File No. 33-15253
811-5221
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 25 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 27 |X|
SELIGMAN PORTFOLIOS, INC.
(Exact name of registrant as specified in charter)
100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
Registrant's Telephone Number: 212-850-1864 or
Toll Free: 800-221-2450
THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate
box):
|_| immediately upon filing pursuant to paragraph (b)
|X| |_|on April 30, 1999 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.
<PAGE>
SELIGMAN
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PORTFOLIOS, INC.
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in a portfolio of this Fund
should be considered based on the investment objective, strategies and risks
described herein, considered in light of all of the other investments in your
portfolio, as well as your risk tolerance, financial goals and time horizons. We
recommend that you consult your financial advisor to determine if one or more of
the portfolios of this Fund is suitable for you.
EQVA1 5/99
o Seligman Bond Portfolio
o Seligman Capital Portfolio
o Seligman Cash Management Portfolio
o Seligman Common Stock Portfolio
o Seligman Communications and Information Portfolio
o Seligman Frontier Portfolio
o Seligman Henderson Global Growth Opportunities Portfolio
o Seligman Henderson Global Smaller Companies Portfolio
o Seligman Henderson Global Technology Portfolio
o Seligman Henderson International Portfolio
o Seligman High-Yield Bond Portfolio
o Seligman Income Portfolio
o Seligman Large-Cap Growth Portfolio
o Seligman Large-Cap Value Portfolio
o Seligman Small-Cap Value Portfolio
PROSPECTUS
MAY 1, 1999
MANAGED BY
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
TABLE OF CONTENTS
THE FUND
DISCUSSIONS OF THE INVESTMENT OBJECTIVES, STRATEGIES, RISKS, AND
PERFORMANCE OF THE PORTFOLIOS OF THE FUND
OVERVIEW OF THE FUND P-1
SELIGMAN BOND PORTFOLIO P-2
SELIGMAN CAPITAL PORTFOLIO P-5
SELIGMAN CASH MANAGEMENT PORTFOLIO P-7
SELIGMAN COMMON STOCK PORTFOLIO P-9
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO P-11
SELIGMAN FRONTIER PORTFOLIO P-13
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO P-15
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO P-18
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO P-21
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO P-24
SELIGMAN HIGH-YIELD BOND PORTFOLIO P-27
SELIGMAN INCOME PORTFOLIO P-30
SELIGMAN LARGE-CAP GROWTH PORTFOLIO P-33
SELIGMAN LARGE-CAP VALUE PORTFOLIO P-35
SELIGMAN SMALL-CAP VALUE PORTFOLIO P-37
MANAGEMENT OF THE FUND P-39
YEAR 2000 P-40
EURO CONVERSION P-40
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES P-41
HOW TO PURCHASE AND SELL SHARES P-41
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS P-41
TAXES P-41
FINANCIAL HIGHLIGHTS P-42
FOR MORE INFORMATION BACK COVER
TIMES CHANGE ... VALUES ENDURE
<PAGE>
THE FUND
OVERVIEW OF THE FUND
This Prospectus contains information about Seligman Portfolios, Inc. The Fund
consists of the following 15 separate and distinct portfolios:
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 GROWTH PORTFOLIO
SELIGMAN LARGE-CAP VALUE PORTFOLIO
SELIGMAN SMALL-CAP VALUE PORTFOLIO
Shares of the Fund's Portfolios are not offered or sold directly to investors.
They are offered and sold only to insurance company separate accounts.
The shares are currently provided as the investment medium for certain variable
annuity accounts offered by Canada Life Insurance Company of America and Canada
Life Insurance Company of New York. Shares of some of the Portfolios of the Fund
may not be offered to all Canada Life Accounts.
Shares of the Fund's Portfolio will be purchased and sold by Canada Life
Accounts at net asset value, without charge. However, the Canada Life Accounts
are sold subject to certain fees and charges. These fees and charges for the
Canada Life Accounts are described in the prospectuses or disclosure documents
for Canada Life Accounts and should be read together with this Prospectus, as
applicable.
Shares of some of the Fund's Portfolios are also provided as the investment
medium for Seligman Mutual Benefit Plan, a separate account of MBL Life
Assurance Corporation. However, MBL Life no longer accepts applications for new
contracts, nor will it accept additional purchase payments under existing
contracts.
Each Portfolio has its own investment objectives, strategies and risks. A
discussion of each Portfolio begins on the next page.
A Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
that Portfolio's investment objectives. A Portfolio's objectives and any
fundamental policies may be changed only with shareholder approval. If a change
of objectives or fundamental policies is proposed, investors in Canada Life
Accounts and Seligman Mutual Benefit Plan will be asked to give voting
instructions to Canada Life and/or MBL Life, as applicable.
A Portfolio may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent a Portfolio from achieving its objectives.
As with any mutual fund, there is no guarantee a Portfolio will achieve its
objectives.
You should read the information about a particular Portfolio before making an
investment decision about that Portfolio.
P-1
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SELIGMAN BOND PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is favorable current income.
The Portfolio uses the following principal strategies to seek its objective:
Generally, the Portfolio invests in fixed-income securities, diversified among a
number of market sectors. The Portfolio has a fundamental policy that at least
80% of the Portfolio's assets will be invested in securities that are rated
investment grade when purchased by the Portfolio. The Portfolio may invest in
securities of any duration. Capital appreciation is a secondary consideration in
selecting securities for purchase by the Portfolio.
The Portfolio may invest in corporate debt securities (including bonds and
debentures convertible into common stock or with rights and warrants),
securities issued or guaranteed by the US Treasury, its agencies or
instrumentalities, mortgage-backed securities (including collateralized mortgage
obligations and mortgage pass-through securities), and high-grade money market
instruments. The Portfolio may also hold or sell any securities obtained through
the exercise of conversion rights or warrants, or as a result of a
reorganization, recapitalization, or liquidation proceeding of any issuer of
securities owned by the Portfolio.
The Portfolio's investment approach combines macro analysis of the fixed-income
market with fundamental research into individual securities, customized by
market sector. This means that the investment manager considers the trends in
the fixed-income market and evaluates the long-term trends in interest rates,
and then selects individual securities for the Portfolio based on its evaluation
of each security's particular characteristics (for example, duration, yield,
quality, relative value). The average maturity of the Portfolio will vary in
response to what the investment manager believes to be the long-term trend in
interest rates. Generally, if rates are trending up, the Portfolio will tend to
hold securities with shorter maturities. If rates are trending down, the
Portfolio will tend to hold securities with longer maturities. Additionally, the
Portfolio's concentration in any particular market sector and the Portfolio's
individual security holdings will vary depending on the investment manager's
view of the relative value offered by certain sectors, as well as specific
securities within those sectors.
In selecting individual securities for purchase by the Portfolio, the investment
manager will seek to identify securities of various market sectors that it
believes offer better total return opportunities.
The Portfolio generally sells securities when the investment manager believes
that the direction of long-term interest rates is changing, better opportunities
exist in the market, or yield spreads (i.e., the yields offered on different
securities) have become too narrow to justify the added volatility of long-term
securities (which generally offer higher yields), or when the Portfolio must
meet cash requirements.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold), and may invest up to 10% of its
total assets directly in foreign securities. The Portfolio may purchase
securities on a when-issued or forward commitment basis (delivery of securities
and payment of the purchase price takes place after the commitment to purchase
the securities). The Fund generally does not invest a significant amount, if
any, in illiquid or foreign securities.
P-2
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SELIGMAN BOND PORTFOLIO
PRINCIPAL RISKS
The value of your investment in the Portfolio will fluctuate with fluctuations
in the value of the securities held by the Portfolio. The principal factors that
may affect the value of the Portfolio's securities holdings are changes in
interest rates and the credit worthiness of the issuers of securities held by
the Portfolio.
INTEREST RATE RISK. Changes in market interest rates will affect the value of
securities held by the Portfolio. The Portfolio invests mostly in fixed-income
securities. In general, the market value of fixed-income securities moves in the
opposite direction of interest rates: the market value decreases when interest
rates rise and increases when interest rates fall. The Portfolio's net asset
value per share generally moves in the same direction as the market value of the
securities it holds. Therefore, if interest rates rise, you should expect the
Portfolio's net asset value per share to fall, and if interest rates fall, the
Portfolio's net asset value should rise.
Long-term securities are generally more sensitive to changes in interest rates,
and, therefore, are subject to a greater degree of market price volatility. To
the extent the Portfolio holds long-term securities, its net asset value will be
subject to a greater degree of fluctuation than if it held securities of shorter
duration.
CREDIT RISK. A fixed-income security could deteriorate in quality to such an
extent that its rating is downgraded or its market value declines relative to
comparable securities. Credit risk also includes the risk that an issuer of a
debt security would be unable to make interest and principal payments. To the
extent the Portfolio holds securities that have been downgraded, or that default
on payment, its performance could be negatively affected.
While the Portfolio is required to invest a majority of its assets in securities
rated investment grade on the date of purchase, there is no guarantee that these
securities are free from credit risk. Ratings by Moody's Investors Service, Inc.
(Moody's) and Standard and Poor's Rating Service (S&P), are generally accepted
measures of credit risk. However, these ratings are subject to certain
limitations. The rating of an issuer is based heavily on past developments and
does not necessarily reflect probable future conditions. Ratings also are not
updated continuously.
Fixed-income securities, like those in which the Portfolio invests, are traded
principally by dealers in the over-the-counter market. The Portfolio's ability
to sell securities it holds is dependent on the willingness and ability of
market participants to provide bids that reflect current market levels. Adverse
market conditions could reduce the number of ready buyers.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-3
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SELIGMAN BOND PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Bond Portfolio by showing how the performance of a single share of the Portfolio
has varied year to year, as well as how its performance compares to two
widely-used measures of performance. How the Portfolio has performed in the
past, however, is not necessarily an indication of how it will perform in the
future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
contracts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1989 8.70%
1990 6.14%
1991 14.58%
1992 5.60%
1993 7.98%
1994 -3.39%
1995 19.18%
1996 0.09%
1997 8.98%
1998 8.20%
Best quarter return: 6.88% - quarter ended 6/30/95
Worst quarter return: -3.35% - quarter ended 3/31/96
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ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE FIVE TEN
YEAR YEARS YEARS
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Seligman Bond Portfolio 8.20% 6.33% 7.43%
Lehman Brothers Government Bond Index 9.85 7.19 9.17
Lipper Corporate Debt BBB-Rated Funds Average 6.45 7.07 9.12
The Lehman Brothers Government Bond Index and the Lipper Corporate Debt
BBB-Rated Funds Average are unmanaged benchmarks that assume reinvestment of
dividends. The Lipper Corporate Debt BBB-Rated Funds Average excludes the effect
of sales charges and the Lehman Brothers Government BondIndex excludes the
effect of fees and sales charges.
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PORTFOLIO MANAGEMENT
The Bond Portfolio is managed by the Seligman Taxable Fixed Income Team, headed
by Mr. Gary S. Zeltzer. Mr. Zeltzer joined Seligman in March 1998 as Senior Vice
President, Manager Taxable Fixed Income. He is a Vice President of the Fund and
has been a Portfolio Manager of the Bond Portfolio since March 1998. Prior to
joining Seligman, Mr. Zeltzer was a Group Vice President and Portfolio Manager
at Schroder Capital Management from July 1979 to March 1998. Mr. Zeltzer also
manages the Cash Management Portfolio of the Fund; and he manages Seligman Cash
Management Fund, Inc. and Seligman U.S. Government Securities Series, a series
of Seligman High Income Fund Series.
P-4
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SELIGMAN CAPITAL PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is capital appreciation.
The Portfolio uses the following principal strategies to seek its objective:
Generally, the Portfolio invests primarily in the common stock of medium-sized
US companies. The investment manager chooses common stocks for the Portfolio
using both quantitative and fundamental analysis. This means the investment
manager first screens companies for past growth in sales and earnings, as well
as a strong balance sheet (e.g., low ratio of debt to total capital). In
selecting individual securities for investment, the investment manager then
looks to identify medium-sized companies that it believes display one or more of
the following:
- --------------------------------------
MEDIUM-SIZED COMPANIES:
COMPANIES WITH MARKET CAPITALIZATIONS,
AT THE TIME OF PURCHASE BY THE PORTFOLIO,
OF BETWEEN $1 BILLION AND $10 BILLION.
- ---------------------------------------
o Proven track record
o Strong management
o Multiple product lines
o Potential for improvement in overall operations (a catalyst for
growth in revenues and/or earnings)
o Positive supply and demand outlook for its industry
The investment manager also looks at the forecasted earnings of a company
considered for investment to determine if the company has the potential for
above-average growth.
The Portfolio will generally sell a stock when the investment manager believes
that the company or industry fundamentals have deteriorated or the company's
catalyst for growth is already reflected in the stock's price (i.e., the stock
is fully valued).
The Portfolio primarily invests in common stocks. However, the Portfolio may
also invest in preferred stocks, securities convertible into common stocks,
common stock rights or warrants, and debt securities if the investment manager
believes they offer capital appreciation opportunities.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold) and may invest up to 10% of its
total assets directly in foreign securities. The Portfolio generally does not
invest a significant amount, if any, in illiquid or foreign securities. The
Portfolio may borrow money from time to time to purchase securities.
The Fund's Board of Directors may change the parameters by which "medium-sized
companies" are defined if they conclude that such a change is appropriate.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate, especially in the short term. You
may experience a decline in the value of your investment and you could lose
money if you sell your shares at a price lower than you paid for them.
The Portfolio's performance may be affected by the broad investment environment
in the US or international securities markets, which is influenced by, among
other things, interest rates, inflation, politics, fiscal policy, and current
events.
The Portfolio may not invest more than 25% of its total assets in securities of
companies in any one industry. The Portfolio may, however, invest more heavily
in certain industries which the investment manager believes offer good
investment opportunities. If an industry in which the Portfolio is invested
falls out of favor, the Portfolio's performance may be negatively affected.
Foreign securities or illiquid securities in the Portfolio's investment
portfolio involve higher risk and may subject the Portfolios to higher price
volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-5
<PAGE>
SELIGMAN CAPITAL PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Capital Portfolio by showing how the performance of a single share of the
Portfolio has varied year to year, as well as how its performance compares to
two widely-used measures of performance. How the Portfolio has performed in the
past, however, is not necessarily an indication of how it will perform in the
future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
contracts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1989 16.47%
1990 -3.18%
1991 59.05%
1992 6.80%
1993 11.65%
1994 -4.59%
1995 27.17%
1996 14.51%
1997 21.31%
1998 22.19%
Best quarter return: 32.91% - quarter ended 12/31/98
Worst quarter return: -23.55% - quarter ended 9/30/90
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AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE FIVE TEN
YEAR YEARS YEARS
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Seligman Capital Portfolio 22.19% 15.54% 15.98%
Russell Midcap Growth Index 17.86 17.33 17.30
Lipper Mid Cap Funds Average 11.37 15.44 16.51
The Lipper Mid Cap Funds Average and the Russell Midcap Growth Index are
unmanaged benchmarks that assume reinvestment of dividends. The Lipper Mid Cap
Funds Average does not reflect sales charges and the Russell Midcap GrowthIndex
does not reflect fees and sales charges.
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PORTFOLIO MANAGEMENT
The Capital Portfolio is managed by the Seligman Growth Team, headed by Ms.
Marion S. Schultheis. Ms. Schultheis joined Seligman in May 1998 as a Managing
Director. She is a Vice President of the Fund and has been Portfolio Manager of
the Capital Portfolio since May 1998. Prior to joining Seligman, Ms. Schultheis
was a Managing Director at Chancellor LGT from October 1997 to May 1998. Prior
thereto, she was Senior Portfolio Manager at IDS Advisory Group Inc. from August
1987 to October 1997. Ms. Schultheis also manages the Large-Cap Growth Portfolio
and co-manages the Global Growth Opportunities Portfolio of the Fund; and she
manages Seligman Capital Fund, Inc. and Seligman Growth Fund, Inc. and
co-manages Seligman Henderson Global Growth Opportunities Fund, a series of
Seligman Henderson Global Fund Series, Inc.
P-6
<PAGE>
SELIGMAN CASH MANAGEMENT PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objectives are to preserve capital and to maximize liquidity and
current income.
The Portfolio uses the following principal strategies to seek its objectives:
The Portfolio invests in US dollar-denominated high-quality money market
instruments. Such instruments include obligations of the US Treasury, its
agencies or instrumentalities, obligations of domestic and foreign banks (such
as certificates of deposit and fixed time deposits), commercial paper and
short-term corporate debt securities, and repurchase agreements with respect to
these types of instruments.
The Portfolio will invest only in US dollar-denominated securities having a
remaining maturity of 13 months (397 days) or less and will maintain a US
dollar-weighted average portfolio maturity of 90 days or less.
In seeking to maintain a constant net asset value of $1.00, the Portfolio will
limit its investments to securities that, in accordance with guidelines approved
by the Fund's Board of Directors, present minimal credit risk. Accordingly, the
Portfolio will only purchase US Government securities, or securities rated in
one of the two highest rating categories assigned to short-term debt securities
by at least two nationally recognized statistical rating organizations (such as
Moody's Investors Service, Inc. (Moody's) or Standard and Poor's Rating Service
(S&P), or if not so rated, determined to be of comparable quality).
Determination of quality is made at the time of investment, in accordance with
procedures approved by the Fund's Board of Directors. The investment manager
continuously monitors the quality of the Portfolio's investments. If the quality
of an investment declines, the Portfolio may, in certain limited circumstances,
continue to hold it.
Currently, the Portfolio invests only in US Government securities and in
securities that are rated in the top 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 rating category by two rating organizations. The Fund may not invest
more than the greater of 1% of its total assets or $1,000,000 in any one
security in the second rating category.
PRINCIPAL RISKS
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Portfolio seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Portfolio.
Yield and total return of the Portfolio will fluctuate with fluctuations in the
yields of the securities held by the Portfolio. In periods of declining interest
rates, the yields of the securities held by the Portfolio will tend to be
somewhat higher than prevailing market rates, and in periods of rising interest
rates, the yields of securities held by the Portfolio will tend to be lower than
market rates. Additionally, when interest rates are falling, the inflow of new
money to the Portfolio from sales of its shares will likely be invested in
securities producing lower yields than the balance of the Portfolio's assets,
reducing the current yield of the Portfolio. In periods of rising interest
rates, the opposite may be true.
Repurchase agreements in which the Portfolio invests could involve certain risks
in the event of the default by the seller, including possible delays and
expenses in liquidating the securities underlying the agreement, decline in the
value of the underlying securities and loss of interest.
Investments in foreign banks and foreign branches of US banks involve certain
risks not generally associated with investments in US banks. While US banks and
US branches of foreign banks are required to maintain certain reserves and are
subject to other regulations, these requirements and regulations may not apply
to foreign banks or foreign branches of US banks. Investments in foreign banks
or foreign branches may also be subject to other risks, including political or
economic developments, the seizure or nationalization of foreign deposits and
the establishments of exchange controls or other restrictions.
P-7
<PAGE>
SELIGMAN CASH MANAGEMENT PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Cash Management Portfolio by showing how the performance of a single share of
the Portfolio has varied year to year. How the Portfolio has performed in the
past, however, is not necessarily an indication of how it will perform in the
future.
The returns presented in the bar chart do not reflect the effect of any
administration fees or sales charges associated with variable annuity contracts.
If these expenses were included, the returns would be less. The returns
presented assume that all dividends were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1989 7.81%
1990 7.79%
1991 5.70%
1992 3.53%
1993 3.00%
1994 4.03%
1995 5.60%
1996 5.43%
1997 5.52%
1998 5.42%
Best quarter return: 2.07% - quarter ended 6/30/89
Worst quarter return: 0.72% - quarter ended 6/30/93
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
5.42% 5.20% 5.32%
- --------------------------------------------------------------------------------
The Portfolio's 7-day yield as of December 31, 1998 was 4.93%.
P-8
<PAGE>
SELIGMAN COMMON STOCK PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objectives are 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 uses the following principal strategies to seek its objectives:
Generally, the Portfolio invests a majority of its assets in common stocks,
broadly diversified among a number of industries. The Portfolio usually invests
in the common stock of larger US companies; however, it may invest in companies
of any size. While common stocks have for many years been the predominant type
of security owned by the Portfolio, substantial portions of the Portfolio's
assets have been held, and may be held, in cash and fixed-income securities.
The Portfolio uses a bottom-up stock selection approach. This means the
investment manager concentrates on individual company fundamentals, rather than
on a particular industry. The Portfolio seeks to purchase strong, well-managed
companies that have the potential for solid earnings growth and dividend
increases.
The investment manager generally looks to identify companies that have
attractive dividend yields and that typically display relatively low valuations
based on one or more of the following measures: price-to-earnings, price-to-cash
flow, price-to-sales, and price-to-book value. The investment manager then uses
in-depth research into each company that meets its preliminary criteria to
identify those companies that it believes possess a catalyst for earnings
acceleration (i.e., a reason to expect a growth in earnings).
The Portfolio generally sells a stock if the investment manager believes one or
more of the following:
o The stock is over valued or fully valued
o Its dividend yield is not competitive compared to the yields offered
by other securities in its industry
o Its earnings are disappointing or the catalyst for earnings
acceleration no longer exists
o The company's underlying fundamentals have deteriorated o There are
more attractive investment opportunities
The Portfolio may purchase American Depositary Receipts (ADRs), which are
publicly traded instruments generally issued by domestic banks or trust
companies that represent a security of a foreign issuer. The Portfolio may
invest up to 15% of its net assets in illiquid securities (i.e., securities that
cannot be readily sold) and may invest up to 10% of its total assets directly in
foreign securities. The limit on foreign securities does not include ADRs, or
commercial paper and certificates of deposit issued by foreign banks. The
Portfolio generally does not invest a significant amount, if any, in illiquid or
foreign securities.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate, especially in the short term. You
may experience a decline in the value of your investment and you could lose
money if you sell your shares at a price lower than you paid for them.
The Portfolio may not invest more than 25% of its total assets in securities of
companies in any one industry. The Portfolio may, however, invest more heavily
in certain industries believed to offer good investment opportunities. If an
industry in which the Portfolio is invested falls out of favor, the Portfolio's
performance may be negatively affected.
The Portfolio's performance may be affected by the broad investment environment
in the US or international securities markets, which is influenced by, among
other things, interest rates, inflation, politics, fiscal policy, and current
events.
Stocks of large US companies, like those in which the Portfolio generally
invests, are experiencing an extended period of strong performance. However, if
investor sentiment changes, the value of large company stocks may decline. This
could have an adverse effect on the Portfolio's performance.
Foreign securities or illiquid securities in the Portfolio's investment
portfolio involve higher risk and may subject the Portfolio to higher price
volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-9
<PAGE>
SELIGMAN COMMON STOCK PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Common Stock Portfolio by showing how the performance of a single share of the
Portfolio has varied year to year, as well as how its performance compares to
two widely-used measures of performance. How the Portfolio has performed in the
past, however, is not necessarily an indication of how it will perform in the
future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
accounts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1989 24.11%
1990 -3.15%
1991 33.16%
1992 12.14%
1993 11.94%
1994 0.04%
1995 27.28%
1996 20.08%
1997 21.31%
1998 24.16%
Best quarter return: 19.11% - quarter ended 12/31/98
Worst quarter return: -17.65% - quarter ended 9/30/90
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Common Stock Portfolio 24.16% 18.16% 16.55%
S&P 500 Index 28.58 24.06 19.21
Lipper Growth and Income Funds Average 15.32 18.32 15.76
The Lipper Growth and Income Funds Average excludes the effect of sales charges
that may be incurred in connection with purchases or sales. The S&P 500 Index is
an unmanaged benchmark that assumes investment of dividends and excludes the
effect of fees and sales charges.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The Common Stock Portfolio is managed by the Seligman Growth and Income Team,
headed by Mr. Charles C. Smith, Jr. Mr. Smith, a Managing Director of Seligman,
is a Vice President of the Fund and has been Portfolio Manager of the Common
Stock Portfolio since December 1991. Mr. Smith joined Seligman in 1985 as Vice
President, Investment Officer. He became Senior Vice President, Senior
Investment Officer in 1992, and Managing Director in January 1994. Mr. Smith
also manages the Income Portfolio of the Fund; and he manages Seligman Common
Stock Fund, Inc. and Seligman Income Fund, Inc.
Mr. Rodney D. Collins, Senior Vice President, Investment Officer of Seligman
since January 1999, co-manages the Common Stock Portfolio. Mr. Collins joined
Seligman in 1992 as an Investment Associate, and was named a Vice President,
Investment Officer in January 1995. Mr. Collins also co-manages the Income
Portfolio of the Fund; and he co-manages Seligman Common Stock Fund, Inc. and
Seligman Income Fund, Inc.
P-10
<PAGE>
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is capital gain.
The Portfolio uses the following principal strategies to seek its objective:
The Portfolio invests at least 80% of its net assets, exclusive of government
securities, short-term notes, and cash and cash equivalents, in securities of
companies operating in the communications, information and related industries.
The Portfolio generally invests at least 65% of its total assets in securities
of companies engaged in these industries. The Portfolio may invest in companies
of any size.
The Portfolio may invest in 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. The Portfolio may also invest in
small-to-medium size companies that the investment manager believes provide
opportunities to benefit from the rapidly changing technologies and the
expansion of the communications, information and related industries.
The Portfolio uses a bottom-up stock selection approach. This means that the
investment manager uses extensive in-depth research into specific companies in
the communications, information and related industries to find those companies
that it believes offer the greatest prospects for future growth. In selecting
individual securities, the investment manager looks for companies that it
believes display or are expected to display:
o Robust growth prospects
o High profit margins or return on capital
o Attractive valuation relative to expected earnings or cash flow
o Quality management
o Unique competitive advantages
The Portfolio generally sells a stock if the investment manager believes its
target price is reached, its earnings are disappointing, its revenue growth has
slowed, or its underlying fundamentals have deteriorated.
The Portfolio primarily invests in common stocks. However, the Fund may also
invest in securities convertible into or exchangeable for common stocks, in
rights and warrants to purchase common stocks, and in debt securities or
preferred stocks believed to provide opportunities for capital gain.
The Portfolio may purchase American Depositary Receipts (ADRs), which are
publicly traded instruments generally issued by domestic banks or trust
companies that represent a security of a foreign issuer. The Portfolio may
invest up to 15% of its net assets in illiquid securities (i.e., securities that
cannot be readily sold) and may invest up to 10% of its total assets directly in
foreign securities. The limit on foreign securities does not include ADRs, or
commercial paper and certificates of deposit issued by foreign banks. The
Portfolio may also purchase put options in an attempt to hedge against a decline
in the price of securities it holds. A put option gives the Portfolio the right
to sell an underlying security at a particular price during a fixed period.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate. You may experience a decline in the
value of your investment and you could lose money if you sell your shares at a
price lower than you paid for them.
The Portfolio concentrates its investments in companies in the communications,
information and related industries. Therefore, the Portfolio may be susceptible
to factors affecting these industries and the Portfolio's net asset value may
fluctuate more than a fund that invests in a wider range of industries. In
addition, the rapid pace of change within many of these industries tends to
create a more volatile operating environment than in other industries.
The Portfolio may be negatively affected by the broad investment environment in
the international or US securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
Illiquid securities, foreign securities, or options in the Portfolio's
investment portfolio involve higher risk and may subject the Portfolio to higher
price volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
The Portfolio may actively and frequently trade stocks in its portfolio to carry
out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-11
<PAGE>
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Communications and Information Portfolio by showing how the performance of a
single share of the Portfolio has varied year to year, as well as how its
performance compares to two widely-used measures of performance. How the
Portfolio has performed in the past, however, is not necessarily an indication
of how it will perform in the future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
accounts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1995 38.55%
1996 8.81%
1997 22.22%
1998 36.49%
Best quarter return: 45.02% - quarter ended 12/31/98
Worst quarter return: -16.81% - quarter ended 9/30/98
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE SINCE INCEPTION
YEAR 10/11/94
------- ---------------
Seligman Communications and Information Portfolio 36.49% 25.67%
S&P 500 Index 28.58 28.47(1)
Lipper Science & Technology Funds Average 52.55 30.32(1)
The Lipper Science & Technology Funds Average is an average of 57 science and
technology funds and excludes the effect of the sales charges that may be
incurred in connection with purchases or sales. The S&P 500 Index is an
unmanaged index that assumes investment of dividends and excludes the effect of
fees and sales charges.
(1)From September 30, 1994.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The Communications and Information Portfolio is managed by the Seligman
Technology Team, headed by Mr. Paul H. Wick. Mr. Wick, a Director and Managing
Director of Seligman, is Vice President of the Fund and has been Portfolio
Manager of the Communications and Information Portfolio since its inception. Mr.
Wick joined Seligman in August 1987 as an Associate, Investment Research and
became a Vice President, Investment Officer in August 1991; he was named
Managing Director in January 1995 and was elected a Director of Seligman in
November 1997. Mr. Wick also co-manages the Seligman Henderson Global Technology
Portfolio of the Fund; and he manages Seligman Communications and Information
Fund, Inc. and co-manages Seligman Henderson Global Technology Fund, a series of
Seligman Henderson Global Fund Series, Inc.
P-12
<PAGE>
SELIGMAN FRONTIER PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is growth of capital. Income may be considered but is
incidental to the Portfolio's investment objective. The Portfolio uses the
following strategies to pursue its objective of growth of capital: The Portfolio
generally invests at least 65% of its total assets in the common stock of small
US companies. Companies are selected for their growth prospects. The Portfolio
uses a bottom-up stock selection approach. This means that the investment
manager concentrates on individual company fundamentals, rather than on a
particular market sector. The Portfolio maintains a disciplined investment
process that focuses on downside risks as well as upside potential. In selecting
investments, the investment manager looks to identify companies that typically
display one or more of the following:
- --------------------------------------
SMALL COMPANIES:
COMPANIES WITH MARKET CAPITALIZATIONS,
AT THE TIME OF PURCHASE BY THE PORTFOLIO,
OF $1.25 BILLION OR LESS.
- ---------------------------------------
o Positive operating cash flows
o Management ownership
o A unique competitive advantage
o Historically high returns on capital
The Portfolio generally sells a stock if its target price is reached, its
earnings are disappointing, its revenue growth slows, or its underlying
fundamentals deteriorate.
Although the Portfolio generally concentrates its investments in common stocks,
it may invest up to 35% of its assets in preferred stocks, securities
convertible into common stocks, and stock purchase warrants if the manager
believes they offer capital growth opportunities. The Portfolio may also invest
in American Depositary Receipts (ADRs), which are publicly-traded instruments
generally issued by domestic banks or trust companies that represent a security
of a foreign issuer. ADRs are quoted and settled in USdollars. The Portfolio
uses the same criteria in evaluating these securities as it does for common
stocks.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold), and may invest up to 10% of its
total assets directly in foreign securities. The limit on foreign securities
does not include ADRs, or commercial paper and certificates of deposit issued by
foreign banks. The Portfolio may also purchase put options in an attempt to
hedge against a decline in the price of securities it holds in its portfolio and
may lend portfolio securities. A put option gives the Portfolio the right to
sell an underlying security at a particular price during a fixed period. The
Portfolio generally does not invest a significant amount of its assets, if any,
in illiquid securities, foreign securities, or put options.
The Fund's Board of Directors may change the definition of "small companies" if
they conclude that such a change is appropriate.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate, especially in the short term. You
may experience a decline in the value of your investment and you could lose
money if you sell your shares at a price lower than you paid for them.
Investments in smaller companies typically involve greater risks than
investments in larger companies. Small company stocks, as a whole, may
experience larger price fluctuations than large-company stocks or other types of
investments. Some small companies may have shorter operating histories, less
experienced management and limited product lines, markets, and financial or
managerial resources.
The Portfolio may not invest more than 25% of its total assets in securities of
companies in any one industry. The Portfolio may, however, invest more heavily
in certain industries which the investment manager believes to offer good
investment opportunities. If an industry in which the Portfolio is invested
falls out of favor, the Portfolio's performance may be negatively affected.
The Portfolio may also be negatively affected by the broad investment
environment in the US or international securities markets, which is influenced
by, among other things, interest rates, inflation, politics, fiscal policy, and
current events.
Foreign securities, illiquid securities, or options, in the Portfolio's
investment portfolio involve higher risk and may subject the Portfolio to higher
price volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-13
<PAGE>
SELIGMAN FRONTIER PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Frontier Portfolio by showing how the performance of a single share of the
Portfolio has varied year to year, as well as how its performance compares to
three widely-used measures of performance. How the Portfolio has performed in
the past, however, is not necessarily an indication of how the Portfolio will
perform in the future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
accounts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1995 33.28%
1996 23.93%
1997 16.33%
1998 -1.46%
Best quarter return: 21.12% - quarter ended 6/30/97
Worst quarter return: -23.61% - quarter ended 9/30/98
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE SINCE INCEPTION
YEAR 10/11/94
------- ---------------
Seligman Frontier Portfolio -1.46% 17.88%
Russell 2000 Index -2.55 14.09(1)
Russell 2000 Growth Index 1.23 12.58(1)
Lipper Small Cap Funds Average -0.40 16.31(1)
The Lipper Small Cap Funds Average, the Russell 2000 Growth Index, and the
Russell 2000 Index are unmanaged benchmarks that assume investment of all
dividends. The Lipper Small Cap Funds Average does not reflect sales charges,
and the Russell 2000 Growth Index and the Russell 2000 Index do not reflect fees
and sales charges.
(1) From September 30, 1994.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The Frontier Portfolio is managed by the Seligman Small Company Team, headed by
Mr. Arsen Mrakovcic. Mr. Mrakovcic, a managing director of Seligman, is a Vice
President of the Fund and has been Portfolio Manager of the Frontier Portfolio
since October 1995. Mr. Mrakovcic joined Seligman in 1992 as a Portfolio
Assistant, became Assistant Vice President, Credit Officer in April 1993, Vice
President, Investment Officer in January 1995, and a Managing Director in
January 1996. Mr. Mrakovcic also co-manages the Seligman Henderson Global
Smaller Companies Portfolio of the Fund; and he manages Seligman Frontier Fund,
Inc. and co-manages Seligman Henderson Global Smaller Companies Fund, a series
of Seligman Henderson Global Fund Series, Inc.
P-14
<PAGE>
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is long-term capital appreciation.
The Portfolio uses the following principal strategies to seek its objective:
The Portfolio invests primarily in equity securities of non-US and US growth
companies that have the potential to benefit from global economic or social
trends.
The Portfolio may invest in companies of any size, domiciled in any country.
Typically, the Portfolio will invest in several countries in different
geographic regions.
The Portfolio uses an investment style that combines macro analysis of global
trends with in-depth research of individual companies. This means that the
investment managers analyze the rapidly changing world to identify investment
themes that they believe will have the greatest impact on global markets, and
use in-depth research to identify attractive companies around the world. The
Portfolio focuses on the following macro trends:
o Economic liberalization and the flow of capital through global trade
and investment
o Globalization of the world's economy
o The expansion of technology as an increasingly important influence on
society
o Increased awareness of the importance of protecting the environment
o The increase in life expectancy leading to changes in consumer
demographics and a greater need for healthcare, personal security,
and leisure
In selecting individual securities, the investment managers look to identify
companies that they believe display one or more of the following:
o Attractive pricing relative to earnings forecasts or other valuation
criteria (e.g., return on equity)
o Quality management and equity ownership by executives
o A unique competitive advantage (e.g., market share, proprietary
products)
o Market liquidity
o Potential for improvement in overall operations
The Portfolio generally sells a stock if its target price is reached, its
earnings are disappointing, its revenue growth slows, or its underlying
fundamentals deteriorate. The Portfolio may also sell a stock if the investment
manager believes that a shifting in global trends may negatively affect a
company's outlook.
The Portfolio may invest in all types of securities, many of which will be
denominated in currencies other than the US dollar. Although the Portfolio
normally invests in equity securities, the Portfolio may invest up to 25% of its
assets in preferred stock and investment grade or comparable quality debt
securities. The Portfolio may also invest in depositary receipts, which are
publicly traded instruments generally issued by US or foreign banks or trust
companies that represent securities of foreign issuers.
The Portfolio may invest up to 15% of its assets in illiquid securities (i.e.,
securities that cannot be readily sold), and may from time to time enter into
forward foreign currency exchange contracts in an attempt to manage the risk of
adverse changes in currencies. The Portfolio may also purchase put options in an
attempt to hedge against a decline in the price of securities it holds. A put
option gives the Portfolio the right to sell an underlying security at a
particular price during a fixed period.
P-15
<PAGE>
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate. You may experience a decline in the
value of your investment and you could lose money if you sell your shares at a
price lower than you paid for them.
Investing in securities of foreign issuers involves risks not associated with US
investments, including currency fluctuations, foreign taxation, differences in
financial reporting practices, and changes in political conditions. There can be
no assurance that the Portfolio's foreign investments will present less risk
than a portfolio of solely US securities.
The Portfolio seeks to limit the risk of investing in foreign securities by
diversifying its investments among different countries, as well as among
different regions. Diversification reduces the effect events in any one country
will have on the Portfolio's entire investment portfolio. However, a decline in
the value of the Portfolio's investments in one country may offset potential
gains from investments in another country.
If global trends do not develop as the manager expects, the Portfolio's
performance could be negatively affected.
The Portfolio may be negatively affected by the broad investment environment in
the international or US securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
Options or illiquid securities in the Portfolio's investment portfolio involve
higher risk and may subject the Portfolio to higher price volatility.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-16
<PAGE>
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Global Growth Opportunities Portfolio by showing how the performance of a single
share of the Portfolio has varied year to year, as well as how its performance
compares to two widely-used measures of performance. How the Portfolio has
performed in the past, however, is not necessarily an indication of how it will
perform in the future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charge associated with variable annuity
accounts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1997 12.57%
1998 21.60%
Best quarter return: 18.90% - quarter ended 12/31/98
Worst quarter return: -14.29% - quarter ended 9/30/98
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE SINCE INCEPTION
YEAR 5/1/96
------- ---------------
Seligman Henderson Global Growth
Opportunities Portfolio 21.60% 12.16%
MSCI World Index 24.80 17.87(1)
Lipper Global Funds Average 14.06 12.98(1)
The Lipper Global Funds Average and the Morgan Stanley Capital International
World Index (MSCI World Index) are unmanaged benchmarks that assume reinvestment
of dividends. The Lipper Global Funds Average excludes the effect of sales
charges and the MSCI World Index excludes the effect of fees and sales charges.
(1) From April 30, 1996.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The Global Growth Opportunities Portfolio is co-managed by the Seligman Growth
Team and Henderson Investment Management Limited, subadviser to the Portfolio.
The Seligman Growth Team is headed by Ms. Marion Schultheis. Ms. Schultheis
joined Seligman in May 1998 as a Managing Director. She is a Vice President of
the Fund and has been Co-Portfolio Manager of the Global Growth Opportunities
Portfolio since May 1998. Prior to joining Seligman, Ms. Schultheis was a
Managing Director at Chancellor LGT from October 1997 to May 1998 and Senior
Portfolio Manager at IDS Advisory Group Inc. from August 1987 to October 1997.
Ms. Schultheis also manages the Capital Portfolio and the Large-Cap Growth
Portfolio and co-manages the Global Growth Opportunities Portfolio of the Fund;
and she manages Seligman Capital Fund, Inc. and Seligman Growth Fund, Inc. and
co-manages Seligman Henderson Global Growth Opportunities Fund, a series of
Seligman Henderson Global Fund Series, Inc.
Mr. Nitin Mehta, a Vice President of the Fund, has been Co-Portfolio Manager of
the Global Growth Opportunities Portfolio since its inception. Mr. Mehta has
been a Portfolio Manager with Henderson plc since September 1994. Prior to
joining Henderson, Mr. Mehta was Head of Currency Management and Derivatives at
Quroum Capital Management from May 1993 to September 1994. Mr. Mehta also
co-manages Seligman Henderson Global Growth Opportunities Fund, a series of
Seligman Henderson Global Growth Opportunities Fund.
Ms. Schultheis and Mr. Mehta have responsibility for directing the domestic and
international investments, respectively, of the Global Growth Opportunities
Portfolio.
P-17
<PAGE>
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is long-term capital appreciation.
The Portfolio uses the following principal strategies to seek its objective:
The Portfolio generally invests at least 65% of its assets in equity securities
of smaller US and non-US companies.
The Portfolio may invest in companies domiciled in any country, although it
typically invests in developed countries. The Portfolio will generally invest in
several countries in different geographic regions.
The Portfolio uses an investment style that combines macro analysis with
research into individual company attractiveness. This means that the investment
managers look to identify countries that they believe offer good investment
opportunities, and use extensive in-depth research to identify attractive
smaller companies around the world. The investment managers look at the
following factors when making country allocation decisions:
- ------------------------------------------
SMALLER COMPANIES:
COMPANIES WITH MARKET CAPITALIZATION,
AT THE TIME OF PURCHASE BY THE PORTFOLIO,
EQUIVALENT TO US $1 BILLION OR LESS.
- ------------------------------------------
o Relative economic growth potential of the various economies and
securities markets
o Political, financial, and social conditions influencing investment
opportunities
o Investor sentiment
o Prevailing interest rates and expected levels of inflation
o Market prices relative to historic averages
In selecting individual securities, the investment managers look to identify
companies that they believe display one or more of the following:
o Attractive pricing relative to earnings forecasts or other valuation
criteria (e.g., return on equity)
o Quality management and equity ownership by executives
o A unique competitive advantage (e.g., market share, proprietary
products)
o Market liquidity
o Potential for improvement in overall operations
The Portfolio generally sells a stock if its target price is reached, its
earnings are disappointing, its revenue growth slows, or its underlying
fundamentals deteriorate. The Portfolio anticipates that it will continue to
hold securities of companies that grow or expand so long as those investments
continue to offer prospects of long-term growth.
The Portfolio may invest in all types of securities, many of which will be
denominated in currencies other than the US dollar. Although the Portfolio
normally invests in equity securities, the Portfolio may invest up to 25% of its
assets in preferred stock and investment grade or comparable quality debt
securities. The Portfolio may also invest in depositary receipts, which are
publicly traded instruments generally issued by US or foreign banks or trust
companies that represent securities of foreign issuers. Additionally, the
Portfolio may invest up to 35% of it assets in companies with market
capitalization of over $1billion.
The Portfolio may invest up to 15% of its assets in illiquid securities (i.e.,
securities that cannot be readily sold), and may from time to time enter into
forward foreign currency exchange contracts in an attempt to manage the risk of
adverse changes in currencies. The Portfolio may also purchase put options in an
attempt to hedge against a decline in the price of securities it holds. A put
option gives the Portfolio the right to sell an underlying security at a
particular price during a fixed period.
The Fund's Board of Directors may change the definition of "smaller companies"
if they conclude that such a change is appropriate.
P-18
<PAGE>
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio that invests in stocks,
the Portfolio's net asset value will fluctuate. You may experience a decline in
the value of your investment and you could lose money if you sell your shares at
a price lower than you paid for them.
Investing in securities of foreign issuers involves risks not associated with US
investments, including settlement risks, currency fluctuations, foreign
taxation, differences in financial reporting practices, and changes in political
conditions.
Investments in smaller companies typically involve greater risks than
investments in larger companies. Small company stocks, as a whole, may
experience larger price fluctuations than large-company stocks or other types of
investments. Some small companies may have shorter operating histories, less
experienced management and limited product lines, markets, and financial or
managerial resources.
The Portfolio may be negatively affected by the broad investment environment in
the US or international securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
Options or illiquid securities in the Portfolio's investment portfolio involve
higher risk and may subject the Portfolio to higher price volatility.
The Portfolio may actively and frequently trade stocks in its portfolio to carry
out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-19
<PAGE>
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Global Smaller Companies Portfolio by showing how the performance of a single
share of the Portfolio has varied year to year, as well as how its performance
compares to two widely-used measures of performance. How the Portfolio has
performed in the past, however, is not necessarily an indication of how it will
perform in the future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
accounts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1995 17.38%
1996 18.66%
1997 3.43%
1998 6.58%
Best quarter return: 15.72% - quarter ended 3/31/98
Worst quarter return: -16.71% - quarter ended 9/30/98
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE SINCE INCEPTION
YEAR 10/11/94
------- -------------------
Seligman Henderson Global Smaller
Companies Portfolio 6.58% 11.60%
Salomon Smith Barney EM Index World 5.93 9.43(1)
Lipper Global Small Cap Funds Average 0.75 7.91(1)
The Lipper Global Small Cap Funds Average and the Salomon Smith Barney Extended
Market Index World (Salomon Smith Barney EM Index World) are unmanaged
benchmarks that assume reinvestment of dividends. The Lipper Global Small Cap
Funds Average excludes the effect of sales charges, and the Salomon Smith Barney
EM Index World excludes the effect of fees and sales charges.
(1) From September 30, 1994.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The Global Smaller Companies Portfolio is co-managed by the Seligman Small
Company Team and Henderson Investment Management Limited, subadviser to the
Portfolio.
The Seligman Small Company Team is headed by Mr. Arsen Mrakovcic. Mr. Mrakovcic,
a Managing Director of Seligman, is a Vice President of the Fund and has been
Portfolio Manager of the Global Smaller Companies since October 1995. Mr.
Mrakovcic joined Seligman in 1992 as a Portfolio Assistant, became Assistant
Vice President, Credit Officer in April 1993, Vice President, Investment Officer
in January 1995, and a Managing Director in January 1996. Mr. Mrakovcic also
manages the Frontier Portfolio of the Fund; and he manages Seligman Frontier
Fund, Inc. and co-manages Seligman Henderson Global Smaller Companies Fund, a
series of Seligman Henderson Global Fund Series, Inc.
Mr. Iain C. Clark, Chief Investment officer of Henderson Investment Management
Limited, is a Vice President of the Fund and has been Co-Portfolio Manager of
the Global Smaller Companies Portfolio since its inception. Mr. Clark has been a
Director and Senior Portfolio Manager of Henderson plc and Director of Henderson
International, Ltd. since 1985. He has been Secretary, Treasurer and Vice
President of Henderson International, Inc. since 1991. Mr. Clark also manages
the Seligman Henderson International Portfolio of the Fund; and he manages
Seligman Henderson International Fund and co-manages Seligman Henderson Global
Smaller Companies Fund, two series of Seligman Henderson Global Fund Series,
Inc.
Mr. Mrakovcic and Mr. Clark have responsibility for directing the domestic and
international investments, respectively, of the Global Smaller Companies
Portfolio.
P-20
<PAGE>
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is long-term capital appreciation.
The Portfolio uses the following principal strategies to seek its objective:
- -----------------------------------
TECHNOLOGY:
THE USE OF SCIENCE TO CREATE NEW
PRODUCTS AND SERVICES. THE INDUSTRY
COMPRISES INFORMATION TECHNOLOGY AND
COMMUNICATIONS, AS WELL AS MEDICAL,
ENVIRONMENTAL AND BIOTECHNOLOGY.
- ------------------------------------
The Portfolio generally invests at least 65% of its assets in equity securities
of US and non-US companies with business operations in technology and
technology-related industries.
The Portfolio may invest in companies domiciled in any country. The Portfolio
generally invests in several countries in different geographic regions.
The Portfolio may invest in companies of any size. 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 Portfolio. However, rapidly
changing technologies and expansion of technology and technology-related
industries often provide a favorable environment for companies of
small-to-medium size, and the Portfolio may invest in these companies as well.
The investment managers seek to identify those technology companies that they
believe have the greatest prospects for future growth, no matter what their
country of origin. The Portfolio combines in-depth research into individual
companies with macro analysis. The investment managers look for attractive
technology companies around the world, while seeking to identify particularly
strong technology sectors and/or factors within regions or specific countries
that may affect investment opportunities. In selecting individual securities,
the investment managers look for companies that they believe display one or more
of the following:
o Robust growth prospects
o High profit margins
o Attractive valuation relative to earnings forecasts or other
valuation criteria (e.g., return on equity)
o Quality management and equity ownership by executives
o Unique competitive advantages (e.g., market share, proprietary
products)
o Potential for improvement in overall operations
The Portfolio generally sells a stock if its target price is reached, its
earnings are disappointing, its revenue growth slows, or its underlying
fundamentals deteriorate.
The Portfolio may invest in all types of securities, many of which will be
denominated in currencies other than the US dollar. Although the Portfolio
normally invests in equity securities, the Portfolio may invest up to 25% of its
assets in preferred stock and investment grade or comparable quality debt
securities. The Portfolio may also invest in depositary receipts, which are
publicly traded instruments generally issued by US or foreign banks or trust
companies that represent securities of foreign issuers.
The Portfolio may invest up to 15% of its assets in illiquid securities (i.e.,
securities that cannot be readily sold), and may from time to time enter into
forward foreign currency exchange contracts in an attempt to manage the risk of
adverse changes in currencies. The Portfolio may also purchase put options in an
attempt to hedge against a decline in the price of securities it holds. A put
option gives the Portfolio the right to sell an underlying security at a
particular price during a fixed period.
P-21
<PAGE>
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio that invests in stocks,
the Portfolio's net asset value will fluctuate. You may experience a decline in
the value of your investment and you could lose money if you sell your shares at
a price lower than you paid for them.
Investing in securities of foreign issuers involves risks not associated with US
investments, including settlement risks, currency fluctuations, foreign
taxation, differences in financial reporting practices, and changes in political
conditions.
The Portfolio may be susceptible to factors affecting technology and
technology-related industries and the Portfolio's net asset value may fluctuate
more than a portfolio that invests in a wider range of portfolio securities.
Technology companies are often smaller and less experienced companies and may be
subject to greater risks than larger companies, such as limited product lines,
markets, and financial or managerial resources. These risks may be heightened
for technology companies in foreign markets.
The Portfolio seeks to limit risk by diversifying its investments among
different sectors within the technology industry, as well as among different
countries. Diversification reduces the effect the performance of any one sector
or events in any one country will have on the Portfolio's entire investment
portfolio. However, a decline in the value of one of the Portfolio's investments
may offset potential gains from other investments.
The Portfolio may be negatively affected by the broad investment environment in
the international or US securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
Options or illiquid securities in the Portfolio's investment portfolio involve
higher risk and may subject the Portfolio to higher price volatility.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-22
<PAGE>
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Global Technology Portfolio by showing how the performance of a single share of
the Portfolio has varied year to year, as well as how its performance compares
to three widely-used measures of performance. How the Portfolio has performed in
the past, however, is not necessarily an indication of how it will perform in
the future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
contracts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1997 19.53%
1998 36.80%
Best quarter return: 33.28% - quarter ended 12/31/98
Worst quarter return: -15.54% - quarter ended 9/30/98
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE SINCE INCEPTION
YEAR 5/1/96
------- ---------------
Seligman Henderson Global Technology Portfolio 36.80% 22.02%
MSCI World Index 24.80 17.87(1)
Lipper Global Funds Average 14.06 12.98(1)
Lipper Science & Technology Funds Average 52.55 25.95(1)
The Lipper Global Funds Average, Lipper Science & Technology Funds Average, and
the Morgan Stanley Capital International World Index (MSCI World Index) are
unmanaged benchmarks that assume reinvestment of dividends. The Lipper Global
Fund Average and the Lipper Science & Technology Fund Average exclude the effect
of sales charges and the MSCI World Index excludes the effect of fees and sales
charges. (1) From April 30, 1996.
PORTFOLIO MANAGEMENT
The Global Technology Portfolio is co-managed by the Seligman Technology Team
and Henderson Investment Management Limited, subadviser to the Portfolio.
The Seligman Technology Team is headed by Mr. Paul H. Wick. Mr. Wick, a Managing
Director of Seligman, is Vice President of the Fund and has been Portfolio
Manager of the Global Technology Portfolio since its inception. Mr. Wick joined
Seligman in August 1987 as an Associate, Investment Research and became Vice
President, Investment Officer in August 1991; he was named Managing Director in
January 1995 and was elected a Director of Seligman in November 1997. Mr. Wick
also manages the Communications and Information Portfolio of the Fund; and he
manages Seligman Communications and Information Fund, Inc. and co-manages
Seligman Henderson Global Technology Fund, a series of Seligman Henderson Global
Fund Series, Inc.
Mr. Brian Ashford-Russell, a Vice President of the Fund, has been Co-Portfolio
Manager of the Global Technology Portfolio since its inception. Mr.
Ashford-Russell has been a Portfolio Manager with Henderson plc since February
1993. Mr. Ashford-Russell also co-manages Seligman Henderson Global Technology
Fund, as series of Seligman Henderson Global Technology Fund.
Mr. Wick and Mr. Ashford-Russell have responsibility for directing the domestic
and international investments, respectively, of the Global Technology Portfolio.
P-23
<PAGE>
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is long-term capital appreciation.
The Portfolio uses the following principal strategies to seek its objective:
The Portfolio invests primarily in equity securities of non-US companies. The
Portfolio may invest in companies domiciled in any country; however, it
typically will not invest in the US or Canada. It generally invests in several
countries in different geographic regions.
While the Portfolio may invest in companies of any size, it generally invests in
medium to large-sized companies in the principal international markets. It may
also invest in companies with lower market capitalization or in smaller regional
or emerging markets.
The Portfolio uses a top-down investment style when choosing securities to
purchase. This means the investment manager concentrates first on regional and
country allocations, then on industry sectors, followed by fundamental analysis
of individual companies. The Portfolio's investments are allocated among
geographic regions or countries based on such factors as:
o Relative economic growth potential of the various economies and
securities markets
o Political, financial, and social conditions influencing investment
opportunities
o Investor sentiment
o Prevailing interest rates and expected levels of inflation
o Market prices relative to historic averages
In selecting individual securities, the investment manager looks to identify
companies that it believes display one or more of the following:
o Attractive pricing relative to earnings forecasts or other valuation
criteria (e.g., return on equity)
o Quality management and equity ownership by executives
o A unique competitive advantage (e.g., market share, proprietary
products)
o Market liquidity
o Potential for improvement in overall operations
The Portfolio generally sells a stock if its target price is reached, its
earnings are disappointing, its revenue growth slows, or its underlying
fundamentals deteriorate. The Portfolio may also sell a stock if the investment
manager believes that negative country or regional factors may affect a
company's outlook.
The Portfolio may invest in all types of securities, many of which will be
denominated in currencies other than the US dollar. The securities may be listed
on a US or foreign stock exchange or traded in US or foreign over-the-counter
markets. Although the Portfolio normally invests in equity securities, the
Portfolio may invest up to 25% of its assets in preferred stock and investment
grade or comparable quality debt securities. The Portfolio may also invest in
depositary receipts, which are publicly traded instruments generally issued by
US or foreign banks or trust companies that represent securities of foreign
issuers.
The Portfolio may invest up to 15% of its assets in illiquid securities (i.e.,
securities that cannot be readily sold), and may from time to time enter into
forward foreign currency exchange contracts in an attempt to manage the risk of
adverse changes in currencies. The Portfolio may also purchase put options in an
attempt to hedge against a decline in the price of securities it holds in its
portfolio. A put option gives the Portfolio the right to sell an underlying
security at a particular price during a fixed period.
P-24
<PAGE>
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio that invests in stocks,
the Portfolio's net asset value will fluctuate. You may experience a decline in
the value of your investment and you could lose money if you sell your shares at
a price lower than you paid for them.
Investing in securities of foreign issuers involves risks not associated with US
investments, including settlement risks, currency fluctuations, foreign
taxation, differences in financial reporting practices, and changes in political
conditions. There can be no assurance that the Portfolio's foreign investments
will present less risk than a portfolio of solely US securities.
The Portfolio seeks to limit the risk of investing in foreign securities by
diversifying its investments among different regions and countries.
Diversification reduces the effect events in any one country will have on the
Portfolio's entire investment portfolio. However, a decline in the value of the
Portfolio's investments in one country may offset potential gains from
investments in another country.
The Portfolio may be negatively affected by the broad investment environment in
the international or US securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
Options or illiquid securities, in the Portfolio's investment portfolio involve
higher risk and may subject the Portfolio to higher price volatility.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-25
<PAGE>
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
International Portfolio by showing how the performance of a single share of the
Portfolio has varied year to year, as well as how its performance compares to
two widely-used measures of performance. How the Portfolio has performed in the
past, however, is not necessarily an indication of how it will perform in the
future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
accounts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1994 1.32%
1995 11.34%
1996 7.08%
1997 8.35%
1998 15.81%
Best quarter return: 17.81% - quarter ended 12/31/98
Worst quarter return: -16.76% - quarter ended 9/30/98
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE FIVE SINCE INCEPTION
YEAR YEARS 5/3/93
------- ------- ---------------
Seligman Henderson International Portfolio 15.81% 8.67% 10.20%
MSCI EAFE Index 20.33 9.50 9.88(1)
Lipper International Funds Average 12.80 7.78 10.16(1)
The Morgan Stanley Capital International EAFE(Europe, Australasia, Far East)
Index (MSCIEAFEIndex) and the Lipper International Funds Average are unmanaged
benchmarks that assume reinvestment of dividends. The Lipper International Funds
Average excludes the effect of sales charges and the MSCIEAFEIndex excludes the
effect of fees and sales charges.
(1) From April 30, 1993.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
Mr. Iain C. Clark, Chief Investment Officer of Henderson Investment Management
Limited, is a Vice President of the Fund and has been Portfolio Manager of the
International Portfolio since its inception. Mr. Clark has been a Director and
Senior Portfolio Manager of Henderson plc and Director of Henderson
International, Ltd. since 1985. He has been Secretary, Treasurer and Vice
President of Henderson International, Inc. since 1991. Mr. Clark also co-manages
the Seligman Henderson Global Smaller Companies Portfolio of the Fund; and he
manages Seligman Henderson International Fund and co-manages Seligman Henderson
Global Smaller Companies Fund, two series of Seligman Henderson Global Fund
Series, Inc.
P-26
<PAGE>
SELIGMAN HIGH-YIELD BOND PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is to produce maximum current income.
The Portfolio uses the following principal strategies to seek its objective:
The Portfolio has a fundamental policy that requires that, except for temporary
defensive purposes, it invest at least 80% of the value of its total assets in
high-yielding, income-producing corporate bonds.
The Portfolio invests in a diversified range of high-yield, high-risk, medium
and lower quality corporate bonds and notes. Generally, bonds and notes
providing the highest yield are unrated or carry lower ratings (Baa or lower by
Moody's Investors Service, Inc. (Moody's) or BBB or lower by Standard and Poor's
Rating Service (S&P)). The Portfolio may purchase restricted securities that may
be offered and sold only to "qualified institutional buyers" under Rule 144A of
the Securities Act of 1933 (Rule 144A Securities).
The Portfolio uses a bottom-up security selection process. This means the
investment manager concentrates first on individual company fundamentals, before
industry considerations. The investment manager then looks at the particular
bond characteristics of the securities considered for purchase. In selecting
individual securities, the investment manager looks to identify companies that
it believes display one or more of the following:
o Strong operating cash flow and margins
o Improving financial ratios (i.e., creditworthiness)
o Leadership in market share or other competitive advantage
o Superior management
o Attractive relative pricing
The Portfolio will generally sell a security if the investment manager believes
that the company displays deteriorating cash flows, an ineffective management
team, or an unattractive relative valuation.
The Portfolio may invest up to 20% 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 FDIC member banks having total assets of
more than $1 billion; bankers' acceptances and interest-bearing savings or time
deposits of such banks; prime commercial paper; securities issued, guaranteed,
or insured by the US Government, its agencies or instrumentalities; and other
income-producing cash items, including repurchase agreements.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold). Rule 144A Securities deemed to
be liquid by the investment manager are not included in this limitation. The
Portfolio may invest up to 10% of its total assets in debt securities of foreign
issuers. 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. While the Portfolio favors
cash-paying bonds over deferred pay securities, it may invest in "zero-coupon"
bonds (interest payments accrue until maturity) and "pay-in-kind" bonds
(interest payments are made in additional bonds).
P-27
<PAGE>
SELIGMAN HIGH-YIELD BOND PORTFOLIO
PRINCIPAL RISKS
The Portfolio's net asset value, yield and total return will fluctuate with
fluctuations in the yield and market value of the individual securities held by
the Portfolio. The types of securities in which the Portfolio invests are
generally subject to higher volatility in yield and market value than securities
of higher quality. Factors that may affect the performance of the securities
held by the Portfolio are discussed below.
Higher-yielding, higher-risk, medium and lower quality corporate bonds and
notes, like the securities in which the Portfolio invests, are subject to
greater risk 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.
An economic downturn could adversely impact issuers' ability 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.
Lower-rated and unrated corporate bonds and notes 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 its securities.
Foreign securities or illiquid securities in the Portfolio's investment
portfolio involve higher risk and may subject the Portfolio to higher price
volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
"Zero-coupon" and "pay-in-kind" securities may be subject to greater
fluctuations in value because they tend to be more speculative than
income-bearing securities. Fluctuations in the market prices of these securities
owned by the Portfolio will result in corresponding fluctuations and volatility
in the net asset value of the shares of the Portfolio. Additionally, because
they do not pay current income, they will detract from the Portfolio's objective
of producing maximum current income.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-28
<PAGE>
SELIGMAN HIGH-YIELD BOND PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
High-Yield Bond Portfolio by showing how the performance of a single share of
the Portfolio has varied year to year, as well as how its performance compares
to two widely-used measures of performance. How the Portfolio has performed in
the past, however, is not necessarily an indication of how it will perform in
the future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
contracts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1996 14.62%
1997 15.09%
1998 1.02%
Best quarter return: 6.28% - quarter ended 6/30/97
Worst quarter return: -0.45% - quarter ended 3/31/97
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE SINCE INCEPTION
YEAR 5/1/95
------- -------------------
Seligman High-Yield Bond Portfolio 1.02% 10.25%
Merrill Lynch High Yield Master Index 3.66 10.36(1)
Lipper High Current Yield -0.30 9.63(1)
The Lipper High Current Yield and the Merrill Lynch High Yield Master Index are
unmanaged benchmarks that assume investment of dividends and exclude the effect
of fees or sales charges.
(1) From April 30, 1995.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The High-Yield Bond Portfolio is managed by the Seligman High-Yield Team, headed
by Mr. Daniel J. Charleston. Mr. Charleston, a Managing Director of Seligman, is
a Vice President of the Fund and has been Portfolio Manager of the High-Yield
Portfolio since its inception. Mr. Charleston joined Seligman in 1987 as an
Assistant Portfolio Manager. He became Vice President, Investment Officer in
August 1991, and Managing Director in January 1996. Mr. Charleston also manages
Seligman High-Yield Bond Series, a series of Seligman High Income Fund Series.
p-29
<PAGE>
SELIGMAN INCOME PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objectives are high current income consistent with what is
believed to be prudent risk of capital and the possibility of improvement in
income over time.
The Portfolio uses the following principal strategies to seek its objectives:
The Portfolio invests at least 80% of its assets in income-producing securities.
The Portfolio has a fundamental policy that, at all times, it must invest at
least 25% of the value of its gross assets in cash, bonds and/or preferred
stocks.
Subject to these requirements, the Portfolio may invest in many different types
of securities. Income-producing securities in which the Portfolio may invest
include money market instruments, fixed-income securities (such as notes, bonds,
debentures, and preferred stock), US Government securities, collateralized
mortgage obligations, senior securities convertible into common stocks, common
stocks, and American Depositary Receipts (ADRs). ADRs are publicly traded
instruments generally issued by domestic banks or trust companies that represent
securities of foreign issuers. Securities are carefully selected in light of the
Portfolio's investment objectives and are diversified among many different types
of securities and market sectors.
The Portfolio allocates its assets between equity securities and fixed-income
securities. If equity valuations become excessive, then the Portfolio will
invest more of its assets in fixed-income securities.
Equity securities are chosen for purchase by the Portfolio using a bottom-up
stock selection approach. This means the investment manager concentrates on
individual company fundamentals, rather than on a particular industry. The
Portfolio maintains a disciplined investment process that focuses on downside
risk as well as upside potential. The Portfolio seeks to purchase strong,
well-managed companies, generally large US companies, which have the potential
for solid earnings growth and dividend increases. The investment manager looks
to identify companies that it believes offer attractive dividend yields relative
to the market and, typically, that display relatively low valuations.
Fixed-income securities are chosen for purchase by the Portfolio using a method
that combines macro analysis of the fixed-income with fundamental research into
individual securities, customized by market sector. This means that the
investment manager considers the trends in the fixed-income market and evaluates
the long-term trends in interest rates, and then selects individual securities
for the Portfolio based on its evaluation of each security's particular
characteristics (for example, duration, yield, quality, relative value) and
total return opportunities.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold) and may invest up to 10% of its
total assets directly in foreign securities. The limit on foreign securities
does not include ADRs, or commercial paper and certificates of deposit issued by
foreign banks. The Portfolio generally does not invest a significant amount, if
any, in illiquid or foreign securities.
P-30
<PAGE>
SELIGMAN INCOME PORTFOLIO
PRINCIPAL RISKS
A significant portion of the Portfolio's assets is generally invested in common
stocks. Stock prices fluctuate. Therefore, as with any fund that invests in
stocks, the Portfolio's net assets value will fluctuate, especially in the short
term. You may experience a decline in the value of your investment and you could
lose money if you sell your shares at a price lower than you paid for them.
While the Portfolio maintains exposure to varied industry sectors over the
longer term, it may invest more heavily in certain industries believed to offer
good investment opportunities. To the extent that an industry in which the
Portfolio is invested falls out of favor, the Portfolio's performance may be
negatively affected.
Stocks of large US companies, like those in which the Portfolio may invest, are
experiencing an extended period of strong performance. However, if investor
sentiment changes, the value of large company stocks may decline. This could
have an adverse effect on the Portfolio's yield, net assets value, and total
return.
The portion of the Portfolio's assets that are invested in fixed-income
securities will be subject to interest rate risk and credit risk, as discussed
below.
Changes in market interest rates will affect the value of the fixed-income
securities held by the Portfolio. In general, the market value of fixed-income
securities move in the opposite direction of interest rates: the market value
decreases when interest rates rise and increases when interest rates fall.
Long-term securities are generally more sensitive to changes in interest rates,
and therefore subject to a greater degree of market price volatility. Changes in
the value of the fixed-income securities held by the Portfolio may affect the
Portfolio's net asset value. The extent to which the Portfolio is affected will
depend on the percentage of the Portfolio's assets that is invested in
fixed-income securities and the duration of the securities held.
A fixed-income security could deteriorate in quality to such an extent that its
rating is downgraded or its market value declines relative to comparable
securities. Credit risk also includes the risk that an issuer of a security
would be unable to make interest and principal payments. To the extent the
Portfolio holds securities that are downgraded, or default on payment, its
performance could be negatively affected.
Fixed-income securities, like those in which the Portfolio invests, are traded
principally by dealers in the over-the-counter market. The Portfolio's ability
to sell securities it holds is dependent on the willingness and ability of
market participants to provide bids that reflect current market levels. Adverse
market conditions could result in a lack of liquidity by reducing the number of
ready buyers.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
P-31
<PAGE>
SELIGMAN INCOME PORTFOLIO
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Income Portfolio by showing how the performance of a single share of the
Portfolio has varied year to year, as well as how its performance compares to
three widely-used measures of performance. How the Portfolio has performed in
the past, however, is not necessarily an indication of how it will perform in
the future.
The returns presented in the bar chart and table do not reflect the effect of
any administration fees or sales charges associated with variable annuity
contracts. If these expenses were included, the returns would be less. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS
[The following table represents a chart in the printed piece.]
1989 14.61%
1990 -6.10%
1991 30.89%
1992 15.72%
1993 12.37%
1994 -5.96%
1995 17.98%
1996 6.66%
1997 14.02%
1998 7.76%
Best quarter return: 11.26% - quarter ended 3/31/91
Worst quarter return: -9.94% - quarter ended 9/30/90
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS - PERIODS ENDED 12/31/98
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Income Portfolio 7.76% 7.77% 10.29%
S&P 500 Index 28.58 24.06 19.21
Lehman Brothers Aggregate Bond Index 8.69 7.27 9.26
Lipper Income Funds Average 7.85 10.68 11.61
The Lipper Income Funds Average, the Lehman Brothers Aggregate Bond Index, and
the S&P 500 Index are unmanaged benchmarks that assume investment of dividends.
The Lipper Income Funds Average excludes the effect of sales charges. The S&P
500 Index and the Lehman Brothers Aggregate Index exclude the effect of fees and
sales charges.
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT
The Income Portfolio is managed by the Seligman Growth and Income Team, headed
by Mr. Charles C. Smith, Jr. Mr. Smith, a Managing Director of Seligman, is a
Vice President of the Fund and has been Portfolio Manager of the Income
Portfolio since December 1991. Mr. Smith joined Seligman in 1985 as Vice
President, Investment Officer. He became Senior Vice President, Senior
Investment Officer in 1992, and Managing Director in January 1994. Mr. Smith
also manages the Common Stock Portfolio of the Fund; and he manages Seligman
Common Stock Fund, Inc. and Seligman Income Fund, Inc.
Mr. Rodney D. Collins, Senior Vice President, Investment Officer of Seligman
since January 1999, co-manages the Income Portfolio. Mr. Collins joined Seligman
in 1992 as an Investment Associate, and was named a Vice President, Investment
Officer in January 1995. Mr. Collins also co-manages the Common Stock Portfolio
of the Fund; and he co-manages Seligman Common Stock Fund, Inc. and Seligman
Income Fund, Inc.
P-32
<PAGE>
SELIGMAN LARGE-CAP GROWTH PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objectives are longer-term growth in capital value.
The Portfolio uses the following principal strategies to seek these objectives:
- ----------------------------------------
LARGE COMPANIES:
COMPANIES WITH MARKET CAPITALIZATIONS,
AT THE TIME OF PURCHASE BY THE
PORTFOLIO, OF $5 BILLION OR MORE.
- ----------------------------------------
Generally, the Portfolio invests primarily in the common stock of large US
companies, selected for their growth prospects. The investment manager chooses
common stocks for the Portfolio using both quantitative and fundamental
analysis. This means the investment manager first screens companies for past
growth in sales and earnings, as well as a strong balance sheet. The investment
manager favors a low ratio of debt to total capital. In selecting individual
securities for investment, the investment manager then looks to identify large
companies that it believes display one or more of the following:
o Proven track record
o Strong management
o Multiple product lines
o Potential for improvement in overall operations (a catalyst for
growth in revenues and/or earnings)
o Positive supply and demand outlook for its industry
The investment manager also looks at the forecasted earnings of a company to
determine if it has the potential for above-average growth.
The Portfolio will generally sell a stock when the investment manager believes
that the company or industry fundamentals have deteriorated or the company's
catalyst for growth is already reflected in the stock's price (i.e., the stock
is fully valued).
Although the Portfolio generally concentrates its investment in common stocks,
it may also invest in preferred stocks, securities convertible into common
stocks, common stock rights or warrants, and debt securities if the investment
manager believes they offer opportunities for growth in capital value.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold) and may invest up to 10% of its
total assets directly in foreign securities. The Portfolio generally does not
invest a significant amount, if any, in illiquid or foreign securities.
The Fund's Board of Directors may change the parameters by which "large
companies" are defined if they conclude such a change is appropriate.
P-33
<PAGE>
SELIGMAN LARGE-CAP GROWTH PORTFOLIO
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate, especially in the short term. You
may experience a decline in the value of your investment and you could lose
money if you sell your shares at a price lower than you paid for them.
The Portfolio's performance may be affected by the broad investment environment
in the US or international securities markets, which is influenced by, among
other things, interest rates, inflation, politics, fiscal policy, and current
events.
The Portfolio may not invest more than 25% of its total assets in securities of
companies in any one industry. The Portfolio may, however, invest more heavily
in certain industries believed to offer good investment opportunities. If an
industry in which the Portfolio is invested falls out of favor, the Portfolio's
performance may be negatively affected.
Foreign securities or illiquid securities in the Portfolio's investment
portfolio involve higher risk and may subject the Portfolio to higher price
volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
The Portfolio may actively and frequently trade securities in its portfolio to
carry out its principal strategies. A high portfolio turnover rate increases
transaction costs which may increase the Portfolio's expenses.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PAST PERFORMANCE
The Large-Cap Growth Portfolio is a new portfolio. Therefore, no performance
information is provided.
PORTFOLIO MANAGEMENT
The Large-Cap Growth Portfolio is managed by the Seligman Growth Team, headed by
Ms. Marion S. Schultheis. Ms. Schultheis joined Seligman in May 1998 as a
Managing Director. She is a Vice President of the Fund and has been Portfolio
Manager of the Large-Cap Growth Portfolio since its inception. Prior to joining
Seligman, Ms. Schultheis was a Managing Director at Chancellor LGT from October
1997 to May 1998 and Senior Portfolio Manager at IDS Advisory Group Inc. from
August 1987 to October 1997. Ms. Schultheis also manages the Capital Portfolio
and co-manages the Global Growth Opportunities Portfolio of the Fund; and she
manages Seligman Capital Fund, Inc. and Seligman Growth Fund, Inc. and
co-manages Seligman Henderson Global Growth Opportunities Fund, a series of
Seligman Henderson Global Fund Series, Inc.
P-34
<PAGE>
SELIGMAN LARGE-CAP VALUE PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is long-term capital appreciation.
The Portfolio uses the following principal strategies to pursue its objective:
The Portfolio generally invests at least 65% of its total assets in the common
stocks of "value" companies with large market capitalization ($2 billion or
more) at the time of purchase by the Portfolio.
The Portfolio uses a bottom-up stock selection approach. This means that the
investment manager concentrates on individual company fundamentals, rather than
on a particular industry. In selecting investments, the investment manager seeks
to identify value companies that it believes display one or more of the
following:
- -------------------------------------
VALUE COMPANIES:
THOSE COMPANIES BELIEVED BY THE
INVESTMENT MANAGER TO BE UNDERVALUED,
EITHER HISTORICALLY, BY THE MARKET,
OR BY THEIR PEERS.
- -------------------------------------
o A low price-to-earnings and/or low price-to-book ratio
o Positive change in senior management
o Positive corporate restructuring
o Temporary setback in price due to factors that no longer exist
The Portfolio generally holds a small number of securities because the
investment manager believe doing so allows it to adhere to its disciplined value
investment approach. The investment manager maintains close contact with the
management of each company in which the Portfolio invests and continually
monitors portfolio holdings, remaining sensitive to overvaluation and
deteriorating fundamentals.
The Portfolio generally sells a stock if the investment manager believes it has
become fully valued, its fundamentals have deteriorated, or ongoing evaluation
reveals that there are more attractive investment opportunities available.
The Portfolio invests primarily in equity-related securities of domestic
issuers. These securities may include common stock, preferred stock and stock
convertible into or exchangeable for such securities. The Portfolio expects that
no more than 15% of its assets will be invested in cash or fixed-income
securities, except as a temporary defensive measure. The Portfolio may also
invest in American Depository Receipts (ADRs). ADRs are publicly traded
instruments generally issued by domestic banks or trust companies that represent
a security of a foreign issuer. ADRs are quoted and settled in US dollars. The
Portfolio uses the same criteria in evaluating these securities as it does for
common stocks.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold). The Portfolio may also invest up
to 10% of its total assets directly in foreign securities. The limit on foreign
securities does not include ADRs, or commercial paper and certificates of
deposit issued by foreign banks. The Portfolio may also purchase put options in
an attempt to hedge against a decline in the price of securities it holds in its
portfolio. A put option gives the Portfolio the right to sell an underlying
security at a particular price during a fixed period. The Portfolio generally
does not invest a significant amount of its assets, if any, in illiquid
securities, foreign securities, or put options.
The Fund's Board of Directors may change the parameters by which large market
capitalization is defined if they conclude such a change is appropriate.
P-35
<PAGE>
SELIGMAN LARGE-CAP VALUE PORTFOLIO
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate, especially in the short term. You
may experience a decline in the value of your investment and you could lose
money if you sell your shares at a price lower than you paid for them.
The Portfolio holds a small number of securities. Consequently, if one or more
of the securities held in its portfolio declines in value or underperforms
relative to the market, it may have a greater impact on the Portfolio's
performance than if the Portfolio held a larger number of securities. The
Portfolio may experience more volatility, especially over the short term, than a
fund with a greater number of holdings.
The Portfolio may not invest more than 25% of its total assets in securities of
companies in any one industry. However, the Portfolio may invest more heavily in
certain industries believed to offer good investment opportunities. If an
industry in which the Portfolio is invested falls out of favor, the Portfolio's
performance may be negatively affected. This effect may be heightened because
the Portfolio holds a smaller number of securities.
The Portfolio's performance may be affected by the broad investment environment
in the US or international securities markets, which is influenced by, among
other things, interest rates, inflation, politics, fiscal policy, and current
events.
Foreign securities, illiquid securities, or options in the Portfolio's
investment portfolio involve higher risk and may subject the Portfolio to higher
price volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PAST PERFORMANCE
The Large-Cap Value Portfolio commenced operations on May 1, 1998 and has not
completed a full calendar year's performance. Therefore, no performance
information is provided for the Portfolio.
PORTFOLIO MANAGEMENT
The Large-Cap Value Portfolio is managed by the Seligman Value Team, headed by
Mr. Neil T. Eigen. Mr. Eigen joined Seligman in January 1998 as a Managing
Director. He is a Vice President of the Fund and has been Portfolio Manager of
the Large-Cap Value Portfolio since its inception. Prior to joining Seligman,
Mr. Eigen was Senior Managing Director, Chief Investment Officer and Director of
Equity Investing at Bear Stearns Asset Management. Mr. Eigen also manages the
Seligman Small-Cap Value Portfolio of the Fund; and he manages the Seligman
Large-Cap Value Fund and the Seligman Small-Cap Value Fund, the two series of
Seligman Value Fund Series, Inc.
Mr. Richard S. Rosen co-manages the Large-Cap Value Portfolio. Mr. Rosen joined
Seligman in January 1998 as a Senior Vice President, Investment Officer. Prior
to joining Seligman, Mr. Rosen was a Managing Director and Portfolio Manager at
Bear Stearns Asset Management. Mr. Rosen also co-manages the Seligman Small-Cap
Value Portfolio of the Fund; and he co-manages the Seligman Large-Cap Value Fund
and the Seligman Small-Cap Value Fund, the two series of Seligman Value Fund
Series, Inc.
P-36
<PAGE>
SELIGMAN SMALL-CAP VALUE PORTFOLIO
INVESTMENT OBJECTIVE/PRINCIPAL STRATEGIES
The Portfolio's objective is long-term capital appreciation.
The Portfolio uses the following principal strategies to pursue its objective:
The Portfolio generally invests at least 65% of its total assets in the common
stocks of "value" companies with small market capitalization (up to $1 billion)
at the time of purchase by the Portfolio.
- -------------------------------------
VALUE COMPANIES:
THOSE COMPANIES BELIEVED BY THE
INVESTMENT MANAGER TO BE UNDERVALUED,
EITHER HISTORICALLY, BY THE MARKET,
OR BY THEIR PEERS.
- -------------------------------------
The Portfolio uses a bottom-up stock selection approach. This means that the
investment manager concentrates on individual company fundamentals, rather than
on a particular industry. In selecting investments, the investment manager seeks
to identify value companies that it believes display one or more of the
following:
o A low price-to-earnings and/or low price-to-book ratio
o Positive change in senior management
o Positive corporate restructuring
o Temporary setback in price due to factors that no longer exist
The Portfolio generally holds a small number of securities because the
investment manager believe doing so allows it to adhere to its disciplined value
investment approach. The investment manager maintains close contact with the
management of each company in which the Portfolio invests and continually
monitors portfolio holdings, remaining sensitive to overvaluation and
deteriorating fundamentals.
The Portfolio generally sells a stock if the investment manager believes it has
become fully valued, its fundamentals have deteriorated, or ongoing evaluation
reveals that there are more attractive investment opportunities available.
The Portfolio invests primarily in equity-related securities of domestic
issuers. These securities may include common stock, preferred stock and stock
convertible into or exchangeable for such securities. The Portfolio expects that
no more than 15% of its assets will be invested in cash or fixed-income
securities, except as a temporary defensive measure. The Portfolio may also
invest in American Depository Receipts (ADRs). ADRs are publicly traded
instruments generally issued by domestic banks or trust companies that represent
a security of a foreign issuer. ADRs are quoted and settled in US dollars. The
Portfolio uses the same criteria in evaluating these securities as it does for
common stocks.
The Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that cannot be readily sold). The Portfolio may also invest up
to 10% of its total assets directly in foreign securities. The limit on foreign
securities does not include ADRs, or commercial paper and certificates of
deposit issued by foreign banks. The Portfolio may also purchase put options in
an attempt to hedge against a decline in the price of securities it holds in its
portfolio. A put option gives the Portfolio the right to sell an underlying
security at a particular price during a fixed period. The Portfolio generally
does not invest a significant amount of its assets, if any, in illiquid
securities, foreign securities, or put options.
The Fund's Board of Directors may change the parameters by which small market
capitalization is defined if they conclude such a change is appropriate.
P-37
<PAGE>
SELIGMAN SMALL-CAP VALUE PORTFOLIO
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Portfolio's net asset value will fluctuate, especially in the short term. You
may experience a decline in the value of your investment and you could lose
money if you sell your shares at a price lower than you paid for them.
Investments in smaller companies typically involve greater risks than
investments in larger companies. Small company stocks, as a whole, may
experience larger price fluctuations than large-company stocks or other types of
investments. Some small companies may have shorter operating histories, less
experienced management and limited product lines, markets, and financial or
managerial resources.
The Portfolio holds a small number of securities. Consequently, if one or more
of the securities held in its portfolio declines in value or underperforms
relative to the market, it may have a greater impact on the Portfolio's
performance than if the Portfolio held a larger number of securities. The
Portfolio may experience more volatility, especially over the short term, than a
fund with a greater number of holdings.
The Portfolio may not invest more than 25% of its total assets in securities of
companies in any one industry. However, the Portfolio may invest more heavily in
certain industries which the investment manager believes to offer good
investment opportunities. If an industry in which the Portfolio is invested
falls out of favor, the Portfolio's performance may be negatively affected. This
effect may be heightened because the Portfolio holds a smaller number of
securities.
The Portfolio's performance may be affected by the broad investment environment
in the US or international securities markets, which is influenced by, among
other things, interest rates, inflation, politics, fiscal policy, and current
events.
Foreign securities, illiquid securities, or options in the Portfolio's
investment portfolio involve higher risk and may subject the Portfolio to higher
price volatility. Investing in securities of foreign issuers involves risks not
associated with US investments, including settlement risks, currency
fluctuations, foreign taxation, differences in financial reporting practices,
and changes in political conditions.
An investment in the Portfolio is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PAST PERFORMANCE
The Small-Cap Value Portfolio commenced operations on May 1, 1998 and has not
completed a full calendar year's performance. Therefore, no performance
information is provided for the Portfolio.
PORTFOLIO MANAGEMENT
The Small-Cap Value Portfolio is managed by the Seligman Value Team, headed by
Mr. Neil T. Eigen. Mr. Eigen joined Seligman in January 1998 as a Managing
Director. He is a Vice President of the Fund and has been Portfolio Manager of
the Small-Cap Value Portfolio since its inception. Prior to joining Seligman,
Mr. Eigen was Senior Managing Director, Chief Investment Officer and Director of
Equity Investing at Bear Stearns Asset Management. Mr. Eigen also manages the
Seligman Large-Cap Value Portfolio of the Fund; and he manages the Seligman
Large-Cap Value Fund and the Seligman Small-Cap Value Fund, the two series of
Seligman Value Fund Series, Inc.
Mr. Richard S. Rosen co-manages the Small-Cap Value Portfolio. Mr. Rosen joined
Seligman in January 1998 as a Senior Vice President, Investment Officer. Prior
to joining Seligman, Mr. Rosen was a Managing Director and Portfolio Manager at
Bear Stearns Asset Management. Mr. Rosen also co-manages the Seligman Large-Cap
Value Portfolio of the Fund; and he co-manages the Seligman Large-Cap Value Fund
and the Seligman Small-Cap Value Fund, the two series of Seligman Value Fund
Series, Inc.
P-38
<PAGE>
MANAGEMENT OF THE FUND
The Fund's Board of Directors provides broad supervision over the affairs of the
Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of the Fund. Seligman provides investment management
services for each of the Fund's Portfolios, including making purchases and sales
of securities for the Portfolios, consistent with each Portfolio's investment
objectives and strategies, and administers each Portfolio's business and other
affairs.
Established in 1864, Seligman currently serves as manager to 18 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $21.1 billion in assets as of March 31, 1999. Seligman also
provides investment management or advice to institutional or other accounts
having an aggregate value at March 31, 1999 of approximately $9.6 billion.
Each Portfolio pays Seligman a management fee for its services, equal to a
percentage of the Portfolio's average daily net assets, as follows:
<TABLE>
<CAPTION>
MANAGEMENT FEE RATE
MANAGEMENT FEE RATE PAID FOR
AS A % OF AVERAGE PERIOD ENDED
DAILY NET ASSETS DECEMBER 31, 1998
-------------------- ---------------------
<S> <C> <C>
Seligman Bond Portfolio .40% .40%
Seligman Capital Portfolio .40% .40%
Seligman Cash Management Portfolio .40% --*
Seligman Common Stock Portfolio .40% .40%
Seligman Communications and Information Portfolio .75% .75%
Seligman Frontier Portfolio .75% .75%
Seligman Henderson Global Growth Opportunities Portfolio 1.00% 1.00%
Seligman Henderson Global Smaller Companies Portfolio 1.00% 1.00%
Seligman Henderson Global Technology Portfolio 1.00% 1.00%
Seligman Henderson International Portfolio 1.00% 1.00%
Seligman High-Yield Bond Portfolio .50% .50%
Seligman Income Portfolio .40% .40%
Seligman Large-Cap Growth Portfolio .70% on first $1 billion; N/A**
.65% on next $1 billion;
.60% thereafter
Seligman Large-Cap Value Portfolio .80% on first $500 million; .80%
.70% on next $500 million;
.60% thereafter
Seligman Small-Cap Value Portfolio 1.00% on first $500 million; 1.00%
.90% on next $500 million;
.80% thereafter
</TABLE>
*Seligman voluntarily waived its management fee for the Seligman Cash
Management Portfolio. There is no assurance that Seligman will continue this
policy in the future.
**Seligman Large-Cap Growth Portfolio is a new Portfolio.
THE FUND'S SUBADVISER
The Fund's subadviser is Henderson Investment Management Limited (HIML), 3
Finsbury Avenue, London EC2M 2PA. HIML, established in 1984, is a wholly owned
subsidiary of Henderson plc, a United Kingdom corporation. Henderson plc is a
subsidiary of AMP Limited, an Australian life insurance and financial services
company. HIML provides investment advice, research and assistance with respect
to the non-US investments of each of the Seligman Henderson Portfolios of the
Fund.
Seligman pays HIML a fee for its services in respect of each Seligman Henderson
Portfolio based on the assets under HIML's supervision. This fee does not affect
the fees paid by any Portfolio.
Prior to July 1, 1998, Seligman Henderson Co. served as subadviser to the Fund.
Seligman Henderson Co. was founded in 1991 as a general partnership between
Seligman and Henderson International, Inc., a wholly owned subsidiary of
Henderson plc.
P-39
<PAGE>
YEAR 2000
As the millennium approaches, mutual funds, financial and business
organizations, and individuals could be adversely affected if their computer
systems do not properly process and calculate date-related information and data
on and after January 1, 2000. Like other mutual funds, the Fund relies upon
service providers and their computer systems for its day-to-day operations. Many
of the Fund's service providers in turn depend upon computer systems of their
vendors. Seligman and SDC have established a year 2000 project team. The team's
purpose is to assess the state of readiness of Seligman and SDC and the Fund's
other service providers and vendors. The team is comprised of several
information technology and business professionals as well as outside
consultants. The Project Manager of the team reports directly to the
Administrative Committee of Seligman. The Project Manager and other members of
the team also report to the Board of Directors of the Fund and its Audit
Committee.
The team has identified the service providers and vendors who furnish critical
services or software systems to the Fund, including securities firms that
execute portfolio transactions for the Fund and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Fund. The team will
assess the feasibility of their year 2000 plans. The team has made progress on
its year 2000 contingency plans - recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Fund. The team anticipates
finalizing these plans in the near future.
The Fund anticipates the team will implement all significant components of the
team's year 2000 plans by mid-1999, including appropriate testing of critical
systems and receipt of satisfactory assurances from critical service providers
and vendors regarding their year 2000 compliance. The Fund believes that the
critical systems on which it relies will function properly on and after the year
2000, but this is not guaranteed. If these systems do not function properly, or
the Fund's critical service providers are not successful in implementing their
year 2000 plans, the Fund's operations may be adversely affected, including
pricing, securities trading and settlement, and the provision of shareholder
services.
In addition, the Fund may hold securities of issuers whose underlying business
leaves them susceptible to year 2000 issues. The Fund may also hold securities
issued by governmental or quasi-governmental issuers, which, like other
organizations, are also susceptible to year 2000 concerns. Year 2000 issues may
affect an issuer's operations, creditworthiness, and ability to make timely
payment on any indebtedness and could have an adverse impact on the value of its
securities. If the Fund holds these securities, the Fund's performance could be
negatively affected. Seligman seeks to identify an issuer's state of year 2000
readiness as part of the research it employs. However, the perception of
an issuer's year 2000 preparedness is only one of the many factors considered in
determining whether to buy, sell, or continue to hold a security. Information
provided by issuers concerning their state of readiness may or may not be
accurate or readily available. Further, the Fund may be adversely affected if
the domestic or foreign exchanges, markets, depositories, clearing agencies, or
governments or third parties responsible for infrastructure needs do not address
their year 2000 issues in a satisfactory manner.
SDC has informed the Fund that it does not expect the cost of its services to
increase materially as a result of the modifications to its computer systems
necessary to prepare for the year 2000. The Fund will not pay to remediate the
systems of Seligman or bear directly the costs to remediate the systems of any
other service providers or vendors, other than SDC.
EURO CONVERSION
On January 1, 1999, 11 of the 15 member countries in the European Union adopted
the "euro" as a common legal currency. For European issuers, and other entities
with significant markets or operations in Europe (whether or not in the
participating countries), the euro conversion may create strategic challenges as
these entities adapt to a single transnational currency.
The Fund, Seligman, and HIML are monitoring the changing marketplace in Europe
to seek to identify investment opportunities created by the euro and avoid
investments that may adversely affect the performance of any Portfolio. Despite
these efforts, a Portfolio's performance may be adversely affected if the
issuers of securities that are purchased, held, or sold by the Portfolio do not
adapt to the potential changes in the European marketplace as a result of the
euro. For example, the euro will likely result in greater price transparency
(making it more difficult for businesses to charge different prices for the same
products on a country-by-country basis), thereby creating a more competitive
marketplace in Europe. As a result, European issuers and other issuers with
significant markets or operations in Europe (whether or not in the participating
countries), may be adversely affected if they do not respond to this new
competitive marketplace by cutting costs and streamlining operations. Further,
any participating country may opt out of the euro within the first three years.
A participating country may decide to opt out of the euro for several reasons,
including high unemployment, lack of economic growth, or frustration with the
lack of unity in the participating countries' economies. The risk of one or more
participating countries opting out of the euro is enhanced by the participating
countries' lack of control over their own monetary policies as they have
delegated this function to the European Central Bank. Issuers in a participating
country, as well as other issuers globally, may be adversely impacted in the
event that a participating country terminates its participation in the euro or
the euro itself collapses due to disagreements among the governments of the
participating countries.
P-40
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the applicable Portfolio's net asset
value (NAV) next calculated after your request is received by Canada Life or MBL
Life. If your purchase or sell request is received by Canada Life or MBL Life by
the close of regular trading on the New York Stock Exchange (NYSE) (normally
4:00 p.m. Eastern time), it will be executed at the applicable Portfolio's NAV
calculated as of the close of regular trading on the NYSE on that day.
If your purchase or sell request is received by Canada Life or MBL Life after
the close of regular trading on the NYSE, your request will be executed at the
applicable Portfolio's NAV calculated as of the close of regular trading on the
next NYSE trading day.
The NAV of each Portfolio is computed each day, Monday through Friday, on days
that the NYSE is open for trading. Securities owned by each Portfolio are valued
at current market prices. If reliable market prices are unavailable, securities
are valued in accordance with procedures approved by the Fund's Board of
Directors.
HOW TO PURCHASE AND SELL SHARES
Shares of the Fund's Portfolios are offered only to Canada Life Accounts and
Seligman Mutual Benefit Plan. Shares of some Portfolios of the Fund may not be
offered to all Canada Life Accounts. Additionally, MBL Life no longer accepts
applications for new contracts nor will it accept additional purchase payments
under existing contracts.
Canada Life Accounts and Seligman Mutual Benefit Plan are sold subject to
certain fees and charges. These fees and charges are described in the
prospectuses or disclosure documents for the Canada Life Accounts and Seligman
Mutual Benefit Plan, which should be read together with this Prospectus.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Dividends and capital gain distributions from each of the Portfolios, except the
Seligman Cash Management Portfolio, will be declared and paid annually and will
be reinvested in additional shares (at net asset value) of the Portfolio that
declared such dividend or capital gain distribution. Dividends on the Seligman
Cash Management Portfolio will be declared daily and reinvested monthly in
additional shares of this Portfolio; it is not expected that this Portfolio will
realize capital gains.
TAXES
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 for income tax purposes.
Dividends or capital gain distributions are generally not currently taxable to
owners of the Canada Life Accounts or Seligman Mutual Benefit Plan. Further
information regarding the tax consequences of an investment in the Fund is
contained in the separate prospectuses or disclosure documents of the Canada
Life Accounts or Seligman Mutual Benefit Plan.
P-41
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand each Portfolio's financial
performance for the past five years or, if less than five years, the period of
the Portfolio's operations. Certain information reflects financial results for a
single share of a Portfolio that was held throughout the periods shown. "Total
return" shows the rate that you would have earned (or lost) on an investment in
the Portfolio. Total returns do not reflect the effect of any administration
fees or sales charges associated with variable annuity accounts. Ernst & Young
llp, independent auditors, have audited this information. Their report, along
with each Portfolio's financial statements, is included in the Fund's annual
report, which is available upon request.
<TABLE>
<CAPTION>
SELIGMAN BOND PORTFOLIO
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
PER SHARE DATA:*
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .............. $10.24 $9.89 $10.44 $9.27 $10.11
----- ----- ----- ----- -----
Income from investment operations:
Net investment income** ....................... 0.59 0.54 0.56 0.61 0.50
Net gains or losses on securities (both
realized and unrealized) ...................... 0.25 0.35 (0.55) 1.17 (0.84)
----- ----- ----- ----- -----
Total from investment operations ................ 0.84 0.89 0.01 1.78 (0.34)
----- ----- ----- ----- -----
Less distributions:
Dividends (from net
investment income) ............................ (0.59) (0.54) (0.56) (0.61) (0.50)
Distributions (from capital gains) ............ (0.11) -- -- -- --
----- ----- ----- ----- -----
Total distributions ............................. (0.70) (0.54) (0.56) (0.61) (0.50)
----- ----- ----- ----- -----
Net asset value, end of year .................... $10.38 $10.24 $ 9.89 $10.44 $ 9.27
===== ===== ===== ===== =====
TOTAL RETURN: ................................... 8.20% 8.98% 0.09% 19.18% (3.39)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) .......... $7,320 $7,232 $5,015 $4,497 $3,606
Ratio of expenses to average net assets** ....... 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net income to average
net assets** .................................. 5.58% 6.22% 5.97% 6.22% 5.12%
Portfolio turnover rate ......................... 73.31% 170.12% 199.74% 114.42% 237.23%
SELIGMAN CAPITAL PORTFOLIO
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
PER SHARE DATA:*
Net asset value, beginning of year .............. $18.10 $16.01 $14.91 $12.70 $14.95
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ......................... 0.04 0.03 0.04 0.05 0.02
Net gains or losses on securities (both
realized and unrealized) ...................... 3.89 3.35 2.12 3.39 (0.70)
----- ----- ----- ----- -----
Total from investment operations ................ 3.93 3.38 2.16 3.44 (0.68)
----- ----- ----- ----- -----
Less distributions:
Dividends (from net
investment income) ............................ (0.04) (0.03) (0.04) (0.05) (0.02)
Distributions (from capital gains) ............ (1.18) (1.26) (1.02) (1.18) (1.55)
----- ----- ----- ----- -----
Total distributions ............................. (1.22) (1.29) (1.06) (1.23) (1.57)
----- ----- ----- ----- -----
Net asset value, end of year .................... $20.81 $18.10 $16.01 $14.91 $12.70
===== ===== ===== ===== =====
TOTAL RETURN: ................................... 22.19% 21.31% 14.51% 27.17% (4.59)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) ..........$24,141 $20,400 $14,313 $9,294 $5,942
Ratio of expenses to average net assets ......... 0.60% 0.60%** 0.59% 0.60%** 0.60%**
Ratio of net income to average
net assets .................................... 0.19% 0.16%** 0.29% 0.32%** 0.10%**
Portfolio turnover rate .........................130.86% 93.97% 88.78% 122.20% 67.39%
</TABLE>
- --------------------------------------------------------------------------------
* Per share amounts are calculated based on average shares outstanding.
** Seligman voluntarily reimburses expenses (excluding its management fee) that
exceed .20% per annum of the Portfolio's average daily net assets. These amounts
reflect the effect of these waivers and/or reimbursements. There is no assurance
that Seligman will continue this policy in the future.
P-42
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN CASH MANAGEMENT PORTFOLIO
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
PER SHARE DATA:*
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .............. $1.000 $1.000 $1.000 $1.000 $1.000
----- ----- ----- ----- -----
Income from investment operations:
Net investment income** ....................... 0.053 0.054 0.053 0.055 0.040
----- ----- ----- ----- -----
Total from investment operations ................ 0.053 0.054 0.053 0.055 0.040
----- ----- ----- ----- -----
Less distributions:
Dividends (from net
investment income) ............................ (0.053) (0.054) (0.053) (0.055) (0.040)
----- ----- ----- ----- -----
Total distributions ............................. (0.053) (0.054) (0.053) (0.055) (0.040)
----- ----- ----- ----- -----
Net asset value, end of year .................... $1.000 $1.000 $1.000 $1.000 $1.000
===== ===== ===== ===== =====
TOTAL RETURN: ................................... 5.42% 5.52% 5.43% 5.60% 4.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) ..........$10,520 $8,635 $9,755 $7,800 $3,230
Ratio of expenses to average net assets** -- -- -- -- --
Ratio of net income to average
net assets** .................................. 5.30% 5.39% 5.30% 5.48% 3.98%
SELIGMAN COMMON STOCK PORTFOLIO
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
PER SHARE DATA:*
Net asset value, beginning of year .............. $16.28 $15.92 $15.44 $13.78 $14.98
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ......................... 0.29 0.33 0.34 0.35 0.37**
Net gains or losses on securities (both
realized and unrealized) ...................... 3.61 3.01 2.79 3.40 (0.36)
----- ----- ----- ----- -----
Total from investment operations ................ 3.90 3.34 3.13 3.75 0.01
----- ----- ----- ----- -----
Less distributions:
Dividends (from net
investment income) ............................ (0.31) (0.32) (0.34) (0.35) (0.39)
Distributions (from capital gains) ............ (1.24) (2.66) (2.31) (1.74) (0.82)
----- ----- ----- ----- -----
Total distributions ............................. (1.55) (2.98) (2.65) (2.09) (1.21)
----- ----- ----- ----- -----
Net asset value, end of year .................... $18.63 $16.28 $15.92 $15.44 $13.78
===== ===== ===== ===== =====
TOTAL RETURN: ................................... 24.16% 21.31% 20.08% 27.28% 0.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) ..........$62,588 $50,737 $37,168 $28,836 $20,168
Ratio of expenses to average net assets ......... 0.52% 0.53% 0.53% 0.54% 0.60%**
Ratio of net income to average
net assets .................................... 1.61% 1.92% 1.99% 2.42% 2.45%**
Portfolio turnover rate ......................... 55.55% 80.13% 50.33% 55.48% 15.29%
</TABLE>
- ------------------------------------------------------------------------------
* Per share amounts are calculated based on average shares outstanding.
** Seligman voluntarily waives its management fee and reimburses all expenses
for the Cash Management Portfolio; and reimburses expenses (excluding its
management fee) that exceed .20% per annum of the Common Stock Portfolio's
average daily net assets. These amounts reflect the effect of these waivers
and/or reimbursements. There is no assurance that Seligman will continue this
policy in the future.
P-43
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
YEAR ENDED DECEMBER 31, 10/11/94+
---------------------------------------------------- TO
1998 1997 1996 1995 12/31/94
----- ----- ----- ----- --------
PER SHARE DATA:*
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $13.09 $14.69 $13.50 $10.44 $10.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ........................ (0.08) (0.08) (0.04) (0.13) (0.02)**
Net gains or losses on securities (both
realized and unrealized) ..................... 4.81 3.13 1.23 4.15 0.46
----- ----- ----- ----- -----
Total from investment operations ............... 4.73 3.05 1.19 4.02 0.44
----- ----- ----- ----- -----
Less distributions:
Distributions (from capital gains) ........... (0.68) (4.65) -- (0.96) --
----- ----- ----- ----- -----
Total distributions ............................ (0.68) (4.65) -- (0.96) --
----- ----- ----- ----- -----
Net asset value, end of period ................. $17.14 $13.09 $14.69 $13.50 $10.44
===== ===== ===== ===== =====
TOTAL RETURN: .................................. 36.49% 22.22% 8.81% 38.55% 4.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .......$122,279 $87,633 $60,645 $38,442 $495
Ratio of expenses to average net assets ........ 0.87% 0.87% 0.87% 0.95% 0.95%++**
Ratio of net income to average
net assets ................................... (0.56)% (0.49)% (0.32)% (0.89)% (0.95)%++**
Portfolio turnover rate ........................ 132.57% 277.14% 167.20% 96.62% --
SELIGMAN FRONTIER PORTFOLIO
YEAR ENDED DECEMBER 31, 10/11/94+
---------------------------------------------------- TO
1998 1997 1996 1995 12/31/94
----- ----- ----- ----- ------
PER SHARE DATA:*
Net asset value, beginning of period ........... $15.78 $14.98 $13.56 $10.58 $10.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income ........................ (0.08) (0.08) (0.06) (0.07)** (0.01)**
Net gains or losses on securities (both
realized and unrealized) ..................... (0.15) 2.47 3.28 3.58 0.59
----- ----- ----- ----- -----
Total from investment operations ............... (0.23) 2.39 3.22 3.51 0.58
----- ----- ----- ----- -----
Less distributions:
Distributions (from capital gains) ........... -- (1.59) (1.80) (0.53) --
----- ----- ----- ----- -----
Total distributions ............................ -- (1.59) (1.80) (0.53) --
----- ----- ----- ----- -----
Net asset value, end of period ................. $15.55 $15.78 $14.98 $13.56 $10.58
===== ===== ===== ===== =====
TOTAL RETURN: .................................. (1.46)% 16.33% 23.93% 33.28% 5.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ....... $39,148 $42.973 $31,672 $12,476 $169
Ratio of expenses to average net assets ........ 0.92% 0.89% 0.92% 0.95%** 0.95%++**
Ratio of net income to average
net assets ................................... (0.51)% (0.49)% (0.37)% (0.55)%** (0.70)%++**
Portfolio turnover rate ........................ 86.52% 101.68% 119.74% 106.48% --
</TABLE>
- --------------------------------------------------------------------------------
* Per share amounts are calculated based on average shares outstanding.
** Seligman voluntarily reimburses expenses (excluding its management fee) that
exceed .20% per annum of the Portfolio's average daily net assets. These
amounts reflect the effect of these waivers. There is no assurance that
Seligman will continue this policy in the future.
+ Commencement of operations.
++ Annualized.
P-44
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
YEAR ENDED DECEMBER 31, 5/1/96+
---------------------- TO
1998 1997 12/31/96
----- ----- ------
<S> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period ......................................... $11.03 $9.91 $10.00
----- ----- -----
Income from investment operations:
Net investment income** .................................................... (0.01) 0.01 0.01
Net gains or losses on securities (both realized and unrealized) ........... 2.25 1.79 0.02
Net gains or losses on foreign currency transactions
(both realized and unrealized) ........................................... 0.14 (0.56) (0.11)
----- ----- -----
Total from investment operations ............................................. 2.38 1.24 (0.08)
----- ----- -----
Less distributions:
Dividends (from net investment income) ..................................... -- -- (0.01)
Distributions (from capital gains) ......................................... (0.08) (0.12) --
----- ----- -----
Total distributions .......................................................... (0.08) (0.12) (0.01)
----- ----- -----
Net asset value, end of period ............................................... $13.33 $11.03 $ 9.91
===== ===== =====
TOTAL RETURN: ................................................................ 21.60% 12.57% (0.78)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ..................................... $8,643 $5,449 $1,590
Ratio of expenses to average net assets** .................................... 1.40% 1.40% 1.40%+++
Ratio of net income to average net assets** .................................. (0.06)% 0.01% 0.37%+++
Portfolio turnover rate ...................................................... 48.99% 77.85% 12.99%
</TABLE>
<TABLE>
<CAPTION>
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
YEAR ENDED DECEMBER 31, 10/11/94++
------------------------------------------------------ TO
1998 1997 1996 1995 12/31/94
----- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period ........... $12.98 $12.87 $11.67 $10.31 $10.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income** ...................... (0.01) 0.02 0.02 0.05 0.06
Net gains or losses on securities (both
realized and unrealized) ................... 1.02 1.17 2.31 2.04 0.26
Net gains or losses on
foreign currency transactions
(both realized and unrealized) ............. (0.17) (0.75) (0.16) (0.30) 0.03
----- ----- ----- ----- -----
Total from investment operations ............... 0.84 0.44 2.17 1.79 0.35
----- ----- ----- ----- -----
Less distributions:
Dividends (from net investment income) ....... -- (0.02) (0.02) (0.05) (0.04)
Distributions (from capital gains) ........... (0.20) (0.31) (0.95) (0.38) --
----- ----- ----- ----- -----
Total distributions ............................ (0.20) (0.33) (0.97) (0.43) (0.04)
----- ----- ----- ----- -----
Net asset value, end of period ................. $13.62 $12.98 $12.87 $11.67 $10.31
===== ===== ===== ===== =====
TOTAL RETURN: .................................. 6.58% 3.43% 18.66% 17.38% 3.53%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ....... $20,814 $20,505 $16,876 $4,837 $132
Ratio of expenses to average net assets** ...... 1.40% 1.40% 1.40% 1.39% 1.20%+++
Ratio of net income to average
net assets** ................................. (0.06)% 0.24% 0.23% 0.64% 3.14%+++
Portfolio turnover rate ........................ 66.40% 64.81% 62.31% 55.65% --
</TABLE>
- -------------------------------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (HIML for periods after 7/1/98)
voluntarily waived a portion of the management fees and/or reimbursed
expenses for the Portfolio. These amounts reflect the effect of these
waivers and/or reimbursements. There is no assurance that Seligman or HIML
will continue this policy in the future.
+ Commencement of operations.
++ Commencement of investment operations.
+++ Annualized.
P-45
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
YEAR ENDED DECEMBER 31, 5/1/96+
------------------------ TO
1998 1997 12/31/96
----- ----- ------
<S> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period ........................................ $10.59 $10.32 $10.00
----- ----- -----
Income from investment operations:
Net investment income** ................................................... (0.05) 0.01 --
Net gains or losses on securities (both realized and unrealized) .......... 3.81 2.15 0.30
Net gains or losses on foreign currency transactions
(both realized and unrealized) .......................................... 0.11 (0.19) 0.10
----- ----- -----
Total from investment operations ............................................ 3.87 1.97 0.40
----- ----- -----
Less distributions:
Dividends (from net investment income) .................................... -- (0.01) --
Distributions (from capital gains) ........................................ (0.61) (1.69) (0.08)
----- ----- -----
Total distributions ......................................................... (0.61) (1.70) (0.08)
----- ----- -----
Net asset value, end of period .............................................. $13.85 $10.59 $10.32
===== ===== =====
TOTAL RETURN: ............................................................... 36.80% 19.53% 4.01%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .................................... $6,130 $3,686 $1,364
Ratio of expenses to average net assets** ................................... 1.40% 1.40% 1.40%++
Ratio of net income to average net assets** ................................. (0.43)% 0.12% 0.60%++
Portfolio turnover rate ..................................................... 82.27% 167.36% 45.04%
</TABLE>
<TABLE>
<CAPTION>
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of year ............. $13.54 $12.96 $12.39 $11.34 $11.37
----- ----- ----- ----- -----
Income from investment operations:
Net investment income** ...................... 0.08 0.03 0.07 0.15 0.13
Net gains or losses on securities (both
realized and unrealized) ..................... 1.90 2.11 1.13 0.90 (0.31)
Net gains or losses on
foreign currency transactions
(both realized and unrealized) ............... 0.16 (1.06) (0.32) 0.24 0.33
----- ----- ----- ----- -----
Total from investment operations ............... 2.14 1.08 0.88 1.29 0.15
----- ----- ----- ----- -----
Less distributions:
Dividends (from net investment income) ....... (0.15) (0.03) (0.07) (0.15) (0.06)
Distributions (from capital gains) ........... (0.16) (0.47) (0.24) (0.09) (0.12)
----- ----- ----- ----- -----
Total distributions ............................ (0.31) (0.50) (0.31) (0.24) (0.18)
----- ----- ----- ----- -----
Net asset value, end of year ................... $15.37 $13.54 $12.96 $12.39 $11.34
===== ===== ===== ===== =====
TOTAL RETURN: .................................. 15.81% 8.35% 7.08% 11.34% 1.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) ......... $9,893 $9,182 $7,242 $4,183 $1,776
Ratio of expenses to average net assets** ...... 1.40% 1.40% 1.40% 1.35% 1.20%
Ratio of net income to average net assets** .... 0.52% 0.43% 0.70% 1.01% 1.17%
Portfolio turnover rate ........................ 75.81% 89.43% 48.53% 41.40% 47.34%
</TABLE>
- --------------------------------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (HIML for periods after 7/1/98)
voluntarily waived a portion of the management fees and/or reimbursed
expenses for the Portfolio. These amounts reflect the effect of these
waivers and/or reimbursements. There is no assurance that Seligman or HIML
will continue this policy in the future.
+ Commencement of operations.
++ Annualized.
P-46
<PAGE>
<TABLE>
<CAPTION>
SELIGMAN HIGH-YIELD BOND PORTFOLIO
YEAR ENDED DECEMBER 31, 5/1/95+
------------------------------------- TO
1998 1997 1996 12/31/95
----- ----- ----- ------
<S> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of period .......................... $11.87 $11.19 $10.50 $10.00
----- ----- ----- -----
Income from investment operations:
Net investment income** ..................................... 1.11 0.91 0.77 0.22
Net gains or losses on securities (both
realized and unrealized) .................................... (0.99) 0.78 0.77 0.52
----- ----- ----- -----
Total from investment operations .............................. 0.12 1.69 1.54 0.74
----- ----- ----- -----
Less distributions:
Dividends (from net investment income) ...................... (1.11) (0.90) (0.77) (0.22)
Distributions (from capital gains) .......................... (0.01) (0.11) (0.08) (0.02)
----- ----- ----- -----
Total distributions ........................................... (1.12) (1.01) (0.85) (0.24)
----- ----- ----- -----
Net asset value, end of period ................................ $10.87 $11.87 $11.19 $10.50
===== ===== ===== =====
TOTAL RETURN: ................................................. 1.02% 15.09% 14.62% 7.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ...................... $32,253 $23,268 $11,176 $3,009
Ratio of expenses to average net assets** ..................... 0.70% 0.70% 0.70% 0.70%++
Ratio of net income to average net assets** ................... 9.60% 9.61% 9.77% 7.46%++
Portfolio turnover rate ....................................... 43.13% 74.54% 117.01% 67.55%
</TABLE>
<TABLE>
<CAPTION>
SELIGMAN INCOME PORTFOLIO
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:*
Net asset value, beginning of year ............. $10.80 $10.52 $10.56 $ 9.97 $11.38
----- ----- ----- ----- -----
Income from investment operations:
Net investment income** ...................... 0.45 0.56 0.58 0.60 0.69
Net gains or losses on securities (both
realized and unrealized) ..................... 0.38 0.91 0.13 1.19 (1.37)
----- ----- ----- ----- -----
Total from investment operations ............... 0.83 1.47 0.71 1.79 (0.68)
----- ----- ----- ----- -----
Less distributions:
Dividends (from net investment income) ....... (0.46) (0.55) (0.58) (0.60) (0.73)
Distributions (from capital gains) ........... (0.16) (0.64) (0.17) (0.60) --
----- ----- ----- ----- -----
Total distributions ............................ (0.62) (1.19) (0.75) (1.20) (0.73)
----- ----- ----- ----- -----
Net asset value, end of year ................... $11.01 $10.80 $10.52 $10.56 $9.97
===== ===== ===== ===== =====
TOTAL RETURN: .................................. 7.76% 14.02% 6.66% 17.98% (5.96)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) ......... $14,582 $13,835 $13,717 $12,619 $10,050
Ratio of expenses to average net assets** ...... 0.60% 0.60% 0.59% 0.60% 0.60%
Ratio of net income to average
net assets** ................................. 3.94% 4.71% 5.37% 5.55% 6.34%
Portfolio turnover rate ........................ 70.45% 96.99% 19.59% 51.22% 29.76%
</TABLE>
- -----------------------------
* Per share amounts are calculated based on average shares outstanding.
** Seligman voluntarily reimburses expenses (excluding its management fee) that
exceed .20% per annum of the Portfolio's average daily net assets. These
amounts reflect the effect of these reimbursements. There is no assurance
that Seligman will continue this policy in the future.
+ Commencement of operations.
++ Annualized.
P-47
<PAGE>
SELIGMAN LARGE-CAP VALUE PORTFOLIO
5/1/98+
TO
12/31/98
--------
PER SHARE DATA:*
Net asset value, beginning of period ............................... $10.00
-----
Income from investment operations:
Net investment income** .......................................... 0.04
Net gains or losses on securities (both realized and unrealized) . (0.07)
-----
Total from investment operations ................................... (0.03)
-----
Less distributions:
Dividends (from net investment income) ........................... (0.04)
Distributions (from capital gains) ............................... (0.27)
-----
Total distributions ................................................ (0.31)
-----
Net asset value, end of period ..................................... $ 9.66
=====
TOTAL RETURN: ......................................................(0.26)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ........................... $3,845
Ratio of expenses to average net assets** .......................... 0.80%++
Ratio of net income to average net assets** ........................ 1.11%++
Portfolio turnover rate ............................................ 65.82%
SELIGMAN SMALL-CAP VALUE PORTFOLIO
5/1/98+
TO
12/31/98
--------
PER SHARE DATA:*
Net asset value, beginning of period ............................... $10.00
-----
Income from investment operations:
Net investment income** .......................................... (0.02)
Net gains or losses on securities (both realized and unrealized) . (1.73)
-----
Total from investment operations ................................... (1.75)
-----
Less distributions:
Distributions (from capital gains) ............................... (0.94)
-----
Total distributions ................................................ (0.94)
-----
Net asset value, end of period ..................................... $ 7.31
=====
TOTAL RETURN: ......................................................17.00)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ........................... $2,469
Ratio of expenses to average net assets** .......................... 1.00%++
Ratio of net income to average net assets** ........................(0.34)%++
Portfolio turnover rate ............................................ 73.87%
- -----------------------------
* Per share amounts are calculated based on average shares outstanding.
** Seligman voluntarily reimburses 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. These amounts reflect the
effect of these waivers. There is no assurance that Seligman will continue
this policy in the future.
+ Commencement of operations
++ Annualized.
P-48
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
THE FOLLOWING INFORMATION IS AVAILABLE WITHOUT CHARGE UPON REQUEST: CALL
TOLL-FREE (800) 221-2783 IN THE US OR (212) 850-1864 OUTSIDE THE US.
STATEMENT OF ADDITIONAL INFORMATION (SAI) CONTAINS ADDITIONAL INFORMATION ABOUT
THE FUND. IT IS ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) AND IS
INCORPORATED BY REFERENCE INTO (IS LEGALLY PART OF) THIS PROSPECTUS.
ANNUAL/SEMI-ANNUAL REPORTS CONTAIN ADDITIONAL INFORMATION ABOUT EACH PORTFOLIO'S
INVESTMENTS. IN THE FUND'S ANNUAL REPORT, YOU WILL FIND A DISCUSSION OF THE
MARKET CONDITIONS AND INVESTMENT STRATEGIES THAT SIGNIFICANTLY AFFECTED EACH
PORTFOLIO'S PERFORMANCE DURING ITS LAST FISCAL YEAR.
- --------------------------------------------------------------------------------
[SELIGMAN LOGO]
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (800) SEC-0330. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing: Public Reference Section of the SEC, Washington, DC 20549-6009.
SEC FILE NUMBER: 811-5221
<PAGE>
SELIGMAN PORTFOLIOS, INC.
Statement of Additional Information
May 1, 1999
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of Seligman Portfolios, Inc.
(the "Fund"), dated May 1, 1999. This SAI, although not in itself a prospectus,
is incorporated by reference into the Prospectus in its entirety. It should be
read in conjunction with the Prospectus, which you may obtain by writing or
calling the Fund at the above address or telephone numbers.
The financial statements and notes included in the Fund's Annual Report, and the
Independent Auditors' Report thereon, are incorporated herein by reference. The
Annual Report will be furnished to you without charge if you request a copy of
this SAI.
Table of Contents
Fund History............................................. 2
Description of the Fund and its Investments and Risks.... 2
Management of the Fund................................... 15
Investment Advisory and Other Services................... 20
Brokerage Allocation and Other Practices................. 24
Capital Stock and Other Securities....................... 25
Purchase, Redemption, and Pricing of Shares.............. 26
Taxation of the Fund..................................... 27
Financial Statements..................................... 28
General Information...................................... 28
Appendix A .............................................. 29
Appendix B .............................................. 32
<PAGE>
Fund History
The Fund was 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.
Description of the Fund and its Investments and Risks
Classification
The Fund is a diversified open-end management investment company, or mutual
fund. The Fund consists of the following fifteen separate and independent
Portfolios:
<TABLE>
<S> <C>
Seligman Bond Portfolio Seligman Henderson Global Technology Portfolio
Seligman Capital Portfolio Seligman Henderson International Portfolio
Seligman Cash Management Portfolio Seligman High-Yield Bond Portfolio
Seligman Common Stock Portfolio Seligman Income Portfolio
Seligman Communications and Information Portfolio Seligman Large-Cap Growth Portfolio
Seligman Frontier Portfolio Seligman Large-Cap Value Portfolio
Seligman Henderson Global Growth Opportunities Portfolio Seligman Small-Cap Value Portfolio
Seligman Henderson Global Smaller Companies Portfolio
</TABLE>
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 or Seligman Mutual Benefit Plan) established by MBL
Life Assurance Corporation (MBL Life). However, MBL Life no longer accepts
applications for contracts nor will it accept additional purchase payments under
existing contracts.
CLAVA-1, CLAVA-2, CLNYVA-1 and CLNYVA-2 are each registered as a unit investment
trust under the Investment Company Act of 1940 (1940 Act) and fund variable
annuity contracts (VA Contracts) issued by Canada Life and distributed by
Seligman Advisors, Inc. (formerly, 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 Advisors, 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.
Investment Strategies and Risks
The Prospectus discusses the investment objectives of each of the Fund's
Portfolios and the policies each Portfolio employs to achieve its objectives.
The following information regarding the Fund's Portfolios' investment policies
supplements the information contained in the Prospectus.
2
<PAGE>
Convertible Bonds
Each Portfolio, other than the Seligman Cash Management Portfolio, may purchase
convertible bonds. 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 a Portfolio, the investment 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 investment 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
investment 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 Standard & Poor's Rating Service (S&P) or Ca by Moody's
Investors Service, Inc. (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 Appendix A to
this Prospectus. The investment 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.
Derivatives
Each of the Portfolios, other than the Seligman Cash Management Portfolio and
Seligman Bond Portfolio, 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, as described more fully below, are
forward currency exchange contracts, put options, and rights and warrants.
Forward Foreign Currency Exchange Contracts
Each of 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) will generally enter into
forward foreign currency exchange contracts to fix the US dollar value of a
security it has agreed to buy or sell for the period between the date the trade
was entered into and the date the security is delivered and paid for, or, to
hedge the US dollar value of securities it owns. A forward foreign currency
exchange contract is
3
<PAGE>
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.
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
US 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 investment 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 Fund's 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 Fund's 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 not enter
into 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 parities will
be incorporated into the longer-term investment decisions made with regard to
overall diversification strategies. However, the Fund's 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.
4
<PAGE>
Each Portfolio's dealing in forward foreign currency exchange contracts will be
limited to the transactions described above. 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 Fund's
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.
Put Options
Each Portfolio, other than the Seligman Cash Management Portfolio, the Seligman
Bond Portfolio, and the Seligman High-Yield Bond Portfolio, may purchase put
options in an attempt to provide a hedge against a decrease in the market price
of an underlying security held by a 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. 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 option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option premium and transaction costs.
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 a 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. 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 both listed and over-the-counter put options. A
Portfolio will be exposed to the risk of counterparty nonperformance in the case
of over-the-counter put options.
A Portfolio's ability to engage in option transactions may be limited by tax
considerations.
Rights and Warrants
Each Portfolio, other than the Seligman Cash Management Portfolio, Seligman Bond
Portfolio and Seligman High-Yield Bond Portfolio, may invest in common stock
rights and warrants believed by the investment manager to provide capital
appreciation opportunities. Common stock rights and warrants received as part of
a unit or attached to securities purchased (i.e., not separately purchased) are
not included in each Portfolio's investment restrictions regarding such
securities.
Each Portfolio may not invest in rights and warrants if, at the time of
acquisition, the investment in rights and warrants would exceed 5% of the
Portfolio's net assets, valued at the lower of cost or market. In
5
<PAGE>
addition, no more than 2% of net assets of each Portfolio, other than the
Seligman Large-Cap Growth Portfolio, Seligman Large-Cap Value Portfolio and
Seligman Small-Cap Value Portfolio, may be invested in warrants not listed on
the New York or American Stock Exchanges. For purposes of this restriction,
rights and warrants acquired by each Portfolio in units or attached to
securities may be deemed to have been purchased without cost.
Foreign Securities
Each of the 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 which are
traded in the United States 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 US
company, and foreign companies may not be subject to reporting standards and
requirements comparable to those applicable to US companies. Foreign securities
may not be as liquid as US securities. Securities of foreign companies may
involve greater market risk than securities of US companies, and foreign
brokerage commissions and custody fees are generally higher than in the US.
Investments in foreign securities may also be subject to local economic or
political risks, political instability and possible nationalization of issuers.
By investing in foreign securities, the Portfolios will attempt to take
advantage of differences among economic trends and the performance of securities
markets in various countries. To date, the market values of securities of
issuers located in different countries have moved relatively independently of
each other. During certain periods, the return on equity investments in some
countries has exceeded the return on similar investments in the United States.
The Fund's 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.
Investments in securities of foreign issuers may involve risks that are not
associated with domestic investments, and there can be no assurance that the
Portfolios' foreign investments will present less risk than a portfolio of
domestic securities. Foreign issuers may lack uniform accounting, auditing and
financial reporting standards, practices and requirements, and there is
generally less publicly available information about foreign issuers than there
is about US issuers. Governmental regulation and supervision of foreign stock
exchanges, brokers and listed companies may be less pervasive than is customary
in the US. 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 US markets and far fewer traded issues. Fixed brokerage
commissions on foreign securities exchanges are generally higher than in the
United States, 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 United States.
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
6
<PAGE>
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 US 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.
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 US dollar,
changes in foreign currency and US dollar exchange rates and exchange control
regulations. A Portfolio may incur costs in connection with conversions between
various currencies. A Portfolio's net asset value per share will be affected by
changes in currency exchange rates. Changes in foreign currency exchange rates
may also affect the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income and gains, if any,
to be distributed to shareholders by the Portfolios. The rate of exchange
between the US 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).
Depositary Receipts
Depositary Receipts are instruments generally issued by domestic banks or trust
companies that represent the deposits of a security of a foreign issuer.
American Depositary Receipts (ADRs), which are traded in dollars on US Exchanges
or over-the-counter, are issued by domestic banks and evidence ownership of
securities issued by foreign corporations. European Depositary Receipts (EDRs)
are typically traded in Europe. Global Depositary Receipts (GDRs) are typically
traded in both Europe and the United States. 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
US, and therefore, the import of such information may not be reflected in the
market value of such instruments.
IIliquid Securities
Each Portfolio, other than the Seligman Cash Management 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 (1933 Act)) and other securities that are not readily
marketable. Each Portfolio, other than the Seligman Cash Management Portfolio,
may purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and Fund's Board of
Directors, may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the 15% limitation on illiquid securities. Should
the Board of Directors make this determination, it will carefully monitor the
security (focusing on such factors, among others, as trading activity and
availability of information) to determine that the Rule 144A security continues
to be liquid. It is not possible to predict with assurance exactly how the
market for Rule 144A securities will
7
<PAGE>
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.
Money Market Instruments
Each of the Portfolios, other than the Seligman Cash Management Portfolio, which
intends to invest primarily in the money market instruments described below, may
invest a portion of their assets in the following money market instruments.
US Government Obligations
US Government Obligations are obligations issued or guaranteed as to both
principal and interest by the US Government or backed by the full faith and
credit of the United States, such as US Treasury Bills, securities issued or
guaranteed by a US Government agency or instrumentality, and securities
supported by the right of the issuer to borrow from the US Treasury.
Bank Obligations
Bank obligations include US 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 US 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
Commercial paper and short-term 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 US bank holding companies in terms of assets.
Mortgage Related Securities
Mortgage Pass-Through Securities. Each Portfolio may invest in mortgage
pass-through securities. Mortgage pass-through securities include securities
that represent interests in pools of mortgage loans made by lenders such as
savings and loan institutions, mortgage bankers, and commercial banks. Such
securities provide a "pass-through" of monthly payments of interest and
principal made by the borrowers on their residential mortgage loans (net of any
fees paid to the issuer or guarantor of such securities). Although the
residential mortgages underlying a pool may have maturities of up to 30 years, a
pool's effective maturity may be reduced by prepayments of principal on the
underlying mortgage obligations. Factors affecting mortgage prepayments include,
among other things, the level of interest rates, general economic and social
conditions and the location and age of the mortgages. High interest rate
mortgages are more likely to be prepaid than lower-rate mortgages; consequently,
the effective maturities of mortgage-related obligations that pass-through
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.
The Government National Mortgage Association (GNMA) is a US Government
corporation within the Department of Housing and Urban Development, authorized
to guarantee, with the full faith and credit of the US 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
8
<PAGE>
actually make the payments. Other government-related issuers of mortgage-related
securities include the Federal National Mortgage Association (FNMA), a
government-sponsored corporation subject to general regulation by the Secretary
of Housing and Urban Development but owned entirely by private stockholders, and
the Federal Home Loan Mortgage Corporation (FHLMC), a corporate instrumentality
of the US 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 US 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 US 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.
Collateralized Mortgage Obligations. The Seligman Income Portfolio may invest in
Collateralized Mortgage Obligations (CMOs), including certain CMOs that have
elected to be treated as Real Estate Mortgage Investment Conduits (REMICs). CMOs
are fixed-income securities collateralized by pooled mortgages and separated
into short-, medium-, and long-term positions (called tranches). Tranches pay
different rates of interest depending upon their maturity. CMOs may be
collateralized by (a) pass through securities issued or guaranteed by GNMA, FNMA
or FHLMC, (b) unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veteran's Affairs, (c)
unsecuritized conventional Mortgages, (d) other mortgage related securities or
(e) any combination thereof.
Each tranche of a CMO is issued at a specific coupon rate and has a stated
maturity. As the payments on the underlying mortgage loans are collected, the
CMO issuer generally pays the coupon rate of interest to the holders of each
tranche. In a common structure referred to as a "Pay" CMO, all scheduled and
unscheduled principal payments generated by the collateral, as loans are repaid
or prepaid, go initially to investors in the first tranches. Investors in later
tranches do not start receiving principal payments until the prior tranches are
paid in full. Sometimes, CMOs are structured so that the prepayment and/or
market risks are transferred from one tranche to another.
Most CMOs are issued by Federal agencies. However, the only CMOs backed by the
full faith and credit of the US Government are CMOs collateralized by pass
through securities guaranteed by GNMA. All CMOs are subject to reinvestment
risk; that is, as prepayments on the underlying pool of mortgages increase, the
maturity of the tranches in the CMO will decrease. As a result, the Portfolio
may have to invest the proceeds that were invested in such CMOs in securities
with lower yields. Factors affecting reinvestment risk include the level of
interest rates, general economic and social conditions and the location and age
of the mortgages.
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 US
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.
9
<PAGE>
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.
When-Issued and Forward Commitment Securities
The Seligman Bond Portfolio and the Seligman High-Yield Bond Portfolio may
purchase securities on a when-issued or forward commitment 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 or forward commitment 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 and
forward commitment 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 or forward commitment 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 or forward commitment obligations; these
accounts will be valued each day and additional cash and/or liquid high-grade
debt securities will be added to an account in the event that the current value
of the when-issued or forward commitment obligations increase. When the time
comes to pay for when-issued or forward commitment 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 or forward commitment securities themselves (which may
have a value greater or less than a Portfolio's payment obligations). Sale of
securities to meet when-issued and forward commitment obligations carries with
it a greater potential for the realization of capital gain or loss.
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.
Lending of Portfolio Securities
Other than the Seligman Cash Management Portfolio, each of the 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 33 1/3% of the Portfolios' total assets taken at
market value. The 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 pays the lending Portfolio an amount equal to any
dividends or interest paid on the securities. The lending Portfolio may invest
the collateral and earn additional income or receive an agreed upon amount of
interest income from the borrower. Loans made by the Portfolios will generally
be short-
10
<PAGE>
term. Loans are subject to termination at the option of the lending Portfolio 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 collateral to the borrower or placing broker. The lending
Portfolio does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment. The lending Portfolio may lose money
if a borrower defaults on its obligation to return securities and the value of
the collateral held by the lending Portfolio is insufficient to replace the
loaned securities. In addition, the lending Portfolio is responsible for any
loss that might result from its investment of the borrower's collateral.
Borrowing
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 Growth 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 Growth
Portfolio, 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 Growth Portfolio, the Seligman Large-Cap Value Portfolio, and
the Seligman Small-Cap Value Portfolio) 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.
Except as otherwise specifically noted above, each of the Fund's Portfolios'
investment strategies are not fundamental and the Fund, with the approval of the
Board of Directors, may change such strategies without the vote of a majority of
a Portfolio's outstanding voting securities.
Fund Policies
The Fund is subject to fundamental policies that place restrictions on certain
types of investments. 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 Growth Portfolio, the Seligman Large-Cap
Value Portfolio, and the Seligman Small-Cap Value Portfolio) of the value
of the total assets of the Portfolio; except that the Seligman Capital
Portfolio, Seligman Common
11
<PAGE>
Stock Portfolio, Seligman Communications and Information Portfolio,
Seligman Large-Cap Growth 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 Growth
Portfolio, the Seligman Large-Cap Value Portfolio, and the Seligman
Small-Cap Value Portfolio) of such assets (taken at cost); except that the
Seligman Frontier Portfolio, the Seligman High-Yield Bond Portfolio, the
Seligman Large-Cap Growth Portfolio, the Seligman Large-Cap Value Portfolio
and the Seligman Small-Cap Value Portfolio will not purchase additional
portfolio securities if it has outstanding borrowings in excess of 5% of
the value of its total assets; and except that each of the Seligman
Henderson Portfolios may borrow money from banks to purchase securities in
amounts not in excess of 5% of its total assets.
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 US
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 US 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 Growth 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.
12
<PAGE>
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 its investment objective, (b) through repurchase agreements
and (c) by lending portfolio securities in an amount not to exceed 33 1/3%
of its total assets.
10. Purchase illiquid securities for any Portfolio including repurchase
agreements maturing in more than seven days and securities that cannot be
sold without registration or the filing of a notification under Federal or
state securities laws, if, as a result, such investment would exceed 15% of
the value of such Portfolio's net assets.
11. Invest in oil, gas or other mineral exploration or development programs;
provided, however, that this investment restriction shall not prohibit a
Portfolio from purchasing publicly-traded securities of companies engaging
in whole or in part in such activities.
12. Purchase securities of any other investment company, except in connection
with a merger, consolidation, acquisition or reorganization or for the
purpose of hedging the Portfolio's obligations under the Deferred
Compensation Plan for Directors, and except to the extent permitted by
Section 12 of 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 Growth Portfolio, 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
13
<PAGE>
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 separate account prospectuses or disclosure documents of
Canada Life or MBL Life, as applicable.
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.
Temporary Defensive Position
Each Portfolio may, from time to time, take a temporary defensive position in
seeking to minimize extreme volatility caused by adverse market, economic, or
other conditions, or in anticipation of significant withdrawals.
When the investment manager believes that market conditions warrant a temporary
defensive position, a Portfolio may invest up to 100% of its assets in cash or
cash equivalents, including, but not limited to, prime commercial paper, bank
certificates of deposit, bankers' acceptances, or repurchase agreements for such
securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. A Portfolio's investments in foreign cash equivalents will be
limited to those that, in the opinion of the investment manager, equate
generally to the standards established for US cash equivalents. 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 US 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. In addition, the High-Yield Bond Portfolio may
also invest in high-yield, medium and lower quality corporate notes.
Portfolio Turnover
The portfolio turnover rates for each Portfolio are calculated by dividing the
lesser of purchases or sales of portfolio securities for the year by the monthly
average of the value of the portfolio securities owned during the 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, 1998 and 1997 for each Portfolio (except the
Seligman Cash Management Portfolio; the Seligman Large-Cap Growth Portfolio,
which commenced operations on May 1, 1999; and the Seligman Large-Cap Value
Portfolio and Seligman Small-Cap Value Portfolio for the period May 1, 1998,
commencement of operations, to December 31, 1998) were as follows:
1998 1997
---- ----
Seligman Bond Portfolio 73.31% 170.12%
Seligman Capital Portfolio 130.86 93.97
Seligman Common Stock Portfolio 55.55 80.13
Seligman Communications and Information Portfolio 132.57 277.14
Seligman Frontier Portfolio 86.52 101.68
Seligman Henderson Global Growth Opportunities Portfolio 48.99 77.85
Seligman Henderson Global Smaller Companies Portfolio 66.40 64.81
Seligman Henderson Global Technology Portfolio 82.27 167.36
Seligman Henderson International Portfolio 75.81 89.43
Seligman High-Yield Bond Portfolio 43.13 74.54
Seligman Income Portfolio 70.45 96.99
Seligman Large-Cap Value Portfolio 65.82 --
Seligman Small-Cap Value Portfolio 73.87 --
14
<PAGE>
Management of the Fund
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Fund.
Management Information
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, NY
10017.
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
William C. Morris* Director, Chairman of the Chairman, J. & W. Seligman & Co. Incorporated,
(61) Board, Chief Executive Chairman and Chief Executive Officer, the Seligman
Officer and Chairman of the Group of investment companies; Chairman, Seligman
Executive Committee Advisors, Inc., Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas
industry; Director, Seligman Data Corp., Kerr-McGee
Corporation, diversified energy company; and Sarah
Lawrence College. Formerly, Director, Daniel
Industries Inc., manufacturer of oil and gas metering
equipment.
Brian T. Zino* Director, President and Director and President, J. & W. Seligman & Co.
(46) Member of the Executive Incorporated; President (with the exception of
Committee 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.; Member of the Board of Governors
of the Investment Company Institute; and Director,
ICI Mutual Insurance Company, Seligman Advisors,
Inc., and Seligman Services, Inc.
Richard R. Schmaltz* Director and Member of the Director and Managing Director, Director of
(58) Executive Committee Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of investment
companies (except Seligman Cash Management Fund,
Inc.); Director, Seligman Henderson Co., and Trustee
Emeritus of Colby College. Formerly, Director,
Investment Research at Neuberger & Berman from May
1993 to September 1996.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts
(69) University; Director or Trustee, the Seligman Group
Tufts University of investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; a Governor of the Center for
Medford, MA 02155 Creative Leadership; Director; Raytheon Co.,
electronics; National Defense University; and the
Institute for Defense Analyses. Formerly, Director,
USLIFE Corporation; 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.
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director
(64) or Trustee, the Seligman Group of investment
18 Highland Circle, companies; Trustee, the Committee for Economic
Bronxville, NY 10708 Development; and Chairman, The Rockefeller
Foundation, charitable foundation. Formerly, Trustee,
The Markle Foundation, philanthropic organization; and
Director, New York Telephone Company; and
International Research and Exchange Board,
intellectual exchanges.
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of
(66) Kerr-McGee Corporation; Director or Trustee, the
2601 Northwest Expressway, Suite Seligman Group of investment companies; Director,
805E Kimberly-Clark Corporation, consumer products; Bank
Oklahoma City, OK 73112 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 Member of the Business
Roundtable and National Petroleum Council. Formerly,
Chairman, Oklahoma City Public Schools Foundation;
and Director, Federal Reserve System's Kansas City
Reserve Bank and the Oklahoma City Chamber of
Commerce.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of investment companies; Director, Commonwealth
New York, NY 10004 Industries, Inc., manufacturers of aluminum sheet
products; the Foreign Policy Association; Municipal
Art Society of New York; the U.S. Council for
International Business; and New York Presbyterian
Hospital; Chairman, American Australian Association;
and New York Presbyterian Healthcare Network, Inc.;
Vice-Chairman, the US-New Zealand Council; and Member
of the American Law Institute and Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of
(56) investment companies; Trustee, The Geraldine R. Dodge
P.O. Box 449, Foundation, charitable foundation; and Chairman of
Gladstone, NJ 07934 the Board of Trustees of St. George's School
(Newport, RI). Formerly, Director, the National
Association of Independent Schools (Washington, DC).
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Morris County, investment companies. Formerly, Director, Public
P.O. Box 1945, Morristown, NJ Service Enterprise Group, public utility.
07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment
(71) companies; Director, The Houston Exploration Company;
675 Third Avenue, The Brooklyn Museum, KeySpan Energy Corporation; and
Suite 3004 Public Broadcasting Service; and Trustee, the
New York, NY 10017 Committee for Economic Development. Formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies,
Inc. and Dow Jones & Company, Inc.; Director and
President, Bekaert Corporation; and Co-Chairman,
Mobil Corporation.
Robert L. Shafer Director Retired Vice President, Pfizer Inc.; Director or
(66) Trustee, the Seligman Group of investment companies.
96 Evergreen Avenue, Formerly, Director, USLIFE Corporation.
Rye, NY 10580
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc.;
(64) Director or Trustee, the Seligman Group of investment
6606 Forestshire Drive, companies; Director, C-SPAN and CommScope, Inc.,
Dallas, TX 75230 manufacturer of coaxial cables. Formerly, Executive
Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.; and Director, Red Man Pipe and
Supply Company, piping and other materials.
Brian Ashford-Russell Vice President and Portfolio Portfolio Manager, Henderson Investment Management
(40) Manager Limited. He has been a Portfolio Manager at
Henderson plc since February 1993. Formerly, Vice
President and Portfolio Manager, one other open-end
investment company in the Seligman Group of investment
companies.
Daniel J. Charleston Vice President and Portfolio Managing Director (formerly, Vice President,
(39) Manager Investment Officer), J. & W. Seligman & Co.
Incorporated; 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 Chief Investment Officer, Henderson Investment
(48) Manager Management Limited since April 1992. He has been a
Director at Henderson International Limited and Senior
Portfolio Manager at Henderson plc, respectively,
since April 1995.
Neil T. Eigen Vice President and Portfolio Managing Director, J. & W. Seligman & Co.
(56) Manager Incorporated; Vice President and Portfolio Manager,
two other open-end investment companies in the
Seligman Group of investment companies.
Nitin Mehta Vice President and Portfolio Portfolio Manager, Henderson Investment Management
(38) Manager Limited. He has been a portfolio manager at
Henderson plc since September 1994. From May 1993 to
September 1994, has was Head of Currency Management
and Derivatives at Quorum Capital Management.
Arsen Mrakovcic Vice President and Portfolio Managing Director, J. & W. Seligman & Co.
(33) Manager Incorporated; Vice President and Portfolio Manager,
two other open-end investment companies in the
Seligman Group of investment companies. Formerly,
Vice President, Investment Officer,
J. & W. Seligman & Co. Incorporated from January 1995
to January 1996 and Portfolio Assistant,
J. & W. Seligman & Co. Incorporated from June 1992 to
January 1995.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address with Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Marion S. Schultheis Vice President and Portfolio Managing Director, J. & W. Seligman & Co.
(53) Manager Incorporated since May 1998; Vice President and
Portfolio Manager, three other open-end investment
companies in the Seligman Group of investment
companies. Formerly, Managing Director at Chancellor
LGT from October 1997 until May 1998; and Senior
Portfolio Manager at IDS Advisory Group Inc. from
August 1987 until October 1997.
Charles C. Smith, Jr. Vice President and Portfolio Managing Director (formerly, Senior Vice President
(42) Manager and Senior Investment Officer), J. & W. Seligman &
Co. Incorporated; Vice President and Portfolio
Manager, two other open-end investment companies in
the Seligman Group of investment companies and
Tri-Continental Corporation, a closed-end investment
company.
Paul H. Wick Vice President and Portfolio Director and Managing Director, J. & W. Seligman &
(36) Manager Co. Incorporated since January 1995 and November
1997, respectively; Vice President and Portfolio
Manager, two other open-end investment companies in
the Seligman Group of investment companies; and
Portfolio Manager, Henderson Investment Management
Limited. He joined J. & W. Seligman & Co. Incorporated
in 1987 as an Associate, Investment Research.
Gary S. Zeltzer Vice President and Portfolio Senior Vice President, J. & W. Seligman & Co.
(47) Manager Incorporated; Vice President and Portfolio Manager,
two other open-end investment companies in the
Seligman Group of investment companies.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman &
(42) Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies, and Seligman Services,
Inc.; Vice President and Treasurer, Seligman
International, Inc.; and Treasurer, Seligman
Henderson Co.
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(34) Regulation and Corporate Secretary, J. & W. Seligman
& Co. Incorporated; Secretary, the Seligman Group of
investment companies, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services, Inc.,
Seligman International, Inc. and Seligman Data Corp.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies
(41) and Seligman Data Corp.
</TABLE>
19
<PAGE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
Directors and officers of the Fund are also directors and officers of some or
all of the other investment companies in the Seligman Group.
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund
Name and Compensation Accrued as part of and Fund Complex
Position with Fund From 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
John R. Galvin, Director $7,608.99 N/A $79,000
Alice S. Ilchman, Director 6,752.04 N/A 73,000
Frank A. McPherson, Director 7,608.99 N/A 79,000
John E. Merow, Director 7,323.34 N/A 77,000
Betsy S. Michel, Director 7,608.99 N/A 79,000
James C. Pitney, Director 7,037.69 N/A 75,000
James Q. Riordan, Director 7,037.69 N/A 75,000
Robert L. Shafer, Director 7,037.69 N/A 75,000
James N. Whitson, Director 7,608.99(d) N/A 79,000(d)
</TABLE>
- ----------
(1) For the Fund's year ended December 31, 1998. Effective January 16, 1998,
the per meeting fee for Directors was increased by $1,000, which is
allocated among all Funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of eighteen investment
companies.
(d) Deferred.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. The Fund has adopted a Deferred Compensation Plan
under which a director who has elected deferral of his or her fees may choose a
rate of return equal to either (1) the interest rate on short-term Treasury
Bills, or (2) the rate of return on the shares of any of the investment
companies advised by J. & W. Seligman & Co. Incorporated, as designated by the
director. The cost of such fees and earnings is included in the directors' fees
and expenses, and the accumulated balance thereof is included in other
liabilities in the Fund's financial statements. The total amount of deferred
compensation (including earnings) payable in respect of the Fund to Mr. Whitson
as of December 31, 1998 was $24,881. Messrs. Merow and Pitney no longer defer
current compensation; however, they have accrued deferred compensation
(including earnings) in the amounts of $14,591 and $3,298, respectively, as of
December 31, 1998.
The Fund may, but is not obligated to, purchase shares of the Seligman Group of
investment companies to hedge its obligations in connection with the Fund's
Deferred Compensation Plan (except Seligman Cash Management Portfolio, which is
obligated to purchase shares of the Seligman Group of investment companies).
Investment Advisory and Other Services
The Investment Manager
J. & W. Seligman & Co. Incorporated (Seligman) manages the Fund. Seligman 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 Seligman was purchased by Mr. William C. Morris and a simultaneous
recapitalization of Seligman occurred. See Appendix B for further history of
Seligman.
20
<PAGE>
All of the officers of the Fund listed above are officers or employees of
Seligman or Henderson Investment Management Limited. Their affiliations with the
Fund and with Seligman and Henderson are provided under their principal business
occupations.
The Seligman Bond Portfolio, Seligman Capital Portfolio, Seligman Cash
Management Portfolio, Seligman Common Stock Portfolio and Seligman Income
Portfolio each pays Seligman 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
Seligman 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 Seligman 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 Seligman 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's average daily net assets in excess of $1 billion. The
Seligman Small-Cap Value Portfolio pays Seligman a management fee for its
services, calculated daily and payable monthly, equal to an annual rate of 1% 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. The Seligman Large-Cap Growth Portfolio pays Seligman a
management fee for its services, calculated daily and payable monthly, equal to
an annual rate of .70% of the Portfolio's average daily net assets on the first
$1 billion of net assets, .65% of the Portfolio's average daily net assets on
the next $1 billion of net assets and .60% of the Portfolio's average daily net
assets in excess of $2 billion. Each of the Seligman Henderson Portfolios pays
Seligman a management fee for its services, calculated daily and payable
monthly, equal to an annual rate of 1% of the average daily net assets of each
such Portfolio.
The following table indicates the management fees paid for the years 1998, 1997,
and 1996 for each Portfolio (except the Seligman Large-Cap Growth Portfolio
which commenced operations on May 1, 1999):
<TABLE>
<CAPTION>
Fund 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Seligman Bond Portfolio $ 27,438* $ 23,150* $ 18,034
Seligman Capital Portfolio 86,101 70,147* 48,339
Seligman Cash Management Portfolio 40,831* 38,042* 36,532
Seligman Common Stock Portfolio 224,301 178,662 134,264
Seligman Communications and Information Portfolio 748,401 574,370 373,337
Seligman Frontier Portfolio 323,502 282,248 165,050
Seligman Henderson Global Growth Opportunities Portfolio 73,741* 38,358* 4,098**
Seligman Henderson Global Smaller Companies Portfolio 215,796* 200,415* 110,169
Seligman Henderson Global Technology Portfolio 49,036* 26,504* 4,920**
Seligman Henderson International Portfolio 100,225* 88,212* 57,323
Seligman High-Yield Bond Portfolio 142,265* 84,740* 35,858
Seligman Income Portfolio 57,362* 54,451* 49,574
Seligman Large-Cap Value Portfolio 9,139*** -- --
Seligman Small-Cap Value Portfolio 7,951*** -- --
</TABLE>
- ----------
* Seligman, at its discretion, waived all or a portion of its fees.
** Fees paid from May 1, 1996 (commencement of operations) to December 31,
1996.
*** Fees paid from May 1, 1998 (commencement of operations) to December 31,
1998.
Under a Subadvisory Agreement dated July 1, 1998, Henderson Investment
Management Limited (HIML) furnishes investment advice, research and assistance
with respect to each of the Seligman Henderson Portfolio's non-US investments.
HIML, headquartered in the United Kingdom, was incorporated in 1984 and is a
registered investment adviser under the Investment Advisers Act of 1940. HIML is
a wholly owned subsidiary of Henderson plc. Henderson plc is a subsidiary of AMP
Limited, an Australian life insurance and financial services company. Henderson
plc, headquartered in London, is one of the largest money managers in Europe.
21
<PAGE>
HIML receives a fee from Seligman, equal to an annual rate of .50% of each of
the Seligman Henderson Portfolio's average daily net assets under the
supervision of HIML. The Subadvisory Agreement will continue until December 31,
1999 and from year to year thereafter (1) if such continuance is approved in the
manner required by the 1940 Act (by a vote of a majority of the Board of
Directors or of the outstanding voting securities of the Portfolios and by a
vote of a majority of the Directors who are not parties to the Subadvisory
Agreement or interested persons of any such party) and (2) HIML shall not have
notified Seligman in writing at least 60 days prior to such December 31 or prior
to December 31 of any year thereafter that it does not desire such continuance.
The Subadvisory Agreement may be terminated at any time by the Fund, on 60 days
written notice to HIML. The Subadvisory Agreement will terminate automatically
in the event of its assignment or upon the termination of the relevant
Management Agreement.
The Management Agreements (and Subadvisory Agreement, in the case of the
Seligman Henderson Portfolios) provide that Seligman (and HIML, 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 Subadvisory Agreement), except for willful misfeasance, bad
faith, gross negligence, or reckless disregard of their obligations and duties
under the Management Agreements (or Subadvisory Agreement).
The Fund pays all its expenses other than those assumed by Seligman or HIML,
including brokerage commissions, fees and expenses of independent attorneys and
auditors, taxes and governmental fees, including fees and expenses of qualifying
the Fund and its shares under Federal 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,
expenses of shareholders' meetings, expenses of corporate data processing and
related services, shareholder record keeping and shareholder account services,
fees and disbursements of transfer agents and custodians, fees and expenses of
directors of the Fund not employed by or serving as a Director of Seligman or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses.
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 and by the sole shareholder of each Portfolio on
April 30, 1998. The Management Agreement with respect to the Seligman Large-Cap
Growth Portfolio was approved by the Board of Directors on March 18, 1999. The
Management Agreements will continue in effect until December 31 of each year,
with respect to each Portfolio (except the Seligman Large-Cap Growth Portfolio,
for which the Management Agreement is in effect until December 31, 2000, 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) Seligman 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 Seligman. Seligman
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 Seligman's business.
22
<PAGE>
The Code of Ethics
Officers, directors and employees of Seligman are permitted to engage in
personal securities transactions, subject to Seligman's Code of Ethics. The Code
of Ethics 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 Seligman's Compliance Officer,
and sets forth a procedure of identifying, for disciplinary action, those
individuals who violate the Code of Ethics. The Code of Ethics prohibits each of
the officers, directors and employees (including all portfolio managers) of
Seligman from purchasing or selling any security that the officer, director, or
employee knows or believes (1) was recommended by Seligman for purchase or sale
by any client, including the Fund, within the preceding two weeks, (2) has been
reviewed by Seligman for possible purchase or sale within the preceding two
weeks, (3) is being purchased or sold by any client, (4) is being considered by
a research analyst, (5) is being acquired in a private placement, unless prior
approval has been obtained from Seligman's Compliance Officer, or (6) is being
acquired during an initial or secondary public offering. The Code of Ethics also
imposes a strict standard of confidentiality and requires portfolio managers to
disclose any interest they may have in the securities or issuers that they
recommend for purchase by any client.
The Code of Ethics also prohibits (1) 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 (2) 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 Seligman's
order desk. 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.
Services Provided by the Investment Manager
Pursuant to management agreements between the Fund and Seligman in respect of
the Portfolios and subject to the control of the Board of Directors, Seligman
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. Seligman provides the Fund with such office space, administrative
and other services and executive and other personnel as are necessary for Fund
operations. Seligman pays all of the compensation of directors and/or officers
of the Fund who are employees or consultants of Seligman except as otherwise
provided by HIML.
Service Agreements
There are no other management-related service contracts under which services are
provided to the Fund.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman
or HIML, regularly advise the Fund's Portfolios with respect to their
investments.
23
<PAGE>
Brokerage Allocation and Other Practices
Portfolio Transactions
In directing transactions involving exchange-listed securities, Seligman (or in
the case of the Seligman Henderson Portfolios, Seligman or HIML) 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 Seligman or HIML for its use. In addition, Seligman and
HIML 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 Seligman or HIML 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 Seligman or HIML to dealers
in the over-the-counter market acting as principal, except dealers with which
their directors 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 Growth Portfolio which commenced operations on May 1,
1999) for the years 1998, and if applicable, 1997 and 1996, are set forth in the
following table:
<TABLE>
<CAPTION>
Total Brokerage Commissions Paid for
Execution and Statistical Services(1)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Seligman Capital Portfolio $ 74,776 $ 35,821 $ 19,283
Seligman Common Stock Portfolio 68,974 74,489 37,709
Seligman Communications and Information Portfolio 177,132 235,341 82,832
Seligman Frontier Portfolio 85,207 69,951 43,065
Seligman Henderson Global Growth Opportunities Portfolio 14,141 15,812 4,056
Seligman Henderson Global Smaller Companies Portfolio 40,386 42,231 39,649
Seligman Henderson Global Technology Portfolio 10,211 6,589 2,037
Seligman Henderson International Portfolio 37,779 36,291 20,495
Seligman Income Portfolio 9,505 11,228 1,483
Seligman Large-Cap Value Portfolio 6,315* -- --
Seligman Small-Cap Value Portfolio 7,028* -- --
</TABLE>
- ----------
(1) Not including any spreads on principal transactions on a net basis.
* Commissions paid from May 1, 1998 (commencement of operations).
The amount of brokerage commissions paid by the Seligman Capital Portfolio has
increased materially from 1996 due to the Portfolio's increase in portfolio
turnover and the Portfolio's increase in portfolio transactions on public
exchanges as opposed to over-the-counter markets. The amount of brokerage
commissions paid by the Seligman Income Portfolio has increased materially from
1996 due to both a realignment of the Portfolio which decreased its convertible
debt holdings and increased its equity holdings and the Portfolio's sale of
international securities. The amount of brokerage commissions paid by the
Seligman Common Stock Portfolio has increased materially from 1996 due to an
increase in portfolio turnover. The increase in portfolio turnover was due to a
realignment of the Portfolio which decreased its convertible debt holdings and
increased its holdings in common stock. The amount of brokerage commissions paid
by the Seligman Frontier Portfolio has increased materially from 1996 due to an
increase in portfolio turnover. The amount of brokerage commissions paid by the
Seligman Communications and Information Portfolio has increased materially from
1996 due to the Portfolio's increase in new assets under management.
24
<PAGE>
Commissions
For the years ended December 31, 1998, 1997 and 1996, the Fund did not execute
any portfolio transactions with, and therefore did not pay any commissions to,
any broker affiliated with either the Fund, Seligman, HIML, or Seligman
Advisors.
Brokerage Selection
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, Seligman or HIML 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.
Directed Brokerage
During the Fund's year ended December 31, 1998, neither the Fund, Seligman, nor
HIML directed any of the Fund's brokerage transactions to a broker because of
research services provided.
Regular Broker-Dealers
During the Fund's year ended December 31, 1998, the Fund did not acquire
securities of any of its regular brokers or dealers (as defined in Rule 10b-1
under the 1940 Act) or of their parents.
Capital Stock and Other Securities
Capital Stock
The Fund is authorized to issue a total of 1,000,000,000 shares, each with a par
value of $.001. The Fund presently has fifteen 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 Growth Portfolio, Seligman Large-Cap Value
Portfolio, and Seligman Small-Cap Value Portfolio. Each share represents an
equal proportionate interest in the respective series and shares entitle their
holders to one vote per share. Shares have noncumulative voting rights, do not
have preemptive or subscription rights, are transferable and are fully paid and
non-assessable. In accordance with current policy of the Securities and Exchange
Commission (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 prospectuses or disclosure
documents relating to those accounts, 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.
Other Securities
The Fund has no authorized securities other than common stock.
25
<PAGE>
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Shares of the Portfolios are offered only to Canada Life Accounts. Shares of the
Portfolios are no longer available for purchase by any participants in the
Seligman Mutual Benefit Plan. Shares of the Portfolios will be purchased by
Canada Life Accounts at net asset value, without charge. However, the Canada
Life Accounts are sold subject to certain fees and charges. These fees and
charges for the Canada Life Accounts are described in the prospectuses or
disclosure documents for Canada Life Accounts, which should be read together
with this Prospectus, as applicable.
Offering Price
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.
It is the policy of the Seligman Cash Management Portfolio to use its best
efforts to maintain a constant per share price equal to $1.00. Instruments held
by the Seligman Cash Management Portfolio are valued on the basis of amortized
cost. This involves valuing an instrument at its cost initially and, thereafter,
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. While this method provides certainty in valuation, it may result
in periods during which the value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if it sold the instrument.
The foregoing method of valuation is permitted by Rule 2a-7 adopted by the SEC.
Under this rule, the Seligman Cash Management Portfolio must maintain an
average-weighted portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days 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 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 60 days remaining to maturity are
generally valued at amortized cost. Short-term obligations with more than 60
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
26
<PAGE>
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 US 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 US dollars at the mean between the bid and offer prices of such
currencies against US 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.
Purchase or redemption requests received by Canada 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.
Redemption in Kind
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.
Taxation of the Fund
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. 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 capital gain distribution. Information regarding the tax
consequences of an investment in the Fund is contained in the separate
prospectuses or disclosure documents of the Canada Life Accounts and VCA-9,
which should be read together with this SAI.
27
<PAGE>
Financial Statements
The Annual Report to shareholders for the year ended December 31, 1998 for the
Fund's Portfolios contains a schedule of the investments of each Portfolio as of
December 31, 1998, as well as certain other financial information as of that
date. The financial statements and notes included in the Annual Report, and the
Independent Auditors' Report thereon, are incorporated herein by reference. The
Annual Report will be furnished without charge to investors who request copies
of this SAI.
General Information
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.
Chase Manhattan Bank, 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.
28
<PAGE>
APPENDIX A
MOODY'S INVESTORS SERVICE, INC. (MOODY'S)
DEBT SECURITIES
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than Aaa bonds because margins of protection may not
be as large or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be characteristically lacking or may be unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact may have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in high
degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
29
<PAGE>
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.
30
<PAGE>
COMMERCIAL PAPER
S&P Commercial Paper ratings are current assessments of the likelihood of timely
payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding timely
payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
The ratings assigned by S&P may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within its major rating categories.
31
<PAGE>
Appendix B
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 underwritings.
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 $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
32
<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 50
mutual fund portfolios.
o Helps pioneer state-specific municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, 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 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.
- -------------------------------------------------------------------------------
A N N U A L R E P O R T
- -------------------------------------------------------------------------------
SELIGMAN
PORTFOLIOS,
INC.
[GRAPHIC OMITTED]
December 31, 1998
<PAGE>
-----------------------
SELIGMAN
PORTFOLIOS,
INC.
-----------------------
February 5, 1999
Dear Contract Owner:
J. & W. Seligman & Co. Incorporated, as Manager of Seligman Portfolios, Inc.
(the "Fund"), is pleased to provide the enclosed audited financial statements
and accompanying information for the year ended December 31, 1998.
In 1998, for the eighth straight year, the US economy expanded, with real
domestic growth of 3.9%. Once again, large-cap US stocks responded to this
favorable environment with strong performance. The market, as measured by the
Standard & Poor's 500 Composite Stock Price Index (S&P 500), rose 28.58% -- the
first time in history that this widely watched index returned more than 20% for
four years in a row.
Although 1998 will certainly be recorded as another stellar year for
equities, the market gave investors a bumpy ride along the way. In fact, such
wide market swings haven't been seen since 1987. A number of factors contributed
to this volatility -- some domestic, many international. The global economic
background in 1998 was one of steadily deteriorating conditions as the financial
crisis, originally limited to a few Asian countries, spread throughout other
regions. The global turmoil continued when Russia defaulted on its debt and
devalued its currency, and investors everywhere feared that Brazil and other
Latin American countries would follow.
In addition to high volatility, last year's market was notable for being
extremely narrow, with the exceptional performances of a few stocks distorting
the total picture. In fact, 197 stocks, representing 39% of the S&P 500,
actually lost market value during the last 12 months. Investment results between
market caps were also more widely dispersed than usual. The disparity was almost
unprecedented. For example, the large-capitalization-dominated S&P 500 rose
28.58%, while the Russell 2000 Index of smaller-capitalization stocks actually
declined 2.55%.
International markets began the year with generally strong performances,
fueled by expectations of lower inflation and falling interest rates. Beginning
in mid-July, however, the combination of the Russian debt default, speculative
attacks against emerging market currencies, and a worse-than-expected economic
impact from Asia on the rest of the world led to sharp market corrections. Then,
in October, markets recovered as interest rates were cut in many parts of the
world and a coordinated program of support for the world's financial system was
implemented.
Fixed-income markets posted strong returns for the year but, as in the equity
markets, some segments performed notably better than others. US Treasury bonds,
in particular, benefitted from a confluence of events that drove prices higher
and yields to 30-year lows. US government-backed bonds, which carry the highest
credit quality, were in great demand as the global financial turmoil produced a
"flight to quality" around the world. Further boosting the US government bond
market was the Federal Reserve Board's lowering of the federal-funds rate, and a
federal budget surplus which caused the overall supply of bonds to decrease.
In 1999, we believe gross domestic product (GDP) should slow to about 2.5
percent. We expect a challenging financial market environment with ongoing
economic uncertainties and continued high volatility. Nonetheless, we see
moderately positive returns for the year in line with our lower growth
projections. In addition, low inflation, falling or stable interest rates,
improving prospects in Asia, and a Federal Reserve leading the fight against
global recession should all provide support for US markets. We expect that the
equity market, which began to show signs of broadening in the fourth quarter of
1998, will continue to broaden in 1999. If this trend continues, small- and
mid-cap stocks should begin to benefit from the favorable equity environment to
a greater extent.
Thank you for your continued support of Seligman Portfolios, Inc. We look
forward to continuing to serve your investment needs in 1999.
Respectfully,
/S/ William C. Morris
---------------------
William C. Morris
Chairman
J. & W. Seligman & Co. Incorporated
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OVERVIEW
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
PRINCIPAL AMOUNT
OR SHARES
--------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
SELIGMAN BOND PORTFOLIO
US GOVERNMENT AGENCIES
Aid-Israel 0%, 11/15/2010......... $500,000 $500,000
Federal National Mortgage
Association:
5.795%, 1/1/2009................ 150,000 150,000
6%, 12/1/2028................... 200,000 200,000
Government National Mortgage
Association:
6 1/2%, 12/15/2028.............. 200,000 200,000
6%, 12/20/2028.................. 200,000 200,000
CORPORATE BONDS
Cardinal Health 6 1/4%, 7/15/2008. 100,000 100,000
First Data 5.80%, 12/15/2008...... 100,000 100,000
Sprint Capital 6 1/8%, 11/15/2008. 200,000 200,000
PRINCIPAL AMOUNT
OR SHARES
-------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ----------- -------- --------
US GOVERNMENT AGENCIES
Government National Mortgage
Association 6 1/2%, 4/15/2028... $1,008,064 --
CORPORATE BONDS
Equifax 6.30%, 7/1/2005........... 100,000 $100,000
SELIGMAN CAPITAL PORTFOLIO
COMMON STOCKS
Applied Power (Class A)........... 16,900 shs. 16,900 shs.
CNF Transportation................ 10,900 10,900
Deluxe............................ 13,100 13,100
Electronic Arts................... 10,400 10,400
General Dynamics.................. 7,100 7,100
Infinity Broadcasting (Class A)... 23,000 23,000
Office Depot...................... 18,700 18,700
Pall.............................. 19,900 19,900
Service Corp. International....... 10,600 10,600
VERITAS Software.................. 9,400 9,400
COMMON STOCKS
AutoZone.......................... 17,500 shs. --
BMC Software...................... 8,000 --
Budget Group (Class A)............ 15,200 --
Gartner Group (Class A)........... 14,300 --
Jones Apparel Group............... 15,200 --
Life Re........................... 3,600 --
Microchip Technology.............. 12,200 --
Proffitt's........................ 11,000 --
Rayovac........................... 8,700 12,200 shs.
Schwab (Charles).................. 11,600 7,500
SELIGMAN COMMON STOCK PORTFOLIO
COMMON STOCKS
AT&T.............................. 10,200 15,900
BP Amoco (ADRs)................... 4,600 11,200
Chubb............................. 9,500 9,500
Crown Cork & Seal................. 17,500 17,500
DQE............................... 15,000 15,000
Electronic Data Systems........... 14,300 14,300
Ford Motor........................ 11,800 11,800
Harris............................ 16,000 16,000
Morgan (J.P.)..................... 4,600 4,600
Sonat............................. 19,300 19,300
COMMON STOCKS
ACE............................... 13,700 --
Edison International.............. 22,900 --
General Electric.................. 6,500 17,800
Harley-Davidson................... 18,200 --
Marsh & McLennan.................. 11,850 --
Mobil............................. 8,900 9,600
Penney (J.C.)..................... 11,200 --
St. Paul Companies................ 16,900 --
Texaco............................ 11,000 --
US WEST Communications Group...... 13,900 --
- --------------
See footnotes on page P-9.
P-1
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OVERVIEW (continued)
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
SHARES
--------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
SELIGMAN COMMUNICATIONS
AND INFORMATION PORTFOLIO
COMMON STOCKS
Advanced Micro Devices............ 60,200 60,200
Applied Materials................. 26,600 26,600
C-Cube Microsystems............... 52,100 52,100
Check Point Software Technologies. 60,600 60,600
Electronic Arts................... 31,900 77,400
Fox Entertainment Group (Class A). 50,300 50,300
Intel............................. 20,500 20,500
MediaOne Group.................... 40,900 50,700
Microsoft......................... 16,600 20,500
Tele-Communications (Series A)
TCI Ventures Group.............. 34,200 53,500
SHARES
-------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ----------- -------- --------
COMMON STOCKS
American Power Conversion......... 37,700 1,700
Ascend Communications............. 23,300 --
Cisco Systems..................... 15,500 2,000
Citrix Systems.................... 20,700 --
Compuware......................... 16,700 20,000
EMC............................... 76,600 58,200
Excel Switching................... 50,000 --
International Business Machines... 9,100 --
Novellus Systems.................. 42,400 --
Time Warner....................... 18,900 --
SELIGMAN FRONTIER PORTFOLIO
COMMON STOCKS
Aspect Telecommunications......... 20,000 20,000
Casella Waste Systems............. 15,200 15,200
Keystone Automotive Industries.... 16,500 16,500
Metamor Worldwide................. 15,600 25,600
Premier Parks..................... 30,100 38,100
Primark........................... 12,300 19,400
Sanmina........................... 12,000 12,000
Henry Schein...................... 8,400 8,400
Superior Services................. 16,300 16,300
Transaction Systems Architects
(Class A)....................... 11,600 11,600
COMMON STOCKS
Barnes & Noble.................... 15,400 --
BISYS Group....................... 12,800 --
Ceridian.......................... 14,500 5,400
Duane Reade....................... 13,600 --
Equity Corporation................ 17,100 --
First Commonwealth Financial...... 71,700 --
Hearst-Argyle Television (Class A) 14,400 3,981
Jacor Communications.............. 13,350 --
Petersen Companies (Class A)...... 16,700 --
Waters............................ 7,300 --
- -------------
See footnotes on page P-9
P-2
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL
GROWTH OPPORTUNITIES PORTFOLIO
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
SHARES
--------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
COMMON STOCKS
AES.............................. 2,700 2,700
Azkoyen.......................... 2,620 2,620
Banca Nazionale del Lavoro....... 38,000 38,000
CBS.............................. 2,500 2,500
CNP Assurances................... 3,940 3,940
Equant........................... 1,790 1,790
MCI WorldCom..................... 1,700 1,700
Motorola......................... 1,400 1,400
Newell........................... 2,000 2,000
Tyco International............... 2,000 2,000
SHARES
--------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ----------- -------- --------
COMMON STOCKS
Dayton Hudson.................... 2,600 --
Hewlett-Packard.................. 1,200 --
Koninklijke KNP BT............... 2,615 --
Lufthansa........................ 5,300 --
MBNA............................. 3,413 (1) --
Meitec........................... 2,000 --
Nokia (Series A)................. 775 2,125
Pfizer........................... 600 700
Sairgroup........................ 400 --
Secom............................ 1,000 --
DIVERSIFICATION OF NET ASSETS*
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
----------------------
ISSUES COST VALUE 1998 1997
------ ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Aerospace........................................... 1 $ 50,559 $ 51,608 0.6 1.0
Automotive and Related.............................. 3 226,116 280,884 3.2 2.9
Business Goods and Services......................... 7 517,195 789,236 9.1 6.8
Capital Goods....................................... 1 33,259 41,038 0.5 --
Commerical Services................................. 1 17,004 17,015 0.2 --
Computer and Technology Related..................... 6 289,391 532,601 6.2 9.6
Construction and Property........................... 2 137,599 178,931 2.1 1.7
Consumer Goods and Services......................... 9 583,174 747,092 8.6 8.9
Diversified......................................... 2 203,453 283,556 3.3 3.3
Drugs and Health Care............................... 11 747,424 1,006,302 11.6 11.0
Electric and Gas Utilities.......................... 2 146,635 143,863 1.7 0.6
Electronics......................................... 5 330,533 370,945 4.3 3.3
Electronics Capital Equipment....................... 1 53,382 91,605 1.0 --
Entertainment and Leisure........................... 6 407,060 426,472 4.9 6.2
Financial Services.................................. 8 480,620 623,114 7.2 9.0
Industrial Goods and Services....................... 1 80,113 82,830 1.0 2.8
Manufacturing and Industrial Equipment.............. 1 91,885 94,142 1.1 0.9
Media............................................... 2 165,669 176,334 2.0 --
Publishing.......................................... -- -- -- -- 1.3
Resources........................................... 1 38,547 48,067 0.6 4.3
Restaurants......................................... 1 100,508 106,791 1.2 0.9
Retailing........................................... 6 493,171 646,104 7.5 2.9
Support Services.................................... 1 28,746 15,683 0.2 1.9
Telecommunications.................................. 13 705,573 985,956 11.4 8.1
Tobacco............................................. 2 191,357 286,998 3.3 1.9
Transportation...................................... 1 62,487 100,261 1.2 4.5
--- ---------- ---------- ----- -----
94 6,181,460 8,127,428 94.0 93.8
Other Assets Less Liabilities....................... -- 515,867 515,867 6.0 6.2
--- ---------- ---------- ----- -----
NET ASSETS.......................................... 94 $6,697,327 $8,643,295 100.0 100.0
=== ========== ========== ===== =====
</TABLE>
- --------------
See footnotes on page P-9.
P-3
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OVERVIEW (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL
SMALLER COMPANIES PORTFOLIO
DIVERSIFICATION OF NET ASSETS*
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
----------------------
ISSUES COST VALUE 1998 1997
------ ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Advertising...................................... 2 $ 211,674 $ 252,145 1.2 2.0
Automotive Parts Manufacturing................... 7 306,843 316,866 1.5 2.7
Building Materials............................... 2 237,355 155,942 0.7 1.4
Business Services................................ 23 2,068,653 2,411,983 11.6 10.1
Capital Goods.................................... 6 430,105 366,284 1.8 2.3
Chemicals........................................ 4 226,750 232,049 1.1 1.2
Computer Software................................ 10 697,965 1,112,982 5.3 5.1
Construction and Property........................ 18 1,304,347 1,258,732 6.0 6.3
Consumer Goods and Services...................... 26 1,582,670 1,827,101 8.8 6.8
Distributors..................................... 2 104,529 96,728 0.5 0.1
Drugs and Health Care............................ 21 1,472,654 1,639,746 7.9 6.5
Educational Services............................. 1 100,538 28,500 0.1 --
Electric Utilities............................... 3 316,252 391,958 1.9 0.2
Electrical Distribution.......................... 1 47,169 68,983 0.3 0.6
Electronics...................................... 12 655,443 598,790 2.9 5.8
Energy........................................... 2 176,070 143,073 0.7 0.9
Financial Services............................... 14 578,216 594,355 2.9 4.6
Independent Power Producers...................... -- -- -- -- 1.2
Industrial Goods and Services.................... 7 508,390 680,638 3.3 3.1
Leisure and Hotels............................... 5 420,833 468,434 2.3 1.5
Manufacturing.................................... 22 1,363,232 1,194,623 5.7 7.6
Media............................................ 14 1,282,376 1,467,441 7.1 5.3
Medical Products and Technology.................. 12 716,241 751,992 3.6 1.9
Metals........................................... 3 104,954 54,832 0.3 0.9
Paper and Printing............................... 2 97,020 59,763 0.3 0.5
Resources........................................ 2 88,896 71,078 0.3 --
Restaurants...................................... 3 171,370 306,658 1.5 1.4
Retailing........................................ 18 1,173,143 1,161,786 5.6 4.1
Semiconductors................................... 1 55,018 81,575 0.4 --
Support Services................................. 5 313,540 460,898 2.2 1.6
Technology....................................... 13 897,722 1,090,005 5.2 3.7
Telecommunications............................... 7 494,146 448,920 2.2 1.6
Transportation................................... 7 383,745 505,853 2.4 2.6
Veterinary Products.............................. 2 229,816 215,656 1.0 0.5
Miscellaneous.................................... 1 22,325 23,648 0.1 0.2
--- ----------- ----------- ----- -----
278 18,840,000 20,540,017 98.7 94.3
Other Assets Less Liabilities.................... -- 274,045 274,045 1.3 5.7
--- ----------- ----------- ----- -----
NET ASSETS....................................... 278 $19,114,045 $20,814,062 100.0 100.0
=== =========== =========== ===== =====
</TABLE>
- ------------------
See footnotes on page P-9.
P-4
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL
SMALLER COMPANIES PORTFOLIO (continued)
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
SHARES
-------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
COMMON STOCKS
Hawesko Holding................... 2,442 2,442
Kaba Holding...................... 242 242
Metamor Worldwide................. 4,700 6,900
Nobel Biocare..................... 11,294 11,294
Premier Parks..................... 8,400 10,000
Primark........................... 6,100 6,100
Superior Services................. 5,100 5,100
Tandberg Television............... 22,300 24,900
TelePizza......................... 13,044 13,044
Transaction Systems Architects
(Class A)....................... 3,600 3,600
SHARES
---------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ----------- -------- --------
COMMON STOCKS
BISYS Group....................... 2,900 --
Canandaigua Brands (Class A)...... 2,615 --
Ceridian.......................... 2,700 1,200
CMG............................... 6,000 12,000
Duane Reade....................... 3,000 --
F. I. Group....................... 30,000 55,176
Jacor Communications.............. 2,900 --
Montupet.......................... 4,339 2,101
Tamro (Series A).................. 30,000 --
Telinfo........................... 2,350 --
- -------------
See footnotes on page P-9.
P-5
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OVERVIEW (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL
TECHNOLOGY PORTFOLIO
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
SHARES
----------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
COMMON STOCKS
Altran Technologies............ 350 350
DII Group...................... 3,500 3,500
Druid.......................... 3,500 3,500
Elec & Eltek International
Holdings.................... 10,000 150,000
Koninklijke (Royal) Philips
Electronics.................. 1,800 1,800
Microsoft...................... 900 900
Murata Manufacturing........... 2,000 2,000
SMART Modular Technology....... 2,200 2,200
STMicroelectronics............. 1,200 1,200
Tele-Communications (Series A)
TCI Ventures Group........... 1,200 1,200
SHARES
----------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ----------- -------- --------
COMMON STOCKS
American Power Conversion...... 1,400 --
Cable & Wireless............... 6,000 --
ECI Telecommunications......... 1,500 1,500
EMC............................ 1,300 2,000
L.M. Ericsson Telefon (Series B) 2,900 --
Flextronics International...... 1,000 --
KLA-Tencor..................... 1,300 --
Maxim Integrated Products...... 1,500 900
Novellus Systems............... 2,300 --
Pharmacia & Upjohn............. 920 --
DIVERSIFICATION OF NET ASSETS*
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
----------------------
ISSUES COST VALUE 1998 1997
------ ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Computer and Business Services......................... 11 $ 483,955 $ 684,579 11.2 13.7
Computer Hardware/Peripherals.......................... 8 473,456 735,773 12.0 10.3
Computer Software...................................... 24 1,190,028 1,388,085 22.7 15.0
Contract Manufacturing/Circuit Boards.................. 3 150,195 204,719 3.3 --
Distributors........................................... 2 85,442 50,427 0.8 1.3
Electronics............................................ 11 617,824 717,300 11.7 9.5
Electronics Capital Equipment.......................... 6 219,812 263,780 4.3 8.9
Machinery and Equipment................................ 3 116,534 146,027 2.4 --
Media.................................................. 3 147,314 166,706 2.7 1.6
Medical Products and Technology........................ 6 263,929 254,630 4.2 4.2
Networking/Communications Infrastructure............... 5 177,025 244,728 4.0 6.7
Semiconductors......................................... 9 269,688 333,321 5.4 5.3
Telecommunications..................................... 10 351,836 511,510 8.3 3.8
Miscellaneous.......................................... 1 46,045 38,459 0.6 6.1
--- ---------- ---------- ----- -----
102 4,593,083 5,740,044 93.6 86.4
Other Assets Less Liabilities.......................... -- 389,927 389,927 6.4 13.6
--- ---------- ---------- ----- -----
NET ASSETS............................................. 102 $4,983,010 $6,129,971 100.0 100.0
=== ========== ========== ===== =====
</TABLE>
- ---------------------
See footnotes on page P-9.
P-6
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON
INTERNATIONAL PORTFOLIO
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
SHARES
--------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
COMMON STOCKS
Corporacion Bancaria de
Espana Argentaria.............. 6,186 6,186
Credito Italiano................. 21,475 21,475
Hoechst.......................... 2,519 2,519
Istituto Nazionale delle
Assicurazioni.................. 40,188 44,756
RWE.............................. 2,625 2,625
Siemens.......................... 1,678 1,678
Suez Lyonnaise des Eaux.......... 761 761
TOTAL............................ 1,148 1,148
Unilever......................... 1,814 1,814
Valeo............................ 1,494 1,494
SHARES
--------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ----------- -------- --------
COMMON STOCKS
Accor............................ 664 --
Bayer............................ 2,799 --
Bayerische Motoren Werke "BMW"... 119 --
Carrefour Supermarche............ 204 --
CS Holdings...................... 846 --
Deutsche Bank.................... 1,721 --
Lufthansa........................ 6,388 --
Mitsui........................... 45,000 5,000
MOL Magyar Olaj-es Gazipari
(GDRs)......................... 4,400 --
Schneider........................ 1,408 --
DIVERSIFICATION OF NET ASSETS*
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PERCENT OF NET ASSETS
DECEMBER 31,
----------------------
ISSUES COST VALUE 1998 1997
------ ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
Automotive and Related................................. 3 $ 202,659 $ 207,920 2.1 --
Banking................................................ 12 954.810 1,245,952 12.6 9.6
Building Materials..................................... -- -- -- -- 0.5
Business Services...................................... 2 51,433 48,204 0.5 0.7
Chemicals.............................................. 4 247,379 219,846 2.2 4.6
Construction and Property.............................. 4 356,162 455,406 4.6 2.7
Consumer Products...................................... 7 493,301 641,441 6.5 0.8
Distributors........................................... -- -- -- -- --
Electronics............................................ 4 145,624 170,471 1.7 2.1
Entertainment and Leisure.............................. 1 133,373 185,695 1.9 --
Financial Services..................................... 6 235,503 271,241 2.7 2.5
Health and Household................................... 6 562,428 681,701 6.9 7.1
Industrial Goods and Services.......................... 7 394,076 617,532 6.2 6.3
Insurance.............................................. 5 479,278 813,187 8.2 5.6
Leisure and Hotels..................................... -- -- -- -- 3.2
Manufacturing.......................................... 4 335,229 336,127 3.4 4.6
Media.................................................. 1 79,894 120,721 1.2 4.0
Metals................................................. 1 5,199 4,734 0.1 2.3
Resources.............................................. 5 621,217 688,731 7.0 9.5
Restaurants............................................ -- -- -- -- 0.2
Retailing.............................................. 10 704,195 838,461 8.5 5.2
Telecommunications..................................... 13 931,282 1,227,761 12.4 11.3
Tobacco................................................ 2 91,939 134,946 1.4 2.0
Transportation......................................... 3 197,577 301,745 3.1 3.6
Utilities.............................................. 4 400,076 449,698 4.5 5.7
Miscellaneous.......................................... 2 25,642 19,625 0.2 0.2
--- ---------- ---------- ----- -----
106 7,648,276 9,681,145 97.9 94.3
Other Assets Less Liabilities.......................... -- 211,684 211,684 2.1 5.7
--- ---------- ---------- ----- -----
NET ASSETS............................................. 106 $7,859,960 $9,892,829 100.0 100.0
=== ========== ========== ===== =====
</TABLE>
- -----------------
See footnotes on page P-9.
P-7
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OVERVIEW (continued)
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
PRINCIPAL AMOUNT
OR SHARES
--------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
SELIGMAN HIGH-YIELD BOND PORTFOLIO
CORPORATE BONDS
Advanced Micro Devices
11%, 8/1/2003................ $125,000 $375,000
ALARIS Medical
0% (11 1/8%), 8/1/2008....... 300,000 300,000
B&G Foods 9 5/8%, 8/31/2007..... 120,000 120,000
Centennial Cellular
10 3/4%, 12/15/2008.......... 200,000 200,000
Golden Sky Systems
12 3/8%, 8/1/2006............ 325,000 325,000
Metrocall 11%, 9/15/2008........ 190,000 240,000
Price Communications
Cellular Holdings
11 1/4%, 8/15/2008........... 190,000 190,000
Sun Healthcare Group
9 1/2%, 7/1/2007............. 130,000 280,000
Verio 11 1/4%, 12/1/2008........ 140,000 140,000
PREFERRED STOCKS
Crown Castle International 12 3/4% 155 shs. 155 shs.
PRINCIPAL AMOUNT
OR SHARES
--------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/98
- ----------- -------- --------
CORPORATE BONDS
Centennial Cellular
10 1/8%, 5/15/2005........... $125,000 --
Clearview Cinema Group
10 7/8%, 6/1/2008............ 125,000 --
Diamond Triumph Automotive
9 1/4%, 4/1/2008............. 115,000 $ 60,000
ITC DeltaCom 11%, 6/1/2007...... 100,000 --
Jitney Jungle Stores
12%, 3/1/2006................ 75,000 150,000
Premier Parks 12%, 8/15/2003.... 100,000 --
Premier Parks
0% (10%), 4/1/2008........... 175,000 --
Ryder TRS 10%, 12/1/2006........ 150,000 --
Sprint Spectrum 11%, 8/15/2006.. 200,000 --
Unisys 12%, 4/15/2003........... 75,000 175,000
- --------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO
CORPORATE BONDS
GMAC 6 1/2%, 12/15/2005......... $200,000 $200,000
Heller Financial
5 7/8%, 11/1/2000............ 200,000 200,000
International Business
Machines 5.37%, 9/22/2003.... 200,000 200,000
Sprint Capital 6 1/8%, 11/15/2008 200,000 200,000
US GOVERNMENT AGENCY SECURITIES
US Government Title XI
(Bay Transportation)
7.30%, 6/1/2021.............. 200,000 200,000
FHLMC Gold
5 1/2%, 7/1/2013............. 297,919 297,919
Federal National Mortgage
Association:
5.90%, 6/19/2003............. 300,000 300,000
6.35%, 5/18/2005............. 300,000 300,000
5.795%, 1/1/2009............. 200,000 200,000
Government National Mortgage
Association
6 1/2%, 12/15/2028........... 200,000 200,000
COMMON STOCKS
Avon Products................... 1,700 shs. --
General Dynamics................ 2,300 1,500 shs.
Marsh & McLennan................ 2,250 --
Penney (J.C.)................... 2,300 --
St. Paul Companies.............. 2,600 --
Texaco.......................... 3,600 --
CORPORATE BONDS
Federated Department Stores
10%, 2/15/2001............... $500,000 --
US GOVERNMENT SECURITIES
US Treasury Notes:
6 1/4%, 6/30/2002............ 200,000 $300,000
5 3/4%, 11/30/2002........... 300,000 --
6 5/8%, 5/15/2007............ 500,000 500,000
- ---------------
See footnotes on page P-9.
P-8
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LARGEST PORTFOLIO CHANGES
DURING THE SIX MONTHS ENDED DECEMBER 31, 1998
SHARES
--------------------
HOLDINGS
ADDITIONS INCREASE 12/31/98
- --------- -------- --------
SELIGMAN LARGE-CAP VALUE PORTFOLIO
COMMON STOCKS
Bristol-Myers Squibb.......... 1,100 1,100
Crown Cork & Seal............. 2,900 3,400
The Equitable Companies....... 2,100 2,700
Fannie Mae.................... 1,600 1,600
Georgia-Pacific Group......... 1,700 2,350
Goodrich (B.F.)............... 4,300 5,000
Penney (J.C.)................. 2,400 2,750
St. Paul Companies............ 3,000 3,000
Sears, Roebuck................ 3,400 4,000
United Healthcare............. 3,500 3,500
SELIGMAN SMALL-CAP VALUE PORTFOLIO
COMMON STOCKS
ABC Rail Products............. 7,000 7,000
AMRESCO....................... 10,000 10,000
Applied Extrusion
Technologies............... 10,000 10,000
Bay View Capital.............. 3,200 3,200
Lamson & Sessions............. 11,500 15,500
Marine Drilling............... 7,000 8,800
Stage Stores.................. 7,500 7,500
Stewart & Stevenson
Services................... 7,700 9,700
True North Communications..... 2,500 3,500
Windmere-Durable Holdings..... 13,500 13,500
- -------------
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
* "Diversification of Net Assets" is included for the Seligman Henderson
Portfolios because their portfolio holdings are listed by country rather
than by industry in the "Portfolios of Investments."
(1) Includes 1,138 shares received as a result of a 3-for-2 stock split.
(2) Includes 70,980 shares received as a result of a 6-for-1 stock split.
P-9
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
ANNUAL PERFORMANCE OVERVIEW
- --------------------------------------------------------------------------------
The following charts compare a $10,000 hypothetical investment made in each
of Portfolios of Seligman Portfolios, Inc. (with the exception of Seligman Cash
Management Portfolio), for the 10-year period ended December 31, 1998, or since
inception through December 31, 1998, if less than 10 years, to a $10,000
hypothetical investment made in the appropriate benchmark indices and averages
for the same period. Accompanying each chart is a discussion of the investment
strategy and sector performance that affected the Portfolio during the past
year.
SELIGMAN BOND PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
One Yr. Five Yrs. Ten Yrs.
Seligman Bond Portfolio 8.20% 6.33% 7.43%
Lehman Brothers
Government Bond Index 9.85 7.19 9.17
Lipper Corporate Debt BBB-Rated
Funds Average 6.45 7.07 9.12
Lipper
Seligman Lehman Bros. Corporate Debt
Bond Government BBB Rated
Date Portfolio Bond Index Funds Average
12/31/1988 10000 10000 10000
03/31/1989 10020 10106 10130
06/30/1989 10564 10919 10755
09/30/1989 10584 11009 10809
12/31/1989 10870 11423 10973
03/31/1990 10689 11281 10761
06/30/1990 11008 11676 11115
09/30/1990 11051 11773 10997
12/31/1990 11514 12420 11412
03/31/1991 11805 12689 11903
06/30/1991 11973 12860 12163
09/30/1991 12600 13593 12891
12/31/1991 13219 14322 13564
03/31/1992 12990 14071 13573
06/30/1992 13351 14629 14115
09/30/1992 13940 15351 14825
12/31/1992 13958 15357 14834
03/31/1993 14403 16052 15679
06/30/1993 14731 16515 16264
09/30/1993 15097 17052 16882
12/31/1993 15072 16994 17000
03/31/1994 14640 16483 16379
06/30/1994 14476 16295 16012
09/30/1994 14595 16363 16146
12/31/1994 14562 16420 16123
03/31/1995 15064 17194 16893
06/30/1995 16101 18260 18205
09/30/1995 16431 18583 18656
12/31/1995 17355 19432 19566
03/31/1996 16773 18993 19122
06/30/1996 16707 19084 19215
09/30/1996 16873 19405 19650
12/31/1996 17371 19972 20390
03/31/1997 17248 19810 20272
06/30/1997 17810 20497 21114
09/30/1997 18372 21184 21932
12/31/1997 18932 21887 22475
03/31/1998 19117 22218 22861
06/30/1998 19653 22804 23330
09/30/1998 20540 24065 23756
12/31/1998 20485 24046 23925
Global financial turmoil throughout 1998 had investors throughout the world
pursuing the perceived safety of the highest credit quality securities -- US
Treasury bonds. At the same time, the Federal Reserve Board lowered the
federal-funds rate while a federal budget surplus caused the overall supply of
bonds to decrease, as the government needed less paper to finance spending. This
combination of factors drove US Treasury yields to 30-year lows, which was
positive for the Portfolio. The long bond began the year with a yield of 5.92%,
and fell to a low of 4.70% before moving back up to close the year at 5.09%.
During the year, as the spread between Treasuries and agency securities
widened, we increased the Portfolio's exposure to agencies to pursue additional
yield. As the year progressed, we reduced our exposure to mortgage-backed
securities, selling higher-coupon securities as concerns over prepayments in a
falling-interest-rate environment made other areas more attractive. This
strategy was successful; however, even our reduced exposure placed a slight drag
on performance in the third quarter as the flight to Treasuries hurt all other
types of bonds.
Going forward, we may shorten the Portfolio's duration as the rewards of
maintaining a longer duration become less compelling. The Portfolio's duration
is currently about 6.4 years, which is slightly longer than that of our
benchmark, the Lehman Brothers Government Bond Index. In the coming year,
ongoing global problems and the continuing disappearance of the US budget
deficit should combine to keep supply low and demand high, a positive scenario
for the Portfolio. In addition, we will continue to seek opportunities in
non-Treasury securities to enhance the Portfolio's yield and total return.
SELIGMAN CAPITAL PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
Last year's economic environment of subdued inflation, low interest rates,
and strong consumer demand pro vided a favorable backdrop for mid-capitalization
(between $1 billion and $10 billion in market value) growth stocks. However,
ongoing concerns regarding global financial problems produced a "flight to
quality" that favored larger-cap stocks. This bias hurt the performance of
small- and mid-cap stocks, despite their attractive fundamentals. However, in
the fourth quarter, the market began to broaden to include a wider range of
market caps -- a favorable development for the Portfolio.
AVERAGE ANNUAL TOTAL RETURNS+
One Yr. Five Yrs. Ten Yrs.
Seligman Capital Portfolio 22.19% 15.54% 15.98%
Lipper Mid Cap Funds Average 11.37 15.44 16.51
Russell Midcap Growth Index 17.86 17.33 17.30
Lipper Rusell
Seligman Mid Cap MidCap
Capital Funds Growth
Date Portfolio Average Index
12/31/1988 10000 10000 10000
03/31/1989 10179 10766 10631
06/30/1989 10775 11699 11675
09/30/1989 11968 12997 13072
12/31/1989 11647 12780 13148
03/31/1990 11276 12654 12685
06/30/1990 12639 13670 13771
09/30/1990 9662 11033 10984
12/31/1990 11276 12149 12473
03/31/1991 13516 14774 15352
06/30/1991 13696 14650 15114
09/30/1991 15363 15977 16354
12/31/1991 17935 17645 18341
03/31/1992 16742 17705 17781
06/30/1992 15508 16671 16954
09/30/1992 16691 17247 17862
12/31/1992 19153 19593 19937
03/31/1993 19785 19948 20117
06/30/1993 19435 20441 20119
09/30/1993 20721 21955 21475
12/31/1993 21385 22484 22168
03/31/1994 20713 21789 21481
06/30/1994 18896 20695 20536
09/30/1994 20613 22369 21994
12/31/1994 20403 22213 21688
03/31/1995 21672 23770 24033
06/30/1995 22974 25853 25962
09/30/1995 25046 28614 28520
12/31/1995 25947 29094 29056
03/31/1996 27687 30869 30930
06/30/1996 29584 32510 32087
09/30/1996 30297 33530 33178
12/31/1996 29712 34367 34137
03/31/1997 28525 32336 32891
06/30/1997 32422 37384 37732
09/30/1997 36227 42695 43011
12/31/1997 36043 41394 41829
03/31/1998 40066 46420 46823
06/30/1998 41061 45780 46795
09/30/1998 33136 37507 38985
12/31/1998 44040 46099 49304
- -----------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-10
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO (continued)
Technology, telecommunication, and consumer-cyclical companies had a year of
strong earnings, which translated into solid returns for the Portfolio. In
technology, anything Internet-related performed extremely well. While we did not
own any pure-play Internet companies -- due to their astronomical valuations and
lack of earnings -- we nonetheless benefited from the Internet boom as many of
our technology holdings are involved in building and maintaining the
infrastructure of the Internet.
The Portfolio's exposure to industrial companies hurt overall performance.
Global deflation in commodity prices, along with fallout from the Asian
Financial crisis, negatively impacted this sector. Although none of our
industrial holdings had direct exposure to Asia, many of their customers did and
thus were hurt indirectly.
Going into 1999, conditions appear positive for the Portfolio. Valuations for
many quality mid-cap stocks are attractive, especially relative to the
larger-cap stocks whose prices were driven up during last year's narrow market
run-up. If the market continues to broaden -- a trend that we began to see in
the fourth quarter of 1998 -- the mid-cap stocks held by the Portfolio would
benefit. In addition, we believe that, like last year, companies that can either
meet or surpass earnings estimates will be rewarded, while companies that fall
short will be punished severely. This is another positive for the Portfolio,
which looks for companies with the potential for positive earnings surprises. As
1999 begins, we believe that the areas of broadcasting and advertising,
telecommunications, and specialty retailers have good prospects for such
earnings surprises. Finally, we see the biggest risks to the US market in 1999
coming from abroad. The Portfolio, however, should be largely insulated from
this because the mid-cap companies in the Portfolio are domestic in nature,
relying little on international markets for earnings growth.
SELIGMAN COMMON STOCK PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
One Yr. Five Yrs. Ten Yrs.
Seligman Common Stock Portfolio 24.16% 18.16% 16.55%
Lipper Growth & Income Funds Average 15.32 18.32 15.76
S&P 500 28.58 24.06 19.21
Seligman Lipper Growth
Common & Income
Stock Funds
Date Portfolio Average S&P 500
12/31/1988 10000 10000 10000
03/31/1989 10394 10644 10709
06/30/1989 11025 11396 11655
09/30/1989 12099 12387 12903
12/31/1989 12411 12382 13169
03/31/1990 12300 12074 12772
06/30/1990 13079 12691 13576
09/30/1990 10771 11013 11710
12/31/1990 12020 11825 12760
03/31/1991 14169 13511 14614
06/30/1991 14034 13485 14580
09/30/1991 15010 14238 15360
12/31/1991 16006 15254 16647
03/31/1992 16311 15271 16226
06/30/1992 16180 15317 16534
09/30/1992 16843 15692 17055
12/31/1992 17949 16639 17913
03/31/1993 18593 17426 18696
06/30/1993 18789 17587 18787
09/30/1993 19260 18207 19272
12/31/1993 20092 18641 19719
03/31/1994 19274 18064 18972
06/30/1994 19381 18006 19051
09/30/1994 20360 18768 19983
12/31/1994 20101 18485 19979
03/31/1995 21545 19990 21925
06/30/1995 22901 21593 24019
09/30/1995 24331 23178 25928
12/31/1995 25583 24309 27489
03/31/1996 27339 25730 28965
06/30/1996 28582 26619 30266
09/30/1996 29129 27408 31201
12/31/1996 30719 29502 33803
03/31/1997 31067 29844 34709
06/30/1997 35022 34142 40770
09/30/1997 37666 37193 43823
12/31/1997 37267 37482 45082
03/31/1998 41570 41854 51371
06/30/1998 42166 41947 53066
09/30/1998 38846 36706 47786
12/31/1998 46269 43224 57964
In 1998, the US economy expanded for the eighth consecutive year. Low
inflation, continued corporate earnings growth, and a benign interest rate
environment combined to propel US stocks higher -- especially the largest, most
liquid names, as investors tried to insulate themselves from global financial
turmoil. The Portfolio, which generally invests in large-cap stocks, benefited
from this year-long trend.
The Portfolio remains broadly diversified among industry groups and
individual holdings; however, we have reduced our number of holdings to focus on
companies with stable earnings and dividend growth, which are selling at
reasonable valuations relative to their industries. This approach was positive
for the Portfolio during last summer's market downturn since it led us to
underweight many excessively valued large-capitalization stocks, which were hit
the hardest during that difficult environment.
During the year, we increased our exposure to technology, and by year-end the
industry represented 15% of the Portfolio. The group rallied in the fourth
quarter, allowing these holdings to contribute positively to absolute
performance; however, relative to the S&P 500 we lost some ground, since our
weighting was slightly less than the 17% weighting of the Index. In addition to
our technology holdings, the Portfolio benefited from our telecommunications and
health care holdings.
The weakest area of the Portfolio were cyclical stocks. While we were
generally underweight in these issues, they did negatively impact results. Our
energy stocks also adversely affected our returns. Weak demand from Asia, warm
weather in the US, and an overall free-fall in commodity prices around the world
all contributed to the poor showing of energy stocks in 1998. And while many of
our energy holdings did better than the sector as a whole, they lagged the
overall market in 1998.
We believe that the fundamentals of the US economy remain strong and will
provide a supportive environment for equities in 1999. However, we remain
cautious of the high valuations on many of the largest stocks and fear that much
of this has been driven by liquidity factors, not fundamentals. Therefore, we
will look for companies with attractive valuations that more fully reflect their
future prospects, and where we believe there is a catalyst for earnings
acceleration going forward.
- -------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-11
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
ANNUAL PERFORMANCE OVERVIEW (continued)
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
Since
One Yr. Inception
Seligman Communications
and Information Portfolio 36.49% 25.67%
Lipper Science & Technology Funds Average 52.55 30.32*
S&P 500 28.58 28.47*
*From September 30, 1994.
Seligman Lipper Science
C&I & Technology
Date Portfolio Funds Average S&P 500
09/30/1994 10000 10000 10000
12/31/1994 10440 10609 9998
03/31/1995 11030 11341 10972
06/30/1995 14690 13639 12020
09/30/1995 16950 15816 12975
12/31/1995 14464 14927 13756
03/31/1996 13618 15028 14495
06/30/1996 13993 16059 15146
09/30/1996 15139 17368 15614
12/31/1996 15739 18169 16916
03/31/1997 14271 16522 17370
06/30/1997 16961 19545 20402
09/30/1997 22018 23298 21930
12/31/1997 19237 20229 22560
03/31/1998 22103 23674 25707
06/30/1998 21765 24414 26555
09/30/1998 18105 21787 23913
12/31/1998 26256 30859 29007
As was the case in the broader market, large-cap technology stocks
outperformed their small- and mid-cap counterparts in 1998. As segments of the
technology industry have matured, larger companies have frequently gained market
share and dis proportionate profitability as purchasing power, incumbency, and
customer preference for fewer vendors have continued to rise in importance.
These trends were pronounced in the personal computer and data networking
segments, where a few large com panies have prospered to the exclusion of all
others. Further aiding the performance of large-cap technology stocks has been
the ongoing popularity of the stocks of the S&P 500 and S&P 500 Index funds.
Finally, the disappointing performance of large consumer and industrial
companies, which have suffered profit shortfalls from the Asian and South
American currency crises, has caused large-company fund managers to shift assets
into big technology companies that continue to meet Wall Street expectations.
The end result of these trends has been a snowballing of valuations, as already
expensive stocks attain ever-higher absolute and relative valuations. In
addition to large-cap technology companies, Internet companies also performed
well. However, the Portfolio generally avoided pure-play Internet companies,
given their high valuations, often negative cash flow, and typically cloudy
profitability outlooks.
The Portfolio's holdings in media stocks negatively affected performance.
Although fundamentals were favorable throughout the year and our media holdings
performed reasonably well, they underperformed relative to the
largest-capitalization technology stocks. The weakest area of the Portfolio was
the semiconductor-related sector, which went through a serious recession in the
wake of the Asian financial crisis. However, this sector's fundamentals have
recently begun to improve. The top-performing area of the Portfolio was computer
hardware and peripherals, which was positively affected by Year 2000 testing,
increased demand for data storage, and market-share consolidation in the
computer industry.
In the large-capitalization area we remain underweighted relative to the
technology indices, although we do own significant positions in industry
leaders. The Portfolio also holds many mid-capitalization technology companies
with excellent fundamentals that have gone unappreciated by the market. In 1999,
we believe that we will find attractive opportunities in radio broadcasting and
cable television, semiconductor and semiconductor capital equipment companies,
integrated circuit design software companies, mechanical design software
companies, and entertainment software companies.
- ------------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-12
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO
THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
Since
One Yr. Inception
Seligman Frontier Portfolio (1.46)% 17.88%
Lipper Small Cap Funds Average (0.40) 16.31*
Russell 2000 Index (2.55) 14.09*
Russell 2000 Growth Index 1.23 12.58*
*From September 30, 1994.
Seligman Lipper
Frontier Russell 2000 Russell 2000 Small Cap
Date Portfolio Growth Index Index Funds Average
09/30/1994 10000 10000 10000 10000
12/31/1994 10580 9926 9813 9961
03/31/1995 11300 10470 10265 10540
06/30/1995 12260 11509 11227 11482
09/30/1995 13780 12817 12336 12827
12/31/1995 14101 13007 12604 13130
03/31/1996 15443 13753 13247 13986
06/30/1996 17065 14557 13909 15073
09/30/1996 17731 14433 13957 15371
12/31/1996 17476 14470 14682 15751
03/31/1997 15855 12952 13923 14720
06/30/1997 19203 15226 16180 17245
09/30/1997 21455 17802 18588 20075
12/31/1997 20331 16343 17965 19098
03/31/1998 22650 18284 19773 21200
06/30/1998 22044 17235 18851 20330
09/30/1998 16839 13381 15053 15982
12/31/1998 20034 16544 17508 19021
The past year was a difficult one for small-company stocks. The greatest
influence on both the Portfolio and the small-cap market was an ongoing
reduction in expectations for corporate earnings throughout 1998. When
conditions are positive, investors are generally willing to pay big premiums to
own the faster rate of earnings growth that small-cap stocks typically enjoy.
However, when there is earnings uncertainty (as was the case in 1998), investors
avoid smaller companies, regardless of their attractive relative valuations and
long-term growth prospects.
In 1998, small-cap stocks were at a disadvantage on both the supply and
demand side of the equation when judged against larger-cap stocks. From a supply
standpoint, the stock market was headed toward a record year in terms of initial
public offering (IPO) activity, until it cracked in mid-summer. New equity
supply tends to disadvantage small-cap investors, because most new issues are
for smaller companies. When an IPO successfully comes to market, fund managers,
in general, become net sellers of other small-cap holdings to pay for the
purchase. In addition, most of the money from individuals that poured into
stocks this year was invested in the largest stocks. Even the tremendous inflows
of money from foreign investors completely ignored small caps, as the global
"flight to quality" benefited only the best-known American companies. To
small-cap investors, the supply/demand equation became a vicious circle. Money
flowing into large-cap funds (particularly index funds), went into the market's
largest stocks, causing their prices to rise. With corporate earnings
uncertainty, few investors wanted to buy small caps, an asset class with less
liquidity and poor recent relative performance.
One area of strength in the market that has traditionally benefited small-cap
growth stocks was technology. Unfortunately, the majority of the technology
sector's gains in 1998 were limited to large technology leaders and speculative
pure-play Internet companies. Due to the Portfolio's small-cap mandate, we could
not take advantage of opportunities in large-cap technology stocks. And due to
our investment approach, which focuses on fundamentals, we would not chase
over-priced Internet stocks.
We believe that small-cap growth stocks are at such attractive valuations,
compared to their long-term growth prospects, that 1999 could be the year they
return to favor. Many of the large-cap market leaders of the past few years may
find their earnings under continued pressure due to ongoing global financial
problems. Small-company stocks derive the majority of their earnings from
domestic sources, and should therefore should do well in spite of global
difficulties.
- -------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-13
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
ANNUAL PERFORMANCE OVERVIEW (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO THE CHART AND TOTAL
RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN
PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
Since
One Yr. Inception
Seligman Henderson Global Growth
Opportunities Portfolio 21.60% 12.16%
Lipper Global Funds Average 14.06 12.98*
MSCI World Index 24.80 17.87*
*From April 30, 1996.
Seligman
Henderson
Global Growth Lipper MSCI
Opportunities Global Funs World
Date Portfolio Average Index
04/30/1996 10000 10000 10000
05/31/1996 10000 10116 10010
06/30/1996 10010 10106 10062
07/31/1996 9480 9666 9708
08/31/1996 9790 9915 9821
09/30/1996 9810 10214 10207
10/31/1996 9650 10221 10281
11/30/1996 9980 10720 10859
12/31/1996 9922 10731 10687
01/31/1997 10102 10970 10818
02/28/1997 10072 11008 10944
03/31/1997 10022 10822 10730
04/30/1997 10072 10962 11083
05/31/1997 10773 11643 11769
06/30/1997 11274 12126 12357
07/31/1997 11784 12724 12928
08/31/1997 11164 12056 12066
09/30/1997 11694 12784 12723
10/31/1997 11043 11973 12055
11/30/1997 11164 12001 12271
12/31/1997 11169 12145 12422
01/31/1998 11432 12265 12770
02/28/1998 12394 13134 13636
03/31/1998 13022 13778 14214
04/30/1998 13397 13964 14354
05/31/1998 13245 13779 14176
06/30/1998 13326 13802 14515
07/31/1998 13508 13752 14493
08/31/1998 11473 11691 12563
09/30/1998 11422 11786 12788
10/31/1998 12010 12588 13946
11/30/1998 12769 13274 14778
12/31/1998 13581 13853 15502
During the first half of 1998, world markets rose strongly by about 25%, led
by Continental Europe and fueled by expectations of lower inflation and falling
interest rates. After mid-July, the combination of the Russian debt default,
speculative attacks against emerging market currencies, and a
worse-than-expected economic impact from Asia on the rest of the world led to
sharp market corrections. Then, in October, markets recovered as interest rates
were cut in many parts of the world and a coordinated program of support for the
world's financial system was implemented.
During the year, the Portfolio's bias for stocks with higher earnings growth
and a preference for Continental European markets were major positive factors.
However, Asian and other emerging market investments dampened relative
performance even though we had significantly reduced exposure to these markets
during the year.
The Portfolio remained broadly invested in our four major growth themes.
During the year, we reduced exposure to the Productivity theme while increasing
exposure to the more stable Quality-of-Life theme, with its emphasis on health
care stocks. Our exposure to the Consumption theme remained virtually unchanged,
but we shifted our geographical focus away from Asia and the emerging markets
toward Europe. In general, within each theme, we shifted the Portfolio's
investments toward those with greater earnings reliability.
Profit growth around the world has become more scarce and uncertain, which
has increased market volatility everywhere. However, a global economic recession
accompanied by prolonged deflation is unlikely, as there is still room for lower
interest rates. Meanwhile, the world has an excess of industrial capacity. Until
demand rises sufficiently to meet it, pricing power will be scarce in industrial
goods markets. The service sector businesses in which the Portfolio's
investments are concentrated are likely to perform well in such an environment.
During times of subdued profit advance, high-quality growth stocks tend to
perform well. And when there is a high level of near-term uncertainty, it is
appropriate to look at the secular trends which are most likely to drive wealth
creation. Accordingly, we will continue to use a thematic approach to identify
superior growth opportunities in which to invest.
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
Since
One Yr. Inception
Seligman Henderson Global Smaller
Companies Portfolio 6.58% 11.60%
Lipper Global Small Cap Funds Average 0.75 7.91*
Salomon Smith Barney EM Index World 5.93 9.43*
*From September 30, 1994.
Seligman
Henderson
Global
Smaller Lipper Global
Companies Small Cap Funds Salomon Smith Barney
Date Portfolio Average EM Index World
10/11/1994 10000 10000 10000
12/31/1994 10353 9649 9724
03/31/1995 10594 9585 9997
06/30/1995 10886 10373 10404
09/30/1995 11860 11311 11110
12/31/1995 12152 11341 11352
03/31/1996 13246 12150 11969
06/30/1996 14589 12911 12460
09/30/1996 14464 12800 12459
12/31/1996 14421 13084 12774
03/31/1997 14196 12872 12396
06/30/1997 15810 14220 13793
09/30/1997 16023 14930 14658
12/31/1997 14915 13720 13844
03/31/1998 17260 15552 15649
06/30/1998 17329 15208 15285
09/30/1998 14433 12055 12651
12/31/1998 15897 13824 14665
During 1998, smaller US companies generally posted dis appointing returns,
lagging well behind their larger counterparts. In the UK, this divergence was
less pronounced than in the US, but was nevertheless significant, and the
environment there remains difficult for small caps. Smaller companies in
Continental Europe, with the notable exception of Norway, generally performed
well, though still lagging large caps. The economic background in Japan
continued to deteriorate throughout the year as the economy appeared to be in
the grip of deflation,
- --------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-14
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
a banking crisis, and policy paralysis. Despite this environment, smaller
companies in Japan returned 18.7% in US dollar terms, 14% ahead of the return
from large companies. Japan was the only one to see outperformance from smaller
companies. Smaller companies in Asia, excluding Japan, fell 14.2% during 1998,
underperforming large companies.
The Portfolio's allocation to US equities rose from a low of 41.7% in January
to 52.7% at the end of December. For much of the year, the allocation was in the
mid-40% range, but we increased this allocation in the fourth quarter, given the
attractive combination of growth opportunities and valuation levels.
The Portfolio maintained a neutral to slightly overweight position in
Continental Europe throughout the period, starting the year at 22.1%, rising to
22.6% in June, and ending the year at 19.0%. During the year, the Portfolio
reduced exposure to the more cyclical sectors of the market where pricing
pressure is likely to be most damaging for smaller companies.
The Portfolio was underweighted in Japan for the whole period. At the
beginning of the year, our allocation was 5.6% and rose to 6.5% by year-end. In
the rest of Asia, the Portfolio began the year underweighted and ended with a
neutral weight of 2.9%. Signs of an improved economic background and
confirmation of improvements at the corporate level need to be seen before we
will increase the Portfolio's allocation to this region.
Volatility, which was the defining characteristic of equity markets in 1998,
does not favor small caps. The current focus on large companies may continue,
but with the valuation gap between large and small caps now looking very
stretched, and earnings forecasts in many regions better for small companies
than for large, the global small-cap market looks attractive as we begin 1999.
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
Since
One Yr. Inception
Seligman Henderson Global
Technology Portfolio 36.80% 22.02%
Lipper Global Funds Average 14.06 12.98*
Lipper Science & Technology Funds Average 52.55 25.95*
MSCI World Index 24.80 17.87*
*From April 30, 1996.
Seligman
Henderson Lipper Lipper
Global Global Science & MSCI
Technology Funds Technology World
Date Portfolio Average Funds Average Index
05/01/1996 10000 10000 10000 10000
05/31/1996 10000 10116 10355 10010
06/30/1996 9860 10106 9637 10062
07/31/1996 8830 9666 8762 9708
08/31/1996 9250 9915 9307 9821
09/30/1996 9970 10214 10423 10207
10/31/1996 9880 10221 10251 10281
11/30/1996 10400 10720 11120 10859
12/31/1996 10401 10731 10904 10687
01/31/1997 11137 10970 11667 10818
02/28/1997 10663 11008 10712 10944
03/31/1997 9957 10822 9916 10730
04/30/1997 10109 10962 10245 11083
05/31/1997 11379 11643 11651 11769
06/30/1997 11328 12126 11730 12357
07/31/1997 12638 12724 13241 12928
08/31/1997 12729 12056 13294 12066
09/30/1997 13525 12784 13982 12723
10/31/1997 12648 11973 12673 12055
11/30/1997 12779 12001 12539 12271
12/31/1997 12432 12145 12140 12422
01/31/1998 12702 12265 12467 12770
02/28/1998 14662 13134 13918 13636
03/31/1998 14803 13778 14208 14214
04/30/1998 15331 13964 14782 14354
05/31/1998 14932 13779 13691 14176
06/30/1998 15108 13802 14652 14515
07/31/1998 14897 13752 14419 14493
08/31/1998 11880 11691 11525 12563
09/30/1998 12761 11786 13075 12788
10/31/1998 13899 12588 14057 13946
11/30/1998 15367 13274 15889 14778
12/31/1998 17007 13853 18520 15502
In 1998, the technology industry significantly outperformed the broad market
in most countries, with US and European tech stocks leading the way. Inventory
issues in the PC market early in the year led to severe underperformance by
cyclical technology shares but, by the late autumn, strong PC demand combined
with constrained production produced strong year-end results. The dramatic
growth of Internet usage represented perhaps the single most significant
contributor to the growth of the technology market. Consumer enthusiasm for
getting on-line drove heavy retail demand for PCs, while the explosion in data
traffic obliged communications carriers to upgrade and extend their network
infrastructure. Consequently, we have seen tremendous strength in the networking
and communications equipment markets. This was matched by growth in wireless
where subscriber growth, particularly in Europe, has vastly exceeded
expectations.
Throughout the year we remained heavily focused on the US as the global
technology leader and on Europe as the market that seems to be positioned for a
period of strong growth. We maintained a modest weighting in Asia and continue
to believe that the best investment prospects lie outside that region.
With corporate profit growth in the broad stock market slowing markedly in
the current deflationary climate, the exceptional growth rates being delivered
by technology companies are commanding ever-higher valuations. As we begin 1999,
the industry's absolute fundamentals are good and continue to improve, and
relative fundamentals are among the best seen in 15 years.
- --------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-15
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
ANNUAL PERFORMANCE OVERVIEW (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
One Five Since
Yr. Yr. Inception
Seligman Henderson International Portfolio 15.81% 8.67% 10.20%
Lipper International Funds Average Index 12.80 7.78 10.16*
MSCI EAFE Index 20.33 9.50 9.88*
*From April 30, 1993.
Seligman Lipper
Henderson International MSCI
International Funds Average EAFE
Date Portfolio Index Index
05/03/1993 10000 10000 10000
06/30/1993 10010 10004 10057
09/30/1993 10480 10873 10731
12/31/1993 11440 11907 10831
03/31/1994 10987 11813 11216
06/30/1994 11399 11946 11797
09/30/1994 11751 12318 11816
12/31/1994 11591 11829 11704
03/31/1995 11428 11635 11931
06/30/1995 11765 12120 12028
09/30/1995 12603 12717 12539
12/31/1995 12905 12975 13057
03/31/1996 13228 13555 13443
06/30/1996 13603 14047 13666
09/30/1996 13520 13984 13659
12/31/1996 13819 14551 13887
03/31/1997 13925 14752 13680
06/30/1997 15802 16396 15466
09/30/1997 15716 16622 15367
12/31/1997 14973 15351 14173
03/31/1998 17295 17608 16269
06/30/1998 17682 17733 16453
09/30/1998 14719 14875 14125
12/31/1998 17340 17316 17056
The year began with international stock markets rising strongly. However,
this ended abruptly during the summer when Russia's default on its debt produced
significant financial consequences around the globe. During the third quarter,
stock markets fell sharply, but rebounded strongly during the fourth quarter.
Inflation remained low, causing long-bond yields to decline, and enabling
central banks around the world to respond quickly to the global financial crisis
by cutting short rates, a process that is likely to continue.
UK markets followed the fortunes of the rest of the world during the year,
falling dramatically from July highs, but recovering by year-end. We remained
overweighted in the UK as we viewed that market as a defensive bet relative to
the rest of the world. The Portfolio was heavily overweighted in Continental
Europe during the year, which contributed positively to performance. Lower
interest rates, anticipation of the European Monetary Union, and strong
forecasted earnings growth helped lift these stocks higher in the first half of
the year, allowing Continental Europe to outperform most other regional markets.
The Portfolio will likely maintain this regional overweighting as economic
growth in Europe should be among the most resilient in the world.
The Portfolio maintained a very low weighting in Japan throughout the year
because we did not anticipate any near-term economic recovery in this troubled
market. We do not expect a speedy solution to the banking crisis nor sufficient
stimulus to boost the economy, and believe significant risks for the Japanese
market remain. During the year, we maintained minimal exposure to the Pacific
markets, which were down by 5.1% on average, and expect to remain underweighted
in this region over the near term. In other emerging markets, which suffered
greatly in an environment of falling commodity prices and slowing global
economic growth, we maintained only limited exposure.
International stock markets continue to look more secure as interest-rate
reductions boost investor sentiment. But despite these improvements, risks
remain and markets must account for slower economic and corporate profit growth.
Within this context, we expect continental Europe, the UK, and select emerging
markets to offer attractive return potential, as we believe corporate earnings
have the greatest potential in these regions. In contrast, we believe that Japan
and the Pacific region will remain depressed over the near term.
- ------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-16
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO
THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
Since
One Yr. Inception
Seligman High-Yield Bond Portfolio 1.02% 10.25%
Lipper High Current Yield (0.30) 9.63*
Merrill Lynch High Yield Master Index 3.66 10.36*
*From April 30, 1995.
Seligman
Henderson
High-Yield Lipper High Merrill Lynch
Bond Current High-Yield
Date Portfolio Yield Master Index
05/01/1995 10000 10000 10000
06/30/1995 10030 10391 10264
09/30/1995 10300 10694 10589
12/31/1995 10737 11049 10903
03/31/1996 11126 11211 11214
06/30/1996 11341 11364 11437
09/30/1996 11872 11808 11978
12/31/1996 12307 12272 12414
03/31/1997 12252 12400 12501
06/30/1997 13022 12990 13167
09/30/1997 13824 13497 13870
12/31/1997 14164 13846 14058
03/31/1998 14820 14232 14662
06/30/1998 14987 14471 14715
09/30/1998 13925 13953 13640
12/31/1998 14309 14354 14016
A very unusual combination of events forced a liquidity squeeze on the
high-yield market in 1998. The global stock market decline which began in July
caused many high-yield issuers to lose another potential source of financing and
thus much-needed financial flexibility. Then, when rumors began to circulate
that Russia and a number of Asian countries would default on their debt, mutual
funds with direct emerging market exposure faced significant redemptions and
sold their most stable assets -- domestic high-yield bonds -- to meet those
redemptions. While the Portfolio had no direct emerging market exposure, the
selling pressure created by those funds led to repricing of domestic high-yield
issues. Finally, additional downward pressure was created following the
announcement of the bailout of Long-Term Capital Management (LTCM), which had
many high-yield investments. Unfortunately, because LTCM was so secretive about
its holdings, no one knew which bonds would be most impacted, so the whole
market repriced downward.
In the fourth quarter, the high-yield market rebounded, for a number of
reasons. The most compelling was that bargain hunters moved in to an oversold
market. Mutual fund investors, pension funds, and insurance companies poured
billions of dollars into the attractively priced high-yield market. Other
important factors contributing to the rebound included Federal Reserve Board
Chairman Alan Greenspan's positive statements, the Federal Reserve Board's rate
cuts, and the recovery of the equity markets.
Defensive sectors such as cable, publishing, and gaming all did well in 1998.
The hardest-hit areas of the high-yield market were those that require
additional funding to meet their respective business plans. Fortunately, the
Portfolio's exposure to those issues was minimal. Another area hit hard was
nursing homes. The prospective payment system recently put in place has created
some short-term challenges in this area, but we think that there are long-term
opportunities in nursing home providers. In our opinion, this sector was
oversold in 1998. During the year, we increased the Portfolio's exposure to
health care, paging, publishing, and rural cellular providers.
A strong US economy, featuring modest gross domestic product (GDP) growth,
low interest rates, and a federal budget surplus should allow defaults in the
high-yield market to remain modest. In this environment, our investment strategy
remains unchanged. We prefer domestic issuers with predictable cash flows,
dominant market shares, high cash flow margins (which are indicative of pricing
power), and strong management teams. We have no emerging market exposure and
avoid purchasing defaulted and distressed bonds.
- -----------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-17
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
ANNUAL PERFORMANCE OVERVIEW (continued)
- --------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
AVERAGE ANNUAL TOTAL RETURNS+
One Yr. Five Yrs. Ten Yrs.
Seligman Income Portfolio 7.76% 7.77% 10.29%
Lehman Brothers Aggregate
Bond Index 8.69 7.27 9.26
Lipper Income Funds Average 7.85 10.68 11.61
S&P 500 28.58 24.06 19.21
Lehman Lipper
Seligman Brothers Income
Income Aggregate Funds
Date Portfolio Bond Index Average S&P 500
12/31/1988 10000 10000 10000 10000
03/31/1989 10339 10114 10428 10709
06/30/1989 10976 10920 11111 11655
09/30/1989 11255 11043 11633 12903
12/31/1989 11461 11454 11823 13169
03/31/1990 11440 11363 11558 12772
06/30/1990 11546 11779 11901 13576
09/30/1990 10398 11880 11071 11710
12/31/1990 10761 12481 11702 12760
03/31/1991 11973 12830 12777 14614
06/30/1991 12472 13038 12878 14580
09/30/1991 13491 13779 13817 15360
12/31/1991 14086 14477 14640 16647
03/31/1992 14662 14292 14640 16226
06/30/1992 15025 14870 15059 16534
09/30/1992 15576 15509 15587 17055
12/31/1992 16299 15551 15987 17913
03/31/1993 17187 16193 16952 18696
06/30/1993 17659 16622 17326 18787
09/30/1993 18188 17056 17944 19272
12/31/1993 18316 17066 18051 19719
03/31/1994 17543 16576 17377 18972
06/30/1994 17012 16406 17308 19051
09/30/1994 17591 16506 17751 19983
12/31/1994 17223 16568 17425 19979
03/31/1995 17845 17404 18493 21925
06/30/1995 19055 18463 19694 24019
09/30/1995 20178 18825 20697 25928
12/31/1995 20319 19627 21596 27489
03/31/1996 20570 19280 22062 28965
06/30/1996 20839 19390 22468 30266
09/30/1996 21012 19748 22894 31201
12/31/1996 21672 20341 23958 33803
03/31/1997 21796 20227 23993 34709
06/30/1997 23217 20969 25833 40770
09/30/1997 24350 21666 27337 43823
12/31/1997 24711 22302 27801 45082
03/31/1998 26107 22650 29311 51371
06/30/1998 26107 23180 29427 53066
09/30/1998 25557 24161 28168 47786
12/31/1998 26628 24243 29983 57964
In 1998, the US economy expanded for the eighth year in a row. Low inflation,
continued corporate earnings growth in a benign interest rate environment, and
an investor "flight to quality" all pushed US equity and fixed-income markets
higher. On the equity side, the movement to securities that were considered
safer was positive for the biggest US stocks, but caused a narrowing of the
market that excluded many stocks. On the fixed-income side, this trend was
positive for US Treasuries, as global demand for securities backed by the US
government grew. US corporate securities, on the other hand, did not fare as
well in comparison.
While the Portfolio remains well diversified among industry groups and
individual holdings, we have reduced the number of holdings in the Portfolio to
focus on companies with dividend yields equal to, or greater than the S&P 500,
and those with valuations at the lower end of their industry group. This
approach led us to underweight many of the excessively-valued
large-capitalization stocks that were hit the hardest by last summer's market
downturn. During the year, we significantly reduced the Portfolio's
international holdings because of ongoing global economic problems. We continued
to reduce the convertible securities in the Portfolio, which helped to increase
returns without increasing overall risk. We also increased the Fund's
fixed-income holdings, as we felt that real interest rates were attractive.
However, our fixed-income exposure was heavily weighted to corporate bonds,
which underperformed Treasuries.
Due to our concerns regarding large-cap equity valuations, we ended 1998
underweighted in equities. With the strong results in the equity markets in
1998, our underweighting in stocks negatively impacted our relative performance.
If the stock market corrects in 1999, we would use the opportunity to add to
positions in high-quality companies at more attractive valuations.
We continue to believe that the US economy is an attractive environment for
investing in financial markets. We do not see any reason for a significant rise
in interest rates in 1999 as long as corporate profits and overall economic
growth continue to be moderate. Deflationary concerns outside the US should
benefit the fixed-income marketplace. Within the equity markets, we remain
cautious of the high valuations on many of the largest stocks, and fear that
much of this has been driven by liquidity factors, not fundamentals. Therefore,
we are focusing on identifying companies whose valuations more fully reflect
their future prospects, and where we believe there is a catalyst for earnings
acceleration going forward.
- --------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-18
<PAGE>
SELIGMAN PORTFOLIOS, INC.
SELIGMAN LARGE-CAP VALUE PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
TOTAL RETURNS+
Since Inception
Seligman Large-Cap
Value Portfolio (0.26)%
Russell 1000 Index 10.91*
Russell 1000 Value Index 2.87*
S&P 500 11.71*
*From April 30, 1998.
Seligman
Large Cap Russell Rusell
Value 1000 1000
Date Portfolio Index Value Index S&P 500
05/01/1998 10000 10000 10000 10000
05/31/1998 9990 9852 9784 9828
06/30/1998 9920 9978 10146 10227
07/31/1998 9550 9802 10024 10118
08/31/1998 7980 8344 8526 8655
09/30/1998 8050 8823 9100 9209
10/31/1998 9000 9507 9819 9958
11/30/1998 9940 9950 10427 10562
12/31/1998 9974 10288 11091 11170
The period under review was a difficult one for the Portfolio, and for value
funds in general. As investors worried about everything from deflationary
pressures in the US to devalued currencies in emerging markets, the largest,
most liquid growth companies in the US -- companies with proven track records of
growing earnings in the past -- benefited from a "flight to quality."
Large-capitalization growth stocks were among the year's biggest winners, but to
the exclusion of large-capitalization value stocks.
The Portfolio's most heavily weighted sector, financial stocks, suffered to
an even greater degree than the broader market during the difficult third
quarter, which was characterized by concerns and uncertainties regarding the
global financial crisis. The Portfolio's performance was also hurt by the
strength in technology stocks in general and Internet stocks in particular,
where a virtual mania developed. This resulted in a speculative trading market
that became extremely divergent. Value stocks, which are low priced, do not do
well in this type of environment.
In 1999, we expect a slowdown in domestic gross domestic product (GDP) to
about 2.5 percent. Trade should continue to come under pressure and there could
be a meaningful decline in capital spending, resulting in a period of slowing
job creation and reduced income gains. Unemployment may rise somewhat and
inflation should remain muted. We think one of the major investment themes for
1999 will be restructuring and consolidating, as managements continue to attempt
to grow profits in a slow growth environment. In commodity price-sensitive
businesses, this will slowly bring supply into better balance.
- --------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
See footnote on page P-20.
P-19
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
ANNUAL PERFORMANCE OVERVIEW (continued)
- --------------------------------------------------------------------------------
SELIGMAN SMALL-CAP VALUE PORTFOLIO
THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS
WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS.
TOTAL RETURNS+
Since Inception
Seligman Small-Cap Value Portfolio (17.00)%
Lipper Small Cap Funds Average (11.01)*
Russell 2000 Value Index (14.09)*
*From April 30, 1998.
Seligman Lipper
Small-Cap Russell 2000 Small Cap
Value Value Funds
Date Portfolio Index Average
05/01/1998 10000 10000 10000
05/31/1998 9500 9646 9437
06/30/1998 9150 9592 9512
07/31/1998 8460 8841 8830
08/31/1998 6350 7456 7063
09/30/1998 6420 7878 7477
10/31/1998 6850 8112 7783
11/30/1998 7290 8332 8291
12/31/1998 8300 8593 8899
The greatest influence on both the Portfolio and the small-cap market was an
ongoing reduction in expectations for corporate earnings throughout 1998. When
conditions are positive, investors are generally willing to pay big premiums to
own the faster rate of earnings growth that small-cap stocks typically enjoy.
However, during periods of earnings uncertainty (as in 1998), investors do not
want to own smaller companies, regardless of valuations.
We responded to this environment by staying focused on our investment
discipline. We bought what we considered to be quality companies with favorable
long-term return prospects. In retrospect, a winning strategy for small-cap
investors in 1998 would have been to emphasize those "concept" companies that
have no earnings, or high-tech companies where valuations are well above what a
traditional value investor is willing to pay. However, we remained committed to
our long-term value approach to investing. To change one's investment style in
order to fit with what is working in the market today is better known as style
rotation, and it is something we will not do.
The Portfolio benefited from having owned five companies that were taken over
during 1998. While we do not buy stocks simply because we think they will be
taken over, takeovers are a logical outcome given that our investment process is
often focused on those companies that sell at a discount to their private market
value.
We generally avoid investing in companies where the movement in the price of
a commodity (gold, oil, interest rates, etc.) far outweighs any impact
management can make. However, we did add two energy-related investments earlier
this year, based on a discount to net asset value, already significant price
declines, unseasonably mild weather for the prior year, and potential demand
recovery in Asia. While these investments have not yet paid off, we believe
that, at some point, when energy prices come back, so will these stocks.
Current valuations suggest that a period of significant catch-up for
small-cap stocks, in general, and small-cap value stocks, in particular, is
coming. We are not market timers and we do not know if 1999 will be the year
that these stocks will rebound. But for investors seeking long-term capital
appreciation who can withstand greater volatility, small-cap value remains an
attractive investment area.
- ------------
The investment return and principal value of an investment will fluctuate.
Shares, if redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results. + Performance data
quoted represent past performance and assume that all dividends and
distributions are invested in additional shares.
P-20
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN BOND PORTFOLIO
PRINCIPAL
AMOUNT VALUE
--------- ---------
US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES -- 49.8% US GOVERNMENT SECURITIES
- -- 36.0% US Treasury Bonds:
8 3/4%, 5/15/2020............. $500,000 $ 711,562
6 5/8%, 2/15/2027............. 900,000 1,064,812
US Treasury Notes:
6 1/4%, 10/31/2001............ 300,000 312,563
6 1/4%, 6/30/2002............. 200,000 209,938
6 5/8%, 5/15/2007............. 300,000 337,500
----------
Total US Government
Securities
(Cost $2,422,781)............. 2,636,375
----------
US GOVERNMENT
AGENCY SECURITIES -- 13.8%
Aid-Israel 0%, 11/15/2010........ 500,000 264,565
Federal National Mortgage
Association:
5.795%, 1/1/2009.............. 150,000 150,750
6%, 12/1/2028+................ 200,000 197,438
Government National Mortgage
Association, Mortgage-backed
Passed-through Certificates:+
6 1/2%, 12/15/2028............ 200,000 202,188
6%, 12/20/2028................ 200,000 198,250
----------
Total US Government
Agency Securities
(Cost $1,016,711)............. 1,013,191
----------
TOTAL US GOVERNMENT AND
GOVERNMENT AGENCY SECURITIES
(Cost $3,439,492)............. 3,649,566
----------
CORPORATE BONDS -- 41.6% AT&T Capital Corp.
6 1/4%, 5/15/2001............. 200,000 197,455
Associates Corporation of North
America 6 1/2%, 8/15/2002..... 200,000 206,682
Barrett Resources
7.55%, 2/1/2007............... 200,000 192,784
Capital One Bank
8 1/8%, 3/1/2000.............. 150,000 152,657
PRINCIPAL
AMOUNT VALUE
--------- ---------
CORPORATE BONDS (continued)
Cardinal Health
6 1/4%, 7/15/2008............. $100,000 $ 102,559
Chrysler Financial
6.09%, 4/6/2001............... 200,000 203,302
Dell Computer
6.55%, 4/15/2008.............. 200,000 208,111
Equifax
6.30%, 7/1/2005............... 100,000 103,125
First Data Corp.
5.80%, 12/15/2008............. 100,000 99,085
First USA Bank
5 3/4%, 1/15/1999............. 100,000 100,001
Loewen Group International
7 1/2%, 4/15/2001............. 200,000 179,000
Petroleum Georgia Pacific
7 1/2%, 3/31/2007............. 200,000 213,092
Philip Morris
7 1/8%, 8/15/2002............. 200,000 209,865
Sprint Capital
6 1/8%, 11/15/2008............ 200,000 204,446
Time Warner
9 1/8%, 1/15/2013............. 200,000 253,788
Viacom
7 3/4%, 6/1/2005.............. 200,000 218,662
Woolworth
7%, 6/1/2000.................. 200,000 200,064
----------
TOTAL CORPORATE BONDS
(Cost $2,995,620)............. 3,044,678
----------
REPURCHASE AGREEMENT -- 5.5%
(Cost $400,000)...............
State Street Bank and Trust 4.45%, dated 12/31/1998, maturing 1/4/1999
collateralized by: $300,000 US Treasury Notes 11 5/8%, 11/15/2004, with a
fair
market value of $408,353...... 400,000 400,000
----------
TOTAL INVESTMENTS - 96.9%
(Cost $6,835,112)............. 7,094,244
OTHER ASSETS LESS
LIABILITIES - 3.1%............ 226,112
----------
NET ASSETS - 100.0%.............. $7,320,356
==========
- -------------
+ 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.
P-21
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 96.3%
BASIC MATERIALS -- 2.2%
Crompton & Knowles............... 12,000 $ 248,250
Minerals Technologies............ 7,100 290,656
----------
538,906
----------
CAPITAL GOODS -- 10.3%
Applied Power (Class A).......... 16,900 637,975
General Dynamics................. 7,100 416,237
Molex............................ 15,500 590,453
Pall............................. 19,900 503,719
Rayovac*......................... 12,200 325,587
----------
2,473,971
----------
COMMUNICATIONS SERVICES -- 6.1%
Century Telephone Enterprises.... 13,400 904,500
Tele-Communications (Series A)
TCI Ventures Group*........... 24,400 577,212
----------
1,481,712
----------
CONSUMER CYCLICALS -- 23.6%
Apollo Group (Class A)*.......... 6,700 226,544
Circuit City Stores-Circuit City
Group......................... 6,900 344,569
Fastenal......................... 5,600 246,225
General Nutrition*............... 11,400 184,894
HA-LO Industries*................ 6,400 240,800
Harley-Davidson.................. 7,600 360,050
Interpublic Group of Companies... 8,100 645,975
ITT Educational Services*........ 17,500 595,000
Lancaster Colony................. 7,900 253,294
Leggett & Platt.................. 13,000 286,000
Lowe's Companies................. 6,100 312,244
Office Depot*.................... 18,700 690,731
Service Corp. International...... 10,600 403,462
Snyder Communications*........... 7,600 256,500
TJX Companies.................... 12,300 356,700
Williams-Sonoma*................. 7,000 282,188
----------
5,685,176
----------
CONSUMER STAPLES -- 17.3%
Cardinal Health.................. 4,500 341,438
CBS.............................. 19,900 651,725
Chancellor Media*................ 6,900 330,122
Clorox........................... 2,300 268,669
Deluxe........................... 13,100 478,969
Dial............................. 14,500 418,688
SHARES VALUE
-------- ---------
CONSUMER STAPLES (continued)
Infinity Broadcasting (Class A)*. 23,000 $ 629,625
Kroger*.......................... 10,100 611,050
Newell........................... 10,600 437,250
----------
4,167,536
----------
ENERGY -- 1.4%
Anadarko Petroleum............... 7,300 225,388
Enron Oil & Gas.................. 6,100 105,225
----------
330,613
----------
FINANCIAL SERVICES -- 10.0%
AFLAC............................ 8,600 378,400
Nationwide Financial Services
(Class A)..................... 8,000 413,500
Old Republic International....... 14,250 320,625
Progressive (Ohio)............... 1,800 304,875
Provident Companies.............. 7,900 327,850
Schwab (Charles)................. 7,500 421,406
SouthTrust....................... 6,950 256,498
----------
2,423,154
----------
HEALTH CARE -- 6.6%
ALZA*............................ 5,500 287,375
Biogen*.......................... 4,300 356,631
Covance*......................... 14,800 431,050
Universal Health Services
(Class B)*.................... 7,100 368,313
Wellpoint Health Networks........ 1,700 147,900
----------
1,591,269
----------
TECHNOLOGY -- 16.0%
Applied Materials................ 4,900 209,322
Ascend Communications*........... 3,300 217,078
Cadence Design System*........... 8,300 246,925
Compuware*....................... 4,100 320,184
Electronic Arts*................. 10,400 583,050
Fiserv*.......................... 7,100 364,984
General Instrument*.............. 12,000 407,250
Maxim Integrated Products*....... 5,000 218,281
Network Associates*.............. 4,800 318,450
Parametric Technology*........... 25,600 416,000
VERITAS Software*................ 9,400 562,825
----------
3,864,349
----------
TRANSPORTATION -- 1.7%
CNF Transportation............... 10,900 409,431
----------
- -------------
* Non-income producing security.
See Notes to Financial Statements.
P-22
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO (continued)
SHARES VALUE
-------- ---------
UTILITIES -- 1.1%
AES*............................. 5,800 $ 274,775
-----------
TOTAL COMMON STOCKS
(Cost $16,679,590)............ 23,240,892
-----------
SHORT-TERM HOLDINGS -- 4.1%
(Cost $1,000,000)............. 1,000,000
-----------
TOTAL INVESTMENTS -- 100.4%
(Cost $17,679,590)............ $24,240,892
OTHER ASSETS LESS
LIABILITIES-- (0.4)%.......... (100,198)
-----------
NET ASSETS-- 100.0%.............. $24,140,694
===========
SELIGMAN CASH MANAGEMENT PORTFOLIO
ANNUALIZED
YIELD ON PRINCIPAL
PURCHASE DATE AMOUNT VALUE
------------- -------- ---------
US GOVERNMENT
AND GOVERNMENT
AGENCY SECURITIES -- 57.6%
US Government SECURITIES -- 48.2% US Treasury Bills:
2/11/1999............ 4.38% $1,000,000 $ 995,103
3/11/1999............ 4.46 600,000 594,986
3/25/1999............ 4.44 700,000 693,028
4/15/1999............ 4.52 1,000,000 987,347
4/29/1999............ 4.49 600,000 591,425
US Treasury Notes:
5%, 1/31/1999........ 5.12 600,000 599,929
6 3/8%, 4/30/1999.... 4.53 600,000 603,502
----------
Total US Government
Securities
(Cost $5,065,320).... 5,065,320
----------
US Government
AGENCY
SECURITIES -- 9.4%
Federal Home Loan
Bank Corp., 4.94%,
3/5/1999............. 5.07 500,000 495,677
Federal National
Mortgage Association,
4.95%, 3/11/1999..... 5.08 500,000 495,256
----------
Total US Government
Agency Securities
(Cost $990,933)...... 990,933
----------
TOTAL US GOVERNMENT AND
GOVERNMENT AGENCY
SECURITIES
(Cost $6,056,253) ... 6,056,253
----------
ANNUALIZED
YIELD ON PRINCIPAL
PURCHASE DATE AMOUNT VALUE
------------- -------- ---------
COMMERCIAL
PAPER -- 31.7%
American Express Credit
Corp., 2/26/1999..... 5.07% $540,000 $ 535,800
American General Finance
Corp., 2/8/1999...... 5.30 500,000 497,240
Ford Motor Credit Co.,
4/5/1999............. 4.98 475,000 468,923
General Electric Capital
Corp., 1/19/1999..... 5.24 650,000 648,320
John Deere Capital Corp.,
2/18/1999............ 5.12 540,000 536,364
Norwest Financial, Inc.,
1/15/1999............ 5.25 650,000 648,690
-----------
TOTAL COMMERCIAL
PAPER
(Cost $3,335,337).... 3,335,337
-----------
REPURCHASE
AGREEMENT -- 9.5%
(Cost $1,000,000)
State Street Bank and
Trust 4.45%, dated 12/31/1998, maturing 1/4/1999 collateralized by: $750,000
US Treasury Notes 115 1/48%, 11/15/2004, with a fair market value of
$1,020,883........... 4.51 1,000,000 1,000,000
-----------
TOTAL INVESTMENTS -- 98.8%
(Cost $10,391,590)... 10,391,590
OTHER ASSETS LESS
LIABILITIES-- 1.2%..... 128,305
-----------
NET ASSETS-- 100.0%....... $10,519,895
===========
- -----------------
* Non-income producing security.
See Notes to Financial Statements.
P-23
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS - 90.7%
AEROSPACE/DEFENSE -- 0.5%
General Dynamics................. 6,000 $ 351,750
----------
AUTOMOTIVE AND
RELATED - 3.5%
DaimlerChrysler.................. 12,999 1,248,716
Dana............................. 6,600 269,775
Ford Motor....................... 11,800 692,512
----------
2,211,003
----------
BASIC MATERIALS - 0.5%
Alcoa............................ 4,100 305,706
----------
BUSINESS SERVICES AND
SUPPLIES -- 1.4%
Xerox............................ 7,400 873,200
----------
CAPITAL GOODS - 0.9%
Crown Cork & Seal................ 17,500 539,219
----------
CHEMICALS -- 0.8%
duPont (E.I.) de Nemours......... 9,100 482,869
----------
CONSUMER GOODS AND
SERVICES - 8.1%
Anheuser-Busch................... 17,900 1,174,687
Coca-Cola........................ 11,700 782,437
General Mills.................... 7,900 614,225
PepsiCo.......................... 18,200 745,063
Philip Morris.................... 23,400 1,251,900
Procter & Gamble................. 5,900 538,744
----------
5,107,056
----------
DRUGS AND HEALTH
CARE - 10.8%
Abbott Laboratories.............. 16,600 813,400
American Home Products........... 19,800 1,114,988
Baxter International............. 6,000 385,875
Bristol-Myers Squibb............. 9,700 1,297,981
Johnson & Johnson................ 9,900 830,362
Merck............................ 7,800 1,151,963
Pfizer........................... 5,200 652,275
Schering-Plough.................. 9,200 508,300
----------
6,755,144
----------
SHARES VALUE
-------- ---------
ELECTRIC AND GAS
UTILITIES - 4.1%
DQE.............................. 15,000 $ 659,062
Sonat............................ 19,300 522,306
Unicom........................... 17,600 678,700
The Williams Cos................. 23,200 723,550
----------
2,583,618
----------
ELECTRONICS -- 1.5%
Raytheon (Class B)............... 17,300 921,225
----------
ENERGY - 8.1%
BP Amoco (ADRs)
(United Kingdom).............. 11,200 1,003,800
Chevron.......................... 7,300 605,444
Exxon............................ 20,300 1,484,437
Mobil............................ 9,600 836,400
Royal Dutch Petroleum ..........
(Netherlands)................. 15,700 751,638
Schlumberger..................... 7,900 364,388
----------
5,046,107
----------
FINANCE AND
INSURANCE - 14.1%
American General................. 15,200 1,185,600
American International Group..... 10,800 1,043,550
Bank of New York................. 32,800 1,320,200
BankAmerica...................... 13,205 793,951
Chubb............................ 9,500 616,312
Citigroup........................ 20,005 990,247
Fannie Mae....................... 10,900 806,600
Mellon Bank...................... 11,400 783,750
Morgan (J.P.).................... 4,600 483,287
Washington Mutual................ 20,496 782,691
----------
8,806,188
----------
FOOD - 2.6%
ConAgra.......................... 25,000 787,500
Sara Lee......................... 29,600 834,350
----------
1,621,850
----------
MACHINERY AND INDUSTRIAL
EQUIPMENT -- 6.1%
GATX............................. 11,600 439,350
General Electric................. 17,800 1,816,712
United Technologies.............. 14,200 1,544,250
----------
3,800,312
----------
- ------------
See Notes to Financial Statements.
P-24
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO (continued)
SHARES VALUE
-------- ---------
PAPER AND PACKAGING -- 2.1%
Fort James....................... 21,700 $ 868,000
Mead............................. 16,400 480,725
-----------
1,348,725
-----------
PRINTING AND
PUBLISHING -- 0.6%
Gannett.......................... 6,100 403,744
-----------
RETAIL TRADE -- 2.6%
May Department Stores............ 12,100 730,538
Wal-Mart Stores.................. 10,800 879,525
-----------
1,610,063
-----------
TECHNOLOGY -- 11.7%
Cisco Systems*................... 7,100 659,191
Dell Computer*................... 5,100 373,416
Electronic Data Systems.......... 14,300 718,575
Harris........................... 16,000 586,000
Intel............................ 9,700 1,149,753
International Business Machines.. 7,500 1,385,625
Lucent Technologies.............. 5,500 605,000
Microsoft*....................... 13,400 1,856,319
-----------
7,333,879
-----------
TELECOMMUNICATIONS -- 8.6%
AT&T............................. 15,900 1,196,475
Ameritech........................ 14,600 925,275
GTE.............................. 19,200 1,294,800
MCI WorldCom*.................... 18,500 1,327,953
SBC Communications............... 11,900 638,138
-----------
5,382,641
-----------
SHARES OR
PRINCIPAL
AMOUNT VALUE
--------- ---------
TRANSPORTATION -- 0.8%
Norfolk Southern.............. 15,900 shs. $ 503,831
-----------
MISCELLANEOUS/
DIVERSIFIED -- 1.3%
AlliedSignal.................. 17,900 793,194
-----------
TOTAL COMMON STOCKS
(Cost $41,069,060)......... 56,781,324
REPURCHASE
AGREEMENT -- 8.6%
(Cost $5,400,000)
State Street Bank and Trust
4.45%,dated 12/31/1998,
maturing 1/4/1999
collateralized by:
$4,050,000 US Treasury
Notes 11 5/8%, 11/15/2004,
with a fair market value of
$5,512,139................ $5,400,000 5,400,000
-----------
TOTAL INVESTMENTS -- 99.3%....
(Cost $46,469,060)........ 62,181,324
OTHER ASSETS LESS
LIABILITIES-- 0.7% ....... 406,734
-----------
NET ASSETS-- 100.0%.......... $62,588,058
===========
- ----------------
* Non-income producing security.
See Notes to Financial Statements.
P-25
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 98.6%
COMMUNICATIONS
INFRASTRUCTURE -- 4.5%
ADC Telecommunications*.......... 16,500 $ 571,312
Advanced Fibre Communications*... 10,400 113,750
Aspect Telecommunications*....... 41,800 728,887
Cisco Systems*................... 2,000 185,687
DSP Communications*.............. 35,000 535,937
ECI Telecommunications (Israel).. 30,900 1,094,053
Nokia (Class A) (ADRs)
(Finland)..................... 9,800 1,180,288
Oak Industries*.................. 14,000 490,000
Tekelec*......................... 25,700 426,459
Xylan*........................... 10,100 182,747
-----------
5,509,120
-----------
COMMUNICATIONS
SERVICES -- 6.5%
ICG Communications*.............. 5,400 116,438
MCI WorldCom*.................... 20,600 1,478,694
Pacific Gateway Exchange*........ 22,500 1,082,109
RSL Communications (Class A)*.... 20,200 597,162
Tele-Communications (Series A)
TCI Group*.................... 53,500 2,960,891
Tele-Communications (Series A)
TCI Ventures Group*........... 53,500 1,265,609
Verio*........................... 19,800 440,550
-----------
7,941,453
-----------
COMPUTER AND BUSINESS
SERVICES -- 2.4%
First Data....................... 52,200 1,654,088
Galileo International............ 12,300 535,050
Unisys*.......................... 20,300 699,081
-----------
2,888,219
-----------
COMPUTER HARDWARE/
PERIPHERALS -- 16.1%
American Power Conversion*....... 1,700 82,291
Apex PC Solutions................ 26,000 747,500
Apple Computer*.................. 8,000 327,750
Comdisco......................... 60,000 1,012,500
Creative Technology*
(Singapore)................... 154,500 2,317,500
Electronics for Imaging*......... 99,700 3,984,884
EMC*............................. 58,200 4,947,000
SHARES VALUE
-------- ---------
COMPUTER HARDWARE/
PERIPHERALS (continued)
Lexmark International Group
(Class A)*.................... 28,900 $ 2,904,450
Splash Technology Holdings*...... 12,200 91,119
Storage Technology*.............. 58,000 2,062,625
Western Digital*................. 19,900 299,744
Xerox............................ 8,100 955,800
-----------
19,733,163
-----------
COMPUTER SOFTWARE -- 24.6%
3DO*............................. 51,100 234,741
Acclaim Entertainment*........... 61,100 748,475
Activision*...................... 20,000 220,000
Autodesk......................... 66,600 2,840,906
Check Point Software
Technologies* (Israel)........ 60,600 2,770,556
Compuware*....................... 20,000 1,561,875
Electronic Arts*................. 77,400 4,339,238
HNC Software*.................... 9,900 400,331
Hyperion Solutions*.............. 11,700 211,331
The Learning Company*............ 79,800 2,069,813
Microsoft*....................... 20,500 2,839,891
Network Associates*.............. 81,801 5,426,952
Novell*.......................... 20,200 366,756
Parametric Technology*........... 107,400 1,745,250
Platinum Technology
International*................ 72,700 1,397,203
Rational Software*............... 34,300 908,950
Structural Dynamics Research*.... 59,800 1,184,788
Tecnomatix Technologies*
(Israel)...................... 12,300 214,866
VERITAS Software*................ 10,400 622,700
-----------
30,104,622
-----------
CONTRACT MANUFACTURING/
CIRCUIT BOARDS -- 5.2%
ADFlex Solutions*................ 22,000 151,250
DII Group*....................... 20,200 463,337
Hadco*........................... 16,000 559,000
Sanmina*......................... 6,200 386,725
SCI Systems*..................... 49,800 2,875,950
SMART Modular Technologies*...... 71,000 1,965,813
-----------
6,402,075
-----------
ELECTRONICS CAPITAL
EQUIPMENT -- 7.3%
Applied Materials*............... 26,600 1,136,319
Asyst Technologies*.............. 17,700 361,744
- ----------------
* Non-income producing security.
See Notes to Financial Statements.
P-26
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO (continued)
SHARES VALUE
-------- ---------
ELECTRONICS CAPITAL
EQUIPMENT (continued)
Cognex*.......................... 47,400 $ 945,037
Credence Systems*................ 35,700 658,219
Electro Scientific Industries*... 19,700 892,656
Etec Systems*.................... 27,000 1,080,000
Orbotech* (Israel)............... 24,900 1,174,191
Teradyne*........................ 63,500 2,690,812
------------
8,938,978
------------
MEDIA -- 17.0%
Cablevision Systems (Class A)*... 20,000 1,003,750
CBS.............................. 127,400 4,172,350
Chancellor Media*................ 93,000 4,449,469
Clear Channel Communications*.... 52,146 2,841,957
Cox Radio (Class A)*............. 12,200 515,450
Fox Entertainment Group
(Class A)*.................... 50,300 1,266,931
Infinity Broadcasting (Class A)*. 36,900 1,010,138
MediaOne Group*.................. 50,700 2,382,900
Sinclair Broadcast Group
(Class A)*.................... 44,600 882,244
USA Networks*.................... 40,600 1,343,606
Ziff-Davis*...................... 56,900 899,731
------------
20,768,526
------------
SEMICONDUCTORS -- 15.0%
Advanced Micro Devices*.......... 60,200 1,742,037
Amkor Technology*................ 162,500 1,762,109
Cadence Design Systems*.......... 20,600 612,850
C-Cube Microsystems*............. 52,100 1,414,841
SHARES OR
PRINCIPAL
AMOUNT VALUE
-------- ----------
SEMICONDUCTORS (continued)
Dallas Semiconductor............. 29,200 shs. $ 1,189,900
Discreet Logic* (Canada)......... 29,900 562,494
Intel............................ 20,500 2,429,891
Lattice Semiconductor*........... 41,600 1,909,700
Level One Communications*........ 20,300 721,284
Maxim Integrated Products*....... 24,700 1,078,309
Microchip Technology*............ 43,500 1,606,781
Synopsys*........................ 52,737 2,857,686
Xilinx*.......................... 6,000 390,563
------------
18,278,445
------------
TOTAL COMMON STOCKS
(Cost $98,088,703)............ 120,564,601
------------
SUBORDINATED CONVERTIBLE
BONDS -- 0.1%
(Cost $190,000)
COMPUTER
SOFTWARE -- 0.1%
Activision 6 3/4%, 1/1/2005+... $190,000 163,400
------------
SHORT-TERM HOLDINGS -- 0.5%
(Cost $600,000)............... 600,000
------------
TOTAL INVESTMENTS -- 99.2%
(Cost $98,878,703)............ 121,328,001
OTHER ASSETS LESS
LIABILITIES-- 0.8%............ 950,930
------------
NET ASSETS-- 100.0%.............. $122,278,931
============
- -------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 98.6%
CAPITAL GOODS -- 11.2%
Allied Waste Industries*......... 26,900 $635,512
Casella Waste Systems
(Class A)*.................... 15,200 563,350
Corporate Express*............... 56,800 292,875
Fusion Systems (Rights)*......... 3,745 59
Integrated Electrical Services*.. 10,800 240,300
Metamor Worldwide*............... 25,600 635,200
Oak Industries*.................. 10,130 354,550
Sanmina*......................... 12,000 748,500
SHARES VALUE
-------- ---------
CAPITAL GOODS (continued)
Superior Services*............... 16,300 $ 327,019
UCAR International*.............. 23,300 415,031
Waste Connections*............... 10,400 190,775
----------
4,403,171
----------
CONSUMER CYCLICALS -- 18.9%
American Homestar*............... 30,437 458,457
Applied Graphics Technology*..... 8,400 137,025
Career Education*................ 10,000 300,000
Copart*.......................... 14,400 470,700
HA-LO Industries*................ 21,200 797,650
- -----------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
P-27
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO (continued)
SHARES VALUE
-------- ---------
CONSUMER CYCLICALS (continued)
Journal Register*................ 33,500 $ 502,500
Keystone Automotive
Industries*................... 16,500 347,531
Market Facts*.................... 11,100 278,888
MemberWorks*..................... 15,100 446,394
Modis Professional Services*..... 61,900 897,550
Personnel Group of America*...... 48,100 841,750
Pier 1 Imports................... 23,650 229,109
Pre-Paid Legal Services*......... 13,200 435,600
Primark*......................... 19,400 526,225
ResortQuest International*....... 8,700 127,238
Sun International Hotels*........ 6,500 295,344
Wilmar Industries*............... 15,500 314,359
----------
7,406,320
----------
CONSUMER STAPLES -- 12.1%
Aurora Foods*.................... 12,200 241,712
Carriage Services (Class A)*..... 23,800 676,813
EduTrek International
(Class A)*.................... 23,700 140,719
Hearst-Argyle Television
(Class A)*.................... 3,981 131,373
Premier Parks*................... 38,100 1,152,525
Provant*......................... 16,700 356,963
SBS Broadcasting
(Luxembourg)*................. 800 21,850
Sinclair Broadcast Group
(Class A)*.................... 25,000 494,531
U.S. Foodservice*................ 17,100 837,900
Vlasic Foods International*...... 26,500 631,031
Youth Services International*.... 10,100 38,664
----------
4,724,081
----------
ENERGY -- 2.8%
Cabot Oil & Gas (Class A)........ 11,400 171,000
Calpine*......................... 16,600 419,150
McDermott International.......... 11,600 286,375
Santa Fe Energy Resources*....... 28,500 210,188
----------
1,086,713
----------
FINANCIAL SERVICES -- 5.8%
Affiliated Managers Group*....... 6,900 206,137
American Capital Strategies*..... 12,400 214,675
Crusader Holding*................ 3,465 36,383
DST Systems*..................... 7,200 410,850
ESG Re........................... 12,700 259,556
FirstService* (Canada)........... 17,200 205,325
SHARES VALUE
-------- ---------
FINANCIAL SERVICES (Continued)
Insignia Financial Group*........ 15,666 $ 189,950
NOVA............................. 18,733 649,801
Stirling Cooke Brown Holdings
(Bermuda)..................... 4,900 82,381
----------
2,255,058
----------
HEALTH CARE -- 20.6%
AmSurg (Class A)*................ 10,000 71,875
Barr Laboratories*............... 9,500 456,000
CompDent*........................ 19,600 203,350
Covance*......................... 8,500 247,563
Hanger Orthopedic Group*......... 13,000 292,500
New American Healthcare*......... 19,200 214,800
Omnicare......................... 13,500 469,125
Pharmaceutical Product
Development*.................. 7,300 221,053
Professional Detailing*.......... 15,900 453,150
Province Healthcare*............. 19,900 707,694
PSS World Medical*............... 49,100 1,127,766
Quorum Health Group*............. 16,200 209,081
Renal Care Group*................ 7,400 214,600
Renex*........................... 50,000 359,375
Henry Schein*.................... 8,400 375,375
Schein Pharmaceutical*........... 6,800 99,025
Somnus Medical Technologies*..... 20,000 58,750
Total Renal Care Holdings*....... 37,400 1,105,637
Triangle Pharmaceuticals*........ 12,200 168,513
Universal Health Services
(Class B)*.................... 10,000 518,750
Watson Pharmaceuticals*.......... 7,500 471,563
----------
8,045,545
----------
TECHNOLOGY -- 24.0%
Affiliated Computer Services
(Class A)*.................... 14,900 670,500
American Management Systems*..... 6,000 240,375
Analog Devices*.................. 9,900 310,612
ANTEC*........................... 22,200 448,162
Aspect Telecommunications*....... 20,000 348,750
Avant!*.......................... 38,300 610,406
AVX.............................. 29,400 497,962
Burr-Brown*...................... 43,550 1,017,981
Ceridian*........................ 5,400 376,988
General Semiconductors*.......... 17,400 142,463
Glenayre Technologies*........... 53,000 233,531
HMT Technology*.................. 33,600 430,500
Indus International*............. 21,800 151,919
- ------------
* Non-income producing security.
See Notes to Financial Statements.
P-28
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO (continued)
SHARES VALUE
-------- ---------
TECHNOLOGY (continued)
Inso*............................ 15,100 $ 378,444
KLA-Tencor*...................... 6,000 260,438
Microchip Technology*............ 16,900 624,244
Micrografx*...................... 3,000 33,094
National Instruments*............ 7,000 238,656
Platinum Technology
International*................ 10,900 209,484
PMC-Sierra* (Canada)............. 7,100 447,522
Structural Dynamics Research*.... 13,600 269,450
SunGard Data Systems............. 8,400 333,375
Transaction Systems Architects
(Class A)*.................... 11,600 583,625
Unigraphics Solutions (Class A)*. 20,100 291,450
Xilinx*.......................... 4,000 260,375
----------
9,410,306
----------
TRANSPORTATION -- 1.3%
Coach USA*....................... 9,900 343,406
SHARES VALUE
-------- ---------
TRANSPORTATION (continued)
US Xpress Enterprises
(Class A)*.................... 11,800 $ 175,525
-----------
518,931
UTILITIES -- 1.9%
CalEnergy*....................... 21,960 761,736
-----------
TOTAL COMMON STOCKS
(Cost $34,675,524)............ 38,611,861
SHORT-TERM HOLDINGS -- 4.9%
(Cost $1,900,000)............. 1,900,000
-----------
TOTAL INVESTMENTS -- 103.5%
(Cost $36,575,523)............ 40,511,861
OTHER ASSETS LESS
LIABILITIES-- (3.5)%.......... (1,364,190)
-----------
NET ASSETS-- 100.0%.............. $39,147,671
===========
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 92.4%
AUSTRALIA -- 0.7%
Brambles Industries
(Commercial Services)......... 700 $ 17,015
CSL (Drugs and Health Care)...... 3,000 25,670
Telstra* (Telecommunications).... 3,900 18,197
--------
60,882
--------
BRAZIL -- 0.2%
Telesp Participacoes (ADRs)*
(Telecommunications).......... 1,000 22,125
--------
CHINA -- 0.5%
China Telecom (Hong Kong)*
(Telecommunications).......... 10,000 17,296
Huaneng Power International
(ADRs)* (Electric and Gas
Utilities).................... 1,100 15,950
SmarTone Telecommunications
(Telecommunications).......... 3,000 8,325
--------
41,571
--------
SHARES VALUE
-------- ---------
FINLAND -- 3.9% Nokia (Series A)
(Telecommunications).......... 2,125 $258,387
Raisio Group (Consumer
Goods and Services)........... 4,000 43,931
Sonera Group*
(Telecommunications).......... 2,200 38,831
--------
341,149
--------
FRANCE -- 8.0%
Accor (Entertainment
and Leisure).................. 540 116,893
Cap Gemini (Computer and
Technology Related)........... 1,111 178,285
CNP Assurances* (Financial
Services)..................... 3,940 119,685
Genset (ADRs)* (Drugs and
Health Care).................. 2,500 68,125
Hachette Filipacchi Medias
(Media)....................... 400 94,459
Valeo (Automotive and Related)... 1,430 112,665
--------
690,112
--------
- ---------------
* Non-income producing security.
See Notes to Financial Statements.
P-29
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
GERMANY -- 3.4%
Adidas-Salomon (Retailing)....... 1,150 $126,746
Metro (Retailing)................ 2,088 164,286
--------
291,032
--------
GREECE -- 1.5%
Hellenic Telecommunication
Organization
(Telecommunications).......... 3,166 84,148
National Bank of Greece (GDRs)+
(Financial Services).......... 960 42,144
--------
126,292
--------
HUNGARY -- 1.2%
Magyar Tavkozlesi "Matav" (ADRs)
(Telecommunications).......... 1,890 56,346
MOL Magyar Olaj-es Gazipari
(GDRs) (Resources)............ 1,740 48,067
--------
104,413
--------
IRELAND -- 1.8%
Elan (ADRs)* (Drugs and
Health Care).................. 2,250 156,516
--------
ITALY -- 4.0%
Aeroporti di Roma
(Transportation).............. 11,500 100,261
Banca Nazionale del Lavoro*
(Financial Services).......... 38,000 113,769
Mediolanum (Financial Services).. 18,000 133,500
--------
347,530
--------
JAPAN -- 6.4%
Bellsystem 24 (Business Goods
and Services)................. 150 33,311
Diamond Computer Service
(Computer and Technology
Related)...................... 3,000 49,703
Fancl (Consumer Goods
and Services)................. 1,000 85,393
Fujitsu Support and Service
(Business Goods and
Services)..................... 1,000 71,822
H.I.S. (Entertainment
and Leisure).................. 4,000 82,133
Keyence (Electronics)............ 500 61,247
SHARES VALUE
-------- ---------
JAPAN (continued)
Nichii Gakkan (Drugs
and Health Care).............. 1,100 $ 45,561
Nippon Telegraph & Telephone
(Telecommunications).......... 4 30,738
NTT Mobile Communication
Network "NTT DoCoMo"
(Telecommunications).......... 1 40,978
Softbank (Computer and
Technology Related)........... 400 23,970
Sundrug (Retailing).............. 1,600 30,315
--------
555,171
--------
MEXICO -- 0.4%
Fomento Economico Mexicano
"Femsa" (ADRs) (Consumer
Goods and Services)........... 1,300 34,612
--------
NETHERLANDS -- 4.0%
ASM Lithography Holding*
(Electronics Capital
Equipment).................... 3,000 91,605
Equant* (Business Goods
and Services)................. 1,790 124,537
Philips Electronics (Electronics) 1,900 127,354
--------
343,496
--------
NORWAY -- 2.2%
Tomra Systems (Business
Goods and Services)........... 5,700 187,538
--------
SINGAPORE -- 0.4%
Electronic Resources (Electronics) 25,000 22,713
Overseas Chinese Banking
(Financial Services).......... 2,000 13,568
--------
36,281
--------
SPAIN -- 9.8%
Actividades de Construccion y
Servicios (Construction
and Property)................. 3,400 134,146
Azkoyen (Manufacturing and
Industrial Equipment)......... 2,620 94,142
Centros Comerciales
Continente (Retailing)........ 4,850 164,360
- ------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
P-30
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
SPAIN (continued)
Sociedad General de Aguas de
Barcelona..... (Consumer Goods
and Services)................. 2,500 $167,330
Sociedad General de Aguas de
Barcelona*....(Consumer Goods
and Services)................. 20 1,339
Superdiplo* (Retailing).......... 4,320 121,594
Tabacalera (Class A) (Tobacco)... 6,500 163,948
--------
846,859
--------
SWEDEN -- 3.4%
Astra (Class A) (Drugs and
Health Care).................. 6,235 127,006
Autoliv (SDRs) (Automotive
and Related).................. 1,100 39,398
L.M. Ericsson Telefon (Series B)
(Telecommunications).......... 5,495 130,532
--------
296,936
--------
SWITZERLAND -- 0.8%
Helvetia Patria Holding
(Financial Services).......... 75 71,234
--------
UNITED KINGDOM -- 10.1%
Airtours (Entertainment and
Leisure)...................... 8,500 54,125
Ashtead Group (Construction
and Property)................. 19,500 44,785
Bodycote International (Industrial
Goods and Services)........... 6,000 82,830
CMG* (Computer and
Technology Related)........... 2,800 72,572
Games Workshop Group
(Retailing)................... 4,500 38,803
Granada Group (Entertainment
and Leisure).................. 4,500 79,584
Halma (Electronics).............. 36,500 74,144
Ladbroke Group (Entertainment
and Leisure).................. 13,000 51,737
Parity (Computer and
Technology Related)........... 7,325 69,540
Pizza Express (Restaurants)...... 8,000 106,791
Rolls Royce (Aerospace).......... 12,600 51,608
SmithKline Beecham (Drugs
and Health Care).............. 3,000 41,962
SHARES VALUE
-------- ---------
UNITED KINGDOM (continued)
Spring Group (Support Services).. 6,500 $ 15,683
WPP Group (Business Goods
and Services)................. 15,000 90,540
--------
874,704
--------
UNITED STATES -- 29.7%
AES* (Electric and Gas
Utilities).................... 2,700 127,913
American International Group
(Financial Services).......... 1,275 123,197
AT&T (Telecommunications)........ 2,100 158,025
Bristol-Myers Squibb (Drugs
and Health Care).............. 800 107,050
Cardinal Health (Drugs and
Health Care).................. 1,800 136,575
CBS (Media)...................... 2,500 81,875
ConAgra (Consumer Goods
and Services)................. 3,600 113,400
Disney, Walt (Entertainment
and Leisure).................. 1,400 42,000
General Dynamics (Capital
Goods)........................ 700 41,038
General Electric (Diversified)... 1,300 132,681
Interpublic Group of Companies
(Business Goods and
Services)..................... 2,050 163,488
Kroger* (Consumer Goods
and Services)................. 1,500 90,750
Lilly (Eli) (Drugs and Health
Care)......................... 1,200 106,650
MCI WorldCom*
(Telecommunications).......... 1,700 122,028
Merck (Drugs and Health Care).... 700 103,381
Microsoft* (Computer and
Technology Related)........... 1,000 138,531
Motorola (Electronics)........... 1,400 85,487
Newell (Consumer Goods and
Services)..................... 2,000 82,500
Pfizer (Drugs and Health Care)... 700 87,806
Philip Morris (Tobacco).......... 2,300 123,050
Procter & Gamble (Consumer
Goods and Services)........... 1,400 127,837
Tyco International (Diversified). 2,000 150,875
Xerox (Business Goods and
Services)..................... 1,000 118,000
--------
2,564,137
--------
- ----------------
* Non-income producing security.
See Notes to Financial Statements.
P-31
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
TOTAL COMMON STOCKS
(Cost $6,083,240)............. $7,992,590
----------
PREFERRED STOCKS -- 1.5%
(Cost $93,300)
GERMANY -- 1.5%
Porsche (Non-Voting)*
(Automotive and Related)...... 56 128,821
----------
CORPORATE BONDS -- 0.1%
(Cost $4,920)
PRINCIPAL
AMOUNT VALUE
--------- ---------
GERMANY -- 0.1%
Metro Finance 0%, 9/7/2013
(Financial Services).......... 9,000** $ 6,017
----------
TOTAL INVESTMENTS -- 94.0%
(Cost $6,181,460)............. 8,127,428
OTHER ASSETS LESS
LIABILITIES-- 6.0%............ 515,867
----------
NET ASSETS-- 100.0%.............. $8,643,295
==========
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 98.1%
AUSTRALIA -- 1.3%
BRL Hardy (Consumer Goods
and Services)................. 8,850 $ 29,873
Cochlear (Medical Products
and Technology)............... 4,300 24,191
CSL (Medical Products
and Technology)............... 4,650 39,789
Futuris (Automotive Parts
Manufacturing)................ 27,673 31,306
National Foods (Consumer
Goods and Services)........... 16,800 29,792
National Mutual Property Trust
(Construction and Property)... 19,700 16,745
National Mutual Property Trust
(Rights)* (Construction and
Property)..................... 1,212 1,030
Pasminco (Metals)................ 31,500 23,885
Stockland Trust Group
(Construction and Property)... 12,200 30,289
TAB* (Leisure and Hotels)........ 14,000 27,737
Henry Walker Group
(Support Services)............ 5,100 5,302
--------
259,939
--------
AUSTRIA -- 0.6%
Bau Holdings (Voting Preference
Shares) (Construction and
Property)..................... 684 25,693
Bau Holdings (Construction and
Property)..................... 1,930 90,622
--------
116,315
--------
SHARES VALUE
-------- ---------
BERMUDA -- 0.1%
Dairy Farm International
Holdings (Retailing).......... 14,500 $ 16,675
Stirling Cooke Brown Holdings
(Financial Services).......... 400 6,725
--------
23,400
--------
CANADA -- 1.2%
Celestica* (Technology).......... 1,900 46,906
PMC-Sierra* (Technology)......... 1,300 81,941
Teleglobe (Telecommunications)... 2,100 75,441
Trojan Technologies*
(Support Services)............ 2,000 45,395
--------
249,683
--------
DENMARK -- 2.1%
Danske Traelastkompagni
(Construction and Property)... 1,209 81,686
NeuroSearch*
(Drugs and Health Care)....... 659 43,697
Sondagsavisen
(Media)....................... 700 43,446
Sydbank
(Financial Services).......... 2,015 86,435
Thorkild Kristensen
(Construction and Property)... 2,065 188,867
--------
444,131
--------
FINLAND
Rapala Normark*
(Consumer Goods and
Services)..................... 1,000 8,629
--------
- --------------
* Non-income producing security.
** Principal amount reported in German deutschemarks.
See Notes to Financial Statements.
P-32
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
FRANCE -- 4.3%
Compagnie Francaise d'Etudes et
de Construction Technip "Technip"
(Construction and Property)... 1,016 $ 95,606
Du Pareil au Meme
(Retailing)................... 760 61,727
ECIA (Automotive Parts
Manufacturing)................ 720 96,477
Etam Developpement* (Retailing) 2,309 117,727
L'Europeenne d'Extincteurs
(Manufacturing)............... 1,372 85,785
Genset (ADRs)*
(Drugs and Health Care)....... 2,793 76,109
International Metal Service
(Metals)...................... 1,960 18,654
Montupet (Automotive Parts
Manufacturing)................ 2,101 86,449
Royal Canin (Veterinary Products) 1,519 95,112
Sylea (Automotive Parts
Manufacturing)................ 707 39,083
Virbac (Veterinary Products)..... 1,567 120,544
--------
893,273
--------
GERMANY -- 1.6%
Beru (Automotive Parts
Manufacturing)................ 1,626 33,058
Bien-Haus (Construction and
Property)..................... 221 59,731
Hawesko Holding
(Telecommunications).......... 2,442 136,404
Moebel Walther (Retailing)....... 3,035 102,993
--------
332,186
--------
HONG KONG -- 0.7%
Dah Sing Financial Group
(Financial Services).......... 9,800 24,034
Esprit Holdings (Retailing)...... 19,000 8,216
Johnson Electric Holdings
(Electronics)................. 5,000 12,843
Kerry Properties (Construction
and Property)................. 26,000 20,974
Li & Fung (Consumer
Goods and Services)........... 8,200 16,987
Ng Fung Hong (Consumer
Goods and Services)........... 22,000 19,735
Shenzhen Expressway
(Transportation).............. 69,500 16,147
SHARES VALUE
-------- ---------
HONG KONG (continued)
South China Morning Post
(Media)....................... 53,000 $ 27,193
Yanzhou Coal Mining
(Series H)* (Resources)....... 50,000 8,390
--------
154,519
--------
IRELAND -- 0.9%
Esat Telecom Group (ADRs)*
(Telecommunications).......... 2,250 85,641
Ryanair Holdings*
(Transportation).............. 12,900 92,168
--------
177,809
--------
ITALY -- 0.6%
La Doria (Consumer Goods
and Services)................. 37,643 123,070
--------
JAPAN -- 6.5%
Asahi Diamond Industries
(Manufacturing)............... 4,000 19,811
Asatsu-DK (Advertising).......... 1,900 45,208
Benesse (Business Services)...... 600 32,307
The Eighteenth Bank
(Financial Services).......... 4,000 17,131
Enplas (Electronics)............. 1,000 25,997
Forval (Telecommunications)...... 1,000 5,816
Fujicco (Consumer Goods and
Services)..................... 2,000 33,135
Fujitsu Business Systems
(Business Services)........... 2,500 33,928
Glory Kogyo (Manufacturing)...... 2,000 35,250
H.I.S. (Leisure and Hotels)...... 1,000 20,533
Higashi Nihon House
(Construction and Property)... 6,000 23,106
Hitachi Information Systems
(Computer Software)........... 2,000 19,581
Hitachi Medical (Medical
Products and Technology)...... 2,000 20,745
Hogy Medical (Medical
Products and Technology)...... 700 19,493
Hokkai Can (Manufacturing)....... 7,000 16,162
Horiba Instruments (Electronics). 4,000 39,480
Iino Kaiun Kaisha*
(Transportation).............. 12,000 20,093
The Iyo Bank (Financial
Services)..................... 3,000 18,691
- -----------
* Non-income producing security.
See Notes to Financial Statements.
P-33
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
JAPAN (continued)
Japan Information Processing
Service (Computer Software)... 2,200 $ 19,814
Kentucky Fried Chicken
(Restaurants)................. 3,000 28,288
Kissei Pharmaceutical (Drugs
and Health Care).............. 1,000 17,581
Komatsu Seiren
(Manufacturing)............... 6,000 21,679
Komori (Capital Goods)........... 2,000 41,948
Maspro Denkoh
(Telecommunications).......... 2,000 16,215
Mitsubishi Cable Industries
(Manufacturing)............... 9,000 14,593
Mitsubishi Gas Chemical
(Chemicals)................... 7,000 19,308
Mitsui Home (Construction
and Property)................. 7,000 32,078
Namura Shipbuilding (Capital
Goods)........................ 4,000 7,579
Nichicon (Manufacturing)......... 2,000 24,851
Nippon Broadcasting System (Media) 1,000 39,833
Nippon Seiki (Automotive Parts
Manufacturing)................ 3,000 20,568
Nishio Rent All (Construction
and Property)................. 2,000 13,483
Nissha Printing (Paper and
Printing)..................... 3,000 18,242
Nisshin Fire & Marine Insurance
(Financial Services).......... 8,000 23,406
Nova (Consumer Goods and
Services)..................... 3,000 8,857
Okinawa Electric Power
(Electric Utilities).......... 1,200 22,208
Olympus Optical (Electronics).... 4,000 45,790
Otsuka Kagu (Retailing).......... 500 34,369
Ryoyo Electro (Electronics)...... 3,000 26,094
Sagami Chain (Restaurants)....... 2,000 18,066
Sankyo (Manufacturing)........... 2,600 43,305
Sanyo Special Steel (Metals)..... 15,000 12,293
Shimachu (Retailing)............. 1,200 23,794
Sodick (Manufacturing)........... 5,000 10,575
Sundrug (Retailing).............. 1,800 34,104
Takasago International (Chemicals) 4,000 21,996
Tokyo Style (Manufacturing)...... 2,000 20,163
Towa Pharmaceutical (Drugs
and Health Care)............. 3,000 22,472
Toyo Ink Manufacturing (Chemicals) 7,000 15,545
JAPAN (continued) SHARES VALUE
-------- ---------
Tsubaki Nakashima
(Manufacturing)............... 7,500 $ 45,605
Tsudakoma (Manufacturing)........ 19,000 35,162
Tsutsumi Jewelry (Retailing)..... 2,500 39,656
Xebio (Retailing)................ 2,100 43,582
Yokohama Reito (Distributors).... 3,000 18,797
---------
1,348,366
---------
LUXEMBOURG
SBS Broadcasting* (Media)........ 200 5,462
---------
NETHERLANDS -- 3.1%
Athlon Groep (Consumer
Goods and Services)........... 2,913 86,624
Benckiser (Series B)*
(Consumer Goods and
Services)..................... 1,275 83,426
CMG (Support Services)........... 12,000 311,021
Samas Groep
(Manufacturing)............... 8,765 156,668
--------
637,739
--------
NEW ZEALAND -- 0.1%
Auckland International Airport*
(Transportation).............. 10,700 14,920
Sky Network Television* (Media).. 9,200 12,587
--------
27,507
--------
NORWAY -- 2.1%
Ekornes (Manufacturing).......... 17,347 139,261
Petroleum Geo-Services*
(Energy)...................... 7,800 99,573
Tandberg Television* (Media)..... 24,900 206,450
--------
445,284
--------
SINGAPORE -- 0.4%
Keppel FELS (Industrial Goods
and Services)................. 7,000 13,483
Keppel Tatlee Bank
(Financial Services).......... 12,000 20,933
Singapore Land (Construction
and Property)................. 9,000 19,952
Venture Manufacturing
(Electronics)................. 4,500 17,171
Want Want Holdings (Consumer
Goods and Services)........... 10,120 12,144
--------
83,683
--------
- ----------------
* Non-income producing security.
See Notes to Financial Statements.
P-34
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
SPAIN -- 0.6%
TelePizza* (Consumer Goods
and Services)................. 13,044 $124,067
--------
SWEDEN -- 1.9% Angpanneforeningen (Series B)
(Business Services)........... 2,641 38,682
Bure Investment Aktiebolaget
(Financial Services).......... 8,935 126,468
Finnveden (Series B)
(Manufacturing)............... 2,447 37,497
Munksjo (Paper and Printing)..... 6,024 41,521
Nobel Biocare (Medical
Products and Technology)...... 11,294 152,908
--------
397,076
--------
SWITZERLAND -- 2.2%
Bon Appetit Holding (Retailing).. 149 81,223
Hero (Consumer Goods
and Services)................. 120 82,096
Kaba Holding
(Business Services)........... 242 118,886
Selecta Group (Consumer
Goods and Services)........... 619 171,194
--------
453,399
--------
TAIWAN -- 0.1%
Taiwan American Fund*
(Miscellaneous)............... 1,600 23,648
--------
THAILAND -- 0.2%
Hana Microelectronics
(Electronics)................. 1,600 3,873
Siam Cement (Building
Materials).................... 1,000 22,668
Tipco Asphalt (Construction
and Property)................. 4,000 6,437
--------
32,978
--------
UNITED KINGDOM -- 16.5%
AEA Technology (Industrial
Goods and Services)........... 6,500 78,953
Allied Leisure (Leisure and
Hotels)....................... 97,500 40,420
Ashtead Group (Construction
and Property)................. 106,600 244,826
BTG (Technology)................. 7,000 40,627
Capital Radio (Media)............ 20,500 197,846
SHARES VALUE
-------- ---------
UNITED KINGDOM (continued)
Chiroscience Group (Drugs
and Health Care).............. 4,250 $ 17,689
Clinton Cards (Retailing)........ 46,200 114,917
Cobham (Manufacturing)........... 8,950 101,886
Dawson Group (Transportation).... 26,600 83,808
Domnick Hunter Group
(Manufacturing)............... 20,000 66,993
Druck Holdings (Industrial
Goods and Services)........... 11,500 53,396
Electronics Boutique (Retailing). 129,800 173,807
Fairey Group (Electronics)....... 10,500 44,661
F.I. Group (Computer Software)... 55,176 300,563
Games Workshop Group
(Retailing)................... 9,400 81,055
GWR Group (Media)................ 24,000 90,142
ICON (ADRs)* (Business
Services)..................... 4,100 136,581
LLP Group (Media)................ 46,426 219,025
National Express Group
(Transportation).............. 10,000 185,061
Parity (Computer Software)....... 25,312 240,299
Peptide Therapeutics (Drugs
and Health Care).............. 2,750 3,717
Pizza Express (Restaurants)...... 19,500 260,304
Polypipe (Building Materials).... 70,500 133,274
Save Group (Retailing)........... 8,600 8,129
Shire Pharmaceuticals* (Drugs
and Health Care).............. 5,500 35,205
Spring Group (Support Services).. 30,000 72,383
Tilbury Douglas (Construction
and Property)................. 50,500 182,557
Torotrak* (Automotive Parts
Manufacturing)................ 7,000 9,925
Trifast (Electrical Distribution) 8,000 68,983
Trinity International Holdings
(Media)....................... 19,600 129,519
Vanguard Medica Group
(Drugs and Health Care)....... 3,500 9,867
Wellington Holdings
(Manufacturing)............... 8,500 13,038
--------
3,439,456
--------
UNITED STATES -- 51.0%
Acxiom* (Computer Software)...... 4,800 148,500
Affiliated Computer Services
(Class A)* (Business
Services)..................... 3,900 175,500
Affiliated Managers Group*
(Financial Services).......... 1,900 56,762
- ---------------
* Non-income producing security.
See Notes to Financial Statements.
P-35
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
UNITED STATES (continued)
Allied Waste Industries
(Industrial Goods and
Services)..................... 7,300 $172,462
American Capital Strategies*
(Financial Services).......... 1,800 31,162
American Homestar*
(Manufacturing)............... 8,100 122,006
American Management Systems*
(Business Services)........... 1,000 40,062
Analog Devices*
(Semiconductors).............. 2,600 81,575
ANTEC* (Telecommunications)...... 3,900 78,731
Applied Graphics Technologies*
(Consumer Goods and
Services)..................... 2,400 39,150
Aspect Telecommunications*
(Technology).................. 5,500 95,906
Aurora Foods* (Consumer
Goods and Services)........... 2,900 57,456
Avant!* (Computer Software)...... 6,200 98,812
AVX (Electronics)................ 7,800 132,112
Bacou USA* (Industrial Goods
and Services)................. 4,300 92,450
Barr Laboratories* (Drugs and
Health Care).................. 2,200 105,600
Budget Group* (Consumer
Goods and Services)........... 1,400 22,225
Burr-Brown* (Technology)......... 7,400 172,975
Cabot Oil & Gas (Class A)
(Energy)...................... 2,900 43,500
CalEnergy* (Electric Utilities).. 5,200 180,375
Calpine* (Electric Utilities).... 7,500 189,375
Carriage Services* (Consumer
Goods and Services)........... 5,100 145,031
Casella Waste Systems
(Class A)* (Capital Goods).... 3,700 137,131
Ceridian* (Business Services).... 1,200 83,775
Coach USA* (Transportation)...... 2,700 93,656
Cognex* (Electronics)............ 6,500 129,594
CompDent* (Medical Products
and Technology)............... 5,700 59,137
Copart* (Retailing).............. 3,000 98,062
Corporate Express* (Retailing)... 11,400 58,781
Covance* (Drugs and Health
Care)......................... 2,400 69,900
Cox Radio (Class A)* (Media)..... 4,500 190,125
Crusader Holding*
(Financial Services).......... 735 7,717
SHARES VALUE
-------- ---------
UNITED STATES (continued)
EduTrek International (Class A)*
(Educational Services)....... 4,800 $28,500
FirstService* (Business Services) 4,800 57,300
Fusion Systems (Rights)*
(Capital Goods)............... 800 13
General Cable (Manufacturing).... 2,800 57,400
General Semiconductor
(Technology).................. 4,900 40,119
Glenayre Technologies*
(Telecommunications).......... 11,500 50,672
HA-LO Industries* (Advertising).. 5,500 206,937
Hanger Orthopedic Group*
(Medical Products and
Technology)................... 3,900 87,750
Hearst-Argyle Television
(Class A)* (Media)............ 1,100 36,300
HMT Technology*
(Technology).................. 3,900 49,969
Indus International*
(Business Services)........... 5,700 39,722
Insignia Financial Group*
(Financial Services).......... 3,733 45,267
Inso* (Computer Software)........ 3,900 97,744
Integrated Electrical Services*
(Electronics)................. 2,300 51,175
Ivex Packaging* (Consumer
Goods and Services)........... 4,000 93,000
Journal Register* (Media)........ 9,000 135,000
Keystone Automotive Industries*
(Distributors)................ 3,700 77,931
KLA-Tencor* (Technology)......... 700 30,384
LandCARE USA* (Business
Services)..................... 8,900 86,219
Marcam Solutions* (Computer
Software).................... 1,800 11,194
Market Facts* (Business
Services)..................... 2,800 70,350
McDermott International
(Industrial Goods and
Services)..................... 3,100 76,531
MemberWorks* (Consumer
Goods and Services)........... 4,200 124,163
Metamor Worldwide* (Business
Services)..................... 6,900 171,206
Microchip Technology*
(Technology).................. 4,400 162,525
Micrografx* (Business
Services)..................... 700 7,722
- --------------
* Non-income producing security.
See Notes to Financial Statements.
P-36
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
UNITED STATES (continued)
MMI Companies (Financial
Services)..................... 3,226 $ 54,035
Modis Professional Services*
(Business Services)........... 17,200 249,400
Mutual Risk Management
(Financial Services).......... 1,932 75,589
National Instruments*
(Technology).................. 1,900 64,778
New American Healthcare*
(Drugs and Health Care)....... 5,100 57,056
NOVA* (Business Services)........ 4,418 153,249
Oak Industries* (Electronics).... 2,000 70,000
OM Group (Chemicals)............. 4,800 175,200
Omnicare (Drugs and Health
Care)......................... 2,100 72,975
Personnel Group of America*
(Business Services)........... 13,600 238,000
Pharmaceutical Product
Development* (Medical
Products and Technology)...... 1,700 51,478
Physicians' Specialty* (Drugs
and Health Care).............. 10,000 82,500
Pier 1 Imports (Retailing)....... 6,500 62,969
PLATINUM Technology
International* (Technology)... 3,000 57,656
Pre-Paid Legal Services*
(Business Services)........... 4,000 132,000
Premier Parks* (Leisure and
Hotels)....................... 10,000 302,500
Primark* (Consumer Goods
and Services)................. 6,100 165,462
Prison Realty Trust
(Construction and Property)... 6,100 125,050
Professional Detailing*
(Business Services)........... 4,200 119,700
Provant* (Business Services)..... 4,200 89,775
Province Healthcare* (Drugs
and Health Care).............. 4,200 149,363
PSS World Medical* (Drugs and
Health Care).................. 13,200 303,187
Quorum Health Group* (Drugs
and Health Care).............. 2,000 25,813
Renal Care Group* (Medical
Products and Technology)...... 1,900 55,100
Renex* (Drugs and Health
Care)......................... 9,000 64,688
SHARES VALUE
-------- ---------
UNITED STATES (continued)
ResortQuest International*
(Consumer Goods and
Services)..................... 2,500 $ 36,563
Sanmina* (Industrial Goods
and Services)................. 3,100 193,363
Santa Fe Energy Resources*
(Resources)................... 8,500 62,688
Henry Schein* (Medical
Products and Technology)...... 2,400 107,250
Schein Pharmaceutical* (Drugs
and Health Care).............. 1,900 27,669
Sinclair Broadcast Group
(Class A)*(Media)............. 6,800 134,513
Sola International* (Consumer
Goods and Services)........... 1,100 18,975
Somnus Medical Technologies*
(Medical Products and
Technology)................... 5,000 14,688
Steinway Musical Instruments*
(Consumer Goods and
Services)..................... 1,900 49,400
Structural Dynamics Research*
(Computer Software)........... 4,300 85,194
Sun International Hotels*
(Leisure and Hotels).......... 1,700 77,244
SunGard Data Systems*
(Computer Software)........... 2,300 91,281
Superior Services*
(Business Services)........... 5,100 102,319
Total Renal Care Holdings*
(Drugs and Health Care)....... 10,433 308,426
Transaction Systems Architects
(Class A)* (Technology)....... 3,600 181,125
Triangle Pharmaceuticals*
(Drugs and Health Care)....... 2,700 37,294
UCAR International*
(Capital Goods)............... 7,200 128,250
Unigraphics Solutions (Class A)*
(Business Services)........... 4,400 63,800
Universal Health Services
(Class B) (Drugs and Health
Care)......................... 2,100 108,938
U.S. Foodservice* (Business
Services)..................... 3,500 171,500
Vlasic Foods International*
(Consumer Goods and
Services)..................... 6,500 154,781
- ----------------
* Non-income producing security.
See Notes to Financial Statements.
P-37
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued)
SHARES VALUE
-------- ---------
UNITED STATES (continued)
Waste Connections* (Capital
Goods)........................ 2,800 $ 51,363
Watson Parmaceuticals*
(Medical Products and
Technology)................... 1,900 119,463
Wilmar Industries* (Consumer
Goods and Services)........... 4,500 91,266
Xilinx* (Technology)............. 1,000 65,094
Youth Services* (Support
Services)..................... 7,000 26,797
----------
10,611,465
----------
TOTAL COMMON STOCKS
(Cost $18,656,850)............ 20,413,084
----------
PREFERRED STOCKS -- 0.5%
(Cost $164,090)
GERMANY -- 0.5%
Gerry Weber International
(Manufacturing)............... 5,824 106,689
----------
PRINCIPAL
AMOUNT VALUE
-------- ---------
CONVERTIBLE BONDS -- 0.1%
(Cost $19,060)
FRANCE -- 0.1%
L'Europeenne d'Extincteurs
4 1/4%, 1/1/2005
(Manufacturing)............... $24,600 $ 20,244
-----------
TOTAL INVESTMENTS -- 98.7%
(Cost $18,840,000)............ 20,540,017
OTHER ASSETS LESS
LIABILITIES-- 1.3%............ 274,045
-----------
NET ASSETS-- 100.0%.............. $20,814,062
===========
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 93.6%
BRAZIL -- 0.6%
Telecomunicacoes Brasileiras
"Telebras" (ADRs)
(Telecommunications).......... 500 $ 36,344
---------
DENMARK -- 0.6%
NeuroSearch* (Miscellaneous)..... 580 38,459
---------
FINLAND -- 2.8% Nokia (Series A)
(Telecommunications).......... 1,400 170,231
---------
FRANCE -- 5.1%
Alcatel (Telecommunications)..... 30 3,671
Altran Technologies (Computer
and Business Services)........ 350 84,404
Cap Gemini* (Computer
Software)..................... 200 32,094
Genset (ADRs)* (Medical
Products and Technology)...... 1,500 40,875
SHARES VALUE
-------- ---------
FRANCE (continued) Rhone-Poulenc (Series A)
(Medical Products and
Technology)................... 1,200 $ 61,742
STMicroelectronics*
(Electronics)................. 1,200 93,675
---------
316,461
---------
GERMANY -- 1.7%
Mannesmann (Machinery and
Equipment).................... 900 104,192
---------
HONG KONG -- 0.5%
Elec & Eltek International
Holdings (Electronics)........ 150,000 28,654
---------
HUNGARY -- 0.2%
Richter Gedeon (GDRs) (Medical
Products and Technology)...... 350 14,962
---------
- ---------------
* Non-income producing security.
See Notes to Financial Statements.
P-38
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued)
SHARES VALUE
-------- ---------
INDIA -- 0.2%
Videsh Sanchar Nigam (GDRs)*+
(Telecommunications).......... 1,000 $ 12,250
--------
ISRAEL -- 4.3%
Check Point Software Technologies*
(Computer Software)........... 1,800 82,294
ECI Telecommunications
(Networking/
Communications
Infrastructure)............... 1,500 53,109
Orbotech* (Electronics).......... 1,700 80,166
Tecnomatix Technologies*
(Computer Software)........... 2,700 47,166
--------
262,735
--------
ITALY -- 1.0%
Telecom Italia
(Telecommunications).......... 7,000 59,757
--------
JAPAN -- 5.6%
CSK (Computer and Business
Services)..................... 1,000 22,912
Hirose Electronics (Electronics). 400 27,883
Murata Manufacturing
(Electronics)................. 2,000 82,661
NEC (Networking/
Communications
Infrastructure)............... 5,000 45,825
Ricoh (Machinery and
Equipment).................... 4,000 36,731
Secom (Computer and Business
Services)..................... 1,000 82,485
Sharp (Electronics).............. 5,000 44,900
--------
343,397
--------
LUXEMBOURG -- 0.6%
SBS Broadcasting* (Media)........ 1,400 38,237
--------
NETHERLANDS -- 3.6%
CMG* (Computer and
Business Services)............ 3,900 101,082
Koninklijke (Royal) Philips
Electronics (Electronics)..... 1,800 120,651
--------
221,733
--------
SHARES VALUE
-------- ---------
NORWAY -- 1.6%
Merkantildata (Computer Software) 9,000 $ 88,834
Provida* (Computer Software)..... 2,000 8,423
--------
97,257
--------
SINGAPORE -- 4.0%
Creative Technology* (Computer
Hardware/Peripherals)......... 6,100 91,500
Elec & Eltek International
(Electronics)................. 10,000 54,000
Informatics Holdings
(Computer Software)........... 70,000 24,591
Venture Manufacturing
(Electronics)................. 20,000 76,317
--------
246,408
--------
SOUTH KOREA -- 0.1%
SK Telecom Group (ADRs)
(Telecommunications).......... 451 4,595
--------
SWEDEN -- 0.7% WM-Data (Series B)
(Computer and Business
Services)..................... 1,000 42,586
--------
SWITZERLAND -- 1.0%
Novartis (Medical Products and
Technology)................... 30 58,952
--------
TAIWAN -- 1.7%
Siliconware Precision Industries
(GDRs)* (Electronics Capital
Equipment).................... 5,424 57,630
Taiwan Semiconductor Manufacturing
(ADRs)* (Semiconductors)...... 3,190 45,258
--------
102,888
--------
UNITED KINGDOM -- 15.3%
Abacus Polar (Distributors)...... 25,500 41,228
Admiral (Computer and Business
Services)..................... 3,570 68,967
Astec (Computer Hardware/
Peripherals).................. 60,000 85,068
Celltech* (Medical Products and
Technology)................... 4,700 31,253
COLT Telecom Group*
(Telecommunications).......... 6,000 87,556
- ------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
P-39
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued)
SHARES VALUE
-------- ---------
UNITED KINGDOM (continued)
Druid (Computer and Business
Services)..................... 3,500 $ 76,466
General Electric (Electronics)... 8,700 77,905
Isotron (Medical Products and
Technology)................... 5,000 46,846
Logica (Computer and Business
Services)..................... 9,950 86,210
Misys (Computer Software)........ 6,000 43,977
M.M.T. Computing (Computer
and Business Services)........ 4,500 69,957
Premier Farnell (Distributors)... 3,500 9,199
Psion (Computer Hardware/
Peripherals).................. 11,600 111,086
RM (Networking/Communications
Infrastructure)............... 10,000 76,860
Spring Group (Computer and
Business Services)............ 8,700 20,991
Torotrak* (Machinery and
Equipment).................... 3,600 5,104
--------
938,673
--------
UNITED STATES -- 42.4%
3DO* (Computer Software)......... 2,900 13,322
Activision* (Computer
Software)..................... 1,200 13,200
Amdocs* (Computer Software)...... 900 15,412
Amkor Technology*
(Semiconductors).............. 4,300 46,628
Applied Materials* (Electronics
Capital Equipment)............ 600 25,631
Autodesk (Computer Software)..... 1,200 51,187
C-Cube Microsystems*
(Semiconductors).............. 200 5,431
Cadence Design Systems*
(Computer Software)........... 2,300 68,425
CHS Electronics*
(Electronics)................. 1,800 30,488
CMP Media (Class A)*
(Media)....................... 4,700 85,775
Cognex* (Electronics Capital
Equipment).................... 1,800 35,888
Comdisco (Computer Hardware/
Peripherals).................. 1,800 30,375
Credence Systems* (Electronics
Capital Equipment)............ 1,400 25,812
Dallas Semiconductor
(Semiconductors).............. 500 20,375
SHARES VALUE
-------- ---------
UNITED STATES (continued)
DII Group* (Contract
Manufacturing/Circuit
Boards)....................... 3,500 $ 80,281
DSP Communications*
(Networking/Communications
Infrastructure)............... 1,800 27,562
Electro Scientific Industries*
(Electronics Capital
Equipment).................... 1,500 67,969
Electronic Arts* (Computer
Software)..................... 1,700 95,306
Electronics for Imaging*
(Computer Hardware/
Peripherals).................. 1,800 71,944
EMC* (Computer Hardware/
Peripherals).................. 2,000 170,000
First Data (Computer and
Business Services)............ 900 28,519
Genesys Telecommunications
Laboratories* (Computer
Software)..................... 1,700 38,462
HNC Software* (Computer
Software)..................... 1,700 68,744
Lattice Semiconductor*
(Semiconductors).............. 1,200 55,088
The Learning Company*
(Computer Software)........... 2,900 75,219
Level One Communications*
(Semiconductors).............. 900 31,978
Lexmark International Group
(Class A)* (Computer
Hardware/Peripherals)......... 900 90,450
Maxim Integrated Products*
(Semiconductors).............. 900 39,291
Microchip Technology*
(Semiconductors).............. 1,400 51,713
Microsoft* (Computer Software)... 900 124,678
NeoMagic* (Semiconductors)....... 1,700 37,559
Network Associates* (Computer
Software)..................... 2,001 132,729
Novell* (Computer Software)...... 1,100 19,972
NTL* (Telecommunications)........ 750 42,305
Parametric Technology*
(Computer Software)........... 3,000 48,750
PLATINUM Technology
International* (Computer
Software)..................... 2,300 44,203
Rational Software* (Computer
Software)..................... 1,800 47,700
- -----------
*Non-income producing security.
See Notes to Financial Statements.
P-40
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued)
SHARES VALUE
-------- ---------
UNITED STATES (continued)
RF Micro Devices* (Networking/
Communications
Infrastructure)............... 900 $ 41,372
SCI Systems* (Contract
Manufacturing/
Circuit Boards)............... 1,100 63,525
SMART Modular Technology*
(Contract Manufacturing/
Circuit Boards)............... 2,200 60,913
Storage Technology* (Computer
Hardware/Peripherals)......... 2,400 85,350
Structural Dynamics Research*
(Computer Software)........... 3,300 65,381
Synopsys* (Computer Software).... 2,547 138,016
Tele-Communications (Series A)
TCI Group*
(Telecommunications).......... 1,200 66,413
SHARES VALUE
-------- ---------
UNITED STATES (continued) Tele-Communications (Series A)
TCI Ventures Group*
(Telecommunications).......... 1,200 $ 28,388
Teradyne* (Electronics
Capital Equipment)............ 1,200 50,850
Ziff-Davis* (Media).............. 2,700 42,694
----------
2,601,273
----------
TOTAL INVESTMENTS -- 93.6%
(Cost $4,593,083)............. 5,740,044
OTHER ASSETS LESS
LIABILITIES-- 6.4%............ 389,927
----------
NET ASSETS-- 100.0%.............. $6,129,971
==========
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 97.4%
AUSTRALIA -- 1.2%
Colonial (Financial Services).... 16,800 $ 57,530
Rio Tinto (Metals)............... 400 4,734
Telstra (Telecommunications)..... 2,400 11,198
Westpac Banking (Banking)........ 7,000 46,743
---------
120,205
---------
BRAZIL -- 0.4%
Telesp Participacoes (ADRs)
(Telecommunications)............. 1,900 42,037
---------
DENMARK -- 1.4%
Tele Danmark (Series B)*
(Telecommunications)............. 1,009 136,187
---------
FRANCE -- 12.9%
AXA-UAP (Insurance).............. 1,500 217,362
Castorama Dubois
Investissements (Retailing)... 495 112,907
ELF Aquitaine (Resources)........ 1,275 147,350
Etam Developpement (Retailing)... 945 48,182
Lafarge (Construction and
Property)..................... 1,340 127,294
STMicroelectronics*
(Electronics)................. 250 19,679
SHARES VALUE
-------- ---------
FRANCE (continued)
Suez Lyonnaise des Eaux
(Construction and Property)... 761 $ 156,291
TOTAL (Resources)................ 1,148 116,243
Valeo (Manufacturing)............ 1,494 117,708
Vivendi (Industrial Goods and
Services)..................... 815 211,414
---------
1,274,430
---------
GERMANY -- 9.9%
Adidas-Salomon (Retailing)....... 766 84,424
Bayerische Hypo-und
Vereinsbank (Banking)......... 1,788 141,541
DaimlerChrysler* (Automotive
and Related).................. 1,308 130,018
Deutsche Telekom
(Telecommunications).......... 2,406 79,119
Hoechst (Chemicals).............. 2,519 104,243
Mannesmann (Industrial Goods
and Services)................. 1,591 184,189
RWE (Resources).................. 2,625 145,049
Siemens (Manufacturing).......... 1,678 110,358
---------
978,941
---------
- --------------
* Non-income producing security.
See Notes to Financial Statements.
P-41
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO (continued)
SHARES VALUE
-------- ---------
GREECE -- 1.9%
Hellenic Telecommunications
Organization
(Telecommunications).......... 2,700 $ 71,762
National Bank of Greece
(Banking)..................... 1,920 84,288
National Bank of Greece
(GDRs)*+ (Banking)............ 650 28,535
---------
184,585
---------
HUNGARY -- 2.3%
Magyar Tavkozlesi "Matav"
(ADRs) (Telecommunications)... 7,700 229,556
---------
IRELAND -- 0.9%
Bank of Ireland (Banking)........ 4,000 87,622
---------
ITALY -- 7.9%
Banca Popolare di Bresci
(Banking)..................... 5,593 136,465
Credito Italiano (Financial
Services)..................... 21,475 127,353
ENI (Resources).................. 20,858 136,386
Istituto Nazionale delle
Assicurazioni (Insurance)..... 44,756 118,279
Telecom Italia
(Telecommunications).......... 27,762 174,806
Telecom Italia Mobile
(Telecommunications).......... 12,244 90,439
---------
783,728
---------
JAPAN -- 8.5%
Benesse (Business Services)...... 500 26,922
Bridgestone (Automotive and
Related)...................... 2,000 45,208
Canon (Business Services)........ 1,000 21,282
Chugai Pharmaceutical
(Health and Household)........ 5,000 49,791
Credit Saison (Financial
Services)..................... 200 4,909
East Japan Railway
(Transportation).............. 6 33,364
Fuji Machine Manufacturing
(Industrial Goods and
Services)..................... 1,000 31,461
Honda Motor (Automotive and
Related)...................... 1,000 32,694
Hosiden (Electronics)............ 2,000 34,756
SHARES VALUE
-------- ---------
JAPAN (continued)
Japan Tobacco (Tobacco).......... 6 $ 59,749
KAO (Consumer Products).......... 2,000 44,944
Kawasaki Heavy Industries
(Industrial Goods and
Services)..................... 13,000 30,359
Mitsubishi Gas Chemical
(Chemicals)................... 11,000 30,341
Mitsui* (Industrial Goods and
Services)..................... 5,000 27,803
Mitsui Chemicals (Chemicals)..... 9,000 31,170
Mitsui Fudosan (Construction
and Property)................. 4,000 30,139
Nippon Telegraph & Telephone
(Telecommunications).......... 7 53,792
NTT Data (Telecommunications).... 8 39,551
NTT Mobile Communication
Network "NTT DoCoMo"
(Telecommunications).......... 1 40,978
Shohkoh Fund (Financial Services) 100 32,078
Sony (Consumer Products)......... 500 36,263
Takefuji (Financial Services).... 600 43,622
Tsubaki Nakashima (Manufacturing) 3,000 18,242
Uny (Retailing).................. 1,000 18,198
York-Benimaru (Retailing)........ 700 22,146
---------
839,762
---------
MEXICO -- 0.7%
Fomento Economico Mexicano
"Femsa" (ADRs) (Consumer
Products)..................... 2,500 66,562
---------
NETHERLANDS -- 6.9%
Benckiser (Series B)*
(Consumer Products)........... 2,618 171,302
ING Groep (Insurance)............ 2,429 147,952
Koninklijke Ahold (Retailing).... 2,922 107,877
Koninklijke (Royal) Philips
Electronics (Electronics)..... 1,544 103,492
Unilever (Consumer Products)..... 1,814 154,882
---------
685,505
---------
PORTUGAL -- 1.0%
Banco Portugues do Atlantico
(Financial Services).......... 281 5,749
Electricidade de Portugal
(Utilities)................... 4,273 93,920
---------
99,669
---------
- ---------------
* Non-income producing security.
+ Rule 144A security.
See Notes to Financial Statements.
P-42
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO (continued)
SHARES VALUE
-------- ---------
SOUTH KOREA -- 0.1%
Samsung Electronics
(Electronics)................. 187 $ 12,544
---------
SPAIN -- 6.9%
Actividades de Construccion y
Servicios (Construction and
Property)..................... 3,591 141,682
Centros Comerciales
Continente (Retailing)........ 3,803 128,879
Corporacion Bancaria de
Espana Argentaria (Banking)... 6,186 160,169
Endesa (Utilities)............... 4,250 112,587
Telefonica de Espana
(Telecommunications).......... 3,127 139,017
---------
682,334
---------
SWEDEN -- 5.3% Astra-Zeneca (Class A)
(Health and Household)........ 7,600 154,811
Electrolux (Series B)
(Health and Household)........ 5,508 94,571
L.M. Ericsson Telefon (Series B)
(Telecommunications).......... 5,023 119,319
Nordbanken Holding (Banking)..... 25,091 160,587
---------
529,288
---------
SWITZERLAND -- 7.5%
Nestle (Consumer Products)....... 51 110,983
Novartis (Health and
Household).................... 97 190,611
Roche Holding (Health and
Household).................... 10 121,980
UBS* (Banking)................... 369 113,332
Zurich Allied (Insurance)........ 274 202,808
---------
739,714
---------
TAIWAN -- 0.2%
The ROC Taiwan Fund
(Miscellaneous)............... 1,200 7,425
Taiwan Opportunities Fund*
(Miscellaneous)............... 1,000 12,200
---------
19,625
---------
UNITED KINGDOM -- 21.5%
Allied Zurich* (Insurance)....... 8,500 126,786
SHARES OR
PRINCIPAL
AMOUNT VALUE
--------- ---------
UNITED KINGDOM (continued)
Associated British Ports Holdings
(Transportation).............. 14,500 shs. $ 67,686
BP Amoco (Resources)............. 9,661 143,703
British American Tobacco
(Tobacco)..................... 8,500 75,197
Bunzl (Manufacturing)............ 23,000 89,819
FKI Babcock (Industrial Goods
and Services)................. 27,000 60,219
Granada Group (Entertainment
and Leisure).................. 10,500 185,695
The Great Universal Stores
(Retailing)................... 7,400 77,246
Kingfisher (Retailing)........... 9,000 97,008
Laporte (Chemicals).............. 7,000 54,092
Lloyds TSB Group (Banking)....... 7,500 106,087
National Power (Utilities)....... 13,500 118,872
Railtrack Group (Transportation). 7,699 200,695
Rolls Royce (Industrial Goods
and Services)................. 17,600 72,087
Royal Bank of Scotland
(Banking)..................... 8,500 136,300
Scottish & Newcastle (Consumer
Products)..................... 5,000 56,505
SmithKline Beecham (Health
and Household)................ 5,000 69,937
Tesco (Retailing)................ 49,500 141,594
United Utilities (Utilities)..... 9,000 124,319
WPP Group (Media)................ 20,000 120,721
---------
2,124,568
---------
TOTAL COMMON STOCKS
(Cost $7,614,257)............. 9,636,862
CONVERTIBLE BONDS -- 0.5%
(Cost $34,019)
JAPAN -- 0.5%
Sanwa International 1 1/4%,
7/31/2005 (Banking)........... 6,000,000** 44,283
---------
TOTAL INVESTMENTS -- 97.9%
(Cost $7,648,276)............. 9,681,145
OTHER ASSETS LESS
LIABILITIES-- 2.1%............ 211,684
----------
NET ASSETS-- 100.0%.............. $9,892,829
==========
- ---------------
* Non-income producing security.
** Principal amount reported in Japanese yen.
See Notes to Financial Statements.
P-43
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO
PRINCIPAL
AMOUNT VALUE
--------- ---------
CORPORATE BONDS -- 81.9%
ADVERTISING -- 0.4%
Adams Outdoor Advertising
10 3/4%, 3/15/2006............... $125,000 $ 135,000
---------
AUTOMOTIVE AND
RELATED -- 0.2%
Diamond Triumph Automotive
9 1/4%, 4/1/2008+................ 60,000 60,000
---------
BROADCASTING -- 1.8%................
Capstar Broadcasting 10 3/4%,
5/15/2006........................ 110,000 121,000
Capstar Broadcasting Partners
0% (12 3/4%**), 2/1/2009......... 250,000 203,750
Cumulus Media 10 3/8%,
7/1/2008......................... 125,000 133,125
Paxson Communications 11 5/8%,
10/1/2002........................ 125,000 128,750
---------
586,625
---------
CABLE SYSTEMS AND
SATELLITE VIDEO -- 7.8%
Avalon Cable Holdings 0%
(11 7/8%**), 12/1/2008+.......... 175,000 98,219
Avalon Cable of Michigan
Holdings 9 3/8%, 12/1/2008+...... 50,000 51,375
Charter Communications
Southeast Holdings 11 1/4%,
3/15/2006........................ 250,000 282,500
Charter Communications
Southeast Holdings 0%
(14%**), 3/15/2007............... 300,000 268,500
CSC Holdings 10 1/2%, 5/15/2016..... 125,000 147,500
Digital Television
12 1/2%, 8/1/2007................ 200,000 219,000
EchoStar DBS 12 1/2%, 7/1/2002...... 350,000 404,250
Intermedia Capital Partners IV,
11 1/4%, 8/1/2006................ 375,000 423,750
Northland Cable Television
10 1/4%, 11/15/2007.............. 150,000 158,625
Pagasus Communications
9 3/4%, 12/1/2006+............... 65,000 65,487
Rogers Cablesystems
11%, 12/1/2015................... 225,000 264,375
TCI Satellite Entertainment
10 7/8%, 2/15/2007............... 400,000 134,000
---------
2,517,581
---------
CELLULAR -- 2.9%
American Cellular
10 1/2%, 5/15/2008+.............. $175,000 $ 169,750
Centennial Cellular
10 3/4%, 12/15/2008+............. 200,000 200,000
Price Communications Cellular
Holdings 11 1/4%, 8/15/2008...... 190,000 180,500
Price Communications Wireless
11 3/4%, 7/15/2007............... 375,000 397,500
---------
947,750
---------
CHEMICALS -- 1.3%
Koppers Industries
9 7/8% 12/1/2007................. 125,000 123,125
Texas Petrochemicals
11 1/8%, 7/1/2006................ 300,000 297,000
---------
420,125
---------
COMPUTER AND RELATED
SERVICES -- 1.9%
DecisionOne 9 3/4%, 8/1/2007........ 275,000 127,875
DecisionOne Holdings
0% (11 1/2%**), 8/1/2008......... 100,000 23,500
Unisys 12%, 4/15/2003............... 175,000 196,875
Unisys 11 3/4%, 10/15/2004.......... 225,000 262,125
---------
610,375
---------
CONSUMER PRODUCTS -- 4.8%
Aki 10 1/2%, 7/1/2008............... 75,000 71,625
Aki Holdings 0% (13 1/2%**),
7/1/2009......................... 75,000 29,625
Albecca 10 3/4%, 8/15/2008+......... 45,000 44,325
Amscan Holdings
9 7/8%, 12/15/2007............... 200,000 185,000
Anchor Advanced Products
11 3/4%, 4/1/2004................ 200,000 218,000
Diamond Brands 0%
(12 7/8%**), 4/15/2009........... 175,000 62,125
Diamond Brands Operating
10 1/8%, 4/15/2008............... 150,000 135,750
French Fragrances
10 3/8%, 5/15/2007............... 200,000 198,000
Global Health Sciences
11%, 5/1/2008.................... 325,000 216,125
Iron Age 9 7/8%, 5/1/2008........... 200,000 171,000
- -------------
+ 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.
P-44
<PAGE>
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
PRINCIPAL
AMOUNT VALUE
--------- ---------
CONSUMER PRODUCTS (continued)
Iron Age Holdings
0% (12 1/8%**), 5/1/2009......... $ 80,000 $ 36,400
Moll Industries 101 1/42%, 7/1/2008. 125,000 123,125
Windmere-Durable Holdings
10%, 7/31/2008................... 60,000 56,400
---------
1,547,500
---------
CONTAINERS -- 0.6%
U.S. Can 10 1/8%, 10/15/2006........ 200,000 206,000
---------
ENERGY -- 0.8%
Abraxas Petroleum
11 1/2%, 11/1/2004............... 150,000 114,000
Universal Compression Holdings
0% (9 7/8%**), 2/15/2008......... 100,000 60,500
Universal Compression Holdings
0% (11 3/8%**), 2/15/2009........ 150,000 90,000
---------
264,500
---------
EQUIPMENT -- 1.4%
Neff 10 1/4%, 6/1/2008.............. 85,000 83,725
Neff 10 1/4%, 6/1/2008+............. 65,000 64,025
Williams Scotsman
9 7/8%, 6/1/2007................. 280,000 289,100
---------
436,850
---------
FINANCIAL SERVICES -- 1.8%
AMRESCO 10%, 3/15/2004.............. 210,000 149,625
Dollar Financial Group
10 7/8%, 11/15/2006.............. 185,000 187,775
Ocwen Capital Trust I
10 7/8%, 8/1/2027................ 150,000 120,750
Veritas Capital Trust
10%, 1/1/2028.................... 150,000 135,375
---------
593,525
---------
FOOD -- 3.4%
AFC Enterprises
10 1/4%, 5/15/2007............... 200,000 209,000
Agrilink Foods 11 7/8%, 11/1/2008+.. 50,000 51,125
AmeriKing 10 3/4%, 12/1/2006........ 150,000 157,125
AmeriServe Food Distributors
10 1/8%, 7/15/2007............... 350,000 304,500
B&G Foods 9 5/8%, 8/1/2007.......... 120,000 117,600
PRINCIPAL
AMOUNT VALUE
--------- ---------
FOOD (continued)
Carrols 9 1/2%, 12/1/2008+.......... $ 70,000 $ 71,575
Packaged Ice 9 3/4%, 2/1/2005....... 200,000 201,000
---------
1,111,925
---------
GAMING/HOTEL -- 7.1%
Alliance Gaming 10%, 8/1/2007....... 125,000 113,125
Ameristar Casino
10 1/2%, 8/1/2004................ 250,000 228,750
Aztar 13 3/4%, 10/1/2004............ 100,000 111,250
Casino America
12 1/2%, 8/1/2003................ 400,000 445,000
Casino Magic of Louisiana
13%, 8/15/2003................... 150,000 170,250
Coast Hotels & Casinos
13%, 12/15/2002.................. 200,000 225,000
Fitzgerald Gaming
12 1/4%, 12/15/2004.............. 150,000 83,250
Showboat Marina Casino
Partnership 13 1/2%, 3/15/2003... 150,000 170,250
Trump Atlantic City Funding
11 1/4%, 5/1/2006................ 550,000 486,750
Trump Hotels & Casino Resorts
Funding 15 1/2%, 6/15/2005....... 250,000 266,250
---------
2,299,875
---------
HEALTH CARE/MEDICAL
PRODUCTS -- 5.7%
ALARIS Medical
9 3/4%, 12/1/2006................ 250,000 256,250
ALARIS Medical
0% (11 1/8%**), 8/1/2008+........ 300,000 165,000
Alliance Imaging
9 5/8%, 12/15/2005............... 115,000 114,425
Dade International
11 1/8%, 5/1/2006................ 275,000 306,625
Everest Healthcare Services
9 3/4%, 5/1/2008................. 200,000 199,000
Graphic Controls
12%, 9/15/2005................... 125,000 144,375
Paracelsus Healthcare
10%, 8/15/2006................... 275,000 248,875
Sun Healthcare Group
9 1/2%, 7/1/2007................. 280,000 228,200
Vencor 9 7/8%, 5/1/2005............. 200,000 173,000
---------
1,835,750
---------
- ----------------
+ 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.
P-45
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
PRINCIPAL
AMOUNT VALUE
-------- ---------
INDUSTRIAL/
MANUFACTURING -- 3.3%
Airxcel 11%, 11/15/2007............. $ 250,000 $ 252,500
Alliance Laundry Systems
9 5/8%, 5/1/2008+................ 150,000 144,750
BPC Holding 12 1/2%, 6/15/2006...... 150,000 156,750
Coyne International Enterprises
11 1/4%, 6/1/2008................ 130,000 128,050
Day International Group
9 1/2%, 3/15/2008................ 150,000 147,375
Great Lakes Acquisition
0% (13 1/8%**), 5/15/2009........ 75,000 38,625
Great Lakes Carbon
10 1/4%, 5/15/2008............... 200,000 202,500
---------
1,070,550
---------
LEISURE -- 1.6%
Affinity Group Holding
11%, 4/1/2007.................... 250,000 260,000
AMF Bowling Worldwide
0% (12 1/4%**), 3/15/2006........ 175,000 100,625
AMF Group 10 7/8%, 3/15/2006........ 50,000 40,750
Premier Parks
9 1/4%, 4/1/2006................. 125,000 129,844
---------
531,219
---------
METALS -- 0.9%
Renco Metals 11 1/2%, 7/1/2003...... 175,000 181,125
Royal Oak Mines 12 3/4%,
8/15/2006........................ 225,000 113,625
---------
294,750
---------
PAGING -- 5.0%
Metrocall 9 3/4%, 11/1/2007......... 300,000 288,000
Metrocall 11%, 9/15/2008+........... 240,000 242,400
Mobile Telecommunication
Technologies 13 1/2%,
12/15/2002....................... 225,000 255,938
Paging Network
10%, 10/15/2008.................. 575,000 554,875
ProNet 11 7/8%, 6/15/2005........... 250,000 266,250
---------
1,607,463
---------
PAPER AND PACKAGING -- 0.6%
Crown Paper 11%, 9/1/2005........... 225,000 199,125
---------
PRINCIPAL
AMOUNT VALUE
-------- ---------
PRINTING AND
PUBLISHING -- 5.1%
Advanstar Communications
9 1/4%, 5/1/2008................. $ 200,000 $ 202,000
American Lawyer Media
9 3/4%, 12/15/2007............... 175,000 180,687
American Lawyer Media
Holdings 0% (12 1/4%**),
12/15/2008....................... 60,000 37,200
Liberty Group Publishing
9 3/8%, 2/1/2008................. 150,000 147,750
Liberty Group Publishing
0% (11 5/8%**), 2/1/2009......... 275,000 152,625
NBC Acquisition
0% (10 3/4%**), 2/15/2009........ 365,000 211,700
Perry-Judd 10 5/8%, 12/15/2007...... 165,000 174,075
Regional Independent Media
Group 10 1/2%, 7/1/2008.......... 225,000 228,375
TransWestern Holdings
0% (11 7/8%**), 11/15/2008....... 255,000 169,575
Von Hoffman Press
10 7/8%, 5/15/2007+.............. 125,000 129,375
---------
1,633,362
---------
RECORD STORAGE -- 0.3%
Pierce Leahy 11 1/8%, 7/15/2006..... 75,000 83,250
---------
RETAILING -- 2.3%
Central Tractor 10 5/8%, 4/1/2007... 175,000 180,250
Cole National Group
9 7/8%, 12/31/2006............... 100,000 104,000
Frank's Nursery & Crafts
10 1/4%, 3/1/2008................ 90,000 89,100
Musicland Group
9 7/8%, 3/15/2008................ 200,000 195,000
TM Group Holdings
11%, 5/15/2008+.................. 175,000 175,875
---------
744,225
---------
SUPERMARKETS -- 1.9%
Jitney-Jungle Stores of America
12%, 3/1/2006.................... 150,000 168,000
Jitney-Jungle Stores of America
10 3/8%, 9/15/2007............... 200,000 206,000
Pathmark Stores
11 5/8%, 6/15/2002............... 240,000 234,000
---------
608,000
---------
- --------------
+ 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.
P-46
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
PRINCIPAL
AMOUNT OR
WARRANTS VALUE
---------- ---------
TECHNOLOGY -- 3.9%
Advanced Micro Devices
11%, 8/1/2003.................... $ 375,000 $ 401,250
Hadco 9 1/2%, 6/15/2008............. 200,000 199,000
MCMS 9 3/4%, 3/1/2008............... 225,000 191,250
Therma-Wave
10 5/8%, 5/15/2004............... 150,000 75,750
Viasystems 9 3/4%, 6/1/2007......... 400,000 376,000
---------
1,243,250
---------
TELECOMMUNICATIONS -- 12.9%
BTI Telecom
10 1/2%, 9/15/2007............... 275,000 202,125
CapRock Communications
12%, 7/15/2008................... 125,000 116,250
Crown Castle International
0% (10 5/8%**),11/15/2007........ 200,000 141,000
Exodus Communications
11 1/4%, 7/1/2008................ 55,000 55,275
Facilicom International
10 1/2%, 1/15/2008............... 325,000 261,625
GCI 9 3/4%, 8/1/2007................ 175,000 174,125
GlobalStar 11 1/4%, 6/15/2004....... 275,000 209,000
GlobalStar 10 3/4%, 11/1/2004....... 75,000 54,000
Golden Sky Systems
12 3/8%, 8/1/2006+............... 325,000 338,000
ICG Holdings 0% (11 5/8%**),
3/15/2007........................ 175,000 113,750
IXC Communications
9%, 4/15/2008.................... 100,000 100,750
Nextel Communications
0% (10.65%**), 9/15/2007......... 215,000 138,137
NEXTLINK Communications
12 1/2%, 4/15/2006............... 350,000 379,750
ORBCOMM Global
14%, 8/15/2004................... 80,000 82,800
Pinnacle Holdings
0% (10%**), 3/15/2008............ 590,000 346,625
Powertel 11 1/8%, 6/1/2007.......... 250,000 250,000
PSINet 10%, 2/15/2005............... 175,000 174,125
RCN 10%, 10/15/2007................. 175,000 168,000
Splitrock Services
11 3/4%, 7/15/2008............... 55,000 47,850
Splitrock Services (warrants
expiring 7/15/2008)*............. 55 wts. 605
PRINCIPAL
AMOUNT,
SHARES,
OR WARRANTS VALUE
----------- ---------
TELECOMMUNICATIONS (continued)
Talton Holdings 11%,
6/30/2007........................ $200,000 $ 191,000
Verio 10 3/8%, 4/1/2005............. 125,000 123,125
Verio 11 1/4%, 12/1/2008+........... 140,000 141,400
Verio 13 1/2%, 6/15/2004............ 200,000 217,000
Verio (warrants expiring
6/15/2004)*...................... 800 wts. 28,000
Viatel 11 1/4%, 4/15/2008........... $ 90,000 92,475
---------
4,146,792
---------
TEXTILES -- 0.3%
Tropical Sportswear International
11%, 6/15/2008................... 100,000 105,750
---------
THEATERS -- 0.6%
Hollywood Theaters
10 5/8%, 8/1/2007................ 250,000 185,625
---------
TRANSPORTATION -- 0.8%
Atlas Air 10 3/4%, 8/1/2005......... 240,000 253,200
---------
UTILITIES -- 0.5%
Midland Cogeneration Venture
11 3/4%, 7/23/2005............... 125,000 147,269
---------
TOTAL CORPORATE BONDS
(Cost $28,042,831).............. 26,427,211
----------
PREFERRED STOCKS -- 6.8%
BROADCASTING -- 1.3%
Capstar Broadcasting Partners
12%.............................. 978 shs. 111,737
Capstar Communications 12 5/8%...... 375 45,375
Cumulus Media 13 3/4%............... 77 82,967
Sinclair Capital 11 5/8%............ 1,500 163,875
---------
403,954
---------
CABLE SYSTEMS -- 0.7%
Pegasus Communications
12 3/4% (Series A)............... 164 172,610
Pegasus Communications
12 3/4% (units).................. 50 50,750
---------
223,360
---------
- ---------------------
* Non-income producing security.
** Deferred-interest debentures pay no interest for a stipulated number of
years, after which they pay the indicated coupon rate.
+ Rule 144A security.
See Notes to Financial Statements.
P-47
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued)
SHARES VALUE
-------- ---------
CELLULAR -- 0.5%
Rural Cellular 11 3/8%.............. 185 $ 172,623
---------
FOOD -- 0.4%
Nebco Evans 11 1/4%................. 2,712 136,279
---------
HEALTH CARE/MEDICAL
PRODUCTS -- 0.3%
River Holding 11 1/2%............... 1,722 103,750
---------
INDUSTRIAL/
MANUFACTURING -- 0.3%
Day International Group 12 1/4%..... 109 100,553
---------
PRINTING AND
PUBLISHING -- 0.8%
Liberty Group Publishing 14 3/4%.... 9,534 240,735
---------
TECHNOLOGY -- 0.3%
MCMS 12 1/2%........................ 1,230 98,093
---------
TELECOMMUNICATIONS -- 2.2%
Crown Castle International
12 3/4%.......................... 155 156,356
Global Crossing Holding
10 1/2%.......................... 750 73,688
IXC Communications 12 1/2%.......... 137 140,646
Nextel Communications 11 1/8%....... 269 242,773
NEXTLINK Communications
14%.............................. 1,587 84,508
---------
697,971
---------
TOTAL PREFERRED STOCKS
(Cost $2,417,652)................ 2,177,318
-----------
SHARES OR
PRINCIPAL
AMOUNT VALUE
-------- ---------
CONVERTIBLE PREFERRED
STOCKS -- 0.8%
BROADCASTING -- 0.6%
Chancellor Media $3................. 875 shs. $ 81,703
Chancellor Media $3+................ 1,250 116,719
----------
198,422
----------
TELECOMMUNICATIONS -- 0.2%
IXC Communications 6 3/4%+.......... 1,160 38,425
Viatel 10%.......................... 34 3,842
----------
42,267
----------
TOTAL CONVERTIBLE PREFERRED
STOCKS
(Cost $187,690).................. 240,689
----------
REPURCHASE AGREEMENT -- 6.8%
(Cost $2,200,000)
State Street Bank and Trust
4.45%, dated 12/31/1998,
maturing 1/4/1999
collateralized by: $1,650,000
US Treasury Notes 11 5/8%,
11/15/2004, with a fair market
value of $2,245,944.............. $2,200,000 2,200,000
----------
TOTAL INVESTMENTS -- 96.3%
(Cost $32,848,173).............. 31,045,218
OTHER ASSETS LESS
LIABILITIES-- 3.7%............... 1,207,590
----------
NET ASSETS-- 100.0%................. $32,252,808
===========
- --------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 35.2%
AEROSPACE -- 0.6%
General Dynamics................. 1,500 $ 87,938
---------
AUTOMOTIVE AND
RELATED -- 1.4%
DaimlerChrysler.................. 2,199 211,241
---------
BANKING AND FINANCE -- 4.5%
Bank of New York................. 4,400 177,100
BankAmerica...................... 1,018 61,207
SHARES VALUE
-------- ---------
BANKING AND FINANCE
(continued)
Citigroup........................ 2,000 $99,000
Hartford Financial Services
Group......................... 2,200 120,725
Morgan (J.P.).................... 250 26,266
Washington Mutual................ 4,536 173,218
---------
657,516
---------
BUSINESS SERVICES -- 0.3%
Electronic Data Systems.......... 850 42,712
---------
- ------------
+ Rule 144A security.
See Notes to Financial Statements.
P-48
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO (continued)
SHARES VALUE
-------- ---------
CAPITAL GOODS -- 0.2%
Crown Cork & Seal................ 1,000 $ 30,813
---------
CHEMICALS -- 0.5%
duPont (E.I.) de Nemours......... 1,300 68,981
---------
CONSUMER GOODS AND
SERVICES -- 4.5%
Anheuser-Busch................... 1,400 91,875
General Mills.................... 2,500 194,375
Russell.......................... 3,600 73,125
Sara Lee......................... 8,600 242,412
Stanley Works.................... 2,100 58,275
---------
660,062
---------
DRUGS AND HEALTH
CARE -- 3.0%
American Home Products........... 2,200 123,888
Baxter International............. 800 51,450
Bristol-Myers Squibb............. 2,000 267,625
---------
442,963
---------
ELECTRIC AND GAS
UTILITIES -- 4.5%
FPL Group........................ 2,500 154,062
Sonat............................ 4,700 127,194
Unicom........................... 4,700 181,244
Williams Companies............... 6,000 187,125
---------
649,625
---------
ENERGY -- 4.3%
BP Amoco (ADRs)
(United Kingdom).............. 650 58,256
Exxon............................ 1,900 138,937
Mobil............................ 1,900 165,538
Royal Dutch Petroleum
(Netherlands)................. 2,300 110,112
Unocal........................... 5,100 148,856
---------
621,699
---------
FOOD -- 0.5%
ConAgra.......................... 2,400 75,600
---------
INSURANCE -- 2.6%
American General................. 2,200 171,600
Chubb............................ 1,200 77,850
Lincoln National................. 1,500 122,719
---------
372,169
---------
SHARES OR
PRINCIPAL
AMOUNT VALUE
-------- ---------
MACHINERY AND
EQUIPMENT -- 1.2%
GATX............................. 4,800 shs. $ 181,800
---------
PAPER AND PACKAGING -- 0.4%
Mead............................. 1,800 52,763
---------
RETAILING -- 0.8%
May Department Stores............ 1,900 114,712
---------
TOBACCO -- 1.6%
Philip Morris.................... 4,400 235,400
---------
TRANSPORTATION -- 0.4%
Norfolk Southern................. 1,800 57,038
---------
UTILITIES/
TELECOMMUNICATIONS -- 3.9%
DQE.............................. 1,700 74,694
GTE.............................. 3,700 249,519
Harris........................... 1,000 36,625
SBC Communications............... 4,000 214,500
---------
575,338
---------
TOTAL COMMON STOCKS
(Cost $4,320,812)............. 5,138,370
---------
CORPORATE BONDS -- 31.9%
AUTOMOTIVE -- 3.9%
Chrysler Financial
6.09%, 4/6/2001................ $300,000 304,952
Ford Motor Credit
6 3/4%, 8/15/2008.............. 250,000 266,009
---------
570,961
---------
BANKING AND
FINANCE -- 7.4%
Associates Corp. of North
America 6 1/2%, 8/15/2002...... 300,000 310,023
Capital One Bank
8 1/8%, 3/1/2000............... 250,000 254,428
First USA Bank
5 3/4%, 1/15/1999.............. 100,000 100,001
GMAC 6 1/2%, 12/5/2005............ 200,000 210,053
Heller Financial
5 7/8%, 11/1/2000.............. 200,000 199,887
---------
1,074,392
---------
- ----------------
See Notes to Financial Statements.
P-49
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO (continued)
PRINCIPAL
AMOUNT VALUE
-------- ---------
ELECTRIC AND GAS
UTILITIES -- 2.1%
Consumers Energy
6 3/8%, 2/1/2008................. $300,000 $ 302,998
---------
ENERGY -- 2.9%
Petroleum Geo-Services
7 1/2%, 3/31/2007................ 400,000 426,184
---------
FUNERAL SERVICES -- 1.8%
Loewen Group International
7 1/2%, 4/15/2001................ 300,000 268,500
---------
MEDIA -- 6.1%
Time Warner 7 3/4%, 6/15/2005....... 500,000 555,022
Viacom 7 3/4%, 6/1/2005............. 300,000 327,992
---------
883,014
---------
TECHNOLOGY -- 4.9%
Dell Computer 6.55%,
4/15/2008........................ 400,000 416,222
First Data 5.80%, 12/15/2008........ 100,000 99,085
International Business Machines
5.37%, 9/22/2003................ 200,000 202,312
---------
717,619
---------
UTILITIES/
TELECOMMUNICATIONS -- 2.8%
MCI WorldCom 6.40%,
8/15/2005........................ 200,000 207,568
Sprint Capital 6 1/8%, 11/15/2008... 200,000 204,446
---------
412,014
---------
TOTAL CORPORATE BONDS
(Cost $4,581,625)................ 4,655,682
---------
US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES -- 26.8% US GOVERNMENT SECURITIES
- -- 13.6% US Treasury Notes:
6 1/4%, 6/30/2002................ 300,000 314,906
6 1/2%, 5/15/2005................ 500,000 548,125
6 1/2%, 10/15/2006............... 500,000 555,157
6 5/8%, 5/15/2007................ 500,000 562,500
---------
PRINCIPAL
AMOUNT
OR SHARES VALUE
--------- ---------
Total US Government
Securities
(Cost $1,873,774)................ $1,980,688
---------
US GOVERNMENT
AGENCY SECURITIES -- 13.2%
US Government Title XI
(Bay Transportation) 7.30%,
6/1/2021......................... $200,000 218,456
FHLMC Gold 5 1/2%, 7/1/2013++....... 297,919 294,289
Federal National Mortgage
Association:
5.90%, 6/19/2003................. 300,000 304,019
6.35%, 5/18/2005................. 300,000 307,076
5.795%, 1/1/2009................. 200,000 201,000
6%, 12/1/2028++.................. 200,000 197,438
Government National Mortgage
Association, Mortgage-backed
Passed-through Certificates:++
6 1/2%, 12/15/2028............... 200,000 202,188
6%, 12/20/2028................... 200,000 198,250
---------
Total US Government Agency
Securities (Cost $1,902,347)..... 1,922,716
---------
TOTAL US GOVERNMENT
AND GOVERNMENT
AGENCY SECURITIES
(Cost $3,776,121)................ 3,903,404
---------
CONVERTIBLE PREFERRED
STOCKS -- 4.4%
BANKING AND FINANCE -- 2.4%
Salomon Smith Barney 7 5/8%......... 7,500 shs. 345,000
---------
INSURANCE -- 2.0%
St. Paul Capital 6%................. 4,500 290,250
---------
TOTAL CONVERTIBLE PREFERRED
STOCKS (Cost $439,020)........... 635,250
---------
TOTAL INVESTMENTS -- 98.3%
(Cost $13,117,578)............... 14,332,706
OTHER ASSETS LESS
LIABILITIES-- 1.7%............... 249,519
---------
NET ASSETS-- 100.0%.............. $14,582,225
===========
- ----------------
++ 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.
P-50
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN LARGE-CAP VALUE PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 97.4%
AEROSPACE -- 4.7%
Goodrich (B.F.).................. 5,000 $ 179,375
---------
AUTOMOTIVE AND
RELATED -- 6.9%
Ford Motor....................... 2,100 123,244
General Motors................... 2,000 143,125
---------
266,369
---------
BANKING -- 11.0%
Bank of New York................. 4,000 161,000
BankAmerica...................... 2,205 132,576
Summit Bancorp................... 3,000 131,062
---------
424,638
---------
DRUGS AND
HEALTH CARE -- 7.7%
Bristol-Myers Squibb............. 1,100 147,194
United Healthcare................ 3,500 150,719
---------
297,913
---------
ENERGY -- 2.8%
Texaco........................... 2,000 105,750
---------
FINANCE AND
INSURANCE -- 16.0%
Citigroup........................ 2,100 103,950
The Equitable Companies.......... 2,700 156,262
Fannie Mae....................... 1,600 118,400
St. Paul Companies............... 3,000 104,250
Washington Mutual................ 3,425 130,792
---------
613,654
---------
FOOD -- 2.7%
Dole Food........................ 3,500 105,000
---------
HOUSEHOLD PRODUCTS
AND FURNISHINGS -- 8.9%
Armstrong World Industries....... 1,600 96,500
Dial............................. 4,400 127,050
Kimberly-Clark................... 2,200 119,900
---------
343,450
---------
SHARES VALUE
-------- ---------
INDUSTRIAL EQUIPMENT -- 2.7%
General Electric................. 1,000 $ 102,063
---------
MEDICAL PRODUCTS AND
TECHNOLOGY -- 3.3%
Baxter International............. 2,000 128,625
---------
OFFICE EQUIPMENT -- 3.7%
Xerox............................ 1,200 141,600
---------
PACKAGING -- 2.7%
Crown Cork & Seal................ 3,400 104,762
---------
PAPER AND FOREST
PRODUCTS -- 6.6%
Champion International........... 2,900 117,450
Georgia-Pacific Group............ 2,350 137,622
---------
255,072
---------
RETAIL TRADE -- 10.8%
May Department Stores............ 1,900 114,713
Penney (J.C.).................... 2,750 128,906
Sears, Roebuck................... 4,000 170,000
---------
413,619
---------
SPECIALTY MATERIALS -- 2.9%
Raychem.......................... 3,450 111,478
---------
TOBACCO -- 4.0%
Philip Morris.................... 2,850 152,475
---------
TOTAL INVESTMENTS -- 97.4%
(Cost $3,637,303)............. 3,745,843
OTHER ASSETS LESS
LIABILITIES-- 2.6%............ 99,980
----------
NET ASSETS-- 100.0%.............. $3,845,823
==========
- --------------
See Notes to Financial Statements.
P-51
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
SELIGMAN SMALL-CAP VALUE PORTFOLIO
SHARES VALUE
-------- ---------
COMMON STOCKS -- 98.1%
ADVERTISING -- 3.8%
True North Communications........ 3,500 $ 94,062
---------
APPAREL AND
TEXTILES -- 4.9%
Cutter & Buck*................... 3,250 121,672
---------
APPLIANCES -- 4.2%
Windmere-Durable Holdings........ 13,500 104,625
---------
BANKING -- 2.8%
Bay View Capital................. 3,200 69,000
---------
BUILDING AND
CONSTRUCTION -- 2.5%
Dal-Tile International*.......... 6,000 62,250
---------
CAPITAL GOODS -- 4.4%
Apogee Enterprises............... 5,200 58,500
BMC Industries................... 8,100 50,625
---------
109,125
---------
COMPUTER SOFTWARE -- 2.5%
Dialogic*........................ 3,100 60,934
---------
DISTRIBUTORS -- 5.4%
Cubic............................ 3,050 57,187
Elsag Bailey Process Auto (ADRs)*
(Netherlands).................. 1,950 76,294
---------
133,481
---------
FINANCE AND INSURANCE -- 3.6%
AMRESCO*......................... 10,000 87,812
---------
GARDEN PRODUCTS -- 3.0%
Acorn Products*.................. 10,700 72,894
---------
INDUSTRIAL GOODS AND
SERVICES -- 3.5%
Furon............................ 5,000 85,313
---------
MACHINERY -- 3.8%
Stewart & Stevenson Services..... 9,700 93,059
---------
SHARES VALUE
-------- ---------
MANUFACTURING -- 3.0%
Mueller Industries*.............. 3,700 $ 75,156
---------
MEDICAL PRODUCTS AND
TECHNOLOGY -- 3.8%
ChiRex*.......................... 4,400 93,500
---------
OIL AND GAS -- 5.1%
Friede Goldman International*.... 5,200 59,150
Marine Drilling*................. 8,800 67,650
---------
126,800
---------
PACKAGING/
CONTAINERS -- 3.3%
Applied Extrusion
Technologies*................. 10,000 81,250
---------
PLASTICS -- 3.2%
Lamson & Sessions*............... 15,500 79,438
---------
PRINTING AND
PUBLISHING -- 5.6%
Cadmus Communications............ 3,050 58,141
Merrill.......................... 4,200 81,112
---------
139,253
---------
RESTAURANTS -- 5.7%
Avado Brands..................... 7,600 63,650
Foodmaker*....................... 3,450 76,116
---------
139,766
---------
RETAIL TRADE -- 8.8%
Abercrombie & Fitch (Class A)*... 1,000 70,750
Stage Stores*.................... 7,500 70,312
The Wet Seal (Class A)*.......... 2,500 75,469
---------
216,531
---------
SPECIALTY CHEMICALS -- 2.2%
Dexter........................... 1,750 55,016
---------
SPECIALTY
METALS/STEEL -- 1.6%
Olympic Steel*................... 8,000 40,125
---------
TOBACCO -- 3.4%
Consolidated Cigar Holding*...... 4,800 84,900
---------
- --------------
* Non-income producing security.
See Notes to Financial Statements.
P-52
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
SELIGMAN SMALL-CAP VALUE PORTFOLIO (continued)
SHARES VALUE
-------- ---------
TRANSPORTATION -- 8.0%
ABC Rail Products*............... 7,000 $ 85,969
Pittston BAX Group............... 10,000 111,250
---------
197,219
---------
TOTAL INVESTMENTS -- 98.1%
(Cost $2,587,518)............. 2,423,181
VALUE
----------
OTHER ASSETS LESS
LIABILITIES-- 1.9%............ $45,750
----------
NET ASSETS-- 100.0%.............. $2,468,931
==========
- -------------
* Non-income producing security.
See Notes to Financial Statements.
P-53
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN
SELIGMAN SELIGMAN COMMUNICATIONS
SELIGMAN SELIGMAN CASH COMMON AND
BOND CAPITAL MANAGEMENT STOCK INFORMATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (see
portfolios of investments):
Long-term holdings................. $6,694,244 $23,240,892 $ -- $56,781,324 $120,728,001
Short-term holdings................ 400,000 1,000,000 10,391,590 5,400,000 600,000
---------- ----------- ----------- ----------- ------------
Total Investments 7,094,244 24,240,89 10,391,590 62,181,324 121,328,001
Cash............................... 77,844 97,894 118,378 67,770 73,789
Interest and dividends
receivable...................... 97,222 4,867 19,229 86,436 10,994
Receivable for Capital
Stock sold...................... 67,486 -- 2,301 310,309 12,978
Receivable from associated
companies....................... 4,409 -- 7,009 -- --
Receivable for securities sold..... -- 714,472 -- -- 2,448,223
---------- ----------- ----------- ----------- ------------
TOTAL ASSETS....................... 7,341,205 25,058,125 10,538,507 62,645,839 123,873,985
---------- ----------- ----------- ----------- ------------
LIABILITIES:
Payable for Capital Stock
redeemed........................ 56 40,058 29 513 840,331
Payable for securities purchased... -- 847,446 -- -- 632,714
Unrealized depreciation on
foreign currencies and
forward currency contracts...... -- -- -- -- --
Accrued expenses, taxes,
and other....................... 20,793 29,927 18,583 57,268 122,009
---------- ----------- ----------- ----------- ------------
TOTAL LIABILITIES.................. 20,849 917,431 18,612 57,781 1,595,054
---------- ----------- ----------- ----------- ------------
NET ASSETS......................... $7,320,356 $24,140,694 $10,519,895 $62,588,058 $122,278,931
========== =========== =========== =========== ============
COMPOSITION OF NET ASSETS:
Capital Stock, at par.............. $ 705 $ 1,160 $ 10,519 $ 3,360 $ 7,132
Additional paid-in-capital......... 7,065,028 17,101,537 10,508,236 46,881,737 99,821,375
Undistributed/accumulated net
investment income (loss)........ (4,509) (5,145) -- (5,229) (2,533)
Undistributed/accumulated net
realized gain (loss)............ -- 481,840 1,140 (4,074) 3,659
Net unrealized appreciation
(depreciation) of investments... 259,132 6,561,302 -- 15,712,264 22,449,298
Net unrealized appreciation
(depreciation) on translation
of assets and liabilities deno-
minated in foreign currencies and
forward currency contracts...... -- -- -- -- --
---------- ----------- ----------- ----------- ------------
NET ASSETS......................... $7,320,356 $24,140,694 $10,519,895 $62,588,058 $122,278,931
========== =========== =========== =========== ============
SHARES OF CAPITAL STOCK
OUTSTANDING
($.001 par value)............... 705,129 1,160,023 10,518,755 3,360,130 7,132,343
========== =========== =========== =========== ============
NET ASSET VALUE PER SHARE.......... $10.38 $20.81 $1.00 $18.63 $17.14
========== =========== =========== =========== ============
</TABLE>
- ----------------------------
See Notes to Financial Statements.
P-54
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN SELIGMAN
HENDERSON HENDERSON HENDERSON SELIGMAN
SELIGMAN GLOBAL GROWTH GLOBAL SMALLER GLOBAL HENDERSON
FRONTIER OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (see
portfolios of investments):
Long-term holdings................. $38,611,861 $8,127,428 $20,540,017 $5,740,044 $9,681,145
Short-term holdings................ 1,900,000 -- -- -- --
----------- ---------- ----------- ---------- ----------
Total Investments 40,511,861 8,127,428 20,540,017 5,740,044 9,681,145
Cash............................... 63,831 644,561 311,060 429,258 230,849
Interest and dividends
receivable...................... 2,201 10,390 36,130 4,880 35,780
Receivable for Capital
Stock sold...................... 497 -- 1,893 2,727 --
Receivable from associated
companies....................... -- -- 6,222 2,670 262
Receivable for securities sold..... -- -- 78,597 12,191 2,503
----------- ---------- ----------- ---------- ----------
TOTAL ASSETS....................... 40,578,390 8,782,379 20,973,919 6,191,770 9,950,539
----------- ---------- ----------- ---------- ----------
LIABILITIES:
Payable for Capital Stock
redeemed........................ 1,207,750 6,829 -- 34,431 3,695
Payable for securities purchased... 173,004 100,271 86,553 -- --
Unrealized depreciation on
foreign currencies and
forward currency contracts...... -- 10,067 35,075 8,730 24,636
Accrued expenses, taxes,
and other....................... 49,965 21,917 38,229 18,638 29,379
----------- ---------- ----------- ---------- ----------
TOTAL LIABILITIES.................. 1,430,719 139,084 159,857 61,799 57,710
----------- ---------- ----------- ---------- ----------
NET ASSETS......................... $39,147,671 $8,643,295 $20,814,062 $6,129,971 $9,892,829
=========== ========== =========== ========== ==========
COMPOSITION OF NET ASSETS:
Capital Stock, at par.............. $ 2,517 $ 649 $ 1,528 $ 442 $ 644
Additional paid-in-capital......... 36,334,865 7,075,238 19,423,247 4,935,072 7,869,584
Undistributed/accumulated net
investment income (loss)........ (2,403) (1,513) (2,344) (1,509) (3,713)
Undistributed/accumulated net
realized gain (loss)............ (1,123,646) (367,113) (274,496) 57,662 17,083
Net unrealized appreciation
(depreciation) of investments... 3,936,338 1,816,901 1,585,902 1,095,960 1,842,381
Net unrealized appreciation
(depreciation) on translation
of assets and liabilities deno-
minated in foreign currencies and
forward currency contracts...... -- 119,133 80,225 42,344 166,850
----------- ---------- ----------- ---------- ----------
NET ASSETS......................... $39,147,671 $8,643,295 $20,814,062 $6,129,971 $9,892,829
=========== ========== =========== ========== ==========
SHARES OF CAPITAL STOCK
OUTSTANDING
($.001 par value)............... 2,516,965 648,509 1,528,209 442,463 643,753
=========== ========== =========== ========== ==========
NET ASSET VALUE PER SHARE.......... $15.55 $13.33 $13.62 $13.85 $15.37
=========== ========== =========== ========== ==========
</TABLE>
- -------------------------
See Notes to Financial Statements.
P-54a
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN SELIGMAN
HIGH-YIELD SELIGMAN LARGE-CAP SMALL-CAP
BOND INCOME VALUE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (see
portfolios of investments):
Long-term holdings................. $28,845,218 $14,332,706 $3,745,843 $2,423,181
Short-term holdings................ 2,200,000 -- -- --
----------- ----------- ---------- ----------
Total Investments 31,045,218 14,332,706 3,745,843 2,423,181
Cash............................... 92,190 180,630 122,886 54,395
Interest and dividends
receivable...................... 726,955 111,042 5,437 1,102
Receivable for Capital
Stock sold...................... 417,318 11,946 -- --
Receivable from associated
companies....................... -- 847 1,043 1,363
Receivable for securities sold..... 5,354 -- -- --
----------- ----------- ---------- ----------
TOTAL ASSETS....................... 32,287,035 14,637,171 3,875,209 2,480,041
----------- ----------- ---------- ----------
LIABILITIES:
Payable for Capital Stock
redeemed........................ -- 30,729 18,165 858
Payable for securities purchased... -- -- -- --
Unrealized depreciation on
foreign currencies and
forward currency contracts...... -- -- -- --
Accrued expenses, taxes,
and other....................... 34,227 24,217 11,221 10,252
----------- ----------- ---------- ----------
TOTAL LIABILITIES.................. 34,227 54,946 29,386 11,110
----------- ----------- ---------- ----------
NET ASSETS......................... $32,252,808 $14,582,225 $3,845,823 $2,468,931
=========== =========== ========== ==========
COMPOSITION OF NET ASSETS:
Capital Stock, at par.............. $ 2,966 $ 1,324 $ 398 $ 338
Additional paid-in-capital......... 34,040,154 13,444,085 3,771,795 2,633,353
Undistributed/accumulated net
investment income (loss)........ 19,492 (3,094) (420) (423)
Undistributed/accumulated net
realized gain (loss)............ (6,849) (75,218) (34,490) --
Net unrealized appreciation
(depreciation) of investments... (1,802,955) 1,215,128 108,540 (164,337)
Net unrealized appreciation
(depreciation) on translation
of assets and liabilities deno-
minated in foreign currencies and
forward currency contracts...... -- -- -- --
----------- ----------- ---------- ----------
NET ASSETS......................... $32,252,808 $14,582,225 $3,845,823 $2,468,931
=========== =========== ========== ==========
SHARES OF CAPITAL STOCK
OUTSTANDING
($.001 par value)............... 2,965,856 1,324,302 398,168 337,678
=========== =========== ========== ==========
NET ASSET VALUE PER SHARE.......... $10.87 $11.01 $9.66 $7.31
=========== =========== ========== ==========
</TABLE>
- -----------------------
See Notes to Financial Statements.
P-55
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN
SELIGMAN SELIGMAN COMMUNICATIONS
SELIGMAN SELIGMAN CASH COMMON AND
BOND CAPITAL MANAGEMENT STOCK INFORMATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest........................... $424,426 $ 75,340 $540,798 $ 170,116 $ 229,459
Dividends.......................... -- 93,947 -- 1,021,009 78,079
-------- ---------- -------- ----------- -----------
TOTAL INVESTMENT INCOME**.......... 424,426 169,287 540,798 1,191,125 307,538
-------- ---------- -------- ----------- -----------
EXPENSES:
Management fee..................... 27,438 86,101 40,831 224,301 748,401
Custody and related services....... 7,576 13,731 4,331 18,893 55,629
Auditing fee....................... 6,166 10,666 8,266 22,966 35,666
Directors' fees and expenses....... 5,021 5,214 5,062 5,651 6,175
Shareholder reports and
communications.................. 3,937 3,937 3,937 3,937 1,921
Registration....................... 2,938 4,170 3,101 6,548 8,478
Legal fee.......................... 1,265 1,311 1,245 1,414 1,543
Miscellaneous...................... 2,320 3,719 1,862 6,573 9,685
-------- ---------- -------- ----------- -----------
TOTAL EXPENSES BEFORE
WAIVER/REIMBURSEMENT............ 56,661 128,849 68,635 290,283 867,498
Waiver/reimbursement of
expenses........................ (15,486) -- (68,635) -- --
-------- ---------- -------- ----------- -----------
TOTAL EXPENSES AFTER
WAIVER/REIMBURSEMENT............ 41,175 128,849 -- 290,283 867,498
-------- ---------- -------- ----------- -----------
NET INVESTMENT INCOME (LOSS)....... 383,251 40,438 540,798 900,842 (559,960)
-------- ---------- -------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) on
investments..................... 123,784 1,655,402 1,53 3,819,226 5,762,699
Net realized gain (loss) from
foreign currency transactions... -- -- -- -- --
Net change in unrealized
appreciation/depreciation
of investments.................. 37,175 2,577,044 -- 7,459,005 28,175,377
Net change in unrealized
depreciation on translation of
assets and liabilities denominated
in foreign currencies and
forward currency contracts...... -- -- -- -- --
-------- ---------- -------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS.................... 160,959 4,232,446 1,538 11,278,231 33,938,076
-------- ---------- -------- ----------- -----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS.......... $544,210 $4,272,884 $542,336 $12,179,073 $33,378,116
======== ========== ======== =========== ===========
<FN>
- --------------------
* For the period May 1, 1998, commencement of operations, to December 31, 1998.
** Net of foreign tax withheld
as follows: $ -- $ 281 $ -- $ 4,562 $ 1,877
See Notes to Financial Statements.
</FN>
</TABLE>
P-56
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN SELIGMAN
HENDERSON HENDERSON HENDERSON SELIGMAN
SELIGMAN GLOBAL GROWTH GLOBAL SMALLER GLOBAL HENDERSON
FRONTIER OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest........................... $ 126,546 $ 26,258 $ 65,266 $ 25,410 $ 19,011
Dividends.......................... 50,634 72,454 223,528 22,181 172,921
--------- ---------- ---------- ---------- ----------
TOTAL INVESTMENT INCOME**.......... 177,180 98,712 288,794 47,591 191,932
--------- ---------- ---------- ---------- ----------
EXPENSES:
Management fee..................... 323,502 73,741 215,796 49,036 100,225
Custody and related services....... 38,105 22,615 81,743 20,281 56,636
Auditing fee....................... 15,666 6,166 10,666 5,366 6,866
Directors' fees and expenses....... 5,477 4,902 5,155 4,878 5,035
Shareholder reports and
communications.................. 1,921 1,887 1,887 1,887 1,887
Registration....................... 4,137 3,050 3,929 2,914 3,317
Legal fee.......................... 1,383 1,420 1,441 1,415 1,423
Miscellaneous...................... 5,502 4,186 3,590 2,675 3,006
--------- ---------- ---------- ---------- ----------
TOTAL EXPENSES BEFORE
WAIVER/REIMBURSEMENT............ 395,693 117,967 324,207 88,452 178,395
Waiver/reimbursement of
expenses........................ -- (14,740) (22,085) (19,816) (38,092)
--------- ---------- ---------- ---------- ----------
TOTAL EXPENSES AFTER
WAIVER/REIMBURSEMENT............ 395,693 103,227 302,122 68,636 140,303
--------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME (LOSS)....... (218,513) (4,515) (13,328) (21,045) 51,629
--------- ---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) on
investments..................... (1,118,028) (276,305) 379,220 327,368 232,518
Net realized gain (loss) from
foreign currency transactions... -- (36,450) (341,781) 1,871 (58,342)
Net change in unrealized
appreciation/depreciation
of investments.................. 896,484 1,405,297 442,586 1,121,131 749,881
Net change in unrealized
depreciation on translation of
assets and liabilities denominated
in foreign currencies and
forward currency contracts...... -- 239,832 782,308 73,954 412,820
--------- ---------- ---------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS.................... (221,544) 1,332,374 1,262,333 1,524,324 1,336,877
--------- ---------- ---------- ---------- ----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS.......... $(440,057) $1,327,859 $1,249,005 $1,503,279 $1,388,506
========= ========== ========== ========== ==========
<FN>
- --------------------
* For the period May 1, 1998, commencement of operations, to December 31, 1998.
** Net of foreign tax withheld
as follows: $ -- $ 6,398 $ 28,620 $ 3,461 $ 18,270
See Notes to Financial Statements.
</FN>
</TABLE>
P-56a
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
For the Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN SELIGMAN
HIGH-YIELD SELIGMAN LARGE-CAP SMALL-CAP
BOND INCOME VALUE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest........................... $2,717,284 $ 467,836 $ 642 $ 0--
Dividends.......................... 212,942 183,523 21,191 5,235
---------- ---------- ---------- ----------
TOTAL INVESTMENT INCOME**.......... 2,930,226 651,359 21,833 5,235
---------- ---------- ---------- ----------
EXPENSES:
Management fee..................... 142,265 57,362 9,139 7,951
Custody and related services....... 35,962 4,470 1,355 1,730
Auditing fee....................... 13,666 8,866 4,229 4,029
Directors' fees and expenses....... 5,171 5,128 3,224 3,250
Shareholder reports and
communications.................. 1,921 3,933 2,780 2,780
Registration....................... 5,032 3,051 2,482 2,432
Legal fee.......................... 1,338 1,287 983 982
Miscellaneous...................... 3,869 3,119 1,391 1,372
---------- ---------- ---------- ----------
TOTAL EXPENSES BEFORE
WAIVER/REIMBURSEMENT............ 209,224 87,216 25,583 24,526
Waiver/reimbursement of
expenses........................ (10,046) (1,176) (16,444) (16,575)
---------- ---------- ---------- ----------
TOTAL EXPENSES AFTER
WAIVER/REIMBURSEMENT............ 199,178 86,040 9,139 7,951
---------- ---------- ---------- ----------
NET INVESTMENT INCOME (LOSS)....... 2,731,048 565,319 12,694 (2,716)
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) on
investments..................... 10,307 124,492 67,875 271,788
Net realized gain (loss) from
foreign currency transactions... -- -- -- --
Net change in unrealized
appreciation/depreciation
of investments.................. (2,638,907) 381,475 108,540 (164,337)
Net change in unrealized
depreciation on translation of
assets and liabilities denominated
in foreign currencies and
forward currency contracts...... -- -- -- --
---------- ---------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS.................... (2,628,600) 505,967 176,415 107,451
---------- ---------- ---------- ----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS.......... $ 102,448 $1,071,286 $ 189,109 $ 104,735
========== ========== ========== ==========
<FN>
- --------------------
* For the period May 1, 1998, commencement of operations, to December 31, 1998.
** Net of foreign tax withheld
as follows: $ -- $ 562 $ -- $ --
See Notes to Financial Statements.
</FN>
</TABLE>
P-57
<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,
----------------------- -------------------------- -----------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............. $ 383,251 $ 359,627 $ 40,438 $ 28,503 $ 540,798 $ 512,275
Net realized gain (loss) on investments.. 123,784 2,573 1,655,402 1,456,363 1,538 --
Net realized gain (loss) from foreign
currency transactions................. -- -- -- -- -- --
Net change in unrealized appreciation/
depreciation of investments........... 37,175 158,584 2,577,044 1,876,910 -- --
Net change in unrealized appreciation/
depreciation on translation of assets
and liabilities denominated in foreign
currencies and forward currency
contracts............................. -- -- -- -- -- --
---------- ---------- ----------- ----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS....................... 544,210 520,784 4,272,884 3,361,776 542,336 512,275
---------- ---------- ----------- ----------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................... (383,617) (360,523) (42,246) (29,292) (540,798) (512,275)
Realized gain on investments............. (72,294) -- (1,310,739) (1,319,186) -- --
---------- ---------- ----------- ----------- ----------- ----------
DECREASE IN NET ASSETS
FROM DISTRIBUTIONS.................... (455,911) (360,523) (1,352,985) (1,348,478) (540,798) (512,275)
---------- ---------- ----------- ----------- ----------- ----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares......... 2,476,931 3,014,160 11,707,365 7,491,753 32,521,913 25,875,970
Investment of dividends.................. 383,617 360,523 42,246 29,292 540,798 512,275
Shares issued in payment of gain
distributions......................... 72,294 -- 1,310,739 1,319,186 -- --
---------- ---------- ----------- ----------- ----------- ----------
Total.................................... 2,932,842 3,374,683 13,060,350 8,840,231 33,062,711 26,388,245
---------- ---------- ----------- ----------- ----------- ----------
Cost of shares redeemed.................. (2,932,822) (1,317,788) (12,239,347) (4,766,794) (31,179,640)(27,507,851)
---------- ---------- ----------- ----------- ----------- ----------
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS.......................... 20 2,056,895 821,003 4,073,437 1,883,071 (1,119,606)
---------- ---------- ----------- ----------- ----------- ----------
INCREASE (DECREASE) IN
NET ASSETS............................ 88,319 2,217,156 3,740,902 6,086,735 1,884,609 (1,119,606)
NET ASSETS:
Beginning of Year........................ 7,232,037 5,014,881 20,399,792 14,313,057 8,635,286 9,754,892
---------- ---------- ----------- ----------- ----------- ----------
END OF YEAR.............................. $7,320,356 $7,232,037 $24,140,694 $20,399,792 $10,519,895 $8,635,286
========== ========== =========== =========== =========== ==========
</TABLE>
- --------------------
See Notes to Financial Statements.
P-58
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SELIGMAN SELIGMAN
COMMON STOCK COMMUNICATIONS AND
PORTFOLIO INFORMATION PORTFOLIO
----------------------- --------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............. $ 900,842 $ 858,211 $ (559,960) $ (378,304)
Net realized gain (loss) on investments.. 3,819,226 6,975,977 5,762,699 25,855,124
Net realized gain (loss) from foreign
currency transactions................. -- -- -- --
Net change in unrealized appreciation/
depreciation of investments........... 7,459,005 523,788 28,175,377 (10,538,214)
Net change in unrealized appreciation/
depreciation on translation of assets
and liabilities denominated in foreign
currencies and forward currency
contracts............................. -- -- -- --
----------- ----------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS....................... 12,179,073 8,357,976 33,378,116 14,938,606
----------- ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................... (940,040) (827,581) -- --
Realized gain on investments............. (3,824,886) (6,979,440) (4,823,503) (22,307,569)
----------- ----------- ------------ -----------
DECREASE IN NET ASSETS
FROM DISTRIBUTIONS.................... (4,764,926) (7,807,021) (4,823,503) (22,307,569)
----------- ----------- ------------ -----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares......... 14,190,439 12,649,970 199,351,030 50,718,332
Investment of dividends.................. 940,040 827,581 -- --
Shares issued in payment of gain
distributions......................... 3,824,886 6,979,440 4,823,503 22,307,569
----------- ----------- ------------ -----------
Total.................................... 18,955,365 20,456,991 204,174,533 73,025,901
----------- ----------- ------------ -----------
Cost of shares redeemed.................. (14,518,617) (7,439,183) (198,083,052) (38,669,048)
----------- ----------- ------------ -----------
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS.......................... 4,436,748 13,017,808 6,091,481 34,356,853
----------- ----------- ------------ -----------
INCREASE (DECREASE) IN
NET ASSETS............................ 11,850,895 13,568,763 34,646,094 26,987,890
NET ASSETS:
Beginning of Year........................ 50,737,163 37,168,400 87,632,837 60,644,947
----------- ----------- ------------ -----------
END OF YEAR.............................. $62,588,058 $50,737,163 $122,278,931 $87,632,837
=========== =========== ============ ===========
</TABLE>
- --------------------
See Notes to Financial Statements.
P-58a
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN HENDERSON
SELIGMAN GLOBAL GROWTH
FRONTIER PORTFOLIO OPPORTUNITIES PORTFOLIO
----------------------- --------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............. $ (218,513) $ (184,281) $ (4,515) $ 283
Net realized gain (loss) on investments.. (1,118,028) 4,064,832 (276,305) 141,228
Net realized gain (loss) from foreign
currency transactions................. -- -- (36,450) (73,436)
Net change in unrealized appreciation/
depreciation of investments........... 896,484 1,855,841 1,405,297 381,018
Net change in unrealized appreciation/
depreciation on translation of assets
and liabilities denominated in foreign
currencies and forward currency
contracts............................. -- -- 239,832 (112,875)
----------- ----------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS....................... (440,057) 5,736,392 1,327,859 336,218
----------- ----------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................... -- -- -- --
Realized gain on investments............. -- (3,889,283) (50,935) (60,644)
----------- ----------- ---------- ----------
DECREASE IN NET ASSETS
FROM DISTRIBUTIONS.................... -- (3,889,283) (50,935) (60,644)
----------- ----------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares......... 227,067,285 18,870,587 4,808,045 4,394,619
Investment of dividends.................. -- -- -- --
Shares issued in payment of gain
distributions......................... -- 3,889,283 50,935 60,644
----------- ----------- ---------- ----------
Total.................................... 227,067,285 22,759,870 4,858,980 4,455,263
----------- ----------- ---------- ----------
Cost of shares redeemed.................. (230,452,830) (13,305,727) (2,941,841) (871,295)
----------- ----------- ---------- ----------
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS.......................... (3,385,545) 9,454,143 1,917,139 3,583,968
----------- ----------- ---------- ----------
INCREASE (DECREASE) IN
NET ASSETS............................ (3,825,602) 11,301,252 3,194,063 3,859,542
NET ASSETS:
Beginning of Year........................ 42,973,273 31,672,021 5,449,232 1,589,690
----------- ----------- ---------- ----------
END OF YEAR.............................. $39,147,671 $42,973,273 $8,643,295 $5,449,232
=========== =========== ========== ==========
</TABLE>
- --------------------
See Notes to Financial Statements.
P-59
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN HENDERSON SELIGMAN HENDERSON SELIGMAN HENDERSON
GLOBAL SMALLER GLOBAL TECHNOLOGY INTERNATIONAL
COMPANIES PORTFOLIO PORTFOLIO PORTFOLIO
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
----------------------- ----------------------- -----------------------
1998 1997 1998 1997 1998 1997
----------- -------- ---------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income (loss)......................... $ (13,328) $ 48,159 $ (21,045) $ 3,172 $ 51,629 $ 37,783
Net realized gain on
investments........................... 380,866 813,641 327,368 513,781 236,433 665,686
Net realized gain (loss)
from foreign currency
transactions.......................... (343,427) (407,259) 1,871 (12,358) (62,257) (422,188)
Net change in unrealized
appreciation/depreciation
of investments........................ 442,586 750,188 1,121,131 (84,833) 749,881 439,369
Net change in unrealized
appreciation/depreciation
on translation of assets
and liabilities denominated
in foreign currencies and
forward currency contracts............ 782,308 (536,914) 73,954 (40,471) 412,820 (72,394)
----------- ----------- ---------- ---------- ---------- ----------
INCREASE IN NET ASSETS
FROM OPERATIONS....................... 1,249,005 667,815 1,503,279 379,291 1,388,506 648,256
----------- ----------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................... -- (26,233) (857) (3,585) (92,510) (17,648)
Realized gain on investments............. (307,092) (475,283) (262,609) (503,962) (102,080) (308,510)
----------- ----------- ---------- ---------- ---------- ----------
DECREASE IN NET ASSETS
FROM DISTRIBUTIONS.................... (307,092) (501,516) (263,466) (507,547) (194,590) (326,158)
----------- ----------- ---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale
of shares............................. 3,255,307 5,959,379 4,355,443 3,874,388 1,772,992 3,331,657
Investment of dividends.................. -- 26,233 857 3,585 92,510 17,648
Shares issued in payment
of gain distributions................. 307,092 475,283 262,609 503,962 102,080 308,510
----------- ----------- ---------- ---------- ---------- ----------
Total.................................... 3,562,399 6,460,895 4,618,909 4,381,935 1,967,582 3,657,815
----------- ----------- ---------- ---------- ---------- ----------
Cost of shares redeemed.................. (4,194,840) (2,998,851) (3,414,979) (1,931,166) (2,451,134) (2,039,720)
----------- ----------- ---------- ---------- ---------- ----------
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS.......................... (632,441) 3,462,044 1,203,930 2,450,769 (483,552) 1,618,095
----------- ----------- ---------- ---------- ---------- ----------
INCREASE IN NET ASSETS................... 309,472 3,628,343 2,443,743 2,322,513 710,364 1,940,193
NET ASSETS:
Beginning of Period...................... 20,504,590 16,876,247 3,686,228 1,363,715 9,182,465 7,242,272
----------- ----------- ---------- ---------- ---------- ----------
END OF PERIOD............................ $20,814,062 $20,504,590 $6,129,971 $3,686,228 $9,892,829 $9,182,465
=========== =========== =========== ========== ========== ==========
</TABLE>
- -------------------
* Commencement of operations.
See Notes to Financial Statements.
P-60
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN
SELIGMAN SELIGMAN LARGE-CAP SMALL-CAP
HIGH-YIELD BOND PORTFOLIO INCOME PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO
------------------------- --------------------- --------------- ---------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, 5/1/98* 5/1/98*
------------------------- --------------------- to to
1998 1997 1998 1997 12/31/98 12/31/98
---------- ------------ --------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income (loss)......................... $ 2,731,048 $ 1,628,914 $ 565,319 $ 640,866 $ 12,694 $ (2,716)
Net realized gain on
investments........................... 10,307 186,257 124,492 731,075 67,875 271,788
Net realized gain (loss)
from foreign currency
transactions.......................... -- -- -- 5,037 -- --
Net change in unrealized
appreciation/depreciation
of investments........................ (2,638,907) 571,005 381,475 419,679 108,540 (164,337)
Net change in unrealized
appreciation/depreciation
on translation of assets
and liabilities denominated
in foreign currencies and
forward currency contracts............ -- -- -- (10,907) -- --
----------- ----------- ----------- ----------- ---------- ----------
INCREASE IN NET ASSETS
FROM OPERATIONS....................... 102,448 2,386,176 1,071,286 1,785,750 189,109 104,735
----------- ----------- ----------- ----------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................... (2,720,490) (1,614,526) (579,531) (625,869) (13,586) --
Realized gain on investments............. (17,156) (193,743) (200,703) (735,166) (101,893) (270,486)
----------- ----------- ----------- ----------- ---------- ----------
DECREASE IN NET ASSETS
FROM DISTRIBUTIONS.................... (2,737,646) (1,808,269) (780,234) (1,361,035) (115,479) (270,486)
----------- ----------- ----------- ----------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale
of shares............................. 17,539,019 16,215,266 2,781,692 2,166,510 4,577,607 3,140,726
Investment of dividends.................. 2,720,490 1,614,526 579,531 625,869 13,586 --
Shares issued in payment
of gain distributions................. 17,156 193,743 200,703 735,166 101,893 270,486
----------- ----------- ----------- ----------- ---------- ----------
Total.................................... 20,276,665 18,023,535 3,561,926 3,527,545 4,693,086 3,411,212
----------- ----------- ----------- ----------- ---------- ----------
Cost of shares redeemed.................. (8,656,439) (6,510,022) (3,106,033) (3,833,770) (1,068,342) (923,979)
----------- ----------- ----------- ----------- ---------- ----------
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS.......................... 11,620,226 11,513,513 455,893 (306,225) 3,624,744 2,487,233
----------- ----------- ----------- ----------- ---------- ----------
INCREASE IN NET ASSETS................... 8,985,028 12,091,420 746,945 118,490 3,698,374 2,321,482
NET ASSETS:
Beginning of Period...................... 23,267,780 11,176,360 13,835,280 13,716,790 147,449 147,449
----------- ----------- ----------- ----------- ---------- ----------
END OF PERIOD............................ $32,252,808 $23,267,780 $14,582,225 $13,835,280 $3,845,823 $2,468,931
=========== =========== =========== =========== ========== ==========
</TABLE>
- ----------------
* Commencement of operations.
See Notes to Financial Statements.
P-61
<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 14 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"), Seligman Income Portfolio ("Income Portfolio"),
Seligman Large-Cap Value Portfolio ("Large-Cap Value Portfolio"), and Seligman
Small-Cap Value Portfolio ("Small-Cap Value 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 Advisors, Inc. (the "Distributor") (formerly 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 Advisors, 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 Bond, Capital,CashManagement,CommonStock, andIncomePortfolios are also
provided as the investment medium for Seligman Mutual Benefit Plan (the "Mutual
Benefit Plan"), a separate account of MBLLife 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 andGovernment 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 an exchange 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 generally valued using the amortized cost method which approximates fair
value. Investments of certain other funds in the Seligman Group of Investment
Companies purchased to offset the Cash Management Portfolio's liability for
deferred directors' fees are valued at current market values.
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, (together, the "Seligman Henderson Portfolios"),
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.
P-62
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 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 Seligman Henderson Portfolios 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 during 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
agreements, 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, 1998, were as follows:
PORTFOLIO PURCHASES SALES
-------- ----------- -----------
Bond $ 1,616,895 $ 1,567,785
Capital 26,450,215 27,418,664
Common Stock 29,054,192 31,947,041
Communications and Information 129,886,119 129,088,232
Frontier 35,509,366 37,054,475
Global Growth Opportunities 4,901,068 3,356,414
P-63
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
PORTFOLIO PURCHASES SALES
-------- ----------- -----------
Global Smaller Companies $13,292,708 $13,589,183
Global Technology 4,677,853 3,660,253
International 7,246,645 7,591,199
High-Yield Bond 20,815,115 11,761,887
Income 7,829,674 7,869,770
Large-Cap Value 4,746,735 1,177,307
Small-Cap Value 3,275,749 960,019
For the year ended December 31, 1998, purchases and sales of US Government
obligations were $3,112,503 and $3,205,188, respectively, for the Bond
Portfolio, and $3,068,155 and $1,597,913, respectively, for the Income
Portfolio.
Identified cost of investments sold is used for both financial statement and
federal income tax purposes.
At December 31, 1998, 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 $ 296,435 $ 37,303
Capital 6,587,602 26,300
Common Stock 15,991,279 279,015
Communications and Information 26,480,438 4,031,140
Frontier 7,744,857 3,808,519
Global Growth Opportunities 2,028,631 82,663
Global Smaller Companies 4,077,821 2,377,804
Global Technology 1,463,691 316,730
International 2,239,328 206,459
High-Yield Bond 631,512 2,434,467
Income 1,417,589 202,461
Large-Cap Value 241,686 133,146
Small-Cap Value 225,529 389,866
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. The Manager's fee, which is calculated daily
and payable monthly, is equal to 0.40%, on an annual basis, of each of Bond,
Capital, Cash Management, Common Stock, and Income Portfolios' daily net assets;
equal to 0.75%, on an annual basis, of each of Communications and Information
and Frontier Portfolios' daily net assets; equal to 1.00%, on an annual basis,
of each of the Seligman Henderson 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 for the Large-Cap Value Portfolio is equal to 0.80% per annum of
the first $500 million of average daily net assets, 0.70% per annum of the next
$500 million of average daily net assets, and 0.60% per annum in excess of $1
billion of average daily net assets of the Portfolio. The Manager's fee for the
Small-Cap Value Portfolio is equal to 1.00% per annum of the first $500 million
of average daily net assets, 0.90% per annum of the next $500 million of average
daily net assets, and 0.80% per annum in excess of $1 billion of average daily
net assets of the Portfolio.
Prior to July 1, 1998, Seligman Henderson Co., an entity owned 50% each by
the Manager and Henderson International, Inc., a subsidiary of Henderson plc,
supervised and directed the global investments of the Seligman Henderson
Portfolios. Pursuant to subadvisory agreements with the Manager, the Manager
paid Seligman Henderson Co. 0.90% per annum of the average daily net assets of
each of the Seligman Henderson Portfolios.
On March 30, 1998, AMP Limited, an Australian life insurance and financial
services company, completed an acquisition of Henderson plc, which resulted in
the termination of the Fund's subadvisory agreements. The Fund's Board of
Directors approved interim subadvisory agreements pursuant to which Seligman
Henderson Co. continued to supervise and direct the global investments of the
Seligman Henderson Portfolios. The Fund's directors also approved a proposed new
subadvisory agreement pursuant to which Henderson Investment Management Limited
(the "Subadviser"), a wholly-owned subsidiary of Henderson plc, would replace
Seligman Henderson Co. as subadviser to the Seligman Henderson Portfolios, and
be respon-
P-64
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
sible for furnishing investment advice, research, and assistance with respect to
their non-US investments. Under the new agreement, the Manager is responsible
for the US investments of the Seligman Henderson Portfolios and has overall
responsibility for management of the Portfolios. Both the interim and the new
subadvisory agreements were approved by votes of the shareholders of each of the
Seligman Henderson Portfolios on June 30, 1998. Under the new subadvisory
agreement, the Manager pays the Subadviser a subadvisory fee for each of the
Seligman Henderson Portfolios at a rate of 0.50% per annum of the average
monthly assets under the Subadviser's supervision.
The Manager has agreed to reimburse expenses, other than the management fee
that exceed 0.20% per annum of the average daily net assets of each of Bond,
Capital, Common Stock, Communications and Information, Frontier, High-Yield Bond
and Income Portfolios. The Manager, at its discretion and until it determines
otherwise, has elected to waive all of its fee for, and reimburse all of the
expenses of, the Cash Management Portfolio. The Manager and Seligman Henderson
Co. (through June 30, 1998) have agreed to reimburse expenses, other than the
management fee, which exceed 0.40% per annum of the average daily net assets of
each of the Seligman Henderson Portfolios. The Manager, at its discretion, has
also agreed to reimburse all expenses, other than the management fees, of the
Large-Cap Value and Small-Cap Value Portfolios. The amounts of these
reimbursements for the year ended December 31, 1998 are disclosed in the
Statements of Operations.
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 Distributor, agent for the distribution of the CLVA-2 Contracts and an
affiliate of the Manager, received concessions of $228,662 from Canada Life
Insurance Company of America and $15,703 from Canada Life Insurance Company of
New York, after commissions paid to dealers for the sale of shares of the Fund.
Certain officers and directors of the Fund are officers or directors of the
Manager and the Distributor.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of the
other funds in the Seligman Group of Investment Companies. The cost of such fees
and earnings accrued thereon is included in directors' fees and expenses, and
the accumulated balances thereof at December 31, 1998, are included in other
liabilities. Deferred fees and related accrued earnings are not deductible for
the federal income tax purposes until such amounts are paid.
5. LOSS CARRYFORWARD -- At December 31, 1998, the Frontier Portfolio, Global
Growth Opportunities Portfolio, and Global Smaller Companies Portfolio had net
capital loss carryforwards for federal income tax purposes of $1,123,646,
$376,086 and $308,768, respectively, which are available for offset against
future taxable net gains. These net capital loss carryforwards will expire in
2006. Accordingly, no capital gain distributions are expected to be paid to
shareholders until net capital gains have been realized in excess of the
available capital loss carryforwards.
6. OUTSTANDING FORWARD EXCHANGE CURRENCY CONTRACTS -- At December 31, 1998, the
Fund had outstanding forward exchange currency contracts to sell foreign
currencies as follows:
<TABLE>
<CAPTION>
FOREIGN IN EXCHANGE SETTLEMENT US $ UNREALIZED
CONTRACT CURRENCY FOR US $ DATE VALUE DEPRECIATION
- -------- --------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
GLOBAL GROWTH OPPORTUNITIES PORTFOLIO
Japanese yen 26,000,000 219,372 2/16/99 229,439 $(10,067)
========
GLOBAL SMALLER COMPANIES PORTFOLIO
Japanese yen 1,557,808 13,499 1/4/99 13,728 $ (229)
Japanese yen 90,000,000 759,365 2/16/99 794,211 (34,846)
--------
$(35,075)
========
GLOBAL TECHNOLOGY PORTFOLIO
Japanese yen 15,700,100 130,000 2/26/99 138,730 $ (8,730)
========
INTERNATIONAL PORTFOLIO
Japanese yen 1,658,887 14,375 1/4/99 14,619 $ (244)
Japanese yen 63,000,000 531,556 2/16/99 555,948 (24,392)
--------
$(24,636)
========
</TABLE>
P-65
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
7. CAPITAL STOCK TRANSACTIONS -- At December 31, 1998, there were 20,000,000
shares of Capital Stock authorized for each of Global Growth Opportunities,
Global Technology, Large-Cap Value, and Small-Cap Value Portfolios; 80,000,000
shares for each of Bond, Capital, International, and Income Portfolios; and
100,000,000 shares for each of Cash Management, Common Stock, Communications and
Information, Frontier, Global Smaller Companies, and High-Yield Bond Portfolios,
all at a par value of $0.001 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,
------------------------ ---------------------- ------------------------
1998 1997 1998 1997 1998 1997
---------- --------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares...................... 230,745 292,591 626,516 421,000 32,521,913 25,875,970
Shares issued in payment
of dividends..................... 36,957 35,242 2,179 1,659 540,798 512,275
Shares issued in payment
of gain distributions............ 6,965 -- 67,599 74,699 -- --
-------- -------- -------- -------- ----------- -----------
Total............................... 274,667 327,833 696,294 497,358 33,062,711 26,388,245
-------- -------- -------- -------- ----------- -----------
Shares redeemed..................... (276,064) (128,619) (663,507) (264,028) (31,179,640) (27,507,851)
-------- -------- -------- -------- ----------- -----------
Increase (decrease) in shares....... (1,397) 199,214 32,787 233,330 1,883,071 (1,119,606)
======== ======== ======== ======== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
COMMUNICATIONS
COMMON STOCK AND INFORMATION FRONTIER
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------ ---------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------ ---------------------- ------------------------
1998 1997 1998 1997 1998 1997
---------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares...................... 787,642 706,222 13,848,034 2,968,727 14,693,247 1,172,506
Shares issued in payment
of dividends..................... 51,651 51,724 -- -- -- --
Shares issued in payment
of gain distributions............ 210,158 436,215 299,597 1,783,179 -- 255,874
--------- --------- ----------- ---------- ----------- ----------
Total............................... 1,049,451 1,194,161 14,147,631 4,751,906 14,693,247 1,428,380
--------- --------- ----------- ---------- ----------- ----------
Shares redeemed..................... (806,174) (412,385) (13,711,324) (2,185,329) (14,899,641) (819,268)
--------- --------- ----------- ---------- ----------- ----------
Increase (decrease) in shares....... 243,277 781,776 436,307 2,566,577 (206,394) 609,112
========= ========= =========== ========== =========== ==========
</TABLE>
<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,
------------------------ ---------------------- -------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares...................... 390,170 409,426 231,087 447,087 354,582 329,216
Shares issued in payment
of dividends..................... -- -- -- 2,062 64 347
Shares issued in payment
of gain distributions............ 3,970 5,564 23,787 37,365 19,642 48,881
-------- -------- -------- -------- -------- --------
Total............................... 394,140 414,990 254,874 486,514 374,288 378,444
-------- -------- -------- -------- -------- --------
Shares redeemed..................... (239,884) (81,077) (306,840) (217,853) (280,044) (162,342)
-------- -------- -------- -------- -------- --------
Increase (decrease) in shares....... 154,256 333,913 (51,966) 268,661 94,244 216,102
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL HIGH-YIELD BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------- ----------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------- ----------------------- -------------------------
1998 1997 1998 1997 1998 1997
---------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Sale of shares...................... 118,684 239,540 1,464,357 1,357,028 248,332 192,283
Shares issued in payment
of dividends..................... 6,127 1,313 251,200 136,132 53,119 58,547
Shares issued in payment
of gain distributions............ 6,760 22,955 1,584 16,336 18,396 68,771
-------- -------- --------- --------- -------- --------
Total............................... 131,571 263,808 1,717,141 1,509,496 319,847 319,601
-------- -------- --------- --------- -------- --------
Shares redeemed..................... (166,031) (144,243) (711,853) (547,725) (276,496) (342,394)
-------- -------- --------- --------- -------- --------
Increase (decrease) in shares....... (34,460) 119,565 1,005,288 961,771 43,351 (22,793)
======== ======== ========= ========= ======== ========
</TABLE>
P-66
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LARGE-CAP SMALL-CAP
VALUE VALUE
PORTFOLIO PORTFOLIO
--------- ---------
5/1/98* 5/1/98*
TO TO
12/31/98 12/31/98
---------- ---------
Sale of shares...................... 485,276 400,968
Shares issued in payment
of dividends ................... 1,442 --
Shares issued in payment
of gain distributions .......... 10,817 39,088
-------- --------
Total............................... 497,535 440,056
-------- --------
Shares redeemed..................... (114,112) (117,123)
-------- --------
Increase in shares.................. 383,423 322,933
======== ========
- -------------
* Commencement of operations.
8. COMMITTED LINE OF CREDIT --Effective July 1, 1998, Communications and
Information, Frontier, Global Growth Opportunities, Global Smaller Companies,
Global Technology, International, and High-Yield Bond Portfolios terminated
their $12 million committed line of credit facility and all of the Portfolios
except the Cash Management Portfolio, entered into a joint $800 million
committed line of credit that is shared by substantially all funds in the
Seligman Group of Investment Companies. Each Portfolio's borrowings are limited
to 10% (5% for the Seligman Henderson Portfolios) of its net assets. Borrowings
pursuant to the credit facility are subject to interest at a rate equal to the
overnight federal funds rate plus 0.50%. Each Portfolio incurs a commitment fee
of 0.08% per annum on its share of the unused portion of the credit facility.
The credit facility may be drawn upon only for temporary purposes and is subject
to certain other customary restrictions. The credit facility commitment expires
one year from the date of the agreement but is renewable with the consent of the
participating banks. To date, none of the Portfolios have borrowed from the
credit facility.
9. SELIGMAN MUTUAL BENEFIT PLAN -- On December 31, 1998, MBL Life sold
substantially all of its general account life insurance and annuity businesses
to SunAmerica, Inc. The Order from the Superior Court of New Jersey (the
"Order") approving the transaction provided for the termination of the Mutual
Benefit Plan. The Order authorizes MBL Life to take any and all actions
necessary to facilitate the termination of the Mutual Benefit Plan.
Contractholders will be given the opportunity to exchange their contracts for
contracts issued by other insurance companies until June 30, 1999. Any contracts
remaining with MBL Life at June 30, 1999 will be terminated and MBL Life will
pay out their account value.
At December 31, 1998, the Mutual Benefit Plan assets held in the Fund were as
follows:
Bond Portfolio $ 1,650,594
Capital Portfolio 5,139,844
Cash Management Portfolio 833,299
Common Stock Portfolio 15,020,603
Income Portfolio 3,742,406
Because the Manager currently limits the expenses incurred by these
portfolios, the withdrawal of Mutual Benefit Plan assets is not expected to have
a significant impact on the ratio of expenses to average net assets for any of
these portfolios.
P-67
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below are intended to help you understand each Portfolio's
financial performance for the past five years or from its inception, if less
than five years. Certain information reflects financial results for a single
share that was held throughout the periods shown. Per share amounts are
calcuated using average shares outstanding. "Total return" shows the rate that
you would have earned (or lost) on an investment in each Portfolio, assuming you
reinvested all your dividends and capital gain distributions. Total returns do
not reflect any administrative fees and asset based sales charges that are
associated with variable annuity contracts, and are not annualized for periods
of less than one year.
<TABLE>
<CAPTION>
BOND PORTFOLIO
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR................. $10.24 $9.89 $10.44 $9.27 $10.11
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................... 0.59 0.54 0.56 0.61 0.50
Net realized and unrealized gain (loss) on investments 0.25 0.35 (0.55) 1.17 (0.84)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................... 0.84 0.89 0.01 1.78 (0.34)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............... (0.59) (0.54) (0.56) (0.61) (0.50)
Distributions from net realized capital gain ...... (0.11) -- -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................................ (0.70) (0.54) (0.56) (0.61) (0.50)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR....................... $10.38 $10.24 $ 9.89 $10.44 $ 9.27
====== ====== ====== ====== ======
TOTAL RETURN: 8.20% 8.98% 0.09% 19.18% (3.39)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)............. $7,320 $7,232 $5,015 $4,497 $3,606
Ratio of expenses to average net assets............ 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net income (loss) to average net assets... 5.58% 6.22% 5.97% 6.22% 5.12%
Portfolio turnover rate............................ 73.31% 170.12% 199.74% 114.42% 237.23%
Without management fee waiver:*
Ratio of expenses to average net assets............ 0.82% 0.83% 0.79% 0.99% 1.31%
Ratio of net income (loss) to average net assets... 5.36% 5.99% 5.78% 5.83% 4.41%
</TABLE>
- --------------
* The Manager, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented.
See Notes to Financial Statements.
P-68
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL PORTFOLIO
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR................. $18.10 $16.01 $14.91 $12.70 $14.95
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................... 0.04 0.03 0.04 0.05 0.02
Net realized and unrealized gain (loss)
on investments................................... 3.89 3.35 2.12 3.39 (0.70)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................... 3.93 3.38 2.16 3.44 (0.68)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............... (0.04) (0.03) (0.04) (0.05) (0.02)
Distributions from net realized capital gain ...... (1.18) (1.26) (1.02) (1.18) (1.55)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................................ (1.22) (1.29) (1.06) (1.23) (1.57)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR....................... $20.81 $18.10 $16.01 $14.91 $12.70
====== ====== ====== ====== ======
TOTAL RETURN: 22.19% 21.31% 14.51% 27.17% (4.59)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)............. $24,141 $20,400 $14,313 $9,294 $5,942
Ratio of expenses to average net assets............ 0.60% 0.60% 0.59% 0.60% 0.60%
Ratio of net income (loss) to average net assets... 0.19% 0.16% 0.29% 0.32% 0.10%
Portfolio turnover rate............................ 130.86% 93.97% 88.78% 122.20% 67.39%
Without management fee waiver:*
Ratio of expenses to average net assets............ 0.62% 0.71% 0.96%
Ratio of net income (loss) to average net assets... 0.14% 0.21% (0.26)%
</TABLE>
<TABLE>
<CAPTION>
CASH MANAGEMENT PORTFOLIO
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR................. $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................... 0.053 0.054 0.053 0.055 0.040
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................... 0.053 0.054 0.053 0.055 0.040
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............... (0.053) (0.054) (0.053) (0.055) (0.040)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................................ (0.053) (0.054) (0.053) (0.055) (0.040)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR....................... $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
TOTAL RETURN: 5.42% 5.52% 5.43% 5.60% 4.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)............. $10,520 $8,635 $9,755 $7,800 $3,230
Ratio of expenses to average net assets............ -- -- -- -- --
Ratio of net income (loss) to average net assets... 5.30% 5.39% 5.30% 5.48% 3.98%
Without management fee waiver and
expense reimbursement:*
Ratio of expenses to average net assets............ 0.67% 0.79% 0.63% 0.87% 1.48%
Ratio of net income (loss) to average net assets... 4.63% 4.60% 4.67% 4.61% 2.50%
</TABLE>
- ----------------------
* The Manager, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented.
See Notes to Financial Statements.
P-69
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK PORTFOLIO
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF YEAR................. $16.28 $15.92 $15.44 $13.78 $14.98
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................... 0.29 0.33 0.34 0.35 0.37
Net realized and unrealized gain (loss) on investments 3.61 3.01 2.79 3.40 (0.36)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................... 3.90 3.34 3.13 3.75 0.01
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............... (0.31) (0.32) (0.34) (0.35) (0.39)
Distributions from net realized capital gain ...... (1.24) (2.66) (2.31) (1.74) (0.82)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................................ (1.55) (2.98) (2.65) (2.09) (1.21)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR....................... $18.63 $16.28 $15.92 $15.44 $13.78
====== ====== ====== ====== ======
TOTAL RETURN: 24.16% 21.31% 20.08% 27.28% 0.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s omitted)............. $62,588 $50,737 $37,168 $28,836 $20,168
Ratio of expenses to average net assets............ 0.52% 0.53% 0.53% 0.54% 0.60%
Ratio of net income (loss) to average net assets... 1.61% 1.92% 1.99% 2.42% 2.45%
Portfolio turnover rate............................ 55.55% 80.13% 50.33% 55.48% 15.29%
Without management fee waiver:++
Ratio of expenses to average net assets............ 0.62%
Ratio of net income (loss) to average net assets... 2.43%
</TABLE>
<TABLE>
<CAPTION>
COMMUNICATIONS AND INFORMATION PORTFOLIO
----------------------------------------------------------------
10/11/94*
YEAR ENDED DECEMBER 31, TO
----------------------------------------------
1998 1997 1996 1995 12/31/94
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD............... $13.09 $14.69 $13.50 $10.44 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................... (0.08) (0.08) (0.04) (0.13) (0.02)
Net realized and unrealized gain (loss) on investments 4.81 3.13 1.23 4.15 0.46
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS................... 4.73 3.05 1.19 4.02 0.44
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from net realized capital gain ...... (0.68) (4.65) -- (0.96) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................................ (0.68) (4.65) -- (0.96) --
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD..................... $17.14 $13.09 $14.69 $13.50 $10.44
====== ====== ====== ====== ======
TOTAL RETURN: 36.49% 22.22% 8.81% 38.55% 4.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)........... $122,279 $87,633 $60,645 $38,442 $495
Ratio of expenses to average net assets............ 0.87% 0.87% 0.87% 0.95% 0.95%+
Ratio of net income (loss) to average net assets... (0.56)% (0.49)% (0.32)% (0.89)% (0.95)%+
Portfolio turnover rate............................ 132.57% 277.14% 167.20% 96.62% --
Without management fee waiver
and expense reimbursement:++
Ratio of expenses to average net assets............ 13.96%+
Ratio of net income (loss) to average net assets... (13.96)%+
</TABLE>
- --------------------
* 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.
P-70
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GROWTH
FRONTIER PORTFOLIO OPPORTUNITIES PORTFOLIO
-------------------------------------------- -----------------------------
10/11/94* YEAR ENDED 5/1/96**
YEAR ENDED DECEMBER 31, TO DECEMBER 31, TO
----------------------------------- -----------------
PER SHARE DATA: 1998 1997 1996 1995 12/31/94 1998 1997 12/31/96
------ ------ ------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.78 $14.98 $13.56 $10.58 $10.00 $11.03 $ 9.91 $10.00
------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)........ (0.08) (0.08) (0.06) (0.07) (0.01) (0.01) 0.01 0.01
Net realized and unrealized gain (loss)
on investments................... (0.15) 2.47 3.28 3.58 0.59 2.25 1.79 0.02
Net realized and unrealized gain (loss)
on foreign currency transactions. -- -- -- -- -- 0.14 (0.56) (0.11)
------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.... (0.23) 2.39 3.22 3.51 0.58 2.38 1.24 (0.08)
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- -- -- -- -- (0.01)
Distributions from net realized
capital gain..................... -- (1.59) (1.80) (0.53) -- (0.08) (0.12) --
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS:................ -- (1.59) (1.80) (0.53) -- (0.08) (0.12) (0.01)
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD...... $15.55 $15.78 $14.98 $13.56 $10.58 $13.33 $11.03 $ 9.91
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN: (1.46)% 16.33% 23.93% 33.28% 5.80% 21.60% 12.57% (0.78)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted)................... $39,148 $42,973 $31,672 $12,476 $169 $8,643 $5,449 $1,590
Ratio of expenses to
average net assets............... 0.92% 0.89% 0.92% 0.95% 0.95%+ 1.40% 1.40% 1.40%+
Ratio of net income (loss) to
average net assets.............. (0.51)% (0.49)% (0.37)% (0.55)% (0.70)%+ (0.06)% 0.01% 0.37%+
Portfolio turnover rate............. 86.52% 101.68% 119.74% 106.48% -- 48.99% 77.85% 12.99%
Without management fee waiver
and expense reimbursement:++
Ratio of expenses to average
net assets...................... 1.37% 40.47%+ 1.60% 2.11% 6.04%+
Ratios of net income (loss) to
average net assets.............. (0.97)% (40.22)%+ (0.26)% (0.70)% (4.27)%+
</TABLE>
- -----------------------
* 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.
P-71
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL SMALLER COMPANIES PORTFOLIO GLOBAL TECHNOLOGY PORTFOLIO
--------------------------------------------- ---------------------------
10/11/94* YEAR ENDED 5/1/96**
YEAR ENDED DECEMBER 31, TO DECEMBER 31, TO
--------------------------------- ----------------
PER SHARE DATA: 1998 1997 1996 1995 12/31/94 1998 1997 12/31/96
------ ------ ------ ------ -------- ----- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.98 $12.87 $11.67 $10.31 $10.00 $10.59 $10.32 $10.00
------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVETMENT OPERATIONS:
Net investment income (loss)........ (0.01) 0.02 0.02 0.05 0.06 (0.05) 0.01 --
Net realized and unrealized gain
on investments................... 1.02 1.17 2.31 2.04 0.26 3.81 2.15 0.30
Net realized and unrealized gain (loss)
on foreign currency transactions. (0.17) (0.75) (0.16) (0.30) 0.03 0.11 (0.19) 0.10
------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.... 0.84 0.44 2.17 1.79 0.35 3.87 1.97 0.40
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (0.02) (0.02) (0.05) (0.04) -- (0.01) --
Distributions from net realized
capital gain..................... (0.20) (0.31) (0.95) (0.38) -- (0.61) (1.69) --
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................. (0.20) (0.33) (0.97) (0.43) (0.04) (0.61) (1.70) (0.08)
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD...... $13.62 $12.98 $12.87 $11.67 $10.31 $13.85 $10.59 $10.32
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN: 6.58% 3.43% 18.66% 17.38% 3.53% 36.80% 19.53% 4.01%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted)................... $20,814 $20,505 $16,876 $4,837 $132 $6,130 $3,686 $1,364
Ratio of expenses to
average net assets............... 1.40% 1.40% 1.40% 1.39% 1.20%+ 1.40% 1.40% 1.40%+
Ratio of net income (loss) to
average net assets............... (0.06)% 0.24% 0.23% 0.64% 3.14%+ (0.43)% 0.12% 0.60%+
Portfolio turnover rate............. 66.40% 64.81% 62.31% 55.65% -- 82.27% 167.36% 45.04%
Without management fee waiver
and expense reimbursement:++
Ratio of expenses to
average net assets................ 1.50% 1.56% 1.90% 3.84% 37.25%+ 1.80% 2.10% 4.71%+
Ratio of net income (loss) to
average net assets................ (0.16)% 0.08% (0.27)% (1.81)% (32.91)%+ (0.83)% (0.58)% (2.71)%+
</TABLE>
- ----------------
* Commencement of investment operations.
** Commencement of operations.
+ Annualized.
++ The Manager and/or Subadviser, at their discretion, reimbursed expenses
and/or waived management fees for the periods presented.
See Notes to Financial Statements.
P-72
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO HIGH-YIELD BOND PORTFOLIO
------------------------------------------- ---------------------------------
5/1/95*
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, TO
------------------------------------------- -----------------------
PER SHARE DATA: 1998 1997 1996 1995 1994 1998 1997 1996 12/31/95
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.54 $12.96 $12.39 $11.34 $11.37 $11.87 $11.19 $10.50 $10.00
------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)...... 0.08 0.03 0.07 0.15 0.13 1.11 0.91 0.77 0.22
Net realized and unrealized gain (loss)
on investments................ 1.90 2.11 1.13 0.90 (0.31) (0.99) 0.78 0.77 0.52
Net realized and unrealized gain (loss)
on foreign currency transactions 0.16 (1.06) (0.32) 0.24 0.33 -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.. 2.14 1.08 0.88 1.29 0.15 0.12 1.69 1.54 0.74
------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income.............. (0.15) (0.03) (0.07) (0.15) (0.06) (1.11) (0.90) (0.77) (0.22)
Distributions from net realized
capital gain................... (0.16) (0.47) (0.24) (0.09) (0.12) (0.01) (0.11) (0.08) (0.02)
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS............... (0.31) (0.50) (0.31) (0.24) (0.18) (1.12) (1.01) (0.85) (0.24)
------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD.... $15.37 $13.54 $12.96 $12.39 $11.34 $10.87 $11.87 $11.19 $10.50
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN: 15.81% 8.35% 7.08% 11.34% 1.32% 1.02% 15.09% 14.62% 7.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted)................. $9,893 $9,182 $7,242 $4,183 $1,776 $32,253 $23,268 $11,176 $3,009
Ratio of expenses to
average net assets............. 1.40% 1.40% 1.40% 1.35% 1.20% 0.70% 0.70% 0.70% 0.70%+
Ratio of net income (loss) to
average net assets............. 0.52% 0.43% 0.70% 1.01% 1.17% 9.60% 9.61% 9.77% 7.46%+
Portfolio turnover rate........... 75.81% 89.43% 48.53% 41.40% 47.34% 43.13% 74.54% 117.01% 67.55%
Without management fee waiver
and expense reimbursement:++
Ratio of expenses to average
net assets...................... 1.78% 2.07% 2.30% 3.40% 6.12% 0.74% 0.79% 0.88% 4.38%+
Ratios of net income (loss) to
average net assets.............. 0.14% (0.24)% (0.20)% (1.04)% (3.75)% 9.56% 9.52% 9.59% 3.78%+
</TABLE>
- ----------------------
* Commencement of operations.
+ Annualized.
++ The Manager and/or Subadviser, at their discretion, reimbursed expenses
and/or waived management fees for the periods presented.
See Notes to Financial Statements.
P-73
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP
INCOME PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO
----------------------------------------------- --------------- ---------------
YEAR ENDED DECEMBER 31, 5/1/98* 5/1/98*
----------------------------------------------- TO TO
1998 1997 1996 1995 1994 12/31/98 12/31/98
------ ------ ------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD $10.80 $10.52 $10.56 $9.97 $11.38 $10.00 $10.00
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)........ 0.45 0.56 0.58 0.60 0.69 0.04 (0.02)
Net realized and unrealized gain
(loss) on investments............ 0.38 0.91 0.13 1.19 (1.37) (0.07) (1.73)
------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS.... 0.83 1.47 0.71 1.79 (0.68) (0.03) (1.75)
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income........................... (0.46) (0.55) (0.58) (0.60) (0.73) (0.04) --
Distributions from net realized
capital gain ................... (0.16) (0.64) (0.17) (0.60) -- (0.27) (0.94)
------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS................. (0.62) (1.19) (0.75) (1.20) (0.73) (0.31) (0.94)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD...... $11.01 $10.80 $10.52 $10.56 $ 9.97 $ 9.66 $ 7.31
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN: 7.76% 14.02% 6.66% 17.98% (5.96)% (0.26)% (17.00)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted)................... $14,582 $13,835 $13,717 $12,619 $10,050 $3,845 $2,469
Ratio of expenses to
average net assets............... 0.60% 0.60% 0.59% 0.60% 0.60% 0.80%+ 1.00%+
Ratio of net income (loss) to
average net assets............... 3.94% 4.71% 5.37% 5.55% 6.34% 1.11%+ (0.34)%+
Portfolio turnover rate............. 70.45% 96.99% 19.59% 51.22% 29.76% 65.82% 73.87%
Without management fee waiver
and expense reimbursement:++
Ratio of expenses to
average net assets............... 0.61% 0.63% 0.62% 0.77% 2.24%+ 3.08%+
Ratio of net income (loss) to
average net assets............... 3.93% 4.68% 5.53% 6.17% (0.33)%+ (2.43)%+
</TABLE>
- ------------------
* Commencement of operations.
+ Annualized.
++ The Manager, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented.
See Notes to Financial Statements.
P-74
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
REPORT OF THE 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,
Seligman Income Portfolio, Seligman Large-Cap Value Portfolio, and Seligman
Small-Cap Value Portfolio, collectively referred to as the "Fund") as of
December 31, 1998, and the related statements of operations, the statements of
changes in net assets, 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, 1998, 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, 1998, the results of their operations, the changes in their net assets, 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 5, 1999
P-75
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
BOARD OF DIRECTORS
- -------------------------------------------------------------------------
JOHN R. GALVIN 2, 4
Dean, Fletcher School of Law and Diplomacy
at Tufts University
Director, Raytheon Company
ALICE S. ILCHMAN 3, 4
Trustee, Committee for Economic Development
Chairman, The Rockefeller Foundation
FRANK A. MCPHERSON 2, 4
Director, Kimberly-Clark Corporation
Director, Baptist Medical Center
JOHN E. MEROW 2, 4
Retired Chairman and Senior Partner,
Sullivan & Cromwell, Law Firm
Director, Commonwealth Industries, Inc.
Director, New York Presbyterian Hospital
BETSY S. MICHEL 2, 4
Trustee, The Geraldine R. Dodge Foundation
Chairman of the Board of Trustees, St. George's School
WILLIAM C. MORRIS 1
Chairman
Chairman of the Board,
J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Kerr-McGee Corporation
JAMES C. PITNEY 3, 4
Retired Partner, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN 3, 4
Director, KeySpan Energy Corporation
Trustee, Committee for Economic Development
Director, Public Broadcasting Service
RICHARD R. SCHMALTZ 1
Managing Director, Director of Investments,
J. & W. Seligman & Co. Incorporated
Trustee Emeritus, Colby College
ROBERT L. SHAFER 3, 4
Retired Vice President, Pfizer Inc.
JAMES N. WHITSON 2, 4
Director and Consultant,
Sammons Enterprises, Inc.
Director, C-SPAN
Director, CommScope, Inc.
BRIAN T. ZINO 1
President
President, J. & W. Seligman & Co. Incorporated
Chairman, Seligman Data Corp.
Director, ICI Mutual Insurance Company
Director Emeritus
FRED E. BROWN
Director and Consultant,
J. & W. Seligman & Co. Incorporated
- -----------------
Member:
1 Executive Committee
2 Audit Committee
3 Director Nominating Committee
4 Board Operations Committee
P-76
<PAGE>
SELIGMAN PORTFOLIOS, INC.
- -------------------------------------------------------------------------
EXECUTIVE OFFICERS
- -------------------------------------------------------------------------
WILLIAM C. MORRIS
Chairman
BRIANT.ZINO
President
BRIAN ASHFORD-RUSSELL
Vice President
DANIEL J. CHARLESTON
Vice President
IAIN C. CLARK
Vice President
NITIN MEHTA
Vice President
ARSEN MRAKOVCIC
Vice President
MARION S. SCHULTHEIS
Vice President
CHARLES C. SMITH, JR.
Vice President
LAWRENCE P. VOGEL
Vice President
PAUL H. WICK
Vice President
GARY S. ZELTZER
Vice President
THOMAS G. ROSE
Treasurer
FRANK J. NASTA
Secretary
- -------------------------------------------------------------------------
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, New York 10017
SUBADVISER
Henderson Investment
Management Limited
3 Finsbury Avenue
London EC2M 2PA
GENERAL DISTRIBUTOR
Seligman Advisors, Inc.
100 Park Avenue
New York, New York 10017
CUSTODIANS
Investors Fiduciary Trust Company
The Chase Manhattan Bank
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Ernst & Young LLP
P-77
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits.
All Exhibits have been previously filed, except Exhibits marked with an
asterisk (*) which are filed herewith.
(a) Articles of Incorporation
(1) Form of Articles of Amendment and Restatement of Articles of
Incorporation. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(2) Articles Supplementary in respect of Seligman Large-Cap Growth
Portfolio.
(b) By-laws of Registrant. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 20 filed on April 17, 1997.)
(c) Not applicable.
(d) Investment Management Agreements.
(1) Form of Management Agreement in respect of Seligman Large-Cap
Growth Portfolio.
(2) Form of Management Agreement in respect of Seligman Henderson
Global Growth Opportunities Portfolio and Seligman Henderson
Global Technology Portfolio. (Incorporated by reference to
Registrant's Post-Effective No. 17 filed on February 15, 1996.)
(3) Subadvisory Agreement in respect of Seligman Henderson Global
Growth Opportunities Portfolio and Seligman Henderson Global
Technology Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(4) Form of Management Agreement in respect of Seligman High-Yield
Bond Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 14 filed on February 14, 1995.)
(5) Management Agreement in respect of Seligman Communications and
Information and Seligman Frontier Portfolios. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 15 filed
on March 31, 1995.)
(6) Management Agreement in respect of Seligman Henderson Global
Smaller Companies Portfolio (formerly, Seligman Henderson Global
Emerging Companies Portfolio). (Incorporated by reference to
Registrant's Post-Effective Amendment No. 15 filed on March 31,
1995.)
(7) Subadvisory Agreement in respect of Seligman Henderson Global
Smaller Companies Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 22 filed on April 28,
1998.)
(8) Management Agreement in respect of Seligman Henderson
International Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 15 filed on March 31,
1995.)
(9) Subadvisory Agreement in respect of Seligman Henderson Global
Growth Opportunities Portfolio and Seligman Henderson Global
Technology Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(10) Management Agreement in respect of Seligman Capital, Seligman
Cash Management, Seligman Common Stock, Seligman Bond Securities,
and Seligman Income Portfolios. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 15 filed on March 31,
1995.)
(11) Management Agreement in respect of Seligman Large-Cap Value
Portfolio and Seligman Small-Cap Value Portfolio. (Incorporated
by reference to Registrant's Post-Effective Amendment No. 22
filed on April 28, 1998.)
(e) Not applicable.
C-1
<PAGE>
PART C. OTHER INFORMATION (cont'd)
(f) Deferred Compensation Plan for Directors of Seligman Portfolios, Inc.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 22 filed on April 28, 1998.)
(g) Custodian Agreements.
(1) Form of Custodian Agreement in respect of Seligman Capital,
Seligman Cash Management, Seligman Common Stock, Seligman Bond
Securities, and Seligman Income Portfolios. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 22 filed
on April 28, 1998.)
(2) Form of First Amendment to Custodian Agreement in respect of
Seligman Communications and Information and Seligman Frontier
Portfolios. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(3) Form of Recordkeeping Agreement in respect of Seligman Henderson
International Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 22 filed on April 28,
1998.)
(4) Form of First Amendment to Recordkeeping Agreement in respect of
Seligman Henderson Global Smaller Companies Portfolio.
(Incorporated by reference to Registrant's Post-Effective
Amendment No. 22 filed on April 28, 1998.)
(5) Second Amendment to Custodian Agreement in respect of Seligman
High-Yield Bond Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 18 filed on May 2,
1996.)
(6) Second Amendment to Recordkeeping Agreement in respect of
Seligman Henderson Global Growth Opportunities Portfolio and
Seligman Henderson Global Technology Portfolio. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 18 filed
on May 2, 1996.)
(7) Custodian Agreement between Registrant and Morgan Stanley Trust
Company in respect of the Seligman Henderson Portfolios.
(Incorporated by reference to Registrant's Post-Effective
Amendment No. 19 filed on November 1, 1996.)
(h) Other Material Contracts.
(1) Buy/Sell Agreement and Modification between the Registrant and
The Mutual Benefit Life Insurance Company. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 10 filed
on April 26, 1993.)
(2) Form of Buy/Sell Agreement between Registrant and Canada Life
Insurance Company of America. (Incorporated by reference to
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(3) Form of Buy/Sell Agreement between Registrant and Canada Life
Insurance Company of New York. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 22 filed on April 28,
1998.)
(4) 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. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(5) 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. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
C-2
<PAGE>
PART C. OTHER INFORMATION (cont'd)
(6) Second Amendment to Agency Agreement between Investors Fiduciary
Trust Company, acting as Transfer and Dividend Disbursing Agent,
and the Fund in respect of Seligman Communications and
Information, Seligman Frontier, and Seligman Henderson Global
Smaller Companies Portfolios. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 22 filed on April 28,
1998.)
(7) 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 Registrant's Post-Effective
Amendment No. 18, filed May 2, 1996.)
(8) 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 Registrant's
Post-Effective Amendment No. 18, filed May 2, 1996.)
(9) Form of Promotional Agent Distribution Agreement between Seligman
Advisors, Inc., on behalf of Registrant and Canada Life Insurance
Company of America. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(10) Form of Promotional Agent Distribution Agreement between Seligman
Advisors, Inc., on behalf of Registrant and Canada Life Insurance
Company of New York. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(11) Form of Selling Agreement between Seligman Advisors, Inc., on
behalf of Registrant and Canada Life Insurance Company of
America. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(12) Form of Selling Agreement between Seligman Advisors, Inc., on
behalf of Registrant and Canada Life Insurance Company of New
York. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 22 filed on April 28, 1998.)
(i) Opinion and Consent of Counsel.
*(1) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Large-Cap Growth Portfolio.
*(2) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Bond Portfolio (formerly, Seligman Fixed-Income Portfolio),
Seligman Capital Portfolio, Seligman Cash Management Portfolio,
Seligman Common Stock Portfolio and Seligman Income Portfolio.
(3) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Henderson International Portfolio (formerly, Seligman Henderson
Global Portfolio). (Incorporated by reference to Registrant's
Post-Effective Amendment No. 10 filed on April 29, 1994.)
(4) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Communication and Information Portfolio, Seligman Frontier
Portfolio and Seligman Henderson Global Smaller Companies
Portfolio (formerly, Seligman Henderson Global Emerging Companies
Portfolio). (Incorporated by reference to Registrant's
Post-Effective Amendment No. 13 filed on September 30, 1994.)
C-3
<PAGE>
PART C. OTHER INFORMATION (cont'd)
(5) Opinion and Consent of Counsel on behalf of Registrant's Seligman
High-Yield Bond Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 15 filed on March 31,
1995.)
(6) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Henderson Global Growth Opportunities Portfolio and Seligman
Henderson Global Technology Portfolio. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 18 filed on May 1,
1996.)
(7) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Large-Cap Value Portfolio and Seligman Small-Cap Value Portfolio.
(Incorporated by reference to Registrant's Post-Effective
Amendment No. 23 filed on June 1, 1998.)
(j) *Consent of Independent Auditors.
(k) Not applicable.
(l) Initial Capital Agreements.
*(1) Form of Investment Letter on behalf of Registrant's Seligman
Large-Cap Growth Portfolio.
*(2) Form of Investment Letter on behalf of Registrant's Seligman
Large-Cap Value Portfolio.
*(3) Form of Investment Letter on behalf of Registrant's Seligman
Small Cap Value Portfolio.
(4) Form of Purchase Agreement on behalf of Registrant's Seligman
Capital, Seligman Cash Management, Seligman Common Stock,
Seligman Bond, and Seligman Income Portfolios. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 22 filed
on April 28, 1998.)
(5) Investment Letter on behalf of Registrant's Seligman Henderson
International Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 22 filed on April 28,
1998.)
(6) Investment Letter on behalf of Registrant's Seligman High-Yield
Bond Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 15 filed on March 31, 1995.)
(7) Investment Letter on behalf of Registrant's Seligman Henderson
Global Growth Opportunities Portfolio and Seligman Henderson
Global Technology Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 18 filed on May 2,
1996.)
(m) Not applicable.
(n) *Financial Data Schedules.
(o) Not applicable.
Other Exhibits: Power of Attorney for Richard R. Schmaltz. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 22 filed
on April 28, 1998.)
Powers of Attorney. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 20 filed on April 17, 1997.)
Item 24. Persons Controlled by or Under Common Control with Registrant. None.
C-4
<PAGE>
PART C. OTHER INFORMATION (cont'd)
Item 25. 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 Registrant's 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.
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 26. 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.
Henderson Investment Management Limited ("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 801-55577, respectively), which were
filed on March 31, 1999 and October 15, 1998, respectively.
Item 27. Not applicable.
Item 28. 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.
C-5
<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: Chase Manhattan Bank, 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 29. Management Services. Not applicable.
Item 30. Undertakings. The Registrant undertakes: (1) 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; and,
(2) 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, as amended.
C-6
<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 Registration Statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 25 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 30 th day of April, 1999.
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. 25 to the
Registration Statement has been signed below by the following persons, in the
capacities indicated on April 30, 1999.
Signature Title
--------- -----
/s/ Brian T. Zino 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 )
C-7
<PAGE>
SELIGMAN PORTFOLIOS, INC.
Post-Effective Amendment No. 25 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
23 (a) (2) Articles Supplementary in respect of Seligman
Large-Cap Growth Portfolio
23 (d) (1) Form of Management Agreement in respect of
Seligman Large-Cap Growth Portfolio
23 (i) (1) Opinion and Consent of Counsel for Registrant's
Seligman Large-Cap Growth Portfolio
23 (i) (2) Opinion and Consent of Counsel for Registrant's
Seligman Bond Portfolio, Seligman Capital
Portfolio, Seligman Cash Management Portfolio,
Seligman Common Stock Portfolio and Seligman
Income Portfolio
23 (j) Consent of Independent Auditors
23 (1) (1) Form of Investment Letter for Seligman Large-Cap
Growth Portfolio
23 (1) (2) Form of Investment Letter for Seligman Large-Cap
Value Portfolio
23 (1) (3) Form of Investment Letter for Seligman Small-Cap
Value Portfolio
23 (n) Financial Data Schedules
C-8
ARTICLES SUPPLEMENTARY
to
ARTICLES OF AMENDMENT AND RESTATEMENT
of
SELIGMAN PORTFOLIOS, INC.
THIS IS TO CERTIFY that SELIGMAN PORTFOLIOS, INC., a Maryland corporation
having its principal office in Baltimore City, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, at a meeting duly
convened and held on March 18, 1999, adopted a resolution (a) classifying
20,000,000 authorized and unissued shares of the par value of $.001 each of the
common stock ("Shares") of the Seligman Henderson Global Smaller Companies
Portfolio class of the Corporation as a separate class of Shares (the "Seligman
Large-Cap Growth Portfolio") designated the "Seligman Large-Cap Growth
Portfolio" and (b) setting and establishing the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of each class of Seligman Large-Cap Growth
Portfolio as those set forth for a class of Shares of the Corporation in the
Corporation's Charter as supplemented or amended from time to time, including
the Articles of Amendment and Restatement as filed on April 14, 1988 and
approved on the same day.
SECOND: The Shares of the Seligman Large-Cap Growth Portfolio aforesaid
have been duly classified by the Board of Directors pursuant to authority and
power contained in the Articles of Amendment and Restatement of the Corporation.
IN WITNESS WHEREOF, SELIGMAN PORTFOLIOS, INC. has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
witnessed by its Secretary, and each of said officers of the Corporation has
also acknowledged these Articles Supplementary to be the corporate act of the
Corporation and has stated under penalties of perjury that to the best of his
knowledge, information and belief that the matters and facts set forth with
respect to approval are true in all material respects, all on April 22,1999.
SELIGMAN PORTFOLIOS, INC.
By: /s/ Brian T. Zino
------------------------
Brian T. Zino, President
Witness:
/s/ Frank J. Nasta
-------------------------
Frank J. Nasta, Secretary
<PAGE>
THE UNDERSIGNED, President of SELIGMAN PORTFOLIOS, INC., who executed on
behalf of said corporation the foregoing Articles Supplementary of which this
Certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation, the foregoing Articles Supplementary to be the corporate act
of said corporation and further certifies under penalties of perjury that, to
the best of his knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true in all material
respects.
/s/ Brian T. Zino
----------------------
Brian T. Zino
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of March 18, 1999 between SELIGMAN
PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of
Seligman Large-Cap Growth Portfolio (the "Portfolio"), and J. & W. SELIGMAN &
CO. INCORPORATED, a Delaware corporation (the "Manager").
WHEREAS, the Corporation is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Corporation desires to retain the Manager to render or contract to
obtain as hereinafter provided investment management services to the
Corporation, and to administer the business and other affairs of the Corporation
and the Manager is willing to render such services;
Now, therefore, in consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Duties of the Manager. The Manager shall, subject to the control of the
Board of Directors of the Corporation, manage the affairs of the Portfolio as
hereinafter defined, including, but not limited to, continuously providing the
Corporation with investment management, including investment research, advice
and supervision, determining which securities shall be purchased or sold by the
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. In
connection with the performance of its duties hereunder, the Manager shall
provide such office space, such bookkeeping, accounting, internal legal,
clerical, secretarial and administrative services (exclusive of, and in addition
to, any such services provided by any others retained by the Corporation) and
such executive and other personnel as shall be necessary for the operations of
the Portfolio. The Corporation understands that the Manager also acts as the
manager of all of the investment companies in the Seligman Group.
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
<PAGE>
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 Portfolio, including, but not limited to,
direct charges relating to the purchase and sale of portfolio securities,
interest charges, fees and expenses of independent attorneys and auditors, taxes
and governmental fees, cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase or redemption of
shares, expenses of registering and qualifying shares for sale, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of corporate data processing and related services, shareholder
recordkeeping and shareholder account services, expenses of printing and filing
reports and other documents filed with governmental agencies, expenses of
printing and distributing prospectuses, expenses of annual and special
shareholders' meetings, fees and disbursements of transfer agents and
custodians, expenses of disbursing dividends and distributions, fees and
expenses of directors of the Corporation who are not employees of the Manager or
its affiliates, membership dues in the Investment Company Institute, insurance
premiums and extraordinary expenses such as litigation expenses.
3. Compensation. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, the
Portfolio will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month at the annual rate of .70% of the
Portfolio's average daily net assets on the first $1 billion of net assets, .65%
of the Portfolio's average daily net assets on the next $1 billion of net
assets, and .60% of the Portfolio's average daily net assets in excess of $2
billion.
(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) of the Corporation or as the Board of Directors of the
Corporation may direct from time to time. In providing the Portfolio with
investment management and supervision, it is recognized that the Manager 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
-2-
<PAGE>
attitude of brokers or dealers toward investment companies and their support of
them, and to such other considerations as the Board of Directors of the
Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for the
Portfolio that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers who execute
brokerage transactions at a higher cost to the Portfolio than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and execution. Therefore, the Manager is authorized to place orders for
the purchase and sale of securities for the Portfolio with such brokers, subject
to review by the Corporation's Board of Directors from time to time with respect
to the extent and continuation of this practice. It is understood that the
services provided by such brokers may be useful to the Manager in connection
with its services to other clients as well as the Portfolio.
The placing of purchase and sale orders may be carried out by the Manager
or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the Portfolio,
the Manager or any subsidiary of the Manager may, without material risk, arrange
to receive a soliciting dealer's fee or other underwriter's or dealer's discount
or commission, the Manager shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and the
amount thereof shall be applied to reduce the compensation to be received by the
Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Portfolio of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and
effect until December 31, 2000, and from year to year thereafter if such
continuance is approved in the manner required by the 1940 Act if the Manager
shall not have notified the Portfolio in writing at least 60 days prior to such
December 31 or prior to December 31 of any year thereafter that it does not
desire such continuance. This Agreement may be terminated at any time in respect
of the Portfolio, without payment of any penalty by the Portfolio 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 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).
-3-
<PAGE>
6. Right of Manager In Corporate Name. The Manager and the Corporation each
agree that the word "Seligman" which comprises a component of the Corporation's
and Portfolio's name, is a property right of the Manager. The Portfolio agrees
and consents that (i) it will only use the word "Seligman" as a component of its
corporate name and for no other purpose, (ii) it will not purport to grant to
any third party the right to use the word "Seligman" for any purpose, (iii) the
Manager or any corporate affiliate of the Manager may use or grant to others the
right to use the word "Seligman", or any combination or abbreviation thereof, as
all or a portion of a corporate or business name or for any commercial purpose,
including a grant of such right to any other investment company, and at the
request of the Manager, the Corporation and the Portfolio will take such action
as may be required to provide its consent to the use of the word "Seligman", or
any combination or abbreviation thereof, by the Manager or any corporate
affiliate of the Manager, or by any person to whom the Manager or an affiliate
of the Manager shall have granted the right to such use; and (iv) upon the
termination of any management agreement into which the Manager and the
Corporation may enter, the Corporation and the Portfolio shall, upon request by
the Manager, promptly take such action, at its own expense, as may be necessary
to change its corporate name to one not containing the word "Seligman" and
following such change, shall not use the word Seligman, or any combination
thereof, as a part of its corporate name or for any other commercial purpose,
and shall use its best efforts to cause its officers, trustees and shareholders
to take any and all actions which the Manager may request to effect the
foregoing and to reconvey to the Manager any and all rights to such word.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation on behalf of the Portfolio and the
Manager have caused this Agreement to be executed by their duly authorized
officers as of the date first above written.
SELIGMAN PORTFOLIOS, INC.
By ________________________________
J. & W. SELIGMAN & CO. INCORPORATED
By ________________________________
-4-
[Sullivan & Cromwell]
April 29,1999
Seligman Portfolios, Inc.,
100 Park Avenue,
New York, New York 10017.
Dear Sirs:
In connection with Post-Effective Amendment No. 25 to the Registration
Statement on Form N-1A (File No. 33- 15253) of Seligman Portfolios, Inc., a
Maryland corporation (the "Fund"), which you expect to file under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to an indefinite
number of shares of Capital Stock, par value $.001 per share, of the class
designated as Seligman Large-Cap Growth Portfolio (the "Portfolio", and the
Shares of the Portfolio being referred to herein as the "Shares"), we, as your
counsel, have examined such corporate records, certificates and other documents,
and such questions of law, as we have considered necessary or appropriate for
the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion, the
Shares have been duly authorized to the extent of 20,000,000 Shares of the
Portfolio, and when the Post-Effective Amendment referred to above has become
effective under the Securities Act and the Shares of the Portfolio have been
issued (a) for at least the par value thereof in accordance with the
Registration Statement referred to above, (b) so as not to exceed the then
authorized number of Shares of the Portfolio and (c) in accordance with the
authorization of the Board of Directors, the Shares will be duly and validly
issued, fully paid and non-assessable.
We have relied as to certain matters on information obtained from public
officials, officers of the Fund and other sources believed by us to be
responsible.
The foregoing opinion is limited to the federal laws of the United States
and the General Corporation Law of the State of Maryland, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment referred to above. In giving such consent, we do not
thereby admit that we are in the category of person whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
s/Sullivan & Cromwell
SULLIVAN & CROMWELL
Sullivan & Cromwell
125 Broad Street, New York 10004
New York Telephone (212) 850-4000
May 20, 1988
Seligman Mutual Benefit Portfolios, Inc.,
One Bankers Trust Plaza
New York, New York 10006
Dear Sirs:
In connection with Pre-Effective Amendment No. 2 to the Registration
Statement on Form N-1A (File No. 33-15253) of Seligman Mutual Benefit
Portfolios, Inc., a Maryland corporation (the "Fund"), which you expect to file
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to an indefinite number of shares, par value $.001 per share (the
"Shares") of five Series, we, as your counsel, have examined such corporate
records, certificates and other documents and such questions of law as we have
considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion:
(1) The Fund has been duly incorporated and is an existing corporation in
good standing under the laws of the State of Maryland.
(2) The Shares have been duly authorized to the extent of 1,000,000,000
Shares and, when the Registration Statement referred to above has become
effective under the Securities Act and the Shares of each Series have been
issued as described in such Registration Statement (a) for at least the par
value thereof, (b) so as not to exceed the then authorized number of Shares of
each Series and (c) in accordance with the authorization of the Board of
Directors, the Shares of each Series will be duly and validly issued, fully paid
and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Pre-Effective Amendment referred to above. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
/s/Sullivan & Cromwell
-------------------------
Sullivan & Cromwell
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "General Information - Independent Auditors" and to the
incorporation by reference of our report dated February 5, 1999 on the Seligman
Portfolios, Inc. (which were comprised of 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, Seligman Income Portfolio, Seligman Large-Cap Value
Portfolio, and Seligman Small-Cap Value Portfolio) in this Registration
Statement (Form N-1A Nos. 33-15253 and 811-5221) of Seligman Portfolios, Inc.
ERNST & YOUNG LLP
New York, New York
April 26, 1999
INVESTMENT LETTER
SELIGMAN PORTFOLIOS, INC.
Seligman Portfolios, Inc. (the "Fund"), an open-end, diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. In order to provide the Seligman Large-Cap Growth Portfolio of the Fund
(the "Portfolio") with its initial capital, the Fund hereby sells to
Purchaser and Purchaser purchases ____ 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 $_______ 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 the Shares.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 30th day
of April, 1999 ("Purchase Date").
SELIGMAN PORTFOLIOS, INC.
By: /s/
-----------------------------
Name: Lawrence P. Vogel
Title: Vice President
SELIGMAN ADVISORS, INC.
By: /s/
---------------------------
Name: Stephen J. Hodgdon
Title: President
INVESTMENT LETTER
SELIGMAN PORTFOLIOS, INC.
Seligman Portfolios, Inc. (the "Fund"), an open-end, diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. In order to provide the Seligman Large-Cap Value Portfolio of the Fund (the
"Portfolio") with its initial capital, the Fund hereby sells to Purchaser
and Purchaser purchases 1 share (the "Share") of Capital Stock (par value
$.001) of the Portfolio at a price of $10.00 per share. The Fund hereby
acknowledges receipt from Purchaser of funds in the amount of $10.00 in
full payment for one (1) Share.
2. Purchaser represents and warrants to the Fund that the Share is being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of that Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 30th day
of April, 1999 ("Purchase Date").
SELIGMAN PORTFOLIOS, INC.
By: /s/ Lawrence P. Vogel
----------------------------
Name: Lawrence P. Vogel
Title: Vice President
SELIGMAN ADVISORS, INC.
By: /s/ Stephen J. Hodgdon
------------------------
Name: Stephen J. Hodgdon
Title: President
INVESTMENT LETTER
SELIGMAN PORTFOLIOS, INC.
Seligman Portfolios, Inc. (the "Fund"), an open-end, diversified management
investment company, and the undersigned ("Purchaser"), intending to be legally
bound, hereby agree as follows:
1. In order to provide the Seligman Small-Cap Value Portfolio of the Fund (the
"Portfolio") with its initial capital, the Fund hereby sells to Purchaser
and Purchaser purchases 1 share (the "Share") of Capital Stock (par value
$.001) of the Portfolio at a price of $10.00 per share. The Fund hereby
acknowledges receipt from Purchaser of funds in the amount of $10.00 in
full payment for one (1) Share.
2. Purchaser represents and warrants to the Fund that the Share is being
acquired for investment and not with a view to distribution thereof, and
that Purchaser has no present intention to redeem or dispose of that Share.
IN WITNESS WHEREOF, the parties have executed this agreement as of the 30th day
of April, 1999 ("Purchase Date").
SELIGMAN PORTFOLIOS, INC.
By: /s/ Lawrence P. Vogel
----------------------------
Name: Lawrence P. Vogel
Title: Vice President
SELIGMAN ADVISORS, INC.
By: /s/ Stephen J. Hodgdon
------------------------
Name: Stephen J. Hodgdon
Title: President
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<NAME> SELIGMAN BOND PORTFOLIO
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<NAME> SELIGMAN CAPITAL PORTFOLIO
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<NAME> SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO
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<NAME> SELIGMAN CASH MANAGEMENT PORTFOLIO
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<NAME> SELIGMAN COMMON STOCK PORTFOLIO
<MULTIPLIER> 1000
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<NAME> SELIGMAN FRONTIER PORTFOLIO
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<NAME> SELIGMAN HENDERSON GLOBAL GROWTH OPP PORT
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<NAME> SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO
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<NAME> SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO
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<NAME> SELIGMAN HIGH-YIELD BOND PORTFOLIO
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<NAME> SELIGMAN INCOME PORTFOLIO
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<NAME> SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO
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<NAME> SELIGMAN SMALL-CAP VALUE PORTFOLIO
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