SECURITIES ACT FILE NO. 333-79083
INVESTMENT COMPANY ACT FILE NO. 811-09353
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
PRE-EFFECTIVE AMENDMENT NO. 1 |X|
POST-EFFECTIVE AMENDMENT NO. |_|
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
AMENDMENT NO. 1 |X|
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SELIGMAN NEW TECHNOLOGIES FUND, INC.
(Exact Name of Registrant as Specified in its Charter)
C/O J. & W. SELIGMAN & CO. INCORPORATED
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 850-1864 or
toll-free (800) 221-2450
THOMAS G. ROSE, TREASURER
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(Name and Address of Agent for Service)
COPIES TO:
Donald R. Crawshaw, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. |X|
It is proposed that this filing will become effective when declared effective
pursuant to section 8(c).
If appropriate, check the following box:
|_| This [post-effective] amendment designates a new effective date for
a previously filed [post-effective amendment] [registration statement].
|_| This form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration statement
for the same offering is - ______.
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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TITLE OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED AGGREGATE OFFERING PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------
Common Stock, par value
$0.01 per share $200,000,000 $ 55,600 (1)
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(1) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CROSS REFERENCE SHEET
PARTS A AND B OF PROSPECTUS
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ITEM
NO. CAPTION LOCATION IN PROSPECTUS
- --- ------- ----------------------
1. Outside Front Cover Page....................... Outside Front Cover Page
2. Inside Front and Outside
Back Cover Page................................ Inside Front and Outside Back Cover Page
3. Fee Table and Synopsis......................... Summary of Fund Expenses
4. Financial Highlights........................... Not Applicable
5. Plan of Distribution........................... Outside Front Cover Page; How to Purchase Fund
Shares
6. Selling of Shareholders........................ Not Applicable
7. Use of Proceeds................................ Use of Proceeds
8. General Description of the Registrant.......... Outside Front Cover Page; Investment Objective
and Principal Strategies; Risk Factors; General
Information
9. Management..................................... Management of the Fund
10. Capital Stock, Long-Term Debt, and
Other Securities............................... Capital Stock
11. Defaults and Arrears on Senior Securities Not Applicable
12. Legal Proceedings.............................. Not Applicable
13. Table of Contents of the Statement of Table of Contents of Statement of Additional
Additional Information......................... Information
14. Cover Page..................................... Cover Page (SAI)
15. Table of Contents.............................. Table of Contents (SAI)
16. General Information and History................ Appendix A (SAI)
17. Investment Objective and Policies.............. Additional Investment Policies (SAI)
18. Management..................................... Directors and Officers (SAI); Investment Advisory
and Other Services (SAI)
19. Control Persons and
Principal Holders of Securities................ Not Applicable
20. Investment Advisory and Other Services......... Investment Advisory and Other Services (SAI)
21. Brokerage Allocation and Other Practices....... Brokerage Commissions (SAI)
22. Tax Status..................................... Not Applicable
23. Financial Statements........................... Not Applicable
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RED HERRING TEXT
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A
REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE FUND MAY NOT SELL THESE SECURITIES UNTIL
THE REGISTRATION STATEMENT IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER, SOLICITATION OR SALE IS NOT PERMITTED.
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SUBJECT TO COMPLETION, DATED JUNE 23, 1999
o Shares
SELIGMAN
NEW TECHNOLOGIES FUND, INC.
Common Stock
100 Park Avenue
New York, New York 10017
Seligman New Technologies Fund, Inc. is a newly organized,
non-diversified, closed-end management investment company. The Fund's investment
objective is to seek long-term capital appreciation. The Fund proposes to
achieve its objective by investing at least 65% of its total assets in equity
securities of U.S. and non-U.S. companies considered by the Fund's investment
manager to rely significantly on technological events or advances in their
product development or operations. The Fund seeks to identify and invest in
companies that will provide tomorrow's technology. The Fund may invest in
companies of any size, but generally expects to invest at least 65% of its
assets in small and medium-sized companies. The Fund may invest up to 35% of its
total assets in equity securities of privately owned technology companies that
plan to conduct an initial public offering, or IPO, within a period of several
months to three years. These are referred to as venture capital companies. There
will be no public market for the shares of a venture capital company at the time
of the Fund's investment, and there can be no assurance that a planned IPO will
ever be completed. The Fund may also invest in securities of private investment
funds that invest primarily in venture capital companies. INVESTMENTS IN
TECHNOLOGY COMPANIES, AND IN PARTICULAR VENTURE CAPITAL COMPANIES, ARE
SPECULATIVE AND POSE SPECIAL RISKS. THESE RISKS ARE MORE FULLY EXPLAINED BELOW
UNDER THE HEADING "RISK FACTORS."
The Fund's investment manager is J. & W. Seligman & Co. Incorporated.
NO MARKET EXISTS FOR THE FUND'S SHARES. THE FUND'S SHARES WILL NOT BE
LISTED ON ANY SECURITIES EXCHANGE, AND THE FUND DOES NOT ANTICIPATE THAT A
SECONDARY MARKET WILL DEVELOP FOR ITS SHARES. YOU MAY NOT BE ABLE TO SELL YOUR
SHARES. Because the Fund is a closed-end investment company, shares of the Fund
may not be redeemed on a daily basis, and they may not be exchanged for shares
of any other fund. The shares are appropriate only as a long-term investment.
In order to provide a limited degree of liquidity to shareholders, the
Fund will make quarterly offers to repurchase 5% of its outstanding shares at
their net asset value. The number of shares tendered for repurchase may exceed
the number that the Fund offers to repurchase. If that happens, the Fund will
repurchase shares on a pro rata basis, and tendering shareholders will not have
all of their tendered shares repurchased by the Fund. The Fund intends to
complete its first quarterly repurchase offer in January 2000. See "Repurchase
Offers."
The Fund's shares are being offered initially by selected brokers and
dealers at a price of $24.25 per share, plus a sales charge of up to $0.75 per
share, for a maximum offering price of $25.00 per share. The sales charge is
payable to the selected broker or dealer who arranges for a sale. Reductions in
the sales charge are available for large purchases and in certain other
circumstances. See "How to Purchase Fund Shares." Seligman Advisors, Inc., an
affiliate of the investment manager, will pay to the selected brokers and
dealers from its own resources an additional sales commission equal to an
additional $0.25 per share. The total proceeds to the Fund from the initial
offering are expected to be $ o million. The Fund will pay organizational and
offering expenses estimated at $500,000 from the proceeds of the offering. The
initial offering will terminate on July 27, 1999, unless extended by Seligman
Advisors.
If the Fund raises less than $500 million in this offering, then, not
less than 30 days after the closing of the initial offering, the Fund expects to
commence a continuous offering of its shares through selected brokers and
dealers at a price equal to their net asset value plus a maximum sales charge of
3%. Seligman Advisors will pay to the selected brokers and dealers from its own
resources an additional sales commission equal to an additional 1% for each
share sold in any continuous offering. Any such continuous offering, if
commenced, may be discontinued when the Fund's net assets reach $500 million,
and may be discontinued at any time. The Fund may commence other continuous
offerings from time to time in the future.
The Fund will pay each selected broker or dealer that is not affiliated
with the Fund or Seligman a shareholder servicing fee at an annual rate of 0.50%
of the net asset value of the outstanding shares owned by customers of such
broker or dealer.
This prospectus concisely provides the information that a prospective
investor should know about the Fund before investing. You are advised to read
this prospectus carefully and to retain it for future reference. Additional
information about the Fund, including a statement of additional information
("SAI") dated o, 1999, has been filed with the Securities and Exchange
Commission. The SAI is available upon request and without charge by writing the
Fund at the address above or by calling (800) 221-2450. The SAI is dated the
same date as this prospectus and is incorporated by reference into this
prospectus in its entirety. The table of contents of the SAI appears on page o
of this prospectus. The SAI, and other information about the Fund, is also
available on the SEC's website (http://www.sec.gov).
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED
WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. NOR HAVE THEY MADE, NOR WILL
THEY MAKE, ANY DETERMINATION AS TO WHETHER ANYONE SHOULD BUY THESE SECURITIES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
THE DATE OF THIS PROSPECTUS IS JULY |X| , 1999.
<PAGE>
TABLE OF CONTENTS
PAGE
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Prospectus Summary.................................................... iii
Summary of Fund Expenses ............................................. 1
Risk Factors.......................................................... 2
Year 2000 ............................................................ 5
Use of Proceeds ...................................................... 5
Investment Objective and Principal Strategies ........................ 6
Management of the Fund ............................................... 9
Repurchase Offers .................................................... 10
Calculation of Net Asset Value ....................................... 12
Capital Stock ........................................................ 12
Distribution Policy .................................................. 13
Taxes ................................................................ 13
How to Purchase Fund Shares .......................................... 14
General Information .................................................. 15
Table of Contents of Statement of Additional Information ............. 16
iii
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PROSPECTUS SUMMARY
THE FUND Seligman New Technologies Fund, Inc. (the
"Fund") is a newly organized non-diversified,
closed-end management investment company
registered under the Investment Company Act
of 1940. The Fund's investment manager is J.
& W. Seligman & Co. Incorporated
("Seligman"). See "General Information."
INVESTMENT OBJECTIVE AND The Fund's investment objective is to seek
PRINCIPAL STRATEGIES long-term capital appreciation. The Fund
proposes to achieve its objective by
investing at least 65% of its total assets in
equity securities of U.S. and non-U.S.
companies considered
by Seligman to rely significantly on
technological events or advances in their
product development or operations. The Fund
seeks to identify and invest in companies
that will provide tomorrow's technology.
The Fund may invest in companies of any size,
but generally expects to invest at least 65%
of its assets in small and medium-sized
companies. The Fund may invest up to 35% of
its total assets in equity securities of
privately owned technology companies that
plan to conduct an initial public offering,
or IPO, within a period of several months to
three years. These are referred to as venture
capital companies. There will be no public
market for the shares of a venture capital
company at the time of the Fund's investment,
and there can be no assurance that a planned
IPO will ever be completed. The Fund may also
invest up to 5% of its assets in securities
of private investment funds that invest
primarily in venture capital companies. See
"Investment Objective and Principal
Strategies."
INVESTMENT RATIONALE The speed and magnitude of technological
innovation has frequently been
underestimated. The pace of technological
advancement that began more than 40 years ago
with the first commercialization of the
computer is accelerating beyond many people's
expectations. The Fund's investment manager
expects this secular trend, largely driven by
the ability of technology to increase
productivity, to continue to evolve well into
the next century.
Developments in the computer industry
illustrate this trend. In the 1960s and
1970s, mainframe computers were the dominant
technology, but they were superseded by
personal computers in the 1980s and 1990s.
This shift in the dominant technology
resulted in significant changes in industry
leaders. Some of the companies that are now
at the forefront of mainstream technological
innovation were in the early stages of their
development less than 20 years ago. Seligman
believes that there are emerging technology
companies today that offer similar
opportunities for appreciation.
The Fund will seek to identify and invest in
companies that will provide tomorrow's
technology. Seligman currently believes the
greatest growth potential is found in five
areas of technology: Internet and new media;
broadband and fiber optics; digital consumer
electronics; biometric software; and wireless
communications and computing. See "Investment
Objective and Principal Strategies -
Investment Rationale."
iv
<PAGE>
THE MANAGER J. & W. Seligman & Co. Incorporated, the
manager of the Fund, has substantial
experience in technology investing.
The Fund is co-managed by Paul H. Wick,
leader of Seligman's Technology Team, and
Storm Boswick. Both are managing directors of
Seligman. As of March 31, 1999, Seligman's
Technology Team managed approximately $7
billion of public and private securities of
technology and related companies, including
the world's largest technology fund, Seligman
Communications and Information Fund, Inc.,
and the US assets of Seligman Henderson
Global Technology Fund, one of the world's
largest global technology funds.
With offices in both Palo Alto, the heart of
Silicon Valley, and New York, the financial
capital of the world, Seligman's Technology
Team is able to effectively cover the broad
scope of both public and private technology
companies. The team conducts first-hand
research on all companies considered for
inclusion in the Fund. The team's research
includes hundreds of on-site visits and
one-on-one meetings with management to assess
the quality, prospects and direction of a
company.
INVESTMENT ADVISER FEES The Fund will pay a fee to Seligman for its
management services at an annual rate of
2.00% of the Fund's average daily net assets.
This management fee is higher than the
advisory fees paid by most U.S. investment
companies. See "Management of the Fund."
BORROWING The Fund is authorized to borrow money in an
amount up to 5% of its total assets (giving
effect to the amount borrowed) in order to
meet repurchase requests, for other cash
management purposes and to fund the purchase
of portfolio securities for a period of not
longer than 30 days. The Fund may not
purchase additional portfolio securities at
any time that borrowings exceed 5% of its
total assets. The Fund is not authorized to
use borrowings for long-term financial
leverage purposes.
HEDGING The Fund may use derivative instruments to
hedge portfolio risks and for cash management
purposes. Hedging activity may relate to a
specific security or to the Fund's portfolio
as a whole. The Fund may not use derivative
instruments to seek increased return on its
investments.
THE OFFERING The initial offering will terminate on July
27, 1999, unless extended by Seligman
Advisors. In the initial offering the Fund
will not raise more than $500 million. The
Fund is initially offering its shares through
selected brokers and dealers. The minimum
investment is $10,000. The maximum purchase
price per share of $25.00 includes a sales
charge equal to $0.75 per share. Reductions
in the sales charge are available for large
purchases and in certain other circumstances.
See "How to Purchase Fund Shares." In the
initial offering, Seligman will pay an
additional commission to the selected brokers
and dealers equal to $0.25 per share. Each
selected
v
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broker or dealer will also receive a
shareholder servicing fee from the Fund at
the annual rate of 0.50% of the net asset
value of the outstanding shares owned by
customers of such broker or dealer.
If the Fund raises less than $500 million in
the initial offering, then, not less than 30
days after the closing of the initial
offering, the Fund may commence a continuous
offering of its shares through selected
brokers and dealers at a price equal to their
net asset value plus a sales charge of 3%.
Any such continuous offering, if commenced,
may be discontinued when the Fund's total
assets reach $500 million, and may be
discontinued at any time. The Fund may
commence other continuous offerings from time
to time in the future. Seligman will pay an
additional commission to the selected brokers
and dealers equal to 1% of the net asset
value of shares purchased during any
continuous offering. See "How to Purchase
Fund Shares."
DISTRIBUTION POLICY The Fund will pay dividends on the shares
annually in amounts representing
substantially all of the net investment
income, if any, earned each year. It is
likely that many of the companies in which
the Fund invests will not pay any dividends,
and this, together with the Fund's relatively
high expenses, means that the Fund is
unlikely to have income or pay dividends.
The Fund will pay substantially all of any
taxable net capital gain realized on
investments to shareholders at least
annually.
An automatic reinvestment plan is available
for any holder of the Fund's common stock who
wishes to purchase additional shares using
dividends and/or capital gain distributions
paid by the Fund. Shares will be issued under
the plan at their net asset value on the
ex-dividend date; there is no sales charge or
other charge for reinvestment.
UNLISTED CLOSED-END STRUCTURE; The Fund has been organized as a closed-end
LIMITED LIQUIDITY management investment company. Closed-end
funds differ from open-end management
investment companies (commonly known as
mutual funds) in that shareholders of a
closed-end fund do not have the right to
redeem their shares on a daily basis. In
order to be able to meet daily redemption
requests, mutual funds are subject to more
stringent regulatory limitations than
closed-end funds. In particular, a mutual
fund generally may not invest more than 15%
of its assets in illiquid securities. The
Fund believes that unique investment
opportunities exist in the market for venture
capital technology companies and in private
funds that invest in venture capital
technology companies. However, these venture
capital investments are often illiquid, and
an open-end fund's ability to make such
investments is limited. For this reason the
Fund has been organized as a closed-end fund.
The Fund's shares will not be listed on any
securities exchange and does not expect any
secondary market to develop for its shares.
YOU WILL NOT BE ABLE TO REDEEM YOUR SHARES ON
A DAILY BASIS BECAUSE THE FUND IS A
CLOSED-END FUND. Shares of the Fund may not
be exchanged for shares of any other fund. As
described below,
vi
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however, in order to provide a limited degree
of liquidity, the Fund will conduct quarterly
repurchase offers for 5% of its outstanding
shares. An investment in the Fund is suitable
only for investors who can bear the risks
associated with the limited liquidity of the
shares.
QUARTERLY REPURCHASE OFFERS In order to provide a limited degree of
liquidity to shareholders, the Fund will
conduct quarterly repurchase offers. The Fund
intends to commence the first repurchase
offer in December 1999 and to complete it in
January 2000. In each repurchase offer, the
Fund will offer to repurchase 5% of its
outstanding shares at their net asset value.
The Fund may offer to repurchase more than 5%
of its shares in any quarter with the
approval of the board of directors. If the
number of shares tendered for repurchase
exceeds the number the Fund intends to
repurchase, the Fund will repurchase shares
on a pro-rata basis, and tendering
shareholders will not have all of their
tendered shares repurchased by the Fund. See
"Repurchase Offers."
RISK FACTORS An investment in the Fund involves a high
degree of risk. These include the risks of:
o investing in shares of an unlisted
closed-end fund with limited liquidity
o investing in the technology and related
industries
o concentration in a small number of
industry sectors and maintaining a
"non-diversified" portfolio
o investing in small companies
o investing in venture capital companies
and venture capital funds
o investing in securities that are illiquid
and volatile
o investing in securities of non-U.S.
issuers
See "Risk Factors."
vii
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SUMMARY OF FUND EXPENSES
The following table illustrates the expenses and fees that the Fund
expects to incur and that shareholders can expect to bear.
SHAREHOLDER TRANSACTION EXPENSES
Sales load (as a percentage of offering price)..................... 3%
Automatic reinvestment plan fees................................... none
MAXIMUM REDEMPTION FEE ............................................ none
ANNUAL EXPENSES (as a percentage of net assets attributable to common shares)
Management fees.................................................... 2.00%
Shareholder servicing fees......................................... 0.50%
Other expenses..................................................... 0.50%
-----
Total annual expenses.............................................. 3.00%
====
The purpose of the table above is to assist you in understanding the
various costs and expenses you would bear directly or indirectly as a
shareholder of the Fund. The annual "Other expenses" shown above are estimated,
based on net assets of the Fund of $200 million at the closing of the initial
public offering and organizational and offering expenses payable by the Fund
estimated to be $500,000. For a more complete description of the various costs
and expenses, see "Management of the Fund."
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EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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You would pay the following expenses on a $1,000 $59 $120 $183 $352
investment, assuming a 5% annual return:
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THE EXAMPLE DOES NOT PRESENT ACTUAL EXPENSES AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN. Moreover, the Fund's actual rate of return may be
greater or less than the hypothetical 5% return shown in the example.
1
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RISK FACTORS
Stock prices fluctuate. Apart from the specific risks identified below,
the Fund's investments may be negatively affected by the broad investment
environment in the US and international securities markets, which investment
environment is influenced by, among other things, interest rates, inflation,
politics, fiscal policy, and current events. Therefore, as with any fund that
invests in stocks, the Fund's net asset value will fluctuate, especially in the
short term. You may experience a decline in the value of your investments and
could lose money.
NEWLY ORGANIZED FUND
The Fund is a newly organized investment company with no previous
operating history. Although Seligman and the Fund's portfolio manager have
considerable experience managing other funds with investment objectives similar
to the Fund's, the Fund may not succeed in meeting its objective, and the Fund's
net asset value may decrease.
UNLISTED CLOSED-END FUND; LIMITED LIQUIDITY
The Fund is a closed-end investment company designed primarily for
long-term investors and is not intended to be a trading vehicle. The Fund does
not intend to list its shares for trading on any national securities exchange.
There is no secondary trading market for Fund shares, and none is expected to
develop. The Fund's shares are therefore not readily marketable. Unlike shares
of some open-end mutual funds, shares of the Fund may not be exchanged for
shares of any other fund. Although the Fund, as a fundamental policy, will make
quarterly repurchase offers for 5% (or more, at the discretion of the board of
directors) of its outstanding common shares at net asset value, the Fund's
shares are less liquid than shares of funds that trade on a stock exchange.
Also, because the common stock will not be listed on any securities exchange,
the Fund is not required, and does not intend, to hold annual meetings of
shareholders.
REPURCHASE OFFERS
The Fund will offer to purchase only a small portion of its shares each
quarter, and there is no guarantee that you will be able to sell all of your
Fund shares that you desire to sell. If a repurchase offer is oversubscribed by
shareholders, the Fund will repurchase only a pro rata portion of the shares
tendered by each shareholder. The potential for pro-ration may cause some
investors to tender more shares for repurchase than they wish to have
repurchased. Moreover, the Fund's repurchase policy may have the effect of
decreasing the size of the Fund. This may force the Fund to sell assets it would
not otherwise sell. It may also reduce the investment opportunities available to
the Fund and cause its expense ratio to increase.
INVESTMENT IN THE TECHNOLOGY INDUSTRY
The Fund plans to invest primarily in the stock of technology
companies. The value of the Fund's shares may be susceptible to factors
affecting technology and technology-related industries and to greater risk and
market fluctuation than an investment in a fund that invests in a broader range
of portfolio securities. The specific risks faced by technology companies
include:
o rapidly changing technologies and products that may quickly become
obsolete
o exposure to a high degree of government regulation, making these
companies susceptible to changes in government policy and failures
to secure regulatory approvals
o cyclical patterns in information technology spending which may
result in inventory write-offs
o scarcity of management, engineering and marketing personnel with
appropriate technological training
o the possibility of lawsuits related to technological patents
o changing investor sentiments and preferences with regard to
technology sector investments (which are generally perceived as
risky)
INVESTMENTS IN SMALL COMPANIES
The Fund plans to invest primarily in the stock of small and
medium-sized companies. These investments may present greater opportunity for
growth, but there are specific risks associated with investments in small
companies, which include:
2
<PAGE>
o poor corporate performance due to less experienced management,
limited product lines, undeveloped markets and/or limited financial
resources
o due to shorter operating histories, less publicly available
information and little or no research by the investment community
o reduced or zero liquidity due to small market capitalization and
absence of exchange listing or dealers willing to make a market
o increased share price volatility due to the fact that, in periods
of investor uncertainty, investor sentiment may favor large,
well-known companies over small, lesser-known companies
o reliance, in many cases, on one or two key individuals for
management
The Fund may invest a substantial portion of its assets in securities
of unseasoned venture capital companies, which present additional risks. These
companies represent highly speculative investments by the Fund, and the Fund may
lose all or part of its entire investment if these companies fail or their
product lines fail to achieve an adequate level of market recognition. Some
companies may depend upon managerial assistance provided by their investors. The
Fund does not intend to provide any such managerial assistance, and the value of
its investments may therefore depend upon the quality of managerial assistance
provided by other investors.
The Fund's net asset value per share may change substantially in a
short time as a result of developments at the companies in which the Fund
invests. Changes in the Fund's net asset value may be more pronounced and more
rapid than with other funds because of the Fund's emphasis on small companies
and on venture capital companies that are not publicly traded. The Fund's net
asset value per share may change materially between the date a repurchase offer
is mailed and the due date for tendering shares, and it may also change
materially shortly after a repurchase is completed.
CONCENTRATION; NON-DIVERSIFIED STATUS
Where your portfolio is concentrated in securities of a small number of
companies or in securities of companies in single industry, the risk of any
investment decision is increased. The assets of the Fund will consist almost
entirely of companies within or related to various sectors of the technology
industry. Seligman will seek to reduce the company-specific risk, as opposed to
sector-specific risk, of the Fund's portfolio by investing in more than one
company in a particular sector, but this may not always be practicable.
The Fund is classified as a "non-diversified" management investment
company under the Investment Company Act of 1940 (the "1940 Act"). This means
that the Fund may invest a greater portion of its assets in a limited number of
issuers than would be the case if the Fund were classified as a "diversified"
management investment company. Accordingly, the Fund may be subject to greater
risk with respect to its portfolio securities than a "diversified" fund because
changes in the financial condition or market assessment of a single issuer may
cause greater fluctuation in the net asset value of the Fund's shares.
INVESTMENTS IN VENTURE CAPITAL FUNDS
Venture capital funds involve all the risks of investing in small
companies described in this prospectus, plus certain additional risks. In
particular, the Fund must rely upon the judgment of the general partner or other
manager of a venture capital fund in selecting the companies in which the
venture capital fund invests and in deciding when to sell its investments. A
venture capital fund may employ a high degree of leverage, which can magnify any
losses incurred by its investors, including the Fund. A venture capital fund may
also be required to pay management fees and/or performance fees to its general
partner or manager, which can reduce the return to investors, including the
Fund. The Fund may also pay certain costs of evaluating each venture capital
investment, including fees of outside legal counsel, which may reduce the
Fund's return. Investments in venture capital funds may be highly illiquid. The
Fund may not be able to dispose of a venture capital holding when it wishes to,
or may be able to do so only at a disadvantageous price.
INVESTMENTS IN FOREIGN SECURITIES
The Fund plans to invest in the securities of foreign technology
companies. Investments in foreign securities face specific risks, which include:
o unfavorable changes in currency rates and exchange control
regulations
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o restrictions on, and costs associated with, the exchange of
currencies and the repatriation of capital invested abroad
o reduced availability of information regarding foreign companies
o foreign companies may be subject to different accounting, auditing
and financial standards and to less stringent reporting standards
and requirements
o reduced liquidity as a result of inadequate trading volume and
government-imposed trading restrictions
o the difficulty in obtaining or enforcing a judgment abroad o
increased market risk due to regional economic and political
instability o increased brokerage commissions and custody fees o
securities markets which are subject to a lesser degree of
supervision and regulation by competent authorities
o foreign withholding taxes
o the threat of nationalization and expropriation
BORROWING
The Fund is authorized to borrow money in an amount up to 5% of its
total assets (giving effect to the amount borrowed) in order to meet repurchase
requests, for other cash management purposes and to fund the purchase of
portfolio securities for a period of not longer than 30 days. The Fund may not
purchase additional portfolio securities at any time that borrowings exceed 5%
of its total assets. The Fund is not authorized to use borrowings for long-term
financial leverage purposes. The rights of any lenders to the Fund to receive
payments of interest or repayments of principal will be senior to those of the
holders of the Fund's shares, and the terms of any borrowings may contain
provisions that limit certain activities of the Fund, including the payment of
dividends (if any) to holders of shares. Interest payments and fees incurred in
connection with borrowings will increase the Fund's expense ratio and will
reduce any income the Fund otherwise has available for the payment of dividends.
USE OF DERIVATIVES FOR HEDGING PURPOSES
The Fund intends to use derivative instruments to hedge portfolio risk
and for cash management purposes. Investing in derivative investments involves
numerous risks. For example,
o The underlying investment or security might not perform in the
manner that Seligman expects it to perform. This could make the
effort to hedge unsuccessful.
o The company issuing the instrument may be unable to pay the amount
due on the maturity of the instrument.
o Certain derivative investments held by the Fund may trade only in
the over-the-counter markets or not at all, and can be illiquid.
o Derivatives may change rapidly in value because of their inherent
leverage.
All of this can mean that the Fund's net asset value may change more often and
to a greater degree than it otherwise would.
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RESTRICTED AND ILLIQUID SECURITIES
The Fund intends to invest a substantial portion of its assets in
restricted securities and other investments which are illiquid. Restricted
securities are securities that may not be resold to the public without an
effective registration statement under the Securities Act of 1933 or, if they
are unregistered, may be sold only in a privately negotiated transaction or
pursuant to an exemption from registration.
Restricted and other illiquid investments involve the risk that the
securities will not be able to be sold at the time desired by Seligman or at
prices approximating the value at which the Fund is carrying the securities on
its books.
YEAR 2000
As the millennium approaches, investment companies, financial and
business organizations, and individuals could be adversely affected if their
computer systems do not properly process and calculate date-related information
and data on and after January 1, 2000. Like other investment companies, the Fund
relies upon service providers and their computer systems for its day-to-day
operations. Many of the Fund's service providers in turn depend upon the
computer systems of their vendors. Seligman and the Fund's shareholder service
agent, Seligman Data Corp. ("SDC"), have established a year 2000 project team.
The team's purpose is to assess the state of readiness of Seligman and SDC and
the Fund's other service providers and vendors. The team is comprised of several
information technology and business professionals as well as outside
consultants. The project manager of the team reports directly to the
administrative committee of Seligman. The project manager and other members of
the team also report to the board of directors of the Fund and its audit
committee.
The team has identified the service providers and vendors who furnish
critical services or software systems to the Fund, including securities firms
that execute portfolio transactions for the Fund and firms responsible for
shareholder account recordkeeping. The team is working with these critical
service providers and vendors to evaluate the impact year 2000 issues may have
on their ability to provide uninterrupted services to the Fund. The team will
assess the feasibility of their year 2000 plans. The team continues to update
its year 2000 contingency plans -- recovery efforts the team will employ in the
event that year 2000 issues adversely affect the Fund.
The Fund anticipates that the team will implement all significant
components of the team's year 2000 plans by mid-1999, including appropriate
testing of critical systems and receipt of satisfactory assurances from critical
service providers and vendors regarding their year 2000 compliance. The Fund
believes that the critical systems on which it relies will function properly on
and after the year 2000, but this is not guaranteed. If these systems do not
function properly, or the Fund's critical service providers are not successful
in implementing their year 2000 plans, the Fund's operations may be adversely
affected, including pricing, securities trading and settlement, and the
provision of shareholder services.
In addition, the Fund may hold securities of issuers whose underlying
business leaves them susceptible to year 2000 issues. The Fund may also hold
securities issued by governmental or quasi-governmental issuers, which, like
other organizations, are also susceptible to year 2000 concerns. Year 2000
issues may affect an issuer's operations, creditworthiness and ability to make
timely payment on any indebtedness and could have an adverse impact on the value
of its securities. If the Fund holds these securities, the Fund's performance
could be negatively affected. Seligman seeks to identify an issuer's state of
year 2000 readiness as part of the research it employs. However, the perception
of an issuer's year 2000 preparedness is only one of the many factors considered
in determining whether to buy, sell, or continue to hold a security. Information
provided by issuers concerning their state of readiness may or may not be
accurate or readily available. Further, the Fund may be adversely affected if
the exchanges, markets, depositories, clearing agencies, or government or third
parties responsible for infrastructure needs do not address their year 2000
issues in a satisfactory manner. The Fund may invest in securities of non-US
issuers. It may be more difficult to assess the preparedness of such issuers for
year 2000 than it is in the case of US issuers because there may be less
information available about their systems and about procedures they have
followed to address technical problems. In addition, non-US issuers may be
dependent upon foreign governments and governmental agencies for essential
services that may be disrupted if those governments and agencies are not
themselves prepared for year 2000. Such disruptions could have an adverse effect
on the business of non-US issuers and thus on the value of their securities.
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SDC has informed the Fund that it does not expect the cost of its
services to increase materially as a result of the modifications to its computer
systems necessary to prepare for the year 2000. The Fund will not pay to
remediate the systems of Seligman or directly bear the costs to remediate the
systems of any other service provider or vendor, other than SDC.
USE OF PROCEEDS
The net proceeds of the initial offering are estimated to be $ o after
payment of underwriting discounts and commissions, and organizational and
offering expenses estimated to be $500,000 payable by the Fund. The net proceeds
of this offering will be invested in accordance with the Fund's investment
objective and principal strategies as soon as practicable after the closing of
this offering. Seligman expects the Fund will be fully invested within one year.
This lengthy investment period reflects the fact that: (i) the Fund plans to
spend considerable time researching prospective investments; and (ii) the
companies in which the Fund plans to invest will be primarily small to
medium-sized technology and technology-related companies which may have limited
amounts of outstanding securities available for purchase. The Fund plans to
minimize the positive impact its purchases of securities will have on the price
of these securities by purchasing the securities over a period of time. Pending
the full investment of the proceeds of the offering in technology and
technology-related stocks, the proceeds of the offering will be invested in
short-term, high quality debt securities. Organizational expenses will be borne
by investors in the initial offering; investors in any subsequent continuous
offering will not bear any organizational expenses.
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES
LONG-TERM CAPITAL APPRECIATION
The Fund's investment objective is to seek long-term capital
appreciation. Income is not an objective. There can be no assurance that the
Fund will achieve its investment objective.
INVESTMENT IN EQUITY SECURITIES OF TECHNOLOGY COMPANIES
The Fund proposes to achieve its objective by investing at least 65% of
its total assets in equity securities of U.S. and non-U.S. companies considered
by the Fund's investment manager to rely significantly on technological events
or advances in their product development or operations. The companies in which
the Fund plans to invest may operate in any of the following or similar fields:
computer software, computer services, computer hardware, semiconductors,
communications and telecommunications, the Internet, consumer electronics,
biomedics and pharmaceuticals. The Fund may invest in companies of any size, but
generally expects to invest at least 65% of its assets in small and medium-sized
companies. In current market conditions, the Fund considers small and
medium-sized companies to be those with market capitalizations, at time of
purchase by the Fund, of a little as $10 million and as much as $10 billion. The
Fund's definition of small and medium-sized companies may be changed in light of
market developments.
The Fund anticipates that it will invest primarily in common stocks.
The Fund may also invest in securities convertible into or exchangeable for
common stocks, rights and warrants to purchase common stocks and depository
receipts representing an ownership interest in equity securities. The Fund
considers all of these securities equity securities for purposes of its
investment strategies. The Fund may also invest in debt securities or preferred
stocks believed to provide opportunities for capital gain.
The Fund may invest up to 35% of its total assets in equity securities
of privately owned technology companies that plan to conduct an initial public
offering, or IPO, within a period of several months to three years. These are
referred to as venture capital companies. There will be no public market for the
shares of a venture capital company at the time of the Fund's investment, and
there can be no assurance that a planned
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IPO will be completed. The Fund expects to invest in venture capital companies
that it determines to be in the "late-stage" or "pre-IPO" stage of development.
The Fund considers a company to be in the late stage if it has a developed
infrastructure and has commenced earning revenues. The Fund expects that
late-stage companies will undertake an initial public offering within a period
of one to three years. A pre-IPO company is somewhat more developed than a
late-stage company. The Fund expects to be able to acquire equity securities of
pre-IPO companies in private placements within a year prior to their planned
initial public offerings. Late-stage and pre-IPO companies will typically have
small market capitalizations and limited or no liquidity; even after an initial
public offering, liquidity may be limited and the Fund may be subject to
contractual limitations on its ability to sell shares. Of the Fund's venture
capital investments, up to 5% of the Fund's total assets may be invested in
securities of investment funds that invest primarily in venture capital
companies. These investments may involve relatively high fees (the Fund will be
indirectly paying fees to the manager of such investment funds and to Seligman
on the same assets) and a high degree of risk. See "Risk Factors - Venture
Capital Funds."
The Fund may invest in securities of non-U.S. issuers. The Fund may
invest directly in foreign securities or it may invest through depositary
receipts, which are certificates issued by a bank or other financial institution
that evidence the right to receive the underlying foreign security. Investments
in non-US securities involve certain risks in addition to those of technology
companies generally. These risks are discussed under "Risk Factors." The Fund
may not invest more than 25% of its total assets in non-US securities, but this
limit does not apply to investments in depositary receipts.
INVESTMENT RATIONALE
The speed and magnitude of technological innovation has frequently been
underestimated. The pace of technological advancement that began more than 40
years ago with the first commercialization of the computer is accelerating
beyond many people's expectations. Seligman expects this secular trend, largely
driven by the ability of technology to increase productivity, to continue to
evolve well into the next century.
Developments in the computer industry illustrate this trend. In the
1960s and 1970s, mainframe computers were the dominant technology, but they were
superseded by personal computers in the 1980s and 1990s. This shift in the
dominant technology resulted in significant changes in industry leaders. Some of
the companies that are now at the forefront of mainstream technological
innovation were in the early stages of their development less than 20 years ago.
Seligman believes that there are emerging technology companies today that offer
similar opportunities for appreciation.
The Fund seeks to identify and invest in companies that will provide
tomorrow's technology. Seligman currently believes the greatest growth potential
is found in five areas of technology:
o Internet and new media. Seligman believes the Internet has the
potential to revolutionize the way people and businesses communicate and
interact. Currently the Internet is widely used only in the United States and
Western Europe. Seligman believes the Internet will continue to expand until it
is a global phenomenon.
o Broadband and fiber optics. Computer processing power currently
exceeds the transmission capacity of the networks that connect computers.
Seligman believes substantial investment will be required in broadband and fiber
optic technology in order to improve the speed of data transmission.
o Digital consumer electronics. Consumer electronics are becoming
increasingly digital to permit the rapid transmission of data. Digital
technology is becoming less expensive than analog and other earlier
technologies, which Seligman believes should result a deeper penetration of
digital products in the marketplace.
o Biometric software. Seligman believes that the ability for the human
body to interact with a computer or a communications device has far-reaching
implications. Heightened security may be made possible as fingerprints and
cornea scans can be used as identification. Doctors may be able to use this
technology to interact with and monitor patients from remote locations.
o Wireless communications and computing. Hand-held devices and cellular
phones enable workers to remain effective when they are away from their desk-top
computers. Wireless communications and computing has the potential for
productivity enhancement for businesses and lifestyle enhancement for consumers.
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HEDGING
The Fund may seek to hedge portfolio risk through the use of financial
instruments known as derivatives. A derivative is generally defined as an
instrument whose value is derived from, or based upon, some underlying index,
reference rate (such as interest rates or currency exchange rates), security,
commodity or other asset. The Fund will use a specific type of derivative only
after consideration of, among other things, how the derivative instrument serves
the Fund's investment objective and the risk associated with the instrument. The
Fund may use derivatives only for the purposes of hedging portfolio risk and
cash management.
The Fund may buy or sell put or call options on transferable securities
if these options are traded on options exchanges or over-the-counter markets
with broker-dealers that are reputable financial institutions that specialize in
these types of transactions, that make markets in these options, or are
participants in over-the-counter markets. A put option gives the purchaser of
the option the right to sell, and obligates the writer of the put option to buy,
the underlying security at a stated exercise price at any time prior to the
expiration of the option. Similarly, a call option gives the purchaser of the
option the right to buy, and obligates the writer to the call option to sell,
the underlying security at a stated exercise price at any time prior to the
expiration of the option.
Seligman will consider changes in foreign currency exchange rates in
making investment decisions about non-US securities. As one way of managing
exchange rate risk, the Fund may enter into forward currency exchange contracts
(agreements to purchase or to sell US dollars or non-US currencies at a future
date). A forward contract may help reduce the Fund's losses on securities
denominated in a currency other than US dollars, but it may also reduce the
potential gain on the securities depending on changes in the currency's value
relative to the US dollar.
INVESTMENT CONCENTRATION
As a non-diversified investment company, the Fund faces few regulatory
restrictions on the proportion of its total assets it may invest in the
securities of any one company, or on the proportion of its total assets it
allocates to control interests in companies. However, the Fund does not intend
to invest more than 25% of its total assets in the securities of any one
company. Similarly, the Fund does not intend to invest more than 25% of its
total assets in controlling interests of companies. Market fluctuations could
cause these limits to be exceeded.
BORROWING; USE OF LEVERAGE
The Fund is authorized to borrow money in an amount up to 5% of its
total assets (giving effect to the amount borrowed) in order to meet repurchase
requests, for other cash management purposes and to fund the purchase of
portfolio securities for a period of not longer than 30 days. The Fund may not
purchase additional portfolio securities at any time that borrowings exceed 5%
of its total assets. The Fund is not authorized to use borrowings for long-term
financial leverage purposes. Borrowing by the Fund involves certain risks for
shareholders. See "Risk Factors - Borrowing."
INVESTMENT DECISIONS BASED UPON EXTENSIVE FIRM-LEVEL RESEARCH
The Fund will use a bottom-up stock selection approach. This means that
Seligman will extensively research specific companies in the technology and
technology-related industries to find those companies that Seligman believes
offer the greatest prospects for future growth. In selecting individual
securities, Seligman will look for companies that it believes display or are
expected to display:
o robust growth prospects
o high profit margins or return on capital
o attractive valuation relative to expected earnings or cash flow o
quality management o unique competitive advantages
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CIRCUMSTANCES IN WHICH THE FUND WILL SELL A SECURITY
While it is the policy of the Fund to hold securities for investment,
the Fund will consider selling securities of a company if Seligman's target
price for the security has been reached or if Seligman believes that:
o the company's earnings are disappointing,
o the company's revenue growth has slowed, or
o the company's underlying fundamentals have deteriorated.
The Fund may also be forced to sell securities to meet its quarterly share
repurchase obligation. As a result, the annual portfolio turnover of the Fund
may exceed 100%. A high portfolio turnover rate will increase the Fund's
expenses. On the other hand, the Fund may invest a significant portion of its
assets in venture capital securities having very little liquidity. The Fund may
be forced to retain such assets even in circumstances where the Fund's
investment policies indicate the assets should be sold. See "Risk Factors -
Restricted and Illiquid Securities."
DEFENSIVE MEASURES
The Fund may, from time to time, take temporary defensive positions
that are inconsistent with its principal strategies in seeking to minimize
extreme volatility caused by adverse market, economic, or other conditions. This
could prevent the Fund from achieving its investment objective.
THE FUND MAY CHANGE ITS INVESTMENT STRATEGIES
The Fund may change any of the investment strategies outlined above,
and may change the definition of small and medium-sized companies, if the Fund's
board of directors believes doing so is consistent with the Fund's investment
objective of long-term capital appreciation. The Fund's investment objective is
a fundamental policy and may not be changed without the approval of
shareholders.
MANAGEMENT OF THE FUND
The board of directors provides broad supervision over the affairs of
the Fund.
J. & W. Seligman & Co. Incorporated, 100 Park Avenue, New York, New
York, 10017, is the manager of the Fund. Seligman is responsible for the Fund's
investments and administers the Fund's business and other affairs.
Seligman has substantial experience in technology investing.
Established in 1864, Seligman currently serves as manager to 19 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $21.8 billion in aggregate assets as of March 31, 1999. Seligman
also provides investment management or advice to institutional or other accounts
having an aggregate value at March 31, 1999 of approximately $8.8 billion.
The Fund will pay a fee to Seligman for its management services at an
annual rate of 2% of the Fund's average daily net assets. The fee is calculated
daily and payable monthly. This management fee is higher than the advisory fees
paid by most U.S. investment companies.
PORTFOLIO MANAGEMENT
The Fund is managed by Seligman's Technology Team, and Mr. Paul H. Wick
and Mr. Storm Boswick are responsible for directing the investments of the Fund.
As of March 31, 1999, Seligman's Technology Team managed approximately $7
billion of public and private securities of technology and related companies,
including the world's largest technology fund, Seligman Communications and
Information Fund, Inc., and the US assets of Seligman Henderson Global
Technology Fund, one of the world's largest global technology funds.
With offices in both Palo Alto, the heart of Silicon Valley, and New
York, the financial capital of the world, Seligman's Technology Team is able to
effectively cover the broad scope of both public and private technology
companies in the world's largest technology market. The team conducts first-hand
research on all
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companies considered for inclusion in the Fund. The team's research includes
hundreds of on-site visits and one-on-one meetings with management to assess the
quality, prospects and direction of a company.
Mr. Wick is a Vice President of the Fund and has been a Managing
Director of Seligman since January 1995 and a Director of Seligman since
November 1997. He was formerly a Vice President, Investment Officer of Seligman
from April 1993 to November 1997. Mr. Wick joined Seligman in 1987 as an
Associate, Investment Research. He has been Vice President and Portfolio Manager
of Seligman Communications and Information Fund, Inc. since January 1990 and
December 1989, respectively. Mr. Wick is a Vice President of Seligman Henderson
Global Fund Series, Inc., for which he has acted as Co-Portfolio Manager of the
Global Technology Fund since May 1994. Mr. Wick is also Vice President of
Seligman Portfolios, Inc. for which he acts as Portfolio Manager of its Seligman
Communications and Information Portfolio and Co-Portfolio Manager of its
Seligman Henderson Global Technology Portfolio.
Mr. Boswick is also a Vice President of the Fund and has been a
Managing Director of Seligman since January 1999. He was formerly a Vice
President, Investment Officer of Seligman from January 1997 to December 1998.
Mr. Boswick joined Seligman in June 1996 as an Associate, Investment Research.
Prior to joining Seligman, Mr. Boswick was a Financial Analyst, Investment
Research, with Goldman, Sachs & Co. from February 1994 to May 1996.
EXPENSES OF THE FUND
The Fund pays a management fee to Seligman plus all its expenses other
than those assumed by Seligman. These include the shareholder servicing fee,
brokerage commissions, interest on any borrowings by the Fund, fees and expenses
of outside legal counsel (including fees and expenses associated with review of
documentation for prospective venture capital investments by the Fund) and
independent auditors, taxes and governmental fees, custody, expenses of printing
and distributing prospectuses, reports, notices and proxy material, expenses of
printing and filing reports and other documents with government agencies,
expenses of shareholders' meetings, expenses of corporate data processing and
related services, shareholder record keeping and shareholder account services,
fees and disbursements, fees and expenses of directors of the Fund not employed
by Seligman or its affiliates, insurance premiums and extraordinary expenses
such as litigation expenses.
REPURCHASE OFFERS
The Fund expects that a substantial portion of its investments will be
illiquid and does not intend to maintain a significant cash position. For this
reason, the Fund is structured as a closed-end fund, which means that you will
not have the right to redeem your shares on a daily basis. In addition, the Fund
does not expect any trading market to develop for its shares. As a result, if
you invest in the Fund you will have limited opportunity to sell your shares.
To provide you with a degree of liquidity, and the ability to receive
net asset value on a disposition of your shares, the Fund will make quarterly
offers to repurchase its shares. The repurchase offers will be limited to a
specified percentage of the Fund's outstanding shares. Shares will be
repurchased at their net asset value. The Fund intends to commence the first
quarterly repurchase offer in December 1999 and to complete it in January 2000.
The quarterly offers will be made pursuant to a fundamental policy of the Fund
that may be changed only with the approval of the Fund's shareholders.
THE FUND WILL OFFER TO REPURCHASE 5% OF ITS OUTSTANDING SHARES EACH QUARTER
Each quarter, the Fund will offer to repurchase 5% of the number of
shares outstanding on the date repurchase requests are due. The Fund's board of
directors may establish a larger percentage for any quarterly repurchase offer.
However, the percentage will not be less than 5% or more than 25% of the shares
outstanding on the date repurchase requests are due.
The Fund intends to commence the first quarterly repurchase offer in
December 1999 and to complete it in January 2000. Thereafter, quarterly
repurchase offers will commence each March, June, September and December and
will be completed in the following month.
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When a repurchase offer commences, the Fund will send shareholders a
notification of the offer, which will specify, among other things:
o the percentage of shares that the Fund is offering to repurchase.
This will ordinarily be 5%.
o the date on which the a shareholder's repurchase request is due.
This will ordinarily be the second Friday of the following month.
o the date that will be used to determine the Fund's net asset value
applicable to the share repurchase. This is generally expected to
be the day on which requests are due.
o the date by which shareholders will receive the proceeds from their
share sales.
o the net asset value of the common stock of the Fund no more than
seven days prior to the date of the notification.
The Fund intends to send this notification approximately 30 days before
the due date for the repurchase request. In no event will the notification be
sent less than 21 or more than 42 days in advance. Your shares of the Fund must
be held through a selected broker or dealer. Certificated shares will not be
available, and you will not be able to receive repurchase offers directly from
the Fund. Your selected broker or dealer may require additional time to mail the
repurchase offer to you, to process your request, and to credit your account
with the proceeds of any repurchased shares.
THE DUE DATE FOR REPURCHASE REQUESTS IS A DEADLINE THAT WILL BE
STRICTLY OBSERVED. If you or your intermediary fail to submit repurchase
requests in good order by the due date, you will be unable to liquidate your
shares until a subsequent quarter, and you will have to resubmit your request in
that quarter. You may, however, withdraw or change your repurchase request at
any point before the due date.
THE FUND'S FUNDAMENTAL POLICIES WITH RESPECT TO SHARE REPURCHASES
The Fund has adopted the following fundamental policies in relation to
its share repurchases which may only be changed by a majority vote of the
outstanding voting securities of the Fund:
o as stated above, the Fund will make share repurchase offers every
three months, pursuant to Rule 23c-3 under the 1940 Act, as it may
be amended from time to time, commencing December 1999;
o 5% of the Fund's outstanding common stock will be subject to the
repurchase offer, unless the board of directors establishes a
different percentage, which must be between 5% and 25%;
o the repurchase request due dates will be the second Friday of each
January, April, July and October (or the preceding business day if
that day is a holiday); and
o there will be a maximum 14 day period between the due date for each
repurchase request and the date on which the Fund's net asset value
for that repurchase is determined.
PRO RATA PURCHASES OF SHARES IN THE EVENT OF AN OVERSUBSCRIBED REPURCHASE OFFER
There is no minimum number of shares that must be tendered before the
Fund will honor repurchase requests. However, the percentage determined by the
board of directors for each repurchase offer will set a maximum number of shares
that may be purchased by the Fund. In the event a repurchase offer by the Fund
is oversubscribed, the Fund may, but is not required to, repurchase additional
shares, but only up to a maximum amount of two percent of the outstanding shares
of the Fund. If the Fund determines not to repurchase additional shares beyond
the repurchase offer amount, or if shareholders tender an amount of shares
greater than that which the Fund is entitled to purchase, the Fund will
repurchase the shares tendered on a pro rata basis.
If pro-ration is necessary, the Fund will send a notice of pro-ration
to selected brokers and dealers on the business day following the due date. The
number of shares each investor asked to have repurchased will be reduced by the
same percentage. If any shares that you wish to have repurchased by the Fund are
not repurchased because of pro-ration, you will have to wait until the next
repurchase offer, and your repurchase request will not be given any priority
over other investors' requests. Thus, there is a risk that the Fund may not
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purchase all of the shares you wish to sell in a given quarter or in any
subsequent quarter. THERE IS NO ASSURANCE THAT YOU WILL BE ABLE TO SELL AS MANY
OF YOUR SHARES AS YOU DESIRE TO SELL.
The Fund may suspend or postpone a repurchase offer in limited
circumstances, but only with the approval of a majority of the board of
directors, including a majority of independent directors.
DETERMINATION OF REPURCHASE PRICE
The repurchase price payable in respect of a repurchased share will be
equal to the share's net asset value on the date specified in the notice. The
Fund's net asset value per share may change substantially in a short time as a
result of developments at the companies in which the Fund invests. Changes in
the Fund's net asset value may be more pronounced and more rapid than with other
funds because of the Fund's emphasis on small companies and venture capital
companies that are not publicly traded. The Fund's net asset value per share may
change materially between the date a repurchase offer is mailed and the due
date, and it may also change materially shortly after a repurchase is completed.
The method by which the Fund calculates net asset value is discussed under the
caption "Calculation of Net Asset Value."
PAYMENT
The Fund expects to distribute payment for repurchased shares on the
next business day after the net asset value determination date. In any event,
the Fund will pay repurchase proceeds no later than 7 days after the date on
which net asset value for the repurchased shares is determined.
IMPACT OF REPURCHASE POLICIES ON THE LIQUIDITY OF THE FUND
From the time the Fund distributes each repurchase offer notification
until the date on which the net asset value for that repurchase is determined,
the Fund must maintain liquid assets at least equal to the percentage of its
shares subject to the repurchase offer. For this purpose, liquid assets means
assets that may be disposed of in the ordinary course of business at
approximately the price at which they are valued or which mature by the
repurchase payment date. The Fund is also permitted to borrow money to meet
repurchase requests. Borrowing by the Fund involves certain risks for
shareholders. See "Risk Factors - Borrowing."
IN-KIND REPURCHASES
Under normal conditions, the Fund intends to repurchase its shares for
cash. However, the Fund reserves the right to pay for all or a portion of its
repurchased shares with an in-kind distribution of a portion of its portfolio
securities.
CONSEQUENCES OF REPURCHASE OFFERS
The Fund believes that repurchase offers will generally be beneficial
to the Fund's shareholders, and will generally be funded from available cash or
sales of portfolio securities. However, if the Fund borrows to finance
repurchases, interest on that borrowing will increase the Fund's expenses and
will reduce any net investment income. To the extent the Fund finances
repurchase proceeds by selling Fund investments, the Fund will hold a larger
proportion of its total assets in highly liquid securities. From time to time
commencing at least 30 days after the closing of this offering, the Fund may
offer new shares continuously, which may alleviate these potential consequences,
but there is no assurance that the Fund will be able to secure new investments
or raise new cash.
Repurchase offers provide shareholders with the opportunity to dispose
of shares at net asset value. The Fund does not anticipate that a secondary
market will develop, but in the event that a secondary market were to develop,
it is possible that shares would trade in that market at a discount to net asset
value. The existence of periodic repurchase offers at net asset value may not
alleviate such discount.
Repurchase of the Fund's shares will tend to reduce the number of
outstanding shares and, depending upon the Fund's investment performance and its
ability to sell additional shares in a continuous offering, its net assets. A
reduction in the Fund's net assets will tend to increase the Fund's expense
ratio.
In addition, the repurchase of shares by the Fund will be a taxable
event to shareholders. For a discussion of these tax consequences, see "Taxes."
12
<PAGE>
CALCULATION OF NET ASSET VALUE
The Fund will compute its net asset value on each business day as of
the close of regular business of the New York Stock Exchange, which is currently
4:00 p.m. New York time. Securities owned by the Fund are valued at current
market prices. If reliable market prices are unavailable (e.g., in the case of
the Fund's venture capital investments), securities are valued in accordance
with procedures approved by the Fund's board of directors. Venture capital
investments will be valued at cost unless Seligman determines, pursuant to the
Fund's valuation procedures, that such a valuation is no longer fair or
appropriate. Examples of cases where cost may no longer appropriate include
sales of similar securities to third parties at different prices, or if a
venture capital company in which the Fund has an investment undertakes an
initial public offering. In such situations, the Fund's investment will be
revalued in a manner that Seligman, following procedures approved by the Board,
determines best reflects its fair value. When the Fund holds securities of a
class that has been sold to the public, fair valuation would often be market
value less a discount to reflect contractual or legal restrictions limiting
resale. All such determinations by Seligman are subject to ratification by the
board of directors. Expenses of the Fund, including Seligman's investment
management fee and the costs of any borrowings, are accrued daily and taken into
account for the purpose of determining net asset value.
The net asset value per share is computed by dividing (i) the net asset
value of the Fund by (ii) the number of shares then outstanding. The net asset
value per share will be rounded up or down to the nearest cent. You may obtain
the Fund's daily net asset value per share by calling (800) 622-4597 or by
visiting Seligman's Internet website (http://www.seligman.com). The Fund also
intends to publish its net asset value once weekly in various financial
periodicals.
CAPITAL STOCK
The Fund is authorized to issue 100 million shares of capital stock,
all of one class called common stock, $0.01 par value. The board of directors is
authorized to classify and reclassify any unissued shares of capital stock from
time to time by setting or changing the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications or
terms or conditions of redemptions of such shares. The board of directors is
also authorized to increase or decrease the number of shares the Fund is
authorized to issue.
The common stock is entitled to one vote per share at all meetings of
shareholders. The Fund does not intend to hold annual meetings of shareholders.
Common shareholders do not have preemptive, subscription or conversion rights,
and are not liable for further calls or assessments. Common shareholders are
entitled to receive dividends only if and to the extent declared by the board of
directors and only after the board has made provision for working capital and
reserves as it in its sole discretion deems advisable. Common stock is not
available in certificated form, and shares must be held through a selected
broker or dealer.
In general, any action requiring a vote of the holders of the common
stock of the Fund shall be effective if taken or authorized by the affirmative
vote of a majority of the aggregate number of the votes entitled to vote
thereon. Any change in the Fund's fundamental policies may also be authorized by
the vote of two-thirds of the votes present at a shareholders' meeting if the
holders of a majority of the aggregate number of votes entitled to vote are
present or represented by proxy. The Fund's charter requires the affirmative
vote of two-thirds of the aggregate number of votes entitled to be cast to
authorize any of the following actions: (i) the dissolution of the Fund; (ii) a
merger or consolidation of the Fund in which the Fund is not the surviving
corporation; (iii) the sale of all or substantially all of the assets of the
Fund; or (iv) any amendment of the charter of the Fund which makes the Fund's
common stock a redeemable security (as such term is defined in the 1940 Act) or
reduces the two-thirds vote required to authorize the actions listed in this
paragraph. This could have the effect of delaying, deferring or preventing
changes in control of the Fund.
13
<PAGE>
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Fund, after payment of all of the liabilities of the Fund,
the common shareholders are entitled to share ratably in all the remaining
assets of the Fund.
DISTRIBUTION POLICY
Dividends will be paid annually on the common stock in amounts
representing substantially all of the net investment income, if any, earned each
year. Payments on the common stock will vary in amount, depending on investment
income received and expenses of operation. It is likely that many of the
companies in which the Fund invests will not pay any dividends, and this,
together with the Fund's relatively high expenses, means that the Fund is
unlikely to have income or pay dividends. The Fund is not a suitable investment
if you require regular dividend income.
Substantially all of any taxable net gain realized on investments will
be paid to common shareholders at least annually.
The net asset value of each share that you own will be reduced by the
amount of the distributions or dividends that you receive from that share.
AUTOMATIC REINVESTMENT PLAN
The automatic reinvestment plan is available for any holder of the
Fund's common stock who wishes to purchase additional shares using dividends
and/or capital gain distributions paid by the Fund. You may elect to:
o reinvest both dividends and capital gain distributions;
o receive dividends in cash and reinvest capital gain distributions;
or
o receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be reinvested if you do not
instruct otherwise.
Shares will be issued to you at their net asset value on the
ex-dividend date; there is no sales charge or other charge for reinvestment. You
are free to change your elections at any time by notifying SDC in writing. Your
request must be received by SDC before the record date to be effective for that
dividend or capital gain distribution.
TAXES
The Fund intends to qualify and elect to be treated as a regulated
investment company under the Internal Revenue Code. As a regulated investment
company, the Fund will generally be exempt from federal income taxes on net
investment income and capital gains distributed to shareholders, as long as at
least 90% of the Fund's investment income and net short-term capital gains are
distributed to shareholders each year.
Dividends from net investment income and distributions from net
short-term capital gain are taxable as ordinary income and, to the extent
attributable to dividends received by the Fund from US corporations, may be
eligible for a 70% dividends-received deduction for shareholders that are
corporations. Distributions from net capital gain are taxable as long-term
capital gain, regardless of how long shares in the Fund have been held by the
shareholder, and are not eligible for the dividends-received deduction. The tax
treatment of dividends and capital gain distributions is the same whether you
take them in cash or reinvest them to buy additional Fund shares.
When you sell Fund shares or have shares repurchased by the Fund, any
gain or loss you realize will generally be treated as a long-term capital gain
or loss if you held your shares for more than one year, or as a short-term
capital gain or loss if you held your shares for one year or less. However, if
you sell Fund shares
14
<PAGE>
on which a long-term capital gain distribution has been received and you held
the shares for six months or less, any loss you realize will be treated as a
long-term capital loss to the extent that it offsets the long-term capital gain
distribution.
The Fund does not intend to operate so as to be permitted to
"pass-through" to its shareholders credit for foreign taxes if any, payable by
the Fund.
Each January, you will be sent information on the tax status of any
distribution made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
HOW TO PURCHASE FUND SHARES
INITIAL OFFERING
The Fund is party to a Distribution Agreement with Seligman Advisors,
Inc., its principal underwriter. The Fund is initially offering its shares
through a group of brokers and dealers selected by Seligman Advisors. In the
initial offering the Fund will not raise more than $500 million. Shares of
common stock are offered at $24.25 per share plus a sales charge of up to $0.75
per share payable to the selected broker or dealer who arranges for the sale.
The maximum offering price is $25.00 per share. Reductions in the sales charge
are available depending upon the amount of you purchase:
SALES CHARGE TOTAL OFFERING PRICE
AMOUNT OF PURCHASE PER SHARE PER SHARE
Under $500,000 $0.75 $25.00
$500,000 but less than $1 million 0.50 24.75
$1 million or more 0.25 24.50
Seligman will pay an additional sales commission from its own resources to each
selected broker or dealer equal to $0.25 for each share sold by such selected
broker or dealer. In addition, the Fund will pay each selected broker or dealer
that is not affiliated with the Fund or Seligman a shareholder servicing fee at
an annual rate of 0.50% of the net asset value of the outstanding shares owned
by customers of such broker or dealer, as described below.
Seligman has retained PaineWebber Incorporated to provide it with
advice in connection with the structuring and marketing of the initial offering.
Seligman will pay PaineWebber Incorporated a structuring and marketing fee equal
to $0.25 per share in respect of shares purchased in the initial offering.
PaineWebber Incorporated is also participating in the initial offering and will
be paid the sales commissions described above on shares sold by it in the
initial offering.
CONTINUOUS OFFERING
If the Fund raises less than $500 million in the initial offering,
then, not less than 30 days after the closing of the initial offering, the Fund
may commence a continuous offering of its shares through selected brokers and
dealers at a price equal to their net asset value plus a maximum sales charge of
3%. Any such continuous offering, if commenced, may be discontinued when the
Fund's total assets reach $500 million, and may be discontinued at any time. The
Fund may commence other continuous offerings from time to time in the future.
Any such continuous offering, if commenced, may be discontinued at any time
without notice. During any continuous offering of the Fund's shares, shares of
the Fund may be purchased only from selected brokers and dealers.
During any continuous offering, the Fund's shares will be offered at a
price equal to the net asset value per share plus a maximum sales charge of 3%.
Reductions in the sales charge will be available as described above under
"Initial Offering." Seligman will pay an additional sales commission to such
selected brokers and dealers equal to 1% of the net asset value of each share
sold. The price will be determined based upon the net asset value next
calculated after Seligman Advisors accepts your request. Purchase orders
received by a selected broker or dealer by the close of regular business on the
New York Stock Exchange, currently 4:00
15
<PAGE>
p.m., New York time, including orders received after the close of regular
business on the previous day, and accepted by Seligman Advisors before 5:00
p.m., New York time, on the same day will be executed at the net asset value per
share calculated as of the close of business on the NYSE on that day. If your
purchase order is received after the times indicated above, your order will be
executed at the net asset value per share calculated as of the close of business
on the NYSE the next business day.
SHAREHOLDER SERVICING FEE
The Fund may pay selected brokers and dealers that are not affiliates
of the Fund or Seligman a shareholder servicing fee to compensate them for
providing shareholder services and the maintenance of accounts. These services
include providing information and responding to shareholder questions about the
structure of the Fund, the availability of shares in any continuous offering,
and repurchase offers. The shareholder service fee is payable quarterly at an
annual rate of 0.50% of the value of the outstanding shares owned by customers
of such broker or dealer. This fee is accrued daily as an expense of the Fund.
OPENING AN ACCOUNT WITH THE FUND
To make an investment in the Fund, contact your financial advisor.
Accounts may be opened only through selected brokers and dealers. Shares are not
available in certificated form.
The required minimum initial investment in the Fund is $10,000.
Additional investments during a continuous offering, if any, must be at least
$1,000.
SALES AT NET ASSET VALUE
The following persons are eligible to purchase shares of the Fund at
net asset value, without payment of the front-end sales charge: directors of the
Fund and directors/trustees of other funds managed by Seligman; employees of
Seligman, its subsidiaries and Seligman Data Corp.; employees of selected
brokers and dealers that offer the Fund; and those partners and employees of
outside legal counsel to the Fund or its directors who regularly provide advice
and services to the Fund, to other funds managed by Seligman, or to their
directors. Such persons are not required to hold their shares through a selected
broker or dealer.
GENERAL INFORMATION
DESCRIPTION OF THE FUND
The Fund is registered under the Investment Company Act of 1940 as a
closed-end, non-diversified management investment company. The Fund was
incorporated under the laws of the State of Maryland on May 19, 1999 and has no
operating history. The Fund's office is located at 100 Park Avenue, New York,
New York 10017 and its telephone number is (212) 850-1864. Investment advisory
services are provided to the Fund by J. & W. Seligman & Co. Incorporated. The
Fund acts as its own transfer agent.
CONFLICTS OF INTEREST
It is expected that the Fund will have transactions in the ordinary
course of business with firms and companies of which one or more directors and
officers is a director and/or officer of the Fund.
16
<PAGE>
TABLE OF CONTENTS OF SAI
Additional Investment Policies..................................... B-2
Directors and Officers............................................. B-6
Investment Advisory and Other Services............................. B-9
Experts............................................................ B-9
Custodian, Stockholder Service Agent and Dividend Paying Agent..... B-10
Principal Underwriter Following Initial Public Offering............ B-10
Brokerage Commissions.............................................. B-10
Appendix A
17
<PAGE>
UNTIL o, 1999 (25 CALENDAR DAYS --------------------
AFTER THE COMMENCEMENT OF THE
OFFERING), ALL DEALERS EFFECTING
TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN
THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS DELIVERY SELIGMAN
REQUIREMENT IS IN ADDITION TO THE NEW TECHNOLOGIES FUND, INC.
DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS. --------------------
SELIGMAN
NEW TECHNOLOGIES FUND, INC. A MANAGEMENT TYPE
100 Park Avenue NON-DIVERSIFIED, CLOSED-END
New York, New York 10017 INVESTMENT COMPANY
INVESTMENT MANAGER
J. & W. Seligman & Co. --------------------
Incorporated
100 Park Avenue
New York, New York 10017
COMMON STOCK
SHAREHOLDER SERVICE AGENT ($0.01 PAR VALUE)
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
--------------------
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell PROSPECTUS
125 Broad Street
New York, New York 10004 o , 1999
<PAGE>
SELIGMAN NEW TECHNOLOGIES FUND, INC.
|X| , 1999
STATEMENT OF ADDITIONAL INFORMATION
100 Park Avenue
New York, New York 10017
THIS STATEMENT OF ADDITIONAL INFORMATION ("SAI") IS NOT A PROSPECTUS.
THIS SAI RELATES TO AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS OF
SELIGMAN NEW TECHNOLOGIES FUND, INC. (THE "FUND"), DATED |X| , 1999. A COPY OF
THE PROSPECTUS MAY BE OBTAINED BY CONTACTING THE FUND AT THE TELEPHONE NUMBERS
OR ADDRESS SET FORTH ABOVE.
THE INFORMATION IN THIS SAI IS NOT COMPLETE AND MAY BE CHANGED. THE
FUND MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IS EFFECTIVE. THIS SAI
IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
TABLE OF CONTENTS
Additional Investment Policies........................................B-2
Directors and Officers................................................B-6
Investment Advisory and Other Services................................B-9
Experts...............................................................B-9
Custodian, Stockholder Service Agent and Dividend Paying Agent.......B-10
Principal Underwriter Following Initial Public Offering..............B-10
Brokerage Commissions................................................B-10
Appendix A
B-1
<PAGE>
ADDITIONAL INVESTMENT POLICIES
The investment objective and principal investment strategies of the
Fund, as well as the principal risks associated with the Fund's investment
strategies, are set forth in the Prospectus. Certain additional investment
information is set forth below.
FUNDAMENTAL POLICIES
The Fund's stated fundamental policies, which may not be changed
without a vote of stockholders, are listed below; within the limits of these
fundamental policies, the management has reserved freedom of action. The Fund:
(1) May not issue senior securities such as bonds, notes or other
evidences of indebtedness, or otherwise borrow money, or issue
preferred stock unless, immediately after issuance, the net assets
of the Fund provide asset coverage (as defined in the 1940 Act) of
at least 300% with respect to indebtedness and at least 200% with
respect to preferred stock.
(2) May not engage in the business of underwriting securities, except
to the extent it may be deemed to be engaged in such business by
disposing of portfolio securities.
(3) May not, with limited exceptions, purchase and sell real estate
directly, but may do so through majority-owned subsidiaries, so
long as its real estate investments do not exceed 10% of the value
of the Fund's total assets.
(4) May not lend portfolio securities to broker/dealers or other
institutions, unless the Fund's investment advisor, J. & W.
Seligman & Co. Incorporated ("Seligman") believes such loans will
be beneficial to the Fund. The borrower must maintain with the
Fund cash or equivalent collateral equal to at least 100% of the
market value of the securities loaned. Moreover, all such loans
taken together cannot exceed 10% of the value of total assets of
the Fund. The Fund may make loans represented by repurchase
agreements, so long as such loans do not exceed 10% of the value
of total assets of the Fund.
(5) With respect to its share repurchases:
o the Fund will make share repurchase offers every
three months (except under the circumstances
described on page B-6), commencing December 1999,
pursuant to Rule 23c-3 under the 1940 Act, as it
may be amended from time to time;
o 5% of the Fund's outstanding common stock will be
subject to the repurchase offer, unless the board
of directors establishes a different percentage,
which must be between 5% and 25%;
o the repurchase request due dates will be the second
Wednesday of each January, April, July and October
(or the next business day if that day is a
holiday); and
o there will be a maximum 14 day period between the
due date for each repurchase request and the date
on which the Fund's net asset value for that
repurchase is determined.
(6) May not invest more than 25% of its total assets in any one
industry, except that the Fund will invest at least 25% of the
value of its total assets in securities of companies considered by
the Fund's investment manager to rely significantly on
technological events or advances in their product development or
operations, except when investing for temporary defensive
purposes.
(7) May purchase or sell commodities and commodity contracts
(including stock index, currency and other financial futures
contracts).
B-2
<PAGE>
OTHER OPERATING POLICIES
Lending of Portfolio Securities. During the time portfolio
securities are on loan, the borrower pays the Fund any dividends or interest
paid on the securities. The Fund may invest the collateral and earn additional
income or receive an agreed upon amount of interest income from the borrower.
Loans made by the Fund will generally be short-term. Loans are subject to
termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the interest earned on the collateral to the
borrower or placing broker. The Fund does not have the right to vote securities
on loan, but would terminate the loan and regain the right to vote if that were
considered important with respect to the investment. The Fund may lose money if
a borrower defaults on its obligation to return securities and the value of the
collateral held by the Fund is insufficient to replace the loaned securities. In
addition, the Fund is responsible for any loss that might result from its
investment of the borrower's collateral.
Foreign Securities. The Fund may invest in commercial paper and
certificates of deposit issued by foreign banks and may invest either directly
or through American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), or Global Depositary Receipts ("GDRs") (collectively, "depositary
receipts") in other securities of foreign issuers. For a discussion of the risks
associated with investments in foreign securities, see "Risk Factors - Foreign
Securities" in the Prospectus.
Depositary receipts are instruments generally issued by domestic
banks or trust companies that represent the deposits of a security of a foreign
issuer. ADRs, which are traded in dollars on US exchanges or over-the-counter,
are issued by domestic banks and evidence ownership of securities issued by
foreign corporations. EDRs are typically traded in Europe. GDRs are typically
traded in both Europe and the United States. Depositary receipts may be issued
under sponsored or unsponsored programs. In sponsored programs, the issuer has
made arrangements to have its securities traded in the form of a depositary
receipt. In unsponsored programs, the issuers may not be directly involved in
the creation of the program. Although regulatory requirements with respect to
sponsored and unsponsored depositary receipt programs are generally similar, the
issuers of securities represented by unsponsored depositary receipts are not
obligated to disclose material information in the United States, and therefore,
the import of such information may not be reflected in the market value of such
receipts. The Fund may invest up to 25% of its total assets in foreign
securities that it holds directly (which limitation may be changed without a
shareholder vote), but this 25% limit does not apply to foreign securities held
through depositary receipts which are traded in the United States or to
commercial paper and certificates of deposit issued by foreign banks.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of such taxes or exemption from taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amounts of the Fund's assets to be invested within various
countries is not known.
Foreign Currency Transactions. A forward foreign currency exchange
contract is an agreement to purchase or sell a specific currency at a future
date and at a price set at the time the contract is entered into. The Fund will
generally enter into forward foreign currency exchange contracts to fix the U.S.
dollar value of a security it has agreed to buy or sell for the period between
the date the trade was entered into and the date the security is delivered and
paid for, or, to hedge the U.S. dollar value of securities it owns.
B-3
<PAGE>
The Fund may enter into a forward contract to sell or buy the amount
of a foreign currency it believes may experience a substantial movement against
the U.S. dollar. In this case the contract would approximate the value of some
or all of the Fund's portfolio securities denominated in such foreign currency.
Under normal circumstances, the portfolio manager will limit forward currency
contracts to not greater than 75% of the Fund's portfolio position in any one
country as of the date the contract is entered into. This limitation will be
measured at the point the hedging transaction is entered into by the Fund. Under
extraordinary circumstances, the Manager may enter into forward currency
contracts in excess of 75% of the Fund's portfolio position in any one country
as of the date the contract is entered into. The precise matching of the forward
contract amounts and the value of securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market involvement in the value of those securities
between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movement is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Under certain circumstances, the Fund may commit up to the entire
value of its assets which are denominated in foreign currencies to the
consummation of these contracts. Seligman will consider the effect a substantial
commitment of the Fund's assets to forward contracts would have on the
investment program of the Fund and its ability to purchase additional
securities.
Except as set forth above and immediately below, the Fund will also
not enter into such forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would oblige the Fund to
deliver an amount of foreign currency in excess of the value of the Fund's
portfolio securities or other assets denominated in that currency. The Fund, in
order to avoid excess transactions and transaction costs, may nonetheless
maintain a net exposure to forward contracts in excess of the value of the
Fund's portfolio securities or other assets denominated in that currency
provided the excess amount is "covered" by cash or liquid, high-grade debt
securities, denominated in any currency, at least equal at all times to the
amount of such excess. Under normal circumstances, consideration of the prospect
for currency parities will be incorporated into the longer-term investment
decisions made with regard to overall diversification strategies. However,
Seligman believes that it is important to have the flexibility to enter into
such forward contracts when it determines that the best interests of the Fund
will be served.
At the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute
precision the market value of portfolio securities at the expiration of the
forward contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver. However, the Fund may use
liquid, high-grade debt securities, denominated in any currency, to cover the
amount by which the value of a forward contract exceeds the value of the
securities to which it relates.
If the Fund retains the portfolio security and engages in offsetting
transactions, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward
B-4
<PAGE>
contract to sell the foreign currency. Should forward prices decline during the
period between the Fund's entering into a forward contract for the sale of a
foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, the Fund will realize a gain to the extent the
price of the currency it has agreed to sell exceeds the price of the currency it
has agreed to purchase. Should forward prices increase, the Fund will suffer a
loss to the extent the price of the currency it has agreed to purchase exceeds
the price of the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange contracts
will be limited to the transactions described above. Of course, the Fund is not
required to enter into forward contracts with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
Seligman. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange at
a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of a hedged currency, at the same time,
they tend to limit any potential gain which might result from an increase in the
value of that currency.
Stockholders should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer.
Repurchase Agreements. The Fund may enter into repurchase agreements
with commercial banks and broker/dealers as a short-term cash management tool. A
repurchase agreement is an agreement under which the Fund acquires a security,
generally a US Government obligation, subject to resale at an agreed upon price
and date. The resale price reflects an agreed upon interest rate effective for
the period of time the Fund holds the security and is unrelated to the interest
rate on the security. The Fund's repurchase agreements will at all times be
fully collateralized.
Repurchase agreements could involve certain risks in the event of
bankruptcy or other default by the seller, including possible delays and
expenses in liquidating the securities underlying the agreement, a decline in
value of the underlying securities and a loss of interest. Repurchase agreements
are typically entered into for periods of one week or less. As a matter of
fundamental policy, the Fund will not enter into repurchase agreements of more
than one week's duration if more than 10% of its net assets would be so
invested.
Illiquid Securities. The Fund may invest in illiquid securities,
including restricted securities (i.e., securities not readily marketable without
registration under the Securities Act of 1933 (the "1933 Act")) and other
securities that are not readily marketable. These may include restricted
securities that can be offered and sold only to "qualified institutional buyers"
under Rule 144A of the 1933 Act. There is no limit to the percentage of the
Fund's net assets that may be invested in illiquid securities, but Seligman does
not expect that illiquid securities will ordinarily exceed 50% of the Fund's net
assets.
Rights and Warrants. The Fund may invest in common stock rights and
warrants believed by the investment manager to provide capital appreciation
opportunities. Common stock rights and warrants may be purchased separately or
may be received as part of a unit or attached to securities purchased.
Put Options. The Fund may purchase put options on portfolio securities
in an attempt to provide a hedge against a decrease in the market price of an
underlying security held by the Fund. The Fund will not purchase options for
speculative purposes.
B-5
<PAGE>
Purchasing a put option gives the Fund the right to sell, and
obligates the writer to buy, the underlying security at the exercise price at
any time during the option period. This hedge protection is provided during the
life of the put option since the Fund, as holder of the put option, can sell the
underlying security at the put exercise price regardless of any decline in the
underlying security's market price. In order for a put option to be profitable,
the market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs. By using put options
in this manner, the Fund will reduce any profit it might otherwise have realized
in the underlying security by the premium paid for the put option and by the
transaction costs.
Because a purchased put option gives the purchaser a right and not
an obligation, the purchaser is not required to exercise the option. If the
underlying position incurs a gain, the Fund would let the option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option premium and transaction costs.
When the Fund purchases an option, it is required to pay a premium
to the party writing the option and a commission to the broker selling the
option. If the option is exercised by the Fund, the premium and the commission
paid may be greater than the amount of the brokerage commission charged if the
security were to be purchased or sold directly. The cost of the put option is
limited to the premium plus commission paid. The Fund's maximum financial
exposure will be limited to these costs.
The Fund may purchase both listed and over-the-counter put options.
The Fund will be exposed to the risk of counterparty nonperformance in the case
of over-the-counter put options.
Put options on securities may not be available to the Fund on
reasonable terms in many situations and the Fund may frequently choose not to
purchase options even when they are available. The Fund's ability to engage in
option transactions may be limited by tax considerations.
Debt Securities. The Fund does not plan to invest more than 10% of its
net assets in debt securities which are not rated within the four highest rating
categories by Standard & Poor's Rating Services Inc. or Moody's Investors
Services, Inc.
Temporary Defensive Position. In an attempt to respond to adverse
market, economic, political, or other conditions, the Fund may invest up to 100%
of its assets in cash or cash equivalents including, but not limited to, prime
commercial paper, bank certificates of deposit, bankers' acceptances or
repurchase agreements for such securities, and securities of the US Government
and its agencies and instrumentalities, as well as cash and cash equivalents
denominated in foreign currencies. The Fund's investments in foreign cash
equivalents will be limited to those that, in the opinion of the investment
manager, equate generally to the standards established for US cash equivalents.
Investments in bank obligations will be limited at the time of investment to the
obligations of the 100 largest domestic banks in terms of assets which are
subject to regulatory supervision by the US Government or state governments, and
the obligations of the 100 largest foreign banks in terms of assets with
branches or agencies in the United States.
Share Repurchases. The Fund may not suspend or postpone a repurchase
offer except pursuant to a vote of a majority of the directors, including a
majority of the disinterested directors, and only:
o If the repurchase would cause the Fund to lose its status as a
regulated investment company under Subchapter M of the Internal
Revenue Code;
o For any period during which the New York Stock Exchange or any
other market in which the securities owned by the Fund are
principally traded is closed, other than customary weekend and
holiday closings, or during which trading in such market is
restricted;
B-6
<PAGE>
o For any period during which an emergency exists as a result of
which disposal by the Fund of securities owned by it is not
reasonably practicable, or during which it is not reasonably
practicable for the Fund fairly to determine the value of its
net assets; or
o For such other periods as the SEC may by order permit for the
protection of securityholders of the Fund.
DIRECTORS AND OFFICERS
A listing of the directors and officers of the Fund and their
business experience for the past five years follows. An asterisk (*) indicates
directors who are "interested persons" of the Fund (as defined by the Investment
Company Act of 1940 (the "1940 Act")). Unless otherwise noted, the address of
each director and officer is 100 Park Avenue, New York, NY 10017.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief Executive
(61) Officer and Chairman of the Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated;
Chairman and Chief Executive Officer, the
Seligman Group of investment companies; Chairman,
Seligman Advisors, Inc., Seligman Services, Inc.,
and Carbo Ceramics Inc., ceramic proppants for
oil and gas industry; and Director, Seligman Data
Corp. and Kerr-McGee Corporation, diversified
energy company. Formerly, Director, Daniel
Industries Inc., manufacturer of oil and gas
metering equipment.
BRIAN T. ZINO* Director, President and Member of the Executive
(46) Committee
Director and President, J. & W. Seligman & Co.
Incorporated; President (with the exception of
Seligman Quality Municipal Fund, Inc. and
Seligman Select Municipal Fund, Inc.) and
Director or Trustee, the Seligman Group of
investment companies; Chairman, Seligman Data
Corp.; Member of the Board of Governors, the
Investment Company Institute and Director, ICI
Mutual Insurance Company, Seligman Advisors,
Inc., and Seligman Services, Inc.
RICHARD R. SCHMALTZ* Director and Member of the Executive Committee
(58) Director and Managing Director, Director of
Investments, J. & W. Seligman & Co. Incorporated;
Director or Trustee, the Seligman Group of
investment companies (except Seligman Cash
Management Fund, Inc.); Director, Seligman
Henderson Co.; and Trustee Emeritus of Colby
College. Formerly, Director, Investment Research
at Neuberger & Berman from May 1993 to September
1996.
B-7
<PAGE>
PAUL H. WICK Vice President and Portfolio Manager
(35)
Director and Managing Director, J. & W. Seligman
& Co. Incorporated since January 1995 and
November 1997, respectively; Vice President and
Portfolio Manager, three open-end companies in
the Seligman Group of investment companies;
Portfolio Manager, Henderson Investment
Management Limited. He joined J. & W. Seligman &
Co. Incorporated in 1987 as an Associate,
Investment Research. Formerly, Vice President,
Investment Officer, J. & W. Seligman & Co.
Incorporated from April 1993 to November 1997.
STORM BOSWICK Vice President and Portfolio Manager
(30)
Managing Director, J. & W. Seligman & Co.
Incorporated since January 1999. He joined J. &
W. Seligman & Co. Incorporated in June 1996 as an
Associate, Investment Research. Formerly, Vice
President, Investment Officer of J. & W. Seligman
& Co. Incorporated from January 1997 to December
1998; and Financial Analyst, Investment Research,
Goldman, Sachs & Co. from February 1994 to May
1996.
LAWRENCE P. VOGEL Vice President
(42)
Senior Vice President, Finance, J. & W. Seligman
& Co. Incorporated, Seligman Advisors, Inc., and
Seligman Data Corp.; Vice President, the Seligman
Group of investment companies and Seligman
Services, Inc.; Vice President and Treasurer,
Seligman International, Inc.; and Treasurer,
Seligman Henderson Co.
FRANK J. NASTA Secretary
(34)
General Counsel, Senior Vice President, Law and
Regulation, and Corporate Secretary, J. & W.
Seligman & Co. Incorporated; Secretary, the
Seligman Group of investment companies; and
Corporate Secretary, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services, Inc.,
Seligman International, Inc. and Seligman Data
Corp.
THOMAS G. ROSE Treasurer
(41)
Treasurer, the Seligman Group of investment
companies and Seligman Data Corp.
COMPENSATION
B-8
<PAGE>
- --------------------------------------------------------------------------------
NAME AND POSITION AGGREGATE PENSION OR TOTAL COMPENSATION
WITH FUND COMPENSATION FROM RETIREMENT BENEFITS RECEIVED FROM FUND
FUND (1) ACCRUED AS PART OF AND FUND COMPLEX
FUND EXPENSES (1)(2)
- --------------------------------------------------------------------------------
William C. Morris, N/A N/A N/A
Director and
Chairman
- --------------------------------------------------------------------------------
Brian T. Zino, N/A N/A N/A
Director and
President
- --------------------------------------------------------------------------------
Richard R. Schmaltz, N/A N/A N/A
Director
- ----------
(1) Based on remuneration expected to be paid to the Directors of the Fund for
the fiscal year ended December 31, 1999.
(2) The Seligman Group of Investment Companies consists of nineteen investment
companies.
The Fund has a compensation arrangement under which outside directors may
elect to defer receiving their fees. Under this arrangement, interest is accrued
on the deferred balances. The annual cost of such fees and interest is included
in the director's fees and expenses and the accumulated balance thereof is
included in "Liabilities" in the Fund's financial statements. The Fund has
applied for and received exemptive relief that would permit a director who has
elected deferral of his or her fees to choose a rate of return equal to either
(i) the interest rate on short-term Treasury bills, or (ii) the rate of return
on the shares of any of the investment companies advised by the Manager, as
designated by the director. The Fund may, but is not obligated to, purchase
shares of such investment companies to hedge its obligations in connection with
this deferral arrangement.
Directors and officers of the Fund are also directors, trustees and
officers of some or all of the other investment companies in the Seligman Group.
The Executive Committee of the board of directors has the power to (a)
determine the value of securities and assets owned by the Fund, (b) elect or
appoint officers of the Fund to serve until the next meeting of the Directors
succeeding such action and (c) determine the price at which shares of Common
Stock of the Fund shall be issued and sold. All action taken by the Executive
Committee is recorded and reported to the board of directors at their meeting
succeeding such action. The members of the Executive Committee consist of Mr.
William C. Morris, Chairman, Richard R. Schmaltz, and Brian T. Zino, President.
INVESTMENT ADVISORY AND OTHER SERVICES
Subject to the control of the Fund's board of directors, J. & W.
Seligman & Co. Incorporated ("Seligman") manages the investment of the assets of
the Fund and administers its business and other affairs pursuant to a Management
Agreement approved by the board of directors and the stockholders of the
Corporation. Seligman also serves as investment adviser to eighteen other U.S.
registered investment companies which, together with the Fund, make up the
"Seligman Group". There are no other management-related service contracts under
which services are provided to the Fund. No person or persons, other than the
directors, officers or employees of Seligman and the Fund, regularly advise the
Fund with respect to its investments.
B-9
<PAGE>
Seligman is a successor firm to an investment banking business
founded in 1864 which has thereafter provided investment services to
individuals, families, institutions, and corporations. On December 29, 1988, a
majority of the outstanding voting securities of Seligman was purchased by Mr.
William C. Morris, Chairman and C.E.O. of Seligman and Chairman of the Board and
C.E.O. of the Fund, and a simultaneous recapitalization of Seligman occurred.
See Appendix A for information regarding the history of Seligman.
All of the officers of the Fund listed above are officers or
employees of Seligman. Their affiliations with the Fund and with Seligman are
provided under their principal business occupations.
The Fund pays Seligman a management fee for its services, calculated
daily and payable monthly, equal to 2.00% of the daily net assets of the Fund.
As part of its services to the Fund, Seligman provides the Fund with
such office space, administrative and other services and executive and other
personnel as are necessary for the operations of the Fund. Seligman also
provides senior management for Seligman Data Corp., an affiliate of the Fund and
certain other investment companies in the Seligman Group. Seligman pays all of
the compensation of the directors of the Fund who are employees or consultants
of Seligman and its affiliates, of the officers and employees of the Fund and of
certain executive officers of Seligman Data Corp.
EXPERTS
___________________________ acts as independent auditors for the
Fund and in such capacity will audit the Fund's annual and semi-annual financial
statements and financial highlights.
CUSTODIAN, STOCKHOLDER SERVICE AGENT AND
DIVIDEND PAYING AGENT
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105, serves as custodian to the Fund. It also maintains, under the
general supervision of Seligman, the Fund's accounting records and is
responsible for the determination of the net asset value of the Fund.
Seligman Data Corp., an affiliate of both Seligman and the Fund,
acts as the stockholder service agent and dividend paying agent of the Fund, and
performs, at cost, certain recordkeeping functions for the Fund. In other words,
Seligman Data Corp. maintains the records of shareholder accounts and furnishes
dividend paying, redemption and related services.
PRINCIPAL UNDERWRITER FOLLOWING INITIAL PUBLIC OFFERING
Seligman Advisors, Inc., an affiliate of both Seligman and the Fund,
located at 100 Park Avenue, New York, New York 10017, will act as general
distributor of the shares of the Fund during any continuous offering of the
Fund's shares following the initial public offering.
BROKERAGE COMMISSIONS
Seligman will seek the most favorable price and execution in the
purchase and sale of portfolio securities of the Fund. When two or more of the
investment companies in the Seligman Group or other investment advisory clients
of Seligman desire to buy or sell the same security at the same time, the
securities purchased or sold are allocated by Seligman in a manner believed to
be equitable to each.
B-10
<PAGE>
There may be possible advantages or disadvantages to such transactions with
respect to price or the size of positions readily obtainable or saleable.
In over-the-counter markets, the Fund deals with responsible primary
market makers unless a more favorable execution or price is believed to be
obtainable. The Fund may buy securities from or sell securities to dealers
acting as principal, except dealers with which its directors and/or officers are
affiliated.
The Fund does not plan to execute any portfolio transactions with,
and therefore will not pay any commissions to, any broker affiliated, directly
or indirectly, with either the Fund, Seligman, or Seligman Advisors, Inc.
Consistent with seeking the most favorable price and execution when
buying or selling portfolio securities, Seligman may give consideration to the
research, statistical, and other services furnished by brokers or dealers to
Seligman for its use, as well as the general attitude toward and support of
investment companies demonstrated by such brokers or dealers. Such services
include supplemental investment research, analysis, and reports concerning
issuers, industries, and securities deemed by Seligman to be beneficial to the
Fund. In addition, Seligman is authorized to place orders with brokers who
provide supplemental investment and market research and security and economic
analysis, although the use of such brokers may result in a higher brokerage
charge to the Fund than the use of brokers selected solely on the basis of
seeking the most favorable price and execution, and although such research and
analysis may be useful to Seligman in connection with its services to clients
other than the Fund.
B-11
<PAGE>
APPENDIX A
Established in 1864, J. & W. Seligman's more than 130 years of
providing financial services have been marked not by fanfare, but rather by a
quiet and firm adherence to managing investments and giving prudent financial
advice. Seligman is proud of its distinctive past and traditional values, which
continue to shape its business decisions and investment judgment.
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. Nearly 30
years later, in 1864, after achieving success as international bankers, the
Seligmans established the investment firm of J. & W. Seligman & Co.
In the years that followed, Seligman played a major role in the
geographical expansion and industrial development of the United States. It
helped finance the westward path of the railroads and the building of the Panama
Canal. In the late 1800s, and early 1900s, the firm was instrumental in
financing the fledgling American automobile and steel industries.
Throughout the first quarter of this century, Seligman participated
in hundreds of successful underwritings, including those for some of the
country's most important companies: United Artists Theatre Circuit, Dodge
Brothers, General Motors, Victor Talking Machine, Minneapolis-Honeywell
Regulator, and Maytag, to name just a few. In 1929, Seligman organized its first
investment company, Tri-Continental Corporation, today the nation's largest,
diversified, publicly traded, closed-end investment company, with more than $
|X| billion in assets as of June 30, 1999. In the following year, the firm began
managing its first mutual fund, Broad Street Investing Co. Inc., now known as
Seligman Common Stock Fund.
Today, Seligman manages institutional accounts - including some of
the nation's largest public funds, endowments, and foundations and offers
individual investors a full range of investment products. The Seligman Group of
Funds includes more than 50 investment portfolios, several closed-end municipal
bond funds that trade on the New York Stock Exchange, and a range of offshore
investment funds available for non-US residents.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements:
Part A: Financial Highlights (not applicable)
Part B: Financial Statements (to be filed by amendment)
2. Exhibits: (Exhibits marked with an asterisk (*) will be filed by
amendment.)
a. Charter of Registrant.
b. By-laws of Registrant.
e. Registrant's Automatic Reinvestment Plan.*
g. Management Agreement between Registrant and J. & W. Seligman & Co.
Incorporated.*
h. Underwriting Agreement.*
i. Deferred Compensation Plan for Directors.*
j. Form of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company.*
l. Opinion and Consent of Counsel.*
n. Consent of Independent Auditors.*
o. Agreement with respect to seed capital.*
r. Financial Data Schedule meeting the requirements of Rule 483 under the
Securities Act of 1933.*
Item 25. Marketing Arrangements: Not Applicable
Item 26. Other Expenses of Issuance and Distribution:
Registration fees $
Legal fees
Accounting fees
Miscellaneous (mailing, etc.)
Item 27. Persons Controlled by or Under Common Control with Registrant: None.
Item 28. Number of Holders of Securities
As of June 22, 1999:
Title of Class Number of Recordholders
Common Stock 0
Item 29. Indemnification:
Reference is made to the provisions of Article VIII of Registrant's
Charter and Article VII of Registrant's By-laws, each filed as an
exhibit to this Registration Statement.
C-1
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 30. Business and Other Connections of Investment Adviser:
J. & W. Seligman & Co. Incorporated, a Delaware corporation, is the
Registrant's investment manager. Seligman also serves as investment
manager to eighteen associated investment companies. They are Seligman
Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc.,
Seligman Henderson Global Fund Series, Inc., Seligman High Income Fund
Series, Seligman Income Fund, Inc., Seligman Municipal Fund Series,
Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal
Fund, Inc., Seligman Pennsylvania Municipal Fund Series, Seligman
Portfolios, Inc., Seligman Quality Municipal Fund, Inc., Seligman
Select Municipal Fund, Inc., Tri-Continental Corporation and Seligman
Value Fund Series, Inc.
The Manager has an advisory service division which provides investment
management or advice to private clients. The list required by this
Item 30 of officers and directors of the Manager together with
information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, in incorporated by reference to
Schedules A and D of Form ADV, filed by the Manager, pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-15798) which was
filed on March 31, 1999.
Item 31. Location of Accounts and Records:
Custodian: Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
AND
Seligman New Technologies Fund, Inc.
100 Park Avenue
New York, New York 10017
Item 32. Management Services: Not Applicable
Item 33. Undertakings:
I. The Registrant undertakes to suspend the offering of shares until the
prospectus is amended if (1) subsequent to the effective date of its
registration statement, the net asset
C-2
<PAGE>
value declines more than ten percent from its net asset value as of
the effective date of the registration statement.
II. The Registrant undertakes:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to the registration statement:
(1) to include any prospectus required by Section 10(a)(3) of
the 1933 Act;
(2) to reflect in the prospectus any facts or events after the
effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and
(3) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(b) that, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of those securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
III. The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
IV. The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery within two business days of
receipt of a written or oral request, the Registrant's Statement of
Additional Information.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned, its
duly authorized representative, in the City of New York, State of New York, on
the 22nd day of June, 1999.
SELIGMAN NEW TECHNOLOGIES FUND, INC.
By: /s/ WILLIAM C. MORRIS
--------------------------------
William C. Morris
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the following
persons, in the capacities indicated on June 22, 1999.
NAME TITLE
/s/ WILLIAM C. MORRIS Chairman of the Board (Principal executive officer and
- ----------------------- Director)
(William C. Morris)
/s/ BRIAN T. ZINO President and Director
- -----------------------
(Brian T. Zino)
/s/ RICHARD R. SCHMALTZ Director
- -----------------------
(Richard R. Schmaltz)
/s/ THOMAS G. ROSE Treasurer (Principal financial and accounting officer)
- -----------------------
(Thomas G. Rose)
<PAGE>
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
a. Certificate of Incorporation
b. By-laws
ARTICLES OF INCORPORATION
OF
SELIGMAN NEW TECHNOLOGIES FUND, INC.
ARTICLE I
INCORPORATOR
I, the incorporator, Billie Swoboda, whose post office address is 125
Broad Street, New York, New York 10004, being at least eighteen years of age,
hereby, under and by virtue of the general laws of the State of Maryland
authorizing the formation of corporations, form a corporation.
ARTICLE II
NAME
The name of the corporation (hereinafter, the "Corporation") is
SELIGMAN NEW TECHNOLOGIES FUND, INC.
ARTICLE III
PURPOSES AND POWERS
The purpose for which the Corporation is formed is to act as an
investment company of the management type registered as such with the Securities
and Exchange Commission pursuant to the Investment Company Act of 1940 (the
"1940 Act") and to exercise and generally to enjoy all of the powers, rights and
privileges granted to, or conferred upon, corporations by the general laws of
the State of Maryland now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
Section 1. The post office address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Incorporated,
300 East Lombard Street, Baltimore, Maryland 21202.
<PAGE>
Section 2. The name of the Corporation's resident agent is The
Corporation Trust Incorporated, and its post office address is 300 East Lombard
Street, Baltimore, Maryland 21202. Said resident agent is a corporation of the
State of Maryland.
ARTICLE V
CAPITAL STOCK
Section 1. The total number of shares of capital stock that the
Corporation has authority to issue is 100,000,000 shares, all of one class
called Common Stock, having a par value of $0.01 per share and an aggregate par
value of $1,000,000.
Section 2. The Board of Directors of the Corporation may classify or
reclassify any unissued shares of capital stock from time to time by setting or
changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, or qualifications of such shares of
stock.
Section 3. To the extent permitted by Maryland law, the Board of
Directors of the Corporation, without any action by the stockholders of the
Corporation, may amend these Articles of Incorporation from time to time to
increase or decrease the aggregate number of shares of stock or the number of
shares of stock of any class or series that the Corporation has authority to
issue.
Section 4. The Board of Directors of the Corporation is hereby
empowered to authorize the issuance from time to time of shares of any class of
the Corporation's capital stock, whether now or hereafter authorized, or
securities convertible into shares of any class or classes of its capital stock,
whether now or hereafter authorized.
Section 5. The Board of Directors of the Corporation is hereby
empowered to authorize the repurchase by the Corporation from time to time of
shares of any class of its capital stock, whether now or hereafter authorized,
or securities convertible into shares of any class or classes of its capital
stock, whether now or hereafter authorized, upon such terms, at such prices
(which may be determined by formula) and subject to such conditions (which may
include pro ration of shares tendered for repurchase) as the Board of Directors
of the Corporation may determine.
Section 6. Unless otherwise expressly provided in these Articles of
Incorporation, including any Articles Supplementary creating any class of
capital stock, the holders of each class of capital stock shall be entitled to
dividends and distributions in such
2
<PAGE>
amounts, at such times and to such stockholders of record as may be determined
by the Board of Directors of the Corporation, and the dividends and
distributions paid with respect to the various classes of capital stock may vary
among such classes.
Section 7. Unless otherwise expressly provided in these Articles of
Incorporation, including any Articles Supplementary creating any class of
capital stock, on each matter submitted to a vote of stockholders, each holder
of a share of capital stock of the Corporation shall be entitled to one vote for
each share held in such holder's name on the books of the Corporation,
irrespective of the class thereof, and all shares of all classes of capital
stock shall vote together as a single class; provided, however, that as to any
matter with respect to which a separate vote of any class is required by the
1940 Act or any rules, regulations or orders issued thereunder, or the Maryland
General Corporation Law, such requirement as to a separate vote by that class
shall apply in lieu of a vote of all classes voting together as a single class
as described above.
Section 8. The presence in person or by proxy of stockholders holding
of record one-third of the shares of the capital stock of the Corporation
issued, outstanding and entitled to vote thereat shall constitute a quorum for
the transaction of any business at all meetings of the stockholders except as
otherwise provided by law or in these Articles of Incorporation or in the Bylaws
of the Corporation, provided that the Bylaws shall not provide for a quorum of
less than the holders of record of one-third of all shares of the capital stock
of the Corporation issued, outstanding and entitled to vote.
Section 9. Notwithstanding any provision of the general laws of the
State of Maryland requiring action to be taken or authorized by the affirmative
vote of the holders of a designated proportion greater than a majority of the
votes of all classes of capital stock of the Corporation (or of any class
entitled to vote thereon as a separate class), such action shall, except as
otherwise provided in Section 10 of this Article V, be valid and effective if
taken or authorized by the affirmative vote of the holders of a majority of the
aggregate number of shares of capital stock of the Corporation outstanding and
entitled to vote thereon (or a majority of the aggregate number of shares of a
class entitled to vote thereon as a separate class).
Section 10. Unless otherwise indicated below, the affirmative vote of
at least 66 2/3% of the shares of capital stock of the Corporation outstanding
and entitled to vote thereon shall be necessary to authorize any of the
following actions:
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(a) a merger or consolidation or statutory stock exchange of the
Corporation with or into another corporation;
(b) a sale of all or substantially all of the Corporation's assets
(other than in the regular course of the Corporation's investment
activities or in connection with the repurchase of the
Corporation's shares in the open market);
(c) a liquidation or dissolution of the Corporation, unless such
action has been approved, adopted or authorized by the
affirmative vote of 66 2/3% of the total number of directors
fixed in accordance with the Bylaws, in which case the
affirmative vote of only a majority of the outstanding voting
securities is required;
(d) the conversion of the Corporation to an "open-end company" (as
defined in the 1940 Act);
(e) an increase in the maximum number of directors set forth in
Article VI hereof;
(f) the removal of a director; or
(g) any amendment of these Articles of Incorporation to reduce the
66-2/3% vote requirement to authorize any of the actions in this
Section 10.
Section 11. No holder of shares of the capital stock of the Corporation
shall, as such holder, have any preemptive right to purchase or subscribe for
any part of any new or additional issue of stock of any class, or of rights or
options to purchase any stock, or of securities convertible into, or carrying
rights or options to purchase, stock of any class, whether now or hereafter
authorized or whether issued for money, for a consideration other than money or
by way of a dividend or otherwise, and all such rights are hereby waived by each
holder of capital stock and of any other class of stock or securities of the
Corporation that may hereafter be created.
Section 12. All persons who shall acquire capital stock in the
Corporation shall acquire the same subject to the provisions of these Articles
of Incorporation.
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ARTICLE VI
DIRECTORS
Section 1. The initial number of directors of the Corporation shall be
three, and the names of those persons who shall act as such until the first
annual meeting and until their successors are elected and qualified are as
follows: William C. Morris, Brian T. Zino and Richard R. Schmaltz. The Bylaws of
the Corporation may fix the number of directors at a certain number and may
authorize the Board of Directors of the Corporation, by the vote of a majority
of the entire Board of Directors of the Corporation, to increase or decrease the
number of directors provided that in no case shall the number of directors be
less than three, and to fill the vacancies created by any such increase in the
number of directors. Unless otherwise provided by the Bylaws of the Corporation,
the directors of the Corporation need not be stockholders.
Section 2. A director may be removed only with cause, and any such
removal may be made only by the stockholders of the Corporation in accordance
with the requirements of Section 10 of Article V hereof.
ARTICLE VII
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
Section 1. All corporate powers and authority of the Corporation
(except as at the time otherwise provided by statute, by these Articles of
Incorporation or by the Bylaws) shall be vested in and exercised by the Board of
Directors of the Corporation.
Section 2. The Board of Directors of the Corporation shall have the
power to adopt, alter or repeal the Bylaws of the Corporation except to the
extent that the Bylaws otherwise provide.
Section 3. The Board of Directors of the Corporation shall have the
power from time to time to determine whether and to what extent, and at what
times and places and under what conditions and regulations, the accounts and
books of the Corporation or any of them shall be open to the inspection of
stockholders, and no stockholder shall have any right to inspect any account,
book or document of the Corporation except to the extent required by statute or
permitted by the Bylaws.
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Section 4. The Board of Directors of the Corporation shall have the
power to determine, as provided in these Articles of Incorporation, or if
provision is not made herein, in accordance with generally accepted accounting
principles, what constitutes net income, total assets and the net asset value of
the shares of capital stock of the Corporation.
ARTICLE VIII
LIABILITY
Section 1. A director or officer of the Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director or officer, except to the extent such exemption
from liability or limitation thereof is not permitted by law (including the 1940
Act) as currently in effect or as the same may hereafter be amended.
Section 2. No amendment, modification or repeal of this Article VIII
shall adversely affect any right or protection of a director or officer that
exists at the time of such amendment, modification or repeal.
ARTICLE IX
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
ARTICLE X
AMENDMENTS
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed, and other provisions that
may, under the statutes of the State of Maryland at the time in force, be
lawfully contained in articles of incorporation may be added or inserted, except
as otherwise provided in Section 10 of Article V of these Articles of
Incorporation, upon the vote of the holders of a majority of the shares of
capital stock of the Corporation outstanding and entitled to vote thereon. All
rights at any time conferred upon the stockholders of the Corporation by these
Articles of Incorporation are subject to the provisions of this Article X.
------------------------
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The term "Articles of Incorporation" as used herein and in the Bylaws
of the Corporation shall be deemed to mean these Articles of Incorporation as
from time to time amended, amended and restated, or supplemented.
The undersigned incorporator of SELIGMAN NEW TECHNOLOGIES FUND, INC.
hereby executes the foregoing Articles of Incorporation and acknowledges the
same to be his act and further acknowledges that, to the best of his knowledge,
the matters and facts set forth herein are true in all material respects under
the penalties of perjury.
May 19, 1999
/s/ BILLIE SWOBODA
-----------------------------------
BILLIE SWOBODA
INCORPORATOR
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SELIGMAN NEW TECHNOLOGIES FUND, INC.
BYLAWS
ARTICLE I
STOCKHOLDERS
Section 1.1. Place of Meeting. All meetings of the stockholders of the
Corporation shall be held at the principal office of the Corporation in the
State of Maryland or at such other place within the United States as may from
time to time be designated by the Board of Directors and stated in the notice of
such meeting.
Section 1.2. Annual Meetings. The Corporation is not required to hold
an annual meeting in any year in which the election of Directors is not required
by the Investment Company Act of 1940 (the "1940 Act"). If the Corporation is
required to hold a meeting of stockholders to elect Directors, such meeting
shall be designated an annual meeting and shall be held on such date no later
than 120 days after the occurrence of the event requiring the meeting and at
such hour as may be designated by the Board of Directors and stated in the
notice of such meeting. Any business of the Corporation may be considered at an
annual meeting without being specified in the notice, except as otherwise
required by law or these Bylaws.
Section 1.3. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President, or a majority of the Board of Directors. Special meetings of
stockholders shall also be called by the Secretary on the written request of
stockholders holding not less than 50% of the votes entitled to be cast thereat.
Such request shall state the purpose or purposes of the proposed meeting and the
matters proposed to be acted on at such proposed meeting. The Secretary shall
inform such stockholders of the reasonably estimated cost of preparing and
mailing such notice of meeting and upon payment to the Corporation of such
costs, the Secretary shall give notice as required in this Article to all
stockholders entitled to notice of such meeting. No special meeting of
stockholders need be called upon the request of the stockholders entitled to
cast less than a majority of all votes entitled to be cast at such meeting to
consider any matter that is substantially the same as a matter voted upon at any
special meeting of stockholders held during the preceding 12 months.
Section 1.4. Notice of Meetings of Stockholders. Not less than 10 days'
and not more than 90 days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the purpose of any special
meeting), shall be given to each stockholder entitled to vote thereat and to
each other stockholder entitled to notice of meeting by leaving the same with
such stockholder or at such stockholder's residence or usual place of business
or by mailing it, postage prepaid, and addressed to such
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stockholder at such stockholder's address as it appears upon the books of the
Corporation. If mailed, notice shall be deemed to be given when deposited in the
mail addressed to the stockholder as aforesaid.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who waives such notice by: (1) his presence at
the meeting in person or by proxy; or (2) his signing, before or after the
meeting, a waiver of notice which is filed with the records of the meeting.
Section 1.5. Record Dates. The Board of Directors may fix, in advance,
a record date for the determination of stockholders entitled to notice of or to
vote at any stockholders' meeting or to receive a dividend or be allotted rights
or for the purpose of any other proper determination with respect to
stockholders and only stockholders of record on such date shall be entitled to
notice of and to vote at such meeting or to receive such dividends or rights or
otherwise, as the case may be; provided, however, that such record date shall
not be more than 90 days preceding the date of any such meeting of stockholders,
dividend payment date, date for the allotment of rights or other such action
requiring the determination of a record date; and further provided that such
record date shall not be prior to the close of business on the day the record
date is fixed, that the transfer books shall not be closed for a period longer
than 20 days, and that in the case of a meeting of stockholders, the record date
or the closing of the transfer books shall not be less than 10 days prior to the
date fixed for such meeting.
Section 1.6. Quorum; Adjournment of Meetings. The presence in person or
by proxy of stockholders entitled to cast a majority of the votes entitled to be
cast thereat shall constitute a quorum at all meetings of the stockholders
except as otherwise provided in the Articles of Incorporation or the Maryland
General Corporation Law. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the holders of a majority of the
stock present in person or by proxy shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote at such meeting shall be present, to
a date not more than 120 days after the original record date. At such adjourned
meeting at which the requisite amount of stock entitled to vote thereat shall be
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 1.7. Voting and Inspectors. Unless otherwise provided in the
Articles of Incorporation of the Corporation, at all meetings, each stockholder
of record entitled to vote thereat shall have one vote for each share of stock
held in his name on the books of the Corporation on the date of determination of
the stockholders entitled to vote at such meeting; stockholders of record
holding fractional shares, if any, shall have proportionate voting rights. The
stockholder may vote either in person or by proxy appointed by instrument in
writing subscribed by such stockholder or his duly authorized attorney.
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All elections and all questions shall be decided by a majority of the
votes cast at a duly constituted meeting, except as otherwise provided by
statute or by the Articles of Incorporation or by these Bylaws.
At any election of Directors, the Chairman of the meeting may, and upon
the request of the holders of 10% of the stock entitled to vote at such election
shall, appoint two inspectors of election who shall first subscribe an oath or
affirmation to execute faithfully the duties of inspectors at such election with
strict impartiality and according to the best of their ability, and shall after
the election make a certificate of the result of the vote taken.
Section 1.8. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, or if he is
not present, by the President, or if he is not present, by a Vice-President, or
if none of them is present, by a Chairman to be elected at the meeting. The
Secretary of the Corporation, if present, shall act as a Secretary of such
meetings, or if he is not present, an Assistant Secretary shall so act: if
neither the Secretary nor an Assistant Secretary is present, then the meeting
shall elect its Secretary.
Section 1.9. Concerning Validity of Proxies, Ballots, etc. At every
meeting of the stockholders, all proxies shall be received and taken in charge
of and all ballots shall be received and canvassed by the Secretary of the
meeting, who shall decide all questions regarding the qualification of voters,
the validity of the proxies and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed by the Chairman of the meeting,
in which event such inspectors of election shall decide all such questions.
Section 1.10. Action Without Meeting. Any action to be taken by
stockholders may be taken without a meeting if (1) all stockholders entitled to
vote on the matter consent to the action in writing, (2) all stockholders
entitled to notice of the meeting, but not entitled to vote at it, sign a
written waiver of any right to dissent, and (3) said consents and waivers are
filed with the records of the meetings of stockholders. Such consent shall be
treated for all purposes as a vote at the meeting.
Section 1.11. Advance Notice of Stockholder Nominees for Director and
Other Stockholder Proposals.
(a) The matters to be considered and brought before any annual or
special meeting of stockholders of the Corporation shall be limited to only such
matters, including the nomination and election of Directors, as shall be brought
properly before such meeting in compliance with the procedures set forth in this
Section 1.11.
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(b) For any matter to be properly brought before any annual meeting of
stockholders, the matter must be (i) specified in the notice of annual meeting
given by or at the direction of the Board of Directors, (ii) otherwise brought
before the annual meeting by or at the direction of the Board of Directors, or
(iii) brought before the annual meeting in the manner specified in this Section
1.11 by a stockholder of record or a stockholder (a "Nominee Holder") that holds
voting securities entitled to vote at meetings of stockholders through a nominee
or "street name" holder of record and can demonstrate to the Corporation such
indirect ownership and such Nominee Holder's entitlement to vote such
securities. In addition to any other requirements under applicable law and the
Articles of Incorporation and By-Laws of the Corporation, persons nominated by
stockholders for election as Directors of the Corporation and any other
proposals by stockholders shall be properly brought before the meeting only if
notice of any such matter to be presented by a stockholder at such meeting of
stockholders (the "Stockholder Notice") shall be delivered to the Secretary of
the Corporation at the principal executive office of the Corporation not less
than 60 and not more than 90 days prior to the first anniversary date of the
annual meeting for the preceding year; provided, however, that, if and only if
the annual meeting is not scheduled to be held within a period that commences 30
days before such anniversary date and ends 30 days after such anniversary date
(an annual meeting date outside such period being referred to herein as an
"Other Annual Meeting Date"), such Stockholder Notice shall be given in the
manner provided herein by the later of the close of business on (i) the date 60
days prior to such Other Meeting Date or (ii) the 10th day following the date
such Other Annual Meeting Date is first publicly announced or disclosed. Any
stockholder desiring to nominate any person or persons (as the case may be) for
election as a Director or Directors of the Corporation shall deliver, as part of
such Stockholder Notice: (i) a statement in writing setting forth (A) the name
of the person or persons to be nominated, (B) the number and class of all shares
of each class of stock of the Corporation owned of record and beneficially by
each such person, as reported to such stockholder by such nominee(s), (C) the
information regarding each such person required by paragraph (b) of Item 22 of
Rule 14a-101 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), adopted by the Securities and Exchange Commission (or the corre
sponding provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission applicable to the Corporation), (D) whether
such stockholder believes any nominee will be an "interested person" of the
Corporation (as defined in the 1940 Act) and, if not an "interested person",
information regarding each nominee that will be sufficient for the Corporation
to make such determination, and (E) the number of shares of each class of stock
of the Corporation owned of record and beneficially by such stockholder; (ii)
each such person's signed consent to serve as a Director of the Corporation if
elected; (iii) such stockholder's name and address; and (iv) in the case of a
Nominee Holder, evidence establishing such Nominee Holder's indirect ownership
of, and entitlement to vote, securities at the meeting of stockholders. Any
stockholder who gives a Stockholder Notice of any matter proposed to be brought
before the meeting (not involving nominees for Director) shall deliver, as part
of such Stockholder Notice: (i) the text of the proposal to be presented; (ii) a
brief written statement setting forth (A) the reasons why such stockholder
favors the proposal, (B) such stockholder's name and address, (C) the number of
shares of each
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class of stock of the Corporation owned of record and beneficially by such
stockholder, and (D), if applicable, any material interest of such stockholder
in the matter proposed (other than as a stockholder); and (iii) in the case of a
Nominee Holder, evidence establishing such Nominee Holder's indirect ownership
of, and entitlement to vote, securities at the meeting of stockholders. As used
herein, shares "beneficially owned" shall mean all shares which such person is
deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Exchange
Act.
Notwithstanding anything in this Section 1.11 to the contrary, in the
event that the number of Directors to be elected to the Board of Directors of
the Corporation is increased, and either all of the nominees for Director or the
size of the increased Board of Directors are not publicly announced or disclosed
by the Corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting, then a Stockholder Notice shall also be
considered timely hereunder, but only with respect to nominees for any new
positions created by such increase, if it is delivered to the Secretary of the
Corporation at the principal executive office of the Corporation not later than
the close of business on the 10th day following the first date all of such
nominees or the size of the increased Board of Directors shall have been
publicly announced or disclosed.
(c) No business other than that stated in the notice shall be
transacted at any special meeting. In the event the Corporation calls a special
meeting of stockholders for the purpose of electing one or more Directors to the
Board of Directors, any stockholder may nominate a person or persons (as the
case may be), for election to such position(s) as specified in the Corporation's
notice of meeting, if the Stockholder Notice required by clause (b) of this
Section 1.11 is delivered to the Secretary of the Corporation at the principal
executive office of the Corporation not later than the close of business on the
10th day following the day on which the date of the special meeting and the
nominees proposed by the Board of Directors to be elected at such meeting are
publicly announced or disclosed.
(d) For purposes of this Section 1.11, a matter shall be deemed to have
been "publicly announced or disclosed" if such matter is disclosed in a press
release reported by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission.
(e) In no event shall the adjournment of an annual meeting, or any
announcement thereof, commence a new period for the giving of notice as provided
in this Section 1.11. This Section 1.11 shall not apply to stockholder proposals
made pursuant to Rule 14a-8 under the Exchange Act.
(f) The person presiding at any meeting of stockholders, in addition to
making any other determinations that may be appropriate to the conduct of the
meeting, shall have the power and duty to deter mine whether notice of nominees
and other matters proposed to be brought before a meeting has been duly
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given in the manner provided in this Section 1.11 and, if not so given, shall
direct and declare at the meeting that such nominees and other matters shall not
be considered.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1. Function of Directors. The business and affairs of the
Corporation shall be conducted and managed by the Board of Directors. All powers
of the Corporation shall be exercised by the Board of Directors except as
conferred on or reserved to the stockholders by statute.
Section 2.2. Number of Directors. The Board of Directors shall consist
of not less than three and not more than 20 Directors, as may be determined from
time to time by vote of a majority of the Directors then in office.
Section 2.3. Vacancies. In the case of any vacancy in the Board of
Directors through death, resignation or other cause, other than an increase in
the number of Directors, a majority of the remaining Directors, even if a
majority is less than a quorum, by an affirmative vote, may elect a successor to
hold office until the next annual meeting of stockholders or until his successor
is chosen and qualifies if, immediately after filling any such vacancy, at least
two-thirds of the Directors then holding office shall have been elected to such
office by the holders of outstanding voting securities of the Corporation.
If at any time the number of Directors elected by holders of
outstanding voting securities of the Corporation is less than a majority of the
members of the Board of Directors, the Board of Directors or proper Officer of
the Corporation shall forthwith cause to be held as promptly as possible and in
any event within 60 days a meeting of such holders for the purpose of electing
Directors to fill any existing vacancies in the Board of Directors, unless the
Securities and Exchange Commission shall by order extend such period.
Section 2.4. Increase or Decrease in Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of Directors and may elect Directors to fill the vacancies created by any
such increase in the number of Directors until the next annual meeting or until
their successors are duly chosen and qualified if, immediately after filling any
such vacancies, at least two-thirds of the Directors then holding office shall
have been elected to such office by the holders of outstanding voting securities
of the Corporation. The Board of Directors, by the vote of a majority of the
entire Board, may likewise decrease the number of Directors to a number not less
than three.
Section 2.5. Place of Meeting. The Directors may hold their meetings
within or outside the State of Maryland, at any office or offices of the
Corporation or at any other place as they may from time to time determine.
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Section 2.6. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and on such notice as the Directors may
from time to time determine.
The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of the stockholders for the election of
Directors or, if no such annual meeting is held, within 120 days after the close
of the Corporation's most recently ended fiscal year.
Section 2.7. Special Meetings. Special meetings of the Board of
Directors may be held from time to time upon call of the Chairman of the Board,
the President, the Secretary or two or more of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed to each Director
not less than one day before such meeting.
Section 2.8. Notices. Unless required by statute or otherwise
determined by resolution of the Board of Directors in accordance with these
Bylaws, notices to Directors need not be in writing and need not state the
business to be transacted at or the purpose of any meeting, and no notice need
be given to any Director who is present in person or to any Director who, before
or after the meeting, signs a waiver of notice which is filed with the records
of the meeting. Waivers of notice need not state the purpose or purposes of such
meeting.
Section 2.9. Quorum. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum shall have been
obtained. The act of the majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Directors, except as may be
otherwise specifically provided by statute or by the Articles of Incorporation
or by these Bylaws.
Section 2.10. Executive Committee. The Board of Directors may appoint
from the Directors an Executive Committee to consist of such number of Directors
(one or more) as the Board may from time to time determine. The Chairman of the
Committee shall be elected by the Board of Directors. The Board of Directors
shall have power at any time to change the members of such Committee and may
fill vacancies in the Committee by election from the Directors. When the Board
of Directors is not in session, to the extent permitted by law, the Executive
Committee shall have and may exercise any or all of the powers of the Board of
Directors in the management and conduct of the business and affairs of the
Corporation. The Executive Committee may fix its own rules of procedure and may
meet when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary to
constitute a quorum. During the absence of a member of the Executive Committee,
the remaining members may appoint a member of the Board of Directors to act in
his place.
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Section 2.11. Other Committees. The Board of Directors may appoint from
the Directors other committees which shall in each case consist of such number
of Directors (not less than two) and, to the extent permitted by law, shall have
and may exercise such powers as the Board may determine in the resolution
appointing them. A majority of all the members of any such committee may
determine its actions and fix the time and place of its meetings, unless the
Board of Directors shall otherwise provide. The Board of Directors shall have
power at any time to change the members or powers of any such committee, to fill
vacancies and to discharge any such committee.
Section 2.12. Telephone Meetings. Members of the Board of Directors or
a committee of the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means, subject to the provisions of the 1940 Act,
constitutes presence in person at the meeting.
Section 2.13. Action Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting, if a written consent to such action is
signed by all members of the Board or of such committee, as the case may be, and
such written consent is filed with the minutes of the proceedings of the Board
or such committee.
Section 2.14. Compensation of Directors. No Director shall receive any
stated salary or fees from the Corporation for his services as such if such
Director is, otherwise than by reason of his being such Director, an "interested
person" (as such term is defined by the 1940 Act) of the Corporation or of its
investment adviser or principal underwriter. Except as provided in the preceding
sentence, Directors shall be entitled to receive such compensation from the
Corporation for their services as may from time to time be approved by the Board
of Directors.
ARTICLE III
OFFICERS
Section 3.1. Executive Officers. The executive officers of the
Corporation shall be chosen by the Board of Directors. These may include a
Chairman of the Board of Directors (who shall be a Director) and shall include a
President, a Secretary and a Treasurer. The Board of Directors or the Executive
Committee may also in its discretion appoint one or more Vice-Presidents,
Assistant Secretaries, Assistant Treasurers and other officers, agents and
employees, who shall have such authority and perform such duties as the Board of
Directors or the Executive Committee may determine. The Board of Directors may
fill any vacancy which may occur in any office. Any two offices, except those of
President and Vice-President, may be held by the same person, but no officer
shall execute, acknowledge or verify any
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instrument in more than one capacity, if such instrument is required by law or
these Bylaws to be executed, acknowledged or verified by two or more officers.
Section 3.2. Term of Office. The term of office of all officers shall
be one year and until their respective successors are elected and qualified. Any
officer may be removed from office at any time with or without cause by the vote
of a majority of the whole Board of Directors. Any officer may resign his office
at any time by delivering a written resignation to the Corporation and, unless
otherwise specified therein, such resignation shall take effect upon delivery.
Section 3.3. Powers and Duties. The officers of the Corporation shall
have such powers and duties as shall be stated in a resolution of the Board of
Directors, or the Executive Committee and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board of Directors and the Executive Committee.
Section 3.4. Surety Bonds. The Board of Directors may require any
officer or agent of the Corporation to execute a bond (including, without
limitation, any bond required by the 1940 Act and the rules and regulations of
the Securities and Exchange Commission) to the Corporation in such sum and with
such surety or sureties as the Board of Directors may determine, conditioned
upon the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting of any of the Corporation's
property, funds or securities that may come into his hands.
ARTICLE IV
CAPITAL STOCK
Section 4.1. Certificates of Stock. The shares of stock of the
Corporation shall be issued in uncertificated form only.
Section 4.2. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and only if all taxes have been paid in respect of such shares.
Except as otherwise provided by law, the Corporation shall be entitled to
recognize the exclusive rights of a person in whose name any share or shares
stand on the record of Stockholders as the owner of such share or shares for all
purposes, including, without limitation, the rights to receive dividends or
other distributions, and to vote as such owner, and the Corporation shall not be
bound to recognize any equitable or legal claim to or interest in any such share
or shares on the part of any other person.
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Section 4.3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of shares
held by them respectively, shall be kept at the principal office of the
Corporation or, if the Corporation employs a transfer agent, at the offices of
such transfer agent or subagent of the Corporation.
Section 4.4. Transfer Agents and Registrars. The Board of Directors may
from time to time appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the Corporation, and it may appoint the same
person as both transfer agent and registrar.
ARTICLE V
CORPORATE SEAL; LOCATION OF
OFFICES; BOOKS; NET ASSET VALUE
Section 5.1. Corporate Seal. The Board of Directors may provide for a
suitable corporate seal, in such form and bearing such inscriptions as it may
determine. Any officer or Director shall have the authority to affix the
corporate seal. If the Corporation is required to place its corporate seal to a
document, subject to applicable law, it shall be sufficient to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
Section 5.2. Location of Offices. The Corporation shall have a
principal office in the State of Maryland. The Corporation may, in addition,
establish and maintain such other offices as the Board of Directors or any
officer may, from time to time, determine.
Section 5.3. Books and Records. The books and records of the
Corporation shall be kept at the places, within or outside the State of
Maryland, as the Board of Directors or any officer may determine; provided,
however, that the original or a certified copy of the Bylaws, including any
amendments to them, shall be kept at the Corporation's principal office.
Section 5.4. Annual Statement of Affairs. The President or any other
executive officer of the Corporation shall prepare annually a full and correct
statement of the affairs of the Corporation, to include a balance sheet and a
financial statement of operations for the preceding fiscal year. The statement
of affairs shall be submitted at any annual meeting of stockholders of the
Corporation and shall be placed on file at the Corporation's principal office
within 20 days after such annual meeting. In the event the Corporation is not
required to hold an annual meeting of stockholders, the statement of affairs
shall be placed on file at the principal office of the Corporation within 120
days after the end of the Corporation's fiscal year to which the statement
relates.
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Section 5.5. Net Asset Value. Subject to any requirements of the
Corporation's Articles of Incorporation, the value of the Corporation's net
assets shall be determined at such times and by such method as shall be
established from time to time by the Board of Directors.
ARTICLE VI
FISCAL YEAR AND ACCOUNTANT
Section 6.1. Fiscal Year. The fiscal year of the Corporation, unless
otherwise fixed by resolution of the Board of Directors, shall begin on the
first day of January and shall end on the last of December in each year.
Section 6.2. Accountant. The Corporation shall employ an independent
public accountant or a firm of independent public accountants as its Accountant
to examine the accounts of the Corporation and to sign and certify financial
statements filed by the Corporation. The employment of the Accountant shall be
conditioned upon the right of the Corporation to terminate the employment
forthwith without any penalty by vote of a majority of the outstanding voting
securities at any stockholders' meeting called for that purpose.
ARTICLE VII
INDEMNIFICATION AND INSURANCE
Section 7.1. Indemnification and Advancement of Expenses. The
Corporation shall indemnify any person who is or was a Director, officer or
employee of the Corporation and may advance the reasonable expenses incurred by
a Director, officer or employee who is a party to a proceeding to the maximum
extent permitted by the Maryland General Corporation Law. No amendment of this
Article VII shall impair the rights of any person arising at any time with
respect to events occurring prior to such amendment. The rights of
indemnification and advancement of expenses provided in this Article VII shall
neither be exclusive of, nor be deemed in limitation of, any right to which any
person may otherwise be entitled or permitted by contract or otherwise.
Section 7.2. Limitations. Notwithstanding anything in Section 7.1 to
the contrary, no Director, officer or employee of the Corporation shall be
indemnified against any liability to the Corporation or its stockholders to
which he is subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. In the case of criminal proceedings, no Director, officer or employee
shall be indemnified for any penalty or expense incurred by the Director,
officer or employee in connection with such proceedings in circumstances where
the Director, officer or employee had reasonable cause to believe that the act
or omission was unlawful.
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Section 7.3. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, or employee
of the Corporation or who, while a Director, officer, employee, or agent of the
Corporation, is or was serving at the request of the Corporation as a Director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the Corporation would have
power to indemnify such person against such liability.
ARTICLE VIII
AMENDMENT OF BYLAWS
The Bylaws of the Corporation may be altered, amended, added to or
repealed only by a majority of the entire Board of Directors.
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