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>
AVERAGE ANNUAL
---------------------------------------------------------------------------
CLASS B CLASS D
SINCE SINCE
SIX ONE FIVE 10 INCEPTION INCEPTION
MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
---------- -------- -------- -------- ----------- -----------
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
NET ASSET VALUE
<S> <C> <C>
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)++
</TABLE>
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
======
- ------------------
* 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
</TABLE>
<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>
<S> <C> <C> <C> <C> <C> <C>
GROSS GROSS
BEGINNING PURCHASES SALES AND ENDING REALIZED DIVIDEND ENDING
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES GAIN (LOSS) INCOME VALUE
- ---------- -------- ------------- ---------- ------ ----------- ------ --------
Renex .................. 363,900 9,600 -- 373,500 -- -- $1,680,750
15
<PAGE>
</TABLE>
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
