<PAGE>
- ------------------------------------------------------------------
A N N U A L R E P O R T
- ------------------------------------------------------------------
S E L I G M A N
- ------------------------
M U T U A L
- ------------------------
B E N E F I T
- ------------------------
P L A N
J&WS
December 31, 1996
<PAGE>
TOTAL RETURNS*
For the Year Ended December 31, 1996
Seligman Capital Sub-Account......................................... 13.09%
Seligman Cash Management Sub-Account................................. 4.18
Seligman Common Stock Sub-Account.................................... 18.59
Seligman Fixed Income Securities Sub-Account......................... (1.20)
Seligman Income Sub-Account.......................................... 5.25
- -------------------
* Total returns of the Separate Account are based on the performance of the
Seligman Portfolios, Inc., the underlying investment vehicle for the Seligman
Mutual Benefit Plan, less separate account charges.
<PAGE>
SELIGMAN P.O. Box 13326
MUTUAL Kansas City, MO 64199
BENEFIT
PLAN
February 11, 1997
Dear Contract Owner:
As Manager of the Seligman Portfolios, Inc., we are pleased to provide the
enclosed audited financial statements and accompanying information for the
Seligman Mutual Benefit Plan (the "Separate Account") and Seligman Portfolios,
Inc. for the year ended December 31, 1996.
A constructive economic environment supported strong corporate earnings in
most industries during 1996. In spite of continued corporate downsizing and
restructuring, the unemployment rate fell as low as 5.2% in August and ended the
year at 5.3%, as compared to 5.6% in December 1995. Simply put, the increased
competitiveness of US industry and the low inflation environment provided strong
fundamental support to higher equity prices and improved results in the
fixed-income markets, particularly in the last half of the year.
Driven by the outstanding performance of a small number of the largest
stocks, the US large-capitalized equity markets continued to advance in 1996,
setting new highs and rebounding from sharp short-term setbacks. The S&P 500's
total return for the year was 22.96%, and the Dow Jones Industrial Average
(DJIA) posted an exceptional total return of 28.91%.
The fixed-income markets, in contrast, had a less positive year. In the
first two quarters of the year, the markets were hindered by persistent concerns
that the economy's unexpected vigor would produce higher levels of inflation
and, in turn, increases in interest rates. However, performance improved in the
last two quarters of the year, as low levels of inflation prevailed despite
continued economic growth. The yield on the benchmark 30-year Treasury bond
reflected the changing perceptions of inflationary pressure, rising from 5.95%
on December 31, 1995, to end the year at 6.64%. Additionally, the yield on the
benchmark three-month Treasury bill ended the year at 5.17%, modestly higher
than the 5.05% yield at year-end 1995.
Looking ahead, the economic environment supporting the US financial
markets remains generally positive, given continued modest economic growth, low
inflation, and bipartisan efforts to balance the federal budget without raising
taxes. While we always recognize that there could be further short-term
volatility, we remain positive about the long-term outlook for the US economy
and the financial markets.
Respectfully,
William C. Morris
Chairman
J. & W. Seligman & Co. Incorporated
-- 1 --
<PAGE>
Seligman Mutual Benefit Plan
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
Investments in Seligman Portfolios, Inc.:
<S> <C>
Seligman Bond (formerly Fixed Income Securities) Portfolio--222,241 shares at Net Asset Value of $9.89
(cost--$2,212,303)............................................................................ $ 2,197,966
Seligman Capital Portfolio--290,556 shares at Net Asset Value of $16.01 (cost--$4,255,353)....... 4,651,808
Seligman Cash Management Portfolio--1,607,548 shares at Net Asset Value of $1.00
(cost--$1,607,548)............................................................................ 1,607,548
Seligman Common Stock Portfolio--865,315 shares at Net Asset Value of $15.92 (cost--$13,789,259). 13,775,820
Seligman Income Portfolio--406,563 shares at Net Asset Value of $10.52 (cost--$4,399,128)........ 4,277,041
-----------
TOTAL ASSETS........................................................................................ 26,510,183
LIABILITIES
Due to MBL Life--Note 4............................................................................. 33,532
-----------
NET ASSETS.......................................................................................... $26,476,651
===========
Net assets attributable to Variable Annuity Contract Owners--Note 3................................. $26,476,651
===========
</TABLE>
- --------------------------
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
Combined Statement of Operations Year Ended December 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN
SELIGMAN CASH SELIGMAN FIXED INCOME SELIGMAN
CAPITAL MANAGEMENT COMMON STOCK SECURITIES INCOME
COMBINED SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------- ----------- ----------- ------------ ------------ -----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C> <C>
Dividends......................... $ 687,448 $ 11,444 $87,848 $ 249,692 $118,438 $220,026
Capital gain distributions....... 2,055,970 278,482 -- 1,714,406 -- 63,082
---------- -------- ------- ---------- -------- --------
Total investment income........... 2,743,418 289,926 87,848 1,964,098 118,438 283,108
---------- -------- ------- ---------- -------- --------
EXPENSES--Note 4:
Mortality and expense risk charges 370,504 63,594 20,781 193,324 29,885 62,920
Asset-based sales charge.......... 2,390 353 179 1,190 122 546
Administration charge............. 25,724 4,335 1,739 12,640 2,610 4,400
---------- -------- ------- ---------- -------- --------
Total expenses.................... 398,618 68,282 22,699 207,154 32,617 67,866
---------- -------- ------- ---------- -------- --------
NET INVESTMENT INCOME ............ 2,344,800 221,644 65,149 1,756,944 85,821 215,242
---------- -------- ------- ---------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS--Note 5:
Net realized gain (loss) on sales
of investments................. 1,410,886 267,715 -- 1,199,207 855 (56,891)
Net change in unrealized
appreciation/depreciation
of investments................. (175,771) 149,798 -- (283,134) (126,285) 83,850
---------- -------- ------- ---------- -------- --------
NET GAIN (LOSS) ON INVESTMENTS.... 1,235,115 417,513 -- 916,073 (125,430) 26,959
---------- -------- ------- ---------- -------- --------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS................ $3,579,915 $639,157 $65,149 $2,673,017 $(39,609) $242,201
---------- -------- ------- ---------- -------- --------
---------- -------- ------- ---------- -------- --------
</TABLE>
See Notes to Financial Statements.
-- 2 --
<PAGE>
SELIGMAN MUTUAL BENEFIT PLAN
- -------------------------------------------------------------------------------
COMBINED STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN
SELIGMAN CAPITAL CASH MANAGEMENT
COMBINED SUB-ACCOUNT SUB-ACCOUNT
----------------------- ----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- ----------------------- -----------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income............. $ 2,344,800 $ 2,860,482 $ 221,644 $ 325,286 $ 65,149 $ 81,990
Net realized gain (loss) on sales
of investments................. 1,410,886 (241,216) 267,715 (354,072) -- --
Net change in unrealized
appreciation/depreciation
of investments................. (175,771) 4,131,889 149,798 1,170,734 -- --
----------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) resulting
from operations................ 3,579,915 6,751,155 639,157 1,141,948 65,149 81,990
----------- ----------- ---------- ---------- ---------- ----------
FROM CONTRACT OWNERS'
TRANSACTIONS--Note 2:
Net transfers between
sub-accounts.................. -- -- (18,341) 99,124 199,559 (37,710)
Redemptions and annuity benefits. (10,273,215) (9,687,905) (1,182,694) (810,103) (481,155) (913,272)
----------- ----------- ---------- ---------- ---------- ----------
Decrease in net assets resulting
from Contract Owners'
transactions.................. (10,273,215) (9,687,905) (1,201,035) (710,979) (281,596) (950,982)
----------- ----------- ---------- ---------- ---------- ----------
(Increase) decrease in amount due
MBL Life--Note 4.............. (4,438) (15,212) 19 612 24 159
----------- ----------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets (6,697,738) (2,951,962) (561,859) 431,581 (216,423) (868,833)
NET ASSETS:
Beginning of year................ 33,174,389 36,126,351 5,215,774 4,784,193 1,824,530 2,693,363
----------- ----------- ---------- ---------- ---------- ----------
End of year...................... $26,476,651 $33,174,389 $4,653,915 $5,215,774 $1,608,107 $1,824,530
============ =========== ========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
-- 3 --
<PAGE>
SELIGMAN MUTUAL BENEFIT PLAN
- -------------------------------------------------------------------------------
COMBINED STATEMENTS OF CHANGES IN NET ASSETS (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELIGMAN
SELIGMAN FIXED INCOME SELIGMAN
COMMON STOCK SECURITIES INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------------- ----------------------- -----------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- ----------------------- -----------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income ............. $ 1,756,944 $ 1,774,447 $ 85,821 $ 107,972 $ 215,242 $ 570,787
Net realized gain (loss) on sales
of investments.................. 1,199,207 403,366 855 (72,603) (56,891) (217,907)
Net change in unrealized
appreciation/depreciation
of investments.................. (283,134) 1,794,616 (126,285) 392,734 83,850 773,805
----------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) resulting
from operations................. 2,673,017 3,972,429 (39,609) 428,103 242,201 1,126,685
----------- ----------- ---------- ---------- ---------- ----------
FROM CONTRACT OWNERS'
TRANSACTIONS--Note 2:
Net transfers between
sub-accounts.................... (34,638) (5,440) (40,143) (14,658) (106,437) (41,316)
Redemptions and annuity benefits... (5,794,194) (4,837,670) (365,200) (526,494) (2,449,972) (2,600,366)
----------- ----------- ---------- ---------- ---------- ----------
Decrease in net assets resulting
from Contract Owners'
transactions.................... (5,828,832) (4,843,110) (405,343) (541,152) (2,556,409) (2,641,682)
----------- ----------- ---------- ---------- ---------- ----------
(Increase) decrease in amount due
MBL Life--Note 4................. (2,711) (13,400) 2,952 (1,411) (4,722) (1,172)
----------- ----------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets.. (3,158,526) (884,081) (442,000) (114,460) (2,318,930) (1,516,169)
NET ASSETS:
Beginning of year.................. 16,913,113 17,797,194 2,632,543 2,747,003 6,588,429 8,104,598
----------- ----------- ---------- ---------- ---------- ----------
End of year........................ $13,754,587 $16,913,113 $2,190,543 $2,632,543 $4,269,499 $6,588,429
----------- ----------- ---------- ---------- ---------- ----------
----------- ----------- ---------- ---------- ---------- ----------
</TABLE>
See Notes to Financial Statements.
-- 4 --
<PAGE>
SELIGMAN MUTUAL BENEFIT PLAN
- ------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
1. The Seligman Mutual Benefit Plan (the "Plan") is a unit investment trust
registered under the Investment Company Act of 1940, as amended, and a
separate account of the MBL Life Assurance Corporation ("MBL Life")
established under the insurance laws of New Jersey. MBL Life provides for
variable accumulation and benefits under the Plan's contract by crediting
annuity considerations to one or more Variable Accumulation Sub-Accounts
("sub-account") within the Plan or the Fixed Accumulation Account, as
elected by the Contract Owner. Significant accounting policies of the Plan are
as follows:
a. Investments -- Investments are valued at net asset value. The Plan invests
exclusively in shares of the following five portfolios of Seligman
Portfolios, Inc. (the "Fund"), a series Fund: Seligman Bond Portfolio
(formerly "Seligman Fixed Income Securities Portfolio"), Seligman Capital
Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock
Portfolio, and Seligman Income Portfolio. Shares are purchased in each
portfolio, in accordance with the Contract Owner's allocation of net purchase
payments (see Note 2), at the net asset value of such shares on the date
monies are received. Cost represents the aggregate of such purchases at net
asset value. Dividends from net investment income and capital gain
distributions are recognized on the ex-dividend date. Except for the Seligman
Cash Management Portfolio, which declares daily dividends, dividends and
capital gain distributions, if any, are declared annually.
b. Federal Income Taxes -- The Plan does not provide for Federal income taxes
since the operations of the Plan form a part of, and are taxed with, the
total operations of MBL Life which is taxed as a "life insurance company"
under the Internal Revenue Code. Earnings and realized capital gains and
losses, if any, of the Plan attributable to the Contract Owners, are excluded
in the determination of the Federal income tax liability of MBL Life.
c. Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual
results could differ from these estimates.
2. On April 29, 1994, the Third Amended Plan of Rehabilitation (the "Plan of
Rehabilitation") of Mutual Benefit Life Insurance Company in Rehabilitation
("Mutual Benefit Life"), which as confirmed by the Superior Court of New Jersey
reaffirmed the status of the Account as a separate account, was implemented.
Pursuant to the terms of the Plan of Rehabilitation, substantially all of the
assets and liabilities of Mutual Benefit Life were transferred to MBL Life. In
addition, the assets and liabilities of the Plan were transferred to a new
separate account of MBL Life. Also, as of April 29, 1994, the ownership of the
stock of MBL Life was transferred to a Trust, of which the New Jersey
Commissioner of Banking and Insurance is the sole Trustee.
MBL Life has decided that it will not accept applications for new contracts nor
will it accept additional purchase payments under existing contracts, including
transfers from the Fixed Accumulation Account to any sub-account of the Plan. In
addition, requests for transfers of amounts to the Fixed Accumulation Account
from the Plan will not be accepted. Annuity payments which commenced prior to
July 16, 1991 and any death benefits payable, both before and after July 16,
1991, are unaffected and will continue to be paid under the terms of the Plan of
Rehabilitation. In addition, the Plan of Rehabilitation permits redemptions of
amounts from any sub-account of the Plan to continue, as requested, along with
transfers between sub-accounts within the Plan.
3. The net assets of the Plan, attributable to Variable Annuity Contract
Owners at December 31, 1996, are as follows:
<TABLE>
<CAPTION>
UNIT ACCUMULATION
VARIABLE ACCUMULATION SUB-ACCOUNT UNITS OWNED VALUE VALUE
------------------------------- ----------- ----- ------------
<S> <C> <C> <C>
Seligman Capital Sub-Account................................ 173,135 $26.880 $ 4,653,915
Seligman Cash Management Sub-Account........................ 1,151,458 1.397 1,608,107
Seligman Common Stock Sub-Account........................... 492,347 27.937 13,754,587
Seligman Fixed Income Securities Sub-Account................ 138,915 15.769 2,190,543
Seligman Income Sub-Account................................. 215,733 19.791 4,269,499
-----------
Net assets attributable to Variable Annuity Contract Owners $26,476,651
-----------
</TABLE>
4. A charge, at the annual rate of 1.25% of the asset value of each sub-account,
is made daily against Plan assets for mortality and expense risks assumed by MBL
Life and for provision of the minimum death benefit. During 1996, all of the
Contracts, previously subject to an asset-based sales charge, reached their
fifth contractual anniversary and are no longer subject to such charge.
Administration charges are made against the Contract Owner's account by
redemption of variable accumulation units.
-- 5 --
<PAGE>
SELIGMAN MUTUAL BENEFIT PLAN
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
Any portion of the above charges,
retained in the Plan and due to MBL Life, participates ratably in the investment
performance of the Plan.
5. Aggregate purchases and proceeds from the sales of investments for the year
ended December 31, 1996, amounted to $10,580,865 and $18,509,244, respectively.
The net realized gain (loss) on sales of investments was calculated as follows:
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN
SELIGMAN CASH SELIGMAN FIXED INCOME SELIGMAN
CAPITAL MANAGEMENT COMMON STOCK SECURITIES INCOME
COMBINED SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from sales of investments. $18,509,244 $2,236,362 $958,817 $9,793,712 $893,268 $4,627,085
Cost of investments sold........... 17,098,358 1,968,647 958,817 8,594,505 892,413 4,683,976
----------- ---------- -------- ---------- -------- ----------
Net realized gain (loss)
on investments.................. $ 1,410,886 $ 267,715 $ -- $1,199,207 $ 855 $ (56,891)
----------- ---------- -------- ---------- -------- ----------
----------- ---------- -------- ---------- -------- ----------
</TABLE>
The net change in unrealized appreciation/depreciation was calculated as
follows:
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN
SELIGMAN CASH SELIGMAN FIXED INCOME SELIGMAN
CAPITAL MANAGEMENT COMMON STOCK SECURITIES INCOME
COMBINED SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENTS:
<S> <C> <C> <C> <C> <C> <C>
Beginning of year................ $ 422,363 $246,657 $ -- $ 269,695 $ 111,948 $(205,937)
End of year...................... 246,592 396,455 -- (13,439) (14,337) (122,087)
--------- -------- ----------- --------- --------- ---------
Net change in unrealized
appreciation/depreciation
of investments................ $(175,771) $149,798 $ -- $(283,134) $(126,285) $ 83,850
--------- -------- ----------- --------- --------- ---------
--------- -------- ----------- --------- --------- ---------
</TABLE>
6. The changes in the number of accumulation units outstanding were as follows,
see Note 2:
<TABLE>
<CAPTION>
SELIGMAN SELIGMAN
SELIGMAN CASH SELIGMAN FIXED INCOME SELIGMAN
CAPITAL MANAGEMENT COMMON STOCK SECURITIES INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -----------
FOR THE YEAR ENDED DECEMBER 31, 1995
<S> <C> <C> <C> <C> <C>
Balance at beginning of year............... 254,801 2,120,138 954,391 203,947 508,739
Issued as a result of sub-account transfers 80,026 1,329,745 369,393 39,943 142,243
Redemptions and sub-account transfers...... (114,790) (2,083,486) (604,326) (78,502) (298,285)
-------- ---------- -------- ------- --------
Balance at end of year..................... 220,037 1,366,397 719,458 165,388 352,697
-------- ---------- -------- ------- --------
-------- ---------- -------- ------- --------
FOR THE YEAR ENDED DECEMBER 31, 1996
Balance at beginning of year............... 220,037 1,366,397 719,458 165,388 352,697
Issued as a result of sub-account transfers 32,053 476,985 133,074 24,545 99,767
Redemptions and sub-account transfers...... (78,955) (691,924) (360,185) (51,018) (236,731)
-------- ---------- -------- ------- --------
Balance at end of year..................... 173,135 1,151,458 492,347 138,915 215,733
-------- ---------- -------- ------- --------
-------- ---------- -------- ------- --------
</TABLE>
-- 6 --
<PAGE>
SELIGMAN MUTUAL BENEFIT PLAN
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
The Variable Annuity Contract Owners
Seligman Mutual Benefit Plan
We have audited the accompanying statement of assets and liabilities of the
Seligman Mutual Benefit Plan (the "Plan") as of December 31, 1996, the related
combined statement of operations for the year then ended and the combined
statements of changes in net assets for each of the two years in the period then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Seligman Mutual Benefit
Plan as of December 31, 1996, the results of its operations for the year then
ended and the changes in its net assets for each of the two years in the period
then ended in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Parsippany, New Jersey
February 11, 1997
-- 7 --
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