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. 27 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 29 |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 28, 2000 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>
S E L I G M A N
-----------------
PORTFOLIOS, INC.
SELIGMAN
BOND 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.
SPB1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
-------
Seeking Favorable
Current Income
Through Investments
In Fixed-Income
Securities
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Bond Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is favorable current income.
PRINCIPAL INVESTMENT STRATEGIES
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.
P-1
<PAGE>
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 Portfolio generally does not invest a significant amount,
if any, in illiquid or foreign securities.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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 and
Standard & Poor's Ratings Services 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 -4.48%
Best quarter return: 6.88% - quarter ended 6/30/95.
Worst quarter return: -3.35% - quarter ended 3/31/96.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Bond Portfolio -4.48% 6.09% 6.05%
Lehman Brothers Government Bond Index -2.24 7.44 7.48
Lipper Corporate Debt BBB-Rated Funds Average -1.69 7.78 7.87
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 Bond Index excludes the
effect of fees and sales charges.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 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, Seligman Cash Management
Fund, Inc. and Seligman U.S. Government Securities Series, a series of Seligman
High Income Fund Series.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year .......... $ 10.38 $ 10.24 $ 9.89 $ 10.44 $ 9.27
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss) .............. 0.64 0.59 0.54 0.56 0.61
Net gains or losses on securities (both
realized and unrealized) .................. (1.10) 0.25 0.35 (0.55) 1.17
--------- --------- --------- --------- ---------
Total from investment operations ............ (0.46) 0.84 0.89 0.01 1.78
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net
investment income ......................... (0.65) (0.59) (0.54) (0.56) (0.61)
Distributions from capital gains .......... -- (0.11) -- -- --
--------- --------- --------- --------- ---------
Total distributions ......................... (0.65) (0.70) (0.54) (0.56) (0.61)
--------- --------- --------- --------- ---------
Net asset value, end of year ................ $ 9.27 $ 10.38 $ 10.24 $ 9.89 $ 10.44
========= ========= ========= ========= =========
Total Return: ............................... (4.48%) 8.20% 8.98% 0.09% 19.18%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ...... $ 4,947 $ 7,320 $ 7,232 $ 5,015 $ 4,497
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 ................................ 5.56% 5.58% 6.22% 5.97% 6.22%
Portfolio turnover rate ..................... 64.22% 73.31% 170.12% 199.74% 114.42%
Without management fee waiver:**
Ratio of expenses to average net assets ... 0.71% 0.82% 0.83% 0.79% 0.99%
Ratio of net income (loss)
to average net assets .................... 5.45% 5.36% 5.99% 5.78% 5.83%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
BOND 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.
SPB1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
---------
Seeking Favorable
Current Income
Through Investments
In Fixed-Income
Securities
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Bond Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is favorable current income.
PRINCIPAL INVESTMENT STRATEGIES
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.
P-1
<PAGE>
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 Portfolio generally does not invest a significant amount,
if any, in illiquid or foreign securities.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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 and
Standard & Poor's Ratings Services 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 -4.48%
Best quarter return: 6.88% - quarter ended 6/30/95.
Worst quarter return: -3.35% - quarter ended 3/31/96.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Bond Portfolio -4.48% 6.09% 6.05%
Lehman Brothers Government Bond Index -2.24 7.44 7.48
Lipper Corporate Debt BBB-Rated Funds Average -1.69 7.78 7.87
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 Bond Index excludes the
effect of fees and sales charges.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 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, Seligman Cash Management
Fund, Inc. and Seligman U.S. Government Securities Series, a series of Seligman
High Income Fund Series.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year .......... $ 10.38 $ 10.24 $ 9.89 $ 10.44 $ 9.27
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss) .............. 0.64 0.59 0.54 0.56 0.61
Net gains or losses on securities (both
realized and unrealized) .................. (1.10) 0.25 0.35 (0.55) 1.17
--------- --------- --------- --------- ---------
Total from investment operations ............ (0.46) 0.84 0.89 0.01 1.78
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net
investment income ......................... (0.65) (0.59) (0.54) (0.56) (0.61)
Distributions from capital gains .......... -- (0.11) -- -- --
--------- --------- --------- --------- ---------
Total distributions ......................... (0.65) (0.70) (0.54) (0.56) (0.61)
--------- --------- --------- --------- ---------
Net asset value, end of year ................ $ 9.27 $ 10.38 $ 10.24 $ 9.89 $ 10.44
========= ========= ========= ========= =========
Total Return: ............................... (4.48%) 8.20% 8.98% 0.09% 19.18%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ...... $ 4,947 $ 7,320 $ 7,232 $ 5,015 $ 4,497
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 ................................ 5.56% 5.58% 6.22% 5.97% 6.22%
Portfolio turnover rate ..................... 64.22% 73.31% 170.12% 199.74% 114.42%
Without management fee waiver:**
Ratio of expenses to average net assets ... 0.71% 0.82% 0.83% 0.79% 0.99%
Ratio of net income (loss)
to average net assets .................... 5.45% 5.36% 5.99% 5.78% 5.83%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
CAPITAL
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.
SPCA1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
----------
Seeking
Capital Appreciation
by Investing in
Mid-Capitalization
Growth Stocks
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
TIMES CHANGE ... VALUES ENDURE
[PHOTO]
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Capital Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
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.
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which "medium-sized
companies" are defined if it concludes that such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 53.33%
Best quarter return: 44.77% - quarter ended 12/31/99.
Worst quarter return: -23.55% - quarter ended 9/30/90.
- --------------------------------------------------------------------------------
Class I Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Capital Portfolio 53.33% 27.04% 19.21%
Russell Midcap Growth Index 51.29 28.03 18.95
Lipper Mid Cap Funds Average 36.29 23.35 17.35
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 Growth Index
does not reflect fees and sales charges.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The Portfolio is managed by Ms. Marion S. Schultheis, co-head of Seligman's
Global Growth Team. 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 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 Portfolio of the Fund; and she manages Seligman
Capital Fund, Inc. and Seligman Growth Fund, Inc. and co-manages Seligman Global
Growth Fund, a series of Seligman Global Fund Series, Inc.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ........ $ 20.81 $ 18.10 $ 16.01 $ 14.91 $ 12.70
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income(loss) ............. 0.01 0.04 0.03 0.04 0.05
Net gains or losses on securities (both
realized and unrealized) ................ 10.21 3.89 3.35 2.12 3.39
---------- ---------- ---------- ---------- ----------
Total from investment operations .......... 10.22 3.93 3.38 2.16 3.44
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends (from net
investment income) ...................... (0.01) (0.04) (0.03) (0.04) (0.05)
Distributions from capital gains ........ (7.12) (1.18) (1.26) (1.02) (1.18)
---------- ---------- ---------- ---------- ----------
Total distributions ....................... (7.13) (1.22) (1.29) (1.06) (1.23)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .............. $ 23.90 $ 20.81 $ 18.10 $ 16.01 $ 14.91
========== ========== ========== ========== ==========
Total Return: ............................. 53.33% 22.19% 21.31% 14.51% 27.17%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .... $ 27,586 $ 24,141 $ 20,400 $ 14,313 $ 9,294
Ratio of expenses to average net assets ... 0.59% 0.60% 0.60% 0.59% 0.60%
Ratio of net income (loss) to average
net assets .............................. 0.03% 0.19% 0.16% 0.29% 0.32%
Portfolio turnover rate ................... 172.88% 130.86% 93.97% 88.78% 122.20%
Without management fee waiver:**
Ratio of expenses to average net assets . 0.62% 0.71%
Ratio of net income (loss)
to average net assets .................. 0.14% 0.21%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
CAPITAL
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.
SPCA1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
Seeking
Capital Appreciation
by Investing in
Mid-Capitalization
Growth Stocks
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Capital Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
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.
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which "medium-sized
companies" are defined if it concludes that such a change is appropriate.
There is no guarantee that the Portfolio will achieve its investment objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 53.33%
Best quarter return: 44.77% - quarter ended 12/31/99.
Worst quarter return: -23.55% - quarter ended 9/30/90.
- --------------------------------------------------------------------------------
Class I Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Capital Portfolio 53.33% 27.04% 19.21%
Russell Midcap Growth Index 51.29 28.03 18.95
Lipper Mid Cap Funds Average 36.29 23.35 17.35
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 Growth Index
does not reflect fees and sales charges.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The Portfolio is managed by Ms. Marion S. Schultheis, co-head of Seligman's
Global Growth Team. 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 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 Portfolio of the Fund; and she manages Seligman
Capital Fund, Inc. and Seligman Growth Fund, Inc. and co-manages Seligman Global
Growth Fund, a series of Seligman Global Fund Series, Inc.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ......... $ 20.81 $ 18.10 $ 16.01 $ 14.91 $ 12.70
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income(loss) .............. 0.01 0.04 0.03 0.04 0.05
Net gains or losses on securities (both
realized and unrealized) ................. 10.21 3.89 3.35 2.12 3.39
---------- ---------- ---------- ---------- ----------
Total from investment operations ........... 10.22 3.93 3.38 2.16 3.44
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends (from net
investment income) ....................... (0.01) (0.04) (0.03) (0.04) (0.05)
Distributions from capital gains ......... (7.12) (1.18) (1.26) (1.02) (1.18)
---------- ---------- ---------- ---------- ----------
Total distributions ........................ (7.13) (1.22) (1.29) (1.06) (1.23)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ............... $ 23.90 $ 20.81 $ 18.10 $ 16.01 $ 14.91
========== ========== ========== ========== ==========
Total Return: .............................. 53.33% 22.19% 21.31% 14.51% 27.17%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ..... $ 27,586 $ 24,141 $ 20,400 $ 14,313 $ 9,294
Ratio of expenses to average net assets .... 0.59% 0.60% 0.60% 0.59% 0.60%
Ratio of net income (loss) to average
net assets ............................... 0.03% 0.19% 0.16% 0.29% 0.32%
Portfolio turnover rate .................... 172.88% 130.86% 93.97% 88.78% 122.20%
Without management fee waiver:**
Ratio of expenses to average net assets . 0.62% 0.71%
ratio of net income (loss)
to average net assets .................. 0.14% 0.21%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented. There is no assurance that Seligman
will continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
CASH
MANAGEMENT
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 objectives, 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.
SPCM1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
----------
A Money Market
Portfolio Seeking to Preserve
Capital and to Maximize
Liquidity and Current Income
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund and the Portfolio
Overview of the Fund P-1
Investment Objectives P-1
Principal Investment Strategies P-1
Principal Risks P-2
Past Performance P-3
Management of the Fund P-4
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Cash Management Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVES
The Portfolio's objectives are to preserve capital and to maximize liquidity and
current income.
PRINCIPAL INVESTMENT STRATEGIES
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 (Moody's) or Standard & Poor's Ratings Services (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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objectives. The Portfolio's objectives and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
There is no guarantee that the Portfolio will achieve its objectives.
P-1
<PAGE>
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 USbanks. While US banks and
US branches of foreign banks are required to maintain certain reserve 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
P-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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 were reinvested.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 5.07%
Best quarter return: 1.93% - quarter ended 6/30/90.
Worst quarter return: 0.72% - quarter ended 6/30/93.
- --------------------------------------------------------------------------------
Class I Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
5.07% 5.40% 5.10%
- --------------------------------------------------------------------------------
The Portfolio's 7-day yield as of December 31, 1999 was 5.28%.
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 objectives and
strategies, and administers the Portfolio's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio. For the
period ended December 31, 1999, Seligman voluntarily waived its management fee
for the Portfolio. There is no assurance that Seligman will continue this policy
in the future.
P-4
<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.
P-5
<PAGE>
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Dividends from the Portfolio will be declared daily and reinvested monthly in
additional shares, at NAV, of the Portfolio. It is not expected that the
Portfolio will realize capital gains.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<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) ............. 0.050 0.053 0.054 0.053 0.055
----------- ----------- ----------- ----------- -----------
Total from investment operations ........... 0.050 0.053 0.054 0.053 0.055
----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends from net
investment income ...................... (0.050) (0.053) (0.054) (0.053) (0.055)
----------- ----------- ----------- ----------- -----------
Total distributions ........................ (0.050) (0.053) (0.054) (0.053) (0.055)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
=========== =========== =========== =========== ===========
Total Return: 5.07% 5.42% 5.52% 5.43% 5.60%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ..... $ 17,611 $ 10,520 $ 8,635 $ 9,755 $ 7,800
Ratio of expenses to average net assets .... -- -- -- -- --
Ratio of net income (loss)to average
net assets ............................... 4.99% 5.30% 5.39% 5.30% 5.48%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets .. 0.65% 0.67% 0.79% 0.63% 0.87%
Ratio of net income (loss)
to average net assets ................... 4.34% 4.63% 4.60% 4.67% 4.61%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed all expenses and waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
CASH
MANAGEMENT
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 objectives, 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.
SPCM1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
------
A Money Market
Portfolio Seeking to Preserve
Capital and to Maximize
Liquidity and Current Income
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund and the Portfolio
Overview of the Fund P-1
Investment Objectives P-1
Principal Investment Strategies P-1
Principal Risks P-2
Past Performance P-3
Management of the Fund P-4
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Cash Management Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVES
The Portfolio's objectives are to preserve capital and to maximize liquidity and
current income.
PRINCIPAL INVESTMENT STRATEGIES
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 (Moody's) or Standard & Poor's Ratings Services (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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
There is no guarantee that the Portfolio will achieve its objectives.
P-1
<PAGE>
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 reserve 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
P-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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 were reinvested.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 5.07%
Best quarter return: 1.93% - quarter ended 6/30/90.
Worst quarter return: 0.72% - quarter ended 6/30/93.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
5.07% 5.40% 5.10%
- --------------------------------------------------------------------------------
The Portfolio's 7-day yield as of December 31, 1999 was 5.28%.
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 objectives and
strategies, and administers the Portfolio's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio. For the
period ended December 31, 1999, Seligman voluntarily waived its management fee
for the Portfolio. There is no assurance that Seligman will continue this policy
in the future.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Dividends from the Portfolio will be declared daily and reinvested monthly in
additional shares, at NAV, of the Portfolio. Dividends on Class 2 shares
generally will be lower than the dividends on Class 1 shares as a result of
12b-1 fees. It is not expected that the Portfolio will realize capital gains.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<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) ................... 0.050 0.053 0.054 0.053 0.055
----------- ----------- ----------- ----------- -----------
Total from investment operations ................. 0.050 0.053 0.054 0.053 0.055
----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends from net
investment income .............................. (0.050) (0.053) (0.054) (0.053) (0.055)
----------- ----------- ----------- ----------- -----------
Total distributions .............................. (0.050) (0.053) (0.054) (0.053) (0.055)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ..................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
=========== =========== =========== =========== ===========
Total Return: .................................... 5.07% 5.42% 5.52% 5.43% 5.60%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ........... $ 17,611 $ 10,520 $ 8,635 $ 9,755 $ 7,800
Ratio of expenses to average net assets .......... -- -- -- -- --
Ratio of net income (loss) to average
net assets ..................................... 4.99% 5.30% 5.39% 5.30% 5.48%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets ........ 0.65% 0.67% 0.79% 0.63% 0.87%
Ratio of net income (loss)
to average net assets ......................... 4.34% 4.63% 4.60% 4.67% 4.61%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed all expenses and waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
-----------------
PORTFOLIOS, INC.
SELIGMAN
COMMUNICATIONS
AND INFORMATION
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.
SPCI1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
-------
Seeking Capital Gain
by Investing in Companies
Operating in the
Communications,
Information, and
Related Industries
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Communications and Information
Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is capital gain.
PRINCIPAL INVESTMENT STRATEGIES
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 Portfolio 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.
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies. The 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 the Portfolio
from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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.
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.
Stocks of companies in the technology sector, like those in which the Portfolio
may invest, have recently experienced a period of strong performance. However,
if investor sentiment changes, the value of technology stocks may decline. There
can be no assurances that the Portfolio will continue consistently to achieve,
by investing in initial public offerings or otherwise, substantially similar
performance that the Portfolio had previously experienced.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
1995 38.55%
1996 8.81%
1997 22.22%
1998 36.49%
1999 85.81%
Best quarter return: 45.09% - quarter ended 12/31/99.
Worst quarter return: -16.81% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE FIVE SINCE INCEPTION
YEAR YEARS 10/11/94
------- ------- --------------
Seligman Communications and Information Portfolio 85.81% 36.12% 35.44%
S&P 500 Index 21.04 28.55 27.02(1)
Lipper Science & Technology Funds Average 137.64 48.31 47.15(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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .75% of the average daily net assets of the Portfolio.
Portfolio Management
The Portfolio is managed by the Seligman Technology Group, 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 Portfolio since its inception.
Mr. Wick has been a Managing Director of Seligman since January 1995 and a
Director of Seligman since November 1997. Mr. Wick also co-manages the Global
Technology Portfolio of the Fund. Mr. Wick has been a Vice President and
Portfolio Manager of Seligman Communications and Information Fund, Inc. since
January 1990 and December 1989, respectively. Mr. Wick is a Vice President and
Co-Portfolio Manager of Seligman New Technologies Fund, Inc. He is also a Vice
President of Seligman Global Fund Series, Inc. and Co-Portfolio Manager of its
Seligman Global Technology Fund.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ...... $ 17.14 $ 13.09 $ 14.69 $ 13.50 $ 10.44
----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income (loss) .......... (0.10) (0.08) (0.08) (0.04) (0.13)
Net gains or losses on securities (both
realized and unrealized) ............ 14.36 4.81 3.13 1.23 4.15
----------- ----------- ----------- ----------- -----------
Total from investment operations ........ 14.26 4.73 3.05 1.19 4.02
----------- ----------- ----------- ----------- -----------
Less distributions:
Distributions from capital gains ...... (4.70) (0.68) (4.65) -- (0.96)
----------- ----------- ----------- ----------- -----------
Total distributions ..................... (4.70) (0.68) (4.65) -- (0.96)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............ $ 26.70 $ 17.14 $ 13.09 $ 14.69 $ 13.50
=========== =========== =========== =========== ===========
Total Return: ........................... 85.81% 36.49% 22.22% 8.81% 38.55%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .. $ 213,961 $ 122,279 $ 87,633 $ 60,645 $ 38,442
Ratio of expenses to average net assets . 0.86% 0.87% 0.87% 0.87% 0.95%
Ratio of net income (loss) to average
net assets ............................ (0.51)% (0.56)% (0.49)% (0.32)% (0.89)%
Portfolio turnover rate ................. 118.16% 132.57% 227.14% 167.20% 96.62%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
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
[LOGO]
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>
S E L I G M A N
---------------
PORTFOLIOS, INC.
SELIGMAN
COMMUNICATIONS
AND INFORMATION
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.
SPCI1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
--------
Seeking Capital Gain
by Investing in Companies
Operating in the
Communications,
Information, and
Related Industries
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Communications and Information
Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is capital gain.
PRINCIPAL INVESTMENT STRATEGIES
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 Portfolio 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.
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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.
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.
Stocks of companies in the technology sector, like those in which the Portfolio
may invest, have recently experienced a period of strong performance. However,
if investor sentiment changes, the value of technology stocks may decline. There
can be no assurances that the Portfolio will continue consistently to achieve,
by investing in initial public offerings or otherwise, substantially similar
performance that the Portfolio had previously experienced.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1995 38.55%
1996 8.81%
1997 22.22%
1998 36.49%
1999 85.81%
Best quarter return: 45.09% - quarter ended12/31/99.
Worst quarter return: -16.81% - quarter ended9/30/98.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE FIVE SINCE INCEPTION
YEAR YEARS 10/11/94
------- ------- -------------------
<S> <C> <C> <C>
Seligman Communications and Information Portfolio 85.81% 36.12% 35.44%
S&P 500 Index 21.04 28.55 27.02(1)
Lipper Science & Technology Funds Average 137.64 48.31 47.15(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.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .75% of the average daily net assets of the Portfolio.
Portfolio Management
The Portfolio is managed by the Seligman Technology Group, 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 Portfolio since its inception.
Mr. Wick has been a Managing Director of Seligman since January 1995 and a
Director of Seligman since November 1997. Mr. Wick also co-manages the Global
Technology Portfolio of the Fund. Mr. Wick has been a Vice President and
Portfolio Manager of Seligman Communications and Information Fund, Inc. since
January 1990 and December 1989, respectively. Mr. Wick is a Vice President and
Co-Portfolio Manager of Seligman New Technologies Fund, Inc. He is also a Vice
President of Seligman Global Fund Series, Inc. and a Co-Portfolio Manager of its
Seligman Global Technology Fund.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than dividends on
Class 1 shares as a result of 12b-1 fees. Capital gain distributions will be
paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ...... $ 17.14 $ 13.09 $ 14.69 $ 13.50 $ 10.44
---------- ----------- ---------- ----------- -----------
Income from investment operations:
Net investment income (loss) .......... (0.10) (0.08) (0.08) (0.04) (0.13)
Net gains or losses on securities (both
realized and unrealized) .............. 14.36 4.81 3.13 1.23 4.15
---------- ---------- ---------- ----------- -----------
Total from investment operations ........ 14.26 4.73 3.05 1.19 4.02
---------- ---------- ---------- ----------- -----------
Less distributions:
Distributions from capital gains ...... (4.70) (0.68) (4.65) -- (0.96)
---------- ---------- ---------- ----------- -----------
Total distributions ..................... (4.70) (0.68) (4.65) -- (0.96)
---------- ---------- ---------- ----------- -----------
Net asset value, end of year ............ $ 26.70 $ 17.14 $ 13.09 $ 14.69 $ 13.50
========== ========== ========== =========== ===========
Total Return: ........................... 85.81% 36.49% 22.22% 8.81% 38.55%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .. $ 213,961 $ 122,279 $ 87,633 $ 60,645 $ 38,442
Ratio of expenses to average net assets . 0.86% 0.87% 0.87% 0.87% 0.95%
Ratio of net income (loss) to average
net assets ............................ (0.51)% (0.56)% (0.49)% (0.32)% (0.89)%
Portfolio turnover rate ................. 118.16% 132.57% 227.14% 167.20% 96.62%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
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
[Logo}
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>
S E L I G M A N
---------------
PORTFOLIOS, INC.
SELIGMAN
COMMON STOCK
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 objectives, 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.
SPCS1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
------
Seeking Favorable
Current Income and
Long-Term Growth of
Both Income and Capital
Without Exposing Capital
to Undue Risk
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund and the Portfolio
Overview of the Fund P-1
Investment Objectives P-1
Principal Investment Strategies P-1
Principal Risks P-2
Past Performance P-3
Management of the Fund P-4
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Common Stock Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVES
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.
PRINCIPAL INVESTMENT STRATEGIES
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
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objectives. The Portfolio's objectives and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objectives.
There is no guarantee that the Portfolio will achieve its objectives.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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, have experienced 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 13.15%
Best quarter return: 19.11% - quarter ended 12/31/98.
Worst quarter return: -17.65% - quarter ended 9/30/90.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- ------
Seligman Common Stock Portfolio 13.15% 21.10% 15.48%
S&P 500 Index 21.04 28.55 18.21
Lipper Growth and Income Funds Average 13.15 21.56 14.75
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.
- --------------------------------------------------------------------------------
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 objectives and
strategies, and administers the Portfolio's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 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., Seligman Income
Fund, Inc., and Tri-Continental Corporation.
Mr. Rodney D. Collins, Senior Vice President, Investment Officer of Seligman
since January 1999, co-manages the 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., Seligman Income Fund,
Inc., and Tri-Continental Corporation.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ............ $ 18.63 $ 16.28 $ 15.92 $ 15.44 $ 13.78
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ................ 0.32 0.29 0.33 0.34 0.35
Net gains or losses on securities (both
realized and unrealized) .................... 2.03 3.61 3.01 2.79 3.40
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 2.35 3.90 3.34 3.13 3.75
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income ........................... (0.32) (0.31) (0.32) (0.34) (0.35)
Distributions from capital gains ............ (4.05) (1.24) (2.66) (2.31) (1.74)
---------- ---------- ---------- ---------- ----------
Total distributions ........................... (4.37) (1.55) (2.98) (2.65) (2.09)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .................. $ 16.61 $ 18.63 $ 16.28 $ 15.92 $ 15.44
========== ========== ========== ========== ==========
Total Return: ................................. 13.15% 24.16% 21.31% 20.08% 27.28%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ........ $ 47,303 $ 62,588 $ 50,737 $ 37,168 $ 28,836
Ratio of expenses to average net assets ....... 0.52% 0.52% 0.53% 0.53% 0.54%
Ratio of net income (loss) to average
net assets .................................. 1.30% 1.61% 1.92% 1.99% 2.42%
Portfolio turnover rate ....................... 38.11% 55.55% 80.13% 50.33% 55.48%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
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
[LOGO]
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>
S E L I G M A N
-----------------
PORTFOLIOS, INC.
SELIGMAN
COMMON STOCK
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 objectives, 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.
SPCS1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
--------
Seeking Favorable
Current Income and
Long-Term Growth of
Both Income and Capital
Without Exposing Capital
to Undue Risk
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund and the Portfolio
Overview of the Fund P-1
Investment Objectives P-1
Principal Investment Strategies P-1
Principal Risks P-2
Past Performance P-3
Management of the Fund P-4
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
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
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Common Stock Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVES
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.
PRINCIPAL INVESTMENT STRATEGIES
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
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objectives. The Portfolio's objectives and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objectives.
There is no guarantee that the Portfolio will achieve its objectives.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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, have experienced 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
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%
1999 13.15%
Best quarter return: 19.11% - quarter ended 12/31/98.
Worst quarter return: -17.65% - quarter ended 9/30/90.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
----- ----- -----
Seligman Common Stock Portfolio 13.15% 21.10% 15.48%
S&P 500 Index 21.04 28.55 18.21
Lipper Growth and Income Funds Average 13.15 21.56 14.75
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.
- --------------------------------------------------------------------------------
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 objectives and
strategies, and administers the Portfolio's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 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., Seligman Income
Fund, Inc., and Tri-Continental Corporation.
Mr. Rodney D. Collins, Senior Vice President, Investment Officer of Seligman
since January 1999, co-manages the 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., Seligman Income Fund,
Inc., and Tri-Continental Corporation.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ...... $ 18.63 $ 16.28 $ 15.92 $ 15.44 $ 13.78
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .......... 0.32 0.29 0.33 0.34 0.35
Net gains or losses on securities (both
realized and unrealized) .............. 2.03 3.61 3.01 2.79 3.40
---------- ---------- ---------- ---------- ----------
Total from investment operations ........ 2.35 3.90 3.34 3.13 3.75
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income ..................... (0.32) (0.31) (0.32) (0.34) (0.35)
Distributions from capital gains ...... (4.05) (1.24) (2.66) (2.31) (1.74)
---------- ---------- ---------- ---------- ----------
Total distributions ..................... (4.37) (1.55) (2.98) (2.65) (2.09)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ............ $ 16.61 $ 18.63 $ 16.28 $ 15.92 $ 15.44
========== ========== ========== ========== ==========
Total Return: ........................... 13.15% 24.16% 21.31% 20.08% 27.28%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .. 47,303 $ 62,588 $ 50,737 $ 37,168 $ 28,836
Ratio of expenses to average net assets . 0.52% 0.52% 0.53% 0.53% 0.54%
Ratio of net income (loss)to average
net assets ............................ 1.30% 1.61% 1.92% 1.99% 2.42%
Portfolio turnover rate ................. 38.11% 55.55% 80.13% 50.33% 55.48%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
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
[LOGO]
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>
S E L I G M A N
---------------
PORTFOLIOS, INC.
SELIGMAN
FRONTIER
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.
SPFR1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
------
Seeking Growth
In Capital Value
Through Investments
In Small-Company
Stocks
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Frontier Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is growth of capital. Income may be considered but is
incidental to the Portfolio's investment objective.
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
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:
o Positive operating cash flows
o Management ownership
o A unique competitive advantage
o Historically high returns on capital
- ------------------------------
Small Companies:
Companies with market
capitalizations, at the time
of purchase by the Portfolio,
of $1.25 billion or less.
- ------------------------------
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 investment
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 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), 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
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the definition of "small companies" if
it concludes that such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Small company stocks, as a whole, may experience larger price fluctuations than
large-company stocks or other types of investments. Small companies tend to have
shorter operating histories, and may have less experienced management. During
periods of investor uncertainty, investor sentiment may favor large, well-known
companies over small, lesser-known companies.
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 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.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1995 33.28%
1996 23.93%
1997 16.33%
1998 -1.46%
1999 16.59%
Best quarter return: 28.95% - quarter ended 12/31/99.
Worst quarter return: -23.61% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE FIVE SINCE INCEPTION
YEAR YEARS 10/11/94
------- ------- ---------------
Seligman Frontier Portfolio 16.59% 17.16% 17.63%
Russell 2000 Index 21.26 16.69 15.42(1)
Russell 2000 Growth Index 43.09 18.99 17.84(1)
Lipper Small Cap Funds Average 30.04 20.22 19.08(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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .75% of the average daily net assets of the Portfolio.
Portfolio Management
The Portfolio is managed by the Seligman Global Small Company Growth Team,
headed by Mr. Mark J. Cunneen. Mr. Cunneen joined Seligman on March 1, 2000 as a
Managing Director. Prior to joining Seligman, Mr. Cunneen had been Senior Vice
President - Head of Small Cap Group at Alliance Capital Management since January
1999. Prior thereto, he was with Chancellor Capital Management and its successor
firms as Managing Director and Head of the Small Cap Group from December 1992 to
March 1997. (Chancellor Capital Management was acquired by LGT Asset Management
in October 1996, which was acquired by Invesco in May 1998.) Mr. Cunneen also
co-manages the Seligman Global Smaller Companies Portfolio of the Fund; and he
manages Seligman Frontier Fund, Inc. and co-manages Seligman Global Smaller
Companies Fund, a series of Seligman Global Fund Series, Inc.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ............ $ 15.55 $ 15.78 $ 14.98 $ 13.56 $ 10.58
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ................ (0.10) (0.08) (0.08) (0.06) (0.07)
Net gains or losses on securities (both
realized and unrealized) .................... 2.68 (0.15) 2.47 3.28 3.58
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 2.58 (0.23) 2.39 3.22 3.51
---------- ---------- ---------- ---------- ----------
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 year .................. $ 18.13 $ 15.55 $ 15.78 $ 14.98 $ 13.56
========== ========== ========== ========== ==========
Total Return: ................................. 16.59% (1.46)% 16.33% 23.93% 33.28%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ........ $ 25,706 $ 39,148 $ 42,973 $ 31,672 $ 12,476
Ratio of expenses to average net assets ....... 0.95% 0.92% 0.89% 0.92% 0.95%
Ratio of net income (loss) to average
net assets .................................. (0.68)% (0.51)% (0.49)% (0.37)% (0.55)%
Portfolio turnover rate ....................... 57.93% 86.52% 101.68% 119.74% 106.48%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets ..... 0.96% 1.37%
Ratio of net income (loss) to
average net assets ........................ (0.69)% (0.97)%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented. There is no assurance that Seligman
will continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
------------------
PORTFOLIOS, INC.
SELIGMAN
FRONTIER 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.
SPFR1 5/2000 C2
[PHOTO]
Prospectus
MAY 1, 2000
--------
Seeking Growth
In Capital Value
Through Investments
In Small-Company
Stocks
managed by
[LOGO]
J. & W. Seligman & Co.
INCORPORATED
ESTABLIHSED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. consists of 15 separate portfolios. This Prospectus
contains information about Seligman Frontier Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is growth of capital. Income may be considered but is
incidental to the Portfolio's investment objective.
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
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:
o Positive operating cash flows
o Management ownership
o A unique competitive advantage
o Historically high returns on capital
- -----------------------------------------
Small Companies:
Companies with market capitalizations,
at the time of purchase by the Portfolio,
of $1.25 billion or less.
- -----------------------------------------
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 investment
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
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the definition of "small companies" if
it concludes that such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Small company stocks, as a whole, may experience larger price fluctuations than
large-company stocks or other types of investments. Small companies tend to have
shorter operating histories, and may have less experienced management. During
periods of investor uncertainty, investor sentiment may favor large, well-known
companies over smaller, lesser-known companies.
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 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.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL]
Year Percentage
---- ----------
1995 33.28%
1996 23.93%
1997 16.33%
1998 -1.46%
1999 16.59%
Best quarter return: 28.95% - quarter ended 12/31/99.
Worst quarter return: -23.61% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE FIVE SINCE INCEPTION
YEAR YEARS 10/11/94
------- ------- -------------------
Seligman Frontier Portfolio 16.59% 17.16% 17.63%
Russell 2000 Index 21.26 16.69 15.42(1)
Russell 2000 Growth Index 43.09 18.99 17.84(1)
Lipper Small Cap Funds Average 30.04 20.22 19.08(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.
- -------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .75% of the average daily net assets of the Portfolio.
Portfolio Management
The Portfolio is managed by the Seligman Global Small Company Growth Team,
headed by Mr. Mark J. Cunneen. Mr. Cunneen joined Seligman on March 1, 2000 as a
Managing Director. Prior to joining Seligman, Mr. Cunneen had been Senior Vice
President - Head of Small Cap Group at Alliance Capital Management since January
1999. Prior thereto, he was with Chancellor Capital Management and its successor
firms as Managing Director and Head of the Small Cap Group from December 1992 to
March 1997. (Chancellor Capital Management was acquired by LGT Asset Management
in October 1996, which was acquired by Invesco in May 1998.) Mr. Cunneen also
co-manages the Seligman Global Smaller Companies Portfolio of the Fund; and he
manages Seligman Frontier Fund, Inc. and co-manages Seligman Global Smaller
Companies Fund, a series of Seligman Global Fund Series, Inc.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ...... $ 15.55 $ 15.78 $ 14.98 $ 13.56 $ 10.58
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .......... (0.10) (0.08) (0.08) (0.06) (0.07)
Net gains or losses on securities (both
realized and unrealized) .............. 2.68 (0.15) 2.47 3.28 3.58
---------- ---------- ---------- ---------- ----------
Total from investment operations ........ 2.58 (0.23) 2.39 3.22 3.51
---------- ---------- ---------- ---------- ----------
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 year ............ $ 18.13 $ 15.55 $ 15.78 $ 14.98 $ 13.56
========== ========== ========== ========== ==========
Total Return: ........................... 16.59% (1.46)% 16.33% 23.93% 33.28%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .. $ 25,706 $ 39,148 $ 42,973 $ 31,672 $ 12,476
Ratio of expenses to average net assets . 0.95% 0.92% 0.89% 0.92% 0.95%
Ratio of net income (loss) to average
net assets ............................ (0.68)% (0.51)% (0.49)% (0.37)% (0.55)%
Portfolio turnover rate ................. 57.93% 86.52% 101.68% 119.74% 106.48%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets 0.96% 1.37%
Ratio of net income (loss) to
average net assets .................. (0.69)% (0.97)%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented. There is no assurance that Seligman
will continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
-----------------
PORTFOLIOS, INC.
SELIGMAN
GLOBAL GROWTH
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.
SPGG1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
------------
Investing Around
the World for Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Global Growth Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
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 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 manager analyzes the rapidly changing world to identify investment
themes that it believes will have the greatest impact on global markets, and
uses 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 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 a shifting in global trends may negatively affect a
company's outlook.
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, contract owners will be asked to give
voting instructions to the participating insurance companies.
The Portolio 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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 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 investment 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1997 12.57%
1998 21.60%
1999 52.49%
Best quarter return: 29.72% - quarter ended 12/31/99.
Worst quarter return: -14.29% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/96
------ ---------------
Seligman Global Growth Portfolio 52.49% 21.95%
MSCI World Index 25.34 19.86(1)
Lipper Global Funds Average 34.52 18.93(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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $1 billion; .95% on next $1 billion; and .90% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of 1.00% of its average daily net assets.
Prior to March 31, 2000, Henderson Investment Management Limited (HIML) served
as a subadviser to the Portfolio. HIML, established in 1984, is a wholly owned
subsidiary of Henderson plc, a United Kingdom corporation. For the year ended
December 31, 1999, Seligman paid HIML a fee for its services in respect of the
Portfolio based on the assets under HIML's supervision. This fee did not affect
the fees paid by the Portfolio.
Portfolio Management
The Portfolio is managed by Seligman's Global Growth Team. The Global Growth
Team is co-headed by Ms. Marion S. Schultheis and Mr. Jack P. Chang.
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 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 of the Fund;
and she manages Seligman Capital Fund, Inc. and Seligman Growth Fund, Inc. Ms.
Schultheis is also a Vice President of Seligman Global Fund Series, Inc. and
co-manages its Seligman Global Growth Fund.
Mr. Chang joined Seligman on September 20, 1999 as a Managing Director. He is a
Vice President of the Fund. Prior to joining Seligman, Mr. Chang was a Senior
Vice President and Portfolio Manager at Putnam Investment Management since 1997.
Prior thereto, he was a Portfolio Manager with Columbia Management Company from
1993 to 1997, and a Senior Analyst and Portfolio Manager with Scudder, Stevens &
Clark from 1989 to 1993. Mr. Chang also manages the International Growth
Portfolioof the Fund. Mr. Chang is also a Vice President of Seligman Global Fund
Series, Inc. and manages its Seligman International Growth Fund and co-manages
its Seligman Global Growth Fund.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended
December 31, 5/1/96+
----------------------------------------- to
1999 1998 1997 12/31/96
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period .... $ 13.33 $ 11.03 $ 9.91 $ 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .......... (0.06) (0.01) 0.01 0.01
Net gains or losses on securities
(both realized and unrealized) ........ 7.31 2.25 1.79 0.02
Net gains or losses on foreign
currency transactions
(both realized and unrealized) ...... (0.44) 0.14 (0.56) (0.11)
---------- ---------- ---------- ----------
Total from investment operations ........ 6.81 2.38 1.24 (0.08)
---------- ---------- ---------- ----------
Less distributions:
Dividends (from net investment income) -- -- -- (0.01)
Distributions (from capital gains) .... (1.92) (0.08) (0.12) --
---------- ---------- ---------- ----------
Total distributions ..................... (1.92) (0.08) (0.12) (0.01)
---------- ---------- ---------- ----------
Net asset value, end of period .......... $ 18.22 $ 13.33 $ 11.03 $ 9.91
========== ========== ========== ==========
Total Return: ........................... 52.49% 21.60% 12.57% (0.78)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 11,889 $ 8,643 $ 5,449 $ 1,590
Ratio of expenses to average net assets . 1.40% 1.40% 1.40% 1.40%++
Ratio of net income (loss) to
average net assets .................... (0.38)% (0.06)% 0.01% 0.37%++
Portfolio turnover rate ................. 69.18% 48.99% 77.85% 12.99%
Without management fee waiver
and expense reimbursement:**
Ratio of expenses to average net assets 1.45% 1.60% 2.11% 6.04%++
Ratio of net income (loss) to average
net assets .......................... (0.43)% (0.26)% (0.70)% (4.27)%++
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (subadviser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
---------------
PORTFOLIOS, INC.
SELIGMAN
GLOBAL GROWTH
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.
SPGG1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
------
Investing Around
the World for Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
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
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Global Growth Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
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 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 manager analyzes the rapidly changing world to identify investment
themes that it believes will have the greatest impact on global markets, and
uses 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 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 a shifting in global trends may negatively affect a
company's outlook.
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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 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 investment 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1997 12.57%
1998 21.60%
1999 52.49%
Best quarter return: 29.72% - quarter ended 12/31/99.
Worst quarter return: -14.29% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/96
------- -------------------
Seligman Global Growth Portfolio 52.49% 21.95%
MSCI World Index 25.34 19.86(1)
Lipper Global Funds Average 34.52 18.93(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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $1 billion; .95% on next $1 billion; and .90% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of 1.00% of its average daily net assets.
Prior to March 31, 2000, Henderson Investment Management Limited (HIML) served
as a subadviser to the Portfolio. HIML, established in 1984, is a wholly owned
subsidiary of Henderson plc, a United Kingdom corporation. For the year ended
December 31, 1999, Seligman paid HIML a fee for its services in respect to the
Portfolio based on the assets under HIML's supervision. This fee did not affect
the fees paid by the Portfolio.
Portfolio Management
The Portfolio is managed by Seligman's Global Growth Team. The Global Growth
Team is co-headed by Ms. Marion S. Schultheis and Mr. Jack P. Chang.
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 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 International Growth Portfolio of the Fund; and she manages Seligman Capital
Fund, Inc. and Seligman Growth Fund, Inc. Ms. Schultheis is also a Vice
President of Seligman Global Fund Series, Inc. and co-manages its Seligman
International Growth Fund and Seligman Global Growth Fund.
Mr. Chang joined Seligman on September 20, 1999 as a Managing Director. He is a
Vice President of the Fund. Prior to joining Seligman, Mr. Chang was a Senior
Vice President and Portfolio Manager at Putnam Investment Management since 1997.
Prior thereto, he was a Portfolio Manager with Columbia Management Company from
1993 to 1997, and a Senior Analyst and Portfolio Manager with Scudder, Stevens &
Clark from 1989 to 1993. Mr. Chang also co-manages the International Growth
Portfolio of the Fund. Mr. Chang is also a Vice President of Seligman Global
Fund Series, Inc. and co-manages its Seligman International Growth Fund and
Seligman Global Growth Fund.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. Class 2 shares are a newly
offered Class, effective May 1, 2000, so financial highlights are not available.
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 the shareholder servicing and
distribution (12b-1) fees associated with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended
December 31, 5/1/96+
------------------------------------------------ to
1999 1998 1997 12/31/96
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period ................ $ 13.33 $ 11.03 $ 9.91 $ 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ...................... (0.06) (0.01) 0.01 0.01
Net gains or losses on securities
(both realized and unrealized) .................... 7.31 2.25 1.79 0.02
Net gains or losses on foreign
currency transactions
(both realized and unrealized) .................. (0.44) 0.14 (0.56) (0.11)
---------- ---------- ---------- ----------
Total from investment operations .................... 6.81 2.38 1.24 (0.08)
---------- ---------- ---------- ----------
Less distributions:
Dividends (from net investment income) ............ -- -- -- (0.01)
Distributions (from capital gains) ................ (1.92) (0.08) (0.12) --
---------- ---------- ---------- ----------
Total distributions ................................. (1.92) (0.08) (0.12) (0.01)
---------- ---------- ---------- ----------
Net asset value, end of period ...................... $ 18.22 $ 13.33 $ 11.03 $ 9.91
========== ========== ========== ==========
Total Return: ....................................... 52.49% 21.60% 12.57% (0.78)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ............ $ 11,889 $ 8,643 $ 5,449 $ 1,590
Ratio of expenses to average net assets ............. 1.40% 1.40% 1.40% 1.40%++
Ratio of net income (loss)to
average net assets ................................ (0.38)% (0.06)% 0.01% 0.37%++
Portfolio turnover rate ............................. 69.18% 48.99% 77.85% 12.99%
Without management fee waiver
and expense reimbursement:**
Ratio of expenses to average net assets ........... 1.45% 1.60% 2.11% 6.04%++
Ratio of net income (loss) to
average net assets .............................. (0.43)% (0.26)% (0.70)% (4.27)%++
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co., (subadviser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
GLOBAL SMALLER
COMPANIES
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.
SPGS1 5/2000 C1
PROSPECTUS
MAY 1, 2000
Investing Around
the World for Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
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
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Global Smaller Companies
Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
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 smaller US and non-US companies.
- ----------------------------------------
Smaller companies:
Companies with market capitalization, at
the time of purchase by the Portfolio,
equivalent to US $1 billion or less.
- ----------------------------------------
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:
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
P-1
<PAGE>
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 its assets in companies with market
capitalization of over $1 billion.
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the definition of "smaller companies"
if it concludes that such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
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.
Small company stocks, as a whole, may experience larger price fluctuations than
large-company stocks or other types of investments. Small companies tend to have
shorter operating histories, and may have less experienced management. During
periods of investor uncertainty, investor sentiment may favor large, well-known
companies over small, lesser known companies.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1995 17.38%
1996 18.66%
1997 3.43%
1998 6.58%
1999 28.34%
Best quarter return: 20.22% - quarter ended 12/31/99.
Worst quarter return: -16.71% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
SINCE
One Five INCEPTION
Year Years 10/11/94
------- ------- --------
Seligman Global Smaller Companies Portfolio 28.34% 14.53% 14.62%
Salomon Smith Barney EM Index World 22.38 13.04 11.78(1)
Lipper Global Small Cap Funds Average 45.23 15.67 14.08(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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $1 billion; .95% on next $1 billion; and .90% thereafter. For the year
ended December 31, 1999, 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 co-managed by the Seligman Global Small Company Growth Team and
Henderson Investment Management Limited (HIML), subadviser to the Portfolio.
The Seligman Global Small Company Growth Team is headed by Mr. Mark J. Cunneen.
Mr. cunneen joined Seligman on March 1, 2000 as a Managing Director. Prior to
joining Seligman, Mr. Cunneen had been Senior Vice President - Head of Small Cap
Group at Alliance Capital Management since January 1999. Prior thereto, he was
with Chancellor Capital Management and its successor firms as Managing Director
and Head of the Small Cap Group from March 1997 to January 1999, and as a
portfolio manager in the Small Cap Group from December 1992 to March 1997.
(Chancellor Capital Management was acquired by LGT Asset Management in October
1996, which was acquired by Invesco in May 1998.) Mr. Cunneen also manages the
Frontier Portfolio of the Fund; and he manages Seligman Frontier Fund, Inc. and
co-manages SeligmanGlobal Smaller Companies Fund, a series of Seligman Global
Fund Series, Inc.
Mr. Iain C. Clark, Chief Investment Officer of HIML, is a Vice President of the
Fund and has been Co-Portfolio Manager of the 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 co-manages Seligman Global Smaller Companies Fund, a series of Seligman
Global Fund Series, Inc.
Mr. Cunneen and Mr. Clark have responsibility for directing the domestic and
international investments, respectively, of the Portfolio.
The Portfolio Subadviser
The Portfolio subadviser is 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 a subadviser to the
Portfolio. 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>
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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ............. $ 13.62 $ 12.98 $ 12.87 $ 11.67 $ 10.31
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ................. (0.06) (0.01) 0.02 0.02 0.05
Net gains or losses on securities (both
realized and unrealized) ..................... 4.10 1.02 1.17 2.31 2.04
Net gains or losses on
foreign currency transactions
(both realized and unrealized) ............... (0.18) (0.17) (0.75) (0.16) (0.30)
---------- ---------- ---------- ---------- ----------
Total from investment operations ............... 3.86 0.84 0.44 2.17 1.79
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income ......... -- -- (0.02) (0.02) (0.05)
Distributions from capital gains ............. -- (0.20) (0.31) (0.95) (0.38)
---------- ---------- ---------- ---------- ----------
Total distributions ............................ -- (0.20) (0.33) (0.97) (0.43)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ................... $ 17.48 $ 13.62 $ 12.98 $ 12.87 $ 11.67
========== ========== ========== ========== ==========
Total Return: .................................. 28.34% 6.58% 3.43% 18.66% 17.38%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ......... $ 19,569 $ 20,814 $ 20,505 $ 16,876 $ 4,837
Ratio of expenses to average net assets ........ 1.40% 1.40% 1.40% 1.40% 1.39%
Ratio of net income (loss) to average
net assets ................................... (0.46)% (0.06)% 0.24% 0.23% 0.64%
Portfolio turnover rate ........................ 46.75% 66.40% 64.81% 62.31% 55.65%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets ...... 1.60% 1.50% 1.56% 1.90% 3.84%
Ratio of net income (loss)
to average net assets ....................... (0.66)% (0.16)% (0.08)% (0.27)% (1.81)%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (subadviser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
GLOBAL SMALLER
COMPANIES
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.
SPGS1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
---------
Investing Around
the World for Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Global Smaller Companies
Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
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 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.
- ------------------------
Smaller companies:
Companies with market
capitalization, at the
time of purchase by the
Portfolio, equivalent to
US $1 billion or less.
- ------------------------
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:
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.
P-1
<PAGE>
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 its assets in companies with market
capitalization of over $1 billion.
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the definition of "smaller companies"
if it concludes that such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
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.
Small company stocks, as a whole, may experience larger price fluctuations than
large-company stocks or other types of investments. Small companies tend to have
shorter operating histories, and may have less experienced management. During
periods of investor uncertainty, investor sentiment may favor large, well-known
companies over small, lesser-known companies.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
Year Percentage
---- ----------
1995 17.38%
1996 18.66%
1997 3.43%
1998 6.58%
1999 28.34%
Best quarter return: 20.22% - quarter ended 12/31/99.
Worst quarter return: -16.71% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE FIVE SINCE INCEPTION
YEAR YEARS 10/11/94
----- ------ ---------------
Seligman Global Smaller Companies Portfolio 28.34% 14.53% 14.62%
Salomon Smith Barney EM Index World 22.38 13.04 11.78(1)
Lipper Global Small Cap Funds Average 45.23 15.67 14.08(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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $1 billion; .95% on next $1 billion; and .90% thereafter. For the year
ended December 31, 1999, 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 co-managed by the Seligman Global Small Company Growth Team and
Henderson Investment Management Limited (HIML), subadviser to the Portfolio.
The Seligman Global Small Company Growth Team is headed by Mr. Mark J. Cunneen.
Mr. Cunneen joined Seligman on March 1, 2000 as a Managing Director. Prior to
joining Seligman, Mr. Cunneen had been Senior Vice President - Head of Small Cap
Group at Alliance Capital Management since January 1999. Prior thereto, he was
with Chancellor Capital Management and its successor firms as Managing Director
and Head of the Small Cap Group from March 1997 to January 1999, and as a
portfolio manager in the Small Cap Group from December 1992 to March 1997.
(Chancellor Capital Management was acquired by LGT Asset Management in October
1996, which was acquired by Invesco in May 1998.) Mr. Cunneen also manages the
Frontier Portfolio of the Fund; and he manages Seligman Frontier Fund, Inc. and
co-manages Seligman Global Smaller Companies Fund, a series of Seligman Global
Fund Series, Inc.
Mr. Iain C. Clark, Chief Investment Officer of HIML, is a Vice President of the
Fund and has been Co-Portfolio Manager of the 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 Seligman Global Smaller Companies Fund, a series
of Seligman Global Fund Series, Inc.
Mr. Cunneen and Mr. Clark have responsibility for directing the domestic and
international investments, respectively, of the Portfolio.
The Portfolio Subadviser
The Portfolio subadviser is 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 a subadviser to the
Portfolio. 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>
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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ...... $ 13.62 $ 12.98 $ 12.87 $ 11.67 $ 10.31
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .......... (0.06) (0.01) 0.02 0.02 0.05
Net gains or losses on securities (both
realized and unrealized) .............. 4.10 1.02 1.17 2.31 2.04
Net gains or losses on
foreign currency transactions
(both realized and unrealized) ........ (0.18) (0.17) (0.75) (0.16) (0.30)
---------- ---------- ---------- ---------- ----------
Total from investment operations ........ 3.86 0.84 0.44 2.17 1.79
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income .. -- -- (0.02) (0.02) (0.05)
Distributions from capital gains ...... -- (0.20) (0.31) (0.95) (0.38)
---------- ---------- ---------- ---------- ----------
Total distributions ..................... -- (0.20) (0.33) (0.97) (0.43)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ............ $ 17.48 $ 13.62 $ 12.98 $ 12.87 $ 11.67
========== ========== ========== ========== ==========
Total Return: ........................... 28.34% 6.58% 3.43% 18.66% 17.38%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .. $ 19,569 $ 20,814 $ 20,505 $ 16,876 $ 4,837
Ratio of expenses to average net assets . 1.40% 1.40% 1.40% 1.40% 1.39%
Ratio of net income (loss) to average
net assets ............................ (0.46)% (0.06)% 0.24% 0.23% 0.64%
Portfolio turnover rate ................. 46.75% 66.40% 64.81% 62.31% 55.65%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets 1.60% 1.50% 1.56% 1.90% 3.84%
Ratio of net income (loss) to average
net assets .......................... (0.66)% (0.16)% (0.08)% (0.27)% (1.81)%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (subadviser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
-----------------
PORTFOLIOS, INC.
SELIGMAN
GLOBAL
TECHNOLOGY
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.
SPGT1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
---------
Investing Around the
World for Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Global Technology Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
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.
- ------------------------------------
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 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 manager seeks to identify those technology companies that it
believes 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 manager looks 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 manager looks for companies it believes 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.
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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.
Stocks of companies in the technology sector, like those in which the Portfolio
may invest, have recently experienced a period of strong performance. However,
if investor sentiment changes, the value of technology stocks may decline. There
can be no assurances that the Portfolio will continue consistently to achieve,
by investing in initial public offerings or otherwise, substantially similar
performance that the Portfolio had previously experienced.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1997 19.53%
1998 36.80%
1999 118.80%
Best quarter return: 56.85% - quarter ended 12/31/99.
Worst quarter return: -15.54% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/96
---- ---------------
Seligman Global Technology Portfolio 118.80% 43.07%
MSCI World Index 25.34 19.86(1)
Lipper Global Funds Average 34.52 18.93(1)
Lipper Science & Technology Funds Average 137.64 50.04(1)
The Lipper Global Funds Average, the 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
Funds Average and the Lipper Science & Technology Funds 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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $2 billion; .95% on next $2 billion; and .90% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of 1.00% of its average daily net assets.
Prior to March 31, 2000, Henderson Investment Management Limited (HIML) served
as a subadviser to the Portfolio. HIML, established in 1984, is a wholly owned
subsidiary of Henderson plc, a United Kingdom corporation. For the year ended
December 31, 1999, Seligman paid HIML a fee for its services in respect of the
Portfolio based on the assets under HIML's supervision. This fee did not affect
the fees paid by the Portfolio.
Portfolio Management
The Portfolio is managed by Seligman's Technology Group, headed by Mr. Paul H.
Wick. Mr. Wick, a Managing Director of Seligman, is a Vice President of the Fund
and has been Co-Portfolio Manager of the Portfolio since its inception. Mr. Wick
has been a Managing Director of Seligman since January 1995 and a Director of
Seligman since November 1997. Mr. Wick also manages the Communications and
Information Portfolio of the Fund. Mr. Wick has been a Vice President and
Portfolio Manager of Seligman Communications and Information Fund, Inc. since
January 1990 and December 1989, respectively. Mr. Wick is a Vice President and
Co-Portfolio Manager of Seligman New Technologies Fund, Inc. He is also a Vice
President of Seligman Global Fund Series, Inc. and Co-Portfolio Manager of its
Seligman Global Technology Fund.
Mr. Steven A. Werber, a Vice President of the Fund, is Co-Portfolio Manager of
the Portfolio. Mr. Werber joined Seligman on January 10, 2000 as a Senior Vice
President. Prior to joining Seligman, Mr. Werber was an Analyst and Portfolio
Manager at Fidelity Investments International since 1996. Prior thereto, he was
an Associate at Goldman Sachs International from 1992 to 1996. Mr. Werber is
also a Vice President of Seligman Global Fund Series, Inc. and Co-Portfolio
Manager of its Seligman Global Technology Fund.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended
December 31, 5/1/96+
------------------------------------------- to
1999 1998 1997 12/31/96
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period ................. $ 13.85 $ 10.59 $ 10.32 $ 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ....................... (0.09) (0.05) 0.01 --
Net gains or losses on securities (both
realized and unrealized) ......................... 16.25 3.81 2.15 0.30
Net gains or losses on foreign currency transactions
(both realized and unrealized) ................... (0.04) 0.11 (0.19) 0.10
---------- ---------- ---------- ----------
Total from investment operations ..................... 16.12 3.87 1.97 0.40
---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income ............... -- -- (0.01) --
Distributions from capital gains ................... (2.55) (0.61) (1.69) (0.08)
---------- ---------- ---------- ----------
Total distributions .................................. (2.55) (0.61) (1.70) (0.08)
---------- ---------- ---------- ----------
Net asset value, end of period ....................... $ 27.42 $ 13.85 $ 10.59 $ 10.32
========== ========== ========== ==========
Total Return: ........................................ 118.80% 36.80% 19.53% 4.01%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ............. $ 22,087 $ 6,130 $ 3,686 $ 1,364
Ratio of expenses to average net assets .............. 1.40% 1.40% 1.40% 1.40%++
Ratio of net income (loss) to average net assets ..... (0.51)% (0.43)% 0.12% 0.60%++
Portfolio turnover rate .............................. 116.88% 82.27% 167.36% 45.04%
Without management fee waiver
and expense reimbursement:**
Ratio of expenses to average net assets ............ 1.41% 1.80% 2.10% 4.71%++
Ratio of net income (loss) to
average net assets ............................... (0.52)% (0.83)% (0.58)% (2.71)%++
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (subadviser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
---------------
PORTFOLIOS, INC.
SELIGMAN
GLOBAL
TECHNOLOGY
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.
SPGT1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
------
Investing Around the
World for Long-Term
Capital Appreciation
managed by
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Global Technology Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
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.
- ----------------------------------------
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 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 manager seeks to identify those technology companies that it
believes 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 manager looks 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 manager looks for companies it believes 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.
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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.
Stocks of companies in the technology sector, like those in which the Portfolio
may invest, have recently experienced a period of strong performance. However,
if investor sentiment changes, the value of technology stocks may decline. There
can be no assurances that the Portfolio will continue consistently to achieve,
by investing in initial public offerings or otherwise, substantially similar
performance that the Portfolio had previously experienced.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1997 19.53%
1998 36.80%
1999 118.80%
Best quarter return: 56.85% - quarter ended 12/31/99.
Worst quarter return: -15.54% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/96
------- ------------------
Seligman Global Technology Portfolio 118.80% 43.07%
MSCI World Index 25.34 19.86(1)
Lipper Global Funds Average 34.52 18.93(1)
Lipper Science & Technology Funds Average 137.64 50.04(1)
The Lipper Global Funds Average, the 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
Funds Average and the Lipper Science & Technology Funds 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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $2 billion; .95% on next $2 billion; and .90% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of 1.00% of its average daily net assets.
Prior to March 31, 2000, Henderson Investment Management Limited (HIML) served
as a subadviser to the Portfolio. HIML, established in 1984, is a wholly owned
subsidiary of Henderson plc, a United Kingdom corporation. For the year ended
December 31, 1999, Seligman paid HIML a fee for its services in respect of the
Portfolio based on the assets under HIML's supervision. This fee did not affect
the fees paid by the Portfolio.
Portfolio Management
The Portfolio is managed by Seligman's Technology Group, headed by Mr. Paul H.
Wick. Mr. Wick, a Managing Director of Seligman, is a Vice President of the Fund
and has been Co-Portfolio Manager of the Portfolio since its inception. Mr. Wick
has been a Managing Director of Seligman since January 1995 and a Director of
Seligman since November 1997. Mr. Wick also manages the Communications and
Information Portfolio of the Fund. Mr. Wick has been a Vice President and
Portfolio Manager of Seligman Communications and Information Fund, Inc. since
January 1990 and December 1989, respectively. Mr. Wick is a Vice President and
Co-Portfolio Manager of Seligman New Technologies Fund, Inc. He is also a Vice
President of Seligman Global Fund Series, Inc. and Co-Portfolio Manager of its
Seligman Global Technology Fund.
Mr. Steven A. Werber, a Vice President of the Fund, is Co-Portfolio Manager of
the Portfolio. Mr. Werber joined Seligman on January 10, 2000 as a Senior Vice
President. Prior to joining Seligman, Mr. Werber was an Analyst and Portfolio
Manager at Fidelity Investments International since 1996. Prior thereto, he was
an Associate at Goldman Sachs International from 1992 to 1996. Mr. Werber is
also a Vice President of Seligman Global Fund Series, Inc. and Co-Portfolio
Manager of its Seligman Global Technology Fund.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. Class 2 shares are a newly
offered Class, effective May 1, 2000, so financial highlights are not available.
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 the shareholder servicing and
distribution (12b-1) fees associated with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended
December 31, 5/1/96+
----------------------------------------- to
1999 1998 1997 12/31/96
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period ................................ $ 13.85 $ 10.59 $ 10.32 $ 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ...................................... (0.09) (0.05) 0.01 --
Net gains or losses on securities (both realized and unrealized) .. 16.25 3.81 2.15 0.30
Net gains or losses on foreign currency transactions
(both realized and unrealized) .................................. (0.04) 0.11 (0.19) 0.10
---------- ---------- ---------- ----------
Total from investment operations .................................... 16.12 3.87 1.97 0.40
---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income .............................. -- -- (0.01) --
Distributions from capital gains .................................. (2.55) (0.61) (1.69) (0.08)
---------- ---------- ----------
Total distributions ................................................. (2.55) (0.61) (1.70) (0.08)
---------- ---------- ---------- ----------
Net asset value, end of period ...................................... $ 27.42 $ 13.85 $ 10.59 $ 10.32
========== ========== ========== ==========
Total Return: ....................................................... 118.80% 36.80% 19.53% 4.01%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ............................ $ 22,087 $ 6,130 $ 3,686 $ 1,364
Ratio of expenses to average net assets ............................. 1.40% 1.40% 1.40% 1.40%++
Ratio of net income (loss) to average net assets .................... (0.51)% (0.43)% 0.12% 0.60%++
Portfolio turnover rate ............................................. 116.88% 82.27% 167.36% 45.04%
Without management fee waiver
and expense reimbursement:**
Ratio of expenses to average net assets ........................... 1.41% 1.80% 2.10% 4.71%++
Ratio of net income (loss) to
average net assets .............................................. (0.52)% (0.83)% (0.58)% (2.71)%++
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (subadviser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
INTERNATIONAL
GROWTH
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.
SPINT1 5/2000 C1
[PHOTO]
Prospectus
May 1, 2000
----------
Investing Around the
World for Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman International Growth Portfolio
(the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
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 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
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1994 1.32%
1995 11.34%
1996 7.08%
1997 8.35%
1998 15.81%
1999 26.64%
Best quarter return: 17.81% - quarter ended 12/31/98.
Worst quarter return: -16.76% - quarter ended 9/30/98.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
One Five Since Inception
Year Years 5/3/93
----- ----- ---------------
Seligman International Growth Portfolio 26.64% 13.63% 12.53%
MSCI EAFE Index 27.30 13.15 12.33(1)
Lipper International Funds Average 39.68 15.47 14.23(1)
The Morgan Stanley Capital International EAFE(Europe, Australasia, Far East)
Index (MSCI EAFE Index) 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 MSCI EAFE Index excludes
the effect of fees and sales charges.
- ----------
(1) From April 30, 1993.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $1 billion; .95% on next $1 billion; and .90% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of 1.00% of its average daily net assets.
Prior to March 31, 2000, Henderson Investment Management Limited (HIML) served
as a subadviser to the Portfolio. HIML, established in 1984, is a wholly owned
subsidiary of Henderson plc, a United Kingdom corporation. For the year ended
December 31, 1999, Seligman paid HIML a fee for its services in respect of the
Portfolio based on the assets under HIML's supervision. This fee did not affect
the fees paid by the Portfolio.
Portfolio Management
The Portfolio is managed by Mr. Jack P. Chang, co-leader of Seligman's Global
Growth Team.
Mr. Chang joined Seligman on September 20, 1999 as a Managing Director. He is a
Vice President of the Fund. Prior to joining Seligman, Mr. Chang was a Senior
Vice President and Portfolio Manager at Putnam Investment Management since 1997.
Prior thereto, he was a Portfolio Manager with Columbia Management Company from
1993 to 1997, and a Senior Analyst and Portfolio Manager with Scudder, Stevens &
Clark from 1989 to 1993. Mr. Chang also co-manages the Global Growth Portfolio
of the Fund. Mr. Chang is also a Vice President of Seligman Global Fund Series,
Inc. and manages its Seligman International Growth Fund and co-manages its
Seligman Global Growth Fund.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ................ $ 15.37 $ 13.54 $ 12.96 $ 12.39 $ 11.34
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .................... 0.05 0.08 0.03 0.07 0.15
Net gains or losses on securities (both
realized and unrealized) ........................ 4.59 1.90 2.11 1.13 0.90
Net gains or losses on
foreign currency transactions
(both realized and unrealized) .................. (0.73) 0.16 (1.06) (0.32) 0.24
---------- ---------- ---------- ---------- ----------
Total from investment operations .................. 3.91 2.14 1.08 0.88 1.29
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income ............................... -- (0.15) (0.03) (0.07) (0.15)
Distributions from capital gains ................ (2.65) (0.16) (0.47) (0.24) (0.09)
---------- ---------- ---------- ---------- ----------
Total distributions ............................... (2.65) (0.31) (0.50) (0.31) (0.24)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ...................... $ 16.63 $ 15.37 $ 13.54 $ 12.96 $ 12.39
========== ========== ========== ========== ==========
Total Return: ..................................... 26.64% 15.81% 8.35% 7.08% 11.34%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ............ $ 10,248 $ 9,893 $ 9,182 $ 7,242 $ 4,183
Ratio of expenses to average net assets ........... 1.39% 1.40% 1.40% 1.40% 1.35%
Ratio of net income (loss) to average
net assets ...................................... 0.33% 0.52% 0.43% 0.70% 1.01%
Portfolio turnover rate ........................... 79.17% 75.81% 89.43% 48.53% 41.40%
Without management fee waiver and
expenses reimbursement:**
Ratio of expenses to average net assets ......... 1.66% 1.78% 2.07% 2.30% 3.40%
Ratio of net income (loss) to
average net assets ............................ 0.06% 0.14% (0.24)% (0.20)% (1.04)%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (subsidiser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
================================================================================
<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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
INTERNATIONAL
GROWTH
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.
SPINTI 5/2000 C2
[PHOTO]
Prospectus
May 1, 2000
----------
Investing Around the
World for Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman International Growth Portfolio
(the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
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 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
P-1
<PAGE>
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.
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Class 1 Annual Total Returns - Calendar Years
Year Percentage
---- ----------
1994 1.32%
1995 11.34%
1996 7.08%
1997 8.35%
1998 15.81%
1999 26.64%
Best quarter return: 17.81% - quarter ended 12/31/98.
Worst quarter return: -16.76% - quarter ended 9/30/98.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE FIVE SINCE INCEPTION
YEAR YEARS 5/3/93
------- ------- ---------------
<S> <C> <C> <C>
Seligman International Growth Portfolio 26.64% 13.63% 12.53%
MSCI EAFE Index 27.30 13.15 12.33(1)
Lipper International Funds Average 39.68 15.47 14.23(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.
- -------------------------------------------------------------------------------------------------
</TABLE>
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 $1 billion; .95% on next $1 billion; and .90% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of 1.00% of its average daily net assets.
Prior to March 31, 2000, Henderson Investment Management Limited (HIML) served
as a subadviser to the Portfolio. HIML, established in 1984, is a wholly owned
subsidiary of Henderson plc, a United Kingdom corporation. For the year ended
December 31, 1999, Seligman paid HIML a fee for its services in respect of the
Portfolio based on the assets under HIML's supervision. This fee did not affect
the fees paid by the Portfolio.
Portfolio Management
The Portfolio is managed by Mr. Jack P. Chang, co-leader of Seligman's Global
Growth Team.
Mr. Chang joined Seligman on September 20, 1999 as a Managing Director. He is a
Vice President of the Fund. Prior to joining Seligman, Mr. Chang was a Senior
Vice President and Portfolio Manager at Putnam Investment Management since 1997.
Prior thereto, he was a Portfolio Manager with Columbia Management Company from
1993 to 1997, and a Senior Analyst and Portfolio Manager with Scudder, Stevens &
Clark from 1989 to 1993. Mr. Chang also co-manages the Global Growth Portfolio
of the Fund. Mr. Chang is also a Vice President of Seligman Global Fund Series,
Inc. and manages its Seligman International Growth Fund and co-manages its
Seligman Global Growth Fund.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than dividends on
Class 1 shares as a result of 12b-1 fees. Capital gain distributions will be
paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ...... $ 15.37 $ 13.54 $ 12.96 $ 12.39 $ 11.34
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) .......... 0.05 0.08 0.03 0.07 0.15
Net gains or losses on securities (both
realized and unrealized) .............. 4.59 1.90 2.11 1.13 0.90
Net gains or losses on
foreign currency transactions
(both realized and unrealized) ........ (0.73) 0.16 (1.06) (0.32) 0.24
---------- ---------- ---------- ---------- ----------
Total from investment operations ........ 3.91 2.14 1.08 0.88 1.29
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income ..................... -- (0.15) (0.03) (0.07) (0.15)
Distributions from capital gains ...... (2.65) (0.16) (0.47) (0.24) (0.09)
---------- ---------- ---------- ---------- ----------
Total distributions ..................... (2.65) (0.31) (0.50) (0.31) (0.24)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ............ $ 16.63 $ 15.37 $ 13.54 $ 12.96 $ 12.39
========== ========== ========== ========== ==========
Total Return: ........................... 26.64% 15.81% 8.35% 7.08% 11.34%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .. $ 10,248 $ 9,893 $ 9,182 $ 7,242 $ 4,183
Ratio of expenses to average net assets . 1.39% 1.40% 1.40% 1.40% 1.35%
Ratio of net income (loss) to average
net assets ............................ 0.33% 0.52% 0.43% 0.70% 1.01%
Portfolio turnover rate ................. 79.17% 75.81% 89.43% 48.53% 41.40%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets 1.66% 1.78% 2.07% 2.30% 3.40%
Ratio of net income (loss) to
average net assets .................. 0.06% 0.14% (0.24)% (0.20)% (1.04)%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman and Seligman Henderson Co. (subadviser to the Portfolio until
6/30/98), at their discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
HIGH-YIELD
BOND
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.
SPHY1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
-----------
Seeking to Maximize Current
Income by Investing
in a Diversified Portfolio
of High-Yielding
Corporate Bonds
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
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
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman High-Yield Bond Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is to produce maximum current income.
PRINCIPAL INVESTMENT STRATEGIES
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, or BBB or lower by Standard & Poor's Ratings
Services). 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
P-1
<PAGE>
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).
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will acheive its objective.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1996 14.62%
1997 15.09%
1998 1.02%
1999 -0.75%
Best quarter return: 6.28% - quarter ended 6/30/97.
Worst quarter return: -2.94% - quarter ended 9/30/99.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/95
------ ---------------
Seligman High-Yield Bond Portfolio -0.75% 7.80%
Merrill Lynch High Yield Master Index 1.57 8.42 (1)
Lipper High Current Yield Funds Average 4.50 8.56 (1)
The Lipper High Current Yield Funds Average 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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .50% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 Portfolio since its
inception. Mr. Charleston joined Seligman in 1987 as an Assistant Portfolio
Manager and became a Managing Director in January 1996. Mr. Charleston also
manages Seligman High-Yield Bond Series, a series of Seligman High Income Fund
Series.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31, 5/1/95+
------------------------------------------------------------- to
1999 1998 1997 1996 12/31/95
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period ......... $ 10.87 $ 11.87 $ 11.19 $ 10.50 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ............... 1.19 1.11 0.91 0.77 0.22
Net gains or losses on securities (both
realized and unrealized) ................... (1.27) (0.99) 0.78 0.77 0.52
---------- ---------- ---------- ---------- ----------
Total from investment operations ............. (0.08) 0.12 1.69 1.54 0.74
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income .......................... (1.20) (1.11) (0.90) (0.77) (0.22)
Distributions from capital gains ........... -- (0.01) (0.11) (0.08) (0.02)
---------- ---------- ---------- ---------- ----------
Total distributions .......................... (1.20) (1.12) (1.01) (0.85) (0.24)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ............... $ 9.59 $ 10.87 $ 11.87 $ 11.19 $ 10.50
========== ========== ========== ========== ==========
Total Return: ................................ (0.75)% 1.02% 15.09% 14.62% 7.37%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ..... $ 26,892 $ 32,253 $ 23,268 $ 11,176 $ 3,009
Ratio of expenses to average net assets ...... 0.70% 0.70% 0.70% 0.70% 0.70%++
Ratio of net income (loss) to average
net assets ................................. 10.33% 9.60% 9.61% 9.77% 7.46%++
Portfolio turnover rate ...................... 57.05% 43.13% 74.54% 117.01% 67.55%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets .... 0.77% 0.74% 0.79% 0.88% 4.38%++
Ratio of net income (loss) to
average net assets ......................... 10.26% 9.56% 9.52% 9.59% 3.78%++
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
HIGH-YIELD
BOND 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.
SPHY1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
-------
Seeking to Maximize Current
Income by Investing
in a Diversified Portfolio
of High-Yielding
Corporate Bonds
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separateportfolios. This
Prospectus contains information about Seligman High-Yield Bond Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is to produce maximum current income.
PRINCIPAL INVESTMENT STRATEGIES
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 or BBB or lower by Standard & Poor's Ratings
Services). 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-
P-1
<PAGE>
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).
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
There is no guarantee that the Portfolio will achieve its objective.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1996 14.62%
1997 15.09%
1998 1.02%
1999 -0.75%
Best quarter return: 6.28% - quarter ended 6/30/97.
Worst quarter return: -2.94% - quarter ended 9/30/99.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/95
------- -------------------
Seligman High-Yield Bond Portfolio -0.75% 7.80%
Merrill Lynch High Yield Master Index 1.57 8.42(1)
Lipper High Current Yield Funds Average 4.50 8.56(1)
The Lipper High Current Yield Funds Average 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.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .50% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 Portfolio since its
inception. Mr. Charleston joined Seligman in 1987 as an Assistant Portfolio
Manager and became a Managing Director in January 1996. Mr. Charleston also
manages Seligman High-Yield Bond Series, a series of Seligman High Income Fund
Series.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. Class 2 shares are a newly
offered Class, effective May 1, 2000, so financial highlights are not available.
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 the shareholder servicing and
distribution (12b-1) fees associated with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31, 5/1/95+
------------------------------------------------------------- to
1999 1998 1997 1996 12/31/95
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of period ......... $ 10.87 $ 11.87 $ 11.19 $ 10.50 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ............... 1.19 1.11 0.91 0.77 0.22
Net gains or losses on securities (both
realized and unrealized) ................... (1.27) (0.99) 0.78 0.77 0.52
---------- ---------- ---------- ---------- ----------
Total from investment operations ............. (0.08) 0.12 1.69 1.54 0.74
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income .......................... (1.20) (1.11) (0.90) (0.77) (0.22)
Distributions from capital gains ........... -- (0.01) (0.11) (0.08) (0.02)
---------- ---------- ---------- ---------- ----------
Total distributions .......................... (1.20) (1.12) (1.01) (0.85) (0.24)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ............... $ 9.59 $ 10.87 $ 11.87 $ 11.19 $ 10.50
========== ========== ========== ========== ==========
Total Return: ................................ (0.75)% 1.02% 15.09% 14.62% 7.37%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ..... $ 26,892 $ 32,253 $ 23,268 $ 11,176 $ 3,009
Ratio of expenses to average net assets ...... 0.70% 0.70% 0.70% 0.70% 0.70%++
Ratio of net income (loss) to average
net assets ................................. 10.33% 9.60% 9.61% 9.77% 7.46%++
Portfolio turnover rate ...................... 57.05% 43.13% 74.54% 117.01% 67.55%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets .... 0.77% 0.74% 0.79% 0.88% 4.38%++
Ratio of net income (loss) to
average net assets ......................... 10.26% 9.56% 9.52% 9.59% 3.78%++
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
---------------
PORTFOLIOS, INC.
SELIGMAN
INCOME 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 objectives, 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.
SPIN1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
------
Seeking High Current Income
Consistent with Prudent Risk
and Improvement of
Income Over the Longer Term
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund and the Portfolio
Overview of the Fund P-1
Investment Objectives P-1
Principal Investment Strategies P-1
Principal Risks P-2
Past Performance P-3
Management of the Fund P-4
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Income Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVES
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.
PRINCIPAL INVESTMENT STRATEGIES
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 are 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-1
<PAGE>
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objectives. The Portfolio's objectives and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objectives.
There is no guarantee that the Portfolio will achieve its objectives.
PRINCIPAL RISKS
A significant portion of the Portfolio's assets is generally invested in common
stocks. Stock prices fluctuate. Therefore, as with any portfolio 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, have
experienced 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 asset 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 moves 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Class 1 annual total returns presented in the bar chart and average annual total
returns presented in the table do not reflect the effect of the 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 2.87%
Best quarter return: 11.26% - quarter ended 3/31/91.
Worst quarter return: -9.94% - quarter ended 9/30/90.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Income Portfolio 2.87% 9.72% 9.10%
S&P 500 Index 21.04 28.55 18.21
Lehman Brothers Aggregate Bond Index -0.82 7.73 7.70
Lipper Income Funds Average 4.99 12.62 10.24
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 AggregateBond Index exclude the effect of fees
and sales charges.
- --------------------------------------------------------------------------------
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 objectives and
strategies, and administers the Portfolio's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 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., Seligman
Income Fund, Inc., and Tri-Continental Corporation.
Mr. Rodney D. Collins, Senior Vice President, Investment Officer of Seligman
since January 1999, co-manages the 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., Seligman Income
Fund, Inc., and Tri-Continental Corporation.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. 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.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ............. $ 11.01 $ 10.80 $ 10.52 $ 10.56 $ 9.97
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ................. 0.53 0.45 0.56 0.58 0.60
Net gains or losses on securities (both
realized and unrealized) ..................... (0.23) 0.38 0.91 0.13 1.19
---------- ---------- ---------- ---------- ----------
Total from investment operations ............... 0.30 0.83 1.47 0.71 1.79
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income ............................ (0.52) (0.46) (0.55) (0.58) (0.60)
Distributions from capital gains ............. (0.88) (0.16) (0.64) (0.17) (0.60)
---------- ---------- ---------- ---------- ----------
Total distributions ............................ (1.40) (0.62) (1.19) (0.75) (1.20)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ................... $ 9.91 $ 11.01 $ 10.80 $ 10.52 $ 10.56
========== ========== ========== ========== ==========
Total Return: .................................. 2.87% 7.76% 14.02% 6.66% 17.98%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) ......... $ 8,595 $ 14,582 $ 13,835 $ 13,717 $ 12,619
Ratio of expenses to average net assets ........ 0.60% 0.60% 0.60% 0.59% 0.60%
Ratio of net income (loss) to average
net assets ................................... 3.62% 3.94% 4.71% 5.37% 5.55%
Portfolio turnover rate ........................ 75.08% 70.45% 96.99% 19.59% 51.22%
Without management fee waiver and expense
reimbursement.**
Ratio of expenses to average net assets ........ 0.72% 0.61% 0.63% 0.62%
Ratio of net income (loss)
to average net assets ........................ 3.50% 3.93% 4.68% 5.53%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented. There is no assurance that Seligman
will continue this policy in the future.
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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
INCOME
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 objectives, 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.
SPIN1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
----------
Seeking High Current Income
Consistent with Prudent Risk
and Improvement of
Income Over the Longer Term
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund and the Portfolio
Overview of the Fund P-1
Investment Objectives P-1
Principal Investment Strategies P-1
Principal Risks P-2
Past Performance P-3
Management of the Fund P-4
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Income Portfolio (the Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVES
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.
PRINCIPAL INVESTMENT STRATEGIES
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 are 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-1
<PAGE>
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objectives. The Portfolio's objectives and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objectives.
There is no guarantee that the Portfolio will achieve its objectives.
PRINCIPAL RISKS
A significant portion of the Portfolio's assets is generally invested in common
stocks. Stock prices fluctuate. Therefore, as with any portfolio 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, have
experienced 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 asset 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 moves 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares 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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total returns presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Returns - Calendar Years
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
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%
1999 2.87%
Best quarter return: 11.26% - quarter ended 3/31/91.
Worst quarter return: -9.94% - quarter ended 9/30/90.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Years Ended 12/31/99
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- -------
Seligman Income Portfolio 2.87% 9.72% 9.10%
S&P 500 Index 21.04 28.55 18.21
Lehman Brothers Aggregate Bond Index -0.82 7.73 7.70
Lipper Income Funds Average 4.99 12.62 10.24
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 Bond Index exclude the effect of
fees and sales charges.
- --------------------------------------------------------------------------------
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 objectives and
strategies, and administers the Portfolio's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 billion.
The Portfolio pays Seligman a management fee for its services, equal to an
annual rate of .40% of the average daily net assets of the Portfolio.
Portfolio Management
The 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 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., Seligman
Income Fund, Inc., and Tri-Continental Corporation.
Mr. Rodney D. Collins, Senior Vice President, Investment Officer of Seligman
since January 1999, co-manages the 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., Seligman Income
Fund, Inc., and Tri-Continental Corporation.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the past five years.
It is intended to help you understand the financial performance of the
Portfolio's Class 1 shares. Class 2 shares are a newly offered Class, effective
May 1, 2000, so financial highlights are not available. 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 the shareholder servicing and distribution (12b-1) fees associated
with Class 2 shares or 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.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Data:*
Net asset value, beginning of year ........ $ 11.01 $ 10.80 $ 10.52 $ 10.56 $ 9.97
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) ............ 0.53 0.45 0.56 0.58 0.60
Net gains or losses on securities (both
realized and unrealized) ................ (0.23) 0.38 0.91 0.13 1.19
---------- ---------- ---------- ---------- ----------
Total from investment operations .......... 0.30 0.83 1.47 0.71 1.79
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income ....................... (0.52) (0.46) (0.55) (0.58) (0.60)
Distributions from capital gains ........ (0.88) (0.16) (0.64) (0.17) (0.60)
---------- ---------- ---------- ---------- ----------
Total distributions ....................... (1.40) (0.62) (1.19) (0.75) (1.20)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .............. $ 9.91 $ 11.01 $ 10.80 $ 10.52 $ 10.56
========== ========== ========== ========== ==========
Total Return: ............................. 2.87% 7.76% 14.02% 6.66% 17.98%
Ratios/Supplemental Data:
Net assets, end of year (in thousands) .... $ 8,595 $ 14,582 $ 13,835 $ 13,717 $ 12,619
Ratio of expenses to average net assets ... 0.60% 0.60% 0.60% 0.59% 0.60%
Ratio of net income (loss) to average
net assets .............................. 3.62% 3.94% 4.71% 5.37% 5.55%
Portfolio turnover rate ................... 75.08% 70.45% 96.99% 19.59% 51.22%
Without management fee waiver and expense
reimbursement:**
Ratio of expenses to average net assets . 0.72% 0.61% 0.63% 0.62%
Ratio of net income (loss)
to average net assets ................. 3.50% 3.93% 4.68% 5.53%
</TABLE>
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for certain periods presented. There is no assurance that Seligman
will continue this policy in the future.
P-7
<PAGE>
For More InformationSeligman , Inc.
------------------------------------------------------------------------
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
[Logo}
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>
S E L I G M A N
-----------------
PORTFOLIOS, INC.
SELIGMAN
LARGE-CAP
GROWTH
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.
SPLCG1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
------
Seeking Longer-Term
Growth in Capital Value
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-4
How to Purchase and Sell Shares P-4
Dividends and Capital Gain Distributions P-4
Taxes P-4
Financial Highlights P-5
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Large-Cap Growth Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is longer-term growth in capital value.
PRINCIPAL INVESTMENT STRATEGIES
The Portfolio uses the following principal strategies to seek its objective:
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
- -----------------------------
Large Companies:
Companies with market
capitalizations, at the time
of purchase by the
Portfolio, of $5 billion or
more.
- -----------------------------
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 investments 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
P-1
<PAGE>
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 change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which "large
companies" are defined if it concludes such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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, 1999 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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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: .70% on
first $1 billion; .65% on next $1 billion; and .60% therafter. For the period
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of .70% of its average daily net assets.
Portfolio Management
The Portfolio is managed by Ms. Marion S. Schultheis, co-head of Seligman's
Global Growth Team. 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 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 Portfolio of the Fund; and she manages Seligman Capital Fund, Inc. and
Seligman Growth Fund, Inc. and co-manages Seligman Global Growth Fund, a series
of Seligman Global Fund Series, Inc.
P-3
<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-4
<PAGE>
Financial Highlights
The table below describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. 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 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.
5/1/99+
to
12/31/99
---------
Per Share Data:*
Net asset value, beginning of period .... $ 10.00
---------
Income from investment operations:
Net investment income (loss) .......... --
Net gains or losses on securities (both
realized and unrealized) .............. 2.16
---------
Total from investment operations ........ 2.16
---------
Less distributions:
Dividends from net
investment income ..................... --
Distributions from capital gains ...... --
---------
Total distributions ..................... --
---------
Net asset value, end of period .......... $ 12.16
=========
Total Return: ........................... 21.60%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 3,668
Ratio of expenses to average net assets . 0.70%++
Ratio of net income (loss) to average
net assets ............................ (0.03)%++
Portfolio turnover rate ................. 56.69%
Without management fee waiver and expense
reimbursement:**
Ratio of expenses to average net assets 1.52%++
Ratio of net income (loss) to
average net assets .................. (0.85)%++
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the period presented. There is no assurance that Seligman will
continue this policy in the future.
+ Commencement of operations.
++ Annualized.
P-5
<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
[LOGO]
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>
S E L I G M A N
----------------
PORTFOLIOS, INC.
SELIGMAN
LARGE-CAP
GROWTH
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.
SPLCG1 5/2000 C2
[PHOTO]
PROSPECTUS
May 1, 2000
--------
Seeking Longer-Term
Growth in Capital Value
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-4
How to Purchase and Sell Shares P-4
Shareholder Servicing and Distribution Arrangements P-4
Dividends and Capital Gain Distributions P-5
Taxes P-5
Financial Highlights P-6
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Large-Cap Growth Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
INVESTMENT OBJECTIVE
The Portfolio's objective is longer-term growth in capital value.
PRINCIPAL INVESTMENT STRATEGIES
The Portfolio uses the following principal strategies to seek its objective:
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:
- ------------------------------------------
Large Companies:
Companies with market capitalizations,
at the time of purchase by the Portfolio,
of $5 billion or more.
- ------------------------------------------
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 investments 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.
P-1
<PAGE>
The Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which "large
companies" are defined if it concludes such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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, 1999 and has not completed a full
calendar year of 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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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: .70% on
first $1 billion; .65% on next $1 billion; and .60% therafter. For the period
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of .70% of its average daily net assets.
Portfolio Management
The Portfolio is managed by Ms. Marion S. Schultheis, co-head of Seligman's
Global Growth Team. 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 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 Portfolio of the Fund; and she manages Seligman Capital Fund, Inc. and
Seligman Growth Fund, Inc. and co-manages Seligman Global Growth Fund, a series
of Seligman Global Fund Series, Inc.
P-3
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-4
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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-5
<PAGE>
Financial Highlights
The table below describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. Class 2 shares are a newly
offered Class, effective May 1, 2000, so financial highlights are not available.
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 returns do not reflect the effect of the shareholder servicing and
distribution (12b-1) fees associated with Class 2 shares or 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.
5/1/99+
to
12/31/99
--------
Per Share Data:*
Net asset value, beginning of period ............ $ 10.00
---------
Income from investment operations:
Net investment income (loss) .................. --
Net gains or losses on securities (both
realized and unrealized) ...................... 2.16
---------
Total from investment operations ................ 2.16
---------
Less distributions:
Dividends from net
investment income ............................. --
Distributions from capital gains .............. --
---------
Total distributions ............................. --
---------
Net asset value, end of period .................. $ 12.16
=========
Total Return: ................................... 21.60%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ........ $ 3,668
Ratio of expenses to average net assets ......... 0.70%++
Ratio of net income (loss) to average
net assets .................................... (0.03)%++
Portfolio turnover rate ......................... 56.69%
Without management fee waiver and expense
reimbursement:**
Ratio of expenses to average net assets ....... 1.52%++
Ratio of net income (loss) to
average net assets .......................... (0.85)%++
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the period presented. There is no assurance that Seligman will
continue this policy in the future.
+ Commencement of operations.
++ Annualized.
P-6
<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
[LOGO]
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>
S E L I G M A N
---------------
PORTFOLIOS, INC.
SELIGMAN
LARGE-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.
SPLCV1 5/2000 C1
[PHOTO]
PROSPECTUS
MAY 1, 2000
-----------
A Value Approach
to Seeking Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
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
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Large-Cap Value Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
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 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 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.
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which large market
capitalization is defined if it concludes such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares over the periods
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.
Class 1 annual total return presented in the bar chart and average annual total
returns presented in the 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.
Class 1 Annual Total Return - Calendar Year
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1999 -2.76%
Best quarter return: 10.38% - quarter ended 6/30/99.
Worst quarter return: -14.99% - quarter ended 9/30/99.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/98
------ ---------------
Seligman Large-Cap Value Portfolio -2.76% -1.82%
S&P 500 Index 21.04 19.77(1)
Russell 1000 Value Index 7.35 6.12(1)
Russell 1000 Index 20.91 19.20(1)
The Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index), the
Russell 1000 Value Index and the Russell 1000 Index are unmanaged benchmarks
that assume the reinvestment of dividends and exclude the effect of fees and
sales charges.
In the future, the Portfolio will no longer be compared to the Russell 1000
Index, as it measures the performance of 1,000 widely held large capitalization
stocks. Instead, the Portfolio will be compared to the Russell 1000 Value Index,
which the investment manager believes is a more appropriate benchmark because it
measures the performance of large-cap value stocks, and the Portfolio invests
primarily in these types of stocks. Therefore, the Portfolio will continue to be
compared to the Russell 1000 Value Index and the S&P 500 Index.
- ----------
(1) From April 30, 1998.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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: .80% on
first $500 million; .70% on next $500 million; and .60% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of .80% 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 Small-Cap Value
Portfolio of the Fund; and he manages Seligman Large-Cap Value Fund and 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 Small-Cap Value
Portfolio of the Fund; and he co-manages Seligman Large-Cap Value Fund and
Seligman Small-Cap Value Fund, the two series of Seligman Value Fund Series,
Inc.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. 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 5/1/98+
December 31, to
1999 12/31/98
--------- ---------
Per Share Data:*
Net asset value, beginning of period .... $ 9.66 $ 10.00
--------- ---------
Income from investment operations:
Net investment income (loss) .......... 0.10 0.04
Net gains or losses on securities (both
realized and unrealized) .............. (0.37) (0.07)
--------- ---------
Total from investment operations ........ (0.27) (0.03)
--------- ---------
Less distributions:
Dividends from net
investment income ..................... (0.11) (0.04)
Distributions from capital gains ...... -- (0.27)
--------- ---------
Total distributions ..................... (0.11) (0.31)
--------- ---------
Net asset value, end of period .......... $ 9.28 $ 9.66
========= =========
Total Return: ........................... (2.76)% (0.26)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 5,758 $ 3,845
Ratio of expenses to average net assets . 0.80% 0.80%++
Ratio of net income (loss) to average
net assets ............................ 1.18% 1.11%++
Portfolio turnover rate ................. 28.01% 65.82%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets 1.13% 2.24%++
Ratio of net income (loss) to
average net assets .................. 0.85% (0.33)%++
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
-----------------
PORTFOLIOS, INC.
SELIGMAN
LARGE-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.
SPLCV1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
-------
A Value Approach
to Seeking Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Large-Cap Value Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
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 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:
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
- -------------------------------------
Value Companies:
Those companies believed by the
investment manager to be undervalued,
either historically, by the market,
or by their peers.
- -------------------------------------
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.
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which large market
capitalization is defined if it concludes such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares over the periods
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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total return presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
Class 1 Annual Total Return - Calendar Year
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Year Percentage
---- ----------
1999 -2.76%
Best quarter return: 10.38% - quarter ended 6/30/99.
Worst quarter return: -14.99% - quarter ended 9/30/99.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/98
------- ------------------
Seligman Large-Cap Value Portfolio -2.76% -1.82%
S&P 500 Index 21.04 19.77(1)
Russell 1000 Value Index 7.35 6.12(1)
Russell 1000 Index 20.91 19.20(1)
The Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index), the
Russell 1000 Value Index and the Russell 1000 Index are unmanged benchmarks that
assume the reinvestment of dividends and exclude the effect of fees and sales
charges. In the future, the Portfolio will no longer be compared to the Russell
1000 Index, as it measures the performance of 1,000 widely held large
capitalization stocks. Instead, the Portfolio will be compared to the Russell
1000 Value Index, which the investment manager believes is a more appropriate
benchmark because it measures the performance of large-cap value stocks, and the
Portfolio invests primarily in these types of stocks. Therefore, the Portfolio
will continue to be compared to the Russell 1000 Value Index and the S&P 500
Index.
(1) From April 30, 1998
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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: .80% on
first $500 million; .70% on next $500 million; and .60% thereafter. For the year
ended December 31, 1999, the Portfolio paid Seligman a management fee equal to
an annual rate of .80% 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 Small-Cap Value
Portfolio of the Fund; and he manages Seligman Large-Cap Value Fund and 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 Small-Cap Value
Portfolio of the Fund; and he co-manages Seligman Large-Cap Value Fund and
Seligman Small-Cap Value Fund, the two series of Seligman Value Fund Series,
Inc.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. Class 2 shares are a newly
offered Class, effective May 1, 2000, so financial highlights are not available.
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 the shareholder servicing and
distribution (12b-1) fees associated with Class 2 shares or 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 5/1/98+
December 31, to
1999 12/31/98
--------- ---------
Per Share Data:*
Net asset value, beginning of period ......... $ 9.66 $ 10.00
--------- ---------
Income from investment operations:
Net investment income (loss) ............... 0.10 0.04
Net gains or losses on securities (both
realized and unrealized) ................... (0.37) (0.07)
--------- ---------
Total from investment operations ............. (0.27) (0.03)
--------- ---------
Less distributions:
Dividends from net
investment income .......................... (0.11) (0.04)
Distributions from capital gains ........... -- (0.27)
--------- ---------
Total distributions .......................... (0.11) (0.31)
--------- ---------
Net asset value, end of period ............... $ 9.28 $ 9.66
========= =========
Total Return: ................................ (2.76)% (0.26)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ..... $ 5,758 $ 3,845
Ratio of expenses to average net assets ...... 0.80% 0.80%++
Ratio of net income (loss) to average
net assets ................................. 1.18% 1.11%++
Portfolio turnover rate ...................... 28.01% 65.82%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets .... 1.13% 2.24%++
Ratio of net income (loss) to average
net assets ............................... 0.85% (0.33)%++
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. There is no assurance that Seligman will
continue this policy in the future.
+ Commencement of operations.
++ Anualized.
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
[LOGO]
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>
S E L I G M A N
----------------
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.
SPSCV1 5/2000 C1
[PHOTO]
PROSPECTUS
May 1, 2000
---------
A Value Approach
to Seeking Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
[PHOTO]
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Small-Cap Value Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 1 shares and is for use with Accounts that
make Class 1 shares available to Contract owners.
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:
- ------------------------------------
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 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.
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which small market
capitalization is defined if it concludes such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Small company stocks, as a whole, may experience larger price fluctuations than
large company stocks or other types of investments. Small companies tend to have
shorter operating histories, and may have less experienced management. During
periods of investor uncertainty, investor sentiment may favor large, well-known
companies over small, lesser-known companies.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
The information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares over the periods
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.
Class 1 annual total return presented in the bar chart and average annual total
returns presented in the 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.
[THE FOLLOWING TABLE IS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Class 1 Annual Total Return - Calendar Year
Year Percentage
---- ----------
1999 35.26%
Best quarter return: 34.49% - quarter ended 6/30/99.
Worst quarter return: -11.44% - quarter ended 9/30/99.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
One Since Inception
Year 5/1/98
------- ---------------
Seligman Small-Cap Value Portfolio 35.26% 7.18%
Russell 2000 Value Index -1.49 -9.48(1)
Lipper Small-Cap Funds Average 30.04 9.41(1)
The Russell 2000 Value Index and the Lipper Small-Cap Funds Average are
unmanaged benchmarks that assume the reinvestment of dividends and exclude the
effect of fees and sales charges.
- ----------
(1) From April 30, 1998.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 year
ended December 31, 1999, 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 Seligman Large-Cap Value Fund and 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 Seligman Large-Cap Value Fund and
Seligman Small-Cap Value Fund, the two series of Seligman Value Fund Series,
Inc.
P-4
<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.
P-5
<PAGE>
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. 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 5/1/98+
December 31, to
1999 12/31/98
--------- --------
Per Share Data:*
Net asset value, beginning of period .... $ 7.31 $ 10.00
--------- ---------
Income from investment operations:
Net investment income (loss) .......... (0.03) (0.02)
Net gains or losses on securities (both
realized and unrealized) .............. 2.49 (1.73)
--------- ---------
Total from investment operations ........ 2.46 (1.75)
--------- ---------
Less distributions:
Distributions from capital gains ...... (1.69) (0.94)
--------- ---------
Total distributions ..................... (1.69) (0.94)
--------- ---------
Net asset value, end of period .......... $ 8.08 $ 7.31
========= =========
Total Return: ........................... 35.26% (17.00)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 4,403 $ 2,469
Ratio of expenses to average net assets . 1.00% 1.00%++
Ratio of net income (loss) to average
net assets ............................ (0.27)% (0.34)%++
Portfolio turnover rate ................. 90.51% 73.87%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average net assets 1.41% 3.08%++
Ratio of net income (loss) to
average net assets .................. (0.68)% (2.43)%++
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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>
S E L I G M A N
----------------
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.
SPSCV1 5/2000 C2
[PHOTO]
PROSPECTUS
MAY 1, 2000
---------
A Value Approach
to Seeking Long-Term
Capital Appreciation
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<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
Shareholder Information
Pricing of Fund Shares P-5
How to Purchase and Sell Shares P-5
Shareholder Servicing and Distribution Arrangements P-5
Dividends and Capital Gain Distributions P-6
Taxes P-6
Financial Highlights P-7
For More Information back cover
TIMES CHANGE ... VALUES ENDURE
<PAGE>
[PHOTO]
The Fund and the Portfolio
OVERVIEW OF THE FUND
Seligman Portfolios, Inc. (the Fund) consists of 15 separate portfolios. This
Prospectus contains information about Seligman Small-Cap Value Portfolio (the
Portfolio).
The Portfolio is offering its shares only to separate accounts (Accounts) of
participating insurance companies to fund benefits of variable annuity and
variable life insurance 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.
The Portfolio offers two classes of shares: Class 1 shares and Class 2 shares.
This Prospectus offers only Class 2 shares and is for use with Accounts that
make Class 2 shares available to Contract owners.
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
- ---------------------------------------
Value Companies:
Those companies believed by the
investment manager to be undervalued,
either historically, by the market,
or by their peers.
- ---------------------------------------
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.
P-1
<PAGE>
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 Portfolio may change its principal strategies, except for stated fundamental
policies, if the Fund's Board of Directors believes doing so is consistent with
the Portfolio's objective. The Portfolio's objective and any fundamental
policies may be changed only with shareholder approval. If a change of objective
or fundamental policies is proposed, Contract owners will be asked to give
voting instructions to the participating insurance companies.
The 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 the Portfolio from achieving its objective.
The Fund's Board of Directors may change the parameters by which small market
capitalization is defined if it concludes such a change is appropriate.
There is no guarantee that the Portfolio will achieve its objective.
PRINCIPAL RISKS
Stock prices fluctuate. Therefore, as with any portfolio 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.
Small company stocks, as a whole, may experience larger price fluctuations than
large company stocks or other types of investments. Small companies tend to have
shorter operating histories, and may have less experienced management. During
periods of investor uncertainty, investor sentiment may favor large, well-known
companies over small, lesser-known companies.
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.
Due to differences of tax treatment and other considerations, there is a
possibility that the interests of various Contract owners who own shares of the
Portfolio may conflict. The Board of Directors monitors events in order to
identify any disadvantages or material irreconcilable conflicts and to determine
what action, if any, should be taken in response.
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-2
<PAGE>
PAST PERFORMANCE
Class 2 shares are newly offered and have no performance history. The
information below provides some indication of the risks of investing in the
Portfolio by showing how the performance of Class 1 shares over the periods
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.
Total returns will vary between Class 1 shares and Class 2 shares due to
different expenses of the two Classes. Class 1 annual total return presented in
the bar chart and average annual total returns presented in the table do not
reflect the effect of the shareholder servicing and distribution (12b-1) fees
associated with Class 2 shares or 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.
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL.]
Class 1 Annual Total Return - Calendar Year
Year Percentage
---- ----------
1999 35.26%
Best quarter return: 34.49% - quarter ended 6/30/99.
Worst quarter return: -11.44% - quarter ended 9/30/99.
- --------------------------------------------------------------------------------
Class 1 Average Annual Total Returns - Periods Ended 12/31/99
ONE SINCE INCEPTION
YEAR 5/1/98
------- ----------------
Seligman Small-Cap Value Portfolio 35.26% 7.18%
Russell 2000 Value Index -1.49 -9.48(1)
Lipper Small-Cap Funds Average 30.04 9.41(1)
The Russell 2000 Value Index and the Lipper Small-Cap Funds Average are
unmanaged benchmarks that assume the reinvestment of dividends and exclude the
effect of fees and sales charges.
(1) From April 30, 1998.
- --------------------------------------------------------------------------------
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 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in assets as of March 31, 2000. Seligman also provides
investment management or advice to institutional or other accounts having an
aggregate value at March 31, 2000 of approximately $12 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 year
ended December 31, 1999, 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 Seligman Large-Cap Value Fund and 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 Seligman Large-Cap Value Fund and
Seligman Small-Cap Value Fund, the two series of Seligman Value Fund Series,
Inc.
P-4
<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.
SHAREHOLDER SERVICING AND DISTRIBUTION ARRANGEMENTS
Under a Rule 12b-1 plan adopted by the Fund with respect to the Portfolio, Class
2 shares pay an annual shareholder servicing and distribution (12b-1) fee of up
to 0.25% of average net assets. The Portfolio pays this fee to Seligman
Advisors, Inc., the principal underwriter of the Portfolio's shares. Seligman
Advisors uses this fee to make payments to participating insurance companies or
their affiliates for services that the participating insurance companies provide
to Contract owners of Class 2 shares, and for distribution related expenses.
Because these 12b-1 fees are paid out of the Portfolio's assets on an ongoing
basis, over time they will increase the cost of a Contract owner's investment
and may cost you more than other types of sales charges.
P-5
<PAGE>
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. Dividends on Class 2 shares generally will be lower than the
dividends on Class 1 shares as a result of 12b-1 fees. Capital gain
distributions will be paid in the same amount for each Class.
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 describes the Portfolio's performance for the period of the
Portfolio's operations. It is intended to help you understand the financial
performance of the Portfolio's Class 1 shares. Class 2 shares are a newly
offered Class, effective May 1, 2000, so financial highlights are not available.
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 the shareholder servicing and
distribution (12b-1) fees associated with Class 2 shares or 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 5/1/98+
December 31, to
1999 12/31/98
------------ ---------
Per Share Data:*
Net asset value, beginning of period .... $ 7.31 $ 10.00
--------- ---------
Income from investment operations:
Net investment income (loss) .......... (0.03) (0.02)
Net gains or losses on securities (both
realized and unrealized) .............. 2.49 (1.73)
--------- ---------
Total from investment operations ........ 2.46 (1.75)
--------- ---------
Less distributions:
Distributions from capital gains ...... (1.69) (0.94)
--------- ---------
Total distributions ..................... (1.69) (0.94)
--------- ---------
Net asset value, end of period .......... $ 8.08 $ 7.31
========= =========
Total Return: ........................... 35.26% (17.00)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands). $ 4,403 $ 2,469
Ratio of expenses to average net assets . 1.00% 1.00%++
Ratio of net income (loss) to average
net assets ............................ (0.27)% (0.34)%++
Portfolio turnover rate ................. 90.51% 73.87%
Without management fee waiver and
expense reimbursement:**
Ratio of expenses to average
net assets ............................ 1.41% 3.08%++
Ratio of net income (loss) to
average net assets .................. (0.68)% (2.43)%++
- ----------
* Per share amounts are calculated based on average shares outstanding.
** Seligman, at its discretion, reimbursed expenses and/or waived management
fees for the periods presented. 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
[LOGO]
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.
Statement of Additional Information
May 1, 2000
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 Prospectuses, dated May 1, 2000 for each of
Seligman Bond Portfolio, Seligman Capital Portfolio, Seligman Cash Management
Portfolio, Seligman Common Stock Portfolio, Seligman Communications and
Information Portfolio, Seligman Frontier Portfolio, Seligman Global Growth
Portfolio, Seligman Global Smaller Companies Portfolio, Seligman Global
Technology Portfolio, Seligman High-Yield Bond Portfolio, Seligman Income
Portfolio, Seligman International Growth Portfolio, Seligman Large-Cap Growth
Portfolio, Seligman Large-Cap Value Portfolio and Seligman Small-Cap Value
Portfolio (individually, a Portfolio and collectively, the Portfolios), each a
separate portfolio of Seligman Portfolios, Inc. (the Fund). This SAI, although
not in itself a prospectus, is incorporated by reference into each Portfolio's
Prospectus in its entirety. It should be read in conjunction with each
Portfolio's 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 ................................... 14
Investment Advisory and Other Services ................... 19
Brokerage Allocation and Other Practices ................. 23
Capital Stock and Other Securities ....................... 24
Purchase, Redemption, and Pricing of Shares .............. 25
Taxation of the Fund ..................................... 27
Underwriters ............................................. 27
Calculation of Performance Data........................... 27
Financial Statements ..................................... 29
General Information ...................................... 30
Appendix A ............................................... 31
Appendix B ............................................... 34
<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 Portfolios:
<TABLE>
<S> <C>
Seligman Bond Portfolio Seligman Global Technology Portfolio (formerly known
as Seligman Henderson Global Technology Portfolio)
Seligman Capital Portfolio Seligman High-Yield Bond Portfolio
Seligman Cash Management Portfolio Seligman Income Portfolio
Seligman Common Stock Portfolio Seligman International Growth Portfolio (formerly
known as Seligman Henderson International Portfolio)
Seligman Communications and Information Portfolio Seligman Large-Cap Growth Portfolio
Seligman Frontier Portfolio Seligman Large-Cap Value Portfolio
Seligman Global Growth Portfolio (formerly known as Seligman Seligman Small-Cap Value Portfolio
Henderson Global Growth Opportunities Portfolio)
Seligman Global Smaller Companies Portfolio (formerly known as
Seligman Henderson Global Smaller Companies Portfolio)
</TABLE>
The Fund's Portfolios are offering their shares only to separate accounts
(Accounts) of participating insurance companies to fund benefits of variable
annuity and variable life insurance contracts (Contracts). The Accounts may
invest in shares of the Portfolios 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 each Portfolio's Prospectus.
The Fund reserves the right to reject any order for the purchase of shares of
the Fund's Portfolios.
Investment Strategies and Risks
The Prospectuses discuss 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 Prospectuses.
Convertible Bonds
Each Portfolio, other than 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
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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 Portfolios may invest in debt securities convertible into
equity securities rated as low as CC by Standard & Poor's Ratings Services (S&P)
or Ca by Moody's Investors Service (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 SAI. 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 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 Seligman Global Growth Portfolio, Seligman Global Smaller Companies
Portfolio, Seligman Global Technology Portfolio and Seligman International
Growth Portfolio (collectively, the Global 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 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 investment manager (or subadviser, in the case of
Seligman Global Smaller Companies Portfolio) 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
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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 investment
manager (or subadviser, in the case of Seligman Global Smaller Companies
Portfolio) 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 investment manager (and
subadviser, in the case of Seligman Global Smaller Companies Portfolio) believe
that it is important to have the flexibility to enter into such forward
contracts when they determine 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.
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 investment
manager (or subadviser, in the case of Seligman Global Smaller Companies
Portfolio). 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
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<PAGE>
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 Seligman Cash Management Portfolio, Seligman Bond
Portfolio, and 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.
Rights and Warrants
Each Portfolio, other than 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 addition, no
more than 2% of net assets of each Portfolio, other than 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 Global 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 United
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<PAGE>
States. 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 investment manager (and subadviser, in the case of Seligman Global
Smaller Companies Portfolio) believe 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 United States. 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 judgment 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
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
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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 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 Seligman Cash Management Portfolio, may
purchase restricted securities that can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the Fund's Board of
Directors may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the 15% limitation on illiquid securities. Should
the Board of Directors make this determination, it will carefully monitor the
security (focusing on such factors, among others, as trading activity and
availability of information) to determine that the Rule 144A security continues
to be liquid. It is not possible to predict with assurance exactly how the
market for Rule 144A securities will further evolve. This investment practice
could have the effect of increasing the level of illiquidity in a Portfolio, if
and to the extent that qualified institutional buyers become for a time
uninterested in purchasing Rule 144A securities.
Money Market Instruments
Each of the Portfolios, other than 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.
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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 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.
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Collateralized Mortgage Obligations. 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. 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 investment manager. The investment manager
has implemented measures to review and monitor the creditworthiness of such
institutions. 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
Seligman Bond Portfolio and 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 Seligman Bond Portfolio and 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 Portfolios may
sell these securities before the purchase settlement date if it is deemed
advisable.
9
<PAGE>
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 Global 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 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 Global 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-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, Seligman Frontier Portfolio, Seligman High-Yield Bond
Portfolio, Seligman Large-Cap Growth Portfolio, Seligman Large-Cap Value
Portfolio, and 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.
Seligman Capital Portfolio, Seligman Common Stock Portfolio, Seligman
Communications and Information Portfolio, Seligman Large-Cap Growth Portfolio,
Seligman Large-Cap Value Portfolio, and 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 Seligman Large-Cap Growth
10
<PAGE>
Portfolio, Seligman Large-Cap Value Portfolio, and 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 Global 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 Seligman Large-Cap Growth Portfolio, Seligman Large-Cap Value
Portfolio, and Seligman Small-Cap Value Portfolio) of the value of the
total assets of the Portfolio; except that Seligman Capital Portfolio,
Seligman Common 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 Seligman Large-Cap Growth
Portfolio, Seligman Large-Cap Value Portfolio, and Seligman Small-Cap Value
Portfolio) of such assets (taken at cost); except that Seligman Frontier
Portfolio, Seligman High-Yield Bond Portfolio, Seligman Large-Cap Growth
Portfolio, Seligman Large-Cap Value Portfolio and 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 Global 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 Seligman High-Yield Bond Portfolio, by the Fund's Board of Directors.
3. Make "short" sales of securities (except that each of the Global 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.
11
<PAGE>
4. With respect to 75% of its securities portfolio (or 100% of its securities
portfolio, in the case of 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 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 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 Seligman Bond Portfolio,
Seligman Common Stock Portfolio, Seligman Income Portfolio, Seligman
Large-Cap Growth Portfolio, Seligman Large-Cap Value Portfolio, Seligman
Small-Cap Value Portfolio, and each of the Global Portfolios may engage in
transactions involving securities secured by real estate or interests
therein, and each of the Global 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 Seligman Cash
Management Portfolio and Seligman High-Yield Bond Portfolio to engage in
transactions involving interest rate and/or stock index futures and related
options solely for the purposes of reducing investment risk and not for
speculative purposes.
8. Underwrite the securities of other issuers, provided that the disposition
of investments otherwise permitted to be made by any Portfolio (such as
investments in securities that are not readily marketable without
registration under the 1933 Act and repurchase agreements with maturities
in excess of seven days) will not be deemed to render a Portfolio engaged
in an underwriting investment if not more than 10% of the value of such
Portfolio's total assets (taken at cost) would be so invested and except
that in connection with the disposition of a security a Portfolio may be
deemed to be an underwriter as defined in the 1933 Act.
9. Make loans, except loans of securities, provided that purchases of notes,
bonds or other evidences of indebtedness, including repurchase agreements,
are not considered loans for purposes of this restriction; provided further
that each of the 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 its 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 Seligman Communications and
Information Portfolio, Seligman Frontier Portfolio, each of the Global
Portfolios and 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
12
<PAGE>
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 Seligman Large-Cap Growth Portfolio, Seligman Large-Cap
Value Portfolio or 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, Seligman
High-Yield Bond Portfolio may not purchase or hold the securities of any
issuer if, to its knowledge, directors or officers of the Fund individually
owning beneficially more than 0.5% of the securities of that issuer own in
the aggregate more than 5% of such securities.
16. Invest more than 5% of the value of its net assets, valued at the lower of
cost or market, in warrants, of which no more than 2% of net assets may be
invested in warrants and rights not listed on the New York or American
Stock Exchange. For this purpose, warrants acquired by the Fund in units or
attached to securities may be deemed to have been purchased without cost.
If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in such percentage resulting from a change in the value of
assets will not constitute a violation of such restriction. In order to permit
the sale of the Fund's shares in certain states, the Fund may make commitments
more restrictive than the investment restrictions described above. Should the
Fund determine that any such commitment is no longer in the best interest of the
Fund it will revoke the commitment by terminating sales in the state involved.
The Fund also intends to comply with the diversification requirements under
Section 817(h) of the Internal Revenue Code of 1986, as amended. For a
description of these requirements, see the separate account prospectuses or
disclosure documents of the participating insurance companies.
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
each Portfolio (except Seligman Cash Management Portfolio) for the years ended
December 31, 1999 and, if applicable, 1998 were as follows:
13
<PAGE>
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Seligman Bond Portfolio 64.22% 73.31%
Seligman Capital Portfolio 172.88 130.86
Seligman Common Stock Portfolio 38.11 55.55
Seligman Communications and Information Portfolio 118.16 132.57
Seligman Frontier Portfolio 57.93 86.52
Seligman Global Growth Portfolio 69.18 48.99
Seligman Global Smaller Companies Portfolio 46.75 66.40
Seligman Global Technology Portfolio 116.88 82.27
Seligman High-Yield Bond Portfolio 57.05 43.13
Seligman Income Portfolio 75.08 70.45
Seligman International Growth Portfolio 79.17 75.81
Seligman Large-Cap Growth Portfolio 56.69* --
Seligman Large-Cap Value Portfolio 28.01 65.82**
Seligman Small-Cap Value Portfolio 90.51 73.87**
</TABLE>
-------------------
* Portfolio turnover rate for the period May 1, 1999 (commencement of
operations) to December 31, 1999.
** Portfolio turnover rate for the period May 1, 1998 (commencement of
operations) to December 31, 1998.
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 Chairman, J. & W. Seligman & Co. Incorporated, Chairman and Chief
(62) of the Board, Chief Executive Officer, the Seligman Group of investment companies;
Executive Officer Chairman, Seligman Advisors, Inc., Seligman Services, Inc., and Carbo
and Chairman of the Ceramics Inc., ceramic proppants for oil and gas industry; Director,
Executive Committee 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, Director and President, J. & W. Seligman & Co. Incorporated; President
(47) President and (with the exception of Seligman Quality Municipal Fund, Inc. and
Member of the Seligman Select Municipal Fund, Inc.) and Director or Trustee, the
Executive Committee 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.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Richard R. Schmaltz* Director and Director and Managing Director, Director of Investments, J. & W.
(59) Member of the Seligman & Co. Incorporated; Director or Trustee, the Seligman Group
Executive of investment companies (except Seligman Cash Management Fund, Inc.);
Committee Trustee Emeritus of Colby College. Formerly, Director, Investment
Research at Neuberger & Berman from May 1993 to September 1996
and Director, Seligman Henderson Co.
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts University;
(70) Director or Trustee, the Seligman Group of investment companies;
Tufts University Chairman Emeritus, American Council on Germany; a Governor of the
Packard Avenue, Center for Creative Leadership; Director; Raytheon Co., electronics;
Medford, MA 02155 National Defense University; and the Institute for Defense Analyses.
Formerly, Director, USLIFE Corporation, life insurance; Ambassador,
U.S. State Department for negotiations in Bosnia; Distinguished Policy
Analyst at Ohio State University and Olin Distinguished Professor of
National Security Studies at the United States Military Academy. From
June 1987 to June 1992, he was the Supreme Allied Commander, Europe
and the Commander-in-Chief, United States European Command.
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director or Trustee, the
(65) Seligman Group of investment companies; Trustee, the Committee for
18 Highland Circle, Economic Development; and Chairman, The Rockefeller Foundation,
Bronxville, NY 10708 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 Kerr-McGee
(67) Corporation; Director or Trustee, the Seligman Group of investment
2601 Northwest Expressway, companies; Director, Kimberly-Clark Corporation, consumer products;
Suite 805E Conoco Inc, oil exploration and production; Bank of Oklahoma Holding
Oklahoma City, OK 73112 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.
John E. Merow Director Retired Chairman and Senior Partner, Sullivan & Cromwell, law firm;
(70) Director or Trustee, the Seligman Group of investment companies;
125 Broad Street, Director, Commonwealth Industries, Inc., manufacturers of aluminum
New York, NY 10004 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, 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.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of investment
(57) companies; Trustee, The Geraldine R. Dodge Foundation, charitable
P.O. Box 719, foundation. Formerly, Chairman of the Board of Trustees of St.
Gladstone, NJ 07934 George's School (Newport, RI) and Director, the National
Association of Independent Schools (Washington, DC).
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm; Director
(73) or Trustee, the Seligman Group of investment companies. Formerly,
Park Avenue at Morris Director, Public Service Enterprise Group, public utility.
County, P.O. Box 1945,
Morristown, NJ 07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment companies;
(72) Director, The Houston Exploration Company, oil exploration; The
2893 S. E. Ocean Boulevard, Brooklyn Museum, KeySpan Energy Corporation; and Public
Stuart, FL 34996 Broadcasting Service; and Trustee, the 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., pharmaceuticals; Director or
(67) Trustee, the Seligman Group of investment companies. Formerly,
96 Evergreen Avenue, Director, USLIFE Corporation, life insurance.
Rye, NY 10580
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc., a diversified
(65) holding company; Director or Trustee, the Seligman Group of
6606 Forestshire Drive, investment companies; Director, C-SPAN, cable television, and
Dallas, TX 75230 CommScope, Inc., manufacturer of coaxial cables. Formerly,
Executive Vice President, Chief Operating Officer, Sammons
Enterprises, Inc.
Jack P. Chang Vice President and Managing Director, J. & W. Seligman & Co. Incorporated since
(41) Portfolio Manager September 1999; Vice President and Portfolio Manager, Seligman
Global Fund Series, Inc. Formerly, Senior Vice President and Portfolio
Manager at Putnam Investment Management since 1997; and Portfolio Manager
with Columbia Management Company from 1993 to 1997.
Daniel J. Charleston Vice President and Managing Director (formerly, Vice President, Investment Officer),
(40) Portfolio Manager J. & W. Seligman & Co. Incorporated; Vice President and Portfolio
Manager, Seligman High-Yield Bond Series.
Iain C. Clark Vice President and Chief Investment Officer, Henderson Investment Management Limited
(49) Portfolio Manager since April 1992. He has been a Director at Henderson
International Limited and Senior Portfolio Manager at Henderson
plc, respectively, since April 1995. Vice President and Portfolio
Manager, Seligman Global Fund Series, Inc.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Mark J. Cunneen Vice President and Managing Director, J. & W. Seligman & Co. Incorporated since March
(40) Portfolio Manager 1, 2000; Vice President and Portfolio Manager, Seligman Frontier
Fund, Inc. and Seligman Global Fund Series, Inc. Formerly, Senior Vice
President - Head of Small Cap Group at Alliance Capital Management since
January 1999. Prior thereto, he was with Chancellor Capital
Management and its successor firms as Managing Director and Head of the
Small Cap Group from March 1997 to January 1999, and as a Portfolio Manager in
the Small Cap Group from December 1992 to March 1997.
Neil T. Eigen Vice President and Managing Director, J. & W. Seligman & Co. Incorporated; Vice
(57) Portfolio Manager President and Portfolio Manager, Seligman Value Fund Series, Inc.
Marion S. Schultheis Vice President and Managing Director, J. & W. Seligman & Co. Incorporated since May
(54) Portfolio Manager 1998; Vice President and Portfolio Manager, Seligman Capital Fund,
Inc., Seligman Global Fund Series, Inc. and Seligman Growth Fund,
Inc. 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 Managing Director (formerly, Senior Vice President and Senior
(43) Portfolio Manager Investment Officer), J. & W. Seligman & Co. Incorporated; Vice
President and Portfolio Manager, Seligman Common Stock Fund, Inc.,
Seligman Income Fund, Inc. and Tri-Continental Corporation.
Steven A. Werber Vice President and Senior Vice President, J. & W. Seligman & Co. Incorporated since
(34) Portfolio Manager January 2000; Vice President and Portfolio Manager, Seligman
Global Fund Series, Inc. Formerly, Analyst and Portfolio Manager
at Fidelity Investments International since 1996; and Associate at
Goldman Sachs International from 1992 to 1996.
Paul H. Wick Vice President and Director and Managing Director, J. & W. Seligman & Co.
(37) Portfolio Manager Incorporated since November 1997 and January 1995, respectively;
Vice President and Portfolio Manager, Seligman Communications and
Information Fund, Inc., Seligman Global Fund Series, Inc. and
Seligman New Technologies Fund, Inc. He joined J. & W. Seligman &
Co. Incorporated in 1987 as an Associate, Investment Research.
Gary S. Zeltzer Vice President and Senior Vice President, J. & W. Seligman & Co. Incorporated; Vice
(48) Portfolio Manager President and Portfolio Manager, Seligman Cash Management Fund,
Inc. and Seligman High Income Fund Series.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman & Co.
(43) 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. Formerly, Treasurer, Seligman Henderson Co.
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and Regulation and
(35) Corporate Secretary, J. & W. Seligman & Co. Incorporated;
Secretary, the Seligman Group of investment companies, Seligman
Advisors, Inc., Seligman Services, Inc., Seligman International,
Inc. and Seligman Data Corp. Formerly, Secretary, Seligman
Henderson Co.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies and Seligman
(42) Data Corp.
</TABLE>
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.
<TABLE>
<CAPTION>
Compensation
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 $8,868 N/A $82,000
Alice S. Ilchman, Director 8,568 N/A 80,000
Frank A. McPherson, Director 8,572 N/A 78,000
John E. Merow, Director 7,980 N/A 80,000
Betsy S. Michel, Director 8,868 N/A 82,000
James C. Pitney, Director 7,380 N/A 74,000
James Q. Riordan, Director 8,568 N/A 80,000
Robert L. Shafer, Director 8,568 N/A 80,000
James N. Whitson, Director 8,568 (3) N/A 80,000 (3)
- -----------------------
(1) For the Fund's year ended December 31, 1999. Effective Janaury 21, 2000, the
per meeting fee for Directors was increased by $1,000, which is allocated
among all the Funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of twenty investment
companies.
(3) Deferred.
</TABLE>
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 certain of the investment
companies advised by J. & W. Seligman & Co. Incorporated (Seligman), 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.
18
<PAGE>
The total amount of deferred compensation (including earnings) payable in
respect of the Fund to Mr. Whitson as of December 31, 1999 was $36,159. Messrs.
Merow and Pitney no longer defer current compensation; however, they have
accrued deferred compensation (including earnings) in the amounts of $17,746 and
$2,589, respectively, as of December 31, 1999.
The Fund may, but is not obligated to, purchase shares of the other funds in 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).
Code of Ethics
Seligman, Seligman Advisors, Inc. (Seligman Advisors), their subsidiaries and
affiliates, and the Seligman Group of Investment Companies have adopted a Code
of Ethics that sets forth the circumstances under which officers, directors and
employees (collectively, Employees) are permitted to engage in personal
securities transactions. 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 Director of Compliance, and sets forth a procedure of identifying,
for disciplinary action, those individuals who violate the Code of Ethics. The
Code of Ethics prohibits Employees (including all investment team members) from
purchasing or selling any security or an equivalent security that is being
purchased or sold by any client, or where the Employee intends, knows of
another's intention, to purchase or sell the security on behalf of a client. The
Code also prohibits all Employees from acquiring securities in a private
placement or in an initial or secondary public offering unless an exemption has
been obtained from Seligman's Director of Compliance.
The Code of Ethics 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) that the portfolio manager or investment team
manages; (2) each Employee from engaging in short-term trading (a purchase and
sale or vice-versa within 60 days); and (3) each member of an investment team
from engaging in short sales of a security if, at that time, any client managed
by that team has a long position in that security. Any profit realized pursuant
to any of these prohibitions must be disgorged.
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 Employees are also required to disclose all
securities beneficially owned by them upon commencement of employment and at the
end of each calendar year.
A copy of the Code of Ethics is on public file with, and is available upon
request from, the Securities and Exchange Commission (SEC). You can access it
through the SEC's Internet site, http://www.sec.gov.
Investment Advisory and Other Services
The Investment Manager
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. Mr. William C. Morris
owns a majority of the outstanding voting securities of Seligman. See Appendix B
for further history of Seligman.
All of the officers of the Fund listed above are officers or employees of
Seligman or Henderson Investment Management Limited (HIML), the subadviser to
Seligman Global Smaller Companies Portfolio. Their affiliations with the Fund
and with Seligman and HIML are provided under their principal business
occupations.
Each Portfolio pays Seligman a management fee for its services, equal to a
percentage of the Portfolio's average daily net assets, as follows:
19
<PAGE>
<TABLE>
<CAPTION>
Management Fee Rate as a % of
Portfolio Average Daily Net Assets
--------- ------------------------
<S> <C>
Seligman Bond Portfolio .40%
Seligman Capital Portfolio .40%
Seligman Cash Management Portfolio .40%
Seligman Common Stock Portfolio .40%
Seligman Communications and Information Portfolio .75%
Seligman Frontier Portfolio .75%
Seligman Global Growth Portfolio 1.00% on first $1 billion;
.95% on next $1 billion;
.90% thereafter
Seligman Global Smaller Companies Portfolio 1.00% on first $1 billion;
.95% on next $1 billion;
.90% thereafter
Seligman Global Technology Portfolio 1.00% on first $2 billion;
.95% on next $2 billion;
.90% thereafter
Seligman High-Yield Bond Portfolio .50%
Seligman Income Portfolio .40%
Seligman International Growth Portfolio 1.00% on first $1 billion;
.95% on next $1 billion;
.90% thereafter
Seligman Large-Cap Growth Portfolio .70% on first $1 billion;
.65% on next $1 billion;
.60% thereafter
Seligman Large-Cap Value Portfolio .80% on first $500 million;
.70% on next $500 million;
.60% thereafter
Seligman Small-Cap Value Portfolio 1.00% on first $500 million;
.90% on next $500 million;
.80% thereafter
</TABLE>
The following table indicates the management fees paid (or waived, in the case
of Seligman Cash Management Portfolio) for the years 1999, 1998 and 1997 for
each Portfolio.
<TABLE>
<CAPTION>
Fund 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Seligman Bond Portfolio $ 25,174 $27,438 $23,150
Seligman Capital Portfolio 87,388 86,101 70,147
Seligman Cash Management Portfolio 59,121* 40,831* 38,042*
Seligman Common Stock Portfolio 227,424 224,301 178,662
Seligman Communications and Information Portfolio 1,069,705 748,401 574,370
Seligman Frontier Portfolio 203,535 323,502 282,248
Seligman Global Growth Portfolio 94,873 73,741 38,358
Seligman Global Smaller Companies Portfolio 179,034 215,796 200,415
Seligman Global Technology Portfolio 107,062 49,036 26,504
Seligman High-Yield Bond Portfolio 150,001 142,265 84,740
Seligman Income Portfolio 46,448 57,362 54,451
Seligman International Growth Portfolio 95,391 100,225 88,212
Seligman Large-Cap Growth Portfolio 10,543** -- --
Seligman Large-Cap Value Portfolio 43,362 9,139*** --
Seligman Small-Cap Value Portfolio 41,087 7,951*** --
</TABLE>
---------------------
* Seligman, at its discretion, waived all of its fees for Seligman Cash
Management Portfolio.
** Fees paid from May 1, 1999 (commencement of operations) to
December 31, 1999.
*** Fees paid from May 1, 1998 (commencement of operations) to
December 31, 1998.
20
<PAGE>
Under a Subadvisory Agreement dated July 1, 1998, HIML furnishes investment
advice, research and assistance with respect to the Seligman Global Smaller
Companies Portfolio's non-US investments. Prior to March 31, 2000, HIML also
served as a subadviser with respect to each of the other Global Portfolios.
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.
HIML receives a fee from Seligman, equal to an annual rate of .50% of the
Seligman Global Smaller Companies Portfolio's average daily net assets under the
supervision of HIML. The Subadvisory Agreement will continue until December 31,
2000 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 Portfolio 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 Global Smaller Companies Portfolio) provide that Seligman (and HIML, in
the case of the Seligman Global Smaller Companies Portfolio) 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 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 International
Growth Portfolio was approved by the Board of Directors on March 18, 1993. The
Management Agreements with respect to Seligman Communications and Information
Portfolio, Seligman Frontier Portfolio, and Seligman Global Smaller Companies
Portfolio were approved by the Board of Directors on July 21, 1994. The
Management Agreement with respect to Seligman High-Yield Bond Portfolio was
approved by the Board of Directors on March 16, 1995. The Management Agreement
with respect to Seligman Global Growth Portfolio and Seligman Global Technology
Portfolio was approved by the Board of Directors on March 21, 1996. The
Management Agreement with respect to Seligman Large-Cap Value Portfolio and
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 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 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
21
<PAGE>
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.
Principal Underwriter
Seligman Advisors, an affiliate of Seligman, 100 Park Avenue, New York, New York
10017, acts a general distributor of the shares of the Portfolios and of each of
the mutual funds in the Seligman Group. Seligman Advisors is an "affiliated
person" (as defined in the 1940 Act) of Seligman, which is itself an affiliated
person of the Fund. Those individuals identified above under "Management
Information" as directors or officers of both the Fund and Seligman Advisors are
affiliated persons of both entities.
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 with respect to Seligman Global Smaller Companies Portfolio, regularly
advise the Fund's Portfolios with respect to their investments.
Rule 12b-1 Plan
Each Portfolio has adopted a Shareholder Servicing and Distribution Plan (12b-1
Plan) with respect to the Portfolio's Class 2 shares in accordance with Section
12(b) of the 1940 Act and Rule 12b-1 thereunder.
Under the 12b-1 Plan, Class 2 shares of each Portfolio pay monthly to Seligman
Advisors, an annual shareholder servicing and distribution fee of up to 0.25% of
the average daily net assets attributable to Class 2 shares. Seligman Advisors
uses this fee to make payments to participating insurance companies or their
affiliates for services that the participating insurance companies provide to
Contract owners of Class 2 shares including, but not limited to, (1) the
printing and delivering of prospectuses, statements of additional information,
shareholder reports, proxy statements and marketing materials related to the
Portfolios to current Contract owners, (2) providing facilities to answer
questions from current Contract owners about the Portfolios, (3) receiving and
answering correspondence, (4) providing information to Seligman and to Contract
owners with respect to shares of the Portfolios attributable to Contract owner
Accounts, (5) complying with federal and state securities laws pertaining to the
sale of shares of the Portfolios, (6) assisting Contract owners in completing
application forms and selecting dividend and other Account options, and (7)
other distribution related services. The participating insurance companies will
also provide such office space and equipment, telephone facilities, and
personnel as may be reasonably necessary or beneficial in order to provide such
services to owners.
Seligman, in its sole discretion, may also make similar payments to Seligman
Advisors and participating insurance companies from its own resources, which may
include the management fee that Seligman receives from the Portfolios. Payments
made by the Portfolios under the 12b-1 Plan are intended to be used to encourage
sales of Class 2 shares to Contract owners, as well as to discourage redemptions
and/or exchanges.
Fees paid by each Portfolio under the 12b-1 Plan for Class 2 shares may not be
used to pay expenses incurred solely in respect of Class 1 shares or any other
Seligman fund.
22
<PAGE>
The amounts expended by participating insurance companies in any one year with
respect to Class 2 shares of a Portfolio may exceed the 12b-1 fees paid by the
Portfolio in that year. Each Portfolio's 12b-1 Plan permits expenses incurred by
participating insurance companies in respect of Class 2 shares in one fiscal
year to be paid from Class 2 12b-1 fees in any other fiscal year; however, in
any fiscal year the Portfolios are not obligated to pay any 12b-1 fees in excess
of those described above.
The 12b-1 Plan was approved with respect to the Class 2 shares of each Portfolio
on March 16, 2000 by the Board of Directors, including a majority of the
Directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who had no direct or indirect financial interest in the operation of
the 12b-1 Plan or in any agreement related to the Plan (Qualified Directors).
The 12b-1 Plan will continue in effect until December 31 of each year, so long
as such continuance is approved annually by a majority vote of both the
Directors and the Qualified Directors of the Fund, cast in person at a meeting
called for the purpose of voting on such approval. The 12b-1 Plans may not be
amended to increase materially the amounts payable to Seligman Advisors without
the approval of a majority of the outstanding voting securities of the relevant
class. No material amendment to the 12b-1 Plans may be made except by a majority
of both the Directors and Qualified Directors.
The 12b-1 Plans require that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the Plans. Rule 12b-1 also
requires that the selection and nomination of Directors who are not "interested
persons" of the Fund be made by such disinterested Directors. The 12b-1 Plans
will be reviewed by the Directors annually.
No Class 2 shares were outstanding during the year ended December 31, 1999, and
no Portfolio paid any fees to Seligman Advisors under the 12b-1 Plan.
Brokerage Allocation and Other Practices
Portfolio Transactions
In directing transactions involving exchange-listed securities, Seligman (or in
the case of Seligman Global Smaller Companies Portfolio, 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 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 Seligman Bond Portfolio,
Seligman Cash Management Portfolio and Seligman High-Yield Bond Portfolio) for
the years 1999, and if applicable, 1998 and 1997, are set forth in the following
table:
23
<PAGE>
<TABLE>
<CAPTION>
Total Brokerage Commissions Paid for
Execution and Statistical Services(1)
-------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Seligman Capital Portfolio $77,687 $74,776 $35,821
Seligman Common Stock Portfolio 47,746 68,974 74,489
Seligman Communications and Information Portfolio 179,868 177,132 235,341
Seligman Frontier Portfolio 53,681 85,207 69,951
Seligman Global Growth Portfolio 19,618 14,141 15,812
Seligman Global Smaller Companies Portfolio 38,173 40,386 42,231
Seligman Global Technology Portfolio 20,369 10,211 6,589
Seligman Income Portfolio 8,774 9,505 11,228
Seligman International Growth Portfolio 33,299 37,779 36,291
Seligman Large-Cap Growth Portfolio 3,611* -- --
Seligman Large-Cap Value Portfolio 7,165 6,315** --
Seligman Small-Cap Value Portfolio 11,125 7,028** --
</TABLE>
- --------------
(1) Not including any spreads on principal transactions on a net basis.
* Commissions paid from May 1, 1999 (commencement of operations).
** Commissions paid from May 1, 1998 (commencement of operations).
The amount of brokerage commissions paid by Seligman Capital Portfolio has
increased materially from 1997 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.
Commissions
For the years ended December 31, 1999, 1998 and 1997, 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 other applicable laws, 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 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, 1999, neither the Fund, Seligman, nor
HIML, through an agreement or understanding with a broker, or otherwise through
an internal allocation procedure, 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, 1999, 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, create and classify shares of capital stock in
separate series without further action by shareholders. 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
24
<PAGE>
and Information Portfolio, Seligman Frontier Portfolio, Seligman Global Growth
Portfolio, Seligman Global Smaller Companies Portfolio, Seligman Global
Technology Portfolio, Seligman International Growth 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. Shares of capital stock of each Portfolio have a par value of $.001
and are divided into two classes, designated as Class 1 common stock and Class 2
common stock. Each share of a Fund's Class 1 and Class 2 common stock is equal
as to earnings, assets and voting privileges, except that each class bears its
own separate shareholder servicing and, potentially, certain other class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required by the 1940 Act or Maryland law. The
Series has adopted a Plan (Multiclass Plan) pursuant to Rule 18f-3 under the
1940 Act permitting the issuance and sale of multiple classes of common stock.
In accordance with the Articles of Incorporation, the Board of Directors may
authorize the creation of additional classes of common stock with such
characteristics as are permitted by the Multiclass Plan and Rule 18f-3. The 1940
Act requires that where more than one class exists, each class must be preferred
over all other classes in respect of assets specifically allocated to such
class. Shares have non-cumulative voting rights for the election of directors.
Each outstanding share will be fully paid and non-assessable, and freely
transferable. There are no liquidation, conversion or prescriptive rights.
In accordance with current policy of the SEC, holders of the Accounts have the
right to instruct the applicable participating insurance companies as to voting
of Fund shares held by such Accounts 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 Accounts of participating
insurance companies are more fully set forth in the prospectuses or disclosure
documents relating to those Accounts, which should be read together with each
Portfolio's 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 the above-mentioned common
stock.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
The Fund's Portfolios are offering their shares only to the Accounts of
participating insurance companies to fund benefits of the Contracts. The
Accounts may invest in shares of the Portfolios 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 each Portfolio's Prospectus.
The Fund reserves the right to reject any order for the purchase of shares of
the Fund's Portfolios.
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 (NYSE) (normally, 4:00 p.m.
Eastern time) each day that the NYSE is open. Currently, the NYSE 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 Seligman Cash Management Portfolio to use its best efforts
to maintain a constant per share price equal to $1.00. Instruments held by
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
25
<PAGE>
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, 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 Seligman
Cash Management Portfolio at $1.00. Such procedures include review of the
portfolio holdings by Seligman Cash Management Portfolio and determination as to
whether the net asset value of 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 Global 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 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 NYSE. 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 NYSE.
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 NYSE, 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 participating insurance companies by
the close of regular trading on the NYSE (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.
26
<PAGE>
Redemption in Kind
The procedures for redemption of Fund shares under ordinary circumstances are
set forth in each Portfolio's 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 NYSE 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 Accounts 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 Accounts 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 Seligman Cash Management Portfolio will be
declared daily and reinvested monthly in additional full and fractional shares
of 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's Portfolios is contained in the
separate prospectuses or disclosure documents of the Accounts, which should be
read together with this SAI.
Underwriters
Distribution of Securities
The Fund and Seligman Advisors are parties to a Distribution and Shareholder
Servicing Agreement, dated March 16, 2000, under which Seligman Advisors acts as
the exclusive agent for distribution of shares of the Portfolios. Seligman
Advisors accepts orders for the purchase of Portfolio shares, which are offered
continuously.
Compensation
Seligman Advisors, which is an affiliated person of Seligman, which is an
affiliated person of the Fund, did not receive any commissions or other
compensation from the Fund during the fiscal year ended December 31, 1999.
Calculation of Performance Data
From time to time the average annual total return and other total return data,
as well as yield, of one or more of the Portfolios may be included in
advertisements or information furnished to present or prospective Contract
owners. Total return and yield figures are based on each Portfolio's historical
performance and are not intended to indicate future performance. Average annual
total return and yield are determined in accordance with formulas specified by
the SEC.
The average annual total returns for each Portfolio are computed by assuming a
hypothetical initial investment of $1,000 in the Portfolio, and assuming that
all of the dividends and capital gain distributions paid by the Portfolio, if
any, are reinvested over the relevant time period. It is then assumed that at
the end of each period, the entire amount is redeemed. The average annual total
return is then calculated by calculating the annual rate required for the
initial payment to grow to the amount which would have been received upon such
redemption (i.e., the average annual compound rate of return).
Annualized yield quotations (with respect to Seligman Bond Portfolio and
Seligman High-Yield Bond Portfolio) are computed by dividing each Portfolio's
net investment income per share earned during the 30-day period by the offering
price per share on the last day of the period. Income is computed by totaling
the dividends and interest earned on all portfolio investments during the 30-day
period and subtracting from that amount the total of all
27
<PAGE>
recurring expenses incurred during the period. The 30-day yield is then
annualized on a bond-equivalent basis assuming semi-annual reinvestment and
compounding of net investment income. The annualized yield for the 30-day period
ended December 31, 1999 for Class 1 shares of Seligman Bond Portfolio and
Seligman High-Yield Bond Portfolio was 6.73% and 12.07%, respectively. The
average number of Class 1 shares of Seligman Bond Portfolio and Seligman
High-Yield Bond Portfolio was 557,563 and 2,727,751, respectively, which was the
average daily number of shares outstanding during the 30-day period that were
eligible to receive dividends. Yield quotations may be of limited use for
comparative purposes because they do not reflect charges imposed at the Account
level which, if included, would decrease the yield. There were no Class 2 shares
of Seligman Bond Portfolio or Seligman High-Yield Bond Portfolio outstanding
during the period shown, so no yield data is presented with respect to Class 2
shares.
The average annual total returns for each of the Portfolio's (except Seligman
Cash Management Portfolio and Seligman Large-Cap Growth Portfolio, which
commenced operations on May 1, 1999) Class 1 shares for the one-, five- and
ten-year periods ended December 31, 1999 (or for the period the Portfolio has
been in operation) are presented below. The returns for periods of less than one
year are not annualized. The average annual total return quotations may be of
limited use for comparative purposes because they do not reflect charges imposed
at the Account level which, if included, would decrease average annual total
return. There were no Class 2 shares outstanding during the periods shown, so no
performance data is presented with respect to Class 2 shares.
<TABLE>
<CAPTION>
SEC Average Annual Returns
Inception Date
(if less than 10 years) One Year Five Years Ten Years
----------------------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Seligman Bond Portfolio (4.48)% 6.09% 6.05%
Seligman Capital Portfolio 53.33 27.04 19.21
Seligman Common Stock Portfolio 13.15 21.10 15.48
Seligman Communications
and Information Portfolio 10/11/94 85.81 36.12 35.44*
Seligman Frontier Portfolio 10/11/94 16.59 17.16 17.63*
Seligman Global Growth Portfolio 05/01/96 52.49 21.95*
Seligman Global Smaller
Companies Portfolio 10/11/94 28.34 14.53 14.62*
Seligman Global Technology Portfolio 05/01/96 118.80 43.07*
Seligman High-Yield Bond Portfolio 05/01/95 (0.75) 7.80*
Seligman Income Portfolio 2.87 9.72 9.10
Seligman International Growth Portfolio 05/03/93 26.64 13.63 12.53*
Seligman Large-Cap Growth Portfolio 05/01/99 21.60*
Seligman Large-Cap Value Portfolio 05/01/98 (2.76) (1.82)*
Seligman Small-Cap Value Portfolio 05/01/98 35.26 7.18*
</TABLE>
* Since inception.
The current yield of Seligman Cash Management Portfolio is computed by
determining the net change exclusive of capital changes in the value of a
hypothetical pre-existing account having a balance of 1 share at the beginning
of a seven-day calendar period, dividing the net change in account value by the
value of the account at the beginning of the period, and multiplying the return
over the seven-day period by 365/7. For purposes of the calculation, net change
in account value reflects the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares, but does not reflect realized gains or
losses or unrealized appreciation or depreciation. Effective yield is computed
by annualizing the seven-day return with all dividends reinvested in additional
Portfolio shares.
The following are examples of the yield calculations for Class 1 shares of
Seligman Cash Management Portfolio for the seven-day period ended December 31,
1999. Yield quotations may be of limited use for comparative purposes because
they do not reflect charges imposed at the Account level which, if included,
would decrease the yield. There were no Class 2 shares of Seligman Cash
Portfolio outstanding during the period shown, so no yield data is presented
with respect to Class 2 shares.
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<PAGE>
<TABLE>
<S> <C>
Total dividends per share from net investment income
(seven days ended December 31, 1999) $.001013
--------
Annualized (365 day basis) .052821
-------
Average net asset value per share 1.000
-----
Annualized historical net yield per share (seven
days ended December 31, 1999)* 5.28%
-----
Effective yield (seven days ended December 31, 1999)** 5.42%
-----
Weighted average life to maturity of investments was
19 days at December 31, 1999.
</TABLE>
- --------------
* This represents the annualized average net investment income per share for
the seven days ended December 31, 1999.
** Annualized average of net investment income for the same period with
dividends reinvested.
From time to time, reference may be made in advertising or promotional material
to performance information, including mutual fund rankings, prepared by Lipper
Analytical Services, Inc., an independent reporting service which monitors the
performance of mutual funds. In calculating the total return of the Portfolio's
Class 1 and Class 2 shares, the Lipper analysis assumes investment of all
dividends and distributions paid but does not take into account applicable sales
charges. Each Portfolio may also refer in advertisements in other promotional
material to articles, comments, listings and columns in the financial press
pertaining to the Portfolio's performance. Examples of such financial and other
press publications include BARRON'S, BUSINESS WEEK, CDA/WIESENBERGER MUTUAL
FUNDS INVESTMENT REPORT, CHRISTIAN SCIENCE MONITOR, FINANCIAL PLANNING,
FINANCIAL TIMES, FINANCIAL WORLD, FORBES, FORTUNE, INDIVIDUAL INVESTOR,
INVESTMENT ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S, LOS ANGELES TIMES,
MONEY MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS, SMART MONEY, THE NEW
YORK TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS AND WORLD REPORT,
WORTH MAGAZINE, WASHINGTON POST and YOUR MONEY.
A Portfolio's advertising or promotional material may make reference to the
Portfolio's "Beta," "Standard Deviation," or "Alpha." Beta measures the
volatility of the Portfolio, as compared to that of the overall market. Standard
deviation measures how widely the Portfolio's performance has varied from its
average performance, and is an indicator of the Portfolio's potential for
volatility. Alpha measures the difference between the returns of the Portfolio
and the returns of the market, adjusted for volatility.
Financial Statements
The Annual Report to shareholders for the year ended December 31, 1999 for the
Fund's Portfolios contains a schedule of the investments of each Portfolio as of
December 31, 1999, 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.
29
<PAGE>
General Information
Custodians
With the exception of each of the Global 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 Global 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.
30
<PAGE>
APPENDIX A
MOODY'S INVESTORS SERVICE (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.
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<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 RATINGS SERVICES (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.
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<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.
33
<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.
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<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 Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Global Fund Series, Inc., which today offers five
separate series: Seligman International Growth Fund, Seligman Global
Smaller Companies Fund, Seligman Global Technology Fund, Seligman Global
Growth Fund and Seligman Emerging Markets 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.
o Launches innovative Seligman New Technologies Fund, Inc., a closed-end
"interval" fund seeking long-term capital appreciation by investing in
technology companies, including venture capital investing.
...2000
o Introduces Seligman Time Horizon/Harvester Series, Inc., an asset
allocation type mutual fund containing four funds: Seligman Time Horizon 30
Fund, Seligman Time Horizon 20 Fund, Seligman Time Horizon 10 Fund and
Seligman Harvester Fund.
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<PAGE>
File No. 33-15253
811-5221
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. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 25 filed on April 28, 1999.)
(3) *Articles Supplementary in respect of Class 2 shares of the
Portfolios.
(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. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 25 filed on April 28, 1999.)
(2) Form of Management Agreement in respect of Seligman Global Growth
Portfolio (formerly, Seligman Henderson Global Growth Opportunities
Portfolio) and Seligman Global Technology Portfolio (formerly,
Seligman Henderson Global Technology Portfolio). (Incorporated by
reference to Registrant's Post-Effective Amendment No. 17 filed on
February 15, 1996.)
(3) 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.)
(4) Management Agreement in respect of Seligman Communications and
Information Portfolio and Seligman Frontier Portfolio. (Incorporated
by reference to Registrant's Post-Effective Amendment No. 15 filed on
March 30, 1995.)
(5) Management Agreement in respect of Seligman Global Smaller Companies
Portfolio (formerly, Seligman Henderson Global Smaller Companies
Portfolio; and also formerly, Seligman Henderson Global Emerging
Companies Portfolio). (Incorporated by reference to Registrant's
Post-Effective Amendment No. 15 filed on March 31, 1995.)
(6) Subadvisory Agreement in respect of Seligman Global Smaller Companies
Portfolio. (Incorporated by reference to Registrant's Post-Effective
Amendment No. 22 filed on April 28, 1998.)
(7) Management Agreement in respect of Seligman International Growth
Portfolio (formerly, Seligman Henderson International Portfolio; and
also formerly, Seligman Henderson Global Portfolio). (Incorporated by
reference to Registrant's Post-Effective Amendment No. 15 filed on
March 31, 1995.)
(8) Management Agreement in respect of Seligman Capital Portfolio,
Seligman Cash Management Portfolio, Seligman Common Stock Portfolio,
Seligman Bond Portfolio (formerly, Seligman Fixed-Income Bond
Portfolio), and Seligman Income Portfolio. (Incorporated by reference
to Registrant's Post-Effective Amendment No. 15 filed on March 31,
1995.)
C-1
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File No. 33-15253
811-5221
PART C. OTHER INFORMATION (cont'd)
(9) 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) *Distribution and Shareholder Servicing Agreement between Registrant and
Seligman Advisors, Inc.
(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 Portfolio,
Seligman Cash Management Portfolio, Seligman Common Stock Portfolio,
Seligman Bond Portfolio, and Seligman Income Portfolio. (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 Portfolio and Seligman Frontier
Portfolio. (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 International
Growth 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 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
Global Growth Portfolio and Seligman 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 International Portfolios. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 19 filed on
November 1, 1996.)
(h) Other Material Contracts.
(1) 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.)
(2) 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.)
(3) *Form of Participation Agreement.
(4) Agency Agreement between Investors Fiduciary Trust Company, acting as
Transfer and Dividend Disbursing Agent, and the Fund in respect of
Seligman Capital Portfolio, Seligman Cash Management Portfolio,
Seligman Common Stock Portfolio, Seligman Bond Portfolio, and Seligman
Income Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
C-2
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File No. 33-15253
811-5221
PART C. OTHER INFORMATION (cont'd)
(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 International Growth Portfolio.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 22 filed on April 28, 1998.)
(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 Portfolio,
Seligman Frontier Portfolio, and Seligman Global Smaller Companies
Portfolio. (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 Global Growth Portfolio and Seligman
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 with respect to Class 2 shares of the
Portfolios.
(2) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Large-Cap Growth Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 25 filed on April 28, 1999.)
(3) Opinion and Consent of Counsel on behalf of Registrant's Seligman Bond
Portfolio, Seligman Capital Portfolio, Seligman Cash Management
Portfolio, Seligman Common Stock Portfolio and Seligman Income
Portfolio. (Incorporated by reference to Registrant's Post-Effective
Amendment No 25 filed on April 28, 1999.)
(4) Opinion and Consent of Counsel on behalf of Registrant's Seligman
International Growth Portfolio. (Incorporated by reference to
Registrant's Post-Effective Amendment No. 10 filed on April 29, 1994.)
C-3
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File No. 33-15253
811-5221
PART C. OTHER INFORMATION (cont'd)
(5) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Communication and Information Portfolio, Seligman Frontier Portfolio
and Seligman Global Smaller Companies Portfolio. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 13 filed on
September 30, 1994.)
(6) 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.)
(7) Opinion and Consent of Counsel on behalf of Registrant's Seligman
Global Growth Portfolio and Seligman Global Technology Portfolio.
(Incorporated by reference to Registrant's Post-Effective Amendment
No. 18 filed on May 1, 1996.)
(8) 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 of the Registrant on behalf of the Class 2
shares of the Portfolios.
(2) Form of Investment Letter on behalf of Registrant's Seligman Large-Cap
Growth Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 25 filed on April 28, 1999.)
(3) Form of Investment Letter on behalf of Registrant's Seligman Large-Cap
Value Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 25 filed on April 28, 1999.)
(4) Form of Investment Letter on behalf of Registrant's Seligman Small-Cap
Value Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 25 filed on April 28, 1999.)
(5) Form of Purchase Agreement on behalf of Registrant's Seligman Capital
Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock
Portfolio, Seligman Bond Portfolio, and Seligman Income 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 International
Growth Portfolio. (Incorporated by reference to Registrant's
Post-Effective Amendment No. 22 filed on April 28, 1998.)
(7) 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.)
(8) Investment Letter on behalf of Registrant's Seligman Global Growth
Portfolio and Seligman Global Technology Portfolio. (Incorporated by
reference to Registrant's Post-Effective Amendment No. 18 filed on May
2, 1996.)
(m) Rule 12b-1 Plan.
(1) *Shareholder Servicing and Distribution Plan pursuant to Rule 12b-1
with respect to Class 2 shares of the Portfolios.
(2) *Form of Shareholder Servicing Agreement with respect to Class 2
shares of the Portfolios between Seligman Advisors, Inc. and
Participating Insurance Companies.
C-4
<PAGE>
File No. 33-15253
811-5221
PART C. OTHER INFORMATION (cont'd)
(n) *Plan of Multiple Classes of Shares (two Classes) pursuant to Rule 18f-3.
(p) *Code of Ethics.
(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.
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, as amended, 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 (Seligman), is the
Registrant's investment manager. Seligman also serves as investment
manager to nineteen 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 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 New Technologies Fund, Inc., Seligman
Pennsylvania Municipal Fund Series, Seligman Quality Municipal Fund,
Inc., Seligman Select Municipal Fund, Inc., Seligman Time
Horizon/Harvester Series, Inc., Seligman Value Fund Series, Inc., and
Tri-Continental Corporation.
Henderson Investment Management Limited (HIML), subadviser to Seligman
Global Smaller Companies Portfolio, also serves as subadviser to
Seligman Global Smaller Companies Fund, a Series of Seligman Global
Fund Series, Inc., and served as subadviser to each of the other
Global Portfolios of the Registrant and to Seligman Emerging Markets
Fund, Seligman Global Growth Fund, Seligman Global Technology Fund and
Seligman International Growth Fund, each a separate series of Seligman
Global Fund Series, Inc., from July 1, 1998 to March 31, 2000.
Seligman and HIML each have an investment advisory service division,
which provides investment management or advice to private clients. The
list required by this Item 26 of officers and directors of Seligman
and HIML, 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 Seligman and HIML, respectively, pursuant to the Investment
Advisers Act of 1940, as amended, (SEC File Nos. 801-15798 and
801-55577, respectively), which were filed on March 30, 2000.
C-5
<PAGE>
File No. 33-15253
811-5221
PART C. OTHER INFORMATION (cont'd)
Item 27. Principal Underwriters.
(a) The names of each investment company (other than the Registrant)
for which Registrant's principal underwriter currently
distributing securities of the Registrant also acts as a
principal underwriter, depositor or investment adviser follow:
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 Global Fund Series, Inc.
Seligman High Income Fund Series, Inc.
Seligman Income Fund, Inc.
Seligman Municipal Fund Series, Inc.
Seligman Municipal Series Trust, Inc.
Seligman New Jersey Municipal Fund, Inc.
Seligman Pennsylvania Municipal Fund Series, Inc.
Seligman Time Horizon/Harvester Series, Inc.
Seligman Value Fund Series, Inc.
(b) Name of each director, officer or partner of Registrant's
principal underwriter named in response to Item 20:
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 2000
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board
and Chief Executive
Officer
Brian T. Zino* Director President and Director
Ronald T. Schroeder* Director None
Fred E. Brown* Director Director Emeritus
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
Stephen J. Hodgdon* President and Director None
Charles W. Kadlec* Chief Investment Strategist None
Lawrence P. Vogel* Senior Vice President, Finance Vice President
Edward F. Lynch* Senior Vice President, National None
Sales Director
James R. Besher Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
Gerald I. Cetrulo, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
Matthew A. Digan* Senior Vice President, None
Domestic Funds
Jonathan G. Evans Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
T. Wayne Knowles Senior Vice President, Division None
104 Morninghills Court Sales Director
Cary, NC 27511
</TABLE>
C-6
<PAGE>
File No. 33-15253
811-5221
PART C. OTHER INFORMATION (cont'd)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 2000
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>>
Joseph Lam Senior Vice President, Regional None
Seligman International, Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
Michelle L. McCann-Rappa* Senior Vice President, Retirement Plans None
Scott H. Novak* Senior Vice President, Insurance None
Jeff Rold Senior Vice President, Product None
181 East 73rd Street, Apt 20B Business Management
New York, New York 10021
Ronald W. Pond* Senior Vice President, Division None
Sales Director
Richard M. Potocki Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
Bruce M. Tuckey Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
Andrew S. Veasey Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
Charles L. von Breitenbach, II* Senior Vice President, Managed None
Money
Gail S. Cushing* Vice President, National Accounts None
Jeffrey S. Dean* Vice President, Business Analysis None
Ron Dragotta* Vice President, Regional Retirement None
Plans Manager
Mason S. Flinn Vice President, Regional Retirement None
2130 Filmore Street Plans Manager
PMB 280
San Francisco, CA 94115-2224
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
Jody Knapp* Vice President, Regional Retirement None
17011 East Monterey Drive Plans Manager
Fountain Hills, AZ 85268
David W. Mountford* Vice President, Regional Retirement None
7131 NW 46th Street Plans Manager
Lauderhill, FL 33319
Jeffery C. Pleet* Vice President, Regional Retirement None
Plans Manager
Tracy A. Salomon* Vice President, Retirement Marketing None
Helen Simon* Vice President, Sales Administration None
</TABLE>
C-7
<PAGE>
File No. 33-15253
811-5221
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 2000
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Gary A. Terpening* Vice President, Director of Business None
Development
John E. Skillman* Vice President, Portfolio Advisor None
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Robert McBride Vice President, Marketing Director None
Seligman International, Inc. Latin America
Sucursal Argentina
Edificio Laminar Plaza
Ingeniero Butty No. 240, 4th Floor
C1001ASB Buenos Aires, Argentina
Daniel Chambers Regional Vice President None
4618 Lorraine Avenue
Dallas, TX 75209
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
Kevin Casey Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
Bradford C. Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Cathy Des Jardins Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
Kenneth Dougherty Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
Kelli A. Wirth Dumser Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
Edward S. Finocchiaro Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
Michael C. Forgea Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
Carla A. Goehring Regional Vice President None
11426 Long Pine Drive
Houston, TX 77077
Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
</TABLE>
C-8
<PAGE>
File No. 33-15253
811-5221
PART C. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Seligman Advisors, Inc.
-----------------------
As of March 31, 2000
--------------------
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Leslie A. Mudd Regional Vice President None
5243 East Calle Redonda
Phoenix, AZ 85018
Tim O'Connell Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
George M. Palmer, Jr. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
Thomas Parnell Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
Nicholas Roberts Regional Vice President None
200 Broad Street, Apt. 2451
Stamford, CT 06901
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
James Taylor Regional Vice President None
290 Bellington Lane
Creve Coeur, MO 63141
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
Sandra G. Floris* Assistant Vice President, Order Desk None
Keith Landry* Assistant Vice President, Order Desk None
Albert A. Pisano* Assistant Vice President and None
Compliance Officer
Joyce Peress* Assistant Secretary Assistant Secretary
</TABLE>
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.
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.
Custodian for Seligman Global Growth Portfolio, Seligman Global
Smaller Companies Portfolio, Seligman Global Technology Portfolio, and
Seligman International Growth Portfolio: Chase Manhattan Bank, One
Pierrepont Plaza, Brooklyn, New York 11201.
C-9
<PAGE>
File No. 33-15253
811-5221
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-10
<PAGE>
File No. 33-15253
811-5221
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment No. 27 pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 27 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 28th day of April, 2000.
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. 27 has been signed below
by the following persons, in the capacities indicated on April 28, 2000.
Signature Title
--------- -----
/s/ William C. Morris Chairman of the Board (Principal
- ------------------------------------ executive officer) and Director
William C. Morris
/s/ Brian T. Zino Director and President
- ------------------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- ------------------------------------
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /s/ Brian T. Zino
James C. Pitney, Director ) -------------------------------
James Q. Riordan, Director ) Brian T. Zino, Attorney-In-fact
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
SELIGMAN PORTFOLIOS, INC.
Post-Effective Amendment No. 27 to the
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
- ------------------ -----------
Item 23(a)(3) Articles Supplementary in respect of Class 2 shares of
the Portfolios.
Item 23(e) Distribution and Shareholder Servicing Agreement
between Registrant and Seligman Advisors, Inc.
Item 23(h)(3) Form of Participation Agreement.
Item 23(i)(1) Opinion and Consent of Counsel with respect to Class 2
shares of the Portfolios.
Item 23(j) Consent of Independent Auditors.
Item 23(l)(1) Form of Investment Letter of the Registrant on behalf
of the Class 2 shares of the Portfolios.
Item 23(m)(1) Shareholder Servicing and Distribution Plan pursuant to
Rule 12b-1 with respect to Portfolios between Seligman
Advisors, Inc. and Participating Insurance Companies.
Item 23(m)(2) Form of Shareholder Servicing Agreement with respect to
Class 2 shares of the Portfolios between Seligman
Advisors, Inc. and Participating Insurance Companies.
Item 23(n) Plan of Multiple Classes of Shares (two Classes)
pursuant to Rule 18f-3.
Item 23(p) Code of Ethics.
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: (a) The total number of shares of capital stock of the Seligman Bond
Portfolio Class of the Corporation (the "Bond Portfolio Series") which the
Corporation has authority to issue is 80,000,000 shares, which were previously
classified by the Board of Directors of the Corporation as one class of the Bond
Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Bond
Portfolio Series into the following subclasses, has provided for the issuance of
shares of such subclasses and has set the following terms of such subclasses:
(1) The total number of shares of stock which the Bond Portfolio
Series has authority to issue is 80,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$80,000. The Common Stock of the Bond Portfolio Series shall have two
subclasses of shares, which shall be designated Class 1 Common Stock and
Class 2 Common Stock. The number of authorized shares of Class 1 Common
Stock and of Class 2 Common Stock of the Bond Portfolio Series shall each
consist of the sum of x and y, where x equals the issued and outstanding
shares of such subclass and y equals one-half of the authorized but
unissued shares of Common Stock of both subclasses; provided that at all
times the aggregate authorized, issued and outstanding shares of Class 1
and Class 2 Common Stock of the Bond Portfolio Series shall not exceed the
authorized number of shares of Common Stock of the Bond Portfolio Series
(i.e., 80,000,000 shares of Common Stock until changed by further action of
the Board of Directors in accordance with Section 2-208.1 of the Maryland
General Corporation Law, or any successor provision); and, in the event
application of the formula above would result, at any time, in fractional
shares, the applicable number of authorized shares of each class shall be
rounded down to the nearest whole number of shares of such class. Each
subclass of Common Stock of the Bond Portfolio Series shall be referred to
herein individually as a "Bond Portfolio Class" and collectively, together
with any further subclass or subclasses from time to time established, as
the "Bond Portfolio Classes".
(2) Each Bond Portfolio Class shall represent the same interest in the
Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the Articles of
Amendment and Restatement of the Corporation to the contrary:
(A) Expenses related solely to a particular Bond Portfolio Class
(including, without limitation, shareholder servicing expenses under a
Rule 12b-1 plan, agreement or other arrangement, which may differ
between the Bond Portfolio Classes) shall be borne by that Bond
Portfolio Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Bond Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Bond Portfolio Class is required by the Investment Company Act
or by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other
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arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Bond Portfolio Class shall apply in lieu of
single Bond Portfolio Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders thereunder
and the Maryland General Corporation Law, the Bond Portfolio Classes
shall vote together as a single Bond Portfolio Class on any such
matter that shall have the same effect on each such Bond Portfolio
Class. As to any matter that does not affect the interest of a
particular Bond Portfolio Class, only the holders of shares of the
affected Bond Portfolio Class shall be entitled to vote.
SECOND: (a) The total number of shares of capital stock of the Seligman
Capital Portfolio Class of the Corporation (the "Capital Portfolio Series")
which the Corporation has authority to issue is 80,000,000 shares, which were
previously classified by the Board of Directors of the Corporation as one class
of the Capital Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Capital
Portfolio Series into the following subclasses, has provided for the issuance of
shares of such subclasses and has set the following terms of such subclasses:
(1) The total number of shares of stock which the Capital Portfolio
Series has authority to issue is 80,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$80,000. The Common Stock of the Capital Portfolio Series shall have two
subclasses of shares, which shall be designated Class 1 Common Stock and
Class 2 Common Stock. The number of authorized shares of Class 1 Common
Stock and of Class 2 Common Stock of the Capital Portfolio Series shall
each consist of the sum of x and y, where x equals the issued and
outstanding shares of such subclass and y equals one-half of the authorized
but unissued shares of Common Stock of both subclasses; provided that at
all times the aggregate authorized, issued and outstanding shares of Class
1 and Class 2 Common Stock of the Capital Portfolio Series shall not exceed
the authorized number of shares of Common Stock of the Capital Portfolio
Series (i.e., 80,000,000 shares of Common Stock until changed by further
action of the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in the
event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Each subclass of Common Stock of the Capital Portfolio Series shall be
referred to herein individually as a "Capital Portfolio Class" and
collectively, together with any further subclass or subclasses from time to
time established, as the "Capital Portfolio Classes".
(2) Each Capital Portfolio Class shall represent the same interest in
the Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the Articles of
Amendment and Restatement of the Corporation to the contrary:
(A) Expenses related solely to a particular Capital Portfolio
Class (including, without limitation, shareholder servicing expenses
under a Rule 12b-1 plan, agreement or other arrangement, which may
differ between the Capital Portfolio Classes) shall be borne by that
Capital Portfolio Class and shall be appropriately reflected (in the
manner determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Capital Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Capital Portfolio Class is required by the Investment Company
Act or by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other arrangement
referred to in subsection (A) above), such requirement as to a
separate vote by the Capital Portfolio Class shall apply in lieu of
single Capital Portfolio Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders thereunder
and the Maryland General Corporation Law, the Capital Portfolio
Classes shall vote
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together as a single Capital Portfolio Class on any such matter that
shall have the same effect on each such Capital Portfolio Class. As to
any matter that does not affect the interest of a particular Capital
Portfolio Class, only the holders of shares of the affected Capital
Portfolio Class shall be entitled to vote.
THIRD: (a) The total number of shares of capital stock of the Seligman Cash
Management Portfolio Class of the Corporation (the "Cash Management Portfolio
Series") which the Corporation has authority to issue is 100,000,000 shares,
which were previously classified by the Board of Directors of the Corporation as
one class of the Cash Management Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Cash
Management Portfolio Series into the following subclasses, has provided for the
issuance of shares of such subclasses and has set the following terms of such
subclasses:
(1) The total number of shares of stock which the Cash Management
Portfolio Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Cash Management Portfolio Series
shall have two subclasses of shares, which shall be designated Class 1
Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the Cash Management
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the Cash Management Portfolio
Series shall not exceed the authorized number of shares of Common Stock of
the Cash Management Portfolio Series (i.e., 100,000,000 shares of Common
Stock until changed by further action of the Board of Directors in
accordance with Section 2-208.1 of the Maryland General Corporation Law, or
any successor provision); and, in the event application of the formula
above would result, at any time, in fractional shares, the applicable
number of authorized shares of each class shall be rounded down to the
nearest whole number of shares of such class. Each subclass of Common Stock
of the Cash Management Portfolio Series shall be referred to herein
individually as a "Cash Management Portfolio Class" and collectively,
together with any further subclass or subclasses from time to time
established, as the "Cash Management Portfolio Classes".
(2) Each Cash Management Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Cash Management
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the Cash Management Portfolio Classes) shall
be borne by that Cash Management Portfolio Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Cash Management Portfolio
Class.
(B) As to any matter with respect to which a separate vote of
either Cash Management Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Cash Management Portfolio Class shall apply
in lieu of single Cash Management Portfolio Class voting, and, if
permitted by the Investment Company Act or any rules, regulations or
orders thereunder and the Maryland General Corporation Law, the Cash
Management Portfolio Classes shall vote together as a single Cash
Management Portfolio Class on any such matter that shall have the same
effect on each such Cash
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Management Portfolio Class. As to any matter that does not affect the
interest of a particular Cash Management Portfolio Class, only the
holders of shares of the affected Cash Management Portfolio Class
shall be entitled to vote.
FOURTH: (a) The total number of shares of capital stock of the Seligman
Common Stock Portfolio Class of the Corporation (the "Common Stock Portfolio
Series") which the Corporation has authority to issue is 100,000,000 shares,
which were previously classified by the Board of Directors of the Corporation as
one class of the Common Stock Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Common
Stock Portfolio Series into the following subclasses, has provided for the
issuance of shares of such subclasses and has set the following terms of such
subclasses:
(1) The total number of shares of stock which the Common Stock
Portfolio Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the Common Stock Portfolio Series
shall have two subclasses of shares, which shall be designated Class 1
Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the Common Stock
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the Common Stock Portfolio
Series shall not exceed the authorized number of shares of Common Stock of
the Common Stock Portfolio Series (i.e., 100,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Each subclass of Common Stock of the Common
Stock Portfolio Series shall be referred to herein individually as a
"Common Stock Portfolio Class" and collectively, together with any further
subclass or subclasses from time to time established, as the "Common Stock
Portfolio Classes".
(2) Each Common Stock Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Common Stock
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the Common Stock Portfolio Classes) shall be
borne by that Common Stock Portfolio Class and shall be appropriately
reflected (in the manner determined by the Board of Directors) in the
net asset value, dividends, distribution and liquidation rights of the
shares of that Common Stock Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Common Stock Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Common Stock Portfolio Class shall apply in
lieu of single Common Stock Portfolio Class voting, and, if permitted
by the Investment Company Act or any rules, regulations or orders
thereunder and the Maryland General Corporation Law, the Common Stock
Portfolio Classes shall vote together as a single Common Stock
Portfolio Class on any such matter that shall have the same effect on
each such Common Stock Portfolio Class. As to any matter that does not
affect the interest of a particular Common Stock
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Portfolio Class, only the holders of shares of the affected Common
Stock Portfolio Class shall be entitled to vote.
FIFTH: (a) The total number of shares of capital stock of the Seligman
Communications and Information Portfolio Class of the Corporation (the
"Communications and Information Portfolio Series") which the Corporation has
authority to issue is 100,000,000 shares, which were previously classified by
the Board of Directors of the Corporation as one class of the Communications and
Information Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the
Communications and Information Portfolio Series into the following subclasses,
has provided for the issuance of shares of such subclasses and has set the
following terms of such subclasses:
(1) The total number of shares of stock which the Communications and
Information Portfolio Series has authority to issue is 100,000,000 shares
of common stock ("Shares") of the par value of $.001 each having an
aggregate par value of $100,000. The Common Stock of the Communications and
Information Portfolio Series shall have two subclasses of shares, which
shall be designated Class 1 Common Stock and Class 2 Common Stock. The
number of authorized shares of Class 1 Common Stock and of Class 2 Common
Stock of the Communications and Information Portfolio Series shall each
consist of the sum of x and y, where x equals the issued and outstanding
shares of such subclass and y equals one-half of the authorized but
unissued shares of Common Stock of both subclasses; provided that at all
times the aggregate authorized, issued and outstanding shares of Class 1
and Class 2 Common Stock of the Communications and Information Portfolio
Series shall not exceed the authorized number of shares of Common Stock of
the Communications and Information Portfolio Series (i.e., 100,000,000
shares of Common Stock until changed by further action of the Board of
Directors in accordance with Section 2-208.1 of the Maryland General
Corporation Law, or any successor provision); and, in the event application
of the formula above would result, at any time, in fractional shares, the
applicable number of authorized shares of each class shall be rounded down
to the nearest whole number of shares of such class. Each subclass of
Common Stock of the Communications and Information Portfolio Series shall
be referred to herein individually as a "Communications and Information
Portfolio Class" and collectively, together with any further subclass or
subclasses from time to time established, as the "Communications and
Information Portfolio Classes".
(2) Each Communications and Information Portfolio Class shall
represent the same interest in the Corporation and have identical voting,
dividend, liquidation, and other rights; provided, however, that
notwithstanding anything in the Articles of Amendment and Restatement of
the Corporation to the contrary:
(A) Expenses related solely to a particular Communications and
Information Portfolio Class (including, without limitation,
shareholder servicing expenses under a Rule 12b-1 plan, agreement or
other arrangement, which may differ between the Communications and
Information Portfolio Classes) shall be borne by that Communications
and Information Portfolio Class and shall be appropriately reflected
(in the manner determined by the Board of Directors) in the net asset
value, dividends, distribution and liquidation rights of the shares of
that Communications and Information Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Communications and Information Portfolio Class is required by
the Investment Company Act or by the Maryland General Corporation Law
(including, without limitation, approval of any plan, agreement or
other arrangement referred to in subsection (A) above), such
requirement as to a separate vote by the Communications and
Information Portfolio Class shall apply in lieu of single
Communications and Information Portfolio Class voting, and, if
permitted by the Investment Company Act or any rules, regulations or
orders thereunder and the Maryland General Corporation Law, the
Communications and Information Portfolio Classes shall vote together
as a single Communications and Information
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Portfolio Class on any such matter that shall have the same effect on
each such Communications and Information Portfolio Class. As to any
matter that does not affect the interest of a particular
Communications and Information Portfolio Class, only the holders of
shares of the affected Communications and Information Portfolio Class
shall be entitled to vote.
SIXTH: (a) The total number of shares of capital stock of the Seligman
Frontier Portfolio Class of the Corporation (the "Frontier Portfolio Series")
which the Corporation has authority to issue is 100,000,000 shares, which were
previously classified by the Board of Directors of the Corporation as one class
of the Frontier Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Frontier
Portfolio Series into the following subclasses, has provided for the issuance of
shares of such subclasses and has set the following terms of such subclasses:
(1) The total number of shares of stock which the Frontier Portfolio
Series has authority to issue is 100,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$100,000. The Common Stock of the Frontier Portfolio Series shall have two
subclasses of shares, which shall be designated Class 1 Common Stock and
Class 2 Common Stock. The number of authorized shares of Class 1 Common
Stock and of Class 2 Common Stock of the Frontier Portfolio Series shall
each consist of the sum of x and y, where x equals the issued and
outstanding shares of such subclass and y equals one-half of the authorized
but unissued shares of Common Stock of both subclasses; provided that at
all times the aggregate authorized, issued and outstanding shares of Class
1 and Class 2 Common Stock of the Frontier Portfolio Series shall not
exceed the authorized number of shares of Common Stock of the Frontier
Portfolio Series (i.e., 100,000,000 shares of Common Stock until changed by
further action of the Board of Directors in accordance with Section 2-208.1
of the Maryland General Corporation Law, or any successor provision); and,
in the event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Each subclass of Common Stock of the Frontier Portfolio Series shall be
referred to herein individually as a "Frontier Portfolio Class" and
collectively, together with any further subclass or subclasses from time to
time established, as the "Frontier Portfolio Classes".
(2) Each Frontier Portfolio Class shall represent the same interest in
the Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the Articles of
Amendment and Restatement of the Corporation to the contrary:
(A) Expenses related solely to a particular Frontier Portfolio
Class (including, without limitation, shareholder servicing expenses
under a Rule 12b-1 plan, agreement or other arrangement, which may
differ between the Frontier Portfolio Classes) shall be borne by that
Frontier Portfolio Class and shall be appropriately reflected (in the
manner determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Frontier Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Frontier Portfolio Class is required by the Investment Company
Act or by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other arrangement
referred to in subsection (A) above), such requirement as to a
separate vote by the Frontier Portfolio Class shall apply in lieu of
single Frontier Portfolio Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders thereunder
and the Maryland General Corporation Law, the Frontier Portfolio
Classes shall vote together as a single Frontier Portfolio Class on
any such matter that shall have the same effect on each such Frontier
Portfolio Class. As to any matter that does not affect the
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interest of a particular Frontier Portfolio Class, only the holders of
shares of the affected Frontier Portfolio Class shall be entitled to
vote.
SEVENTH: (a) The total number of shares of capital stock of the Seligman
Income Portfolio Class of the Corporation (the "Income Portfolio Series") which
the Corporation has authority to issue is 80,000,000 shares, which were
previously classified by the Board of Directors of the Corporation as one class
of the Income Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Income
Portfolio Series into the following subclasses, has provided for the issuance of
shares of such subclasses and has set the following terms of such subclasses:
(1) The total number of shares of stock which the Income Portfolio
Series has authority to issue is 80,000,000 shares of common stock
("Shares") of the par value of $.001 each having an aggregate par value of
$80,000. The Common Stock of the Income Portfolio Series shall have two
subclasses of shares, which shall be designated Class 1 Common Stock and
Class 2 Common Stock. The number of authorized shares of Class 1 Common
Stock and of Class 2 Common Stock of the Income Portfolio Series shall each
consist of the sum of x and y, where x equals the issued and outstanding
shares of such subclass and y equals one-half of the authorized but
unissued shares of Common Stock of both subclasses; provided that at all
times the aggregate authorized, issued and outstanding shares of Class 1
and Class 2 Common Stock of the Income Portfolio Series shall not exceed
the authorized number of shares of Common Stock of the Income Portfolio
Series (i.e., 80,000,000 shares of Common Stock until changed by further
action of the Board of Directors in accordance with Section 2-208.1 of the
Maryland General Corporation Law, or any successor provision); and, in the
event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Each subclass of Common Stock of the Income Portfolio Series shall be
referred to herein individually as a "Income Portfolio Class" and
collectively, together with any further subclass or subclasses from time to
time established, as the "Income Portfolio Classes".
(2) Each Income Portfolio Class shall represent the same interest in
the Corporation and have identical voting, dividend, liquidation, and other
rights; provided, however, that notwithstanding anything in the Articles of
Amendment and Restatement of the Corporation to the contrary:
(A) Expenses related solely to a particular Income Portfolio
Class (including, without limitation, shareholder servicing expenses
under a Rule 12b-1 plan, agreement or other arrangement, which may
differ between the Income Portfolio Classes) shall be borne by that
Income Portfolio Class and shall be appropriately reflected (in the
manner determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Income Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Income Portfolio Class is required by the Investment Company
Act or by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other arrangement
referred to in subsection (A) above), such requirement as to a
separate vote by the Income Portfolio Class shall apply in lieu of
single Income Portfolio Class voting, and, if permitted by the
Investment Company Act or any rules, regulations or orders thereunder
and the Maryland General Corporation Law, the Income Portfolio Classes
shall vote together as a single Income Portfolio Class on any such
matter that shall have the same effect on each such Income Portfolio
Class. As to any matter that does not affect the interest of a
particular Income Portfolio Class, only the holders of shares of the
affected Income Portfolio Class shall be entitled to vote.
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EIGHTH: (a) The total number of shares of capital stock of the Seligman
International Growth Portfolio Class of the Corporation (the "International
Growth Portfolio Series") which the Corporation has authority to issue is
80,000,000 shares, which were previously classified by the Board of Directors of
the Corporation as one class of the International Growth Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the
International Growth Portfolio Series into the following subclasses, has
provided for the issuance of shares of such subclasses and has set the following
terms of such subclasses:
(1) The total number of shares of stock which the International Growth
Portfolio Series has authority to issue is 80,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $80,000. The Common Stock of the International Growth Portfolio
Series shall have two subclasses of shares, which shall be designated Class
1 Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the International
Growth Portfolio Series shall each consist of the sum of x and y, where x
equals the issued and outstanding shares of such subclass and y equals
one-half of the authorized but unissued shares of Common Stock of both
subclasses; provided that at all times the aggregate authorized, issued and
outstanding shares of Class 1 and Class 2 Common Stock of the International
Growth Portfolio Series shall not exceed the authorized number of shares of
Common Stock of the International Growth Portfolio Series (i.e., 80,000,000
shares of Common Stock until changed by further action of the Board of
Directors in accordance with Section 2-208.1 of the Maryland General
Corporation Law, or any successor provision); and, in the event application
of the formula above would result, at any time, in fractional shares, the
applicable number of authorized shares of each class shall be rounded down
to the nearest whole number of shares of such class. Each subclass of
Common Stock of the International Growth Portfolio Series shall be referred
to herein individually as a "International Growth Portfolio Class" and
collectively, together with any further subclass or subclasses from time to
time established, as the "International Growth Portfolio Classes".
(2) Each International Growth Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular International Growth
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the International Growth Portfolio Classes)
shall be borne by that International Growth Portfolio Class and shall
be appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that International Growth
Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either International Growth Portfolio Class is required by the
Investment Company Act or by the Maryland General Corporation Law
(including, without limitation, approval of any plan, agreement or
other arrangement referred to in subsection (A) above), such
requirement as to a separate vote by the International Growth
Portfolio Class shall apply in lieu of single International Growth
Portfolio Class voting, and, if permitted by the Investment Company
Act or any rules, regulations or orders thereunder and the Maryland
General Corporation Law, the International Growth Portfolio Classes
shall vote together as a single International Growth Portfolio Class
on any such matter that shall have the same effect on each such
International Growth Portfolio Class. As to any matter that does not
affect the interest of a particular International Growth Portfolio
Class, only the holders of shares of the affected International Growth
Portfolio Class shall be entitled to vote.
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NINTH: (a) The total number of shares of capital stock of the Seligman
High-Yield Bond Portfolio Class of the Corporation (the "High-Yield Bond
Portfolio Series") which the Corporation has authority to issue is 100,000,000
shares, which were previously classified by the Board of Directors of the
Corporation as one class of the High-Yield Bond Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the High-Yield
Bond Portfolio Series into the following subclasses, has provided for the
issuance of shares of such subclasses and has set the following terms of such
subclasses:
(1) The total number of shares of stock which the High-Yield Bond
Portfolio Series has authority to issue is 100,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $100,000. The Common Stock of the High-Yield Bond Portfolio Series
shall have two subclasses of shares, which shall be designated Class 1
Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the High-Yield Bond
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the High-Yield Bond Portfolio
Series shall not exceed the authorized number of shares of Common Stock of
the High-Yield Bond Portfolio Series (i.e., 100,000,000 shares of Common
Stock until changed by further action of the Board of Directors in
accordance with Section 2-208.1 of the Maryland General Corporation Law, or
any successor provision); and, in the event application of the formula
above would result, at any time, in fractional shares, the applicable
number of authorized shares of each class shall be rounded down to the
nearest whole number of shares of such class. Each subclass of Common Stock
of the High-Yield Bond Portfolio Series shall be referred to herein
individually as a "High-Yield Bond Portfolio Class" and collectively,
together with any further subclass or subclasses from time to time
established, as the "High-Yield Bond Portfolio Classes".
(2) Each High-Yield Bond Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular High-Yield Bond
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the High-Yield Bond Portfolio Classes) shall
be borne by that High-Yield Bond Portfolio Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that High-Yield Bond Portfolio
Class.
(B) As to any matter with respect to which a separate vote of
either High-Yield Bond Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the High-Yield Bond Portfolio Class shall apply
in lieu of single High-Yield Bond Portfolio Class voting, and, if
permitted by the Investment Company Act or any rules, regulations or
orders thereunder and the Maryland General Corporation Law, the
High-Yield Bond Portfolio Classes shall vote together as a single
High-Yield Bond Portfolio Class on any such matter that shall have the
same effect on each such High-Yield Bond Portfolio Class. As to any
matter that does not affect the interest of a particular High-Yield
Bond Portfolio Class, only the holders of shares of the affected
High-Yield Bond Portfolio Class shall be entitled to vote.
TENTH: (a) The total number of shares of capital stock of the Seligman
Global Growth Portfolio Class of the Corporation (the "Global Growth Portfolio
Series") which the Corporation has authority
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to issue is 20,000,000 shares, which were previously classified by the Board of
Directors of the Corporation as one class of the Global Growth Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Global
Growth Portfolio Series into the following subclasses, has provided for the
issuance of shares of such subclasses and has set the following terms of such
subclasses:
(1) The total number of shares of stock which the Global Growth
Portfolio Series has authority to issue is 20,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $20,000. The Common Stock of the Global Growth Portfolio Series
shall have two subclasses of shares, which shall be designated Class 1
Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the Global Growth
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the Global Growth Portfolio
Series shall not exceed the authorized number of shares of Common Stock of
the Global Growth Portfolio Series (i.e., 20,000,000 shares of Common Stock
until changed by further action of the Board of Directors in accordance
with Section 2-208.1 of the Maryland General Corporation Law, or any
successor provision); and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each class shall be rounded down to the nearest whole
number of shares of such class. Each subclass of Common Stock of the Global
Growth Portfolio Series shall be referred to herein individually as a
"Global Growth Portfolio Class" and collectively, together with any further
subclass or subclasses from time to time established, as the "Global Growth
Portfolio Classes".
(2) Each Global Growth Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Global Growth
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the Global Growth Portfolio Classes) shall be
borne by that Global Growth Portfolio Class and shall be appropriately
reflected (in the manner determined by the Board of Directors) in the
net asset value, dividends, distribution and liquidation rights of the
shares of that Global Growth Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Global Growth Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Global Growth Portfolio Class shall apply in
lieu of single Global Growth Portfolio Class voting, and, if permitted
by the Investment Company Act or any rules, regulations or orders
thereunder and the Maryland General Corporation Law, the Global Growth
Portfolio Classes shall vote together as a single Global Growth
Portfolio Class on any such matter that shall have the same effect on
each such Global Growth Portfolio Class. As to any matter that does
not affect the interest of a particular Global Growth Portfolio Class,
only the holders of shares of the affected Global Growth Portfolio
Class shall be entitled to vote.
ELEVENTH: (a) The total number of shares of capital stock of the Seligman
Global Smaller Companies Portfolio Class of the Corporation (the "Global Smaller
Companies Portfolio Series") which the Corporation has authority to issue is
80,000,000 shares, which were previously classified by the Board of Directors of
the Corporation as one class of the Global Smaller Companies Portfolio Series.
10
<PAGE>
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Global
Smaller Companies Portfolio Series into the following subclasses, has provided
for the issuance of shares of such subclasses and has set the following terms of
such subclasses:
(1) The total number of shares of stock which the Global Smaller
Companies Portfolio Series has authority to issue is 80,000,000 shares of
common stock ("Shares") of the par value of $.001 each having an aggregate
par value of $80,000. The Common Stock of the Global Smaller Companies
Portfolio Series shall have two subclasses of shares, which shall be
designated Class 1 Common Stock and Class 2 Common Stock. The number of
authorized shares of Class 1 Common Stock and of Class 2 Common Stock of
the Global Smaller Companies Portfolio Series shall each consist of the sum
of x and y, where x equals the issued and outstanding shares of such
subclass and y equals one-half of the authorized but unissued shares of
Common Stock of both subclasses; provided that at all times the aggregate
authorized, issued and outstanding shares of Class 1 and Class 2 Common
Stock of the Global Smaller Companies Portfolio Series shall not exceed the
authorized number of shares of Common Stock of the Global Smaller Companies
Portfolio Series (i.e., 80,000,000 shares of Common Stock until changed by
further action of the Board of Directors in accordance with Section 2-208.1
of the Maryland General Corporation Law, or any successor provision); and,
in the event application of the formula above would result, at any time, in
fractional shares, the applicable number of authorized shares of each class
shall be rounded down to the nearest whole number of shares of such class.
Each subclass of Common Stock of the Global Smaller Companies Portfolio
Series shall be referred to herein individually as a "Global Smaller
Companies Portfolio Class" and collectively, together with any further
subclass or subclasses from time to time established, as the "Global
Smaller Companies Portfolio Classes".
(2) Each Global Smaller Companies Portfolio Class shall represent the
same interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Global Smaller
Companies Portfolio Class (including, without limitation, shareholder
servicing expenses under a Rule 12b-1 plan, agreement or other
arrangement, which may differ between the Global Smaller Companies
Portfolio Classes) shall be borne by that Global Smaller Companies
Portfolio Class and shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of that
Global Smaller Companies Portfolio Class.
(B) As to any matter with respect to which a separate vote of
either Global Smaller Companies Portfolio Class is required by the
Investment Company Act or by the Maryland General Corporation Law
(including, without limitation, approval of any plan, agreement or
other arrangement referred to in subsection (A) above), such
requirement as to a separate vote by the Global Smaller Companies
Portfolio Class shall apply in lieu of single Global Smaller Companies
Portfolio Class voting, and, if permitted by the Investment Company
Act or any rules, regulations or orders thereunder and the Maryland
General Corporation Law, the Global Smaller Companies Portfolio
Classes shall vote together as a single Global Smaller Companies
Portfolio Class on any such matter that shall have the same effect on
each such Global Smaller Companies Portfolio Class. As to any matter
that does not affect the interest of a particular Global Smaller
Companies Portfolio Class, only the holders of shares of the affected
Global Smaller Companies Portfolio Class shall be entitled to vote.
TWELFTH: (a) The total number of shares of capital stock of the Seligman
Global Technology Portfolio Class of the Corporation (the "Global Technology
Portfolio Series") which the Corporation has authority to issue is 20,000,000
shares, which were previously classified by the Board of Directors of the
Corporation as one class of the Global Technology Portfolio Series.
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<PAGE>
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Global
Technology Portfolio Series into the following subclasses, has provided for the
issuance of shares of such subclasses and has set the following terms of such
subclasses:
(1) The total number of shares of stock which the Global Technology
Portfolio Series has authority to issue is 20,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $20,000. The Common Stock of the Global Technology Portfolio
Series shall have two subclasses of shares, which shall be designated Class
1 Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the Global Technology
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the Global Technology
Portfolio Series shall not exceed the authorized number of shares of Common
Stock of the Global Technology Portfolio Series (i.e., 20,000,000 shares of
Common Stock until changed by further action of the Board of Directors in
accordance with Section 2-208.1 of the Maryland General Corporation Law, or
any successor provision); and, in the event application of the formula
above would result, at any time, in fractional shares, the applicable
number of authorized shares of each class shall be rounded down to the
nearest whole number of shares of such class. Each subclass of Common Stock
of the Global Technology Portfolio Series shall be referred to herein
individually as a "Global Technology Portfolio Class" and collectively,
together with any further subclass or subclasses from time to time
established, as the "Global Technology Portfolio Classes".
(2) Each Global Technology Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Global Technology
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the Global Technology Portfolio Classes)
shall be borne by that Global Technology Portfolio Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Global Technology Portfolio
Class.
(B) As to any matter with respect to which a separate vote of
either Global Technology Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Global Technology Portfolio Class shall
apply in lieu of single Global Technology Portfolio Class voting, and,
if permitted by the Investment Company Act or any rules, regulations
or orders thereunder and the Maryland General Corporation Law, the
Global Technology Portfolio Classes shall vote together as a single
Global Technology Portfolio Class on any such matter that shall have
the same effect on each such Global Technology Portfolio Class. As to
any matter that does not affect the interest of a particular Global
Technology Portfolio Class, only the holders of shares of the affected
Global Technology Portfolio Class shall be entitled to vote.
THIRTEENTH: (a) The total number of shares of capital stock of the Seligman
Large-Cap Growth Portfolio Class of the Corporation (the "Large-Cap Growth
Portfolio Series") which the Corporation has authority to issue is 20,000,000
shares, which were previously classified by the Board of Directors of the
Corporation as one class of the Large-Cap Growth Portfolio Series.
12
<PAGE>
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Large-Cap
Growth Portfolio Series into the following subclasses, has provided for the
issuance of shares of such subclasses and has set the following terms of such
subclasses:
(1) The total number of shares of stock which the Large-Cap Growth
Portfolio Series has authority to issue is 20,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $20,000. The Common Stock of the Large-Cap Growth Portfolio Series
shall have two subclasses of shares, which shall be designated Class 1
Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the Large-Cap Growth
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the Large-Cap Growth
Portfolio Series shall not exceed the authorized number of shares of Common
Stock of the Large-Cap Growth Portfolio Series (i.e., 20,000,000 shares of
Common Stock until changed by further action of the Board of Directors in
accordance with Section 2-208.1 of the Maryland General Corporation Law, or
any successor provision); and, in the event application of the formula
above would result, at any time, in fractional shares, the applicable
number of authorized shares of each class shall be rounded down to the
nearest whole number of shares of such class. Each subclass of Common Stock
of the Large-Cap Growth Portfolio Series shall be referred to herein
individually as a "Large-Cap Growth Portfolio Class" and collectively,
together with any further subclass or subclasses from time to time
established, as the "Large-Cap Growth Portfolio Classes".
(2) Each Large-Cap Growth Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Large-Cap Growth
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the Large-Cap Growth Portfolio Classes) shall
be borne by that Large-Cap Growth Portfolio Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Large-Cap Growth Portfolio
Class.
(B) As to any matter with respect to which a separate vote of
either Large-Cap Growth Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Large-Cap Growth Portfolio Class shall apply
in lieu of single Large-Cap Growth Portfolio Class voting, and, if
permitted by the Investment Company Act or any rules, regulations or
orders thereunder and the Maryland General Corporation Law, the
Large-Cap Growth Portfolio Classes shall vote together as a single
Large-Cap Growth Portfolio Class on any such matter that shall have
the same effect on each such Large-Cap Growth Portfolio Class. As to
any matter that does not affect the interest of a particular Large-Cap
Growth Portfolio Class, only the holders of shares of the affected
Large-Cap Growth Portfolio Class shall be entitled to vote.
FOURTEENTH (a) The total number of shares of capital stock of the Seligman
Large-Cap Value Portfolio Class of the Corporation (the "Large-Cap Value
Portfolio Series") which the Corporation has authority to issue is 20,000,000
shares, which were previously classified by the Board of Directors of the
Corporation as one class of the Large-Cap Value Portfolio Series.
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<PAGE>
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of Common Stock of the Large-Cap
Value Portfolio Series into the following subclasses, has provided for the
issuance of shares of such subclasses and has set the following terms of such
subclasses:
(1) The total number of shares of stock which the Large-Cap Value
Portfolio Series has authority to issue is 20,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $20,000. The Common Stock of the Large-Cap Value Portfolio Series
shall have two subclasses of shares, which shall be designated Class 1
Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the Large-Cap Value
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the Large-Cap Value Portfolio
Series shall not exceed the authorized number of shares of Common Stock of
the Large-Cap Value Portfolio Series (i.e., 20,000,000 shares of Common
Stock until changed by further action of the Board of Directors in
accordance with Section 2-208.1 of the Maryland General Corporation Law, or
any successor provision); and, in the event application of the formula
above would result, at any time, in fractional shares, the applicable
number of authorized shares of each class shall be rounded down to the
nearest whole number of shares of such class. Each subclass of Common Stock
of the Large-Cap Value Portfolio Series shall be referred to herein
individually as a "Large-Cap Value Portfolio Class" and collectively,
together with any further subclass or subclasses from time to time
established, as the "Large-Cap Value Portfolio Classes".
(2) Each Large-Cap Value Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Large-Cap Value
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the Large-Cap Value Portfolio Classes) shall
be borne by that Large-Cap Value Portfolio Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Large-Cap Value Portfolio
Class.
(B) As to any matter with respect to which a separate vote of
either Large-Cap Value Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Large-Cap Value Portfolio Class shall apply
in lieu of single Large-Cap Value Portfolio Class voting, and, if
permitted by the Investment Company Act or any rules, regulations or
orders thereunder and the Maryland General Corporation Law, the
Large-Cap Value Portfolio Classes shall vote together as a single
Large-Cap Value Portfolio Class on any such matter that shall have the
same effect on each such Large-Cap Value Portfolio Class. As to any
matter that does not affect the interest of a particular Large-Cap
Value Portfolio Class, only the holders of shares of the affected
Large-Cap Value Portfolio Class shall be entitled to vote.
FIFTEENTH: (a) The total number of shares of capital stock of the Seligman
Small-Cap Value Portfolio Class of the Corporation (the "Small-Cap Value
Portfolio Series") which the Corporation has authority to issue is 20,000,000
shares, which were previously classified by the Board of Directors of the
Corporation as one class of the Small-Cap Value Portfolio Series.
(b) Pursuant to the authority of the Board of Directors to classify and
reclassify unissued shares of capital stock of the Corporation, the Board of
Directors has reclassified the unissued shares of
14
<PAGE>
Common Stock of the Small-Cap Value Portfolio Series into the following
subclasses, has provided for the issuance of shares of such subclasses and has
set the following terms of such subclasses:
(1) The total number of shares of stock which the Small-Cap Value
Portfolio Series has authority to issue is 20,000,000 shares of common
stock ("Shares") of the par value of $.001 each having an aggregate par
value of $20,000. The Common Stock of the Small-Cap Value Portfolio Series
shall have two subclasses of shares, which shall be designated Class 1
Common Stock and Class 2 Common Stock. The number of authorized shares of
Class 1 Common Stock and of Class 2 Common Stock of the Small-Cap Value
Portfolio Series shall each consist of the sum of x and y, where x equals
the issued and outstanding shares of such subclass and y equals one-half of
the authorized but unissued shares of Common Stock of both subclasses;
provided that at all times the aggregate authorized, issued and outstanding
shares of Class 1 and Class 2 Common Stock of the Small-Cap Value Portfolio
Series shall not exceed the authorized number of shares of Common Stock of
the Small-Cap Value Portfolio Series (i.e., 20,000,000 shares of Common
Stock until changed by further action of the Board of Directors in
accordance with Section 2-208.1 of the Maryland General Corporation Law, or
any successor provision); and, in the event application of the formula
above would result, at any time, in fractional shares, the applicable
number of authorized shares of each class shall be rounded down to the
nearest whole number of shares of such class. Each subclass of Common Stock
of the Small-Cap Value Portfolio Series shall be referred to herein
individually as a "Small-Cap Value Portfolio Class" and collectively,
together with any further subclass or subclasses from time to time
established, as the "Small-Cap Value Portfolio Classes".
(2) Each Small-Cap Value Portfolio Class shall represent the same
interest in the Corporation and have identical voting, dividend,
liquidation, and other rights; provided, however, that notwithstanding
anything in the Articles of Amendment and Restatement of the Corporation to
the contrary:
(A) Expenses related solely to a particular Small-Cap Value
Portfolio Class (including, without limitation, shareholder servicing
expenses under a Rule 12b-1 plan, agreement or other arrangement,
which may differ between the Small-Cap Value Portfolio Classes) shall
be borne by that Small-Cap Value Portfolio Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Small-Cap Value Portfolio
Class.
(B) As to any matter with respect to which a separate vote of
either Small-Cap Value Portfolio Class is required by the Investment
Company Act or by the Maryland General Corporation Law (including,
without limitation, approval of any plan, agreement or other
arrangement referred to in subsection (A) above), such requirement as
to a separate vote by the Small-Cap Value Portfolio Class shall apply
in lieu of single Small-Cap Value Portfolio Class voting, and, if
permitted by the Investment Company Act or any rules, regulations or
orders thereunder and the Maryland General Corporation Law, the
Small-Cap Value Portfolio Classes shall vote together as a single
Small-Cap Value Portfolio Class on any such matter that shall have the
same effect on each such Small-Cap Value Portfolio Class. As to any
matter that does not affect the interest of a particular Small-Cap
Value Portfolio Class, only the holders of shares of the affected
Small-Cap Value Portfolio Class shall be entitled to vote.
SIXTEENTH: These Articles Supplementary do not change the total number of
authorized shares of the Corporation.
15
<PAGE>
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 18, 2000.
SELIGMAN PORTFOLIOS, INC.
By: /s/ Brian T. Zino
------------------------
Brian T. Zino, President
Witness:
/s/ Frank J. Nasta
- -------------------------------
Frank J. Nasta, Secretary
16
DISTRIBUTION AND SHAREHOLDER SERVICING AGREEMENT
DISTRIBUTION AND SHAREHOLDER SERVICING AGREEMENT, dated as of March 16,
2000, between SELIGMAN PORTFOLIOS, INC., a Maryland corporation (the "Fund"),
and SELIGMAN ADVISORS, INC., a Delaware corporation ("Seligman Advisors").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end, diversified management investment
company and has established several separate series of shares (each a
"Portfolio"), with each Portfolio having its own assets and investment policies;
WHEREAS, the Portfolios propose to issue and sell their shares of capital
stock ("Shares") to separate accounts of participating insurance companies to
fund benefits of variable annuity contracts and, upon the receipt of an
exemptive order from the Securities and Exchange Commission ("SEC"), variable
life insurance contracts; and
WHEREAS, the Fund desires to retain Seligman Advisors to furnish
distribution services to each Portfolio of the Fund listed in Schedule A
attached hereto, and Seligman Advisors is willing to furnish such services.
NOW THEREFORE, in consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Exclusive Distributor. The Fund hereby agrees that Seligman Advisors shall
be for the period of this Agreement exclusive agent for distribution within
the United States and its territories, and Seligman Advisors agrees to use
its best efforts during such period to effect such distribution of Shares
of the Portfolios. The Fund understands that Seligman Advisors also acts as
agent for distribution of the shares of capital stock or beneficial
interest of other open-end investment companies which have entered into
management agreements with J. & W. Seligman & Co. Incorporated (the
"Manager").
2. Sales of Shares. Seligman Advisors is authorized, as agent for the Fund and
not as principal, to sell Shares of the Portfolios to (a) separate accounts
of participating insurance companies in accordance with participation
agreements between the Fund and participating insurance companies to fund
variable annuity contracts and, upon receipt by the Fund of an exemptive
order from the SEC, variable life insurance contracts; or (b) pension or
retirement plans intended to qualify under Sections 401(a) and 501(c) of
the Internal Revenue Code of 1986, as amended; provided, however, that no
sales of Shares shall be confirmed by Seligman Advisors at any time when,
according to advice received by Seligman Advisors from the Fund, the
officers of the Fund have for any reason sufficient to them temporarily or
permanently suspended or discontinued the sale and issuance of the Shares.
Each sale of Shares of a Portfolio shall be effected by Seligman
<PAGE>
Advisors only at net asset value, determined in accordance with the Fund's
then current prospectus relating to such Shares. Seligman Advisors shall
comply with all applicable laws, rules and regulations including, without
limiting the generality of the foregoing, all rules or regulations made or
adopted pursuant to Section 22 of the Investment Company Act of 1940 (the
"1940 Act") by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934.
The Fund agrees, as long as its Shares may legally be issued, to fill all
orders confirmed by Seligman Advisors in accordance with the provisions of
this Agreement.
3. Repurchase Agent. Seligman Advisors is authorized, as agent for the Fund
and not as principal, to accept offers for resale to the Fund and to
repurchase on behalf of the Fund Shares of the Portfolios at net asset
values determined by the Fund in conformity with its then current
prospectus relating to such Shares.
4. Compensation. In accordance with the terms of the Portfolios' Shareholder
Servicing and Distribution Plan (the "Plan"), each Portfolio may make
payments from time to time to Seligman Advisors in accordance with the
terms and limitations of, and for the purposes set forth in the Plan.
Seligman Advisors may use such payments, in its discretion, to compensate
participating insurance companies or other entities who provide
distribution assistance and/or shareholder services to the extent permitted
by the Plan. Seligman Advisors will not be entitled to any other
compensation under this Agreement.
5. Expenses. Except as provided in this Agreement and in accordance with the
Plan, Seligman Advisors shall pay all its own costs and expenses incurred
in connection with the sale of Shares. Seligman Advisors also agrees to pay
all fees and related expenses connected with its own qualification as a
broker or dealer under Federal or State laws.
The Fund agrees to pay all fees and expenses in connection with the
preparation, printing and distribution of copies of any prospectus,
statement of additional information, report or other communication to
shareholders, or any other material used by Seligman Advisors in connection
with offering Shares of the Portfolios for sale, all expenses in connection
with the registration of Shares of the Portfolios under the Securities Act
of 1933 (the "Act"), all fees and related expenses which may be incurred in
connection with the qualification of Shares of the Portfolios for sale in
such States (as well as the District of Columbia, Puerto Rico and other
territories) as Seligman Advisors may designate, and all expenses in
connection with maintaining facilities for the issue and transfer of
Shares, of
2
<PAGE>
supplying information, prices and other data to be furnished by it
hereunder, and through [Seligman Data Corp.], of all data processing and
related services related to the share distribution activity contemplated
hereby.
The Fund agrees to execute such documents and to furnish such information
as may be reasonably necessary, in the discretion of the Directors of the
Fund, in connection with the qualification of Shares of the Portfolios for
sale in such States (as well as the District of Columbia, Puerto Rico and
other territories) as Seligman Advisors may designate, and to pay all
expenses of qualifying the Fund as a dealer or broker under the laws of
such States as may be designated by Seligman Advisors, if deemed necessary
or advisable by the Fund.
It is understood and agreed that any payments made to Seligman Advisors
pursuant to the Plan may be used to defray some or all of the expenses
incurred by Seligman Advisors pursuant to this Agreement.
6. Prospectus and Other Information. The Fund represents and warrants to and
agrees with Seligman Advisors that:
(a) A registration statement, including prospectuses relating to the
Shares of the Portfolios, has been filed by the Fund under the Act and
has become effective. Such registration statement, as now in effect
and as from time to time hereafter amended, and also any other
registration statement relating to the Shares which may be filed by
the Fund under the Act which shall become effective, is herein
referred to as the "Registration Statement", and any prospectuses
filed by the Fund as a part of the Registration Statement, as the
"Prospectuses".
(b) At all times during the term of this Agreement, except when the
officers of the Fund have suspended or discontinued the sale and
issuance of Shares of the Portfolios as contemplated by Section 2
hereof, the Registration Statement and Prospectuses will conform in
all respects to the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission, and neither of
such documents will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statement therein not misleading, except that
the foregoing does not apply to any statements or omissions in either
of such documents based upon written information furnished to the Fund
by Seligman Advisors specifically for use therein.
The Fund agrees to prepare and furnish to Seligman Advisors from time to
time a copy of its Prospectuses, and authorizes Seligman Advisors to use
such
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Prospectuses, in the form furnished to Seligman Advisors from time to time,
in connection with the sale of the Portfolios' Shares. The Fund also agrees
to furnish Seligman Advisors from time to time, for use in connection with
the sale of such Shares, such information with respect to the Portfolios
and their Shares as Seligman Advisors may reasonably request.
7. Reports. Seligman Advisors will prepare and furnish to the Directors of the
Fund at least quarterly a written report complying with the requirements of
Rule 12b-1 under the 1940 Act setting forth all amounts expended under the
Plan and the purposes for which such expenditures were made.
8. Indemnification.
(a) The Fund will indemnify and hold harmless Seligman Advisors and each
person, if any, who controls Seligman Advisors within the meaning of
the Act against any losses, claims, damages or liabilities to which
Seligman Advisors or such controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in the Fund's Registration Statement or any Prospectus
or any other written sales material prepared by the Fund which is
utilized by Seligman Advisors in connection with the sale of Shares or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or (in the
case of the Registration Statement and any Prospectus) necessary to
make the statements therein not misleading or (in the case of such
other sales material) necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made; and will reimburse Seligman Advisors and each such controlling
person for any legal or other expenses reasonably incurred by Seligman
Advisors or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that the Fund will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration
Statement or Prospectus in conformity with written information
furnished to the Fund by Seligman Advisors specifically for use
therein; and provided, further, that nothing herein shall be so
construed as to protect Seligman Advisors against any liability to the
Fund or its security holders to which Seligman Advisors would
otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence, in the performance of its duties, or by reason of
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the reckless disregard by Seligman Advisors of its obligations and
duties under this Agreement. This indemnity agreement will be in
addition to any liability which the Fund may otherwise have.
(b) Seligman Advisors will indemnify and hold harmless the Fund, each of
its Directors and officers and each person, if any, who controls the
Fund within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Fund or any such Director, officer
or controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or any sales material not
prepared by the Fund which is utilized in connection with the sale of
Shares or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or (in the case of the Registration Statement and Prospectus)
necessary to make the statements therein not misleading or (in the
case of such other sales material) necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made, in the case of the Registration Statement and any
Prospectus to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in conformity with written information furnished to the Fund
by Seligman Advisors specifically for use therein; and Seligman
Advisors will reimburse any legal or other expenses reasonably
incurred by the Fund or any such Director, officer or controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which Seligman Advisors may otherwise
have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from liability which it may have to any
indemnified party otherwise than under this Section. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its
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election to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation.
9. Effective Date. This Agreement shall become effective upon its execution by
an authorized officer of the respective parties to this Agreement, but in
no event prior to shareholder approval of the Plan.
10. Term of Agreement. This Agreement shall continue in effect until December
31, 2001 and through December 31 of each year thereafter if such
continuance is approved in the manner required by the 1940 Act and the
rules thereunder and Seligman Advisors shall not have notified the Fund in
writing at least 60 days prior to the anniversary date of the previous
continuance that it does not desire such continuance. This Agreement may be
terminated with respect to a Portfolio at any time, without payment of
penalty on 60 days' written notice to the other party by vote of a majority
of the Directors of the Fund who are not interested persons (as defined in
the 1940 Act) of the Fund and have no direct or indirect financial interest
in the operation of the Plan or any agreement related thereto, or by vote
of a majority of the outstanding voting securities of such Portfolio (as
defined in the 1940 Act). This Agreement shall automatically terminate in
the event of its assignment (as defined in the 1940 Act).
11. 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.
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<PAGE>
IN WITNESS WHEREOF, the Fund and Seligman Advisors have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
SELIGMAN PORTFOLIOS, INC.
By /s/ Brian T. Zino
-----------------------------------
Brian T. Zino, President
SELIGMAN ADVISORS, INC.
By /s/ Stephen J. Hodgdon
-----------------------------------
Stephen J. Hodgdon, President
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SCHEDULE A
Seligman Bond Portfolio Seligman Global Technology Portfolio
Seligman Capital Portfolio Seligman International Growth Portfolio
Seligman Cash Management Portfolio Seligman High-Yield Bond Portfolio
Seligman Common Stock Portfolio Seligman Income Portfolio
Seligman Communications and Information Seligman Large-Cap Growth Portfolio
Portfolio
Seligman Frontier Portfolio Seligman Large-Cap Value Portfolio
Seligman Global Growth Portfolio Seligman Small-Cap Value Portfolio
Seligman Global Smaller Companies
Portfolio
8
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this ___ day of _______, ___, between Seligman
Portfolios, Inc., an open-end management investment company organized as a
Maryland Corporation (the "Fund"), and ____________, a life insurance company
organized under the laws of the State of ________________ (the "Company"), on
its own behalf and on behalf of each segregated asset account of the Company set
forth on Schedule A, as may be amended from time to time (the "Account").
W I T N E S S E T H :
WHEREAS, the Fund is a registered open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and has
filed a currently effective registration statement to offer and sell of its
shares under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Fund (the "Participating Insurance
Companies"); and
WHEREAS, the shares of the Fund are divided into several series of shares,
each series representing an interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has applied for an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies (as defined in the
Fund's application for such order) and their separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies and certain qualified pension and retirement plans (the
"Exemptive Order"); and
WHEREAS, the Company has registered or will register certain variable life
insurance policies and/or variable annuity contracts under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
<PAGE>
WHEREAS, the Company desires to utilize shares of one or more Portfolios as
an investment vehicle of the Accounts;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
ARTICLE I.
Sale of Fund Shares
1.1. The Fund shall make [Class 1/Class 2] shares of its Portfolios
available to the Accounts at the net asset value next computed after receipt of
such purchase order by the Fund (or its agent), as established in accordance
with the provisions of the then current prospectus of the Portfolio or
Portfolios. Shares of a particular Portfolio of the Fund shall be ordered in
such quantities and at such times as determined by the Company to be necessary
to meet the requirements of the Contracts. The Directors of the Fund (the
"Directors") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Directors acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Portfolio.
1.2. The Fund will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Fund (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Fund. The Fund shall make payment for such shares in the
manner established from time to time by the Fund, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3. For the purposes of Sections 1.1 and 1.2, the Fund hereby appoints the
Company as its agent for the limited purpose of receiving and accepting purchase
and redemption orders resulting from investment in and payments under the
Contracts. Receipt by the Company shall constitute receipt by the Fund provided
that (i) such orders are received by the Company in good order prior to the time
the net asset value of each Portfolio is priced in accordance with its
prospectus and (ii) the Fund receives notice of such orders by 10:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the SEC.
1.4. Purchase orders that are transmitted to the Fund in accordance with
Section 1.3 shall be paid for on the same Business Day that the Fund receives
notice of the order. Payments shall be made in federal funds transmitted by
wire.
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<PAGE>
1.5. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Fund will be recorded in the appropriate title for each Account
or the appropriate subaccount of each Account.
1.6. The Fund shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Fund shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall us its best efforts to
make such net asset value per share available by 6 p.m. New York time.
1.8. The Fund agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Exemptive Order. No shares
of any Portfolio will be sold directly to the general public. The Company agrees
that Fund shares will be used only for the purposes of funding the Contracts and
Accounts listed in Schedule A, as amended from time to time.
1.9. The Fund and the Company agree that they shall amend any provision of
this Agreement to the extent that it is inconsistent with any condition imposed
by the SEC in the Exemptive Order.
ARTICLE II.
Obligations of the Parties
2.1. The Fund shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Fund.
The Fund shall bear the cost of registration and qualification of its shares,
preparation and filing of the documents listed in this section 2.1 and all taxes
to which an issuer is subject on the issuance and transfer of its shares.
2.2. At the option of the Company, the Fund shall either (i) provide the
Company (at the Company's expense) with as many copies of the Fund's or the
relevant Portfolio's current prospectus, annual reports, semi-annual report and
other shareholder communications, including any amendments or supplements to any
of the foregoing, as the Company shall reasonably request; or (ii) provide the
Company with a camera ready copy of such documents in a form suitable for
printing. The Fund shall provide the Company with a copy of its statement of
additional information in a form suitable for duplication by the Company. The
Fund (at its expense) shall provide the Company with copies of any
Fund-sponsored proxy materials in such quantity as the Company shall reasonably
require for distribution to Contract owners.
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<PAGE>
2.3. The Company shall bear the costs of printing and distributing the
Fund's or the relevant Portfolio's prospectus, statement of additional
information, shareholder reports and other shareholder communications to owners
of and applicants for policies for which the Fund is serving or is to serve as
an investment vehicle. The Company shall bear the costs of distributing proxy
materials (or similar materials such as voting solicitation instructions) to
Contract owners. The Company assumes sole responsibility for ensuring that such
materials are delivered to Contract owners in accordance with applicable federal
and state securities laws.
2.4 The Company agrees and acknowledges that the Fund's manager, J. & W.
Seligman & Co. Incorporated ("Seligman"), is the sole owner of the name and mark
"Seligman" and that all use of any designation comprised in whole or part of
Seligman (a "Seligman Mark") under this Agreement shall inure to the benefit of
Seligman. Except as provided in section 2.5, the Company shall not use any
Seligman Mark on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of
Seligman. Upon termination of this Agreement for any reason, the Company shall
cease all use of any Seligman Mark(s) as soon as reasonably practicable.
2.5. The Company shall fully disclose in each Contract prospectus any fees
paid or to be paid by the relevant Portfolio under a plan adopted pursuant to
Rule 12b-1 of the 1940 Act. The Company shall furnish, or cause to be furnished,
to the Fund or its designee, a copy of each Contract prospectus or statement of
additional information in which the Fund or Seligman is named prior to the
filing of such document with the SEC. The Company shall furnish, or shall cause
to be furnished, to the Fund or its designee, each piece of advertising, sales
literature or other promotional material in which the Fund or Seligman is named,
at least fifteen Business Days prior to its use. No such material shall be used
if the Fund or its designee reasonably objects to such use within fifteen
Business Days after receipt of such material.
2.6. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund or Seligman in
connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Fund shares (as such registration statement and
prospectus may be amended or supplemented from time to time), reports of the
Fund, Fund-sponsored proxy statements, or in any advertisements, sales
literature or other promotional material approved by the Fund or its designee,
except as required by legal process or regulatory authorities or with the
written permission of the Fund or its designee.
2.7. The Fund shall not give any information or make any representations or
statements on behalf of the Company, or concerning the Company, the Accounts or
the Contracts other than information or representations contained in and
accurately derived from the registration statement or prospectus for the
Contracts (as such registration statement and prospectus may be amended or
supplemented from time to time), or in materials approved by the Company for
distribution including advertisements, sales literature or other promotional
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<PAGE>
materials, except as required by legal process or regulatory authorities or with
the written permission of the Company.
2.8. So long as, and to the extent that the SEC interprets the 1940 Act to
require pass-through voting privileges for variable policyowners, the Company
will provide pass-through voting privileges to owners of policies whose cash
values are invested, through the Accounts, in shares of the Fund. The Fund shall
require all Participating Insurance Companies to calculate voting privileges in
the same manner and the Company shall be responsible for assuring that the
Accounts calculate voting privileges in the manner established by the Fund. With
respect to each Account, the Company will vote shares of the Fund held by the
Account and for which no timely voting instructions for policyowners are
received as well as shares it owns that are held by that Account, in the same
proportion as those shares for which voting instructions are received. The
Company and its agents will in no way recommend or oppose or interfere with the
solicitation of proxies for Fund shares held by Contract owners without the
prior written consent of the Fund, which consent may be withheld in the Fund's
sole discretion.
2.9 The Company shall establish and disclose to Contract owners a
reasonable policy designed to discourage frequent and disruptive purchases and
redemptions of Fund shares by Contract owners and shall cooperate with the Fund
to minimize the impact on the Fund of such transactions.
ARTICLE III.
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of _______ and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2. The Company represents and warrants that it has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
3.3. The Company represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement. The Company represents and warrants that the Contracts will be
registered under the 1933 Act prior to any issuance or sale of the Contracts;
the Contracts will be issued and sold in compliance in all material respects
with all applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
3.4. The Fund represents and warrants that it is duly organized and validly
existing under the laws of the State of Maryland.
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<PAGE>
3.5. The Fund represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the 1933 Act and the Fund
shall be registered under the 1940 Act prior to any issuance or sale of such
shares. The Fund shall amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall make notice or other filings in
accordance with the laws of the various states only if and to the extent deemed
necessary by the Fund.
3.6 The Fund represents and warrants that the investments of each Portfolio
will comply with the diversification requirements set forth in Section 817(h) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder.
3.7 The Fund represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement.
ARTICLE IV.
Potential Conflicts
4.1. The parties acknowledge that the Fund's shares may be made available
for investment to other Participating Insurance Companies and qualified pension
and retirement plans ("Qualified Plans"). In such event, the Directors will
monitor the Fund for the existence of any material irreconcilable conflict
between the interests of the contract owners of all Participating Insurance
Companies and of Qualified Plans. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Directors shall promptly inform the Company if they determine that
an irreconcilable material conflict exists and the implications thereof.
4.2. The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. The Company will assist the
Directors in carrying out their responsibilities under the Exemptive Order by
providing the Directors with all information reasonably necessary for the
Directors to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contact owner voting
instructions.
4.3 If it is determined by a majority of the Directors, or a majority of
its disinterested Directors, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Directors) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (i) withdrawing the
assets allocable to some or all of the Accounts from the Fund or any Portfolio
and reinvesting such assets in a
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<PAGE>
different investment medium, including (but not limited to) another Portfolio of
the Fund, or submitting the question of whether or not such segregation should
be implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., variable annuity contract
owners or variable, life insurance contract owners that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change; and (ii) establishing a new registered management investment
company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account if
requested by the Fund's Directors, terminate this Agreement with respect to such
Account within six months after the Directors inform the Company in writing that
it has determined that such decision has created a material irreconcilable
conflict; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Directors. Until the end of
such six month period, the Fund shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and, if requested by the Fund's
Directors, terminate this Agreement with respect to such Account within six
months after the Directors inform the Company in writing that it has determined
that such decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested Directors. Until the end of such six month period,
the Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Directors shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Company be required to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Directors determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Directors inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Directors.
4.7. The Company and Seligman shall at least annually submit to the
Directors such reports, materials or data as the Directors may reasonable
request so that the Directors may fully
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<PAGE>
carry out the duties imposed upon them by the Exemptive Order, and said reports,
materials and data shall be submitted more frequently if deemed appropriate by
the Directors.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Exemptive Order) on terms and conditions materially different
from those contained in the Exemptive Order, then the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V.
Indemnification
5.1. Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Fund and each of its Directors, officers, employees and agents
and each person, if any, who controls the Fund within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a registration statement or
prospectus for the Contracts or in the Contracts themselves or in any
advertising, sales literature or other promotional literature generated or
approved by the Company on behalf of the Contracts or Accounts (or any amendment
or supplement to any of the foregoing) (collectively, "Company Documents" for
the purposes of this Article V), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that this indemnity shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and was accurately derived from written information furnished to the
Company by or on behalf of the Fund for use in Company Documents or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Fund Documents as defined in Section 5.2(a)) or wrongful conduct of the
Company or persons under its control, or subject to its authorization or
supervisions with respect to the sale or acquisition of the Contracts or
Fund shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Fund Documents as defined in
Section 5.2(a) or the
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<PAGE>
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance upon and
accurately derived from written information furnished to the Fund by or on
behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide
the services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company.
5.2 Indemnification By the Fund. The Fund agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Fund (or any amendment or supplement
thereto), (collectively, "Fund Documents" for the purposes of this Article
V), or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this indemnity
shall not apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Fund by or on
behalf of the Company for use in Fund Documents or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Fund or persons under its
control, or subject to its authorization or supervision with respect to the
sale or acquisition of the Contracts or Fund shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon
9
<PAGE>
and accurately derived from written information furnished to the Company by
or on behalf of the Fund; or
(d) arise out of or result from any failure by the Fund to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Fund.
5.3. Neither the Company nor the Fund shall be liable under the
indemnification provisions of sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
5.4. Neither the Company nor the Fund shall be liable under the
indemnification provisions of sections 5.1 or 5.2, as applicable, with respect
to any claim made against any Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice of
service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of sections 5.1 and 5.2.
5.5. In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
ARTICLE VI.
Termination
6.1. This Agreement may be terminated by either party for any reason by
ninety (90) days advance written notice delivered to the other party.
6.2. Notwithstanding any termination of this Agreement, the Fund shall, at
the option of the Company, continue to make available additional shares of the
Fund (or any Portfolio) pursuant to the terms and conditions of this Agreement
for all Contracts in effect on the effective
10
<PAGE>
date of termination of this Agreement, provided that the Company continues to
pay the costs set forth in section 2.3.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Fund are held on behalf
of the Contract owners in accordance with section 6.2.
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
100 Park Avenue
New York, New York 10017
Attention: General Counsel, Law & Regulation
If to the Company:
______________________________
______________________________
______________________________
Attention: _________________
ARTICLE VIII.
Miscellaneous
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of State of New York. Each party hereto
unconditionally
11
<PAGE>
submits to the jurisdiction of any New York state court or federal court of the
United States sitting in New York City, and any appellate court thereof, in any
action or proceeding arising out of or relating to this Agreement.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Fund and that no Director, officer, agent or holder of shares of
beneficial interest of the Fund shall be personally liable for any such
liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers and state insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
8.8. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
8.11 This Agreement constitutes the entire contract between the parties
relating to the subject matter hereof and supersedes any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
Seligman Portfolios, Inc. (Insurance Company)
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
12
<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Names of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
A-1
SULLIVAN & CROMWELL
April 24, 2000
Seligman Portfolios, Inc.,
100 Park Avenue,
New York, N.Y. 10017.
Dear Sirs:
In connection with Post-Effective Amendment No. 27 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 $0.001 per share, of the class
designated as Class 2 shares (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.
The number of shares of each class of capital stock that the Fund is
authorized to issue at any time is determined by adding to the number of shares
of such class then outstanding additional authorized shares in an amount
determined according to a formula set forth in the Fund's charter. The formula
allocates to each class an equal portion of the number of shares representing
the difference
<PAGE>
Seligman Portfolios, Inc. - 2 -
between the number of shares that the Fund is authorized to issue and the total
number of shares of all classes outstanding at such time.
Upon the basis of such examination, we advise you that, in our opinion, the
Fund is authorized to issue the number of Shares determined in accordance with
the charter of the Fund as described above and, when the Post-Effective
Amendment referred to above has become effective under the Securities Act and
the Shares 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 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.
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 persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
/s/SULLIVAN & CROMWELL
SULIVAN & 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 7, 2000 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 25, 2000
Page 1
INVESTMENT LETTER
SELIGMAN PORTFOLIOS, INC.
Seligman Portfolios, Inc. (the "Fund"), an open-end diversified management
investment company, and Seligman Advisors, Inc. (the "Purchaser"), intending to
be legally bound, hereby agree to the following:
1. The Fund hereby sells to Purchaser and Purchaser purchases one Class 2
share of Capital Stock (par value $.001) of each of the following
Portfolios (each a "Portfolio") of the Fund at a price equivalent to the
net asset value of one Class 1 share of each Portfolio as of the close of
business on April __, 2000 (the "Purchase Date"): Seligman Bond Portfolio,
Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman
Common Stock Portfolio, Seligman Communications and Information Portfolio,
Seligman Frontier Portfolio, Seligman Global Growth Portfolio, Seligman
Global Smaller Companies Portfolio, Seligman Global Technology Portfolio,
Seligman International Growth 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
(collectively, the "Shares"). The Fund hereby acknowledges receipt from
Purchaser of funds in such amount 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 Purchase
Date.
SELIGMAN PORTFOLIOS, INC.
By:
---------------------------------
Name: Lawrence P. Vogel
Title: Vice President
SELIGMAN ADVISORS, INC.
By:
---------------------------------
Name: Stephen J. Hodgdon
Title: President
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
March 16, 2000
Section 1. Each series of Seligman Portfolios, Inc. (the "Fund") listed in
Schedule A hereto (each, a "Portfolio" and collectively, the "Portfolios")
offers its shares to separate accounts ("Accounts") of participating insurance
companies to fund benefits of variable annuity contracts and, upon the receipt
of an exemptive order from the Securities and Exchange Commission, variable life
insurance contracts (collectively, the "Contracts"). Each Portfolio may pay a
fee to Seligman Advisors, Inc., the principal underwriter of its shares (the
"Distributor"), for shareholder services and distribution assistance provided
with respect to Class 2 shares of such Portfolio. As a result, each Portfolio is
adopting this Shareholder Servicing and Distribution Plan (the "Plan") pursuant
to Section 12(b) of the Investment Company Act of 1940, as amended (the "Act"),
and Rule 12b-1 thereunder.
Section 2. Pursuant to this Plan, each Portfolio may pay a shareholder
servicing and distribution fee to the Distributor of up to .25% on an annual
basis, payable monthly, of the average daily net assets attributable to Class 2
shares of such Portfolio. The Distributor will use this fee to make payments to
participating insurance companies or their affiliates for services that the
participating insurance companies provide to Contract owners of Class 2 shares,
including, but not limited to (i) the printing and delivering of prospectuses,
statements of additional information, shareholder reports, proxy statements and
marketing materials related to the Portfolios to current Contract owners, (ii)
providing facilities to answer questions from current Contract owners of Class 2
shares about the Portfolios, (iii) receiving and answering correspondence, (iv)
providing information to J. & W. Seligman & Co. Incorporated, the Fund's
investment manager (the "Manager"), and to Contract owners with respect to Class
2 shares of the Portfolios attributable to Contract owner Accounts, (v)
complying with federal and state securities laws pertaining to the sale of Class
2 shares of the Portfolios, and (vi) assisting Contract owners in completing
application forms and selecting dividend and other Account options, and for
distribution related services. Fees received hereunder may not be used to pay
any allocation of overhead of the Distributor. Fees paid by Class 2 shares of a
Portfolio may not be used to pay expenses incurred solely in respect of any
other class of any Portfolio. The fees payable to participating insurance
companies from time to time shall, within such limits, be determined by the
Directors of the Fund.
Section 3. The Manager, in its sole discretion, may make payments to the
Distributor for similar purposes. These payments will be made by the Manager
from its own resources, which may include the management fee that the Manager
receives from the Portfolios.
Section 4. This Plan shall continue in effect through December 31 of each
year so long as such continuance is specifically approved at least annually by
vote of a majority of both (a) the Directors of the Fund and (b) the Qualified
Directors, cast in person at a meeting called for the purpose of voting on such
approval.
Section 5. The Distributor shall provide to the Fund's Directors, and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated by the Fund with respect to a
Portfolio at any time by vote of a majority of the Qualified Directors, or by
vote of a majority of the outstanding voting securities of such Portfolio's
Class 2 shares. If this Plan is terminated in respect of a Portfolio, no amounts
(other than amounts accrued but not yet paid) would be owed by such Portfolio to
the Distributor.
Section 7. All agreements related to this Plan shall be in writing, and
shall be approved by vote of a majority of both (a) the Directors of the Fund
and (b) the Qualified Directors, cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that the identity of a
particular participating insurance company executing any such agreement may be
ratified by such a vote within 90 days of such execution. Any agreement related
to this Plan shall provide:
A. That such agreement may be terminated in respect of a Portfolio at any
time, without payment of any penalty, by vote of a majority of the
Qualified Directors or by vote of a majority of the outstanding voting
securities of the Class 2 shares of that Portfolio, on not more than
60 days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 8. This Plan may not be amended to increase materially the amount
of fees permitted pursuant to Section 2 hereof without the approval of a
majority of the outstanding voting securities of the relevant class and no
material
1
<PAGE>
amendment to this Plan shall be approved other than by vote of a majority of
both (a) the Directors of the Fund and (b) the Qualified Directors, cast in
person at a meeting called for the purpose of voting on such approval.
Section 9. The Portfolios are not obligated to pay any shareholder
servicing or distribution expenses in excess of the fee described in Section 2
hereof.
Section 10. As used in this Plan, (a) the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission and (b) the term "Qualified Directors" shall mean the
Directors of the Fund who are not "interested persons" of the Fund and have no
direct or indirect financial interest in the operation of this Plan or in any
agreement related to this Plan.
2
<PAGE>
SCHEDULE A
Seligman Bond Portfolio Seligman Global Technology Portfolio
Seligman Capital Portfolio Seligman International Growth Portfolio
Seligman Cash Management Portfolio Seligman High-Yield Bond Portfolio
Seligman Common Stock Portfolio Seligman Income Portfolio
Seligman Communications and Information Seligman Large-Cap Growth Portfolio
Portfolio
Seligman Frontier Portfolio
Seligman Global Growth Portfolio Seligman Large-Cap Value Portfolio
Seligman Global Smaller Companies Seligman Small-Cap Value Portfolio
Portfolio
3
SHAREHOLDER SERVICING AGREEMENT
SHAREHOLDER SERVICING AGREEMENT, dated as of ___________, 2000 between Seligman
Advisors, Inc. ("Seligman Advisors") and [Participating Insurance Company] (the
"Company").
The parties hereto enter into a Shareholder Servicing Agreement ("Servicing
Agreement") with respect to the Class 2 shares of each of the series of Seligman
Portfolios, Inc. (the "Fund") listed in Schedule A hereto (the "Portfolios"),
and in consideration of the mutual agreements herein made, agree as follows:
1. The Company shall provide the following support services to owners of
variable annuity contracts issued by the Company ("Owners") who invest
in Class 2 shares of the Portfolios: printing and delivering
prospectuses, statements of additional information, shareholder
reports, proxy statements and marketing materials related to the
Portfolios to existing Owners; providing facilities to answer
questions from existing Owners about the Portfolios; receiving and
answering correspondence; providing information to J. & W. Seligman &
Co. Incorporated, the Fund's investment manager (the "Manager"), and
to Owners with respect to Class 2 shares attributable to Owner
accounts; complying with federal and state securities laws pertaining
to the sale of Class 2 shares; assisting Owners in completing
application forms and selecting account options; and other
distribution related services.
2. The Company will provide such office space and equipment, telephone
facilities, and personnel as may be reasonably necessary or beneficial
in order to provide such services to Owners.
3. Neither the Company nor any of its employees or agents are authorized
to make any representation concerning the Portfolios or the
Portfolios' Class 2 shares except those contained in the then current
Prospectus, copies of which will be supplied by Seligman Advisors. The
Company shall have no authority to act as agent for Seligman Advisors
or the Portfolios.
4. In consideration of the services and facilities described herein, the
Company shall be entitled to receive a shareholder servicing and
distribution fee in an amount up to .25% on an annual basis of the
average daily net assets attributable to Class 2 shares of the
Portfolios. Seligman Advisors has no obligation to make any such
payment and the Company agrees to waive payment of its fee until
Seligman Advisors is in receipt of the fee from the Portfolios. The
payment of fees has been authorized pursuant to a Shareholder
Servicing and Distribution Plan (the "Plan") approved by the Directors
of the Fund and the shareholders of the Portfolios pursuant to the
requirements of Rule 12b-1 under the Investment Company Act of 1940
(the "Act") and such authorizations may be withdrawn at any time.
<PAGE>
5. It is understood that the Fund reserves the right, at its discretion
and without notice, to suspend or withdraw the sale of Class 2 shares
of the Portfolios. This Agreement shall not be construed to authorize
the Company to perform any act that Seligman Advisors would not be
permitted to perform under the Distribution and Shareholder Servicing
Agreement between the Fund and Seligman Advisors.
6. Subject to the proviso in Section 6 of the Plan, this Agreement shall
continue until December 31 of the year in which the Plan has first
been approved by shareholders and through December 31 of each year
thereafter provided such continuance is specifically approved at least
annually by a vote of a majority of (i) the Fund's Directors and (ii)
the Qualified Directors cast in person at a meeting called for the
purpose of voting on such approval and provided further that the
Company shall not have notified Seligman Advisors in writing at least
60 days prior to the anniversary date of the previous continuance that
it does not desire such continuance. This Agreement may be terminated
at any time without payment of any penalty with respect to any
Portfolio by vote of a majority of the Qualified Directors, or by vote
of a majority of the outstanding voting securities of such Portfolio's
Class 2 shares, on 60 days' written notice to the Company and Seligman
Advisors. Notwithstanding anything contained herein, in the event that
the Plan shall be terminated or any part thereof shall be found
invalid or ordered terminated by any regulatory or judicial authority,
or the Company shall fail to perform the services contemplated by this
Agreement, such determination to be made in good faith by Seligman
Advisors, this Agreement may be terminated effective upon receipt of
written notice thereof by the Company. This Agreement will also
terminate automatically in the event of its assignment.
7. All communications to Seligman Advisors shall be sent to its offices,
100 Park Avenue, New York, New York 10017. Any notice to the Company
shall be duly given if mailed or telegraphed to it at the address
shown below.
8. As used in this Agreement, the terms "assignment", "interested person"
and "vote of a majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and in the rules and
regulations thereunder and the term "Qualified Directors" shall mean
the Directors of the Fund who are not interested persons of the Fund
and have no direct or indirect financial interest in the Plan or in
any agreements related to the Plan.
9. 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, any of the parties to do anything in
violation of any applicable laws or regulations.
<PAGE>
IN WITNESS WHEREOF, Seligman Advisors and the Company have caused this Agreement
to be executed by their duly authorized offices as of the date first above
written.
SELIGMAN ADVISORS, INC.
By:_________________________________
Name:
Title:
COMPANY
By:_________________________________
Address:____________________________
__________________________________
__________________________________
<PAGE>
SCHEDULE A
PORTFOLIOS
[Portfolios being serviced by the Company]
SELIGMAN PORTFOLIOS, INC.
Plan for Multiple Classes of Shares (two classes)
THIS PLAN, as it may be amended from time to time, sets forth the separate
arrangement and expense allocation of each class of shares (a "Class") of each
Portfolio listed on Schedule I hereto (each, a "Portfolio" and collectively, the
"Portfolios"), of Seligman Portfolios, Inc. (the "Fund"). The Plan has been
adopted pursuant to Rule 18f-3(d) under the Investment Company Act of 1940, as
amended (the "Act"), by a majority of the Board of Directors ("Directors") of
the Fund, including a majority of the Directors who are not interested persons
of the Fund within the meaning of Section 2(a)(19) of the Act ("Disinterested
Directors"). Any material amendment to this Plan is subject to the prior
approval of the Board of Directors of the Fund, including a majority of the
Disinterested Directors.
1. General
A. Any Portfolio may issue more than one Class of voting stock, provided
that each Class:
i. Shall have a different arrangement for shareholder services or
the distribution of securities or both, and shall pay all of the
expenses of that arrangement;
ii. May pay a different share of other expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount by that Class, or if the Class
receives services of a different kind or to a different degree
than the other Class of the same Portfolio ("Class Level
Expenses");
iii. May pay a different advisory fee to the extent that any
difference in amount paid is the result of the application of the
same performance fee provisions in the advisory contract of the
Fund to the different investment performance of each Class;
iv. Shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement;
v. Shall have separate voting rights on any matter submitted to
shareholders in which the interests of one Class differ from the
interests of the other Class; and
vi. Shall have in all other respects the same rights and obligations
as the other Class of the Portfolio.
B. i. Except as expressly contemplated by this paragraph B., no types
or categories of expenses shall be designated Class Level
Expenses.
ii. The Directors recognize that certain expenses arising in certain
sorts of unusual situations are properly attributable solely to
one Class and therefore should be borne by that Class. These
expenses ("Special Expenses") may include, for example: (i) the
costs of preparing a proxy statement for, and holding, a special
meeting of shareholders to vote on a matter affecting only one
Class; (ii) the costs of holding a special meeting of Directors
to consider such a matter; (iii) the costs of preparing a special
report relating exclusively to shareholders of one Class; and
(iv) the costs of litigation affecting one Class exclusively. J.
& W. Seligman & Co. Incorporated (the "Manager") shall be
responsible for identifying expenses that are potential Special
Expenses.
-1-
<PAGE>
iii. Subject to clause iv. below, any Special Expense identified by
the Manager shall be treated as a Class Level Expense.
iv. Any Special Expense identified by the Manager that is material to
the Class in respect of which it is incurred shall be submitted
by the Manager to the Directors of the Fund on a case by case
basis with a recommendation by the Manager as to whether it
should be treated as a Class Level Expense. If approved by the
Directors, such Special Expense shall be treated as a Class Level
Expense of the affected Class.
C. i. Realized and unrealized capital gains and losses of a Portfolio
shall be allocated to each Class of that Portfolio on the basis
of the aggregate net asset value of all outstanding shares
("Record Shares") of the Class in relation to the aggregate net
asset value of Record Shares of the Portfolio.
ii. Income and expenses of a Portfolio not charged directly to a
particular Class shall be allocated to each Class of that
Portfolio on the following basis:
(a) Except for Cash Management Portfolio, on the basis of
the aggregate net asset value of the Record Shares of each Class
in relation to the aggregate net asset value of Record Shares of
the Portfolio.
(b) For Cash Management Portfolio, on the basis of the
aggregate net asset value of Settled Shares of each Class in
relation to the aggregate net asset value of Settled Shares of
the Portfolio. "Settled Shares" means Record Shares minus the
number of shares of that Class or Portfolio that have been issued
but for which payment has not cleared and plus the number of
shares of that Class or Portfolio which have been redeemed but
for which payment has not yet been issued.
D. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the Act and otherwise, will monitor each
Portfolio for the existence of any material conflicts among the
interests of its Classes. The Directors, including a majority of the
Disinterested Directors, shall take such action as is reasonably
necessary to eliminate any such conflicts that may develop. The
Manager and Seligman Advisors, Inc. (the "Distributor") will be
responsible for reporting any potential or existing conflicts to the
Directors. If a conflict arises, the Manager and the Distributor will
be responsible at their own expense for remedying such conflict by
appropriate steps up to and including separating the Classes in
conflict by establishing a new registered management company to
operate one of the Classes.
E. The plan of each Portfolio adopted pursuant to Rule 12b-1 under the
Act (the "Rule 12b-1 Plan") provides that the Directors will receive
quarterly and annual statements complying with paragraph (b)(3)(ii) of
Rule 12b-1, as it may be amended from time to time. To the extent that
the Rule 12b-1 Plan in respect of a specific Class is a reimbursement
plan, then only expenditures properly attributable to shares of that
Class will be used in the statements to support the Rule 12b-1 fee
charged to shareholders of such Class. In such cases expenditures not
related to a specific Class will not be presented to the Directors to
support Rule 12b-1 fees charged to shareholders of such Class. The
statements, including the allocations upon which they are based, will
be subject to the review of the Disinterested Directors.
F. Dividends paid by a Portfolio with respect to each Class, to the
extent any dividends are paid, will be calculated in the same manner,
at the same time and on the same day and will be in the same amount,
except that fee payments made under the Rule 12b-1 Plan
-2-
<PAGE>
relating to the Classes will be borne exclusively by each Class and
except that any Class Level Expenses shall be borne by the applicable
Class.
G. The Directors of the Fund hereby instruct each Portfolio's independent
auditors to review expense allocations each year as part of their
regular audit process, to inform the Directors and the Manager of any
irregularities detected and, if specifically requested by the
Directors, to prepare a written report thereon. In addition, if any
Special Expense is incurred by a Portfolio and is classified as a
Class Level Expense in the manner contemplated by paragraph B. above,
the independent auditors for such Portfolio, in addition to reviewing
such allocation, are hereby instructed to report thereon to the Audit
Committee of the Fund and to the Manager. The Manager will be
responsible for taking such steps as are necessary to remedy any
irregularities so detected, and will do so at its own expense to the
extent such irregularities should reasonably have been detected and
prevented by the Manager in the performance of its services to the
Fund.
2. Specific Arrangements for Each Class
The following arrangements regarding shareholder services and expense
allocation shall be in effect with respect to the Class 1 shares and Class 2
shares of each Portfolio. The following descriptions are qualified by reference
to the more detailed description of such arrangements set forth in the
prospectuses and statement of additional information relating to the Portfolios,
as the same may from time to time be amended or supplemented, provided that no
relevant prospectus or statement of additional information may modify the
provisions of this Plan applicable to Rule 12b-1 fees or Class Level Expenses.
(a) Class 1 Shares
i. Class 1 shares shall not be subject to a Rule 12b-1 shareholder
servicing and distribution fee.
ii. Special Expenses attributable to the Class 1 shares, except those
determined by the Directors not to be Class Level Expenses of the
Class 1 shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class 1 shares. No other
expenses shall be treated as Class Level Expenses of the Class 1
shares.
(b) Class 2 Shares
i. Class 2 shares shall be subject to a Rule 12b-1 shareholder servicing
and distribution fee of up to 0.25% of average daily net assets.
ii. Special Expenses attributable to the Class 2 shares, except those
determined by the Directors not to be Class Level Expenses of the
Class 2 shares in accordance with paragraph 1.B.iv., shall be Class
Level Expenses and attributed solely to the Class 2 shares. No other
expenses shall be treated as Class Level Expenses of the Class 2
shares.
-3-
<PAGE>
Schedule I
Seligman Bond Portfolio Seligman Global Technology Portfolio
Seligman Capital Portfolio Seligman International Growth Portfolio
Seligman Cash Management Portfolio Seligman High-Yield Bond Portfolio
Seligman Common Stock Portfolio Seligman Income Portfolio
Seligman Communications and Information Seligman Large-Cap Growth Portfolio
Portfolio
Seligman Frontier Portfolio
Seligman Global Growth Portfolio Seligman Large-Cap Value Portfolio
Seligman Global Smaller Companies Seligman Small-Cap Value Portfolio
Portfolio
-4-
CODE OF ETHICS
J. & W. Seligman & Co. Incorporated
Seligman Advisors, Inc.
Seligman Services, Inc.
Seligman Data Corp.
Seligman International, Inc.
Seligman International UK Limited
The Seligman Group of Investment Companies
I. Introduction
A primary duty of all directors, officers and employees (collectively
"Employees") of J. & W. Seligman & Co. Incorporated, its subsidiaries and
affiliates (collectively, "Seligman") is to be faithful to the interest of the
various Seligman advisory clients, including the registered and unregistered
companies advised by Seligman (collectively, "Clients"). Directors of the
Seligman Registered Investment Companies also have a duty to the Seligman
Registered Investment Companies and their shareholders. Persons who are
Disinterested Directors are "Employees" for purposes of this Code of Ethics.
Through the years, Seligman and its predecessor organizations have had a
reputation of maintaining the highest business and ethical standards and have
been favored with the confidence of investors and the financial community. Such
a reputation and confidence are not easily gained and are among the most
precious assets of Seligman. In large measure, they depend on the devotion and
integrity with which each Employee discharges his or her responsibilities. Their
preservation and development must be a main concern of each Employee, and each
Employee has a primary obligation to avoid any action or activity that could
produce conflict between the interest of the Clients and that Employee's
self-interest.
The purpose of this Code of Ethics ("Code") is to set forth the policies of
Seligman in the matter of conflicts of interest and to provide a formal record
for each Employee's reference and guidance. This Code is also designed to
prevent any act, practice or course of business prohibited by the rules and
regulations governing our industry.
Each Employee owes a fiduciary duty to each Client. Therefore, all Employees
must avoid activities, interests and relationships that might appear to
interfere with making decisions in the best interest of the Clients.
As an Employee, you must at all times:
1. Avoid serving your own personal interests ahead of the interests of
Clients. You may not cause a Client to take action, or not to take action,
for your personal benefit rather than the Client's benefit.
2. Avoid taking inappropriate advantage of your position. The receipt of
investment opportunities, perquisites or gifts from persons seeking
business with Clients or with Seligman could call into question the
exercise of your better judgment. Therefore, you must not give or receive
benefits that would compromise your ability to act in the best interest of
the Clients.
3. Conduct all personal Securities Transactions in full compliance with the
Code, including the pre-authorization and reporting requirements, and
comply fully with the Seligman Insider Trading Policies and Procedures (See
Appendix A).
While Seligman encourages you and your families to develop personal investment
programs, you must not take any action that could cause even the appearance that
an unfair or improper action has been taken. Accordingly, you must follow the
policies set forth below with respect to trading in your Account(s). This Code
places reliance on the good sense and judgment of you as an Employee; however,
if you are unclear as to the Code's meaning, you should seek the advice of the
Law and Regulation Department and assume the Code will be interpreted in the
most restrictive manner. Questionable situations should be resolved in favor of
Clients.
<PAGE>
Technical compliance with the Code's procedures will not insulate from scrutiny
any trades that indicate a violation of your fiduciary duties.
Application of the Code to Disinterested Directors
Disinterested Directors are only subject to the reporting requirements in
Section III.5(b) of the Code. Disinterested Directors are not subject to other
provisions of the Code but are subject to the requirements of the federal
securities laws and other applicable laws, such as the prohibition on trading in
securities of an issuer while in possession of material non-public information.
II. Definitions
(a) "Accounts" means all Employee Accounts and Employee Related Accounts.
(b) "Beneficial Interest" is broadly interpreted. The SEC has said that
the final determination of Beneficial Interest is a question to be
determined in the light of the facts of each particular case. The
terms Employee Account and Employee Related Account, as defined below,
generally define Beneficial Interest. However, the meaning of
"Beneficial Interest" may be broader than that described below. If
there are any questions as to Beneficial Interest, please contact the
Director of Compliance, General Counsel or Associate General Counsel.
(i) "Employee Account" means the following securities Accounts: (i)
any of your personal account(s); (ii) any joint or
tenant-in-common account in which you have an interest or are a
participant; (iii) any account for which you act as trustee,
executor, or custodian; (iv) any account over which you have
investment discretion or otherwise can exercise control,
including the accounts of entities controlled directly or
indirectly by you; (v) any account in which you have a direct or
indirect interest through a contract, arrangement or otherwise
(e.g., economic, voting power, power to buy or sell, or
otherwise); (vi) any account held by pledges, or for a
partnership in which you are a member, or by a corporation which
you should regard as a personal holding company; (vii) any
account held in the name of another person in which you do not
have benefits of ownership, but which you can vest or revest
title in yourself at once or some future time; (viii) any account
of which you have benefit of ownership; and (ix) accounts
registered by custodians, brokers, executors or other fiduciaries
for your benefit.
(ii) "Employee Related Account" means any Account of (i) your spouse
and minor children and (ii) any account of relatives or any other
persons to whose support you materially contribute, directly or
indirectly.
(c) "Disinterested Director" means a director or trustee of a Seligman
Registered Investment Company who is not an "interested person" of
such investment company within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940.
(d) "Equivalent Security" includes, among other things, an option to
purchase or sell a Security or an instrument convertible or
exchangeable into a Security.
(e) "Investment Team" means one or more Investment Teams formed by the
Manager in various investment disciplines to review and approve
Securities for purchase and sale by Client Accounts. This includes a
team's leader, portfolio managers, research analysts, traders and
their direct supervisors.
(f) "Security" includes, among other things, stocks, notes, bonds,
debentures, and other evidences of indebtedness (including loan
participation and assignments), limited partnership interests,
investment contracts, and all derivative instruments (e.g., options
and warrants).
<PAGE>
(g) "Securities Transaction" means a purchase or sale of a Security.
(h) "Seligman Registered Investment Company" means an investment company
registered under the Investment Company Act of 1940 for which Seligman
serves as investment manager or adviser.
III. Personal Securities Transactions
1. Prohibited Transactions
These apply to all of your Accounts.
(a) Seven-Day Blackout: If you are a member of an Investment Team,
Securities Transactions are prohibited within seven calendar days
either before or after the purchase or sale of the relevant security
(or an Equivalent Security) by a Client whose Account is managed by
your Investment Team.
(b) Intention to Buy or Sell for Clients: Securities Transactions are
prohibited at a time when you intend, or know of another's intention,
to purchase or sell that Security (or an Equivalent Security) on
behalf of a Client.
(c) Sixty-Day Holding Period: Profits on Securities Transactions made
within a sixty-day period are prohibited and must be disgorged. This
is a prohibition of short term trading. Specifically,
o Purchase of a Security within 60 days of your sale of the
Security (or an Equivalent Security), at a price that is less
than the price in the previous sale is prohibited.
o Sale of a Security within the 60 day period of your purchase of
the Security (or an Equivalent Security), at a price that is
greater than the price in the previous purchase is prohibited.
Examples are as follows:
1. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee sells 100 shares of XYZ ($15 a share) on February 15.
Employee must disgorge $500.
2. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee purchases 50 shares of XYZ ($12 a share) on January 30.
Employee sells 50 shares of XYZ ($15 a share) on March 15.
Employee must disgorge $150. (The March 15 sale may not be
matched to the January 1 purchase).
3. Employee purchases 100 shares of XYZ ($10 a share) on January 1.
Employee sells 100 shares of XYZ ($10 a share) on February 1.
Employee purchases 100 shares of XYZ ($9 a share) on March 1
Employee must disgorge $100.
(The February 1 sale is permissible because no profit was made.
However, the March 1 purchase is matched against the February 1
sale resulting in a $100 profit).
(d) Restricted Transactions: Transactions in a Security are prohibited (i)
on the day of a purchase or sale of the Security by a Client, or (ii)
anytime a Client's order in the Security is open on the trading desk.
Other Securities may be restricted from time to time as deemed
appropriate by the Law and Regulation Department.
<PAGE>
(e) Short Sales: If you are a member of an Investment Team, you may not
engage in any short sale of a Security if, at the time of the
transaction, any Client managed by your Team has a long position in
that same Security. However, this prohibition does not prevent you
from engaging short sales against the box and covered call writing, as
long as these personal trades are in accordance with the sixty-day
holding period described above.
(f) Public Offerings: Acquisitions of Securities in initial and secondary
public offerings are prohibited, unless granted an exemption by the
Director of Compliance. An exemption for an initial public offering
will only be granted in certain limited circumstances, for example,
the demutualization of a savings bank.
(g) Private Placements: Acquisition of Securities in a private placement
is prohibited absent prior written approval by the Director of
Compliance.
(h) Market Manipulation: Transactions intended to raise, lower, or
maintain the price of any Security or to create a false appearance of
active trading are prohibited.
(i) Inside Information: You may not trade, either personally or on behalf
of others, on material, non-public information or communicate
material, non-public information to another in violation of the law.
This policy extends to activities within and outside your duties at
Seligman. (See Appendix A).
2. Maintenance of Accounts
All Accounts that have the ability to engage in Securities Transactions
must be maintained at Ernst & Company (Investec) and/or the specific
Merrill Lynch branch office located at 712 Fifth Avenue, New York, NY. You
are required to notify the Director of Compliance of any change to your
account status. This includes opening a new Account, converting,
transferring or closing an existing account or acquiring Beneficial
Interest in an Account through marriage or otherwise. You must place all
orders for Securities Transactions in these Account(s) with the Equity
Trading Desk or the appropriate Fixed Income Team as set forth in Section
III.3 ("Trade Pre-authorization Requirements").
The Director of Compliance may grant exceptions to the foregoing
requirements on a case by case basis. All requests for exceptions must be
applied for in writing and submitted for approval to the Director of
Compliance and will be subject to certain conditions.
3. Trade Pre-authorization Requirements
All Securities Transactions in an Employee Account or Employee Related
Account must be pre-authorized, except for Securities Transactions set
forth in Section III.4 ("Exempt Transactions").
(a) Trade Authorization Request Form: Prior to entering an order for a
Securities Transaction in an Employee Account or Employee Related
Account, which is subject to pre-authorization, you must complete a
Trade Authorization Request Form (set forth in Appendix B) and submit
the completed Form (faxed or hand delivered) to the Director of
Compliance (or designee).
(b) Review of the Form and Trade Execution: After receiving the completed
Trade Authorization Request Form, the Director of Compliance (or
designee) will review the information and, as soon as practical,
determine whether to authorize the proposed Securities Transaction.
The authorization, date and time of the authorization must be
reflected on the Form. Once approved the order may then be executed by
Equity Trading Desk or the appropriate Fixed Income Team, except for
accounts for which an exemption was granted under Section III.2.
<PAGE>
(c) Length of Trade Authorization Approval: Any authorization, if granted,
is effective until the earliest of (i) its revocation, (ii) the close
of business on the day from which authorization was granted or (iii)
your discovery that the information in the Trade Authorization Request
Form is no longer accurate. If the Securities Transaction was not
placed or executed within that period, a new pre-authorization must be
obtained. A new pre-authorization need not be obtained for orders
which cannot be filled in one day due to an illiquid market, so long
as such order was placed for execution on the day the original
pre-authorization was given.
No order for a Securities Transaction may be placed prior to the Director
of Compliance (or designee) receiving the completed Trade Pre-authorization
Form and approving the transaction. In some cases, trades may be rejected
for a reason that is confidential.
4. Exempt Transactions
The prohibitions of this Code shall not apply to the following Securities
Transactions in your Account(s):
(a) Purchases or sales of Securities which are non-volitional (i.e., not
involving any investment decision or recommendation).
(b) Purchases of Securities through certain corporate actions (such as
stock dividends, dividend reinvestments, stock splits, mergers,
consolidations, spin-offs, or other similar corporate reorganizations
or distributions generally applicable to all holders of the same class
of Securities).
(c) Purchases of Securities effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its Securities, to the
extent such rights were acquired from the issuer.
(d) Purchases or sales of open-end registered investment companies, U.S.
Government Securities and money market instruments (e.g., U.S.
Treasury Securities, bankers acceptances, bank certificates of
deposit, commercial paper and repurchase agreements).
(e) Purchases of Securities which are part of an automatic dividend
reinvestment plan or stock accumulation plan; however, quarterly
account statement of such plans must be sent to the Director of
Compliance.
(f) Securities Transactions that are granted a prior exemption by the
Director of Compliance, the General Counsel or the Associate General
Counsel.
5. Reporting
(a) You must arrange for the Director of Compliance to receive from the
executing broker, dealer or bank duplicate copies of each confirmation
and account statement for each Securities Transaction in an Employee
Account or Employee Related Account.
(b) If you are a Disinterested Director you are required to report the
information specified below with respect to any Securities Transaction
in any Securities Account in which you have Beneficial Interest, if
you knew, or in the ordinary course of fulfilling your official duties
as a Disinterested Director, should have known, that during 15 days
immediately before or after the date of your transaction, the Security
(or Equivalent Security) was purchased or sold by a Seligman
Registered Investment Company or considered for purchase or sale by a
Seligman Registered Investment Company. Such report shall be made not
later than 10 days after the end of the calendar quarter in which the
Transaction was effected and shall contain the following information:
<PAGE>
(i) The date of the transaction, the name of the company, the number
of shares, and the principal amount of each Security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(v) The date the report is submitted.
(c) You are required to disclose all Securities beneficially owned by you
within ten days of commencement of employment and at the end of each
calendar year within 10 days thereafter (See Appendix C).
(d) You are also required to disclose all Employee and Employee Related
Securities Accounts, Private Securities Transactions and Outside
Activities, Affiliations and Investments upon commencement of
employment and annually thereafter (See Appendix D).
(e) Any report may contain a statement that the report shall not be
construed as an admission by you, that you have any direct or indirect
beneficial ownership in the Security to which the report relates.
(f) The Director of Compliance or his designee will review all reports.
6. Dealings with the Clients
You should not have any direct or indirect investment interest in the
purchase or sale of any Security or property from or to Clients. This is a
prohibition against dealings between you and the Clients and is not
intended to preclude or limit investment transactions by you in Securities
or property, provided such transactions are not in conflict with the
provisions of this Code.
7. Preferential Treatment, Favors and Gifts
You are prohibited from giving and receiving gifts of significant value or
cost from any person or entity that does business with or on behalf of any
Client. You should also avoid preferential treatment, favors, gifts and
entertainment which might, or might appear to, influence adversely or
restrict the independent exercise of your best efforts and best judgments
on behalf of the Clients or which might tend in any way to impair
confidence in Seligman by Clients. Cash Gifts that do not exceed $100 in
value per person for a calendar year are permissible. Ordinary courtesies
of business life, or ordinary business entertainment, and gifts of
inconsequential value are also permissible. However, they should not be so
frequent nor so extensive as to raise any question of impropriety.
8. Outside Business Activities and Service as a Director, Trustee or in a
Fiduciary Capacity of any Organization
You may not engage in any outside business activities or serve as a
Director, Trustee or in a fiduciary capacity of any organization, without
the prior written consent of the Director of Compliance.
<PAGE>
9. Remedies of the Code
Upon discovering a violation of this Code, sanctions may be imposed against
the person concerned as may be deemed appropriate, including, among other
things, a letter of censure, fines, suspension or termination of personal
trading rights and/or employment.
As part of any sanction, you may be required to absorb any loss from the
trade. Any profits realized, as a result of your personal transaction that
violates the Code must be disgorged to a charitable organization, which you
may designate.
10. Compliance Certification
At least once a year, you will be required to certify on the Employee
Certification Form (set forth in Appendix E) that you have read and
understand this Code, that you have complied with the requirements of the
Code, and that you have disclosed or reported all personal Securities
Transactions pursuant to the provisions of the Code.
11. Inquiries Regarding the Code
If you have any questions regarding this Code or any other
compliance-related matter, please call the Director of Compliance, or in
his absence, the General Counsel or Associate General Counsel.
--------------------------------
William C. Morris
Chairman
December 22, 1966
Revised: March 8, 1968 December 7, 1990
January 14, 1970 November 18, 1991
March 21, 1975 April 1, 1993
May 1, 1981 November 1, 1994
May 1, 1982 February 28, 1995
April 1, 1985 November 19, 1999*
March 27, 1989
*Refers to the incorporation of the Code of Ethics of the Seligman Investment
Companies originally adopted June 12, 1962, as amended.
<PAGE>
Appendix A
Amended November 19, 1999
J. & W. Seligman & Co. Incorporated - Insider Trading Policies and Procedures
SECTION I. BACKGROUND
Introduction
United States law creates an affirmative duty on the part of broker-dealers
and investment advisers to establish, maintain and enforce written policies and
procedures that provide a reasonable and proper system of supervision,
surveillance and internal control to prevent the misuse of material, non-public
information by the broker-dealer, investment adviser or any person associated
with them. The purpose of these procedures is to meet those requirements. The
following procedures apply to J. & W. Seligman & Co. Incorporated, its
subsidiaries and affiliates (collectively, "Seligman") and all officers,
directors and employees (collectively, "Employees") thereof.
Statement of Policy
No Employee may trade, either personally or on behalf of others, on
material, non-public information or communicate material, non-public information
to another in violation of the law. This policy extends to activities within and
outside their duties at Seligman. Each Employee must read, acknowledge receipt
and retain a copy of these procedures.
Inside Information
The term "insider trading" is not defined in the federal securities laws,
but generally is used to refer to the use of material, non-public information to
trade in securities or to communicate material, non-public information to
others.
While the law concerning insider trading is not static, it is understood
that the law generally prohibits:
A. trading by an insider, while in possession of material, non-public
information, or
B. trading by a non-insider, while knowingly in possession of material,
non-public information, where the information either was disclosed to
the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated, or
C. communicating material, non-public information to others.
The elements of insider trading and the penalties for such unlawful conduct
are discussed below. If you have any questions after reviewing these procedures,
you should consult the Director of Compliance, General Counsel or Associate
General Counsel.
1. Who Is An Insider?
The concept of "insider" is broad. It includes Employees of a company. In
addition, a person can be a "temporary insider" if he or she enters into a
special confidential relationship in the conduct of a company's affairs and
as a result is given access to information solely for the company's
purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the
Employees of such organizations. In addition, Seligman may become a
temporary insider of a company it advises or for which it performs other
services. According to the Supreme Court, the company must expect the
outsider to keep the disclosed non-public information
<PAGE>
confidential and the relationship must at least imply such a duty before the
outsider will be considered an insider.
2. What Is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment
decisions, or information that is reasonably certain to have a substantial
affect on the price of a company's securities. Information that Employees
should consider material includes, but is not limited to: dividend changes,
earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major
litigation, liquidation problems and extraordinary management developments.
In addition, information about major contracts or new customers could also
qualify as material, depending upon the importance of such developments to
the company's financial condition or anticipated performance.
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S., 408 U.S. 316 (1987), the Supreme Court
considered as material certain information about the contents of a
forthcoming newspaper column that was expected to affect the market price
of a Security. In that case, a Wall Street Journal reporter was found
criminally liable for disclosing to others the dates that reports on
various companies would appear in the Journal and whether those reports
would be favorable or not.
3. What Is Non-Public Information?
Information is non-public until it has been effectively communicated to the
market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services,
The Wall Street Journal or other publications of general circulation would
be considered public. However, see Section II, Paragraph 2.
4. Penalties for Insider Trading
Penalties for trading on or communicating material, non-public information
are severe, both for individuals involved in such unlawful conduct and
their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
- Civil injunctions
- Disgorgement of profits
- Jail sentences
- Fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
- Fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
In addition, any violation of policies and procedures set forth herein can
be expected to result in serious sanctions by Seligman, including dismissal of
the persons involved.
<PAGE>
SECTION II. PROCEDURES
Procedures to Implement Policy Against Insider Trading.
The following procedures have been established to assist the Employees of
Seligman in avoiding insider trading, and to aid Seligman in preventing,
detecting and imposing sanctions against insider trading. Every Employee of
Seligman must follow these procedures or risk serious sanctions, including
dismissal, substantial personal liability and criminal penalties. If you have
any questions about these procedures you should consult the Director of
Compliance, the General Counsel or Associate General Counsel.
1. Identifying Inside Information.
Before trading for yourself or others (including investment companies and
private Accounts managed by Seligman), in the securities of a company about
which you may have potential inside information, ask yourself the following
questions:
a. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is
this information that would substantially affect the market price of
the securities if generally disclosed?
b. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace in a publication of general circulation or does it fall
within the circumstances set forth in paragraph 2 below.
If, after consideration of the above, you believe that the information is
material and non-public, or if you have questions as to whether the information
is material and non-public, you should take the following steps:
c. Report the matter immediately to the Director of Compliance, General
Counsel or Associate General Counsel.
d. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private Accounts managed by
Seligman.
e. Do not communicate the information inside or outside Seligman other
than to the Director of Compliance, General Counsel or Associate
General Counsel.
f. After the Director of Compliance, General Counsel or Associate General
Counsel has reviewed the issue, you will be instructed to continue the
prohibitions against trading and communication, or you will be allowed
to trade and communicate the information.
2. Important Specific Examples
a. If you have a telephone or face-to-face conversation with a senior
executive of a publicly-traded company and are provided information
about the company that you have reason to believe has not yet been
disclosed in a widely-disseminated publication such as a press
release, quarterly report or other public filing, you have received
non-public information. This information is considered non-public even
if you believe that the company executive would provide the same
information to other analysts or portfolio managers who call the
company. Until information has been disclosed in a manner that makes
it available to (or capable of being accessed by) the investment
community as a whole, it is considered non-public. If the information
is material, as described above, you may not trade while in possession
of this information unless you first discuss the matter and obtain
approval from the Director of Compliance, General Counsel or Associate
General Counsel. Although it may be lawful for an analyst to act on
the basis of material information that the company's management has
chosen to disclose selectively to that analyst, where the information
is provided in a one-on-one context,
<PAGE>
regulators are likely to question such conduct. Approval from the Law
and Regulation Department will therefore depend on the specific
circumstances of the information and the disclosure. Under the Supreme
Court's important decision of Dirks v. SEC, 463 U.S. 646 (1983),
securities analysts may be free to act on selectively disclosed
material information if it is provided by company executives
exclusively to achieve proper corporate purposes.
b. If you obtain material information in the course of an analysts'
conference call or meeting conducted by a publicly-traded company in
the ordinary course of its business in which representatives of
several other firms or investors are also present (as distinguished
from the one-on-one situation described in the preceding paragraph),
you may act on the basis of that information without need to consult
with the Director of Compliance, General Counsel or Associate General
Counsel, even if the information has not yet been published by the
news media. You should be aware, however, that if there is something
highly unusual about the meeting or conference call that leads you to
question whether it has been authorized by the company or is otherwise
suspect, you should first consult with the Director of Compliance,
General Counsel or Associate General Counsel.
c. If you are provided material information by a company and are
requested to keep such information confidential, you may not trade
while in possession of that information before first obtaining the
approval of the Director of Compliance, General Counsel or the
Associate General Counsel.
As these examples illustrate, the legal requirements governing insider
trading are not always obvious. You should therefore always consult with the
Director of Compliance, General Counsel or Associate General Counsel if you have
any question at all about the appropriateness of your proposed conduct.
3. Restricting Access To Material, Non-Public Information
Information in your possession that you identify as material and non-public
may not be communicated to anyone, including persons within Seligman,
except as provided in paragraphs 1 and 2 above. In addition, care should be
taken so that such information is secure. For example, files containing
material, non-public information should be sealed; access to computer files
containing material, non-public information should be restricted.
4. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in paragraphs 1 and 2, doubt
remains as to whether information is material or non-public, or if there is
any unresolved question as to the applicability or interpretation of the
foregoing procedures, or as to the propriety of any action, it must be
discussed with the Director of Compliance, General Counsel and or the
Associate General Counsel before trading or communicating the information
to anyone.
5. Personal Securities Trading
All Employees shall follow with respect to personal Securities trading the
procedures set forth in the Code of Ethics. In addition, no Employee shall
establish a brokerage Account with a Firm other than those previously
approved without the prior consent of the Director of Compliance and every
Employee shall be subject to reporting requirements under Section III.5 of
the Code of Ethics. The Director of Compliance, or his designee, shall
monitor the personal Securities trading of all Employees.
<PAGE>
Appendix B
Amended November 19, 1999
J. & W. SELIGMAN & CO. INCORPORATED
TRADE AUTHORIZATION REQUEST FORM
<TABLE>
<CAPTION>
<S> <C>
1. Name of Employee/Telephone Number: _____________________________________
2. If different than #1, name of the person in whose
account the trade will occur: _____________________________________
3. Relationship of (2) to (1): _____________________________________
4. Name the firm at which the account is held: _____________________________________
5. Name of Security: _____________________________________
6. Number of shares or units to be bought or
sold or amount of bond: _____________________________________
7. Approximate price per share, unit or bond: _____________________________________
8. Check those that are applicable: __________ Purchase _________ Sale
_____ Market Order ______ Limit Order (Price of Limit Order: _____)
9. Do you possess material non public information regarding
the Security or the issuer of the Security? ______ Yes ______ No
10. To your knowledge, are there any outstanding (purchase or
sell) orders for this Security or any Equivalent Security by
a Seligman Client? ______ Yes ______ No
11. To your knowledge, is this Security or Equivalent Security
being considered for purchase or sale for one or more
Seligman Clients? ______ Yes ______ No
12. Is this Security being acquired in an initial or secondary public
offering? ______ Yes ______ No
13. Is this Security being acquired in a private placement? ______ Yes ______ No
14. Have you or any Related Account covered by the pre-
authorization provisions of the Code purchased or sold
this Security within the past 60 days? ______ Yes ______ No
</TABLE>
<PAGE>
- - - - - -
For Investment Team Members Only:
15. Has any Client Account managed by your team purchased
or sold this Security or Equivalent Security within the
past seven calendar days or do you expect any such
account to purchase or sell this Security or Equivalent
Security within seven calendar days of your purchase or
sale? ______ Yes ______ No
16. Why is this Security Transaction appropriate for you and not for one or
more of your team's Clients?
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
- - - - - -
I have read the J. & W. Seligman & Co. Incorporated Code of Ethics, as revised
on November 19, 1999, within the prior 12 months and believe that the proposed
trade(s) fully complies with the requirements of the Code of Ethics and Insider
Trading policy.
----------------------------
Employee Signature
----------------------------
Date Submitted
Authorized by: ________________________
Date: ________________________
<PAGE>
Appendix C
Amended November 19, 1999
REPORT OF SECURITIES BENEFICIALLY OWNED
AS OF DECEMBER 31, 1999
The following is a list of all Securities positions (except open-end
investment companies, U.S. Government Securities and money market instruments)
in which I have direct or indirect beneficial ownership, as defined in the Code
of Ethics. This includes Securities held at home, in safe deposit boxes or by an
issuer.
<TABLE>
<CAPTION>
Description of Security No. of Shares Principal Amount Location of Security
<S> <C> <C> <C>
- -------------------------- ------------- ------------------- ------------------
- -------------------------- ------------- ------------------- ------------------
- -------------------------- ------------- ------------------- ------------------
- -------------------------- ------------- ------------------- ------------------
- -------------------------- ------------- ------------------- ------------------
- -------------------------- ------------- ------------------- ------------------
</TABLE>
_______ The list above (and any additional sheets I have attached)
represents all my Securities positions in which I have direct
or indirect beneficial ownership as defined in the Code of
Ethics.
_______ I only have a beneficial ownership interest in open-end
investment companies, U.S. Government Securities and money
market instruments, and/or I do not beneficially own any
Securities.
Date:
------------------------ ---------------------------------
First Last, Company
<PAGE>
Appendix D
Amended November 19, 1999
EMPLOYEE REPORTING QUESTIONNAIRE
<TABLE>
<CAPTION>
Employee Name: ___________________________ Ext: ______ Department: ___________________
Please Print
Company/Affiliate: ______________________________ Supervisor: ___________________
<S> <C>
1. Securities Accounts
Do you have any Accounts in which Securities can be purchased or sold over which you have control or in which you
have a Beneficial Interest, as defined in Seligman's Code of Ethics?
Yes _______ No ________
<CAPTION>
If yes, please list all such Accounts:
Account Account Type of
Institution Number Title Account
<S> <C> <C> <C>
---------------------------- ---------------- -------------------------- --------------
---------------------------- ---------------- -------------------------- --------------
---------------------------- ---------------- -------------------------- --------------
<CAPTION>
<S> <C>
2. Financial Interests
Do you have any private placements, restricted stock warrants, general or limited partnerships, or other
investment interests in any organization (public, private or charitable) not held in the accounts listed above?
Please include Securities and certificates held in your custody.
Yes _______ No _______
If yes, please describe: _____________________________________________________________________________________
__________________________________________________________________________________________________________________
3. Outside Activities/Affiliations
a) Do you have any activities outside Seligman or its affiliates for which you receive additional compensation:
Yes _______ No _______
If yes, please describe: _____________________________________________________________________________________
__________________________________________________________________________________________________________________
b) Do you serve in the capacity of officer, director, partner or employee (or in any other fiduciary capacity)
for any company or organization (public, private or charitable) other than Seligman or its affiliates.
Yes ________ No _______
If yes, please describe: _____________________________________________________________________________________
__________________________________________________________________________________________________________________
</TABLE>
I hereby certify that I have read and understand the foregoing statements
and that each of my responses thereto are true and complete. I agree to
immediately inform the Director of Compliance if there is any change in any
of the above answers. I also understand that any misrepresentation or
omissions of facts in response to this questionnaire and failure to
immediately inform the Director of Compliance of any changes to responses
provided herein may result in termination of my employment.
------------------------------------ -----------------------------
Employee's Signature Date
------------------------------------
Title
<PAGE>
Appendix E
Amended November 19, 1999
Annual Certification of Compliance with the Code of Ethics
I acknowledge that I have received and read the Code of Ethics and Insider
Trading Policies and Procedures, as amended on November 19, 1999 and hereby
agree, in consideration of my continued employment by J. & W. Seligman & Co.
Incorporated, or one of its subsidiaries or affiliates, to comply with the Code
of Ethics and Insider Trading Policies and Procedures.
I hereby certify that during the past calendar year:
1. In accordance with the Code of Ethics, I have fully disclosed the
Securities holdings in my Employee Account(s) and Employee Related
Account(s) (as defined in the Code of Ethics).
2. In accordance with the Code of Ethics, I have maintained all Employee
Accounts and Employee Related Accounts at Ernst & Company (Investec) or
Merrill Lynch located at 712 Fifth Avenue, New York, NY except for Accounts
as to which the Director of Compliance has provided written permission to
maintain elsewhere.
3. In accordance with the Code of Ethics, except for transactions exempt from
reporting under the Code of Ethics, I have arranged for the Director of
Compliance to receive duplicate confirmations and statements for each
Securities Transaction of all Employee Accounts and Employee Related
Accounts, and I have reported all Securities Transactions in each of my
Employee Accounts and Employee Related Accounts.
4. I have complied with the Code of Ethics in all other respects.
--------------------------------
Employee Signature
--------------------------------
Date:____________ Print Name
