Report, and the Independent Auditors' Reports thereon, are incorporated
herein by reference. The Annual Report and Mid-Year Report will be furnished to
you without charge if you request a copy of this SAI.
Table of Contents
Fund History .............................................................. 2
Description of the Fund and its Investments and Risks ..................... 2
Management of the Fund .................................................... 5
Control Persons and Principal Holders of Securities ....................... 10
Investment Advisory and Other Services .................................... 10
Brokerage Allocation and Other Practices .................................. 16
Capital Stock and Other Securities ........................................ 17
Purchase, Redemption, and Pricing of Shares ............................... 18
Taxation of the Fund ...................................................... 23
Underwriters .............................................................. 24
Calculation of Performance Data ........................................... 26
Financial Statements ...................................................... 28
General Information ....................................................... 28
Appendix .................................................................. 29
EQFR1A
<PAGE>
Fund History
The Fund was incorporated under the laws of the state of Maryland on July 9,
1984.
Description of the Fund and Its Investments and Risks
Classification
The Fund is a diversified open-end management investment company, or mutual
fund.
Investment Strategies and Risks
The following information regarding the Fund's investments and risks supplements
the information contained in the Fund's Prospectus.
Foreign Securities. The Fund may invest in commercial paper and certificates of
deposit issued by foreign banks and may invest either directly or through
American Depositary Receipts (ADRs) in other securities of foreign issuers.
Foreign investments may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. There may be less information
available about a foreign company than about a US company and foreign companies
may not be subject to reporting standards and requirements comparable to those
applicable to US companies. Foreign securities may not be as liquid as US
securities and there may be delays and risks attendant in local settlement
procedures. Securities of foreign companies may involve greater market risk than
securities of US companies, and foreign brokerage commissions and custody fees
are generally higher than those in the United States. Investments in foreign
securities may also be subject to local economic or political risks, political
instability, the possible nationalization of issuers and the risk of
expropriation or restrictions on the repatriation of proceeds of sale. In
addition, foreign investments may be subject to withholding and other taxes.
ADRs, which are traded in dollars on US Exchanges or over-the-counter, are
issued by domestic banks and evidence ownership of securities issued by foreign
corporations. The Fund may invest up to 10% of its total assets in foreign
securities that it holds directly, but this 10% limit does not apply to foreign
securities held through ADRs or to commercial paper and certificates of deposit
issued by foreign banks.
Investment income received by the Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries which entitle the Fund to
a reduced rate of such taxes or exemption from taxes on such income. It is
impossible to determine the effective rate of foreign tax in advance since the
amounts of the Fund's assets to be invested within various countries is not
known.
Repurchase Agreements. The Fund may enter into repurchase agreements with
commercial banks and broker/dealers as a short-term cash management tool. A
repurchase agreement is an agreement under which the Fund acquires a security,
generally a US Government obligation, subject to resale at an agreed upon price
and date. The resale price reflects an agreed upon interest rate effective for
the period of time the Fund holds the security and is unrelated to the interest
rate on the security. The Fund's repurchase agreements will at all times be
fully collateralized.
Repurchase agreements could involve certain risks in the event of bankruptcy or
other default by the seller, including possible delays and expenses in
liquidating the securities underlying the agreement, a decline in value of the
underlying securities and a loss of interest. Repurchase agreements are
typically entered into for periods of one week or less. As a matter of
fundamental policy, the Fund will not enter into repurchase agreements of more
than one week's duration if more than 10% of its net assets would be so
invested.
Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities, including restricted securities (i.e., securities not readily
marketable without registration under the Securities Act of 1933 (1933 Act)) and
other securities that are not readily marketable. The Fund may purchase
restricted securities that can be offered and sold to "qualified institutional
buyers" under Rule 144A of the 1933
2
<PAGE>
Act, and the Fund's Board of Directors, may determine, when appropriate, that
specific Rule 144A securities are liquid and not subject to the 15% limitation
on illiquid securities. Should the Board of Directors make this determination,
it will carefully monitor the security (focusing on such factors, among others,
as trading activity and availability of information) to determine that the Rule
144A security continues to be liquid. It is not possible to predict with
assurance exactly how the market for Rule 144A securities will further evolve.
This investment practice could have the effect of increasing the level of
illiquidity in the Fund, if and to the extent that qualified institutional
buyers become for a time uninterested in purchasing Rule 144A securities.
Borrowing. The Fund may borrow money only from banks and only for temporary or
emergency purposes (but not for the purchase of portfolio securities) in an
amount not in excess of 10% of the value of its total assets. The Fund will not
purchase additional portfolio securities if the Fund has outstanding borrowings
in excess of 5% of the value of its total assets.
Put Options. The Fund may purchase put options on portfolio securities in an
attempt to provide a hedge against a decrease in the market price of an
underlying security held by the Fund. The Fund will not purchase options for
speculative purposes.
Purchasing a put option gives the Fund the right to sell, and obligates the
writer to buy, the underlying security at the exercise price at any time during
the option period. This hedge protection is provided during the life of the put
option since the Fund, as holder of the put option, can sell the underlying
security at the put exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be profitable, the market
price of the underlying security must decline sufficiently below the exercise
price to cover the premium and transaction costs. By using put options in this
manner, the Fund will reduce any profit it might otherwise have realized in the
underlying security by the premium paid for the put option and by transaction
costs.
Because a purchased put option gives the purchaser a right and not an
obligation, the purchaser is not required to exercise the option. If the
underlying position incurs a gain, the Fund would let the option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option premium and transaction costs.
When the Fund purchases an option, it is required to pay a premium to the party
writing the option and a commission to the broker selling the option. If the
option is exercised by the Fund, the premium and the commission paid may be
greater than the amount of the brokerage commission charged if the security were
to be purchased or sold directly. The cost of the put option is limited to the
premium plus commission paid. The Fund's maximum financial exposure will be
limited to these costs.
The Fund may purchase both listed and over-the-counter put options. The Fund
will be exposed to the risk of counterparty nonperformance in the case of
over-the-counter put options.
Put options on securities may not be available to the Fund on reasonable terms
in many situations and the Fund may frequently choose not to purchase options
even when they are available. The Fund's ability to engage in option
transactions may be limited by tax considerations.
Rights and Warrants. The Fund may invest in common stock rights and warrants
believed by the investment manager to provide capital appreciation
opportunities. Common stock rights and warrants received as part of a unit or
attached to securities purchased (i.e., not separately purchased) are not
included in the Fund's investment restrictions regarding such securities.
The Fund may not invest in rights and warrants if, at the time of acquisition,
the investment in rights and warrants would exceed 5% of the Fund's net assets,
valued at the lower of cost or market. In addition, no more than 2% of net
assets may be invested in warrants not listed on the New York or American Stock
Exchanges. For purposes of this restriction, rights and warrants acquired by the
Fund in units or attached to securities may be deemed to have been purchased
without cost.
3
<PAGE>
Lending of Portfolio Securities. The Fund may lend portfolio securities to
broker/dealers or other institutions, if the investment manager believes such
loans will be beneficial to the Fund. The borrower must maintain with the Fund
cash or equivalent collateral equal to at least 100% of the market value of the
securities loaned. During the time portfolio securities are on loan, the
borrower pays the Fund any dividend or interest paid on the securities. The Fund
may invest the collateral and earn additional income or receive an agreed upon
amount of interest income from the borrower. Loans made by the Fund will
generally be short-term. Loans are subject to termination at the option of the
Fund or the borrower. The Fund may pay reasonable administrative and custodial
fees in connection with a loan and may pay a negotiated portion of the interest
earned on the collateral to the borrower or placing broker. The Fund does not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to the
investment. The Fund may lose money if a borrower defaults on its obligation to
return securities and the value of the collateral held by the Fund is
insufficient to replace the loaned securities. In addition, the Fund is
responsible for any loss that might result from its investment of the borrower's
collateral.
Except as otherwise specifically noted above, the Fund's investment strategies
are not fundamental and the Fund, with the approval of the Board of Directors,
may change such strategies without the vote of shareholders.
Fund Policies
The Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of the Fund's outstanding voting securities. Under these policies, the
Fund may not:
o Borrow money, except from banks for temporary or emergency purposes (but
not for the purchase of portfolio securities) in an amount not to exceed
15% of the value of its total assets. The Fund will not purchase additional
portfolio securities if the Fund has outstanding borrowings in excess of 5%
of the value of its total assets;
o Purchase securities on "margin," or sell "short", or write or purchase put,
call, straddle or spread options, except that the Fund may make margin
deposits on future contracts, and may purchase put options solely for the
purpose of hedging against a decline in the price of securities held in the
Fund's portfolio;
o Invest more than 5% of its total assets, at market value, in securities of
any one issuer other than the US Government, its agencies or
instrumentalities, buy more than 10% of the voting securities of any
issuer, or invest to control or manage any company;
o Invest more than 5% of the value of its total assets, at market value, in
securities of any company which, with their predecessors, have been in
operation less than three continuous years, provided, however, that
securities guaranteed by a company that (including predecessors) has been
in operation at least three continuous years shall be excluded from this
calculation;
o Invest more than 25% of the value of its total assets in any one industry;
o Invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
for the purpose of hedging the Fund's obligations under the Deferred
Compensation Plan for Directors;
o Purchase or sell commodities and commodity contracts other than stock index
futures contracts or purchase or hold real estate;
o Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the Fund individually owning beneficially more
than 0.5% of the securities of that issuer own in the aggregate more than
5% of such securities;
4
<PAGE>
o Underwrite the securities of other issuers except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security; or
o Make loans, except loans of portfolio securities (which loans would be
fully collateralized and marked to market daily) and except to the extent
the purchase of notes, bonds or other evidences of indebtedness, or the
entry into repurchase agreements may be considered loans.
o Invest more than 5% of the value of its net assets, valued at the lower of
cost or market, in warrants, of which no more than 2% of net assets may be
invested in warrants not listed on the New York or American Stock
Exchanges.
The Fund also may not change its investment objective without shareholder
approval.
Under the Investment Company Act of 1940, as amended (1940 Act), a "vote of a
majority of the outstanding voting securities" of the Fund means the affirmative
vote of the lesser of (l) more than 50% of the outstanding shares of the Fund;
or (2) 67% or more of the shares present at a shareholders' meeting if more than
50% of the outstanding shares are represented at the meeting in person or by
proxy.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, the Fund may invest up to 100% of its assets in cash or cash
equivalents, including, but not limited to, prime commercial paper, bank
certificates of deposit, bankers' acceptances, or repurchase agreements for such
securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. The Fund's investments in foreign cash equivalents will be limited
to those that, in the opinion of the investment manager, equate generally to the
standards established for US cash equivalents. Investments in bank obligations
will be limited at the time of investment to the obligations of the 100 largest
domestic banks in terms of assets which are subject to regulatory supervision by
the US Government or state governments, and the obligations of the 100 largest
foreign banks in terms of assets with branches or agencies in the United States.
Portfolio Turnover
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned during the fiscal year.
Securities whose maturity or expiration date at the time of acquisition were one
year or less are excluded from the calculation. The Fund's portfolio turnover
rates for the fiscal years ended September 30, 1998 and 1997 were 83.90% and
97.37%, respectively.
Management of the Fund
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Fund.
Management Information
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years are shown below. Each
Director who is an "interested person" of the Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
6
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
William C. Morris* Director, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(61) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc, Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; and Director, Seligman Data Corp.,
Kerr-McGee Corporation, diversified energy company.
Formerly, Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
Brian T. Zino* Director, President and Director and President, J. & W. Seligman & Co.
(46) Member of the Executive Incorporated; President (with the exception of
Committee Seligman Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc.) and Director or Trustee,
the Seligman Group of investment companies; Chairman,
Seligman Data Corp.; Member of the Board of Governors
of the Investment Company Institute and Director, ICI
Mutual Insurance Company; Seligman Advisors, Inc., and
Seligman Services, Inc.
Richard R. Schmaltz* Director and Member of the Director and Managing Director, Director of
(58) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of
investment companies (except Seligman Cash
Management Fund, Inc.); Director, Seligman
Henderson Co., and Trustee Emeritus of Colby
College. Formerly, Director, Investment Research
at Neuberger & Berman from May 1993 to September
1996.
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts
(69) University; Director or Trustee, the Seligman Group
Tufts University of investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; Governor of the Center for
Medford, MA 02155 Creative Leadership; Director; Raytheon Co.,
electronics; National Defense University; and the
Institute for Defense Analysis. Formerly, Director,
USLIFE Corporation, life insurance; Ambassador, U.S.
State Department for negotiations in Bosnia;
Distinguished Policy Analyst at Ohio State University
and Olin Distinguished Professor of National Security
Studies at the United States Military Academy. From
June 1987 to June 1992, he was the Supreme Allied
Commander, Europe and the Commander-in-Chief, United
States European Command.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director
(64) or Trustee, the Seligman Group of investment
18 Highland Circle companies; Trustee, the Committee for Economic
Bronxville, NY 10708 Development; and Chairman, The Rockefeller
Foundation, charitable foundation. Formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, New York Telephone
Company and International Research and Exchange
Board, intellectual exchanges.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(66) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Seligman Group of investment companies; Director,
Suite 805E Kimberly-Clark Corporation, consumer products; Bank
Oklahoma City, OK 73112 of Oklahoma Holding Company; Baptist Medical Center;
Oklahoma Chapter of the Nature Conservancy; Oklahoma
Medical Research Foundation; and National Boys and
Girls Clubs of America; and Member of the Business
Roundtable and National Petroleum Council. Formerly,
Chairman, Oklahoma City Public Schools Foundation;
and Director, Federal Reserve System's Kansas City
Reserve Bank and the Oklahoma City Chamber of
Commerce.
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of investment companies;
Director, Commonwealth New York, NY 10004
Industries, Inc., manufacturers of aluminum sheet
products; the Foreign Policy Association;
Municipal Art Society of New York; the U.S.
Council for International Business; and New York
Presbyterian Hospital; Chairman, American
Australian Association; and New York Presbyterian
Healthcare Network, Inc.; Vice-Chairman, the
U.S.-New Zealand Council; and Member of the
American Law Institute and Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of
(56) investment companies; Trustee, The Geraldine R. Dodge
P.O. Box 449 Foundation, charitable foundation; and Chairman of
Gladstone, NJ 07934 the Board of Trustees of St. George's School
(Newport, RI). Formerly, Director, the National
Association of Independent Schools (Washington, DC).
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris County, investment companies. Formerly, Director, Public
P.O. Box 1945, Morristown, NJ Service Enterprise Group, public utility.
07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment
(71) companies; Director, The Houston Exploration Company;
675 Third Avenue, The Brooklyn Museum, KeySpan Energy Corporation; and
Suite 3004 Public Broadcasting Service; and Trustee, the
New York, NY 10017 Committee for Economic Development. Formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies,
Inc. and Dow Jones & Company, Inc.; Director and
President, Bekaert Corporation; and Co-Chairman,
Mobil Corporation.
Robert L. Shafer Director Retired Vice President, Pfizer Inc.; Director or
(66) Trustee, the Seligman Group of investment companies.
96 Evergreen Avenue, Formerly, Director, USLIFE Corporation.
Rye, NY 10580
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc.;
(64) Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive companies; Director, C-SPAN and CommScope, Inc.,
Dallas, TX 75230 manufacturer of coaxial cables. Formerly, Executive
Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.; and Director, Red Man Pipe and
Supply Company, piping and other materials.
Arsen Mrakovcic Vice President and Portfolio Managing Director, J. & W. Seligman & Co.
(33) Manager Incorporated; Vice President and Portfolio Manager,
two other open-end investment companies in the
Seligman Group of investment companies. Formerly,
Vice President, Investment Officer, J. & W. Seligman
& Co. Incorporated from January 1995 to January 1996
and Portfolio Assistant, J. & W. Seligman & Co.
Incorporated from June 1992 to January 1995.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(42) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies, and Seligman Services,
Inc.; and Vice President and Treasurer, Seligman
International, Inc., and Treasurer, Seligman
Henderson Co.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(34) Regulation and Corporate Secretary, J. & W. Seligman
& Co. Incorporated; Secretary, the Seligman Group of
investment companies, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services, Inc.,
Seligman International, Inc. and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(41) and Seligman Data Corp.
</TABLE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available, and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
Directors and officers of the Fund are also directors and officers of some or
all of the other investment companies in the Seligman Group.
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to Directors (1)(2)
------------------ ------------- ------------- -------------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Richard R. Schmaltz, Director N/A N/A N/A
John R. Galvin, Director $2,092.72 N/A $77,000
Alice S. Ilchman, Director 2,020.85 N/A 70,000
Frank A. McPherson, Director 2,071.44 N/A 75,000
John E. Merow, Director 2,061.67 N/A 74,000
Betsy S. Michel, Director 2,092.72 N/A 77,000
James C. Pitney, Director 2,041.26 N/A 72,000
James Q. Riordan, Director 2,041.26 N/A 72,000
Robert L. Shafer, Director 2,041.26 N/A 72,000
James N. Whitson, Director 2,092.72(d) N/A 77,000(d)
</TABLE>
- ----------
(1) For the Fund's fiscal year ended September 30, 1998. Effective January 16,
1998, the per meeting fee for Directors was increased by $1,000, which is
allocated among all Funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of eighteen investment
companies.
(d) Deferred.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. The Fund has adopted a Deferred Compensation Plan
under which a director who has elected deferral of his or her fees may choose a
rate of return equal to either (1) the interest rate on short-term Treasury
bills, or (2) the rate of return on the shares of any of the investment
companies advised by J. & W. Seligman & Co. Incorporated, as designated by the
director. The cost of such fees and earnings is included in directors' fees and
expenses, and the accumulated balance thereof is included in other liabilities
in the Fund's financial statements. The total amount of deferred compensation
(including earnings) payable in respect of the Fund to Mr. Whitson as of
September 30, 1998 was $13,492.
9
<PAGE>
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation in the amounts of $22,181 and $13,644,
respectively, as of September 30, 1998.
The Fund may, but is not obligated to, purchase shares of the Seligman Group of
investment companies to hedge its obligations in connection with the Fund's
Deferred Compensation Plan.
Sales Charges
Class A shares of the Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Fund, the other investment companies in the Seligman Group, and J. & W.
Seligman & Co. Incorporated and its affiliates. Family members are defined to
include lineal descendants and lineal ancestors, siblings (and their spouses and
children) and any company or organization controlled by any of the foregoing.
Such sales may also be made to employee benefit plans and thrift plans for such
persons and to any investment advisory, custodial, trust or other fiduciary
account managed or advised by J. & W. Seligman & Co. Incorporated or any
affiliate. The sales may be made for investment purposes only, and shares may be
resold only to the Fund.
Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.
Control Persons and Principal Holders of Securities
Control Persons
As of May 14, 1999, there was no person or persons who controlled the Fund,
either through a significant ownership of shares or any other means of control.
Principal Holders
As of May 14, 1999, 14.37% of the Fund's Class A capital stock then outstanding,
34.29% of the Fund's Class B capital stock then outstanding and 45.43% of the
Fund's Class D capital stock then outstanding, were owned of record by MLPF&S
for the Sole Benefit of Its Customers, Attn Fund Administrator, 4800 Deer Lake
Drive East, 3rd Floor, Jacksonville, FL 32246.
Management Ownership
Directors and officers of the Fund as a group owned less than 1% of the Fund's
Class A capital stock as of May 14, 1999. As of the same date, no Directors or
officers owned shares of the Fund's Class B or Class D capital stock.
Investment Advisory and Other Services
Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages the Fund. Seligman is a
successor firm to an investment banking business founded in 1864 which has
thereafter provided investment services to individuals, families, institutions,
and corporations. On December 29, 1988, a majority of the outstanding voting
securities of Seligman was purchased by Mr. William C. Morris and a simultaneous
recapitalization of Seligman occurred. See Appendix for further history of
Seligman.
All of the officers of the Fund listed above are officers or employees of
Seligman. Their affiliations with the Fund and with Seligman are provided under
their principal business occupations.
The Fund pays Seligman a management fee for its services, calculated daily and
payable monthly. The management fee is equal to .95% per annum of the Fund's
average daily net assets on the first $750 million of net assets and .85% per
annum of the Fund's average daily net assets in excess of $750 million. For the
fiscal year ended September 30, 1998, the Fund paid Seligman $8,859,463, equal
to
10
<PAGE>
0.93% per annum of its average daily net assets. For the fiscal year ended
September 30, 1997, the Fund paid Seligman $8,127,464, equal to .94% per annum
of its average daily net assets, and for the fiscal year ended September 30,
1996, the Fund paid Seligman $6,014,692, equal to .92% per annum of its average
daily net assets.
The Fund pays all of its expenses other than those assumed by Seligman,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, including fees and expenses of qualifying the Fund
and its shares under Federal and State securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by or serving as a Director of the Manager or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses.
The Management Agreement provides that Seligman will not be liable to the Fund
for any error of judgment or mistake of law, or for any loss arising out of any
investment, or for any act or omission in performing its duties under the
Agreement, except for willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Agreement.
The Management Agreement was initially approved by the Board of Directors at a
Meeting held on October 11, 1988 and by the shareholders at a meeting held on
December 15, 1988. Amendments to the Management Agreement, effective January 1,
1996, to increase the fee rate payable to the Manager by the Fund, were approved
by the Board of Directors on September 21, 1995 and by the shareholders at a
special meeting held on December 12, 1995. The Management Agreement will
continue in effect until December 31 of each year if (1) such continuance is
approved in the manner required by the 1940 Act (i.e., by a vote of a majority
of the Board of Directors or of the outstanding voting securities of the Fund
and by a vote of a majority of the Directors who are not parties to the
Management Agreement or interested persons of any such party) and (2) Seligman
shall not have notified the Fund at least 60 days prior to December 31 of any
year that it does not desire such continuance. The Management Agreement may be
terminated by the Fund or by Seligman, without penalty, on 60 days' written
notice to Seligman and will terminate automatically in the event of its
assignment. The Fund has agreed to change its name upon termination of the
Management Agreement if continued use of the name would cause confusion in the
context of Seligman's business.
Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. The Code
of Ethics proscribes certain practices with regard to personal securities
transactions and personal dealings, provides a framework for the reporting and
monitoring of personal securities transactions by Seligman's Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, directors and employees (including all portfolio managers) of
Seligman from purchasing or selling any security that the officer, director, or
employee knows or believes (1) was recommended by Seligman for purchase or sale
by any client, including the Fund, within the preceding two weeks, (2) has been
reviewed by Seligman for possible purchase or sale within the preceding two
weeks, (3) is being purchased or sold by any client, (4) is being considered by
a research analyst, (5) is being acquired in a private placement, unless prior
approval has been obtained from Seligman's Compliance Officer, or (6) is being
acquired during an initial or secondary public offering. The Code of Ethics also
imposes a strict standard of confidentiality and requires portfolio managers to
disclose any interest they may have in the securities or issuers that they
recommend for purchase by any client.
The Code of Ethics also prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages; and (2) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
11
<PAGE>
Officers, directors, and employees are required, except under very limited
circumstances, to engage in personal securities transactions through Seligman's
order desk. The order desk maintains a list of securities that may not be
purchased due to a possible conflict with clients. All officers, directors and
employees are also required to disclose all securities beneficially owned by
them on December 31 of each year.
Principal Underwriter
Seligman Advisors, Inc. (Seligman Advisors) an affiliate of Seligman, 100 Park
Avenue, New York, New York 10017, acts as general distributor of the shares of
the Fund and of the other mutual funds in the Seligman Group. Seligman Advisors
is an "affiliated person" (as defined in the 1940 Act) of Seligman, which is
itself an affiliated person of the Fund. Those individuals identified above
under "Management Information" as directors or officers of both the Fund and
Seligman Advisors are affiliated persons of both entities.
Services Provided by the Investment Manager
Under the Management Agreement, dated December 29, 1988, as amended January 1,
1996, subject to the control of the Board of Directors, Seligman manages the
investment of the assets of the Fund, including making purchases and sales of
portfolio securities consistent with the Fund's investment objectives and
policies, and administers its business and other affairs. Seligman provides the
Fund with such office space, administrative and other services and executive and
other personnel as are necessary for Fund operations. Seligman pays all of the
compensation of directors of the Fund who are employees or consultants of
Seligman and of the officers and employees of the Fund. Seligman also provides
senior management for Seligman Data Corp., the Fund's shareholder service agent.
Service Agreements
There are no other management-related service contracts under which services are
provided to the Fund.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise the Fund with respect to its investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of the Fund, as set forth below:
Class A shares:
- ---------------
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
As a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 - $99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more, but you
will be subject to a 1% CDSC if you sell your shares within 18 months.
12
<PAGE>
Class C shares:
- ---------------
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
As a % of as a % of Net As a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000(2) 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
(2) Your purchase of Class C shares must be for less than $1,000,000 because if
you invest $1,000,000 or more, you will pay less in fees and charges if you
buy Class A shares.
Seligman Services, Inc. (Seligman Services), an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares. For the fiscal years ended
September 30, 1998, 1997, and 1996, Seligman Services received commissions in
the amounts of $14,982, $25,093, and $156,157, respectively.
Rule 12b-1 Plan
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under the 12b-1 Plan, the Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class B, Class C, and Class D shares. Payments under the 12b-1 Plan may include,
but are not limited to: (1) compensation to securities dealers and other
organizations (Service Organizations) for providing distribution assistance with
respect to assets invested in the Fund; (2) compensation to Service
Organizations for providing administration, accounting and other shareholder
services with respect to Fund shareholders; and (3) otherwise promoting the sale
of shares of the Fund, including paying for the preparation of advertising and
sales literature and the printing and distribution of such promotional materials
and prospectuses to prospective investors and defraying Seligman Advisors' costs
incurred in connection with its marketing efforts with respect to shares of the
Fund. Seligman, in its sole discretion, may also make similar payments to
Seligman Advisors from its own resources, which may include the management fee
that Seligman receives from the Fund. Payments made by the Fund under the 12b-1
Plan are intended to be used to encourage sales of the Fund, as well as to
discourage redemptions.
Fees paid by the Fund under the 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of the
Fund are allocated between the classes in accordance with a methodology approved
by the Fund's Board of Directors. The Fund may participate in joint distribution
activities with other Seligman funds, and the expenses of such activities will
be allocated among the applicable funds based on relative sales, in accordance
with a methodology approved by the Board.
Class A
Under the 12b-1 Plan, the Fund, with respect to Class A shares, pays quarterly
to Seligman Advisors a service fee at an annual rate of up to .25% of the
average daily net asset value of the Class A shares. These fees are used by
Seligman Advisors exclusively to make payments to Service Organizations which
have entered into agreements with Seligman Advisors. Such Service Organizations
receive from Seligman Advisors a continuing fee of up to .25% on an annual
basis, payable quarterly, of the average daily net assets of Class A shares
attributable to the particular Service Organization for providing personal
service and/or maintenance of shareholder accounts. The fee payable to Service
Organizations from time to time shall, within such limits, be determined by the
Directors of the Fund. The Fund is not obligated to pay Seligman Advisors for
any such costs it incurs in excess of the fee described above. No
13
<PAGE>
expense incurred in one fiscal year by Seligman Advisors with respect to Class A
shares of the Fund may be paid from Class A 12b-1 fees received from the Fund in
any other fiscal year. If the Fund's 12b-1 Plan is terminated in respect of
Class A shares, no amounts (other than amounts accrued but not yet paid) would
be owed by the Fund to Seligman Advisors with respect to Class A shares. The
total amount paid by the Fund to Seligman Advisors in respect of Class A shares
for the fiscal year ended September 30, 1998 was $1,175,841, equivalent to .23%
per annum of the average daily net assets of Class A shares.
Class B
Under the 12b-1 Plan, the Fund, with respect to Class B shares, pays monthly a
12b-1 fee at an annual rate of up to 1% of the average daily net asset value of
the Class B shares. The fee is comprised of (1) a distribution fee equal to .75%
per annum, which is paid directly to a third party, FEP Capital, L.P., to
compensate it for having funded, at the time of sale of Class B shares (i) a 4%
sales commission to Service Organizations and (ii) a payment of up to .25% of
sales to Seligman Advisors to help defray its costs of distributing Class B
shares; and (2) a service fee of up to .25% per annum which is paid to Seligman
Advisors. The service fee is used by Seligman Advisors exclusively to make
payments to Service Organizations which have entered into agreements with
Seligman Advisors. Such Service Organizations receive from Seligman Advisors a
continuing service fee of up to .25% on an annual basis, payable quarterly, of
the average daily net assets of Class B shares attributable to the particular
Service Organization for providing personal service and/or maintenance of
shareholder accounts. The amounts expended by Seligman Advisors or FEP Capital,
L.P. in any one year upon the initial purchase of Class B shares of the Fund may
exceed the 12b-1 fees paid by the Fund in that year. The Fund's 12b-1 Plan
permits expenses incurred in respect of Class B shares in one fiscal year to be
paid from Class B 12b-1 fees received from the Fund in any other fiscal year;
however, in any fiscal year the Fund is not obligated to pay any 12b-1 fees in
excess of the fees described above. Seligman Advisors and FEP Capital, L.P. are
not reimbursed for expenses which exceed such fees. If the Fund's 12b-1 Plan is
terminated in respect of Class B shares, no amounts (other than amounts accrued
but not yet paid) would be owed by that Fund to Seligman Advisors or FEP
Capital, L.P. with respect to Class B shares. The total amount paid by the Fund
in respect of Class B shares for the fiscal year ended September 30, 1998 was
$796,405, equivalent to 1% per annum of the average daily net assets of Class B
shares.
Class C
Under the 12b-1 Plan, the Fund, with respect to Class C shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class C shares. The fee is used by Seligman Advisors as
follows: During the first year following the sale of Class C shares, a
distribution fee of .75% of the average daily net assets attributable to Class C
shares is used, along with any CDSC proceeds during the first eighteen months,
to (1) reimburse Seligman Advisors for its payment at the time of sale of Class
C shares of a 1.25% sales commission to Service Organizations, and (2) pay for
other distribution expenses, including paying for the preparation of advertising
and sales literature and the printing and distribution of such promotional
materials and prospectuses to prospective investors and other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class C shares, a service fee of up to .25% of the average daily net assets
attributable to such Class C shares is used to reimburse Seligman Advisors for
its prepayment to Service Organizations at the time of sale of Class C shares of
a service fee of .25% of the net asset value of the Class C shares sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale). The payment of services fees to
Seligman Advisors is limited to amounts Seligman Advisors actually paid to
Service Organizations at the time of sale as service fees. After the initial
one-year period following a sale of Class C shares, the entire 12b-1 fee
attributable to such Class C shares is paid to Service Organizations for
providing continuing shareholder services and distribution assistance in respect
of the Fund. The Fund did not pay any 12b-1 fees in respect of Class C shares
for the fiscal year ended September 30, 1998 because no Class C shares were
issued or outstanding during such period.
14
<PAGE>
Class D
Under the 12b-1 Plan, the Fund, with respect to Class D shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class D shares. The fee is used by Seligman Advisors as
follows: During the first year following the sale of Class D shares, a
distribution fee of .75% of the average daily net assets attributable to such
Class D shares is used, along with any CDSC proceeds, to (1) reimburse Seligman
Advisors for its payment at the time of sale of Class D shares of a .75% sales
commission to Service Organizations, and (2) pay for other distribution
expenses, including paying for the preparation of advertising and sales
literature and the printing and distribution of such promotional materials and
prospectuses to prospective investors and other marketing costs of Seligman
Advisors. In addition, during the first year following the sale of Class D
shares, a service fee of up to .25% of the average daily net assets attributable
to such Class D shares is used to reimburse Seligman Advisors for its prepayment
to Service Organizations at the time of sale of Class D shares of a service fee
of .25% of the net asset value of the Class D shares sold (for shareholder
services to be provided to Class D shareholders over the course of the one year
immediately following the sale). The payment of service fees to Seligman
Advisors is limited to amounts Seligman Advisors actually paid to Service
Organizations at the time of sale as service fees. After the initial one-year
period following a sale of Class D shares, the entire 12b-1 fee attributable to
such Class D shares is paid to Service Organizations for providing continuing
shareholder services and distribution assistance in respect of the Fund. The
total amount paid by the Fund in respect of Class D shares for the fiscal year
ended September 30, 1998 was $3,588,957, equivalent to 1% per annum of the
average daily net assets of Class D shares.
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year.
The Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class D shares in one fiscal year to be paid from Class D 12b-1 fees in any
other fiscal year; however, in any fiscal year the Fund is not obligated to pay
any 12b-1 fees in excess of the fees described above.
As of September 30, 1998, Seligman Advisors has incurred $308,875 of
unreimbursed expenses in respect of the Fund's Class D shares. This amount is
equal to .12% of the net assets of Class D at September 30, 1998.
If the 12b-1 Plan is terminated in respect of Class D shares of the Fund, no
amounts (other than amounts accrued by not yet paid) would be owed by the Fund
to Seligman Advisors with respect to Class D shares.
Payments made by the Fund under the 12b-1 Plan for its fiscal year ended
September 30, 1998, were spent on the following activities in the following
amounts (no Class C shares were outstanding during such fiscal year):
Class A Class B Class D
------- ------- -------
Compensation to underwriters -- $ 4,689 $ 618,914
Compensation to broker/dealers $1,175,841 $ 199,044 $2,970,043
Other* -- $ 592,672 --
* Payment is made to FEP Capital, L. P. to compensate it for having funded at
the time of sale, payments to broker/dealers and underwriters.
The 12b-1 Plan was approved on March 19, 1992 by the Directors, including a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund and who have no direct or indirect financial interest in
the operation of the 12b-1 Plan or in any agreement related to the 12b-1 Plan
(the "Qualified Directors") and was approved by shareholders of the Fund at a
Special Meeting of the Shareholders held on May 1, 1992. The 12b-1 Plan became
effective in respect of the Class A shares
15
<PAGE>
on June 1, 1992. The 12b-1 Plan was approved in respect of the Class B shares on
March 21, 1996 by the Board of Directors of the Fund, including a majority of
the Qualified Directors, and became effective in respect of the Class B shares
on April 22, 1996. The 12b-1 Plan was approved in respect of the Class D shares
on March 18, 1993 by the Directors, including a majority of the Qualified
Directors, and became effective in respect of the Class D shares on May 1, 1993.
The 12b-1 Plan was approved in respect of the Class C shares on May 20, 1999 by
the Directors, including a majority of the Qualified Directors, and became
effective in respect of the Class C shares on June 1, 1999. The 12b-1 Plan will
continue in effect until December 31 of each year so long as such continuance is
approved annually by a majority vote of both the Directors of the Fund and the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval. The 12b-1 Plan may not be amended to increase
materially the amounts payable to Service Organizations with respect to a class
without the approval of a majority of the outstanding voting securities of the
class. If the amount payable in respect of Class A shares under the 12b-1 Plan
is proposed to be increased materially, the Fund will either (1) permit holders
of Class B shares to vote as a separate class on the proposed increase or (2)
establish a new class of shares subject to the same payment under the 12b-1 Plan
as existing Class A shares, in which case the Class B shares will thereafter
convert into the new class instead of into Class A shares. No material amendment
to the 12b-1 Plan may be made except by vote of a majority of both the Directors
and the Qualified Directors.
The 12b-1 Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the 12b-1 Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be made by such disinterested Directors. The
12b-1 Plan is reviewed by the Directors annually.
Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor and receives compensation from
the Fund pursuant to the 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services. For the fiscal
years ended September 30, 1998, 1997, and 1996, Seligman Services received
distribution and service fees from the Fund pursuant to its 12b-1 Plan of
$87,176, $65,586, and $73,340, respectively.
Brokerage Allocation and Other Practices
Brokerage Transactions
Seligman will seek the most favorable price and execution in the purchase and
sale of portfolio securities of the Fund. When two or more of the investment
companies in the Seligman Group or other investment advisory clients of Seligman
desire to buy or sell the same security at the same time, the securities
purchased or sold are allocated by Seligman in a manner believed to be equitable
to each. There may be possible advantages or disadvantages of such transactions
with respect to price or the size of positions readily obtainable or saleable.
In over-the-counter markets, the Fund deals with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
The Fund may buy securities from or sell securities to dealers acting as
principal, except dealers with which its directors and/or officers are
affiliated.
For the fiscal years ended September 30, 1998, 1997, and 1996, the Fund paid
total brokerage commissions to others for execution, research and statistical
services in the amounts of $1,769,832, $1,446,040, and $956,356, respectively.
The amount of brokerage commissions paid by the Fund has increased materially
from 1996 due to an increase in portfolio turnover.
Commissions
For the fiscal years ended September 30, 1998, 1997, and 1996, the Fund did not
execute any portfolio transactions with, and therefore did not pay any
commissions to, any broker affiliated with either the Fund, Seligman, or
Seligman Advisors.
16
<PAGE>
Brokerage Selection
Consistent with seeking the most favorable price and execution when buying or
selling portfolio securities, Seligman may give consideration to the research,
statistical, and other services furnished by brokers or dealers to Seligman for
its use, as well as the general attitude toward and support of investment
companies demonstrated by such brokers or dealers. Such services include
supplemental investment research, analysis, and reports concerning issuers,
industries, and securities deemed by Seligman to be beneficial to the Fund. In
addition, Seligman is authorized to place orders with brokers who provide
supplemental investment and market research and security and economic analysis
although the use of such brokers may result in a higher brokerage charge to the
Fund than the use of brokers selected solely on the basis of seeking the most
favorable price and execution and although such research and analysis may be
useful to Seligman in connection with its services to clients other than the
Fund.
Directed Brokerage
During its fiscal year ended September 30, 1998 neither the Fund nor Seligman
directed any of the Fund's brokerage transactions to a broker because of
research services provided.
Regular Broker-Dealers
During its fiscal year ended September 30, 1998, the Fund did not acquire
securities of its regular brokers or dealers (as defined in Rule 10b-1 under the
1940 Act) or of their parents.
Capital Stock and Other Securities
Capital Stock
The Fund is authorized to issue 500,000,000 shares of capital stock, each with a
par value of $0.10, divided into four classes, designated Class A common stock,
Class B common stock, Class C common stock, and Class D common stock. Each share
of the Fund's Class A, Class B, Class C, and Class D common stock is equal as to
earnings, assets, and voting privileges, except that each class bears its own
separate distribution and, potentially, certain other class expenses and has
exclusive voting rights with respect to any matter to which a separate vote of
any class is required by the 1940 Act or Maryland law. The Fund has adopted a
multiclass plan pursuant to Rule 18f-3 under the 1940 Act permitting the
issuance and sale of multiple classes of common stock. In accordance with the
Articles of Incorporation, the Board of Directors may authorize the creation of
additional classes of common stock with such characteristics as are permitted by
the multiclass plan and Rule 18f-3. The 1940 Act requires that where more than
one class exists, each class must be preferred over all other classes in respect
of assets specifically allocated to such class. All shares have noncumulative
voting rights for the election of directors. Each outstanding share is fully
paid and non-assessable, and each is freely transferable. There are no
liquidation, conversion, or preemptive rights.
Other Securities
The Fund has no authorized securities other than common stock.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Class A shares may be purchased at a price equal to the next determined net
asset value per share, plus an initial sales charge.
17
<PAGE>
Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:
Volume Discounts are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge schedule set forth in the Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
and the total net asset value of shares of Seligman Cash Management Fund which
were acquired through an exchange of shares of another Seligman mutual fund on
which there was an initial sales charge at the time of purchase to determine
reduced sales charges in accordance with the schedule in the prospectus. The
value of the shares owned, including the value of shares of Seligman Cash
Management Fund acquired in an exchange of shares of another Seligman mutual
fund on which there was an initial sales charge at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Advisors is notified by an investor or a dealer of the amount owned by the
investor at the time the purchase is made and is furnished sufficient
information to permit confirmation.
A Letter of Intent allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales charge of the other Seligman mutual
funds already owned and the total net asset value of shares of Seligman Cash
Management Fund which were acquired through an exchange of shares of another
Seligman mutual fund on which there was an initial sales charge at the time of
purchase. Reduced sales charges also may apply to purchases made within a
13-month period starting up to 90 days before the date of execution of a letter
of intent.
Persons Entitled to Reductions. Reductions in initial sales charges apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code of 1986,
as amended, organizations tax exempt under Section 501(c)(3) or (13) of the
Internal Revenue Code, and non-qualified employee benefit plans that satisfy
uniform criteria are considered "single persons" for this purpose. The uniform
criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports, and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The table of sales charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans" which have
at least (1) $500,000 invested in the Seligman Group of mutual funds or (2) 50
eligible employees to whom such plan is made available. Such sales must be made
in connection with a payroll deduction system of plan funding or other systems
acceptable to Seligman Data Corp., the Fund's shareholder service agent.
"Eligible employee benefit plan" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Fund shares. Sales of shares
to such plans must be made in connection with a payroll deduction system of plan
funding or other
18
<PAGE>
system acceptable to Seligman Data Corp. Section 403(b) plans sponsored by
public educational institutions are not eligible for net asset value purchases
based on the aggregate investment made by the plan or number of eligible
employees.
Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman Data
Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:
(1) to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in Fund
shares;
(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;
(4) to financial institution trust departments;
(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;
(6) to accounts of financial institutions or broker/dealers that charge account
management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts;
(7) pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the
Fund;
(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside directors;
(9) to certain "eligible employee benefit plans" as discussed above;
(10) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and
(11) in connection with sales pursuant to a 401(k) alliance program which has an
agreement with Seligman Advisors.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge in accordance with the sales charge schedule in the Fund's
Prospectus, or pursuant to a Volume Discount, Right of Accumulation, or Letter
of Intent are subject to a CDSC of 1% on redemptions of such shares within
eighteen months of purchase. Employee benefit plans eligible for net asset value
sales (as described below) may be subject to a CDSC of 1% for terminations at
the plan level only, on redemptions of shares purchased within eighteen months
prior to plan termination. The 1% CDSC will be waived on shares that were
purchased through Morgan Stanley Dean Witter & Co. by certain Chilean
institutional investors (i.e. pension plans, insurance companies, and mutual
funds). Upon redemption of such shares within an eighteen-month period, Morgan
Stanley Dean Witter will reimburse Seligman Advisors a pro rata portion of the
fee it received from Seligman Advisors at the time of sale of such shares.
19
<PAGE>
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Class B
Class B shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class B shares are
subject to a CDSC if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
Years Since Purchase CDSC
- -------------------- ----
Less than 1 year .......................................... 5%
1 year or more but less than 2 years ...................... 4%
2 years or more but less than 3 years ..................... 3%
3 years or more but less than 4 years ..................... 3%
4 years or more but less than 5 years ..................... 2%
5 years or more but less than 6 years ..................... 1%
6 years or more ........................................... 0%
Approximately eight years after purchase, Class B shares will convert
automatically to Class A shares. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Conversion occurs at the end of the month which precedes the eighth anniversary
of the purchase date. If Class B shares of the Fund are exchanged for Class B
shares of another Seligman Mutual Fund, the conversion period applicable to the
Class B shares acquired in the exchange will apply, and the holding period of
the shares exchanged will be tacked onto the holding period of the shares
acquired. Class B shareholders of the Fund exercising the exchange privilege
will continue to be subject to the Fund's CDSC schedule if such schedule is
higher or longer than the CDSC schedule relating to the new Class B shares. In
addition, Class B shares of the Fund acquired by exchange will be subject to the
Fund's CDSC schedule if such schedule is higher or longer than the CDSC schedule
relating to the Class B shares of the Seligman mutual fund from which the
exchange has been made.
Class C
Class C shares may be purchased at a price equal to the next determined net
asset value, plus an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less.
Class D
Class D shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class D shares are
subject to a CDSC of 1% if the shares are redeemed within one year of purchase,
charged as a percentage of the current net asset value or the original purchase
price, whichever is less. Unlike Class B shares, Class D shares do not
automatically convert to Class A shares after eight years.
Systematic Withdrawals. Class B, Class C, and Class D shareholders who reinvest
both their dividends and capital gain distributions to purchase additional
shares of the Fund, may use the Systematic Withdrawal Plan to withdraw up to
12%, 10%, and 10%, respectively, of the value of their accounts per year without
the imposition of a CDSC. Account value is determined as of the date the
systematic withdrawals begin.
CDSC Waivers. The CDSC on Class B, Class C, and Class D shares (and certain
Class A shares, as discussed above) will be waived or reduced in the following
instances:
20
<PAGE>
(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;
(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue Code when such redemptions are
necessary to make distributions to plan participants (such payments
include, but are not limited to, death, disability, retirement, or
separation of service), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age
70 1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
(3) in whole or in part, in connection with shares sold to current and retired
Directors of the Fund;
(4) in whole or in part, in connection with shares sold to any state, county,
or city or any instrumentality, department, authority, or agency thereof,
which is prohibited by applicable investment laws from paying a sales load
or commission in connection with the purchase of any registered investment
management company;
(5) in whole or in part, in connection with systematic withdrawals;
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class B, Class C, or Class D
shares sold by a dealer, the CDSC is waived because the redemption qualifies for
a waiver as set forth above, the dealer shall remit to Seligman Advisors
promptly upon notice, an amount equal to the payment or a portion of the payment
made by Seligman Advisors at the time of sale of such shares.
Fund Reorganizations
Class A and Class C shares may be issued without an initial sales charge in
connection with the acquisition of cash and securities owned by other investment
companies. Any CDSC will be waived in connection with the redemption of shares
of the Fund if the Fund is combined with another Seligman mutual fund, or in
connection with a similar reorganization transaction.
Payment in Securities. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales charge), although the Fund does not
presently intend to accept securities in payment for Fund shares. Generally, the
Fund will only consider accepting securities (l) to increase its holdings in a
portfolio security, or (2) if Seligman determines that the offered securities
are a suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than $100,000 per issue in
payment for shares. The Fund may reject in whole or in part offers to pay for
Fund shares with securities, may require partial payment in cash for applicable
sales charges, and may discontinue accepting securities as payment for Fund
shares at any time without notice. The Fund will not accept restricted
securities in payment for shares. The Fund will value accepted securities in the
manner provided for valuing portfolio securities of the Fund.
Offering Price
When you buy or sell fund shares, you do so at the Class's net asset value (NAV)
next calculated after Seligman Advisors accepts your request. Any applicable
sales charge will be added to the purchase price for Class A shares and Class C
shares.
NAV per share of each class of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open for business. The NYSE is currently closed on New
Year's Day, Martin Luther King, Jr. Day, Presidents'
21
<PAGE>
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. The Fund will also determine NAV for each class on each day
in which there is a sufficient degree of trading in the Fund's portfolio
securities that the NAV of Fund shares might be materially affected. NAV per
share for a class is computed by dividing such class's share of the value of the
net assets of the Fund (i.e., the value of its assets less liabilities) by the
total number of outstanding shares of such class. All expenses of the Fund,
including the management fee, are accrued daily and taken into account for the
purpose of determining NAV. The NAV of Class B, Class C, and Class D shares will
generally be lower than the NAV of Class A shares as a result of the higher
12b-1 fees with respect to such shares.
Portfolio securities, including open short positions and options written, are
valued at the last sale price on the securities exchange or securities market on
which such securities primarily are traded. Securities not listed on an exchange
or securities market, or securities in which there were no transactions, are
valued at the average of the most recent bid and asked price, except in the case
of open short positions where the asked price is available. Any securities or
other assets for which recent market quotations are not readily available are
valued at fair value as determined in accordance with procedures approved by the
Board of Directors. Short-term obligations with less than 60 days remaining to
maturity are generally valued at amortized cost. Short-term obligations with
more than 60 days remaining to maturity will be valued at current market value
until the sixtieth day prior to maturity, and will then be valued on an
amortized cost basis based on the value on such date unless the Board determines
that this amortized cost value does not represent fair market value. Expenses
and fees, including the investment management fee, are accrued daily and taken
into account for the purpose of determining the net asset value of Fund shares.
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the shares of the Fund are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into US dollars at the mean between the bid and offer prices of such
currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
Specimen Price Make-Up
Under the current distribution arrangements between the Fund and Seligman
Advisors, Class A shares and Class C shares are sold with a maximum initial
sales charge of 4.75% and 1.00%(1), respectively, and Class B and Class D shares
are sold at NAV(2). Using each Class's NAV at March 31, 1999, (except Class C
shares, which commences operations effective June, 1 1999) the maximum offering
price of the Fund's shares is as follows:
Class A
- -------
Net asset value per share...................................... $12.03
------
Maximum sales charge (4.75% of offering price)................. .60
------
Offering price to public....................................... $12.63
======
22
<PAGE>
Class B
- -------
Net asset value and offering price per share(2)................ $11.24
======
Class D
- -------
Net asset value and offering price per share(2) ............... $11.24
======
- ----------
(1) In addition to the 1.00% front-end sales charge, Class C shares are subject
to a 1% CDSC if you redeem your shares within eighteen months of purchase.
(2) Class B shares are subject to a CDSC declining from 5% in the first year
after purchase to 0% after six years. Class D shares are also subject to a
1% CDSC if you redeem your shares within one year of purchase.
Redemption in Kind
The procedures for selling Fund shares under ordinary circumstances are set
forth in the Prospectus. In unusual circumstances, payment may be postponed, or
the right of redemption postponed for more than seven days, if the orderly
liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the NYSE during periods of emergency, or such other
periods as ordered by the Securities and Exchange Commission. Under these
circumstances, redemption proceeds may be made in securities. If payment is made
in securities, a shareholder may incur brokerage expenses in converting these
securities to cash.
Taxation of the Fund
The Fund is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, the Fund will not be subject to federal income taxes on its
net investment income and capital gains, if any, realized during any taxable
year, which it distributes to its shareholders, provided that at least 90% of
its net investment income and net short-term capital gains are distributed to
shareholders each year.
Dividends from net investment income and distributions from net short-term
capital gains are taxable as ordinary income to shareholders, whether received
in cash or reinvested in additional shares. To the extent designated as derived
from the Fund's dividend income that would be eligible for the dividends
received deduction if the Fund were not a regulated investment company, they are
eligible, subject to certain restrictions, for the 70% dividends received
deduction for corporations.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in the form of additional shares issued by
the Fund will be treated for federal income tax purposes as having received a
distribution in an amount equal to the fair market value on the date of
distribution of the shares received. Individual shareholders generally will be
subject to federal tax on distributions of net capital gains at a maximum rate
of 20% if designated as derived from the Fund's capital gains from property held
for more than one year.
Any gain or loss realized upon a sale or redemption of shares in the Fund by a
shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Individual shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as long-term capital loss to the extent
that it offsets the long-term capital gain distribution. In addition, no loss
will be allowed on the sale or other disposition of shares of the Fund if,
within a period beginning 30 days before the date of such sale or disposition
and ending 30 days after such date, the holder acquires (including shares
acquired through dividend reinvestment) securities that are substantially
identical to the shares of the Fund.
23
<PAGE>
In determining gain or loss on shares of the Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales charge not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
The Fund will generally be subject to an excise tax of 4% on the amount of any
income or capital gains, above certain permitted levels, distributed to
shareholder on a basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned by the Fund.
Furthermore, dividends declared in October, November or December, payable to
shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January of
the following year.
Shareholders are urged to consult their tax advisors concerning the effect of
federal income taxes in their individual circumstances.
Unless a shareholder includes a certified taxpayer identification number (social
security number for individuals) on the account application and certifies that
the shareholder is not subject to backup withholding, the fund is required to
withhold and remit to the US Treasury a portion of distributions and other
reportable payments to the shareholder. The rate of backup withholding is 31%.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed, the Fund may charge a service fee of up to $50 that may be
deducted from the shareholder's account and offset against any undistributed
dividends and capital gain distributions. The Fund also reserves the right to
close any account which does not have a certified taxpayer identification
number.
Underwriters
Distribution of Securities
The Fund and Seligman Advisors are parties to a Distributing Agreement dated
January 1, 1993 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Fund. Seligman Advisors accepts orders for the
purchase of Fund shares, which are offered continuously. As general distributor
of the Fund's capital stock, Seligman Advisors allows reallowances to all
dealers on sales of Class A shares, as set forth above under "Dealer
Reallowances." Seligman Advisors retains the balance of sales charges and any
CDSCs paid by investors.
Total initial sales charges paid by shareholders of Class A shares of the Fund
for the fiscal years ended September 30, 1998, 1997 and 1996, amounted to
$1,040,233, $1,825,779, and $6,222,709, respectively, of which $117,076,
$203,896, and $689,900, respectively, was retained by Seligman Advisors. No
Class C shares of the Fund were issued or outstanding during such fiscal years.
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Fund, received the following commissions and other
compensation from the Fund during its fiscal year ended September 30, 1998:
24
<PAGE>
Net Underwriting Compensation on
Discounts and Redemptions and
Commissions Repurchases
(Class A Sales (CDSC on Class A and Brokerage Other
Charge Retained) Class D Retained) Commissions Compensation (1)
- ---------------- ------------------- ----------- ----------------
$117,076 $119,411 $0 $59,977
(1) Seligman Advisors has sold its rights to collect any the distribution fees
paid by the Fund in respect of Class B shares and any CDSC imposed on
redemptions of Class B shares to FEP Capital, L.P., in connection with an
arrangement with FEP Capital, L.P. as discussed above under "12b-1 Plan."
In connection with this arrangement, Seligman Advisors receives payments
from FEP Capital, L.P. based on the value of Class B shares sold. Such
payments received for the fiscal year ended 1998 are reflected in the
table.
Other Payments
Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of $1,000,000 or more (NAV sales), calculated as
follows: 1.00% of NAV sales up to but not including $2 million; .80% of NAV
sales from $2 million up to but not including $3 million; .50% of NAV sales from
$3 million up to but not including $5 million; and .25% of NAV sales from $5
million and above. The calculation of the fee will be based on assets held by a
"single person," including an individual, members of a family unit comprising
husband, wife and minor children purchasing securities for their own account, or
a trustee or other fiduciary purchasing for a single fiduciary account or single
trust. Purchases made by a trustee or other fiduciary for a fiduciary account
may not be aggregated purchases made on behalf of any other fiduciary or
individual account.
Seligman Advisors shall also pay broker/dealers, from its own resources, a fee
on assets of certain investments in Class A shares of the Seligman mutual funds
participating in an "eligible employee benefit plan" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 50 eligible employees to whom such plan is made available. Class A
shares representing only an initial purchase of Seligman Cash Management Fund
are not eligible for the fee. Such shares will become eligible for the fee once
they are exchanged for shares of another Seligman mutual fund. The payment is
based on cumulative sales for each Plan during a single calendar year, or
portion thereof. The payment schedule, for each calendar year, is as follows:
1.00% of sales up to but not including $2 million; .80% of sales from $2 million
up to but not including $3 million; .50% of sales from $3 million up to but not
including $5 million; and .25% of sales from $5 million and above.
Seligman Advisors may from time to time assist dealers by, among other things,
providing sales literature to, and holding informational programs for the
benefit of, dealers' registered representatives. Dealers may limit the
participation of registered representatives in such informational programs by
means of sales incentive programs which may require the sale of minimum dollar
amounts of shares of Seligman mutual funds. Seligman Advisors may from time to
time pay a bonus or other incentive to dealers that sell shares of the Seligman
mutual funds. In some instances, these bonuses or incentives may be offered only
to certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by the Manager during a specified period of time. Such bonus or
other incentive may take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives and members of their families to places within or outside the
United States. The cost to Seligman Advisors of such promotional activities and
payments shall be consistent with the rules of the National Association of
Securities Dealers, Inc., as then in effect.
25
<PAGE>
Calculation of Performance Data
The average annual total returns for the Fund's Class A shares for the one-,
five-, and ten-year periods through September 30, 1998, were -25.08%, 9.12%, and
14.31%, respectively. These returns were computed by subtracting the maximum
sales charge of 4.75% of public offering price and assuming that all of the
dividends and distributions paid by the Fund over the relevant time period were
reinvested. It was then assumed that at the end of each period, the entire
amount was redeemed. The average annual total return was then calculated by
calculating the annual rate required for the initial payment to grow to the
amount which would have been received upon such redemption (i.e., the average
annual compound rate of return). Table A below illustrates the total return
(income and capital) on Class A shares of the Fund, assuming all dividends and
gain distributions are reinvested in additional taken in shares. It shows that a
$1,000 investment in Class A shares, assuming payment of the initial 4.75% sales
charge, made on September 30, 1988, had a value of $3,811 on September 30, 1998,
resulting in an aggregate total return of 281.09%.
The average annual total returns for the Fund's Class B shares for the one-year
period ended September 30, 1998 and for the period from April 22, 1996
(inception) through September 30, 1998, were -25.45% and -2.99%, respectively.
These returns were computed assuming that all dividends and distributions paid
by the Fund's Class B shares, if any, were reinvested over the relevant time
period. It was then assumed that at the end of each period, the entire amount
was redeemed, subtracting the applicable CDSC. Table B illustrates the total
return (income and capital) on Class B shares of the Fund, assuming all
dividends and gain distributions are reinvested in additional shares. It shows
that a $1,000 investment in Class B shares on April 22, 1996 (commencement of
operations of Class B shares) had a value of $929 on September 30, 1998,
resulting in an aggregate total return of -7.14%.
The average annual total returns for the Fund's Class D shares for the one- and
five-year periods ended September 30, 1998 and for the period from May 3, 1993
(inception) through September 30, 1998, were -22.64%, 9.12%, and 13.20%,
respectively. These returns were computed assuming that all of the dividends and
distributions paid by the Fund's Class D shares, if any, were reinvested over
the relevant time period. It was then assumed that at the end of each period,
the entire amount was redeemed, subtracting for the one year period the 1% CDSC,
if applicable. Table C illustrates the total return (income and capital) on
Class D shares of the Fund, assuming all dividends and gain distributions are
reinvested in additional shares. It shows that a $1,000 investment in Class D
shares made on May 3, 1993 (commencement of operations of Class D shares) had a
value of $1,957 on September 30, 1998, resulting in an aggregate total return of
95.68%.
Class C shares are a new class, effective June 1, 1999, so no performance data
is presented.
The results shown below should not be considered a representation of the
dividend income or gain or loss in capital value which may be realized from an
investment made in a class of shares of the Fund today.
<TABLE>
<CAPTION>
TABLE A - CLASS A
Value of Value of Total Value
Year Initial Capital Gain Value of of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
9/30/89 $1,242 $ --- $--- $1,242
9/30/90 968 --- --- 968
9/30/91 1,479 5 1 1,485
9/30/92 1,412 145 1 1,558
9/30/93 1,772 574 1 2,347
9/30/94 1,605 971 1 2,577
9/30/95 1,939 1,584 2 3,525
9/30/96 2,124 1,871 2 3,997
9/30/97 2,424 2,418 2 4,844
9/30/98 1,718 2,091 2 3,811 281.09%
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
TABLE B - CLASS B
Value of Value of Total Value
Year Initial Capital Gain Value of of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
9/30/96 $1,016 $ --- $--- $1,016
9/30/97 1,146 75 --- 1,221
9/30/98 777 152 --- 929 -7.14%
<CAPTION>
TABLE C - CLASS D
Value of Value of Total Value
Year Initial Capital Gain Value of of Total
Ended(1) Investment(2) Distributions Dividends Investment(2) Return(1)(3)
-------- ------------- ------------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
9/30/93 $1,265 $ --- $--- $1,265
9/30/94 1,126 241 --- 1,367
9/30/95 1,345 507 --- 1,852
9/30/96 1,459 624 --- 2,083
9/30/97 1,649 858 --- 2,507
9/30/98 1,153 804 --- 1,957 95.68%
</TABLE>
- ----------
1 For the ten-year period ended September 30, 1998 for Class A shares, from
commencement of operations of Class B shares on April 22, 1996 and from
commencement of operations of Class D shares on May 3, 1993.
2 The "Value of Initial Investment" as of the date indicated (1) reflects the
effect of the maximum initial sales charge or CDSC, if applicable, (2) assumes
that all dividends and capital gain distributions were taken in cash, and (3)
reflects changes in the net asset value of the shares purchased with the
hypothetical initial investment. "Total Value of Investment" (1) reflects the
effect of the CDSC, if applicable, and (2) assumes investment of all dividends
and capital gain distributions.
3 Total return for each Class of shares of the Fund is calculated by assuming a
hypothetical initial investment of $1,000 at the beginning of the period
specified; subtracting the maximum sales charge for Class A shares; determining
total value of all dividends and distributions that would have been paid during
the period on such shares assuming that each dividend or distribution was
invested in additional shares at net asset value; calculating the total value of
the investment at the end of the period; subtracting the CDSC on Class B and
Class D shares, if applicable; and finally, by dividing the difference between
the amount of the hypothetical initial investment at the beginning of the period
and its total value at the end of the period by the amount of the hypothetical
initial investment.
The total returns and average annual total returns of Class A shares quoted from
time to time for periods through June 1, 1992, do not reflect the deduction of
12b-1 fees, because the 12b-1 Plan was implemented on that date. The total
returns and average annual total returns for Class A and Class D shares for
periods through December 31, 1995 do not reflect the increased management fee,
approved by shareholders on December 12, 1995, and effective on January 1, 1996.
These fees, if reflected, would reduce the performance quoted.
From time to time, reference may be made in advertising or promotional material
to performance information, including mutual fund rankings, prepared by Lipper
Analytical Services, Inc., an independent reporting service which monitors the
performance of mutual funds. In calculating the total return of the Fund's Class
A, Class B, Class C, and Class D shares, the Lipper analysis assumes investment
of all dividends and distributions paid but does not take into account
applicable sales charges. The Fund may also refer in advertisements in other
promotional material to articles, comments, listings and columns in the
financial press pertaining to the Fund's performance. Examples of such financial
and other press publications include BARRON'S, BUSINESS WEEK, CDA/WIESENBERGER
MUTUAL FUNDS INVESTMENT REPORT, CHRISTIAN SCIENCE MONITOR, FINANCIAL PLANNING,
FINANCIAL TIMES, FINANCIAL WORLD, FORBES, FORTUNE, INDIVIDUAL INVESTOR,
INVESTMENT ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S, LOS ANGELES TIMES,
MONEY MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS, SMART MONEY, THE NEW
YORK TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS AND WORLD REPORT,
WORTH MAGAZINE, WASHINGTON POST AND YOUR MONEY.
27
<PAGE>
The Fund's advertising or promotional material may make reference to the Fund's
"Beta," "Standard Deviation," or "Alpha." Beta measures the volatility of the
Fund, as compared to that of the overall market. Standard deviation measures how
widely the Fund's performance has varied from its average performance, and is an
indicator of the Fund's potential for volatility. Alpha measures the difference
between the returns of the Fund and the returns of the market, adjusted for
volatility.
Financial Statements
The Annual Report to Shareholders for the fiscal year ended September 30, 1998
and the Mid-Year Report to Shareholders for the fiscal six-month period ended
March 31, 1999, contain a schedule of the investments of the Fund as of
September 30, 1998 and March 31, 1999, respectively, as well as certain other
financial information. The financial statements and notes included in the Annual
Report and Mid-Year Report, and the Independent Auditors' Reports thereon, are
incorporated herein by reference. The Annual Report and Mid-Year Report will be
furnished without charge to investors who request copies of this SAI.
General Information
Custodian. Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105 serves as custodian of the Fund. It also maintains, under the
general supervision of the Manager, the accounting records and determines the
net asset value for the Fund.
Auditors. Deloitte & Touche LLP, independent auditors, have been selected as
auditors of the Fund. Their address is Two World Financial Center, New York, NY
10281.
28
<PAGE>
Appendix
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing businesses in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale of
government securities to help finance the Civil War -Joseph Seligman, with his
brothers, established the international banking and investment firm of J. & W.
Seligman & Co. In the years that followed, the Seligman Complex played a major
role in the geographical expansion and industrial development of the United
States.
The Seligman Complex:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the Country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
29
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson plc, of London, known as
Seligman Henderson Co., to offer global investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
30
<PAGE>
SELIGMAN
- ----------
FRONTIER
FUND, INC.
[Picture]
ANNUAL REPORT
SEPTEMBER 30, 1998
SEEKING GROWTH
IN CAPITAL VALUE
THROUGH
INVESTMENTS IN
SMALL-COMPANY
GROWTH STOCKS
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
[picture omitted]
James, Jesse, and Joseph Seligman, 1870
TIMES CHANGE...
Established in 1864, Seligman's history of providing financial services has been
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 134 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including 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 ......................................................... 7
Portfolio of Investments ................................................... 9
Statement of Assets and Liabilities ........................................ 14
Statement of Operations .................................................... 15
Statements of Changes in Net Assets ........................................ 16
Notes to Financial Statements .............................................. 17
Financial Highlights ....................................................... 20
Report of Independent Auditors ............................................. 22
Board of Directors ......................................................... 23
Executive Officers AND For More Information ................................ 24
Glossary of Financial Terms ................................................ 25
<PAGE>
TO THE SHAREHOLDERS
For the 12 months ended September 30, 1998, Seligman Frontier Fund had a total
return of -21.32% based on the net asset value of Class A shares, outperforming
the -24.83% total return of the Russell 2000 Growth Index, which is its market
benchmark. The total return of its peer group, as measured by the Lipper Small
Cap Funds Average was -20.52%. A discussion with your Portfolio Manager
regarding the past 12 months begins on page 2.
Despite their often superior sales and earnings growth, attractive valuations,
and limited exposure to depressed foreign markets, small-capitalization growth
stocks fared poorly in the past year compared to large-capitalization growth
stocks. The primary reason for the poor returns in the sector was the Asian
financial crisis, which caused investors to seek the perceived safety and
liquidity of large-cap growth stocks. The situation for small caps further
deteriorated in the final months of the Fund's fiscal year as the Asian crisis
worsened, Japan's recession and banking problems deepened, Russia's economy
neared ruin, and Brazil encountered fiscal problems that threatened all of Latin
America. The quest for liquidity in these volatile financial markets further
exacerbated investors' flight to large caps.
Global financial disorder, while likely to continue for many months, may
ultimately have a positive impact on small-cap valuations. Widespread currency
devaluations and depressed demand for products in Asia, Latin America, and
Russia, has led to concern about the future earnings of large-cap multinational
companies. Ongoing uncertainty about business conditions may compel investors to
favor smaller domestic companies whose revenues typically have only modest
exposure to today's tumultuous overseas markets.
Meanwhile, small-cap valuations have dropped to levels last seen in 1990, just
before the most recent extended run-up in value. In the 12 months ended
September 30, the S&P 500 gained 9.0%, while the Russell 2000 Growth Index fell
by 24.83%. The last two times the Russell 2000 suffered comparable declines, in
1979 and in 1990, strong rallies in small-cap stock prices followed. We believe
that the present low valuations and relatively positive earnings prospects of
small caps improve the potential for outperformance relative to large caps,
especially in light of the possibility that large caps may experience further
earnings pressure in the coming months.
As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, the Seligman Investment Companies, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that when our plans are finalized and
all systems are tested, there will be no disruption in the services provided by
your Fund.
Thank you for your continued support of Seligman Frontier Fund. We look forward
to serving your investment needs in the many years to come. The Fund's portfolio
of investments and financial statements follow this letter.
By order of the Board of Directors,
/s/William C. Morris
- --------------------
William C. Morris
Chairman
/s/Brian T. Zino
----------------
Brian T. Zino
President
October 30, 1998
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
ARSEN MRAKOVCIC
Q. HOW DID SELIGMAN FRONTIER FUND PERFORM IN THE PAST 12 MONTHS?
A. For the 12 months ended September 30, 1998, Seligman Frontier Fund posted a
total return of -21.32% based on the net asset value of Class A shares. The
Fund outperformed the -24.83% return of the Russell 2000 Growth Index, its
market benchmark. The Fund's return lagged the -20.52% total return of its
peers, as measured by the Lipper Small Cap Funds Average.
Q. WHICH ECONOMIC AND MARKET FACTORS INFLUENCED SELIGMAN FRONTIER FUND IN THE
PAST 12 MONTHS?
A. Small-capitalization growth stocks continued to underperform
large-capitalization growth stocks during the period, stretching the gradual
price decline to three and one-half years. The decline in small-cap stock
prices persisted, despite their attractive valuations relative to their
growth rates.
Despite ongoing strength in the domestic economy, economic turmoil began to
spread throughout the world during the past 12 months, increasing investor
concern in the US equity markets. The Asian financial crisis worsened, Japan
again failed to resolve its banking problems, Russia allowed the ruble to
devalue and subsequently defaulted on many of its debts, emerging markets
collapsed, and the specter of economic crises looming throughout Latin
America pressured equity markets worldwide. These factors prompted a
so-called "flight to quality," in which many domestic and overseas investors
sought the perceived safety and liquidity of large-cap growth stocks, often
at the expense of small-cap stocks. As the US stock market was shaken by
volatility in the final quarter of the Fund's fiscal year, the situation for
small-cap stocks further deteriorated. Small caps were also hurt by
continuing heavy volumes of initial public offering (IPO) activity,
resulting in an oversupply of small-cap stocks in the market.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THE YEAR?
A. We are long-term investors who purchase small- capitalization growth stocks
with significant earnings growth potential, and that are selling at
reasonable cash flow valuations. Holdings are added to the portfolio based
on their individual merits, on a stock-by-stock basis.
We analyze the underlying fundamentals of companies, and prefer those with
strong management, solid product lines, market niche dominance, proprietary
and innovative products, and significant management ownership. Additionally,
we favor companies with revenues and reported earnings growth of 20% or
more, and with businesses and market shares that are growing faster than the
- --------------------------------------------------------------------------------
SELIGMAN SMALL COMPANY TEAM
Ted Hillenmeyer, Arsen Mrakovcic (Portfolio Manager), Rick Ruvkun, Sonia Thomas
(Administrative Assistant),Bruce Zirman
- --------------------------------------------------------------------------------
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
industry norm. We prefer companies that generate operating cash flow to
finance growth over those which rely on excessive debt.
We choose to sell stocks when they reach our target price, or when the
company or industry fundamentals deteriorate. Seligman Frontier Fund remains
highly diversified in order to reduce sector risk. No sector has a weighting
of more than 25%, and no single stock represents more than 3% of the Fund's
net assets.
Q. WHAT INDUSTRY GROUPS INFLUENCED THE FUND'S PERFORMANCE?
A. In an environment of global economic uncertainty and equity market
volatility, defensive stocks lived up to their name. Consumer noncyclical
stocks, such as Duane Reade, also did well. Health care stocks also were a
profitable part of the portfolio. Several stocks in the pharmaceuticals
sector outperformed expectations, as did some holdings in the consumer
staples sector, such as U.S. Foodservice, a provider to the food service
industry. Additionally, information technology services companies posted
solid results for the 12-month period. These included BISYS Group, a
supplier of data processing services; American Management Systems, which
furnishes management and administration of computer services; and Ceridian,
which provides data processing services.
Further, a number of companies in the portfolio were acquired by larger
companies during the 12-month period. Mergers and acquisitions activity
demonstrates that the private market recognizes the quality of these
companies, and the value of their stocks. These companies included R.P.
Scherer, which manufactures soft gelatin capsules ("softgels"), and
AmeriSource Health, a distributor of pharmaceutical supplies. As a result of
mergers activity, these companies posted strong performances, benefiting the
Fund.
The basic materials sector is generally more sensitive to global economic
conditions, and did not do well in the 12-month period. The capital goods,
financial services, and transportation sectors also underperformed our
expectations, mainly due to stock selection in each sector. In the capital
goods sector, UCAR International, a producer of graphite electrodes,
affected the portfolio's performance due to the company's unresolved
antitrust issues. In the financial services sector, CCA Prison Realty Trust,
a real estate investment trust for prisons, underperformed expectations
because of concerns about slowing growth in the prison-building industry.
Additionally, within the portfolio, there were poor performers even in
strong industry sectors. Health care company ESC Medical Systems develops
and manufactures medical devices for non-invasive, elective treatment of
varicose veins. The stock suffered because of depressed demand, as
discretionary procedures generally are more sensitive to economic
conditions. In the business goods and services sector, Modis Professional
Services, formerly AccuStaff, a provider of temporary personnel services,
also underperformed expectations because of nationwide high levels of
employment. In the educational services sector, EduTrek International,
operator of the American Intercontinental University, also dampened the
portfolio's performance.
Q. WHAT IS YOUR OUTLOOK?
A. History gives us reason for optimism. Despite the recent broad market
downturn, which caused the S&P 500 to fall 14.1% from its peak on July 17,
the S&P 500 was still up 9.0% in the past 12 months. However, the Russell
2000 Index dropped 19.02% in this period, and the Russell 2000 Growth Index
fell 24.83%. This wide gap in performance between the S&P 500 and the
Russell 2000 Indices suggests that small caps are attractively valued
compared to the large-cap growth stocks of the S&P 500. At current
valuations, small caps should provide an attractive alternative to large
caps, which have high price-to-earnings ratios. In fact, small-cap
(Continued on page 6)
3
<PAGE>
PERFORMANCE OVERVIEW
This chart compares a $10,000 hypothetical investment made in Seligman
Frontier Fund Class A shares, with and without the initial 4.75% maximum sales
charge, and assumes that all distributions within the period are invested in
additional shares, for the 10-year period ended September 30, 1998, to a $10,000
investment made in the Lipper Small Cap Funds Average (Lipper Average), the
Lipper Small Cap Fund Index (Lipper Index), the Russell 2000 Growth Index, and
the Russell 2000 Index for the same period. The performances of Seligman
Frontier Fund Class B and Class D shares are not shown in this chart but are
included in the table on page 5. It is important to keep in mind that the Lipper
Average and the Lipper Index exclude the effect of sales charges, and the
Russell indices exclude the effect of any fees or sales charges.
Seligman Frontier Fund will no longer be compared to the Lipper Index after
September 30, 1998. Instead, the Fund will be compared to the Lipper Average,
which measures the performance of the entire universe of funds that have similar
investment objectives to your Fund. The Manager believes that the Lipper Average
is more appropriate than the more narrowly focused Lipper Index, which measures
the performance of only 30 funds. Therefore, going forward, your Fund will be
compared to the Lipper Average, the Russell 2000 Growth Index, and the Russell
2000 Index.
[Table below presents plot points for line chart]
Lipper Lipper Russell
SmCap SmCap 2000 Russell
Without With Funds Fund Growth 2000
DATE Sales Charge Sales Charge Avg Index Index Index
- --------------------------------------------------------------------------------
9/30/88 10,000 9,530 10,000 10,000 10,000 10,000
12/31/88 9,971 9,503 10,053 10,050 9,913 9,934
3/31/89 10,812 10,304 10,860 10,808 10,649 10,699
6/30/89 11,464 10,925 11,657 11,528 11,338 11,380
9/30/89 13,029 12,417 12,783 12,527 12,350 12,149
12/31/89 12,775 12,175 12,419 12,166 11,912 11,547
3/31/90 12,391 11,809 12,249 11,907 11,595 11,292
6/30/90 13,261 12,638 13,199 12,605 12,326 11,728
9/30/90 10,159 9,682 10,182 9,760 9,109 8,850
12/31/90 11,622 11,076 11,114 10,490 9,837 9,295
3/31/91 14,342 13,668 13,974 12,961 12,842 12,059
6/30/91 14,051 13,391 13,746 12,821 12,397 11,872
9/30/91 15,578 14,847 15,251 14,123 13,734 12,840
12/31/91 17,390 16,573 16,805 15,582 14,871 13,575
3/31/92 17,558 16,733 17,268 15,753 15,279 14,593
6/30/92 15,831 15,088 15,850 14,431 13,444 13,598
9/30/92 16,343 15,575 16,380 14,912 13,705 13,987
12/31/92 20,171 19,224 19,026 17,326 16,028 16,075
3/31/93 20,210 19,261 19,489 17,519 15,741 16,762
6/30/93 21,668 20,651 20,091 18,063 16,194 17,128
9/30/93 24,624 23,467 21,860 19,729 17,705 18,625
12/31/93 25,477 24,280 22,403 20,260 18,170 19,114
3/31/94 25,151 23,970 21,775 19,526 17,431 18,607
6/30/94 23,476 22,373 20,595 18,470 16,336 17,882
9/30/94 27,036 25,766 22,324 20,189 17,859 19,123
12/31/94 27,263 25,983 22,260 20,161 17,727 18,766
3/31/95 29,397 28,016 23,548 21,292 18,698 19,631
6/30/95 32,452 30,928 25,659 23,266 20,553 21,471
9/30/95 36,983 35,246 28,663 26,174 22,890 23,591
12/31/95 37,194 35,448 29,313 26,535 23,229 24,103
3/31/96 39,294 37,449 31,256 28,032 24,562 25,332
6/30/96 42,048 40,073 33,684 30,258 25,996 26,600
9/30/96 41,939 39,970 34,369 30,639 25,775 26,690
12/31/96 41,383 39,440 35,217 30,348 25,842 28,078
3/31/97 37,300 35,548 32,890 27,489 23,132 26,626
6/30/97 44,887 42,779 38,527 32,162 27,191 30,942
9/30/97 50,824 48,437 44,840 37,067 31,792 35,546
12/31/97 48,762 46,472 42,640 34,906 29,185 34,355
3/31/98 53,648 51,129 47,342 38,648 32,652 37,812
6/30/98 51,880 49,444 45,390 37,156 30,778 36,050
9/30/98 39,987 38,109 35,638 29,205 23,896 28,786
The stocks of smaller companies may be subject to above-average market price
fluctuations.
The performances of Class B and Class D shares will be greater than or less
than the performance shown for Class A shares, based on the differences in sales
charges and fees paid by shareholders.
4
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
---------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge (28.99)% (25.08)% 9.12% 14.31% n/a n/a
Without Sales Charge (25.46) (21.32) 10.18 14.87 n/a n/a
CLASS B**
With CDSC+ (29.49) (25.45) n/a n/a (2.99)% n/a
Without CDSC (25.78) (21.95) n/a n/a (1.97) n/a
CLASS D**
With 1% CDSC (26.46) (22.64) n/a n/a n/a n/a
Without CDSC (25.72) (21.94) 9.12 n/a n/a 13.20%
LIPPER SMALL CAP FUNDS AVERAGE*** (24.72) (20.52) 10.27 13.55 2.44o 12.41oo
LIPPER SMALL CAP FUND INDEX*** (24.43) (21.21) 8.16 11.31 (1.47)o 10.56oo
RUSSELL 2000 GROWTH INDEX*** (26.82) (24.83) 6.19 9.11 (4.11)o 8.66oo
RUSSELL 2000 INDEX*** (23.87) (19.02) 9.10 11.15 3.18o 11.07oo
</TABLE>
NET ASSET VALUE
SEPTEMBER 30, 1998 MARCH 31, 1998 SEPTEMBER 30, 1997
-------------------- ----------------- --------------------
CLASS A $12.44 $16.69 $17.55
CLASS B 11.66 15.71 16.68
CLASS D 11.67 15.71 16.69
CAPITAL GAIN INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 1998
PAID $1.634
REALIZED 0.471
UNREALIZED (0.393)++
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 (12b-1) 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 charge ("CDSC"), charged on redemptions made
within one year of the date of purchase, declining to 1% in the sixth year
and 0% thereafter. Returns for Class D shares are calculated with and
without the effect of the 1% CDSC, charged on redemptions made within one
year of the date of purchase.
*** The Lipper Average, the Lipper Index, the Russell 2000 Growth Index, and the
Russell 2000 Index are unmanaged benchmarks that assume investment of all
dividends. The Lipper Average and Index do 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 CDSC is 5% for periods of one year or less, and 3% since inception.
++ Represents the per share amount of net unrealized depreciation of portfolio
securities as of September 30, 1998.
o From April 30, 1996.
oo From April 30, 1993.
5
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
ARSEN MRAKOVCIC (CONTINUED)
valuations have fallen to levels not seen since 1990, just before the
beginning of their last extended increase in price. The last two times the
Russell 2000 was down 30% from its highs, in 1979 and in 1990, strong
rallies followed.
Small-cap companies are generally distinguished by the type of innovation
that drives economic growth in this country. Smaller companies tend to
possess internal management dynamics and product cycles that can weather
economic turmoil and fickle financial markets. Further, smaller companies
can, to a greater degree than larger companies, control their own destiny,
irrespective of overall economic conditions. We are confident that the
valuations and earnings prospects of small-cap stocks are favorable,
especially in light of the possibility that large caps may experience
earnings pressure in the coming months.
We believe the case is strong for an impending appreciation in the price of
small-cap stocks. Global financial disorder is likely to persist for many
months, and could have less of a negative impact on small caps than on large
caps. The strong dollar, widespread currency devaluations, and depressed
demand for products in Asia, Latin America, and Russia has led to
uncertainty about future earnings of large-cap multinational companies that
do business in these regions. However, most small-cap growth companies have
little exposure to depressed overseas markets, and they do not compete
against local firms for market share. The earnings growth of a majority of
US small caps is dependent to a great degree on the viability of their
innovative products and their product cycles, and reflects their ability to
execute their business plans. Overall, small-cap companies are less
dependent on global economic conditions than are large-cap companies.
The Federal Reserve Board's September and October cuts in short-term
interest rates may benefit long-duration investments such as small-cap
stocks. The rate reductions were done to temper inflation and sustain
domestic economic growth, and to help cushion the US economy from global
financial turmoil. Since the revenues of smaller companies are primarily
linked to the strength of the domestic economy, an interest-rate cut may
improve their earnings. Finally, the IPO market has slowed significantly,
since the pricing of recent new issues was soft, and after-market
performance was poor. Lower volumes of IPOs could help the performances of
existing small-cap stocks.
6
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
SEPTEMBER 30,
------------------------
ISSUES COST VALUE 1998 1997
------- ----------------- ---------------- -------- --------
COMMON STOCKS:
<S> <C> <C> <C> <C> <C>
Basic Materials .................. 1 $ 10,515,779 $ 5,718,600 0.8 1.8
Capital Goods .................... 12 69,335,393 70,346,906 9.9 10.9
Communication Services ........... -- -- -- -- 0.3
Consumer Cyclicals ............... 21 148,741,535 153,814,828 21.6 18.1
Consumer Staples ................. 11 77,651,120 76,684,434 10.8 6.4
Energy ........................... 5 30,913,966 26,190,088 3.7 3.3
Financial Services ............... 10 47,932,737 40,044,378 5.6 8.6
Health Care ...................... 23 135,773,969 130,795,161 18.4 17.3
Technology ....................... 24 146,864,724 140,975,289 19.8 22.9
Transportation ................... 1 2,916,595 2,771,437 0.4 2.2
Utilities ........................ 1 11,115,552 11,267,800 1.6 1.9
Other ............................ 1 -- 6,875 -- --
----- ---------------- ---------------- ------- -------
110 681,761,370 658,615,796 92.6 93.7
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES .... 1 52,427,941 52,427,941 7.4 6.3
----- ---------------- ---------------- ------- -------
NET ASSETS ......................... 111 $734,189,311 $711,043,737 100.0 100.0
===== ================ ================ ======= =======
</TABLE>
LARGEST INDUSTRIES
SEPTEMBER 30, 1998
[Table below represents values for a bar chart]
CONSUMER CYCLICALS 21.6% $153,814,828
TECHNOLOGY 19.8% $140,975,289
HEALTH CARE 18.4% $130,795,161
CONSUMER STAPLES 10.8% $76,684,434
CAPITAL GOODS 9.9% $70,346,906
7
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING THE PAST SIX MONTHS
SHARES
----------------------------
HOLDINGS
ADDITIONS INCREASE 9/30/98
- ----------- ----------- -----------
AVX ............................. 581,500 581,500
Casella Waste Systems
(Class A) ..................... 280,700 280,700
ESC Medical Systems ............. 250,000 250,000
Personnel Group of America ...... 533,100 1,033,100
PSS World Medical ............... 648,900 990,700
Schein (Henry) .................. 177,400 177,400
Sinclair Broadcast Group
(Class A) ..................... 134,300 268,600(1)
Superior Services ............... 300,200 300,200
Universal Health Services
(Class B) ..................... 150,000 150,000
Vlasic Foods International ...... 498,600 498,600
SHARES
----------------------------
HOLDINGS
REDUCTIONS DECREASE 9/30/98
- ------------- ----------- -----------
Black Box ....................... 275,000 --
Ceridian ........................ 236,400 157,700
Credence Systems ................ 561,700 --
Equity .......................... 337,700 --
First Sierra Financial .......... 300,000 --
Kemet ........................... 801,500 --
National Surgery Centers ........ 577,800 --
Oak Industries .................. 304,000 142,900
Scherer (R.P.) .................. 300,100 --
Synopsys ........................ 213,300 --
Largest portfolio changes from previous period to the current period are based
on cost of purchases and proceeds from sales of securities.
- ----------
(1) Includes 134,300 shares received as a result of a 2-for-1 stock split.
LARGEST PORTFOLIO HOLDINGS
SEPTEMBER 30, 1998
SECURITY VALUE
- ---------- ---------------
Total Renal Care Holdings .............. $18,564,000
PSS World Medical ...................... 18,327,950
Burr-Brown ............................. 14,931,652
Modis Professional Services ............ 14,172,225
U.S. Foodservice ....................... 13,632,187
Province Healthcare .................... 13,191,578
Allied Waste Industries ................ 13,072,391
Personnel Group of America ............. 12,720,044
Omnicare ............................... 12,700,575
BISYS Group ............................ 11,772,047
8
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------
<S> <C> <C>
COMMON STOCKS 92.6%
BASIC MATERIALS 0.8%
UCAR INTERNATIONAL*
Producer of graphite electrodes 317,700 $ 5,718,600
--------------
CAPITAL GOODS 9.9%
Allied Waste Industries*
Integrated waste disposal 558,500 13,072,391
AVX
Manufacturer and supplier of
passive electronic
components and related
products 581,500 8,649,812
CASELLA WASTE SYSTEMS (CLASS A)*
Provider of non-hazardous
solid waste collection,
disposal, and recycling
services 280,700 9,508,712
COGNEX*
Manufacturer of machine
vision systems 73,500 849,844
CORPORATE EXPRESS*
Supplier of office furniture 522,600 6,222,206
FLANDERS*
Designer, manufacturer, and
marketer of a range of
air filtration products 405,300 1,608,534
INTEGRATED ELECTRICAL SERVICES*
Provider of electrical
contracting and
maintenance services 225,900 3,360,263
IVEX PACKAGING*
Manufacturer of specialty
packaging 321,900 4,667,550
KEYSTONE AUTOMOTIVE*
Distributor of aftermarket
collision replacement
parts for automobiles
and light trucks 314,900 6,140,550
OAK INDUSTRIES*
Manufacturer of electrical
controls 142,900 3,858,300
SUPERIOR SERVICES*
Provider of solid waste
collection, disposal, and
recycling services 300,200 8,433,744
WASTE CONNECTIONS*
Provider of solid waste
collection, disposal, and
recycling services 200,000 3,975,000
--------------
70,346,906
--------------
CONSUMER CYCLICALS 21.6%
AMERICAN HOMESTAR*
Retailer and producer of
manufactured homes 503,100 10,942,425
BARNES & NOBLE*
Owner and operator of retail
book stores and superstores 229,100 6,185,700
COPART*
Auctioneer of damaged vehicles
for insurance companies 305,600 6,742,300
DUANE READE*
Retail drugstore chain 293,400 11,130,862
HA-LO INDUSTRIES*
Distributor of specialty
advertising products 327,300 9,573,525
JOURNAL REGISTER*
Publisher of newspapers 616,300 9,090,425
MARKET FACTS*
Compiler of information for
the optimization of the
marketing decision process 224,600 6,316,875
MEMBERWORKS*
Provider of membership
service programs for
various industries 212,000 3,272,750
METAMOR WORLDWIDE*
International provider of
information technology
and staffing services 200,000 5,450,000
MODIS PROFESSIONAL SERVICES
Temporary personnel services 973,200 14,172,225
NOVA*
Provider of language
instruction courses 348,205 10,685,541
PERSONNEL GROUP OF AMERICA*
Personnel staffing services 1,033,100 12,720,044
PETERSEN COMPANIES (CLASS A)*
Special-interest
magazine publisher 331,800 9,456,300
9
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
SHARES VALUE
------ -------
CONSUMER CYCLICALS (continued)
PIER 1 IMPORTS
Retailer specializing in
decorative home
furnishings, gifts, and
related items 324,600 $ 2,434,500
PITTSTON BRINK'S GROUP
Provider of security services 236,000 8,260,000
PRE-PAID LEGAL SERVICES*
Underwriter and marketer of
legal service plans 144,900 3,704,006
PRIMARK*
Provider of information through
software and databases 332,700 10,147,350
PROVANT*
Provider of training and
development services 328,600 4,764,700
RESORTQUEST INTERNATIONAL*
Provider of upscale vacation
condominiums and
home rentals 302,000 2,661,375
WILMAR INDUSTRIES*
Marketer and distributor of
repair and maintenance
products to the apartment
housing market 229,200 4,913,475
ZIFF-DAVIS*
Integrated media and
marketing company focused
on computer and
Internet-related technology 164,200 1,190,450
--------------
153,814,828
--------------
CONSUMER STAPLES 10.8%
AURORA FOODS*
Producer and marketer of
brand name food products 229,400 3,154,250
CAREER EDUCATION*
Provider of private
post-secondary education 219,000 4,776,937
CARRIAGE SERVICES (CLASS A)*
Provider of funeral products
and services 416,100 10,272,469
EDUTREK INTERNATIONAL (CLASS A)*
Operator of the American
InterContinental University 304,500 2,131,500
HEARST-ARGYLE TELEVISION*
TV broadcasting 208,948 6,973,640
JACOR COMMUNICATIONS*
Radio broadcasting 225,200 11,393,712
PREMIER PARKS*
Owner and operator of
regional theme parks 560,300 9,805,250
SINCLAIR BROADCAST GROUP
(CLASS A)*
Diversified broadcasting
company that owns and
services television and
radio stations 268,600 4,347,963
U.S. FOODSERVICE*
Distributor to food service
industry 327,500 13,632,187
VLASIC FOODS INTERNATIONAL*
Manufacturer and marketer of
branded convenience
food products 498,600 9,317,588
YOUTH SERVICES INTERNATIONAL*
Operator of residential and
community-based programs
for at-risk youths 287,000 878,938
--------------
76,684,434
--------------
ENERGY 3.7%
CABOT OIL & GAS (CLASS A)
Explorer, developer, and
producer of oil and gas 232,700 3,548,675
CALPINE*
Developer, marketer, and
operator of power
generation facilities 449,800 9,108,450
EAGLE GEOPHYSICAL*
Company specializing in
seismic data collection 252,600 1,728,731
MCDERMOTT INTERNATIONAL
A leading worldwide energy
services company 258,900 6,974,119
SANTA FE ENERGY RESOURCES*
Oil and gas exploration,
production, and
development 511,800 4,830,113
--------------
26,190,088
--------------
10
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
SHARES VALUE
-------- --------
FINANCIAL SERVICES 5.6%
AMERICAN CAPITAL STRATEGIES
Provider of commercial
financing 243,700 $ 3,944,894
CCA PRISON REALTY TRUST
Prison REIT 319,300 5,747,400
CRUSADER HOLDING
Provider of community
banking services, including
residential mortgages and
commercial leases 75,390 909,392
DST SYSTEMS*
Provider of information
processing and software
services 151,000 7,965,250
ESG RE
International provider of
health, life, and special
risk reinsurance 258,500 3,974,437
FIRSTSERVICE* (CANADA)
Provider of property
management and
business services 361,900 4,071,375
INSIGNIA/ESG HOLDINGS*
Provider of real estate
management and services 309,533 3,559,630
INSIGNIA FINANCIAL GROUP
(CLASS A)*
Real estate management
services 190,400 1,880,200
STIRLING COOKE BROWN HOLDINGS
(Bermuda)
Provider of risk management
services 240,000 3,555,000
T&W FINANCIAL*
Equipment leasing company 300,800 4,436,800
--------------
40,044,378
--------------
HEALTH CARE 18.4%
AMERICAN DENTAL PARTNERS*
Provider of dental practice
management services 139,500 1,205,367
AMSURG (CLASS A)*
Developer and operator of
ambulatory surgery centers 200,000 1,387,500
BARR LABORATORIES*
Developer, manufacturer, and
marketer of generic
prescription drugs 140,500 4,267,687
COMPDENT*
Provider of managed-care
dental services 276,400 3,714,125
ESC MEDICAL SYSTEMS*
Manufacturer of specialized
medical devices 250,000 1,753,906
HANGER ORTHOPEDIC GROUP*
Provider of orthopedic and
prosthetic rehabilitation
services 410,500 7,645,563
NCS HEALTHCARE (CLASS A)*
Health care facility and
pharmacy services 29,200 512,825
NEW AMERICAN HEALTHCARE*
Owner and operator of acute
care hospitals 191,800 2,013,900
OMNICARE
Provider of pharmacy services
to long-term care institutions 360,300 12,700,575
PMR*
Operator of mental health
care programs 225,000 1,575,000
PROFESSIONAL DETAILING*
Provider of consulting services
to the pharmaceutical
industry 210,000 5,814,375
PROVINCE HEALTHCARE*
Provider of health care
services in non-urban
markets 390,500 13,191,578
PSS WORLD MEDICAL*
Distributor of medical
supplies, equipment,
and pharmaceuticals 990,700 18,327,950
QUORUM HEALTH GROUP*
Owner of acute care hospitals 327,000 5,313,750
RENAL CARE GROUP*
Provider of dialysis services 150,600 3,854,419
11
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
SHARES VALUE
-------- --------
HEALTH CARE (continued)
RENEX*o
Provider of dialysis and
ancillary services 363,900 $ 2,172,028
SCHEIN (HENRY)*
International marketer of
health care products
and services to
medical providers 177,400 6,175,738
SCHEIN PHARMACEUTICALS*
Developer, manufacturer,
and vendor of generic
pharmaceuticals 144,600 1,229,100
SOMNUS MEDICAL TECHNOLOGIES*
Developer and manufacturer
of medical devices used
in treatment of upper
respiratory disorders 200,000 612,500
TOTAL RENAL CARE HOLDINGS*
Provider of dialysis services 773,500 18,564,000
TRIANGLE PHARMACEUTICALS*
Developer of new drug
candidates, primarily in
the antiviral area 257,600 3,381,000
UNIVERSAL HEALTH SERVICES
(CLASS B)*
Owner and operator of
health care institutions 150,000 6,262,500
WATSON PHARMACEUTICALS*
Manufacturer of off-patent
medications 179,700 9,119,775
--------------
130,795,161
--------------
TECHNOLOGY 19.8%
AFFILIATED COMPUTER SERVICES
(CLASS A)*
Provider of information
processing services 223,300 6,810,650
AMERICAN MANAGEMENT SYSTEMS*
Management and administration
of computer services 250,000 6,781,250
ANALYSTS INTERNATIONAL
Provider of computer
programming services 187,500 5,613,281
ANTEC*
Developer and supplier of
products for the cable
television industry 437,700 6,756,994
AVANT!*
Developer and marketer of
software products that
assist design engineers 773,800 9,817,587
BISYS GROUP*
Provider of data processing
services 268,500 11,772,047
BURR-BROWN*
Manufacturer of microelectric
data devices for business
end-users 879,950 14,931,652
CERIDIAN*
Provider of data processing
services 157,700 9,048,037
GENERAL SEMICONDUCTORS*
Manufacturer of power
semiconductors 371,500 2,229,000
GLENAYRE TECHNOLOGIES*
Manufacturer of paging
infrastructure equipment 1,027,900 7,484,397
HMT TECHNOLOGY*
Supplier of high-performance
thin-film disks for
high-end, high-capacity,
hard disk drives 563,500 4,384,734
INDUS INTERNATIONAL*
Worldwide developer and
marketer of management
software and implementation
services 192,200 961,000
INSO*
Marketer and developer of
textual information software 213,600 4,071,750
KLA-TENCOR*
Manufacturer of wafer and
metrology equipment 249,300 6,209,128
MICROCHIP TECHNOLOGY*
Supplier of field programmable
microcontrollers 388,500 8,462,016
12
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998
SHARES VALUE
-------- --------
TECHNOLOGY (continued)
MICROGRAFX*
Developer and marketer of
graphics applications
and software 64,000 $ 620,000
NATIONAL INSTRUMENTS*
Provider of instrumentation
hardware and software
products for the engineering
and scientific industries 95,200 2,323,475
PMC-SIERRA* (CANADA)
Integrated circuit supplier 227,300 7,202,569
PSW TECHNOLOGIES*
Provider of high-value solutions
to technology vendors and
business end users 131,000 309,078
SANMINA*
Provider of services for
equipment manufacturers
in the electronics industry 186,700 5,245,103
TRANSACTION SYSTEMS ARCHITECTS
(CLASS A)*
Worldwide developer and
marketer of software
products for electronic
funds transfer 105,600 3,738,900
UNIGRAPHICS SOLUTIONS (CLASS A)*
International provider of
services used for virtual
product development 286,900 2,707,619
WATERS*
Manufacturer of liquid
chromatography instruments 161,700 10,833,900
XILINX*
Supplier of field-programmable
gate arrays 76,100 2,661,122
--------------
140,975,289
--------------
TRANSPORTATION 0.4%
US XPRESS ENTERPRISES (CLASS A)*
Provider of transportation
and logistics services 227,400 2,771,437
--------------
UTILITIES 1.6%
CALENERGY*
Developer, marketer, and
operator of power
generation facilities 425,200 11,267,800
--------------
OTHER 6,875
--------------
TOTAL COMMON STOCKS 92.6%
(Cost $681,761,370) 658,615,796
--------------
TOTAL Short-Term Holdings 4.8%
(COST $34,000,000) 34,000,000
--------------
TOTAL INVESTMENTS 97.4%
(Cost $715,761,370) 692,615,796
OTHER ASSETS
LESS LIABILITIES 2.6% 18,427,941
--------------
NET ASSETS 100.0% $ 711,043,737
==============
- ---------
</TABLE>
* Non-income producing security.
o Affiliated issuers (Fund's holdings representing 5% or more of the
outstanding voting securities).
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks* (cost $681,761,370) .......... $658,615,796
Short-term holdings (cost $34,000,000) ...... 34,000,000 $692,615,796
-------------
CASH 5,538,205
Receivable for securities sold ................................................ 37,764,588
Receivable for Capital Stock sold ............................................. 1,409,925
Receivable for dividends and interest ......................................... 234,157
Expenses prepaid to shareholder service agent ................................. 225,957
Other ......................................................................... 21,615
------------
TOTAL ASSETS .................................................................. 737,810,243
------------
LIABILITIES:
Payable for securities purchased .............................................. 20,203,557
Payable for Capital Stock repurchased ......................................... 5,174,292
Accrued expenses, taxes, and other ............................................ 1,388,657
------------
TOTAL LIABILITIES ............................................................. 26,766,506
------------
NET ASSETS $711,043,737
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value; 500,000,000 shares authorized;
58,929,477 shares outstanding):
Class A ..................................................................... $ 3,054,929
Class B ..................................................................... 576,228
Class D ..................................................................... 2,261,791
Additional paid-in capital .................................................... 728,345,680
Accumulated net investment loss ............................................... (49,317)
Net unrealized depreciation of investments .................................... (23,145,574)
------------
NET ASSETS $711,043,737
============
NET ASSET VALUE PER SHARE:
CLASS A ($379,944,784 / 30,549,293 shares) .................................... $12.44
======
CLASS B ($67,198,845 / 5,762,276 shares) ...................................... $11.66
======
CLASS D ($263,900,108 / 22,617,908 shares) .................................... $11.67
======
</TABLE>
- ---------
* Includes affiliated issuers (issuers in which the Fund's holdings represent 5%
or more of the outstanding voting securities) with a cost of $2,677,342 and a
value of $2,172,028. See Notes to Financial Statements.
14
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended September 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest ....................................... .. $ 2,340,267
Dividends ...................................... .. 1,670,493
--------------
TOTAL INVESTMENT INCOME .......................................... $ 4,010,760
EXPENSES:
Management fee .................................... 8,859,463
Distribution and service fees ..................... 5,561,203
Shareholder account services ...................... 2,105,436
Shareholder reports and communications ............ 343,135
Custody and related services ...................... 208,950
Registration ...................................... 196,073
Auditing and legal fees ........................... 59,420
Directors' fees and expenses ...................... 16,194
Miscellaneous ..................................... 35,291
.................................................. --------------
TOTAL EXPENSES ................................................... 17,385,165
-------------
NET INVESTMENT LOSS .............................................. (13,374,405)
NET REALIZED AND UNREALIZED GAIN (LOSS)ON INVESTMENTS:
Net realized gain on investments* ................................ 27,728,578
Net change in unrealized appreciation of investments ............. (216,052,533)
--------------
NET LOSS ON INVESTMENTS .......................................... (188,323,955)
--------------
DECREASE IN NET ASSETS FROM OPERATIONS ........................... $(201,698,360)
==============
</TABLE>
- ---------
* Includes net realized loss from affiliated issuers of $4,089,614.
See Notes to Financial Statements.
15
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1998 1997
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment loss ............................................................ $ (13,374,405) $ (12,505,119)
Net realized gain on investments ............................................... 27,728,578 91,955,538
Net change in unrealized appreciation of investments ........................... (216,052,533) 93,832,612
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .............................. (201,698,360) 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)
--------------- --------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------
1998 1997
------------ ------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
CLASS A ...................................... 5,029,443 8,188,436 78,991,830 120,301,313
CLASS B ...................................... 2,005,337 2,700,791 29,952,250 38,590,991
CLASS D ...................................... 2,895,974 5,459,136 42,946,058 76,822,163
Exchanged from associated Funds:
CLASS A ...................................... 19,887,832 10,428,910 302,151,838 150,564,472
CLASS B ...................................... 1,708,776 442,678 24,644,626 6,149,856
CLASS D ...................................... 18,380,183 2,960,507 261,891,857 41,877,344
Shares issued in payment of gain distributions:
CLASS A ...................................... 3,197,741 1,789,620 47,518,435 25,108,371
CLASS B ...................................... 474,373 114,153 6,655,460 1,533,070
CLASS D ...................................... 2,484,536 1,400,777 34,882,889 18,812,429
-------------- -------------- --------------- ---------------
Total .......................................... 56,064,195 33,485,008 829,635,243 479,760,009
-------------- -------------- --------------- ---------------
Cost of shares repurchased:
CLASS A ..................................... (9,287,625) (10,676,096) (142,825,418) (155,515,563)
CLASS B ...................................... (570,218) (208,490) (8,232,601) (2,970,321)
CLASS D ...................................... (5,658,913) (5,321,563) (81,513,938) (73,595,265)
Exchanged into associated Funds:
Class A ......................................(20,657,403) (11,414,103) (315,167,006) (165,114,909)
Class B ...................................... (2,043,767) (486,787) (29,641,042) (6,666,931)
Class D ......................................(18,903,435) (3,910,240) (270,690,109) (54,310,345)
-------------- -------------- --------------- -------------
Total .......................................... (57,121,361) (32,017,279) (848,070,114) (458,173,334)
-------------- -------------- --------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ................... (1,057,166) 1,467,729 (18,434,871) 21,586,675
============== ============== =============== =============
INCREASE (DECREASE) IN NET ASSETS .............................................. (317,990,104) 143,953,537
NET ASSETS:
Beginning of year .............................................................. 1,029,033,841 885,080,304
--------------- -------------
END OF YEAR (including accumulated net investment loss of $49,317
and $55,235, respectively) ................................................... $ 711,043,737 $1,029,033,841
=============== =============
</TABLE>
- ----------
See Notes to Financial Statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Frontier Fund, Inc. (the "Fund")
offers three classes of shares. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an annual
basis. Class A shares purchased in an amount of $1,000,000 or more are sold
without an initial sales charge but are subject to a contingent deferred sales
charge ("CDSC") of 1% on redemptions within 18 months of purchase. Class B
shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75%, and a service fee of up to 0.25% on an annual basis,
and a CDSC, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of up
to 0.75%, and a service fee of up to 0.25% on an annual basis, and a CDSC, if
applicable, of 1% imposed on redemptions made within one year of purchase. The
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 year ended September 30, 1998,
distribution and service fees were the only class-specific expenses.
e. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. For the year ended
September 30, 1998, permanent differences aggregating approximately $13
million have been reclassified from accumulated net investment loss and
undistributed net realized gain to additional paid-in capital. These
reclassifications will have no effect on net assets, results of operations,
or net asset value per share of the Fund.
For the year ended September 30, 1998, the Fund redeemed 57,121,361 of its
shares from shareholders aggregating $848,070,114, of which approximately
$2,200,000 represents capital gain distributions. This information is
provided for federal income tax purposes only.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended September 30, 1998, amounted to $757,185,252 and $874,511,926,
respectively.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At September 30, 1998, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities amounted to $89,766,901 and $113,595,579 respectively.
4. MANAGEMENT FEE, DISTRIBUTION SERVICES, AND OTHER TRANSACTIONS -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides the necessary personnel and facilities. Compensation of all officers of
the Fund, all directors of the Fund who are employees or consultants of the
Manager, and all personnel of the Fund and the Manager, is paid by the Manager.
The Manager receives a fee, calculated daily and payable monthly, equal to 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 Advisors, Inc. (the "Distributor") (formerly Seligman Financial
Services, Inc.), agent for the distribution of the Fund's shares and an
affiliate of the Manager, received concessions of $117,076 from sales of Class A
shares after commissions of $923,157 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 year ended September 30, 1998, fees incurred
under the Plan aggregated $1,175,841, 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 year ended September 30, 1998, fees incurred under the Plan,
equivalent to 1% per annum of the average daily net assets of Class B and Class
D shares, amounted to $796,405 and $3,588,957, respectively.
The Distributor is entitled to retain any CDSC 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 year ended
September 30, 1998, such charges amounted to $119,411.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
and the Class B shares' distribution fees retained by the Distributor, for the
year ended September 30, 1998, amounted to $59,977.
Seligman Services, Inc., an affiliate of the Manager, is eligible to receive
commissions from certain sales of shares of the Fund, as well as distribution
and service fees pursuant to the Plan. For the year ended September 30, 1998,
Seligman Services, Inc. received commissions of $14,982 from the sale of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $87,176, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $2,105,436 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.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 September 30, 1998, of $49,317
is included in other liabilities. Deferred fees and related accrued earnings are
not deductible for federal income tax purposes until such amounts are paid.
5. COMMITTED LINE OF CREDIT -- Effective July 1, 1998, the Fund terminated its
$78 million committed line of credit and entered into a joint $800 million
committed line of credit that is shared by substantially all funds in the
Seligman Group of Investment Companies. The Fund's borrowings are limited to 10%
of its net assets. Borrowings pursuant to the credit facility are subject to
interest at a rate equal to the overnight federal funds rate plus 0.50% on an
overnight basis. The Fund incurs a commitment fee of 0.08% per annum on its
share of the unused portion of the credit facility. The credit facility may be
drawn upon only for temporary purposes and is subject to certain other customary
restrictions. The credit facility commitment expires one year from the date of
the agreement but is renewable with the consent of the participating banks. To
date, the Fund has not borrowed from the credit facility.
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 year ended September 30, 1998, is as follows:
<TABLE>
<CAPTION>
GROSS GROSS
BEGINNING PURCHASES SALES AND ENDING REALIZED DIVIDEND ENDING
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES GAIN (LOSS) INCOME VALUE
- ---------- ----------- -------------- -------------- --------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Coinmach Laundry ............ 600,000 -- 600,000 -- $(2,084,286) -- $ --
DONCASTERS (ADRs) ........... 500,000 -- 500,000 -- 509,806 -- --
Quest Education* ............ 605,000 -- 605,000 -- (2,515,134) -- --
Renex ....................... -- 363,900 -- 363,900 -- -- 2,172,028
----------- -----------
TOTAL ....................... $(4,089,614) $2,172,028
=========== ===========
</TABLE>
*Formerly Educational Medical.
19
<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, based on average shares
outstanding.
"Total return based on net asset value" measures each Class's performance
assuming that investors purchased Fund shares at net asset value as of the
beginning of the period, invested dividends and capital gains paid at net asset
value, and then sold their shares at the net asset value on the last day of the
period. The total return computations do not reflect any sales charges investors
may incur in purchasing or selling shares of the Fund. Total returns for periods
of less than one year are not annualized.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR ............................... $17.55 $15.38 $14.04 $11.62 $12.83
-------- -------- -------- -------- --------
Net investment loss .............................................. (0.16) (0.16) (0.13) (0.06) (0.08)
Net realized and unrealized investment gain (loss) ............... (3.32) 3.20 1.95 3.87 1.10
-------- -------- -------- -------- --------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS ................... (3.48) 3.04 1.82 3.81 1.02
Distributions from net gain realized ............................. (1.63) (0.87) (0.48) (1.39) (2.23)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSET VALUE ....................... (5.11) 2.17 1.34 2.42 (1.21)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR ..................................... $12.44 $17.55 $15.38 $14.04 $11.62
======== ======== ======== ======== ========
TOTAL RETURN BASED ON NET ASSET VALUE: (21.32)% 21.19% 13.40% 36.80% 9.79%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................... 1.47% 1.52% 1.56% 1.43% 1.34%
Net investment loss to average net assets ........................ (1.05)% (1.10)% (0.91)% (0.50)% (0.87)%
Portfolio turnover ............................................... 83.90% 97.37% 59.36% 71.52% 124.76%
Net Assets, End of Year (000s omitted) ........................... $379,945 $568,261 $523,737 $272,122 $58,478
</TABLE>
- ----------
See footnotes on page 21.
20
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
------------------------------------
YEAR ENDED
SEPTEMBER 30, 4/22/96*
--------------------- TO
1998 1997 9/30/96
-------- -------- --------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD ............................ $16.68 $14.78 $14.55
-------- -------- --------
Net investment loss ............................................. (0.27) (0.27) (0.11)
Net realized and unrealized investment gain (loss) .............. (3.12) 3.04 0.34
-------- -------- --------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS .................. (3.39) 2.77 0.23
Distributions from net gain realized ............................ (1.63) (0.87) --
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSET VALUE ...................... (5.02) 1.90 0.23
-------- -------- --------
NET ASSET VALUE, END OF PERIOD .................................. $11.66 $16.68 $14.78
======== ======== ========
TOTAL RETURN BASED ON NET ASSET VALUE: .......................... (21.95)% 20.17% 1.58%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets .................................. 2.24% 2.30% 2.45%+
Net investment loss to average net assets ....................... (1.82)% (1.88)% (1.80)%+
Portfolio turnover .............................................. 83.90% 97.37% 59.36%++
NET ASSETS, END OF PERIOD (000s omitted) ........................ $67,199 $69,869 $24,016
</TABLE>
<TABLE>
<CAPTION>
CLASS D
----------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR ............................. $16.69 $14.77 $13.61 $11.40 $12.80
-------- -------- -------- -------- --------
Net investment loss ............................................ (0.27) (0.27) (0.24) (0.15) (0.23)
Net realized and unrealized investment gain (loss) ............. (3.12) 3.06 1.88 3.75 1.06
-------- -------- -------- -------- --------
INCREASE (DECREASE) FROM INVESTMENT OPERATIONS ................. (3.39) 2.79 1.64 3.60 0.83
Distributions from net gain realized ........................... (1.63) (0.87) (0.48) (1.39) (2.23)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSET VALUE ..................... (5.02) 1.92 1.16 2.21 (1.40)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR ................................... $11.67 $16.69 $14.77 $13.61 $11.40
======== ======== ======== ======== ========
Total return based on net asset value: ......................... (21.94)% 20.32% 12.47% 35.53% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets ................................. 2.24% 2.30% 2.35% 2.29% 2.72%
Net investment loss to average net assets ...................... (1.82)% (1.88)% (1.70)% (1.35)% (2.25)%
Portfolio turnover ............................................. 83.90% 97.37% 59.36% 71.52% 124.76%
NET ASSETS, END OF YEAR (000s omitted) ......................... $263,900 $390,904 $337,327 $145,443 $9,318
</TABLE>
- ----------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended September 30, 1996.
See Notes to Financial Statements.
21
<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 September
30, 1998, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. We conducted our audits
in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of September 30, 1998, by correspondence
with the Fund's custodian and brokers; where replies were not received from
brokers we performed other auditing procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Seligman Frontier
Fund, Inc. as of September 30, 1998, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
October 30, 1998
22
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD, J. & W. Seligman & Co.
Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
DIRECTOR, KeySpan Energy Corporation
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR, ICIMutual Insurance Company
DIRECTOR EMERITUS
Fred E. Brown
DIRECTOR AND CONSULTANT, J. &W. Seligman &Co.
Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
23
<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 Advisors, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan Services
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated Telephone Access Service
24
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio. For tax purposes,
these profits may be taxed at different rates, primarily depending upon the
length of time the securities were owned by the fund.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES CHARGE (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price.
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 an investment company and that supplements the
prospectus. It is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The AVERAGE ANNUAL TOTAL
RETURN represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- --------------------------------------------------------------------------------
Adapted from the Investment Company Institute's 1998 MUTUAL FUND FACT BOOK.
25
<PAGE>
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman 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 ADVISORS, INC.
an affiliate of
[logo]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQF2 9/98 [RECYCLE LOGO] Printed on Recycled Paper
<PAGE>
S E L I G M A N
- -------------------
FRONTIER
FUND, INC.
[GRAPHIC OMITTED]
MID-YEAR REPORT
MARCH 31, 1999
----------------------
SEEKING GROWTH
IN CAPITAL VALUE THROUGH
INVESTMENTS IN
SMALL-COMPANY
GROWTH STOCKS
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE ...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
{PICTURE}
JAMES, JESSE, AND JOSEPH SELIGMAN, 1870
TIMES CHANGE ...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 135 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including equity funds that specialize in small companies,
technology, or international securities, and bond funds that focus on high-yield
issuers, US government bonds, or municipal securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman into the new millennium.
TABLE OF CONTENTS
To the Shareholders .................................. 1
Interview With Your Portfolio Manager ................ 2
Performance Overview ................................. 4
Portfolio Overview ................................... 6
Portfolio of Investments ............................. 8
Statement of Assets and Liabilities .................. 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
The six-month period ended March 31, 1999, was a difficult one for Seligman
Frontier Fund, and we were very disappointed with the Fund's investment results.
The Fund's total return during this time was -3.30% based on the net asset value
of Class A shares. At the same time, the Lipper Small Cap Funds Average returned
11.90%, the Russell 2000 Growth Index returned 21.56%, and the Russell 2000
Index returned 10.00%.
This underperformance was due to a combination of factors. First, a few of our
holdings, representing significant percentages of the portfolio, experienced
considerable price declines. Another factor was our lack of exposure to Internet
stocks, which was the only sector within the small-capitalization universe that
posted strong returns.
In regard to the difficulties that the Fund has had with individual portfolio
holdings, we are committed to taking action sooner to contain losses and we
believe that the worst is indeed behind us. We have also given much thought to
our decision to avoid Internet stocks and, while we are concerned about the
Fund's underperformance relative to its benchmarks, these stocks, most of which
have no earnings, do not meet the Fund's philosophy of investing in companies
with strong fundamentals.
The small-capitalization market as a whole continued to underperform
large-capitalization stocks during this time. As the Dow Jones Industrial
Average, which consists of only 30 large-company stocks, broke through the
much-hyped 10000 mark in March, small- and mid-capitalization stocks languished.
In fact, the performance disparity between larger and smaller issues reached
unprecedented levels. Investors continued to pursue past market performance,
with apparent disregard for valuations and company fundamentals. In addition to
the increasing narrowness of the market, troubles were evident in rising
volatility and high investor expectations.
We believe that stock price movements will soon begin to correspond to
fundamentals to a greater degree. US corporate profits are once again on the
rise, a trend that began in the fourth quarter of 1998 with 3% profit growth,
and one that we believe will continue, with profit growth between 6% and 10%
forecast for calendar year 1999. In addition, global economic turmoil seems to
be abating and the US economy appears poised for yet another year of expansion,
albeit at a slower pace. For the largest companies, which enjoyed spectacular
run-ups during 1998, we believe that these positive fundamentals are already
adequately reflected in current prices. However, there are broad areas of the
market -- particularly small- and mid-capitalization stocks -- that are trading
at low valuations in spite of strong fundamentals. It is these areas that we
believe currently offer the greatest opportunities.
Your portfolio management team considers the potential ramifications of the Year
2000 (Y2K) computer issue when making decisions on which securities should be
held by the Fund. In addition, the Fund's manager, J. & W. Seligman & Co.
Incorporated, continues to work to ensure that all its operations are prepared
for the challenges posed by Y2K, and we are confident that there will be no
disruption in the investment and shareholder services provided by the Fund as a
result of this issue.
We appreciate your continued support of Seligman Frontier Fund and look forward
to serving your investment needs for many years to come. A discussion with the
Fund's Portfolio Manager, as well as the Fund's investment results and portfolio
of investments, follows this
letter.
By order of the Board of Directors,
/s/ William C. Morris
- -----------------------------
William C. Morris
Chairman
/s/ Brian T. Zino
-----------------------
Brian T. Zino
President
April 30, 1999
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
ARSEN MRAKOVCIC
Q: HOW DID SELIGMAN FRONTIER FUND PERFORM DURING THE PAST SIX MONTHS?
A: For the six months ended March 31, 1999, Seligman Frontier Fund posted a
-3.30% total return based on the net asset value of Class A shares. During
the same period, the Lipper Small Cap Funds Average posted a total return of
11.90%, the Russell 2000 Growth Index posted a total return of 21.56%, and
the Russell 2000 Index posted a total return of 10.00%.
Q: WHAT ECONOMIC AND MARKET FACTORS AFFECTED SELIGMAN FRONTIER FUND DURING THE
PAST SIX MONTHS?
A: Large-capitalization stocks continued to outperform small-capitalization
stocks by a wide margin. We believe that this has remained the case until
now primarily because investor sentiment and momentum have continued to push
prices for the largest companies higher. Eventually, however, stock prices
should once again correspond more closely to the fundamentals of the issuing
companies. Valuations for smaller companies are near historical lows; yet,
as a group, their growth rates are competitive with those of larger
companies, and we expect that this will continue throughout 1999.
Q: WHAT HAS BEEN YOUR INVESTMENT STRATEGY IN THIS ENVIRONMENT?
A: Throughout the past six months, which has certainly been a difficult period
for the small-cap market in general and for the Fund in particular, we
remained disciplined in pursuing companies with strong revenue and earnings
growth, which also trade at reasonable valuations. However, the environment
of the past six months-- an environment characterized by momentum investing
with high levels of emotion-- also caused us to consider the likely effects
of investor sentiment when taking any actions for the portfolio. In some
cases, we were able to mitigate losses somewhat by selling holdings before
negative sentiment drove them lower. In other cases, we saw buying
opportunities when investor sentiment drove prices to what we perceived were
unjustified and exaggerated lows. While fundamental analysis is always our
most important consideration, our expectations regarding investor sentiment,
which has been so critical in this market, did play a role in our decision
making.
Q: WHAT PORTFOLIO MANAGEMENT DECISIONS MOST INFLUENCED THE FUND'S PERFORMANCE?
A: During the period under review, we were very disappointed in the
performances of a number of significant portfolio positions. For mostly
unrelated reasons, the health care sector of the portfolio dampened overall
performance considerably. This was primarily due to individual stock
selection and not because of problems with health care as an industry. Other
poor performances occurred in information technology staffing.
[PICTURE]
SMALL COMPANY TEAM: (FROM LEFT) TED HILLENMEYER, MIKE SULLIVAN, SONIA THOMAS
(ADMINISTRATIVE ASSISTANT), BRUCE ZIRMAN, (SEATED) RICK RUVKUN, 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
While we can attribute some of the period's disappointing performance to a
number of unfortunate stock picks, it is also true that, within small-cap
growth, Internet stocks were the only group that returned strong market
performance during the past six months.
It is clear that our lack of exposure to this sector hurt the Fund's
relative performance during the period under review. However, we have not
changed our investment discipline of analyzing company fundamentals strictly
when we choose stocks for the port-folio. At this time, Internet companies
do not have the strong fundamentals, such as earnings and historical
earnings growth, that we look for in our holdings.
It is important to note that should an Internet company meet our strict
investment criteria, we would consider it for the portfolio. The Fund does
hold technology companies -- many of which provide hardware support for the
Internet -- which have passed through our strict screening process.
Q: WHAT PORTFOLIO ACTIONS CONTRIBUTED POSITIVELY TO THE FUND'S PERFORMANCE?
A: During the period under review, we began to take more aggressive steps when
we perceived that a stock price would suffer from negative investor
sentiment. That has helped us to contain some losses in a volatile
environment.
While we have avoided Internet stocks, we have pursued solid technology
companies, many of which manufacture the components that support the
structure of the Internet. These stocks have performed well for the Fund,
and they are consistent with our discipline.
Q: WHAT IS YOUR STRATEGY GOING FORWARD?
A: We will remain committed to our investment discipline of seeking companies
with solid fundamentals. Over the near term, this will likely mean
continuing to avoid pure Internet companies. However, we do see some good
values in technology, especially semiconductor equipment companies, and will
be pursuing opportunities in this area.
In the information technology staffing sector, we plan to remain on the
sidelines, neither buying nor selling these issues. We believe that, at the
end of 1999, we will have an opportunity to move into this sector
aggressively. Over the near term, these companies are likely to experience a
short-term falloff in business as Year 2000 (Y2K) issues are resolved. In
addition, their customers are currently reluctant to add new technology
infrastructure because they don't want additional complications prior to
Y2K. However, we believe that once the Y2K issue is fully behind us,
information technology staffing companies will see a rapid increase in
business. When this occurs, the stock prices of these companies should
benefit, and we plan to be there when they do.
Q: WHAT IS YOUR OUTLOOK FOR THE SMALL-CAP GROWTH SECTOR?
A: It is extraordinarily difficult to predict where the small-cap market will
be over the short term. This is why investors who look to the small-cap
arena for greater growth, which historically the sector has delivered over
the long term, must also be willing to ride out the volatility which is also
characteristic of this sector. This market has been exceptionally narrow,
with the stock market's continued run being driven by a limited number of
large-cap issues. This is a scenario that we believe must, at some time,
reverse. Small-cap valuations are now extremely attractive relative to
larger companies. The fundamentals are in place. It is a matter of
sentiment, and sentiment is difficult to predict over the short term. Over
the long term, we believe that the solid fundamentals of the small-cap
sector will be reflected in company share prices. When this turnaround
occurs, Seligman Frontier Fund will be well positioned to benefit.
3
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED MARCH 31, 1999
<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>
CLASS A**
With Sales Charge (7.89)% (31.34)% 7.93% 13.04% n/a n/a
Without Sales Charge (3.30) (27.92) 8.98 13.59 n/a n/a
CLASS B**
With CDSC+ (8.42) (32.03) n/a n/a (3.70)% n/a
Without CDSC (3.60) (28.45) n/a n/a (2.86) n/a
CLASS D**
With 1% CDSC (4.65) (29.17) n/a n/a n/a n/a
Without CDSC (3.68) (28.45) 8.04 n/a n/a 11.32%
LIPPER SMALL CAP FUNDS AVERAGE*** 11.90 (15.64) 12.93 13.95 6.200 13.4800
RUSSELL 2000 GROWTH INDEX*** 21.56 (11.04) 10.76 10.56 3.270 11.5200
RUSSELL 2000 INDEX*** 10.00 (16.26) 11.22 11.46 6.040 11.8800
</TABLE>
NET ASSET VALUE
MARCH 31, 1999 SEPTEMBER 30, 1998 MARCH 31, 1998
-------------- ------------------ --------------
CLASS A $12.03 $12.44 $16.69
CLASS B 11.24 11.66 15.71
CLASS D 11.24 11.67 15.71
CAPITAL GAIN (LOSS) INFORMATION
FOR THE SIX MONTHS ENDED MARCH 31, 1999
REALIZED $0.148
UNREALIZED (0.797)++
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 (12b-1) 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 charge ("CDSC"), charged on redemptions made within
one year of the date of purchase, declining to 1% in the sixth year and 0%
thereafter. Returns for Class D shares are calculated with and without the
effect of the 1% CDSC, charged on redemptions made within one year of the
date of purchase.
***The Lipper Small Cap Funds Average (Lipper Average) is an average of all
funds that invest primarily in companies with market capitalizations of less
than $1 billion at the time of purchase. The Russell 2000 Growth Index
consists of small-company growth stocks. The Russell 2000 Index consists of
small-company stocks. The Lipper Average, the Russell 2000 Growth Index, and
the Russell 2000 Index are unmanaged benchmarks that assume reinvestment of
all dividends and exclude the effect of fees and/or 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 CDSC is 5% for periods of one year or less, and 3% since inception.
++Represents the per share amount of net unrealized depreciation of portfolio
securities as of March 31, 1999.
0From April 30, 1996.
00From April 30, 1993.
4
<PAGE>
PERFORMANCE OVERVIEW
- ------------------------------
CLASS A SHARES
GROWTH OF AN
ASSUMED $10,000
INVESTMENT
MARCH 31, 1989, TO
MARCH 31, 1999
[The following table represents a chart in the printed piece]
3/31/89 9,527
6/30/89 10,102
9/30/89 11,481
12/31/89 11,258
3/31/90 10,920
6/30/90 11,686
9/30/90 8,953
12/31/90 10,242
3/31/91 12,639
6/30/91 12,382
9/30/91 13,728
12/31/91 15,325
3/31/92 15,473
6/30/92 13,951
9/30/92 14,402
12/31/92 17,775
3/31/93 17,809
6/30/93 19,095
9/30/93 21,699
12/31/93 22,451
3/31/94 22,164
6/30/94 20,688
9/30/94 23,824
12/31/94 24,025
3/31/95 25,905
6/30/95 28,598
9/30/95 32,590
12/31/95 32,777
3/31/96 34,627
6/30/96 37,054
9/30/96 36,958
12/31/96 36,468
3/31/97 32,870
6/30/97 39,556
9/30/97 44,787
12/31/97 42,970
3/31/98 47,276
6/30/98 45,718
9/30/98 35,237
12/31/98 42,007
3/31/99 34,076
CLASS B SHARES
GROWTH OF AN
ASSUMED $10,000
INVESTMENT
APRIL 22, 1996,+ TO
MARCH 31, 1999
[The following table represents a chart in the printed piece]
4/22/96 10,000
6/30/96 10,206
9/30/96 10,158
12/31/96 10,004
3/31/97 9,001
6/30/97 10,809
9/30/97 12,207
12/31/97 11,684
3/31/98 12,836
6/30/98 12,386
9/30/98 9,527
12/31/98 11,340
3/31/99 9,184
CLASS D SHARES
GROWTH OF AN
ASSUMED $10,000
INVESTMENT
MAY 3, 1993,+ TO
MARCH 31, 1999
[The following table represents a chart in the printed piece]
5/3/93 10,000.00
10,573.24
6/30/93 11,146.00
11,646.90
12,147.56
9/30/93 12,648.00
12,776.16
12,904.10
12/31/93 13,032.00
12,956.11
12,850.19
3/31/94 12,804.00
12,500.55
12,196.83
6/30/94 11,893.00
12,484.57
13,076.03
9/30/94 13,667.00
13,693.88
13,720.28
12/31/94 13,747.00
14,096.03
14,445.37
3/31/95 14,795.00
15,289.22
15,783.74
6/30/95 16,278.00
17,026.83
17,775.41
9/30/95 18,524.00
18,546.48
18,568.96
12/31/95 18,591.00
18,929.97
19,268.51
3/31/96 19,607.00
20,053.74
20,500.43
6/30/96 20,947.00
20,912.48
20,877.86
9/30/96 20,834.00
20,739.42
20,635.59
12/31/96 20,532.00
19,845.86
19,159.97
3/31/97 18,474.00
19,710.68
20,947.29
6/30/97 22,184.00
23,145.15
24,106.40
9/30/97 25,068.00
24,709.90
24,352.14
12/31/97 23,994.00
24,776.88
25,559.37
3/31/98 26,342.00
26,040.00
25,738.00
6/30/98 25,436.00
23,480.00
21,524.00
9/30/98 19,568.00
20,808.00
22,048.00
12/31/98 23,290.00
21,809.00
20,328.00
3/31/99 18,847.00
- ------------------------------
These charts reflect the growth of a $10,000 investment for a 10-year period for
Class A shares and since inception for Class B and Class D shares, assuming that
all distributions within the periods are invested in additional shares. Since
the measured periods vary, the charts are plotted using different scales and are
not comparable.
- -------------------
* Net of the 4.75% maximum initial sales charge.
** Excludes the effect of the 3% CDSC.
+ Inception date.
5
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
MARCH 31, 1999
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
---------------------
MARCH SEPTEMBER
ISSUES COST VALUE 31, 1999 30, 1998
------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Advertising ....................................... 2 $ 14,922,048 $ 12,290,159 2.4 1.3
Business Goods and Services ....................... 16 77,688,270 78,638,172 15.4 16.5
Capital Goods ..................................... 4 30,127,266 25,742,159 5.0 4.1
Computer Software and Services .................... 7 51,191,345 51,640,793 10.1 5.8
Consulting Services ............................... 4 19,559,430 19,813,554 3.9 4.1
Consumer Goods and Services ....................... 6 29,632,949 30,925,054 6.1 5.3
Drugs and Health Care ............................. 13 63,670,575 48,243,563 9.5 12.7
Electronics ....................................... 9 52,895,932 66,476,413 13.0 7.3
Energy ............................................ 4 16,869,405 19,731,174 3.9 4.0
Environmental Management .......................... 4 22,516,363 19,627,494 3.8 4.9
Financial Services ................................ 6 20,380,829 13,435,989 2.6 3.1
Industrial Goods and Services ..................... 2 12,286,249 9,189,656 1.8 1.5
Leisure and Entertainment ......................... 2 12,751,056 22,861,000 4.5 1.8
Manufacturing ..................................... 1 6,251,840 3,911,086 0.8 1.5
Media and Broadcasting ............................ 4 21,376,478 17,340,603 3.4 6.0
Medical Products and Technology ................... 7 39,516,934 28,313,156 5.6 4.9
Paper and Packaging ............................... 1 6,902,936 4,888,856 1.0 0.7
Real Estate Investment Trust ...................... 1 9,892,041 5,660,212 1.1 0.8
Retail Trade ...................................... 1 5,897,421 3,514,062 0.7 2.8
Schools ........................................... 3 18,096,524 17,619,181 3.4 1.1
Telecommunications ................................ 2 13,294,002 11,725,800 2.3 2.0
Transportation .................................... 2 9,846,705 9,092,219 1.8 0.4
---- ------------- ------------ ------ -----
101 555,566,598 520,680,355 102.1 92.6
OTHER ASSETS LESS LIABILITIES ....................... -- (10,850,368) (10,850,368) (2.1) 7.4
---- ------------- ------------ ------ -----
NET ASSETS .......................................... 101 $544,716,230 $509,829,987 100.0 100.0
==== ============= ============ ====== =====
</TABLE>
[The following table represents a bar chart in the printed piece]
LARGEST INDUSTRIES
MARCH 31, 1999
PERCENT OF
NET ASSETS DOLLAR AMOUNTS
----------- --------------
BUSINESS GOODS AND SERVICES 15.4% $78,638,172
ELECTRONICS 13.0% $66,476,413
COMPUTER SOFTWARE AND SERVICES 10.1% $51,640,793
DRUGS AND HEALTH CARE 9.5% $48,243,563
CONSUMER GOODS AND SERVICES 6.1% $30,925,054
6
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
DURING THE PAST SIX MONTHS
SHARES
--------------------------
HOLDINGS
ADDITIONS INCREASE 3/31/99
- --------- ----------- -----------
Analog Devices ..................... 217,400 217,400
Coach USA .......................... 255,200 255,200
Cognex ............................. 162,200 235,700
Covance ............................ 228,000 228,000
ITT Educational Services ........... 208,400 208,400
National Instruments ............... 222,500 317,700
Novellus Systems ................... 96,000 96,000
Rexall Sundown ..................... 220,600 220,600
SunGard Data Systems ............... 172,000 172,000
Teva Pharmaceutical
Industries (ADRs) ................ 206,600 206,600
SHARES
--------------------------
HOLDINGS
REDUCTIONS DECREASE 3/31/99
- ---------- ----------- -----------
American Management
Systems .......................... 250,000 --
BISYS Group ........................ 268,500 --
Ceridian ........................... 157,700 --
Duane Reade ........................ 293,400 --
Jacor Communications ............... 225,200 --
KLA-Tencor ......................... 151,400 97,900
MidAmerican Energy* ................ 425,200 --
Petersen Companies
(Class A) ........................ 331,800 --
Waters ............................. 161,700 --
Watson Pharmaceuticals ............. 179,700 --
- ---------------
* Formerly CalEnergy.
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
LARGEST PORTFOLIO HOLDINGS
MARCH 31, 1999
SECURITY VALUE
- -------- -----------
Burr-Brown ................................... $20,898,813
Premier Parks ................................ 18,029,000
Avant! ....................................... 13,759,131
Microchip Technology ......................... 12,791,581
MemberWorks .................................. 11,840,550
SECURITY VALUE
- -------- -----------
Teva Pharmaceutical Industries
(ADRs) ..................................... $ 9,794,131
HA-LO Industries ............................. 9,773,047
U.S. Foodservice ............................. 9,499,950
ANTEC ........................................ 9,492,619
Sanmina ...................................... 9,359,238
7
<PAGE>
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999
SHARES VALUE
--------- ------------
COMMON STOCKS 102.1%
ADVERTISING 2.4%
HA-LO Industries* 793,750 $ 9,773,047
Snyder Communications* 90,300 2,517,112
------------
12,290,159
------------
BUSINESS GOODS AND
SERVICES 15.4%
Abacus Direct* 74,000 6,068,000
Affiliated Computer Services
(Class A)* 121,900 5,576,925
Applied Graphics Technologies* 273,300 2,041,209
Copart* 272,800 5,643,550
DST Systems* 70,200 4,216,388
FirstService* (Canada) 361,900 4,738,628
Indus International* 459,300 2,023,791
Integrated Electrical Services* 211,300 3,380,800
Keystone Automotive Industries* 343,500 5,549,672
Metamor Worldwide* 68,800 958,900
Modis Professional Services* 509,100 4,613,719
NOVA* 348,205 9,140,381
Personnel Group of America* 457,500 3,288,281
Provant* 389,670 7,111,478
U.S. Foodservice* 204,300 9,499,950
Wilmar Industries* 319,100 4,786,500
------------
78,638,172
------------
CAPITAL GOODS 5.0%
HMT Technology* 183,300 647,278
Microchip Technology* 370,100 12,791,581
Novellus Systems* 96,000 5,286,000
UCAR International* 496,800 7,017,300
------------
25,742,159
------------
COMPUTER SOFTWARE
AND SERVICES 10.1%
Avant!* 773,800 13,759,131
Inso* 380,400 2,841,112
National Instruments* 317,700 9,004,809
Structural Dynamics Research* 270,000 5,104,688
SunGard Data Systems 172,000 6,880,000
Transaction Systems Architects
(Class A)* 204,100 7,353,978
Unigraphics Solutions
(Class A)* 377,300 6,697,075
------------
51,640,793
------------
CONSULTING SERVICES 3.9%
Forrester Research* 12,600 379,969
Market Facts* 223,100 4,977,919
Primark* 373,900 7,945,375
Professional Detailing* 248,900 6,510,291
------------
19,813,554
------------
CONSUMER GOODS
AND SERVICES 6.1%
Carey International* 85,000 1,349,375
Carriage Services (Class A)* 481,300 7,279,663
MemberWorks* 327,200 11,840,550
Packaged Ice* 124,300 772,991
Pre-Paid Legal Services* 223,000 5,463,500
Rexall Sundown* 220,600 4,218,975
------------
30,925,054
------------
DRUGS AND HEALTH CARE 9.5%
AmSurg (Class A)* 171,500 1,221,938
Barr Laboratories* 150,600 4,593,300
Health Management Associates
(Class A) 246,600 3,005,438
Omnicare 193,700 3,692,406
Priority Healthcare (Class B)* 10,000 451,250
Province Healthcare* 337,700 6,289,663
Renal Care Group* 115,500 2,263,078
Renex*+ 373,500 1,680,750
Schein Pharmaceutical* 144,600 1,879,800
Teva Pharmaceutical Industries
ADRs (Israel) 206,600 9,794,131
Total Renal Care Holdings* 538,400 5,922,400
Triangle Pharmaceuticals* 177,300 1,900,434
Universal Health Services
(Class B)* 128,300 5,548,975
------------
48,243,563
------------
ELECTRONICS 13.0%
Analog Devices* 217,400 6,467,650
AVX 493,800 7,900,800
Burr-Brown* 879,950 20,898,813
Cognex* 235,700 5,553,681
General Semiconductors* 305,000 2,211,250
KLA-Tencor* 97,900 4,757,328
Oak Industries* 81,100 2,574,925
PMC-Sierra* (Canada) 94,900 6,752,728
Sanmina* 147,100 9,359,238
------------
66,476,413
------------
ENERGY 3.9%
Barrett Resources* 68,400 1,714,275
Cabot Oil & Gas (Class A) 337,500 4,872,656
Calpine* 245,500 8,945,406
Santa Fe Energy Resources* 574,200 4,198,837
------------
19,731,174
------------
ENVIRONMENTAL
MANAGEMENT 3.8%
Allied Waste Industries* 226,400 3,268,650
Casella Waste Systems (Class A)* 230,200 5,193,888
Superior Services* 296,900 5,873,053
Waste Connections* 223,700 5,291,903
------------
19,627,494
------------
FINANCIAL SERVICES 2.6%
Affiliated Managers Group* 141,500 3,679,000
American Capital Strategies 190,300 3,246,994
- ----------
See footnotes on page 9.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1999
SHARES VALUE
--------- -----------
FINANCIAL SERVICES (CONTINUED)
Crusader Holding* 75,390 $ 749,188
ESG Re (Bermuda) 189,000 2,994,469
Metris Companies 26,700 1,071,338
Stirling Cooke Brown Holdings
(Bermuda) 240,000 1,695,000
-------------
13,435,989
-------------
INDUSTRIAL GOODS
AND SERVICES 1.8%
McDermott International 258,900 6,553,406
United Rentals* 92,500 2,636,250
-------------
9,189,656
-------------
LEISURE AND
ENTERTAINMENT 4.5%
Premier Parks* 484,000 18,029,000
ResortQuest International* 302,000 4,832,000
-------------
22,861,000
-------------
MANUFACTURING 0.8%
American Homestar* 538,300 3,911,086
-------------
MEDIA AND
BROADCASTING 3.4%
Journal Register* 412,000 4,944,000
SBS Broadcasting*
(Luxembourg) 150,300 4,818,994
Sinclair Broadcast Group
(Class A)* 462,500 6,749,609
Ziff-Davis* 23,000 828,000
-------------
17,340,603
-------------
MEDICAL PRODUCTS AND
TECHNOLOGY 5.6%
Covance* 228,000 5,714,250
Dura Pharmaceuticals* 240,700 3,392,366
Hanger Orthopedic Group* 257,700 3,478,950
Pharmaceutical Product
Development* 144,300 4,838,559
PSS World Medical* 992,800 8,687,000
Henry Schein* 66,500 1,683,281
Somnus Medical Technologies* 200,000 518,750
-------------
28,313,156
-------------
PAPER AND PACKAGING 1.0%
Ivex Packaging* 321,900 4,888,856
-------------
REAL ESTATE INVESTMENT
TRUST 1.1%
Prison Realty Trust 324,600 5,660,212
-------------
RETAIL TRADE 0.7%
Pier 1 Imports 432,500 3,514,062
-------------
SCHOOLS 3.4%
Career Education* 219,000 7,678,687
EduTrek International*
(Class A) 304,500 2,112,469
ITT Educational Services* 208,400 7,828,025
-------------
17,619,181
-------------
TELECOMMUNICATIONS 2.3%
ANTEC* 437,700 9,492,619
Glenayre Technologies* 643,800 2,233,181
-------------
11,725,800
-------------
TRANSPORTATION 1.8%
Coach USA* 255,200 7,018,000
U. S. Xpress Enterprises
(Class A)* 177,000 2,074,219
-------------
9,092,219
-------------
TOTAL INVESTMENTS 102.1%
(Cost $555,566,598) 520,680,355
OTHER ASSETS
LESS LIABILITIES (2.1)% (10,850,368)
-------------
NET ASSETS 100.0% $509,829,987
=============
- -----------------------
* Non-income producing security.
+ Affiliated issuer (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, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks* (cost $555,566,598) ..................................................... $520,680,355
Receivable for securities sold .......................................................... 6,717,920
Receivable for Capital Stock sold ....................................................... 1,124,370
Expenses prepaid to shareholder service agent ........................................... 190,384
Receivable for dividends and interest ................................................... 12,945
Other ................................................................................... 79,969
------------
TOTAL ASSETS ............................................................................ 528,805,943
------------
LIABILITIES:
Payable for Capital Stock repurchased ................................................... 8,919,893
Payable for securities purchased ........................................................ 4,466,403
Payable to custodian .................................................................... 4,458,267
Accrued expenses and other .............................................................. 1,131,393
------------
TOTAL LIABILITIES ....................................................................... 18,975,956
------------
NET ASSETS .............................................................................. $509,829,987
============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value; 500,000,000 shares authorized;
43,762,658 shares outstanding):
Class A ............................................................................... $ 2,284,153
Class B ............................................................................... 497,119
Class D ............................................................................... 1,594,994
Additional paid-in capital .............................................................. 539,554,638
Accumulated net investment loss ......................................................... (4,994,235)
Undistributed net realized gain ......................................................... 5,779,561
Net unrealized depreciation of investments .............................................. (34,886,243)
------------
NET ASSETS .............................................................................. $509,829,987
============
NET ASSET VALUE PER SHARE:
CLASS A ($274,679,879 / 22,841,529 shares) .............................................. $12.03
======
CLASS B ($55,851,275 / 4,971,186 shares) ................................................ $11.24
======
CLASS D ($179,298,833 / 15,949,943 shares) .............................................. $11.24
======
</TABLE>
- ------------------
* Includes affiliated issuer (issuer in which the Fund's holdings represent 5%
or more of the outstanding voting securities) with a cost of $2,743,742 and a
value of $1,680,750.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest .......................................................... $ 949,265
Dividends ......................................................... 762,179
------------
TOTAL INVESTMENT INCOME (net of foreign taxes
withheld of $3,719) .............................................................. $1,711,444
EXPENSES:
Management fee .................................................... 3,313,512
Distribution and service fees ..................................... 2,056,293
Shareholder account services ...................................... 967,879
Shareholder reports and communications ............................ 123,619
Custody and related services ...................................... 67,691
Registration ...................................................... 45,481
Auditing and legal fees ........................................... 37,728
Directors' fees and expenses ...................................... 17,311
Miscellaneous ..................................................... 26,848
------------
TOTAL EXPENSES ..................................................................... 6,656,362
------------
NET INVESTMENT LOSS ................................................................ (4,944,918)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 6,462,665
Net change in unrealized depreciation of investments (11,740,669)
------------
NET LOSS ON INVESTMENTS ............................................................ (5,278,004)
------------
DECREASE IN NET ASSETS FROM OPERATIONS ............................................. $(10,222,922)
============
</TABLE>
- ----------------
See Notes to Financial Statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998
---------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment loss ........................................................... $ (4,944,918) $ (13,374,405)
Net realized gain on investments .............................................. 6,462,665 27,728,578
Net change in unrealized appreciation/depreciation of investments ............. (11,740,669) (216,052,533)
------------ -------------
DECREASE IN NET ASSETS FROM OPERATIONS ........................................ (10,222,922) (201,698,360)
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investments:
Class A .................................................................... -- (53,153,741)
Class B .................................................................... -- (7,202,049)
Class D .................................................................... -- (37,501,083)
------------ -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS ..................................... -- (97,856,873)
------------ -------------
<CAPTION>
SHARES
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998
--------------- ------------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares:
Class A ................................. 1,953,348 5,029,443 25,640,183 78,991,830
Class B ................................. 467,357 2,005,337 5,743,465 29,952,250
Class D ................................. 722,808 2,895,974 8,811,743 42,946,058
Exchanged from associated Funds:
Class A ................................. 19,147,708 19,887,832 249,412,586 302,151,838
Class B ................................. 1,258,766 1,708,776 15,230,481 24,644,626
Class D ................................. 20,766,220 18,380,183 253,724,856 261,891,857
Shares issued in payment of gain
distributions:
Class A ................................. -- 3,197,741 -- 47,518,435
Class B ................................. -- 474,373 -- 6,655,460
Class D ................................. -- 2,484,536 -- 34,882,889
------------ ------------ ------------- -------------
Total ...................................... 44,316,207 56,064,195 558,563,314 829,635,243
------------ ------------ ------------- -------------
Cost of shares repurchased:
Class A ................................. (8,795,798) (9,287,625) (112,240,212) (142,825,418)
Class B ................................. (661,551) (570,218) (8,090,060) (8,232,601)
Class D ................................. (6,088,761) (5,658,913) (73,516,590) (81,513,938)
Exchanged into associated Funds:
Class A ................................. (20,013,022) (20,657,403) (262,322,249) (315,167,006)
Class B ................................. (1,855,662) (2,043,767) (22,615,666) (29,641,042)
Class D ................................. (22,068,232) (18,903,435) (270,769,365) (270,690,109)
------------ ------------ ------------- -------------
Total ...................................... (59,483,026) (57,121,361) (749,554,142) (848,070,114)
------------ ------------ ------------- -------------
DECREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ............... (15,166,819) (1,057,166) (190,990,828) (18,434,871)
============ ============ ============= =============
DECREASE IN NET ASSETS ......................................................... (201,213,750) (317,990,104)
NET ASSETS:
Beginning of period ............................................................ 711,043,737 1,029,033,841
------------- -------------
END OF PERIOD (including accumulated net investment loss of $4,994,235
and $49,317, respectively) ................................................... $509,829,987 $ 711,043,737
============ =============
</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. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an annual
basis. Class A shares purchased in an amount of $1,000,000 or more are sold
without an initial sales charge but are subject to a contingent deferred sales
charge ("CDSC") of 1% on redemptions within 18 months of purchase. Class B
shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75%, and a service fee of up to 0.25% on an annual basis,
and a CDSC, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. Class D shares are
sold without an initial sales charge but are subject to a distribution fee of up
to 0.75%, and a service fee of up to 0.25% on an annual basis, and a CDSC, if
applicable, of 1% imposed on redemptions made within one year of purchase. The
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, 1999,
distribution and service fees were the only class-specific expenses.
e. DISTRIBUTIONS TO SHAREHOLDERS -- The treatment for financial statement
purposes of distributions made to shareholders during the year from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassifications
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, 1999, amounted to $208,110,173 and $340,767,610,
respectively.
At March 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio securities
amounted to $78,811,320 and $113,697,563, respectively.
4. MANAGEMENT FEE, DISTRIBUTION SERVICES, AND OTHER TRANSACTIONS -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and
provides the necessary personnel and facilities. Compensa-
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
tion 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 0.95% per annum of the Fund's average daily net assets.
Seligman Advisors, Inc. (the "Distributor"), agent for the distribution of
the Fund's shares and an affiliate of the Manager, received concessions of
$25,175 from sales of Class A shares after commissions of $196,409 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, 1999, fees
incurred under the Plan aggregated $453,200, or 0.24% 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 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, 1999, 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 $351,178 and $1,251,915, respectively.
The Distributor is entitled to retain any CDSC 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, 1999, such charges amounted to $69,702.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate amount of such payments
retained by the Distributor, for the six months ended March 31, 1999, amounted
to $8,324.
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, 1999,
Seligman Services, Inc. received commissions of $3,139 from the sale of shares
of the Fund. Seligman Services, Inc. also received distribution and service fees
of $24,642, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $964,850 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, 1999, of $53,936 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 -- Effective July 1, 1998, the Fund terminated its
$78 million committed line of credit and entered into a joint $800 million
committed line of credit that is shared by substantially all funds in the
Seligman Group of Investment Companies. The Fund's borrowings are limited to 10%
of its net assets. Borrowings pursuant to the credit facility are subject to
interest at a rate equal to the overnight federal funds rate plus 0.50%. The
Fund incurs a commitment fee of 0.08% per annum on its share of the unused
portion of the credit facility. The credit facility may be drawn upon only for
temporary purposes and is subject to certain other customary restrictions. The
credit facility commitment expires one year from the date of the agreement but
is renewable with the consent of the participating banks.
During the six-month period ended March 31, 1999, the Fund periodically
borrowed from the credit facility. The average outstanding daily balance of bank
loans (based on the number of days the loans were outstanding) was $12,022,222
with a weighted interest rate of 5.28%. The maximum borrowing outstanding during
the period was $21,000,000.
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
represent 5% or more of the outstanding voting securities of the issuer. The
Fund's transaction in the securities of these issuers during the six months
ended March 31, 1999 is as follows:
<TABLE>
<CAPTION>
GROSS GROSS
BEGINNING PURCHASES SALES AND ENDING REALIZED DIVIDEND ENDING
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES GAIN (LOSS) INCOME VALUE
- ---------- -------- ------------- ---------- ------ ----------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Renex .................. 363,900 9,600 -- 373,500 -- -- $1,680,750
</TABLE>
15
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five and one-half years or from its inception if less
than five and one-half years. Certain information reflects financial results for
a single share of a Class that was held throughout the periods shown. Per share
amounts are calculated using average shares outstanding. "Total return" shows
the rate that you would have earned (or lost) on an investment in each Class,
assuming you reinvested all your capital gain distributions. Total returns do
not reflect any sales charges, and are not annualized for periods of less than
one year.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED ---------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................ $12.44 $17.55 $15.38 $14.04 $11.62 $12.83
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ................................. (0.07) (0.16) (0.16) (0.13) (0.06) (0.08)
Net realized and unrealized
gain (loss) on investments ........................ (0.34) (3.32) 3.20 1.95 3.87 1.10
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS .................... (0.41) (3.48) 3.04 1.82 3.81 1.02
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ........ -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ................................. -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ...................... $12.03 $12.44 $17.55 $15.38 $14.04 $11.62
====== ====== ====== ====== ====== ======
TOTAL RETURN: (3.30)% (21.32)% 21.19% 13.40% 36.80% 9.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............ 274,680 $379,945 $568,261 $523,737 $272,122 $58,478
Ratio of expenses to average net assets ............. 1.56%+ 1.47% 1.52% 1.56% 1.43% 1.34%
Ratio of net loss to average net assets ............. (1.07)%+ (1.05)% (1.10)% (0.91)% (0.50)% (0.87)%
Portfolio turnover rate ............................. 31.33% 83.90% 97.37% 59.36% 71.52% 124.76%
<CAPTION>
CLASS B
-------------------------------------------------------
YEAR ENDED
SIX MONTHS SEPTEMBER 30, 4/22/96*
ENDED ----------------------- TO
3/31/99 1998 1997 9/30/96
-------------- ----- ----- ---------
<S> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $11.66 $16.68 $14.78 $14.55
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.11) (0.27) (0.27) (0.11)
Net realized and unrealized gain (loss) on investments (0.31) (3.12) 3.04 0.34
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.42) (3.39) 2.77 0.23
------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain -- (1.63) (0.87) --
------ ------ ------ ------
TOTAL DISTRIBUTIONS -- (1.63) (0.87) --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.24 $11.66 $16.68 $14.78
====== ====== ====== ======
TOTAL RETURN: (3.60)% (21.95)% 20.17% 1.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $55,851 $67,199 $69,869 $24,016
Ratio of expenses to average net assets 2.32%+ 2.24% 2.30% 2.45%+
Ratio of net loss to average net assets (1.83)%+ (1.82)% (1.88)% (1.80)%+
Portfolio turnover rate 31.33% 83.90% 97.37% 59.36%++
</TABLE>
- ----------------------
See footnotes on page 17.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS D
------------------------------------------------------------------------
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED --------------------------------------------------------
3/31/99 1998 1997 1996 1995 1994
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $11.67 $16.69 $14.77 $13.61 $11.40 $12.80
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.11) (0.27) (0.27) (0.24) (0.15) (0.23)
Net realized and unrealized
gain (loss) on investments (0.32) (3.12) 3.06 1.88 3.75 1.06
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.43) (3.39) 2.79 1.64 3.60 0.83
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS -- (1.63) (0.87) (0.48) (1.39) (2.23)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.24 $11.67 $16.69 $14.77 $13.61 $11.40
====== ====== ====== ====== ====== ======
TOTAL RETURN: (3.68)% (21.94)% 20.32% 12.47% 35.53% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $179,299 $263,900 $390,904 $337,327 $145,443 $9,318
Ratio of expenses to average net assets 2.32%+ 2.24% 2.30% 2.35% 2.29% 2.72%
Ratio of net loss to average net assets (1.83)%+ (1.82)% (1.88)% (1.70)% (1.35)% (2.25)%
Portfolio turnover rate 31.33% 83.90% 97.37% 59.36% 71.52% 124.76%
</TABLE>
- --------------------
* Commencement of offering of shares.
+ Annualized.
++ For the year ended September 30, 1996.
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,
1999, the related statements of operations for the six months then ended and of
changes in net assets for the six months then ended and for the year ended
September 30, 1998, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the Fund's custodian and brokers; where replies
were not received from brokers we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Seligman Frontier Fund, Inc. as of March 31, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
April 30, 1999
18
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN 2, 4
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN 3, 4
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW 2, 4
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL 2, 4
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES, St. George's School
WILLIAM C. MORRIS 1
CHAIRMAN
CHAIRMAN OF THE BOARD,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
DIRECTOR, KeySpan Energy Corporation
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER 3, 4
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON 2, 4
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO 1
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR, ICIMutual Insurance Company
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
19
<PAGE>
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
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 Advisors, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) 221-2450 Shareholder Services
(800) 445-1777 Retirement Plan
Services
(212) 682-7600 Outside the
United States
(800) 622-4597 24-Hour Automated
Telephone Access
Service
20
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES CHARGE (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund (the
CDSC expires after a fixed time period).
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price or net asset value.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE -- The price at which a mutual fund's share can be purchased. The
offering price per share is the current net asset value plus any sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains more detailed
information about an investment company and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- --------------------
Adapted from the Investment Company Institute's 1998 MUTUAL FUND FACT BOOK.
<PAGE>
This report is intended only for the information of shareholders or those who
have received the offering prospectus covering shares of Capital Stock of
Seligman 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 ADVISORS, INC.
AN AFFILIATE OF
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQF3 3/99 [Printed Cycle Logo] Printed on Recycled Paper
<PAGE>
FILE NO. 2-92487
811-4078
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
All Exhibits have been previously filed and are incorporated herein by
reference, except Exhibits marked with an asterisk (*) which are filed
herebwith.
(a) *Articles Supplementary dated May 24, 1999.
(a)(1) Amended and Restated Articles of Incorporation. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 21 filed on
January 28, 1997.)
(b) Amended and Restated Bylaws of Registrant. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 21 filed on January 28,
1997.)
(c) Copy of Specimen Stock Certificate. (Incorporated by Reference to Form
SE filed on April 16, 1996.)
(d) Management Agreement between the Registrant and J. & W. Seligman & Co.
Incorporated. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 20 filed April 19, 1996.)
(e) *Addendum to Sales/Bank Agreement. (Incorporated by reference to
Post-Effective Amendment No. 57 to the Registration Statement of
Seligman Capital Fund, Inc. (File #811-1886) filed on May 28, 1999.)
(e)(1) *Form of Bank Agreement between Seligman Advisors, Inc. and Banks.
(Incorporated by reference to Post-Effective Amendment No. 57 to the
Registration Statement of Seligman Capital Fund, Inc. (File #811-1886)
filed on May 28, 1999.)
(e)(2) Distributing Agreement between Registrant and Seligman Advisors, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
21 filed on January 28, 1997.)
(e)(3) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co.(formerly, Dean Witter Reynolds, Inc.)
(Incorporated by reference to Exhibit 6b of Registration Statement No.
2-33566, Post-Effective Amendment No. 53, filed on April 28, 1997.)
(e)(4) Form of Sales Agreement between Seligman Advisors, Inc. and Morgan
Stanley Dean Witter & Co., (formerly Dean Witter Reynolds, Inc.) with
respect to certain Chilean institutional investors. (Incorporated by
reference to Exhibit 6c of Registration Statement No. 2-33566,
Post-Effective Amendment No. 53, filed on April 28, 1997.)
(e)(5) Form of Dealer Agreement between Seligman Advisors, Inc. and Salomon
Smith Barney Inc.(formerly, Smith Barney Inc.) (Incorporated by
reference to Exhibit 6d of Registration Statement No. 2-33566,
Post-Effective Amendment No. 53, filed on April 28, 1997.)
(f) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
21 filed on January 28, 1997.)
<PAGE>
FILE NO. 2-92487
811-4078
PART C. OTHER INFORMATION (CONTINUED)
(f)(1) Deferred Compensation Plan for the Board of Directors of Seligman
Frontier Fund, Inc. (Incorporated by reference to Exhibit (f)(1) of
Registrant's Post-Effective Amendment No. 26 filed January 27, 1999.
(g) Custody Agreement between Registrant and Investors Fiduciary Trust
Company. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 21 filed on January 28, 1997.)
(h) Not applicable.
(i) *Opinion and Consent of Counsel in respect of Class C shares.
(i)(1) Opinion and Consent of Counsel. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 21 filed on January 28,
1997.)
(j) *Consent of Independent Auditors.
(k) Not applicable.
(l) *Form of Purchase Agreement for Initial Capital for Class C shares.
(l)(1) Copy of Purchase Agreement for Initial Capital for Class B shares.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
20 filed on April 19, 1996.
(l)(2) Copy of Purchase Agreement for Initial Capital for Class D shares.
(Incorporated by reference to Registrant's Post-Effective Amendment No.
21 filed on January 28, 1997.)
(m) *Amended Administration, Shareholder Services and Distribution Plan.
(m)(1) *Amended Administration, Shareholder Services and Distribution
Agreement between Seligman Advisors, Inc. and Dealers. (Incorporated by
reference to Post-Effective Amendment No. 57 to the Registration
Statement of Seligman Capital Fund, Inc. File #811-1886) filed on May
28, 1999.)
(n) *Financial Data Schedules.
(o) *Plan of Multiple Classes of Shares (four Classes) pursuant to Rule
18f-3 under the Investment Company Act of 1940. (Incorporated by
reference to Post-Effective Amendment No. 57 to the Registration
Statement of Seligman Capital Fund, Inc. (File #811-1886) filed on May
28, 1999.)
OTHER EXHIBITS: Powers of Attorney. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 23 filed on
January 28, 1998.)
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT - None.
ITEM 25. INDEMNIFICATION - Reference is made to the provisions of Articles
Twelfth and Thirteenth of Registrant's Amended and Restated Articles of
Incorporation filed as Exhibit 24(b)(1) and Article IV of Registrant's
Amended and Restated By-laws filed as Exhibit 24(b)(2) to Registrant's
Post-Effective Amendment No. 21 to the Registration Statement.
<PAGE>
FILE NO. 2-92487
811-4078
PART C. OTHER INFORMATION (CONTINUED)
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised by the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act as is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER - J. & W.
Seligman & Co. Incorporated, a Delaware corporation ("Manager"), is the
Registrant's investment manager. The Manager also serves as investment
manager to eighteen associated investment companies. They are Seligman
Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund,
Inc., Seligman Municipal Fund Series, Inc., Seligman Municipal Series
Trust, Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Portfolios, Inc., Seligman Quality
Municipal Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman
Value Fund Series, Inc. and Tri-Continental Corporation.
The Manager has an investment advisory service division which provides
investment management or advice to private clients. The list required
by this Item 28 of officers and directors of the Manager, together with
information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D or Form ADV, filed by the Manager pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-15798), which was
filed on March 31, 1999.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter currently distributing
securities of the Registrant also acts as a principal underwriter,
depositor or investment adviser are:
Seligman Capital Fund, Inc.
Seligman Cash Management Fund, Inc.
Seligman Common Stock Fund, Inc.
Seligman Communications and Information Fund, Inc.
Seligman Growth Fund, Inc.
Seligman Henderson Global Fund Series, Inc.
Seligman High Income Fund Series
Seligman Income Fund, Inc.
Seligman Municipal Fund Series, Inc.
Seligman Municipal Series Trust
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series
Seligman Portfolios, Inc.
Seligman Value Fund Series, Inc.
<PAGE>
FILE NO. 2-92487
811-4078
PART C. OTHER INFORMATION (CONTINUED)
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 20:
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter With Registrant
-------------------- ----------------------- ---------------------
<S> <C> <C>
WILLIAM C. MORRIS* Director Chairman of the Board and
Chief Executive Officer
BRIAN T. ZINO* Director President and Director
RONALD T. SCHROEDER* Director None
FRED E. BROWN* Director Director Emeritus
WILLIAM H. HAZEN* Director None
THOMAS G. MOLES* Director None
DAVID F. STEIN* Director None
STEPHEN J. HODGDON* President and Director None
CHARLES W. KADLEC* Chief Investment Strategist None
LAWRENCE P. VOGEL* Senior Vice President, Finance Vice President
EDWARD F. LYNCH* Senior Vice President, National None
Sales Director
JAMES R. BESHER Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
GERALD I. CETRULO, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
MATTHEW A. DIGAN* Senior Vice President, None
Domestic Funds
JONATHAN G. EVANS Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
ROBERT T. HAUSLER* Senior Vice President, International None
Funds
T. WAYNE KNOWLES Senior Vice President, None
104 Morninghills Court Division Sales Director
Cary, NC 27511
JOSEPH LAM Senior Vice President, Regional None
Seligman International Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
BRADLEY W. LARSON Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
MICHELLE L. MCCANN-RAPPA* Senior Vice President, None
Retirement Plans
SCOTT H. NOVAK* Senior Vice President, Insurance None
RICHARD M. POTOCKI Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
</TABLE>
<PAGE>
FILE NO. 2-92487
811-4078
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter With Registrant
-------------------- ----------------------- ---------------------
<S> <C> <C>
BRUCE M. TUCKEY Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
ANDREW S. VEASEY Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
CHARLES L. VON BREITENBACH, II* Senior Vice President, None
Managed Money
J. BRERETON YOUNG* Senior Vice President, Director None
of Sales Development
JEFFREY S. DEAN* Vice President, Business Analysis None
MASON S. FLINN Vice President, Regional Retirement None
159 Varennes Plans Manager
San Francisco, CA 94133
MARSHA E. JACOBY* Vice President, Offshore Business None
Manager
WILLIAM W. JOHNSON* Vice President, Order Desk None
JOAN M. O'CONNELL Vice President, Regional Retirement None
3707 Fifth Avenue #136 Plans Manager
San Diego, CA 92103
RONALD W. POND* Vice President, Portfolio Advisor None
JEFFERY C. PLEET* Vice President, Regional Retirement None
Plans Manager
TRACY A. SALOMON* Vice President, Retirement Marketing None
HELEN SIMON* Vice President, Sales Administration None
GARY A. TERPENING* Vice President, Director of Business None
Development
CHARLES E. WENZEL Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
JEFF BOTWINICK Regional Vice President None
11508 Foster Road
Overland Park, KS 66210
KEVIN CASEY Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
RICHARD B. CALLAGHAN Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
</TABLE>
<PAGE>
FILE NO. 2-92487
811-4078
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter With Registrant
-------------------- ----------------------- ---------------------
<S> <C> <C>
BRADFORD C. DAVIS Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
CHRISTOPHER J. DERRY Regional Vice President None
2380 Mt. Lebanon Church Road
Alvaton, KY 42122
KENNETH DOUGHERTY Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
KELLI A. WIRTH DUMSER Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
EDWARD S. FINOCCHIARO Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
MICHAEL C. FORGEA Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
CARLA A. GOEHRING Regional Vice President None
11426 Long Pine
Houston, TX 77077
CATHY DES JARDINS Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
MICHAEL K. LEWALLEN Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
JUDITH L. LYON Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
TIM O'CONNELL Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
GEORGE M. PALMER, JR. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
THOMAS PARNELL Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
CRAIG PRICHARD Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
</TABLE>
<PAGE>
FILE NO. 2-92487
811-4078
PART C. OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SELIGMAN ADVISORS, INC.
AS OF APRIL 30, 1999
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter With Registrant
-------------------- ----------------------- ---------------------
<S> <C> <C>
NICHOLAS ROBERTS Regional Vice President None
200 Broad Street, Apt. 2225
Stamford, CT 06901
DIANE H. SNOWDEN Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
EUGENE P. SULLIVAN Regional Vice President None
4858 Battery Lane Bethesda, MD 21814
JAMES TAYLOR Regional Vice President None
1145 Kenilworth Circle
Naperville, IL 60540
STEVE WILSON Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
FRANK J. NASTA* Secretary Secretary
AURELIA LACSAMANA* Treasurer None
GAIL S. CUSHING* Assistant Vice President, National None
Accounts Manager
SANDRA G. FLORIS* Assistant Vice President, Order Desk None
KEITH LANDRY* Assistant Vice President, Order Desk None
ALBERT A. PISANO* Assistant Vice President and None
Compliance Officer
JOYCE PERESS* Assistant Secretary Assistant Secretary
</TABLE>
* The principal business address of each of these directors and/or officers is
100 Park Avenue, New York, NY 10017.
(c) Not Applicable
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Custodian: Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, MO 64105 and
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
ITEM 29. MANAGEMENT SERVICES - Not Applicable.
ITEM 30. UNDERTAKINGS - The Registrant undertakes: (1) if requested to do
so by the holders of at least ten percent of its outstanding shares,
to call a meeting of shareholders for the purpose of voting upon the
removal of a director or directors and to assist in communications
with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940, as amended; and (2) to furnish to
each person to whom a prospectus is delivered, a copy of the
Registrant's latest annual report to shareholders, upon request and
without charge.
<PAGE>
FILE NO. 2-92487
811-4078
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 28 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 27th day of May, 1999.
SELIGMAN FRONTIER FUND, INC.
By: /S/ WILLIAM C. MORRIS
---------------------------------
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Post-Effective Amendment No. 28 has been
signed below by the following persons in the capacities indicated on May 27,
1999.
SIGNATURE TITLE
/S/ BRIAN T. ZINO Chairman of the Board (Principal
- ------------------------------- executive officer) and Director
William C. Morris*
/S/ BRIAN T. ZINO President and Director
- -------------------------------
Brian T. Zino
/S/ THOMAS G. ROSE Treasurer (Principal financial
- -------------------------------- and accounting officer)
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director ) /S/ BRIAN T. ZINO
Betsy S. Michel, Director ) ----------------------------------
James C. Pitney, Director ) *Brian T. Zino, Attorney-in-fact
James Q. Riordan, Director )
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
FILE NO. 2-92487
811-4078
SELIGMAN FRONTIER FUND, INC.
POST-EFFECTIVE AMENDMENT NO. 28 TO THE
REGISTRATION STATEMENT ON FORM N-1A
EXHIBIT INDEX
FORM N-1A ITEM NO. DESCRIPTION
- ------------------ -----------
Item 23(a) Amended Supplementary
Item 23(i) Opinion and Consent of Counsel
Item 23(j) Consent of Independent Auditors
Item 23(l) Form of Purchase Agreement for Initial Capital
Item 23(m) Amended Administration, Shareholder Services
And Distribution Plan
Item 23(n) Financial Data Schedules
SELIGMAN FRONTIER FUND, INC.
ARTICLES SUPPLEMENTARY
Seligman Frontier Fund, Inc., a Maryland corporation having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation") and registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The total number of shares of capital stock of all
classes which the Corporation has authority to issue is 500,000,000 shares,
which were previously classified by the Board of Directors of the Corporation
into three classes designated as Class A Common Stock, Class B Common Stock and
Class D Common Stock. The number of authorized shares of Class A Common Stock,
Class B Common Stock and Class D Common Stock each consisted of the sum of x and
y, where x equaled the issued and outstanding shares of such class and y equaled
one-third of the authorized but unissued shares of Common Stock of all classes;
PROVIDED that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class B and Class D Common Stock shall not exceed the
authorized number of shares of Common Stock; and, in the event application of
the formula above would have resulted, at any time, in fractional shares, the
applicable number of authorized shares of each class was to have been rounded
down to the nearest whole number of shares of such class.
SECOND: Pursuant to the authority of the Board of Directors to
classify and reclassify unissued shares of capital stock, the Board of Directors
has reclassified the unissued shares of Class A Common Stock, Class B Common
Stock and Class D Common Stock into the following classes and has provided for
the issuance of shares of such classes. The terms of the Common Stock as set by
the Board of Directors are as follows:
(a) The total number of shares of all classes of stock which
the Corporation has authority to issue is 500,000,000 shares of common
stock ("Shares") of the par value of $.10 each having an aggregate par
value of $50,000,000. The Common Stock of the Corporation shall have
four classes of shares, which shall be designated Class A Common Stock,
Class B Common Stock, Class C Common Stock and Class D Common Stock.
The number of authorized shares of Class A Common Stock, of Class B
Common Stock, of Class C Common Stock and of Class D Common Stock shall
each consist of the sum of x and y, where x equals the issued and
outstanding shares of such class and y equals one-fourth of the
authorized but unissued shares of Common Stock of all classes; PROVIDED
that at all times the aggregate authorized, issued and outstanding
shares of Class A, Class B, Class C and Class D Common Stock shall not
exceed the authorized number of shares of Common Stock (i.e.,
500,000,000 shares of Common Stock until changed by further action of
the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in
the event application of the formula above would result, at any time,
in fractional shares, the applicable number of authorized shares of
each class shall be rounded down to the nearest
1
<PAGE>
whole number of shares of such class. Any class of Common Stock shall
be referred to herein individually as a "Class" and collectively,
together with any further class or classes from time to time
established, as the "Classes."
(b) All Classes shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; PROVIDED HOWEVER, that notwithstanding anything in the charter
of the Corporation to the contrary:
(1) Class A shares may be subject to such front-end
sales loads as may be established by the Board of Directors
from time to time in accordance with the Investment Company
Act and applicable rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD").
(2) Class B shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
Subject to subsection (6) below, each Class B share shall
convert automatically into Class A shares on the last business
day of the month that precedes the eighth anniversary of the
date of issuance of such Class B shares; such conversion shall
be effected on the basis of the relative net asset values of
Class B and Class A shares as determined by the Corporation on
the date of conversion.
(3) Class C shares may be subject to such front-end
sales loads and such contingent deferred sales charges as may
be established from time to time by the Board of Directors in
accordance with the Investment Company Act and the applicable
rules and regulations of the NASD.
(4) Class D shares may be subject to such contingent
deferred sales charges as may be established from time to time
by the Board of Directors in accordance with the Investment
Company Act and applicable rules and regulations of the NASD.
(5) Expenses related solely to a particular Class
(including, without limitation, distribution expenses under a
Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other
arrangement, however designated, which may differ between the
Classes) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board
of Directors) in the net asset value, dividends, distribution
and liquidation rights of the shares of that Class.
(6) At such time as shall be permitted under the
Investment Company Act, any applicable rules and regulations
thereunder and the provision of any exemptive order applicable
to the Corporation, and as may be determined by the Board of
Directors and disclosed in the then current prospectus of the
2
<PAGE>
Corporation, shares of a particular Class may be automatically
converted into shares of another Class; PROVIDED, HOWEVER,
that such conversion shall be subject to the continuing
availability of an opinion of counsel to the effect that such
conversion does not constitute a taxable event under Federal
income tax law. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion
is no longer available.
(7) As to any matter with respect to which a separate
vote of any Class is required by the Investment Company Act or
by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other
arrangement referred to in subsection (5) above), such
requirement as to a separate vote by the Class shall apply in
lieu of single Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders
thereunder and the Maryland General Corporation Law, the
Classes shall vote together as a single Class on any such
manner that shall have the same effect on each such Class. As
to any matter that does not affect the interest of a
particular Class, only the holders of shares of the affected
Class shall be entitled to vote.
THIRD: These Articles Supplementary do not change the total number of
authorized shares of the Corporation.
IN WITNESS WHEREOF, SELIGMAN FRONTIER FUND, INC. has caused
these Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Secretary, and each of said officers of the
Corporation has also acknowledged these Articles Supplementary to be the
corporate act of the Corporation and has stated under penalties of perjury that
to the best of his knowledge, information and belief that the matters and facts
set forth with respect to approval are true in all material respects, all on May
24, 1999.
SELIGMAN FRONTIER FUND, INC.
By: /S/ BRIAN T. ZINO
---------------------------------------
Brian T. Zino, President
Witness:
/S/ FRANK J. NASTA
- --------------------------------------
Frank J. Nasta, Secretary
3
SULLIVAN & CROMWELL
May 27, 1999
Seligman Frontier Fund, Inc.,
100 Park Avenue,
New York, N.Y. 10017.
Dear Sirs:
In connection with Post-Effective Amendment No.28 to the Registration
Statement on Form N-1A (File No. 2-92487) of Seligman Frontier Fund, Inc., a
Maryland corporation (the "Fund"), which you expect to file under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to an indefinite
number of shares of capital stock, par value $0.100 per share, of the class
designated as Class C shares (the "Shares"), we, as your counsel, have examined
such corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of this
opinion.
The number of shares of each class of capital stock that the Fund is
authorized to issue at any time is determined by adding to the number of shares
of such class then outstanding additional authorized shares in an amount
determined according to a formula set forth in the Fund's charter. The formula
allocates to each class an equal portion of the number of shares representing
the difference between the number of shares that the Fund is authorized to issue
and the total number of shares of all classes outstanding at such time.
Upon the basis of such examination, we advise you that, in our opinion, the
Fund is authorized to issue the number of Shares determined in accordance with
the charter of the Fund as described above and, when the Post-Effective
Amendment referred to above has become effective under the Securities Act and
the Shares have been issued (a) for at least the par value thereof in accordance
with the Registration Statement referred to above, (b) so as not to exceed the
then authorized number of Shares and (c) in accordance with the authorization of
the Board of Directors, the Shares will be duly and validly issued, fully paid
and non-assessable.
<PAGE>
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of the State of Maryland, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment referred to above. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
SULLIVAN & CROMWELL
-2-
CONSENT OF INDEPENDENT AUDITORS
Seligman Frontier Fund, Inc.:
We consent to the use in Post-Effective Amendment No. 28 to Registration
Statement No. 2-92487 of our reports dated October 30, 1998, and April 30, 1999,
appearing in the Annual Report to Shareholders for the year ended September 30,
1998, and the Mid-Year Report to Shareholders for the six months ended March 31,
1999, respectively, incorporated by reference in the Statement of Additional
Information, and to the reference to us under the caption "Financial Highlights"
in the Prospectus, which is also part of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
May 26, 1999
INVESTMENT LETTER
SELIGMAN FRONTIER FUND, INC.
Seligman Frontier Fund, Inc. (the "Fund"), an open-end diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. The Fund hereby sells to Purchaser and Purchaser purchases 1 Class C
share (the "Share") of Capital Stock (par value $.10) of the Fund at a
price equivalent to the net asset value of one Class D share of the
Fund as of the close of business on May 27, 1999. The Fund hereby
acknowledges receipt from Purchaser of funds in such amount in full
payment for the Share.
2. Purchaser represents and warrants to the Fund that the Share is being
acquired for investment and not with a view to distribution thereof,
and that Purchaser has no present intention to redeem or dispose of the
Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 28th day
of May, 1999 ("Purchase Date").
SELIGMAN FRONTIER FUND, INC.
By:____________________________
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By:____________________________
Name: Brian T. Zino
Title: President
ADMINISTRATION, SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
as amended and restated through June 1, 1999
SECTION 1. Seligman Frontier Fund, Inc. (the "Fund") will pay
fees to Seligman Advisors, Inc., the principal underwriter of its shares (the
"Distributor"), for administration, shareholder services and distribution
assistance for the Class A, Class B, Class C and Class D shares of the Fund. As
a result, the Fund is adopting this Administration, Shareholder Services and
Distribution Plan (the "Plan") pursuant to Section 12(b) of the Investment
Company Act of 1940, as amended (the "Act") and Rule 12b-1 thereunder.
SECTION 2. Pursuant to this Plan, the Fund may pay to the
Distributor a shareholder servicing fee of up to .25% on an annual basis of the
average daily net assets of the Fund (payable quarterly with respect to Class A
and monthly with respect to Class B, Class C and Class D) and a distribution fee
of .75% on an annual basis, payable monthly, of the average daily net assets of
the Fund attributable to the Class B Shares and a distribution fee of up to .75%
on an annual basis, payable monthly, of the average daily net assets of the Fund
attributable to Class C and Class D shares. Such fees will be used in their
entirety by the Distributor to make payments for administration, shareholder
services and distribution assistance, including, but not limited to (i)
compensation to securities dealers and other organizations (each, a "Service
Organization" and collectively, the "Service Organizations"), for providing
distribution assistance with respect to assets invested in the Fund, (ii)
compensation to Service Organizations for providing administration, accounting
and other shareholder services with respect to Fund shareholders, and (iii)
otherwise promoting the sale of shares of the Fund, including paying for the
preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and defraying the Distributor's costs incurred in connection with its
marketing efforts with respect to shares of the Fund. To the extent a Service
Organization provides administration, accounting and other shareholder services,
payment for which is not required to be made pursuant to a plan meeting the
requirements of Rule 12b-1, a portion of the fee paid by the Fund shall be
deemed to include compensation for such services. The fees received from the
Fund hereunder in respect of the Class A shares may not be used to pay any
interest expense, carrying charges or other financing costs, and fees received
hereunder may not be used to pay any allocation of overhead of the Distributor.
The fees of any particular class of the Fund may not be used to subsidize the
sale of shares of any other class. The fees payable to Service Organizations
from time to time shall, within such limits, be determined by the Directors of
the Fund.
SECTION 3. J. & W. Seligman & Co. Incorporated, the Fund's
investment manager (the "Manager"), in its sole discretion, may make payments to
the Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Fund.
SECTION 4. This Plan shall continue in effect through December
31 of each year so long as such continuance is specifically approved at least
annually by vote of a majority of both (a) the Directors of the Fund and (b) the
Qualified Directors, cast in person at a meeting called for the purpose of
voting on such approval.
1
<PAGE>
SECTION 5. The Distributor shall provide to the Fund's
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
SECTION 6. This Plan may be terminated by the Fund with
respect to any class at any time by vote of a majority of the Qualified
Directors, or by vote of a majority of the outstanding voting securities of such
class. If this Plan is terminated in respect of a class, no amounts (other than
amounts accrued but not yet paid) would be owed by the Fund to the Distributor
with respect to such class.
SECTION 7. All agreements related to this Plan shall be in
writing, and shall be approved by vote of a majority of both (a) the Directors
of the Fund and (b) the Qualified Directors, cast in person at a meeting called
for the purpose of voting on such approval, provided, however, that the identity
of a particular Service Organization executing any such agreement may be
ratified by such a vote within 90 days of such execution. Any agreement related
to this Plan shall provide:
A. That such agreement may be terminated in respect of any class
of the Fund at any time, without payment of any penalty, by
vote of a majority of the Qualified Directors or by vote of a
majority of the outstanding voting securities of the class, on
not more than 60 days' written notice to any other party to
the agreement; and
B. That such agreement shall terminate automatically in the event of
its assignment.
SECTION 8. This Plan may not be amended to increase materially
the amount of fees permitted pursuant to Section 2 hereof without the approval
of a majority of the outstanding voting securities of the relevant class and no
material amendment to this Plan shall be approved other than by vote of a
majority of both (a) the Directors of the Fund and (b) the Qualified Directors,
cast in person at a meeting called for the purpose of voting on such approval.
This Plan shall not be amended to reduce the distribution fee payable to the
Distributor pursuant to Section 2 hereof in respect of Class B shares, unless
the shareholder servicing fee payable pursuant to Section 2 hereof for
compensation to Service Organizations for providing administration, accounting
and other shareholder services has been eliminated, provided, however that the
distribution fee in respect of Class B shares may be reduced without change to
the shareholder servicing fee, if and to the extent required in order to comply
with any applicable laws or regulations, including applicable rules of the
National Association of Securities Dealers, Inc. regulating maximum sales
charges.
SECTION 9. The Fund is not obligated to pay any
administration, shareholder services or distribution expense in excess of the
fee described in Section 2 hereof, and, in the case of Class A shares, any
expenses of administration, shareholder services and distribution of Class A
shares of the Fund accrued in one fiscal year of the Fund may not be paid from
administration, shareholder services and distribution fees received from the
Fund in respect of Class A shares in any other fiscal year.
2
<PAGE>
SECTION 10. As used in this Plan, (a) the terms "assignment",
"interested person" and "vote of a majority of the outstanding voting
securities" shall have the respective meanings specified in the Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission and (b) the term "Qualified Directors"
shall mean the Directors of the Fund who are not "interested persons" of the
Fund and have no direct or indirect financial interest in the operation of this
Plan or in any agreement related to this Plan.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> SELIGMAN FRONTIER FUND, INC.-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 555566
<INVESTMENTS-AT-VALUE> 520680
<RECEIVABLES> 8046
<ASSETS-OTHER> 80
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 528806
<PAYABLE-FOR-SECURITIES> 4466
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14510
<TOTAL-LIABILITIES> 18976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 543930
<SHARES-COMMON-STOCK> 22842<F1>
<SHARES-COMMON-PRIOR> 30549<F1>
<ACCUMULATED-NII-CURRENT> (4994)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5780
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (34886)
<NET-ASSETS> 274680<F1>
<DIVIDEND-INCOME> 514<F1>
<INTEREST-INCOME> 410<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2944)<F1>
<NET-INVESTMENT-INCOME> (2020)<F1>
<REALIZED-GAINS-CURRENT> 6463
<APPREC-INCREASE-CURRENT> (11741)
<NET-CHANGE-FROM-OPS> (10223)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21101<F1>
<NUMBER-OF-SHARES-REDEEMED> (28809)<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> (201214)
<ACCUMULATED-NII-PRIOR> (49)
<ACCUMULATED-GAINS-PRIOR> (683)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1794<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2944<F1>
<AVERAGE-NET-ASSETS> 379303<F1>
<PER-SHARE-NAV-BEGIN> 12.44<F1>
<PER-SHARE-NII> (0.07)<F1>
<PER-SHARE-GAIN-APPREC> (0.34)<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.03<F1>
<EXPENSE-RATIO> 1.56<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class A only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> SELIGMAN FRONTIER FUND, INC.-CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 555566
<INVESTMENTS-AT-VALUE> 520680
<RECEIVABLES> 8046
<ASSETS-OTHER> 80
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 528806
<PAYABLE-FOR-SECURITIES> 4466
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14510
<TOTAL-LIABILITIES> 18976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 543930
<SHARES-COMMON-STOCK> 4971<F1>
<SHARES-COMMON-PRIOR> 5762<F1>
<ACCUMULATED-NII-CURRENT> (4994)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5780
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (34886)
<NET-ASSETS> 55851<F1>
<DIVIDEND-INCOME> 95<F1>
<INTEREST-INCOME> 77<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (814)<F1>
<NET-INVESTMENT-INCOME> (642)<F1>
<REALIZED-GAINS-CURRENT> 6463
<APPREC-INCREASE-CURRENT> (11741)
<NET-CHANGE-FROM-OPS> (10223)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1726<F1>
<NUMBER-OF-SHARES-REDEEMED> (2517)<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> (201214)
<ACCUMULATED-NII-PRIOR> (49)
<ACCUMULATED-GAINS-PRIOR> (683)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 333<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 814<F1>
<AVERAGE-NET-ASSETS> 70412<F1>
<PER-SHARE-NAV-BEGIN> 11.66<F1>
<PER-SHARE-NII> (0.11)<F1>
<PER-SHARE-GAIN-APPREC> (0.31)<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.24<F1>
<EXPENSE-RATIO> 2.32<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class B only. All other data are fund level.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> SELIGMAN FRONTIER FUND, INC.-CLASS D
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 555566
<INVESTMENTS-AT-VALUE> 520680
<RECEIVABLES> 8046
<ASSETS-OTHER> 80
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 528806
<PAYABLE-FOR-SECURITIES> 4466
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14510
<TOTAL-LIABILITIES> 18976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 543930
<SHARES-COMMON-STOCK> 15950<F1>
<SHARES-COMMON-PRIOR> 22618<F1>
<ACCUMULATED-NII-CURRENT> (4994)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5780
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (34886)
<NET-ASSETS> 179299<F1>
<DIVIDEND-INCOME> 340<F1>
<INTEREST-INCOME> 275<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (2898)<F1>
<NET-INVESTMENT-INCOME> (2283)<F1>
<REALIZED-GAINS-CURRENT> 6463
<APPREC-INCREASE-CURRENT> (11741)
<NET-CHANGE-FROM-OPS> (10223)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21489<F1>
<NUMBER-OF-SHARES-REDEEMED> (28157)<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> (201214)
<ACCUMULATED-NII-PRIOR> (49)
<ACCUMULATED-GAINS-PRIOR> (683)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1187<F1>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2898<F1>
<AVERAGE-NET-ASSETS> 251071<F1>
<PER-SHARE-NAV-BEGIN> 11.67<F1>
<PER-SHARE-NII> (0.11)<F1>
<PER-SHARE-GAIN-APPREC> (0.32)<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.24<F1>
<EXPENSE-RATIO> 2.32<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Class D only. All other data are fund level.
</FN>
</TABLE>
