<PAGE>
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A N N U A L R E P O R T
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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
[LOGO]
December 31, 1998
MBL LIFE
ASSURANCE
CORPORATION
<PAGE>
Total Returns*
For the Year Ended December 31, 1998
Seligman Capital Sub-Account.................... 20.68%
Seligman Cash Management Sub-Account............ 5.20
Seligman Common Stock Sub-Account............... 22.60
Seligman Fixed Income Securities Sub-Account.... 6.92
Seligman Income Sub-Account..................... 6.45
- -----------------------
* Total returns of the Separate Account are based on the performance of five
portfolios 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
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MUTUAL 520 BROAD STREET A1ON
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BENEFIT NEWARK, NJ 07102-3111
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PLAN 1-800-435-3191
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February 15, 1999
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 year ended December 31, 1998.
In 1998, for the eighth straight year, the US economy expanded, with real
domestic growth of 3.9%. Once again, large-cap US stocks responded to this
favorable environment with strong performance. The market, as measured by the
Standard & Poor's 500 Composite Stock Price Index, (S&P 500), rose 28.58% -- the
first time in history that this widely watched index returned more than 20% for
four years in a row.
Although 1998 will certainly be recorded as another stellar year for
equities, the market gave investors a bumpy ride along the way. In fact, such
wide market swings haven't been seen since 1987. A number of factors contributed
to this volatility -- some domestic, many international. The global economic
background in 1998 was one of steadily deteriorating conditions as the financial
crisis, originally limited to a few Asian countries, spread throughout other
regions. The global turmoil continued when Russia defaulted on its debt and
devalued its currency. Fear then spread to Latin America as Brazil struggled in
vain to protect its currency, the real.
In addition to high volatility, last year's market was notable for being
extremely narrow, with the exceptional performances of a few stocks distorting
the total picture. In fact, 197 stocks, representing 39% of the S&P 500,
actually lost market value during the last 12 months. Investment results between
market caps were also more widely dispersed than usual. The disparity was almost
unprecedented. For example, the large-capitalization-dominated S&P 500 rose
28.58%, while the Russell 2000 Index of smaller-capitalization stocks actually
declined 2.55%.
Fixed-income markets posted strong returns for the year but, as in the
equity markets, some segments performed notably better than others. US Treasury
bonds, in particular, benefitted from a confluence of events that drove prices
higher and yields to 30-year lows. US government-backed bonds, which carry the
highest credit quality, were in great demand as the global financial turmoil
produced a "flight to quality" around the world. Further boosting the US
government bond market was the Federal Reserve Board's lowering of the
federal-funds rate, and a federal budget surplus that caused the overall supply
of bonds to decrease.
In 1999, we believe gross domestic product (GDP) should slow to about 2.5
percent. We expect a challenging financial market environment with ongoing
economic uncertainties and continued high volatility. Nonetheless, we see
moderately positive returns for the year in line with our lower growth
projections. In addition, low inflation, falling or stable interest rates,
improving prospects in Asia, and a Federal Reserve leading the fight against
global recession should all provide support for US markets. We expect that the
equity market, which began to show signs of broadening in the fourth quarter of
1998, will continue to broaden in 1999. If this trend continues, small- and
mid-cap stocks should begin to benefit from the favorable equity environment to
a greater extent.
Thank you for your support of Seligman Portfolios, Inc. in 1998.
Respectfully,
/s/ William C. Morris
William C. Morris
Chairman
J. & W. Seligman & Co. Incorporated
-- 1 --
<PAGE>
Seligman Mutual Benefit Plan
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Statement of Assets and Liabilities December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in Seligman Portfolios, Inc.:
Seligman Capital Portfolio--246,989 shares at Net Asset Value of $20.81 (cost--$3,821,818).............. $ 5,139,844
Seligman Cash Management Portfolio--833,299 shares at Net Asset Value of $1.00
(cost--$833,299) .................................................................................... 833,299
Seligman Common Stock Portfolio--806,259 shares at Net Asset Value of $18.63 (cost--$13,200,190)........ 15,020,603
Seligman Bond Portfolio--159,017 shares at Net Asset Value of $10.38 (cost--$1,614,026)................. 1,650,594
Seligman Income Portfolio--339,910 shares at Net Asset Value of $11.01 (cost--$3,631,816)............... 3,742,406
-----------
Total Assets............................................................................................... 26,386,746
LIABILITIES
Due to MBL Life--Note 5 ................................................................................... 44,491
-----------
Net Assets ................................................................................................ $26,342,255
===========
Net Assets Attributable to Variable Annuity Contract Owners--Note 4........................................ $26,342,255
===========
</TABLE>
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See Notes to Financial Statements.
- -------------------------------------------------------------------------------
Combined Statement of Operations Year Ended December 31, 1998
- -------------------------------------------------------------------------------
<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......................... $ 522,540 $ 8,935 $49,968 $ 227,121 $ 87,783 $148,733
Capital gain distributions........ 1,269,406 277,231 -- 924,123 16,543 51,509
----------- -------- ------- --------- ------- --------
Total investment income........... 1,791,946 286,166 49,968 1,151,244 104,326 200,242
Expenses--Note 5:
Mortality and expense risk charges 313,770 59,437 11,606 175,026 20,797 46,904
----------- -------- ------- --------- ------- --------
Net Investment Income............. 1,478,176 226,729 38,362 976,218 83,529 153,338
----------- -------- ------- --------- ------- --------
Realized and Unrealized Gain (Loss) on Investments--Note 6:
Net realized gain (loss) from
security transactions.......... 396,417 213,781 -- 176,010 29,016 (22,390)
Increase (decrease) in unrealized
appreciation of investments.... 2,308,182 482,319 -- 1,725,379 (2,067) 102,551
----------- -------- ------- --------- ------- --------
Net Gain on Investments........... 2,704,599 696,100 -- 1,901,389 26,949 80,161
----------- -------- ------- --------- ------- --------
Net Increase in Net Assets
Resulting from
Operations..................... $4,182,775 $922,829 $38,362 $2,877,607 $110,478 $233,499
========== ======== ======= ========== ======== ========
</TABLE>
- -----------------
See Notes to Financial Statements.
-- 2 --
<PAGE>
Seligman Mutual Benefit Plan
- -------------------------------------------------------------------------------
Combined Statements of Changes in Net Assets
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<TABLE>
<CAPTION>
Seligman
Seligman Capital Cash Management
Combined Sub-Account Sub-Account
------------------------- ------------------------ -------------------------
Year Ended December 31, Year Ended December 31, Year Ended December 31,
------------------------- ------------------------ -------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
>From Operations:
Net investment income.............. $ 1,478,176 $ 2,654,416 $ 226,729 $ 253,619 $ 38,362 $ 56,371
Net realized gain (loss) from
security transactions........... 396,417 691,375 213,781 174,453 -- --
Net change in unrealized
appreciation/depreciation
of investments ................. 2,308,182 730,823 482,319 439,252 -- --
----------- ----------- ---------- ---------- ---------- ----------
Net Increase Resulting
from Operations................. 4,182,775 4,076,614 922,829 867,324 38,362 56,371
----------- ----------- ---------- ---------- ---------- ----------
>From Contract Owners'
Transactions--Note 2:
Net transfers between
sub-accounts.................... -- -- -- 25,676 -- (128,958)
Redemptions and annuity benefits... (3,292,779) (5,090,047) (552,795) (775,000) (345,617) (394,409)
----------- ----------- ---------- ---------- ---------- ----------
Decrease in Net Assets Resulting
from Contract Owners'
Transactions.................... (3,292,779) (5,090,047) (552,795) (749,324) (345,617) (523,367)
----------- ----------- ---------- ---------- ---------- ----------
(Increase) decrease in amount due
MBL Life--Note 5................ 6,284 (17,243) 889 (722) 12,128 (12,043)
----------- ----------- ---------- ---------- ---------- ----------
Increase (Decrease) in Net Assets.. 896,280 (1,030,676) 370,923 117,278 (295,127) (479,039)
NET ASSETS:
Beginning of Year.................. 25,445,975 26,476,651 4,771,193 4,653,915 1,129,068 1,608,107
----------- ----------- ---------- ---------- ---------- ----------
End of Year........................ $26,342,255 $25,445,975 $5,142,116 $4,771,193 $ 833,941 $1,129,068
=========== =========== ========== ========== ========== ==========
</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,
------------------------- ------------------------ -------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
>From Operations:
Net investment income.............. $ 976,218 $ 1,948,287 $ 83,529 $ 66,154 $ 153,338 $ 329,985
Net realized gain (loss) from
security transactions........... 176,010 468,410 29,016 26,105 (22,390) 22,407
Net change in unrealized
appreciation/depreciation
of investments.................. 1,725,379 108,473 (2,067) 52,972 102,551 130,126
----------- ----------- ---------- ---------- ---------- ----------
Net Increase Resulting
from Operations................. 2,877,607 2,525,170 110,478 145,231 233,499 482,518
----------- ----------- ---------- ---------- ---------- ----------
>From Contract Owners'
Transactions--Note 2:
Net transfers between
sub-accounts.................... 36,615 112,708 (36,615) (6,000) -- (3,426)
Redemptions and annuity benefits... (1,718,356) (2,588,960) (294,350) (466,113) (381,661) (865,565)
----------- ----------- ---------- ---------- ---------- ----------
Decrease in Net Assets Resulting
from Contract Owners'
Transactions.................... (1,681,741) (2,476,252) (330,965) (472,113) (381,661) (868,991)
----------- ----------- ---------- ---------- ---------- ----------
(Increase) decrease in amount due
MBL Life--Note 5 (7,848) (2,507) 384 (327) 731 (1,644)
----------- ----------- ---------- ---------- ---------- ----------
Increase (Decrease) in Net Assets.. 1,188,018 46,411 (220,103) (327,209) (147,431) (388,117)
NET ASSETS:
Beginning of Year.................. 13,800,998 13,754,587 1,863,334 2,190,543 3,881,382 4,269,499
----------- ----------- ---------- ---------- ---------- ----------
End of Year........................ $14,989,016 $13,800,998 $1,643,231 $1,863,334 $3,733,951 $3,881,382
=========== =========== ========== ========== ========== ==========
</TABLE>
- --------------------
See Notes to Financial Statements.
-- 4 --
<PAGE>
Seligman Mutual Benefit Plan
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Notes to Financial Statements
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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 Notes 2 and
3). 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 Notes 2 and 3), 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, 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.
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. On December 31, 1998, MBL Life sold substantially all of its general account
life insurance and annuity business to SunAmerica Inc. (the "Acquisition"). The
business sold did not include the Plan. The Acquisition along with the Order of
the Superior Court of New Jersey (the "Order") approving the transaction
effected a resolution to the proceedings associated with the Plan of
Rehabilitation. The Rehabilitation Period will end June 30, 1999.
The Order provides for the termination of the Plan at the end of the
Rehabilitation Period. In addition, the Order authorizes MBL Life to take any
and all actions necessary to facilitate the termination of the Plan. During the
six month period prior to the end of the Rehabilitation Period, contract owners
will be given the opportunity to exchange their Plan contracts for contracts
issued by other insurance companies. Any contracts remaining with MBL Life at
the end of the Rehabilitation Period (June 30, 1999) will be terminated and MBL
Life will pay out their account value.
4. The net assets of the Plan, attributable to Variable Annuity Contract Owners
at December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Unit Accumulation
Variable Accumulation Sub-Account Units Owned Value Value
--------------------------------- ----------- ------- ------------
<S> <C> <C> <C>
Seligman Capital Sub-Account...................................... 132,338 $38.856 $ 5,142,116
Seligman Cash Management Sub-Account.............................. 550,093 1.516 833,941
Seligman Common Stock Sub-Account................................. 365,229 41.040 14,989,016
Seligman Fixed Income Securities Sub-Account...................... 90,546 18.148 1,643,231
Seligman Income Sub-Account....................................... 157,405 23.722 3,733,951
-----------
Net assets attributable to Variable Annuity Contract Owners.......... $26,342,255
===========
</TABLE>
-- 5 --
<PAGE>
Seligman Mutual Benefit Plan
- -------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
5. 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.
6. Aggregate purchases and proceeds from the sales of investments for the year
ended December 31, 1998, amounted to $2,134,035 and $3,948,638, 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.................. $3,948,638 $612,232 $358,210 $2,089,827 $394,969 $493,400
Cost of investments sold........... 3,552,221 398,451 358,210 1,913,817 365,953 515,790
---------- -------- -------- ---------- -------- --------
Net realized gain (loss)
on investments.................. $ 396,417 $213,781 $ -- $ 176,010 $ 29,016 $(22,390)
========== ======== ======== ========== ======== ========
</TABLE>
The increase (decrease) in unrealized appreciation 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
of investments:
Beginning of year.................. $ 977,415 $ 835,707 $ -- $ 95,034 $ 38,635 $ 8,039
End of year........................ 3,285,597 1,318,026 -- 1,820,413 36,568 110,590
---------- ---------- --------- ---------- -------- --------
Increase (decrease) in unrealized
appreciation of investments..... $2,308,182 $ 482,319 $ -- $1,725,379 $ (2,067) $102,551
========== ========== ========= ========== ======== ========
</TABLE>
7. 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, 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
======= ========= ======= ======= =======
For the Year Ended December 31, 1998
Balance at beginning of year..................... 148,188 783,531 412,265 109,776 174,178
Issued as a result of sub-account transfers...... -- 674 6,156 360 311
Redemptions and sub-account transfers............ (15,850) (234,112) (53,192) (19,590) (17,084)
------- --------- ------- ------- -------
Balance at end of year........................... 132,338 550,093 365,229 90,546 157,405
======= ========= ======= ======= =======
</TABLE>
-- 6 --
<PAGE>
Seligman Mutual Benefit Plan
- -------------------------------------------------------------------------------
Report of Independent Accountants
- -------------------------------------------------------------------------------
The Variable Annuity Contract Owners
Seligman Mutual Benefit Plan
In our opinion, the accompanying statement of assets and liabilities and the
related combined statements of operations and of changes in net assets present
fairly, in all material respects, the financial position of the Seligman Mutual
Benefit Plan (the "Plan") at December 31, 1998 and 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. 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 of these financial
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which include
confirmation of securities owned as of December 31, 1998 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above.
As described in Note 3 of the notes to financial statements, the Plan will
cease business operations by June 30, 1999.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
February 15, 1999
-- 7 --
