485BPOS 1 FORM N-1A UNDER PARAGRAPH (B) OF RULE 485 File No. 33-15253 811-5221 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------------------------------------------------- FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_| Pre-Effective Amendment No. ___ |_| Post-Effective Amendment No. 15 |X| REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_| Amendment No. 17 |X| ------------------------------------------------------------------------------- SELIGMAN PORTFOLIOS, INC. (Exact name of registrant as specified in charter) ------------------------------------------------------------------------------- 100 PARK AVENUE, NEW YORK, NEW YORK 10017 (Address of principal executive office) Registrant's Telephone Number: 212-850-1864 or Toll Free: 800-221-2450 ------------------------------------------------------------------------------- THOMAS G. ROSE, Treasurer 100 Park Avenue New York, New York 10017 (Name and address of agent for service) ------------------------------------------------------------------------------- It is proposed that this filing will become effective (check appropriate box): |_| immediately upon filing pursuant to paragraph (b) of rule 485 |X| on May 1, 1995 pursuant to paragraph (b) of rule 485 |_| 60 days after filing pursuant to paragraph (a)(i) of rule 485 |_| on (date) pursuant to paragraph (a)(i) of rule 485 |_| 75 days after filing pursuant to paragraph (a)(ii) of rule 485 |_| on (date) pursuant to paragraph (a)(ii) of rule 485. If appropriate, check the following box: |_| This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Registrant has registered an indefinite amount of securities under the Securities Act of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-1 Notice for Registrant's most recent fiscal year was filed with the Commission on February 27, 1995.
POST-EFFECTIVE AMENDMENT NO. 15 CROSS REFERENCE SHEET Pursuant to Rule 481 (a) Item No. in Part A of Form N-1A Location in Prospectus ------------------------------- ---------------------- 1. Cover Page Cover Page 2. Synopsis Not applicable 3. Condensed Financial Information Financial Highlights 4. General Description of Registrant Investment Objectives and Policies 5. Management of Fund Management Services; Portfolio Transactions, Portfolio Turnover and Valuation 5a. Managers' Discussion of Fund Performance Management Services 6. Capital Stock and Other Securities Organization and Capitalization; Other Investment Policies; Dividends, Distributions and Taxes 7. Purchase of Securities Being Offered Cover Page; Purchases and Redemptions 8. Redemption or Repurchase Purchases and Redemptions 9. Pending Legal Proceedings Not applicable Item No. in Part B of Form N-1A Location in Statement of Additional Information ------------------------------- ----------------------------------------------- 10. Cover Page Cover Page 11. Table of Contents Table of Contents 12. General Information and History Appendix C; Organization and Capitalization (Prospectus) 13. Investment Objectives and Policies Investment Policies and Restrictions 14. Management of the Registrant Management and Expenses 15. Control Persons and Principal Directors and Officers Holders of Services 16. Investment Advisory and Other Management and Expenses; Services Custodians and Independent Auditors 17. Brokerage Allocation Portfolio Transactions, Valuation and Redemption 18. Capital Stock and Other Securities Portfolio Transactions, Valuation and Redemption 19. Purchase, Redemption and Pricing of Portfolio Transactions, Valuation and Securities Being Offered Redemption 20. Tax Status Dividends, Distributions and Taxes (Prospectus) 21. Underwriters Not applicable 22. Calculation of Performance Data Portfolio Transactions, Valuation and Redemption 23. Financial Statements Financial Statements
SELIGMAN PORTFOLIOS, INC. 100 Park Avenue New York, New York 10017 800-221-7844 All Continental United States, except New York 212-850-1864 New York State 800-221-2783 Marketing Services May 1, 1995 Seligman Portfolios, Inc. (the "Fund") is an open-end diversified management investment company consisting of ten separate portfolios (the "Portfolios"), each designed to meet different investment goals. Investment management services for each of the Fund's Portfolios are provided by J. & W. Seligman & Co. Incorporated (the "Manager"). Seligman Henderson Co. supervises and directs the global investments of Seligman Henderson Global Portfolio (continued on page 2) The Fund's ten Portfolios are: * SELIGMAN CAPITAL PORTFOLIO: seeks to produce capital appreciation, not current income, by investing in common stocks (primarily those with strong near or intermediate-term prospects) and securities convertible into or exchangeable for common stocks, in common stock purchase warrants and rights, in debt securities and in preferred stocks believed to provide capital appreciation opportunities. * SELIGMAN CASH MANAGEMENT PORTFOLIO: seeks to preserve capital and to maximize liquidity and current income by investing in a diversified portfolio of high-quality money market instruments. Investments in this Portfolio are neither insured nor guaranteed by the U.S. Government and there is no assurance that this Portfolio will be able to maintain a stable net asset value of $1.00 per share. * SELIGMAN COMMON STOCK PORTFOLIO: seeks favorable, but not the highest, current income and long-term growth of both income and capital value without exposing capital to undue risk, primarily through equity investments broadly diversified over a number of industries. * SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO: seeks capital gain, not income, by investing primarily in securities of companies in the communications, information and related industries. * SELIGMAN FIXED INCOME SECURITIES PORTFOLIO: seeks favorable current income by investing in a diversified portfolio of debt securities, primarily of investment grade, including convertible issues and preferred stocks, with capital appreciation as a secondary consideration. * SELIGMAN FRONTIER PORTFOLIO: seeks growth in capital value; income may be considered but will be only incidental to the Portfolio's investment objective. In general, securities owned are likely to be those issued by small to medium-sized companies selected for their growth prospects. * SELIGMAN HENDERSON GLOBAL PORTFOLIO: seeks long-term capital appreciation primarily through global investments in securities of medium- to large-sized companies. * SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO: (formerly Seligman Henderson Global Emerging Companies Portfolio), seeks long-term capital appreciation primarily through global investments in securities of companies with small to medium market capitalization. * SELIGMAN HIGH-YIELD BOND PORTFOLIO: seeks to produce maximum current income by investing primarily in high-yielding, high risk corporate bonds and corporate notes, which, generally, are non-rated or carry ratings lower than those assigned to investment grade bonds. The Portfolio will invest up to 100% of its assets in lower rated bonds, commonly known as "junk bonds," which are subject to a greater risk of loss of principal and interest than higher rated investment grade bonds. Purchasers should carefully assess the risks associated with an investment in this Portfolio. See "Investment Objectives and Policies--Seligman High-Yield Bond Portfolio." * SELIGMAN INCOME PORTFOLIO: seeks primarily to produce high current income consistent with what is believed to be prudent risk of capital and secondarily to provide the possibility of improvement in income and capital value over the longer term, by investing primarily in income-producing securities. SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. (continued from page 1) and Seligman Henderson Global Smaller Companies Portfolio. Shares of the Fund are currently provided as the investment medium for Canada Life of America Variable Annuity Account 2 ("CLVA-2") and Canada Life of America Annuity Account 3 ("CLVA-3"), each established by Canada Life Insurance Company of America ("Canada Life"). CLVA-2 is registered as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act") and funds variable annuity contracts (the "CLVA-2 Contracts") issued by Canada Life and distributed by Seligman Financial Services, Inc. CLVA-3 is not registered or regulated as an investment company under the 1940 Act in reliance on the exemption provided in Section 3(c)(11) of the 1940 Act and funds variable annuity contracts (the "CLVA-3 Contracts") issued by Canada Life and distributed by Seligman Financial Services, Inc. CLVA-3 Contracts may be purchased only by pension or profit-sharing employee benefit plans that satisfy the requirements for qualification set forth in Section 401 of the Internal Revenue Code of 1986. Shares of the Fund are also expected to be provided as the investment medium for other variable annuity accounts to be established by Canada Life or its affiliates ("Canada Life Separate Accounts"). Shares of the Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman Fixed Income Portfolio and Seligman Income Portfolio (but not the other Portfolios of the Fund) are also provided as the investment medium for Mutual Benefit Variable Contract Account-9 ("VCA-9") established by MBL Life Assurance Corporation ("MBL Life") (formerly, The Mutual Benefit Life Insurance Company). VCA-9 is registered as a unit investment trust under the 1940 Act and funds variable annuity contracts (the "VCA-9 Contracts") issued by MBL Life. This Prospectus sets forth concisely information about the Fund and its Portfolios that a prospective investor should know before investing. Please read it carefully before you invest and keep it for future reference. Additional information about the Fund, including a Statement of Additional Information, has been filed with the Securities and Exchange Commission (the "SEC"). The Statement of Additional Information is available upon request and without charge by calling or writing the Fund at the telephone numbers or address set forth above. The Statement of Additional Information is dated the same date as this Prospectus and is incorporated herein by reference in its entirety. TABLE OF CONTENTS PAGE ---- Financial Highlights................................ P-4 Investment Objectives And Policies.................. P-8 Seligman Capital Portfolio.......................... P-8 Seligman Cash Management Portfolio.................. P-8 Seligman Common Stock Portfolio..................... P-9 Seligman Communications and Information Portfolio............................. P-9 Seligman Fixed Income Securities Portfolio......................................... P-10 Seligman Frontier Portfolio......................... P-11 Seligman Henderson Global Portfolio................. P-12 Seligman Henderson Global Smaller Companies Portfolio............................... P-12 Seligman High-Yield Bond Portfolio.................. P-14 Seligman Income Portfolio........................... P-15 Other Investment Policies........................... P-16 Management Services................................. P-18 Portfolio Transactions, Portfolio Turnover And Valuation..................................... P-21 Dividends, Distributions And Taxes.................. P-22 Purchases And Redemptions........................... P-22 Custodians And Transfer Agent....................... P-22 Organization And Capitalization..................... P-23 Appendix............................................ P-24 P-2 THIS PAGE INTENTIONALLY LEFT BLANK P-3 FINANCIAL HIGHLIGHTS The following sets forth selected data for the periods indicated for a single share outstanding of each of the Fund's Portfolios except Seligman High-Yield Bond Portfolio, which is a new Portfolio. The results shown below for all periods through the year ended December 31, 1994 have been audited in conjunction with the annual audits of the financial statements of Seligman Portfolios, Inc. by Ernst & Young LLP, independent auditors. The 1994 financial statements and independent auditors' report thereon are incorporated by reference in the Fund's Statement of Additional Information. The per share operating performance data is designed to allow investors to trace the operating performance, on a per share basis, from a Portfolio's beginning net asset value to its ending net asset value so that investors may understand what effect the individual items have on their investment, assuming it was held throughout the period. Generally, the per share amounts are derived by converting the actual dollar amounts incurred for each item, as disclosed in the financial statements, to their equivalent per share amount. The total return based on net asset value measures a Portfolio's performance assuming investors purchased shares at net asset value as of the beginning of the period, reinvested dividends and capital gains paid at net asset value, and then sold the shares at the net asset value per share on the last day of the period. The total returns exclude the effect of all administration fees and asset-based sales loads associated with variable annuity contracts. The total returns for periods of less than one year are not annualized.
NET REALIZED & INCREASE NET NET ASSET NET UNREALIZED (DECREASE) DISTRIBUTIONS INCREASE NET ASSET VALUE INVESTMENT GAIN FROM FROM (DECREASE) VALUE PER SHARE OPERATING AT BEGINNING INCOME (LOSS) ON INVESTMENT DIVIDENDS NET GAIN IN NET AT END PERFORMANCE: OF PERIOD (LOSS)** INVESTMENT OPERATIONS PAID REALIZED ASSET VALUE OF PERIOD ------------------- ------------ ---------- ---------- ---------- --------- ------------ ----------- --------- CAPITAL PORTFOLIO Year ended 12/31/94...... $14.950 $0.015 $(0.699) $(0.684) $(0.018) $(1.548) $(2.250) $12.700 Year ended 12/31/93...... 16.980 0.021 1.928 1.949 (0.021) (3.958) (2.030) 14.950 Year ended 12/31/92...... 17.740 (0.022) 1.202 1.180 -- (1.940) (0.760) 16.980 Year ended 12/31/91...... 11.230 0.079 6.547 6.626 (0.088) (0.028) 6.510 17.740 Year ended 12/31/90...... 11.620 0.044 (0.414) (0.370) (0.020) -- (0.390) 11.230 Year ended 12/31/89...... 10.060 (0.084) 1.739 1.655 -- (0.095) 1.560 11.620 6/21/88*-12/31/88........ 10.000 0.060 -- 0.060 -- -- 0.060 10.060 CASH MANAGEMENT PORTFOLIO Year ended 12/31/94...... 1.000 0.040 -- -- (0.040) -- -- 1.000 Year ended 12/31/93...... 1.000 0.030 -- -- (0.030) -- -- 1.000 Year ended 12/31/92...... 1.000 0.035 -- -- (0.035) -- -- 1.000 Year ended 12/31/91...... 1.000 0.056 -- -- (0.056) -- -- 1.000 Year ended 12/31/90...... 1.000 0.075 -- -- (0.075) -- -- 1.000 Year ended 12/31/89...... 1.000 0.075 -- -- (0.075) -- -- 1.000 6/21/88*-12/31/88........ 1.000 0.020 -- -- (0.020) -- -- 1.000 COMMON STOCK PORTFOLIO Year ended 12/31/94...... 14.980 0.365 (0.356) 0.009 (0.385) (0.824) (1.200) 13.780 Year ended 12/31/93...... 15.600 0.392 1.479 1.871 (0.394) (2.097) (0.620) 14.980 Year ended 12/31/92...... 14.740 0.346 1.445 1.791 (0.369) (0.562) 0.860 15.600 Year ended 12/31/91...... 11.580 0.362 3.459 3.821 (0.355) (0.306) 3.160 14.740 Year ended 12/31/90...... 12.260 0.356 (0.743) (0.387) (0.263) (0.030) (0.680) 11.580 Year ended 12/31/89...... 10.150 0.248 2.195 2.443 (0.179) (0.154) 2.110 12.260 6/21/88*-12/31/88........ 10.000 0.120 0.060 0.180 (0.030) -- 0.150 10.150 COMMUNICATIONS AND INFORMATION PORTFOLIO 10/11/94* to 12/31/94.... 10.000 (0.016) 0.456 0.440 -- -- 0.440 10.440 FIXED INCOME SECURITIES PORTFOLIO Year ended 12/31/94...... 10.110 0.499 (0.841) (0.342) (0.498) -- (0.840) 9.270 Year ended 12/31/93...... 10.660 0.713 0.142 0.855 (0.711) (0.694) (0.550) 10.110 Year ended 12/31/92...... 10.990 0.706 (0.092) 0.614 (0.772) (0.172) (0.330) 10.660 Year ended 12/31/91...... 10.310 0.798 0.699 1.497 (0.817) -- 0.680 10.990 Year ended 12/31/90...... 10.220 0.680 (0.054) 0.626 (0.536) -- 0.090 10.310 Year ended 12/31/89...... 9.930 0.658 0.208 0.866 (0.576) -- 0.290 10.220 6/21/88*-12/31/88........ 10.000 0.262 (0.162) 0.100 (0.170) -- (0.070) 9.930 FRONTIER PORTFOLIO 10/11/94* to 12/31/94.... 10.000 (0.012) 0.592 0.580 -- -- 0.580 10.580
------------ *Commencement of Operations. **The Manager, at its discretion, waived its management fee and/or reimbursed expenses for certain periods presented. +Annualized P-4
WITHOUT MANAGEMENT FEE WAIVER AND/OR EXPENSE REIMBURSEMENT** ---------------------------------------- RATIOS/SUPPLEMENTAL DATA** --------------------------------------------- NET NET ASSETS RATIOS EXPENSES INVESTMENT AT OF NET TOTAL RETURN TO INCOME (LOSS) END OF NET RATIOS OF INVESTMENT BASED AVERAGE TO AVERAGE PERIOD INVESTMENT EXPENSES T0 INCOME (LOSS) PER SHARE OPERATING ON NET ASSET NET NET PORTFOLIO (000'S INCOME (LOSS) AVERAGE NET TO AVERAGE PERFORMANCE: VALUE ASSETS ASSETS TURNOVER OMITTED) PER SHARE** ASSETS NET ASSETS ------------------- ------------ ---------- ---------- ---------- -------- ------------- ----------- ------------ CAPITAL PORTFOLIO Year ended 12/31/94...... (4.59)% 0.60% 0.10% 67.39% $5,942 $(0.036) 0.96% (0.26)% Year ended 12/31/93...... 11.65 0.71 0.09 65.30 5,886 (0.003) 0.83 (0.03) Year ended 12/31/92...... 6.80 0.91 (0.14) 54.95 5,497 Year ended 12/31/91...... 59.05 0.60 0.56 31.44 5,812 (0.035) 1.37 (0.21) Year ended 12/31/90...... (3.18) 2.15 0.18 28.94 3,560 Year ended 12/31/89...... 16.47 3.55 (0.88) 32.55 2,577 (0.092) 3.80 (1.12) 6/21/88*-12/31/88........ 0.60 6.99+ (0.11)+ -- 890 CASH MANAGEMENT PORTFOLIO Year ended 12/31/94...... 4.03 -- 3.98 -- 3,230 0.025 1.48 2.50 Year ended 12/31/93...... 3.00 -- 2.96 -- 3,102 0.019 1.07 1.89 Year ended 12/31/92...... 3.53 -- 3.50 -- 4,230 0.025 0.97 2.53 Year ended 12/31/91...... 5.70 -- 5.49 -- 5,849 0.048 0.83 4.66 Year ended 12/31/90...... 7.79 -- 7.53 -- 3,994 0.045 2.97 4.56 Year ended 12/31/89...... 7.81 -- 7.72 -- 908 (0.019) 9.57 (1.85) 6/21/88*-12/31/88........ 2.35 .95+ 5.83+ -- 283 (0.050) 20.02+ (13.24)+ COMMON STOCK PORTFOLIO Year ended 12/31/94...... 0.04 0.60 2.45 15.29 20,168 0.361 0.62 2.43 Year ended 12/31/93...... 11.94 0.55 2.10 10.70 21,861 Year ended 12/31/92...... 12.14 0.56 2.21 12.57 24,987 Year ended 12/31/91...... 33.16 0.60 2.63 27.67 26,103 0.350 0.71 2.52 Year ended 12/31/90...... (3.15) 0.88 3.01 13.78 18,030 Year ended 12/31/89...... 24.11 1.59 2.32 37.56 9,332 0.236 1.67 2.23 6/21/88*-12/31/88........ 1.80 3.62+ 1.65+ 14.40 2,476 COMMUNICATIONS AND INFORMATION PORTFOLIO 10/11/94* to 12/31/94.... 4.40 0.95+ (0.95)+ -- 495 (0.436) 13.96+ (13.96)+ FIXED INCOME SECURITIES PORTFOLIO Year ended 12/31/94...... (3.39) 0.60 5.12 237.23 3,606 0.430 1.31 4.41 Year ended 12/31/93...... 7.98 0.74 5.41 33.21 3,775 0.675 1.07 5.08 Year ended 12/31/92...... 5.60 1.00 6.22 23.40 4,750 Year ended 12/31/91...... 14.58 0.60 7.30 6.34 5,369 0.712 1.42 6.48 Year ended 12/31/90...... 6.14 1.73 6.59 6.62 4,600 Year ended 12/31/89...... 8.70 2.13 6.51 49.92 4,129 0.643 2.27 6.37 6/21/88*-12/31/88........ 1.01 2.99+ 5.25+ 144.21 2,223 FRONTIER PORTFOLIO 10/11/94* to 12/31/94.... 5.80 0.95+ (0.70)+ -- 169 (1.319) 40.47+ (40.22)+
P-5
NET REALIZED & NET UNREALIZED NET REALIZED & GAIN INCREASE DISTRI- INCREASE NET ASSET UNREALIZED (LOSS) FROM (DECREASE) BUTIONS (DECREASE) VALUE NET GAIN FOREIGN FROM FROM IN PER SHARE OPERATING AT BEGINNING INVESTMENT (LOSS) ON CURRENCY INVESTMENT DIVIDENDS NET GAIN NET ASSET PERFORMANCE: OF PERIOD INCOME** INVESTMENT TRANSACTIONS OPERATIONS PAID REALIZED VALUE ------------------- ------------ ---------- ---------- ------------ ---------- --------- --------- ---------- GLOBAL PORTFOLIO Year ended 12/31/94...... $11.370 $0.131 $(0.306) $0.325 $0.150 $(0.064) $(0.116) $(0.030) 5/3/93*-12/31/93......... 10.000 0.021 1.518 (0.099) 1.440 (0.053) (0.017) 1.370 GLOBAL SMALLER COMPANIES PORTFOLIO 10/11/94*-12/31/94....... 10.000 0.058 0.266 0.029 0.353 (0.043) -- 0.310 INCOME PORTFOLIO Year ended 12/31/94...... 11.380 0.689 (1.369) -- (0.680) (0.730) -- (1.410) Year ended 12/31/93...... 11.390 0.828 0.576 -- 1.404 (0.828) (0.586) (0.010) Year ended 12/31/92...... 11.250 0.862 0.896 -- 1.758 (0.987) (0.631) 0.140 Year ended 12/31/91...... 9.500 0.896 2.024 -- 2.920 (0.904) (0.266) 1.750 Year ended 12/31/90...... 10.780 0.829 (1.487) -- (0.658) (0.622) -- (1.280) Year ended 12/31/89...... 10.040 0.634 0.834 -- 1.468 (0.419) (0.309) 0.740 6/21/88*-12/31/88........ 10.000 0.142 (0.032) -- 0.110 (0.070) -- 0.040
------------ *Commencement of Operations. **The Manager (and Subadviser in the case of the Global Portfolio and Global Smaller Companies Portfolio), at their discretion, waived management fees and/or reimbursed expenses for certain periods presented. +Annualized P-6
WITHOUT MANAGEMENT FEE WAIVER AND/OR EXPENSE REIMBURSEMENT** ------------------------------------- RATIOS/SUPPLEMENTAL DATA** ------------------------------------------- NET NET NET ASSETS RATIOS ASSET EXPENSES INVESTMENT AT OF NET VALUE TOTAL RETURN TO INCOME(LOSS) END OF NET RATIOS OF INVESTMENT AT BASED AVERAGE TO AVERAGE PERIOD INVESTMENT EXPENSES T0 INCOME(LOSS) PER SHARE OPERATING END OF ON NET ASSET NET NET PORTFOLIO (000'S INCOME(LOSS) AVERAGE NET TO AVERAGE PERFORMANCE: PERIOD VALUE ASSETS ASSETS TURNOVER OMITTED) PER SHARE ASSETS NET ASSETS ------------------- --------- ------------ ---------- ---------- -------- -------- ----------- ----------- ------------ GLOBAL PORTFOLIO Year ended 12/31/94...... $11.340 1.32% 1.20% 1.17% 47.34% $1,776 $(0.419) 6.12% (3.75)% 5/3/93*-12/31/93......... 11.370 14.40 1.20+ 1.30+ 2.82 648 (1.004) 17.94+ (15.44)+ GLOBAL SMALLER COMPANIES PORTFOLIO 10/11/94*-12/31/94....... 10.310 3.53 1.20+ 3.14+ -- 132 (1.225) 37.25+ (32.91)+ INCOME PORTFOLIO Year ended 12/31/94...... 9.970 (5.96) 0.60 6.34 29.76 10,050 0.670 0.77 6.17 Year ended 12/31/93...... 11.380 12.37 0.64 6.40 38.38 11,220 0.826 0.65 6.39 Year ended 12/31/92...... 11.390 15.72 0.68 7.53 39.46 11.363 Year ended 12/31/91...... 11.250 30.89 0.60 8.05 43.67 11,509 0.867 0.93 7.72 Year ended 12/31/90...... 9.500 (6.10) 1.40 8.19 21.64 7,419 Year ended 12/31/89...... 10.780 14.61 2.69 5.95 60.10 4,085 0.610 2.88 5.77 6/21/88*-12/31/88........ 10.040 1.10 5.02+ 2.46+ -- 1,265 0.089 5.42+ 2.07+
P-7 INVESTMENT OBJECTIVES AND POLICIES Set forth below is a description of the investment objective of each of the Fund's Portfolios and their investment policies. Of course, because any investment involves risk, there can be no assurance that any of the Portfolios will meet its objective. The investment objective(s) of each Portfolio may not be changed without the affirmative vote of the holders of a majority of the voting securities of that Portfolio; however, unless otherwise noted, the investment policies of each Portfolio are not fundamental and may be changed by the Fund's Board of Directors without a vote of shareholders. A more detailed description of each Portfolio's investment policies, including a list of those restrictions on each Portfolio's investment activities which cannot be changed without such a vote, appears in the Statement of Additional Information. Information regarding the various rating categories used by the Standard & Poor's Corporation ("S&P") and Moody's Investors Services, Inc. ("Moody's"), and referred to in the following descriptions, is included in the Appendix to this Prospectus. SELIGMAN CAPITAL PORTFOLIO The investment objective of this Portfolio is to produce capital appreciation for its shareholders. Current income is not an objective. The Portfolio will seek to achieve its objective by investing in common stocks and securities convertible into or exchangeable for common stocks, in common stock purchase warrants and rights, in debt securities and in preferred stocks believed to provide capital appreciation opportunities. Common stocks, for the most part, are selected for their near or intermediate-term prospects. They may be stocks believed to be underpriced or stocks of growth companies, cyclical companies, or companies believed to be undergoing a basic change for the better. They may be stocks of established, well-known companies or of newer, less-seasoned companies believed to have better-than-average prospects. The principal criterion for choice of investments is capital appreciation potential. The Portfolio may, pending investment and for temporary defensive purposes, hold cash and invest without limitation in high-grade, short-term money market instruments, including repurchase agreements, of the types listed under "Seligman Cash Management Portfolio." The Seligman Capital Portfolio may borrow money to increase its portfolio of securities. Investing for capital appreciation and borrowing ordinarily expose capital to added risk, and investment in the Portfolio should be considered only by persons who are able and willing to take such risk. SELIGMAN CASH MANAGEMENT PORTFOLIO The investment objective of this Portfolio is to preserve capital and to maximize liquidity and current income by investing in a diversified portfolio of high-quality money market instruments consisting of United States ("U.S.") Government obligations, U.S. dollar-denominated bank obligations (including those issued by U.S. banks, their foreign branches and U.S. branches of foreign banks), prime commercial paper, high-grade, short-term corporate obligations and repurchase agreements with respect to the above types of instruments. The Portfolio seeks to maintain a constant net asset value of $1.00 per share; there can be no assurance that the Portfolio will be able to do so. In an effort to maintain a stable net asset value, the Portfolio uses the amortized cost method of valuing its securities. The Portfolio will invest only in U.S. dollar-denominated securities having a remaining maturity of 13 months (397 days) or less and will maintain a dollar-weighted average portfolio maturity of 90 days or less. The Portfolio will limit its investments to those securities that, in accordance with guidelines adopted by the Board of Directors, present minimal credit risks. Accordingly, the Portfolio will not purchase any security (other than a U.S. Government obligation) unless (i) it is rated in one of the two highest rating categories assigned to short-term debt securities by at least two nationally recognized statistical rating organizations ("NRSROs") such as Moody's and S&P, or (ii) if not so rated, it is determined to be of comparable quality. Determinations of comparable quality will be made in accordance with procedures established by the Directors. These standards must be satisfied at the time an investment is made. If the quality of the investment later declines, the Portfolio may continue to hold the investment, subject in certain circumstances to a finding by the Board of Directors that disposing of the investment would not be in the Portfolio's best interest. P-8 Presently, the Portfolio only invests in either U.S. Government obligations or securities that are rated in the top rating category by Moody's and S&P. However, the Portfolio is permitted to invest up to 5% of its assets in securities rated in the second highest rating category by two NRSROs, provided that not more than the greater of 1% of its total assets or $1,000,000 is invested in any one such security. U.S. GOVERNMENT OBLIGATIONS in which the Portfolio invests include obligations issued or guaranteed as to both principal and interest by the U.S. Government or backed by the full faith and credit of the United States, such as U.S. Treasury bills, securities issued or guaranteed by a U.S. Government agency or instrumentality, and securities supported by the right of the issuer to borrow from the U.S. Treasury. BANK OBLIGATIONS purchased by the Portfolio include U.S. dollar-denominated certificates of deposit, banker's acceptances, fixed time deposits and commercial paper of domestic banks, including their branches located outside the United States, and of domestic branches of foreign banks. Investments in bank obligations will be limited at the time of investment to the obligations of the 100 largest domestic banks in terms of assets which are subject to regulatory supervision by the U.S. Government or state governments, and the obligations of the 50 largest foreign banks in terms of assets with branches or agencies in the United States. COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT SECURITIES include short-term unsecured promissory notes with maturities not exceeding nine months issued in bearer form by bank holding companies, corporations and finance companies. Investments in commercial paper issued by bank holding companies will be limited at the time of investment to the 100 largest U.S. bank holding companies in terms of assets. YIELD INFORMATION. Investors should recognize that, in periods of declining interest rates, yields will tend to be somewhat higher than prevailing market rates, and in periods of rising interest rates, the yield of the Portfolio will tend to be somewhat lower. Also, when interest rates are falling, the inflow of new money to the Portfolio from the continuous sale of its shares will likely be invested in portfolio instruments producing lower yields than the balance of the Portfolio assets, thereby reducing the current yield of the Portfolio. In periods of rising interest rates, the opposite can be true. The Seligman Cash Management Portfolio may attempt to increase yields on its investments by using trading techniques designed to take advantage of short-term market variations. This policy, together with the short maturities of the securities in which the Portfolio invests, would result in high portfolio turnover. The Portfolio does not anticipate incurring significant brokerage or transaction expenses since portfolio transactions ordinarily will be made directly with the issuer, money market dealer, or other financial institution on a net price basis. SELIGMAN COMMON STOCK PORTFOLIO The investment objective of this Portfolio is to produce favorable, but not the highest, current income and long-term growth of both income and capital value, without exposing capital to undue risk. The Seligman Common Stock Portfolio seeks to achieve its objective primarily through equity investments, and in general, investments will be broadly diversified over a number of industries. The Seligman Common Stock Portfolio may, pending investment and for temporary defensive purposes, invest without limitation in high-grade, short-term money market instruments, including repurchase agreements, of the types listed under "Seligman Cash Management Portfolio." SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO The investment objective of this Portfolio is to produce capital gain. Income is not an objective. The Portfolio seeks to achieve its objective by investing in a portfolio consisting of securities of companies operating in virtually all aspects of the communications, information and related industries. It invests at least 80% of its net assets, exclusive of government securities, short-term notes, cash and cash equivalents, in securities of companies engaged in these industries. The value of Portfolio shares may be susceptible to factors affecting the communications, information and related industries. As such, this Portfolio is not an appropriate investment for individuals who require safety of principal or stable income from their investments. These industries may be subject to greater governmental regulation than many other industries and changes in governmental policies and the need for regulatory approvals may have a material effect on the products and services of these industries. Although securities of large companies that now are well established in the world communications and information market and can be expected to grow with the market are held by this P-9 Portfolio, rapidly changing technologies and the expansion of the communications, information and related industries provide a favorable environment for investing in companies of small to medium size. Securities of smaller, less-seasoned companies may be subject to greater price fluctuation, limited liquidity and above-average investment risk. This Portfolio invests primarily in common stocks. It also may invest in securities convertible into or exchangeable for common stocks, in warrants and rights to purchase common stocks and in debt securities or preferred stocks believed to provide opportunities for capital gain. It is this Portfolio's present intention to invest not more than 5% of its net assets in debt securities that are not rated within the four highest rating categories by S&P or by Moody's. SELIGMAN FIXED INCOME SECURITIES PORTFOLIO The investment objective of this Portfolio is to achieve favorable current income by investing in debt securities, including convertible issues and preferred stock, diversified over a number of industries. Capital appreciation will be a secondary consideration in selecting portfolio securities. As a matter of fundamental policy, the Portfolio will invest at least 80% of its assets in securities that are rated investment grade. The Portfolio's assets may be invested in (l) corporate debt securities, including bonds and debentures convertible into common stock or with warrants and rights; (2) debt securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities; or (3) mortgage-backed debt securities, including securities issued by the Government National Mortgage Association ("GNMA") and debt obligations secured by commercial or residential real estate, rated within one of the three highest rating categories by S&P or, if unrated, of comparable quality in the opinion of the Manager; (4) preferred stock; and (5) commercial paper rated within one of the three highest rating categories by S&P or Moody's. The Portfolio may also hold or sell any securities obtained through the exercise of conversion rights or warrants, or as a result of reorganization, recapitalization, or liquidation proceedings of any issuer of securities owned by the Portfolio. Long-term debt securities normally will be held when it is believed that the trend of interest rates is down and prices of such securities will increase; conversely, when it is believed that long-term interest rates will rise, the Portfolio may attempt to shift into short-term debt securities that are generally not as volatile as longer-term securities in periods of rising interest rates. The Portfolio may, pending investment and for temporary defensive purposes, invest without limitation in high-grade short-term money market instruments, including repurchase agreements, of the types listed under "Seligman Cash Management Portfolio." Corporate debt securities purchased by the Portfolio will, in order to meet the Portfolio's fundamental policy, be investment grade bonds that are rated within one of the four highest rating categories by S&P or Moody's. To the extent that the Portfolio may invest in lower-rated bonds, an investor should be aware that while providing higher yields, such lower-rated bonds generally are subject to greater market fluctuations and risks of loss of income and principal than higher-rated (and lower-yielding) bonds. A description of the credit ratings and the risks associated with such investments is contained in the Appendix to this Prospectus. U.S. Government and agency obligations in which the Portfolio invests may include direct obligations of the U.S. Treasury, such as bills, notes and bonds, and marketable obligations issued by a U.S. Government agency or instrumentality. Agency securities include those issued by the Small Business Administration, General Services Administration and Farmers Home Administration, which are guaranteed by the U.S. Treasury. Other such securities are supported by the right of the issuer to borrow from the Treasury, such as securities issued by the Federal Home Loan Mortgage Corporation ("FHLMC"), while certain other securities are supported only by the credit of the agency or instrumentality itself, such as securities issued by the Federal National Mortgage Association ("FNMA"). Commercial paper includes unsecured promissory notes of corporate issuers, which securities generally have remaining maturities not exceeding nine months. The mortgage-backed securities in which the Portfolio invests will include securities that represent interests in pools of mortgage loans made by lenders such as savings and loan institutions, mortgage bankers, and commercial banks. Such securities provide a "pass-through" of monthly payments of interest and principal made by the borrowers on their residential mortgage loans (net of any fees paid to the issuer or guarantor of such securities). Although the residential mortgages underlying a pool may have maturities of up to 30 years, a pool's effective maturity may be reduced by prepayments of principal on the underlying mortgage obligations. Factors affecting mortgage prepayments include, among other things, the level of interest rates, general economic and social conditions and the location and age of the mortgages. High interest rate mortgages are more likely to be prepaid than lower-rate mortgages; consequently, the effective maturities of mortgage-related obligations that pass-through P-10 payments of higher-rate mortgages are likely to be shorter than those of obligations that pass-through payments of lower-rate mortgages. If such prepayment of mortgage-related securities in which the Portfolio invests occurs, the Portfolio may have to invest the proceeds in securities with lower yields. GNMA is a U.S. Government corporation within the Department of Housing and Urban Development, authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of Federal Housing Administration insured or Veterans Administration guaranteed residential mortgages. These securities entitle the holder to receive all interest and principal payments owed on the mortgages in the pool, net of certain fees, regardless of whether or not the mortgagors actually make the payments. Other government-related issuers of mortgage-related securities include FNMA, a government-sponsored corporation subject to general regulation by the Secretary of Housing and Urban Development but owned entirely by private stockholders, and FHLMC, a corporate instrumentality of the U.S. Government created for the purpose of increasing the availability of mortgage credit for residential housing that is owned by the twelve Federal Home Loan Banks. FHLMC issues Participation Certificates ("PCs"), which represent interests in mortgages from FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the U.S. Government. Pass-through securities issued by FNMA are backed by residential mortgages purchased from a list of approved seller/servicers and are guaranteed as to timely payment of principal and interest by FNMA, but are not backed by the full faith and credit of the U.S. Government. Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through securities based on pools of conventional residential mortgage loans. Securities created by such non-governmental issuers may offer a higher rate of interest than government-related securities; however, timely payment of interest and principal may or may not be supported by insurance or guarantee arrangements, and there can be no assurance that the private issuers can meet their obligations. SELIGMAN FRONTIER PORTFOLIO The investment objective of this Portfolio is to produce growth in capital value; income may be considered but will be only incidental to the Portfolio's investment objective. This Portfolio seeks to achieve its objective by investing in a portfolio consisting of securities of companies selected for their growth prospects. It invests primarily in common stocks, and may also invest in securities that may be exchanged for or converted into common stock, preferred stock and common stock purchase warrants and rights believed by the Manager to provide capital growth opportunities. Stocks of companies believed by the Manager to have special characteristics (such as a high growth rate of unit sales, an important opportunity in a developing industry or a distinct competitive advantage) are favored by this Portfolio. In general, securities owned are likely to be those issued by companies of small to medium size with annual revenue of $400 million or less. Except when investing for temporary defensive purposes, this Portfolio will invest at least 65% of its net assets, exclusive of government securities, short-term notes, cash and cash items, in securities of such companies. Securities of smaller or medium-sized companies may be subject to above-average market price fluctuation and business risk; however, the Manager will seek to temper such risks by diversification of investments and by avoiding concentration of investments in any one industry. This Portfolio's investments, other than in securities of the companies discussed above, will be substantially in securities issued or guaranteed by the U.S. Government (such as Treasury bills, notes and bonds), its agencies, instrumentalities or authorities, highly-rated corporate debt securities (rated AA-, or better, by S&P or Aa3, or better, by Moody's); prime commercial paper (rated A-1+/A-1 by S&P or P-1 by Moody's) and certificates of deposit of the 100 largest (based on assets) banks that are subject to regulatory supervision by the U.S. Government or state governments and the 50 largest (based on assets) foreign banks with branches or agencies in the United States. P-11 SELIGMAN HENDERSON GLOBAL PORTFOLIO SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO Unless otherwise indicated, the following description of investment objectives and policies applies to both the Seligman Henderson Global Portfolio ("Global Portfolio") and the Seligman Henderson Global Smaller Companies Portfolio ("Global Smaller Companies Portfolio"). The investment objective of the Global Portfolio is long-term capital appreciation primarily through global investments in securities of medium- to large-sized companies. Under normal market conditions, the Global Port-folio will invest 65% of its assets in securities of issuers located in at least three different countries, one of which may be the U.S. The investment objective of the Global Smaller Companies Portfolio is long-term capital appreciation primarily through global investments in securities of companies with small to medium market capitalizations. Under normal market conditions, the Global Smaller Companies Portfolio will invest its assets in securities of issuers located in at least three different countries, one of which may be the U.S., and will invest at least 65% of its assets in securities of small to medium-sized companies with market capitalization up to $750 million. Seligman Henderson Co. (the "Subadviser") will supervise and direct the investments of both Portfolios. While each Portfolio may invest in securities of issuers domiciled in any country, under normal conditions investments will be made in four principal regions: The United Kingdom/Continental Europe, North America, the Pacific Basin and Latin America. Continental European countries include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and Turkey. Pacific Basin countries include Australia, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, The Philippines, Singapore, Sri Lanka, and Thailand. North America includes the United States and Canada. Latin American countries include Argentina, Brazil, Chile, Mexico and Venezuela. In allocating investments among geographic regions and individual countries, the Subadviser will consider such factors as the relative economic growth potential of the various economies and securities markets; expected levels of inflation; financial, social and political conditions influencing investment opportunities; and the outlook for currency relationships. These Portfolios may invest in all types of securities, most of which will be denominated in currencies other than the U.S. dollar. Since opportunities for long-term growth are primarily expected from equity securities, the Portfolios will normally invest substantially all of their assets in such securities, including common stock, securities convertible into common stock, depository receipts for these securities and warrants. These Portfolios may, however, invest up to 25% of their assets in preferred stock and debt securities if the Subadviser believes that the capital appreciation available from an investment in such securities will equal or exceed the capital appreciation available from an investment in equity securities. Dividends or interest income are considered only when the Subadviser believes that such income will have a favorable influence on the market value of a security in light of the Portfolios' objective of capital appreciation. There is no requirement that the debt securities in which the Portfolios may invest be rated by a recognized rating agency. However, it is the Portfolios' policy that investments in debt securities, whether rated or unrated, will be made only if they are, in the opinion of the Subadviser, of equivalent quality to "investment grade" securities. "Investment grade" securities are those rated within the four highest quality grades as determined by Moody's or S&P. Debt securities are interest-rate sensitive, so that their value will tend to decrease when interest rates rise and increase when interest rates fall. DEPOSITORY RECEIPTS. The Portfolios may invest in securities represented by European Depository Receipts ("EDRs"), Global Depository Receipts ("GDRs"), American Depository Receipts ("ADRs"), or American Depository Shares ("ADSs"). ADRs and ADSs are instruments generally issued by domestic banks or trust companies that represent the deposit of a security of a foreign issuer. ADRs and ADSs may be publicly traded on exchanges or over-the-counter in the United States and are quoted and settled in dollars at a price that generally reflects the dollar equivalent of the home country share price. EDRs and GDRs are typically issued by foreign banks or trust companies and traded in Europe. ADRs, ADSs, EDRs and GDRs may be issued under sponsored or unsponsored programs. In sponsored programs, the issuer has made arrangements to have its securities trade in the form of ADRs, ADSs, EDRs or GDRs. In unsponsored programs, the P-12 issuer may not be directly involved in the creation of the program. Although regulatory requirements with respect to sponsored and unsponsored programs are generally similar, the issuers of unsponsored ADRs, ADSs, EDRs or GDRs are not obligated to disclose material information in the U.S., and, therefore, the import of such information may not be reflected in the market value of such receipts. By investing in foreign securities, the Portfolios will attempt to take advantage of differences among economic trends and the performance of securities markets in various countries. To date, the market values of securities of issuers located in different countries have moved relatively independently of each other. During certain periods, the return on equity investments in some countries has exceeded the return on similar investments in the U.S. The Subadviser believes that, in comparison with investment companies investing solely in domestic securities, it may be possible to obtain significant appreciation from a portfolio of foreign investments and securities from various markets that offer different investment opportunities and are affected by different economic trends. Global diversification reduces the effect that events in any one country will have on the entire investment portfolio. Of course, a decline in the value of a Portfolio's investments in one country may offset potential gains from investments in another country. RISK FACTORS. Investments in securities of foreign issuers may involve risks that are not associated with domestic investments, and there can be no assurance that either of the Portfolios' foreign investments will present less risk than a portfolio of domestic securities. Foreign issuers may lack uniform accounting, auditing and financial reporting standards, practices and requirements, and there is generally less publicly available information about foreign issuers than there is about U.S. issuers. Governmental regulation and supervision of foreign stock exchanges, brokers and listed companies may be less pervasive than is customary in the U.S. Securities of some foreign issuers are less liquid and their prices are more volatile than securities of comparable domestic issuers. Foreign securities settlements may in some instances be subject to delays and related administrative uncertainties which could result in temporary periods when assets of a Portfolio are uninvested and no return is earned thereon and may involve a risk of loss to a Portfolio. Foreign securities markets may have substantially less volume than U.S. markets and far fewer traded issues. Fixed brokerage commissions on foreign securities exchanges are generally higher than in the U.S., and transaction costs with respect to smaller capitalization companies may be higher than those of larger capitalization companies. Income from foreign securities may be reduced by a withholding tax at the source or other foreign taxes. In some countries, there may also be the possibility of nationalization, expropriation or confiscatory taxation, (in which a Portfolio could lose its entire investment in a certain market), limitations on the removal of monies or other assets of the Portfolios, higher rates of inflation, political or social instability or revolution, or diplomatic developments that could affect investments in those countries. In addition, it may be difficult to obtain and enforce a judgement in a court outside the U.S. Some of the risks described in the preceding paragraph may be more severe for investments in emerging or developing countries. By comparison with the United States and other developed countries, emerging or developing countries may have relatively unstable governments, economies based on a less diversified industrial base and securities markets that trade a smaller number of securities. Companies in emerging markets may generally be smaller, less experienced and more recently organized than many domestic companies. Prices of securities traded in the securities markets of emerging or developing countries tend to be volatile. Furthermore, foreign investors are subject to many restrictions in emerging or developing countries. These restrictions may require, among other things, governmental approval prior to making investments or repatriating income or capital, or may impose limits on the amount or type of securities held by foreigners or on the companies in which the foreigners may invest. Investments in foreign securities will usually be denominated in foreign currencies, and each Portfolio may temporarily hold funds in foreign currencies. The value of a Portfolio's investments denominated in foreign currencies may be affected, favorably or unfavorably, by the relative strength of the U.S. dollar, changes in foreign currency and U.S. dollar exchange rates and exchange control regulations. A Portfolio may incur costs in connection with conversions between various currencies. A Portfolio's net asset value per share will be affected by changes in currency exchange rates. Changes in foreign currency exchange rates may also affect the value of dividends and interest earned, gains and losses realized on the sale of securities and net investment income and gains, if any, to be distributed to shareholders by the Portfolios. The rate of exchange between the U.S. dollar and other currencies is determined by the forces of supply and demand in the foreign exchange markets (which in turn are affected by interest rates, trade flows and numerous other factors, including, in some countries, local governmental intervention). P-13 With regard to the Global Smaller Companies Portfolio, the Subadviser believes that smaller companies generally have greater earnings and sales growth potential than larger companies. However, investments in such companies may involve greater risks, such as limited product lines, markets and financial or managerial resources. Less frequently traded securities may be subject to more abrupt price movements than securities of larger companies. FORWARD CURRENCY EXCHANGE CONTRACTS. The Subadviser will consider changes in exchange rates in making investment decisions. As one way of managing exchange rate risk, each Portfolio may enter into forward currency exchange contracts (agreements to purchase or sell foreign currencies at a future date). A Portfolio will usually enter into these contracts to fix the U.S. dollar value of securities that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. A Portfolio may also use these contracts to hedge the U.S. dollar value of securities it already owns. A Portfolio may be required to cover certain forward currency exchange contract positions by establishing a segregated account with its custodian that will contain only liquid assets, such as U.S. Government securities or other liquid high-grade debt obligations. Under normal circumstances, the portfolio manager will limit forward currency contracts to not greater than 75% of the Portfolio's position in any one country as of the date the contract is entered into. Although the Portfolios will seek to benefit by using forward contracts, anticipated currency movements may not be accurately predicted and the Portfolios may therefore incur a gain or loss on a forward contract. A forward contract may help reduce the Portfolios' losses on securities denominated in foreign currency, but it may also reduce the potential gain on the securities depending on changes in the currency's value relative to the U.S. dollar or other currencies. TEMPORARY INVESTMENTS. When the Subadviser believes that market conditions warrant a temporary defensive position, a Portfolio may invest up to 100% of its assets in short-term instruments such as commercial paper, bank certificates of deposit, bankers' acceptances, or repurchase agreements for such securities and securities of the U.S. Government and its agencies and instrumentalities, as well as cash and cash equivalents denominated in foreign currencies. Investments in domestic bank certificates of deposit and bankers' acceptances will be limited to banks that have total assets in excess of $500 million and are subject to regulatory supervision by the U.S. Government or state governments. A Portfolio's investments in commercial paper of U.S. issuers will be limited to (a) obligations rated Prime-1 by Moody's or A-1 by S&P or (b) unrated obligations issued by companies having an outstanding unsecured debt issue currently rated A or better by S&P. A description of various commercial paper ratings and debt securities ratings appears in the Appendix to this Prospectus. A Portfolio's investments in foreign short-term instruments will be limited to those that, in the opinion of the Subadviser, equate generally to the standards established for U.S. short-term instruments. SELIGMAN HIGH-YIELD BOND PORTFOLIO The objective of this Portfolio is to produce maximum current income. The Portfolio seeks to achieve its objective by following a policy of investing in a diversified range of high-yield, high-risk, medium and lower quality corporate bonds and notes, commonly referred to as "junk bonds". Generally, bonds and notes providing the highest yield are unrated or carry lower ratings (Baa or lower by Moody's or BBB or lower by S&P) than those assigned by S&P or Moody's to investment-grade bonds and notes. A description of the S&P and Moody's rating categories is set forth in the Appendix to this Prospectus. While providing higher yields, these bonds and notes are subject to greater risks of loss of principal and income than higher-rated bonds and notes and are considered to be predominantly speculative with respect to the issuer's capacity to pay interest and repay principal. They are also generally considered to be subject to greater price volatility due to market risks than higher rated bonds and notes. The amount of outstanding high-yield, lower-rated corporate securities has recently proliferated. Based on industry estimates, the market grew from $20 billion in outstanding securities to in excess of $270 billion, principally over the past ten years, a period of national economic expansion. An economic downturn could adversely impact issuers' abilities to pay interest and repay principal and could result in issuers' defaulting on such payments. The value of the Portfolio's bonds and notes will be affected like all fixed-income securities by market conditions relating to changes in prevailing interest rates. However, the value of lower-rated or unrated corporate bonds and notes is also affected by investors' perceptions. When economic conditions appear to be deteriorating, lower-rated or unrated corporate bonds and notes may decline in market value due to investors' heightened concerns and perceptions over credit quality. If the security is downgraded, the Portfolio may retain the security. P-14 The Portfolio may invest in "zero coupon" (interest payments accrue until maturity) and "pay-in-kind" (interest payments are made in cash or additional shares) bonds. Such securities may be subject to greater fluctuations in value as they tend to be more speculative than income bearing securities. Fluctuations in the market prices of the securities owned by the Portfolio result in corresponding fluctuations and volatility in the net asset value of the shares of the Portfolio. Lower-rated and non-rated corporate bonds and notes in which the Portfolio invests are traded principally by dealers in the over-the-counter market. The market for these securities may be less active and less liquid than for higher rated securities. Under adverse market or economic conditions, the secondary market for these bonds and notes could contract further, causing the Portfolio difficulties in valuing and selling the securities in its portfolio. The ratings of fixed-income securities by Moody's and S&P are a generally accepted barometer of credit risk. They are, however, subject to certain limitations from an investor's standpoint. The rating of an issuer is heavily weighted by past developments and does not necessarily reflect probable future conditions. There is frequently a lag between the time the rating is assigned and the time it is updated. In addition there may be varying degrees of difference in credit risk of securities within each rating category. The Manager will try to minimize the risk inherent in the Portfolio's investment objective through credit analysis, diversification and attention to current developments and trends in interest rates and economic conditions. However, there can be no assurance that losses will not occur and an investment in the Portfolio is appropriate for you only if you can bear the high risk inherent in seeking maximum current income by investing in high-yielding corporate bonds and notes which are unrated or carry lower ratings than those assigned by S&P or Moody's to investment-grade bonds. Except for temporary defensive purposes, at least 80% of the value of the Portfolio's total assets will be invested in high-yielding, income-producing corporate bonds. This investment policy is a fundamental policy and may not be changed by the Board of Directors of the Fund without the vote of a majority of the Portfolio's outstanding voting securities. The Portfolio may invest up to 20% of the value of its total assets in a range of high-yield, medium and lower quality corporate notes, short-term money market instruments, including certificates of deposit of banks having total assets of more than $1 billion and which are members of the FDIC, bankers' acceptances and interest-bearing savings or time deposits of such banks, commercial paper of prime quality rated A-1 or higher by S&P or Prime-1 or higher by Moody's or, if not rated, issued by companies which have an outstanding debt issue rated AA or higher by S&P or Aa or higher by Moody's, securities issued, guaranteed or insured by the U.S. Government, its agencies and instrumentalities and other income-producing cash items. The Portfolio may invest temporarily for defensive purposes without limit in the foregoing securities. SELIGMAN INCOME PORTFOLIO The primary investment objective of this Portfolio is to provide shareholders with high current income consistent with what is believed to be prudent risk of capital; secondarily, the Portfolio seeks to provide the possibility of improvement in income and capital value over the longer term. Assets are invested in securities carefully selected in light of the Portfolio's investment objectives and diversified to limit risk. The distribution of investments between different types of securities is governed by a fundamental policy, which can be changed only by the vote of the shareholders, that at least 25% of the market value of gross assets must at all times be in cash, bonds and/or preferred stocks. Under an investment policy established by the Board of Directors, at least 80% of assets will be invested in income-producing securities. Subject to that limitation, assets may be invested in many different types of securities, including money market instruments, fixed-income securities such as bonds, debentures and preferred stocks, senior securities convertible into common stocks, and common stocks. Convertible bonds are convertible at a stated exchange rate or price into common stock. Before conversion, convertible securities are similar to non-convertible debt securities in that they provide a steady stream of income with generally higher yields than an issuer's equity securities. The market value of all debt securities, including convertible securities, tends to decline as interest rates increase and to increase as interest rates decline. In general, convertible securities may provide lower interest or dividend yields than non-convertible debt securities of similar quality, but they may also allow P-15 investors to benefit from increases in the market price of the underlying common stock. When the market price of the underlying common stock increases, the price of the convertible security tends to reflect the increase. When the market price of the underlying common stock declines, the convertible security tends to trade on the basis of yield, and may not depreciate to the same extent as the underlying common stock. In an issuer's capital structure, convertible securities are senior to common stocks. They are therefore of higher quality and involve less risk than the issuer's common stock, but the extent to which risk is reduced depends largely on the extent to which the convertible security sells above its value as a fixed-income security. In selecting convertible securities for the Portfolio, the Manager evaluates such factors as economic and business conditions involving the issuer, future earnings growth potential of the issuer, potential for price appreciation of the underlying equity, the value of individual securities relative to other investment alternatives, trends in the determinants of corporate profits and capability of management. In evaluating a convertible security, the Manager gives emphasis to the attractiveness of the underlying common stock and the capital appreciation opportunities that the convertible bonds present. Convertible securities can be callable or redeemable at the issuer's discretion, in which case the Manager would be forced to seek alternative investments. The Portfolio may invest in debt securities convertible into equity securities rated as low as CC by S&P or Ca by Moody's. Debt securities rated below investment grade (frequently referred to as "junk bonds") often have speculative characteristics and will be subject to greater market fluctuations and risk of loss of income and principal than higher-rated securities. A description of credit ratings and risks associated with lower-rated debt securities is set forth in the Appendix to this Prospectus. The Manager does not rely on the ratings of these securities in making investment decisions but performs its own analysis, based on the factors described above, in light of the Portfolio's investment objectives. The Portfolio does not expect to invest more than 5% of its assets in non-convertible bonds, notes and debentures ("bonds") rated below BBB by S&P or Baa by Moody's. Although bonds rated in the fourth credit rating category (BBB or Baa) are commonly referred to as investment grade, they may have speculative characteristics. The Appendix to this Prospectus contains a description of credit ratings and the risks associated with lower-rated debt securities, which tend to be more speculative and riskier than higher-rated debt securities. The following table sets forth the weighted average ratings of the Portfolio invested in debt securities, including convertible bonds, for the year ended December 31, 1994. The balance of the Portfolio is invested in equity securities. When securities received different ratings from S&P and Moody's, the table reflects the higher rating. AAA/Aaa .......... 2.9% AA/Aa ............ -- A/A .............. 5.1% BBB/Baa .......... 25.6% BB/Ba ............ 5.4% B/B .............. 17.9% CCC/Caa .......... -- CC/Ca ............ -- Non-rated ........ 4.5% OTHER INVESTMENT POLICIES The Fund's Portfolios may invest for either the long or short term in their efforts to attain their objectives, and changes in investments may be made whenever considered advisable by the Manager or, in the case of the Global Portfolio and the Global Smaller Companies Portfolio, the Subadviser. Except as otherwise noted, each of the Portfolios may engage in transactions involving the types of securities and investment strategies described below. Further information about these strategies is included in the Fund's Statement of Additional Information. REPURCHASE AGREEMENTS. Each Portfolio may hold cash or cash equivalents and may enter into repurchase agreements with respect to securities; normally repurchase agreements relate to money market obligations backed by the full faith and credit of the U.S. Government. Repurchase agreements are transactions in which an investor (e.g., any of the Fund's Portfolios) purchases a security from a bank, recognized securities dealer, or other financial institution and simultaneously commits to resell that security to such institution at an agreed upon price, date and market rate of interest unrelated to the coupon rate or maturity of the purchased security. A repurchase agreement thus involves the P-16 obligation of the bank or securities dealer to pay the agreed upon price on the date agreed to, which obligation is in effect secured by the value of the underlying security held by the Portfolio. Repurchase agreements could involve certain risks in the event of bankruptcy or other default by the seller, including possible delays and expenses in liquidating the securities underlying the agreement, decline in value of the underlying securities and loss of interest. Although repurchase agreements carry certain risks not associated with direct investments in securities, each Portfolio intends to enter into repurchase agreements only with financial institutions believed to present minimum credit risks in accordance with guidelines established by the Fund's Board of Directors. The creditworthiness of such institutions will be reviewed and monitored under the general supervision of the Board of Directors. The Portfolios will invest only in repurchase agreements collateralized in an amount at least equal at all times to the purchase price plus accrued interest. Repurchase agreements usually are for short periods, such as one week or less, but may be for longer periods. No Portfolio will enter into a repurchase agreement with a maturity of more than seven days if, as a result, more than 15% of the value of its net assets would then be invested in such repurchase agreements and other illiquid investments. ILLIQUID SECURITIES. Other than the Seligman Cash Management Portfolio, each Portfolio may invest up to 15% of its net assets in illiquid securities, including restricted securities (i.e., securities not readily marketable without registration under the Securities Act of 1933 (the "1933 Act")) and other securities that are not readily marketable. Each Portfolio, other than the Seligman Cash Management Portfolio, may purchase restricted securities that can be offered and sold to "qualified institutional buyers" under Rule 144A of the 1933 Act, and the Fund's Board of Directors may determine, when appropriate, that specific Rule 144A securities are liquid and not subject to the 15% limitation on illiquid securities. Should the Board of Directors make this determination, it will carefully monitor the security (focusing on such factors, among others, as trading activity and availability of information) to determine that the Rule 144A security continues to be liquid. It is not possible to predict with assurance exactly how the market for restricted securities offered and sold under Rule 144A will develop. This investment practice could have the effect of increasing the level of illiquidity in a Portfolio to the extent that qualified institutional buyers become for a time uninterested in purchasing Rule 144A securities. SHORT SALES. The Global Smaller Companies Portfolio may sell securities short "against-the-box." A short sale "against-the-box" is a short sale in which the Portfolio owns an equal amount of the securities sold short or securities convertible into or exchangeable without payment of further consideration for securities of the same issue as, and equal in amount to, the securities sold short. FOREIGN SECURITIES. Each of the Fund's Portfolios may invest in commercial paper and certificates of deposit issued by foreign banks and may invest in other securities of foreign issuers directly or through ADRs, ADSs, EDRs or GDRs. Foreign investments may be affected favorably or unfavorably by changes in currency rates and exchange control regulations. There may be less information available about a foreign company than about a U.S. company and foreign companies may not be subject to reporting standards and requirements comparable to those applicable to U.S. companies. Foreign securities may not be as liquid as U.S. securities. Securities of foreign companies may involve greater market risk than securities of U.S. companies, and foreign brokerage commissions and custody fees are generally higher than in the U.S. Investments in foreign securities may also be subject to local economic or political risks, political instability and possible nationalization of issuers. A Portfolio may invest up to 10% of its total assets in foreign securities (except the Global Portfolio and the Global Smaller Companies Portfolio, which may invest up to 100% of their total assets in foreign securities), except that this 10% limit does not apply to foreign securities held through ADRs, ADSs, EDRs or GDRs or to commercial paper and certificates of deposit issued by foreign banks. LENDING OF PORTFOLIO SECURITIES AND BORROWING. Other than the Seligman Cash Management Portfolio, each of the Fund's Portfolios may lend portfolio securities to banks or other institutional borrowers. The Fund's Portfolios will not lend portfolio securities to any institutions affiliated with the Fund. The borrower must maintain with the Fund's custodian bank cash or equivalent collateral equal to at least 100% of the market value of the securities loaned. During the time portfolio securities are on loan, the borrower is required to pay an amount equal to any dividends or interest paid on the securities to the lending Portfolio. In addition, the lending Portfolio may invest the cash collateral and earn additional income or may receive an agreed upon amount of interest income from the borrower. P-17 Except as noted below, a Portfolio may not borrow money except from banks for temporary purposes (but not for the purpose of purchasing portfolio securities) in an amount not to exceed 10% of the value of the total assets of that Portfolio. In addition, the Seligman Frontier Portfolio and the Seligman High-Yield Bond Portfolio will not purchase additional portfolio securities if that Portfolio has outstanding borrowings in excess of 5% of the value of its total assets. The Seligman Capital Portfolio, the Seligman Common Stock Portfolio and the Seligman Communications and Information Portfolio may from time to time borrow money in order to purchase securities. Borrowings may be made only from banks and each of these Portfolios may not borrow in excess of one-third of the market value of its assets, less liabilities other than such borrowing, or pledge more than 10% of its total assets, taken at cost, to secure the borrowing. Current asset value coverage of three times any amount borrowed by the respective Portfolio is required at all times. Borrowed money creates an opportunity for greater capital appreciation, but at the same time increases exposure to capital risk. The net cost of any money borrowed would be an expense that otherwise would not be incurred, and this expense will reduce the Portfolio's net investment income in any given period. Any gain in the value of securities purchased with money borrowed to an amount in excess of amounts borrowed plus interest would cause the net asset value of the Portfolio's shares to increase more than otherwise would be the case. Conversely, any decline in the value of securities purchased to an amount below the amount borrowed plus interest would cause the net asset value to decrease more than would otherwise be the case. The Global Portfolio and the Global Smaller Companies Portfolio may from time to time borrow money for temporary, extraordinary or emergency purposes and may invest the funds in additional securities. Borrowings for the purchase of securities will not exceed 5% of the Portfolio's total assets and will be made at prevailing interest rates. WHEN-ISSUED SECURITIES. The Seligman Fixed Income Securities Portfolio and the Seligman High-Yield Bond Portfolio may purchase securities on a when-issued basis. Settlement of such transactions (i.e., delivery of securities and payment of purchase price) normally takes place within 45 days after the date of the commitment to purchase. Although the Seligman High-Yield Bond Portfolio will purchase a security on a when-issued basis only with the intention of actually acquiring the securities, the Portfolio may sell these securities before the purchase settlement date if it is deemed advisable. At the time a Portfolio enters into such a commitment both payment and interest terms will be established prior to settlement; there is a risk that prevailing interest rates on the settlement date will be greater than the interest rate terms established at the time the commitment was entered into. When-issued securities are subject to changes in market value prior to settlement based upon changes, real or anticipated, in the level of interest rates or creditworthiness of the issuer. If a Portfolio remains substantially fully invested at the same time that it has purchased securities on a when-issued basis, the market value of that Portfolio's assets may fluctuate more than otherwise would be the case. For this reason, accounts for each Portfolio will be established with the Fund's custodian consisting of cash and/or liquid high-grade debt securities equal to the amount of each Portfolio's when-issued commitment; these accounts will be valued each day and additional cash and/or liquid high-grade debt securities will be added to an account in the event that the current value of the when-issued commitment increases. When the time comes to pay for when-issued securities, a Portfolio will meet its respective obligations from then available cash flow, sale of securities held in the separate account, sale of other securities, or from the sale of the when-issued securities themselves (which may have a value greater or less than a Portfolio's payment obligations). Sale of securities to meet when-issued commitments carries with it a greater potential for the realization of capital gain or loss. MANAGEMENT SERVICES The Board of Directors provides broad supervision over the affairs of the Fund. Pursuant to management agreements approved by the Board of Directors (the "Management Agreements"), the Manager manages the investments of each Portfolio and administers its business and other affairs. The address of the Manager is 100 Park Avenue, New York, New York 10017. Mr. William C. Morris is Chairman and President of the Manager and Chairman of the Board and Chief Executive Officer of the Fund. Mr. Morris owns a majority of the outstanding voting securities of the Manager. For its services under the Management Agreements, the Manager receives a fee, calculated daily and payable monthly, at an annual rate of .40% of the average daily net assets of the Seligman Capital Portfolio, the Seligman Cash Management Portfolio, the Seligman Common Stock Portfolio, the Seligman Fixed P-18 Income Securities Portfolio, and the Seligman Income Portfolio, at an annual rate of .50% of the average daily net assets of the Seligman High-Yield Bond Portfolio, and at an annual rate of .75% of the average daily net assets of the Seligman Communications and Information Portfolio and the Seligman Frontier Portfolio. The Global Portfolio and the Global Smaller Companies Portfolio each pay the Manager a management fee, calculated daily and payable monthly, equal to an annual rate of 1.00% of the average daily net assets of each Portfolio, of which .90% is paid to the Subadviser for the services described below. This management fee is higher than that of the other Portfolios of the Fund and of most investment companies but is comparable to that of most global equity funds. The Manager voluntarily has agreed to waive its management fee and to reimburse all expenses for the Seligman Cash Management Portfolio, and has voluntarily agreed to reimburse annual expenses (other than the management fee) that exceed .20% of average net assets for each of the Seligman Capital, Seligman Common Stock, Seligman Communications and Information, Seligman Fixed Income Securities, Seligman Frontier, Seligman High-Yield Bond and Seligman Income Portfolios. There is no assurance that the Manager will continue this policy in the future. For the year/period ended December 31, 1994, the Subadviser voluntarily agreed to reimburse certain annual expenses (other than the management fee) that exceeded .20% of average net assets for the Global Portfolio and the Global Smaller Companies Portfolio and will continue to do so for the period prior to May 1, 1995. Effective May 1, 1995, the Subadviser has agreed to reimburse annual expenses (other than the management fee) that exceed .40% of average net assets. The management fee paid by each Portfolio expressed as a percentage of average daily net assets of that Portfolio is presented in the following table for the fiscal year/period ended December 31, 1994. Total expenses for each Portfolio's shares, expressed as an annualized percentage of average daily net assets, are also presented in the following table for the year/period ended December 31, 1994. MANAGEMENT ANNUALIZED EXPENSE FEE RATE RATIOS FOR IN THE FOR THE YEAR ENDED YEAR/PERIOD ENDED PORTFOLIO 12/31/94 12/31/94* --------- ------------------- ------------------ Capital Portfolio ....................... .40% .60% Cash Management Portfolio ............... --* -- Common Stock Portfolio .................. .40 .60 Communications and Information Portfolio .75+ .95 Fixed Income Securities Portfolio ....... .40 .60 Frontier Portfolio ...................... .75+ .95 Global Portfolio ........................ 1.00 1.20 Global Smaller Companies Portfolio ...... 1.00+ 1.20 Income Portfolio ........................ .40 .60 ------------- * During the year/period ended December 31, 1994, the Manager, at its discretion, waived all of its fees for the Seligman Cash Management Portfolio, and the Manager or Subadviser elected to reimburse all or a portion of the expenses for each Portfolio. + Annualized. The Manager also serves as manager of sixteen other investment companies, which, together with the Fund, make up the "Seligman Group." The aggregate assets of the Seligman Group are approximately $6.6 billion. The Manager also provides investment management or advice to individual and institutional accounts having an aggregate value of approximately $3 billion. The Fund bears all expenses of its organization, operations, and business not specifically assumed or agreed to be paid by the Manager as provided in the Management Agreements. In particular, but without limiting the generality of the foregoing, the Fund pays brokerage commissions, custody expenses and expenses relating to computation of the Fund's net asset value per share, including the cost of any equipment or services used for obtaining price quotations; legal and accounting fees and expenses; fees and expenses of registering the Fund under P-19 the federal securities laws; taxes or governmental fees payable by or with respect to the Fund to federal, state, or other governmental agencies, domestic or foreign, including stamp or other transfer taxes; fees, dues, and other expenses incurred in connection with the Fund's membership in any trade association or other investment organization; and such nonrecurring expenses as may arise, including litigation costs. THE SUBADVISER. Seligman Henderson Co. serves as Subadviser to the Global Portfolio and the Global Smaller Companies Portfolio pursuant to Subadvisory Agreements between the Manager and the Subadviser (the "Subadvisory Agreements"). The Subadvisory Agreements provide that the Subadviser will supervise and direct the Portfolios' international investments in accordance with the Portfolios' investment objectives, policies and restrictions. Seligman Henderson Co. was created to provide international and global investment management services to institutional and individual investors and investment companies in the U.S. The address of the Subadviser is 100 Park Avenue, New York, New York 10017. PORTFOLIO MANAGERS. Loris D. Muzzatti, a Managing Director of the Manager, serves as Vice President of the Fund and has been the Portfolio Manager of the Seligman Capital Portfolio since December 1988. Mr. Muzzatti, who joined the Manager in 1985, also manages a portion of the Manager's leading institutional accounts. The Portfolio Manager's discussion of the Portfolio's performance, as well as a line graph illustrating comparative performance information between the Portfolio, the Standard & Poor's 500 Composite Stock Price Index and the Lipper Capital Appreciation Fund Average, is included in the Fund's 1994 Annual Report to Shareholders. Charles C. Smith, Jr., a Managing Director of the Manager since January 1, 1994, serves as Vice President of the Fund and has been Portfolio Manager of the Seligman Common Stock Portfolio and the Seligman Income Portfolio since December 1991. Mr. Smith, who joined the Manager in 1985 as Vice President, Investment Officer and became Senior Vice President, Senior Investment Officer in 1992, also manages Seligman Common Stock Fund, Inc. and Seligman Income Fund, Inc. Stacey G. Navin, Vice President of the Manager, serves as Vice President of the Fund and has been a Co-Portfolio Manager of the Seligman Common Stock Portfolio and the Seligman Income Portfolio since December 1991. Ms. Navin, who joined the Manager in 1986 and assumed her current responsibilities in 1988, also co-manages Seligman Common Stock Fund, Inc. and Seligman Income Fund, Inc. The Portfolio Manager's discussion of the Seligman Common Stock Portfolio's performance, as well as a line graph illustrating comparative performance information between the Seligman Common Stock Portfolio, the Standard & Poor's 500 Composite Stock Price Index and the Lipper Growth and Income Fund Average, is included in the Fund's 1994 Annual Report to Shareholders. The Portfolio Manager's discussion of the Seligman Income Portfolio's performance, as well as a line graph illustrating comparative performance information between the Seligman Income Portfolio, the Standard & Poor's 500 Composite Stock Price Index, and the Lipper Income Fund Average, is included in the Fund's 1994 Annual Report to Shareholders. Paul H. Wick, a Managing Director of the Manager, serves as Vice President of the Fund and is the Portfolio Manager of the Seligman Communications and Information Portfolio and the Seligman Frontier Portfolio. Mr. Wick, who joined the Manager in 1987, also manages Seligman Communications and Information Fund, Inc. and Seligman Frontier Fund, Inc., and co-manages Seligman Henderson Global Technology Fund, a series of Seligman Henderson Global Fund Series, Inc. The Portfolio Manager's discussion of the Seligman Communications and Information Portfolio's performance, as well as a line graph illustrating comparative information between the Seligman Communications and Information Portfolio, the Standard & Poor's 500 Composite Stock Price Index and the Lipper Science and Technology Fund Average, is included in the Fund's 1994 Annual Report to Shareholders. The Portfolio Manager's discussion of the Seligman Frontier Portfolio's performance, as well as a line graph illustrating comparative information between the Seligman Frontier Portfolio, the National Association of Securities Dealers Automated Quotations ("NASDAQ") and the Lipper Small Company Fund Average, is included in the Fund's 1994 Annual Report to Shareholders. Leonard J. Lovito, a Vice President of the Manager, serves as Vice President of the Fund and has been Portfolio Manager of the Seligman Fixed Income Securities Portfolio since January 1, 1994 and of the Seligman Cash Management Portfolio and Seligman Cash Management Fund, Inc. since January 1, 1995. Mr. Lovito, who joined the Manager in 1984, manages the Seligman U.S. Government Securities Series of Seligman High Income Fund Series. The Portfolio Manager's discussion of the Seligman Fixed Income Securities Portfolio's performance, as well as a line graph illustrating comparative performance information between the Seligman Fixed Income Securities Portfolio, the Standard & Poor's 500 Composite Stock Price Index, the Lehman Brothers Government Bond Index, and the Lipper Fixed Income Fund Average, is included in the Fund's 1994 Annual Report to Shareholders. P-20 Daniel J. Charleston, a Vice President of the Manager, serves as a Vice President of the Fund and is the Portfolio Manager of the Seligman High-Yield Bond Portfolio. Mr. Charleston, who joined the Manager in 1987, has also managed the Seligman High-Yield Bond Series of Seligman High Income Fund Series since 1989. The Subadviser's International Policy Group has overall responsibility for directing and overseeing all aspects of investment activity for the Global Portfolio and the Global Smaller Companies Portfolio and provides international investment policy, including country weightings, asset allocations and industry sector guidelines, as appropriate. Mr. Iain C. Clark, a Managing Director and the Chief Investment Officer of the Subadviser, is responsible for the day-to-day investment activity of the Global Portfolio and the Global Smaller Companies Portfolio. Mr. Clark, who joined the Subadviser in 1992, has been a Director of Henderson Administration Group plc and Henderson International, Ltd. and Secretary, Treasurer and Vice President of Henderson International, Inc. since 1985. Mr. Clark's discussion of the Global Portfolio's performance, as well as a line graph illustrating comparative performance information between the Global Portfolio, the Morgan Stanley Capital International ("MSCI") World Index and the MSCI Europe-Asia-Far East Index, is included in the Fund's 1994 Annual Report to Shareholders. Mr. Clark's discussion of the Global Smaller Companies Portfolio's performance, as well as a line graph illustrating comparative information between the Global Smaller Companies Portfolio, the MSCI World Index, and the Lipper Global Small Company Fund Average, is included in the Fund's 1994 Annual Report to Shareholders. Copies of the Fund's 1994 Annual Report to Shareholders may be obtained, without charge, by calling or writing the Fund at the telephone numbers or address listed on the front page of this Prospectus. PORTFOLIO TRANSACTIONS, PORTFOLIO TURNOVER AND VALUATION PORTFOLIO TRANSACTIONS. In directing transactions involving exchange-listed securities, the Manager (or in the case of the Global Portfolio and the Global Smaller Companies Portfolio, the Manager or the Subadviser) will seek the most favorable price and execution, and consistent with that policy may give consideration to the research, statistical, and other services furnished by brokers or dealers to the Manager or the Subadviser for its use. In addition, the Manager and Subadviser are authorized to place orders with brokers who provide supplemental investment and market research and security and economic analysis, although the use of such brokers may result in a higher brokerage charge to a Portfolio than the use of brokers selected solely on the basis of seeking the most favorable price and execution although such research and analysis received may be useful to the Manager or the Subadviser in connection with their services to other clients as well as to the Portfolios. Portfolio transactions for the Seligman Cash Management Portfolio, Seligman Fixed Income Securities Portfolio and Seligman High-Yield Bond Portfolio, which invest in debt securities generally traded in the over-the-counter market, and transactions by any of the other Portfolios in debt securities traded on a "principal basis" in the over-the-counter market are normally directed by the Manager or the Subadviser to dealers in the over-the-counter market, which dealers generally act as principals for their own accounts. Consistent with the rules of the National Association of Securities Dealers, Inc. and subject to seeking the most favorable price and execution available and such other policies as the Directors may determine, the Manager or Subadviser may consider sales of the variable contracts which are funded though CLVA-2, CLVA-3, Canada Life Separate Accounts (collectively, "Canada Life Accounts") and, if permitted by applicable laws, of the other Funds in the Seligman Group as a factor in the selection of brokers or dealers to execute portfolio transactions for the Fund. PORTFOLIO TURNOVER. A change in securities held by any Portfolio is known as "portfolio turnover" and may involve the payment by the Fund of dealer spreads or underwriting commissions and other transactions costs on the sale of securities as well as on the reinvestment of the proceeds in other securities. Changes will be made whenever the Manager or, in the case of the Global Portfolio and the Global Smaller Companies Portfolio, the Subadviser, believes such changes will strengthen any Portfolio's position. Portfolio turnover will vary from year to year as well as within a year and may exceed 100%. VALUATION. The net asset value of the shares of each Portfolio will be computed each day, Monday through Friday, as of the close of the New York Stock Exchange (usually 4:00 p.m., New York City time), on days the New York Stock Exchange is open for trading. Securities of each Portfolio (except Seligman Cash Management Portfolio) are valued at current market value, or in the absence P-21 thereof, at fair value in accordance with procedures approved by the Board of Directors. For purposes of determining the net asset value per share of the Global Portfolio and the Global Smaller Companies Portfolio, securities traded on a foreign exchange or over-the-counter market are valued at the last sales price on the primary exchange or market on which they are traded. United Kingdom securities and securities for which there are no recent sales transactions are valued based on quotations provided by primary market makers in such securities. Any securities for which recent market quotations are not readily available are valued at fair value determined in accordance with procedures approved by the Board of Directors. Short-term holdings maturing in 60 days or less are generally valued at amortized cost if their original maturity was 60 days or less. Short-term holdings with more than 60 days remaining to maturity will be valued at current market value until the 61st day prior to maturity, and will then be valued on an amortized cost basis based on the value of such date unless the Board determines that this amortized cost value does not represent fair market value. Securities held by the Seligman Cash Management Portfolio are valued using the amortized cost method. This method is designed to stabilize the net asset value of that Portfolio at $1.00 per share. The Board of Directors will monitor closely the stabilization of the net asset value at $1.00 per share and has adopted procedures to facilitate such stabilization. More information regarding this method of valuation is contained in the Statement of Additional Information. DIVIDENDS, DISTRIBUTIONS AND TAXES Each Portfolio of the Fund intends to qualify as a "regulated investment company" under certain provisions of the Internal Revenue Code of 1986, as amended (the "Code"). Under such provisions, the Fund's Portfolios will be subject to federal income tax only with respect to undistributed net investment income and net realized capital gain. Each of the Fund's Portfolios will be treated as a separate entity. Dividends on the Seligman Cash Management Portfolio will be declared daily and reinvested monthly in additional full and fractional shares of the Seligman Cash Management Portfolio; it is not expected that this Portfolio will realize capital gains. Dividends and capital gain distributions from each of the other Portfolios will be declared and paid annually and will be reinvested at the net asset value of such shares of the Portfolio that declared such dividend or gain distribution. Dividend and gain distributions are generally not currently taxable to owners of the CLVA-2, CLVA-3 or VCA-9 Contracts; further information regarding the tax consequences of an investment in the Fund is contained in the separate prospectus or disclosure documents of the Canada Life Accounts and VCA-9. PURCHASES AND REDEMPTIONS Shares of the Portfolios will be offered only to Canada Life Accounts and VCA-9. Shares of the Fund will be purchased and redeemed by Canada Life Accounts and VCA-9 at net asset value, without charge. However, the Canada Life Accounts and VCA-9 Contracts are sold subject to certain fees and charges. These fees and charges for the Canada Life Accounts and VCA-9 Contracts are more fully described in the prospectuses or disclosure documents for Canada Life Accounts and VCA-9 which should be read together with this Prospectus, as applicable. Purchase or redemption requests received by the Fund prior to 4:00 p.m., New York City time are effected at the applicable Portfolio's net asset value per share calculated on the date such purchase or redemption requests are received. Any inquiries regarding the Fund should be directed in writing to Seligman Financial Services, Inc., 100 Park Avenue, New York, New York 10017, or by calling the telephone numbers listed on the front page of the Prospectus. Seligman Financial Services, Inc. is an affiliate of the Manager and distributor of the contracts funded through the Canada Life Accounts. CUSTODIANS AND TRANSFER AGENT Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105, acts as custodian of the Fund's assets, except for the assets of the Global Portfolio and the Global Smaller Companies Portfolio, as well as transfer and dividend disbursing agent. Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York 11201, acts as custodian of the assets of the Global Portfolio and the Global Smaller Companies Portfolio. P-22 ORGANIZATION AND CAPITALIZATION The Fund is an open-end diversified management investment company incorporated under the laws of the state of Maryland on June 24, 1987 under the name Seligman Mutual Benefit Portfolios, Inc. The Fund's name was changed to Seligman Portfolios, Inc. on April 15, 1993. Directors of the Fund have authority to issue a total of 1,000,000,000 shares, each with a par value of $.001. The Fund presently has ten separate series of common stock, each of which maintains a separate investment portfolio, designated as follows: Seligman Capital Portfolio; Seligman Cash Management Portfolio; Seligman Common Stock Portfolio; Seligman Communications and Information Portfolio; Seligman Fixed Income Securities Portfolio; Seligman Frontier Portfolio; Seligman Henderson Global Portfolio; Seligman Henderson Global Smaller Companies Portfolio; Seligman High-Yield Bond Portfolio; and Seligman Income Portfolio. Each share represents an equal proportionate interest in the respective series and shares entitle their holders to one vote per share. Shares have noncumulative voting rights, do not have preemptive or subscription rights, are transferable and are fully paid and non-assessable. In accordance with current policy of the SEC, holders of the Canada Life Accounts and VCA-9 Contracts have the right to instruct Canada Life and MBL Life, respectively, as to voting Fund shares held by such Canada Life Accounts and VCA-9, respectively, on all matters to be voted on by Fund shareholders. Such rights may change in accordance with changes in policies of the SEC. Voting rights of the participants in the Canada Life Accounts and VCA-9 are more fully set forth in the prospectus or disclosure document relating to that account, as applicable, which should be read together with this Prospectus. The Directors of the Fund have authority to create additional portfolios and to classify and reclassify shares of capital stock without further action by shareholders and additional series may be created in the future. Under Maryland corporate law, the Fund is not required to hold annual meetings and it is the intention of the Fund's Directors not to do so. However, special meetings of shareholders will be held for action by shareholders as may be required by the 1940 Act, the Fund's Articles of Incorporation and By-Laws, or Maryland corporate law. P-23 APPENDIX MOODY'S INVESTORS SERVICE (MOODY'S) DEBT SECURITIES AAA: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than Aaa bonds because margins of protection may not be as large or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. BAA: Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be characteristically lacking or may be unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact may have speculative characteristics as well. BA: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during other good and bad times over the future. Uncertainty of position characterizes bonds in this class. B: Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. CAA: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. CA: Bonds which are rated Ca represent obligations which are speculative in high degree. Such issues are often in default or have other marked shortcomings. C: Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Moody's applies numerical modifiers (1, 2 and 3) in each generic rating classification from Aa through B in its corporate bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; modifier 2 indicates a mid-range ranking; and modifier 3 indicates that the issuer ranks in the lower end of its generic rating category. COMMERCIAL PAPER Moody's Commercial Paper Ratings are opinions of the ability of issuers to repay punctually promissory senior debt obligations not having an original maturity in excess of one year. Issuers rated "Prime-1" or "P-1" indicates the highest quality repayment ability of the rated issue. The designation "Prime-2" or "P-2" indicates that the issuer has a strong ability for repayment of senior short-term promissory obligations. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternative liquidity is maintained. The designation "Prime-3" or "P-3" indicates that the issuer has an acceptable capacity for repayment of short-term promissory obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. P-24 Issues rated "Not Prime" do not fall within any of the Prime rating categories. STANDARD & POOR'S CORPORATION ("S&P") DEBT SECURITIES AAA: Debt issues rated AAA are highest grade obligations. Capacity to pay interest and repay principal is extremely strong. AA: Debt issues rated AA have a very strong capacity to pay interest and repay principal and differ from the highest rated issues only in small degree. A: Debt issues rated A are regarded as upper medium grade. They have a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB: Debt issues rated BBB are regarded as having an adequate capacity to pay interest and re-pay principal. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and re-pay principal for bonds in this category than for bonds in higher rated categories. BB, B, CCC, CC: Debt issues rated BB, B, CCC and CC are regarded on balance, as predominantly speculative with respect to capacity to pay interest and pre-pay principal in accordance with the terms of the bond. BB indicates the lowest degree of speculation and CC the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposure to adverse conditions. C: The rating C is reserved for income bonds on which no interest is being paid. D: Debt issues rated D are in default, and payment of interest and/or repayment of principal is in arrears. NR: Indicates that no rating has been requested, that there is insufficient information on which to base a rating or that S&P does not rate a particular type of bond as a matter of policy. COMMERCIAL PAPER S&P Commercial Paper ratings are current assessments of the likelihood of timely payment of debts having an original maturity of no more than 365 days. A-1: The A-1 designation indicates that the degree of safety regarding timely payment is very strong. A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated "A-1." A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. B: Issues rated B" are regarded as having only a speculative capacity for timely payment. C: This rating is assigned to short-term debt obligations with a doubtful capacity of payment. D: Debt rated "D is in payment default. The ratings assigned by S&P may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within its major rating categories. P-25 STATEMENT OF ADDITIONAL INFORMATION May 1, 1995 SELIGMAN PORTFOLIOS, INC. 100 Park Avenue New York, New York 10017 800-221-7844 - all continental United States, except New York 212-850-1864 - New York State 800-221-2783 - Marketing Services This Statement of Additional Information expands upon and supplements the information contained in the current Prospectus of Seligman Portfolios, Inc. (the "Fund"), dated May 1, 1995. It should be read in conjunction with the Prospectus, which may be obtained by contacting the Fund at the telephone numbers or address set forth above. This Statement of Additional Information, although not in itself a Prospectus, is incorporated by reference into the Prospectus in its entirety. TABLE OF CONTENTS INVESTMENT POLICIES AND RESTRICTIONS................... DIRECTORS AND OFFICERS................................. MANAGEMENT AND EXPENSES................................ PORTFOLIO TRANSACTIONS, VALUATION AND REDEMPTION....... CUSTODIANS AND INDEPENDENT AUDITORS.................... FINANCIAL STATEMENTS................................... APPENDIX A............................................. -1- INVESTMENT POLICIES AND RESTRICTIONS The Prospectus discusses the investment objectives of each of the Fund's Portfolios and the policies it employs to achieve those objectives. The following information regarding the Fund's investment policies supplements the information contained in the Prospectus. Lending of Portfolio Securities Certain of the Fund's Portfolios may lend portfolio securities to certain institutional borrowers of securities and may invest the cash collateral and obtain additional income or receive an agreed-upon amount of interest from the borrower. Loans made will generally be short-term and are subject to termination at the option of the Fund or the borrower. The lending Portfolio may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash or equivalent collateral to the borrower or placing broker. The lending Portfolio does not have the right to vote securities during the period of the loan, but would terminate the loan and regain the right to vote if that were considered important with respect to the investment. Repurchase Agreements Each of the Portfolios may enter into repurchase agreements with commercial banks and with broker/dealers to invest cash for the short term. A repurchase agreement is an agreement under which a Portfolio acquires a money market instrument, generally a U.S. Government obligation, subject to resale at an agreed-upon price and date. Such resale price reflects an agreed-upon interest rate effective for the period of time the instrument is held by a Portfolio and is unrelated to the interest rate on the instrument. Each of the Portfolios has the right to sell securities subject to repurchase agreements but would be required to deliver identical securities upon maturity of the repurchase agreement unless the seller failed to pay the repurchase price. It is not anticipated that securities subject to repurchase agreements will be sold except in the case of default on the obligation to repurchase. To the extent that the proceeds from any sale upon a default in the obligation to repurchase were less than the repurchase price, a Portfolio would suffer a loss. In addition, the law is unsettled regarding the rights of a Portfolio if the financial institution that is party to the repurchase agreement petitions for bankruptcy or otherwise becomes subject to the United States Bankruptcy Code. As a result, under these extreme circumstances, there may be restrictions on the ability to sell the collateral, and losses could be incurred. Illiquid Securities Other than the Seligman Cash Management Portfolio, each Portfolio of the Fund may invest up to 15% of its net assets in illiquid securities, including restricted securities (i.e., securities subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act")) and other securities that are not readily marketable. Foreign Currency Transactions. A forward foreign currency exchange contract is an agreement to purchase or sell a specific currency at a future date and at a price set at the time the contract is entered into. The Seligman Henderson Global Portfolio or the Seligman Henderson Global Smaller Companies Portfolio will generally enter into forward foreign currency exchange contracts to fix the US dollar value of a security it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for, or, to hedge the US dollar value of securities it owns. The Fund may enter into a forward contract to sell or buy the amount of a foreign currency it believes may experience a substantial movement against the US dollar. In this case the contract would approximate the value of some or all of the Fund's portfolio securities denominated in such foreign currency. Under normal circumstances, the portfolio manager will limit forward currency contracts to not greater than 75% of a Fund's portfolio position in any one country as of the date the contract is entered into. This limitation will be measured at the point the hedging -2- transaction is entered into by the Fund. Under extraordinary circumstances, the Subadviser may enter into forward currency contracts in excess of 75% of a Fund's portfolio position in any one country as of the date the contract is entered into. The precise matching of the forward contract amounts and the value of securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movement in the value of those securities between the date the forward contract is entered into and the date it matures. The projection of short-term currency market movement is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Under certain circumstances, a Portfolio may commit a substantial portion or the entire value of its assets to the consummation of these contracts. The Subadviser will consider the effect a substantial commitment of its assets to forward contracts would have on the investment program of a Portfolio and its ability to purchase additional securities. Except as set forth above and immediately below, each Portfolio will also not enter into such forward contracts or maintain a net exposure to such contracts where the consummation of the contracts would oblige the Portfolio to deliver an amount of foreign currency in excess of the value of the Portfolio's portfolio securities or other assets denominated in that currency. A Portfolio, in order to avoid excess transactions and transaction costs, may nonetheless maintain a net exposure to forward contracts in excess of the value of the Portfolio's portfolio securities or other assets denominated in that currency provided the excess amount is "covered" by cash and/or liquid, high-grade debt securities, denominated in any currency, having a value at least equal at all times to the amount of such excess. Under normal circumstances, consideration of the prospect for currency parties will be incorporated into the longer term investment decisions made with regard to overall diversification strategies. However, the Subadviser believes that it is important to have the flexibility to enter into such forward contracts when it determines that the best interests of the Portfolio will be served. At the maturity of a forward contract, a Portfolio may either sell the portfolio security and make delivery of the foreign currency, or it may retain the security and terminate its contractual obligation to deliver the foreign currency by purchasing an "offsetting" contract obligating it to purchase, on the same maturity date, the same amount of the foreign currency. As indicated above, it is impossible to forecast with absolute precision the market value of portfolio securities at the expiration of the forward contract. Accordingly, it may be necessary for a Portfolio to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security if its market value exceeds the amount of foreign currency a Portfolio is obligated to deliver. However, a Portfolio may use liquid, high-grade debt securities, denominated in any currency, to cover the amount by which the value of a forward contract exceeds the value of the securities to which it relates. If a Portfolio retains the portfolio security and engages in offsetting transactions, the Portfolio will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If the Portfolio engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency. Should forward prices decline during the period between the Portfolio's entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the Portfolio will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Portfolio will suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell. Each Portfolio's dealing in forward foreign currency exchange contracts will be limited to the transactions described above. Of course, a Portfolio is not required to enter into forward contracts with regard to its foreign currency-denominated securities and will not do so unless deemed appropriate by the Subadviser. It also should be realized that this method of hedging against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange at a future date. -3- Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of a hedged currency, at the same time, they tend to limit any potential gain which might result from an increase in the value of that currency. Shareholders should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the "spread") between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to a Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that currency to the dealer. Portfolio Turnover. The portfolio turnover rate for each Portfolio is calculated by dividing the lesser of purchases or sales of portfolio securities for the fiscal year by the monthly average of the value of the portfolio securities owned during the fiscal year. Securities whose maturity or expiration date at the time of acquisition were one year or less are excluded from the calculation. The portfolio turnover rates for the years 1994 and 1993 of the Seligman Capital Portfolio, Seligman Common Stock Portfolio, Seligman Fixed Income Securities Portfolio and Seligman Income Portfolio were 67.39% and 65.30%; 15.29% and 10.70%; 237.23% and 33.21%; and 29.76% and 38.38%, respectively. The portfolio turnover rates for the Seligman Henderson Global Portfolio for the year 1994 and from May 3, 1993 (commencement of operations) through December 31, 1993 was 47.34% and 2.82%. For the period from October 11, 1994 (commencement of operations) through December 31, 1994, the portfolio turnover rate of Seligman Communications and Information Portfolio, Seligman Frontier Portfolio and Seligman Henderson Global Smaller Companies Portfolio, respectively, was 0%, 0%, and 0%, respectively. The increase in portfolio turnover for the Seligman Fixed Income Securities Portfolio during 1994 was due to a rising interest rate environment throughout the year. In response to this, the portfolio manager shortened the maturity of the portfolio by selling long-term bonds and purchased shorter maturity securities in order to reduce the interest rate exposure of the portfolio. The fluctuation in the portfolio turnover rate for the Seligman Henderson Global Portfolio during the years 1994 and 1993 was due to short length of time the Portfolio was in operation in 1993. Investment Restrictions The Fund has adopted the several investment restrictions enumerated below. Except as otherwise indicated below, restrictions No. 1 through 9 may not be changed without the affirmative vote of the holders of a majority of the Fund's outstanding voting securities; restrictions No. 10 through 16 may be changed by the Fund's Board of Directors. Under these restrictions, none of the Portfolios may: 1. Borrow money, except from banks for temporary purposes (but not for the purpose of purchasing portfolio securities) in an amount not to exceed 10% of the value of the total assets of the Portfolio; except that the Seligman Capital Portfolio, Seligman Common Stock Portfolio and Seligman Communications and Information Portfolio may borrow to purchase securities provided that such borrowings are made only from banks, do not exceed one-third of the respective Portfolio's net assets (taken at market) and are secured by not more than 10% of such assets (taken at cost); except that the Seligman Frontier Portfolio and the Seligman High-Yield Bond Portfolio will not purchase additional portfolio securities if it has outstanding borrowings in excess of 5% of the value of its total assets; and except that each of Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller Companies Portfolio may borrow money from banks to purchase securities in amounts not in excess of 5% of its total assets. 2. Mortgage, pledge or hypothecate any of its assets, except to secure borrowings permitted by paragraph 1 and provided that this limitation does not prohibit escrow, collateral or margin arrangements in connection with (a) the purchase or sale of covered options (including stock index options), (b) the purchase or sale of interest rate or stock index futures contracts or options on such contracts by any of the Fund's Portfolios otherwise permitted to engage in transactions involving such instruments or (c) in connection with the Fund's purchase of fidelity insurance and errors and omissions insurance, and provided, further, that Seligman High-Yield Bond Portfolio may mortgage, pledge or hypothecate its assets, but the value of such encumbered assets may not exceed 10% of that Portfolio's net asset value. This investment restriction No. 2 may be changed, with respect to the Seligman High-Yield Bond Portfolio, by the Fund's Board of Directors. -4- 3. Make "short" sales of securities (except that the Seligman Henderson Global Smaller Companies Portfolio may make short sales "against-the-box"), or purchase securities on "margin" except for short-term credits necessary for the purchase or sale of securities, provided that for purposes of this limitation, initial and variation payments or deposits in connection with transactions involving interest rate or stock index futures contracts and options on such contracts by any Portfolio permitted to engage in transactions involving such instruments will not be deemed to be the purchase of securities on margin. 4. With respect to 75% of its securities portfolio (or 100% of its securities portfolio, in the case of the Seligman High-Yield Bond Portfolio), purchase securities of any issuer if immediately thereafter more than 5% of its total assets valued at market would be invested in the securities of any one issuer, other than securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities; or buy more than 10% of the voting securities of any one issuer. 5. Invest more than 25% of the market value of its total assets in securities of issuers in any one industry, provided that for the purpose of this limitation, mortgage-related securities do not constitute an industry; provided further that Seligman Communications and Information Portfolio will invest at least 65% of the value of its total assets in securities of companies principally engaged in the communications, information and related industries, except when investing for temporary defensive purposes; and provided further that the Seligman Cash Management Portfolio may invest more than 25% of its gross assets: (i) in the banking industry; (ii) in the personal credit institution or business credit institution industries; or (iii) in any combination of (i) and (ii). 6. Purchase or hold any real estate, except that the Seligman Fixed Income Securities Portfolio and the Seligman Henderson Global Smaller Companies Portfolio may engage in transactions involving securities secured by real estate or interests therein, and the Seligman Henderson Global Smaller Companies Portfolio may purchase securities issued by companies or investment trusts that invest in real estate or interests therein. 7. Purchase or sell commodities and commodity futures contracts except that the Board of Directors may authorize any Portfolio other than the Seligman Cash Management Portfolio and the Seligman High-Yield Bond Portfolio to engage in transactions involving interest rate and/or stock index futures and related options solely for the purposes of reducing investment risk and not for speculative purposes. 8. Underwrite the securities of other issuers, provided that the disposition of investments otherwise permitted to be made by any Portfolio (such as investments in securities that are not readily marketable without registration under the Securities Act of 1933 and repurchase agreements with maturities in excess of seven days) will not be deemed to render a Portfolio engaged in an underwriting investment if not more than 10% of the value of such Portfolio's total assets (taken at cost) would be so invested and except that in connection with the disposition of a security a Portfolio may be deemed to be an underwriter as defined in the 1933 Act. 9. Make loans, except loans of securities, provided that purchases of notes, bonds or other evidences of indebtedness, including repurchase agreements, are not considered loans for purposes of this restriction. 10. Purchase illiquid securities for any Portfolio including repurchase agreements maturing in more than seven days and securities that cannot be sold without registration or the filing of a notification under Federal or state securities laws, if, as a result, such investment would exceed 15% of the value of such Portfolio's net assets. 11. Invest in oil, gas or other mineral exploration or development programs; provided, however, that this investment restriction shall not prohibit a Portfolio from purchasing publicly-traded securities of companies engaging in whole or in part in such activities. -5- 12. Purchase securities of any other investment company, except in connection with a merger, consolidation, acquisition or reorganization and except to the extent permitted by Section 12 of the Investment Company Act of 1940 (the "1940 Act"). 13. Purchase securities of companies which, together with predecessors, have a record of less than three years' continuous operation, if as a result of such purchase, more than 5% of such Portfolio's net assets would then be invested in such securities; except that the Seligman Communications and Information Portfolio, the Seligman Frontier Portfolio, the Seligman Henderson Global Smaller Companies Portfolio, and Seligman High-Yield Bond Portfolio may each invest no more than 5% of total assets, at market value, in securities of companies which, with their predecessors, have been in operation less than three continuous years, excluding from this limitation securities guaranteed by a company that, including predecessors, has been in operation at least three continuous years. 14. Purchase securities of companies for the purpose of exercising control. 15. Purchase securities from or sell securities to any of its officers or Directors, except with respect to its own shares and as permissible under applicable statutes, rules and regulations. In addition, Seligman High-Yield Bond Portfolio may not purchase or hold the securities of any issuer if, to its knowledge, directors or officers of the Fund individually owning beneficially more than 0.5% of the securities of that issuer own in the aggregate more than 5% of such securities. 16. Invest more than 5% of the value of its net assets, valued at the lower of cost or market, in warrants, of which no more than 2% of net assets may be invested in warrants and rights not listed on the New York or American Stock Exchange. For this purpose, warrants acquired by the Fund in units or attached to securities may be deemed to have been purchased without cost. If a percentage restriction is adhered to at the time of an investment, a later increase or decrease in such percentage resulting from a change in the value of assets will not constitute a violation of such restriction. In order to permit the sale of the Fund's shares in certain states, the Fund may make commitments more restrictive than the investment restrictions described above. Should the Fund determine that any such commitment is no longer in the best interest of the Fund it will revoke the commitment by terminating sales of its shares in the state involved. The Fund also intends to comply with the diversification requirements under Section 817(h) of the Internal Revenue Code of 1986, as amended. For a description of these requirements see the Prospectus of Canada Life of America Variable Annuity Account 2 and the Disclosure Statement of Canada Life of America Annuity Account 3, each established by Canada Life Insurance Company of America ("Canada Life") or the Prospectus of the Variable Contract Account-9 established by MBL Life Assurance Corporation ("MBL Life"). Under the 1940 Act, a "vote of a majority of the outstanding voting securities" of the Fund or of a particular Portfolio means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or of such Portfolio or (2) 67% or more of the shares of the Fund or of such Portfolio present at a shareholder's meeting if more than 50% of the outstanding shares of the Fund or of such Portfolio are represented at the meeting in person or by proxy. DIRECTORS AND OFFICERS Directors and Officers. Directors and officers of the Fund, together with information as to their principal business occupations during the past five years, are shown below. The age of each Director and officer is indicated in parentheses. Each Director who is an "interested person" of the Fund, as defined in the 1940 Act, is indicated by an asterisk. Unless otherwise indicated, the address of each is 100 Park Avenue, New York, New York 10017. -6- WILLIAM C. MORRIS* Director, Chairman of the Board, Chief (56) Executive Officer and Chairman of the Executive Committee Managing Director, Chairman and President, J. & W. Seligman & Co. Incorporated, investment managers and advisors; and Seligman Advisors, Inc., advisors; Chairman and Chief Executive Officer, the Seligman Group of Investment Companies; Chairman, Seligman Financial Services, Inc., distributor; Seligman Holdings, Inc, holding company; Seligman Services, Inc., broker/dealer; J. & W. Seligman Trust Company, trust company; and Carbo Ceramics Inc., ceramic proppants for oil and gas industry; Director or Trustee, Seligman Data Corp. (formerly Union Data Service Center, Inc.), shareholder service agent; Daniel Industries, Inc., manufacturer of oil and gas metering equipment; Kerr-McGee Corporation, diversified energy company; and Sarah Lawrence College; and a Member of the Board of Governors of the Investment Company Institute; formerly, Chairman, Seligman Securities, Inc., broker/dealer. RONALD T. SCHROEDER* Director, President and Member of the Executive (47) Committee Director, Managing Director and Chief Investment Officer, J. & W. Seligman & Co. Incorporated, investment managers and advisors; Managing Director and Chief Investment Officer, Seligman Advisors, Inc., advisors; Director or Trustee and President and Chief Investment Officer, Tri-Continental Corporation, closed-end investment company and the open-end investment companies in the Seligman Group of Investment Companies; Director and President, Seligman Holdings, Inc., holding company; Director, Seligman Financial Services, Inc., distributor; Seligman Data Corp., shareholder service agent; Seligman Quality Municipal Fund, Inc. and Seligman Select Municipal Fund, Inc., closed-end investment companies; Seligman Henderson Co., advisors; and Seligman Services, Inc., broker/dealer; formerly, Director, J. & W. Seligman Trust Company, trust company; and Seligman Securities, Inc., broker/dealer. FRED E. BROWN* Director (81) Director and Consultant, J. & W. Seligman & Co. Incorporated, investment managers and advisors; Director or Trustee, Tri-Continental Corporation, closed-end investment company; and the open-end investment companies in the Seligman Group of Investment Companies; Director, Seligman Financial Services, Inc., distributor; Seligman Quality Municipal Fund, Inc. and Seligman Select Municipal Fund, Inc., closed-end investment companies; Seligman Services Inc., broker/dealer; Trustee, Trudeau Institute, nonprofit bio-medical research organization; Lake Placid Center for the Arts, cultural organization; Lake Placid Education Foundation, education foundation; formerly, Director, J. & W. Seligman Trust Company, trust company; and Seligman Securities, Inc., broker/dealer. -7- ALICE S. ILCHMAN Director (59) President, Sarah Lawrence College; Director or Trustee, the Seligman Group of Investment Companies; NYNEX (formerly, New York Telephone Company), telephone company; The Rockefeller Foundation, charitable foundation; and The Committee for Economic Development; formerly, Trustee, The Markle Foundation, philanthropic organization; and Director, International Research and Exchange Board, intellectual exchanges. Sarah Lawrence College, Bronxville, NY 10708 JOHN E. MEROW* Director (65) Partner, Sullivan & Cromwell, law firm; Director or Trustee, the Commonwealth Aluminum Corporation; the Seligman Group of Investment Companies; the Municipal Art Society of New York; the U. S. Council for International Business and the U. S.-New Zealand Council; Chairman, American Australian Association; the Municipal Art Society of New York; Member of the American Law Institute and Council on Foreign Relations; and Member of the Board of Governors of the Foreign Policy Association and New York Hospital. 125 Broad Street, New York, NY 10004 BETSY S. MICHEL Director (52) Attorney; Director or Trustee, the Seligman Group of Investment Companies; National Association of Independent Schools (Washington, D.C.), education; Chairman of the Board of Trustees of St. George's School (Newport, RI). St. Bernard's Road, P.O. Box 449, Gladstone, NJ 07934 DOUGLAS R. NICHOLS, JR. Director (75) Management Consultant; Director or Trustee, the Seligman Group of Investment Companies; formerly, Trustee, Drew University. 790 Andrews Avenue, Delray Beach, FL 33483 JAMES C. PITNEY Director (68) Partner, Pitney, Hardin, Kipp & Szuch, law firm; Director or Trustee, the Seligman Group of Investment Companies; Public Service Enterprise Group, public utility. Park Avenue at Morris County, P.O. Box 1945, Morristown, NJ 07962-1945 JAMES Q. RIORDAN Director (67) Director, Various Corporations; Director or Trustee, the Seligman Group of Investment Companies; The Brooklyn Museum; The Brooklyn Union Gas Company; The Committee for Economic Development; Dow Jones & Co., Inc.; Public Broadcasting Service; formerly, Co-Chairman of the Policy Council of the Tax Foundation; Director and Vice Chairman, Mobil Corporation; Director, Tesoro Petroleum Companies, Inc.; and Director and President, Bekaert Corporation. 675 Third Avenue, Suite 3004, New York, NY 10017 -8- HERMAN J. SCHMIDT Director (78) Director, Various Corporations; Director or Trustee, the Seligman Group of Investment Companies; H. J. Heinz Company; HON Industries, Inc.; and MAPCO, Inc; formerly, Director, MetLife Series Fund, Inc. and MetLife Portfolios, Inc.; and Ryder System, Inc. 15 Oakley Lane, Greenwich, CT 06830 ROBERT L. SHAFER Director (62) Vice President, Pfizer Inc., pharmaceuticals; Director or Trustee, the Seligman Group of Investment Companies; and USLIFE Corporation, life insurance. 235 East 42nd Street, New York, NY 10017 JAMES N. WHITSON Director (60) Executive Vice President, Chief Operating Officer and Director, Sammons Enterprises, Inc.; Director or Trustee, Red Man Pipe and Supply Company, piping and other materials; the Seligman Group of Investment Companies; Director, C-SPAN. 300 Crescent Court, Suite 700, Dallas, TX 75201 BRIAN T. ZINO* Director and Member of the Executive Committee (42) Managing Director (formerly, Chief Administrative and Financial Officer), J. & W. Seligman & Co. Incorporated, investment managers and advisors; Director or Trustee, the Seligman Group of Investment Companies; Chairman, Seligman Data Corp., shareholder service agent; Director, Seligman Financial Services, Inc., distributor; Seligman Services, Inc., broker/dealer; and J. & W. Seligman Trust Company, trust company; Senior Vice President, Seligman Henderson Co., advisors; formerly, Director and Secretary, Chuo Trust - JWS Advisors, Inc., advisors; and Director, Seligman Securities, Inc., broker/dealer. DANIEL J. CHARLESTON Portfolio Manager (35) Vice President, Investment Officer, J. & W. Seligman & Co. Incorporated, investment managers and advisors; and Vice President and Portfolio Manager of one other open-end investment company in the Seligman Group of Investment Companies. LEONARD J. LOVITO Vice President and Portfolio Manager (34) Vice President, Investment Officer, J. & W. Seligman & Co. Incorporated, investment managers and advisors; Vice President and Portfolio Manager, two other open-end investment companies in the Seligman Group of Investment Companies. LORIS D. MUZZATTI Vice President and Portfolio Manager (38) Managing Director (formerly, Vice President and Portfolio Manager), J. & W. Seligman & Co. Incorporated, investment managers and advisors; Vice President and Portfolio Manager, one other open-end investment company in the Seligman Group of Investment Companies. -9- STACEY G. NAVIN Co-Portfolio Manager (30) Vice President, Investment Officer, J. & W. Seligman & Co. Incorporated, investment managers and advisors; Co-Portfolio Manager, two other open-end investment companies in the Seligman Group of Investment Companies. CHARLES C. SMITH, JR. Vice President and Portfolio Manager (38) Managing Director (formerly, Senior Vice President and Senior Investment Officer), J. & W. Seligman & Co. Incorporated, investment managers and advisors; Vice President and Portfolio Manager, two other open-end investment companies in the Seligman Group of Investment Companies and Tri-Continental Corporation, closed-end investment company. PAUL H. WICK Vice President and Portfolio Manager (33) Managing Director (formerly, Vice President, Investment Officer), J. & W. Seligman & Co. Incorporated, investment managers and advisors; Vice President and Portfolio Manager, three other open-end investment companies in the Seligman Group of Investment Companies; Portfolio Manager, Seligman Henderson Co., advisor; formerly, Senior Vice President, Portfolio Management, Chuo Trust-JWS Advisors, Inc., advisor. LAWRENCE P. VOGEL Vice President (38) Senior Vice President, Finance, J. & W. Seligman & Co. Incorporated, investment managers and advisors; Seligman Financial Services, Inc., distributor; and Seligman Advisors, Inc., advisors; Vice President, the Seligman Group of Investment Companies; Senior Vice President, Finance (formerly, Treasurer), Seligman Data Corp., shareholder service agent; Treasurer, Seligman Holdings, Inc., holding company; and Seligman Henderson Co., advisors; formerly, Senior Audit Manager at Price Waterhouse, independent accountants. FRANK J. NASTA Secretary (30) Secretary, the Seligman Group of Investment Companies; J. & W. Seligman & Co., Incorporated, investment managers and advisers; Seligman Financial Services, Inc., distributor; Seligman Henderson Co., advisers; Seligman Services, Inc., broker/dealers; Seligman Data Corp.; Vice President, Law and Regulation, J. & W. Seligman & Co. Incorporated, investment managers and advisers; formerly, attorney, Seward & Kissel. THOMAS G. ROSE Treasurer (37) Treasurer, the Seligman Group of Investment Companies; and Seligman Data Corp., shareholder service agent; formerly, Treasurer, American Investors Advisors, Inc. -10- The Executive Committee of the Board acts on behalf of the Board between meetings to determine the value of securities and assets owned by the Fund for which no market valuation is available and to elect or appoint officers of the Fund to serve until the next meeting of the Board.
Compensation Table Pension or Aggregate Retirement Benefits Total Compensation Compensation Accrued as part of from Fund and Position With Registrant from Fund (1) Fund Expenses Fund Complex (2) ------------------------ ------------- ------------- ---------------- William C. Morris, Director N/A N/A N/A Ronald T. Schroeder, Director N/A N/A N/A Fred E. Brown, Director N/A N/A N/A Alice S. Ilchman, Director $2,396.09 N/A $67,000.00 John E. Merow, Director 2,360.38(d) N/A 66,000.00(d) Betsy S. Michel, Director 2,360.38 N/A 66,000.00 Douglas R. Nichols, Jr., Director 2,360.38 N/A 66,000.00 James C. Pitney, Director 2,396.09 N/A 67,000.00 James Q. Riordan, Director 2,360.38 N/A 66,000.00 Herman J. Schmidt, Director 2,360.38 N/A 66,000.00 Robert L. Shafer, Director 2,360.38 N/A 66,000.00 James N. Whitson, Director 2,360.38(d) N/A 66,000.00(d) Brian T. Zino, Director N/A N/A N/A ----------------------
(1) Based on remuneration received by the Directors of the Fund for the year ended December 31, 1994. (2) As defined in the Fund's Prospectus, the Seligman Group of Investment Companies consists of seventeen investment companies. (d) Deferred. The total amounts of deferred compensation (including interest) payable to Messrs. Merow, Pitney and Whitson as of December 31, 1994 were $8,033, $3,346 and $3,861, respectively. Mr. Pitney no longer defers current compensation. The Fund has a compensation arrangement under which outside directors may elect to defer receiving their fees. Under this arrangement, interest is accrued on the deferred balances. The annual cost of such fees and interest is included in the director's fees and expenses and the accumulated balance thereof is included in "Liabilities" in the Fund's financial statements. Directors and officers of the Fund are also trustees, directors and officers of some or all of the other investment companies in the Seligman Group. As of March 31, 1995, no Directors or officers of the Fund owned directly or indirectly shares of any of the Portfolios. MANAGEMENT AND EXPENSES As indicated in the Prospectus, under the Management Agreements and subject to the control of the Board of Directors, the Manager (or in the case of Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller Companies Portfolio, the Manager and Seligman Henderson Co. (the "Subadviser")) manages the investment of the assets of the Fund, including making purchases and sales of portfolio securities consistent with the Fund's investment objectives and policies, and administers its business and other affairs. The Manager provides the Fund with such office space, administrative and other services and executive and other personnel as are necessary for Fund operations. The Manager pays all of the compensation of directors and/or officers of the Fund who are employees or advisors of the Manager. -11- The Management Agreements (and the Subadvisory Agreements, in the case of Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller Companies Portfolio) provide that the Manager (and the Subadviser, in the case of Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller Companies Portfolio) will not be liable to the Fund for any error of judgment or mistake of law, or for any loss arising out of any investment, or for any act or omission in performing their duties under the Management (and Subadvisory) Agreements, except for willful misfeasance, bad faith, gross negligence, or reckless disregard of their obligations and duties under the Management (and Subadvisory) Agreements. The Fund pays all its expenses other than those assumed by the Manager or Subadviser, including fees and expenses of independent attorneys and auditors, taxes and governmental fees (including fees and expenses for qualifying the Fund and its shares under Federal and state securities laws), expenses of printing and distributing reports, notices and proxy materials to shareholders, expenses of printing and filing reports and other documents with governmental agencies, fees and expenses of directors of the Fund not employed by the Manager or any of its affiliates (including the Subadviser), insurance premiums and extraordinary expenses such as litigation expenses. Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman Fixed Income Securities Portfolio, and Seligman Income Portfolio each pay the Manager a management fee for its services, calculated daily and payable monthly, at an annual rate of .40% of the daily net assets of each Portfolio. Seligman High-Yield Bond Portfolio pays the Manager a management fee for its services calculated daily and payable monthly at an annual rate of .50% of the daily net assets of the Portfolio. Seligman Communications and Information Portfolio and Seligman Frontier Portfolio each pay the Manager a management fee for its services, calculated daily and payable monthly, at an annual rate of .75% of the daily net assets of each Portfolio. Seligman Henderson Global Portfolio and Seligman Henderson Global Smaller Companies Portfolio each pay the Manager a management fee, calculated daily and payable monthly, equal to an annual rate of 1.00% of the average daily net assets of each Portfolio, of which .90% is paid to the Subadviser for the services described below. The following table indicates the management fees paid or reimbursed, in the case of Seligman Cash Management Portfolio, for the year 1994, 1993 and 1992:
1994 1993 1992 ---- ---- ---- Seligman Capital Portfolio $ 23,120 $ 21,941 $ 20,551 Seligman Cash Management Portfolio* 12,837 14,216 19,150 Seligman Common Stock Portfolio 84,124 93,118 100,502 Seligman Communications and Information Portfolio** 349 N/A N/A Seligman Fixed Income Securities Portfolio 14,043 17,252 20,226 Seligman Frontier Portfolio** 99 N/A N/A Seligman Henderson Global Portfolio** 11,417 1,656 N/A Seligman Henderson Global Smaller Companies Portfolio** 159 N/A N/A Seligman High-Yield Bond Portfolio N/A N/A N/A Seligman Income Portfolio 42,854 45,567 45,673
------------------------ * The Manager, at its discretion, waived all of its fees. ** Fees paid from commencement of operations. N/A - Portfolio did not exist. -12- The Manager is a successor firm to an investment banking business founded in 1864 which has thereafter provided investment services to individuals, families, institutions and corporations. See Appendix A for further information about the Manager. On December 29, 1988, a majority of the outstanding voting securities of the Manager was purchased by Mr. William C. Morris and a simultaneous recapitalization of the Manager occurred. The Management Agreement with respect to Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman Fixed Income Portfolio and Seligman Income Portfolio was approved by the Board of Directors on September 30, 1988 and by shareholders at a Special Meeting held on December 16, 1988. The Management Agreement with respect to the Seligman Henderson Global Portfolio was approved by the Board of Directors on March 18, 1993. The Management Agreements with respect to the Seligman Communications and Information Portfolio, the Seligman Frontier Portfolio, and the Seligman Henderson Global Smaller Companies Portfolio were approved by the Board of Directors on July 21, 1994. The Management Agreement with respect to the Seligman High-Yield Bond Portfolio was approved by the Board of Directors on March 16, 1995. The Management Agreements will continue in effect until December 31 of each year, with respect to each portfolio (except Seligman Communications and Information Portfolio, Seligman Frontier Portfolio, and Seligman Henderson Global Smaller Companies Portfolio, the Management Agreements with respect to which are in effect until December 31, 1995 and then December 31 of each year thereafter; and except Seligman High-Yield Bond Portfolio, which Management Agreement is in effect until December 31, 1996 and December 31 of each year thereafter), if (1) such continuance is approved in the manner required by the 1940 Act (by a vote of a majority of the Board of Directors or of the outstanding voting securities of the Portfolio and by a vote of a majority of the Directors who are not parties to the Management Agreements or interested persons of any such party) and (2) if the Manager shall not have notified the Fund at least 60 days prior to the anniversary date of the previous continuance that it does not desire such continuance. The Management Agreements may be terminated at any time with respect to any or all Portfolios, by the Fund, without penalty, on 60 days' written notice to the Manager. The Manager may terminate the Management Agreements at any time upon 60 days written notice to the Fund. The Management Agreements will terminate automatically in the event of their assignment. The Fund has agreed to change its name upon termination of the Management Agreements if continued use of the name would cause confusion in the context of the Manager's business. Under the Subadvisory Agreements between the Manager and the Subadviser, the Subadviser supervises and directs the investment of the assets of the Seligman Henderson Global Portfolio and the Seligman Henderson Global Smaller Companies Portfolio, including making purchases and sales of portfolio securities consistent with each Portfolio's investment objectives and policies. For these services the Subadviser is paid a fee equal to an annual rate of .90% of each Portfolio's average daily net assets. The Subadvisory Agreement with respect to Seligman Henderson Global Portfolio was approved by the Board of Directors at a meeting held on March 18, 1993. The Subadvisory Agreement with respect to Seligman Henderson Global Smaller Companies Portfolio was approved by the Board of Directors at a meeting held on July 21, 1994. The Subadvisory Agreements will continue in effect until December 31 (in the case of the Seligman Henderson Global Smaller Companies Portfolio until December 31, 1995), and from year to year thereafter if such continuance is approved in the manner required by the 1940 Act (by a vote of a majority of the Board of Directors or of the outstanding voting securities of the Portfolio and by a vote of a majority of the Directors who are not parties to the Subadvisory Agreement or interested persons of any such party) and (2) if the Subadviser shall not have notified the Manager in writing at least 60 days prior to such December 31 or prior to December 31 of any year thereafter that it does not desire such continuance. The Subadvisory Agreements may be terminated at any time by the Fund, on 60 days written notice to the Subadviser. The Subadvisory Agreements will terminate automatically in the event of their assignment or upon the termination of the relevant Management Agreement. The Subadviser is a New York general partnership formed by the Manager and Henderson International, Inc., a controlled affiliate of Henderson Administration Group plc (the "Firm"). Henderson Administration Group plc, -13- headquartered in London, is one of the largest independent money managers in Europe. The Firm currently manages approximately $18.5 billion in assets, and is recognized as a specialist in global equity investing. Officers, directors and employees of the Manager are permitted to engage in personal securities transactions, subject to the Manager's Code of Ethics (the "Code"). The Code proscribes certain practices with regard to personal securities transactions and personal dealings, provides a framework for the reporting and monitoring of personal securities transactions by the Manager's Director of Compliance, and sets forth a procedure of identifying, for disciplinary action, those individuals who violate the Code. The Code prohibits each of the officers, directors and employees (including all portfolio managers) of the Manager from purchasing or selling any security that the officer, director or employee knows or believes (i) was recommended by the Manager for purchase or sale by any client, including the Fund, within the preceding two weeks, (ii) has been reviewed by the Manager for possible purchase or sale within the preceding two weeks, (iii) is being purchased or sold by any client, (iv) is being considered by a research analyst, (v) is being acquired in a private placement, unless prior approval has been obtained from the Manager's Director of Compliance, or (vi) is being acquired during an initial or secondary public offering. The Code also imposes a strict standard of confidentiality and requires portfolio managers to disclose any interest they may have in the securities or issuers that they recommend for purchase by any client. The Code also prohibits (i) each portfolio manager or member of an investment team from purchasing or selling any security within seven calendar days of the purchase or sale of the security by a client's account (including investment company accounts) for which the portfolio manager or investment team manages and (ii) each employee from engaging in short-term trading (a purchase and sale or vice-versa within 60 days). Any profit realized pursuant to either of these prohibitions must be disgorged. Officers, directors and employees are required, except under very limited circumstances, to engage in personal securities transactions through the Manager's order desk. In turn, the order desk maintains a list of securities that may not be purchased due to a possible conflict with clients. All officers, directors and employees are also required to disclose all securities beneficially owned by them on December 31 of each year. PORTFOLIO TRANSACTIONS, VALUATION AND REDEMPTION As provided in the Management Agreements, the Manager (or in the case of the Seligman Henderson Global Portfolio and the Seligman Henderson Global Smaller Companies Portfolio, the Manager or the Subadviser) purchases and sells securities for the Fund. Purchase and sale orders are placed by the Manager or the Subadviser. The Management Agreements and the Subadvisory Agreements recognize that in the purchase and sale of portfolio securities the Manager or the Subadviser will seek the most favorable price and execution, and, consistent with that policy, may give consideration to the research, statistical and other services furnished by brokers or dealers to the manager for its use, as well as to the general attitude toward and support of investment companies demonstrated by such brokers or dealers. Such services include supplemental investment research, analysis and reports concerning issuers, industries and securities deemed by the Manager or Subadviser to be beneficial to the Fund. In addition, the Manager or the Subadviser is authorized to place orders with brokers who provide supplemental investment and market research and statistical and economic analysis although the use of such brokers may result in a higher brokerage charge to the Fund that the use of brokers selected solely on the basis of seeking the most favorable price and execution and although such research and analysis may be useful to the Manager or the Subadviser in connection with its services to clients other than the Fund. In over-the-counter markets, the Fund deals with responsible primary market makers unless a more favorable execution or price is believed to be obtainable. The Fund may buy securities from or sell securities to dealers acting as principal, except dealers with which its directors and/or officers are affiliated. -14- Brokerage commissions of each Portfolio (except Seligman Cash Management Portfolio, Seligman Fixed Income Securities Portfolio and Seligman High-Yield Bond Portfolio) for the years 1994, and if applicable, 1993 and 1992, are set forth in the following table:
Brokerage Commissions Total Brokerage Commissions Paid to Others for Brokerage Commissions Paid to Execution and Execution(2) Paid (1) Seligman Securities(2) Statistical Services ------------ -------- ---------------------- -------------------- 1994 1993 1992 1994 1993 1992 1994 1993 1992 ---- ---- ---- ---- ---- ---- ---- ---- ---- Seligman Capital Portfolio $ 8,412 $ 7,285 $ 5,853 --- $ 275 $2,832 $ 8,412 $7,010 $3,021 Seligman Common Stock Portfolio 12,559 12,006 11,418 --- 1,984 6,987 12,559 10,022 4,431 Seligman Communications and Information Portfolio 134 --- --- --- --- --- 134 --- --- Seligman Frontier Portfolio 111 --- --- --- --- --- 111 --- --- Seligman Henderson Global Portfolio 5,503 824 --- --- --- --- 5,503 824 --- Seligman Henderson Global Smaller Companies Portfolio 180 --- --- --- --- --- 180 --- --- Seligman Income Portfolio 2,839 2,152 5,404 --- 635 1,765 2,839 1,517 3,639
--------------- Notes: (1) Not including any spreads on principal transactions on a net basis. (2) Brokerage commissions paid by Seligman Capital Portfolio, Seligman Common Stock Portfolio, and Seligman Income Portfolio, respectively, to Seligman Securities, Inc. were 4%, 48% and 30%; and 17%, 61% and 61%, respectively, of total brokerage commissions paid for 1993 and 1992. The aggregate dollar amount of each Portfolio's transactions for which Seligman Securities, Inc. acted as broker was 2%, 51% and 40%; and 13%, 61% and 58%, respectively, of the total dollar amount of all commission transactions for 1993 and 1992. Under procedures adopted by the Board of Directors, and in accordance with Section 17(e) under the 1940 Act, Seligman Securities, Inc., an affiliate of the Manager, acted as broker, for the Fund. Section 11(a) of the Securities Exchange Act of 1934 prohibits members of U.S. securities exchanges from executing exchange transactions for their affiliates and institutional accounts. Under this provision, Seligman Securities, Inc. acted as broker for any of the Portfolios only as permitted under regulations adopted by the SEC. In accordance with such regulations, the Management Agreement permitted Seligman Securities, Inc. to effect such transactions except on the floor of a national securities exchange and to retain compensation in connection with such transactions. As of March 31, 1993, Seligman Securities, Inc. ceased functioning as a broker for the Fund and its clients. When two or more of the investment companies in the Seligman Group or other investment advisory clients of the Manager desire to buy or sell the same security at the same time, the securities purchased or sold are allocated by the Manager in a manner believed to be equitable to each. There may be possible advantages or disadvantages of such transactions with respect to price or the size of positions readily obtainable or saleable. -15- Valuation. As noted in the Prospectus the net asset value per share of each Portfolio is determined as of the close of trading on the New York Stock Exchange, currently 4:00 p.m. New York City time, each day that the New York Stock Exchange is open. Currently, the New York Stock Exchange is closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The following supplements information contained in the Prospectus regarding the manner in which securities are valued. It is the policy of the Seligman Cash Management Portfolio to use its best efforts to maintain a constant per share price equal to $1.00. Instruments held by the Seligman Cash Management Portfolio are valued on the basis of amortized cost. This involves valuing an instrument at its cost initially and, thereafter, assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which the value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if it sold the instrument. The foregoing method of valuation is permitted by Rule 2a-7 adopted by the SEC. Under this rule, the Seligman Cash Management Portfolio must maintain an average-weighted portfolio maturity of 90 days or less, purchase only instruments having remaining maturities of one year or less, and invest only in securities determined by the Fund's Directors to be of high quality with minimal credit risks. In accordance with the rule, the Directors have established procedures designed to stabilize, to the extent reasonably practicable, the price per share as computed for the purpose of sales and redemptions of the Seligman Cash Management Portfolio at $1.00. Such procedures include review of the portfolio holdings by the Seligman Cash Management Portfolio and determination as to whether the net asset value of the Seligman Cash Management Portfolio, calculated by using available market quotations or market equivalents, deviates from $1.00 per share based on amortized cost. The rule also provides that the extent of any deviation between the net asset value based upon available market quotations or market equivalents, and $1.00 per share net asset value, based on amortized cost, must be examined by the Directors. In the event that a deviation of .5 of 1% or more exists between the Portfolio's $1.00 per share net asset value and the net asset value calculated by reference to market gestations, or if there is any deviation which the Board of Directors believes would result in a material dilution to shareholders or purchasers, the Board of Directors will promptly consider what action, if any, should be initiated. Any such action may include: selling portfolio instruments prior to maturity to realize capital gains or losses or to shorten average portfolio maturity; withholding dividends or paying distributions from capital or capital gains; redeeming shares in kind; or establishing a net asset value per share by using available market quotations. With respect to the Seligman Henderson Global Portfolio and the Seligman Henderson Global Smaller Companies Portfolio, portfolio securities, including open short positions, are valued at the last sale price on the securities exchange or securities market on which such securities primarily are traded. Securities traded on a foreign exchange or over-the-counter market are valued at the last sales price on the primary exchange or market on which they are traded. United Kingdom securities and securities for which there are not recent sales transactions are valued based on quotations provided by primary market makers in such securities. Any securities for which recent market quotations are not readily available, including restricted securities, are valued at fair value determined in accordance with procedures approved by the Board of Directors. Short-term obligations with less than sixty days remaining to maturity are generally valued at amortized cost. Short-term obligations with more than sixty days remaining to maturity will be valued at current market value until the sixtieth day prior to maturity, and will then be valued on an amortized cost basis based on the value on such date unless the Board of Directors determine that this amortized cost value does not represent fair market value. Generally, trading in foreign securities, as well as U.S. Government securities, money market instruments and repurchase agreements, is substantially completed each day at various times prior to the close of the New York Stock Exchange. The values of such securities used in computing the net asset value of -16- the shares of the Portfolio are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the New York Stock Exchange. Occasionally, events affecting the value of such securities and such exchange rates may occur between the times at which they are determined and the close of the New York Stock Exchange, which will not be reflected in the computation of net asset value. If during such periods events occur which materially affect the value of such securities, the securities will be valued at their fair market value as determined in accordance with procedures approved by the Board of Directors. For purposes of determining the net asset value per share of the Portfolio all assets and liabilities initially expressed in foreign currencies will be converted into U.S. dollars at the mean between the bid and offer prices of such currencies against U.S. dollars quoted by a major bank that is a regular participant in the foreign exchange market or on the basis of a pricing service that takes into account the quotes provided by a number of such major banks. Redemption. The procedures for redemption of Fund shares under ordinary circumstances are set forth in the Prospectus. In unusual circumstances, payment may be postponed, if the orderly liquidation of portfolio securities is prevented by the closing of, or restricted trading on the New York Stock Exchange during periods of emergency, or such other periods as ordered by the SEC. It is not anticipated that shares will be redeemed for other than cash or its equivalent. However, the Fund reserves the right to pay the redemption price to the Canada Life Accounts and VCA-9 in whole or in part, by a distribution in kind from the Fund's investment portfolio, in lieu of cash, taking the securities at their value employed for determining such redemption price, and selecting the securities in such manner as the Board of Directors may deem fair and equitable. If shares are redeemed in this way, brokerage costs will ordinarily be incurred by the Canada Life Accounts and VCA-9 in converting such securities into cash. CUSTODIANS AND INDEPENDENT AUDITORS Custodians. With the exception of the Seligman Henderson Global Portfolio and the Seligman Henderson Global Smaller Companies Portfolio, Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105, serves as custodian for the Fund, and in such capacity holds in a separate account assets received by it from or for the account of each of the Fund's Portfolios. Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York 11201, serves as custodian for the Seligman Henderson Global Portfolio and the Seligman Henderson Global Smaller Companies Portfolio, and in such capacity holds in a separate account assets received by it from or for the account of each of these two Portfolios of the Fund. Independent Auditors. Ernst & Young LLP, independent auditors, have been selected as auditors of the Fund and certify the annual financial statements of the Fund. Their address is 787 Seventh Avenue, New York, New York 10019. FINANCIAL STATEMENTS The balance sheet for the Seligman High-Yield Bond Portfolio presented below has been audited by Ernst & Young LLP, independent auditors. -17- SELIGMAN PORTFOLIOS, INC. SELIGMAN HIGH-YIELD BOND PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES March 30, 1995 ASSETS Cash................................................ $10 --- Total Assets........................................ 10 LIABILITIES 0 --- Net assets equivalent to $10.00 per share (applicable to 1 share of Capital Stock, $.001 par value; 20,000,000 shares authorized).................... $10 === Note 1. Organization Seligman High-Yield Bond Portfolio (the "Portfolio") is a portfolio of Seligman Portfolios, Inc. (the "Fund"). The Fund is an open-end diversified management investment company consisting of ten separate portfolios. The Portfolio had no operations other than the sale and issuance of one share of capital stock for $10 to Seligman Financial Services, Inc., the Fund's Distributor, on March 29, 1995. Note 2. Agreement Under the Management Agreement, the Portfolio will pay J. & W. Seligman & Co. Incorporated (the "Manager") a management fee for its services, calculated daily and payable monthly, equal to 0.50% per annum of its average daily net assets. The Manager has voluntarily agreed to reimburse annual expenses (other than management fees) that exceed 0.20% of average daily net assets. Note 3. Taxes The Portfolio intends to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and intends to distribute substantially all of its taxable income. As such, the Portfolio will not be subject to federal income or excise taxes. -18- REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders of Seligman Portfolios, Inc. - Seligman High-Yield Bond Portfolio: We have audited the accompanying statement of assets and liabilities of Seligman Portfolios, Inc. as of March 30, 1995. This financial statement is the responsibility of the Fund's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted audited standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether this financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statement. 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 statement referred to above presents fairly, in all material respects, the financial position of Seligman Portfolios, Inc. - Seligman High-Yield Bond Portfolio as of March 30, 1995, in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP --------------------- ERNST & YOUNG LLP New York, New York March 30, 1995 -19- APPENDIX A HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of eight brothers, arrived in the United States from Germany. He earned his living as a pack peddler in Pennsylvania, and began sending for his brothers. The Seligmans became successful merchants, establishing businesses in the South and East. Backed by nearly thirty years of business success - culminating in the sale of government securities to help finance the Civil War - Joseph Seligman, with his brothers, established the international banking and investment firm of J. & W. Seligman & Co. In the years that followed, Seligman played a major role in the geographical expansion and industrial development of the United States. Seligman: .... Prior to 1900 o Helps finance America's fledgling railroads through underwriting. o Is admitted to the New York Stock Exchange in 1869. Seligman remained a member of the NYSE until 1993, when the evolution of its business made it unnecessary. o Becomes a prominent underwriter of corporate securities, including New York Mutual Gas Light Company, later part of Consolidated Edison. o Provides financial assistance to Mary Todd Lincoln and urges the Senate to award her a pension. o Is appointed U.S. Navy fiscal agent by President Grant. o Plays a signifcant role in raising capital for America's industrial and urban development. ...1900-1910 o Helps Congress finance the building of the Panama Canal by underwriting. ...1910s o Participates in raising billions for Great Britain, France and Italy, helping finance World War I. ...1920s o Participates in underwritings including those for some of the country's largest companies: Briggs Manufacturing, Dodge Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company, United Artists Theater Circuit and Victor Talking Machine Company. o Forms Tri-Continental Corporation in 1929, today the nation's largest, diversified closed-end equity investment company, with over $2 billion in assets, and one of its oldest. ...1930s o Assumes management of Broad Street Investing Co. Inc., its first mutual fund, today known as Seligman Common Stock Fund. o Establishes Investment Advisory Service. -20- ...1940s o Helps shape the Investment Company Act of 1940. o Leads in the purchase and subsequent sale to the public of Newport News Shipbuilding and Dry Dock Company, a prototype transaction for the investment banking industry. o Assumes management of National Investors Corporation, today Seligman Growth Fund. o Establishes Whitehall Fund, Inc., today Seligman Income Fund. ...1950-1989 o Develops new open-end investment companies. Today, manages 43 mutual fund portfolios with combined assets of $6.6 billion. o Helps pioneer state-specific, tax-exempt municipal bond funds, today managing a national and 18 state-specific tax-exempt funds. o Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations Corporation. o Establishes Seligman Portfolios, Inc., an investment vehicle offered through variable annuity products. ...1990s o Introduces Seligman Select Municipal Fund and Seligman Quality Municipal Fund, two closed-end funds that invest in high-quality municipal bonds. o In 1991 establishes a joint venture with Henderson Administration Group plc, of London, known as Seligman Henderson Co., to offer global investment products. o Introduces Seligman Frontier Fund, Inc., a small capitalization fund. o Launches Seligman Henderson Global Fund Series, Inc., which today offers three separate series: Seligman Henderson International Fund, Seligman Henderson Global Smaller Companies Fund and Seligman Henderson Global Technology Fund. -21- ------------------------------------------------------------------------------- A N N U A L R E P O R T ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- TRILLIUM [Logo] A VARIABLE ANNUITY December 31, 1994 ------------------------------------------------------------------------------- Seligman Portfolios, Inc. the underlying investment vehicle for ===================================== TRILLIUM A VARIABLE ANNUITY ------------------------------------- ------------------------------------- ------------------------------------- February 10, 1995 Dear Contract Owner: J. & W. Seligman & Co. Incorporated, as Manager of Seligman Portfolios, Inc. (the "Fund"), the underlying investment vehicle for your Trillium Variable annuity, and Canada Life Insurance Company of America, as issuer of The Canada Life of America Variable Annuity Account 2 (the "Variable Account"), are pleased to provide the enclosed audited financial statements and accompanying information for the year ended December 31, 1994, which begin on page 2 for the Variable Account, and on page 9 for the Fund. The performance of the six sub-accounts of the Variable Account, which invests in and is based upon the performance of the Fund (adjusted for the current fees and charges, excluding the CDSL, associated with the Variable Account) was as follows for the six- and 12-month periods ended December 31, 1994: the Capital Sub-Account's total returns were 6.39% and -6.76%, respectively; the Common Stock Sub-Account's total returns were 3.37% and -1.10%, respectively; the Global Sub-Account's total returns were 0.90% and -0.64%, respectively; the Income Sub-Account's total returns were 0.27% and -7.55%, respectively; and the Fixed Income Securities Sub-Account's total returns were -0.17% and -4.85%, respectively. The six- and 12-month total returns for the Cash Management Sub-Account were 1.53% and 2.28%, respectively. The Variable Account commenced operations on June 21, 1993. The Fund was first created in June 1988. The performance of the three new sub-accounts that commenced operations on October 11, 1994, was as follows for the since-inception through December 31,1994, period: the Communications and Information Sub-Account's total return was 4.01%; the Frontier Sub-Account's total return was 5.40%; and the Global Smaller Companies, formerly Global Emerging Companies, Sub-Account's total return was 3.19%. Looking back on 1994, the one generalization that can be made with confidence is that it was a turbulent and trying year for equity and bond investors alike. The Federal Reserve Board exhibited an aggressive stance against inflation, putting through six short-term interest rate increases by the end of the year. This caused an upheaval in the bond market, with yields increasing and bond prices spiraling lower--an event in the financial markets unmatched in magnitude since 1973-74. The equity market remained hostage to the bond market and demonstrated lackluster performance: The Standard & Poor's 500 Composite Stock Price Index had a modest gain of 1.32% for the year. The U.S. economy continued to grow at a modest yet controlled pace, accompanied by corporate news of solid growth and strong earnings. This economic news, although positive, caused the underlying question to remain: Will the economy overheat, opening the door to increased inflation? We don't believe so. We believe an economic slowdown is close at hand. In March of 1995, the current growth cycle will mark its fourth year. The consumer has both increased debt as a percentage of income and drawn down savings--suggesting nearer-term caution after a stronger-than-expected pattern of spending in 1994. We also believe that inflation will remain under control in light of intense global competition, low unit labor costs, and an aging population that should favor saving over spending. Job creation remains robust despite gains in productivity, and U.S. competitiveness in world markets is likely to be enhanced under G.A.T.T.--General Agreement on Tariffs and Trade. Respectfully, /s/ D. Allen Loney /s/ William C. Morris D. Allen Loney William C. Morris President Chairman Canada Life Insurance Company of America J.&W. Seligman & Co. Incorporated -- 1 -- Canada Life of America Variable Annuity Account 2
----------------------------------------------------------------------------------------------------------------------------------- Statement of Net Assets December 31, 1994 ----------------------------------------------------------------------------------------------------------------------------------- Cash Common Communications Capital Management Stock and Information Sub-Account Sub-Account Sub-Account Sub-Account ----------- ----------- ----------- ----------- Net Assets: Investment in Seligman Portfolios, Inc., at market (see Note 3 for cost values) ......................... $1,159,748 $537,245 $2,359,352 $494,664 Due (to) from Canada Life Insurance Company of America (Note 6) ..................................... (19,222) 5,398 5,191 (204) Receivable (payable) for investments sold (purchased) ... 111 (511) (92) -- ---------- -------- ---------- -------- Net assets .............................................. $1,140,637 $542,132 $2,364,451 $494,460 ========== ======== ========== ======== Net assets attributable to: Policyholders' liability reserve ........................ $1,140,637 $542,132 $2,364,451 $494,460 ---------- -------- ---------- -------- Net assets .............................................. $1,140,637 $542,132 $2,364,451 $494,460 ========== ======== ========== ======== Number of units outstanding ............................. 62,358 434,226 127,570 47,541 ========== ======== ========== ======== Net asset value per unit ................................ $ 18.2918 $1.2485 $18.5345 $10.4007 ========== ======== ========== ========
Statement of Net Assets (continued)
Fixed Global Income Smaller Securities Frontier Global Companies Income Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account ----------- ----------- ----------- ----------- ----------- Net Assets: Investment in Seligman Portfolios, Inc., at market (see Note 3 for cost values) ......................... $850,588 $122,411 $1,705,592 $131,532 $1,940,063 Due (to) from Canada Life Insurance Company of America (Note 6) ..................................... 388 (53) (10,422) (64) 19,030 Receivable (payable) for investments sold (purchased) ... 178 -- (779) -- 356 -------- -------- ---------- -------- ---------- Net assets .............................................. $851,154 $122,358 $1,694,391 $131,468 $1,959,449 ======== ======== ========== ======== ========== Net assets attributable to: Policyholders' liability reserve ........................ $851,154 $122,358 $1,694,391 $131,468 $1,959,449 -------- -------- ---------- -------- ---------- Net assets .............................................. $851,154 $122,358 $1,694,391 $131,468 $1,959,449 ======== ======== ========== ======== ========== Number of units outstanding ............................. 64,614 11,609 150,440 12,740 124,878 ======== ======== ========== ======== ========== Net asset value per unit ................................ $13.1729 $10.5399 $11.2629 $10.3193 $15.6909 ======== ======== ========== ======== ==========
Statement of Net Assets (continued) Combined ------------ Net Assets: Investment in Seligman Portfolios, Inc., at market (see Note 3 for cost values) ......................... $9,301,195 Due (to) from Canada Life Insurance Company of America (Note 6) ..................................... 42 Receivable (payable) for investments sold (purchased) ... (737) ---------- Net assets .............................................. $9,300,500 ========== Net assets attributable to: Policyholders' liability reserve ........................ $9,300,500 ---------- Net assets .............................................. $9,300,500 ========== Number of units outstanding ............................. Net asset value per unit ................................ ---------- See accompanying notes.
------------------------------------------------------------------------------- Statement of Operations For the year ended December 31, 1994 ------------------------------------------------------------------------------- Cash Common Communications Capital Management Stock and Information Sub-Account Sub-Account Sub-Account Sub-Account* ----------- ----------- ----------- ------------ Net investment income: Dividend and capital gain distributions ................. $124,301 $15,929 $187,438 $ -- Less mortality and expense risk charges (Note 6) ........ 9,411 5,752 18,228 875 -------- ------- -------- ------- Net investment income ................................... 114,890 10,177 169,210 (875) -------- ------- -------- ------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments ................. (12,916) -- (1,721) 15 Net unrealized appreciation (depreciation) on investments ....................................... (124,248) -- (179,355) 18,098 -------- ------- -------- ------- Net realized and unrealized gain (loss) on investments ....................................... (137,164) -- (181,076) 18,113 -------- ------- -------- ------- Net increase (decrease) in net assets resulting from operations ..................... $(22,274) $10,177 $(11,866) $17,238 ======== ======= ======== =======
Statement of Operations (continued)
Fixed Global Income Smaller Securities Frontier Global Companies Income Sub-Account Sub-Account* Sub-Account Sub-Account* Sub-Account ----------- ------------ ----------- ------------ ----------- Net investment income: Dividend and capital gain distributions ................. $ 41,029 $ -- $26,068 $ 537 $132,305 Less mortality and expense risk charges (Note 6) ........ 5,588 216 16,791 258 21,607 -------- ------- ------- ------ -------- Net investment income ................................... 35,441 (216) 9,277 279 110,698 -------- ------- ------- ------ -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments ................. (10,205) 7 6,044 2 (15,131) Net unrealized appreciation (depreciation) on investments ....................................... (39,410) 6,405 (21,540) 3,794 (163,064) -------- ------- ------- ------ -------- Net realized and unrealized gain (loss) on investments ....................................... (49,615) 6,412 (15,496) 3,796 (178,195) -------- ------- ------- ------ -------- Net increase (decrease) in net assets resulting from operations ..................... $(14,174) $ 6,196 $(6,219) $4,075 $(67,497) ======== ======= ======= ====== ========
Statement of Operations (continued) Combined ---------- Net investment income: Dividend and capital gain distributions ................. $527,607 Less mortality and expense risk charges (Note 6) ....... 78,726 -------- Net investment income ................................... 448,881 -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments ................. (33,905) Net unrealized appreciation (depreciation) on investments ....................................... (499,320) -------- Net realized and unrealized gain (loss) on investments ....................................... (533,225) -------- Net increase (decrease) in net assets resulting from operations ..................... $(84,344) ======== ---------- * For the period October 11, 1994 (commencement of operations) to December 31, 1994 See accompanying notes. --2-- & --3--
Canada Life of America Variable Annuity Account 2 ------------------------------------------------------------------------------------------------------------------------------------ Statement of Changes in Net Assets ------------------------------------------------------------------------------------------------------------------------------------ Cash Capital Management Sub- Sub- Account Account ---------------------- ---------------------- Year 6/21/93* Year 6/21/93* Ended to Ended to 12/31/94 12/31/93 12/31/94 12/31/93 -------- -------- -------- -------- Operations: Net investment income (loss) ................. $ 114,890 $18,768 $ 10,177 $ 256 Net realized gain (loss) on investments ...... (12,916) (33) -- -- Unrealized appreciation (depreciation) on investments ............. (124,248) (15,155) -- -- ---------- ------- -------- ------- Net increase (decrease) in net assets resulting from operations ................. (22,274) 3,580 10,177 256 ---------- ------- -------- ------- Capital transactions: Net increase from unit transactions (Note 5) ..................... 1,071,495 87,836 463,427 68,272 ---------- ------- -------- ------- Net increase in net assets arising from capital transactions ................. 1,071,495 87,836 463,427 68,272 ---------- ------- -------- ------- Total increase in net assets ................. 1,049,221 91,416 473,604 68,528 Net assets, beginning of period .............. 91,416 -- 68,528 -- ---------- ------- -------- ------- Net assets, end of period .................... $1,140,637 $91,416 $542,132 $68,528 ========== ======= ======== =======
Statement of Changes in Net Assets (continued) Common Communications Fixed Income Stock and Information Securities Sub- Sub- Sub- Account Account Account --------------------- -------- --------------------- Year 6/21/93* 10/11/94* Year 6/21/93* Ended to to Ended to 12/31/94 12/31/93 12/31/94 12/31/94 12/31/93 -------- -------- -------- -------- -------- Operations: Net investment income (loss) ................. $ 169,210 $ 91,784 $ (875) $ 35,441 $ 25,233 Net realized gain (loss) on investments ...... (1,721) (141) 15 (10,205) (131) Unrealized appreciation (depreciation) on investments ............. (179,355) (75,185) 18,098 (39,410) (25,591) ---------- -------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations ................. (11,866) 16,458 17,238 (14,174) (489) ---------- -------- -------- -------- -------- Capital transactions: Net increase from unit transactions (Note 5) ..................... 1,716,567 643,292 477,222 656,499 209,318 ---------- -------- -------- -------- -------- Net increase in net assets arising from capital transactions ................. 1,716,567 643,292 477,222 656,499 209,318 ---------- -------- -------- -------- -------- Total increase in net assets ................. 1,704,701 659,750 494,460 642,325 208,829 Net assets, beginning of period .............. 659,750 -- -- 208,829 -- ---------- -------- -------- -------- -------- Net assets, end of period .................... $2,364,451 $659,750 $494,460 $851,154 $208,829 ========== ======== ======== ======== ========
Statement of Changes in Net Assets (continued) Frontier Sub- Account -------- 10/11/94* to 12/31/94 -------- Operations: Net investment income (loss) ................. $ (216) Net realized gain (loss) on investments ...... 7 Unrealized appreciation (depreciation) on investments ............. 6,405 -------- Net increase (decrease) in net assets resulting from operations ................. 6,196 -------- Capital transactions: Net increase from unit transactions (Note 5) ..................... 116,162 -------- Net increase in net assets arising from capital transactions ................. 116,162 -------- Total increase in net assets ................. 122,358 Net assets, beginning of period -- ............................................. -------- Net assets, end of period .................... $122,358 ========
Statement of Changes in Net Assets (continued) Global Smaller Global Companies Sub- Sub- Account Account --------------------- -------- Year 6/21/93* 10/11/94* Ended to to 12/31/94 12/31/93 12/31/94 -------- -------- -------- Operations: Net investment income ........................ $ 9,277 $ 1,063 $ 279 Net realized gain (loss) on investments ...... 6,044 79 2 Unrealized appreciation (depreciation) on investments ............. (21,540) 24,587 3,794 ---------- -------- -------- Net increase (decrease) in net assets resulting from operations ................ (6,219) 25,729 4,075 ---------- -------- -------- Capital transactions: Net increase from unit transactions (Note 5) ..................... 1,167,854 507,027 127,393 ---------- -------- -------- Net increase in net assets arising from capital transactions ................. 1,167,854 507,027 127,393 ---------- -------- -------- Total increase in net assets ................. 1,161,635 532,756 131,468 Net assets, beginning of period .............. 532,756 -- -- ---------- -------- -------- Net assets, end of period .................... $1,694,391 $532,756 $131,468 ========== ======== ========
Statement of Changes in Net Assets (continued) Income Sub- Account Combined --------------------- --------------------- Year 6/21/93* Year 6/21/93* Ended to Ended to 12/31/94 12/31/93 12/31/94 12/31/93 -------- -------- -------- -------- Operations: Net investment income ........................ $ 110,698 $ 49,925 $ 448,881 $ 187,029 Net realized gain (loss) on investments ...... (15,131) (297) (33,905) (523) Unrealized appreciation (depreciation) on investments ............. (163,064) (44,870) (499,320) (136,214) ---------- -------- ---------- ---------- Net increase (decrease) in net assets resulting from operations ................ (67,497) 4,758 (84,344) 50,292 ---------- -------- ---------- ---------- Capital transactions: Net increase from unit transactions (Note 5) ..................... 1,560,635 461,553 7,357,254 1,977,298 ---------- -------- ---------- ---------- Net increase in net assets arising from capital transactions ................. 1,560,635 461,553 7,357,254 1,977,298 ---------- -------- ---------- ---------- Total increase in net assets ................. 1,493,138 466,311 7,272,910 2,027,590 Net assets, beginning of period .............. 466,311 -- 2,027,590 -- ---------- -------- ---------- ---------- Net assets, end of period .................... $1,959,449 $466,311 $9,300,500 $2,027,590 ========== ======== ========== ==========
--4-- & --5-- Canada Life of America Variable Annuity Account 2 -------------------------------------------------------------------------------- Notes to Financial Statements -------------------------------------------------------------------------------- 1. Organization Canada Life of America Variable Annuity Account 2 ("Variable Annuity Account 2") was established on February 26, 1993 as a separate investment account of Canada Life Insurance Company of America ("CLICA") to receive and invest premium payments under variable annuity policies issued by CLICA. Variable Annuity Account 2 is registered as a unit investment trust under the Investment Company Act of 1940, as amended. The assets of Variable Annuity Account 2 are invested in the shares of Seligman Portfolios, Inc. (the "Fund"), a diversified, open-end, management investment company. Variable Annuity Account 2 has nine sub-accounts, each of which invests only in the shares of the corresponding portfolio of the Fund. The assets of Variable Annuity Account 2 are the property of CLICA. The portion of Variable Annuity Account 2 assets applicable to the policies will not be charged with liabilities arising out of any other business CLICA may conduct. 2. Significant Accounting Policies Investments Investments in shares of the Fund are valued at the reported net asset values of the respective portfolios. Realized gains and losses are computed on the basis of average cost. The difference between cost and current market value of investments owned is recorded as an unrealized gain or loss on investments. Dividends Dividends are recorded on the ex-dividend date and reflect the dividends declared by the Fund from their accumulated net investment income and net realized investment gains. Dividends in the Cash Management Portfolio are declared daily and paid monthly. Dividends in the Capital, Common Stock, Communications and Information, Fixed Income Securities, Frontier, Global, Global Smaller Companies (formerly Global Emerging Companies) and Income Portfolios are declared and paid annually. Dividends paid to the Variable Annuity Account 2 are reinvested in additional shares of the respective Fund at the net asset value per share. Federal Income Taxes Variable Annuity Account 2 is not taxed separately because the operations of Variable Annuity Account 2 will be included in the Federal income tax return of CLICA, which is taxed as a "life insurance company" under the provisions of the Internal Revenue Code. 3. Investments The investment by Variable Annuity Account 2 in the individual Portfolios of the Fund is as follows:
Number of Shares Market Price Market Value Cost ---------------- ------------ ------------ ------------ Capital 91,326 $12.699 $1,159,748 $1,299,151 Cash Management 537,245 1.000 537,245 537,245 Common Stock 171,166 13.784 2,359,352 2,613,892 Communications and Information 47,368 10.443 494,664 476,566 Fixed Income Securities 91,767 9.269 850,588 915,589 Frontier 11,570 10.580 122,411 116,006 Global 150,458 11.336 1,705,592 1,702,545 Global Smaller Companies 12,754 10.313 131,532 127,738 Income 194,512 9.974 1,940,063 2,147,997 ---------- ---------- $9,301,195 $9,936,729 ========== ==========
4. Security Purchases and Sales The aggregate cost of purchases and the proceeds from sales of investments are presented below:
Aggregate Cost of Purchases Proceeds from Sales ---------------------------- ----------------- Capital $1,423,989 $ 218,696 Cash Management 1,067,045 598,765 Common Stock 1,936,894 57,396 Communications and Information 505,821 29,270 Fixed Income Securities 846,815 155,282 Frontier 116,166 167 Global 1,389,758 202,473 Global Smaller Companies 127,955 219 Income 2,011,418 359,912 ---------- ---------- $9,425,861 $1,622,180 ========== ==========
--6-- Canada Life of America Variable Annuity Account 2 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 5. Summary of Changes from Unit Transactions The following table represents a summary of changes from unit transactions attributable to contractholders for the periods indicated. The Communications and Information, Frontier and Global Smaller Companies Portfolios commenced operations on October 11, 1994:
For the period from June 21, 1993 (commencement of operations) Year ended December 31, 1994 to December 31, 1993 ---------------------------- ----------------------------- Units Amount Units Amount ------ -------- ------- -------- Capital Sub-Account Accumulation Units: Contract purchases and net transfers in 68,845 $1,206,771 4,660 $ 87,836 Terminated contracts and net transfers out (11,147) (135,276) -- -- -------- ---------- --------- --------- 57,698 1,071,495 4,660 87,836 ======== ========== ========= ========= Cash Management Sub-Account Accumulation Units: Contract purchases and net transfers in 895,094 919,388 194,451 236,916 Terminated contracts and net transfers out (517,005) (455,961) (138,313) (168,644) -------- ---------- --------- --------- 378,089 463,427 56,138 68,272 ======== ========== ========= ========= Common Stock Sub-Account Accumulation Units: Contract purchases and net transfers in 94,149 1,729,749 35,267 644,443 Terminated contracts and net transfers out (1,785) (13,182) (61) (1,151) -------- ---------- --------- --------- 92,364 1,716,567 35,206 643,292 ======== ========== ========= ========= Communications and Information Sub-Account Accumulation Units: Contract purchases and net transfers in 47,541 477,222 Terminated contracts and net transfers out -- -- -------- ---------- 47,541 477,222 ======== ========== Fixed Income Securities Sub-Account Accumulation Units: Contract purchases and net transfers in 60,800 705,025 15,130 209,969 Terminated contracts and net transfers out (11,270) (48,526) (46) (651) -------- ---------- --------- --------- 49,530 656,499 15,084 209,318 ======== ========== ========= ========= Frontier Sub-Account Accumulation Units: Contract purchases and net transfers in 11,609 116,162 Terminated contracts and net transfers out -- -- -------- ---------- 11,609 116,162 ======== ========== Global Sub-Account Accumulation Units: Contract purchases and net transfers in 119,532 1,203,916 47,057 507,678 Terminated contracts and net transfers out (16,093) (36,062) (56) (651) -------- ---------- --------- ---------- 103,439 1,167,854 47,001 507,027 ======== ========== ========= ========== Global Smaller Companies Sub-Account Accumulation Units: Contract purchases and net transfers in 12,740 127,393 Terminated contracts and net transfers out -- -- -------- ---------- 12,740 127,393 ======== ========== Income Sub-Account Accumulation Units: Contract purchases and net transfers in 117,463 1,805,921 27,513 462,204 Terminated contracts and net transfers out (20,059) (245,286) (39) (651) ======== ========== --------- ---------- 97,404 1,560,635 27,474 461,553 ======== ---------- ========= ---------- Net increase from unit transactions $7,357,254 $1,977,298 ========== ==========
--7-- Canada Life of America Variable Annuity Account 2 -------------------------------------------------------------------------------- Notes to Financial Statements (continued) -------------------------------------------------------------------------------- 6. Mortality and Expense Risk (M and E) Charges CLICA assumes mortality and expense risks related to the operations of Variable Annuity Account 2 and deducts a charge equal to an effective annual rate of 1.25% of the net asset value of each of the Funds at each valuation period. In addition, at each valuation period an effective annual rate of 0.35% of the net asset value of each Fund is deducted as daily administration fees. 7. Net Assets Net assets at December 31, 1994 consisted of the following:
Net Accumulated Net Unrealized Investment Realized Appreciation Accumulated Income Gain (Depreciation) Unit M and E and Capital (Loss) on on Sub-Account Transactions Charges Gains Investments Investments Combined ----------- ---------- ---------- ---------- ---------- ---------- -------- Capital $1,159,331 $ (9,873) $143,531 $(12,949) $(139,403) $1,140,637 Cash Management 531,699 (6,865) 17,298 -- -- 542,132 Common Stock 2,359,859 (20,803) 281,797 (1,862) (254,540) 2,364,451 Communications and Information 477,222 (875) -- 15 18,098 494,460 Fixed Income Securities 865,817 (5,904) 66,578 (10,336) (65,001) 851,154 Frontier 116,162 (216) -- 7 6,405 122,358 Global 1,674,881 (18,998) 29,338 6,123 3,047 1,694,391 Global Smaller Companies 127,393 (258) 537 2 3,794 131,468 Income 2,022,188 (23,321) 183,944 (15,428) (207,934) 1,959,449 ---------- -------- -------- -------- --------- ---------- $9,334,552 $(87,113) $723,023 $(34,428) $(635,534) $9,300,500 ========== ======== ======== ======== ========= ==========
-------------------------------------------------------------------------------- Report of Independent Auditors -------------------------------------------------------------------------------- Board of Directors of Canada Life Insurance Company of America and Contract Owners of Canada Life of America Variable Annuity Account 2: We have audited the accompanying statement of net assets of Canada Life of America Variable Annuity Account 2 ("Variable Annuity Account 2") as of December 31, 1994, and the related statements of operations and changes in net assets for the periods indicated therein. These financial statements are the responsibility of the Company'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 audits 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, 1994, 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 Variable Annuity Account 2 at December 31, 1994, and the results of its operations and the changes in its net assets for each of the periods indicated therein in conformity with generally accepted accounting principles. /S/ ERNST & YOUNG LLP ERNST & YOUNG LLP Atlanta, Georgia January 26, 1995 --8-- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Important Portfolio Changes* (unaudited) -------------------------------------------------------------------------------- During the six months ended December 31, 1994
Principal Amount Principal Amount Additions or Shares Reductions or Shares --------------------- ---------------------- --------------------- ---------------------- Holdings Holdings Increase 12/31/94 Decrease 12/31/94 -------- -------- -------- -------- SELIGMAN CAPITAL PORTFOLIO Common Stocks Common Stocks British Sky Broadcasting (ADRs) 4,900 shs. 4,900 shs. Barnes & Noble................. 4,100 shs. -- Fingerhut...................... 1,000 5,200 Columbia/HCA Healthcare........ 1,000 2,900 shs. Illinois Tool Works............ 2,700 2,700 Corvel......................... 5,400 -- John Alden Financial........... 3,400 3,400 Cracker Barrel Old Country..... 4,200 -- Liz Claiborne.................. 4,800 4,800 Department 56.................. 2,000 2,000 MBNA........................... 4,800 4,800 General Nutrition.............. 4,000 -- NEXTEL Communications.......... 1,500 4,300 Harley-Davidson................ 2,500 -- OfficeMax...................... 5,700 5,700 Nordson........................ 1,800 -- Paging Network................. 4,300 4,300 PETsMART....................... 4,300 -- Powersoft...................... 1,700 1,700 Snapple Beverage............... 4,300 --
-------------------------------------------------------------------------------- SELIGMAN COMMON STOCK PORTFOLIO Common Stocks K Mart......................... 5,500 shs. 5,500 shs. Mallinckrodt Group............. 3,600 3,600 Snap-On Tools.................. 4,100 4,100 Wendy's International.......... 7,000 7,000 Common Stocks Pall........................... 12,899 shs. -- Texas Instruments.............. 4,000 -- Convertible Preferred Stocks Great Western Financial 83/4%.. 5,000 -- Mobile Telecommunications Technology $2.25............ 5,000 -- Subordinated Convertible Bonds Genzyme 6 3/4%, 10/1/2001....... $250,000 -- Michaels Stores 4 3/4%, 1/15/2003 100,000 -- Oryx Energy 7 1/2%, 5/15/2014... 250,000 -- -------------------------------------------------------------------------------- SELIGMAN FIXED INCOME SECURITIES PORTFOLIO U.S. Government Securities U.S. Treasury Bonds 8 7/8%, 2/15/2019............ $900,000 $900,000 Corporate Bonds News America Holdings 8 1/4%, 8/10/2018............ 150,000 150,000 USX 9 1/8%, 1/15/2013........... 100,000 100,000 Asset-backed Security Ford Credit Grantor Trust 7.30%, 10/15/1999........... 145,874 145,874 U.S. Government Securities and Agencies U.S. Treasury Bonds 9 1/4%, 2/15/2016........... $300,000 -- U.S. Treasury Notes 7%, 9/30/1996 .............. 300,000 -- Government National Mortgage Association 7.30%, 12/16/2017 REMIC Trust 1994-1.......... 500,000 -- Corporate Bonds Ford Motor Credit 6 3/4%, 8/15/2008 150,000 -- Time Warner Entertainment 7 1/4%, 9/1/2008............. 150,000 -- ---------- See footnote on page 10. -9- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Important Portfolio Changes* (unaudited) (continued) -------------------------------------------------------------------------------- During the six months ended December 31, 1994
Principal Amount Principal Amount Additions or Shares Reductions or Shares --------------------- ---------------------- --------------------- ---------------------- Holdings Holdings Increase 12/31/94 Decrease 12/31/94 -------- -------- -------- -------- SELIGMAN HENDERSON GLOBAL PORTFOLIO Common Stocks Common Stocks Daiwa House Industry........... 3,000 shs. 4,000 shs. Alco Standard.................. 200 shs. -- East Japan Railways............ 11 11 American International Group... 150 -- Mitsubishi Rayon............... 9,000 13,000 Coca-Cola...................... 300 -- News Corp...................... 5,203 6,204 Dow Chemical................... 150 -- Nippon Telegraph & Telephone... 6 6 General Mills.................. 200 -- Pioneer Electronics............ 1,000 2,000 Honda Motor.................... 1,000 -- Sumitomo Trust and Banking..... 2,000 2,000 International Business Machines 200 -- Toshiba........................ 6,000 8,000 Omnicom Group.................. 200 -- TPI Polene..................... 3,250 3,250 Schering-Plough................ 200 -- Yamaha......................... 3,000 4,000 Sharp.......................... 1,000 --
-------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO Common Stocks CINergy........................ 9,718 shs. 9,718 shs. K Mart......................... 3,200 3,200 Convertible Preferred Stocks Alexander & Alexander (Series A) $3.625........... 1,500 1,500 Corning Delaware L.P. 6%....... 1,700 1,700 Subordinated Convertible Bonds Bay Networks 5 1/4%, 5/15/2003. $100,000 $100,000 U.S. Government Securities U.S. Treasury Notes 7 1/4%,11/15/1996........... 500,000 500,000 Common Stocks Union Electric................. 5,200 shs. -- Washington Energy.............. 14,000 -- Convertible Preferred Stocks Great Western Financial 8 3/4%. 5,000 -- Mobile Telecommunications Technology $2.25............ 3,500 -- Subordinated Convertible Bonds Genzyme 6 3/4%,10/1/2001....... $250,000 -- USLICO 8 1/2%, 12/15/2014...... 250,000 -- Hechinger 5 1/2%, 4/1/2012..... 250,000 -- Corporate Bonds Quaker Oats 9.15%, 10/28/2004.. 100,000 -- U.S. Government Agencies Government National Mortgage Association 7.30%, 12/16/2017 REMIC Trust 1994-1.......... 500,000 -- ---------- * Largest portfolio changes from the previous midyear to the current year-end are based on cost of purchases and proceeds from sales of securities. -10- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Annual Performance Overview December 31, 1994 -------------------------------------------------------------------------------- The following charts compare a $10,000 hypothetical investment made in each of the Portfolios of Seligman Portfolios, Inc. (with the exception of Seligman Cash Management Portfolio), since inception through December 31, 1994, to a $10,000 hypothetical investment made in the appropriate benchmark indices and/or averages for the same period. Accompanying each chart is a discussion of the economic factors, investment strategy, and sector performance that affected the Portfolio during the past year. Seligman Capital Portfolio THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Seligman Lipper Capital Capital Portfolio Appreciation Average S&P 500 ----------------- -------------------- ------- 6/21/88 $10,000 $10,000 $10,000 9/30/88 $10,090 $ 9,868 $10,034 12/31/88 $10,060 $ 9,962 $10,344 3/31/89 $10,240 $10,738 $11,077 6/30/89 $10,840 $11,620 $12,055 9/30/89 $12,040 $12,827 $13,346 12/31/89 $11,717 $12,627 $13,621 3/31/90 $11,344 $12,325 $13,211 6/30/90 $12,715 $13,109 $14,042 9/30/90 $ 9,720 $10,872 $12,113 12/31/90 $11,344 $11,630 $13,198 3/31/91 $13,597 $13,821 $15,115 6/30/91 $13,778 $13,615 $15,081 9/30/91 $15,455 $14,820 $15,887 12/31/91 $18,042 $16,230 $17,219 3/31/92 $16,842 $16,280 $16,784 6/30/92 $15,601 $15,632 $17,104 9/30/92 $16,791 $15,974 $17,643 12/31/92 $19,268 $17,671 $18,531 3/31/93 $19,904 $18,286 $19,341 6/30/93 $19,552 $18,792 $19,435 9/30/93 $20,846 $20,093 $19,937 12/31/93 $21,514 $20,492 $20,399 3/31/94 $20,837 $19,802 $19,625 6/30/94 $19,010 $18,931 $19,708 9/30/94 $20,736 $20,154 $20,672 12/31/94 $20,526 $19,791 $20,668 Average Annual Total Returns+ Since One Yr. Five Yrs. Inception ------- --------- --------- Seligman Capital Portfolio -4.59% 11.87% 11.64% Lipper Capital Appreciation -3.42 9.40 11.06 S&P 500 1.32 8.70 11.80 Continued solid economic growth, despite the Federal Reserve Board's six short-term interest rate increases, had a negative impact on U.S. financial markets in 1994. The bulk of the damage was sustained in the second quarter of the year, as interest rates were increased twice within the three-month period. Since then, due to subsided selling pressure from liquidity-sensitive investors and the fact that equity valuations have begun to rebound, the financial markets and your Portfolio regained strength. Throughout the year, your Portfolio maintained a large exposure to companies with steady predictable earnings growth. Typically, these companies, which are driven by growth in unit sales, do not rely on significant price increases or strong economic growth. However, in a period of strong economic growth, like 1994, cyclical or highly economically sensitive companies can show rapid growth spurts, which often dwarf the performance of companies with steady earnings streams. In 1994, technology was the best performing sector in the market and in your Portfolio. Your Portfolio's position in Microsoft performed very well, as did its semiconductor-related issues. Although the technology sector of the market continues to provide us with a number of attractive investment opportunities, the sector also tends to exhibit considerable volatility--a characteristic we feel is worth withstanding. The Portfolio's consumer cyclical exposure remained heavy throughout the year, but again, despite some very strong financial performances, the stocks continued to remain undervalued. The expected slowing of the economy in the second half of 1995 should play well into the Portfolio's exposure to companies with superior earnings prospects that are selling at compelling valuations. The unsettled international environment and an improving U.S. Dollar may also bring the U.S. equity markets back into investor focus, and provide for some good capital appreciation, all of which bodes well for your Portfolio. ---------- See footnote on page 15. -11- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Annual Performance Overview (continued) -------------------------------------------------------------------------------- Seligman Common Stock Portfolio THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Seligman Common Lipper Growth and Stock Portfolio S&P 500 Income Average --------------- ------- -------------- 6/21/88 $10,000 $10,000 $10,000 9/30/88 $10,190 $10,034 $10,030 12/31/88 $10,180 $10,344 $10,226 3/31/89 $10,581 $11,077 $10,880 6/30/89 $11,223 $12,055 $11,648 9/30/89 $12,317 $13,346 $12,646 12/31/89 $12,635 $13,621 $12,640 3/31/90 $12,522 $13,211 $12,332 6/30/90 $13,315 $14,042 $12,953 9/30/90 $10,965 $12,113 $11,260 12/31/90 $12,237 $13,198 $12,084 3/31/91 $14,425 $15,115 $13,822 6/30/91 $14,287 $15,081 $13,771 9/30/91 $15,281 $15,887 $14,550 12/31/91 $16,295 $17,219 $15,604 3/31/92 $16,604 $16,784 $15,590 6/30/92 $16,472 $17,104 $15,612 9/30/92 $17,146 $17,643 $16,022 12/31/92 $18,272 $18,531 $16,977 3/31/93 $18,928 $19,341 $17,741 6/30/93 $19,127 $19,435 $17,878 9/30/93 $19,608 $19,937 $18,514 12/31/93 $20,454 $20,399 $18,933 3/31/94 $19,621 $19,625 $18,338 6/30/94 $19,730 $19,708 $18,265 9/30/94 $20,727 $20,672 $19,052 12/31/94 $20,463 $20,668 $18,753 Average Annual Total Returns+ Since One Yr. Five Yrs. Inception ------- --------- --------- Seligman Common Stock Portfolio 0.04% 10.12% 11.59% S&P 500 1.32 8.70 11.80 Lipper Growth and Income -0.95 8.21 10.15 The rise in short-term interest rates and investors' concerns over an increased rate of future inflation had a tremendous effect on both the equity and bond markets. This made 1994 a challenging year for investors. While many investors focused on issues with attractive short-term momentum, such as cyclical and technology issues, your Portfolio continued to be broadly diversified with quality companies with strong long-term prospects for earnings growth. We believe our strategy of holding a well-rounded list of companies in many industry groups should continue to benefit the Portfolio in the years ahead. While cyclical issues such as chemical and technology companies did particularly well, the Portfolio's best performing stocks were the restructuring companies such as IBM. Conversely, both financial stocks, in particular bank issues, and convertible securities had a difficult time in 1994 due to their inherent sensitivity to interest rate changes. With the prospect of slowing economic growth in 1995, stock selection will continue to be central to good near-term performance. We will continue to focus on identifying companies with strong long-term earnings and solid growth potential as a means of achieving solid capital appreciation. Seligman Communications and Information Portfolio THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Seligman Communications Lipper Science and Information Portfolio S&P 500 and Technology ------------------------- ------- -------------- 10/11/94 $10,000 $10,000 $10,000 10/31/94 $10,000 $10,209 $10,534 11/30/94 $10,000 $ 9,805 $10,222 12/31/94 $10,440 $ 9,998 $10,404 Cumulative Total Return+ Since Inception --------- Seligman Communications and Information Portfolio 4.40% S&P 500 -0.02 Lipper Science and Technology 4.20 In 1994, technology stocks as a group benefited from the strong global demand for the key technology "end markets:" personal computers; networking; telecom-munications equipment; software; and wireless communications. In turn, the strength of these markets created a healthy climate for their suppliers: contract manufacturers; semiconductor companies; and suppliers of capital equipment to the electronics market. The Portfolio's emphasis on investing in fast-growing companies that demonstrate the potential for positive earnings surprises proved quite rewarding. We believe that the secular bull market for technology experienced thus far in the 1990s will continue through this decade. The industry is benefiting from both the capital investment cycle that is driving the current economic expansion, and the information-driven revolution that has been unfolding. Technology continues to dominate the office, the factory, the home, and the transportation and entertainment industries; as a result it will continue to capture a greater share of corporate and consumer spending over time. We believe 1995 will be an advantageous environment for technology issues. But, more specifically, the overall technology industry, and your Portfolio in particular, should benefit from the increased spending associated with two key events: the emergence of the Intel Pentium chip in the mainstream of the PC market, and the launch of Microsoft's new operating system for PCs--Windows95. Because these advances in the computer market will continually demand upgraded products and services, every industry involved in the process of manufacturing PCs should benefit, which bodes well for your Portfolio's investments. ---------- See footnote on page 15. -12- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- Seligman Fixed Income Securities Portfolio THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Seligman Fixed Lehman Brothers Income Securities Government Lipper Fixed Portfolio S&P 500* Bond Index Income Average ---------------- -------- ---------- -------------- 6/21/88 $10,000 $10,000 $10,000 $10,000 9/30/88 $10,100 $10,034 $10,169 $10,136 12/31/88 $10,101 $10,344 $10,265 $10,228 3/31/89 $10,121 $11,077 $10,374 $10,316 6/30/89 $10,670 $12,055 $11,208 $11,032 9/30/89 $10,691 $13,346 $11,300 $11,119 12/31/89 $10,979 $13,621 $11,726 $11,503 3/31/90 $10,797 $13,211 $11,581 $11,382 6/30/90 $11,119 $14,042 $11,986 $11,751 9/30/90 $11,162 $12,113 $12,085 $11,821 12/31/90 $11,653 $13,198 $12,750 $12,458 3/31/91 $11,924 $15,115 $13,026 $12,720 6/30/91 $12,094 $15,081 $13,202 $12,856 9/30/91 $12,727 $15,887 $13,956 $13,595 12/31/91 $13,352 $17,219 $14,704 $14,281 3/31/92 $13,121 $16,784 $14,447 $14,006 6/30/92 $13,485 $17,104 $15,018 $14,534 9/30/92 $14,081 $17,643 $15,760 $15,148 12/31/92 $14,099 $18,531 $15,766 $15,189 3/31/93 $14,548 $19,341 $16,479 $15,808 6/30/93 $14,879 $19,435 $16,955 $16,232 9/30/93 $15,249 $19,937 $17,506 $16,686 12/31/93 $15,224 $20,399 $17,447 $16,621 3/31/94 $14,787 $19,625 $16,922 $16,093 6/30/94 $14,622 $19,708 $16,729 $15,802 9/30/94 $14,742 $20,672 $16,800 $15,808 12/31/94 $14,708 $20,668 $16,860 $15,846 Average Annual Total Returns+ Since One Yr. Five Yrs. Inception ------- --------- --------- Seligman Fixed Income Securities Portfolio -3.39% 6.02% 6.08% S&P 500* 1.32 8.70 11.80 Lehman Brothers Government Bond Index -3.37 7.53 8.37 Lipper Fixed Income Average -4.67 6.62 7.33 * The Seligman Fixed Income Securities Portfolio will no longer be compared to the Standard & Poor's 500 Composite Stock Price Index (S&P 500) after December 31, 1994, because the Manager does not believe a comparison between a broad-based equity index (S&P 500) and your Portfolio's holdings is appropriate. Stronger economic growth and anticipation of higher inflation, which prompted the Federal Reserve Board to raise short-term interest rates six times, adversely effected all bond funds in 1994. However, because your Portfolio held issues with shorter maturities than its peers, it performed relatively well against its peers for the year. Once the Federal Reserve Board raised short-term interest rates for the first time on February 4, 1994, we began to shorten the maturity of your Portfolio's holdings. This was done in order to lessen the impact of the increase, as short-term bonds react with less volatility than long-term bonds in a period of changing interest rates. Shorter maturities were kept throughout the year, resulting in your Portfolio's stronger relative performance. In addition, we favored U.S. Treasury issues over GNMA securities, as we felt liquidity was somewhat more important than yield, given the volatile investment environment. Finally, we did not invest in "risky" derivative securities as a means of achieving greater yields, nor are we permitted to do so under your Portfolio's investment policies. Because the Federal Reserve Board is expected to continue to raise short-term interest rates until it believes they are high enough to slow the economy to a non-inflationary pace, the short-term may remain difficult for bond markets. However, the higher interest rates should slow the economy during 1995, resulting in a stabilized bond market in which valuations can begin to recover. In this situation, we may then begin to purchase longer-term bonds to take advantage of the possible increase in prices. Seligman Frontier Portfolio THE CHART AND TOTAL RETURN DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Lipper Seligman Small Company Frontier Portfolio NASDAQ Fund Average ------------------ ------ ------------ 10/11/94 $10,000 $10,000 $10,000 10/31/94 $10,000 $10,171 $10,135 11/30/94 $10,000 $ 9,816 $ 9,766 12/31/94 $10,580 $ 9,837 $ 9,974 Cumulative Total Return+ Since Inception --------- Seligman Frontier Portfolio 5.80% NASDAQ -1.63 Lipper Small Company Fund -0.26 Higher interest rates cause small- and medium-company growth stocks, the very type in which the Frontier Portfolio invests, to fall under pressure. Therefore, the rise in interest rates in 1994 certainly hampered the Portfolio's performance. Nevertheless, performance was still strong. Our focus remains on investing in companies that we believe will demonstrate positive earnings surprises. It has been our experience that such companies often sustain their better-than-expected funda-mentals over a six- to 12-month period or longer, leading to exceptional price appreciation. This focus clearly benefited the Portfolio's performance. Many of the technology holdings performed particularly well in response to strong demand for semiconductors and semi-conductor production equipment. By contrast, the financial issues had relatively flat performance because of their inherent sensitivity to interest rate increases. Looking forward, we are optimistic about the coming year. In 1994, interest rates rose in response to inflationary fears. However, if inflation remains controlled, we expect excellent performance by small- and medium-company growth stocks as interest rates fall. In any event, small-company growth stocks are currently trading at very reasonable valuations and are enjoying excellent earnings due to the robust economy in the United States, and improving economies and increased demand in other countries. If inflation does increase over the next year, these factors should help protect the Portfolio. ---------- See footnote on page 15. -13- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Annual Performance Overview (continued) -------------------------------------------------------------------------------- After a strong 1993, this past year proved to be difficult for stock markets worldwide: Of the major international markets, Japan was the only one that managed to rise. The principal factor behind the weakness of the stock markets was the sharp turn in the bond markets; yields rose sharply in all bond markets as the U.S. Federal Reserve Board increased short-term interest rates. Furthermore, economic growth worldwide shifted money away from the financial markets and into capital spending. The economic outlook for 1995 looks positive with worldwide growth likely to continue at a good pace and inflation, while moderately rising, should remain under control. There are uncertainties, however, in the outlook for interest rates. In the short term, rates are likely to rise further, which may continue to put pressure on the long-end of the bond market. However, hallowing last year's weakness, we now feel that yields on bonds are quite attractive and will not increase much further on a sustained basis. With corporate profit-growth likely to be above expectations, stock markets should improve once the short-term uncertainties over the bond market have passed. This background should be positive for small companies that, with the exception of those in the U.S. and U.K., have not yet performed particularly well. However, following the example of the smaller companies in the U.S. and U.K., many of these underperforming small companies seem set to enjoy a strong period of growth. Seligman Henderson Global Portfolio THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Seligman Henderson EAFE Global Portfolio MSCI World Index Index ---------------- ---------------- ----- 5/3/93 $10,000 $10,000 $10,000 5/31/93 $10,000 $10,213 $10,198 6/30/93 $10,010 $10,110 $10,026 7/31/93 $10,040 $10,301 $10,364 8/31/93 $10,510 $10,756 $10,911 9/30/93 $10,480 $10,540 $10,652 10/31/93 $10,840 $10,814 $10,967 11/30/93 $10,840 $10,185 $ 9,996 12/31/93 $11,440 $10,666 $10,705 1/31/94 $11,832 $11,353 $11,597 2/28/94 $11,470 $11,188 $11,552 3/31/94 $10,987 $10,688 $11,041 4/29/94 $11,309 $11,001 $11,496 5/31/94 $11,440 $11,012 $11,416 6/30/94 $11,399 $10,964 $11,564 7/29/94 $11,711 $11,154 $11,661 8/31/94 $11,963 $11,472 $11,923 9/30/94 $11,751 $11,153 $11,533 10/31/94 $11,923 $11,452 $11,903 11/30/94 $11,510 $10,937 $11,316 12/31/94 $11,591 $11,024 $11,373 Average Annual Total Returns+ Since One Yr. Inception ------- --------- Seligman Henderson Global Portfolio 1.32% 9.28% MSCI World Index 3.36 6.01 EAFE Index 6.24 8.00 We significantly increased our weighting in Japan early in 1994, which enabled us to take some advantage of the rise in that market. Throughout the year, we remained overweighted in the Pacific Region, favoring countries such as Korea, Taiwan, and Singapore, and remained underweighted in Hong Kong and Malaysia. In Europe, as a whole, we were broadly neutral with no significant bias towards any particular country. Additionally, we held a modest weighting in Latin America, which suffered in the fourth quarter following the Mexican crisis. However, because of your Portfolio's diversification, we saw little impact. Seligman Henderson Global Smaller Companies Portfolio THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Seligman Henderson Global MSCI World Lipper Global Small Smaller Companies Portfolio Index Company Fund Average --------------------------- ---------- -------------------- 10/11/94 $10,000 $10,000 $10,000 10/31/94 $10,000 $10,268 $10,079 11/30/94 $10,000 $ 9,806 $ 9,584 12/31/94 $10,353 $ 9,885 $ 9,581 Cumulative Total Return+ Since Inception --------- Seligman Henderson Global Smaller Companies Portfolio 3.53% MSCI World Index -1.15 Lipper Global Small Company Avg. -4.19 We were relatively cautious in the investment of the Portfolio in October and November, and only started to make significant investments in December. Our initial strategy was to focus on the U.S., U.K., Continental Europe, and Japan. Given the small size of the Portfolio, we purchased a limited number of companies in these markets, but will continue to expand our holdings as the Portfolio grows in size. ---------- See footnote on page 15. -14- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- Seligman Income Portfolio THE CHART AND TOTAL RETURNS DO NOT REFLECT ANY FEES OR CHARGES THAT INVESTORS WILL INCUR IN PURCHASING OR SELLING UNITS OF THE VARIABLE ACCOUNTS. [The table below was represented as a graph in the printed material] Seligman Lipper Income Portfolio S&P 500 Income Average ---------------- ------- -------------- 6/21/88 $10,000 $10,000 $10,000 9/30/88 $10,090 $10,034 $10,150 12/31/88 $10,110 $10,344 $10,273 3/31/89 $10,453 $11,077 $10,610 6/30/89 $11,097 $12,055 $11,196 9/30/89 $11,379 $13,346 $11,628 12/31/89 $11,587 $13,621 $11,747 3/31/90 $11,566 $13,211 $11,552 6/30/90 $11,673 $14,042 $11,899 9/30/90 $10,512 $12,113 $11,243 12/31/90 $10,880 $13,198 $11,738 3/31/91 $12,105 $15,115 $12,773 6/30/91 $12,609 $15,081 $12,994 9/30/91 $13,640 $15,887 $13,827 12/31/91 $14,241 $17,219 $14,566 3/31/92 $14,823 $16,784 $14,711 6/30/92 $15,190 $17,104 $15,141 9/30/92 $15,747 $17,643 $15,671 12/31/92 $16,479 $18,531 $15,983 3/31/93 $17,376 $19,341 $16,746 6/30/93 $17,853 $19,435 $17,118 9/30/93 $18,389 $19,937 $17,649 12/31/93 $18,518 $20,399 $17,845 3/31/94 $17,736 $19,625 $17,276 6/30/94 $17,199 $19,708 $17,220 9/30/94 $17,785 $20,672 $17,589 12/31/94 $17,413 $20,668 $17,334 Average Annual Total Returns+ Since One Yr. Five Yrs. Inception ------- --------- --------- Seligman Income Portfolio -5.96% 8.49% 8.86% S&P 500 1.32 8.70 11.80 Lipper Income -2.86 8.09 8.82 The rise in short-term interest rates and investors' concerns over the possibility of an increase in the future rate of inflation had a tremendous effect on both the equity and bond markets. Our strategy in 1994 was to lessen the impact of rising interest rates on the Portfolio. We began the year with a relatively large cash position and a reduced exposure to convertible securities. Throughout the year we avoided domestic electric utilities and focused instead on other issues with stronger fundamentals and attractive yields. In hindsight though, cash equivalents proved to be the only true safe haven for yield-oriented investors. Stock selection was the key to performance in 1994 and should remain important in 1995. Within the difficult market conditions, few sectors saw strong stock price appreciation in 1994, except for select technology and cyclical issues. The interest-sensitive nature of the Income Portfolio was the main reason for its lackluster performance, as 1994 was a year in which interest rates were dramatically increased. With the majority of the interest rate increase behind us, we expect 1995 to be a better year for interest-sensitive assets, which should benefit the Income Portfolio. We remain committed to identifying companies that represent good value and have strong potential for future earnings growth, a strategy that has served us well over the years. ---------- + Performance data quoted represent past performance and assume that all dividends and distributions are invested in additional shares. The investment return and principal value of an investment will fluctuate so that shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. -15- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments -------------------------------------------------------------------------------- SELIGMAN CAPITAL PORTFOLIO Shares Value ------ ----- COMMON STOCKS -- 95.5% AUTOMOTIVE AND RELATED -- 4.8% Chrysler ......................................... 2,100 $ 102,900 Eaton ............................................ 2,000 99,000 TBC* ............................................. 9,150 83,494 ---------- 285,394 ---------- BASIC MATERIALS -- 3.1% Louisiana Pacific ................................ 4,600 125,350 Nucor ............................................ 1,000 55,500 ---------- 180,850 ---------- BUSINESS SERVICES AND SUPPLIES -- 8.4% Grainger (W.W.) .................................. 1,900 109,725 Interpublic Group of Companies ................... 3,600 115,650 Paging Network ................................... 4,300 145,125 Sensormatic Electronics .......................... 3,500 126,000 ---------- 496,500 ---------- COMPUTER GOODS AND SERVICES -- 13.3% Ceridian* ........................................ 5,400 145,125 Compuware* ....................................... 2,600 93,275 EMC* ............................................. 6,300 136,238 FIserv* .......................................... 6,000 129,750 Parametric Technology ............................ 4,800 165,000 Xilinx* .......................................... 2,000 118,250 ---------- 787,638 ---------- CONSUMER GOODS AND SERVICES -- 7.2% CUC International* ............................... 3,400 113,900 Department 56* ................................... 2,000 79,500 Newell ........................................... 5,800 121,800 UST Inc. ......................................... 4,000 111,000 ---------- 426,200 ---------- DRUGS AND HEALTH CARE -- 13.9% Beverly Enterprises .............................. 7,800 112,125 Columbia/HCA Healthcare .......................... 2,900 105,850 Community Psychiatric Centers .................... 6,800 74,800 Corvel ........................................... 4,000 110,000 Dentsply International* .......................... 3,200 100,000 Protein Design Labs* ............................. 4,900 77,481 Sunrise Medical* ................................. 5,000 138,125 Teva Pharmaceutical (ADRs) ....................... 4,500 109,125 ---------- 827,506 ---------- FINANCIAL SERVICES -- 5.3% John Alden Financial ............................. 3,400 97,750 MBNA ............................................. 4,800 112,200 Travelers ........................................ 3,300 107,250 ---------- 317,200 ---------- ---------- * Non-income producing security. See notes to financial statements. -16- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN CAPITAL PORTFOLIO (continued) Shares Value ------ ----- FOOD AND FOOD SERVICES -- 3.4% Brinker International* ........................... 5,200 $ 94,250 PepsiCo .......................................... 3,000 108,750 ---------- 203,000 ---------- LEISURE AND RELATED -- 5.0% Circus Circus Enterprises* ....................... 3,700 86,025 Marvel Entertainment Group* ...................... 6,000 85,500 Mattel ........................................... 5,000 125,625 ---------- 297,150 ---------- RETAIL TRADE -- 12.7% Dillard Department Stores (Class A) .............. 3,200 85,600 Fingerhut ........................................ 5,200 80,600 Home Depot ....................................... 2,900 133,400 Illinois Tool Works .............................. 2,700 118,125 Liz Claiborne .................................... 4,800 81,000 OfficeMax* ....................................... 5,700 151,050 Sports & Recreation* ............................. 4,200 107,625 ---------- 757,400 ---------- SOFTWARE -- 4.8% Microsoft* ....................................... 2,400 147,000 Powersoft ........................................ 1,700 140,250 ---------- 287,250 ---------- SPECIALTY CHEMICALS -- 2.1% Schulman, A ...................................... 4,687 127,721 ---------- TELECOMMUNICATIONS -- 11.5% British Sky Broadcasting (ADRs) .................. 4,900 117,600 Century Telephone Enterprises .................... 4,000 118,000 Cisco Systems* ................................... 4,500 157,781 MCICommunications ................................ 4,700 86,656 Motorola ......................................... 2,400 138,900 NEXTEL Communications* ........................... 4,300 62,350 ---------- 681,287 ---------- Total Investments -- 95.5% (Cost $5,231,478) ..... 5,675,096 Other Assets Less Liabilities -- 4.5% ............ 267,278 ---------- Net Assets -- 100.0% ............................. $5,942,374 ========== ---------- * Non-income producing security. See notes to financial statements. -17- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN CASH MANAGEMENT PORTFOLIO
Annualized Yield on Principal Purchase Date Amount Value ------------- -------- ----- U.S. GOVERNMENT SECURITIES -- 49.1% (Cost $1,587,551) U.S. Treasury Bills, 2/23/1995 ............................................... 5.43% $1,600,000 $1,587,551 ---------- COMMERCIAL PAPER -- 34.5% AT&T Capital Corp., 1/10/1995 ................................................ 5.44 150,000 149,799 Associates Corp. of North America, 3/20/1995 ................................. 6.25 160,000 157,868 Bankers Trust Corp., 1/27/1995 ............................................... 5.48 160,000 159,376 Ford Motor Credit Corp., 3/6/1995 ............................................ 6.25 165,000 163,196 John Deere Capital Corp., 1/19/1995 .......................................... 5.52 165,000 164,550 J. P. Morgan & Co., 2/14/1995 ................................................ 5.81 160,000 158,879 NationsBank of North Carolina, 1/9/1995 ...................................... 5.62 160,000 159,802 ---------- Total Commercial Paper (Cost $1,113,470) ..................................... 1,113,470 ---------- REPURCHASE AGREEMENTS -- 9.3% (maturing 1/4/1995) (Cost $300,000) Lehman Government Securities, Inc., collateralized by: $305,000 U.S. Treasury Notes 7%, 9/30/1996, with a fair market value of $306,848 ...................................... 5.30 300,000 300,000 ---------- BANKERS' ACCEPTANCES -- 4.4% (Cost $142,629) Republic National Bank of New York, 3/1/1995 ................................. 6.11 144,055 142,629 ---------- Total Investments -- 97.3% (Cost $3,143,650) ................................. 3,143,650 Other Assets Less Liabilities -- 2.7% ........................................ 86,191 ---------- Net Assets -- 100.0% ......................................................... $3,229,841 ==========
SELIGMAN COMMON STOCK PORTFOLIO Shares Value ------ ----- COMMON STOCKS -- 86.6% ADVERTISING -- 1.0% Omnicom Group .................................... 4,000 $ 207,000 ---------- AUTOMOTIVE AND RELATED -- 1.4% Arvin Industries ................................. 4,700 109,275 General Motors ................................... 3,900 164,775 ---------- 274,050 ---------- CHEMICALS -- 5.2% Air Products and Chemicals ....................... 6,000 267,750 Dow Chemical ..................................... 7,500 504,375 Engelhard ........................................ 5,900 131,275 Lubrizol ......................................... 4,000 135,500 ---------- 1,038,900 ---------- COMPUTERS AND BUSINESS SERVICES -- 3.2% First Data ....................................... 6,000 284,250 International Business Machines .................. 5,000 367,500 ---------- 651,750 ---------- ---------- See notes to financial statements. -18- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN COMMON STOCK PORTFOLIO (continued) Shares Value ------ ----- CONSTRUCTION -- 0.5% Cemex S.A. (ADSs) ................................ 16,875 $ 90,692 ---------- CONSUMER GOODS AND SERVICES -- 10.1% Coca-Cola ........................................ 6,000 309,000 Colgate-Palmolive ................................ 4,000 253,500 Eastman Kodak .................................... 3,000 143,250 Gillette ......................................... 4,000 299,000 International Flavors & Fragrances ............... 8,400 388,500 PepsiCo .......................................... 11,800 427,750 UST Inc. ......................................... 8,000 222,000 ---------- 2,043,000 ---------- DRUGS AND HEALTH CARE -- 3.7% Abbott Laboratories .............................. 5,900 192,488 Mallinckrodt Group ............................... 3,600 107,550 Schering-Plough .................................. 6,100 451,400 ---------- 751,438 ---------- ELECTRIC AND GAS UTILITIES -- 0.8% PacifiCorp ....................................... 9,000 163,125 ---------- ELECTRONICS -- 3.4% Motorola ......................................... 8,000 463,000 Perkin-Elmer ..................................... 4,000 102,500 Seagate Technology* .............................. 5,000 120,000 ---------- 685,500 ---------- ENERGY -- 10.2% Baker Hughes ..................................... 7,000 127,750 British Petroleum (ADRs) ......................... 5,000 399,375 Enron ............................................ 12,000 366,000 Mobil ............................................ 2,200 185,350 Pennzoil ......................................... 4,100 180,913 Royal Dutch Petroleum ............................ 1,000 107,500 Schlumberger ..................................... 5,200 261,950 Societe Nationale Elf Aquitaine (ADRs) ........... 5,000 176,250 Sonat ............................................ 9,000 252,000 ---------- 2,057,088 ---------- FINANCE AND INSURANCE -- 11.5% Ahmanson (H.F.) .................................. 7,900 127,387 American International Group ..................... 4,500 441,000 Bank of New York ................................. 6,000 174,000 Chubb ............................................ 2,600 201,175 First Financial Management ....................... 5,000 308,125 Gainsco .......................................... 24,309 200,549 General Re ....................................... 3,000 371,250 KeyCorp .......................................... 4,800 120,000 NationsBank ...................................... 5,614 253,332 PNC Bank ......................................... 5,900 124,637 ---------- 2,321,455 ---------- ---------- * Non-income producing security. See notes to financial statements. -19- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN COMMON STOCK PORTFOLIO (continued) Shares Value ------ ----- FOOD -- 4.4% ConAgra .......................................... 3,750 $ 117,188 CPC International ................................ 4,000 213,000 Sara Lee ......................................... 18,000 454,500 Wendy's International ............................ 7,000 100,625 ---------- 885,313 ---------- INDUSTRIAL EQUIPMENT -- 2.5% General Electric ................................. 10,000 510,000 ---------- OFFICE EQUIPMENT -- 1.9% Pitney Bowes ..................................... 12,000 381,000 ---------- PAPER PRODUCTS -- 3.2% Federal Paper Board .............................. 5,100 147,900 Scott Paper ...................................... 4,400 304,150 Union Camp ....................................... 4,000 188,500 ---------- 640,550 ---------- PRINTING AND PUBLISHING -- 1.4% Knight-Ridder Newspapers ......................... 5,400 272,700 ---------- RETAIL TRADE -- 4.3% K Mart ........................................... 5,500 71,500 Nordstrom ........................................ 6,400 269,600 Penney (J.C.) .................................... 4,000 178,500 Snap-On Tools .................................... 4,100 136,325 TJX Companies .................................... 6,000 93,750 Wal-Mart ......................................... 6,000 127,500 ---------- 877,175 ---------- TELECOMMUNICATIONS -- 6.0% ALLTEL ........................................... 8,600 259,075 American Telephone & Telegraph ................... 4,000 201,000 GTE .............................................. 6,200 188,325 Telefonos de Mexico, S.A. (ADRs) ................. 6,000 246,000 Vodafone Group (ADSs) ............................ 9,195 309,182 ---------- 1,203,582 ---------- TOBACCO -- 1.1% Philip Morris .................................... 4,000 230,000 ---------- TRANSPORTATION -- 5.0% British Airways (ADRs) ........................... 6,250 353,906 Conrail .......................................... 2,800 141,400 NFC .............................................. 40,000 107,046 Roadway Services ................................. 7,000 396,375 ---------- 998,727 ---------- ---------- See notes to financial statements. -20- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN COMMON STOCK PORTFOLIO (continued)
Shares or Principal Amount Value --------- ----- MISCELLANEOUS -- 5.8% Alco Standard ........................................ 5,000 shs. $ 313,750 Corning .............................................. 11,800 352,525 Minnesota Mining & Manufacturing ..................... 8,000 427,000 Raychem .............................................. 2,200 78,375 1,171,650 ----------- Total Common Stocks (Cost $12,718,011) ............... 17,454,695 ----------- CONVERTIBLE SECURITIES -- 10.1% CONVERTIBLE PREFERRED STOCKS -- 2.0% ConAgra (Series E) $1.6875 ........................... 5,000 163,750 Freeport-McMoRan $4.375+ ............................. 5,000 238,750 ----------- Total Convertible Preferred Stocks (Cost $403,094) ... 402,500 ----------- SUBORDINATED CONVERTIBLE BONDS -- 8.1% Century Telephone 6%, 2/1/2007+ ...................... $ 250,000 295,625 CML Group 5 1/2%, 1/15/2003 .......................... 250,000 180,000 Compania de Telefonos de Chile S.A. 4 1/2%, 1/15/2003. 350,000 374,938 EMC 4 1/4%, 1/1/2001 ................................. 125,000 151,406 ICICI 2 1/2%, 4/3/2000 ............................... 100,000 74,500 MascoTech 4 1/2%, 12/15/2003 ......................... 125,000 84,062 Medical Care International 6 3/4%, 10/1/2006+ ........ 250,000 210,000 Network Equipment 7 1/4%, 5/15/2014 .................. 300,000 272,625 ----------- Total Subordinated Convertible Bonds (Cost $1,679,289) 1,643,156 ----------- Total Convertible Securities (Cost $2,082,383) ....... 2,045,656 ----------- REPURCHASE AGREEMENT -- 2.5% (Cost $500,000) ......... 500,000 500,000 ----------- Total Investments -- 99.2% (Cost $15,300,394) ........ 20,000,351 Other Assets Less Liabilities -- 0.8% ................ 167,222 ----------- Net Assets -- 100.0% ................................. $20,167,573 ===========
SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO Shares Value ------ ----- COMMON STOCKS -- 68.1% COMPUTER HARDWARE/PERIPHERALS -- 8.6% Electro Scientific Industries* ................... 500 $ 10,750 Electronics for Imaging* ......................... 400 10,950 EMC* ............................................. 500 10,813 Western Digital* ................................. 600 10,050 ---------- 42,563 ---------- ---------- + Rule 144A security. * Non-income producing security. See notes to financial statements. -21- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO (continued) Shares Value ------ ----- COMPUTER SOFTWARE -- 15.0% Compuware* ....................................... 300 $ 10,762 Corel* ........................................... 700 9,712 Delrina* ......................................... 700 8,663 MapInfo* ......................................... 500 12,688 Parametric Technology* ........................... 300 10,313 Synopsys* ........................................ 250 10,875 Viewlogic Systems* ............................... 600 11,025 ---------- 74,038 ---------- CONTRACT MANUFACTURING -- 4.9% Quickturn Design Systems* ........................ 1,000 13,563 Sanmina* ......................................... 400 11,000 ---------- 24,563 ---------- INFORMATION SERVICES -- 1.9% SunGard Data Systems* ............................ 250 9,563 ---------- NETWORKING -- 5.0% DSC Communications* .............................. 350 12,622 Standard Microsystems* ........................... 400 12,050 ---------- 24,672 ---------- SEMICONDUCTORS -- 15.9% Advanced Micro Devices* .......................... 430 10,696 Cypress Semiconductor* ........................... 500 11,562 Exar* ............................................ 500 12,125 Intergrated Device Technology* ................... 370 10,938 Linear Technology ................................ 200 9,875 Motorola ......................................... 200 11,575 Xilinx* .......................................... 200 11,825 ---------- 78,596 ---------- SEMICONDUCTOR CAPITAL EQUIPMENT -- 16.8% Applied Materials* ............................... 250 10,500 Cognex* .......................................... 500 13,062 Credence Systems* ................................ 400 9,150 Electroglas* ..................................... 300 10,050 FSI International* ............................... 400 10,850 Fusion Systems* .................................. 400 10,350 KLA Instruments* ................................. 200 9,825 Lam Research* .................................... 250 9,280 ---------- 83,067 ---------- Total Investments -- 68.1% (Cost $318,551) ....... 337,062 Other Assets Less Liabilities -- 31.9% ........... 157,559 ---------- Net Assets -- 100.0% ............................. $ 494,621 ========== ---------- * Non-income producing security. See notes to financial statements. -22- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN FIXED INCOME SECURITIES PORTFOLIO
Principal Amount Value -------- ----- U.S. GOVERNMENT SECURITIES AND AGENCIES -- 61.1% U.S. GOVERNMENT SECURITIES -- 52.6% U.S. Treasury Bonds 8 7/8%, 2/15/2019 ........................... $ 900,000 $ 982,125 U.S. Treasury Notes 8 7/8%, 2/15/1996 ........................... 900,000 913,500 ---------- Total U.S. Government Securities (Cost $1,909,042) .............. 1,895,625 ---------- U.S. GOVERNMENT AGENCIES -- 8.5% (Cost $316,178) Government National Mortgage Association 10%, 12/15/2020++ ...... 291,287 306,671 ---------- Total U.S. Government Securities and Agencies (Cost $2,225,220) . 2,202,296 ---------- CORPORATE BONDS -- 19.9% Banco Nacional de Comercio Exterior 7 1/4%, 2/2/2004+ ........... 150,000 106,690 First USA Bank 5 3/4%, 1/15/1999 ................................ 100,000 90,435 General Motors Acceptance 5 5/8%, 2/1/1999 ...................... 150,000 134,234 News America Holdings 8 1/4%, 8/10/2018 ......................... 150,000 132,813 United Telecommunications 9 1/2%, 4/1/2003 ...................... 150,000 157,530 USX 9 1/8%, 1/15/2013 ........................................... 100,000 96,851 ---------- Total Corporate Bonds (Cost $789,010) ........................... 718,553 ---------- ASSET-BACKED SECURITIES -- 4.0% (Cost $145,752) Ford Credit Grantor Trust 7.30%, 10/15/1999++ ................... 145,874 144,794 ---------- REPURCHASE AGREEMENTS -- 8.3% (maturing 1/4/1995) (Cost $300,000) Lehman Government Securities, Inc., collateralized by: $300,000 U.S. Treasury Notes 7 3/4%, 3/31/1996, with a fair market value of $306,264 ......................... 300,000 300,000 ---------- Total Investments -- 93.3% (Cost $3,459,982) .................... 3,365,643 Other Assets Less Liabilities -- 6.7% ........................... 240,731 ---------- Net Assets -- 100.0% ............................................ $3,606,374 ==========
---------- +Rule 144A security. ++Investments in mortgage-backed and asset-backed securities are subject to principal paydowns. As a result of prepayments from refinancing or satisfaction of the underlying instruments, the average life may be less than the stated maturity. This in turn may impact the ultimate yield realized from these investments. See notes to financial statements. -23- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN FRONTIER PORTFOLIO Shares Value ------ ----- COMMON STOCKS -- 94.7% ADVERTISING -- 6.2% Dimac* ........................................... 400 $ 5,050 Heritage Media (Class A)* ........................ 200 5,375 ---------- 10,425 ---------- APPAREL -- 8.5% Cygne Designs* ................................... 300 4,050 Nautica Enterprises* ............................. 200 6,000 St. John Knits ................................... 150 4,294 ---------- 14,344 ---------- BROADCASTING -- 4.3% United Video Satellite Group (Class A) ........... 300 7,275 ---------- BUSINESS SERVICES -- 12.4% Interim Services* ................................ 200 4,913 Nu-Kote Holdings (Class A)* ...................... 230 5,951 SPS Transaction Services* ........................ 200 5,250 SunGard Data Systems ............................. 125 4,781 ---------- 20,895 ---------- CAPITAL GOODS -- 10.1% Cognex ........................................... 250 6,531 Dorsey Trailers* ................................. 400 5,975 Fusion Systems* .................................. 180 4,658 ---------- 17,164 ---------- CONSUMER GOODS -- 2.8% Duracraft* ....................................... 150 4,772 ---------- COMPUTER SOFTWARE -- 3.3% Viewlogic Systems* ............................... 300 5,512 ---------- DRUGS AND HEALTH CARE -- 2.8% Protein Design Labs* ............................. 300 4,744 ---------- ELECTRONICS -- 2.7% Oak Industries ................................... 200 4,575 ---------- FARM EQUIPMENT -- 4.0% AGCO ............................................. 225 6,834 ---------- FINANCIAL SERVICES -- 6.6% T. Rowe Price .................................... 175 5,228 Roosevelt Financial Group ........................ 400 5,975 ---------- 11,203 ---------- FOOD -- 2.5% Brothers Gourmet Coffees* ........................ 400 4,250 ---------- ---------- * Non-income producing security. See notes to financial statements. -24- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN FRONTIER PORTFOLIO (continued) Shares Value ------ ----- LEISURE -- 3.4% Aldila* .......................................... 500 $ 5,719 ---------- MEDICAL PRODUCTS AND TECHNOLOGY -- 3.0% Patterson Dental* ................................ 250 5,094 ---------- RESTAURANTS --3.2% International House of Pancakes* ................. 200 5,425 ---------- RETAIL TRADE -- 3.2% Ernst Home Centers* .............................. 600 5,325 ---------- TECHNOLOGY -- 12.8% Electroglas* ..................................... 150 5,025 Electronics for Imaging* ......................... 200 5,475 Standard Microsystems* ........................... 200 6,025 Western Digital* ................................. 300 5,025 ---------- 21,550 ---------- UTILITIES -- 2.9% Trigen Energy .................................... 250 4,906 ---------- Total Investments -- 94.7% (Cost $150,952) ....... 160,012 Other Assets Less Liabilities -- 5.3% ............ 8,939 ---------- Net Assets -- 100.0% ............................. $ 168,951 ========== SELIGMAN HENDERSON GLOBAL PORTFOLIO Shares Value ------ ----- COMMON STOCKS -- 81.7% BANKING -- 10.4% ABN-AMRO Holdings (Netherlands) .................. 350 $ 12,171 Banco de Santander (Spain) ....................... 360 13,789 Banco de Santander Rights* (Spain) ............... 36 1,331 Banco Espanol de Credito* (Spain) ................ 132 883 Credito Italiano (Italy) ......................... 5,600 5,778 Credito Italiano Warrants* (Italy) ............... 800 180 C.S. Holdings (Switzerland) ...................... 15 6,417 Deutsche Bank (Germany) .......................... 37 17,174 Fuji Bank (Japan) ................................ 2,000 44,226 Lloyds Bank (UK) ................................. 740 6,399 Malayan Banking (Malaysia) ....................... 2,500 15,080 Siam Commercial Bank (Thailand) .................. 1,000 9,163 Sumitomo Trust and Banking (Japan) ............... 2,000 28,144 United Overseas Bank (Singapore) ................. 2,237 23,628 ---------- 184,363 ---------- ---------- * Non-income producing security. See notes to financial statements. -25- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL PORTFOLIO (continued) Shares Value ------ ----- CHEMICALS -- 2.3% Akzo Nobel (Netherlands) ......................... 130 $ 15,024 Bayer A.G. (Germany) ............................. 60 13,906 Toyo Ink Manufacturing (Japan) ................... 2,000 12,926 ---------- 41,856 ---------- COMMERCIAL SERVICES -- 0.8% Kvaerner Industries (Norway) ..................... 300 13,572 ---------- CONSTRUCTION AND PROPERTY -- 5.3% City Developments (Singapore) .................... 3,400 19,006 Daiwa House Industry (Japan) ..................... 4,000 56,689 Grupo Tribasa (ADRs)* (Mexico) ................... 300 4,988 Hochtief (Germany) ............................... 10 6,036 LaFarge Coppee, SA (France) ...................... 101 7,191 ---------- 93,910 ---------- CONSUMER PRODUCTS -- 4.6% Cifra SA (Mexico) ................................ 4,000 8,287 CSK (Japan) ...................................... 1,000 32,566 Nestle (Switzerland) ............................. 20 19,053 Unilever (UK) .................................... 1,200 21,747 ---------- 81,653 ---------- DRUGS AND HEALTH CARE -- 0.5% Roche Holdings (Switzerland) ..................... 2 9,679 ---------- ELECTRONICS -- 7.9% Farnell Electronics (UK) ......................... 2,000 16,088 Nokia (Finland) .................................. 60 8,837 Pioneer Electronics (Japan) ...................... 2,000 48,246 Schneider (France) ............................... 150 9,949 Toshiba (Japan) .................................. 8,000 58,137 ---------- 141,257 ---------- Finance and Insurance -- 4.2% Assicurazioni Generali (Italy) ................... 375 8,823 AXA (France) ..................................... 251 11,635 Internationale Nederlanden Bank (Netherlands) .... 303 14,329 Legal & General Group (UK) ....................... 2,100 14,198 Muenchener Rueckversicherung (Germany) ........... 2 3,757 Skandia Forsakrings (Sweden) ..................... 700 12,116 Zurich Versicherung (Switzerland) ................ 10 9,511 ---------- 74,369 ---------- INDUSTRIAL GOODS AND SERVICES -- 2.8% BBC Brown Boverie (Switzerland) .................. 16 13,775 Bekaert (Belgium) ................................ 20 14,153 BTR (UK) ......................................... 4,900 22,507 BTR Warrants* (UK) ............................... 33 17 ---------- 50,452 ---------- ---------- * Non-income producing security. See notes to financial statements. -26- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL PORTFOLIO (continued) Shares Value ------ ----- LEISURE AND HOTELS -- 1.3% Granada Group (UK) ............................... 2,800 $ 22,348 ---------- MANUFACTURING -- 7.7% Alcatel Alsthom (France) ......................... 61 5,212 Cia Acos Especiais Itabira (ADRs) (Brazil) ....... 75 2,039 Delta Group (UK) ................................. 1,700 11,653 FKI Babcock (UK) ................................. 6,000 13,991 Gadjah Tungal (Indonesia) ........................ 11,000 15,007 Michelin (Class B) (France) ...................... 250 9,102 TPI Polene (Thailand) ............................ 3,250 28,875 Yamaha (Japan) ................................... 4,000 51,060 ---------- 136,939 ---------- MEDIA -- 5.9% Elsevier (Netherlands) ........................... 1,750 18,267 News Corp. (Australia) ........................... 6,204 24,281 Nippon Television Network (Japan) ................ 110 26,425 Reuters Holdings (UK) ............................ 3,000 21,949 WPP Group (UK) ................................... 8,000 13,709 ---------- 104,631 ---------- METALS -- 1.1% Allusuisse-Lonza (Switzerland) ................... 22 11,008 NSK (Japan) ...................................... 1,000 7,941 ---------- 18,949 ---------- PACKAGING AND PAPER -- 2.4% Nippon Paper (Japan) ............................. 4,000 29,430 Stora Kopparbergs (Sweden) ....................... 210 12,672 ---------- 42,102 ---------- RESOURCES -- 4.6% British Petroleum (UK) ........................... 3,250 21,642 Broken Hill Proprietary (Australia) .............. 1,550 23,520 Repsol (Spain) ................................... 400 10,853 Societe Nationale ELF Aquitaine (France) ......... 230 16,200 YPF Sociedad Anonima (ADRs) (Argentina) .......... 400 8,550 ---------- 80,765 ---------- RETAILING -- 2.7% Carrefour Supermarche (France) ................... 45 18,651 Karstadt (Germany) ............................... 20 7,295 Tesco (UK) ....................................... 5,700 22,212 ---------- 48,158 ---------- TELECOMMUNICATIONS -- 5.6% Hong Kong Telecommunications (Hong Kong) ......... 7,800 14,868 Nippon Telegraph & Telephone (Japan) ............. 6 53,131 Syarikat Telecom Malaysia (Malaysia) ............. 1,000 6,776 Tele Danmark (ADRs) (Denmark) .................... 280 14,226 ---------- * Non-income producing security. See notes to financial statements. -27- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL PORTFOLIO (continued) Shares or Principal Amount Value ------ ----- TELECOMMUNICATIONS (continued) Telefonica de Espana (Spain) ..................... 500shs. $ 5,909 Telefonos de Mexico, S.A. (ADRs) (Mexico) ........ 100 4,100 ---------- 99,010 ---------- TEXTILES -- 4.0% Mitsubishi Rayon (Japan) ......................... 13,000 55,795 Tuntex Distinct (Global Depository Receipts)* (Taiwan) ....................................... 1,200 15,900 ---------- 71,695 ---------- TOBACCO -- 1.2% B.A.T. Industries (UK) ........................... 3,100 20,934 ---------- TRANSPORTATION -- 5.8% East Japan Railways (Japan) ...................... 11 55,061 Lufthansa (Germany) .............................. 100 12,492 Perusahaan Otomobil Nasional (Malaysia) .......... 3,000 10,928 Swire Pacific (Hong Kong) ........................ 4,000 24,916 ---------- 103,397 ---------- UTILITIES -- 0.6% Cie Generale des Eaux (France) ................... 114 11,086 ---------- Total Common Stocks (Cost $1,426,163) ............ 1,451,125 ---------- CONVERTIBLE SECURITIES -- 1.0% Convertible Bonds -- 1.0% (Cost $19,765) ELECTRONICS -- 1.0% Daewoo Electric (Korea) Zero Coupon Bond due 12/31/2004* ................................ $ 25,000 17,375 Total Investments -- 82.7% (Cost $1,445,928) ..... 1,468,500 Other Assets Less Liabilities -- 17.3% ........... 307,805 ---------- Net Assets -- 100.0% ............................. $1,776,305 ========== SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO Shares Value ------ ----- COMMON STOCKS -- 109.0% ADVERTISING -- 3.4% Heritage Media (Class A)* (US) ................... 165 $ 4,434 ---------- BUSINESS SERVICES -- 8.9% BISYS Group* (US) ................................ 190 4,180 Nu-Kote Holdings (Class A)* (US) ................. 145 3,752 SunGard Data Systems* (US) ....................... 100 3,825 ---------- 11,757 ---------- ---------- * Non-income producing security. See notes to financial statements. -28- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) Shares Value ------ ----- CONSTRUCTION AND PROPERTY -- 8.1% Danske Traelastkompagni (Denmark) ................ 70 $ 5,568 Polypipe (UK) .................................... 2,500 5,164 ---------- 10,732 ---------- CONSUMER GOODS AND SERVICES -- 13.2% Birkby (UK) ...................................... 1,500 5,000 DeVRY (US) ....................................... 125 3,859 Duracraft* (US) .................................. 120 3,818 Rentsch, Walter (Switzerland) .................... 30 4,652 ---------- 17,329 ---------- COMPUTER HARDWARE/PERIPHERALS -- 3.5% Electronics for Imaging* (US) .................... 170 4,654 ---------- DRUGS AND HEALTH CARE -- 2.6% Protein Design Labs* (US) ........................ 215 3,400 ---------- FARM EQUIPMENT -- 3.8% AGCO (US) ........................................ 165 5,012 ---------- FINANCIAL SERVICES -- 3.2% T. Rowe Price (US) ............................... 140 4,183 ---------- LEISURE --3.3% Aldila* (US) ..................................... 375 4,289 ---------- MANUFACTURING -- 14.8% Equipements et Composants pour l'Industrie Automobile (France) ............................ 40 5,202 Kalmar Industries* (Sweden) ...................... 400 4,526 Tsudakoma (Japan) ................................ 1,000 9,729 ---------- 19,457 ---------- MEDIA -- 3.2% United Video Satellite Group (Class A) (US) ...... 175 4,244 ---------- MEDICAL PRODUCTS AND TECHNOLOGY -- 6.7% Life Sciences (UK) ............................... 2,500 5,204 Sullivan Dental Products* (US) ................... 270 3,645 ---------- 8,849 ---------- METALS -- 5.7% Nakayama Steel Works (Japan) ..................... 1,000 7,488 ---------- OIL SERVICES -- 3.0% Coflexip (ADRs)* (France) ........................ 170 3,931 ---------- PRINTING -- 4.0% Wace Group (UK) .................................. 1,400 5,258 ---------- ---------- * Non-income producing security. See notes to financial statements. -29- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) Shares Value ------ ----- RESTAURANTS -- 3.0% International House of Pancakes* (US) ............ 145 $ 3,933 ---------- RETAILING -- 3.9% Adelsten (Norway) ................................ 30 5,100 ---------- TECHNOLOGY -- 14.7% Credence Systems* (US) ........................... 170 3,889 FSI International* (US) .......................... 150 4,069 PRI Automation* (US) ............................. 230 3,709 Sanmina* (US) .................................... 140 3,850 Western Digital* (US) ............................ 230 3,853 ---------- 19,370 ---------- Total Investments -- 109.0% (Cost $139,375) ...... 143,420 Other Assets Less Liabilities -- (9.0)% .......... (11,910) ---------- Net Assets -- 100.0% ............................. $131,510 ========== SELIGMAN INCOME PORTFOLIO Shares Value ------ ----- CONVERTIBLE SECURITIES -- 52.8% CONVERTIBLE PREFERRED STOCKS -- 15.5% BANKING AND FINANCE -- 2.0% Alexander & Alexander (Series A) $3.625+ ......... 1,500 $ 60,000 Chemical Banking $5 .............................. 2,000 137,750 ---------- 197,750 ---------- FOOD -- 2.6% ConAgra (Series E) $1.6875 ....................... 8,000 262,000 ---------- MINERALS -- 2.4% Freeport-McMoRan $4.375+ ......................... 5,000 238,750 ---------- RETAILING -- 0.8% TJX Companies $3.125 ............................. 2,000 77,500 ---------- TRANSPORTATION -- 6.9% Consolidated Freightways $1.54 ................... 10,000 223,750 GATX $3.875 ...................................... 5,000 270,000 Sea Containers 8% ................................ 5,000 203,125 ---------- 696,875 ---------- ---------- * Non-income producing security. + Rule 144A security. See notes to financial statements. -30- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO (continued) Shares or Principal Amount Value --------- ----- MISCELLANEOUS -- 0.8% Corning 6% ....................................... 1,700shs. $ 79,475 ---------- Total Convertible Preferred Stocks (Cost $1,587,768) 1,552,350 ---------- SUBORDINATED CONVERTIBLE BONDS -- 37.3% AUTOMOTIVE -- 2.0% Arvin Industries 7 1/2%, 9/30/2014 ............... $200,000 196,750 ---------- BANKING AND FINANCE -- 2.2% Bank of Boston 7 3/4%, 6/15/2011 ................. 200,000 224,000 ---------- DRUGS AND HEALTH CARE -- 1.5% Pharmaceutical Marketing Services 6 1/4%, 2/1/2003+ 235,000 156,275 ---------- ELECTRONICS -- 10.2% Micropolis 6%, 3/15/2012 ......................... 350,000 223,125 Network Equipment 7 1/4%, 5/15/2014 .............. 300,000 272,625 Quantum 6 3/8%, 4/1/2002 ......................... 250,000 241,875 Seagate Technology 6 3/4%, 5/1/2012 .............. 350,000 289,187 ---------- 1,026,812 ---------- ENERGY -- 5.3% Kelley Oil & Gas 8 1/2%, 4/1/2000 ................ 285,000 236,194 Santa Fe Pipelines 10.418%, 8/15/2010 ............ 250,000 296,250 ---------- 532,444 ---------- ENTERTAINMENT/PUBLISHING -- 1.3% Time Warner 8 3/4%, 1/10/2015 .................... 140,000 131,950 ---------- ENVIRONMENTAL SERVICES -- 2.0% USA Waste Services 8 1/2%, 10/15/2002 ............ 200,000 200,750 ---------- INSURANCE -- 2.0% Trenwick Group 6%, 12/15/1999 .................... 200,000 199,000 ---------- RETAILING -- 1.8% CML Group 5 1/2%, 1/15/2003 ...................... 250,000 180,000 ---------- TELECOMMUNICATIONS -- 5.2% Bay Networks 5 1/4%, 5/15/2003+ .................. 100,000 75,750 Century Telephone 6%, 2/1/2007+ .................. 150,000 177,375 Compania de Telefonos de Chile S.A. 4 1/2%, 1/15/2003 250,000 267,813 ---------- 520,938 ---------- TEXTILES-- 2.9% Unifi 6%, 3/15/2002 .............................. 300,000 292,125 ---------- ---------- + Rule 144A security. See notes to financial statements. -31- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Portfolios of Investments (continued) -------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO (continued) Principal Amount or Shares Value --------- ----- TRANSPORTATION -- 0.9% Airborne Freight 6 3/4%, 8/15/2001 ............... $100,000 $ 91,500 ---------- Total Subordinated Convertible Bonds (Cost $3,688,832) .............................. 3,752,544 ---------- Total Convertible Securities (Cost $5,276,600) ... 5,304,894 ---------- CORPORATE BONDS -- 16.2% AUTOMOTIVE -- 6.2% Chrysler Financial 6 1/2%, 6/15/1998 ............. 200,000 187,983 Ford Motor Credit 6 3/4%, 8/15/2008 .............. 250,000 211,301 General Motors Acceptance 5 5/8%, 2/1/1999 ....... 250,000 223,723 ---------- 623,007 ---------- BANKING AND FINANCE -- 3.7% Banco Nacional de Comercio Exterior 7 1/4%, 2/2/2004+ ...................................... 250,000 177,816 First USA Bank 5 3/4%, 1/15/1999 ................. 100,000 90,435 NationsBank 9 1/8%, 10/15/2001 ................... 100,000 102,897 ---------- 371,148 ---------- TELECOMMUNICATIONS -- 3.7% United Telecommunications 9 1/2%, 4/1/2003 ....... 350,000 367,571 ---------- MISCELLANEOUS -- 2.6% Tenneco Credit 9 5/8%, 8/15/2001 ................. 250,000 262,960 ---------- Total Corporate Bonds (Cost $1,814,664) .......... 1,624,686 ---------- COMMON STOCKS -- 13.5% CHEMICALS -- 2.3% Dow Chemical ..................................... 3,500shs. 235,375 ---------- ELECTRIC UTILITIES -- 5.6% CINergy .......................................... 9,718 227,158 Dominion Resources ............................... 3,000 107,250 New England Electric ............................. 3,000 96,375 Unicom ........................................... 5,304 127,296 ---------- 558,079 ---------- GAS UTILITIES -- 0.9% Atlanta Gas & Light .............................. 3,000 90,000 ---------- RETAILING -- 0.4% K Mart ........................................... 3,200 41,600 ---------- STEEL -- 1.9% Inland Steel Industries .......................... 5,406 189,886 ---------- TRANSPORTATION -- 0.5% NFC .............................................. 20,000 53,523 ---------- ---------- + Rule 144A security. See notes to financial statements. -32- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- December 31, 1994 -------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO (continued)
Shares or Principal Amount Value --------- ----- MISCELLANEOUS -- 1.9% Ogden ............................................................... 10,000shs. $ 187,500 Total Common Stocks (Cost $1,286,557) ............................... 1,355,963 U.S. GOVERNMENT SECURITIES -- 4.9% (Cost $505,839) U. S. Treasury Notes 7 1/4%, 11/15/1996 ............................. $ 500,000 496,250 ----------- REPURCHASE AGREEMENT -- 10.4% (maturing 1/4/1995) (Cost $1,050,000) Lehman Government Securities, Inc., collateralized by: $1,055,000 U.S. Treasury Notes 7 1/4%, 8/31/1996, with a fair market value of $1,073,596 ........................... 1,050,000 1,050,000 ----------- Total Investments -- 97.8% (Cost $9,933,660) ........................ 9,831,793 Other Assets Less Liabilities -- 2.2% ............................... 218,484 ----------- Net Assets -- 100.0% ................................................ $10,050,277 ===========
---------- See notes to financial statements. -33- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Statements of Assets and Liabilities December 31, 1994 --------------------------------------------------------------------------------
Seligman Seligman Seligman Seligman ASSETS: Seligman Cash Common Communications Fixed Income Investments, at value (see Capital Management Stock and Information Securities portfolios of investments): Portfolio Portfolio Portfolio Portfolio Portfolio ----------- ------------ ------------- ----------------- -------------- Common Stocks $5,675,096 $ -- $17,454,695 $337,062 $ -- Convertible Securities -- -- 2,045,656 -- -- U.S. Government Securities and Agencies -- 1,587,551 -- -- 2,202,296 Corporate Bonds -- -- -- -- 718,553 Asset-backed Security -- -- -- -- 144,794 Commercial Paper -- 1,113,470 -- -- -- Repurchase Agreements -- 300,000 500,000 -- 300,000 Bankers' Acceptances -- 142,629 -- -- -- ---------- ---------- ----------- -------- ---------- Total Investments 5,675,096 3,143,650 20,000,351 337,062 3,365,643 Cash 275,547 92,198 153,467 158,000 172,283 Receivable from associated companies 6,241 1,831 -- 11,628 711 Interest and dividends receivable 3,910 177 85,274 -- 86,703 Receivable for Capital Stock sold -- 7,000 -- -- -- Receivable for securities sold -- -- -- -- -- ---------- ---------- ----------- -------- ---------- Total Assets 5,960,794 3,244,856 20,239,092 506,690 3,625,340 ---------- ---------- ----------- -------- ---------- LIABILITIES: Payable for Capital Stock repurchased 1,482 100 49,038 -- 2,838 Payable for securities purchased -- -- -- -- -- Accrued expenses, taxes, and other 16,938 14,915 22,481 12,069 16,128 ---------- ---------- ----------- -------- ---------- Total Liabilities 18,420 15,015 71,519 12,069 18,966 ---------- ---------- ----------- -------- ---------- NET ASSETS $5,942,374 $3,229,841 $20,167,573 $494,621 $3,606,374 ========== ========== =========== ======== ========== COMPOSITION OF NET ASSETS: Capital Stock, at par $ 468 $ 3,230 $ 1,463 $ 47 $ 389 Additional paid-in capital 5,501,065 3,227,005 15,468,970 476,063 3,784,132 Dividends in excess of net investment income (2,777) -- (2,777) -- (2,777) Accumulated net realized gain (loss) -- (394) -- -- (81,031) Net unrealized appreciation/ depreciation of investments 443,618 -- 4,699,957 18,511 (94,339) Net unrealized appreciation/ depreciation on translation of assets and liabilities denominated in foreign currencies -- -- (40) -- -- ---------- ---------- ----------- -------- ---------- NET ASSETS $5,942,374 $3,229,841 $20,167,573 $494,621 $3,606,374 ========== ========== =========== ======== ========== Shares of Capital Stock ($.001 par value) outstanding: 467,918 3,230,235 1,463,060 47,368 389,066 ========== ========== =========== ======== ========== Net Asset Value per share $ 12.70 $ 1.00 $ 13.78 $ 10.44 $ 9.27 ========== ========== =========== ======== ==========
---------- See notes to financial statements. -34- -------------------------------------------------------------------------------- Statements of Assets and Liabilities December 31, 1994 --------------------------------------------------------------------------------
Seligman Seligman Henderson ASSETS: Seligman Henderson Global Smaller Seligman Investments, at value (see Frontier Global Companies Income portfolios of investments): Portfolio Portfolio Portfolio Portfolio ------------- ------------- ------------------- ----------- Common Stocks $160,012 $1,451,125 $143,420 $ 1,355,963 Convertible Securities -- 17,375 -- 5,304,894 U.S. Government Securities and Agencies -- -- -- 496,250 Corporate Bonds -- -- -- 1,624,686 Asset-backed Security -- -- -- -- Commercial Paper -- -- -- -- Repurchase Agreements -- -- -- 1,050,000 Bankers' Acceptances -- -- -- -- --------- --------- -------- ---------- Total Investments 160,012 1,468,500 143,420 9,831,793 Cash 9,045 343,968 53,838 111,610 Receivable from associated companies 11,509 4,735 11,328 1,076 Interest and dividends receivable 37 1,119 74 140,826 Receivable for Capital Stock sold -- -- -- -- Receivable for securities sold -- 14,819 -- -- --------- --------- -------- ---------- Total Assets 180,603 1,833,141 208,660 10,085,305 --------- --------- -------- ---------- LIABILITIES: Payable for Capital Stock repurchased -- -- -- 16,535 Payable for securities purchased -- 41,178 65,624 -- Accrued expenses, taxes, and other 11,652 15,658 11,526 18,493 -------- --------- -------- ---------- Total Liabilities 11,652 56,836 77,150 35,028 -------- --------- -------- ---------- NET ASSETS $168,951 $1,776,305 $131,510 $10,050,277 ======== ========= ======== ========== COMPOSITION OF NET ASSETS: Capital Stock, at par $ 16 $ 157 $ 13 $ 1,008 Additional paid-in capital 159,875 1,752,568 127,645 10,173,046 Dividends in excess of net investment income -- (1,354) -- (2,777) Accumulated net realized gain (loss) -- -- -- (19,113) Net unrealized appreciation/ depreciation of investments 9,060 (2,780) 3,279 (101,867) Net unrealized appreciation/ depreciation on translation of assets and liabilities denominated in foreign currencies -- 27,714 573 (20) -------- --------- -------- ---------- NET ASSETS $168,951 $1,776,305 $131,510 $10,050,277 ======== ========= ======== ========== Shares of Capital Stock ($.001 par value) outstanding: 15,970 156,688 12,754 1,007,576 ======== ========= ======== ========== Net Asset Value per share $ 10.58 $ 11.34 $ 10.31 $ 9.97 ======== ========= ======== ==========
---------- See notes to financial statements. -35- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Statements of Operations For the year ended December 31, 1994 --------------------------------------------------------------------------------
Seligman Seligman Seligman Seligman Seligman Cash Common Communications Fixed Income Capital Management Stock and Information Securities Portfolio Portfolio Portfolio Portfolio* Portfolio -------- ----------- -------- ----------- --------- Investment income: Dividends** $ 37,864 $ -- $ 514,207 $ -- $ -- Interest 2,796 127,857 127,684 -- 200,991 --------- -------- --------- ------- --------- Total investment income 40,660 127,857 641,891 -- 200,991 --------- -------- --------- ------- --------- Expenses: Management fee 23,120 12,837 84,124 349 14,043 Auditing fee 15,512 15,512 15,512 7,000 15,512 Legal fee 6,609 11,060 14,620 2,551 6,609 Directors' fees and expenses 3,636 3,636 3,636 -- 3,636 Shareholder reports and communications 2,044 2,044 2,044 726 2,044 Registration 1,153 1,103 1,028 164 1,028 Custody and related services 661 244 4,759 400 489 Miscellaneous 2,711 1,175 5,671 879 2,581 --------- -------- --------- ------- --------- Total expenses before reimbursement 55,446 47,611 131,394 12,069 45,942 Reimbursement of expenses (20,761) (47,611) (5,204) (11,627) (24,851) --------- -------- --------- ------- --------- Total expenses after reimbursement 34,685 -- 126,190 442 21,091 --------- -------- --------- ------- --------- Net investment income (loss) 5,975 127,857 515,701 (442) 179,900 --------- -------- --------- ------- --------- Net realized and unrealized gain (loss) on investments and foreign currency transactions: Net realized gain (loss) on investments 642,271 (240) 1,108,365 -- (81,031) Net realized gain (loss) from foreign currency transactions -- -- 20 -- -- Net change in unrealized appreciation/ depreciation of investments (912,365) -- (1,604,789) 18,511 (225,410) Net change in unrealized appreciation/ depreciation on translation of assets and liabilities denominated in foreign currencies -- -- (40) -- -- --------- -------- --------- ------- --------- Net gain (loss) on investments and foreign currency transactions (270,094) (240) (496,444) 18,511 (306,441) --------- -------- --------- ------- --------- Increase (decrease) in net assets from operations $(264,119) $127,617 $ 19,257 $18,069 $(126,541) ========= ======== ========= ======= ========= ---------- * For the period October 11, 1994, (commencement of operations) to December 31, 1994. ** Net of foreign tax withheld as follows: $ 236 $ -- $ 5,345 $ -- $ -- See notes to financial statements.
-36- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Statements of Operations (continued) For the year ended December 31, 1994 --------------------------------------------------------------------------------
Seligman Seligman Henderson Seligman Henderson Global Smaller Seligman Frontier Global Companies Income Portfolio* Portfolio Portfolio* Portfolio --------- ----------- --------- ----------- Investment income: Dividends** $ 37 $12,229 $ 22 $ 231,024 Interest -- 14,855 693 512,207 ------- ------- ------- --------- Total investment income 37 27,084 715 743,231 ------- ------- ------- --------- Expenses: Management fee 99 11,417 159 42,854 Auditing fee 7,000 13,512 7,000 15,512 Legal fee 2,551 6,609 2,551 11,950 Directors' fees and expenses -- 3,611 -- 3,636 Shareholder reports and communications 726 1,117 726 2,044 Registration 55 1,412 44 1,028 Custody and related services 400 19,221 400 981 Miscellaneous 821 12,953 805 4,333 ------- ------- ------- --------- Total expenses before reimbursement 11,652 69,852 11,685 82,338 Reimbursement of expenses (11,509) (56,165) (11,487) (18,064) ------- ------- ------- --------- Total expenses after reimbursement 143 13,687 198 64,274 ------- ------- ------- --------- Net investment income (loss) (106) 13,397 517 678,957 ------- ------- ------- --------- Net realized and unrealized gain (loss) on investments and foreign currency transactions: Net realized gain (loss) on investments -- 9,138 -- (19,113) Net realized gain (loss) from foreign currency transactions -- 3,259 (58) 10 Net change in unrealized appreciation/ depreciation of investments 9,060 (44,914) 3,279 (1,298,035) Net change in unrealized appreciation/ depreciation on translation of assets and liabilities denominated in foreign currencies -- 29,924 573 (20) ------- ------- ------- ---------- Net gain (loss) on investments and foreign currency transactions 9,060 (2,593) 3,794 (1,317,158) ------- ------- ------- ---------- Increase (decrease) in net assets from operations $ 8,954 $10,804 $ 4,311 $ (638,201) ======= ======= ======= ========== ----------- * For the period October 11, 1994, (commencement of operations) to December 31, 1994. ** Net of foreign tax withheld as follows: $ -- $ 1,102 $ -- $ 184 See notes to financial statements.
-37- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Statements of Changes in Net Assets --------------------------------------------------------------------------------
Seligman Seligman Seligman Capital Portfolio Cash Management Portfolio Common Stock Portfolio ---------------------- ------------------------- ----------------------- Year ended December 31 Year ended December 31 Year ended December 31 ---------------------- ------------------------- ----------------------- 1994 1993 1994 1993 1994 1993 -------- -------- -------- -------- -------- -------- Operations: Net investment income $ 5,975 $ 4,835 $ 127,857 $ 105,206 $ 515,701 $ 489,260 Net realized gain (loss) on investments 642,271 1,230,974 (240) -- 1,108,365 2,624,623 Net realized gain (loss) from foreign currency transactions -- -- -- -- 20 -- Net change in unrealized appreciation of investments (912,365) (618,489) -- -- (1,604,789) (500,444) Net change in unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies -- -- -- -- (40) -- ---------- ---------- ---------- ---------- ----------- ----------- Increase (decrease) in net assets from operations (264,119) 617,320 127,617 105,206 19,257 2,613,439 ---------- ---------- ---------- ---------- ----------- ----------- Distributions to shareholders: Net investment income (7,465) (6,530) (127,857) (105,206) (517,958) (494,022) Realized gain on investments (641,977) (1,230,686) -- -- (1,108,564) (2,629,351) ---------- ---------- ---------- ---------- ----------- ----------- Decrease in net assets from distributions (649,442) (1,237,216) (127,857) (105,206) (1,626,522) (3,123,373) ---------- ---------- ---------- ---------- ----------- ----------- Capital share transactions: Net proceeds from sale of shares 3,619,176 2,019,707 2,322,638 1,718,990 9,040,524 3,925,915 Investment of dividends 7,465 6,530 127,857 105,206 517,958 494,022 Shares issued in payment of gain distributions 641,977 1,230,686 -- -- 1,108,564 2,629,351 ---------- ---------- ---------- ---------- ----------- ----------- Total 4,268,618 3,256,923 2,450,495 1,824,196 10,667,046 7,049,288 ---------- ---------- ---------- ---------- ----------- ----------- Cost of shares repurchased (3,298,449) (2,248,670) (2,322,134) (2,952,298) (10,753,287) (9,665,140) ---------- ---------- ---------- ---------- ----------- ----------- Increase (decrease) in net assets from capital share transactions 970,169 1,008,253 128,361 (1,128,102) (86,241) (2,615,852) ---------- ---------- ---------- ---------- ----------- ----------- Increase (decrease) in net assets 56,608 388,357 128,121 (1,128,102) (1,693,506) (3,125,786) Net Assets: Beginning of period 5,885,766 5,497,409 3,101,720 4,229,822 21,861,079 24,986,865 ---------- ---------- ---------- ---------- ----------- ----------- End of period $5,942,374 $5,885,766 $3,229,841 $3,101,720 $20,167,573 $21,861,079 ========== ========== ========== ========== =========== ===========
---------- * Commencement of operations. See notes to financial statements. -38- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Statements of Changes in Net Assets (continued) --------------------------------------------------------------------------------
Seligman Seligman Seligman Communications and Fixed Income Seligman Henderson Information Portfolio Securities Portfolio Frontier Portfolio Global Portfolio ---------------------- ---------------------- ---------------------- ------------------ Year ended December 31 10/11/94* to --------------------- 10/11/94* to Year ended 5/3/93* to 12/31/94 1994 1993 12/31/94 12/31/94 12/31/93 -------- -------- -------- -------- -------- -------- Operations: Net investment income $ (442) $ 179,900 $ 232,876 $ (106) $ 13,397 $ 2,140 Net realized gain (loss) on investments -- (81,031) 229,048 -- 9,138 939 Net realized gain (loss) from foreign currency transactions -- -- -- -- 3,259 (589) Net change in unrealized appreciation of investments 18,511 (225,410) (117,262) 9,060 (44,914) 42,134 Net change in unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies -- -- -- -- 29,924 (2,210) -------- ---------- ----------- --------- ---------- --------- Increase (decrease) in net assets from operations 18,069 (126,541) 344,662 8,954 10,804 42,414 -------- ---------- ----------- --------- ---------- --------- Distributions to shareholders: Net investment income -- (181,555) (233,219) -- (9,661) (3,005) Realized gain on investments -- -- (227,642) -- (17,511) (964) -------- ---------- ----------- --------- ---------- --------- Decrease in net assets from distributions -- (181,555) (460,861) -- (27,172) (3,969) -------- ---------- ----------- --------- ---------- --------- Capital share transactions: Net proceeds from sale of shares 476,552 2,264,201 1,396,663 159,997 1,317,845 607,754 Investment of dividends -- 181,555 233,219 -- 9,661 3,005 Shares issued in payment of gain distributions -- -- 227,642 -- 17,511 964 -------- ---------- ----------- --------- ---------- --------- Total 476,552 2,445,756 1,857,524 159,997 1,345,017 611,723 -------- ---------- ----------- --------- ---------- --------- Cost of shares repurchased -- (2,306,325) (2,716,463) -- (200,626) (1,886) -------- --------- --------- -------- --------- -------- Increase (decrease) in net assets from capital share transactions 476,552 139,431 (858,939) 159,997 1,144,391 609,837 -------- ---------- ----------- --------- ---------- --------- Increase (decrease) in net assets 494,621 (168,665) (975,138) 168,951 1,128,023 648,282 Net Assets: Beginning of period -- 3,775,039 4,750,177 -- 648,282 -- -------- ---------- ----------- --------- ---------- --------- End of period $494,621 $3,606,374 $3,775,039 $ 168,951 $1,776,305 $ 648,282 ======== ========== ========== ========= ========== =========
-39- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Statements of Changes in Net Assets (continued) --------------------------------------------------------------------------------
Seligman Henderson Global Smaller Seligman Companies Portfolio Income Portfolio --------------------- ----------------------- Year ended December 31 10/11/94* to --------------------- 12/31/94 1994 1993 --------- -------- -------- Operations: Net investment income $ 517 $ 678,957 $ 728,986 Net realized gain (loss) on investments -- (19,113) 517,657 Net realized gain from foreign currency transactions (58) 10 -- Net change in unrealized appreciation of investments 3,279 (1,298,035) 80,007 Net change in unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies 573 (20) -- -------- ----------- ----------- Increase (decrease) in net assets from operations 4,311 (638,201) 1,326,650 -------- ----------- ----------- Distributions to shareholders: Net investment income (537) (685,315) (730,447) Realized gain on investments -- -- (516,959) -------- ----------- ----------- Decrease in net assets from distributions (537) (685,315) (1,247,406) -------- ----------- ----------- Capital share transactions: Net proceeds from sale of shares 127,199 4,595,781 2,983,739 Investment of dividends 537 685,315 730,447 Shares issued in payment of gain distributions -- -- 516,959 -------- ----------- ----------- Total 127,736 5,281,096 4,231,145 -------- ----------- ----------- Cost of shares repurchased -- (5,127,246) (4,453,579) -------- ----------- ----------- Increase (decrease) in net assets from capital share transactions 127,736 153,850 (222,434) -------- ----------- ----------- Increase (decrease) in net assets 131,510 (1,169,666) (143,190) Net Assets: Beginning of period -- 11,219,943 11,363,133 -------- ----------- ----------- End of period $131,510 $10,050,277 $11,219,943 ======== =========== ===========
* Commencement of operations. See notes to financial statements. -40- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Notes to Financial Statements -------------------------------------------------------------------------------- 1. Seligman Portfolios, Inc. (the "Fund") is an open-end diversified management investment company consisting of nine separate portfolios (the "Portfolios"), "Seligman Capital Portfolio" ("Capital Portfolio"), "Seligman Cash Management Portfolio" ("Cash Management Portfolio"), "Seligman Common Stock Portfolio" ("Common Stock Portfolio"), "Seligman Communications and Information Portfolio" ("Communications and Information Portfolio"), "Seligman Fixed Income Securities Portfolio" ("Fixed Income Securities Portfolio"), "Seligman Frontier Portfolio" ("Frontier Portfolio"), "Seligman Henderson Global Portfolio" ("Global Portfolio"), "Seligman Henderson Global Smaller Companies Portfolio" ("Global Smaller Companies Portfolio", formerly "Seligman Henderson Global Emerging Companies Portfolio"), and "Seligman Income Portfolio" ("Income Portfolio"), each designed to meet different investment goals. Shares of the Fund are currently provided as the investment medium for Canada Life of America Variable Annuity Account 2 ("CLVA-2") established by Canada Life Insurance Company of America ("Canada Life"). CLVA-2 is registered as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act") and funds variable annuity contracts (the "CLVA-2 Contracts") issued by Canada Life and distributed by Seligman Financial Services, Inc. Shares of the Fund are also expected to be provided as the investment medium for other variable annuity accounts to be established by Canada Life or its affiliates ("Canada Life Separate Accounts"). Shares of the Fund (except Communications and Information Portfolio, Frontier Portfolio, Global Portfolio and Global Smaller Companies Portfolio) are also provided as the investment medium for Seligman Mutual Benefit Plan (the "Mutual Benefit Plan") established by MBLLife Assurance Corporation ("MBL Life"). Significant accounting policies followed, all in conformity with generally accepted accounting principles, are given below: a. Investments in U.S. Government securities, bonds, convertible securities, and stocks are valued at the most current market values or, in their absence, at fair market value determined in accordance with procedures approved by the Board of Directors. Securities traded on national exchanges are valued at the last sales prices or, in their absence and in the case of over-the-counter securities, a mean of closing bid and asked prices. Short-term holdings maturing in 60 days or less are valued at amortized cost. Investments held by Cash Management Portfolio are valued using the amortized cost method which approximates fair value. b. The Portfolios may invest up to 10% of their total assets in foreign securities (except Global Portfolio and Global Smaller Companies Portfolio which may invest up to 100% of their total assets in foreign securities). Investments in foreign securities will usually be denominated in foreign currencies, and the Portfolios may temporarily hold funds in foreign currencies. The Portfolios may also invest in U.S. dollar-denominated American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"), and European Depository Receipts ("EDRs"). ADRs and ADSs are issued by domestic banks or trust companies and evidence ownership of securities issued by foreign corporations. ADRs and ADSs are traded on United States exchanges or over-the-counter and are not included in the 10% limitation. EDRs are receipts similar to ADRs and ADSs and are issued and traded in Europe. The books and records of the Portfolios are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities, at the closing daily rate of exchange as reported by a pricing service; (ii) purchases and sales of investment securities, income and expenses, at the rate of exchange prevailing on the respective dates of such transactions. The Portfolios' net asset values per share will be affected by changes in currency exchange rates. Changes in foreign currency exchange rates may also affect the value of dividends and interest earned, gains and losses realized on sales of securities and net investment income and gains, if any, to be distributed to shareholders of the Portfolios. The rate of exchange between the U.S. dollar and other currencies is determined by the forces of supply and demand in the foreign exchange markets. Net realized foreign exchange gains (losses) arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Portfolios' books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of portfolio securities and other foreign currency denominated assets and liabilities at period end, resulting from changes in exchange rates. The Portfolios separate that portion of the results of operations resulting from changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held in the Portfolios. Similarly, the Portfolios separate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of portfolio securities sold during the period. c. The Global Portfolio and Global Smaller Companies Portfolio may enter into forward currency contracts in order to hedge their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings, or other amounts receivable or payable in foreign currency. A forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Certain risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts. The contracts are valued daily at current exchange rates and -41- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Notes to Financial Statements (continued) -------------------------------------------------------------------------------- any unrealized gain or loss is included in net unrealized appreciation or depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts. The gain or loss, if any, arising from the difference between the settlement value of the forward contract and the closing of such contract, is included in net realized gain or loss from foreign currency transactions. For federal income tax purposes, certain open forward currency contracts are treated as sold on the last day of the fiscal year and any gains or losses are recognized immediately. As a result, the amount of income distributable to shareholders may vary from the amount recognized for financial statement purposes. d. The Portfolios' policy is to comply with the requirements of the Internal Revenue Code applicable to Regulated Investment Companies and to distribute substantially all of their taxable net income and net gain realized to shareholders. e. Investment transactions are recorded on trade dates. Interest income is recorded on the accrual basis. The Portfolios amortize market discounts and premiums on purchases of portfolio securities. Dividends receivable and payable are recorded on ex-dividend dates. The Portfolios may enter into repurchase agreements with commercial banks and with broker/dealers deemed to be creditworthy by the Manager. Securities purchased subject to repurchase agreements are deposited with the Portfolios' custodians and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. Procedures have been established to monitor, on a daily basis, the market value of the repurchase agreements' underlying securities to ensure the existence of the proper level of collateral. f. Expenses directly attributable to each Portfolio are charged to such Portfolio, and expenses that are applicable to more than one Portfolio are allocated among them. g. The treatment for financial statement purposes of distributions made during the year from net investment income or net realized gains may differ from their ultimate treatment for federal income tax purposes. These differences primarily are caused by differences in the timing of the recognition of certain components of income, expense or capital gain and the recharacterization of foreign exchange gains or losses to either ordinary income or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassification will have no effect on net assets, results of operations, or net asset values per share of the Portfolios. 2. Until April 15, 1993, the Fund functioned exclusively as the investment vehicle for the separate account options of the Mutual Benefit Plan issued by MBL Life. On July 16, 1991, the Superior Court of New Jersey (the "Court") entered an Order (the "Order") appointing the New Jersey Insurance Commissioner as Rehabilitator of Mutual Benefit Life Insurance Company in Rehabilitation ("Mutual Benefit Life"). The Commissioner was granted immediate exclusive possession and control of, and title to, the business and assets of Mutual Benefit Life, including the assets and liabilities of the Mutual Benefit Plan. The Commissioner was empowered by the Order to take such steps as he deemed appropriate to remove the cause and conditions that made rehabilitation necessary. On January 15, 1993, the Commissioner filed the First Amended Plan of Rehabilitation (the "Plan of Rehabilitation") with the Court. On August 12, 1993, the Court rendered an opinion approving the Plan of Rehabilitation with certain modifications. Two subsequent amendments to the Plan of Rehabilitation were filed with and approved by the Court. None of the modifications or amendments to the Plan of Rehabilitation affected the status of the Mutual Benefit Plan. On November 10, 1993, the Court issued an Order of Confirmation which provided for implementation of the Plan of Rehabilitation. On April 29, 1994, the Plan of Rehabilitation was implemented. Substantially all of the assets and liabilities of Mutual Benefit Life were transferred to MBL Life. In addition, the assets and liabilities of the Mutual Benefit Plan were transferred to a separate account of MBL Life. As a separate account, the assets and liabilities of the Mutual Benefit Plan are maintained separate and apart from MBL Life's other assets and liabilities. Also, as of April 29, 1994, the ownership of the stock of MBLLife was transferred to a Trust. The Commissioner is the sole Trustee of the Trust. MBL Life has decided that it will not accept applications for new contracts nor will it accept additional purchase payments under existing contracts. In addition, requests for transfers of amounts to the Fixed Accumulation Account from the Plan will not be accepted. The ultimate impact of this decision on the level of the Plan's assets cannot currently be determined. However, the impact is not expected to be material. -42- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 3. Purchases and sales of portfolio securities, excluding short-term investments, for the period ended December 31, 1994, were as follows: Portfolio Purchases Sales -------- --------- ----- Capital $4,213,379 $3,782,920 Common Stock 3,165,571 4,721,029 Communications and Information 318,551 -- Fixed Income Securities 8,018,964 8,247,758 Frontier 150,952 -- Global 1,449,079 396,656 Global Smaller Companies 139,375 -- Income 2,940,045 3,644,423 Identified cost of investments sold is used for both financial statement and federal income tax purposes. At December 31, 1994, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes, and the tax basis gross unrealized appreciation and depreciation of portfolio securities, including the effects of foreign currency transactions, were as follows: Unrealized Unrealized Portfolio Appreciation Depreciation -------- ------------ ----------- Capital $ 990,937 $547,319 Common Stock 5,301,355 601,398 Communications and Information 22,640 4,129 Fixed Income Securities 4,044 98,383 Frontier 11,980 2,920 Global 67,473 44,901 Global Smaller Companies 5,311 1,266 Income 617,629 719,496 At December 31, 1994, the Cash Management Portfolio, the Fixed Income Securities Portfolio and the Income Portfolio incurred net capital loss carryforwards of $394, $81,031 and $19,113, respectively, which are available for offset against future taxable net gains. These net capital loss carryforwards will expire in varying amounts through 2002. 4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of the Fund and provides the necessary personnel and facilities, exclusive of and in addition to those retained by the Fund. Compensation of all officers of the Fund, all directors of the Fund who are employees or consultants of the Manager, and all personnel of the Fund and the Manager is paid by the Manager. The Manager's fee is calculated daily and payable monthly, equal to 0.40%, on an annual basis, of Capital Portfolio's, Cash Management Portfolio's, Common Stock Portfolio's, Fixed Income Securities Portfolio's, and Income Portfolio's daily net assets and equal to 0.75%, on an annual basis of Communications and Information Portfolio's, and Frontier Portfolio's daily net assets. The Manager's fee from the Global Portfolio and the Global Smaller Companies Portfolio is calculated daily and payable monthly, equal to an annual rate of 1.00% of the average daily net assets of each Portfolio, of which 0.90% is paid to Seligman Henderson Co. (the "Subadviser"), a 50% owned affiliate of the Manager. The Manager or Subadviser has agreed to reimburse expenses, other than the management fee, which exceed 0.20% per annum of the average daily net assets of each of the Portfolios (except Cash Management Portfolio). The Manager, at its discretion, has elected to waive all of its fee for, and reimburse all of the expenses of, the Cash Management Portfolio until such time as the Manager determines. For the year ended December 31, 1994, the Manager waived fees and/or reimbursed expenses of $20,761, $47,611, $5,204, $24,851, and $18,064, for the Capital Portfolio, Cash Management Portfolio, Common Stock Portfolio, Fixed Income Securities Portfolio, and Income Portfolio, respectively. For the same period, the Manager and Subadviser waived all of their fees and the Subadviser reimbursed expenses totalling $56,165 for the Global Portfolio. For the period from October 11, 1994 (commencement of operations) to December 31, 1994, the Manager reimbursed expenses of $11,627 and $11,509 for the Communications and Information Portfolio and the Frontier Portfolio, respectively. For the same period, the Manager and Subadviser waived all of their fees, and the Subadviser reimbursed expenses totalling $11,487 for the Global Smaller Companies Portfolio. -43- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Notes to Financial Statements (continued) -------------------------------------------------------------------------------- Seligman Financial Services, Inc. (the "Distributor"), agent for the distribution of the CLVA-2 contracts and an affiliate of the Manager, received commissions of $32,913 from Canada Life after concessions paid to dealers. Certain officers and directors of the Fund are officers or directors of the Manager, the Distributor, and/or the Subadviser. Fees of $35,000 were incurred by the Fund for the legal services of Sullivan & Cromwell, a member of which firm is a director of the Fund. The Fund has a compensation arrangement under which directors who receive fees may elect to defer receiving such fees. Interest is accrued on the deferred balances. The annual cost of such fees and interest is included in directors' fees and expenses, and the accumulated balance thereof at December 31, 1994, is included in other liabilities. Deferred fees and the related accrued interest are not deductible for federal income tax purposes until such amounts are paid. 5. At December 31, 1994, there were 20,000,000 shares of Capital Stock authorized for each of the Capital, Common Stock, Communications and Information, Fixed Income Securities, Frontier, Global, Global Smaller Companies, and Income Portfolios, and 100,000,000 shares for the Cash Management Portfolio, all at a par value of $.001 per share. Transactions in shares of Capital Stock were as follows:
Capital Portfolio Cash Management Portfolio Common Stock Portfolio ----------------------- ------------------------ ----------------------- Year ended December 31 Year ended December 31 Year ended December 31 ---------------------- ---------------------- ---------------------- 1994 1993 1994 1993 1994 1993 -------- -------- -------- -------- -------- -------- Sale of shares................ 250,641 115,000 2,322,638 1,718,990 602,357 239,028 Shares issued in payment of dividends.................. 587 440 127,857 105,206 37,506 32,869 Shares issued in payment of gain distributions...... 50,470 82,930 -- -- 80,272 174,940 ------- ------- --------- --------- ------- ------- Total......................... 301,698 198,370 2,450,495 1,824,196 720,135 446,837 ------- ------- --------- --------- ------- ------- Shares repurchased............ (227,501) (128,463) (2,322,134) (2,952,298) (716,170) (589,714) ------- ------- --------- --------- ------- ------- Increase (decrease) in shares. 74,197 69,907 128,361 (1,128,102) 3,965 (142,877) ======= ======= ========= ========= ======= =======
Communications and Fixed Income Information Portfolio Securities Portfolio Frontier Portfolio ----------------------- ---------------------- ----------------------- Year ended December 31 10/11/94* to ---------------------- 10/11/94* to 12/31/94 1994 1993 12/31/94 -------- -------- -------- -------- Sale of shares................ 47,368 229,957 126,797 15,970 Shares issued in payment of dividends............... -- 19,564 23,000 -- Shares issued in payment of gain distributions...... -- -- 22,450 -- ------- ------- -------- ------- Total......................... 47,368 249,521 172,247 15,970 ------- ------- -------- ------- Shares repurchased............ -- (233,817) (244,481) -- ------- ------- -------- ------- Increase (decrease) in shares. 47,368 15,704 (72,234) 15,970 ======= ======= ======== =======
Global Smaller Global Portfolio Companies Portfolio Income Portfolio -------------------------- ---------------------- ----------------------- Year ended December 31 Year ended 5/3/93* to 10/11/94* to ---------------------- 12/31/94 12/31/93 12/31/94 1994 1993 -------- -------- -------- -------- -------- Sale of shares................ 114,731 56,817 12,701 423,636 245,072 Shares issued in payment of dividends............... 855 263 53 68,876 64,413 Shares issued in payment of gain distributions...... 1,550 84 -- -- 45,587 ------- ------- -------- ------- -------- Total......................... 117,136 57,164 12,754 492,512 355,072 ------- ------- -------- ------- -------- Shares repurchased............ (17,445) (167) -- (470,827) (366,762) ------- ------- -------- ------- -------- Increase (decrease) in shares. 99,691 56,997 12,754 21,685 (11,690) ======= ======= ======== ======= ========
---------- * Commencement of operations. -44- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Cash Common Communications Fixed Income Capital Management Stock and Information Securities Portfolio Portfolio Portfolio Portfolio Portfolio -------- ----------- -------- ------------ ---------- Shares owned at December 31, 1994: Seligman Mutual Benefit Plan ..... 376,592 2,692,990 1,291,894 -- 297,299 Canada Life of America Variable Annuity Account 2 .... 91,326 537,245 171,166 47,368 91,767 J. & W. Seligman & Co. Incorporated .................. -- -- -- -- -- ------- --------- --------- ------- ------- Shares outstanding ............... 467,918 3,230,235 1,463,060 47,368 389,066 ======= ========= ========= ======= =======
Global Smaller Frontier Global Companies Income Portfolio Portfolio Portfolio Portfolio -------- ----------- -------- ---------- Shares owned at December 31, 1994: Seligman Mutual Benefit Plan ..... -- -- -- 813,064 Canada Life of America Variable Annuity Account 2 .... 11,570 150,458 12,754 194,512 J. & W. Seligman & Co. Incorporated .................. 4,400 6,230 -- -- ------- ------- ------- -------- Shares outstanding ............... 15,970 156,688 12,754 1,007,576 ======= ======= ======= ========
-45- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Financial Highlights -------------------------------------------------------------------------------- The Fund's financial highlights are presented below. The per share operating performance data is designed to allow investors to trace the operating performance, on a per share basis, from a Portfolio's beginning net asset value to the ending net asset value so that they can understand what effect the individual items have on their investment, assuming it was held throughout the period. Generally, the per share amounts are derived by converting the actual dollar amounts incurred for each item, as disclosed in the financial statements, to their equivalent per share amount. The total return based on net asset value measures a Portfolio's performance assuming investors purchased shares of a Portfolio at net asset value as of the beginning of the period, reinvested dividends and capital gains paid at net asset value, and then sold their shares at the net asset value per share on the last day of the period. The total returns exclude the effect of all administration fees and asset based sales charges associated with variable annuity contracts. The total returns for periods of less than one year are not annualized.
Capital Portfolio ------------------------------------------------------ Year Ended December 31 ------------------------------------------------------ 1994 1993 1992 1991 1990 ------ ------ ------ ------ ------ Per Share Operating Performance: Net asset value, beginning of year $14.950 $16.980 $17.740 $11.230 $11.620 ------- ------- ------- ------- ------- Net investment income (loss) 0.015 0.021 (0.022) 0.079 0.044 Net realized and unrealized gain (loss) on investments (0.699) 1.928 1.202 6.547 (0.414) ------- ------- ------- ------- ------- Increase (decrease) from investment operations (0.684) 1.949 1.180 6.626 (0.370) Dividends paid (0.018) (0.021) -- (0.088) (0.020) Distributions from net gain realized (1.548) (3.958) (1.940) (0.028) -- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value (2.250) (2.030) (0.760) 6.510 (0.390) ------- ------- ------- ------- ------- Net asset value, end of year $12.700 $14.950 $16.980 $17.740 $11.230 ======= ======= ======= ======= ======= Total return based on net asset value (4.59)% 11.65% 6.80% 59.05% (3.18)% Ratios/Supplemental Data: Expenses to average net assets 0.60% 0.71% 0.91% 0.60% 2.15% Net investment income (loss) to average net assets 0.10% 0.09% (0.14)% 0.56% 0.18% Portfolio turnover 67.39% 65.30% 54.95% 31.44% 28.94% Net assets, end of year (000's omitted) $5,942 $5,886 $5,497 $5,812 $3,560 Without management fee waiver and expense reimbursement:* Net investment loss per share $(0.036) $ (0.003) $ (0.035) Ratios: Expenses to average net assets 0.96% 0.83% 1.37% Net investment loss to average net assets (0.26)% (0.03)% (0.21)%
Cash Management Portfolio ---------------------------------------------------- Year Ended December 31 ---------------------------------------------------- 1994 1993 1992 1991 1990 ------ ------ ------ ------ ------ Per Share Operating Performance: Net asset value, beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 Net investment income 0.040 0.030 0.035 0.056 0.075 Dividends paid (0.040) (0.030) (0.035) (0.056) (0.075) ------- ------- ------- ------- ------- Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 ======= ======= ======= ======= ======= Total return based on net asset value 4.03% 3.00% 3.53% 5.70% 7.79% Ratios/Supplemental Data: Expenses to average net assets -- -- -- -- -- Net investment income to average net assets 3.98% 2.96% 3.50% 5.49% 7.53% Net assets, end of year (000's omitted) $3,230 $3,102 $4,230 $5,849 $3,994 Without management fee waiver and expense reimbursement:* Net investment income per share $0.025 $0.019 $0.025 $0.048 $0.045 Ratios: Expenses to average net assets 1.48% 1.07% 0.97% 0.83% 2.97% Net investment income to average net assets 2.50% 1.89% 2.53% 4.66% 4.56%
---------- * The Manager, at its discretion, waived management fees and/or reimbursed expenses for certain periods presented. -46- -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Communications and Common Stock Portfolio Information Portfolio ---------------------------------------------- ------------------ Year Ended December 31 10/11/94* to ---------------------------------------------- 1994 1993 1992 1991 1990 12/31/94 ------ ------ ------ ------ ------ -------- Per Share Operating Performance: Net asset value, beginning of period $14.980 $15.600 $14.740 $11.580 $12.260 $10.000 ------- ------- ------- ------- ------- ------- Net investment income (loss) 0.365 0.392 0.346 0.362 0.356 (0.016) Net realized and unrealized gain (loss) on investments (0.356) 1.479 1.445 3.459 (0.743) 0.456 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations 0.009 1.871 1.791 3.821 (0.387) 0.440 Dividends paid (0.385) (0.394) (0.369) (0.355) (0.263) -- Distributions from net gain realized (0.824) (2.097) (0.562) (0.306) (0.030) -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value (1.200) (0.620) 0.860 3.160 (0.680) 0.440 ------- ------- ------- ------- ------- ------- Net asset value, end of period $13.780 $14.980 $15.600 $14.740 $11.580 $10.440 ======= ======= ======= ======= ======= ======= Total return based on net asset value 0.04% 11.94% 12.14% 33.16% (3.15)% 4.40% Ratios/Supplemental Data: Expenses to average net assets 0.60% 0.55% 0.56% 0.60% 0.88% 0.95%+ Net investment income (loss) to average net assets 2.45% 2.10% 2.21% 2.63% 3.01% (0.95)%+ Portfolio turnover 15.29% 10.70% 12.57% 27.67% 13.78% -- Net assets, end of period (000's omitted) $20,168 $21,861 $24,987 $26,103 $18,030 $495 Without management fee waiver and expense reimbursement:** Net investment income (loss) per share $0.361 $0.350 $(0.436) Ratios: Expenses to average net assets 0.62% 0.71% 13.96%+ Net investment income (loss) to average net assets 2.43% 2.52% (13.96)%+
Fixed Income Securities Portfolio Frontier Portfolio ----------------------------------------------- -------------------- Year Ended December 31 ----------------------------------------------- 10/11/94* to 1994 1993 1992 1991 1990 12/31/94 ------ ------ ------ ------ ------ -------- Per Share Operating Performance: Net asset value, beginning of period $10.110 $10.660 $10.990 $10.310 $10.220 $10.000 ------- ------- ------- ------- ------- ------- Net investment income (loss) 0.499 0.713 0.706 0.798 0.680 (0.012) Net realized and unrealized gain (loss) on investments (0.841) 0.142 (0.092) 0.699 (0.054) 0.592 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations (0.342) 0.855 0.614 1.497 0.626 0.580 Dividends paid (0.498) (0.711) (0.772) (0.817) (0.536) -- Distributions from net gain realized -- (0.694) (0.172) -- -- -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value (0.840) (0.550) (0.330) 0.680 0.090 0.580 ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 9.270 $10.110 $10.660 $10.990 $10.310 $10.580 ======= ======= ======= ======= ======= ======= Total return based on net asset value (3.39)% 7.98% 5.60% 14.58% 6.14% 5.80% Ratios/Supplemental Data: Expenses to average net assets 0.60% 0.74% 1.00% 0.60% 1.73% 0.95%+ Net investment income (loss) to average net assets 5.12% 5.41% 6.22% 7.30% 6.59% (0.70)%+ Portfolio turnover 237.23% 33.21% 23.40% 6.34% 6.62% -- Net assets, end of period (000's omitted) $3,606 $3,775 $4,750 $5,369 $4,600 $169 Without management fee waiver and expense reimbursement:** Net investment income (loss) per share $0.430 $0.675 $0.712 $(1.319) Ratios: Expenses to average net assets 1.31% 1.07% 1.42% 40.47%+ Net investment income (loss) to average net assets 4.41% 5.08% 6.48% (40.22)%+
---------- * Commencement of operations. ** The Manager, at its discretion, waived management fees and/or reimbursed expenses for certain periods presented. + Annualized. -47- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Financial Highlights (continued) --------------------------------------------------------------------------------
Global Smaller Global Portfolio Companies Portfolio -------------------------- ----------------- Year ended 5/3/93* to 10/11/94* to 12/31/94 12/31/93 12/31/94 ---------- ---------- --------- Per Share Operating Performance: Net asset value, beginning of period $11.370 $10.000 $10.000 ------- ------- ------- Net investment income 0.131 0.021 0.058 Net realized and unrealized gain (loss) on investments (0.306) 1.518 0.266 Net realized and unrealized gain (loss) from foreign currency transactions 0.325 (0.099) 0.029 ------- ------- ------- Increase from investment operations 0.150 1.440 0.353 Dividends paid (0.064) (0.053) (0.043) Distributions from net gain realized (0.116) (0.017) -- ------- ------- ------- Net increase (decrease) in net asset value (0.030) 1.370 0.310 ------- ------- ------- Net asset value, end of period $11.340 $11.370 $10.310 ======= ======= ======= Total return based on net asset value 1.32% 14.40% 3.53% Ratios/Supplemental Data: Expenses to average net assets 1.20% 1.20%+ 1.20%+ Net investment income to average net assets 1.17% 1.30%+ 3.14%+ Portfolio turnover 47.34% 2.82% -- Net assets, end of period (000's omitted) $1,776 $648 $132 Without management fee waiver and expense reimbursement:** Net investment income (loss) per share $(0.419) $(1.004) $(1.225) Ratios: Expenses to average net assets 6.12% 17.94%+ 37.25%+ Net investment loss to average net assets (3.75)% (15.44)%+ (32.91)%+
Income Portfolio ----------------------------------------------------- Year Ended December 31 ----------------------------------------------------- 1994 1993 1992 1991 1990 ------ ------ ------ ------ ------ Per Share Operating Performance: Net asset value, beginning of year $11.380 $11.390 $11.250 $ 9.500 $10.780 ------- ------- ------- -------- ------- Net investment income 0.689 0.828 0.862 0.896 0.829 Net realized and unrealized gain (loss) on investments (1.369) 0.576 0.896 2.024 (1.487) ------- ------- ------- -------- ------- Increase (decrease) from investment operations (0.680) 1.404 1.758 2.920 (0.658) Dividends paid (0.730) (0.828) (0.987) (0.904) (0.622) Distributions from net gain realized -- (0.586) (0.631) (0.266) -- ------- ------- ------- -------- ------- Net increase (decrease) in net asset value (1.410) (0.010) 0.140 1.750 (1.280) ------- ------- ------- -------- ------- Net asset value, end of year $ 9.970 $11.380 $11.390 $11.250 $ 9.500 ======= ======= ======= ======== ======= Total return based on net asset value (5.96)% 12.37% 15.72% 30.89% (6.10)% Ratios/Supplemental Data: Expenses to average net assets 0.60% 0.64% 0.68% 0.60% 1.40% Net investment income to average net assets 6.34% 6.40% 7.53% 8.05% 8.19% Portfolio turnover 29.76% 38.38% 39.46% 43.67% 21.64% Net assets, end of year (000's omitted) $10,050 $11,220 $11,363 $11,509 $7,419 Without management fee waiver and expense reimbursement:** Net investment income per share $0.670 $0.826 $0.867 Ratios: Expenses to average net assets 0.77% 0.65% 0.93% Net investment income to average net assets 6.17% 6.39% 7.72%
---------- * Commencement of operations. ** The Manager and/or Subadviser, at their discretion, waived management fees and/or reimbursed expenses for certain periods presented. + Annualized. See notes to financial statements. -48- -------------------------------------------------------------------------------- Report of Ernst & Young LLP, Independent Auditors -------------------------------------------------------------------------------- The Directors and Shareholders, Seligman Portfolios, Inc.: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Seligman Portfolios, Inc. (comprising, respectively, the Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman Communications and Information Portfolio, Seligman Fixed Income Securities Portfolio, Seligman Frontier Portfolio, Seligman Henderson Global Portfolio, Seligman Henderson Global Smaller Companies Portfolio, and Seligman Income Portfolio, collectively referred to as the "Fund") as of December 31, 1994, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights 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 and financial highlights 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, 1994, by correspondence with the custodian and brokers. 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 and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective portfolios constituting the Seligman Portfolios, Inc. at December 31, 1994, the results of their operations for the year then ended, the changes in their net assets, for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP New York, New York February 10, 1995 -49- Seligman Portfolios, Inc. -------------------------------------------------------------------------------- Board of Directors -------------------------------------------------------------------------------- Fred E. Brown Director and Consultant, J. & W. Seligman & Co. Incorporated Alice S. Ilchman 3 President, Sarah Lawrence College Trustee, Committee for Economic Development Director, NYNEX Trustee, The Rockefeller Foundation John E. Merow Partner, Sullivan & Cromwell, Attorneys Betsy S. Michel 2 Director or Trustee, Various Organizations William C. Morris 1 Chairman Chairman of the Board and President, J. & W. Seligman & Co. Incorporated Chairman, Carbo Ceramics Inc. Director, Daniel Industries, Inc. Director, Kerr-McGee Corporation Douglas R. Nichols, Jr. 2 Management Consultant James C. Pitney 3 Partner, Pitney, Hardin, Kipp & Szuch, Attorneys Director, Public Service Enterprise Group James Q. Riordan 3 Director, The Brooklyn Union Gas Company Trustee, Committee for Economic Development Director, Dow Jones & Co., Inc. Director, Public Broadcasting Service Herman J. Schmidt 2 Director, H.J. Heinz Company Director, HON Industries, Inc. Director, MAPCO, Inc. Ronald T. Schroeder 1 President Managing Director, J. & W. Seligman & Co. Incorporated Robert L. Shafer 3 Vice President, Pfizer Inc. Director, USLIFE Corporation James N. Whitson 2 Executive Vice President and Director, Sammons Enterprises, Inc. Director, C-SPAN Brian T. Zino 1 Managing Director, J. & W. Seligman & Co. Incorporated Member: 1 Executive Committee 2 Audit Committee 3 Director Nominating Committee -------------------------------------------------------------------------------- Executive Officers -------------------------------------------------------------------------------- William C. Morris Chairman Ronald T. Schroeder President Leonard J. Lovito Vice President Loris D. Muzzatti Vice President Charles C. Smith, Jr. Vice President Lawrence P. Vogel Vice President Paul H. Wick Vice President Thomas G. Rose Treasurer Frank J. Nasta Secretary -------------------------------------------------------------------------------- Manager J. & W. Seligman & Co. Incorporated 100 Park Avenue New York, New York 10017 Subadviser Seligman Henderson Co. 100 Park Avenue New York, New York 10017 General Distributor Seligman Financial Services, Inc. 100 Park Avenue New York, New York 10017 Custodians Investors Fiduciary Trust Company Morgan Stanley Trust Company General Counsel Sullivan & Cromwell Independent Auditors Ernst & Young LLP PART C OTHER INFORMATION ------ ----------------- Item 24. Financial Statements and Exhibits (a) Financial Statements and Schedules: Part A - Financial Highlights from June 21, 1988 (commencement of operations) to December 31, 1994 for Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman Fixed Income Portfolio and Seligman Income Portfolio; from May 3, 1993 (commencement of operations) to December 31, 1994 for the Seligman Henderson Global Portfolio and from October 11, 1994 (commencement of operations) to December 31, 1994 for Seligman Communications and Information Portfolio, Seligman Frontier Portfolio and Seligman Henderson Global Smaller Companies Portfolio; Financial Highlights for the Seligman High-Yield Bond Portfolio are not included as it is a new portfolio for which financial statements are not required to be filed. Part B - Required Financial Statements are included in the Fund's audited 1994 Annual Report which is incorporated by reference in the Fund's Statement of Additional Information. These Financial Statements are: Portfolio of Investments as of December 31, 1994; Statement of Assets and Liabilities as of December 31, 1994; Statement of Operations for the year ended December 31, 1994; Statement of Changes in Net Assets for the years ended December 31, 1994 and 1993; Notes to Financial Statements; Financial Highlights from June 21, 1988, May 3, 1993 and October 11, 1994 (commencement of operations) to December 31, 1994; Report of Independent Auditors. Also included in the Fund's Statement of Additional Information is a Condensed Statement of Net Assets as of March 30, 1995 for the Seligman High-Yield Bond Portfolio. (b) Exhibits: All Exhibits have been filed previously except where otherwise noted and Exhibits marked with an asterisk (*) are filed herewith. (1) Form of Articles of Amendment and Restatement of Articles of Incorporation. (Incorporated by reference to Post-Effective Amendment No. 14 filed on February 14, 1995.) (2) By-laws of Registrant. (Incorporated by Reference to Pre-Effective Amendment No. 2 filed on May 24, 1988.) (3) N/A. (4) N/A. (5) (a) Form of Management Agreement in respect of Seligman High-Yield Bond Portfolio. (Incorporated by reference to Post-Effective Amendment No. 14 filed on February 14, 1995.) (b) Management Agreements in respect of Seligman Communications and Information and Seligman Frontier Portfolios.* (c) Management Agreement in respect of Seligman Henderson Global Smaller Companies Portfolio (formerly, Seligman Henderson Global Emerging Companies Portfolio).* (d) Subadvisory Agreement in respect of Seligman Henderson Global Smaller Companies Portfolio.* (e) Management Agreement in respect of Seligman Henderson Global Portfolio.* (f) Subadvisory Agreement in respect of Seligman Henderson Global Portfolio.* (g) Management Agreement in respect of Seligman Capital, Seligman Cash Management, Seligman Common Stock, Seligman Fixed Income Securities, and Seligman Income Portfolios.* (6) N/A. (7) N/A. (8) (a) Custodian Agreement and Sub-Custodian Agreement in respect of Seligman Capital, Seligman Cash Management, Seligman Common Stock, Seligman Fixed Income Securities, and Seligman Income Portfolios. (Incorporated by Reference to Pre-Effective Amendment No. 2 filed on May 24, 1988.) (b) Custodian Agreement in respect of Seligman Henderson Global Portfolio. (Incorporated by Reference to Post-Effective Amendment No. 10 filed on April 26, 1993.) PART C OTHER INFORMATION (cont'd) ------ -------------------------- (8) (c) Form of First Amendment to Custodian Agreement in respect of Seligman Communications and Information and Seligman Frontier Portfolios. (Incorporated by Reference to Post-Effective Amendment 13 filed on September 30, 1994.) (d) Form of Custodian Agreement in respect of Seligman Henderson Global Smaller Companies Portfolio. (Incorporated by Reference to Post-Effective Amendment No. 13 filed on September 30, 1994.) (e) Recordkeeping Agreement in respect of Seligman Henderson Global Portfolio. (Incorporated by Reference to Post-Effective Amendment No. 10 filed on April 26, 1993.) (f) Form of Amendment to Recordkeeping Agreement in respect of Seligman Henderson Global Smaller Companies Portfolio. (Incorporated by Reference to Post-Effective Amendment No. 13 filed on September 30, 1994.) (g) Form of Amendment to Custodian Agreement in respect of Seligman High-Yield Bond Portfolio. (To be filed by amendment.) (9) Other Material Contracts. (a) Waiver of Buy/Sell Agreement between the Registrant and The Mutual Benefit Life Insurance Company. (Incorporated by Reference to Post-Effective Amendment No. 10 filed on April 26, 1993.) (b) Buy/Sell Agreement between Registrant and Canada Life Insurance Company of America. (Incorporated by Reference to Post-Effective Amendment No. 10 filed on April 26, 1993.) (c) Buy/Sell Agreement between Registrant and Canada Life Insurance Company of America. (Incorporated by Reference to Post-Effective Amendment No. 13 filed on September 30, 1994.) (d) Agency Agreement between Investors Fiduciary Trust Company, acting as Transfer and Dividend Disbursing Agent, and the Fund in respect of Seligman Capital, Seligman Cash Management, Seligman Common Stock, Seligman Fixed Income Securities, and Seligman Income Portfolios. (Incorporated by Reference to Pre-Effective Amendment No. 2 filed on May 24, 1988.) (e) First Amendment to Agency Agreement between Investors Fiduciary Trust Company, acting as Transfer and Dividend Disbursing Agent, and the Fund in respect of Seligman Henderson Global Portfolio. (Incorporated by Reference to Post-Effective Amendment No. 10 filed on April 26, 1993.) (f) Second Amendment to Agency Agreement between Investors Fiduciary Trust Company, acting as Transfer and Dividend Disbursing Agent, and the Fund in respect of Seligman Communications and Information, Seligman Frontier, and Seligman Henderson Global Smaller Companies Portfolios. (Incorporated by Reference to Post-Effective Amendment No. 13 filed on September 30, 1994.) (g) Third Amendment to Agency Agreement between Investors Fiduciary Trust Company, acting as Transfer and Dividend Disbursing Agent, and the Fund in respect of Seligman High-Yield Bond Portfolio. (To be filed by amendment.) (10) Opinion and Consent of Counsel.* (11) Consent of independent auditors.* (12) N/A. (13) (a) Representation Re: Initial Capital (Purchase Agreement for Seligman Capital, Seligman Cash Management, Seligman Common Stock, Seligman Fixed Income Securities, and Seligman Income Portfolios). (Incorporated by Reference to Pre-Effective Amendment No. 2 filed on May 24, 1988.) (b) Representation Re: Initial Capital (Purchase Agreement for Seligman Henderson Global Portfolio). (Incorporated by Reference to Post-Effective Amendment No. 10 filed on April 26, 1993.) (c) Representation Re: Initial Capital (Purchase Agreement for Seligman High-Yield Bond Portfolio).* (14) The Seligman 401(K) Retirement Plan Marketing. (Incorporated by Reference to Post-Effective Amendment No. 3 filed on May 1, 1989.) (15) N/A. Item 25. Persons Controlled by or Under Common Control with Registrant None. PART C OTHER INFORMATION (cont'd) ------ -------------------------- Item 26. Number of Holders of Securities - As of March 31, 1994, there were three record holders of Capital Stock of the Registrant. Item 27. Indemnification - Incorporated by reference to Registrant's Post-Effective Amendment #6 (File No. 33-15253) as filed with the Commission on May 1, 1991. Item 28. Business and Other Connections of Investment Adviser - J. & W. Seligman & Co. Incorporated, a Delaware Corporation ("Manager"), is the Registrant's investment manager. The Manager also serves as investment manager to sixteen associated investment companies. They are Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman Common Stock Fund, Inc., Seligman Communications and Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc., Seligman High Income Fund Series, Seligman Income Fund, Inc., Seligman New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund Series, Seligman Quality Municipal Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt Series Trust and Tri-Continental Corporation. The Subadviser also serves as subadviser to five other associated investment companies. They are Seligman Capital Fund, Seligman Common Stock Fund, Seligman Communications and Information Fund, Seligman Growth Fund, Seligman Henderson Global Fund Series, Seligman Income Fund, the Global and Global Smaller Companies Portfolios of Seligman Portfolios, Inc. and Tri-Continental Corporation. The Manager and Subadviser have an investment advisory service division which provides investment management or advice to private clients. The list required by this Item 28 of officers and directors of the Manager and the Subadviser, respectively, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated by reference to Schedules A and D of Form ADV, filed by the Manager and the Subadviser, respectively, pursuant to the Investment Advisers Act of 1940 (SEC File Nos. 801-5798 and 801-4067), both of which were filed on March 31, 1995. Item 29. N/A Item 30. Location of Accounts and Records - All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder will be maintained by the following: Custodian and Recordkeeping Agent for Seligman Capital, Seligman Cash Management, Seligman Common Stock, Seligman Communications and Information, Seligman Fixed Income Securities, Seligman Frontier, Seligman High-Yield Bond, and Seligman Income Portfolios: Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105. Custodian for Seligman Henderson Global Smaller Companies and Seligman Henderson Global Portfolios: Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York 11201. Recordkeeping Agent for Seligman Henderson Global Smaller Companies and Seligman Henderson Global Portfolios: Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105. Transfer, Redemption and Other Shareholder Account Services for all Portfolios: Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri 64105. Item 31. Management Services - None not discussed in the Prospectus or Statement of Additional Information for the Registrant. PART C OTHER INFORMATION (cont'd) ------ -------------------------- Item 32. Undertakings - (1) The Registrant undertakes to furnish to each person to whom a prospectus is delivered a copy of the Registrant's latest annual report to shareholders, upon request and without charge. (2) The Registrant undertakes to file a post-effective amendment under the Securities Act of 1933 with financial statements of the Seligman High-Yield Bond Portfolio within four to six months of the effective date of this Registration Statement. SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment pursuant to Rule 485(b) of the Securities Act of 1933 and has duly caused this Post-Effective Amendment #15 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 31st day of March, 1995. SELIGMAN PORTFOLIOS, INC. By: /s/ WILLIAM C. MORRIS ---------------------- William C. Morris*, Chairman Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment #15 to the Registration Statement has been signed below by the following persons, in the capacities indicated on March 31, 1995. Signature Title --------- ----- /s/ WILLIAM C. MORRIS ---------------------- Chairman of the Board (Principal William C. Morris* executive officer) and Director /s/ RONALD T. SCHROEDER Director and President ------------------------ Ronald T. Schroeder* /s/ THOMAS G. ROSE Treasurer ------------------ Thomas G. Rose Fred E. Brown, Director ) Alice S. Ilchman, Director ) John R. Merow, Director ) /s/ BRIAN T. ZINO Betsy S. Michel, Director ) ------------------- Douglas R. Nichols, Jr., Director ) *Brian T. Zino, Attorney-In-Fact James C. Pitney, Director ) James Q. Riordan, Director ) Herman J. Schmidt, Director ) Robert L. Shafer, Director ) James N. Whitson, Director ) Brian T. Zino, Director ) EX-10.5B 2 MANAGEMENT AGREEMENT-SC&IP AND SFP MANAGEMENT AGREEMENT MANAGEMENT AGREEMENT, dated as of October 1, 1994 between SELIGMAN PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of Seligman Communications and Information Portfolio and Seligman Frontier Portfolio (the "Portfolios"), and J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager"). WHEREAS, the Corporation is an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Corporation desires to retain the Manager to render or contract to obtain as hereinafter provided investment management services to the Corporation, and to administer the business and other affairs of the Corporation and the Manager is willing to render such services; Now, therefore, in consideration of the mutual agreements herein made, the parties hereto agree as follows: 1. Duties of the Manager. The Manager shall, subject to the control of the Board of Directors of the Corporation, manage the affairs of each Portfolio as hereinafter defined, including, but not limited to, continuously providing the Corporation with investment management, including investment research, advice and supervision, determining which securities shall be purchased or sold by each Portfolio, making purchases and sales of securities on behalf of each Portfolio and determining how voting and other rights with respect to securities of each Portfolio shall be exercised, subject in each case to the control of the Board of Directors of the Corporation and in accordance with the objectives, policies and principles set forth in the Registration Statement and Prospectus of the Corporation and the requirements of the 1940 Act and other applicable law. In connection with the performance of its duties hereunder, the Manager shall provide such office space, such bookkeeping, accounting, internal legal, clerical, secretarial and administrative services (exclusive of, and in addition to, any such services provided by any others retained by the Corporation) and such executive and other personnel as shall be necessary for the operations of the Portfolios. The Corporation understands that the Manager also acts as the manager of all of the investment companies in the Seligman Group. Subject to Section 36 of the 1940 Act, the Manager shall not be liable to the Corporation for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Portfolios and the performance of its duties under this Agreement except for willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties under this Agreement. 2. Expenses. The Manager shall pay all of its expenses arising from the performance of its obligations under Section 1, and shall pay any salaries, fees and expenses of the directors of the Corporation who are employees of the Manager or its affiliates. The Manager shall not be required to pay any other expenses of the Corporation or the Portfolios, including, but not limited to, direct charges relating to the purchase and sale of portfolio securities, interest charges, fees and expenses of independent attorneys and auditors, taxes and governmental fees, cost of stock certificates and any other expenses (including clerical expenses) of issue, sale, repurchase or redemption of shares, expenses of registering and qualifying shares for sale, expenses of printing and distributing reports, notices and proxy materials to shareholders, expenses of corporate data processing and related services, shareholder recordkeeping and shareholder account services, expenses of printing and filing reports and other documents filed with governmental agencies, expenses of printing and distributing prospectuses, expenses of annual and special shareholders' meetings, fees and disbursements of transfer agents and custodians, expenses of disbursing dividends and distributions, fees and expenses of directors of the Corporation who are not employees of the Manager or its affiliates, membership dues in the Investment Company Institute, insurance premiums and extraordinary expenses such as litigation expenses. 3. Compensation. (a) As compensation for the services performed and the facilities and personnel provided by the Manager pursuant to Section 1, each Portfolio will pay to the Manager promptly after the end of each month a fee, calculated on each day during such month at the annual rate of 0.75% of the average daily net assets attributable to that Portfolio. (b) If the Manager shall serve hereunder for less than the whole of any month, the fee hereunder shall be prorated. 4. Purchase and Sale of Securities. The Manager shall purchase securities from or through and sell securities to or through such persons, brokers or dealers (including the Manager or an affiliate of the Manager) as the Manager shall deem appropriate in order to carry out the policy with respect to allocation of portfolio transactions as set forth in the Registration Statement and Prospectus(es) of the Corporation or as the Board of Directors of the Corporation may direct from time to time. In providing the Portfolios with investment management and supervision, it is recognized that the Manager will seek the most favorable price and execution, and, consistent with such policy, may give consideration to the research, statistical and other services furnished by brokers or dealers to the Manager for its use, to the general attitude of brokers or dealers toward investment companies and their support of them, and to such other considerations as the Board of Directors of the Corporation may direct or authorize from time to time. Notwithstanding the above, it is understood that it is desirable for the Portfolios that the Manager have access to supplemental investment and market research and security and economic analysis provided by brokers who execute brokerage transactions at a higher cost to the Portfolios than may result when allocating brokerage to other brokers on the basis of seeking the most favorable price and execution. Therefore, the Manager is authorized to place orders for the purchase and sale of securities for the Portfolios with such brokers, subject to review by the Corporation's Board of Directors from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Manager in connection with its services to other clients as well as the Portfolios. The placing of purchase and sale orders may be carried out by the Manager or any wholly-owned subsidiary of the Manager. If, in connection with purchases and sales of securities for the Portfolios, the Manager or any subsidiary of the Manager may, without material risk, arrange to receive a soliciting dealer's fee or other underwriter's or dealer's discount or commission, the Manager shall, unless otherwise directed by the Board of Directors of the Corporation, obtain such fee, discount or commission and the amount thereof shall be applied to reduce the compensation to be received by the Manager pursuant to Section 3 hereof. Nothing herein shall prohibit the Board of Directors of the Corporation from approving the payment by the Portfolios of additional compensation to others for consulting services, supplemental research and security and economic analysis. 5. Term of Agreement. This Agreement shall continue in full force and effect until December 31, 1995, and from year to year thereafter if such continuance is approved in the manner required by the 1940 Act if the Manager shall not have notified the Portfolios in writing at least 60 days prior to such December 31 or prior to December 31 of any year thereafter that it does not desire such continuance. This Agreement may be terminated at any time with respect to one or both Portfolios, without payment of any penalty by the Corporation, on 60 days' written notice to the Manager by vote of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the affected Portfolio (as defined by the 1940 Act). The failure of the Board of Directors of the Corporation or holders of securities of one Portfolio to approve the continuance of this Agreement, or the termination of this Agreement with respect to one Portfolio, shall be without prejudice to the effectiveness of this Agreement with respect to the other Portfolio. This Agreement will automatically terminate in the event of its assignment (as defined by the 1940 Act). 6. Right of Manager In Corporate Name. The Manager and the Corporation each agree that the word "Seligman", which comprises a component of the Corporation's and both Portfolios' names, is a property right of the Manager. Each Portfolio agrees and consents that (i) it will only use the word "Seligman" as a component of its corporate name and for no other purpose, (ii) it will not purport to grant to any third party the right to use the word "Seligman" for any purpose, (iii) the Manager or any corporate affiliate of the Manager may use or grant to others the right to use the word "Seligman", or any combination or abbreviation thereof, as all or a portion of a corporate or business name or for any commercial purpose, including a grant of such right to any other investment company, and at the request of the Manager, the Corporation and the Portfolio will take such action as may be required to provide its consent to the use of the word "Seligman", or any combination or abbreviation thereof, by the Manager or any corporate affiliate of the Manager, or by any person to whom the Manager or an affiliate of the Manager shall have granted the right to such use; and (iv) upon the termination of any management agreement into which the Manager and the Corporation may enter, the Corporation and the Portfolio shall, upon request by the Manager, promptly take such action, at its own expense, as may be necessary to change its corporate name to one not containing the word "Seligman" and following such change, shall not use the word Seligman, or any combination thereof, as a part of its corporate name or for any other commercial purpose, and shall use its best efforts to cause its officers, trustees and shareholders to take any and all actions which the Manager may request to effect the foregoing and to reconvey to the Manager any and all rights to such word. 7. Miscellaneous. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Anything herein to the contrary notwithstanding, this Agreement shall not be construed to require, or to impose any duty upon either of the parties, to do anything in violation of any applicable laws or regulations. IN WITNESS WHEREOF, the Corporation on behalf of the Portfolios and the Manager have caused this Agreement to be executed by their duly authorized officers as of the date first above written. SELIGMAN PORTFOLIOS, INC. By /s/ Ronald T. Schroeder ----------------------- J. & W. SELIGMAN & CO. INCORPORATED By /s/ Brian T. Zino ----------------- EX-10.5C 3 MANAGEMENT AGREEMENT-GLOBAL EMERGING COMPANIES MANAGEMENT AGREEMENT MANAGEMENT AGREEMENT, dated as of October 1, 1994 between SELIGMAN PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of Seligman Henderson Global Emerging Companies Portfolio (the "Portfolio"), and J. & W. SELIGMAN & CO.INCORPORATED, a Delaware corporation (the "Manager"). WHEREAS, the Corporation is an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Corporation desires to retain the Manager to render or contract to obtain as hereinafter provided investment management services to the Corporation, and to administer the business and other affairs of the Corporation and the Manager is willing to render such services; Now, therefore, in consideration of the mutual agreements herein made, the parties hereto agree as follows: 1. Duties of the Manager. The Manager shall, subject to the control of the Board of Directors of the Corporation, manage the affairs of the Portfolio and agrees to provide the services described in this Agreement on the terms set forth herein. The Manager will enter into an agreement dated the date hereof (the "Subadvisory Agreement") with Seligman Henderson Co. (the "Subadviser") pursuant to which the Subadviser will provide the Portfolio with investment management services, including investment research, advice and supervision, determining which securities shall be purchased or sold by the Portfolio, making purchases and sales of securities on behalf of the Portfolio and determining how voting and other rights with respect to securities of the Portfolio shall be exercised, subject in each case to the control of the Board of Directors of the Corporation and in accordance with the objectives, policies and principles set forth in the Registration Statement and Prospectus of the Corporation and the requirements of the 1940 Act and other applicable law. The Manager will continue to have responsibility for investment management services provided under the Subadvisory Agreement. In the event the Subadviser ceases to provide such investment management services to the Corporation, they shall be provided by the Manager or by such other form as may be selected by the Corporation and approved in accordance with applicable requirements. In connection with the performance of its duties hereunder, the Manager shall provide such office space, such bookkeeping, accounting, internal legal, clerical, secretarial and administrative services (exclusive of, and in addition to, any such services provided by any others retained by the Corporation) and such executive and other personnel as shall be necessary for the operations of the Portfolio. The Corporation understands that the Manager also acts as the manager of all of the investment companies in the Seligman Group. Subject to Section 36 of the 1940 Act, the Manager shall not be liable to the Corporation for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Portfolio and the performance of its duties under this Agreement except for willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties under this Agreement. 2. Expenses. The Manager shall pay all of its expenses arising from the performance of its obligations under Section 1 including the fee of the Subadviser, and shall pay any salaries, fees and expenses of the directors of the Corporation who are employees of the Manager or its affiliates. The Manager shall not be required to pay any other expenses of the Corporation or the Portfolio, including, but not limited to, direct charges relating to the purchase and sale of portfolio securities, interest charges, fees and expenses of independent attorneys and auditors, taxes and governmental fees, cost of stock certificates and any other expenses (including clerical expenses) of issue, sale, repurchase or redemption of shares, expenses of registering and qualifying shares for sale, expenses of printing and distributing reports, notices and proxy materials to shareholders, expenses of corporate data processing and related services, shareholder recordkeeping and shareholder account services, expenses of printing and filing reports and other documents filed with governmental agencies, expenses of printing and distributing prospectuses, expenses of annual and special shareholders' meetings, fees and disbursements of transfer agents and custodians, expenses of disbursing dividends and distributions, fees and expenses of directors of the Corporation who are not employees of the Manager or its affiliates, membership dues in the Investment Company Institute, insurance premiums and extraordinary expenses such as litigation expenses. 3. Compensation. (a) As compensation for the services performed and the facilities and personnel provided by the Manager pursuant to Section 1, the Portfolio will pay to the Manager promptly after the end of each month a fee, calculated on each day during such month at the annual rate of 1.00% of the average daily net assets attributable to the Portfolio. (b) If the Manager shall serve hereunder for less than the whole of any month, the fee hereunder shall be prorated. 4. Purchase and Sale of Securities. The Manager or, pursuant to the Subadvisory Agreement, the Subadviser shall purchase securities from or through and sell securities to or through such persons, brokers or dealers (including the Manager or an affiliate of the Manager) as the Manager and the Subadviser shall deem appropriate in order to carry out the policy with respect to allocation of portfolio transactions as set forth in the Registration Statement and Prospectus(es) of the Corporation or as the Board of Directors of the Corporation may direct from time to time. In providing the Portfolio with investment management and supervision, it is recognized that the Manager or the Subadviser will seek the most favorable price and execution, and, consistent with such policy, may give consideration to the research, statistical and other services furnished by brokers or dealers to the Manager or the Subadviser for its use, to the general attitude of brokers or dealers toward investment companies and their support of them, and to such other considerations as the Board of Directors of the Corporation may direct or authorize from time to time. Notwithstanding the above, it is understood that it is desirable for the Portfolio that the Manager and the Subadviser have access to supplemental investment and market research and security and economic analysis provided by brokers who execute brokerage transactions at a higher cost to the Portfolio than may result when allocating brokerage to other brokers on the basis of seeking the most favorable price and execution. Therefore, the Manager and the Subadviser are authorized to place orders for the purchase and sale of securities for the Portfolio with such brokers, subject to review by the Corporation's Board of Directors from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Manager and the Subadviser in connection with their services to other clients as well as the Portfolio. The placing of purchase and sale orders may be carried out by the Manager or the Subadviser or any wholly-owned subsidiary of the Manager. If, in connection with purchases and sales of securities for the Portfolio, the Manager or any subsidiary of the Manager may, without material risk, arrange to receive a soliciting dealer's fee or other underwriter's or dealer's discount or commission, the Manager shall, unless otherwise directed by the Board of Directors of the Corporation, obtain such fee, discount or commission and the amount thereof shall be applied to reduce the compensation to be received by the Manager pursuant to Section 3 hereof. Nothing herein shall prohibit the Board of Directors of the Corporation from approving the payment by the Portfolio of additional compensation to others for consulting services, supplemental research and security and economic analysis. 5. Term of Agreement. This Agreement shall continue in full force and effect until December 31, 1995, and from year to year thereafter if such continuance is approved in the manner required by the 1940 Act if the Manager shall not have notified the Portfolio in writing at least 60 days prior to such December 31 or prior to December 31 of any year thereafter that it does not desire such continuance. This Agreement may be terminated at any time with respect to the Portfolio, without payment of any penalty by the Corporation, on 60 days' written notice to the Manager by vote of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the Portfolio (as defined by the 1940 Act). This Agreement will automatically terminate in the event of its assignment (as defined by the 1940 Act). 6. Right of Manager In Corporate Name. The Manager and the Corporation each agree that the word "Seligman", which comprises a component of the Corporation's and the Portfolio's names, is a property right of the Manager. The Portfolio agrees and consents that (i) it will only use the word "Seligman" as a component of its corporate name and for no other purpose, (ii) it will not purport to grant to any third party the right to use the word "Seligman" for any purpose, (iii) the Manager or any corporate affiliate of the Manager may use or grant to others the right to use the word "Seligman", or any combination or abbreviation thereof, as all or a portion of a corporate or business name or for any commercial purpose, including a grant of such right to any other investment company, and at the request of the Manager, the Corporation and the Portfolio will take such action as may be required to provide its consent to the use of the word "Seligman", or any combination or abbreviation thereof, by the Manager or any corporate affiliate of the Manager, or by any person to whom the Manager or an affiliate of the Manager shall have granted the right to such use; and (iv) upon the termination of any management agreement into which the Manager and the Corporation may enter, the Corporation and the Portfolio shall, upon request by the Manager, promptly take such action, at its own expense, as may be necessary to change its corporate name to one not containing the word "Seligman" and following such change, shall not use the word Seligman, or any combination thereof, as a part of its corporate name or for any other commercial purpose, and shall use its best efforts to cause its officers, trustees and shareholders to take any and all actions which the Manager may request to effect the foregoing and to reconvey to the Manager any and all rights to such word. 7. Miscellaneous. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Anything herein to the contrary notwithstanding, this Agreement shall not be construed to require, or to impose any duty upon either of the parties, to do anything in violation of any applicable laws or regulations. IN WITNESS WHEREOF, the Corporation on behalf of the Portfolio and the Manager have caused this Agreement to be executed by their duly authorized officers as of the date first above written. SELIGMAN PORTFOLIOS, INC. By /s/ Ronald T. Schroeder ----------------------- J. & W. SELIGMAN & CO. INCORPORATED By /s/ Brian T. Zino ----------------- EX-10.5D 4 SUBADVISORY AGREEMENT-GLOBAL EMERGING COMPANIES SUBADVISORY AGREEMENT SUBADVISORY AGREEMENT, dated as of October 1, 1994 between J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager") and SELIGMAN HENDERSON CO., a New York general partnership (the "Subadviser"). WHEREAS, the Manager has entered into a Management Agreement dated October 1, 1994 (the "Management Agreement") with Seligman Portfolios, Inc. (the "Corporation"), an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of the Seligman Henderson Global Emerging Companies Portfolio of the Corporation (the "Portfolio"), pursuant to which the Manager will render or contract to obtain as hereinafter provided investment management services to the Portfolio, and to administer the business and other affairs of the Portfolio; and WHEREAS, the Manager desires to retain the Subadviser to provide investment management services to the Portfolio, and the Subadviser is willing to render such investment management services. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows: 1. Duties of the Subadviser. The Subadviser will provide the Portfolio with investment management services, including investment research, advice and supervision, determining which securities shall be purchased or sold by the Portfolio, making purchases and sales of securities on behalf of the Portfolio and determining how voting and other rights with respect to securities of the Portfolio shall be exercised, subject in each case to the control of the Board of Directors of the Corporation and in accordance with the objectives, policies and principles set forth in the Registration Statement and Prospectus(es) of the Corporation and the requirements of the 1940 Act and other applicable law. Subject to Section 36 of the 1940 Act, the Subadviser shall not be liable to the Corporation for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Corporation and the performance of its duties under this Agreement except for willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties under this Agreement. 2. Expenses. The Subadviser shall pay all of its expenses arising from the performance of its obligations under Section 1. 3. Compensation. (a) As compensation for the services performed and the facilities and personnel provided by the Manager pursuant to Section 1, the Manager will pay to the Subadviser each month a fee, calculated on each day during such month, at an annual rate of .90% of the Portfolio's average daily net assets. (b) If the Subadviser shall serve hereunder for less than the whole of any month, the fee hereunder shall be prorated. 4. Purchase and Sale of Securities. The Subadviser shall purchase securities from or through and sell securities to or through such persons, brokers or dealers as the Subadviser shall deem appropriate in order to carry out the policy with respect to allocation of portfolio transactions as set forth in the Registration Statement and Prospectus(es) of the Corporation or as the Board of Directors of the Corporation may direct from time to time. In providing the Portfolio with investment management and supervision, it is recognized that the Subadviser will seek the most favorable price and execution, and, consistent with such policy, may give consideration to the research, statistical and other services furnished by brokers or dealers to the Subadviser for its use, to the general attitude of brokers or dealers toward investment companies and their support of them, and to such other considerations as the Board of Directors of the Corporation may direct or authorize from time to time. Notwithstanding the above, it is understood that it is desirable for the Portfolio that the Subadviser have access to supplemental investment and market research and security and economic analysis provided by brokers who execute brokerage transactions at a higher cost to the Portfolio than may result when allocating brokerage to other brokers on the basis of seeking the most favorable price and execution. Therefore, the Subadviser is authorized to place orders for the purchase and sale of securities of the Portfolio with such brokers, subject to review by the Corporation's Board of Directors from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Subadviser in connection with its services to other clients as well as the Portfolio. If, in connection with purchases and sales of securities for the Portfolio, the Subadviser may, without material risk, arrange to receive a soliciting dealer's fee or other underwriter's or dealer's discount or commission, the Subadviser shall, unless otherwise directed by the Board of Directors of the Corporation, obtain such fee, discount or commission and the amount thereof shall be applied to reduce the compensation to be received by the Subadviser pursuant to Section 3 hereof. Nothing herein shall prohibit the Board of Directors of the Corporation from approving the payment by the Portfolio of additional compensation to others for consulting services, supplemental research and security and economic analysis. 5. Term of Agreement. This Agreement shall continue in full force and effect until December 31, 1995, and from year to year thereafter if such continuance is approved in the manner required by the 1940 Act if the Subadviser shall not have notified the Manager in writing at least 60 days prior to such December 31 or prior to December 31 of any year thereafter that it does not desire such continuance. This Agreement may be terminated at any time, without payment of penalty by the Corporation, on 60 days' written notice to the Subadviser by vote of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the Portfolio (as defined by the 1940 Act). This Agreement will automatically terminate in the event of its assignment (as defined by the 1940 Act) or upon the termination of the Management Agreement. 6. Amendments. This Agreement may be amended by consent of the parties hereto provided that the consent of the Corporation is obtained in accordance with the requirements of the 1940 Act. 7. Miscellaneous. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Anything herein to the contrary notwithstanding, this Agreement shall not be construed to require, or to impose any duty upon either of the parties, to do anything in violation of any applicable laws or regulations. IN WITNESS WHEREOF, the Manager and the Subadviser have caused this Agreement to be executed by their duly authorized officers as of the date first above written. J. & W. SELIGMAN & CO. INCORPORATED By /s/ Ronald T. Schroeder ----------------------- SELIGMAN HENDERSON CO. By /s/ Brian T. Zino ----------------- EX-10.5E 5 MANAGEMENT AGREEMENT-GLOBAL PORTFOLIO MANAGEMENT AGREEMENT MANAGEMENT AGREEMENT, dated as of May 1, 1993 between SELIGMAN PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of Seligman Global Portfolio (the "Portfolio") and J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager"). WHEREAS, the Corporation is an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Corporation desires to retain the Manager to render or contract to obtain as hereinafter provided investment management services to the Corporation, and to administer the business and other affairs of the Corporation and the Manager is willing to render such services; Now, therefore, in consideration of the mutual agreements herein made, the parties hereto agree as follows: 1. Duties of the Manager. The Manager shall, subject to the control of the Board of Directors of the Corporation, manage the affairs of the Portfolio and agrees to provide the services described in this Agreement on the terms set forth herein. The Manager will enter into an agreement dated the date hereof (the "Subadvisory Agreement") with Seligman Henderson Co. (the "Subadviser") pursuant to which the Subadviser will provide the Portfolio with investment management services, including investment research, advice and supervision, determining which securities shall be purchased or sold by the Portfolio, making purchases and sales of securities on behalf of the Portfolio and determining how voting and other rights with respect to securities of the Portfolio shall be exercised, subject in each case to the control of the Board of Directors of the Corporation and in accordance with the objectives, policies and principles set forth in the Registration Statement and Prospectus of the Corporation and the requirements of the 1940 Act and other applicable law. The Manager will continue to have responsibility for investment management services provided under the Subadvisory Agreement. In the event the Subadviser ceases to provide such investment management services to the Corporation, they shall be provided by the Manager or by such other form as may be selected by the Corporation and approved in accordance with applicable requirements. In connection with the performance of its duties hereunder, the Manager shall provide such office space, such bookkeeping, accounting, internal legal, clerical, secretarial and administrative services (exclusive of, and in addition to, any such services provided by any others retained by the Corporation) and such executive and other personnel as shall be necessary for the operations of the Portfolio. The Corporation understands that the Manager also acts as the manager of all of the investment companies in the Seligman Group. Subject to Section 36 of the 1940 Act, the Manager shall not be liable to the Corporation for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Portfolio and the performance of its duties under this Agreement except for willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties under this Agreement. 2. Expenses. The Manager shall pay all of its expenses arising from the performance of its obligations under Section 1 including the fee of the Subadviser, and shall pay any salaries, fees and expenses of the directors of the Corporation who are employees of the Manager or its affiliates. The Manager shall not be required to pay any other expenses of the Corporation or the Portfolio, including, but not limited to, direct charges relating to the purchase and sale of portfolio securities, interest charges, fees and expenses of independent attorneys and auditors, taxes and governmental fees, cost of stock certificates and any other expenses (including clerical expenses) of issue, sale, repurchase or redemption of shares, expenses of registering and qualifying shares for sale, expenses of printing and distributing reports, notices and proxy materials to shareholders, expenses of corporate data processing and related services, shareholder recordkeeping and shareholder account services, expenses of printing and filing reports and other documents filed with governmental agencies, expenses of printing and distributing prospectuses, expenses of annual and special shareholders' meetings, fees and disbursements of transfer agents and custodians, expenses of disbursing dividends and distributions, fees and expenses of directors of the Corporation who are not employees of the Manager or its affiliates, membership dues in the Investment Company Institute, insurance premiums and extraordinary expenses such as litigation expenses. 3. Compensation. (a) As compensation for the services performed and the facilities and personnel provided by the Manager pursuant to Section 1, the Portfolio will pay to the Manager promptly after the end of each month a fee, calculated on each day during such month at the annual rate of 1.00% of the average daily net assets attributable to the Portfolio. (b) If the Manager shall serve hereunder for less than the whole of any month, the fee hereunder shall be prorated. 4. Purchase and Sale of Securities. The Manager or, pursuant to the Subadvisory Agreement, the Subadviser shall purchase securities from or through and sell securities to or through such persons, brokers or dealers (including the Manager or an affiliate of the Manager) as the Manager and the Subadviser shall deem appropriate in order to carry out the policy with respect to allocation of portfolio transactions as set forth in the Registration Statement and Prospectus(es) of the Corporation or as the Board of Directors of the Corporation may direct from time to time. In providing the Portfolio with investment management and supervision, it is recognized that the Manager or the Subadviser will seek the most favorable price and execution, and, consistent with such policy, may give consideration to the research, statistical and other services furnished by brokers or dealers to the Manager or the Subadviser for its use, to the general attitude of brokers or dealers toward investment companies and their support of them, and to such other considerations as the Board of Directors of the Corporation may direct or authorize from time to time. Notwithstanding the above, it is understood that it is desirable for the Portfolio that the Manager and the Subadviser have access to supplemental investment and market research and security and economic analysis provided by brokers who execute brokerage transactions at a higher cost to the Portfolio than may result when allocating brokerage to other brokers on the basis of seeking the most favorable price and execution. Therefore, the Manager and the Subadviser are authorized to place orders for the purchase and sale of securities for the Portfolio with such brokers, subject to review by the Corporation's Board of Directors from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Manager and the Subadviser in connection with their services to other clients as well as the Portfolio. The placing of purchase and sale orders may be carried out by the Manager or the Subadviser or any wholly-owned subsidiary of the Manager. If, in connection with purchases and sales of securities for the Portfolio, the Manager or any subsidiary of the Manager may, without material risk, arrange to receive a soliciting dealer's fee or other underwriter's or dealer's discount or commission, the Manager shall, unless otherwise directed by the Board of Directors of the Corporation, obtain such fee, discount or commission and the amount thereof shall be applied to reduce the compensation to be received by the Manager pursuant to Section 3 hereof. Nothing herein shall prohibit the Board of Directors of the Corporation from approving the payment by the Portfolio of additional compensation to others for consulting services, supplemental research and security and economic analysis. 5. Term of Agreement. This Agreement shall continue in full force and effect until December 31, 1994, and from year to year thereafter if such continuance is approved in the manner required by the 1940 Act if the Manager shall not have notified the Portfolio in writing at least 60 days prior to such December 31 or prior to December 31 of any year thereafter that it does not desire such continuance. This Agreement may be terminated at any time, without payment of any penalty by the Corporation, on 60 days' written notice to the Manager by vote of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the Portfolio (as defined by the 1940 Act). This Agreement will automatically terminate in the event of its assignment (as defined by the 1940 Act). 6. Right of Manager In Corporate Name. The Manager and the Corporation each agree that the word "Seligman", which comprises a component of the Portfolio's name, is a property right of the Manager. The Portfolio agrees and consents that (i) it will only use the word "Seligman" as a component of its corporate name and for no other purpose, (ii) it will not purport to grant to any third party the right to use the word "Seligman" for any purpose, (iii) the Manager or any corporate affiliate of the Manager may use or grant to others the right to use the word "Seligman", or any combination or abbreviation thereof, as all or a portion of a corporate or business name or for any commercial purpose, including a grant of such right to any other investment company, and at the request of the Manager, the Corporation and the Portfolio will take such action as may be required to provide its consent to the use of the word "Seligman", or any combination or abbreviation thereof, by the Manager or any corporate affiliate of the Manager, or by any person to whom the Manager or an affiliate of the Manager shall have granted the right to such use; and (iv) upon the termination of any management agreement into which the Manager and the Corporation may enter, the Corporation and the Portfolio shall, upon request by the Manager, promptly take such action, at its own expense, as may be necessary to change its corporate name to one not containing the word "Seligman" and following such change, shall not use the word Seligman, or any combination thereof, as a part of its corporate name or for any other commercial purpose, and shall use its best efforts to cause its officers, trustees and shareholders to take any and all actions which the Manager may request to effect the foregoing and to reconvey to the Manager any and all rights to such word. 7. Miscellaneous. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Anything herein to the contrary notwithstanding, this Agreement shall not be construed to require, or to impose any duty upon either of the parties, to do anything in violation of any applicable laws or regulations. IN WITNESS WHEREOF, the Corporation on behalf of the Portfolio and the Manager have caused this Agreement to be executed by their duly authorized officers as of the date first above written. SELIGMAN PORTFOLIOS, INC. By /s/ Ronald T. Schroeder ----------------------- J. & W. SELIGMAN & CO. INCORPORATED By /s/ Brian T. Zino ----------------- EX-10.5F 6 SUBADVISORY AGREEMENT-GLOBAL PORTFOLIO SUBADVISORY AGREEMENT SUBADVISORY AGREEMENT, dated as of May 1, 1993 between J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager") and Seligman Henderson Co., a New York general partnership (the "Subadviser"). WHEREAS, the Manager has entered into a Management Agreement dated May 1, 1993 (the "Management Agreement") with Seligman Portfolios, Inc. (the "Corporation"), an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of the Seligman Henderson Global Portfolio of the Corporation (the "Portfolio") pursuant to which the Manager will render or contract to obtain as hereinafter provided investment management services to the Portfolio, and to administer the business and other affairs of the Portfolio; and WHEREAS, the Manager desires to retain the Subadviser to provide investment management services to the Portfolio, and the Subadviser is willing to render such investment management services. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows: 1. Duties of the Subadviser. The Subadviser will provide the Portfolio with investment management services, including investment research, advice and supervision, determining which securities shall be purchased or sold by the Portfolio, making purchases and sales of securities on behalf of the Portfolio and determining how voting and other rights with respect to securities of the Portfolio shall be exercised, subject in each case to the control of the Board of Directors of the Corporation and in accordance with the objectives, policies and principles set forth in the Registration Statement and Prospectus(es) of the Corporation and the requirements of the 1940 Act and other applicable law. Subject to Section 36 of the 1940 Act, the Subadviser shall not be liable to the Corporation for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Corporation and the performance of its duties under this Agreement except for willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties under this Agreement. 2. Expenses. The Subadviser shall pay all of its expenses arising from the performance of its obligations under Section 1. 3. Compensation. (a) As compensation for the services performed and the facilities and personnel provided by the Manager pursuant to Section 1, the Manager will pay to the Subadviser each month a fee, calculated on each day during such month, at an annual rate of .90% of the Portfolio's average daily net assets. (b) If the Subadviser shall serve hereunder for less than the whole of any month, the fee hereunder shall be prorated. 4. Purchase and Sale of Securities. The Subadviser shall purchase securities from or through and sell securities to or through such persons, brokers or dealers as the Subadviser shall deem appropriate in order to carry out the policy with respect to allocation of portfolio transactions as set forth in the Registration Statement and Prospectus(es) of the Corporation or as the Board of Directors of the Corporation may direct from time to time. In providing the Portfolio with investment management and supervision, it is recognized that the Subadviser will seek the most favorable price and execution, and, consistent with such policy, may give consideration to the research, statistical and other services furnished by brokers or dealers to the Subadviser for its use, to the general attitude of brokers or dealers toward investment companies and their support of them, and to such other considerations as the Board of Directors of the Corporation may direct or authorize from time to time. Notwithstanding the above, it is understood that it is desirable for the Portfolio that the Subadviser have access to supplemental investment and market research and security and economic analysis provided by brokers who execute brokerage transactions at a higher cost to the Portfolio than may result when allocating brokerage to other brokers on the basis of seeking the most favorable price and execution. Therefore, the Subadviser is authorized to place orders for the purchase and sale of securities of the Portfolio with such brokers, subject to review by the Corporation's Board of Directors from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Subadviser in connection with its services to other clients as well as the Portfolio. If, in connection with purchases and sales of securities for the Portfolio, the Subadviser may, without material risk, arrange to receive a soliciting dealer's fee or other underwriter's or dealer's discount or commission, the Subadviser shall, unless otherwise directed by the Board of Directors of the Corporation, obtain such fee, discount or commission and the amount thereof shall be applied to reduce the compensation to be received by the Subadviser pursuant to Section 3 hereof. Nothing herein shall prohibit the Board of Directors of the Corporation from approving the payment by the Portfolio of additional compensation to others for consulting services, supplemental research and security and economic analysis. 5. Term of Agreement. This Agreement shall continue in full force and effect until December 31, 1994, and from year to year thereafter if such continuance is approved in the manner required by the 1940 Act if the Subadviser shall not have notified the Manager in writing at least 60 days prior to such December 31 or prior to December 31 of any year thereafter that it does not desire such continuance. This Agreement may be terminated at any time, without payment of penalty by the Corporation, on 60 days' written notice to the Subadviser by vote of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the Portfolio (as defined by the 1940 Act). This Agreement will automatically terminate in the event of its assignment (as defined by the 1940 Act) or upon the termination of the Management Agreement. 6. Amendments. This Agreement may be amended by consent of the parties hereto provided that the consent of the Corporation is obtained in accordance with the requirements of the 1940 Act. 7. Miscellaneous. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Anything herein to the contrary notwithstanding, this Agreement shall not be construed to require, or to impose any duty upon either of the parties, to do anything in violation of any applicable laws or regulations. IN WITNESS WHEREOF, the Manager and the Subadviser have caused this Agreement to be executed by their duly authorized officers as of the date first above written. J. & W. SELIGMAN & CO. INCORPORATED By /s/ Ronald T. Schroeder ----------------------- SELIGMAN HENDERSON CO. By /s/ Brian T. Zino ------------------ EX-10.5G 7 MANAGEMENT AGREEMENT-SCP,SCMP,SCSP,SFISP,SIF MANAGEMENT AGREEMENT MANAGEMENT AGREEMENT, dated as of December 29, 1988, between SELIGMAN MUTUAL BENEFIT PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), and J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation (the "Manager"). In consideration of the mutual agreements herein made, the parties hereto agree as follows: 1. Duties of the Manager. The Manager shall manage the affairs of the Corporation with respect to each Portfolio, as hereinafter defined including, but not limited to, continuously providing the Corporation with investment management, including investment research, advice and supervision, determining which securities shall be purchased or sold by the Corporation, making purchases and sales of securities on behalf of the Corporation and determining how voting and other rights with respect to securities of each Portfolio shall be exercised, subject in each case to the control of the Board of Directors of the Corporation and in accordance with the objectives, policies and principles set forth in the Registration Statement including the Prospectus and Statement of Additional Information of the Corporation as relating to the Portfolio and the requirements of the Investment Company Act of 1940 (the "Act") and other applicable law. In performing such duties, the Manager shall provide such office space, such bookkeeping, accounting, internal legal, clerical, secretarial and administrative services (exclusive of and in addition to, any such services provided by any others retained by the Corporation) and such executive and other personnel as shall be necessary for the operations of the Corporation. The Corporation understands that the Manager also acts as the manager of the investment companies in the Seligman Group. As used herein a "Portfolio" means the assets and liabilities of the Corporation attributable to any of the following classes or series of its capital stock: The Seligman Capital Portfolio, The Seligman Common Stock Portfolio, The Seligman Income Portfolio, The Seligman Fixed Income Securities Portfolio, The Seligman Cash Management Portfolio and any other class of the Corporation's Capital Stock to which the Corporation and the Manager agree this Agreement shall apply. Subject to Section 36 of the Act, the Manager shall not be liable to the Corporation for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the management of the Corporation and the performance of its duties under this Agreement except for willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties under this Agreement. 2. Expenses. The Manager shall pay all of its expenses arising from the performance of its obligations under Section l and shall pay any salaries, fees and expenses of the directors of the Corporation who are employees of the Manager or its affiliates. The Manager shall not be required to pay any other expenses of the Corporation, including, but not limited to, direct charges relating to the purchase and sale of portfolio securities, interest charges, fees and expenses of independent attorneys and auditors, taxes and governmental fees and any other expenses (including clerical expenses) of issue, sale, repurchase or redemption of shares, expenses of registering and qualifying shares for sale, expenses of corporate data processing and related services, the daily computation of each Portfolio's net asset value as required by applicable laws, shareholder recordkeeping and shareholder account services, expenses of typesetting and filing reports and other documents filed with governmental agencies, fees and disbursements of transfer agents and custodians, expenses of disbursing dividends and distributions, fees and expenses of directors of the Corporation who are not employees of the Manager or its affiliates, membership dues in the Investment Company Institute, insurance premiums and extraordinary expenses such as litigation expenses. The Manager may from time to time voluntarily assume certain expenses of a Portfolio and may be reimbursed for such amounts prior to the end of the fiscal year in which they were voluntarily assumed. 3. Compensation. (a) As compensation for the services performed and the facilities and personnel provided by the Manager pursuant to Section l, the Corporation will pay to the Manager promptly after the end of each month a fee, calculated on each day during such month, at an annual rate of 0.40% of the Corporation's average daily net assets attributable to each Portfolio. (b) If the Manager shall serve hereunder for less than the whole of any month, the fee hereunder shall be prorated. 4. Purchase and Sale of Securities. The Manager shall purchase securities from or through and sell securities to or through such persons, brokers or dealers (including the Manager or an affiliate of the Manager) as the Manager shall deem appropriate in order to carry out the policy with respect to allocation of portfolio transactions as set forth in the Registration Statement of the Corporation relating to each Portfolio or as the Board of Directors of the Corporation may direct from time to time. In providing the Corporation with investment management and supervision, it is recognized that the Manager will seek the most favorable price and execution, and, consistent with such policy, may give consideration to the research, statistical and other services furnished by brokers or dealers to the Manager for its use, to the general attitude of brokers or dealers toward investment companies and their support of them, and to such other considerations as the Board of Directors of the Corporation may direct or authorize from time to time. Notwithstanding the above, it is understood that it is desirable for the Corporation that the Manager have access to supplemental investment and market research and security and economic analysis provided by brokers who execute brokerage transactions at a higher cost to the Corporation than may result when allocating brokerage to other brokers on the basis of seeking the most favorable price and execution. Therefore, the Manager is authorized to place orders for the purchase and sale of securities for the Portfolio of the Corporation with such brokers, subject to review by the Corporation's Board of Directors from time to time with respect to the extent and continuation of this practice. It is understood that the services provided by such brokers may be useful to the Manager in connection with its services to other clients as well as the Corporation. The placing of purchase and sale orders may be carried out by the Manager or any wholly-owned subsidiary of the Manager. If, in connection with purchases and sales of securities for the Portfolio of the Corporation, the Manager or any subsidiary of the Manager may, without material risk, arrange to receive a soliciting dealer's fee or other underwriter's or dealer's discount or commission, the Manager shall, unless otherwise directed by the Board of Directors of the Corporation, obtain such fee, discount or commission and the amount thereof shall be applied to reduce the compensation to be received by the Manager pursuant to Section 3 hereof. Nothing herein shall prohibit the Board of Directors of the Corporation from approving the payment by the Corporation of additional compensation to others for consulting services, supplemental research and security and economic analysis. 5. Term of Agreement. This Agreement shall continue in full force and effect with respect to a Portfolio of the Corporation until December 29, 1989 and from year to year thereafter if such continuance is approved in the manner required by the Act and if the Manager shall not have notified the Corporation in writing at least 60 days prior to such December 29 or prior to December 29 of any year thereafter that it does not desire such continuance; provided, however, that with respect to a Portfolio of the Corporation which first offers its shares subsequent to the first meeting of shareholders of the Portfolio after the date hereof, this Agreement shall continue in full force and effect until the earlier of (a) two years from the date such shares are first offered and (b) the first meeting of shareholders of such Portfolio after such date. If approved at such meeting by the affirmative vote of a majority of the outstanding voting securities (as defined by the Act) of such Portfolio, this Agreement shall continue in full force and effect with respect to such Portfolio, from year to year thereafter if such continuance is approved in the manner required by the Act. This Agreement may be terminated at any time with respect to any or all Portfolios without payment of penalty by the Corporation or on 60 days' written notice to the Manager by vote of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the affected Portfolio of the Corporation (as defined by the Act). The failure of the Board of Directors or holders of securities of any Portfolio of the Corporation to approve the continuance of this Agreement, or the termination of this Agreement with respect to any Portfolio shall be without prejudice to the effectiveness of this Agreement with respect to any other Portfolio. The Manager may not terminate this Agreement for a period of five years from the effective date of this Agreement, except if agreed upon by the parties hereto to terminate sooner or at the option of the Manager upon 60 days' written notice for the following reasons: (a) upon the institution of formal proceedings against Mutual Benefit Life Insurance Company, ("Mutual Benefit Life") a New Jersey corporation, the depositor of Mutual Benefit Variable Contract Account-9 (the "Separate Account") to which Separate Account shares of the Corporation will be sold or Mutual Benefit Financial Services Company, brought by the National Association of Securities Dealers, Inc., the SEC or any state securities or state insurance department or any other regulatory body, provided that the Manager determines in good faith in its sole judgement, that such institution will have a material adverse impact upon the Fund; (b) upon a material adverse change in the financial condition of Mutual Benefit Life; (c) if there is material adverse publicity regarding Mutual Benefit Life; or (d) upon the termination of the Buy-Sell Agreement, dated May 16, 1988, (the "Buy-Sell Agreement") among Mutual Benefit Life on its own behalf and on behalf of the Separate Account, the Corporation and the Manager. After such five years the Manager may terminate this Agreement at any time upon 60 days' written notice to the Fund. This Agreement shall automatically terminate in the event of its assignment (as defined by the Act). 6. Right of Manager in Corporate Name. The Manager and the Corporation each agree that the word "Seligman", which comprises a component of the Corporation's name and each Portfolio's name, is a property right of the Manager. The Corporation agrees and consents that (i) it will only use the word "Seligman" as a component of its corporate name and the names of each Portfolio, and for no other purpose, (ii) it will not purport to grant to any third party the right to use the word "Seligman" for any purpose, (iii) the Manager or any corporate affiliate of the Manager may use or grant to others the right to use the word "Seligman", or any combination or abbreviation thereof, as all or a portion of a corporate or business name or for any commercial purpose, including a grant of such right to any other investment company, and at the request of the Manager, the Corporation will take such action as may be required to provide its consent to the use of the word "Seligman", or any combination or abbreviation thereof, by the Manager or any corporate affiliate of the Manager, or by any person to whom the Manager or an affiliate of the Manager shall have granted the right to such use; and (iv) upon the termination of this Management Agreement, the Corporation shall, upon request by the Manager, promptly take action, at its own expense, as may be necessary to change its corporate name or a Portfolio's name to one not containing the word "Seligman" and following such change, shall not use the word "Seligman", or any combination thereof, as a part of its corporate name or for any other commercial purpose, and shall use its best efforts to cause its officers, directors and shareholders to take any and all actions which the Manager may request to effect the foregoing and to reconvey to the Manager any and all rights to such word. 7. Right of Mutual Benefit Life in Corporate Name. The Corporation agrees that the word "Mutual Benefit Life", which comprises a component of the Corporation's name, is a property right of Mutual Benefit Life. The Corporation agrees and consents that (i) it will only use the word "Mutual Benefit Life" as a component of its corporate name and for no other purpose, (ii) it will not purport to grant to any third party their right to use the word "Mutual Benefit Life", (iii) Mutual Benefit Life or any corporate affiliate of Mutual Benefit Life may use or grant to others the right to use the word "Mutual Benefit Life", or any combination or abbreviation thereof, as all or a portion of a corporate or business name or for any commercial purpose, the Corporation will take such action as may be required to provide its consent to the use of the word Mutual Benefit Life or any combination or abbreviation thereof, by Mutual Benefit Life or any corporate affiliate of Mutual Benefit Life, or by any person to whom Mutual Benefit Life or an affiliate of Mutual Benefit Life shall have granted the right to such use; and (iv) upon the termination of this Management Agreement or the Buy-Sell Agreement, the Corporation shall upon the request of Mutual Benefit Life, promptly take action at its own expense, as may be necessary to change its corporate name to one not containing the word "Mutual Benefit Life" and following such change, shall not use the word "Mutual Benefit Life" or any combination thereof, as a part of its corporate name or for any other commercial purpose, and shall use its best efforts to cause it officers, directors and shareholders to take any and all actions which Mutual Benefit Life may request to effect the foregoing and to reconvey to Mutual Benefit Life any and all rights to such words. 8. Miscellaneous. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Anything herein to the contrary notwithstanding, this Agreement shall not be construed to require, or to impose any duty upon either of the parties, to do anything in violation of any applicable laws or regulations. IN WITNESS WHEREOF, the Corporation and the Manager have caused this Agreement to be executed by their duly authorized officers as of the date first above written. SELIGMAN MUTUAL BENEFIT PORTFOLIOS, INC. By /s/ Ronald T. Schroeder ----------------------- J. & W. SELIGMAN & CO. INCORPORATED By /s/ Brian T. Zino ----------------- EX-23.1 8 (10) OPINION OF COUNSEL March 29, 1995 Seligman Portfolios, Inc., 100 Park Avenue, New York, New York 10017. Dear Sirs: In connection with Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A (File No. 33-15253) of Seligman Portfolios, Inc., a Maryland corporation (the "Fund"), which you expect to file under the Securities Act of 1933, as amended (the "Securities Act"), with respect to an indefinite number of shares of Capital Stock, par value $.001 per share, of the class designated as Seligman High-Yield Bond Portfolio (the "Portfolio", and the Shares of the Portfolio being referred to herein as the "Shares"), we, as your counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion, the Shares have been duly authorized to the extent of 20,000,000 Shares and, when the Post-Effective Amendment referred to above has become effective under the Securities Act and the Shares have been issued (a) for at least the par value thereof in accordance with the Registration Statement referred to above, (b) so as not to exceed the then authorized number of Shares and (c) in accordance with the authorization of the Board of Directors, the Shares will be duly and validly issued, fully paid and non-assessable. We have relied as to certain matters on information obtained from public officials, officers of the Fund and other sources believed by us to be responsible. The foregoing opinion is limited to the federal laws of the United States and the General Corporation Law of the State of Maryland, and we are expressing no opinion as to the effect of the laws of any other jurisdiction. We hereby consent to the filing of this opinion as an exhibit to the Post-Effective Amendment referred to above. In giving such consent, we do not thereby admit that we are in the category of person whose consent is required under Section 7 of the Securities Act. Very truly yours, /s/ Sullivan & Cromwell ----------------------- EX-23.2 9 (11) CONSENT AND REPORT OF INDEPENDENT AUDITORS CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the captions "Financial Highlights" and "Custodians and Independent Auditors" and to the use of our reports dated February 10, 1995 and March 30, 1995, in this Registration Statement (Form N-1A No. 33-15253) of Seligman Portfolios, Inc. /s/ ERNST & YOUNG LLP --------------------- ERNST & YOUNG LLP New York, New York March 30, 1995 Report of Independent Auditors Shareholder and Board of Directors Seligman Portfolios, Inc. - Seligman High - Yield Bond Portfolio We have audited the accompanying statement of assets and liabilities of Seligman Portfolios, Inc. - Seligman High - Yield Bond Portfolio as of March 30, 1995. This statement of assets and liabilities is the responsibility of the Fund's management. Our responsibility is to express an opinion on this statement of assets and liabilities based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether this statement of assets and liabilities is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of assets and liabilities. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement of assets and liabilities presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the statement of assets and liabilities referred to above presents fairly, in all material respects, the financial position of Seligman Portfolios, Inc. - Seligman High - Yield Bond Portfolio at March 30, 1995 in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP ---------------------- ERNST & YOUNG LLP New York, New York March 30, 1995 EX-27.1 10 FDS - SELIGMAN CAPITAL PORTFOLIO
6 1 SELIGMAN CAPITAL PORTFOLIO 1000 YEAR DEC-31-1994 DEC-31-1994 5231 5675 10 275 0 5960 0 0 18 18 0 5501 468 394 0 3 0 0 444 5942 38 3 0 35 6 642 (912) (264) 0 7 642 0 251 228 51 57 0 0 2 0 23 0 56 5822 14.95 .015 (.699) .018 1.548 0 12.70 .60 0 0
EX-27.2 11 FDS - SELIGMAN CASH MANAGEMENT PORTFOLIO
6 2 SELIGMAN CASH MAMAGEMENT PORTFOLIO 1000 YEAR DEC-31-1994 DEC-31-1994 3144 3144 9 92 0 3245 0 0 15 15 0 3230 3230 3102 0 0 0 0 0 3230 0 128 0 0 128 0 0 128 0 128 0 0 2323 2323 128 128 0 0 0 0 13 0 48 3211 1.000 .040 0 .040 0 0 1.00 0 0 0
EX-27.3 12 FDS-COMMUNICATIONS AND INFORMATION PORTFOLIO
6 7 SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO 1000 3-MOS DEC-31-1994 DEC-31-1994 318 337 12 158 0 507 0 0 12 12 0 476 47 0 0 0 0 0 19 495 1 0 0 1 0 0 19 19 0 0 0 0 47 0 0 495 0 0 0 0 0 0 12 267 10.00 (.016) .456 0 0 0 10.44 .95 0 0
EX-27.4 13 FDS - SELIGMAN COMMON STOCK PORTFOLIO
6 3 SELIGMAN COMMON STOCK PORTFOLIO 1000 YEAR DEC-31-1994 DEC-31-1994 15300 20000 86 153 0 20239 0 0 71 71 0 15471 1463 1459 0 3 0 0 4700 20168 514 128 0 126 516 1108 (1605) 19 0 518 1109 0 602 716 118 (1694) 0 0 2 0 84 0 131 21056 14.98 .365 (.356) .385 .824 0 13.78 .60 0 0
EX-27.5 14 FDS - SELIGMAN FRONTIER PORTFOLIO
6 8 SELIGMAN FRONTIER PORTFOLIO 1000 3-MOS DEC-31-1994 DEC-31-1994 151 160 12 9 0 181 0 0 12 12 0 160 16 0 0 0 0 0 9 169 1 0 0 1 0 0 9 9 0 0 0 0 16 0 0 169 0 0 0 0 0 0 12 91 10.00 (.012) .592 0 0 0 10.58 .95 0 0
EX-27.6 15 FDS - SELIGMAN FIXED INCOME PORTFOLIO
6 4 SELIGMAN FIXED INCOME PORTFOLIO 1000 YEAR DEC-31-1994 DEC-31-1994 3460 3366 87 172 0 3625 0 0 19 19 0 3784 389 373 0 3 (81) 0 (94) 3606 0 201 0 21 180 (81) (225) (126) 0 182 0 0 230 234 20 (169) 0 0 2 0 14 0 46 3538 10.11 .499 (.841) .498 0 0 9.27 .60 0 0
EX-27.7 16 FDS - SELIGMAN HENDERSON GLOBAL PORTFOLIO
6 6 SELIGMAN HENDERSON GLOBAL PORTFOLIO 1000 YEAR DEC-31-1994 DEC-31-1994 1446 1468 21 344 0 1833 41 0 16 57 0 1752 157 57 0 1 0 0 25 1776 12 15 (5) 14 8 1 (15) 11 0 10 18 0 115 17 2 1128 0 0 1 0 11 0 70 1173 11.37 .131 .019 .064 .116 0 11.34 1.20 0 0
EX-27.8 17 FDS-GLOBAL SMALLER COMPANIES PORTFOLIO
6 9 SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO 1000 3-MOS DEC-31-1994 DEC-31-1994 139 143 12 54 0 209 65 0 12 77 0 128 13 0 0 0 0 0 4 132 0 1 0 0 1 0 4 5 0 1 0 0 13 0 0 132 0 0 0 0 0 0 12 91 10.00 .058 .295 .043 0 0 10.31 1.20 0 0
EX-27.9 18 FDS - SELIGMAN INCOME PORTFOLIO
6 5 SELIGMAN INCOME PORTFOLIO 1000 YEAR DEC-31-1994 DEC-31-1994 9934 9832 142 111 0 10085 0 0 35 35 0 10174 1008 986 0 3 (19) 0 (102) 10050 231 512 0 64 679 (19) (1298) (638) 0 685 0 0 424 471 69 (1170) 0 0 2 0 43 0 82 10727 11.38 .689 (1.369) .730 0 9.97 .60 0 0 0
EX-99.13C 19 INVESTMENT LETTER RE: HIGH-YIELD BOND PORTFOLIO INVESTMENT LETTER SELIGMAN PORTFOLIOS, INC. Seligman Portfolios, Inc. (the "Fund"), an open-end, diversified management investment company, and the undersigned ("Purchaser"), intending to be legally bound, hereby agree as follows: 1. In order to provide the Seligman High-Yield Bond Portfolio of the Fund (the "Portfolio") with its initial capital, the Fund hereby sells to Purchaser and Purchaser purchases 1 share (the "Share") of Capital Stock (par value $.001) of the Portfolio at a price of $10.00 per share. The Fund hereby acknowledges receipt from Purchaser of funds in the amount of $10.00 in full payment for the Share. 2. Purchaser represents and warrants to the Fund that the Share is being acquired for investment and not with a view to distribution thereof, and that Purchaser has no present intention to redeem or dispose of the Share. IN WITNESS WHEREOF, the parties have executed this agreement as of the 29th day of March, 1995 ("Purchase Date"). SELIGMAN PORTFOLIOS, INC. By: /s/ Lawrence P. Vogel ----------------------- Name: Lawrence P. Vogel Title: Vice President SELIGMAN FINANCIAL SERVICES, INC. By: /s/ Stephen J. Hodgdon ----------------------- Name: Stephen J. Hodgdon Title: President