<PAGE>
----------------------------
M I D - Y E A R 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
- -----------------
June 30, 1997
MBL Life
Assurance
Corporation
<PAGE>
Total Returns*
For the Six Months Ended June 30, 1997
Seligman Capital Sub-Account....................... 8.44%
Seligman Cash Management Sub-Account............... 2.08
Seligman Common Stock Sub-Account.................. 13.33
Seligman Fixed Income Securities Sub-Account....... 1.98
Seligman Income Sub-Account........................ 6.47
- -------------------------
*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 MBL LIFE ASSURANCE CORPORATION
----------------------------------------------------
MUTUAL 520 BROAD STREET A10N
----------------------------------------------------
BENEFIT NEWARK, NJ 07102-3111
----------------------------------------------------
PLAN
August 1, 1997
Dear Contract Owner:
As Manager of Seligman Portfolios, Inc., we are pleased to provide the
enclosed unaudited financial statements and accompanying information for the
Seligman Mutual Benefit Plan (the "Separate Account") and Seligman Portfolios,
Inc. for the six months ended June 30, 1997.
Thus far, 1997 has shown great promise for both the domestic economy and
the financial markets. Instead of increasing inflation, the growing economy
actually generated lower producer prices for six consecutive months. The Federal
Reserve Board's decision to leave the federal funds rate unchanged in May also
helped tame inflation fears and gave further support to the already strong
financial markets. Low unemployment and high consumer confidence levels
continued, while consumer spending was relatively restrained.
While low interest rates generally supported the appreciation of the
equity market, investors remained primarily focused on the large, more liquid
stocks with predictable earnings. Consequently, the 25 largest stocks were
responsible for the majority of the equity market's gains. However, beginning in
May, the market's advances broadened to include a greater number of smaller- and
mid-capitalization stocks.
In the fixed-income markets, the enduring absence of inflationary
pressures and the lack of Fed intervention after the March increase prompted a
moderate rally, with bond prices rising and yields falling. After the
uncertainties of the first quarter, when the inflationary outlook was unclear,
market participants became optimistic in the second quarter as the low interest
rate environment persisted. Consequently, the yield on the benchmark 30-year US
Treasury bond fell to 6.78% on June 30, from a high of 7.17% on April 14. The
yield on the benchmark three-month US Treasury bill fell to 5.17% at June 30,
having reached a high of 5.40% on March 21.
The long-term outlook for the US economy and financial markets remains
positive. Productivity improvements, driven in large part by the deployment of
technology, have helped reduce corporate costs and increased profitability.
While the broadening of the market that took place in the second quarter is a
positive trend, market volatility has increased this year, and the possibility
of a short-term correction in the US markets is real.
I would like to remind you of the recent changes in the servicing of your
contract. Effective August 15, 1997, the contract administration function will
be transferred from Vantage Computer Systems Inc., Kansas City, MO, to MBL Life
Assurance Corporation. Other changes are also being made to your contract. These
changes will be outlined in a separate letter to you dated August 4, 1997. If
you have any questions concerning these changes, or about your contract in
general, please contact Ms. Burnell Johnson at MBL Life Assurance Corporation
toll-free at 1-800-435-3191, ext. 8504.
Respectfully,
William C. Morris
Chairman
J. & W. Seligman & Co. Incorporated
<PAGE>
Seligman Mutual Benefit Plan
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in Seligman Portfolios, Inc.:
Seligman Capital Portfolio--272,175 shares at Net Asset Value of $17.47 (cost--$3,994,603)........ $ 4,754,900
Seligman Cash Management Portfolio--1,413,222 shares at Net Asset Value of $1.00
(cost--$1,413,222)............................................................................. 1,413,222
Seligman Common Stock Portfolio--776,159 shares at Net Asset Value of $18.15 (cost--$12,514,983).. 14,087,278
Seligman Bond Portfolio (formerly, Seligman Fixed Income Securities Portfolio)--
201,547 shares at Net Asset Value of $10.14 (cost--$2,010,822)................................. 2,043,691
Seligman Income Portfolio--357,272 shares at Net Asset Value of $11.27 (cost--$3,871,202)......... 4,026,453
----------
Total Assets......................................................................................... 26,325,544
LIABILITIES:
Due to MBL Life--Note 4.............................................................................. 31,179
----------
Net Assets........................................................................................... $26,294,365
===========
Net Assets Attributable to Variable Annuity Contract Owners--Note 3.................................. $26,294,365
===========
</TABLE>
- -------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Combined Statement of Operations (unaudited) Six Months Ended June 30, 1997
- --------------------------------------------------------------------------------
<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>
Investment Income:
Dividends......................... $ 40,693 $ -- $40,693 $ -- $ -- $ --
--------- -------- ------- --------- ------- --------
Expenses--Note 4:
Mortality and expense risk charges 162,236 28,726 9,457 85,641 12,839 25,573
Administration charge............. 11,790 2,031 677 5,976 1,272 1,834
--------- -------- ------- --------- ------- --------
Total Expenses.................... 174,026 30,757 10,134 91,617 14,111 27,407
--------- -------- ------- --------- ------- --------
Net Investment Income (Loss)...... (133,333) (30,757) 30,559 (91,617) (14,111) (27,407)
--------- -------- ------- --------- ------- --------
Realized and Unrealized Gain
on Investments--Note 5:
Net realized gain on sales
of investments................. 289,911 42,234 -- 236,595 4,004 7,078
Net change in unrealized
appreciation/depreciation
of investments................. 2,274,120 363,842 -- 1,585,734 47,206 277,338
--------- -------- ------- --------- ------- --------
Net Gain on Investments........... 2,564,031 406,076 -- 1,822,329 51,210 284,416
--------- -------- ------- --------- ------- --------
Net Increase in Net Assets
Resulting from Operations...... $2,430,698 $375,319 $30,559 $1,730,712 $37,099 $257,009
========== ======== ======= ========== ======= ========
</TABLE>
- ---------------------------
See Notes to Financial Statements.
<PAGE>
Seligman Mutual Benefit Plan
- --------------------------------------------------------------------------------
Combined Statements of Changes in Net Assets (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman
Seligman Capital Cash Management
Combined Sub-Account Sub-Account
------------------------- ------------------------- -------------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
June 30, December 31, June 30, December 31, June 30, December 31,
1997 1996 1997 1996 1997 1996
---------- ------------ ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income (loss)......... $ (133,333) $ 2,344,800 $ (30,757) $ 221,644 $ 30,559 $ 65,149
Net realized gain (loss) on sales
of investments.................... 289,911 1,410,886 42,234 267,715 -- --
Net change in unrealized
appreciation/depreciation
of investments.................... 2,274,120 (175,771) 363,842 149,798 -- --
---------- ---------- --------- --------- --------- ---------
Net Increase (Decrease)
Resulting from Operations......... 2,430,698 3,579,915 375,319 639,157 30,559 65,149
---------- ---------- --------- --------- --------- ---------
From Contract Owners'
Transactions--Note 2:
Net transfers between
sub-accounts...................... -- -- 22,806 (18,341) (47,151) 199,559
Redemptions and annuity benefits..... (2,615,337) (10,273,215) (295,032) (1,182,694) (177,735) (481,155)
---------- ---------- --------- --------- -------- -------
Decrease in Net Assets
Resulting from Contract
Owners' Transactions.............. (2,615,337) (10,273,215) (272,226) (1,201,035) (224,886) (281,596)
---------- ---------- --------- --------- --------- ---------
(Increase) Decrease in Amount
due MBL Life--Note 4.............. 2,353 (4,438) 155 19 101 24
---------- ---------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets.... (182,286) (6,697,738) 103,248 (561,859) (194,226) (216,423)
NET ASSETS:
Beginning of Period.................. 26,476,651 33,174,389 4,653,915 5,215,774 1,608,107 1,824,530
---------- ---------- --------- ---------- --------- ---------
End of Period........................ $26,294,365 $26,476,651 $4,757,163 $4,653,915 $1,413,881 $1,608,107
============ =========== ========== ========== ========== ==========
</TABLE>
- ----------------
See Notes to Financial Statements.
<PAGE>
Seligman Mutual Benefit Plan
- ------------------------------------------------------------------------------
Combined Statements of Changes in Net Assets (unaudited) (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Seligman
Seligman Fixed Income Seligman
Common Stock Securities Income
Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- -----------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
June 30, December 31, June 30, December 31, June 30, December 31,
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income (loss)......... (91,617) $ 1,756,944 $ (14,111) $ 85,821 $ (27,407) $ 215,242
Net realized gain (loss) on sales of
investments....................... 236,595 1,199,207 4,004 855 7,078 (56,891)
Net change in unrealized
appreciation/depreciation
of investments.................... 1,585,734 (283,134) 47,206 (126,285) 277,338 83,850
--------- ---------- --------- --------- -------- ---------
Net Increase (Decrease)
Resulting from Operations......... 1,730,712 2,673,017 37,099 (39,609) 257,009 242,201
--------- ---------- --------- --------- -------- ---------
From Contract Owners'
Transactions--Note 2:
Net transfers between
sub-accounts...................... 33,771 (34,638) (6,000) (40,143) (3,426) (106,437)
Redemptions and annuity benefits..... (1,453,025) (5,794,194) (185,374) (365,200) (504,171) (2,449,972)
---------- ---------- --------- --------- --------- ---------
Decrease in Net Assets
Resulting from Contract
Owners' Transactions.............. (1,419,254) (5,828,832) (191,374) (405,343) (507,597) (2,556,409)
---------- ---------- --------- --------- --------- ---------
(Increase) Decrease in Amount
due MBL Life--Note 4.............. 646 (2,711) 1,646 2,952 (195) (4,722)
---------- ---------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets 312,104 (3,158,526) (152,629) (442,000) (250,783) (2,318,930)
NET ASSETS:
Beginning of Period.................. 13,754,587 16,913,113 2,190,543 2,632,543 4,269,499 6,588,429
---------- ---------- --------- --------- --------- ---------
End of Period........................ $14,066,691 $13,754,587 $2,037,914 $2,190,543 $4,018,716 $4,269,499
=========== =========== ========== ========== ========== ==========
</TABLE>
- ----------
See Notes to Financial Statements.
<PAGE>
Seligman Mutual Benefit Plan
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 (see Note 2).
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 thereported 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") was implemented. The Plan of Rehabilitation, as
confirmed by the Superior Court of New Jersey, reaffirmed the status of the
Account as a separate account. 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. Pursuant to the terms of a Settlement Agreement
between MBL Life and the Class Four Creditors, as identified in the Plan of
Rehabilitation, Class Four Creditors and eligible Policyholders/Contract Owners
who remain with MBL Life after the end of the rehabilitation period (December
31, 1999) will share in the future value of MBL Life. The sharing will be based
on a ratio of 70% to the Class Four Creditors and 30% to eligible
Policyholders/Contract Owners. If MBL Life does not meet its capital growth
projections, the Policyholder/Contract Owner share may be reduced below 30%.
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 June 30, 1997, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Unit Accumulation
Variable Accumulation Sub-Account Units Owned Value Value
------------------------------- ----------- ----- ------------
Seligman Capital Sub-Account.............................. 163,195 $29.150 $4,757,163
Seligman Cash Management Sub-Account...................... 991,804 1.426 1,413,881
Seligman Common Stock Sub-Account......................... 444,294 31.661 14,066,691
Seligman Fixed Income Securities Sub-Account.............. 126,729 16.081 2,037,914
Seligman Income Sub-Account............................... 190,714 21.072 4,018,716
-----------
Net Assets Attributable to Variable Annuity Contract Owners.. $26,294,365
===========
</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. Any portion of this charge,
retained in the Plan and due to MBL Life, participates ratably in the investment
performance of the Plan.
Administration charges are made against the Contract Owner's account by
redemption of variable accumulation units.
<PAGE>
Seligman Mutual Benefit Plan
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
5. Aggregate purchases and proceeds from the sales of investments for the six
months ended June 30, 1997, amounted to $573,697 and $3,322,367, respectively.
The net realized gain 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 $3,322,367 $337,622 $334,699 $1,680,935 $223,527 $745,584
Cost of investments sold............. 3,032,456 295,388 334,699 1,444,340 219,523 738,506
---------- --------- --------- ---------- --------- --------
Net Realized Gain
on Investments.................... $ 289,911 $ 42,234 $ -- $236,595 $ 4,004 $ 7,078
========== ========= ======== ========== ========= ========
</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
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unrealized Appreciation
(Depreciation) of Investments:
Beginning of period................... $ 246,592 $396,455 $ -- $ (13,439) $ (14,337) $(122,087)
End of period......................... 2,520,712 760,297 -- 1,572,295 32,869 155,251
----------- --------- ---------- ----------- --------- ---------
Net Change in Unrealized
Appreciation/Depreciation
of Investments..................... $2,274,120 $363,842 $ -- $1,585,734 $ 47,206 $ 277,338
=========== ========= ========== =========== ========== =========
</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
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
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
======== ========= ======== ======= =======
For the Six Months Ended June 30, 1997
Balance at beginning of period................. 173,135 1,151,458 492,347 138,915 215,733
Issued as a result of sub-account transfers.... 1,253 5,990 1,186 827 --
Redemptions and sub-account transfers.......... (11,193) (165,644) (49,239) (13,013) (25,019)
-------- --------- -------- ------- -------
Balance at end of period....................... 163,195 991,804 444,294 126,729 190,714
======== ========= ======== ======= =======
</TABLE>
