Filed Pursuant to Rule 497(c)
Registration No. 333-79083
811-09353
S E L I G M A N
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, production 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 from the time the Fund makes its investment. 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 intends to raise approximately $500 million of net proceeds in
its initial offering. The minimum investment in this offering is $10,000. 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., the Fund's principal
underwriter and 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 Fund will pay organizational and offering
expenses estimated at $836,000 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 July 27, 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 incorporated
by reference into this prospectus in its entirety. The table of contents of the
SAI appears on page 17 of this prospectus. The SAI, and other information about
the Fund, is also available on the SEC's website (http://www.sec.gov).
<PAGE>
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.
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 27, 1999.
<PAGE>
TABLE OF CONTENTS
PAGE
----
Prospectus Summary........................................................ iii
Summary of Fund Expenses ................................................. 1
Risk Factors.............................................................. 2
Year 2000 ................................................................ 5
Use of Proceeds .......................................................... 6
Investment Objective and Principal Strategies ............................ 6
Management of the Fund ................................................... 10
Repurchase Offers ........................................................ 11
Calculation of Net Asset Value ........................................... 13
Capital Stock ............................................................ 14
Distribution Policy ...................................................... 14
Taxes .................................................................... 15
How to Purchase Fund Shares .............................................. 15
General Information ...................................................... 17
Table of Contents of SAI ................................................. 17
----------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell or a solicitation of an offer to buy the securities it
describes, but only under circumstances and in jurisdictions where it is lawful
to do so. The information contained in this prospectus is current only as of its
date.
iii
<PAGE>
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, production 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 total 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 from the time
the Fund makes its investment. 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
iv
<PAGE>
consumer electronics; biometric software; and
wireless communications and computing. See
"Investment Objective and Principal Strategies
-- Investment Rationale."
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 June 30, 1999, Seligman's
Technology Team managed approximately $7.5
billion of public and $47.5 million of
private securities of technology and related
companies, including the world's largest
technology fund, Seligman Communications and
Information Fund, Inc., and the U.S. 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 intends to raise
approximately $500 million of net proceeds. The
Fund is initially offering its shares through a
group of brokers and dealers selected by
Seligman Advisors. The minimum investment is
$10,000. The maximum purchase price per share
of $25.00 includes a sales charge of up to
$0.75 per share. Reductions in the sales charge
are available for large purchases and in
certain other
v
<PAGE>
circumstances. See "How to Purchase Fund
Shares." In the initial offering, Seligman will
pay an additional commission to the selected
brokers and dealers from its own resources
equal to $0.25 per share.
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 from its own
resources equal to 1% of the net asset value of
shares purchased during any continuous
offering. See "How to Purchase Fund Shares."
The Fund will pay each selected broker or
dealer 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.
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.
vi
<PAGE>
The Fund's shares will not be listed on any
securities exchange and the Fund 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, 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
<PAGE>
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%
====
Seligman has undertaken to reimburse a portion of the Fund's expenses or
to waive a portion of its management fee to the extent that the Fund's total
expenses would otherwise exceed 3% of its average daily net assets during the
first year of the Fund's operations.
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 $500 million at the closing of the initial
public offering and organizational and offering expenses payable by the Fund
estimated to be $836,000. For a more complete description of the various costs
and expenses of the Fund, see "Management of the Fund."
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return: $59 $120 $183 $352
</TABLE>
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
<PAGE>
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 U.S. 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 investment 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 managers 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. In addition, Seligman and the Fund's portfolio
managers have less experience in venture capital investing than they have in
investing in public companies.
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 the Fund's shares, and none is expected
to develop. The Fund's shares are therefore not readily marketable. 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.
Although the Fund, as a fundamental policy, will make quarterly repurchase
offers for 5% (or more, at the discretion of the Fund's board of directors) of
its outstanding shares of common stock 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:
o poor corporate performance due to less experienced management,
limited product lines, undeveloped markets and/or limited financial
resources
2
<PAGE>
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
INVESTMENTS IN VENTURE CAPITAL COMPANIES
The Fund may invest a substantial portion of its assets in securities of
unseasoned venture capital companies, which present all the risks of investment
in small companies described above plus certain additional risks. Venture
capital companies represent highly speculative investments by the Fund. The
Fund's ability to realize value from an investment in a venture capital company
is to a large degree dependent upon successful completion of the company's
initial public offering or the sale of the venture capital company to another
company, which may not occur for a period of several years after the date of the
Fund's investment, if ever. There can be no assurance that any of the venture
capital companies in which the Fund invests will complete public offerings or be
sold, or, if such events occur, as to the timing and values of such offerings or
sales. The Fund may also 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 or acceptance. Some companies may depend upon managerial
assistance or financing provided by their investors. The Fund does not intend to
provide any such managerial assistance and will not generally provide additional
financing to the companies in which it invests. Therefore, the value of its
investments may depend upon the quality of managerial assistance provided by
other investors and their ability and willingness to provide financial support.
Venture capital investing is a highly specialized field, and Seligman and the
Fund's portfolio managers have less experience in venture capital investing than
they have in investing in public companies. In addition, there can be no
assurance that the Fund will be able to identify a sufficient number of
desirable venture capital investments.
Depending on the specific facts and circumstances of a venture capital
investment, there may not be a reasonable basis to revalue it for a substantial
period of time after the Fund's investment. If a venture capital company does
not complete an initial public offering within the anticipated time frame of up
to three years from the date of the Fund's investment, or enter into a
transaction whereby its shares are exchanged for shares of a public company,
there may never be a public market benchmark for valuing the investment. 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 venture capital companies that are not
publicly traded. The Fund's net asset value per share may change materially from
day to day, including during the time between the date a repurchase offer is
mailed and the due date for tendering shares, and during the period immediately
after a repurchase is completed.
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. A venture capital 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 fund holding
when it wishes to, or may be able to do so only at a disadvantageous price.
CONCENTRATION; NON-DIVERSIFIED STATUS
Where a portfolio is concentrated in securities of a small number of
companies or in securities of companies in a 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
3
<PAGE>
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.
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 the Fund or at
prices approximating the value at which the Fund is carrying the securities on
its books.
INVESTMENTS IN FOREIGN SECURITIES
The Fund plans to invest in securities of foreign technology companies.
Investments in foreign securities face specific risks, which include:
o unfavorable changes in currency rates and exchange control
regulations
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 may use derivative instruments to hedge portfolio risk and for
cash management purposes. Investing in derivative investments involves numerous
risks. For example:
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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. The Fund has no obligation to enter
into any hedging transactions.
LENDING OF SECURITIES
Although the Fund will receive collateral in connection with all loans
of portfolio securities, and such collateral will be marked to market, the Fund
will be exposed to the risk of loss should a borrower default on its obligation
to return the borrowed securities. For example, loaned securities may have
appreciated beyond the value of the collateral held by the Fund at the time of a
default. In addition, the Fund will bear the risk of loss on any collateral that
it chooses to invest.
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 that year 2000 issues may
have on their ability to provide uninterrupted services to the Fund. The team
has assessed, and will continue to assess, the status of their year 2000
readiness. 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 team has confirmed that it has implemented all significant
components of its year 2000 plans, 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
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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-U.S.
issuers. It may be more difficult to assess the preparedness of such issuers for
year 2000 than it is in the case of U.S. issuers because there may be less
information available about their systems and about procedures they have
followed to address technical problems. In addition, non-U.S. 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-U.S. issuers and thus on the value of their securities.
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 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. Based on current market conditions, 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 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 equity
securities of technology companies, the proceeds of the offering will be
invested in short-term, high quality debt securities. In addition, up to 10% of
the Fund's assets may be invested temporarily in shares of exchange-traded funds
that seek to track the performance of technology or other stock market indices.
The Fund will pay organizational and offering expenses estimated to be $836,000
from the proceeds of the initial offering. Such expenses will therefore be borne
by investors in the initial offering. Investors in any subsequent continuous
offering may not bear any organizational or offering 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, production 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 the
time of purchase by the Fund, of as little as $10 million and as much as $10
billion. The Fund's definition of small and medium-sized companies may change 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
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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
non-convertible 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 from the time
the Fund makes its investment. 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 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." During the initial investment period, the Fund may invest up to
10% of its total assets in shares of exchange-traded funds that seek to track
technology or other stock indices. Such funds pay certain fees and expenses, and
these will be indirectly borne by the Fund and its shareholders.
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-U.S. 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-U.S. securities, but
this limit does not apply to investments in depositary receipts.
The limitations on the percentage of the Fund's assets that may be
invested in securities of venture capital companies, venture capital funds and
securities of non-U.S. issuers apply at the time of investment by the Fund. The
Fund will not be required to reduce its investments in these securities if a
percentage limit is exceeded as a result of changes in the value of the Fund's
portfolio securities. However, the Fund may not purchase additional securities
that are subject to a percentage limitation at any time when the limitation is
met or exceeded.
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.
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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 fingerprint and cornea scans can be used as a means of
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.
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
to hedge against adverse movements in the prices of securities held in the
Fund's portfolio. The Fund may buy or sell these options if they are traded on
options exchanges or over-the-counter markets and will enter into transactions
only 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-U.S. securities. As one way of managing
exchange rate risk, the Fund may enter into forward currency exchange contracts
(agreements to purchase or to sell U.S. dollars or non-U.S. currencies at a
future date). A forward contract may help reduce the Fund's losses on securities
denominated in a currency other than U.S. dollars, but it may also reduce the
potential gain on the securities depending on changes in the currency's value
relative to the U.S. dollar. See "Additional Investment Policies -- Other
Operating Policies -- Foreign Currency Transactions" in the SAI.
NON-DIVERSIFICATION
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
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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. The
board of directors of the Fund may modify the Fund's policies with respect to
borrowing, including the percentage limitations, the purposes of borrowings and
the length of time that portfolio securities purchased with borrowed money may
be held by the Fund. Management of the Fund has no current intention of
requesting any such modifications. See "Risk Factors -- Borrowing" and
"Additional Investment Policies -- Fundamental Policies" in the SAI.
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
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
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. Established
in 1864, Seligman currently serves as manager to 19 U.S. registered investment
companies, which offer more than 50 investment portfolios with approximately
$22.3 billion in aggregate
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assets as of June 30, 1999. Seligman also provides investment management or
advice to institutional or other accounts having an aggregate value at June 30,
1999 of approximately $10.6 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
Seligman has substantial experience in technology investing. 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 June
30, 1999, Seligman's Technology Team managed approximately $7.5 billion of
public and $47.5 million of private securities of technology and related
companies, including the world's largest technology fund, Seligman
Communications and Information Fund, Inc., and the U.S. 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 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 December 1994. 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. The expenses of the Fund 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.
SDC, the Fund's shareholder service agent, provides shareholder account
services to the Fund at cost.
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.
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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.
When a repurchase offer commences, the Fund will send a notification of
the offer to shareholders via their financial intermediaries. The notification
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 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 as of a date 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 your intermediary fails to submit your repurchase request 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 should be sure to advise your intermediary of your intentions in a timely
manner. You may 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 New York Stock Exchange 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
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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 2%
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
purchase all of the shares you wish to sell in a given quarter or in any
subsequent quarter. In anticipation of the possibility of pro-ration, some
shareholders may tender more shares than they wish to have repurchased in a
particular quarter, thereby increasing the likelihood of pro-ration. 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. See "Additional
Investment Policies - Other Operating Policies - Share Repurchases" in the SAI.
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 repurchase shares on the next business day after the
net asset value determination date. Proceeds will be distributed to
intermediaries as specified in the repurchase offer notification, usually on the
third business day after repurchase. In any event, the Fund will pay repurchase
proceeds no later than seven days after the net asset value determination date.
IMPACT OF REPURCHASE POLICIES ON THE LIQUIDITY OF THE FUND
From the time the Fund distributes each repurchase offer notification
until the net asset value determination date, 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.
12
<PAGE>
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."
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 generally
4:00 p.m. New York time. Securities owned by the Fund will be valued at current
market prices. If reliable market prices are unavailable (e.g., in the case of
the Fund's venture capital investments), securities will be valued at fair value
as determined in good faith in accordance with procedures approved by the Fund's
board of directors. Venture capital investments will be valued at fair value,
which will be 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 be 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 of directors, 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. Fair
value represents a good faith approximation of the value of an asset and will be
used where there is no public market or possibly no market at all for a
company's securities. The fair values of one or more assets may not, in
retrospect, be the prices at which those assets could have been sold during the
period in which the particular fair values were used in determining the Fund's
net asset value. As a result, the Fund's issuance or repurchase of its shares at
net asset value at a time when it owns securities that are valued at fair value
may have the effect of diluting or increasing the economic interest of existing
shareholders. All fair value 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.
13
<PAGE>
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) a merger or consolidation of the
Fund; (ii) certain sales of all or substantially all of the Fund's assets; (iii)
the liquidation or dissolution of the Fund, unless such action has been approved
by a two-thirds vote of the entire board of directors; (iv) the conversion of
the Fund into an open-end fund; (v) an increase in the maximum number of
directors specified in the charter; (vi) the removal of a director; or (vii) an
amendment of the charter to reduce the two-thirds vote required to authorize the
actions listed in this sentence. In addition, the Fund's bylaws provide, among
other things, that: nominations for directors and other stockholder proposals
must be made within specified time frames in advance of an annual or special
meeting of stockholders and must be accompanied by specified information;
special meetings of stockholders may be called at the written request of
stockholders holding not less than 50% of the votes entitled to be cast at such
a meeting; and only the board of directors may amend the bylaws. Some of the
foregoing could have the effect of delaying, deferring or preventing changes in
control of the Fund.
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 capital 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 your broker or dealer 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 election at any time by contacting your broker or dealer, who will
inform the Fund. Your request must be received by the Fund before the record
date to be effective for that dividend or capital gain distribution.
14
<PAGE>
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 U.S. 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 have held your shares for more than one year, or as a short-term
capital gain or loss if you have held your shares for one year or less. However,
if you sell Fund shares on which a long-term capital gain distribution has been
received and you have 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 Distributing Agreement with Seligman Advisors,
Inc., its principal underwriter. Seligman Advisors, which is a subsidiary of,
and shares the same address as, the Fund's investment manager, Seligman, is
offering the Fund's shares on a best efforts basis. This offering will be made
through a group of brokers and dealers selected by Seligman Advisors. In the
initial offering the Fund intends to raise approximately $500 million of net
proceeds. 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 the sale. The maximum offering price is $25.00 per share. Reductions in
the sales charge are available depending upon the amount of your 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
The Fund must receive your payment for shares purchased in the initial
public offering by July 30, 1999, unless the offering is extended by Seligman
Advisors. You should consult with your broker or dealer to ensure that this
deadline is met.
The Fund will have the sole right to accept orders to purchase shares
and reserves the right to reject any order in whole or in part.
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 in the
initial offering 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.
15
<PAGE>
Seligman has retained PaineWebber Incorporated to provide it with advice
in connection with the structuring of the initial offering. Seligman will pay
PaineWebber Incorporated a structuring fee of approximately $5 million.
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.
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. Neither Seligman Advisors, nor any
broker or dealer selected by Seligman Advisors to participate in the initial
offering of the Fund's shares, intends to make a market in the Fund's shares.
The Fund has agreed to indemnify Seligman Advisors, and Seligman
Advisors has agreed to indemnify each selected broker and dealer, against
certain liabilities, including liabilities under the Securities Act of 1933.
CONTINUOUS OFFERING
If the Fund raises net proceeds of 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 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.
If the Fund commences a continuous offering, reductions in the sales
charge may also be available depending upon the total cost of the shares you
purchase. A right of accumulation may allow you to combine the total cost of the
shares you purchase in the initial offering and in any future continuous
offerings to permit you to have the benefit, if you qualify, of a reduced sales
charge for your then current share purchase. However, the total cost of the
shares owned by you will only be taken into account in orders placed through a
broker or dealer if you notify your broker or dealer that you wish to take
advantage of the right of accumulation and provide sufficient information to
permit confirmation of the total cost of the shares of the Fund you own at the
time that the subsequent purchase is made.
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 servicing 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. Shares may be transferred to an account at
another broker or dealer only if the broker or dealer has entered into an
agreement with Seligman Advisors relating to shares of the fund.
16
<PAGE>
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, and may hold shares
directly with the Fund: present and retired directors, trustees and employees
(and their respective spouses) of the Fund, the other investment companies in
the Seligman Group, Seligman, its subsidiaries and SDC (collectively, "Seligman
Investors"); 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.
Sales of the Fund at net asset value may also be made to employees of
selected brokers and dealers that offer the Fund and to family members of
Seligman Investors. Family members include lineal descendants and ancestors,
siblings (and their spouses and children) and any company or organization
controlled by any of the foregoing.
During the period between the date of this Prospectus and September 30,
1999, employees of Seligman, its subsidiaries and SDC may purchase shares of the
Fund through an IRA sponsored by Seligman at the Fund's then current net asset
value.
GENERAL INFORMATION
The Fund is registered under the 1940 Act 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.
TABLE OF CONTENTS OF SAI
Additional Investment Policies........................................... B-2
Directors and Officers................................................... B-7
Investment Advisory and Other Services................................... B-12
Experts.................................................................. B-12
Custodian, Stockholder Service Agent and Dividend Paying Agent........... B-12
Principal Underwriter Following Initial Public Offering.................. B-13
Brokerage Commissions.................................................... B-13
Financial Statements..................................................... B-13
Appendix A
17
<PAGE>
S E L I G M A N
NEW TECHNOLOGIES FUND, INC.
100 Park Avenue New York, New York 10017
A Management Type
Non-Diversified, Closed-End
Investment Company
------------------------
COMMON STOCK
($0.01 PAR VALUE)
------------------------
PROSPECTUS
JULY 27, 1999
UNTIL OCTOBER 25, 1999 (90 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 REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF THE SELECTED
BROKERS AND DEALERS TO DELIVER A PROSPECTUS IN CONNECTION WITH EACH SALE MADE
PURSUANT TO THIS OFFERING.
INVESTMENT MANAGER SHAREHOLDER SERVICE AGENT
J. & W. Seligman & Co. Seligman Data Corp.
Incorporated 100 Park Avenue
100 Park Avenue New York, New York 10017
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN GENERAL COUNSEL
Investors Fiduciary Trust Company Sullivan & Cromwell
801 Pennsylvania 125 Broad Street
Kansas City, Missouri 64105 New York, New York 10004
18
<PAGE>
SELIGMAN NEW TECHNOLOGIES FUND, INC.
July 27, 1999
STATEMENT OF ADDITIONAL INFORMATION
100 Park Avenue
New York, New York 10017
(212) 850-1864
toll-free (800) 221-2450
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 JULY |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-7
Investment Advisory and Other Services....................................B-12
Experts...................................................................B-12
Custodian, Stockholder Service Agent and Dividend Paying Agent............B-12
Principal Underwriter Following Initial Public Offering...................B-13
Brokerage Commissions.....................................................B-13
Financial Statements......................................................B-13
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 Fund's 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 the 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 the 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 below beginning at
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
each 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 New York Stock Exchange
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,
production or operations, except when investing for temporary
defensive purposes.
B-2
<PAGE>
(7) May purchase or sell commodities and commodity contracts
(including stock index, currency and other financial futures
contracts).
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 a 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 U.S. 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, Seligman 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 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 contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's
B-4
<PAGE>
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 U.S. 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, as amended (the "Securities
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 Securities 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 U.S. 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 U.S. 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 U.S. 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.
<TABLE>
<S> <C> <C>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
------- --------- -----------------------------------------------
William C. Morris* Director, Chairman, J. & W. Seligman & Co. Incorporated;
(61) Chairman of the Chairman and Chief Executive Officer, the Seligman
Board and Chief Group of investment companies; Chairman, Seligman
Executive Advisors, Inc., Seligman Services, Inc., and Carbo
Officer 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 and Director and President, J. & W. Seligman & Co.
(46) President 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 Director and Managing Director, Director of
(58) 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.
</TABLE>
B-7
<PAGE>
<TABLE>
<S> <C> <C>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
------- --------- -----------------------------------------------
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts
(69) University; Director or Trustee, the Seligman Group of
Tufts University Investment Companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; Governor, the Center for Creative
Medford, MA 02155 Leadership; Director, the National Defense University,
the Institute for Defense Analyses, and Raytheon Co.,
electronics. Formerly: Director, USLIFE Fund, life
insurance; Ambassador, U.S. State Department for
negotiations in Bosnia; Distinguished Policy Analyst at
Ohio State University; Olin Distinguished Professor of
National Security Studies, United States Military
Academy; and Supreme Allied Commander, Europe
and Commander-in-Chief, United States European
Command from June, 1987 to June, 1992.
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director or
(64) Trustee, the Seligman Group of Investment Companies;
18 Highland Circle, Trustee, the Committee for Economic Development;
Bronxville, NY 10708 Chairman, The Rockefeller Foundation, charitable
foundation. Formerly: Trustee, The Markle
Foundation, philanthropic organization; and Director,
New York Telephone Company, and International
Research and Exchange Board, intellectual exchanges.
Frank A. McPherson Director Retired Chairman of the Board and Chief Executive
(66) Officer, Kerr-McKee Fund; Director or Trustee, the
2601 Northwest Seligman Group of Investment Companies; Director,
Expressway, Kimberly-Clark Fund, consumer products, Bank of
Suite 805E, Oklahoma Holding Company, Baptist Medical Center,
Oklahoma City, OK Oklahoma Chapter of the Nature Conservancy,
73112 Oklahoma Medical Research Foundation, and National
Boys and Girls Clubs of America; and President,
Oklahoma Foundation for Excellence in Education.
Formerly: Chairman of the Oklahoma City Chamber of
Commerce, and the Oklahoma City Public Schools
Foundation; Director, Federal Reserve System's Kansas
City Reserve Bank; and Member, the Business
Roundtable.
</TABLE>
B-8
<PAGE>
<TABLE>
<S> <C> <C>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
------- --------- -----------------------------------------------
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(69) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of Investment Companies, Commonwealth
New York, NY 10004 Industries, Inc., manufacturer of aluminum sheet
products, the Foreign Policy
Association, the Municipal Art
Society of New York, and the United
States Council for International
Business; Chairman, American
Australian Association, and New York
Presbyterian Healthcare Network,
Inc.; Trustee, New York Presbyterian
Hospital; Vice-Chairman, the
U.S.-New Zealand Council; and
Member, the American Law Institute,
and the Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of
(56) Investment Companies; Trustee, The Geraldine R.
P.O. Box 449, Dodge Foundation, charitable foundation; Formerly:
Gladstone, NJ 07934 Chairman of the Board of Trustees, St. George's
School, Newport, RI.; and Director,
the National Association of
Independent Schools, Washington DC.
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law
(72) firm; Director or Trustee, the Seligman Group of
Park Avenue at Investment Companies. Formerly: Director, Public
Morris County, Service Enterprise Group, public utility.
P.O. Box 1945,
Morristown, NJ 07962
James Q. Riordan Director Director, various organizations; Director or Trustee, the
(71) Seligman Group of Investment Companies, The
675 Third Avenue, Brooklyn Museum, KeySpan Energy Fund, The
Suite 3004, Committee for Economic Development, and Public
New York, NY 10017 Broadcasting Service (PBS). Formerly: Co-Chairman
of the Policy Council of the Tax Foundation; Director
and Vice Chairman, Mobil Fund; Director, Tesoro
Petroleum Companies and Dow Jones & Company Inc.;
and Director and President, Bekaert Fund.
Robert L. Shafer Director Retired Vice President, Pfizer Inc.; Director or Trustee,
(66) the Seligman Group of Investment Companies.
96 Evergreen Avenue, Formerly: Director, USLIFE Fund, life insurance.
Rye, NY 10580
</TABLE>
B-9
<PAGE>
<TABLE>
<S> <C> <C>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
James N. Whitson Director Retired Executive Vice President and Chief Operating
---------------- -------- ----------------------------------------------------
(64) Officer, Sammons Enterprises, Inc.; Director or
6606 Forestshire Drive, Trustee, the Seligman Group of Investment Companies;
Dallas TX 75230 Consultant to and Director of Sammons Enterprises,
Inc.; and Director, C-SPAN and CommScope, Inc.,
manufacturer of coaxial cables. Formerly: Director,
Red Man Pipe and Supply Company, piping and other
materials.
Paul H. Wick Vice President Director and Managing Director, J. & W. Seligman &
(35) and Portfolio Co. Incorporated since January 1995 and November
Manager 1997, respectively; Vice President and Portfolio
Manager, three open-end companies in the Seligman
Group of investment companies; Portfolio Manager,
Henderson Investment Management Limited. Mr.
Wick 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 Managing Director, J. & W. Seligman & Co.
(30) and Portfolio Incorporated since January 1999. Mr. Boswick joined
Manager 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 Senior Vice President, Finance, J. & W. Seligman &
(42) 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 General Counsel, Senior Vice President, Law and
(34) 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 Treasurer, the Seligman Group of investment
(41) companies and Seligman Data Corp.
</TABLE>
B-10
<PAGE>
COMPENSATION
<TABLE>
<S> <C> <C> <C>
NAME AND POSITION AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION
WITH FUND COMPENSATION FROM BENEFITS ACCRUED AS RECEIVED FROM FUND
FUND (1) PART OF FUND AND FUND COMPLEX
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
- ---------------------------------------------------------------------------------------------
John R. Galvin, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
Alice S. Ilchman, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
Frank A. McPherson, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
John E. Merow, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
Betsy S. Michel, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
James C. Pitney, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
James Q. Riordan, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
Robert L. Shafer, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
James N. Whitson, $1,980 N/A $78,000
Director
- ---------------------------------------------------------------------------------------------
<FN>
- ---------------------
(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.
</FN>
</TABLE>
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 Seligman, 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.
B-11
<PAGE>
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, 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 Fund. 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.
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 of directors
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.
This management fee is higher than the advisory fees paid by most U.S.
investment companies.
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 Seligman,
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
Deloitte & Touche LLP act as independent auditors for the Fund and in
such capacity will audit the Fund's annual and semi-annual financial statements
and financial highlights.
B-12
<PAGE>
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. 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-13
<PAGE>
FINANCIAL STATEMENTS
The following comprise the financial statements of the Fund:
o Independent Auditors' Report.
o Statement of Assets and Liabilities.
o Statement of Operations.
o Notes to the Financial Statements.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholder of
Seligman New Technologies Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Seligman New Technologies Fund, Inc. (the "Fund") as of July 19, 1999 and the
related statement of operations for the period from the date of organization May
19, 1999 to July 19, 1999. These financial statements are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements referred to above present
fairly, in all material respects, the financial position of Seligman New
Technologies Fund, Inc. as of July 19, 1999, and the results of operations for
the stated period, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
July 19, 1999
B-14
<PAGE>
SELIGMAN NEW TECHNOLOGIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 19, 1999
ASSETS
<TABLE>
<S> <C>
Cash.................................................................................. $100,007
Prepaid expenses...................................................................... 805,000
-------
Total assets................................................................ 905,007
LIABILITIES
Accrued expenses payable.............................................................. 805,000
-------
Commitments and contingencies (Notes 1 and 2)
Net assets equivalent to $24.25 per share (applicable to 4,124 shares of common stock,
$.01 Par value; 100,000,000 shares authorized)........................................ $100,007
========
</TABLE>
B-15
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM THE DATE OF ORGANIZATION,
MAY 19, 1999, TO JULY 19, 1999
Income................................................................ $ 0
--------
Expenses:
Organization expenses................................................. 30,500
Less: Reimbursement of expenses by Manager............................ (30,500)
------
Net expenses.......................................................... 0
------
Net income............................................................ $ 0
======
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Seligman New Technologies Fund, Inc. (the "Fund") was incorporated in
the State of Maryland on May 19, 1999 as a non-diversified, closed-end
management investment company. The Fund has had no operations other than those
related to organizational matters and the sale and issuance to Seligman
Advisors, Inc. (the "Distributor") of 4,124 shares of common stock for $100,007
on July 16, 1999.
Expenses incurred to establish the Fund have been expensed as
organization expenses. Included in prepaid expenses are the costs incurred in
connection with the initial offering of the Fund's shares. Prepaid expenses will
be amortized to expense over twelve months on a straight-line basis starting
with the commencement of operations, provided that the Fund's shares are
continuously offered during the period. Any unamortized prepaid expenses will be
charged directly to expense if and when it is no longer probable that the Fund's
shares will be publicly offered. If the Fund's initial offering is fully
subscribed (resulting in net proceeds of approximately $500,000,000), the Fund's
shares will not be offered on a continuous basis and the prepaid expenses will
be charged directly to paid-in capital upon the sale of the shares.
A portion of the costs incurred, and to be incurred, in connection with
the organization and the initial offering of the Fund will be paid by J. & W.
Seligman & Co. Incorporated (the "Manager") or the Distributor; however, the
Fund will reimburse such persons for these costs.
NOTE 2. MANAGEMENT AGREEMENT
The Management Agreement provides the Manager with a monthly management
fee at the annual rate of 2% of the Fund's average daily net assets. The Manager
has voluntarily agreed to waive its fee and/or reimburse expenses of the Fund to
the extent that total expenses of the Fund exceed an annual rate of 3% of
average net assets during the first year of the Fund's operations.
NOTE 3. INCOME TAXES
The Fund intends to meet the requirements of the Internal Revenue Code
of 1986 applicable to regulated investment companies and as such will not be
subject to federal income taxes.
B-16
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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 $4.2 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-U.S. residents.
