File No. 33-15253
811-5221
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 21 /x/
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 23 /x/
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SELIGMAN PORTFOLIOS, INC.
(Exact name of registrant as specified in charter)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
Registrant's Telephone Number: 212-850-1864 or Toll Free: 800-221-2450
- --------------------------------------------------------------------------------
THOMAS G. ROSE, Treasurer, 100 Park Avenue, New York, New York 10017
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/x/ 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for
Registrant's most recent fiscal year which will be filed with the Commission on
or about March 20, 1998.
<PAGE>
SELIGMAN PORTFOLIOS, INC.
100 Park Avenue o New York, New York 10017
Toll-Free Telephone: (800) 221-7844 all continental United States
New York City Telephone:(212) 850-1864
Marketing Services--Toll-Free Telephone: (800) 221-2783
May 1, 1998
Seligman Portfolios, Inc. (the "Fund") is an open-end diversified management
investment company consisting of fourteen separate portfolios (the
"Portfolios"), each designed to meet different investment goals. Investment
management services for each of the Fund's Portfolios are provided by J. & W.
Seligman & Co. Incorporated (the
(continued on page 2)
The Fund's fourteen Portfolios are:
// SELIGMAN BOND PORTFOLIO: seeks favorable current income by investing
in a diversified portfolio of debt securities, primarily of investment
grade, including convertible issues and preferred stocks, with capital
appreciation as a secondary consideration.
// SELIGMAN CAPITAL PORTFOLIO: seeks to produce capital appreciation, not
current income, by investing in common stocks (primarily those with
strong near or intermediate-term prospects) and securities convertible
into or exchangeable for common stocks, in common stock purchase
warrants and rights, in debt securities and in preferred stocks
believed to provide capital appreciation opportunities.
// SELIGMAN CASH MANAGEMENT PORTFOLIO: seeks to preserve capital and to
maximize liquidity and current income by investing in a diversified
portfolio of high-quality money market instruments. INVESTMENTS IN
THIS PORTFOLIO ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE IS NO ASSURANCE THAT THIS PORTFOLIO WILL BE ABLE
TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
// SELIGMAN COMMON STOCK PORTFOLIO: seeks favorable, but not the highest,
current income and long-term growth of both income and capital value
without exposing capital to undue risk, primarily through equity
investments broadly diversified over a number of industries.
// SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO: seeks capital gain,
not income, by investing primarily in securities of companies in the
communications, information and related industries.
// SELIGMAN FRONTIER PORTFOLIO: seeks growth in capital value; income may
be considered but will be only incidental to the Portfolio's
investment objective. In general, securities owned are likely to be
those issued by small to medium-sized companies selected for their
growth prospects.
// SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO: seeks to
achieve its objective of long-term capital appreciation by investing
primarily in equity securities of companies that have the potential to
benefit from global economic or social trends.
// SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO: seeks long-term
capital appreciation primarily through global investments in
securities of companies with small to medium market capitalization.
// SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO: seeks long-term
capital appreciation by making global investments of at least 65% of
its assets in securities of companies with business operations in
technology and technology-related industries.
// SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO: seeks long-term capital
appreciation primarily through international investments in securities
of medium- to large-sized companies.
// SELIGMAN HIGH-YIELD BOND PORTFOLIO: seeks to produce maximum current
income by investing primarily in high-yielding, high risk corporate
bonds and corporate notes, which, generally, are non-rated or carry
ratings lower than those assigned to investment grade bonds. THE
PORTFOLIO WILL INVEST UP TO 100% OF ITS ASSETS IN LOWER RATED BONDS,
COMMONLY KNOWN AS "JUNK BONDS," WHICH ARE SUBJECT TO A GREATER RISK OF
LOSS OF PRINCIPAL AND INTEREST THAN HIGHER RATED INVESTMENT GRADE
BONDS. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN
INVESTMENT IN THIS PORTFOLIO. SEE "INVESTMENT OBJECTIVES AND
POLICIES--SELIGMAN HIGH-YIELD BOND PORTFOLIO."
// SELIGMAN INCOME PORTFOLIO: seeks primarily to produce high current
income consistent with what is believed to be prudent risk of capital
and secondarily to provide the possibility of improvement in income
and capital value over the longer term, by investing primarily in
income-producing securities.
// SELIGMAN LARGE-CAP VALUE PORTFOLIO: seeks capital appreciation by
investing primarily in equity securities of companies with large
market capitalizations deemed to be value companies by the investment
manager.
// SELIGMAN SMALL-CAP VALUE PORTFOLIO: seeks capital appreciation by
investing primarily in equity securities of companies with small
market capitalizations deemed to be value companies by the investment
manager.
<TABLE>
<CAPTION>
<S><C>
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK,
AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
</TABLE>
<PAGE>
(continued from page 1)
"Manager"). Seligman Henderson Co. supervises and directs the non-U.S.
investments of the Seligman Henderson Global Growth Opportunities Portfolio,
Seligman Henderson Global Smaller Companies Portfolio, Seligman Henderson Global
Technology Portfolio and Seligman Henderson International Portfolio
(collectively, the "Seligman Henderson Portfolios").
Shares of the Fund are currently provided as the investment medium for
Canada Life of America Variable Annuity Account 1 ("CLAVA-1"), Canada Life of
America Variable Annuity Account 2 ("CLAVA-2"), Canada Life of America Annuity
Account 2 ("CLAA-2"), Canada Life of America Annuity Account 3 ("CLAA-3"),
Canada Life of New York Variable Annuity Account 1 ("CLNYVA-1") and Canada Life
of New York Variable Annuity Account 2 ("CLNYVA-2") (collectively, "Canada Life
Accounts"), each of which is a separate account of either Canada Life Insurance
Company of America or Canada Life Insurance Company of New York, (collectively,
"Canada Life"). Shares of certain Portfolios of the Fund may not be offered to
all Canada Life Accounts. Shares of the Seligman Bond Portfolio, Seligman
Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock
Portfolio and Seligman Income Portfolio are also provided as the investment
medium for Mutual Benefit Variable Contract Account-9 ("VCA-9") established by
MBL Life Assurance Corporation (formerly, The Mutual Benefit Life Insurance
Company) ("MBL Life").
CLAVA-1, CLAVA-2, CLNYVA-1 and CLNYVA-2 are each registered as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act") and
fund variable annuity contracts ("VA Contracts") issued by Canada Life and
distributed by Seligman Financial Services, Inc. CLAA-2 and CLAA-3 are not
registered or regulated under the 1940 Act in reliance on the exemption provided
in Section 3(c)(11) of the 1940 Act. CLAA-2 and CLAA-3 fund annuity contracts
("CLAA Contracts") issued by Canada Life and distributed by Seligman Financial
Services, Inc. which may be purchased only by pension or profit-sharing employee
benefit plans that satisfy the requirements for qualification set forth in
Section 401 of the Internal Revenue Code of 1986. VCA-9 is registered as a unit
investment trust under the 1940 Act and funds variable annuity contracts ("VCA-9
Contracts") issued by MBL Life.
This Prospectus sets forth concisely information about the Fund and its
Portfolios that a prospective investor should know before investing. Please read
it carefully before you invest and keep it for future reference. Additional
information about the Fund, including a Statement of Additional Information, has
been filed with the Securities and Exchange Commission (the "SEC"). The
Statement of Additional Information is available upon request and without charge
by calling or writing the Fund at the telephone numbers or address set forth
above. The Statement of Additional Information is dated the same date as this
Prospectus and is incorporated herein by reference in its entirety.
TABLE OF CONTENTS
PAGE
----
Financial Highlights .............................................. P-4
Investment Objectives and Policies ................................ P-8
Seligman Bond Portfolio ........................................... P-8
Seligman Capital Portfolio ........................................ P-9
Seligman Cash Management Portfolio ................................ P-9
Seligman Common Stock Portfolio ................................... P-10
Seligman Communications and Information Portfolio ................. P-11
Seligman Frontier Portfolio ....................................... P-11
Seligman Henderson Global Growth Opportunities Portfolio .......... P-12
Seligman Henderson Global Smaller Companies Portfolio ............. P-12
Seligman Henderson Global Technology Portfolio .................... P-12
Seligman Henderson International Portfolio ........................ P-12
Seligman High-Yield Bond Portfolio ................................ P-16
Seligman Income Portfolio ......................................... P-17
Seligman Large-Cap Value Portfolio ................................ P-18
Seligman Small-Cap Value Portfolio ................................ P-18
Other Investment Policies ......................................... P-19
Management Services ............................................... P-22
Portfolio Transactions, Portfolio Turnover And Valuation .......... P-26
Dividends, Distributions and Taxes ................................ P-27
Purchases and Redemptions ......................................... P-27
Custodians and Transfer Agent ..................................... P-27
Organization and Capitalization ................................... P-27
Appendix .......................................................... P-28
P-2
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THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables set forth selected data for the periods indicated for
a single share outstanding of each of the Fund's Portfolios (except Seligman
Large-Cap Value Portfolio and Seligman Small-Cap Value Portfolio, each of which
commenced operations on May 1, 1998). The results shown for all periods through
the year ended December 31, 1997 have been audited in conjunction with the
annual audits of the financial statements of Seligman Portfolios, Inc. by ,
independent auditors, whose reports thereon are unqualified. The 1997 financial
statements and independent auditors' report thereon are incorporated by
reference in the Fund's Statement of Additional Information. Copies of the
Statement of Additional Information may be obtained free of charge from the Fund
at the telephone numbers or address provided on the cover page of this
Prospectus.
The per share operating performance data is designed to allow investors to
trace the operating performance, on a per share basis, from a Portfolio's
beginning net asset value to its ending net asset value so that investors may
understand what effect the individual items have on their investment, assuming
it was held throughout the period.
<TABLE>
<CAPTION>
INCREASE
NET ASSET NET NET REALIZED (DECREASE) NET INCREASE
VALUE AT INVESTMENT & UNREALIZED FROM DISTRIBUTIONS (DECREASE) NET ASSET
PER SHARE OPERATING BEGINNING INCOME GAIN (LOSS) INVESTMENT DIVIDENDS FROM NET IN NET ASSET VALUE AT END
PERFORMANCE: OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS PAID GAIN REALIZED VALUE OF PERIOD
- ------------------- --------- ---------- -------------- ---------- --------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOND PORTFOLIO
Year ended 12/31/97...... $ 9.890 $ $ $ $ $ $ $
Year ended 12/31/96...... 10.440 0.565 (0.552) 0.013 (0.563) -- (0.550) 9.890
Year ended 12/31/95 ..... 9.270 0.605 1.171 1.776 (0.606) -- 1.170 10.440
Year ended 12/31/94...... 10.110 0.499 (0.841) (0.342) (0.498) -- (0.840) 9.270
Year ended 12/31/93...... 10.660 0.713 0.142 0.855 (0.711) (0.694) (0.550) 10.110
Year ended 12/31/92...... 10.990 0.706 (0.092) 0.614 (0.772) (0.172) (0.330) 10.660
Year ended 12/31/91...... 10.310 0.798 0.699 1.497 (0.817) -- 0.680 10.990
Year ended 12/31/90...... 10.220 0.680 (0.054) 0.626 (0.536) -- 0.090 10.310
Year ended 12/31/89...... 9.930 0.658 0.208 0.866 (0.576) -- 0.290 10.220
6/21/88*-12/31/88........ 10.000 0.262 (0.162) 0.100 (0.170) -- (0.070) 9.930
CAPITAL PORTFOLIO
Year ended 12/31/97...... 16.010
Year ended 12/31/96...... 14.910 0.043 2.121 2.164 (0.042) (1.022) 1.100 16.010
Year ended 12/31/95 ..... 12.700 0.048 3.385 3.433 (0.047) (1.176) 2.210 14.910
Year ended 12/31/94...... 14.950 0.015 (0.699) (0.684) (0.018) (1.548) (2.250) 12.700
Year ended 12/31/93...... 16.980 0.021 1.928 1.949 (0.021) (3.958) (2.030) 14.950
Year ended 12/31/92...... 17.740 (0.022) 1.202 1.180 -- (1.940) (0.760) 16.980
Year ended 12/31/91...... 11.230 0.079 6.547 6.626 (0.088) (0.028) 6.510 17.740
Year ended 12/31/90...... 11.620 0.044 (0.414) (0.370) (0.020) -- (0.390) 11.230
Year ended 12/31/89...... 10.060 (0.084) 1.739 1.655 -- (0.095) 1.560 11.620
6/21/88*-12/31/88........ 10.000 0.060 -- 0.060 -- -- 0.060 10.060
CASH MANAGEMENT PORTFOLIO
Year ended 12/31/97...... 1.000
Year ended 12/31/96...... 1.000 0.053 -- 0.053 (0.053) -- -- 1.000
Year ended 12/31/95 ..... 1.000 0.055 -- 0.055 (0.055) -- -- 1.000
Year ended 12/31/94...... 1.000 0.040 -- 0.040 (0.040) -- -- 1.000
Year ended 12/31/93...... 1.000 0.030 -- 0.030 (0.030) -- -- 1.000
Year ended 12/31/92...... 1.000 0.035 -- 0.035 (0.035) -- -- 1.000
Year ended 12/31/91...... 1.000 0.056 -- 0.056 (0.056) -- -- 1.000
Year ended 12/31/90...... 1.000 0.075 -- 0.075 (0.075) -- -- 1.000
Year ended 12/31/89...... 1.000 0.075 -- 0.075 (0.075) -- -- 1.000
6/21/88*-12/31/88........ 1.000 0.020 -- 0.020 (0.020) -- -- 1.000
COMMON STOCK PORTFOLIO
Year ended 12/31/97...... 15.920
Year ended 12/31/96...... 15.440 0.334 2.789 3.123 (0.336) (2.307) 0.480 15.920
Year ended 12/31/95 ..... 13.780 0.349 3.400 3.749 (0.345) (1.744) 1.660 15.440
Year ended 12/31/94...... 14.980 0.365 (0.356) 0.009 (0.385) (0.824) (1.200) 13.780
Year ended 12/31/93...... 15.600 0.392 1.479 1.871 (0.394) (2.097) (0.620) 14.980
Year ended 12/31/92...... 14.740 0.346 1.445 1.791 (0.369) (0.562) 0.860 15.600
Year ended 12/31/91...... 11.580 0.362 3.459 3.821 (0.355) (0.306) 3.160 14.740
Year ended 12/31/90...... 12.260 0.356 (0.743) (0.387) (0.263) (0.030) (0.680) 11.580
Year ended 12/31/89...... 10.150 0.248 2.195 2.443 (0.179) (0.154) 2.110 12.260
6/21/88*-12/31/88........ 10.000 0.120 0.060 0.180 (0.030) -- 0.150 10.150
</TABLE>
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* Commencement of operations.
** The Manager, at its discretion, waived its management fee and/or reimbursed
expenses for certain periods presented.
+ Annualized.
P-4
<PAGE>
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.
"Total return based on net asset value" measures a Portfolio's performance
assuming investors purchased shares at net asset value as of the beginning of
the period, reinvested dividends and capital gains paid at net asset value, and
then sold the shares at the net asset value per share on the last day of the
period. The total returns exclude the effect of all administration fees and
asset-based sales loads associated with variable annuity contracts. The total
returns for periods of less than one year are not annualized.
"Average commission rate paid" represents the average commissions paid by a
Portfolio to purchase or sell securities. It is determined by dividing the total
commission dollars paid by the number of shares purchased and sold during the
period for which commissions were paid.
<TABLE>
<CAPTION>
WITHOUT MANAGEMENT
FEE WAIVER AND/OR
EXPENSE REIMBURSEMENT**
--------------------------------
RATIOS/SUPPLEMENTAL DATA RATIO
----------------------------------------------------------- OF NET
TOTAL NET NET ASSETS RATIO OF INVESTMENT
RETURN EXPENSES INVESTMENT AT NET EXPENSES INCOME
BASED ON TO INCOME END OF INVESTMENT TO (LOSS) TO
NET AVERAGE (LOSS) AVERAGE PERIOD INCOME AVERAGE AVERAGE
PER SHARE OPERATING ASSET NET TO AVERAGE PORTFOLIO COMMISSION (000s (LOSS) NET NET
PERFORMANCE: VALUE ASSETS NET ASSETS TURNOVER RATE PAID OMITTED) PER SHARE ASSETS ASSETS
- ------------------- -------- -------- ---------- --------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BOND PORTFOLIO
Year ended 12/31/97...... % % % % $ $ % %
Year ended 12/31/96...... 0.09 0.60 5.97 199.74 5,015 0.545 0.79 5.78
Year ended 12/31/95 ..... 19.18 0.60 6.22 114.42 4,497 0.571 0.99 5.83
Year ended 12/31/94...... (3.39) 0.60 5.12 237.23 3,606 0.430 1.31 4.41
Year ended 12/31/93...... 7.98 0.74 5.41 33.21 3,775 0.675 1.07 5.08
Year ended 12/31/92...... 5.60 1.00 6.22 23.40 4,750
Year ended 12/31/91...... 14.58 0.60 7.30 6.34 5,369 0.712 1.42 6.48
Year ended 12/31/90...... 6.14 1.73 6.59 6.62 4,600
Year ended 12/31/89...... 8.70 2.13 6.51 49.92 4,129 0.643 2.27 6.37
6/21/88*-12/31/88........ 1.01 2.99+ 5.25+ 144.21 2,223
CAPITAL PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 14.51 0.59 0.29 88.78 $0.0557 14,313
Year ended 12/31/95 ..... 27.17 0.60 0.32 122.20 9,294 0.035 0.71 0.21
Year ended 12/31/94...... (4.59) 0.60 0.10 67.39 5,942 (0.036) 0.96 (0.26)
Year ended 12/31/93...... 11.65 0.71 0.09 65.30 5,886 (0.003) 0.83 (0.03)
Year ended 12/31/92...... 6.80 0.91 (0.14) 54.95 5,497
Year ended 12/31/91...... 59.05 0.60 0.56 31.44 5,812 (0.035) 1.37 (0.21)
Year ended 12/31/90...... (3.18) 2.15 0.18 28.94 3,560
Year ended 12/31/89...... 16.47 3.55 (0.88) 32.55 2,577 (0.092) 3.80 (1.12)
6/21/88*-12/31/88........ 0.60 6.99+ (0.11)+ -- 890
CASH MANAGEMENT PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 5.43 -- 5.30 -- 9,755 0.047 0.63 4.67
Year ended 12/31/95 ..... 5.60 -- 5.48 -- 7,800 0.046 0.87 4.61
Year ended 12/31/94...... 4.03 -- 3.98 -- 3,230 0.025 1.48 2.50
Year ended 12/31/93...... 3.00 -- 2.96 -- 3,102 0.019 1.07 1.89
Year ended 12/31/92...... 3.53 -- 3.50 -- 4,230 0.025 0.97 2.53
Year ended 12/31/91...... 5.70 -- 5.49 -- 5,849 0.048 0.83 4.66
Year ended 12/31/90...... 7.79 -- 7.53 -- 3,994 0.045 2.97 4.56
Year ended 12/31/89...... 7.81 -- 7.72 -- 908 (0.019) 9.57 (1.85)
6/21/88*-12/31/88........ 2.35 0.95+ 5.83+ -- 283 (0.050) 20.02+ (13.24)+
COMMON STOCK PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 20.08 0.53 1.99 50.33 0.0561 37,168
Year ended 12/31/95 ..... 27.28 0.54 2.42 55.48 28,836
Year ended 12/31/94...... 0.04 0.60 2.45 15.29 20,168 0.361 0.62 2.43
Year ended 12/31/93...... 11.94 0.55 2.10 10.70 21,861
Year ended 12/31/92...... 12.14 0.56 2.21 12.57 24,987
Year ended 12/31/91...... 33.16 0.60 2.63 27.67 26,103 0.350 0.71 2.52
Year ended 12/31/90...... (3.15) 0.88 3.01 13.78 18,030
Year ended 12/31/89...... 24.11 1.59 2.32 37.56 9,332 0.236 1.67 2.23
6/21/88*-12/31/88........ 1.80 3.62+ 1.65+ 14.40 2,476
</TABLE>
P-5
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
NET REALIZED
& UNREALIZED INCREASE
NET ASSET NET REALIZED GAIN (LOSS) (DECREASE) NET INCREASE
VALUE AT NET & UNREALIZED FROM FOREIGN FROM DISTRIBUTIONS (DECREASE)
PER SHARE OPERATING BEGINNING INVESTMENT GAIN (LOSS) CURRENCY INVESTMENT DIVIDENDS FROM NET IN NET ASSET
PERFORMANCE: OF PERIOD INCOME ON INVESTMENTS TRANSACTIONS OPERATIONS PAID GAIN REALIZED VALUE
- ------------------- --------- ---------- -------------- ------------- ---------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNICATIONS AND
INFORMATION PORTFOLIO
Year ended 12/31/97...... $14.690 $ $ $ $ $ $
Year ended 12/31/96...... 13.500 -- 1.190 1.190 -- -- 1.190
Year ended 12/31/95 ..... 10.440 -- 4.015 4.015 -- (0.955) 3.060
10/11/94*-12/31/94....... 10.000 (0.016) 0.456 0.440 -- -- 0.440
FRONTIER PORTFOLIO
Year ended 12/31/97...... 14.980
Year ended 12/31/96...... 13.560 0.001 3.220 3.221 -- (1.801) 1.420
Year ended 12/31/95 ..... 10.580 (0.001) 3.512 3.511 -- (0.531) 2.980
10/11/94*-12/31/94....... 10.000 (0.012) 0.592 0.580 -- -- 0.580
GLOBAL GROWTH
Opportunities Portfolio
Year ended 12/31/97...... 9.910
5/1/96*-12/31/96......... 10.000 0.008 0.018 $(0.104) (0.078) (0.012) -- (0.090)
GLOBAL SMALLER COMPANIES
PORTFOLIO
Year ended 12/31/97...... 12.870
Year ended 12/31/96...... 11.670 0.022 2.305 (0.158) 2.169 (0.018) (0.951) 1.200
Year ended 12/31/95...... 10.310 0.051 2.037 (0.301) 1.787 (0.052) (0.375) 1.360
10/11/94*-12/31/94....... 10.000 0.058 0.266 0.029 0.353 (0.043) -- 0.310
GLOBAL TECHNOLOGY
PORTFOLIO
Year ended 12/31/97...... 10.320
5/1/96*-12/31/96......... 10.000 (0.004) 0.305 0.099 0.400 -- (0.080) 0.320
INTERNATIONAL PORTFOLIO
Year ended 12/31/97...... 12.960
Year ended 12/31/96...... 12.390 0.074 1.124 (0.323) 0.875 (0.068) (0.237) 0.570
Year ended 12/31/95...... 11.340 0.154 0.896 0.236 1.286 (0.151) (0.085) 1.050
Year ended 12/31/94...... 11.370 0.131 (0.306) 0.325 0.150 (0.064) (0.116) (0.030)
5/3/93*-12/31/93......... 10.000 0.021 1.518 (0.099) 1.440 (0.053) (0.017) 1.370
HIGH-YIELD BOND PORTFOLIO
Year ended 12/31/97...... 11.190
Year ended 12/31/96...... 10.500 0.768 0.766 -- 1.534 (0.766) (0.078) 0.690
5/1/95*-12/31/95......... 10.000 0.218 0.519 -- 0.737 (0.219) (0.018) 0.500
INCOME PORTFOLIO
Year ended 12/31/97...... 10.520
Year ended 12/31/96...... 10.560 0.579 0.126 -- 0.705 (0.579) (0.166) (0.040)
Year ended 12/31/95...... 9.970 0.604 1.187 -- 1.791 (0.604) (0.597) 0.590
Year ended 12/31/94...... 11.380 0.689 (1.369) -- (0.680) (0.730) -- (1.410)
Year ended 12/31/93...... 11.390 0.828 0.576 -- 1.404 (0.828) (0.586) (0.010)
Year ended 12/31/92...... 11.250 0.862 0.896 -- 1.758 (0.987) (0.631) 0.140
Year ended 12/31/91...... 9.500 0.896 2.024 -- 2.920 (0.904) (0.266) 1.750
Year ended 12/31/90...... 10.780 0.829 (1.487) -- (0.658) (0.622) -- (1.280)
Year ended 12/31/89...... 10.040 0.634 0.834 -- 1.468 (0.419) (0.309) 0.740
6/21/88*-12/31/88........ 10.000 0.142 (0.032) -- 0.110 (0.070) -- 0.040
</TABLE>
- --------------
* Commencement of operations.
** The Manager, at its discretion, waived its management fee and/or reimbursed
expenses for certain periods presented.
+ Annualized.
P-6
<PAGE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------
TOTAL NET NET ASSETS
NET ASSET RETURN EXPENSES INVESTMENT AT
VALUE AT BASED ON TO INCOME END OF
END NET AVERAGE (LOSS) AVERAGE PERIOD
PER SHARE OPERATING OF ASSET NET TO AVERAGE PORTFOLIO COMMISSION (000s
PERFORMANCE: PERIOD VALUE ASSETS NET ASSETS TURNOVER RATE PAID OMITTED)
- ------------------- -------- -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMUNICATIONS AND
INFORMATION PORTFOLIO
Year ended 12/31/97...... $ % % % % $ $
Year ended 12/31/96...... 14.690 8.81 0.87 (0.32) 167.20 0.0530 60,645
Year ended 12/31/95 ..... 13.500 38.55 0.95 (0.89) 96.62 38,442
10/11/94*-12/31/94....... 10.440 4.40 0.95+ (0.95)+ -- 495
FRONTIER PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 14.980 23.93 0.92 (0.37) 119.74 0.0532 31,672
Year ended 12/31/95 ..... 13.560 33.28 0.95 (0.55) 106.48 12,476
10/11/94*-12/31/94....... 10.580 5.80 0.95+ (0.70)+ -- 169
GLOBAL GROWTH
Opportunities Portfolio
Year ended 12/31/97......
5/1/96*-12/31/96......... 9.910 (0.78) 1.40+ 0.37 12.99 0.0522 1,590
GLOBAL SMALLER COMPANIES
PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 12.870 18.66 1.40 0.23 62.31 0.0219 16,876
Year ended 12/31/95...... 11.670 17.38 1.39 0.64 55.65 4,837
10/11/94*-12/31/94....... 10.310 3.53 1.20+ 3.14+ -- 132
GLOBAL TECHNOLOGY
PORTFOLIO
Year ended 12/31/97......
5/1/96*-12/31/96......... 10.320 4.01 1.40+ 0.60+ 45.04 0.0160 1,364
INTERNATIONAL PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 12.960 7.08 1.40 0.70 48.53 0.0191 7,242
Year ended 12/31/95...... 12.390 11.34 1.35 1.01 41.40 4,183
Year ended 12/31/94...... 11.340 1.32 1.20 1.17 47.34 1,776
5/3/93*-12/31/93......... 11.370 14.40 1.20+ 1.30+ 2.82 648
HIGH-YIELD BOND PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 11.190 14.62 0.70 9.77 117.01 11,176
5/1/95*-12/31/95......... 10.500 7.37 0.70+ 7.46+ 67.55 3,009
INCOME PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 10.520 6.66 0.59 5.37 19.59 0.0600 13,717
Year ended 12/31/95...... 10.560 17.98 0.60 5.55 51.22 12,619
Year ended 12/31/94...... 9.970 (5.96) 0.60 6.34 29.76 10,050
Year ended 12/31/93...... 11.380 12.37 0.64 6.40 38.38 11,220
Year ended 12/31/92...... 11.390 15.72 0.68 7.53 39.46 11.363
Year ended 12/31/91...... 11.250 30.89 0.60 8.05 43.67 11,509
Year ended 12/31/90...... 9.500 (6.10) 1.40 8.19 21.64 7,419
Year ended 12/31/89...... 10.780 14.61 2.69 5.95 60.10 4,085
6/21/88*-12/31/88........ 10.040 1.10 5.02+ 2.46+ -- 1,265
</TABLE>
WITHOUT MANAGEMENT FEE WAIVER
AND/OR EXPENSE REIMBURSEMENT**
---------------------------------------------
RATIOS OF
RATIOS OF NET INVESTMENT
NET INVESTMENT EXPENSES TO INCOME (LOSS)
PER SHARE OPERATING INCOME (LOSS) AVERAGE NET TO AVERAGE
PERFORMANCE: PER SHARE ASSETS NET ASSETS
- ------------------- -------------- ----------- --------------
COMMUNICATIONS AND
INFORMATION PORTFOLIO
Year ended 12/31/97...... $ % %
Year ended 12/31/96......
Year ended 12/31/95 .....
10/11/94*-12/31/94....... (0.436) 13.96+ (13.96)+
FRONTIER PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96......
Year ended 12/31/95 ..... (0.019) 1.37 (0.97)
10/11/94*-12/31/94....... (1.319) 40.47+ (40.22)+
GLOBAL GROWTH
Opportunities Portfolio
Year ended 12/31/97......
5/1/96*-12/31/96......... (0.255) 6.04+ (4.27)+
GLOBAL SMALLER COMPANIES
PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... (0.044) 1.90 (0.27)
Year ended 12/31/95...... (0.051) 3.84 (1.81)
10/11/94*-12/31/94....... (1.225) 37.25+ (32.91)+
GLOBAL TECHNOLOGY
PORTFOLIO
Year ended 12/31/97......
5/1/96*-12/31/96......... (0.202) 4.71+ (2.71)+
INTERNATIONAL PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... (0.042) 2.30 (0.20)
Year ended 12/31/95...... 0.001 3.40 (1.04)
Year ended 12/31/94...... (0.419) 6.12 (3.75)
5/3/93*-12/31/93......... (1.004) 17.94+ (15.44)+
HIGH-YIELD BOND PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96...... 0.747 0.88 9.59
5/1/95*-12/31/95......... 0.117 4.38+ 3.78+
INCOME PORTFOLIO
Year ended 12/31/97......
Year ended 12/31/96......
Year ended 12/31/95...... 0.602 0.62 5.53
Year ended 12/31/94...... 0.670 0.77 6.17
Year ended 12/31/93...... 0.826 0.65 6.39
Year ended 12/31/92......
Year ended 12/31/91...... 0.867 0.93 7.72
Year ended 12/31/90......
Year ended 12/31/89...... 0.610 2.88 5.77
6/21/88*-12/31/88........ 0.089 5.42+ 2.07+
P-7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Set forth below is a description of the investment objective of each of the
Fund's Portfolios and their investment policies. Of course, because any
investment involves risk, there can be no assurance that any of the Portfolios
will meet its objective. The investment objective of each Portfolio may not be
changed without the affirmative vote of the holders of a majority of the voting
securities of that Portfolio; however, unless otherwise noted, the investment
policies of each Portfolio are not fundamental and may be changed by the Fund's
Board of Directors without a vote of shareholders. A more detailed description
of each Portfolio's investment policies, including a list of those restrictions
on each Portfolio's investment activities which cannot be changed without such a
vote, appears in the Statement of Additional Information. Information regarding
the various rating categories used by the Standard & Poor's Rating Service
("S&P") and Moody's Investors Service, Inc. ("Moody's"), and referred to in the
following descriptions, is included in the Appendix to this Prospectus.
SELIGMAN BOND PORTFOLIO
The investment objective of this Portfolio is to achieve favorable current
income by investing in debt securities, including convertible issues and
preferred stock, diversified over a number of industries. Capital appreciation
will be a secondary consideration in selecting portfolio securities. As a matter
of fundamental policy, the Portfolio will invest at least 80% of its assets in
securities that are rated investment grade.
The Portfolio's assets may be invested in (l) corporate debt securities,
including bonds and debentures convertible into common stock or with warrants
and rights; (2) debt securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; or (3) mortgage-backed debt securities, including
securities issued by the Government National Mortgage Association ("GNMA") and
debt obligations secured by commercial or residential real estate, rated within
one of the three highest rating categories by S&P or, if unrated, of comparable
quality in the opinion of the Manager; (4) preferred stock; and (5) commercial
paper rated within one of the three highest rating categories by S&P or Moody's.
The Portfolio may also hold or sell any securities obtained through the exercise
of conversion rights or warrants, or as a result of reorganization,
recapitalization, or liquidation proceedings of any issuer of securities owned
by the Portfolio. Long-term debt securities normally will be held when it is
believed that the trend of interest rates is down and prices of such securities
will increase; conversely, when it is believed that long-term interest rates
will rise, the Portfolio may attempt to shift into short-term debt securities
that are generally not as volatile as longer-term securities in periods of
rising interest rates. The Portfolio may, pending investment and for temporary
defensive purposes, invest without limitation in high-grade short-term money
market instruments, including repurchase agreements, of the types listed under
"Seligman Cash Management Portfolio."
Corporate debt securities purchased by the Portfolio will, in order to meet
the Portfolio's fundamental policy, be investment grade bonds that are rated
within one of the four highest rating categories by S&P or Moody's. To the
extent that the Portfolio may invest in lower-rated bonds, an investor should be
aware that while providing higher yields, such lower-rated bonds generally are
subject to greater market fluctuations and risks of loss of income and principal
than higher-rated (and lower-yielding) bonds. A description of the credit
ratings and the risks associated with such investments is contained in the
Appendix to this Prospectus. U.S. Government and agency obligations in which the
Portfolio invests may include direct obligations of the U.S. Treasury, such as
bills, notes and bonds, and marketable obligations issued by a U.S. Government
agency or instrumentality. Agency securities include those issued by the Small
Business Administration, General Services Administration and Farmers Home
Administration, which are guaranteed by the U.S. Treasury. Other such securities
are supported by the right of the issuer to borrow from the Treasury, such as
securities issued by the Federal Home Loan Mortgage Corporation ("FHLMC"), while
certain other securities are supported only by the credit of the agency or
instrumentality itself, such as securities issued by the Federal National
Mortgage Association ("FNMA"). Commercial paper includes unsecured promissory
notes of corporate issuers, which securities generally have remaining maturities
not exceeding nine months.
The mortgage-backed securities in which the Portfolio invests will include
securities that represent interests in pools of mortgage loans made by lenders
such as savings and loan institutions, mortgage bankers, and commercial banks.
Such securities provide a "pass-through" of monthly payments of interest and
principal made by the borrowers on their residential mortgage loans (net of any
fees paid to the issuer or guarantor of such securities). Although the
residential mortgages underlying a pool may have maturities of up to 30 years, a
pool's effective maturity may be reduced by prepayments of principal on the
underlying mortgage obligations. Factors affecting
P-8
<PAGE>
mortgage prepayments include, among other things, the level of interest rates,
general economic and social conditions and the location and age of the
mortgages. High interest rate mortgages are more likely to be prepaid than
lower-rate mortgages; consequently, the effective maturities of mortgage-related
obligations that pass-through payments of higher-rate mortgages are likely to be
shorter than those of obligations that pass-through payments of lower-rate
mortgages. If such prepayment of mortgage-related securities in which the
Portfolio invests occurs, the Portfolio may have to invest the proceeds in
securities with lower yields.
GNMA is a U.S. Government corporation within the Department of Housing and
Urban Development, authorized to guarantee, with the full faith and credit of
the U.S. Government, the timely payment of principal and interest on securities
issued by institutions approved by GNMA (such as savings and loan institutions,
commercial banks and mortgage bankers) and backed by pools of Federal Housing
Administration insured or Veterans Administration guaranteed residential
mortgages. These securities entitle the holder to receive all interest and
principal payments owed on the mortgages in the pool, net of certain fees,
regardless of whether or not the mortgagors actually make the payments. Other
government-related issuers of mortgage-related securities include FNMA, a
government-sponsored corporation subject to general regulation by the Secretary
of Housing and Urban Development but owned entirely by private stockholders, and
FHLMC, a corporate instrumentality of the U.S. Government created for the
purpose of increasing the availability of mortgage credit for residential
housing that is owned by the twelve Federal Home Loan Banks. FHLMC issues
Participation Certificates ("PCs"), which represent interests in mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal, but PCs are not backed by the full faith and
credit of the U.S. Government. Pass-through securities issued by FNMA are backed
by residential mortgages purchased from a list of approved seller/servicers and
are guaranteed as to timely payment of principal and interest by FNMA, but are
not backed by the full faith and credit of the U.S. Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through securities based on pools of conventional residential mortgage
loans. Securities created by such non-governmental issuers may offer a higher
rate of interest than government-related securities; however, timely payment of
interest and principal may or may not be supported by insurance or guarantee
arrangements, and there can be no assurance that the private issuers can meet
their obligations.
SELIGMAN CAPITAL PORTFOLIO
The investment objective of this Portfolio is to produce capital
appreciation for its shareholders. Current income is not an objective. The
Portfolio will seek to achieve its objective by investing in common stocks and
securities convertible into or exchangeable for common stocks, in common stock
purchase warrants and rights, in debt securities and in preferred stocks
believed to provide capital appreciation opportunities. Common stocks, for the
most part, are selected for their near or intermediate-term prospects. They may
be stocks believed to be underpriced or stocks of growth companies, cyclical
companies, or companies believed to be undergoing a basic change for the better.
They may be stocks of established, well-known companies or of newer,
less-seasoned companies believed to have better-than-average prospects. The
principal criterion for choice of investments is capital appreciation potential.
The Portfolio may, pending investment and for temporary defensive purposes,
hold cash and invest without limitation in high-grade, short-term money market
instruments, including repurchase agreements, of the types listed under
"Seligman Cash Management Portfolio."
The Seligman Capital Portfolio may borrow money to increase its portfolio
of securities. Investing for capital appreciation and borrowing ordinarily
expose capital to added risk, and investment in the Portfolio should be
considered only by persons who are able and willing to take such risk.
SELIGMAN CASH MANAGEMENT PORTFOLIO
The investment objective of this Portfolio is to preserve capital and to
maximize liquidity and current income by investing in a diversified portfolio of
high-quality money market instruments consisting of U.S. Government obligations,
U.S. dollar-denominated bank obligations (including those issued by U.S. banks,
their foreign branches and
P-9
<PAGE>
U.S. branches of foreign banks), prime commercial paper, high-grade, short-term
corporate obligations and repurchase agreements with respect to the above types
of instruments. The Portfolio seeks to maintain a constant net asset value of
$1.00 per share; there can be no assurance that the Portfolio will be able to do
so. In an effort to maintain a stable net asset value, the Portfolio uses the
amortized cost method of valuing its securities.
The Portfolio will invest only in U.S. dollar-denominated securities having
a remaining maturity of 13 months (397 days) or less and will maintain a
dollar-weighted average portfolio maturity of 90 days or less. The Portfolio
will limit its investments to those securities that, in accordance with
guidelines adopted by the Board of Directors, present minimal credit risks.
Accordingly, the Portfolio will not purchase any security (other than a U.S.
Government obligation) unless (i) it is rated in one of the two highest rating
categories assigned to short-term debt securities by at least two nationally
recognized statistical rating organizations ("NRSROs") such as Moody's and S&P,
or (ii) if not so rated, it is determined to be of comparable quality.
Determinations of comparable quality will be made in accordance with procedures
established by the Directors. These standards must be satisfied at the time an
investment is made. If the quality of the investment later declines, the
Portfolio may continue to hold the investment, subject in certain circumstances
to a finding by the Board of Directors that disposing of the investment would
not be in the Portfolio's best interest.
Presently, the Portfolio only invests in either U.S. Government obligations
or securities that are rated in the top rating category by Moody's and S&P.
However, the Portfolio is permitted to invest up to 5% of its assets in
securities rated in the second highest rating category by two NRSROs, provided
that not more than the greater of 1% of its total assets or $1,000,000 is
invested in any one such security.
U.S. GOVERNMENT OBLIGATIONS in which the Portfolio invests include
obligations issued or guaranteed as to both principal and interest by the U.S.
Government or backed by the full faith and credit of the United States, such as
U.S. Treasury bills, securities issued or guaranteed by a U.S. Government agency
or instrumentality, and securities supported by the right of the issuer to
borrow from the U.S. Treasury.
BANK OBLIGATIONS purchased by the Portfolio include U.S. dollar-denominated
certificates of deposit, banker's acceptances, fixed time deposits and
commercial paper of domestic banks, including their branches located outside the
United States, and of domestic branches of foreign banks. Investments in bank
obligations will be limited at the time of investment to the obligations of the
100 largest domestic banks in terms of assets which are subject to regulatory
supervision by the U.S. Government or state governments, and the obligations of
the 100 largest foreign banks in terms of assets with branches or agencies in
the United States.
COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT SECURITIES include
short-term unsecured promissory notes with maturities not exceeding nine months
issued in bearer form by bank holding companies, corporations and finance
companies. Investments in commercial paper issued by bank holding companies will
be limited at the time of investment to the 100 largest U.S. bank holding
companies in terms of assets.
YIELD INFORMATION. Investors should recognize that, in periods of declining
interest rates, yields will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the yield of the Portfolio will
tend to be somewhat lower. Also, when interest rates are falling, the inflow of
new money to the Portfolio from the continuous sale of its shares will likely be
invested in portfolio instruments producing lower yields than the balance of the
Portfolio assets, thereby reducing the current yield of the Portfolio. In
periods of rising interest rates, the opposite can be true. The Portfolio may
attempt to increase yields on its investments by using trading techniques
designed to take advantage of short-term market variations. This policy,
together with the short maturities of the securities in which the Portfolio
invests, would result in high portfolio turnover. The Portfolio does not
anticipate incurring significant brokerage or transaction expenses since
portfolio transactions ordinarily will be made directly with the issuer, money
market dealer, or other financial institution on a net price basis.
SELIGMAN COMMON STOCK PORTFOLIO
The investment objective of this Portfolio is to produce favorable, but not
the highest, current income and long-term growth of both income and capital
value, without exposing capital to undue risk. The Portfolio seeks to achieve
its objective primarily through equity investments, and in general, investments
will be broadly diversified over a number of industries. The Portfolio may,
pending investment and for temporary defensive purposes, invest without
P-10
<PAGE>
limitation in high-grade, short-term money market instruments, including
repurchase agreements, of the types listed under "Seligman Cash Management
Portfolio."
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
The investment objective of this Portfolio is to produce capital gain.
Income is not an objective. The Portfolio seeks to achieve its objective by
investing in a portfolio consisting of securities of companies operating in
virtually all aspects of the communications, information and related industries.
It invests at least 80% of its net assets, exclusive of government securities,
short-term notes, cash and cash equivalents, in securities of companies engaged
in these industries.
The value of Portfolio shares may be susceptible to factors affecting the
communications, information and related industries. As such, this Portfolio is
not an appropriate investment for individuals who require safety of principal or
stable income from their investments. These industries may be subject to greater
governmental regulation than many other industries and changes in governmental
policies and the need for regulatory approvals may have a material effect on the
products and services of these industries. Although securities of large
companies that now are well established in the world communications and
information market and can be expected to grow with the market are held by this
Portfolio, rapidly changing technologies and the expansion of the
communications, information and related industries provide a favorable
environment for investing in companies of small to medium size. Securities of
smaller, less-seasoned companies may be subject to greater price fluctuation,
limited liquidity and above-average investment risk.
This Portfolio invests primarily in common stocks. It also may invest in
securities convertible into or exchangeable for common stocks, in warrants and
rights to purchase common stocks and in debt securities or preferred stocks
believed to provide opportunities for capital gain. It is this Portfolio's
present intention to invest not more than 5% of its net assets in debt
securities that are not rated within the four highest rating categories by S&P
or by Moody's.
SELIGMAN FRONTIER PORTFOLIO
The investment objective of this Portfolio is to produce growth in capital
value; income may be considered but will be only incidental to the Portfolio's
investment objective. This Portfolio seeks to achieve its objective by investing
in a portfolio consisting of securities of companies selected for their growth
prospects. It invests primarily in common stocks, and may also invest in
securities that may be exchanged for or converted into common stock, preferred
stock and common stock purchase warrants and rights believed by the Manager to
provide capital growth opportunities.
Under normal conditions, the Portfolio will invest at least 65% of the
value of its total assets in equity securities with market capitalizations, at
the time of purchase by the Portfolio, of up to $1.25 billion. Stocks of
companies believed by the Manager to have special characteristics (such as a
high growth rate of unit sales, an important opportunity in a developing
industry or a distinct competitive advantage) are favored. Securities of these
companies may be subject to above-average market price fluctuation and business
risk; however, the Manager will seek to temper such risks by diversification of
investments and by avoiding concentration of investments in any one industry.
This Portfolio's investments, other than in securities of the companies
discussed above, will be substantially in securities issued or guaranteed by the
U.S. Government (such as Treasury bills, notes and bonds), its agencies,
instrumentalities or authorities, highly-rated corporate debt securities (rated
AA-, or better, by S&P or Aa3, or better, by Moody's); prime commercial paper
(rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of the 100
largest (based on assets) banks that are subject to regulatory supervision by
the U.S. Government or state governments and the 100 largest (based on assets)
foreign banks with branches or agencies in the United States.
P-11
<PAGE>
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
Unless otherwise indicated, the following description of investment
objectives and policies applies to each of the Seligman Henderson Global Growth
Opportunities Portfolio ("Global Growth Opportunities Portfolio"), Seligman
Henderson Global Smaller Companies Portfolio ("Global Smaller Companies
Portfolio"), Seligman Henderson Global Technology Portfolio ("Global Technology
Portfolio") and Seligman Henderson International Portfolio ("International
Portfolio").
The investment objective of the Global Growth Opportunities Portfolio is
long-term capital appreciation. The Global Growth Opportunities Portfolio seeks
to achieve its objective by investing primarily in equity securities of
companies that have the potential to benefit from global economic or social
trends. The Subadviser believes that such trends are reshaping the world as it
moves towards the new millennium. The trends that will be initially focused on
will include global economic liberalization and the flow of capital through
trade and investment; the globalization of the world's economy; the expansion of
technology as an increasingly important influence on society; the increased
awareness of the importance of protecting the environment; and the increase in
life expectancy leading to changes in consumer demographics and a greater need
for healthcare, security and leisure.
The investment objective of the Global Smaller Companies Portfolio is
long-term capital appreciation primarily through global investments in
securities of companies with small to medium market capitalizations. Under
normal market conditions, the Global Smaller Companies Portfolio will invest its
assets in securities of issuers located in at least three different countries,
one of which may be the U.S., and will invest at least 65% of its assets in
securities of small to medium-sized companies with market capitalization up to
$1 billion.
The investment objective of the Global Technology Portfolio is long-term
capital appreciation. The Global Technology Portfolio seeks to achieve its
objective by making global investments of at least 65% of its assets in
securities of companies with business operations in technology and
technology-related industries. The Global Technology Portfolio defines
technology as the use of science to create new products and services. As such
the industry comprises not only information technology and communications but
also medical, environmental and bio-technology. The Global Technology Portfolio
expects to invest in a broad range of technologies. The technology market is
global in its scope and has exhibited and continues to demonstrate rapid growth
both through increasing demand for existing products and services and the
broadening of the technology market. Penetration rates remain low while emerging
technologies such as multimedia and genetic engineering are opening up whole new
markets. The application of new technology to traditional industries is, in many
cases, revolutionizing both manufacturing and distribution industries.
Nonetheless, older technologies such as photography and print may also be
represented. The Subadviser expects to take advantage of valuation anomalies in
international markets created by the emergence of established U.S. technology
trends in overseas markets and the relative immaturity of the technology sectors
in those countries' securities markets. Securities of large companies that are
well established in the world technology market can be expected to grow with the
market and will frequently be held by the Global Technology Portfolio; however,
rapidly changing technologies and the expansion of technology and
technology-related industries provide a favorable environment for investment in
companies of small- to medium-size. Consequently, the Global Technology
Portfolio's investments are not subject to any minimum capitalization
requirement, and the Global Technology Portfolio may invest in securities
without regard to the capitalization of the issuer.
The investment objective of the International Portfolio is long-term
capital appreciation primarily through international investments in securities
of medium- to large-sized companies. Under normal market conditions, the
International Portfolio will invest 65% of its assets in securities of issuers
located in at least three different countries, not including the U.S.
Seligman Henderson Co. (the "Subadviser") will supervise and direct the
investments of each of the Seligman Henderson Portfolios. While each Seligman
Henderson Portfolio may invest in securities of issuers domiciled in any country
(except the International Portfolio, which normally will not invest in the
U.S.), under normal conditions investments will be made in four principal
regions: The United Kingdom/Continental Europe, North America, the Pacific Basin
and Latin America. Continental European countries include Austria, Belgium,
Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and
P-12
<PAGE>
Turkey. Pacific Basin countries include Australia, Hong Kong, India, Indonesia,
Japan, Korea, Malaysia, New Zealand, Pakistan, The People's Republic of China,
The Philippines, Singapore, Sri Lanka, Taiwan and Thailand. North America
includes the United States and Canada. Latin American countries include
Argentina, Brazil, Chile, Mexico and Venezuela.
In allocating investments among geographic regions and individual
countries, the Subadviser will consider such factors as the relative economic
growth potential of the various economies and securities markets; expected
levels of inflation; financial, social and political conditions influencing
investment opportunities; and the outlook for currency relationships.
The Seligman Henderson Portfolios may invest in all types of securities,
most of which will be denominated in currencies other than the U.S. dollar.
Since opportunities for long-term growth are primarily expected from equity
securities, the Portfolios will normally invest substantially all of their
assets in such securities, including common stock, securities convertible into
common stock, depositary receipts for these securities and warrants. These
Portfolios may, however, invest up to 25% of their assets in preferred stock and
debt securities if the Subadviser believes that the capital appreciation
available from an investment in such securities will equal or exceed the capital
appreciation available from an investment in equity securities. Dividends or
interest income are considered only when the Subadviser believes that such
income will have a favorable influence on the market value of a security in
light of each Portfolio's objective of capital appreciation. Equity securities
in which each of the Seligman Henderson Portfolios will invest may be listed on
a U.S. or foreign stock exchange or traded in U.S. or foreign over-the-counter
markets.
There is no requirement that the debt securities in which the Seligman
Henderson Portfolios invest be rated by a recognized rating agency. However, it
is each Portfolio's policy that investments in debt securities, whether rated or
unrated, will be made only if they are, in the opinion of the Subadviser, of
equivalent quality to "investment grade" securities. "Investment grade"
securities are those rated within the four highest quality grades as determined
by Moody's or S&P. Debt securities are interest-rate sensitive, so that their
value will tend to decrease when interest rates rise and increase when interest
rates fall.
DEPOSITARY RECEIPTS. The Seligman Henderson Portfolios may invest in
securities represented by American Depositary Receipts ("ADRs"), American
Depositary Shares ("ADSs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") or Global Depositary Shares ("GDSs"). ADRs and ADSs
are instruments generally issued by domestic banks or trust companies that
represent the deposit of a security of a foreign issuer. ADRs and ADSs may be
publicly traded on exchanges or over-the-counter in the United States and are
quoted and settled in dollars at a price that generally reflects the dollar
equivalent of the home country share price. EDRs, GDRs and GDSs are typically
issued by foreign banks or trust companies and traded in Europe. ADRs, ADSs,
EDRs, GDRs and GDSs may be issued under sponsored or unsponsored programs. In
sponsored programs, the issuer has made arrangements to have its securities
trade in the form of ADRs, ADSs, EDRs, GDRs or GDSs. In unsponsored programs,
the issuer may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, the issuers of unsponsored ADRs, ADSs, EDRs, GDRs and GDSs
are not obligated to disclose material information in the U.S., and therefore,
the import of such information may not be reflected in the market value of such
receipts.
By investing in foreign securities, the Seligman Henderson Portfolios will
attempt to take advantage of differences among economic trends and the
performance of securities markets in various countries. To date, the market
values of securities of issuers located in different countries have moved
relatively independently of each other. During certain periods, the return on
equity investments in some countries has exceeded the return on similar
investments in the U.S. The Subadviser believes that, in comparison with
investment companies investing solely in domestic securities, it may be possible
to obtain significant appreciation from a portfolio of foreign investments and
securities from various markets that offer different investment opportunities
and are affected by different economic trends. Global diversification reduces
the effect that events in any one country will have on the entire investment
portfolio. Of course, a decline in the value of a Portfolio's investments in one
country may offset potential gains from investments in another country.
FOREIGN INVESTMENT RISK FACTORS. Investments in securities of foreign
issuers may involve risks that are not associated with domestic investments, and
there can be no assurance that any of the Seligman Henderson Portfolios' foreign
investments will present less risk than a portfolio of domestic securities.
Foreign issuers may lack
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uniform accounting, auditing and financial reporting standards, practices and
requirements, and there is generally less publicly available information about
foreign issuers than there is about U.S. issuers. Governmental regulation and
supervision of foreign stock exchanges, brokers and listed companies may be less
pervasive than is customary in the U.S. Securities of some foreign issuers are
less liquid and their prices are more volatile than securities of comparable
domestic issuers. Foreign securities settlements may in some instances be
subject to delays and related administrative uncertainties which could result in
temporary periods when assets of a Portfolio are uninvested and no return is
earned thereon and may involve a risk of loss to a Portfolio. Foreign securities
markets may have substantially less volume than U.S. markets and far fewer
traded issues. Fixed brokerage commissions on foreign securities exchanges are
generally higher than in the U.S., and transaction costs with respect to smaller
capitalization companies may be higher than those of larger capitalization
companies. Income from foreign securities may be reduced by a withholding tax at
the source or other foreign taxes. In some countries, there may also be the
possibility of nationalization, expropriation or confiscatory taxation, (in
which a Portfolio could lose its entire investment in a certain market),
limitations on the removal of monies or other assets of the Portfolios, higher
rates of inflation, political or social instability or revolution, or diplomatic
developments that could affect investments in those countries. In addition, it
may be difficult to obtain and enforce a judgement in a court outside the U.S.
Some of the risks described in the preceding paragraph may be more severe
for investments in emerging or developing countries. By comparison with the
United States and other developed countries, emerging or developing countries
may have relatively unstable governments, economies based on a less diversified
industrial base and securities markets that trade a smaller number of
securities. Companies in emerging markets may generally be smaller, less
experienced and more recently organized than many domestic companies. Prices of
securities traded in the securities markets of emerging or developing countries
tend to be volatile. Furthermore, foreign investors are subject to many
restrictions in emerging or developing countries. These restrictions may
require, among other things, governmental approval prior to making investments
or repatriating income or capital, or may impose limits on the amount or type of
securities held by foreigners or on the companies in which the foreigners may
invest.
The economies of individual emerging countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rates of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency and balance of payment position and may be based on a
substantially less diversified industrial base. Further, the economies of
developing countries generally are heavily dependent upon international trade
and, accordingly, have been, and may continue to be, adversely affected by trade
barriers, exchange controls, managed adjustments in relative currency values and
other protectionist measures imposed or negotiated by the countries with which
they trade. These economies also have been, and may continue to be, adversely
affected by economic conditions in the countries with which they trade.
FOREIGN CURRENCY RISK FACTORS. Investments in foreign securities will
usually be denominated in foreign currencies, and each Portfolio may temporarily
hold funds in foreign currencies. The value of a Portfolio's investments
denominated in foreign currencies may be affected, favorably or unfavorably, by
the relative strength of the U.S. dollar, changes in foreign currency and U.S.
dollar exchange rates and exchange control regulations. A Portfolio may incur
costs in connection with conversions between various currencies. A Portfolio's
net asset value per share will be affected by changes in currency exchange
rates. Changes in foreign currency exchange rates may also affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by the Portfolios. The rate of exchange between the U.S. dollar and
other currencies is determined by the forces of supply and demand in the foreign
exchange markets (which in turn are affected by interest rates, trade flows and
numerous other factors, including, in some countries, local governmental
intervention).
SMALLER COMPANY INVESTMENT RISK FACTORS. With regard to the Global Smaller
Companies Portfolio and the Global Technology Portfolio, the Subadviser believes
that smaller companies generally have greater earnings and sales growth
potential than larger companies. In addition, the Global Growth Opportunities
Portfolio may also invest in securities without regard to the minimum
capitalization of issuers. However, investments in such companies may involve
greater risks, such as limited product lines, markets and financial or
managerial resources. Less frequently traded securities may be subject to more
abrupt price movements than securities of larger companies.
TECHNOLOGY INVESTMENT RISK FACTORS. The value of the Global Technology
Portfolio shares may be susceptible to factors affecting technology and
technology-related industries and to greater risk and market fluctuation than an
investment in a fund that invests in a broader range of portfolio securities. As
such, the Global Technology
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Portfolio is not an appropriate investment for individuals who require safety of
principal or stable income from their investments. Technology and
technology-related industries may be subject to greater governmental regulation
than many other industries in certain countries; changes in governmental
policies and the need for regulatory approvals may have a material adverse
effect on these industries. Additionally, these companies may be subject to
risks of developing technologies, competitive pressures and other factors and
are dependent upon consumer and business acceptance as new technologies evolve.
Securities of smaller, less experienced companies also may involve greater
risks, such as limited product lines, markets and financial or managerial
resources, and trading in such securities may be subject to more abrupt price
movements than trading in the securities of larger companies.
DERIVATIVES. Each of the Seligman Henderson Portfolios may invest in
financial instruments commonly known as "derivatives" only for hedging or
investment purposes. A Portfolio will not invest in derivatives for speculative
purposes, i.e., where the derivative investment exposes the Portfolio to undue
risk of loss, such as where the risk of loss is greater than the cost of the
investment.
A derivative is generally defined as an instrument whose value is derived
from, or based upon, some underlying index, reference rate (e.g., interest rates
or currency exchange rates), security, commodity or other asset. A Portfolio
will not invest in a specific type of derivative without prior approval from its
Board of Directors, after consideration of, among other things, how the
derivative instrument serves the Portfolio's investment objective, and the risk
associated with the investment. The only types of derivatives in which the
Portfolios are currently permitted to invest are stock purchase rights and
warrants, and, as described more fully below, forward currency exchange
contracts and put options.
A Portfolio may not invest in rights and warrants if, at the time of
acquisition, the investment in rights and warrants would exceed 5% of the
Portfolio's net assets (valued at the lower of cost or market). In addition, no
more than 2% of net assets may be invested in warrants not listed on the New
York or American Stock Exchanges. For purposes of this restriction, warrants
acquired in units or attached to securities will be deemed to have been
purchased without cost.
FORWARD CURRENCY EXCHANGE CONTRACTS. The Subadviser will consider changes
in exchange rates in making investment decisions. As one way of managing
exchange rate risk, each Portfolio may enter into forward currency exchange
contracts (agreements to purchase or sell foreign currencies at a future date).
A Portfolio will usually enter into these contracts to fix the U.S. dollar value
of securities that it has agreed to buy or sell for the period between the date
the trade was entered into and the date the security is delivered and paid for.
A Portfolio may also use these contracts to hedge the U.S. dollar value of
securities it already owns. A Portfolio may be required to cover certain forward
currency exchange contract positions by establishing a segregated account with
its custodian that will contain only liquid assets, such as U.S. Government
securities or other liquid high-grade debt obligations. Under normal
circumstances, the portfolio manager will limit forward currency contracts to
not greater than 75% of the Portfolio's position in any one country as of the
date the contract is entered into.
Although the Portfolios will seek to benefit by using forward contracts,
anticipated currency movements may not be accurately predicted and the
Portfolios may therefore incur a gain or loss on a forward contract. A forward
contract may help reduce the Portfolios' losses on securities denominated in
foreign currency, but it may also reduce the potential gain on the securities
depending on changes in the currency's value relative to the U.S. dollar or
other currencies.
OPTIONS TRANSACTIONS. Each of the Seligman Henderson Portfolios may
purchase put options on portfolio securities in an attempt to provide a hedge
against a decrease in the price of a security held by the Portfolio. A Portfolio
will not purchase options for speculative purposes. Purchasing a put option
gives a Portfolio the right to sell, and obligates the writer to buy, the
underlying security at the exercise price at any time during the option period.
When a Portfolio purchases an option, it is required to pay a premium to
the party writing the option and a commission to the broker selling the option.
If the option is exercised by the Portfolio, the premium and the commission paid
may be greater than the amount of the brokerage commission charged if the
security were to be purchased or sold directly. See "Investment Policies and
Restrictions" in the Statement of Additional Information.
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<PAGE>
TEMPORARY INVESTMENTS. When the Subadviser believes that market conditions
warrant a temporary defensive position, a Portfolio may invest up to 100% of its
assets in short-term instruments such as commercial paper, bank certificates of
deposit, bankers' acceptances, or repurchase agreements for such securities and
securities of the U.S. Government and its agencies and instrumentalities, as
well as cash and cash equivalents denominated in foreign currencies. Investments
in domestic bank certificates of deposit and bankers' acceptances will be
limited to banks that have total assets in excess of $500 million and are
subject to regulatory supervision by the U.S. Government or state governments. A
Portfolio's investments in commercial paper of U.S. issuers will be limited to
(a) obligations rated Prime-1 by Moody's or A-1 by S&P or (b) unrated
obligations issued by companies having an outstanding unsecured debt issue
currently rated A or better by S&P. A description of various commercial paper
ratings and debt securities ratings appears in the Appendix to this Prospectus.
A Portfolio's investments in foreign short-term instruments will be limited to
those that, in the opinion of the Subadviser, equate generally to the standards
established for U.S. short-term instruments.
SELIGMAN HIGH-YIELD BOND PORTFOLIO
The objective of this Portfolio is to produce maximum current income. The
Portfolio seeks to achieve its objective by following a policy of investing in a
diversified range of high-yield, high-risk, medium and lower quality corporate
bonds and notes, commonly referred to as "junk bonds". Generally, bonds and
notes providing the highest yield are unrated or carry lower ratings (Baa or
lower by Moody's or BBB or lower by S&P) than those assigned by S&P or Moody's
to investment-grade bonds and notes. A description of the S&P and Moody's rating
categories is set forth in the Appendix to this Prospectus. While providing
higher yields, these bonds and notes are subject to greater risks of loss of
principal and income than higher-rated bonds and notes and are considered to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. They are also generally considered to be subject to greater
price volatility due to market risks than higher rated bonds and notes.
The amount of outstanding high-yield, lower-rated corporate securities has
recently proliferated. Based on industry estimates, the market grew from $20
billion in outstanding securities to in excess of $300 billion, principally over
the past ten years, a period of national economic expansion. An economic
downturn could adversely impact issuers' abilities to pay interest and repay
principal and could result in issuers' defaulting on such payments. The value of
the Portfolio's bonds and notes will be affected like all fixed-income
securities by market conditions relating to changes in prevailing interest
rates. However, the value of lower-rated or unrated corporate bonds and notes is
also affected by investors' perceptions. When economic conditions appear to be
deteriorating, lower-rated or unrated corporate bonds and notes may decline in
market value due to investors' heightened concerns and perceptions over credit
quality. If the security is downgraded, the Portfolio may retain the security.
The Portfolio may invest in "zero coupon" (interest payments accrue until
maturity) and "pay-in-kind" (interest payments are made in cash or additional
shares) bonds. Such securities may be subject to greater fluctuations in value
as they tend to be more speculative than income bearing securities. Fluctuations
in the market prices of the securities owned by the Portfolio result in
corresponding fluctuations and volatility in the net asset value of the shares
of the Portfolio.
Lower-rated and non-rated corporate bonds and notes in which the Portfolio
invests are traded principally by dealers in the over-the-counter market. The
market for these securities may be less active and less liquid than for higher
rated securities. Under adverse market or economic conditions, the secondary
market for these bonds and notes could contract further, causing the Portfolio
difficulties in valuing and selling the securities in its portfolio.
The ratings of fixed-income securities by Moody's and S&P are a generally
accepted barometer of credit risk. They are, however, subject to certain
limitations from an investor's standpoint. The rating of an issuer is heavily
weighted by past developments and does not necessarily reflect probable future
conditions. There is frequently a lag between the time the rating is assigned
and the time it is updated. In addition there may be varying degrees of
difference in credit risk of securities within each rating category.
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The following table sets forth the weighted average ratings of the
Portfolio invested in debt securities, including convertible bonds, for the year
ended December 31, 1997. When securities received different ratings from S&P and
Moody's, the table reflects the lower rating.
AAA/Aaa .......................... --
AA/Aa ............................ --
A/A .............................. --
BBB/Baa .......................... --
BB/Ba ............................ %
B/B .............................. %
CCC/Caa .......................... %
CC/Ca ............................ --
Non-rated ........................ %
The Manager will try to minimize the risk inherent in the Portfolio's
investment objective through credit analysis, diversification and attention to
current developments and trends in interest rates and economic conditions.
However, there can be no assurance that losses will not occur and an investment
in the Portfolio is appropriate for you only if you can bear the high risk
inherent in seeking maximum current income by investing in high-yielding
corporate bonds and notes which are unrated or carry lower ratings than those
assigned by S&P or Moody's to investment-grade bonds.
Except for temporary defensive purposes, at least 80% of the value of the
Portfolio's total assets will be invested in high-yielding, income-producing
corporate bonds. This investment policy is a fundamental policy and may not be
changed by the Board of Directors of the Fund without the vote of a majority of
the Portfolio's outstanding voting securities. The Portfolio may invest up to
20% of the value of its total assets in a range of high-yield, medium and lower
quality corporate notes, short-term money market instruments, including
certificates of deposit of banks having total assets of more than $1 billion and
which are members of the FDIC, bankers' acceptances and interest-bearing savings
or time deposits of such banks, commercial paper of prime quality rated A-1 or
higher by S&P or Prime-1 or higher by Moody's or, if not rated, issued by
companies which have an outstanding debt issue rated AA or higher by S&P or Aa
or higher by Moody's, securities issued, guaranteed or insured by the U.S.
Government, its agencies and instrumentalities and other income-producing cash
items. The Portfolio may invest temporarily for defensive purposes without limit
in the foregoing securities.
In accordance with its objective of producing maximum current income, the
Portfolio may invest up to 10% of its total assets in preferred stock, including
non-investment grade preferred stock. Certain preferred stock issues may offer
higher yields than similar bond issues because their rights are subordinated to
the bonds. Consequently, such preferred stock issues will have a greater risk
potential. The Manager will try to minimize this greater risk potential through
its investment process. However, there can be assurance that losses will not
occur and, as stated above, an investment in the Portfolio is appropriate only
for an investor who can bear the high risk in seeking maximum current income by
investing in high-yielding securities, including non-investment grade preferred
stock.
SELIGMAN INCOME PORTFOLIO
The primary investment objective of this Portfolio is to provide
shareholders with high current income consistent with what is believed to be
prudent risk of capital; secondarily, the Portfolio seeks to provide the
possibility of improvement in income and capital value over the longer term.
Assets are invested in securities carefully selected in light of the Portfolio's
investment objectives and diversified to limit risk. The distribution of
investments between different types of securities is governed by a fundamental
policy, which can be changed only by the vote of the shareholders, that at least
25% of the market value of gross assets must at all times be in cash, bonds
and/or preferred stocks. Under an investment policy established by the Board of
Directors, at least 80% of assets will be invested in income-producing
securities.
Subject to that limitation, assets may be invested in many different types
of securities, including money market instruments, fixed-income securities such
as bonds, debentures and preferred stocks, senior securities convertible into
common stocks, and common stocks.
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Convertible bonds are convertible at a stated exchange rate or price into
common stock. Before conversion, convertible securities are similar to
non-convertible debt securities in that they provide a steady stream of income
with generally higher yields than an issuer's equity securities. The market
value of all debt securities, including convertible securities, tends to decline
as interest rates increase and to increase as interest rates decline. In
general, convertible securities may provide lower interest or dividend yields
than non-convertible debt securities of similar quality, but they may also allow
investors to benefit from increases in the market price of the underlying common
stock. When the market price of the underlying common stock increases, the price
of the convertible security tends to reflect the increase. When the market price
of the underlying common stock declines, the convertible security tends to trade
on the basis of yield, and may not depreciate to the same extent as the
underlying common stock. In an issuer's capital structure, convertible
securities are senior to common stocks. They are therefore of higher quality and
involve less risk than the issuer's common stock, but the extent to which risk
is reduced depends largely on the extent to which the convertible security sells
above its value as a fixed-income security. In selecting convertible securities
for the Portfolio, the Manager evaluates such factors as economic and business
conditions involving the issuer, future earnings growth potential of the issuer,
potential for price appreciation of the underlying equity, the value of
individual securities relative to other investment alternatives, trends in the
determinants of corporate profits and capability of management. In evaluating a
convertible security, the Manager gives emphasis to the attractiveness of the
underlying common stock and the capital appreciation opportunities that the
convertible bonds present. Convertible securities can be callable or redeemable
at the issuer's discretion, in which case the Manager would be forced to seek
alternative investments. The Portfolio may invest in debt securities convertible
into equity securities rated as low as CC by S&P or Ca by Moody's. Debt
securities rated below investment grade (frequently referred to as "junk bonds")
often have speculative characteristics and will be subject to greater market
fluctuations and risk of loss of income and principal than higher-rated
securities. A description of credit ratings and risks associated with
lower-rated debt securities is set forth in the Appendix to this Prospectus. The
Manager does not rely on the ratings of these securities in making investment
decisions but performs its own analysis, based on the factors described above,
in light of the Portfolio's investment objectives.
The Portfolio does not expect to invest more than 5% of its assets in
non-convertible bonds, notes and debentures ("bonds") rated below BBB by S&P or
Baa by Moody's. Although bonds rated in the fourth credit rating category (BBB
or Baa) are commonly referred to as investment grade, they may have speculative
characteristics. The Appendix to this Prospectus contains a description of
credit ratings and the risks associated with lower-rated debt securities, which
tend to be more speculative and riskier than higher-rated debt securities.
The following table sets forth the weighted average ratings of the
Portfolio invested in debt securities, including convertible bonds, for the year
ended December 31, 1997. The balance of the Portfolio is invested in equity
securities. When securities received different ratings from S&P and Moody's, the
table reflects the higher rating.
AAA/Aaa ........................... %
AA/Aa ............................. %
A/A ............................... %
BBB/Baa ........................... %
BB/Ba ............................. %
B/B_ .............................. %
CCC/Caa ........................... %
CC/Ca ............................. --
Non-rated ......................... %
SELIGMAN LARGE-CAP VALUE PORTFOLIO
SELIGMAN SMALL-CAP VALUE PORTFOLIO
The investment objective of these Portfolios is long-term capital
appreciation. The Seligman Large-Cap Value Portfolio seeks to achieve this
objective by investing at least 65% of its total assets in equity securities of
"value" companies with large market capitalization (i.e., $2 billion or more),
at the time of purchase by the Portfolio. The Seligman Small-Cap Value Portfolio
seeks to achieve this objective by investing at least 65% of its total assets in
equity securities of "value" companies with small market capitalization (i.e.,
up to $1 billion), at the time of purchase by the Portfolio.
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A "value" company, as determined by the Manager, is a company that
typically displays, among other things, a relatively low price-to-book and/or
price-to-earnings ratio. The Manager, in selecting securities for purchase by a
Portfolio, may also consider, among other factors, evaluation of a company's
growth prospects, quality of management, and liquidity. The Manager will also
look for companies in which new management or proposed restructuring plans are
expected by the Manager to have a positive impact on the company's overall
business operations and productivity.
Under normal market conditions, each Portfolio anticipates that it will be
invested primarily in equity securities of domestic issuers, including common
stock, preferred stock and stock convertible into or exchangeable for such
securities. Each Portfolio expects that no more than 15% of its assets will be
invested in cash or fixed-income securities except for temporary defensive
purposes.
SMALL COMPANY INVESTMENT RISK FACTORS. With regard to the Seligman
Small-Cap Value Portfolio, investments in smaller companies may involve greater
risks than larger companies, such as limited product lines, markets and
financial or managerial resources. Less frequently traded securities may be
subject to more abrupt price movements than securities of larger companies.
DERIVATIVES. Each Portfolio may invest in derivatives only for hedging or
investment purposes. A Portfolio will not invest in derivatives for speculative
purposes, i.e., where the derivative investment exposes the Portfolio to undue
risk of loss, such as where the risk of loss is greater than the cost of the
investment. The only types of derivatives in which the Seligman Large-Cap Value
Portfolio and the Seligman Small-Cap Value Portfolio are currently permitted to
invest are stock purchase rights and warrants, and put options.
The Portfolios may not invest in rights and warrants if, at the time of
acquisition, the investment in rights and warrants would exceed 5 % of the
Portfolio's net assets (valued at the lower of cost or market).
OPTIONS TRANSACTIONS. Each of the Seligman Large-Cap Value Portfolio and
the Seligman Small-Cap Value Portfolio may purchase put options on portfolio
securities in an attempt to provide a hedge against a decrease in the price of a
security held by the Portfolio. A Portfolio will not purchase options for
speculative purposes. Purchasing a put option gives a Portfolio the right to
sell, and obligates the writer to buy, the underlying security at the exercise
price at any time during the option period.
When a Portfolio purchases an option, it is required to pay a premium to
the party writing the option and a commission to the broker selling the option.
If the option is exercised by the Portfolio, the premium and the commission paid
may be greater than the amount of the brokerage commission charged if the
security were to be purchased or sold directly. See "Investment Policies and
Restrictions" in the Statement of Additional Information.
TEMPORARY INVESTMENTS. When the Manager believes that market conditions
warrant a temporary defensive position, a Portfolio may invest up to 100% of its
assets in short-term instruments such as commercial paper, bank certificates of
deposit, bankers' acceptances, or repurchase agreements for such securities and
securities of the U.S. Government and its agencies and instrumentalities, as
well as cash and cash equivalents denominated in foreign currencies. Investments
in domestic bank certificates of deposit and bankers' acceptances will be
limited to banks that have total assets in excess of $500 million and are
subject to regulatory supervision by the U.S. Government or state governments. A
Portfolio's investments in commercial paper of U.S. issuers will be limited to
(a) obligations rated Prime-1 by Moody's or A-1 by S&P or (b) unrated
obligations issued by companies having an outstanding unsecured debt issue
currently rated A or better by S&P. A description of various commercial paper
ratings and debt securities ratings appears in the Appendix to this Prospectus.
A Portfolio's investments in foreign short-term instruments will be limited to
those that, in the opinion of the Manager, equate generally to the standards
established for U.S. short-term instruments.
OTHER INVESTMENT POLICIES
The Fund's Portfolios may invest for either the long or short term in their
efforts to attain their objectives, and changes in investments may be made
whenever considered advisable by the Manager or, in the case of the Seligman
Henderson Portfolios, the Subadviser. Except as otherwise noted, each of the
Portfolios may engage in transactions involving the types of securities and
investment strategies described below. Further information about these
strategies is included in the Fund's Statement of Additional Information.
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REPURCHASE AGREEMENTS. Each Portfolio may hold cash or cash equivalents and
may enter into repurchase agreements with respect to securities; normally
repurchase agreements relate to money market obligations backed by the full
faith and credit of the U.S. Government. Repurchase agreements are transactions
in which an investor (e.g., any of the Fund's Portfolios) purchases a security
from a bank, recognized securities dealer, or other financial institution and
simultaneously commits to resell that security to such institution at an agreed
upon price, date and market rate of interest unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement thus involves the
obligation of the bank or securities dealer to pay the agreed upon price on the
date agreed to, which obligation is in effect secured by the value of the
underlying security held by the Portfolio. Repurchase agreements could involve
certain risks in the event of bankruptcy or other default by the seller,
including possible delays and expenses in liquidating the securities underlying
the agreement, decline in value of the underlying securities and loss of
interest. Although repurchase agreements carry certain risks not associated with
direct investments in securities, each Portfolio intends to enter into
repurchase agreements only with financial institutions believed to present
minimum credit risks in accordance with guidelines established by the Fund's
Board of Directors. The creditworthiness of such institutions will be reviewed
and monitored under the general supervision of the Board of Directors. The
Portfolios will invest only in repurchase agreements collateralized in an amount
at least equal at all times to the purchase price plus accrued interest.
Repurchase agreements usually are for short periods, such as one week or less,
but may be for longer periods. No Portfolio will enter into a repurchase
agreement with a maturity of more than seven days if, as a result, more than 15%
of the value of its net assets would then be invested in such repurchase
agreements and other illiquid investments.
ILLIQUID SECURITIES. Other than the Seligman Cash Management Portfolio,
each Portfolio may invest up to 15% of its net assets in illiquid securities,
including restricted securities (i.e., securities not readily marketable without
registration under the Securities Act of 1933 (the "1933 Act")) and other
securities that are not readily marketable. Each Portfolio, other than the
Seligman Cash Management Portfolio, may purchase restricted securities that can
be offered and sold to "qualified institutional buyers" under Rule 144A of the
1933 Act, and the Fund's Board of Directors may determine, when appropriate,
that specific Rule 144A securities are liquid and not subject to the 15%
limitation on illiquid securities. Should the Board of Directors make this
determination, it will carefully monitor the security (focusing on such factors,
among others, as trading activity and availability of information) to determine
that the Rule 144A security continues to be liquid. It is not possible to
predict with assurance exactly how the market for restricted securities offered
and sold under Rule 144A will develop. This investment practice could have the
effect of increasing the level of illiquidity in a Portfolio to the extent that
qualified institutional buyers become for a time uninterested in purchasing Rule
144A securities.
SHORT SALES. Each of the Seligman Henderson Portfolios may sell securities
short "against-the-box." A short sale "against-the-box" is a short sale in which
the Portfolio owns an equal amount of the securities sold short or securities
convertible into or exchangeable without payment of further consideration for
securities of the same issue as, and equal in amount to, the securities sold
short.
FOREIGN SECURITIES. Each of the Fund's Portfolios may invest in commercial
paper and certificates of deposit issued by foreign banks and may invest in
other securities of foreign issuers directly or through ADRs, ADSs, EDRs, GDRs
or GDSs. Foreign investments may be affected favorably or unfavorably by changes
in currency rates and exchange control regulations. There may be less
information available about a foreign company than about a U.S. company and
foreign companies may not be subject to reporting standards and requirements
comparable to those applicable to U.S. companies. Foreign securities may not be
as liquid as U.S. securities. Securities of foreign companies may involve
greater market risk than securities of U.S. companies, and foreign brokerage
commissions and custody fees are generally higher than in the U.S. Investments
in foreign securities may also be subject to local economic or political risks,
political instability and possible nationalization of issuers. A Portfolio may
invest up to 10% of its total assets in foreign securities (except the Seligman
Henderson Portfolios, which may invest up to 100% of their total assets in
foreign securities), except that this 10% limit does not apply to foreign
securities held through ADRs, ADSs, EDRs, GDRs or GDSs (as defined on page
P-13), or to commercial paper and certificates of deposit issued by foreign
banks.
LENDING OF PORTFOLIO SECURITIES AND BORROWING. Other than the Seligman Cash
Management Portfolio, each of the Fund's Portfolios may lend portfolio
securities to banks or other institutional borrowers, provided that securities
loaned by each of the Seligman Henderson Portfolios may not exceed 331/3% of the
Portfolios' total assets taken at market value. The Fund's Portfolios will not
lend portfolio securities to any institutions affiliated with
P-20
<PAGE>
the Fund. The borrower must maintain with the Fund's custodian bank cash or
equivalent collateral equal to at least 100% of the market value of the
securities loaned. During the time portfolio securities are on loan, the
borrower is required to pay an amount equal to any dividends or interest paid on
the securities to the lending Portfolio. In addition, the lending Portfolio may
invest the cash collateral and earn additional income or may receive an agreed
upon amount of interest income from the borrower. The lending of portfolio
securities could involve the risk of delays in receiving additional collateral
or in the recovery of securities and possible loss of rights in collateral in
the event that a borrower fails financially.
Except as noted below, a Portfolio may not borrow money except from banks
for temporary purposes (but not for the purpose of purchasing portfolio
securities) in an amount not to exceed 10% of the value of the total assets of
that Portfolio. In addition, the Seligman Frontier Portfolio, the Seligman
High-Yield Bond Portfolio, the Seligman Large-Cap Value Portfolio, and the
Seligman Small-Cap Portfolio will not purchase additional portfolio securities
if that Portfolio has outstanding borrowings in excess of 5% of the value of its
total assets.
The Seligman Capital Portfolio, the Seligman Common Stock Portfolio, the
Seligman Communications and Information Portfolio, the Seligman Large-Cap Value
Portfolio, and the Seligman Small-Cap Value Portfolio may from time to time
borrow money in order to purchase securities. Borrowings may be made only from
banks and each of these Portfolios may not borrow in excess of one-third of the
market value of its assets, less liabilities other than such borrowing, or
pledge more than 10% (15% for the Seligman Large-Cap Value and Seligman
Small-Cap Value Portfolios) of its total assets, taken at cost, to secure the
borrowing. Current asset value coverage of three times any amount borrowed by
the respective Portfolio is required at all times. Borrowed money creates an
opportunity for greater capital appreciation, but at the same time increases
exposure to capital risk. The net cost of any money borrowed would be an expense
that otherwise would not be incurred, and this expense will reduce the
Portfolio's net investment income in any given period. Any gain in the value of
securities purchased with money borrowed to an amount in excess of amounts
borrowed plus interest would cause the net asset value of the Portfolio's shares
to increase more than otherwise would be the case. Conversely, any decline in
the value of securities purchased to an amount below the amount borrowed plus
interest would cause the net asset value to decrease more than would otherwise
be the case.
Each of the Seligman Henderson Portfolios may from time to time borrow
money for temporary, extraordinary or emergency purposes and may invest the
funds in additional securities. Borrowings for the purchase of securities will
not exceed 5% of the Portfolio's total assets and will be made at prevailing
interest rates.
WHEN-ISSUED SECURITIES. The Seligman Bond Portfolio and the Seligman
High-Yield Bond Portfolio may purchase securities on a when-issued basis.
Settlement of such transactions (i.e., delivery of securities and payment of
purchase price) normally takes place within 45 days after the date of the
commitment to purchase. Although the Seligman High-Yield Bond Portfolio will
purchase a security on a when-issued basis only with the intention of actually
acquiring the securities, the Portfolio may sell these securities before the
purchase settlement date if it is deemed advisable.
At the time a Portfolio enters into such a commitment both payment and
interest terms will be established prior to settlement; there is a risk that
prevailing interest rates on the settlement date will be greater than the
interest rate terms established at the time the commitment was entered into.
When-issued securities are subject to changes in market value prior to
settlement based upon changes, real or anticipated, in the level of interest
rates or creditworthiness of the issuer. If a Portfolio remains substantially
fully invested at the same time that it has purchased securities on a
when-issued basis, the market value of that Portfolio's assets may fluctuate
more than otherwise would be the case. For this reason, accounts for each
Portfolio will be established with the Fund's custodian consisting of cash
and/or liquid high-grade debt securities equal to the amount of each Portfolio's
when-issued commitment; these accounts will be valued each day and additional
cash and/or liquid high-grade debt securities will be added to an account in the
event that the current value of the when-issued commitment increases. When the
time comes to pay for when-issued securities, a Portfolio will meet its
respective obligations from then available cash flow, sale of securities held in
the separate account, sale of other securities, or from the sale of the
when-issued securities themselves (which may have a value greater or less than a
Portfolio's payment obligations). Sale of securities to meet when-issued
commitments carries with it a greater potential for the realization of capital
gain or loss.
P-21
<PAGE>
MANAGEMENT SERVICES
The Board of Directors provides broad supervision over the affairs of the
Fund. Pursuant to management agreements approved by the Board of Directors (the
"Management Agreements"), the Manager manages the investments of each Portfolio
and administers their business and other affairs. The address of the Manager is
100 Park Avenue, New York, New York 10017.
Mr. William C. Morris is Chairman of the Manager and Chairman of the Board
and Chief Executive Officer of the Fund. Mr. Morris owns a majority of the
outstanding voting securities of the Manager.
For its services under the Management Agreements, the Manager receives a
fee from each Portfolio, calculated daily and payable monthly, at an annual rate
of .40% of the average daily net assets of the Seligman Bond Portfolio, Seligman
Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock
Portfolio and Seligman Income Portfolio; at an annual rate of .50% of the
average daily net assets of the Seligman High-Yield Bond Portfolio; at an annual
rate of .75% of the average daily net assets of the Seligman Communications and
Information Portfolio and Seligman Frontier Portfolio; at an annual rate of .80%
of the average daily net assets of the Seligman Large-Cap Value Portfolio on the
first $500 million of its net assets, .70% of the average daily net assets on
its next $500 million of net assets and .60% of the average daily net assets in
excess of $1 billion; and at an annual rate of 1.00% of the average daily net
assets of the Seligman Small-Cap Value Portfolio on the first $500 million of
its net assets, .90% of the average daily net assets on its next $500 million of
net assets and .80% of the average daily net assets in excess of $1 billion.
Each of the Seligman Henderson Portfolios pays the Manager a management
fee, calculated daily and payable monthly, equal to an annual rate of 1.00% of
the average daily net assets of each Portfolio, of which .90% is paid to the
Subadviser for the services described below. This management fee is higher than
that of the other Portfolios of the Fund and of most investment companies but is
comparable to that of most global or international equity funds.
The Manager voluntarily has agreed to waive its management fee and to
reimburse all expenses for the Seligman Cash Management Portfolio, has
voluntarily agreed to reimburse expenses (other than the management fee) that
exceed .20% per annum of the average daily net assets for each of the Seligman
Bond, Seligman Capital, Seligman Common Stock, Seligman Communications and
Information, Seligman Frontier, Seligman High-Yield Bond, and Seligman Income
Portfolios; and has voluntarily agreed to reimburse expenses (including the
management fee) that exceed .80% and 1.00%, respectively, of the Seligman
Large-Cap Value and Seligman Small-Cap Value Portfolios. There is no assurance
that the Manager will continue this policy in the future.
The Manager and Subadviser voluntarily agreed to reimburse certain expenses
(other than the management fee) that exceed .40% per annum of the average daily
net assets for each of the Seligman Henderson Portfolios. There is no assurance
that the Manager and Subadviser will continue this policy in the future.
The management fee and total expenses paid by each Portfolio (except
Seligman Large-Cap Value Portfolio and Seligman Small-Cap Value Portfolio, each
of which commenced operations on May 1, 1998), expressed as an annualized
percentage of average daily net assets of such Portfolio, are presented in the
following table for the fiscal year ended December 31, 1997.
P-22
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT FEE RATE EXPENSE RATIOS FOR
FOR THE YEAR ENDED THE YEAR ENDED
PORTFOLIO 12/31/97 12/31/97*
--------- ---------------------- -----------------------
<S> <C> <C>
Seligman Bond Portfolio .......................... .40% .60%
Seligman Capital Portfolio ....................... .40 .60
Seligman Cash Management Portfolio ............... -* --
Seligman Common Stock Portfolio .................. .40 .53
Seligman Communications and Information
Portfolio ...................................... .75 .87
Seligman Frontier Portfolio ...................... .75 .89
Seligman Henderson Global
Growth Opportunities Portfolio ................. 1.00 1.40
Seligman Henderson Global Smaller
Companies Portfolio ............................ 1.00 1.40
Seligman Henderson Global
Technology Portfolio ........................... 1.00 1.40
Seligman Henderson International Portfolio ....... 1.00 1.40
Seligman High-Yield Bond Portfolio ............... .50 .70
Seligman Income Portfolio ........................ .40 .60
</TABLE>
- -------------
* During the year ended December 31, 1997, the Manager, at its discretion,
waived all of its fees for the Seligman Cash Management Portfolio, and the
Manager and/or Subadviser elected to reimburse all or a portion of the
expenses for the Seligman Bond Portfolio, Seligman Capital Portfolio,
Global Growth Opportunities Portfolio, Global Smaller Companies Portfolio,
Global Technology Portfolio, International Portfolio, Seligman High-Yield
Bond Portfolio and Seligman Income Portfolio.
The Manager also serves as manager of seventeen other investment companies,
which, together with the Fund, make up the "Seligman Group." The aggregate
assets of the Seligman Group were approximately $ billion at March 31, 1998. The
Manager also provides investment management or advice to institutional and other
accounts having an aggregate value of approximately $ billion at March 31, 1998.
The Fund bears all expenses of its organization, operations, and business
not specifically assumed or agreed to be paid by the Manager as provided in the
Management Agreements. In particular, but without limiting the generality of the
foregoing, the Fund pays brokerage commissions, custody expenses and expenses
relating to computation of the Fund's net asset value per share, including the
cost of any equipment or services used for obtaining price quotations; legal and
accounting fees and expenses; fees and expenses of registering the Fund under
the federal securities laws; taxes or governmental fees payable by or with
respect to the Fund to federal, state, or other governmental agencies, domestic
or foreign, including stamp or other transfer taxes; fees, dues, and other
expenses incurred in connection with the Fund's membership in any trade
association or other investment organization; and such nonrecurring expenses as
may arise, including litigation costs.
THE SUBADVISER. Seligman Henderson Co. serves as Subadviser to each of the
Seligman Henderson Portfolios pursuant to Subadvisory Agreements between the
Manager and the Subadviser (the "Subadvisory Agreements"). The Subadvisory
Agreements provide that the Subadviser will supervise and direct the Seligman
Henderson Portfolios' international investments in accordance with the
Portfolios' investment objectives, policies and restrictions. Seligman Henderson
Co. was created to provide international and global investment management
services to institutional investors and investment companies in the U.S. The
address of the Subadviser is 100 Park Avenue, New York, New York 10017.
PORTFOLIO MANAGEMENT. Leonard J. Lovito, a Vice President, Investment
Officer of the Manager, serves as a Vice President of the Fund and has been
Portfolio Manager of the Seligman Bond Portfolio since January 1, 1994 and of
the Seligman Cash Management Portfolio since January 1, 1995. Mr. Lovito joined
the Manager in December 1984 as a Trader, was named Assistant Vice President and
Portfolio Manager in January 1987 and Vice President, Investment Officer in
August 1991. He also serves as Vice President and Portfolio Manager of Seligman
Cash Management Fund, Inc., and Vice President of Seligman High Income Fund
Series and Portfolio Manager of its Seligman U.S. Government Securities Series.
The Portfolio Manager's discussion of the Seligman Bond Portfolio's performance,
as well as a line graph illustrating comparative performance information between
the Seligman Bond
P-23
<PAGE>
Portfolio, the Lehman Brothers Government Bond Index, and the Lipper Corporate
Debt BBB-Rated Funds Average, is included in the Fund's 1997 Annual Report to
Shareholders.
Richard R. Schmaltz, who joined the Manager as Managing Director, Director
of Investments in September 1996, is primarily responsible for the day-to-day
management of the Seligman Capital Portfolio as a member of the Seligman Growth
Team. Mr. Schmaltz was named a Director of the Manager in November 1997. From
May 1993 to September 1996, Mr. Schmaltz was Director, Investment Research at
Neuberger and Berman. Prior thereto, Mr. Schmaltz was Executive Vice President
of McGlinn Capital. Mr. Schmaltz is also responsible for the management of
Seligman Capital Fund, Inc. and Seligman Growth Fund, Inc. Additionally, he has
responsibility for directing the domestic investments of the Global Growth
Opportunities Portfolio and Seligman Henderson Global Growth Opportunities Fund,
a series of Seligman Henderson Global Fund Series, Inc. A discussion of the
Seligman Capital Portfolio's performance, as well as a line graph illustrating
comparative performance information between the Seligman Capital Portfolio, the
Standard & Poor's 500 Composite Stock Price Index the Lipper Capital
Appreciation Funds Average, the Lipper Mid Cap Funds Average, and the Russell
Mid Cap Growth Index, is included in the Fund's 1997 Annual Report to
Shareholders.
Charles C. Smith, Jr., a Managing Director of the Manager, serves as a Vice
President of the Fund and has been Portfolio Manager of the Seligman Common
Stock Portfolio and the Seligman Income Portfolio since December 1991. Mr.
Smith, joined the Manager in 1985 as Vice President, Investment Officer and
became Senior Vice President, Senior Investment Officer in 1992 and a Managing
Director in January 1994. He also serves as Vice President and Portfolio Manager
of Seligman Common Stock Fund, Inc., Seligman Income Fund, Inc. and
Tri-Continental Corporation.
Odette S. Galli, Senior Vice President, Investment Officer of the Manager,
serves as Co-Portfolio Manager of the Seligman Common Stock Portfolio. Ms. Galli
joined the Manager in August 1993 as a Vice President, Investment Officer and
was named Senior Vice President, Investment Officer in December 1997. She is
also Co-Portfolio Manager of Seligman Common Stock Fund, Inc. and
Tri-Continental Corporation. Prior to 1993, Ms. Galli was an equity research
analyst at Morgan Stanley & Co. The Portfolio Managers' discussion of the
Seligman Common Stock Portfolio's performance, as well as a line graph
illustrating comparative performance information between the Seligman Common
Stock Portfolio, the Standard & Poor's 500 Composite Stock Price Index and the
Lipper Growth and Income Funds Average, is included in the Fund's 1997 Annual
Report to Shareholders.
Rodney D. Collins, Vice President, Investment Officer of the Manager,
serves as Co-Portfolio Manager of the Seligman Income Portfolio. Mr. Collins
joined the Manager in 1992 as a Vice President, Investment Officer. He is also
Co-Portfolio Manager of Seligman Income Fund, Inc. The Portfolio Managers'
discussion of the Seligman Income Portfolio's performance, as well as a line
graph illustrating comparative performance information between the Seligman
Income Portfolio, the Standard & Poor's 500 Composite Stock Price Index, the
Lehman Brothers Aggregate Bond Index and the Lipper Income Funds Average, is
included in the Fund's 1997 Annual Report to Shareholders.
Paul H. Wick, a Director and Managing Director of the Manager, serves as a
Vice President of the Fund and is the Portfolio Manager of the Seligman
Communications and Information Portfolio and a Co-Portfolio Manager of the
Global Technology Portfolio. Mr. Wick joined the Manager in August 1987 as a
Vice President, Investment Officer and was named a Managing Director in January
1995. He also serves as Vice President and Portfolio Manager of Seligman
Communications and Information Fund, Inc., and Vice President of Seligman
Henderson Global Fund Series, Inc. and Co-Portfolio Manager of its Seligman
Henderson Global Technology Fund. The Portfolio Manager's discussion of the
Seligman Communications and Information Portfolio's performance, as well as a
line graph illustrating comparative information between the Seligman
Communications and Information Portfolio, the Standard & Poor's 500 Composite
Stock Price Index and the Lipper Science and Technology Funds Average, is
included in the Fund's 1997 Annual Report to Shareholders.
Arsen Mrakovcic, a Managing Director of the Manager, is a Vice President of
the Fund and Portfolio Manager of the Seligman Frontier Portfolio since October
1, 1995 and Co-Portfolio Manager of the Global Smaller Companies Portfolio. Mr.
Mrakovcic, who joined the Manager in 1992 as a Portfolio Assistant, was named
Vice President, Investment Officer on January 1, 1995 and a Managing Director on
January 1, 1996. Mr. Mrakovcic also serves as Vice President and Portfolio
Manager of Seligman Frontier Fund, Inc. and Vice President of Seligman Henderson
Global Fund Series, Inc. and Co-Portfolio Manager of its Seligman Henderson
Global Smaller Companies Fund. The Portfolio Manager's discussion of the
Seligman Frontier Portfolio's performance, as well as a line graph illustrating
comparative information between the Seligman Frontier Portfolio, the Lipper
Small Cap Fund Index, the Lipper Small Cap Funds Average, the Russell 2000
Index, and the Russell 2000 Growth Index, is included in the Fund's 1997 Annual
Report to Shareholders.
P-24
<PAGE>
Daniel J. Charleston, a Managing Director of the Manager, is a Vice
President of the Fund and has been the Portfolio Manager of the Seligman
High-Yield Bond Portfolio since its inception on May 1, 1995. Mr. Charleston
joined the Manager in 1987 as an Assistant Portfolio Manager, was named Vice
President, Investment Officer in August 1991 and Managing Director in January
1996. He also serves as Vice President of Seligman High Income Fund Series and
Portfolio Manager of its Seligman High-Yield Bond Series. The Portfolio
Manager's discussion of the Seligman High-Yield Bond Portfolio's performance, as
well as a line graph illustrating comparative information between the Seligman
High-Yield Bond Portfolio, the Lipper High-Yield Bond Funds Index and the
Merrill Lynch High-Yield Master Index, is included in the Fund's 1997 Annual
Report to Shareholders.
The Subadviser's International Policy Group has overall responsibility for
directing and overseeing all aspects of investment activity for each of the
Seligman Henderson Portfolios and provides international investment policy,
including country weightings, asset allocations and industry sector guidelines,
as appropriate. Mr. Iain C. Clark, Chief Investment Officer of the Subadviser,
is a Vice President of the Fund and is responsible for the day-to-day investment
activity of the International Portfolio and the international investments of the
Global Smaller Companies Portfolio. Mr. Clark, who joined the Subadviser in
1992, has been a Director and Senior Portfolio Manager of Henderson plc and
Director of Henderson International, Ltd. since 1985 and Secretary, Treasurer
and Vice President of Henderson International, Inc. since 1991. Mr. Clark's
discussion of the International Portfolio's performance, as well as a line graph
illustrating comparative performance information between the International
Portfolio, the Lipper International Funds Average, the Morgan Stanley Capital
International ("MSCI") World Index and the MSCI Europe-Asia-Far East Index, is
included in the Fund's 1997 Annual Report to Shareholders. The Portfolio
Managers' discussion of the Global Smaller Companies Portfolio's performance, as
well as a line graph illustrating comparative information between the Global
Smaller Companies Portfolio, the MSCI World Index, The Saloman Brothers World
EMI Index, and the Lipper Global Small Company Funds Average, is included in the
Fund's 1997 Annual Report to Shareholders.
Brian Ashford-Russell, a Portfolio Manager with Henderson plc since
February 1993, is a Vice President of the Fund and Co-Portfolio Manager of the
Global Technology Portfolio. Prior to joining Henderson plc, Mr. Ashford-Russell
was a Portfolio Manager with Touche Remnant & Co. Mr. Ashford-Russell and Mr.
Wick have responsibility for directing and overseeing the international and
domestic investments, respectively, of the Global Technology Portfolio including
the selection of individual securities for purchase or sale. The Portfolio
Managers' discussion of the Global Technology Portfolio's performance, as well
as a line graph illustrating comparative performance between the Global
Technology Portfolio, the Lipper Global Funds Average and the MSCI World Index,
is included in the Fund's 1997 Annual Report to Shareholders.
Nitin Mehta, a Portfolio Manager with Henderson plc since September 1994,
is a Vice President of the Fund and Co-Portfolio Manager of the Global Growth
Opportunities Portfolio. From May 1993 to September 1994, Mr. Mehta was Head of
Currency Management and Derivatives at Quorum Capital Management. From February
1993 to May 1993, he was an Investment Officer with International Finance
Corporation. From July 1986 to March 1992, he was Director of Equities at
Shearson Lehman Global Asset Management. Mr. Mehta and Mr. Schmaltz have
responsibility for directing and overseeing the international and domestic
investments, respectively, of the Global Growth Opportunities Portfolio
including the selection of individual securities for purchase or sale. The
Portfolio Managers' discussion of the Global Growth Opportunities Portfolio's
performance, as well as a line graph illustrating comparative performance
information between the Global Growth Opportunities Portfolio, the Lipper Global
Funds Average and the MSCI World Index, is included in the Fund's 1997 Annual
Report to Shareholders.
Neil T. Eigen, a Managing Director of the Manager and Head of the Manager's
Value Investment Team, is a Vice President of the Fund and Portfolio Manager of
the Seligman Large-Cap Value Portfolio and the Seligman Small-Cap Value
Portfolio since each Portfolio's inception on May 1, 1998. Mr. Eigen joined the
Manager in his current position on January 3, 1997. Prior to joining the
Manager, Mr. Eigen served as Senior Managing Director, Chief Investment Officer
and Director of Equity Investing at Bear Stearns Asset Management. Mr. Eigen
also serves as Vice President and Portfolio Manager of Seligman Value Fund
Series, Inc.
P-25
<PAGE>
Richard S. Rosen, a Senior Vice President, Investment Officer of the
Manager, is Co-Portfolio Manager of the Seligman Large-Cap Value Portfolio and
the Seligman Small-Cap Value Portfolio since each Portfolio's inception on May
1, 1998. Mr. Rosen joined the Manager in his current position on January 3,
1997. Prior to joining the Manager, Mr. Rosen served as a Managing Director and
Portfolio Manager at Bear Stearns Asset Management. Mr. Rosen also serves as
Co-Portfolio Manager of Seligman Value Fund Series, Inc. The Portfolio Managers'
discussion of the performances of the Seligman Large-Cap Value Portfolio and the
Seligman Small-Cap Value Portfolio, as well as line graphs illustrating
comparative performance information between the Portfolios and appropriate broad
based indices will be included in the Fund's next Annual Report to Shareholders.
Copies of the Fund's 1997 Annual Report to Shareholders may be obtained,
without charge, by calling or writing the Fund at the telephone numbers or
address listed on the front page of this Prospectus.
PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND VALUATION
PORTFOLIO TRANSACTIONS. In directing transactions involving exchange-listed
securities, the Manager (or in the case of the Seligman Henderson Portfolios,
the Manager or the Subadviser) will seek the most favorable price and execution,
and consistent with that policy may give consideration to the research,
statistical, and other services furnished by brokers or dealers to the Manager
or the Subadviser for its use. In addition, the Manager and Subadviser are
authorized to place orders with brokers who provide supplemental investment and
market research and security and economic analysis, although the use of such
brokers may result in a higher brokerage charge to a Portfolio than the use of
brokers selected solely on the basis of seeking the most favorable price and
execution although such research and analysis received may be useful to the
Manager or the Subadviser in connection with their services to other clients as
well as to the Portfolios. Portfolio transactions for the Seligman Bond
Portfolio, Seligman Cash Management Portfolio and Seligman High-Yield Bond
Portfolio, which invest in debt securities generally traded in the
over-the-counter market, and transactions by any of the other Portfolios in debt
securities traded on a "principal basis" in the over-the-counter market are
normally directed by the Manager or the Subadviser to dealers in the
over-the-counter market, which dealers generally act as principals for their own
accounts.
Consistent with the rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Directors may determine, the Manager or
Subadviser may consider sales of the Canada Life Accounts and, if permitted by
applicable laws, of the other Funds in the Seligman Group as a factor in the
selection of brokers or dealers to execute portfolio transactions for the Fund.
PORTFOLIO TURNOVER. A change in securities held by any Portfolio is known
as "portfolio turnover" and may involve the payment by the Fund of dealer
spreads or underwriting commissions and other transactions costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
Changes will be made whenever the Manager or, in the case of the Seligman
Henderson Portfolios, the Subadviser, believes such changes will strengthen any
Portfolio's position. Portfolio turnover will vary from year to year as well as
within a year and may exceed 100%.
VALUATION. The net asset value of the shares of each Portfolio will be
computed each day, Monday through Friday, as of the close of regular trading of
the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on days the New
York Stock Exchange is open for trading. Securities of each Portfolio (except
Seligman Cash Management Portfolio) are valued at current market value, or in
the absence thereof, at fair value in accordance with procedures approved by the
Board of Directors. For purposes of determining the net asset value per share of
each of the Seligman Henderson Portfolios, securities traded on a foreign
exchange or over-the-counter market are valued at the last sales price on the
primary exchange or market on which they are traded. United Kingdom securities
and securities for which there are no recent sales transactions are valued based
on quotations provided by primary market makers in such securities. Any
securities for which recent market quotations are not readily available are
valued at fair value determined in accordance with procedures approved by the
Board of Directors. Short-term holdings maturing in 60 days or less are
generally valued at amortized cost if their original maturity was 60 days or
less. Short-term holdings with more than 60 days remaining to maturity will be
valued at current market value until the 61st day prior to maturity, and will
then be valued on an amortized cost basis based on the value of such date unless
the Board determines that this amortized cost value does not represent fair
market value.
Securities held by the Seligman Cash Management Portfolio are valued using
the amortized cost method. This method is designed to stabilize the net asset
value of that Portfolio at $1.00 per share. The Board of Directors will
P-26
<PAGE>
monitor closely the stabilization of the net asset value at $1.00 per share and
has adopted procedures to facilitate such stabilization. More information
regarding this method of valuation is contained in the Statement of Additional
Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio of the Fund has qualified and intends to continue to qualify
as a "regulated investment company" under certain provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). Under such provisions, the Fund's
Portfolios will be subject to federal income tax only with respect to
undistributed net investment income and net realized capital gain. Each of the
Fund's Portfolios will be treated as a separate entity. Dividends on the
Seligman Cash Management Portfolio will be declared daily and reinvested monthly
in additional full and fractional shares of the Seligman Cash Management
Portfolio; it is not expected that this Portfolio will realize capital gains.
Dividends and capital gain distributions from each of the other Portfolios will
be declared and paid annually and will be reinvested at the net asset value of
such shares of the Portfolio that declared such dividend or gain distribution.
Dividend and gain distributions are generally not currently taxable to owners of
the VA, CLAA or VCA-9 Contracts; further information regarding the tax
consequences of an investment in the Fund is contained in the separate
prospectus or disclosure documents of the Canada Life Accounts and VCA-9.
PURCHASES AND REDEMPTIONS
Shares of the Portfolios will be offered only to Canada Life Accounts and
VCA-9. Shares of the Fund will be purchased and redeemed by Canada Life Accounts
and VCA-9 at net asset value, without charge. However, the Canada Life Accounts
and VCA-9 are sold subject to certain fees and charges. These fees and charges
for the Canada Life Accounts and VCA-9 are more fully described in the
prospectuses or disclosure documents for Canada Life Accounts and VCA-9 which
should be read together with this Prospectus, as applicable. Purchase or
redemption requests received by the Fund prior to 4:00 p.m. Eastern time are
effected at the applicable Portfolio's net asset value per share calculated on
the date such purchase or redemption requests are received.
Any inquiries regarding the Fund should be directed in writing to Seligman
Financial Services, Inc., 100 Park Avenue, New York, New York 10017, or by
calling the telephone numbers listed on the front page of the Prospectus.
Seligman Financial Services, Inc. is an affiliate of the Manager and distributor
of the Fund's shares.
CUSTODIANS AND TRANSFER AGENT
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, acts as custodian of the Fund's assets, except for the assets of
each of the Seligman Henderson Portfolios, as well as transfer and dividend
disbursing agent.
Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York
11201, acts as custodian of the assets of each of the Seligman Henderson
Portfolios.
ORGANIZATION AND CAPITALIZATION
The Fund is an open-end diversified management investment company
incorporated under the laws of the state of Maryland on June 24, 1987 under the
name Seligman Mutual Benefit Portfolios, Inc. The Fund's name was changed to
Seligman Portfolios, Inc. on April 15, 1993. Directors of the Fund have
authority to issue a total of 1,000,000,000 shares, each with a par value of
$.001. The Fund presently has fourteen separate series of common stock, each of
which maintains a separate investment portfolio, designated as follows: Seligman
Bond Portfolio, Seligman Capital Portfolio, Seligman Cash Management Portfolio,
Seligman Common Stock Portfolio, Seligman Communications and Information
Portfolio, Seligman Frontier Portfolio, Seligman Henderson Global Growth
Opportunities Portfolio, Seligman Henderson Global Smaller Companies Portfolio,
Seligman Henderson Global Technology Portfolio, Seligman Henderson International
Portfolio, Seligman High-Yield Bond Portfolio, Seligman Income Portfolio,
Seligman Large-Cap Value Portfolio, and Seligman Small-Cap Value Portfolio. Each
share represents an equal proportionate interest in the respective series and
shares entitle their holders to one vote per share. Shares have noncumulative
voting rights, do not have preemptive or subscription rights, are transferable
and are fully paid and non-assessable. In accordance with current policy of the
SEC, holders of the Canada Life Accounts and VCA-9 have the right to instruct
Canada Life and MBL Life, respectively, as to voting Fund shares held by such
Canada Life Accounts and VCA-9, respectively, on all matters to be voted on by
Fund shareholders. Such rights may change in accordance with changes in policies
of the SEC. Voting rights of the participants in the Canada Life Accounts and
VCA-9 are more fully set forth in the prospectus or disclosure document relating
to that account, as
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applicable, which should be read together with this Prospectus. The Directors of
the Fund have authority to create additional portfolios and to classify and
reclassify shares of capital stock without further action by shareholders and
additional series may be created in the future. Under Maryland corporate law,
the Fund is not required to hold annual meetings and it is the intention of the
Fund's Directors not to do so. However, special meetings of shareholders will be
held for action by shareholders as may be required by the 1940 Act, the Fund's
Articles of Incorporation and By-Laws, or Maryland corporate law.
APPENDIX
MOODY'S INVESTORS SERVICE, INC. (MOODY'S)
DEBT SECURITIES
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be characteristically lacking or may be unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact may have speculative characteristics as well.
BA: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA: Bonds which are rated Ca represent obligations which are speculative in
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment ability of the rated issue.
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The designation "Prime-2" or "P-2" indicates that the issuer has a strong
ability for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
Issues rated "Not Prime" do not fall within any of the Prime rating
categories.
STANDARD & POOR'S RATING SERVICE ("S&P")
DEBT SECURITIES
AAA: Debt issues rated AAA are highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt issues rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A: Debt issues rated A are regarded as upper medium grade. They have a
strong capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB: Debt issues rated BBB are regarded as having an adequate capacity to
pay interest and re-pay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and re-pay principal
for bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC: Debt issues rated BB, B, CCC and CC are regarded on
balance, as predominantly speculative with respect to capacity to pay interest
and pre-pay principal in accordance with the terms of the bond. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions.
C: The rating C is reserved for income bonds on which no interest is being
paid.
D: Debt issues rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
COMMERCIAL PAPER
S&P Commercial Paper ratings are current assessments of the likelihood of
timely payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is
not as high as for issues designated "A-1."
A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
The ratings assigned by S&P may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within its major rating categories.
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
SELIGMAN PORTFOLIOS, INC.
100 Park Avenue
New York, New York 10017
800-221-7844 - all continental United States, except New York
212-850-1864 - New York State
800-221-2783 - Marketing Services
This Statement of Additional Information expands upon and supplements
the information contained in the current Prospectus of Seligman Portfolios, Inc.
(the "Fund"), dated May 1, 1998. It should be read in conjunction with the
Prospectus, which may be obtained by contacting the Fund at the telephone
numbers or address set forth above. This Statement of Additional Information,
although not in itself a Prospectus, is incorporated by reference into the
Prospectus in its entirety.
TABLE OF CONTENTS
INVESTMENT POLICIES AND RESTRICTIONS...................................... 2
DIRECTORS AND OFFICERS.................................................... 6
MANAGEMENT AND EXPENSES................................................... 11
PORTFOLIO TRANSACTION, VALUATION AND REDEMPTION........................... 13
CUSTODIAN AND INDEPENDENT AUDITORS........................................ 15
FINANCIAL STATEMENTS...................................................... 15
APPENDIX A................................................................ 16
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The Prospectus discusses the investment objectives of each of the Fund's
Portfolios and the policies it employs to achieve those objectives. The
following information regarding the Fund's investment policies supplements the
information contained in the Prospectus.
PURCHASING PUT OPTIONS ON SECURITIES
The Seligman Henderson Global Growth Opportunities Portfolio, the Seligman
Henderson Global Smaller Companies Portfolio, the Seligman Henderson Global
Technology Portfolio and the Seligman Henderson International Portfolio
(collectively, the "Seligman Henderson Portfolios") and the Seligman Large-Cap
Value Portfolio and the Seligman Small-Cap Value Portfolio each may purchase put
options to protect its portfolio holdings in an underlying security against a
decline in market value. This hedge protection is provided during the life of
the put option since a Portfolio, as holder of the put option, can sell the
underlying security at the put exercise price regardless of any decline in the
underlying security's market price. In order for a put option to be profitable,
the market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs. By using put options
in this manner, a Portfolio will reduce any profit it might otherwise have
realized in the underlying security by the premium paid for the put option and
by transaction costs.
Because a purchased put option gives the purchaser a right and not an
obligation, the purchaser is not required to exercise the option. If the
underlying position incurs a gain, a Portfolio would let the put option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option. The cost of the put option is limited to the premium plus
commission paid. A Portfolio's maximum financial exposure will be limited to
these costs.
A Portfolio may purchase options listed on public exchanges as well as
over-the-counter. Options listed on an exchange are generally considered very
liquid. OTC options are considered less liquid, and therefore, will only be
considered where there is not a comparable listed option. Because options will
be used solely for hedging and due to their relatively low cost and short
duration, liquidity is not a significant concern.
A Portfolio's ability to engage in option transactions may be limited by
tax considerations.
LENDING OF PORTFOLIO SECURITIES
Certain of the Fund's Portfolios may lend portfolio securities to certain
institutional borrowers of securities and may invest the cash collateral and
obtain additional income or receive an agreed-upon amount of interest from the
borrower. Loans made will generally be short-term and are subject to termination
at the option of the Fund or the borrower. The lending Portfolio may pay
reasonable administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker. The lending Portfolio does not
have the right to vote securities during the period of the loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
REPURCHASE AGREEMENTS
Each of the Portfolios may enter into repurchase agreements with commercial
banks and with broker/dealers to invest cash for the short term. A repurchase
agreement is an agreement under which a Portfolio acquires a money market
instrument, generally a U.S. Government obligation, subject to resale at an
agreed-upon price and date. Such resale price reflects an agreed-upon interest
rate effective for the period of time the instrument is held by a Portfolio and
is unrelated to the interest rate on the instrument.
Each of the Portfolios has the right to sell securities subject to
repurchase agreements but would be required to deliver identical securities upon
maturity of the repurchase agreement unless the seller failed to pay the
repurchase price. It is not anticipated that securities subject to repurchase
agreements will be sold except in the case of default on the obligation to
repurchase. To the extent that the proceeds from any sale upon a default in the
obligation to repurchase were less than the repurchase price, a Portfolio would
suffer a loss. In addition, the law is unsettled regarding the rights of a
Portfolio if the financial institution that is party to the repurchase agreement
petitions for bankruptcy or otherwise becomes subject to the United States
Bankruptcy Code. As a result, under these extreme circumstances, there may be
restrictions on the ability to sell the collateral, and losses could be
incurred.
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<PAGE>
ILLIQUID SECURITIES
Other than the Seligman Cash Management Portfolio, each Portfolio of the
Fund may invest up to 15% of its net assets in illiquid securities, including
restricted securities (i.e., securities subject to restrictions on resale
because they have not been registered under the Securities Act of 1933 (the
"1933 Act")) and other securities that are not readily marketable.
FOREIGN CURRENCY TRANSACTIONS
A forward foreign currency exchange contract is an agreement to purchase or
sell a specific currency at a future date and at a price set at the time the
contract is entered into. Each of the Seligman Henderson Portfolios will
generally enter into forward foreign currency exchange contracts to fix the U.S.
dollar value of a security it has agreed to buy or sell for the period between
the date the trade was entered into and the date the security is delivered and
paid for, or, to hedge the U.S. dollar value of securities it owns.
A Portfolio may enter into a forward contract to sell or buy the amount of
a foreign currency it believes may experience a substantial movement against the
U.S. dollar. In this case the contract would approximate the value of some or
all of the Portfolio's securities denominated in such foreign currency. Under
normal circumstances, the portfolio manager will limit forward currency
contracts to not greater than 75% of a Portfolio's position in any one country
as of the date the contract is entered into. This limitation will be measured at
the point the hedging transaction is entered into by the Portfolio. Under
extraordinary circumstances, the Subadviser may enter into forward currency
contracts in excess of 75% of a Portfolio's position in any one country as of
the date the contract is entered into. The precise matching of the forward
contract amounts and the value of securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market movement in the value of those securities
between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movement is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Under certain circumstances, a Portfolio may commit a substantial
portion or the entire value of its assets to the consummation of these
contracts. The Subadviser will consider the effect a substantial commitment of
its assets to forward contracts would have on the investment program of a
Portfolio and its ability to purchase additional securities.
Except as set forth above and immediately below, each Portfolio will
also not enter into such forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would oblige the Portfolio to
deliver an amount of foreign currency in excess of the value of the Portfolio's
securities or other assets denominated in that currency. A Portfolio, in order
to avoid excess transactions and transaction costs, may nonetheless maintain a
net exposure to forward contracts in excess of the value of the Portfolio's
securities or other assets denominated in that currency provided the excess
amount is "covered" by cash and/or liquid, high-grade debt securities,
denominated in any currency, having a value at least equal at all times to the
amount of such excess. Under normal circumstances, consideration of the prospect
for currency parties will be incorporated into the longer term investment
decisions made with regard to overall diversification strategies. However, the
Subadviser believes that it is important to have the flexibility to enter into
such forward contracts when it determines that the best interests of the
Portfolio will be served.
At the maturity of a forward contract, a Portfolio may either sell the
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision
the market value of portfolio securities at the expiration of the forward
contract. Accordingly, it may be necessary for a Portfolio to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Portfolio is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security if its market value exceeds the amount of
foreign currency a Portfolio is obligated to deliver. However, a Portfolio may
use liquid, high-grade debt securities, denominated in any currency, to cover
the amount by which the value of a forward contract exceeds the value of the
securities to which it relates.
If a Portfolio retains the portfolio security and engages in offsetting
transactions, the Portfolio will incur a gain or a loss (as described below) to
the extent that there has been movement in forward contract prices. If the
Portfolio engages in an offsetting transaction, it may subsequently enter into a
new forward contract to sell the foreign currency. Should forward prices decline
during the period between the Portfolio's entering into a forward contract for
the sale of a foreign currency and the date it enters into an offsetting
contract for the purchase of the foreign currency, the Portfolio will realize a
gain to the extent the price of the currency it has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices increase,
the Portfolio will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
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<PAGE>
Each Portfolio's dealing in forward foreign currency exchange contracts
will be limited to the transactions described above. Of course, a Portfolio is
not required to enter into forward contracts with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
the Subadviser. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange at
a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of a hedged currency, at the same time,
they tend to limit any potential gain which might result from an increase in the
value of that currency.
Shareholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.
PORTFOLIO TURNOVER
The portfolio turnover rates for each Portfolio are calculated by dividing
the lesser of purchases or sales of portfolio securities for the fiscal year by
the monthly average of the value of the portfolio securities owned during the
fiscal year. Securities whose maturity or expiration date at the time of
acquisition were one year or less are excluded from the calculation. The
portfolio turnover rates for the years ended December 31, 1997 and 1996 for each
Portfolio (except the Seligman Cash Management Portfolio; and the Seligman
Large-Cap Value Portfolio and the Seligman Small-Cap Value Portfolio which each
commenced operations on May 1, 1998*) were as follows: 0
1997 1996
---- ----
Seligman Bond Portfolio 170.12% 199.74%
Seligman Capital Portfolio 93.97 88.78
Seligman Common Stock Portfolio 80.13 50.33
Seligman Communications and
Information Portfolio 277.14 167.20
Seligman Frontier Portfolio 101.68 119.74
Seligman Henderson Global Growth
Opportunities Portfolio 77.85 12.99
Seligman Henderson Global
Smaller Companies Portfolio 64.81 62.31
Seligman Henderson Global
Technology Portfolio 167.36 45.04
Seligman Henderson
International Portfolio 89.43 48.53
Seligman High-Yield Bond Portfolio 74.54 117.01
Seligman Income Portfolio 96.99 19.59
* The portfolio turnover rate for each of the Seligman Large-Cap Value and
Seligman Small-Cap Value Portfolios is not expected to exceed 100%.
INVESTMENT RESTRICTIONS
The Fund has adopted the several investment restrictions enumerated
below. Except as otherwise indicated below, restrictions No. 1 through 9 may not
be changed without the affirmative vote of the holders of a majority of a
Portfolio's outstanding voting securities; restrictions No. 10 through 16 may be
changed by the Fund's Board of Directors without such a vote.
Under these restrictions, none of the Portfolios may:
1. Borrow money, except from banks for temporary purposes (but not for the
purpose of purchasing portfolio securities) in an amount not to exceed 10 %
(15% for the Seligman Large-Cap Value Portfolio and Seligman Small-Cap
Value Portfolio) of the value of the total assets of the Portfolio; except
that the Seligman Capital Portfolio, Seligman Common Stock Portfolio,
Seligman Communications and Information Portfolio, Seligman Large-Cap Value
Portfolio, and Seligman Small-Cap Value Portfolio may borrow to purchase
securities provided that such borrowings are made only from banks, do not
exceed one-third of the respective Portfolio's net assets (taken at market)
and are secured by not more than 10% (15% for the Seligman Large-Cap Value
and Seligman Small-Cap Value Portfolios) of such assets (taken at cost);
except that the Seligman Frontier Portfolio, the Seligman High-Yield Bond
Portfolio, the Seligman Large-Cap Value Portfolio and the Seligman
Small-Cap Value Portfolio will not purchase additional portfolio securities
if it has outstanding borrowings in excess of 5% of the value of its total
assets; and except that each of the Seligman Henderson Portfolios may
borrow money from banks to purchase securities in amounts not in excess of
5% of its total assets.
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2. Mortgage, pledge or hypothecate any of its assets, except to secure
borrowings permitted by paragraph 1 and provided that this limitation does
not prohibit escrow, collateral or margin arrangements in connection with
(a) the purchase or sale of covered options (including stock index
options), (b) the purchase or sale of interest rate or stock index futures
contracts or options on such contracts by any of the Fund's Portfolios
otherwise permitted to engage in transactions involving such instruments or
(c) in connection with the Fund's purchase of fidelity insurance and errors
and omissions insurance, and provided, further, that Seligman High-Yield
Bond Portfolio may mortgage, pledge or hypothecate its assets, but the
value of such encumbered assets may not exceed 10% of that Portfolio's net
asset value. This investment restriction No. 2 may be changed, with respect
to the Seligman High-Yield Bond Portfolio, by the Fund's Board of
Directors.
3. Make "short" sales of securities (except that each of the Seligman
Henderson Portfolios may make short sales "against-the-box"), or purchase
securities on "margin" except for short-term credits necessary for the
purchase or sale of securities, provided that for purposes of this
limitation, initial and variation payments or deposits in connection with
transactions involving interest rate or stock index futures contracts and
options on such contracts by any Portfolio permitted to engage in
transactions involving such instruments will not be deemed to be the
purchase of securities on margin.
4. With respect to 75% of its securities portfolio (or 100% of its securities
portfolio, in the case of the Seligman High-Yield Bond Portfolio), purchase
securities of any issuer if immediately thereafter more than 5% of its
total assets valued at market would be invested in the securities of any
one issuer, other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; or buy more than 10% of the
voting securities of any one issuer.
5. Invest more than 25% of the market value of its total assets in securities
of issuers in any one industry (except securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities), provided that for
the purpose of this limitation, mortgage-related securities do not
constitute an industry; provided further that the Seligman Communications
and Information Portfolio will invest at least 65% of the value of its
total assets in securities of companies principally engaged in the
communications, information and related industries, except when investing
for temporary defensive purposes; and provided further that the Seligman
Cash Management Portfolio may invest more than 25% of its gross assets: (i)
in the banking industry; (ii) in the personal credit institution or
business credit institution industries; or (iii) in any combination of (i)
and (ii).
6. Purchase or hold any real estate, except that the Seligman Bond Portfolio,
the Seligman Large-Cap Value Portfolio, the Seligman Small-Cap Value
Portfolio, and each of the Seligman Henderson Portfolios may engage in
transactions involving securities secured by real estate or interests
therein, and the Seligman Large-Cap Value Portfolio, the Seligman Small-Cap
Value Portfolio, and each of the Seligman Henderson Portfolios may purchase
securities issued by companies or investment trusts that invest in real
estate or interests therein.
7. Purchase or sell commodities and commodity futures contracts; except that
the Board of Directors may authorize any Portfolio other than the Seligman
Cash Management Portfolio and the Seligman High-Yield Bond Portfolio to
engage in transactions involving interest rate and/or stock index futures
and related options solely for the purposes of reducing investment risk and
not for speculative purposes.
8. Underwrite the securities of other issuers, provided that the disposition
of investments otherwise permitted to be made by any Portfolio (such as
investments in securities that are not readily marketable without
registration under the 1933 Act and repurchase agreements with maturities
in excess of seven days) will not be deemed to render a Portfolio engaged
in an underwriting investment if not more than 10% of the value of such
Portfolio's total assets (taken at cost) would be so invested and except
that in connection with the disposition of a security a Portfolio may be
deemed to be an underwriter as defined in the 1933 Act.
9. Make loans, except loans of securities, provided that purchases of notes,
bonds or other evidences of indebtedness, including repurchase agreements,
are not considered loans for purposes of this restriction; provided further
that each of the Seligman Henderson Global Portfolios may not make loans of
money or securities other than (a) through the purchase of securities in
accordance with the Fund's investment objective, (b) through repurchase
agreements and (c) by lending portfolio securities in an amount not to
exceed 33 1/3% of the funds total assets.
10. Purchase illiquid securities for any Portfolio including repurchase
agreements maturing in more than seven days and securities that cannot be
sold without registration or the filing of a notification under Federal or
state securities laws, if, as a result, such investment would exceed 15% of
the value of such Portfolio's net assets.
11. Invest in oil, gas or other mineral exploration or development programs;
PROVIDED, HOWEVER, that this investment restriction shall not prohibit a
Portfolio from purchasing publicly-traded securities of companies engaging
in whole or in part in such activities.
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12. Purchase securities of any other investment company, except in connection
with a merger, consolidation, acquisition or reorganization and except to
the extent permitted by Section 12 of the Investment Company Act of 1940
(the "1940 Act").
13. Purchase securities of companies which, together with predecessors, have a
record of less than three years' continuous operation, if as a result of
such purchase, more than 5% of such Portfolio's net assets would then be
invested in such securities; except that the Seligman Communications and
Information Portfolio, the Seligman Frontier Portfolio, each of the
Seligman Henderson Portfolios and the Seligman High-Yield Bond Portfolio
may each invest no more than 5% of total assets, at market value, in
securities of companies which, with their predecessors, have been in
operation less than three continuous years, excluding from this limitation
securities guaranteed by a company that, including predecessors, has been
in operation at least three continuous years. This restriction does not
apply to the Seligman Large-Cap Value Portfolio or the Seligman Small-Cap
Value Portfolio.
14. Purchase securities of companies for the purpose of exercising control.
15. Purchase securities from or sell securities to any of its officers or
Directors, except with respect to its own shares and as permissible under
applicable statutes, rules and regulations. In addition, the Seligman
High-Yield Bond Portfolio may not purchase or hold the securities of any
issuer if, to its knowledge, directors or officers of the Fund individually
owning beneficially more than 0.5% of the securities of that issuer own in
the aggregate more than 5% of such securities.
16. Invest more than 5% of the value of its net assets, valued at the lower of
cost or market, in warrants, of which no more than 2% of net assets may be
invested in warrants and rights not listed on the New York or American
Stock Exchange. For this purpose, warrants acquired by the Fund in units or
attached to securities may be deemed to have been purchased without cost.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in such percentage resulting from a change in the
value of assets will not constitute a violation of such restriction. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments more restrictive than the investment restrictions described above.
Should the Fund determine that any such commitment is no longer in the best
interest of the Fund it will revoke the commitment by terminating sales in the
state involved. The Fund also intends to comply with the diversification
requirements under Section 817(h) of the Internal Revenue Code of 1986, as
amended. For a description of these requirements see the Prospectus of Canada
Life of America Variable Annuity Account 2 and the Disclosure Statement of
Canada Life of America Annuity Account 3, each established by Canada Life
Insurance Company of America ("Canada Life") or the Prospectus of the Variable
Contract Account-9 established by MBL Life Assurance Corporation ("MBL Life").
Under the 1940 Act, a "vote of a majority of the outstanding voting
securities" of the Fund or of a particular Portfolio means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of the Fund or of
such Portfolio or (2) 67% or more of the shares of the Fund or of such Portfolio
present at a shareholder's meeting if more than 50% of the outstanding shares of
the Fund or of such Portfolio are represented at the meeting in person or by
proxy.
DIRECTORS AND OFFICERS
Directors and Officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below. Each
Director who is an "interested person" of the Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, New York 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive
(60) Officer and Chairman of the Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; Chairman and Chief
Executive Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial Services,
Inc., broker/dealer; Seligman Services, Inc.,
broker/dealer; and Carbo Ceramics Inc., ceramic
proppants for oil and gas industry; Director,
Seligman Data Corp., shareholder service agent;
Kerr-McGee Corporation, diversified energy company;
Trustee, Sarah Lawrence College; and a Member of the
Board of Governors of the Investment Company
Institute; formerly, Director, Daniel Industries,
Inc., manufacturer of oil and gas metering
equipment.
6
<PAGE>
BRIAN T. ZINO* Director, President and Member of the
(45) Executive Committee
Director and President, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
President (with the exception of Seligman Quality
Municipal Fund, Inc. and Seligman Select Municipal
Fund, Inc.) and Director or Trustee, the Seligman
Group of Investment Companies; Chairman, Seligman
Data Corp., shareholder service agent; and Director,
Seligman Financial Services, Inc., broker/dealer;
Seligman Services, Inc., broker/dealer; and Seligman
Henderson Co., advisers.
RICHARD R. SCHMALTZ* Director, Member of the Executive Committee and
(57) Portfolio Manager
Managing Director, Director of Investments, J & W
Seligman & Co. Incorporated; Director of Seligman
Henderson co. and Trustee Emeritus of Colby College;
formerly Director, Investment Research at Neuberger
& Berman from may 1993 to September 1996 and
Executive Vice President of McGlinn Capital from
July 1987 to May 1993.
JOHN R. GALVIN Director
(68)
Dean, Fletcher School of Law and Diplomacy at Tufts
University; Director or Trustee, the Seligman Group
of Investment Companies; Chairman, American Council
on Germany; a Governor of the Center for Creative
Leadership; Director, USLIFE Corporation, insurance;
Raytheon Co., electronics; the National Defense
University; and the Institute for Defense Analysis;
formerly, Ambassador, U.S. State Department for
negotiations in Bosnia; Distinguished Policy Analyst
at Ohio State University and Olin Distinguished
Professor of National Security Studies at the United
States Military Academy. From June, 1987 to June,
1992, he was the Supreme Allied Commander, Europe
and the Commander-in-Chief, United States European
Command. Tufts University, Packard Avenue, Medford,
MA 02155
ALICE S. ILCHMAN Director
(63)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment Companies;
Chairman, The Rockefeller Foundation, charitable
foundation; and Director, NYNEX, telephone company;
and the Committee for Economic Development;
formerly, Trustee, The Markle Foundation,
philanthropic organization; and Director,
International Research and Exchange Board,
intellectual exchanges. Sarah Lawrence College,
Bronxville, NY 10708
FRANK A. McPHERSON Director
(65)
Director, various organizations; Director or
Trustee, the Seligman Group of Investment Companies;
Director, Kimberly-Clark Corporation, consumer
products, Bank of Oklahoma Holding Company, Oklahoma
City Chamber of Commerce, Baptist Medical Center,
Oklahoma Chapter of the Nature Conservancy, Oklahoma
Medical Research Foundation, and National Boys and
Girls Clubs of America; Chairman, Oklahoma City
Public Schools Foundation; and a Member of the
Business Roundtable; formerly, Chairman of the Board
and Chief Executive Officer, Kerr-McGee Corporation,
energy and chemicals. 123 Robert S. Kerr Avenue,
Oklahoma City, OK 73102
JOHN E. MEROW Director
(68)
Retired Chairman and Senior Partner, Sullivan &
Cromwell, law firm; Director or Trustee, the
Seligman Group of Investment Companies; Commonwealth
Industries, Inc.; the Municipal Art Society of New
York; and the Unites States Council for
International Business; Chairman, the American
Australian Association; Chairman, The New York and
Presbyterian Hospital Care Network, Inc. and a
Director of The New York and Presbytaria Hospital;
Vice Chairman of the Unites States-New Zealand
Council; and a Member of the American Law Institute
and the Council on Foreign Relations. 125 Broad
Street, New York, NY 10004
7
<PAGE>
BETSY S. MICHEL Director
(55)
Attorney; Director or Trustee, the Seligman Group of
Investment Companies; Trustee, Geraldine R. Dodge
Foundation, charitable foundation; and Chairman of
the Board of Trustees of St. George's School
(Newport, RI); formerly, Director, The National
Association of Independent Schools (Washington, DC).
St. Bernard's Road, P.O. Box 449, Gladstone, NJ
07934
JAMES C. PITNEY Director
(71)
Retired Partner, Pitney, Hardin, Kipp & Szuch, law
firm; Director or Trustee, the Seligman Group of
Investment Companies; formerly, Director, Public
Service Enterprise Group, public utility. Park
Avenue at Morris County, P.O. Box 1945, Morristown,
NJ 07962-1945
JAMES Q. RIORDAN Director
(70)
Director, various organizations; Director or
Trustee, the Seligman Group of Investment Companies,
Director, The Houston Exploration Company, The
Brooklyn Museum, The Brooklyn Union Gas Company, The
Committee for Economic Development, Dow Jones & Co.,
Inc. and Public Broadcasting Service; formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies,
Inc.; and Director and President, Bekaert
Corporation. 675 Third Avenue, Suite 3004, New York,
NY 10017
ROBERT L. SHAFER Director
(65)
Director, various organizations; Director or
Trustee, the Seligman Group of Investment Companies;
and Director, USLIFE Corporation, life insurance;
formerly, Vice President, Pfizer Inc.,
pharmaceuticals. 235 East 42nd Street, New York, NY
10017
JAMES N. WHITSON Director
(63)
Director, various organizations, Director or
Trustee, the Seligman Group of Investment Companies;
Director, Sammons Enterprises, Inc.; Red Man Pipe
and Supply Company, piping and other materials; and
C-SPAN; formerly, Executive Vice President, Chief
Operating Officer and Director, Sammons Enterprises,
Inc. 300 Crescent Court, Suite 700, Dallas, TX 75201
BRIAN ASHFORD- RUSSELL Vice President and Portfolio Manager
(39)
Portfolio Manager, Seligman Henderson Co., advisers;
and Henderson plc, investment managers; and Vice
President and Portfolio Manager, one other open-end
investment company in the Seligman Group of
investment companies; formerly, Portfolio Manager,
Touche Remnant & Co., investment managers.
DANIEL J. CHARLESTON Vice President and Portfolio Manager
(38)
Managing Director (formerly, Vice President,
Investment Officer), J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Vice President and Portfolio Manager, one other
open-end investment company in the Seligman Group of
Investment Companies.
8
<PAGE>
IAIN C. CLARK Vice President and Portfolio Manager
(47)
Chief Investment Officer, Seligman Henderson Co.,
advisers; Vice President and Portfolio Manager, one
other open-end investment company in the Seligman
Group of investment companies; Director and Senior
Portfolio Manager, Henderson plc, investment
managers; Director, Henderson International, Ltd.,
investment managers; and Secretary, Treasurer and
Vice President, Henderson International, Inc.,
investment adviser.
LEONARD J. LOVITO Vice President and Portfolio Manager
(38)
Vice President, Investment Officer, J. & W. Seligman
& Co. Incorporated, investment managers and
advisers; Vice President and Portfolio Manager, two
other open-end investment companies in the Seligman
Group of Investment Companies.
NITIN MEHTA Vice President and Portfolio Manager
(37)
Portfolio Manager, Seligman Henderson Co., advisers;
and Henderson plc, investment managers; and Vice
President and Portfolio Manager, one other open-end
investment company in the Seligman Group of
investment companies; formerly, Head of Currency
Management and Derivatives, Quorum Capital
Management; Investment Officer, International
Finance Corp.; and Director of Equities, Shearson
Lehman Global Asset Management.
ARSEN MRAKOVCIC Vice President and Portfolio Manager
(32)
Managing Director (formerly, Vice President,
Investment Officer), J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Vice President and Portfolio Manager, two other
open-end investment companies in the Seligman Group
of Investment Companies
CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(41)
Managing Director (formerly, Senior Vice President
and Senior Investment Officer), J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
Vice President and Portfolio Manager, two other
open-end investment companies in the Seligman Group
of Investment Companies and Tri-Continental
Corporation, closed-end investment company.
PAUL H. WICK Vice President and Portfolio Manager
(35)
Managing Director (formerly, Vice President,
Investment Officer), J. & W. Seligman & Co.
Incorporated, investment managers and advisers; and
Vice President and Portfolio Manager, two other
open-end investment companies in the Seligman Group
of Investment Companies.
LAWRENCE P. VOGEL Vice President
(41)
Senior Vice President, Finance, J. & W. Seligman &
Co. Incorporated, investment managers and advisers;
Seligman Financial Services, Inc., broker/dealer;
and Seligman Data Corp., shareholder service agent;
Vice President, the Seligman Group of Investment
Companies and Seligman Services, Inc.,
broker/dealer; and Treasurer, Seligman Henderson
Co., advisers.
9
<PAGE>
FRANK J. NASTA Secretary
(33)
Senior Vice President, Law and Regulation and
Corporate Secretary, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
Corporate Secretary, the Seligman Group of
Investment Companies; Seligman Financial Services,
Inc., broker/dealer; Seligman Henderson Co.,
advisers; Seligman Services, Inc., broker/dealer and
Seligman Data Corp., shareholder service agent;
formerly, Secretary, J. & W. Seligman Trust Company,
trust company; and attorney, Seward and Kissel, law
firm.
THOMAS G. ROSE Treasurer
(40)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc. and the American Investors
Family of Funds.
The Executive Committee of the Board acts on behalf of the Board
between meetings to determine the value of securities and assets owned by the
Fund for which no market valuation is available and to elect or appoint officers
of the Fund to serve until the next meeting of the Board.
<TABLE>
<CAPTION>
Compensation Table
Pension or Total Compensation
Aggregate Retirement Benefits from Fund
Name and Compensation From Accrued as part of and Fund Complex
POSITION WITH FUND Fund (1) FUND EXPENSES PAID TO DIRECTORS (1) (2)
------------------ -------- ------------- -------------------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Richard R. Schmaltz, Director* N/A N/A N/A
Ronald T. Schroeder, Director** N/A N/A N/A
Fred E. Brown, Director Emeritus*** N/A N/A N/A
John R. Galvin, Director $5,131.57 N/A $69,000.00
Alice S. Ilchman, Director 4,713.08 N/A 65,000.00
Frank A. McPherson, Director 4,748.77 N/A 66,000.00
John E. Merow, Director 4,713.13 N/A 65,000.00
Betsy S. Michael, Director 5,131.57 N/A 69,000.00
James C. Pitney, Director 4,585.53 N/A 64,000.00
James Q. Riordan, Director 4,876.37 N/A 67,000.00
Robert L. Shafer, Director 4,876.37 N/A 67,000.00
James N. Whitson, Director 5,003.99(d) N/A 68,000.00(d)
</TABLE>
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1997. Effective January 16, 1998, the per meeting fee for
Directors was increased by $1000, which is allocated proportionately among all
funds in the Fund Complex.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
* Elected May 15, 1997.
** Retired May 15, 1997.
*** Retired as Director and designated Director Emeritus on March 20, 1997.
(d) Deferred.
The Fund has a compensation arrangement under which outside directors
may elect to defer receiving their fees. Under this arrangement, interest is
accrued on the deferred balances. The annual cost of such fees and interest is
included in the directors' fees and expenses and the accumulated balance thereof
is included in "Liabilities" in the Fund's financial statements. The total
amounts of deferred compensation (including interest) payable in respect of the
Fund to Mr. Whitson as of December 31, 1997 was .
10
<PAGE>
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation (including interest) in the amount of and ,
respectively, as of December 31, 1997. The Fund has applied for, and received,
exemptive relief that would permit a director who has elected deferral of his or
her fees to choose a rate of return equal to either (i) the interest rate on
short-term Treasury bills, or (ii) the rate of return on the shares of any of
the investment companies advised by the Manager, as designated by the director.
The Fund may, but is not obligated to, purchase shares of such investment
companies to hedge its obligations in connection with this deferral arrangement.
Directors and officers of the Fund are also trustees, directors and
officers of some or all of the other investment companies in the Seligman Group.
As of , 1998, no Directors or officers of the Fund owned directly or indirectly
shares of any of the Portfolios.
MANAGEMENT AND EXPENSES
Under the Management Agreements and subject to the control of the Board
of Directors, the Manager (or in the case of each of the Seligman Henderson
Portfolios, the Manager and Seligman Henderson Co. (the "Subadviser") manages
the investment of the assets of the Fund, including making purchases and sales
of portfolio securities consistent with the Fund's investment objectives and
policies, and administers its business and other affairs. The Manager provides
the Fund with such office space, administrative and other services and executive
and other personnel as are necessary for Fund operations. The Manager pays all
of the compensation of directors and/or officers of the Fund who are employees
or advisors of the Manager.
The Management Agreements (and the Subadvisory Agreements, in the case
of the Seligman Henderson Portfolios) provide that the Manager (and the
Subadviser, in the case of the Seligman Henderson Portfolios) will not be liable
to the Fund for any error of judgment or mistake of law, or for any loss arising
out of any investment, or for any act or omission in performing their duties
under the Management (and Subadvisory) Agreements, except for willful
misfeasance, bad faith, gross negligence, or reckless disregard of their
obligations and duties under the Management (and Subadvisory) Agreements.
The Fund pays all its expenses other than those assumed by the Manager
or Subadviser, including fees and expenses of independent attorneys and
auditors, taxes and governmental fees (including fees and expenses for
qualifying the Fund and its shares under Federal and state securities laws),
expenses of printing and distributing reports, notices and proxy materials to
shareholders, expenses of printing and filing reports and other documents with
governmental agencies, fees and expenses of directors of the Fund not employed
by the Manager or any of its affiliates (including the Subadviser), insurance
premiums and extraordinary expenses such as litigation expenses.
The Seligman Bond Portfolio, Seligman Capital Portfolio, Seligman Cash
Management Portfolio, Seligman Common Stock Portfolio and Seligman Income
Portfolio each pays the Manager a management fee for its services, calculated
daily and payable monthly, equal to an annual rate of .40% of the average daily
net assets of each such Portfolio. The Seligman High-Yield Bond Portfolio pays
the Manager a management fee for its services, calculated daily and payable
monthly, equal to an annual rate of .50% of the average daily net assets of such
Portfolio. The Seligman Communications and Information Portfolio and Seligman
Frontier Portfolio each pay the Manager a management fee for its services,
calculated daily and payable monthly, equal to an annual rate of .75% of the
average daily net assets of each such Portfolio. The Seligman Large-Cap Value
Portfolio pays the Manger a management fee for its services, calculated daily
and payable monthly, equal to an annual rate of .80% of the Portfolio's average
daily net assets on the first $500 million of net assets, .70% of the
Portfolio's average daily net assets on the next $500 million of net assets and
.60% of the Portfolio' average daily net assets in excess of $1 billion. The
Seligman Small-Cap Value Portfolio pays the Manager a management fee for its
services, calculated daily and payable monthly, equal to an annual rate of 1.00%
of the Portfolio's average daily net assets on the first $500 million of net
assets, .90% of the Portfolio's average daily net assets on the next $500
million of net assets, and .80% of the Portfolio's average daily net assets in
excess of $1 billion. Each of the Seligman Henderson Portfolios pays the Manager
a management fee for its services, calculated daily and payable monthly, equal
to an annual rate of 1.00% of the average daily net assets of each such
Portfolio, of which .90% is paid to the Subadviser for the services described
below.
11
<PAGE>
The following table indicates the management fees paid (or waived, in the
case of Seligman Cash Management Portfolio) for the years 1997, 1996, and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Seligman Bond Portfolio $ $ 18,034 $ 15,262
Seligman Capital Portfolio 48,339 28,551
Seligman Cash Management Portfolio* 36,532 18,365
Seligman Common Stock Portfolio 134,264 94,380
Seligman Communications and Information Portfolio 373,337 123,216
Seligman Frontier Portfolio 165,050 29,219
Seligman Henderson Global Growth Opportunities Portfolio 4,098** --
Seligman Henderson Global Smaller Companies Portfolio 110,169 17,210
Seligman Henderson Global Technology Portfolio 4,920** --
Seligman Henderson International Portfolio 57,323 25,312
Seligman High-Yield Bond Portfolio 35,858 3,941**
Seligman Income Portfolio 49,574 45,797
</TABLE>
- ------------------------
* The Manager, at its discretion, waived all of its fees.
** Fees paid from commencement of operations.
The Manager is a successor firm to an investment banking business
founded in 1864 which has thereafter provided investment services to
individuals, families, institutions and corporations. On December 29, 1988, a
majority of the outstanding voting securities of the Manager was purchased by
Mr. William C. Morris and a simultaneous recapitalization of the Manager
occurred. See Appendix A for further information about the Manager.
The Management Agreement with respect to the Seligman Bond Portfolio,
Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common
Stock Portfolio and Seligman Income Portfolio was approved by the Board of
Directors on September 30, 1988 and by shareholders at a Special Meeting held on
December 16, 1988. The Management Agreement with respect to the Seligman
Henderson International Portfolio was approved by the Board of Directors on
March 18, 1993. The Management Agreements with respect to the Seligman
Communications and Information Portfolio, the Seligman Frontier Portfolio, and
the Seligman Henderson Global Smaller Companies Portfolio were approved by the
Board of Directors on July 21, 1994. The Management Agreement with respect to
the Seligman High-Yield Bond Portfolio was approved by the Board of Directors on
March 16, 1995. The Management Agreement with respect to the Seligman Henderson
Global Growth Opportunities Portfolio and the Seligman Henderson Global
Technology Portfolio was approved by the Board of Directors on March 21, 1996.
The Management Agreement with respect to the Seligman Large-Cap Value Portfolio
and the Seligman Small-Cap Value Portfolio was approved by the Board of
Directors on March 19, 1998. The Management Agreements will continue in effect
until December 31 of each year, with respect to each Portfolio (except the
Seligman Large-Cap Value Portfolio and the Seligman Small-Cap Portfolio, for
which the Management Agreement is in effect until December 31, 1999, and then
each December 31 thereafter) if (1) such continuance is approved in the manner
required by the 1940 Act (by a vote of a majority of the Board of Directors or
of the outstanding voting securities of the Portfolios and by a vote of a
majority of the Directors who are not parties to the Management Agreements or
interested persons of any such party) and (2) the Manager shall not have
notified the Fund at least 60 days prior to the anniversary date of the previous
continuance that it does not desire such continuance. The Management Agreements
may be terminated at any time with respect to any or all Portfolios, by the
Fund, without penalty, on 60 days' written notice to the Manager. The Manager
may terminate the Management Agreements at any time upon 60 days written notice
to the Fund. The Management Agreements will terminate automatically in the event
of their assignment. The Fund has agreed to change its name upon termination of
the Management Agreements if continued use of the name would cause confusion in
the context of the Manager's business.
Under the Subadvisory Agreements between the Manager and the
Subadviser, the Subadviser supervises and directs the investment of the assets
of each of the Seligman Henderson Portfolios, including making purchases and
sales of portfolio securities consistent with each of the Seligman Henderson
Portfolio's investment objectives and policies. For these services the
Subadviser is paid a fee equal to an annual rate of .90% of each of the Seligman
Henderson Portfolio's average daily net assets. The Subadvisory Agreement with
respect to Seligman Henderson International Portfolio was approved by the Board
of Directors at a meeting held on March 18, 1993. The Subadvisory Agreement with
respect to Seligman Henderson Global Smaller Companies Portfolio was approved by
the Board of Directors at a meeting held on July 21, 1994. The Subadvisory
Agreements with respect to Seligman Henderson Global Growth Opportunities
Portfolio and Seligman Henderson Global Technology Portfolio were approved by
the Board of Directors at a meeting held on March 21, 1996. The Subadvisory
Agreements will continue in effect until December 31 of each year, and from year
to year thereafter
12
<PAGE>
if (1) such continuance is approved in the manner required by the 1940 Act (by a
vote of a majority of the Board of Directors or of the outstanding voting
securities of the Portfolios and by a vote of a majority of the Directors who
are not parties to the Subadvisory Agreements or interested persons of any such
party) and (2) the Subadviser shall not have notified the Manager in writing at
least 60 days prior to such December 31 or prior to December 31 of any year
thereafter that it does not desire such continuance. The Subadvisory Agreements
may be terminated at any time by the Fund, on 60 days written notice to the
Subadviser. The Subadvisory Agreements will terminate automatically in the event
of their assignment or upon the termination of the relevant Management
Agreement.
The Subadviser is a New York general partnership formed by the Manager
and Henderson International, Inc., a controlled affiliate of Henderson plc.
Henderson plc, headquartered in London, is one of the largest independent money
managers in Europe and is recognized as a specialist in global equity investing.
Officers, directors and employees of the Manager are permitted to
engage in personal securities transactions, subject to the Manager's Code of
Ethics (the "Ethics Code"). The Ethics Code proscribes certain practices with
regard to personal securities transactions and personal dealings, provides a
framework for the reporting and monitoring of personal securities transactions
by the Manager's Director of Compliance, and sets forth a procedure of
identifying, for disciplinary action, those individuals who violate the Ethics
Code. The Ethics Code prohibits each of the officers, directors and employees
(including all portfolio managers) of the Manager from purchasing or selling any
security that the officer, director or employee knows or believes (i) was
recommended by the Manager for purchase or sale by any client, including the
Fund, within the preceding two weeks, (ii) has been reviewed by the Manager for
possible purchase or sale within the preceding two weeks, (iii) is being
purchased or sold by any client, (iv) is being considered by a research analyst,
(v) is being acquired in a private placement, unless prior approval has been
obtained from the Manager's Director of Compliance, or (vi) is being acquired
during an initial or secondary public offering. The Ethics Code also imposes a
strict standard of confidentiality and requires portfolio managers to disclose
any interest they may have in the securities or issuers that they recommend for
purchase by any client.
The Ethics Code also prohibits (i) each portfolio manager or member of
an investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) for which the portfolio manager or investment team
manages and (ii) each employee from engaging in short-term trading (a purchase
and sale or vice-versa within 60 days). Any profit realized pursuant to either
of these prohibitions must be disgorged.
Officers, directors and employees are required, except under very
limited circumstances, to engage in personal securities transactions through the
Manager's order desk. In turn, the order desk maintains a list of securities
that may not be purchased due to a possible conflict with clients. All officers,
directors and employees are also required to disclose all securities
beneficially owned by them on December 31 of each year.
PORTFOLIO TRANSACTIONS, VALUATION AND REDEMPTION
As provided in the Management Agreements, the Manager (or in the case
of each of the Seligman Henderson Portfolios, the Manager or the Subadviser)
purchases and sells securities for the Fund. Purchase and sale orders are placed
by the Manager or the Subadviser.
The Management Agreements and the Subadvisory Agreements recognize that
in the purchase and sale of portfolio securities the Manager or the Subadviser
will seek the most favorable price and execution, and, consistent with that
policy, may give consideration to the research, statistical and other services
furnished by brokers or dealers to the manager for its use, as well as to the
general attitude toward and support of investment companies demonstrated by such
brokers or dealers. Such services include supplemental investment research,
analysis and reports concerning issuers, industries and securities deemed by the
Manager or Subadviser to be beneficial to the Fund. In addition, the Manager or
the Subadviser is authorized to place orders with brokers who provide
supplemental investment and market research and statistical and economic
analysis although the use of such brokers may result in a higher brokerage
charge to the Fund that the use of brokers selected solely on the basis of
seeking the most favorable price and execution and although such research and
analysis may be useful to the Manager or the Subadviser in connection with its
services to clients other than the Fund.
In over-the-counter markets, the Fund deals with primary market makers
unless a more favorable execution or price is believed to be obtainable. The
Fund may buy securities from or sell securities to dealers acting as principal,
except dealers with which its directors and/or officers are affiliated.
13
<PAGE>
Brokerage commissions of each Portfolio (except the Seligman Bond
Portfolio, Seligman Cash Management Portfolio and Seligman High-Yield Bond
Portfolio; and the Seligman Large-Cap Value Portfolio and Seligman Small-Cap
Value Portfolio, which both commenced operations on May 1, 1998) for the years
1997, and if applicable, 1996 and 1995, are set forth in the following table:
<TABLE>
<CAPTION>
Total Brokerage
Commissions Paid for
Execution And Statistical Services (1)
--------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Seligman Capital Portfolio $ $ 19,283 $20,041
Seligman Common Stock Portfolio 37,709 34,600
Seligman Communications and Information Portfolio 82,832 32,247
Seligman Frontier Portfolio 43,065 12,086
Seligman Henderson Global Growth Opportunities Portfolio 4,056 N/A
Seligman Henderson Global Smaller Companies Portfolio 39,649 12,794
Seligman Henderson Global Technology Portfolio 2,037 N/A
Seligman Henderson International Portfolio 20,495 12,389
Seligman Income Portfolio 1,483 6,746
</TABLE>
- --------------
(1) Not including any spreads on principal transactions on a net basis.
When two or more of the investment companies in the Seligman Group or
other investment advisory clients of the Manager desire to buy or sell the same
security at the same time, the securities purchased or sold are allocated by the
Manager in a manner believed to be equitable to each. There may be possible
advantages or disadvantages of such transactions with respect to price or the
size of positions readily obtainable or salable.
VALUATION. The net asset value per share of each Portfolio is
determined as of the close of regular trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time) each day that the New York Stock Exchange is
open. Currently, the New York Stock Exchange is closed on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. The following supplements
information contained in the Prospectus regarding the manner in which securities
are valued.
It is the policy of the Seligman Cash Management Portfolio to use its
best efforts to maintain a constant per share price equal to $1.00. Instruments
held by the Seligman Cash Management Portfolio are valued on the basis of
amortized cost. This involves valuing an instrument at its cost initially and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which the value, as determined by amortized cost,
is higher or lower than the price the Portfolio would receive if it sold the
instrument.
The foregoing method of valuation is permitted by Rule 2a-7 adopted by
the Securities and Exchange Commission (the "SEC"). Under this rule, the
Seligman Cash Management Portfolio must maintain an average-weighted portfolio
maturity of 90 days or less, purchase only instruments having remaining
maturities of one year or less, and invest only in securities determined by the
Fund's Directors to be of high quality with minimal credit risks. In accordance
with the rule, the Directors have established procedures designed to stabilize,
to the extent reasonably practicable, the price per share as computed for the
purpose of sales and redemptions of the Seligman Cash Management Portfolio at
$1.00. Such procedures include review of the portfolio holdings by the Seligman
Cash Management Portfolio and determination as to whether the net asset value of
the Seligman Cash Management Portfolio, calculated by using available market
quotations or market equivalents, deviates from $1.00 per share based on
amortized cost. The rule also provides that the extent of any deviation between
the net asset value based upon available market quotations or market
equivalents, and $1.00 per share net asset value, based on amortized cost, must
be examined by the Directors. In the event that a deviation of .5 of 1% or more
exists between the Portfolio's $1.00 per share net asset value and the net asset
value calculated by reference to market gestations, or if there is any deviation
which the Board of Directors believes would result in a material dilution to
shareholders or purchasers, the Board of Directors will promptly consider what
action, if any, should be initiated. Any such action may include: selling
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market quotations.
With respect to each of the Seligman Henderson Portfolios, portfolio
securities, including open short positions, are valued at the last sale price on
the securities exchange or securities market on which such securities primarily
are traded. Securities traded on a foreign
14
<PAGE>
exchange or over-the-counter market are valued at the last sales price on the
primary exchange or market on which they are traded. United Kingdom securities
and securities for which there are not recent sales transactions are valued
based on quotations provided by primary market makers in such securities. Any
securities for which recent market quotations are not readily available,
including restricted securities, are valued at fair value determined in
accordance with procedures approved by the Board of Directors. Short-term
obligations with less than sixty days remaining to maturity are generally valued
at amortized cost. Short-term obligations with more than sixty days remaining to
maturity will be valued at current market value until the sixtieth day prior to
maturity, and will then be valued on an amortized cost basis based on the value
on such date unless the Board of Directors determines that this amortized cost
value does not represent fair market value.
Generally, trading in foreign securities, as well as U.S. Government
securities, money market instruments and repurchase agreements, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value of
the shares of the Portfolio are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the New York
Stock Exchange. Occasionally, events affecting the value of such securities and
such exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange, which will not be reflected in the
computation of net asset value. If during such periods events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in accordance with procedures approved by
the Board of Directors.
For purposes of determining the net asset value per share of the
Portfolio all assets and liabilities initially expressed in foreign currencies
will be converted into U.S. dollars at the mean between the bid and offer prices
of such currencies against U.S. dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
REDEMPTION. The procedures for redemption of Fund shares under ordinary
circumstances are set forth in the Prospectus. In unusual circumstances, payment
may be postponed, if the orderly liquidation of portfolio securities is
prevented by the closing of, or restricted trading on the New York Stock
Exchange during periods of emergency, or such other periods as ordered by the
SEC. It is not anticipated that shares will be redeemed for other than cash or
its equivalent. However, the Fund reserves the right to pay the redemption price
to the Canada Life Accounts and VCA-9 in whole or in part, by a distribution in
kind from the Fund's investment portfolio, in lieu of cash, taking the
securities at their value employed for determining such redemption price, and
selecting the securities in such manner as the Board of Directors may deem fair
and equitable. If shares are redeemed in this way, brokerage costs will
ordinarily be incurred by the Canada Life Accounts and VCA-9 in converting such
securities into cash.
CUSTODIANS AND INDEPENDENT AUDITORS
CUSTODIANS. With the exception of each of the Seligman Henderson
Portfolios, Investors Fiduciary Trust Company, 127 West 10th Street, Kansas
City, Missouri 64105, serves as custodian for the Fund, and in such capacity
holds in a separate account assets received by it from or for the account of
each of the Fund's Portfolios.
Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York
11201, serves as custodian for each of the Seligman Henderson Portfolios, and in
such capacity holds in a separate account assets received by it from or for the
account of each of these Portfolios of the Fund.
INDEPENDENT AUDITORS., independent auditors, serve as auditors of the
Fund and certify the annual financial statements of the Fund. Their address is
787 Seventh Avenue, New York, New York 10019.
FINANCIAL STATEMENTS
Audited financial statements and notes thereon as of December 31, 1997
for the Fund's Portfolios are incorporated herein by reference to the Fund's
1997 Annual Report. The Annual Report will be furnished, without charge, to
investors who request copies of the Fund's Statement of Additional Information.
15
<PAGE>
APPENDIX A
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. He earned
his living as a pack peddler in Pennsylvania, and began sending for his
brothers. The Seligmans became successful merchants, establishing businesses in
the South and East.
Backed by nearly thirty years of business success - culminating in the
sale of government securities to help finance the Civil War - Joseph Seligman,
with his brothers, established the international banking and investment firm of
J. & W. Seligman & Co. In the years that followed, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.
THE SELIGMAN COMPLEX:
.... Prior to 1900
o Helps finance America's fledgling railroads through underwriting.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New
York Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates i n raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the Country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine
Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, 0with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
16
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific .
o Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds. o In 1991 establishes a joint venture with Henderson plc,
of London, known as Seligman Henderson Co., to offer global and
international investment products.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund and
Seligman Henderson Emerging Markets Growth Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
17
<PAGE>
POST-EFFECTIVE AMENDMENT NO. 21
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
Item No. In Part A Of Form N-1a Location In Prospectus
- ------------------------------- ----------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Not applicable
3. Condensed Financial Information Financial Highlights
4. General Description of Investment Objectives and
Registrant Policies
5. Management of Fund Management Services; Portfolio
and Valuation Transactions,
Portfolio Turnover
5a. Manager's Discussion of Fund Management Services
Performance
6. Capital Stock and Other Securities Organization and Capitalization;
Other Investment Policies;
Dividends, Distributions and Taxes
7. Purchase of Securities Being Purchases and Redemptions
Offered
8. Redemption or Repurchase Purchases and Redemptions
9. Pending Legal Proceedings Not applicable
Item No. In Part B Of Form N-1a Location In Statement Of Additional
- ------------------------------- -----------------------------------
Information
-----------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Appendix A
13. Investment Objectives and Policies Investment Policies and Restrictions
14. Management of the Registrant Management and Expenses
15. Control Persons and Principal Directors and Officers
Holders of Services
16. Investment Advisory and Other Management and Expenses;
Services Custodians and Independent Auditors
17. Brokerage Allocation Portfolio Transactions, Valuation
and Redemption
18. Capital Stock and Other Securities Portfolio Transactions, Valuation
and Redemption
19. Purchase, Redemption and Pricing Portfolio Transactions, Valuation
of Securities Being Offered and Redemption
20. Tax Status Dividends, Distributions and Taxes
(Prospectus)
21. Underwriters Not applicable
22. Calculation of Performance Data Portfolio Transactions, Valuation
and Redemption
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
- ------- -----------------
Item 24. Financial Statements And Exhibits
- -------- ---------------------------------
(a) Financial Statements:
Part A: Financial Highlights from June 21, 1988 (commencement of
operations) to December 31, 1996 for Seligman Bond Portfolio,
Seligman Capital Portfolio, Seligman Cash Management Portfolio,
Seligman Common Stock Portfolio, and Seligman Income Portfolio; from
May 3, 1993 (commencement of operations) to December 31, 1996 for
the Seligman Henderson International Portfolio; from October 11,
1994 (commencement of operations) to December 31, 1996 for Seligman
Communications and Information Portfolio, Seligman Frontier
Portfolio and Seligman Henderson Global Smaller Companies Portfolio;
from May 1, 1995 (commencement of operations) to December 31, 1996
for Seligman High-Yield Bond Portfolio; and from May 1, 1996
(commencement of operations) to December 31, 1996 for Seligman
Henderson Global Growth Opportunities Portfolio and Seligman
Henderson Global Technology Portfolio.
Part B: Financial Statements will be included in the Fund's audited 1997
Annual Report, and will be incorporated by reference in the Fund's
Statement of Additional Information. These Financial Statements are:
Portfolios of Investments as of December 31, 1997; Statements of
Assets and Liabilities as of December 31, 1997; Statements of
Operations for the yearended December 31, 1997; Statements of
Changes in Net Assets for the years ended December 31, 1997 and 1996
for Seligman Bond Portfolio, Seligman Capital Portfolio, Seligman
Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman
Communications and Information Portfolio, Seligman Frontier
Portfolio, Seligman Henderson Global Smaller Companies Portfolio,
Seligman Henderson International Portfolio, Seligman Higi-Yield Bond
Portfolio, and Seligman Income Portfolio; and for the year ended
December 31, 1997 and the period May 1, 1996 (commencement of
operations) to December 31, 1996 for the Seligman Henderson Global
Growth Opportunities Portfolio and Seligman Henderson Global
Technology Portfolio; Notes to Financial Statements; Financial
Highlights for the five years ended December 31, 1997 for Seligman
Bond Portfolio, Seligman Capital Portfolio, Seligman Cash Management
Portfolio, Seligman Common Stock Portfolio, and Seligman Income
Portfolio; for the period May 3, 1993 (commencement of operations)
to December 31, 1997 for Seligman Henderson International Portfolio;
for the period October 11, 1994 (commencement of operations) to
December 31, 1997 for Seligman Communications and Information
Portfolio, Seligman Frontier Portfolio and Seligman Henderson Global
Smaller Companies Portfolio; for the period May 1, 1995
(commencement of operations) to December 31, 1997 for Seligman
High-Yield Bond Portfolio; and for the period May 1, 1996
(commencement of operations) to December 31, 1997 for Seligman
Henderson Global Growth Opportunities Portfolio and Seligman
Henderson Global Technology Portfolio; Report of Independent
Auditors. These financial statements will be filed by amendment.
(b) Exhibits: All Exhibits have been previously filed, except Exhibits marked
with an asterisk (*) which will be filed by amendment.
(1) Form of Articles of Amendment and Restatement of Articles of
Incorporation. (Incorporated by reference to Post-Effective Amendment No.
19 filed on November 1, 1996.)
(2) By-laws of Registrant. (Incorporated by reference to Post-Effective
Amendment No. 20 filed on April 17, 1997.)
(3) Not applicable.
(4) Not applicable.
<PAGE>
PART C. OTHER INFORMATION (CONT'D)
- ------ -------------------------
(5) (a) Form of Management Agreement in respect of Seligman Henderson
Global Growth Opportunities Portfolio and Seligman Henderson
Global Technology Portfolio. (Incorporated by reference to
Post-Effective No. 17 filed on February 15, 1996.)
(b) Form of Subadvisory Agreement in respect of Seligman Henderson
Global Growth Opportunities Portfolio and Seligman Henderson Global
Technology Portfolio. (Incorporated by reference to Post-Effective
No. 17 filed on February 15, 1996.)
(c) Form of Management Agreement in respect of Seligman High-Yield Bond
Portfolio. (Incorporated by reference to Post-Effective Amendment
No. 14 filed on February 14, 1995.)
(d) Management Agreement in respect of Seligman Communications and
Information and Seligman Frontier Portfolios. (Incorporated by
reference to Post-Effective Amendment No. 15 filed on March 31,
1995.) (e) Management Agreement in respect of Seligman Henderson
Global Smaller Companies Portfolio (formerly, Seligman Henderson
Global Emerging Companies Portfolio). (Incorporated by reference to
Post-Effective Amendment No. 15 filed on March 31, 1995.) (f)
Subadvisory Agreement in respect of Seligman Henderson Global
Smaller Companies Portfolio. (Incorporated by reference to
Post-Effective Amendment No. 15 filed on March 31, 1995.) (g)
Management Agreement in respect of Seligman Henderson Global
Portfolio. (Incorporated by reference to Post-Effective Amendment
No. 15 filed on March 31, 1995.) (h) Subadvisory Agreement in
respect of Seligman Henderson Global Portfolio. (Incorporated by
reference to Post-Effective Amendment No. 15 filed on March 31,
1995.) (i) Management Agreement in respect of Seligman Capital,
Seligman Cash Management, Seligman Common Stock, Seligman Fixed
Income Securities, and Seligman Income Portfolios. (Incorporated by
reference to Post-Effective Amendment No. 15 filed on March 31,
1995.)
(j) Management Agreement in respect of Seligman Large-Cap Value
Portfolio and Seligman Small-Cap Value Portfolio.*
(6) Not applicable.
(7) Not applicable.
(8) (a) Custodian Agreement and Sub-Custodian Agreement in respect of
Seligman Capital, Seligman Cash Management, Seligman Common Stock,
Seligman Fixed Income Securities, and Seligman Income Portfolios.*
(b) Form of First Amendment to Custodian Agreement in respect of
Seligman Communications and Information and Seligman Frontier
Portfolios.*
(c) Recordkeeping Agreement in respect of Seligman Henderson Global
Portfolio.*
(d) First Amendment to Recordkeeping Agreement in respect of Seligman
Henderson Global Smaller Companies Portfolio.*
(e) Second Amendment to Custodian Agreement in respect of Seligman
High-Yield Bond Portfolio. (Incorporated by reference to
Post-Effective Amendment No. 18 filed on May 2, 1996.)
(f) Second Amendment to Recordkeeping Agreement in respect of Seligman
Henderson Global Growth Opportunities Portfolio and Seligman
Henderson Global Technology Portfolio. (Incorporated by reference
to Post-Effective Amendment No. 18, filed May 2, 1996.)
(g) Custodian Agreement between Registrant and Morgan Stanley Trust
Company in respect of the Seligman Henderson Portfolios.
(Incorporated by reference to Post-Effective Amendment No. 19 filed
on November 1, 1996.)
<PAGE>
PART C. OTHER INFORMATION (CONT'D)
- ------- --------------------------
(9) Other Material Contracts.
(a) Waiver of Buy/Sell Agreement between the Registrant and The Mutual
Benefit Life Insurance Company.*
(b) Buy/Sell Agreement between Registrant and Canada Life Insurance
Company of America.*
(c) Buy/Sell Agreement between Registrant and Canada Life Insurance
Company of America.*
(d) Agency Agreement between Investors Fiduciary Trust Company, acting
as Transfer and Dividend Disbursing Agent, and the Fund in respect
of Seligman Capital, Seligman Cash Management, Seligman Common
Stock, Seligman Fixed Income Securities, and Seligman Income
Portfolios.*
(e) First Amendment to Agency Agreement between Investors Fiduciary
Trust Company, acting as Transfer and Dividend Disbursing Agent,
and the Fund in respect of Seligman Henderson Global Portfolio.*
(f) Second Amendment to Agency Agreement between Investors Fiduciary
Trust Company, acting as Transfer and Dividend Disbursing Agent,
and the Fund in respect of Seligman Communications and Information,
Seligman Frontier, and Seligman Henderson Global Smaller Companies
Portfolios.*
(g) Third Amendment to Agency Agreement between Investors Fiduciary
Trust Company, acting as Transfer and Dividend Disbursing Agent,
and the Fund in respect of Seligman High-Yield Bond Portfolio.
(Incorporated by reference to Post-Effective Amendment No. 18,
filed May 2, 1996.)
(h) Fourth Amendment to Agency Agreement between Investors Fiduciary
Trust Company, acting as Transfer and Dividend Disbursing Agent,
and the Fund in respect of Seligman Henderson Global Growth
Opportunities Portfolio and Seligman Henderson Global Technology
Portfolio. (Incorporated by reference to Post-Effective Amendment
No. 18, filed May 2, 1996.)
(10) Opinion and Consent of Counsel.
(Incorporated by reference to Post-Effective Amendment No. 18, filed
May 2, 1996.)
(11) Consent of independent auditors.*
(12) N/A
(13) (a) Representation Re: Initial Capital (Purchase Agreement for Seligman
Capital, Seligman Cash Management, Seligman Common Stock, Seligman
Fixed Income Securities, and Seligman Income Portfolios).*
(b) Representation Re: Initial Capital (Purchase Agreement for Seligman
Henderson Global Portfolio).*
(c) Representation Re: Initial Capital (Purchase Agreement for Seligman
High-Yield Bond Portfolio). (Incorporated by reference to
Post-Effective Amendment No. 15 filed on March 31, 1995.)
(d) Representation Re: Initial Capital (Purchase Agreement for Seligman
Henderson Global Growth Opportunities Portfolio and Seligman
Henderson Global Technology Portfolio). (Incorporated by reference
to Post-Effective Amendment No. 18, filed May 2, 1996.)
<PAGE>
PART C. OTHER INFORMATION (CONT'D)
- ------ --------------------------
(14) The Seligman IRA Plan Agreement.
(Incorporated by reference to Exhibit 14 of Registration Statement
No. 333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(14a) The Seligman Simple IRA Plan Set-Up Kit.
(Incorporated by reference to Exhibit 14 of Registration Statement
No. 333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(14b) The Seligman Simple IRA Plan Agreement.
(Incorporated by reference to Exhibit 14 of Registration Statement
No. 333-20621, Pre-Effective Amendment No. 2, filed on April 17, 1997.)
(15) Not applicable.
(16) Not applicable.
(17) Financial Data Schedules meeting the requirements of Rule 483 under the
Securities Act of 1933.*
(18) Not applicable.
Other Exhibits: Powers of Attorney (Incorporated by reference to
Post-Effective Amendment No. 20 filed on April 17, 1996.)
Item 25. Persons Controlled By Or Under Common Control With Registrant
- -------- -------------------------------------------------------------
None.
Item 26. Number Of Holders Of Securities
- -------- -------------------------------
As of February 12, 1998, there were eight record holders of Capital
Stock of the Registrant.
Item 27. Indemnification
- -------- ---------------
Reference is made to the provisions of Article Eleventh of
Registrant's Amended and Restated Articles of Incorporation filed
as Exhibit 24(b)(1) of Post-Effective Amendment No. 19 to the
Registration Statement, filed November 6, 1996 and Article IV of
Registrant's Amended and Restated By-laws filed as Exhibit 24(b)(2)
to this Post-Effective Amendment No.
20 to the Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
PART C. OTHER INFORMATION (cont'd)
- ------- --------------------------
Item 28. Business And Other Connections Of Investment Adviser
- -------- ----------------------------------------------------
J. & W. Seligman & Co. Incorporated, a Delaware Corporation
("Manager"), is the Registrant's investment manager. The Manager also
serves as investment manager to seventeen other associated investment
companies. They are Seligman Capital Fund, Inc., Seligman Cash
Management Fund, Inc., Seligman Common Stock Fund, Inc., Seligman
Communications and Information Fund, Inc., Seligman Frontier Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund,
Inc., Seligman Municipal Fund Series, Inc., Seligman Municipal Series
Trust, Seligman New Jersey Municipal Fund, Inc., Seligman
Pennsylvania Municipal Fund Series, Seligman Quality Municipal Fund,
Inc., Seligman Select Municipal Fund, Inc., Seligman Value Fund
Series, Inc., and Tri-Continental Corporation.
The Subadviser also serves as subadviser to nine other associated
investment companies. They are Seligman Capital Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information
Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc.,
Seligman Henderson Global Fund Series, Inc., Seligman Income Fund,
Inc., Seligman Value Fund Series, Inc., and Tri-Continental
Corporation.
The Manager and Subadviser each have an investment advisory service
division which provides investment management or advice to private
clients. The list required by this Item 28 of officers and directors
of the Manager and the Subadviser, respectively, together with
information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by the Manager and the
Subadviser, respectively, pursuant to the Investment Advisers Act of
1940 (SEC File Nos. 801-15798 and 801-40670, respectively), which
were filed on June 3, 1997.
Item 29. Not applicable.
- --------
Item 30. Location of Accounts and Records - All accounts, books and other
- -------- documents required to be maintained by Section 31(a) of the 1940 Act
and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder will
be maintained by the following:
Custodian for Seligman Bond Portfolio, Seligman Capital Portfolio,
Seligman Cash Management Portfolio, Seligman Common Stock Portfolio,
Seligman Communications and Information Portfolio, Seligman Frontier
Portfolio, Seligman High-Yield Bond Portfolio, and Seligman Income
Portfolio and Recordkeeping agent for all Portfolios: Investors
Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105.
Custodian for Seligman Henderson Global Growth Opportunities
Portfolio, Seligman Henderson Global Smaller Companies Portfolio,
Seligman Henderson Global Technology Portfolio, and Seligman
Henderson International Portfolio: Morgan Stanley Trust Company, One
Pierrepont Plaza, Brooklyn, New York 11201.
Transfer, Redemption and Other Shareholder Account Services for all
Portfolios: Investors Fiduciary Trust Company, 127 West 10th Street,
Kansas City, Missouri 64105.
Item 31. Management Services - None not discussed in the Prospectus or
Statement of Additional Information for the Registrant.
<PAGE>
PART C. OTHER INFORMATION (cont'd)
- ------- --------------------------
Item 32. Undertakings -
- -------- --------------
(1) The Registrant undertakes to file a post-effective amendment with
financial statements, which need not be certified, within four to six
months from the effective date of this Post-Effective Amendment.
(2) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(3) The Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the removal of a director or directors and to
assist in communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 21 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 13th day of February, 1998.
SELIGMAN PORTFOLIOS, INC.
By: /s/ WILLIAM C. MORRIS
---------------------
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Post-Effective Amendment No. 21 to the Registration
Statement has been signed below by the following persons, in the capacities
indicated on February 13, 1998.
Signature Title
--------- -----
/s/ WILLIAM C. MORRIS Chairman of the Board (Principal
- ------------------------- executive officer) and Director
William C. Morris
/s/ BRIAN T. ZINO Director and President
- -------------------------
Brian T. Zino
/s/ THOMAS G. ROSE Treasurer
- --------------------------
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /S/ BRIAN T. ZINO
James C. Pitney, Director ) -----------------
James Q. Riordan, Director )*Brian T. Zino, Attorney-In-Fact
Robert L. Shafer, Director )
James N. Whitson, Director )
