<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, 1997
MBL Life
Assurance
Corporation
<PAGE>
Total Returns*
For the Year Ended December 31, 1997
Seligman Capital Sub-Account........................... 19.78%
Seligman Cash Management Sub-Account................... 3.15
Seligman Common Stock Sub-Account...................... 19.83
Seligman Fixed Income Securities Sub-Account........... 7.64
Seligman Income Sub-Account............................ 12.60
- ------------------------------
* 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 A1ON
----------------------------------------------------
BENEFIT NEWARK, NJ 07102-3111
----------------------------------------------------
PLAN 1-800-435-3191
----------------------------------------------------
February 10, 1998
Dear Contract Owner:
As Manager of 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 12 months ended December 31, 1997.
Nineteen ninety-seven was the seventh year of economic expansion in the
US, with real domestic growth of 3.8%. Consumer price inflation slowed to under
2%, interest rates moved steadily lower, productivity rose, and unemployment
levels reached 27-year lows. Meanwhile, the federal budget deficit virtually
disappeared and corporate profits posted a third consecutive year of strong
gains.
The domestic equity markets, as measured by the Dow Jones Industrial
Average (DJIA), posted returns in excess of 20% for a third consecutive year --
a feat unmatched in the DJIA's 101-year history. However, the majority of the
market advances occurred in the first seven months of the year, as the Asian
financial crisis increased uncertainty in the last quarter. Overall,
large-capitalization stocks continued to drive the market advances. Despite a
brief rally in May, and strong results when the equity markets broadened in the
third quarter, the valuations and performance of small-capitalization stocks
continued to trail those of large-capitalization stocks.
Although there were occasional setbacks due to fears of inflation and the
possibility of Federal Reserve Board interventions, 1997 was also a successful
year for the fixed-income markets. Once the effect of the March adjustment in
the federal funds rate subsided, yields progressively trended downward and
prices improved. The yield on the benchmark 30-year US Treasury bond ended the
year at 5.92%, significantly lower than the 6.64% yield on December 31, 1996.
Indicating a flattening of the yield curve, the yield on the benchmark
three-month US Treasury bill reached 5.34% by year end, somewhat higher than the
5.17% yield on December 31, 1996.
Going forward, the outlook for US corporate profits in 1998 is more
uncertain due to expectations of modest economic growth and the unforeseeable
effects of the Asian crisis. There is also a risk of temporary price deflation
linked to the Asian crisis, as those economies seek to export their way out of
trouble. Barring problems caused by the tightness of the labor market, we expect
a continuation of the current low-inflation and low-interest-rate environment,
but no deflation.
Respectfully,
/s/ William C. Morris
William C. Morris
Chairman
J. & W. Seligman & Co. Incorporated
-- 1 --
<PAGE>
Seligman Mutual Benefit Plan
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1997
- -------------------------------------------------------------------------------
ASSETS
Investments in Seligman Portfolios, Inc.:
Seligman Capital Portfolio--263,525 shares at Net Asset
Value of $18.10 (cost--$3,934,103)........................ $ 4,769,810
Seligman Cash Management Portfolio--1,140,554 shares at
Net Asset Value of $1.00 (cost--$1,140,554)............... 1,140,554
Seligman Common Stock Portfolio--849,185 shares at Net
Asset Value of $16.28 (cost--$13,729,702)................. 13,824,736
Seligman Bond Portfolio--182,723 shares at Net Asset
Value of $10.24 (cost--$1,832,448) ....................... 1,871,083
Seligman Income Portfolio--360,238 shares at Net Asset
Value of $10.80 (cost--$3,882,528)........................ 3,890,567
-----------
Total Assets.................................................... 25,496,750
Liabilties - Due to MBL Life - Note 4........................... 50,775
-----------
Net Assets...................................................... $25,445,975
===========
Net Assets Attributable to Variable Annuity Contract
Owners--Note 3............................................... $25,445,975
===========
- -----------------------
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
Combined Statement of Operations Year Ended December 31, 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......................... $ 577,900 $ 6,878 $74,896 $ 226,241 $ 93,410 $176,475
Capital gain distributions........ 2,425,061 309,756 -- 1,908,012 -- 207,293
---------- -------- ------- ---------- -------- --------
Total Investment Income........... 3,002,961 316,634 74,896 2,134,253 93,410 383,768
---------- -------- ------- ---------- -------- --------
Expenses--Note 4:
Mortality and expense risk charges 326,886 59,354 17,314 174,661 25,124 50,433
Administration charge............. 21,659 3,661 1,211 11,305 2,132 3,350
---------- -------- ------- ---------- -------- --------
Total Expenses.................... 348,545 63,015 18,525 185,966 27,256 53,783
---------- -------- ------- ---------- -------- --------
Net Investment Income ............ 2,654,416 253,619 56,371 1,948,287 66,154 329,985
---------- -------- ------- ---------- -------- --------
Realized and Unrealized Gain
on Investments--Note 5:
Net realized gain from security
transactions................... 691,375 174,453 -- 468,410 26,105 22,407
Net change in unrealized
appreciation/depreciation
of investments................. 730,823 439,252 -- 108,473 52,972 130,126
---------- -------- ------- ---------- -------- --------
Net Gain on Investments........... 1,422,198 613,705 -- 576,883 79,077 152,533
---------- -------- ------- ---------- -------- --------
Net Increase in Net Assets
Resulting from
Operations..................... $4,076,614 $867,324 $56,371 $2,525,170 $145,231 $482,518
========== ======== ======= ========== ======== ========
<FN>
- -----------------------
See Notes to Financial Statements.
</FN>
</TABLE>
-- 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,
----------------------- ----------------------- -----------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income......................... $ 2,654,416 $ 2,344,800 $ 253,619 $ 221,644 $ 56,371 $ 65,149
Net realized gain (loss) from
security transactions...................... 691,375 1,410,886 174,453 267,715 -- --
Net change in unrealized
appreciation/depreciation
of investments............................. 730,823 (175,771) 439,252 149,798 -- --
----------- ----------- ---------- ---------- ---------- ----------
Net Increase (Decrease) Resulting
from Operations............................ 4,076,614 3,579,915 867,324 639,157 56,371 65,149
----------- ----------- ---------- ---------- ---------- ----------
From Contract Owners'
Transactions--Note 2:
Net transfers between
sub-accounts............................... -- -- 25,676 (18,341) (128,958) 199,559
Redemptions and annuity benefits.............. (5,090,047) (10,273,215) (775,000) (1,182,694) (394,409) (481,155)
----------- ----------- ---------- ---------- ---------- ----------
Decrease in Net Assets Resulting
from Contract Owners'
Transactions............................... (5,090,047) (10,273,215) (749,324) (1,201,035) (523,367) (281,596)
----------- ----------- ---------- ---------- ---------- ----------
(Increase) decrease in amount due
MBL Life--Note 4........................... (17,243) (4,438) (722) 19 (12,043) 24
----------- ----------- ---------- ---------- ---------- ----------
Increase (Decrease) in Net Assets............. (1,030,676) (6,697,738) 117,278 (561,859) (479,039) (216,423)
NET ASSETS:
Beginning of Year............................. 26,476,651 33,174,389 4,653,915 5,215,774 1,608,107 1,824,530
----------- ----------- ---------- ---------- ---------- ----------
End of Year................................... $25,445,975 $26,476,651 $4,771,193 $4,653,915 $1,129,068 $1,608,107
=========== =========== ========== ========== ========== ==========
<FN>
- ----------------------
See Notes to Financial Statements.
</FN>
</TABLE>
-- 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,
----------------------- ----------------------- -----------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income......................... $ 1,948,287 $ 1,756,944 $ 66,154 $ 85,821 $ 329,985 $ 215,242
Net realized gain (loss) from
security transactions...................... 468,410 1,199,207 26,105 855 22,407 (56,891)
Net change in unrealized
appreciation/depreciation
of investments............................. 108,473 (283,134) 52,972 (126,285) 130,126 83,850
----------- ----------- ---------- ---------- ---------- ----------
Net Increase (Decrease) Resulting
from Operations............................ 2,525,170 2,673,017 145,231 (39,609) 482,518 242,201
----------- ----------- ---------- ---------- ---------- ----------
From Contract Owners'
Transactions--Note 2:
Net transfers between
sub-accounts .............................. 112,708 (34,638) (6,000) (40,143) (3,426) (106,437)
Redemptions and annuity benefits.............. (2,588,960) (5,794,194) (466,113) (365,200) (865,565) (2,449,972)
----------- ----------- ---------- ---------- ---------- ----------
Decrease in Net Assets Resulting
from Contract Owners'
Transactions............................... (2,476,252) (5,828,832) (472,113) (405,343) (868,991) (2,556,409)
----------- ----------- ---------- ---------- ---------- ----------
(Increase) decrease in amount due
MBL Life--Note 4........................... (2,507) (2,711) (327) 2,952 (1,644) (4,722)
----------- ----------- ---------- ---------- ---------- ----------
Increase (Decrease) in Net Assets............. 46,411 (3,158,526) (327,209) (442,000) (388,117) (2,318,930)
NET ASSETS:
Beginning of Year............................. 13,754,587 16,913,113 2,190,543 2,632,543 4,269,499 6,588,429
----------- ----------- ---------- ---------- ---------- ----------
End of Year................................... $13,800,998 $13,754,587 $1,863,334 $2,190,543 $3,881,382 $4,269,499
=========== =========== ========== ========== ========== ==========
<FN>
- -----------------------
See Notes to Financial Statements.
</FN>
</TABLE>
-- 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 (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 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"), was implemented. The Plan of Rehabilitation, as
confirmed by the Superior Court of New Jersey (the "Court"), 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 (the "Commissioner") is the sole Trustee. On January 9, 1997, the
Court entered an order approving a Settlement Agreement among the Commissioner
in her capacity as Rehabilitator and Trustee, 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 the 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%.
On September 15, 1997, the Board of Directors of MBL Life announced that it had
engaged an investment banking firm to assist in exploring a possible sale of MBL
Life before the end of the Rehabilitation Period. Any resulting transaction must
go through an extensive approval process including reviews by the New Jersey
Department of Banking and Insurance, the Superior Court of New Jersey, and the
then existing Class Four Creditors.
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, 1997, are as follows:
<TABLE>
<CAPTION>
Unit Accumulation
Variable Accumulation Sub-Account Units Owned Value Value
--------------------------------- ----------- -------- -------------
<S> <C> <C> <C>
Seligman Capital Sub-Account....................................... 148,188 $32.197 $ 4,771,193
Seligman Cash Management Sub-Account............................... 783,531 1.441 1,129,068
Seligman Common Stock Sub-Account.................................. 412,265 33.476 13,800,998
Seligman Fixed Income Securities Sub-Account....................... 109,776 16.974 1,863,334
Seligman Income Sub-Account........................................ 174,178 22.284 3,881,382
-----------
Net assets attributable to Variable Annuity Contract Owners........... $25,445,975
===========
</TABLE>
-- 5 --
<PAGE>
Seligman Mutual Benefit Plan
- -------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
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.
5. Aggregate purchases and proceeds from the sales of investments for the year
ended December 31, 1997, amounted to $3,642,218 and $6,077,849, 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........ $6,077,849 $854,940 $641,571 $2,915,097 $530,805 $1,135,436
Cost of investments sold ................. 5,386,474 680,487 641,571 2,446,687 504,700 1,113,029
---------- -------- -------- ---------- -------- ----------
Net realized gain on investments.......... $ 691,375 $174,453 $ -- $ 468,410 $ 26,105 $ 22,407
========== ======== ======== ========== ======== ==========
</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 year.......................... $246,592 $396,455 $ -- $(13,439) $(14,337) $(122,087)
End of year................................ 977,415 835,707 -- 95,034 38,635 8,039
-------- -------- -------- -------- -------- ---------
Net change in unrealized
appreciation/depreciation
of investments.......................... $730,823 $439,252 $ -- $108,473 $ 52,972 $ 130,126
======== ======== ======== ======== ======== =========
</TABLE>
<TABLE>
6. The changes in the number of accumulation units outstanding were as follows (see Note 2):
<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 Year Ended December 31, 1997
Balance at beginning of year.......................... 173,135 1,151,458 492,347 138,915 215,733
Issued as a result of sub-account transfers........... 1,434 6,004 3,744 828 --
Redemptions and sub-account transfers................. (26,381) (373,931) (83,826) (29,967) (41,555)
------- --------- ------- ------- -------
Balance at end of year................................ 148,188 783,531 412,265 109,776 174,178
======= ========= ======= ======= =======
</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, 1997, 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, 1997, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Seligman Mutual Benefit
Plan as of December 31, 1997, 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 10, 1998
-- 7 --
