-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SLutcA6U60stzJAORUvWsyYZX1/eVav4IOTL9BBhirxwxgJAYpynO2VHtlHiBtS5 Mdw7/cCY5FgcaT/kPbkiHw== 0000817841-99-000004.txt : 19990305 0000817841-99-000004.hdr.sgml : 19990305 ACCESSION NUMBER: 0000817841-99-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SELIGMAN PORTFOLIOS INC/NY CENTRAL INDEX KEY: 0000817841 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05221 FILM NUMBER: 99557032 BUSINESS ADDRESS: STREET 1: 100 PARK AVENUE STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2124880200 MAIL ADDRESS: STREET 1: 100 PARK AVENUE STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: SELIGMAN MUTUAL BENEFIT PORTFOLIOS INC DATE OF NAME CHANGE: 19920703 N-30D 1 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------------- A N N U A L R E P O R T - ------------------------------------------------------------------------------- SELIGMAN PORTFOLIOS, INC. [GRAPHIC OMITTED] December 31, 1998 ----------------------- SELIGMAN PORTFOLIOS, INC. ----------------------- February 5, 1999 Dear Contract Owner: J. & W. Seligman & Co. Incorporated, as Manager of Seligman Portfolios, Inc. (the "Fund"), is pleased to provide the enclosed audited financial statements and accompanying information for the year ended December 31, 1998. In 1998, for the eighth straight year, the US economy expanded, with real domestic growth of 3.9%. Once again, large-cap US stocks responded to this favorable environment with strong performance. The market, as measured by the Standard & Poor's 500 Composite Stock Price Index (S&P 500), rose 28.58% -- the first time in history that this widely watched index returned more than 20% for four years in a row. Although 1998 will certainly be recorded as another stellar year for equities, the market gave investors a bumpy ride along the way. In fact, such wide market swings haven't been seen since 1987. A number of factors contributed to this volatility -- some domestic, many international. The global economic background in 1998 was one of steadily deteriorating conditions as the financial crisis, originally limited to a few Asian countries, spread throughout other regions. The global turmoil continued when Russia defaulted on its debt and devalued its currency, and investors everywhere feared that Brazil and other Latin American countries would follow. In addition to high volatility, last year's market was notable for being extremely narrow, with the exceptional performances of a few stocks distorting the total picture. In fact, 197 stocks, representing 39% of the S&P 500, actually lost market value during the last 12 months. Investment results between market caps were also more widely dispersed than usual. The disparity was almost unprecedented. For example, the large-capitalization-dominated S&P 500 rose 28.58%, while the Russell 2000 Index of smaller-capitalization stocks actually declined 2.55%. International markets began the year with generally strong performances, fueled by expectations of lower inflation and falling interest rates. Beginning in mid-July, however, the combination of the Russian debt default, speculative attacks against emerging market currencies, and a worse-than-expected economic impact from Asia on the rest of the world led to sharp market corrections. Then, in October, markets recovered as interest rates were cut in many parts of the world and a coordinated program of support for the world's financial system was implemented. Fixed-income markets posted strong returns for the year but, as in the equity markets, some segments performed notably better than others. US Treasury bonds, in particular, benefitted from a confluence of events that drove prices higher and yields to 30-year lows. US government-backed bonds, which carry the highest credit quality, were in great demand as the global financial turmoil produced a "flight to quality" around the world. Further boosting the US government bond market was the Federal Reserve Board's lowering of the federal-funds rate, and a federal budget surplus which caused the overall supply of bonds to decrease. In 1999, we believe gross domestic product (GDP) should slow to about 2.5 percent. We expect a challenging financial market environment with ongoing economic uncertainties and continued high volatility. Nonetheless, we see moderately positive returns for the year in line with our lower growth projections. In addition, low inflation, falling or stable interest rates, improving prospects in Asia, and a Federal Reserve leading the fight against global recession should all provide support for US markets. We expect that the equity market, which began to show signs of broadening in the fourth quarter of 1998, will continue to broaden in 1999. If this trend continues, small- and mid-cap stocks should begin to benefit from the favorable equity environment to a greater extent. Thank you for your continued support of Seligman Portfolios, Inc. We look forward to continuing to serve your investment needs in 1999. Respectfully, /S/ William C. Morris --------------------- William C. Morris Chairman J. & W. Seligman & Co. Incorporated SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIO OVERVIEW - -------------------------------------------------------------------------------- LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 PRINCIPAL AMOUNT OR SHARES -------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- SELIGMAN BOND PORTFOLIO US GOVERNMENT AGENCIES Aid-Israel 0%, 11/15/2010......... $500,000 $500,000 Federal National Mortgage Association: 5.795%, 1/1/2009................ 150,000 150,000 6%, 12/1/2028................... 200,000 200,000 Government National Mortgage Association: 6 1/2%, 12/15/2028.............. 200,000 200,000 6%, 12/20/2028.................. 200,000 200,000 CORPORATE BONDS Cardinal Health 6 1/4%, 7/15/2008. 100,000 100,000 First Data 5.80%, 12/15/2008...... 100,000 100,000 Sprint Capital 6 1/8%, 11/15/2008. 200,000 200,000 PRINCIPAL AMOUNT OR SHARES ------------------- HOLDINGS REDUCTIONS DECREASE 12/31/98 - ----------- -------- -------- US GOVERNMENT AGENCIES Government National Mortgage Association 6 1/2%, 4/15/2028... $1,008,064 -- CORPORATE BONDS Equifax 6.30%, 7/1/2005........... 100,000 $100,000 SELIGMAN CAPITAL PORTFOLIO COMMON STOCKS Applied Power (Class A)........... 16,900 shs. 16,900 shs. CNF Transportation................ 10,900 10,900 Deluxe............................ 13,100 13,100 Electronic Arts................... 10,400 10,400 General Dynamics.................. 7,100 7,100 Infinity Broadcasting (Class A)... 23,000 23,000 Office Depot...................... 18,700 18,700 Pall.............................. 19,900 19,900 Service Corp. International....... 10,600 10,600 VERITAS Software.................. 9,400 9,400 COMMON STOCKS AutoZone.......................... 17,500 shs. -- BMC Software...................... 8,000 -- Budget Group (Class A)............ 15,200 -- Gartner Group (Class A)........... 14,300 -- Jones Apparel Group............... 15,200 -- Life Re........................... 3,600 -- Microchip Technology.............. 12,200 -- Proffitt's........................ 11,000 -- Rayovac........................... 8,700 12,200 shs. Schwab (Charles).................. 11,600 7,500 SELIGMAN COMMON STOCK PORTFOLIO COMMON STOCKS AT&T.............................. 10,200 15,900 BP Amoco (ADRs)................... 4,600 11,200 Chubb............................. 9,500 9,500 Crown Cork & Seal................. 17,500 17,500 DQE............................... 15,000 15,000 Electronic Data Systems........... 14,300 14,300 Ford Motor........................ 11,800 11,800 Harris............................ 16,000 16,000 Morgan (J.P.)..................... 4,600 4,600 Sonat............................. 19,300 19,300 COMMON STOCKS ACE............................... 13,700 -- Edison International.............. 22,900 -- General Electric.................. 6,500 17,800 Harley-Davidson................... 18,200 -- Marsh & McLennan.................. 11,850 -- Mobil............................. 8,900 9,600 Penney (J.C.)..................... 11,200 -- St. Paul Companies................ 16,900 -- Texaco............................ 11,000 -- US WEST Communications Group...... 13,900 -- - -------------- See footnotes on page P-9. P-1 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIO OVERVIEW (continued) - -------------------------------------------------------------------------------- LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 SHARES -------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO COMMON STOCKS Advanced Micro Devices............ 60,200 60,200 Applied Materials................. 26,600 26,600 C-Cube Microsystems............... 52,100 52,100 Check Point Software Technologies. 60,600 60,600 Electronic Arts................... 31,900 77,400 Fox Entertainment Group (Class A). 50,300 50,300 Intel............................. 20,500 20,500 MediaOne Group.................... 40,900 50,700 Microsoft......................... 16,600 20,500 Tele-Communications (Series A) TCI Ventures Group.............. 34,200 53,500 SHARES ------------------- HOLDINGS REDUCTIONS DECREASE 12/31/98 - ----------- -------- -------- COMMON STOCKS American Power Conversion......... 37,700 1,700 Ascend Communications............. 23,300 -- Cisco Systems..................... 15,500 2,000 Citrix Systems.................... 20,700 -- Compuware......................... 16,700 20,000 EMC............................... 76,600 58,200 Excel Switching................... 50,000 -- International Business Machines... 9,100 -- Novellus Systems.................. 42,400 -- Time Warner....................... 18,900 -- SELIGMAN FRONTIER PORTFOLIO COMMON STOCKS Aspect Telecommunications......... 20,000 20,000 Casella Waste Systems............. 15,200 15,200 Keystone Automotive Industries.... 16,500 16,500 Metamor Worldwide................. 15,600 25,600 Premier Parks..................... 30,100 38,100 Primark........................... 12,300 19,400 Sanmina........................... 12,000 12,000 Henry Schein...................... 8,400 8,400 Superior Services................. 16,300 16,300 Transaction Systems Architects (Class A)....................... 11,600 11,600 COMMON STOCKS Barnes & Noble.................... 15,400 -- BISYS Group....................... 12,800 -- Ceridian.......................... 14,500 5,400 Duane Reade....................... 13,600 -- Equity Corporation................ 17,100 -- First Commonwealth Financial...... 71,700 -- Hearst-Argyle Television (Class A) 14,400 3,981 Jacor Communications.............. 13,350 -- Petersen Companies (Class A)...... 16,700 -- Waters............................ 7,300 -- - ------------- See footnotes on page P-9 P-2 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 SHARES -------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- COMMON STOCKS AES.............................. 2,700 2,700 Azkoyen.......................... 2,620 2,620 Banca Nazionale del Lavoro....... 38,000 38,000 CBS.............................. 2,500 2,500 CNP Assurances................... 3,940 3,940 Equant........................... 1,790 1,790 MCI WorldCom..................... 1,700 1,700 Motorola......................... 1,400 1,400 Newell........................... 2,000 2,000 Tyco International............... 2,000 2,000 SHARES -------------------- HOLDINGS REDUCTIONS DECREASE 12/31/98 - ----------- -------- -------- COMMON STOCKS Dayton Hudson.................... 2,600 -- Hewlett-Packard.................. 1,200 -- Koninklijke KNP BT............... 2,615 -- Lufthansa........................ 5,300 -- MBNA............................. 3,413 (1) -- Meitec........................... 2,000 -- Nokia (Series A)................. 775 2,125 Pfizer........................... 600 700 Sairgroup........................ 400 -- Secom............................ 1,000 -- DIVERSIFICATION OF NET ASSETS* DECEMBER 31, 1998
PERCENT OF NET ASSETS DECEMBER 31, ---------------------- ISSUES COST VALUE 1998 1997 ------ ---------- ---------- --------- ----------- COMMON STOCKS Aerospace........................................... 1 $ 50,559 $ 51,608 0.6 1.0 Automotive and Related.............................. 3 226,116 280,884 3.2 2.9 Business Goods and Services......................... 7 517,195 789,236 9.1 6.8 Capital Goods....................................... 1 33,259 41,038 0.5 -- Commerical Services................................. 1 17,004 17,015 0.2 -- Computer and Technology Related..................... 6 289,391 532,601 6.2 9.6 Construction and Property........................... 2 137,599 178,931 2.1 1.7 Consumer Goods and Services......................... 9 583,174 747,092 8.6 8.9 Diversified......................................... 2 203,453 283,556 3.3 3.3 Drugs and Health Care............................... 11 747,424 1,006,302 11.6 11.0 Electric and Gas Utilities.......................... 2 146,635 143,863 1.7 0.6 Electronics......................................... 5 330,533 370,945 4.3 3.3 Electronics Capital Equipment....................... 1 53,382 91,605 1.0 -- Entertainment and Leisure........................... 6 407,060 426,472 4.9 6.2 Financial Services.................................. 8 480,620 623,114 7.2 9.0 Industrial Goods and Services....................... 1 80,113 82,830 1.0 2.8 Manufacturing and Industrial Equipment.............. 1 91,885 94,142 1.1 0.9 Media............................................... 2 165,669 176,334 2.0 -- Publishing.......................................... -- -- -- -- 1.3 Resources........................................... 1 38,547 48,067 0.6 4.3 Restaurants......................................... 1 100,508 106,791 1.2 0.9 Retailing........................................... 6 493,171 646,104 7.5 2.9 Support Services.................................... 1 28,746 15,683 0.2 1.9 Telecommunications.................................. 13 705,573 985,956 11.4 8.1 Tobacco............................................. 2 191,357 286,998 3.3 1.9 Transportation...................................... 1 62,487 100,261 1.2 4.5 --- ---------- ---------- ----- ----- 94 6,181,460 8,127,428 94.0 93.8 Other Assets Less Liabilities....................... -- 515,867 515,867 6.0 6.2 --- ---------- ---------- ----- ----- NET ASSETS.......................................... 94 $6,697,327 $8,643,295 100.0 100.0 === ========== ========== ===== =====
- -------------- See footnotes on page P-9. P-3 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIO OVERVIEW (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO DIVERSIFICATION OF NET ASSETS* DECEMBER 31, 1998
PERCENT OF NET ASSETS DECEMBER 31, ---------------------- ISSUES COST VALUE 1998 1997 ------ ---------- ---------- --------- ----------- COMMON STOCKS Advertising...................................... 2 $ 211,674 $ 252,145 1.2 2.0 Automotive Parts Manufacturing................... 7 306,843 316,866 1.5 2.7 Building Materials............................... 2 237,355 155,942 0.7 1.4 Business Services................................ 23 2,068,653 2,411,983 11.6 10.1 Capital Goods.................................... 6 430,105 366,284 1.8 2.3 Chemicals........................................ 4 226,750 232,049 1.1 1.2 Computer Software................................ 10 697,965 1,112,982 5.3 5.1 Construction and Property........................ 18 1,304,347 1,258,732 6.0 6.3 Consumer Goods and Services...................... 26 1,582,670 1,827,101 8.8 6.8 Distributors..................................... 2 104,529 96,728 0.5 0.1 Drugs and Health Care............................ 21 1,472,654 1,639,746 7.9 6.5 Educational Services............................. 1 100,538 28,500 0.1 -- Electric Utilities............................... 3 316,252 391,958 1.9 0.2 Electrical Distribution.......................... 1 47,169 68,983 0.3 0.6 Electronics...................................... 12 655,443 598,790 2.9 5.8 Energy........................................... 2 176,070 143,073 0.7 0.9 Financial Services............................... 14 578,216 594,355 2.9 4.6 Independent Power Producers...................... -- -- -- -- 1.2 Industrial Goods and Services.................... 7 508,390 680,638 3.3 3.1 Leisure and Hotels............................... 5 420,833 468,434 2.3 1.5 Manufacturing.................................... 22 1,363,232 1,194,623 5.7 7.6 Media............................................ 14 1,282,376 1,467,441 7.1 5.3 Medical Products and Technology.................. 12 716,241 751,992 3.6 1.9 Metals........................................... 3 104,954 54,832 0.3 0.9 Paper and Printing............................... 2 97,020 59,763 0.3 0.5 Resources........................................ 2 88,896 71,078 0.3 -- Restaurants...................................... 3 171,370 306,658 1.5 1.4 Retailing........................................ 18 1,173,143 1,161,786 5.6 4.1 Semiconductors................................... 1 55,018 81,575 0.4 -- Support Services................................. 5 313,540 460,898 2.2 1.6 Technology....................................... 13 897,722 1,090,005 5.2 3.7 Telecommunications............................... 7 494,146 448,920 2.2 1.6 Transportation................................... 7 383,745 505,853 2.4 2.6 Veterinary Products.............................. 2 229,816 215,656 1.0 0.5 Miscellaneous.................................... 1 22,325 23,648 0.1 0.2 --- ----------- ----------- ----- ----- 278 18,840,000 20,540,017 98.7 94.3 Other Assets Less Liabilities.................... -- 274,045 274,045 1.3 5.7 --- ----------- ----------- ----- ----- NET ASSETS....................................... 278 $19,114,045 $20,814,062 100.0 100.0 === =========== =========== ===== =====
- ------------------ See footnotes on page P-9. P-4 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 SHARES ------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- COMMON STOCKS Hawesko Holding................... 2,442 2,442 Kaba Holding...................... 242 242 Metamor Worldwide................. 4,700 6,900 Nobel Biocare..................... 11,294 11,294 Premier Parks..................... 8,400 10,000 Primark........................... 6,100 6,100 Superior Services................. 5,100 5,100 Tandberg Television............... 22,300 24,900 TelePizza......................... 13,044 13,044 Transaction Systems Architects (Class A)....................... 3,600 3,600 SHARES --------------------- HOLDINGS REDUCTIONS DECREASE 12/31/98 - ----------- -------- -------- COMMON STOCKS BISYS Group....................... 2,900 -- Canandaigua Brands (Class A)...... 2,615 -- Ceridian.......................... 2,700 1,200 CMG............................... 6,000 12,000 Duane Reade....................... 3,000 -- F. I. Group....................... 30,000 55,176 Jacor Communications.............. 2,900 -- Montupet.......................... 4,339 2,101 Tamro (Series A).................. 30,000 -- Telinfo........................... 2,350 -- - ------------- See footnotes on page P-9. P-5 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIO OVERVIEW (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 SHARES ---------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- COMMON STOCKS Altran Technologies............ 350 350 DII Group...................... 3,500 3,500 Druid.......................... 3,500 3,500 Elec & Eltek International Holdings.................... 10,000 150,000 Koninklijke (Royal) Philips Electronics.................. 1,800 1,800 Microsoft...................... 900 900 Murata Manufacturing........... 2,000 2,000 SMART Modular Technology....... 2,200 2,200 STMicroelectronics............. 1,200 1,200 Tele-Communications (Series A) TCI Ventures Group........... 1,200 1,200 SHARES ---------------------- HOLDINGS REDUCTIONS DECREASE 12/31/98 - ----------- -------- -------- COMMON STOCKS American Power Conversion...... 1,400 -- Cable & Wireless............... 6,000 -- ECI Telecommunications......... 1,500 1,500 EMC............................ 1,300 2,000 L.M. Ericsson Telefon (Series B) 2,900 -- Flextronics International...... 1,000 -- KLA-Tencor..................... 1,300 -- Maxim Integrated Products...... 1,500 900 Novellus Systems............... 2,300 -- Pharmacia & Upjohn............. 920 -- DIVERSIFICATION OF NET ASSETS* DECEMBER 31, 1998
PERCENT OF NET ASSETS DECEMBER 31, ---------------------- ISSUES COST VALUE 1998 1997 ------ ---------- ---------- --------- ----------- COMMON STOCKS Computer and Business Services......................... 11 $ 483,955 $ 684,579 11.2 13.7 Computer Hardware/Peripherals.......................... 8 473,456 735,773 12.0 10.3 Computer Software...................................... 24 1,190,028 1,388,085 22.7 15.0 Contract Manufacturing/Circuit Boards.................. 3 150,195 204,719 3.3 -- Distributors........................................... 2 85,442 50,427 0.8 1.3 Electronics............................................ 11 617,824 717,300 11.7 9.5 Electronics Capital Equipment.......................... 6 219,812 263,780 4.3 8.9 Machinery and Equipment................................ 3 116,534 146,027 2.4 -- Media.................................................. 3 147,314 166,706 2.7 1.6 Medical Products and Technology........................ 6 263,929 254,630 4.2 4.2 Networking/Communications Infrastructure............... 5 177,025 244,728 4.0 6.7 Semiconductors......................................... 9 269,688 333,321 5.4 5.3 Telecommunications..................................... 10 351,836 511,510 8.3 3.8 Miscellaneous.......................................... 1 46,045 38,459 0.6 6.1 --- ---------- ---------- ----- ----- 102 4,593,083 5,740,044 93.6 86.4 Other Assets Less Liabilities.......................... -- 389,927 389,927 6.4 13.6 --- ---------- ---------- ----- ----- NET ASSETS............................................. 102 $4,983,010 $6,129,971 100.0 100.0 === ========== ========== ===== =====
- --------------------- See footnotes on page P-9. P-6 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 SHARES -------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- COMMON STOCKS Corporacion Bancaria de Espana Argentaria.............. 6,186 6,186 Credito Italiano................. 21,475 21,475 Hoechst.......................... 2,519 2,519 Istituto Nazionale delle Assicurazioni.................. 40,188 44,756 RWE.............................. 2,625 2,625 Siemens.......................... 1,678 1,678 Suez Lyonnaise des Eaux.......... 761 761 TOTAL............................ 1,148 1,148 Unilever......................... 1,814 1,814 Valeo............................ 1,494 1,494 SHARES -------------------- HOLDINGS REDUCTIONS DECREASE 12/31/98 - ----------- -------- -------- COMMON STOCKS Accor............................ 664 -- Bayer............................ 2,799 -- Bayerische Motoren Werke "BMW"... 119 -- Carrefour Supermarche............ 204 -- CS Holdings...................... 846 -- Deutsche Bank.................... 1,721 -- Lufthansa........................ 6,388 -- Mitsui........................... 45,000 5,000 MOL Magyar Olaj-es Gazipari (GDRs)......................... 4,400 -- Schneider........................ 1,408 -- DIVERSIFICATION OF NET ASSETS* DECEMBER 31, 1998
PERCENT OF NET ASSETS DECEMBER 31, ---------------------- ISSUES COST VALUE 1998 1997 ------ ---------- ---------- --------- ----------- COMMON STOCKS Automotive and Related................................. 3 $ 202,659 $ 207,920 2.1 -- Banking................................................ 12 954.810 1,245,952 12.6 9.6 Building Materials..................................... -- -- -- -- 0.5 Business Services...................................... 2 51,433 48,204 0.5 0.7 Chemicals.............................................. 4 247,379 219,846 2.2 4.6 Construction and Property.............................. 4 356,162 455,406 4.6 2.7 Consumer Products...................................... 7 493,301 641,441 6.5 0.8 Distributors........................................... -- -- -- -- -- Electronics............................................ 4 145,624 170,471 1.7 2.1 Entertainment and Leisure.............................. 1 133,373 185,695 1.9 -- Financial Services..................................... 6 235,503 271,241 2.7 2.5 Health and Household................................... 6 562,428 681,701 6.9 7.1 Industrial Goods and Services.......................... 7 394,076 617,532 6.2 6.3 Insurance.............................................. 5 479,278 813,187 8.2 5.6 Leisure and Hotels..................................... -- -- -- -- 3.2 Manufacturing.......................................... 4 335,229 336,127 3.4 4.6 Media.................................................. 1 79,894 120,721 1.2 4.0 Metals................................................. 1 5,199 4,734 0.1 2.3 Resources.............................................. 5 621,217 688,731 7.0 9.5 Restaurants............................................ -- -- -- -- 0.2 Retailing.............................................. 10 704,195 838,461 8.5 5.2 Telecommunications..................................... 13 931,282 1,227,761 12.4 11.3 Tobacco................................................ 2 91,939 134,946 1.4 2.0 Transportation......................................... 3 197,577 301,745 3.1 3.6 Utilities.............................................. 4 400,076 449,698 4.5 5.7 Miscellaneous.......................................... 2 25,642 19,625 0.2 0.2 --- ---------- ---------- ----- ----- 106 7,648,276 9,681,145 97.9 94.3 Other Assets Less Liabilities.......................... -- 211,684 211,684 2.1 5.7 --- ---------- ---------- ----- ----- NET ASSETS............................................. 106 $7,859,960 $9,892,829 100.0 100.0 === ========== ========== ===== =====
- ----------------- See footnotes on page P-9. P-7 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIO OVERVIEW (continued) - -------------------------------------------------------------------------------- LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 PRINCIPAL AMOUNT OR SHARES -------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- SELIGMAN HIGH-YIELD BOND PORTFOLIO CORPORATE BONDS Advanced Micro Devices 11%, 8/1/2003................ $125,000 $375,000 ALARIS Medical 0% (11 1/8%), 8/1/2008....... 300,000 300,000 B&G Foods 9 5/8%, 8/31/2007..... 120,000 120,000 Centennial Cellular 10 3/4%, 12/15/2008.......... 200,000 200,000 Golden Sky Systems 12 3/8%, 8/1/2006............ 325,000 325,000 Metrocall 11%, 9/15/2008........ 190,000 240,000 Price Communications Cellular Holdings 11 1/4%, 8/15/2008........... 190,000 190,000 Sun Healthcare Group 9 1/2%, 7/1/2007............. 130,000 280,000 Verio 11 1/4%, 12/1/2008........ 140,000 140,000 PREFERRED STOCKS Crown Castle International 12 3/4% 155 shs. 155 shs. PRINCIPAL AMOUNT OR SHARES -------------------- HOLDINGS REDUCTIONS DECREASE 12/31/98 - ----------- -------- -------- CORPORATE BONDS Centennial Cellular 10 1/8%, 5/15/2005........... $125,000 -- Clearview Cinema Group 10 7/8%, 6/1/2008............ 125,000 -- Diamond Triumph Automotive 9 1/4%, 4/1/2008............. 115,000 $ 60,000 ITC DeltaCom 11%, 6/1/2007...... 100,000 -- Jitney Jungle Stores 12%, 3/1/2006................ 75,000 150,000 Premier Parks 12%, 8/15/2003.... 100,000 -- Premier Parks 0% (10%), 4/1/2008........... 175,000 -- Ryder TRS 10%, 12/1/2006........ 150,000 -- Sprint Spectrum 11%, 8/15/2006.. 200,000 -- Unisys 12%, 4/15/2003........... 75,000 175,000 - -------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO CORPORATE BONDS GMAC 6 1/2%, 12/15/2005......... $200,000 $200,000 Heller Financial 5 7/8%, 11/1/2000............ 200,000 200,000 International Business Machines 5.37%, 9/22/2003.... 200,000 200,000 Sprint Capital 6 1/8%, 11/15/2008 200,000 200,000 US GOVERNMENT AGENCY SECURITIES US Government Title XI (Bay Transportation) 7.30%, 6/1/2021.............. 200,000 200,000 FHLMC Gold 5 1/2%, 7/1/2013............. 297,919 297,919 Federal National Mortgage Association: 5.90%, 6/19/2003............. 300,000 300,000 6.35%, 5/18/2005............. 300,000 300,000 5.795%, 1/1/2009............. 200,000 200,000 Government National Mortgage Association 6 1/2%, 12/15/2028........... 200,000 200,000 COMMON STOCKS Avon Products................... 1,700 shs. -- General Dynamics................ 2,300 1,500 shs. Marsh & McLennan................ 2,250 -- Penney (J.C.)................... 2,300 -- St. Paul Companies.............. 2,600 -- Texaco.......................... 3,600 -- CORPORATE BONDS Federated Department Stores 10%, 2/15/2001............... $500,000 -- US GOVERNMENT SECURITIES US Treasury Notes: 6 1/4%, 6/30/2002............ 200,000 $300,000 5 3/4%, 11/30/2002........... 300,000 -- 6 5/8%, 5/15/2007............ 500,000 500,000 - --------------- See footnotes on page P-9. P-8 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LARGEST PORTFOLIO CHANGES DURING THE SIX MONTHS ENDED DECEMBER 31, 1998 SHARES -------------------- HOLDINGS ADDITIONS INCREASE 12/31/98 - --------- -------- -------- SELIGMAN LARGE-CAP VALUE PORTFOLIO COMMON STOCKS Bristol-Myers Squibb.......... 1,100 1,100 Crown Cork & Seal............. 2,900 3,400 The Equitable Companies....... 2,100 2,700 Fannie Mae.................... 1,600 1,600 Georgia-Pacific Group......... 1,700 2,350 Goodrich (B.F.)............... 4,300 5,000 Penney (J.C.)................. 2,400 2,750 St. Paul Companies............ 3,000 3,000 Sears, Roebuck................ 3,400 4,000 United Healthcare............. 3,500 3,500 SELIGMAN SMALL-CAP VALUE PORTFOLIO COMMON STOCKS ABC Rail Products............. 7,000 7,000 AMRESCO....................... 10,000 10,000 Applied Extrusion Technologies............... 10,000 10,000 Bay View Capital.............. 3,200 3,200 Lamson & Sessions............. 11,500 15,500 Marine Drilling............... 7,000 8,800 Stage Stores.................. 7,500 7,500 Stewart & Stevenson Services................... 7,700 9,700 True North Communications..... 2,500 3,500 Windmere-Durable Holdings..... 13,500 13,500 - ------------- Largest portfolio changes from the previous period to the current period are based on cost of purchases and proceeds from sales of securities. * "Diversification of Net Assets" is included for the Seligman Henderson Portfolios because their portfolio holdings are listed by country rather than by industry in the "Portfolios of Investments." (1) Includes 1,138 shares received as a result of a 3-for-2 stock split. (2) Includes 70,980 shares received as a result of a 6-for-1 stock split. P-9 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- ANNUAL PERFORMANCE OVERVIEW - -------------------------------------------------------------------------------- The following charts compare a $10,000 hypothetical investment made in each of Portfolios of Seligman Portfolios, Inc. (with the exception of Seligman Cash Management Portfolio), for the 10-year period ended December 31, 1998, or since inception through December 31, 1998, if less than 10 years, to a $10,000 hypothetical investment made in the appropriate benchmark indices and averages for the same period. Accompanying each chart is a discussion of the investment strategy and sector performance that affected the Portfolio during the past year. SELIGMAN BOND 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. AVERAGE ANNUAL TOTAL RETURNS+ One Yr. Five Yrs. Ten Yrs. Seligman Bond Portfolio 8.20% 6.33% 7.43% Lehman Brothers Government Bond Index 9.85 7.19 9.17 Lipper Corporate Debt BBB-Rated Funds Average 6.45 7.07 9.12 Lipper Seligman Lehman Bros. Corporate Debt Bond Government BBB Rated Date Portfolio Bond Index Funds Average 12/31/1988 10000 10000 10000 03/31/1989 10020 10106 10130 06/30/1989 10564 10919 10755 09/30/1989 10584 11009 10809 12/31/1989 10870 11423 10973 03/31/1990 10689 11281 10761 06/30/1990 11008 11676 11115 09/30/1990 11051 11773 10997 12/31/1990 11514 12420 11412 03/31/1991 11805 12689 11903 06/30/1991 11973 12860 12163 09/30/1991 12600 13593 12891 12/31/1991 13219 14322 13564 03/31/1992 12990 14071 13573 06/30/1992 13351 14629 14115 09/30/1992 13940 15351 14825 12/31/1992 13958 15357 14834 03/31/1993 14403 16052 15679 06/30/1993 14731 16515 16264 09/30/1993 15097 17052 16882 12/31/1993 15072 16994 17000 03/31/1994 14640 16483 16379 06/30/1994 14476 16295 16012 09/30/1994 14595 16363 16146 12/31/1994 14562 16420 16123 03/31/1995 15064 17194 16893 06/30/1995 16101 18260 18205 09/30/1995 16431 18583 18656 12/31/1995 17355 19432 19566 03/31/1996 16773 18993 19122 06/30/1996 16707 19084 19215 09/30/1996 16873 19405 19650 12/31/1996 17371 19972 20390 03/31/1997 17248 19810 20272 06/30/1997 17810 20497 21114 09/30/1997 18372 21184 21932 12/31/1997 18932 21887 22475 03/31/1998 19117 22218 22861 06/30/1998 19653 22804 23330 09/30/1998 20540 24065 23756 12/31/1998 20485 24046 23925 Global financial turmoil throughout 1998 had investors throughout the world pursuing the perceived safety of the highest credit quality securities -- US Treasury bonds. At the same time, the Federal Reserve Board lowered the federal-funds rate while a federal budget surplus caused the overall supply of bonds to decrease, as the government needed less paper to finance spending. This combination of factors drove US Treasury yields to 30-year lows, which was positive for the Portfolio. The long bond began the year with a yield of 5.92%, and fell to a low of 4.70% before moving back up to close the year at 5.09%. During the year, as the spread between Treasuries and agency securities widened, we increased the Portfolio's exposure to agencies to pursue additional yield. As the year progressed, we reduced our exposure to mortgage-backed securities, selling higher-coupon securities as concerns over prepayments in a falling-interest-rate environment made other areas more attractive. This strategy was successful; however, even our reduced exposure placed a slight drag on performance in the third quarter as the flight to Treasuries hurt all other types of bonds. Going forward, we may shorten the Portfolio's duration as the rewards of maintaining a longer duration become less compelling. The Portfolio's duration is currently about 6.4 years, which is slightly longer than that of our benchmark, the Lehman Brothers Government Bond Index. In the coming year, ongoing global problems and the continuing disappearance of the US budget deficit should combine to keep supply low and demand high, a positive scenario for the Portfolio. In addition, we will continue to seek opportunities in non-Treasury securities to enhance the Portfolio's yield and total return. 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. Last year's economic environment of subdued inflation, low interest rates, and strong consumer demand pro vided a favorable backdrop for mid-capitalization (between $1 billion and $10 billion in market value) growth stocks. However, ongoing concerns regarding global financial problems produced a "flight to quality" that favored larger-cap stocks. This bias hurt the performance of small- and mid-cap stocks, despite their attractive fundamentals. However, in the fourth quarter, the market began to broaden to include a wider range of market caps -- a favorable development for the Portfolio. AVERAGE ANNUAL TOTAL RETURNS+ One Yr. Five Yrs. Ten Yrs. Seligman Capital Portfolio 22.19% 15.54% 15.98% Lipper Mid Cap Funds Average 11.37 15.44 16.51 Russell Midcap Growth Index 17.86 17.33 17.30 Lipper Rusell Seligman Mid Cap MidCap Capital Funds Growth Date Portfolio Average Index 12/31/1988 10000 10000 10000 03/31/1989 10179 10766 10631 06/30/1989 10775 11699 11675 09/30/1989 11968 12997 13072 12/31/1989 11647 12780 13148 03/31/1990 11276 12654 12685 06/30/1990 12639 13670 13771 09/30/1990 9662 11033 10984 12/31/1990 11276 12149 12473 03/31/1991 13516 14774 15352 06/30/1991 13696 14650 15114 09/30/1991 15363 15977 16354 12/31/1991 17935 17645 18341 03/31/1992 16742 17705 17781 06/30/1992 15508 16671 16954 09/30/1992 16691 17247 17862 12/31/1992 19153 19593 19937 03/31/1993 19785 19948 20117 06/30/1993 19435 20441 20119 09/30/1993 20721 21955 21475 12/31/1993 21385 22484 22168 03/31/1994 20713 21789 21481 06/30/1994 18896 20695 20536 09/30/1994 20613 22369 21994 12/31/1994 20403 22213 21688 03/31/1995 21672 23770 24033 06/30/1995 22974 25853 25962 09/30/1995 25046 28614 28520 12/31/1995 25947 29094 29056 03/31/1996 27687 30869 30930 06/30/1996 29584 32510 32087 09/30/1996 30297 33530 33178 12/31/1996 29712 34367 34137 03/31/1997 28525 32336 32891 06/30/1997 32422 37384 37732 09/30/1997 36227 42695 43011 12/31/1997 36043 41394 41829 03/31/1998 40066 46420 46823 06/30/1998 41061 45780 46795 09/30/1998 33136 37507 38985 12/31/1998 44040 46099 49304 - ----------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-10 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SELIGMAN CAPITAL PORTFOLIO (continued) Technology, telecommunication, and consumer-cyclical companies had a year of strong earnings, which translated into solid returns for the Portfolio. In technology, anything Internet-related performed extremely well. While we did not own any pure-play Internet companies -- due to their astronomical valuations and lack of earnings -- we nonetheless benefited from the Internet boom as many of our technology holdings are involved in building and maintaining the infrastructure of the Internet. The Portfolio's exposure to industrial companies hurt overall performance. Global deflation in commodity prices, along with fallout from the Asian Financial crisis, negatively impacted this sector. Although none of our industrial holdings had direct exposure to Asia, many of their customers did and thus were hurt indirectly. Going into 1999, conditions appear positive for the Portfolio. Valuations for many quality mid-cap stocks are attractive, especially relative to the larger-cap stocks whose prices were driven up during last year's narrow market run-up. If the market continues to broaden -- a trend that we began to see in the fourth quarter of 1998 -- the mid-cap stocks held by the Portfolio would benefit. In addition, we believe that, like last year, companies that can either meet or surpass earnings estimates will be rewarded, while companies that fall short will be punished severely. This is another positive for the Portfolio, which looks for companies with the potential for positive earnings surprises. As 1999 begins, we believe that the areas of broadcasting and advertising, telecommunications, and specialty retailers have good prospects for such earnings surprises. Finally, we see the biggest risks to the US market in 1999 coming from abroad. The Portfolio, however, should be largely insulated from this because the mid-cap companies in the Portfolio are domestic in nature, relying little on international markets for earnings growth. 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. AVERAGE ANNUAL TOTAL RETURNS+ One Yr. Five Yrs. Ten Yrs. Seligman Common Stock Portfolio 24.16% 18.16% 16.55% Lipper Growth & Income Funds Average 15.32 18.32 15.76 S&P 500 28.58 24.06 19.21 Seligman Lipper Growth Common & Income Stock Funds Date Portfolio Average S&P 500 12/31/1988 10000 10000 10000 03/31/1989 10394 10644 10709 06/30/1989 11025 11396 11655 09/30/1989 12099 12387 12903 12/31/1989 12411 12382 13169 03/31/1990 12300 12074 12772 06/30/1990 13079 12691 13576 09/30/1990 10771 11013 11710 12/31/1990 12020 11825 12760 03/31/1991 14169 13511 14614 06/30/1991 14034 13485 14580 09/30/1991 15010 14238 15360 12/31/1991 16006 15254 16647 03/31/1992 16311 15271 16226 06/30/1992 16180 15317 16534 09/30/1992 16843 15692 17055 12/31/1992 17949 16639 17913 03/31/1993 18593 17426 18696 06/30/1993 18789 17587 18787 09/30/1993 19260 18207 19272 12/31/1993 20092 18641 19719 03/31/1994 19274 18064 18972 06/30/1994 19381 18006 19051 09/30/1994 20360 18768 19983 12/31/1994 20101 18485 19979 03/31/1995 21545 19990 21925 06/30/1995 22901 21593 24019 09/30/1995 24331 23178 25928 12/31/1995 25583 24309 27489 03/31/1996 27339 25730 28965 06/30/1996 28582 26619 30266 09/30/1996 29129 27408 31201 12/31/1996 30719 29502 33803 03/31/1997 31067 29844 34709 06/30/1997 35022 34142 40770 09/30/1997 37666 37193 43823 12/31/1997 37267 37482 45082 03/31/1998 41570 41854 51371 06/30/1998 42166 41947 53066 09/30/1998 38846 36706 47786 12/31/1998 46269 43224 57964 In 1998, the US economy expanded for the eighth consecutive year. Low inflation, continued corporate earnings growth, and a benign interest rate environment combined to propel US stocks higher -- especially the largest, most liquid names, as investors tried to insulate themselves from global financial turmoil. The Portfolio, which generally invests in large-cap stocks, benefited from this year-long trend. The Portfolio remains broadly diversified among industry groups and individual holdings; however, we have reduced our number of holdings to focus on companies with stable earnings and dividend growth, which are selling at reasonable valuations relative to their industries. This approach was positive for the Portfolio during last summer's market downturn since it led us to underweight many excessively valued large-capitalization stocks, which were hit the hardest during that difficult environment. During the year, we increased our exposure to technology, and by year-end the industry represented 15% of the Portfolio. The group rallied in the fourth quarter, allowing these holdings to contribute positively to absolute performance; however, relative to the S&P 500 we lost some ground, since our weighting was slightly less than the 17% weighting of the Index. In addition to our technology holdings, the Portfolio benefited from our telecommunications and health care holdings. The weakest area of the Portfolio were cyclical stocks. While we were generally underweight in these issues, they did negatively impact results. Our energy stocks also adversely affected our returns. Weak demand from Asia, warm weather in the US, and an overall free-fall in commodity prices around the world all contributed to the poor showing of energy stocks in 1998. And while many of our energy holdings did better than the sector as a whole, they lagged the overall market in 1998. We believe that the fundamentals of the US economy remain strong and will provide a supportive environment for equities in 1999. However, we remain cautious of the high valuations on many of the largest stocks and fear that much of this has been driven by liquidity factors, not fundamentals. Therefore, we will look for companies with attractive valuations that more fully reflect their future prospects, and where we believe there is a catalyst for earnings acceleration going forward. - ------------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-11 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- ANNUAL PERFORMANCE OVERVIEW (continued) - -------------------------------------------------------------------------------- SELIGMAN COMMUNICATIONS AND INFORMATION 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. AVERAGE ANNUAL TOTAL RETURNS+ Since One Yr. Inception Seligman Communications and Information Portfolio 36.49% 25.67% Lipper Science & Technology Funds Average 52.55 30.32* S&P 500 28.58 28.47* *From September 30, 1994. Seligman Lipper Science C&I & Technology Date Portfolio Funds Average S&P 500 09/30/1994 10000 10000 10000 12/31/1994 10440 10609 9998 03/31/1995 11030 11341 10972 06/30/1995 14690 13639 12020 09/30/1995 16950 15816 12975 12/31/1995 14464 14927 13756 03/31/1996 13618 15028 14495 06/30/1996 13993 16059 15146 09/30/1996 15139 17368 15614 12/31/1996 15739 18169 16916 03/31/1997 14271 16522 17370 06/30/1997 16961 19545 20402 09/30/1997 22018 23298 21930 12/31/1997 19237 20229 22560 03/31/1998 22103 23674 25707 06/30/1998 21765 24414 26555 09/30/1998 18105 21787 23913 12/31/1998 26256 30859 29007 As was the case in the broader market, large-cap technology stocks outperformed their small- and mid-cap counterparts in 1998. As segments of the technology industry have matured, larger companies have frequently gained market share and dis proportionate profitability as purchasing power, incumbency, and customer preference for fewer vendors have continued to rise in importance. These trends were pronounced in the personal computer and data networking segments, where a few large com panies have prospered to the exclusion of all others. Further aiding the performance of large-cap technology stocks has been the ongoing popularity of the stocks of the S&P 500 and S&P 500 Index funds. Finally, the disappointing performance of large consumer and industrial companies, which have suffered profit shortfalls from the Asian and South American currency crises, has caused large-company fund managers to shift assets into big technology companies that continue to meet Wall Street expectations. The end result of these trends has been a snowballing of valuations, as already expensive stocks attain ever-higher absolute and relative valuations. In addition to large-cap technology companies, Internet companies also performed well. However, the Portfolio generally avoided pure-play Internet companies, given their high valuations, often negative cash flow, and typically cloudy profitability outlooks. The Portfolio's holdings in media stocks negatively affected performance. Although fundamentals were favorable throughout the year and our media holdings performed reasonably well, they underperformed relative to the largest-capitalization technology stocks. The weakest area of the Portfolio was the semiconductor-related sector, which went through a serious recession in the wake of the Asian financial crisis. However, this sector's fundamentals have recently begun to improve. The top-performing area of the Portfolio was computer hardware and peripherals, which was positively affected by Year 2000 testing, increased demand for data storage, and market-share consolidation in the computer industry. In the large-capitalization area we remain underweighted relative to the technology indices, although we do own significant positions in industry leaders. The Portfolio also holds many mid-capitalization technology companies with excellent fundamentals that have gone unappreciated by the market. In 1999, we believe that we will find attractive opportunities in radio broadcasting and cable television, semiconductor and semiconductor capital equipment companies, integrated circuit design software companies, mechanical design software companies, and entertainment software companies. - ------------------ The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-12 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. AVERAGE ANNUAL TOTAL RETURNS+ Since One Yr. Inception Seligman Frontier Portfolio (1.46)% 17.88% Lipper Small Cap Funds Average (0.40) 16.31* Russell 2000 Index (2.55) 14.09* Russell 2000 Growth Index 1.23 12.58* *From September 30, 1994. Seligman Lipper Frontier Russell 2000 Russell 2000 Small Cap Date Portfolio Growth Index Index Funds Average 09/30/1994 10000 10000 10000 10000 12/31/1994 10580 9926 9813 9961 03/31/1995 11300 10470 10265 10540 06/30/1995 12260 11509 11227 11482 09/30/1995 13780 12817 12336 12827 12/31/1995 14101 13007 12604 13130 03/31/1996 15443 13753 13247 13986 06/30/1996 17065 14557 13909 15073 09/30/1996 17731 14433 13957 15371 12/31/1996 17476 14470 14682 15751 03/31/1997 15855 12952 13923 14720 06/30/1997 19203 15226 16180 17245 09/30/1997 21455 17802 18588 20075 12/31/1997 20331 16343 17965 19098 03/31/1998 22650 18284 19773 21200 06/30/1998 22044 17235 18851 20330 09/30/1998 16839 13381 15053 15982 12/31/1998 20034 16544 17508 19021 The past year was a difficult one for small-company stocks. The greatest influence on both the Portfolio and the small-cap market was an ongoing reduction in expectations for corporate earnings throughout 1998. When conditions are positive, investors are generally willing to pay big premiums to own the faster rate of earnings growth that small-cap stocks typically enjoy. However, when there is earnings uncertainty (as was the case in 1998), investors avoid smaller companies, regardless of their attractive relative valuations and long-term growth prospects. In 1998, small-cap stocks were at a disadvantage on both the supply and demand side of the equation when judged against larger-cap stocks. From a supply standpoint, the stock market was headed toward a record year in terms of initial public offering (IPO) activity, until it cracked in mid-summer. New equity supply tends to disadvantage small-cap investors, because most new issues are for smaller companies. When an IPO successfully comes to market, fund managers, in general, become net sellers of other small-cap holdings to pay for the purchase. In addition, most of the money from individuals that poured into stocks this year was invested in the largest stocks. Even the tremendous inflows of money from foreign investors completely ignored small caps, as the global "flight to quality" benefited only the best-known American companies. To small-cap investors, the supply/demand equation became a vicious circle. Money flowing into large-cap funds (particularly index funds), went into the market's largest stocks, causing their prices to rise. With corporate earnings uncertainty, few investors wanted to buy small caps, an asset class with less liquidity and poor recent relative performance. One area of strength in the market that has traditionally benefited small-cap growth stocks was technology. Unfortunately, the majority of the technology sector's gains in 1998 were limited to large technology leaders and speculative pure-play Internet companies. Due to the Portfolio's small-cap mandate, we could not take advantage of opportunities in large-cap technology stocks. And due to our investment approach, which focuses on fundamentals, we would not chase over-priced Internet stocks. We believe that small-cap growth stocks are at such attractive valuations, compared to their long-term growth prospects, that 1999 could be the year they return to favor. Many of the large-cap market leaders of the past few years may find their earnings under continued pressure due to ongoing global financial problems. Small-company stocks derive the majority of their earnings from domestic sources, and should therefore should do well in spite of global difficulties. - ------------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-13 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- ANNUAL PERFORMANCE OVERVIEW (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES 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. AVERAGE ANNUAL TOTAL RETURNS+ Since One Yr. Inception Seligman Henderson Global Growth Opportunities Portfolio 21.60% 12.16% Lipper Global Funds Average 14.06 12.98* MSCI World Index 24.80 17.87* *From April 30, 1996. Seligman Henderson Global Growth Lipper MSCI Opportunities Global Funs World Date Portfolio Average Index 04/30/1996 10000 10000 10000 05/31/1996 10000 10116 10010 06/30/1996 10010 10106 10062 07/31/1996 9480 9666 9708 08/31/1996 9790 9915 9821 09/30/1996 9810 10214 10207 10/31/1996 9650 10221 10281 11/30/1996 9980 10720 10859 12/31/1996 9922 10731 10687 01/31/1997 10102 10970 10818 02/28/1997 10072 11008 10944 03/31/1997 10022 10822 10730 04/30/1997 10072 10962 11083 05/31/1997 10773 11643 11769 06/30/1997 11274 12126 12357 07/31/1997 11784 12724 12928 08/31/1997 11164 12056 12066 09/30/1997 11694 12784 12723 10/31/1997 11043 11973 12055 11/30/1997 11164 12001 12271 12/31/1997 11169 12145 12422 01/31/1998 11432 12265 12770 02/28/1998 12394 13134 13636 03/31/1998 13022 13778 14214 04/30/1998 13397 13964 14354 05/31/1998 13245 13779 14176 06/30/1998 13326 13802 14515 07/31/1998 13508 13752 14493 08/31/1998 11473 11691 12563 09/30/1998 11422 11786 12788 10/31/1998 12010 12588 13946 11/30/1998 12769 13274 14778 12/31/1998 13581 13853 15502 During the first half of 1998, world markets rose strongly by about 25%, led by Continental Europe and fueled by expectations of lower inflation and falling interest rates. After mid-July, the combination of the Russian debt default, speculative attacks against emerging market currencies, and a worse-than-expected economic impact from Asia on the rest of the world led to sharp market corrections. Then, in October, markets recovered as interest rates were cut in many parts of the world and a coordinated program of support for the world's financial system was implemented. During the year, the Portfolio's bias for stocks with higher earnings growth and a preference for Continental European markets were major positive factors. However, Asian and other emerging market investments dampened relative performance even though we had significantly reduced exposure to these markets during the year. The Portfolio remained broadly invested in our four major growth themes. During the year, we reduced exposure to the Productivity theme while increasing exposure to the more stable Quality-of-Life theme, with its emphasis on health care stocks. Our exposure to the Consumption theme remained virtually unchanged, but we shifted our geographical focus away from Asia and the emerging markets toward Europe. In general, within each theme, we shifted the Portfolio's investments toward those with greater earnings reliability. Profit growth around the world has become more scarce and uncertain, which has increased market volatility everywhere. However, a global economic recession accompanied by prolonged deflation is unlikely, as there is still room for lower interest rates. Meanwhile, the world has an excess of industrial capacity. Until demand rises sufficiently to meet it, pricing power will be scarce in industrial goods markets. The service sector businesses in which the Portfolio's investments are concentrated are likely to perform well in such an environment. During times of subdued profit advance, high-quality growth stocks tend to perform well. And when there is a high level of near-term uncertainty, it is appropriate to look at the secular trends which are most likely to drive wealth creation. Accordingly, we will continue to use a thematic approach to identify superior growth opportunities in which to invest. SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES 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. AVERAGE ANNUAL TOTAL RETURNS+ Since One Yr. Inception Seligman Henderson Global Smaller Companies Portfolio 6.58% 11.60% Lipper Global Small Cap Funds Average 0.75 7.91* Salomon Smith Barney EM Index World 5.93 9.43* *From September 30, 1994. Seligman Henderson Global Smaller Lipper Global Companies Small Cap Funds Salomon Smith Barney Date Portfolio Average EM Index World 10/11/1994 10000 10000 10000 12/31/1994 10353 9649 9724 03/31/1995 10594 9585 9997 06/30/1995 10886 10373 10404 09/30/1995 11860 11311 11110 12/31/1995 12152 11341 11352 03/31/1996 13246 12150 11969 06/30/1996 14589 12911 12460 09/30/1996 14464 12800 12459 12/31/1996 14421 13084 12774 03/31/1997 14196 12872 12396 06/30/1997 15810 14220 13793 09/30/1997 16023 14930 14658 12/31/1997 14915 13720 13844 03/31/1998 17260 15552 15649 06/30/1998 17329 15208 15285 09/30/1998 14433 12055 12651 12/31/1998 15897 13824 14665 During 1998, smaller US companies generally posted dis appointing returns, lagging well behind their larger counterparts. In the UK, this divergence was less pronounced than in the US, but was nevertheless significant, and the environment there remains difficult for small caps. Smaller companies in Continental Europe, with the notable exception of Norway, generally performed well, though still lagging large caps. The economic background in Japan continued to deteriorate throughout the year as the economy appeared to be in the grip of deflation, - -------------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-14 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) a banking crisis, and policy paralysis. Despite this environment, smaller companies in Japan returned 18.7% in US dollar terms, 14% ahead of the return from large companies. Japan was the only one to see outperformance from smaller companies. Smaller companies in Asia, excluding Japan, fell 14.2% during 1998, underperforming large companies. The Portfolio's allocation to US equities rose from a low of 41.7% in January to 52.7% at the end of December. For much of the year, the allocation was in the mid-40% range, but we increased this allocation in the fourth quarter, given the attractive combination of growth opportunities and valuation levels. The Portfolio maintained a neutral to slightly overweight position in Continental Europe throughout the period, starting the year at 22.1%, rising to 22.6% in June, and ending the year at 19.0%. During the year, the Portfolio reduced exposure to the more cyclical sectors of the market where pricing pressure is likely to be most damaging for smaller companies. The Portfolio was underweighted in Japan for the whole period. At the beginning of the year, our allocation was 5.6% and rose to 6.5% by year-end. In the rest of Asia, the Portfolio began the year underweighted and ended with a neutral weight of 2.9%. Signs of an improved economic background and confirmation of improvements at the corporate level need to be seen before we will increase the Portfolio's allocation to this region. Volatility, which was the defining characteristic of equity markets in 1998, does not favor small caps. The current focus on large companies may continue, but with the valuation gap between large and small caps now looking very stretched, and earnings forecasts in many regions better for small companies than for large, the global small-cap market looks attractive as we begin 1999. SELIGMAN HENDERSON GLOBAL TECHNOLOGY 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. AVERAGE ANNUAL TOTAL RETURNS+ Since One Yr. Inception Seligman Henderson Global Technology Portfolio 36.80% 22.02% Lipper Global Funds Average 14.06 12.98* Lipper Science & Technology Funds Average 52.55 25.95* MSCI World Index 24.80 17.87* *From April 30, 1996. Seligman Henderson Lipper Lipper Global Global Science & MSCI Technology Funds Technology World Date Portfolio Average Funds Average Index 05/01/1996 10000 10000 10000 10000 05/31/1996 10000 10116 10355 10010 06/30/1996 9860 10106 9637 10062 07/31/1996 8830 9666 8762 9708 08/31/1996 9250 9915 9307 9821 09/30/1996 9970 10214 10423 10207 10/31/1996 9880 10221 10251 10281 11/30/1996 10400 10720 11120 10859 12/31/1996 10401 10731 10904 10687 01/31/1997 11137 10970 11667 10818 02/28/1997 10663 11008 10712 10944 03/31/1997 9957 10822 9916 10730 04/30/1997 10109 10962 10245 11083 05/31/1997 11379 11643 11651 11769 06/30/1997 11328 12126 11730 12357 07/31/1997 12638 12724 13241 12928 08/31/1997 12729 12056 13294 12066 09/30/1997 13525 12784 13982 12723 10/31/1997 12648 11973 12673 12055 11/30/1997 12779 12001 12539 12271 12/31/1997 12432 12145 12140 12422 01/31/1998 12702 12265 12467 12770 02/28/1998 14662 13134 13918 13636 03/31/1998 14803 13778 14208 14214 04/30/1998 15331 13964 14782 14354 05/31/1998 14932 13779 13691 14176 06/30/1998 15108 13802 14652 14515 07/31/1998 14897 13752 14419 14493 08/31/1998 11880 11691 11525 12563 09/30/1998 12761 11786 13075 12788 10/31/1998 13899 12588 14057 13946 11/30/1998 15367 13274 15889 14778 12/31/1998 17007 13853 18520 15502 In 1998, the technology industry significantly outperformed the broad market in most countries, with US and European tech stocks leading the way. Inventory issues in the PC market early in the year led to severe underperformance by cyclical technology shares but, by the late autumn, strong PC demand combined with constrained production produced strong year-end results. The dramatic growth of Internet usage represented perhaps the single most significant contributor to the growth of the technology market. Consumer enthusiasm for getting on-line drove heavy retail demand for PCs, while the explosion in data traffic obliged communications carriers to upgrade and extend their network infrastructure. Consequently, we have seen tremendous strength in the networking and communications equipment markets. This was matched by growth in wireless where subscriber growth, particularly in Europe, has vastly exceeded expectations. Throughout the year we remained heavily focused on the US as the global technology leader and on Europe as the market that seems to be positioned for a period of strong growth. We maintained a modest weighting in Asia and continue to believe that the best investment prospects lie outside that region. With corporate profit growth in the broad stock market slowing markedly in the current deflationary climate, the exceptional growth rates being delivered by technology companies are commanding ever-higher valuations. As we begin 1999, the industry's absolute fundamentals are good and continue to improve, and relative fundamentals are among the best seen in 15 years. - -------------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-15 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- ANNUAL PERFORMANCE OVERVIEW (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON INTERNATIONAL 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. AVERAGE ANNUAL TOTAL RETURNS+ One Five Since Yr. Yr. Inception Seligman Henderson International Portfolio 15.81% 8.67% 10.20% Lipper International Funds Average Index 12.80 7.78 10.16* MSCI EAFE Index 20.33 9.50 9.88* *From April 30, 1993. Seligman Lipper Henderson International MSCI International Funds Average EAFE Date Portfolio Index Index 05/03/1993 10000 10000 10000 06/30/1993 10010 10004 10057 09/30/1993 10480 10873 10731 12/31/1993 11440 11907 10831 03/31/1994 10987 11813 11216 06/30/1994 11399 11946 11797 09/30/1994 11751 12318 11816 12/31/1994 11591 11829 11704 03/31/1995 11428 11635 11931 06/30/1995 11765 12120 12028 09/30/1995 12603 12717 12539 12/31/1995 12905 12975 13057 03/31/1996 13228 13555 13443 06/30/1996 13603 14047 13666 09/30/1996 13520 13984 13659 12/31/1996 13819 14551 13887 03/31/1997 13925 14752 13680 06/30/1997 15802 16396 15466 09/30/1997 15716 16622 15367 12/31/1997 14973 15351 14173 03/31/1998 17295 17608 16269 06/30/1998 17682 17733 16453 09/30/1998 14719 14875 14125 12/31/1998 17340 17316 17056 The year began with international stock markets rising strongly. However, this ended abruptly during the summer when Russia's default on its debt produced significant financial consequences around the globe. During the third quarter, stock markets fell sharply, but rebounded strongly during the fourth quarter. Inflation remained low, causing long-bond yields to decline, and enabling central banks around the world to respond quickly to the global financial crisis by cutting short rates, a process that is likely to continue. UK markets followed the fortunes of the rest of the world during the year, falling dramatically from July highs, but recovering by year-end. We remained overweighted in the UK as we viewed that market as a defensive bet relative to the rest of the world. The Portfolio was heavily overweighted in Continental Europe during the year, which contributed positively to performance. Lower interest rates, anticipation of the European Monetary Union, and strong forecasted earnings growth helped lift these stocks higher in the first half of the year, allowing Continental Europe to outperform most other regional markets. The Portfolio will likely maintain this regional overweighting as economic growth in Europe should be among the most resilient in the world. The Portfolio maintained a very low weighting in Japan throughout the year because we did not anticipate any near-term economic recovery in this troubled market. We do not expect a speedy solution to the banking crisis nor sufficient stimulus to boost the economy, and believe significant risks for the Japanese market remain. During the year, we maintained minimal exposure to the Pacific markets, which were down by 5.1% on average, and expect to remain underweighted in this region over the near term. In other emerging markets, which suffered greatly in an environment of falling commodity prices and slowing global economic growth, we maintained only limited exposure. International stock markets continue to look more secure as interest-rate reductions boost investor sentiment. But despite these improvements, risks remain and markets must account for slower economic and corporate profit growth. Within this context, we expect continental Europe, the UK, and select emerging markets to offer attractive return potential, as we believe corporate earnings have the greatest potential in these regions. In contrast, we believe that Japan and the Pacific region will remain depressed over the near term. - ------------ The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-16 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD BOND 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. AVERAGE ANNUAL TOTAL RETURNS+ Since One Yr. Inception Seligman High-Yield Bond Portfolio 1.02% 10.25% Lipper High Current Yield (0.30) 9.63* Merrill Lynch High Yield Master Index 3.66 10.36* *From April 30, 1995. Seligman Henderson High-Yield Lipper High Merrill Lynch Bond Current High-Yield Date Portfolio Yield Master Index 05/01/1995 10000 10000 10000 06/30/1995 10030 10391 10264 09/30/1995 10300 10694 10589 12/31/1995 10737 11049 10903 03/31/1996 11126 11211 11214 06/30/1996 11341 11364 11437 09/30/1996 11872 11808 11978 12/31/1996 12307 12272 12414 03/31/1997 12252 12400 12501 06/30/1997 13022 12990 13167 09/30/1997 13824 13497 13870 12/31/1997 14164 13846 14058 03/31/1998 14820 14232 14662 06/30/1998 14987 14471 14715 09/30/1998 13925 13953 13640 12/31/1998 14309 14354 14016 A very unusual combination of events forced a liquidity squeeze on the high-yield market in 1998. The global stock market decline which began in July caused many high-yield issuers to lose another potential source of financing and thus much-needed financial flexibility. Then, when rumors began to circulate that Russia and a number of Asian countries would default on their debt, mutual funds with direct emerging market exposure faced significant redemptions and sold their most stable assets -- domestic high-yield bonds -- to meet those redemptions. While the Portfolio had no direct emerging market exposure, the selling pressure created by those funds led to repricing of domestic high-yield issues. Finally, additional downward pressure was created following the announcement of the bailout of Long-Term Capital Management (LTCM), which had many high-yield investments. Unfortunately, because LTCM was so secretive about its holdings, no one knew which bonds would be most impacted, so the whole market repriced downward. In the fourth quarter, the high-yield market rebounded, for a number of reasons. The most compelling was that bargain hunters moved in to an oversold market. Mutual fund investors, pension funds, and insurance companies poured billions of dollars into the attractively priced high-yield market. Other important factors contributing to the rebound included Federal Reserve Board Chairman Alan Greenspan's positive statements, the Federal Reserve Board's rate cuts, and the recovery of the equity markets. Defensive sectors such as cable, publishing, and gaming all did well in 1998. The hardest-hit areas of the high-yield market were those that require additional funding to meet their respective business plans. Fortunately, the Portfolio's exposure to those issues was minimal. Another area hit hard was nursing homes. The prospective payment system recently put in place has created some short-term challenges in this area, but we think that there are long-term opportunities in nursing home providers. In our opinion, this sector was oversold in 1998. During the year, we increased the Portfolio's exposure to health care, paging, publishing, and rural cellular providers. A strong US economy, featuring modest gross domestic product (GDP) growth, low interest rates, and a federal budget surplus should allow defaults in the high-yield market to remain modest. In this environment, our investment strategy remains unchanged. We prefer domestic issuers with predictable cash flows, dominant market shares, high cash flow margins (which are indicative of pricing power), and strong management teams. We have no emerging market exposure and avoid purchasing defaulted and distressed bonds. - ----------------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-17 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- ANNUAL PERFORMANCE OVERVIEW (continued) - -------------------------------------------------------------------------------- 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. AVERAGE ANNUAL TOTAL RETURNS+ One Yr. Five Yrs. Ten Yrs. Seligman Income Portfolio 7.76% 7.77% 10.29% Lehman Brothers Aggregate Bond Index 8.69 7.27 9.26 Lipper Income Funds Average 7.85 10.68 11.61 S&P 500 28.58 24.06 19.21 Lehman Lipper Seligman Brothers Income Income Aggregate Funds Date Portfolio Bond Index Average S&P 500 12/31/1988 10000 10000 10000 10000 03/31/1989 10339 10114 10428 10709 06/30/1989 10976 10920 11111 11655 09/30/1989 11255 11043 11633 12903 12/31/1989 11461 11454 11823 13169 03/31/1990 11440 11363 11558 12772 06/30/1990 11546 11779 11901 13576 09/30/1990 10398 11880 11071 11710 12/31/1990 10761 12481 11702 12760 03/31/1991 11973 12830 12777 14614 06/30/1991 12472 13038 12878 14580 09/30/1991 13491 13779 13817 15360 12/31/1991 14086 14477 14640 16647 03/31/1992 14662 14292 14640 16226 06/30/1992 15025 14870 15059 16534 09/30/1992 15576 15509 15587 17055 12/31/1992 16299 15551 15987 17913 03/31/1993 17187 16193 16952 18696 06/30/1993 17659 16622 17326 18787 09/30/1993 18188 17056 17944 19272 12/31/1993 18316 17066 18051 19719 03/31/1994 17543 16576 17377 18972 06/30/1994 17012 16406 17308 19051 09/30/1994 17591 16506 17751 19983 12/31/1994 17223 16568 17425 19979 03/31/1995 17845 17404 18493 21925 06/30/1995 19055 18463 19694 24019 09/30/1995 20178 18825 20697 25928 12/31/1995 20319 19627 21596 27489 03/31/1996 20570 19280 22062 28965 06/30/1996 20839 19390 22468 30266 09/30/1996 21012 19748 22894 31201 12/31/1996 21672 20341 23958 33803 03/31/1997 21796 20227 23993 34709 06/30/1997 23217 20969 25833 40770 09/30/1997 24350 21666 27337 43823 12/31/1997 24711 22302 27801 45082 03/31/1998 26107 22650 29311 51371 06/30/1998 26107 23180 29427 53066 09/30/1998 25557 24161 28168 47786 12/31/1998 26628 24243 29983 57964 In 1998, the US economy expanded for the eighth year in a row. Low inflation, continued corporate earnings growth in a benign interest rate environment, and an investor "flight to quality" all pushed US equity and fixed-income markets higher. On the equity side, the movement to securities that were considered safer was positive for the biggest US stocks, but caused a narrowing of the market that excluded many stocks. On the fixed-income side, this trend was positive for US Treasuries, as global demand for securities backed by the US government grew. US corporate securities, on the other hand, did not fare as well in comparison. While the Portfolio remains well diversified among industry groups and individual holdings, we have reduced the number of holdings in the Portfolio to focus on companies with dividend yields equal to, or greater than the S&P 500, and those with valuations at the lower end of their industry group. This approach led us to underweight many of the excessively-valued large-capitalization stocks that were hit the hardest by last summer's market downturn. During the year, we significantly reduced the Portfolio's international holdings because of ongoing global economic problems. We continued to reduce the convertible securities in the Portfolio, which helped to increase returns without increasing overall risk. We also increased the Fund's fixed-income holdings, as we felt that real interest rates were attractive. However, our fixed-income exposure was heavily weighted to corporate bonds, which underperformed Treasuries. Due to our concerns regarding large-cap equity valuations, we ended 1998 underweighted in equities. With the strong results in the equity markets in 1998, our underweighting in stocks negatively impacted our relative performance. If the stock market corrects in 1999, we would use the opportunity to add to positions in high-quality companies at more attractive valuations. We continue to believe that the US economy is an attractive environment for investing in financial markets. We do not see any reason for a significant rise in interest rates in 1999 as long as corporate profits and overall economic growth continue to be moderate. Deflationary concerns outside the US should benefit the fixed-income marketplace. Within the equity markets, we remain cautious of the high valuations on many of the largest stocks, and fear that much of this has been driven by liquidity factors, not fundamentals. Therefore, we are focusing on identifying companies whose valuations more fully reflect their future prospects, and where we believe there is a catalyst for earnings acceleration going forward. - -------------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-18 SELIGMAN PORTFOLIOS, INC. SELIGMAN LARGE-CAP VALUE 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. TOTAL RETURNS+ Since Inception Seligman Large-Cap Value Portfolio (0.26)% Russell 1000 Index 10.91* Russell 1000 Value Index 2.87* S&P 500 11.71* *From April 30, 1998. Seligman Large Cap Russell Rusell Value 1000 1000 Date Portfolio Index Value Index S&P 500 05/01/1998 10000 10000 10000 10000 05/31/1998 9990 9852 9784 9828 06/30/1998 9920 9978 10146 10227 07/31/1998 9550 9802 10024 10118 08/31/1998 7980 8344 8526 8655 09/30/1998 8050 8823 9100 9209 10/31/1998 9000 9507 9819 9958 11/30/1998 9940 9950 10427 10562 12/31/1998 9974 10288 11091 11170 The period under review was a difficult one for the Portfolio, and for value funds in general. As investors worried about everything from deflationary pressures in the US to devalued currencies in emerging markets, the largest, most liquid growth companies in the US -- companies with proven track records of growing earnings in the past -- benefited from a "flight to quality." Large-capitalization growth stocks were among the year's biggest winners, but to the exclusion of large-capitalization value stocks. The Portfolio's most heavily weighted sector, financial stocks, suffered to an even greater degree than the broader market during the difficult third quarter, which was characterized by concerns and uncertainties regarding the global financial crisis. The Portfolio's performance was also hurt by the strength in technology stocks in general and Internet stocks in particular, where a virtual mania developed. This resulted in a speculative trading market that became extremely divergent. Value stocks, which are low priced, do not do well in this type of environment. In 1999, we expect a slowdown in domestic gross domestic product (GDP) to about 2.5 percent. Trade should continue to come under pressure and there could be a meaningful decline in capital spending, resulting in a period of slowing job creation and reduced income gains. Unemployment may rise somewhat and inflation should remain muted. We think one of the major investment themes for 1999 will be restructuring and consolidating, as managements continue to attempt to grow profits in a slow growth environment. In commodity price-sensitive businesses, this will slowly bring supply into better balance. - -------------- The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. See footnote on page P-20. P-19 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- ANNUAL PERFORMANCE OVERVIEW (continued) - -------------------------------------------------------------------------------- SELIGMAN SMALL-CAP VALUE 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. TOTAL RETURNS+ Since Inception Seligman Small-Cap Value Portfolio (17.00)% Lipper Small Cap Funds Average (11.01)* Russell 2000 Value Index (14.09)* *From April 30, 1998. Seligman Lipper Small-Cap Russell 2000 Small Cap Value Value Funds Date Portfolio Index Average 05/01/1998 10000 10000 10000 05/31/1998 9500 9646 9437 06/30/1998 9150 9592 9512 07/31/1998 8460 8841 8830 08/31/1998 6350 7456 7063 09/30/1998 6420 7878 7477 10/31/1998 6850 8112 7783 11/30/1998 7290 8332 8291 12/31/1998 8300 8593 8899 The greatest influence on both the Portfolio and the small-cap market was an ongoing reduction in expectations for corporate earnings throughout 1998. When conditions are positive, investors are generally willing to pay big premiums to own the faster rate of earnings growth that small-cap stocks typically enjoy. However, during periods of earnings uncertainty (as in 1998), investors do not want to own smaller companies, regardless of valuations. We responded to this environment by staying focused on our investment discipline. We bought what we considered to be quality companies with favorable long-term return prospects. In retrospect, a winning strategy for small-cap investors in 1998 would have been to emphasize those "concept" companies that have no earnings, or high-tech companies where valuations are well above what a traditional value investor is willing to pay. However, we remained committed to our long-term value approach to investing. To change one's investment style in order to fit with what is working in the market today is better known as style rotation, and it is something we will not do. The Portfolio benefited from having owned five companies that were taken over during 1998. While we do not buy stocks simply because we think they will be taken over, takeovers are a logical outcome given that our investment process is often focused on those companies that sell at a discount to their private market value. We generally avoid investing in companies where the movement in the price of a commodity (gold, oil, interest rates, etc.) far outweighs any impact management can make. However, we did add two energy-related investments earlier this year, based on a discount to net asset value, already significant price declines, unseasonably mild weather for the prior year, and potential demand recovery in Asia. While these investments have not yet paid off, we believe that, at some point, when energy prices come back, so will these stocks. Current valuations suggest that a period of significant catch-up for small-cap stocks, in general, and small-cap value stocks, in particular, is coming. We are not market timers and we do not know if 1999 will be the year that these stocks will rebound. But for investors seeking long-term capital appreciation who can withstand greater volatility, small-cap value remains an attractive investment area. - ------------ The investment return and principal value of an investment will fluctuate. Shares, if redeemed, may be worth more or less than their original cost. Past performance is not indicative of future investment results. + Performance data quoted represent past performance and assume that all dividends and distributions are invested in additional shares. P-20 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN BOND PORTFOLIO PRINCIPAL AMOUNT VALUE --------- --------- US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES -- 49.8% US GOVERNMENT SECURITIES - -- 36.0% US Treasury Bonds: 8 3/4%, 5/15/2020............. $500,000 $ 711,562 6 5/8%, 2/15/2027............. 900,000 1,064,812 US Treasury Notes: 6 1/4%, 10/31/2001............ 300,000 312,563 6 1/4%, 6/30/2002............. 200,000 209,938 6 5/8%, 5/15/2007............. 300,000 337,500 ---------- Total US Government Securities (Cost $2,422,781)............. 2,636,375 ---------- US GOVERNMENT AGENCY SECURITIES -- 13.8% Aid-Israel 0%, 11/15/2010........ 500,000 264,565 Federal National Mortgage Association: 5.795%, 1/1/2009.............. 150,000 150,750 6%, 12/1/2028+................ 200,000 197,438 Government National Mortgage Association, Mortgage-backed Passed-through Certificates:+ 6 1/2%, 12/15/2028............ 200,000 202,188 6%, 12/20/2028................ 200,000 198,250 ---------- Total US Government Agency Securities (Cost $1,016,711)............. 1,013,191 ---------- TOTAL US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES (Cost $3,439,492)............. 3,649,566 ---------- CORPORATE BONDS -- 41.6% AT&T Capital Corp. 6 1/4%, 5/15/2001............. 200,000 197,455 Associates Corporation of North America 6 1/2%, 8/15/2002..... 200,000 206,682 Barrett Resources 7.55%, 2/1/2007............... 200,000 192,784 Capital One Bank 8 1/8%, 3/1/2000.............. 150,000 152,657 PRINCIPAL AMOUNT VALUE --------- --------- CORPORATE BONDS (continued) Cardinal Health 6 1/4%, 7/15/2008............. $100,000 $ 102,559 Chrysler Financial 6.09%, 4/6/2001............... 200,000 203,302 Dell Computer 6.55%, 4/15/2008.............. 200,000 208,111 Equifax 6.30%, 7/1/2005............... 100,000 103,125 First Data Corp. 5.80%, 12/15/2008............. 100,000 99,085 First USA Bank 5 3/4%, 1/15/1999............. 100,000 100,001 Loewen Group International 7 1/2%, 4/15/2001............. 200,000 179,000 Petroleum Georgia Pacific 7 1/2%, 3/31/2007............. 200,000 213,092 Philip Morris 7 1/8%, 8/15/2002............. 200,000 209,865 Sprint Capital 6 1/8%, 11/15/2008............ 200,000 204,446 Time Warner 9 1/8%, 1/15/2013............. 200,000 253,788 Viacom 7 3/4%, 6/1/2005.............. 200,000 218,662 Woolworth 7%, 6/1/2000.................. 200,000 200,064 ---------- TOTAL CORPORATE BONDS (Cost $2,995,620)............. 3,044,678 ---------- REPURCHASE AGREEMENT -- 5.5% (Cost $400,000)............... State Street Bank and Trust 4.45%, dated 12/31/1998, maturing 1/4/1999 collateralized by: $300,000 US Treasury Notes 11 5/8%, 11/15/2004, with a fair market value of $408,353...... 400,000 400,000 ---------- TOTAL INVESTMENTS - 96.9% (Cost $6,835,112)............. 7,094,244 OTHER ASSETS LESS LIABILITIES - 3.1%............ 226,112 ---------- NET ASSETS - 100.0%.............. $7,320,356 ========== - ------------- + Investments in mortgage-backed securities are subject to principal paydowns. As a result of prepayments from refinancing or satisfaction of the underlying mortgage instruments, the average life may be less than the original maturity. This in turn may impact the ultimate yield realized from these investments. See Notes to Financial Statements. P-21 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN CAPITAL PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 96.3% BASIC MATERIALS -- 2.2% Crompton & Knowles............... 12,000 $ 248,250 Minerals Technologies............ 7,100 290,656 ---------- 538,906 ---------- CAPITAL GOODS -- 10.3% Applied Power (Class A).......... 16,900 637,975 General Dynamics................. 7,100 416,237 Molex............................ 15,500 590,453 Pall............................. 19,900 503,719 Rayovac*......................... 12,200 325,587 ---------- 2,473,971 ---------- COMMUNICATIONS SERVICES -- 6.1% Century Telephone Enterprises.... 13,400 904,500 Tele-Communications (Series A) TCI Ventures Group*........... 24,400 577,212 ---------- 1,481,712 ---------- CONSUMER CYCLICALS -- 23.6% Apollo Group (Class A)*.......... 6,700 226,544 Circuit City Stores-Circuit City Group......................... 6,900 344,569 Fastenal......................... 5,600 246,225 General Nutrition*............... 11,400 184,894 HA-LO Industries*................ 6,400 240,800 Harley-Davidson.................. 7,600 360,050 Interpublic Group of Companies... 8,100 645,975 ITT Educational Services*........ 17,500 595,000 Lancaster Colony................. 7,900 253,294 Leggett & Platt.................. 13,000 286,000 Lowe's Companies................. 6,100 312,244 Office Depot*.................... 18,700 690,731 Service Corp. International...... 10,600 403,462 Snyder Communications*........... 7,600 256,500 TJX Companies.................... 12,300 356,700 Williams-Sonoma*................. 7,000 282,188 ---------- 5,685,176 ---------- CONSUMER STAPLES -- 17.3% Cardinal Health.................. 4,500 341,438 CBS.............................. 19,900 651,725 Chancellor Media*................ 6,900 330,122 Clorox........................... 2,300 268,669 Deluxe........................... 13,100 478,969 Dial............................. 14,500 418,688 SHARES VALUE -------- --------- CONSUMER STAPLES (continued) Infinity Broadcasting (Class A)*. 23,000 $ 629,625 Kroger*.......................... 10,100 611,050 Newell........................... 10,600 437,250 ---------- 4,167,536 ---------- ENERGY -- 1.4% Anadarko Petroleum............... 7,300 225,388 Enron Oil & Gas.................. 6,100 105,225 ---------- 330,613 ---------- FINANCIAL SERVICES -- 10.0% AFLAC............................ 8,600 378,400 Nationwide Financial Services (Class A)..................... 8,000 413,500 Old Republic International....... 14,250 320,625 Progressive (Ohio)............... 1,800 304,875 Provident Companies.............. 7,900 327,850 Schwab (Charles)................. 7,500 421,406 SouthTrust....................... 6,950 256,498 ---------- 2,423,154 ---------- HEALTH CARE -- 6.6% ALZA*............................ 5,500 287,375 Biogen*.......................... 4,300 356,631 Covance*......................... 14,800 431,050 Universal Health Services (Class B)*.................... 7,100 368,313 Wellpoint Health Networks........ 1,700 147,900 ---------- 1,591,269 ---------- TECHNOLOGY -- 16.0% Applied Materials................ 4,900 209,322 Ascend Communications*........... 3,300 217,078 Cadence Design System*........... 8,300 246,925 Compuware*....................... 4,100 320,184 Electronic Arts*................. 10,400 583,050 Fiserv*.......................... 7,100 364,984 General Instrument*.............. 12,000 407,250 Maxim Integrated Products*....... 5,000 218,281 Network Associates*.............. 4,800 318,450 Parametric Technology*........... 25,600 416,000 VERITAS Software*................ 9,400 562,825 ---------- 3,864,349 ---------- TRANSPORTATION -- 1.7% CNF Transportation............... 10,900 409,431 ---------- - ------------- * Non-income producing security. See Notes to Financial Statements. P-22 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN CAPITAL PORTFOLIO (continued) SHARES VALUE -------- --------- UTILITIES -- 1.1% AES*............................. 5,800 $ 274,775 ----------- TOTAL COMMON STOCKS (Cost $16,679,590)............ 23,240,892 ----------- SHORT-TERM HOLDINGS -- 4.1% (Cost $1,000,000)............. 1,000,000 ----------- TOTAL INVESTMENTS -- 100.4% (Cost $17,679,590)............ $24,240,892 OTHER ASSETS LESS LIABILITIES-- (0.4)%.......... (100,198) ----------- NET ASSETS-- 100.0%.............. $24,140,694 =========== SELIGMAN CASH MANAGEMENT PORTFOLIO ANNUALIZED YIELD ON PRINCIPAL PURCHASE DATE AMOUNT VALUE ------------- -------- --------- US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES -- 57.6% US Government SECURITIES -- 48.2% US Treasury Bills: 2/11/1999............ 4.38% $1,000,000 $ 995,103 3/11/1999............ 4.46 600,000 594,986 3/25/1999............ 4.44 700,000 693,028 4/15/1999............ 4.52 1,000,000 987,347 4/29/1999............ 4.49 600,000 591,425 US Treasury Notes: 5%, 1/31/1999........ 5.12 600,000 599,929 6 3/8%, 4/30/1999.... 4.53 600,000 603,502 ---------- Total US Government Securities (Cost $5,065,320).... 5,065,320 ---------- US Government AGENCY SECURITIES -- 9.4% Federal Home Loan Bank Corp., 4.94%, 3/5/1999............. 5.07 500,000 495,677 Federal National Mortgage Association, 4.95%, 3/11/1999..... 5.08 500,000 495,256 ---------- Total US Government Agency Securities (Cost $990,933)...... 990,933 ---------- TOTAL US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES (Cost $6,056,253) ... 6,056,253 ---------- ANNUALIZED YIELD ON PRINCIPAL PURCHASE DATE AMOUNT VALUE ------------- -------- --------- COMMERCIAL PAPER -- 31.7% American Express Credit Corp., 2/26/1999..... 5.07% $540,000 $ 535,800 American General Finance Corp., 2/8/1999...... 5.30 500,000 497,240 Ford Motor Credit Co., 4/5/1999............. 4.98 475,000 468,923 General Electric Capital Corp., 1/19/1999..... 5.24 650,000 648,320 John Deere Capital Corp., 2/18/1999............ 5.12 540,000 536,364 Norwest Financial, Inc., 1/15/1999............ 5.25 650,000 648,690 ----------- TOTAL COMMERCIAL PAPER (Cost $3,335,337).... 3,335,337 ----------- REPURCHASE AGREEMENT -- 9.5% (Cost $1,000,000) State Street Bank and Trust 4.45%, dated 12/31/1998, maturing 1/4/1999 collateralized by: $750,000 US Treasury Notes 115 1/48%, 11/15/2004, with a fair market value of $1,020,883........... 4.51 1,000,000 1,000,000 ----------- TOTAL INVESTMENTS -- 98.8% (Cost $10,391,590)... 10,391,590 OTHER ASSETS LESS LIABILITIES-- 1.2%..... 128,305 ----------- NET ASSETS-- 100.0%....... $10,519,895 =========== - ----------------- * Non-income producing security. See Notes to Financial Statements. P-23 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN COMMON STOCK PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS - 90.7% AEROSPACE/DEFENSE -- 0.5% General Dynamics................. 6,000 $ 351,750 ---------- AUTOMOTIVE AND RELATED - 3.5% DaimlerChrysler.................. 12,999 1,248,716 Dana............................. 6,600 269,775 Ford Motor....................... 11,800 692,512 ---------- 2,211,003 ---------- BASIC MATERIALS - 0.5% Alcoa............................ 4,100 305,706 ---------- BUSINESS SERVICES AND SUPPLIES -- 1.4% Xerox............................ 7,400 873,200 ---------- CAPITAL GOODS - 0.9% Crown Cork & Seal................ 17,500 539,219 ---------- CHEMICALS -- 0.8% duPont (E.I.) de Nemours......... 9,100 482,869 ---------- CONSUMER GOODS AND SERVICES - 8.1% Anheuser-Busch................... 17,900 1,174,687 Coca-Cola........................ 11,700 782,437 General Mills.................... 7,900 614,225 PepsiCo.......................... 18,200 745,063 Philip Morris.................... 23,400 1,251,900 Procter & Gamble................. 5,900 538,744 ---------- 5,107,056 ---------- DRUGS AND HEALTH CARE - 10.8% Abbott Laboratories.............. 16,600 813,400 American Home Products........... 19,800 1,114,988 Baxter International............. 6,000 385,875 Bristol-Myers Squibb............. 9,700 1,297,981 Johnson & Johnson................ 9,900 830,362 Merck............................ 7,800 1,151,963 Pfizer........................... 5,200 652,275 Schering-Plough.................. 9,200 508,300 ---------- 6,755,144 ---------- SHARES VALUE -------- --------- ELECTRIC AND GAS UTILITIES - 4.1% DQE.............................. 15,000 $ 659,062 Sonat............................ 19,300 522,306 Unicom........................... 17,600 678,700 The Williams Cos................. 23,200 723,550 ---------- 2,583,618 ---------- ELECTRONICS -- 1.5% Raytheon (Class B)............... 17,300 921,225 ---------- ENERGY - 8.1% BP Amoco (ADRs) (United Kingdom).............. 11,200 1,003,800 Chevron.......................... 7,300 605,444 Exxon............................ 20,300 1,484,437 Mobil............................ 9,600 836,400 Royal Dutch Petroleum .......... (Netherlands)................. 15,700 751,638 Schlumberger..................... 7,900 364,388 ---------- 5,046,107 ---------- FINANCE AND INSURANCE - 14.1% American General................. 15,200 1,185,600 American International Group..... 10,800 1,043,550 Bank of New York................. 32,800 1,320,200 BankAmerica...................... 13,205 793,951 Chubb............................ 9,500 616,312 Citigroup........................ 20,005 990,247 Fannie Mae....................... 10,900 806,600 Mellon Bank...................... 11,400 783,750 Morgan (J.P.).................... 4,600 483,287 Washington Mutual................ 20,496 782,691 ---------- 8,806,188 ---------- FOOD - 2.6% ConAgra.......................... 25,000 787,500 Sara Lee......................... 29,600 834,350 ---------- 1,621,850 ---------- MACHINERY AND INDUSTRIAL EQUIPMENT -- 6.1% GATX............................. 11,600 439,350 General Electric................. 17,800 1,816,712 United Technologies.............. 14,200 1,544,250 ---------- 3,800,312 ---------- - ------------ See Notes to Financial Statements. P-24 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN COMMON STOCK PORTFOLIO (continued) SHARES VALUE -------- --------- PAPER AND PACKAGING -- 2.1% Fort James....................... 21,700 $ 868,000 Mead............................. 16,400 480,725 ----------- 1,348,725 ----------- PRINTING AND PUBLISHING -- 0.6% Gannett.......................... 6,100 403,744 ----------- RETAIL TRADE -- 2.6% May Department Stores............ 12,100 730,538 Wal-Mart Stores.................. 10,800 879,525 ----------- 1,610,063 ----------- TECHNOLOGY -- 11.7% Cisco Systems*................... 7,100 659,191 Dell Computer*................... 5,100 373,416 Electronic Data Systems.......... 14,300 718,575 Harris........................... 16,000 586,000 Intel............................ 9,700 1,149,753 International Business Machines.. 7,500 1,385,625 Lucent Technologies.............. 5,500 605,000 Microsoft*....................... 13,400 1,856,319 ----------- 7,333,879 ----------- TELECOMMUNICATIONS -- 8.6% AT&T............................. 15,900 1,196,475 Ameritech........................ 14,600 925,275 GTE.............................. 19,200 1,294,800 MCI WorldCom*.................... 18,500 1,327,953 SBC Communications............... 11,900 638,138 ----------- 5,382,641 ----------- SHARES OR PRINCIPAL AMOUNT VALUE --------- --------- TRANSPORTATION -- 0.8% Norfolk Southern.............. 15,900 shs. $ 503,831 ----------- MISCELLANEOUS/ DIVERSIFIED -- 1.3% AlliedSignal.................. 17,900 793,194 ----------- TOTAL COMMON STOCKS (Cost $41,069,060)......... 56,781,324 REPURCHASE AGREEMENT -- 8.6% (Cost $5,400,000) State Street Bank and Trust 4.45%,dated 12/31/1998, maturing 1/4/1999 collateralized by: $4,050,000 US Treasury Notes 11 5/8%, 11/15/2004, with a fair market value of $5,512,139................ $5,400,000 5,400,000 ----------- TOTAL INVESTMENTS -- 99.3%.... (Cost $46,469,060)........ 62,181,324 OTHER ASSETS LESS LIABILITIES-- 0.7% ....... 406,734 ----------- NET ASSETS-- 100.0%.......... $62,588,058 =========== - ---------------- * Non-income producing security. See Notes to Financial Statements. P-25 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 98.6% COMMUNICATIONS INFRASTRUCTURE -- 4.5% ADC Telecommunications*.......... 16,500 $ 571,312 Advanced Fibre Communications*... 10,400 113,750 Aspect Telecommunications*....... 41,800 728,887 Cisco Systems*................... 2,000 185,687 DSP Communications*.............. 35,000 535,937 ECI Telecommunications (Israel).. 30,900 1,094,053 Nokia (Class A) (ADRs) (Finland)..................... 9,800 1,180,288 Oak Industries*.................. 14,000 490,000 Tekelec*......................... 25,700 426,459 Xylan*........................... 10,100 182,747 ----------- 5,509,120 ----------- COMMUNICATIONS SERVICES -- 6.5% ICG Communications*.............. 5,400 116,438 MCI WorldCom*.................... 20,600 1,478,694 Pacific Gateway Exchange*........ 22,500 1,082,109 RSL Communications (Class A)*.... 20,200 597,162 Tele-Communications (Series A) TCI Group*.................... 53,500 2,960,891 Tele-Communications (Series A) TCI Ventures Group*........... 53,500 1,265,609 Verio*........................... 19,800 440,550 ----------- 7,941,453 ----------- COMPUTER AND BUSINESS SERVICES -- 2.4% First Data....................... 52,200 1,654,088 Galileo International............ 12,300 535,050 Unisys*.......................... 20,300 699,081 ----------- 2,888,219 ----------- COMPUTER HARDWARE/ PERIPHERALS -- 16.1% American Power Conversion*....... 1,700 82,291 Apex PC Solutions................ 26,000 747,500 Apple Computer*.................. 8,000 327,750 Comdisco......................... 60,000 1,012,500 Creative Technology* (Singapore)................... 154,500 2,317,500 Electronics for Imaging*......... 99,700 3,984,884 EMC*............................. 58,200 4,947,000 SHARES VALUE -------- --------- COMPUTER HARDWARE/ PERIPHERALS (continued) Lexmark International Group (Class A)*.................... 28,900 $ 2,904,450 Splash Technology Holdings*...... 12,200 91,119 Storage Technology*.............. 58,000 2,062,625 Western Digital*................. 19,900 299,744 Xerox............................ 8,100 955,800 ----------- 19,733,163 ----------- COMPUTER SOFTWARE -- 24.6% 3DO*............................. 51,100 234,741 Acclaim Entertainment*........... 61,100 748,475 Activision*...................... 20,000 220,000 Autodesk......................... 66,600 2,840,906 Check Point Software Technologies* (Israel)........ 60,600 2,770,556 Compuware*....................... 20,000 1,561,875 Electronic Arts*................. 77,400 4,339,238 HNC Software*.................... 9,900 400,331 Hyperion Solutions*.............. 11,700 211,331 The Learning Company*............ 79,800 2,069,813 Microsoft*....................... 20,500 2,839,891 Network Associates*.............. 81,801 5,426,952 Novell*.......................... 20,200 366,756 Parametric Technology*........... 107,400 1,745,250 Platinum Technology International*................ 72,700 1,397,203 Rational Software*............... 34,300 908,950 Structural Dynamics Research*.... 59,800 1,184,788 Tecnomatix Technologies* (Israel)...................... 12,300 214,866 VERITAS Software*................ 10,400 622,700 ----------- 30,104,622 ----------- CONTRACT MANUFACTURING/ CIRCUIT BOARDS -- 5.2% ADFlex Solutions*................ 22,000 151,250 DII Group*....................... 20,200 463,337 Hadco*........................... 16,000 559,000 Sanmina*......................... 6,200 386,725 SCI Systems*..................... 49,800 2,875,950 SMART Modular Technologies*...... 71,000 1,965,813 ----------- 6,402,075 ----------- ELECTRONICS CAPITAL EQUIPMENT -- 7.3% Applied Materials*............... 26,600 1,136,319 Asyst Technologies*.............. 17,700 361,744 - ---------------- * Non-income producing security. See Notes to Financial Statements. P-26 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO (continued) SHARES VALUE -------- --------- ELECTRONICS CAPITAL EQUIPMENT (continued) Cognex*.......................... 47,400 $ 945,037 Credence Systems*................ 35,700 658,219 Electro Scientific Industries*... 19,700 892,656 Etec Systems*.................... 27,000 1,080,000 Orbotech* (Israel)............... 24,900 1,174,191 Teradyne*........................ 63,500 2,690,812 ------------ 8,938,978 ------------ MEDIA -- 17.0% Cablevision Systems (Class A)*... 20,000 1,003,750 CBS.............................. 127,400 4,172,350 Chancellor Media*................ 93,000 4,449,469 Clear Channel Communications*.... 52,146 2,841,957 Cox Radio (Class A)*............. 12,200 515,450 Fox Entertainment Group (Class A)*.................... 50,300 1,266,931 Infinity Broadcasting (Class A)*. 36,900 1,010,138 MediaOne Group*.................. 50,700 2,382,900 Sinclair Broadcast Group (Class A)*.................... 44,600 882,244 USA Networks*.................... 40,600 1,343,606 Ziff-Davis*...................... 56,900 899,731 ------------ 20,768,526 ------------ SEMICONDUCTORS -- 15.0% Advanced Micro Devices*.......... 60,200 1,742,037 Amkor Technology*................ 162,500 1,762,109 Cadence Design Systems*.......... 20,600 612,850 C-Cube Microsystems*............. 52,100 1,414,841 SHARES OR PRINCIPAL AMOUNT VALUE -------- ---------- SEMICONDUCTORS (continued) Dallas Semiconductor............. 29,200 shs. $ 1,189,900 Discreet Logic* (Canada)......... 29,900 562,494 Intel............................ 20,500 2,429,891 Lattice Semiconductor*........... 41,600 1,909,700 Level One Communications*........ 20,300 721,284 Maxim Integrated Products*....... 24,700 1,078,309 Microchip Technology*............ 43,500 1,606,781 Synopsys*........................ 52,737 2,857,686 Xilinx*.......................... 6,000 390,563 ------------ 18,278,445 ------------ TOTAL COMMON STOCKS (Cost $98,088,703)............ 120,564,601 ------------ SUBORDINATED CONVERTIBLE BONDS -- 0.1% (Cost $190,000) COMPUTER SOFTWARE -- 0.1% Activision 6 3/4%, 1/1/2005+... $190,000 163,400 ------------ SHORT-TERM HOLDINGS -- 0.5% (Cost $600,000)............... 600,000 ------------ TOTAL INVESTMENTS -- 99.2% (Cost $98,878,703)............ 121,328,001 OTHER ASSETS LESS LIABILITIES-- 0.8%............ 950,930 ------------ NET ASSETS-- 100.0%.............. $122,278,931 ============ - ------------------------------------------------------------------------------- SELIGMAN FRONTIER PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 98.6% CAPITAL GOODS -- 11.2% Allied Waste Industries*......... 26,900 $635,512 Casella Waste Systems (Class A)*.................... 15,200 563,350 Corporate Express*............... 56,800 292,875 Fusion Systems (Rights)*......... 3,745 59 Integrated Electrical Services*.. 10,800 240,300 Metamor Worldwide*............... 25,600 635,200 Oak Industries*.................. 10,130 354,550 Sanmina*......................... 12,000 748,500 SHARES VALUE -------- --------- CAPITAL GOODS (continued) Superior Services*............... 16,300 $ 327,019 UCAR International*.............. 23,300 415,031 Waste Connections*............... 10,400 190,775 ---------- 4,403,171 ---------- CONSUMER CYCLICALS -- 18.9% American Homestar*............... 30,437 458,457 Applied Graphics Technology*..... 8,400 137,025 Career Education*................ 10,000 300,000 Copart*.......................... 14,400 470,700 HA-LO Industries*................ 21,200 797,650 - ----------------- * Non-income producing security. + Rule 144A security. See Notes to Financial Statements. P-27 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN FRONTIER PORTFOLIO (continued) SHARES VALUE -------- --------- CONSUMER CYCLICALS (continued) Journal Register*................ 33,500 $ 502,500 Keystone Automotive Industries*................... 16,500 347,531 Market Facts*.................... 11,100 278,888 MemberWorks*..................... 15,100 446,394 Modis Professional Services*..... 61,900 897,550 Personnel Group of America*...... 48,100 841,750 Pier 1 Imports................... 23,650 229,109 Pre-Paid Legal Services*......... 13,200 435,600 Primark*......................... 19,400 526,225 ResortQuest International*....... 8,700 127,238 Sun International Hotels*........ 6,500 295,344 Wilmar Industries*............... 15,500 314,359 ---------- 7,406,320 ---------- CONSUMER STAPLES -- 12.1% Aurora Foods*.................... 12,200 241,712 Carriage Services (Class A)*..... 23,800 676,813 EduTrek International (Class A)*.................... 23,700 140,719 Hearst-Argyle Television (Class A)*.................... 3,981 131,373 Premier Parks*................... 38,100 1,152,525 Provant*......................... 16,700 356,963 SBS Broadcasting (Luxembourg)*................. 800 21,850 Sinclair Broadcast Group (Class A)*.................... 25,000 494,531 U.S. Foodservice*................ 17,100 837,900 Vlasic Foods International*...... 26,500 631,031 Youth Services International*.... 10,100 38,664 ---------- 4,724,081 ---------- ENERGY -- 2.8% Cabot Oil & Gas (Class A)........ 11,400 171,000 Calpine*......................... 16,600 419,150 McDermott International.......... 11,600 286,375 Santa Fe Energy Resources*....... 28,500 210,188 ---------- 1,086,713 ---------- FINANCIAL SERVICES -- 5.8% Affiliated Managers Group*....... 6,900 206,137 American Capital Strategies*..... 12,400 214,675 Crusader Holding*................ 3,465 36,383 DST Systems*..................... 7,200 410,850 ESG Re........................... 12,700 259,556 FirstService* (Canada)........... 17,200 205,325 SHARES VALUE -------- --------- FINANCIAL SERVICES (Continued) Insignia Financial Group*........ 15,666 $ 189,950 NOVA............................. 18,733 649,801 Stirling Cooke Brown Holdings (Bermuda)..................... 4,900 82,381 ---------- 2,255,058 ---------- HEALTH CARE -- 20.6% AmSurg (Class A)*................ 10,000 71,875 Barr Laboratories*............... 9,500 456,000 CompDent*........................ 19,600 203,350 Covance*......................... 8,500 247,563 Hanger Orthopedic Group*......... 13,000 292,500 New American Healthcare*......... 19,200 214,800 Omnicare......................... 13,500 469,125 Pharmaceutical Product Development*.................. 7,300 221,053 Professional Detailing*.......... 15,900 453,150 Province Healthcare*............. 19,900 707,694 PSS World Medical*............... 49,100 1,127,766 Quorum Health Group*............. 16,200 209,081 Renal Care Group*................ 7,400 214,600 Renex*........................... 50,000 359,375 Henry Schein*.................... 8,400 375,375 Schein Pharmaceutical*........... 6,800 99,025 Somnus Medical Technologies*..... 20,000 58,750 Total Renal Care Holdings*....... 37,400 1,105,637 Triangle Pharmaceuticals*........ 12,200 168,513 Universal Health Services (Class B)*.................... 10,000 518,750 Watson Pharmaceuticals*.......... 7,500 471,563 ---------- 8,045,545 ---------- TECHNOLOGY -- 24.0% Affiliated Computer Services (Class A)*.................... 14,900 670,500 American Management Systems*..... 6,000 240,375 Analog Devices*.................. 9,900 310,612 ANTEC*........................... 22,200 448,162 Aspect Telecommunications*....... 20,000 348,750 Avant!*.......................... 38,300 610,406 AVX.............................. 29,400 497,962 Burr-Brown*...................... 43,550 1,017,981 Ceridian*........................ 5,400 376,988 General Semiconductors*.......... 17,400 142,463 Glenayre Technologies*........... 53,000 233,531 HMT Technology*.................. 33,600 430,500 Indus International*............. 21,800 151,919 - ------------ * Non-income producing security. See Notes to Financial Statements. P-28 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN FRONTIER PORTFOLIO (continued) SHARES VALUE -------- --------- TECHNOLOGY (continued) Inso*............................ 15,100 $ 378,444 KLA-Tencor*...................... 6,000 260,438 Microchip Technology*............ 16,900 624,244 Micrografx*...................... 3,000 33,094 National Instruments*............ 7,000 238,656 Platinum Technology International*................ 10,900 209,484 PMC-Sierra* (Canada)............. 7,100 447,522 Structural Dynamics Research*.... 13,600 269,450 SunGard Data Systems............. 8,400 333,375 Transaction Systems Architects (Class A)*.................... 11,600 583,625 Unigraphics Solutions (Class A)*. 20,100 291,450 Xilinx*.......................... 4,000 260,375 ---------- 9,410,306 ---------- TRANSPORTATION -- 1.3% Coach USA*....................... 9,900 343,406 SHARES VALUE -------- --------- TRANSPORTATION (continued) US Xpress Enterprises (Class A)*.................... 11,800 $ 175,525 ----------- 518,931 UTILITIES -- 1.9% CalEnergy*....................... 21,960 761,736 ----------- TOTAL COMMON STOCKS (Cost $34,675,524)............ 38,611,861 SHORT-TERM HOLDINGS -- 4.9% (Cost $1,900,000)............. 1,900,000 ----------- TOTAL INVESTMENTS -- 103.5% (Cost $36,575,523)............ 40,511,861 OTHER ASSETS LESS LIABILITIES-- (3.5)%.......... (1,364,190) ----------- NET ASSETS-- 100.0%.............. $39,147,671 =========== - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 92.4% AUSTRALIA -- 0.7% Brambles Industries (Commercial Services)......... 700 $ 17,015 CSL (Drugs and Health Care)...... 3,000 25,670 Telstra* (Telecommunications).... 3,900 18,197 -------- 60,882 -------- BRAZIL -- 0.2% Telesp Participacoes (ADRs)* (Telecommunications).......... 1,000 22,125 -------- CHINA -- 0.5% China Telecom (Hong Kong)* (Telecommunications).......... 10,000 17,296 Huaneng Power International (ADRs)* (Electric and Gas Utilities).................... 1,100 15,950 SmarTone Telecommunications (Telecommunications).......... 3,000 8,325 -------- 41,571 -------- SHARES VALUE -------- --------- FINLAND -- 3.9% Nokia (Series A) (Telecommunications).......... 2,125 $258,387 Raisio Group (Consumer Goods and Services)........... 4,000 43,931 Sonera Group* (Telecommunications).......... 2,200 38,831 -------- 341,149 -------- FRANCE -- 8.0% Accor (Entertainment and Leisure).................. 540 116,893 Cap Gemini (Computer and Technology Related)........... 1,111 178,285 CNP Assurances* (Financial Services)..................... 3,940 119,685 Genset (ADRs)* (Drugs and Health Care).................. 2,500 68,125 Hachette Filipacchi Medias (Media)....................... 400 94,459 Valeo (Automotive and Related)... 1,430 112,665 -------- 690,112 -------- - --------------- * Non-income producing security. See Notes to Financial Statements. P-29 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued) SHARES VALUE -------- --------- GERMANY -- 3.4% Adidas-Salomon (Retailing)....... 1,150 $126,746 Metro (Retailing)................ 2,088 164,286 -------- 291,032 -------- GREECE -- 1.5% Hellenic Telecommunication Organization (Telecommunications).......... 3,166 84,148 National Bank of Greece (GDRs)+ (Financial Services).......... 960 42,144 -------- 126,292 -------- HUNGARY -- 1.2% Magyar Tavkozlesi "Matav" (ADRs) (Telecommunications).......... 1,890 56,346 MOL Magyar Olaj-es Gazipari (GDRs) (Resources)............ 1,740 48,067 -------- 104,413 -------- IRELAND -- 1.8% Elan (ADRs)* (Drugs and Health Care).................. 2,250 156,516 -------- ITALY -- 4.0% Aeroporti di Roma (Transportation).............. 11,500 100,261 Banca Nazionale del Lavoro* (Financial Services).......... 38,000 113,769 Mediolanum (Financial Services).. 18,000 133,500 -------- 347,530 -------- JAPAN -- 6.4% Bellsystem 24 (Business Goods and Services)................. 150 33,311 Diamond Computer Service (Computer and Technology Related)...................... 3,000 49,703 Fancl (Consumer Goods and Services)................. 1,000 85,393 Fujitsu Support and Service (Business Goods and Services)..................... 1,000 71,822 H.I.S. (Entertainment and Leisure).................. 4,000 82,133 Keyence (Electronics)............ 500 61,247 SHARES VALUE -------- --------- JAPAN (continued) Nichii Gakkan (Drugs and Health Care).............. 1,100 $ 45,561 Nippon Telegraph & Telephone (Telecommunications).......... 4 30,738 NTT Mobile Communication Network "NTT DoCoMo" (Telecommunications).......... 1 40,978 Softbank (Computer and Technology Related)........... 400 23,970 Sundrug (Retailing).............. 1,600 30,315 -------- 555,171 -------- MEXICO -- 0.4% Fomento Economico Mexicano "Femsa" (ADRs) (Consumer Goods and Services)........... 1,300 34,612 -------- NETHERLANDS -- 4.0% ASM Lithography Holding* (Electronics Capital Equipment).................... 3,000 91,605 Equant* (Business Goods and Services)................. 1,790 124,537 Philips Electronics (Electronics) 1,900 127,354 -------- 343,496 -------- NORWAY -- 2.2% Tomra Systems (Business Goods and Services)........... 5,700 187,538 -------- SINGAPORE -- 0.4% Electronic Resources (Electronics) 25,000 22,713 Overseas Chinese Banking (Financial Services).......... 2,000 13,568 -------- 36,281 -------- SPAIN -- 9.8% Actividades de Construccion y Servicios (Construction and Property)................. 3,400 134,146 Azkoyen (Manufacturing and Industrial Equipment)......... 2,620 94,142 Centros Comerciales Continente (Retailing)........ 4,850 164,360 - ------------ * Non-income producing security. + Rule 144A security. See Notes to Financial Statements. P-30 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued) SHARES VALUE -------- --------- SPAIN (continued) Sociedad General de Aguas de Barcelona..... (Consumer Goods and Services)................. 2,500 $167,330 Sociedad General de Aguas de Barcelona*....(Consumer Goods and Services)................. 20 1,339 Superdiplo* (Retailing).......... 4,320 121,594 Tabacalera (Class A) (Tobacco)... 6,500 163,948 -------- 846,859 -------- SWEDEN -- 3.4% Astra (Class A) (Drugs and Health Care).................. 6,235 127,006 Autoliv (SDRs) (Automotive and Related).................. 1,100 39,398 L.M. Ericsson Telefon (Series B) (Telecommunications).......... 5,495 130,532 -------- 296,936 -------- SWITZERLAND -- 0.8% Helvetia Patria Holding (Financial Services).......... 75 71,234 -------- UNITED KINGDOM -- 10.1% Airtours (Entertainment and Leisure)...................... 8,500 54,125 Ashtead Group (Construction and Property)................. 19,500 44,785 Bodycote International (Industrial Goods and Services)........... 6,000 82,830 CMG* (Computer and Technology Related)........... 2,800 72,572 Games Workshop Group (Retailing)................... 4,500 38,803 Granada Group (Entertainment and Leisure).................. 4,500 79,584 Halma (Electronics).............. 36,500 74,144 Ladbroke Group (Entertainment and Leisure).................. 13,000 51,737 Parity (Computer and Technology Related)........... 7,325 69,540 Pizza Express (Restaurants)...... 8,000 106,791 Rolls Royce (Aerospace).......... 12,600 51,608 SmithKline Beecham (Drugs and Health Care).............. 3,000 41,962 SHARES VALUE -------- --------- UNITED KINGDOM (continued) Spring Group (Support Services).. 6,500 $ 15,683 WPP Group (Business Goods and Services)................. 15,000 90,540 -------- 874,704 -------- UNITED STATES -- 29.7% AES* (Electric and Gas Utilities).................... 2,700 127,913 American International Group (Financial Services).......... 1,275 123,197 AT&T (Telecommunications)........ 2,100 158,025 Bristol-Myers Squibb (Drugs and Health Care).............. 800 107,050 Cardinal Health (Drugs and Health Care).................. 1,800 136,575 CBS (Media)...................... 2,500 81,875 ConAgra (Consumer Goods and Services)................. 3,600 113,400 Disney, Walt (Entertainment and Leisure).................. 1,400 42,000 General Dynamics (Capital Goods)........................ 700 41,038 General Electric (Diversified)... 1,300 132,681 Interpublic Group of Companies (Business Goods and Services)..................... 2,050 163,488 Kroger* (Consumer Goods and Services)................. 1,500 90,750 Lilly (Eli) (Drugs and Health Care)......................... 1,200 106,650 MCI WorldCom* (Telecommunications).......... 1,700 122,028 Merck (Drugs and Health Care).... 700 103,381 Microsoft* (Computer and Technology Related)........... 1,000 138,531 Motorola (Electronics)........... 1,400 85,487 Newell (Consumer Goods and Services)..................... 2,000 82,500 Pfizer (Drugs and Health Care)... 700 87,806 Philip Morris (Tobacco).......... 2,300 123,050 Procter & Gamble (Consumer Goods and Services)........... 1,400 127,837 Tyco International (Diversified). 2,000 150,875 Xerox (Business Goods and Services)..................... 1,000 118,000 -------- 2,564,137 -------- - ---------------- * Non-income producing security. See Notes to Financial Statements. P-31 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL GROWTH OPPORTUNITIES PORTFOLIO (continued) SHARES VALUE -------- --------- TOTAL COMMON STOCKS (Cost $6,083,240)............. $7,992,590 ---------- PREFERRED STOCKS -- 1.5% (Cost $93,300) GERMANY -- 1.5% Porsche (Non-Voting)* (Automotive and Related)...... 56 128,821 ---------- CORPORATE BONDS -- 0.1% (Cost $4,920) PRINCIPAL AMOUNT VALUE --------- --------- GERMANY -- 0.1% Metro Finance 0%, 9/7/2013 (Financial Services).......... 9,000** $ 6,017 ---------- TOTAL INVESTMENTS -- 94.0% (Cost $6,181,460)............. 8,127,428 OTHER ASSETS LESS LIABILITIES-- 6.0%............ 515,867 ---------- NET ASSETS-- 100.0%.............. $8,643,295 ========== - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 98.1% AUSTRALIA -- 1.3% BRL Hardy (Consumer Goods and Services)................. 8,850 $ 29,873 Cochlear (Medical Products and Technology)............... 4,300 24,191 CSL (Medical Products and Technology)............... 4,650 39,789 Futuris (Automotive Parts Manufacturing)................ 27,673 31,306 National Foods (Consumer Goods and Services)........... 16,800 29,792 National Mutual Property Trust (Construction and Property)... 19,700 16,745 National Mutual Property Trust (Rights)* (Construction and Property)..................... 1,212 1,030 Pasminco (Metals)................ 31,500 23,885 Stockland Trust Group (Construction and Property)... 12,200 30,289 TAB* (Leisure and Hotels)........ 14,000 27,737 Henry Walker Group (Support Services)............ 5,100 5,302 -------- 259,939 -------- AUSTRIA -- 0.6% Bau Holdings (Voting Preference Shares) (Construction and Property)..................... 684 25,693 Bau Holdings (Construction and Property)..................... 1,930 90,622 -------- 116,315 -------- SHARES VALUE -------- --------- BERMUDA -- 0.1% Dairy Farm International Holdings (Retailing).......... 14,500 $ 16,675 Stirling Cooke Brown Holdings (Financial Services).......... 400 6,725 -------- 23,400 -------- CANADA -- 1.2% Celestica* (Technology).......... 1,900 46,906 PMC-Sierra* (Technology)......... 1,300 81,941 Teleglobe (Telecommunications)... 2,100 75,441 Trojan Technologies* (Support Services)............ 2,000 45,395 -------- 249,683 -------- DENMARK -- 2.1% Danske Traelastkompagni (Construction and Property)... 1,209 81,686 NeuroSearch* (Drugs and Health Care)....... 659 43,697 Sondagsavisen (Media)....................... 700 43,446 Sydbank (Financial Services).......... 2,015 86,435 Thorkild Kristensen (Construction and Property)... 2,065 188,867 -------- 444,131 -------- FINLAND Rapala Normark* (Consumer Goods and Services)..................... 1,000 8,629 -------- - -------------- * Non-income producing security. ** Principal amount reported in German deutschemarks. See Notes to Financial Statements. P-32 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) SHARES VALUE -------- --------- FRANCE -- 4.3% Compagnie Francaise d'Etudes et de Construction Technip "Technip" (Construction and Property)... 1,016 $ 95,606 Du Pareil au Meme (Retailing)................... 760 61,727 ECIA (Automotive Parts Manufacturing)................ 720 96,477 Etam Developpement* (Retailing) 2,309 117,727 L'Europeenne d'Extincteurs (Manufacturing)............... 1,372 85,785 Genset (ADRs)* (Drugs and Health Care)....... 2,793 76,109 International Metal Service (Metals)...................... 1,960 18,654 Montupet (Automotive Parts Manufacturing)................ 2,101 86,449 Royal Canin (Veterinary Products) 1,519 95,112 Sylea (Automotive Parts Manufacturing)................ 707 39,083 Virbac (Veterinary Products)..... 1,567 120,544 -------- 893,273 -------- GERMANY -- 1.6% Beru (Automotive Parts Manufacturing)................ 1,626 33,058 Bien-Haus (Construction and Property)..................... 221 59,731 Hawesko Holding (Telecommunications).......... 2,442 136,404 Moebel Walther (Retailing)....... 3,035 102,993 -------- 332,186 -------- HONG KONG -- 0.7% Dah Sing Financial Group (Financial Services).......... 9,800 24,034 Esprit Holdings (Retailing)...... 19,000 8,216 Johnson Electric Holdings (Electronics)................. 5,000 12,843 Kerry Properties (Construction and Property)................. 26,000 20,974 Li & Fung (Consumer Goods and Services)........... 8,200 16,987 Ng Fung Hong (Consumer Goods and Services)........... 22,000 19,735 Shenzhen Expressway (Transportation).............. 69,500 16,147 SHARES VALUE -------- --------- HONG KONG (continued) South China Morning Post (Media)....................... 53,000 $ 27,193 Yanzhou Coal Mining (Series H)* (Resources)....... 50,000 8,390 -------- 154,519 -------- IRELAND -- 0.9% Esat Telecom Group (ADRs)* (Telecommunications).......... 2,250 85,641 Ryanair Holdings* (Transportation).............. 12,900 92,168 -------- 177,809 -------- ITALY -- 0.6% La Doria (Consumer Goods and Services)................. 37,643 123,070 -------- JAPAN -- 6.5% Asahi Diamond Industries (Manufacturing)............... 4,000 19,811 Asatsu-DK (Advertising).......... 1,900 45,208 Benesse (Business Services)...... 600 32,307 The Eighteenth Bank (Financial Services).......... 4,000 17,131 Enplas (Electronics)............. 1,000 25,997 Forval (Telecommunications)...... 1,000 5,816 Fujicco (Consumer Goods and Services)..................... 2,000 33,135 Fujitsu Business Systems (Business Services)........... 2,500 33,928 Glory Kogyo (Manufacturing)...... 2,000 35,250 H.I.S. (Leisure and Hotels)...... 1,000 20,533 Higashi Nihon House (Construction and Property)... 6,000 23,106 Hitachi Information Systems (Computer Software)........... 2,000 19,581 Hitachi Medical (Medical Products and Technology)...... 2,000 20,745 Hogy Medical (Medical Products and Technology)...... 700 19,493 Hokkai Can (Manufacturing)....... 7,000 16,162 Horiba Instruments (Electronics). 4,000 39,480 Iino Kaiun Kaisha* (Transportation).............. 12,000 20,093 The Iyo Bank (Financial Services)..................... 3,000 18,691 - ----------- * Non-income producing security. See Notes to Financial Statements. P-33 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) SHARES VALUE -------- --------- JAPAN (continued) Japan Information Processing Service (Computer Software)... 2,200 $ 19,814 Kentucky Fried Chicken (Restaurants)................. 3,000 28,288 Kissei Pharmaceutical (Drugs and Health Care).............. 1,000 17,581 Komatsu Seiren (Manufacturing)............... 6,000 21,679 Komori (Capital Goods)........... 2,000 41,948 Maspro Denkoh (Telecommunications).......... 2,000 16,215 Mitsubishi Cable Industries (Manufacturing)............... 9,000 14,593 Mitsubishi Gas Chemical (Chemicals)................... 7,000 19,308 Mitsui Home (Construction and Property)................. 7,000 32,078 Namura Shipbuilding (Capital Goods)........................ 4,000 7,579 Nichicon (Manufacturing)......... 2,000 24,851 Nippon Broadcasting System (Media) 1,000 39,833 Nippon Seiki (Automotive Parts Manufacturing)................ 3,000 20,568 Nishio Rent All (Construction and Property)................. 2,000 13,483 Nissha Printing (Paper and Printing)..................... 3,000 18,242 Nisshin Fire & Marine Insurance (Financial Services).......... 8,000 23,406 Nova (Consumer Goods and Services)..................... 3,000 8,857 Okinawa Electric Power (Electric Utilities).......... 1,200 22,208 Olympus Optical (Electronics).... 4,000 45,790 Otsuka Kagu (Retailing).......... 500 34,369 Ryoyo Electro (Electronics)...... 3,000 26,094 Sagami Chain (Restaurants)....... 2,000 18,066 Sankyo (Manufacturing)........... 2,600 43,305 Sanyo Special Steel (Metals)..... 15,000 12,293 Shimachu (Retailing)............. 1,200 23,794 Sodick (Manufacturing)........... 5,000 10,575 Sundrug (Retailing).............. 1,800 34,104 Takasago International (Chemicals) 4,000 21,996 Tokyo Style (Manufacturing)...... 2,000 20,163 Towa Pharmaceutical (Drugs and Health Care)............. 3,000 22,472 Toyo Ink Manufacturing (Chemicals) 7,000 15,545 JAPAN (continued) SHARES VALUE -------- --------- Tsubaki Nakashima (Manufacturing)............... 7,500 $ 45,605 Tsudakoma (Manufacturing)........ 19,000 35,162 Tsutsumi Jewelry (Retailing)..... 2,500 39,656 Xebio (Retailing)................ 2,100 43,582 Yokohama Reito (Distributors).... 3,000 18,797 --------- 1,348,366 --------- LUXEMBOURG SBS Broadcasting* (Media)........ 200 5,462 --------- NETHERLANDS -- 3.1% Athlon Groep (Consumer Goods and Services)........... 2,913 86,624 Benckiser (Series B)* (Consumer Goods and Services)..................... 1,275 83,426 CMG (Support Services)........... 12,000 311,021 Samas Groep (Manufacturing)............... 8,765 156,668 -------- 637,739 -------- NEW ZEALAND -- 0.1% Auckland International Airport* (Transportation).............. 10,700 14,920 Sky Network Television* (Media).. 9,200 12,587 -------- 27,507 -------- NORWAY -- 2.1% Ekornes (Manufacturing).......... 17,347 139,261 Petroleum Geo-Services* (Energy)...................... 7,800 99,573 Tandberg Television* (Media)..... 24,900 206,450 -------- 445,284 -------- SINGAPORE -- 0.4% Keppel FELS (Industrial Goods and Services)................. 7,000 13,483 Keppel Tatlee Bank (Financial Services).......... 12,000 20,933 Singapore Land (Construction and Property)................. 9,000 19,952 Venture Manufacturing (Electronics)................. 4,500 17,171 Want Want Holdings (Consumer Goods and Services)........... 10,120 12,144 -------- 83,683 -------- - ---------------- * Non-income producing security. See Notes to Financial Statements. P-34 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) SHARES VALUE -------- --------- SPAIN -- 0.6% TelePizza* (Consumer Goods and Services)................. 13,044 $124,067 -------- SWEDEN -- 1.9% Angpanneforeningen (Series B) (Business Services)........... 2,641 38,682 Bure Investment Aktiebolaget (Financial Services).......... 8,935 126,468 Finnveden (Series B) (Manufacturing)............... 2,447 37,497 Munksjo (Paper and Printing)..... 6,024 41,521 Nobel Biocare (Medical Products and Technology)...... 11,294 152,908 -------- 397,076 -------- SWITZERLAND -- 2.2% Bon Appetit Holding (Retailing).. 149 81,223 Hero (Consumer Goods and Services)................. 120 82,096 Kaba Holding (Business Services)........... 242 118,886 Selecta Group (Consumer Goods and Services)........... 619 171,194 -------- 453,399 -------- TAIWAN -- 0.1% Taiwan American Fund* (Miscellaneous)............... 1,600 23,648 -------- THAILAND -- 0.2% Hana Microelectronics (Electronics)................. 1,600 3,873 Siam Cement (Building Materials).................... 1,000 22,668 Tipco Asphalt (Construction and Property)................. 4,000 6,437 -------- 32,978 -------- UNITED KINGDOM -- 16.5% AEA Technology (Industrial Goods and Services)........... 6,500 78,953 Allied Leisure (Leisure and Hotels)....................... 97,500 40,420 Ashtead Group (Construction and Property)................. 106,600 244,826 BTG (Technology)................. 7,000 40,627 Capital Radio (Media)............ 20,500 197,846 SHARES VALUE -------- --------- UNITED KINGDOM (continued) Chiroscience Group (Drugs and Health Care).............. 4,250 $ 17,689 Clinton Cards (Retailing)........ 46,200 114,917 Cobham (Manufacturing)........... 8,950 101,886 Dawson Group (Transportation).... 26,600 83,808 Domnick Hunter Group (Manufacturing)............... 20,000 66,993 Druck Holdings (Industrial Goods and Services)........... 11,500 53,396 Electronics Boutique (Retailing). 129,800 173,807 Fairey Group (Electronics)....... 10,500 44,661 F.I. Group (Computer Software)... 55,176 300,563 Games Workshop Group (Retailing)................... 9,400 81,055 GWR Group (Media)................ 24,000 90,142 ICON (ADRs)* (Business Services)..................... 4,100 136,581 LLP Group (Media)................ 46,426 219,025 National Express Group (Transportation).............. 10,000 185,061 Parity (Computer Software)....... 25,312 240,299 Peptide Therapeutics (Drugs and Health Care).............. 2,750 3,717 Pizza Express (Restaurants)...... 19,500 260,304 Polypipe (Building Materials).... 70,500 133,274 Save Group (Retailing)........... 8,600 8,129 Shire Pharmaceuticals* (Drugs and Health Care).............. 5,500 35,205 Spring Group (Support Services).. 30,000 72,383 Tilbury Douglas (Construction and Property)................. 50,500 182,557 Torotrak* (Automotive Parts Manufacturing)................ 7,000 9,925 Trifast (Electrical Distribution) 8,000 68,983 Trinity International Holdings (Media)....................... 19,600 129,519 Vanguard Medica Group (Drugs and Health Care)....... 3,500 9,867 Wellington Holdings (Manufacturing)............... 8,500 13,038 -------- 3,439,456 -------- UNITED STATES -- 51.0% Acxiom* (Computer Software)...... 4,800 148,500 Affiliated Computer Services (Class A)* (Business Services)..................... 3,900 175,500 Affiliated Managers Group* (Financial Services).......... 1,900 56,762 - --------------- * Non-income producing security. See Notes to Financial Statements. P-35 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) SHARES VALUE -------- --------- UNITED STATES (continued) Allied Waste Industries (Industrial Goods and Services)..................... 7,300 $172,462 American Capital Strategies* (Financial Services).......... 1,800 31,162 American Homestar* (Manufacturing)............... 8,100 122,006 American Management Systems* (Business Services)........... 1,000 40,062 Analog Devices* (Semiconductors).............. 2,600 81,575 ANTEC* (Telecommunications)...... 3,900 78,731 Applied Graphics Technologies* (Consumer Goods and Services)..................... 2,400 39,150 Aspect Telecommunications* (Technology).................. 5,500 95,906 Aurora Foods* (Consumer Goods and Services)........... 2,900 57,456 Avant!* (Computer Software)...... 6,200 98,812 AVX (Electronics)................ 7,800 132,112 Bacou USA* (Industrial Goods and Services)................. 4,300 92,450 Barr Laboratories* (Drugs and Health Care).................. 2,200 105,600 Budget Group* (Consumer Goods and Services)........... 1,400 22,225 Burr-Brown* (Technology)......... 7,400 172,975 Cabot Oil & Gas (Class A) (Energy)...................... 2,900 43,500 CalEnergy* (Electric Utilities).. 5,200 180,375 Calpine* (Electric Utilities).... 7,500 189,375 Carriage Services* (Consumer Goods and Services)........... 5,100 145,031 Casella Waste Systems (Class A)* (Capital Goods).... 3,700 137,131 Ceridian* (Business Services).... 1,200 83,775 Coach USA* (Transportation)...... 2,700 93,656 Cognex* (Electronics)............ 6,500 129,594 CompDent* (Medical Products and Technology)............... 5,700 59,137 Copart* (Retailing).............. 3,000 98,062 Corporate Express* (Retailing)... 11,400 58,781 Covance* (Drugs and Health Care)......................... 2,400 69,900 Cox Radio (Class A)* (Media)..... 4,500 190,125 Crusader Holding* (Financial Services).......... 735 7,717 SHARES VALUE -------- --------- UNITED STATES (continued) EduTrek International (Class A)* (Educational Services)....... 4,800 $28,500 FirstService* (Business Services) 4,800 57,300 Fusion Systems (Rights)* (Capital Goods)............... 800 13 General Cable (Manufacturing).... 2,800 57,400 General Semiconductor (Technology).................. 4,900 40,119 Glenayre Technologies* (Telecommunications).......... 11,500 50,672 HA-LO Industries* (Advertising).. 5,500 206,937 Hanger Orthopedic Group* (Medical Products and Technology)................... 3,900 87,750 Hearst-Argyle Television (Class A)* (Media)............ 1,100 36,300 HMT Technology* (Technology).................. 3,900 49,969 Indus International* (Business Services)........... 5,700 39,722 Insignia Financial Group* (Financial Services).......... 3,733 45,267 Inso* (Computer Software)........ 3,900 97,744 Integrated Electrical Services* (Electronics)................. 2,300 51,175 Ivex Packaging* (Consumer Goods and Services)........... 4,000 93,000 Journal Register* (Media)........ 9,000 135,000 Keystone Automotive Industries* (Distributors)................ 3,700 77,931 KLA-Tencor* (Technology)......... 700 30,384 LandCARE USA* (Business Services)..................... 8,900 86,219 Marcam Solutions* (Computer Software).................... 1,800 11,194 Market Facts* (Business Services)..................... 2,800 70,350 McDermott International (Industrial Goods and Services)..................... 3,100 76,531 MemberWorks* (Consumer Goods and Services)........... 4,200 124,163 Metamor Worldwide* (Business Services)..................... 6,900 171,206 Microchip Technology* (Technology).................. 4,400 162,525 Micrografx* (Business Services)..................... 700 7,722 - -------------- * Non-income producing security. See Notes to Financial Statements. P-36 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) SHARES VALUE -------- --------- UNITED STATES (continued) MMI Companies (Financial Services)..................... 3,226 $ 54,035 Modis Professional Services* (Business Services)........... 17,200 249,400 Mutual Risk Management (Financial Services).......... 1,932 75,589 National Instruments* (Technology).................. 1,900 64,778 New American Healthcare* (Drugs and Health Care)....... 5,100 57,056 NOVA* (Business Services)........ 4,418 153,249 Oak Industries* (Electronics).... 2,000 70,000 OM Group (Chemicals)............. 4,800 175,200 Omnicare (Drugs and Health Care)......................... 2,100 72,975 Personnel Group of America* (Business Services)........... 13,600 238,000 Pharmaceutical Product Development* (Medical Products and Technology)...... 1,700 51,478 Physicians' Specialty* (Drugs and Health Care).............. 10,000 82,500 Pier 1 Imports (Retailing)....... 6,500 62,969 PLATINUM Technology International* (Technology)... 3,000 57,656 Pre-Paid Legal Services* (Business Services)........... 4,000 132,000 Premier Parks* (Leisure and Hotels)....................... 10,000 302,500 Primark* (Consumer Goods and Services)................. 6,100 165,462 Prison Realty Trust (Construction and Property)... 6,100 125,050 Professional Detailing* (Business Services)........... 4,200 119,700 Provant* (Business Services)..... 4,200 89,775 Province Healthcare* (Drugs and Health Care).............. 4,200 149,363 PSS World Medical* (Drugs and Health Care).................. 13,200 303,187 Quorum Health Group* (Drugs and Health Care).............. 2,000 25,813 Renal Care Group* (Medical Products and Technology)...... 1,900 55,100 Renex* (Drugs and Health Care)......................... 9,000 64,688 SHARES VALUE -------- --------- UNITED STATES (continued) ResortQuest International* (Consumer Goods and Services)..................... 2,500 $ 36,563 Sanmina* (Industrial Goods and Services)................. 3,100 193,363 Santa Fe Energy Resources* (Resources)................... 8,500 62,688 Henry Schein* (Medical Products and Technology)...... 2,400 107,250 Schein Pharmaceutical* (Drugs and Health Care).............. 1,900 27,669 Sinclair Broadcast Group (Class A)*(Media)............. 6,800 134,513 Sola International* (Consumer Goods and Services)........... 1,100 18,975 Somnus Medical Technologies* (Medical Products and Technology)................... 5,000 14,688 Steinway Musical Instruments* (Consumer Goods and Services)..................... 1,900 49,400 Structural Dynamics Research* (Computer Software)........... 4,300 85,194 Sun International Hotels* (Leisure and Hotels).......... 1,700 77,244 SunGard Data Systems* (Computer Software)........... 2,300 91,281 Superior Services* (Business Services)........... 5,100 102,319 Total Renal Care Holdings* (Drugs and Health Care)....... 10,433 308,426 Transaction Systems Architects (Class A)* (Technology)....... 3,600 181,125 Triangle Pharmaceuticals* (Drugs and Health Care)....... 2,700 37,294 UCAR International* (Capital Goods)............... 7,200 128,250 Unigraphics Solutions (Class A)* (Business Services)........... 4,400 63,800 Universal Health Services (Class B) (Drugs and Health Care)......................... 2,100 108,938 U.S. Foodservice* (Business Services)..................... 3,500 171,500 Vlasic Foods International* (Consumer Goods and Services)..................... 6,500 154,781 - ---------------- * Non-income producing security. See Notes to Financial Statements. P-37 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO (continued) SHARES VALUE -------- --------- UNITED STATES (continued) Waste Connections* (Capital Goods)........................ 2,800 $ 51,363 Watson Parmaceuticals* (Medical Products and Technology)................... 1,900 119,463 Wilmar Industries* (Consumer Goods and Services)........... 4,500 91,266 Xilinx* (Technology)............. 1,000 65,094 Youth Services* (Support Services)..................... 7,000 26,797 ---------- 10,611,465 ---------- TOTAL COMMON STOCKS (Cost $18,656,850)............ 20,413,084 ---------- PREFERRED STOCKS -- 0.5% (Cost $164,090) GERMANY -- 0.5% Gerry Weber International (Manufacturing)............... 5,824 106,689 ---------- PRINCIPAL AMOUNT VALUE -------- --------- CONVERTIBLE BONDS -- 0.1% (Cost $19,060) FRANCE -- 0.1% L'Europeenne d'Extincteurs 4 1/4%, 1/1/2005 (Manufacturing)............... $24,600 $ 20,244 ----------- TOTAL INVESTMENTS -- 98.7% (Cost $18,840,000)............ 20,540,017 OTHER ASSETS LESS LIABILITIES-- 1.3%............ 274,045 ----------- NET ASSETS-- 100.0%.............. $20,814,062 =========== - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 93.6% BRAZIL -- 0.6% Telecomunicacoes Brasileiras "Telebras" (ADRs) (Telecommunications).......... 500 $ 36,344 --------- DENMARK -- 0.6% NeuroSearch* (Miscellaneous)..... 580 38,459 --------- FINLAND -- 2.8% Nokia (Series A) (Telecommunications).......... 1,400 170,231 --------- FRANCE -- 5.1% Alcatel (Telecommunications)..... 30 3,671 Altran Technologies (Computer and Business Services)........ 350 84,404 Cap Gemini* (Computer Software)..................... 200 32,094 Genset (ADRs)* (Medical Products and Technology)...... 1,500 40,875 SHARES VALUE -------- --------- FRANCE (continued) Rhone-Poulenc (Series A) (Medical Products and Technology)................... 1,200 $ 61,742 STMicroelectronics* (Electronics)................. 1,200 93,675 --------- 316,461 --------- GERMANY -- 1.7% Mannesmann (Machinery and Equipment).................... 900 104,192 --------- HONG KONG -- 0.5% Elec & Eltek International Holdings (Electronics)........ 150,000 28,654 --------- HUNGARY -- 0.2% Richter Gedeon (GDRs) (Medical Products and Technology)...... 350 14,962 --------- - --------------- * Non-income producing security. See Notes to Financial Statements. P-38 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued) SHARES VALUE -------- --------- INDIA -- 0.2% Videsh Sanchar Nigam (GDRs)*+ (Telecommunications).......... 1,000 $ 12,250 -------- ISRAEL -- 4.3% Check Point Software Technologies* (Computer Software)........... 1,800 82,294 ECI Telecommunications (Networking/ Communications Infrastructure)............... 1,500 53,109 Orbotech* (Electronics).......... 1,700 80,166 Tecnomatix Technologies* (Computer Software)........... 2,700 47,166 -------- 262,735 -------- ITALY -- 1.0% Telecom Italia (Telecommunications).......... 7,000 59,757 -------- JAPAN -- 5.6% CSK (Computer and Business Services)..................... 1,000 22,912 Hirose Electronics (Electronics). 400 27,883 Murata Manufacturing (Electronics)................. 2,000 82,661 NEC (Networking/ Communications Infrastructure)............... 5,000 45,825 Ricoh (Machinery and Equipment).................... 4,000 36,731 Secom (Computer and Business Services)..................... 1,000 82,485 Sharp (Electronics).............. 5,000 44,900 -------- 343,397 -------- LUXEMBOURG -- 0.6% SBS Broadcasting* (Media)........ 1,400 38,237 -------- NETHERLANDS -- 3.6% CMG* (Computer and Business Services)............ 3,900 101,082 Koninklijke (Royal) Philips Electronics (Electronics)..... 1,800 120,651 -------- 221,733 -------- SHARES VALUE -------- --------- NORWAY -- 1.6% Merkantildata (Computer Software) 9,000 $ 88,834 Provida* (Computer Software)..... 2,000 8,423 -------- 97,257 -------- SINGAPORE -- 4.0% Creative Technology* (Computer Hardware/Peripherals)......... 6,100 91,500 Elec & Eltek International (Electronics)................. 10,000 54,000 Informatics Holdings (Computer Software)........... 70,000 24,591 Venture Manufacturing (Electronics)................. 20,000 76,317 -------- 246,408 -------- SOUTH KOREA -- 0.1% SK Telecom Group (ADRs) (Telecommunications).......... 451 4,595 -------- SWEDEN -- 0.7% WM-Data (Series B) (Computer and Business Services)..................... 1,000 42,586 -------- SWITZERLAND -- 1.0% Novartis (Medical Products and Technology)................... 30 58,952 -------- TAIWAN -- 1.7% Siliconware Precision Industries (GDRs)* (Electronics Capital Equipment).................... 5,424 57,630 Taiwan Semiconductor Manufacturing (ADRs)* (Semiconductors)...... 3,190 45,258 -------- 102,888 -------- UNITED KINGDOM -- 15.3% Abacus Polar (Distributors)...... 25,500 41,228 Admiral (Computer and Business Services)..................... 3,570 68,967 Astec (Computer Hardware/ Peripherals).................. 60,000 85,068 Celltech* (Medical Products and Technology)................... 4,700 31,253 COLT Telecom Group* (Telecommunications).......... 6,000 87,556 - ------------ * Non-income producing security. + Rule 144A security. See Notes to Financial Statements. P-39 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued) SHARES VALUE -------- --------- UNITED KINGDOM (continued) Druid (Computer and Business Services)..................... 3,500 $ 76,466 General Electric (Electronics)... 8,700 77,905 Isotron (Medical Products and Technology)................... 5,000 46,846 Logica (Computer and Business Services)..................... 9,950 86,210 Misys (Computer Software)........ 6,000 43,977 M.M.T. Computing (Computer and Business Services)........ 4,500 69,957 Premier Farnell (Distributors)... 3,500 9,199 Psion (Computer Hardware/ Peripherals).................. 11,600 111,086 RM (Networking/Communications Infrastructure)............... 10,000 76,860 Spring Group (Computer and Business Services)............ 8,700 20,991 Torotrak* (Machinery and Equipment).................... 3,600 5,104 -------- 938,673 -------- UNITED STATES -- 42.4% 3DO* (Computer Software)......... 2,900 13,322 Activision* (Computer Software)..................... 1,200 13,200 Amdocs* (Computer Software)...... 900 15,412 Amkor Technology* (Semiconductors).............. 4,300 46,628 Applied Materials* (Electronics Capital Equipment)............ 600 25,631 Autodesk (Computer Software)..... 1,200 51,187 C-Cube Microsystems* (Semiconductors).............. 200 5,431 Cadence Design Systems* (Computer Software)........... 2,300 68,425 CHS Electronics* (Electronics)................. 1,800 30,488 CMP Media (Class A)* (Media)....................... 4,700 85,775 Cognex* (Electronics Capital Equipment).................... 1,800 35,888 Comdisco (Computer Hardware/ Peripherals).................. 1,800 30,375 Credence Systems* (Electronics Capital Equipment)............ 1,400 25,812 Dallas Semiconductor (Semiconductors).............. 500 20,375 SHARES VALUE -------- --------- UNITED STATES (continued) DII Group* (Contract Manufacturing/Circuit Boards)....................... 3,500 $ 80,281 DSP Communications* (Networking/Communications Infrastructure)............... 1,800 27,562 Electro Scientific Industries* (Electronics Capital Equipment).................... 1,500 67,969 Electronic Arts* (Computer Software)..................... 1,700 95,306 Electronics for Imaging* (Computer Hardware/ Peripherals).................. 1,800 71,944 EMC* (Computer Hardware/ Peripherals).................. 2,000 170,000 First Data (Computer and Business Services)............ 900 28,519 Genesys Telecommunications Laboratories* (Computer Software)..................... 1,700 38,462 HNC Software* (Computer Software)..................... 1,700 68,744 Lattice Semiconductor* (Semiconductors).............. 1,200 55,088 The Learning Company* (Computer Software)........... 2,900 75,219 Level One Communications* (Semiconductors).............. 900 31,978 Lexmark International Group (Class A)* (Computer Hardware/Peripherals)......... 900 90,450 Maxim Integrated Products* (Semiconductors).............. 900 39,291 Microchip Technology* (Semiconductors).............. 1,400 51,713 Microsoft* (Computer Software)... 900 124,678 NeoMagic* (Semiconductors)....... 1,700 37,559 Network Associates* (Computer Software)..................... 2,001 132,729 Novell* (Computer Software)...... 1,100 19,972 NTL* (Telecommunications)........ 750 42,305 Parametric Technology* (Computer Software)........... 3,000 48,750 PLATINUM Technology International* (Computer Software)..................... 2,300 44,203 Rational Software* (Computer Software)..................... 1,800 47,700 - ----------- *Non-income producing security. See Notes to Financial Statements. P-40 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO (continued) SHARES VALUE -------- --------- UNITED STATES (continued) RF Micro Devices* (Networking/ Communications Infrastructure)............... 900 $ 41,372 SCI Systems* (Contract Manufacturing/ Circuit Boards)............... 1,100 63,525 SMART Modular Technology* (Contract Manufacturing/ Circuit Boards)............... 2,200 60,913 Storage Technology* (Computer Hardware/Peripherals)......... 2,400 85,350 Structural Dynamics Research* (Computer Software)........... 3,300 65,381 Synopsys* (Computer Software).... 2,547 138,016 Tele-Communications (Series A) TCI Group* (Telecommunications).......... 1,200 66,413 SHARES VALUE -------- --------- UNITED STATES (continued) Tele-Communications (Series A) TCI Ventures Group* (Telecommunications).......... 1,200 $ 28,388 Teradyne* (Electronics Capital Equipment)............ 1,200 50,850 Ziff-Davis* (Media).............. 2,700 42,694 ---------- 2,601,273 ---------- TOTAL INVESTMENTS -- 93.6% (Cost $4,593,083)............. 5,740,044 OTHER ASSETS LESS LIABILITIES-- 6.4%............ 389,927 ---------- NET ASSETS-- 100.0%.............. $6,129,971 ========== - -------------------------------------------------------------------------------- SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 97.4% AUSTRALIA -- 1.2% Colonial (Financial Services).... 16,800 $ 57,530 Rio Tinto (Metals)............... 400 4,734 Telstra (Telecommunications)..... 2,400 11,198 Westpac Banking (Banking)........ 7,000 46,743 --------- 120,205 --------- BRAZIL -- 0.4% Telesp Participacoes (ADRs) (Telecommunications)............. 1,900 42,037 --------- DENMARK -- 1.4% Tele Danmark (Series B)* (Telecommunications)............. 1,009 136,187 --------- FRANCE -- 12.9% AXA-UAP (Insurance).............. 1,500 217,362 Castorama Dubois Investissements (Retailing)... 495 112,907 ELF Aquitaine (Resources)........ 1,275 147,350 Etam Developpement (Retailing)... 945 48,182 Lafarge (Construction and Property)..................... 1,340 127,294 STMicroelectronics* (Electronics)................. 250 19,679 SHARES VALUE -------- --------- FRANCE (continued) Suez Lyonnaise des Eaux (Construction and Property)... 761 $ 156,291 TOTAL (Resources)................ 1,148 116,243 Valeo (Manufacturing)............ 1,494 117,708 Vivendi (Industrial Goods and Services)..................... 815 211,414 --------- 1,274,430 --------- GERMANY -- 9.9% Adidas-Salomon (Retailing)....... 766 84,424 Bayerische Hypo-und Vereinsbank (Banking)......... 1,788 141,541 DaimlerChrysler* (Automotive and Related).................. 1,308 130,018 Deutsche Telekom (Telecommunications).......... 2,406 79,119 Hoechst (Chemicals).............. 2,519 104,243 Mannesmann (Industrial Goods and Services)................. 1,591 184,189 RWE (Resources).................. 2,625 145,049 Siemens (Manufacturing).......... 1,678 110,358 --------- 978,941 --------- - -------------- * Non-income producing security. See Notes to Financial Statements. P-41 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO (continued) SHARES VALUE -------- --------- GREECE -- 1.9% Hellenic Telecommunications Organization (Telecommunications).......... 2,700 $ 71,762 National Bank of Greece (Banking)..................... 1,920 84,288 National Bank of Greece (GDRs)*+ (Banking)............ 650 28,535 --------- 184,585 --------- HUNGARY -- 2.3% Magyar Tavkozlesi "Matav" (ADRs) (Telecommunications)... 7,700 229,556 --------- IRELAND -- 0.9% Bank of Ireland (Banking)........ 4,000 87,622 --------- ITALY -- 7.9% Banca Popolare di Bresci (Banking)..................... 5,593 136,465 Credito Italiano (Financial Services)..................... 21,475 127,353 ENI (Resources).................. 20,858 136,386 Istituto Nazionale delle Assicurazioni (Insurance)..... 44,756 118,279 Telecom Italia (Telecommunications).......... 27,762 174,806 Telecom Italia Mobile (Telecommunications).......... 12,244 90,439 --------- 783,728 --------- JAPAN -- 8.5% Benesse (Business Services)...... 500 26,922 Bridgestone (Automotive and Related)...................... 2,000 45,208 Canon (Business Services)........ 1,000 21,282 Chugai Pharmaceutical (Health and Household)........ 5,000 49,791 Credit Saison (Financial Services)..................... 200 4,909 East Japan Railway (Transportation).............. 6 33,364 Fuji Machine Manufacturing (Industrial Goods and Services)..................... 1,000 31,461 Honda Motor (Automotive and Related)...................... 1,000 32,694 Hosiden (Electronics)............ 2,000 34,756 SHARES VALUE -------- --------- JAPAN (continued) Japan Tobacco (Tobacco).......... 6 $ 59,749 KAO (Consumer Products).......... 2,000 44,944 Kawasaki Heavy Industries (Industrial Goods and Services)..................... 13,000 30,359 Mitsubishi Gas Chemical (Chemicals)................... 11,000 30,341 Mitsui* (Industrial Goods and Services)..................... 5,000 27,803 Mitsui Chemicals (Chemicals)..... 9,000 31,170 Mitsui Fudosan (Construction and Property)................. 4,000 30,139 Nippon Telegraph & Telephone (Telecommunications).......... 7 53,792 NTT Data (Telecommunications).... 8 39,551 NTT Mobile Communication Network "NTT DoCoMo" (Telecommunications).......... 1 40,978 Shohkoh Fund (Financial Services) 100 32,078 Sony (Consumer Products)......... 500 36,263 Takefuji (Financial Services).... 600 43,622 Tsubaki Nakashima (Manufacturing) 3,000 18,242 Uny (Retailing).................. 1,000 18,198 York-Benimaru (Retailing)........ 700 22,146 --------- 839,762 --------- MEXICO -- 0.7% Fomento Economico Mexicano "Femsa" (ADRs) (Consumer Products)..................... 2,500 66,562 --------- NETHERLANDS -- 6.9% Benckiser (Series B)* (Consumer Products)........... 2,618 171,302 ING Groep (Insurance)............ 2,429 147,952 Koninklijke Ahold (Retailing).... 2,922 107,877 Koninklijke (Royal) Philips Electronics (Electronics)..... 1,544 103,492 Unilever (Consumer Products)..... 1,814 154,882 --------- 685,505 --------- PORTUGAL -- 1.0% Banco Portugues do Atlantico (Financial Services).......... 281 5,749 Electricidade de Portugal (Utilities)................... 4,273 93,920 --------- 99,669 --------- - --------------- * Non-income producing security. + Rule 144A security. See Notes to Financial Statements. P-42 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO (continued) SHARES VALUE -------- --------- SOUTH KOREA -- 0.1% Samsung Electronics (Electronics)................. 187 $ 12,544 --------- SPAIN -- 6.9% Actividades de Construccion y Servicios (Construction and Property)..................... 3,591 141,682 Centros Comerciales Continente (Retailing)........ 3,803 128,879 Corporacion Bancaria de Espana Argentaria (Banking)... 6,186 160,169 Endesa (Utilities)............... 4,250 112,587 Telefonica de Espana (Telecommunications).......... 3,127 139,017 --------- 682,334 --------- SWEDEN -- 5.3% Astra-Zeneca (Class A) (Health and Household)........ 7,600 154,811 Electrolux (Series B) (Health and Household)........ 5,508 94,571 L.M. Ericsson Telefon (Series B) (Telecommunications).......... 5,023 119,319 Nordbanken Holding (Banking)..... 25,091 160,587 --------- 529,288 --------- SWITZERLAND -- 7.5% Nestle (Consumer Products)....... 51 110,983 Novartis (Health and Household).................... 97 190,611 Roche Holding (Health and Household).................... 10 121,980 UBS* (Banking)................... 369 113,332 Zurich Allied (Insurance)........ 274 202,808 --------- 739,714 --------- TAIWAN -- 0.2% The ROC Taiwan Fund (Miscellaneous)............... 1,200 7,425 Taiwan Opportunities Fund* (Miscellaneous)............... 1,000 12,200 --------- 19,625 --------- UNITED KINGDOM -- 21.5% Allied Zurich* (Insurance)....... 8,500 126,786 SHARES OR PRINCIPAL AMOUNT VALUE --------- --------- UNITED KINGDOM (continued) Associated British Ports Holdings (Transportation).............. 14,500 shs. $ 67,686 BP Amoco (Resources)............. 9,661 143,703 British American Tobacco (Tobacco)..................... 8,500 75,197 Bunzl (Manufacturing)............ 23,000 89,819 FKI Babcock (Industrial Goods and Services)................. 27,000 60,219 Granada Group (Entertainment and Leisure).................. 10,500 185,695 The Great Universal Stores (Retailing)................... 7,400 77,246 Kingfisher (Retailing)........... 9,000 97,008 Laporte (Chemicals).............. 7,000 54,092 Lloyds TSB Group (Banking)....... 7,500 106,087 National Power (Utilities)....... 13,500 118,872 Railtrack Group (Transportation). 7,699 200,695 Rolls Royce (Industrial Goods and Services)................. 17,600 72,087 Royal Bank of Scotland (Banking)..................... 8,500 136,300 Scottish & Newcastle (Consumer Products)..................... 5,000 56,505 SmithKline Beecham (Health and Household)................ 5,000 69,937 Tesco (Retailing)................ 49,500 141,594 United Utilities (Utilities)..... 9,000 124,319 WPP Group (Media)................ 20,000 120,721 --------- 2,124,568 --------- TOTAL COMMON STOCKS (Cost $7,614,257)............. 9,636,862 CONVERTIBLE BONDS -- 0.5% (Cost $34,019) JAPAN -- 0.5% Sanwa International 1 1/4%, 7/31/2005 (Banking)........... 6,000,000** 44,283 --------- TOTAL INVESTMENTS -- 97.9% (Cost $7,648,276)............. 9,681,145 OTHER ASSETS LESS LIABILITIES-- 2.1%............ 211,684 ---------- NET ASSETS-- 100.0%.............. $9,892,829 ========== - --------------- * Non-income producing security. ** Principal amount reported in Japanese yen. See Notes to Financial Statements. P-43 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD BOND PORTFOLIO PRINCIPAL AMOUNT VALUE --------- --------- CORPORATE BONDS -- 81.9% ADVERTISING -- 0.4% Adams Outdoor Advertising 10 3/4%, 3/15/2006............... $125,000 $ 135,000 --------- AUTOMOTIVE AND RELATED -- 0.2% Diamond Triumph Automotive 9 1/4%, 4/1/2008+................ 60,000 60,000 --------- BROADCASTING -- 1.8%................ Capstar Broadcasting 10 3/4%, 5/15/2006........................ 110,000 121,000 Capstar Broadcasting Partners 0% (12 3/4%**), 2/1/2009......... 250,000 203,750 Cumulus Media 10 3/8%, 7/1/2008......................... 125,000 133,125 Paxson Communications 11 5/8%, 10/1/2002........................ 125,000 128,750 --------- 586,625 --------- CABLE SYSTEMS AND SATELLITE VIDEO -- 7.8% Avalon Cable Holdings 0% (11 7/8%**), 12/1/2008+.......... 175,000 98,219 Avalon Cable of Michigan Holdings 9 3/8%, 12/1/2008+...... 50,000 51,375 Charter Communications Southeast Holdings 11 1/4%, 3/15/2006........................ 250,000 282,500 Charter Communications Southeast Holdings 0% (14%**), 3/15/2007............... 300,000 268,500 CSC Holdings 10 1/2%, 5/15/2016..... 125,000 147,500 Digital Television 12 1/2%, 8/1/2007................ 200,000 219,000 EchoStar DBS 12 1/2%, 7/1/2002...... 350,000 404,250 Intermedia Capital Partners IV, 11 1/4%, 8/1/2006................ 375,000 423,750 Northland Cable Television 10 1/4%, 11/15/2007.............. 150,000 158,625 Pagasus Communications 9 3/4%, 12/1/2006+............... 65,000 65,487 Rogers Cablesystems 11%, 12/1/2015................... 225,000 264,375 TCI Satellite Entertainment 10 7/8%, 2/15/2007............... 400,000 134,000 --------- 2,517,581 --------- CELLULAR -- 2.9% American Cellular 10 1/2%, 5/15/2008+.............. $175,000 $ 169,750 Centennial Cellular 10 3/4%, 12/15/2008+............. 200,000 200,000 Price Communications Cellular Holdings 11 1/4%, 8/15/2008...... 190,000 180,500 Price Communications Wireless 11 3/4%, 7/15/2007............... 375,000 397,500 --------- 947,750 --------- CHEMICALS -- 1.3% Koppers Industries 9 7/8% 12/1/2007................. 125,000 123,125 Texas Petrochemicals 11 1/8%, 7/1/2006................ 300,000 297,000 --------- 420,125 --------- COMPUTER AND RELATED SERVICES -- 1.9% DecisionOne 9 3/4%, 8/1/2007........ 275,000 127,875 DecisionOne Holdings 0% (11 1/2%**), 8/1/2008......... 100,000 23,500 Unisys 12%, 4/15/2003............... 175,000 196,875 Unisys 11 3/4%, 10/15/2004.......... 225,000 262,125 --------- 610,375 --------- CONSUMER PRODUCTS -- 4.8% Aki 10 1/2%, 7/1/2008............... 75,000 71,625 Aki Holdings 0% (13 1/2%**), 7/1/2009......................... 75,000 29,625 Albecca 10 3/4%, 8/15/2008+......... 45,000 44,325 Amscan Holdings 9 7/8%, 12/15/2007............... 200,000 185,000 Anchor Advanced Products 11 3/4%, 4/1/2004................ 200,000 218,000 Diamond Brands 0% (12 7/8%**), 4/15/2009........... 175,000 62,125 Diamond Brands Operating 10 1/8%, 4/15/2008............... 150,000 135,750 French Fragrances 10 3/8%, 5/15/2007............... 200,000 198,000 Global Health Sciences 11%, 5/1/2008.................... 325,000 216,125 Iron Age 9 7/8%, 5/1/2008........... 200,000 171,000 - ------------- + Rule 144A security. ** Deferred interest debentures pay no interest for a stipulated number of years, after which they pay the indicated coupon rate. See Notes to Financial Statements. P-44 - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued) PRINCIPAL AMOUNT VALUE --------- --------- CONSUMER PRODUCTS (continued) Iron Age Holdings 0% (12 1/8%**), 5/1/2009......... $ 80,000 $ 36,400 Moll Industries 101 1/42%, 7/1/2008. 125,000 123,125 Windmere-Durable Holdings 10%, 7/31/2008................... 60,000 56,400 --------- 1,547,500 --------- CONTAINERS -- 0.6% U.S. Can 10 1/8%, 10/15/2006........ 200,000 206,000 --------- ENERGY -- 0.8% Abraxas Petroleum 11 1/2%, 11/1/2004............... 150,000 114,000 Universal Compression Holdings 0% (9 7/8%**), 2/15/2008......... 100,000 60,500 Universal Compression Holdings 0% (11 3/8%**), 2/15/2009........ 150,000 90,000 --------- 264,500 --------- EQUIPMENT -- 1.4% Neff 10 1/4%, 6/1/2008.............. 85,000 83,725 Neff 10 1/4%, 6/1/2008+............. 65,000 64,025 Williams Scotsman 9 7/8%, 6/1/2007................. 280,000 289,100 --------- 436,850 --------- FINANCIAL SERVICES -- 1.8% AMRESCO 10%, 3/15/2004.............. 210,000 149,625 Dollar Financial Group 10 7/8%, 11/15/2006.............. 185,000 187,775 Ocwen Capital Trust I 10 7/8%, 8/1/2027................ 150,000 120,750 Veritas Capital Trust 10%, 1/1/2028.................... 150,000 135,375 --------- 593,525 --------- FOOD -- 3.4% AFC Enterprises 10 1/4%, 5/15/2007............... 200,000 209,000 Agrilink Foods 11 7/8%, 11/1/2008+.. 50,000 51,125 AmeriKing 10 3/4%, 12/1/2006........ 150,000 157,125 AmeriServe Food Distributors 10 1/8%, 7/15/2007............... 350,000 304,500 B&G Foods 9 5/8%, 8/1/2007.......... 120,000 117,600 PRINCIPAL AMOUNT VALUE --------- --------- FOOD (continued) Carrols 9 1/2%, 12/1/2008+.......... $ 70,000 $ 71,575 Packaged Ice 9 3/4%, 2/1/2005....... 200,000 201,000 --------- 1,111,925 --------- GAMING/HOTEL -- 7.1% Alliance Gaming 10%, 8/1/2007....... 125,000 113,125 Ameristar Casino 10 1/2%, 8/1/2004................ 250,000 228,750 Aztar 13 3/4%, 10/1/2004............ 100,000 111,250 Casino America 12 1/2%, 8/1/2003................ 400,000 445,000 Casino Magic of Louisiana 13%, 8/15/2003................... 150,000 170,250 Coast Hotels & Casinos 13%, 12/15/2002.................. 200,000 225,000 Fitzgerald Gaming 12 1/4%, 12/15/2004.............. 150,000 83,250 Showboat Marina Casino Partnership 13 1/2%, 3/15/2003... 150,000 170,250 Trump Atlantic City Funding 11 1/4%, 5/1/2006................ 550,000 486,750 Trump Hotels & Casino Resorts Funding 15 1/2%, 6/15/2005....... 250,000 266,250 --------- 2,299,875 --------- HEALTH CARE/MEDICAL PRODUCTS -- 5.7% ALARIS Medical 9 3/4%, 12/1/2006................ 250,000 256,250 ALARIS Medical 0% (11 1/8%**), 8/1/2008+........ 300,000 165,000 Alliance Imaging 9 5/8%, 12/15/2005............... 115,000 114,425 Dade International 11 1/8%, 5/1/2006................ 275,000 306,625 Everest Healthcare Services 9 3/4%, 5/1/2008................. 200,000 199,000 Graphic Controls 12%, 9/15/2005................... 125,000 144,375 Paracelsus Healthcare 10%, 8/15/2006................... 275,000 248,875 Sun Healthcare Group 9 1/2%, 7/1/2007................. 280,000 228,200 Vencor 9 7/8%, 5/1/2005............. 200,000 173,000 --------- 1,835,750 --------- - ---------------- + Rule 144A security. ** Deferred-interest debentures pay no interest for a stipulated number of years, after which they pay the indicated coupon rate. See Notes to Financial Statements. P-45 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued) PRINCIPAL AMOUNT VALUE -------- --------- INDUSTRIAL/ MANUFACTURING -- 3.3% Airxcel 11%, 11/15/2007............. $ 250,000 $ 252,500 Alliance Laundry Systems 9 5/8%, 5/1/2008+................ 150,000 144,750 BPC Holding 12 1/2%, 6/15/2006...... 150,000 156,750 Coyne International Enterprises 11 1/4%, 6/1/2008................ 130,000 128,050 Day International Group 9 1/2%, 3/15/2008................ 150,000 147,375 Great Lakes Acquisition 0% (13 1/8%**), 5/15/2009........ 75,000 38,625 Great Lakes Carbon 10 1/4%, 5/15/2008............... 200,000 202,500 --------- 1,070,550 --------- LEISURE -- 1.6% Affinity Group Holding 11%, 4/1/2007.................... 250,000 260,000 AMF Bowling Worldwide 0% (12 1/4%**), 3/15/2006........ 175,000 100,625 AMF Group 10 7/8%, 3/15/2006........ 50,000 40,750 Premier Parks 9 1/4%, 4/1/2006................. 125,000 129,844 --------- 531,219 --------- METALS -- 0.9% Renco Metals 11 1/2%, 7/1/2003...... 175,000 181,125 Royal Oak Mines 12 3/4%, 8/15/2006........................ 225,000 113,625 --------- 294,750 --------- PAGING -- 5.0% Metrocall 9 3/4%, 11/1/2007......... 300,000 288,000 Metrocall 11%, 9/15/2008+........... 240,000 242,400 Mobile Telecommunication Technologies 13 1/2%, 12/15/2002....................... 225,000 255,938 Paging Network 10%, 10/15/2008.................. 575,000 554,875 ProNet 11 7/8%, 6/15/2005........... 250,000 266,250 --------- 1,607,463 --------- PAPER AND PACKAGING -- 0.6% Crown Paper 11%, 9/1/2005........... 225,000 199,125 --------- PRINCIPAL AMOUNT VALUE -------- --------- PRINTING AND PUBLISHING -- 5.1% Advanstar Communications 9 1/4%, 5/1/2008................. $ 200,000 $ 202,000 American Lawyer Media 9 3/4%, 12/15/2007............... 175,000 180,687 American Lawyer Media Holdings 0% (12 1/4%**), 12/15/2008....................... 60,000 37,200 Liberty Group Publishing 9 3/8%, 2/1/2008................. 150,000 147,750 Liberty Group Publishing 0% (11 5/8%**), 2/1/2009......... 275,000 152,625 NBC Acquisition 0% (10 3/4%**), 2/15/2009........ 365,000 211,700 Perry-Judd 10 5/8%, 12/15/2007...... 165,000 174,075 Regional Independent Media Group 10 1/2%, 7/1/2008.......... 225,000 228,375 TransWestern Holdings 0% (11 7/8%**), 11/15/2008....... 255,000 169,575 Von Hoffman Press 10 7/8%, 5/15/2007+.............. 125,000 129,375 --------- 1,633,362 --------- RECORD STORAGE -- 0.3% Pierce Leahy 11 1/8%, 7/15/2006..... 75,000 83,250 --------- RETAILING -- 2.3% Central Tractor 10 5/8%, 4/1/2007... 175,000 180,250 Cole National Group 9 7/8%, 12/31/2006............... 100,000 104,000 Frank's Nursery & Crafts 10 1/4%, 3/1/2008................ 90,000 89,100 Musicland Group 9 7/8%, 3/15/2008................ 200,000 195,000 TM Group Holdings 11%, 5/15/2008+.................. 175,000 175,875 --------- 744,225 --------- SUPERMARKETS -- 1.9% Jitney-Jungle Stores of America 12%, 3/1/2006.................... 150,000 168,000 Jitney-Jungle Stores of America 10 3/8%, 9/15/2007............... 200,000 206,000 Pathmark Stores 11 5/8%, 6/15/2002............... 240,000 234,000 --------- 608,000 --------- - -------------- + Rule 144A security. ** Deferred-interest debentures pay no interest for a stipulated number of years, after which they pay the indicated coupon rate. See Notes to Financial Statements. P-46 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued) PRINCIPAL AMOUNT OR WARRANTS VALUE ---------- --------- TECHNOLOGY -- 3.9% Advanced Micro Devices 11%, 8/1/2003.................... $ 375,000 $ 401,250 Hadco 9 1/2%, 6/15/2008............. 200,000 199,000 MCMS 9 3/4%, 3/1/2008............... 225,000 191,250 Therma-Wave 10 5/8%, 5/15/2004............... 150,000 75,750 Viasystems 9 3/4%, 6/1/2007......... 400,000 376,000 --------- 1,243,250 --------- TELECOMMUNICATIONS -- 12.9% BTI Telecom 10 1/2%, 9/15/2007............... 275,000 202,125 CapRock Communications 12%, 7/15/2008................... 125,000 116,250 Crown Castle International 0% (10 5/8%**),11/15/2007........ 200,000 141,000 Exodus Communications 11 1/4%, 7/1/2008................ 55,000 55,275 Facilicom International 10 1/2%, 1/15/2008............... 325,000 261,625 GCI 9 3/4%, 8/1/2007................ 175,000 174,125 GlobalStar 11 1/4%, 6/15/2004....... 275,000 209,000 GlobalStar 10 3/4%, 11/1/2004....... 75,000 54,000 Golden Sky Systems 12 3/8%, 8/1/2006+............... 325,000 338,000 ICG Holdings 0% (11 5/8%**), 3/15/2007........................ 175,000 113,750 IXC Communications 9%, 4/15/2008.................... 100,000 100,750 Nextel Communications 0% (10.65%**), 9/15/2007......... 215,000 138,137 NEXTLINK Communications 12 1/2%, 4/15/2006............... 350,000 379,750 ORBCOMM Global 14%, 8/15/2004................... 80,000 82,800 Pinnacle Holdings 0% (10%**), 3/15/2008............ 590,000 346,625 Powertel 11 1/8%, 6/1/2007.......... 250,000 250,000 PSINet 10%, 2/15/2005............... 175,000 174,125 RCN 10%, 10/15/2007................. 175,000 168,000 Splitrock Services 11 3/4%, 7/15/2008............... 55,000 47,850 Splitrock Services (warrants expiring 7/15/2008)*............. 55 wts. 605 PRINCIPAL AMOUNT, SHARES, OR WARRANTS VALUE ----------- --------- TELECOMMUNICATIONS (continued) Talton Holdings 11%, 6/30/2007........................ $200,000 $ 191,000 Verio 10 3/8%, 4/1/2005............. 125,000 123,125 Verio 11 1/4%, 12/1/2008+........... 140,000 141,400 Verio 13 1/2%, 6/15/2004............ 200,000 217,000 Verio (warrants expiring 6/15/2004)*...................... 800 wts. 28,000 Viatel 11 1/4%, 4/15/2008........... $ 90,000 92,475 --------- 4,146,792 --------- TEXTILES -- 0.3% Tropical Sportswear International 11%, 6/15/2008................... 100,000 105,750 --------- THEATERS -- 0.6% Hollywood Theaters 10 5/8%, 8/1/2007................ 250,000 185,625 --------- TRANSPORTATION -- 0.8% Atlas Air 10 3/4%, 8/1/2005......... 240,000 253,200 --------- UTILITIES -- 0.5% Midland Cogeneration Venture 11 3/4%, 7/23/2005............... 125,000 147,269 --------- TOTAL CORPORATE BONDS (Cost $28,042,831).............. 26,427,211 ---------- PREFERRED STOCKS -- 6.8% BROADCASTING -- 1.3% Capstar Broadcasting Partners 12%.............................. 978 shs. 111,737 Capstar Communications 12 5/8%...... 375 45,375 Cumulus Media 13 3/4%............... 77 82,967 Sinclair Capital 11 5/8%............ 1,500 163,875 --------- 403,954 --------- CABLE SYSTEMS -- 0.7% Pegasus Communications 12 3/4% (Series A)............... 164 172,610 Pegasus Communications 12 3/4% (units).................. 50 50,750 --------- 223,360 --------- - --------------------- * Non-income producing security. ** Deferred-interest debentures pay no interest for a stipulated number of years, after which they pay the indicated coupon rate. + Rule 144A security. See Notes to Financial Statements. P-47 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN HIGH-YIELD BOND PORTFOLIO (continued) SHARES VALUE -------- --------- CELLULAR -- 0.5% Rural Cellular 11 3/8%.............. 185 $ 172,623 --------- FOOD -- 0.4% Nebco Evans 11 1/4%................. 2,712 136,279 --------- HEALTH CARE/MEDICAL PRODUCTS -- 0.3% River Holding 11 1/2%............... 1,722 103,750 --------- INDUSTRIAL/ MANUFACTURING -- 0.3% Day International Group 12 1/4%..... 109 100,553 --------- PRINTING AND PUBLISHING -- 0.8% Liberty Group Publishing 14 3/4%.... 9,534 240,735 --------- TECHNOLOGY -- 0.3% MCMS 12 1/2%........................ 1,230 98,093 --------- TELECOMMUNICATIONS -- 2.2% Crown Castle International 12 3/4%.......................... 155 156,356 Global Crossing Holding 10 1/2%.......................... 750 73,688 IXC Communications 12 1/2%.......... 137 140,646 Nextel Communications 11 1/8%....... 269 242,773 NEXTLINK Communications 14%.............................. 1,587 84,508 --------- 697,971 --------- TOTAL PREFERRED STOCKS (Cost $2,417,652)................ 2,177,318 ----------- SHARES OR PRINCIPAL AMOUNT VALUE -------- --------- CONVERTIBLE PREFERRED STOCKS -- 0.8% BROADCASTING -- 0.6% Chancellor Media $3................. 875 shs. $ 81,703 Chancellor Media $3+................ 1,250 116,719 ---------- 198,422 ---------- TELECOMMUNICATIONS -- 0.2% IXC Communications 6 3/4%+.......... 1,160 38,425 Viatel 10%.......................... 34 3,842 ---------- 42,267 ---------- TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $187,690).................. 240,689 ---------- REPURCHASE AGREEMENT -- 6.8% (Cost $2,200,000) State Street Bank and Trust 4.45%, dated 12/31/1998, maturing 1/4/1999 collateralized by: $1,650,000 US Treasury Notes 11 5/8%, 11/15/2004, with a fair market value of $2,245,944.............. $2,200,000 2,200,000 ---------- TOTAL INVESTMENTS -- 96.3% (Cost $32,848,173).............. 31,045,218 OTHER ASSETS LESS LIABILITIES-- 3.7%............... 1,207,590 ---------- NET ASSETS-- 100.0%................. $32,252,808 =========== - -------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 35.2% AEROSPACE -- 0.6% General Dynamics................. 1,500 $ 87,938 --------- AUTOMOTIVE AND RELATED -- 1.4% DaimlerChrysler.................. 2,199 211,241 --------- BANKING AND FINANCE -- 4.5% Bank of New York................. 4,400 177,100 BankAmerica...................... 1,018 61,207 SHARES VALUE -------- --------- BANKING AND FINANCE (continued) Citigroup........................ 2,000 $99,000 Hartford Financial Services Group......................... 2,200 120,725 Morgan (J.P.).................... 250 26,266 Washington Mutual................ 4,536 173,218 --------- 657,516 --------- BUSINESS SERVICES -- 0.3% Electronic Data Systems.......... 850 42,712 --------- - ------------ + Rule 144A security. See Notes to Financial Statements. P-48 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO (continued) SHARES VALUE -------- --------- CAPITAL GOODS -- 0.2% Crown Cork & Seal................ 1,000 $ 30,813 --------- CHEMICALS -- 0.5% duPont (E.I.) de Nemours......... 1,300 68,981 --------- CONSUMER GOODS AND SERVICES -- 4.5% Anheuser-Busch................... 1,400 91,875 General Mills.................... 2,500 194,375 Russell.......................... 3,600 73,125 Sara Lee......................... 8,600 242,412 Stanley Works.................... 2,100 58,275 --------- 660,062 --------- DRUGS AND HEALTH CARE -- 3.0% American Home Products........... 2,200 123,888 Baxter International............. 800 51,450 Bristol-Myers Squibb............. 2,000 267,625 --------- 442,963 --------- ELECTRIC AND GAS UTILITIES -- 4.5% FPL Group........................ 2,500 154,062 Sonat............................ 4,700 127,194 Unicom........................... 4,700 181,244 Williams Companies............... 6,000 187,125 --------- 649,625 --------- ENERGY -- 4.3% BP Amoco (ADRs) (United Kingdom).............. 650 58,256 Exxon............................ 1,900 138,937 Mobil............................ 1,900 165,538 Royal Dutch Petroleum (Netherlands)................. 2,300 110,112 Unocal........................... 5,100 148,856 --------- 621,699 --------- FOOD -- 0.5% ConAgra.......................... 2,400 75,600 --------- INSURANCE -- 2.6% American General................. 2,200 171,600 Chubb............................ 1,200 77,850 Lincoln National................. 1,500 122,719 --------- 372,169 --------- SHARES OR PRINCIPAL AMOUNT VALUE -------- --------- MACHINERY AND EQUIPMENT -- 1.2% GATX............................. 4,800 shs. $ 181,800 --------- PAPER AND PACKAGING -- 0.4% Mead............................. 1,800 52,763 --------- RETAILING -- 0.8% May Department Stores............ 1,900 114,712 --------- TOBACCO -- 1.6% Philip Morris.................... 4,400 235,400 --------- TRANSPORTATION -- 0.4% Norfolk Southern................. 1,800 57,038 --------- UTILITIES/ TELECOMMUNICATIONS -- 3.9% DQE.............................. 1,700 74,694 GTE.............................. 3,700 249,519 Harris........................... 1,000 36,625 SBC Communications............... 4,000 214,500 --------- 575,338 --------- TOTAL COMMON STOCKS (Cost $4,320,812)............. 5,138,370 --------- CORPORATE BONDS -- 31.9% AUTOMOTIVE -- 3.9% Chrysler Financial 6.09%, 4/6/2001................ $300,000 304,952 Ford Motor Credit 6 3/4%, 8/15/2008.............. 250,000 266,009 --------- 570,961 --------- BANKING AND FINANCE -- 7.4% Associates Corp. of North America 6 1/2%, 8/15/2002...... 300,000 310,023 Capital One Bank 8 1/8%, 3/1/2000............... 250,000 254,428 First USA Bank 5 3/4%, 1/15/1999.............. 100,000 100,001 GMAC 6 1/2%, 12/5/2005............ 200,000 210,053 Heller Financial 5 7/8%, 11/1/2000.............. 200,000 199,887 --------- 1,074,392 --------- - ---------------- See Notes to Financial Statements. P-49 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN INCOME PORTFOLIO (continued) PRINCIPAL AMOUNT VALUE -------- --------- ELECTRIC AND GAS UTILITIES -- 2.1% Consumers Energy 6 3/8%, 2/1/2008................. $300,000 $ 302,998 --------- ENERGY -- 2.9% Petroleum Geo-Services 7 1/2%, 3/31/2007................ 400,000 426,184 --------- FUNERAL SERVICES -- 1.8% Loewen Group International 7 1/2%, 4/15/2001................ 300,000 268,500 --------- MEDIA -- 6.1% Time Warner 7 3/4%, 6/15/2005....... 500,000 555,022 Viacom 7 3/4%, 6/1/2005............. 300,000 327,992 --------- 883,014 --------- TECHNOLOGY -- 4.9% Dell Computer 6.55%, 4/15/2008........................ 400,000 416,222 First Data 5.80%, 12/15/2008........ 100,000 99,085 International Business Machines 5.37%, 9/22/2003................ 200,000 202,312 --------- 717,619 --------- UTILITIES/ TELECOMMUNICATIONS -- 2.8% MCI WorldCom 6.40%, 8/15/2005........................ 200,000 207,568 Sprint Capital 6 1/8%, 11/15/2008... 200,000 204,446 --------- 412,014 --------- TOTAL CORPORATE BONDS (Cost $4,581,625)................ 4,655,682 --------- US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES -- 26.8% US GOVERNMENT SECURITIES - -- 13.6% US Treasury Notes: 6 1/4%, 6/30/2002................ 300,000 314,906 6 1/2%, 5/15/2005................ 500,000 548,125 6 1/2%, 10/15/2006............... 500,000 555,157 6 5/8%, 5/15/2007................ 500,000 562,500 --------- PRINCIPAL AMOUNT OR SHARES VALUE --------- --------- Total US Government Securities (Cost $1,873,774)................ $1,980,688 --------- US GOVERNMENT AGENCY SECURITIES -- 13.2% US Government Title XI (Bay Transportation) 7.30%, 6/1/2021......................... $200,000 218,456 FHLMC Gold 5 1/2%, 7/1/2013++....... 297,919 294,289 Federal National Mortgage Association: 5.90%, 6/19/2003................. 300,000 304,019 6.35%, 5/18/2005................. 300,000 307,076 5.795%, 1/1/2009................. 200,000 201,000 6%, 12/1/2028++.................. 200,000 197,438 Government National Mortgage Association, Mortgage-backed Passed-through Certificates:++ 6 1/2%, 12/15/2028............... 200,000 202,188 6%, 12/20/2028................... 200,000 198,250 --------- Total US Government Agency Securities (Cost $1,902,347)..... 1,922,716 --------- TOTAL US GOVERNMENT AND GOVERNMENT AGENCY SECURITIES (Cost $3,776,121)................ 3,903,404 --------- CONVERTIBLE PREFERRED STOCKS -- 4.4% BANKING AND FINANCE -- 2.4% Salomon Smith Barney 7 5/8%......... 7,500 shs. 345,000 --------- INSURANCE -- 2.0% St. Paul Capital 6%................. 4,500 290,250 --------- TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $439,020)........... 635,250 --------- TOTAL INVESTMENTS -- 98.3% (Cost $13,117,578)............... 14,332,706 OTHER ASSETS LESS LIABILITIES-- 1.7%............... 249,519 --------- NET ASSETS-- 100.0%.............. $14,582,225 =========== - ---------------- ++ Investments in mortgage-backed securities are subject to principal paydowns. As a result of prepayments from refinancing or satisfaction of the underlying mortgage instruments, the average life may be less than the original maturity. This in turn may impact the ultimate yield realized from these investments. See Notes to Financial Statements. P-50 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN LARGE-CAP VALUE PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 97.4% AEROSPACE -- 4.7% Goodrich (B.F.).................. 5,000 $ 179,375 --------- AUTOMOTIVE AND RELATED -- 6.9% Ford Motor....................... 2,100 123,244 General Motors................... 2,000 143,125 --------- 266,369 --------- BANKING -- 11.0% Bank of New York................. 4,000 161,000 BankAmerica...................... 2,205 132,576 Summit Bancorp................... 3,000 131,062 --------- 424,638 --------- DRUGS AND HEALTH CARE -- 7.7% Bristol-Myers Squibb............. 1,100 147,194 United Healthcare................ 3,500 150,719 --------- 297,913 --------- ENERGY -- 2.8% Texaco........................... 2,000 105,750 --------- FINANCE AND INSURANCE -- 16.0% Citigroup........................ 2,100 103,950 The Equitable Companies.......... 2,700 156,262 Fannie Mae....................... 1,600 118,400 St. Paul Companies............... 3,000 104,250 Washington Mutual................ 3,425 130,792 --------- 613,654 --------- FOOD -- 2.7% Dole Food........................ 3,500 105,000 --------- HOUSEHOLD PRODUCTS AND FURNISHINGS -- 8.9% Armstrong World Industries....... 1,600 96,500 Dial............................. 4,400 127,050 Kimberly-Clark................... 2,200 119,900 --------- 343,450 --------- SHARES VALUE -------- --------- INDUSTRIAL EQUIPMENT -- 2.7% General Electric................. 1,000 $ 102,063 --------- MEDICAL PRODUCTS AND TECHNOLOGY -- 3.3% Baxter International............. 2,000 128,625 --------- OFFICE EQUIPMENT -- 3.7% Xerox............................ 1,200 141,600 --------- PACKAGING -- 2.7% Crown Cork & Seal................ 3,400 104,762 --------- PAPER AND FOREST PRODUCTS -- 6.6% Champion International........... 2,900 117,450 Georgia-Pacific Group............ 2,350 137,622 --------- 255,072 --------- RETAIL TRADE -- 10.8% May Department Stores............ 1,900 114,713 Penney (J.C.).................... 2,750 128,906 Sears, Roebuck................... 4,000 170,000 --------- 413,619 --------- SPECIALTY MATERIALS -- 2.9% Raychem.......................... 3,450 111,478 --------- TOBACCO -- 4.0% Philip Morris.................... 2,850 152,475 --------- TOTAL INVESTMENTS -- 97.4% (Cost $3,637,303)............. 3,745,843 OTHER ASSETS LESS LIABILITIES-- 2.6%............ 99,980 ---------- NET ASSETS-- 100.0%.............. $3,845,823 ========== - -------------- See Notes to Financial Statements. P-51 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- PORTFOLIOS OF INVESTMENTS (continued) - -------------------------------------------------------------------------------- SELIGMAN SMALL-CAP VALUE PORTFOLIO SHARES VALUE -------- --------- COMMON STOCKS -- 98.1% ADVERTISING -- 3.8% True North Communications........ 3,500 $ 94,062 --------- APPAREL AND TEXTILES -- 4.9% Cutter & Buck*................... 3,250 121,672 --------- APPLIANCES -- 4.2% Windmere-Durable Holdings........ 13,500 104,625 --------- BANKING -- 2.8% Bay View Capital................. 3,200 69,000 --------- BUILDING AND CONSTRUCTION -- 2.5% Dal-Tile International*.......... 6,000 62,250 --------- CAPITAL GOODS -- 4.4% Apogee Enterprises............... 5,200 58,500 BMC Industries................... 8,100 50,625 --------- 109,125 --------- COMPUTER SOFTWARE -- 2.5% Dialogic*........................ 3,100 60,934 --------- DISTRIBUTORS -- 5.4% Cubic............................ 3,050 57,187 Elsag Bailey Process Auto (ADRs)* (Netherlands).................. 1,950 76,294 --------- 133,481 --------- FINANCE AND INSURANCE -- 3.6% AMRESCO*......................... 10,000 87,812 --------- GARDEN PRODUCTS -- 3.0% Acorn Products*.................. 10,700 72,894 --------- INDUSTRIAL GOODS AND SERVICES -- 3.5% Furon............................ 5,000 85,313 --------- MACHINERY -- 3.8% Stewart & Stevenson Services..... 9,700 93,059 --------- SHARES VALUE -------- --------- MANUFACTURING -- 3.0% Mueller Industries*.............. 3,700 $ 75,156 --------- MEDICAL PRODUCTS AND TECHNOLOGY -- 3.8% ChiRex*.......................... 4,400 93,500 --------- OIL AND GAS -- 5.1% Friede Goldman International*.... 5,200 59,150 Marine Drilling*................. 8,800 67,650 --------- 126,800 --------- PACKAGING/ CONTAINERS -- 3.3% Applied Extrusion Technologies*................. 10,000 81,250 --------- PLASTICS -- 3.2% Lamson & Sessions*............... 15,500 79,438 --------- PRINTING AND PUBLISHING -- 5.6% Cadmus Communications............ 3,050 58,141 Merrill.......................... 4,200 81,112 --------- 139,253 --------- RESTAURANTS -- 5.7% Avado Brands..................... 7,600 63,650 Foodmaker*....................... 3,450 76,116 --------- 139,766 --------- RETAIL TRADE -- 8.8% Abercrombie & Fitch (Class A)*... 1,000 70,750 Stage Stores*.................... 7,500 70,312 The Wet Seal (Class A)*.......... 2,500 75,469 --------- 216,531 --------- SPECIALTY CHEMICALS -- 2.2% Dexter........................... 1,750 55,016 --------- SPECIALTY METALS/STEEL -- 1.6% Olympic Steel*................... 8,000 40,125 --------- TOBACCO -- 3.4% Consolidated Cigar Holding*...... 4,800 84,900 --------- - -------------- * Non-income producing security. See Notes to Financial Statements. P-52 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - -------------------------------------------------------------------------------- SELIGMAN SMALL-CAP VALUE PORTFOLIO (continued) SHARES VALUE -------- --------- TRANSPORTATION -- 8.0% ABC Rail Products*............... 7,000 $ 85,969 Pittston BAX Group............... 10,000 111,250 --------- 197,219 --------- TOTAL INVESTMENTS -- 98.1% (Cost $2,587,518)............. 2,423,181 VALUE ---------- OTHER ASSETS LESS LIABILITIES-- 1.9%............ $45,750 ---------- NET ASSETS-- 100.0%.............. $2,468,931 ========== - ------------- * Non-income producing security. See Notes to Financial Statements. P-53 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES - --------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN COMMUNICATIONS SELIGMAN SELIGMAN CASH COMMON AND BOND CAPITAL MANAGEMENT STOCK INFORMATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- --------- ASSETS: Investments, at value (see portfolios of investments): Long-term holdings................. $6,694,244 $23,240,892 $ -- $56,781,324 $120,728,001 Short-term holdings................ 400,000 1,000,000 10,391,590 5,400,000 600,000 ---------- ----------- ----------- ----------- ------------ Total Investments 7,094,244 24,240,89 10,391,590 62,181,324 121,328,001 Cash............................... 77,844 97,894 118,378 67,770 73,789 Interest and dividends receivable...................... 97,222 4,867 19,229 86,436 10,994 Receivable for Capital Stock sold...................... 67,486 -- 2,301 310,309 12,978 Receivable from associated companies....................... 4,409 -- 7,009 -- -- Receivable for securities sold..... -- 714,472 -- -- 2,448,223 ---------- ----------- ----------- ----------- ------------ TOTAL ASSETS....................... 7,341,205 25,058,125 10,538,507 62,645,839 123,873,985 ---------- ----------- ----------- ----------- ------------ LIABILITIES: Payable for Capital Stock redeemed........................ 56 40,058 29 513 840,331 Payable for securities purchased... -- 847,446 -- -- 632,714 Unrealized depreciation on foreign currencies and forward currency contracts...... -- -- -- -- -- Accrued expenses, taxes, and other....................... 20,793 29,927 18,583 57,268 122,009 ---------- ----------- ----------- ----------- ------------ TOTAL LIABILITIES.................. 20,849 917,431 18,612 57,781 1,595,054 ---------- ----------- ----------- ----------- ------------ NET ASSETS......................... $7,320,356 $24,140,694 $10,519,895 $62,588,058 $122,278,931 ========== =========== =========== =========== ============ COMPOSITION OF NET ASSETS: Capital Stock, at par.............. $ 705 $ 1,160 $ 10,519 $ 3,360 $ 7,132 Additional paid-in-capital......... 7,065,028 17,101,537 10,508,236 46,881,737 99,821,375 Undistributed/accumulated net investment income (loss)........ (4,509) (5,145) -- (5,229) (2,533) Undistributed/accumulated net realized gain (loss)............ -- 481,840 1,140 (4,074) 3,659 Net unrealized appreciation (depreciation) of investments... 259,132 6,561,302 -- 15,712,264 22,449,298 Net unrealized appreciation (depreciation) on translation of assets and liabilities deno- minated in foreign currencies and forward currency contracts...... -- -- -- -- -- ---------- ----------- ----------- ----------- ------------ NET ASSETS......................... $7,320,356 $24,140,694 $10,519,895 $62,588,058 $122,278,931 ========== =========== =========== =========== ============ SHARES OF CAPITAL STOCK OUTSTANDING ($.001 par value)............... 705,129 1,160,023 10,518,755 3,360,130 7,132,343 ========== =========== =========== =========== ============ NET ASSET VALUE PER SHARE.......... $10.38 $20.81 $1.00 $18.63 $17.14 ========== =========== =========== =========== ============
- ---------------------------- See Notes to Financial Statements. P-54 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN HENDERSON HENDERSON HENDERSON SELIGMAN SELIGMAN GLOBAL GROWTH GLOBAL SMALLER GLOBAL HENDERSON FRONTIER OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- --------- ASSETS: Investments, at value (see portfolios of investments): Long-term holdings................. $38,611,861 $8,127,428 $20,540,017 $5,740,044 $9,681,145 Short-term holdings................ 1,900,000 -- -- -- -- ----------- ---------- ----------- ---------- ---------- Total Investments 40,511,861 8,127,428 20,540,017 5,740,044 9,681,145 Cash............................... 63,831 644,561 311,060 429,258 230,849 Interest and dividends receivable...................... 2,201 10,390 36,130 4,880 35,780 Receivable for Capital Stock sold...................... 497 -- 1,893 2,727 -- Receivable from associated companies....................... -- -- 6,222 2,670 262 Receivable for securities sold..... -- -- 78,597 12,191 2,503 ----------- ---------- ----------- ---------- ---------- TOTAL ASSETS....................... 40,578,390 8,782,379 20,973,919 6,191,770 9,950,539 ----------- ---------- ----------- ---------- ---------- LIABILITIES: Payable for Capital Stock redeemed........................ 1,207,750 6,829 -- 34,431 3,695 Payable for securities purchased... 173,004 100,271 86,553 -- -- Unrealized depreciation on foreign currencies and forward currency contracts...... -- 10,067 35,075 8,730 24,636 Accrued expenses, taxes, and other....................... 49,965 21,917 38,229 18,638 29,379 ----------- ---------- ----------- ---------- ---------- TOTAL LIABILITIES.................. 1,430,719 139,084 159,857 61,799 57,710 ----------- ---------- ----------- ---------- ---------- NET ASSETS......................... $39,147,671 $8,643,295 $20,814,062 $6,129,971 $9,892,829 =========== ========== =========== ========== ========== COMPOSITION OF NET ASSETS: Capital Stock, at par.............. $ 2,517 $ 649 $ 1,528 $ 442 $ 644 Additional paid-in-capital......... 36,334,865 7,075,238 19,423,247 4,935,072 7,869,584 Undistributed/accumulated net investment income (loss)........ (2,403) (1,513) (2,344) (1,509) (3,713) Undistributed/accumulated net realized gain (loss)............ (1,123,646) (367,113) (274,496) 57,662 17,083 Net unrealized appreciation (depreciation) of investments... 3,936,338 1,816,901 1,585,902 1,095,960 1,842,381 Net unrealized appreciation (depreciation) on translation of assets and liabilities deno- minated in foreign currencies and forward currency contracts...... -- 119,133 80,225 42,344 166,850 ----------- ---------- ----------- ---------- ---------- NET ASSETS......................... $39,147,671 $8,643,295 $20,814,062 $6,129,971 $9,892,829 =========== ========== =========== ========== ========== SHARES OF CAPITAL STOCK OUTSTANDING ($.001 par value)............... 2,516,965 648,509 1,528,209 442,463 643,753 =========== ========== =========== ========== ========== NET ASSET VALUE PER SHARE.......... $15.55 $13.33 $13.62 $13.85 $15.37 =========== ========== =========== ========== ==========
- ------------------------- See Notes to Financial Statements. P-54a SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- December 31, 1998 - --------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN HIGH-YIELD SELIGMAN LARGE-CAP SMALL-CAP BOND INCOME VALUE VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- ASSETS: Investments, at value (see portfolios of investments): Long-term holdings................. $28,845,218 $14,332,706 $3,745,843 $2,423,181 Short-term holdings................ 2,200,000 -- -- -- ----------- ----------- ---------- ---------- Total Investments 31,045,218 14,332,706 3,745,843 2,423,181 Cash............................... 92,190 180,630 122,886 54,395 Interest and dividends receivable...................... 726,955 111,042 5,437 1,102 Receivable for Capital Stock sold...................... 417,318 11,946 -- -- Receivable from associated companies....................... -- 847 1,043 1,363 Receivable for securities sold..... 5,354 -- -- -- ----------- ----------- ---------- ---------- TOTAL ASSETS....................... 32,287,035 14,637,171 3,875,209 2,480,041 ----------- ----------- ---------- ---------- LIABILITIES: Payable for Capital Stock redeemed........................ -- 30,729 18,165 858 Payable for securities purchased... -- -- -- -- Unrealized depreciation on foreign currencies and forward currency contracts...... -- -- -- -- Accrued expenses, taxes, and other....................... 34,227 24,217 11,221 10,252 ----------- ----------- ---------- ---------- TOTAL LIABILITIES.................. 34,227 54,946 29,386 11,110 ----------- ----------- ---------- ---------- NET ASSETS......................... $32,252,808 $14,582,225 $3,845,823 $2,468,931 =========== =========== ========== ========== COMPOSITION OF NET ASSETS: Capital Stock, at par.............. $ 2,966 $ 1,324 $ 398 $ 338 Additional paid-in-capital......... 34,040,154 13,444,085 3,771,795 2,633,353 Undistributed/accumulated net investment income (loss)........ 19,492 (3,094) (420) (423) Undistributed/accumulated net realized gain (loss)............ (6,849) (75,218) (34,490) -- Net unrealized appreciation (depreciation) of investments... (1,802,955) 1,215,128 108,540 (164,337) Net unrealized appreciation (depreciation) on translation of assets and liabilities deno- minated in foreign currencies and forward currency contracts...... -- -- -- -- ----------- ----------- ---------- ---------- NET ASSETS......................... $32,252,808 $14,582,225 $3,845,823 $2,468,931 =========== =========== ========== ========== SHARES OF CAPITAL STOCK OUTSTANDING ($.001 par value)............... 2,965,856 1,324,302 398,168 337,678 =========== =========== ========== ========== NET ASSET VALUE PER SHARE.......... $10.87 $11.01 $9.66 $7.31 =========== =========== ========== ==========
- ----------------------- See Notes to Financial Statements. P-55 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS - --------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN COMMUNICATIONS SELIGMAN SELIGMAN CASH COMMON AND BOND CAPITAL MANAGEMENT STOCK INFORMATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------- ---------- ---------- ---------- ---------- INVESTMENT INCOME: Interest........................... $424,426 $ 75,340 $540,798 $ 170,116 $ 229,459 Dividends.......................... -- 93,947 -- 1,021,009 78,079 -------- ---------- -------- ----------- ----------- TOTAL INVESTMENT INCOME**.......... 424,426 169,287 540,798 1,191,125 307,538 -------- ---------- -------- ----------- ----------- EXPENSES: Management fee..................... 27,438 86,101 40,831 224,301 748,401 Custody and related services....... 7,576 13,731 4,331 18,893 55,629 Auditing fee....................... 6,166 10,666 8,266 22,966 35,666 Directors' fees and expenses....... 5,021 5,214 5,062 5,651 6,175 Shareholder reports and communications.................. 3,937 3,937 3,937 3,937 1,921 Registration....................... 2,938 4,170 3,101 6,548 8,478 Legal fee.......................... 1,265 1,311 1,245 1,414 1,543 Miscellaneous...................... 2,320 3,719 1,862 6,573 9,685 -------- ---------- -------- ----------- ----------- TOTAL EXPENSES BEFORE WAIVER/REIMBURSEMENT............ 56,661 128,849 68,635 290,283 867,498 Waiver/reimbursement of expenses........................ (15,486) -- (68,635) -- -- -------- ---------- -------- ----------- ----------- TOTAL EXPENSES AFTER WAIVER/REIMBURSEMENT............ 41,175 128,849 -- 290,283 867,498 -------- ---------- -------- ----------- ----------- NET INVESTMENT INCOME (LOSS)....... 383,251 40,438 540,798 900,842 (559,960) -------- ---------- -------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) on investments..................... 123,784 1,655,402 1,53 3,819,226 5,762,699 Net realized gain (loss) from foreign currency transactions... -- -- -- -- -- Net change in unrealized appreciation/depreciation of investments.................. 37,175 2,577,044 -- 7,459,005 28,175,377 Net change in unrealized depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts...... -- -- -- -- -- -------- ---------- -------- ----------- ----------- NET GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS.................... 160,959 4,232,446 1,538 11,278,231 33,938,076 -------- ---------- -------- ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.......... $544,210 $4,272,884 $542,336 $12,179,073 $33,378,116 ======== ========== ======== =========== =========== - -------------------- * For the period May 1, 1998, commencement of operations, to December 31, 1998. ** Net of foreign tax withheld as follows: $ -- $ 281 $ -- $ 4,562 $ 1,877 See Notes to Financial Statements.
P-56 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS (continued) - --------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN HENDERSON HENDERSON HENDERSON SELIGMAN SELIGMAN GLOBAL GROWTH GLOBAL SMALLER GLOBAL HENDERSON FRONTIER OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- --------- INVESTMENT INCOME: Interest........................... $ 126,546 $ 26,258 $ 65,266 $ 25,410 $ 19,011 Dividends.......................... 50,634 72,454 223,528 22,181 172,921 --------- ---------- ---------- ---------- ---------- TOTAL INVESTMENT INCOME**.......... 177,180 98,712 288,794 47,591 191,932 --------- ---------- ---------- ---------- ---------- EXPENSES: Management fee..................... 323,502 73,741 215,796 49,036 100,225 Custody and related services....... 38,105 22,615 81,743 20,281 56,636 Auditing fee....................... 15,666 6,166 10,666 5,366 6,866 Directors' fees and expenses....... 5,477 4,902 5,155 4,878 5,035 Shareholder reports and communications.................. 1,921 1,887 1,887 1,887 1,887 Registration....................... 4,137 3,050 3,929 2,914 3,317 Legal fee.......................... 1,383 1,420 1,441 1,415 1,423 Miscellaneous...................... 5,502 4,186 3,590 2,675 3,006 --------- ---------- ---------- ---------- ---------- TOTAL EXPENSES BEFORE WAIVER/REIMBURSEMENT............ 395,693 117,967 324,207 88,452 178,395 Waiver/reimbursement of expenses........................ -- (14,740) (22,085) (19,816) (38,092) --------- ---------- ---------- ---------- ---------- TOTAL EXPENSES AFTER WAIVER/REIMBURSEMENT............ 395,693 103,227 302,122 68,636 140,303 --------- ---------- ---------- ---------- ---------- NET INVESTMENT INCOME (LOSS)....... (218,513) (4,515) (13,328) (21,045) 51,629 --------- ---------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) on investments..................... (1,118,028) (276,305) 379,220 327,368 232,518 Net realized gain (loss) from foreign currency transactions... -- (36,450) (341,781) 1,871 (58,342) Net change in unrealized appreciation/depreciation of investments.................. 896,484 1,405,297 442,586 1,121,131 749,881 Net change in unrealized depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts...... -- 239,832 782,308 73,954 412,820 --------- ---------- ---------- ---------- ---------- NET GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS.................... (221,544) 1,332,374 1,262,333 1,524,324 1,336,877 --------- ---------- ---------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.......... $(440,057) $1,327,859 $1,249,005 $1,503,279 $1,388,506 ========= ========== ========== ========== ========== - -------------------- * For the period May 1, 1998, commencement of operations, to December 31, 1998. ** Net of foreign tax withheld as follows: $ -- $ 6,398 $ 28,620 $ 3,461 $ 18,270 See Notes to Financial Statements.
P-56a SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- For the Year Ended December 31, 1998 - --------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN HIGH-YIELD SELIGMAN LARGE-CAP SMALL-CAP BOND INCOME VALUE VALUE PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- INVESTMENT INCOME: Interest........................... $2,717,284 $ 467,836 $ 642 $ 0-- Dividends.......................... 212,942 183,523 21,191 5,235 ---------- ---------- ---------- ---------- TOTAL INVESTMENT INCOME**.......... 2,930,226 651,359 21,833 5,235 ---------- ---------- ---------- ---------- EXPENSES: Management fee..................... 142,265 57,362 9,139 7,951 Custody and related services....... 35,962 4,470 1,355 1,730 Auditing fee....................... 13,666 8,866 4,229 4,029 Directors' fees and expenses....... 5,171 5,128 3,224 3,250 Shareholder reports and communications.................. 1,921 3,933 2,780 2,780 Registration....................... 5,032 3,051 2,482 2,432 Legal fee.......................... 1,338 1,287 983 982 Miscellaneous...................... 3,869 3,119 1,391 1,372 ---------- ---------- ---------- ---------- TOTAL EXPENSES BEFORE WAIVER/REIMBURSEMENT............ 209,224 87,216 25,583 24,526 Waiver/reimbursement of expenses........................ (10,046) (1,176) (16,444) (16,575) ---------- ---------- ---------- ---------- TOTAL EXPENSES AFTER WAIVER/REIMBURSEMENT............ 199,178 86,040 9,139 7,951 ---------- ---------- ---------- ---------- NET INVESTMENT INCOME (LOSS)....... 2,731,048 565,319 12,694 (2,716) ---------- ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) on investments..................... 10,307 124,492 67,875 271,788 Net realized gain (loss) from foreign currency transactions... -- -- -- -- Net change in unrealized appreciation/depreciation of investments.................. (2,638,907) 381,475 108,540 (164,337) Net change in unrealized depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts...... -- -- -- -- ---------- ---------- ---------- ---------- NET GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS.................... (2,628,600) 505,967 176,415 107,451 ---------- ---------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.......... $ 102,448 $1,071,286 $ 189,109 $ 104,735 ========== ========== ========== ========== - -------------------- * For the period May 1, 1998, commencement of operations, to December 31, 1998. ** Net of foreign tax withheld as follows: $ -- $ 562 $ -- $ -- See Notes to Financial Statements.
P-57 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN BOND PORTFOLIO CAPITAL PORTFOLIO CASH MANAGEMENT PORTFOLIO ----------------------- -------------------------- ------------------------- YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, ----------------------- -------------------------- ----------------------- 1998 1997 1998 1997 1998 1997 ----------- ----------- ----------- ---------- ----------- ---------- OPERATIONS: Net investment income (loss)............. $ 383,251 $ 359,627 $ 40,438 $ 28,503 $ 540,798 $ 512,275 Net realized gain (loss) on investments.. 123,784 2,573 1,655,402 1,456,363 1,538 -- Net realized gain (loss) from foreign currency transactions................. -- -- -- -- -- -- Net change in unrealized appreciation/ depreciation of investments........... 37,175 158,584 2,577,044 1,876,910 -- -- Net change in unrealized appreciation/ depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts............................. -- -- -- -- -- -- ---------- ---------- ----------- ----------- ----------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 544,210 520,784 4,272,884 3,361,776 542,336 512,275 ---------- ---------- ----------- ----------- ----------- ---------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income.................... (383,617) (360,523) (42,246) (29,292) (540,798) (512,275) Realized gain on investments............. (72,294) -- (1,310,739) (1,319,186) -- -- ---------- ---------- ----------- ----------- ----------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS.................... (455,911) (360,523) (1,352,985) (1,348,478) (540,798) (512,275) ---------- ---------- ----------- ----------- ----------- ---------- CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares......... 2,476,931 3,014,160 11,707,365 7,491,753 32,521,913 25,875,970 Investment of dividends.................. 383,617 360,523 42,246 29,292 540,798 512,275 Shares issued in payment of gain distributions......................... 72,294 -- 1,310,739 1,319,186 -- -- ---------- ---------- ----------- ----------- ----------- ---------- Total.................................... 2,932,842 3,374,683 13,060,350 8,840,231 33,062,711 26,388,245 ---------- ---------- ----------- ----------- ----------- ---------- Cost of shares redeemed.................. (2,932,822) (1,317,788) (12,239,347) (4,766,794) (31,179,640)(27,507,851) ---------- ---------- ----------- ----------- ----------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS.......................... 20 2,056,895 821,003 4,073,437 1,883,071 (1,119,606) ---------- ---------- ----------- ----------- ----------- ---------- INCREASE (DECREASE) IN NET ASSETS............................ 88,319 2,217,156 3,740,902 6,086,735 1,884,609 (1,119,606) NET ASSETS: Beginning of Year........................ 7,232,037 5,014,881 20,399,792 14,313,057 8,635,286 9,754,892 ---------- ---------- ----------- ----------- ----------- ---------- END OF YEAR.............................. $7,320,356 $7,232,037 $24,140,694 $20,399,792 $10,519,895 $8,635,286 ========== ========== =========== =========== =========== ==========
- -------------------- See Notes to Financial Statements. P-58 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS SELIGMAN SELIGMAN COMMON STOCK COMMUNICATIONS AND PORTFOLIO INFORMATION PORTFOLIO ----------------------- -------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- -------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ---------- OPERATIONS: Net investment income (loss)............. $ 900,842 $ 858,211 $ (559,960) $ (378,304) Net realized gain (loss) on investments.. 3,819,226 6,975,977 5,762,699 25,855,124 Net realized gain (loss) from foreign currency transactions................. -- -- -- -- Net change in unrealized appreciation/ depreciation of investments........... 7,459,005 523,788 28,175,377 (10,538,214) Net change in unrealized appreciation/ depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts............................. -- -- -- -- ----------- ----------- ------------ ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... 12,179,073 8,357,976 33,378,116 14,938,606 ----------- ----------- ------------ ----------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income.................... (940,040) (827,581) -- -- Realized gain on investments............. (3,824,886) (6,979,440) (4,823,503) (22,307,569) ----------- ----------- ------------ ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS.................... (4,764,926) (7,807,021) (4,823,503) (22,307,569) ----------- ----------- ------------ ----------- CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares......... 14,190,439 12,649,970 199,351,030 50,718,332 Investment of dividends.................. 940,040 827,581 -- -- Shares issued in payment of gain distributions......................... 3,824,886 6,979,440 4,823,503 22,307,569 ----------- ----------- ------------ ----------- Total.................................... 18,955,365 20,456,991 204,174,533 73,025,901 ----------- ----------- ------------ ----------- Cost of shares redeemed.................. (14,518,617) (7,439,183) (198,083,052) (38,669,048) ----------- ----------- ------------ ----------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS.......................... 4,436,748 13,017,808 6,091,481 34,356,853 ----------- ----------- ------------ ----------- INCREASE (DECREASE) IN NET ASSETS............................ 11,850,895 13,568,763 34,646,094 26,987,890 NET ASSETS: Beginning of Year........................ 50,737,163 37,168,400 87,632,837 60,644,947 ----------- ----------- ------------ ----------- END OF YEAR.............................. $62,588,058 $50,737,163 $122,278,931 $87,632,837 =========== =========== ============ ===========
- -------------------- See Notes to Financial Statements. P-58a SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
SELIGMAN HENDERSON SELIGMAN GLOBAL GROWTH FRONTIER PORTFOLIO OPPORTUNITIES PORTFOLIO ----------------------- -------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- -------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ---------- OPERATIONS: Net investment income (loss)............. $ (218,513) $ (184,281) $ (4,515) $ 283 Net realized gain (loss) on investments.. (1,118,028) 4,064,832 (276,305) 141,228 Net realized gain (loss) from foreign currency transactions................. -- -- (36,450) (73,436) Net change in unrealized appreciation/ depreciation of investments........... 896,484 1,855,841 1,405,297 381,018 Net change in unrealized appreciation/ depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts............................. -- -- 239,832 (112,875) ----------- ----------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS....................... (440,057) 5,736,392 1,327,859 336,218 ----------- ----------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income.................... -- -- -- -- Realized gain on investments............. -- (3,889,283) (50,935) (60,644) ----------- ----------- ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS.................... -- (3,889,283) (50,935) (60,644) ----------- ----------- ---------- ---------- CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares......... 227,067,285 18,870,587 4,808,045 4,394,619 Investment of dividends.................. -- -- -- -- Shares issued in payment of gain distributions......................... -- 3,889,283 50,935 60,644 ----------- ----------- ---------- ---------- Total.................................... 227,067,285 22,759,870 4,858,980 4,455,263 ----------- ----------- ---------- ---------- Cost of shares redeemed.................. (230,452,830) (13,305,727) (2,941,841) (871,295) ----------- ----------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS.......................... (3,385,545) 9,454,143 1,917,139 3,583,968 ----------- ----------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS............................ (3,825,602) 11,301,252 3,194,063 3,859,542 NET ASSETS: Beginning of Year........................ 42,973,273 31,672,021 5,449,232 1,589,690 ----------- ----------- ---------- ---------- END OF YEAR.............................. $39,147,671 $42,973,273 $8,643,295 $5,449,232 =========== =========== ========== ==========
- -------------------- See Notes to Financial Statements. P-59 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (continued) - --------------------------------------------------------------------------------
SELIGMAN HENDERSON SELIGMAN HENDERSON SELIGMAN HENDERSON GLOBAL SMALLER GLOBAL TECHNOLOGY INTERNATIONAL COMPANIES PORTFOLIO PORTFOLIO PORTFOLIO ----------------------- ----------------------- ----------------------- YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- ----------------------- 1998 1997 1998 1997 1998 1997 ----------- -------- ---------- ------- ----------- --------- OPERATIONS: Net investment income (loss)......................... $ (13,328) $ 48,159 $ (21,045) $ 3,172 $ 51,629 $ 37,783 Net realized gain on investments........................... 380,866 813,641 327,368 513,781 236,433 665,686 Net realized gain (loss) from foreign currency transactions.......................... (343,427) (407,259) 1,871 (12,358) (62,257) (422,188) Net change in unrealized appreciation/depreciation of investments........................ 442,586 750,188 1,121,131 (84,833) 749,881 439,369 Net change in unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts............ 782,308 (536,914) 73,954 (40,471) 412,820 (72,394) ----------- ----------- ---------- ---------- ---------- ---------- INCREASE IN NET ASSETS FROM OPERATIONS....................... 1,249,005 667,815 1,503,279 379,291 1,388,506 648,256 ----------- ----------- ---------- ---------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income.................... -- (26,233) (857) (3,585) (92,510) (17,648) Realized gain on investments............. (307,092) (475,283) (262,609) (503,962) (102,080) (308,510) ----------- ----------- ---------- ---------- ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS.................... (307,092) (501,516) (263,466) (507,547) (194,590) (326,158) ----------- ----------- ---------- ---------- ---------- ---------- CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares............................. 3,255,307 5,959,379 4,355,443 3,874,388 1,772,992 3,331,657 Investment of dividends.................. -- 26,233 857 3,585 92,510 17,648 Shares issued in payment of gain distributions................. 307,092 475,283 262,609 503,962 102,080 308,510 ----------- ----------- ---------- ---------- ---------- ---------- Total.................................... 3,562,399 6,460,895 4,618,909 4,381,935 1,967,582 3,657,815 ----------- ----------- ---------- ---------- ---------- ---------- Cost of shares redeemed.................. (4,194,840) (2,998,851) (3,414,979) (1,931,166) (2,451,134) (2,039,720) ----------- ----------- ---------- ---------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS.......................... (632,441) 3,462,044 1,203,930 2,450,769 (483,552) 1,618,095 ----------- ----------- ---------- ---------- ---------- ---------- INCREASE IN NET ASSETS................... 309,472 3,628,343 2,443,743 2,322,513 710,364 1,940,193 NET ASSETS: Beginning of Period...................... 20,504,590 16,876,247 3,686,228 1,363,715 9,182,465 7,242,272 ----------- ----------- ---------- ---------- ---------- ---------- END OF PERIOD............................ $20,814,062 $20,504,590 $6,129,971 $3,686,228 $9,892,829 $9,182,465 =========== =========== =========== ========== ========== ==========
- ------------------- * Commencement of operations. See Notes to Financial Statements. P-60 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
SELIGMAN SELIGMAN SELIGMAN SELIGMAN LARGE-CAP SMALL-CAP HIGH-YIELD BOND PORTFOLIO INCOME PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO ------------------------- --------------------- --------------- --------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 5/1/98* 5/1/98* ------------------------- --------------------- to to 1998 1997 1998 1997 12/31/98 12/31/98 ---------- ------------ --------- ---------- --------------- --------------- OPERATIONS: Net investment income (loss)......................... $ 2,731,048 $ 1,628,914 $ 565,319 $ 640,866 $ 12,694 $ (2,716) Net realized gain on investments........................... 10,307 186,257 124,492 731,075 67,875 271,788 Net realized gain (loss) from foreign currency transactions.......................... -- -- -- 5,037 -- -- Net change in unrealized appreciation/depreciation of investments........................ (2,638,907) 571,005 381,475 419,679 108,540 (164,337) Net change in unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies and forward currency contracts............ -- -- -- (10,907) -- -- ----------- ----------- ----------- ----------- ---------- ---------- INCREASE IN NET ASSETS FROM OPERATIONS....................... 102,448 2,386,176 1,071,286 1,785,750 189,109 104,735 ----------- ----------- ----------- ----------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS: Net investment income.................... (2,720,490) (1,614,526) (579,531) (625,869) (13,586) -- Realized gain on investments............. (17,156) (193,743) (200,703) (735,166) (101,893) (270,486) ----------- ----------- ----------- ----------- ---------- ---------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS.................... (2,737,646) (1,808,269) (780,234) (1,361,035) (115,479) (270,486) ----------- ----------- ----------- ----------- ---------- ---------- CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares............................. 17,539,019 16,215,266 2,781,692 2,166,510 4,577,607 3,140,726 Investment of dividends.................. 2,720,490 1,614,526 579,531 625,869 13,586 -- Shares issued in payment of gain distributions................. 17,156 193,743 200,703 735,166 101,893 270,486 ----------- ----------- ----------- ----------- ---------- ---------- Total.................................... 20,276,665 18,023,535 3,561,926 3,527,545 4,693,086 3,411,212 ----------- ----------- ----------- ----------- ---------- ---------- Cost of shares redeemed.................. (8,656,439) (6,510,022) (3,106,033) (3,833,770) (1,068,342) (923,979) ----------- ----------- ----------- ----------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS.......................... 11,620,226 11,513,513 455,893 (306,225) 3,624,744 2,487,233 ----------- ----------- ----------- ----------- ---------- ---------- INCREASE IN NET ASSETS................... 8,985,028 12,091,420 746,945 118,490 3,698,374 2,321,482 NET ASSETS: Beginning of Period...................... 23,267,780 11,176,360 13,835,280 13,716,790 147,449 147,449 ----------- ----------- ----------- ----------- ---------- ---------- END OF PERIOD............................ $32,252,808 $23,267,780 $14,582,225 $13,835,280 $3,845,823 $2,468,931 =========== =========== =========== =========== ========== ==========
- ---------------- * Commencement of operations. See Notes to Financial Statements. P-61 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION -- Seligman Portfolios, Inc. (the "Fund") is an open-end diversified management investment company consisting of 14 separate portfolios (the Portfolios): Seligman Bond Portfolio ("Bond Portfolio"), 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 Frontier Portfolio ("Frontier Portfolio"), Seligman Henderson Global Growth Opportunities Portfolio ("Global Growth Opportunities Portfolio"), Seligman Henderson Global Smaller Companies Portfolio ("Global Smaller Companies Portfolio"),Seligman Henderson Global Technology Portfolio ("Global Technology Portfolio"), Seligman Henderson International Portfolio ("International Portfolio"), Seligman High-Yield Bond Portfolio ("High-Yield Bond Portfolio"), Seligman Income Portfolio ("Income Portfolio"), Seligman Large-Cap Value Portfolio ("Large-Cap Value Portfolio"), and Seligman Small-Cap Value Portfolio ("Small-Cap Value 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"), which is offered by Canada Life Insurance Company of America ("CLICA"), Canada Life of New York Variable Annuity Account 2 ("CLNYVA-2"), which is offered by Canada Life Insurance Company of New York ("CLNY"), and Canada Life of America Annuity Account 3 ("CLVA-3"), which is offered by CLICA. CLVA-2 and CLNYVA-2 are registered as unit investment trusts under the Investment Company Act of 1940, as amended (the "1940 Act") and fund variable annuity contracts (the "CLVA-2 Contracts") issued by CLICA and CLNY and distributed by Seligman Advisors, Inc. (the "Distributor") (formerly Seligman Financial Services, Inc.). CLVA-3 is not registered or regulated as a unit investment trust 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 CLICA and distributed by Seligman Advisors, 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, as amended. Shares of the Fund are also provided as the investment medium for other variable annuity accounts established by CLICA or its affiliates ("Canada Life Separate Accounts"). Shares of Bond, Capital,CashManagement,CommonStock, andIncomePortfolios are also provided as the investment medium for Seligman Mutual Benefit Plan (the "Mutual Benefit Plan"), a separate account of MBLLife Assurance Corporation ("MBL Life"). However, 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 its Fixed Accumulation Account from the Mutual Benefit Plan will not be accepted. 2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund: a. SECURITY VALUATION --Investments in US Government andGovernment Agency securities, bonds, convertible securities, and stocks are valued at the most current market values or, in their absence, at fair market values determined in accordance with procedures approved by the Board of Directors. Securities traded on an exchange are valued at the last sales prices or, in their absence and in the case of over-the-counter securities, at the 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 generally valued using the amortized cost method which approximates fair value. Investments of certain other funds in the Seligman Group of Investment Companies purchased to offset the Cash Management Portfolio's liability for deferred directors' fees are valued at current market values. b. FOREIGN SECURITIES -- The Portfolios may invest up to 10% of their total assets in foreign securities (except Global Growth Opportunities Portfolio, Global Smaller Companies Portfolio, Global Technology Portfolio, and International Portfolio, (together, the "Seligman Henderson Portfolios"), 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 US dollar-denominated American Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), and Global Depositary Shares ("GDSs"). 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, GDRs, and GDSs are receipts similar to ADRs and ADSs and are typically issued by foreign banks or trust companies and traded in Europe. The books and records of the Portfolios are maintained in US dollars. Foreign currency amounts are translated into US dollars on the following basis: (i) market value of investment securities, other assets, and liabilities, at the 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 net asset values per share of Portfolios which invest in securities denominated in foreign currencies 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 US dollar and other currencies is determined by the forces of supply and demand in the foreign exchange markets. P-62 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Net realized foreign exchange gains or 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 from the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Portfolios' books, and the US 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. FORWARD CURRENCY CONTRACTS -- The Seligman Henderson Portfolios 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 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 during 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. FEDERAL TAXES -- 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. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME --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, except that certain dividends from foreign securities where the ex-dividend dates may have passed are recorded as soon as the Fund is informed of the dividend. f. REPURCHASE AGREEMENTS --The Portfolios may enter into repurchase agreements with commercial banks and with broker/dealers deemed to be creditworthy by J. & W. Seligman & Co. Incorporated (the "Manager"). Securities purchased subject to repurchase agreements are deposited with the Portfolios' custodians and, pursuant to the terms of the repurchase agreements, 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. g. EXPENSE ALLOCATIONS -- 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. h. DISTRIBUTIONS TO SHAREHOLDERS -- 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. 3. PURCHASES AND SALES OF SECURITIES --Purchases and sales of portfolio securities, excluding US Government obligations and short-term investments, for the year ended December 31, 1998, were as follows: PORTFOLIO PURCHASES SALES -------- ----------- ----------- Bond $ 1,616,895 $ 1,567,785 Capital 26,450,215 27,418,664 Common Stock 29,054,192 31,947,041 Communications and Information 129,886,119 129,088,232 Frontier 35,509,366 37,054,475 Global Growth Opportunities 4,901,068 3,356,414 P-63 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- PORTFOLIO PURCHASES SALES -------- ----------- ----------- Global Smaller Companies $13,292,708 $13,589,183 Global Technology 4,677,853 3,660,253 International 7,246,645 7,591,199 High-Yield Bond 20,815,115 11,761,887 Income 7,829,674 7,869,770 Large-Cap Value 4,746,735 1,177,307 Small-Cap Value 3,275,749 960,019 For the year ended December 31, 1998, purchases and sales of US Government obligations were $3,112,503 and $3,205,188, respectively, for the Bond Portfolio, and $3,068,155 and $1,597,913, respectively, for the Income Portfolio. Identified cost of investments sold is used for both financial statement and federal income tax purposes. At December 31, 1998, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. 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 -------- ------------ ----------- Bond $ 296,435 $ 37,303 Capital 6,587,602 26,300 Common Stock 15,991,279 279,015 Communications and Information 26,480,438 4,031,140 Frontier 7,744,857 3,808,519 Global Growth Opportunities 2,028,631 82,663 Global Smaller Companies 4,077,821 2,377,804 Global Technology 1,463,691 316,730 International 2,239,328 206,459 High-Yield Bond 631,512 2,434,467 Income 1,417,589 202,461 Large-Cap Value 241,686 133,146 Small-Cap Value 225,529 389,866 4. MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS -- The Manager manages the affairs of the Fund and provides or arranges for the necessary personnel and facilities. The Manager's fee, which is calculated daily and payable monthly, is equal to 0.40%, on an annual basis, of each of Bond, Capital, Cash Management, Common Stock, and Income Portfolios' daily net assets; equal to 0.75%, on an annual basis, of each of Communications and Information and Frontier Portfolios' daily net assets; equal to 1.00%, on an annual basis, of each of the Seligman Henderson Portfolios' daily net assets; and equal to 0.50%, on an annual basis, of High-Yield Bond Portfolio's daily net assets. The Manager's fee for the Large-Cap Value Portfolio is equal to 0.80% per annum of the first $500 million of average daily net assets, 0.70% per annum of the next $500 million of average daily net assets, and 0.60% per annum in excess of $1 billion of average daily net assets of the Portfolio. The Manager's fee for the Small-Cap Value Portfolio is equal to 1.00% per annum of the first $500 million of average daily net assets, 0.90% per annum of the next $500 million of average daily net assets, and 0.80% per annum in excess of $1 billion of average daily net assets of the Portfolio. Prior to July 1, 1998, Seligman Henderson Co., an entity owned 50% each by the Manager and Henderson International, Inc., a subsidiary of Henderson plc, supervised and directed the global investments of the Seligman Henderson Portfolios. Pursuant to subadvisory agreements with the Manager, the Manager paid Seligman Henderson Co. 0.90% per annum of the average daily net assets of each of the Seligman Henderson Portfolios. On March 30, 1998, AMP Limited, an Australian life insurance and financial services company, completed an acquisition of Henderson plc, which resulted in the termination of the Fund's subadvisory agreements. The Fund's Board of Directors approved interim subadvisory agreements pursuant to which Seligman Henderson Co. continued to supervise and direct the global investments of the Seligman Henderson Portfolios. The Fund's directors also approved a proposed new subadvisory agreement pursuant to which Henderson Investment Management Limited (the "Subadviser"), a wholly-owned subsidiary of Henderson plc, would replace Seligman Henderson Co. as subadviser to the Seligman Henderson Portfolios, and be respon- P-64 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- sible for furnishing investment advice, research, and assistance with respect to their non-US investments. Under the new agreement, the Manager is responsible for the US investments of the Seligman Henderson Portfolios and has overall responsibility for management of the Portfolios. Both the interim and the new subadvisory agreements were approved by votes of the shareholders of each of the Seligman Henderson Portfolios on June 30, 1998. Under the new subadvisory agreement, the Manager pays the Subadviser a subadvisory fee for each of the Seligman Henderson Portfolios at a rate of 0.50% per annum of the average monthly assets under the Subadviser's supervision. The Manager has agreed to reimburse expenses, other than the management fee that exceed 0.20% per annum of the average daily net assets of each of Bond, Capital, Common Stock, Communications and Information, Frontier, High-Yield Bond and Income Portfolios. The Manager, at its discretion and until it determines otherwise, has elected to waive all of its fee for, and reimburse all of the expenses of, the Cash Management Portfolio. The Manager and Seligman Henderson Co. (through June 30, 1998) have agreed to reimburse expenses, other than the management fee, which exceed 0.40% per annum of the average daily net assets of each of the Seligman Henderson Portfolios. The Manager, at its discretion, has also agreed to reimburse all expenses, other than the management fees, of the Large-Cap Value and Small-Cap Value Portfolios. The amounts of these reimbursements for the year ended December 31, 1998 are disclosed in the Statements of Operations. 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 or by Henderson plc. The Distributor, agent for the distribution of the CLVA-2 Contracts and an affiliate of the Manager, received concessions of $228,662 from Canada Life Insurance Company of America and $15,703 from Canada Life Insurance Company of New York, after commissions paid to dealers for the sale of shares of the Fund. Certain officers and directors of the Fund are officers or directors of the Manager and the Distributor. The Fund has a compensation arrangement under which directors who receive fees may elect to defer receiving such fees. Directors may elect to have their deferred fees accrue interest or earn a return based on the performance of the other funds in the Seligman Group of Investment Companies. The cost of such fees and earnings accrued thereon is included in directors' fees and expenses, and the accumulated balances thereof at December 31, 1998, are included in other liabilities. Deferred fees and related accrued earnings are not deductible for the federal income tax purposes until such amounts are paid. 5. LOSS CARRYFORWARD -- At December 31, 1998, the Frontier Portfolio, Global Growth Opportunities Portfolio, and Global Smaller Companies Portfolio had net capital loss carryforwards for federal income tax purposes of $1,123,646, $376,086 and $308,768, respectively, which are available for offset against future taxable net gains. These net capital loss carryforwards will expire in 2006. Accordingly, no capital gain distributions are expected to be paid to shareholders until net capital gains have been realized in excess of the available capital loss carryforwards. 6. OUTSTANDING FORWARD EXCHANGE CURRENCY CONTRACTS -- At December 31, 1998, the Fund had outstanding forward exchange currency contracts to sell foreign currencies as follows:
FOREIGN IN EXCHANGE SETTLEMENT US $ UNREALIZED CONTRACT CURRENCY FOR US $ DATE VALUE DEPRECIATION - -------- --------- ---------- --------- --------- ------------ GLOBAL GROWTH OPPORTUNITIES PORTFOLIO Japanese yen 26,000,000 219,372 2/16/99 229,439 $(10,067) ======== GLOBAL SMALLER COMPANIES PORTFOLIO Japanese yen 1,557,808 13,499 1/4/99 13,728 $ (229) Japanese yen 90,000,000 759,365 2/16/99 794,211 (34,846) -------- $(35,075) ======== GLOBAL TECHNOLOGY PORTFOLIO Japanese yen 15,700,100 130,000 2/26/99 138,730 $ (8,730) ======== INTERNATIONAL PORTFOLIO Japanese yen 1,658,887 14,375 1/4/99 14,619 $ (244) Japanese yen 63,000,000 531,556 2/16/99 555,948 (24,392) -------- $(24,636) ========
P-65 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- 7. CAPITAL STOCK TRANSACTIONS -- At December 31, 1998, there were 20,000,000 shares of Capital Stock authorized for each of Global Growth Opportunities, Global Technology, Large-Cap Value, and Small-Cap Value Portfolios; 80,000,000 shares for each of Bond, Capital, International, and Income Portfolios; and 100,000,000 shares for each of Cash Management, Common Stock, Communications and Information, Frontier, Global Smaller Companies, and High-Yield Bond Portfolios, all at a par value of $0.001 per share. Transactions in shares of Capital Stock were as follows:
BOND CAPITAL CASH MANAGEMENT PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ---------------------- ------------------------ YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------ ---------------------- ------------------------ 1998 1997 1998 1997 1998 1997 ---------- --------- -------- -------- --------- ---------- Sale of shares...................... 230,745 292,591 626,516 421,000 32,521,913 25,875,970 Shares issued in payment of dividends..................... 36,957 35,242 2,179 1,659 540,798 512,275 Shares issued in payment of gain distributions............ 6,965 -- 67,599 74,699 -- -- -------- -------- -------- -------- ----------- ----------- Total............................... 274,667 327,833 696,294 497,358 33,062,711 26,388,245 -------- -------- -------- -------- ----------- ----------- Shares redeemed..................... (276,064) (128,619) (663,507) (264,028) (31,179,640) (27,507,851) -------- -------- -------- -------- ----------- ----------- Increase (decrease) in shares....... (1,397) 199,214 32,787 233,330 1,883,071 (1,119,606) ======== ======== ======== ======== =========== ===========
COMMUNICATIONS COMMON STOCK AND INFORMATION FRONTIER PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ---------------------- ------------------------ YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------ ---------------------- ------------------------ 1998 1997 1998 1997 1998 1997 ---------- --------- -------- -------- --------- -------- Sale of shares...................... 787,642 706,222 13,848,034 2,968,727 14,693,247 1,172,506 Shares issued in payment of dividends..................... 51,651 51,724 -- -- -- -- Shares issued in payment of gain distributions............ 210,158 436,215 299,597 1,783,179 -- 255,874 --------- --------- ----------- ---------- ----------- ---------- Total............................... 1,049,451 1,194,161 14,147,631 4,751,906 14,693,247 1,428,380 --------- --------- ----------- ---------- ----------- ---------- Shares redeemed..................... (806,174) (412,385) (13,711,324) (2,185,329) (14,899,641) (819,268) --------- --------- ----------- ---------- ----------- ---------- Increase (decrease) in shares....... 243,277 781,776 436,307 2,566,577 (206,394) 609,112 ========= ========= =========== ========== =========== ==========
GLOBAL GROWTH GLOBAL SMALLER GLOBAL OPPORTUNITIES COMPANIES TECHNOLOGY PORTFOLIO PORTFOLIO PORTFOLIO ------------------------ ---------------------- ------------------------- YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------ ---------------------- ------------------------- 1998 1997 1998 1997 1998 1997 ---------- ---------- ---------- ---------- ---------- ---------- Sale of shares...................... 390,170 409,426 231,087 447,087 354,582 329,216 Shares issued in payment of dividends..................... -- -- -- 2,062 64 347 Shares issued in payment of gain distributions............ 3,970 5,564 23,787 37,365 19,642 48,881 -------- -------- -------- -------- -------- -------- Total............................... 394,140 414,990 254,874 486,514 374,288 378,444 -------- -------- -------- -------- -------- -------- Shares redeemed..................... (239,884) (81,077) (306,840) (217,853) (280,044) (162,342) -------- -------- -------- -------- -------- -------- Increase (decrease) in shares....... 154,256 333,913 (51,966) 268,661 94,244 216,102 ======== ======== ======== ======== ======== ========
INTERNATIONAL HIGH-YIELD BOND INCOME PORTFOLIO PORTFOLIO PORTFOLIO ------------------------- ----------------------- ------------------------- YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------- ----------------------- ------------------------- 1998 1997 1998 1997 1998 1997 ---------- --------- -------- -------- --------- -------- Sale of shares...................... 118,684 239,540 1,464,357 1,357,028 248,332 192,283 Shares issued in payment of dividends..................... 6,127 1,313 251,200 136,132 53,119 58,547 Shares issued in payment of gain distributions............ 6,760 22,955 1,584 16,336 18,396 68,771 -------- -------- --------- --------- -------- -------- Total............................... 131,571 263,808 1,717,141 1,509,496 319,847 319,601 -------- -------- --------- --------- -------- -------- Shares redeemed..................... (166,031) (144,243) (711,853) (547,725) (276,496) (342,394) -------- -------- --------- --------- -------- -------- Increase (decrease) in shares....... (34,460) 119,565 1,005,288 961,771 43,351 (22,793) ======== ======== ========= ========= ======== ========
P-66 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LARGE-CAP SMALL-CAP VALUE VALUE PORTFOLIO PORTFOLIO --------- --------- 5/1/98* 5/1/98* TO TO 12/31/98 12/31/98 ---------- --------- Sale of shares...................... 485,276 400,968 Shares issued in payment of dividends ................... 1,442 -- Shares issued in payment of gain distributions .......... 10,817 39,088 -------- -------- Total............................... 497,535 440,056 -------- -------- Shares redeemed..................... (114,112) (117,123) -------- -------- Increase in shares.................. 383,423 322,933 ======== ======== - ------------- * Commencement of operations. 8. COMMITTED LINE OF CREDIT --Effective July 1, 1998, Communications and Information, Frontier, Global Growth Opportunities, Global Smaller Companies, Global Technology, International, and High-Yield Bond Portfolios terminated their $12 million committed line of credit facility and all of the Portfolios except the Cash Management Portfolio, entered into a joint $800 million committed line of credit that is shared by substantially all funds in the Seligman Group of Investment Companies. Each Portfolio's borrowings are limited to 10% (5% for the Seligman Henderson Portfolios) of its net assets. Borrowings pursuant to the credit facility are subject to interest at a rate equal to the overnight federal funds rate plus 0.50%. Each Portfolio incurs a commitment fee of 0.08% per annum on its share of the unused portion of the credit facility. The credit facility may be drawn upon only for temporary purposes and is subject to certain other customary restrictions. The credit facility commitment expires one year from the date of the agreement but is renewable with the consent of the participating banks. To date, none of the Portfolios have borrowed from the credit facility. 9. SELIGMAN MUTUAL BENEFIT PLAN -- On December 31, 1998, MBL Life sold substantially all of its general account life insurance and annuity businesses to SunAmerica, Inc. The Order from the Superior Court of New Jersey (the "Order") approving the transaction provided for the termination of the Mutual Benefit Plan. The Order authorizes MBL Life to take any and all actions necessary to facilitate the termination of the Mutual Benefit Plan. Contractholders will be given the opportunity to exchange their contracts for contracts issued by other insurance companies until June 30, 1999. Any contracts remaining with MBL Life at June 30, 1999 will be terminated and MBL Life will pay out their account value. At December 31, 1998, the Mutual Benefit Plan assets held in the Fund were as follows: Bond Portfolio $ 1,650,594 Capital Portfolio 5,139,844 Cash Management Portfolio 833,299 Common Stock Portfolio 15,020,603 Income Portfolio 3,742,406 Because the Manager currently limits the expenses incurred by these portfolios, the withdrawal of Mutual Benefit Plan assets is not expected to have a significant impact on the ratio of expenses to average net assets for any of these portfolios. P-67 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The tables below are intended to help you understand each Portfolio's financial performance for the past five years or from its inception, if less than five years. Certain information reflects financial results for a single share that was held throughout the periods shown. Per share amounts are calcuated using average shares outstanding. "Total return" shows the rate that you would have earned (or lost) on an investment in each Portfolio, assuming you reinvested all your dividends and capital gain distributions. Total returns do not reflect any administrative fees and asset based sales charges that are associated with variable annuity contracts, and are not annualized for periods of less than one year.
BOND PORTFOLIO ----------------------------------------------------------- YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 1998 1997 1996 1995 1994 ------ ------ ------ ------ ------ PER SHARE DATA: NET ASSET VALUE, BEGINNING OF YEAR................. $10.24 $9.89 $10.44 $9.27 $10.11 ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)....................... 0.59 0.54 0.56 0.61 0.50 Net realized and unrealized gain (loss) on investments 0.25 0.35 (0.55) 1.17 (0.84) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS................... 0.84 0.89 0.01 1.78 (0.34) ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income............... (0.59) (0.54) (0.56) (0.61) (0.50) Distributions from net realized capital gain ...... (0.11) -- -- -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................................ (0.70) (0.54) (0.56) (0.61) (0.50) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF YEAR....................... $10.38 $10.24 $ 9.89 $10.44 $ 9.27 ====== ====== ====== ====== ====== TOTAL RETURN: 8.20% 8.98% 0.09% 19.18% (3.39)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted)............. $7,320 $7,232 $5,015 $4,497 $3,606 Ratio of expenses to average net assets............ 0.60% 0.60% 0.60% 0.60% 0.60% Ratio of net income (loss) to average net assets... 5.58% 6.22% 5.97% 6.22% 5.12% Portfolio turnover rate............................ 73.31% 170.12% 199.74% 114.42% 237.23% Without management fee waiver:* Ratio of expenses to average net assets............ 0.82% 0.83% 0.79% 0.99% 1.31% Ratio of net income (loss) to average net assets... 5.36% 5.99% 5.78% 5.83% 4.41%
- -------------- * The Manager, at its discretion, reimbursed expenses and/or waived management fees for certain periods presented. See Notes to Financial Statements. P-68 SELIGMAN PORTFOLIOS, INC. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
CAPITAL PORTFOLIO ----------------------------------------------------------- YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 1998 1997 1996 1995 1994 ------ ------ ------ ------ ------ PER SHARE DATA: NET ASSET VALUE, BEGINNING OF YEAR................. $18.10 $16.01 $14.91 $12.70 $14.95 ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)....................... 0.04 0.03 0.04 0.05 0.02 Net realized and unrealized gain (loss) on investments................................... 3.89 3.35 2.12 3.39 (0.70) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS................... 3.93 3.38 2.16 3.44 (0.68) ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income............... (0.04) (0.03) (0.04) (0.05) (0.02) Distributions from net realized capital gain ...... (1.18) (1.26) (1.02) (1.18) (1.55) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................................ (1.22) (1.29) (1.06) (1.23) (1.57) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF YEAR....................... $20.81 $18.10 $16.01 $14.91 $12.70 ====== ====== ====== ====== ====== TOTAL RETURN: 22.19% 21.31% 14.51% 27.17% (4.59)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted)............. $24,141 $20,400 $14,313 $9,294 $5,942 Ratio of expenses to average net assets............ 0.60% 0.60% 0.59% 0.60% 0.60% Ratio of net income (loss) to average net assets... 0.19% 0.16% 0.29% 0.32% 0.10% Portfolio turnover rate............................ 130.86% 93.97% 88.78% 122.20% 67.39% Without management fee waiver:* Ratio of expenses to average net assets............ 0.62% 0.71% 0.96% Ratio of net income (loss) to average net assets... 0.14% 0.21% (0.26)%
CASH MANAGEMENT PORTFOLIO -------------------------------------------------------------- YEAR ENDED DECEMBER 31, -------------------------------------------------------------- 1998 1997 1996 1995 1994 ----- ----- ----- ----- ----- PER SHARE DATA: NET ASSET VALUE, BEGINNING OF YEAR................. $1.000 $1.000 $1.000 $1.000 $1.000 ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)....................... 0.053 0.054 0.053 0.055 0.040 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS................... 0.053 0.054 0.053 0.055 0.040 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income............... (0.053) (0.054) (0.053) (0.055) (0.040) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................................ (0.053) (0.054) (0.053) (0.055) (0.040) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF YEAR....................... $1.000 $1.000 $1.000 $1.000 $1.000 ====== ====== ====== ====== ====== TOTAL RETURN: 5.42% 5.52% 5.43% 5.60% 4.03% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted)............. $10,520 $8,635 $9,755 $7,800 $3,230 Ratio of expenses to average net assets............ -- -- -- -- -- Ratio of net income (loss) to average net assets... 5.30% 5.39% 5.30% 5.48% 3.98% Without management fee waiver and expense reimbursement:* Ratio of expenses to average net assets............ 0.67% 0.79% 0.63% 0.87% 1.48% Ratio of net income (loss) to average net assets... 4.63% 4.60% 4.67% 4.61% 2.50%
- ---------------------- * The Manager, at its discretion, reimbursed expenses and/or waived management fees for certain periods presented. See Notes to Financial Statements. P-69 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------
COMMON STOCK PORTFOLIO --------------------------------------------------------------- YEAR ENDED DECEMBER 31, --------------------------------------------------------------- 1998 1997 1996 1995 1994 ------ ------ ------ ------ ------ PER SHARE DATA: NET ASSET VALUE, BEGINNING OF YEAR................. $16.28 $15.92 $15.44 $13.78 $14.98 ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)....................... 0.29 0.33 0.34 0.35 0.37 Net realized and unrealized gain (loss) on investments 3.61 3.01 2.79 3.40 (0.36) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS................... 3.90 3.34 3.13 3.75 0.01 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income............... (0.31) (0.32) (0.34) (0.35) (0.39) Distributions from net realized capital gain ...... (1.24) (2.66) (2.31) (1.74) (0.82) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................................ (1.55) (2.98) (2.65) (2.09) (1.21) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF YEAR....................... $18.63 $16.28 $15.92 $15.44 $13.78 ====== ====== ====== ====== ====== TOTAL RETURN: 24.16% 21.31% 20.08% 27.28% 0.04% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (000s omitted)............. $62,588 $50,737 $37,168 $28,836 $20,168 Ratio of expenses to average net assets............ 0.52% 0.53% 0.53% 0.54% 0.60% Ratio of net income (loss) to average net assets... 1.61% 1.92% 1.99% 2.42% 2.45% Portfolio turnover rate............................ 55.55% 80.13% 50.33% 55.48% 15.29% Without management fee waiver:++ Ratio of expenses to average net assets............ 0.62% Ratio of net income (loss) to average net assets... 2.43%
COMMUNICATIONS AND INFORMATION PORTFOLIO ---------------------------------------------------------------- 10/11/94* YEAR ENDED DECEMBER 31, TO ---------------------------------------------- 1998 1997 1996 1995 12/31/94 ------ ------ ------ ------ -------- PER SHARE DATA: NET ASSET VALUE, BEGINNING OF PERIOD............... $13.09 $14.69 $13.50 $10.44 $10.00 ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)....................... (0.08) (0.08) (0.04) (0.13) (0.02) Net realized and unrealized gain (loss) on investments 4.81 3.13 1.23 4.15 0.46 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS................... 4.73 3.05 1.19 4.02 0.44 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Distributions from net realized capital gain ...... (0.68) (4.65) -- (0.96) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................................ (0.68) (4.65) -- (0.96) -- ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD..................... $17.14 $13.09 $14.69 $13.50 $10.44 ====== ====== ====== ====== ====== TOTAL RETURN: 36.49% 22.22% 8.81% 38.55% 4.40% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted)........... $122,279 $87,633 $60,645 $38,442 $495 Ratio of expenses to average net assets............ 0.87% 0.87% 0.87% 0.95% 0.95%+ Ratio of net income (loss) to average net assets... (0.56)% (0.49)% (0.32)% (0.89)% (0.95)%+ Portfolio turnover rate............................ 132.57% 277.14% 167.20% 96.62% -- Without management fee waiver and expense reimbursement:++ Ratio of expenses to average net assets............ 13.96%+ Ratio of net income (loss) to average net assets... (13.96)%+
- -------------------- * Commencement of investment operations. + Annualized. ++ The Manager, at its discretion, reimbursed expenses and/or waived management fees for certain periods presented. See Notes to Financial Statements. P-70 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- - -------------------------------------------------------------------------
GLOBAL GROWTH FRONTIER PORTFOLIO OPPORTUNITIES PORTFOLIO -------------------------------------------- ----------------------------- 10/11/94* YEAR ENDED 5/1/96** YEAR ENDED DECEMBER 31, TO DECEMBER 31, TO ----------------------------------- ----------------- PER SHARE DATA: 1998 1997 1996 1995 12/31/94 1998 1997 12/31/96 ------ ------ ------ ------ -------- ------ ------ -------- NET ASSET VALUE, BEGINNING OF PERIOD $15.78 $14.98 $13.56 $10.58 $10.00 $11.03 $ 9.91 $10.00 ------ ------ ------ ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)........ (0.08) (0.08) (0.06) (0.07) (0.01) (0.01) 0.01 0.01 Net realized and unrealized gain (loss) on investments................... (0.15) 2.47 3.28 3.58 0.59 2.25 1.79 0.02 Net realized and unrealized gain (loss) on foreign currency transactions. -- -- -- -- -- 0.14 (0.56) (0.11) ------ ------ ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS.... (0.23) 2.39 3.22 3.51 0.58 2.38 1.24 (0.08) ------ ------ ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- -- -- -- -- (0.01) Distributions from net realized capital gain..................... -- (1.59) (1.80) (0.53) -- (0.08) (0.12) -- ------ ------ ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS:................ -- (1.59) (1.80) (0.53) -- (0.08) (0.12) (0.01) ------ ------ ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD...... $15.55 $15.78 $14.98 $13.56 $10.58 $13.33 $11.03 $ 9.91 ====== ====== ====== ====== ====== ====== ====== ====== TOTAL RETURN: (1.46)% 16.33% 23.93% 33.28% 5.80% 21.60% 12.57% (0.78)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted)................... $39,148 $42,973 $31,672 $12,476 $169 $8,643 $5,449 $1,590 Ratio of expenses to average net assets............... 0.92% 0.89% 0.92% 0.95% 0.95%+ 1.40% 1.40% 1.40%+ Ratio of net income (loss) to average net assets.............. (0.51)% (0.49)% (0.37)% (0.55)% (0.70)%+ (0.06)% 0.01% 0.37%+ Portfolio turnover rate............. 86.52% 101.68% 119.74% 106.48% -- 48.99% 77.85% 12.99% Without management fee waiver and expense reimbursement:++ Ratio of expenses to average net assets...................... 1.37% 40.47%+ 1.60% 2.11% 6.04%+ Ratios of net income (loss) to average net assets.............. (0.97)% (40.22)%+ (0.26)% (0.70)% (4.27)%+
- ----------------------- * Commencement of investment operations. ** Commencement of operations. + Annualized. ++ The Manager and/or Subadviser, at their discretion, reimbursed expenses and/or waived management fees for certain periods presented. See Notes to Financial Statements. P-71 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------
GLOBAL SMALLER COMPANIES PORTFOLIO GLOBAL TECHNOLOGY PORTFOLIO --------------------------------------------- --------------------------- 10/11/94* YEAR ENDED 5/1/96** YEAR ENDED DECEMBER 31, TO DECEMBER 31, TO --------------------------------- ---------------- PER SHARE DATA: 1998 1997 1996 1995 12/31/94 1998 1997 12/31/96 ------ ------ ------ ------ -------- ----- ------ -------- NET ASSET VALUE, BEGINNING OF PERIOD $12.98 $12.87 $11.67 $10.31 $10.00 $10.59 $10.32 $10.00 ------ ------ ------ ------ ------ ------ ------ ------ INCOME FROM INVETMENT OPERATIONS: Net investment income (loss)........ (0.01) 0.02 0.02 0.05 0.06 (0.05) 0.01 -- Net realized and unrealized gain on investments................... 1.02 1.17 2.31 2.04 0.26 3.81 2.15 0.30 Net realized and unrealized gain (loss) on foreign currency transactions. (0.17) (0.75) (0.16) (0.30) 0.03 0.11 (0.19) 0.10 ------ ------ ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS.... 0.84 0.44 2.17 1.79 0.35 3.87 1.97 0.40 ------ ------ ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income -- (0.02) (0.02) (0.05) (0.04) -- (0.01) -- Distributions from net realized capital gain..................... (0.20) (0.31) (0.95) (0.38) -- (0.61) (1.69) -- ------ ------ ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................. (0.20) (0.33) (0.97) (0.43) (0.04) (0.61) (1.70) (0.08) ------ ------ ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD...... $13.62 $12.98 $12.87 $11.67 $10.31 $13.85 $10.59 $10.32 ====== ====== ====== ====== ====== ====== ====== ====== TOTAL RETURN: 6.58% 3.43% 18.66% 17.38% 3.53% 36.80% 19.53% 4.01% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted)................... $20,814 $20,505 $16,876 $4,837 $132 $6,130 $3,686 $1,364 Ratio of expenses to average net assets............... 1.40% 1.40% 1.40% 1.39% 1.20%+ 1.40% 1.40% 1.40%+ Ratio of net income (loss) to average net assets............... (0.06)% 0.24% 0.23% 0.64% 3.14%+ (0.43)% 0.12% 0.60%+ Portfolio turnover rate............. 66.40% 64.81% 62.31% 55.65% -- 82.27% 167.36% 45.04% Without management fee waiver and expense reimbursement:++ Ratio of expenses to average net assets................ 1.50% 1.56% 1.90% 3.84% 37.25%+ 1.80% 2.10% 4.71%+ Ratio of net income (loss) to average net assets................ (0.16)% 0.08% (0.27)% (1.81)% (32.91)%+ (0.83)% (0.58)% (2.71)%+
- ---------------- * Commencement of investment operations. ** Commencement of operations. + Annualized. ++ The Manager and/or Subadviser, at their discretion, reimbursed expenses and/or waived management fees for the periods presented. See Notes to Financial Statements. P-72 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- - -------------------------------------------------------------------------
INTERNATIONAL PORTFOLIO HIGH-YIELD BOND PORTFOLIO ------------------------------------------- --------------------------------- 5/1/95* YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, TO ------------------------------------------- ----------------------- PER SHARE DATA: 1998 1997 1996 1995 1994 1998 1997 1996 12/31/95 ------ ------ ------ ------ ------ ------ ------ ------ ------- NET ASSET VALUE, BEGINNING OF PERIOD $13.54 $12.96 $12.39 $11.34 $11.37 $11.87 $11.19 $10.50 $10.00 ------ ------ ------ ------ ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)...... 0.08 0.03 0.07 0.15 0.13 1.11 0.91 0.77 0.22 Net realized and unrealized gain (loss) on investments................ 1.90 2.11 1.13 0.90 (0.31) (0.99) 0.78 0.77 0.52 Net realized and unrealized gain (loss) on foreign currency transactions 0.16 (1.06) (0.32) 0.24 0.33 -- -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS.. 2.14 1.08 0.88 1.29 0.15 0.12 1.69 1.54 0.74 ------ ------ ------ ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income.............. (0.15) (0.03) (0.07) (0.15) (0.06) (1.11) (0.90) (0.77) (0.22) Distributions from net realized capital gain................... (0.16) (0.47) (0.24) (0.09) (0.12) (0.01) (0.11) (0.08) (0.02) ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS............... (0.31) (0.50) (0.31) (0.24) (0.18) (1.12) (1.01) (0.85) (0.24) ------ ------ ------ ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD.... $15.37 $13.54 $12.96 $12.39 $11.34 $10.87 $11.87 $11.19 $10.50 ====== ====== ====== ====== ====== ====== ====== ====== ====== TOTAL RETURN: 15.81% 8.35% 7.08% 11.34% 1.32% 1.02% 15.09% 14.62% 7.37% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted)................. $9,893 $9,182 $7,242 $4,183 $1,776 $32,253 $23,268 $11,176 $3,009 Ratio of expenses to average net assets............. 1.40% 1.40% 1.40% 1.35% 1.20% 0.70% 0.70% 0.70% 0.70%+ Ratio of net income (loss) to average net assets............. 0.52% 0.43% 0.70% 1.01% 1.17% 9.60% 9.61% 9.77% 7.46%+ Portfolio turnover rate........... 75.81% 89.43% 48.53% 41.40% 47.34% 43.13% 74.54% 117.01% 67.55% Without management fee waiver and expense reimbursement:++ Ratio of expenses to average net assets...................... 1.78% 2.07% 2.30% 3.40% 6.12% 0.74% 0.79% 0.88% 4.38%+ Ratios of net income (loss) to average net assets.............. 0.14% (0.24)% (0.20)% (1.04)% (3.75)% 9.56% 9.52% 9.59% 3.78%+
- ---------------------- * Commencement of operations. + Annualized. ++ The Manager and/or Subadviser, at their discretion, reimbursed expenses and/or waived management fees for the periods presented. See Notes to Financial Statements. P-73 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------
LARGE-CAP SMALL-CAP INCOME PORTFOLIO VALUE PORTFOLIO VALUE PORTFOLIO ----------------------------------------------- --------------- --------------- YEAR ENDED DECEMBER 31, 5/1/98* 5/1/98* ----------------------------------------------- TO TO 1998 1997 1996 1995 1994 12/31/98 12/31/98 ------ ------ ------ ------ ------ -------- -------- PER SHARE DATA: NET ASSET VALUE, BEGINNING OF PERIOD $10.80 $10.52 $10.56 $9.97 $11.38 $10.00 $10.00 ------ ------ ------ ------ ------ ------ ------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)........ 0.45 0.56 0.58 0.60 0.69 0.04 (0.02) Net realized and unrealized gain (loss) on investments............ 0.38 0.91 0.13 1.19 (1.37) (0.07) (1.73) ------ ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS.... 0.83 1.47 0.71 1.79 (0.68) (0.03) (1.75) ------ ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income........................... (0.46) (0.55) (0.58) (0.60) (0.73) (0.04) -- Distributions from net realized capital gain ................... (0.16) (0.64) (0.17) (0.60) -- (0.27) (0.94) ------ ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS................. (0.62) (1.19) (0.75) (1.20) (0.73) (0.31) (0.94) ------ ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD...... $11.01 $10.80 $10.52 $10.56 $ 9.97 $ 9.66 $ 7.31 ====== ====== ====== ====== ====== ====== ====== TOTAL RETURN: 7.76% 14.02% 6.66% 17.98% (5.96)% (0.26)% (17.00)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted)................... $14,582 $13,835 $13,717 $12,619 $10,050 $3,845 $2,469 Ratio of expenses to average net assets............... 0.60% 0.60% 0.59% 0.60% 0.60% 0.80%+ 1.00%+ Ratio of net income (loss) to average net assets............... 3.94% 4.71% 5.37% 5.55% 6.34% 1.11%+ (0.34)%+ Portfolio turnover rate............. 70.45% 96.99% 19.59% 51.22% 29.76% 65.82% 73.87% Without management fee waiver and expense reimbursement:++ Ratio of expenses to average net assets............... 0.61% 0.63% 0.62% 0.77% 2.24%+ 3.08%+ Ratio of net income (loss) to average net assets............... 3.93% 4.68% 5.53% 6.17% (0.33)%+ (2.43)%+
- ------------------ * Commencement of operations. + Annualized. ++ The Manager, at its discretion, reimbursed expenses and/or waived management fees for certain periods presented. See Notes to Financial Statements. P-74 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- REPORT OF THE 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 Bond Portfolio, Seligman Capital Portfolio, Seligman Cash Management Portfolio, Seligman Common Stock Portfolio, Seligman Communications and Information Portfolio, Seligman Frontier Portfolio, Seligman Henderson Global Growth Opportunities Portfolio, Seligman Henderson Global Smaller Companies Portfolio, Seligman Henderson Global Technology Portfolio, Seligman Henderson International Portfolio, Seligman High-Yield Bond Portfolio, Seligman Income Portfolio, Seligman Large-Cap Value Portfolio, and Seligman Small-Cap Value Portfolio, collectively referred to as the "Fund") as of December 31, 1998, and the related statements of operations, the statements of changes in net assets, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights 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 and financial highlights. Our procedures included confirmation of securities owned as of December 31, 1998, by correspondence with the custodians 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 Seligman Portfolios, Inc. at December 31, 1998, the results of their operations, the changes in their net assets, and the financial highlights for each of the indicated periods, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP --------------------- New York, New York February 5, 1999 P-75 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- BOARD OF DIRECTORS - ------------------------------------------------------------------------- JOHN R. GALVIN 2, 4 Dean, Fletcher School of Law and Diplomacy at Tufts University Director, Raytheon Company ALICE S. ILCHMAN 3, 4 Trustee, Committee for Economic Development Chairman, The Rockefeller Foundation FRANK A. MCPHERSON 2, 4 Director, Kimberly-Clark Corporation Director, Baptist Medical Center JOHN E. MEROW 2, 4 Retired Chairman and Senior Partner, Sullivan & Cromwell, Law Firm Director, Commonwealth Industries, Inc. Director, New York Presbyterian Hospital BETSY S. MICHEL 2, 4 Trustee, The Geraldine R. Dodge Foundation Chairman of the Board of Trustees, St. George's School WILLIAM C. MORRIS 1 Chairman Chairman of the Board, J. & W. Seligman & Co. Incorporated Chairman, Carbo Ceramics Inc. Director, Kerr-McGee Corporation JAMES C. PITNEY 3, 4 Retired Partner, Pitney, Hardin, Kipp & Szuch, Law Firm JAMES Q. RIORDAN 3, 4 Director, KeySpan Energy Corporation Trustee, Committee for Economic Development Director, Public Broadcasting Service RICHARD R. SCHMALTZ 1 Managing Director, Director of Investments, J. & W. Seligman & Co. Incorporated Trustee Emeritus, Colby College ROBERT L. SHAFER 3, 4 Retired Vice President, Pfizer Inc. JAMES N. WHITSON 2, 4 Director and Consultant, Sammons Enterprises, Inc. Director, C-SPAN Director, CommScope, Inc. BRIAN T. ZINO 1 President President, J. & W. Seligman & Co. Incorporated Chairman, Seligman Data Corp. Director, ICI Mutual Insurance Company Director Emeritus FRED E. BROWN Director and Consultant, J. & W. Seligman & Co. Incorporated - ----------------- Member: 1 Executive Committee 2 Audit Committee 3 Director Nominating Committee 4 Board Operations Committee P-76 SELIGMAN PORTFOLIOS, INC. - ------------------------------------------------------------------------- EXECUTIVE OFFICERS - ------------------------------------------------------------------------- WILLIAM C. MORRIS Chairman BRIANT.ZINO President BRIAN ASHFORD-RUSSELL Vice President DANIEL J. CHARLESTON Vice President IAIN C. CLARK Vice President NITIN MEHTA Vice President ARSEN MRAKOVCIC Vice President MARION S. SCHULTHEIS Vice President CHARLES C. SMITH, JR. Vice President LAWRENCE P. VOGEL Vice President PAUL H. WICK Vice President GARY S. ZELTZER 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 Henderson Investment Management Limited 3 Finsbury Avenue London EC2M 2PA GENERAL DISTRIBUTOR Seligman Advisors, Inc. 100 Park Avenue New York, New York 10017 CUSTODIANS Investors Fiduciary Trust Company The Chase Manhattan Bank GENERAL COUNSEL Sullivan & Cromwell INDEPENDENT AUDITORS Ernst & Young LLP P-77 -----END PRIVACY-ENHANCED MESSAGE-----