J. & W. SELIGMAN & CO.
INCORPORATED
January 13, 2000
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
Re: Seligman Portfolios, Inc.
File No. 033-15253
-------------------------
Dear Sir or Madam:
Enclosed for filing, pursuant to Rule 497(e) under the Securities Act of
1933, is the prospectus of each of Seligman Henderson Global Technology
Portfolio and Seligman Small-Cap Value Portfolio, each a portfolio of Seligman
Portfolios, Inc.
Very truly yours,
/s/ Julie L. Wilson
Julie L. Wilson
Vice President
Law & Regulation
JLW:jw
<PAGE>
SELIGMAN
---------------------
PORTFOLIOS, INC.
SELIGMAN HENDERSON
GLOBAL TECHNOLOGY
PORTFOLIO
SEEKING LONG-TERM CAPITAL
APPRECIATION BY INVESTING
IN COMPANIES IN TECHNOLOGY
AND TECHNOLOGY-RELATED
INDUSTRIES AROUND THE WORLD
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 the Portfolio should be
considered based on the investment objective, strategies and risks described in
this prospectus, 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 this Portfolio
is suitable for you.
[GRAPHIC OMITTED]
PROSPECTUS
MAY 1, 1999
-------
MANAGED BY
[SELIGMAN MONOGRAM]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
SPGT1 5/99
<PAGE>
TABLE OF CONTENTS
THE FUND AND THE PORTFOLIO
OVERVIEW OF THE FUND P-1
INVESTMENT OBJECTIVE P-1
PRINCIPAL INVESTMENT STRATEGIES P-1
PRINCIPAL RISKS P-2
PAST PERFORMANCE P-3
MANAGEMENT OF THE FUND P-4
YEAR 2000 P-5
EURO CONVERSION P-6
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES P-7
HOW TO PURCHASE AND SELL SHARES P-7
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS P-7
TAXES P-7
FINANCIAL HIGHLIGHTS P-8
FOR MORE INFORMATION BACK COVER
TIMES CHANGE ... VALUES ENDURE
<PAGE>
THE FUND AND THE PORTFOLIO
OVERVIEW OF THE FUND
The Fund consists of 15 separate and distinct portfolios. This Prospectus
contains information about Seligman Henderson Global Technology Portfolio.
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity contracts
(Contracts). The Accounts may invest in shares of the Portfolio in accordance
with allocation instructions received from the owners of the Contracts. Such
allocations rights and information on how to purchase or surrender a Contract,
as well as sales charges and other expenses imposed by the Contracts on their
owners, are further described in the separate prospectuses and disclosure
documents issued by the participating insurance companies and accompanying this
Prospectus. The Fund reserves the right to reject any order for the purchase of
shares of the Portfolio.
INVESTMENT OBJECTIVE
The Portfolio's objective is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
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 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
P-1
<PAGE>
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.
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.
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<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
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 imposed by the Contracts on their
owners. If these expenses were included, the returns would be lower. Both the
bar chart and table assume that all dividends and capital gain distributions
were reinvested.
ANNUAL TOTAL RETURNS - CALENDAR YEARS
[BAR CHART OMITTED]
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.
- --------------------------------------------------------------------------------
P-3
<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 the Portfolio, including making purchases and sales of securities
for the Portfolio, consistent with the Portfolio's investment objective and
strategies, and administers the 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.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of 1.00% of the average daily net assets of the Portfolio.
PORTFOLIO MANAGEMENT
The 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 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 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, a series of Seligman
Henderson Global Fund Series, Inc.
Mr. Wick and Mr. Ashford-Russell have responsibility for directing the domestic
and international investments, respectively, of the 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 the Portfolio.
Seligman pays HIML a fee for its services in respect of the Portfolio based on
the assets under HIML's supervision. This fee does not affect the fees paid by
the 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-4
<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.
P-5
<PAGE>
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 the Portfolio. Despite
these efforts, the 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-6
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Portfolio's net asset value (NAV)
next calculated after your request is received by participating insurance
companies. If your purchase or sell request is received by participating
insurance companies 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
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 participating insurance
companies after the close of regular trading on the NYSE, your request will be
executed at the Portfolio's NAV calculated as of the close of regular trading on
the next NYSE trading day.
The NAV of the Portfolio is computed each day, Monday through Friday, on days
that the NYSE is open for trading. Securities owned by the 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
The Portfolio is offering its shares only to Accounts of participating insurance
companies to fund benefits of the Contracts. The Accounts may invest in shares
of the Portfolio in accordance with allocation instructions received from the
owners of the Contracts. Such allocations rights and information on how to
purchase or surrender a Contract, as well as sales charges and other expenses
imposed by the Contracts on their owners, are further described in the separate
prospectuses and disclosure documents issued by the participating insurance
companies and accompanying this Prospectus. The Fund reserves the right to
reject any order for the purchase of shares of the Portfolio.
An Account may sell all or any portion of the Portfolio shares that it holds at
any time at the next computed NAV per share, as described above. Portfolio
shares that are sold are entitled to any dividends that have been declared as
payable to record owners up to and including the day the sale is effected. There
is no charge. Payment of the sale price will normally be made within seven days
after receipt of such sale. In addition, the right to sell your shares may be
suspended and the date of payment of the sale price may be postponed for any
period during which the NYSE is closed (other than customary weekend and holiday
closings) or during which the Securities and Exchange Commission (SEC)
determines that trading thereon is restricted, or for any period during which an
emergency (as determined by the SEC) exists as a result of which the sale of
Portfolio shares is not reasonably practicable or as a result of which it is not
reasonably practicable for the Portfolio to fairly determine the value of its
net assets, or for such other periods as the SEC may by order permit for the
protection of shareholders.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Dividends and capital gain distributions from the Portfolio will be declared and
paid annually and will be reinvested in additional shares, at NAV, of the
Portfolio.
TAXES
Further information regarding the tax consequences of an investment in the
Portfolio is contained in the separate prospectuses and disclosure documents
issued by the participating insurance companies and accompanying this
Prospectus.
P-7
<PAGE>
FINANCIAL HIGHLIGHTS
The table below is intended to help you understand the Portfolio's financial
performance for the period of the Portfolio's operations. Certain information
reflects financial results for a single share of the 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 imposed by the Contracts
on their owners. Ernst & Young LLP, independent auditors, have audited this
information. Their report, along with the Portfolio's financial statements, is
included in the Fund's annual report, which is available upon request.
Year ended
December 31, 5/1/96+
---------------- to
1998 1997 12/31/96
------ ------ ------
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%
- ----------
* 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-8
<PAGE>
[955}
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
The following information is available without charge upon request: Call
toll-free (800) 221-2783 in the US or collect (212) 850-1864 outside the US. You
may also call these numbers to request other information about the Fund or to
make shareholder inquiries.
STATEMENT OF ADDITIONAL INFORMATION (SAI) contains additional information about
the Fund. It is on file with the Securities and Exchange Commission, or SEC, and
is incorporated by reference into (is legally part of) this prospectus.
ANNUAL/SEMI-ANNUAL REPORTS contain additional information about the Portfolio's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
- --------------------------------------------------------------------------------
SELIGMAN ADVISORS, INC.
AN AFFILIATE OF
[SELIGMAN MONOGRAM]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
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 (202) 942-8090. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the EDGAR Database on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained by electronic request at the
following E-mail address: [email protected], or, upon payment of a duplicating
fee, by writing: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102.
SEC FILE NUMBER: 811-5221
<PAGE>
SELIGMAN
------------------
PORTFOLIOS, INC.
SELIGMAN
SMALL-CAP VALUE
PORTFOLIO
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 the Portfolio should be
considered based on the investment objective, strategies and risks described in
this prospectus, 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 this Portfolio
is suitable for you.
[GRAPHIC OMITTED]
PROSPECTUS
MAY 1, 1999
-------
A VALUE APPROACH
TO SEEKING LONG-TERM
CAPITAL APPRECIATION
MANAGED BY
[SELIGMAN MONOGRAM]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
SPSCV1 5/99
<PAGE>
TABLE OF CONTENTS
THE FUND AND THE PORTFOLIO
OVERVIEW OF THE FUND P-1
INVESTMENT OBJECTIVE P-1
PRINCIPAL INVESTMENT STRATEGIES P-1
PRINCIPAL RISKS P-2
PAST PERFORMANCE P-2
MANAGEMENT OF THE FUND P-3
YEAR 2000 P-4
EURO CONVERSION P-5
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES P-6
HOW TO PURCHASE AND SELL SHARES P-6
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS P-6
TAXES P-6
FINANCIAL HIGHLIGHTS P-7
FOR MORE INFORMATION BACK COVER
TIMES CHANGE ... VALUES ENDURE
<PAGE>
THE FUND AND THE PORTFOLIO
OVERVIEW OF THE FUND
The Fund consists of 15 separate and distinct portfolios. This Prospectus
contains information about Seligman Small-Cap Value Portfolio.
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity contracts
(Contracts). The Accounts may invest in shares of the Portfolio in accordance
with allocation instructions received from the owners of the Contracts. Such
allocations rights and information on how to purchase or surrender a Contract,
as well as sales charges and other expenses imposed by the Contracts on their
owners, are further described in the separate prospectuses and disclosure
documents issued by the participating insurance companies and accompanying this
Prospectus. The Fund reserves the right to reject any order for the purchase of
shares of the Portfolio.
INVESTMENT OBJECTIVE
The Portfolio's objective is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Portfolio uses the following principal strategies to seek 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.
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 believes 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
P-1
<PAGE>
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.
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 that 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. 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 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.
P-2
<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 the Portfolio, including making purchases and sales of securities
for the Portfolio, consistent with the Portfolio's investment objective and
strategies, and administers the 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.
The Portfolio pays Seligman a management fee for its services, equal to a
percentage of the Portfolio's average daily net assets, as follows: 1.00% on
first $500 million; .90% on next $500 million; and .80% thereafter. For the
period ended December 31, 1998, the Portfolio paid Seligman a management fee
equal to an annual rate of 1.00% of its average daily net assets.
PORTFOLIO MANAGEMENT
The 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 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 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-3
<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.
P-4
<PAGE>
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 the Portfolio. Despite
these efforts, the 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-5
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
When you buy or sell shares, you do so at the Portfolio's net asset value (NAV)
next calculated after your request is received by participating insurance
companies. If your purchase or sell request is received by participating
insurance companies 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
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 participating insurance
companies after the close of regular trading on the NYSE, your request will be
executed at the Portfolio's NAV calculated as of the close of regular trading on
the next NYSE trading day.
The NAV of the Portfolio is computed each day, Monday through Friday, on days
that the NYSE is open for trading. Securities owned by the 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
The Portfolio is offering its shares only to Accounts of participating insurance
companies to fund benefits of the Contracts. The Accounts may invest in shares
of the Portfolio in accordance with allocation instructions received from the
owners of the Contracts. Such allocations rights and information on how to
purchase or surrender a Contract, as well as sales charges and other expenses
imposed by the Contracts on their owners, are further described in the separate
prospectuses and disclosure documents issued by the participating insurance
companies and accompanying this Prospectus. The Fund reserves the right to
reject any order for the purchase of shares of the Portfolio.
An Account may sell all or any portion of the Portfolio shares that it holds at
any time at the next computed NAV per share, as described above. Portfolio
shares that are sold are entitled to any dividends that have been declared as
payable to record owners up to and including the day the sale is effected. There
is no charge. Payment of the sale price will normally be made within seven days
after receipt of such sale. In addition, the right to sell your shares may be
suspended and the date of payment of the sale price may be postponed for any
period during which the NYSE is closed (other than customary weekend and holiday
closings) or during which the Securities and Exchange Commission (SEC)
determines that trading thereon is restricted, or for any period during which an
emergency (as determined by the SEC) exists as a result of which the sale of
Portfolio shares is not reasonably practicable or as a result of which it is not
reasonably practicable for the Portfolio to fairly determine the value of its
net assets, or for such other periods as the SEC may by order permit for the
protection of shareholders.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Dividends and capital gain distributions from the Portfolio will be declared and
paid annually and will be reinvested in additional shares, at NAV, of the
Portfolio.
TAXES
Further information regarding the tax consequences of an investment in the
Portfolio is contained in the separate prospectuses and disclosure documents
issued by the participating insurance companies and accompanying this
Prospectus.
P-6
<PAGE>
FINANCIAL HIGHLIGHTS
The table below is intended to help you understand the Portfolio's performance
for the period of the Portfolio's operations. Certain information reflects
financial results for a single share of the Portfolio that was held throughout
the period shown. "Total return" shows the rate that you would have earned (or
lost) on an investment in the Portfolio. Total return does not reflect the
effect of any administration fees or sales charges imposed by the Contracts on
their owners. Ernst & Young LLP, independent auditors, have audited this
information. Their report, along with the Portfolio's financial statements, is
included in the Fund's annual report, which is available upon request.
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 1.00% of the Portfolio's net assets. These amounts reflect
the effect of this waiver. There is no assurance that Seligman will
continue this policy in the future.
+ Commencement of operations.
++ Annualized.
P-7
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
The following information is available without charge upon request: Call
toll-free (800) 221-2783 in the US or collect (212) 850-1864 outside the US. You
may also call these numbers to request other information about the Fund or to
make shareholder inquiries.
STATEMENT OF ADDITIONAL INFORMATION (SAI) contains additional information about
the Fund. It is on file with the Securities and Exchange Commission, or SEC, and
is incorporated by reference into (is legally part of) this prospectus.
ANNUAL/SEMI-ANNUAL REPORTS contain additional information about the Portfolio's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Portfolio's performance during its last fiscal year.
- --------------------------------------------------------------------------------
SELIGMAN ADVISORS, INC.
AN AFFILIATE OF
[SELIGMAN MONOGRAM]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
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 (202) 942-8090. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the EDGAR Database on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained by electronic request at the
following E-mail address: [email protected], or, upon payment of a duplicating
fee, by writing: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102.
SEC FILE NUMBER: 811-5221
