- -------------------------------------------------------------------------------
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
