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. |_|
-----
Post-Effective Amendment No. 22 |X|
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 24 |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)
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It is proposed that this filing will become effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b)
|X| on April 29, 1998 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| on (date) pursuant to paragraph (a)(1)
|_| 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
March 27, 1998.
<PAGE>
POST-EFFECTIVE AMENDMENT NO. 22
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
ITEM NO. IN PART A OF FORM N-1A LOCATION IN PROSPECTUS
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<C> <C>
1. Cover Page Cover Page
2. Synopsis Not applicable
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Objectives and Policies
5. Management of Fund Management Services; Portfolio Transactions,
Portfolio Turnover and Valuation
5a. Manager's Discussion of Fund Performance Management Services
6. Capital Stock and Other Securities Organization and Capitalization; Other Investment
Policies; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Redemptions
8. Redemption or Repurchase Purchases and Redemptions
9. Pending Legal Proceedings Not applicable
ITEM NO. IN PART B OF FORM N-1A LOCATION IN STATEMENT OF ADDITIONAL INFORMATION
- ------------------------------- -----------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Appendix 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 of Portfolio Transactions, Valuation and
Securities Being Offered Redemption
20. Tax Status Dividends, Distributions and Taxes (Prospectus)
21. Underwriters Not applicable
22. Calculation of Performance Data Portfolio Transactions, Valuation and Redemption
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
SELIGMAN PORTFOLIOS, INC.
100 Park Avenue o New York, New York 10017
Toll-Free Telephone: (800) 221-7844
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, the Portfolio invests in securities
of 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 unrated 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.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
(continued from page 1)
"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
<TABLE>
<CAPTION>
PAGE PAGE
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<S> <C> <C>
Financial Highlights................................ P-4 Seligman High-Yield Bond Portfolio............ P-16
Investment Objectives and Policies.................. P-8 Seligman Income Portfolio..................... P-17
Seligman Bond Portfolio............................. P-8 Seligman Large-Cap Value Portfolio............ P-19
Seligman Capital Portfolio.......................... P-9 Seligman Small-Cap Value Portfolio............ P-19
Seligman Cash Management Portfolio.................. P-9 Other Investment Policies..................... P-20
Seligman Common Stock Portfolio..................... P-10 Management Services........................... P-22
Seligman Communications and Portfolio Transactions, Portfolio Turnover
Information Portfolio............................. P-11 And Valuation............................... P-26
Seligman Frontier Portfolio......................... P-11 Dividends, Capital Gain Distributions
Seligman Henderson Global Growth and Taxes................................... P-27
Opportunities Portfolio........................... P-12 Purchases and Redemptions..................... P-27
Seligman Henderson Global Smaller Custodians and Transfer Agent................. P-27
Companies Portfolio............................... P-12 Organization and Capitalization............... P-27
Seligman Henderson Global Technology Appendix.................................... P-28
Portfolio......................................... P-12
Seligman Henderson International Portfolio.......... P-12
</TABLE>
P-2
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THIS PAGE INTENTIONALLY LEFT BLANK
P-3
<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 Ernst
& Young, LLP, 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 REALIZED (DECREASE)
NET ASSET VALUE NET & UNREALIZED FROM
PER SHARE OPERATING AT BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT DIVIDENDS
PERFORMANCE: OF PERIOD INCOME (LOSS) ON INVESTMENTS OPERATIONS PAID
- ------------------ -------------- ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
BOND PORTFOLIO
Year ended 12/31/97...... $ 9.890 $0.538 $ 0.350 $ 0.888 $(0.538)
Year ended 12/31/96...... 10.440 0.565 (0.552) 0.013 (0.563)
Year ended 12/31/95 ..... 9.270 0.605 1.171 1.776 (0.606)
Year ended 12/31/94...... 10.110 0.499 (0.841) (0.342) (0.498)
Year ended 12/31/93...... 10.660 0.713 0.142 0.855 (0.711)
Year ended 12/31/92...... 10.990 0.706 (0.092) 0.614 (0.772)
Year ended 12/31/91...... 10.310 0.798 0.699 1.497 (0.817)
Year ended 12/31/90...... 10.220 0.680 (0.054) 0.626 (0.536)
Year ended 12/31/89...... 9.930 0.658 0.208 0.866 (0.576)
6/21/88*-12/31/88........ 10.000 0.262 (0.162) 0.100 (0.170)
CAPITAL PORTFOLIO
Year ended 12/31/97...... 16.010 0.029 3.350 3.379 (0.028)
Year ended 12/31/96...... 14.910 0.043 2.121 2.164 (0.042)
Year ended 12/31/95 ..... 12.700 0.048 3.385 3.433 (0.047)
Year ended 12/31/94...... 14.950 0.015 (0.699) (0.684) (0.018)
Year ended 12/31/93...... 16.980 0.021 1.928 1.949 (0.021)
Year ended 12/31/92...... 17.740 (0.022) 1.202 1.180 --
Year ended 12/31/91...... 11.230 0.079 6.547 6.626 (0.088)
Year ended 12/31/90...... 11.620 0.044 (0.414) (0.370) (0.020)
Year ended 12/31/89...... 10.060 (0.084) 1.739 1.655 --
6/21/88*-12/31/88........ 10.000 0.060 -- 0.060 --
CASH MANAGEMENT PORTFOLIO
Year ended 12/31/97...... 1.000 0.054 -- 0.054 (0.054)
Year ended 12/31/96...... 1.000 0.053 -- 0.053 (0.053)
Year ended 12/31/95 ..... 1.000 0.055 -- 0.055 (0.055)
Year ended 12/31/94...... 1.000 0.040 -- 0.040 (0.040)
Year ended 12/31/93...... 1.000 0.030 -- 0.030 (0.030)
Year ended 12/31/92...... 1.000 0.035 -- 0.035 (0.035)
Year ended 12/31/91...... 1.000 0.056 -- 0.056 (0.056)
Year ended 12/31/90...... 1.000 0.075 -- 0.075 (0.075)
Year ended 12/31/89...... 1.000 0.075 -- 0.075 (0.075)
6/21/88*-12/31/88........ 1.000 0.020 -- 0.020 (0.020)
COMMON STOCK PORTFOLIO
Year ended 12/31/97...... 15.920 0.328 3.013 3.341 (0.316)
Year ended 12/31/96...... 15.440 0.334 2.789 3.123 (0.336)
Year ended 12/31/95 ..... 13.780 0.349 3.400 3.749 (0.345)
Year ended 12/31/94...... 14.980 0.365 (0.356) 0.009 (0.385)
Year ended 12/31/93...... 15.600 0.392 1.479 1.871 (0.394)
Year ended 12/31/92...... 14.740 0.346 1.445 1.791 (0.369)
Year ended 12/31/91...... 11.580 0.362 3.459 3.821 (0.355)
Year ended 12/31/90...... 12.260 0.356 (0.743) (0.387) (0.263)
Year ended 12/31/89...... 10.150 0.248 2.195 2.443 (0.179)
6/21/88*-12/31/88........ 10.000 0.120 0.060 0.180 (0.030)
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS NET INCREASE NET ASSET
PER SHARE OPERATING FROM NET (DECREASE) IN VALUE AT
PERFORMANCE: GAIN REALIZED NET ASSET VALUE END OF PERIOD
- ------------------ ------------- --------------- -------------
<S> <C> <C> <C>
BOND PORTFOLIO
Year ended 12/31/97...... $-- $ 0.350 $10.240
Year ended 12/31/96...... -- (0.550) 9.890
Year ended 12/31/95 ..... -- 1.170 10.440
Year ended 12/31/94...... -- (0.840) 9.270
Year ended 12/31/93...... (0.694) (0.550) 10.110
Year ended 12/31/92...... (0.172) (0.330) 10.660
Year ended 12/31/91...... -- 0.680 10.990
Year ended 12/31/90...... -- 0.090 10.310
Year ended 12/31/89...... -- 0.290 10.220
6/21/88*-12/31/88........ -- (0.070) 9.930
CAPITAL PORTFOLIO
Year ended 12/31/97...... (1.261) 2.090 18.100
Year ended 12/31/96...... (1.022) 1.100 16.010
Year ended 12/31/95 ..... (1.176) 2.210 14.910
Year ended 12/31/94...... (1.548) (2.250) 12.700
Year ended 12/31/93...... (3.958) (2.030) 14.950
Year ended 12/31/92...... (1.940) (0.760) 16.980
Year ended 12/31/91...... (0.028) 6.510 17.740
Year ended 12/31/90...... -- (0.390) 11.230
Year ended 12/31/89...... (0.095) 1.560 11.620
6/21/88*-12/31/88........ -- 0.060 10.060
CASH MANAGEMENT PORTFOLIO
Year ended 12/31/97...... -- -- 1.000
Year ended 12/31/96...... -- -- 1.000
Year ended 12/31/95 ..... -- -- 1.000
Year ended 12/31/94...... -- -- 1.000
Year ended 12/31/93...... -- -- 1.000
Year ended 12/31/92...... -- -- 1.000
Year ended 12/31/91...... -- -- 1.000
Year ended 12/31/90...... -- -- 1.000
Year ended 12/31/89...... -- -- 1.000
6/21/88*-12/31/88........ -- -- 1.000
COMMON STOCK PORTFOLIO
Year ended 12/31/97...... (2.665) 0.360 16.280
Year ended 12/31/96...... (2.307) 0.480 15.920
Year ended 12/31/95 ..... (1.744) 1.660 15.440
Year ended 12/31/94...... (0.824) (1.200) 13.780
Year ended 12/31/93...... (2.097) (0.620) 14.980
Year ended 12/31/92...... (0.562) 0.860 15.600
Year ended 12/31/91...... (0.306) 3.160 14.740
Year ended 12/31/90...... (0.030) (0.680) 11.580
Year ended 12/31/89...... (0.154) 2.110 12.260
6/21/88*-12/31/88........ -- 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>
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------- RATIO OF
TOTAL RETURN EXPENSE NET INVESTMENT RATIO OF NET INVESTMENT
BASED ON TO INCOME (LOSS) AVERAGE NET ASSETS AT NET INVESTMENT EXPENSES TO INCOME (LOSS)
NET ASSET AVERAGE TO AVERAGE PORTFOLIO COMMISSION END OF PERIOD INCOME (LOSS) AVERAGE NET TO AVERAGE
VALUE NET ASSETS NET ASSETS TURNOVER RATE PAID (000S OMITTED) PER SHARE ASSETS NET ASSETS
- ------------ ------------ ------------- --------- ----------- --------------- ------------ --------------- ------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
8.98% 0.60% 6.22% 170.12% $ 7,233 $0.515 0.83% 5.99%
0.09 0.60 5.97 199.74 5,015 0.545 0.79 5.78
19.18 0.60 6.22 114.42 4,497 0.571 0.99 5.83
(3.39) 0.60 5.12 237.23 3,606 0.430 1.31 4.41
7.98 0.74 5.41 33.21 3,775 0.675 1.07 5.08
5.60 1.00 6.22 23.40 4,750
14.58 0.60 7.30 6.34 5,369 0.712 1.42 6.48
6.14 1.73 6.59 6.62 4,600
8.70 2.13 6.51 49.92 4,129 0.643 2.27 6.37
1.01 2.99+ 5.25+ 144.21 2,223
21.31 0.60 0.16 93.97 $0.0567 20,400 0.026 0.62 0.14
14.51 0.59 0.29 88.78 0.0557 14,313
27.17 0.60 0.32 122.20 9,294
(4.59) 0.60 0.10 67.39 5,942 0.035 0.71 0.21
11.65 0.71 0.09 65.30 5,886 (0.036) 0.96 (0.26)
6.80 0.91 (0.14) 54.95 5,497 (0.003) 0.83 (0.03)
59.05 0.60 0.56 31.44 5,812
(3.18) 2.15 0.18 28.94 3,560 (0.035) 1.37 (0.21)
16.47 3.55 (0.88) 32.55 2,577
0.60 6.99+ (0.11)+ -- 890 (0.092) 3.80 (1.12)
5.52 -- 5.39 -- 8,635 0.046 0.79 4.60
5.43 -- 5.30 -- 9,755 0.047 0.63 4.67
5.60 -- 5.48 -- 7,800 0.046 0.87 4.61
4.03 -- 3.98 -- 3,230 0.025 1.48 2.50
3.00 -- 2.96 -- 3,102 0.019 1.07 1.89
3.53 -- 3.50 -- 4,230 0.025 0.97 2.53
5.70 -- 5.49 -- 5,849 0.048 0.83 4.66
7.79 -- 7.53 -- 3,994 0.045 2.97 4.56
7.81 -- 7.72 -- 908 (0.019) 9.57 (1.85)
2.35 0.95+ 5.83+ -- 283 (0.050) 20.02+ 13.24)+
21.31 0.53 1.92 80.13 0.0594 50,737
20.08 0.53 1.99 50.33 0.0561 37,168
27.28 0.54 2.42 55.48 28,836
0.04 0.60 2.45 15.29 20,168 0.361 0.62 2.43
11.94 0.55 2.10 10.70 21,861
12.14 0.56 2.21 12.57 24,987
33.16 0.60 2.63 27.67 26,103 0.350 0.71 2.52
(3.15) 0.88 3.01 13.78 18,030
24.11 1.59 2.32 37.56 9,332 0.236 1.67 2.23
1.80 3.62+ 1.65+ 14.40 2,476
</TABLE>
P-5
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
NET REALIZED
& UNREALIZED
NET REALIZED GAIN (LOSS)
NET ASSET VALUE NET & REALIZED FROM FOREIGN
PER SHARE OPERATING AT BEGINNING INVESTMENT GAIN (LOSS) CURRENCY
PERFORMANCE: OF PERIOD INCOME (LOSS) ON INVESTMENTS TRANSACTIONS
- ------------------ ---------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C>
INFORMATION PORTFOLIO
Year ended 12/31/97...... $14.690 $-- $ 3.049 --
Year ended 12/31/96...... 13.500 -- 1.190 --
Year ended 12/31/95 ..... 10.440 -- 4.015 --
10/11/94*-12/31/94....... 10.000 (0.016) 0.456 --
FRONTIER PORTFOLIO
Year ended 12/31/97...... 14.980 -- 2.386 --
Year ended 12/31/96...... 13.560 0.001 3.220 --
Year ended 12/31/95 ..... 10.580 (0.001) 3.512 --
10/11/94*-12/31/94....... 10.000 (0.012) 0.592 --
GLOBAL GROWTH
OPPORTUNITIES PORTFOLIO
Year ended 12/31/97...... 9.910 0.006 1.799 $(0.561)
5/1/96*-12/31/96......... 10.000 0.008 0.018 (0.104)
GLOBAL SMALLER COMPANIES
PORTFOLIO
Year ended 12/31/97...... 12.870 0.016 1.166 (0.747)
Year ended 12/31/96...... 11.670 0.022 2.305 (0.158)
Year ended 12/31/95...... 10.310 0.051 2.037 (0.301)
10/11/94*-12/31/94....... 10.000 0.058 0.266 0.029
GLOBAL TECHNOLOGY
PORTFOLIO
Year ended 12/31/97...... 10.320 0.012 2.151 (0.194)
5/1/96*-12/31/96......... 10.000 (0.004) 0.305 0.099
INTERNATIONAL PORTFOLIO
Year ended 12/31/97...... 12.960 0.026 2.110 (1.057)
Year ended 12/31/96...... 12.390 0.074 1.124 (0.323)
Year ended 12/31/95...... 11.340 0.154 0.896 0.236
Year ended 12/31/94...... 11.370 0.131 (0.306) 0.325
5/3/93*-12/31/93......... 10.000 0.021 1.518 (0.099)
HIGH-YIELD BOND PORTFOLIO
Year ended 12/31/97...... 11.190 0.908 0.780 --
Year ended 12/31/96...... 10.500 0.768 0.766 --
5/1/95*-12/31/95......... 10.000 0.218 0.519 --
INCOME PORTFOLIO
Year ended 12/31/97...... 10.520 0.556 0.907 --
Year ended 12/31/96...... 10.560 0.579 0.126 --
Year ended 12/31/95...... 9.970 0.604 1.187 --
Year ended 12/31/94...... 11.380 0.689 (1.369) --
Year ended 12/31/93...... 11.390 0.828 0.576 --
Year ended 12/31/92...... 11.250 0.862 0.896 --
Year ended 12/31/91...... 9.500 0.896 2.024 --
Year ended 12/31/90...... 10.780 0.829 (1.487) --
Year ended 12/31/89...... 10.040 0.634 0.834 --
6/21/88*-12/31/88........ 10.000 0.142 (0.032) --
</TABLE>
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
FROM DISTRIBUTION
PER SHARE OPERATING INVESTMENT DIVIDENDS FROM NET (DECREASE) IN
PERFORMANCE: OPERATIONS PAID GAIN REALIZED NET ASSET VALUE
- ------------------ -- ------------- -------- -------------- --------------
<S> <C> <C> <C> <C>
INFORMATION PORTFOLIO
Year ended 12/31/97..... $ 3.049 $-- $(4.649) $(1.600)
Year ended 12/31/96..... 1.190 -- -- 1.190
Year ended 12/31/95 .... 4.015 -- (0.955) 3.060
10/11/94*-12/31/94...... 0.440 -- -- 0.440
FRONTIER PORTFOLIO
Year ended 12/31/97..... 2.386 -- (1.586) 0.800
Year ended 12/31/96..... 3.221 -- (1.801) 1.420
Year ended 12/31/95 .... 3.511 -- (0.531) 2.980
10/11/94*-12/31/94...... 0.580 -- -- 0.580
GLOBAL GROWTH
OPPORTUNITIES PORTFOLIO
Year ended 12/31/97..... 1.244 -- (0.124) 1.120
5/1/96*-12/31/96........ (0.078) (0.012) -- (0.090)
GLOBAL SMALLER COMPANIES
PORTFOLIO
Year ended 12/31/97..... 0.435 (0.017) (0.308) 0.110
Year ended 12/31/96..... 2.169 (0.018) (0.951) 1.200
Year ended 12/31/95..... 1.787 (0.052) (0.375) 1.360
10/11/94*-12/31/94...... 0.353 (0.043) -- 0.310
GLOBAL TECHNOLOGY
PORTFOLIO
Year ended 12/31/97..... 1.969 (0.012) (1.687) 0.270
5/1/96*-12/31/96........ 0.400 -- (0.080) 0.320
INTERNATIONAL PORTFOLIO
Year ended 12/31/97..... 1.079 (0.027) (0.472) 0.580
Year ended 12/31/96..... 0.875 (0.068) (0.237) 0.570
Year ended 12/31/95..... 1.286 (0.151) (0.085) 1.050
Year ended 12/31/94..... 0.150 (0.064) (0.116) (0.030)
5/3/93*-12/31/93........ 1.440 (0.053) (0.017) 1.370
HIGH-YIELD BOND PORTFOLIO
Year ended 12/31/97..... 1.688 (0.900) (0.108) 0.680
Year ended 12/31/96..... 1.534 (0.766) (0.078) 0.690
5/1/95*-12/31/95........ 0.737 (0.219) (0.018) 0.500
INCOME PORTFOLIO
Year ended 12/31/97..... 1.463 (0.544) (0.639) 0.280
Year ended 12/31/96..... 0.705 (0.579) (0.166) (0.040)
Year ended 12/31/95..... 1.791 (0.604) (0.597) 0.590
Year ended 12/31/94..... (0.680) (0.730) -- (1.410)
Year ended 12/31/93..... 1.404 (0.828) (0.586) (0.010)
Year ended 12/31/92..... 1.758 (0.987) (0.631) 0.140
Year ended 12/31/91..... 2.920 (0.904) (0.266) 1.750
Year ended 12/31/90..... (0.658) (0.622) -- (1.280)
Year ended 12/31/89..... 1.468 (0.419) (0.309) 0.740
6/21/88*-12/31/88....... 0.110 (0.070) -- 0.040
</TABLE>
- ---------
* Commencement of operations.
** The Manager and/or Subadviser, at their discretion, waived management fees
and/or reimbursed expenses for certain periods presented.
+ Annualized.
P-6
<PAGE>
<TABLE>
<CAPTION>
WITHOUT MANAGEMENT FEE WAIVER
RATIOS/SUPPLEMENT DATA AND/OR EXPENSE REIMBURSEMENT
----------------------------------------------------- -------------------------------------
RATIOS OF
TOTAL RETURN EXPENSES NET INVESTMENT RATIO OF NET INVESTMENT
NET ASSET BASED ON TO INCOME (LOSS) AVERAGE NET ASSETS AT NET INVESTMENT EXPENSES TO INCOME (LOSS)
VALUE AT NET ASSET AVERAGE TO AVERAGE PORTFOLIO COMMISSION END OF PERIOD INCOME (LOSS) AVERAGE NET TO AVERAGE
END OF PERIOD VALUE NET ASSETS NET ASSETS TURNOVER RATE PAID (000S OMITTED) PER SHARE ASSETS NET ASSETS
- ------------- -------- ---------- ------------ --------- ---------- -------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$13.090 22.22% 0.87% (0.49)% 277.14% $0.0511 $87,633
14.690 8.81 0.87 (0.32) 167.20 0.0530 60,645
13.500 38.55 0.95 (0.89) 96.62 38,442
10.440 4.40 0.95+ (0.95)+ -- 495 $(0.436) 13.96%+ (13.96)%+
15.780 16.33 0.89 (0.049) 101.68 0.0539 42,973
14.980 23.93 0.92 (0.37) 119.74 0.0532 31,672
13.560 33.28 0.95 (0.55) 106.48 12,476 (0.019) 1.37 (0.97)
10.580 5.80 0.95+ (0.70)+ -- 169 (1.319) 40.47+ (40.22)+
11.030 12.57 1.40 0.01 77.85 0.0289 5,449 (0.072) 2.11 (0.70)
9.910 (0.78) 1.40+ 0.37 12.99 0.0522 1,590 (0.255) 6.04+ (4.27)+
12.980 3.43 1.40 0.24 64.81 0.0183 20,505 0.006 1.56 0.08
12.870 18.66 1.40 0.23 62.31 0.0219 16,876 (0.044) 1.90 (0.27)
11.670 17.38 1.39 0.64 55.65 4,837 (0.051) 3.84 (1.81)
10.310 3.53 1.20+ 3.14+ -- 132 (1.225) 37.25+ (32.91)+
10.590 19.53 1.40 0.12 167.36 0.0228 3,686 (0.070) 2.10 (0.58)
10.320 4.01 1.40+ 0.60+ 45.04 0.0160 1,364 (0.202) 4.71+ (2.71)+
13.540 8.35 1.40 0.43 89.43 0.0214 9,182 (0.069) 2.07 (0.24)
12.960 7.08 1.40 0.70 48.53 0.0191 7,242 (0.042) 2.30 (0.20)
12.390 11.34 1.35 1.01 41.40 4,183 0.001 3.40 (1.04)
11.340 1.32 1.20 1.17 47.34 1,776 (0.419) 6.12 (3.75)
11.370 14.40 1.20+ 1.30+ 2.82 648 (1.004) 17.94+ (15.44)+
11.870 15.09 0.70 9.61 74.54 23,268 0.897 0.79 9.52
11.190 14.62 0.70 9.77 117.01 11,176 0.747 0.88 9.59
10.500 7.37 0.70+ 7.46+ 67.55 3,009 0.117 4.38+ 3.78+
10.800 14.02 0.60 4.71 96.99 0.0544 13,835 0.553 0.63 4.68
10.520 6.66 0.59 5.37 19.59 0.0600 13,717
10.560 17.98 0.60 5.55 51.22 12,619 0.602 0.62 5.53
9.970 (5.96) 0.60 6.34 29.76 10,050 0.670 0.77 6.17
11.380 12.37 0.64 6.40 38.38 11,220 0.826 0.65 6.39
11.390 15.72 0.68 7.53 39.46 11.363
11.250 30.89 0.60 8.05 43.67 11,509 0.867 0.93 7.72
9.500 (6.10) 1.40 8.19 21.64 7,419
10.780 14.61 2.69 5.95 60.10 4,085 0.610 2.88 5.77
10.040 1.10 5.02+ 2.46+ -- 1,265 0.089 5.42+ 2.07+
</TABLE>
P-7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Set forth below is a description of the investment objective of each of the
Fund's Portfolios and their investment policies. Of course, because any
investment involves risk, there can be no assurance that any of the Portfolios
will meet its objective. The investment objective 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
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<PAGE>
Turkey. Pacific Basin countries include Australia, India, Indonesia, Japan,
Korea, Malaysia, New Zealand, Pakistan, The People's Republic of China
(including Hong Kong), 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") (collectively,
"Depositary Receipts"). 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. Depositary Receipts may be issued as sponsored
or unsponsored programs. In sponsored programs, the issuer has made arrangements
to have its securities trade in the form of Depositary Receipts. 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
Depositary Receipts 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 instruments.
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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<PAGE>
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 a Portfolio. 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 portfolio that invests in a broader range of securities. As
such, the Global Technology
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<PAGE>
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 such
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 a Portfolio's position in any one country as of the date
the contract is entered into.
Although a Portfolio will seek to benefit by using forward contracts,
anticipated currency movements may not be accurately predicted and the Portfolio
may therefore incur a gain or loss on a forward contract. A forward contract may
help reduce a Portfolio's 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 such 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 P-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 unrated 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.
P-16
<PAGE>
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.
PERCENTAGE OF
S&P/MOODY'S RATINGS TOTAL INVESTMENTS
------------------- ----------------
AAA/Aaa..................................... --
AA/Aa....................................... --
A/A......................................... --
BBB/Baa..................................... --
BB/Ba....................................... 0.6%
B/B......................................... 82.7%
CCC/Caa..................................... 6.5%
CC/Ca....................................... --
Non-rated................................... 4.1%
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 only if the investor 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 P-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.
PREFERRED STOCKS. 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.
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<PAGE>
Subject to that limitation, assets may be invested in many different types
of securities, including money market instruments, fixed-income securities such
as bonds, debentures and preferred stocks, senior securities convertible into
common stocks, and common stocks.
Convertible bonds are convertible at a stated exchange rate or price into
common stock. Before conversion, convertible securities are similar to
non-convertible debt securities in that they provide a steady stream of income
with generally higher yields than an issuer's equity securities. The market
value of all debt securities, including convertible securities, tends to decline
as interest rates increase and to increase as interest rates decline. In
general, convertible securities may provide lower interest or dividend yields
than non-convertible debt securities of similar quality, but they may also allow
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 security presents. 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.
PERCENTAGE OF
S&P/MOODY'S RATINGS TOTAL INVESTMENTS
------------------- ----------------
AAA/Aaa..................................... 10.3%
AA/Aa....................................... 1.0%
A/A......................................... 6.5%
BBB/Baa..................................... 8.8%
BB/Ba....................................... 7.6%
B/B......................................... 3.3%
CCC/Caa..................................... --
CC/Ca....................................... --
Non-rated................................... 1.9%
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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.
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 inclusion in 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 Portfolios 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 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 P-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.
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<PAGE>
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.
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 only to "qualified institutional buyers" under Rule 144A of
the 1933 Act, and the Manager, acting pursuant to procedures approved by 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 this determination be made, the Manager, acting pursuant to
such procedures, 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 Rule 144A securities will
further evolve. This investment practice could have the effect of increasing the
level of illiquidity in a Portfolio if and 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 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 Depositary Receipts (as defined on page P-13), or to commercial
paper and certificates of deposit issued by foreign banks. 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
P-20
<PAGE>
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.
LENDING OF PORTFOLIO SECURITIES AND BORROWING. Other than the Seligman Cash
Management Portfolio, each of the Fund's Portfolios may lend portfolio
securities to broker/dealers, 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 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 borrow money only 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 Value Portfolio will not purchase additional portfolio securities if
such Portfolios have outstanding borrowings in excess of 5% of the value of
their 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
P-21
<PAGE>
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.
YEAR 2000 RISKS. The Fund is dependent upon service providers and their
computer systems for its day-to-day operations, and many of the Fund's service
providers in turn depend upon computer systems of other persons. Many computer
systems currently cannot properly recognize or process date sensitive
information relating to the year 2000 and beyond. The Manager, Subadviser,
Seligman Financial Services, Inc., and the Fund's custodians have been
evaluating the impact the year 2000 issue may have on their computer systems.
They expect that any modifications to their computer systems necessary to
address the year 2000 issue will be made and tested in a timely manner. They are
also working with vendors and other persons whose systems are linked to theirs
to obtain satisfactory assurances regarding the year 2000 issue. There can be no
assurance that the remedial actions taken by the Fund's service providers will
be sufficient or timely. Inadequate remediation could have an adverse effect on
the Fund's operations, including pricing and securities trading and settlement.
MANAGEMENT SERVICES
THE MANAGER. 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
the Fund's Portfolios, and administers the Fund's 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 total 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.
For the year ended December 31, 1997, the Manager waived all of its fee and
the Subadviser waived a portion of its fee 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 year ended December 31, 1997.
P-22
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT FEE RATES 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>
- --------------
*It is estimated that for fiscal 1998, the management fee rates for the
Seligman Large-Cap Value Portfolio and the Seligman Small-Cap Value
Portfolio will be .80% and 1.00%, respectively, and the expense ratios
will be .80% and 1.00%, respectively, after reimbursement.
**During the year ended December 31, 1997, the Manager, at its discretion,
waived all of its fees and reimbursed all expenses for the Seligman Cash
Management Portfolio, and the Manager and/or Subadviser elected to
reimburse 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 $20.2 billion at March 31, 1998.
The Manager also provides investment management or advice to institutional and
other accounts having an aggregate value of approximately $7.4 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. On March 30, 1998, AMP Limited, an Australian life
insurance and financial services company, acquired control of Henderson plc
pursuant to a cash offer. Henderson plc is the indirect owner of 50% of the
Subadviser. As a result of this acquisition, the subadvisory agreements between
the Manager and the Subadviser relating to the Fund (the "Old Subadvisory
Agreements") terminated automatically in accordance with their terms. Pursuant
to an order issued by the SEC, and with the approval of the Fund's Board of
Directors, the Manager has entered into new subadvisory agreements with the
Subadviser (the "New Subadvisory Agreements"). The New Subadvisory Agreements
are identical in all respects to the Old Subadvisory Agreements except for their
commencement and termination dates. Pursuant to the New Subadvisory Agreements,
the Subadviser supervises and directs the Seligman Henderson Portfolios'
international investments in accordance with such Portfolios' investment
objectives, policies and restrictions. A meeting of shareholders of the Seligman
Henderson Portfolios of the Fund is expected to be held on June 30, 1998 to vote
on the New Subadvisory Agreements.
P-23
<PAGE>
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 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
Midcap 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 January 1998. 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.
P-24
<PAGE>
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.
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 Current Yield, the Lipper High-Yield
Bond Fund 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 and the Morgan Stanley Capital
International ("MSCI") EAFE (Europe, Australasia, 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 EM Index,
and the Lipper Global Small Cap 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.
P-25
<PAGE>
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.
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.
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<PAGE>
Short-term holdings maturing in 60 days or less are generally valued at
amortized cost if their original maturity was 60 days or less. Short-term
holdings with more than 60 days remaining to maturity will be valued at current
market value until the 61st day prior to maturity, and will then be valued on an
amortized cost basis based on the value of such date unless the Board determines
that this amortized cost value does not represent fair market value.
Securities held by the Seligman Cash Management Portfolio are valued using
the amortized cost method. This method is designed to stabilize the net asset
value of that Portfolio at $1.00 per share. The Board of Directors will monitor
closely the stabilization of the net asset value at $1.00 per share and has
adopted procedures to facilitate such stabilization. More information regarding
this method of valuation is contained in the Statement of Additional
Information.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
Each Portfolio of the Fund 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 Contracts,
CLAA Contracts 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 Canada Life or MBL Life by the close of regular
trading on the New York Stock Exchange (normally, 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, 801 Pennsylvania, 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
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<PAGE>
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 of Fund shares held by such Canada Life
Accounts and VCA-9, respectively, on all matters to be voted on by Fund
shareholders. Such rights may change in accordance with changes in policies of
the SEC. Voting rights of the participants in the Canada Life Accounts and VCA-9
are more fully set forth in the prospectus or disclosure document relating to
that account, as applicable, which should be read together with this Prospectus.
The Directors of the Fund have authority to create additional portfolios and to
classify and reclassify shares of capital stock without further action by
shareholders and additional series may be created in the future. Under Maryland
corporate law, the Fund is not required to hold annual meetings and it is the
intention of the Fund's Directors not to do so. However, special meetings of
shareholders will be held for action by shareholders as may be required by the
1940 Act, the Fund's Articles of Incorporation and By-Laws, or Maryland
corporate law.
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
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<PAGE>
category; modifier 2 indicates a mid-range ranking; and modifier 3 indicates
that the issuer ranks in the lower end of its generic rating category.
COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to
repay punctually promissory senior debt obligations not having an original
maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the
highest quality repayment ability of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
ability for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage.
Adequate alternate liquidity is maintained.
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."
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<PAGE>
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.
P-30
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
SELIGMAN PORTFOLIOS, INC.
100 Park Avenue o New York, New York 10017
Toll-Free Telephone: 800-221-7844
New York City Telephone:212-850-1864
Marketing Services--Toll-Free Telephone: 800-221-2783
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................................... 7
MANAGEMENT AND EXPENSES ................................. 11
PORTFOLIO TRANSACTIONS, VALUATION AND REDEMPTION......... 14
CUSTODIANS AND INDEPENDENT AUDITORS ..................... 16
FINANCIAL STATEMENTS .................................... 16
APPENDIX A .............................................. 17
<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.
2
<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 Seligman Henderson Co. (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.
3
<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:
1997 1996
---- ----
Seligman Bond Portfolio 170.12% 199.74%
Seligman Capital Portfolio 93.97 88.78
Se ligman Common Stock Portfolio 80.13 50.33
Seligman Communications and Information Portfolio 1 277.14 167.20
Seligman Frontier Portfolio 101.68 119.74
Seligman Henderson Global Growth Opportunities Portfolio 2 77.85 12.99
Seligman Henderson Global Smaller Companies Portfolio 64.81 62.31
Seligman Henderson Global Technology Portfolio 2 167.36 45.04
Seligman Henderson International Portfolio 2 89.43 48.53
Seligman High-Yield Bond Portfolio 3 74.54 117.01
Seligman Income Portfolio 4 96.99 19.59
- ---------
1 The increase in portfolio turnover was due to the sharp volatility in the
technology area.
2 The increase in portfolio turnover was due to reducing exposure in Asian
markets.
3 The decrease in portfolio turnover was due to an increase in the size of
the Portfolio.
4 The increase in portfolio turnover was due to a realignment of the portfolio
away from convertible securities and into common stocks.
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
4
<PAGE>
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.
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 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.
5
<PAGE>
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.
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.
6
<PAGE>
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 MORRIS* Chairman of the Board, Chief Executive Officer and
(60) Director, Chairman of the Executive Committee
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; and Sarah Lawrence College; and a Member
of the Board of Governors of the Investment
Company Institute; formerly, President, J. & W.
Seligman & Co., Incorporated; Chairman, Seligman
Advisors, Inc., advisers; Seligman Holdings, Inc.,
holding company; Seligman Securities, Inc.,
broker/dealer; and J. & W. Seligman Trust Company,
trust company; and Director, Daniel Industries,
Inc., manufacturer of oil and gas metering
equipment.
BRIAN T. ZINO* Director, President and Member of the Executive
(45) 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; formerly, Director, Seligman Advisors,
Inc., advisers; Seligman Securities, Inc.,
broker/dealer; and J. & W. Seligman Trust Company,
trust company.
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; Raytheon Co.,
electronics; the National Defense University; and
the Institute for Defense Analysis; formerly,
Director, USLIFE Corporation, life insurance;
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
7
<PAGE>
ALICE S. ILCHMAN Director
(63)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; and the Committee for Economic
Development; Chairman, The Rockefeller Foundation,
charitable foundation; formerly, Trustee, The
Markle Foundation, philanthropic organization; and
Director, NYNEX, telephone company; and
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; Baptist Medical Center; Oklahoma Chapter
of the Nature Conservancy; Oklahoma Medical
Research Foundation; and National Boys and Girls
Clubs of America; and a Member of the Business
Roundtable; formerly, Chairman of the Board and
Chief Executive Officer, Kerr-McGee Corporation,
diversified energy company; Chairman, Oklahoma
City Public Schools Foundation; and Director,
Federal Reserve System's Kansas City Reserve Bank;
and the Oklahoma City Chamber of Commerce. 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., manufacturer of
aluminum sheet products; 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 Presbyterian
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
BETSY S. MICHEL Director
(55)
Attorney; Director or Trustee, the Seligman Group
of Investment Companies; Trustee, The 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; and Director, Public
Broadcasting Service (PBS); 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; and Public Broadcasting Service
(PBS); formerly, Co-Chairman of the Policy Council
of the Tax Foundation; Director, Tesoro Petroleum
Companies, Inc.; Dow Jones & Co., Inc.; and
Director and President, Bekaert Corporation. 675
Third Avenue, Suite 3004, New York, NY 10017
8
<PAGE>
ROBERT L. SHAFER Director
(65)
Director, various organizations; Director or
Trustee, the Seligman Group of Investment
Companies; formerly, Vice President, Pfizer Inc.,
pharmaceuticals; and Director, USLIFE Corporation,
life insurance. 235 East 42nd Street, New York, NY
10017
JAMES N. WHITSON Director
(63)
Director, various corporations; Director or
Trustee, the Seligman Group of Investment
Companies; Director, Sammons Enterprises, Inc.;
C-SPAN; and CommScope, Inc., manufacturer of
coaxial cables; formerly, Executive Vice President
and Chief Operating Officer, Sammons Enterprises,
Inc.; Director, Red Man Pipe and Supply Company,
piping and other materials. 5949 Sherry Lane,
Suite 1900, Dallas, TX 75225
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.
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.
9
<PAGE>
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;
formerly, Director, Seligman Advisors, Inc.,
advisers; and Treasurer, Seligman Holdings, Inc.,
holding company.
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, Senior Vice President, Law and
Regulation and Corporate Secretary, Seligman
Advisors, Inc., advisers; and an attorney at
Seward and Kissel, law firm.
THOMAS G. ROSE Treasurer
(40)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent.
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.
Compensation Table
<TABLE>
<CAPTION>
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
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
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
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>
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 $1,000, 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 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 amount of deferred compensation (including interest) payable in respect
of the Fund to Mr. Whitson as of December 31, 1997 was $14,827. Messrs. Merow
and Pitney no longer defer current compensation; however, they have accrued
deferred compensation (including interest) in the amounts of $14,619 and
$3,913, 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 J. & W. Seligman & Co.
(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 (except Seligman Cash
Management Portfolio, which is obligated to purchase shares of such investment
companies).
Directors and officers of the Fund are also trustees, directors or
officers of some or all of the other investment companies in the Seligman
Group. As of March 31, 1998, no Directors or officers of the Fund owned
directly or indirectly shares of any of the Portfolios.
MANAGEMENT AND EXPENSES
GENERAL
Pursuant to management agreements between the Fund and the Manager in
respect of the Portfolios (the "Management Agreements") and subject to the
control of the Board of Directors, the Manager manages the investment of the
assets of the Fund's Portfolios, including making purchases and sales of
portfolio securities consistent with each Portfolio's investment objectives
and policies, and administers the Fund's 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 consultants of the Manager except as
otherwise provided by the Subadviser.
Pursuant to subadvisory agreements between the Manager and the
Subadviser approved by the Fund's Board of Directors on March 19, 1998 (the
"New Subadvisory Agreements"), the Subadviser supervises and directs the
international investment of the Seligman Henderson Portfolios in accordance
with each such Portfolio's investment objectives, policies and restrictions.
The Management Agreements (and New 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 Agreements (or New Subadvisory Agreements),
except for willful misfeasance, bad faith, gross negligence, or reckless
disregard of their obligations and duties under the Management Agreements (or
New Subadvisory Agreements).
11
<PAGE>
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 MANAGER AND THE MANAGEMENT FEES
- -----------------------------------
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.
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 $ 23,150 $ 18,034 $ 15,262
Seligman Capital Portfolio 70,147 48,339 28,551
Seligman Cash Management Portfolio* 38,042 36,532 18,365
Seligman Common Stock Portfolio 178,662 134,264 94,380
Seligman Communications and Information Portfolio 574,370 373,337 123,216
Seligman Frontier Portfolio 282,248 165,050 29,219
Seligman Henderson Global Growth Opportunities Portfolio 38,358 4,098** --
Seligman Henderson Global Smaller Companies Portfolio 200,415 110,169 17,210
Seligman Henderson Global Technology Portfolio 26,504 4,920** --
Seligman Henderson International Portfolio 88,212 57,323 25,312
Seligman High-Yield Bond Portfolio 84,740 35,858 3,941**
Seligman Income Portfolio 54,451 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.
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 Compliance Officer, 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
12
<PAGE>
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
Compliance Officer, 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.
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.
THE SUBADVISER AND THE SUBADVISORY FEES
- ---------------------------------------
The Subadviser is a New York general partnership formed by the
Manager and Henderson International, Inc., a controlled affiliate of Henderson
plc. On March 30, 1998, AMP Limited, an Australian life insurance and
financial services company, acquired control of Henderson plc pursuant to a
cash offer. As a result of this acquisition, the subadvisory agreements
between the Manager and Seligman Henderson Co. relating to the Fund (the "Old
Subadvisory Agreements") terminated automatically in accordance with their
terms. Pursuant to an order issued by the Securities and Exchange Commission,
and with the approval of the Fund's Board of Directors, the Manager has
entered into the New Subadvisory Agreements with Seligman Henderson Co. with
respect to the Seligman Henderson Portfolios of the Fund. The New Subadvisory
Agreements are identical in all respects to the Old Subadvisory Agreements
except for their commencement and termination dates. A meeting of shareholders
of the Seligman Henderson Portfolios of the Fund is expected to be held on
June 30, 1998 to vote on the New Subadvisory Agreements.
For its services, the Subadviser will be paid a fee, subject to
shareholder approval, equal to an annual rate of .90% of each of the Seligman
Henderson Portfolio's average daily net assets. The New Subadvisory
Agreements, if approved by shareholders, will continue in effect until
December 31, 1998, and from year to year thereafter if (1) such continuance is
approved in the manner required by the 1940 Act (by a vote of a majority of
the Board of Directors or of the outstanding voting securities of the
Portfolios and by a vote of a majority of the Directors who are not parties to
the New Subadvisory Agreements or interested persons of any such party) and
(2) the Subadviser
13
<PAGE>
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 New Subadvisory Agreements may be terminated at
any time by the Fund, on 60 days written notice to the Subadviser. The New
Subadvisory Agreements will terminate automatically in the event of their
assignment or upon the termination of the relevant Management Agreement.
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.
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 $ 35,821 $ 19,283 $ 20,041
Seligman Common Stock Portfolio 74,489 37,709 34,600
Seligman Communications and Information Portfolio 235,341 82,832 32,247
Seligman Frontier Portfolio 69,951 43,065 12,086
Seligman Henderson Global Growth Opportunities Portfolio 15,812 4,056 N/A
Seligman Henderson Global Smaller Companies Portfolio 43,231 39,649 12,794
Seligman Henderson Global Technology Portfolio 6,589 2,037 N/A
Seligman Henderson International Portfolio 36,291 20,495 12,389
Seligman Income Portfolio 11,228 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.
14
<PAGE>
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 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
regular trading on 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 regular trading on 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 regular trading on 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.
15
<PAGE>
CUSTODIANS AND INDEPENDENT AUDITORS
CUSTODIANS. With the exception of each of the Seligman Henderson
Portfolios, Investors Fiduciary Trust Company, 801 Pennsylvania, 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. Ernst & Young LLP, 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 financial statements and notes included in the
Annual Report, and the Independent Auditor's Report thereon, are incorporated
herein by reference. The Annual Report will be furnished, without charge, to
investors who request copies of the Fund's Statement of Additional
Information.
16
<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 in 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, with over
$3 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.
17
<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.
18
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN BOND PORTFOLIO
Principal
Amount Value
---------- -----------
US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES -- 50.7%
US GOVERNMENT
SECURITIES -- 37.3%
US Treasury Bonds
8-3/4%, 5/15/2020............. $ 500,000 $ 665,938
US Treasury Bonds
6-5/8%, 2/15/2027............. 1,400,000 1,519,877
US Treasury Notes 6-1/4%,
10/31/2001.................... 300,000 305,344
US Treasury Notes 6-1/4%,
6/30/2002..................... 200,000 204,125
-----------
Total US Government
Securities
(Cost $2,612,492)............. 2,695,284
-----------
US GOVERNMENT
AGENCY SECURITIES -- 13.4%
Federal National Mortgage
Association 7-1/2%,
11/1/2026+.................... 463,195 474,341
Government National Mortgage
Association:
7-1/2%, 6/15/2023+............ 215,496 221,757
7-1/2%, 3/15/2026+............ 269,170 275,982
-----------
Total US Government
Agency Securities
(Cost $924,959)............... 972,080
-----------
Total US Government and
Government Agency Securities
(Cost $3,537,451)............. 3,667,364
-----------
CORPORATE BONDS -- 40.4%
Anixter 8%, 9/15/2003............ 200,000 210,279
Associates Corp. of North
America 6-1/2%, 8/15/2002..... 200,000 202,068
Barrett Resources 7.55%,
2/1/2007...................... 200,000 207,771
Capital One Bank 8-1/8%,
3/1/2000...................... 150,000 155,386
Principal
Amount Value
---------- -----------
CORPORATE BONDS (continued)
First Data 6-3/8%, 12/15/2007.... $ 200,000 $ 199,291
First USA Bank 5-3/4%,
1/15/1999..................... 100,000 99,819
General Motors Acceptance
5-5/8%, 2/1/1999.............. 150,000 149,456
Geon 6-7/8%, 12/15/2005.......... 200,000 202,032
Loewen Group International
7-1/2%, 4/15/2001............. 200,000 206,142
The Money Store 8.05%,
4/15/2002..................... 200,000 207,206
Oryx Energy 8-1/8%,
10/15/2005.................... 200,000 215,288
Owens-Illinois 7.85%,
5/15/2004..................... 200,000 210,250
Petroleum Georgia Pacific
7-1/2%, 3/31/2007............. 200,000 213,408
Time Warner 9-1/8%, 1/15/2013.... 200,000 239,369
Woolworth 7%, 6/1/2000........... 200,000 202,771
-----------
Total Corporate Bonds
(Cost $2,828,492)............. 2,920,536
-----------
REPURCHASE
AGREEMENTS -- 5.5%
(Cost $400,000)
HSBC Securities, Inc. 5%, dated
12/31/1997, maturing 1/5/1998
collateralized by: $380,000
US Treasury Notes 6-7/8%
5/15/2006, with a fair market
value of $409,979............. 400,000 400,000
-----------
Total Investments -- 96.6%
(Cost $6,765,943)............. 6,987,900
Other Assets Less
Liabilities -- 3.4%........... 244,137
-----------
Net Assets -- 100.0%............. $7,232,037
===========
- ----------------
+ Investments in mortgage-backed securities are subject to principal paydowns.
As a result of prepayments from refinancing or satisfaction of the underlying
mortgage instruments, the average life may be less than the original maturity.
This in turn may impact the ultimate yield realized from these investments.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 97.9%
BASIC MATERIALS -- 3.6%
Minerals Technologies............ 5,000 $ 227,187
Nucor............................ 4,500 217,406
Olin............................. 6,400 300,000
-----------
744,593
-----------
CAPITAL GOODS -- 3.1%
Gulfstream Aerospace*............ 10,600 310,050
Rayovac*......................... 9,300 179,025
Vishay Intertechnology*.......... 6,510 153,798
-----------
642,873
-----------
CONSUMER CYCLICALS -- 13.5%
AccuStaff*....................... 7,300 167,900
American Skiing*................. 13,400 199,325
Barnes & Noble*.................. 8,200 273,675
CapStar Hotel*................... 6,400 219,600
Harley-Davidson.................. 7,100 194,363
Interpublic Group of
Companies..................... 9,600 478,200
Jones Apparel Group*............. 9,600 412,800
Mattel........................... 7,812 290,997
Mirage Resorts*.................. 13,500 307,125
Snyder Communications*........... 5,700 208,050
-----------
2,752,035
-----------
CONSUMER STAPLES -- 14.4%
Bergen Brunswig (Class A)........ 3,200 134,800
Beringer Wine Estates
(Class B)*.................... 3,050 115,900
Cardinal Health.................. 2,800 210,350
Clorox........................... 3,200 253,000
Coca-Cola Enterprises............ 17,600 625,900
Dial............................. 14,000 291,375
Estee Lauder (Class A)........... 4,800 246,900
Fresh Del Monte Produce*......... 21,200 310,050
Kroger*.......................... 6,400 236,400
McKesson......................... 2,500 270,469
Newell........................... 5,500 233,750
-----------
2,928,894
-----------
DRUGS AND
HEALTH CARE -- 10.5%
Biogen*.......................... 3,900 142,106
Covance*......................... 20,700 411,412
Shares Value
---------- -----------
DRUGS AND
HEALTH CARE (continued)
Humana*.......................... 15,500 $ 321,625
KOS Pharmaceuticals*............. 7,600 117,088
Pfizer........................... 3,800 283,338
US Surgical...................... 10,600 310,712
Universal Health Services
(Class B)*.................... 11,200 564,200
-----------
2,150,481
-----------
ENERGY -- 5.1%
Barrett Resources*............... 8,000 242,000
Bayard Drilling Technologies*.... 7,700 125,125
EVI*............................. 1,600 82,800
Gulf Indonesia Resources*
(Indonesia)................... 3,200 70,400
Petroleum Geo-Services
(ADRs)* (Norway).............. 5,000 323,750
Transocean Offshore.............. 4,000 192,750
-----------
1,036,825
-----------
FINANCIAL SERVICES -- 19.2%
AFLAC............................ 3,800 194,275
Donaldson, Lufkin & Jenrette
Securities.................... 4,100 325,950
MBNA............................. 15,000 409,688
Nationwide Financial Services
(Class A)..................... 8,000 289,000
Old Republic International....... 5,500 204,531
Peoples Heritage Financial
Group......................... 4,700 217,081
Progressive (Ohio)............... 3,700 443,537
Provident Companies.............. 7,700 297,412
Schwab (Charles)................. 14,800 620,675
SouthTrust....................... 4,500 285,188
Travelers........................ 11,700 630,338
-----------
3,917,675
-----------
MEDIA AND
BROADCASTING -- 2.4%
CBS.............................. 16,390 482,481
-----------
PRINTING AND
PUBLISHING -- 1.0%
Petersen Companies (Class A)*.... 3,000 69,000
World Color Press*............... 5,100 135,469
-----------
204,469
-----------
- -------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO (continued)
Shares Value
---------- -----------
SAVINGS AND LOAN
COMPANIES -- 8.0%
GreenPoint Financial............. 6,400 $ 464,400
Ocwen Financial*................. 10,200 259,462
St. Paul Bancorp................. 8,587 224,872
TCF Financial.................... 8,300 281,681
Washington Mutual................ 6,400 408,200
-----------
1,638,615
-----------
TECHNOLOGY -- 14.3%
Activision*...................... 12,500 224,219
Adaptec*......................... 4,400 163,625
Arrow Electronics*............... 6,000 194,625
BMC Software*.................... 3,700 242,581
Ceridian*........................ 6,400 293,200
Fiserv*.......................... 7,900 389,075
Gartner Group (Class A)*......... 5,700 212,681
Linear Technology................ 3,400 195,713
Maxim Integrated Products*....... 9,800 338,713
Symantec*........................ 6,200 136,981
Synopsys*........................ 8,200 292,638
Xilinx*.......................... 6,500 227,500
-----------
2,911,551
-----------
Shares Value
---------- -----------
TELECOMMUNICATIONS -- 2.8%
Century Telephone
Enterprises................... 6,400 $ 318,800
QUALCOMM*........................ 4,900 247,603
-----------
566,403
-----------
Total Common Stocks
(Cost $15,992,637)............ 19,976,895
SHORT-TERM HOLDINGS -- 4.9%
(Cost $1,000,000)............. 1,000,000
-----------
Total Investments -- 102.8%
(Cost $16,992,637)............ 20,976,895
Other Assets Less
Liabilities -- (2.8)%......... (577,103)
-----------
Net Assets -- 100.0%............. $20,399,792
-----------
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN CASH MANAGEMENT PORTFOLIO
Annualized
Yield on Principal
Purchase Date Amount Value
------------- --------- -----
US GOVERNMENT
SECURITIES -- 58.6 %
US Treasury Bills,
1/8/1998.............. 5.21% $1,415,000 $ 1,413,609
US Treasury Bills,
1/29/1998............. 5.22 1,900,000 1,892,545
US Treasury Bills,
3/5/1998.............. 5.33 1,775,000 1,758,941
-----------
Total US Government
Securities
(Cost $5,065,095)..... 5,065,095
-----------
COMMERCIAL
PAPER -- 38.7%
American General Finance
Corp., 2/4/1998....... 5.70 510,000 507,332
Associates Corp. of North
America, 3/4/1998.... 5.85 460,000 455,492
Beneficial Corp.,
1/15/1998............. 5.78 510,000 508,881
Ford Motor Credit Corp.,
2/27/1998............. 5.86 460,000 455,849
General Electric Capital
Corp., 3/30/1998...... 5.72 450,000 443,884
John Deere Capital Corp.,
3/11/1998............. 5.81 465,000 459,964
Annualized
Yield on Principal
Purchase Date Amount Value
------------- --------- -----
COMMERCIAL PAPER (continued)
Norwest Financial,
2/10/1998............... 5.81% $510,000 $ 506,798
-----------
Total Commercial Paper
(Cost $3,338,200)....... 3,338,200
REPURCHASE
AGREEMENTS -- 5.8%
(Cost $500,000)
HSBC Securities, Inc. 5%,
dated 12/31/1997,
maturing 1/5/1998
collateralized by:
$475,000 US Treasury
Notes 6-7/8% 5/15/2006,
with a fair market value of
$512,474................ 500,000 500,000
-----------
Total Investments -- 103.1%
(Cost $8,903,295)....... 8,903,295
Other Assets Less
Liabilities -- (3.1)%.... (268,009)
-----------
Net Assets -- 100.0%........ $ 8,635,286
===========
- ------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 95.4%
AEROSPACE/DEFENSE -- 2.7%
General Dynamics................. 6,000 $ 518,625
United Technologies.............. 11,400 830,063
-----------
1,348,688
-----------
AUTOMOTIVE AND RELATED -- 4.2%
Chrysler......................... 13,600 478,550
Dana............................. 10,600 503,500
Eaton............................ 5,200 464,100
Harley-Davidson.................. 25,900 709,013
-----------
2,155,163
-----------
Shares Value
---------- -----------
BASIC MATERIALS -- 0.9%
Aluminum Company of
America....................... 6,500 $ 457,438
-----------
BUSINESS SERVICES AND
SUPPLIES -- 0.6%
Xerox............................ 4,200 310,013
-----------
CHEMICALS -- 1.9%
duPont (E.l.) de Nemours......... 8,000 480,500
Goodrich (B.F.).................. 11,300 468,244
-----------
948,744
-----------
- ---------------
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO (continued)
Shares Value
---------- -----------
COMPUTER GOODS AND
SERVICES -- 4.5%
Compaq Computer.................. 11,250 $ 634,922
Computer Associates
International................. 6,300 333,112
International Business
Machines...................... 4,700 491,444
Microsoft*....................... 6,300 814,078
-----------
2,273,556
-----------
CONSTRUCTION -- 1.0%
Sherwin-Williams................. 17,700 491,175
-----------
CONSUMER GOODS AND
SERVICES -- 11.4%
Anheuser-Busch................... 23,300 1,025,200
Coca-Cola........................ 13,700 912,762
PepsiCo.......................... 13,200 480,975
Philip Morris.................... 23,300 1,055,781
Procter & Gamble................. 12,600 1,005,638
RJR Nabisco Holdings............. 34,800 1,305,000
-----------
5,785,356
-----------
DRUGS AND HEALTH
CARE -- 10.4%
Abbott Laboratories.............. 6,500 426,156
American Home Products........... 4,700 359,550
Bristol-Myers Squibb............. 13,000 1,230,125
Johnson & Johnson................ 12,100 797,088
Merck............................ 8,300 881,875
Pfizer........................... 9,600 715,800
Schering-Plough.................. 13,800 857,325
-----------
5,267,919
-----------
ELECTRIC AND GAS
UTILITIES -- 3.4%
Unicom*.......................... 29,200 897,900
Williams Companies............... 29,800 845,575
-----------
1,743,475
-----------
ELECTRICAL
EQUIPMENT -- 0.8%
Thomas & Betts................... 9,100 429,975
-----------
Shares Value
---------- -----------
ELECTRONICS -- 6.0%
AMP.............................. 13,400 $ 562,800
Applied Materials*............... 18,700 562,753
Arrow Electronics*............... 16,600 538,463
KLA-Tencor*...................... 9,900 382,078
Motorola......................... 8,000 456,500
Raytheon......................... 11,000 555,500
-----------
3,058,094
-----------
ENERGY -- 9.7%
Atlantic Richfield............... 5,200 416,650
Baker Hughes..................... 7,300 318,462
Exxon............................ 16,100 985,119
Mobil............................ 13,500 974,531
Royal Dutch Petroleum
(Netherlands)................. 20,600 1,116,262
Schlumberger..................... 6,300 507,150
Texaco........................... 11,100 603,563
-----------
4,921,737
-----------
FINANCE AND
INSURANCE -- 13.1%
Ahmanson (H.F.).................. 8,400 562,275
American General................. 9,900 535,219
American International Group..... 7,500 815,625
BankAmerica...................... 5,100 372,300
Bank of New York................. 10,100 583,906
Citicorp......................... 3,142 397,267
Federal National Mortgage
Association................... 10,900 621,981
First Union...................... 10,600 543,250
General Re....................... 1,300 275,600
Mellon Bank...................... 5,400 327,375
St. Paul Companies............... 5,200 426,725
TIG Holdings .................... 22,400 743,400
Travelers........................ 7,900 425,612
-----------
6,630,535
-----------
FOOD -- 2.7%
ConAgra.......................... 21,000 689,062
Sara Lee......................... 11,900 670,119
-----------
1,359,181
-----------
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
Portfolios of Investments (continued)
SELIGMAN COMMON STOCK PORTFOLIO (continued)
Shares Value
---------- -----------
MACHINERY AND INDUSTRIAL
EQUIPMENT -- 6.7%
Deere............................ 8,500 $ 495,656
GATX............................. 5,200 377,325
General Electric................. 20,100 1,474,838
Harnischfeger Industries......... 11,400 402,563
Illinois Tool Works.............. 10,500 631,312
-----------
3,381,694
-----------
METALS AND MINING -- 0.8%
Allegheny Teledyne............... 15,400 398,475
-----------
PAPER AND PACKAGING -- 1.6%
Fort James....................... 7,300 279,225
Mead............................. 18,900 529,200
-----------
808,425
-----------
PUBLISHING -- 1.0%
Gannett.......................... 8,400 519,225
-----------
RETAIL TRADE -- 1.6%
Penney (J.C.).................... 8,000 482,500
Wal-Mart Stores.................. 8,500 335,218
-----------
817,718
-----------
TECHNOLOGY -- 2.1%
Hewlett-Packard.................. 5,200 325,000
Intel............................ 10,500 737,297
-----------
1,062,297
-----------
Shares Value
---------- -----------
TELECOMMUNICATIONS -- 1.9%
Sprint........................... 6,800 $ 398,650
WorldCom*........................ 18,900 572,316
-----------
970,966
-----------
TELEPHONE UTILITIES -- 4.1%
Ameritech........................ 10,500 845,250
Bell Atlantic.................... 6,500 591,500
SBC Communications............... 8,800 644,600
-----------
2,081,350
-----------
TRANSPORTATION -- 0.9%
Norfolk Southern................. 15,000 462,187
-----------
MISCELLANEOUS/
DIVERSIFIED -- 1.4%
AlliedSignal..................... 18,300 712,556
-----------
Total Common Stocks
(Cost $40,142,683)............ 48,395,942
Short-Term Holdings -- 3.9%
(Cost $2,000,000)............. 2,000,000
-----------
Total Investments -- 99.3%
(Cost $42,142,683)............ 50,395,942
Other Assets Less
Liabilities -- 0.7%........... 341,221
-----------
Net Assets -- 100.0%............. $50,737,163
-----------
-----------
- ------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 97.9%
COMMUNICATIONS
INFRASTRUCTURE -- 7.9%
Aspect Telecommunications*....... 31,900 $ 669,900
CIDCO*........................... 40,000 762,500
Cisco Systems*................... 34,950 1,950,647
ECI Telecommunications........... 45,200 1,155,425
Excel Switching*................. 50,000 896,875
Oak Industries*.................. 19,600 581,875
Tellabs*......................... 17,300 913,116
-----------
6,930,338
-----------
Shares Value
---------- -----------
COMPUTER HARDWARE/
PERIPHERALS -- 21.1%
Adaptec*......................... 35,600 $ 1,323,875
American Power Conversion*....... 39,400 933,287
Creative Technology*............. 81,700 1,792,294
Data General..................... 19,600 341,775
Electronics for Imaging*......... 88,400 1,466,888
EMC*............................. 147,200 4,038,800
Encad*........................... 14,400 399,600
Gateway 2000*.................... 22,000 717,750
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO (continued)
Shares Value
---------- -----------
COMPUTER HARDWARE/
PERIPHERALS (continued)
In Focus Systems*................ 16,900 $ 518,619
Lexmark International Group
(Class A)*.................... 62,300 2,367,400
Read-Rite*....................... 74,100 1,176,337
Storage Technology*.............. 49,000 3,034,938
Unisys*.......................... 30,800 427,350
-----------
18,538,913
-----------
COMPUTER SOFTWARE -- 15.2%
3DO*............................. 41,400 89,916
Activision*...................... 19,600 351,575
ANSYS*........................... 25,500 182,484
Cadence Design Systems*.......... 47,000 1,151,500
Compuware*....................... 30,700 983,359
Electronic Arts*................. 12,000 453,750
Gemstar International Group*..... 20,600 495,687
Microsoft*....................... 3,300 426,422
Network Associates*.............. 46,134 2,435,010
Parametric Technology*........... 50,000 2,365,625
Structural Dynamics
Research*..................... 63,700 1,441,213
Synopsys*........................ 62,037 2,213,945
Viasoft*......................... 18,300 774,319
-----------
13,364,805
-----------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS -- 3.5%
ADFlex Solutions*................ 17,300 282,206
Hadco*........................... 22,100 1,000,716
Jabil Circuit*................... 13,500 536,625
Sanmina*......................... 17,900 1,218,319
-----------
3,037,866
-----------
ELECTRONICS CAPITAL
EQUIPMENT -- 14.6%
Applied Materials*............... 38,400 1,155,600
ASM Lithography* (Netherlands)... 3,800 256,737
Asyst Technologies*.............. 11,700 257,400
Cognex*.......................... 45,100 1,231,794
Credence Systems*................ 42,800 1,265,275
Electro Scientific Industries*... 21,300 816,056
Etec Systems*.................... 34,600 1,606,737
Fusion Systems (Rights)*......... 20,000 15,000
KLA-Tencor*...................... 40,400 1,559,187
Kulicke & Soffa Industries*...... 47,900 895,131
Shares Value
---------- -----------
ELECTRONICS CAPITAL
EQUIPMENT (continued)
Novellus Systems*................ 53,000 $ 1,714,219
Teradyne*........................ 62,800 2,009,600
-----------
12,782,736
-----------
INFORMATION SERVICES -- 8.4%
BISYS Group*..................... 21,100 704,212
Computer Sciences*............... 19,200 1,603,200
First Data....................... 46,100 1,348,425
Galileo International............ 35,600 983,450
Gartner Group (Class A)*......... 47,100 1,757,419
Information Resources*........... 19,800 266,063
Tele-Communications*............. 23,500 666,078
-----------
7,328,847
-----------
MEDIA -- 11.1%
A.H. Belo (Class A).............. 15,400 864,325
CBS.............................. 108,200 3,185,137
Chancellor Media (Class A)*...... 33,300 2,486,053
CKS Group*....................... 10,000 141,250
Clear Channel
Communications*............... 13,700 1,088,294
Cox Radio (Class A)*............. 17,700 712,425
Time Warner...................... 9,600 595,200
Universal Outdoor Holdings*...... 11,900 620,288
-----------
9,692,972
-----------
SEMICONDUCTORS -- 14.1%
Altera*.......................... 9,700 321,616
Atmel*........................... 19,700 366,297
Dallas Semiconductor............. 22,100 900,575
International Rectifier*......... 33,900 400,444
Lattice Semiconductor*........... 43,200 2,052,000
Maxim Integrated Products*....... 61,600 2,129,050
Microchip Technology*............ 56,700 1,704,544
National Semiconductor*.......... 25,035 649,345
PMC-Sierra*...................... 19,500 608,156
Unitrode*........................ 30,800 662,200
Vishay Intertechnology*.......... 40,400 954,450
VLSI Technology*................. 50,000 1,181,250
Xilinx*.......................... 13,500 472,500
-----------
12,402,427
-----------
- -------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO (continued)
Shares or
Principal
Amount Value
---------- -----------
TELECOMMUNICATIONS -- 2.0%
L.M. Ericsson Telefon (Series B)
(ADRs) (Sweden)............... 5,900 shs. $ 220,327
General Communications*.......... 34,900 233,394
Lucent Technologies.............. 2,900 231,638
MCI Communications............... 9,600 411,000
Millicom International Cellular*
(Luxembourg).................. 5,600 209,300
Nokia (Class A) (ADRs)
(Finland)..................... 2,900 203,000
QUALCOMM*........................ 4,000 202,125
-----------
1,710,784
-----------
Total Common Stocks
(Cost $91,528,117)............ 85,789,688
-----------
SUBORDINATED CONVERTIBLE
BONDS -- 0.2%
(Cost $190,000)
COMPUTER SOFTWARE -- 0.2%
Activision 6-3/4%, 1/1/2005...... $190,000 202,350
-----------
Principal
Amount Value
---------- -----------
REPURCHASE
AGREEMENTS -- 7.8%
(Cost $6,800,000)
HSBC Securities, Inc., 5%,
dated 12/31/1997, maturing
1/5/1998 collateralized by:
$5,290,000 US Treasury
Notes 11-7/8% 11/15/2003,
with a fair market value
of $6,960,131................. $6,800,000 $ 6,800,000
-----------
Total Investments -- 105.9%
(Cost $98,518,117)............ 92,792,038
Other Assets Less
Liabilities -- (5.9)%......... (5,159,201)
-----------
Net Assets -- 100.0%............. $87,632,837
===========
- ------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 93.9%
ADVERTISING -- 1.4%
Acxiom........................... 1,900 $ 36,337
ADVO*............................ 14,700 286,650
HA-LO Industries*................ 11,200 291,200
-----------
614,187
-----------
AEROSPACE AND DEFENSE -- 0.8%
Avondale Industries*............. 11,300 336,175
-----------
BUSINESS GOODS AND
SERVICES -- 14.7%
AccuStaff*....................... 38,600 887,800
Affiliated Computer Services
(Class A)*.................... 11,400 299,962
American Management
Systems*...................... 6,000 116,625
American Pad & Paper*............ 7,100 68,338
Analysts International........... 7,500 260,625
Ceridian*........................ 24,900 1,140,731
Copart*.......................... 8,000 141,500
Corporate Express................ 47,600 614,337
Shares Value
---------- -----------
BUSINESS GOODS AND
SERVICES (continued)
DST Systems*..................... 11,800 $ 503,713
FirstService*.................... 7,100 53,250
JP Foodservice*.................. 17,100 631,631
Personnel Group of America*...... 10,100 333,300
Pierce Leahy*.................... 9,200 188,600
Pittston Brink's Group........... 10,400 418,600
PMT Services*.................... 28,100 392,522
SPR.............................. 10,000 168,125
Staff Leasing*................... 4,900 92,487
-----------
6,312,146
-----------
CAPITAL GOODS -- 3.2%
DONCASTERS (ADRs)*
(United Kingdom).............. 22,800 481,650
Fusion Systems (Rights)*......... 3,745 2,809
Oak Industries*.................. 17,230 511,516
UCAR International*.............. 9,500 379,406
-----------
1,375,381
-----------
CHEMICALS -- 0.5%
Polymer Group*................... 21,600 205,200
-----------
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO (continued)
Shares Value
---------- -----------
COMMUNICATIONS -- 2.5%
ANTEC*........................... 18,700 $ 294,525
Arch Communications Group*....... 6,165 31,981
CIDCO*........................... 11,480 218,838
Glenayre Technologies*........... 19,400 192,787
Omnipoint*....................... 15,100 352,019
-----------
1,090,150
-----------
COMPUTER SOFTWARE -- 4.5%
Avant!*.......................... 16,900 284,131
BISYS Group*..................... 13,600 453,900
IMNET Systems*................... 10,000 161,250
Inso*............................ 7,900 90,603
Primark*......................... 7,100 288,881
PSW Technologies*................ 17,700 253,331
Synopsys*........................ 11,300 403,269
-----------
1,935,365
-----------
CONSUMER GOODS AND
SERVICES -- 6.3%
American Homestar................ 44,137 728,261
Carriage Services (Class A)*..... 12,900 242,681
Coinmach Laundry*................ 45,000 1,108,125
Equity*.......................... 14,300 330,687
International Home Foods*........ 2,900 81,200
Zag Industries*.................. 23,500 205,625
-----------
2,696,579
-----------
DRUGS AND HEALTH
CARE -- 14.8%
American HomePatient*............ 21,200 492,900
AmeriSource Health (Class A)*.... 9,730 566,773
Castle Dental Centers*........... 55,000 419,375
Collaborative Clinical
Research*..................... 20,000 103,125
CompDent*........................ 16,500 337,219
First Commonwealth .............. 71,700 833,512
HealthCor Holdings*.............. 13,700 54,800
National Surgery Centers*........ 19,575 512,620
NCS Healthcare*.................. 12,900 340,238
Omnicare......................... 8,700 269,700
Orthalliance (Class A)*.......... 15,000 136,406
Quorum Health Group*............. 8,600 225,750
Renex*........................... 50,000 268,750
Scherer (R.P.)*.................. 12,600 768,600
Total Renal Care Holdings*....... 22,500 618,750
Watson Pharmaceuticals*.......... 12,600 408,712
-----------
6,357,230
-----------
Shares Value
---------- -----------
EDUCATIONAL
SERVICES -- 1.7%
Educational Medical*............. 25,000 $ 206,250
Edutrek International
(Class A)*.................... 20,200 527,725
-----------
733,975
-----------
ELECTRONICS -- 11.1%
Applied Micro Circuits*.......... 7,600 94,525
Black Box*....................... 10,800 383,400
Burr-Brown*...................... 16,500 531,094
Cognex*.......................... 24,560 670,795
Credence Systems*................ 24,500 724,281
General Semiconductors*.......... 28,000 323,750
Integrated Device
Technologies*................. 10,800 101,925
KEMET*........................... 31,600 610,275
Lattice Semiconductor*........... 5,670 269,325
PMC-Sierra*...................... 21,300 664,294
Vishay Intertechnology*.......... 16,040 378,945
-----------
4,752,609
-----------
ENVIRONMENTAL
MANAGEMENT -- 1.6%
Allied Waste Industries*......... 29,400 686,306
-----------
FARM EQUIPMENT -- 0.4%
RDO Equipment (Class A)*......... 9,000 164,813
-----------
FINANCIAL SERVICES -- 5.9%
American Capital Strategies*..... 10,600 190,138
CMAC Investment.................. 6,800 410,550
Commerce Bancorp................. 5,381 274,431
First Investors Financial
Services Group*............... 5,100 34,425
HCC Insurance Holdings........... 6,700 142,375
Imperial Credit*................. 13,800 285,488
Imperial Credit Commercial
Mortgage...................... 7,200 105,300
Insignia Financial Group*........ 19,700 453,100
Ocwen Financial*................. 10,400 264,550
PFF Bancorp*..................... 3,400 68,213
Roslyn Bancorp................... 8,900 207,203
Statewide Financial.............. 5,100 119,212
-----------
2,554,985
-----------
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO (continued)
Shares Value
---------- -----------
GAMING -- 1.9%
Anchor Gaming*................... 7,800 $ 434,850
GTECH Holdings*.................. 12,300 392,831
-----------
827,681
-----------
INDEPENDENT POWER
PRODUCERS -- 2.2%
CalEnergy*....................... 17,360 499,100
Calpine*......................... 31,100 462,612
-----------
961,712
-----------
INDUSTRIAL GOODS
AND SERVICES -- 1.4%
Chart Industries................. 4,300 98,094
Flanders*........................ 16,000 149,500
General Cable*................... 9,700 351,019
-----------
598,613
-----------
MEDIA AND BROADCASTING -- 4.3%
Chancellor Media (Class A)*...... 8,954 668,472
Hearst-Argyle Television
(Class A)*.................... 11,481 339,407
Jacor Communications*............ 13,350 710,053
Paxson Communications
(Class A)*.................... 20,300 149,713
-----------
1,867,645
-----------
MEDICAL PRODUCTS AND
TECHNOLOGY -- 5.1%
Dentsply International........... 16,170 499,754
Gulf South Medical Supply*....... 12,400 464,225
Physician Sales and Service*..... 14,300 311,025
Somnus Medical
Technologies*................. 20,000 253,125
Suburban Ostomy Supply*.......... 15,700 183,494
Thermoquest*..................... 10,100 183,063
Waters*.......................... 7,300 274,662
-----------
2,169,348
-----------
OIL AND GAS -- 2.6%
Cabot Oil & Gas.................. 3,300 64,144
Eagle Geophysical*............... 10,800 141,750
McDermott International.......... 5,600 205,100
Pogo Producing................... 11,410 336,595
Shares or
Principal
Amount Value
---------- -----------
OIL AND GAS (continued)
Pride International*............. 6,200 shs. $ 156,550
Santa Fe Energy Resources*....... 19,600 220,500
-----------
1,124,639
-----------
PUBLISHING -- 1.8%
CMP Media (Class A)*............. 4,100 70,725
Journal Register*................ 20,100 422,100
Petersen Companies
(Class A)*.................... 12,700 292,100
-----------
784,925
-----------
REAL ESTATE INVESTMENT
TRUST -- 1.3%
CCA Prison Realty Trust.......... 12,800 571,200
-----------
RETAIL TRADE -- 1.9%
Barnes & Noble*.................. 10,000 333,750
Borders Group*................... 8,500 266,156
Party City*...................... 6,400 205,200
-----------
805,106
-----------
THEATERS -- 0.2%
Regal Cinemas*................... 3,500 98,000
-----------
TRANSPORTATION -- 1.8%
OMI*............................. 24,300 223,256
US Xpress Enterprises*........... 10,300 226,600
Wisconsin Central Transport*..... 13,000 304,688
-----------
754,544
-----------
Total Common Stocks
(Cost $37,338,660)............ 40,378,514
REPURCHASE
AGREEMENTS -- 7.0%
(Cost $3,000,000)
HSBC Securities, Inc., 5%,
dated 12/31/1997, maturing
1/5/1998 collateralized by:
$2,334,000 US Treasury
Notes 11-7/8% 11/15/2003,
with a fair market value
of $3,070,878 $3,000,000 3,000,000
-----------
- -------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO (continued)
Value
-----------
Total Investments -- 100.9%
(Cost $40,338,660)........... $43,378,514
Other Assets
Less Liabilities -- (0.9)%.... (405,241)
Value
-----------
Net Assets -- 100.0%............. $42,973,273
===========
- ------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 93.8%
AUSTRALIA -- 0.4%
Pacifica Group
(Automotive and Related)...... 5,200 $ 17,230
Telstra* (Telecommunications).... 2,500 5,277
-----------
22,507
-----------
BRAZIL -- 2.8%
Companhia Energetica de
Minas Gerais "CEMIG"
(ADRs) (Electric and
Gas Utilities)................ 380 17,100
Petroleo Brasileiro "Petrobras"
(ADRs) (Resources)............ 2,430 56,829
Telecomunicacoes Brasileiras
"Telebras" (ADRs)
(Telecommunications).......... 680 79,178
-----------
153,107
-----------
CHINA -- 0.3%
Huaneng Power International
(ADRs)* (Electric and
Gas Utilities)................ 688 15,953
-----------
FINLAND -- 2.6%
Nokia (Telecommunications)....... 985 69,973
Outokumpu (Industrial
Goods and Services)........... 2,080 25,391
Raision Tehtaat (Consumer
Goods and Services)........... 400 47,506
-----------
142,870
-----------
FRANCE -- 4.9%
Accor (Entertainment and
Leisure)...................... 440 81,835
Cap Gemini (Computer and
Technology Related)........... 1,000 82,024
Genset* (Drugs and
Health Care).................. 1,600 31,700
Shares Value
---------- -----------
FRANCE (continued)
Valeo (Automotive and
Related)...................... 1,030 $ 69,882
-----------
265,441
-----------
GERMANY -- 3.8%
Adidas (Consumer Goods
and Services)................. 750 99,252
Lufthansa (Transportation)....... 2,970 55,818
Metro (Retailing)................ 1,416 50,233
-----------
205,303
-----------
HONG KONG -- 0.2%
Kwoon Chung Bus Holdings
(Transportation).............. 40,000 9,603
-----------
HUNGARY -- 3.3%
Magyar Tavkozlesi Rt.
"Matav" (ADRs)
(Telecommunications).......... 2,080 54,080
MOL Magyar Olaj-es Gazipari
(GDRs) (Resources)............ 5,200 126,880
-----------
180,960
-----------
INDIA -- 1.3%
State Bank of India (GDRs)+
(Financial Services).......... 1,400 25,375
Videsh Sanchar Nigam (GDRs)+
(Telecommunications).......... 3,350 46,481
-----------
71,856
-----------
INDONESIA -- 0.4%
Gulf Indonesia Resources*
(Resources)................... 1,000 22,000
-----------
IRELAND -- 1.4%
Elan (ADRs)*
(Drugs and Health Care)....... 1,525 78,061
-----------
- --------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued)
Shares Value
---------- -----------
ITALY -- 1.8%
Aeroporti di Roma
(Transportation).............. 4,850 $ 50,308
Mediolanum* (Financial
Services)..................... 2,400 45,177
-----------
95,485
-----------
JAPAN -- 7.5%
Asahi Diamond Industries
(Manufacturing and Industrial
Equipment).................... 60 262
Bellsystem 24 (Business Goods
and Services)................. 300 39,336
Daitec (Business Goods
and Services)................. 800 13,495
Diamond Computer Service
(Computer and Technology
Related)...................... 3,000 44,167
HIS (Entertainment
and Leisure).................. 1,100 19,147
Hogy Medical (Drugs and
Health Care).................. 900 27,328
Keyence (Electronics)............ 200 29,598
Kyocera (Electronics)............ 600 27,236
Meitec (Computer and Technology
Related)...................... 1,000 28,141
Nomura Securities (Financial
Services)..................... 4,000 53,368
Sanyo Shinpan Finance
(Financial Services).......... 740 32,740
Secom (Support Services)......... 1,000 63,950
Softbank (Computer and
Technology Related)........... 900 23,464
Tsutsumi Jewelry (Retailing)..... 500 6,134
-----------
408,366
-----------
MEXICO -- 2.3%
Desc (ADRs) (Diversified)........ 2,650 99,375
Grupo Iusacell (ADRs)*
(Telecommunications).......... 1,200 26,025
-----------
125,400
-----------
NETHERLANDS -- 6.4%
Elsevier (Publishing)............ 4,500 72,835
Gucci Group (Consumer Goods
and Services)................ 1,300 54,438
Heineken (Consumer Goods
and Services)................ 395 68,806
Shares Value
---------- -----------
NETHERLANDS (continued)
Koninklijke KNP BT (Business
Goods and Services)........... 2,090 $ 48,163
Koninklijke Van Ommeren
(Transportation).............. 1,010 33,891
Philips Electronics
(Electronics)................. 1,185 71,106
-----------
349,239
-----------
NORWAY -- 1.6%
Tomra Systems (Business
Goods and Services)........... 3,800 85,040
-----------
RUSSIA -- 0.5%
Tatneft (ADRs) (Resources)....... 200 28,422
-----------
SINGAPORE -- 0.9%
Advanced Systems Automation
(Manufacturing and Industrial
Equipment).................... 11,000 8,892
Datacraft Asia
(Telecommunications).......... 10,000 25,800
Electronic Resources
(Electronics)................. 13,000 13,212
-----------
47,904
-----------
SPAIN -- 4.0%
Actividades de Construccion y
Servicios (Construction and
Property)..................... 2,000 48,439
Aguas de Barcelona (Industrial
Goods and Services)........... 1,505 62,035
Tabacalera (Series A)
(Tobacco)..................... 1,300 105,379
-----------
215,853
-----------
SWEDEN -- 4.7%
Astra (Drugs and
Health Care).................. 3,935 68,195
Autoliv (ADRs) (Automotive and
Related)...................... 2,100 68,775
Kalmar Industries (Manufacturing
and Industrial Equipment)..... 2,300 37,106
L.M. Ericsson Telefon (Series B)
(Telecommunications).......... 2,200 82,769
-----------
256,845
-----------
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued)
Shares Value
---------- -----------
SWITZERLAND -- 2.6%
Helvetia Patria (Financial
Services)..................... 55 $ 47,025
Sairgroup (Transportation)....... 70 95,759
-----------
142,784
-----------
TAIWAN -- 0.4%
Hotung Investment Holdings*
(Financial Services).......... 56,000 10,500
Synnex Technology International
(GDRs)* (Computer and
Technology Related)........... 700 13,216
-----------
23,716
-----------
UNITED KINGDOM -- 11.8%
Airtours (Entertainment and
Leisure)...................... 2,000 40,796
Ashtead Group (Construction
and Property)................. 14,000 43,935
Bodycote International
(Industrial Goods and
Services)..................... 4,000 59,692
Bodycote International (Rights)*
(Industrial Goods and
Services)..................... 1,000 6,665
British Biotech (Drugs and
Health Care).................. 14,000 24,049
CMG* (Computer and
Technology Related)........... 1,100 27,707
CRT Group (Support Services)..... 6,500 38,113
Dixons Group (Retailing)......... 2,800 27,818
Granada Group (Entertainment
and Leisure).................. 4,500 69,644
Halma (Electronics).............. 20,000 38,485
Ladbroke Group (Entertainment
and Leisure).................. 13,000 56,686
Parity (Computer and
Technology Related)........... 5,625 59,090
Pizza Express (Restaurants)...... 4,000 49,551
Rolls Royce (Aerospace).......... 14,200 53,945
WPP Group (Business Goods
and Services)................. 10,500 46,739
-----------
642,915
-----------
UNITED STATES -- 27.9%
American International Group
(Financial Services).......... 650 70,688
AT&T (Telecommunications)........ 800 49,000
Shares Value
---------- -----------
UNITED STATES (continued)
Bristol-Myers Squibb (Drugs
and Health Care).............. 900 $ 85,163
Cardinal Health (Drugs
and Health Care).............. 900 67,613
Coca-Cola Enterprises
(Consumer Goods and
Services)..................... 1,700 60,456
Compaq Computer (Computer
and Technology Related)....... 1,100 62,081
Dayton Hudson (Retailing)........ 1,100 74,250
Disney, Walt (Entertainment
and Leisure).................. 700 69,344
Donaldson, Lufkin & Jenrette
Securities (Financial
Services)..................... 300 23,850
General Electric (Diversified)... 1,100 80,712
Hewlett-Packard (Computer and
Technology Related)........... 1,000 62,500
Intel (Computer and
Technology Related)........... 800 56,175
Interpublic Group of Companies
(Business Goods and
Services)..................... 1,550 77,209
MBNA (Financial Services)........ 3,475 94,911
Merck (Drugs and Health Care).... 800 85,000
Microsoft* (Computer and
Technology Related)........... 500 64,609
PepsiCo (Consumer Goods and
Services)..................... 2,000 72,875
Pfizer (Drugs and
Health Care).................. 1,800 134,213
Procter & Gamble (Consumer
Goods and Services)........... 1,000 79,812
Travelers (Financial Services)... 1,650 88,894
Xerox (Business Goods and
Services)..................... 800 59,050
-----------
1,518,405
-----------
Total Common Stocks
(Cost $4,853,342)............. 5,108,035
-----------
PREFERRED STOCKS -- 1.9%
(Cost $74,609)
GERMANY
Porsche (Non-Voting)*
(Automotive and Related)...... 62 104,112
-----------
- ---------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued)
Principal
Amount Value
---------- -----------
FIXED TIME DEPOSITS -- 5.5%
Canadian Imperial Bank of
Commerce, Grand Cayman
5.70%, dated 12/30/1997,
maturing 1/2/1998............. $150,000 $ 150,000
First National Bank of Chicago,
Grand Cayman 5-1/2%,
dated 12/30/1997,
maturing 1/2/1998............. 150,000 150,000
-----------
Value
-----------
Total Fixed Time Deposits
(Cost $300,000)............... $ 300,000
-----------
Total Investments -- 101.2%
(Cost $5,227,951)............. 5,512,147
Other Assets Less
Liabilities -- (1.2)%.......... (62,915)
-----------
Net Assets -- 100.0%.............. $ 5,449,232
===========
- ------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 94.3%
AUSTRALIA -- 0.8%
Australia National Industries
(Industrial Goods and
Services)..................... 23,000 $ 21,128
Bristile* (Construction and
Property)..................... 6,089 6,030
CSL (Medical Products and
Technology)................... 3,200 20,014
Futuris (Automotive Parts
Manufacturing)................ 20,273 22,189
HIH Winterthur International
Holdings (Financial
Services)..................... 12,000 25,721
Jupiters (Leisure and Hotels).... 11,900 21,708
Simsmetal (Metals)............... 4,000 23,196
Henry Walker Group
(Support Services)............ 14,000 16,874
-----------
156,860
-----------
AUSTRIA -- 1.1%
Bau Holdings (Construction and
Property)..................... 2,600 162,609
Bau Holdings (Voting Preference
Shares) (Construction and
Property)..................... 1,380 62,601
-----------
225,210
-----------
BELGIUM -- 0.7%
Telinfo (Telecommunications)..... 2,400 147,513
Telinfo (Rights)*
(Telecommunications).......... 400 11
-----------
147,524
-----------
Shares Value
---------- -----------
CHINA -- 0.1%
Qingling Motors (Automotive Parts
Manufacturing)................ 27,000 $ 13,243
-----------
DENMARK -- 2.4%
Danske Traelastkompagni
(Construction and
Property)..................... 2,043 181,934
Sydbank (Financial Services)..... 2,300 130,951
Thorkild Kristensen
(Construction and
Property)..................... 2,065 176,809
-----------
489,694
-----------
FINLAND -- 2.2%
Nokian Tyres* (Automotive Parts
Manufacturing)................ 1,365 43,347
Rauma (Capital Goods)............ 8,231 128,428
Tamro (Drugs and Health
Care)......................... 30,000 164,657
Valmet (Capital Goods)........... 8,915 123,062
-----------
459,494
-----------
FRANCE -- 4.1%
Assystem (Industrial Goods
and Services)................. 1,950 63,201
ECIA (Automotive Parts
Manufacturing)................ 910 183,014
L'Europeenne d'Extincteurs
(Manufacturing)............... 1,610 108,377
L'Europeenne d'Extincteurs
(Warrants)* (Manufacturing)... 247 1,355
IMS International Metal
Service (Metals).............. 8,280 104,592
- ---------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
---------- -----------
FRANCE (continued)
Montupet (Automotive Parts
Manufacturing)................ 950 $ 106,582
Sylea (Automotive Parts
Manufacturing)................ 1,807 172,696
Virbac (Veterinary Products)..... 1,360 111,666
-----------
851,483
-----------
GERMANY -- 1.4%
Hornbach Baumarkt
(Retailing)................... 1,530 43,812
Moebel Walther (Retailing)....... 3,400 93,392
Tarkett (Consumer Goods and
Services)..................... 6,300 141,872
-----------
279,076
-----------
HONG KONG -- 0.5%
Beijing Datang Power
Generation* (Electric
Utilities).................... 27,000 12,372
Esprit Holdings (Retailing)...... 32,000 10,429
Jardine International Motor
Holdings (Retailing).......... 34,000 18,432
Johnson Electric Holdings
(Electronics)................. 8,000 23,028
Li & Fung (Consumer Goods
and Services)................. 31,000 43,415
-----------
107,676
-----------
INDIA -- 0.4%
Gujurat Ambuja Cement (GDRs)
(Building Materials).......... 10,839 77,228
-----------
ITALY -- 0.5%
La Doria (Consumer Goods and
Services).................... 41,700 114,324
-----------
JAPAN -- 5.6%
Aiya (Restaurants)............... 2,000 15,489
Asahi Diamond Industries
(Manufacturing)............... 3,300 14,398
Asatsu (Advertising)............. 1,900 27,389
Benesse (Business Goods and
Services)..................... 1,000 24,077
Enplas (Electronics)............. 2,000 26,991
Forval (Telecommunications)...... 2,000 18,710
Fujicco (Consumer Goods and
Services)..................... 2,000 16,869
Fujitsu Business Systems
(Business Goods and
Services)..................... 2,000 32,205
Shares Value
---------- -----------
JAPAN (continued)
Glory Kogyo (Manufacturing)...... 3,000 $ 37,956
Higashi Nihon House
(Construction and
Property)..................... 4,000 18,249
HIS (Leisure and Hotels)......... 1,100 19,147
Hitachi Information Systems
(Computer Software)........... 2,000 19,936
Hitachi Medical (Medical
Products and Technology)...... 3,000 29,444
Hokkai Can (Manufacturing)....... 7,000 13,419
Hokushin (Manufacturing)......... 2,300 4,056
Horiba Instruments
(Electronics)................. 4,000 41,100
Iino Kaiun* (Transportation)..... 23,000 34,038
Japan Information Processing
Service (Computer
Software)..................... 3,200 22,329
Kentucky Fried Chicken
(Restaurants)................. 3,000 22,773
Kissei Pharmaceutical (Drugs and
Health Care).................. 2,000 28,831
Komatsu Seiren
(Manufacturing)............... 3,000 17,943
Maspro Denkoh
(Telecommunications).......... 3,000 19,438
Mitsubishi Cable Industries
(Manufacturing)............... 9,000 15,872
Mitsui Home (Construction and
Property)..................... 8,000 43,553
Nakayama Steel Works
(Metals)...................... 18,000 24,844
Namura Shipbuilding (Capital
Goods)........................ 8,000 18,096
Nichicon (Manufacturing)......... 3,000 27,834
Nippon Seiki (Automotive Parts
Manufacturing)............... 2,300 15,872
Nishio Rent All (Construction
and Property)................. 3,000 25,994
Nissha Printing (Paper and
Printing)..................... 3,000 18,081
Nisshin Fire & Marine Insurance
(Financial Services).......... 11,000 25,304
Nittetsu Mining (Energy)......... 4,000 16,256
Nova (Consumer Goods and
Services)..................... 3,000 9,201
Okinawa Electric Power
(Electric Utilities).......... 1,200 18,403
Rengo (Paper and Printing)....... 5,000 10,927
Ryoyo Electro (Electronics)...... 4,000 42,020
- ----------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
---------- -----------
JAPAN (continued)
Sagami Chain (Restaurants)....... 2,000 $ 14,185
Sanyo Special Steel (Metals)..... 25,000 28,754
Shohkoh Fund (Financial
Services)..................... 100 30,518
Sodick (Manufacturing)........... 5,000 14,339
Sundrug (Retailing).............. 1,400 15,029
Takasago (Chemicals)............. 7,000 28,501
TOEI (Media)..................... 5,000 18,211
Tokyo Style (Manufacturing)...... 2,000 18,096
Towa Pharmaceutical (Drugs
and Health Care).............. 2,000 13,112
Toyo Ink Manufacturing
(Chemicals)................... 7,000 12,345
Tsubaki Nakashima
(Manufacturing)............... 6,000 31,975
Tsudakoma (Manufacturing)........ 13,000 28,509
Tsutsumi Jewelry (Retailing)..... 3,000 36,806
Xebio (Retailing)................ 2,600 20,734
Yokohama Reito (Distributors).... 3,000 23,003
-----------
1,151,161
-----------
MALAYSIA -- 0.0%
Chemical Company of Malaysia
(Warrants)* (Chemicals)....... 1,250 217
-----------
NETHERLANDS -- 1.9%
Benckiser* (Consumer Goods
and Services)................. 2,700 111,784
Otra (Electronics)............... 9,140 130,797
Samas Groep (Manufacturing)...... 3,036 141,425
-----------
384,006
-----------
NEW ZEALAND -- 0.1%
Sky Network Television*
(Media)....................... 8,000 12,028
-----------
NORWAY -- 0.5%
Ekornes (Manufacturing).......... 13,800 113,237
-----------
SINGAPORE -- 0.4%
Bukit Sembawang Estates
(Construction and
Property)..................... 900 5,938
Dairy Farm International Holdings
(Retailing).................. 18,000 19,440
Excel Machine Tools*
(Manufacturing)............... 40,000 8,678
Shares Value
---------- -----------
SINGAPORE (continued)
Informatics Holdings (Business
Goods and Services)........... 41,000 $ 18,276
Venture Manufacturing
(Electronics)................. 3,500 9,777
Want Want Holdings (Class A)*
(Consumer Goods and
Services)..................... 8,200 11,316
Want Want Holdings* (Consumer
Goods and Services)........... 3,400 4,488
-----------
77,913
-----------
SWEDEN -- 3.0%
Angpanneforeningen (Class B)
(Business Goods and
Services)..................... 4,375 63,137
BT Industries (Capital Goods).... 4,740 94,990
Bure Investment Aktiebolaget
(Financial Services).......... 4,700 61,904
Finnveden (Series B)
(Manufacturing)............... 5,400 100,390
Kalmar Industries (Capital
Goods)........................ 4,563 73,614
Munksjo (Paper and Printing)..... 8,400 79,934
PLM (Manufacturing).............. 9,500 132,907
-----------
606,876
-----------
SWITZERLAND -- 3.2%
Fotolabo Club (Retailing)........ 185 41,125
Hero (Consumer Goods and
Services)..................... 150 84,644
Kardex (Industrial Goods and
Services)..................... 484 128,449
Prodega (Retailing).............. 229 101,030
Selecta Group* (Consumer
Goods and Services).......... 850 113,953
SIG Schweizerische Industrie-
Gesellschaft* (Manufacturing). 90 122,811
Tag Heuer (ADRs)* (Retailing).... 730 63,413
-----------
655,425
-----------
TAIWAN -- 0.2%
Taiwan American Fund*
(Miscellaneous)............... 2,000 31,420
-----------
THAILAND -- 0.1%
Hana Microelectronics
(Electronics)................. 12,000 28,479
-----------
- ---------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
---------- -----------
UNITED KINGDOM -- 19.1%
Abacus Polar (Electrical
Distribution)................. 22,500 $ 54,816
AEA Technology (Industrial
Goods and Services)........... 6,500 57,760
Allied Leisure (Leisure and
Hotels)....................... 97,500 45,091
Ashtead Group (Construction
and Property)................. 101,600 318,844
British Polythene Industries
(Manufacturing)............... 5,500 39,517
BTG (Technology)................. 5,000 56,158
Capital Radio (Media)............ 20,500 168,283
Chiroscience Group (Drugs and
Health Care).................. 4,250 15,514
CMG* (Computer Software)......... 9,000 226,696
Cobham (Manufacturing)........... 8,950 123,657
CRT Group (Support Services)..... 30,000 175,906
David Brown Group
(Manufacturing)............... 35,657 128,096
Dawson Group
(Transportation).............. 26,600 92,264
Domnick Hunter Group
(Manufacturing)............... 20,000 108,847
Druck Holdings (Industrial Goods
and Services)................. 11,500 45,587
Electronics Boutique*
(Retailing)................... 129,800 101,836
F.I. Group (Computer
Software)..................... 11,720 180,513
F.I. Group (Rights)* (Computer
Software)..................... 976 15,032
Fairey Group (Electronics)....... 15,200 129,546
Games Workshop Group
(Retailing)................... 9,400 90,438
GWR Group (Media)................ 24,000 66,795
IBC Group (Business Goods
and Services)................. 27,800 181,144
ISA International (Business
Goods and Services)........... 33,400 46,064
National Express Group
(Transportation).............. 14,000 158,514
Parity (Computer Software)....... 25,312 265,898
Peptide Therapeutics (Drugs
and Health Care).............. 2,750 12,105
Pizza Express (Restaurants)...... 19,500 241,561
Polypipe (Building Materials).... 70,500 204,361
Shares Value
---------- -----------
UNITED KINGDOM (continued)
Save Group (Retailing)........... 8,600 $ 12,855
Shire Pharmaceuticals* (Drugs
and Health Care).............. 5,500 26,027
Stoves (Manufacturing)........... 10,000 41,458
Tilbury Douglas (Construction
and Property)................. 50,500 162,651
Trifast (Electrical Distribution) 8,000 72,146
Trinity International Holdings
(Media)....................... 26,100 208,649
Vanguard Medica Group (Drugs
and Health Care).............. 3,500 24,482
Vanguard Medica Group
(Warrants)* (Drugs and
Health Care).................. 500 376
Wellington Holdings
(Manufacturing)............... 9,500 24,714
-----------
3,924,201
-----------
UNITED STATES -- 46.0%
AccuStaff* (Business Goods
and Services)................. 8,600 197,800
Acuson* (Medical Products and
Technology)................... 3,000 49,687
Acxiom* (Computer Software)...... 2,200 42,075
ADVO* (Business Goods
and Services)................. 3,200 62,400
Affiliated Computer Services
(Class A)* (Business Goods
and Services)................. 2,200 57,888
Allied Waste Industries (Industrial
Goods and Services)........... 6,800 158,737
American Capital Strategies*
(Financial Services).......... 2,200 39,463
American HomePatient* (Drugs
and Health Care)............. 2,800 65,100
American Homestar*
(Manufacturing)............... 9,000 148,500
American Management
Systems* (Business Goods
and Services)................. 1,000 19,437
AmeriSource Health (Class A)*
(Drugs and Health Care)....... 2,200 128,150
Analysts International (Business
Goods and Services)........... 1,500 52,125
Anchor Gaming* (Leisure and
Hotels)....................... 1,600 89,200
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
---------- -----------
UNITED STATES (continued)
ANTEC*
(Telecommunications).......... 3,900 $ 61,425
Applied Micro Circuits*
(Electronics)................. 1,700 21,144
Arch Communications Group*
(Telecommunications).......... 6,000 31,125
Asyst Technologies*
(Technology).................. 5,800 127,600
Avant!* (Computer Software)...... 3,800 63,887
BA Merchant Services (Class A)*
(Business Goods and
Services)..................... 5,100 90,525
Bacou USA* (Industrial Goods
and Services)................. 3,100 53,669
Berg Electronics* (Electronics).. 11,000 250,250
BISYS Group* (Business Goods
and Services)................. 2,900 96,787
Black Box* (Electronics)......... 3,000 106,500
Budget Group* (Consumer Goods
and Services)................. 4,100 141,706
Burr-Brown* (Technology)......... 3,700 119,094
Cabot Oil & Gas (Energy)......... 700 13,606
CalEnergy* (Independent
Power Producers).............. 3,900 112,125
Calpine* (Independent
Power Producers).............. 9,600 142,800
Canandaigua Brands (Class A)*
(Consumer Goods and
Services)..................... 2,915 161,782
Carriage Services* (Consumer
Goods and Services)........... 2,700 50,794
Castle Dental Centers* (Drugs
and Health Care).............. 6,000 45,750
CCA Prison Realty Trust
(Construction and Property)... 2,800 124,950
Celadon Group*
(Transportation).............. 6,000 79,500
Ceridian* (Business Goods
and Services)................. 5,500 251,969
Chart Industries (Industrial
Goods and Services)........... 1,000 22,812
CMP Media (Class A)*
(Media)....................... 900 15,525
Cognex* (Electronics)............ 5,400 147,488
Coinmach Laundry* (Consumer
Goods and Services)........... 4,600 113,275
Collaborative Clinical Research*
(Drugs and Health Care)....... 2,900 14,953
Shares Value
---------- -----------
UNITED STATES (continued)
Compdent* (Drugs and
Health Care).................. 6,000 $ 122,625
Corporate Express* (Business
Goods and Services)........... 10,500 135,516
Cox Radio (Class A)* (Media)..... 6,500 261,625
Credence Systems*
(Technology).................. 5,425 160,377
Dominick's Supermarkets*
(Retailing)................... 2,300 83,950
Eagle Geophysical* (Energy)...... 1,800 23,625
Edutrek International (Class A)*
(Miscellaneous)............... 100 2,613
Equity International* (Consumer
Goods and Services)........... 3,000 69,375
FactSet Research Systems*
(Business Goods
and Services)................. 5,900 181,425
FirstService* (Business Goods
and Services)................. 1,600 12,000
Flanders* (Industrial Goods
and Services)................. 4,200 39,244
Fusion Systems (Rights)* (Capital
Goods)........................ 800 600
General Cable* (Industrial Goods
and Services)................ 1,000 36,188
General Semiconductor*
(Technology).................. 6,200 71,688
Glenayre Technologies*
(Telecommunications).......... 4,000 39,750
GTECH Holdings* (Leisure and
Hotels)....................... 3,700 118,169
Gulf South Medical Supply*
(Medical Products and
Technology)................... 2,600 97,338
HA-LO Industries*
(Advertising)................. 2,300 59,800
HCC Insurance Holdings
(Financial Services).......... 1,500 31,875
Hearst-Argyle Television
(Class A)* (Media)............ 900 26,606
Imnet Systems* (Computer
Software)..................... 2,200 35,475
Imperial Credit* (Financial
Services)..................... 3,000 62,063
Imperial Credit Commercial
Mortgage (Financial
Services)..................... 1,600 23,400
- ----------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
---------- -----------
UNITED STATES (continued)
Insignia Financial* (Financial
Services)..................... 4,400 $ 101,200
Inso* (Computer Software)........ 1,600 18,350
Integrated Device Technology*
(Technology).................. 2,300 21,706
International Home Foods*
(Consumer Goods and
Services)..................... 600 16,800
Jacor Communications*
(Media)....................... 2,900 154,244
Journal Register* (Media)........ 4,500 94,500
JP Foodservice* (Business
Goods and Services)........... 4,000 147,750
KEMET* (Electronics)............. 7,000 135,188
Kendle International* (Drugs and
Health Care).................. 5,000 82,500
Lattice Semiconductor*
(Technology).................. 1,200 57,000
MAPICS (Computer Software)....... 5,000 54,375
Marcam Solutions* (Computer
Software)..................... 2,500 17,969
McDermott International
(Energy)...................... 1,200 43,950
Medallion Financial
(Financial Services).......... 6,000 130,500
MMI (Financial Services)......... 2,926 73,516
Mutual Risk Management
(Financial Services).......... 3,332 99,752
NCS HealthCare (Class A)*
(Drugs and Health Care)....... 6,100 160,887
Oak Industries*
(Capital Goods)............... 900 26,719
Ocwen Financial* (Financial
Services)..................... 2,200 55,962
OM Group (Chemicals)............. 3,000 109,875
Omnicare (Drugs and Health
Care)......................... 1,800 55,800
Personnel Group of America*
(Business Goods
and Services)................. 2,200 72,600
Petersen Companies
(Class A)* (Media)............ 2,700 62,100
Physician Sales & Services*
(Medical Products
and Technology)............... 3,200 69,600
Pierce Leahy* (Business Goods
and Services)................. 1,800 36,900
PMC-Sierra* (Technology)......... 4,800 149,700
Shares Value
---------- -----------
UNITED STATES (continued)
PMT Services* (Business Goods
and Services)................. 6,200 $ 86,606
Polymer Group*
(Chemicals)................... 2,000 19,000
Pride International* (Energy).... 1,400 35,350
PSW Technologies* (Business
Goods and Services)........... 2,900 41,506
Quorum Health Group* (Drugs
and Health Care).............. 1,900 49,875
RDO Equipment (Class A)*
(Retailing)................... 4,800 87,900
Regal Cinemas* (Leisure and
Hotels)....................... 700 19,600
Renex* (Drugs and
Health Care).................. 5,000 26,875
Roslyn Bancorp (Financial
Services)..................... 2,000 46,563
Santa Fe Energy Resources*
(Energy)...................... 4,900 55,125
Scherer (R.P.)* (Drugs and
Health Care).................. 600 36,600
Simon Transportation Services*
(Transportation).............. 4,600 109,250
SITEL* (Business Goods
and Services)................. 4,000 36,500
Somnus Medical Technologies*
(Medical Products and
Technology)................... 5,000 63,281
Source Services* (Business
Goods and Services)........... 5,700 122,194
Staff Leasing* (Business Goods
and Services)................. 1,100 20,762
Steinway Musical Instruments*
(Consumer Goods and
Services)..................... 2,900 67,062
Synopsys* (Computer
Software)..................... 2,400 85,650
Total Renal Care Holdings*
(Drugs and Health Care)....... 6,833 187,907
Universal Outdoor Holdings*
(Advertising)................. 6,000 312,750
Valley National Gases*
(Chemicals)................... 6,100 66,528
Vishay Intertechnology*
(Electronics)................. 3,400 80,325
Waters* (Medical Products and
Technology)................... 1,600 60,200
Watson Pharmaceuticals* (Drugs
and Health Care).............. 2,400 77,850
- ---------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
Shares Value
---------- -----------
UNITED STATES (continued)
Wisconsin Central Transportation*
(Transportation).............. 2,600 $ 60,937
Youth Services* (Support
Services)..................... 8,900 136,559
Zag Industries* (Consumer
Goods and Services)........... 14,200 124,250
-----------
9,433,378
-----------
Total Common Stocks
(Cost $18,902,276)............ 19,340,153
-----------
PREFERRED STOCKS -- 0.6%
(Cost $148,363)
GERMANY
Gerry Weber International*
(Manufacturing)............... 4,993 116,604
-----------
Principal
Amount Value
---------- -----------
SUBORDINATED
CONVERTIBLE BONDS -- 0.1%
(Cost $19,151)
FRANCE
L'Europeenne d'Extincteurs 4-1/4%,
1/1/2005 (Manufacturing)...... $24,700 $ 19,275
-----------
SHORT-TERM HOLDINGS -- 4.4%
(Cost $900,000).............. 900,000
-----------
Total Investments -- 99.4%
(Cost $19,969,790)............ 20,376,032
Other Assets Less
Liabilities -- 0.6%............ 128,558
-----------
Net Assets -- 100.0%.............. $20,504,590
===========
- ------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 86.4%
FINLAND -- 0.3%
Nokia (Telecommunications)....... 175 $ 12,432
-----------
FRANCE -- 3.3%
Alcatel Alsthom
(Telecommunications).......... 300 38,145
Cap Gemini* (Computer
Software)..................... 340 27,888
Rhone-Poulenc
(Medical Products and
Technology)................... 1,200 53,772
-----------
119,805
-----------
GERMANY -- 1.6%
LHS Group* (Computer
Software)..................... 1,000 59,495
-----------
HONG KONG -- 1.0%
Elec & Eltek International
Holdings (Electronics)........ 150,000 37,174
-----------
HUNGARY -- 1.1%
Richter Gedeon (GDRs)
(Medical Products and
Technology)................... 350 40,688
-----------
Shares Value
---------- -----------
INDIA -- 0.4%
Videsh Sanchar Nigam
(GDRs)+
(Telecommunications).......... 1,000 $ 13,875
-----------
ISRAEL -- 1.2%
ECI Telecommunications
(Networking/Communications
Infrastructure)............... 1,700 43,456
-----------
ITALY -- 1.1%
Telecom Italia
(Telecommunications).......... 6,500 41,520
-----------
JAPAN -- 3.6%
Canon (Computer Hardware/
Peripherals).................. 1,000 23,310
CSK (Computer and Business
Services)..................... 1,000 25,611
Hirose Electronics (Electronics). 400 20,457
Secom (Computer and Business
Services)..................... 1,000 63,950
-----------
133,328
-----------
LUXEMBOURG -- 0.5%
Millicom International Cellular*
(Telecommunications).......... 500 18,688
-----------
- ---------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued)
Shares Value
---------- -----------
NETHERLANDS -- 3.3%
ASM Lithography Holding*
(Electronics Capital
Equipment).................... 800 $ 54,050
Philips Electronics
(Electronics)................. 1,150 69,006
-----------
123,056
-----------
SINGAPORE -- 1.8%
Amtek Engineering (Electronics
Capital Equipment)............ 11,000 6,668
Informatics Holdings
(Computer Software)........... 70,000 31,204
Venture Manufacturing
(Electronics)................. 10,000 27,935
-----------
65,807
-----------
SOUTH KOREA -- 0.1%
SK Telecommunications (ADRs)
(Telecommunications).......... 438 2,847
-----------
SWEDEN -- 2.5%
L.M. Ericsson Telefon (Series B)
(Networking/Communications
Infrastructure)............... 500 18,811
Information Highway* (Computer
and Business Services)........ 2,000 40,963
Pharmacia & Upjohn (Medical
Products and Technology)...... 920 33,859
-----------
93,633
-----------
TAIWAN -- 1.5%
Siliconware Precision Industries
(GDRs)* (Electronics Capital
Equipment).................... 2,150 27,520
Taiwan Semiconductor
Manufacturing (ADRs)*
(Semiconductors).............. 1,500 27,281
-----------
54,801
-----------
UNITED KINGDOM -- 16.4%
Abacus Polar (Distributors)...... 8,500 20,708
Admiral (Computer and Business
Services)..................... 7,000 83,072
Astec (Computer Hardware/
Peripherals).................. 12,600 22,164
BTG (Computer and Business
Services)..................... 3,600 40,434
Shares Value
---------- -----------
UNITED KINGDOM (continued)
Celltech* (Medical Products and
Technology)................... 5,000 $ 24,569
CMG* (Computer Software)......... 3,000 75,565
CRT Group (Computer and
Business Services)............ 8,700 51,013
Logica (Computer and
Business Services)........... 2,988 57,126
Misys (Computer Software)........ 1,600 48,362
M.M.T. Computing (Computer
and Business Services)........ 6,000 83,196
Premier Farnell (Distributors)... 3,500 25,465
Dr. Solomon's Group (ADRs)*
(Computer Software)........... 1,650 52,800
VERO Group (Electronics)......... 12,500 18,582
-----------
603,056
-----------
UNITED STATES -- 46.7%
3DO* (Computer Software)......... 2,400 5,212
Activision*
(Computer Software)........... 800 14,350
Adaptec* (Electronics)........... 700 26,031
ADFlex Solutions*
(Electronics)................. 600 9,788
American Power Conversion*
(Computer Hardware/
Peripherals).................. 1,300 30,794
AMF Bowling*
(Miscellaneous)............... 9,000 225,000
Applied Materials* (Electronics
Capital Equipment)............ 800 24,075
Aspect Telecommunications*
(Networking/Communications
Infrastructure)............... 600 12,600
Cadence Design System*
(Computer Software)........... 1,200 29,400
CIDCO* (Networking/
Communications
Infrastructure)............... 400 7,625
Cisco Systems* (Networking/
Communications
Infrastructure)............... 750 41,859
CMP Media (Class A)* (Media)..... 3,400 58,650
Cognex* (Electronics)............ 1,100 30,044
Creative Technology* (Computer
Hardware/Peripherals)......... 2,500 54,844
Credence Systems* (Electronics
Capital Equipment)............ 1,100 32,519
- --------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued)
Shares Value
---------- -----------
UNITED STATES (continued)
Electro Scientific Industries*
(Electronics Capital
Equipment).................... 600 $ 22,988
Electronics for Imaging*
(Electronics)................. 1,300 21,572
EMC* (Computer Hardware/
Peripherals).................. 2,400 65,850
Etec Systems* (Electronics
Capital Equipment)............ 650 30,184
Flextronics International*
(Electronics)................. 600 20,550
Gartner Group (Class A)*
(Computer and Business
Services)..................... 1,000 37,313
GaSonics International*
(Electronics)................. 700 6,934
Gemstar International*
(Telecommunications).......... 500 12,031
GenRad* (Electronics)............ 300 9,056
Hadco* (Electronics)............. 300 13,584
In Focus Systems* (Computer
Hardware/Peripherals)......... 950 29,153
International Rectifier*
(Semiconductors).............. 1,000 11,813
KLA-Tencor* (Electronics Capital
Equipment).................... 900 34,734
Kulicke & Soffa Industries*
(Electronics)................. 2,200 41,113
Lattice Semiconductor*
(Semiconductors).............. 700 33,250
Lexmark International Group
(Class A)* (Computer
Hardware/Peripherals)......... 1,500 57,000
Maxim Integrated Products*
(Semiconductors).............. 1,600 55,300
Microchip Technology*
(Semiconductors).............. 1,200 36,075
MMC Networks* (Networking/
Communications
Infrastructure)............... 6,000 100,313
Network Appliances*
(Networking/Communications
Infrastructure)............... 600 21,075
Networks Associates* (Computer
Software)..................... 666 35,152
Novellus Systems* (Electronics
Capital Equipment)............ 1,300 42,047
Shares or
Principal
Amount Value
---------- ----------
UNITED STATES (continued)
Parametric Technology*
(Computer Software)........... 1,300 shs. $ 61,506
PMC-Sierra*
(Semiconductors).............. 1,000 31,188
Read-Rite* (Computer Hardware/
Peripherals).................. 1,900 30,162
Storage Technology* (Computer
Hardware/Peripherals)......... 1,100 68,131
Structural Dynamics Research*
(Computer Software)........... 2,100 47,513
Synopsys* (Computer
Software)..................... 1,847 65,941
Teradyne* (Electronics Capital
Equipment).................... 1,300 41,600
Veeco Instruments (Electronics
Capital Equipment)............ 600 13,237
Vestcom International (Computer
and Business Services)........ 1,000 22,000
-----------
1,721,156
-----------
Total Common Stocks
(Cost $3,241,519)............ 3,184,817
-----------
FIXED TIME DEPOSITS -- 10.8%
Canadian Imperial Bank of
Commerce, Grand Cayman
5.70%, dated 12/30/1997,
maturing 1/2/1998............. $140,000 140,000
First National Bank of Chicago,
Grand Cayman 5-1/2%,
dated 12/30/1997, maturing
1/2/1998...................... 140,000 140,000
National Westminster, Nassau
5-1/4%, dated 12/30/1997,
maturing 1/2/1998............. 120,000 120,000
-----------
Total Fixed Time Deposits
(Cost $400,000)............... 400,000
-----------
Total Investments -- 97.2%
(Cost $3,641,519)............. 3,584,817
Other Assets Less
Liabilities -- 2.8%............ 101,411
-----------
Net Assets -- 100.0%.............. $ 3,686,228
===========
- -----------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
Shares Value
---------- -----------
COMMON STOCKS -- 94.3%
AUSTRALIA -- 0.9%
Australia and New Zealand
Banking Group (Banking)....... 750 $ 4,954
Australian Gas Light
(Resources)................... 1,800 12,548
Brambles Industries (Industrial
Goods and Services)........... 370 7,340
ICI Australia (Manufacturing).... 1,000 7,004
Lend Lease (Construction and
Property)..................... 510 9,968
Santos (Resources)............... 1,050 4,323
Telstra* (Telecommunications).... 2,400 5,067
Westpac Banking (Banking)........ 2,000 12,790
Woodside Petroleum
(Resources)................... 1,300 9,164
Woolworth (Retailing)............ 2,000 6,684
-----------
79,842
-----------
BELGIUM -- 1.4%
Credit Communal Holding/Dexia*
(Financial Services).......... 990 132,774
-----------
BRAZIL -- 3.5%
Companhia Energetica de Minas
Gerais "CEMIG" (ADRs)
(Utilities)................... 2,000 90,000
Petroleo Brasileiro "Petrobras"
(Resources)................... 4,625 108,163
Telecomunicacoes Brasileiras
"Telebras" (ADRs)
(Telecommunications).......... 1,050 122,259
-----------
320,422
-----------
CROATIA -- 0.3%
Pliva (GDRs) (Health and
Household).................... 1,850 30,664
-----------
CZECH REPUBLIC -- 0.2%
SPT Telecom*
(Telecommunications).......... 200 21,400
-----------
DENMARK -- 0.9%
Novo Nordisk (Class B) (Health
and Household)................ 546 78,115
-----------
Shares Value
---------- -----------
FRANCE -- 10.5%
Accor (Leisure and Hotels)....... 690 $ 128,332
AXA-UAP (Insurance).............. 1,739 134,605
Banque Nationale de Paris
(Banking)..................... 2,209 117,453
Carrefour Supermarche
(Retailing)................... 166 86,635
Cie Generale des Eaux
(Industrial Goods and
Services)..................... 929 129,703
ELF Aquitaine (Resources)........ 1,145 133,217
France Telecom*
(Telecommunications).......... 1,544 56,022
Lafarge (Construction and
Property)..................... 1,435 94,188
Usinor Sacilor (Metals).......... 5,884 84,986
-----------
965,141
-----------
GERMANY -- 8.2%
Adidas (Retailing)............... 667 88,268
Bayer (Chemicals)................ 2,765 102,624
Bayerische Vereinsbank*
(Banking)..................... 1,842 118,809
Lufthansa (Transportation)....... 5,665 106,468
Mannesmann (Industrial Goods
and Services)................. 288 144,605
SKW Trostberg
(Chemicals)................... 2,556 81,152
Thyssen (Metals)................. 525 112,096
-----------
754,022
-----------
HONG KONG -- 0.6%
Cheung Kong (Construction and
Property)..................... 1,000 6,551
CITIC Pacific (Miscellaneous).... 1,000 3,976
Hutchison Whampoa (Industrial
Goods and Services)........... 1,000 6,273
New World Development
(Construction and
Property)..................... 1,000 3,459
New World Infrastructure
(Construction and
Property)..................... 3,000 6,757
Sun Hung Kai Properties
(Construction and
Property)..................... 200 1,394
- -------------
* Non-income producing security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO (continued)
Shares Value
---------- -----------
HONG KONG (continued)
Swire Pacific (Construction and
Property)..................... 1,500 $ 8,229
Television Broadcasts (Media).... 3,000 8,558
Wharf Holdings (Construction
and Property)................. 3,000 6,583
-----------
51,780
-----------
HUNGARY -- 4.3%
Magyar Tavkozlesi Rt. "Matav"
(ADRs)*
(Telecommunications).......... 6,840 177,840
MOL Magyar Olaj-es Gazipari
(GDRs)* (Resources)........... 6,400 156,160
MOL Magyar Olaj-es Gazipari
(GDRs)*+ (Resources).......... 2,600 63,440
-----------
397,440
-----------
INDIA -- 1.2%
Gujurat Ambuja Cement (GDRs)
(Manufacturing)............... 7,060 50,303
Videsh Sanchar Nigam (GDRs)+
(Telecommunications).......... 4,450 61,744
-----------
112,047
-----------
ITALY -- 3.7%
ENI (Resources).................. 18,834 106,783
Istituto Nazionale delle
Assicurazioni (Insurance)..... 3,693 90,705
Telecom Italia
(Telecommunications).......... 32,408 142,892
-----------
340,380
-----------
JAPAN -- 9.6%
Aoyama Trading (Retailing)....... 700 12,506
Autobacs Seven (Retailing)....... 700 20,128
Bank of Tokyo Mitsubishi
(Financial Services).......... 3,000 41,406
Banyu Pharmaceutical (Health
and Household)................ 1,000 11,042
Benesse (Business Services)...... 500 12,038
CSK (Business Services).......... 1,700 43,538
Dai Nippon Printing (Industrial
Goods and Services)........... 2,000 37,572
Denny's (Restaurants)............ 1,000 22,083
East Japan Railway
(Transportation).............. 7 31,614
Fujitsu Business Systems
(Business Services)........... 600 9,661
Shares Value
---------- -----------
JAPAN (continued)
Hokkai Can (Manufacturing)....... 4,000 $ 7,668
Ishikawajima-Harima (Industrial
Goods and Services)........... 18,000 26,914
Japan Airport Terminal
(Transportation).............. 2,000 12,575
Japan Tobacco (Tobacco).......... 4 28,402
KAO (Consumer Products).......... 2,000 28,831
Kirin Brewery (Consumer
Products)..................... 4,000 29,138
Mitsubishi Materials (Metals).... 10,000 16,102
Mitsui Chemicals (Chemicals)..... 13,000 23,924
Mitsui Marine & Fire
(Insurance)................... 6,000 30,641
Mitsui O.S.K. Lines
(Transportation).............. 19,000 26,370
Nippon Telegraph & Telephone
(Telecommunications).......... 4 34,352
Nitto Denko (Industrial Goods
and Services)................. 2,000 34,505
Nomura Securities (Financial
Services)..................... 4,000 53,368
Pioneer Electronic+
(Electronics)................. 3,000 46,237
Sumitomo Bank (Banking).......... 4,000 45,700
Sumitomo Realty & Development
(Construction and
Property)..................... 7,000 40,256
Sumitomo Trust and Banking
(Banking)..................... 5,000 25,994
Toho (Media)..................... 200 21,317
Toshiba (Electronics)............ 11,000 45,800
Tsubaki Nakashima
(Manufacturing)............... 2,500 13,323
Yamaha (Manufacturing)........... 3,000 34,045
York-Benimaru (Retailing)........ 1,000 12,038
-----------
879,088
-----------
MEXICO -- 2.9%
Desc (ADRs) (Manufacturing)...... 5,423 203,363
Grupo Iusacell (ADRs)*
(Telecommunications).......... 2,700 58,556
-----------
261,919
-----------
NETHERLANDS -- 6.2%
Akzo Nobel (Chemicals)........... 792 136,631
Benckiser (Series B) (Health and
Household).................... 3,195 132,278
Elsevier (Media)................. 4,662 75,457
- ---------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO (continued)
Shares Value
---------- -----------
NETHERLANDS (continued)
ING Groep (Insurance)............ 2,972 $ 125,245
Philips Electronics
(Electronics)................. 1,667 100,028
-----------
569,639
-----------
PORTUGAL -- 1.9%
Electricidade de Portugal
(Utilities)................... 2,966 56,192
Portugal Telecom (ADRs)
(Telecommunications).......... 1,200 56,400
Telecel-Comunicacoes Pessoais*
(Telecommunications).......... 590 62,897
-----------
175,489
-----------
RUSSIA -- 1.7%
Tatneft (ADRs) (Resources)....... 220 31,264
Tatneft (ADRs)+ (Resources)...... 860 122,550
-----------
153,814
-----------
SINGAPORE -- 0.1%
Singapore Press Holdings
(Media)....................... 300 3,762
-----------
SPAIN -- 4.9%
Actividades de Construccion y
Servicios (Construction and
Property)..................... 2,920 70,722
Banco Bilbao Vizcaya
(Banking)..................... 4,233 136,974
Endesa (Utilities)............... 7,030 124,815
Telefonica de Espana
(Telecommunications).......... 4,138 118,147
-----------
450,658
-----------
SWEDEN -- 3.4%
Astra (Health and Household)..... 5,233 90,689
Electrolux (Series B) (Consumer
Products)..................... 249 17,292
L.M. Ericsson Telefon (Series B)
(Telecommunications).......... 3,230 121,520
Nordbanken Holding (Banking)..... 14,899 84,315
-----------
313,816
-----------
SWITZERLAND -- 6.3%
CS Holdings (Banking)............ 779 120,420
Novartis (Health and
Household).................... 81 131,306
Roche Holdings (Health and
Household).................... 13 128,977
Shares Value
---------- -----------
SWITZERLAND (continued)
Schweizerischer Bankerein
(Banking)..................... 211 $ 65,523
Zurich Versicherungs
(Insurance)................... 277 131,869
-----------
578,095
-----------
TAIWAN -- 0.2%
The ROC Taiwan Fund
(Miscellaneous)............... 1,200 9,750
Taiwan Opportunities Fund*
(Miscellaneous)............... 1,000 12,880
-----------
22,630
-----------
UNITED KINGDOM -- 21.4%
B.A.T. Industries (Tobacco)...... 17,000 155,698
British Biotech (Health and
Household).................... 26,500 45,521
British Petroleum (Resources).... 9,500 125,608
Bunzl (Manufacturing)............ 28,000 109,607
Caradon (Building Materials)..... 16,200 48,030
Dixons Group (Retailing)......... 7,000 69,545
FKI Babcock (Industrial Goods
and Services)................. 31,000 98,309
Granada Group (Leisure and
Hotels)....................... 10,500 162,502
Laporte (Chemicals).............. 7,000 77,291
National Power (Utilities)....... 13,500 134,345
Railtrack Group
(Transportation).............. 9,699 155,553
Reuters Holdings (Media)......... 8,500 93,854
Rolls Royce (Industrial Goods
and Services)................. 23,500 89,274
Royal Bank of Scotland
(Banking)..................... 11,500 147,778
Tesco (Retailing)................ 22,000 178,053
United Utilities (Utilities)..... 9,000 116,693
WPP Group (Media)................ 36,000 160,248
-----------
1,967,909
-----------
Total Common Stocks
(Cost $7,836,740)............. 8,660,846
Other Assets Less
Liabilities -- 5.7%............ 521,619
-----------
Net Assets -- 100.0%.............. $ 9,182,465
===========
- ---------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO
Principal
Amount Value
---------- -----------
CORPORATE BONDS -- 90.0%
ADVERTISING -- 0.6%
Adams Outdoor Advertising
10-3/4%, 3/15/2006............. $ 125,000 $ 137,500
-----------
BROADCASTING -- 2.7%
Capstar Broadcasting Partners 0%
(12-3/4%**), 2/1/2009.......... 250,000 182,500
Paxson Communications
11-5/8%, 10/1/2002............. 200,000 215,000
SFX Broadcasting 10-3/4%,
5/15/2006.. ................... 200,000 220,000
-----------
617,500
-----------
CABLE SYSTEMS -- 12.9%
Cablevision Systems 10-1/2%,
5/15/2016...................... 250,000 291,875
Charter Communications
Southeast Holdings
11-1/4%, 3/15/2006............. 250,000 278,750
Charter Communications
Southeast Holdings 0%
(14%**), 3/15/2007............. 300,000 238,500
Comcast 10-5/8%, 7/15/2012........ 50,000 62,750
Digital Television 12-1/2%,
8/1/2007+...................... 225,000 255,375
EchoStar DBS 12-1/2%,
7/1/2002....................... 250,000 271,250
Heartland Wireless
Communications 14%,
10/15/2004..................... 200,000 75,000
Intermedia Capital Partners IV,
11-1/4%, 8/1/2006.............. 500,000 550,000
Northland Cable Television 10-1/4%,
11/15/2007+.................... 125,000 132,187
NTL 10%, 2/15/2007................ 50,000 52,875
Rogers Cablesystems 11%,
12/1/2015...................... 270,000 313,200
TCI Satellite Entertainment
10-7/8% 2/15/2007+............. 350,000 368,375
TCI Satellite Entertainment 0%
(12-1/4%**), 2/15/2007+........ 100,000 67,000
Wireless One 13%,
10/15/2003..................... 150,000 54,750
-----------
3,011,887
-----------
Principal
Amount Value
---------- -----------
CELLULAR -- 2.9%
Centennial Cellular 10-1/8%,
5/15/2005..................... $ 150,000 $ 163,500
Price Communications Wireless
11-3/4%, 7/15/2007+........... 250,000 272,500
PriCellular Wireless 10-3/4%,
11/1/2004..................... 225,000 244,687
-----------
680,687
-----------
CHEMICALS -- 0.9
Texas Petrochemicals 11-1/8%,
7/1/2006...................... 200,000 216,000
-----------
COMPUTER AND RELATED
SERVICES -- 3.5%
DecisionOne 9-3/4%, 8/1/2007...... 100,000 103,250
DecisionOne Holdings 0%
(11-1/2%**), 8/1/2008.......... 220,000 141,900
Unisys 12%, 4/15/2003............. 250,000 284,375
Unisys 11-3/4%, 10/15/2004........ 250,000 286,875
-----------
816,400
-----------
CONSUMER PRODUCTS -- 4.2%
American Pad & Paper 13%,
11/15/2005..................... 60,000 67,500
Amscan Holdings 9-7/8%
12/15/2007+.................... 150,000 154,125
Anchor Advanced Products
11-3/4%, 4/1/2004.............. 150,000 162,000
Carson 10-3/8%,11/1/2007+......... 150,000 150,750
French Fragrances 10-3/8%,
5/15/2007...................... 150,000 157,500
North Atlantic Trading 11%,
6/15/2004...................... 75,000 78,750
Ryder TRS 10%, 12/1/2006.......... 200,000 201,000
-----------
971,625
-----------
CONTAINERS -- 1.0%
Plastic Containers 10%,
12/15/2006..................... 100,000 106,500
U.S. Can 10-1/8%, 10/15/2006...... 125,000 133,125
-----------
239,625
-----------
- ---------------
+Rule 144A security.
** Deferred-interest debentures pay no interest for a stipulated number of
years, after which they pay the indicated coupon rate.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
Principal
Amount Value
---------- -----------
ENERGY -- 0.5%
Abraxas Petroleum 11-1/2%,
11/1/2004..................... $ 100,000 $ 109,750
-----------
EQUIPMENT -- 1.1%
Williams Scotsman 9-7/8%
6/1/2007....................... 250,000 261,250
-----------
FINANCIAL SERVICES -- 3.3%
AMRESCO 10%, 3/15/2004............ 125,000 130,312
Crown Castle International 0%
(10-5/8%**), 11/15/2007+....... 175,000 109,812
Dollar Financial Group 10-7/8%
11/15/2006..................... 150,000 162,750
Iowa Select Farm 10-3/4%,
12/1/2005+..................... 75,000 77,344
Ocwen Capital Trust I 10-7/8%
8/1/2027....................... 150,000 163,500
Superior National Trust I 10-3/4%,
12/1/2017+..................... 25,000 25,687
Veritas Capital Trust 10%,
1/1/2028+...................... 90,000 92,025
-----------
761,430
-----------
FOOD -- 4.3%
AFC Enterprises 10-1/4%,
5/15/2007...................... 200,000 211,000
AmeriKing 10-3/4%, 12/1/2006...... 175,000 184,625
Ameriserve Food 10-1/8%,
7/15/2007...................... 250,000 263,750
Gorges/Quik-to-Fix Foods 11-1/2%,
12/1/2006...................... 250,000 265,000
International Home Foods 10-3/8%,
11/1/2006...................... 75,000 82,687
-----------
1,007,062
-----------
GAMING/HOTEL -- 10.9%
Alliance Gaming 10%,
8/1/2007+...................... 100,000 100,625
Ameristar Casinos 10-1/2%,
8/1/2004+...................... 200,000 205,000
Aztar 13-3/4%, 10/1/2004.......... 200,000 230,000
Casino America 12-1/2%,
8/1/2003....................... 400,000 436,500
Principal
Amount Value
---------- -----------
GAMING/HOTEL (continued)
Casino Magic of Louisiana 13%,
8/15/2003..................... $ 200,000 $ 193,000
Coast Hotels & Casinos 13%,
12/15/2002.................... 300,000 340,500
Fitzgerald Gaming 12-1/4%,
12/15/2004+................... 115,000 117,013
Showboat 13%, 8/1/2009........... 125,000 155,625
Showboat Marina Casino
Partnership
13-1/2%, 3/15/2003............. 150,000 180,750
Trump Atlantic City Funding
11-1/4%, 5/1/2006.............. 350,000 343,000
Trump Atlantic City Funding
11-1/4%, 5/1/2006+............. 45,000 43,650
Trump Hotels & Casino Resorts
Funding 15-1/2%, 6/15/2005..... 175,000 200,375
-----------
2,546,038
-----------
HEALTH CARE/MEDICAL
PRODUCTS -- 4.6%
Alaris Medical 9-3/4%, 12/1/2006.. 200,000 211,000
Alliance Imaging 9-5/8%,
12/15/2005..................... 60,000 61,350
Dade International 11-1/8%,
5/1/2006....................... 200,000 221,000
Graphic Controls 12%,
9/15/2005...................... 150,000 168,000
Paracelsus Healthcare 10%,
8/15/2006...................... 200,000 205,000
Paragon Health 0% (10-1/2%**),
11/1/2007+..................... 175,000 109,375
Sun Healthcare Group 9-1/2%,
7/1/2007+...................... 100,000 103,000
-----------
1,078,725
-----------
LEISURE-- 2.4%
Affinity Group 11%, 4/1/2007...... 200,000 214,000
AMF Bowling 0% (12-1/4%**),
3/15/2006...................... 150,000 118,688
Premier Parks 12%, 8/15/2003...... 150,000 167,625
Premier Parks 9-3/4%, 1/15/2007... 50,000 53,500
-----------
553,813
-----------
- ---------------
+ Rule 144A security.
** Deferred-interest debentures pay no interest for a stipulated number of
years, after which they pay the indicated coupon rate.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
Principal
Amount Value
---------- -----------
MANUFACTURING -- 1.1%
Airxcel 11%, 11/15/2007+......... $125,000 $ 129,375
Clark-Schwebel 12-1/2%,
7/15/2007+.................... 45,994 49,444
International Knife & Saw 11-3/8%,
11/15/2006.................... 50,000 54,250
Werner Holdings 10%,
11/15/2007+................... 30,000 30,900
-----------
263,969
-----------
METALS -- 1.8%
Koppers Industries 97/8%
12/1/2007+..................... 25,000 25,875
Renco Metals 11-1/2%, 7/1/2003.... 225,000 240,187
Royal Oak Mines 11%,
8/15/2006...................... 225,000 158,625
-----------
424,687
-----------
PAGING -- 5.6%
Metrocall 9-3/4%, 11/1/2007+...... 125,000 124,062
Mobile Telecommunication
Technologies 13-1/2%,
12/15/2002..................... 375,000 436,875
Paging Network 10%,
10/15/2008..................... 450,000 468,563
ProNet 11-7/8% 6/15/2005.......... 250,000 270,000
-----------
1,299,500
-----------
PAPER AND PACKAGING -- 1.6%
BPC Holding 12-1/2%, 6/15/2006.... 150,000 165,750
Crown Paper 11%, 9/1/2005......... 200,000 207,000
-----------
372,750
-----------
PUBLISHING-- 2.5%
American Lawyer Media
Holdings 9-3/4%,
12/15/2007+.................... 150,000 153,000
American Lawyer Media
Holdings 0% (12-1/4%**),
12/15/2008+.................... 45,000 25,650
Perry-Judd 10-5/8%, 12/15/2007+... 50,000 52,250
Petersen Publishing 11-1/8%,
11/15/2006..................... 110,000 124,850
Principal
Amount Value
---------- -----------
PUBLISHING (continued)
TransWestern Holdings 0%
(11-7/8%**), 11/15/2008+........ $110,000 $ 66,550
TransWestern Publishing 9-5/8%,
11/15/2007+.................... 30,000 31,350
Von Hoffman Press 10-3/4%,
5/15/2007+..................... 110,000 118,250
-----------
571,900
-----------
RECORD STORAGE -- 0.4%
Pierce Leahy 11-1/8%,
7/15/2006...................... 75,000 85,125
-----------
RETAILING-- 1.6%
Central Tractor 10-5/8%, 4/1/2007. 200,000 212,000
Cole National Group 9-7/8%
12/31/2006..................... 150,000 161,250
-----------
373,250
-----------
SUPERMARKETS -- 1.9%
Jitney-Jungle Stores of
America 12%, 3/1/2006.......... 175,000 199,500
Jitney-Jungle Stores of America
10-3/4%, 9/15/2007............. 125,000 130,312
Pathmark Stores 11-5/8%,
6/15/2002...................... 150,000 122,250
-----------
452,062
-----------
TECHNOLOGY -- 2.2%
Advanced Micro Devices 11%,
8/1/2003....................... 200,000 215,000
Therma-Wave 10-5/8%,
5/15/2004...................... 150,000 156,750
Viasystems 9-3/4%, 6/1/2007....... 125,000 129,844
-----------
501,594
-----------
TELECOMMUNICATIONS -- 12.8%
BTI Telecom 10-1/2%,
9/15/2007+..................... 175,000 179,375
GCI 9-3/4%, 8/1/2007.............. 170,000 177,225
GlobalStar 11-1/4%, 6/15/2004..... 175,000 176,313
ICG Holdings 0% (11-5/8%** ),
3/15/2007...................... 175,000 119,875
- ---------------
+ Rule 144A security.
** Deferred-interest debentures pay no interest for a stipulated number of
years, after which they pay the indicated coupon rate.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
Principal
Amount Value
---------- -----------
TELECOMMUNICATIONS (continued)
Intermedia Communications
0% (11-1/4%**), 7/1/2007....... $125,000 $ 89,688
Intermedia Communications
0% (12-1/2%**), 5/15/2006...... 150,000 118,500
ITC DeltaCom 11%, 6/1/2007........ 200,000 221,000
IXC Communications 12-1/2%,
10/1/2005...................... 325,000 376,188
Nextel Communications 0%
(10.65%**), 9/15/2007+......... 350,000 222,250
NEXTLINK Communications
12-1/2%, 4/15/2006............. 250,000 286,250
Powertel 11-1/8%, 6/1/2007........ 225,000 245,250
RCN 10%, 10/15/2007+.............. 190,000 198,075
RCN 0% (11-1/8%**),
10/15/2007+.................... 175,000 110,250
Sprint Spectrum 11%,
8/15/2006...................... 200,000 226,000
Talton Holdings 11%,
6/30/2007+..................... 100,000 109,000
Verio 13-1/2%, 6/15/2004+......... 100,000 120,000
-----------
2,975,239
-----------
THEATERS -- 1.3%
Hollywood Theaters 10-5/8%,
8/1/2007+...................... 150,000 160,125
Plitt Theaters 10-7/8% 6/15/2004.. 125,000 135,625
-----------
295,750
-----------
TRANSPORTATION -- 0.7%
Atlas Air 10-3/4%, 8/1/2005....... 150,000 159,000
-----------
UTILITIES -- 0.7%
Midland Cogeneration
Venture 11-3/4%, 7/23/2005..... 125,000 149,988
-----------
Total Corporate Bonds
(Cost $20,242,454).......... 20,934,106
-----------
Shares or
Principal
Amount Value
---------- -----------
PREFERRED STOCKS -- 4.1%
BROADCASTING -- 2.5%
Capstar Broadcasting Partners
12%............................ 750 shs. $ 86,437
Chancellor Media 12%+............. 1,376 158,584
SFX Broadcasting 12-5/8%.......... 1,500 171,375
Sinclair Capital 11-5/8%+......... 1,500 166,125
-----------
582,521
-----------
CABLE SYSTEMS -- 0.6%
EchoStar Communications
12-1/8%........................ 75 78,563
Pegasus Communications
12-3/4%........................ 50 55,875
-----------
134,438
-----------
TELECOMMUNICATIONS -- 1.0%
IXC Communications 12-1/2%+....... 123 144,901
NEXTLINK Communications 14%....... 1,385 86,216
-----------
231,117
-----------
Total Preferred Stocks
(Cost $839,463)............... 948,076
-----------
CONVERTIBLE SECURITIES -- 1.4%
SUBORDINATED
CONVERTIBLE BONDS -- 1.0%
TECHNOLOGY -- 1.0%
EMC 3-1/4%, 3/15/2002............. $75,000 101,906
Xilinx 5-1/4%, 11/1/2002+......... 150,000 146,063
-----------
Total Subordinated Convertible
Bonds (Cost $245,439)......... 247,969
-----------
CONVERTIBLE PREFERRED
STOCKS -- 0.4% (Cost $63,562)
BROADCASTING -- 0.4%
Chancellor Media $3+............. 1,250 96,719
-----------
- ---------------
+ Rule 144A security.
** Deferred-interest debentures pay no interest for a stipulated number of
years, after which they pay the indicated coupon rate.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued)
- -------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
Value
-----------
Total Convertible Securities
(Cost $309,001)............... $ 344,688
-----------
Short-Term Holdings -- 1.3%
(Cost $300,000)............... 300,000
-----------
Value
-----------
Total Investments -- 96.8%
(Cost $21,690,918)............ $22,526,870
Other Assets
Less Liabilities -- 3.2% ......... 740,910
-----------
Net Assets -- 100.0%.............. $23,267,780
===========
- -------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO
Shares Value
---------- -----------
CONVERTIBLE SECURITIES -- 22.4%
CONVERTIBLE PREFERRED STOCKS -- 15.0%
AUTOMOTIVE AND
RELATED -- 1.5%
Federal-Mogul 7%+................ 4,000 $ 202,000
-----------
DRUGS AND HEALTH
CARE -- 2.2%
McKesson 5%+..................... 4,000 306,000
-----------
ENERGY -- 0.5%
Lomak Petroleum 5-3/4%............ 1,500 70,875
-----------
ENVIRONMENTAL
SERVICES -- 1.8%
Browning-Ferris Industries
7-1/4%......................... 7,500 255,000
-----------
INSURANCE -- 4.5%
St. Paul Capital 6%.............. 4,500 324,000
Salomon Smith Barney 7-5/8%....... 7,500 301,875
-----------
625,875
-----------
OFFICE EQUIPMENT -- 1.7%
IKON Office Solutions $5.04...... 3,500 237,125
-----------
TRANSPORTATION -- 2.0%
Sea Containers $4.00............. 5,000 278,750
-----------
MISCELLANEOUS -- 0.8%
Corning (Delaware) 6%............ 1,700 104,763
Principal
Amount Value
---------- -----------
Total Convertible Preferred
Stocks (Cost $1,811,482)...... $ 2,080,388
-----------
SUBORDINATED CONVERTIBLE
BONDS -- 7.4%
DIVERSIFIED -- 1.9%
MascoTech 4-1/2%, 12/15/2003..... $ 300,000 262,500
-----------
ELECTRONICS -- 0.7%
Park Electrochemical 5-1/2%,
3/1/2006+..................... 100,000 94,500
-----------
ENERGY -- 3.1%
Santa Fe Pipelines 11.162%,
8/15/2010..................... 250,000 423,750
-----------
TECHNOLOGY -- 1.7%
Xilinx 5-1/4%, 11/1/2002+........ 250,000 243,437
-----------
Total Subordinated Convertible
Bonds (Cost $801,975)......... 1,024,187
-----------
Total Convertible Securities
(Cost $2,613,457)............. 3,104,575
-----------
CORPORATE BONDS -- 18.4%
AUTOMOTIVE AND RELATED-- 5.1%
Chrysler Financial 6-1/2%,
6/15/1998..................... 200,000 200,628
Ford Motor Credit 6-3/4%,
8/15/2008..................... 250,000 253,211
General Motors Acceptance
5-5/8%, 2/1/1999.............. 250,000 249,093
-----------
702,932
-----------
- -------------
+ Rule 144A security.
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO (continued)
Shares or
Principal
Amount Value
---------- -----------
BANKING AND FINANCE -- 4.8%
Associates Corp. of North America
6-1/2%, 8/15/2002.............. $300,000 $ 303,102
Capital One Bank 8-1/8%, 3/1/2000 250,000 258,977
First USA Bank 5-3/4%, 1/15/1999.. 100,000 99,819
-----------
661,898
-----------
ELECTRONICS -- 0.0%
StreamLogic 14%, 10/7/1998........ 33,999 6,800
-----------
FUNERAL SERVICES -- 2.2%
Loewen Group International 7-1/2%,
4/15/2001...................... 300,000 309,212
-----------
PAPER AND PACKAGING -- 2.3%
Owens-Illinois 7.85%,
5/15/2004...................... 300,000 315,376
-----------
RETAILING -- 4.0%
Federated Department Stores
10%, 2/15/2001................. 500,000 551,557
-----------
Total Corporate Bonds
(Cost $2,586,323).............. 2,547,775
-----------
US GOVERNMENT
SECURITIES -- 15.1%
US Treasury Notes 7-3/4%,
12/31/1999..................... 500,000 519,688
US Treasury Notes 6-1/4%,
6/30/2002...................... 500,000 510,313
US Treasury Notes 6-1/2%,
5/15/2005...................... 500,000 521,407
US Treasury Notes 6-5/8%,
5/15/2007...................... 500,000 529,531
-----------
Total US Government
Securities
(Cost $2,046,763).............. 2,080,939
-----------
COMMON STOCKS -- 33.9%
AEROSPACE -- 1.0%
General Dynamics.................. 1,600 shs. 138,300
-----------
Shares Value
---------- -----------
AUTOMOTIVE AND RELATED -- 0.5%
Chrysler......................... 2,000 $ 70,375
-----------
BANKING AND FINANCE -- 2.2%
Ahmanson (H.F.).................. 1,400 93,712
BankAmerica...................... 800 58,400
Citicorp......................... 600 75,862
First Union...................... 1,500 76,875
-----------
304,849
-----------
CHEMICALS -- 1.0%
duPont (E.l.) de Nemours......... 1,100 66,069
Goodrich (B.F.).................. 1,800 74,588
-----------
140,657
-----------
CONSUMER GOODS AND
SERVICES -- 5.9%
Anheuser-Busch................... 1,200 52,800
General Mills.................... 1,900 136,088
PepsiCo.......................... 3,700 134,819
RJR Nabisco Holdings............. 3,700 138,750
Sara Lee......................... 3,200 180,200
The Stanley Works................ 1,800 84,937
Xerox............................ 1,200 88,575
-----------
816,169
-----------
DIVERSIFIED -- 0.9%
Tenneco.......................... 3,200 126,400
-----------
DRUGS AND HEALTH
CARE -- 1.6%
American Home Products........... 1,000 76,500
Bristol-Myers Squibb............. 1,500 141,937
-----------
218,437
-----------
ELECTRIC AND GAS
UTILITIES -- 2.5%
Duke Energy...................... 1,900 105,212
FPL Group........................ 2,000 118,375
Williams Companies............... 4,400 124,850
-----------
348,437
-----------
- ----------------
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Portfolios of Investments (continued) December 31, 1997
- -------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO (continued)
Shares Value
---------- -----------
ELECTRONICS -- 1.7%
AMP.............................. 3,300 $ 138,600
Thomas & Betts................... 2,100 99,225
-----------
237,825
-----------
ENERGY -- 4.5%
Atlantic Richfield............... 2,600 208,325
Exxon............................ 3,000 183,563
Royal Dutch Petroleum
(Netherlands)................. 1,700 92,119
Snyder Oil....................... 3,666 66,905
Unocal........................... 1,800 69,862
-----------
620,774
-----------
FOOD -- 1.2%
ConAgra.......................... 5,000 164,062
-----------
INSURANCE -- 1.9%
American General................. 3,200 173,000
Lincoln National................. 1,200 93,750
-----------
266,750
-----------
MACHINERY -- 0.9%
GATX............................. 1,700 123,356
-----------
PAPER AND
PACKAGING -- 2.7%
Bemis............................ 1,900 83,719
Mead............................. 1,600 44,800
Union Camp....................... 1,800 96,638
Weyerhaeuser..................... 3,000 147,187
-----------
372,344
-----------
RETAILING -- 1.4%
May Department Stores............ 1,600 84,300
Penney (J.C.).................... 1,800 108,563
-----------
192,863
-----------
Shares or
Principal
Amount Value
---------- -----------
TOBACCO -- 1.0%
Philip Morris.................... 2,900 shs. $ 131,406
-----------
TRANSPORTATION -- 0.6%
Norfolk Southern................. 2,700 83,194
-----------
UTILITIES/
TELECOMMUNICATIONS -- 2.4%
Bell Atlantic.................... 1,300 118,300
GTE.............................. 2,100 109,725
SBC Communications............... 1,500 109,875
-----------
337,900
-----------
Total Common Stocks
(Cost $4,347,191)............. 4,694,098
-----------
REPURCHASE
AGREEMENTS -- 8.0%
(Cost $1,100,000)
HSBC Securities, Inc., 5%, dated
12/31/1997, maturing 1/5/1998
collateralized by: $1,045,000
US Treasury Notes 6-7/8%
5/15/2006, with a fair market
value of $1,128,095........... $1,100,000 1,100,000
-----------
Total Investments -- 97.8%
(Cost $12,693,734)............ 13,527,387
Other Assets Less
Liabilities -- 2.2%........... 307,893
-----------
Net Assets -- 100.0%............. $13,835,280
===========
- ---------------
See Notes to Financial Statements.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Statements of Assets and Liabilities
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman
Seligman Seligman Cash Common Communications
Bond Capital Management Stock and Information
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (see
portfolios of investments):
Long-term holdings......................... $6,587,900 $19,976,895 -- $48,395,942 $85,992,038
Short-term holdings........................ 400,000 1,000,000 $8,903,295 2,000,000 6,800,000
---------- ----------- ---------- ----------- -----------
Total Investments.......................... 6,987,900 20,976,895 8,903,295 50,395,942 92,792,038
Cash....................................... 149,578 240,536 -- 207,842 681,920
Interest and dividends receivable.......... 103,107 5,554 69 90,240 5,729
Receivable for Capital Stock sold.......... 3,776 29,356 -- 75,128 934,098
Receivable from associated companies....... 1,177 784 4,651 -- --
Receivable for securities sold............. -- 387,161 -- -- 86,247
Unrealized appreciation on foreign
currencies and forward currency
contracts.............................. -- -- -- -- --
---------- ----------- ---------- ----------- -----------
Total Assets............................... 7,245,538 21,640,286 8,908,015 50,769,152 94,500,032
---------- ----------- ---------- ----------- -----------
LIABILITIES:
Payable for Capital Stock redeemed......... 64 165 127,943 473 --
Payable for securities purchased........... -- 1,222,115 -- -- 6,795,250
Payable to custodian....................... -- -- 134,067 -- --
Unrealized depreciation on foreign
currencies and forward currency
contracts............................... -- -- -- -- --
Accrued expenses, taxes, and other......... 13,437 18,214 10,719 31,516 71,945
---------- ----------- ---------- ----------- -----------
Total Liabilities.......................... 13,501 1,240,494 272,729 31,989 6,867,195
---------- ----------- ---------- ----------- -----------
Net Assets................................. $7,232,037 $20,399,792 $8,635,286 $50,737,163 $87,632,837
========== =========== ========== =========== ===========
COMPOSITION OF NET ASSETS:
Capital Stock, at par...................... $ 707 $ 1,127 $ 8,636 $ 3,117 $ 6,696
Additional paid-in capital................. 7,065,414 16,281,718 8,627,048 42,448,949 93,353,881
Undistributed/accumulated
net investment income (loss)........... (4,143) (4,488) -- 30,252 (1,661)
Undistributed/accumulated net
realized gain (loss)................... (51,898) 137,177 (398) 1,586 --
Net unrealized appreciation (depreciation)
of investments......................... 221,957 3,984,258 -- 8,253,259 (5,726,079)
Net unrealized appreciation (depreciation)
on translation of assets and liabilities
denominated in foreign currencies and
forward currency contracts............. -- -- -- -- --
---------- ----------- ---------- ----------- -----------
Net Assets................................. $7,232,037 $20,399,792 $8,635,286 $50,737,163 $87,632,837
========== =========== ========== =========== ===========
Shares of Capital Stock Outstanding
($.001 par value)....................... 706,526 1,127,236 8,635,684 3,116,853 6,696,036
========== =========== ========== =========== ===========
Net Asset Value per Share.................. $10.24 $18.10 $1.00 $16.28 $13.09
========== =========== ========== =========== ===========
</TABLE>
- ----------------------
See Notes to Financial Statements.
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
December 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman
Henderson Henderson Henderson Seligman Seligman
Seligman Global Growth Global Smaller Global Henderson High-Yield Seligman
Frontier Opportunities Companies Technology International Bond Income
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- --------- ----------- ----------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
$40,378,514 $5,212,147 $19,476,032 $3,184,817 $8,660,846 $22,226,870 $12,427,387
3,000,000 300,000 900,000 400,000 -- 300,000 1,100,000
- ----------- ---------- ----------- ---------- ---------- ----------- -----------
43,378,514 5,512,147 20,376,032 3,584,817 8,660,846 22,526,870 13,527,387
209,739 278,472 395,833 162,039 476,397 211,942 206,245
6,760 5,196 42,983 2,181 30,560 512,700 92,409
146,927 337 260 2,872 1,360 58,140 24,487
-- 3,356 9,667 2,633 7,833 -- 331
150,292 1,102 31,571 -- 4,597 -- --
-- 7,268 37,769 -- 25,580 -- --
- ----------- ---------- ----------- ---------- ---------- ----------- -----------
43,892,232 5,807,878 20,894,115 3,754,542 9,207,173 23,309,652 13,850,859
- ----------- ---------- ----------- ---------- ---------- ----------- -----------
-- 15,098 35,449 -- 37 -- 133
877,881 331,066 321,845 58,650 3,678 20,250 --
-- -- -- -- -- -- --
-- 393 -- -- 16 -- --
41,078 12,089 32,231 9,664 20,977 21,622 15,446
- ----------- ---------- ----------- ---------- ---------- ----------- -----------
918,959 358,646 389,525 68,314 24,708 41,872 15,579
- ----------- ---------- ----------- ---------- ---------- ----------- -----------
$42,973,273 $5,449,232 $20,504,590 $3,686,228 $9,182,465 $23,267,780 $13,835,280
=========== ========== =========== ========== ========== =========== ===========
$ 2,723 $ 494 $ 1,580 $ 348 $ 678 $ 1,961 $ 1,281
39,932,315 5,157,361 20,063,377 3,743,487 8,338,198 22,420,933 12,988,331
(1,619) 472 (1,600) (826) (2,941) 8,934 11,118
-- -- -- -- -- -- 897
3,039,854 411,604 1,143,316 (25,171) 1,092,500 835,952 833,653
-- (120,699) (702,083) (31,610) (245,970) -- --
- ----------- ---------- ----------- ---------- ---------- ----------- -----------
$42,973,273 $5,449,232 $20,504,590 $3,686,228 $9,182,465 $23,267,780 $13,835,280
=========== ========== =========== ========== ========== =========== ===========
2,723,359 494,253 1,580,175 348,219 678,213 1,960,568 1,280,951
=========== ========== =========== ========== ========== =========== ===========
$15.78 $11.03 $12.98 $10.59 $13.54 $11.87 $10.80
=========== ========== =========== ========== ========== =========== ===========
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Statements of Operations
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman
Seligman Seligman Cash Common Communications
Bond Capital Management Stock and Information
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest................................... $394,336 $ 50,153 $512,275 $ 455,945 $ 242,059
Dividends*................................. -- 83,568 -- 639,449 42,765
-------- ----------- -------- ---------- -----------
Total Investment Income.................... 394,336 133,721 512,275 1,095,394 284,824
-------- ----------- -------- ---------- -----------
EXPENSES:
Management fees............................ 23,150 70,147 38,042 178,662 574,370
Shareholder reports and
communications.......................... 6,874 6,874 6,874 6,874 4,766
Auditing fees.............................. 6,356 10,556 8,554 21,254 31,256
Directors' fees and expenses............... 3,966 4,082 4,004 4,340 4,616
Custody and related services............... 3,683 11,489 13,779 17,969 39,170
Registration............................... 1,359 2,022 972 4,469 4,397
Legal fees................................. 1,345 1,345 1,345 1,345 1,442
Miscellaneous.............................. 1,044 1,411 1,153 2,270 3,111
-------- ----------- -------- ---------- -----------
Total Expenses Before
Waiver/Reimbursement.................... 47,777 107,926 74,723 237,183 663,128
Waiver/reimbursement of expenses........... (13,068) (2,708) (74,723) -- --
-------- ----------- -------- ---------- -----------
Total Expenses After Waiver/
Reimbursement........................... 34,709 105,218 -- 237,183 663,128
-------- ----------- -------- ---------- -----------
Net Investment Income (Loss)............... 359,627 28,503 512,275 858,211 (378,304)
-------- ----------- -------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments.... 2,573 1,456,363 -- 6,975,977 25,855,124
Net realized loss from foreign
currency transactions................... -- -- -- -- --
Net change in unrealized appreciation/
depreciation of investments............. 158,584 1,876,910 -- 523,788 (10,538,214)
Netchange in unrealized appreciation/
depreciation on translation of
assets and liabilities denominated
in foreign currencies and forward
currency contracts...................... -- -- -- -- --
-------- ----------- -------- ---------- -----------
Net Gain (Loss) on Investments
and Foreign Currency
Transactions............................ 161,157 3,333,273 -- 7,499,765 15,316,910
-------- ----------- -------- ---------- -----------
Increase in Net Assets
from Operations......................... $520,784 $3,361,776 $512,275 $8,357,976 $14,938,606
======== ========== ======== ========== ===========
- ----------------------------
* Net of foreign tax withheld as follows: $ -- $ 511 $ -- $ 2,868 $ 1,575
See Notes to Financial Statements.
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
For the Year Ended December 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman
Henderson Henderson Henderson Seligman Seligman
Seligman Global Growth Global Smaller Global Henderson High-Yield Seligman
Frontier Opportunities Companies Technology International Bond Income
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- --------- ----------- ----------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 116,255 $ 22,193 $ 49,082 $ 15,984 $ 24,643 $1,684,004 $ 466,955
34,531 31,782 279,653 24,294 136,659 63,550 255,598
- ---------- -------- -------- -------- -------- ---------- ----------
150,786 53,975 328,735 40,278 161,302 1,747,554 722,553
- ---------- -------- -------- -------- -------- ---------- ----------
282,248 38,358 200,415 26,504 88,212 84,740 54,451
4,766 4,766 4,766 4,766 4,766 4,766 6,874
17,456 4,600 11,300 4,500 7,100 8,556 9,956
4,237 3,894 4,066 3,892 3,952 4,005 4,061
18,795 25,563 86,946 12,731 74,727 27,025 6,882
4,146 1,281 1,673 994 1,739 1,906 1,242
1,396 1,348 1,359 1,347 1,352 1,367 1,345
2,023 975 1,514 925 1,162 1,341 1,292
- ---------- -------- -------- -------- -------- ---------- ----------
335,067 80,785 312,039 55,659 183,010 133,706 86,103
-- (27,093) (31,463) (18,553) (59,491) (15,066) (4,416)
- ---------- -------- -------- -------- -------- ---------- ----------
335,067 53,692 280,576 37,106 123,519 118,640 81,687
- ---------- -------- -------- -------- -------- ---------- ----------
(184,281) 283 48,159 3,172 37,783 1,628,914 640,866
- ---------- -------- -------- -------- -------- ---------- ----------
4,064,832 141,228 813,641 513,781 665,686 186,257 731,075
-- (73,436) (407,259) (12,358) (422,188) -- 5,037
1,855,841 381,018 750,188 (84,833) 439,369 571,005 419,679
-- (112,875) (536,914) (40,471) (72,394) -- (10,907)
- ---------- -------- -------- -------- -------- ---------- ----------
5,920,673 335,935 619,656 376,119 610,473 757,262 1,144,884
- ---------- -------- -------- -------- -------- ---------- ----------
$5,736,392 $336,218 $667,815 $379,291 $648,256 $2,386,176 $1,785,750
========== ======== ======== ======== ======== ========== ==========
$ 222 $ 2,873 $ 38,977 $ 1,620 $ 16,430 $ -- $ 18
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman Seligman
Bond Portfolio Capital Portfolio Cash Management Portfolio
-------------------- --------------------- -------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
-------------------- --------------------- --------------------
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 359,627 $ 269,490 $ 28,503 $ 34,560 $ 512,275 $ 483,722
Net realized gain (loss) on
investments........................ 2,573 42,902 1,456,363 793,791 -- --
Net realized gain (loss)
from foreign currency
transactions....................... -- -- -- -- -- --
Net change in unrealized
appreciation/depreciation
of investments..................... 158,584 (291,839) 1,876,910 666,893 -- --
Net change in unrealized
appreciation/depreciation
on translation of assets
and liabilities denominated
in foreign currencies and
forward currency contracts......... -- -- -- -- -- --
---------- ---------- ----------- ----------- ---------- ----------
Increase in Net Assets From
Operations......................... 520,784 20,553 3,361,776 1,495,244 512,275 483,722
---------- ---------- ----------- ----------- ---------- ----------
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income................. (360,523) (269,359) (29,292) (35,038) (512,275) (483,722)
Realized gain on investments.......... -- -- (1,319,186) (852,588) -- --
---------- ---------- ----------- ----------- ---------- ----------
Decrease in Net Assets From
Distributions...................... (360,523) (269,359) (1,348,478) (887,626) (512,275) (483,722)
---------- ---------- ----------- ----------- ---------- ----------
CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sale of
shares............................. 3,014,160 2,178,074 7,491,753 6,122,881 25,875,970 16,950,432
Investment of dividends............... 360,523 269,359 29,292 35,038 512,275 483,722
Shares issued in payment
of gain distributions.............. -- -- 1,319,186 852,588 -- --
---------- ---------- ----------- ----------- ---------- ----------
Total................................. 3,374,683 2,447,433 8,840,231 7,010,507 26,388,245 17,434,154
---------- ---------- ----------- ----------- ---------- ----------
Cost of shares redeemed............... (1,317,788) (1,680,294) (4,766,794) (2,598,584) (27,507,851) (15,478,773)
---------- ---------- ----------- ----------- ---------- ----------
Increase (Decrease) in Net
Assets From Capital
Share Transactions................. 2,056,895 767,139 4,073,437 4,411,923 (1,119,606) 1,955,381
---------- ---------- ----------- ----------- ---------- ----------
Increase (Decrease) in
Net Assets......................... 2,217,156 518,333 6,086,735 5,019,541 (1,119,606) 1,955,381
Net Assets:
Beginning of year..................... 5,014,881 4,496,548 14,313,057 9,293,516 9,754,892 7,799,511
---------- ---------- ----------- ----------- ---------- ----------
End of Year........................... $7,232,037 $5,014,881 $20,399,792 $14,313,057 $8,635,286 $9,754,892
========== ========== =========== =========== ========== ==========
- ----------------------
* For the period May 1, 1996, commencement of operations, to December 31, 1996.
See Notes to Financial Statements.
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman
Seligman Seligman Henderson Henderson
Common Stock Communications and Seligman Global Growth Global Smaller
Portfolio Information Portfolio Frontier Portfolio Opportunities Portfolio Companies Portfolio
----------------------- ----------------------- ------------------------ ------------------------- -----------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
----------------------- ----------------------- ----------------------- ------------------------- ------------------------
1997 1996 1997 1996 1997 1996 1997 1996* 1997 1996
----------- --------- ----------- --------- ----------- --------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 858,211 $ 666,793 $ (378,304) $ (159,892) $ (184,281) $ (80,539) $ 283 $ 1,510 $ 48,159 $ 24,879
6,975,977 4,441,023 25,855,124 (3,546,285) 4,064,832 3,410,956 141,228 (9,589) 813,641 1,146,142
-- (56,144) -- -- -- -- (73,436) 297 (407,259) 34,461
523,788 985,046 (10,538,214) 8,651,223 1,855,841 693,961 381,018 30,586 750,188 192,735
-- 55,242 -- -- -- -- (112,875) (7,824) (536,914) (129,401)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
8,357,976 6,091,960 14,938,606 4,945,046 5,736,392 4,024,378 336,218 14,980 667,815 1,268,816
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
(827,581) (669,792) -- -- -- -- -- (1,843) (26,233) (21,782)
(6,979,440) (4,598,840) (22,307,569) -- (3,889,283) (3,392,252) (60,644) -- (475,283) (1,150,819)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
(7,807,021) (5,268,632) (22,307,569) -- (3,889,283) (3,392,252) (60,644) (1,843) (501,516) (1,172,601)
12,649,970 11,490,927 50,718,332 27,653,569 18,870,587 17,892,649 4,394,619 1,707,364 5,959,379 11,760,606
827,581 669,792 -- -- -- -- -- 1,843 26,233 21,782
6,979,440 4,598,840 22,307,569 -- 3,889,283 3,392,252 60,644 -- 475,283 1,150,819
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
20,456,991 16,759,559 73,025,901 27,653,569 22,759,870 21,284,901 4,455,263 1,709,207 6,460,895 12,933,207
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
(7,439,183) (9,250,532) (38,669,048) (10,395,761) (13,305,727) (2,721,117) (871,295) (132,654) (2,998,851) (989,791)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
13,017,808 7,509,027 34,356,853 17,257,808 9,454,143 18,563,784 3,583,968 1,576,553 3,462,044 11,943,416
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
13,568,763 8,332,355 26,987,890 22,202,854 11,301,252 19,195,910 3,859,542 1,589,690 3,628,343 12,039,631
37,168,400 28,836,045 60,644,947 38,442,093 31,672,021 12,476,111 1,589,690 -- 16,876,247 4,836,616
----------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- -----------
$50,737,163 $37,168,400 $87,632,837 $60,644,947 $42,973,273 $31,672,021 $5,449,232 $1,589,690 $20,504,590 $16,876,247
=========== =========== =========== =========== =========== =========== ========== ========== =========== ============
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman Seligman
Henderson Henderson Seligman
Global Technology International High-Yield Seligman
Portfolio Portfolio Bond Portfolio Income Portfolio
------------------- ------------------ ------------------- -------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
------------------ ------------------ ------------------- -------------------
1997 1996* 1997 1996 1997 1996 1997 1996
-------- -------- --------- ------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).. $ 3,172 $ (2,332) $ 37,783 $ 40,190 $ 1,628,914 $ 700,400 $ 640,866 $ 665,263
Net realized gain (loss) on
investments................ 513,781 9,847 665,686 99,382 186,257 71,419 731,075 188,849
Net realized gain (loss)
from foreign currency
transactions............... (12,358) (762) (422,188) 29,228 -- -- 5,037 (24)
Net change in unrealized
appreciation/depreciation
of investments............. (84,833) 59,662 439,369 378,494 571,005 207,559 419,679 (75,436)
Net change in unrealized
appreciation/depreciation
on translation of assets
and liabilities denominated
in foreign currenciesand
forward currency contracts. (40,471) 8,861 (72,394) (153,172) -- -- (10,907) 7,431
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Increase in Net Assets From
Operations................. 379,291 75,276 648,256 394,122 2,386,176 979,378 1,785,750 786,083
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income......... (3,585) -- (17,648) (36,924) (1,614,526) (700,656) (625,869) (693,657)
Realized gain on investments.. (503,962) (10,437) (308,510) (128,691) (193,743) (71,346) (735,166) (198,872)
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Decrease in Net Assets
From Distributions......... (507,547) (10,437) (326,158) (165,615) (1,808,269) (772,002) (1,361,035) (892,529)
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sale of
shares..................... 3,874,388 1,484,242 3,331,657 4,060,684 16,215,266 9,904,511 2,166,510 5,080,349
Investment of dividends....... 3,585 -- 17,648 36,924 1,614,526 700,656 625,869 693,657
Shares issued in payment of
gain distributions......... 503,962 10,437 308,510 128,691 193,743 71,346 735,166 198,872
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Total......................... 4,381,935 1,494,679 3,657,815 4,226,299 18,023,535 10,676,513 3,527,545 5,972,878
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Cost of shares redeemed....... (1,931,166) (195,803) (2,039,720) (1,395,763) (6,510,022) (2,716,951) (3,833,770) (4,769,122)
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net
Assets From Capital
Share Transactions......... 2,450,769 1,298,876 1,618,095 2,830,536 11,513,513 7,959,562 (306,225) 1,203,756
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Increase in Net Assets........ 2,322,513 1,363,715 1,940,193 3,059,043 12,091,420 8,166,938 118,490 1,097,310
Net Assets:
Beginning of year............. 1,363,715 -- 7,242,272 4,183,229 11,176,360 3,009,422 13,716,790 12,619,480
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
End of Year................... $3,686,228 $1,363,715 $9,182,465 $7,242,272 $23,267,780 $11,176,360 $13,835,280 $13,716,790
========== ========== ========== ========== =========== =========== =========== ===========
- ----------------------
* For the period May 1, 1996, commencement of operations, to December 31, 1996.
See Notes to Financial Statements.
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Notes to Financial Statements
- ------------------------------------------------------------------------------
1. Organization -- Seligman Portfolios, Inc. (the "Fund") is an open-end
diversified management investment company consisting of twelve separate
portfolios (the "Portfolios"): "Seligman Bond Portfolio" ("Bond Portfolio"),
"Seligman Capital Portfolio" ("Capital Portfolio"), "Seligman Cash Management
Portfolio" ("Cash Management Portfolio"), "Seligman Common Stock Portfolio"
("Common Stock Portfolio"), "Seligman Communications and Information Portfolio"
("Communications and Information Portfolio"), "Seligman Frontier Portfolio"
("Frontier Portfolio"), "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"),
"Seligman Henderson International Portfolio" ("International Portfolio"),
"Seligman High-Yield Bond Portfolio" ("High-Yield Bond Portfolio"), and
"Seligman Income Portfolio" ("Income Portfolio"), each designed to meet
different investment goals. Shares of the Fund are currently provided as the
investment medium for Canada Life of America Variable Annuity Account 2
("CLVA-2"), which is offered by Canada Life Insurance Company of America
("CLICA"), Canada Life of New York Variable Annuity Account 2 ("CLNYVA-2") which
is offered by Canada Life Insurance Company of New York ("CLNY"), and Canada
Life of America Annuity Account 3 ("CLVA-3"), which is offered by CLICA. CLVA-2
and CLNYVA-2 are registered as unit investment trusts under the Investment
Company Act of 1940, as amended (the "1940 Act") and fund variable annuity
contracts (the "CLVA-2 Contracts") issued by CLICA and CLNY and distributed by
Seligman Financial Services, Inc. CLVA-3 is not registered or regulated as a
unit investment trust under the 1940 Act in reliance on the exemption provided
in Section 3(c)(11) of the 1940 Act, and funds variable annuity contracts (the
"CLVA-3 Contracts") issued by CLICA and distributed by Seligman Financial
Services, Inc. CLVA-3 Contracts may be purchased only by pension or
profit-sharing employee benefit plans that satisfy the requirements for
qualification set forth in Section 401 of the Internal Revenue Code of 1986, as
amended. Shares of the Fund are also provided as the investment medium for other
variable annuity accounts established by CLICA or its affiliates ("Canada Life
Separate Accounts"). Shares of the Bond, Capital, Cash Management, Common Stock,
and Income Portfolios are also provided as the investment medium for Seligman
Mutual Benefit Plan (the "Mutual Benefit Plan"), a separate account of MBL Life
Assurance Corporation ("MBL Life"). However, MBL Life has decided that it will
not accept applications for new contracts nor will it accept additional purchase
payments under existing contracts. In addition, requests for transfers of
amounts to its Fixed Accumulation Account from the Mutual Benefit Plan will not
be accepted.
2. Significant Accounting Policies -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Fund:
a. Security Valuation --Investments in US Government and Government Agency
securities, bonds, convertible securities, and stocks are valued at the most
current market values or, in their absence, at fair market values determined
in accordance with procedures approved by the Board of Directors. Securities
traded on national exchanges are valued at the last sales prices or, in their
absence and in the case of over-the-counter securities, at the mean of
closing bid and asked prices. Short-term holdings maturing in 60 days or less
are valued at amortized cost. Investments held by Cash Management Portfolio
are valued using the amortized cost method which approximates fair value.
b. Foreign Securities -- The Portfolios may invest up to 10% of their total
assets in foreign securities (except Global Growth Opportunities Portfolio,
Global Smaller Companies Portfolio, Global Technology Portfolio, and
International Portfolio, which may invest up to 100% of their total assets in
foreign securities). Investments in foreign securities will usually be
denominated in foreign currencies, and the Portfolios may temporarily hold
funds in foreign currencies. The Portfolios may also invest in US
dollar-denominated American Depositary Receipts ("ADRs"), American Depositary
Shares ("ADSs"), European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs"), and Global Depositary Shares ("GDSs"). ADRs and ADSs are
issued by domestic banks or trust companies and evidence ownership of
securities issued by foreign corporations. ADRs and ADSs are traded on United
States exchanges or over-the-counter and are not included in the 10%
limitation. EDRs, GDRs, and GDSs are receipts similar to ADRs and ADSs and
are typically issued by foreign banks or trust companies and traded in
Europe. The books and records of the Portfolios are maintained in US dollars.
Foreign currency amounts are translated into US dollars on the following
basis:
(i) market value of investment securities, other assets, and liabilities,
at the daily rate of exchange as reported by a pricing service;
(ii)purchases and sales of investment securities, income and expenses, at
the rate of exchange prevailing on the respective dates of such
transactions.
The net asset values per share of Portfolios which invest in securities
denominated in foreign currencies will be affected by changes in currency
exchange rates. Changes in foreign currency exchange rates may also affect
the value of dividends and interest earned, gains and losses realized on
sales of securities, and net investment income and gains, if any, to be
distributed to shareholders of the Portfolios. The rate of exchange between
the US dollar and other currencies is determined by the forces of supply and
demand in the foreign exchange markets.
Net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and from the difference between
the amounts of dividends, interest and foreign withholding
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- ------------------------------------------------------------------------------
taxes recorded on the Portfolios' books, and the US dollar equivalent of
the amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of portfolio securities and other
foreign currency-denominated assets and liabilities at period end, resulting
from changes in exchange rates.
The Portfolios separate that portion of the results of operations
resulting from changes in the foreign exchange rates from the fluctuations
arising from changes in the market prices of securities held in the
Portfolios. Similarly, the Portfolios separate the effect of changes in
foreign exchange rates from the fluctuations arising from changes in the
market prices of portfolio securities sold during the period.
c. Forward Currency Contracts -- The Global Growth Opportunities Portfolio,
Global Smaller Companies Portfolio, Global Technology Portfolio, and
International Portfolio may enter into forward currency contracts in
order to hedge their exposure to changes in foreign currency exchange
rates on their foreign portfolio holdings, or other amounts receivable
or payable in foreign currency. A forward contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated
forward rate. Certain risks may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts. The contracts are valued daily at current exchange rates and
any unrealized gain or loss is included in net unrealized appreciation or
depreciation on translation of assets and liabilities denominated in
foreign currencies and forward currency contracts. The gain or loss,
if any, arising from the difference between the settlement value of the
forward contract and the closing of such contract, is included in net
realized gain or loss from foreign currency transactions. For federal
income tax purposes, certain open forward currency contracts are treated as
sold on the last day of the fiscal year and any gains or losses are
recognized immediately. As a result, the amount of income distributable to
shareholders may vary from the amount recognized for financial statement
purposes.
d. Federal Taxes -- The Portfolios' policy is to comply with the
requirements of the Internal Revenue Code applicable to Regulated Investment
Companies and to distribute substantially all of their taxable net income and
net gain realized to shareholders.
e. Security Transactions and Related Investment Income --Investment
transactions are recorded on trade dates. Interest income is recorded on the
accrual basis. The Portfolios amortize market discounts and premiums on
purchases of portfolio securities. Dividends receivable and payable are
recorded on ex-dividend dates, except that certain dividends from foreign
securities where the ex-dividend dates may have passed are recorded as
soon as the Fund is informed of the dividend.
f. Repurchase Agreements --The Portfolios may enter into repurchase
agreements with commercial banks and with broker/dealers deemed to be
creditworthy by J. & W. Seligman & Co. Incorporated (the "Manager").
Securities purchased subject to repurchase agreements are deposited with
the Portfolios' custodians and, pursuant to the terms of the repurchase
agreement, must have an aggregate market value greater than or equal to the
repurchase price, plus accrued interest, at all times. Procedures have been
established to monitor, on a daily basis, the market value of the
repurchase agreements' underlying securities to ensure the existence of the
proper level of collateral.
g. Expense Allocations -- Expenses directly attributable to each Portfolio
are charged to such Portfolio, and expenses that are applicable to more
than one Portfolio are allocated among them.
h. Distributions to Shareholders -- The treatment for financial statement
purposes of distributions made during the year from net investment income
or net realized gains may differ from their ultimate treatment for federal
income tax purposes. These differences primarily are caused by differences
in the timing of the recognition of certain components of income, expense
or capital gain and the recharacterization of foreign exchange gains or
losses to either ordinary income or realized capital gain for federal
income tax purposes. Where such differences are permanent in nature, they
are reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset
values per share of the Portfolios.
3. Purchases and Sales of Securities --Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments, for
the year ended December 31, 1997, were as follows:
Portfolio Purchases Sales
--------- ------------ ------------
Bond $ 5,091,586 $ 4,134,111
Capital 19,047,518 15,667,004
Common Stock 40,626,631 28,596,935
Communications and Information 211,971,199 200,473,181
Frontier 41,767,990 36,189,622
Global Growth Opportunities 6,136,540 2,643,212
Global Smaller Companies 15,065,283 12,282,453
Global Technology 5,267,471 3,882,450
International 9,185,558 7,351,490
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Portfolio Purchases Sales
--------- ------------ -------------
High-Yield Bond $ 23,074,271 $ 12,229,771
Income 10,225,670 11,098,708
For the year ended December 31, 1997, purchases and sales of US Government
obligations were $5,210,388 and $4,388,183, respectively, for the Bond
Portfolio, and purchases of US Government obligations were $1,015,977 for the
Income Portfolio.
Identified cost of investments sold is used for both financial statement and
federal income tax purposes.
At December 31, 1997, the cost of investments for federal income tax purposes
was substantially the same as the cost for financial reporting purposes. The tax
basis gross unrealized appreciation and depreciation of portfolio securities,
including the effects of foreign currency transactions, were as follows:
Unrealized Unrealized
Portfolio Appreciation Depreciation
--------- ------------ -----------
Bond $ 222,049 $ 92
Capital 4,535,682 551,424
Common Stock 9,125,971 872,712
Communications and Information 4,564,965 10,291,044
Frontier 6,220,677 3,180,823
Global Growth Opportunities 588,894 304,698
Global Smaller Companies 3,207,540 2,801,298
Global Technology 375,070 431,772
International 1,316,976 492,870
High-Yield Bond 1,164,189 328,237
Income 1,135,757 302,104
4. Management Fee, Administrative Services, and Other Transactions -- The
Manager manages the affairs of the Fund and provides or arranges for the
necessary personnel and facilities. Seligman Henderson Co. (the "Subadviser"),
an entity owned 50% each by the Manager and Henderson plc, supervises and
directs the Fund's foreign investments. Compensation of all officers of the
Fund, all directors of the Fund who are employees or consultants of the
Manager, and all personnel of the Fund and the Manager is paid by the
Manager or by Henderson plc. The Manager's fee is calculated daily and payable
monthly, equal to 0.40%, on an annual basis, of Bond, Capital, Cash
Management, Common Stock, and Income Portfolios' daily net assets; equal to
0.75%, on an annual basis, of Communications and Information and Frontier
Portfolios' daily net assets; and equal to 0.50%, on an annual basis, of
High-Yield Bond Portfolio's daily net assets. The Manager's fee from Global
Growth Opportunities, Global Smaller Companies, Global Technology and
International Portfolios is calculated daily and payable monthly, equal to an
annual rate of 1.00% of the daily net assets of each Portfolio, of which 0.90%
is paid to the Subadviser. The Manager has agreed to reimburse expenses, other
than the management fee, which exceed 0.20% per annum of the average daily net
assets of each of the Portfolios (except the Cash Management, Global Growth
Opportunities, Global Smaller Companies, Global Technology and International
Portfolios). The Manager, at its discretion, has elected to waive all of its
fee for, and reimburse all of the expenses of, the Cash Management Portfolio
until such time as the Manager determines. The Manager and Subadviser have
agreed to reimburse expenses, other than the management fee, which exceed
0.40% per annum of the average daily net assets of the Global Growth
Opportunities, Global Smaller Companies, Global Technology and International
Portfolios. For the year ended December 31, 1997, the Manager reimbursed
expenses and/or waived fees of $13,068, $2,708, $74,723, $15,066, and $4,416
for the Bond, Capital, Cash Management, High-Yield Bond, and Income
Portfolios, respectively. For the same period, the Manager waived all its fee
and the Subadviser waived a portion of its fee for the Global Growth
Opportunities Portfolio, the Global Smaller Companies Portfolio, the Global
Technology Portfolio, and the International Portfolio, totalling $27,093,
$31,463, $18,553, and $59,491, respectively.
Seligman Financial Services, Inc. (the "Distributor"), agent for the
distribution of the CLVA-2 Contracts and an affiliate of the Manager, received
concessions of $301,510 from Canada Life Insurance Company of America and
$20,947 from Canada Life Insurance Company of New York, after commissions paid
to dealers.
Certain officers and directors of the Fund are officers or directors of the
Manager, the Distributor, and/or the Subadviser.
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- ------------------------------------------------------------------------------
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Interest is accrued on the deferred
balances. The cost of such fees and interest is included in directors' fees and
expenses, and the accumulated balance thereof at December 31, 1997, is included
in other liabilities. Deferred fees and the related accrued interest are not
deductible for federal income tax purposes until such amounts are paid.
5. Loss Carryforward -- At December 31, 1997, the Bond Portfolio and the Cash
Management Portfolio had net capital loss carryforwards for federal income tax
purposes of $51,898 and $398, respectively, which are available for offset
against future taxable net gains. These net capital loss carryforwards will
expire in varying amounts through 2003.
6. Outstanding Forward Exchange Currency Contracts -- At December 31, 1997,
the Fund had outstanding forward exchange currency contracts to purchase or
sell foreign currencies as follows:
<TABLE>
<CAPTION>
Unrealized
Foreign In Exchange Settlement Appreciation
Contract Currency for US $ Date US $ Value (Depreciation)
- -------- ---------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
Purchases:
Italian lira 27,903,636 15,860 1/5/98 15,773 $ (87)
Dutch guilders 98,485 48,811 1/5/98 48,599 (212)
Swedish kronor 186,590 23,611 1/5/98 23,517 (94)
-------
(393)
-------
Sales:
Japanese yen 26,318,670 210,000 2/20/98 202,732 7,268
-------
$ 6,875
=======
GLOBAL SMALLER COMPANIES PORTFOLIO
Sales:
Italian lira 22,231,840 12,637 1/5/98 12,567 $70
Japanese yen 100,909,225 815,000 2/20/98 777,301 37,699
-------
$37,769
=======
INTERNATIONAL PORTFOLIO
Purchases:
Singapore dollars 6,188 3,694 1/2/98 3,678 $ (16)
-------
Sales:
Japanese yen 68,469,695 553,000 2/20/98 527,420 25,580
-------
$25,564
=======
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
7. Capital Stock Transactions -- At December 31, 1997, there were 20,000,000
shares of Capital Stock authorized for each of the Global Growth Opportunities
and Global Technology Portfolios; 80,000,000 shares for the Bond and Capital
Portfolios; and 100,000,000 shares for each of the Cash Management, Common
Stock, Communications and Information, Frontier, Global Smaller Companies,
International, High-Yield Bond, and Income Portfolios, all at a par value of
$.001 per share. Transactions in shares of Capital Stock were as follows:
<TABLE>
<CAPTION>
Bond Capital Cash Management
Portfolio Portfolio Portfolio
------------------------ ---------------------- -----------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------ ---------------------- -----------------------
1997 1996 1997 1996 1997 1996
--------- --------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares.................... 292,591 214,510 421,000 371,812 25,875,970 16,950,432
Shares issued in payment
of dividends................... 35,242 27,071 1,659 2,189 512,275 483,722
Shares issued in payment
of gain distributions.......... -- -- 74,699 53,253 -- --
--------- --------- -------- -------- ---------- ----------
Total............................. 327,833 241,581 497,358 427,254 26,388,245 17,434,154
--------- --------- -------- -------- ---------- ----------
Shares redeemed................... (128,619) (165,022) (264,028) (156,642) (27,507,851) (15,478,773)
--------- --------- -------- -------- ---------- ----------
Increase (Decrease)
in Shares...................... 199,214 76,559 233,330 270,612 (1,119,606) 1,955,381
========= ========= ======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Communications
Common Stock and Information Frontier
Portfolio Portfolio Portfolio
------------------------ ---------------------- ------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------- ---------------------- ------------------------
1997 1996 1997 1996 1997 1996
--------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares.................... 706,222 676,407 2,968,727 2,058,865 1,172,506 1,141,808
Shares issued in payment
of dividends................... 51,724 41,705 -- -- -- --
Shares issued in payment
of gain distributions.......... 436,215 286,354 1,783,179 -- 255,874 229,516
--------- ---------- --------- --------- --------- ---------
Total............................. 1,194,161 1,004,466 4,751,906 2,058,865 1,428,380 1,371,324
--------- ---------- --------- --------- --------- ---------
Shares redeemed................... (412,385) (537,472) (2,185,329) (777,428) (819,268) (177,011)
--------- ---------- --------- --------- --------- ---------
Increase in Shares................ 781,776 466,994 2,566,577 1,281,437 609,112 1,194,313
========= ========== ========= ========= ========= =========
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Growth Global Smaller Global
Opportunities Companies Technology
Portfolio Portfolio Portfolio
------------------------ ---------------------- -------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------ ---------------------- -------------------------
1997 1996* 1997 1996 1997 1996*
--------- --------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares...................... 409,426 173,750 447,087 877,250 329,216 150,969
Shares issued in payment
of dividends..................... -- 186 2,062 1,708 347 --
Shares issued in payment
of gain distributions............ 5,564 -- 37,365 90,260 48,881 1,023
--------- --------- -------- -------- --------- ---------
Total............................... 414,990 173,936 486,514 969,218 378,444 151,992
--------- --------- -------- -------- --------- ---------
Shares redeemed..................... (81,077) (13,596) (217,853) (72,141) (162,342) (19,875)
--------- --------- -------- -------- --------- ---------
Increase in Shares.................. 333,913 160,340 268,661 897,077 216,102 132,117
========= ========= ======== ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
International High-Yield Bond Income
Portfolio Portfolio Portfolio
------------------------- ----------------------- -------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------ ---------------------- -------------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares...................... 239,540 316,262 1,357,028 885,932 192,283 468,320
Shares issued in payment
of dividends..................... 1,313 2,864 136,132 62,670 58,547 65,750
Shares issued in payment
of gain distributions............ 22,955 9,983 16,336 6,382 68,771 18,850
--------- --------- --------- -------- --------- ---------
Total............................... 263,808 329,109 1,509,496 954,984 319,601 552,920
--------- --------- --------- -------- --------- ---------
Shares redeemed..................... (144,243) (108,146) (547,725) (242,875) (342,394) (443,660)
--------- --------- --------- -------- --------- ---------
Increase (Decrease)
in Shares........................ 119,565 220,963 961,771 712,109 (22,793) 109,260
========= ========= ========= ======== ========= =========
<FN>
- -----------------
* For the period May 1, 1996, commencement of operations, to December 31, 1996.
</FN>
</TABLE>
8. Committed Line of Credit --Effective July 23, 1997, the Communications and
Information Portfolio, Frontier Portfolio, Global Growth Opportunities
Portfolio, Global Smaller Companies Portfolio, Global Technology Portfolio,
International Portfolio, and High-Yield Bond Portfolio, collectively, entered
into a $12 million committed line of credit facility with a group of banks.
Borrowings pursuant to the credit facility will be subject to interest at a rate
equal to the federal funds rate plus 0.50% per annum. The participating
Portfolios incur a commitment fee of 0.10% per annum on the unused portion of
the credit facility. The credit facility may be drawn upon only for temporary
purposes and is subject to certain other customary restrictions. The credit
facility commitment will expire one year from the date of the agreement but is
renewable with the consent of the participating banks. To date, the
participating Portfolios have not borrowed from the credit facility.
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------------------------
The Fund's financial highlights are presented below. "Per share operating
performance" data is designed to allow investors to trace the operating
performance, on a per share basis, from a Portfolio's beginning net asset value
to the ending net asset value, so that investors can understand what effect the
individual items have on their investment, assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item, as disclosed in the financial statements,
to their equivalent per share amount.
"Total return based on net asset value" measures each Portfolio's performance
assuming that investors purchased shares of a Portfolio at net asset value at
the beginning of the period, invested dividends and capital gains paid at net
asset value, and then sold their shares at the net asset value on the last day
of the period. The total returns exclude the effect of all administration fees
and asset based sales charges associated with variable annuity contracts. The
total returns for periods of less than one year are not annualized.
"Average commission rate paid" represents the average commission paid by the
Portfolios to purchase or sell portfolio 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. This rate is provided
for all periods beginning January 1, 1996.
<TABLE>
<CAPTION>
Bond Portfolio
-------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....................... $9.890 $10.440 $9.270 $10.110 $10.660
------- -------- ------- -------- -------
Net investment income.................................... 0.538 0.565 0.605 0.499 0.713
Net realized and unrealized gain (loss) on investments... 0.350 (0.552) 1.171 (0.841) 0.142
------- -------- ------- -------- -------
Increase (Decrease) from Investment Operations........... 0.888 0.013 1.776 (0.342) 0.855
Dividends paid........................................... (0.538) (0.563) (0.606) (0.498) (0.711)
Distributions from net realized gain..................... -- -- -- -- (0.694)
------- -------- ------- -------- -------
Net Increase (Decrease) in Net Asset Value............... 0.350 (0.550) 1.170 (0.840) (0.550)
------- -------- ------- -------- -------
Net Asset Value, End of Year............................. $10.240 $ 9.890 $10.440 $ 9.270 $10.110
======= ======== ======= ======== =======
TOTAL RETURN BASED ON NET ASSET VALUE: 8.98% 0.09% 19.18% (3.39)% 7.98%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets........................... 0.60% 0.60% 0.60% 0.60% 0.74%
Net investment income to average net assets.............. 6.22% 5.97% 6.22% 5.12% 5.41%
Portfolio turnover....................................... 170.12% 199.74% 114.42% 237.23% 33.21%
Net Assets, End of Year (000s omitted)................... $7,232 $5,015 $4,497 $3,606 $3,775
Without management fee waiver and
expense reimbursement:+
Net investment income per share....................... $0.515 $0.545 $0.571 $0.430 $0.675
Ratios:
Expenses to average net assets........................ 0.83% 0.79% 0.99% 1.31% 1.07%
Net investment income to average net assets........... 5.99% 5.78% 5.83% 4.41% 5.08%
<FN>
- --------------------------
+ The Manager, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Financial Highlights (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Portfolio
-----------------------------------------------------
Year Ended December 31,
------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year...................... $16.010 $14.910 $12.700 $14.950 $16.980
------- ------- ------- ------- -------
Net investment income................................... 0.029 0.043 0.048 0.015 0.021
Net realized and unrealized gain (loss) on investments.. 3.350 2.121 3.385 (0.699) 1.928
------- ------- ------- ------- -------
Increase (Decrease) from Investment Operations.......... 3.379 2.164 3.433 (0.684) 1.949
Dividends paid.......................................... (0.028) (0.042) (0.047) (0.018) (0.021)
Distributions from net realized gain.................... (1.261) (1.022) (1.176) (1.548) (3.958)
------- ------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value.............. 2.090 1.100 2.210 (2.250) (2.030)
------- ------- ------- ------- -------
Net Asset Value, End of Year............................ $18.100 $16.010 $14.910 $12.700 $14.950
======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 21.31% 14.51% 27.17% (4.59)% 11.65%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.......................... 0.60% 0.59% 0.60% 0.60% 0.71%
Net investment income to average net assets............. 0.16% 0.29% 0.32% 0.10% 0.09%
Portfolio turnover...................................... 93.97% 88.78% 122.20% 67.39% 65.30%
Average commission rate paid............................ $0.0567 $0.0557
Net Assets, End of Year (000s omitted).................. $20,400 $14,313 $9,294 $5,942 $5,886
Without management fee waiver and
expense reimbursement:+
Net investment income (loss) per share............... $0.026 $0.035 $(0.036) $(0.003)
Ratios:
Expenses to average net assets....................... 0.62% 0.71% 0.96% 0.83%
Net investment income (loss) to average net assets... 0.14% 0.21% (0.26)% (0.03)%
</TABLE>
<TABLE>
<CAPTION>
Cash Management Portfolio
-----------------------------------------------------
Year Ended December 31,
------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year...................... $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income................................... 0.054 0.053 0.055 0.040 0.030
Dividends paid.......................................... (0.054) (0.053) (0.055) (0.040) (0.030)
------ ------ ------ ------ ------
Net Asset Value, End of Year............................ $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN BASED ON NET ASSET VALUE: 5.52% 5.43% 5.60% 4.03% 3.00%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.......................... -- -- -- -- --
Net investment income to average net assets............. 5.39% 5.30% 5.48% 3.98% 2.96%
Net Assets, End of Year (000s omitted).................. $8,635 $9,755 $7,800 $3,230 $3,102
Without management fee waiver and
expense reimbursement:+
Net investment income per share...................... $0.046 $0.047 $0.046 $0.025 $ 0.019
Ratios:
Expenses to average net assets....................... 0.79% 0.63% 0.87% 1.48% 1.07%
Net investment income to average net assets.......... 4.60% 4.67% 4.61% 2.50% 1.89%
<FN>
- --------------------------
+ The Manager, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Portfolio
-------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....................... $15.920 $15.440 $13.780 $14.980 $15.600
------- ------- ------- ------- -------
Net investment income.................................... 0.328 0.334 0.349 0.365 0.392
Net realized and unrealized gain (loss) on investments... 3.013 2.789 3.400 (0.356) 1.479
------- ------- ------- ------- -------
Increase from Investment Operations...................... 3.341 3.123 3.749 0.009 1.871
Dividends paid........................................... (0.316) (0.336) (0.345) (0.385) (0.394)
Distributions from net realized gain..................... (2.665) (2.307) (1.744) (0.824) (2.097)
------- ------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value............... 0.360 0.480 1.660 (1.200) (0.620)
------- ------- ------- ------- -------
Net Asset Value, End of Year............................. $16.280 $15.920 $15.440 $13.780 $14.980
======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 21.31% 20.08% 27.28% 0.04% 11.94%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets........................... 0.53% 0.53% 0.54% 0.60% 0.55%
Net investment income to average net assets.............. 1.92% 1.99% 2.42% 2.45% 2.10%
Portfolio turnover....................................... 80.13% 50.33% 55.48% 15.29% 10.70%
Average commission rate paid............................. $0.0594 $0.0561
Net Assets, End of Year (000s omitted) .................. $50,737 $37,168 $28,836 $20,168 $21,861
Without management fee waiver and
expense reimbursement:++
Net investment income per share....................... $0.361
Ratios:
Expenses to average net assets........................ 0.62%
Net investment income to average net assets........... 2.43%
</TABLE>
<TABLE>
<CAPTION>
Communications and Information Portfolio
---------------------------------------------------------
10/11/94*
Year Ended December 31, to
----------------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 12/31/94
------- ------- ------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....................... $14.690 $13.500 $10.440 $10.000
------- ------- ------- -------
Net investment loss...................................... -- -- -- (0.016)
Net realized and unrealized gain on investments.......... 3.049 1.190 4.015 0.456
------ ------- ------- -------
Increase from Investment Operations...................... 3.049 1.190 4.015 0.440
Dividends paid........................................... -- -- -- --
Distributions from net realized gain..................... (4.649) -- (0.955) --
------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value............... (1.600) 1.190 3.060 0.440
------- ------- ------- -------
Net Asset Value, End of Year............................. $13.090 $14.690 $13.500 $10.440
======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 22.22% 8.81% 38.55% 4.40%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets........................... 0.87% 0.87% 0.95% 0.95%+
Net investment loss to average net assets................ (0.49)% (0.32)% (0.89)% (0.95)%+
Portfolio turnover....................................... 277.14% 167.20% 96.62% --
Average commission rate paid............................. $0.0511 $0.0530
Net Assets, End of Year (000s omitted)................... $87,633 $60,645 $38,442 $495
Without management fee waiver and
expense reimbursement:++
Net investment loss per share......................... $(0.436)
Ratios:
Expenses to average net assets........................ 13.96%+
Net investment loss to average net assets............. (13.96)%+
<FN>
- ---------------------
* Commencement of investment operations.
+ Annualized.
++ The Manager, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Financial Highlights (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Growth
Opportunities
Frontier Portfolio Portfolio
---------------------------------------- ------------------
10/11/94* Year 5/1/96**
Year Ended December 31, to Ended to
----------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 12/31/94 12/31/97 12/31/96
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....................... $14.980 $13.560 $10.580 $10.000 $ 9.910 $10.000
------- ------- ------- ------- ------- -------
Net investment income (loss)............................. -- 0.001 (0.001) (0.012) 0.006 0.008
Net realized and unrealized gain on investments.......... 2.386 3.220 3.512 0.592 1.799 0.018
Net realized and unrealized loss on
foreign currency transactions......................... -- -- -- -- (0.561) (0.104)
------- ------- ------- ------- ------- -------
Increase (Decrease) from Investment Operations........... 2.386 3.221 3.511 0.580 1.244 (0.078)
Dividends paid........................................... -- -- -- -- -- (0.012)
Distributions from net realized gain..................... (1.586) (1.801) (0.531) -- (0.124) --
------- ------- ------- -------- ------- -------
Net Increase (Decrease) in Net Asset Value............... 0.800 1.420 2.980 0.580 1.120 (0.090)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Year............................. $15.780 $14.980 $13.560 $10.580 $11.030 $ 9.910
======= ======= ======= ======= ======= ========
TOTAL RETURN BASED ON NET ASSET VALUE: .................. 16.33% 23.93% 33.28% 5.80% 12.57% (0.78)%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets........................... 0.89% 0.92% 0.95% 0.95%+ 1.40% 1.40%+
Net investment income (loss) to average net assets....... (0.49)% (0.37)% (0.55)% (0.70)%+ 0.01% 0.37%+
Portfolio turnover....................................... 101.68% 119.74% 106.48% -- 77.85% 12.99%
Average commission rate paid............................. $0.0539 $0.0532 $0.0289 $0.0522
Net Assets, End of Year (000s omitted)................... $42,973 $31,672 $12,476 $169 $5,449 $1,590
Without management fee waiver and
expense reimbursement:++
Net investment loss per share......................... $(0.019) $(1.319) $(0.072) $(0.255)
Ratios:
Expenses to average net assets........................ 1.37% 40.47%+ 2.11% 6.04%+
Net investment loss to average net assets............. (0.97)% (40.22)%+ (0.70)% (4.27)%+
<FN>
- -----------------------
* Commencement of investment operations.
** Commencement of operations.
+ Annualized.
++ The Manager and/or Subadviser, at their discretion, reimbursed expenses
and/or waived management fees for certain periods presented.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global
Global Smaller Technology
Companies Portfolio Portfolio
--------------------------------- -------------------
10/11/94* Year 5/1/96**
Year Ended December 31, to Ended to
---------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 12/31/94 12/31/97 12/31/96
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....................... $12.870 $11.670 $10.310 $10.000 $10.320 $10.000
------- ------- ------- ------- ------- -------
Net investment income (loss)............................. 0.016 0.022 0.051 0.058 0.012 (0.004)
Net realized and unrealized gain on investments.......... 1.166 2.305 2.037 0.266 2.151 0.305
Net realized and unrealized gain (loss) on
foreign currency transactions......................... (0.747) (0.158) (0.301) 0.029 (0.194) 0.099
------- ------- ------- ------- ------- -------
Increase from Investment Operations...................... 0.435 2.169 1.787 0.353 1.969 0.400
Dividends paid........................................... (0.017) (0.018) (0.052) (0.043) (0.012) --
Distributions from net realized gain..................... (0.308) (0.951) (0.375) -- (1.687) (0.080)
------- ------- ------- ------- ------- -------
Net Increase in Net Asset Value.......................... 0.110 1.200 1.360 0.310 0.270 0.320
------- ------- ------- ------- ------- -------
Net Asset Value, End of Year ............................ $12.980 $12.870 $11.670 $10.310 $10.590 $10.320
======= ======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 3.43% 18.66% 17.38% 3.53% 19.53% 4.01%
RATIOS/SUPPLEMENTAL DATA
Expenses to average net assets........................... 1.40% 1.40% 1.39% 1.20%+ 1.40% 1.40%+
Net investment income to average net assets.............. 0.24% 0.23% 0.64% 3.14%+ 0.12% 0.60%+
Portfolio turnover....................................... 64.81% 62.31% 55.65% -- 167.36% 45.04%
Average commission rate paid............................. $0.0183 $0.0219 $0.0228 $0.0160
Net Assets, End of Year (000s omitted)................... $20,505 $16,876 $4,837 $132 $3,686 $1,364
Without management fee waiver and
expense reimbursement:++
Net investment income (loss) per share ............... $0.006 $(0.044) $(0.051) $(1.225) $(0.070) $(0.202)
Ratios:
Expenses to average net assets........................ 1.56% 1.90% 3.84% 37.25%+ 2.10% 4.71%+
Net investment income (loss) to average net assets.... 0.08% (0.27)% (1.81)% (32.91)%+ (0.58)% (2.71)%+
<FN>
- ------------------------
* Commencement of investment operations.
** Commencement of operations.
+ Annualized.
++ The Manager and Subadviser, at their discretion, reimbursed expenses and/or
waived management fees for certain periods presented.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Financial Highlights (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International High-Yield Bond
Portfolio Portfolio
---------------------------------------------- ----------------------------
5/3/93* Year Ended 5/1/95*
Year Ended December 31, to December 31, to
----------------------------------- ----------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 1994 12/31/93 1997 1996 12/31/95
------- ------- ------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year.......... $12.960 $12.390 $11.340 $11.370 $10.000 $11.190 $10.500 $10.000
------- ------- ------- ------- ------- ------- ------- -------
Net investment income....................... 0.026 0.074 0.154 0.131 0.021 0.908 0.768 0.218
Net realized and unrealized gain (loss)
on investments........................... 2.110 1.124 0.896 (0.306) 1.518 0.780 0.766 0.519
Net realized and unrealized gain (loss) on
foreign currency transactions ........... (1.057) (0.323) 0.236 0.325 (0.099) -- -- --
------- ------- ------- ------ ------- ------- ------- -------
Increase from Investment Operations......... 1.079 0.875 1.286 0.150 1.440 1.688 1.534 0.737
Dividends paid.............................. (0.027) (0.068) (0.151) (0.064) (0.053) (0.900) (0.766) (0.219)
Distributions from net realized gain........ (0.472) (0.237) (0.085) (0.116) (0.017) (0.108) (0.078) (0.018)
------- ------- ------- ------ ------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value.. 0.580 0.570 1.050 (0.030) 1.370 0.680 0.690 0.500
------- ------- ------- ------ ------- ------- ------- -------
Net Asset Value, End of Year................ $13.540 $12.960 $12.390 $11.340 $11.370 $11.870 $11.190 $10.500
======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 8.35% 7.08% 11.34% 1.32% 14.40% 15.09% 14.62% 7.37%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets.............. 1.40% 1.40% 1.35% 1.20% 1.20%+ 0.70% 0.70% 0.70%+
Net investment income to average net assets. 0.43% 0.70% 1.01% 1.17% 1.30%+ 9.61% 9.77% 7.46%+
Portfolio turnover.......................... 89.43% 48.53% 41.40% 47.34% 2.82% 74.54% 117.01% 67.55%
Average commission rate paid................ $0.0214 $0.0191
Net Assets, End of Year (000s omitted)...... $9,182 $7,242 $4,183 $1,776 $648 $23,268 $11,176 $3,009
Without management fee waiver and
expense reimbursement:++
Net investment income (loss) per share... $(0.069) $(0.042) $0.001 $(0.419) $(1.004) $0.897 $0.747 $0.117
Ratios:
Expenses to average net assets........... 2.07% 2.30% 3.40% 6.12% 17.94%+ 0.79% 0.88% 4.38%+
Net investment income (loss) to average
net assets............................. (0.24)% (0.20)% (1.04)% (3.75)% (15.44)%+ 9.52% 9.59% 3.78%+
<FN>
- -----------------------
* Commencement of operations.
+ Annualized.
++ The Manager and/or Subadviser, at their discretion, reimbursed expenses
and/or waived management fees for certain periods presented.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income Portfolio
-------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1997 1996 1995 1994 1993
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....................... $10.520 $10.560 $9.970 $11.380 $11.390
------- ------- ------- ------- -------
Net investment income.................................... 0.556 0.579 0.604 0.689 0.828
Net realized and unrealized gain (loss) on investments... 0.907 0.126 1.187 (1.369) 0.576
------- ------- ------- ------- -------
Increase (Decrease) from Investment Operations........... 1.463 0.705 1.791 (0.680) 1.404
Dividends paid........................................... (0.544) (0.579) (0.604) (0.730) (0.828)
Distributions from net realized gain..................... (0.639) (0.166) (0.597) -- (0.586)
------- ------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value............... 0.280 (0.040) 0.590 (1.410) (0.010)
------- ------- ------- ------- -------
Net Asset Value, End of Year............................. $10.800 $10.520 $10.560 $9.970 $11.380
======= ======= ======= ======= =======
TOTAL RETURN BASED ON NET ASSET VALUE: 14.02% 6.66% 17.98% (5.96)% 12.37%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average net assets........................... 0.60% 0.59% 0.60% 0.60% 0.64%
Net investment income to average net assets.............. 4.71% 5.37% 5.55% 6.34% 6.40%
Portfolio turnover....................................... 96.99% 19.59% 51.22% 29.76% 38.38%
Average commission rate paid............................. $0.0544 $0.0600
Net Assets, End of Year (000s omitted)................... $13,835 $13,717 $12,619 $10,050 $11,220
Without management fee waiver and
expense reimbursement:+
Net investment income per share....................... $0.553 $0.602 $0.670 $0.826
Ratios:
Expenses to average net assets........................ 0.63% 0.62% 0.77% 0.65%
Net investment income to average net assets........... 4.68% 5.53% 6.17% 6.39%
<FN>
- ---------------------------
+The Manager, at its discretion, waived management fees for certain periods
presented.
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Seligman Portfolios, Inc.
- -------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
- -------------------------------------------------------------------------------
The Directors and Shareholders,
Seligman Portfolios, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Seligman Portfolios, Inc. (comprising,
respectively, the Seligman 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,
and Seligman Income Portfolio, collectively referred to as the "Fund") as of
December 31, 1997, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997, by correspondence with the custodians
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Seligman Portfolios, Inc. at December
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated periods, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
----------------------
New York, New York
February 6, 1998
<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, 1997 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, 1997 for the Seligman
Henderson International Portfolio; from 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;
from May 1, 1995 (commencement of operations) to December 31, 1997
for Seligman High-Yield Bond Portfolio; and from May 1, 1996
(commencement of operations) to December 31, 1997 for Seligman
Henderson Global Growth Opportunities Portfolio and Seligman
Henderson Global Technology Portfolio.
Part B: Required Financial Statements, which are included in the Fund's 1997
Annual Report, are 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 year ended 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 High-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.
(b) Exhibits: All Exhibits have been previously filed, except Exhibits
marked with an asterisk (*) which are incorporated herein.
(1) Form of Articles of Amendment and Restatement of Articles of
Incorporation.*
(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) Subadvisory Agreement in respect of Seligman Henderson Global
Growth Opportunities Portfolio and Seligman Henderson Global
Technology Portfolio.*
(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.*
(g) Management Agreement in respect of Seligman Henderson
International Portfolio. (Incorporated by reference to
Post-Effective Amendment No. 15 filed on March 31, 1995.)
(h) Subadvisory Agreement in respect of Seligman Henderson Global
Growth Opportunities Portfolio and Seligman Henderson Global
Technology Portfolio.*
(i) Management Agreement in respect of Seligman Capital, Seligman
Cash Management, Seligman Common Stock, Seligman Bond 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) Deferred Compensation Plan for Directors of Seligman Portfolios, Inc.*
(8)
(a) Form of Custodian Agreement in respect of Seligman Capital,
Seligman Cash Management, Seligman Common Stock, Seligman Bond
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) Form of Recordkeeping Agreement in respect of Seligman Henderson
International Portfolio.*
(d) Form of 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) Buy-Sell Agreement and Modification between the Registrant and
The Mutual Benefit Life Insurance Company. (Incorporated by
reference to Post-Effective Amendment No. 10 filed on April 26,
1993.)
(b) Form of Buy/Sell Agreement between Registrant and Canada Life
Insurance Company of America.*
(c) Form of Buy/Sell Agreement between Registrant and Canada Life
Insurance Company of New York.*
(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 Bond 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 International
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.)
(i) Form of Promotional Agent Distribution Agreement between Seligman
Financial Services, Inc. on behalf of Registrant and Canada Life
Insurance Company of America.*
(j) Form of Promotional Agent Distribution Agreement between Seligman
Financial Services, Inc. on behalf of Registrant and Canada Life
Insurance Company of New York.*
(k) Form of Selling Agreement between Seligman Financial Services,
Inc. on behalf of Registrant and Canada Life Insurance Company of
America.*
(l) Form of Selling Agreement between Seligman Financial Services,
Inc. on behalf of Registrant and Canada Life Insurance Company of
New York.*
(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) Form of Purchase Agreement for Seligman Capital, Seligman Cash
Management, Seligman Common Stock, Seligman Bond Securities, and
Seligman Income Portfolios.*
(b) Investment Letter for Seligman Henderson International
Portfolio.*
(c) Investment Letter for Seligman High-Yield Bond Portfolio.
(Incorporated by reference to Post-Effective Amendment No. 15
filed on March 31, 1995.)
(d) Investment Letter 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 Roth/Traditional IRA Information Kit. (Incorporated by
reference to Exhibit q(1) of Registration Statement No. 333-50295,
Form N-2, filed on April 16, 1998.)
(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.)
(14c) Qualified Plan and Trust Basic Plan Document. (Incorporated by
reference to Exhibit q(4) to Registration No. 333-50295, Form N-2,
filed on April 16, 1998.)
(14d) Flexible Standardized 401(k) Profit Sharing Plan Adoption Agreement.
(Incorporated by reference to Exhibit q(4) to Registration No.
333-50295, Form N-2, filed on April 16, 1998.)
(14e) Flexible Nonstandardized Safe Harbor 401(k) Profit Sharing Plan
Adoption Agreement. (Incorporated by reference to Exhibit q(4) to
Registration No. 333-50295, Form N-2, filed on April 16, 1998.)
(14f) Simplified Employee Pension Plan. (Incorporated by reference to
Exhibit 14(f) to Registration No. 2-10835, Post-Effective Amendment
No. 76, filed on April , 1998.)
(14g) Educational IRA. (Incorporated by reference to Exhibit 14(f) to
Registration No. 2-10835, Post-Effective Amendment No. 76, filed on
April , 1998.)
(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: Power of Attorney for Richard R. Schmaltz.*
Powers of Attorney (Incorporated by reference to
Post-Effective Amendment No. 20 filed on April 17, 1997.)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of March 31, 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 this Post-Effective Amendment No. 22 to the
Registration Statement and Article IV of Registrant's Amended and
Restated By-laws filed as Exhibit 24(b)(2) to Registrant's
Post-Effective Amendment No. 20 to the Registration Statement.
<PAGE>
PART C. OTHER INFORMATION (CONT'D)
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.
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.
Seligman Henderson Co. (the "Subadviser") serves as subadviser to the
Registrant and Seligman Henderson Global Fund Series, Inc.
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 March 31, 1998.
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, 801 Pennsylvania, Kansas City, Missouri
64105.
<PAGE>
PART C. OTHER INFORMATION (CONT'D)
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, 801 Pennsylvania,
Kansas City, Missouri 64105.
ITEM 31. Management Services - None not discussed in the Prospectus or
Statement of Additional Information for the Registrant.
ITEM 32. UNDERTAKINGS -
(1) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(2) The Registrant undertakes to 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 certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 22 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 28th day of April, 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. 22 to the Registration
Statement has been signed below by the following persons, in the capacities
indicated on April 28, 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
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
SELIGMAN PORTFOLIOS, INC.
Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
FORM N-1A ITEM NO. DESCRIPTION
24(b)(1) Form of Articles of Amendment and Restatement of
Articles of Incorporation
24(b)(5)(b) Subadvisory Agreement in respect of Seligman
Henderson Global Growth Opportunities Portfolio and
Seligman Henderson Global Technology Portfolio
24(b)(5)(f) Subadvisory Agreement in respect of Seligman
Henderson Global Smaller Companies Portfolio
24(b)(5)(h) Subadvisory Agreement in respect of Seligman
Henderson International Portfolio
24(b)(5)(j) Management Agreement in respect of Seligman Large-Cap
Value Portfolio and Seligman Small-Cap Value
Portfolio
24(b)(7) Deferred Compensation Plan for Directors
24(b)(8)(a) Form of Custodian Agreement in respect of Seligman
Capital, Seligman Cash Management, Seligman Common
Stock, Seligman Bond Securities, and Seligman Income
Portfolios
24(b)(8)(b) Form of First Amendment to Custodian Agreement in
respect of Seligman Communications and Information
and Seligman Frontier Portfolios
24(b)(8)(c) Form of Recordkeeping Agreement in respect of
Seligman Henderson International Portfolio
24(b)(8)(d) Form of First Amendment to Recordkeeping Agreement in
respect of Seligman Henderson Global Smaller
Companies Portfolio
24(b)(9)(b) Form of Buy/Sell Agreement between Registrant and
Canada Life Insurance Company of America
<PAGE>
24(b)(9)(c) Form of Buy/Sell Agreement between Registrant and
Canada Life Insurance Company of America
24(b)(9)(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 Bond Securities, and Seligman Income
Portfolios
24(b)(9)(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 International Portfolio
24(b)(9)(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
24(b)(9)(i) Form of Promotional Agent Distribution Agreement
between Seligman Financial Services, Inc. on behalf
of Registrant and Canada Life Insurance Company of
America
24(b)(9)(j) Form of Promotional Agent Distribution Agreement
between Seligman Financial Services, Inc. on behalf
of Registrant and Canada Life Insurance Company of
New York
24(b)(9)(k) Form of Selling Agreement between Seligman Financial
Services, Inc. on behalf of Registrant and Canada
Life Insurance Company of America
24(b)(9)(l) Form of Selling Agreement between Seligman Financial
Services, Inc. on behalf of Registrant and Canada
Life Insurance Company of New York
24(b)(11) Consent of Independent Auditors
24(b)(13)(a) Form of Purchase Agreement for Seligman Capital,
Seligman Cash Management, Seligman Common Stock,
Seligman Bond Securities, and Seligman Income
Portfolios
24(b)(13)(b) Investment Letter for Seligman Henderson
International Portfolio
24(b)(17) Financial Data Schedules
Other Exhibit Power of Attorney
[The text of this Exhibit is a composite restatement of all
charter documents of the Registrant currently on file with the
State Department of Assessments and Taxation of the State of
Maryland.]
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
SELIGMAN PORTFOLIOS, INC.
WE, THE UNDERSIGNED, RONALD T. SCHROEDER AND CARL J. WHITE,
being the President and Secretary, respectively, of Seligman Portfolios,
Inc. (herein, the "Corporation"), certify that there are no shares of the
Corporation outstanding or entitled to vote, and further certify that by
action of the Board of Directors on April 12, 1988, following the
organizational meeting, the entire Board of Directors unanimously approved
the following as the Articles of Amendment and Restatement of the
Corporation.
FIRST: I, the subscriber, Nina O. Shenker, whose post office
address is One Bankers Trust Plaza, New York, New York 10006, being more
than 18 years of age, do, under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations, form a
corporation.
SECOND: Name. The name of the corporation (which is
hereinafter called the "Corporation") is
SELIGMAN PORTFOLIOS, INC.
THIRD: Purposes and Powers. The purposes for which the
Corporation is formed and the business or objects to be carried on or
promoted by it are to engage in the business of an open-end investment
company, and in connection therewith, to hold part or all of its funds in
cash, to acquire by purchase, subscription, contract, exchange or
otherwise, and to own, hold for investment, resale or otherwise, sell,
assign, negotiate, exchange, transfer or otherwise dispose of, or turn to
account or realize upon, and generally to deal in and with, all forms of
stocks, bonds, debentures, notes, evidences of interest, evidences of
indebtedness, warrants, certificates of deposit, bankers' acceptances,
repurchase agreements, options on securities and other securities,
commodity futures contracts and options thereon, irrespective of their
form, the name by which they may be described, or the character or form of
the entities by which they are issued or created (hereinafter sometimes
called "Securities"), and to make payment therefor by any lawful means; to
exercise any and all rights, powers and privileges of individual ownership
or interest in respect of any and all such Securities; including the right
to vote thereon and to consent and otherwise act with respect thereto; to
do any and all acts and things for the preservation, protection,
improvement and enhancement in value of any and all such Securities; to
acquire or become interested in any such Securities as aforesaid,
irrespective of whether or not such Securities be fully paid or subject to
further payments, and to make payments thereon as called for or in advance
of calls or otherwise.
And, in general, to do any or all such other things in
connection with the objects and purposes of the Corporation hereinbefore
set forth, as are, in the opinion of the Board of Directors of the
Corporation, necessary, incidental, relative or conducive to the attainment
of such objects and purposes; and to do such acts and things; and to
exercise any and all such powers to the same extent authorized or permitted
to a Corporation under any laws that may be now or hereafter applicable or
available to the Corporation.
In addition, the Corporation may issue, sell, acquire through
purchase, exchange, or otherwise hold, dispose of, resell, transfer,
reissue or cancel shares of its capital stock in any manner and to the
extent now or hereafter permitted by the laws of Maryland and by these
Amended and Restated Articles of Incorporation.
The foregoing matters shall each be construed as purposes,
objects and powers, and none of such matters shall be in any wise limited
by reference to, or inference from, any other of such matters or any other
Article of these Amended and Restated Articles of Incorporation, but shall
be regarded as independent purposes, objects and powers and the enumeration
of specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers
of the Corporation now or hereafter conferred by the laws of the State of
Maryland, nor shall the expression of one thing be deemed to exclude
another, although it be of like nature, not expressed.
Nothing herein contained shall be construed as giving the
Corporation any rights, powers or privileges not permitted to it by law.
FOURTH: Principal Office. The post office address of the
principal office of the Corporation in this State is c/o The Corporation
Trust Incorporated, 32 South Street, Baltimore, Maryland 21202. The
resident agent of the Corporation is The Corporation Trust Incorporated,
the post office address of which is 32 South Street, Baltimore, Maryland
21202. Said resident agent is a Corporation of the State of Maryland.
FIFTH: Capital Stock.
A. The total number of shares of all classes of stock which
the Corporation has authority to issue is 1,000,000,000 shares of Common
Stock ("Shares") of the par value of $.001 each, having an aggregate par
value of $1,000,000. The Shares shall initially constitute fourteen
classes, designated as:
"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 consisting of 100,000,000 shares, except for Seligman Bond Portfolio
which consists of 80,000,000 shares; Seligman Capital Portfolio which
consists of 80,000,000 shares; Seligman Henderson Global Growth
Opportunities Portfolio which consists of 20,000,000 shares; Seligman
Henderson Global Technology Portfolio which consists of 20,000,000 shares;
Seligman Henderson International Portfolio which consists of 80,000,000
shares; Seligman Income Portfolio which consists of 80,000,000 shares;
Seligman Large-Cap Value Portfolio which consists of 20,000,000 shares; and
Seligman Small-Cap Value Portfolio which consists of 20,000,000 shares
(such fourteen classes together with any further class or classes of shares
from time to time created by the Board of Directors, being herein referred
to individually as a "Class" and collectively as "Classes"). The Board of
Directors of the Corporation shall have the power and authority (a) to
increase and decrease the aggregate number of Shares of stock or the number
of Shares of stock of any Class that the Corporation has authority to issue
and (b) to classify or reclassify any unissued shares from time to time by
setting or changing the preferences, conversion or other rights, voting
powers, restric-tions, limitations as to dividends, qualifications, or
terms or conditions of redemption of such unissued Shares, provided that,
upon the creation of any further class or classes, the Board of Directors
shall, for purposes of identification, also have the power and authority to
designate a name for the existing class that includes issued Shares of
Common Stock.
B. A description of the relative preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of all Classes of
Shares is as follows, unless otherwise set forth in the Articles
Supplementary filed with the Maryland State Department of Assessments and
Taxation describing any further Class or Classes from time to time created
by the Board of Directors:
(i) Assets Belonging to Class. All consideration received by the
Corporation for the issue or sale of Shares of a particular Class,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to
that Class for all purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of the account of the Corporation.
Such consideration, assets, income, earnings, profits and proceeds,
including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds, in whatever form the same may be, together with any
General Asset Items (as hereinafter defined) allocated to that Class as
provided in the following sentence, are herein referred to as "assets
belonging to" that Class. In the event that there are any assets, income,
earnings, profits or proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Class (collectively
"General Asset Items"), the Board of Directors shall allocate such
General Asset Items to and among any one or more of the Classes created
from time to time in such manner and on such basis as it, in its sole
discretion, deems fair and equitable; and any General Asset Items so
allocated to a particular Class shall belong to that Class. Each such
allocation by the Board of Directors shall be conclusive and binding upon
the stockholders of all Classes for all purposes.
(ii) Liabilities Belonging to Class. The assets belonging to each
particular Class shall be charged with the liabilities of the Corporation
in respect of that Class and with all expenses, costs, charges and
reserves attributable to that Class, and shall be so recorded upon the
books of account of the Corporation. Such liabilities, expenses, costs,
charges and reserves, together with any General Liability Items (as
hereinafter defined) allocated and charged to that Class as provided in
the following sentence, are herein referred to as "liabilities belonging
to" that Class. In the event there are any general liabilities, expenses,
costs, charges or reserves of the Corporation which are not readily
identifiable as belonging to any particular Class (collectively "General
Liability Items"), the Board of Directors shall allocate and charge such
General Liability Items to and among any one or more of the Classes
created from time to time in such manner and on such basis as the Board
of Directors in its sole discretion deems fair and equitable; and any
General Liability Items so allocated and charged to a particular Class
shall belong to that Class. Each such allocation and charge by the Board
of Directors shall be conclusive and binding upon the stockholders of all
Classes for all purposes.
(iii) Dividends. Dividends and distributions on Shares of a
particular Class may be paid to the holders of Shares of that Class at
such times, in such manner and from such of the income and capital gains,
accrued or realized, from the assets belonging to that Class, after
providing for actual and accrued liabilities belonging to that Class, as
the Board of Directors may determine.
(iv) Liquidation. In event of the liquidation or dissolution of the
Corporation, the stockholders of each Class that has been created shall
be entitled to receive, as a Class, when and as declared by the Board of
Directors, the excess of the assets belonging to that Class over the
liabilities belonging to that Class. The assets so distributable to the
stockholders of any particular Class shall be distributed among such
stockholders in proportion to the number of Shares of that Class held by
them and recorded on the books of the Corporation.
(v) Voting. On each matter submitted to vote of the stockholders,
each holder of a Share shall be entitled to one vote for each such Share
standing in his name on the books of the Corporation irrespective of the
Class thereof and all Shares of all Classes shall vote as a single Class
("Single Class Voting"); provided, however, that (A)as to any matter with
respect to which a separate vote of any Class is required by the
Investment Company Act of 1940 or would be required under the Maryland
General Corporation Law, such requirements as to a separate vote by that
Class shall apply in lieu of Single Class Voting as described above;
(B)in the event that the separate vote requirements referred to in (A)
above apply with respect to one or more Classes, then, subject to (C)
below, the Shares of all other Classes shall vote as a single Class; and
(C)as to any matter which does not affect the interest of a particular
Class, only the holders of Shares of the one or more affected Classes
shall be entitled to vote.
(vi) Equality. All Shares of each particular Class shall represent
an equal proportionate interest in the assets belonging to that Class
(subject to the liabilities belonging to that Class), and each Share of
any particular Class shall be equal to each other Share of that Class;
but the provisions of this sentence shall not restrict any distinctions
permissible under these Amended and Restated Articles of Incorporation
that may exist with respect to stockholder elections to receive dividends
or distributions in cash or Shares of the same Class or that may
otherwise exist with respect to dividends and distributions on Shares of
the same Class.
C. No holder of Shares shall be entitled as such, as a matter
of right, to purchase or subscribe for any part of any new or additional
issue of Shares or securities of the Corporation. All Shares now or
hereafter authorized, and of any Class, shall be "subject to redemption"
and "redeemable", in the sense used in the General Laws of the State of
Maryland authorizing the formation of corporations, at the redemption or
repurchase price for shares of that Class, determined in the manner set out
in these Amended and Restated Articles of Incorporation or in any amendment
hereto. In the absence of any contrary specification as to the purpose for
which Shares are repurchased by it, all Shares so repurchased shall be
deemed to be "acquired for retirement" in the sense contemplated by the
laws of the State of Maryland. Shares retired by repurchase or retired by
redemption shall thereafter have the status of authorized by unissued
Shares of the Corporation. All persons who shall acquire Shares shall
acquire the same subject to the provisions of these Amended and Restated
Articles of Incorporation.
SIXTH: Directors. The Corporation has thirteen directors in
office, each of whom will serve as directors until their successors are
elected and qualify; the names of the thirteen directors in office are
William C. Morris, Ronald T. Schroeder, Fred E. Brown, Alice S. Ilchman,
John E. Merow, Betsy S. Michel, Douglas R. Nichols, Jr., James C. Pitney,
James Q. Riordan, Herman J. Schmidt, Robert L. Shafer, James N. Whitson and
Brian T. Zino. The number of directors in office may be changed from time
to time in such lawful manner as the By-Laws of the Corporation shall
provide.
SEVENTH: Provisions for Defining, Limiting and Regulating the
Powers of the Corporation, Directors and Stockholders.
A. Board of Directors: The Board of Directors shall have the
general management and control of the business and property of the
Corporation, and may exercise all the powers of the Corporation,
except such as are by statute or by these Amended and Restated
Articles of Incorporation or by the By-Laws conferred upon or
reserved to the stockholders. In furtherance and not in limitation
of the powers conferred by statute, the Board of Directors is hereby
empowered: (1)To authorize the issuance and sale, from time to
time, of Shares of any Class whether for cash at not less than the
par value thereof or for such other consideration as the Board of
Directors may deem advisable, in the manner and to the extent now or
hereafter permitted by the laws of Maryland; provided, however, the
consideration (or the value thereof as determined by the Board of
Directors) per share to be received by the Corporation upon the sale
of shares of any Class (including Treasury Shares) shall not be less
than the net asset value (determined as provided in Article NINTH
hereof) per Share of that Class outstanding at the time (determined
by the Board of Directors) as of which the computation of such net
asset value shall be made; (2)to authorize the execution and
performance by the Corporation of an agreement or agreements with
J.& W. Seligman & Co. Incorporated, a Delaware corporation, or any
successor to such corporation ("Seligman") providing for the
investment and other operations of the Corporation; (3)to authorize
the execution and performance by the Corporation of an agreement or
agreements, which may be exclusive contracts, with Seligman
Marketing, Inc., a Delaware corporation, or any other person, as
distributor, providing for the distribution of Shares of any Class;
(4) to authorize the execution and performance by the Corporation of
an agreement with The Mutual Benefit Life Insurance Company ("Mutual
Benefit") on behalf of Mutual Benefit Variable Contract Account 9,
regarding the sale of Shares of the Corporation of any class to such
Account in accordance with the provisions of these Articles of
Incorporation; and (5) to specify, in instances in which it may be
desirable, that Shares of any Class repurchased by the Corporation
are not acquired for retirement and to specify the purpose for which
such Shares are repurchased. The Corporation may in its By-Laws
confer powers on the Board of Directors in addition to the powers
expressly conferred by statute.
B. Quorum; Adjournment; Majority Vote: No presence in person
or by proxy of the holders of one-third of the Shares of all Classes
issued and outstanding and entitled to vote thereat shall constitute
a quorum for the transaction of any business at all meetings of the
shareholders except as otherwise provided by law or in these Amended
and Restated Articles of Incorporation and except that where the
holders of Shares of any Class are entitled to a separate vote as a
Class (a "Separate Class") or where the holders of Shares of two or
more (but not all) Classes are required to vote as a single Class (a
"Combined Class"), the presence in person or by proxy of the holders
of one-third of the Shares of that Separate Class or Combined Class,
as the case may be, issued and outstanding and entitled to vote
thereat shall constitute a quorum for such vote. If, however, a
quorum with respect to all Classes, a Separate Class or a Combined
Class, as the case may be, shall not be present or represented at any
meeting of the shareholders, the holders of a majority of the Shares
of all Classes, such Separate Class or such Combined Class, as the
case may be, present in person or by proxy and entitled to vote shall
have power to adjourn the meeting from time to time as to all
Classes, such Separate Class or such Combined Class, as the case may
be, without notice other than announcement at the meeting, until the
requisite number of Shares entitled to vote at such meeting shall be
present. At such adjourned meeting at which the requisite number of
Share entitled to vote thereat shall be represented any business may
be transacted which might have been transacted at the meeting as
originally notified. The absence from any meeting of stockholders of
the number of Shares in excess of one-third of the Shares of all
Classes or of the affected Class or Classes, as the case may be,
which may be required by the laws of the State of Maryland, the
Investment Company Act of 1940 or any other applicable law, or these
Amended and Restated Articles of Incorporation, for action upon any
given matter shall not prevent action of such meeting upon any other
matter or matters which may properly come before the meeting, if
there shall be present thereat, in person or by proxy, holders of the
number of Shares required for action in respect of such other matter
or matters. Notwithstanding any provision of law requiring any
action to be taken or authorized by the holders of a greater
proportion than a majority of the Shares of all Classes or of the
Shares of a particular Class or Classes, as the case may be, entitled
to vote thereon, such action shall be valid and effective if taken or
authorized by the affirmative vote of the holders of a majority of
the Shares of all Classes or of such Class or Classes, as the case
may be, outstanding and entitled to vote thereon.
EIGHTH: Redemptions and Repurchases.
A. The Corporation shall under some circumstances redeem, and
may under other circumstances redeem or repurchase, Shares as follows:
1. Obligation of the Corporation to Redeem Shares: Each
holder of Shares of any Class shall be entitled at his option to
require the Corporation to redeem all or any part of the Shares of
that Class owned by such holder, upon written or telegraphic request
to the Corporation or its designated agent, accompanied by surrender
of any certificate or certificates for such shares, or such other
evidence of ownership as shall be specified by the Board of
Directors, for the proportionate interests per Share in the assets of
the Corporation belonging to that Class, or the cash equivalent
thereof (being the net asset value per Share of that Class determined
as provided in Article NINTH hereof), subject to and in accordance
with the provisions of paragraph B of this Article.
2. Right of the Corporation to Redeem Shares. In
addition the Board of Directors may, from time to time in its
discretion, authorize the Corporation to require the redemption of
all or any part of the outstanding Shares of any Class, for the
proportionate interest per Share in the assets of the Corporation
belonging to that Class, or the cash equivalent thereof (being the
net asset value per Share of that Class determined as provided in
Article NINTH hereof), subject to and in accordance with the
provisions of paragraph B of this Article, upon the sending of
written notice thereof to each stockholder any of whose Shares are so
redeemed and upon such terms and conditions as the Board of Directors
shall deem advisable.
3. Right of the Corporation to Repurchase Shares. In
addition the Board of Directors may, from time to time in its
discretion, authorize the officers of the Corporation to repurchase
Shares of any Class, either directly or through an agent, subject to
and in accordance with the provisions of paragraph B of this
Article. The price to be paid by the Corporation upon any such
repurchase shall be determined, in the discretion of the Board of
Directors, in accordance with any provision of the Investment Company
Act of 1940 or any rule or regulation thereunder, including any rule
or regulation made or adopted pursuant to Section 22 of the
Investment Company Act of 1940 by the Securities and Exchange
Commission or any securities association registered under the
Securities Exchange Act of 1934.
B. The following provisions shall be applicable with respect
to redemptions and repurchases of Shares of any Class pursuant to
paragraph 4 hereof:
1. The time as of which the net asset value per Share of
a particular Class applicable to any redemption pursuant to
subparagraph A(1) or A(2) of this Article shall be computed shall be
such time as may be determined by or pursuant to the direction of the
Board of Directors (which time may differ from Class to Class).
2. Any certificates for Shares of any Class to be
redeemed or repurchased shall be surrendered in proper form for
transfer, together with such proof of the authenticity of signatures
as may be required by resolution of the Board of Directors.
3. Payment of the redemption or repurchase price by the
Corporation or its designated agent shall be made in cash within
seven days after the time used for determination of the redemption or
repurchase price, but in no event prior to delivery to the
Corporation or its designated agent of any certificate or certificates
for the Shares of the particular Class so redeemed or repurchased, or
of such other evidence of ownership as shall be specified by the
Board of Directors; except that any payment may be made in whole or
in part in securities or other assets of the Corporation belonging to
that Class if, in the event of the closing of the New York Stock
Exchange or the happening of any event at any time prior to actual
payment which makes the liquidation of Securities in orderly fashion
impractical or impossible, the Board of Directors shall determine
that payment in cash would be prejudicial to the best interests of
the remaining stockholders of that Class. In making any such payment
in whole or in part in Securities or other assets of the Corporation
belonging to that Class, the Corporation shall, as nearly as may be
practicable, deliver Securities or other assets of a gross value
(determined in the manner provided in Article NINTH hereof)
representing the same proportionate interest in the Securities and
other assets of the Corporation belonging to that class as is
represented by the Shares of that Class so to be paid for. Delivery
of the Securities included in any such payment shall be made as
promptly as any necessary transfers on the books of the several
corporations whose Securities are to be delivered may be made.
4. The right of the holder of Shares of any Class
redeemed or repurchased by the Corporation as provided in this
Article to receive dividends thereon and all other rights of such
holder with respect to such Shares shall forthwith cease and
terminate from and after the time of which the redemption or
repurchase price of such Shares has been determined (except the right
of such holder to receive (a) the redemption or repurchase price of
such Shares from the Corporation or its designated agent, in cash
and/or in securities or other assets of the Corporation belonging to
that Class, and (b) any dividend to which such holder had previously
become entitled as the record holder of such Shares on the record
date for such dividend, and, with respect to such Shares otherwise
entitled to vote, except the right of such holder to vote at a
meeting of stockholders such Shares owned of record by him on the
record date for such meeting).
NINTH: Determination of Net Asset Value. For the purposes
referred to in Articles SEVENTH and EIGHTH hereof the net asset value per
Share of any Class shall be determined by or pursuant to the direction of
the Board of Directors in accordance with the following provisions:
A. Such net asset value per Share of a particular Class on any
day shall be computed an follows:
The net asset value per Share of that Class shall be the
quotient obtained by dividing the "net value of the assets" of the
Corporation belonging to that Class by the total number of Shares of
that Class at the time deemed to be outstanding (including Shares
sold whether paid for and issued or not, and excluding Shares
redeemed or repurchased on the basis of previously determined values,
whether paid for, received and held in treasury, or not).
The "net value of the assets" of the Corporation
belonging to a particular Class shall be the "gross value" of the
assets belonging to that Class after deducting the amount of all
expenses incurred and accrued and unpaid belonging to that Class,
such reserves belonging to that Class as may be set up to cover taxes
and any other liabilities, and such other deductions belonging to
that Class as in the opinion of the officers of the Corporation are
in accordance with accepted accounting practice.
The "gross value" of the assets belonging to a particular
Class shall be the amount of all cash and receivables and the market
value of all Securities and other assets held by the Corporation and
belonging to that Class at the time as of which the determination is
made. Securities held shall be valued at market value or, in the
absence of readily available market quotations, at fair value, both
as determined pursuant to methods approved by the Board of Directors
and in accordance with applicable statutes and regulations.
B. The Board of Directors is empowered, in its absolute
discretion, to establish other methods for determining such net asset value
whenever such other methods are redeemed by it to be necessary or desirable
and are consistent with the provisions of the Investment Company Act of
1940 and the rules and regulations thereunder.
TENTH: Determination Binding. Any determination made by or
pursuant to the direction of the Board of Directors in good faith, and so
far as accounting matters are involved in accordance with accepted
accounting practices, as to the amount of the assets, obligations or
liabilities of the Corporation belonging to any Class, as to the amount of
the net income of the Corporation belonging to any Class for any period or
amounts that are any time legally available for payment of dividends on
Shares of any Class, as to the amount of any reserves or charges set upon
with respect to any Class and the propriety thereof, as to the time of or
purpose for treating any reserves or charges with respect to any Class, as
to the use, alteration or cancellation of any reserves or charges with
respect to any Class (whether or not any obligation or liability for which
such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or
discharged), as to the price or closing bid or asked price of any security
owned or held by the Corporation and belonging to any Class, as to the
market value of any security or fair value of any other asset owned by the
Corporation and belonging to any Class, as to the number of Shares of any
Class outstanding or deemed to be outstanding, as to the impracticability
or impossibility of liquidating Securities in an orderly fashion, as to the
extent to which it is practicable to deliver the proportionate interest in
the Securities and other assets of the Corporation belonging to any Class
redeemed or repurchased in payment for any such Shares, as to the method of
payment for any such Shares redeemed or repurchased, or as to any other
matters relating to the issue, sale, redemption, repurchase, and/or other
acquisition or disposition of Securities or Shares of the Corporation,
shall be final and conclusive and shall be binding upon the Corporation and
all holders of Shares of all Classes past, present and future, and Shares
of all Classes are issued and sold on the condition and understanding that
any and all such determinations shall be binding as aforesaid. No
provision of these Amended and Restated Articles of Incorporation shall be
effective to bind any person to waive compliance with any provision of the
Securities Act of 1933 or the Investment Company Act of 1940 or of any
valid rule, regulation or order of the Securities and Exchange Commission
thereunder.
ELEVENTH: Liability and Indemnification of Directors and
Officers.
A. A director or officer of the Corporation shall not be
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director or officer, except to the extent
such exemption from liability or limitation thereof is not permitted by law
(including the Investment Company Act of 1940) as currently in effect or as
the same may hereafter be amended. No amendment, modification or repeal of
this Article ELEVENTH, Paragraph A shall adversely affect any right or
protection of a director or officer that exists at the time of such
amendment, modification or repeal.
B. The Corporation shall indemnify to the fullest extent
permitted by law (including the Investment Company Act of 1940) as
currently in effect or as the same may hereafter be amended, any person
made or threatened to be made a party to any action, suit or proceeding,
whether criminal, civil, administrative or investigative, by reason of the
fact that such person or such person's testator or intestate is or was a
director or officer of the Corporation or serves or served at the request
of the Corporation any other enterprise as a director or officer. To the
fullest extent permitted by law (including the Investment Company Act of
1940) as currently in effect or as the same may hereafter be amended,
expenses incurred by any such person in defending any such action, suit or
proceeding shall be paid or reimbursed by the Corporation promptly upon
receipt by it of an undertaking of such person to repay such expenses if it
shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation. The rights provided to any person by this
Article ELEVENTH, Paragraph B shall be enforceable against the Corporation
by such person who shall be presumed to have relied upon it in serving or
continuing to serve as a director or officer as provided above. No
amendment of this Article ELEVENTH, Paragraph B shall impair the rights of
any person arising at any time with respect to events occurring prior to
such amendment. For purposes of this Article ELEVENTH, Paragraph B, the
term "Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation or merger; the term "other
enterprise" shall include any corporation, partnership, joint venture or
trust.
TWELFTH: Amendments. The Corporation reserves the right to
take any lawful action and to make any amendment of these Amended and
Restated Articles of Incorporation, including the right to make any
amendment which changes the terms of any Shares of any Class now or
hereafter authorized by classification, reclassification, or otherwise, and
to make any amendment authorizing any sale, lease, exchange or transfer of
the property and assets of the Corporation or belonging to any Class or
Classes as an entirety, or substantially as an entirety, with or without
its good will and franchise, if a majority of all the Shares of all Classes
or of the affected Class or Classes, as the case may be, at the time issued
and outstanding and entitled to vote, vote in favor of any such action or
amendment, or consent thereto in writing, and reserves the right to make
any amendment of these Amended and Restated Articles of Incorporation in
any form, manner or substance now or hereafter authorized or permitted by
law.
IN WITNESS WHEREOF, the undersigned President and Secretary of
Seligman Portfolios, Inc. have executed the foregoing Articles of Amendment
And Restatement and hereby acknowledge the same to be the act of Seligman
Portfolios, Inc., and further acknowledge that, to the best of their
knowledge, information and belief the matters and facts set forth therein
are true in all material respects under the penalties of perjury.
Dated the 12th day of April, 1988.
/s/ Ronald T. Schroeder
-----------------------
Ronald T. Schroeder
/s/ Carl J. White
-----------------------
Carl J. White
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, dated as of March 30, 1998 between J. & W. SELIGMAN
& CO. INCORPORATED, a Delaware corporation (the "Manager") and SELIGMAN
HENDERSON CO., a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated October
1, 1994 (the "Management Agreement") with Seligman Portfolios, Inc. (the
"Corporation"), an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), on behalf of the Seligman Henderson Global Emerging Companies
Portfolio of the Corporation (the "Portfolio"), pursuant to which the
Manager will render or contract to obtain as hereinafter provided
investment management services to the Portfolio, and to administer the
business and other affairs of the Portfolio; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Portfolio, and the Subadviser is willing to
render such investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will provide the
Portfolio with investment management services, including investment
research, advice and supervision, determining which securities shall be
purchased or sold by the Portfolio, making purchases and sales of
securities on behalf of the Portfolio and determining how voting and other
rights with respect to securities of the Portfolio shall be exercised,
subject in each case to the control of the Board of Directors of the
Corporation and in accordance with the objectives, policies and principles
set forth in the Registration Statement and Prospectus(es) of the
Corporation and the requirements of the 1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be
liable to the Corporation for any error of judgment or mistake of law or
for any loss arising out of any investment or for any act or omission in
the management of the Corporation and the performance of its duties under
this Agreement except for willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties under this Agreement.
2. Expenses. The Subadviser shall pay all of its expenses arising
from the performance of its obligations under Section 1.
3. Compensation. (a) As compensation for the services performed and
the facilities and personnel provided by the Manager pursuant to Section 1,
the Manager will pay to the Subadviser each month a fee, calculated on each
day during such month, at an annual rate of .90% of the Portfolio's average
daily net assets.
(b) If the Subadviser shall serve hereunder for less than the whole
of any month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Subadviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Subadviser shall deem appropriate in order to
carry out the policy with respect to allocation of portfolio transactions
as set forth in the Registration Statement and Prospectus(es) of the
Corporation or as the Board of Directors of the Corporation may direct from
time to time. In providing the Portfolio with investment management and
supervision, it is recognized that the Subadviser will seek the most
favorable price and execution, and, consistent with such policy, may give
consideration to the research, statistical and other services furnished by
brokers or dealers to the Subadviser for its use, to the general attitude
of brokers or dealers toward investment companies and their support of
them, and to such other considerations as the Board of Directors of the
Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolio that the Subadviser have access to supplemental investment
and market research and security and economic analysis provided by brokers
who execute brokerage transactions at a higher cost to the Portfolio than
may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and execution. Therefore, the Subadviser
is authorized to place orders for the purchase and sale of securities of
the Portfolio with such brokers, subject to review by the Corporation's
Board of Directors from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Subadviser in connection with its
services to other clients as well as the Portfolio.
If, in connection with purchases and sales of securities for the
Portfolio, the Subadviser may, without material risk, arrange to receive a
soliciting dealer's fee or other underwriter's or dealer's discount or
commission, the Subadviser shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and
the amount thereof shall be applied to reduce the compensation to be
received by the Subadviser pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the
Corporation from approving the payment by the Portfolio of additional
compensation to others for consulting services, supplemental research and
security and economic analysis.
5. Term of Agreement. This Agreement shall continue in full force
and effect until December 31, 1998, and from year to year thereafter if
such continuance is approved in the manner required by the 1940 Act if the
Subadviser shall not have notified the Manager in writing at least 60 days
prior to such December 31 or prior to December 31 of any year thereafter
that it does not desire such continuance. This Agreement may be terminated
at any time, without payment of penalty by the Corporation, on 60 days'
written notice to the Subadviser by vote of the Board of Directors of the
Corporation or by vote of a majority of the outstanding voting securities
of the Portfolio (as defined by the 1940 Act). This Agreement will
automatically terminate in the event of its assignment (as defined by the
1940 Act) or upon the termination of the Management Agreement.
6. Amendments. This Agreement may be amended by consent of the
parties hereto provided that the consent of the Corporation is obtained in
accordance with the requirements of the 1940 Act.
7. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Anything herein to
the contrary notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon either of the parties, to do anything
in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date
first above written.
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Brian T. Zino
--------------------
BRIAN T. ZINO
SELIGMAN HENDERSON CO.
By /s/ David F. Stein
---------------------
DAVID F. STEIN
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, dated as of March 30, 1998 between J. & W. SELIGMAN &
CO. INCORPORATED, a Delaware Corporation (the "Manager") and SELIGMAN
HENDERSON CO., a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated May 1, 1996
(the "Management Agreement") with Seligman Portfolios, Inc. (the
"Corporation"), an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), on behalf of the Seligman Henderson Global Growth Opportunities
Portfolio and the Seligman Henderson Global Technology Portfolio of the
Corporation (the "Portfolios"), pursuant to which the Manager will render or
contract to obtain as hereinafter provided investment management services to
each Portfolio, and to administer the business and other affairs of each
Portfolio; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to each Portfolio, and the Subadviser is willing to render
such investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. DUTIES OF THE SUBADVISER. The Subadviser will provide each Portfolio
with investment management services, including investment research, advice and
supervision, determining which securities shall be purchased or sold by each
Portfolio, making purchases and sales of securities on behalf of each
Portfolio and determining how voting and other rights with respect to
securities of each Portfolio shall be exercised, subject in each case to the
control of the Board of Directors of the Corporation and in accordance with
the objectives, policies and principles set forth in the Registration
Statement and Prospectus(es) of the Corporation and the requirements of the
1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be
liable to the Corporation for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission in the
management of the Corporation and the performance of its duties under this
Agreement except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its
obligations and duties under this Agreement.
-1-
<PAGE>
2. EXPENSES. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under Section 1.
3. COMPENSATION. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Manager will pay to the Subadviser each month a fee, calculated on each day
during such month, at an annual rate of .90% of each Portfolios' average daily
net assets.
(b) If the Subadviser shall serve hereunder for less than the whole of
any month, the fee hereunder shall be prorated.
4. PURCHASE AND SALE OF SECURITIES. The Subadviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Subadviser shall deem appropriate in order to carry
out the policy with respect to allocation of portfolio transactions as set
forth in the Registration Statement and Prospectus(es) of the Corporation or
as the Board of Directors of the Corporation may direct from time to time. In
providing the Portfolios with investment management and supervision, it is
recognized that the Subadviser will seek the most favorable price and
execution, and, consistent with such policy, may give consideration to the
research, statistical and other services furnished by brokers or dealers to
the Subadviser for its use, to the general attitude of brokers or dealers
toward investment companies and their support of them, and to such other
considerations as the Board of Directors of the Corporation may direct or
authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for the
Portfolios that the Subadviser have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Portfolios than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and execution. Therefore, the Subadviser is authorized to
place orders for the purchase and sale of securities of the Portfolios with
such brokers, subject to review by the Corporation's Board of Directors from
time to time with respect to the extent and continuation of this practice. It
is understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients as well as the
Portfolios.
-2-
<PAGE>
If, in connection with purchases and sales of securities for the
Portfolios, the Subadviser may, without material risk, arrange to receive a
soliciting dealer's fee or other underwriter's or dealer's discount or
commission, the Subadviser shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and the
amount thereof shall be applied to reduce the compensation to be received by
the Subadviser pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Portfolios of additional compensation to
others for consulting services, supplemental research and security and
economic analysis.
5. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect until December 31, 1997, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the
Subadviser shall not have notified the Manager in writing at least 60 days
prior to such December 31 or prior to December 31 of any year thereafter that
it does not desire such continuance. This Agreement may be terminated at any
time, without payment of penalty by the Corporation, on 60 days written notice
to the Subadviser by vote of the Board of Directors of the Corporation or by
vote of a majority of the outstanding voting securities of the Portfolio (as
defined by the 1940 Act). The failure of the Board of Directors of the
Corporation or holders of securities of one Portfolio to approve the
continuance of this Agreement with respect to one Portfolio, shall be without
prejudice to the effectiveness of this Agreement with respect to the other
Portfolio. This Agreement will automatically terminate in the event of its
assignment (as defined by the 1940 Act) or upon termination of the Management
Agreement.
6. AMENDMENTS. This Agreement may be amended by consent of the parties
hereto provided that the consent of the Corporation is obtained in accordance
with the requirements of the 1940 Act.
7. MISCELLANEOUS. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein
-3-
<PAGE>
to the contrary notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon either of the parties, to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date
first above written.
J. & W. SELIGMAN & CO. INCORPORATED
BY: /S/BRIAN T. ZINO
-------------------------------
SELIGMAN HENDERSON CO.
BY: /S/DAVID F. STEIN
-------------------------------
-4-
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, dated as of March 30, 1998 between J. & W. SELIGMAN &
CO. INCORPORATED, a Delaware corporation (the "Manager") and SELIGMAN
HENDERSON CO., a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated October 1,
1994 (the "Management Agreement") with Seligman Portfolios, Inc. (the
"Corporation"), an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), on behalf of the Seligman Henderson Global Emerging Companies Portfolio
of the Corporation (the "Portfolio"), pursuant to which the Manager will
render or contract to obtain as hereinafter provided investment management
services to the Portfolio, and to administer the business and other affairs of
the Portfolio; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Portfolio, and the Subadviser is willing to render
such investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. DUTIES OF THE SUBADVISER. The Subadviser will provide the
Portfolio with investment management services, including investment research,
advice and supervision, determining which securities shall be purchased or
sold by the Portfolio, making purchases and sales of securities on behalf of
the Portfolio and determining how voting and other rights with respect to
securities of the Portfolio shall be exercised, subject in each case to the
control of the Board of Directors of the Corporation and in accordance with
the objectives, policies and principles set forth in the Registration
Statement and Prospectus(es) of the Corporation and the requirements of the
1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be
liable to the Corporation for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission in the
management of the Corporation and the performance of its duties under this
Agreement except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its
obligations and duties under this Agreement.
2. EXPENSES. The Subadviser shall pay all of its expenses arising
from the performance of its obligations under Section 1.
3. COMPENSATION. (a) As compensation for the services performed and
the facilities and personnel provided by the Manager pursuant to Section 1, the
Manager will pay to the Subadviser each month a fee, calculated on each day
during such month, at an annual rate of .90% of the Portfolio's average daily
net assets.
<PAGE>
(b) If the Subadviser shall serve hereunder for less than the whole
of any month, the fee hereunder shall be prorated.
4. PURCHASE AND SALE OF SECURITIES. The Subadviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Subadviser shall deem appropriate in order to carry
out the policy with respect to allocation of portfolio transactions as set
forth in the Registration Statement and Prospectus(es) of the Corporation or
as the Board of Directors of the Corporation may direct from time to time. In
providing the Portfolio with investment management and supervision, it is
recognized that the Subadviser will seek the most favorable price and
execution, and, consistent with such policy, may give consideration to the
research, statistical and other services furnished by brokers or dealers to
the Subadviser for its use, to the general attitude of brokers or dealers
toward investment companies and their support of them, and to such other
considerations as the Board of Directors of the Corporation may direct or
authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolio that the Subadviser have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Portfolio than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and execution. Therefore, the Subadviser is authorized to
place orders for the purchase and sale of securities of the Portfolio with
such brokers, subject to review by the Corporation's Board of Directors from
time to time with respect to the extent and continuation of this practice. It
is understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients as well as the
Portfolio.
If, in connection with purchases and sales of securities for the
Portfolio, the Subadviser may, without material risk, arrange to receive a
soliciting dealer's fee or other underwriter's or dealer's discount or
commission, the Subadviser shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and the
amount thereof shall be applied to reduce the compensation to be received by
the Subadviser pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the
Corporation from approving the payment by the Portfolio of additional
compensation to others for consulting services, supplemental research and
security and economic analysis.
5. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect until December 31, 1998, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the
Subadviser shall not have notified the Manager in writing at least 60 days
prior to such December 31 or prior to December 31 of any year thereafter that
it does not desire such continuance. This Agreement may be terminated at any
time, without payment of penalty by the Corporation, on 60 days' written
notice to the Subadviser by vote of the Board of Directors of the Corporation
or by vote of a majority of the outstanding voting securities of the Portfolio
(as defined by the 1940 Act). This Agreement will
2
<PAGE>
automatically terminate in the event of its assignment (as defined by the 1940
Act) or upon the termination of the Management Agreement.
6. AMENDMENTS. This Agreement may be amended by consent of the
parties hereto provided that the consent of the Corporation is obtained in
accordance with the requirements of the 1940 Act.
7. MISCELLANEOUS. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date
first above written.
J. & W. SELIGMAN & CO. INCORPORATED
BY /S/BRIAN T. ZINO
-------------------------------------
SELIGMAN HENDERSON CO.
By /S/ DAVID F. STEIN
-------------------------------------
3
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT, dated as of March 30, 1998 between J. & W. SELIGMAN
& CO. INCORPORATED, a Delaware corporation (the "Manager") and Seligman
Henderson Co., a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated May 1,
1993 (the "Management Agreement") with Seligman Portfolios, Inc. (the
"Corporation"), an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), on behalf of the Seligman Henderson Global Portfolio of the
Corporation (the "Portfolio") pursuant to which the Manager will render or
contract to obtain as hereinafter provided investment management services
to the Portfolio, and to administer the business and other affairs of the
Portfolio; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Portfolio, and the Subadviser is willing to
render such investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will provide the
Portfolio with investment management services, including investment
research, advice and supervision, determining which securities shall be
purchased or sold by the Portfolio, making purchases and sales of
securities on behalf of the Portfolio and determining how voting and other
rights with respect to securities of the Portfolio shall be exercised,
subject in each case to the control of the Board of Directors of the
Corporation and in accordance with the objectives, policies and principles
set forth in the Registration Statement and Prospectus(es) of the
Corporation and the requirements of the 1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be
liable to the Corporation for any error of judgment or mistake of law or
for any loss arising out of any investment or for any act or omission in
the management of the Corporation and the performance of its duties under
this Agreement except for willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties under this Agreement.
2. Expenses. The Subadviser shall pay all of its expenses arising
from the performance of its obligations under Section1.
3. Compensation. (a) As compensation for the services performed and
the facilities and personnel provided by the Manager pursuant to
Section1, the Manager will pay to the Subadviser each month a fee,
calculated on each day during such month, at an annual rate of .90% of the
Portfolio's average daily net assets.
(b) If the Subadviser shall serve hereunder for less than the whole
of any month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Subadviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Subadviser shall deem appropriate in order to
carry out the policy with respect to allocation of portfolio transactions
as set forth in the Registration Statement and Prospectus(es) of the
Corporation or as the Board of Directors of the Corporation may direct from
time to time. In providing the Portfolio with investment management and
supervision, it is recognized that the Subadviser will seek the most
favorable price and execution, and, consistent with such policy, may give
consideration to the research, statistical and other services furnished by
brokers or dealers to the Subadviser for its use, to the general attitude
of brokers or dealers toward investment companies and their support of
them, and to such other considerations as the Board of Directors of the
Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolio that the Subadviser have access to supplemental investment
and market research and security and economic analysis provided by brokers
who execute brokerage transactions at a higher cost to the Portfolio than
may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and execution. Therefore, the Subadviser
is authorized to place orders for the purchase and sale of securities of
the Portfolio with such brokers, subject to review by the Corporation's
Board of Directors from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Subadviser in connection with its
services to other clients as well as the Portfolio.
If, in connection with purchases and sales of securities for the
Portfolio, the Subadviser may, without material risk, arrange to receive a
soliciting dealer's fee or other underwriter's or dealer's discount or
commission, the Subadviser shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and
the amount thereof shall be applied to reduce the compensation to be
received by the Subadviser pursuant to Section3 hereof.
Nothing herein shall prohibit the Board of Directors of the
Corporation from approving the payment by the Portfolio of additional
compensation to others for consulting services, supplemental research and
security and economic analysis.
5. Term of Agreement. This Agreement shall continue in full force
and effect until December 31, 1998, and from year to year thereafter if
such continuance is approved in the manner required by the 1940 Act if the
Subadviser shall not have notified the Manager in writing at least 60 days
prior to such December 31 or prior to December 31 of any year thereafter
that it does not desire such continuance. This Agreement may be terminated
at any time, without payment of penalty by the Corporation, on 60 days'
written notice to the Subadviser by vote of the Board of Directors of the
Corporation or by vote of a majority of the outstanding voting securities
of the Portfolio (as defined by the 1940 Act). This Agreement will
automatically terminate in the event of its assignment (as defined by the
1940 Act) or upon the termination of the Management Agreement.
6. Amendments. This Agreement may be amended by consent of the
parties hereto provided that the consent of the Corporation is obtained in
accordance with the requirements of the 1940 Act.
7. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Anything herein to
the contrary notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon either of the parties, to do anything
in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date
first above written.
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Brian T. Zino
-----------------
BRIAN T. ZINO
SELIGMAN HENDERSON CO.
By /s/ David F. Stein
------------------
DAVID F. STEIN
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of March 19, 1998 between SELIGMAN
PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of
Seligman Large-Cap Value Portfolio and Seligman Small-Cap Value Portfolio (the
"Portfolios"), and J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation
(the "Manager").
WHEREAS, the Corporation is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Corporation desires to retain the Manager to render or contract to
obtain as hereinafter provided investment management services to the
Corporation, and to administer the business and other affairs of the Corporation
and the Manager is willing to render such services;
Now, therefore, in consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Duties of the Manager. The Manager shall, subject to the control
of the Board of Directors of the Corporation, manage the affairs of each
Portfolio as hereinafter defined, including, but not limited to, continuously
providing the Corporation with investment management, including investment
research, advice and supervision, determining which securities shall be
purchased or sold by each Portfolio, making purchases and sales of securities on
behalf of each Portfolio and determining how voting and other rights with
respect to securities of each Portfolio shall be exercised, subject in each case
to the control of the Board of Directors of the Corporation and in accordance
with the objectives, policies and principles set forth in the Registration
Statement and Prospectus(es) of the Corporation and the requirements of the 1940
Act and other applicable law. In connection with the performance of its duties
hereunder, the Manager shall provide such office space, such bookkeeping,
accounting, internal legal, clerical, secretarial and administrative services
(exclusive of, and in addition to, any such services provided by any others
retained by the Corporation) and such executive and other personnel as shall be
necessary for the operations of each Portfolio. The Corporation understands that
the Manager also acts as the manager of all of the investment companies in the
Seligman Group.
-1-
<PAGE>
Subject to Section 36 of the 1940 Act, the Manager shall not be liable to
the Corporation for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Portfolio and the performance of its duties under this Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Manager shall pay all of its expenses arising from
the performance of its obligations under Section 1, and shall pay any salaries,
fees and expenses of the directors of the Corporation who are employees of the
Manager or its affiliates. The Manager shall not be required to pay any other
expenses of the Corporation or the Portfolios, including, but not limited to,
direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent attorneys and auditors, taxes
and governmental fees, cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase or redemption of
shares, expenses of registering and qualifying shares for sale, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services, expenses of printing and filing
reports and other documents filed with governmental agencies, expenses of
printing and distributing prospectuses, expenses of annual and special
shareholders' meetings, fees and disbursements of transfer agents and
custodians, expenses of disbursing dividends and distributions, fees and
expenses of directors of the Corporation who are not employees of the Manager or
its affiliates, membership dues in the Investment Company Institute, insurance
premiums and extraordinary expenses such as litigation expenses.
3. Compensation. (a) As compensation for the services performed and
the facilities and personnel provided by the Manager pursuant to Section 1, each
Portfolio will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month as indicated on the attached fee
schedule.
(b) If the Manager shall serve hereunder for less then the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Manager shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with respect to
allocation of portfolio transactions as set forth in the Registration Statement
and Prospectus(es)
-2-
<PAGE>
of the Corporation or as the Board of Directors of the Corporation may direct
from time to time. In providing the Portfolios with investment management and
supervision, it is recognized that the Manager will seek the most favorable
price and execution, and, consistent with such policy, may give consideration to
the research, statistical and other services furnished by brokers or dealers to
the Manager for its use, to the general attitude of brokers or dealers toward
investment companies and their support of them, and to such other considerations
as the Board of Directors of the Corporation may direct or authorize from time
to time.
Notwithstanding the above, it is understood that it is desirable for
the Portfolios that the Manager have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Portfolios than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and execution. Therefore, the Manager is authorized to
place orders for the purchase and sale of securities for the Portfolios with
such brokers, subject to review by the Corporation's Board of Directors from
time to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Manager in connection with its services to other clients as well as the
Portfolios.
The placing of purchase and sale orders may be carried out by the
Manager or the Subadviser or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Portfolios, the Manager or any subsidiary of the Manager may, without material
risk, arrange to receive a soliciting dealer's fee or other underwriter's or
dealer's discount or commission, the Manager shall, unless otherwise directed by
the Board of Directors of the Corporation, obtain such fee, discount or
commission and the amount thereof shall be applied to reduce the compensation to
be received by the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the
Corporation from approving the payment by the Portfolios of additional
compensation to others for consulting services, supplemental research and
security and economic analysis.
5. Term of Agreement. This Agreement shall continue in full force
and effect until December 31, 1999, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Manager
shall not have notified the Portfolios in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire
-3-
<PAGE>
such continuance. This Agreement may be terminated at any time with respect to
any Portfolio, without payment of any penalty by the Portfolios or the
Corporation, on 60 days' written notice to the Manager by vote of the Board of
Directors of the Corporation or by vote of a majority of the outstanding voting
securities of such Portfolio (as defined by the 1940 Act). The failure of the
Board of Directors of the Corporation or holders of securities of one Portfolio
to approve the continuance of this Agreement with respect to such Portfolio,
shall be without prejudice to the effectiveness of this Agreement with respect
to the other Portfolio. This Agreement will automatically terminate in the event
of its assignment (as defined by the 1940 Act).
6. Right of Manager In Corporate Name. The Manager and the
Corporation each agree that the word "Seligman" which comprises a component of
the Corporation's and both Portfolios' names, is a property right of the
Manager. Each Portfolio agrees and consents that (i) it will only use the word
"Seligman" as a component of its corporate name and for no other purpose, (ii)
it will not purport to grant to any third party the right to use the word
"Seligman" for any purpose, (iii) the Manager or any corporate affiliate of the
Manager may use or grant to others the right to use the word "Seligman", or any
combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, including a grant of such right to
any other investment company, and at the request of the Manager, the Corporation
and the Portfolio will take such action as may be required to provide its
consent to the use of the word "Seligman", or any combination or abbreviation
thereof, by the Manager or any corporate affiliate of the Manager, or by any
person to whom the Manager or an affiliate of the Manager shall have granted the
right to such use; and (iv) upon the termination of any management agreement
into which the Manager and the Corporation may enter, the Corporation and the
Portfolio shall, upon request by the Manager, promptly take such action, at its
own expense, as may be necessary to change its corporate name to one not
containing the word "Seligman" and following such change, shall not use the word
Seligman, or any combination thereof, as a part of its corporate name or for any
other commercial purpose, and shall use its best efforts to cause its officers,
trustees and shareholders to take any and all actions which the Manager may
request to effect the foregoing and to reconvey to the Manager any and all
rights to such word.
7. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
-4-
<PAGE>
IN WITNESS WHEREOF, the Corporation on behalf of the Portfolios and
the Manager have caused this Agreement to be executed by their duly authorized
officers as of the date first above written.
SELIGMAN PORTFOLIOS, INC.
By /s/William C. Morris
------------------------------------------
J. & W. SELIGMAN & CO. INCORPORATED
By /s/Brian T. Zino
------------------------------------------
-5-
<PAGE>
FEE SCHEDULE
Portfolio Annual Rate
--------- -----------
Seligman Large-Cap Value Portfolio .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's average daily
net assets in excess of $1
billion.
Seligman Small-Cap Value Portfolio 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.
-6-
DEFERRED COMPENSATION PLAN FOR DIRECTORS
OF
SELIGMAN PORTFOLIOS, INC.
("FUND")
1. Election to Defer Payments. Any member of the Board of Directors (herein, a
"Director") of the Fund may elect to have payment of that Director's annual
retainer or meeting fees or both for Board service deferred as provided in this
Plan. The election shall be made in writing prior to, and to take effect from,
the beginning of a calendar year. For any Director in the year in which this
Plan is adopted or for a person elected a director in other than the last
calendar month of a year, the election shall be made within 30 days after that
event and prior to, and to take effect from, the beginning of the calendar
quarter next ensuing after that event. Elections shall continue in effect until
terminated in writing, any such termination to take effect on the first day of
the calendar year beginning after receipt of the notice of termination. An
election shall be irrevocable as to payments deferred in conformity with that
election.
2. Deferred Payment Account. Each deferred retainer or fee shall be credited at
the time when it otherwise would have been payable to an account to be
established in the name of the Director on the books of the Fund (the "Deferred
Payment Account") adjusted for notional investment experience as hereinafter
described.
3. Return on Deferred Payment Account Balance. (a) For purposes of measuring the
investment return on his Deferred Payment Account, the Director may elect to
have the aggregate amount of his deferred compensation (or a specified portion
thereof) receive a return (i) at a rate equal to the return earned on
three-month U.S. Treasury Bills at the beginning of each calendar quarter (the
"Treasury Bill Rate") and such interest shall be credited to the account
quarterly at the end of each calendar quarter, or (ii) at a rate of return
(positive or negative) equal to the rate of return on the shares of any of the
registered investment companies managed by J. & W. Seligman & Co. Incorporated
("Seligman") or any other entity controlling, controlled by, or under common
control with (as such terms are defined in the Investment Company Act of 1940)
Seligman (each, a "Notional Fund"), assuming reinvestment of dividends and
distributions from the Notional Funds. (b) A Director may amend his designation
of investment return as of the end of each calendar quarter by giving written
notice to the President of the Fund at least 30 days prior to the end of such
calendar quarter. A timely change to a Director's designation of investment
return shall become effective on the first day of the calendar quarter following
receipt by the President of the Fund (the "President").
4. Notional Investment Experience. Amounts credited to a Deferred Payment
Account shall be periodically adjusted for notional investment experience. In
each case such notional investment experience shall be determined by treating
the Deferred Payment Account as though an equivalent dollar amount had been
invested and reinvested in one or more of the Notional Funds. The Notional Funds
used as a basis for determining notional investment experience with respect to
any Director's Deferred Payment Account shall be designated by the Director in
writing by instrument of election substantially in the form attached hereto as
Exhibit C and may be changed prospectively by similar written election effective
as of the first day of any calendar quarter. The President may from time to time
limit the Notional Funds available for purposes of such election. If at any time
any Notional Fund that has previously been
<PAGE>
designated by a Director as a notional investment shall cease to exist or shall
be unavailable for any reason, or if the Director fails to designate one or more
Notional Funds pursuant to this Section 4, the President may, at his discretion
and upon notice to the Director, treat any amounts notionally invested in such
Notional Fund (whether representing past amounts credited to a Director's
Deferred Payment Account or subsequent fee deferrals or both) as having been
invested at the Treasury Bill Rate, only until such time as the Director shall
have made another investment election in accordance with the foregoing
procedures. Deferred Payment Accounts shall continue to be adjusted for notional
investment experience until distributed in full in accordance with the
distribution method elected by the Director pursuant to Section 5 hereof.
5. Payment of Deferred Amounts. All amounts credited to an account pursuant to
any election by the Director made as provided in Section 1 hereof shall be paid
to the Director
(a) in, or beginning in, the calendar year following the calendar year
in which the Director ceases to be a Director of the Fund, or
(b) in, or beginning in, the calendar year following the earlier of the
calendar year in which the Director ceases to be a Director of the
Fund or attains age 70, and shall be paid
(c) in a lump sum payable on the first day of the calendar year in which
payment is to be made, or
(d) in 10 or fewer installments, payable on the first day of each year
commencing with the calendar year in which payment is to begin, all
as the Director shall specify in making the election. If the payment
is to be made in installments, the amount of each installment shall
be equal to a fraction of the total of the amounts in the account at
the date of the payment the numerator of which shall be one and the
denominator of which shall be the then remaining number of unpaid
installments (including the installment then to be paid). If the
Director dies at any time before all amounts in the account have
been paid, such amounts shall be paid at that time in a lump sum to
the beneficiary or beneficiaries designated by the Director in
writing to receive such payments or in the absence of such a
designation to the estate of the Director.
The Board of Directors may, in the case of an unforseeable emergency, at its
sole discretion accelerate the payment of any unpaid amount for any or all
Directors. For purposes of this paragraph, an unforseeable emergency is severe
financial hardship to the Director resulting from a sudden and unexpected
illness or accident of the Director or of a dependent (as defined in section
152(a) of the Internal Revenue Code) of the Director, loss of the Director's
property due to casualty, or other similar extraordinary and unforseeable
circumstances arising as a result of events beyond the control of the Director.
Payment due to an unforseeable emergency may not be made to the extent that such
hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of the Director's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship, or (iii) by cessation of deferrals under the Plan. Examples of what
are not considered to be unforseeable emergencies include the need to send a
Director's child to college or the desire to purchase a home.
<PAGE>
Withdrawals of amounts because of an unforseeable emergency are only permitted
to the extent reasonably necessary to satisfy the emergency need.
6. Assignment. No deferred amount or unpaid portion thereof may be assigned or
transferred by the Director except by will or the laws of descent and
distribution.
7. Withholding Taxes. The Fund shall deduct from all payments any federal, state
or local taxes and other charges required by law to be withheld with respect to
such payments.
8. Nature of Rights; Nonalienation. A Director's rights to deferred payment
under the Plan shall be solely those of an unsecured general creditor of the
Fund, and any payments by the Fund pursuant to the Plan will be made solely from
the Fund's general assets and property. The Fund will be under no obligation to
purchase, hold or dispose of any investment for the specific benefit of any
Director but, if the Fund should choose to purchase shares of any Notional Fund
in order to cover all or a portion of its obligations under the Plan, then such
investments will continue to be a part of the general assets and property of the
Fund. A Director's rights under the Plan may not be transferred, assigned,
pledged or otherwise alienated, and any attempt by the Director to do so shall
be null and void.
9. Status of Director. Nothing in the Plan nor any election hereunder shall be
construed as conferring on any Director the right to remain a Director of the
Fund or to receive fees at any particular rate.
10. Amendment and Acceleration. The Board of Directors may at any time at its
sole discretion amend or terminate this Plan, provided that no such amendment or
termination shall adversely affect the right of Directors to receive deferred
amounts credited to their account.
11. Administration. The Plan shall be administered by the President or by such
person or persons as the President may designate to carry out administrative
functions hereunder. The President shall have complete discretion to interpret
and administer the Plan in accordance with its terms, and his determinations
shall be binding on all persons.
Amended as of March 19, 1998
<PAGE>
EXHIBIT A
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLAN
ELECTION FORM
Pursuant to the Deferred Compensation Plan for Directors, as amended as of
March 19, 1998, (the "Plan") adopted by each of the Seligman Investment
Companies (the "Funds"), I hereby elect to have ___% of my annual retainer fees
and ___% of my meeting fees for service to the Funds deferred as provided in the
Plan. This election will take effect at such time as is provided in section 1 of
the Plans, and shall continue in effect until terminated in writing, any such
termination to take effect of the first day of the next calendar year beginning
after receipt of the notice of termination.
The Deferred Compensation Plan Return Designation Form attached hereto
indicates the percentage of each of the above amounts that should earn the
designated returns. Such designations shall remain in effect until changed by
submission of a new form as provided in the Plan.
All amounts deferred with respect to any Fund and the earnings thereon
made pursuant to any election by me shall be credited to an account for my
benefit and shall be paid to me:
Check (a) or (b)
------- (a) in, or beginning in, the calendar year following the calendar
year in which I cease to be a director of the Fund, or
------- (b) in, or beginning in, the calendar year following the earlier
of the calendar year in which I cease to be a director of the
Fund or attain age 70, and shall be paid
Check (c) or (d)
------- (c) in a lump sum payable on the first day of the calendar year in
which payment is to be made, or
------- (d) in 10 or fewer installments, payable on the first day of each
year commencing with the calendar year in which payment is to
begin.
If (d) is selected, enter number of annual installments _________.
If the payment is to be made in installments, the amount of each
installment shall be equal to a fraction of the total of the amounts in the
account at the date of the payment the numerator of which shall be one and the
denominator of which shall be the then remaining number of unpaid installments
(including the installment then to be paid). If I die at any time before all
amounts in the account have been paid, such amounts shall be paid at that time
in a lump sum to the beneficiary or beneficiaries designated by me on the
attached Beneficiary Designation Form or in the absence of such a designation to
my estate.
- ---------------------- ---------------------------
Date Signature
<PAGE>
EXHIBIT B
DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM
I hereby designate the following beneficiary or beneficiaries to receive at my
death the amounts held in my Deferred Payment Accounts from my participation in
the Deferred Compensation Plans for Directors/Trustees of all registered
investment companies advised by J. & W. Seligman & Co. Incorporated for which I
serve as a director or trustee (the "Plans").
A. Primary Beneficiary(ies)
1. Name: % Share:
------------------------------- ---------------------------
Address:
------------------------------------------------------------------
Social
Relationship: DOB: Security #:
------------------ ------ ----------------
Trustee Name and Date (if beneficiary is a trust):
------------------------
Trustee of Trust:
---------------------------------------------------------
2. Name: % Share:
------------------------------- ---------------------------
Address:
------------------------------------------------------------------
Social
Relationship: DOB: Security #:
------------------ ------ ----------------
Trustee Name and Date (if beneficiary is a trust):
------------------------
Trustee of Trust:
---------------------------------------------------------
B. Contingent Beneficiary(ies)
1. Name: % Share:
------------------------------- ---------------------------
Address:
------------------------------------------------------------------
Social
Relationship: DOB: Security #:
------------------ ------ ----------------
Trustee Name and Date (if beneficiary is a trust):
------------------------
Trustee of Trust:
---------------------------------------------------------
2. Name: % Share:
------------------------------- ---------------------------
Address:
------------------------------------------------------------------
Social
Relationship: DOB: Security #:
------------------ ------ ----------------
Trustee Name and Date (if beneficiary is a trust):
------------------------
Trustee of Trust:
---------------------------------------------------------
<PAGE>
I understand that I may revoke or amend the above designation at any time. I
understand that payment will be made to my Contingent Beneficiary(ies) only if
there is no surviving Primary Beneficiary(ies). I further understand that if I
am not survived by any Primary or Contingent Beneficiaries, payment will be made
to my estate as set forth under the Plans.
- ---------------------- ---------------------------
Date Signature
---------------------------
Participant's Name Printed
<PAGE>
EXHIBIT C
SELIGMAN INVESTMENT COMPANIES
DEFERRED COMPENSATION PLANS
RETURN DESIGNATION FORM
I elect to have my deferred compensation for all registered investment companies
advised by J. & W. Seligman & Co. Incorporated for which I serve as a Director
or Trustee deemed to be invested as specified below:
- --------------------------------------------------------------------------------
% Allocation
% Allocation for accumulated
for future fees balances
- --------------------------------------------------------------------------------
At the prevailing three-month U.S.
Treasury Bill Rate
- --------------------------------------------------------------------------------
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 Henderson Emerging Markets Growth Fund
- --------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Growth Opportunities Fund
- --------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Smaller Companies Fund
- --------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson Global Technology Fund
- --------------------------------------------------------------------------------
Seligman Henderson Global Fund Series, Inc. -
Seligman Henderson International Fund
- --------------------------------------------------------------------------------
Seligman High Income Fund Series -
Seligman High-Yield Bond Series
- --------------------------------------------------------------------------------
Seligman High Income Fund Series -
Seligman U.S. Government Securities Series
- --------------------------------------------------------------------------------
Seligman Income Fund, Inc.
- --------------------------------------------------------------------------------
Seligman Value Fund Series, Inc. -
Seligman Large-Cap Value Fund
- --------------------------------------------------------------------------------
Seligman Value Fund Series, Inc. -
Seligman Small-Cap Value Fund
- --------------------------------------------------------------------------------
Tri-Continental Corporation
- --------------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------------
I acknowledge that I may amend this Return Designation in the manner, and
at such time as permitted, under the Plans. Furthermore, I acknowledge that in
certain circumstances, and pursuant to Section 4 of the Plans, the President may
at his discretion, and upon notice to me, disregard the designations made above
and cause all or a portion of my Deferred Account to receive a return equal to
the prevailing three-month U.S. Treasury Bill Rate.
- ------------------- ---------------------------------------
Date Signature
CUSTODY AGREEMENT
THIS AGREEMENT made the 1st day of June, 1988, by and between INVESTORS
FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of the state
of Missouri, having its trust office located at 127 West 10th Street, Kansas
City, Missouri 64105 ("Custodian"), and SELIGMAN MUTUAL BENEFIT PORTFOLIOS,
INC., a Maryland Corporation having its principal office and place of business
at One Bankers Trust Plaza, New York, New York 10006 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian and Recordkeeper of the securities and monies of each of the Fund
portfolios, which as of the date hereof includes the Seligman Cash Management
Portfolio, Seligman Capital Portfolio, Seligman Common Stock Portfolio, Seligman
Income Portfolio and Seligman Fixed Income Securities Portfolio ("Portfolio" or
collectively "Portfolios"); and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints Custodian as
custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at any time
owned by each Portfolio of the Fund; and
B. Appointment as agent to perform certain accounting and recordkeeping
functions required of a duly registered investment company in
compliance with applicable provisions of federal, state and local
laws, rules and regulations including, as may be required:
1. Provide information necessary for Fund and each Portfolio to
file required financial reports; maintaining and preserving
required books, accounts and records as the basis for such
<PAGE>
reports; and performing certain daily functions in connection
with such accounts and records.
2. Calculating daily net asset value of each Portfolio of the
Fund, and
3. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the following
documents and all amendments or supplements thereto, properly certified or
authenticated:
A. Resolutions of the Board of Directors of Fund appointing Custodian
as custodian hereunder and approving the form of this Agreement; and
B. Resolutions of the Board of Directors of Fund designating certain
persons to give instructions on behalf of Fund to Custodian and
authorizing Custodian to rely upon written instructions over their
signatures, together with a certificate of an officer of the Fund
certifying the signatures of those persons authorized to sign the
written and facsimile orders from the Fund as described in Section
4. hereof ("signature card").
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Fund will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as
practicable, and from time to time thereafter, all portfolio
securities acquired by it and monies then owned by it except as
permitted by the Investment Company Act of 1940 or from time to time
coming into its possession during the time this Agreement shall
continue in effect. Custodian shall have no responsibility or
liability whatsoever for or on account of securities or monies not
so delivered. All securities so delivered to Custodian (other than
bearer securities) shall be registered in the name of Fund or its
nominee, or of a nominee of Custodian or shall be properly endorsed
and in form for transfer satisfactory to Custodian.
<PAGE>
B. Delivery of Accounts and Records
Fund shall turn over to Custodian all of the Fund's relevant
accounts and records previously maintained by it. Custodian shall be
entitled to rely conclusively on the completeness and correctness of
the accounts and records turned over to it by Fund, and Fund shall
indemnify and hold Custodian harmless of and from any and all
expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency
of such accounts and records or in the failure of Fund to provide
any portion of such or to provide any information needed by the
Custodian knowledgeably to perform its function hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of
Fund delivered to it from time to time and the assets of each
Portfolio shall be segregated in a separate account. Custodian will
not deliver, assign, pledge or hypothecate any such assets to any
person except as permitted by the provisions of this Agreement or
any agreement executed by it according to the terms of Section 3.S.
of this Agreement. Upon delivery of any such assets to a
subcustodian pursuant to Section 3.S. of this Agreement, Custodian
will create and maintain records identifying those assets which have
been delivered to the subcustodian as belonging to such Portfolio of
Fund. The Custodian is responsible for the securities and monies of
Fund only until they have been transmitted to and received by other
persons as permitted under the terms of this Agreement, except for
securities and monies transmitted to a subcustodian as provided for
by Section 3.S., for which Custodian remains responsible. Custodian
shall be responsible only for the monies and securities of Fund held
by it or its nominees or subcustodians under this Agreement.
Custodian may participate directly or indirectly through a
subcustodian in the Depository Trust Company or Treasury/Federal
Reserve Book Entry System (as such entity is defined at 17 CFR
Section 270.17f-4(b)) or other depository approved in writing by the
Fund.
<PAGE>
D. Registration of Securities
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or in the name of
any nominee of Custodian for whose fidelity and liability Custodian
will be fully responsible, or in street certificate form, so-called,
with or without any indication of fiduciary capacity. Unless
otherwise instructed, Custodian will register all such portfolio
securities in the name of its authorized nominee. All securities,
and the ownership thereof by a Portfolio of Fund, which are held by
Custodian hereunder, however, shall at all times be identifiable on
the records of the Custodian. The Fund agrees to hold Custodian and
its nominee harmless for any liability solely as a record holder of
securities held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A.,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of any Portfolio of Fund for
other securities or cash issued or paid in connection with any
reorganization, recapitalization, merger, consolidation, split-up of
shares, change of par value, conversion, surrender convertible
securities or otherwise, and will deposit any such securities in
accordance with the terms of any reorganization or protective plan.
Without instructions, Custodian is authorized to exchange securities
held by it in temporary form for securities in definitive form, to
effect an exchange of shares when the par value of the stock is
changed, and, upon receiving payment therefor or in accordance with
industry practice, will surrender bonds, government issues and money
market instruments held by it at maturity or when advised of earlier
call for redemption. Pursuant to this paragraph, the Custodian will
inform the Fund of such corporate actions and capital changes when
it is informed of them through the publications it subscribes to.
F. Purchases of Investments of the Fund
Fund will, on each business day on which a purchase of securities
shall be made by it, deliver to Custodian instructions which shall
specify with respect to each such purchase:
<PAGE>
1. Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares or the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission,
taxes and other expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer
through whom the purchase was made.
In accordance with such instructions, Custodian will pay for out of
monies held for the account of such Portfolio making such purchase
but only insofar as monies are available therein for such purpose,
and receive the portfolio securities so purchased by or for the
account of such Portfolio of Fund except that Custodian may in its
sole discretion advance funds to the Fund which may result in an
overdraft because the monies held by the Custodian on behalf of the
Fund are insufficient to pay the total amount payable upon such
purchase. Such payment will be made only upon receipt by Custodian
of the securities so purchased in form for transfer satisfactory to
Custodian. Custodian agrees to promptly inform Fund of any failures
by sellers to make proper deliveries of securities purchased by
Fund.
G. Sales and Deliveries of Investments of the Fund - Other than Options
and Futures
Fund will, on each business day on which a sale of investment
securities of Fund has been made, deliver to Custodian instructions
specifying with respect to each such sale:
1. The Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares or principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be
delivered;
<PAGE>
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by such Portfolio upon such
sale; and
9. The name and address of the broker or dealer through whom or
person to whom the sale was made.
In accordance with such instructions, Custodian will deliver or
cause to be delivered the securities thus designated as sold for the
account of such Portfolio to the broker or other person specified in
the instructions relating to such sale, such delivery to be made
only upon receipt of payment therefor in such form as is
satisfactory to Custodian, with the understanding that Custodian may
deliver or cause to be delivered securities for payment in
accordance with the customs prevailing among dealers in securities.
Custodian agrees to promptly inform Fund of any failures of
purchasers to make proper payment for securities sold by Fund.
H. Purchases or Sales of Security Options, Options on Indices and
Security Index Futures Contracts
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:
1. The Portfolio making such purchase or sale
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
<PAGE>
i. Market on which option traded;
j. Name and address of the broker or dealer through whom
the sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through
whom the sale or purchase was made, or other applicable
settlement instructions.
4. Security Index Future Contracts
a. The last trading date specified in the contract and,
when available, the closing level, thereof;
b. The index level or value of the underlying security or
currency on the date the contract is entered into;
c. The multiple;
d. Any margin requirements; and
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete
and executed custodial safekeeping account and
procedural agreement which shall be incorporated by
reference into this Custody Agreement).
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
<PAGE>
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of the Portfolio of
Fund making such pledge or loan:
1. Upon receipt of instructions, Custodian will release or cause
to be released securities held in custody to the pledgee
designated in such instructions by way of pledge or
hypothecation to secure any loan incurred by a Portfolio of
the Fund; provided, however, that the securities shall be
released only upon payment to Custodian of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, further
securities may be released or caused to be released for that
purpose upon receipt of instructions. Upon receipt of
instructions, Custodian will pay, but only from funds
available for such purpose, any such loan upon redelivery to
it of the securities pledged or hypothecated therefor and upon
surrender of the note or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated in such
instructions; provided, however, that the securities will be
released only upon deposit with Custodian of full cash
collateral as specified in such instructions, and that Fund
will retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt of
instructions and the loaned securities, Custodian will release
the cash collateral to the borrower.
<PAGE>
J. Routine Matters
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution,
purchase, transfer, or other dealings with securities or other
property of Fund except as may be otherwise provided in this
Agreement or directed from time to time by the Board of Directors of
Fund.
K. Deposit Account
Custodian will open and maintain a special purpose deposit account
or accounts in the name of Custodian for each Portfolio ("Account"
or "Accounts"), subject only to draft or order by Custodian upon
receipt of instructions. All monies received by Custodian from or
for the account of a Portfolio of Fund shall be deposited in said
Account, barring events not in the control of the Custodian such as
strikes, lockouts or labor disputes, riots, war or equipment or
transmission failure or damage, fire, flood, earthquake or other
natural disaster, action or inaction of governmental authority or
other causes beyond its control, at 9:00 a.m., Kansas City time, on
the business day following deposit of any check or monies into
Fund's Account. Custodian may open and maintain an Account in such
other banks or trust companies as may be designated by it or by
properly authorized resolution of the Board of Directors of Fund,
such Account, however, to be in the name of custodian and subject
only to its draft or order.
L. Income and other Payments to Fund
Custodian will:
1. Collect, claim and receive and deposit for the Account of each
Portfolio of Fund all income and other payments which become
due and payable on or after the effective date of this
Agreement with respect to the securities deposited under this
Agreement, and credit the account of the appropriate Portfolio
of Fund with such income when received;
2. Execute ownership and other certificates and affidavits for
all federal, state and local tax purposes in connection with
the collection of bond and note coupons; and
<PAGE>
3. Take such other action as may be necessary or proper in
connection with:
a. the collection, receipt and deposit of such income and
other payments, including but not limited to the
presentation for payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be
called, redeemed, retired or otherwise become
payable and regarding which the Custodian has
actual knowledge, or notice of which is contained
in publications of the type to which it normally
subscribes for such purpose in accordance with
Section 3.E. hereof; and
b. the endorsement for collection, in the name of the
applicable Portfolio of the Fund, of all checks, drafts
or other negotiable instruments.
Custodian, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon receipt
of instructions and upon being indemnified to its satisfaction
against the costs and expenses of such suit or other actions.
Custodian will receive, claim and collect all stock dividends,
rights and other similar items and will deal with the same pursuant
to instructions. Unless prior instructions have been received to the
contrary, Custodian will, without further instructions, sell any
rights held for the account of Fund on the last trade date prior to
the date of expiration of such rights.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on the
shares of Capital Stock of any Portfolio ("Portfolio Shares") by the
Board of Directors of Fund, Fund shall deliver to Custodian
instructions with respect thereto, including a copy of the
Resolution of said Board of Directors certified by the Secretary or
an Assistant Secretary of Fund wherein there shall be set forth the
record date as of which shareholders entitled to receive such
dividend or other distribution shall be determined, the date of
payment of such dividend or distribution, and the amount payable
<PAGE>
per share on such dividend or distribution.
Custodian will record the dividend and gain distributions declared
by each Portfolio of the Fund, will notify the transfer agent
thereof and will record the reinvestment of such dividend and gain
distributions on the books and records of the appropriate Portfolio
of the Fund.
N. Shares of Portfolio Purchased by Fund
Whenever any Portfolio Shares are repurchased or redeemed by Fund,
Fund or its agent shall advise Custodian of the aggregate dollar
amount to be paid for such shares and shall confirm such advice in
writing. Upon receipt of such advice, Custodian shall charge such
aggregate dollar amount to the Account of Portfolio and either
deposit the same in the account maintained for the purpose of paying
for the repurchase or redemption of Portfolio Shares or deliver the
same in accordance with such advice.
Custodian (in its capacity as Custodian) shall not have any duty or
responsibility to determine that Portfolio Shares purchased by Fund
have been removed from the proper shareholder account or accounts or
that the proper number of such shares have been cancelled and
removed from the shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Portfolio Shares are purchased from Fund, Fund will deposit
or cause to be deposited with Custodian the amount received for such
shares. Custodian (in its capacity as Custodian) shall not have any
duty or responsibility to determine that Portfolio Shares purchased
from Fund have been added to the proper shareholder account or
accounts or that the proper number of such shares have been added to
the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or mailed
to Fund all proxies properly signed, all notices of meetings, all
proxy statements and other notices, requests or announcements
affecting or relating to securities held by Custodian for Fund and
will, upon receipt of instructions, execute and deliver or cause its
nominee to execute and deliver or mail or
<PAGE>
have delivered or mailed such proxies or other authorizations as may
be required. Except as provided by this Agreement or pursuant to
instructions hereafter received by Custodian, neither it nor its
nominee will exercise any power inherent in any such securities,
including any power to vote the same, or execute any proxy, power of
attorney, or other similar instrument voting any of such securities,
or give any consent, approval or waiver with respect thereto, or
take any other similar action.
Q. Disbursements
Custodian will pay or cause to be paid insofar as funds are
available for the purpose, bills, statements and other obligations
of Fund (including but not limited to obligations in connection with
the conversion, exchange or surrender of securities owned by Fund,
interest charges, dividend disbursements, taxes, management fees,
custodian fees, legal fees, auditors' fees, transfer agents' fees,
brokerage commissions, compensation to personnel, and other
operating expenses of Fund) pursuant to instructions of Fund setting
forth the name of the person to whom payment is to be made, the
amount of the payment, and the purpose of the payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund as of the
close of business on each day, a detailed statement of the amounts
received or paid and of securities received or delivered for the
account of Fund during said day. Custodian will, from time to time,
upon request by Fund, render a detailed statement of the securities
and monies held for Fund under this Agreement, and Custodian will
maintain such books and records as are necessary to enable it to do
so and will permit such persons as are authorized by Fund including
Fund's independent public accountants, access to such records or
confirmation of the contents of such records; and if demanded, will
permit federal and state regulatory agencies to examine the
securities, books and records. Upon the written instructions of Fund
or as demanded by federal or state regulatory agencies, Custodian
will instruct subcustodian to give such persons as are authorized by
Fund including Fund's independent public accountants, access to such
records or confirmation of the
<PAGE>
contents of such records; and if demanded, to permit federal and
state regulatory agencies to examine the books, records and
securities held by subcustodian which relate to Fund. Fund will be
entitled to receive reports produced by the portfolio accounting
system, including those represented in the sample report package and
any others intended for use by the Fund unless IFTC determines that
such reports are no longer necessary or relevant to the services
provided hereunder.
S. Appointment of Subcustodians
1. Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of Irving Trust
Company, a banking corporation under the laws of the state of
New York ("Irving") or one or more other banks or trust
companies selected by Custodian and approved in advance by the
Fund's Board of Directors. Approval in advance will include
approval of the Agreement between the Custodian and
Subcustodian. Any such subcustodian must have the
qualifications required for custodian under the Investment
Company Act of 1940, as amended. The subcustodian may
participate directly or indirectly in the Depository Trust
Company or Treasury/Federal Reserve Book Entry System (as such
entity is defined at 17 CFR Sec. 270.17f-4(b)) or other
depository approved by the Fund. Neither Custodian nor
subcustodian will be entitled to reimbursement by Fund for any
fees or expenses of any subcustodian. The appointment of a
subcustodian will not relieve Custodian of any of its
obligations hereunder.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f-5(c)(1) under the
Investment Company Act of 1940) and Fund's cash or cash
equivalents, in amounts reasonably necessary to effect Fund's
foreign securities transactions, may be held in the custody of
one or more banks or trust companies acting as subcustodians,
according to Section 3.S.1.; and thereafter, pursuant to a
written contract or contracts as approved by
<PAGE>
Fund's Board of Directors, must be transferred to an account
maintained by such subcustodian with an eligible foreign
custodian, as defined in Rule 17f-5(c)(2), provided that any
such arrangement involving a foreign custodian shall be in
accordance with the provisions of Rule 17f-5 under the
Investment Company Act of 1940 as that Rule may be amended
from time to time.
T. Accounts and Records
Custodian with the direction and as interpreted by the Fund, Fund's
accountants and/or other tax advisors will prepare and maintain as
complete, accurate and current all accounts and records required to
be maintained by Fund and each Portfolio under the Internal Revenue
Code of 1986 ("Code") as amended and under the General Rules and
Regulations under the Investment Company Act of 1940 ("Rules") as
amended, and as agreed upon between the parties and will preserve
said records in the manner and for the periods prescribed in said
Code and Rules, or for such longer period as is agreed upon by the
parties.
Custodian relies upon Fund to furnish, in writing, accurate and
timely information to complete Fund's records and perform daily
calculation of the Fund's net asset value, as provided in Section
3.W. below.
Custodian shall incur no liability and Fund shall indemnify and hold
harmless Custodian from and against any liability arising from any
failure of Fund to furnish such information in a timely and accurate
manner, even if Fund subsequently provides accurate but untimely
information. It shall be the responsibility of Fund to furnish
Custodian with the declaration, record and payment dates and amounts
of any dividends or income and any other special actions required
concerning each of its securities when such information is not
readily available from generally accepted securities industry
services or publications.
U. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to this Agreement are the property
of Fund, and will be made available to Fund for
<PAGE>
inspection or reproduction within a reasonable period of time, upon
demand. Custodian will assist Fund's independent auditors, or upon
approval of Fund, or upon demand, any regulatory body, having
jurisdiction over the Fund or Custodian, in any requested review of
Fund's accounts and records but shall be reimbursed for all expenses
and employee time invested in any such review outside of routine and
normal periodic reviews. Upon receipt from Fund of the necessary
information, Custodian will supply necessary data for Fund's
completion of any necessary tax returns, questionnaires, periodic
reports to Shareholders and such other reports and information
requests as Fund and Custodian shall agree upon from time to time.
V. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no procedure
approved by Fund, or directed by Fund, conflicts with or violates
any requirements of its prospectus, "Articles of Incorporation,"
Bylaws, or any rule or regulation of any regulatory body or
governmental agency. Fund will be responsible to notify Custodian of
any changes in state statutes, regulations, rules or policies of
which it is aware which might necessitate changes in Custodian's
responsibilities or procedures.
W. Calculation of Net Asset Value
Custodian will calculate each Portfolio's net asset value, in
accordance with Fund's prospectus, once daily. Custodian will
prepare and maintain a daily evaluation of securities for which
market quotations are available by the use of outside services
normally used and contracted for this purpose; all other securities
will be evaluated in accordance with Fund's instructions. Custodian
will have no responsibility for the accuracy of the prices quoted by
these outside services or for the information supplied by Fund or
upon instructions.
X. Overdrafts
Custodian may in its sole discretion advance funds to the account of
the Fund which results in an overdraft because the monies held by
Custodian on behalf of the Fund are insufficient to pay the
<PAGE>
total amount payable upon a purchase of securities as specified in
Fund's instructions or for some other reason. The amount of the
overdraft shall be payable by the Fund to IFTC upon demand. Fund
agrees to leave on deposit in the Account such amount which
Custodian advanced under this subparagraph X for the amount of time
such monies remained unpaid to IFTC.
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written, facsimile
or oral instructions to Custodian from a designated representative
of Fund. Certified copies of resolutions of the Board of Directors
of Fund naming such designated representatives to give instructions
in the name and on behalf of Fund, and a Signature Card may be
received and accepted from time to time by Custodian as conclusive
evidence of the authority of such designated representatives to act
for Fund and may be considered to be in full force and effect (and
Custodian will be fully protected in acting in reliance thereon)
until receipt by Custodian of notice to the contrary. Unless the
resolution delegating authority to any person to give instructions
specifically requires that the approval of anyone else will first
have been obtained, Custodian will be under no obligation to inquire
into the right of the person giving such instructions to do so.
Notwithstanding any of the foregoing provisions of this Section 4.
no authorizations or instructions received by Custodian from Fund,
will be deemed to authorize or permit any Director, officer,
employee, or agent of Fund to withdraw any of the securities or
similar investments of Fund upon the mere receipt of such
authorization or instructions from such trustee, officer, employee
or agent. Notwithstanding any other provision of this Agreement,
Custodian, upon receipt (and acknowledgement if required at the
discretion of Custodian) of the instructions of such designated
representatives of Fund will undertake to deliver for Fund's account
monies, (provided such monies are on hand or available) in
connection with Fund's transactions and to wire transfer such monies
to such broker, dealer, subcustodian, bank or other agent specified
in such instructions by such designated representative of Fund.
<PAGE>
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written or facsimile
confirmation of such oral instruction. At Custodian's sole
discretion, Custodian may record on tape, or otherwise, any oral
instruction whether given in person or via telephone, each such
recording identifying the parties, the date and the time of the
beginning and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall hold harmless and indemnify Fund from and against
any loss or liability arising out of Custodian's failure to comply
with the terms of this Agreement or arising out of Custodian's
negligence, willful misconduct, or bad faith. Custodian may request
and obtain the advice and opinion of counsel for Fund, or of its own
counsel with notice to the Fund with respect to questions or matters
of law, and it shall be without liability to Fund for any action
taken or omitted by it in good faith, in conformity with such advice
or opinion. If IFTC reasonably believes that it could not prudently
act according to the instructions of the Fund or the Fund's counsel,
it may in its discretion, with notice to the Fund, not act according
to such instructions.
B. Custodian may rely upon the advice of Fund and upon statements of
Fund's accountants and other persons believed by, it in good faith,
to be expert in matters upon which they are consulted, and Custodian
shall not be liable for any actions taken, in good faith, upon such
statements.
C. If Fund requires Custodian in any capacity to take, with respect to
any securities, any action which involves the payment of money by
it, or which in Custodian's opinion might make it or its nominee
liable for payment of monies or in any other way, Custodian, upon
notice to Fund given prior to such actions, shall be and be kept
indemnified by Fund in an amount and form satisfactory to Custodian
against any liability on account of such action.
D. Custodian shall be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for such cash disbursements,
<PAGE>
costs and expenses as may be agreed upon from time to time by
Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder upon
any instructions, advice, notice, request, consent, certificate or
other instrument or paper reasonably appearing to it to be genuine
and to have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as conclusive
proof of any fact or matter required to be ascertained from Fund
hereunder, a certificate signed by the Fund's President, or other
officer specifically authorized for such purpose.
F. Without limiting the generality of the foregoing, Custodian shall be
under no duty or obligation to inquire into, and shall not be liable
for:
1. The validity of the issue of any securities purchased by or
for Fund, the legality of the purchase thereof or evidence of
ownership required by Fund to be received by Custodian, or the
propriety of the decision to purchase or amount paid therefor;
2. The legality of the sale of any securities by or for Fund, or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any shares of the Capital
Stock of Fund, or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any shares of
Fund Shares, or the propriety of the amount to be paid
therefor; or
5. The legality of the declaration of any dividend by Fund, or
the legality of the issue of any Fund Shares in payment of any
stock dividend.
G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer, clearing
house funds, uncollected funds, or instrument for the payment of
money received by it on behalf of Fund, until Custodian actually
receives such money, provided only that it shall advise Fund
promptly if it fails to receive any such money in the ordinary
course of business, and use its best efforts and
<PAGE>
cooperate with Fund toward the end that such money shall be
received.
H. Except for any subcustodians appointed under Section 3.S., Custodian
shall not be responsible for loss occasioned by the acts, neglects,
defaults or insolvency of any broker, bank, trust company, or any
other person with whom Custodian may deal in the absence of
negligence, misconduct, or bad faith on the part of Custodian.
I. Notwithstanding anything herein to the contrary, Custodian may, and
with respect to any foreign subcustodian appointed under Section
3.S.2. must, provide Fund for its approval, agreements with banks or
trust companies which will act as subcustodians for Fund pursuant to
Section 3.S. of this Agreement.
6. COMPENSATION. Fund will pay to Custodian such compensation as is stated in
the Fee Schedule attached hereto as Exhibit A which may be changed from
time to time as agreed to in writing by Custodian and Fund. Custodian may
not charge such compensation against monies held by it for the account of
Fund. Custodian will also be entitled, notwithstanding the provisions of
Sections 5.C. or 5.D. hereof, to charge against any monies or securities
held by it for the account of Fund the amount of any loss, damage,
liability, advance or expense for which it shall be entitled to
reimbursement under the provisions of this Agreement including fees or
expenses due to IFTC for other services provided to the Fund by the
Custodian. Custodian will not be entitled to reimbursement by Fund for any
loss or expenses of any subcustodian.
7. TERMINATION. The term of this Agreement shall be one year. Either party to
this Agreement may terminate the same by notice in writing, delivered or
mailed, postage prepaid, to the other party hereto and received not less
than ninety (90) days prior to the date upon which such termination will
take effect. Upon termination of this Agreement, Fund will pay to
Custodian such compensation for its reimbursable disbursements, costs and
expenses paid or incurred to such date and Fund will use its best efforts
to obtain a successor custodian. Unless the holders of a majority of the
outstanding shares of "Capital Stock" of Fund vote to have the securities,
funds and other properties held
<PAGE>
under this Agreement delivered and paid over to some other person, firm or
corporation specified in the vote, having not less the Two Million Five
Hundred Dollars ($2,500,000) aggregate capital, surplus and undivided
profits, as shown by its last published report, and meeting such other
qualifications for Custodian as set forth in the Bylaws of Fund, the Board
of Directors of Fund will, forthwith upon giving or receiving notice of
termination of this Agreement, appoint as successor custodian a bank or
trust company having such qualifications. Custodian will, upon termination
of this Agreement, deliver to the successor custodian so specified or
appointed, at Custodian's office, all securities then held by Custodian
hereunder, duly endorsed and in form for transfer, all funds and other
properties of Fund deposited with or held by Custodian hereunder, or will
co-operate in effecting changes in book-entries at the Depository Trust
Company or in the Treasury/Federal Reserve Book-Entry System pursuant to
31 CFR Sec. 306.118. In the event no such vote has been adopted by the
stockholder of Fund and no written order designating a successor custodian
has been delivered to Custodian on or before the date when such
termination becomes effective, then Custodian will deliver the securities,
funds and properties of Fund to a bank or trust company at the selection
of Custodian and meeting the qualifications for custodian, if any, set
forth in the Bylaws of Fund and having not less that Two Million Five
Hundred Dollars ($2,500,000) aggregate capital, surplus and undivided
profits, as shown by its last published report. Upon either such delivery
to a successor custodian, Custodian will have no further duties under this
Agreement. Thereafter such bank or trust company will be the successor
custodian under this Agreement and will be entitled to reasonable
compensation for its services. In the event that no such successor
custodian can be found, Fund will submit to its shareholders, before
permitting delivery of the cash and securities owned by Fund to anyone
other than a successor custodian, the question of whether Fund will be
liquidated or function without a custodian. Notwithstanding the foregoing
requirement as to delivery upon termination of this Agreement, Custodian
may make any other delivery of the securities, funds and property of Fund
which is permitted by the Investment Company Act of 1940, Fund's
Certificate of Incorporation and
<PAGE>
Bylaws then in effect or apply to a court of competent jurisdiction for
the appointment of a successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received by
Fund at One Bankers Trust Plaza, New York, New York 10006 or at such other
address as Fund may have designated to Custodian in writing, will be
deemed to have been properly given to Fund hereunder; and notices,
requests, instructions and other writings received by Custodian at its
offices at 21 West 10th Street, 16th Floor, Kansas City, Missouri 64105,
or to such other address as it may have designated to Fund in writing,
will be deemed to have been properly given to Custodian hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of New York
and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
E. This Agreement shall become effective at the close of business on
_____ day of ___________, 1988.
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and
not be affected, and the rights and obligations of the parties shall
be construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
<PAGE>
H. Custodian will not release the identity of Fund to an issuer which
requests such information pursuant to the Shareholder Communications
Act of 1985 for the specific purpose of direct communications
between such issuer and Fund unless the Fund directs the Custodian
otherwise.
I. This Agreement may not be assigned by either party without prior
written consent of the other party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
--------------------------------
Richard A. Winegar, Vice President
ATTEST:
- --------------------------------------
Cheryl J. Naegler, Assistant Secretary
SELIGMAN MUTUAL BENEFIT PORTFOLIOS, INC.
By:
--------------------------------
Title:
-----------------------------
ATTEST:
- --------------------------------------
Secretary
FIRST AMENDMENT OF CUSTODY AGREEMENT
THIS FIRST AMENDMENT OF CUSTODY AGREEMENT ("Agreement") is made and
entered into to be effective as of October 4, 1994, by and between SELIGMAN
PORTFOLIOS, INC. (f/k/a Seligman Mutual Benefit Portfolios, Inc.), a Maryland
corporation ("Fund"), and INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust
company ("IFTC").
RECITALS
A. Fund and IFTC are parties to that certain Custody Agreement dated June 1,
1988 ("Custody Agreement"), pursuant to which Fund appointed IFTC as
custodian and recordkeeping agent of the Fund's five then-existing
portfolios.
B. Fund desires to appoint IFTC as custodian and recordkeeping agent of two
of its new portfolios, known as the Seligman Communications and
Information Portfolio and the Seligman Frontier Portfolio, upon and
subject to the terms, conditions and agreements set forth in the Custody
Agreement, and IFTC is willing to accept such appointment.
AGREEMENT
1. Fund hereby appoints IFTC as custodian and recordkeeping agent of the
Seligman Communications and Information Portfolio and the Seligman
Frontier Portfolio, and IFTC hereby accepts such appointment and agrees
that it will act as the custodian and recordkeeping agent of the Seligman
Communications and Information Portfolio and the Seligman Frontier
Portfolio.
2. Such appointment and agreement is made upon and subject to all the terms,
conditions and agreements set forth in the Custody Agreement, which is
hereby incorporated herein by reference. Fund and IFTC hereby ratify and
confirm the Custody Agreement and agree that it remains in full force and
effect and is binding upon the parties in accordance with its terms,
except as amended hereby. Each party hereby confirms that except as
amended herein all of its representations and warranties set forth in the
Custody Agreement remain true and correct as of the date of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers to be effective as of the date and year first
above written.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-----------------------------------------
Title:
--------------------------------------
SELIGMAN PORTFOLIOS, INC.
(f/k/a Seligman Mutual Benefit Portfolios,
Inc.)
By:
-----------------------------------------
Title:
--------------------------------------
RECORDKEEPING AGREEMENT
THIS AGREEMENT made as of this __ day of _________, 1993, by and
between SELIGMAN PORTFOLIOS, INC., a Maryland corporation, having its principal
place of business at 130 Liberty, New York, New York 10006 ("Fund"), and
INVESTORS FIDUCIARY TRUST COMPANY, a state chartered trust company organized and
existing under the laws of the State of Missouri, having its principal place of
business at 127 West 10th Street, Kansas City, Missouri, 64105 ("IFTC"):
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto, intending to be legally bound, mutually covenant and agree as
follows:
1. APPOINTMENT OF RECORDKEEPING AGENT
Fund hereby constitutes and appoints IFTC as Recordkeeping Agent of
the Fund's Seligman Henderson Global Portfolio ("Portfolio") to
perform certain accounting and recordkeeping functions required of
Fund as a duly registered investment company in compliance with
applicable provisions of federal, state and local laws, rules and
regulations; in connection therewith, to provide information necessary
for Fund to file required financial reports concerning the Portfolio;
to maintain and preserve certain required books, accounts and records
as the basis for such reports; to perform certain daily functions in
connection with such accounts and records; to calculate daily net
asset value of the Portfolio; to act as liaison with the Fund's
independent auditors with respect to the Portfolio; and to provide
information to and cooperate with the Portfolio's custodian as
provided in this Agreement.
2. DELIVERY OF CORPORATE DOCUMENTS
Fund shall deliver to IFTC prior to the effective date of this
Agreement copies of a resolution of the Board of Directors of Fund
appointing IFTC as Recordkeeping Agent for the Portfolio.
3. REPRESENTATIONS AND WARRANTIES OF FUND
A. Fund represents and warrants that it is a corporation duly
organized as heretofore described and existing and in good
standing under the laws of Maryland;
B. Fund represents and warrants that it has the power and authority
under applicable laws, its charter document and bylaws, and has
taken all action necessary, to enter into and perform this
Agreement including appropriate authorization from the Fund;
<PAGE>
C. Fund represents and warrants that it has determined that the
Investment Accounting System (the accounting system licensed for
use by IFTC from DST Systems, Inc. ("Licensor") to maintain the
accounting records of the Portfolio) is appropriate and suitable
for its needs;
D. Fund acknowledges that IFTC and Licensor have proprietary rights
in and to the Investment Accounting System and that the
Investment Accounting System and the programs, documentation and
information of, and other materials relevant to, the Investment
Accounting System or the business of IFTC ("Confidential
Information") are confidential and constitute trade secrets of
IFTC;
E. Fund shall preserve the confidentiality of the Confidential
Information and prevent its disclosure to other than its own
employees and agents who reasonably have a need to know such
information pursuant to this Agreement, and shall take reasonable
action to protect the rights of IFTC and Licensor in the
Investment Accounting System. For purposes of this paragraph,
"reasonable action" shall mean taking such actions and exercising
such degree of care as Fund uses with reference to its own highly
confidential information. Certain reports as agreed upon in
writing by the Fund and IFTC will be furnished to the Portfolio's
custodian for its reasonable business needs.
4. REPRESENTATION AND WARRANTIES OF IFTC
A. It is a trust company duly organized and existing and in good
standing under the laws of the State of Missouri.
B. It has the requisite power and authority under applicable laws,
by its charter and bylaws, and by agreement to enter into this
Agreement and has taken all action necessary to enter into and
perform the services contemplated herein and this Agreement has
been duly executed and delivered by IFTC and constitutes a legal,
valid and binding obligation of IFTC, enforceable in accordance
with its terms.
5. DUTIES AND RESPONSIBILITIES OF IFTC
A. Fund shall turn over to IFTC all of Fund's accounts and records
(if any) relating to the Portfolio which have been previously
maintained. IFTC shall be entitled to rely conclusively on the
completeness and correctness of the accounts and records turned
over to it by Fund and Fund shall indemnify and hold IFTC
harmless of and from any and all expenses, damages and losses
whatsoever arising out of or in connection with any error,
omission, inaccuracy or other deficiency of such accounts and
records or in the failure of Fund to provide any portion of such
or to provide any information needed by IFTC to perform its
function hereunder.
B. ACCOUNTS AND RECORDS
1. IFTC, with the directions and as interpreted by the Fund,
Fund's accountants and/or other advisors, will prepare and
maintain as complete, accurate and current all accounts and
records respecting the Portfolio which are required to be
maintained by Fund under the general Rules and
<PAGE>
Regulations under the Investment Company Act of 1940
("Rules"), as amended, and as agreed upon between the
parties, and will preserve said records in the manner and
for the periods prescribed in said Rules, or for such longer
period as is agreed upon by the parties.
2. IFTC relies upon Fund to furnish, in writing, accurate and
timely information to complete the Portfolio's records and
perform daily calculation of the Portfolio's net asset value
as provided in Section 5.B.8. below. IFTC shall incur no
liability except as provided in Section 6.A. herein and the
Fund shall indemnify and hold IFTC harmless from and against
any liability arising from any failure of Fund to furnish
such information in timely and accurate manner, even if Fund
subsequently provides accurate but untimely information.
3. It shall be the responsibility of Fund to furnish IFTC with
the declaration, record and payment dates and amounts of any
dividends or income and any other special actions required
concerning the securities in the Portfolio when such
information is not readily available from generally accepted
securities industry services or publications.
4. The accounts and records maintained and preserved by IFTC
shall be the property of the Fund and shall be made
available to the Fund for inspection or reproduction within
a reasonable time, upon demand. The Fund will be entitled to
receive reports produced by the Investment Accounting
System, including without limitation those listed on Exhibit
B hereof.
5. IFTC shall assist Fund's independent accountants, or upon
approval of Fund or upon demand, any regulatory body, in any
requested review of Fund's accounts and records relating to
the Portfolio which are maintained by IFTC but shall be
reimbursed by Fund for all expenses and employee time
invested in any such review outside or routine and normal
periodic reviews.
6. Upon receipt from Fund of the necessary information, IFTC
shall provide information for tax returns, questionnaires,
or periodic reports to Portfolio shareholders and such other
reports and information requests as Fund and IFTC shall
agree upon from time to time.
7. IFTC and Fund may from time to time adopt procedures as they
agree upon, and IFTC may conclusively assume that any
procedure approved by Fund, or directed by Fund, does not
conflict with or violate any requirements of Fund's
prospectus, Articles of Incorporation, Bylaws, or any rule
or regulation of any applicable regulatory body or
governmental agency. Fund shall be responsible to notify
IFTC of any changes in
<PAGE>
statutes, rules or requirements, or policies which may
necessitate changes in IFTC's responsibilities or
procedures.
8. IFTC will calculate the Portfolio's net asset value, in
accordance with the Fund's prospectus once daily. IFTC will
prepare and maintain a daily evaluation of securities for
which market quotations are available by the use of outside
services normally used and contracted for this purpose; all
other securities will be evaluated in accordance with Fund's
instructions. Notwithstanding anything in this Agreement to
the contrary, the evaluation of the Portfolio's securities
will be in accordance with Fund's Statement of Procedure as
to Valuation of Portfolio Securities. Fund will be solely
responsible for providing IFTC with such statement and with
any subsequent supplements, amendments or modifications
thereof in a timely manner.
9. IFTC will cooperate with the Portfolio's custodian as
necessary with respect to Portfolio's custodian to cooperate
with IFTC as necessary for the performance of IFTC's
obligations under this Agreement.
6. LIMITATION OF LIABILITY OF IFTC
A. IFTC shall not be liable for any loss or damage resulting from
its action or omission to act or otherwise, including but not
limited to any act or omission of IFTC done in response to or in
reliance upon any act or omission of or information provided by
the Fund or the Portfolio's custodian, except for any loss or
damage arising from any negligent act or willful misconduct of
IFTC and IFTC shall indemnify and hold harmless Fund from and
against any liability arising from such negligence or willful
misconduct. IFTC shall not be liable for consequential, special,
or punitive damages. IFTC may request and obtain the advice and
opinion of counsel for Fund or its own counsel at the expense of
Fund with respect to questions or matters of law, and it shall be
without liability to Fund for any action taken or omitted by it
in good faith, in conformity with such advice or opinion.
B. IFTC may rely in good faith upon the advice of Fund, The Fund's
representatives, other authorized individuals as provided by
corporate resolution to IFTC, and others believed by it in good
faith to be expert in matters upon which they are consulted.
Actions or inaction taken in reliance on such advice shall be
considered "negligent" and IFTC shall not be liable for any
actions taken in good faith upon such statements.
C. If Fund requires IFTC in any capacity to take any action which
involves the payment of money by it, or which in IFTC's opinion
might make it liable for payment of money or in any other way,
IFTC shall be and be kept indemnified by
<PAGE>
Fund in an amount and form satisfactory to IFTC against any
liability on account of such action.
D. IFTC shall be entitled to receive and Fund agrees to pay to
IFTC, on demand, reimbursement for such cash disbursements,
costs and expenses as may be agreed upon in writing from time to
time by IFTC and Fund.
E. IFTC shall be protected in acting hereunder upon any
instructions, advice, notice, request, consent, certificate or
other instrument or paper appearing to it to be genuine and to
have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained
from Fund as determined by IFTC, a certificate signed by Fund's
President or other officer of Fund as requested by IFTC.
F. Without limiting the generality of the foregoing, IFTC shall be
under no duty or obligation to inquire into, and shall not be
liable for:
1. The validity of the issue of any securities purchased by or
for the Portfolio, or the legality of the purchase thereof;
2. The legality of the sale of any securities by or for the
Portfolio, or the propriety of the amount for which the same
are sold; 3. The legality of the issue or sale of any shares
of the shares of the Portfolio, of the sufficiency of the
amount to be received therefore; 4. The legality of the
purchase of any shares of the Portfolio, or the propriety of
the amount to be paid therefore, or 5. The legality of the
declaration of any dividend by Fund, or the legality of the
issue of any of the Portfolio's shares in payment of any
stock dividend.
G. IFTC shall not be responsible in any manner for any custodial
services with respect to the Portfolio or any of its assets.
H. Not withstanding anything herein to the contrary, it is expressly
understood and agreed that IFTC shall have no responsibility to
Fund, the Portfolio's shareowners or any other person or entity
for moneys or securities of the Portfolio held by banks or trust
companies as custodians in the absence of negligence or willful
misconduct of IFTC.
I. IFTC shall not use any information made available to it under the
terms of this Agreement for any purpose other than complying with
its duties and responsibilities under this Agreement or as
specifically authorized by Fund in writing to IFTC.
<PAGE>
7. FORCE MAJEURE
IFTC shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, any interruption, loss or
malfunction of any utility, transportation, computer (hardware or
software) or communication service.
8. ADDITIONAL PORTFOLIOS
IFTC shall act as recordkeeper for additional portfolios of Fund upon
30 days notice to IFTC provided IFTC consents to such arrangement.
Rates or charges for such additional portfolios shall be as agreed by
IFTC and Fund in writing.
9. COMPENSATION
Fund shall pay to IFTC such compensation at such time as may from time
to time be agreed upon in writing by IFTC and Fund. The initial
compensation schedule is attached as Exhibit A.
10. TERMINATION
Either party to this Agreement may terminate same by notice in writing
received by the other party not less than ninety (90) days prior to
the date upon which such termination shall take effect. Upon
termination of this Agreement, Fund shall pay to IFTC such
compensation for its reimbursable disbursements, costs and expenses
paid or incurred to such date and Fund shall use his best efforts to
obtain successor. IFTC shall, upon termination of this Agreement,
deliver to the successor so specified or appointed, or to Fund, at
IFTC's office, all records then held by IFTC hereunder, all funds and
other properties of the Portfolio deposited with or held by IFTC
hereunder. In the event no written order designating a successor
(which may be Fund) shall have been delivered to IFTC on or before the
date when such termination shall become effective, then IFTC shall
deliver the records, funds and properties of the Portfolio to a bank
or trust company at the selection of IFTC or if a satisfactory
successor cannot be obtained, IFTC may deliver the records, funds and
properties to the Fund, at IFTC's offices or as otherwise agreed to
between the parties. Thereafter the Fund or such bank or trust company
shall be the successor under this Agreement and shall be entitled to
reasonable compensation for its services. Notwithstanding the
foregoing requirement as to delivery upon termination of this
Agreement, IFTC may make any other delivery of the funds and property
of the Portfolio which shall be permitted by the Investment Company
Act of 1940 and Fund's Articles of Incorporation, Declaration of
Trust, and/or Bylaws then in effect. Except as otherwise provided
herein, neither this Agreement nor any portion thereof may be assigned
by IFTC without the consent of Fund.
11. NOTICES
Notices, requests, instructions and other writings received by Fund at
130 Liberty Street, New York, New York 10006, Attention: Tom Rose,
Treasurer, cc: Nina O. Shenker,
<PAGE>
General Counsel, or at such address as Fund may have designated to
IFTC in writing, shall be deemed to have been properly given to Fund
hereunder; and notices, requests, instruction and other writings
received by IFTC at its offices at 127 West 10th Street, Kansas City,
MO 64105, or to such other address as it may have designated to Fund
in writing, shall be deemed to have been properly given to IFTC
hereunder.
12. MISCELLANEOUS
A. This Agreement is executed and delivered in the State of Missouri
and shall be governed by the laws of said state.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in the Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effort.
E. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be considered
severable and not be affected, and the rights and obligations of
the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be
illegal or invalid.
G. This Agreement may not be assigned by either party without prior
written consent in writing of the other party.
H. This Agreement shall be effective as of the ______ day of
____________, 1993.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective and duly authorized corporate or trust officers.
INVESTORS FIDUCIARY TRUST COMPANY
By: __________________________________
Title: __________________________________
SELIGMAN PORTFOLIOS, INC.
By: __________________________________
Title: __________________________________
<PAGE>
INVESTORS FIDUCIARY TRUST COMPANY
J & W SELIGMAN & CO., INC.
FEE SCHEDULE FOR
SELIGMAN PORTFOLIOS, INC.,
JANUARY 1 - DECEMBER 31, 1993
I. PORTFOLIO ACCOUNTING
A. BASE FEE
$750 per month.
B. ASSET BASED FEE
3/100 of 1 % (3 basis points) on all assets.
II. NOTES TO THE ABOVE FEE SCHEDULE
A. Fees are payable monthly at 1/12th of the annual stated rate
based on monthly average net assets.
B. The fees stated above are exclusive of terminal equipment
required in the client's location(s) and communication line
costs.
C. The above schedule does not include out-of-pocket expenses that
would be incurred on the Fund's behalf
D. Any fees not paid within 45 days of the date of the original
invoice will be charged a late payment fee of 1 % per month until
payment of the fees are received by IFTC.
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INVESTORS FIDUCIARY TRUST COMPANY SELIGMAN PORTFOLIOS, INC.
SELIGMAN GLOBAL PORTFOLIO
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DATE DATE
IFTC REPORTS AND DOWNLOAD TO BE TRANSMITTED TO
J. & W SELIGMAN & CO., INC.
I. IFTC Reports To Be Transmitted To UDSC Computer Room
RUN NAME
Daily Mutual Fund NAV
Pricing Stratification
Dividend Accrual Work Sheet
Daily General Ledger By Portfolio
Short-Term Paper Daily Interest & Amortization
Portfolio Fail Detail
Daily Long-Term Interest/Amortization Journal
Paydown Journal
Principal Payment Projections
Portfolio of Pass-Through Investments
Compliance Report
Daily General Ledger Detail
Year-to Date Dividend Journal-Daily
Cumulative Stock Split and Dividends Announcements
Monthly General Ledger by Portfolio
Money Market Pricing Matrix
Money Market Detail Pricing.
Money Market Matrix Pricing
Gain/Loss Status-Daily Securities/Long-Term
Gain/Loss Status-Daily Securities/Short-Term
Fixed Income Portfolio of Investments with Ratings & Yields
Allowable Short-Term Gains
Compliance Report Daily
Daily Price Make-Up
Year-to-Date Dividend Journal
Broker Securities Journal-Purchases
Broker Securities Journal-Sales
Municipal Securities/Call Date/Price
Rating Summary Report
Municipal Bond Maturity Summary
Municipal Bond Percentage of Assets by State
Interest Income Journal
Avg. Cost of Sales/Position Summary
Status of Portfolio
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Cash Receipts Journal
Cash Disbursements Journal
Summary of Average Maturities
Portfolio of Investments by Industry
Summary of Purchases
Monthly Detail of Securities Purchased
Monthly Detail of Securities Sold
Detail Cost Ledger by Portfolio
IFTC REPORTS AND DOWNLOAD TO BE TRANSMITTED TO
J & W SELIGMAN & CO., INC.
Run Name
Ranked Portfolio Commissions by Portfolio
Broker Securities Journal-Purchases
Broker Securities Journal-Sales
Commission/Concession report by Broker
Muni. Bond Monthly Income by State
Monthly General Ledger by Portfolio
Form 13F-Preliminary Listing
S-T Principal Transaction N-1R
Portfolio Transaction-Principal Trades
Investment Activity Journal
II. IFTC Reports To Be Created And Sent To Seligman Via Overnight Or
Downloaded Through Treasurer's PC Computers
1. Management Fee
2. Market Letter
3. NAV Pricing Sheet
4 Yield Sheets
5. Assets & Liabilities
6. Statement of Net Income
7. Statement of Changes
III IFTC Report To Be Created And Transmitted Through UDSC Computer Room
1. Valuation Report
FIRST AMENDMENT OF RECORDKEEPING AGREEMENT
THIS FIRST AMENDMENT OF RECORDKEEPING AGREEMENT ("Agreement") is made and
entered into to be effective as of October 4, 1994 by and between SELIGMAN
PORTFOLIOS, INC. (f/k/a Seligman Mutual Benefit Portfolios, Inc.), a Maryland
corporation ("Fund") and INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust
company ("IFTC").
RECITALS
A. Fund and IFTC are parties to that certain Recordkeeping Agreement dated
April 27, 1993 ("Recordkeeping Agreement"), pursuant to which Fund
appointed IFTC as recordkeeping agent of the Fund's Seligman Henderson
Global Portfolio.
B. Fund desires to appoint IFTC as recordkeeping agent of one of its new
portfolios, known as the Seligman Henderson Global Emerging Companies
Portfolio, upon and subject to the terms, conditions and agreements set
forth in the Recordkeeping Agreement, and IFTC is willing to accept such
appointment.
AGREEMENT
1. Fund hereby appoints IFTC as recordkeeping agent of the Seligman Henderson
Global Emerging Companies Portfolio, and IFTC hereby accepts such
appointment and agrees that it will act as the recordkeeping agent of the
Seligman Henderson Global Emerging Companies Portfolio.
2. Such appointment and agreement is made upon and subject to all the terms,
conditions and agreements set forth in the Recordkeeping Agreement, which
is hereby incorporated herein by reference. Fund and IFTC hereby ratify
and confirm the Recordkeeping Agreement and agree that it remains in full
force and effect and is binding upon the parties in accordance with its
terms, except as amended hereby. Each party hereby confirms that except as
amended herein all of its representations and warranties set forth in the
Recordkeeping Agreement remain true and correct as of the date of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers to be effective as of the date and year first
above written.
INVESTORS FIDUCIARY TRUST COMPANY
By:
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Title:
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SELIGMAN PORTFOLIOS, INC.
(f/k/a Seligman Mutual Benefit Portfolios,
Inc.)
By:
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Title:
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BUY-SELL AGREEMENT
THIS AGREEMENT is made on this 26th day of April, 1993 by and
among the Canada Life Insurance Company of America, a Michigan
corporation ("CLICA") on its own behalf and on behalf of its Variable
Annuity Account 2 (the "Separate Account"), Seligman Portfolios, Inc.
(formerly Seligman Mutual Benefit Portfolios, Inc.) (the "Fund") and J.
& W. Seligman & Co. Incorporated ("JWSI").
WHEREAS, CLICA is a stock life insurance company incorporated
under the laws of the State of Michigan; and
WHEREAS, the Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940 ("1940 Act")
and it is intended that certain variable annuity contracts (the
"Contracts"), a form of which is included herein as Exhibit A, shall be
funded through the Separate Account; and
WHEREAS, the Fund is registered as an open-end diversified
management investment company under the 1940 Act and is currently
authorized to issue six separate series of shares (the "Portfolios") and
to create additional Portfolios in the future; and
WHEREAS, JWSI is registered as an investment adviser under
the Investment Advisers Act of 1940 and is the Fund's investment adviser
pursuant to the terms of agreements between JWSI and the Fund dated
December 29, 1988 and April , 1993 ("Management Agreements"); and
WHEREAS, it is the intention of the parties to this Agreement
that the Fund will serve as the sole funding vehicle for the Separate
Account under the variable accumulation options afforded by the
Contracts;
NOW, THEREFORE, in consideration of the covenants, mutual
promises herein contained and other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
1. Fund Shares.
A. CLICA agrees that the Fund will be the sole funding vehicle
for the Separate Account. The Fund agrees that, except for shares sold
to JWSI at the Fund's initial capitalization, and to The Mutual Benefit
Life Insurance Company through its Mutual Benefit Variable Contract
Account 9 ("VCA-9") on behalf of existing Mutual Benefit Life contract
owners, the Fund will sell its shares only to the Separate Account or to
other separate accounts of CLICA or any of its affiliates. CLICA and
the Fund agree that at such time that CLICA and Seligman Financial
Services, Inc. ("SFSI") are no longer subject to the exclusivity
provisions of the Promotional Agent Distribution Agreement between CLICA
and SFSI dated _____________, 1993, CLICA may purchase shares for the
Separate Account from entities other than the Fund and the Fund may sell
its shares to entities other than the Separate Account, other separate
accounts of CLICA or its affiliates, and VCA-9.
B. The Fund agrees to sell to CLICA, on behalf of the Separate
Account, those shares of the Fund which the Separate Account orders,
executing such orders on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the order for the
shares of the Fund. For purposes of this Section, CLICA (or its
designated agent) shall be the designee of the Fund for receipt of such
orders from Policy owners and receipt by such designee by 4:00 p.m. New
York time on a Business Day, shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. New
York time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading.
C. The Fund agrees to make Fund shares available for purchase at
the applicable net asset value per share by CLICA for the Separate
Account on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund
shall use reasonable efforts to calculate such net asset value on each
day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the parties to this Agreement recognize
that the Board of Directors of the Fund (hereinafter the "Directors")
may refuse to sell shares of any Portfolio to the Separate Account, or
suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Directors acting in
good faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of such Portfolio. The Separate Account shall pay for the
Fund shares on the next Business Day after an order to purchase shares
is made in accordance with the provisions of this Section. Payment
shall be in federal funds transmitted by wire to the Fund's designated
custodian or by a credit for any shares redeemed.
D. The Fund agrees to redeem for cash, on CLICA's request, any
full or fractional shares of the Fund held by CLICA, executing such
requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. For
purposes of this Section, CLICA (or its designated agent) shall be the
designee of the Fund for receipt of requests for redemption from Policy
owners and receipt by such designee by 4:00 p.m. New York time on a
Business Day, shall constitute receipt by the Fund, provided that the
Fund receives notice of such request for redemption by 9:30 a.m. New
York time on the next following Business Day. The Fund ordinarily shall
make payment to CLICA for shares on the next business day after the Fund
receives notice from CLICA. Payment shall be in federal funds
transmitted by wire or by a debit against any shares purchased.
E. Transfer of Portfolio shares will be by book entry. No stock
certificates will be issued to the Separate Account unless the Separate
Account so requests. Shares of each Portfolio will be recorded in an
appropriate title for the corresponding Sub- account on the books of
CLICA. If, however, state law requires transfer other than by book
entry, then the Fund agrees to provide the required form of transfer.
F. The Fund shall make the net asset value per share for each
Portfolio available to CLICA on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated. The Fund
will instruct its recordkeeper to use all reasonable efforts to make
such net asset value per share available by 5:30 p.m. New York time, but
in no event later than 6 p.m. New York time. Notwithstanding the
foregoing, the parties to this Agreement recognize that the Fund is
ultimately responsible for the pricing of its own shares.
G. The Fund shall furnish notice on the ex-dividend date to
CLICA of any dividend or distribution payable on any shares underlying
Sub-accounts. All of such dividends and distributions as are payable on
shares of a Portfolio recorded in the title for the corresponding
Sub-account shall be automatically reinvested in additional shares of
that Portfolio at the net asset value computed on its dividend or
distribution payable date. The Fund shall notify CLICA of the number of
shares so issued.
2. Representations and Warranties of the Fund. The Fund
and JWSI hereby represent and warrant that:
A. The Fund is duly incorporated and in good standing under the
laws of the State of Maryland;
B. The Fund is duly registered under the 1940 Act as an open-end
diversified management investment company;
C. All actions necessary to authorize the execution, delivery
and performance of this Agreement and all transactions contemplated
hereunder have been taken or will be taken prior to any sale hereunder;
D. A Registration Statement on Form N-1A relating to the Fund,
including a Prospectus and statement of additional information, has been
prepared and filed with the SEC in accordance with applicable provisions
of the Securities Act of 1933 ("1933 Act") and the 1940 Act, and is
effective;
E. The Registration Statement does not include any untrue
statements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading;
F. The Fund will use its best efforts to ensure that the
Registration Statement continues to conform in all material respects to
the requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the SEC thereunder and its best efforts to ensure that at
no time will the Registration Statement include an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
G. The Fund will promptly furnish CLICA with copies of the
Fund's Registration Statement, all amendments and exhibits thereto, each
definitive Prospectus, each Prospectus supplement, and each periodic
report under the 1940 Act, as filed with the SEC;
H. The Fund will promptly advise CLICA of any proposed amendment
to the Registration Statement or supplement to the Prospectus and shall
provide CLICA with a copy of such proposed amendment or supplement in
advance of the filing with the SEC of such amendment or supplement to
permit CLICA's review of such amendment or supplement, unless legal or
regulatory requirements would make such review impractical;
I. The Fund and JWSI represent that each Portfolio except for
the Seligman Henderson Global Portfolio, which expects to be, is
currently qualified as a Regulated Investment Company under Subchapter M
of the Internal Revenue Code of 1986, as amended ("Code"), that they
will use reasonable effort to maintain such qualification (under
Subchapter M or any successor or similar provision), and that they will
notify CLICA immediately upon having a reasonable basis for believing
that a Portfolio has ceased to so qualify or that it might not so
qualify in the future, and that it provide to CLICA not later than 14
days following the end of each calendar quarter, a report showing each
Portfolio's continued qualification;
J. The Fund and JWSI represent that each Portfolio except for
the Seligman Henderson Global Portfolio, which expects to be, is
currently in compliance with the provisions of Section 817(h) of the
Code and regulations thereunder concerning diversification of the assets
of the Portfolios of the Fund, and that they will use reasonable effort
to maintain such compliance (under Section 817(h) or any successor or
similar provision), provided that CLICA will promptly advise the Fund of
any changes in such provisions after the date of this Agreement, and
that it will provide to CLICA, not later than 14 days following the end
of each calendar quarter, a report showing each Portfolio's continued
compliance;
K. The Fund will as directed in writing by CLICA make every
effort to comply with the requirements of the State of Michigan
concerning permissible investments for the Separate Account;
L. The Fund shall pay all its expenses incidental to its
performance under this Agreement. The Fund shall see to it that its
shares are continuously registered and authorized for issue in
accordance with any applicable federal and state laws for so long as
this Agreement is in effect, and for so long as CLICA may purchase
shares of the Fund. Without limiting the generality of the foregoing,
the Fund shall bear any expenses in connection with the cost of
maintaining registration of Fund shares and a current registration
statement, proxy materials, any solicitation of Fund proxies, the
preparation of all statements and notices required by any federal or
state law, and taxes imposed upon the Fund on the issue or transfer of
the Fund's shares subject to this Agreement, to the extent such expenses
are incurred. The parties shall cooperate in the printing of the
prospectuses of the Fund and of any disclosure documents related to the
Contracts; however, the cost of printing prospectuses shall not be borne
by the Fund; and
M. The Fund and JWSI represent and warrant that each of the
Fund's officers and employees that is a "covered person" as defined in
Rule 17g-1 under the 1940 Act shall at all times be covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the amount of coverage required by Section 17(g) of
the 1940 Act and Rule 17g-1 thereunder. The aforesaid bond shall cover
larceny and embezzlement and shall be issued by a reputable fidelity
insurance company.
3. Representations and Warranties of JWSI. JWSI represents
and warrants that:
A. It will vote Fund shares which it owns in the same proportion
as instructions received from owners of variable contracts backed by the
Fund;
B. It will not vote to elect a Director of the Fund unless the
composition of the Board of Directors of the Fund is in compliance with
the 1940 Act; and
C. JWSI agrees that in connection with the Fund's compliance
with Section 817(h) of the Code and any regulations thereunder,
concerning diversification of the assets of the Portfolios of the Fund,
(i) JWSI will provide CLICA within 14 days of the end of each quarter of
the Fund's fiscal year, a statement of each Portfolio's assets and (ii)
JWSI will provide CLICA with a copy of the procedures that have been
established by JWSI for the purpose of ascertaining and monitoring the
Fund's compliance with the diversification requirements of Section
817(h) and regulations thereunder.
4. Representations and Warranties of CLICA. CLICA
represents and warrants that:
A. All actions necessary to authorize the execution, delivery
and performance of this Agreement and all transactions contemplated
hereunder have been taken;
B. All actions required to authorize investment by the Separate
Account in the Fund have been taken;
C. It will comply with applicable law, including state insurance
law, in connection with its obligations hereunder;
D. It will provide to Contract owners voting privileges with
respect to Fund shares attributable to the variable annuity contracts of
such Contract owners. Pass-through voting privileges will be calculated
with reference to the number of shares of the Fund attributable to a
particular Contract or pursuant to any other method of calculation
recommended by the SEC or its staff. CLICA will vote its own shares and
shares for which no instructions have been received in the same
proportion as instructions received from Contract owners for that
Portfolio;
E. The shares of the Fund qualify as an eligible investment for
the Separate Account; and
F. The Separate Account has been established in accordance with
Section 925 of the Michigan Insurance Code and applicable regulations of
the Michigan Administrative Code.
(i) Section 925 provides that the income, if any, and gains or
losses realized or unrealized on the Separate Account will be
credited to or charged against the amount allocated to the
Separate Account in accordance with the Contracts, without regard
to CLICA's other income, gains or losses.
(ii) Regulation 500.624 of the Michigan Administrative Code
provides that the Separate Account shall not be charged with
liabilities arising out of other separate accounts or out of other
business of CLICA unless the liabilities have a specific and
determinable relation to or dependence upon the Separate Account.
(iii) The Contracts provide that although CLICA owns the assets
in the Separate Account, these assets are held separately from
CLICA's other assets and are not part of CLICA's general account;
and the assets in the Separate Account are used to support the
operation of and provide the variable values and benefits for the
Contracts and similar policies. Further, the Contracts provide
that the portion of the assets of the Separate Account equal to
the reserves and other contract liabilities of the Separate
Account will not be charged with liabilities that arise from any
other business that CLICA conducts. CLICA has the right to
transfer to its general account any assets of the Separate Account
which are in excess of such reserves and other liabilities.
(iv) Based on the foregoing, CLICA believes that the portion of
the assets of the Separate Account equal to the reserves and other
contract liabilities of the Separate Account will not be charged
with liabilities that arise from any other business that CLICA
conducts.
5. Indemnification.
A. The Fund and JWSI will indemnify and hold harmless CLICA and
the Separate Account against any and all losses, claims, damages,
liabilities or expenses (including, without limitation, any expenses
reasonably incurred in investigating or defending against any litigation
commenced or threatened, or any claim) to which CLICA or the Separate
Account may become subject arising out of or based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement or Prospectus relating to the Fund or any
amendment or supplement thereto; (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (iii) any
material breach of any representation and/or warranty made by the Fund
or JWSI in this Agreement or any material breach of this Agreement by
the Fund or JWSI; provided, however, JWSI and the Fund shall not be
liable in any such case under (i) and (ii) above to the extent that any
such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Registration Statement or Prospectus relating to
the Fund made in good faith reliance upon and in conformity with written
information furnished by CLICA or the Separate Account specifically for
use in the preparation thereof.
B. CLICA will indemnify and hold harmless the Fund and JWSI
against any and all losses, claims, damages, liabilities, or expense
(including without limitation, any expense reasonably incurred in
investigating or defending against any litigation commenced or
threatened, or any claim) to which the Fund or JWSI becomes subject
arising out of or based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus relating to the Contracts or any amendment or supplement
thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) any material breach of any
representation and/or warranty made by CLICA in this Agreement or of any
material breach of this Agreement by CLICA; provided, however, that
CLICA shall not be liable in any such case under (i) and (ii) above to
the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the registration statement
or prospectus relating to the Contracts made in good faith reliance upon
and in conformity with written information furnished by the Fund or JWSI
specifically for use in the preparation thereof; and that CLICA shall
not be liable to the extent that any such loss, claim, damage, liability
or expense arises out of or is based upon the Fund's failure to comply
with the investment policies and restrictions set forth in its
Registration Statement.
C. Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action by a third party,
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof. The omission so to
notify the indemnifying party shall not relieve it from liability which
it may have to any indemnified party under this Section 5, except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give such notice; however, it shall not relieve
it otherwise. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, to assume the
defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation.
6. Term of Agreement. This Agreement shall continue in
full force and effect for a period of five (5) years from the effective
date of this Agreement, unless otherwise agreed upon by the parties to
terminate sooner or if terminated for such reasons as set forth in
Section 7 below. After such 5 year period, it will be deemed extended
thereafter from year to year, subject to termination at will by any
party hereto upon 60 days prior written notice to the other party.
7. Termination. This Agreement shall terminate:
A. At the option of CLICA, upon the institution of formal
proceedings against the Fund, JWSI, or SFSI by the SEC, the National
Association of Securities Dealers, Inc. ("NASD"), any state securities
or insurance department or any other regulatory body provided that CLICA
determines in good faith in its sole judgment, that such institution
will have a material adverse impact upon the Fund or JWSI's ability to
perform its obligations under this Agreement; or
B. At the option of the Fund, upon the institution of formal
proceedings against The Canada Life Assurance Company ("CLA"), CLICA or
Canada Life of America Financial Services, Inc. ("CLAFS") brought by a
Canadian regulatory authority, the SEC, the NASD, or any formal
proceedings involving a material matter brought by any state securities
or state insurance department or any other regulatory body regarding
CLICA or CLAFS provided that the Fund determines in good faith in its
sole judgment that such institution will have a material adverse impact
upon CLA's or CLICA's ability to perform its obligations under this
Agreement; or
C. At the option of the Fund, if there is a material adverse
change in the financial condition of CLA or CLICA; or
D. At the option of the Fund, if there is material adverse
publicity regarding CLA or CLICA; or
E. At the option of CLICA, if the Fund fails to meet the
diversification requirements in Section 817(h) of the Code and the
regulations thereunder; or
F. At the option of CLICA, if there is a material adverse change
in the financial condition of the Fund or JWSI; or
G. At the option of CLICA, if there is material adverse
publicity regarding the Fund or JWSI; or
H. At the option of CLICA, if JWSI hires a sub-adviser for a
Portfolio of the Fund without the prior written consent of CLICA. CLICA
agrees that Seligman Henderson Co. shall act as sub-adviser for the
Seligman Henderson Global Portfolio of the Fund; or
I. If such action is required by law or by regulatory
authorities having jurisdiction or is, in the discretion of the Board of
Directors of CLICA or the Board of Directors of the Fund acting in good
faith and in light of their fiduciary duties under applicable federal
and state laws, necessary in the best interests of the shareholders of
the Fund or Contract owners;
J. At the option of CLICA or the Fund, upon the termination of
the Management Agreements; or
K. At the option of CLICA or the Fund, if the Promotional Agent
Distribution Agreement terminates.
In the event that JWSI shall cease to serve as the Fund's
investment adviser, the obligations of JWSI hereunder shall terminate,
provided only that any liability for action taken by JWSI in accordance
with its representations, warranties, and obligations hereunder during
the period that JWSI served as investment adviser to the Fund shall
survive such termination.
8. Plan Name. JWSI, CLICA and the Fund agree that the name
"Trillium" and all property rights thereunder, are owned by CLICA which
will enter into a license agreement with SFSI to permit the Name's use.
9. Miscellaneous; Books and Records.
A. The terms and conditions of this Agreement shall be
interpreted and construed in accordance with the provisions of the
federal securities laws and rules and regulations thereunder.
B. The Fund shall immediately notify CLICA of the issuance by
any regulatory body of any stop order with respect to the Fund's
Registration Statement or the initiation of any proceeding relating to
the offer or sale of shares of the Fund in any state or jurisdiction.
C. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities and shall permit such
authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
D. The Fund agrees that all records and other data pertaining to
the Contracts are the exclusive property of CLICA and that any such
records and other data shall be furnished to CLICA by the Fund upon
termination of this Agreement for any reason whatsoever. This shall not
preclude the Fund from keeping copies of such data or records for its
own files to the extent that the Fund is required to keep such records
in order to meet any applicable legal or regulatory requirements. CLICA
shall have the right to inspect, audit and copy all pertinent records
pertaining to the Contracts.
10. Severability and Governing Law. If any provisions of
this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be interpreted in accordance
with the laws of the State of Michigan.
11. Notices. Any notice required under this Agreement shall
deemed to have been given to CLICA and the Separate Account if mailed to
Secretary, Canada Life Insurance Company of America, 6201 Powers Ferry
Road, Atlanta, Georgia 30339, and notice given to the Fund (Attention:
Treasurer) and JWSI (Attention: General Counsel) if mailed to J. & W.
Seligman & Co. Incorporated at 130 Liberty Street, New York, New York
10006, or at such other address furnished to the other party pursuant
hereto.
12. Provision Surviving Termination.
A. Notwithstanding any termination of this Agreement, and
regardless of the cause or reason for such termination, the provisions
of Section 5 of this Agreement (Indemnification) shall survive and be
binding upon JWSI, the Fund, and CLICA for a period of ten years
following such termination.
B. Upon termination of this Agreement, as long as the Fund is in
existence, the Fund shall, so long as Contracts in effect on the
effective date of termination of this Agreement ("Existing Contracts")
remain outstanding, continue to make additional Portfolio shares
available pursuant to the terms of this Agreement for all Existing
Contracts. The Fund agrees to provide CLICA and the Separate Account
with the daily net asset value of each of the Portfolios for as long as
there are Existing Contract owners with Contract values allocated to a
Sub-Account of the Separate Account which invests in such Portfolio.
13. Headings. The descriptive headings of this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
14. Waivers. The waiver by any party of a breach of any
other party of any of the provisions of this Agreement shall not operate
or be deemed as a waiver of any other provision of this Agreement or of
any subsequent breach thereof by any party.
15. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto or separate
counterparts, each complete set of which, when so executed and delivered
by the parties shall constitute one and the same instrument.
16. Entire Agreement; Modifications; Amendments. This
Agreement constitutes the entire agreement between the parties hereto
and may not be modified or amended except as herein noted or in a
written instrument executed by all parties hereto. Notwithstanding the
foregoing, the parties to this Agreement acknowledge that the parties
may execute a letter of intent regarding the resolution of certain
matters in connection with the Fund's obligations under Section 1.F. of
this Agreement.
17. Assignment. No party hereto may assign any of its
rights pursuant to this Agreement without the prior written consent of
the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Attest: CANADA LIFE INSURANCE COMPANY
OF AMERICA, on its own behalf
and on behalf of its Variable
Annuity Account 2
______________________________ By: _________________________
Secretary
Attest:
______________________________ By: _________________________
Secretary
Attest: SELIGMAN PORTFOLIOS, INC.
______________________________ By: _________________________
Secretary
Attest: J. & W. SELIGMAN & CO.
INCORPORATED
______________________________ By: _________________________
Secretary
BUY-SELL AGREEMENT
THIS AGREEMENT is made on this __th day of _________, 1994 by
and among the Canada Life Insurance Company of New York, a New York
corporation ("CLNY") on its own behalf and on behalf of its Variable
Annuity Account 2 (the "Separate Account"), Seligman Portfolios, Inc.
(formerly Seligman Mutual Benefit Portfolios, Inc.) (the "Fund") and J.
& W. Seligman & Co. Incorporated ("JWSI").
WHEREAS, CLNY is a stock life insurance company incorporated
under the laws of the State of New York; and
WHEREAS, the Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940 ("1940 Act")
and it is intended that certain variable annuity contracts (the
"Contracts"), a form of which is included herein as Exhibit A, shall be
funded through the Separate Account; and
WHEREAS, the Fund is registered as an open-end diversified
management investment company under the 1940 Act and is currently
authorized to issue six separate series of shares (the "Portfolios") and
to create additional Portfolios in the future; and
WHEREAS, JWSI is registered as an investment adviser under
the Investment Advisers Act of 1940 and is the Fund's investment adviser
pursuant to the terms of agreements between JWSI and the Fund dated
December 29, 1988 and May 1, 1993 ("Management Agreements"); and
WHEREAS, it is the intention of the parties to this Agreement
that the Fund will serve as the sole funding vehicle for the Separate
Account under the variable accumulation options afforded by the
Contracts;
NOW, THEREFORE, in consideration of the covenants, mutual
promises herein contained and other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
1. Fund Shares.
A. CLNY agrees that the Fund will be the sole funding vehicle
for the Separate Account. The Fund agrees that, except for shares sold
to JWSI at the Fund's initial capitalization, and to The Mutual Benefit
Life Insurance Company through its Mutual Benefit Variable Contract
Account 9 ("VCA-9") on behalf of existing Mutual Benefit Life contract
owners, the Fund will sell its shares only to the Separate Account or to
other separate accounts of CLNY or any of its affiliates. CLNY and the
Fund agree that at such time that CLNY and Seligman Financial Services,
Inc. ("SFSI") are no longer subject to the exclusivity provisions of the
Promotional Agent Distribution Agreement between CLNY and SFSI dated
_____________, 1994, CLNY may purchase shares for the Separate Account
from entities other than the Fund and the Fund may sell its shares to
entities other than the Separate Account, other separate accounts of
CLNY or its affiliates, and VCA-9.
B. The Fund agrees to sell to CLNY, on behalf of the Separate
Account, those shares of the Fund which the Separate Account orders,
executing such orders on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the order for the
shares of the Fund. For purposes of this Section, CLNY (or its
designated agent) shall be the designee of the Fund for receipt of such
orders from Policy owners and receipt by such designee by 4:00 p.m. New
York time on a Business Day, shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. New
York time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading.
C. The Fund agrees to make Fund shares available for purchase at
the applicable net asset value per share by CLNY for the Separate
Account on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund
shall use reasonable efforts to calculate such net asset value on each
day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the parties to this Agreement recognize
that the Board of Directors of the Fund (hereinafter the "Directors")
may refuse to sell shares of any Portfolio to the Separate Account, or
suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Directors acting in
good faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the
shareholders of such Portfolio. The Separate Account shall pay for the
Fund shares on the next Business Day after an order to purchase shares
is made in accordance with the provisions of this Section. Payment
shall be in federal funds transmitted by wire to the Fund's designated
custodian or by a credit for any shares redeemed.
D. The Fund agrees to redeem for cash, on CLNY's request, any
full or fractional shares of the Fund held by CLNY, executing such
requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. For
purposes of this Section, CLNY (or its designated agent) shall be the
designee of the Fund for receipt of requests for redemption from Policy
owners and receipt by such designee by 4:00 p.m. New York time on a
Business Day, shall constitute receipt by the Fund, provided that the
Fund receives notice of such request for redemption by 9:30 a.m. New
York time on the next following Business Day. The Fund ordinarily shall
make payment to CLNY for shares on the next business day after the Fund
receives notice from CLNY. Payment shall be in federal funds
transmitted by wire or by a debit against any shares purchased.
E. Transfer of Portfolio shares will be by book entry. No stock
certificates will be issued to the Separate Account unless the Separate
Account so requests. Shares of each Portfolio will be recorded in an
appropriate title for the corresponding Sub- account on the books of
CLNY. If, however, state law requires transfer other than by book
entry, then the Fund agrees to provide the required form of transfer.
F. The Fund shall make the net asset value per share for each
Portfolio available to CLNY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated. The Fund
will instruct its recordkeeper to use all reasonable efforts to make
such net asset value per share available by 5:30 p.m. New York time, but
in no event later than 6 p.m. New York time. Notwithstanding the
foregoing, the parties to this Agreement recognize that the Fund is
ultimately responsible for the pricing of its own shares.
G. The Fund shall furnish notice on the ex-dividend date to CLNY
of any dividend or distribution payable on any shares underlying
Sub-accounts. All of such dividends and distributions as are payable on
shares of a Portfolio recorded in the title for the corresponding
Sub-account shall be automatically reinvested in additional shares of
that Portfolio at the net asset value computed on its dividend or
distribution payable date. The Fund shall notify CLNY of the number of
shares so issued.
2. Representations and Warranties of the Fund. The Fund
and JWSI hereby represent and warrant that:
A. The Fund is duly incorporated and in good standing under the
laws of the State of Maryland;
B. The Fund is duly registered under the 1940 Act as an open-end
diversified management investment company;
C. All actions necessary to authorize the execution, delivery
and performance of this Agreement and all transactions contemplated
hereunder have been taken or will be taken prior to any sale hereunder;
D. A Registration Statement on Form N-1A relating to the Fund,
including a Prospectus and statement of additional information, has been
prepared and filed with the SEC in accordance with applicable provisions
of the Securities Act of 1933 ("1933 Act") and the 1940 Act, and is
effective;
E. The Registration Statement does not include any untrue
statements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading;
F. The Fund will use its best efforts to ensure that the
Registration Statement continues to conform in all material respects to
the requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the SEC thereunder and its best efforts to ensure that at
no time will the Registration Statement include an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
G. The Fund will promptly furnish CLNY with copies of the Fund's
Registration Statement, all amendments and exhibits thereto, each
definitive Prospectus, each Prospectus supplement, and each periodic
report under the 1940 Act, as filed with the SEC;
H. The Fund will promptly advise CLNY of any proposed amendment
to the Registration Statement or supplement to the Prospectus and shall
provide CLNY with a copy of such proposed amendment or supplement in
advance of the filing with the SEC of such amendment or supplement to
permit CLNY's review of such amendment or supplement, unless legal or
regulatory requirements would make such review impractical;
I. The Fund and JWSI represent that each Portfolio except for
the Seligman Henderson Global Portfolio, which expects to be, is
currently qualified as a Regulated Investment Company under Subchapter M
of the Internal Revenue Code of 1986, as amended ("Code"), that they
will use reasonable effort to maintain such qualification (under
Subchapter M or any successor or similar provision), and that they will
notify CLNY immediately upon having a reasonable basis for believing
that a Portfolio has ceased to so qualify or that it might not so
qualify in the future, and that it provide to CLNY not later than 14
days following the end of each calendar quarter, a report showing each
Portfolio's continued qualification;
J. The Fund and JWSI represent that each Portfolio except for
the Seligman Henderson Global Portfolio, which expects to be, is
currently in compliance with the provisions of Section 817(h) of the
Code and regulations thereunder concerning diversification of the assets
of the Portfolios of the Fund, and that they will use reasonable effort
to maintain such compliance (under Section 817(h) or any successor or
similar provision), provided that CLNY will promptly advise the Fund of
any changes in such provisions after the date of this Agreement, and
that it will provide to CLNY, not later than 14 days following the end
of each calendar quarter, a report showing each Portfolio's continued
compliance;
K. The Fund will as directed in writing by CLNY make every
effort to comply with the requirements of the State of New York
concerning permissible investments for the Separate Account;
L. The Fund shall pay all its expenses incidental to its
performance under this Agreement. The Fund shall see to it that its
shares are continuously registered and authorized for issue in
accordance with any applicable federal and state laws for so long as
this Agreement is in effect, and for so long as CLNY may purchase shares
of the Fund. Without limiting the generality of the foregoing, the Fund
shall bear any expenses in connection with the cost of maintaining
registration of Fund shares and a current registration statement, proxy
materials, any solicitation of Fund proxies, the preparation of all
statements and notices required by any federal or state law, and taxes
imposed upon the Fund on the issue or transfer of the Fund's shares
subject to this Agreement, to the extent such expenses are incurred.
The parties shall cooperate in the printing of the prospectuses of the
Fund and of any disclosure documents related to the Contracts; however,
the cost of printing prospectuses shall not be borne by the Fund; and
M. The Fund and JWSI represent and warrant that each of the
Fund's officers and employees that is a "covered person" as defined in
Rule 17g-1 under the 1940 Act shall at all times be covered by a blanket
fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the amount of coverage required by Section 17(g) of
the 1940 Act and Rule 17g-1 thereunder. The aforesaid bond shall cover
larceny and embezzlement and shall be issued by a reputable fidelity
insurance company.
3. Representations and Warranties of JWSI. JWSI represents
and warrants that:
A. It will vote Fund shares which it owns in the same proportion
as instructions received from owners of variable contracts backed by the
Fund;
B. It will not vote to elect a Director of the Fund unless the
composition of the Board of Directors of the Fund is in compliance with
the 1940 Act; and
C. JWSI agrees that in connection with the Fund's compliance
with Section 817(h) of the Code and any regulations thereunder,
concerning diversification of the assets of the Portfolios of the Fund,
(i) JWSI will provide CLNY within 14 days of the end of each quarter of
the Fund's fiscal year, a statement of each Portfolio's assets and (ii)
JWSI will provide CLNY with a copy of the procedures that have been
established by JWSI for the purpose of ascertaining and monitoring the
Fund's compliance with the diversification requirements of Section
817(h) and regulations thereunder.
4. Representations and Warranties of CLNY. CLNY represents
and warrants that:
A. All actions necessary to authorize the execution, delivery
and performance of this Agreement and all transactions contemplated
hereunder have been taken;
B. All actions required to authorize investment by the Separate
Account in the Fund have been taken;
C. It will comply with applicable law, including state insurance
law, in connection with its obligations hereunder;
D. It will provide to Contract owners voting privileges with
respect to Fund shares attributable to the variable annuity contracts of
such Contract owners. Pass-through voting privileges will be calculated
with reference to the number of shares of the Fund attributable to a
particular Contract or pursuant to any other method of calculation
recommended by the SEC or its staff. CLNY will vote its own shares and
shares for which no instructions have been received in the same
proportion as instructions received from Contract owners for that
Portfolio;
E. The shares of the Fund qualify as an eligible investment for
the Separate Account; and
F. The Separate Account has been established in accordance with
Section 4240 of the New York Insurance Law and Regulation 47 thereunder.
(i) Section 4240(a)(1) provides that income, gains and losses,
whether or not realized, from assets allocated to a separate
account shall, in accordance with the applicable agreement or
agreements, be credited to or charged against such account without
regard to other income, gains or losses of the insurer. Section
4240(a)(12) provides that, if and to the extent so provided in the
applicable agreements, the assets in a separate account shall not
be chargeable with liabilities arising out of any other business
of the insurer.
(ii) Subsection 3(a)(2) of Regulation 47 provides that a separate
account annuity contract may provide that the portion of the
assets of the separate account not exceeding the reserves and
other contract liabilities with respect to such Separate Account
shall not be chargeable with liabilities arising out of any other
business of the insurer.
(iii) The Contracts provide that although CLNY owns the assets in
the Separate Account, these assets are held separately from CLNY's
other assets and are not part of CLNY's general account; and the
assets in the Separate Account are used to support the operation
of and provide the variable values and benefits for the Contracts
and similar policies. Further, the Contracts provide that the
portion of the assets of the Separate Account equal to the
reserves and other contract liabilities of the Separate Account
will not be charged with liabilities that arise from any other
business that CLNY conducts. CLNY has the right to transfer to its
general account any assets of the Separate Account which are in
excess of such reserves and other liabilities.
(iv) Section 7435(b) of the New York Insurance Law provides that
every claim under a separate account agreement providing, in
effect, that the assets in the separate account shall not be
chargeable with liabilities arising out of any other business of
the insurer shall be satisfied out of the assets in the separate
account equal to the reserves maintained in such account for such
agreement and, to the extent, if any, not fully discharged
thereby, shall be treated as a class four claim against the estate
of the life insurance company. Section 7435(a)(4) defines a
"Class Four" claim as all claims under insurance policies, annuity
contracts and funding agreements, and all claims of The Life
Insurance Company Guaranty Corporation of New York or any other
guaranty corporation or association of the state of New York or
another jurisdiction, other than (i) claims provided for in
paragraph one of subsection (a) of Section 7435, and (ii) claims
for interest. (Paragraph one refers to claims for the actual and
necessary costs of administration of the estate of the insolvent
company.)
(v) Based on the foregoing, CLNY believes that the portion of the
assets of the Separate Account equal to the reserves and other
contract liabilities of the Separate Account will not be charged
with liabilities that arise from any other business that CLNY
conducts.
5. Indemnification.
A. The Fund and JWSI will indemnify and hold harmless CLNY and
the Separate Account against any and all losses, claims, damages,
liabilities or expenses (including, without limitation, any expenses
reasonably incurred in investigating or defending against any litigation
commenced or threatened, or any claim) to which CLNY or the Separate
Account may become subject arising out of or based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement or Prospectus relating to the Fund or any
amendment or supplement thereto; (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (iii) any
material breach of any representation and/or warranty made by the Fund
or JWSI in this Agreement or any material breach of this Agreement by
the Fund or JWSI; provided, however, JWSI and the Fund shall not be
liable in any such case under (i) and (ii) above to the extent that any
such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Registration Statement or Prospectus relating to
the Fund made in good faith reliance upon and in conformity with written
information furnished by CLNY or the Separate Account specifically for
use in the preparation thereof.
B. CLNY will indemnify and hold harmless the Fund and JWSI
against any and all losses, claims, damages, liabilities, or expense
(including without limitation, any expense reasonably incurred in
investigating or defending against any litigation commenced or
threatened, or any claim) to which the Fund or JWSI becomes subject
arising out of or based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus relating to the Contracts or any amendment or supplement
thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) any material breach of any
representation and/or warranty made by CLNY in this Agreement or of any
material breach of this Agreement by CLNY; provided, however, that CLNY
shall not be liable in any such case under (i) and (ii) above to the
extent that any such loss, claim, damage, liability or expense arises
out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the registration statement or
prospectus relating to the Contracts made in good faith reliance upon
and in conformity with written information furnished by the Fund or JWSI
specifically for use in the preparation thereof; and that CLNY shall not
be liable to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon the Fund's failure to comply with
the investment policies and restrictions set forth in its Registration
Statement.
C. Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action by a third party,
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof. The omission so to
notify the indemnifying party shall not relieve it from liability which
it may have to any indemnified party under this Section 5, except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give such notice; however, it shall not relieve
it otherwise. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, to assume the
defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation.
6. Term of Agreement. This Agreement shall continue in
full force and effect for a period of five (5) years from the effective
date of this Agreement, unless otherwise agreed upon by the parties to
terminate sooner or if terminated for such reasons as set forth in
Section 7 below. After such 5 year period, it will be deemed extended
thereafter from year to year, subject to termination at will by any
party hereto upon 60 days prior written notice to the other party.
7. Termination. This Agreement shall terminate:
A. At the option of CLNY, upon the institution of formal
proceedings against the Fund, JWSI, or SFSI by the SEC, the National
Association of Securities Dealers, Inc. ("NASD"), any state securities
or insurance department or any other regulatory body provided that CLNY
determines in good faith in its sole judgment, that such institution
will have a material adverse impact upon the Fund or JWSI's ability to
perform its obligations under this Agreement; or
B. At the option of the Fund, upon the institution of formal
proceedings against The Canada Life Assurance Company ("CLA"), CLNY or
Canada Life of America Financial Services, Inc. ("CLAFS") brought by a
Canadian regulatory authority, the SEC, the NASD, or any formal
proceedings involving a material matter brought by any state securities
or state insurance department or any other regulatory body regarding
CLNY or CLAFS provided that the Fund determines in good faith in its
sole judgment that such institution will have a material adverse impact
upon CLA's or CLNY's ability to perform its obligations under this
Agreement; or
C. At the option of the Fund, if there is a material adverse
change in the financial condition of CLA or CLNY; or
D. At the option of the Fund, if there is material adverse
publicity regarding CLA or CLNY; or
E. At the option of CLNY, if the Fund fails to meet the
diversification requirements in Section 817(h) of the Code and the
regulations thereunder; or
F. At the option of CLNY, if there is a material adverse change
in the financial condition of the Fund or JWSI; or
G. At the option of CLNY, if there is material adverse publicity
regarding the Fund or JWSI; or
H. At the option of CLNY, if JWSI hires a sub-adviser for a
Portfolio of the Fund without the prior written consent of CLNY. CLNY
agrees that Seligman Henderson Co. may act as sub-adviser for any
Portfolio of the Fund that is designated as a "Seligman Henderson"
Portfolio, provided that JWSI shall give CLNY advance notice of any such
arrangement; or
I. If such action is required by law or by regulatory
authorities having jurisdiction or is, in the discretion of the Board of
Directors of CLNY or the Board of Directors of the Fund acting in good
faith and in light of their fiduciary duties under applicable federal
and state laws, necessary in the best interests of the shareholders of
the Fund or Contract owners;
J. At the option of CLNY or the Fund, upon the termination of
the Management Agreements; or
K. At the option of CLNY or the Fund, if the Promotional Agent
Distribution Agreement terminates.
In the event that JWSI shall cease to serve as the Fund's
investment adviser, the obligations of JWSI hereunder shall terminate,
provided only that any liability for action taken by JWSI in accordance
with its representations, warranties, and obligations hereunder during
the period that JWSI served as investment adviser to the Fund shall
survive such termination.
8. Plan Name. JWSI, CLNY and the Fund agree that the name
"Trillium" and all property rights thereunder, are owned by Canada Life
Insurance Company of America, an affiliate of CLNY, which has entered
into a license agreement with SFSI to permit the Name's use.
9. Miscellaneous; Books and Records.
A. The terms and conditions of this Agreement shall be
interpreted and construed in accordance with the provisions of the
federal securities laws and rules and regulations thereunder.
B. The Fund shall immediately notify CLNY of the issuance by any
regulatory body of any stop order with respect to the Fund's
Registration Statement or the initiation of any proceeding relating to
the offer or sale of shares of the Fund in any state or jurisdiction.
C. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities and shall permit such
authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
D. The Fund agrees that all records and other data pertaining to
the Contracts are the exclusive property of CLNY and that any such
records and other data shall be furnished to CLNY by the Fund upon
termination of this Agreement for any reason whatsoever. This shall not
preclude the Fund from keeping copies of such data or records for its
own files to the extent that the Fund is required to keep such records
in order to meet any applicable legal or regulatory requirements. CLNY
shall have the right to inspect, audit and copy all pertinent records
pertaining to the Contracts.
10. Severability and Governing Law. If any provisions of
this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be interpreted in accordance
with the laws of the State of New York.
11. Notices. Any notice required under this Agreement shall
deemed to have been given to CLNY and the Separate Account if mailed to
Assistant Secretary, Canada Life Insurance Company of New York, 500
Mamaroneck Avenue, Harrison, New York 10528, and notice given to the
Fund (Attention: Treasurer) and JWSI (Attention: General Counsel) if
mailed to J. & W. Seligman & Co. Incorporated at 100 Park Avenue, New
York, New York 10017, or at such other address furnished to the other
party pursuant hereto.
12. Provision Surviving Termination.
A. Notwithstanding any termination of this Agreement, and
regardless of the cause or reason for such termination, the provisions
of Section 5 of this Agreement (Indemnification) shall survive and be
binding upon JWSI, the Fund, and CLNY for a period of ten years
following such termination.
B. Upon termination of this Agreement, as long as the Fund is in
existence, the Fund shall, so long as Contracts in effect on the
effective date of termination of this Agreement ("Existing Contracts")
remain outstanding, continue to make additional Portfolio shares
available pursuant to the terms of this Agreement for all Existing
Contracts. The Fund agrees to provide CLNY and the Separate Account
with the daily net asset value of each of the Portfolios for as long as
there are Existing Contract owners with Contract values allocated to a
Sub-Account of the Separate Account which invests in such Portfolio.
13. Headings. The descriptive headings of this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
14. Waivers. The waiver by any party of a breach of any
other party of any of the provisions of this Agreement shall not operate
or be deemed as a waiver of any other provision of this Agreement or of
any subsequent breach thereof by any party.
15. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto or separate
counterparts, each complete set of which, when so executed and delivered
by the parties shall constitute one and the same instrument.
16. Entire Agreement; Modifications; Amendments. This
Agreement constitutes the entire agreement between the parties hereto
and may not be modified or amended except as herein noted or in a
written instrument executed by all parties hereto. Notwithstanding the
foregoing, the parties to this Agreement acknowledge that the parties
may execute a letter of intent regarding the resolution of certain
matters in connection with the Fund's obligations under Section 1.F. of
this Agreement.
17. Assignment. No party hereto may assign any of its
rights pursuant to this Agreement without the prior written consent of
the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Attest: CANADA LIFE INSURANCE COMPANY
OF NEW YORK, on its own behalf
and on behalf of its Variable
Annuity Account 2
______________________________ By: _________________________
Assistant Secretary
Attest:
______________________________ By: _________________________
Assistant Secretary
Attest: SELIGMAN PORTFOLIOS, INC.
______________________________ By: _________________________
Secretary
Attest: J. & W. SELIGMAN & CO.
INCORPORATED
______________________________ By: _________________________
Secretary
AGENCY AGREEMENT
THIS AGREEMENT made the ____ day of ____________, 1988, by and
between SELIGMAN MUTUAL BENEFIT PORTFOLIOS, INC., a corporation existing under
the laws of the State of Maryland, having its principal place of business at
One Bankers Trust Plaza New York, New York 10006 ("Fund"), and INVESTORS
FIDUCIARY TRUST COMPANY, a state chartered trust company organized and
existing under the laws of the State of Missouri, having its principal place
of business at 21 West 10th Street, Kansas City, Missouri 64105 ("IFTC"):
WITNESSETH:
WHEREAS, Mutual Benefit Life Insurance Company ("Mutual Benefit
Life") has registered a Separate Account with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of 1940
for the purpose of offering for sale and issuing certain variable annuity
insurance contracts;
WHEREAS, the Separate Account has been established to purchase only
shares of the Fund;
WHEREAS, the Fund has been established to sell shares only to the
Separate Account except for shares sold to the Fund's Manager to capitalize
the Fund;
WHEREAS, Fund desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for each Portfolio of the Fund which as of the date hereof
includes the Seligman Cash Management Portfolio, Seligman Capital Portfolio,
Seligman Common Stock Portfolio, Seligman Fixed Income Securities Portfolio
and Seligman Income Portfolio ("Portfolio" or collectively "Portfolios") and
IFTC desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Documents to be Filed with Appointment. In connection with the
appointment of IFTC as Transfer Agent and Dividend Disbursing Agent for each
Portfolio of Fund, there will be filed with IFTC the following documents:
A. A certified copy of the resolutions of the Board of Directors of Fund
appointing IFTC as Transfer Agent and Dividend Disbursing Agent, approving the
form of this Agreement, and individuals authorized to give written
instructions and requests on behalf of Fund;
B. A certified copy of the Articles of Incorporation of Fund and all
amendments thereto;
C A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements and amendments thereto, filed with the
Securities and Exchange Commission.
E. Specimens of the signatures of the officers of the Fund and individuals
authorized to sign written instructions and requests;
F. An opinion of counsel for Fund with respect to:
1. Fund's organization and existence under the laws of its state of
organization,
2. Status of all shares of stock of Fund covered by the appointment under
the Securities Act of 1933, as amended, and any other applicable federal or
state statute and
<PAGE>
3. That all issued shares are, and all unissued shares will be, when
issued, validly issued, fully paid and non-assessable.
2. Certain Representations and Warranties of IFTC. IFTC represents and
warrants to Fund that:
A. It is a trust company duly organized and existing and in good standing
under the laws of Missouri.
B. It is duly qualified to carry on its business in the State of Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and bylaws to enter into and perform the services contemplated
in this Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3. Certain Representations and Warranties of Fund. Fund represents and
warrants to IFTC that:
A. It is a corporation duly organized and existing and in good standing
under the laws of the State of Maryland.
B. it is an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933 has been
filed and will be effective with respect to all shares of Fund being offered
for sale.
D. Fund is empowered under applicable laws and by its charter and bylaws
to enter into and perform this Agreement.
4. Scope of Appointment.
A. Subject to the conditions set forth in this Agreement, Fund and each
Portfolio of Fund hereby employs and appoints IFTC as Transfer Agent and
Dividend Disbursing Agent for each Portfolio of the Fund effective the 1st day
of June, 1988.
B. IFTC hereby accepts such employment and appointment and agrees that it
will act as each Portfolio and Fund's Transfer Agent and Dividend Disbursing
Agent.
C. IFTC agrees to provide the necessary facilities, equipment and
personnel to perform its duties and obligations hereunder in accordance with
industry practice.
D. Fund agrees to use its best efforts to deliver to IFTC in Kansas City,
Missouri, as soon as they are available, all of its shareholder account records.
E. IFTC agrees that it will perform all of the usual and ordinary services
of Transfer Agent and Dividend Disbursing Agent and as Agent for the various
shareholder accounts for a registered open-end investment management company
which serves as the investment vehicle for a Separate Account of an insurance
company which issues certain variable annuity contracts including, without
limitation the following: maintaining all shareholder accounts, processing
purchase, redemption and transfer requests
<PAGE>
received from the shareholders or its agent as provided herein, confirm
transactions to the shareholder and the Fund, disburse payments with respect
to redemptions to the accounts of shareholders of the Fund, and record on the
books of the shareholder the reinvestment of any dividend and capital gain
distributions in additional shares and all purchases, redemptions, and
transfers and maintain and make available the records of the Fund and each
portfolio of the Fund to the Fund and J. & W. Seligman & Co. Incorporated, the
Fund's Manager, and their authorized directors, officers, employees and
agents. Instructions with respect to purchases, redemptions and transfers may
be accepted only from the shareholder, or an authorized representative of the
shareholder's agent, Policyholder Service Corporation ("PSC") or an authorized
representative of the governing body of the shareholder, Mutual Benefit Life.
5. Limit of Authority.
Unless otherwise expressly limited by the resolution of appointment
or by subsequent action by the Fund, the appointment of IFTC as Transfer Agent
will be construed to cover the full amount of authorized stock for the class
or classes for which IFTC is appointed as the same will, from time to time, be
constituted and any subsequent increases in such authorized amount.
In case of such increase Fund will file with IFTC:
A. If the appointment of IFTC was theretofore expressly limited, a
certified copy of a resolution of the Board of Directors of Fund increasing
the authority of IFTC;
B. A certified copy of the amendment to the Articles of Incorporation of
Fund authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of the
increased stock, and an opinion of counsel that the order or consent of no
other governmental or regulatory authority is required;
D. Opinion of counsel for Fund stating:
1. The status of the additional shares of stock of Fund under the
Securities Act of 1933, as amended, and any other applicable federal or state
statute; and
2. That the additional shares are, or when issued will be, validly issued,
fully paid and non-assessable.
6. Compensation and Expenses.
A. In consideration for its services hereunder as Transfer Agent and
Dividend Disbursing Agent, Fund will pay to IFTC from time to time a
reasonable compensation for all services rendered as Agent, and also, all its
reasonable out-of-pocket expenses, charges, counsel fees, and other
disbursements incurred in connection with the agency. Such compensation will
be set forth in a separate schedule to be agreed to by Fund and IFTC, a copy
of which is attached hereto and incorporated herein by reference as though
fully set out at this point. If and as permitted by applicable law, IFTC may
charge against any monies held under this Agreement, the amount of any
compensation, expense, loss, or liability for which IFTC shall be entitled to
reimbursement under this Agreement.
B. Fund agrees to promptly reimburse IFTC for all reasonable out-of-pocket
expenses or advances incurred by IFTC in connection with the performance of
services under this Agreement, for postage (and first class mail insurance in
connection with mailing stock certificates), envelopes, check forms,
continuous forms, forms for reports and statements, stationery, and other
similar items, telephone and telegraph charges incurred in answering inquiries
from dealers or shareholders, microfilm used each year to record the previous
year's transaction in shareholder accounts and computer tapes used for
permanent storage of records and cost of insertion of materials in mailing
envelopes by outside firms.
<PAGE>
7. Operation of IFTC System.
A. In connection with the performance of its services under this
Agreement, IFTC is responsible for such items as:
1. The accuracy of entries in IFTC's records reflecting orders and
instructions received by IFTC from the shareholder, or authorized
representatives of the shareholder, including PSC and Mutual Benefit Life, or
the Fund;
2. The availability of shareholder account verifications, confirmations
and other shareholder account information to be produced from its records or
data;
3. The accurate and timely reporting and recording of dividend and
distributions and the reinvestments thereof in accordance with instructions
received from Fund;
4. The accuracy of redemption transactions and payments in accordance
with redemption instructions received from the shareholder or authorized
representatives of the shareholder including PSC or Mutual Benefit Life;
5. The deposit daily in Fund's appropriate special bank account of all
checks and payments received from the shareholder, or an authorized
representative of the shareholder including PSC or Mutual Benefit Life or the
Fund.
6. The requiring of proper forms of instructions and authorizations
supporting the legality of transfers, redemptions and other shareholder
account transactions, all in conformance with IFTC's present procedures with
respect to its activities as transfer and dividend disbursing agent for an
investment company which serves as the investment vehicle for a Separate
Account with such changes as may be required or approved by Fund; and
7. The maintenance of a current duplicate set of each Portfolio of the
Fund and the Fund's essential records at a secure distant location, in a form
available and usable forthwith in the event of any breakdown or disaster
disrupting its main operation.
8. Indemnification.
A Except to the extent that IFTC is covered by and receives payment from
any insurance required hereunder, IFTC will not be responsible for, and Fund
will hold harmless and indemnify IFTC from and against any loss by or
liability to the Fund or a third party, including attorney's fees, in
connection with any claim or suit asserting any such liability arising out of
or attributable to actions taken or omitted by IFTC pursuant to this
Agreement, unless IFTC has acted negligently or in bad faith. The matters
covered by this indemnification include but are not limited to those of
Section 12 hereof.
Fund will be responsible for, and will have the right to conduct or
control the defense of any litigation asserting liability against which IFTC
is indemnified hereunder. IFTC will cooperate with the Fund by furnishing
documents that the Fund needs in that defense and which are maintained by IFTC
under this Agreement. IFTC will not be under any obligation to prosecute or
defend any action or suit in respect of the agency relationship hereunder,
which, in its opinion, may involve it in expense or liability, unless Fund
will, as often as requested, furnish IFTC with reasonable, satisfactory
security and indemnity against such expense or liability.
B. IFTC will hold harmless and indemnify Fund from and against any loss or
liability arising out of IFTC's failure to comply with the terms of this
Agreement or in breach of any representation or warranty of IFTC arising out
of IFTC's negligence, willful misconduct, or bad faith.
<PAGE>
9. Certain Covenants of IFTC and Fund.
A. All requisite steps will be taken by Fund from time to time when and as
necessary to register the Fund's shares for sale in all states in which Fund's
shares shall at the time be offered for sale and require registration. If at
any time Fund will receive notice of any stop order or other proceeding in any
such state affecting such registration or the sale of Fund's shares, or of any
stop order or other proceeding under the Federal securities laws affecting the
sale of Fund's shares, Fund will give prompt notice thereof to IFTC. B. IFTC
hereby agrees to perform such transfer agency functions as are attached hereto
as Exhibit A and establish and maintain facilities and procedures reasonably
acceptable to Fund for safekeeping of check forms, and facsimile signature
imprinting deices, if any; and for the preparation or use, and for keeping
account of, such forms and devices, and to carry insurance as specified in
Exhibit B which will not be lowered without notice to Fund.
C. To the extent required by Section 31 of the Investment Company Act of
1940 as amended as Rules thereunder, IFTC agrees that all records maintained
by IFTC relating to the services to be performed by IFTC under this Agreement
are the property of Fund and will be preserved and will be surrendered
promptly to Fund on request.
D. IFTC agrees to furnish Fund semi-annual reports of its financial
condition consisting of a balance sheet, earnings statement and any other
financial information reasonably requested by Fund. The annual financial
statements will be certified by IFTC's certified public accountants.
E. IFTC represents and agrees that it will use its best efforts to keep
current on the trends of the investment company industry relating to
shareholder services of an investment company serving as an investment vehicle
for a Separate Account and will use its best efforts to continue to modernize
and improve its system without additional cost to Fund.
F. IFTC will permit Fund and its authorized representatives to make
periodic inspections of its operations at reasonable time during business
hours.
10. Death, Resignation or Removal of Signing Officer.
Fund will file promptly with IFTC written notice of any change in the officers
authorized to sign written instructions or requests, together with two
signature cards bearing the specimen signature of each newly authorized
officer.
11. Future Amendments of Charter and Bylaws.
Fund will promptly file with IFTC copies of all material amendments to its
Articles of Incorporation or bylaws made after the date of this Agreement.
12. Instructions, Opinion of Counsel and Signatures.
At any time IFTC may apply to any officer of Fund for instructions, and may
consult, with notice to the Fund, with legal counsel for fund or its own legal
counsel at the expense of Fund, with respect to any matter arising in
connection with the agency and it will not be liable for any action taken or
omitted by it in good faith in reliance upon such instructions or upon the
opinion of such counsel. IFTC will be protected in acting upon any paper or
document reasonably believed by it to be genuine and to have been signed by
the proper person or persons as provided for herein and will not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from Fund.
13. Papers Subject to Approval of Counsel.
All documents filed in connection with such appointment and thereafter in
connection with the agencies, will be subject to the approval of legal counsel
for IFTC (which approval will be not unreasonably withheld).
14. Certification of Documents.
<PAGE>
The required copy of the Articles of Incorporation of Fund and copies of all
amendments thereto will be certified by the Secretary of State (or other
appropriate official) of the State of Incorporation, and if such Articles of
Incorporation and amendments are required by law to be also filed with a
county, city or other officer of official body, a certificate of such filing
will appear on the certified copy submitted to IFTC. A copy of the order or
consent of each governmental or regulatory authority required by law to the
issuance of the stock will be certified by the Secretary of Clerk of such
governmental or regulatory authority, under proper seal of such authority. The
copy of the Bylaws and copies of all amendments thereto, and copies of
resolutions of the Board of Directors of Fund, will be certified by the
Secretary or an Assistant Secretary of Fund under the corporate seal.
15. Records.
IFTC will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained pursuant to
sub-paragraph (2)(iv) of paragraph (b) of rule 31a-1, 31a-2 and 31a-3 under
the Investment Company Act of 1940, if any.
16. Disposition of Books, Records and Canceled Certificates. IFTC will send
periodically to Fund, or to where designated by the Secretary or an Assistant
Secretary of Fund, all books, documents, and all records no longer deemed
needed for current purposes upon the understanding that such books, documents
and records, stock certificates will not be destroyed by Fund without the
consent of IFTC (which consent will not be unreasonably withheld), but will be
safely stored for possible future reference. In case of any request or demand
for the inspection of the stock books of Fund or any other books in the
possession of IFTC, IFTC will endeavor to notify Fund and to secure
instructions as to permitting or refusing such inspection. IFTC reserves the
right, however, to exhibit the stock books or other books to any person in
case it is advised by its counsel that it may be held responsible for the
failure to exhibit the stock books or other books to such person.
17. Termination of Agreement.
A. This Agreement may be terminated by either party upon receipt of ninety
(90) days written notice from the other party. B. Fund, in addition to any
other rights and remedies, shall have the right to terminate this Agreement
forthwith upon the occurrence at any time of any of the following events:
1. Any interruption or cessation of operations by IFTC or its assigns which
materially interferes with the business operation of Fund;
2. The bankruptcy of IFTC or its assigns or the appointment of a receiver
for IFTC or its assigns;
3. Any merger, consolidation or sale of substantially all the assets of
IFTC or its assigns;
4. The acquisition of a controlling interest in IFTC or its assigns, by
any broker, dealer, investment adviser or investment company except as may
presently exist; or
5. Failure by IFTC or its assigns to perform its duties in accordance with
the Agreement, which failure materially adversely affects the business
operations of Fund and which failure continues for thirty (30) days after
receipt of written notice form Fund.
C. In the event of termination, Fund will promptly pay IFTC all amounts
due to IFTC hereunder.
18. Assignment.
<PAGE>
A. Neither this Agreement nor any rights or obligations hereunder may be
assigned by IFTC without the written consent of Fund; provided, however, no
assignment will relieve IFTC of any of its obligations hereunder.
B. This Agreement will inure to the benefit of and be binding upon the
parties and their respective successors and assigns.
19. Confidentiality.
A. IFTC agrees that, except as provided in the last sentence of Section 16
hereof, or as otherwise required by law, IFTC will keep confidential all
records of and information in its possession relating to Fund or its
shareholders or shareholder accounts and will not disclose the same to any
person except at the request or with the consent of Fund.
B. Fund agrees to keep confidential all financial statements and other
financial records (other than statements and records relating solely to Fund's
business dealings with IFTC) and all manuals, systems and other technical
information and data, not publicly disclosed, relating to IFTC's operations
and programs furnished to it by IFTC pursuant to this Agreement and will not
disclose the same to any person except at the request or with the consent of
IFTC.
20. Survival of Representations and Warranties.
A. All representations and warranties by either party herein contained will
survive the execution and delivery of this Agreement.
21. Miscellaneous.
A. This Agreement is executed and delivered in the State of New York and
shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successor and
assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
E. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected, and the
rights and obligations of the parties shall be construed and enforced as if
the Agreement did not contain the particular part, term or provision held to
be illegal or invalid.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers.
FIRST AMENDMENT OF AGENCY AGREEMENT
THIS FIRST AMENDMENT OF AGENCY AGREEMENT ("Agreement") is made and entered into
to be effective as of May 3, 1993, by and between SELIGMAN PORTFOLIOS, INC.
(f/k/a Seligman Mutual Benefit Portfolios, Inc.), a Maryland corporation
("Fund"), and INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust company
("IFTC").
RECITALS
A. Fund and IFTC are parties to that certain Agency Agreement dated June 1,
1988 ("Agency Agreement"), pursuant to which Fund appointed IFTC as
transfer agent and dividend disbursing agent of the Fund's five
then-existing portfolios.
B. Fund is instituting a new portfolio, to be known as the Seligman Henderson
Global Portfolio, and desires to appoint IFTC as transfer agent and
dividend disbursing agent thereof upon and subject to the terms,
conditions and agreements set forth in the Agency Agreement.
C. Fund will as of May, 1993 begin selling its shares to separate accounts,
in addition to the Separate Account established by Mutual Benefit Life and
desires to have IFTC provide these separate accounts on behalf of the Fund
with the same transfer agent and dividend disbursing agent services it
currently provides shareholders of the Fund pursuant to the Agency
Agreement.
D. IFTC is willing to accept such appoint and to provide such services on
such terms and conditions.
AGREEMENT
1. Fund hereby appoints IFTC as transfer agent and dividend disbursing agent
of the Seligman Henderson Global Portfolio, and IFTC hereby accepts such
appointment and agrees that it will act as the transfer agent and dividend
disbursing services to separate account shareholders of the Fund, in
addition to Mutual Benefit Life.
2. Such appointment and agreement is made upon and subject to all the terms,
conditions and agreements set forth in the Agency Agreement, which is
hereby incorporated herein by reference. Fund and IFTC hereby ratify and
confirm the Agency Agreement and agree that it remains in full force and
effect and is binding upon the parties in accordance with its terms,
except as amended hereby. Each party hereby confirms that except as
amended herein all of its representations and warranties set forth in the
Agency Agreement remain true and correct as of the date of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by the
authorized officers to be effective as of the date and year first above written.
INVESTORS FIDUCIARY TRUST COMPANY
By:
------------------------------------
SELIGMAN PORTFOLIOS, INC.
(f/k/a Seligman Mutual Benefit Portfolios,
Inc.)
By:
------------------------------------
SECOND AMENDMENT OF AGENCY AGREEMENT
THIS SECOND AMENDMENT OF AGENCY AGREEMENT ("Agreement") is made and
entered into to be effective as of ______________, 1994 by and between SELIGMAN
PORTFOLIOS, INC. (f/k/a Seligman Mutual Benefit Portfolios, Inc.), a Maryland
corporation ("Fund"), and INVESTORS FIDUCIARY TRUST COMPANY, a Missouri trust
company ("IFTC").
RECITALS
A. Fund and IFTC are parties to that certain Agency Agreement dated June 1,
1988, as amended by that certain First Amendment of Agency Agreement dated
as of May 3, 1993 (collectively, "Agency Agreement"), pursuant to which
Fund appointed IFTC as transfer agent and dividend disbursing agent of the
Fund's six then-existing portfolios.
B. Fund is instituting three new portfolios, to be known as the Seligman
Communications and Information Portfolio, the Seligman Frontier Portfolio,
and the Seligman Henderson Global Emerging Companies Portfolio
(collectively, the "New Portfolios"), and desires to appoint IFTC as
transfer agent and dividend disbursing agent thereof upon and subject to
the terms, conditions and agreements set forth in the Agency Agreement and
IFTC is willing to accept such appointment.
AGREEMENT
1. Fund hereby appoints IFTC as transfer agent and dividend disbursing agent
of the New Portfolios, and IFTC hereby accepts such appointment and agrees
that it will act as the transfer agent and dividend disbursing agent of
the New Portfolios.
2. Such appointment and agreement is made upon and subject to all the terms,
conditions and agreements set forth in the Agency Agreement, which is
hereby incorporated herein by reference. Fund and IFTC hereby ratify and
confirm the Agency Agreement and agree that it remains in full force and
effect and is binding upon the parties in accordance with its terms,
except as amended hereby. Each party hereby confirms that except as
amended herein all of its representations and warranties set forth in the
Agency Agreement remain true and correct as of the date of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers to be effective as of the date and year first
above written.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-----------------------------------
Title:
--------------------------------
SELIGMAN PORTFOLIOS, INC.
(f/k/a Seligman Mutual Benefit Portfolios,
Inc.)
By:
-----------------------------------
Title:
--------------------------------
PROMOTIONAL AGENT DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this _____ day of __________, 199___ is among CANADA LIFE
OF AMERICA FINANCIAL SERVICES, INC., a Georgia corporation ("CLAFS"), CANADA
LIFE INSURANCE COMPANY OF AMERICA, a Michigan Corporation ("CLICA"), and
SELIGMAN FINANCIAL SERVICES, INC., a Delaware Corporation ("Seligman
Financial").
WHEREAS, CLICA has determined to issue certain contracts or subsequent
variations thereof, such contracts are described in Exhibit A hereto (the
"Contracts"), which Contracts shall be funded either through a separate account
known as CLICA Variable Annuity Account 2 ("Separate Account") and/or through
CLICA's General Account; and
WHEREAS, a Registration Statement on Form N-4 including a Prospectus and
Statement of Additional Information relating to the Separate Account and units
of interest under the Contracts ("Registration Statement") have been or will be
filed with the Securities and Exchange Commission ("SEC") to register the
Separate Account as a unit investment trust under the Investment Company Act of
1940 ("1940 Act") and to register the units of interest under the Contracts
funded through the Separate Account under the Securities Act of 1933 ("1933
Act") and
WHEREAS, CLICA and CLAFS have entered into an agreement pursuant to which CLAFS
will serve as principal underwriter for the Contracts funded through the
Separate Account, it being the intention of CLICA AND CLAFS that such Contracts
be offered to the public on a continuous basis; and
WHEREAS, Seligman Financial is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, CLAFS desires to appoint Seligman Financial as the promotional
distributing agent for the Contracts and Seligman Financial desires to act as
such promotional distributing agent.
In consideration of the mutual agreements herein made and intending to be
legally bound hereby, the parties agree as follows:
1. Promotional Distributing Agent. CLICA and CLAFS hereby appoint
Seligman Financial, and Seligman Financial hereby accepts appointment, as the
promotional distributing agent ("Promotional Agent") for the Contracts within
the United States and its territories. CLAFS agrees that during the term of
the Agreement, except in its capacity as a Selling Firm, as hereinafter
defined, it will not distribute the Contracts, will not reallow any
compensation it receives to any broker-dealer firm unaffiliated with it and
will not be entitled to compensation with respect to distribution of the
Contracts to purchasers thereof. As Promotional Agent, Seligman Financial
undertakes to make best efforts consistent with market conditions to actively
market the Contracts through Selling Firms in those states in which it is so
authorized pursuant to applicable law, including, among other things,
advertising, visits to brokerage firms, and development of sales literature.
As Promotional Agent, Seligman Financial may enter into written agreements
("Selling Agreements") with such brokerage firms ("Selling Firms") as it may
from time to time select subject to Section 10(D) below. The form of Selling
Agreement is attached hereto as Exhibit B. Any material changes to the form of
the Selling Agreement must be approved by CLICA and such approval shall not be
unreasonably withheld. CLICA and CLAFS hereby undertake and agree that during
the term of this Agreement applications to purchase the Contracts will not be
accepted or Contracts issued unless submitted by Selling Firms or Seligman
Financial. Seligman Financial hereby agrees that CLAFS may become a Selling
Firm, provided however, that CLAFS enters into a Selling Agreement with
Seligman Financial.
2. Compensation. As compensation for its services as Promotional Agent,
Seligman Financial shall be entitled to receive compensation ("Promotional
Agent Fee") with respect to any Contract issued, as disclosed on the attached
Exhibit C, Statement of Compensation. CLICA agrees to pay to Selling Firms
compensation as set
<PAGE>
forth in Exhibit C which includes commissions payable to Selling Firms ("B/D
Concession"), and any potential Service Fee that might become payable to
Seligman Financial and Selling Firm at annuitization. CLICA will pay all
compensation consistent with its regular compensation-paying schedule.
In addition, CLICA will accept purchase payments net of B/D Concession, subject
to certain conditions imposed by CLICA from time to time, from Selling Firms as
specified from time to time by Seligman Financial on both initial and
subsequent purchase payments. If CLICA is required to purchase payments
because (i) a Contracts's "Free Look" provision was exercised, (ii) a Contract
was not issued as a result of a failure by a Selling Firm to submit to CLICA an
application sufficient to satisfy state insurance laws or CLICA's eligibility
requirement, or (iii) a Contract was tendered to CLICA for redemption within
ten business days of the date of activity, then (a) no B/D Concession will be
payable with respect to said purchase payments, (b) Seligman Financial will
refund to CLICA the Promotional Agent Fee it may have received in connection
with such purchase payments, (c) any B/D Concessions paid by CLICA for said
purchase payments may be deducted by CLICA from any B/D Concession owing to the
Selling Firm, and (d) if no B/D Concession is owing to such Selling Firm,
Seligman Financial will collect from Selling Firm, such B/D Concession paid by
CLICA and will pay such amount to CLICA, it being understood that CLICA's,
CLAFS' and Seligman Financial's liability is limited and that Selling Firms are
responsible to Contract Owners for any loss of contract value or loss due to
reversal of trades which may occur due to wire errors, either in purchase
payment amount or investment option, failure or CLICA to receive an original
properly completed application, and/or any other failure on part of Selling
Firms to follow CLICA's administrative procedures. It is also understood that
Seligman Financial's liability, if it is unable to collect from a Selling Firm,
is limited as provided in Section 11D.
3. Recordkeeping Service Agent. The parties hereby agree that CLICA
shall be the Recordkeeping Service Agent to perform certain services in
connection with processing purchase payments, redemptions, transfers,
processing of Promotional Agent Fee and B/D Concessions and related services as
agent for itself and CLAFS. It is understood that in entering into this
Agreement, Seligman Financial is relying upon representations by CLICA that it,
CLICA, will provide and maintain or cause to be provided and maintained,
certain administrative and other services necessary for the operation of the
Separate Account and for the benefit of the Contract Owners and Seligman
Financial.
4. Issuance of Contracts. CLICA and CLAFS hereby undertake to use their
best efforts, subject to the standards set forth in the Registration Statement,
(i) to maintain a continuous offering of the Contracts and (ii) to ensure that
applications to purchase units of interest under the Contracts shall be
acceptable to CLICA and that the Contracts shall be issued pursuant to such
applications and (iii) to ensure that all purchase payments be processed at the
accumulation unit value determined in the manner as described in the
Registration Statement. It is understood that a Contract shall not be issued
unless and until the purchase payments and application received relating to
such Contract are sufficient to satisfy CLICA's eligibility requirements as set
forth in the Contracts and the requirements of applicable state insurance law.
Seligman Financial agrees that all applications for the Contracts shall be made
on the application forms supplied by CLICA. Seligman Financial agrees to
instruct Selling Firms to (i) review the applications for completeness and
correctness as to form, (ii) review all applications for suitability, and (iii)
to promptly forward to CLICA all applications found to be complete together
with any purchase payments received with the applications received. Any
additional purchase payments, to the extent permitted by the Contract shall
also be remitted directly to CLICA.
5. Chargebacks. (i) In the event a Contract is returned to CLICA
pursuant to a Free Look provision, the full Promotional Agent Fee paid thereon
shall be charged back to Seligman Financial in accordance with Section 2 above.
(ii) Should any premium or purchase payment on any Contract issued by CLICA be
refunded for any reason, Seligman Financial shall repay or return Promotional
Agent Fees received by it with respect to such premium or purchase payment.
(iii) For full or partial withdrawals from the Contract: 100% of all Selling
Concessions paid to Selling Firms on amount(s) withdrawn within 12 months of
said amount(s) being paid to CLICA shall be returned or repaid. For any
premium or purchase payment that has been in the contract for more
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than 12 months, there shall be no charge back on either Promotional Agent Fee
or B/D Concession. To the extent permitted by law, the amount so charged back
may, at the option of CLICA, be set off against Promotional Agent Fees
otherwise due to Seligman Financial. In addition, such other compensation will
be payable as are from time to time agreed by the parties to the this Agreement
and will be added to Schedule I of the Selling Agreement in accordance
therewith.
6. Plan Name. CLICA, CLAFS and Seligman Financial agree that the
Contracts will be sold under the name "Trillium" (Trillium) and that
communications to prospective and existing Contract Owners with respect to the
sale and servicing of the Contracts will contain prominent reference to the
aforementioned name. Property rights to the Name are owned by CLICA which will
enter into a license agreement with Seligman Financial to permit the Name's
use.
7. Confirmations and Prospectus Delivery.
A. CLICA and CLAFS agree that CLAFS, at its own expense and
through its agent CLICA, unless otherwise agreed in writing by Seligman
Financial, shall issue and deliver or cause to be issued and delivered,
confirmations of transactions effected with respect to the account of any
Contract Owner for each transaction for which a confirmation is legally
required in accordance with the provisions of the 1934 Act and Rule 10b-10
thereunder. CLICA and CLAFS further agree that CLAFS, through its agent CLICA,
shall cause copies of all such confirmations to be forwarded to such Selling
Firms as agreed to, in writing, by Seligman Financial and CLICA.
B. CLICA agrees that it will, in accordance with the provisions
of the 1933 Act and the rules thereunder, deliver or cause to be delivered to a
Contract Owner who has made an initial purchase payment, a copy of the then
current prospectus of the Separate Account and the then current prospectus for
the Fund. Such prospectuses shall be delivered prior to or at the time the
initial premium or purchase payment is made, or with the confirmation for such
initial premium purchase payment, delivered in accordance with Section 7(A).
8. Expenses. Seligman Financial shall be responsible for all costs
associated with the marketing and distribution of the Contracts including: (i)
the expenses of printing and distributing prospectuses, statements of
additional information and financial reports with respect to the Separate
Account and the Fund to prospective Contract Owners and of prospectuses to
persons described in Section 7(B) above; (ii) the expenses of preparing,
printing and distributing all other literature in connection with the
solicitation of applications to purchase the contracts, including expenses of
filing such literature with the National Association of Securities Dealers,
Inc. provided that Seligman Financial may be reimbursed or otherwise paid for
any such materials by Selling Firms, and further provided that CLAFS and CLICA
will cooperate with Seligman Financial in the development of such materials as
reasonably requested by Seligman Financial; and (iii) expenses of advertising
in connection with such solicitation effort.
CLICA and CLAFS each accept responsibility for, and will bear the cost of,
ensuring that Contract Owners receive on an ongoing basis all reports, notices
and other materials required by applicable provisions of the Federal or State
securities laws, rules of the NASD or any state securities or state insurance
department, including without limitation, annual and semi-annual reports and
prospectuses and statements of additional information for the Fund and Separate
Account. The expenses relating to appointment of agents or producers of
Selling Firms are as set forth in Section III.A. of the Selling Agreement,
attached hereto as Exhibit B.
In addition to any expense hereinabove expressly mentioned, CLICA and CLAFS
each agree to pay all costs associated with the operation of the Separate
Account, including without limitations: all fees and expenses incurred in
connection with the registration of the Separate Account and all units of
interest under the Contracts issued by CLICA under the securities laws of the
United States; all fees and related expenses which may be incurred in
connection with the qualification and registration of the Separate Account and
the units of interest under the Contract for sale in the states; all expense
relating to the filing of all sales literature approved by Seligman Financial
with appropriate state regulatory authorities; and any other costs incurred by
CLICA or CLAFS
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or their respective employees unless otherwise agreed upon by the parties in
writing and except to the extent such costs are paid by charges made against
the Separate Account assets as set forth in the Registration Statement.
9. Representations and Warranties of CLICA and CLAFS. CLICA and CLAFS
each hereby represent and warrant that:
A. all actions, including, without limitation, those necessary
under their articles of incorporation and by-laws and applicable federal and
state law, to authorize and establish the Separate Account have been taken;
B. each has taken all actions necessary to authorize the
execution, delivery and performance of this Agreement and all transactions
contemplated hereunder;
C. a Registration Statement relating to the Separate Account and
the Contracts has been or will be filed with the SEC under the 1933 Act and the
1940 Act and one or more amendments may be filed before the Registration
Statement becomes effective;
D. Seligman Financial has been provided with a copy of the
Registration Statement and amendments thereto in the form in which it has been
filed with the Securities and Exchange Commission and is hereby authorized to
use such Registration Statement in the form in which it becomes effective and
the information contained therein (as post- effectively amended and
supplemented from time to time as provided herein) in connection with its
activities as Promotional Agent hereunder and shall be provided with such other
information relating to the Contracts or the Separate Account as it may
reasonably request;
E. such Registration Statement when it becomes effective will
conform in all material respects with the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations thereunder, will not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading;
F. each of them will use their best efforts to ensure that so
long as the Separate Account and the units of interest under the Contracts are
the subject of a public offering the Prospectus will continue to conform in all
material respects with the requirements of the 1933 Act and the 1940 Act and
the rules and regulations thereunder and that at no time will the prospectus
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
G. recognizing that it is the intention of the parties hereto
that CLICA engage in a continuous public offering of units of interest under
the Contracts and interest thereunder in the Separate Account, every effort
will be made to prepare and file on a timely basis with the SEC such
post-effective amendments or supplements as may be necessary to maintain a
continuous public offering of units of interest under the Contracts. Seligman
Financial shall be promptly advised of any proposed amendment or supplement to
the Registration Statement and shall be provided with a copy of such proposed
amendment or supplement sufficiently in advance of the filing of such amendment
or supplement with the SEC to permit its review unless legal or regulatory
requirements would make such review impracticable;
H. Seligman Financial shall be notified as to the date upon which
the Registration Statement as it may be amended becomes effective and shall be
provided with a copy of such Registration Statement in the form in which it
shall become effective. All information reasonably requested by Seligman
Financial in order to provide prospective Contract Owners with a prospectus as
contained in the initially effective Registration Statement or a subsequently
amended or supplemented Prospectus shall be promptly furnished by CLICA and
CLAFS;
I. Seligman Financial shall be promptly notified of the
institution by the SEC of any stop order proceedings in respect of the
Registration Statement and CLICA and CLAFS will use their best efforts to
prevent
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the issuance of any such stop order and to obtain as soon as possible its
lifting if issued;
J. each shall use its best efforts to file and secure approval
for sale of the Contracts in such states, as well as the District of Columbia,
(hereinafter collectively the "States") in which Seligman Financial, CLICA and
CLAFS agree in writing the Contracts shall be made available to the public, and
CLICA further agrees to maintain such approvals. It is understood that each
shall make every reasonable effort to make the Contracts available in all
States except the State of New York, as soon as practicable;
K. all sales material prepared by Seligman Financial and reviewed
and approved by CLICA and CLAFS, will be filed by CLICA with the appropriate
state regulatory authorities as required in such States and CLICA will use its
best efforts to effect prompt review of such material in such States and to
provide Seligman Financial with such assistance as Seligman Financial may
reasonably require in order to develop sales literature in compliance with the
laws and regulations of such States;
L. upon reasonable request, Seligman Financial shall be informed
as to the status of all such sales literature filings and shall be promptly
notified of all approvals or disapprovals of sales literature filings in the
various States;
M. Seligman Financial will receive full cooperation in its
efforts to assist the registered representatives of Selling Firms in meeting
the requirements for appointment as CLICA agents for the sale of the Contracts
under state insurance laws and, upon reasonable request, Seligman Financial
shall be informed as to the status of applications for such appointment;
N. CLICA will use its best efforts to process all completed
applications for such appointment on a timely basis provided that it is
understood that CLICA may decline to appoint a particular registered
representative; and
O. Seligman Financial may be notified in the event CLICA declines
to appoint a particular registered representative and the reason for such
action.
10. Representations and Warranties of Seligman Financial. Seligman
Financial hereby represents and warrants that:
A. it has taken all actions including, without limitation, those
necessary under its articles of incorporation, by-laws and applicable state
corporate law, necessary to authorize the execution, delivery and performance
of this Agreement and all transactions contemplated hereunder;
B. it is and shall remain duly registered as a broker-dealer
under the 1934 Act, is a member in good standing of the NASD, and is duly
registered under applicable state securities laws;
C. Seligman Financial shall only solicit and shall instruct
Selling Firms only to solicit purchases of the Contracts in those jurisdictions
in which CLICA in writing states that such Contracts are approved for sale
under applicable securities and insurance laws, or where the Contracts are
exempt from such qualification and registration;
D. it shall enter into Selling Agreements, substantially in the
Form of Exhibit B hereto, only with such Selling Firms as are duly registered
as broker dealers under the 1934 Act and are members in good standing of the
NASD properly qualified to undertake their responsibilities under the Selling
Agreements, and who represent that they are duly in compliance with applicable
state securities and insurance laws, and shall direct such Selling Firms to
sell only through those associated persons (as that term is defined in Section
3(a)(18) of the 1934 Act) who are duly and appropriately licensed, registered
and otherwise qualified to sell the Contracts under the 1934
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Act, applicable rules of the NASD, applicable state and insurance law and are
appointed by CLICA as insurance agents for the sale on the Contracts.
In connection with broker-dealers to distribute the Contracts, Seligman
Financial will use reasonable efforts to ascertain that each broker-dealer
wishing to execute a Selling Agreement is a member firm of the NASD duly
qualified with all federal, state and other regulatory bodies, and otherwise is
a suitable entity to represent CLICA and CLAFS. CLICA and CLAFS may refuse to
enter into a Selling Agreement with a broker-dealer selected by Seligman
Financial if such Selling Firm is deemed by CLICA or CLAFS to be unsuitable for
any reason. Neither CLICA nor CLAFS will incur any obligation to compensate,
or reimburse the expenses of, Seligman Financial as a result of any such
refusal.
E. Prior to any use with members of the public, Seligman
Financial will provide CLICA and CLAFS copies of all sales literature developed
by Seligman Financial for their review and approval. Such sales literature
shall be reviewed in light of applicable federal securities laws, NASD
requirements and state insurance laws. Seligman Financial shall file such
sales literature with the NASD in accordance with the rules and regulations of
the NASD. CLICA, CLAFS and Seligman Financial will approve the use of sales
material in any state only if CLICA notifies Seligman Financial that such
material has been submitted by CLICA, as required by applicable law, reviewed
and approved by all appropriate state regulatory authorities;
F. no statement or representation concerning the Contracts shall
be made by Seligman Financial or any associated person thereof in connection
with the Contracts other than those contained in the then current Registration
Statement or in any other sales material released or approved by CLICA or CLAFS
as information supplemental to such Registration Statement; and
G. it shall promptly furnish to CLICA and CLAFS or their agent,
any reports and information which the other party may reasonably request for
the purpose of meeting their reporting and recordkeeping requirements under the
insurance laws of any state, and under the federal and state securities laws
and rules of the NASD.
11. Indemnification.
A. CLICA and CLAFS each agree to indemnify and hold harmless
Seligman Financial, any Selling Firm and each person who controls Seligman
Financial or any such Selling Firm and their agents, subsidiaries and employees
against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, any expenses reasonably incurred in
investigating or defending against any litigation commenced or threatened, or
any claim) arising out of or based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in (a) the Separate Account
Registration Statement; or (b) any contract, application or other document
filed in any State in order to qualify the Separate Account in such State or to
qualify the Contracts to be issued thereby for sale in such state or to
maintain such qualifications; or (ii) the omission or alleged omission in such
Registration Statement, written material, application or other such document to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made; or (iii) the negligent, improper fraudulent or unauthorized
acts or omissions of CLICA or CLAFS or (iv) any breach of, or failure to
comply with, the representations and warranties made by CLICA and/or CLAFS as
set forth herein. Notwithstanding the foregoing, CLICA and CLAFS shall not
indemnify Seligman Financial, any Selling Firm and each person who controls
Seligman Financial or any such Selling Firm and their agents, subsidiaries and
employees under paragraphs 11(A) (i) and 11(A) (ii) hereof to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in 11(A) (i) such Registration Statement or other sales material
in conformity with written information furnished to them by Seligman Financial
or any of its affiliates specifically for use therein; or 11(A) (ii) in the
prospectus and statement of additional information for the Fund, except for
liability arising out or written information furnished by CLICA or CLAFS
specifically for use therein. This indemnity agreement will be in addition to
any liability which CLICA or CLAFS may otherwise have.
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B. Seligman Financial agrees to indemnify and hold harmless
CLICA, CLAFS, each person who controls CLICA or CLAFS and their agents,
subsidiaries and employees against any and all losses, claims, damages,
liabilities, or expenses (including, without limitation any expenses reasonably
incurred in investigating or defending against any litigation commenced or
threatened or any claim) arising out of or based upon: (i) any untrue or
alleged untrue statement or representation made by Seligman Financial in
connection with its obligations as Promotional Agent hereunder or by associated
persons of Seligman Financial (except to the extent that such statements may be
made in reliance on any material relating to the Separate Account or the
contracts supplied by CLICA or CLAFS), or (ii) the omission or alleged
omission by Seligman Financial in connection with its obligations as
Promotional Agent hereunder or by associated persons of Seligman Financial to
state any material fact necessary to make statements made not misleading in
light of the circumstances in which they were made (except to the extent that,
in omitting to make such statement, reliance was placed upon material relating
to the Separate Account or the Contracts supplied by CLICA or CLAFS), or (iii)
use of sales literature by Seligman Financial and associated persons thereof
which has not been approved for use by CLICA and CLAFS and has not been, if
necessary, submitted by Seligman Financial on behalf of CLICA and CLAFS to the
NASD; or (iv) the negligent, improper, fraudulent or unauthorized acts or
omissions of Seligman Financial; or (v) any breach of, or failure to comply
with, the representations and warranties made by Seligman Financial as set
forth herein; or (vi) any untrue statement or alleged untrue statement of a
material fact contained in the prospectus and/or statement of additional
information for the Fund; or (vii) the omission or alleged omission of a
material fact contained in the Prospectus and/or statement of additional
information for the Fund.
C. Promptly after receipt by an indemnified party under this
paragraph 11 of notice of the commencement of any action by a third party, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 11, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from liability which the indemnifying
party may have to any indemnified party otherwise than under this paragraph 11.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
D. Seligman Financial and CLICA agree to share equally any
losses, including reasonable attorney cost, incurred by CLICA resulting from
the breach by Selling Firms or their associated persons of the Selling
Agreements; it being understood that CLICA and Seligman Financial must promptly
notify the other party upon knowledge of such breach. Notwithstanding the
agreement contained in this subsection D, CLICA may in the course of losses
suffered by it as a result of wire orders accompanied by a telephone facsimile
transmission as described in Section 4 thereof, may deduct the amount of
Promotional Agent Fee due Seligman Financial for sales of the Contracts
hereunder. In addition, CLICA will hold Selling Firm liable for losses under
such Contracts when the (i) allocation instructions provided in the facsimile
are different from those provided in the original application; (ii) purchase
payment has been received and invested, and prior to the Contract being issued
it is turned back for cancellation by the Selling Firm; (iii) Contract is being
returned under the Free Look provision, but more than 30 days from the wire
date; and (iv) application is not received by CLICA within five business days
after the wire date. If CLICA is unable to collect such losses from Selling
Firms, then CLICA and Seligman Financial agree to share equally such losses,
including reasonable attorney costs.
12. Opinion of Counsel; Opinion of Auditors; Opinion of Officers.
A. Prior to the date first above written (the "Closing Date"),
CLICA and CLAFS will provide to Seligman Financial in a form acceptable to it,
an opinion of counsel from David A. Hopkins, Assistant Secretary, to be dated
the Closing Date, to the effect that: (i) CLICA and CLAFS are duly
incorporated and are existing corporations in
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good standing under their respective state laws of incorporation; (ii) CLAFS is
duly registered as a broker-dealer under the 1934 Act and is a member in good
standing of the NASD; (iii) CLICA and CLAFS may execute, deliver and perform
their respective obligations hereunder without, as a result, breaching or
violating any provision of their respective corporate charters or by-laws, the
provisions of any statute, rule, regulation or order to which either is subject
or to which any subsidiary is subject or any agreement or instrument to which
either is a party or by which either is bound; (iv) CLICA has taken all
actions, including, without limitation, those necessary under its articles of
incorporation and by-laws and applicable state laws, to authorize and establish
the Separate Account; (v) such counsel has no reason to believe that either the
Registration Statement or any amendment or supplement thereto as of the date of
the opinion contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; the descriptions in the Registration
Statement of statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the information required to be
shown; and such counsel does not know of any legal or governmental proceedings
required to be described in the Registration Statement which are not described
as required or of any contracts or documents of a character required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement which are not described and filed as required, it being
understood that such counsel need express no opinion as to the financial
statement or other financial data contained in the Registration Statement or on
information contained in the Registration Statement based on written
information furnished by Seligman Financial or any of its affiliates
specifically for use therein; and (vi) this Agreement has been duly authorized,
executed and delivered by CLICA and CLAFS.
B. On or before the Closing Date, CLICA will provide to Seligman
Financial a copy of the most recent Report of Independent Auditor prepared by
Ernst & Young to the effect that: (i) Ernst & Young are independent certified
public accountants with respect to CLICA as defined in the Code of Professional
Ethics of the American Institute of Certified Public Accountants and (ii) Ernst
& Young have issued their opinion on the financial statements of CLICA, copies
of which have been furnished to Seligman Financial.
C. On the Closing Date, Seligman Financial will have received a
certificate, dated as of the Closing Date, of the President or any Vice
President, and Secretary or Assistant Secretary of CLICA in which such
officers, to the best of their knowledge after reasonable investigation, shall
state that the representations and warranties of CLICA in this Agreement are
true and current, that CLICA has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
the execution of this Agreement, that subsequent to the date(s) of the most
recent financial statements in the Prospectus, there has been no material
adverse change in the financial position or results or operation of CLICA and
its subsidiaries except as set forth in or contemplated by the Prospectus or as
described in such certificate.
D. Prior to the Closing Date, Seligman Financial will provide to
CLICA and CLAFS in a form acceptable to them, an opinion of Nina O. Shenker,
Senior Vice President and General Counsel of J. & W. Seligman and Company,
Inc., to be dated as of the Closing Date, to the effect that: (i) Seligman
Financial is duly incorporated and is an existing corporation in good standing
under the laws of the state in which it is incorporated; (ii) Seligman
Financial is duly registered as a broker-dealer under the 1934 Act and is a
member in good standing of the NASD; (iii) Seligman Financial may execute,
deliver and perform its obligations hereunder without, as a result, breaching
or violating any provision of its corporate charter or by-laws, any provision
of the federal securities laws, rules and regulations, or the NASD Rules of
Fair Practice, applicable to Seligman Financial, or any judicial or
administrative orders in which it or any subsidiary is named or any material
Agreement or instrument to which it is a party or by which it is bound; and
(iv) this Agreement has been duly authorized, executed and delivered by
Seligman Financial.
E. On the Closing Date, Seligman Financial shall provide to CLICA
and CLAFS in a form acceptable to them a certificate, dated as of the Closing
Date, of the President or any Vice President, and a principal financial or
accounting officer of Seligman Financial in which such officers, to the best of
their knowledge after reasonable investigation, shall state that the
representations and warranties of Seligman Financial in this Agreement are true
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and current, that Seligman Financial has complied with all Agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to execution of this Agreement.
F. CLICA agrees that, so long as this Agreement is in effect, it
will furnish to Seligman Financial, as soon as practicable after the end of
each fiscal year, a copy of its annual report to policyholders for such year,
and CLICA will furnish to Seligman Financial (a) as soon as available, a copy
of each report of CLICA to be mailed to policyholders, and (b) from time to
time, such other financial information concerning CLICA as Seligman Financial
may reasonably request.
13. Term of Agreement. This Agreement may not be assigned by any of the
parties hereto. This Agreement shall continue in full force and effect for a
period of 5 years from the effective date of this Agreement, unless otherwise
mutually agreed upon by the parties to terminate sooner or if terminated for
such reasons as set forth in paragraph 14 below. After such 5 year period, it
will be deemed extended thereafter from year to year subject to termination at
will by any party hereto upon 60 days prior written notice to the other, it
being understood and agreed that the right to terminate this Agreement upon 60
days notice may be exercised for any reason or for no reason.
14. Termination. This Agreement shall terminate:
A. at the option of CLICA or CLAFS upon the institution of formal
proceedings against Seligman Financial or an affiliate by the NASD, the SEC, or
any state securities or insurance department or any other regulatory body
provided that CLICA or CLAFS determines in good faith in either's sole
judgment, that such institution will have a material adverse impact on Seligman
Financial or the affiliate's ability to perform its obligations under this
Agreement; or
B. at the option of Seligman Financial upon the institution of
formal proceedings against The Canada Life Assurance Company ("CLA"), CLICA or
CLAFS brought by any Canadian legal or regulatory authority, the NASD, SEC, or
any formal proceedings involving a material matter brought by any state
securities or state insurance department or any other regulatory body regarding
CLA, CLICA or CLAFS provided that Seligman Financial determines in good faith
in its sole judgment that such institution will have a material adverse impact
on CLICA's or CLAFS' ability to perform its obligations under this Agreement or
Seligman Financial's ability to distribute the Contracts; or
C. at the option of Seligman Financial or CLICA upon any material
adverse change in the financial condition of one or the other; or
D. at the option of Seligman Financial, CLICA or CLAFS if the
Buy-Sell Agreement among the Fund, the Separate Account, CLICA and J. & W.
Seligman & Co., Inc. ("JWSI"), the Investment Adviser is terminated.
E. at the option of Seligman Financial, CLICA or CLAFS, mutually
and equally, if senior management of any of the parties to this Agreement so
determines. In that event, termination of the Agreement will occur 30 days
after written notice to that effect has been received by the non-terminating
party(ies).
15. Provisions Surviving Termination. Notwithstanding termination of this
Agreement, and regardless of the cause or reason for such termination, the
provisions of Paragraph 11 (Indemnification) shall survive and be binding upon
the parties for a period of 10 years following such termination.
16. Notices. Any notice required under this Agreement shall be deemed to
have been given to CLICA and CLAFS if mailed to either, sent to the attention
of the Assistant Secretary, Canada Life Insurance Company of America, 6201
Powers Ferry Road, N.W., Atlanta, GA 30339, and notice is deemed given to
Seligman Financial if mailed to Seligman Financial Services, Inc., with a copy
to Senior Vice President and General Counsel, JWSI, 130 Liberty Street, New
York, NY 10006, or at such other address furnished to the other party pursuant
hereto.
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17. Nature and Survival of Representations and Warranties. All statements
contained in this Agreement or in connection with the transactions contemplated
hereby shall be deemed representations and warranties by the parties hereunder.
All representations and warranties of the parties made in this Agreement or as
provided herein shall survive, regardless of any investigation made by or on
behalf of the parties hereto, until the applicable statutes of limitations have
run, and except if a claim arises under a representation or warranty and a
notice of claim is given prior to the expiration of the survival period, then
such representation or warranty shall not terminate with respect to such claim
until indemnification thereof shall have been made in accordance with the
provisions of this Agreement.
18. Exclusivity of Agreement.
A. CLICA and CLAFS hereby agree not to develop, market or
otherwise engage in the sale of other individual or group variable annuities
distributed through selling agreements with NYSE member firms or other
broker-dealers as agreed to by the parties from time to time, for five years
from the effective date of this Agreement, without the prior written consent of
Seligman Financial subject to the following: (i) This provision is not
applicable to and will in no way limit the further development and distribution
of CLICA's existing individual (VariFund) and group (The Canada Life 401(k))
variable annuity products or amendments thereto; (ii) The exclusive nature of
this Agreement will be reassessed by the parties and the exclusive nature of
this Agreement may be terminated by either CLICA or Seligman Financial, upon
180 days notice, if this venture is not successful in achieving the total
assets under management through individual and group annuity sales by the end
of the year specified below.
Year End
1994 $ 50 million
1995 $100 million
1996 $150 million
1997 $250 million
CLICA and Seligman Financial believe that these levels of production are
achievable and will work together in a spirit of cooperation to achieve the
success of this venture.
B. Seligman Financial agrees during the term of this Agreement
not to enter into any distribution agreement with any other insurance company
unaffiliated with CLICA for the development, distribution, marketing or sale of
any other individual or group variable annuity or similar annuity, so long as
Section 18A of this Agreement is in effect, without the express prior written
consent of CLICA or CLAFS.
C. This Section 18 A and B shall be of no effect if this
Agreement is terminated pursuant to Section 14.
19. Miscellaneous.
A. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations, and CLICA and Seligman Financial shall each
comply with all applicable Federal and State laws, rules and regulations;
B. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original; and
C. If any provisions of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise the remainder of this
Agreement shall not be affected thereby.
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20. Headings. The descriptive headings of this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
21. Waivers. The waiver by any party of a breach by any other party of
any of the provisions of this Agreement shall not operate or be deemed as a
waiver of any other provision of this Agreement or of any subsequent breach
thereof by any party.
22. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and may not be modified except in a written
instrument executed by all parties hereto.
IN WITNESS WHEREOF, Seligman Financial, CLICA and CLAFS have caused
this Agreement to be executed by their duly authorized officers as of the date
first above written.
CANADA LIFE INSURANCE COMPANY OF AMERICA
BY ______________________________________________
BY ______________________________________________
CANADA LIFE OF AMERICA FINANCIAL SERVICES, INC.
BY ______________________________________________
BY ______________________________________________
SELIGMAN FINANCIAL SERVICES, INC.
BY ______________________________________________
11
<PAGE>
EXHIBIT C
STATEMENT OF COMPENSATION
Subject to the terms and conditions of this Agreement, CLAFS will pay to
Seligman Financial compensation based upon the premiums and purchase payments
received from Selling Firms having a Selling Agreement with CLAFS as a direct
result of Seligman Financial's efforts. Promotional Agent Fees will be paid to
Seligman Financial in accordance with applicable law, in the percentages shown
below:
<TABLE>
<CAPTION>
B/D CONCESSION PROMOTIONAL
PAID TO SELLING AGENT FEE PAID TO
GROSS FIRM SELIGMAN
<S> <C> <C> <C>
CLICA-Issued policies;
All States except NY
TRILLIUM VARIABLE
ANNUITY, Form 20067 5.50% of premium 5.00% .50%
.25% annual trail
based on acct. value
as calculated on
Contract Anniversary.
S e r v i c e F e e a t
Annuitization if "internal"
annuity rates are used. 3.5% if payout = or > 10 3.0% .50%
Service Fee is only paid on years or a life annuity
annuitized proceeds that and amount $0-1 million;
are past any applicable 1.5% if amount over $1 1.25% .25%
surrender charge/period. million
(Form is dependent on
payout option and/or State 2.35% if payout, 10 2.0% .35%
of issue.) years, not a life
annuity and amount $0-1
million; 1.5% if amount 1.25% .25%
over $1 million
</TABLE>
Promotional Agent Fees will be paid to Seligman Financial based on premiums or
purchase payments accepted by CLICA on contracts specified above, in accordance
with the provisions of this Agreement. The Gross payout above represents total
payment from CLICA, including Selling Concessions paid to Selling Firms.
Chargebacks: (i) In the event a contract is returned to CLICA pursuant to a
"Free Look" provision, the full Promotional Agent Fee paid thereon shall be
charged back to Seligman Financial. (ii) Should any premium or purchase
payment on any contract issued by CLICA be refunded for any reason, Seligman
Financial shall repay or return Promotional Agent Fees received by it with
respect to such premium or purchase payment. (iii) If a Contract was not
issued as a result of failure by Selling Firm to submit to CLICA an application
sufficient to satisfy state insurance laws or CLICA's eligibility requirements
then amounts paid to Seligman Financial shall be returned or repaid. (iv) If
a Contract was tendered to CLICA for redemption within ten business days of the
date of activity then amounts paid to Seligman Financial shall be returned or
repaid. (v) For full or partial withdrawals from the contract: 100% of all
Selling Concessions paid to Selling Firms on amount(s) withdrawn within 12
months of such amount(s) being paid to CLICA shall be returned or repaid. For
any premium or purchase payment that has been in the contract for more than 12
months, there shall be no charge back on either Promotional Agent Fee or B/D
concession. To the extent permitted by law, the amount so charged back may, at
the option of CLICA, be set off against Promotional Agent Fees otherwise due to
Seligman Financial. In addition, such other compensation will be payable as
are from time to time agreed by the parties to the foregoing Agreement and
which is in accordance with applicable law, and will be added to this Schedule.
PROMOTIONAL AGENT DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this ____ day of __________, 1993 is among CANADA LIFE OF
AMERICA FINANCIAL SERVICES, INC., a Georgia corporation ("CLAFS"), CANADA LIFE
INSURANCE COMPANY OF New York, a New York Corporation ("CLNY"), and SELIGMAN
FINANCIAL SERVICES, INC., a Delaware Corporation ("Seligman Financial").
WHEREAS, CLNY has determined to issue certain contracts or subsequent
variations thereof, such contracts are described in Exhibit A hereto (the
"Contracts"), which Contracts shall be funded either through a separate account
known as CLNY Variable Annuity Account 2 ("Separate Account") and/or through
CLNY's General Account; and
WHEREAS, a Registration Statement on Form N-4 including a Prospectus and
Statement of Additional Information relating to the Separate Account and units
of interest under the Contracts (Registration Statement") have been or will be
filed with the Securities and Exchanged Commission ("SEC") to register the
Separate Account as a unit investment trust under the Investment Company Act of
1940 ("1940 Act") and to register the units of interest under the Contracts
funded through the Separate Account under the Securities Act of 1933 ("1933
Act") and
WHEREAS, CLNY and CLAFS have entered into an agreement pursuant to which CLAFS
will serve as principal underwriter for the Contracts funded through the
Separate Account, it being the intention of CLNY and CLAFS that such Contracts
be offered to the public on a continuous basis; and
WHEREAS, Seligman Financial is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member of the
National Association of Securities Dealers, Inc.("NASD"); and
WHEREAS, CLAFS desires to appoint Seligman Financial as the promotional
distributing agent for the Contracts and Seligman Financial desires to act as
such promotional distributing agent.
In consideration of the mutual agreements herein made and intending to be
legally bound hereby, the parties agree as follows:
1. Promotional Distributing Agent. CLNY and CLAFS hereby appoint
Seligman Financial, and Seligman Financial hereby accepts appointment, as the
promotional distributing agent ("Promotional Agent") for the Contracts within
the United States and its territories. CLAFS agrees that during the term of
the Agreement, except in its capacity as a Selling Firm, as hereinafter
defined, it will not distribute the Contracts, will not reallow any in
compensation it receives to any broker-dealer firm unaffiliated with it and
will not be entitled to compensation with respect to distribution of the
Contracts to purchasers thereof. As Promotional Agent, Seligman Financial
undertakes to make best efforts consistent with market conditions to actively
market the Contracts through Selling Firms in those states in which it is so
authorized pursuant to applicable law, including, among other things,
advertising, visits to brokerage firms, and development of sales literature
As Promotional Agent, Seligman Financial may enter into written agreements
("Selling Agreements") with such brokerage firms ("Selling Firms") as it may
from time to time select subject to Section 10 (D) below. The form of Selling
Agreement is attached hereto as Exhibit B. Any material changes to the form of
the Selling Agreement must be approved by CLNY and such approval shall not be
unreasonably withheld. CLNY and CLAFS hereby undertake and agree that during
the term of this Agreement applications to purchase the Contracts will not be
accepted or Contracts issued unless submitted by Selling Firms or Seligman
Financial. Seligman Financial hereby agrees that CLAFS may become a Selling
Firm, provided however, that CLAFS enters into a Selling Agreement with
Seligman Financial.
2. Compensation. As compensation for its services as Promotional Agent,
Seligman Financial shall be entitled to receive compensation ("Promotional
Agent Fee") with respect to any Contract issued, as disclosed on the attached
Exhibit C, Statement of Compensation. CLNY agrees to pay to Selling Firms
compensation as set
<PAGE>
forth in Exhibit C which includes commissions payable to Selling Firms ("B/D
Concession"), and any potential Service Fee that might become payable to
Seligman Financial and Selling Firm at annuitization. CLNY will pay all
compensation consistent with its regular compensation-paying schedule.
In addition, CLNY will accept purchase payments net of B/D Concession, subject
to certain conditions imposed by CLNY from time to time, from Selling Firms as
specified from time to time by Seligman Financial on both initial and
subsequent purchase payments. If CLNY is required to return purchase payments
because (i) a Contracts's "Free Look" provision was exercised, (ii) a Contract
was not issued as a result of a failure by a Selling Firm to submit to CLNY an
application sufficient to satisfy state insurance laws or CLNY's eligibility
requirement, or (iii) a Contract was tendered to CLNY for redemption within ten
business days of the date of activity, then (a) no B/D Concession will be
payable with respect to said purchase payments, (b) Seligman Financial will
refund to CLNY the Promotional Agent Fee it may have received in connection
with such purchase payments, (c) any B/D Concessions paid by CLNY for said
purchase payments may be deducted by CLNY from any B/D concession owing to the
Selling Firm, and (d) if no B/D Concession is owing to the Selling Firm,
Seligman Financial will collect from Selling Firm such B/D Concession paid by
CLNY and will pay such amount to CLNY , it being understood that CLNY's, CLAFS'
and Seligman Financier's liability is limited and that Selling Firms are
responsible to Contract Owners for any loss of contract value or loss due to
reversal of trades which may occur due to wire errors, either in purchase
payment amount or investment option, failure of CLNY to receive an original
properly completed application, and/or any other failure on part of Selling
Firms to follow CLNY's administrative procedures. It is also understood that
Seligman Financial's liability, it if is unable to collect from a Selling Firm,
is limited as provided in Section 11D.
3. Recordkeeping Service Agent. The parties hereby agree that CLNY shall
be the Recordkeeping Service Agent to perform certain services in connection
with processing purchase payments, redemptions, transfers, processing of
Promotional Agent Fee and B/D Concessions and related services as agent for
itself and CLAFS. It is understood that in entering into this Agreement,
Seligman Financial is relying upon representations by CLNY that it, CLNY, will
provide and maintain or cause to be provided and maintained, certain
administrative and other services necessary for the operation of the Separate
Account and for the benefit of the Contract Owners and Seligman Financial.
4. Issuance of Contracts. CLNY and CLAFS hereby undertake to use their
best efforts, subject to the standards set forth in the Registration Statement,
(i) to maintain a continuous offering of the Contracts and (ii) to ensure that
applications to purchase units of interest under the Contracts shall be
acceptable to CLNY and that the Contracts shall be issued pursuant to such
applications and (iii) to ensure that all purchase payments be processed at the
accumulation unit value determined in the manner as described in the
Registration Statement. It is understood that a Contract shall not be issued
unless and until the purchase payments and application received relating to
such Contract are sufficient to satisfy CLNY's eligibility requirements as set
forth in the Contracts and the requirements of New York insurance law.
Seligman Financial agrees that all applications for the Contracts shall be made
on the application forms supplied by CLNY. Seligman Financial agrees to
instruct Selling Firms to (i) review the applications for completeness and
correctness as to form, (ii) review all applications for suitability, and (iii)
to promptly forward to CLNY all applications found to be complete together with
any purchase payments received with the applications received. Any additional
purchase payments, to the extent permitted by the Contract shall also be
remitted directly to CLNY.
5. Chargebacks. (i) In the event a Contract is returned to CLNY pursuant
to a Free Look provision, the full Promotional Agent Fee paid thereon shall be
charged back to Seligman Financial in accordance with Section 2 above. (ii)
Should any premium or purchase payment on any Contract issued by CLNY be
refunded for any reason, Seligman Financial shall repay or return Promotional
Agent Fees received by it with respect to such premium or purchase payment.
(iii) For full or partial withdrawals from the Contract: 100% of all B/D
Concessions paid to Selling Firms on amount(s) withdrawn within 6 months of
said amount(s) being paid to CLNY and 50% of all B/D concessions paid to
Selling Firms on amount(s) withdrawn from 7-12 months of such amount(s) being
2
<PAGE>
paid to CLNY shall be returned or repaid. For any premium or purchase payment
that has been in the contract for more than 12 months, there shall be no charge
back on either Promotional Agent Fee or B/D Concession. To the extent
permitted by law, the amount so charged back may, at the option of CLNY, be set
off against Promotional Agent Fees otherwise due to Seligman Financial . In
addition, such other compensation will be payable as are from time to time
agreed by the parties to the this Agreement and will be added to Schedule I of
the Selling Agreement in accordance therewith.
6. Plan Name. CLNY, CLAFS and Seligman Financial agree that the
Contracts will be sold under the name "Trillium" (Trillium) and that
communications to prospective and existing Contract Owners with respect to the
sale and servicing of the Contracts will contain prominent reference to the
aforementioned name. Property rights to the Name are owned by Canada Life
Insurance Company of America ("CLICA") an affiliated Company, which has entered
into a license agreement with Seligman Financial to permit the Name's use.
7. Confirmations and Prospectus Delivery.
A. CLNY and CLAFS agree that CLAFS, at its own expense and
through its agent CLNY, unless otherwise agreed in writing by Seligman
Financial, shall issue and deliver or cause to be issued and delivered,
confirmations of transactions effected with respect to the account of any
Contract Owner for each transaction for which a confirmation is legally
required in accordance with the provisions of the 1934 Act and Rule 10b-10
thereunder. CLNY and CLAFS further agree that CLAFS, through its agent CLNY,
shall cause copies of all such confirmations to be forwarded to such Selling
Firms as agreed to, in writing, by Seligman Financial and CLNY.
B. CLNY agrees that it will, in accordance with the provisions of
the 1933 Act and the rules thereunder, deliver or cause to be delivered to a
Contract Owner who has made an initial purchase payment, a copy of the then
current prospectus of the Separate Account and the then current prospectus for
the Fund. Such prospectuses shall be delivered prior to or at the time the
initial premium or purchase payment is made, or with the confirmation for such
initial premium purchase payment, delivered in accordance with Section 7(A).
8. Expenses. Seligman Financial shall be responsible for all costs
associated with the marketing and distribution of the Contracts including: (i)
the expenses of printing and distributing prospectuses, statements of
additional information and financial reports with respect to the Separate
Account and the Fund to prospective Contract Owners and of prospectuses to
persons described in Section 7(B) above; (ii) the expenses of preparing,
printing and distributing all other literature in connection with the
solicitation of applications to purchase the contracts including expenses of
filing such literature with the National Association of Securities Dealers,
Inc. provided that Seligman Financial may be reimbursed or otherwise paid for
any such materials by Selling Firms, and further provided that CLAFS and CLNY
will cooperate with Seligman Financial in the development of such materials as
reasonably requested by Seligman Financial; and (iii) expenses of advertising
in connection with such solicitation effort.
CLNY and CLAFS each accept responsibility for, and will bear the cost of,
ensuring that Contract Owners receive on an ongoing basis all reports, notices
and other materials required by applicable provisions of the Federal or State
securities laws, rules of the NASD or any state securities or state insurance
department, including without limitation, annual and semi-annual reports and
prospectuses and statements of additional information for the Fund and Separate
Account. The expenses relating to appointment of agents or producers of
Selling Firms are as set forth in Section III. A. of the Selling Agreement,
attached hereto as Exhibit B.
In addition to any expense hereinabove expressly mentioned, CLNY and CLAFS each
agree to pay all costs associated with the operation of the Separate Account,
including without limitations: all fees and expenses incurred in connection
with the registration of the Separate Account and all units of interest under
the Contracts issued by CLNY under the securities laws of the United States;
all fees and related expenses which may be incurred in connection with the
qualification and registration of the Separate Account and the units of
interest under the Contract for sale in New York; all expense relating to the
filing of all sales literature approved by
3
<PAGE>
Seligman Financial with New York regulatory authorities; and any other costs
incurred by CLNY or CLAFS or their receptive employees unless otherwise agreed
upon by the parties in writing and except to the extent such costs are paid by
charges made against the Separate Account assets as set forth in the
Registration Statement.
9. Representations and Warranties of CLNY and CLAFS. CLNY and CLAFS each
hereby represent and warrant that:
A. all actions, including, without limitation, those necessary
under their articles of incorporation and by-laws and applicable federal and
state law, to authorize and establish the Separate Account have been taken;
B. each has taken all actions necessary to authorize the
execution, delivery and performance of this Agreement and all transactions
contemplated hereunder;
C. a Registration Statement relating to the Separate Account and
the Contracts has been or will be filed with the SEC under the 1933 Act and the
1940 Act and one or more amendments may be filed before the Registration
Statement becomes effective;
D. Seligman Financial has been provided with a copy of the
Registration Statement and amendments thereto in the form in which it has been
filed with the Securities and Exchange Commission and is hereby authorized to
use such Registration Statement in the form in which it becomes effective and
the information contained therein (as post- effectively amended and
supplemented from time to time as provided herein) in connection with its
activities as Promotional Agent hereunder and shall be provided with such other
information relating to the Contracts or the Separate Account as it may
reasonably request;
E. such Registration Statement when it becomes effective will
conform in all material respects with he applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations thereunder, and will not
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
F each of them will use their best efforts to ensure that so
long as the Separate Account and the units of interest under the Contracts are
the subject of a public offering the Prospectus will continue to conform in all
material respects with the requirements of the 1933 Act and the 1940 Act and
the rules and regulations thereunder and that at no time will the prospectus
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
G. recognizing that it is the intention of the parties hereto
that CLNY engage in a continuous public offering of units of interest under the
Contracts and interests thereunder in the Separate Account, every effort will
be made of prepare and file on a timely basis with the SEC such post-effective
amendments or supplements as may be necessary to maintain a continuous public
offering of units of interest under the Contracts. Seligman Financial shall be
promptly advised of any proposed amendment or supplement to the Registration
Statement and shall be provided with a copy of such proposed amendment or
supplement sufficiently in advance of the filing of such amendment or
supplement with the SEC to permit its review unless legal or regulatory
requirements would make such review impracticable;
H. Seligman Financial shall be notified as to the date upon which
the Registration Statement as it may be amended becomes effective and shall be
provided with a copy of such Registration Statement in the form in which it
shall become effective. All information reasonably requested by Seligman
Financial in order to provide prospective Contract Owners with a prospectus as
contained in the initially effective Registration Statement or a subsequently
amended or supplemented Prospectus shall be promptly furnished by CLNY and
CLAFS;
I. Seligman Financial shall be promptly notified of the
institution by the SEC of any stop order proceedings in respect of
Registration Statement and CLNY and CLAFS will use their best efforts to
prevent
4
<PAGE>
the issuance of any such stop order and to obtain as soon as possible its
lifting if issued;
J. each shall use its best efforts to file and secure approval
for sale of the Contracts in the State of New York, and CLNY further agrees to
maintain such approval. It is understood that each shall make every reasonable
effort to make the Contracts available in the State of New York, as soon as
practicable;
K. all sales material prepared by Seligman Financial and reviewed
and approved by CLNY and CLAFS, will be filed by CLNY with the New York
regulatory authorities as required and CLNY will use its best efforts to effect
prompt review of such material in New York and to provide Seligman Financial
with such assistance as Seligman Financial may reasonably require in order to
develop sales literature in compliance with the laws and regulations of New
York;
L. upon reasonable request, Seligman Financial shall be informed
as to the status of all such sales literature filings and shall be promptly
notified of all approvals or disapproval's of sales literature filings in New
York;
M. Seligman Financial will receive full cooperation in its
efforts to assist the registered representatives of Selling Firms in meeting
the requirements for appointment as CLNY agents for the sale of the Contracts
under New York insurance laws and, upon reasonable request, Seligman Financial
shall be informed as to the status of applications for such appointment;
N. CLNY will use its best efforts to process all completed
applications for such appointment on a timely basis provided that it is
understood that CLNY may decline to appoint a particular registered
representative; and
O. Seligman Financial may be notified in the event CLNY declines
to appoint a particular registered representative and the reason for such
action.
10. Representations and Warranties of Seligman Financial. Seligman
Financial hereby represents and warrants that:
A. it has taken all actions including, without limitation, those
necessary under its articles of incorporation, by-laws and applicable state
corporate law, necessary to authorize the execution, delivery and performance
of this Agreement and all transactions contemplated hereunder;
B. it is and shall remain duly registered as a broker-dealer
under the 1934 Act, is a member in good standing of the NASD, and is duly
registered under applicable state securities laws;
C. Seligman Financial shall only solicit and shall instruct
Selling Firms only to solicit purchases of the Contracts in the State of New
York when the Contracts are approved for sale under applicable securities and
insurance laws;
D. it shall enter into Selling Agreements, substantially in the
Form of Exhibit B hereto, only with such Selling Firms as are duly registered
as broker dealers under the 1934 Act and are members in good standing of the
NASD properly qualified to undertake their responsibilities under the Selling
Agreements, and who represent that they are duly in compliance with applicable
state securities and insurance laws, and shall direct such Selling Firms to
sell only through those associated persons (as that term is defined in Section
3(a)(18) of the 1934 Act) who are duly and appropriately licensed, registered
and otherwise qualified to sell the Contracts under the 1934 Act, applicable
rules of the NASD, applicable state and insurance law and are appointed by CLNY
as insurance agents for the sale on the Contracts.
5
<PAGE>
In connection with broker-dealers to distribute the Contracts, Seligman
Financial will use reasonable efforts to ascertain that each broker-dealer
wishing to execute a Selling Agreement is a member firm of the NASD duly
qualified with all federal, state and other regulatory bodies, and otherwise is
a suitable entity to represent CLNY and CLAFS. CLNY and CLAFS may refuse to
enter into a Selling Agreement with a broker-dealer selected by Seligman
Financial if such Selling Firm is deemed by CLNY or CLAFS to be unsuitable for
any reason. Neither CLNY nor CLAFS will incur any obligation to compensate, or
reimburse the expenses of Seligman Financial as a result of any such refusal.
E. Prior to any use with members of the public, Seligman
Financial will provide CLNY and CLAFS copies of all sales literature developed
by Seligman Financial for their review and approval. Such sales literature
shall be reviewed in light of applicable federal securities laws, NASD
requirements and New York insurance laws. Seligman Financial shall file such
sales literature with the NASD in accordance with the rules and regulations of
the NASD. CLNY, CLAFS and Seligman Financial will approve the use of sales
material in New York only if CLNY notifies Seligman Financial that such
material has been submitted by CLNY, as required by applicable law, reviewed
and approved by New York's regulatory authorities;
F. no statement or representation concerning the Contracts shall
be made by Seligman Financial or any associated person thereof in connection
with the Contracts other than those contained in the then current Registration
Statement or in any other sales material released or approved by CLNY or CLAFS
as information supplemental to such Registration Statement; and
G. it shall promptly furnish to CLNY and CLAFS or their agent,
any reports and information which the other party may reasonably request for
the purpose of meeting their reporting and recordkeeping requirements under the
insurance laws of New York, and under the federal and state securities laws
and rules of the NASD.
11. Indemnification.
A. CLNY and CLAFS each agree to indemnify and hold harmless
Seligman Financial, any Selling Firm and each person who controls Seligman
Financial or any such Selling Firm and their agents, subsidiaries and employees
against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, any expenses reasonably incurred in
investigating or defending against any litigation commenced or threatened, or
any claim) arising out of or based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in (a) the Separate Account
Registration Statement; or (b) any contract, application or other document
filed in any State in order to qualify the Separate Account ins such State or
to qualify the Contracts to be issued thereby for sale in such state or to
maintain such qualifications; or (ii) the omission or alleged omission in such
Registration Statement, written material, application or other such document to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were mad; or (iii) the negligent, improper fraudulent or unauthorized acts
or omissions of CLNY or CLAFS or (iv) any breach of, or failure to comply with,
the representations and warranties made by CLNY and/or CLAFS as set forth
herein. Notwithstanding the foregoing, CLNY and CLAFS shall not indemnify
Seligman Financial, an Selling Firm and each person who controls Seligman
Financial or any such Selling Firm and their agents, subsidiaries and employees
under paragraphs 11(A)(i) and 11(A)(ii) hereof to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in 11(A)(i) such Registration Statement or other sales material in
conformity with written information furnished to them by Seligman Financial or
any of its affiliates specifically for use therein; or 11(A)(ii) in the
prospectus and statement of additional information for the Fund, except for
liability arising out or written information furnished by CLNY or CLAFS
specifically for use therein. This indemnity agreement will be in addition to
any liability which CLNY or CLAFS may otherwise have.
B. Seligman Financial agrees to indemnify and hold harmless CLNY,
CLAFS, each person who controls CLNY or CLAFS and their agents, subsidiaries
and employees against any and all losses, claims, damages, liabilities, or
expenses (including, without limitation any expenses reasonably incurred in
investigating
6
<PAGE>
or defending against any litigation commenced or threatened or any claim)
arising out of or based upon: (i) any untrue or alleged untrue statement or
representation made by Seligman Financial in connection with its obligations as
Promotional Agent hereunder or by associated persons of Seligman Financial
(except to the extent that such statements may be made in reliance on any
material relating to the Separate Account or the contracts supplied by CLNY or
CLAFS), or (ii) the omission or alleged omission by Seligman Financial in
connection with its obligations as Promotional Agent hereunder or by associated
persons of Seligman Financial to state any material fact necessary to make
statements made not misleading in light of the circumstances in which they were
made (except to the extent that, in omitting to make such statement, reliance
was placed upon material relating to the Separate Account or the Contracts
supplied by CLNY or CLAFS), or (iii) use of sales literature by Seligman
Financial and associated persons thereof which has not been approved for use by
CLNY and CLAFS and has not been, if necessary, submitted by Seligman Financial
on behalf of CLNY and CLAFS to the NASD; or (iv) the negligent, improper,
fraudulent or unauthorized acts or omissions of Seligman Financial; or (v) any
breach of, or failure to comply with, the representations and warranties made
by Seligman Financial as set forth herein; or (vi) any untrue statement or
alleged untrue statement of a material fact contained in the prospectus and/or
statement of additional information for the Fund; or (vii) the omission or
alleged omission of a material fact contained in the Prospectus and/or
statement of additional information for the Fund.
C. Promptly after receipt by an indemnified party under this
paragraph 11 of notice of the commencement of any action by a third party, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 11, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying part from liability which the indemnifying
party may have to any indemnified party otherwise than under this paragraph 11.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
D. Seligman Financial and CLNY agree to share equally any losses,
including reasonable attorney cost, incurred by CLNY resulting from the breach
by Selling Firms or their associated persons of the Selling Agreements, it
being understood that CLNY and Seligman Financial must promptly notify the
other party upon knowledge of such breach. Notwithstanding the agreement
contained in this subsection D, CLNY may in the course of losses suffered by it
as a result of wire orders accompanied by a telephone facsimile transmission as
described in Section 4 thereof, may deduct the amount of Promotional Agent Fee
due Seligman Financial for sales of the Contracts hereunder. In addition, CLNY
will hold Selling Firm liable for losses under such Contracts when the (i)
allocation instructions provided in the facsimile are different from those
provided in the original application; (ii) purchase payment has been received
and invested, and prior to the Contract being issued it is turned back for
cancellation by the Selling Firm; (iii) Contract is being returned under the
Free Look provision, but more than 30 days from the wire date; and (iv)
application is not received by CLNY within five business days after the wire
date. If CLNY is unable to collect such losses from Selling Firms, then CLNY
and Seligman Financial agree to share equally such losses, including reasonable
attorney costs.
12. Opinion of Counsel; Opinion of Auditors; Opinion of Officers.
A. Prior to the date first above written (the "Closing Date"),
CLNY and CLAFS will provide to Seligman Financial in a form acceptable to it,
an opinion of counsel from David A. Hopkins, Assistant Secretary, to be dated
the Closing Date, to the effect that: (i) CLNY and CLAFS are duly incorporated
and are existing corporations in good standing under their respective state
laws of incorporations; (ii) CLAFS is duly registered as a broker-dealer under
the 1934 Act and is a member in good standing of the NASD; (iii) CLNY and
CLAFS may execute, deliver and perform their respective obligations hereunder
without, as a result, breaching or violating any provision of their
7
<PAGE>
respective corporate charters or by-laws, the provisions of any statute, rule,
regulation or order to which either is subject or to which any subsidiary is
subject or any agreement or instrument to which either is a party or by which
either is bound; (iv) CLNY has taken all actions, including, without
limitation, those necessary under its articles of incorporation and by-laws and
applicable state laws, to authorize and establish the Separate Account; (v)
such counsel has no reason to believe that either the Registration Statement or
any amendment or supplement thereto as of the date of the opinion contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; the descriptions in the Registration Statement of statutes, legal
and governmental proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel does not
know of any legal or governmental proceedings required to be descried in the
Registration Statement which are not described as required or of any contracts
or documents of a character required to be described in the Registration
Statement or to be filed as exhibits to the Registration Statement which are
not described and filed as required, it being understood that such counsel need
express no opinion as to the financial statement or other financial data
contained in the Registration Statement or on information contained in the
Registration Statement based on written information furnished by Seligman
Financial or any of its affiliates specifically for use therein; and (vi) this
Agreement has been duly authorized, executed and delivered by CLNY and CLAFS .
B. On or before the Closing Date, CLNY will provide to Seligman
Financial a copy of the most recent Report of Independent Auditor prepared by
Ernst & Young to the effect that: (i) Ernst & Young are independent certified
public accountants with respect to CLNY as defined in the Code of Professional
Ethics of the American Institute of Certified Public Accountants and (ii) Ernst
& Young have issued their opinion on the financial statements of CLNY, copies
of which have been furnished to Seligman Financial.
C. On the Closing Date, Seligman Financial will have received a
certificate, dated as of the Closing Date, of the President or any Vice
President, and Secretary or Assistant Secretary of CLNY in which such officers,
to the best of their knowledge after reasonable investigation, shall state that
the representations and warranties of CLNY in this Agreement are true and
current, that CLNY has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
the execution of this Agreement, that subsequent to the date(s) of the most
recent financial statements in the Prospectus, there has been no material
adverse change in the financial position or results or operation of CLNY and
its subsidiaries except as set for in or contemplated by the Prospectus or as
described in such certificate.
D. Prior to the Closing Date, Seligman Financial will provide to
CLNY and CLAFS in a form acceptable to them, an opinion of Nina O. Shenker,
Senior Vice President and General Counsel of J. & W. Seligman and Company,
Inc., to be dated as of the Closing Date, to the effect that: (i) Seligman
Financial is duly incorporated and is an existing corporation in good standing
under the laws of the state in which it is incorporated; (ii) Seligman
Financial is duly registered as a broker-dealer under the 1934 Act and is a
member in good standing of the NASD; (iii) Seligman Financial may execute,
deliver and perform its obligations hereunder without, as a result, breaching
or violating any provision of its corporate charter or by-laws, any provision
of the federal securities laws, rules and regulations, or the NASD Rules of
Fair Practice, applicable to Seligman Financial, or any judicial or
administrative orders in which it or any subsidiary is named or any material
Agreement or instrument to which it is a party or by which it is bound; and
(iv) this Agreement has been duly authorized, executed and delivered by
Seligman Financial.
E. On the Closing Date, Seligman Financial shall provide to CLNY
and CLAFS in a form acceptable to them a certificate, dated as of the Closing
Date, of the President or any Vice President, and a principal financial or
accounting officer of Seligman Financial in which such officers, to the best of
their knowledge after reasonable investigation, shall state that the
representations and warranties of Seligman Financial in this Agreement are true
and current, that Seligman Financial has complied with all Agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to execution of this Agreement.
8
<PAGE>
F. CLNY agrees that, so long as this Agreement is in effect, it
will furnish to Seligman Financial, as soon as practicable after the end of
each fiscal year, a copy of its annual report to policyholders for such year,
and CLNY will furnish to Seligman Financial (a) as soon as available, a copy of
each report of CLNY to be mailed to policyholders, and (b) from time to time,
such other financial information concerning CLNY as Seligman Financial may
reasonably request.
13. Term of Agreement. This Agreement may not be assigned by any of the
parties hereto. This Agreement shall continue in full force and effect for a
period of 5 years from the effective date of this Agreement, unless otherwise
mutually agreed upon by the parties to terminate sooner or if terminated for
such reasons as set forth in paragraph 14 below. After such 5 year period, it
will be deemed extended thereafter from year to year subject to termination at
will by any party hereto upon 60 days prior written notice to the other, it
being understood and agreed that the right to terminate this Agreement upon 60
days notice may be exercised for any reason or for no reason.
14. Termination. This Agreement shall terminate:
A. at the option of CLNY or CLAFS upon the institution of formal
proceedings against Seligman Financial or an affiliate by the NASD, the SEC, or
any state securities or insurance department or any other regulatory body
provided that CLNY or CLAFS determines in good faith in either's sole judgment,
that such institution will have a material adverse impact on Seligman Financial
or the affiliate's ability to perform its obligations under this Agreement; or
B. at the option of Seligman upon the institution of formal
proceedings against The Canada Life Assurance Company ("CLA"), CLNY or CLAFS
brought by any Canadian legal or regulatory authority, the NASD, SEC, or any
formal proceedings involving a material matter brought by any state securities
or state insurance department or any other regulatory body regarding CLA, CLNY
or CLAFS provided that Seligman Financial determines in good faith in its sole
judgment that such institution will have a material adverse impact on CLNY's
Financial or CLAFS' ability to perform its obligations under this Agreement or
Seligman Financial's ability to distribute the Contracts; or
C. at the option of Seligman Financial or CLNY upon any material
adverse change in the financial condition of one or the other; or
D. at the option of Seligman Financial, CLNY or CLAFS if the
Buy-Sell Agreement among the Fund, the Separate Account, CLNY and J. & W.
Seligman & Co., Inc. ("JWSI"), the Investment Adviser is terminated.
E. at the option of Seligman Financial, CLNY or CLAFS, mutually
and equally, if senior management of any of the parties to this Agreement so
determines. In that event, termination of the Agreement will occur 30 days
after written notice to that effect has been received by the non-terminating
party(ies).
15. Provisions Surviving Termination. Notwithstanding termination of this
Agreement, and regardless of the cause or reason for such termination, the
provisions of Paragraph 11 (Indemnification) shall survive and be binding upon
the parties for a period of 10 years following such termination.
16. Notices. Any notice required under this Agreement shall be deemed to
have been given to CLNY and CLAFS if mailed to either, sent to the attention of
the Assistant Secretary, Canada Life Insurance Company of New York, 500
Mamaroneck Avenue, Harrison, New York 10583, and notice is deemed given to
Seligman Financial if mailed to Seligman Financial Services, Inc. with a copy
to Senior Vice President and General Counsel, JWSI, 130 Liberty Street, New
York, NY 10006, or at such other address furnished to the other party pursuant
hereto.
17. Nature and Survival of Representations and Warranties. All statements
contained in this Agreement or in connection with the transactions contemplated
hereby shall be deemed representations and warranties by the
9
<PAGE>
parties hereunder. All representations and warranties of the parties made in
this Agreement or as provided herein shall survive, regardless of any
investigation made by or on behalf of the parties hereto, until the applicable
statutes of limitations have run, and except if a claim arises under a
representation or warranty and a notice of claim is given prior to the
expiration of the survival period, then such representation or warranty shall
not terminate with respect to such claim until indemnification thereof shall
have been made in accordance with the provisions of this Agreement.
18. Exclusivity of Agreement.
A. CLNY and CLAFS hereby agree not to develop, market or
otherwise engage in the sale of other individual or group variable annuities
distributed through selling agreements with NYSE member firms or other
broker-dealers as agreed to by the parties from time to time, for five years
from the effective date of this Agreement, without prior written consent of
Seligman Financial subject to the following: (i) This provision is not
applicable to and will in no way limit the further development and distribution
of CLNY's existing individual (VariFund) and group (The Canada Life 401(k))
variable annuity products or amendments thereto; (ii) The exclusive nature of
this Agreement will be reassessed by the parties and the exclusive nature of
this Agreement may be terminated by either CLNY or Seligman Financial, upon 180
days notice, if this venture is not successful in achieving the total assets
under management through individual and group annuity sales by the end of the
year specified below.
Year End
1994 $ 50 million
1995 $100 million
1996 $150 million
1997 $250 million
CLNY and Seligman Financial believe that these levels of production are
achievable and will work together in a spirit of cooperation to achieve the
success of this venture.
B. Seligman Financial agrees during the term of this Agreement
not to enter into any distribution agreement with any other insurance company
unaffiliated with CLNY for the development, distribution, marketing or sale of
any other individual or group variable annuity or similar annuity, so long as
Section 18A of this Agreement is in effect, without the express prior written
consent of CLNY or CLAFS.
C. This Section 18 A and B shall be of no effect if this
Agreement is terminated pursuant to Section 14.
19. Miscellaneous
A. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations, and CLNY and Seligman Financial shall each
comply with all applicable Federal and State laws, rules and regulations;
B. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original; and
C. If any provisions of this Agreement shall be held or made
invalid by court decision, statute, rule or otherwise the remainder of this
Agreement shall not be affected thereby.
10
<PAGE>
20. Headings: The descriptive headings of this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
21. Waivers. The waiver by any party of a breach by any other party of
any of the provisions of this Agreement shall not operate or be deemed as a
waiver of any other provision of this Agreement or of any subsequent breach
thereof by any party.
22. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and may not be modified except in a written
instrument executed by all parties hereto.
IN WITNESS WHEREOF, Seligman Financial, CLNY and CLAFS have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
CANADA LIFE INSURANCE COMPANY OF NEW YORK
BY __________________________________________________
BY __________________________________________________
CANADA LIFE OF AMERICA FINANCIAL SERVICES, INC.
BY __________________________________________________
BY __________________________________________________
SELIGMAN FINANCIAL SERVICES, INC.
BY __________________________________________________
11
<PAGE>
EXHIBIT C
STATEMENT OF COMPENSATION
As of May, 1993
Subject to the terms and conditions of this Agreement, CLAFS will pay
to Seligman Financial compensation based upon the premiums and
purchase payments received from Selling Firms having a Selling
Agreement with CLAFS as a direct result of Seligman Financial's
efforts. Promotional Agent Fees will be paid to Seligman Financial in
accordance with applicable law, in the percentages shown below: Form
30099
<TABLE>
<CAPTION>
FOR PRE-AUTHORIZED CHECK CASES
------------------------------
Promotional Agent Fee
B/D Concession Paid Paid to Seligman Financial
To Selling Firms as as Master General Agent
Agent General Agent
Policy Years Commission Override Override
- - ------------ ---------- -------- --------
<S> <C> <C> <C>
1-10 3.5% 2.5% 1%
11-15 3.5% 2.5% 0.5%
16+ 1.5% -0- 0.5%
</TABLE>
<TABLE>
<CAPTION>
For Other than Pre-Authorized Check Cases
-----------------------------------------
B/D Concession Paid Paid to Seligman Financial
To Selling Firms as as Master General Agent
Agent General Agent
Policy Years Commission Expense Allowance Expense Allowance
- - ------------ ---------- ----------------- -----------------
<S> <C> <C> <C>
1-10 3.5% 2.5% 1%
11-15 3.5% 2.5% 0.5%
16+ 1.5% -0- 0.5%
</TABLE>
<TABLE>
To B/D To Seligman Financial
------ ---------------------
<S> <C> <C> <C>
Service Fee at Annuit-
ization if "internal"
annuity rates are used. 3.5% if payout 3.0% .50%
Service Fee is only paid = or less than 10 years
on annuitized proceeds that or a life annuity
are past any applicable and amount $0-1
surrender charge/periods. million
1.5% if amount over 1.25% .25%
$1 million
2.35% if payout 2.0% .35%
(less than) 10 yrs and
not a life annuity
and amount $0-1
million
1.5% if amount over 1.25% .25%
$1 million
</TABLE>
Promotional Agent Fees will be paid to Seligman Financial based on
premiums or purchase payments paid in cash or check and accepted by
CLNY on contracts specified above, in accordance with the provisions
of this Agreement. The Gross payout above represents total payout
from CLNY, including Selling Concessions paid to Selling Firms.
<PAGE>
Chargebacks: (i) In the event a contract is returned to CLNY pursuant to a
"Free Look" provision, the full Promotional Agent Fee paid thereon shall be
charged back to Seligman Financial. (ii) Should any premium or purchase
payment on any contract issued by CLNY be refunded for any reason, Seligman
Financial shall repay or return Promotional Agent Fees received by it with
respect to such premium or purchase payment. (iii) If a Contract was not
issued as a result of failure by Selling Firm to submit to CLNY an application
sufficient to satisfy state insurance laws or CLNY eligibility requirements
then amounts paid to Seligman Financial shall be returned or repaid. (iv) If a
Contract was tendered to CLNY for redemption within ten business days of the
date of activity then amounts paid to Seligman Financial shall be returned or
repaid. (v) For full or partial withdrawals from the contract: 100% of all
Promotional Agent Fees and B/D Concessions paid to Selling Firms on amount(s)
withdrawn within 6 months of such amount(s) being paid to CLNY and 50% of all
Promotional Agent Fees and B/D Concessions paid to Selling Firm on amount(s)
withdrawn from 7 - 12 months of such amount(s) being paid to CLNY shall be
returned or repaid. For any premium or purchase payment that has been in the
contract for more than 12 months, there shall be no charge back on either
Promotional Agent Fee or B/D Concession. To the extent permitted by law, the
amount so charged back may, at the option of CLNY, be set off against
Promotional Agent Fees otherwise due to Seligman Financial. In addition, such
other compensation will be payable as are from time to time agreed by the
parties to the foregoing Agreement and which is in accordance with applicable
law, and will be added to this Schedule.
EXPENSE ALLOWANCE
Expense Allowances: The company will pay expense allowances to the general
agent for business effected by or through the general agency based on the
formulas in the Schedule of Expense Allowance Payments.
Conditions and Limitations: The payment of all expense allowances to the
general agent is subject to the following conditions and limitations:
1. Lapses and surrenders in the first policy year, and any refunds
of first year premium made by the company, will result in proportionate
chargebacks of any expense allowances paid to the general agent for
said premiums.
2. No expense allowance will be used by the general agent of the
company to effect compensation in excess of the limits of Section 4228
of the Insurance Law of New York.
3. No expense allowance will be due or payable after the
termination of this contract except for first year expense allowances
for policies written prior to such termination.
4. Notwithstanding any of the other terms and conditions governing
payment of expense allowances in this contract, and to conform with the
requirements of Section 4228 of the Insurance Law and the applicable
regulations resulting therefrom and other governing sections of the
law, the following will apply:
a. The maximum expense allowance payments to a general agent
shall be such that when added to first year commissions,
exclusive of overriding commissions not exceeding
5% of first year premiums, the total shall not exceed 91% of
first year premiums for ordinary life and annuity policies and
contracts other than single premium policies and contracts.
b. The maximum expense allowance shall not exceed 100% of the
commissions payable on single premium policies and
contracts, or the overall 7% of premium limit.
In monitoring the maximum allowances rules in this paragraph 4, the
company will apply those in a and b above on a "per-policy" basis.
CANADA LIFE INSURANCE COMPANY OF AMERICA
A wholly-owned subsidiary of
The Canada Life Assurance Company
Annuity Service Office
6201 Powers Ferry Road
Atlanta, Georgia 30339
(800) 333-2542
SELLING AGREEMENT
AGREEMENT by and between Canada Life Insurance Company of America
(CLICA), a Michigan Corporation, a wholly- owned subsidiary of The Canada Life
Assurance Company of Canada; Canada Life of America Financial Services, Inc.
(CLAFS), a registered broker-dealer with the Securities and Exchange Commission
under the Securities Act of 1934 (the 1934 Act), and a member of the National
Association of Securities Dealers, Inc. (NASD) and Seligman Financial Services
Inc. (Seligman Financial) also a registered broker-dealer and member of the
NASD;
________________________________________________________________________________
________________________________________________________________________________
(Selling Broker-Dealer), also a registered broker-dealer and member of the
NASD; and
________________________________________________________________________________
________________________________________________________________________________
(General Agent).
I. INTRODUCTION
WHEREAS, CLICA has issued certain annuity contracts, and these
Contracts are registered under the Securities Act of 1933 (the 1933 Act) and
the Investment Company Act of 1940 (the "1940 Act") (Contracts or Contracts
collectively); and
WHEREAS, CLICA has authorized CLAFS as principal underwriter and
Seligman Financial as promotional agent to enter into agreements, subject to
the consent of CLICA, with Selling Broker-Dealers and General Agents for the
distribution of the Contracts; and
WHEREAS, CLICA and CLAFS have entered into a Promotional Agent
Distribution Agreement with Seligman Financial that Seligman Financial shall
secure duly qualified Selling Broker-Dealers and General Agents to contract
with CLICA and CLAFS for the distribution of the Contracts, refer these Selling
Broker-Dealers and General Agents to contract with CLICA and CLAFS for the
distribution of the Contracts, refer these Selling Broker-Dealers and General
Agents to CLICA for information in obtaining licenses, registrations and
appointments to enable the registered representatives and producers of these
Selling Broker-Dealers and General Agents to sell the Contracts, and provide
educational meetings to familiarize these Selling Broker-Dealers and General
Agents and their registered representatives and producers with the provisions
and features of the Contracts; and
WHEREAS, Selling Broker-Dealer and General Agent wish to participate
in the distribution of the Contracts;
<PAGE>
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
II. APPOINTMENT
Subject to the terms and conditions of this Agreement, CLICA and CLAFS
hereby appoint ____________________ as Selling Broker-Dealer and
____________________ as General Agent for the solicitation of applications for
the purchase of the Contracts, and Selling Broker-Dealer and General Agent
accept such appointment.
III. AUTHORITY AND DUTIES OF GENERAL AGENT
A. LICENSING AND APPOINTMENT OF PRODUCERS
General Agent is authorized to appoint producers to solicit sales of
the Contracts. General Agent warrants that all producers appointed by General
Agent pursuant to this Agreement shall not solicit nor aid, directly or
indirectly, in the solicitation of any application for any Contract until that
producer is fully licensed under the applicable insurance laws and, in
connection with securities regulated Contracts, is a fully registered
representative of Selling Broker-Dealer. General Agent shall prepare and
transmit the appropriate licensing and appointment forms to CLICA. General
Agent shall pay all fees to state insurance regulatory authorities in
connection with the initial CLICA appointment of producers who already possess
necessary insurance licenses shall be paid by CLICA. Any renewal license fees
due after the initial appointment shall be paid by CLICA, if there has been any
"production" during the period between the initial appointment and the current
renewal, or between the last previous renewal and current renewal; otherwise,
renewal fees shall be paid by General Agent. "Production" is defined as either
a new issued Contract or an additional purchase payment on a previously issued
Contract. General Agent shall periodically provide CLICA with a list of all
producers appointed by General Agent and the jurisdictions where such producers
are licensed to solicit sales of the contracts. CLICA shall periodically
provide General Agent with a list which shows: 1) the jurisdictions where
CLICA is authorized to do business; and 2) any limitations on the availability
of the Contracts in any of such jurisdictions. General Agent agrees to fulfill
all requirements set forth in the General Letter of Recommendation attached as
Exhibit A in conjunction with the submission of licensing and appointment
papers for all applicants as producers submitted by General Agent.
B. REJECTION OF PRODUCER
CLAFS, or CLICA may, by written notice to General Agent, refuse to
permit any producer the right to solicit applications for the sale of any of
the Contracts, require General Agent to cause any producer to cease such
solicitations or sales and cancel the appointment of any producer.
C. SUPERVISION OF PRODUCERS
General Agent shall supervise any producers appointed pursuant to this
Agreement to solicit sales of the Contracts and bear responsibility for all
acts and omissions of each producer. General Agent shall comply with and
exercise all responsibilities required by applicable federal and state law and
regulations. General Agent shall not be responsible for those supervisory
responsibilities belonging to Selling Broker-Dealer under applicable securities
laws which include, but are not limited to, supervising and training producers
in their capacity as registered representatives. Nothing contained in this
Agreement or otherwise shall be deemed to make any producer appointed by
General Agent an employee or agent of CLICA, CLAFS or Seligman Financial. If
the act or omission of a producer or any other employee of General Agent is the
proximate cause of any claim, damage or liability (including reasonable
attorneys' fees) to CLICA, CLAFS or Seligman Financial, General Agent shall be
responsible and liable therefor.
2
<PAGE>
Before a producer is permitted to sell the Contracts, General Agent,
Selling Broker-Dealer and producer shall have entered into a written agreement
pursuant to which: 1) producer is appointed a producer of General Agent and a
registered representative of Selling Broker-Dealer; 2) producer agrees that his
or her selling activities relating to securities regulated contracts shall be
under the supervision and control of Selling Broker-Dealer and his or her
selling activities relating to insurance regulated Contracts shall be under the
supervision and control of General Agent; and 3) that producer's right to
continue to sell such Contracts is subject to his or her continued compliance
with such agreement and any procedures, rules or regulations implemented by
Selling Broker-Dealer or General Agent.
IV. AUTHORITY AND DUTIES OF SELLING BROKER-DEALER
A. SUPERVISION OF REGISTERED REPRESENTATIVES
Selling Broker-Dealer agrees that it has full responsibility for the
training and supervision of all persons, including producers of General Agent,
associated with Selling Broker-Dealer who are engaged directly or indirectly in
the offer or sale of securities regulated Contracts. All such persons shall be
subject to the control of Selling Broker-Dealer with respect to their
securities regulated activities. Broker-Dealer shall: 1) train and supervise
producers, in their capacity as registered representatives, in the sale of
securities regulated Contracts; 2) use its best efforts to cause such producers
to qualify under applicable federal and state laws to engage in the sale of
securities regulated Contracts when required; 3) provide CLICA and CLAFS, to
their satisfaction, with evidence of producers' qualifications to sell
securities regulated Contracts; and 4) notify CLICA if any of such producers
ceases to be a registered representative of Selling Broker-Dealer. Selling
Broker-Dealer agrees that a producer must be a registered representative of
Selling Broker-Dealer before engaging in the solicitation of any securities
regulated Contracts and have entered into the written agreement more fully
described in Section III, Paragraph C. CLICA and CLAFS shall not have any
responsibility for the supervision of any registered representative or any
other employee or affiliate of Selling Broker-Dealer. If the act or omission
of a registered representative or any other employee or affiliate of Selling
Broker-Dealer is the proximate cause of any claim, damage or liability
(including reasonable attorneys' fees) to CLICA, CLAFS or Seligman Financial,
Selling Broker-Dealer shall be responsible and liable therefore.
Selling Broker-Dealer shall fully comply with the requirements of the
National Association of Securities Dealers, Inc. and of the Securities Exchange
Act of 1934 and all other applicable federal or state laws. Selling
Broker-Dealer shall establish such rules and procedures as may be necessary to
cause diligent supervision of the securities activities of the producers. Upon
request by CLICA or CLAFS, Broker-Dealer shall furnish such records as may be
necessary to establish diligent supervision.
V. AUTHORITY AND DUTIES OF GENERAL AGENT
AND SELLING BROKER-DEALER
A. CONTRACTS
The securities and insurance regulated Contracts issued by CLICA to which this
Agreement applies are listed in Schedule I which may be amended from time to
time by CLICA. CLICA, in its sole discretion, with prior or concurrent written
notice to Selling Broker-Dealer and General Agent, may suspend distribution of
any Contracts. CLICA also has the right to amend any Contracts at any time.
B. SECURING APPLICATION
Each application for a Contract shall be made on an application form
provided by CLICA, and all payments collected by Selling Broker-Dealer, General
Agent or any registered representative and producer shall be remitted promptly
in full, together with such application form and any other required
documentation, directly to CLICA at the address indicated on such application
or to such other address as may be designated. Selling Broker-Dealer and
General Agent
3
<PAGE>
shall review all such applications for completeness. Check or money order in
payment of such Contracts should be made payable to the order of "Canada Life
Insurance Company of America". All applications are subject to acceptance or
rejection by CLICA in its sole discretion.
C. RECEIPT OF MONEY
All money payable in connection with any of the Contracts, whether as
premium, purchase payment or otherwise and whether paid by or on behalf of any
contract owner or anyone else having an interest in the Contracts, is the
property of CLICA and shall be transmitted immediately in accordance with the
administrative procedures of CLICA without any deduction or offset for any
reason including, but not limited to, any deduction or offset for compensation
claimed by Selling Broker-Dealer or General Agent, unless there has been a
prior arrangement for net wire transmissions between CLICA and Selling
Broker-Dealer or General Agent.
D. NOTICE OF PRODUCER'S NONCOMPLIANCE
Selling Broker-Dealer shall notify CLAFS and General Agent in the
event a producer fails or refuses to submit to the supervision of Selling
Broker-Dealer or General Agent in accordance with this Agreement, the agreement
between Selling Broker-Dealer, General Agent and producer referred to in
Section III, Paragraph C and Section IV, Paragraph A, or otherwise fails to
meet the rules and standards imposed by Selling Broker-Dealer or its registered
representatives or General Agent or its producers. Selling Broker-Dealer or
General Agent shall also immediately notify such producer that he or she is no
longer authorized to sell the Contracts, and both Selling Broker-Dealer and
General Agent shall take whatever additional action may be necessary to
terminate the sales activities of such producer relating to the Contracts.
E. SALES PROMOTION, ADVERTISING AND PROSPECTUSES
No sales promotion materials, circulars, documents or any advertising
relating to any of the Contracts shall be used by Selling Broker-Dealer,
General Agent or any producers unless the specific item has been approved in
writing by CLAFS and CLICA prior to use. Selling Broker-Dealer shall be
provided by Seligman Financial, without any expense to Selling Broker-Dealer,
with prospectuses and other material determined to be necessary for use
relating to securities regulated Contracts. Nothing in these provisions shall
prohibit Selling Broker-Dealer or General Agent from advertising life insurance
and annuities on a generic basis.
VI. COMPENSATION
A. COMMISSIONS AND FEES
Commissions and fees payable to Selling Broker-Dealer or General Agent
in connection with the securities regulated Contracts shall be paid on behalf
of CLAFS by CLICA to Selling Broker-Dealer or General Agent, or as otherwise
directed or required by law. Commissions and fees payable to Selling
Broker-Dealer, General Agent or producer in connection with the insurance
regulated Contracts shall be paid by CLICA to Selling Broker-Dealer or General
Agent, or as otherwise directed or required by law. Selling Broker-Dealer or
General Agent, as applicable, shall pay producer. CLAFS will provide Selling
Broker-Dealer and General Agent with a copy of CLICA's current Schedule I.
Unless otherwise provided in Schedule I, commissions will be paid as a
percentage of premiums or purchase payments (collectively, Payments) received
in cash or other legal tender and accepted by CLICA on applications obtained
by the various producers appointed by General Agent hereunder. Upon
termination of this Agreement, all compensation to the Selling Broker-Dealer
and General Agent hereunder shall cease. However, Selling Broker-Dealer and
General Agent shall be entitled to receive compensation for all new and
additional premium payments which are in process at the time of termination,
and shall continue to be liable for any chargebacks pursuant to the provisions
of said Contracts, Commissions and Fee Schedule, or for any other amounts
advanced by or otherwise due CLAFS or CLICA hereunder.
4
<PAGE>
B. TIME OF PAYMENT
CLICA will pay any commissions due General Agent hereunder no later
than within fifteen (15) days after the end of the calendar month in which
Payments upon which such commission is based are accepted by CLICA. Any
commission payable by CLICA based upon Account Value (defined as The sum of
the Variable Account Value and the Fixed Account Value) will be paid on or
about the date of the policy anniversary.
C. AMENDMENT OF SCHEDULES
CLAFS, CLICA and Seligman Financial may, upon at least ten (10) days'
prior written notice to Selling Broker- Dealer and General Agent, change the
Contracts, Commissions and Fee Schedule by written amendment of such Schedule.
Any such change shall apply to compensation due on applications received by
CLICA after the effective date of such notice.
D. PROHIBITION AGAINST REBATES
CLAFS or CLICA may terminate this Agreement if Selling Broker-Dealer,
General Agent or any producer of General Agent rebates, offers to rebate or
withholds any part of any Payments on the Contracts. If Selling Broker-Dealer,
General Agent or any producer of General Agent shall at any time induce or
endeavor to induce any owner of any Contract issued hereunder to discontinue
payments or to relinquish any such Contract, except under circumstances where
there is reasonable grounds for believing the Contract is not suitable for such
person, any and all compensation due Selling Broker-Dealer or General Agent
hereunder shall cease and terminate.
E. INDEBTEDNESS AND RIGHT OF SET OFF
Nothing contained in this Agreement shall be construed as giving
Selling Broker-Dealer or General Agent the right to issue any indebtedness on
behalf of CLICA, CLAFS or Seligman Financial. Selling Broker-Dealer and
General Agent hereby authorize CLICA as agent of CLAFS to set off liabilities
of Selling Broker-Dealer and General Agent to CLICA, CLAFS or Seligman
Financial against any and all amounts otherwise payable to Selling
Broker-Dealer or General Agent.
VII. GENERAL PROVISIONS
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed to be, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver.
B. LIMITATIONS
No party other than CLICA shall have the authority to: 1) make,
alter, or discharge any Contract issued by CLICA; 2) waive any forfeiture or
extend the time of making any Payments; or 3) enter into any proceeding in a
court of law or before a regulatory agency in the name of or on behalf of
CLICA. No party other than CLAFS and Seligman Financial, respectively, shall
have the authority to: 1) alter the forms or substitute other forms in place
of those prescribed by CLAFS or Seligman Financial; or 2) enter into any
proceeding in a court of law or before a regulatory agency in the name of or on
behalf of CLAFS or Seligman Financial.
5
<PAGE>
C. FIDELITY BOND AND OTHER LIABILITY COVERAGE
Selling Broker-Dealer and General Agent hereby assign any proceeds
received from a fidelity bonding company, error and omissions or other
liability coverage to CLICA, CLAFS or Seligman Financial, to the extent of
their loss due to activities covered by the bond, policy or other liability
coverage. If there is any deficiency amount, whether due to a deductible or
otherwise, Selling Broker-Dealer or General Agent shall promptly pay such
amount on demand. Selling Broker-Dealer and General Agent hereby indemnify and
hold harmless CLICA, CLAFS and Seligman Financial from any such deficiency and
from the costs of collection thereof (including reasonable attorneys' fees).
D. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of
the parties to it and their respective successors and assigns provided that
neither Selling Broker-Dealer nor General Agent may assign this Agreement or
any rights or obligations hereunder without the prior written consent of CLICA
and CLAFS.
E. REGULATIONS
All parties agree to observe and comply with the existing laws and
rules or regulations of applicable local, state, or federal regulatory
authorities and with those which may be enacted or adopted during the term of
this Agreement regulating the business contemplated hereby in any jurisdiction
in which the business described herein is to be transacted. Selling
Broker-Dealer and General Agent shall promptly furnish to CLICA and CLAFS or
their agent, any reports and information which the other party may reasonably
request for the purpose of meeting their reporting and recordkeeping
requirements under the insurance laws of any state, and under federal and state
securities laws and rules of the NASD.
F. INDEMNIFICATION
1) CLAFS agrees to indemnify and hold harmless Selling Broker-Dealer
and General Agent, their officers, directors and employees, against any and all
losses, claims, damages or liabilities to which they may become subject under
the 1933 Act, the 1934 Act, or other federal or state statutory law or
regulations, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
or any omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in the
registration statement for the Contracts or any prospectus included as a part
thereof, as from time to time amended and supplemented. Seligman Financial
agrees to indemnify and hold harmless Selling Broker-Dealer and General Agent,
their officers, directors and employees, against any and all losses, claims,
damages or liabilities to which they may become subject under the 1933 Act,
1934 Act, or other federal or state statutory law or regulations, at common law
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact or any omission or alleged
omission to state a material fact required to be stated or necessary to make
the statements made not misleading in the registration statement for the shares
of Seligman Portfolios Inc., (the "Fund") filed pursuant to the 1933 Act or any
prospectus included as part thereof, as from time to time amended and
supplemented.
2) Selling Broker-Dealer and General Agent agree to indemnify and
hold harmless CLAFS, CLICA and Seligman Financial, their affiliates and their
officers, directors and employees, against any and all losses, claims, damages
or liabilities to which they may become subject under the 1933 Act, the 1934
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon: a) any oral or written
misrepresentation by Selling Broker-Dealer or General Agent or their officers,
directors, employees or agents unless such misrepresentation is contained in
the registration statement for the Contracts or Fund Shares, any prospectus
included as a part thereof, as from time to time amended and supplemented, or
any advertisement or sales literature approved in writing by CLICA and CLAFS
pursuant to Section V, Paragraph E,
6
<PAGE>
of this Agreement, or b) the failure of Selling Broker-Dealer or General Agent
or their officers, directors, employees or agents to comply with any applicable
provisions of this Agreement.
G. NOTICES
All notices or communications shall be sent to the address shown in
this Agreement or to such other address as the party may request, by giving
written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the State of Georgia.
I. AMENDMENT OF AGREEMENT
CLICA reserves the right to amend this Agreement in writing at any
time. The submission of an application for the Contracts by Selling
Broker-Dealer or General Agent five or more business days after notice of any
such amendment has been sent to the other parties shall constitute agreement to
such amendment.
J. GENERAL AGENT AS BROKER-DEALER
If Selling Broker-Dealer and General Agent are the same person or
legal entity, such person or legal entity shall have the rights and obligations
hereunder of both Selling Broker-Dealer and General Agent and this Agreement
shall be binding and enforceable by and against such person or legal entity in
both capacities.
K. COMPLAINTS AND INVESTIGATIONS
General Agent, Selling Broker-Dealer, CLICA, CLAFS and Seligman
Financial agree to cooperate fully in the event of any regulatory
investigation, inquiry or proceeding, judicial proceeding or customer complaint
involving the Contracts. In furtherance of the foregoing: 1) each party will
notify all other parties of any such investigation, inquiry, proceeding or
complaint involving the Contracts or affecting the ability of a party to
perform pursuant to this Agreement within 10 days of obtaining knowledge of the
same; and 2) in the case of a customer complaint, the involved parties will
consult with each other prior to sending any written response with respect to
such complaint.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon
thirty (30) days' prior written notice; and may be terminated, for cause, by
any party immediately; and shall be terminated if CLAFS and Seligman Financial
or Selling Broker-Dealer shall cease to be a registered broker-dealer under the
Securities Exchange Act of 1934 and a member of the NASD.
M. ADDRESS FOR NOTICES
Address For Canada Life Insurance Company of America and
Canada Life of America Financial Services, Inc.
6201 Powers Ferry Road, N.W.
Atlanta, Georgia 30339
Address for Seligman Financial
100 Park Avenue
New York, New York 10017
7
<PAGE>
Address For Selling Broker-Dealer Address for General Agent
_________________________________ ________________________________
_________________________________ ________________________________
_________________________________ ________________________________
This Agreement shall be effective upon execution by General Agent and
Selling Broker-Dealer, and delivery of the Agreement to CLICA or CLAFS.
Dated: _________________
Canada Life of America Financial Canada Life Insurance Company of America
Services, Inc.
By: /s/ Frank D' Ambra III, President By: /s/ D. Allen Loney, President
---------------------- ------------------
Frank D' Ambra III D. Allen Loney
Seligman Financial Services, Inc.
By: /s/ Stephen J. Hodgdon, President
----------------------
Stephen J. Hodgdon
_______________________________ - General Agent, Please Print
By: __________________________ - Name and Title _________________________
Please Print Signature
_______________________________ - Selling Broker-Dealer, Please Print
By: __________________________ - Name and Title _________________________
Please Print Signature
PLEASE COMPLETE THE FOLLOWING:
1. CLICA IS DIRECTED TO MAIL ISSUED POLICIES TO ____________________ (SELECT
ONE POLICYOWNER, BROKER OR HOME OFFICE.) (IMPORTANT NOTE: IF NOT COMPLETED,
CLICA WILL AUTOMATICALLY SEND ISSUED POLICIES TO THE POLICYOWNER.)
2. WE DO/DO NOT (SELECT ONE) WANT TO ALLOW OUR BROKERS THE OPPORTUNITY TO
SELECT COMMISSION OPTIONS ON A CASE BY CASE BASIS. (IMPORTANT NOTE: PLEASE
MARK ALL OPTIONS, BELOW, IF YOU WILL ALLOW THIS OPPORTUNITY. IF THIS QUESTION
ISN'T ANSWERED BUT ALL BOXES BELOW ARE CHECKED, OR IF THIS QUESTION IS ANSWERED
IN THE AFFIRMATIVE BUT ALL BOXES BELOW ARE NOT CHECKED, CLICA WILL STILL ALLOW
THE CASE BY CASE SELECTION. IF THIS QUESTION IS NOT ANSWERED AND ONLY ONE
OPTION BELOW, IS SELECTED, THEN CLICA WILL NOT ALLOW THE CASE BY CASE
SELECTION.)
COMMISSION SCHEDULE SELECTION: DEFAULT TO "A1" IF NONE SELECTED. A1, B1 & C1
ARE FOR ISSUE AGES 0-80; A2 & B2 FOR ISSUE AGES 81-86. SEE SCHEDULE I FOR
COMMISSION AT ISSUE AGES 86-90 AND ADDITIONAL PREMIUMS AFTER AGE 86.
__________ OPTION A1 - 5.0% OF PREMIUM PLUS 0.25% ANNUAL TRAIL BASED ON
POLICY VALUE AS CALCULATED
ON POLICY ANNIVERSARY, TRAIL INCREASING TO 0.40%
AFTER SURRENDER PERIOD.
__________ OPTION B1 - 6.5% OF PREMIUM, NO TRAIL.
__________ OPTION C - 2.0% OF PREMIUM PLUS 0.75% ANNUAL TRAIL BASED ON
POLICY VALUE AS CALCULATED
ON POLICY ANNIVERSARY.
__________ OPTION A2 - 2.25% OF PREMIUM PLUS 0.25% ANNUAL TRAIL, AS
CALCULATED IN A1.
__________ OPTION B2 - 3.0% OF PREMIUM, NO TRAIL.
8
<PAGE>
EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
General Agent hereby certifies to Canada Life Insurance Company of
America (CLICA) that all of the following requirements will be fulfilled in
conjunction with the submission of licensing/appointment papers for all
applicants as producers submitted by General Agent. General Agent will, upon
request, forward proof of compliance with the same to CLICA in a timely manner.
1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known to us,
has been examined by us, is known to be of good moral character, has a
good business reputation, is reliable, is financially responsible and
is worthy of a license. Each individual is trustworthy, competent and
qualified to act as an agent for CLICA to hold himself out in good
faith to the general public. We vouch for each applicant.
2. We have on file a U-4 Form which was completed by each applicant. We
have fulfilled all the necessary investigative requirements for the
registration of each applicant as a registered representative through
our NASD member firm, and each applicant is presently registered as an
NASD registered representative.
The above information in our files indicates no fact or condition
which would disqualify the applicant from receiving a license and all
the findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the
specific state in which each applicant is requesting a license, and
that all such persons have fulfilled the appropriate examination,
education and training requirements.
4. If the applicant is required to submit his or her picture and
signature in the state in which he or she is applying for a license,
we certify that those items forwarded to CLICA are those of the
applicant.
5. We hereby warrant that the applicant is not applying for a license
with CLICA in order to place insurance chiefly and solely on his or
her life or property, lives or property of his or her relatives, or
property or liability of his or her associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or
all risks written by these applicants, to the end that the insurance
interest of the public will be properly protected.
7. We will not permit any applicant to transact insurance as an agent
until duly licensed therefor. No applicants have been given a
contract or furnished supplies, nor have any applicants been permitted
to write, solicit business, or act as an agent in any capacity, and
they will not be so permitted until the certificate of authority or
license applied for is received.
8. We certify that General Agent, Selling Broker-Dealer and applicant
shall have entered into a written agreement pursuant to which a)
applicant is appointed a producer of General Agent and a registered
representative of Selling Broker-Dealer; b) applicant agrees that his
or her selling activities relating to securities regulated contracts
shall be under the supervision and control of Selling Broker-Dealer
and his or her selling activities relating to insurance regulated
Contracts shall be under the supervision and control of General Agent;
and c) that applicant's right to continue to sell such Contracts is
subject to his or her continued compliance with such agreement and any
procedures, rules or regulations implemented by Selling Broker-Dealer
or General Agent.
<PAGE>
SCHEDULE I - STATEMENT OF COMPENSATION
As of February 1, 1997
Subject to the terms and conditions of this Agreement, CLAFS will pay to
Selling Firm compensation based upon the premiums and purchase payments
received from such Selling Firm, in accordance with applicable law, in the
percentages shown below, for CLICA-issued Trillium Variable Annuity, Form 20067
and any subsequent approved form:
B/D CONCESSION
<TABLE>
<S> <C>
OWNER'S ISSUE AGE 0-80 OWNER'S ISSUE AGE 81-85
Option A1: 5% of premium plus .25% on an Option A2: 2.25% of premium plus .25% annual
annual basis, based on account value of associated trail, calculated as in Option A1.
premium, .0625% first payable at end of 5th quarter Option B2: 3% of premium, no trail.
of the associated premium, end of the following OWNER'S ISSUE AGE 86-90 & ADDITIONAL
quarters thereafter. Option A1 ONLY, the trail PREMIUM ON ISSUED POLICIES, OWNER'S
payable will increase to .40% after Surrender AGE 86-90
Charges are no longer applicable to that premium. Option A3: .50% of premium plus .50% annual
Option B1: 6.5% of premium, no trail. trail, calculated as in Option A1.
Option C: 2% of premium plus .75% annual
trail, calculated as in Option A1.
</TABLE>
ADDITIONAL PREMIUM AFTER OWNER'S
ATTAINED AGE 90
Option A4: .50% of premium plus .25% annual
trail, as calculated as in Option A1.
SERVICE FEE AT ANNUITIZATION (Assumes "internal" annuity rates are used.
Service Fee is only paid on annuitized proceeds that are past any applicable
Surrender Charge period.)
<TABLE>
<S> <C>
I 3% if payout = or (greater than) 10 years, or a life annuity, and the amount is $0 - $1 million;
II 1.25% on amounts over $1 million with same payout duration as I;
III 2% if payout = or (less than) 10 years and not a life annuity, and the amount is $0 - $1 million;
IV 1.25% on amounts over $1 million with same payout duration as III.
</TABLE>
CHARGEBACKS: (i) In the event a policy is returned to CLICA pursuant to a
"Free Look" provision, the full B/D Concession paid thereon or retained by
Selling Firm pursuant to net submission of premium or purchase payment shall be
charged back to the Selling Firm. (ii) Should any premium or purchase payment
on any policy issued by CLICA be refunded for any reason, Selling Firm shall
repay or return B/D Concession received by it with respect to such premium or
purchase payment. (iii) If a policy was not issued as a result of failure of
Selling Firm to submit to CLICA an application sufficient to satisfy state
insurance laws or CLICA's eligibility requirements, then amounts paid to
Selling Firm shall be returned or repaid. (iv) If a policy was tendered to
CLICA for redemption within 10 business days of the date of activity, then
amounts paid to Selling Firm shall be returned or repaid. (v) For full or
partial withdrawals from the policies, other than those pursuant to Systematic
and/or Free Withdrawals: 100% of all B/D Concession paid to Selling Firm on
amount(s) withdrawn within 6 months of such amount(s) being paid to CLICA and
50% of all B/D Concessions paid to Selling Firm on amount(s) withdrawn from
7-12 months of such amount(s) being paid to CLICA, shall be returned or repaid.
(vi) For annuitizations within 6 months of issue, 100% of all B/D Concession
paid to Selling Firm will be returned or repaid, offset by an amount from 1.25%
to 3%, depending on the amount and duration of payout; and for annuitizations
from months 7-12 after issue, 50% of all B/D Concession paid to Selling Firm
shall be returned or repaid, offset by an amount from 1.25% to 3%, depending on
the amount and duration of payout. For any premium or purchase payment that
has been in the Policy for more than 12 months, there shall be no chargeback on
B/D Concession.
(OVER)
<PAGE>
To the extent permitted by law, the amount so charged back may, at the option
of CLICA, be set off against B/D Concession otherwise due Selling Firm. In
addition, such other compensation will be payable as are from time to time
agreed by the parties to the foregoing Agreement and which is in accordance
with applicable law, and will be added to this schedule.
The rates of concession specified above and any rates of concession otherwise
determined by the Company will be subject to change at any time by the Company
but no charge will affect the rates of concession in connection with any policy
effected herein for which the initial premium was due prior to the effective
date of such change. Any such changes of concession will be binding upon the
General Agent and/or Broker/Dealer when the Company sends notice thereof in
writing to him/her and will take effect from the date specified in such notice.
CANADA LIFE INSURANCE COMPANY OF NEW YORK
A wholly-owned subsidiary of
The Canada Life Assurance Company
Home Office
500 Mamaroneck Avenue
Harrison, New York 10528
(914) 835-8400
Annuity Service Office
6201 Powers Ferry Road
Atlanta, Georgia 30339
(800) 905-1959
SELLING AGREEMENT
AGREEMENT by and between Canada Life Insurance Company of New York
(CLNY), a New York Corporation, a wholly- owned subsidiary of The Canada Life
Assurance Company of Canada; Canada Life of America Financial Services, Inc.
(CLAFS), a registered broker-dealer with the Securities and Exchange Commission
under the Securities Act of 1934 (the 1934 Act), and a member of the National
Association of Securities Dealers, Inc. (NASD) and Seligman Financial Services
Inc. (Seligman Financial) also a registered broker-dealer and member of the
NASD;
________________________________________________________________________________
________________________________________________________________________________
(Selling Broker-Dealer), also a registered broker-dealer and member of the
NASD; and
________________________________________________________________________________
________________________________________________________________________________
(General Agent).
I. INTRODUCTION
WHEREAS, CLNY has issued certain annuity contracts, and these
Contracts are registered under the Securities Act of 1933 (the 1933 Act) and
the Investment Company Act of 1940 (the "1940 Act") (Contracts or Contracts
collectively); and
WHEREAS, CLNY has authorized CLAFS as principal underwriter and
Seligman Financial as promotional agent to enter into agreements, subject to
the consent of CLNY, with Selling Broker-Dealers and General Agents for the
distribution of the Contracts; and
<PAGE>
WHEREAS, CLNY and CLAFS have entered into a Promotional Agent Distribution
Agreement with Seligman Financial that Seligman Financial shall secure duly
qualified Selling Broker-Dealers and General Agents to CLNY and CLAFS for the
distribution of the Contracts, refer these Selling Broker-Dealers and General
Agents to CLNY for information in obtaining licenses, registrations and
appointments to enable the registered representatives and producers of these
Selling Broker-Dealers and General Agents to sell the Contracts, and provide
educational meetings to familiarize these Selling Broker-Dealers and General
Agents and their registered representatives and producers with the provisions
and features of the Contracts; and
WHEREAS, Selling Broker-Dealer and General Agent with to participate
in the distribution of the Contracts;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
II. APPOINTMENT
Subject to the terms and conditions of this Agreement, CLNY and CLAFS
hereby appoint _________________________ as Selling Broker-Dealer and
____________________________ as General Agent for the solicitation of
applications for the purchase of the Contracts, and Selling Broker-Dealer and
General Agent accept such appointment.
III. AUTHORITY AND DUTIES OF GENERAL AGENT
A. LICENSING AND APPOINTMENT OF PRODUCERS
General Agent is authorized to appoint producers to solicit sales of
the Contracts. General Agent warrants that all producers appointed by General
Agent pursuant to this Agreement shall not solicit nor aid, directly or
indirectly, in the solicitation of any application for any Contract until that
producer is fully licensed under New York insurance laws and, in connection
with securities regulated Contracts, is a fully registered representative of
Selling Broker-Dealer. General Agent shall prepare and transmit the
appropriate licensing and appointment forms to CLNY. General Agent shall pay
all fees to New York insurance regulatory authorities in connection with
obtaining necessary licenses and appointments for producers. All fees payable
to New York regulatory authorities in connection with the initial CLNY
appointment of producers who already possess necessary insurance licenses shall
be paid by CLNY. Any renewal license fees due after the initial appointment
and the current renewal, or between the last previous renewal and current
renewal; otherwise, renewal fees shall be paid by General Agent. "Production"
is defined as either a new issued Contract or an additional purchase payment on
a previously issued Contract. General Agent shall periodically provide CLNY
with a list of all producers appointed by General Agent when such producers are
licensed in New York to solicit sales of the contracts. General Agent agrees
to fulfill all requirements set forth in the General Letter of Recommendation
attached as Exhibit A in conjunction with the submission of licensing and
appointment papers for all applicants as producers submitted by General Agent.
B. REJECTION OF PRODUCER
CLAFS, or CLNY may, by written notice to General Agent, refuse to
permit any producer the right to solicit applications for the sale of any of
the Contracts, require General Agent to cause any producer to cease such
solicitations or sales and cancel the appointment of any producer.
2
<PAGE>
C. SUPERVISION OF PRODUCERS
General Agent shall supervise any producers appointed pursuant to this
Agreement to solicit sales of the Contracts and bear responsibility for all
acts and omissions of each producer. General Agent shall comply with and
exercise all responsibilities required by applicable federal and New York law
and regulations. General Agent shall not be responsible for those supervisory
responsibilities belonging to Selling Broker-Dealer under applicable securities
laws which include, but are not limited to, supervising and training producers
in their capacity as registered representatives. Nothing contained in this
Agreement or otherwise shall be deemed to make any producer appointed by
General Agent an employee or agent of CLNY, CLAFS or Seligman Financial. If
the act or omission of a producer or any other employee of General Agent is the
proximate cause of any claim, damage or liability (including reasonable
attorneys' fees) to CLNY, CLAFS or Seligman Financial, General Agent shall be
responsible and liable therefor.
Before a producer is permitted to sell the Contracts, General Agent,
Selling Broker-Dealer and producer shall have entered into a written agreement
pursuant to which: 1) producer is appointed a producer of General Agent and a
registered representative of Selling Broker-Dealer; 2) producer agrees that his
or selling activities relating to securities regulated contracts shall be under
the supervision and control of Selling Broker-Dealer and his or her selling
activities relating to insurance regulated Contracts shall be under the
supervision and control of General Agent; and 3) that producer's right to
continue to sell such Contracts is subject to his or continued compliance with
such agreement and any procedures, rules or regulations implemented by Selling
Broker-Dealer or General Agent.
IV. AUTHORITY AND DUTIES OF SELLING BROKER-DEALER
A. SUPERVISION OF REGISTERED REPRESENTATIVES
Selling Broker-Dealer agrees that it has full responsibility for the
training and supervision of all persons, including producers of General Agent,
associated with Selling Broker-Dealer who are engaged directly or indirectly in
the offer or sale of securities regulated Contracts. All such persons shall be
subject to the control of Selling Broker-Dealer with respect to their
securities regulated activities. Broker-Dealer shall: 1) train and supervise
producers, in their capacity as registered representatives, in the sale of
securities regulated Contracts 2) use its best efforts to cause such producers
to qualify under applicable federal and New York laws to engage in the sale of
securities regulated Contracts when required; 3) provide CLNY and CLAFS, to
their satisfaction, with evidence of producers' qualifications to sell
securities regulated Contracts; and 4) notify CLNY if any of such producers
ceases to be a registered representative of Selling Broker-Dealer. Selling
Broker-Dealer agrees that a producer must be a registered representative of
Selling Broker-Dealer before engaging in the solicitation of any securities
regulated Contracts and have entered into the written agreement more fully
described in Section III, Paragraph C. CLNY and CLAFS shall not have any
responsibility for the supervision of any registered representative or any
other employee or affiliate of Selling Broker-Dealer. If the act or omission
of a registered representative or any other employee or affiliate of Selling
Broker-Dealer is the proximate cause of any claim, damage or liability
(including reasonable attorney's fees) to CLNY, CLAFS or Seligman Financial,
Selling Broker-Dealer shall be responsible and liable therefore.
Selling Broker-Dealer shall fully comply with the requirements of the
National Association of Securities Dealers, Inc. and of the Securities Exchange
Act of 1934 and all other applicable federal or state laws. Selling
Broker-Dealer shall establish such rules and procedures as may be necessary to
cause diligent supervision of the securities activities of the producers. Upon
request by CLNY or CLAFS, Broker-Dealer shall furnish such records as may be
necessary to establish diligent supervision.
3
<PAGE>
V. AUTHORITY AND DUTIES OF GENERAL AGENT
AND SELLING BROKER DEALER
A. CONTRACTS
The securities and insurance regulated Contracts issued by CLNY to which this
Agreement applies are listed in Schedule I which may be amended from time to
time by CLNY. CLNY, in its sole discretion, with prior or concurrent written
notice to Selling Broker-Dealer and General Agent, may suspend distribution of
any Contracts. CLNY also has the right to amend any Contracts at any time.
B. SECURING APPLICATION
Each application for a Contract shall be made on an application form
provided by CLNY, and all payments collected by Selling Broker-Dealer, General
Agent or any registered representative and producer shall be remitted promptly
in full, together with such application form and any other required
documentation, directly to CLNY at the address indicated on such application or
to such other address as may be designated. Selling Broker-Dealer and General
Agent shall review all such applications for completeness. Check or money
order in payment of such Contracts should be made payable to the order of
"Canada Life Insurance Company of New York." All applications are subject to
acceptance or rejection by CLNY in its sole discretion.
C. RECEIPT OF MONEY
All money payable in connection with any of the Contracts, whether as
premium, purchase payment or otherwise and whether paid by or on behalf of any
contract owner or anyone else having an interest in the Contracts, is the
property of CLNY and shall be transmitted immediately in accordance with the
administrative procedures of CLNY without any deduction or offset for any
reason including, but not limited to, any deduction or offset for compensation
claimed by Selling Broker-Dealer or General Agent, unless there has been a
prior arrangement for net wire transmissions between CLNY and Selling
Broker-Dealer or General Agent.
D. NOTICE OF PRODUCER'S NONCOMPLIANCE
Selling Broker-Dealer shall notify CLAFS and General Agent in the
event a producer fails or refuses to submit to the supervision of Selling
Broker-dealer or General Agent in accordance with this Agreement, the agreement
between Selling Broker-Dealer, General Agent and producer referred to in
Section III, Paragraph C and Section IV, Paragraph A, or otherwise fails to
meet the rules and standards imposed by Selling Broker-Dealer or its registered
representatives or General Agent or its producers. Selling Broker-Dealer or
General Agent shall also immediately notify such producer that he or she is no
longer authorized to sell the Contracts, and both Selling Broker-Dealer and
General Agent shall take whatever additional action may be necessary to
terminate the sales activities of such producer relating to the Contracts.
E. SALES PROMOTION, ADVERTISING AND PROSPECTUSES
No sales promotion materials, circulars, documents or any advertising
relating to any of the Contracts shall be used by Selling Broker-Dealer,
General Agent or any producers unless the specific item has been approved in
writing by CLAFS and CLNY prior to use. Selling Broker-Dealer shall be
provided by Seligman Financial, without any expense to Selling Broker-Dealer,
with prospectuses and other material determined to be necessary for use
relating to securities regulated Contracts. Nothing in these provisions shall
prohibit Selling Broker-Dealer or General Agent from advertising life insurance
and annuities on a generic basis.
4
<PAGE>
VI. COMPENSATION
A. COMMISSIONS AND FEES
Commissions and fees payable to Selling Broker-Dealer or General Agent
in connection with the securities regulated Contracts shall be paid on behalf
of CLAFS by CLNY to Selling Broker-Dealer or General Agent, or as otherwise
directed or required by law. Commissions and fees payable to Selling
Broker-Dealer, General Agent or producer in connection with the insurance
regulated Contracts shall be paid by CLNY to Selling Broker-Dealer or General
Agent, or as otherwise directed or required by law. Selling Broker-Dealer or
General Agent, as applicable, shall pay producer. CLAFS will provide Selling
Broker-Dealer and General Agent with a copy of CLNY's current Schedule I.
Unless otherwise provided in Schedule I, commissions will be paid as a
percentage of premiums or purchase payments (collectively, Payments) received
in cash or other legal tender and accepted by CLNY on applications obtained by
the various producers appointed by General Agent hereunder. Upon termination
of this Agreement, all compensation to the Selling Broker-Dealer and General
Agent hereunder shall cease. However, Selling Broker-Dealer and General Agent
shall be entitled to receive compensation for all new and additional premium
payments which are in process at the time of termination, and shall continue to
be liable for any chargebacks pursuant to the provisions of said Contracts,
Commissions and Fee Schedule, or for any other amounts advanced by or otherwise
due CLAFS or CLNY hereunder.
B. TIME OF PAYMENT
CLNY will pay any commissions due General Agent hereunder no later
than within fifteen (15) days after the end of the calendar month in which
Payments upon which such commission is based are accepted by CLNY.
C. AMENDMENT OF SCHEDULES
CLAFS, CLNY and Seligman Financial may, upon at least ten (10) days'
prior written notice to Selling Broker- Dealer and General Agent, change the
Contracts, Commissions and Fee Schedule by written amendment of such Schedule.
Any such change shall apply to compensation due on applications received by
CLNY after the effective date of such notice.
D. PROHIBITION AGAINST REBATES
CLAFS or CLNY may terminate this Agreement if Selling Broker-Dealer,
General Agent or any producer of General Agent rebates, offers to rebate or
withholds any part of any Payments on the Contracts. If Selling Broker-Dealer,
General Agent or any producer of General Agent shall at any time induce or
endeavor to induce any owner of any Contract issued hereunder to discontinue
payments or to relinquish any such Contract, except under circumstances where
there is reasonable grounds for believing the Contract is not suitable for such
person, any and all compensation due Selling Broker-Dealer or General Agent
hereunder shall cease and terminate.
E. INDEBTEDNESS AND RIGHT OF SET OFF
Nothing contained in this Agreement shall be construed as giving
Selling Broker-Dealer or General Agent the right to issue any indebtedness on
behalf of CLNY, CLAFS or Seligman Financial. Selling Broker-Dealer and General
Agent hereby authorize CLNY as agent of CLAFS to set off liabilities of Selling
Broker-Dealer and General Agent to CLNY, CLAFS or Seligman Financial against
any and all amounts otherwise payable to Selling Broker-Dealer or General
Agent.
5
<PAGE>
VII. GENERAL PROVISIONS
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed to be, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver.
B. LIMITATIONS
No party other than CLNY shall have the authority to: 1)make, alter,
or discharge any Contract issued by CLNY; 2)waive any forfeiture or extend the
time of making any Payments; or 3) enter into any proceeding in a court of law
or before a regulatory agency in the name of or on behalf of CLNY. No party
other than CLAFS and Seligman Financial, respectively, shall have the authority
to: 1) alter the forms or substitute other forms in place of those prescribed
by CLAFS or Seligman Financial; or 2) enter into any proceeding in a court of
law or before a regulatory agency in the name of or on behalf of CLAFS or
Seligman Financial.
C. FIDELITY BOND AND OTHER LIABILITY COVERAGE
Selling Broker-Dealer and General Agent hereby assign any proceeds
received from a fidelity bonding company, error and omissions or other
liability coverage to CLNY, CLAFS or Seligman Financial, to the extent of their
loss due to activities covered by the bond, policy or other liability coverage.
If there is any deficiency amount, whether due to a deductible or otherwise,
Selling Broker-Dealer or General Agent shall promptly pay such amount on
demand. Selling Broker-Dealer and General Agent hereby indemnify and hold
harmless CLNY, CLAFS and Seligman Financial from any such deficiency and from
the costs of collection thereof (including reasonable attorneys' fees).
D. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of
the parties to it and their respective successors and assigns provided that
neither Selling Broker-Dealer nor General Agent may assign this Agreement or
any rights or obligations hereunder without the prior written consent of CLNY
and CLAFS.
E. REGULATIONS
All parties agree to observe and comply with the existing laws and
rules or regulations of applicable local, state, or federal regulatory
authorities and with those which may be enacted or adopted during the term of
this Agreement regulating the business contemplated hereby in New York where
the business described herein is to be transacted. Selling Broker-Dealer and
General Agent shall promptly furnish to CLNY and CLAFS or their agent, any
reports and information which the other party may reasonably request for the
purpose of meeting their reporting and recordkeeping requirements under the
insurance laws of New York, and under federal and state securities laws and
rules of the NASD.
F. INDEMNIFICATION
1) CLAFS agrees to indemnify and hold harmless Selling Broker-Dealer
and General Agent, their officers, directors and employees, against any and all
losses, claims, damages or liabilities to which they may become subject under
the 1933 Act, the 1934 Act, or other federal or state statutory law or
regulations, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
or any omission or alleged omission to state a material fact required to be
stated or necessary to make the statements made not misleading in the
registration statement for the
6
<PAGE>
Contracts or any prospectus included as a part thereof, as from time to time
amended and supplemented. Seligman Financial agrees to indemnify and hold
harmless Selling Broker-Dealer and General Agent, their officers, directors and
employees, against any and all losses, claims, damages or liabilities to which
they may become subject under the 1933 Act, 1934 Act, or other federal or state
statutory law or regulations, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact
required to be stated or necessary to make the statements made not misleading
in the registration statement for the shares of Seligman Portfolios Inc. (the
"Fund") filed pursuant to the 1933 Act or any prospectus included as part
thereof, as from time to time amended and supplemented.
2) Selling Broker-Dealer and General Agent agree to indemnify and hold
harmless CLAFS, CLNY and Seligman Financial, their affiliates and their
officers, directors, and employees, against any and all losses, claims damages
or liabilities to which they may become subject under the 1933 Act, the 1934
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon: a) any oral or written
misrepresentation by Selling Broker-Dealer or General Agent or their officers,
directors, employees or agents unless such misrepresentation is contained in
the registration statement for the Contracts or Fund Shares, any prospectus
included as a part thereof, as from time to time amended and supplemented, or
any advertisement or sales literature approved in writing by CLNY and CLAFS
pursuant to Section V, Paragraph E, of this Agreement, or b) the failure of
Selling Broker-Dealer or General Agent or their officers, directors, employees
or agents to comply with any applicable provisions of this Agreement.
G. NOTICES
All notices or communications shall be sent to the address shown in
this Agreement or to such other address as the party may request, by giving
written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the State of New York.
I. AMENDMENT OF AGREEMENT
CLNY reserves the right to amend this Agreement in writing at any
time. The submission of an application for the Contracts by Selling
Broker-Dealer or General Agent five or more business days after notice of any
such amendment has been sent to the other parties shall constitute agreement to
such amendments.
J. GENERAL AGENT AS BROKER-DEALER
If Selling Broker-Dealer and General Agent are the same person or
legal entity, such person or legal entity shall have the rights and obligations
hereunder of both Selling Broker-Dealer and General Agent and this Agreement
shall be binding and enforceable by and against such person or legal entity in
both capacities.
K. COMPLAINTS AND INVESTIGATIONS
General Agent, Selling Broker-Dealer, CLNY, and CLAFS and Seligman
Financial agree to cooperate fully in the event of any regulatory
investigation, inquiry or proceeding, judicial proceeding or customer complaint
involving the Contracts. In furtherance of the foregoing: 1) each party will
notify all other parties of any such investigation, inquiry, proceeding or
complaint involving the Contracts or affecting the ability of a party to
perform pursuant to this Agreement within 10 days of obtaining knowledge of the
same; and 2) in the case of a customer complaint, the involved parties will
consult with each other prior to sending any written response with respect to
such complaint.
7
<PAGE>
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon
thirty (30) days' prior written notice; and may be terminated, for cause, by
any party immediately; and shall be terminated if CLAFS and Seligman Financial
or Selling Broker-Dealer shall cease to be a registered broker-dealer under the
Securities Exchange Act of 1934 and a member of the NASD.
M. ADDRESS FOR NOTICES
Address for Canada Life Insurance Company of New York
500 Mamaroneck Avenue
Harrison, New York 10583
Address for Canada Life of America Financial Services, Inc.
6201 Powers Ferry Road, N.W.
Atlanta, Georgia 30339
Address for Seligman Financial
100 Park Avenue
New York, New York 10017
Address For Selling Broker-Dealer Address for General Agent
______________________________ ___________________________
______________________________ ___________________________
______________________________ ___________________________
This Agreement shall be effective upon execution by General Agent and
Selling Broker-Dealer, and delivery of the Agreement to CLNY or CLAFS.
Dated:________________________________
Canada Life of America, Financial Seligman Financial Services, Inc.
Services, Inc.
By: /s/ Frank D'Ambra III President By: /s/ Stephen J. Hodgdon President
--------------------------------- --------------------------------
Frank D'Ambra III Stephen J. Hodgdon
Canada Life Insurance Company of _____________________________________
New York
(General Agent (Please Print)
By: /s/ D. Allen Loney President
---------------------------------
D. Allen Loney
By: __________________________________
(Name and Title - Signature)
______________________________________
(Selling Broker-Dealer Please Print)
By: __________________________________
(Name and Title - Signature)
8
<PAGE>
EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
General Agent hereby certifies to Canada Life Insurance Company of New
York (CLNY) that all of the following requirements will be fulfilled in
conjunction with the submission of licensing/appointment papers for all
applicants as producers submitted by General Agent. General Agent will, upon
request, forward proof of compliance with the same to CLNY in a timely manner.
1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known to us,
has been examined by us, is known to be of good moral character, has a
good business reputation, is reliable, is financially responsible and
is worthy of a license. Each individual is trustworthy, competent and
qualified to act as an agent for CLNY to hold himself out in good
faith to the general public. We vouch for each applicant.
2. We have on file a U-4 Form which was completed by each applicant. We
have fulfilled all the necessary investigative requirements for the
registration of each applicant as a registered representative through
our NASD member firm, and each applicant is presently registered as an
NASD registered representative.
The above information in our files indicates no fact or condition
which would disqualify the applicant from receiving a license and all
the findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the
specific state in which each applicant is requesting a license, and
that all such persons have fulfilled the appropriate examination,
education and training requirements.
4. If the applicant is required to submit his or her picture and
signature in the state in which he or she is applying for a license,
we certify that those items forwarded to CLNY are those of the
applicant.
5. We hereby warrant that the applicant is not applying for a license
with CLNY in order to place insurance chiefly and solely on his or her
life or property, lives or property of his or her relatives, or
property or liability of his or her associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or
all risks written by these applicants, to the end that the insurance
interest of the public will be property protected.
7. We will not permit any applicant to transact insurance as an agent
until duly licensed therefor. No applicants have been given a
contract or furnished supplies, nor have any applicants been permitted
to write, solicit business, or act as an agent in any capacity, and
they will not be so permitted until the certificate of authority or
license applied for is received.
8. We certify that General Agent, Selling Broker-Dealer and applicant
shall have entered into a written agreement pursuant to which a)
applicant is appointed a producer of General Agent and a registered
representative of Selling Broker-Dealer; b) applicant agrees that his
or her selling activities relating to securities regulated contracts
shall be under the supervision and control of Selling Broker-Dealer
and his or her selling activities relating to insurance regulated
Contracts shall be under the supervision and control of General Agent;
and c) that applicant's right to continue to sell such Contracts is
subject to his or her continued compliance with such agreement and any
procedures, rules or regulations implemented by Selling Broker-Dealer
or General Agent.
<PAGE>
SCHEDULE 1
STATEMENT OF COMPENSATION
AS OF APRIL, 1997
Subject to the terms and conditions of this Agreement, CLAFS will pay to
Selling Firm compensation based upon the premiums and purchase payments
received from such Selling Firm, in accordance with applicable law, in the
percentages shown below: (Form 3099)
FOR PRE-AUTHORIZED CHECK CASES - OWNER ISSUE AGE 0-80
POLICY YEARS BROKER-DEALER CONCESSION
1-10 6.5%
11-15 6.5%
16+ 1/5%
FOR OTHER THAN PRE-AUTHORIZED CHECK CASES - OWNER ISSUE AGE 0-80
POLICY YEARS BROKER- DEALER CONCESSION
1-10 6.5%
11-15 6.5%
16+ 1.5%
...............................................................................
FOR PRE-AUTHORIZED CHECK CASES - OWNER ISSUE AGE 81-84
POLICY YEARS BROKER-DEALER CONCESSION
1-10 3.0%
11-15 3.0%
16+ 1.5%
FOR OTHER THAN PRE-AUTHORIZED CHECK CASES - OWNER ISSUE AGE 81-84
POLICY YEARS BROKER- DEALER CONCESSION
1-10 3.0%
11-15 3.0%
16+ 1.5%
<TABLE>
<S> <C>
Service Fee at Annuitization if "internal" annuity rates 3.0% if payout = or (greater than) 10 yrs or a life annuity
are used. Service Fee is only paid on annuitized pro- and amount $0-1 million.
ceeds that are past any applicable surrender charge/ 1.25% if amount over $1 million.
period.
2.0% if payout (less than) 10 yrs. & not a life annuity
and amount $0-1 million.
1.25% if amount over $1 million.
</TABLE>
<PAGE>
Page 2
Chargebacks; (i) In the event a contract is returned to CLNY pursuant to a
"Free Look" provision, the full B/D concession paid thereon or retained by
Selling Firm pursuant to net submission of premiumm or purchased payment shall
be charged back to Selling Firm. (ii) Should any premium or purchase payment
on any Contract issued by CLNY be refunded for any reason, Selling Firm shall
repay or return B/D Concession received by it with respect to such premium or
purchase payment. (iii) If a Contract was not issued as a result of failure by
Selling Firm to submit to CLNY an application sufficient to satisfy state
insurance laws or CLNY eligibility requirements then amounts paid to Selling
Firm shall be returned or repaid. (iv) If a Contract was tendered to CLNY for
redemption within ten business days of the date of activity then amounts paid
to Selling Firm shall be returned or repaid. (v) For full or partial
withdrawals from the Contract other than those made pursuant to a systematic
and/or free withdrawal privilege: 100% of all B/D Concessions paid to Selling
Firms on amount(s) withdrawn within 6 months of such amount(s) being paid to
CLNY and 50% of all B/D Concessions paid to Selling Firm on amount(s) withdrawn
from 7-12 months of such amount(s) being paid to CLNY shall be returned or
repaid. (vi) For annuitizations within 6 months of issue, 100% of all B/D
Concession paid to Selling Firm will be returned or repaid, offset by an amount
from 1.25% to 3%, depending on the amount and duration of payout; and for
annuitizations from months 7-12 after issue, 50% of all B/D Concession paid to
Selling Firm shall be returned or repaid, offset by an amount from 1.25% to 3%,
depending on the amount and duration of the payout. For any premium or
purchase payment that has been in the Contract for more than 12 months, there
shall be no charge back on B/D Concession. To the extent permitted by law, the
amount so charged back may, at the option of CLNY, be set off against B/D
Concession otherwise due to Selling Firm. In addition, such other compensation
will be payable as are from time to time agreed by the parties to the foregoing
Agreement and which is in accordance with applicable law, and will be added to
this Schedule.
EXPENSE ALLOWANCE
Total compensation may consist of agent commissions, override and/or expense
allowance.
If expense allowances are payable, they are subject to the following conditions
and limitations:
1. Lapses and surrenders in the first year, and any returns of first year
premium made by CLNY, will result in proportionate chargebacks of any
expense allowances paid for said premiums.
2. No expense allowance will be used to effect compensation in excess of the
limits of Section 4228 of the Insurance Law of New York.
3. No expense allowance will be due or payable after the termination of this
Contract except for first year expense allowances for policies written
prior to such termination.
4. Notwithstanding any of the other terms and conditions governing payment of
expense allowances in this Contract, and to conform with the requirements
of Section 4228 of the Insurance Law and the applicable regulations
resulting therefrom and other governing sections of the law, the following
will apply:
a. The maximum expense allowance payments shall be such that when added
to first year commissions, exclusive of overriding commissions not
exceeding 5% of first year premiums, the total shall not exceed 91% of
first year premiums for ordinary life and annuity policies and
contracts other than single premium policies and contracts.
b. The maximum expense allowance shall not exceed 100% of the commissions
payable on single premium policies and contracts, or the overall 7% of
premium limit.
In monitoring the maximum allowances rules in this paragraph 4, CLNY will apply
those in a. and b., above, on a "per-policy" basis.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Custodians and Independent Auditors" and to the
incorporation by reference of our report dated February 6, 1998 in this
Registration Statement (Form N-1A No. 811-5221) of Seligman Portfolios, Inc.
ERNST & YOUNG LLP
New York, New York
April 20, 1998
PURCHASE AGREEMENT
SELIGMAN MUTUAL BENEFIT PORTFOLIOS, INC.
Seligman Mutual Benefit Portfolios, Inc. (the "Fund"), an open-end
diversified management investment company consisting of five Portfolios, the
Seligman Cash Management Portfolio, the Seligman Capital Portfolio, the Seligman
Common Stock Portfolio, the Seligman Fixed Income Portfolio and the Seligman
Income Portfolio, and J. & W. Seligman & Co. Incorporated ("Purchaser"),
intending to be legally bound, hereby agree as follows:
1. In order to provide each Portfolio of the Fund with its initial
capital, the Fund hereby sells to Purchaser and Purchaser purchases 20,000
shares (the "Shares") of beneficial interest (par value $.001) of the Seligman
Cash Management Portfolio at a price of $1.00 per Share, and 2,000 Shares of
each of the Seligman Capital Portfolio, the Seligman Common Stock Portfolio, the
Seligman Fixed Income Portfolio and the Seligman Income Portfolio at $10.00 per
Share. The Fund hereby acknowledges receipt from Purchaser of funds in the
aggregate amount of $100,000 in full payment for the Shares.
2. Purchaser represents and warrants to the Fund that the Shares are being
acquired for investment and not with a view to distribution thereof, and that
Purchaser has no present intention to redeem or dispose of any of the Shares.
IN WITNESS WHEREOF, the parties have executed agreement as of the
day of , 1988.
SELIGMAN MUTUAL BENEFIT PORTFOLIOS, INC.
By:
-----------------------------------
Name:
Title:
J. & W. SELIGMAN & CO. INCORPORATED
By:
-----------------------------------
Name:
Title:
INVESTMENT LETTER
SELIGMAN PORTFOLIOS, INC.
Seligman Portfolios, Inc. (the "Fund"), and open-end, diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. In order to provide the Seligman Henderson Global Portfolio of the Fund
(the "Portfolio") with its initial capital, the Fund hereby sells to
Purchaser and Purchaser purchases 10,000 shares (the "Shares") of Capital
Stock (par value $.001) of the Portfolio at a price of $10.00 per share.
The Fund hereby acknowledges receipt from Purchaser of funds in the amount
of $100,000 in full payment for the Shares.
2. Purchaser represents and warrants to the fund that the Shares are being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of any of the
Shares.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 30th day
of April, 1993 ("Purchase Date").
SELIGMAN PORTFOLIOS, INC.
By: /s/ Lawrence P. Vogel
-------------------------------
Name: Lawrence P. Vogel
Title: Vice President
J. & W. SELIGMAN & CO. INCORPORATED
By: /s/ Lawrence P. Vogel
-------------------------------
Name: Lawrence P. Vogel
Title: Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN
PORTFOLIOS, INC., a Maryland corporation, which proposes to file with the
Securities and Exchange Commission an Amendment to Registration Statement on
Form N-1A and further amendments thereto, as necessary, under the Securities Act
of 1933 and the Investment Company Act of 1940, as amended, hereby constitutes
and appoints William C. Morris and Brian T. Zino, and each of them individually,
his attorneys-in-fact and agent, with full power of substitution and
resubstitution, for in his name and stead, in his capacity as such director, to
sign and file such Amendment to Registration Statement or further amendments
thereto, and any and all applications or other documents to be filed with the
Securities and Exchange Commission pertaining thereto, with full power and
authority to do and perform all acts and things requisite and necessary to be
done on the premises.
Executed this 1st day of April, 1998.
/s/ Richard R. Schmaltz (L.S.)
------------------------------
Richard R. Schmaltz
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> SELIGMAN CAPITAL PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 16993
<INVESTMENTS-AT-VALUE> 20977
<RECEIVABLES> 422
<ASSETS-OTHER> 241
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21640
<PAYABLE-FOR-SECURITIES> 1222
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18
<TOTAL-LIABILITIES> 1240
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16283
<SHARES-COMMON-STOCK> 1127
<SHARES-COMMON-PRIOR> 894
<ACCUMULATED-NII-CURRENT> (4)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 137
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3984
<NET-ASSETS> 20400
<DIVIDEND-INCOME> 84
<INTEREST-INCOME> 50
<OTHER-INCOME> 0
<EXPENSES-NET> (105)
<NET-INVESTMENT-INCOME> 29
<REALIZED-GAINS-CURRENT> 1456
<APPREC-INCREASE-CURRENT> 1877
<NET-CHANGE-FROM-OPS> 3362
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (29)
<DISTRIBUTIONS-OF-GAINS> 1319
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 421
<NUMBER-OF-SHARES-REDEEMED> (264)
<SHARES-REINVESTED> 76
<NET-CHANGE-IN-ASSETS> 6087
<ACCUMULATED-NII-PRIOR> (4)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 108
<AVERAGE-NET-ASSETS> 17536
<PER-SHARE-NAV-BEGIN> 16.01
<PER-SHARE-NII> .029
<PER-SHARE-GAIN-APPREC> 3.350
<PER-SHARE-DIVIDEND> (.028)
<PER-SHARE-DISTRIBUTIONS> (1.261)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.10
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> SELIGMAN CASH MANAGEMENT PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8903
<INVESTMENTS-AT-VALUE> 8903
<RECEIVABLES> 5
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8908
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 273
<TOTAL-LIABILITIES> 273
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8635
<SHARES-COMMON-STOCK> 8635
<SHARES-COMMON-PRIOR> 9755
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<TABLE> <S> <C>
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<SERIES>
<NUMBER> 03
<NAME> SELIGMAN COMMON STOCK PORTFOLIO
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 04
<NAME> SELIGMAN BOND PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
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<TABLE> <S> <C>
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<NAME> SELIGMAN INCOME PORTFOLIO
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
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<NAME> SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 07
<NAME> SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 08
<NAME> SELIGMAN FRONTIER PORTFOLIO
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 09
<NAME> SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 10
<NAME> SELIGMAN HIGH-YIELD BOND PORTFOLIO
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 11
<NAME> SELIGMAN HENDERSON GLOBAL GROWTH OPP PORT
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