SELIGMAN
- --------------------------- [Graphic Omitted]
FRONTIER
FUND, INC.
ANNUAL REPORT
SEPTEMBER 30, 1999
AND
THE ONE MONTH ENDED
OCTOBER 31, 1999
----------
SEEKING GROWTH
IN CAPITAL VALUE
THROUGH
INVESTMENTS IN
SMALL-COMPANY
GROWTH STOCKS
[Logo Omitted]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE EVALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
TIMES CHANGE ...
Established in 1864, Seligman has a history of providing
financial services marked not by fanfare, but rather by a
[Graphic Omitted] 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
JAMES, JESSE, AND America became an industrial power, the firm helped fund the
JOSEPH SELIGMAN, growing capital needs of the nascent automobile and steel 1870
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 ................................... 8
Portfolio of Investments ............................. 10
Statements of Assets and Liabilities ................. 18
Statements of Operations ............................. 19
Statements of Changes in Net Assets .................. 20
Notes to Financial Statements ........................ 21
Financial Highlights ................................. 25
Report of Independent Auditors and
For More Information ............................... 27
Board of Directors and Executive Officers ............ 28
Glossary of Financial Terms .......................... 29
<PAGE>
TO THE SHAREHOLDERS
For the fiscal year ended September 30, 1999, Seligman Frontier Fund trailed
markedly behind its benchmark indices. During this time, the Fund posted a total
return of 6.35%, based on the net asset value of Class A shares, while the
Russell 2000 Index returned 19.08%, the Russell 2000 Growth Index returned
32.63%, and the Lipper Small Cap Funds Average returned 25.41%.
This poor showing for the fiscal year was due primarily to a very disappointing
first calendar quarter, from which the Fund has been unable to fully recover.
During the first calendar quarter, the environment was generally unfavorable for
small-capitalization stocks, and the Fund's benchmarks posted poor results.
However, the Fund posted a particularly dismal return of -18.88% for the
quarter. This loss was largely due to a few heavily weighted holdings in health
care -- a sector which suffered dramatically due to concerns regarding
government regulation. The Fund's lack of exposure to Internet issues also
contributed to the poor performance.
In the Fund's last report in March 1999, we assured you that we were taking
action to regain the Fund's standing among its benchmarks. The evidence of the
past six months shows that our commitment is indeed paying off. For the six
months ended September 30, 1999, the Fund's return of 9.98%, based on the net
asset value of Class A shares, outpaced the 9.10% return for the Russell 2000
Growth Index and the 8.25% return for the Russell 2000 Index, but trailed the
12.36% return for the Lipper Small Cap Funds Average.
We remain committed to monitoring the Fund's risk, relative to its benchmarks,
in an effort to avoid poor relative performance in the future. And, we remain
committed to the Fund's stringent investment process, which includes relying
upon research and fundamental analysis. This means that the Fund does not buy
securities simply because its peers are doing so. We believe that this policy is
crucial to the Fund's long-term success.
We have recently expanded the Fund's portfolio management team so that the Fund
has the resources it needs to seek additional opportunities, particularly in the
technology sector. The Fund does, however, continue to avoid direct Internet
exposure because of the sector's high valuations relative to the broader market,
general lack of earnings, and typically poor fundamentals. While these stocks
have, as a group, enjoyed exceptional returns based on stock price appreciation
over the past few years, this industry is fiercely competitive and we believe
that many of these startup companies will be unable to survive over the long
term. However, the Fund is selectively investing in companies that we believe
will be able to profit from the growth of the Internet, such as semiconductors
and semiconductor equipment.
J. & W. Seligman & Co. Incorporated, your Fund's manager, and Seligman Data
Corp., your Fund's shareholder service agent, have completed preparations for
potential computer problems related to the Year 2000 (Y2K). All internal
mission-critical systems, software, and interfaces have been successfully tested
for Y2K compliance. We have devoted considerable time and resources to Y2K
during the past several years, and we believe that shareholders will not be
inconvenienced or experience disruptions as a result of the Corporation's entry
into the new millennium. In addition, your portfolio management team considers
the potential ramifications of the Y2K computer issue when making decisions on
which securities should be held by the Fund.
Seligman Frontier Fund's fiscal year end has been changed to October 31 from
September 30. This change was made to conform the Fund's year end to the date
used for determining annual distributions for federal income tax purposes. For
the one-month period ended October 31, 1999, the Fund returned -2.27% based on
the net asset value of Class A shares. Going forward, shareholder reports will
be mailed following the Fund's semiannual and annual periods ending in April and
October.
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 your
Portfolio Manager regarding the Fund's performance, as well as the Fund's
investment results, portfolio of investments, and financial statements, 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
November 19, 1999
1
<PAGE>
INTERVIEW WITH YOUR PORTFOLIO MANAGER,
ARSEN MRAKOVCIC
Q: HOW DID SELIGMAN FRONTIER FUND PERFORM DURING THE PAST 13 MONTHS?
A: Seligman Frontier Fund returned 6.35%, based on the net asset value of Class
A shares, for the one-year period ended September 30, 1999, while the
Russell 2000 Index returned 19.08%, the Russell 2000 Growth Index returned
32.63%, and the Lipper Small Cap Funds Average returned 25.41%. For the
one-month period ended October 31, 1999, the Fund returned -2.27% based on
the net asset value of Class A shares.
The Fund's underperformance versus its benchmarks was almost entirely due to
events of the first calendar quarter of 1999, which was difficult for
small-cap stocks overall. The Fund's benchmarks posted negative returns for
this period. However, the Fund's return of -18.88% was particularly
disappointing and was the result of a few specific and, unfortunately,
heavily weighted positions, which experienced sharp declines. The third
quarter of 1999 was also a difficult quarter, but the Fund's return of
-4.55% was in line with the small-cap market in general and the Fund's
benchmarks all delivered negative performance.
During the past 13 months, the Fund posted strong returns during two
calendar quarters, the fourth quarter of 1998 and the second quarter of
1999, with returns of 19.21% and 15.21%, respectively. These returns were in
line with the Fund's Lipper peer group and with its Russell benchmarks.
[PHOTO OMITTED]
SELIGMAN SMALL COMPANY TEAM: (FROM LEFT) MIKE SULLIVAN, MANDHIR UPPAL, SONIA
THOMAS (ADMINISTRATIVE ASSISTANT) BRUCE ZIRMAN, TED HILLENMEYER, MICHAEL
ALPERT, (SEATED) RICK RUVKUN, ARSEN MRAKOVCIC (PORTFOLIO MANAGER)
The Fund's performance during the month of October 1999 suffered as a result
of the earthquake in Taiwan, which negatively affected some of our
technology holdings during the month.
Q: WHAT FACTORS MOST INFLUENCED THE FUND'S PERFORMANCE?
A: The primary factor that hurt the Fund's performance for the thirteen-month
period was the sharp decline of some of the Fund's health care holdings
during the first calendar quarter of 1999. At that time, many health care
stocks fell dramatically as investors became concerned about the impact that
the Balanced Budget Act of 1997 (BBA) would have on the profits of these
companies following government funding reductions.
Nursing homes were particularly affected, not only by the legislation itself
but, to a much greater extent, by negative investor reaction to the
legislation. While we did not own any nursing homes directly, fallout
extended to nursing home supply providers, which we did own. At that time,
some of the Fund's health care stocks represented considerably overweighted
positions, and this sector downturn had a significant impact on performance
for that quarter, from which the Fund is still recovering.
In addition, during this time, only two areas of the small-cap sector -- the
Internet and biotechnology -- have delivered exceptional performance.
However, the
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
Fund has intentionally avoided these areas because we believe that they are
highly speculative. While we are convinced that the Internet is a
significant, and growing force in the economy, we are just as sure that many
of today's Internet startups will be unable to survive the intense
competition in this area. However, the Internet is a high-growth industry
which cannot be ignored. To gain exposure to this group, we have sought
opportunities in companies that provide structure for the Internet, such as
semiconductors and semiconductor equipment. The Fund's exposure to these
stocks contributed positively to portfolio performance during the period
overall, but hurt performance in October 1999 when concern that the
earthquake in Taiwan would negatively affect these companies dampened the
sector's performance. We have expanded our portfolio management team as part
of our effort to find additional opportunities in this area.
Q: HAVE YOU MADE ANY CHANGES TO THE FUND'S INVESTMENT STRATEGY DURING THE PAST
13 MONTHS?
A: While the BBA had a much greater impact than could have reasonably been
foreseen, the effect on the portfolio would have been less acute had we not
been as heavily weighted as we were in some specific stocks. At that time,
we took steps to ensure that our sector weightings remain closer to those of
our benchmarks. In this way, we hope to limit some of the Fund's relative
risk and avoid a repeat of the first calendar quarter of 1999 in which the
Fund's returns had strayed far from its benchmarks.
Q: WHAT IS YOUR OUTLOOK FOR THE SMALL-CAP GROWTH SECTOR?
A: The small-cap growth sector is historically volatile and delivers most of
its gains in short periods of time. That is why investors in this area must
keep a long-term time horizon. Those who try to time the market -- getting
out during difficult environments and attempting to get in during better
times -- are likely to miss opportunities, penalizing their portfolio's
long-term performance.
The fundamentals underpinning small-cap stocks remain strong, and these
issues are currently offering exceptional values relative to larger-cap
stocks. Based upon almost any valuation criteria -- price to earnings, price
to book, price to sales, price to cash flow -- these stocks are at 25-year
lows relative to the S&P 500. Small-cap stocks have also sustained a
relative earnings per share growth of two to three times that of the S&P
500.
While the fundamentals are attractive, investor acceptance is a critical
factor, and without it prices cannot move higher. The environment of the
past year has been difficult in this regard. The high level of uncertainty
in the stock market has caused money to flow to the largest and best-known
names in the market. However, we believe that this is now changing. The
global economic crisis has subsided, corporate profits are increasing, and
the economy is showing signs of slowing to a more sustainable rate of
growth. The more settled environment that should result will likely give
investors the confidence to seek more attractively valued opportunities in
the stock market, particularly among the small-cap sector.
We believe that today's small-cap market offers exceptional opportunities
for long-term, patient investors who are willing to ride out high volatility
and remain invested in this fundamentally strong and attractively valued
sector.
3
<PAGE>
PERFORMANCE OVERVIEW
OCTOBER 31, 1999
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 October 31, 1999, to a $10,000
investment made in the Lipper Small Cap Funds Average (Lipper Average), the
Russell 2000 Growth Index, and the Russell 2000 Index for the same period. The
performances of Seligman Frontier Fund Class B, Class C, and Class D shares are
not shown in this chart but are included in the table on page 5. It is important
to keep in mind that the Lipper Average excludes the effect of sales charges,
and the Russell indices exclude the effect of any fees or sales charges.
[FIGURES BELOW REPRESENT LINE CHART IN ITS PRINTED FORM]
Seligman Frontier
Fund Class A
----------------- Lipper
With Without Small Cap Russell 2000 Russell 2000
Date Load Load Funds Average Growth Index Index
- -------- ---- ----- ----- ----- -----
10/31/89 9524 10000 10000 10000 10000
8732 9169 9323 9221 9150
9230 9692 9805 9558 9637
9950 10448 10419 9812 10079
10/31/90 7530 7907 8038 7271 7366
9486 9961 9907 8866 9218
10881 11425 11390 10524 10870
11565 12143 11931 10751 11101
10/31/91 12515 13141 12918 11532 12267
13923 14620 14452 12842 13741
12842 13484 13623 12321 12329
12573 13202 13522 12312 11878
10/31/92 13245 13908 14072 12625 12223
15604 16384 16047 14541 13900
14651 15383 15576 14263 13056
16366 17185 16633 15194 14010
10/31/93 18860 19803 18226 16717 15605
20196 21206 18870 17248 15979
19521 20497 17937 16377 14954
18738 19675 17291 15904 14194
10/31/94 21387 22457 18614 16665 15462
20410 21430 18174 16212 14876
23006 24156 19669 17559 16259
27173 28531 22639 19869 18980
10/31/95 28078 29482 22782 19719 18645
27879 29273 24026 21067 19735
32588 34218 27587 23351 22658
28942 30389 25372 21242 19553
10/31/96 30505 32030 27739 22993 21130
32042 33644 29710 25059 22694
28856 30298 26992 23363 19589
36401 38221 33794 28334 24491
10/31/97 37087 38942 35443 29737 25603
36302 38117 34729 29588 24673
41853 43946 39493 33269 28150
37113 38968 34891 28990 24169
10/31/98 31807 33398 30847 26216 21543
34706 36441 35328 29686 26453
31193 32753 35169 30190 27088
33920 35616 38007 31138 27676
10/31/99 31758 33346 37871 30114 27851
The stocks of smaller companies may be subject to above-average market price
fluctuations.
The performances of Class B, Class C, and Class D shares will be greater than
or less than the performance shown for Class A shares, based on the differences
in sales charges and fees paid by shareholders.
4
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS C CLASS B CLASS D
SINCE SINCE SINCE
INCEPTION SIX ONE FIVE 10 INCEPTION INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
----------- ---------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge n/a (3.00)% (4.93)% 7.18% 12.25% n/a n/a
Without Sales Charge n/a 1.81 (0.15) 8.23 12.80 n/a n/a
CLASS B**
With CDSC+ n/a (3.48) (5.78) n/a n/a (1.21)% n/a
Without CDSC n/a 1.52 (0.82) n/a n/a (0.49) n/a
CLASS C**
With Sales Charge and CDSC (3.17)% n/a n/a n/a n/a n/a n/a
Without Sales Charge and CDSC (1.23) n/a n/a n/a n/a n/a n/a
CLASS D**
With 1% CDSC n/a 0.43 (1.90) n/a n/a n/a n/a
Without CDSC n/a 1.43 (0.91) 7.37 n/a n/a 11.40%
LIPPER SMALL CAP FUNDS AVERAGE*** 5.61o 7.69 22.77 15.26 14.24 9.46++ 14.63+++
RUSSELL 2000 GROWTH INDEX*** 2.66o 2.82 29.28 12.49 10.79 6.07++ 12.36+++
RUSSELL 2000 INDEX*** (1.69)o (0.25) 14.87 12.56 11.65 7.54++ 12.18+++
</TABLE>
NET ASSET VALUE
OCTOBER 31, 1999 APRIL 30, 1999 OCTOBER 31, 1998
-------------------- ------------------ ----------------------
CLASS A $12.93 $12.70 $12.95
CLASS B 12.03 11.85 12.13
CLASS C 12.03 n/a n/a
CLASS D 12.03 11.86 12.14
CAPITAL GAIN INFORMATION
FOR THE ONE MONTH ENDED OCTOBER 31, 1999
REALIZED $0.020
UNREALIZED 0.545oo
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 C shares are calculated with and
without the effect of the initial 1% maximum sales charge and the 1% CDSC
that is charged on redemptions made within 18 months of the date of
purchase. Returns for Class D shares are calculated with and without the
effect of the 1% CDSC, charged on redemptions made within one year of the
date of purchase.
*** The Lipper 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 distributions 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.
++ From April 30, 1996.
+++ From April 30, 1993.
o From May 31, 1999.
oo Represents the per share amount of net unrealized appreciation of portfolio
securities as of October 31, 1999.
5
<PAGE>
PERFORMANCE OVERVIEW
SEPTEMBER 30, 1999
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, 1999, to a $10,000
investment made in the Lipper Small Cap Funds Average (Lipper Average), the
Russell 2000 Growth Index, and the Russell 2000 Index for the same period. The
performances of Seligman Frontier Fund Class B, Class C, and Class D shares are
not shown in this chart but are included in the table on page 7. It is important
to keep in mind that the Lipper Average excludes the effect of sales charges,
and the Russell indices exclude the effect of any fees or sales charges.
[FIGURES BELOW REPRESENT LINE CHART IN ITS PRINTED FORM]
Seligman Frontier
Fund Class A
----------------- Lipper
With Without Small Cap Russell 2000 Russell 2000
Date Load Load Funds Average Growth Index Index
- ---- ---- ------- ------------- ------------ ------------
10/31/89 9524 10000 10000 10000 10000
8732 9169 9323 9221 9150
9230 9692 9805 9558 9637
9950 10448 10419 9812 10079
10/31/90 7530 7907 8038 7271 7366
9486 9961 9907 8866 9218
10881 11425 11390 10524 10870
11565 12143 11931 10751 11101
10/31/91 12515 13141 12918 11532 12267
13923 14620 14452 12842 13741
12842 13484 13623 12321 12329
12573 13202 13522 12312 11878
10/31/92 13245 13908 14072 12625 12223
15604 16384 16047 14541 13900
14651 15383 15576 14263 13056
16366 17185 16633 15194 14010
10/31/93 18860 19803 18226 16717 15605
20196 21206 18870 17248 15979
19521 20497 17937 16377 14954
18738 19675 17291 15904 14194
10/31/94 21387 22457 18614 16665 15462
20410 21430 18174 16212 14876
23006 24156 19669 17559 16259
27173 28531 22639 19869 18980
10/31/95 28078 29482 22782 19719 18645
27879 29273 24026 21067 19735
32588 34218 27587 23351 22658
28942 30389 25372 21242 19553
10/31/96 30505 32030 27739 22993 21130
32042 33644 29710 25059 22694
28856 30298 26992 23363 19589
36401 38221 33794 28334 24491
10/31/97 37087 38942 35443 29737 25603
36302 38117 34729 29588 24673
41853 43946 39493 33269 28150
37113 38968 34891 28990 24169
10/31/98 31807 33398 30847 26216 21543
34706 36441 35328 29686 26453
31193 32753 35169 30190 27088
33920 35616 38007 31138 27676
10/31/99 31758 33346 37871 30114 27851
The stocks of smaller companies may be subject to above-average market price
fluctuations.
The performances of Class B, Class C, and Class D shares will be greater than
or less than the performance shown for Class A shares, based on the differences
in sales charges and fees paid by shareholders.
6
<PAGE>
PERFORMANCE OVERVIEW
INVESTMENT RESULTS PER SHARE
TOTAL RETURNS
FOR PERIODS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
---------------------------------------------------------
CLASS C CLASS B CLASS D
SINCE SINCE SINCE
INCEPTION SIX ONE FIVE 10 INCEPTION INCEPTION
5/27/99* MONTHS* YEAR YEARS YEARS 4/22/96 5/3/93
----------- ---------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A**
With Sales Charge n/a 4.75% 1.30% 8.42% 12.01% n/a n/a
Without Sales Charge n/a 9.98 6.35 9.48 12.56 n/a n/a
CLASS B**
With CDSC+ n/a 4.61 0.66 n/a n/a (0.55)% n/a
Without CDSC n/a 9.61 5.66 n/a n/a 0.19 n/a
CLASS C**
With Sales Charge and CDSC (0.83)% n/a n/a n/a n/a n/a n/a
Without Sales Charge and CDSC 1.15 n/a n/a n/a n/a n/a n/a
CLASS D**
With 1% CDSC n/a 8.61 4.57 n/a n/a n/a n/a
Without CDSC n/a 9.61 5.57 8.61 n/a n/a 11.98%
LIPPER SMALL CAP FUNDS AVERAGE*** 3.51o 12.36 25.41 15.07 13.51 9.07++ 14.48+++
RUSSELL 2000 GROWTH INDEX*** 9.00o 9.10 32.63 12.16 9.89 5.44++ 12.09+++
RUSSELL 2000 INDEX*** (2.09)o 8.25 19.08 12.38 10.93 7.60++ 12.28+++
</TABLE>
NET ASSET VALUE
SEPTEMBER 30, 1999 MARCH 31, 1999 SEPTEMBER 30, 1998
--------------------- ------------------ -----------------------
CLASS A $13.23 $12.03 $12.44
CLASS B 12.32 11.24 11.66
CLASS C 12.32 n/a n/a
CLASS D 12.32 11.24 11.67
CAPITAL GAIN INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 1999
REALIZED $0.055
UNREALIZED 0.81500
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 C shares are calculated with and
without the effect of the initial 1% maximum sales charge and the 1% CDSC
that is charged on redemptions made within 18 months of the date of
purchase. Returns for Class D shares are calculated with and without the
effect of the 1% CDSC, charged on redemptions made within one year of the
date of purchase.
*** The Lipper 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 distributions 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.
++ From April 30, 1996.
+++ From April 30, 1993.
o From May 31, 1999.
oo Represents the per share amount of net unrealized appreciation of portfolio
securities as of September 30, 1999.
7
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
----------------------------
OCTOBER 31, SEPTEMBER 30,
ISSUES COST VALUE 1999 1999 1998
----- ------------- ------------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS:
Advertising ...................................... 2 $ 5,788,564 $ 6,526,969 1.8 0.9 1.3
Business Goods and Services ...................... 19 75,831,484 74,489,745 20.2 19.5 16.5
Capital Goods .................................... 3 12,373,083 17,472,581 4.7 5.1 4.1
Computer Hardware ................................ 1 2,773,002 1,737,928 0.5 0.9 --
Computer Software and Services ................... 14 50,351,303 56,588,602 15.3 17.1 5.8
Consulting Services .............................. 4 12,686,026 14,497,291 3.9 4.8 4.1
Consumer Goods and Services ...................... 6 16,873,626 20,578,058 5.6 7.3 5.3
Drugs and Health Care ............................ 16 62,419,919 43,035,387 11.7 12.4 17.6
Electronics ...................................... 11 29,930,487 48,995,739 13.3 13.3 7.3
Energy ........................................... 4 7,273,481 9,217,562 2.5 2.3 4.0
Environmental Management ......................... 1 641,430 420,591 0.1 0.3 4.9
Financial Services ............................... 2 8,273,989 10,159,700 2.8 3.2 3.1
Industrial Goods and Services .................... 1 3,858,784 2,814,237 0.8 0.5 1.5
Leisure and Entertainment ........................ 1 6,934,963 10,839,987 2.9 3.0 1.8
Manufacturing .................................... 1 1,919,961 492,456 0.1 0.4 1.5
Media and Broadcasting ........................... 2 5,901,008 6,447,103 1.7 2.2 6.0
Paper and Packaging .............................. -- -- -- -- -- 0.7
Real Estate Investment Trust ..................... 1 10,511,554 3,901,813 1.1 1.0 0.8
Retail Trade ..................................... -- -- -- -- -- 2.8
Schools .......................................... 4 15,303,375 12,514,416 3.4 3.2 1.1
Telecommunications ............................... 4 7,918,319 11,954,550 3.2 2.4 2.0
Transportation ................................... 2 2,911,788 3,873,825 1.0 0.8 0.4
---- ------------- ------------- ------ ------ ------
99 340,476,146 356,558,540 96.6 100.6 92.6
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES .................... 1 12,550,558 12,550,558 3.4 (0.6) 7.4
---- ------------- ------------- ------ ------ ------
NET ASSETS ......................................... 100 $353,026,704 $369,109,098 100.0 100.0 100.0
==== ============= ============= ====== ====== ======
</TABLE>
LARGEST INDUSTRIES
OCTOBER 31, 1999
[FIGURES BELOW REPRESENT BAR CHART IN ITS PRINTED FORM]
Percent of
Net Assets
----------
BUSINESS GOODS AND SERVICES $74,489,745 20.2%
COMPUTER SOFTWARE AND SERVICES 56,588,602 14.8%
ELECTRONICS $48,995,739 13.3%
DRUGS AND HEALTH CARE $43,035,387 11.7%
CONSUMER GOODS AND SERVICES $20,578,058 6.1%
8
<PAGE>
PORTFOLIO OVERVIEW
LARGEST PORTFOLIO CHANGES
APRIL 1 TO OCTOBER 31, 1999
SHARES
--------------------------
HOLDINGS
ADDITIONS INCREASE 10/31/99
- --------- --------------------------
Alpharma (Class A) ........... 91,400 91,400
Aspect Development ........... 120,700 120,700
CoStar Group ................. 145,670 145,670
CSG Systems International .... 192,900 192,900
DoubleClick .................. 34,200 34,200
Engage Technologies .......... 147,600 147,600
Insight Communications
(Class A) .................. 101,300 101,300
ISS Group .................... 114,100 114,100
Profit Recovery Group
International .............. 70,700 102,950(1)
Tekelec ...................... 173,200 173,200
SHARES
------------------------
HOLDINGS
ADDITIONS INCREASE 10/31/99
- --------- ------------------------
Analog Devices ............... 217,400 --
antec ........................ 277,100 160,600
avx .......................... 263,400 230,400
Burr-Brown ................... 562,400 317,550
Calpine ...................... 245,500 --
Coach USA .................... 255,200 --
Microchip Technology ......... 262,700 107,400
PMC-Sierra ................... 63,700 31,200
Sanmina ...................... 147,100 --
Superior Services ............ 296,900 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
- -------------
(1) Includes 32,250 shares received as a result of a 3-for-2 stock split.
LARGEST PORTFOLIO HOLDINGS
OCTOBER 31, 1999
<TABLE>
<CAPTION>
SECURITY VALUE SECURITY VALUE
- -------- ------------ -------- ------------
<S> <C> <C> <C>
Burr-Brown ................... $12,533,302 MemberWorks ............... $8,054,425
Premier Parks ................ 10,839,987 ANTEC ..................... 7,774,044
NOVA ......................... 10,519,730 Microchip Technology ...... 7,152,168
National Instruments ......... 10,377,830 Teva Pharmaceutical
U.S. Foodservice ............. 10,002,444 Industries (ADRs) ....... 6,976,003
AVX .......................... 9,216,000
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1999
SHARES VALUE
-------- -------------
COMMON STOCKS 96.6%
ADVERTISING 1.8%
DOUBLECLICK*
Provider of Internet advertising
applications for advertisers
and web publishers 34,200 $ 4,784,794
NFO WORLDWIDE*
International provider of
consulting services 156,600 1,742,175
-------------
6,526,969
-------------
BUSINESS GOODS
AND SERVICES 20.2%
ABACUS DIRECT*
Provider of marketing
research services to the direct
marketing industry 18,700 2,738,966
ACXIOM*
Provider of data processing
services 120,000 1,976,250
AFFILIATED COMPUTER SERVICES
(CLASS A)*
Provider of information
technology services and
electronic funds transfer
processing 76,300 2,899,400
APPLIED GRAPHICS TECHNOLOGIES*
Provider of digital media
asset services; publisher of
greeting cards and calendars 150,400 1,052,800
COPART*
Auctioneer of damaged vehicles
for insurance companies 245,100 5,683,256
COSTAR GROUP*
Information provider for the
real estate industry 145,670 3,550,706
CREO PRODUCTS* (CANADA)
Developer of applications
software for the printing industry 57,000 1,457,063
CSG SYSTEMS INTERNATIONAL*
Provider of customer service for
the communications industry 192,900 6,636,966
FIRSTSERVICE* (CANADA)
Provider of property
management and
business services 273,100 3,140,650
INDUS INTERNATIONAL*
Worldwide developer and
marketer of management
software and implementation
services 446,000 2,773,562
Integrated Electrical Services*
Provider of electrical
contracting and
maintenance services 153,500 1,669,312
BUSINESS GOODS
AND SERVICES (CONTINUED)
KEYSTONE AUTOMOTIVE INDUSTRIES*
Distributor of after-market
collision replacement parts for
automobiles and light trucks 66,600 564,019
METAMOR WORLDWIDE*
International provider of
information technology
and staffing services 148,100 2,786,131
MODIS PROFESSIONAL SERVICES*
Provider of temporary
personnel services 513,800 5,748,137
NOVA*
Provider of transaction
processing services 404,605 10,519,730
PERSONNEL GROUP OF AMERICA*
Provider of personnel
staffing services 308,100 2,060,419
PROVANT*
Provider of training and
development services 378,470 6,670,534
U.S. FOODSERVICE*
Distributor of food and
related products 521,300 10,002,444
WILMAR INDUSTRIES*
Marketer and distributor of
repair and maintenance
products to the apartment
housing market 214,400 2,559,400
-------------
74,489,745
-------------
CAPITAL GOODS 4.7%
MICROCHIP TECHNOLOGY*
Supplier of field programmable
microcontrollers 107,400 7,152,168
NOVELLUS SYSTEMS*
Manufacturer of wafer
fabrication systems for the
disposition of thin films 78,600 6,089,044
UCAR INTERNATIONAL*
Manufacturer of graphite
and carbon electrodes 216,300 4,231,369
-------------
17,472,581
-------------
COMPUTER HARDWARE 0.5%
APEX*
Manufacturer of switching
systems for computer
network administrators 101,300 1,737,928
-------------
COMPUTER SOFTWARE AND
SERVICES 15.3%
Aspect Development
Provider of computer software 120,700 4,243,359
- ----------
See footnotes on page 13.
10
<PAGE>
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1999
SHARES VALUE
-------- -------------
COMPUTER SOFTWARE AND
SERVICES (CONTINUED)
AVANT!*
Developer and marketer of
software products that
assist design engineers 297,700 $ 3,842,191
CAREINSITE*
Provider of Internet messaging
services for physicians 45,400 1,994,761
CBT GROUP (ADRS)* (IRELAND)
Provider of interactive
education software 120,700 2,481,894
ENGAGE TECHNOLOGIES*
Provider of Internet solutions
for web user profiles 147,600 5,189,062
INSO*
Marketer and developer of
textual information software 132,300 1,794,319
ISS GROUP*
Provider of security monitoring,
detection, and response software 114,100 4,371,456
NATIONAL INSTRUMENTS*
Provider of instrumentation
hardware and software products
for the engineering
and scientific industries 344,850 10,377,830
STRUCTURAL DYNAMICS RESEARCH*
Developer of mechanical
design software 332,500 3,304,219
SUNGARD DATA SYSTEMS*
Provider of computer disaster
recovery services, as well as
health care information and
investment support systems 167,000 4,081,063
THQ*
Worldwide provider of inter-
active entertainment software 46,300 1,904,088
TRANSACTION SYSTEMS ARCHITECTS
(Class A)*
Worldwide developer and
marketer of software
products for electronic
funds transfer 204,100 6,282,453
UNIGRAPHICS SOLUTIONS (CLASS A)*
International provider of
services used for virtual
product development 204,600 4,411,688
VERTICALNET*
Operator of vertical trade
communities on the Internet 41,300 2,310,219
-------------
56,588,602
-------------
CONSULTING SERVICES 3.9%
CORPORATE EXECUTIVE BOARD*
Worldwide provider of consulting
services for corporations 59,800 2,244,369
FORRESTER RESEARCH*
Independent research company
which studies changes in future
technology and its impact on
businesses, consumers and society 56,100 2,662,997
PRIMARK*
Provider of information
through software and databases 139,800 3,547,425
PROFESSIONAL DETAILING*
Provider of consulting services
to the pharmaceutical industry 241,700 6,042,500
-------------
14,497,291
-------------
CONSUMER GOODS AND
SERVICES 5.6%
CAREY INTERNATIONAL*
Worldwide provider of
chauffeured vehicle service 201,900 4,309,303
MEMBERWORKS*
Provider of membership
service programs for
various industries 301,100 8,054,425
PRE-PAID LEGAL SERVICES*
Underwriter and marketer of
legal service plans 132,000 3,201,000
PROFIT RECOVERY GROUP INTERNATIONAL*
Worldwide provider of accounts
payable and auditing services 102,950 4,237,036
SITEL*
Provider of customer relation-
ship management services 104,300 469,350
TELESPECTRUM WORLDWIDE*
Provider of marketing and
customer care services 73,300 306,944
-------------
20,578,058
-------------
DRUGS AND HEALTH
CARE 11.7%
AFFYMETRIX*
Developer and manufacturer of
DNA chip technology used to
improve diagnosis, monitoring,
and treatment of diseases 13,800 1,217,850
ALPHARMA (CLASS A)
International manufacturer of
human and animal health
products 91,400 3,216,137
BARR LABORATORIES*
Developer, manufacturer, and
marketer of generic
prescription drugs 128,600 3,898,188
- ----------
See footnotes on page 13.
11
<PAGE>
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1999
SHARES VALUE
-------- -------------
DRUGS AND HEALTH
CARE (CONTINUED)
DRUG EMPORIUM*
Pharmacy operator 127,200 $ 584,325
DURA PHARMACEUTICALS*
Developer and retailer of pres-
cription pharmaceutical products
for the treatment of allergies,
asthma, pneumonia, and
related respiratory conditions 248,500 3,176,140
HANGER ORTHOPEDIC GROUP*
Provider of orthopedic and
prosthetic rehabilitation
services 250,300 3,081,819
NOVEN PHARMACEUTICALS*
Developer of drug delivery
systems and technologies 93,600 921,375
OMNICARE
Provider of pharmaceutical
services to long-term care
institutions 256,900 2,376,325
PRIORITY HEALTHCARE (CLASS B)*
Pharmaceutical and medical
supply distributor to the
alternative health care industry 53,500 1,071,672
PROVINCE HEALTHCARE*
Provider of health care
services in non-urban markets 310,800 5,001,938
PSS WORLD MEDICAL*
Distributor of medical
supplies, equipment,
and pharmaceuticals 651,000 5,075,766
RENEX*
Provider of dialysis and
ancillary services 114,800 509,425
SCHEIN PHARMACEUTICAL*
Developer, manufacturer,
and vendor of generic
pharmaceuticals 140,400 1,193,400
TEVA PHARMACEUTICAL INDUSTRIES
(ADRs) (Israel)
Developer and marketer of
pharmaceutical, disposable
medical, and veterinary
products 144,300 6,976,003
TOTAL RENAL CARE HOLDINGS*
Provider of dialysis services 426,600 3,119,512
TRIANGLE PHARMACEUTICALS*
Developer of new drugs
primarily in the antiviral area 99,800 1,615,512
-------------
43,035,387
-------------
ELECTRONICS 13.3%
AVX
Manufacturer and supplier of
passive electronic
components and related
products 230,400 9,216,000
BURR-BROWN*
Manufacturer of micro-electric
data devices for business
end-users 317,550 12,533,302
C-CUBE MICROSYSTEMS*
Provider of digital video
compression and decompression
circuits and systems 53,900 2,401,919
COGNEX*
Manufacturer of machine
vision systems 177,400 5,305,369
EXAR*
Provider of integrated circuits
for communications and video
products 58,800 2,127,825
GENERAL SEMICONDUCTOR*
Designer and manufacturer
of power semiconductors 498,500 5,234,250
KLA-TENCOR*
Manufacturer of wafer and
metrology equipment 52,700 4,174,828
ORBOTECH* (ISRAEL)
Manufacturer of automated
optical inspection systems for
circuit boards and flat panel
displays 28,500 2,233,687
PHOTON DYNAMICS*
Provider of inspection and
repair systems for the flat panel
display manufacturing industry 65,600 1,996,700
PMC-SIERRA* (CANADA)
Provider of high-speed
networking circuits 31,200 2,939,625
VEECO INSTRUMENTS*
Ion beam etching and surface
measurement systems for
disk drive heads 24,500 832,234
-------------
48,995,739
-------------
ENERGY 2.5%
Barrett Resources*
Explorer, developer, and
producer of oil and gas 66,400 2,228,550
Cabot Oil & Gas (Class A)
Explorer, developer, and
producer of oil and gas 104,800 1,689,900
Pride International*
Provider of oil and gas
well services 136,300 1,874,125
- ----------
See footnotes on page 13.
12
<PAGE>
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1999
SHARES VALUE
-------- -------------
ENERGY (CONTINUED)
SANTA FE SNYDER*
Explorer, producer, and
developer of oil and gas 397,100 $ 3,424,987
-------------
9,217,562
-------------
ENVIRONMENTAL
MANAGEMENT 0.1%
WASTE CONNECTIONS*
Provider of solid waste
collection, disposal, and
recycling services 27,300 420,591
-------------
FINANCIAL SERVICES 2.8%
AFFILIATED MANAGERS GROUP*
Holding company specializing
in asset management 180,000 4,815,000
Metris Companies
Direct marketer of consumer
credit cards 155,200 5,344,700
-------------
10,159,700
-------------
INDUSTRIAL GOODS AND
SERVICES 0.8%
UNITED RENTALS*
Equipment rental supplier
for the construction industry
and homeowners 151,100 2,814,237
-------------
LEISURE AND
ENTERTAINMENT 2.9%
PREMIER PARKS*
Owner and operator of
regional theme parks 374,600 10,839,987
-------------
MANUFACTURING 0.1%
AMERICAN HOMESTAR*
Retailer and producer of
manufactured homes 127,600 492,456
-------------
MEDIA AND
BROADCASTING 1.7%
INSIGHT COMMUNICATIONS (CLASS A)*
Operator of cable television and
interactive digital video 101,300 2,396,378
SBS Broadcasting* (Luxembourg)
Television and radio broadcaster 110,600 4,050,725
-------------
6,447,103
-------------
REAL ESTATE INVESTMENT
TRUST 1.1%
PRISON REALTY TRUST
Real estate investment
trust investing in prisons 383,000 3,901,813
-------------
SCHOOLS 3.4%
CAREER EDUCATION*
Provider of private
post-secondary education 212,700 4,759,163
SCHOOLS (continued)
DeVRY*
Owner and manager of higher
education systems 97,700 $ 2,057,806
ITT EDUCATIONAL SERVICES*
Provider of technology-
oriented schooling 230,800 4,558,300
LEARNING TREE INTERNATIONAL*
Provider of education and
training services for information
technology workers 62,100 1,139,147
-------------
12,514,416
-------------
TELECOMMUNICATIONS 3.2%
ANTEC*
Developer and supplier of
products for the cable
television industry 160,600 7,774,044
CONCORD COMMUNICATIONS*
Provider of performance analysis
for computer network operations 17,900 930,241
TEKELEC*
Provider of telecommunications
switching equipment 173,200 2,192,062
TRANSWITCH*
Provider of integrated semi-
conductor solutions for the
telecommunications and data
communications industries 22,500 1,058,203
-------------
11,954,550
-------------
TRANSPORTATION 1.0%
EXPEDITORS INTERNATIONAL
OF WASHINGTON
Transportation provider 76,000 2,842,875
FORWARD AIR*
Provider of transportation
services to the airline industry 34,800 1,030,950
-------------
3,873,825
-------------
TOTAL COMMON STOCKS
(Cost $340,476,146) 356,558,540
SHORT-TERM HOLDINGS 4.2%
(Cost $15,510,000) 15,510,000
-------------
TOTAL INVESTMENTS 100.8%
(COST $355,986,146) 372,068,540
OTHER ASSETS
LESS LIABILITIES (0.8)% (2,959,952)
-------------
NET ASSETS 100.0% $369,108,588
=============
- ----------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
13
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
SHARES VALUE
-------- -------------
COMMON STOCKS 100.6%
ADVERTISING 0.9%
DOUBLECLICK*
Provider of Internet advertising
applications for advertisers
and web publishers 14,500 $ 1,727,766
NFO WORLDWIDE*
International provider of
consulting services 156,600 1,996,650
-------------
3,724,416
-------------
BUSINESS GOODS
AND SERVICES 19.5%
ABACUS DIRECT*
Provider of marketing
research services to the direct
marketing industry 18,700 2,282,569
ACXIOM*
Provider of data processing
services 120,000 2,358,750
AFFILIATED COMPUTER SERVICES
(CLASS A)*
Provider of information
technology services and
electronic funds transfer
processing 118,400 4,810,000
APPLIED GRAPHICS TECHNOLOGIES*
Provider of digital media
asset services; publisher of
greeting cards and calendars 265,400 2,313,956
COPART*
Auctioneer of damaged vehicles
for insurance companies 245,100 4,542,009
CoSTAR GROUP*
Information provider for the
real estate industry 140,070 3,348,548
CREO PRODUCTS* (CANADA)
Developer of applications
software for the printing industry 57,000 1,405,406
CSG Systems International*
Provider of customer service for
the communications industry 148,800 4,078,050
FIRSTSERVICE* (CANADA)
Provider of property
management and
business services 320,500 3,876,047
INDUS INTERNATIONAL*
Worldwide developer and
marketer of management
software and implementation
services 446,000 2,327,563
INNOTRAC
Provider of technology support
and services for large
corporations 30,100 534,275
INTEGRATED ELECTRICAL SERVICES*
Provider of electrical
contracting and
maintenance services 180,700 2,857,319
KEYSTONE AUTOMOTIVE INDUSTRIES*
Distributor of after-market
collision replacement parts for
automobiles and light trucks 66,600 743,006
METAMOR WORLDWIDE*
International provider of
information technology
and staffing services 148,100 2,624,147
MODIS PROFESSIONAL SERVICES*
Provider of temporary
personnel services 562,400 7,451,800
NOVA*
Provider of transaction
processing services 404,605 10,115,125
PERSONNEL GROUP OF AMERICA*
Provider of personnel
staffing services 457,500 2,859,375
PROVANT*
Provider of training and
development services 378,470 6,055,520
U.S. FOODSERVICE*
Distributor of food and
related products 536,400 9,655,200
WILMAR INDUSTRIES*
Marketer and distributor of
repair and maintenance
products to the apartment
housing market 280,100 3,571,275
-------------
77,809,940
-------------
CAPITAL GOODS 5.1%
MICROCHIP TECHNOLOGY*
Supplier of field programmable
microcontrollers 138,300 7,105,162
NOVELLUS SYSTEMS*
Manufacturer of wafer
fabrication systems for the
disposition of thin films 95,600 6,450,013
UCAR INTERNATIONAL*
Manufacturer of graphite
and carbon electrodes 287,800 6,565,438
-------------
20,120,613
-------------
COMPUTER HARDWARE 0.9%
APEX*
Manufacturer of switching
systems for computer
network administrators 189,600 3,549,075
-------------
- ----------------
See footnotes on page 17.
14
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
SHARES VALUE
-------- -------------
COMPUTER SOFTWARE AND
SERVICES 17.1%
ASPECT DEVELOPMENT
Provider of computer software 120,700 $ 3,051,447
AVANT!*
Developer and marketer of
software products that
assist design engineers 335,200 5,981,225
CAREINSITE*
Provider of Internet messaging
services for physicians 45,400 2,272,838
CBT GROUP (ADRS)* (IRELAND)
Provider of interactive
education software 120,700 2,987,325
ENGAGE TECHNOLOGIES*
Provider of Internet solutions
for web user profiles 147,600 5,558,062
INSO*
Marketer and developer of
textual information software 132,300 1,066,669
ISS GROUP*
Provider of security monitoring,
detection, and response software 114,100 3,094,962
NATIONAL INSTRUMENTS*
Provider of instrumentation
hardware and software products
for the engineering
and scientific industries 422,550 14,934,502
STRUCTURAL DYNAMICS RESEARCH*
Developer of mechnanical
design software 332,500 4,997,891
SUNGARD DATA SYSTEMS*
Provider of computer disaster
recovery services, as well as
health care information and
investment support systems 167,000 4,394,187
THQ*
Worldwide provider of inter-
active entertainment software 24,500 1,057,328
TRANSACTION SYSTEMS ARCHITECTS
(CLASS A)*
Worldwide developer and
marketer of software
products for electronic
funds transfer 204,100 5,504,322
UNIGRAPHICS SOLUTIONS (CLASS A)*
International provider of
services used for virtual
product development 235,800 6,396,075
VERTICALNET*
Operator of vertical trade
communities on the Internet 36,800 1,362,750
COMPUTER SOFTWARE AND
SERVICES (continued)
Visio*
Provider of business
diagramming and technical
drawing software 138,300 $ 5,428,275
------------
68,087,858
------------
CONSULTING SERVICES 4.8%
CORPORATE EXECUTIVE BOARD*
Worldwide provider of consulting
services for corporations 59,800 2,429,375
FORRESTER RESEARCH*
Independent research company
which studies changes in future
technology and its impact on
businesses, consumers and
society 66,900 2,632,097
PRIMARK*
Provider of information
through software and databases 274,700 7,811,781
PROFESSIONAL DETAILING*
Provider of consulting services
to the pharmaceutical industry 241,700 6,261,541
------------
19,134,794
------------
CONSUMER GOODS AND
SERVICES 7.3%
CAREY INTERNATIONAL*
Worldwide provider of
chauffeured vehicle service 201,900 5,034,881
GARDEN.COM*
Internet retailer of gardening
products 12,500 236,328
MEMBERWORKS*
Provider of membership
service programs for
various industries 297,000 9,865,969
PRE-PAID LEGAL SERVICES*
Underwriter and marketer of
legal service plans 216,600 8,528,625
PROFIT RECOVERY GROUP INTERNATIONAL*
Worldwide provider of accounts
payable and auditing services 124,450 5,553,581
------------
29,219,384
------------
DRUGS AND HEALTH
CARE 12.4%
ALPHARMA (CLASS A)
International manufacturer of
human and animal health
products 91,400 3,227,563
BARR LABORATORIES*
Developer, manufacturer, and
marketer of generic
prescription drugs 128,600 4,083,050
- ----------------
See footnotes on page 17.
15
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
SHARES VALUE
-------- -------------
DRUG AND HEALTH
CARE (CONTINUED)
DRUG EMPORIUM*
Pharmacy operator 108,600 $ 726,262
DURA PHARMACEUTICALs*
Developer and retailer of pres-
cription pharmaceutical products
for the treatment of allergies,
asthma, pneumonia, and
related respiratory conditions 233,800 3,265,894
HANGER ORTHOPEDIC GROUP*
Provider of orthopedic and
prosthetic rehabilitation
services 250,300 3,629,350
OMNICARE
Provider of pharmaceutical
services to long-term care
institutions 287,700 2,769,112
PRIORITY HEALTHCARE (CLASS B)*
Pharmaceutical and medical
supply distributor to the
alternative health care industry 61,500 1,902,656
PROVINCE HEALTHCARE*
Provider of health care
services in non-urban markets 310,800 3,554,775
PSS WORLD MEDICAL*
Distributor of medical
supplies, equipment,
and pharmaceuticals 726,400 6,480,850
RENAL CARE GROUP*
Provider of dialysis and
ancillary services 12,900 282,591
RENEX*
Provider of dialysis and
ancillary services 114,800 597,319
SCHEIN PHARMACEUTICAL*
Developer, manufacturer,
and vendor of generic
pharmaceuticals 140,400 1,316,250
Teva Pharmaceutical Industries
(ADRs) (Israel)
Developer and marketer of
pharmaceutical, disposable
medical, and veterinary
products 200,600 10,098,956
TOTAL RENAL CARE HOLDINGS*
Provider of dialysis services 536,600 3,990,963
TRIANGLE PHARMACEUTICALS*
Developer of new drugs
primarily in the antiviral area 172,200 3,309,469
-------------
49,235,060
-------------
ELECTRONICS 13.3%
ANADIGICS*
Designer and manufacturer of
circuits for the communications
industry 29,300 822,231
AVX
Manufacturer and supplier of
passive electronic
components and related
products 276,000 9,694,500
BURR-BROWN*
Manufacturer of micro-electric
data devices for business
end-users 416,850 16,413,469
C-CUBE MICROSYSTEMS*
Provider of digital video
compression and decompression
circuits and systems 66,000 2,868,938
COGNEX*
Manufacturer of machine
vision systems 177,400 5,355,262
EXAR*
Provider of integrated circuits
for communications and video
products 35,400 1,326,394
GENERAL SEMICONDUCTOR*
Designer and manufacturer
of power semiconductors 498,500 5,140,781
KLA-TENCOR*
Manufacturer of wafer and
metrology equipment 52,700 3,427,147
Photon Dynamics*
Provider of inspection and
repair systems for the flat panel
display manufacturing industry 2,800 59,062
PMC-SIERRA* (CANADA)
Provider of high-speed
networking circuits 75,500 6,997,906
VEECO INSTRUMENTS*
Ion beam etching and surface
measurement systems for
disk drive heads 26,500 741,172
-------------
52,846,862
-------------
ENERGY 2.3%
Barrett Resources*
Explorer, developer, and
producer of oil and gas 66,400 2,452,650
CABOT OIL & GAS (CLASS A)
Explorer, developer, and
PRODUCER OF OIL AND GAS 104,800 1,807,800
PRIDE INTERNATIONAL*
Provider of oil and gas
well services 77,000 1,092,438
- ----------------
See footnotes on page 17.
16
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1999
SHARES VALUE
-------- -------------
ENERGY (CONTINUED)
SANTA FE SNYDER*
Explorer, producer, and
developer of oil and gas 397,100 $ 3,573,900
-------------
8,926,788
-------------
ENVIRONMENTAL
MANAGEMENT 0.3%
CASELLA WASTE SYSTEMS (CLASS A)* Provider of non-hazardous solid waste
collection, disposal, and recycling
services 30,300 506,578
WASTE CONNECTIONS*
Provider of solid waste
collection, disposal, and
recycling services 27,300 560,503
-------------
1,067,081
-------------
FINANCIAL SERVICES 3.2%
AFFILIATED MANAGERS GROUP*
Holding company specializing
in asset management 180,000 4,905,000
American Capital Strategies
Provider of commercial
financing 184,800 3,430,350
Metris Companies
Direct marketer of consumer
credit cards 155,200 4,568,700
-------------
12,904,050
-------------
INDUSTRIAL GOODS AND
SERVICES 0.5%
UNITED RENTALS*
Equipment rental supplier
for the construction industry
and homeowners 92,500 2,011,875
-------------
LEISURE AND
ENTERTAINMENT 3.0%
PREMIER PARKS*
Owner and operator of
regional theme parks 417,100 12,095,900
-------------
MANUFACTURING 0.4%
AMERICAN HOMESTAR*
Retailer and producer of
manufactured homes 345,300 1,359,619
-------------
MEDIA AND
BROADCASTING 2.2%
INSIGHT COMMUNICATIONS (CLASS A)*
Operator of cable television and
interactive digital video 101,300 2,906,044
SBS BROADCASTING* (LUXEMBOURG)
Television and radio broadcaster 150,300 5,842,912
-------------
8,748,956
-------------
REAL ESTATE INVESTMENT
TRUST 1.0%
Prison Realty Trust
Real estate investment
trust investing in prisons 383,000 4,117,250
-------------
SCHOOLS 3.2%
CAREER EDUCATION*
Provider of private
post-secondary education 212,700 5,929,012
DeVRY*
Owner and manager of higher
education systems 97,700 1,954,000
ITT EDUCATIONAL SERVICES*
Provider of technology-
oriented schooling 227,000 4,426,500
LEARNING TREE INTERNATIONAL*
Provider of education and
training services for information
technology workers 34,100 565,847
-------------
12,875,359
-------------
TELECOMMUNICATIONS 2.4%
ANTEC*
Developer and supplier of
products for the cable
television industry 144,100 7,650,809
TEKELEC*
Provider of telecommunications
switching equipment 136,200 1,877,006
-------------
9,527,815
-------------
TRANSPORTATION 0.8%
EXPEDITORS INTERNATIONAL
OF WASHINGTON
Transportation provider 76,000 2,439,125
FORWARD AIR*
Provider of transportation
services to the airline industry 34,800 812,363
-------------
3,251,488
-------------
TOTAL COMMON STOCKS
(Cost $375,245,738) 400,614,183
SHORT-TERM HOLDINGS 1.9%
(Cost $7,620,000) 7,620,000
-------------
TOTAL INVESTMENTS 102.5%
(COST $382,865,738) 408,234,183
OTHER ASSETS
LESS LIABILITIES (2.5)% (9,914,424)
-------------
NET ASSETS 100.0% $398,319,759
=============
- -------------
* Non-income producing security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
17
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
OCTOBER 31, 1999 SEPTEMBER 30, 1999
---------------- ------------------
<S> <C> <C>
ASSETS:
Investments, at value:
Common stocks (cost $340,476,146 and $375,245,738, respectively) ... $ 356,558,540 $ 400,614,183
Short-term holdings (cost $15,510,000 and $7,620,000, respectively) 15,510,000 7,620,000
------------- -------------
Total Investments .................................................... 372,068,540 408,234,183
Cash ................................................................. 2,115 10,007
Receivable for securities sold ....................................... 4,376,333 1,487,467
Receivable for Capital Stock sold .................................... 1,715,818 8,877,671
Expenses prepaid to shareholder service agent ........................ 176,939 137,223
Receivable for dividends and interest ................................ 21,762 80,641
Other ................................................................ 27,799 5,953
------------- -------------
TOTAL ASSETS ......................................................... 378,389,306 418,833,145
------------- -------------
LIABILITIES:
Payable for Capital Stock repurchased ................................ 4,487,329 10,183,371
Payable for securities purchased ..................................... 3,918,099 9,396,110
Accrued expenses and other ........................................... 875,290 933,905
------------- -------------
TOTAL LIABILITIES .................................................... 9,280,718 20,513,386
------------- -------------
NET ASSETS ........................................................... $ 369,108,588 $ 398,319,759
============= =============
COMPOSITION OF NET ASSETS:
Capital Stock, at par ($0.10 par value; 500,000,000 shares authorized;
29,534,863 and 31,134,391 shares outstanding, respectively):
Class A ............................................................ $ 1,526,720 $ 1,606,879
Class B ............................................................ 393,306 398,415
Class C ............................................................ 3,486 3,271
Class D ............................................................ 1,029,974 1,104,874
Additional paid-in capital ........................................... 351,699,882 370,829,467
Accumulated net investment loss ...................................... (58,123) (56,400)
Accumulated net realized loss ........................................ (1,569,051) (935,192)
Net unrealized appreciation of investments ........................... 16,082,394 25,368,445
------------- -------------
NET ASSETS ........................................................... $ 369,108,588 $ 398,319,759
============= =============
NET ASSETS:
Class A ............................................................ $ 197,424,189 $ 212,663,725
Class B ............................................................ $ 47,309,695 $ 49,080,340
Class C ............................................................ $ 419,488 $ 403,093
Class D ............................................................ $ 123,955,216 $ 136,172,601
SHARES OF CAPITAL STOCK OUTSTANDING:
Class A ............................................................ 15,267,203 16,068,790
Class B ............................................................ 3,933,057 3,984,151
Class C ............................................................ 34,857 32,713
Class D ............................................................ 10,299,746 11,048,737
NET ASSET VALUE PER SHARE:
CLASS A ............................................................ $ 12.93 $ 13.23
============= =============
CLASS B ............................................................ $ 12.03 $ 12.32
============= =============
CLASS C ............................................................ $ 12.03 $ 12.32
============= =============
CLASS D ............................................................ $ 12.03 $ 12.32
============= =============
</TABLE>
- --------------
See Notes to Financial Statements.
18
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE ONE FOR THE
MONTH ENDED YEAR ENDED
OCTOBER 31, 1999 SEPTEMBER 30, 1999
------------------ --------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest ............................................................... $ 20,205 $ 1,153,750
Dividends (net of foreign taxes withheld of $0 and $7,330, respectively) 19,089 1,541,305
------------ ------------
TOTAL INVESTMENT INCOME ................................................ 39,294 2,695,055
------------ ------------
EXPENSES:
Management fee ......................................................... 295,732 5,574,591
Distribution and service fees .......................................... 183,573 3,461,437
Shareholder account services ........................................... 105,243 1,639,836
Shareholder reports and communications ................................. 16,423 262,319
Custody and related services ........................................... 11,500 130,557
Registration ........................................................... 9,752 198,103
Auditing and legal fees ................................................ 7,252 80,468
Directors' fees and expenses ........................................... 2,915 25,951
Miscellaneous .......................................................... 25,404 189,851
------------ ------------
TOTAL EXPENSES ......................................................... 657,794 11,563,113
------------ ------------
NET INVESTMENT LOSS .................................................... (618,500) (8,868,058)
------------ ------------
NET REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS:
Net realized gain on investments ....................................... 586,290 1,718,133*
Net change in unrealized appreciation/depreciation of investments ...... (9,286,051) 48,514,019
------------ ------------
NET GAIN (LOSS) ON INVESTMENTS ......................................... (8,699,761) 50,232,152
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ...................... $ (9,318,261) $ 41,364,094
============ ============
</TABLE>
- ------------
* Includes net realized loss from affiliated issuer of $911,922.
See Notes to Financial Statements.
19
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE ONE YEAR ENDED SEPTEMBER 30,
MONTH ENDED -----------------------------------
OCTOBER 31, 1999 1999 1998
---------------- -----------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment loss ................................... $ (618,500) $ (8,868,058) $ (13,374,405)
Net realized gain on investments ...................... 586,290 1,718,133 27,728,578
Net change in unrealized appreciation/depreciation
of investments ..................................... (9,286,051) 48,514,019 (216,052,533)
--------------- --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ..... (9,318,261) 41,364,094 (201,698,360)
--------------- --------------- ---------------
DISTRIBUTION 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)
--------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares ..................... 1,590,602 62,895,521 151,890,138
Exchanged from associated Funds ....................... 57,211,520 1,062,460,049 588,688,321
Value of shares issued in payment of gain distributions -- -- 89,056,784
--------------- --------------- ---------------
Total ................................................. 58,802,122 1,125,355,570 829,635,243
--------------- --------------- ---------------
Cost of shares repurchased ............................ (14,135,703) (348,573,441) (232,571,957)
Exchanged into associated Funds ....................... (64,559,329) (1,130,870,201) (615,498,157)
--------------- --------------- ---------------
Total ................................................. (78,695,032) (1,479,443,642) (848,070,114)
--------------- --------------- ---------------
DECREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS .......................... (19,892,910) (354,088,072) (18,434,871)
--------------- --------------- ---------------
DECREASE IN NET ASSETS ................................ (29,211,171) (312,723,978) (317,990,104)
NET ASSETS:
Beginning of period ................................... 398,319,759 711,043,737 1,029,033,841
--------------- --------------- ---------------
END OF PERIOD (including accumulated net investment
loss of $58,123, $56,400, and $49,317, respectively) $ 369,108,588 $ 398,319,759 $ 711,043,737
=============== =============== ===============
</TABLE>
- ------------
See Notes to Financial Statements.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. MULTIPLE CLASSES OF SHARES -- Seligman Frontier Fund, Inc. (the "Fund")
offers four classes of shares. Class A shares are sold with an initial sales
charge of up to 4.75% and a continuing service fee of up to 0.25% on an annual
basis. Class A shares purchased in an amount of $1,000,000 or more are sold
without an initial sales charge but are subject to a contingent deferred sales
charge ("CDSC") of 1% on redemptions within 18 months of purchase. Class B
shares are sold without an initial sales charge but are subject to a
distribution fee of 0.75% and a service fee of up to 0.25% on an annual basis,
and a CDSC, if applicable, of 5% on redemptions in the first year of purchase,
declining to 1% in the sixth year and 0% thereafter. Class B shares will
automatically convert to Class A shares on the last day of the month that
precedes the eighth anniversary of their date of purchase. The Fund began
offering Class C shares on May 27, 1999. Class C shares are sold with an initial
sales charge of up to 1% and are subject to a distribution fee of up to 0.75%
and a service fee of up to 0.25% on an annual basis, and a CDSC, if applicable,
of 1% imposed on redemptions made within 18 months of purchase. Class D shares
are sold without an initial sales charge but are subject to a distribution fee
of up to 0.75%, and a service fee of up to 0.25% on an annual basis, and a CDSC,
if applicable, of 1% imposed on redemptions made within one year of purchase.
The four classes of shares represent interests in the same portfolio of
investments, have the same rights and are generally identical in all respects
except that each class bears its separate distribution and certain other class
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. CHANGE IN FISCAL YEAR END -- Effective for the period ended October 31, 1999,
the Fund changed its fiscal year end for financial reporting and federal
income tax purposes to October 31 from September 30.
B. 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.
C. 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.
D. 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.
E. 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 periods ended October 31, 1999,
and September 30, 1999, distribution and service fees were the only
class-specific expenses.
F. 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 period ended
October 31, 1999, and September 30, 1999, permanent differences aggregating
approximately $600,000 and $7 million respectively, have been reclassified
from accumulated net investment loss and undistributed net realized gain to
additional paid-in
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
capital. These reclassifications have no effect on net assets, results of
operations, or net asset value per share of the Fund.
For the one month ended October 31, 1999, and the year ended September 30,
1999, the Fund redeemed 6,489,844 and 116,768,183, respectively, of its
shares from shareholders aggregating $78,695,032 and $1,479,443,642,
respectively, of which approximately $600,000 and $2,000,000, respectively,
represent 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 one month ended October 31, 1999, aggregated $19,633,239 and $54,989,121,
respectively, and for the year ended September 30, 1999, aggregated $322,227,340
and $630,461,105, respectively.
At October 31, 1999, the cost of investments for federal income tax purposes
was $357,555,197, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $70,567,215 and $56,053,872,
respectively.
At September 30, 1999, the cost of investments for federal income tax
purposes was $383,800,930 and the tax basis gross unrealized appreciation and
depreciation of portfolio securities amounted to $84,475,748 and $60,042,495,
respectively.
4. SHORT-TERM INVESTMENTS -- At October 31, 1999, and September 30, 1999, the
Fund owned short-term investments which matured in less than seven days.
5. 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 fees reflected in the Statements of Operations represent
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 from
sales of Class A shares. For the one month ended October 31, 1999, and the year
ended September 30, 1999, concessions aggregated $1,010 and $36,866,
respectively. For the one month ended October 31, 1999, commissions of $8,605
and $308 were paid to dealers for sales of Class A and Class C shares,
respectively. For the year ended September 30, 1999, commissions of $288,321 and
$4,290 were paid to dealers for sales of Class A and Class C shares,
respectively.
The Fund has an Administration, Shareholder Services and Distribution Plan
(the "Plan") with respect to distribution of its shares. Under the Plan, with
respect to Class A shares, service organizations can enter into agreements with
the Distributor and receive a continuing fee of up to 0.25% on an annual basis,
payable quarterly, of 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 one month ended October 31, 1999, fees
incurred under the Plan aggregated $39,286, or 0.24% per annum of average daily
net assets of Class A shares. For the year ended September 30, 1999, such fees
aggregated $759,146, or 0.24% per annum of average daily net assets of Class A
shares.
Under the Plan, with respect to Class B shares, Class C shares, and Class D
shares, service organizations can enter into agreements with the Distributor and
receive a continuing fee for providing personal services and/or the maintenance
of shareholder accounts of up to 0.25% on an annual basis of the average daily
net assets of the Class B, Class C, and Class D shares for which the
organizations are responsible; and, for Class C and Class D shares, fees for
providing other distribution assistance of up to 0.75% on an annual basis of
such average daily net assets. Such fees are paid monthly by the Fund to the
Distributor pursuant to the Plan.
With respect to Class B shares, a distribution fee of 0.75% on an annual
basis of average daily net assets is payable monthly by the Fund to the
Distributor; however, the Distributor has sold its rights to this fee to a third
party (the "Purchaser"), which provides funding to the Distributor to enable it
to pay commissions to dealers at the time of the sale of the related Class B
shares.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the one month ended October 31, 1999, fees incurred under the Plan
amounted to $38,787, $332, and $105,168, for Class B, Class C, and Class D
shares, respectively, equivalent to 1% per annum of the average daily net assets
of each class. For the year ended September 30, 1999, such fees, equivalent to
1% per annum of the average daily net assets of Class B, Class C, and Class D
shares, amounted to $627,782, $859, and $2,073,650, respectively.
The Distributor is entitled to retain any CDSC imposed on certain redemptions
of Class A and Class C shares occurring within 18 months of purchase and on
redemptions of Class D shares occurring within one year of purchase. For the one
month ended October 31, 1999, and the year ended September 30, 1999, such
charges amounted to $4,992 and $115,637, respectively.
The Distributor has sold its rights to collect any CDSC imposed on
redemptions of Class B shares to the Purchaser. In connection with the sale of
its rights to collect any CDSC and the distribution fees with respect to Class B
shares described above, the Distributor receives payments from the Purchaser
based on the value of Class B shares sold. The aggregate of such payments
retained by the Distributor, for the one month ended October 31, 1999, and the
year ended September 30, 1999, amounted to $247 and $11,285, respectively.
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 one month ended October 31, 1999,
and the year ended September 30, 1999, Seligman Services, Inc. received
commissions of $302 and $7,868, respectively, from the sales of shares of the
Fund. For the year ended September 30, 1999, Seligman Services, Inc. received
distribution and service fees of $47,494, pursuant to the Plan.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $105,243 and $1,636,808 for shareholder
account services for the one month ended October 31, 1999, and the year ended
September 30, 1999, respectively.
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 balances thereof at October 31, 1999 and September
30, 1999, of $58,123 and $56,400, respectively, are included in other
liabilities. Deferred fees and related accrued earnings are not deductible for
federal income tax purposes until such amounts are paid.
6. COMMITTED LINE OF CREDIT -- The Fund is a participant in a joint $750 million
committed line of credit that is shared by substantially all funds in the
Seligman Group of Investment Companies. The Fund's borrowings are limited to 10%
of its net assets. Borrowings pursuant to the credit facility are subject to
interest at a rate equal to the overnight federal funds rate plus 0.50%. The
Fund incurs a commitment fee of 0.08% per annum on its share of the unused
portion of the credit facility. The credit facility may be drawn upon only for
temporary purposes and is subject to certain other customary restrictions. The
credit facility commitment expires in June 2000, but is renewable annually with
the consent of the participating banks.
During the one month ended October 31, 1999, and the year ended September 30,
1999, the Fund periodically borrowed from the credit facility. The average
outstanding daily balances of bank loans (based on the number of days the loans
were outstanding during the periods) were $11,173,846 and $10,064,364,
respectively, with weighted average interest rates of 5.75% and 5.45%,
respectively. The maximum borrowings outstanding during the periods were
$16,330,000 and $21,000,000, respectively.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. Capital Share Transactions -- The Fund has authorized 500,000,000 shares of
$0.10 par value Capital Stock. Transactions in shares of Capital Stock were as
follows:
<TABLE>
<CAPTION>
FOR THE ONE YEAR ENDED SEPTEMBER 30,
MONTH ENDED ------------------------------------------------------------
OCTOBER 31, 1999 1999 1998
-------------------------- ---------------------------- ----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 77,233 $ 980,390 3,193,205 $ 42,033,215 5,029,443 $ 78,991,830
Exchanged from
associated Funds 1,142,641 14,546,456 36,768,137 481,112,233 19,887,832 302,151,838
Shares issued in
payment of gain
distributions -- -- -- -- 3,197,741 47,518,435
-------------------------- ---------------------------- ----------------------------
Total 1,219,874 15,526,846 39,961,342 523,145,448 28,115,016 428,662,103
-------------------------- ---------------------------- ----------------------------
Cost of shares
repurchased (475,943) (6,018,651) (15,770,829) (203,299,642) (9,287,625) (142,825,418)
Exchanged into
associated Funds (1,545,518) (19,845,440) (38,671,016) (509,317,966) (20,657,403) (315,167,006)
-------------------------- ---------------------------- ----------------------------
Total (2,021,461) (25,864,091) (54,441,845) (712,617,608) (29,945,028) (457,992,424)
-------------------------- ---------------------------- ----------------------------
Decrease (801,587) $(10,337,245) (14,480,503) $(189,472,160) (1,830,012) $ (29,330,321)
========================== ============================ ============================
FOR THE ONE YEAR ENDED SEPTEMBER 30,
MONTH ENDED ------------------------------------------------------------
OCTOBER 31, 1999 1999 1998
-------------------------- ---------------------------- ----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------------------------- ---------------------------- ----------------------------
Sales of shares 16,878 $ 198,226 635,500 $ 7,780,693 2,005,337 $ 29,952,250
Exchanged from
associated Funds 201,156 2,396,264 2,728,875 33,176,333 1,708,776 24,644,626
Shares issued in
payment of gain
distributions -- -- -- -- 474,373 6,655,460
-------------------------- ---------------------------- ----------------------------
Total 218,034 2,594,490 3,364,375 40,957,026 4,188,486 61,252,336
-------------------------- ---------------------------- ----------------------------
Cost of shares
repurchased (72,018) (844,478) (1,340,058) (16,374,340) (570,218) (8,232,601)
Exchanged into
associated Funds (197,110) (2,350,985) (3,802,442) (46,598,505) (2,043,767) (29,641,042)
-------------------------- ---------------------------- ----------------------------
Total (269,128) (3,195,463) (5,142,500) (62,972,845) (2,613,985) (37,873,643)
-------------------------- ---------------------------- ----------------------------
Increase (Decrease) (51,094) $ (600,973) (1,778,125) $ (22,015,819) 1,574,501 $ 23,378,693
========================== ============================ ============================
</TABLE>
FOR THE ONE
MONTH ENDED MAY 27, 1999* TO
OCTOBER 31, 1999 SEPTEMBER 30, 1999
-------------------- ----------------------
CLASS C SHARES AMOUNT SHARES AMOUNT
-------------------- ----------------------
Sales of shares 2,729 $ 31,419 33,815 $ 428,738
Exchanged from
associated Funds 169 2,000 884 11,107
-------------------- ----------------------
Total 2,898 33,419 34,699 439,845
-------------------- ----------------------
Cost of shares
repurchased (149) (1,820) (78) (948)
Exchanged into
associated Funds (605) (7,323) (1,908) (23,543)
-------------------- ----------------------
Total (754) (9,143) (1,986) (24,491)
-------------------- ----------------------
Increase 2,144 $ 24,276 32,713 $ 415,354
==================== ======================
* Commencement of offering of shares.
<TABLE>
<CAPTION>
FOR THE ONE YEAR ENDED SEPTEMBER 30,
MONTH ENDED ------------------------------------------------------------
OCTOBER 31, 1999 1999 1998
-------------------------- ---------------------------- ----------------------------
CLASS D SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 32,478 $ 380,567 1,035,938 $ 12,652,875 2,895,974 $ 42,946,058
Exchanged from
associated Funds 3,417,032 40,266,800 44,576,743 548,160,376 18,380,183 261,891,857
Shares issued in
payment of gain
distributions -- -- -- -- 2,484,536 34,882,889
-------------------------- ---------------------------- ----------------------------
Total 3,449,510 40,647,367 45,612,681 560,813,251 23,760,693 339,720,804
-------------------------- ---------------------------- ----------------------------
Cost of shares
repurchased (614,365) (7,270,754) (10,620,686) (128,898,511) (5,658,913) (81,513,938)
Exchanged into
associated Funds (3,584,136) (42,355,581) (46,561,166) (574,930,187) (18,903,435) (270,690,109)
-------------------------- ---------------------------- ----------------------------
Total (4,198,501) (49,626,335) (57,181,852) (703,828,698) (24,562,348) (352,204,047)
-------------------------- ---------------------------- ----------------------------
Decrease (748,991) $ (8,978,968) (11,569,171) $(143,015,447) (801,655) $ (12,483,243)
========================== ============================ ============================
</TABLE>
8. 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 transactions in the securities of these issuers during the year ended
September 30, 1999 are shown below. There were no transactions in such
securities during the month ended October 31, 1999.
<TABLE>
<CAPTION>
GROSS GROSS ENDING VALUE
BEGINNING PURCHASES SALES AND ENDING REALIZED -------------------
AFFILIATE SHARES AND ADDITIONS REDUCTIONS SHARES LOSS 10/31/99 9/30/99
- ---------- --------- ------------- ---------- ------ ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Renex 363,900 9,600 258,700 114,800 $911,922 $509,425 $597,319
</TABLE>
24
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Class's financial
performance for the past five years and one month or from its inception if less
than five years and one month. 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 during the period.
"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
----------------------------------------------------------------------
10/1/99 YEAR ENDED SEPTEMBER 30,
TO ----------------------------------------------------------
10/31/99 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD ................... $13.23 $12.44 $17.55 $15.38 $14.04 $11.62
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................................... (0.02) (0.15) (0.16) (0.16) (0.13) (0.06)
Net realized and unrealized
gain (loss) on investments ........................... (0.28) 0.94 (3.32) 3.20 1.95 3.87
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ....................... (0.30) 0.79 (3.48) 3.04 1.82 3.81
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ........... -- -- (1.63) (0.87) (0.48) (1.39)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS .................................... -- -- (1.63) (0.87) (0.48) (1.39)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ......................... $12.93 $13.23 $12.44 $17.55 $15.38 $14.04
====== ====== ====== ====== ====== ======
TOTAL RETURN: .......................................... (2.27)% 6.35% (21.32)% 21.19% 13.40% 36.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ............... $197,424 $212,664 $379,945 $568,261 $523,737 $272,122
Ratio of expenses to average net assets ................ 1.76%+ 1.62% 1.47% 1.52% 1.56% 1.43%
Ratio of net loss to average net assets ................ (1.63)%+ (1.16)% (1.05)% (1.10)% (0.91)% (0.50)%
Portfolio turnover rate ................................ 5.19% 56.31% 83.90% 97.37% 59.36% 71.52%
</TABLE>
- ----------
See footnotes on page 26.
25
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------------------------- -------------------
10/1/99 YEAR ENDED SEPTEMBER 30, 4/22/96* 10/1/99 5/27/99*
TO ------------------------------ TO TO TO
10/31/99 1999 1998 1997 9/30/96 10/31/99 9/30/99
------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE,
BEGINNING OF PERIOD ....................... $12.32 $11.66 $16.68 $14.78 $14.55 $12.32 $12.18
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment loss ........................ (0.02) (0.23) (0.27) (0.27) (0.11) (0.02) (0.08)
Net realized and unrealized
gain (loss) on investments ............... (0.27) 0.89 (3.12) 3.04 0.34 (0.27) 0.22
------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ........... (0.29) 0.66 (3.39) 2.77 0.23 (0.29) 0.14
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized
capital gain .............................. -- -- (1.63) (0.87) -- -- --
------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS ........................ -- -- (1.63) (0.87) -- -- --
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ............. $12.03 $12.32 $11.66 $16.68 $14.78 $12.03 $12.32
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN: .............................. (2.35)% 5.66% (21.95)% 20.17% 1.58% (2.35)% 1.15%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ... $47,310 $49,080 $67,199 $69,869 $24,016 $420 $403
Ratio of expenses to average net assets .... 2.52%+ 2.38% 2.24% 2.30% 2.45%+ 2.52%+ 2.36%+
Ratio of net loss to average net assets .... (2.39)%+ (1.92)% (1.82)% (1.88)% (1.80)%+ (2.39)%+ (1.84)%+
Portfolio turnover rate .................... 5.19% 56.31% 83.90% 97.37% 59.36%** 5.19% 56.31%++
</TABLE>
<TABLE>
<CAPTION>
CLASS D
----------------------------------------------------------------------
10/1/99 YEAR ENDED SEPTEMBER 30,
To --------------------------------------------------------
10/31/99 1999 1998 1997 1996 1995
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE,
BEGINNING OF PERIOD ......................... $12.32 $11.67 $16.69 $14.77 $13.61 $11.40
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment loss .......................... (0.02) (0.23) (0.27) (0.27) (0.24) (0.15)
Net realized and unrealized
gain (loss) on investments ................. (0.27) 0.88 (3.12) 3.06 1.88 3.75
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS ............. (0.29) 0.65 (3.39) 2.79 1.64 3.60
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized
capital gain ............................... -- -- (1.63) (0.87) (0.48) (1.39)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS .......................... -- -- (1.63) (0.87) (0.48) (1.39)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ............... $12.03 $12.32 $11.67 $16.69 $14.77 $13.61
====== ====== ====== ====== ====== ======
TOTAL RETURN: ................................ (2.35)% 5.57% (21.94)% 20.32% 12.47% 35.53%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) ..... $123,955 $136,173 $263,900 $390,904 $337,327 $145,443
Ratio of expenses to average net assets ...... 2.52%+ 2.38% 2.24% 2.30% 2.35% 2.29%
Ratio of net loss to average net assets ...... (2.39)%+ (1.92)% (1.82)% (1.88)% (1.70)% (1.35)%
Portfolio turnover rate ...................... 5.19% 56.31% 83.90% 97.37% 59.36% 71.52%
</TABLE>
- ----------
* Commencement of offering of shares.
** For the year ended September 30, 1996.
+ Annualized.
++ For the year ended September 30, 1999.
See Notes to Financial Statements.
26
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
SELIGMAN FRONTIER FUND, INC.:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Seligman Frontier Fund, Inc. as of October 31,
1999 and September 30, 1999, the related statements of operations for the one
month ended October 31, 1999 and the year ended September 30, 1999 and of
changes in net assets for the one month ended October 31, 1999 and for each of
the years in the two-year period ended September 30, 1999, 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
October 31, 1999 and September 30, 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 October 31, 1999 and September 30, 1999, the
results of its operations, the changes in its net assets, and the financial
highlights for each of the stated periods, all in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
November 19, 1999
FOR MORE INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MANAGER GENERAL DISTRIBUTOR IMPORTANT TELEPHONE NUMBERS
J. & W. Seligman & Co. Incorporated Seligman Advisors, Inc. (800) 221-2450 Shareholder Services
100 Park Avenue 100 Park Avenue
New York, NY 10017 New York, NY 10017 (800) 445-1777 Retirement Plan
Services
GENERAL COUNSEL SHAREHOLDER SERVICE AGENT
Sullivan & Cromwell Seligman Data Corp. (212) 682-7600 Outside the United States
100 Park Avenue (800) 622-4597 24-Hour Automated Telephone Access Service
INDEPENDENT AUDITORS New York, NY 10017
Deloitte & Touche LLP
</TABLE>
27
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN (2, 4)
DEAN, Fletcher School of Law and Diplomacy
at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN (3, 4)
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON (2, 4)
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
DIRECTOR, Conoco Inc.
JOHN E. MEROW (2, 4)
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL (2, 4)
TRUSTEE, The Geraldine R. Dodge Foundation
WILLIAM C. MORRIS (1)
CHAIRMAN
CHAIRMAN OF THE BOARD,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY (3, 4)
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN (3, 4)
DIRECTOr, KeySpan Energy Corporation
TRUSTEE, Committee for Economic Development
DIRECTOR, Public Broadcasting Service
RICHARD R. SCHMALTZ (1)
MANAGING DIRECTOR, Director of Investments,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER (3, 4)
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON (2, 4)
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN DIRECTOR, CommScope, Inc.
BRIAN T. ZINO (1)
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR, ICI Mutual Insurance Company
MEMBER OF THE BOARD OF GOVERNORS,
Investment Company Institute
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co. Incorporated
- ----------------
Member: 1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
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
28
<PAGE>
GLOSSARY OF FINANCIAL TERMS
CAPITAL GAIN DISTRIBUTION -- A payment to mutual fund shareholders of profits
realized on the sale of securities in a fund's portfolio.
CAPITAL APPRECIATION/DEPRECIATION -- An increase or decrease in the market value
of a mutual fund's portfolio securities, which is reflected in the net asset
value of the fund's shares. Capital appreciation/depreciation of an individual
security is in relation to the original purchase price.
COMPOUNDING -- The change in the value of an investment as shareholders receive
earnings on their investment's earnings. For example, if $1,000 is invested at a
fixed rate of 7% a year, the initial investment is worth $1,070 after one year.
If the return is compounded, second year earnings will not be based on the
original $1,000, but on the $1,070, which includes the first year's earnings.
CONTINGENT DEFERRED SALES CHARGE (CDSC) -- Depending on the class of shares
owned, a fee charged by a mutual fund when shares are sold back to the fund. The
CDSC expires after a fixed time period.
DIVIDEND -- A payment by a mutual fund, usually derived from the fund's net
investment income (dividends and interest less expenses).
DIVIDEND YIELD -- A measurement of a fund's dividend as a percentage of the
maximum offering price or net asset value.
EXPENSE RATIO -- The cost of doing business for a mutual fund, expressed as a
percent of the fund's net assets.
INVESTMENT OBJECTIVE -- The shared investment goal of a fund and its
shareholders.
MANAGEMENT FEE -- The amount paid by a mutual fund to its investment advisor(s).
MULTIPLE CLASSES OF SHARES -- Although an individual mutual fund invests in only
one portfolio of securities, it may offer investors several purchase options
which are "classes" of shares. Multiple classes permit shareholders to choose
the fee structure that best meets their needs and goals. Generally, each class
will differ in terms of how and when sales charges and certain fees are
assessed.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD) -- A self-regulatory
body with authority over firms that distribute mutual funds.
NET ASSET VALUE (NAV) PER SHARE -- The market worth of one fund share, obtained
by adding a mutual fund's total assets (securities, cash, and any accrued
earnings), subtracting liabilities, and dividing the resulting net assets by the
number of shares outstanding.
OFFERING PRICE -- The price at which a mutual fund's share can be purchased. The
offering price per share is the current net asset value plus any sales charge.
PORTFOLIO TURNOVER -- A measure of the trading activity in a mutual fund's
investment portfolio that reflects how often securities are bought and sold.
PROSPECTUS -- The legal document describing a mutual fund to all prospective
shareholders. It contains information required by the Securities and Exchange
Commission (SEC), such as a fund's investment objective and policies, services,
investment restrictions, how shares are bought and sold, fund fees and other
charges, and the fund's financial highlights.
SEC YIELD -- SEC Yield refers to the net income earned by a fund during a recent
30-day period. This income is annualized and then divided by the maximum
offering price per share on the last day of the 30-day period. The SEC Yield
formula reflects semiannual compounding.
SECURITIES AND EXCHANGE COMMISSION -- The primary US federal agency that
regulates the registration and distribution of mutual fund shares.
STATEMENT OF ADDITIONAL INFORMATION -- A document that contains more detailed
information about an investment company and that supplements the prospectus. It
is available at no charge upon request.
TOTAL RETURN -- A measure of a fund's performance encompassing all elements of
return. Reflects the change in share price over a given period and assumes all
distributions are taken in additional fund shares. The Average Annual Total
Return represents the average annual compounded rate of return for the periods
presented.
YIELD ON SECURITIES -- For bonds, the current yield is the coupon rate of
interest, divided by the purchase price. For stocks, the yield is measured by
dividing dividends paid by the market price of the stock.
- ----------
Adapted from the Investment Company Institute's 1999 MUTUAL FUND FACT BOOK.
29
<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
[J.& W. SELIGMAN LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
EQF2 10/99 [Recycle Logo] Printed on Recycled Paper
