File No. 33-15253
811-5221
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. 15 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 17 |X|
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SELIGMAN PORTFOLIOS, INC.
(Exact name of registrant as specified in charter)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive office)
Registrant's Telephone Number: 212-850-1864 or Toll Free: 800-221-2450
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THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
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It is proposed that this filing will become effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b) of rule 485
|X| on May 1, 1995 pursuant to paragraph (b) of rule 485
|_| 60 days after filing pursuant to paragraph (a)(i) of rule 485
|_| on (date) pursuant to paragraph (a)(i) of rule 485
|_| 75 days after filing pursuant to paragraph (a)(ii) of rule 485
|_| on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-1 Notice for
Registrant's most recent fiscal year was filed with the Commission on February
27, 1995.
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<CAPTION>
POST-EFFECTIVE AMENDMENT NO. 15
CROSS REFERENCE SHEET
Pursuant to Rule 481 (a)
Item No. in Part A of Form N-1A Location in Prospectus
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Not applicable
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Objectives and Policies
5. Management of Fund Management Services; Portfolio Transactions, Portfolio
Turnover and Valuation
5a. Managers' Discussion of Fund Performance Management Services
6. Capital Stock and Other Securities Organization and Capitalization; Other Investment Policies;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Cover Page; Purchases and Redemptions
8. Redemption or Repurchase Purchases and Redemptions
9. Pending Legal Proceedings Not applicable
Item No. in Part B of Form N-1A Location in Statement of Additional Information
------------------------------- -----------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Appendix C; Organization and Capitalization (Prospectus)
13. Investment Objectives and Policies Investment Policies and Restrictions
14. Management of the Registrant Management and Expenses
15. Control Persons and Principal Directors and Officers
Holders of Services
16. Investment Advisory and Other Management and Expenses;
Services Custodians and Independent Auditors
17. Brokerage Allocation Portfolio Transactions, Valuation and Redemption
18. Capital Stock and Other Securities Portfolio Transactions, Valuation and Redemption
19. Purchase, Redemption and Pricing of Portfolio Transactions, Valuation and
Securities Being Offered Redemption
20. Tax Status Dividends, Distributions and Taxes (Prospectus)
21. Underwriters Not applicable
22. Calculation of Performance Data Portfolio Transactions, Valuation and Redemption
23. Financial Statements Financial Statements
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SELIGMAN PORTFOLIOS, INC.
100 Park Avenue
New York, New York 10017
800-221-7844 All Continental United States, except New York
212-850-1864 New York State
800-221-2783 Marketing Services
May 1, 1995
Seligman Portfolios, Inc. (the "Fund") is an open-end diversified management
investment company consisting of ten separate portfolios (the "Portfolios"),
each designed to meet different investment goals. Investment management services
for each of the Fund's Portfolios are provided by J. & W. Seligman & Co.
Incorporated (the "Manager"). Seligman Henderson Co. supervises and directs the
global investments of Seligman Henderson Global Portfolio
(continued on page 2)
The Fund's ten Portfolios are:
* SELIGMAN CAPITAL PORTFOLIO: seeks to produce capital appreciation, not
current income, by investing in common stocks (primarily those with
strong near or intermediate-term prospects) and securities convertible
into or exchangeable for common stocks, in common stock purchase
warrants and rights, in debt securities and in preferred stocks
believed to provide capital appreciation opportunities.
* SELIGMAN CASH MANAGEMENT PORTFOLIO: seeks to preserve capital and to
maximize liquidity and current income by investing in a diversified
portfolio of high-quality money market instruments. Investments in
this Portfolio are neither insured nor guaranteed by the U.S.
Government and there is no assurance that this Portfolio will be able
to maintain a stable net asset value of $1.00 per share.
* SELIGMAN COMMON STOCK PORTFOLIO: seeks favorable, but not the highest,
current income and long-term growth of both income and capital value
without exposing capital to undue risk, primarily through equity
investments broadly diversified over a number of industries.
* SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO: seeks capital gain,
not income, by investing primarily in securities of companies in the
communications, information and related industries.
* SELIGMAN FIXED INCOME SECURITIES PORTFOLIO: seeks favorable current
income by investing in a diversified portfolio of debt securities,
primarily of investment grade, including convertible issues and
preferred stocks, with capital appreciation as a secondary
consideration.
* SELIGMAN FRONTIER PORTFOLIO: seeks growth in capital value; income may
be considered but will be only incidental to the Portfolio's
investment objective. In general, securities owned are likely to be
those issued by small to medium-sized companies selected for their
growth prospects.
* SELIGMAN HENDERSON GLOBAL PORTFOLIO: seeks long-term capital
appreciation primarily through global investments in securities of
medium- to large-sized companies.
* SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO: (formerly
Seligman Henderson Global Emerging Companies Portfolio), seeks
long-term capital appreciation primarily through global investments in
securities of companies with small to medium market capitalization.
* SELIGMAN HIGH-YIELD BOND PORTFOLIO: seeks to produce maximum current
income by investing primarily in high-yielding, high risk corporate
bonds and corporate notes, which, generally, are non-rated or carry
ratings lower than those assigned to investment grade bonds. The
Portfolio will invest up to 100% of its assets in lower rated bonds,
commonly known as "junk bonds," which are subject to a greater risk of
loss of principal and interest than higher rated investment grade
bonds. Purchasers should carefully assess the risks associated with an
investment in this Portfolio. See "Investment Objectives and
Policies--Seligman High-Yield Bond Portfolio."
* SELIGMAN INCOME PORTFOLIO: seeks primarily to produce high current
income consistent with what is believed to be prudent risk of capital
and secondarily to provide the possibility of improvement in income
and capital value over the longer term, by investing primarily in
income-producing securities.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
(continued from page 1)
and Seligman Henderson Global Smaller Companies Portfolio. Shares of the Fund
are currently provided as the investment medium for Canada Life of America
Variable Annuity Account 2 ("CLVA-2") and Canada Life of America Annuity Account
3 ("CLVA-3"), each established by Canada Life Insurance Company of America
("Canada Life").
CLVA-2 is registered as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act") and funds variable annuity contracts (the
"CLVA-2 Contracts") issued by Canada Life and distributed by Seligman Financial
Services, Inc. CLVA-3 is not registered or regulated as an investment company
under the 1940 Act in reliance on the exemption provided in Section 3(c)(11) of
the 1940 Act and funds variable annuity contracts (the "CLVA-3 Contracts")
issued by Canada Life and distributed by Seligman Financial Services, Inc.
CLVA-3 Contracts may be purchased only by pension or profit-sharing employee
benefit plans that satisfy the requirements for qualification set forth in
Section 401 of the Internal Revenue Code of 1986. Shares of the Fund are also
expected to be provided as the investment medium for other variable annuity
accounts to be established by Canada Life or its affiliates ("Canada Life
Separate Accounts"). Shares of the Seligman Capital Portfolio, Seligman Cash
Management Portfolio, Seligman Common Stock Portfolio, Seligman Fixed Income
Portfolio and Seligman Income Portfolio (but not the other Portfolios of the
Fund) are also provided as the investment medium for Mutual Benefit Variable
Contract Account-9 ("VCA-9") established by MBL Life Assurance Corporation ("MBL
Life") (formerly, The Mutual Benefit Life Insurance Company). VCA-9 is
registered as a unit investment trust under the 1940 Act and funds variable
annuity contracts (the "VCA-9 Contracts") issued by MBL Life.
This Prospectus sets forth concisely information about the Fund and its
Portfolios that a prospective investor should know before investing. Please read
it carefully before you invest and keep it for future reference. Additional
information about the Fund, including a Statement of Additional Information, has
been filed with the Securities and Exchange Commission (the "SEC"). The
Statement of Additional Information is available upon request and without charge
by calling or writing the Fund at the telephone numbers or address set forth
above. The Statement of Additional Information is dated the same date as this
Prospectus and is incorporated herein by reference in its entirety.
TABLE OF CONTENTS
PAGE
----
Financial Highlights................................ P-4
Investment Objectives And Policies.................. P-8
Seligman Capital Portfolio.......................... P-8
Seligman Cash Management Portfolio.................. P-8
Seligman Common Stock Portfolio..................... P-9
Seligman Communications and
Information Portfolio............................. P-9
Seligman Fixed Income Securities
Portfolio......................................... P-10
Seligman Frontier Portfolio......................... P-11
Seligman Henderson Global Portfolio................. P-12
Seligman Henderson Global Smaller
Companies Portfolio............................... P-12
Seligman High-Yield Bond Portfolio.................. P-14
Seligman Income Portfolio........................... P-15
Other Investment Policies........................... P-16
Management Services................................. P-18
Portfolio Transactions, Portfolio Turnover
And Valuation..................................... P-21
Dividends, Distributions And Taxes.................. P-22
Purchases And Redemptions........................... P-22
Custodians And Transfer Agent....................... P-22
Organization And Capitalization..................... P-23
Appendix............................................ P-24
P-2
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THIS PAGE INTENTIONALLY LEFT BLANK
P-3
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FINANCIAL HIGHLIGHTS
The following sets forth selected data for the periods indicated for a
single share outstanding of each of the Fund's Portfolios except Seligman
High-Yield Bond Portfolio, which is a new Portfolio. The results shown below for
all periods through the year ended December 31, 1994 have been audited in
conjunction with the annual audits of the financial statements of Seligman
Portfolios, Inc. by Ernst & Young LLP, independent auditors. The 1994 financial
statements and independent auditors' report thereon are incorporated by
reference in the Fund's Statement of Additional Information.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from a Portfolio's
beginning net asset value to its ending net asset value so that investors may
understand what effect the individual items have on their investment, assuming
it was held throughout the period. Generally, the per share amounts are derived
by converting the actual dollar amounts incurred for each item, as disclosed in
the financial statements, to their equivalent per share amount.
The total return based on net asset value measures a Portfolio's
performance assuming investors purchased shares at net asset value as of the
beginning of the period, reinvested dividends and capital gains paid at net
asset value, and then sold the shares at the net asset value per share on the
last day of the period. The total returns exclude the effect of all
administration fees and asset-based sales loads associated with variable annuity
contracts. The total returns for periods of less than one year are not
annualized.
<TABLE>
<CAPTION>
NET
REALIZED & INCREASE NET
NET ASSET NET UNREALIZED (DECREASE) DISTRIBUTIONS INCREASE NET ASSET
VALUE INVESTMENT GAIN FROM FROM (DECREASE) VALUE
PER SHARE OPERATING AT BEGINNING INCOME (LOSS) ON INVESTMENT DIVIDENDS NET GAIN IN NET AT END
PERFORMANCE: OF PERIOD (LOSS)** INVESTMENT OPERATIONS PAID REALIZED ASSET VALUE OF PERIOD
------------------- ------------ ---------- ---------- ---------- --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL PORTFOLIO
Year ended 12/31/94...... $14.950 $0.015 $(0.699) $(0.684) $(0.018) $(1.548) $(2.250) $12.700
Year ended 12/31/93...... 16.980 0.021 1.928 1.949 (0.021) (3.958) (2.030) 14.950
Year ended 12/31/92...... 17.740 (0.022) 1.202 1.180 -- (1.940) (0.760) 16.980
Year ended 12/31/91...... 11.230 0.079 6.547 6.626 (0.088) (0.028) 6.510 17.740
Year ended 12/31/90...... 11.620 0.044 (0.414) (0.370) (0.020) -- (0.390) 11.230
Year ended 12/31/89...... 10.060 (0.084) 1.739 1.655 -- (0.095) 1.560 11.620
6/21/88*-12/31/88........ 10.000 0.060 -- 0.060 -- -- 0.060 10.060
CASH MANAGEMENT PORTFOLIO
Year ended 12/31/94...... 1.000 0.040 -- -- (0.040) -- -- 1.000
Year ended 12/31/93...... 1.000 0.030 -- -- (0.030) -- -- 1.000
Year ended 12/31/92...... 1.000 0.035 -- -- (0.035) -- -- 1.000
Year ended 12/31/91...... 1.000 0.056 -- -- (0.056) -- -- 1.000
Year ended 12/31/90...... 1.000 0.075 -- -- (0.075) -- -- 1.000
Year ended 12/31/89...... 1.000 0.075 -- -- (0.075) -- -- 1.000
6/21/88*-12/31/88........ 1.000 0.020 -- -- (0.020) -- -- 1.000
COMMON STOCK PORTFOLIO
Year ended 12/31/94...... 14.980 0.365 (0.356) 0.009 (0.385) (0.824) (1.200) 13.780
Year ended 12/31/93...... 15.600 0.392 1.479 1.871 (0.394) (2.097) (0.620) 14.980
Year ended 12/31/92...... 14.740 0.346 1.445 1.791 (0.369) (0.562) 0.860 15.600
Year ended 12/31/91...... 11.580 0.362 3.459 3.821 (0.355) (0.306) 3.160 14.740
Year ended 12/31/90...... 12.260 0.356 (0.743) (0.387) (0.263) (0.030) (0.680) 11.580
Year ended 12/31/89...... 10.150 0.248 2.195 2.443 (0.179) (0.154) 2.110 12.260
6/21/88*-12/31/88........ 10.000 0.120 0.060 0.180 (0.030) -- 0.150 10.150
COMMUNICATIONS AND
INFORMATION PORTFOLIO
10/11/94* to 12/31/94.... 10.000 (0.016) 0.456 0.440 -- -- 0.440 10.440
FIXED INCOME
SECURITIES PORTFOLIO
Year ended 12/31/94...... 10.110 0.499 (0.841) (0.342) (0.498) -- (0.840) 9.270
Year ended 12/31/93...... 10.660 0.713 0.142 0.855 (0.711) (0.694) (0.550) 10.110
Year ended 12/31/92...... 10.990 0.706 (0.092) 0.614 (0.772) (0.172) (0.330) 10.660
Year ended 12/31/91...... 10.310 0.798 0.699 1.497 (0.817) -- 0.680 10.990
Year ended 12/31/90...... 10.220 0.680 (0.054) 0.626 (0.536) -- 0.090 10.310
Year ended 12/31/89...... 9.930 0.658 0.208 0.866 (0.576) -- 0.290 10.220
6/21/88*-12/31/88........ 10.000 0.262 (0.162) 0.100 (0.170) -- (0.070) 9.930
FRONTIER PORTFOLIO
10/11/94* to 12/31/94.... 10.000 (0.012) 0.592 0.580 -- -- 0.580 10.580
</TABLE>
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*Commencement of Operations.
**The Manager, at its discretion, waived its management fee and/or reimbursed
expenses for certain periods presented.
+Annualized
P-4
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<TABLE>
<CAPTION>
WITHOUT MANAGEMENT FEE WAIVER AND/OR
EXPENSE REIMBURSEMENT**
----------------------------------------
RATIOS/SUPPLEMENTAL DATA**
---------------------------------------------
NET
NET ASSETS RATIOS
EXPENSES INVESTMENT AT OF NET
TOTAL RETURN TO INCOME (LOSS) END OF NET RATIOS OF INVESTMENT
BASED AVERAGE TO AVERAGE PERIOD INVESTMENT EXPENSES T0 INCOME (LOSS)
PER SHARE OPERATING ON NET ASSET NET NET PORTFOLIO (000'S INCOME (LOSS) AVERAGE NET TO AVERAGE
PERFORMANCE: VALUE ASSETS ASSETS TURNOVER OMITTED) PER SHARE** ASSETS NET ASSETS
------------------- ------------ ---------- ---------- ---------- -------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL PORTFOLIO
Year ended 12/31/94...... (4.59)% 0.60% 0.10% 67.39% $5,942 $(0.036) 0.96% (0.26)%
Year ended 12/31/93...... 11.65 0.71 0.09 65.30 5,886 (0.003) 0.83 (0.03)
Year ended 12/31/92...... 6.80 0.91 (0.14) 54.95 5,497
Year ended 12/31/91...... 59.05 0.60 0.56 31.44 5,812 (0.035) 1.37 (0.21)
Year ended 12/31/90...... (3.18) 2.15 0.18 28.94 3,560
Year ended 12/31/89...... 16.47 3.55 (0.88) 32.55 2,577 (0.092) 3.80 (1.12)
6/21/88*-12/31/88........ 0.60 6.99+ (0.11)+ -- 890
CASH MANAGEMENT PORTFOLIO
Year ended 12/31/94...... 4.03 -- 3.98 -- 3,230 0.025 1.48 2.50
Year ended 12/31/93...... 3.00 -- 2.96 -- 3,102 0.019 1.07 1.89
Year ended 12/31/92...... 3.53 -- 3.50 -- 4,230 0.025 0.97 2.53
Year ended 12/31/91...... 5.70 -- 5.49 -- 5,849 0.048 0.83 4.66
Year ended 12/31/90...... 7.79 -- 7.53 -- 3,994 0.045 2.97 4.56
Year ended 12/31/89...... 7.81 -- 7.72 -- 908 (0.019) 9.57 (1.85)
6/21/88*-12/31/88........ 2.35 .95+ 5.83+ -- 283 (0.050) 20.02+ (13.24)+
COMMON STOCK PORTFOLIO
Year ended 12/31/94...... 0.04 0.60 2.45 15.29 20,168 0.361 0.62 2.43
Year ended 12/31/93...... 11.94 0.55 2.10 10.70 21,861
Year ended 12/31/92...... 12.14 0.56 2.21 12.57 24,987
Year ended 12/31/91...... 33.16 0.60 2.63 27.67 26,103 0.350 0.71 2.52
Year ended 12/31/90...... (3.15) 0.88 3.01 13.78 18,030
Year ended 12/31/89...... 24.11 1.59 2.32 37.56 9,332 0.236 1.67 2.23
6/21/88*-12/31/88........ 1.80 3.62+ 1.65+ 14.40 2,476
COMMUNICATIONS AND
INFORMATION PORTFOLIO
10/11/94* to 12/31/94.... 4.40 0.95+ (0.95)+ -- 495 (0.436) 13.96+ (13.96)+
FIXED INCOME
SECURITIES PORTFOLIO
Year ended 12/31/94...... (3.39) 0.60 5.12 237.23 3,606 0.430 1.31 4.41
Year ended 12/31/93...... 7.98 0.74 5.41 33.21 3,775 0.675 1.07 5.08
Year ended 12/31/92...... 5.60 1.00 6.22 23.40 4,750
Year ended 12/31/91...... 14.58 0.60 7.30 6.34 5,369 0.712 1.42 6.48
Year ended 12/31/90...... 6.14 1.73 6.59 6.62 4,600
Year ended 12/31/89...... 8.70 2.13 6.51 49.92 4,129 0.643 2.27 6.37
6/21/88*-12/31/88........ 1.01 2.99+ 5.25+ 144.21 2,223
FRONTIER PORTFOLIO
10/11/94* to 12/31/94.... 5.80 0.95+ (0.70)+ -- 169 (1.319) 40.47+ (40.22)+
</TABLE>
P-5
<PAGE>
<TABLE>
<CAPTION>
NET
REALIZED &
NET UNREALIZED NET
REALIZED & GAIN INCREASE DISTRI- INCREASE
NET ASSET UNREALIZED (LOSS) FROM (DECREASE) BUTIONS (DECREASE)
VALUE NET GAIN FOREIGN FROM FROM IN
PER SHARE OPERATING AT BEGINNING INVESTMENT (LOSS) ON CURRENCY INVESTMENT DIVIDENDS NET GAIN NET ASSET
PERFORMANCE: OF PERIOD INCOME** INVESTMENT TRANSACTIONS OPERATIONS PAID REALIZED VALUE
------------------- ------------ ---------- ---------- ------------ ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GLOBAL PORTFOLIO
Year ended 12/31/94...... $11.370 $0.131 $(0.306) $0.325 $0.150 $(0.064) $(0.116) $(0.030)
5/3/93*-12/31/93......... 10.000 0.021 1.518 (0.099) 1.440 (0.053) (0.017) 1.370
GLOBAL SMALLER COMPANIES
PORTFOLIO
10/11/94*-12/31/94....... 10.000 0.058 0.266 0.029 0.353 (0.043) -- 0.310
INCOME PORTFOLIO
Year ended 12/31/94...... 11.380 0.689 (1.369) -- (0.680) (0.730) -- (1.410)
Year ended 12/31/93...... 11.390 0.828 0.576 -- 1.404 (0.828) (0.586) (0.010)
Year ended 12/31/92...... 11.250 0.862 0.896 -- 1.758 (0.987) (0.631) 0.140
Year ended 12/31/91...... 9.500 0.896 2.024 -- 2.920 (0.904) (0.266) 1.750
Year ended 12/31/90...... 10.780 0.829 (1.487) -- (0.658) (0.622) -- (1.280)
Year ended 12/31/89...... 10.040 0.634 0.834 -- 1.468 (0.419) (0.309) 0.740
6/21/88*-12/31/88........ 10.000 0.142 (0.032) -- 0.110 (0.070) -- 0.040
</TABLE>
------------
*Commencement of Operations.
**The Manager (and Subadviser in the case of the Global Portfolio and Global
Smaller Companies Portfolio), at their discretion, waived management fees
and/or reimbursed expenses for certain periods presented.
+Annualized
P-6
<PAGE>
<TABLE>
<CAPTION>
WITHOUT MANAGEMENT FEE WAIVER
AND/OR EXPENSE REIMBURSEMENT**
-------------------------------------
RATIOS/SUPPLEMENTAL DATA**
-------------------------------------------
NET
NET NET ASSETS RATIOS
ASSET EXPENSES INVESTMENT AT OF NET
VALUE TOTAL RETURN TO INCOME(LOSS) END OF NET RATIOS OF INVESTMENT
AT BASED AVERAGE TO AVERAGE PERIOD INVESTMENT EXPENSES T0 INCOME(LOSS)
PER SHARE OPERATING END OF ON NET ASSET NET NET PORTFOLIO (000'S INCOME(LOSS) AVERAGE NET TO AVERAGE
PERFORMANCE: PERIOD VALUE ASSETS ASSETS TURNOVER OMITTED) PER SHARE ASSETS NET ASSETS
------------------- --------- ------------ ---------- ---------- -------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GLOBAL PORTFOLIO
Year ended 12/31/94...... $11.340 1.32% 1.20% 1.17% 47.34% $1,776 $(0.419) 6.12% (3.75)%
5/3/93*-12/31/93......... 11.370 14.40 1.20+ 1.30+ 2.82 648 (1.004) 17.94+ (15.44)+
GLOBAL SMALLER COMPANIES
PORTFOLIO
10/11/94*-12/31/94....... 10.310 3.53 1.20+ 3.14+ -- 132 (1.225) 37.25+ (32.91)+
INCOME PORTFOLIO
Year ended 12/31/94...... 9.970 (5.96) 0.60 6.34 29.76 10,050 0.670 0.77 6.17
Year ended 12/31/93...... 11.380 12.37 0.64 6.40 38.38 11,220 0.826 0.65 6.39
Year ended 12/31/92...... 11.390 15.72 0.68 7.53 39.46 11.363
Year ended 12/31/91...... 11.250 30.89 0.60 8.05 43.67 11,509 0.867 0.93 7.72
Year ended 12/31/90...... 9.500 (6.10) 1.40 8.19 21.64 7,419
Year ended 12/31/89...... 10.780 14.61 2.69 5.95 60.10 4,085 0.610 2.88 5.77
6/21/88*-12/31/88........ 10.040 1.10 5.02+ 2.46+ -- 1,265 0.089 5.42+ 2.07+
</TABLE>
P-7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Set forth below is a description of the investment objective of each of the
Fund's Portfolios and their investment policies. Of course, because any
investment involves risk, there can be no assurance that any of the Portfolios
will meet its objective. The investment objective(s) of each Portfolio may not
be changed without the affirmative vote of the holders of a majority of the
voting securities of that Portfolio; however, unless otherwise noted, the
investment policies of each Portfolio are not fundamental and may be changed by
the Fund's Board of Directors without a vote of shareholders. A more detailed
description of each Portfolio's investment policies, including a list of those
restrictions on each Portfolio's investment activities which cannot be changed
without such a vote, appears in the Statement of Additional Information.
Information regarding the various rating categories used by the Standard &
Poor's Corporation ("S&P") and Moody's Investors Services, Inc. ("Moody's"), and
referred to in the following descriptions, is included in the Appendix to this
Prospectus.
SELIGMAN CAPITAL PORTFOLIO
The investment objective of this Portfolio is to produce capital
appreciation for its shareholders. Current income is not an objective. The
Portfolio will seek to achieve its objective by investing in common stocks and
securities convertible into or exchangeable for common stocks, in common stock
purchase warrants and rights, in debt securities and in preferred stocks
believed to provide capital appreciation opportunities. Common stocks, for the
most part, are selected for their near or intermediate-term prospects. They may
be stocks believed to be underpriced or stocks of growth companies, cyclical
companies, or companies believed to be undergoing a basic change for the better.
They may be stocks of established, well-known companies or of newer,
less-seasoned companies believed to have better-than-average prospects. The
principal criterion for choice of investments is capital appreciation potential.
The Portfolio may, pending investment and for temporary defensive purposes,
hold cash and invest without limitation in high-grade, short-term money market
instruments, including repurchase agreements, of the types listed under
"Seligman Cash Management Portfolio."
The Seligman Capital Portfolio may borrow money to increase its portfolio
of securities. Investing for capital appreciation and borrowing ordinarily
expose capital to added risk, and investment in the Portfolio should be
considered only by persons who are able and willing to take such risk.
SELIGMAN CASH MANAGEMENT PORTFOLIO
The investment objective of this Portfolio is to preserve capital and to
maximize liquidity and current income by investing in a diversified portfolio of
high-quality money market instruments consisting of United States ("U.S.")
Government obligations, U.S. dollar-denominated bank obligations (including
those issued by U.S. banks, their foreign branches and U.S. branches of foreign
banks), prime commercial paper, high-grade, short-term corporate obligations and
repurchase agreements with respect to the above types of instruments. The
Portfolio seeks to maintain a constant net asset value of $1.00 per share; there
can be no assurance that the Portfolio will be able to do so. In an effort to
maintain a stable net asset value, the Portfolio uses the amortized cost method
of valuing its securities.
The Portfolio will invest only in U.S. dollar-denominated securities having
a remaining maturity of 13 months (397 days) or less and will maintain a
dollar-weighted average portfolio maturity of 90 days or less. The Portfolio
will limit its investments to those securities that, in accordance with
guidelines adopted by the Board of Directors, present minimal credit risks.
Accordingly, the Portfolio will not purchase any security (other than a U.S.
Government obligation) unless (i) it is rated in one of the two highest rating
categories assigned to short-term debt securities by at least two nationally
recognized statistical rating organizations ("NRSROs") such as Moody's and S&P,
or (ii) if not so rated, it is determined to be of comparable quality.
Determinations of comparable quality will be made in accordance with procedures
established by the Directors. These standards must be satisfied at the time an
investment is made. If the quality of the investment later declines, the
Portfolio may continue to hold the investment, subject in certain circumstances
to a finding by the Board of Directors that disposing of the investment would
not be in the Portfolio's best interest.
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Presently, the Portfolio only invests in either U.S. Government obligations
or securities that are rated in the top rating category by Moody's and S&P.
However, the Portfolio is permitted to invest up to 5% of its assets in
securities rated in the second highest rating category by two NRSROs, provided
that not more than the greater of 1% of its total assets or $1,000,000 is
invested in any one such security.
U.S. GOVERNMENT OBLIGATIONS in which the Portfolio invests include
obligations issued or guaranteed as to both principal and interest by the U.S.
Government or backed by the full faith and credit of the United States, such as
U.S. Treasury bills, securities issued or guaranteed by a U.S. Government agency
or instrumentality, and securities supported by the right of the issuer to
borrow from the U.S. Treasury.
BANK OBLIGATIONS purchased by the Portfolio include U.S. dollar-denominated
certificates of deposit, banker's acceptances, fixed time deposits and
commercial paper of domestic banks, including their branches located outside the
United States, and of domestic branches of foreign banks. Investments in bank
obligations will be limited at the time of investment to the obligations of the
100 largest domestic banks in terms of assets which are subject to regulatory
supervision by the U.S. Government or state governments, and the obligations of
the 50 largest foreign banks in terms of assets with branches or agencies in the
United States.
COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT SECURITIES include
short-term unsecured promissory notes with maturities not exceeding nine months
issued in bearer form by bank holding companies, corporations and finance
companies. Investments in commercial paper issued by bank holding companies will
be limited at the time of investment to the 100 largest U.S. bank holding
companies in terms of assets.
YIELD INFORMATION. Investors should recognize that, in periods of declining
interest rates, yields will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the yield of the Portfolio will
tend to be somewhat lower. Also, when interest rates are falling, the inflow of
new money to the Portfolio from the continuous sale of its shares will likely be
invested in portfolio instruments producing lower yields than the balance of the
Portfolio assets, thereby reducing the current yield of the Portfolio. In
periods of rising interest rates, the opposite can be true. The Seligman Cash
Management Portfolio may attempt to increase yields on its investments by using
trading techniques designed to take advantage of short-term market variations.
This policy, together with the short maturities of the securities in which the
Portfolio invests, would result in high portfolio turnover. The Portfolio does
not anticipate incurring significant brokerage or transaction expenses since
portfolio transactions ordinarily will be made directly with the issuer, money
market dealer, or other financial institution on a net price basis.
SELIGMAN COMMON STOCK PORTFOLIO
The investment objective of this Portfolio is to produce favorable, but not
the highest, current income and long-term growth of both income and capital
value, without exposing capital to undue risk. The Seligman Common Stock
Portfolio seeks to achieve its objective primarily through equity investments,
and in general, investments will be broadly diversified over a number of
industries. The Seligman Common Stock Portfolio may, pending investment and for
temporary defensive purposes, invest without limitation in high-grade,
short-term money market instruments, including repurchase agreements, of the
types listed under "Seligman Cash Management Portfolio."
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
The investment objective of this Portfolio is to produce capital gain.
Income is not an objective. The Portfolio seeks to achieve its objective by
investing in a portfolio consisting of securities of companies operating in
virtually all aspects of the communications, information and related industries.
It invests at least 80% of its net assets, exclusive of government securities,
short-term notes, cash and cash equivalents, in securities of companies engaged
in these industries.
The value of Portfolio shares may be susceptible to factors affecting the
communications, information and related industries. As such, this Portfolio is
not an appropriate investment for individuals who require safety of principal or
stable income from their investments. These industries may be subject to greater
governmental regulation than many other industries and changes in governmental
policies and the need for regulatory approvals may have a material effect on the
products and services of these industries. Although securities of large
companies that now are well established in the world communications and
information market and can be expected to grow with the market are held by this
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Portfolio, rapidly changing technologies and the expansion of the
communications, information and related industries provide a favorable
environment for investing in companies of small to medium size. Securities of
smaller, less-seasoned companies may be subject to greater price fluctuation,
limited liquidity and above-average investment risk.
This Portfolio invests primarily in common stocks. It also may invest in
securities convertible into or exchangeable for common stocks, in warrants and
rights to purchase common stocks and in debt securities or preferred stocks
believed to provide opportunities for capital gain. It is this Portfolio's
present intention to invest not more than 5% of its net assets in debt
securities that are not rated within the four highest rating categories by S&P
or by Moody's.
SELIGMAN FIXED INCOME SECURITIES PORTFOLIO
The investment objective of this Portfolio is to achieve favorable current
income by investing in debt securities, including convertible issues and
preferred stock, diversified over a number of industries. Capital appreciation
will be a secondary consideration in selecting portfolio securities. As a matter
of fundamental policy, the Portfolio will invest at least 80% of its assets in
securities that are rated investment grade.
The Portfolio's assets may be invested in (l) corporate debt securities,
including bonds and debentures convertible into common stock or with warrants
and rights; (2) debt securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; or (3) mortgage-backed debt securities, including
securities issued by the Government National Mortgage Association ("GNMA") and
debt obligations secured by commercial or residential real estate, rated within
one of the three highest rating categories by S&P or, if unrated, of comparable
quality in the opinion of the Manager; (4) preferred stock; and (5) commercial
paper rated within one of the three highest rating categories by S&P or Moody's.
The Portfolio may also hold or sell any securities obtained through the exercise
of conversion rights or warrants, or as a result of reorganization,
recapitalization, or liquidation proceedings of any issuer of securities owned
by the Portfolio. Long-term debt securities normally will be held when it is
believed that the trend of interest rates is down and prices of such securities
will increase; conversely, when it is believed that long-term interest rates
will rise, the Portfolio may attempt to shift into short-term debt securities
that are generally not as volatile as longer-term securities in periods of
rising interest rates. The Portfolio may, pending investment and for temporary
defensive purposes, invest without limitation in high-grade short-term money
market instruments, including repurchase agreements, of the types listed under
"Seligman Cash Management Portfolio."
Corporate debt securities purchased by the Portfolio will, in order to meet
the Portfolio's fundamental policy, be investment grade bonds that are rated
within one of the four highest rating categories by S&P or Moody's. To the
extent that the Portfolio may invest in lower-rated bonds, an investor should be
aware that while providing higher yields, such lower-rated bonds generally are
subject to greater market fluctuations and risks of loss of income and principal
than higher-rated (and lower-yielding) bonds. A description of the credit
ratings and the risks associated with such investments is contained in the
Appendix to this Prospectus. U.S. Government and agency obligations in which the
Portfolio invests may include direct obligations of the U.S. Treasury, such as
bills, notes and bonds, and marketable obligations issued by a U.S. Government
agency or instrumentality. Agency securities include those issued by the Small
Business Administration, General Services Administration and Farmers Home
Administration, which are guaranteed by the U.S. Treasury. Other such securities
are supported by the right of the issuer to borrow from the Treasury, such as
securities issued by the Federal Home Loan Mortgage Corporation ("FHLMC"), while
certain other securities are supported only by the credit of the agency or
instrumentality itself, such as securities issued by the Federal National
Mortgage Association ("FNMA"). Commercial paper includes unsecured promissory
notes of corporate issuers, which securities generally have remaining maturities
not exceeding nine months.
The mortgage-backed securities in which the Portfolio invests will include
securities that represent interests in pools of mortgage loans made by lenders
such as savings and loan institutions, mortgage bankers, and commercial banks.
Such securities provide a "pass-through" of monthly payments of interest and
principal made by the borrowers on their residential mortgage loans (net of any
fees paid to the issuer or guarantor of such securities). Although the
residential mortgages underlying a pool may have maturities of up to 30 years, a
pool's effective maturity may be reduced by prepayments of principal on the
underlying mortgage obligations. Factors affecting mortgage prepayments include,
among other things, the level of interest rates, general economic and social
conditions and the location and age of the mortgages. High interest rate
mortgages are more likely to be prepaid than lower-rate mortgages; consequently,
the effective maturities of mortgage-related obligations that pass-through
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payments of higher-rate mortgages are likely to be shorter than those of
obligations that pass-through payments of lower-rate mortgages. If such
prepayment of mortgage-related securities in which the Portfolio invests occurs,
the Portfolio may have to invest the proceeds in securities with lower yields.
GNMA is a U.S. Government corporation within the Department of Housing and
Urban Development, authorized to guarantee, with the full faith and credit of
the U.S. Government, the timely payment of principal and interest on securities
issued by institutions approved by GNMA (such as savings and loan institutions,
commercial banks and mortgage bankers) and backed by pools of Federal Housing
Administration insured or Veterans Administration guaranteed residential
mortgages. These securities entitle the holder to receive all interest and
principal payments owed on the mortgages in the pool, net of certain fees,
regardless of whether or not the mortgagors actually make the payments. Other
government-related issuers of mortgage-related securities include FNMA, a
government-sponsored corporation subject to general regulation by the Secretary
of Housing and Urban Development but owned entirely by private stockholders, and
FHLMC, a corporate instrumentality of the U.S. Government created for the
purpose of increasing the availability of mortgage credit for residential
housing that is owned by the twelve Federal Home Loan Banks. FHLMC issues
Participation Certificates ("PCs"), which represent interests in mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal, but PCs are not backed by the full faith and
credit of the U.S. Government. Pass-through securities issued by FNMA are backed
by residential mortgages purchased from a list of approved seller/servicers and
are guaranteed as to timely payment of principal and interest by FNMA, but are
not backed by the full faith and credit of the U.S. Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through securities based on pools of conventional residential mortgage
loans. Securities created by such non-governmental issuers may offer a higher
rate of interest than government-related securities; however, timely payment of
interest and principal may or may not be supported by insurance or guarantee
arrangements, and there can be no assurance that the private issuers can meet
their obligations.
SELIGMAN FRONTIER PORTFOLIO
The investment objective of this Portfolio is to produce growth in capital
value; income may be considered but will be only incidental to the Portfolio's
investment objective. This Portfolio seeks to achieve its objective by investing
in a portfolio consisting of securities of companies selected for their growth
prospects. It invests primarily in common stocks, and may also invest in
securities that may be exchanged for or converted into common stock, preferred
stock and common stock purchase warrants and rights believed by the Manager to
provide capital growth opportunities.
Stocks of companies believed by the Manager to have special characteristics
(such as a high growth rate of unit sales, an important opportunity in a
developing industry or a distinct competitive advantage) are favored by this
Portfolio. In general, securities owned are likely to be those issued by
companies of small to medium size with annual revenue of $400 million or less.
Except when investing for temporary defensive purposes, this Portfolio will
invest at least 65% of its net assets, exclusive of government securities,
short-term notes, cash and cash items, in securities of such companies.
Securities of smaller or medium-sized companies may be subject to above-average
market price fluctuation and business risk; however, the Manager will seek to
temper such risks by diversification of investments and by avoiding
concentration of investments in any one industry.
This Portfolio's investments, other than in securities of the companies
discussed above, will be substantially in securities issued or guaranteed by the
U.S. Government (such as Treasury bills, notes and bonds), its agencies,
instrumentalities or authorities, highly-rated corporate debt securities (rated
AA-, or better, by S&P or Aa3, or better, by Moody's); prime commercial paper
(rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of the 100
largest (based on assets) banks that are subject to regulatory supervision by
the U.S. Government or state governments and the 50 largest (based on assets)
foreign banks with branches or agencies in the United States.
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SELIGMAN HENDERSON GLOBAL PORTFOLIO
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
Unless otherwise indicated, the following description of investment
objectives and policies applies to both the Seligman Henderson Global Portfolio
("Global Portfolio") and the Seligman Henderson Global Smaller
Companies Portfolio ("Global Smaller Companies Portfolio").
The investment objective of the Global Portfolio is long-term capital
appreciation primarily through global investments in securities of medium- to
large-sized companies. Under normal market conditions, the Global Port-folio
will invest 65% of its assets in securities of issuers located in at least three
different countries, one of which may be the U.S.
The investment objective of the Global Smaller Companies Portfolio is
long-term capital appreciation primarily through global investments in
securities of companies with small to medium market capitalizations. Under
normal market conditions, the Global Smaller Companies Portfolio will invest its
assets in securities of issuers located in at least three different countries,
one of which may be the U.S., and will invest at least 65% of its assets in
securities of small to medium-sized companies with market capitalization up to
$750 million.
Seligman Henderson Co. (the "Subadviser") will supervise and direct the
investments of both Portfolios. While each Portfolio may invest in securities of
issuers domiciled in any country, under normal conditions investments will be
made in four principal regions: The United Kingdom/Continental Europe, North
America, the Pacific Basin and Latin America. Continental European countries
include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and Turkey.
Pacific Basin countries include Australia, Hong Kong, Indonesia, Japan, Korea,
Malaysia, New Zealand, Pakistan, The Philippines, Singapore, Sri Lanka, and
Thailand. North America includes the United States and Canada. Latin American
countries include Argentina, Brazil, Chile, Mexico and Venezuela.
In allocating investments among geographic regions and individual
countries, the Subadviser will consider such factors as the relative economic
growth potential of the various economies and securities markets; expected
levels of inflation; financial, social and political conditions influencing
investment opportunities; and the outlook for currency relationships.
These Portfolios may invest in all types of securities, most of which will
be denominated in currencies other than the U.S. dollar. Since opportunities for
long-term growth are primarily expected from equity securities, the Portfolios
will normally invest substantially all of their assets in such securities,
including common stock, securities convertible into common stock, depository
receipts for these securities and warrants. These Portfolios may, however,
invest up to 25% of their assets in preferred stock and debt securities if the
Subadviser believes that the capital appreciation available from an investment
in such securities will equal or exceed the capital appreciation available from
an investment in equity securities. Dividends or interest income are considered
only when the Subadviser believes that such income will have a favorable
influence on the market value of a security in light of the Portfolios'
objective of capital appreciation.
There is no requirement that the debt securities in which the Portfolios
may invest be rated by a recognized rating agency. However, it is the
Portfolios' policy that investments in debt securities, whether rated or
unrated, will be made only if they are, in the opinion of the Subadviser, of
equivalent quality to "investment grade" securities. "Investment grade"
securities are those rated within the four highest quality grades as determined
by Moody's or S&P. Debt securities are interest-rate sensitive, so that their
value will tend to decrease when interest rates rise and increase when interest
rates fall.
DEPOSITORY RECEIPTS. The Portfolios may invest in securities represented by
European Depository Receipts ("EDRs"), Global Depository Receipts ("GDRs"),
American Depository Receipts ("ADRs"), or American Depository Shares ("ADSs").
ADRs and ADSs are instruments generally issued by domestic banks or trust
companies that represent the deposit of a security of a foreign issuer. ADRs and
ADSs may be publicly traded on exchanges or over-the-counter in the United
States and are quoted and settled in dollars at a price that generally reflects
the dollar equivalent of the home country share price. EDRs and GDRs are
typically issued by foreign banks or trust companies and traded in Europe. ADRs,
ADSs, EDRs and GDRs may be issued under sponsored or unsponsored programs. In
sponsored programs, the issuer has made arrangements to have its securities
trade in the form of ADRs, ADSs, EDRs or GDRs. In unsponsored programs, the
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issuer may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, the issuers of unsponsored ADRs, ADSs, EDRs or GDRs are not
obligated to disclose material information in the U.S., and, therefore, the
import of such information may not be reflected in the market value of such
receipts.
By investing in foreign securities, the Portfolios will attempt to take
advantage of differences among economic trends and the performance of securities
markets in various countries. To date, the market values of securities of
issuers located in different countries have moved relatively independently of
each other. During certain periods, the return on equity investments in some
countries has exceeded the return on similar investments in the U.S. The
Subadviser believes that, in comparison with investment companies investing
solely in domestic securities, it may be possible to obtain significant
appreciation from a portfolio of foreign investments and securities from various
markets that offer different investment opportunities and are affected by
different economic trends. Global diversification reduces the effect that events
in any one country will have on the entire investment portfolio. Of course, a
decline in the value of a Portfolio's investments in one country may offset
potential gains from investments in another country.
RISK FACTORS. Investments in securities of foreign issuers may involve
risks that are not associated with domestic investments, and there can be no
assurance that either of the Portfolios' foreign investments will present less
risk than a portfolio of domestic securities. Foreign issuers may lack uniform
accounting, auditing and financial reporting standards, practices and
requirements, and there is generally less publicly available information about
foreign issuers than there is about U.S. issuers. Governmental regulation and
supervision of foreign stock exchanges, brokers and listed companies may be less
pervasive than is customary in the U.S. Securities of some foreign issuers are
less liquid and their prices are more volatile than securities of comparable
domestic issuers. Foreign securities settlements may in some instances be
subject to delays and related administrative uncertainties which could result in
temporary periods when assets of a Portfolio are uninvested and no return is
earned thereon and may involve a risk of loss to a Portfolio. Foreign securities
markets may have substantially less volume than U.S. markets and far fewer
traded issues. Fixed brokerage commissions on foreign securities exchanges are
generally higher than in the U.S., and transaction costs with respect to smaller
capitalization companies may be higher than those of larger capitalization
companies. Income from foreign securities may be reduced by a withholding tax at
the source or other foreign taxes. In some countries, there may also be the
possibility of nationalization, expropriation or confiscatory taxation, (in
which a Portfolio could lose its entire investment in a certain market),
limitations on the removal of monies or other assets of the Portfolios, higher
rates of inflation, political or social instability or revolution, or diplomatic
developments that could affect investments in those countries. In addition, it
may be difficult to obtain and enforce a judgement in a court outside the U.S.
Some of the risks described in the preceding paragraph may be more severe
for investments in emerging or developing countries. By comparison with the
United States and other developed countries, emerging or developing countries
may have relatively unstable governments, economies based on a less diversified
industrial base and securities markets that trade a smaller number of
securities. Companies in emerging markets may generally be smaller, less
experienced and more recently organized than many domestic companies. Prices of
securities traded in the securities markets of emerging or developing countries
tend to be volatile. Furthermore, foreign investors are subject to many
restrictions in emerging or developing countries. These restrictions may
require, among other things, governmental approval prior to making investments
or repatriating income or capital, or may impose limits on the amount or type of
securities held by foreigners or on the companies in which the foreigners may
invest.
Investments in foreign securities will usually be denominated in foreign
currencies, and each Portfolio may temporarily hold funds in foreign currencies.
The value of a Portfolio's investments denominated in foreign currencies may be
affected, favorably or unfavorably, by the relative strength of the U.S. dollar,
changes in foreign currency and U.S. dollar exchange rates and exchange control
regulations. A Portfolio may incur costs in connection with conversions between
various currencies. A Portfolio's net asset value per share will be affected by
changes in currency exchange rates. Changes in foreign currency exchange rates
may also affect the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income and gains, if any,
to be distributed to shareholders by the Portfolios. The rate of exchange
between the U.S. dollar and other currencies is determined by the forces of
supply and demand in the foreign exchange markets (which in turn are affected by
interest rates, trade flows and numerous other factors, including, in some
countries, local governmental intervention).
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With regard to the Global Smaller Companies Portfolio, the Subadviser
believes that smaller companies generally have greater earnings and sales growth
potential than larger companies. However, investments in such companies may
involve greater risks, such as limited product lines, markets and financial or
managerial resources. Less frequently traded securities may be subject to more
abrupt price movements than securities of larger companies.
FORWARD CURRENCY EXCHANGE CONTRACTS. The Subadviser will consider changes
in exchange rates in making investment decisions. As one way of managing
exchange rate risk, each Portfolio may enter into forward currency exchange
contracts (agreements to purchase or sell foreign currencies at a future date).
A Portfolio will usually enter into these contracts to fix the U.S. dollar value
of securities that it has agreed to buy or sell for the period between the date
the trade was entered into and the date the security is delivered and paid for.
A Portfolio may also use these contracts to hedge the U.S. dollar value of
securities it already owns. A Portfolio may be required to cover certain forward
currency exchange contract positions by establishing a segregated account with
its custodian that will contain only liquid assets, such as U.S. Government
securities or other liquid high-grade debt obligations. Under normal
circumstances, the portfolio manager will limit forward currency contracts to
not greater than 75% of the Portfolio's position in any one country as of the
date the contract is entered into.
Although the Portfolios will seek to benefit by using forward contracts,
anticipated currency movements may not be accurately predicted and the
Portfolios may therefore incur a gain or loss on a forward contract. A forward
contract may help reduce the Portfolios' losses on securities denominated in
foreign currency, but it may also reduce the potential gain on the securities
depending on changes in the currency's value relative to the U.S. dollar or
other currencies.
TEMPORARY INVESTMENTS. When the Subadviser believes that market conditions
warrant a temporary defensive position, a Portfolio may invest up to 100% of its
assets in short-term instruments such as commercial paper, bank certificates of
deposit, bankers' acceptances, or repurchase agreements for such securities and
securities of the U.S. Government and its agencies and instrumentalities, as
well as cash and cash equivalents denominated in foreign currencies. Investments
in domestic bank certificates of deposit and bankers' acceptances will be
limited to banks that have total assets in excess of $500 million and are
subject to regulatory supervision by the U.S. Government or state governments. A
Portfolio's investments in commercial paper of U.S. issuers will be limited to
(a) obligations rated Prime-1 by Moody's or A-1 by S&P or (b) unrated
obligations issued by companies having an outstanding unsecured debt issue
currently rated A or better by S&P. A description of various commercial paper
ratings and debt securities ratings appears in the Appendix to this Prospectus.
A Portfolio's investments in foreign short-term instruments will be limited to
those that, in the opinion of the Subadviser, equate generally to the standards
established for U.S. short-term instruments.
SELIGMAN HIGH-YIELD BOND PORTFOLIO
The objective of this Portfolio is to produce maximum current income. The
Portfolio seeks to achieve its objective by following a policy of investing in a
diversified range of high-yield, high-risk, medium and lower quality corporate
bonds and notes, commonly referred to as "junk bonds". Generally, bonds and
notes providing the highest yield are unrated or carry lower ratings (Baa or
lower by Moody's or BBB or lower by S&P) than those assigned by S&P or Moody's
to investment-grade bonds and notes. A description of the S&P and Moody's rating
categories is set forth in the Appendix to this Prospectus. While providing
higher yields, these bonds and notes are subject to greater risks of loss of
principal and income than higher-rated bonds and notes and are considered to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. They are also generally considered to be subject to greater
price volatility due to market risks than higher rated bonds and notes.
The amount of outstanding high-yield, lower-rated corporate securities has
recently proliferated. Based on industry estimates, the market grew from $20
billion in outstanding securities to in excess of $270 billion, principally over
the past ten years, a period of national economic expansion. An economic
downturn could adversely impact issuers' abilities to pay interest and repay
principal and could result in issuers' defaulting on such payments. The value of
the Portfolio's bonds and notes will be affected like all fixed-income
securities by market conditions relating to changes in prevailing interest
rates. However, the value of lower-rated or unrated corporate bonds and notes is
also affected by investors' perceptions. When economic conditions appear to be
deteriorating, lower-rated or unrated corporate bonds and notes may decline in
market value due to investors' heightened concerns and perceptions over credit
quality. If the security is downgraded, the Portfolio may retain the security.
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The Portfolio may invest in "zero coupon" (interest payments accrue until
maturity) and "pay-in-kind" (interest payments are made in cash or additional
shares) bonds. Such securities may be subject to greater fluctuations in value
as they tend to be more speculative than income bearing securities. Fluctuations
in the market prices of the securities owned by the Portfolio result in
corresponding fluctuations and volatility in the net asset value of the shares
of the Portfolio.
Lower-rated and non-rated corporate bonds and notes in which the Portfolio
invests are traded principally by dealers in the over-the-counter market. The
market for these securities may be less active and less liquid than for higher
rated securities. Under adverse market or economic conditions, the secondary
market for these bonds and notes could contract further, causing the Portfolio
difficulties in valuing and selling the securities in its portfolio.
The ratings of fixed-income securities by Moody's and S&P are a generally
accepted barometer of credit risk. They are, however, subject to certain
limitations from an investor's standpoint. The rating of an issuer is heavily
weighted by past developments and does not necessarily reflect probable future
conditions. There is frequently a lag between the time the rating is assigned
and the time it is updated. In addition there may be varying degrees of
difference in credit risk of securities within each rating category.
The Manager will try to minimize the risk inherent in the Portfolio's
investment objective through credit analysis, diversification and attention to
current developments and trends in interest rates and economic conditions.
However, there can be no assurance that losses will not occur and an investment
in the Portfolio is appropriate for you only if you can bear the high risk
inherent in seeking maximum current income by investing in high-yielding
corporate bonds and notes which are unrated or carry lower ratings than those
assigned by S&P or Moody's to investment-grade bonds.
Except for temporary defensive purposes, at least 80% of the value of the
Portfolio's total assets will be invested in high-yielding, income-producing
corporate bonds. This investment policy is a fundamental policy and may not be
changed by the Board of Directors of the Fund without the vote of a majority of
the Portfolio's outstanding voting securities. The Portfolio may invest up to
20% of the value of its total assets in a range of high-yield, medium and lower
quality corporate notes, short-term money market instruments, including
certificates of deposit of banks having total assets of more than $1 billion and
which are members of the FDIC, bankers' acceptances and interest-bearing savings
or time deposits of such banks, commercial paper of prime quality rated A-1 or
higher by S&P or Prime-1 or higher by Moody's or, if not rated, issued by
companies which have an outstanding debt issue rated AA or higher by S&P or Aa
or higher by Moody's, securities issued, guaranteed or insured by the U.S.
Government, its agencies and instrumentalities and other income-producing cash
items. The Portfolio may invest temporarily for defensive purposes without limit
in the foregoing securities.
SELIGMAN INCOME PORTFOLIO
The primary investment objective of this Portfolio is to provide
shareholders with high current income consistent with what is believed to be
prudent risk of capital; secondarily, the Portfolio seeks to provide the
possibility of improvement in income and capital value over the longer term.
Assets are invested in securities carefully selected in light of the Portfolio's
investment objectives and diversified to limit risk. The distribution of
investments between different types of securities is governed by a fundamental
policy, which can be changed only by the vote of the shareholders, that at least
25% of the market value of gross assets must at all times be in cash, bonds
and/or preferred stocks. Under an investment policy established by the Board of
Directors, at least 80% of assets will be invested in income-producing
securities.
Subject to that limitation, assets may be invested in many different types
of securities, including money market instruments, fixed-income securities such
as bonds, debentures and preferred stocks, senior securities convertible into
common stocks, and common stocks.
Convertible bonds are convertible at a stated exchange rate or price into
common stock. Before conversion, convertible securities are similar to
non-convertible debt securities in that they provide a steady stream of income
with generally higher yields than an issuer's equity securities. The market
value of all debt securities, including convertible securities, tends to decline
as interest rates increase and to increase as interest rates decline. In
general, convertible securities may provide lower interest or dividend yields
than non-convertible debt securities of similar quality, but they may also allow
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investors to benefit from increases in the market price of the underlying common
stock. When the market price of the underlying common stock increases, the price
of the convertible security tends to reflect the increase. When the market price
of the underlying common stock declines, the convertible security tends to trade
on the basis of yield, and may not depreciate to the same extent as the
underlying common stock. In an issuer's capital structure, convertible
securities are senior to common stocks. They are therefore of higher quality and
involve less risk than the issuer's common stock, but the extent to which risk
is reduced depends largely on the extent to which the convertible security sells
above its value as a fixed-income security. In selecting convertible securities
for the Portfolio, the Manager evaluates such factors as economic and business
conditions involving the issuer, future earnings growth potential of the issuer,
potential for price appreciation of the underlying equity, the value of
individual securities relative to other investment alternatives, trends in the
determinants of corporate profits and capability of management. In evaluating a
convertible security, the Manager gives emphasis to the attractiveness of the
underlying common stock and the capital appreciation opportunities that the
convertible bonds present. Convertible securities can be callable or redeemable
at the issuer's discretion, in which case the Manager would be forced to seek
alternative investments. The Portfolio may invest in debt securities convertible
into equity securities rated as low as CC by S&P or Ca by Moody's. Debt
securities rated below investment grade (frequently referred to as "junk bonds")
often have speculative characteristics and will be subject to greater market
fluctuations and risk of loss of income and principal than higher-rated
securities. A description of credit ratings and risks associated with
lower-rated debt securities is set forth in the Appendix to this Prospectus. The
Manager does not rely on the ratings of these securities in making investment
decisions but performs its own analysis, based on the factors described above,
in light of the Portfolio's investment objectives.
The Portfolio does not expect to invest more than 5% of its assets in
non-convertible bonds, notes and debentures ("bonds") rated below BBB by S&P or
Baa by Moody's. Although bonds rated in the fourth credit rating category (BBB
or Baa) are commonly referred to as investment grade, they may have speculative
characteristics. The Appendix to this Prospectus contains a description of
credit ratings and the risks associated with lower-rated debt securities, which
tend to be more speculative and riskier than higher-rated debt securities.
The following table sets forth the weighted average ratings of the
Portfolio invested in debt securities, including convertible bonds, for the year
ended December 31, 1994. The balance of the Portfolio is invested in equity
securities. When securities received different ratings from S&P and Moody's, the
table reflects the higher rating.
AAA/Aaa .......... 2.9%
AA/Aa ............ --
A/A .............. 5.1%
BBB/Baa .......... 25.6%
BB/Ba ............ 5.4%
B/B .............. 17.9%
CCC/Caa .......... --
CC/Ca ............ --
Non-rated ........ 4.5%
OTHER INVESTMENT POLICIES
The Fund's Portfolios may invest for either the long or short term in their
efforts to attain their objectives, and changes in investments may be made
whenever considered advisable by the Manager or, in the case of the Global
Portfolio and the Global Smaller Companies Portfolio, the Subadviser. Except as
otherwise noted, each of the Portfolios may engage in transactions involving the
types of securities and investment strategies described below. Further
information about these strategies is included in the Fund's Statement of
Additional Information.
REPURCHASE AGREEMENTS. Each Portfolio may hold cash or cash equivalents and
may enter into repurchase agreements with respect to securities; normally
repurchase agreements relate to money market obligations backed by the full
faith and credit of the U.S. Government. Repurchase agreements are transactions
in which an investor (e.g., any of the Fund's Portfolios) purchases a security
from a bank, recognized securities dealer, or other financial institution and
simultaneously commits to resell that security to such institution at an agreed
upon price, date and market rate of interest unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement thus involves the
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obligation of the bank or securities dealer to pay the agreed upon price on the
date agreed to, which obligation is in effect secured by the value of the
underlying security held by the Portfolio. Repurchase agreements could involve
certain risks in the event of bankruptcy or other default by the seller,
including possible delays and expenses in liquidating the securities underlying
the agreement, decline in value of the underlying securities and loss of
interest. Although repurchase agreements carry certain risks not associated with
direct investments in securities, each Portfolio intends to enter into
repurchase agreements only with financial institutions believed to present
minimum credit risks in accordance with guidelines established by the Fund's
Board of Directors. The creditworthiness of such institutions will be reviewed
and monitored under the general supervision of the Board of Directors. The
Portfolios will invest only in repurchase agreements collateralized in an amount
at least equal at all times to the purchase price plus accrued interest.
Repurchase agreements usually are for short periods, such as one week or less,
but may be for longer periods. No Portfolio will enter into a repurchase
agreement with a maturity of more than seven days if, as a result, more than 15%
of the value of its net assets would then be invested in such repurchase
agreements and other illiquid investments.
ILLIQUID SECURITIES. Other than the Seligman Cash Management Portfolio,
each Portfolio may invest up to 15% of its net assets in illiquid securities,
including restricted securities (i.e., securities not readily marketable without
registration under the Securities Act of 1933 (the "1933 Act")) and other
securities that are not readily marketable. Each Portfolio, other than the
Seligman Cash Management Portfolio, may purchase restricted securities that can
be offered and sold to "qualified institutional buyers" under Rule 144A of the
1933 Act, and the Fund's Board of Directors may determine, when appropriate,
that specific Rule 144A securities are liquid and not subject to the 15%
limitation on illiquid securities. Should the Board of Directors make this
determination, it will carefully monitor the security (focusing on such factors,
among others, as trading activity and availability of information) to determine
that the Rule 144A security continues to be liquid. It is not possible to
predict with assurance exactly how the market for restricted securities offered
and sold under Rule 144A will develop. This investment practice could have the
effect of increasing the level of illiquidity in a Portfolio to the extent that
qualified institutional buyers become for a time uninterested in purchasing Rule
144A securities.
SHORT SALES. The Global Smaller Companies Portfolio may sell securities
short "against-the-box." A short sale "against-the-box" is a short sale in which
the Portfolio owns an equal amount of the securities sold short or securities
convertible into or exchangeable without payment of further consideration for
securities of the same issue as, and equal in amount to, the securities sold
short.
FOREIGN SECURITIES. Each of the Fund's Portfolios may invest in commercial
paper and certificates of deposit issued by foreign banks and may invest in
other securities of foreign issuers directly or through ADRs, ADSs, EDRs or
GDRs. Foreign investments may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. There may be less information
available about a foreign company than about a U.S. company and foreign
companies may not be subject to reporting standards and requirements comparable
to those applicable to U.S. companies. Foreign securities may not be as liquid
as U.S. securities. Securities of foreign companies may involve greater market
risk than securities of U.S. companies, and foreign brokerage commissions and
custody fees are generally higher than in the U.S. Investments in foreign
securities may also be subject to local economic or political risks, political
instability and possible nationalization of issuers. A Portfolio may invest up
to 10% of its total assets in foreign securities (except the Global Portfolio
and the Global Smaller Companies Portfolio, which may invest up to 100% of their
total assets in foreign securities), except that this 10% limit does not apply
to foreign securities held through ADRs, ADSs, EDRs or GDRs or to commercial
paper and certificates of deposit issued by foreign banks.
LENDING OF PORTFOLIO SECURITIES AND BORROWING. Other than the Seligman Cash
Management Portfolio, each of the Fund's Portfolios may lend portfolio
securities to banks or other institutional borrowers. The Fund's Portfolios will
not lend portfolio securities to any institutions affiliated with the Fund. The
borrower must maintain with the Fund's custodian bank cash or equivalent
collateral equal to at least 100% of the market value of the securities loaned.
During the time portfolio securities are on loan, the borrower is required to
pay an amount equal to any dividends or interest paid on the securities to the
lending Portfolio. In addition, the lending Portfolio may invest the cash
collateral and earn additional income or may receive an agreed upon amount of
interest income from the borrower.
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Except as noted below, a Portfolio may not borrow money except from banks
for temporary purposes (but not for the purpose of purchasing portfolio
securities) in an amount not to exceed 10% of the value of the total assets of
that Portfolio. In addition, the Seligman Frontier Portfolio and the Seligman
High-Yield Bond Portfolio will not purchase additional portfolio securities if
that Portfolio has outstanding borrowings in excess of 5% of the value of its
total assets.
The Seligman Capital Portfolio, the Seligman Common Stock Portfolio and the
Seligman Communications and Information Portfolio may from time to time borrow
money in order to purchase securities. Borrowings may be made only from banks
and each of these Portfolios may not borrow in excess of one-third of the market
value of its assets, less liabilities other than such borrowing, or pledge more
than 10% of its total assets, taken at cost, to secure the borrowing. Current
asset value coverage of three times any amount borrowed by the respective
Portfolio is required at all times. Borrowed money creates an opportunity for
greater capital appreciation, but at the same time increases exposure to capital
risk. The net cost of any money borrowed would be an expense that otherwise
would not be incurred, and this expense will reduce the Portfolio's net
investment income in any given period. Any gain in the value of securities
purchased with money borrowed to an amount in excess of amounts borrowed plus
interest would cause the net asset value of the Portfolio's shares to increase
more than otherwise would be the case. Conversely, any decline in the value of
securities purchased to an amount below the amount borrowed plus interest would
cause the net asset value to decrease more than would otherwise be the case.
The Global Portfolio and the Global Smaller Companies Portfolio may from
time to time borrow money for temporary, extraordinary or emergency purposes and
may invest the funds in additional securities. Borrowings for the purchase of
securities will not exceed 5% of the Portfolio's total assets and will be made
at prevailing interest rates.
WHEN-ISSUED SECURITIES. The Seligman Fixed Income Securities Portfolio and
the Seligman High-Yield Bond Portfolio may purchase securities on a when-issued
basis. Settlement of such transactions (i.e., delivery of securities and payment
of purchase price) normally takes place within 45 days after the date of the
commitment to purchase. Although the Seligman High-Yield Bond Portfolio will
purchase a security on a when-issued basis only with the intention of actually
acquiring the securities, the Portfolio may sell these securities before the
purchase settlement date if it is deemed advisable.
At the time a Portfolio enters into such a commitment both payment and
interest terms will be established prior to settlement; there is a risk that
prevailing interest rates on the settlement date will be greater than the
interest rate terms established at the time the commitment was entered into.
When-issued securities are subject to changes in market value prior to
settlement based upon changes, real or anticipated, in the level of interest
rates or creditworthiness of the issuer. If a Portfolio remains substantially
fully invested at the same time that it has purchased securities on a
when-issued basis, the market value of that Portfolio's assets may fluctuate
more than otherwise would be the case. For this reason, accounts for each
Portfolio will be established with the Fund's custodian consisting of cash
and/or liquid high-grade debt securities equal to the amount of each Portfolio's
when-issued commitment; these accounts will be valued each day and additional
cash and/or liquid high-grade debt securities will be added to an account in the
event that the current value of the when-issued commitment increases. When the
time comes to pay for when-issued securities, a Portfolio will meet its
respective obligations from then available cash flow, sale of securities held in
the separate account, sale of other securities, or from the sale of the
when-issued securities themselves (which may have a value greater or less than a
Portfolio's payment obligations). Sale of securities to meet when-issued
commitments carries with it a greater potential for the realization of capital
gain or loss.
MANAGEMENT SERVICES
The Board of Directors provides broad supervision over the affairs of the
Fund. Pursuant to management agreements approved by the Board of Directors (the
"Management Agreements"), the Manager manages the investments of each Portfolio
and administers its business and other affairs. The address of the Manager is
100 Park Avenue, New York, New York 10017.
Mr. William C. Morris is Chairman and President of the Manager and Chairman
of the Board and Chief Executive Officer of the Fund. Mr. Morris owns a majority
of the outstanding voting securities of the Manager.
For its services under the Management Agreements, the Manager receives a
fee, calculated daily and payable monthly, at an annual rate of .40% of the
average daily net assets of the Seligman Capital Portfolio, the Seligman Cash
Management Portfolio, the Seligman Common Stock Portfolio, the Seligman Fixed
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Income Securities Portfolio, and the Seligman Income Portfolio, at an annual
rate of .50% of the average daily net assets of the Seligman High-Yield Bond
Portfolio, and at an annual rate of .75% of the average daily net assets of the
Seligman Communications and Information Portfolio and the Seligman Frontier
Portfolio.
The Global Portfolio and the Global Smaller Companies Portfolio each pay
the Manager a management fee, calculated daily and payable monthly, equal to an
annual rate of 1.00% of the average daily net assets of each Portfolio, of which
.90% is paid to the Subadviser for the services described below. This management
fee is higher than that of the other Portfolios of the Fund and of most
investment companies but is comparable to that of most global equity funds.
The Manager voluntarily has agreed to waive its management fee and to
reimburse all expenses for the Seligman Cash Management Portfolio, and has
voluntarily agreed to reimburse annual expenses (other than the management fee)
that exceed .20% of average net assets for each of the Seligman Capital,
Seligman Common Stock, Seligman Communications and Information, Seligman Fixed
Income Securities, Seligman Frontier, Seligman High-Yield Bond and Seligman
Income Portfolios. There is no assurance that the Manager will continue this
policy in the future.
For the year/period ended December 31, 1994, the Subadviser voluntarily
agreed to reimburse certain annual expenses (other than the management fee) that
exceeded .20% of average net assets for the Global Portfolio and the Global
Smaller Companies Portfolio and will continue to do so for the period prior to
May 1, 1995. Effective May 1, 1995, the Subadviser has agreed to reimburse
annual expenses (other than the management fee) that exceed .40% of average net
assets.
The management fee paid by each Portfolio expressed as a percentage of
average daily net assets of that Portfolio is presented in the following table
for the fiscal year/period ended December 31, 1994. Total expenses for each
Portfolio's shares, expressed as an annualized percentage of average daily net
assets, are also presented in the following table for the year/period ended
December 31, 1994.
MANAGEMENT ANNUALIZED EXPENSE
FEE RATE RATIOS FOR IN THE
FOR THE YEAR ENDED YEAR/PERIOD ENDED
PORTFOLIO 12/31/94 12/31/94*
--------- ------------------- ------------------
Capital Portfolio ....................... .40% .60%
Cash Management Portfolio ............... --* --
Common Stock Portfolio .................. .40 .60
Communications and Information Portfolio .75+ .95
Fixed Income Securities Portfolio ....... .40 .60
Frontier Portfolio ...................... .75+ .95
Global Portfolio ........................ 1.00 1.20
Global Smaller Companies Portfolio ...... 1.00+ 1.20
Income Portfolio ........................ .40 .60
-------------
* During the year/period ended December 31, 1994, the Manager, at its
discretion, waived all of its fees for the Seligman Cash Management
Portfolio, and the Manager or Subadviser elected to reimburse all or a
portion of the expenses for each Portfolio.
+ Annualized.
The Manager also serves as manager of sixteen other investment companies,
which, together with the Fund, make up the "Seligman Group." The aggregate
assets of the Seligman Group are approximately $6.6 billion. The Manager also
provides investment management or advice to individual and institutional
accounts having an aggregate value of approximately $3 billion.
The Fund bears all expenses of its organization, operations, and business
not specifically assumed or agreed to be paid by the Manager as provided in the
Management Agreements. In particular, but without limiting the generality of the
foregoing, the Fund pays brokerage commissions, custody expenses and expenses
relating to computation of the Fund's net asset value per share, including the
cost of any equipment or services used for obtaining price quotations; legal and
accounting fees and expenses; fees and expenses of registering the Fund under
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the federal securities laws; taxes or governmental fees payable by or with
respect to the Fund to federal, state, or other governmental agencies, domestic
or foreign, including stamp or other transfer taxes; fees, dues, and other
expenses incurred in connection with the Fund's membership in any trade
association or other investment organization; and such nonrecurring expenses as
may arise, including litigation costs.
THE SUBADVISER. Seligman Henderson Co. serves as Subadviser to the Global
Portfolio and the Global Smaller Companies Portfolio pursuant to Subadvisory
Agreements between the Manager and the Subadviser (the "Subadvisory
Agreements"). The Subadvisory Agreements provide that the Subadviser will
supervise and direct the Portfolios' international investments in accordance
with the Portfolios' investment objectives, policies and restrictions. Seligman
Henderson Co. was created to provide international and global investment
management services to institutional and individual investors and investment
companies in the U.S. The address of the Subadviser is 100 Park Avenue, New
York, New York 10017.
PORTFOLIO MANAGERS. Loris D. Muzzatti, a Managing Director of the Manager,
serves as Vice President of the Fund and has been the Portfolio Manager of the
Seligman Capital Portfolio since December 1988. Mr. Muzzatti, who joined the
Manager in 1985, also manages a portion of the Manager's leading institutional
accounts. The Portfolio Manager's discussion of the Portfolio's performance, as
well as a line graph illustrating comparative performance information between
the Portfolio, the Standard & Poor's 500 Composite Stock Price Index and the
Lipper Capital Appreciation Fund Average, is included in the Fund's 1994 Annual
Report to Shareholders.
Charles C. Smith, Jr., a Managing Director of the Manager since January 1,
1994, serves as Vice President of the Fund and has been Portfolio Manager of the
Seligman Common Stock Portfolio and the Seligman Income Portfolio since December
1991. Mr. Smith, who joined the Manager in 1985 as Vice President, Investment
Officer and became Senior Vice President, Senior Investment Officer in 1992,
also manages Seligman Common Stock Fund, Inc. and Seligman Income Fund, Inc.
Stacey G. Navin, Vice President of the Manager, serves as Vice President of the
Fund and has been a Co-Portfolio Manager of the Seligman Common Stock Portfolio
and the Seligman Income Portfolio since December 1991. Ms. Navin, who joined the
Manager in 1986 and assumed her current responsibilities in 1988, also
co-manages Seligman Common Stock Fund, Inc. and Seligman Income Fund, Inc. The
Portfolio Manager's discussion of the Seligman Common Stock Portfolio's
performance, as well as a line graph illustrating comparative performance
information between the Seligman Common Stock Portfolio, the Standard & Poor's
500 Composite Stock Price Index and the Lipper Growth and Income Fund Average,
is included in the Fund's 1994 Annual Report to Shareholders. The Portfolio
Manager's discussion of the Seligman Income Portfolio's performance, as well as
a line graph illustrating comparative performance information between the
Seligman Income Portfolio, the Standard & Poor's 500 Composite Stock Price
Index, and the Lipper Income Fund Average, is included in the Fund's 1994 Annual
Report to Shareholders.
Paul H. Wick, a Managing Director of the Manager, serves as Vice President
of the Fund and is the Portfolio Manager of the Seligman Communications and
Information Portfolio and the Seligman Frontier Portfolio. Mr. Wick, who joined
the Manager in 1987, also manages Seligman Communications and Information Fund,
Inc. and Seligman Frontier Fund, Inc., and co-manages Seligman Henderson Global
Technology Fund, a series of Seligman Henderson Global Fund Series, Inc. The
Portfolio Manager's discussion of the Seligman Communications and Information
Portfolio's performance, as well as a line graph illustrating comparative
information between the Seligman Communications and Information Portfolio, the
Standard & Poor's 500 Composite Stock Price Index and the Lipper Science and
Technology Fund Average, is included in the Fund's 1994 Annual Report to
Shareholders. The Portfolio Manager's discussion of the Seligman Frontier
Portfolio's performance, as well as a line graph illustrating comparative
information between the Seligman Frontier Portfolio, the National Association of
Securities Dealers Automated Quotations ("NASDAQ") and the Lipper Small Company
Fund Average, is included in the Fund's 1994 Annual Report to Shareholders.
Leonard J. Lovito, a Vice President of the Manager, serves as Vice
President of the Fund and has been Portfolio Manager of the Seligman Fixed
Income Securities Portfolio since January 1, 1994 and of the Seligman Cash
Management Portfolio and Seligman Cash Management Fund, Inc. since January 1,
1995. Mr. Lovito, who joined the Manager in 1984, manages the Seligman U.S.
Government Securities Series of Seligman High Income Fund Series. The Portfolio
Manager's discussion of the Seligman Fixed Income Securities Portfolio's
performance, as well as a line graph illustrating comparative performance
information between the Seligman Fixed Income Securities Portfolio, the Standard
& Poor's 500 Composite Stock Price Index, the Lehman Brothers Government Bond
Index, and the Lipper Fixed Income Fund Average, is included in the Fund's 1994
Annual Report to Shareholders.
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Daniel J. Charleston, a Vice President of the Manager, serves as a Vice
President of the Fund and is the Portfolio Manager of the Seligman High-Yield
Bond Portfolio. Mr. Charleston, who joined the Manager in 1987, has also managed
the Seligman High-Yield Bond Series of Seligman High Income Fund Series since
1989.
The Subadviser's International Policy Group has overall responsibility for
directing and overseeing all aspects of investment activity for the Global
Portfolio and the Global Smaller Companies Portfolio and provides international
investment policy, including country weightings, asset allocations and industry
sector guidelines, as appropriate. Mr. Iain C. Clark, a Managing Director and
the Chief Investment Officer of the Subadviser, is responsible for the
day-to-day investment activity of the Global Portfolio and the Global Smaller
Companies Portfolio. Mr. Clark, who joined the Subadviser in 1992, has been a
Director of Henderson Administration Group plc and Henderson International, Ltd.
and Secretary, Treasurer and Vice President of Henderson International, Inc.
since 1985. Mr. Clark's discussion of the Global Portfolio's performance, as
well as a line graph illustrating comparative performance information between
the Global Portfolio, the Morgan Stanley Capital International ("MSCI") World
Index and the MSCI Europe-Asia-Far East Index, is included in the Fund's 1994
Annual Report to Shareholders. Mr. Clark's discussion of the Global Smaller
Companies Portfolio's performance, as well as a line graph illustrating
comparative information between the Global Smaller Companies Portfolio, the MSCI
World Index, and the Lipper Global Small Company Fund Average, is included in
the Fund's 1994 Annual Report to Shareholders.
Copies of the Fund's 1994 Annual Report to Shareholders may be obtained,
without charge, by calling or writing the Fund at the telephone numbers or
address listed on the front page of this Prospectus.
PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND VALUATION
PORTFOLIO TRANSACTIONS. In directing transactions involving exchange-listed
securities, the Manager (or in the case of the Global Portfolio and the Global
Smaller Companies Portfolio, the Manager or the Subadviser) will seek the most
favorable price and execution, and consistent with that policy may give
consideration to the research, statistical, and other services furnished by
brokers or dealers to the Manager or the Subadviser for its use. In addition,
the Manager and Subadviser are authorized to place orders with brokers who
provide supplemental investment and market research and security and economic
analysis, although the use of such brokers may result in a higher brokerage
charge to a Portfolio than the use of brokers selected solely on the basis of
seeking the most favorable price and execution although such research and
analysis received may be useful to the Manager or the Subadviser in connection
with their services to other clients as well as to the Portfolios. Portfolio
transactions for the Seligman Cash Management Portfolio, Seligman Fixed Income
Securities Portfolio and Seligman High-Yield Bond Portfolio, which invest in
debt securities generally traded in the over-the-counter market, and
transactions by any of the other Portfolios in debt securities traded on a
"principal basis" in the over-the-counter market are normally directed by the
Manager or the Subadviser to dealers in the over-the-counter market, which
dealers generally act as principals for their own accounts.
Consistent with the rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Directors may determine, the Manager or
Subadviser may consider sales of the variable contracts which are funded though
CLVA-2, CLVA-3, Canada Life Separate Accounts (collectively, "Canada Life
Accounts") and, if permitted by applicable laws, of the other Funds in the
Seligman Group as a factor in the selection of brokers or dealers to execute
portfolio transactions for the Fund.
PORTFOLIO TURNOVER. A change in securities held by any Portfolio is known
as "portfolio turnover" and may involve the payment by the Fund of dealer
spreads or underwriting commissions and other transactions costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
Changes will be made whenever the Manager or, in the case of the Global
Portfolio and the Global Smaller Companies Portfolio, the Subadviser, believes
such changes will strengthen any Portfolio's position. Portfolio turnover will
vary from year to year as well as within a year and may exceed 100%.
VALUATION. The net asset value of the shares of each Portfolio will be
computed each day, Monday through Friday, as of the close of the New York Stock
Exchange (usually 4:00 p.m., New York City time), on days the New York Stock
Exchange is open for trading. Securities of each Portfolio (except Seligman Cash
Management Portfolio) are valued at current market value, or in the absence
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thereof, at fair value in accordance with procedures approved by the Board of
Directors. For purposes of determining the net asset value per share of the
Global Portfolio and the Global Smaller Companies Portfolio, securities traded
on a foreign exchange or over-the-counter market are valued at the last sales
price on the primary exchange or market on which they are traded. United Kingdom
securities and securities for which there are no recent sales transactions are
valued based on quotations provided by primary market makers in such securities.
Any securities for which recent market quotations are not readily available are
valued at fair value determined in accordance with procedures approved by the
Board of Directors. Short-term holdings maturing in 60 days or less are
generally valued at amortized cost if their original maturity was 60 days or
less. Short-term holdings with more than 60 days remaining to maturity will be
valued at current market value until the 61st day prior to maturity, and will
then be valued on an amortized cost basis based on the value of such date unless
the Board determines that this amortized cost value does not represent fair
market value.
Securities held by the Seligman Cash Management Portfolio are valued using
the amortized cost method. This method is designed to stabilize the net asset
value of that Portfolio at $1.00 per share. The Board of Directors will monitor
closely the stabilization of the net asset value at $1.00 per share and has
adopted procedures to facilitate such stabilization. More information regarding
this method of valuation is contained in the Statement of Additional
Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio of the Fund intends to qualify as a "regulated investment
company" under certain provisions of the Internal Revenue Code of 1986, as
amended (the "Code"). Under such provisions, the Fund's Portfolios will be
subject to federal income tax only with respect to undistributed net investment
income and net realized capital gain. Each of the Fund's Portfolios will be
treated as a separate entity. Dividends on the Seligman Cash Management
Portfolio will be declared daily and reinvested monthly in additional full and
fractional shares of the Seligman Cash Management Portfolio; it is not expected
that this Portfolio will realize capital gains. Dividends and capital gain
distributions from each of the other Portfolios will be declared and paid
annually and will be reinvested at the net asset value of such shares of the
Portfolio that declared such dividend or gain distribution. Dividend and gain
distributions are generally not currently taxable to owners of the CLVA-2,
CLVA-3 or VCA-9 Contracts; further information regarding the tax consequences of
an investment in the Fund is contained in the separate prospectus or disclosure
documents of the Canada Life Accounts and VCA-9.
PURCHASES AND REDEMPTIONS
Shares of the Portfolios will be offered only to Canada Life Accounts and
VCA-9. Shares of the Fund will be purchased and redeemed by Canada Life Accounts
and VCA-9 at net asset value, without charge. However, the Canada Life Accounts
and VCA-9 Contracts are sold subject to certain fees and charges. These fees and
charges for the Canada Life Accounts and VCA-9 Contracts are more fully
described in the prospectuses or disclosure documents for Canada Life Accounts
and VCA-9 which should be read together with this Prospectus, as applicable.
Purchase or redemption requests received by the Fund prior to 4:00 p.m., New
York City time are effected at the applicable Portfolio's net asset value per
share calculated on the date such purchase or redemption requests are received.
Any inquiries regarding the Fund should be directed in writing to Seligman
Financial Services, Inc., 100 Park Avenue, New York, New York 10017, or by
calling the telephone numbers listed on the front page of the Prospectus.
Seligman Financial Services, Inc. is an affiliate of the Manager and distributor
of the contracts funded through the Canada Life Accounts.
CUSTODIANS AND TRANSFER AGENT
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, acts as custodian of the Fund's assets, except for the assets of
the Global Portfolio and the Global Smaller Companies Portfolio, as well as
transfer and dividend disbursing agent.
Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York
11201, acts as custodian of the assets of the Global Portfolio and the Global
Smaller Companies Portfolio.
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ORGANIZATION AND CAPITALIZATION
The Fund is an open-end diversified management investment company
incorporated under the laws of the state of Maryland on June 24, 1987 under the
name Seligman Mutual Benefit Portfolios, Inc. The Fund's name was changed to
Seligman Portfolios, Inc. on April 15, 1993. Directors of the Fund have
authority to issue a total of 1,000,000,000 shares, each with a par value of
$.001. The Fund presently has ten separate series of common stock, each of which
maintains a separate investment portfolio, designated as follows: Seligman
Capital Portfolio; Seligman Cash Management Portfolio; Seligman Common Stock
Portfolio; Seligman Communications and Information Portfolio; Seligman Fixed
Income Securities Portfolio; Seligman Frontier Portfolio; Seligman Henderson
Global Portfolio; Seligman Henderson Global Smaller Companies Portfolio;
Seligman High-Yield Bond Portfolio; and Seligman Income Portfolio. Each share
represents an equal proportionate interest in the respective series and shares
entitle their holders to one vote per share. Shares have noncumulative voting
rights, do not have preemptive or subscription rights, are transferable and are
fully paid and non-assessable. In accordance with current policy of the SEC,
holders of the Canada Life Accounts and VCA-9 Contracts have the right to
instruct Canada Life and MBL Life, respectively, as to voting Fund shares held
by such Canada Life Accounts and VCA-9, respectively, on all matters to be voted
on by Fund shareholders. Such rights may change in accordance with changes in
policies of the SEC. Voting rights of the participants in the Canada Life
Accounts and VCA-9 are more fully set forth in the prospectus or disclosure
document relating to that account, as applicable, which should be read together
with this Prospectus. The Directors of the Fund have authority to create
additional portfolios and to classify and reclassify shares of capital stock
without further action by shareholders and additional series may be created in
the future. Under Maryland corporate law, the Fund is not required to hold
annual meetings and it is the intention of the Fund's Directors not to do so.
However, special meetings of shareholders will be held for action by
shareholders as may be required by the 1940 Act, the Fund's Articles of
Incorporation and By-Laws, or Maryland corporate law.
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APPENDIX
MOODY'S INVESTORS SERVICE (MOODY'S)
DEBT SECURITIES
AAA: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be characteristically lacking or may be unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact may have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA: Bonds which are rated Ca represent obligations which are speculative in
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment ability of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
ability for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
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<PAGE>
Issues rated "Not Prime" do not fall within any of the Prime rating
categories.
STANDARD & POOR'S CORPORATION ("S&P")
DEBT SECURITIES
AAA: Debt issues rated AAA are highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt issues rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A: Debt issues rated A are regarded as upper medium grade. They have a
strong capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB: Debt issues rated BBB are regarded as having an adequate capacity to
pay interest and re-pay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and re-pay principal
for bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC: Debt issues rated BB, B, CCC and CC are regarded on
balance, as predominantly speculative with respect to capacity to pay interest
and pre-pay principal in accordance with the terms of the bond. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions.
C: The rating C is reserved for income bonds on which no interest is being
paid.
D: Debt issues rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
COMMERCIAL PAPER
S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D is in payment default.
The ratings assigned by S&P may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within its major rating categories.
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1995
SELIGMAN PORTFOLIOS, INC.
100 Park Avenue
New York, New York 10017
800-221-7844 - all continental United States, except New York
212-850-1864 - New York State
800-221-2783 - Marketing Services
This Statement of Additional Information expands upon and supplements the
information contained in the current Prospectus of Seligman Portfolios, Inc.
(the "Fund"), dated May 1, 1995. It should be read in conjunction with the
Prospectus, which may be obtained by contacting the Fund at the telephone
numbers or address set forth above. This Statement of Additional Information,
although not in itself a Prospectus, is incorporated by reference into the
Prospectus in its entirety.
TABLE OF CONTENTS
INVESTMENT POLICIES AND RESTRICTIONS...................
DIRECTORS AND OFFICERS.................................
MANAGEMENT AND EXPENSES................................
PORTFOLIO TRANSACTIONS, VALUATION AND REDEMPTION.......
CUSTODIANS AND INDEPENDENT AUDITORS....................
FINANCIAL STATEMENTS...................................
APPENDIX A.............................................
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INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus discusses the investment objectives of each of the Fund's
Portfolios and the policies it employs to achieve those objectives. The
following information regarding the Fund's investment policies supplements the
information contained in the Prospectus.
Lending of Portfolio Securities
Certain of the Fund's Portfolios may lend portfolio securities to certain
institutional borrowers of securities and may invest the cash collateral and
obtain additional income or receive an agreed-upon amount of interest from the
borrower. Loans made will generally be short-term and are subject to termination
at the option of the Fund or the borrower. The lending Portfolio may pay
reasonable administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker. The lending Portfolio does not
have the right to vote securities during the period of the loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
Repurchase Agreements
Each of the Portfolios may enter into repurchase agreements with commercial
banks and with broker/dealers to invest cash for the short term. A repurchase
agreement is an agreement under which a Portfolio acquires a money market
instrument, generally a U.S. Government obligation, subject to resale at an
agreed-upon price and date. Such resale price reflects an agreed-upon interest
rate effective for the period of time the instrument is held by a Portfolio and
is unrelated to the interest rate on the instrument.
Each of the Portfolios has the right to sell securities subject to
repurchase agreements but would be required to deliver identical securities upon
maturity of the repurchase agreement unless the seller failed to pay the
repurchase price. It is not anticipated that securities subject to repurchase
agreements will be sold except in the case of default on the obligation to
repurchase. To the extent that the proceeds from any sale upon a default in the
obligation to repurchase were less than the repurchase price, a Portfolio would
suffer a loss. In addition, the law is unsettled regarding the rights of a
Portfolio if the financial institution that is party to the repurchase agreement
petitions for bankruptcy or otherwise becomes subject to the United States
Bankruptcy Code. As a result, under these extreme circumstances, there may be
restrictions on the ability to sell the collateral, and losses could be
incurred.
Illiquid Securities
Other than the Seligman Cash Management Portfolio, each Portfolio of the
Fund may invest up to 15% of its net assets in illiquid securities, including
restricted securities (i.e., securities subject to restrictions on resale
because they have not been registered under the Securities Act of 1933 (the
"1933 Act")) and other securities that are not readily marketable.
Foreign Currency Transactions. A forward foreign currency exchange contract is
an agreement to purchase or sell a specific currency at a future date and at a
price set at the time the contract is entered into. The Seligman Henderson
Global Portfolio or the Seligman Henderson Global Smaller Companies Portfolio
will generally enter into forward foreign currency exchange contracts to fix the
US dollar value of a security it has agreed to buy or sell for the period
between the date the trade was entered into and the date the security is
delivered and paid for, or, to hedge the US dollar value of securities it owns.
The Fund may enter into a forward contract to sell or buy the amount of a
foreign currency it believes may experience a substantial movement against the
US dollar. In this case the contract would approximate the value of some or all
of the Fund's portfolio securities denominated in such foreign currency. Under
normal circumstances, the portfolio manager will limit forward currency
contracts to not greater than 75% of a Fund's portfolio position in any one
country as of the date the contract is entered into. This limitation will be
measured at the point the hedging
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<PAGE>
transaction is entered into by the Fund. Under extraordinary circumstances, the
Subadviser may enter into forward currency contracts in excess of 75% of a
Fund's portfolio position in any one country as of the date the contract is
entered into. The precise matching of the forward contract amounts and the value
of securities involved will not generally be possible since the future value of
such securities in foreign currencies will change as a consequence of market
movement in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of short-term currency
market movement is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain. Under certain circumstances, a
Portfolio may commit a substantial portion or the entire value of its assets to
the consummation of these contracts. The Subadviser will consider the effect a
substantial commitment of its assets to forward contracts would have on the
investment program of a Portfolio and its ability to purchase additional
securities.
Except as set forth above and immediately below, each Portfolio will also
not enter into such forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would oblige the Portfolio to
deliver an amount of foreign currency in excess of the value of the Portfolio's
portfolio securities or other assets denominated in that currency. A Portfolio,
in order to avoid excess transactions and transaction costs, may nonetheless
maintain a net exposure to forward contracts in excess of the value of the
Portfolio's portfolio securities or other assets denominated in that currency
provided the excess amount is "covered" by cash and/or liquid, high-grade debt
securities, denominated in any currency, having a value at least equal at all
times to the amount of such excess. Under normal circumstances, consideration of
the prospect for currency parties will be incorporated into the longer term
investment decisions made with regard to overall diversification strategies.
However, the Subadviser believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests of
the Portfolio will be served.
At the maturity of a forward contract, a Portfolio may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for a Portfolio to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency a
Portfolio is obligated to deliver. However, a Portfolio may use liquid,
high-grade debt securities, denominated in any currency, to cover the amount by
which the value of a forward contract exceeds the value of the securities to
which it relates.
If a Portfolio retains the portfolio security and engages in offsetting
transactions, the Portfolio will incur a gain or a loss (as described below) to
the extent that there has been movement in forward contract prices. If the
Portfolio engages in an offsetting transaction, it may subsequently enter into a
new forward contract to sell the foreign currency. Should forward prices decline
during the period between the Portfolio's entering into a forward contract for
the sale of a foreign currency and the date it enters into an offsetting
contract for the purchase of the foreign currency, the Portfolio will realize a
gain to the extent the price of the currency it has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices increase,
the Portfolio will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
Each Portfolio's dealing in forward foreign currency exchange contracts will
be limited to the transactions described above. Of course, a Portfolio is not
required to enter into forward contracts with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
the Subadviser. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange at
a future date.
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<PAGE>
Additionally, although such contracts tend to minimize the risk of loss due to a
decline in the value of a hedged currency, at the same time, they tend to limit
any potential gain which might result from an increase in the value of that
currency.
Shareholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.
Portfolio Turnover. The portfolio turnover rate for each Portfolio is calculated
by dividing the lesser of purchases or sales of portfolio securities for the
fiscal year by the monthly average of the value of the portfolio securities
owned during the fiscal year. Securities whose maturity or expiration date at
the time of acquisition were one year or less are excluded from the calculation.
The portfolio turnover rates for the years 1994 and 1993 of the Seligman Capital
Portfolio, Seligman Common Stock Portfolio, Seligman Fixed Income Securities
Portfolio and Seligman Income Portfolio were 67.39% and 65.30%; 15.29% and
10.70%; 237.23% and 33.21%; and 29.76% and 38.38%, respectively. The portfolio
turnover rates for the Seligman Henderson Global Portfolio for the year 1994 and
from May 3, 1993 (commencement of operations) through December 31, 1993 was
47.34% and 2.82%. For the period from October 11, 1994 (commencement of
operations) through December 31, 1994, the portfolio turnover rate of Seligman
Communications and Information Portfolio, Seligman Frontier Portfolio and
Seligman Henderson Global Smaller Companies Portfolio, respectively, was 0%, 0%,
and 0%, respectively. The increase in portfolio turnover for the Seligman Fixed
Income Securities Portfolio during 1994 was due to a rising interest rate
environment throughout the year. In response to this, the portfolio manager
shortened the maturity of the portfolio by selling long-term bonds and purchased
shorter maturity securities in order to reduce the interest rate exposure of the
portfolio. The fluctuation in the portfolio turnover rate for the Seligman
Henderson Global Portfolio during the years 1994 and 1993 was due to short
length of time the Portfolio was in operation in 1993.
Investment Restrictions
The Fund has adopted the several investment restrictions enumerated below.
Except as otherwise indicated below, restrictions No. 1 through 9 may not be
changed without the affirmative vote of the holders of a majority of the Fund's
outstanding voting securities; restrictions No. 10 through 16 may be changed by
the Fund's Board of Directors. Under these restrictions, none of the Portfolios
may:
1. Borrow money, except from banks for temporary purposes (but not for the
purpose of purchasing portfolio securities) in an amount not to exceed 10%
of the value of the total assets of the Portfolio; except that the Seligman
Capital Portfolio, Seligman Common Stock Portfolio and Seligman
Communications and Information Portfolio may borrow to purchase securities
provided that such borrowings are made only from banks, do not exceed
one-third of the respective Portfolio's net assets (taken at market) and are
secured by not more than 10% of such assets (taken at cost); except that the
Seligman Frontier Portfolio and the Seligman High-Yield Bond Portfolio will
not purchase additional portfolio securities if it has outstanding
borrowings in excess of 5% of the value of its total assets; and except that
each of Seligman Henderson Global Portfolio and Seligman Henderson Global
Smaller Companies Portfolio may borrow money from banks to purchase
securities in amounts not in excess of 5% of its total assets.
2. Mortgage, pledge or hypothecate any of its assets, except to secure
borrowings permitted by paragraph 1 and provided that this limitation does
not prohibit escrow, collateral or margin arrangements in connection with
(a) the purchase or sale of covered options (including stock index options),
(b) the purchase or sale of interest rate or stock index futures contracts
or options on such contracts by any of the Fund's Portfolios otherwise
permitted to engage in transactions involving such instruments or (c) in
connection with the Fund's purchase of fidelity insurance and errors and
omissions insurance, and provided, further, that Seligman High-Yield Bond
Portfolio may mortgage, pledge or hypothecate its assets, but the value of
such encumbered assets may not exceed 10% of that Portfolio's net asset
value. This investment restriction No. 2 may be changed, with respect to the
Seligman High-Yield Bond Portfolio, by the Fund's Board of Directors.
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<PAGE>
3. Make "short" sales of securities (except that the Seligman Henderson Global
Smaller Companies Portfolio may make short sales "against-the-box"), or
purchase securities on "margin" except for short-term credits necessary for
the purchase or sale of securities, provided that for purposes of this
limitation, initial and variation payments or deposits in connection with
transactions involving interest rate or stock index futures contracts and
options on such contracts by any Portfolio permitted to engage in
transactions involving such instruments will not be deemed to be the
purchase of securities on margin.
4. With respect to 75% of its securities portfolio (or 100% of its securities
portfolio, in the case of the Seligman High-Yield Bond Portfolio), purchase
securities of any issuer if immediately thereafter more than 5% of its total
assets valued at market would be invested in the securities of any one
issuer, other than securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities; or buy more than 10% of the voting
securities of any one issuer.
5. Invest more than 25% of the market value of its total assets in securities
of issuers in any one industry, provided that for the purpose of this
limitation, mortgage-related securities do not constitute an industry;
provided further that Seligman Communications and Information Portfolio will
invest at least 65% of the value of its total assets in securities of
companies principally engaged in the communications, information and related
industries, except when investing for temporary defensive purposes; and
provided further that the Seligman Cash Management Portfolio may invest more
than 25% of its gross assets: (i) in the banking industry; (ii) in the
personal credit institution or business credit institution industries; or
(iii) in any combination of (i) and (ii).
6. Purchase or hold any real estate, except that the Seligman Fixed Income
Securities Portfolio and the Seligman Henderson Global Smaller Companies
Portfolio may engage in transactions involving securities secured by real
estate or interests therein, and the Seligman Henderson Global Smaller
Companies Portfolio may purchase securities issued by companies or
investment trusts that invest in real estate or interests therein.
7. Purchase or sell commodities and commodity futures contracts except that the
Board of Directors may authorize any Portfolio other than the Seligman Cash
Management Portfolio and the Seligman High-Yield Bond Portfolio to engage in
transactions involving interest rate and/or stock index futures and related
options solely for the purposes of reducing investment risk and not for
speculative purposes.
8. Underwrite the securities of other issuers, provided that the disposition
of investments otherwise permitted to be made by any Portfolio (such as
investments in securities that are not readily marketable without
registration under the Securities Act of 1933 and repurchase agreements
with maturities in excess of seven days) will not be deemed to render a
Portfolio engaged in an underwriting investment if not more than 10% of the
value of such Portfolio's total assets (taken at cost) would be so invested
and except that in connection with the disposition of a security a
Portfolio may be deemed to be an underwriter as defined in the 1933 Act.
9. Make loans, except loans of securities, provided that purchases of notes,
bonds or other evidences of indebtedness, including repurchase agreements,
are not considered loans for purposes of this restriction.
10. Purchase illiquid securities for any Portfolio including repurchase
agreements maturing in more than seven days and securities that cannot be
sold without registration or the filing of a notification under Federal or
state securities laws, if, as a result, such investment would exceed 15% of
the value of such Portfolio's net assets.
11. Invest in oil, gas or other mineral exploration or development programs;
provided, however, that this investment restriction shall not prohibit a
Portfolio from purchasing publicly-traded securities of companies engaging
in whole or in part in such activities.
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<PAGE>
12. Purchase securities of any other investment company, except in connection
with a merger, consolidation, acquisition or reorganization and except to
the extent permitted by Section 12 of the Investment Company Act of 1940
(the "1940 Act").
13. Purchase securities of companies which, together with predecessors, have a
record of less than three years' continuous operation, if as a result of
such purchase, more than 5% of such Portfolio's net assets would then be
invested in such securities; except that the Seligman Communications and
Information Portfolio, the Seligman Frontier Portfolio, the Seligman
Henderson Global Smaller Companies Portfolio, and Seligman High-Yield Bond
Portfolio may each invest no more than 5% of total assets, at market value,
in securities of companies which, with their predecessors, have been in
operation less than three continuous years, excluding from this limitation
securities guaranteed by a company that, including predecessors, has been
in operation at least three continuous years.
14. Purchase securities of companies for the purpose of exercising control.
15. Purchase securities from or sell securities to any of its officers or
Directors, except with respect to its own shares and as permissible under
applicable statutes, rules and regulations. In addition, Seligman
High-Yield Bond Portfolio may not purchase or hold the securities of any
issuer if, to its knowledge, directors or officers of the Fund individually
owning beneficially more than 0.5% of the securities of that issuer own in
the aggregate more than 5% of such securities.
16. Invest more than 5% of the value of its net assets, valued at the lower of
cost or market, in warrants, of which no more than 2% of net assets may be
invested in warrants and rights not listed on the New York or American
Stock Exchange. For this purpose, warrants acquired by the Fund in units or
attached to securities may be deemed to have been purchased without cost.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in such percentage resulting from a change in the
value of assets will not constitute a violation of such restriction. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments more restrictive than the investment restrictions described above.
Should the Fund determine that any such commitment is no longer in the best
interest of the Fund it will revoke the commitment by terminating sales of its
shares in the state involved. The Fund also intends to comply with the
diversification requirements under Section 817(h) of the Internal Revenue Code
of 1986, as amended. For a description of these requirements see the Prospectus
of Canada Life of America Variable Annuity Account 2 and the Disclosure
Statement of Canada Life of America Annuity Account 3, each established by
Canada Life Insurance Company of America ("Canada Life") or the Prospectus of
the Variable Contract Account-9 established by MBL Life Assurance Corporation
("MBL Life").
Under the 1940 Act, a "vote of a majority of the outstanding voting
securities" of the Fund or of a particular Portfolio means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of the Fund or of
such Portfolio or (2) 67% or more of the shares of the Fund or of such Portfolio
present at a shareholder's meeting if more than 50% of the outstanding shares of
the Fund or of such Portfolio are represented at the meeting in person or by
proxy.
DIRECTORS AND OFFICERS
Directors and Officers. Directors and officers of the Fund, together with
information as to their principal business occupations during the past five
years, are shown below. The age of each Director and officer is indicated in
parentheses. Each Director who is an "interested person" of the Fund, as defined
in the 1940 Act, is indicated by an asterisk. Unless otherwise indicated, the
address of each is 100 Park Avenue, New York, New York 10017.
-6-
<PAGE>
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief
(56) Executive Officer and Chairman of the Executive
Committee
Managing Director, Chairman and President, J. &
W. Seligman & Co. Incorporated, investment
managers and advisors; and Seligman Advisors,
Inc., advisors; Chairman and Chief Executive
Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial
Services, Inc., distributor; Seligman Holdings,
Inc, holding company; Seligman Services, Inc.,
broker/dealer; J. & W. Seligman Trust Company,
trust company; and Carbo Ceramics Inc., ceramic
proppants for oil and gas industry; Director or
Trustee, Seligman Data Corp. (formerly Union
Data Service Center, Inc.), shareholder service
agent; Daniel Industries, Inc., manufacturer of
oil and gas metering equipment; Kerr-McGee
Corporation, diversified energy company; and
Sarah Lawrence College; and a Member of the
Board of Governors of the Investment Company
Institute; formerly, Chairman, Seligman
Securities, Inc., broker/dealer.
RONALD T. SCHROEDER* Director, President and Member of the Executive
(47) Committee
Director, Managing Director and Chief
Investment Officer, J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Managing Director and Chief Investment Officer,
Seligman Advisors, Inc., advisors; Director or
Trustee and President and Chief Investment
Officer, Tri-Continental Corporation,
closed-end investment company and the open-end
investment companies in the Seligman Group of
Investment Companies; Director and President,
Seligman Holdings, Inc., holding company;
Director, Seligman Financial Services, Inc.,
distributor; Seligman Data Corp., shareholder
service agent; Seligman Quality Municipal Fund,
Inc. and Seligman Select Municipal Fund, Inc.,
closed-end investment companies; Seligman
Henderson Co., advisors; and Seligman Services,
Inc., broker/dealer; formerly, Director, J. &
W. Seligman Trust Company, trust company; and
Seligman Securities, Inc., broker/dealer.
FRED E. BROWN* Director
(81)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Director or Trustee, Tri-Continental
Corporation, closed-end investment company; and
the open-end investment companies in the
Seligman Group of Investment Companies;
Director, Seligman Financial Services, Inc.,
distributor; Seligman Quality Municipal Fund,
Inc. and Seligman Select Municipal Fund, Inc.,
closed-end investment companies; Seligman
Services Inc., broker/dealer; Trustee, Trudeau
Institute, nonprofit bio-medical research
organization; Lake Placid Center for the Arts,
cultural organization; Lake Placid Education
Foundation, education foundation; formerly,
Director, J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
-7-
<PAGE>
ALICE S. ILCHMAN Director
(59)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; NYNEX (formerly, New York Telephone
Company), telephone company; The Rockefeller
Foundation, charitable foundation; and The
Committee for Economic Development; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, International
Research and Exchange Board, intellectual
exchanges.
Sarah Lawrence College, Bronxville, NY 10708
JOHN E. MEROW* Director
(65)
Partner, Sullivan & Cromwell, law firm;
Director or Trustee, the Commonwealth Aluminum
Corporation; the Seligman Group of Investment
Companies; the Municipal Art Society of New
York; the U. S. Council for International
Business and the U. S.-New Zealand Council;
Chairman, American Australian Association; the
Municipal Art Society of New York; Member of
the American Law Institute and Council on
Foreign Relations; and Member of the Board of
Governors of the Foreign Policy Association and
New York Hospital.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Director
(52)
Attorney; Director or Trustee, the Seligman
Group of Investment Companies; National
Association of Independent Schools (Washington,
D.C.), education; Chairman of the Board of
Trustees of St. George's School (Newport, RI).
St. Bernard's Road, P.O. Box 449, Gladstone, NJ
07934
DOUGLAS R. NICHOLS, JR. Director
(75)
Management Consultant; Director or Trustee, the
Seligman Group of Investment Companies;
formerly, Trustee, Drew University.
790 Andrews Avenue, Delray Beach, FL 33483
JAMES C. PITNEY Director
(68)
Partner, Pitney, Hardin, Kipp & Szuch, law
firm; Director or Trustee, the Seligman Group
of Investment Companies; Public Service
Enterprise Group, public utility.
Park Avenue at Morris County, P.O. Box 1945,
Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(67)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; The Brooklyn
Union Gas Company; The Committee for Economic
Development; Dow Jones & Co., Inc.; Public
Broadcasting Service; formerly, Co-Chairman of
the Policy Council of the Tax Foundation;
Director and Vice Chairman, Mobil Corporation;
Director, Tesoro Petroleum Companies, Inc.; and
Director and President, Bekaert Corporation.
675 Third Avenue, Suite 3004, New York, NY
10017
-8-
<PAGE>
HERMAN J. SCHMIDT Director
(78)
Director, Various Corporations; Director or
Trustee, the Seligman Group of Investment
Companies; H. J. Heinz Company; HON Industries,
Inc.; and MAPCO, Inc; formerly, Director,
MetLife Series Fund, Inc. and MetLife
Portfolios, Inc.; and Ryder System, Inc.
15 Oakley Lane, Greenwich, CT 06830
ROBERT L. SHAFER Director
(62)
Vice President, Pfizer Inc., pharmaceuticals;
Director or Trustee, the Seligman Group of
Investment Companies; and USLIFE Corporation,
life insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(60)
Executive Vice President, Chief Operating
Officer and Director, Sammons Enterprises,
Inc.; Director or Trustee, Red Man Pipe and
Supply Company, piping and other materials; the
Seligman Group of Investment Companies;
Director, C-SPAN.
300 Crescent Court, Suite 700, Dallas, TX 75201
BRIAN T. ZINO* Director and Member of the Executive Committee
(42)
Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Director or Trustee, the
Seligman Group of Investment Companies;
Chairman, Seligman Data Corp., shareholder
service agent; Director, Seligman Financial
Services, Inc., distributor; Seligman Services,
Inc., broker/dealer; and J. & W. Seligman Trust
Company, trust company; Senior Vice President,
Seligman Henderson Co., advisors; formerly,
Director and Secretary, Chuo Trust - JWS
Advisors, Inc., advisors; and Director,
Seligman Securities, Inc., broker/dealer.
DANIEL J. CHARLESTON Portfolio Manager
(35)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; and Vice President and
Portfolio Manager of one other open-end
investment company in the Seligman Group of
Investment Companies.
LEONARD J. LOVITO Vice President and Portfolio Manager
(34)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Vice President and
Portfolio Manager, two other open-end
investment companies in the Seligman Group of
Investment Companies.
LORIS D. MUZZATTI Vice President and Portfolio Manager
(38)
Managing Director (formerly, Vice President and
Portfolio Manager), J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Vice President and Portfolio Manager, one other
open-end investment company in the Seligman
Group of Investment Companies.
-9-
<PAGE>
STACEY G. NAVIN Co-Portfolio Manager
(30)
Vice President, Investment Officer, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Co-Portfolio Manager,
two other open-end investment companies in the
Seligman Group of Investment Companies.
CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(38)
Managing Director (formerly, Senior Vice
President and Senior Investment Officer), J. &
W. Seligman & Co. Incorporated, investment
managers and advisors; Vice President and
Portfolio Manager, two other open-end
investment companies in the Seligman Group of
Investment Companies and Tri-Continental
Corporation, closed-end investment company.
PAUL H. WICK Vice President and Portfolio Manager
(33)
Managing Director (formerly, Vice President,
Investment Officer), J. & W. Seligman & Co.
Incorporated, investment managers and advisors;
Vice President and Portfolio Manager, three
other open-end investment companies in the
Seligman Group of Investment Companies;
Portfolio Manager, Seligman Henderson Co.,
advisor; formerly, Senior Vice President,
Portfolio Management, Chuo Trust-JWS Advisors,
Inc., advisor.
LAWRENCE P. VOGEL Vice President
(38)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Seligman Financial
Services, Inc., distributor; and Seligman
Advisors, Inc., advisors; Vice President, the
Seligman Group of Investment Companies; Senior
Vice President, Finance (formerly, Treasurer),
Seligman Data Corp., shareholder service agent;
Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisors;
formerly, Senior Audit Manager at Price
Waterhouse, independent accountants.
FRANK J. NASTA Secretary
(30)
Secretary, the Seligman Group of Investment
Companies; J. & W. Seligman & Co.,
Incorporated, investment managers and advisers;
Seligman Financial Services, Inc., distributor;
Seligman Henderson Co., advisers; Seligman
Services, Inc., broker/dealers; Seligman Data
Corp.; Vice President, Law and Regulation, J. &
W. Seligman & Co. Incorporated, investment
managers and advisers; formerly, attorney,
Seward & Kissel.
THOMAS G. ROSE Treasurer
(37)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc.
-10-
<PAGE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
<TABLE>
<CAPTION>
Compensation Table
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Fund and
Position With Registrant from Fund (1) Fund Expenses Fund Complex (2)
------------------------ ------------- ------------- ----------------
<S> <C> <C> <C>
William C. Morris, Director N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director N/A N/A N/A
Alice S. Ilchman, Director $2,396.09 N/A $67,000.00
John E. Merow, Director 2,360.38(d) N/A 66,000.00(d)
Betsy S. Michel, Director 2,360.38 N/A 66,000.00
Douglas R. Nichols, Jr., Director 2,360.38 N/A 66,000.00
James C. Pitney, Director 2,396.09 N/A 67,000.00
James Q. Riordan, Director 2,360.38 N/A 66,000.00
Herman J. Schmidt, Director 2,360.38 N/A 66,000.00
Robert L. Shafer, Director 2,360.38 N/A 66,000.00
James N. Whitson, Director 2,360.38(d) N/A 66,000.00(d)
Brian T. Zino, Director N/A N/A N/A
----------------------
</TABLE>
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1994.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
(d) Deferred. The total amounts of deferred compensation (including interest)
payable to Messrs. Merow, Pitney and Whitson as of December 31, 1994 were
$8,033, $3,346 and $3,861, respectively. Mr. Pitney no longer defers current
compensation.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. Under this arrangement, interest is accrued on
the deferred balances. The annual cost of such fees and interest is included in
the director's fees and expenses and the accumulated balance thereof is included
in "Liabilities" in the Fund's financial statements.
Directors and officers of the Fund are also trustees, directors and officers
of some or all of the other investment companies in the Seligman Group. As of
March 31, 1995, no Directors or officers of the Fund owned directly or
indirectly shares of any of the Portfolios.
MANAGEMENT AND EXPENSES
As indicated in the Prospectus, under the Management Agreements and subject
to the control of the Board of Directors, the Manager (or in the case of
Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller
Companies Portfolio, the Manager and Seligman Henderson Co. (the "Subadviser"))
manages the investment of the assets of the Fund, including making purchases and
sales of portfolio securities consistent with the Fund's investment objectives
and policies, and administers its business and other affairs. The Manager
provides the Fund with such office space, administrative and other services and
executive and other personnel as are necessary for Fund operations. The Manager
pays all of the compensation of directors and/or officers of the Fund who are
employees or advisors of the Manager.
-11-
<PAGE>
The Management Agreements (and the Subadvisory Agreements, in the case of
Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller
Companies Portfolio) provide that the Manager (and the Subadviser, in the case
of Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller
Companies Portfolio) will not be liable to the Fund for any error of judgment or
mistake of law, or for any loss arising out of any investment, or for any act or
omission in performing their duties under the Management (and Subadvisory)
Agreements, except for willful misfeasance, bad faith, gross negligence, or
reckless disregard of their obligations and duties under the Management (and
Subadvisory) Agreements.
The Fund pays all its expenses other than those assumed by the Manager or
Subadviser, including fees and expenses of independent attorneys and auditors,
taxes and governmental fees (including fees and expenses for qualifying the Fund
and its shares under Federal and state securities laws), expenses of printing
and distributing reports, notices and proxy materials to shareholders, expenses
of printing and filing reports and other documents with governmental agencies,
fees and expenses of directors of the Fund not employed by the Manager or any of
its affiliates (including the Subadviser), insurance premiums and extraordinary
expenses such as litigation expenses.
Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman
Common Stock Portfolio, Seligman Fixed Income Securities Portfolio, and Seligman
Income Portfolio each pay the Manager a management fee for its services,
calculated daily and payable monthly, at an annual rate of .40% of the daily net
assets of each Portfolio. Seligman High-Yield Bond Portfolio pays the Manager a
management fee for its services calculated daily and payable monthly at an
annual rate of .50% of the daily net assets of the Portfolio. Seligman
Communications and Information Portfolio and Seligman Frontier Portfolio each
pay the Manager a management fee for its services, calculated daily and payable
monthly, at an annual rate of .75% of the daily net assets of each Portfolio.
Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller
Companies Portfolio each pay the Manager a management fee, calculated daily and
payable monthly, equal to an annual rate of 1.00% of the average daily net
assets of each Portfolio, of which .90% is paid to the Subadviser for the
services described below. The following table indicates the management fees paid
or reimbursed, in the case of Seligman Cash Management Portfolio, for the year
1994, 1993 and 1992:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Seligman Capital Portfolio $ 23,120 $ 21,941 $ 20,551
Seligman Cash Management Portfolio* 12,837 14,216 19,150
Seligman Common Stock Portfolio 84,124 93,118 100,502
Seligman Communications and Information Portfolio** 349 N/A N/A
Seligman Fixed Income Securities Portfolio 14,043 17,252 20,226
Seligman Frontier Portfolio** 99 N/A N/A
Seligman Henderson Global Portfolio** 11,417 1,656 N/A
Seligman Henderson Global Smaller Companies Portfolio** 159 N/A N/A
Seligman High-Yield Bond Portfolio N/A N/A N/A
Seligman Income Portfolio 42,854 45,567 45,673
</TABLE>
------------------------
* The Manager, at its discretion, waived all of its fees.
** Fees paid from commencement of operations.
N/A - Portfolio did not exist.
-12-
<PAGE>
The Manager is a successor firm to an investment banking business founded in
1864 which has thereafter provided investment services to individuals, families,
institutions and corporations. See Appendix A for further information about the
Manager.
On December 29, 1988, a majority of the outstanding voting securities of the
Manager was purchased by Mr. William C. Morris and a simultaneous
recapitalization of the Manager occurred.
The Management Agreement with respect to Seligman Capital Portfolio,
Seligman Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman
Fixed Income Portfolio and Seligman Income Portfolio was approved by the Board
of Directors on September 30, 1988 and by shareholders at a Special Meeting held
on December 16, 1988. The Management Agreement with respect to the Seligman
Henderson Global Portfolio was approved by the Board of Directors on March 18,
1993. The Management Agreements with respect to the Seligman Communications and
Information Portfolio, the Seligman Frontier Portfolio, and the Seligman
Henderson Global Smaller Companies Portfolio were approved by the Board of
Directors on July 21, 1994. The Management Agreement with respect to the
Seligman High-Yield Bond Portfolio was approved by the Board of Directors on
March 16, 1995. The Management Agreements will continue in effect until December
31 of each year, with respect to each portfolio (except Seligman Communications
and Information Portfolio, Seligman Frontier Portfolio, and Seligman Henderson
Global Smaller Companies Portfolio, the Management Agreements with respect to
which are in effect until December 31, 1995 and then December 31 of each year
thereafter; and except Seligman High-Yield Bond Portfolio, which Management
Agreement is in effect until December 31, 1996 and December 31 of each year
thereafter), if (1) such continuance is approved in the manner required by the
1940 Act (by a vote of a majority of the Board of Directors or of the
outstanding voting securities of the Portfolio and by a vote of a majority of
the Directors who are not parties to the Management Agreements or interested
persons of any such party) and (2) if the Manager shall not have notified the
Fund at least 60 days prior to the anniversary date of the previous continuance
that it does not desire such continuance. The Management Agreements may be
terminated at any time with respect to any or all Portfolios, by the Fund,
without penalty, on 60 days' written notice to the Manager. The Manager may
terminate the Management Agreements at any time upon 60 days written notice to
the Fund. The Management Agreements will terminate automatically in the event of
their assignment. The Fund has agreed to change its name upon termination of the
Management Agreements if continued use of the name would cause confusion in the
context of the Manager's business.
Under the Subadvisory Agreements between the Manager and the Subadviser, the
Subadviser supervises and directs the investment of the assets of the Seligman
Henderson Global Portfolio and the Seligman Henderson Global Smaller Companies
Portfolio, including making purchases and sales of portfolio securities
consistent with each Portfolio's investment objectives and policies. For these
services the Subadviser is paid a fee equal to an annual rate of .90% of each
Portfolio's average daily net assets. The Subadvisory Agreement with respect to
Seligman Henderson Global Portfolio was approved by the Board of Directors at a
meeting held on March 18, 1993. The Subadvisory Agreement with respect to
Seligman Henderson Global Smaller Companies Portfolio was approved by the Board
of Directors at a meeting held on July 21, 1994. The Subadvisory Agreements will
continue in effect until December 31 (in the case of the Seligman Henderson
Global Smaller Companies Portfolio until December 31, 1995), and from year to
year thereafter if such continuance is approved in the manner required by the
1940 Act (by a vote of a majority of the Board of Directors or of the
outstanding voting securities of the Portfolio and by a vote of a majority of
the Directors who are not parties to the Subadvisory Agreement or interested
persons of any such party) and (2) if the Subadviser shall not have notified the
Manager in writing at least 60 days prior to such December 31 or prior to
December 31 of any year thereafter that it does not desire such continuance. The
Subadvisory Agreements may be terminated at any time by the Fund, on 60 days
written notice to the Subadviser. The Subadvisory Agreements will terminate
automatically in the event of their assignment or upon the termination of the
relevant Management Agreement.
The Subadviser is a New York general partnership formed by the Manager and
Henderson International, Inc., a controlled affiliate of Henderson
Administration Group plc (the "Firm"). Henderson Administration Group plc,
-13-
<PAGE>
headquartered in London, is one of the largest independent money managers in
Europe. The Firm currently manages approximately $18.5 billion in assets, and is
recognized as a specialist in global equity investing.
Officers, directors and employees of the Manager are permitted to
engage in personal securities transactions, subject to the Manager's Code of
Ethics (the "Code"). The Code proscribes certain practices with regard to
personal securities transactions and personal dealings, provides a framework for
the reporting and monitoring of personal securities transactions by the
Manager's Director of Compliance, and sets forth a procedure of identifying, for
disciplinary action, those individuals who violate the Code. The Code prohibits
each of the officers, directors and employees (including all portfolio managers)
of the Manager from purchasing or selling any security that the officer,
director or employee knows or believes (i) was recommended by the Manager for
purchase or sale by any client, including the Fund, within the preceding two
weeks, (ii) has been reviewed by the Manager for possible purchase or sale
within the preceding two weeks, (iii) is being purchased or sold by any client,
(iv) is being considered by a research analyst, (v) is being acquired in a
private placement, unless prior approval has been obtained from the Manager's
Director of Compliance, or (vi) is being acquired during an initial or secondary
public offering. The Code also imposes a strict standard of confidentiality and
requires portfolio managers to disclose any interest they may have in the
securities or issuers that they recommend for purchase by any client.
The Code also prohibits (i) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages and (ii) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors and employees are required, except under very
limited circumstances, to engage in personal securities transactions through the
Manager's order desk. In turn, the order desk maintains a list of securities
that may not be purchased due to a possible conflict with clients. All officers,
directors and employees are also required to disclose all securities
beneficially owned by them on December 31 of each year.
PORTFOLIO TRANSACTIONS, VALUATION AND REDEMPTION
As provided in the Management Agreements, the Manager (or in the case of the
Seligman Henderson Global Portfolio and the Seligman Henderson Global Smaller
Companies Portfolio, the Manager or the Subadviser) purchases and sells
securities for the Fund. Purchase and sale orders are placed by the Manager or
the Subadviser.
The Management Agreements and the Subadvisory Agreements recognize that in
the purchase and sale of portfolio securities the Manager or the Subadviser will
seek the most favorable price and execution, and, consistent with that policy,
may give consideration to the research, statistical and other services furnished
by brokers or dealers to the manager for its use, as well as to the general
attitude toward and support of investment companies demonstrated by such brokers
or dealers. Such services include supplemental investment research, analysis and
reports concerning issuers, industries and securities deemed by the Manager or
Subadviser to be beneficial to the Fund. In addition, the Manager or the
Subadviser is authorized to place orders with brokers who provide supplemental
investment and market research and statistical and economic analysis although
the use of such brokers may result in a higher brokerage charge to the Fund that
the use of brokers selected solely on the basis of seeking the most favorable
price and execution and although such research and analysis may be useful to the
Manager or the Subadviser in connection with its services to clients other than
the Fund.
In over-the-counter markets, the Fund deals with responsible primary market
makers unless a more favorable execution or price is believed to be obtainable.
The Fund may buy securities from or sell securities to dealers acting as
principal, except dealers with which its directors and/or officers are
affiliated.
-14-
<PAGE>
Brokerage commissions of each Portfolio (except Seligman Cash Management
Portfolio, Seligman Fixed Income Securities Portfolio and Seligman High-Yield
Bond Portfolio) for the years 1994, and if applicable, 1993 and 1992, are set
forth in the following table:
<TABLE>
<CAPTION>
Brokerage Commissions
Total Brokerage Commissions Paid to Others for
Brokerage Commissions Paid to Execution and
Execution(2) Paid (1) Seligman Securities(2) Statistical Services
------------ -------- ---------------------- --------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Seligman Capital Portfolio $ 8,412 $ 7,285 $ 5,853 --- $ 275 $2,832 $ 8,412 $7,010 $3,021
Seligman Common
Stock Portfolio 12,559 12,006 11,418 --- 1,984 6,987 12,559 10,022 4,431
Seligman Communications
and Information Portfolio 134 --- --- --- --- --- 134 --- ---
Seligman Frontier
Portfolio 111 --- --- --- --- --- 111 --- ---
Seligman Henderson
Global Portfolio 5,503 824 --- --- --- --- 5,503 824 ---
Seligman Henderson
Global Smaller
Companies Portfolio 180 --- --- --- --- --- 180 --- ---
Seligman Income Portfolio 2,839 2,152 5,404 --- 635 1,765 2,839 1,517 3,639
</TABLE>
---------------
Notes:
(1) Not including any spreads on principal transactions on a net basis.
(2) Brokerage commissions paid by Seligman Capital Portfolio, Seligman Common
Stock Portfolio, and Seligman Income Portfolio, respectively, to Seligman
Securities, Inc. were 4%, 48% and 30%; and 17%, 61% and 61%, respectively,
of total brokerage commissions paid for 1993 and 1992. The aggregate dollar
amount of each Portfolio's transactions for which Seligman Securities, Inc.
acted as broker was 2%, 51% and 40%; and 13%, 61% and 58%, respectively, of
the total dollar amount of all commission transactions for 1993 and 1992.
Under procedures adopted by the Board of Directors, and in accordance with
Section 17(e) under the 1940 Act, Seligman Securities, Inc., an affiliate
of the Manager, acted as broker, for the Fund. Section 11(a) of the
Securities Exchange Act of 1934 prohibits members of U.S. securities
exchanges from executing exchange transactions for their affiliates and
institutional accounts. Under this provision, Seligman Securities, Inc.
acted as broker for any of the Portfolios only as permitted under
regulations adopted by the SEC. In accordance with such regulations, the
Management Agreement permitted Seligman Securities, Inc. to effect such
transactions except on the floor of a national securities exchange and to
retain compensation in connection with such transactions. As of March 31,
1993, Seligman Securities, Inc. ceased functioning as a broker for the Fund
and its clients.
When two or more of the investment companies in the Seligman Group or other
investment advisory clients of the Manager desire to buy or sell the same
security at the same time, the securities purchased or sold are allocated by the
Manager in a manner believed to be equitable to each. There may be possible
advantages or disadvantages of such transactions with respect to price or the
size of positions readily obtainable or saleable.
-15-
<PAGE>
Valuation. As noted in the Prospectus the net asset value per share of each
Portfolio is determined as of the close of trading on the New York Stock
Exchange, currently 4:00 p.m. New York City time, each day that the New York
Stock Exchange is open. Currently, the New York Stock Exchange is closed on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. The following supplements information
contained in the Prospectus regarding the manner in which securities are valued.
It is the policy of the Seligman Cash Management Portfolio to use its best
efforts to maintain a constant per share price equal to $1.00. Instruments held
by the Seligman Cash Management Portfolio are valued on the basis of amortized
cost. This involves valuing an instrument at its cost initially and, thereafter,
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. While this method provides certainty in valuation, it may result
in periods during which the value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if it sold the instrument.
The foregoing method of valuation is permitted by Rule 2a-7 adopted by the
SEC. Under this rule, the Seligman Cash Management Portfolio must maintain an
average-weighted portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of one year or less, and invest only in
securities determined by the Fund's Directors to be of high quality with minimal
credit risks. In accordance with the rule, the Directors have established
procedures designed to stabilize, to the extent reasonably practicable, the
price per share as computed for the purpose of sales and redemptions of the
Seligman Cash Management Portfolio at $1.00. Such procedures include review of
the portfolio holdings by the Seligman Cash Management Portfolio and
determination as to whether the net asset value of the Seligman Cash Management
Portfolio, calculated by using available market quotations or market
equivalents, deviates from $1.00 per share based on amortized cost. The rule
also provides that the extent of any deviation between the net asset value based
upon available market quotations or market equivalents, and $1.00 per share net
asset value, based on amortized cost, must be examined by the Directors. In the
event that a deviation of .5 of 1% or more exists between the Portfolio's $1.00
per share net asset value and the net asset value calculated by reference to
market gestations, or if there is any deviation which the Board of Directors
believes would result in a material dilution to shareholders or purchasers, the
Board of Directors will promptly consider what action, if any, should be
initiated. Any such action may include: selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per share by
using available market quotations.
With respect to the Seligman Henderson Global Portfolio and the Seligman
Henderson Global Smaller Companies Portfolio, portfolio securities, including
open short positions, are valued at the last sale price on the securities
exchange or securities market on which such securities primarily are traded.
Securities traded on a foreign exchange or over-the-counter market are valued at
the last sales price on the primary exchange or market on which they are traded.
United Kingdom securities and securities for which there are not recent sales
transactions are valued based on quotations provided by primary market makers in
such securities. Any securities for which recent market quotations are not
readily available, including restricted securities, are valued at fair value
determined in accordance with procedures approved by the Board of Directors.
Short-term obligations with less than sixty days remaining to maturity are
generally valued at amortized cost. Short-term obligations with more than sixty
days remaining to maturity will be valued at current market value until the
sixtieth day prior to maturity, and will then be valued on an amortized cost
basis based on the value on such date unless the Board of Directors determine
that this amortized cost value does not represent fair market value.
Generally, trading in foreign securities, as well as U.S. Government
securities, money market instruments and repurchase agreements, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value of
-16-
<PAGE>
the shares of the Portfolio are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the New York
Stock Exchange. Occasionally, events affecting the value of such securities and
such exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange, which will not be reflected in the
computation of net asset value. If during such periods events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in accordance with procedures approved by
the Board of Directors.
For purposes of determining the net asset value per share of the Portfolio
all assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the mean between the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
Redemption. The procedures for redemption of Fund shares under ordinary
circumstances are set forth in the Prospectus. In unusual circumstances, payment
may be postponed, if the orderly liquidation of portfolio securities is
prevented by the closing of, or restricted trading on the New York Stock
Exchange during periods of emergency, or such other periods as ordered by the
SEC. It is not anticipated that shares will be redeemed for other than cash or
its equivalent. However, the Fund reserves the right to pay the redemption price
to the Canada Life Accounts and VCA-9 in whole or in part, by a distribution in
kind from the Fund's investment portfolio, in lieu of cash, taking the
securities at their value employed for determining such redemption price, and
selecting the securities in such manner as the Board of Directors may deem fair
and equitable. If shares are redeemed in this way, brokerage costs will
ordinarily be incurred by the Canada Life Accounts and VCA-9 in converting such
securities into cash.
CUSTODIANS AND INDEPENDENT AUDITORS
Custodians. With the exception of the Seligman Henderson Global Portfolio
and the Seligman Henderson Global Smaller Companies Portfolio, Investors
Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105,
serves as custodian for the Fund, and in such capacity holds in a separate
account assets received by it from or for the account of each of the Fund's
Portfolios.
Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York
11201, serves as custodian for the Seligman Henderson Global Portfolio and the
Seligman Henderson Global Smaller Companies Portfolio, and in such capacity
holds in a separate account assets received by it from or for the account of
each of these two Portfolios of the Fund.
Independent Auditors. Ernst & Young LLP, independent auditors, have been
selected as auditors of the Fund and certify the annual financial statements of
the Fund. Their address is 787 Seventh Avenue, New York, New York 10019.
FINANCIAL STATEMENTS
The balance sheet for the Seligman High-Yield Bond Portfolio presented below
has been audited by Ernst & Young LLP, independent auditors.
-17-
<PAGE>
SELIGMAN PORTFOLIOS, INC.
SELIGMAN HIGH-YIELD BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
March 30, 1995
ASSETS
Cash................................................ $10
---
Total Assets........................................ 10
LIABILITIES 0
---
Net assets equivalent to $10.00 per share (applicable to 1 share of
Capital Stock, $.001 par value;
20,000,000 shares authorized).................... $10
===
Note 1. Organization
Seligman High-Yield Bond Portfolio (the "Portfolio") is a portfolio of
Seligman Portfolios, Inc. (the "Fund"). The Fund is an open-end diversified
management investment company consisting of ten separate portfolios. The
Portfolio had no operations other than the sale and issuance of one share of
capital stock for $10 to Seligman Financial Services, Inc., the Fund's
Distributor, on March 29, 1995.
Note 2. Agreement
Under the Management Agreement, the Portfolio will pay J. & W. Seligman
& Co. Incorporated (the "Manager") a management fee for its services, calculated
daily and payable monthly, equal to 0.50% per annum of its average daily net
assets. The Manager has voluntarily agreed to reimburse annual expenses (other
than management fees) that exceed 0.20% of average daily net assets.
Note 3. Taxes
The Portfolio intends to meet the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and
intends to distribute substantially all of its taxable income. As such, the
Portfolio will not be subject to federal income or excise taxes.
-18-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of
Seligman Portfolios, Inc. - Seligman High-Yield Bond Portfolio:
We have audited the accompanying statement of assets and liabilities of
Seligman Portfolios, Inc. as of March 30, 1995. This financial statement is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted audited
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether this financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statement. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the financial position of Seligman Portfolios,
Inc. - Seligman High-Yield Bond Portfolio as of March 30, 1995, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP
New York, New York
March 30, 1995
-19-
<PAGE>
APPENDIX A
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in the
sale of government securities to help finance the Civil War - Joseph Seligman,
with his brothers, established the international banking and investment firm of
J. & W. Seligman & Co. In the years that followed, Seligman played a major role
in the geographical expansion and industrial development of the United States.
Seligman:
.... Prior to 1900
o Helps finance America's fledgling railroads through underwriting.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made
it unnecessary.
o Becomes a prominent underwriter of corporate securities, including New
York Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate
to award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Plays a signifcant role in raising capital for America's industrial and
urban development.
...1900-1910
o Helps Congress finance the building of the Panama Canal by
underwriting.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping finance World War I.
...1920s
o Participates in underwritings including those for some of the country's
largest companies: Briggs Manufacturing, Dodge Brothers, General
Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company,
United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion
in assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund.
o Establishes Investment Advisory Service.
-20-
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman
Growth Fund.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund.
...1950-1989
o Develops new open-end investment companies. Today, manages 43 mutual
fund portfolios with combined assets of $6.6 billion.
o Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt funds.
o Establishes J. & W. Seligman Trust Company, and J. & W. Seligman
Valuations Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund and Seligman Quality
Municipal Fund, two closed-end funds that invest in high-quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global
investment products.
o Introduces Seligman Frontier Fund, Inc., a small capitalization fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today
offers three separate series: Seligman Henderson International Fund,
Seligman Henderson Global Smaller Companies Fund and Seligman Henderson
Global Technology Fund.
-21-
<PAGE>
-------------------------------------------------------------------------------
A N N U A L R E P O R T
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TRILLIUM [Logo]
A VARIABLE ANNUITY
December 31, 1994
-------------------------------------------------------------------------------
<PAGE>
Seligman Portfolios, Inc.
the underlying investment vehicle for
=====================================
TRILLIUM
A VARIABLE
ANNUITY
-------------------------------------
-------------------------------------
-------------------------------------
February 10, 1995
Dear Contract Owner:
J. & W. Seligman & Co. Incorporated, as Manager of Seligman Portfolios,
Inc. (the "Fund"), the underlying investment vehicle for your Trillium Variable
annuity, and Canada Life Insurance Company of America, as issuer of The Canada
Life of America Variable Annuity Account 2 (the "Variable Account"), are pleased
to provide the enclosed audited financial statements and accompanying
information for the year ended December 31, 1994, which begin on page 2 for the
Variable Account, and on page 9 for the Fund.
The performance of the six sub-accounts of the Variable Account, which
invests in and is based upon the performance of the Fund (adjusted for the
current fees and charges, excluding the CDSL, associated with the Variable
Account) was as follows for the six- and 12-month periods ended December 31,
1994: the Capital Sub-Account's total returns were 6.39% and -6.76%,
respectively; the Common Stock Sub-Account's total returns were 3.37% and
-1.10%, respectively; the Global Sub-Account's total returns were 0.90% and
-0.64%, respectively; the Income Sub-Account's total returns were 0.27% and
-7.55%, respectively; and the Fixed Income Securities Sub-Account's total
returns were -0.17% and -4.85%, respectively. The six- and 12-month total
returns for the Cash Management Sub-Account were 1.53% and 2.28%, respectively.
The Variable Account commenced operations on June 21, 1993. The Fund was first
created in June 1988.
The performance of the three new sub-accounts that commenced operations on
October 11, 1994, was as follows for the since-inception through December
31,1994, period: the Communications and Information Sub-Account's total return
was 4.01%; the Frontier Sub-Account's total return was 5.40%; and the Global
Smaller Companies, formerly Global Emerging Companies, Sub-Account's total
return was 3.19%.
Looking back on 1994, the one generalization that can be made with
confidence is that it was a turbulent and trying year for equity and bond
investors alike. The Federal Reserve Board exhibited an aggressive stance
against inflation, putting through six short-term interest rate increases by the
end of the year. This caused an upheaval in the bond market, with yields
increasing and bond prices spiraling lower--an event in the financial markets
unmatched in magnitude since 1973-74. The equity market remained hostage to the
bond market and demonstrated lackluster performance: The Standard & Poor's 500
Composite Stock Price Index had a modest gain of 1.32% for the year.
The U.S. economy continued to grow at a modest yet controlled pace,
accompanied by corporate news of solid growth and strong earnings. This economic
news, although positive, caused the underlying question to remain: Will the
economy overheat, opening the door to increased inflation? We don't believe so.
We believe an economic slowdown is close at hand. In March of 1995, the
current growth cycle will mark its fourth year. The consumer has both increased
debt as a percentage of income and drawn down savings--suggesting nearer-term
caution after a stronger-than-expected pattern of spending in 1994. We also
believe that inflation will remain under control in light of intense global
competition, low unit labor costs, and an aging population that should favor
saving over spending. Job creation remains robust despite gains in productivity,
and U.S. competitiveness in world markets is likely to be enhanced under
G.A.T.T.--General Agreement on Tariffs and Trade.
Respectfully,
/s/ D. Allen Loney /s/ William C. Morris
D. Allen Loney William C. Morris
President Chairman
Canada Life Insurance Company of America J.&W. Seligman & Co. Incorporated
-- 1 --
<PAGE>
Canada Life of America Variable Annuity Account 2
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets December 31, 1994
-----------------------------------------------------------------------------------------------------------------------------------
Cash Common Communications
Capital Management Stock and Information
Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Assets:
Investment in Seligman Portfolios, Inc., at market
(see Note 3 for cost values) ......................... $1,159,748 $537,245 $2,359,352 $494,664
Due (to) from Canada Life Insurance Company of
America (Note 6) ..................................... (19,222) 5,398 5,191 (204)
Receivable (payable) for investments sold (purchased) ... 111 (511) (92) --
---------- -------- ---------- --------
Net assets .............................................. $1,140,637 $542,132 $2,364,451 $494,460
========== ======== ========== ========
Net assets attributable to:
Policyholders' liability reserve ........................ $1,140,637 $542,132 $2,364,451 $494,460
---------- -------- ---------- --------
Net assets .............................................. $1,140,637 $542,132 $2,364,451 $494,460
========== ======== ========== ========
Number of units outstanding ............................. 62,358 434,226 127,570 47,541
========== ======== ========== ========
Net asset value per unit ................................ $ 18.2918 $1.2485 $18.5345 $10.4007
========== ======== ========== ========
</TABLE>
<TABLE>
Statement of Net Assets (continued)
<CAPTION>
Fixed Global
Income Smaller
Securities Frontier Global Companies Income
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Assets:
Investment in Seligman Portfolios, Inc., at market
(see Note 3 for cost values) ......................... $850,588 $122,411 $1,705,592 $131,532 $1,940,063
Due (to) from Canada Life Insurance Company of
America (Note 6) ..................................... 388 (53) (10,422) (64) 19,030
Receivable (payable) for investments sold (purchased) ... 178 -- (779) -- 356
-------- -------- ---------- -------- ----------
Net assets .............................................. $851,154 $122,358 $1,694,391 $131,468 $1,959,449
======== ======== ========== ======== ==========
Net assets attributable to:
Policyholders' liability reserve ........................ $851,154 $122,358 $1,694,391 $131,468 $1,959,449
-------- -------- ---------- -------- ----------
Net assets .............................................. $851,154 $122,358 $1,694,391 $131,468 $1,959,449
======== ======== ========== ======== ==========
Number of units outstanding ............................. 64,614 11,609 150,440 12,740 124,878
======== ======== ========== ======== ==========
Net asset value per unit ................................ $13.1729 $10.5399 $11.2629 $10.3193 $15.6909
======== ======== ========== ======== ==========
</TABLE>
Statement of Net Assets (continued)
Combined
------------
Net Assets:
Investment in Seligman Portfolios, Inc., at market
(see Note 3 for cost values) ......................... $9,301,195
Due (to) from Canada Life Insurance Company of
America (Note 6) ..................................... 42
Receivable (payable) for investments sold (purchased) ... (737)
----------
Net assets .............................................. $9,300,500
==========
Net assets attributable to:
Policyholders' liability reserve ........................ $9,300,500
----------
Net assets .............................................. $9,300,500
==========
Number of units outstanding .............................
Net asset value per unit ................................
----------
See accompanying notes.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Statement of Operations For the year ended December 31, 1994
-------------------------------------------------------------------------------
Cash Common Communications
Capital Management Stock and Information
Sub-Account Sub-Account Sub-Account Sub-Account*
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net investment income:
Dividend and capital gain distributions ................. $124,301 $15,929 $187,438 $ --
Less mortality and expense risk charges (Note 6) ........ 9,411 5,752 18,228 875
-------- ------- -------- -------
Net investment income ................................... 114,890 10,177 169,210 (875)
-------- ------- -------- -------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investments ................. (12,916) -- (1,721) 15
Net unrealized appreciation (depreciation)
on investments ....................................... (124,248) -- (179,355) 18,098
-------- ------- -------- -------
Net realized and unrealized gain (loss)
on investments ....................................... (137,164) -- (181,076) 18,113
-------- ------- -------- -------
Net increase (decrease) in net
assets resulting from operations ..................... $(22,274) $10,177 $(11,866) $17,238
======== ======= ======== =======
</TABLE>
Statement of Operations (continued)
<TABLE>
<CAPTION>
Fixed Global
Income Smaller
Securities Frontier Global Companies Income
Sub-Account Sub-Account* Sub-Account Sub-Account* Sub-Account
----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net investment income:
Dividend and capital gain distributions ................. $ 41,029 $ -- $26,068 $ 537 $132,305
Less mortality and expense risk charges (Note 6) ........ 5,588 216 16,791 258 21,607
-------- ------- ------- ------ --------
Net investment income ................................... 35,441 (216) 9,277 279 110,698
-------- ------- ------- ------ --------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investments ................. (10,205) 7 6,044 2 (15,131)
Net unrealized appreciation (depreciation)
on investments ....................................... (39,410) 6,405 (21,540) 3,794 (163,064)
-------- ------- ------- ------ --------
Net realized and unrealized gain (loss)
on investments ....................................... (49,615) 6,412 (15,496) 3,796 (178,195)
-------- ------- ------- ------ --------
Net increase (decrease) in net
assets resulting from operations ..................... $(14,174) $ 6,196 $(6,219) $4,075 $(67,497)
======== ======= ======= ====== ========
</TABLE>
Statement of Operations (continued)
Combined
----------
Net investment income:
Dividend and capital gain distributions ................. $527,607
Less mortality and expense risk charges (Note 6) ....... 78,726
--------
Net investment income ................................... 448,881
--------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investments ................. (33,905)
Net unrealized appreciation (depreciation)
on investments ....................................... (499,320)
--------
Net realized and unrealized gain (loss)
on investments ....................................... (533,225)
--------
Net increase (decrease) in net
assets resulting from operations ..................... $(84,344)
========
----------
* For the period October 11, 1994 (commencement of operations) to December
31, 1994
See accompanying notes.
--2-- & --3--
<PAGE>
<TABLE>
<CAPTION>
Canada Life of America Variable Annuity Account 2
------------------------------------------------------------------------------------------------------------------------------------
Statement of Changes in Net Assets
------------------------------------------------------------------------------------------------------------------------------------
Cash
Capital Management
Sub- Sub-
Account Account
---------------------- ----------------------
Year 6/21/93* Year 6/21/93*
Ended to Ended to
12/31/94 12/31/93 12/31/94 12/31/93
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) ................. $ 114,890 $18,768 $ 10,177 $ 256
Net realized gain (loss) on investments ...... (12,916) (33) -- --
Unrealized appreciation
(depreciation) on investments ............. (124,248) (15,155) -- --
---------- ------- -------- -------
Net increase (decrease) in net assets
resulting from operations ................. (22,274) 3,580 10,177 256
---------- ------- -------- -------
Capital transactions:
Net increase from unit
transactions (Note 5) ..................... 1,071,495 87,836 463,427 68,272
---------- ------- -------- -------
Net increase in net assets arising
from capital transactions ................. 1,071,495 87,836 463,427 68,272
---------- ------- -------- -------
Total increase in net assets ................. 1,049,221 91,416 473,604 68,528
Net assets, beginning of period .............. 91,416 -- 68,528 --
---------- ------- -------- -------
Net assets, end of period .................... $1,140,637 $91,416 $542,132 $68,528
========== ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets (continued)
Common Communications Fixed Income
Stock and Information Securities
Sub- Sub- Sub-
Account Account Account
--------------------- -------- ---------------------
Year 6/21/93* 10/11/94* Year 6/21/93*
Ended to to Ended to
12/31/94 12/31/93 12/31/94 12/31/94 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) ................. $ 169,210 $ 91,784 $ (875) $ 35,441 $ 25,233
Net realized gain (loss) on investments ...... (1,721) (141) 15 (10,205) (131)
Unrealized appreciation
(depreciation) on investments ............. (179,355) (75,185) 18,098 (39,410) (25,591)
---------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations ................. (11,866) 16,458 17,238 (14,174) (489)
---------- -------- -------- -------- --------
Capital transactions:
Net increase from unit
transactions (Note 5) ..................... 1,716,567 643,292 477,222 656,499 209,318
---------- -------- -------- -------- --------
Net increase in net assets arising
from capital transactions ................. 1,716,567 643,292 477,222 656,499 209,318
---------- -------- -------- -------- --------
Total increase in net assets ................. 1,704,701 659,750 494,460 642,325 208,829
Net assets, beginning of period .............. 659,750 -- -- 208,829 --
---------- -------- -------- -------- --------
Net assets, end of period .................... $2,364,451 $659,750 $494,460 $851,154 $208,829
========== ======== ======== ======== ========
</TABLE>
Statement of Changes in Net Assets (continued)
Frontier
Sub-
Account
--------
10/11/94*
to
12/31/94
--------
Operations:
Net investment income (loss) ................. $ (216)
Net realized gain (loss) on investments ...... 7
Unrealized appreciation
(depreciation) on investments ............. 6,405
--------
Net increase (decrease) in net assets
resulting from operations ................. 6,196
--------
Capital transactions:
Net increase from unit
transactions (Note 5) ..................... 116,162
--------
Net increase in net assets arising
from capital transactions ................. 116,162
--------
Total increase in net assets ................. 122,358
Net assets, beginning of period --
............................................. --------
Net assets, end of period .................... $122,358
========
<TABLE>
<CAPTION>
Statement of Changes in Net Assets (continued)
Global
Smaller
Global Companies
Sub- Sub-
Account Account
--------------------- --------
Year 6/21/93* 10/11/94*
Ended to to
12/31/94 12/31/93 12/31/94
-------- -------- --------
<S> <C> <C> <C>
Operations:
Net investment income ........................ $ 9,277 $ 1,063 $ 279
Net realized gain (loss) on investments ...... 6,044 79 2
Unrealized appreciation
(depreciation) on investments ............. (21,540) 24,587 3,794
---------- -------- --------
Net increase (decrease) in net assets
resulting from operations ................ (6,219) 25,729 4,075
---------- -------- --------
Capital transactions:
Net increase from unit
transactions (Note 5) ..................... 1,167,854 507,027 127,393
---------- -------- --------
Net increase in net assets arising
from capital transactions ................. 1,167,854 507,027 127,393
---------- -------- --------
Total increase in net assets ................. 1,161,635 532,756 131,468
Net assets, beginning of period .............. 532,756 -- --
---------- -------- --------
Net assets, end of period .................... $1,694,391 $532,756 $131,468
========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets (continued)
Income
Sub-
Account Combined
--------------------- ---------------------
Year 6/21/93* Year 6/21/93*
Ended to Ended to
12/31/94 12/31/93 12/31/94 12/31/93
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operations:
Net investment income ........................ $ 110,698 $ 49,925 $ 448,881 $ 187,029
Net realized gain (loss) on investments ...... (15,131) (297) (33,905) (523)
Unrealized appreciation
(depreciation) on investments ............. (163,064) (44,870) (499,320) (136,214)
---------- -------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations ................ (67,497) 4,758 (84,344) 50,292
---------- -------- ---------- ----------
Capital transactions:
Net increase from unit
transactions (Note 5) ..................... 1,560,635 461,553 7,357,254 1,977,298
---------- -------- ---------- ----------
Net increase in net assets arising
from capital transactions ................. 1,560,635 461,553 7,357,254 1,977,298
---------- -------- ---------- ----------
Total increase in net assets ................. 1,493,138 466,311 7,272,910 2,027,590
Net assets, beginning of period .............. 466,311 -- 2,027,590 --
---------- -------- ---------- ----------
Net assets, end of period .................... $1,959,449 $466,311 $9,300,500 $2,027,590
========== ======== ========== ==========
</TABLE>
--4-- & --5--
<PAGE>
Canada Life of America Variable Annuity Account 2
--------------------------------------------------------------------------------
Notes to Financial Statements
--------------------------------------------------------------------------------
1. Organization
Canada Life of America Variable Annuity Account 2 ("Variable Annuity Account 2")
was established on February 26, 1993 as a separate investment account of Canada
Life Insurance Company of America ("CLICA") to receive and invest premium
payments under variable annuity policies issued by CLICA. Variable Annuity
Account 2 is registered as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of Variable Annuity Account 2 are invested
in the shares of Seligman Portfolios, Inc. (the "Fund"), a diversified,
open-end, management investment company. Variable Annuity Account 2 has nine
sub-accounts, each of which invests only in the shares of the corresponding
portfolio of the Fund. The assets of Variable Annuity Account 2 are the property
of CLICA. The portion of Variable Annuity Account 2 assets applicable to the
policies will not be charged with liabilities arising out of any other business
CLICA may conduct.
2. Significant Accounting Policies
Investments
Investments in shares of the Fund are valued at the reported net asset values of
the respective portfolios. Realized gains and losses are computed on the basis
of average cost. The difference between cost and current market value of
investments owned is recorded as an unrealized gain or loss on investments.
Dividends
Dividends are recorded on the ex-dividend date and reflect the dividends
declared by the Fund from their accumulated net investment income and net
realized investment gains. Dividends in the Cash Management Portfolio are
declared daily and paid monthly. Dividends in the Capital, Common Stock,
Communications and Information, Fixed Income Securities, Frontier, Global,
Global Smaller Companies (formerly Global Emerging Companies) and Income
Portfolios are declared and paid annually. Dividends paid to the Variable
Annuity Account 2 are reinvested in additional shares of the respective Fund at
the net asset value per share.
Federal Income Taxes
Variable Annuity Account 2 is not taxed separately because the operations of
Variable Annuity Account 2 will be included in the Federal income tax return of
CLICA, which is taxed as a "life insurance company" under the provisions of the
Internal Revenue Code.
3. Investments
The investment by Variable Annuity Account 2 in the individual Portfolios of the
Fund is as follows:
<TABLE>
<CAPTION>
Number of Shares Market Price Market Value Cost
---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Capital 91,326 $12.699 $1,159,748 $1,299,151
Cash Management 537,245 1.000 537,245 537,245
Common Stock 171,166 13.784 2,359,352 2,613,892
Communications and Information 47,368 10.443 494,664 476,566
Fixed Income Securities 91,767 9.269 850,588 915,589
Frontier 11,570 10.580 122,411 116,006
Global 150,458 11.336 1,705,592 1,702,545
Global Smaller Companies 12,754 10.313 131,532 127,738
Income 194,512 9.974 1,940,063 2,147,997
---------- ----------
$9,301,195 $9,936,729
========== ==========
</TABLE>
4. Security Purchases and Sales
The aggregate cost of purchases and the proceeds from sales of investments are
presented below:
<TABLE>
<CAPTION>
Aggregate Cost of Purchases Proceeds from Sales
---------------------------- -----------------
<S> <C> <C>
Capital $1,423,989 $ 218,696
Cash Management 1,067,045 598,765
Common Stock 1,936,894 57,396
Communications and Information 505,821 29,270
Fixed Income Securities 846,815 155,282
Frontier 116,166 167
Global 1,389,758 202,473
Global Smaller Companies 127,955 219
Income 2,011,418 359,912
---------- ----------
$9,425,861 $1,622,180
========== ==========
</TABLE>
--6--
<PAGE>
Canada Life of America Variable Annuity Account 2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5. Summary of Changes from Unit Transactions
The following table represents a summary of changes from unit transactions
attributable to contractholders for the periods indicated. The Communications
and Information, Frontier and Global Smaller Companies Portfolios commenced
operations on October 11, 1994:
<TABLE>
<CAPTION>
For the period from June 21, 1993
(commencement of operations)
Year ended December 31, 1994 to December 31, 1993
---------------------------- -----------------------------
Units Amount Units Amount
------ -------- ------- --------
<S> <C> <C> <C> <C>
Capital Sub-Account
Accumulation Units:
Contract purchases and net transfers in 68,845 $1,206,771 4,660 $ 87,836
Terminated contracts and net transfers out (11,147) (135,276) -- --
-------- ---------- --------- ---------
57,698 1,071,495 4,660 87,836
======== ========== ========= =========
Cash Management Sub-Account
Accumulation Units:
Contract purchases and net transfers in 895,094 919,388 194,451 236,916
Terminated contracts and net transfers out (517,005) (455,961) (138,313) (168,644)
-------- ---------- --------- ---------
378,089 463,427 56,138 68,272
======== ========== ========= =========
Common Stock Sub-Account
Accumulation Units:
Contract purchases and net transfers in 94,149 1,729,749 35,267 644,443
Terminated contracts and net transfers out (1,785) (13,182) (61) (1,151)
-------- ---------- --------- ---------
92,364 1,716,567 35,206 643,292
======== ========== ========= =========
Communications and Information Sub-Account
Accumulation Units:
Contract purchases and net transfers in 47,541 477,222
Terminated contracts and net transfers out -- --
-------- ----------
47,541 477,222
======== ==========
Fixed Income Securities Sub-Account
Accumulation Units:
Contract purchases and net transfers in 60,800 705,025 15,130 209,969
Terminated contracts and net transfers out (11,270) (48,526) (46) (651)
-------- ---------- --------- ---------
49,530 656,499 15,084 209,318
======== ========== ========= =========
Frontier Sub-Account
Accumulation Units:
Contract purchases and net transfers in 11,609 116,162
Terminated contracts and net transfers out -- --
-------- ----------
11,609 116,162
======== ==========
Global Sub-Account
Accumulation Units:
Contract purchases and net transfers in 119,532 1,203,916 47,057 507,678
Terminated contracts and net transfers out (16,093) (36,062) (56) (651)
-------- ---------- --------- ----------
103,439 1,167,854 47,001 507,027
======== ========== ========= ==========
Global Smaller Companies Sub-Account
Accumulation Units:
Contract purchases and net transfers in 12,740 127,393
Terminated contracts and net transfers out -- --
-------- ----------
12,740 127,393
======== ==========
Income Sub-Account
Accumulation Units:
Contract purchases and net transfers in 117,463 1,805,921 27,513 462,204
Terminated contracts and net transfers out (20,059) (245,286) (39) (651)
======== ========== --------- ----------
97,404 1,560,635 27,474 461,553
======== ---------- ========= ----------
Net increase from unit transactions $7,357,254 $1,977,298
========== ==========
</TABLE>
--7--
<PAGE>
Canada Life of America Variable Annuity Account 2
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
6. Mortality and Expense Risk (M and E) Charges
CLICA assumes mortality and expense risks related to the operations of Variable
Annuity Account 2 and deducts a charge equal to an effective annual rate of
1.25% of the net asset value of each of the Funds at each valuation period. In
addition, at each valuation period an effective annual rate of 0.35% of the net
asset value of each Fund is deducted as daily administration fees.
7. Net Assets
Net assets at December 31, 1994 consisted of the following:
<TABLE>
<CAPTION>
Net
Accumulated Net Unrealized
Investment Realized Appreciation
Accumulated Income Gain (Depreciation)
Unit M and E and Capital (Loss) on on
Sub-Account Transactions Charges Gains Investments Investments Combined
----------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital $1,159,331 $ (9,873) $143,531 $(12,949) $(139,403) $1,140,637
Cash Management 531,699 (6,865) 17,298 -- -- 542,132
Common Stock 2,359,859 (20,803) 281,797 (1,862) (254,540) 2,364,451
Communications and Information 477,222 (875) -- 15 18,098 494,460
Fixed Income Securities 865,817 (5,904) 66,578 (10,336) (65,001) 851,154
Frontier 116,162 (216) -- 7 6,405 122,358
Global 1,674,881 (18,998) 29,338 6,123 3,047 1,694,391
Global Smaller Companies 127,393 (258) 537 2 3,794 131,468
Income 2,022,188 (23,321) 183,944 (15,428) (207,934) 1,959,449
---------- -------- -------- -------- --------- ----------
$9,334,552 $(87,113) $723,023 $(34,428) $(635,534) $9,300,500
========== ======== ======== ======== ========= ==========
</TABLE>
--------------------------------------------------------------------------------
Report of Independent Auditors
--------------------------------------------------------------------------------
Board of Directors of Canada Life Insurance Company of America
and Contract Owners of Canada Life of America Variable Annuity Account 2:
We have audited the accompanying statement of net assets of Canada Life of
America Variable Annuity Account 2 ("Variable Annuity Account 2") as of December
31, 1994, and the related statements of operations and changes in net assets for
the periods indicated therein. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements 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 December 31, 1994, by correspondence with
the custodian. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Variable Annuity Account 2 at
December 31, 1994, and the results of its operations and the changes in its net
assets for each of the periods indicated therein in conformity with generally
accepted accounting principles.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Atlanta, Georgia
January 26, 1995
--8--
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Important Portfolio Changes* (unaudited)
--------------------------------------------------------------------------------
During the six months ended December 31, 1994
<TABLE>
<CAPTION>
Principal Amount Principal Amount
Additions or Shares Reductions or Shares
--------------------- ---------------------- --------------------- ----------------------
Holdings Holdings
Increase 12/31/94 Decrease 12/31/94
-------- -------- -------- --------
SELIGMAN CAPITAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Common Stocks Common Stocks
British Sky Broadcasting (ADRs) 4,900 shs. 4,900 shs. Barnes & Noble................. 4,100 shs. --
Fingerhut...................... 1,000 5,200 Columbia/HCA Healthcare........ 1,000 2,900 shs.
Illinois Tool Works............ 2,700 2,700 Corvel......................... 5,400 --
John Alden Financial........... 3,400 3,400 Cracker Barrel Old Country..... 4,200 --
Liz Claiborne.................. 4,800 4,800 Department 56.................. 2,000 2,000
MBNA........................... 4,800 4,800 General Nutrition.............. 4,000 --
NEXTEL Communications.......... 1,500 4,300 Harley-Davidson................ 2,500 --
OfficeMax...................... 5,700 5,700 Nordson........................ 1,800 --
Paging Network................. 4,300 4,300 PETsMART....................... 4,300 --
Powersoft...................... 1,700 1,700 Snapple Beverage............... 4,300 --
</TABLE>
--------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO
Common Stocks
K Mart......................... 5,500 shs. 5,500 shs.
Mallinckrodt Group............. 3,600 3,600
Snap-On Tools.................. 4,100 4,100
Wendy's International.......... 7,000 7,000
Common Stocks
Pall........................... 12,899 shs. --
Texas Instruments.............. 4,000 --
Convertible Preferred Stocks
Great Western Financial 83/4%.. 5,000 --
Mobile Telecommunications
Technology $2.25............ 5,000 --
Subordinated Convertible Bonds
Genzyme 6 3/4%, 10/1/2001....... $250,000 --
Michaels Stores 4 3/4%, 1/15/2003 100,000 --
Oryx Energy 7 1/2%, 5/15/2014... 250,000 --
--------------------------------------------------------------------------------
SELIGMAN FIXED INCOME SECURITIES PORTFOLIO
U.S. Government Securities
U.S. Treasury Bonds
8 7/8%, 2/15/2019............ $900,000 $900,000
Corporate Bonds
News America Holdings
8 1/4%, 8/10/2018............ 150,000 150,000
USX 9 1/8%, 1/15/2013........... 100,000 100,000
Asset-backed Security
Ford Credit Grantor Trust
7.30%, 10/15/1999........... 145,874 145,874
U.S. Government Securities and Agencies
U.S. Treasury Bonds
9 1/4%, 2/15/2016........... $300,000 --
U.S. Treasury Notes
7%, 9/30/1996 .............. 300,000 --
Government National Mortgage
Association 7.30%, 12/16/2017
REMIC Trust 1994-1.......... 500,000 --
Corporate Bonds
Ford Motor Credit 6 3/4%, 8/15/2008 150,000 --
Time Warner Entertainment
7 1/4%, 9/1/2008............. 150,000 --
----------
See footnote on page 10.
-9-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Important Portfolio Changes* (unaudited) (continued)
--------------------------------------------------------------------------------
During the six months ended December 31, 1994
<TABLE>
<CAPTION>
Principal Amount Principal Amount
Additions or Shares Reductions or Shares
--------------------- ---------------------- --------------------- ----------------------
Holdings Holdings
Increase 12/31/94 Decrease 12/31/94
-------- -------- -------- --------
SELIGMAN HENDERSON GLOBAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Common Stocks Common Stocks
Daiwa House Industry........... 3,000 shs. 4,000 shs. Alco Standard.................. 200 shs. --
East Japan Railways............ 11 11 American International Group... 150 --
Mitsubishi Rayon............... 9,000 13,000 Coca-Cola...................... 300 --
News Corp...................... 5,203 6,204 Dow Chemical................... 150 --
Nippon Telegraph & Telephone... 6 6 General Mills.................. 200 --
Pioneer Electronics............ 1,000 2,000 Honda Motor.................... 1,000 --
Sumitomo Trust and Banking..... 2,000 2,000 International Business Machines 200 --
Toshiba........................ 6,000 8,000 Omnicom Group.................. 200 --
TPI Polene..................... 3,250 3,250 Schering-Plough................ 200 --
Yamaha......................... 3,000 4,000 Sharp.......................... 1,000 --
</TABLE>
--------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO
Common Stocks
CINergy........................ 9,718 shs. 9,718 shs.
K Mart......................... 3,200 3,200
Convertible Preferred Stocks
Alexander & Alexander
(Series A) $3.625........... 1,500 1,500
Corning Delaware L.P. 6%....... 1,700 1,700
Subordinated Convertible Bonds
Bay Networks 5 1/4%, 5/15/2003. $100,000 $100,000
U.S. Government Securities
U.S. Treasury Notes
7 1/4%,11/15/1996........... 500,000 500,000
Common Stocks
Union Electric................. 5,200 shs. --
Washington Energy.............. 14,000 --
Convertible Preferred Stocks
Great Western Financial 8 3/4%. 5,000 --
Mobile Telecommunications
Technology $2.25............ 3,500 --
Subordinated Convertible Bonds
Genzyme 6 3/4%,10/1/2001....... $250,000 --
USLICO 8 1/2%, 12/15/2014...... 250,000 --
Hechinger 5 1/2%, 4/1/2012..... 250,000 --
Corporate Bonds
Quaker Oats 9.15%, 10/28/2004.. 100,000 --
U.S. Government Agencies
Government National Mortgage
Association 7.30%, 12/16/2017
REMIC Trust 1994-1.......... 500,000 --
----------
* Largest portfolio changes from the previous midyear to the current year-end
are based on cost of purchases and proceeds from sales of securities.
-10-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Annual Performance Overview December 31, 1994
--------------------------------------------------------------------------------
The following charts compare a $10,000 hypothetical investment made in each of
the Portfolios of Seligman Portfolios, Inc. (with the exception of Seligman Cash
Management Portfolio), since inception through December 31, 1994, to a $10,000
hypothetical investment made in the appropriate benchmark indices and/or
averages for the same period. Accompanying each chart is a discussion of the
economic factors, investment strategy, and sector performance that affected the
Portfolio during the past year.
Seligman Capital Portfolio
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Seligman Lipper Capital
Capital Portfolio Appreciation Average S&P 500
----------------- -------------------- -------
6/21/88 $10,000 $10,000 $10,000
9/30/88 $10,090 $ 9,868 $10,034
12/31/88 $10,060 $ 9,962 $10,344
3/31/89 $10,240 $10,738 $11,077
6/30/89 $10,840 $11,620 $12,055
9/30/89 $12,040 $12,827 $13,346
12/31/89 $11,717 $12,627 $13,621
3/31/90 $11,344 $12,325 $13,211
6/30/90 $12,715 $13,109 $14,042
9/30/90 $ 9,720 $10,872 $12,113
12/31/90 $11,344 $11,630 $13,198
3/31/91 $13,597 $13,821 $15,115
6/30/91 $13,778 $13,615 $15,081
9/30/91 $15,455 $14,820 $15,887
12/31/91 $18,042 $16,230 $17,219
3/31/92 $16,842 $16,280 $16,784
6/30/92 $15,601 $15,632 $17,104
9/30/92 $16,791 $15,974 $17,643
12/31/92 $19,268 $17,671 $18,531
3/31/93 $19,904 $18,286 $19,341
6/30/93 $19,552 $18,792 $19,435
9/30/93 $20,846 $20,093 $19,937
12/31/93 $21,514 $20,492 $20,399
3/31/94 $20,837 $19,802 $19,625
6/30/94 $19,010 $18,931 $19,708
9/30/94 $20,736 $20,154 $20,672
12/31/94 $20,526 $19,791 $20,668
Average Annual Total Returns+
Since
One Yr. Five Yrs. Inception
------- --------- ---------
Seligman Capital Portfolio -4.59% 11.87% 11.64%
Lipper Capital Appreciation -3.42 9.40 11.06
S&P 500 1.32 8.70 11.80
Continued solid economic growth, despite the Federal Reserve Board's six
short-term interest rate increases, had a negative impact on U.S. financial
markets in 1994. The bulk of the damage was sustained in the second quarter of
the year, as interest rates were increased twice within the three-month period.
Since then, due to subsided selling pressure from liquidity-sensitive investors
and the fact that equity valuations have begun to rebound, the financial markets
and your Portfolio regained strength.
Throughout the year, your Portfolio maintained a large exposure to companies
with steady predictable earnings growth. Typically, these companies, which are
driven by growth in unit sales, do not rely on significant price increases or
strong economic growth. However, in a period of strong economic growth, like
1994, cyclical or highly economically sensitive companies can show rapid growth
spurts, which often dwarf the performance of companies with steady earnings
streams.
In 1994, technology was the best performing sector in the market and in your
Portfolio. Your Portfolio's position in Microsoft performed very well, as did
its semiconductor-related issues. Although the technology sector of the market
continues to provide us with a number of attractive investment opportunities,
the sector also tends to exhibit considerable volatility--a characteristic we
feel is worth withstanding. The Portfolio's consumer cyclical exposure remained
heavy throughout the year, but again, despite some very strong financial
performances, the stocks continued to remain undervalued.
The expected slowing of the economy in the second half of 1995 should play well
into the Portfolio's exposure to companies with superior earnings prospects that
are selling at compelling valuations. The unsettled international environment
and an improving U.S. Dollar may also bring the U.S. equity markets back into
investor focus, and provide for some good capital appreciation, all of which
bodes well for your Portfolio.
----------
See footnote on page 15.
-11-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Annual Performance Overview (continued)
--------------------------------------------------------------------------------
Seligman Common Stock Portfolio
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Seligman Common Lipper Growth and
Stock Portfolio S&P 500 Income Average
--------------- ------- --------------
6/21/88 $10,000 $10,000 $10,000
9/30/88 $10,190 $10,034 $10,030
12/31/88 $10,180 $10,344 $10,226
3/31/89 $10,581 $11,077 $10,880
6/30/89 $11,223 $12,055 $11,648
9/30/89 $12,317 $13,346 $12,646
12/31/89 $12,635 $13,621 $12,640
3/31/90 $12,522 $13,211 $12,332
6/30/90 $13,315 $14,042 $12,953
9/30/90 $10,965 $12,113 $11,260
12/31/90 $12,237 $13,198 $12,084
3/31/91 $14,425 $15,115 $13,822
6/30/91 $14,287 $15,081 $13,771
9/30/91 $15,281 $15,887 $14,550
12/31/91 $16,295 $17,219 $15,604
3/31/92 $16,604 $16,784 $15,590
6/30/92 $16,472 $17,104 $15,612
9/30/92 $17,146 $17,643 $16,022
12/31/92 $18,272 $18,531 $16,977
3/31/93 $18,928 $19,341 $17,741
6/30/93 $19,127 $19,435 $17,878
9/30/93 $19,608 $19,937 $18,514
12/31/93 $20,454 $20,399 $18,933
3/31/94 $19,621 $19,625 $18,338
6/30/94 $19,730 $19,708 $18,265
9/30/94 $20,727 $20,672 $19,052
12/31/94 $20,463 $20,668 $18,753
Average Annual Total Returns+
Since
One Yr. Five Yrs. Inception
------- --------- ---------
Seligman Common Stock Portfolio 0.04% 10.12% 11.59%
S&P 500 1.32 8.70 11.80
Lipper Growth and Income -0.95 8.21 10.15
The rise in short-term interest rates and investors' concerns over an increased
rate of future inflation had a tremendous effect on both the equity and bond
markets. This made 1994 a challenging year for investors.
While many investors focused on issues with attractive short-term momentum, such
as cyclical and technology issues, your Portfolio continued to be broadly
diversified with quality companies with strong long-term prospects for earnings
growth. We believe our strategy of holding a well-rounded list of companies in
many industry groups should continue to benefit the Portfolio in the years
ahead.
While cyclical issues such as chemical and technology companies did particularly
well, the Portfolio's best performing stocks were the restructuring companies
such as IBM. Conversely, both financial stocks, in particular bank issues, and
convertible securities had a difficult time in 1994 due to their inherent
sensitivity to interest rate changes.
With the prospect of slowing economic growth in 1995, stock selection will
continue to be central to good near-term performance. We will continue to focus
on identifying companies with strong long-term earnings and solid growth
potential as a means of achieving solid capital appreciation.
Seligman Communications and Information Portfolio
THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Seligman Communications Lipper Science
and Information Portfolio S&P 500 and Technology
------------------------- ------- --------------
10/11/94 $10,000 $10,000 $10,000
10/31/94 $10,000 $10,209 $10,534
11/30/94 $10,000 $ 9,805 $10,222
12/31/94 $10,440 $ 9,998 $10,404
Cumulative Total Return+
Since
Inception
---------
Seligman Communications and Information Portfolio 4.40%
S&P 500 -0.02
Lipper Science and Technology 4.20
In 1994, technology stocks as a group benefited from the strong global demand
for the key technology "end markets:" personal computers; networking;
telecom-munications equipment; software; and wireless communications. In turn,
the strength of these markets created a healthy climate for their suppliers:
contract manufacturers; semiconductor companies; and suppliers of capital
equipment to the electronics market.
The Portfolio's emphasis on investing in fast-growing companies that demonstrate
the potential for positive earnings surprises proved quite rewarding. We believe
that the secular bull market for technology experienced thus far in the 1990s
will continue through this decade. The industry is benefiting from both the
capital investment cycle that is driving the current economic expansion, and the
information-driven revolution that has been unfolding. Technology continues to
dominate the office, the factory, the home, and the transportation and
entertainment industries; as a result it will continue to capture a greater
share of corporate and consumer spending over time.
We believe 1995 will be an advantageous environment for technology issues. But,
more specifically, the overall technology industry, and your Portfolio in
particular, should benefit from the increased spending associated with two key
events: the emergence of the Intel Pentium chip in the mainstream of the PC
market, and the launch of Microsoft's new operating system for PCs--Windows95.
Because these advances in the computer market will continually demand upgraded
products and services, every industry involved in the process of manufacturing
PCs should benefit, which bodes well for your Portfolio's investments.
----------
See footnote on page 15.
-12-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
Seligman Fixed Income Securities Portfolio
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Seligman Fixed Lehman Brothers
Income Securities Government Lipper Fixed
Portfolio S&P 500* Bond Index Income Average
---------------- -------- ---------- --------------
6/21/88 $10,000 $10,000 $10,000 $10,000
9/30/88 $10,100 $10,034 $10,169 $10,136
12/31/88 $10,101 $10,344 $10,265 $10,228
3/31/89 $10,121 $11,077 $10,374 $10,316
6/30/89 $10,670 $12,055 $11,208 $11,032
9/30/89 $10,691 $13,346 $11,300 $11,119
12/31/89 $10,979 $13,621 $11,726 $11,503
3/31/90 $10,797 $13,211 $11,581 $11,382
6/30/90 $11,119 $14,042 $11,986 $11,751
9/30/90 $11,162 $12,113 $12,085 $11,821
12/31/90 $11,653 $13,198 $12,750 $12,458
3/31/91 $11,924 $15,115 $13,026 $12,720
6/30/91 $12,094 $15,081 $13,202 $12,856
9/30/91 $12,727 $15,887 $13,956 $13,595
12/31/91 $13,352 $17,219 $14,704 $14,281
3/31/92 $13,121 $16,784 $14,447 $14,006
6/30/92 $13,485 $17,104 $15,018 $14,534
9/30/92 $14,081 $17,643 $15,760 $15,148
12/31/92 $14,099 $18,531 $15,766 $15,189
3/31/93 $14,548 $19,341 $16,479 $15,808
6/30/93 $14,879 $19,435 $16,955 $16,232
9/30/93 $15,249 $19,937 $17,506 $16,686
12/31/93 $15,224 $20,399 $17,447 $16,621
3/31/94 $14,787 $19,625 $16,922 $16,093
6/30/94 $14,622 $19,708 $16,729 $15,802
9/30/94 $14,742 $20,672 $16,800 $15,808
12/31/94 $14,708 $20,668 $16,860 $15,846
Average Annual Total Returns+
Since
One Yr. Five Yrs. Inception
------- --------- ---------
Seligman Fixed Income Securities Portfolio -3.39% 6.02% 6.08%
S&P 500* 1.32 8.70 11.80
Lehman Brothers Government Bond Index -3.37 7.53 8.37
Lipper Fixed Income Average -4.67 6.62 7.33
* The Seligman Fixed Income Securities Portfolio will no longer be compared
to the Standard & Poor's 500 Composite Stock Price Index (S&P 500) after
December 31, 1994, because the Manager does not believe a comparison
between a broad-based equity index (S&P 500) and your Portfolio's holdings
is appropriate.
Stronger economic growth and anticipation of higher inflation, which prompted
the Federal Reserve Board to raise short-term interest rates six times,
adversely effected all bond funds in 1994. However, because your Portfolio held
issues with shorter maturities than its peers, it performed relatively well
against its peers for the year.
Once the Federal Reserve Board raised short-term interest rates for the first
time on February 4, 1994, we began to shorten the maturity of your Portfolio's
holdings. This was done in order to lessen the impact of the increase, as
short-term bonds react with less volatility than long-term bonds in a period of
changing interest rates. Shorter maturities were kept throughout the year,
resulting in your Portfolio's stronger relative performance. In addition, we
favored U.S. Treasury issues over GNMA securities, as we felt liquidity was
somewhat more important than yield, given the volatile investment environment.
Finally, we did not invest in "risky" derivative securities as a means of
achieving greater yields, nor are we permitted to do so under your Portfolio's
investment policies.
Because the Federal Reserve Board is expected to continue to raise short-term
interest rates until it believes they are high enough to slow the economy to a
non-inflationary pace, the short-term may remain difficult for bond markets.
However, the higher interest rates should slow the economy during 1995,
resulting in a stabilized bond market in which valuations can begin to recover.
In this situation, we may then begin to purchase longer-term bonds to take
advantage of the possible increase in prices.
Seligman Frontier Portfolio
THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Lipper
Seligman Small Company
Frontier Portfolio NASDAQ Fund Average
------------------ ------ ------------
10/11/94 $10,000 $10,000 $10,000
10/31/94 $10,000 $10,171 $10,135
11/30/94 $10,000 $ 9,816 $ 9,766
12/31/94 $10,580 $ 9,837 $ 9,974
Cumulative Total Return+
Since
Inception
---------
Seligman Frontier Portfolio 5.80%
NASDAQ -1.63
Lipper Small Company Fund -0.26
Higher interest rates cause small- and medium-company growth stocks, the very
type in which the Frontier Portfolio invests, to fall under pressure. Therefore,
the rise in interest rates in 1994 certainly hampered the Portfolio's
performance. Nevertheless, performance was still strong.
Our focus remains on investing in companies that we believe will demonstrate
positive earnings surprises. It has been our experience that such companies
often sustain their better-than-expected funda-mentals over a six- to 12-month
period or longer, leading to exceptional price appreciation. This focus clearly
benefited the Portfolio's performance.
Many of the technology holdings performed particularly well in response to
strong demand for semiconductors and semi-conductor production equipment. By
contrast, the financial issues had relatively flat performance because of their
inherent sensitivity to interest rate increases.
Looking forward, we are optimistic about the coming year. In 1994, interest
rates rose in response to inflationary fears. However, if inflation remains
controlled, we expect excellent performance by small- and medium-company growth
stocks as interest rates fall. In any event, small-company growth stocks are
currently trading at very reasonable valuations and are enjoying excellent
earnings due to the robust economy in the United States, and improving economies
and increased demand in other countries. If inflation does increase over the
next year, these factors should help protect the Portfolio.
----------
See footnote on page 15.
-13-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Annual Performance Overview (continued)
--------------------------------------------------------------------------------
After a strong 1993, this past year proved to be difficult for stock markets
worldwide: Of the major international markets, Japan was the only one that
managed to rise. The principal factor behind the weakness of the stock markets
was the sharp turn in the bond markets; yields rose sharply in all bond markets
as the U.S. Federal Reserve Board increased short-term interest rates.
Furthermore, economic growth worldwide shifted money away from the financial
markets and into capital spending.
The economic outlook for 1995 looks positive with worldwide growth likely to
continue at a good pace and inflation, while moderately rising, should remain
under control. There are uncertainties, however, in the outlook for interest
rates. In the short term, rates are likely to rise further, which may continue
to put pressure on the long-end of the bond market. However, hallowing last
year's weakness, we now feel that yields on bonds are quite attractive and will
not increase much further on a sustained basis. With corporate profit-growth
likely to be above expectations, stock markets should improve once the
short-term uncertainties over the bond market have passed. This background
should be positive for small companies that, with the exception of those in the
U.S. and U.K., have not yet performed particularly well. However, following the
example of the smaller companies in the U.S. and U.K., many of these
underperforming small companies seem set to enjoy a strong period of growth.
Seligman Henderson Global Portfolio
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Seligman Henderson EAFE
Global Portfolio MSCI World Index Index
---------------- ---------------- -----
5/3/93 $10,000 $10,000 $10,000
5/31/93 $10,000 $10,213 $10,198
6/30/93 $10,010 $10,110 $10,026
7/31/93 $10,040 $10,301 $10,364
8/31/93 $10,510 $10,756 $10,911
9/30/93 $10,480 $10,540 $10,652
10/31/93 $10,840 $10,814 $10,967
11/30/93 $10,840 $10,185 $ 9,996
12/31/93 $11,440 $10,666 $10,705
1/31/94 $11,832 $11,353 $11,597
2/28/94 $11,470 $11,188 $11,552
3/31/94 $10,987 $10,688 $11,041
4/29/94 $11,309 $11,001 $11,496
5/31/94 $11,440 $11,012 $11,416
6/30/94 $11,399 $10,964 $11,564
7/29/94 $11,711 $11,154 $11,661
8/31/94 $11,963 $11,472 $11,923
9/30/94 $11,751 $11,153 $11,533
10/31/94 $11,923 $11,452 $11,903
11/30/94 $11,510 $10,937 $11,316
12/31/94 $11,591 $11,024 $11,373
Average Annual Total Returns+
Since
One Yr. Inception
------- ---------
Seligman Henderson Global Portfolio 1.32% 9.28%
MSCI World Index 3.36 6.01
EAFE Index 6.24 8.00
We significantly increased our weighting in Japan early in 1994, which enabled
us to take some advantage of the rise in that market. Throughout the year, we
remained overweighted in the Pacific Region, favoring countries such as Korea,
Taiwan, and Singapore, and remained underweighted in Hong Kong and Malaysia. In
Europe, as a whole, we were broadly neutral with no significant bias towards any
particular country. Additionally, we held a modest weighting in Latin America,
which suffered in the fourth quarter following the Mexican crisis. However,
because of your Portfolio's diversification, we saw little impact.
Seligman Henderson Global Smaller Companies Portfolio
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Seligman Henderson Global MSCI World Lipper Global Small
Smaller Companies Portfolio Index Company Fund Average
--------------------------- ---------- --------------------
10/11/94 $10,000 $10,000 $10,000
10/31/94 $10,000 $10,268 $10,079
11/30/94 $10,000 $ 9,806 $ 9,584
12/31/94 $10,353 $ 9,885 $ 9,581
Cumulative Total Return+
Since
Inception
---------
Seligman Henderson Global Smaller Companies Portfolio 3.53%
MSCI World Index -1.15
Lipper Global Small Company Avg. -4.19
We were relatively cautious in the investment of the Portfolio in October and
November, and only started to make significant investments in December. Our
initial strategy was to focus on the U.S., U.K., Continental Europe, and Japan.
Given the small size of the Portfolio, we purchased a limited number of
companies in these markets, but will continue to expand our holdings as the
Portfolio grows in size.
----------
See footnote on page 15.
-14-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
Seligman Income Portfolio
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
[The table below was represented as a graph in the printed material]
Seligman Lipper
Income Portfolio S&P 500 Income Average
---------------- ------- --------------
6/21/88 $10,000 $10,000 $10,000
9/30/88 $10,090 $10,034 $10,150
12/31/88 $10,110 $10,344 $10,273
3/31/89 $10,453 $11,077 $10,610
6/30/89 $11,097 $12,055 $11,196
9/30/89 $11,379 $13,346 $11,628
12/31/89 $11,587 $13,621 $11,747
3/31/90 $11,566 $13,211 $11,552
6/30/90 $11,673 $14,042 $11,899
9/30/90 $10,512 $12,113 $11,243
12/31/90 $10,880 $13,198 $11,738
3/31/91 $12,105 $15,115 $12,773
6/30/91 $12,609 $15,081 $12,994
9/30/91 $13,640 $15,887 $13,827
12/31/91 $14,241 $17,219 $14,566
3/31/92 $14,823 $16,784 $14,711
6/30/92 $15,190 $17,104 $15,141
9/30/92 $15,747 $17,643 $15,671
12/31/92 $16,479 $18,531 $15,983
3/31/93 $17,376 $19,341 $16,746
6/30/93 $17,853 $19,435 $17,118
9/30/93 $18,389 $19,937 $17,649
12/31/93 $18,518 $20,399 $17,845
3/31/94 $17,736 $19,625 $17,276
6/30/94 $17,199 $19,708 $17,220
9/30/94 $17,785 $20,672 $17,589
12/31/94 $17,413 $20,668 $17,334
Average Annual Total Returns+
Since
One Yr. Five Yrs. Inception
------- --------- ---------
Seligman Income Portfolio -5.96% 8.49% 8.86%
S&P 500 1.32 8.70 11.80
Lipper Income -2.86 8.09 8.82
The rise in short-term interest rates and investors' concerns over the
possibility of an increase in the future rate of inflation had a tremendous
effect on both the equity and bond markets.
Our strategy in 1994 was to lessen the impact of rising interest rates on the
Portfolio. We began the year with a relatively large cash position and a reduced
exposure to convertible securities. Throughout the year we avoided domestic
electric utilities and focused instead on other issues with stronger
fundamentals and attractive yields. In hindsight though, cash equivalents proved
to be the only true safe haven for yield-oriented investors.
Stock selection was the key to performance in 1994 and should remain important
in 1995. Within the difficult market conditions, few sectors saw strong stock
price appreciation in 1994, except for select technology and cyclical issues.
The interest-sensitive nature of the Income Portfolio was the main reason for
its lackluster performance, as 1994 was a year in which interest rates were
dramatically increased.
With the majority of the interest rate increase behind us, we expect 1995 to be
a better year for interest-sensitive assets, which should benefit the Income
Portfolio. We remain committed to identifying companies that represent good
value and have strong potential for future earnings growth, a strategy that has
served us well over the years.
----------
+ Performance data quoted represent past performance and assume that all
dividends and distributions are invested in additional shares. The investment
return and principal value of an investment will fluctuate so that shares, if
redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
-15-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments
--------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO
Shares Value
------ -----
COMMON STOCKS -- 95.5%
AUTOMOTIVE AND RELATED -- 4.8%
Chrysler ......................................... 2,100 $ 102,900
Eaton ............................................ 2,000 99,000
TBC* ............................................. 9,150 83,494
----------
285,394
----------
BASIC MATERIALS -- 3.1%
Louisiana Pacific ................................ 4,600 125,350
Nucor ............................................ 1,000 55,500
----------
180,850
----------
BUSINESS SERVICES AND SUPPLIES -- 8.4%
Grainger (W.W.) .................................. 1,900 109,725
Interpublic Group of Companies ................... 3,600 115,650
Paging Network ................................... 4,300 145,125
Sensormatic Electronics .......................... 3,500 126,000
----------
496,500
----------
COMPUTER GOODS AND SERVICES -- 13.3%
Ceridian* ........................................ 5,400 145,125
Compuware* ....................................... 2,600 93,275
EMC* ............................................. 6,300 136,238
FIserv* .......................................... 6,000 129,750
Parametric Technology ............................ 4,800 165,000
Xilinx* .......................................... 2,000 118,250
----------
787,638
----------
CONSUMER GOODS AND SERVICES -- 7.2%
CUC International* ............................... 3,400 113,900
Department 56* ................................... 2,000 79,500
Newell ........................................... 5,800 121,800
UST Inc. ......................................... 4,000 111,000
----------
426,200
----------
DRUGS AND HEALTH CARE -- 13.9%
Beverly Enterprises .............................. 7,800 112,125
Columbia/HCA Healthcare .......................... 2,900 105,850
Community Psychiatric Centers .................... 6,800 74,800
Corvel ........................................... 4,000 110,000
Dentsply International* .......................... 3,200 100,000
Protein Design Labs* ............................. 4,900 77,481
Sunrise Medical* ................................. 5,000 138,125
Teva Pharmaceutical (ADRs) ....................... 4,500 109,125
----------
827,506
----------
FINANCIAL SERVICES -- 5.3%
John Alden Financial ............................. 3,400 97,750
MBNA ............................................. 4,800 112,200
Travelers ........................................ 3,300 107,250
----------
317,200
----------
----------
* Non-income producing security.
See notes to financial statements.
-16-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO (continued)
Shares Value
------ -----
FOOD AND FOOD SERVICES -- 3.4%
Brinker International* ........................... 5,200 $ 94,250
PepsiCo .......................................... 3,000 108,750
----------
203,000
----------
LEISURE AND RELATED -- 5.0%
Circus Circus Enterprises* ....................... 3,700 86,025
Marvel Entertainment Group* ...................... 6,000 85,500
Mattel ........................................... 5,000 125,625
----------
297,150
----------
RETAIL TRADE -- 12.7%
Dillard Department Stores (Class A) .............. 3,200 85,600
Fingerhut ........................................ 5,200 80,600
Home Depot ....................................... 2,900 133,400
Illinois Tool Works .............................. 2,700 118,125
Liz Claiborne .................................... 4,800 81,000
OfficeMax* ....................................... 5,700 151,050
Sports & Recreation* ............................. 4,200 107,625
----------
757,400
----------
SOFTWARE -- 4.8%
Microsoft* ....................................... 2,400 147,000
Powersoft ........................................ 1,700 140,250
----------
287,250
----------
SPECIALTY CHEMICALS -- 2.1%
Schulman, A ...................................... 4,687 127,721
----------
TELECOMMUNICATIONS -- 11.5%
British Sky Broadcasting (ADRs) .................. 4,900 117,600
Century Telephone Enterprises .................... 4,000 118,000
Cisco Systems* ................................... 4,500 157,781
MCICommunications ................................ 4,700 86,656
Motorola ......................................... 2,400 138,900
NEXTEL Communications* ........................... 4,300 62,350
----------
681,287
----------
Total Investments -- 95.5% (Cost $5,231,478) ..... 5,675,096
Other Assets Less Liabilities -- 4.5% ............ 267,278
----------
Net Assets -- 100.0% ............................. $5,942,374
==========
----------
* Non-income producing security.
See notes to financial statements.
-17-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN CASH MANAGEMENT PORTFOLIO
<TABLE>
<CAPTION>
Annualized
Yield on Principal
Purchase Date Amount Value
------------- -------- -----
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES -- 49.1% (Cost $1,587,551)
U.S. Treasury Bills, 2/23/1995 ............................................... 5.43% $1,600,000 $1,587,551
----------
COMMERCIAL PAPER -- 34.5%
AT&T Capital Corp., 1/10/1995 ................................................ 5.44 150,000 149,799
Associates Corp. of North America, 3/20/1995 ................................. 6.25 160,000 157,868
Bankers Trust Corp., 1/27/1995 ............................................... 5.48 160,000 159,376
Ford Motor Credit Corp., 3/6/1995 ............................................ 6.25 165,000 163,196
John Deere Capital Corp., 1/19/1995 .......................................... 5.52 165,000 164,550
J. P. Morgan & Co., 2/14/1995 ................................................ 5.81 160,000 158,879
NationsBank of North Carolina, 1/9/1995 ...................................... 5.62 160,000 159,802
----------
Total Commercial Paper (Cost $1,113,470) ..................................... 1,113,470
----------
REPURCHASE AGREEMENTS -- 9.3% (maturing 1/4/1995) (Cost $300,000)
Lehman Government Securities, Inc., collateralized by:
$305,000 U.S. Treasury Notes 7%, 9/30/1996,
with a fair market value of $306,848 ...................................... 5.30 300,000 300,000
----------
BANKERS' ACCEPTANCES -- 4.4% (Cost $142,629)
Republic National Bank of New York, 3/1/1995 ................................. 6.11 144,055 142,629
----------
Total Investments -- 97.3% (Cost $3,143,650) ................................. 3,143,650
Other Assets Less Liabilities -- 2.7% ........................................ 86,191
----------
Net Assets -- 100.0% ......................................................... $3,229,841
==========
</TABLE>
SELIGMAN COMMON STOCK PORTFOLIO
Shares Value
------ -----
COMMON STOCKS -- 86.6%
ADVERTISING -- 1.0%
Omnicom Group .................................... 4,000 $ 207,000
----------
AUTOMOTIVE AND RELATED -- 1.4%
Arvin Industries ................................. 4,700 109,275
General Motors ................................... 3,900 164,775
----------
274,050
----------
CHEMICALS -- 5.2%
Air Products and Chemicals ....................... 6,000 267,750
Dow Chemical ..................................... 7,500 504,375
Engelhard ........................................ 5,900 131,275
Lubrizol ......................................... 4,000 135,500
----------
1,038,900
----------
COMPUTERS AND BUSINESS SERVICES -- 3.2%
First Data ....................................... 6,000 284,250
International Business Machines .................. 5,000 367,500
----------
651,750
----------
----------
See notes to financial statements.
-18-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO (continued)
Shares Value
------ -----
CONSTRUCTION -- 0.5%
Cemex S.A. (ADSs) ................................ 16,875 $ 90,692
----------
CONSUMER GOODS AND SERVICES -- 10.1%
Coca-Cola ........................................ 6,000 309,000
Colgate-Palmolive ................................ 4,000 253,500
Eastman Kodak .................................... 3,000 143,250
Gillette ......................................... 4,000 299,000
International Flavors & Fragrances ............... 8,400 388,500
PepsiCo .......................................... 11,800 427,750
UST Inc. ......................................... 8,000 222,000
----------
2,043,000
----------
DRUGS AND HEALTH CARE -- 3.7%
Abbott Laboratories .............................. 5,900 192,488
Mallinckrodt Group ............................... 3,600 107,550
Schering-Plough .................................. 6,100 451,400
----------
751,438
----------
ELECTRIC AND GAS UTILITIES -- 0.8%
PacifiCorp ....................................... 9,000 163,125
----------
ELECTRONICS -- 3.4%
Motorola ......................................... 8,000 463,000
Perkin-Elmer ..................................... 4,000 102,500
Seagate Technology* .............................. 5,000 120,000
----------
685,500
----------
ENERGY -- 10.2%
Baker Hughes ..................................... 7,000 127,750
British Petroleum (ADRs) ......................... 5,000 399,375
Enron ............................................ 12,000 366,000
Mobil ............................................ 2,200 185,350
Pennzoil ......................................... 4,100 180,913
Royal Dutch Petroleum ............................ 1,000 107,500
Schlumberger ..................................... 5,200 261,950
Societe Nationale Elf Aquitaine (ADRs) ........... 5,000 176,250
Sonat ............................................ 9,000 252,000
----------
2,057,088
----------
FINANCE AND INSURANCE -- 11.5%
Ahmanson (H.F.) .................................. 7,900 127,387
American International Group ..................... 4,500 441,000
Bank of New York ................................. 6,000 174,000
Chubb ............................................ 2,600 201,175
First Financial Management ....................... 5,000 308,125
Gainsco .......................................... 24,309 200,549
General Re ....................................... 3,000 371,250
KeyCorp .......................................... 4,800 120,000
NationsBank ...................................... 5,614 253,332
PNC Bank ......................................... 5,900 124,637
----------
2,321,455
----------
----------
* Non-income producing security.
See notes to financial statements.
-19-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO (continued)
Shares Value
------ -----
FOOD -- 4.4%
ConAgra .......................................... 3,750 $ 117,188
CPC International ................................ 4,000 213,000
Sara Lee ......................................... 18,000 454,500
Wendy's International ............................ 7,000 100,625
----------
885,313
----------
INDUSTRIAL EQUIPMENT -- 2.5%
General Electric ................................. 10,000 510,000
----------
OFFICE EQUIPMENT -- 1.9%
Pitney Bowes ..................................... 12,000 381,000
----------
PAPER PRODUCTS -- 3.2%
Federal Paper Board .............................. 5,100 147,900
Scott Paper ...................................... 4,400 304,150
Union Camp ....................................... 4,000 188,500
----------
640,550
----------
PRINTING AND PUBLISHING -- 1.4%
Knight-Ridder Newspapers ......................... 5,400 272,700
----------
RETAIL TRADE -- 4.3%
K Mart ........................................... 5,500 71,500
Nordstrom ........................................ 6,400 269,600
Penney (J.C.) .................................... 4,000 178,500
Snap-On Tools .................................... 4,100 136,325
TJX Companies .................................... 6,000 93,750
Wal-Mart ......................................... 6,000 127,500
----------
877,175
----------
TELECOMMUNICATIONS -- 6.0%
ALLTEL ........................................... 8,600 259,075
American Telephone & Telegraph ................... 4,000 201,000
GTE .............................................. 6,200 188,325
Telefonos de Mexico, S.A. (ADRs) ................. 6,000 246,000
Vodafone Group (ADSs) ............................ 9,195 309,182
----------
1,203,582
----------
TOBACCO -- 1.1%
Philip Morris .................................... 4,000 230,000
----------
TRANSPORTATION -- 5.0%
British Airways (ADRs) ........................... 6,250 353,906
Conrail .......................................... 2,800 141,400
NFC .............................................. 40,000 107,046
Roadway Services ................................. 7,000 396,375
----------
998,727
----------
----------
See notes to financial statements.
-20-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO (continued)
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
--------- -----
<S> <C> <C>
MISCELLANEOUS -- 5.8%
Alco Standard ........................................ 5,000 shs. $ 313,750
Corning .............................................. 11,800 352,525
Minnesota Mining & Manufacturing ..................... 8,000 427,000
Raychem .............................................. 2,200 78,375
1,171,650
-----------
Total Common Stocks (Cost $12,718,011) ............... 17,454,695
-----------
CONVERTIBLE SECURITIES -- 10.1%
CONVERTIBLE PREFERRED STOCKS -- 2.0%
ConAgra (Series E) $1.6875 ........................... 5,000 163,750
Freeport-McMoRan $4.375+ ............................. 5,000 238,750
-----------
Total Convertible Preferred Stocks (Cost $403,094) ... 402,500
-----------
SUBORDINATED CONVERTIBLE BONDS -- 8.1%
Century Telephone 6%, 2/1/2007+ ...................... $ 250,000 295,625
CML Group 5 1/2%, 1/15/2003 .......................... 250,000 180,000
Compania de Telefonos de Chile S.A. 4 1/2%, 1/15/2003. 350,000 374,938
EMC 4 1/4%, 1/1/2001 ................................. 125,000 151,406
ICICI 2 1/2%, 4/3/2000 ............................... 100,000 74,500
MascoTech 4 1/2%, 12/15/2003 ......................... 125,000 84,062
Medical Care International 6 3/4%, 10/1/2006+ ........ 250,000 210,000
Network Equipment 7 1/4%, 5/15/2014 .................. 300,000 272,625
-----------
Total Subordinated Convertible Bonds (Cost $1,679,289) 1,643,156
-----------
Total Convertible Securities (Cost $2,082,383) ....... 2,045,656
-----------
REPURCHASE AGREEMENT -- 2.5% (Cost $500,000) ......... 500,000 500,000
-----------
Total Investments -- 99.2% (Cost $15,300,394) ........ 20,000,351
Other Assets Less Liabilities -- 0.8% ................ 167,222
-----------
Net Assets -- 100.0% ................................. $20,167,573
===========
</TABLE>
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
Shares Value
------ -----
COMMON STOCKS -- 68.1%
COMPUTER HARDWARE/PERIPHERALS -- 8.6%
Electro Scientific Industries* ................... 500 $ 10,750
Electronics for Imaging* ......................... 400 10,950
EMC* ............................................. 500 10,813
Western Digital* ................................. 600 10,050
----------
42,563
----------
----------
+ Rule 144A security.
* Non-income producing security.
See notes to financial statements.
-21-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO (continued)
Shares Value
------ -----
COMPUTER SOFTWARE -- 15.0%
Compuware* ....................................... 300 $ 10,762
Corel* ........................................... 700 9,712
Delrina* ......................................... 700 8,663
MapInfo* ......................................... 500 12,688
Parametric Technology* ........................... 300 10,313
Synopsys* ........................................ 250 10,875
Viewlogic Systems* ............................... 600 11,025
----------
74,038
----------
CONTRACT MANUFACTURING -- 4.9%
Quickturn Design Systems* ........................ 1,000 13,563
Sanmina* ......................................... 400 11,000
----------
24,563
----------
INFORMATION SERVICES -- 1.9%
SunGard Data Systems* ............................ 250 9,563
----------
NETWORKING -- 5.0%
DSC Communications* .............................. 350 12,622
Standard Microsystems* ........................... 400 12,050
----------
24,672
----------
SEMICONDUCTORS -- 15.9%
Advanced Micro Devices* .......................... 430 10,696
Cypress Semiconductor* ........................... 500 11,562
Exar* ............................................ 500 12,125
Intergrated Device Technology* ................... 370 10,938
Linear Technology ................................ 200 9,875
Motorola ......................................... 200 11,575
Xilinx* .......................................... 200 11,825
----------
78,596
----------
SEMICONDUCTOR CAPITAL EQUIPMENT -- 16.8%
Applied Materials* ............................... 250 10,500
Cognex* .......................................... 500 13,062
Credence Systems* ................................ 400 9,150
Electroglas* ..................................... 300 10,050
FSI International* ............................... 400 10,850
Fusion Systems* .................................. 400 10,350
KLA Instruments* ................................. 200 9,825
Lam Research* .................................... 250 9,280
----------
83,067
----------
Total Investments -- 68.1% (Cost $318,551) ....... 337,062
Other Assets Less Liabilities -- 31.9% ........... 157,559
----------
Net Assets -- 100.0% ............................. $ 494,621
==========
----------
* Non-income producing security.
See notes to financial statements.
-22-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN FIXED INCOME SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
Principal
Amount Value
-------- -----
<S> <C> <C>
U.S. GOVERNMENT SECURITIES AND AGENCIES -- 61.1%
U.S. GOVERNMENT SECURITIES -- 52.6%
U.S. Treasury Bonds 8 7/8%, 2/15/2019 ........................... $ 900,000 $ 982,125
U.S. Treasury Notes 8 7/8%, 2/15/1996 ........................... 900,000 913,500
----------
Total U.S. Government Securities (Cost $1,909,042) .............. 1,895,625
----------
U.S. GOVERNMENT AGENCIES -- 8.5% (Cost $316,178)
Government National Mortgage Association 10%, 12/15/2020++ ...... 291,287 306,671
----------
Total U.S. Government Securities and Agencies (Cost $2,225,220) . 2,202,296
----------
CORPORATE BONDS -- 19.9%
Banco Nacional de Comercio Exterior 7 1/4%, 2/2/2004+ ........... 150,000 106,690
First USA Bank 5 3/4%, 1/15/1999 ................................ 100,000 90,435
General Motors Acceptance 5 5/8%, 2/1/1999 ...................... 150,000 134,234
News America Holdings 8 1/4%, 8/10/2018 ......................... 150,000 132,813
United Telecommunications 9 1/2%, 4/1/2003 ...................... 150,000 157,530
USX 9 1/8%, 1/15/2013 ........................................... 100,000 96,851
----------
Total Corporate Bonds (Cost $789,010) ........................... 718,553
----------
ASSET-BACKED SECURITIES -- 4.0% (Cost $145,752)
Ford Credit Grantor Trust 7.30%, 10/15/1999++ ................... 145,874 144,794
----------
REPURCHASE AGREEMENTS -- 8.3% (maturing 1/4/1995) (Cost $300,000)
Lehman Government Securities, Inc., collateralized by:
$300,000 U.S. Treasury Notes 7 3/4%, 3/31/1996,
with a fair market value of $306,264 ......................... 300,000 300,000
----------
Total Investments -- 93.3% (Cost $3,459,982) .................... 3,365,643
Other Assets Less Liabilities -- 6.7% ........................... 240,731
----------
Net Assets -- 100.0% ............................................ $3,606,374
==========
</TABLE>
----------
+Rule 144A security.
++Investments in mortgage-backed and asset-backed securities are subject to
principal paydowns. As a result of prepayments from refinancing or
satisfaction of the underlying instruments, the average life may be less than
the stated maturity. This in turn may impact the ultimate yield realized from
these investments.
See notes to financial statements.
-23-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO
Shares Value
------ -----
COMMON STOCKS -- 94.7%
ADVERTISING -- 6.2%
Dimac* ........................................... 400 $ 5,050
Heritage Media (Class A)* ........................ 200 5,375
----------
10,425
----------
APPAREL -- 8.5%
Cygne Designs* ................................... 300 4,050
Nautica Enterprises* ............................. 200 6,000
St. John Knits ................................... 150 4,294
----------
14,344
----------
BROADCASTING -- 4.3%
United Video Satellite Group (Class A) ........... 300 7,275
----------
BUSINESS SERVICES -- 12.4%
Interim Services* ................................ 200 4,913
Nu-Kote Holdings (Class A)* ...................... 230 5,951
SPS Transaction Services* ........................ 200 5,250
SunGard Data Systems ............................. 125 4,781
----------
20,895
----------
CAPITAL GOODS -- 10.1%
Cognex ........................................... 250 6,531
Dorsey Trailers* ................................. 400 5,975
Fusion Systems* .................................. 180 4,658
----------
17,164
----------
CONSUMER GOODS -- 2.8%
Duracraft* ....................................... 150 4,772
----------
COMPUTER SOFTWARE -- 3.3%
Viewlogic Systems* ............................... 300 5,512
----------
DRUGS AND HEALTH CARE -- 2.8%
Protein Design Labs* ............................. 300 4,744
----------
ELECTRONICS -- 2.7%
Oak Industries ................................... 200 4,575
----------
FARM EQUIPMENT -- 4.0%
AGCO ............................................. 225 6,834
----------
FINANCIAL SERVICES -- 6.6%
T. Rowe Price .................................... 175 5,228
Roosevelt Financial Group ........................ 400 5,975
----------
11,203
----------
FOOD -- 2.5%
Brothers Gourmet Coffees* ........................ 400 4,250
----------
----------
* Non-income producing security.
See notes to financial statements.
-24-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO (continued)
Shares Value
------ -----
LEISURE -- 3.4%
Aldila* .......................................... 500 $ 5,719
----------
MEDICAL PRODUCTS AND TECHNOLOGY -- 3.0%
Patterson Dental* ................................ 250 5,094
----------
RESTAURANTS --3.2%
International House of Pancakes* ................. 200 5,425
----------
RETAIL TRADE -- 3.2%
Ernst Home Centers* .............................. 600 5,325
----------
TECHNOLOGY -- 12.8%
Electroglas* ..................................... 150 5,025
Electronics for Imaging* ......................... 200 5,475
Standard Microsystems* ........................... 200 6,025
Western Digital* ................................. 300 5,025
----------
21,550
----------
UTILITIES -- 2.9%
Trigen Energy .................................... 250 4,906
----------
Total Investments -- 94.7% (Cost $150,952) ....... 160,012
Other Assets Less Liabilities -- 5.3% ............ 8,939
----------
Net Assets -- 100.0% ............................. $ 168,951
==========
SELIGMAN HENDERSON GLOBAL PORTFOLIO
Shares Value
------ -----
COMMON STOCKS -- 81.7%
BANKING -- 10.4%
ABN-AMRO Holdings (Netherlands) .................. 350 $ 12,171
Banco de Santander (Spain) ....................... 360 13,789
Banco de Santander Rights* (Spain) ............... 36 1,331
Banco Espanol de Credito* (Spain) ................ 132 883
Credito Italiano (Italy) ......................... 5,600 5,778
Credito Italiano Warrants* (Italy) ............... 800 180
C.S. Holdings (Switzerland) ...................... 15 6,417
Deutsche Bank (Germany) .......................... 37 17,174
Fuji Bank (Japan) ................................ 2,000 44,226
Lloyds Bank (UK) ................................. 740 6,399
Malayan Banking (Malaysia) ....................... 2,500 15,080
Siam Commercial Bank (Thailand) .................. 1,000 9,163
Sumitomo Trust and Banking (Japan) ............... 2,000 28,144
United Overseas Bank (Singapore) ................. 2,237 23,628
----------
184,363
----------
----------
* Non-income producing security.
See notes to financial statements.
-25-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL PORTFOLIO (continued)
Shares Value
------ -----
CHEMICALS -- 2.3%
Akzo Nobel (Netherlands) ......................... 130 $ 15,024
Bayer A.G. (Germany) ............................. 60 13,906
Toyo Ink Manufacturing (Japan) ................... 2,000 12,926
----------
41,856
----------
COMMERCIAL SERVICES -- 0.8%
Kvaerner Industries (Norway) ..................... 300 13,572
----------
CONSTRUCTION AND PROPERTY -- 5.3%
City Developments (Singapore) .................... 3,400 19,006
Daiwa House Industry (Japan) ..................... 4,000 56,689
Grupo Tribasa (ADRs)* (Mexico) ................... 300 4,988
Hochtief (Germany) ............................... 10 6,036
LaFarge Coppee, SA (France) ...................... 101 7,191
----------
93,910
----------
CONSUMER PRODUCTS -- 4.6%
Cifra SA (Mexico) ................................ 4,000 8,287
CSK (Japan) ...................................... 1,000 32,566
Nestle (Switzerland) ............................. 20 19,053
Unilever (UK) .................................... 1,200 21,747
----------
81,653
----------
DRUGS AND HEALTH CARE -- 0.5%
Roche Holdings (Switzerland) ..................... 2 9,679
----------
ELECTRONICS -- 7.9%
Farnell Electronics (UK) ......................... 2,000 16,088
Nokia (Finland) .................................. 60 8,837
Pioneer Electronics (Japan) ...................... 2,000 48,246
Schneider (France) ............................... 150 9,949
Toshiba (Japan) .................................. 8,000 58,137
----------
141,257
----------
Finance and Insurance -- 4.2%
Assicurazioni Generali (Italy) ................... 375 8,823
AXA (France) ..................................... 251 11,635
Internationale Nederlanden Bank (Netherlands) .... 303 14,329
Legal & General Group (UK) ....................... 2,100 14,198
Muenchener Rueckversicherung (Germany) ........... 2 3,757
Skandia Forsakrings (Sweden) ..................... 700 12,116
Zurich Versicherung (Switzerland) ................ 10 9,511
----------
74,369
----------
INDUSTRIAL GOODS AND SERVICES -- 2.8%
BBC Brown Boverie (Switzerland) .................. 16 13,775
Bekaert (Belgium) ................................ 20 14,153
BTR (UK) ......................................... 4,900 22,507
BTR Warrants* (UK) ............................... 33 17
----------
50,452
----------
----------
* Non-income producing security.
See notes to financial statements.
-26-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL PORTFOLIO (continued)
Shares Value
------ -----
LEISURE AND HOTELS -- 1.3%
Granada Group (UK) ............................... 2,800 $ 22,348
----------
MANUFACTURING -- 7.7%
Alcatel Alsthom (France) ......................... 61 5,212
Cia Acos Especiais Itabira (ADRs) (Brazil) ....... 75 2,039
Delta Group (UK) ................................. 1,700 11,653
FKI Babcock (UK) ................................. 6,000 13,991
Gadjah Tungal (Indonesia) ........................ 11,000 15,007
Michelin (Class B) (France) ...................... 250 9,102
TPI Polene (Thailand) ............................ 3,250 28,875
Yamaha (Japan) ................................... 4,000 51,060
----------
136,939
----------
MEDIA -- 5.9%
Elsevier (Netherlands) ........................... 1,750 18,267
News Corp. (Australia) ........................... 6,204 24,281
Nippon Television Network (Japan) ................ 110 26,425
Reuters Holdings (UK) ............................ 3,000 21,949
WPP Group (UK) ................................... 8,000 13,709
----------
104,631
----------
METALS -- 1.1%
Allusuisse-Lonza (Switzerland) ................... 22 11,008
NSK (Japan) ...................................... 1,000 7,941
----------
18,949
----------
PACKAGING AND PAPER -- 2.4%
Nippon Paper (Japan) ............................. 4,000 29,430
Stora Kopparbergs (Sweden) ....................... 210 12,672
----------
42,102
----------
RESOURCES -- 4.6%
British Petroleum (UK) ........................... 3,250 21,642
Broken Hill Proprietary (Australia) .............. 1,550 23,520
Repsol (Spain) ................................... 400 10,853
Societe Nationale ELF Aquitaine (France) ......... 230 16,200
YPF Sociedad Anonima (ADRs) (Argentina) .......... 400 8,550
----------
80,765
----------
RETAILING -- 2.7%
Carrefour Supermarche (France) ................... 45 18,651
Karstadt (Germany) ............................... 20 7,295
Tesco (UK) ....................................... 5,700 22,212
----------
48,158
----------
TELECOMMUNICATIONS -- 5.6%
Hong Kong Telecommunications (Hong Kong) ......... 7,800 14,868
Nippon Telegraph & Telephone (Japan) ............. 6 53,131
Syarikat Telecom Malaysia (Malaysia) ............. 1,000 6,776
Tele Danmark (ADRs) (Denmark) .................... 280 14,226
----------
* Non-income producing security.
See notes to financial statements.
-27-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL PORTFOLIO (continued)
Shares or
Principal
Amount Value
------ -----
TELECOMMUNICATIONS (continued)
Telefonica de Espana (Spain) ..................... 500shs. $ 5,909
Telefonos de Mexico, S.A. (ADRs) (Mexico) ........ 100 4,100
----------
99,010
----------
TEXTILES -- 4.0%
Mitsubishi Rayon (Japan) ......................... 13,000 55,795
Tuntex Distinct (Global Depository Receipts)*
(Taiwan) ....................................... 1,200 15,900
----------
71,695
----------
TOBACCO -- 1.2%
B.A.T. Industries (UK) ........................... 3,100 20,934
----------
TRANSPORTATION -- 5.8%
East Japan Railways (Japan) ...................... 11 55,061
Lufthansa (Germany) .............................. 100 12,492
Perusahaan Otomobil Nasional (Malaysia) .......... 3,000 10,928
Swire Pacific (Hong Kong) ........................ 4,000 24,916
----------
103,397
----------
UTILITIES -- 0.6%
Cie Generale des Eaux (France) ................... 114 11,086
----------
Total Common Stocks (Cost $1,426,163) ............ 1,451,125
----------
CONVERTIBLE SECURITIES -- 1.0%
Convertible Bonds -- 1.0% (Cost $19,765)
ELECTRONICS -- 1.0%
Daewoo Electric (Korea) Zero Coupon Bond
due 12/31/2004* ................................ $ 25,000 17,375
Total Investments -- 82.7% (Cost $1,445,928) ..... 1,468,500
Other Assets Less Liabilities -- 17.3% ........... 307,805
----------
Net Assets -- 100.0% ............................. $1,776,305
==========
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
Shares Value
------ -----
COMMON STOCKS -- 109.0%
ADVERTISING -- 3.4%
Heritage Media (Class A)* (US) ................... 165 $ 4,434
----------
BUSINESS SERVICES -- 8.9%
BISYS Group* (US) ................................ 190 4,180
Nu-Kote Holdings (Class A)* (US) ................. 145 3,752
SunGard Data Systems* (US) ....................... 100 3,825
----------
11,757
----------
----------
* Non-income producing security.
See notes to financial statements.
-28-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
------ -----
CONSTRUCTION AND PROPERTY -- 8.1%
Danske Traelastkompagni (Denmark) ................ 70 $ 5,568
Polypipe (UK) .................................... 2,500 5,164
----------
10,732
----------
CONSUMER GOODS AND SERVICES -- 13.2%
Birkby (UK) ...................................... 1,500 5,000
DeVRY (US) ....................................... 125 3,859
Duracraft* (US) .................................. 120 3,818
Rentsch, Walter (Switzerland) .................... 30 4,652
----------
17,329
----------
COMPUTER HARDWARE/PERIPHERALS -- 3.5%
Electronics for Imaging* (US) .................... 170 4,654
----------
DRUGS AND HEALTH CARE -- 2.6%
Protein Design Labs* (US) ........................ 215 3,400
----------
FARM EQUIPMENT -- 3.8%
AGCO (US) ........................................ 165 5,012
----------
FINANCIAL SERVICES -- 3.2%
T. Rowe Price (US) ............................... 140 4,183
----------
LEISURE --3.3%
Aldila* (US) ..................................... 375 4,289
----------
MANUFACTURING -- 14.8%
Equipements et Composants pour l'Industrie
Automobile (France) ............................ 40 5,202
Kalmar Industries* (Sweden) ...................... 400 4,526
Tsudakoma (Japan) ................................ 1,000 9,729
----------
19,457
----------
MEDIA -- 3.2%
United Video Satellite Group (Class A) (US) ...... 175 4,244
----------
MEDICAL PRODUCTS AND TECHNOLOGY -- 6.7%
Life Sciences (UK) ............................... 2,500 5,204
Sullivan Dental Products* (US) ................... 270 3,645
----------
8,849
----------
METALS -- 5.7%
Nakayama Steel Works (Japan) ..................... 1,000 7,488
----------
OIL SERVICES -- 3.0%
Coflexip (ADRs)* (France) ........................ 170 3,931
----------
PRINTING -- 4.0%
Wace Group (UK) .................................. 1,400 5,258
----------
----------
* Non-income producing security.
See notes to financial statements.
-29-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
------ -----
RESTAURANTS -- 3.0%
International House of Pancakes* (US) ............ 145 $ 3,933
----------
RETAILING -- 3.9%
Adelsten (Norway) ................................ 30 5,100
----------
TECHNOLOGY -- 14.7%
Credence Systems* (US) ........................... 170 3,889
FSI International* (US) .......................... 150 4,069
PRI Automation* (US) ............................. 230 3,709
Sanmina* (US) .................................... 140 3,850
Western Digital* (US) ............................ 230 3,853
----------
19,370
----------
Total Investments -- 109.0% (Cost $139,375) ...... 143,420
Other Assets Less Liabilities -- (9.0)% .......... (11,910)
----------
Net Assets -- 100.0% ............................. $131,510
==========
SELIGMAN INCOME PORTFOLIO
Shares Value
------ -----
CONVERTIBLE SECURITIES -- 52.8%
CONVERTIBLE PREFERRED STOCKS -- 15.5%
BANKING AND FINANCE -- 2.0%
Alexander & Alexander (Series A) $3.625+ ......... 1,500 $ 60,000
Chemical Banking $5 .............................. 2,000 137,750
----------
197,750
----------
FOOD -- 2.6%
ConAgra (Series E) $1.6875 ....................... 8,000 262,000
----------
MINERALS -- 2.4%
Freeport-McMoRan $4.375+ ......................... 5,000 238,750
----------
RETAILING -- 0.8%
TJX Companies $3.125 ............................. 2,000 77,500
----------
TRANSPORTATION -- 6.9%
Consolidated Freightways $1.54 ................... 10,000 223,750
GATX $3.875 ...................................... 5,000 270,000
Sea Containers 8% ................................ 5,000 203,125
----------
696,875
----------
----------
* Non-income producing security.
+ Rule 144A security.
See notes to financial statements.
-30-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO (continued)
Shares or
Principal
Amount Value
--------- -----
MISCELLANEOUS -- 0.8%
Corning 6% ....................................... 1,700shs. $ 79,475
----------
Total Convertible Preferred Stocks (Cost $1,587,768) 1,552,350
----------
SUBORDINATED CONVERTIBLE BONDS -- 37.3%
AUTOMOTIVE -- 2.0%
Arvin Industries 7 1/2%, 9/30/2014 ............... $200,000 196,750
----------
BANKING AND FINANCE -- 2.2%
Bank of Boston 7 3/4%, 6/15/2011 ................. 200,000 224,000
----------
DRUGS AND HEALTH CARE -- 1.5%
Pharmaceutical Marketing Services 6 1/4%, 2/1/2003+ 235,000 156,275
----------
ELECTRONICS -- 10.2%
Micropolis 6%, 3/15/2012 ......................... 350,000 223,125
Network Equipment 7 1/4%, 5/15/2014 .............. 300,000 272,625
Quantum 6 3/8%, 4/1/2002 ......................... 250,000 241,875
Seagate Technology 6 3/4%, 5/1/2012 .............. 350,000 289,187
----------
1,026,812
----------
ENERGY -- 5.3%
Kelley Oil & Gas 8 1/2%, 4/1/2000 ................ 285,000 236,194
Santa Fe Pipelines 10.418%, 8/15/2010 ............ 250,000 296,250
----------
532,444
----------
ENTERTAINMENT/PUBLISHING -- 1.3%
Time Warner 8 3/4%, 1/10/2015 .................... 140,000 131,950
----------
ENVIRONMENTAL SERVICES -- 2.0%
USA Waste Services 8 1/2%, 10/15/2002 ............ 200,000 200,750
----------
INSURANCE -- 2.0%
Trenwick Group 6%, 12/15/1999 .................... 200,000 199,000
----------
RETAILING -- 1.8%
CML Group 5 1/2%, 1/15/2003 ...................... 250,000 180,000
----------
TELECOMMUNICATIONS -- 5.2%
Bay Networks 5 1/4%, 5/15/2003+ .................. 100,000 75,750
Century Telephone 6%, 2/1/2007+ .................. 150,000 177,375
Compania de Telefonos de Chile S.A. 4 1/2%, 1/15/2003 250,000 267,813
----------
520,938
----------
TEXTILES-- 2.9%
Unifi 6%, 3/15/2002 .............................. 300,000 292,125
----------
----------
+ Rule 144A security.
See notes to financial statements.
-31-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Portfolios of Investments (continued)
--------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO (continued)
Principal
Amount or
Shares Value
--------- -----
TRANSPORTATION -- 0.9%
Airborne Freight 6 3/4%, 8/15/2001 ............... $100,000 $ 91,500
----------
Total Subordinated Convertible Bonds
(Cost $3,688,832) .............................. 3,752,544
----------
Total Convertible Securities (Cost $5,276,600) ... 5,304,894
----------
CORPORATE BONDS -- 16.2%
AUTOMOTIVE -- 6.2%
Chrysler Financial 6 1/2%, 6/15/1998 ............. 200,000 187,983
Ford Motor Credit 6 3/4%, 8/15/2008 .............. 250,000 211,301
General Motors Acceptance 5 5/8%, 2/1/1999 ....... 250,000 223,723
----------
623,007
----------
BANKING AND FINANCE -- 3.7%
Banco Nacional de Comercio Exterior 7 1/4%,
2/2/2004+ ...................................... 250,000 177,816
First USA Bank 5 3/4%, 1/15/1999 ................. 100,000 90,435
NationsBank 9 1/8%, 10/15/2001 ................... 100,000 102,897
----------
371,148
----------
TELECOMMUNICATIONS -- 3.7%
United Telecommunications 9 1/2%, 4/1/2003 ....... 350,000 367,571
----------
MISCELLANEOUS -- 2.6%
Tenneco Credit 9 5/8%, 8/15/2001 ................. 250,000 262,960
----------
Total Corporate Bonds (Cost $1,814,664) .......... 1,624,686
----------
COMMON STOCKS -- 13.5%
CHEMICALS -- 2.3%
Dow Chemical ..................................... 3,500shs. 235,375
----------
ELECTRIC UTILITIES -- 5.6%
CINergy .......................................... 9,718 227,158
Dominion Resources ............................... 3,000 107,250
New England Electric ............................. 3,000 96,375
Unicom ........................................... 5,304 127,296
----------
558,079
----------
GAS UTILITIES -- 0.9%
Atlanta Gas & Light .............................. 3,000 90,000
----------
RETAILING -- 0.4%
K Mart ........................................... 3,200 41,600
----------
STEEL -- 1.9%
Inland Steel Industries .......................... 5,406 189,886
----------
TRANSPORTATION -- 0.5%
NFC .............................................. 20,000 53,523
----------
----------
+ Rule 144A security.
See notes to financial statements.
-32-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO (continued)
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
--------- -----
<S> <C> <C>
MISCELLANEOUS -- 1.9%
Ogden ............................................................... 10,000shs. $ 187,500
Total Common Stocks (Cost $1,286,557) ............................... 1,355,963
U.S. GOVERNMENT SECURITIES -- 4.9% (Cost $505,839)
U. S. Treasury Notes 7 1/4%, 11/15/1996 ............................. $ 500,000 496,250
-----------
REPURCHASE AGREEMENT -- 10.4% (maturing 1/4/1995) (Cost $1,050,000)
Lehman Government Securities, Inc., collateralized by:
$1,055,000 U.S. Treasury Notes 7 1/4%, 8/31/1996,
with a fair market value of $1,073,596 ........................... 1,050,000 1,050,000
-----------
Total Investments -- 97.8% (Cost $9,933,660) ........................ 9,831,793
Other Assets Less Liabilities -- 2.2% ............................... 218,484
-----------
Net Assets -- 100.0% ................................................ $10,050,277
===========
</TABLE>
----------
See notes to financial statements.
-33-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Statements of Assets and Liabilities December 31, 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman Seligman
ASSETS: Seligman Cash Common Communications Fixed Income
Investments, at value (see Capital Management Stock and Information Securities
portfolios of investments): Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ------------ ------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Common Stocks $5,675,096 $ -- $17,454,695 $337,062 $ --
Convertible Securities -- -- 2,045,656 -- --
U.S. Government Securities
and Agencies -- 1,587,551 -- -- 2,202,296
Corporate Bonds -- -- -- -- 718,553
Asset-backed Security -- -- -- -- 144,794
Commercial Paper -- 1,113,470 -- -- --
Repurchase Agreements -- 300,000 500,000 -- 300,000
Bankers' Acceptances -- 142,629 -- -- --
---------- ---------- ----------- -------- ----------
Total Investments 5,675,096 3,143,650 20,000,351 337,062 3,365,643
Cash 275,547 92,198 153,467 158,000 172,283
Receivable from associated
companies 6,241 1,831 -- 11,628 711
Interest and dividends receivable 3,910 177 85,274 -- 86,703
Receivable for Capital Stock sold -- 7,000 -- -- --
Receivable for securities sold -- -- -- -- --
---------- ---------- ----------- -------- ----------
Total Assets 5,960,794 3,244,856 20,239,092 506,690 3,625,340
---------- ---------- ----------- -------- ----------
LIABILITIES:
Payable for Capital Stock
repurchased 1,482 100 49,038 -- 2,838
Payable for securities purchased -- -- -- -- --
Accrued expenses, taxes, and
other 16,938 14,915 22,481 12,069 16,128
---------- ---------- ----------- -------- ----------
Total Liabilities 18,420 15,015 71,519 12,069 18,966
---------- ---------- ----------- -------- ----------
NET ASSETS $5,942,374 $3,229,841 $20,167,573 $494,621 $3,606,374
========== ========== =========== ======== ==========
COMPOSITION OF NET ASSETS:
Capital Stock, at par $ 468 $ 3,230 $ 1,463 $ 47 $ 389
Additional paid-in capital 5,501,065 3,227,005 15,468,970 476,063 3,784,132
Dividends in excess of net
investment income (2,777) -- (2,777) -- (2,777)
Accumulated net realized gain (loss) -- (394) -- -- (81,031)
Net unrealized appreciation/
depreciation of investments 443,618 -- 4,699,957 18,511 (94,339)
Net unrealized appreciation/
depreciation on translation
of assets and liabilities
denominated in foreign
currencies -- -- (40) -- --
---------- ---------- ----------- -------- ----------
NET ASSETS $5,942,374 $3,229,841 $20,167,573 $494,621 $3,606,374
========== ========== =========== ======== ==========
Shares of Capital Stock
($.001 par value) outstanding: 467,918 3,230,235 1,463,060 47,368 389,066
========== ========== =========== ======== ==========
Net Asset Value per share $ 12.70 $ 1.00 $ 13.78 $ 10.44 $ 9.27
========== ========== =========== ======== ==========
</TABLE>
----------
See notes to financial statements.
-34-
<PAGE>
--------------------------------------------------------------------------------
Statements of Assets and Liabilities December 31, 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Henderson
ASSETS: Seligman Henderson Global Smaller Seligman
Investments, at value (see Frontier Global Companies Income
portfolios of investments): Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------------- -----------
<S> <C> <C> <C> <C>
Common Stocks $160,012 $1,451,125 $143,420 $ 1,355,963
Convertible Securities -- 17,375 -- 5,304,894
U.S. Government Securities
and Agencies -- -- -- 496,250
Corporate Bonds -- -- -- 1,624,686
Asset-backed Security -- -- -- --
Commercial Paper -- -- -- --
Repurchase Agreements -- -- -- 1,050,000
Bankers' Acceptances -- -- -- --
--------- --------- -------- ----------
Total Investments 160,012 1,468,500 143,420 9,831,793
Cash 9,045 343,968 53,838 111,610
Receivable from associated
companies 11,509 4,735 11,328 1,076
Interest and dividends receivable 37 1,119 74 140,826
Receivable for Capital Stock sold -- -- -- --
Receivable for securities sold -- 14,819 -- --
--------- --------- -------- ----------
Total Assets 180,603 1,833,141 208,660 10,085,305
--------- --------- -------- ----------
LIABILITIES:
Payable for Capital Stock
repurchased -- -- -- 16,535
Payable for securities purchased -- 41,178 65,624 --
Accrued expenses, taxes, and
other 11,652 15,658 11,526 18,493
-------- --------- -------- ----------
Total Liabilities 11,652 56,836 77,150 35,028
-------- --------- -------- ----------
NET ASSETS $168,951 $1,776,305 $131,510 $10,050,277
======== ========= ======== ==========
COMPOSITION OF NET ASSETS:
Capital Stock, at par $ 16 $ 157 $ 13 $ 1,008
Additional paid-in capital 159,875 1,752,568 127,645 10,173,046
Dividends in excess of net
investment income -- (1,354) -- (2,777)
Accumulated net realized gain (loss) -- -- -- (19,113)
Net unrealized appreciation/
depreciation of investments 9,060 (2,780) 3,279 (101,867)
Net unrealized appreciation/
depreciation on translation
of assets and liabilities
denominated in foreign
currencies -- 27,714 573 (20)
-------- --------- -------- ----------
NET ASSETS $168,951 $1,776,305 $131,510 $10,050,277
======== ========= ======== ==========
Shares of Capital Stock
($.001 par value) outstanding: 15,970 156,688 12,754 1,007,576
======== ========= ======== ==========
Net Asset Value per share $ 10.58 $ 11.34 $ 10.31 $ 9.97
======== ========= ======== ==========
</TABLE>
----------
See notes to financial statements.
-35-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Statements of Operations For the year ended December 31, 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman Seligman
Seligman Cash Common Communications Fixed Income
Capital Management Stock and Information Securities
Portfolio Portfolio Portfolio Portfolio* Portfolio
-------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividends** $ 37,864 $ -- $ 514,207 $ -- $ --
Interest 2,796 127,857 127,684 -- 200,991
--------- -------- --------- ------- ---------
Total investment income 40,660 127,857 641,891 -- 200,991
--------- -------- --------- ------- ---------
Expenses:
Management fee 23,120 12,837 84,124 349 14,043
Auditing fee 15,512 15,512 15,512 7,000 15,512
Legal fee 6,609 11,060 14,620 2,551 6,609
Directors' fees and expenses 3,636 3,636 3,636 -- 3,636
Shareholder reports and
communications 2,044 2,044 2,044 726 2,044
Registration 1,153 1,103 1,028 164 1,028
Custody and related services 661 244 4,759 400 489
Miscellaneous 2,711 1,175 5,671 879 2,581
--------- -------- --------- ------- ---------
Total expenses before
reimbursement 55,446 47,611 131,394 12,069 45,942
Reimbursement of expenses (20,761) (47,611) (5,204) (11,627) (24,851)
--------- -------- --------- ------- ---------
Total expenses after
reimbursement 34,685 -- 126,190 442 21,091
--------- -------- --------- ------- ---------
Net investment income (loss) 5,975 127,857 515,701 (442) 179,900
--------- -------- --------- ------- ---------
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions:
Net realized gain (loss) on
investments 642,271 (240) 1,108,365 -- (81,031)
Net realized gain (loss) from foreign
currency transactions -- -- 20 -- --
Net change in unrealized appreciation/
depreciation of investments (912,365) -- (1,604,789) 18,511 (225,410)
Net change in unrealized appreciation/
depreciation on translation of
assets and liabilities denominated
in foreign currencies -- -- (40) -- --
--------- -------- --------- ------- ---------
Net gain (loss) on investments
and foreign currency
transactions (270,094) (240) (496,444) 18,511 (306,441)
--------- -------- --------- ------- ---------
Increase (decrease) in net
assets from operations $(264,119) $127,617 $ 19,257 $18,069 $(126,541)
========= ======== ========= ======= =========
----------
* For the period October 11, 1994, (commencement of operations) to December 31, 1994.
** Net of foreign tax withheld
as follows: $ 236 $ -- $ 5,345 $ -- $ --
See notes to financial statements.
</TABLE>
-36-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Statements of Operations (continued) For the year ended December 31, 1994
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Henderson
Seligman Henderson Global Smaller Seligman
Frontier Global Companies Income
Portfolio* Portfolio Portfolio* Portfolio
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Investment income:
Dividends** $ 37 $12,229 $ 22 $ 231,024
Interest -- 14,855 693 512,207
------- ------- ------- ---------
Total investment income 37 27,084 715 743,231
------- ------- ------- ---------
Expenses:
Management fee 99 11,417 159 42,854
Auditing fee 7,000 13,512 7,000 15,512
Legal fee 2,551 6,609 2,551 11,950
Directors' fees and expenses -- 3,611 -- 3,636
Shareholder reports and
communications 726 1,117 726 2,044
Registration 55 1,412 44 1,028
Custody and related services 400 19,221 400 981
Miscellaneous 821 12,953 805 4,333
------- ------- ------- ---------
Total expenses before
reimbursement 11,652 69,852 11,685 82,338
Reimbursement of expenses (11,509) (56,165) (11,487) (18,064)
------- ------- ------- ---------
Total expenses after
reimbursement 143 13,687 198 64,274
------- ------- ------- ---------
Net investment income (loss) (106) 13,397 517 678,957
------- ------- ------- ---------
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions:
Net realized gain (loss) on
investments -- 9,138 -- (19,113)
Net realized gain (loss) from foreign
currency transactions -- 3,259 (58) 10
Net change in unrealized appreciation/
depreciation of investments 9,060 (44,914) 3,279 (1,298,035)
Net change in unrealized appreciation/
depreciation on translation of
assets and liabilities denominated
in foreign currencies -- 29,924 573 (20)
------- ------- ------- ----------
Net gain (loss) on investments
and foreign currency
transactions 9,060 (2,593) 3,794 (1,317,158)
------- ------- ------- ----------
Increase (decrease) in net
assets from operations $ 8,954 $10,804 $ 4,311 $ (638,201)
======= ======= ======= ==========
-----------
* For the period October 11, 1994, (commencement of operations) to December 31, 1994.
** Net of foreign tax withheld
as follows: $ -- $ 1,102 $ -- $ 184
See notes to financial statements.
</TABLE>
-37-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman
Capital Portfolio Cash Management Portfolio Common Stock Portfolio
---------------------- ------------------------- -----------------------
Year ended December 31 Year ended December 31 Year ended December 31
---------------------- ------------------------- -----------------------
1994 1993 1994 1993 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 5,975 $ 4,835 $ 127,857 $ 105,206 $ 515,701 $ 489,260
Net realized gain (loss) on
investments 642,271 1,230,974 (240) -- 1,108,365 2,624,623
Net realized gain (loss) from
foreign currency transactions -- -- -- -- 20 --
Net change in unrealized
appreciation of investments (912,365) (618,489) -- -- (1,604,789) (500,444)
Net change in unrealized
appreciation/depreciation on
translation of assets and
liabilities denominated in
foreign currencies -- -- -- -- (40) --
---------- ---------- ---------- ---------- ----------- -----------
Increase (decrease) in net assets
from operations (264,119) 617,320 127,617 105,206 19,257 2,613,439
---------- ---------- ---------- ---------- ----------- -----------
Distributions to shareholders:
Net investment income (7,465) (6,530) (127,857) (105,206) (517,958) (494,022)
Realized gain on investments (641,977) (1,230,686) -- -- (1,108,564) (2,629,351)
---------- ---------- ---------- ---------- ----------- -----------
Decrease in net assets from
distributions (649,442) (1,237,216) (127,857) (105,206) (1,626,522) (3,123,373)
---------- ---------- ---------- ---------- ----------- -----------
Capital share transactions:
Net proceeds from sale of shares 3,619,176 2,019,707 2,322,638 1,718,990 9,040,524 3,925,915
Investment of dividends 7,465 6,530 127,857 105,206 517,958 494,022
Shares issued in payment of gain
distributions 641,977 1,230,686 -- -- 1,108,564 2,629,351
---------- ---------- ---------- ---------- ----------- -----------
Total 4,268,618 3,256,923 2,450,495 1,824,196 10,667,046 7,049,288
---------- ---------- ---------- ---------- ----------- -----------
Cost of shares repurchased (3,298,449) (2,248,670) (2,322,134) (2,952,298) (10,753,287) (9,665,140)
---------- ---------- ---------- ---------- ----------- -----------
Increase (decrease) in net assets
from capital share transactions 970,169 1,008,253 128,361 (1,128,102) (86,241) (2,615,852)
---------- ---------- ---------- ---------- ----------- -----------
Increase (decrease) in net assets 56,608 388,357 128,121 (1,128,102) (1,693,506) (3,125,786)
Net Assets:
Beginning of period 5,885,766 5,497,409 3,101,720 4,229,822 21,861,079 24,986,865
---------- ---------- ---------- ---------- ----------- -----------
End of period $5,942,374 $5,885,766 $3,229,841 $3,101,720 $20,167,573 $21,861,079
========== ========== ========== ========== =========== ===========
</TABLE>
----------
* Commencement of operations.
See notes to financial statements.
-38-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman
Communications and Fixed Income Seligman Henderson
Information Portfolio Securities Portfolio Frontier Portfolio Global Portfolio
---------------------- ---------------------- ---------------------- ------------------
Year ended December 31
10/11/94* to --------------------- 10/11/94* to Year ended 5/3/93* to
12/31/94 1994 1993 12/31/94 12/31/94 12/31/93
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ (442) $ 179,900 $ 232,876 $ (106) $ 13,397 $ 2,140
Net realized gain (loss) on
investments -- (81,031) 229,048 -- 9,138 939
Net realized gain (loss) from
foreign currency transactions -- -- -- -- 3,259 (589)
Net change in unrealized
appreciation of investments 18,511 (225,410) (117,262) 9,060 (44,914) 42,134
Net change in unrealized
appreciation/depreciation on
translation of assets and
liabilities denominated in
foreign currencies -- -- -- -- 29,924 (2,210)
-------- ---------- ----------- --------- ---------- ---------
Increase (decrease) in net assets
from operations 18,069 (126,541) 344,662 8,954 10,804 42,414
-------- ---------- ----------- --------- ---------- ---------
Distributions to shareholders:
Net investment income -- (181,555) (233,219) -- (9,661) (3,005)
Realized gain on investments -- -- (227,642) -- (17,511) (964)
-------- ---------- ----------- --------- ---------- ---------
Decrease in net assets from
distributions -- (181,555) (460,861) -- (27,172) (3,969)
-------- ---------- ----------- --------- ---------- ---------
Capital share transactions:
Net proceeds from sale of shares 476,552 2,264,201 1,396,663 159,997 1,317,845 607,754
Investment of dividends -- 181,555 233,219 -- 9,661 3,005
Shares issued in payment of gain
distributions -- -- 227,642 -- 17,511 964
-------- ---------- ----------- --------- ---------- ---------
Total 476,552 2,445,756 1,857,524 159,997 1,345,017 611,723
-------- ---------- ----------- --------- ---------- ---------
Cost of shares repurchased -- (2,306,325) (2,716,463) -- (200,626) (1,886)
-------- --------- --------- -------- --------- --------
Increase (decrease) in net assets
from capital share transactions 476,552 139,431 (858,939) 159,997 1,144,391 609,837
-------- ---------- ----------- --------- ---------- ---------
Increase (decrease) in net assets 494,621 (168,665) (975,138) 168,951 1,128,023 648,282
Net Assets:
Beginning of period -- 3,775,039 4,750,177 -- 648,282 --
-------- ---------- ----------- --------- ---------- ---------
End of period $494,621 $3,606,374 $3,775,039 $ 168,951 $1,776,305 $ 648,282
======== ========== ========== ========= ========== =========
</TABLE>
-39-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman
Henderson
Global Smaller Seligman
Companies Portfolio Income Portfolio
--------------------- -----------------------
Year ended December 31
10/11/94* to ---------------------
12/31/94 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Operations:
Net investment income $ 517 $ 678,957 $ 728,986
Net realized gain (loss) on
investments -- (19,113) 517,657
Net realized gain from foreign
currency transactions (58) 10 --
Net change in unrealized
appreciation of investments 3,279 (1,298,035) 80,007
Net change in unrealized
appreciation/depreciation on
translation of assets and
liabilities denominated in
foreign currencies 573 (20) --
-------- ----------- -----------
Increase (decrease) in net assets
from operations 4,311 (638,201) 1,326,650
-------- ----------- -----------
Distributions to shareholders:
Net investment income (537) (685,315) (730,447)
Realized gain on investments -- -- (516,959)
-------- ----------- -----------
Decrease in net assets from
distributions (537) (685,315) (1,247,406)
-------- ----------- -----------
Capital share transactions:
Net proceeds from sale of shares 127,199 4,595,781 2,983,739
Investment of dividends 537 685,315 730,447
Shares issued in payment of gain
distributions -- -- 516,959
-------- ----------- -----------
Total 127,736 5,281,096 4,231,145
-------- ----------- -----------
Cost of shares repurchased -- (5,127,246) (4,453,579)
-------- ----------- -----------
Increase (decrease) in net assets
from capital share transactions 127,736 153,850 (222,434)
-------- ----------- -----------
Increase (decrease) in net assets 131,510 (1,169,666) (143,190)
Net Assets:
Beginning of period -- 11,219,943 11,363,133
-------- ----------- -----------
End of period $131,510 $10,050,277 $11,219,943
======== =========== ===========
</TABLE>
* Commencement of operations.
See notes to financial statements.
-40-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements
--------------------------------------------------------------------------------
1. Seligman Portfolios, Inc. (the "Fund") is an open-end diversified management
investment company consisting of nine separate portfolios (the "Portfolios"),
"Seligman Capital Portfolio" ("Capital Portfolio"), "Seligman Cash Management
Portfolio" ("Cash Management Portfolio"), "Seligman Common Stock Portfolio"
("Common Stock Portfolio"), "Seligman Communications and Information Portfolio"
("Communications and Information Portfolio"), "Seligman Fixed Income Securities
Portfolio" ("Fixed Income Securities Portfolio"), "Seligman Frontier Portfolio"
("Frontier Portfolio"), "Seligman Henderson Global Portfolio" ("Global
Portfolio"), "Seligman Henderson Global Smaller Companies Portfolio" ("Global
Smaller Companies Portfolio", formerly "Seligman Henderson Global Emerging
Companies Portfolio"), and "Seligman Income Portfolio" ("Income Portfolio"),
each designed to meet different investment goals. Shares of the Fund are
currently provided as the investment medium for Canada Life of America Variable
Annuity Account 2 ("CLVA-2") established by Canada Life Insurance Company of
America ("Canada Life"). CLVA-2 is registered as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act") and funds variable annuity
contracts (the "CLVA-2 Contracts") issued by Canada Life and distributed by
Seligman Financial Services, Inc. Shares of the Fund are also expected to be
provided as the investment medium for other variable annuity accounts to be
established by Canada Life or its affiliates ("Canada Life Separate Accounts").
Shares of the Fund (except Communications and Information Portfolio, Frontier
Portfolio, Global Portfolio and Global Smaller Companies Portfolio) are also
provided as the investment medium for Seligman Mutual Benefit Plan (the "Mutual
Benefit Plan") established by MBLLife Assurance Corporation ("MBL Life").
Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in U.S. Government securities, bonds, convertible securities,
and stocks are valued at the most current market values or, in their absence,
at fair market value determined in accordance with procedures approved by the
Board of Directors. Securities traded on national exchanges are valued at the
last sales prices or, in their absence and in the case of over-the-counter
securities, a mean of closing bid and asked prices. Short-term holdings
maturing in 60 days or less are valued at amortized cost. Investments held by
Cash Management Portfolio are valued using the amortized cost method which
approximates fair value.
b. The Portfolios may invest up to 10% of their total assets in foreign
securities (except Global Portfolio and Global Smaller Companies Portfolio
which may invest up to 100% of their total assets in foreign securities).
Investments in foreign securities will usually be denominated in foreign
currencies, and the Portfolios may temporarily hold funds in foreign
currencies. The Portfolios may also invest in U.S. dollar-denominated
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"),
and European Depository Receipts ("EDRs"). ADRs and ADSs are issued by
domestic banks or trust companies and evidence ownership of securities issued
by foreign corporations. ADRs and ADSs are traded on United States exchanges
or over-the-counter and are not included in the 10% limitation. EDRs are
receipts similar to ADRs and ADSs and are issued and traded in Europe. The
books and records of the Portfolios are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities,
at the closing daily rate of exchange as reported by a pricing service;
(ii) purchases and sales of investment securities, income and expenses, at
the rate of exchange prevailing on the respective dates of such
transactions.
The Portfolios' net asset values per share will be affected by changes in
currency exchange rates. Changes in foreign currency exchange rates may also
affect the value of dividends and interest earned, gains and losses realized
on sales of securities and net investment income and gains, if any, to be
distributed to shareholders of the Portfolios. The rate of exchange between
the U.S. dollar and other currencies is determined by the forces of supply
and demand in the foreign exchange markets.
Net realized foreign exchange gains (losses) arise from sales of portfolio
securities, sales and maturities of short-term securities, sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Portfolios' books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of portfolio securities and other foreign currency
denominated assets and liabilities at period end, resulting from changes in
exchange rates.
The Portfolios separate that portion of the results of operations resulting
from changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of securities held in the Portfolios. Similarly,
the Portfolios separate the effect of changes in foreign exchange rates from
the fluctuations arising from changes in the market prices of portfolio
securities sold during the period.
c. The Global Portfolio and Global Smaller Companies Portfolio may enter into
forward currency contracts in order to hedge their exposure to changes in
foreign currency exchange rates on their foreign portfolio holdings, or other
amounts receivable or payable in foreign currency. A forward contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Certain risks may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms of
their contracts. The contracts are valued daily at current exchange rates and
-41-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
any unrealized gain or loss is included in net unrealized appreciation or
depreciation on translation of assets and liabilities denominated in foreign
currencies and forward currency contracts. The gain or loss, if any, arising
from the difference between the settlement value of the forward contract and
the closing of such contract, is included in net realized gain or loss from
foreign currency transactions. For federal income tax purposes, certain open
forward currency contracts are treated as sold on the last day of the fiscal
year and any gains or losses are recognized immediately. As a result, the
amount of income distributable to shareholders may vary from the amount
recognized for financial statement purposes.
d. The Portfolios' policy is to comply with the requirements of the Internal
Revenue Code applicable to Regulated Investment Companies and to distribute
substantially all of their taxable net income and net gain realized to
shareholders.
e. Investment transactions are recorded on trade dates. Interest income is
recorded on the accrual basis. The Portfolios amortize market discounts and
premiums on purchases of portfolio securities. Dividends receivable and
payable are recorded on ex-dividend dates. The Portfolios may enter into
repurchase agreements with commercial banks and with broker/dealers deemed to
be creditworthy by the Manager. Securities purchased subject to repurchase
agreements are deposited with the Portfolios' custodians and, pursuant to the
terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. Procedures have been established to monitor, on a daily basis, the
market value of the repurchase agreements' underlying securities to ensure
the existence of the proper level of collateral.
f. Expenses directly attributable to each Portfolio are charged to such
Portfolio, and expenses that are applicable to more than one Portfolio are
allocated among them.
g. The treatment for financial statement purposes of distributions made
during the year from net investment income or net realized gains may differ
from their ultimate treatment for federal income tax purposes. These
differences primarily are caused by differences in the timing of the
recognition of certain components of income, expense or capital gain and the
recharacterization of foreign exchange gains or losses to either ordinary
income or realized capital gain for federal income tax purposes. Where such
differences are permanent in nature, they are reclassified in the components
of net assets based on their ultimate characterization for federal income tax
purposes. Any such reclassification will have no effect on net assets,
results of operations, or net asset values per share of the Portfolios.
2. Until April 15, 1993, the Fund functioned exclusively as the investment
vehicle for the separate account options of the Mutual Benefit Plan issued by
MBL Life.
On July 16, 1991, the Superior Court of New Jersey (the "Court") entered an
Order (the "Order") appointing the New Jersey Insurance Commissioner as
Rehabilitator of Mutual Benefit Life Insurance Company in Rehabilitation
("Mutual Benefit Life"). The Commissioner was granted immediate exclusive
possession and control of, and title to, the business and assets of Mutual
Benefit Life, including the assets and liabilities of the Mutual Benefit Plan.
The Commissioner was empowered by the Order to take such steps as he deemed
appropriate to remove the cause and conditions that made rehabilitation
necessary. On January 15, 1993, the Commissioner filed the First Amended Plan of
Rehabilitation (the "Plan of Rehabilitation") with the Court. On August 12,
1993, the Court rendered an opinion approving the Plan of Rehabilitation with
certain modifications. Two subsequent amendments to the Plan of Rehabilitation
were filed with and approved by the Court. None of the modifications or
amendments to the Plan of Rehabilitation affected the status of the Mutual
Benefit Plan. On November 10, 1993, the Court issued an Order of Confirmation
which provided for implementation of the Plan of Rehabilitation. On April 29,
1994, the Plan of Rehabilitation was implemented. Substantially all of the
assets and liabilities of Mutual Benefit Life were transferred to MBL Life. In
addition, the assets and liabilities of the Mutual Benefit Plan were transferred
to a separate account of MBL Life. As a separate account, the assets and
liabilities of the Mutual Benefit Plan are maintained separate and apart from
MBL Life's other assets and liabilities. Also, as of April 29, 1994, the
ownership of the stock of MBLLife was transferred to a Trust. The Commissioner
is the sole Trustee of the Trust.
MBL Life has decided that it will not accept applications for new contracts nor
will it accept additional purchase payments under existing contracts. In
addition, requests for transfers of amounts to the Fixed Accumulation Account
from the Plan will not be accepted. The ultimate impact of this decision on the
level of the Plan's assets cannot currently be determined. However, the impact
is not expected to be material.
-42-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Purchases and sales of portfolio securities, excluding short-term
investments, for the period ended December 31, 1994, were as follows:
Portfolio Purchases Sales
-------- --------- -----
Capital $4,213,379 $3,782,920
Common Stock 3,165,571 4,721,029
Communications
and Information 318,551 --
Fixed Income Securities 8,018,964 8,247,758
Frontier 150,952 --
Global 1,449,079 396,656
Global Smaller Companies 139,375 --
Income 2,940,045 3,644,423
Identified cost of investments sold is used for both financial statement and
federal income tax purposes.
At December 31, 1994, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes, and the
tax basis gross unrealized appreciation and depreciation of portfolio
securities, including the effects of foreign currency transactions, were as
follows:
Unrealized Unrealized
Portfolio Appreciation Depreciation
-------- ------------ -----------
Capital $ 990,937 $547,319
Common Stock 5,301,355 601,398
Communications
and Information 22,640 4,129
Fixed Income Securities 4,044 98,383
Frontier 11,980 2,920
Global 67,473 44,901
Global Smaller Companies 5,311 1,266
Income 617,629 719,496
At December 31, 1994, the Cash Management Portfolio, the Fixed Income Securities
Portfolio and the Income Portfolio incurred net capital loss carryforwards of
$394, $81,031 and $19,113, respectively, which are available for offset against
future taxable net gains. These net capital loss carryforwards will expire in
varying amounts through 2002.
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Fund and provides the necessary personnel and facilities, exclusive of and
in addition to those retained by the Fund. 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's fee is calculated daily and payable monthly, equal to 0.40%, on an
annual basis, of Capital Portfolio's, Cash Management Portfolio's, Common Stock
Portfolio's, Fixed Income Securities Portfolio's, and Income Portfolio's daily
net assets and equal to 0.75%, on an annual basis of Communications and
Information Portfolio's, and Frontier Portfolio's daily net assets. The
Manager's fee from the Global Portfolio and the Global Smaller Companies
Portfolio is calculated daily and payable monthly, equal to an annual rate of
1.00% of the average daily net assets of each Portfolio, of which 0.90% is paid
to Seligman Henderson Co. (the "Subadviser"), a 50% owned affiliate of the
Manager. The Manager or Subadviser has agreed to reimburse expenses, other than
the management fee, which exceed 0.20% per annum of the average daily net assets
of each of the Portfolios (except Cash Management Portfolio). The Manager, at
its discretion, has elected to waive all of its fee for, and reimburse all of
the expenses of, the Cash Management Portfolio until such time as the Manager
determines. For the year ended December 31, 1994, the Manager waived fees and/or
reimbursed expenses of $20,761, $47,611, $5,204, $24,851, and $18,064, for the
Capital Portfolio, Cash Management Portfolio, Common Stock Portfolio, Fixed
Income Securities Portfolio, and Income Portfolio, respectively. For the same
period, the Manager and Subadviser waived all of their fees and the Subadviser
reimbursed expenses totalling $56,165 for the Global Portfolio. For the period
from October 11, 1994 (commencement of operations) to December 31, 1994, the
Manager reimbursed expenses of $11,627 and $11,509 for the Communications and
Information Portfolio and the Frontier Portfolio, respectively. For the same
period, the Manager and Subadviser waived all of their fees, and the Subadviser
reimbursed expenses totalling $11,487 for the Global Smaller Companies
Portfolio.
-43-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the CLVA-2 contracts and an affiliate of the Manager, received
commissions of $32,913 from Canada Life after concessions paid to dealers.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, and/or the Subadviser.
Fees of $35,000 were incurred by the Fund for the legal services of Sullivan &
Cromwell, a member of which firm is a director of the Fund.
The Fund has a compensation arrangement under which directors who receive fees
may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The annual cost of such fees and interest is included in directors'
fees and expenses, and the accumulated balance thereof at December 31, 1994, is
included in other liabilities. Deferred fees and the related accrued interest
are not deductible for federal income tax purposes until such amounts are paid.
5. At December 31, 1994, there were 20,000,000 shares of Capital Stock
authorized for each of the Capital, Common Stock, Communications and
Information, Fixed Income Securities, Frontier, Global, Global Smaller
Companies, and Income Portfolios, and 100,000,000 shares for the Cash Management
Portfolio, all at a par value of $.001 per share.
Transactions in shares of Capital Stock were as follows:
<TABLE>
<CAPTION>
Capital Portfolio Cash Management Portfolio Common Stock Portfolio
----------------------- ------------------------ -----------------------
Year ended December 31 Year ended December 31 Year ended December 31
---------------------- ---------------------- ----------------------
1994 1993 1994 1993 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares................ 250,641 115,000 2,322,638 1,718,990 602,357 239,028
Shares issued in payment of
dividends.................. 587 440 127,857 105,206 37,506 32,869
Shares issued in payment
of gain distributions...... 50,470 82,930 -- -- 80,272 174,940
------- ------- --------- --------- ------- -------
Total......................... 301,698 198,370 2,450,495 1,824,196 720,135 446,837
------- ------- --------- --------- ------- -------
Shares repurchased............ (227,501) (128,463) (2,322,134) (2,952,298) (716,170) (589,714)
------- ------- --------- --------- ------- -------
Increase (decrease) in shares. 74,197 69,907 128,361 (1,128,102) 3,965 (142,877)
======= ======= ========= ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Communications and Fixed Income
Information Portfolio Securities Portfolio Frontier Portfolio
----------------------- ---------------------- -----------------------
Year ended December 31
10/11/94* to ---------------------- 10/11/94* to
12/31/94 1994 1993 12/31/94
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sale of shares................ 47,368 229,957 126,797 15,970
Shares issued in payment
of dividends............... -- 19,564 23,000 --
Shares issued in payment
of gain distributions...... -- -- 22,450 --
------- ------- -------- -------
Total......................... 47,368 249,521 172,247 15,970
------- ------- -------- -------
Shares repurchased............ -- (233,817) (244,481) --
------- ------- -------- -------
Increase (decrease) in shares. 47,368 15,704 (72,234) 15,970
======= ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
Global Smaller
Global Portfolio Companies Portfolio Income Portfolio
-------------------------- ---------------------- -----------------------
Year ended December 31
Year ended 5/3/93* to 10/11/94* to ----------------------
12/31/94 12/31/93 12/31/94 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Sale of shares................ 114,731 56,817 12,701 423,636 245,072
Shares issued in payment
of dividends............... 855 263 53 68,876 64,413
Shares issued in payment
of gain distributions...... 1,550 84 -- -- 45,587
------- ------- -------- ------- --------
Total......................... 117,136 57,164 12,754 492,512 355,072
------- ------- -------- ------- --------
Shares repurchased............ (17,445) (167) -- (470,827) (366,762)
------- ------- -------- ------- --------
Increase (decrease) in shares. 99,691 56,997 12,754 21,685 (11,690)
======= ======= ======== ======= ========
</TABLE>
----------
* Commencement of operations.
-44-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cash Common Communications Fixed Income
Capital Management Stock and Information Securities
Portfolio Portfolio Portfolio Portfolio Portfolio
-------- ----------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Shares owned at December 31, 1994:
Seligman Mutual Benefit Plan ..... 376,592 2,692,990 1,291,894 -- 297,299
Canada Life of America
Variable Annuity Account 2 .... 91,326 537,245 171,166 47,368 91,767
J. & W. Seligman & Co.
Incorporated .................. -- -- -- -- --
------- --------- --------- ------- -------
Shares outstanding ............... 467,918 3,230,235 1,463,060 47,368 389,066
======= ========= ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Global
Smaller
Frontier Global Companies Income
Portfolio Portfolio Portfolio Portfolio
-------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares owned at December 31, 1994:
Seligman Mutual Benefit Plan ..... -- -- -- 813,064
Canada Life of America
Variable Annuity Account 2 .... 11,570 150,458 12,754 194,512
J. & W. Seligman & Co.
Incorporated .................. 4,400 6,230 -- --
------- ------- ------- --------
Shares outstanding ............... 15,970 156,688 12,754 1,007,576
======= ======= ======= ========
</TABLE>
-45-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
The Fund's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from a Portfolio's beginning net asset value
to the ending net asset value so that they can understand what effect the
individual items have on their investment, assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item, as disclosed in the financial statements,
to their equivalent per share amount.
The total return based on net asset value measures a Portfolio's performance
assuming investors purchased shares of a Portfolio at net asset value as of the
beginning of the period, reinvested dividends and capital gains paid at net
asset value, and then sold their shares at the net asset value per share on the
last day of the period. The total returns exclude the effect of all
administration fees and asset based sales charges associated with variable
annuity contracts. The total returns for periods of less than one year are not
annualized.
<TABLE>
<CAPTION>
Capital Portfolio
------------------------------------------------------
Year Ended December 31
------------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $14.950 $16.980 $17.740 $11.230 $11.620
------- ------- ------- ------- -------
Net investment income (loss) 0.015 0.021 (0.022) 0.079 0.044
Net realized and unrealized gain (loss)
on investments (0.699) 1.928 1.202 6.547 (0.414)
------- ------- ------- ------- -------
Increase (decrease) from investment operations (0.684) 1.949 1.180 6.626 (0.370)
Dividends paid (0.018) (0.021) -- (0.088) (0.020)
Distributions from net gain realized (1.548) (3.958) (1.940) (0.028) --
------- ------- ------- ------- -------
Net increase (decrease) in net asset value (2.250) (2.030) (0.760) 6.510 (0.390)
------- ------- ------- ------- -------
Net asset value, end of year $12.700 $14.950 $16.980 $17.740 $11.230
======= ======= ======= ======= =======
Total return based on net asset value (4.59)% 11.65% 6.80% 59.05% (3.18)%
Ratios/Supplemental Data:
Expenses to average net assets 0.60% 0.71% 0.91% 0.60% 2.15%
Net investment income (loss) to average
net assets 0.10% 0.09% (0.14)% 0.56% 0.18%
Portfolio turnover 67.39% 65.30% 54.95% 31.44% 28.94%
Net assets, end of year (000's omitted) $5,942 $5,886 $5,497 $5,812 $3,560
Without management fee waiver and
expense reimbursement:*
Net investment loss per share $(0.036) $ (0.003) $ (0.035)
Ratios:
Expenses to average net assets 0.96% 0.83% 1.37%
Net investment loss to average net assets (0.26)% (0.03)% (0.21)%
</TABLE>
<TABLE>
<CAPTION>
Cash Management Portfolio
----------------------------------------------------
Year Ended December 31
----------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income 0.040 0.030 0.035 0.056 0.075
Dividends paid (0.040) (0.030) (0.035) (0.056) (0.075)
------- ------- ------- ------- -------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total return based on net asset value 4.03% 3.00% 3.53% 5.70% 7.79%
Ratios/Supplemental Data:
Expenses to average net assets -- -- -- -- --
Net investment income to average net assets 3.98% 2.96% 3.50% 5.49% 7.53%
Net assets, end of year (000's omitted) $3,230 $3,102 $4,230 $5,849 $3,994
Without management fee waiver and
expense reimbursement:*
Net investment income per share $0.025 $0.019 $0.025 $0.048 $0.045
Ratios:
Expenses to average net assets 1.48% 1.07% 0.97% 0.83% 2.97%
Net investment income to average net assets 2.50% 1.89% 2.53% 4.66% 4.56%
</TABLE>
----------
* The Manager, at its discretion, waived management fees and/or reimbursed
expenses for certain periods presented.
-46-
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Communications and
Common Stock Portfolio Information Portfolio
---------------------------------------------- ------------------
Year Ended December 31 10/11/94* to
----------------------------------------------
1994 1993 1992 1991 1990 12/31/94
------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $14.980 $15.600 $14.740 $11.580 $12.260 $10.000
------- ------- ------- ------- ------- -------
Net investment income (loss) 0.365 0.392 0.346 0.362 0.356 (0.016)
Net realized and unrealized gain (loss)
on investments (0.356) 1.479 1.445 3.459 (0.743) 0.456
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations 0.009 1.871 1.791 3.821 (0.387) 0.440
Dividends paid (0.385) (0.394) (0.369) (0.355) (0.263) --
Distributions from net gain realized (0.824) (2.097) (0.562) (0.306) (0.030) --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value (1.200) (0.620) 0.860 3.160 (0.680) 0.440
------- ------- ------- ------- ------- -------
Net asset value, end of period $13.780 $14.980 $15.600 $14.740 $11.580 $10.440
======= ======= ======= ======= ======= =======
Total return based on net asset value 0.04% 11.94% 12.14% 33.16% (3.15)% 4.40%
Ratios/Supplemental Data:
Expenses to average net assets 0.60% 0.55% 0.56% 0.60% 0.88% 0.95%+
Net investment income (loss) to average
net assets 2.45% 2.10% 2.21% 2.63% 3.01% (0.95)%+
Portfolio turnover 15.29% 10.70% 12.57% 27.67% 13.78% --
Net assets, end of period (000's omitted) $20,168 $21,861 $24,987 $26,103 $18,030 $495
Without management fee waiver and
expense reimbursement:**
Net investment income (loss) per share $0.361 $0.350 $(0.436)
Ratios:
Expenses to average net assets 0.62% 0.71% 13.96%+
Net investment income (loss) to average
net assets 2.43% 2.52% (13.96)%+
</TABLE>
<TABLE>
<CAPTION>
Fixed Income Securities Portfolio Frontier Portfolio
----------------------------------------------- --------------------
Year Ended December 31
----------------------------------------------- 10/11/94* to
1994 1993 1992 1991 1990 12/31/94
------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $10.110 $10.660 $10.990 $10.310 $10.220 $10.000
------- ------- ------- ------- ------- -------
Net investment income (loss) 0.499 0.713 0.706 0.798 0.680 (0.012)
Net realized and unrealized gain (loss)
on investments (0.841) 0.142 (0.092) 0.699 (0.054) 0.592
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations (0.342) 0.855 0.614 1.497 0.626 0.580
Dividends paid (0.498) (0.711) (0.772) (0.817) (0.536) --
Distributions from net gain realized -- (0.694) (0.172) -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value (0.840) (0.550) (0.330) 0.680 0.090 0.580
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 9.270 $10.110 $10.660 $10.990 $10.310 $10.580
======= ======= ======= ======= ======= =======
Total return based on net asset value (3.39)% 7.98% 5.60% 14.58% 6.14% 5.80%
Ratios/Supplemental Data:
Expenses to average net assets 0.60% 0.74% 1.00% 0.60% 1.73% 0.95%+
Net investment income (loss) to average
net assets 5.12% 5.41% 6.22% 7.30% 6.59% (0.70)%+
Portfolio turnover 237.23% 33.21% 23.40% 6.34% 6.62% --
Net assets, end of period (000's omitted) $3,606 $3,775 $4,750 $5,369 $4,600 $169
Without management fee waiver and
expense reimbursement:**
Net investment income (loss) per share $0.430 $0.675 $0.712 $(1.319)
Ratios:
Expenses to average net assets 1.31% 1.07% 1.42% 40.47%+
Net investment income (loss) to average
net assets 4.41% 5.08% 6.48% (40.22)%+
</TABLE>
----------
* Commencement of operations.
** The Manager, at its discretion, waived management fees and/or reimbursed
expenses for certain periods presented.
+ Annualized.
-47-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Smaller
Global Portfolio Companies Portfolio
-------------------------- -----------------
Year ended 5/3/93* to 10/11/94* to
12/31/94 12/31/93 12/31/94
---------- ---------- ---------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $11.370 $10.000 $10.000
------- ------- -------
Net investment income 0.131 0.021 0.058
Net realized and unrealized gain (loss) on
investments (0.306) 1.518 0.266
Net realized and unrealized gain (loss) from
foreign currency transactions 0.325 (0.099) 0.029
------- ------- -------
Increase from investment operations 0.150 1.440 0.353
Dividends paid (0.064) (0.053) (0.043)
Distributions from net gain realized (0.116) (0.017) --
------- ------- -------
Net increase (decrease) in net asset value (0.030) 1.370 0.310
------- ------- -------
Net asset value, end of period $11.340 $11.370 $10.310
======= ======= =======
Total return based on net asset value 1.32% 14.40% 3.53%
Ratios/Supplemental Data:
Expenses to average net assets 1.20% 1.20%+ 1.20%+
Net investment income to average net assets 1.17% 1.30%+ 3.14%+
Portfolio turnover 47.34% 2.82% --
Net assets, end of period (000's omitted) $1,776 $648 $132
Without management fee waiver and
expense reimbursement:**
Net investment income (loss) per share $(0.419) $(1.004) $(1.225)
Ratios:
Expenses to average net assets 6.12% 17.94%+ 37.25%+
Net investment loss to average net assets (3.75)% (15.44)%+ (32.91)%+
</TABLE>
<TABLE>
<CAPTION>
Income Portfolio
-----------------------------------------------------
Year Ended December 31
-----------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $11.380 $11.390 $11.250 $ 9.500 $10.780
------- ------- ------- -------- -------
Net investment income 0.689 0.828 0.862 0.896 0.829
Net realized and unrealized gain (loss)
on investments (1.369) 0.576 0.896 2.024 (1.487)
------- ------- ------- -------- -------
Increase (decrease) from investment operations (0.680) 1.404 1.758 2.920 (0.658)
Dividends paid (0.730) (0.828) (0.987) (0.904) (0.622)
Distributions from net gain realized -- (0.586) (0.631) (0.266) --
------- ------- ------- -------- -------
Net increase (decrease) in net asset value (1.410) (0.010) 0.140 1.750 (1.280)
------- ------- ------- -------- -------
Net asset value, end of year $ 9.970 $11.380 $11.390 $11.250 $ 9.500
======= ======= ======= ======== =======
Total return based on net asset value (5.96)% 12.37% 15.72% 30.89% (6.10)%
Ratios/Supplemental Data:
Expenses to average net assets 0.60% 0.64% 0.68% 0.60% 1.40%
Net investment income to average net assets 6.34% 6.40% 7.53% 8.05% 8.19%
Portfolio turnover 29.76% 38.38% 39.46% 43.67% 21.64%
Net assets, end of year (000's omitted) $10,050 $11,220 $11,363 $11,509 $7,419
Without management fee waiver and
expense reimbursement:**
Net investment income per share $0.670 $0.826 $0.867
Ratios:
Expenses to average net assets 0.77% 0.65% 0.93%
Net investment income to average net assets 6.17% 6.39% 7.72%
</TABLE>
----------
* Commencement of operations.
** The Manager and/or Subadviser, at their discretion, waived management fees
and/or reimbursed expenses for certain periods presented.
+ Annualized.
See notes to financial statements.
-48-
<PAGE>
--------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
--------------------------------------------------------------------------------
The Directors and Shareholders,
Seligman Portfolios, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Seligman Portfolios, Inc. (comprising,
respectively, the Seligman Capital Portfolio, Seligman Cash Management
Portfolio, Seligman Common Stock Portfolio, Seligman Communications and
Information Portfolio, Seligman Fixed Income Securities Portfolio, Seligman
Frontier Portfolio, Seligman Henderson Global Portfolio, Seligman Henderson
Global Smaller Companies Portfolio, and Seligman Income Portfolio, collectively
referred to as the "Fund") as of December 31, 1994, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. These financial statements 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
December 31, 1994, by correspondence with the custodian and brokers. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Seligman Portfolios, Inc. at
December 31, 1994, the results of their operations for the year then ended, the
changes in their net assets, for each of the two years in the period then ended,
and the financial highlights for each of the indicated periods, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
New York, New York
February 10, 1995
-49-
<PAGE>
Seligman Portfolios, Inc.
--------------------------------------------------------------------------------
Board of Directors
--------------------------------------------------------------------------------
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co. Incorporated
Alice S. Ilchman 3
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Partner, Sullivan & Cromwell, Attorneys
Betsy S. Michel 2
Director or Trustee,
Various Organizations
William C. Morris 1
Chairman
Chairman of the Board and President,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
Douglas R. Nichols, Jr. 2
Management Consultant
James C. Pitney 3
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group
James Q. Riordan 3
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting Service
Herman J. Schmidt 2
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
Ronald T. Schroeder 1
President
Managing Director,
J. & W. Seligman & Co. Incorporated
Robert L. Shafer 3
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson 2
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Brian T. Zino 1
Managing Director,
J. & W. Seligman & Co. Incorporated
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
--------------------------------------------------------------------------------
Executive Officers
--------------------------------------------------------------------------------
William C. Morris
Chairman
Ronald T. Schroeder
President
Leonard J. Lovito
Vice President
Loris D. Muzzatti
Vice President
Charles C. Smith, Jr.
Vice President
Lawrence P. Vogel
Vice President
Paul H. Wick
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
--------------------------------------------------------------------------------
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, New York 10017
Subadviser
Seligman Henderson Co.
100 Park Avenue
New York, New York 10017
General Distributor
Seligman Financial Services, Inc.
100 Park Avenue
New York, New York 10017
Custodians
Investors Fiduciary Trust Company
Morgan Stanley Trust Company
General Counsel
Sullivan & Cromwell
Independent Auditors
Ernst & Young LLP
<PAGE>
PART C OTHER INFORMATION
------ -----------------
Item 24. Financial Statements and Exhibits
(a) Financial Statements and Schedules:
Part A - Financial Highlights from June 21, 1988 (commencement of
operations) to December 31, 1994 for Seligman Capital Portfolio,
Seligman Cash Management Portfolio, Seligman Common Stock Portfolio,
Seligman Fixed Income Portfolio and Seligman Income Portfolio; from
May 3, 1993 (commencement of operations) to December 31, 1994 for the
Seligman Henderson Global Portfolio and from October 11, 1994
(commencement of operations) to December 31, 1994 for Seligman
Communications and Information Portfolio, Seligman Frontier Portfolio
and Seligman Henderson Global Smaller Companies Portfolio; Financial
Highlights for the Seligman High-Yield Bond Portfolio are not
included as it is a new portfolio for which financial statements are
not required to be filed.
Part B - Required Financial Statements are included in the Fund's
audited 1994 Annual Report which is incorporated by reference in the
Fund's Statement of Additional Information. These Financial
Statements are: Portfolio of Investments as of December 31, 1994;
Statement of Assets and Liabilities as of December 31, 1994;
Statement of Operations for the year ended December 31, 1994;
Statement of Changes in Net Assets for the years ended December 31,
1994 and 1993; Notes to Financial Statements; Financial Highlights
from June 21, 1988, May 3, 1993 and October 11, 1994 (commencement of
operations) to December 31, 1994; Report of Independent Auditors.
Also included in the Fund's Statement of Additional Information is a
Condensed Statement of Net Assets as of March 30, 1995 for the
Seligman High-Yield Bond Portfolio.
(b) Exhibits: All Exhibits have been filed previously except where
otherwise noted and Exhibits marked with an asterisk (*) are
filed herewith.
(1) Form of Articles of Amendment and Restatement of Articles of
Incorporation. (Incorporated by reference to Post-Effective
Amendment No. 14 filed on February 14, 1995.)
(2) By-laws of Registrant. (Incorporated by Reference to
Pre-Effective Amendment No. 2 filed on May 24, 1988.)
(3) N/A.
(4) N/A.
(5) (a) Form of Management Agreement in respect of Seligman
High-Yield Bond Portfolio. (Incorporated by reference to
Post-Effective Amendment No. 14 filed on February 14, 1995.)
(b) Management Agreements in respect of Seligman Communications
and Information and Seligman Frontier Portfolios.*
(c) Management Agreement in respect of Seligman Henderson
Global Smaller Companies Portfolio (formerly, Seligman
Henderson Global Emerging Companies Portfolio).*
(d) Subadvisory Agreement in respect of Seligman Henderson
Global Smaller Companies Portfolio.* (e) Management Agreement
in respect of Seligman Henderson Global Portfolio.* (f)
Subadvisory Agreement in respect of Seligman Henderson Global
Portfolio.*
(g) Management Agreement in respect of Seligman Capital,
Seligman Cash Management, Seligman Common Stock, Seligman Fixed
Income Securities, and Seligman Income Portfolios.*
(6) N/A.
(7) N/A.
(8) (a) Custodian Agreement and Sub-Custodian Agreement in respect
of Seligman Capital, Seligman Cash Management, Seligman
Common Stock, Seligman Fixed Income Securities, and
Seligman Income Portfolios. (Incorporated by Reference to
Pre-Effective Amendment No. 2 filed on May 24, 1988.)
(b) Custodian Agreement in respect of Seligman Henderson
Global Portfolio. (Incorporated by Reference to
Post-Effective Amendment No. 10 filed on April 26, 1993.)
<PAGE>
PART C OTHER INFORMATION (cont'd)
------ --------------------------
(8) (c) Form of First Amendment to Custodian Agreement in respect of
Seligman Communications and Information and Seligman
Frontier Portfolios. (Incorporated by Reference to
Post-Effective Amendment 13 filed on September 30, 1994.)
(d) Form of Custodian Agreement in respect of Seligman Henderson
Global Smaller Companies Portfolio. (Incorporated by
Reference to Post-Effective Amendment No. 13 filed on
September 30, 1994.)
(e) Recordkeeping Agreement in respect of Seligman Henderson
Global Portfolio. (Incorporated by Reference to
Post-Effective Amendment No. 10 filed on April 26, 1993.)
(f) Form of Amendment to Recordkeeping Agreement in respect of
Seligman Henderson Global Smaller Companies Portfolio.
(Incorporated by Reference to Post-Effective Amendment No.
13 filed on September 30, 1994.)
(g) Form of Amendment to Custodian Agreement in respect of
Seligman High-Yield Bond Portfolio. (To be filed by
amendment.)
(9) Other Material Contracts.
(a) Waiver of Buy/Sell Agreement between the Registrant and The
Mutual Benefit Life Insurance Company. (Incorporated by
Reference to Post-Effective Amendment No. 10 filed on April
26, 1993.)
(b) Buy/Sell Agreement between Registrant and Canada Life
Insurance Company of America. (Incorporated by Reference to
Post-Effective Amendment No. 10 filed on April 26, 1993.)
(c) Buy/Sell Agreement between Registrant and Canada Life
Insurance Company of America. (Incorporated by Reference to
Post-Effective Amendment No. 13 filed on September 30,
1994.)
(d) Agency Agreement between Investors Fiduciary Trust Company,
acting as Transfer and Dividend Disbursing Agent, and the
Fund in respect of Seligman Capital, Seligman Cash
Management, Seligman Common Stock, Seligman Fixed Income
Securities, and Seligman Income Portfolios. (Incorporated by
Reference to Pre-Effective Amendment No. 2 filed on May 24,
1988.)
(e) First Amendment to Agency Agreement between Investors
Fiduciary Trust Company, acting as Transfer and Dividend
Disbursing Agent, and the Fund in respect of Seligman
Henderson Global Portfolio. (Incorporated by Reference to
Post-Effective Amendment No. 10 filed on April 26, 1993.)
(f) Second Amendment to Agency Agreement between Investors
Fiduciary Trust Company, acting as Transfer and Dividend
Disbursing Agent, and the Fund in respect of Seligman
Communications and Information, Seligman Frontier, and
Seligman Henderson Global Smaller Companies Portfolios.
(Incorporated by Reference to Post-Effective Amendment No.
13 filed on September 30, 1994.)
(g) Third Amendment to Agency Agreement between Investors
Fiduciary Trust Company, acting as Transfer and Dividend
Disbursing Agent, and the Fund in respect of Seligman
High-Yield Bond Portfolio. (To be filed by amendment.)
(10) Opinion and Consent of Counsel.*
(11) Consent of independent auditors.*
(12) N/A.
(13) (a) Representation Re: Initial Capital (Purchase Agreement for
Seligman Capital, Seligman Cash Management, Seligman Common
Stock, Seligman Fixed Income Securities, and Seligman Income
Portfolios). (Incorporated by Reference to Pre-Effective
Amendment No. 2 filed on May 24, 1988.)
(b) Representation Re: Initial Capital (Purchase Agreement for
Seligman Henderson Global Portfolio). (Incorporated by
Reference to Post-Effective Amendment No. 10 filed on April
26, 1993.)
(c) Representation Re: Initial Capital (Purchase Agreement for
Seligman High-Yield Bond Portfolio).*
(14) The Seligman 401(K) Retirement Plan Marketing. (Incorporated by
Reference to Post-Effective Amendment No. 3 filed on May 1,
1989.)
(15) N/A.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
<PAGE>
PART C OTHER INFORMATION (cont'd)
------ --------------------------
Item 26. Number of Holders of Securities - As of March 31, 1994, there were
three record holders of Capital Stock of the Registrant.
Item 27. Indemnification - Incorporated by reference to Registrant's
Post-Effective Amendment #6 (File No. 33-15253) as filed with the
Commission on May 1, 1991.
Item 28. Business and Other Connections of Investment Adviser - J. & W.
Seligman & Co. Incorporated, a Delaware Corporation ("Manager"), is
the Registrant's investment manager. The Manager also serves as
investment manager to sixteen associated investment companies. They
are Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and
Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth
Fund, Inc., Seligman Henderson Global Fund Series, Inc., Seligman
High Income Fund Series, Seligman Income Fund, Inc., Seligman New
Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund
Series, Seligman Quality Municipal Fund, Inc., Seligman Select
Municipal Fund, Inc., Seligman Tax-Exempt Fund Series, Inc., Seligman
Tax-Exempt Series Trust and Tri-Continental Corporation.
The Subadviser also serves as subadviser to five other associated
investment companies. They are Seligman Capital Fund, Seligman Common
Stock Fund, Seligman Communications and Information Fund, Seligman
Growth Fund, Seligman Henderson Global Fund Series, Seligman Income
Fund, the Global and Global Smaller Companies Portfolios of Seligman
Portfolios, Inc. and Tri-Continental Corporation.
The Manager and Subadviser have an investment advisory service
division which provides investment management or advice to private
clients. The list required by this Item 28 of officers and directors
of the Manager and the Subadviser, respectively, together with
information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by the Manager and the
Subadviser, respectively, pursuant to the Investment Advisers Act of
1940 (SEC File Nos. 801-5798 and 801-4067), both of which were filed
on March 31, 1995.
Item 29. N/A
Item 30. Location of Accounts and Records - All accounts, books and other
documents required to be maintained by Section 31(a) of the 1940 Act
and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder will
be maintained by the following:
Custodian and Recordkeeping Agent for Seligman Capital, Seligman Cash
Management, Seligman Common Stock, Seligman Communications and
Information, Seligman Fixed Income Securities, Seligman Frontier,
Seligman High-Yield Bond, and Seligman Income Portfolios: Investors
Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105.
Custodian for Seligman Henderson Global Smaller Companies and
Seligman Henderson Global Portfolios: Morgan Stanley Trust Company,
One Pierrepont Plaza, Brooklyn, New York 11201.
Recordkeeping Agent for Seligman Henderson Global Smaller Companies
and Seligman Henderson Global Portfolios: Investors Fiduciary Trust
Company, 127 West 10th Street, Kansas City, Missouri 64105.
Transfer, Redemption and Other Shareholder Account Services for all
Portfolios: Investors Fiduciary Trust Company, 127 West 10th Street,
Kansas City, Missouri 64105.
Item 31. Management Services - None not discussed in the Prospectus or
Statement of Additional Information for the Registrant.
<PAGE>
PART C OTHER INFORMATION (cont'd)
------ --------------------------
Item 32. Undertakings -
(1) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
(2) The Registrant undertakes to file a post-effective
amendment under the Securities Act of 1933 with financial
statements of the Seligman High-Yield Bond Portfolio within
four to six months of the effective date of this Registration
Statement.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment pursuant to
Rule 485(b) of the Securities Act of 1933 and has duly caused this
Post-Effective Amendment #15 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 31st day of March, 1995.
SELIGMAN PORTFOLIOS, INC.
By: /s/ WILLIAM C. MORRIS
----------------------
William C. Morris*, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment #15 to the Registration Statement has been signed below by the
following persons, in the capacities indicated on March 31, 1995.
Signature Title
--------- -----
/s/ WILLIAM C. MORRIS
---------------------- Chairman of the Board (Principal
William C. Morris* executive officer) and Director
/s/ RONALD T. SCHROEDER Director and President
------------------------
Ronald T. Schroeder*
/s/ THOMAS G. ROSE Treasurer
------------------
Thomas G. Rose
Fred E. Brown, Director )
Alice S. Ilchman, Director )
John R. Merow, Director ) /s/ BRIAN T. ZINO
Betsy S. Michel, Director ) -------------------
Douglas R. Nichols, Jr., Director ) *Brian T. Zino, Attorney-In-Fact
James C. Pitney, Director )
James Q. Riordan, Director )
Herman J. Schmidt, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
Brian T. Zino, Director )
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of October 1, 1994 between SELIGMAN
PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of
Seligman Communications and Information Portfolio and Seligman Frontier
Portfolio (the "Portfolios"), and J. & W. SELIGMAN & CO. INCORPORATED, a
Delaware corporation (the "Manager").
WHEREAS, the Corporation is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Corporation desires to retain the Manager to render or
contract to obtain as hereinafter provided investment management services to the
Corporation, and to administer the business and other affairs of the Corporation
and the Manager is willing to render such services;
Now, therefore, in consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Duties of the Manager. The Manager shall, subject to the control of
the Board of Directors of the Corporation, manage the affairs of each Portfolio
as hereinafter defined, including, but not limited to, continuously providing
the Corporation with investment management, including investment research,
advice and supervision, determining which securities shall be purchased or sold
by each Portfolio, making purchases and sales of securities on behalf of each
Portfolio and determining how voting and other rights with respect to securities
of each Portfolio shall be exercised, subject in each case to the control of the
Board of Directors of the Corporation and in accordance with the objectives,
policies and principles set forth in the Registration Statement and Prospectus
of the Corporation and the requirements of the 1940 Act and other applicable
law. In connection with the performance of its duties hereunder, the Manager
shall provide such office space, such bookkeeping, accounting, internal legal,
clerical, secretarial and administrative services (exclusive of, and in addition
to, any such services provided by any others retained by the Corporation) and
such executive and other personnel as shall be necessary for the operations of
the Portfolios. The Corporation understands that the Manager also acts as the
manager of all of the investment companies in the Seligman Group.
Subject to Section 36 of the 1940 Act, the Manager shall not be liable
to the Corporation for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Portfolios and the performance of its duties under this Agreement except for
<PAGE>
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1, and shall pay any salaries, fees
and expenses of the directors of the Corporation who are employees of the
Manager or its affiliates. The Manager shall not be required to pay any other
expenses of the Corporation or the Portfolios, including, but not limited to,
direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent attorneys and auditors, taxes
and governmental fees, cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase or redemption of
shares, expenses of registering and qualifying shares for sale, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services, expenses of printing and filing
reports and other documents filed with governmental agencies, expenses of
printing and distributing prospectuses, expenses of annual and special
shareholders' meetings, fees and disbursements of transfer agents and
custodians, expenses of disbursing dividends and distributions, fees and
expenses of directors of the Corporation who are not employees of the Manager or
its affiliates, membership dues in the Investment Company Institute, insurance
premiums and extraordinary expenses such as litigation expenses.
3. Compensation. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, each
Portfolio will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month at the annual rate of 0.75% of the
average daily net assets attributable to that Portfolio.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Manager shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with respect to
allocation of portfolio transactions as set forth in the Registration Statement
and Prospectus(es) of the Corporation or as the Board of Directors of the
Corporation may direct from time to time. In providing the Portfolios with
investment management and supervision, it is recognized that the Manager will
seek the most favorable price and execution, and, consistent with such policy,
may give consideration to the research, statistical and other services furnished
by brokers or dealers to the Manager for its use, to the general attitude of
brokers or dealers toward investment companies and their support of them, and to
such other considerations as the Board of Directors of the Corporation may
direct or authorize from time to time.
<PAGE>
Notwithstanding the above, it is understood that it is desirable for
the Portfolios that the Manager have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Portfolios than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and execution. Therefore, the Manager is authorized to
place orders for the purchase and sale of securities for the Portfolios with
such brokers, subject to review by the Corporation's Board of Directors from
time to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Manager in connection with its services to other clients as well as the
Portfolios.
The placing of purchase and sale orders may be carried out by the
Manager or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Portfolios, the Manager or any subsidiary of the Manager may, without material
risk, arrange to receive a soliciting dealer's fee or other underwriter's or
dealer's discount or commission, the Manager shall, unless otherwise directed by
the Board of Directors of the Corporation, obtain such fee, discount or
commission and the amount thereof shall be applied to reduce the compensation to
be received by the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Portfolios of additional compensation to
others for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and
effect until December 31, 1995, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Manager
shall not have notified the Portfolios in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire such continuance. This Agreement may be terminated at any time with
respect to one or both Portfolios, without payment of any penalty by the
Corporation, on 60 days' written notice to the Manager by vote of the Board of
Directors of the Corporation or by vote of a majority of the outstanding voting
securities of the affected Portfolio (as defined by the 1940 Act). The failure
of the Board of Directors of the Corporation or holders of securities of one
Portfolio to approve the continuance of this Agreement, or the termination of
this Agreement with respect to one Portfolio, shall be without prejudice to the
effectiveness of this Agreement with respect to the other Portfolio. This
Agreement will automatically terminate in the event of its assignment (as
defined by the 1940 Act).
6. Right of Manager In Corporate Name. The Manager and the Corporation
each agree that the word "Seligman", which comprises a component of the
Corporation's and both Portfolios' names, is a property right of the Manager.
<PAGE>
Each Portfolio agrees and consents that (i) it will only use the word "Seligman"
as a component of its corporate name and for no other purpose, (ii) it will not
purport to grant to any third party the right to use the word "Seligman" for any
purpose, (iii) the Manager or any corporate affiliate of the Manager may use or
grant to others the right to use the word "Seligman", or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose, including a grant of such right to any other investment
company, and at the request of the Manager, the Corporation and the Portfolio
will take such action as may be required to provide its consent to the use of
the word "Seligman", or any combination or abbreviation thereof, by the Manager
or any corporate affiliate of the Manager, or by any person to whom the Manager
or an affiliate of the Manager shall have granted the right to such use; and
(iv) upon the termination of any management agreement into which the Manager and
the Corporation may enter, the Corporation and the Portfolio shall, upon request
by the Manager, promptly take such action, at its own expense, as may be
necessary to change its corporate name to one not containing the word "Seligman"
and following such change, shall not use the word Seligman, or any combination
thereof, as a part of its corporate name or for any other commercial purpose,
and shall use its best efforts to cause its officers, trustees and shareholders
to take any and all actions which the Manager may request to effect the
foregoing and to reconvey to the Manager any and all rights to such word.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation on behalf of the Portfolios and the
Manager have caused this Agreement to be executed by their duly authorized
officers as of the date first above written.
SELIGMAN PORTFOLIOS, INC.
By /s/ Ronald T. Schroeder
-----------------------
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Brian T. Zino
-----------------
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of October 1, 1994 between SELIGMAN
PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of
Seligman Henderson Global Emerging Companies Portfolio (the "Portfolio"), and J.
& W. SELIGMAN & CO.INCORPORATED, a Delaware corporation (the "Manager").
WHEREAS, the Corporation is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Corporation desires to retain the Manager to render or
contract to obtain as hereinafter provided investment management services to the
Corporation, and to administer the business and other affairs of the Corporation
and the Manager is willing to render such services;
Now, therefore, in consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Duties of the Manager. The Manager shall, subject to the control of
the Board of Directors of the Corporation, manage the affairs of the Portfolio
and agrees to provide the services described in this Agreement on the terms set
forth herein. The Manager will enter into an agreement dated the date hereof
(the "Subadvisory Agreement") with Seligman Henderson Co. (the "Subadviser")
pursuant to which the Subadviser will provide the Portfolio with investment
management services, including investment research, advice and supervision,
determining which securities shall be purchased or sold by the Portfolio, making
purchases and sales of securities on behalf of the Portfolio and determining how
voting and other rights with respect to securities of the Portfolio shall be
exercised, subject in each case to the control of the Board of Directors of the
Corporation and in accordance with the objectives, policies and principles set
forth in the Registration Statement and Prospectus of the Corporation and the
requirements of the 1940 Act and other applicable law. The Manager will continue
to have responsibility for investment management services provided under the
Subadvisory Agreement. In the event the Subadviser ceases to provide such
investment management services to the Corporation, they shall be provided by the
Manager or by such other form as may be selected by the Corporation and approved
in accordance with applicable requirements. In connection with the performance
of its duties hereunder, the Manager shall provide such office space, such
bookkeeping, accounting, internal legal, clerical, secretarial and
administrative services (exclusive of, and in addition to, any such services
provided by any others retained by the Corporation) and such executive and other
personnel as shall be necessary for the operations of the Portfolio. The
<PAGE>
Corporation understands that the Manager also acts as the manager of all of the
investment companies in the Seligman Group.
Subject to Section 36 of the 1940 Act, the Manager shall not be liable
to the Corporation for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Portfolio and the performance of its duties under this Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1 including the fee of the
Subadviser, and shall pay any salaries, fees and expenses of the directors of
the Corporation who are employees of the Manager or its affiliates. The Manager
shall not be required to pay any other expenses of the Corporation or the
Portfolio, including, but not limited to, direct charges relating to the
purchase and sale of portfolio securities, interest charges, fees and expenses
of independent attorneys and auditors, taxes and governmental fees, cost of
stock certificates and any other expenses (including clerical expenses) of
issue, sale, repurchase or redemption of shares, expenses of registering and
qualifying shares for sale, expenses of printing and distributing reports,
notices and proxy materials to shareholders, expenses of corporate data
processing and related services, shareholder recordkeeping and shareholder
account services, expenses of printing and filing reports and other documents
filed with governmental agencies, expenses of printing and distributing
prospectuses, expenses of annual and special shareholders' meetings, fees and
disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the Corporation
who are not employees of the Manager or its affiliates, membership dues in the
Investment Company Institute, insurance premiums and extraordinary expenses such
as litigation expenses.
3. Compensation. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Portfolio will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month at the annual rate of 1.00% of the
average daily net assets attributable to the Portfolio.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Manager or, pursuant to the
Subadvisory Agreement, the Subadviser shall purchase securities from or through
and sell securities to or through such persons, brokers or dealers (including
the Manager or an affiliate of the Manager) as the Manager and the Subadviser
shall deem appropriate in order to carry out the policy with respect to
allocation of portfolio transactions as set forth in the Registration Statement
and Prospectus(es) of the Corporation or as the Board of Directors of the
Corporation may direct from time to time. In providing the Portfolio with
investment management and supervision, it is recognized that the Manager or the
<PAGE>
Subadviser will seek the most favorable price and execution, and, consistent
with such policy, may give consideration to the research, statistical and other
services furnished by brokers or dealers to the Manager or the Subadviser for
its use, to the general attitude of brokers or dealers toward investment
companies and their support of them, and to such other considerations as the
Board of Directors of the Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolio that the Manager and the Subadviser have access to supplemental
investment and market research and security and economic analysis provided by
brokers who execute brokerage transactions at a higher cost to the Portfolio
than may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and execution. Therefore, the Manager and the
Subadviser are authorized to place orders for the purchase and sale of
securities for the Portfolio with such brokers, subject to review by the
Corporation's Board of Directors from time to time with respect to the extent
and continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Manager and the Subadviser in connection
with their services to other clients as well as the Portfolio.
The placing of purchase and sale orders may be carried out by the
Manager or the Subadviser or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Portfolio, the Manager or any subsidiary of the Manager may, without material
risk, arrange to receive a soliciting dealer's fee or other underwriter's or
dealer's discount or commission, the Manager shall, unless otherwise directed by
the Board of Directors of the Corporation, obtain such fee, discount or
commission and the amount thereof shall be applied to reduce the compensation to
be received by the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Portfolio of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and
effect until December 31, 1995, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Manager
shall not have notified the Portfolio in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire such continuance. This Agreement may be terminated at any time with
respect to the Portfolio, without payment of any penalty by the Corporation, on
60 days' written notice to the Manager by vote of the Board of Directors of the
Corporation or by vote of a majority of the outstanding voting securities of the
Portfolio (as defined by the 1940 Act). This Agreement will automatically
terminate in the event of its assignment (as defined by the 1940 Act).
<PAGE>
6. Right of Manager In Corporate Name. The Manager and the Corporation
each agree that the word "Seligman", which comprises a component of the
Corporation's and the Portfolio's names, is a property right of the Manager. The
Portfolio agrees and consents that (i) it will only use the word "Seligman" as a
component of its corporate name and for no other purpose, (ii) it will not
purport to grant to any third party the right to use the word "Seligman" for any
purpose, (iii) the Manager or any corporate affiliate of the Manager may use or
grant to others the right to use the word "Seligman", or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose, including a grant of such right to any other investment
company, and at the request of the Manager, the Corporation and the Portfolio
will take such action as may be required to provide its consent to the use of
the word "Seligman", or any combination or abbreviation thereof, by the Manager
or any corporate affiliate of the Manager, or by any person to whom the Manager
or an affiliate of the Manager shall have granted the right to such use; and
(iv) upon the termination of any management agreement into which the Manager and
the Corporation may enter, the Corporation and the Portfolio shall, upon request
by the Manager, promptly take such action, at its own expense, as may be
necessary to change its corporate name to one not containing the word "Seligman"
and following such change, shall not use the word Seligman, or any combination
thereof, as a part of its corporate name or for any other commercial purpose,
and shall use its best efforts to cause its officers, trustees and shareholders
to take any and all actions which the Manager may request to effect the
foregoing and to reconvey to the Manager any and all rights to such word.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation on behalf of the Portfolio and the
Manager have caused this Agreement to be executed by their duly authorized
officers as of the date first above written.
SELIGMAN PORTFOLIOS, INC.
By /s/ Ronald T. Schroeder
-----------------------
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Brian T. Zino
-----------------
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, dated as of October 1, 1994 between J. & W. SELIGMAN
& CO. INCORPORATED, a Delaware corporation (the "Manager") and SELIGMAN
HENDERSON CO., a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated October
1, 1994 (the "Management Agreement") with Seligman Portfolios, Inc. (the
"Corporation"), an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf
of the Seligman Henderson Global Emerging Companies Portfolio of the Corporation
(the "Portfolio"), pursuant to which the Manager will render or contract to
obtain as hereinafter provided investment management services to the Portfolio,
and to administer the business and other affairs of the Portfolio; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Portfolio, and the Subadviser is willing to render
such investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will provide the Portfolio
with investment management services, including investment research, advice and
supervision, determining which securities shall be purchased or sold by the
Portfolio, making purchases and sales of securities on behalf of the Portfolio
and determining how voting and other rights with respect to securities of the
Portfolio shall be exercised, subject in each case to the control of the Board
of Directors of the Corporation and in accordance with the objectives, policies
and principles set forth in the Registration Statement and Prospectus(es) of the
Corporation and the requirements of the 1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be
liable to the Corporation for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in the management
of the Corporation and the performance of its duties under this Agreement except
for willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under Section 1.
3. Compensation. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Manager will pay to the Subadviser each month a fee, calculated on each day
during such month, at an annual rate of .90% of the Portfolio's average daily
net assets.
<PAGE>
(b) If the Subadviser shall serve hereunder for less than the whole of
any month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Subadviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Subadviser shall deem appropriate in order to carry
out the policy with respect to allocation of portfolio transactions as set forth
in the Registration Statement and Prospectus(es) of the Corporation or as the
Board of Directors of the Corporation may direct from time to time. In providing
the Portfolio with investment management and supervision, it is recognized that
the Subadviser will seek the most favorable price and execution, and, consistent
with such policy, may give consideration to the research, statistical and other
services furnished by brokers or dealers to the Subadviser for its use, to the
general attitude of brokers or dealers toward investment companies and their
support of them, and to such other considerations as the Board of Directors of
the Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolio that the Subadviser have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Portfolio than may result
when allocating brokerage to other brokers on the basis of seeking the most
favorable price and execution. Therefore, the Subadviser is authorized to place
orders for the purchase and sale of securities of the Portfolio with such
brokers, subject to review by the Corporation's Board of Directors from time to
time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients as well as the
Portfolio.
If, in connection with purchases and sales of securities for the
Portfolio, the Subadviser may, without material risk, arrange to receive a
soliciting dealer's fee or other underwriter's or dealer's discount or
commission, the Subadviser shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and the
amount thereof shall be applied to reduce the compensation to be received by the
Subadviser pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Portfolio of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and
effect until December 31, 1995, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Subadviser
shall not have notified the Manager in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire such continuance. This Agreement may be terminated at any time, without
payment of penalty by the Corporation, on 60 days' written notice to the
Subadviser by vote of the Board of Directors of the Corporation or by vote of a
<PAGE>
majority of the outstanding voting securities of the Portfolio (as defined by
the 1940 Act). This Agreement will automatically terminate in the event of its
assignment (as defined by the 1940 Act) or upon the termination of the
Management Agreement.
6. Amendments. This Agreement may be amended by consent of the parties
hereto provided that the consent of the Corporation is obtained in accordance
with the requirements of the 1940 Act.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Ronald T. Schroeder
-----------------------
SELIGMAN HENDERSON CO.
By /s/ Brian T. Zino
-----------------
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of May 1, 1993 between SELIGMAN
PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of
Seligman Global Portfolio (the "Portfolio") and J. & W. SELIGMAN & CO.
INCORPORATED, a Delaware corporation (the "Manager").
WHEREAS, the Corporation is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Corporation desires to retain the Manager to render or
contract to obtain as hereinafter provided investment management services to the
Corporation, and to administer the business and other affairs of the Corporation
and the Manager is willing to render such services;
Now, therefore, in consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Duties of the Manager. The Manager shall, subject to the control of
the Board of Directors of the Corporation, manage the affairs of the Portfolio
and agrees to provide the services described in this Agreement on the terms set
forth herein. The Manager will enter into an agreement dated the date hereof
(the "Subadvisory Agreement") with Seligman Henderson Co. (the "Subadviser")
pursuant to which the Subadviser will provide the Portfolio with investment
management services, including investment research, advice and supervision,
determining which securities shall be purchased or sold by the Portfolio, making
purchases and sales of securities on behalf of the Portfolio and determining how
voting and other rights with respect to securities of the Portfolio shall be
exercised, subject in each case to the control of the Board of Directors of the
Corporation and in accordance with the objectives, policies and principles set
forth in the Registration Statement and Prospectus of the Corporation and the
requirements of the 1940 Act and other applicable law. The Manager will continue
to have responsibility for investment management services provided under the
Subadvisory Agreement. In the event the Subadviser ceases to provide such
investment management services to the Corporation, they shall be provided by the
Manager or by such other form as may be selected by the Corporation and approved
in accordance with applicable requirements. In connection with the performance
of its duties hereunder, the Manager shall provide such office space, such
bookkeeping, accounting, internal legal, clerical, secretarial and
administrative services (exclusive of, and in addition to, any such services
provided by any others retained by the Corporation) and such executive and other
personnel as shall be necessary for the operations of the Portfolio. The
Corporation understands that the Manager also acts as the manager of all of the
investment companies in the Seligman Group.
<PAGE>
Subject to Section 36 of the 1940 Act, the Manager shall not be liable
to the Corporation for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Portfolio and the performance of its duties under this Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1 including the fee of the
Subadviser, and shall pay any salaries, fees and expenses of the directors of
the Corporation who are employees of the Manager or its affiliates. The Manager
shall not be required to pay any other expenses of the Corporation or the
Portfolio, including, but not limited to, direct charges relating to the
purchase and sale of portfolio securities, interest charges, fees and expenses
of independent attorneys and auditors, taxes and governmental fees, cost of
stock certificates and any other expenses (including clerical expenses) of
issue, sale, repurchase or redemption of shares, expenses of registering and
qualifying shares for sale, expenses of printing and distributing reports,
notices and proxy materials to shareholders, expenses of corporate data
processing and related services, shareholder recordkeeping and shareholder
account services, expenses of printing and filing reports and other documents
filed with governmental agencies, expenses of printing and distributing
prospectuses, expenses of annual and special shareholders' meetings, fees and
disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the Corporation
who are not employees of the Manager or its affiliates, membership dues in the
Investment Company Institute, insurance premiums and extraordinary expenses such
as litigation expenses.
3. Compensation. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Portfolio will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month at the annual rate of 1.00% of the
average daily net assets attributable to the Portfolio.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Manager or, pursuant to the
Subadvisory Agreement, the Subadviser shall purchase securities from or through
and sell securities to or through such persons, brokers or dealers (including
the Manager or an affiliate of the Manager) as the Manager and the Subadviser
shall deem appropriate in order to carry out the policy with respect to
allocation of portfolio transactions as set forth in the Registration Statement
and Prospectus(es) of the Corporation or as the Board of Directors of the
Corporation may direct from time to time. In providing the Portfolio with
investment management and supervision, it is recognized that the Manager or the
Subadviser will seek the most favorable price and execution, and, consistent
with such policy, may give consideration to the research, statistical and other
<PAGE>
services furnished by brokers or dealers to the Manager or the Subadviser for
its use, to the general attitude of brokers or dealers toward investment
companies and their support of them, and to such other considerations as the
Board of Directors of the Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolio that the Manager and the Subadviser have access to supplemental
investment and market research and security and economic analysis provided by
brokers who execute brokerage transactions at a higher cost to the Portfolio
than may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and execution. Therefore, the Manager and the
Subadviser are authorized to place orders for the purchase and sale of
securities for the Portfolio with such brokers, subject to review by the
Corporation's Board of Directors from time to time with respect to the extent
and continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Manager and the Subadviser in connection
with their services to other clients as well as the Portfolio.
The placing of purchase and sale orders may be carried out by the
Manager or the Subadviser or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Portfolio, the Manager or any subsidiary of the Manager may, without material
risk, arrange to receive a soliciting dealer's fee or other underwriter's or
dealer's discount or commission, the Manager shall, unless otherwise directed by
the Board of Directors of the Corporation, obtain such fee, discount or
commission and the amount thereof shall be applied to reduce the compensation to
be received by the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Portfolio of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and
effect until December 31, 1994, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Manager
shall not have notified the Portfolio in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire such continuance. This Agreement may be terminated at any time, without
payment of any penalty by the Corporation, on 60 days' written notice to the
Manager by vote of the Board of Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio (as defined by
the 1940 Act). This Agreement will automatically terminate in the event of its
assignment (as defined by the 1940 Act).
6. Right of Manager In Corporate Name. The Manager and the Corporation
each agree that the word "Seligman", which comprises a component of the
Portfolio's name, is a property right of the Manager. The Portfolio agrees and
consents that (i) it will only use the word "Seligman" as a component of its
corporate name and for no other purpose, (ii) it will not purport to grant to
<PAGE>
any third party the right to use the word "Seligman" for any purpose, (iii) the
Manager or any corporate affiliate of the Manager may use or grant to others the
right to use the word "Seligman", or any combination or abbreviation thereof, as
all or a portion of a corporate or business name or for any commercial purpose,
including a grant of such right to any other investment company, and at the
request of the Manager, the Corporation and the Portfolio will take such action
as may be required to provide its consent to the use of the word "Seligman", or
any combination or abbreviation thereof, by the Manager or any corporate
affiliate of the Manager, or by any person to whom the Manager or an affiliate
of the Manager shall have granted the right to such use; and (iv) upon the
termination of any management agreement into which the Manager and the
Corporation may enter, the Corporation and the Portfolio shall, upon request by
the Manager, promptly take such action, at its own expense, as may be necessary
to change its corporate name to one not containing the word "Seligman" and
following such change, shall not use the word Seligman, or any combination
thereof, as a part of its corporate name or for any other commercial purpose,
and shall use its best efforts to cause its officers, trustees and shareholders
to take any and all actions which the Manager may request to effect the
foregoing and to reconvey to the Manager any and all rights to such word.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation on behalf of the Portfolio and the
Manager have caused this Agreement to be executed by their duly authorized
officers as of the date first above written.
SELIGMAN PORTFOLIOS, INC.
By /s/ Ronald T. Schroeder
-----------------------
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Brian T. Zino
-----------------
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, dated as of May 1, 1993 between J. & W. SELIGMAN &
CO. INCORPORATED, a Delaware corporation (the "Manager") and Seligman Henderson
Co., a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated May 1,
1993 (the "Management Agreement") with Seligman Portfolios, Inc. (the
"Corporation"), an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf
of the Seligman Henderson Global Portfolio of the Corporation (the "Portfolio")
pursuant to which the Manager will render or contract to obtain as hereinafter
provided investment management services to the Portfolio, and to administer the
business and other affairs of the Portfolio; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Portfolio, and the Subadviser is willing to render
such investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will provide the Portfolio
with investment management services, including investment research, advice and
supervision, determining which securities shall be purchased or sold by the
Portfolio, making purchases and sales of securities on behalf of the Portfolio
and determining how voting and other rights with respect to securities of the
Portfolio shall be exercised, subject in each case to the control of the Board
of Directors of the Corporation and in accordance with the objectives, policies
and principles set forth in the Registration Statement and Prospectus(es) of the
Corporation and the requirements of the 1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be
liable to the Corporation for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in the management
of the Corporation and the performance of its duties under this Agreement except
for willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under Section 1.
3. Compensation. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Manager will pay to the Subadviser each month a fee, calculated on each day
during such month, at an annual rate of .90% of the Portfolio's average daily
net assets.
<PAGE>
(b) If the Subadviser shall serve hereunder for less than the whole of
any month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Subadviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Subadviser shall deem appropriate in order to carry
out the policy with respect to allocation of portfolio transactions as set forth
in the Registration Statement and Prospectus(es) of the Corporation or as the
Board of Directors of the Corporation may direct from time to time. In providing
the Portfolio with investment management and supervision, it is recognized that
the Subadviser will seek the most favorable price and execution, and, consistent
with such policy, may give consideration to the research, statistical and other
services furnished by brokers or dealers to the Subadviser for its use, to the
general attitude of brokers or dealers toward investment companies and their
support of them, and to such other considerations as the Board of Directors of
the Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolio that the Subadviser have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Portfolio than may result
when allocating brokerage to other brokers on the basis of seeking the most
favorable price and execution. Therefore, the Subadviser is authorized to place
orders for the purchase and sale of securities of the Portfolio with such
brokers, subject to review by the Corporation's Board of Directors from time to
time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients as well as the
Portfolio.
If, in connection with purchases and sales of securities for the
Portfolio, the Subadviser may, without material risk, arrange to receive a
soliciting dealer's fee or other underwriter's or dealer's discount or
commission, the Subadviser shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and the
amount thereof shall be applied to reduce the compensation to be received by the
Subadviser pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Portfolio of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and
effect until December 31, 1994, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Subadviser
shall not have notified the Manager in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire such continuance. This Agreement may be terminated at any time, without
payment of penalty by the Corporation, on 60 days' written notice to the
Subadviser by vote of the Board of Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio (as defined by
the 1940 Act). This Agreement will automatically terminate in the event of its
assignment (as defined by the 1940 Act) or upon the termination of the
Management Agreement.
<PAGE>
6. Amendments. This Agreement may be amended by consent of the parties
hereto provided that the consent of the Corporation is obtained in accordance
with the requirements of the 1940 Act.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Ronald T. Schroeder
-----------------------
SELIGMAN HENDERSON CO.
By /s/ Brian T. Zino
------------------
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of December 29, 1988, between SELIGMAN
MUTUAL BENEFIT PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), and
J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of the Manager. The Manager shall manage the affairs of the
Corporation with respect to each Portfolio, as hereinafter defined including,
but not limited to, continuously providing the Corporation with investment
management, including investment research, advice and supervision, determining
which securities shall be purchased or sold by the Corporation, making purchases
and sales of securities on behalf of the Corporation and determining how voting
and other rights with respect to securities of each Portfolio shall be
exercised, subject in each case to the control of the Board of Directors of the
Corporation and in accordance with the objectives, policies and principles set
forth in the Registration Statement including the Prospectus and Statement of
Additional Information of the Corporation as relating to the Portfolio and the
requirements of the Investment Company Act of 1940 (the "Act") and other
applicable law. In performing such duties, the Manager shall provide such office
space, such bookkeeping, accounting, internal legal, clerical, secretarial and
administrative services (exclusive of and in addition to, any such services
provided by any others retained by the Corporation) and such executive and other
personnel as shall be necessary for the operations of the Corporation. The
Corporation understands that the Manager also acts as the manager of the
investment companies in the Seligman Group. As used herein a "Portfolio" means
the assets and liabilities of the Corporation attributable to any of the
following classes or series of its capital stock: The Seligman Capital
Portfolio, The Seligman Common Stock Portfolio, The Seligman Income Portfolio,
The Seligman Fixed Income Securities Portfolio, The Seligman Cash Management
Portfolio and any other class of the Corporation's Capital Stock to which the
Corporation and the Manager agree this Agreement shall apply.
Subject to Section 36 of the Act, the Manager shall not be liable to
the Corporation for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Corporation and the performance of its duties under this Agreement except
for willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section l and shall pay any salaries, fees
and expenses of the directors of the Corporation who are employees of the
Manager or its affiliates. The Manager shall not be required to pay any other
expenses of the Corporation, including, but not limited to, direct charges
relating to the purchase and sale of portfolio securities, interest charges,
fees and expenses of independent attorneys and auditors, taxes and governmental
fees and any other expenses (including clerical expenses) of issue, sale,
repurchase or redemption of shares, expenses of registering and qualifying
<PAGE>
shares for sale, expenses of corporate data processing and related services, the
daily computation of each Portfolio's net asset value as required by applicable
laws, shareholder recordkeeping and shareholder account services, expenses of
typesetting and filing reports and other documents filed with governmental
agencies, fees and disbursements of transfer agents and custodians, expenses of
disbursing dividends and distributions, fees and expenses of directors of the
Corporation who are not employees of the Manager or its affiliates, membership
dues in the Investment Company Institute, insurance premiums and extraordinary
expenses such as litigation expenses.
The Manager may from time to time voluntarily assume certain expenses
of a Portfolio and may be reimbursed for such amounts prior to the end of the
fiscal year in which they were voluntarily assumed.
3. Compensation. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section l, the
Corporation will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month, at an annual rate of 0.40% of the
Corporation's average daily net assets attributable to each Portfolio.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Manager shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with respect to
allocation of portfolio transactions as set forth in the Registration Statement
of the Corporation relating to each Portfolio or as the Board of Directors of
the Corporation may direct from time to time. In providing the Corporation with
investment management and supervision, it is recognized that the Manager will
seek the most favorable price and execution, and, consistent with such policy,
may give consideration to the research, statistical and other services furnished
by brokers or dealers to the Manager for its use, to the general attitude of
brokers or dealers toward investment companies and their support of them, and to
such other considerations as the Board of Directors of the Corporation may
direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Corporation that the Manager have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Corporation than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and execution. Therefore, the Manager is authorized to
place orders for the purchase and sale of securities for the Portfolio of the
Corporation with such brokers, subject to review by the Corporation's Board of
Directors from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers may be
useful to the Manager in connection with its services to other clients as well
as the Corporation.
The placing of purchase and sale orders may be carried out by the
Manager or any wholly-owned subsidiary of the Manager.
<PAGE>
If, in connection with purchases and sales of securities for the
Portfolio of the Corporation, the Manager or any subsidiary of the Manager may,
without material risk, arrange to receive a soliciting dealer's fee or other
underwriter's or dealer's discount or commission, the Manager shall, unless
otherwise directed by the Board of Directors of the Corporation, obtain such
fee, discount or commission and the amount thereof shall be applied to reduce
the compensation to be received by the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Corporation of additional compensation to
others for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and
effect with respect to a Portfolio of the Corporation until December 29, 1989
and from year to year thereafter if such continuance is approved in the manner
required by the Act and if the Manager shall not have notified the Corporation
in writing at least 60 days prior to such December 29 or prior to December 29 of
any year thereafter that it does not desire such continuance; provided, however,
that with respect to a Portfolio of the Corporation which first offers its
shares subsequent to the first meeting of shareholders of the Portfolio after
the date hereof, this Agreement shall continue in full force and effect until
the earlier of (a) two years from the date such shares are first offered and (b)
the first meeting of shareholders of such Portfolio after such date. If approved
at such meeting by the affirmative vote of a majority of the outstanding voting
securities (as defined by the Act) of such Portfolio, this Agreement shall
continue in full force and effect with respect to such Portfolio, from year to
year thereafter if such continuance is approved in the manner required by the
Act. This Agreement may be terminated at any time with respect to any or all
Portfolios without payment of penalty by the Corporation or on 60 days' written
notice to the Manager by vote of the Board of Directors of the Corporation or by
vote of a majority of the outstanding voting securities of the affected
Portfolio of the Corporation (as defined by the Act). The failure of the Board
of Directors or holders of securities of any Portfolio of the Corporation to
approve the continuance of this Agreement, or the termination of this Agreement
with respect to any Portfolio shall be without prejudice to the effectiveness of
this Agreement with respect to any other Portfolio. The Manager may not
terminate this Agreement for a period of five years from the effective date of
this Agreement, except if agreed upon by the parties hereto to terminate sooner
or at the option of the Manager upon 60 days' written notice for the following
reasons: (a) upon the institution of formal proceedings against Mutual Benefit
Life Insurance Company, ("Mutual Benefit Life") a New Jersey corporation, the
depositor of Mutual Benefit Variable Contract Account-9 (the "Separate Account")
to which Separate Account shares of the Corporation will be sold or Mutual
Benefit Financial Services Company, brought by the National Association of
Securities Dealers, Inc., the SEC or any state securities or state insurance
department or any other regulatory body, provided that the Manager determines in
good faith in its sole judgement, that such institution will have a material
adverse impact upon the Fund; (b) upon a material adverse change in the
financial condition of Mutual Benefit Life; (c) if there is material adverse
publicity regarding Mutual Benefit Life; or (d) upon the termination of the
Buy-Sell Agreement, dated May 16, 1988, (the "Buy-Sell Agreement") among Mutual
<PAGE>
Benefit Life on its own behalf and on behalf of the Separate Account, the
Corporation and the Manager. After such five years the Manager may terminate
this Agreement at any time upon 60 days' written notice to the Fund. This
Agreement shall automatically terminate in the event of its assignment (as
defined by the Act).
6. Right of Manager in Corporate Name. The Manager and the Corporation
each agree that the word "Seligman", which comprises a component of the
Corporation's name and each Portfolio's name, is a property right of the
Manager. The Corporation agrees and consents that (i) it will only use the word
"Seligman" as a component of its corporate name and the names of each Portfolio,
and for no other purpose, (ii) it will not purport to grant to any third party
the right to use the word "Seligman" for any purpose, (iii) the Manager or any
corporate affiliate of the Manager may use or grant to others the right to use
the word "Seligman", or any combination or abbreviation thereof, as all or a
portion of a corporate or business name or for any commercial purpose, including
a grant of such right to any other investment company, and at the request of the
Manager, the Corporation will take such action as may be required to provide its
consent to the use of the word "Seligman", or any combination or abbreviation
thereof, by the Manager or any corporate affiliate of the Manager, or by any
person to whom the Manager or an affiliate of the Manager shall have granted the
right to such use; and (iv) upon the termination of this Management Agreement,
the Corporation shall, upon request by the Manager, promptly take action, at its
own expense, as may be necessary to change its corporate name or a Portfolio's
name to one not containing the word "Seligman" and following such change, shall
not use the word "Seligman", or any combination thereof, as a part of its
corporate name or for any other commercial purpose, and shall use its best
efforts to cause its officers, directors and shareholders to take any and all
actions which the Manager may request to effect the foregoing and to reconvey to
the Manager any and all rights to such word.
7. Right of Mutual Benefit Life in Corporate Name. The Corporation
agrees that the word "Mutual Benefit Life", which comprises a component of the
Corporation's name, is a property right of Mutual Benefit Life. The Corporation
agrees and consents that (i) it will only use the word "Mutual Benefit Life" as
a component of its corporate name and for no other purpose, (ii) it will not
purport to grant to any third party their right to use the word "Mutual Benefit
Life", (iii) Mutual Benefit Life or any corporate affiliate of Mutual Benefit
Life may use or grant to others the right to use the word "Mutual Benefit Life",
or any combination or abbreviation thereof, as all or a portion of a corporate
or business name or for any commercial purpose, the Corporation will take such
action as may be required to provide its consent to the use of the word Mutual
Benefit Life or any combination or abbreviation thereof, by Mutual Benefit Life
or any corporate affiliate of Mutual Benefit Life, or by any person to whom
Mutual Benefit Life or an affiliate of Mutual Benefit Life shall have granted
the right to such use; and (iv) upon the termination of this Management
Agreement or the Buy-Sell Agreement, the Corporation shall upon the request of
Mutual Benefit Life, promptly take action at its own expense, as may be
necessary to change its corporate name to one not containing the word "Mutual
Benefit Life" and following such change, shall not use the word "Mutual Benefit
Life" or any combination thereof, as a part of its corporate name or for any
other commercial purpose, and shall use its best efforts to cause it officers,
<PAGE>
directors and shareholders to take any and all actions which Mutual Benefit Life
may request to effect the foregoing and to reconvey to Mutual Benefit Life any
and all rights to such words.
8. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation and the Manager have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
SELIGMAN MUTUAL BENEFIT PORTFOLIOS, INC.
By /s/ Ronald T. Schroeder
-----------------------
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Brian T. Zino
-----------------
March 29, 1995
Seligman Portfolios, Inc.,
100 Park Avenue,
New York, New York 10017.
Dear Sirs:
In connection with Post-Effective Amendment No. 15 to the Registration
Statement on Form N-1A (File No. 33-15253) of Seligman Portfolios, Inc., a
Maryland corporation (the "Fund"), which you expect to file under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to an indefinite
number of shares of Capital Stock, par value $.001 per share, of the class
designated as Seligman High-Yield Bond Portfolio (the "Portfolio", and the
Shares of the Portfolio being referred to herein as the "Shares"), we, as your
counsel, have examined such corporate records, certificates and other documents,
and such questions of law, as we have considered necessary or appropriate for
the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion, the
Shares have been duly authorized to the extent of 20,000,000 Shares and, when
the Post-Effective Amendment referred to above has become effective under the
Securities Act and the Shares have been issued (a) for at least the par value
thereof in accordance with the Registration Statement referred to above, (b) so
as not to exceed the then authorized number of Shares and (c) in accordance with
the authorization of the Board of Directors, the Shares will be duly and validly
issued, fully paid and non-assessable.
We have relied as to certain matters on information obtained from public
officials, officers of the Fund and other sources believed by us to be
responsible.
The foregoing opinion is limited to the federal laws of the United States
and the General Corporation Law of the State of Maryland, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment referred to above. In giving such consent, we do not
thereby admit that we are in the category of person whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
/s/ Sullivan & Cromwell
-----------------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Custodians and Independent Auditors" and to the use of our
reports dated February 10, 1995 and March 30, 1995, in this Registration
Statement (Form N-1A No. 33-15253) of Seligman Portfolios, Inc.
/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP
New York, New York
March 30, 1995
<PAGE>
Report of Independent Auditors
Shareholder and Board of Directors
Seligman Portfolios, Inc. - Seligman
High - Yield Bond Portfolio
We have audited the accompanying statement of assets and liabilities of Seligman
Portfolios, Inc. - Seligman High - Yield Bond Portfolio as of March 30, 1995.
This statement of assets and liabilities is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this statement of
assets and liabilities
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether this statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Seligman
Portfolios, Inc. - Seligman High - Yield Bond Portfolio at March 30, 1995 in
conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
----------------------
ERNST & YOUNG LLP
New York, New York
March 30, 1995
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<PERIOD-END> DEC-31-1994
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<EXPENSES-NET> 35
<NET-INVESTMENT-INCOME> 6
<REALIZED-GAINS-CURRENT> 642
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<NET-CHANGE-FROM-OPS> (264)
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<DISTRIBUTIONS-OF-GAINS> 642
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 251
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<SHARES-REINVESTED> 51
<NET-CHANGE-IN-ASSETS> 57
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<PER-SHARE-NAV-BEGIN> 14.95
<PER-SHARE-NII> .015
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<PER-SHARE-DIVIDEND> .018
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<ARTICLE> 6
<SERIES>
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<NAME> SELIGMAN CASH MAMAGEMENT PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 3144
<INVESTMENTS-AT-VALUE> 3144
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3230
<SHARES-COMMON-STOCK> 3230
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<ACCUMULATED-NII-CURRENT> 0
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<NET-INVESTMENT-INCOME> 128
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 128
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<DISTRIBUTIONS-OF-INCOME> 128
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2323
<NUMBER-OF-SHARES-REDEEMED> 2323
<SHARES-REINVESTED> 128
<NET-CHANGE-IN-ASSETS> 128
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13
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<GROSS-EXPENSE> 48
<AVERAGE-NET-ASSETS> 3211
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .040
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .040
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 318
<INVESTMENTS-AT-VALUE> 337
<RECEIVABLES> 12
<ASSETS-OTHER> 158
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 507
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12
<TOTAL-LIABILITIES> 12
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 476
<SHARES-COMMON-STOCK> 47
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19
<NET-ASSETS> 495
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 19
<NET-CHANGE-FROM-OPS> 19
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 495
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12
<AVERAGE-NET-ASSETS> 267
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.016)
<PER-SHARE-GAIN-APPREC> .456
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<MULTIPLIER> 1000
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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<PAID-IN-CAPITAL-COMMON> 15471
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4700
<NET-ASSETS> 20168
<DIVIDEND-INCOME> 514
<INTEREST-INCOME> 128
<OTHER-INCOME> 0
<EXPENSES-NET> 126
<NET-INVESTMENT-INCOME> 516
<REALIZED-GAINS-CURRENT> 1108
<APPREC-INCREASE-CURRENT> (1605)
<NET-CHANGE-FROM-OPS> 19
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 518
<DISTRIBUTIONS-OF-GAINS> 1109
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 602
<NUMBER-OF-SHARES-REDEEMED> 716
<SHARES-REINVESTED> 118
<NET-CHANGE-IN-ASSETS> (1694)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 2
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 84
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 131
<AVERAGE-NET-ASSETS> 21056
<PER-SHARE-NAV-BEGIN> 14.98
<PER-SHARE-NII> .365
<PER-SHARE-GAIN-APPREC> (.356)
<PER-SHARE-DIVIDEND> .385
<PER-SHARE-DISTRIBUTIONS> .824
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.78
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> SELIGMAN FRONTIER PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 151
<INVESTMENTS-AT-VALUE> 160
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 181
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12
<TOTAL-LIABILITIES> 12
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 160
<SHARES-COMMON-STOCK> 16
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9
<NET-ASSETS> 169
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 9
<NET-CHANGE-FROM-OPS> 9
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 169
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12
<AVERAGE-NET-ASSETS> 91
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.012)
<PER-SHARE-GAIN-APPREC> .592
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> .95
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 4
<NAME> SELIGMAN FIXED INCOME PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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<ACCUM-APPREC-OR-DEPREC> (94)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> SELIGMAN HENDERSON GLOBAL PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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<NET-INVESTMENT-INCOME> 8
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
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<NAME> SELIGMAN INCOME PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
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<PERIOD-END> DEC-31-1994
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</TABLE>
INVESTMENT LETTER
SELIGMAN PORTFOLIOS, INC.
Seligman Portfolios, Inc. (the "Fund"), an open-end, diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. In order to provide the Seligman High-Yield Bond Portfolio of the Fund
(the "Portfolio") with its initial capital, the Fund hereby sells to Purchaser
and Purchaser purchases 1 share (the "Share") of Capital Stock (par value $.001)
of the Portfolio at a price of $10.00 per share. The Fund hereby acknowledges
receipt from Purchaser of funds in the amount of $10.00 in full payment for the
Share.
2. Purchaser represents and warrants to the Fund that the Share is being
acquired for investment and not with a view to distribution thereof, and that
Purchaser has no present intention to redeem or dispose of the Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
29th day of March, 1995 ("Purchase Date").
SELIGMAN PORTFOLIOS, INC.
By: /s/ Lawrence P. Vogel
-----------------------
Name: Lawrence P. Vogel
Title: Vice President
SELIGMAN FINANCIAL SERVICES, INC.
By: /s/ Stephen J. Hodgdon
-----------------------
Name: Stephen J. Hodgdon
Title: President
