SELIGMAN
-------------------------------
New Technologies
Fund II, Inc.
[PHOTOS OMITTED]
MID-YEAR REPORT
JUNE 30, 2000
-----[]-----
SEEKING LONG-TERM
CAPITAL APPRECIATION BY
INVESTING IN COMPANIES
THAT HAVE THE POTENTIAL
TO PRODUCE TOMORROW'S
TECHNOLOGIES
[LOGO OMITTED]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
SELIGMAN -- TIMES CHANGE...VALUES ENDURE
J. & W. SELIGMAN & CO. INCORPORATED IS A FIRM WITH A LONG TRADITION OF
INVESTMENT EXPERTISE, OFFERING A BROAD ARRAY OF INVESTMENT CHOICES TO HELP
TODAY'S INVESTORS SEEK THEIR LONG-TERM FINANCIAL GOALS.
[GRAPHIC OMITTED]
JAMES, JESSE, AND
JOSEPH SELIGMAN, 1870
TIMES CHANGE...
Established in 1864, Seligman has a history of providing financial services
marked not by fanfare, but rather by a quiet and firm adherence to financial
prudence. While the world has changed dramatically in the 136 years since
Seligman first opened its doors, the firm has continued to offer its clients
high-quality investment solutions through changing times.
In the late 19th century, as the country grew, Seligman helped finance the
westward expansion of the railroads, the construction of the Panama Canal, and
the launching of urban transit systems. In the first part of the 20th century,
as America became an industrial power, the firm helped fund the growing capital
needs of the nascent automobile and steel industries.
With the formation of Tri-Continental Corporation in 1929 -- today, the nation's
largest diversified publicly-traded closed-end investment company -- Seligman
began shifting its emphasis from investment banking to investment management.
Despite the stock market crash and ensuing depression, Seligman was convinced of
the importance that investment companies could have in building wealth for
individual investors and began managing its first mutual fund in 1930.
In the decades that followed, Seligman has continued to offer forward-looking
investment solutions, including equity funds that specialize in small companies,
technology, or international securities, and bond funds that focus on high-yield
issuers, US government bonds, or municipal securities.
...VALUES ENDURE
Seligman is proud of its distinctive past and of the traditional values that
continue to shape the firm's business decisions and investment judgment. While
much has changed over the years, the firm's commitment to providing prudent
investment management that seeks to build wealth for clients over time is an
enduring value that will guide Seligman in the new millennium.
TABLE OF CONTENTS
To the Stockholders ....................................................... 1
Portfolio Overview ........................................................ 2
Portfolio of Investments .................................................. 4
Statement of Assets and Liabilities ....................................... 6
Statement of Operations ................................................... 7
Statement of Changes in Net Assets ........................................ 8
Notes to Financial Statements ............................................. 9
Financial Highlights ...................................................... 11
Report of Independent Auditors
AND For More Information ................................................. 12
Board of Directors AND Executive Officers ................................. 13
<PAGE>
TO THE STOCKHOLDERS
We are pleased to present the first mid-year shareholder report for Seligman New
Technologies Fund II. As of June 30, 2000, the Fund was over 56% invested in
equities, with computer software and semiconductor companies comprising the
largest percentages of these investments on an industry basis. At period-end,
only 1% of the portfolio was invested in venture capital. However, over the
course of the next year, the Fund expects to invest a substantial portion of its
assets in equity securities of privately owned technology companies.
The first half of 2000 had been a challenging time for the stock market, in
general, and for technology stocks, in particular. However, in June, technology
stocks began to recover from what had been a very difficult six months in which
the Nasdaq Composite Index -- a tech-heavy index -- lost 37% of its market value
from March 10 through May 23.
We believe that this correction was healthy and necessary. Many technology
stocks had reached valuation levels that appeared unsustainable. We feel that
investors will now begin to focus on fundamentals, such as earnings growth and
solid company management, rather than on buying stocks simply because their
prices seem to be moving higher.
Such a return to fundamentals should benefit Seligman New Technologies Fund II.
For publicly held companies, the Fund uses a bottom-up stock selection process,
which means that the Fund's portfolio managers pick stocks based on their
research of individual companies. They look for strong growth prospects,
attractive valuations relative to earnings and cash flows, and unique
competitive advantages. While the analytical approach is similar when
considering private venture capital investments, liquidity considerations and
prospects for raising additional capital are more important over the short term.
Many of these companies need sufficient time to develop their businesses, and to
generate sufficient revenues and cash flows from continuing operations.
The Fund's portfolio managers are optimistic regarding the outlook for the
technology sector, and are particu- larly enthusiastic about semiconductors and
the Internet/Online sector. Semiconductors are in increasing demand as a result
of the continued growth in electronic communications and the Internet. The
Internet is now widely used in the US and Europe, and the Fund's portfolio
managers believe that its use will continue to expand around the globe.
Looking ahead, we expect that the economy will moderate as a result of the
Federal Reserve Board's interest rate increases. While long-term trends remain
healthy, the short-term investment environment, particularly in the technology
sector, may become more challenging, making professional management crucial.
Mutual and other investment funds provide investors with an opportunity to
obtain the services of investment managers who have years of investment
experience and the support of research teams to find the most promising
opportunities.
Thank you for your support of Seligman New Technologies Fund II. The Fund's
investment results, portfolio of investments, and financial statements, follow
this letter. We look forward to serving your investment needs for many years to
come.
By order of the Board of Directors,
/s/ WILLIAM C. MORRIS
---------------------
William C. Morris
Chairman
/s/ Brian T. Zino
Brian T. Zino
President
August 11, 2000
1
<PAGE>
PORTFOLIO OVERVIEW
DIVERSIFICATION OF NET ASSETS
JUNE 30, 2000
PERCENT
OF NET
ISSUES COST VALUE ASSETS
------ ------------ ------------ ------
COMMON AND CONVERTIBLE PREFERRED STOCKS:
Communications Infrastructure .... 3 $ 15,488,057 $ 14,752,987 2.0
Communications Services .......... 2 13,449,826 14,817,788 2.0
Computer and Business Services ... 2 13,946,715 13,991,975 1.8
Computer Hardware/Peripherals .... 5 47,116,613 47,530,849 6.3
Computer Software ................ 14 90,878,058 93,020,360 12.4
Electronic Components ............ 2 17,257,082 16,987,088 2.2
Electronics Capital Equipment .... 7 72,858,949 74,727,129 9.9
Information Services ............. 2 11,054,242 11,284,981 1.5
Internet/Online .................. 3 31,536,554 31,356,847 4.2
Media ............................ 3 19,998,390 20,784,906 2.8
Semiconductors ................... 9 90,270,281 92,474,084 12.3
-- ------------ ------------ -----
52 423,854,767 431,728,994 57.4
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES .... 16 320,662,980 320,662,980 42.6
-- ------------ ------------ -----
NET ASSETS .......................... 68 $744,517,747 $752,391,974 100.0
== ============ ============ =====
LARGEST INDUSTRIES*
JUNE 30, 2000
[BAR CHART OMITTED]
Percent of
Net Assets
----------
COMPUTER SOFTWARE $93,020,360 12.4
SEMI-CONDUCTORS $92,474,084 12.3
ELECTRONICS CAPITAL EQUIPMENT $74,727,129 9.9
COMPUTER HARDWARE/PERIPHERALS $47,530,849 6.3
INTERNET/ONLINE $31,356,847 4.8
----------
* Excluding short-term holdings.
2
<PAGE>
Portfolio Overview
ALLOCATION OF INVESTMENTS
JUNE 30, 2000
[PIE CHART OMITTED]
Publicly Traded Companies 56.4%
Net Cash and Short-Term Holdings 42.6%
Venture Capital 1.0%
LARGEST PORTFOLIO HOLDINGS*
JUNE 30, 2000
SECURITY VALUE
-------- -----------
SCI Systems ..................................................... $16,979,944
Amkor Technology ................................................ 15,424,963
Novellus Systems ................................................ 15,087,894
Intuit .......................................................... 15,041,881
PSINet .......................................................... 14,474,075
Integrated Device Technology .................................... 13,986,000
Lattice Semiconductor ........................................... 13,796,672
Synopsys ........................................................ 12,085,938
Electronics for Imaging ......................................... 11,872,550
American Power Conversion ....................................... 11,488,078
----------
* Excluding short-term holdings.
3
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
SHARES VALUE
------ ---------
COMMON STOCKS 56.4%
COMMUNICATIONS
INFRASTRUCTURE 2.0%
Artesyn Technologies* 270,200 $ 7,531,825
Aspect Communications* 68,100 2,675,053
Gilat Satellite Networks (Israel)* 65,500 4,546,109
-----------
14,752,987
-----------
COMMUNICATIONS
SERVICES 2.0%
Copper Mountain Networks* 54,300 4,783,491
NTL* 167,500 10,034,297
-----------
14,817,788
-----------
COMPUTER AND BUSINESS
SERVICES 1.8%
Amdocs* 61,300 4,704,775
Concord EFS* 357,200 9,287,200
-----------
13,991,975
-----------
COMPUTER HARDWARE/
PERIPHERALS 6.3%
Adaptec* 364,300 8,299,209
American Power Conversion* 281,700 11,488,078
Apex* 187,800 8,204,512
Electronics for Imaging* 470,200 11,872,550
Lexmark International
Group (Class A)* 114,000 7,666,500
-----------
47,530,849
-----------
COMPUTER SOFTWARE 12.4%
BindView Development* 170,300 2,038,278
Entrust Technologies* 26,800 2,222,725
HNC Software* 48,000 2,970,000
Hyperion Solutions* 175,900 5,711,253
Intuit* 364,100 15,041,881
Macromedia* 19,700 1,904,128
Microsoft* 119,400 9,548,269
New Era Networks* 45,100 1,915,341
Parametric Technology* 825,000 9,049,219
Rational Software* 53,500 4,970,484
Remedy* 158,000 8,813,437
Symantec* 211,600 11,419,788
Synopsys* 350,000 12,085,938
Wind River Systems* 140,600 5,329,619
-----------
93,020,360
-----------
ELECTRONIC COMPONENTS 2.2%
CTS 148,900 6,700,500
Sawtek* 178,800 10,286,588
-----------
16,987,088
-----------
ELECTRONICS CAPITAL
EQUIPMENT 9.9%
ACT Manufacturing* 112,300 5,218,441
Credence Systems* 199,500 11,003,672
Kulicke & Soffa Industries* 126,400 7,485,250
Novellus Systems* 266,600 15,087,894
Orbotech* (Israel) 91,900 8,538,084
SCI Systems* 433,300 16,979,944
Vishay Intertechnology* 274,500 10,413,844
-----------
74,727,129
-----------
INFORMATION SERVICES 1.5%
CSG Systems International* 95,800 5,373,781
Gartner Group (Class A)* 492,600 5,911,200
-----------
11,284,981
-----------
INTERNET/ONLINE 3.2%
America Online* 184,300 9,721,825
PSINet* 576,800 14,474,075
-----------
24,195,900
-----------
MEDIA 2.8%
Adelphia Communications
(Class A)* 208,800 9,780,975
Charter Communications
(Class A)* 612,800 10,092,050
TV Guide (Class A)* 26,600 911,881
-----------
20,784,906
-----------
SEMICONDUCTORS 12.3%
Advanced Micro Devices* 88,200 6,813,450
Amkor Technology* 437,200 15,424,963
Conexant Systems* 142,200 6,927,806
Cypress Semiconductor* 168,500 7,119,125
Dallas Semiconductor* 191,700 7,811,775
Integrated Device Technology* 233,100 13,986,000
Lam Research* 282,600 10,606,331
Lattice Semiconductor* 199,500 13,796,672
Microchip Technology* 171,100 9,987,962
-----------
92,474,084
-----------
TOTAL COMMON STOCKS
(Cost $416,693,820) 424,568,047
-----------
CONVERTIBLE PREFERRED
STOCKS 1.0%
(Cost $7,160,947)
INTERNET/ONLINE 1.0%
Metro-Optix (Series B)# 723,328 7,160,947
-----------
----------
See footnotes on page 5.
4
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
PRINCIPAL
AMOUNT VALUE
------ ---------
SHORT-TERM
HOLDINGS 72.3%
FIXED TIME DEPOSITS 39.9%
ABN-AMRO Bank,
Grand Cayman
7%, due 7/3/2000 $35,000,000 $35,000,000
Bank of Montreal,
Grand Cayman
6.75%, due 7/3/2000 35,000,000 35,000,000
Bank of Nova Scotia,
Grand Cayman
7%, due 7/3/2000 20,200,000 20,200,000
Bayerische Hypo-Und
Vereinsbank, Grand Cayman
6.88%, due 7/3/2000 35,000,000 35,000,000
Canadian Imperial Bank of
Commerce, Grand Cayman
6.88%, due 7/3/2000 35,000,000 35,000,000
Dexia Banque,
Grand Cayman
7%, due 7/3/2000 35,000,000 35,000,000
National Westminster Bank,
Nassau 6.94%, due 7/3/2000 35,000,000 35,000,000
State Street Bank and Trust,
Grand Cayman 6.88%,
due 7/3/2000 35,000,000 35,000,000
Wachovia Bank and Trust,
Grand Cayman 6.65%,
due 7/3/2000 35,000,000 35,000,000
------------
TOTAL FIXED
TIME DEPOSITS
(Cost $300,200,000) 300,200,000
------------
COMMERCIAL PAPER 32.4%
American Express Credit
6.56%, due 7/24/2000 $35,000,000 34,853,311
American General Finance
6.61%, due 7/20/2000 35,000,000 34,877,899
Associates Corp. of North
America 6.65%,
due 7/6/2000 35,000,000 34,967,674
Ford Motor Credit
6.60%, due 7/13/2000 35,000,000 34,923,000
General Electric Capital
6.55%, due 7/10/2000 35,000,000 34,942,687
John Deere Capital Corp.
6.57%, due 7/27/2000 35,000,000 34,833,925
Norwest Financial
6.56%, due 7/17/2000 35,000,000 34,897,955
------------
TOTAL COMMERCIAL
PAPER
(Cost $244,296,451) 244,296,451
------------
TOTAL SHORT-TERM
HOLDINGS
(Cost $544,496,451) 544,496,451
------------
TOTAL INVESTMENTS 129.7%
(Cost $968,351,218) 976,225,445
OTHER ASSETS
LESS LIABILITIES (29.7)% (223,833,471)
------------
NET ASSETS 100.0% $752,391,974
============
----------
* Non-income producing security.
# Restricted and non-income producing security.
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
ASSETS:
Investments, at value:
Common stocks (cost $416,693,820) .............. $424,568,047
Convertible preferred stocks
(cost $7,160,947) ............................ 7,160,947
Short-term holdings (cost $544,496,451) ........ 544,496,451 $976,225,445
------------
Cash .......................................................... 6,508,950
Receivable from associated company ............................ 263,119
Receivable for dividends and interest ......................... 57,364
------------
TOTAL ASSETS .................................................. 983,054,878
------------
LIABILITIES:
Payable for securities purchased .............................. 227,520,792
Accrued expenses and other .................................... 3,142,112
------------
TOTAL LIABILITIES ............................................. 230,662,904
------------
NET ASSETS .................................................... $752,391,974
============
COMPOSITION OF NET ASSETS:
Common Stock, at par ($0.01 par value;
100,000,000 shares authorized;
31,498,982 shares outstanding): ............................. $ 314,990
Additional paid-in capital .................................... 744,849,083
Accumulated net investment loss ............................... (646,326)
Net unrealized appreciation of investments .................... 7,874,227
------------
NET ASSETS .................................................... $752,391,974
============
NET ASSET VALUE PER SHARE ..................................... $ 23.89
============
----------
See Notes to Financial Statements.
6
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JUNE 22, 2000* TO JUNE 30, 2000
INVESTMENT INCOME:
Interest ......................................... $ 1,036,588
-----------
TOTAL INVESTMENT INCOME ......................................... $ 1,036,588
EXPENSES:
Incentive fee .................................... 1,275,512
Management fee ................................... 244,441
Stockholder servicing fees ....................... 121,717
Organization expenses ............................ 102,500
Stockholder reports and communications ........... 84,387
Stockholder account services ..................... 82,221
Auditing and legal fees .......................... 35,000
Miscellaneous .................................... 255
-----------
Total expenses before fee waiver/reimbursement ... 1,946,033
Fee waiver/reimbursement of expenses ............. (263,119)
-----------
TOTAL EXPENSES AFTER FEE WAIVER/REIMBURSEMENT ................... 1,682,914
-----------
NET INVESTMENT LOSS ............................................. (646,326)
NETUNREALIZED GAIN ON INVESTMENTS:
Net unrealized appreciation of investments ....... 7,874,227
-----------
NET GAIN ON INVESTMENTS ......................................... 7,874,227
-----------
INCREASE IN NET ASSETS FROM OPERATIONS .......................... $ 7,227,901
===========
----------
* Commencement of operations.
See Notes to Financial Statements.
7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JUNE 22, 2000* TO JUNE 30, 2000
OPERATIONS:
Net investment loss ........................................... $ (646,326)
Net unrealized appreciation of investments .................... 7,874,227
------------
INCREASE IN NET ASSETS FROM OPERATIONS ........................ 7,227,901
------------
SHARES
CAPITAL SHARE TRANSACTIONS: -----------
Net proceeds from issuance of Common Stock ........ 31,494,762 745,064,059
----------- ------------
INCREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ............................... 31,494,762 745,064,059
=========== ============
INCREASE IN NET ASSETS ........................................ 752,291,960
NET ASSETS:
Beginning of period ........................................... 100,014
------------
END OF PERIOD (including accumulated
net loss of $646,326) ....................................... $752,391,974
============
----------
* Commencement of operations.
See Notes to Financial Statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION -- Seligman New Technologies Fund II, Inc. (the "Fund") was
incorporated in Maryland on March 10, 2000 and subsequently was organized and
registered under the Investment Company Act of 1940 as a non-diversified
closed-end management investment company. The Fund had no operations prior to
June 22, 2000 (commencement of operations) other than those relating to
organizational matters and the sale to Seligman Advisors, Inc. of 4,220 shares
of Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America which require management to make certain estimates and
assumptions at the date of the financial statements. The following summarizes
the significant accounting policies of the Fund:
a. SECURITY VALUATION -- Investments in convertible securities and common stocks
are valued at current market values or, in their absence, at fair values
determined in good faith in accordance with procedures approved by the Board
of Directors. Securities traded on an exchange are valued at last sales
prices or, in their absence and in the case of over-the-counter securities,
at the mean of bid and asked prices. Short-term holdings maturing in 60 days
or less are valued at amortized cost.
The Fund may invest in equity securities of privatelyowned technology
companies that plan to conduct an initial public offering 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. Such investments will be
valued at fair value, which is expected to be cost unless J. & W. Seligman
&Co. Incorporated (the "Manager") 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 invests undertakes an initial public
offering. In such situations, the Fund's investment will be revalued in a
manner that the Manager, following procedures approved by the Board of
Directors, determines best reflects its fair value. In addition, the Fund may
hold restricted securities of a class that have been sold to the public. The
fair valuation of these restricted securities will often be the market value
of the publicly traded shares less a discount to reflect contractual or legal
restrictions limiting resale.
b. FEDERAL TAXES -- There is no provision for federal income tax. The Fund will
elect to be taxed as a regula- ted investment company and intends to
distribute substantially all taxable net income and net gain realized.
c. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Investment
transactions are recorded on trade dates. Identified cost of investments sold
is used for both financial statement and federal income tax purposes.
Dividends receivable and payable are recorded on ex-dividend dates. Interest
income is recorded on an accrual basis.
d. DISTRIBUTIONS TO STOCKHOLDERS -- The treatment for financial statement
purposes of distributions made to stockholders during the period from net
investment income or net realized gains may differ from their ultimate
treatment for federal income tax purposes. These differences are caused
primarily by differences in the timing of the recognition of certain
components of income, expense, or realized capital gain for federal income
tax purposes. Where such differences are permanent in nature, they are
reclassified in the components of net assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net investment assets, results of operations, or net
asset value per share of the Fund.
e. ORGANIZATION AND OFFERING EXPENSES -- Costs of $102,500 incurred to establish
the Fund have been expensed as organization expenses. Costs relating to the
public offering of the Fund's Common shares of $1,361,797 were charged to
capital at the time of issuance of the shares.
3. PURCHASES AND SALES OF SECURITIES -- Purchases of portfolio securities,
excluding short-term investments, for the period June 22, 2000 to June 30, 2000
amounted to $423,854,767. The cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes, and the tax basis gross unrealized appreciation and depreciation of
portfolio securities amounted to $13,573,717 and $5,699,490, respectively.
4. REPURCHASE OFFERS -- To provide investors with a limited degree of liquidity,
the Fund will make quarterly offers to repurchase its shares. Repurchase offers
will be limited to 5% of the number of the Fund's outstanding shares on the date
the repurchase requests are due. The Fund may repurchase more than 5% (but not
more than 25%) of its shares in any quarter with the approval of the Fund's
Board of Directors. In the event the repurchase offer is oversubscribed, the
Fund may, but is not required to, repurchase additional shares, but only up to a
maximum of 2% of the outstanding shares of the Fund. If the Fund determines not
to repurchase additional shares, it will repurchase shares on a pro rata basis.
The repurchase price will be equal to the share's net asset value on the date
specified in the notice of repurchase. The repurchase pricing date may be as
much as fourteen days after the date that the repurchase requests are due. The
Fund expects that payment of the repurchase price will be made on the third
business day after the repurchase pricing date, but the payment may be made as
much as seven days after such pricing date.
The Fund's first repurchase offer will commence in September 2000.
Thereafter, quarterly repurchase offers will commence each December, March, June
and September, and each such repurchase offer will be completed in the following
month, ordinarily on the second Friday of that month.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
5. MANAGEMENT FEE, INCENTIVE FEE, STOCKHOLDER SERVICING FEE, AND OTHER
TRANSACTIONS -- The Manager manages the affairs of the Fund and provides the
necessary personnel and facilities. Compensation of all officers of the Fund,
all directors of the Fund who are employees of the Manager, and all personnel of
the Fund and the Manager is paid by the Manager. The Manager receives a fee,
calculated daily and payable monthly, equal to 1.50% per annum of the Fund's
average daily net assets. The Manager has undertaken through December 31, 2001
to waive a portion of its management fee or to reimburse a portion of the Fund's
expenses to the extent that the Fund's total expenses (before payment of the
incentive fee, interest expense on any borrowings, and any extraordinary
expenses) in any calendar year would otherwise exceed an annual rate of 2.50% of
its average daily net assets for such year.
In addition to the management fee, the Fund will pay an annual incentive fee,
if any, to the Manager, calculated as described below. The Fund will accrue
daily a liability for the incentive fee that may be greater than the amount
payable by the Fund to the Manager as a result of using a different calculation
for determining the accrual. The amount of incentive fees paid to the Manager
will not exceed the incentive fees accrued by the Fund.
The incentive fee payable to the Manager at the end of a calendar year will
equal 15% of the cumulative incentive fee base less the cumulative amount of
incentive fees paid to the Manager in previous years. The cumulative incentive
fee base is equal to the sum of the Fund's: (i) cumulative net realized capital
gains or losses; (ii) cumulative net investment income or loss; and (iii) net
unrealized depreciation of securities. The Manager is under no obligation to
repay any incentive fees previously paid by the Fund.
The Fund will accrue daily a liability for incentive fees payable equal to
15% of the daily net increase in the Fund's net assets from investment
operations. If applicable, this liability will be reduced (but not below zero)
on any day by 15% of the net decrease in the Fund's net assets from investment
operations. At the end of each calendar year, if an incentive fee is paid to the
Manager, the amount of the incentive fee accrual will be reduced by the amount
paid to the Manager. No incentive fee will be accrued on any day unless the Fund
has offset all prior net realized losses, net investment losses and net
unrealized depreciation against net realized capital gains, net unrealized
appreciation, and net investment income.
The incentive fee calculations are subject to certain adjustments if the Fund
has cumulative losses from operations at the dates of any repurchases or
issuances of shares.
Brokers or dealers that sold shares of the Fund or that maintain accounts for
stockholders can enter into agreements with the Fund and receive a continuing
fee of up to 0.50% on an annual basis, payable quarterly, of the average daily
net assets attributable to Fund shares owned by customers of the particular
broker or dealer for providing personal services and/or the maintenance of
stockholder accounts. For the period from the initial trade date for Fund shares
(June 19, 2000) to June 30, 2000, such fees aggregated $121,717, or 0.50% per
annum of the Fund's average daily net assets for this period.
Seligman Data Corp., which is owned by certain associated investment
companies, charged the Fund at cost $82,221 for stockholder account services.
Certain officers and directors of the Fund are officers or directors of the
Manager, Seligman Advisors, Inc., and/or Seligman Data Corp.
The Fund has a compensation arrangement under which directors who receive
fees may elect to defer receiving such fees. Directors may elect to have their
deferred fees accrue interest or earn a return based on the performance of
certain other funds in the Seligman Group of Investment Companies. The cost of
such fees and earnings accrued thereon is included in organization expenses, and
the accumulated balance thereof at June 30, 2000, of $3,115 is included in other
liabilities. Deferred fees and related accrued earnings are not deductible for
federal income tax purposes until such amounts are paid.
6. RESTRICTED SECURITIES -- At June 30, 2000, the Fund owned a private placement
investment that was purchased through a private offering and cannot be sold
without prior registration under the Securities Act of 1933 or pursuant to an
exemption therefrom. In addition, the Fund has agreed to further restrictions on
the disposition of this holding as set forth in an agreement entered into in
connection with the purchase of this investment. This investment is valued at
fair value as determined in accordance with procedures approved by the Board of
Directors of the Fund. The acquisition date of this investment, along with its
cost and value at June 30, 2000, is as follows:
ACQUISITION
INVESTMENT DATE COST VALUE
---------- ----------- ---- -----
Metro-Optix
(Series B) 6/23/00 $7,160,947 $7,160,947
10
<PAGE>
FINANCIAL HIGHLIGHTS
The table below is intended to help you understand the Fund's financial
performance from its inception. Certain information reflects financial results
for a single share that was held throughout the period shown. Per share amounts
are calculated using average shares outstanding. "Total return" shows the rate
that you would have earned (or lost) on an investment in the Fund, assuming you
reinvested any capital gain distribution. Total return does not reflect any
sales charges and is not annualized.
6/22/00*
TO
6/30/00
---------
PER SHARE DATA:
NET ASSET VALUE, BEGINNING OF PERIOD .............................. $ 23.70
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................................... (0.02)
Net realized and unrealized gain on investments ................... 0.25
--------
TOTAL FROM INVESTMENT OPERATIONS .................................. 0.23
Offering costs .................................................... (0.04)
--------
NET INCREASE IN NET ASSET VALUE ................................... 0.19
--------
NET ASSET VALUE, END OF PERIOD .................................... $ 23.89
========
TOTAL RETURN: ..................................................... 0.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) .......................... $752,392
Ratio of expenses to average net assets ........................... 2.67%+
Ratio of net investment income to average net assets .............. 3.69%+
Portfolio turnover rate ........................................... --
Without fee waiver/reimbursement:
Ratio of expenses to average net assets ........................... 3.67%+
Ratio of net investment income to average net assets .............. 2.69%+
----------
* Commencement of operations.
+ In computing the ratios of expenses and net investment income to average net
assets, income and expenses other than incentive fees and organization
expenses are annualized. Incentive fees are an expense of the Fund only when
the Fund has positive investment performance. Incentive fees have not been
annualized as there is no assurance that the Fund will have positive
performance in the future. Organization expenses are not annualized because
they were a one-time expense incurred at the Fund's commencement of
operations. The Manager has agreed to limit the Fund's expenses, other than
incentive fees, interest expense on any borrowings and extraordinary expenses,
to an annual rate of 2.50% of the Fund's average net assets.
See Notes to Financial Statements.
11
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND STOCKHOLDERS,
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
We have audited the accompanying statement of assets and liabilities of Seligman
New Technologies Fund II, Inc., including the portfolio of investments, as of
June 30, 2000, and the related statements of operations and of changes in net
assets, and the financial highlights for the period from June 22, 2000
(commencement of operations) to June 30, 2000. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2000, by correspondence with the Fund's
custodian and brokers; where replies were not received from brokers we performed
other auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Seligman New Technologies Fund II, Inc. as of June 30, 2000, the results of its
operations, and the changes in its net assets and the financial highlights for
the period from June 22, 2000 to June 30, 2000, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
August 11, 2000
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
GENERAL COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Deloitte & Touche LLP
GENERAL DISTRIBUTOR
Seligman Advisors, Inc.
100 Park Avenue
New York, NY 10017
SHAREHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
(800) 622-4597 24-HOUR AUTOMATED
TELEPHONE ACCESS
SERVICE
12
<PAGE>
BOARD OF DIRECTORS
JOHN R. GALVIN (2, 4)
DIRECTOR, Raytheon Company
DEAN EMERITUS, Fletcher School of Law and Diplomacy
at Tufts University
ALICE S. ILCHMAN (3, 4)
TRUSTEE, Committee for Economic Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON (2, 4)
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
DIRECTOR, Conoco Inc.
JOHN E. MEROW (2, 4)
DIRECTOR, Commonwealth Industries, Inc.
TRUSTEE, New York-Presbyterian Hospital
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
BETSY S. MICHEL (2, 4)
TRUSTEE, The Geraldine R. Dodge Foundation
WILLIAM C. MORRIS (1)
CHAIRMAN
CHAIRMAN OF THE BOARD,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY (3, 4)
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch, Law Firm
JAMES Q. RIORDAN (3, 4)
DIRECTOR, KeySpan Energy Corporation
TRUSTEE, Committee for Economic Development
RICHARD R. SCHMALTZ (1)
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS, Colby College
ROBERT L. SHAFER (3, 4)
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON (2, 4)
DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO (1)
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR, ICI Mutual Insurance Company
MEMBER OF THE BOARD OF GOVERNORS,
Investment Company Institute
----------
Member: (1) Executive Committee
(2) Audit Committee
(3) Director Nominating Committee
(4) Board Operations Committee
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
STORM BOSWICK
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT AND TREASURER
PAUL H. WICK
VICE PRESIDENT
FRANK J. NASTA
SECRETARY
13
<PAGE>
SELIGMAN ADVISORS, INC.
AN AFFILIATE OF
[LOGO OMITTED]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
www.seligman.com
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF SHAREHOLDERS OR THOSE WHO
HAVE RECEIVED THE OFFERING PROSPECTUS COVERING SHARES OF COMMON STOCK OF
SELIGMAN NEW TECHNOLOGIES FUND II, INC., WHICH CONTAINS INFORMATION ABOUT THE
SALES CHARGES, MANAGEMENT FEE, AND OTHER COSTS.
CENTII-3 6/00 [RECYCLE LOGO] Printed on Recycled Paper
